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Posted at 9:08 AM ET, 01/10/2011

Column: Making the best of our invisibile infrastructure

By Ezra Klein

You're probably reading this on junk. And I'm not talking about newsprint - industry woes aside, that's high-quality stuff. But if you're on a computer or an iPad, and you're not plugged into an Internet jack in the wall? Junk, then.

But it's not your MacBook or your tablet that's so crummy. It's the spectrum it's using.

Spectrum, in the words of FCC Chairman Julius Genachowski, is the economy's "invisible infrastructure." It's the interstate system for information that travels wirelessly. It's how you get radio in your car, service on your cellphone and satellite to your television. It's also how you get WiFi.

But not all spectrum is created equal. "Beachfront spectrum" is like a well-paved road. Lots of information can travel long distances on it without losing much data. But not all spectrum is so valuable.

In 1985, there was a slice of spectrum that was too crummy for anyone to want. It was so weak that the radiation that microwaves emit could mess with it. So the government released it to the public. As long as whatever you were doing didn't interfere with what anyone else was doing, you could build on that spectrum. That's how we got garage-door openers and cordless phones. Because the information didn't have to travel far, the junk spectrum was good enough. Later on, that same section of junk spectrum became the home for WiFi - a crucial, multibillion-dollar industry. A platform for massive technological innovation. A huge increase in quality of life.

There's a lesson in that: Spectrum is really, really important. And not always in ways that we can predict in advance. Making sure that spectrum is used well is no less important than making sure our highways are used well: If the Beltway were reserved for horses, Washington would not be a very good place to do business.

But our spectrum is not being used well. It's the classic innovator's quandary: We made good decisions many years ago, but those good decisions created powerful incumbents, and in order to make good decisions now, we must somehow unseat the incumbents.

Today, much of the best spectrum is allocated to broadcast television. Decades ago, when 90 percent of Americans received their programming this way, that made sense. Today, when fewer than 10 percent of Americans do, it doesn't.

Meanwhile, mobile broadband is quite clearly the platform of the future - or at least the near future. But we don't have nearly enough spectrum allocated for its use. Unless that changes, the technology will be unable to progress, as more advanced uses will require more bandwidth, or it will have to be rationed, perhaps through extremely high prices that make sure most people can't use it.

The FCC could just yank the spectrum from the channels and hand it to the mobile industry. But it won't. It fears lawsuits and angry calls from lawmakers. And temperamentally, Genachowski himself is a consensus-builder rather than a steamroller.

Instead, the hope is that current owners of spectrum will give it up voluntarily. In exchange, they'd get big sacks of money. If a slice of spectrum is worth billions of dollars to Verizon but only a couple of million to a few aging TV stations - TV stations that have other ways to reach most of those customers - then there should be enough money in this transaction to leave everyone happy.

At least, that's some people's hope. Some advocates want that spectrum - or at least a substantial portion of it - left unlicensed. Rather than using telecom corporations such as Verizon to buy off the current owners of the spectrum, they'd like to see the federal government take some of that spectrum back and preserve it as a public resource for the sort of innovation we can't yet imagine and that the big corporations aren't likely to pioneer - the same as happened with WiFi. But as of yet, that's not the FCC's vision for this. Officials are more worried about the mobile broadband market. They argue (accurately) that they've already made more beachfront spectrum available for unlicensed uses. And although they don't say this clearly, auctioning spectrum to large corporations gives them the money to pay off the current owners. But even so, they can't do that.

"Imagine someone was given property on Fifth Avenue 50 years ago, but they don't use it and can't sell it," says Tim Wu, a law professor at Harvard and author of "The Master Switch." That's the situation that's arisen in the spectrum universe. It's not legal for the FCC to run auctions and hand over some of the proceeds to the old owners. That means the people sitting on the spectrum have little incentive to give it up. For that to change, the FCC needs Congress to pass a law empowering it to compensate current holders of spectrum with proceeds from the sale.

One way - the slightly demagogic way - to underscore the urgency here is to invoke China: Do you think it's letting its information infrastructure stagnate because it's a bureaucratic hassle to get the permits shifted? I rather doubt it.

