Wednesday, August 17, 2011

Licensing radio receivers as a way to facilitate negotiation about interference

It’s a curious fact that, while receivers are just as much responsible for breakdowns in radio operations as transmitters [a], regulation is aimed pretty much exclusively at transmitters [b].

Since one can’t ignore the receivers in practice, arguments over interference almost invariably turn to receiver standards. Even if receiver standards were a good idea (and I don’t think they are - see my post Receiver protection limits: a better way to manage interference than receiver standards), the ability to adjust receiver performance by fiat or negotiation is limited when receivers are operated independently of transmitters.

I suspect that receiver licenses may be necessary to reach the optimum outcome in at least some cases. This post is going to take that idea out for a first test drive.

Regulators evidently have managed without receiver licenses (beyond their use as a way to fund traditional broadcasting) so far. Why introduce them now? I’ll give my usual answer: the dramatically increased demand for wireless is squeezing radio operators of widely varying kinds together to an unprecedented extent, and we no longer have the luxury of the wide gaps that allowed regulators to ignore receiver performance, and ways of managing it.

Follow-up post

The Problem

I am going to focus on the case where (1) a more efficient economic outcome can be achieved by negotiating a change in receiver performance, and (2) receivers operate independently of transmitters. [c]

Here are three examples where efficient negotiations are impossible today, and where the assignment of a limited number of receiver licensees would give adjacent operators someone to talk to about finding the economic optimum solution:

1. LightSquared would like to build a terrestrial cellular network adjacent to GPS frequencies, but GPS receivers have been built on the assumption that this band is quiet; since anyone can build, sell or buy a GPS receiver, there is an essentially unlimited numbers of parties LightSquared has to negotiate with

2. US regulators are thinking about delivering shifting weather information off a satellite band, freeing it up for other uses. However, no-one knows how many unlicensed satellite weather receivers have been deployed, let alone how to negotiate with them about relocation.

3. If TV sets had better receivers, whitespace devices operating next to them could use higher power, and provide better service. However, there are no standards for TV receivers, and nobody for whitespace device manufacturers or service providers to negotiate with –TV broadcasters don’t control the receivers, and nobody can sign an agreement on behalf of all the receiver manufacturers

The Receiver Licensing Solution

The proposal here is to require receivers to be authorized, just like transmitters are. Licenses would be issued, either by assignment or by rule.

I think licenses would be expressed most effectively in terms of reception protection limits that would be afforded to receivers, although regulators could choose to condition licenses on performance standards. Devices wouldn’t have to operate to these protection limits; manufacturers could choose to build cheap receivers that would fail even when third party signals were below these limits. However, receivers wouldn’t be afforded any protection in such a case.

If an operator in an adjacent band wanted to increase their power above the protection limit, it would then have to compensate the receiver licensee.

The regulator should issue a limited number of licenses: many enough to ensure competition and innovation, and few enough to make negotiation possible by limiting transaction costs. The literature on what makes for a competitive market is exceedingly complicated, and I’m not aware of work that has calculated the number of parties above which negotiation costs become prohibitive; my guess is that half a dozen licenses would probably be sufficient to avoid market concentration problems, and small enough to keep transaction costs low.

Receiver rights (licenses) could be assigned via auction; this would ensure that those who had them valued them most highly. For communications systems like cellular, transmission and reception rights would typically be kept together in a bundle; for broadcast systems like GPS, one would probably typically separate them.

Ideally the regulator should be neutral about who bid for receiver licenses. Thinking about the equipment value chain (chip manufacturer – equipment manufacturer – vendor – operator) helps predict where ownership of reception licenses might end up. The nexus with the fewest players is probably the most efficient place to hold the licenses; thus, if there were 4-8 reception licenses, they’d probably be bought by chip manufacturers.

