A Technologist View of Washington, DC and the FCC

Date June 4, 2002
Speaker David FARBER(Professor of Telecommunication Systems, Computer and Information Science, University of Pennsylvania)
Moderator IKEDA Nobuo(Senior Fellow, RIETI)


There is a lack of people in Washington, DC who understand technology. The Federal Communications Commission is one of the more competent bureaucracies in Washington. When I was at the FCC, the two big issues were what to do about spectrum and how to handle the AOL and Time Warner merger. I had to double as chief scientist for the Federal Trade Commission.

We took a narrow aim on instant messaging. We did not want systems to be incompatible, as was the case with early telephones. We settled the merger issue by saying that AOL was not allowed to enter video without opening its system. We got the final vote to approve the merger at two minutes before the deadline.

Regarding spectrum, the US is in a nightmare. We have a real shortage of spectrum. It is clear that most of the spectrum is empty, but it is fenced into tiny plots. We should be able to let people use spectrum that is not being used until the titled owner needs it back.

One way to do this is to have the granddaddy of all auctions. All titled owners could put spectrum up for auction. They wouldn't have to put it up. And they wouldn't have to take the price offered either. But the auction would show to senior management what the spectrum is worth.

Once sold, the spectrum could be used in any way that the buyer wants. In the short run, there would be a surplus of spectrum, driving prices down. But there would also be an incentive to use the spectrum. In the long run, however, we would see a real shortage.

The US's spectrum policy is broken. Only 15% of Americans get their TV broadcasts over the air. TV stations only keep their programming on the airwaves because cables are required to carry the stations if they do so. But there is a lot of spectrum here that could be used more productively.

Questions and Answers

Q: Can you compare the prospects of mobile and wireless Internet?

My impression is that most wireless Internet is short message services (SMS), cell phone-based. The US's history is checkered. Wireless companies do not understand the Internet at all. Blackberries are incredibly popular. Once place to look is Finland: the Finns are fanatics. The US needs much higher technology.

Q: You say the problem is the restrictions on what people can do with bandwidth. It seems the first step would be to remove restrictions on what people are allowed to do with bandwidth.

Buyers of bandwidth will not be restricted. A lot of spectrum is owned by people who don't use it. And they don't want to give it away. The expectation is that people will sell things that they are not using. Prices will come down. And there are limits to technology. We are in a quiet time in telecommunications because there are many bad businesses. There is a lot of dark fiber around. Lighting it is a problem. We are at 35% capacity. To get an idea of what may be possible one day, I suggest everyone read the novel Snow Crash by Neal Stephenson. The book's model of metaverses is doable.

Q: Can you comment on the process of regulatory reform in the area of technology?

The money from the auctions would go the sellers. This would be a way to inspire people to use spectrum in a way that is more profitable. It would be a big bang. You have to get the computer experts and policy experts, or the nerds and the wonks, to talk to each other or else policy won't make sense.

Q: Why should the people who just happen to own spectrum get money? Shouldn't spectrum be a public good?

I agree philosophically. But I cannot see any way of breaking it loose politically. You cannot force it; if we did, we would be in court for 500 years.

Q: What about a property tax on sitting on spectrum?

Yes, but could you get Congress to pass a tax hike? I want results. We need the spectrum.

Q: We have learned from the Russian experience that big bang reforms are not necessarily the best policy for privatizing socialism.

To reach the ideal policy, you must start with an outrageous position and negotiate your way back. I could not find an obvious middle ground.

Q: What about reallocating spectrum that was going to 3G?

The Europeans had enormous overbidding. Third Generation is still an extension of current ways of thinking. I would like to see more unlicensed spectrum.

Q: What do you think of Senator Fritz Hollings's bill?

It goes against rational fair use. It destroys the use of the personal computer. Senator Hollings's staff did not have the expertise.

Q: Did the FCC fill the chief scientist position?

The Internet will become a big issue for the government and the FCC does not have the talent. It is difficult to fill the position of chief scientist, as there are many conflicts of interests and academics don't want the job. We had somebody who was to start on September 11; his wife refused to let him commute from Oregon to Washington, DC after the terrorist attacks.

Q: What Internet issues will the FCC face?

The sharing problem; how do you deliver to the home. We will probably have a duopoly, where cable operators will deliver data and video but not voice. What is the Internet? Is it a telecommunications service? Will the FCC be forced to touch the Internet? Should the FCC be concerned with domain naming? Somebody has to be concerned about the robustness of the Internet infrastructure. The Internet could replace the telephone network.

*This summary was compiled by RIETI Editorial staff.