Of course, we don't want the Chinese system. Democracy is worth some red tape. But if we're going to keep a good political system from becoming an economic handicap, there are going to be a lot of decisions like this one that need to be made. Decisions where we know what we need to do to move the economy forward, but where it's easier to do nothing because there are powerful interests attached to old habits. The problem with having a really good 20th century, as America did, is that you've built up a lot of infrastructure and made a lot of decisions that benefit the industries and innovators of the 20th century. But now we're in the 21st century, and junk won't cut it anymore.

By Ezra Klein  | January 10, 2011; 9:08 AM ET
Categories:  Tech  
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Comments

What color is invisi-bile? Most bile I see is green or purple. If you can't see it, that could be pretty messy.

Posted by: yellojkt | January 10, 2011 9:59 AM | Report abuse

It's fascinating how the water infrastructure in the west features the same issues of incumbency, value, and best use as the wireless spectrum. What we work out for wireless may end up being the best way to allocate water as well.

Posted by: dave89 | January 10, 2011 10:34 AM | Report abuse

The one idea that will never occur to pasty faced Genachowski: Get the government out of the spectrum biz, leaving people free to buy and sell slices of it in the free market. All problems solved, except for the caterwauling of the busybodies.

Posted by: msoja | January 10, 2011 10:38 AM | Report abuse

Aren't these regions of the spectrum leased? Why can't we just wait until the current leases expire and let the highest bidders (i.e., the wireless broadband folk) walk away with them next round?

I'm sure this isn't how it works; I'm sure in practice it's more akin to the way we give out oil leases for pennies on the dollar to our golfing buddies. But I think more light on this aspect would be worthwhile.

Posted by: eggnogfool | January 10, 2011 10:42 AM | Report abuse

--*What we work out for wireless may end up being the best way to allocate water as well.*--

Not if it involves disbursement according to government strictures.

What works is private ownership, and not just ownership in name only, like we have with health insurance companies. Individuals must be free to acquire and dispose of their assets according to their own druthers.

Otherwise, the bureaucrats will always be behind the curve, or outright mis-allocating resources, as they are doing now.

Klein likes to blow air kisses to China, and they *look* good now, but it's because they are essentially starting from scratch, and almost anything they do is going to be shiny and smart and completely modern, but the trick in central planning is making it work over the long haul, when the entrenched entities want to stay entrenched, and the upstarts don't have the political clout necessary to catch the central planner's eye.

Posted by: msoja | January 10, 2011 10:52 AM | Report abuse

eggnogfool, I thought roughly the same thing, but concluded that that can't be how it works because it's such an obvious solution that somebody must have thought of it already.

Actually, this seems like a pretty good target for a bi-partisan piece of legislation to come out of the current House. It's not an issue that's overtly political and everyone can make a big show about putting aside their differences to "get things done". Granted, it's hard to spin this as an issue so that it gets people excited about it, but members of both parties like a news cycle about how bipartisan they are every once in a while if it's not a wedge/campaign issue.

Posted by: MosBen | January 10, 2011 11:02 AM | Report abuse

"Imagine someone was given property on Fifth Avenue 50 years ago, but they don't use it and can't sell it,"

Only that's not really the right analogy, is it?

It's more like Macy's let me run their 34th Street flagship store, and I haven't changed the inventory, the decor or the light bulbs since I got it in 1954. But when anybody from Macy's asks me what I'm doing with the store, I go and talk to my best friend, the wife of Macy's owner, and get those questions stopped.

These companies don't own this prime real estate. We do. So, the question is why we are letting the squatters dictate how it is used, instead of renting it out to someone who will make something of it!

Posted by: theorajones1 | January 10, 2011 11:14 AM | Report abuse

"China: Do you think it's letting its information infrastructure stagnate because it's a bureaucratic hassle to get the permits shifted? I rather doubt it."

Not knowing anything specific about the subject, I would imagine that the way China allocates its information infrastructure is (i) nothing like ours, (ii) an interesting story, and (iii) deeply flawed.

Posted by: ostap666 | January 10, 2011 11:23 AM | Report abuse

"Instead, the hope is that current owners of spectrum will give it up voluntarily. In exchange, they'd get big sacks of money. If a slice of spectrum is worth billions of dollars to Verizon but only a couple of million to a few aging TV stations - TV stations that have other ways to reach most of those customers - then there should be enough money in this transaction to leave everyone happy."