(Auctioning receiver licenses to manufacturers can be contrasted with the zombie concept of unlicensed band managers or private commons, i.e. that one or more companies like Google and/or Microsoft would buy a license and turn the band over to unlicensed, covering the cost by charging per-device fees to manufacturers selling equipment for this band. I’ve seen no indication that any company is willing to try this; it’s remained a pipe dream of some activists and regulators. Moving the payment up the value chain is more likely to succeed, since manufacturers make money directly; and having a limited number of licenses – or in this case, type approvals – will spread the risk. In fact, doing it this way might (just might) make private commons practicable.)

I was led to think about reception licenses because it enables negotiation when receivers aren’t tied to transmission licenses. However, it also has the benefit of providing a mechanism to implement a “ratchet” in reception protections or receiver standards, i.e. a way to manage change in the conditions under which receivers have to operate. Reception licenses would have fixed terms just like transmission licenses do, and the conditions associated with them could be changed at successive license renewals.


Receivers are not licensed today (as far as I know), presumably for good reasons. There are surely also not-so-good reasons, e.g. “this is the way we’ve always done things” and “we’ve never needed them before.”

The most serious objection, I believe, is that any new regulation always has unpredicted, unwanted side effects. However, risk is unavoidable if a solution is required to a new problem. A cost-benefit trade-off needs to be done; I don’t know where it would end up.

Some may argue that reception licenses would be a restraint on public discourse: by controlling receiver licenses, a government could control who could listen to broadcasts. I don’t see this as a problem: efficiency requires few licenses, which means that end users will not be subject to licensing, and thus control. And in any case, the government can already control the transmission of broadcast information through existing licenses if it wished.

There will be claims that regulators such as the FCC do not have sufficient statutory authority to issue receiver licenses. This may or may not be so; a colleague with a legal background is helping me research this question. Stay tuned.

There will be the usual arguments from Left and Right that such licenses will Harm Innovation and the Consumer by reducing number of competitors, or by increasing the amount of regulation, respectively. This shouldn’t be a problem if the number of licenses is large enough to protect competition in the value chain segment where they are issued, e.g. to manufacturers; and a great deal of competition and innovation will continue unfettered in other parts of the chain, e.g. in end user applications. If licenses use reception protection limits rather than receiver performance standards, the terms will be broad enough to leave a great deal of discretion in the hands of both operators and manufacturers.


I don’t know if reception licenses are worth introducing. However, I’m surprised that it hasn’t attracted more attention. It may be an idea whose time has come.


[a] To see why responsibility is shared, imagine the case of a two systems in adjacent frequency bands that are coexisting successfully. If one then changes the receivers in band A so that they can no longer filter out the signals of transmissions in adjacent channel B, the service in band A will be degraded even though the transmissions that “cause” the interference haven’t changed.

[b] The burden on transmitters is exemplified by the international definition of interference in Article 1 of the ITU Radio Regulations, para 1.166: “The effect of unwanted energy due to one or a combination of emissions, radiations, or inductions upon reception in a radiocommunication system, manifested by any performance degradation, misinterpretation, or loss of information which could be extracted in the absence of such unwanted energy.” Note that only effects due to transmission are counted, not those due to poor receivers. Licensing appears to be conditioned on transmission, though receivers are mentioned in the chapter on licenses (Article 18).

[c] Cases where receivers are not controlled by transmitter licensees include television, GPS navigation devices, and weather satellite data receivers (EMWIN). These are usually broadcast systems; the operators of communication systems usually control both transmitters and receivers, since any comms device necessarily includes both. (In some broadcast systems the receivers are controlled by the licensee, e.g. satellite audio and video services like SiriusXM, Echostar and DirectTV.)

It’s not quite so black-and-white, though: in Article 15 the list of interference avoidance techniques includes the choice of receivers (para 15.6), and Article 3 requires that “all technically and economically justifiable measures have been taken . . . to reduce the susceptibility to interference of the … receiving equipment” (para 3.3). Still, the detailed rules and requirements deal exclusively with transmitting stations.

No comments: