Obama's FCC guy is big on open spectrum

Today I read perhaps the most positive thing about Obama as I've read in a long time: one of the two people heading his "FCC transition team" is a vocal proponent of open spectrum. His name is Kevin Werbach, and he's written the most complete and compelling open spectrum manifesto that I've ever read (despite the fact that it's six years old). He veers off into silly analogies (the highway analogy halfway through irked me a lot) that muddle his point more than anything, so skip those, but other than that, highly recommended. However, it's really, really, really long, so I've just excerpted some of the best parts.

First, a great two-sentence summary of open spectrum:

The assumptions underlying the dominant paradigm for spectrum management no longer hold. Today’s digital technologies are smart enough to distinguish between signals, allowing users to share the airwaves without exclusive licensing.

And here, an explanation of what interference is, and why it's all relative:

“Interference” is thus highly contingent on real-world factors. Again, this shouldn’t be surprising. Put two television sets next to one another, and you may get a sharp picture on one but a fuzzy image on the other. The difference is that one set has a better tuner. Do we register “interference” when it shows up on one set, or both? Should the most poorly designed set define the requirements for everyone else? What if there is no set in the room but a hypothetical set with certain characteristics might experience a degraded picture there? Under current spectrum policy, such hypothetical “interference” prevents frequency sharing.

Whatever rules we set will influence behavior. If “interference” is defined with reference to a dumb receiver, vendors will try to save money and make receivers as dumb as possible. If, on the other hand, manufacturers have no guarantee of spectrum exclusivity, they will have the opposite incentive. They will build devices robust enough to deal with a variety of situations...

...and this is something I had know idea about: the sinking of the Titanic set the precedence for the laws that still regulate our spectrum. Imagine that...the fate of the Titanic had profound consequences for the telecommunications industry for almost a century!

Here he explains that all of the "science" that current spectrum regulation is based on is flat-out wrong, and we don't even know enough today to say how much we can really jam into the thing (though this question is mostly theoretical...the limit is definitely very high):

Nonetheless, the licensed spectrum model has been the dominant paradigm for so long that there is a surprising amount we simply don’t know about how radios work. For example, we don’t know as a theoretical matter what the maximum capacity is of a geographically defined system filled with randomly distributed radios.

We do know that many of our intuitions are wrong. Research has shown that many factors we believe should decrease the capacity of a system—adding more transmitters, creating more alternative paths for signals to travel, or putting receivers in motion, for example—can actually increase capacity. This occurs because the more data a smart receiver has about the surrounding environment, the better it can do in distinguishing the desired signal.

The commercial viability of any system using these techniques will depend on business conditions.

I'll stop there, because there's just so much in it to quote that I don't even know how to excerpt it all. But if there's one tech-related thing you read this year, it should be this. Let's just hope this guy's thoughts are actually borne out during Obama's presidency.

FCC frees (some of) the spectrum

Amidst the hullaballoo of the presidential election, it's easy to miss a piece of news that is potentially more important: the FCC has freed the "white space" of the electromagnetic spectrum for unlicensed use, à la wi-fi. The parts of the spectrum that they've released were formerly used for padding in between television stations and in niche wireless microphone devices, but advances in technology have allowed these pieces of the spectrum to be used without interfering with traditional broadcasts.

Like wi-fi, these portions of the spectrum will be free for all to use (I expect with some minor restrictions), and won't be monopolized like the current bandwidths used by cell phone carriers. But unlike wi-fi, these spectrum ranges allow signals to travel "two to three times farther than WiFi signals can today, including through obstacles." While this isn't far enough to allow potential carriers to set up a single antenna and serve a large area like with current cell phones, it is possible to have ubiquitous connection through the use of mesh networks.

It's difficult to know today exactly how these spectrum ranges will be used in the future, but it strikes hard at the heart of traditional cell phone carriers' business models, and has the potential to introduce desperately-needed competition into the wireless data industry. For past posts on the spectrum, check out the open spectrum archive.

