Commentary: An Airwave Windfall. A Whole New Ballgame

By Catherine Yang

Supply and demand. Few commodities have been so subject to the market's immutable laws in recent years as has the earth's electromagnetic spectrum. The more communications that zing through the seemingly limited supply of usable spectrum, the more valuable it becomes--or at least that's what phone companies bet when they spent billions of dollars in recent years, buying up slices of the airwaves.

Now, technology breakthroughs could throw the spectrum market for a loop--opening up a vast new supply, revolutionizing mobile communications, and potentially undercutting the phone companies' huge spectrum investments. As early as late October, the Federal Communications Commission will release a report showing that spectrum may not be scarce at all. In fact, there could be enough for everyone--if the Feds find a way to open up the airwaves to new players without alienating existing ones. "Technology is opening the door to fresh policies," says Paul J. Kolodzy, director of the FCC Spectrum Policy Task Force

Why? Think of the airwaves as highways. In the current system, commercial and government operators are allowed to block off major lanes of spectrum for their own traffic. The airwaves are often underutilized, but free from colliding signals. Now, nimble new technologies, such as smart radio devices and transmission techniques, will allow different wireless services to share the same space without crashing into one another. That could spur the development of the wireless Internet.

This is welcome news at a time when the nation's most readily usable airwaves already have been allocated. But no good idea goes unchallenged. The FCC will run into heavy static if it tries to make today's spectrum holders share their coveted space. The cell-phone operators, for one, will lobby heavily to prevent anyone from offering competition on the cheap. "The debate won't be framed by science but by politics," says Dewayne Hendricks, CEO of the Fremont (Calif.)-based Dandin Group Inc., which promotes wireless technology in remote areas.

This puts the FCC in a delicate spot. To get the most out of the airwaves, it will have to convince exclusive licensees to allow others to transmit in their vacant spaces. But that risks angering the phone companies. "It's an issue of parity if we have to pay for our spectrum and others do not," says Brian F. Fontes, vice-president of federal relations at Cingular Wireless.

To balance these two concerns, the FCC should create a secondary market for spectrum, one in which airwave licensees rent out spots they're not using to others. Sometimes companies planning on expansion don't use their spectrum right away, for example. They could rent it, say, to a convention planner who needs extra airwaves for all the cell phones his event will bring to town.

Even as the FCC formulates new policy, innovations are already being tested in the unregulated airwaves. In the range of the spectrum long dominated by garage-door openers, microwave ovens, and baby monitors, researchers have come up with wireless fiber (WiFi) broadband technology. In homes and coffee shops, WiFi local networks are giving users a heady taste of the high-speed mobile Net long before the telcos roll out their own pricey systems. Another innovation: Ultra-wideband, which may provide fast Net links between such home entertainment devices as the camcorder and TV.

While it will take at least five years before many of the new, efficient technologies are perfected, the FCC should put the right policies in place now. The agency needs to set aside more airwaves for unlicensed uses and give new operators access to the airwaves. Both could produce loads of new services. Sure, the phone companies will gripe. But the FCC needs to encourage the sharing of one of America's most coveted natural resources.

Yang covers the FCC from Washington.

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