The real question is really "why isn't most of the spectrum like this?" - people sharing it rather than it being sold off to private holders to be owned
As interpreted by many modern, mostly conservative, regulators and scholars, the idea is that by giving private property rights in spectrum you incentivize not only more efficient usage through price signaling, but you incentivize research & development into more efficient technologies.
There's plenty to critique, especially as it applies to spectrum. See, for example, the famous Salon.com article summarizing David Reed's arguments: "The myth of interference" (2003), https://www.salon.com/2003/03/12/spectrum/ But if you want to understand your adversaries' thinking, Coase's paper is the place to start.
As with software patents, I think there's an argument to be made that this is no longer true. Digital modulation schemes are leagues more efficient than older analog techniques, both in terms of power and bandwidth. Spread spectrum schemes in particular are even reasonably resistant to being plopped on top of each other.
The spectrum ownership scheme allows established players to sit around on their asses using loud, inefficient modulation schemes with huge dead zones in between channels because they don't need to do any better than that.
I think radio technology would be better across the board if spectrum were open, and if people had to compete by using better, more efficient, more interference-immune modulation schemes, or risk getting stepped on by someone else. If we had a system like this, the noise floor would just slowly increase in heavily used parts of the spectrum, rather than what we have now, which is a whole bunch of legally mandated quiet zones punctuated by huge narrow carrier spikes.
The technology to do this exists... you can go buy a broadband SDR and put together a system like this in GNU radio fairly quickly for experimental purposes, but it's not really legal to actually use this anywhere.
Thus the question isn't what regulatory regime is best for squeezing the most out of LTE, but rather what's the optimal pace of radio communications evolution and how to achieve it. That's a drastically different type of question that almost certainly has a drastically different answer, or at least a much more complex answer.
Instead of just giving it away or making it all free-reign.
Whenever anyone wants to use spectrum, their device automatically bids and gets allocated whatever size slice of spectrum and transmit power they ask for. Then the device maker or the user pays the bill at the end of the year, perhaps with some minimum free amount each year per person, which could cover all except the biggest spectrum users.
If you didn't like the government allocation scheme, you could rent your own block and do your own sub-allocations, for example some kind of packetized system with microsecond long packets wouldn't want to have to contact a government server for every 1 microsecond allocation.
That gives a strong incentive to use efficient allocation schemes.
Remember, the free market is only efficient when transaction costs are low.
If I’m out in the middle of nowhere with my team and we’re using these radios because there’s no cell coverage, a) how would a given radio “bid” on a piece of spectrum, and b) how would the other units in the talk group know to listen to a particular frequency for my message?
Right now it’s easy to know whom to tell about the coordination though: the Canadian government :).
In Coase's view the government shouldn't be auctioning spectrum for limited times or with strings attached, as we commonly do now. (What the FCC does now is a quasi-Coasean spectrum regime.) In Coase's view spectrum usage would be most efficient by selling all spectrum (from 0-infinity) in a one-time auction to the single highest bidder. That bidder could (and, crucially, would in Coase's view) then subdivide and sell the spectrum according to market demand.
Coase's logic is solid; it's the premises that are problematic. First, it ignores transaction costs, or at least assumes they're de minimis. Even before the Law & Economics field took off (which is the field Coase most influenced), it was understood that one of the purposes of legal rules was to minimize transaction costs. Sometimes a market is made more efficient by specifying a fixed rule, and even more often by specifying a fixed default rule, then by permitting perfect contractual freedom. Of course, this begs the question of when you can know whether to intervene. But that's the only legitimate question, not whether you should ever intervene. In Coase's time his argument was more practical as widespread independent and even individual broadcast usage wasn't a commercially realistic scenario; transaction costs would always be born by economic behemonths and therefore would be de minimis relative to their price. But that's not Coase's actual argument; his actual argument is categorical and absolute, and that's how most modern proponents (IME) apply it as well.