Mobile banking in the developing world and the modern-day license raj

MIT's Technology Review has an interesting article in their November/December issue about mobile banking in South Asia, and the convergence of banking and mobile phones in the developing world. Having skipped the landline/PC stage of telecom development, the developing world's connectivity needs are most often handled on cell phones and prepaid phone networks. The developing world has astonishing rates of mobile phone penetration – 44% of China's population, and 26% of India's, with much of the growth coming from poor, rural areas – as well as an enormous untapped need for banking services, which the majority of the poor in these countries lack. Mobile banking promises to enable money to be transfered, deposited, withdrawn, and even borrowed (in the form of microcredit) easily from a mobile phone, which are apparently services that would save a lot of time and work for India's poor farmers:

And to grasp how ordinary people could benefit, consider the life of the average farmer in the Bangalore area. Typically, a farmer spends hours trekking into the city for a 4:00 a.m. auction to sell his goods. The auction concludes by 6:00 a.m., after which the farmer takes an IOU to a bank, waits for it to open, and collects his money. Then he returns home, risking theft on the way. "We looked at the model and said, What if the retailer could use mChek to pay farmers electronically, and the farmer would receive notification on his cell phone?" Swamy says. The company conducted a pilot project with Citibank and a Bangalore retailer that buys fresh produce; they learned that 85 percent of the farmers attending the auction already owned cell phones. And some reported that if they could accept payment electronically, not only would they save hours queuing at banks, but they might skip the journey altogether, sending a son or a hired laborer in their place.

Though there is this enormous demand for mobile banking, the concept is still in the beta stages where it's needed most. India – land of the infamous license raj – has regulations that separate the banking and and telecom sectors:

India's regulations, unlike those of some other countries, do not allow telecom companies to enroll people in bank accounts; only banks and nongovernmental organizations, including microfinance institutions like Grameen Koota, can do that. So for now, mChek hopes to form partnerships with such organizations.

Hopefully mChek will be able to find a willing partner, but it sure would get mobile banking into the hands of consumers a lot faster if they were allowed to handle bank accounts themselves. In the absence of rules allowing mobile phone companies to enter directly into the banking sector, partnerships are necessary, but add a level of complexity to entrepreneurship that is apparently a serious stumbling block in the wider implementation of mobile banking:

Yet these efforts to graft developed-world banking onto developing-world mobile networks are not commensurate with the swelling popularity of the mobile phone itself. The larger story is one of pilot projects that petered out amid difficulties including cumbersome national regulations, unfriendly user interfaces, and an inability to make the right partnerships. "The reality of the field today is that the promise--which a lot of people understand is huge--is more in the conceptual stage," says Michael Chu. "The banking industry is very suspicious of the cell-phone industry, because they suspect that cell phones will make them obsolete. The cell-phone companies think the banks are like dinosaurs." But these players have to work together seamlessly for cell-phone-based banking to work.

...and while mChek might be succeeding, they seem to be one of the few that's been able to work through the regulations:

For mChek, then, the task now is to forge more such partnerships and navigate a shifting regulatory environment. Draper Fisher Jurvetson's Jolly says that mChek's achievements thus far are unique in India. "I often talk about [mChek] as a company that is dancing with gorillas or behemoths," says Jolly. "You have the banking sector on one side and the [telecom companies] on the other side, and then you've got the MasterCard and Visa folks, and finally the regulatory oversight bodies like the RBI. Trying to corral all of them, for a startup, is next to impossible. What mChek has been able to accomplish in India has never been done before."

In Africa, mobile phone users have found an interesting work-around to mobile banking restrictions: stop dealing in officially-sanctioned currency, and start dealing in an alternative currency, where the rules for transactions aren't as stifling. The currency of choice in many places is mobile phone credit, which can be sent and received easily and cheaply over text message (users text the code required to redeem the minutes, and the recipient can either use the minutes, or trade them on). The rise of this new mobile credit currency has parallels with the natural emergence of another currency: gold. Though at first valued for its useful properties (i.e., jewelry), the precious metal eventually emerged as a currency because people were sure others would accept it, and it was value-dense and it didn't spoil, allowing it to be used as a good medium of exchange, and store of value. Cell phone minutes have the same properties: they're easy to transfer over long distances (at a cost of only a text message), and retain their value over long periods of time.

Is government really a better technology incubator than the private sector?

Wired has an article about a newly-launched commercial satellite, with the highest resolution of any commercial satellite: 41 cm (the lower the number, the better quality the image). Unfortunately, though, these images won't be available to Google (the exclusive commercial customer), or to anyone except government agencies. Dating back to the Cold War days, the federal government has prevented companies from offering commercial satellite imagery at anything near useful resolutions. However, as far as I can tell, it lifted some of these restrictions at some point "in the 1990's." According to the original Wired article, this seems to have ignited a great leap forward in commercial satellite imagery:

But only in recent years the technology became available to the public and businesses while concurrently making dramatic strides in coverage and resolution. For example, when Google Earth launched in 2004, its imagery was low-res and spotty. But by March 2006, a third of the world population could get a bird's-eye view of their own homes in high resolution.

