J.H. Snider: All Publications, Events and Press

The Art of Spectrum Lobbying

Wireless Future — Fri, 31 Aug 2007 12:36:00 -0400

Introduction

In the late 1980s, the Federal Communications Commission (FCC) conducted a series of lotteries to allocate electromagnetic spectrum (popularly known as the “public airwaves”) for mobile telephone service. More than 320,000 lottery tickets were acquired by spectrum speculators, including dentists, lawyers, accountants, and anyone else willing to devote the time and hire the legal talent necessary to fill out the complicated form to acquire a lottery ticket. Many of the lottery tickets were purchased as part of partnerships, whose members would collectively enter lottery tickets for hundreds of different licenses. For example, in December 1989, the FCC selected the winning ticket for a lottery for one such license on Cape Cod, Massachusetts. The winning ticket holder then sold the ticket ten months later for $41.5 million. Former Governor Mark Warner, a U.S. Senate staffer before the lottery, was among the politically savvy who made millions by acquiring and flipping the licenses granted in the lottery.

The result was widespread outrage because the public could readily perceive that billions of dollars of public assets had been given away to private interests—well-connected, wealthy Americans—without public compensation. As the chairman of the FCC at the time characterized the lottery winners, “They receive a windfall and the public gets no payment.” This outrage led to legislation in 1993 to auction future FCC licenses. Congressional leaders publicly promised that, except for a few services—notably public safety and terrestrial broadcasting—the government would henceforth grant exclusive rights to use spectrum only in return for monetary compensation.

This has not come to pass. According to calculations presented in this paper, since 1993, the government has given to private interests as much as $480 billion in spectrum usage rights without public compensation. That comes to more than 90 percent of the value of spectrum usage rights it has assigned from 1993 through the present.

In addition, the government has warehoused as much as $155 billion of spectrum usage rights in guard bands. The warehousing in itself is not a giveaway to private interests. But, for reasons we shall see, it may position incumbent licensees to acquire the warehoused spectrum without public compensation. Thus, the act of guard band warehousing may be viewed as part of a multi step process that leads to giveaways just like winning a presidential primary election is necessary to winning the presidential general election. For example, since 1997 TV broadcasters have used the digital transition to acquire more than $6 billion worth of guard band spectrum by winning rights to transmit programming across a larger geographic area.

How did this happen? How could the government give away so much in public assets to private interests without public and congressional outrage? A large part of the answer is that the government no longer gives away spectrum usage rights in highly visible ways such as spectrum lotteries. Instead, incumbent licensees and spectrum speculators have perfected strategies that enable them to acquire free spectrum rights below the public radar. Until public policies are implemented to render those low visibility lobbying strategies ineffective—so that spectrum giveaways are once again as visible as they were in the days of spectrum lotteries—spectrum giveaways to private entities will persist. (Of course, when the FCC or Congress grants spectrum to public entities or for unlicensed use, no giveaway in this sense is involved because the public retains full rights to its airwaves.)

This paper deals with what might be considered the third rail of spectrum policy: the rotten, special interest politics that has driven lawmakers to give away the public’s airwaves to private interests without public compensation. In the vast stream of government reports seeking to reform spectrum policy since 1993, one looks in vain for more than a token acknowledgement, let alone a serious and sustained discussion, of this giveaway. Like other politically embarrassing issues, it is an issue that congressional leaders and their proxies—the FCC, GAO, CBO, NTIA, and others—would prefer not to talk about. This, of course, suits the beneficiaries of the giveaway and their army of lobbyists and analysts just fine. For that very reason alone, however, it is an issue that desperately needs a public airing.

This paper is divided into three sections: Part I provides an estimate of the value of the government’s spectrum rights giveaway since 1993, Part II provides a description of the strategies spectrum lobbyists have used to acquire such rights, and Part III provides policy recommendations to ensure that spectrum rights giveaways (which are closely linked to warehousing guard band spectrum) come to an end.

To view the full paper, open the PDF file linked below. The working paper version, which was published in July, is also attached.

Ars Technica Reports on J.H. Snider's Spectrum Working Paper

Communications — Thu, 19 Jul 2007 09:42:00 -0400

Critics of US spectrum policy will have plenty of ammunition for their howitzers after reading the new working paper (PDF) from J.H. Snider of the New America Foundation. Snider heads up the Wireless Future Program at New America, and his paper offers an inside look at the sometimes-dirty world of spectrum lobbying, which Snider characterizes as responsible for a $480 billion giveaway from the public treasury. The giveaway in question comes after Congress passed legislation in 1993 requiring the FCC to hold auctions for future spectrum licenses, a move that was itself prompted by a massive giveaway of prime spectrum in the late 1980s. Using the high end of his estimate (which ranges from $140 to $480 billion), Snider observes that the giveaway in question amounted to "more than 90 percent of the value of spectrum usage rights [the government] has assigned from 1993 through the present." The giveaway that Snider's talking about isn't a massive grant of free spectrum to corporate interests; instead, it's something much more subtle and far more difficult for the public to understand. To understand why Snider considers this a "giveaway," let's first look at the difference… more