Secondly, the notion of spectrum rivalrousness is contentious. If something isn't rivalrous, a property regime is unnecessary and usually strictly inefficient.[1] Without getting into the science (and I'm not an electrical engineer so I'd just make mince of things), as a practical matter spectrum usage is only partly rivalrous (rivalrous mostly deriving from the technical environment, not from the fundamental character of spectrum, as with physical goods and real estate). Your ability to enjoy maximal channel bandwidth between two physical points is limited by how sophisticated your transmitter and receiver, and ultimately by computational power, not by coincidental usage, per se. (Not unless someone is actively trying to screw you.) As WiFi has born out, we're all in an arms race for buying and using the latest, greatest gear. In one sense this is just a convoluted price signaling scheme--the people most in need of bandwidth just pay for fancier equipment--that might be less efficient than a simple property regime. But arguably in practice this process plays out slowly enough (especially with moderate power limits, carve outs for emergency use, etc) that these transaction costs are far less than the transaction costs we see in a market where we expect Verizon's or AT&T's spectrum usage rights to trickle down to ad hoc groups and individuals of spectrum users in the same way William the Conqueror's lands in England were slowly subdivided until every Englishman could build his own castle.
Nobody will ever sell me rights to spectrum for use within a 10-meter or even 100-meter radius, even though it's possible and would open up a tremendous wealth of opportunities. Cordless phones (POTS, not cell) and WiFi could only have happened with unlicensed (i.e. unowned) spectrum, in contradiction to Coase's argument.
[1] Exception--if food wasn't rivalrous because we all had free Star Trek-style replicators I imagine obesity would be an even worse problem than it is today, we'd be more sickly, and so we'd probably want to impose costs to maximize aggregate wealth. (See soda tax.) And if we did that we might want to make those costs transferable (e.g. carbon credits) rather than centrally figuring out the most efficient price for each individual.
Section 5 sophisticatedly exposits the specific case on how the free market solves frequency interference in admonishment of the special regulation. Excerpts of his discourse:
“All property rights interfere with the ability of people to use resources.What has to be insured is that the gain from interference more than offsets the harm it produces. There is no reason to suppose that the optimum situation is one in which there is no interference”
“The operator whose signals were interfered with, if he had the right to stop such interference,would be willing to forego this right if he were paid more than the amount by which the value of his service was decreased by this interference or the costs which he would have to incur to offset it.” He goes on to talk about the case of deliberate interference. This is about deliberate spectrum preference overlap not accidental interference.
And Coase disambiguates his advocation if it still isn’t clear: “What this analysis demonstrates,so far as the radio industry is concerned, is that there is no analytical difference between the problem of interference between operators on a single frequency and that of interference between operators on adjacent frequencies.”
“It has been the burden of this article to show that the problems posed by the broadcasting industry do not call for any fundamental changes in the legal and economic arrangements which serve other industries.”
You’re mistaking market efficiency, transactional costs and externality. It’s argued that legal rules are necessary to instead reduce externalities by market failures, which existed long before Coase. Coase instead contributed to the limits of cost savings about transaction costs provided by the formation of business and maintenance of markets in The Nature of the Firm (aside from his free market advocation of the spectrum), which became Coase’s theorem.
I’m educated as an Electrical Engineer; it’s clear to us spectrum rivalry isn’t contentious but true. Even amongst a single broadcaster within his own spectrum he runs into constant constraint and trade off by his own bandwidth.
I’m not arguing for or against the ideas of Coase, only correcting that public presentation of his ideas as an interventionist. Especially since Coase didn’t think externalities were unfortunate, instead he thought that was a “dirty word”, and seldom found a case for a government all to eager to specially regulate.
But it's rivalrous in a distinctive way--it's a function of contemporaneous and evolving limitations of the existing state of technology and usage patterns. To quote a famous IEEE Spectrum article, "Moreover, interference is not some inherent property of spectrum. It's a property of devices. A better receiver will pick up a transmission where an earlier one heard only static. Whether a new radio system "interferes" with existing ones is entirely dependent on the equipment involved. Consequently, the extent to which there appears to be a spectrum shortage largely depends not on how many frequencies are available but on the technologies that can be deployed. Many regulations intended to promote harmony of the airwaves have instead, by putting artificial limits on technology, created massive inefficiency in spectrum utilization." https://spectrum.ieee.org/telecom/wireless/the-end-of-spectr... What that's referring to are techniques like MIMO, beamforming, beam steering, etc.
