Sunday, June 26, 2011

The LightSquared Mess Shouldn’t Count Against Coase

It seems there’s a new meme floating around DC: I’ve been asked from both sides of the spectrum rights polemic whether the Lightsquared/GPS situation proves that Coasian make-spectrum-property advocates are crazy because the rights seem to be pretty well defined in this case, and yet the argument drags on at the FCC rather than being resolved through market deals. I suspect the source is Harold Feld’s blog My Insanely Long Field Guide to Lightsquared v. The GPS Guys where he says:

For a spectrum wonk such as myself, it simply does not get better than this. I also get one more real world example where I say to all the “property is the answer to everything” guys: “Ha! You think property is so hot? The rights are clearly defined here. Where’s your precious Coasian solution now, smart guys?”

The “Coasian” position does have its problems (see below), but this isn’t an example of one of them. I think Harold’s premise is incorrect: the rights are NOT well-defined. While LightSquared’s transmission rights are clear, GPS’s right to protection – or equivalently, LightSquared’s obligation to protect GPS receivers from its transmissions – is entirely unclear. There’s no objective, predictable definition of the protection that’s required, just a vague generalities, built into statute (see e.g. Mike Marcus’s Harmful Interference: The Definitional Challenge).

LightSquared’s transmission permissions are in some sense meaningless, since “avoiding harmful interference” will always trump whatever transmit right they have, and there’s no way to know in advance what will constitute harmful interference. I believe that’s a fundamental problem with almost all radio rights definitions to date, and why I’ve proposed the Three Ps.

The “Coasian” position’s real important problems are on view elsewhere:

(1) While negotiation between cellular operators to shift cell boundaries show that transactions can succeed in special cases, there is no evidence yet that transaction costs for disputes between different kinds of service will be low, and thus that negotiations will succeed in the general case. Even if one can ensure that rights are well defined, it may prove politically impossible to reduce the number of negotiating parties to manageable levels since radio licenses are a cheap way for the government to distribute largesse to interest groups. This is most obvious in the case of unlicensed operation, but many licensed services such as public safety and rural communications also result in a myriad of licensees.

(2) The FCC’s ability and proclivity to jump in and change operating rules (i.e. licensees rights) in the middle of the game makes regulatory lobbying more efficient than market negotiation. This may be unavoidable given law and precedent. There is no way for today’s Commission to bind tomorrow’s Commission to a path of action; legislation is the only way to do that, and even statute is subject to change.

(3) A significant chunk of radio services aren’t amenable to market forces since they’re operated by government agencies that can’t put a monetary value on their operations, and/or can’t take money in exchange for adjusted rights. Nobody is willing to quantify the cost of a slightly increased risk that an emergency responder won’t be able complete a call, or that a radar system won’t see a missile, even if those systems have a non-zero failure rate to begin with. And even if the Defense Department were willing to do a deal with a cellular company to enable cellular service somewhere, it can’t take the Cellco’s money; the dollars would flow to the Treasury, so there’s absolutely no incentive for the DoD (let alone the people who work for it) to come to some arrangement.

Wednesday, June 22, 2011

Protection Limits are not "Interference Temperature Redux"

My post Receiver Protection Limits may have left the impression that reception protection limits are similar to the dreaded and ill-fated interference temperature notion introduced in 2002 by the FCC’s Spectrum Policy Task Force.

Receiver protections are part of the "Three Ps" approach (Probabilistic reception Protections and transmission Permissions - see e.g. the earlier post How I Learned to Stop Worrying and Love Interference, or the full paper on SSRN). While both the Three P and Interference Temperatur approaches share a desire to “shift the current method for assessing interference which is based on transmitter operations, to an approach that is based on the actual radiofrequency (RF) environment,” to quote from the first paragraph of the Interference Temperature NOI and NPRM (ET Docket No. 03-237), the Three Ps approach differs from Interference Temperature in four important ways:

1. The Three Ps focus on solving out-of-band, cross-channel interference, whereas Interference Temperature is concerned with in-band, co-channel operation

2. The Three Ps are used to define new operating rights, whereas Interference Temperature tried to open up opportunities for additional operations in frequencies allocated to existing licensees

3. The Three Ps do not grant second party rights, whereas Interference Temperature permits second party operation.

4. Three Ps rights are probabilistic, whereas Interference Temperature definitions are deterministic.

Receiver protection limits: Two Analogies

I argued in Receiver protection limits that there are better ways to manage poor receivers causing cross-channel interference problems than specifying receiver standards. Here are two analogies to sharpen one’s intuition for the most appropriate way to handle such situations.

Cities increase the salinity of rivers running through them, affecting downstream agriculture. However, the choices that farmers make determine the degree of harm; some crops are much more salt-tolerant than others. In order to ensure that farms bear their part of the burden, regulators have a choice: they can either regulate which crops may be grown downstream, or they can specify a ceiling on the salinity of the water leaving the city limits, leaving it up to farmers to decide whether to plant salt-tolerant crops, perform desalination, or move their business elsewhere. Limits on salinity protection are a less interventionist solution, and don’t require regulators to have a deep understanding of the interaction between salinity, crops and local geography.

Sound pollution is another analogy to radio operation. Let’s imagine that the state has an interest in the noise levels inside houses near a freeway. It can either provide detailed regulations prescribing building set-backs and comprehensive specifications on how houses should be sound-proofed, or it could ensure that the noise level at the freeway-residential boundary won’t exceed a certain limit, leaving it up to home-owners to decide where and how to build. Again, noise ceilings are a simple and generic regulatory approach that does not limit the freedom of citizens to live as they choose, and that does not require the regulator to keep pace with ever-evolving technologies to sound-proof buildings.

Receiver protection limits: a better way to manage interference than receiver standards

Radio interference cannot simply be blamed on a transmitter; a service can also break down because a receiver should be able to, but does not, reject a signal transmitted on an adjacent channel.

More on this topic in subsequent posts:
Receiver protection limits: Two Analogies (June 2011)
Protection Limits are not "Interference Temperature Redux" (June 2011)
The LightSquared Mess Shouldn’t Count Against Coase (June 2011)
Licensing radio receivers as a way to facilitate negotiation about interference (August 2011)
Incremental management of reception: When protection limits are not sufficient (February 2012)
Four Concerns about Interference Limits (May 2012)
Transmitter versus receiver specifications: measuring loudness versus understanding (July 2012)
Testimony: Harm Claim Thresholds (November 2012)
Receiver Interference Tolerance: The Tent Analogy (November 2012)
I have also written a two-page summary document, see

The LightSquared vs. GPS bun fight is a good example of this “two to tango” situation. GPS receivers – some more so than others – are designed to receive energy way outside the allocated GPS bands which means that operation in the adjacent band due to a new service like LightSquared can cause satellite location services to fail. Without the LightSquared transmissions, there wouldn’t be a problem; but likewise, if GPS receivers were designed with the appropriate filters, they could reject the adjacent LightSquared transmissions while continuing to receive the satellite location signal and function normally. [1]

While the responsibility for interference is, in theory, shared between transmitters and receivers, radio regulation has traditionally placed the onus on a new transmitter to fix any problems that may arise. [2] As I will argue, receiver standards are an impractical response; limits on reception protection, formulated in terms of the RF environment rather than equipment performance, are preferable.