FCC Lets the Telecom Giants Steal from You

As Congress finalizes its budget resolution for next year, there is one item you won't see: the taking, via eminent domain, of tens of billions of dollars worth of your airwaves rights.

You know what eminent domain is. The government comes and takes away your property for the sake of the "greater good." Usually, citizens fight such takings of their property kicking and screaming. And even if they lose, at least individuals have a constitutional right to compensation.

But there is one big exception: the airwaves. Citizens have not only granted the government free reign to appropriate, via eminent domain, the airwaves in their homes; they don't even ask for payment when the government then goes ahead and, in return for campaign contributions and other special-interest perks, gives away your precious airwaves to some gazillion-dollar telecom behemoth.

In recent years, those airwaves in American homes have become more valuable than all the gold and silver ever discovered by mankind. Early this year, a tiny sliver of airwaves, 1 megahertz wide, sold for $4 per person in its geographic coverage area (as a point of comparison, a slice of the spectrum six times wider, or $24 per person worth of airwaves, is used to broadcast a conventional television channel).

You've got thousands of these slices of airwaves in your home, so we are talking thousands of dollars. In contrast, compare this to the value of the gold in your home, which probably cost a lot less. Multiplied on a national scale, these airwaves are now potentially worth trillions of dollars. The U.S. government's biggest-ever public auction, conducted in January 2001, brought in winning bids of over $16 billion for just a handful of these spectrum slices in major U.S. population centers.

To be sure, the airwaves in our homes, unlike the bricks and mortar, are invisible. We occasionally sense their existence when we use a baby monitor, garage door opener, cordless phone, TV or wireless home computer network.

But we experience ownership of these services in the form of physical products we have purchased, not the airwaves on our property that enable them. We're like someone with an oil well in the back yard who thinks the value of the well is not the mineral rights to the oil but the equipment used to drill the well.

But while we remain ignorant of and indifferent to this invisible lucre on our property, armies of telecommunications lobbyists in Washington now spend their days drooling over it. This combination of public indifference and special-interest passion has created the conditions for Congress and its lackey, the Federal Communications Commission (FCC), to pursue the most aggressive policy of eminent domain in our nation's history.

As endorsed by Congress and implemented by the FCC, the eminent domain of the airwaves takes two forms. One form, which involves auctioning off rights to use the airwaves to the highest bidder, with the public getting the proceeds, can be good if used in moderation. The second form, which involves the government simply giving away those rights, is always objectionable.

Unfortunately, the second form is by far more common. Over the last 70 years, the government has netted less than $30 billion from airwaves auctions -- shamefully, the first auction wasn't even held until 1994.

But it is currently giving airwaves rights away at a rate of more than $50 billion a year. This giveaway is being carried out in the name of "efficiency," "deregulation," "flexibility" and a dozen other plausible but misleading rationales dreamed up by telecommunications lobbyists, the most accomplished pirates of our era.

Obviously, it is appropriate for the government to take some of our airwaves via eminent domain and then license them to others, including government agencies. No one wants to do away with interstate telecommunications highways any more than we want to do away with interstate transportation highways.

So ultimately the question is one of balance. Just as we need a balance of roads and homes, we need a balance of licensed and unlicensed airwaves. It is the proper balance between licensed and unlicensed airwaves that Congress is getting wrong.

Congress hates unlicensed airwaves because they alienate powerful telecommunications interests without even bringing any money into the U.S. Treasury. For this reason, proposals to let citizens use unlicensed airwaves at the best frequencies are viewed as politically dead on arrival.

But this is a great misfortune. Unlicensed airwaves are critical to solving the last-mile problem for getting HDTV-quality broadband Internet services (also known as Internet2) into the home.

Here's the last-mile problem: The cost of building a wired telecom network increases exponentially as it approaches your home. The most expensive part of the network is the section between the street curb and the telecom outlets in each room of your home.

Instead of forcing Americans to tear up their walls and pay telephone and cable TV companies hundreds of billions of dollars to wire this section of the next generation broadband Internet, the final section of the last mile of broadband networks should be wireless, using the airwaves that Americans, in theory at least, already own.

Already, a tiny sliver of unlicensed airwaves, known as Wi-Fi (also known as 802.11 or AirPort™) is being used for this purpose. When you are home, this slice of airwaves allows you to wirelessly connect your home computers and consumer electronics. When you are away, it allows you to wirelessly connect your laptop to the Internet at airports, hotels, and your local Starbuck's coffee shop.

Today, Wi-Fi devices are spreading like kudzu and are at the heart of telecommunications innovation. Arguably, Wi-Fi (which stands for "wireless fidelity") has already become the most efficiently used piece of airwaves on the planet.

Testament to its power is the aggressive lobbying by licensed telecommunications providers to restrict its use. But Wi-Fi, while a beacon of light in the darkness, is still woefully inadequate both in amount of airwaves (e.g., for delivering Internet2 into the home) and quality of airwaves (e.g., for delivering signals that can easily penetrate walls).

The real eminent domain we need is not to take airwaves from the public but from the special interests that have worked the political process to get an airwave windfall. A good starting point would be the airwaves currently reserved for local TV broadcasting. This type of broadcasting is already being more efficiently delivered via cable TV and spot-beam satellite technology.

If half of spectrum given away and licensed to broadcasters were auctioned off for long-distance broadband Internet service and the other half returned to its original owners, the land owners of America, America could quickly have a low-cost, high-quality broadband infrastructure that would be the envy of the world. Unfortunately, this is the type of eminent domain -- the return of property to the American public -- for which Congress has no stomach.

Perhaps the Supreme Court will protect Americans' property rights in a way that our elected politicians, bowing to special-interest pressure, have found impossible to do. The Supreme Court has recently decided to take on a case, FCC vs. Nextwave, that hinges in part on whether the airwaves truly belong to the public or are in fact the private property of those with temporary licenses to use them.

If the Supreme Court decides that it is a violation of the takings clause of the U.S. Constitution for Congress and the administration to take away your airwaves without just compensation -- just as it is illegal to take away any of your other property -- then this, the great era of the eminent domain of the airwaves, like the land grab of the early Wild West, may finally come to an end.