2003/01 Research & Review

Wireless Internet and the Open Spectrum

Senior Fellow, RIETI

In the movie "Titanic" there is a scene about radio communication where a ship navigating close by to the Titanic just before the accident issues a radio warning, calling "Caution! There is an iceberg." But the warning ship happens to use the same frequency as the Titanic uses to communicate with her home country, and interference occurs. The Titanic ignores the message, responding, "Don't disturb." The other ship, insulted by the message, turns off its radio.

This scene is essentially factually accurate. Had the radio been operating properly, nearby ships could have offered aid and the accident would not have turned into such a catastrophe. Following this incident, the United States enacted the Radio Act in 1912, adopting the "command and control" approach to spectrum administration. Other nations have adopted similar measures, and this framework, in operation for over 90 years, remains basically unchanged today.

Spectrum reform once in a hundred years

Another major reform since the days of Titanic is about to take place in the world of wireless communication. In November 2002, the U.S. Federal Communications Commission (FCC) issued a report on spectrum administration (*1). The key point in the report is a proposal to do away with the current licensing system under the "command and control" approach and to adopt a flexible system which is more "consumer-oriented." Behind this move lies the recent rapid progress in wireless technology. With Wireless Local Area Network (WLAN) (IEEE802.11b), it is possible to attain a speed of 11 megabits per second in the unlicensed band, which is 1000 times the speed of a mobile phone.

Over 30 million WLAN cards have come into use globally over just the last two years, and that number is expected to grow to 200 million by the year 2006. Furthermore, the next generation high speed WLAN (802.11a) will make it possible to communicate at a speed of 54 megabits per second, or if two channels are used, at 108 megabits per second, which is close to the speed offered by optical fiber. Wireless Internet can be created by connecting WLAN with optical fiber, and this framework will likely be considered the most viable broadband infrastructure in the future. Ultimately, mobile phones will be integrated into the wireless Internet with Internet Protocol (IP) telephones. In the same way the (wired) Internet replaced conventional telephone lines, the "Second Internet revolution" is just around the corner.

Why can one attain a much faster speed with WLAN equipment, which costs only 20,000 Yen a piece, than with a mobile phone, which uses a base station costing over 100 million Yen? To understand the mechanism, think of the network as a road. Mobile phones use the circuit switching system, which monopolizes a single channel throughout a single communication. As in diagram 1, a single lane (channel) of the road (band) is "reserved" for each driver, making each lane narrower and allowing room for only a single bicycle to pass through.


In contrast, WLAN uses packet switching in the same way as the Internet. Like in real-life roads, lanes are open for all to use, and cars (data) can take whichever lane has least traffic passing through. With this system, any large car can pass down the road at whatever speed it wants to as long as there is enough space to do so on the road. The roads at times may be jammed, but with data transmission, the data can be stored and transmitted later. Likewise, with WLAN, it is possible to attain far more efficient transmission than with a mobile phone by sharing a large bandwidth with numerous transmitters.

With wireless transmission, the receiver may pick up various signals unlike with a wired receiver, possibly creating interference. Analog radio sets avoid interference by changing the frequency at which to send the signal. But this approach was adopted because of the low quality of receivers, and there are now ways to distinguish signals without relying on differing frequencies. In packet transmission, such as WLAN, signals are identified by a code attached to each packet.

It is also unnecessary to increase power to decrease noise. Using "spectrum spread" technology, the signal is spread into thin waves over a wide band using only weak power, and the receiver distinguishes the necessary signals and multiplies them to eliminate noise. Using this mechanism, WLAN can cover only a small area of around 100 meters, but this is desirable from the standpoint of efficient use of frequency. Hence one can theoretically increase the band as widely as necessary by dividing the channel into small "microcells" and building a base station for each microcell, so that the same frequency can be used repeatedly.

With this kind of "low power and wide band" system, the efficacy of wireless Internet improves drastically. Previously, spectrum was limited and hence had to be allotted by license. But by sharing a wide bandwidth via wireless packets, and by multiplying space using microcells, it is possible for all users to enjoy a megabit speed equivalent to that available via optical fiber. In other words, spectrum is no longer a scarcity, and need not be allotted.

Furthermore, spectrum is not used constantly. For example, emergency radios have special frequencies allotted to them according to region, but are only used occasionally for town announcements and so on, not in times of emergency. Multiplying time by space, one finds that over 90 percent of the most frequently used bandwidth below 3 GigaHertz (GHz) remains unoccupied (no waves are passing through). If other wireless devices could take advantage of this available time, efficacy would improve drastically. Such "overlay" technology has already been approved and implemented in Europe. It uses a transmission technology called "carrier sense" which detects whether a specific channel is in use before actually sending off signals.

Technologies such as "software-defined radio," which allow one to change the software installed in the radio in the same way as one can change application software for personal computers, and "smart antenna" which combine various antenna elements with a single processor to change the transmission and reception modes in response to the communication environment, have already been implemented. Another new wireless technology called "ultra-wide band" (UWB), which modulates the baseband with very short pulses that are less than a nanosecond, use very weak signals that cannot be distinguished from radio noise generated by household appliances. The FCC authorized UWB in February 2002 with very conservative restrictions.

