America Needs Unchained Spectrum
By Gregg Blonder


Misguided regulations of the airwaves are thwarting precious
opportunities to innovate and create so-far undreamed of services.


=A0 Good is the enemy of great. The risk we venture capitalists fear
most is not the failed investment, nor the modest success, but the lost
opportunity. Ten good deals in the wrong market will never do as well as
one in the right market. And venture capitalists who can't latch onto
rising stars have to find another line of work.


Americans need to develop a similar fear of opportunities lost to a lack
of innovation. It should be a national priority. If we fail to
reinvigorate the country's engines of innovation, I worry that the
balance of innovative economic power will shift more or less permanently
toward Asia.


NO LICENSE REQUIRED.=A0 Take the Internet. Thirty years in gestation,
the World Wide Web created billions in new wealth and is as intertwined
in our lives as Monday Night Football and AC power.
Why was it so successful? Because the "great" had enough time and enough
freedom to emerge.
The federal government never mandated rules, regulations, or a purpose
for the Internet, and large corporations dismissed it as a fad. As a
result, entrepreneurs had time to experiment with new business models at
nearly zero incremental cost -- without a license or oversight.
Greatness took root.


WHAT A WASTE.=A0 A decade later, on the heels of the merely "good" CB
radio, the now-ubiquitous cellular phone market was created. A few
slivers of unlicensed spectrum -- virgin bands of wireless broadcasting
channels for cordless phones and Wi-Fi -- were slowly released, all
under the watchful eye of the Federal Communications Commission.
Now, you can't escape the ring of a cell phone, and Wi-Fi hot spots
infest every coffee shop and hotel lobby. Sounds like a great success,
right? Guess again. Our misuse of spectrum is one of the greatest lost
opportunities of the last century, falling victim to the siren call of
the merely good.


What's wrong with our current spectrum policies? First of all, more than
90% of all spectrum is wasted -=97 a perishable commodity leaking
opportunity away every second. Cell-phone use plummets during evening
hours, which is why wireless companies give away after-hours minutes.


STIFLING OVERSIGHT =A0 Over-the-air TV now serves less than 20% of the
market. Each analog channel could be replaced by six digital channels.
And one TV tower blankets an entire city transmitting a single program,
instead of hundreds of small street-corner antennas each sending out
hundreds of different shows and reusing the same bandwidth over and over
again.


In a free market this commodity would be cleared in no time. But
licenses and regulations discourage both the innovation and investment
that would absorb it.
Second, in a country that celebrates its support for the entrepreneur
and small business, the price of entry is too high. What small business
can afford hundreds of millions of dollars for a wireless license to
simply discover if a customer might want to purchase a new wireless
service?
In a dynamic and changing world, what entrepreneur would buy a license
laden with usage restrictions -- the kind meted out by the FCC forcing
one band to be used for only voice calls and another only for local
commercial TV?

It's like buying a truck from Ford, with a restriction that it can be
driven only on Sundays while carrying nonagricultural products.


TAKING BABY STEPS.=A0 And third, spectrum is so politicized that nimble
decision-making is impossible. For more than a decade the FCC, in a vain
attempt to save the U.S. consumer-electronics industry, has pushed
high-definition TV onto broadcasters.
For more than two decades the FCC has weighed conflicting comments
suggesting new spectrum policies =96- and has taken only baby steps
toward deregulation and minimal spectrum swaps. Before that, the FCC
delayed new technologies like UHF channels or color TV, to placate the
Big Three networks. Smart entrepreneurs had to go elsewhere for
inspiration.


In short, today's spectrum usage is sodden with the inefficiencies that
arise when a command-and-control economy prescribes exactly who will
produce what and for what purpose.


OPENING NEW DOORS.=A0 Freeing spectrum would create another opportunity
like the Internet. A fully functioning market would expand current
spectrum usage by 100 times and add 100 times more entrepreneurial ideas
than exist in the minds of the current spectrum owners.