Yup. That's exactly how it should work. And if/when another new innovation comes along that proves more profitable, the spectrum will be sold again.

Posted by: justin84 | January 10, 2011 11:31 AM | Report abuse

--*[I]f we're going to keep a good political system from becoming an economic handicap, there are going to be a lot of decisions like this one that need to be made.*--

That's always the commies' dilemma, innit?

And it can never be solved, at least not within the bounds of said political system. Where politicians meddle, there is the political handicap. It is itself.

And the politicians never relinquish that which they once get their mitts on.

The free market could solve any spectrum problem in a trice, but it will never get the chance.

Posted by: msoja | January 10, 2011 11:39 AM | Report abuse

"The free market could solve any spectrum problem in a trice, but it will never get the chance."

"Get the government out of the spectrum biz, leaving people free to buy and sell slices of it in the free market."

It would be kinda cool if the government got out of the spectrum biz. We could all broadcast over whatever frequencies we wanted to!

Not sure how the free market would resolve that, but I'm sure msoja sees some way for it to happen without government intervention.

(I've got soul, but I'm not msoja.)

Posted by: rt42 | January 11, 2011 10:12 AM | Report abuse

--*Not sure how the free market would resolve that*--

I'm sure you aren't.

But your lack of imagination is hardly an argument against the idea.

People are actually quite good at cooperating, when allowed to do so.

Posted by: msoja | January 11, 2011 11:46 AM | Report abuse

Clearly, msoja needs to learn some history and maybe read up on natural monopolies. I might suggest reading up on Wolfman Jack
http://en.wikipedia.org/wiki/Wolfman_Jack

In any case, the spectrum is a commons and must be managed.

Posted by: juddrogers | January 11, 2011 1:01 PM | Report abuse

"But your lack of imagination is hardly an argument against the idea."

True - because I'm the one arguing *against the idea.

However, if you as the advocate of this approach can't produce anything better than a vague 'I'm sure it would work out somehow' blurb when I point out a fundamental problem, that IS an argument against the idea.

Maybe we'd like to know HOW we'd know it would work out better than at present if we went your route?

Posted by: rt42 | January 11, 2011 3:10 PM | Report abuse

--*natural monopolies*--

I'm not worried about them.

As it is, the management of the "commons" is being bungled, as it must be when no one and everyone "owns" it.

I rather more trust the private sector for a number of reasons, one being that if I choose not to partake of their services, they won't force to pay anyway, or threaten to seize my assets or throw me in jail.

Posted by: msoja | January 11, 2011 8:37 PM | Report abuse

--*[I]f you as the advocate of this approach can't produce anything better than a vague 'I'm sure it would work out somehow' blurb when I point out a fundamental problem, that IS an argument against the idea.*--

I believe your argument was, "We could all broadcast over whatever frequencies we wanted to!"

While that certainly would be possible, just as it is certainly possible for everyone to go around punching each other in the nose, it is really a taking-things-to-nonsensical-extremes sort of argument.

Take the Internet, for instance. Ponder.

Posted by: msoja | January 11, 2011 8:44 PM | Report abuse

"I rather more trust the private sector for a number of reasons, one being that--"

--you're an Ayn Rand cultist who plays dress-up in toy boats.

Posted by: pseudonymousinnc | January 12, 2011 12:27 AM | Report abuse

--you're an Ayn Rand cultist who plays dress-up in toy boats--

Well, that's an argument.

Did you notice that one of Loughner's allegedly favorite books was by Rand? Yeah, Marx, Hitler, Orwell, Bradbury, Dodgson, and Rand.

It's strange, but I wonder if "words have no meaning", which of those books did he read? Or understand.

I think the guy crafted his profiles, including the little skull shrine in the back yard, just to mess with people's heads.

I can only imagine how badly he messed with yours, as lopsided as it is.

Posted by: msoja | January 12, 2011 12:49 AM | Report abuse

--*We could all broadcast over whatever frequencies we wanted to!*--

As a matter of fact, we could all do that now.

Posted by: msoja | January 12, 2011 1:05 AM | Report abuse

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