But like I said, don't count on getting the 43 cm resolution that's available to government agencies – Google only gets pictures at resolutions of 50 or above. While this 7 cm differential isn't too big, it'll get bigger in a few years when the company is supposed to launch a satellite that can take pictures at a resolution of 25 cm, which of course will only be available to the government. And though I couldn't find any figures from recent years (as it's still a classified national security matter), it seems that as far back as the late '90s, the private Federation of American Scientists estimated the US government's resolution capacity to be 10 cm, and even better if they dip the satellite down closer to earth.

And this isn't the only case where government technical expertise runs laps ahead of the private sector. The Wired article quotes a backer of the project noting that hi-res satellite imagery is part of this longer tradition, "[j]ust like the internet, just like GPS, just like telecom." And indeed, this has become a popular meme these days: in the second presidential debate, Obama claimed that one of the reasons that the government needs to intervene in the green energy market is that government intervention has in the past has produced the beginnings of the most profound technological developments of the century. But why? Well, in the case of wartime inventions (which is what Obama references), a lot of it can be attributed to a crowding-out effect: as we still see today, government jobs often pay more than the private sector for technology jobs, and thus their presence will dampen entrepreneurship in the private sector.

But also, the government can do something even more pernicious: outright ban private sector development of a certain technology. This is what clearly happened in the case of hi-res satellite imagery, and which also happened in the same way with GPS. GPS was outright banned for public consumption in the US until the early '80s, and even then, was only available at the relatively useless accuracy of 400 feet. It wasn't until 2000 when Clinton (seemingly unilaterally?) ended the signal degradation and allowed the civilian GPS market to flourish, though it's unclear if today the military has better capability because they invest more in it, or because they restrict/degrade the civilian signal.

And the last category that the satellite company representative mentions – "telecom" – has had similar restrictions on its adoption. As Tim Wu explains in a NYT op-ed, wireless adoption (the next exciting frontier in telecommunications) is hampered by government policies which restrict access to the bandwidth over which wireless signals of all kind are carried:

After physical wires, the other major way to move information is through the airwaves, a natural resource with enormous potential. But that potential is untapped because of a false scarcity created by bad government policy.

Our current approach is a command and control system dating from the 1920s. The federal government dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev.

Many “owners” of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation’s airwaves are empty.

The solution is to relax the overregulation of the airwaves and allow use of the wasted spaces. Anyone, so long as he or she complies with a few basic rules to avoid interference, could try to build a better Wi-Fi and become a broadband billionaire. These wireless entrepreneurs could one day liberate us from wires, cables and rising prices.

Just something to think about when someone tries to tell you that only the government can make the investment necessary for innovative technologies like satellites, computers, or the internet. The private market, either due to outright restrictions or the siphoning away of talent by the federal government, is often not given the chance.

Why are cell phones so ugly?

I've been saying this since before the iPhone came out: cell phone software is ugly! And I can't help but think that plenty of other people had that same thought. So the question is, why did the market develop better interfaces sooner? My instinct is to look for market perversions, and sure enough, in the cell phone business, you find the mother lode: regulated spectrum. The FCC doles out pieces of the spectrum, artificially limiting something that – with technology – can be infinitely divisible. This limits competition in cellular service, and the hardly-competing oligopolies can get consumers to buy phones bundled with service plans (long service plans at that). In a competitive market, retailers don't bundle, because customers are extremely discerning with regards to price. So, it's probably just a spillover effect from the cartelized broadcast spectrum. The alternative would be an open spectrum, usable for all (or almost all, depending on who you talk to).

Anarchy on the airwaves

Google has recently launced a campaign to lobby the FCC to free up radio spectrum currently used as whitespace between channels. The main opponents of the move seem to be high-end audio equipment manufacturers, who say that interference would be much more common and difficult to deal with if the space were free to be used by any device.

Ultimately, though, the problem is not insurmountable – technological solutions do exist:

Meanwhile, companies are preparing for the worst. For instance, Lectrosonics is now offering a wider range of frequencies for its wireless microphones.

Until last year, the company's wireless microphones spanned a range of 537 MHz to 768 MHz. Now that a part of that band has been auctioned off, the company has reworked its devices to operate in the 470 MHz to 691 MHz spectrum. It has also added another band, the 944 MHz to 952 MHz spectrum, to the mix.