Imagine, for example, private mobile broadcasting that would help
architects visually track construction problems at remote sites. Or new
games, such as three-dimensional hide and seek.


Who knows? I don't, and that's the marvelous thing. History has shown
over and over that once a real opportunity exists, people apply their
creativity to it.
What stands in the way of change? The principal obstacles are the
current owners of billion-dollar swaths of spectrum, who in any freeing
of spectrum would resist losing their dominant positions.


BUYING AND SELLING BANDWIDTH.=A0 Yet the FCC and Congress, if they had a
mind to, could find a relatively painless way around those owners -=97
and even, eventually, get them to acquiesce. I suggest a three-point
spectrum-freeing plan over time that would:
=95 Let broadcasters retain their current TV licenses for any purpose
they desire, in exchange for releasing the rest of the TV spectrum for
unregulated purposes. HDTV broadcasting should be an option, not a
mandate.
=95 Eliminate usage restrictions from cell-phone service providers,
providing they resell that spectrum to third parties. If entrepreneurs
want to monitor vending-machine inventories at 2 a.m., great. Let the
market decide whether free minutes or fees are best.
=95 Slowly return all licensed spectrum to a Chicago Board of Trade-like
commodities exchange, trading spectrum on a second-by-second basis to
entrepreneurs and businesses alike. For each trade, the government could
charge a 1% fee. Let supply match demand and variable cost.


WORLD STANDARDS.=A0 The combined revenue from the taxes paid by
profitable entrepreneurs and the users fees paid for auctioned spectrum,
I believe, would prove more than enough to rapidly purchase back the
additional spectrum held by the large corporations that paid billions
for it.
Talk about win-win-win! Everyone would gain, especially the U.S.
economy. As the successful pioneers of the first broad,
free-market-driven spectrum exchange, we would set world standards for
usage and equipment. The U.S. economy, the home of innovation and the
lone entrepreneur, would prevail once more.
Blonder is a general partner at Morgenthaler Ventures and is based in
Princeton, N.J.
Edited by Jim Kerstetter

"Twistedhed" wrote in message
...
America Needs Unchained Spectrum
By Gregg Blonder


Misguided regulations of the airwaves are thwarting precious
opportunities to innovate and create so-far undreamed of services.


Good is the enemy of great. The risk we venture capitalists fear
most is not the failed investment, nor the modest success, but the lost
opportunity. Ten good deals in the wrong market will never do as well as
one in the right market. And venture capitalists who can't latch onto
rising stars have to find another line of work.


Americans need to develop a similar fear of opportunities lost to a lack
of innovation. It should be a national priority. If we fail to
reinvigorate the country's engines of innovation, I worry that the
balance of innovative economic power will shift more or less permanently
toward Asia.


NO LICENSE REQUIRED. Take the Internet. Thirty years in gestation,
the World Wide Web created billions in new wealth and is as intertwined
in our lives as Monday Night Football and AC power.
Why was it so successful? Because the "great" had enough time and enough
freedom to emerge.
The federal government never mandated rules, regulations, or a purpose
for the Internet, and large corporations dismissed it as a fad. As a
result, entrepreneurs had time to experiment with new business models at
nearly zero incremental cost -- without a license or oversight.
Greatness took root.


WHAT A WASTE. A decade later, on the heels of the merely "good" CB
radio, the now-ubiquitous cellular phone market was created. A few
slivers of unlicensed spectrum -- virgin bands of wireless broadcasting
channels for cordless phones and Wi-Fi -- were slowly released, all
under the watchful eye of the Federal Communications Commission.
Now, you can't escape the ring of a cell phone, and Wi-Fi hot spots
infest every coffee shop and hotel lobby. Sounds like a great success,
right? Guess again. Our misuse of spectrum is one of the greatest lost
opportunities of the last century, falling victim to the siren call of
the merely good.


What's wrong with our current spectrum policies? First of all, more than
90% of all spectrum is wasted -- a perishable commodity leaking
opportunity away every second. Cell-phone use plummets during evening
hours, which is why wireless companies give away after-hours minutes.


