Alfred Kahn, SURs, and new approaches to radio regulation

I have at last finished writing up a Silicon Flatirons meeting on rules for inter-channel radio interference (web page, PDF). Reflecting on the event, I was struck again by the contrast Phil Weiser noted last year [1] between the success of airline deregulation, and the halting progress in doing the same for “spectrum”.

The meeting showed there was broad support for taking receivers into account more explicitly when drafting rules, for example by regulating resulting signal levels rather than the customary approach of specifying rules for individual transmitters. This approach focuses on the results of transmission – which includes interference, the bone of contention in most radio regulation debates – rather than the transmission itself.

Ofcom, the UK communications regulator, took an interference-based approach to licensing by creating Spectrum Usage Rights, also known as SURs [2]. However, SURs were roundly rejected by the cellular operators. Ofcom chose not to impose SURs on the mobile industry, on the premise that the goal of SURs was to improve the certainty of the license holders for their benefit, not the regulator’s benefit.

While there are many other reasons for the cellcos to reject SURs (the problems SURs address, like uncertainty about likely uses and technologies, or disparate uses in adjacent channels, are largely absent in cellular bands), it is clear that Ofcom deferred to the interests of incumbents – potentially at the cost of consumers or new entrants. One of the conclusions of a 2007 report for the European Commission on radio interference regulatory models [3] came to mind:

“Technology and service-neutral licensing (as would be supported by interference-based licensing techniques) offers significant benefit for end-users but not necessarily for spectrum owners and network providers.”

In an essay in honor of Alfred Kahn’s 90th birthday, Phil Weiser observed that airline regulation (where Kahn, the "Father of Airline Deregulation," made his name) and spectrum regulation share some basic characteristics: both regimes emerged from an effort to protect established interests; both limited output by restricting the use of the resource in question; and in both cases, early academic criticism calling for regulatory reform went unheeded. In making the case for Kahn as a political entrepreneur, Weiser argues that he “pursued the objective of eroding the airline industry’s commitment to the legacy regulatory regime by both undermining the manner in which it protected established incumbents and bolstering the strength of those interests that would benefit from deregulation.”

The radio incumbents Weiser had in mind were the broadcasters and not the cellular companies – but it’s not too much of a stretch to attribute at least some of the resistance to new methods of radio regulation to the New Incumbents.

REFERENCES

[1] Phil Weiser (2009), “Alfred Kahn as a Case Study of a Political Entrepreneur: An Essay in Honor of His 90th Birthday.” Journal Network Economics, 2009. Abstract at SSRN. The paper was first delivered at a conference at Silicon Flatirons in Boulder on September 5, 2008.

[2] See e.g. William Webb (2009), “Licensing Spectrum: A discussion of the different approaches to setting spectrum licensing terms” (PDF); and Ofcom (2008), “Spectrum Usage Rights: A Guide Describing SURs” (PDF)

[3] Eurostrategies and LS telcom, “Study on radio interference regulatory models in the European Community” 29 November 2007 (PDF)