Communications Daily Quotes J.H. Snider on Spectrum Licenses

Communications — Wed, 18 Jul 2007 08:14:00 -0400

Spectrum value is lost when incumbents get the FCC to modify their licenses at no charge, said J.H. Snider, research director of New America Foundation's Wireless Future Program. To protect spectrum value, the FCC should charge for license revisions, Snider, author of a paper on spectrum "giveaway," told a Tuesday panel. Another participant estimated that the U.S. loses out on $10 billion yearly in potential fees. Changing the parameters of a license changes the value of the spectrum involved, according Snider. An example of "free" modification is the change from site-based to geographic-based licensing and digital rights for cellular. Without such modifications, licenses now held by cellphone companies in the 800 MHz band would be worth far less, Snider said. After next year, when the FCC completes the auction of the 700 MHz band spectrum, nearly all spectrum below 3 GHz will have been assigned. This means "the name of the game going forward will be the license modification," said Snider. License changes are popular with incumbents because they "can be done quietly, under the radar," he said."You have to have a Ph.D. in spectrum technology to know what is going on," Snider said.… more

InfoWorld Highlights New America Spectrum Event

Communications — Tue, 17 Jul 2007 07:42:00 -0400

The U.S. government has given away between $140 billion and $480 billion worth of radio spectrum to wireless providers and broadcasters since 1993, according to a study released Tuesday. The New America Foundation, a think tank calling for new ways to manage U.S. spectrum, said most of the giveaway has come not through underperforming auctions but through "below the radar" lobbying tactics by spectrum holders. Much of the spectrum giveaway comes through strategies like case-by-case waivers for flexible spectrum use granted by the U.S. Federal Communications Commission (FCC), poorly defined spectrum boundaries, and spectrum holders polluting neighboring spectrum, said J.H. Snider, author of the study. In many cases, the FCC has automatically renewed spectrum licenses even through spectrum law allows for licensing for "limited periods of time," he added. The U.S. government raised about $40 billion in more than 80 spectrum auctions since 1993, Snider said at a forum in Washington, D.C. But wireless providers and broadcasters, in financial reports to the U.S. Securities and Exchange Commission, have given that spectrum a value of about $180 billion, he said. The spectrum is likely worth much more than those estimates, he added. Using… more

The Baltimore Sun Highlights J.H. Snider

Communications — Thu, 12 Jul 2007 08:51:00 -0400

Before he could begin to lead the fifth-largest school district in Maryland, Eric J. Smith was told he needed to make time to speak with one Severna Park family: the Sniders.Smith sat across the dining table from Terra Ziporyn and Jim H. Snider, parents of three school-age children, and got an earful about the value of the arts and the need for new algebra textbooks and greater transparency in the district's decision making."They cared very much about the quality of education in Anne Arundel, and they were never shy about sharing their thoughts on what could be done to improve things," said Smith, who served as superintendent from 2002 to 2005. "They -- their participation -- was crucial."Since moving to the county five years ago, the Sniders and their children have emerged as arguably the most influencial family in the system that educates 74,000 students each year.The family's middle child, Sage, 17, sat at her first school board meeting yesterday, serving as a student representative two years after her sister Pallas held the same post. They are believed to be the only siblings in the state to serve nearly back-to-back… more

America's $480 Billion Spectrum Giveaway

Communications — Wed, 11 Jul 2007 02:59:00 -0400

A New America Event
07/17/2007 - 12:30pm

Spectrum has become one of the most valuable natural resources of the Information Age. Unlike other comparably valuable natural resources such as land and oil, it is owned by the public and allocated exclusively by the federal government. Also, unlike those resources, it is invisible both literally and figuratively: the general public does not understand—and consequently does not care about—its allocation. This combination of huge amounts of money at stake and public ignorance creates the classic conditions for special interest… more

Spectrum Policy for the Emerging Ultrabroadband World

Wireless Future — Fri, 22 Jun 2007 14:51:00 -0400

The slides from J.H. Snider's presentation at the “Ultrabroadband Networks and the Personal Media Cloud" conference, hosted by Columbia University's Institute for Tele-Information, are available here in PDF format. To download the full presentation, please click on the link below. This presentation summarizes J.H. Snider's paper of the same title.

For more information on the conference, please go to http://www.citi.columbia.edu/events/ultrabb3.htm

Spectrum Policy for the Emerging Ultrabroadband World

Wireless Future — Fri, 22 Jun 2007 11:22:00 -0400

Imagine a world with finite spectrum but infinite demand for wireless bandwidth. In such a world, which we shall call the ?wireless ultrabroadband world, what would the wireless telecommunications architecture look like? And what type of property rights regime would accompany it?

No telecommunications architecture following known laws of nature could provide infinite wireless bandwidth. But this paper argues that the architecture that would get closest would be one with very short wireless end user links attached to a wired backbone. It further argues that in such a world the most efficient property rights regime for spectrum management would be one that bundles rights to use spectrum with rights of possession to tangible property.

Contrast this world to the wireless narrowband world in which we currently live in, where demand for wireless bandwidth is relatively modest, wireless links correspondingly large, and the most efficient property rights regime for spectrum management is predominantly one that unbundles spectrum and tangible property rights.

The unbundled property rights regime corresponds to the FCC’s current system of licensing spectrumin in which licenses to use spectrum are granted without consideration of tangible property rights. The bundled property rights regime parallels much of the practice--but not the theory--of the FCC’s current system of unlicensed spectrum.

This paper is divided into three parts:

1) Bundled versus Unbundled Property Rights
2) Wireless Links in an Ultrabroadband Network
3) Public Policy Recommendations

To view the full paper, see the PDF document linked below. This paper was adapted as a presentation given at the “Ultrabroadband Networks and the Personal Media Cloud" conference, hosted by Columbia University's Institute for Tele-Information.