STIFLING OVERSIGHT Over-the-air TV now serves less than 20% of the
market. Each analog channel could be replaced by six digital channels.
And one TV tower blankets an entire city transmitting a single program,
instead of hundreds of small street-corner antennas each sending out
hundreds of different shows and reusing the same bandwidth over and over
again.


In a free market this commodity would be cleared in no time. But
licenses and regulations discourage both the innovation and investment
that would absorb it.
Second, in a country that celebrates its support for the entrepreneur
and small business, the price of entry is too high. What small business
can afford hundreds of millions of dollars for a wireless license to
simply discover if a customer might want to purchase a new wireless
service?
In a dynamic and changing world, what entrepreneur would buy a license
laden with usage restrictions -- the kind meted out by the FCC forcing
one band to be used for only voice calls and another only for local
commercial TV?

It's like buying a truck from Ford, with a restriction that it can be
driven only on Sundays while carrying nonagricultural products.


TAKING BABY STEPS. And third, spectrum is so politicized that nimble
decision-making is impossible. For more than a decade the FCC, in a vain
attempt to save the U.S. consumer-electronics industry, has pushed
high-definition TV onto broadcasters.
For more than two decades the FCC has weighed conflicting comments
suggesting new spectrum policies -- and has taken only baby steps
toward deregulation and minimal spectrum swaps. Before that, the FCC
delayed new technologies like UHF channels or color TV, to placate the
Big Three networks. Smart entrepreneurs had to go elsewhere for
inspiration.


In short, today's spectrum usage is sodden with the inefficiencies that
arise when a command-and-control economy prescribes exactly who will
produce what and for what purpose.


OPENING NEW DOORS. Freeing spectrum would create another opportunity
like the Internet. A fully functioning market would expand current
spectrum usage by 100 times and add 100 times more entrepreneurial ideas
than exist in the minds of the current spectrum owners.


Imagine, for example, private mobile broadcasting that would help
architects visually track construction problems at remote sites. Or new
games, such as three-dimensional hide and seek.


Who knows? I don't, and that's the marvelous thing. History has shown
over and over that once a real opportunity exists, people apply their
creativity to it.
What stands in the way of change? The principal obstacles are the
current owners of billion-dollar swaths of spectrum, who in any freeing
of spectrum would resist losing their dominant positions.


BUYING AND SELLING BANDWIDTH. Yet the FCC and Congress, if they had a
mind to, could find a relatively painless way around those owners --
and even, eventually, get them to acquiesce. I suggest a three-point
spectrum-freeing plan over time that would:
.. Let broadcasters retain their current TV licenses for any purpose
they desire, in exchange for releasing the rest of the TV spectrum for
unregulated purposes. HDTV broadcasting should be an option, not a
mandate.
.. Eliminate usage restrictions from cell-phone service providers,
providing they resell that spectrum to third parties. If entrepreneurs
want to monitor vending-machine inventories at 2 a.m., great. Let the
market decide whether free minutes or fees are best.
.. Slowly return all licensed spectrum to a Chicago Board of Trade-like
commodities exchange, trading spectrum on a second-by-second basis to
entrepreneurs and businesses alike. For each trade, the government could
charge a 1% fee. Let supply match demand and variable cost.


WORLD STANDARDS. The combined revenue from the taxes paid by
profitable entrepreneurs and the users fees paid for auctioned spectrum,
I believe, would prove more than enough to rapidly purchase back the
additional spectrum held by the large corporations that paid billions
for it.
Talk about win-win-win! Everyone would gain, especially the U.S.
economy. As the successful pioneers of the first broad,
free-market-driven spectrum exchange, we would set world standards for
usage and equipment. The U.S. economy, the home of innovation and the
lone entrepreneur, would prevail once more.
Blonder is a general partner at Morgenthaler Ventures and is based in
Princeton, N.J.
Edited by Jim Kerstetter





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Another stupid posting by a stupid keyclown. Twithed has no original
thoughts.