Those changes haven’t been easy. Over the course of a year, Lectrosonics reallocated engineering resources and spent "several thousand dollars" getting each new product certified by the FCC.

"We have a limited amount of engineering resources and there are hard costs such as FCC licenses that we have had to get," says Winkler.

It's interesting how one of the big costs – FCC licenses – are not reflective of inherent technological issues, but rather the bureaucratic process for allocating spectrum.

Of course, the spectrum itself has no hard limit on use, and can theoretically be divided infinitely. Someone at Intel rebuts broadcasters' claims that allowing the whitespace between channels to be used would damage reception of existing channels by pointing out that the aforementioned audio devices already use the spectrum in question (though broadcasters obviously have bigger reasons to fear competition). The infinite divisibility argument and the idea that individuals can successfully defend their airspace using technology without resorting to top-down allocation are the rationales behind the open spectrum movement.

Google has reason to advocate such a policy, since they are very strong on content but are choked by the monopoly on wireless delivery in America and abroad. Obviously they believe that small amounts of the existing bandwidth, if left free to anyone to use, could be successfully developed and eventually used by Google to push content to consumers while bypassing the traditional wireless gatekeepers. Many hardware companies supports open spectrum, as increasing the ubiquity of wireless communications would increase demand for wireless devices and software.

US embargoes dissent in Cuba

According to a document leaked to the very interesting website Wikileaks, Cuba's government has negotiated with Venezuela's government to establish a cable connection to the internet. Apparently Cuba has been walled off from the internet via anything but a slow and expensive satellite connection thanks to Amerca's embargo on Castro's prison paradise. I'm not a big fan of the Cuban embargo, but this strikes me as a particularly boneheaded aspect of it – it's very difficult to fully censor the internet, and in a semi-repressive communist country, the internet could be a great way of safe communication among dissidents. There are already a few famous dissident bloggers in Cuba, and it's hard to imagine that there wouldn't be more if Cubans could access the internet more cheaply and easily.

The revolution will not be broadcast on satellite radio

It looks like the Sirius and XM satellite radio merger will go forward, but not before some representatives hold the deal hostage so that they can steer some business towards a favored private-equity firm. Apparently the new über-station will not be black enough:

Members of the black caucus on Capitol Hill have been arguing for the merged company to lease five times that amount of spectrum to companies owned by racial minorities. Short of that, caucus members have warned in letters to the commission and meetings with Martin, they would oppose the merger.

In an interview yesterday, Rep. G.K. Butterfield (D-N.C.), chairman of the Congressional Black Caucus's working group on satellite radio, called Martin's proposed compromise "completely unacceptable."

The article doesn't really explain why, however, these esteemed black members of our illustrious legislative branch of government are all of the sudden so worried – is part of the merger a plan to fire all of the black DJs? Why is the situation right now tenable, but if they merge, it will not be? But anyway, I digress. The most shocking party is how blithely Butterfield admits that he's engaging in blatant rent-seeking on behalf of a "minority-run" firm:

Butterfield said he got the idea for the 20 percent set-aside for minority-owned companies from Georgetown Partners, a minority-run private-equity firm based in Bethesda, and its managing director, Chester Davenport.

But wait – it gets better! Despite the fact that "he hoped Georgetown Partners would fill that role" (i.e., the 20% stake set aside for minority-owned companies), "Butterfield said he was not pressing for the 20 percent leasing arrangement on behalf of Georgetown Partners or anyone else." Yeah right.

...by the way, I should add that I think that all discussion of dividing the bandwidth is pretty ridiculous in the first place. The FCC came into being to divide up the spectrum and stop anyone from interfering with anyone else's transmission. However since then, we've gained a more nuanced view of the spectrum, and it's now generally understood that it can be infinitely divided. Technology that can better parse out the individual signals is already available and would be developed at a much faster pace if the government were to relinquish control of the airwaves. That's the theory behind the open spectrum movement, which I've talked about before.

Spam and viruses: a symptom of drug prohibition?

Via Slashdot, evidence that computer viruses, spam, and prescription-less prescription drug sales are all intricately linked. Apparently, the Storm botnet – a network of computers infected with the Storm worm, whose spamming services are bought and sold on the black market – generates over $150 in revenue for its owners through online prescription drug sales. The Storm botnet is incredibly powerful, running on anywhere from 160,000 to 50 million infected computers (including, probably, your mom's), and is perhaps the origin of one-fifth of all the Internet's spam. The market for these drugs (mostly Viagra and similar drugs, with my own anecdotal evidence suggesting that painkillers and anti-anxiety meds are also advertised) through shady online operators exists only because of the restrictions placed on buying them in real life. So, next time you check your mail and you have more advertisements for c1a|is and \/1agra than real e-mails, blame the FDA.