Defense News Quotes J.H. Snider on Shared Spectrum, DARPA

Communications — Mon, 16 Apr 2007 20:40:00 -0400

The warnings are dire: The number of available radio frequencies is declining, say U.S. government officials, and with it the Pentagon’s ability to introduce new communications technology...But a seven-year-old firm a stone’s throw from the Capital Beltway says it can harness “white space” in the spectrum to provide interoperable communications. The 30-employee firm, Shared Spectrum, had 2006 revenues of “about $8 million to $9 million” and expects about the same this year...In a test last summer by the Defense Advanced Research Projects Agency (DARPA) at the U.S. Army’s Fort A.P. Hill in Virginia, Shared Spectrum demonstrated that it could send data on frequencies being used by other nearby radios without interference...Shared Spectrum is developing a follow-on radio with partner M/A-COM, a unit of Tyco Electronics and a provider of wireless radio, microwave and millimeter-wave components. They are working together on DARPA’s “Wireless After Next” project, which seeks a radio for less than $500...One wireless policy observer, J.H. Snider, who directs research at the Washington-based New America Foundation’s Wireless Future Program, has criticized other attempts by commercial interests to use spectrum white space. But in an e-mail, he was positive about what Shared… more

J.H. Snider on Spectrum Auction, Nextel in GigaOm

Communications — Fri, 06 Apr 2007 14:25:00 -0400

Like a fresh spring breeze, new radio-frequency spectrum is in the air. It is so close that you can almost smell it -- and seek to keep others away from it.The next big spectrum land grab is over 700 Megahertz (MHz.) It’s the promised land of “beachfront property” that broadcasters are set to vacate on February 19, 2009, when the transition to digital television is supposed to be complete. Lots of folks are jockeying now to lock up these airwaves...With the February 2006 passage of the DTV legislation, 60 of those 108 megahertz will be opened at auction by January 2008...

But if you don’t want to actually pay for the best frequencies, there’s always the good old-fashioned way: convince politicians to give it to you. Morgan O’Brien has perfected this strategy. He used it in 1990 to convert his radio-dispatcher frequencies into cell-phone licenses and jump start cellular carrier FleetCall...“If there were a Nobel Prize for lobbying, I would give it to Nextel and Morgan O’Brien,” said J.H. Snider, research director of the New America Foundation’s Wireless Future Program...

For the complete article, please visit the GigaOm website.

RCR Wireless Quotes J.H. Snider on IWN

Communications — Sat, 31 Mar 2007 19:57:00 -0400

The Department of Justice’s internal watchdog revealed the National Telecommunications and Information Administration, overseer of a Bush administration plan to foster improved spectrum use by federal agencies, state governments and private-sector firms, granted more than 23,000 waivers over two years to allow law enforcement officials to continue operating wireless systems in a less efficient manner than mandated by NTIA in 1993. The finding is included in a new DoJ inspector general’s report that warns plans to deploy a new nationwide wireless network for secure government communications is at risk of failing due to funding and management problems, a prospect that could hurt federal response to the next terrorist attack or natural disaster...J.H. Snider, research director of the New America Foundation’s Wireless Future Program, said the NTIA’s handling of the matter leaves much to be desired and that he suspects the Justice Department is posturing for more congressional funding. Snider said he regards the IWN as a dinosaur. “The whole system is incredibly inefficient except by 1993 standards...”

For the complete article, please visit the RCR Wireless website.

J.H. Snider on White Space Spectrum in Broadcast Engineering

Communications — Mon, 19 Mar 2007 21:05:00 -0400

A coalition of major technology companies continue to aggressively lobby federal officials to use the white space spectrum between television broadcast channels, for wireless consumer devices as well as new Internet access. Now, with critical technology beginning to be tested by the FCC, the stakes are raised for broadcasters, production companies and Internet service providers...Using unlicensed white space spectrum is a politically charged issue in Washington because of the perceived threat of competition it holds for the powerful telecom and cable television companies. Broadcasters are worried about interference with their transmissions, and production companies fear their wireless mics and other equipment will be stepped on..."The telephone companies are terrified they'll lose 40 percent of their wireless minutes, because you'll be able to connect from work or home and bypass their wireless networks," J.H. Snider told MarketWatch. Snider is research director of the wireless future program at the New America Foundation, a Washington-based policy institute that has long advocated allowing use of white spaces...

For the complete article, please visit the Broadcast Engineering website.

J.H. Snider on Microsoft's Wireless Prototype in Dow Jones Marketwatch

Communications — Fri, 09 Mar 2007 14:51:00 -0500

SAN FRANCISCO (MarketWatch) -- When Microsoft Corp. delivers a mysterious prototype for government testing this coming week, it will mark a crucial juncture for a high-stakes bid to change the way consumers get their Internet access. That bid has cast Microsoft and a group of powerful allies from Silicon Valley in the relatively unfamiliar role of Washington policy players. Microsoft's (MSFT) prototype, delivered on behalf of the group, is a wireless device that could provide the public with free and more widespread access to the Web instead of relying on networks owned by big telecom and cable firms. That breakthrough, tapping into an unused part of the nation's airwaves, is politically charged because it threatens to shift the Internet-access business away from telecom and cable companies that are historically well-connected in Washington, throwing open the field to a brand new batch of competitors.It all hinges on how well the prototype performs in tests by the Federal Communications Commission. Microsoft and allies must prove that such devices, which can connect users via unlicensed portions of the nation's wireless spectrum known as white spaces, won't interfere with airwaves that major license holders acquired for… more

