Paper review – Open Wireless vs. Licensed Spectrum: Evidence from Market Adoption Yochai Benkler

 

The paper Open Wireless vs. Licensed Spectrum: Evidence from Market Adoption by Yochai Benkler is in draft form but it is very significant and worthy of a review even at this stage.

This blog is not a review but rather a list of some of the significant points I found in this paperIn this post, the emphasis is mine and I hope that I am able to convey the ideas in this excellent paper!

My own bias leans to Open systems ex – Did you ever hear of a spectrum/bandwidth crunch in Boise Idaho?  And also my PhD research on Optimising resilience of remote monitoring medical devices over white space networks

-       The paper addresses the long standing spectrum policy question surrounding how much of the future of wireless innovation will depend on exclusively-licensed spectrum, allocated by auction and traded in secondary markets, relative to how much will utilize bands in which open (unlicensed, dynamic frequency sharing, license-by-rule etc.) wireless systems are permitted.

-       Yochai benkler reviews evidence from eight wireless markets: mobile broadband; wireless healthcare; smart grid communications; inventory management; access control; mobile payments; fleet management; and secondary markets in spectrum.

-       He finds that markets are adopting open wireless strategies in mission-critical applications, in many cases more so than they are building on licensed strategies.

-       Eighty percent of wireless healthcare; seventy percent of smart grid communications; and forty to ninety percent of mobile broadband data to smartphones and tablets use open wireless strategies.

Background

-       There are two alternatives within the spectrum policy debate:  spectrum property,” seeks to create markets in exclusive spectrum licenses, initially allocated by auction.

-        The primary other alternative is “unlicensed wireless,” “open wireless,” or “spectrum commons,” would enable device vendors and service providers to develop markets in sophisticated equipment and network services built on them to deliver reliable connectivity without possessing an exclusive right to transmit.

-       A study published in March 2011 by the National Research Council’s Computer Science and Telecommunications Board explained, that if a thousand transmitters transmit, the “waves” don’t destroy each other; no information is destroyed. The only thing that happens is that it becomes harder and harder for receivers to figure out who is saying what to whom as more transmitters operate next to each other.

-       The limitation, or the real economic scarcity, is computation and the (battery) power to run calculations. The regulatory model of command and control was created at a time when machine computation was practically impossible. Exclusive licensing was a way to use regulation to limit the number of transmitters in a band, so as to make it possible for very stupid devices to understand who was saying what.

-       The economic models on which auctions are based were developed in the 1950s and 1960s, when computation was still prohibitively expensive. Practically, thinking about “spectrum” as a scarce commodity still made sense in that era.

-       As computation becomes dirt cheap, the assumption that spectrum is a stable, scarce resource is no longer the most useful way of looking at optimizing wireless communications systems.  The question is more: which configuration of very smart equipment, wired and wireless infrastructure, network algorithms, and data processing will allow the largest number of people and machines to communicate what they want, when they want it, where they want to be?

-       While these market segments caution against painting open wireless as ultimately becoming the sole solution, the relatively large role of open strategies suggests that we may need to reverse our orientation from one that assumes that licensed and auctioned spectrum is the core, and open wireless a peripheral complement, to one that sees open strategies as the core, with important residual roles for licensed services, however allocated.

-       Open Wireless Allocations Foster Open Wireless Innovation on an Internet model – A review of the solutions developed in the varied markets considered here suggests that the core to the success of open wireless is its innovation model. Innovation in open spaces is built on the same principle as the Internet: freedom to operate around a set of minimal standards. No one needs special permission to deploy and try out an innovation that uses open wireless strategies. Innovation in the licensed space operates on the principle of the old telephone system innovation. One can only innovate in collaboration with the system owner.

The paper then reviews the domains – I include key ideas from two of them (Smart Grid and Health care)

 Smart Grids: How inadequate levels of open wireless allocations can hobble wireless innovation

-       The smart grid communications market offers a particularly crisp example of how the failure to provide adequate open wireless allocations can hobble wireless innovation.

-       American and European markets have developed along very different trajectories, with the U.S. enjoying far greater and faster deployment of wireless smart grid communications systems, and Europe largely remaining with powerline communications solutions.

-       The difference is not that Europe’s cellular carriers aren’t interested in serving smart grid markets; they are, and they do.

-       The difference is that Europe has no usable open wireless spectrum below 1GHz, and constrained availability in the 2.4GHz bands, and, as a consequence, no significant open wireless solutions deployed.

Healthcare

-       The size and social significance the U.S. healthcare sector make it an extremely important market for wireless technologies. The promise of telemedicine, patient monitoring and care have long been touted as an important dimension for the benefits of broadband and mobile connectivity.

-       A September 2011 analysis finds about 80% of the healthcare wireless market is served by a range of open wireless technologies; only 17% by licensed, cellular technologies, primarily for phones and smartphones.

-       CardioNet, for example, uses open 900MHz communications to communicate from a patient’s pacemaker to their mobile device, and then a licensed-spectrum cellular network to communicate irregularities to a monitoring center. Designs based on this model are common in cardiac monitoring: open wireless does the monitoring work, WiFi the preferred offloading pathway where available, but cellular networks offer the critical pathway of last resort where WiFi is unavailable to communicate the results to monitoring healthcare professionals

 

Conclusion

-       The evidence from the most dynamic and critical markets in wireless communications suggests that open wireless technologies have been underrated in the regulatory calculus.

-       The primary way in which open wireless policy contributed to the development of wireless infrastructure is to harness an Internet model of innovation in the wireless space, instead of depending exclusively on an older, telecommunications-carrier model of innovation.

-       The experience of the past two decades strongly suggests that, however scrappy and uncertain Internet innovations may seem at first by comparison to the highly-engineered models of the telcos, these innovations quickly catch up and surpass their competitors.

Comments

  1. Chaymae says:

    It’s worth noting that AT&T, at least, tnkihs that they’re going to extract more $ out of customers through this merger. At least, that seems to be the message of their presentation to analysts & journalists, as glossed by : But it’s the middle three opportunities that give us pause. Number two is grow ARPU, or average revenue per user. Number three is reduce churn. And number four is expand margins. They could be recast as you’ll pay us more money each month, you won’t leave, and we’ll make more profit on each dollar you pay. Note that AT&T plans to accomplish this despite the acquisition target having lower ARPU & margins than the parent: AT&T is quite explicit about this. The average monthly payout for a T-Mobile data plan is $12.80, while AT&T pulls in an average of $17.50 for its data plans. One goal of the merger is to increase T-Mobile smartphone penetration and data ARPUs, in part through adopting AT&T’s own tiered data plans. T-Mobile’s margins also need to be improved, too, something associated more with being a premium provider and not a value provider. Right now, T-Mobile makes 29.2 percent profit margins, which sounds good until you realize that AT&T makes 40.7 percent.We can have lots of debates about what the rules ought to be that structure the use of wireless spectrum, but I think it’s hard to deny that AT&T believes the merger to have value primarily through its effect of taking out a major competitor, allowing them more market power.