Humans go to work, come home, stay home

Over at the Antiplanner's blog (I find his blog's name incredibly ironic given the author's views, but that's for another time), where I often find myself sucked into repetitive arguments about the merits of contemporary American land use and transportation policy, one commenter made the assertion that individualized transport is inherently superior to mass transit because:

By definition and, communal transport meets only the most common needs. One might lower their aspirations, but it would be like telecom reverting to the party-line phone at the general store.

I take issue with this comment on a number of levels, but today I read an article in the NYT that suggests that "common needs" might be just about all we need. The article is about a study published in Nature that analyzed the movement pattern of 100,000 people in an unnamed European country via cell phone records. The Times write-up didn't have any quantitative specifics, and the study itself is gated, but the researchers concluded that "[i]ndividuals display significant regularity, because they return to a few highly frequented locations, such as home or work." It makes you wonder how necessary the on-demand flexibility of the road/car system really is.

Edit: Reader DS points to this link for an ungated version of the article.

Living on $4/day and owning a cell phone

There's an excellent article in this coming weekend's NY Times Magazine in which a reporter follows around a "human-behavior researcher" or "user anthropologist" at Nokia. Basically, he travels around the world to discover how people use their phones and what Nokia could do to make them sell better. His work mainly is focused on the Third World, it being the place with the largest untapped market for cell phones. It's full of fascinating anecdotes, and reminds you of the power of something that seems as benign as a cell phone. There's a lot that's fascinating about this article, but this is what I found the most intriguing:

One of the most remarkable findings was that even very poor families invested a significant amount of money in the I.C.T. category — information-communication technology, which, according to Al Hammond, the study’s principal author, can include money spent on computers or land-line phones, but in this segment of the population that’s almost never the case. What they’re buying, he says, are cellphones and airtime, usually in the form of prepaid cards. Even more telling is the finding that as a family’s income grows — from $1 per day to $4, for example — their spending on I.C.T. increases faster than spending in any other category, including health, education and housing. “It’s really quite striking,” Hammond says. “What people are voting for with their pocketbooks, as soon as they have more money and even before their basic needs are met, is telecommunications.”

The fact that one would be surprised at the spending habit's of another seems obvious: human desire and exchange is complex, so complex that we cannot hope to possibly be able to understand it all. This is precisely the reason that communism could never work even under the most helpful conditions: no one can possibly allocate goods as well as the market. And yet, in development, people are so often focused on introducing certain things into people's lives, be it safe drinking water of access to healthcare. And yet, when people make decisions with their own money, they spend it on cell phone minutes!

Also, this makes me feel more optimistic about Somalia, because despite its so-often derided status as a stateless wasteland, it has some of the cheapest calling rates and competitive telecom markets in Africa.

Open spectrum

In light of the recent end of the FCC's latest spectrum auction, I think it's a good idea to examine the idea of spectrum licensing and the FCC. Currently, the FCC divides up the spectrum between technologies and companies, using its technocratic expertise as a guide. Some of it is unlicensed – like baby monitors and Wi-Fi – but appliances using it must still adhere to certain specifications, intended to eliminate interference. But is this even necessary? Some people think not. Open spectrum backers (including techno-libertarian Larry Lessig) argue that "interference" is all relative, and is not an issue (or would not be an issue with the proper competitive pressures) with technology that can separate the data from the noise. They argue not just for an increase in unlicensed spectrum – which is still subject to government interference – but a complete liberalization of the airwaves.

It might strike some as communistic, since we generally think of the airwaves as a good, and naturally market liberals would want these to be in private hands. However, they are not any old good – they're infinitely divisible, utterly non-excludable, and pretty damn indefensible – unless you have the power of the state. Without a government, it's hard to imagine any sort of collective agreement being made – more likely is that each firm would work individually to project and protect their data stream. In my mind, it's a similar situation to that of intellectual property – we've attached this label of "property" to these things and have neglected the important differences between these goods and traditional physical goods.

And when you think about all the airwaves as fundamentally planned by government, it raises questions as to how truly "natural" our information and entertainment habits really are.