Michael Calabrese, J.H. Snider on Community Wireless Networks in Communications Daily

Communications — Thu, 08 Mar 2007 04:37:00 -0500

The U.S. needs a wireless broadband policy as community networks "pop up everywhere," said Sascha Meinrath, exec. dir.-Champaign-Urbana Community Wireless. Speaking at the Freedom to Connect conference near D.C., he and others said before the feds can act, they need better information...The U.S. needs to "explicitly pursue federal policy" to stop telcos from getting states to preempt local govts. from doing it, said Michael Calabrese, Dir.-New America Foundation Wireless Future Program. Lack of broad wireless broadband adoption isn't the only problem, he said: "It's also about quality, connection speeds, cost and mobility and ubiquity." Verizon FIOS is "at least bringing some speed" but AT&T's goal of providing up to 6 Mbps to 40% of its service territory in 5 years" is "pathetic," he said. Opening TV white spaces will free 80-200 MHz of spectrum but "we need to open up other white spaces" too, he said.Calabrese's New America Foundation colleague Jim Snider agreed: "I don't think there's been enough attention paid to spectrum inputs."

For the complete article, please visit the Communications Daily website.

J.H. Snider on In-Band-On-Channel Broadcasting in East Bay Express

Communications — Wed, 07 Mar 2007 18:59:00 -0500

Driving across the Bay Area every day, you can't help but hear the great news: HD Radio has arrived! There are now secret stations hiding between the stations you can hear. All you have to do is go out and buy a new HD Radio and you'll hear your old stations in crystal-clear digital, plus secret ones that you've never even heard before. All with no subscription! But after an investigation of HD Radio units, the stations playing HD, and the company that owns the technology; and some interviews with the wonks in DC, it looks like HD Radio is a high-level corporate scam, a huge carny shill...

These local stations multicast using a technique known as In-Band On-Channel broadcasting, whose patents are held by a fifteen-year-old private corporation called iBiquity. CEO Bob Struble says iBiquity arose from next-gen radio research at corporations such as Lucent. These big boys figured out how to squeeze four channels into each existing one, and have poured more than $200 million into controlling them all with help from the FCC. The esteemed commissioners responded by granting iBiquity exclusive rights to digital radio. Struble says nobody owns the rights to analogue radio,… more

Economic/Legal Reply Comments to FCC on TV White Spaces NPRM

Wireless Future — Fri, 02 Mar 2007 06:09:00 -0500

The Economic/Legal Reply Comments filed by NAF, et al. are below. NAF, et al. also filed a separate set of Technical Reply Comments, which you can find here.

BEFORE THE
FEDERAL COMMUNICATIONS COMMISSION

In the Matter of Unlicensed Operation
in the TV Broadcast Bands, ET Docket No. 04-186

Additional Spectrum for Unlicensed Devices
Below 900 MHZ and in the 3 GHz Band, ET Docket No. 02-380

ECONOMIC/LEGAL REPLY COMMENTS OF
NEW AMERICA FOUNDATION,
COMMON CAUSE, EDUCAUSE, PUBLIC KNOWLEDGE,
U.S. PIRG, CENTER FOR DIGITAL DEMOCRACY,
NATIONAL HISPANIC MEDIA COALITION,
WIRELESS INTERNET SERVICE PROVEDERS ASSOCIATION,
ASSOCIATION FOR COMMUNITY NETWORKING, CTCNET,
CUWIN FOUNDATION, ETHOS GROUP, NYC WIRELESS,
TRIBAL DIGITAL VILLAGE, NEWBURYOPEN.NET,
ACORN ACTIVE MEDIA, FREENETWORKS.ORG

NAF, et al. filed extensive comments in this proceeding on January 31, including separate Technical Comments that appended the results of two engineering studies demonstrating that harmful interference to television reception can certainly be avoided. In these Reply Comments to the FCC’s FNPRM, NAF, et al. focuses on two topics: 1) the incumbents’ pleadings for additional free spectrum rights, which in each case would entail enormous opportunity costs with respect to spectrum efficiency and unlicensed innovation; and 2) arguments claiming superiority of licensed over unlicensed allocation of the TV white spaces, which are based in each case on false or contradictory assumptions. These Reply Comments are supplemented by a separate set of Technical Reply Comments, drafted by leading RF engineers and filed concurrently with this filing. We also incorporate and endorse those comments by reference.

I. SPECIAL PLEADINGS BY INCUMBENT LICENSEES WOULD, CUMULATIVELY, DESTROY THE VALUE OF THE TV BAND FOR BROADBAND AND WIRELESS INNOVATION

The comments to this FNPRM represent a diverse array of incumbent interests and an even greater variety of arguments supporting those interests. Earlier comments have focused on the incumbent interests of the high power TV broadcasters, public safety, and wireless microphone licensees to the broadcast spectrum. This set of comments brought out the medical telemetry, cable operators, LPTV, and TV translator incumbents in greater force. Some of the comments are transparent efforts to leverage the proceeding to grab additional spectrum rights; others are blatant attempts to stifle competition to their licensed offerings; while still others are desperate bids to protect an inefficient and eroding status quo despite the enormous social and economic opportunity costs of continuing to warehouse TV band spectrum rather than redeploy it to facilitate wireless broadband and other innovation.