As David Reed is quoted and paraphrased as saying in that Salon article: '[We have stupid radios not because we haven't figured out how to make them smart but because there's been little reason to make them smart. They're designed to expect signal to be whatever comes in on a particular frequency, and noise to be everything on other frequencies.] 'The problem is more complex than just making smart radios, because some of the techniques for un-confusing the receiver are best implemented at the transmitter, or in a network of cooperating transmitters and receivers. It's not simply the radios. It's the systems architecture, stupid!' https://www.salon.com/2003/03/12/spectrum/
We're only beginning to scratch the service of the channel discernment improvements that can had with MIMO, beamforming, beam steering, and other techniques, but we're limited by the larger ecosystem of devices and regulations, which is largely an artifact of a system which assumes a fixed interference burden across vast geographical areas. The channel capacity of a band of spectrum is, in the absence of coherent interference, point-to-point as a theoretical matter because non-coherent electromagnetic radiation does not interfere. To reiterate, interference as typically experienced is a function of the inability to differentiate a signal which is present or which could be present if the transmitting and receiving systems were more sophisticated, and (according to the theoretical work) this is ultimately a computational problem.[1] Thus "spectrum scarcity", at least in the context of P2P wireless networks, is a function of technology, not an intrinsic, fixed property.
Taking that context into account--that interference and thus the degree of rivalrousness for any band of spectrum is a complex, dynamic function that dissipates as technology progresses--we can end up drawing different conclusions than from the technological presumptions behind Coase's argument. For example, as someone else mentioned, maybe we should be promoting technological development by letting people freely interfere, which can be done by imposing no rules whatever, not even a property regime. Absent power limits, that's pretty much what we do with WiFi. Similarly, a lot of theoretical radio techniques are first explored and applied by the military precisely because of the adversarial context, and they're consistently fruitful because the physical limits of what's possible are still quite distant.
> I’m not arguing for or against the ideas of Coase, only correcting that public presentation of his ideas as an interventionist.
I never had the sense that Coase was characterized as interventionist, at least not in the context of FCC reforms. If refuting that is your goal, fair enough. IME, however, in popular discourse anything "free market" is generally considered non-interventionist, and as compared to FCC regulations contemporaneous with his paper that's a fair characterization. But from my perspective (and AFAIU of many others, especially in the SDR community), establishing a private property regime is still rather interventionist, no less than it is with copyrights and patents, relative to the baseline of nothing. Nobody claims taxi medallion systems are non-interventionist, even when medallions are a freely transferable property right (e.g. NYC, sub-class of medallions in SF, etc). Uber would certainly disagree.
[1] This is why 5G achieves aggregate bandwidth multiples in the same bands even though 4G channel efficiency is near the Shannon limit. See https://cmte.ieee.org/futuredirections/2017/05/17/taking-a-f...
> Whether a new radio system "interferes" with existing ones is entirely dependent on the equipment involved.
With this definition then there is no other type of rivalry. This is true for any resource with tragedy of the commons, where an externality is encountered. This goes for land, agriculture, pollution, oil, etc. The limit here is always the efficient production from some resource using technology. This is part of the ceteris paribus of rivalry.
For what you're discussing, for non-interfering waves with the same spectrum, you would need a QAM or some other modulation scheme, with more granular phase detection, which requires exponential more energy, thus capital, per degree resolution of phase detection at the same distance. Thus, the rivalry always exists because enterprises prefer the method leading to the cheapest production with the same product.
> maybe we should be promoting technological development by letting people freely interfere, which can be done by imposing no rules whatever, not even a property regime. Absent power limits, that's pretty much what we do with WiFi.
As I'll continue discussing in your other comment this is exactly what Coase advocated for.
