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Unlicensed Spectrum Needs No New FCC Regulation

Everyone should have the freedom to innovate and compete in America, the land of opportunity.

There should be no innovation or competition double standard where government politically picks winners and losers by rigging competition via denying some companies the freedom to innovate and compete spectrally while granting it to their competitors.

With radio spectrum, America has created different but symbiotic spectrum models. One is licensed spectrum where spectrum for exclusive use is auctioned to the highest bidder. The other is unlicensed spectrum where anyone is free to share the same spectrum if they play nice and do not interfere with other spectrum sharers’ use. These models have never been either/or; they have always been free and open to use separately or together to maximize innovative, commercial, and competitive opportunity.    

Importantly, the broadband industry currently is strongly united in challenging the legality of a blatant FCC competition double standard in the FCC’s Open Internet Order, arguing: “Regulation of Internet Interconnection under Title II without reclassifying that service violates” Verizon v. FCC, which “held that broadband providers ‘furnish a service’ to edge providers separate from the service they provide to end-user customers.” “The FCC’s one-sided application of Title II to Internet interconnection is a deliberate attempt to avoid regulating other entities—such as Internet backbone providers and large edge providers, including Google—that provide similar interconnection but do not offer retail broadband service.”

The FCC majority obviously chose edge providers as winners and broadband providers as losers in their order via an arbitrary one-way, competition double standard that encourages edge interest competition with broadband interests while discouraging broadband interest competition with edge interests.    

Unfortunately, concerning wireless-related competition, it appears to be “déjà vu all over again” to quote the great American thinker Yogi Berra.

Some now appear to be encouraging the FCC to pick companies who have chosen an unlicensed-spectrum-driven business model as winners over companies who have chosen licensed-spectrum-driven models, by specially limiting licensed providers’ use of unlicensed spectrum via new preemptive and potentially onerous requirements that go beyond resolving non-interference and effectively could involve the blocking or throttling of broadband hybrid licensed/unlicensed models in the marketplace.

A recent letter to the FCC from several senators calling for more FCC “oversight” of unlicensed spectrum (open frequencies used by cordless phones, baby monitors, WiFi routers, Bluetooth, garage door openers, toy cars, etc.) “in order to protect consumers from potential harm,” could be a worrisome development because this is how calls for Title II net neutrality regulation originally got started.

Interests then said -- in the absence of evidence of an actual net neutrality problem – the FCC needed to have more oversight and needed to establish more “rules of the road” to protect consumers from potential harms. Then the entire FCC leap to justifying reclassification of broadband to be a Title II utility regulated service was not about addressing real proven consumer harms, but to give the FCC the strongest legal authority possible to once again protect against potential consumer problems.

I hope it is not “déjà vu all over again,” but I am flagging this emergent double standard out of concern that it could get out of hand like net neutrality to Title II did. Asking the FCC to protect against potential problems is like asking an addict to hoard the substance to which they are addicted.

Unlicensed spectrum has long been a most-lightly-regulated FCC segment of communications because previous FCCs have wisely wanted to encourage “permissionless innovation.” This free market dynamic where the FCC did not try and pick technology/company winners and losers has worked exceptionally well because consumers ultimately have been able to choose what best serves their needs, wants, and means.

The danger here for those who seem to be encouraging the FCC to use technical interference oversight and enforcement -- as a stealth de-competition policy where the FCC picks economic winners and losers -- is that FCC regulators have proven to have so little humility and self restraint that they may not stop at economically regulating just some unlicensed aspirants, but economically regulate all unlicensed spectrum competitors under something like the FCC’s “future Internet conduct standard” in its Open Internet Order.

In the be-careful-what-you-ask-for department, FCC economic regulation of unlicensed spectrum could easily spiral into large edge providers having their outsized backbone transmissions be reclassified as Title II common carrier telecommunications, where FCC oversight means one could need the FCC’s permission to innovate.   

Some edge interests already understand this risk conceptually (just not specifically yet) for unlicensed spectrum. That’s because some of the edge interests calling for more FCC oversight of unlicensed spectrum are also simultaneously strongly opposing more FCC oversight in the FCC’s upcoming Title II Over-the-Top Video Streaming proceeding.

In that FCC OTT proceeding, they are taking the opposite position, squealing that the video streaming market is still nascent and that the FCC should not intervene, so that they can continue their nascent market-based experimentation of new business models without regulatory pre-judging or the need for FCC permission to innovate.

Bottom-line: licensed-spectrum competitors that seek to use unlicensed spectrum for their hybrid-wireless-service must abide by unlicensed spectrum non-interference protocols, just as unlicensed-spectrum competitors must abide by them, and abide by the requirements of licensed spectrum to the extent that they use licensed spectrum competitively as well.

What is best for consumers, innovation, and growth, is competition on a level-playing-field with one set of rules, not a double standard where the FCC preemptively picks technology/company winners and losers before market forces and consumer demand can determine what they want, need, and will use.

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Note: for those interested in learning more about this issue I recommend reading excellent pieces by Brent Skorup and Richard Bennett.

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

 

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