One approach to responding to all the incumbents’ arguments is to deal with each one individually. Many of the most consequential assertions of the spectrum incumbents are addressed in NAF, et al.’s separate Technical Reply Comments. Yet even if NAF, et al. had the resources to file hundreds of pages of rebuttal backed by millions of dollars worth of experimental data, it wouldn’t be possible to respond to all the hypothetical arguments the incumbents have raised. But that is surely the point of many of the arguments. Rarely do the incumbents come close to proving their arguments. But they are banking on the fact that they don’t need to; that the burden of proof will be on non-incumbents who seek to use the white space. So all they have to do is sow doubt – and convince the FCC to prohibit unlicensed access to so many unused TV band channels that the potential market for wireless broadband and other new services will be deterred.

NAF, et al., is not going to respond to all those arguments. This is the sixth time NAF, et al. has filed comments on the use of the TV white spaces. Our previous comments, which did attempt to do so, run to more than 400 pages. Instead, NAF, et al. will focus on the heart of the matter.

The unstated assumption underlying the incumbents’ arguments is that the long-term interests of the many should be sacrificed for the short-term interests of the few. They are saying, in essence, that to potentially protect the spectrum uses of a small fraction of the public, for a small fraction of the time, they are willing to sacrifice spectrum uses that could benefit the vast majority of the public in an abundance of different ways, including to facilitate broadband deployment, affordability, and ubiquity at a time when our nation has fallen to 16th in the world in broadband adoption (and with prices ten times higher, per Mbps, than other advanced economies). With rare exception, the spectrum incumbents have been completely unwilling to explicitly deal with this objection, implicitly asserting that if even a single potential user of their service would be inconvenienced, they have the right to absolute protection. Their arguments, therefore, are completely at odds with the FCC’s mission to manage the public airwaves in the public interest, which, in economic terms, means to maximize social welfare, as well as to facilitate robust and diverse communication based on First Amendment principles.

To view the full comments, please see the PDF document linked below.

ISP Planet Cites New America's WISP Response to the FCC

Communications — Fri, 23 Feb 2007 19:06:00 -0500

The FCC has some spectrum and everyone wants a piece of it. As part of the migration of TV broadcast from analog to digital, spectrum previously allocated to UHF and VHF broadcast (and little used) might be opened to other users, depending on the outcome of the FCC's latest inquiry, FCC proceeding 04-186 ("In the Matter of Unlicensed Operation in the TV Broadcast Bands: Additional Spectrum for Unlicensed Devices Below 900 MHz and in the 3 GHz Band").The spectrum under discussion (according to the FCC's Notice of Proposed Rulemaking, dated May 13, 2004, p. 28) is 76 to 88 MHz, 174 to 216 MHz, 470 to 608 MHz, and 614 to 698 MHz. For WISPs, what's important about this spectrum is that it's better than what's available now. The spectrum currently available to WISPs is the worst possible spectrum. In their (89 page) response to the FCC, J.H. Snider and Michael Calabrese of the New America Foundation along with their Media Access Project lawyers Harold Feld and Andrew Jay Schwartzmann point out that WISPs have achieved an astonishing amount in this awful spectrum...WISPs know well that a further disadvantage of the 2.4 GHz band… more

Economic/Legal Comments on Further Notice of Proposed Rulemaking for Unlicensed Access to TV White Spaces

Wireless Future — Wed, 31 Jan 2007 20:00:00 -0500

BEFORE THE
FEDERAL COMMUNICATIONS COMMISSION

In the Matter of Unlicensed Operation
in the TV Broadcast Bands, ET Docket No. 04-186

Additional Spectrum for Unlicensed Devices
Below 900 MHZ and in the 3 GHz Band, ET Docket No. 02-380

COMMENTS OF
NEW AMERICA FOUNDATION,
EDUCAUSE, FREE PRESS, CONSUMERS UNION, PUBLIC KNOWLEDGE
CONSUMER FEDERATION OF AMERICA, COMMON CAUSE,
WIRELESS INTERNET SERVICE PROVIDERS ASSOCIATION (WISPA),
CHAMPAIGN-URBANA COMMUNITY WIRELESS NETWORK,
CLOUD ALLIANCE, TRIBAL DIGITAL VILLAGE, MOUNTAIN AREA INFORMATION NETWORK,
CTCNET, NATIONAL HISPANIC MEDIA COALITION, U.S. PIRG,
CENTER FOR DIGITAL DEMOCRACY, KNOWBILITY,
NEWBURYOPEN.NET, NYCWIRELESS, ASSOCIATION FOR COMMUNITY NETWORKING,
ETHOS GROUP, ACORN ACTIVE MEDIA, FREENETWORKS.ORG,
UNITED CHURCH OF CHRIST, PROMETHEUS RADIO PROJECT

SUMMARY

NAF, et al., applaud the Commission for definitively moving forward with a rulemaking designed to make productive use of extremely valuable, underutilized spectrum in the broadcast bands available. However, commenters must express their concern and frustration that the Commission has chosen to reopen the question of whether to do so on a licensed or unlicensed basis. The Commission’s determination in the first Notice of Proposed Rulemaking (2004 NPRM) to permit unlicensed use of the broadcast “white spaces” rested on a record built over two years which included a special Commission task force and a notice of inquiry. See In re Spectrum for Unlicensed Devices Below 900 MHZ and in the 3 GHz Band, 17 FCC Rec 25632, 25634 (2002) (2002 NOI); Public Notice, Commission Seeks Public Comment On Spectrum Policy Task Force Report, 17 FCC Rec 24316 (2002). Even so, knowing that others would oppose the possibility of unlicensed access, NAF and others extensively catalogued the benefits of unlicensed access in the broadcast white spaces. Comments of NAF, et al., at 1-4.

