The deficit super committee and congressional technology committees searching for new money are considering “incentive auctions” of the TV band spectrum. Versions of these plans that focus on simply selling as much spectrum as possible would threaten the future of wireless innovation in the U.S.
For starters, it would threaten what appears to be the next wave in wireless communications—a wave exemplified by two recently launched products. The first product is Amazon’s Kindle Fire, which came out as a purely Wi-Fi device from a company that only four years ago launched the Kindle as a cellular-only device with service baked into the device price. The second is a $19.99 unlimited voice, text, and data service from Republic Wireless, which uses Wi-Fi as baseline infrastructure, and cellular as its fallback.
Just as packet switching and Internet protocol replaced circuit switching and the old telephone model, the two launches capture a fundamental switch in how wireless infrastructures are built. Open wireless models, like Wi-Fi, are becoming the basic infrastructure for wireless communications, while exclusively licensed services, like cellular, are becoming the (still critical) backup and supplement.
The U.S. Federal Communications Commission, under both Democratic and Republican leadership, has opened up some new spectrum to unlicensed use, including TV white spaces. But these changes, forward-thinking and transformative though they were, have always come in the gaps between and around what was always seen as the main event—auctioning as much spectrum for exclusive rights as possible.
And yet over 90 percent of tablet data is carried over Wi-Fi. For iPhones, the number is about 50 percent, and Android smart phones are catching up. It makes sense: only about a third of our usage is “on the move,” much of that in settings covered by hotspots. The rest is on our home or office Wi-Fi. Carriers know this as much as anyone else. AT&T’s network was practically saved by Wi-Fi when the iPhone’s introduction spiked usage. KDDI, Japan’s second-largest mobile broadband provider, signed a deal in July with a California firm, Ruckus Wireless, to deploy 100,000 hotspots in Japan at the heart of KDDI’s next-generation network. BT now has three million users in the U.K. who are members of its BT FON network: any one of them serves as a hotspot for the others.
The trend is even clearer in other fields. Eighty percent of wireless health care is delivered over a mélange of open wireless technologies—Wi-Fi, Bluetooth, ZigBee, RFID. Mobile payment systems like Mastercard’s PayPass, ExxonMobil’s SpeedPass, or EZ Pass, run on open wireless. Inventory management systems mostly use RFID. Other, yet-to-be-invented wireless technologies could be under threat if the super committee successfully pushes its idea to sell the unlicensed spectrum that those technologies would use.