Subject: [NEXTEL-1] At the heart of the spectrum-

From: [email-masked]
Date: Mon, 10 Nov 2003 23:03:15 -0500

At the heart of the spectrum:
 Powell is the man to watch on wireless
By Sarah Lai Stirland
Special to The Seattle Times
Monday, November 10, 2003

WASHINGTON
Nothing has stirred as much uproar at the Federal Communications
Commission under Michael Powell as removing restraints from media
companies in their pursuit to acquire other media companies.

But there is an even more dramatic shift in agency policymaking that has
received scant attention, and the impact of those changes on the future
of the Internet could become one of the FCC chairman's most enduring
legacies - one perhaps more significant than the issue of media
consolidation.

The changes are in the allocation of the commercially exploitable
airwaves, or spectrum, the resource behind every wireless gadget, from
garage-door openers to cellphones, from Wi-Fi equipment to satellites.

When the commission convenes for its monthly open meeting later this
week, it is expected to issue a progress report on its effort to
overhaul the way it manages those airwaves.

The moves are part of a larger effort that's under way at the commission
to shift from its traditional role of licensing pieces of the spectrum
and toward one where it allows free markets to reign.

The revamp of spectrum policy, in turn, forms an integral part of
Powell's grand plan to stimulate competition in the telecommunications
sector by encouraging different technological methods of providing
Internet access.

"Wireless spectrum has the potential to solve so many problems that have
been so persistent in the 100 years of the phone system," Powell says as
he discusses issues in a recent interview in his office on the eighth
floor of the FCC building.

As commission chairman, Powell and his views stand out because his
strong convictions on the merits of his own arguments sometimes sound
dismissive, even contemptuous, of the other side. During the interview,
he vigorously dismisses the image that some have tried to confer on him:
of being in the pockets of "Big Companies."

He clearly believes in letting "market forces" rule, but more in an
economic, rather than political, sense. And he believes that he can move
forward quickly and push the boundaries of existing law to do that
instead of fighting political battles in Congress that end in stalemate
and result in few changes.

Economic transformation?

What Powell thinks and how he approaches issues will influence the
outcome of the spectrum issue. In turn, the proposed changes themselves
could be significant, leading experts say, because of their potential to
transform the economy and to create an abundance, rather than scarcity,
of spectrum.

"The FCC's new spectrum allocation and secondary market rules really
make this a decade of opportunity for wireless applications, whereas the
1990s were a decade of fiber and wired networks," write Greg Staple and
Kevin Werbach in "The Coming Spectrum Explosion," a paper that contains
a survey of changes in spectrum policy. "This decade's spectrum
explosion, like the 1990s' fiber-optic boom, will trigger major changes
in the way services are priced and marketed, leading to the demise of
old business models and the rise of new ones."

One result of this abundance will be a further decline in the value of
spectrum licenses. Companies, mostly cellular carriers like AT&T
Wireless and the other giants, spent about $24.5 billion to acquire them
in the past decade, Staple and Werbach estimate.

But the pressing question for businesses watching spectrum reform is:

What does Powell believe the free market really looks like in the
wireless world?

And does he have the political will and stamina to overcome the
interests that have fought changes for decades?

Reading between the lines

Observers are divided on the issue. Advocates of the unlicensed world
see hopeful signs in Powell's speech at the University of Colorado in
October 2002 in which he acknowledges the value of the "commons," or an
area of the spectrum to which no one has exclusive rights. In this
vision, all comers have equal or tiered rights, and must coordinate
among themselves to avoid harmful interference.

This view assumes there will be standards to prevent companies currently
holding exclusive spectrum rights from using the ambiguous term of
"harmful interference" as a rhetorical tool to prevent sharing.

"This would have been inconceivable five years ago - a chairman of the
FCC treating open wireless-network approaches and spectrum property
rights as equally attractive alternatives," says Yochai Benkler, a
professor of law at Yale Law School. "This is not a small, but a huge
conceptual step forward."

But this is where the vision of the market bifurcates and where Powell's
leanings get fuzzy. The Colorado speech and a report from the FCC
spectrum-policy task force that followed it gave equal deference to the
"property" approach.

In this version, rather than letting other users freely tiptoe across
their "property," the occupants with exclusive access would have the
right to sublet the spectrum they're not using. That would allow another
kind of free-market setup in which entrepreneurs pay spectrum license
holders a subleasing fee.

Both versions of the free market are designed to make the spectrum more
accessible and used efficiently by businesses. The question is which
method is more efficient. Holders of spectrum leases favor the property
approach and say they can't share spectrum because of harmful
interference.

Faith in innovation

But Powell's belief in technology may provide a hint as to which
direction he's headed.
"I'm a passionate believer in technology in its potential, and I'm a
passionate believer in creating as many competitive and useful
communications platforms for the future as we can," he says.
"[Entrepreneurs] will come up with stuff, and they'll come up with
innovative ways to do it without interfering with others. And that will
limit our role to making sure that where there's a problem, we can
address that."
Powell takes the same approach when dealing with one specific issue of
spectrum reform: the sharing of the broadcast bands. Data-networking
companies are watching closely because these bands, unlike the spectrum
used by Wi-Fi technology, can be used over longer distances and through
walls.