Nevertheless, the instant Further Notice reopens the debate on this critical issue de novo. Worse, in recounting the perceived benefits and drawbacks, the Commission fails to consider the First Amendment and public policy framework provided by NAF, et al. in the previous proceeding. As these factors weigh heavily in favor of unlicensed spectrum, and on their own would foreclose arguments other than those based on a significant risk of harmful interference, the Commission cannot refuse to address them in this stage of the proceeding.

Even without consideration of the First Amendment, however, the evidence clearly demonstrates the superiority of unlicensed access to the broadcast bands. Whether it is the economic success of unlicensed access in such a “Swiss cheese” spectrum environment when contrasted with the continued failure of licensing in such environments (as demonstrated by the ongoing efforts to implement licensed services in the 900 MHz band and 700 MHz guard band), the lack of any “tragedy of the commons” in the intensively used existing bands, or the evidence that auctions for such limited spectrum licenses routinely fail to attract substantial bids, the evidence unequivocally supports unlicensed access for the white spaces.

With regard to the specific technologies, NAF, et al. again caution the Commission that it should not deviate from its traditional Part 15 approach. Rather than bless a single technology such as sensing or “control signals” or “geolocation,” the Commission should instead state the necessary functionalities for devices. This prevents the lock-in of technologies in an early stage of development, promotes innovation, and encourages “new and innovative uses of radio.” 47 U.S.C. §303(g). Nevertheless, to complete the record, NAF, et al. provide information and concerns about possible barriers to entry with regard to the three specific approaches discussed in the First Report and Order and Further Notice of Proposed Rulemaking (2006 FNPRM).

The 2006 FNPRM also raises questions on whether to permit mobile uses, whether to permit operation on Channels 2-4, and whether to permit fixed (but not mobile) operation on Channels 14-20.[1] [ 2006 FNPRM at ¶¶56-57 In addressing all these decisions, the Commission should carefully weigh the benefit of permitting such services and use in such bands, subject to rigorous testing. History has demonstrated time and again that prohibiting a particular use and requiring a full rulemaking to permit it at some future date when the technology has improved or the circumstances change is a death sentence to innovation and advancement of the technology in that space. No one will invest the needed resources given the uncertainty of any future approval.

Furthermore, the Commission must consider the importance of providing sufficient spectrum and sufficient uses to allow economies of scale. Although a few innovators used the existing unlicensed bands for networking prior to 1999, it was only the adoption of the 802.11 “Wi-Fi” standards and the economies of scale achieved by putting Wi-Fi enabled chips in every new computer that brought the price down sufficiently to make broadband via unlicensed spectrum an affordable solution. As a result, millions of homes and businesses use wireless LANs, roughly 5,000 commercial wireless ISPs (WISPs) provide broadband services to hundreds of thousands of mostly rural consumers, volunteers have brought wireless connectivity to thousands in poor urban neighborhoods, and more than 200 city and countywide wireless broadband networks are already in operation for public access, or are in the RFP or deployment process as of this month (see Appendix B).

This boom in business and citizen communication over unlicensed bands takes place despite the failure of the Commission to provide significant new spectrum for unlicensed use. In fact, the Commission has reduced the availability of unlicensed spectrum available for public access today in the high-penetration frequencies below 3 GHz since this proceeding was initiated in 2002.[2] Certainly, this lack of available spectrum has hampered the deployment of new, ubiquitous wireless services to all Americans. Nevertheless, that use and demand for unlicensed spectrum continues to grow despite the artificial obstacles imposed by existing rules both demonstrates the power of innovation in the unlicensed bands and rebuts the continuous predictions of a commons “tragedy.”

This success story also provides an important lesson. In setting the rules for unlicensed access in the white spaces, the Commission should take care to remember that one of the most attractive features of unlicensed access is its affordability and low barriers to entry. The Commission’s rules should therefore reflect an interest in maintaining these attractive features. The Commission should recall the valuable contributions of open source developers, community volunteers, and thousands of WISPs, who have brought broadband to millions of urban users, rural users, and small businesses that would not otherwise have access. Only the low cost of equipment and low barriers to entry have made this quiet broadband revolution feasible. When setting rules for unlicensed access to the white spaces, the potential “rocket fuel” for unlicensed wireless broadband in these underserved communities, the Commission must not impose rules that needlessly drive up cost or that allow incumbents to create barriers to entry.The Commission, in examining the technical submissions of commentors and in conducting its own tests, should likewise ensure that the process is transparent and open to all stakeholders. The Commission should give little, if any, weight to engineering studies that do not include sufficient explanation to allow interested parties or the Commission itself to replicate the results. To further assist the Commission, NAF, et al., provide suggestions and guidelines on how the Commission can conduct its own testing in a way that includes all potential stakeholders. Such proceedings will have the salutary effect of eliminating future objections.

Finally, the Commission should resolve the question of use in the border areas by concluding that coordination is not necessary. The purpose of the treaties mandating coordination is to prevent harmful interference in a neighboring country. This is reflected in the difference between the area of mandatory coordination for UHF and VHF. Here, the low-power signals will not penetrate any significant distance into either Mexico or Canada.