> establishing a private property regime is still rather interventionist
It is in the sense you're discussing with the FCC but not in the Coase's sense where private property is in the strict abstract sense by enforcement of contracts between consenting individuals. Coase's point is that it shouldn't be specially regulated differently than the enforcement of any other private contract. Unless for specific cases which can only be known through experience
In the Chicago School monopolies are impossible; or rather, monopoly pricing is a fiction.
I can't find a direct top-down subdivision quote (my copy isn't searchable; he might not literally say it at all[1]), but efficiency of the single initial auction winner scenario can be logically inferred from what he explicitly says. For example, on pp 20-21 he says that in a property regime broadcasters would be able to assemble larger bands through free market purchases, subject only to their ability and desire to pay. Efficient aggregation and subdivision of spectrum is a built-in presumption.
AFAIU, applying Chicago School principles, the price at which a single owner of all spectrum would subdivide and sell a portion would have no (or at least de minimis) monopoly profit component. Another way to look at it is that ownership of any contiguous range of spectrum, just as with a contiguous piece of land, is by definition monopoly ownership. Breaking contiguousness might require a premium, but only proportional to the economic value from contiguous usage. Breaking contiguousness of all spectrum would require a premium proportional to the marginal additional usage value, which for all spectrum is pretty much nil. What usage of all spectrum has a value greater than the aggregated value of using two, smaller portions? More likely there's greater value in the latter than the former. At some point subdividing becomes inefficient, but certainly at that point we're no longer dealing with a single, contiguous band of spectrum. The initial, profit-maximizing owner has already subdivided most it, and probably no longer owns any of it--our hypothetical bid winner was probably a specialized broker banking on extracting value by subdividing it.
Of course, judging by your comment, we both believe that monopoly profits are real. Minimally they're approximately equal to the transaction costs required to buyout or break the monopoly, which is approximately equal to the cooperation costs for victimized buyers, which in practice would be born by a prospecting broker. (What we intuitively think of as "monopoly profit" are the opportunity costs to buyers having to pay a premium over the price paid in a competitive market. But we don't include those costs in the buyout/breakout scenario because they're recovered after the fact in the hypothetical and cancel out.) AFAIU, according to the Chicago School these transaction costs are de minimis, especially with large, liquid financial markets. This is why they're such fans of financial market deregulation, derivatives markets, short sellers, private equity, etc. But many people, including some Chicago School luminaries after 2008 (e.g. Greenspan), aren't so sanguine about those costs.
And this explains why AT&T and Verizon don't behave like the efficient economic actors in Coase's world--they won't subdivide or sublease their spectrum down to the levels required for WiFi-like usages because the costs of all of us cooperating to collectively bid is too high. Actually, that's not strictly true--the costs of cooperating can be trivial if we move beyond simple market theory. All we need to do is democratically choose, directly or indirectly, for the FCC to expand unlicensed spectrum, marginally rolling back a regime we previously democratically created.
Yes, I get that Coase in particular was appreciative of transaction costs in other contexts, such as in the theory of the firm. But Coase, and people in general, often make implicit assumptions about relative quantitive costs that become assumptions about qualitative costs that in turn become judgments about whether transaction costs are substantive. The transactional costs of subdividing and transferring spectrum among TV, radio, military, and other large, traditional broadcasters undoubtedly looked de minims in 1959. Certainly they were lower than the costs of FCC central planning, and that much I can't disagree with. But 40 years later the environment had completely changed.
[1] I distinctly remember seeing illustrations of this arguing-to-the-extreme concept, but the illustration itself was probably from another author as a gloss on Coase's work.
Coase: “Or, alternatively, if this operator had the right to cause interference, he would be willing to desist if he were paid more than the costs of suppressing the interference or the decrease in the value of the service he could provide if interference were barred. And the operator whose signals were interfered with would be willing to pay to stop this interference an amount up to the decrease in the value of his service which it causes or the costs he has to incur to offset the interference.”
Why would the operator have to pay to stop this interference if he owns that spectrum? If I go onto your land do you have to pay me to get me off of it? No, you have legal protection protecting that property right against non-consensual trespass.
Similarly, we can then conclude the operator must not have a property right of that spectrum if he must pay to prevent trespass, otherwise the operator would be able to file a criminal injunction to prevent the interfering individual from continuing to disrupt his signal at little cost--as you would do for a land trespass.
You're confusing the specific bill he mentions in the preceding section about the legal etiology of the FCC, which had proposed to do exactly what you're mistaking as the argument of Coase; where Coase thinks only that that specific bill shouldn't have been dismissed so trivially and as a resolve to the current situation where the FCC has already sold partial licenses--but leaves it thoroughly short of an advocation as he develops the case of no special regulation for broadcasting rights.
Obviously the system couldn't be expanded to a market with more than two entities without causing a lot of inefficiency. The regulators did this expansion anyway and that led to the insanity we have today.
I think both types are quite important.
I wrote more here: https://wiki.cjpais.com/brain-dump/march-15th-22nd-2020/radi...
Edit: I’m very glad the FCC is doing this. This is a great step forward. Looking forward to experimenting with this spectrum
With other shared mediums, we police the spectrum (e.g. light, sound, etc...). If a user starts blasting out FM, or too much 2.4gz and so on, it can be detected, traced and prosecuted. It's 2020, we don't need FM, we need high speed IPv6 radios and improved routing tables/algorithms. Lift FM channels into the digital realm and let's get on with it.
This all sounds somewhat fair, but the problems really start when not all the stations can hear each other. Station A can hear Station B and Station C. Station C starts sending a message to station A. Station B can't hear Station C, so starts sending a message to station A. The result is that both messages are lost and the effective channel capacity goes to zero. This is obviously a big problem.
The fundamental problem is that radio is very much half-duplex. Only one station can use a certain amount of spectrum at a time; if someone is using it, you can't. It causes problems everywhere; with WiFi, with air traffic control, etc.
Centralized frequency allocations get around this with better protocols. All the stations know about each other, and can be told when they can transmit by a centralized coordinator (TDMA is an example of such a protocol). As a result, each station has a predictable amount of airtime, and therefore guaranteed bandwidth and latency; no time is wasted with two stations talking over each other. (There are other sharing schemes that are more interesting and popular than naive time-sharing; CDMA, spread-spectrum, and GPS's "Gold Codes" are all interesting reading.)
The easiest way to implement this is not to write a standard and then ensure that everyone buys a standards-compliant device, but rather to give chunks of spectrum to companies, and have companies distribute devices that work they way they want. It's easier for the regulatory agency ("pay us money and do whatever you want"), and doesn't cap innovation. Verizon can collect your phone tomorrow and give you a new one if they want to use whizbang new technology. I don't think that's a bad thing, but it is of course a compromise. (Faster innovation, less government interference with technology... but at the cost of making it impossible to start a cell phone provider on your own.)
I guess my TL;DR is: it's not that simple. You could let everyone do whatever they wanted. That's how it was in the early days. People used spark-gap transmitters that generated so much noise that there was effectively only one half-duplex channel for the entire planet to use. Regulators saw that that wasn't going to scale and invented spectrum allocations, and here we are today. It's not perfect, but technology is improving how we used the unlicensed bands. (I am not as up to date as I want to be on WiFi specifically, but if you look at the amateur radio community, it's routine these days to communicate around the world with 5-10W of power. 20 years ago, it would have taken two orders of magnitude more power and 20x the bandwidth to do with voice what we do with FT8 today. People are still idiots, though, and generate plenty of QRM. It only gets worse when people without licenses start operating the radio stations.)
DECT base stations are capable of detecting when two (or more) stations are on the same channel and sharing transmission slots between them.
With 10 channels and 12 full duplex slots/channel you can handle 120 people sitting on top of each other, spread them out a bit and then you can handle many more - probably a small number of hundreds if done right
Actually, the proposal already contains this: "An automated frequency coordination system would prevent standard power access points from operating where they could cause interference to incumbent services." We could absolutely have central authority assigning time slots in congested areas in a fair way, while staying decentralized everywhere else. A bit like the way air traffic control works.