"If somebody has something interesting and can demonstrate that they can
operate in those bands without interfering, we would be receptive to
that," Powell says..

As part of its review process, the commission has asked for public
comment on whether to allow broadcast-band sharing, and Microsoft is
among supporters of the idea.
Political baggage

Despite the sense that, through its task-force report, the FCC may be
open to a lot of ideas that would make more spectrum available, skeptics
abound.

"It's politically crippled," says Dewayne Hendricks, chief executive of
The Dandin Group, a wireless Internet service provider in Fremont,
Calif., and a longtime advocate of spectrum reform. "It will ultimately
fail because it's crippled," he says of the report, which he charges
doesn't go far enough.

He points to another proposal to revamp spectrum in the 1980s that
existing license holders smothered. He predicts the same fate for
current efforts, noting that the report's recommendations were already
watered down from their original form. (Hendricks is on the FCC's
Technological Advisory Group.)

But there are signs things may be different under Powell's tenure. The
commission has a staff of engineers and economists installed under one
of his initiatives and has held a number of workshops examining some of
the tougher issues discussed in the report.
The commission has also taken what many consider a bold step: the
adoption of the secondary-markets proposal in May, which allows most
land mobile and other radio licensees with exclusive spectrum rights to
lease excess capacity. Some groups have charged that this new rule is
questionable legally, while others say it illegally privatized the
airwaves.
The 'counter-revolutionary'

Though many industry watchers don't agree with Powell's policies, they
respect his intellect and his understanding of the business and societal
implications of emerging technologies. (In a trade-magazine editorial
earlier this year, Larry Lessig, a law professor at the center of many
debates over new technology policies, called Powell a brilliant
"counter-revolutionary.")

"You know when you can tell when some people are just clueless and the
questions they ask are just peripheral? Not a hint of that. He
understands what's going on," says David Isenberg, an independent
telecommunications analyst who was in a meeting with Powell last week.
But Isenberg notes some change over time in Powell's discussions. In the
past, Isenberg says, Powell used to talk more freely about creative
disruption and disruptive technology, common concepts among
technologists and popularized by the economist Joseph Schumpeter and
Clayton Christensen, the Harvard business professor who wrote "The
Innovator's Dilemma: When New Technologies Cause Great Firms to Fail."

"He doesn't do that anymore," Isenberg says. "He's toned that rhetoric
down - I think that's because he's chairman for the old guys as well as
the new guys. So he's got to play both sides."

However much of an advocate for free markets and technology he is,
Powell faces some pretty steep political obstacles.
In their survey, Werbach and Staple note that it took the FCC four years
to authorize ultra-wideband, an innovative technology that allows people
to transmit information across other people's spectrum without any
harmful interference.

In addition to broadcasters and the cellular industry, powerful
opponents include the military and the aviation industry.
The authors also predict that the innovative legal reasoning used to
create the secondary markets rule will also lead to litigation.
That doesn't daunt Powell.

"Would you rather have the opportunity with litigation risk, or no
opportunity whatsoever and have nothing to litigate about?" he asks.
"Our job is to write rules that are as ironclad and defensible as
possible.  But we live in a society that if you don't like it, you can
sue."
Sarah Lai Stirland, a freelancer in Washington, D.C., writes frequently
about technology-policy issues.

More On MP-

Michael Powell
Chairman of the Federal Communications Commission

Birthdate: March 23, 1963

Family: Married to Jane Knott Powell. They have two children, Jeffrey
and Bryan, and live in Fairfax Station, Va. His father is Secretary of
State Colin Powell.

Education: College of William and Mary, A.B. in government, 1985.

Georgetown
University Law Center, J.D., 1993.

Military: Served as Army cavalry platoon leader and troop executive
officer, May 1985 to February 1988.

At the FCC: Named chairman by President Bush on Jan. 22, 2001. Joined
the commission November 1997 after being nominated by President
Clinton in July of that year.

Career highlights: Served as chief of staff of the antitrust division in
the Department of Justice, December 1996 to November 1997. Associate in
the Washington, D.C., office of the law firm of O'Melveny & Myers, July
1994 to December 1996.

Thinkers he admires: Albert Einstein; Friedrich von Hayek; Leonardo
daVinci

Books he's reading: "The Tipping Point: How Little Things Can Make a Big

Difference," by Malcolm Gladwell; "Not Fade Away," by Peter Barton with

Laurence Shames; "The Innovator's Solution: Creating and Sustaining

Successful Growth," by Clayton M. Christensen, Michael E. Raynor

Number of PCs at home: Five
Wi-Fi connection? Yes

http://seattletimes.nwsource.com/html/businesstechnology/2001787172_powell10.html

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