This approach is consistent with the Commission’s interpretation of Section 301 adopted in the 2004 Ultra-Wideband Order. There, the Commission determined that the mandatory license requirement did not apply to low-power use of radio frequencies because such uses were incapable of causing harmful interference. See In re Revision of Part 15 of the Commission’s Rules Regarding Ultra-Wideband Transmission Systems, Second Report and Order and Second Memorandum Opinion and Order, 19 FCCRcd 24558 (2004). Similarly, the need for cross-border coordination only applies if a signal will interfere with the operation of wireless services in Mexico or Canada.

To the extent the Commission does not wish to rely on this legal interpretation, it can and should rely upon the interference mitigation measures adopted in this proceeding generally. Whether they incorporate sensing, database, geolocation, or other means, the devices enabled in this proceeding will protect Mexican and Canadian broadcasters as thoroughly as they will protect U.S. broadcasters.

To view the rest of NAF, et al. Comments, please see the PDF documents linked below.

[1] NAF and CUWiN filed a timely Petition for Reconsideration requesting the Commission reconsider its conclusion in the First Report and Order to prohibit use of mobile services on Channels 14-20.

[2] Since November 2002, the amount of “beachfront” spectrum (below 3 GHz) allocated to unlicensed use has actually declined by 10 MHz, while the amount of spectrum for flexible use licensed service has increased by 519 MHz. See J.H. Snider, “The Rhetoric and Reality of Progress in Allocating More Spectrum for Unlicensed Use,” New America Foundation, Policy Backgrounder (February 2006).

Communications Daily Quotes J.H. Snider on Multicasting Stations

Communications — Mon, 08 Jan 2007 20:47:00 -0500

Talks on the 8th floor about an oft-delayed digital radio order include consideration of whether the FCC should issue a notice of proposed rulemaking (NPRM) on multicast reporting obligations, said an agency official and activists involved in the issue. An order to permit FM multicasting and nighttime digital AM broadcasts already has the backing of Chmn. Martin and the other 2 Republican commissioners (CD Aug 14 p3). At stake now is what compromises might bring Comrs. Adelstein and Copps aboard.Concurrent with a vote on the multicast order, the FCC likely would start an inquiry on what types of data radio stations should report to the agency, said the official. Martin favors a notice of inquiry (NOI) asking such questions, the staffer said, adding that the Democrats have indicated they’ll vote for such an item if the chairman agrees to issue an NPRM. An NPRM would send industry a stronger message that the FCC wants to hear annually of what programming is multicast, said the official...The multicast order, said by an industry source to have been drafted in April 2005, was pulled from the July agenda meeting...Broadcasters appear not to be suffering from the order’s state of… more

America’s Million-Dollar Superintendents

Cecille Isidro — Wed, 13 Dec 2006 18:49:00 -0500

The Securities and Exchange Commission, which regulates the financial statements of public companies, has rigorous rules requiring the disclosure of compensation for senior executives. These rules should serve as a model for the disclosure of compensation for public school employees, especially superintendents.

The SEC’s rules were gradually built up in response to frequently recurring scandals revealing that, absent forced government disclosure, corporate CEOs, often with the tacit approval of their boards of directors, have strong incentives to secretly pay themselves above market compensation at shareholder expense. For each of the top five highest-paid executives in a public company, the SEC rules require disclosure of all forms of compensation, including salary, bonus, stock options, nonequity incentives, and changes in pension value and other deferred compensation. All of this compensation information must be disclosed in publicly filed reports freely available via the Internet.

The signature feature of the SEC’s newest rules, effective Dec. 15, is that companies must add up all compensation in a single figure, which facilitates easy comparisons across time and companies. To derive a total-compensation number, the SEC made difficult and controversial assumptions about the present value of stock options, deferred compensation, and other uncertain future income streams. But the effort was widely defended because the health of financial markets depends on such transparency.

Similarly, the efficient operation of public school systems requires that the public understand how its money is being spent. Surprisingly, however, public school systems have far lower standards of transparency for executive compensation than public companies’.

***

Consider the superintendent’s total compensation in the place where I live, Anne Arundel County, MD. The county’s school system is the nation’s 41st largest, with more than 10,000 employees and a budget of close to $1 billion. Last July, the county hired a new superintendent and disclosed his compensation in a press release reported by the three major local newspapers: The Baltimore Sun, The Washington Post, and The Capital of Annapolis, MD. Using SEC accounting standards, his total compensation would have been over $1 million for his first year on the job. But the press release said that the superintendent’s “total package is worth roughly $275,000 in salary and incentives, including an annual performance bonus of up to 10 percent of his base salary and an annual $15,000 payment to a retirement fund for each year he stays in the job.” The release also announced that the new superintendent would “receive a comprehensive benefits package that includes a $750-a-month car allowance for automobile expenses and a cell phone or other communications device provided by the school system for business purposes.”

The efficient operation of public school systems requires that the public understand how its money is being spent.

Following standard Maryland accounting practice, the glossy, 282-page annual school budget includes a section on the cost of the superintendent’s office. But the superintendent’s total compensation is impossible to determine. This is largely because the budget excludes pension benefits paid by the state of Maryland and because benefits paid by the county are aggregated in a separate section called “fixed costs,” which are not allocated to the superintendent’s office -- or any other employee group.

Let’s now look at the compensation components that were and were not publicly disclosed. The public portion, which was the basis of the $275,000 estimate, included base salary ($225,000), expected performance bonus ($22,500), the county’s contribution to a defined-benefit pension plan ($15,000), and miscellaneous business-expense reimbursements for car, phone, and computer, which collectively were probably under $15,000 a year.

