Prime beach­front spec­trum for all

The Washington Post Sunday - - BUSINESS - EZRA KLEIN

You’re prob­a­bly read­ing this on junk. And I’m not talk­ing about newsprint — in­dus­try woes aside, that’s high-qual­ity stuff. But if you’re on a com­puter or an iPad, and you’re not plugged into an In­ter­net jack in the wall? Junk, then.

But it’s not your MacBook or your tablet that’s so crummy. It’s the spec­trum it’s us­ing.

Spec­trum, in the words of FCC Chair­man Julius Ge­na­chowski, is the econ­omy’s “in­vis­i­ble in­fra­struc­ture.” It’s the in­ter­state sys­tem for in­for­ma­tion that trav­els wire­lessly. It’s how you get ra­dio in your car, ser­vice on your cell­phone and satel­lite to your tele­vi­sion. It’s also how you get WiFi.

Junk spec­trum is the home for WiFi — a multi­bil­lion­dol­lar in­dus­try.

But not all spec­trum is cre­ated equal. “Beach­front spec­trum” is high-qual­ity stuff. Lots of in­for­ma­tion can travel long dis­tances on it with­out los­ing much data. But not all spec­trum is so valu­able.

In 1985, there was a slice of spec­trum that was too crummy for any­one to want. It was so weak that the ra­di­a­tion that mi­crowaves emit could mess with it. So the govern­ment re­leased it to the pub­lic. As long as what­ever you were do­ing didn’t in­ter­fere with what any­one else was do­ing, you could build on that spec­trum. That’s how we got garage-door open­ers and cord­less phones. Be­cause the in­for­ma­tion didn’t have to travel far, the junk spec­trum was good enough. Later on, that same sec­tion of junk spec­trum be­came the home for WiFi — a cru­cial, multi­bil­lion-dol­lar in­dus­try. A plat­form for mas­sive tech­no­log­i­cal in­no­va­tion. A huge in­crease in qual­ity of life.

There’s a les­son in that: Spec­trum is re­ally, re­ally im­por­tant. And not al­ways in ways that we can pre­dict in ad­vance. Mak­ing sure that spec­trum is used well is no less im­por­tant than mak­ing sure our high­ways are used well: If the Belt­way were re­served for horses, Washington would not be a

very good place to do busi­ness.

But our spec­trum is not be­ing used well. It’s the clas­sic in­no­va­tor’s quandary: We made good de­ci­sions many years ago, but those good de­ci­sions cre­ated pow­er­ful in­cum­bents, and in or­der to make good de­ci­sions now, we must some­how un­seat the in­cum­bents.

To­day, much of the best spec­trum is al­lo­cated to broad­cast tele­vi­sion. Decades ago, when 90 per­cent of Amer­i­cans re­ceived their pro­gram­ming this way, that made sense. To­day, when fewer than 10 per­cent of Amer­i­cans do, it doesn’t.

Mean­while, mo­bile broad­band is quite clearly the plat­form of the fu­ture — or at least the near fu­ture. But we don’t have nearly enough spec­trum alk­lein lo­cated for its use. Un­less that changes, the technology will be un­able to progress, as more ad­vanced uses will re­quire more band­width, or it will have to be ra­tioned, per­haps through ex­tremely high prices that make sure most peo­ple can’t use it.

The FCC could just yank the spec­trum from the chan­nels and hand it to the mo­bile in­dus­try. But it won’t. It fears law­suits and an­gry calls from law­mak­ers. And tem­per­a­men­tally, Ge­na­chowski him­self is a con­sen­sus-builder rather than a steam­roller.

In­stead, the hope is that cur­rent own­ers of spec­trum will give it up vol­un­tar­ily. In ex­change, they’d get big sacks of money. If a slice of spec­trum is worth bil­lions of dol­lars to Ver­i­zon but only a cou­ple of mil­lion to a few ag­ing TV sta­tions — TV sta­tions that have other ways to reach most of those cus­tomers — then there should be enough money in this trans­ac­tion to leave ev­ery­one happy.

At least, that’s some peo­ple’s hope. Some ad­vo­cates want that spec­trum — or at least a sub­stan­tial por­tion of it — left un­li­censed. Rather than us­ing tele­com cor­po­ra­tions such as Ver­i­zon to buy off the cur­rent own­ers of the spec­trum, they’d like to see the fed­eral govern­ment take some of that spec­trum back and pre­serve it as a pub­lic re­source for the sort of in­no­va­tion we can’t yet imag­ine and that the big cor­po­ra­tions aren’t likely to pi­o­neer — the same as hap­pened with WiFi. But as of yet, that’s not the FCC’s vi­sion for this. Of­fi­cials are more wor­ried about the mo­bile broad­band mar­ket. They ar­gue (ac­cu­rately) that they’ve al­ready made more beach­front spec­trum avail­able for un­li­censed uses. And al­though they don’t say this clearly, auc­tion­ing spec­trum to large cor­po­ra­tions gives them the money to pay off the cur­rent own­ers. But even so, they can’t do that.

“Imag­ine some­one was given prop­erty on Fifth Av­enue 50 years ago, but they don’t use it and can’t sell it,” says Tim Wu, a law pro­fes­sor at Har­vard and author of “ The Mas­ter Switch.” That’s the sit­u­a­tion that’s arisen in the spec­trum uni­verse. It’s not le­gal for the FCC to run auc­tions and hand over some of the pro­ceeds to the old own­ers. That means the peo­ple sit­ting on the spec­trum have lit­tle in­cen­tive to give it up. For that to change, the FCC needs Congress to pass a law em­pow­er­ing it to com­pen­sate cur­rent hold­ers of spec­trum with pro­ceeds from the sale.

One way — the slightly dem­a­gogic way — to un­der­score the ur­gency here is to in­voke China: Do you think it’s let­ting its in­for­ma­tion in­fra­struc­ture stag­nate be­cause it’s a bureau­cratic has­sle to get the per­mits shifted? I rather doubt it.

Of course, we don’t want the Chi­nese sys­tem. Democ­racy is worth some red tape. But if we’re go­ing to keep a good po­lit­i­cal sys­tem from be­com­ing an eco­nomic hand­i­cap, there are go­ing to be a lot of de­ci­sions like this one that need to be made. De­ci­sions where we know what we need to do to move the econ­omy for­ward, but where it’s eas­ier to do noth­ing be­cause there are pow­er­ful in­ter­ests at­tached to old habits. The prob­lem with hav­ing a re­ally good 20th cen­tury, as Amer­ica did, is that you’ve built up a lot of in­fra­struc­ture and made a lot of de­ci­sions that ben­e­fit the in­dus­tries and in­no­va­tors of the 20th cen­tury. But now we’re in the 21st cen­tury, and junk won’t cut it any­more.

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