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

• Stamps and stampholders: a third way to regulate radio operation

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.

Better Radio Rights

Demand for wireless services is growing relentlessly, but the ambiguous definition of rights and unpredictable enforcement has led to prolonged inter-service interference disputes that impede innovation and investment.

Silicon Flatirons organized a conference on this topic in DC a couple of weeks ago. The goal was to explore how radio operating rights could best be defined, assigned and enforced in order to obtain the maximum benefit from wireless operations. The event web site has links a fascinating set of position papers prepared by the panelists. There’s also a compendium that collects them all in one place (PDF).

Kaleb Sieh and I proposed (position paper, full paper on SSRN) an approach to radio operating rights based on three principles: (1) aim regulation at maximizing concurrent operation, not minimizing harmful interference; (2) delegate management of interference to operators; (3) define, assign and enforce entitlements in a way that facilitates transactions.

We argue that radio rights should be articulated using transmission permissions and reception protections, defined probabilistically (the Three Ps): transmission permissions should be based on resulting field strength over space and frequency, rather than radiated power at a transmitter; reception protections should state the maximum electromagnetic energy an operator can expect from other operations; both are specified probabilistically. This formulation of operating rights does not require a definition of harmful interference, and does not require receiver standards.

Since any initial entitlement point is unlikely to be optimal, the regulator should facilitate the adjustment of rights by: limiting the number of parties to a negotiation should be limited by minimizing the number of recipients, and enabling direct bargaining by effective delegation; recording a complete and current description of every entitlement in a public registry; stipulating the remedy (injunctions or damages) that attaches to an operating right when it is issued; the regulator refraining from rulemaking during adjudication; leaving parameter values unchanged after an entitlement has been defined, although values may be adjusted though bilateral negotiation between operators, and the regulator may add new parameters at license renewal.