The undisclosed portion came to $865,000 for the first year and included current insurance ($9,500), retirement insurance ($4,800), unused leave ($35,000), ordinary Maryland pension ($33,000), and extraordinary Maryland pension ($784,000). Here is a breakdown:

Current Insurance Benefit. The superintendent was entitled to health, dental, vision, life ($500,000 worth), and disability insurance. The cost of these benefits was disclosed neither in the press release nor the superintendent’s contract. The employer contribution for the medical, dental and vision plan for an average employee across all employee groups was approximately $9,500.
Retirement Insurance Benefit. The superintendent was entitled to employer-subsidized health care in retirement, with an annual employer liability of approximately $4,800 per eligible employee.
Unused-Leave Benefit. The superintendent was entitled to 28 days a year of vacation leave and 12 days a year of sick leave. If unused, these 40 days could be converted to additional compensation worth $35,000, based on a per diem rate of one-260th of the superintendent’s annual salary. Standard school holidays, plus 10 days a year of discretionary personal and bereavement leave, could not be converted into compensation.
Ordinary State Retirement Benefit. The actuarial cost to Maryland taxpayers of the state’s defined-benefit pension is 11.58 percent of total eligible salary. This came to $33,000.
Extraordinary State Retirement Benefit. The superintendent came to his job with 28 years of work experience in Maryland schools, plus slightly more than one year of accumulated leave. This 29 years of work meant that he was already entitled to 40 percent of his final salary for his annual pension, with the final salary determined by the average of his last three years of work. The superintendent’s previous salary was $135,000 a year, with presumably about 10 percent in unused leave, giving a total eligible salary of $149,000. His new eligible salary was $282,000, for an increase of $133,000, or 212 percent.

Maryland’s pension system assumes only a 4 percent year-to-year increase in salary for a teacher or administrator from age 55 to age 59 (the Anne Arundel County superintendent will be 55 at the end of his first contract year), which is why this is labeled an extraordinary benefit. Assuming the superintendent had at least three years of this salary (his contract was for four years), either retired at the end of his contract or moved to another district (with 30 years of eligible work an employee can retire without an early-retirement penalty), and lived to age 80 (the expected average according to the U.S. Census for a white male age 55), the total increase in the present value of his pension benefits was $1,176,000.

He was eligible for two-thirds of this in the first year of his contract because, in addition to his one year of work, he had more than a year of accumulated leave that could be used for pension benefits. This came to $784,000 for the first year (and half that sum for the second year). In effect, this was an undisclosed signing bonus.

The pattern of undisclosed superintendent compensation is not new. The previous interim superintendent, pulled out of retirement after more than 30 years of work in the district, earned a base salary of $180,000 (disclosed), plus a Maryland pension (undisclosed). To avoid Maryland laws against “double dipping” and to exploit the discrepancy in the definition of the pension calendar year (January to December) and the district-contract calendar year (July to June), the interim superintendent was paid some months at the rate of $360,000 a year and the balance at $120,000 a year.

The superintendent who served before the interim superintendent resigned under pressure from the school board. As part of his termination agreement, the board gave him an undisclosed golden parachute of benefits, totaling upwards of $100,000. The largest component was a lump-sum pension annuity paid before his resignation.

***

The extent of undisclosed compensation in Anne Arundel County may be extreme, but the phenomenon of undisclosed compensation is not unusual. Local governments typically report only employee compensation that they themselves pay for, so when, as in Maryland, the state pays for pensions, this benefit doesn’t appear in local budgets.

Local governments also typically report compensation on a “cash” rather than an “accrual” basis. Public companies, in contrast, provide both types of reporting. If I sign a contract to pay you $1 million five years from now, no cash changes hands during the current accounting period, but I’ve still incurred a legal obligation to pay you.

Cash-based accounting allows politicians to promise future benefits to public employees without having to raise current taxes to pay for them. Consequently, the total unfunded public-pension liability in the United States is more than $1 trillion. Anne Arundel County’s unfunded retirement-health-insurance obligation is $700 million.

The time has come to apply SEC accounting principles to public school financial statements, because current school compensation accounting can be easily manipulated to mislead the public.

Is there a compelling reason for public companies, but not public school systems, to disclose total executive compensation? If so, I haven’t found one. If anything, the rationale for public disclosure of compensation for all employee types, not just senior executives, is much stronger for public school systems than public companies.

Arguably, nothing is more important to a school system than its ability to attract and retain competent employees. So the public has a compelling interest in knowing how much individual classes of employees are actually paid. But employee groups have a common interest in minimizing their apparent cost to taxpayers. This tension helps explain why the compensation of teachers and school superintendents is frequently reported in local newspapers -- but reported with misleadingly low numbers: base salary for superintendents, starting salary for teachers.

Some argue that the public cannot be entrusted with accurate information about public-employee compensation because average citizens are filled with jealousy and don’t appreciate what it costs to attract and retain first-rate public employees. This argument has some truth, but it is also very undemocratic. To the extent it is true, the proper remedy in a democracy is to educate, not mislead, the public.

The time has come to apply SEC accounting principles to public school financial statements that are presently easily manipulated to mislead the public. Those SEC principles should be extended not only to senior school executives, but also to all the major employee groups, with average total compensation disclosed for those at the bottom, middle, and top quintiles of each employee group.

Is Anne Arundel County the only local school system to have a million-dollar superintendent? If SEC-style accounting systems were in place, it would be easy to tell. But as it stands, I don’t know.