If such varying technologies are used, there is no need to divide frequencies. The term "radio interference" gives the impression that radio waves mix in mid-air, but the interference actually occurs in the receiver when it processes the signals. Hence if once can improve the performance (and availability) of the receiver, interference can be controlled. The FCC report proposed a new criterion of "interference temperature" which allows different receiver systems to coexist in a band if the interference temperature is below a particular level. The report also proposed that the performance of receivers needs to be regulated according to interference temperature. Spectrum administration until now had been about regulating the transmitter side, but what is important in the digital era is to regulate the receivers.

Opening spectrum and the "commons" model

The FCC report is impressive in its deep understanding of the most advanced wireless technologies, but its final policy proposal is unfortunately a half-hearted political compromise. All future digital wireless technologies rely on the "commons" approach, as in the case of WLAN, which co-exists in a wide band. Hence there should be no need to divide the frequency range, but the FCC report states that the commons model and the exclusive-rights model should coexist. This is a result of a compromise between technological rationality and a need to protect the vested interests of those already in the trade.

Meanwhile, the "Study Group on Policies Concerning Effective Radio Spectrum Use" of Japan's Ministry of Public Management, Home Affairs, Post and Telecommunication (MPHPT) issued a final report on its policy for reallocating radio spectrum (*2). The key issue in this report is the concept that spectrum license is not an absolute right, and that incumbents could be asked to "move out" at the time of license renewal if their portion of spectrum is not used effectively. This is a legally correct approach, but in reality, license to use spectrum is almost an absolute right and the government could not have the incumbents move out just because a particular spectrum is not being used. But the committee decided that if a license expires, the licensee would be offered compensation for the remaining book value of their wireless equipment, and that a special fund would be set up for such compensation.

The proposal is a step forward compared to previous policies, but the real issue is whether the incumbent would indeed move out or not. The term of amortization for most wireless equipment is six years, so with the term of license being five years, the average licensee's remaining value would be very small. Furthermore, the incumbent would have to go out of business, but there is no scheme to promote a change in business. If the incumbent refuses to move out and continues operation, the authorities have to take action against unauthorized radio transmission by, for example, forcibly taking away the transmitter, but such action has never occurred anywhere in the world. I therefore propose holding a "reverse auction" or buying up of the spectrum from the incumbent.

One further problem is how to reallocate spectrum which has been returned in this fashion. The MPHPT group discussed spectrum auction and decided against adopting the scheme, deciding instead to select users through a "comparative examination system based on market principles." This move is a return to the old ways of "command and control," a concept denied even by the FCC. It would be a move which would only spark an outdated debate unlike in the United States, which has been through a frequency auction and is now ready to consider the commons approach.

The radio spectrum issue is similar to the Internet proliferation issue faced by the communications industry five years ago. In those days, the Internet was still considered an exceptional technology and the fundamental mode of communication was the telephone, with dial-up service being the norm for Internet connection. But dial-up connection is on the decline as Digital Subscriber Line (DSL) shows rapid growth. Even the regular telephone is in danger of being superseded by IP telephone.

A similar reversal of norms and exceptions is definitely going to occur in the wireless world. WLAN is currently considered an exceptional technology to be used in the unlicensed band, but in reality, all new digital wireless technologies take the form of "commons" where a wide band is shared, hence there is no need to allot frequencies. The fundamental concept will be not to have licenses and to allow free access to communication, with licensed use an exception, the ultimate goal being to phase it out entirely in the future. In such circumstances, the role of the administrator would be to impose standardization and standard authentication as for regular household electrical appliances.

Furthermore, the 5 GHz band used by the IEEE 802.11a technology, seen as the future of the mainstream wireless Internet, is available for wireless Internet in the United States as Unlicensed National Information Infrastructure (U-NII), but is only available in Japan through license. Japanese authorities also plan to make the 4 GHz band, which will become available in the future, accessible only through licensing. To have the 4~5 GHz band, the most appropriate band for wireless Internet, under government "control and command" hampers technical innovation and will isolate Japan from the rest of the world.

As FCC Chairman Michael Powell says, now is the time for a historic "paradigm shift" - old ways of thinking will see opportunities slip away. The final goal of spectrum administration should be to abolish the licensing system and to open all bands for wireless Internet use. In the transitional stage (particularly for the lower frequency bands), old wireless technologies may have to co-exist, but other bands scheduled to be opened up in the future should be available to all without license. The 3 GHz and above band in particular should be available for wireless Internet as a Japanese version of U-NII, and the authorities should promote spectrum sharing for bands below it using overlay technology.

WLAN makes optical fiber-equivalent high speed access available at very low cost. If spectrum becomes available for new digital wireless technology and if new communication firms and manufacturers enter the wireless Internet market, broadband proliferation will expand drastically. The currently popular DSL is only a transitional technology and wireless is ultimately bound to be the most cost effective and high speed infrastructure. And the most important transitional step for WLAN is for the common user to own the infrastructure (wireless routers). This kind of "network for users by the users" structure is what the initial Internet sought as its ideal.

When users come to possess their own infrastructure, "common carriers" which provide infrastructure and services in a vertically integrated fashion will eventually disappear, and communication devices will become a dispensable commodity to be bought and used by consumers, just like household electrical appliances and cars. This is an area in which Japan is the strongest player in the world, and if spectrum becomes open to the wireless Internet, there is no question that Japan's information industry will lead the world.

>> Original text in Japanese

May 20, 2003