Spectrum Abundance and the Choice Between Private and Public Control

Abundant Networks and Control

The use of spectrum raises important questions about control and regulation While unlicensed spectrum suggests a lack of controlling agents, it contrasts sharply with scenarios involving government or private oversight In an unregulated environment, users would have the freedom to communicate without imposed limits, potentially leading to a chaotic landscape However, this raises concerns about whether such a system can support the abundant networks envisioned by commons advocates, and the conclusion is that it cannot.

The Importance of Interference

Wireless transmissions are inherently susceptible to interference, which challenges the notion of completely open access to frequencies Every device, from cordless phones to light switches, emits energy that generates minor interference for nearby users While this interference is often negligible and does not noticeably affect signal quality, the primary concern lies in the potential for more substantial interference that could disrupt communication.

47 See Benjamin, supra note _ [Logic of Scarcity], at 11; Bruce M Owen & Gregory L Rosston,

Spectrum Allocation and the Internet, in Cyber Policy and Economics in an Internet Age, (William H Lehr and

Lorenzo M Pupillo eds 2002) [page 14 of the manuscript (available at http://siepr.stanford.edu/papers/pdf/01- 09.pdf).

48 See id at 11-13. set of radio waves overlapping with another set to a sufficient degree that a receiver can hear neither clearly.

Insofar as such harmful interference is likely to arise in any given band, truly open access

Unrestricted communication can lead to an overwhelming "tragedy of the commons," where individual users prioritize their own messages over others, creating redundancy and drowning out important information This behavior results in costs that affect all users, while the benefits are concentrated in the hands of the message senders Without appropriate constraints on communication, the system risks becoming chaotic and ineffective.

When unlicensed users transmit in a shared spectrum band, they reap the benefits of their transmissions, while the negative effects of potential interference are distributed among all users This creates a rational incentive for individual users to increase their transmissions, as they do not bear the costs of interference incurred by others Consequently, this behavior leads to congestion in the spectrum band, exemplifying the ‘tragedy of the commons’ phenomenon.

Unlicensed spectrum faces significant challenges, as highlighted by Durga P Satapathy and Jon M Peha, who discuss the "Tragedy of the Commons," where the lack of incentives for device designers to conserve shared resources can lead to over-saturation The FCC Spectrum Policy Task Force warns that without a pricing mechanism, free access can result in interference among users, further exacerbating the issue Additionally, Thomas W Hazlett points out that open access systems often fail due to congestion and the costs associated with avoiding collisions.

The article discusses significant advancements in the management of unlicensed spectrum, highlighting various studies and algorithms aimed at improving coexistence among devices Key contributions include the development of etiquette modifications for unlicensed spectrum by D P Satapathy and J M Peha, as well as a novel coexistence algorithm for fixed power devices presented at the 2000 IEEE Wireless Communications and Networking Conference Additionally, the performance of unlicensed devices utilizing a spectrum etiquette was examined in a 1997 IEEE Globecom paper The importance of wireless communications and coexistence strategies in smart environments is emphasized by Jon M Peha, while S Michael Yang and colleagues explore the evolution of usage rules and interference mitigation techniques for unlicensed frequency spectrum.

%20unlicesed%20 frequency%20spectrum%20research%20paper4.pdf; Gregory L Rosston, The Long and Winding

Road: The FCC Paves the Path with Good Intentions 22, Stanford Institute for Economic Policy Research

The introduction of unlicensed spectrum necessitates a central authority to establish protocols that ensure users act responsibly, as the absence of constraints may lead to a greedy approach among users.

The government acknowledges that the unlicensed spectrum established by the FCC is not a free-for-all for transmissions The FCC enforces specific transmission standards and mandates the certification of all equipment utilized within this spectrum.

Despite regulatory limits, users frequently experience significant interference on the unlicensed spectrum, particularly with citizens band (CB) radio, which was designed to allow free communication among ordinary people Unlike amateur (or ham) radio operators, who must pass a test and obtain an FCC license, CB radio users were not required to take a test or obtain a license after 1983 The FCC attempted to regulate CB radio by imposing restrictions on power levels and equipment, but this led to a tragedy of the commons, as some users exceeded the permitted power levels, causing interference with other users' communications.

The technical requirements for "Unlicensed National Information Infrastructure" and unlicensed spread spectrum devices are outlined in 47 C.F.R § 15.407(a)(1)—(3) and 47 C.F.R § 15.24, respectively Additionally, the FCC's 1997 amendment allows for the operation of unlicensed NII devices in the 5 GHz frequency range, as detailed in 12 F.C.C.R 1576, ảả 32—55 Scholars like Benkler and Buck emphasize the constraints imposed on unlicensed spectrum, highlighting the regulatory landscape surrounding these technologies.

The FCC's regulations for the Unlicensed National Information Infrastructure mandate that transmissions within the 5.15-5.25 GHz band must not exceed a peak power spectral density of 2.5 mW/MHz Additionally, emissions in adjacent bands are required to be attenuated by a minimum of 27 decibels, ensuring compliance with stringent technical standards.

53 See, e.g., Hazlett, supra note _, at 498-99 (

Unlicensed entry often leads to overcrowding in wireless communication bands Initially, the 900 MHz ISM band became congested, prompting the FCC to open the 2.4 GHz unlicensed band However, this band also experienced crowding in major markets, resulting in the Commission's decision to allocate an additional 300 MHz for the U-NII 5 GHz band.

55 See 47 U.S.C § 307(e)(1); Elimination of Individual Station Licenses in Radio Control Radio Services and Citizens Band Radio Service, 48 Fed Reg 24,884 (1983) (codified at 47 C.F.R §§ 95.401, 95.407(f), 95.420 (1994)).

The Federal Communications Commission (FCC) has proposed amendments to Parts 2 and 97 of its rules, mandating type acceptance for equipment marketed for the Amateur Radio Service Additionally, the amendments aim to prohibit the sale of external radio frequency power amplifiers that can operate within the frequency range of 24 to 35 MHz.

67 F.C.C.2d 939, ảả 5-6 (1978) (noting serious interference caused by illegal use of powerful amplifiers on the citizens band); FCC News Release, Federal Communications Commission Unveils Joint Criminal Investigation,

In 1997, the case 1997 WL 602954 highlighted issues stemming from CB amplifiers operating at illegal power levels, raising concerns about their impact on electronic equipment Similarly, the 1978 report Radio Frequency (RF) Interference to Electronic Equipment emphasized that amplifiers boosting CB set output power in violation of Commission Rules have led to significant interference problems.

Citizens band users, in other words, behaved exactly as economic theory would predict, with the result that many users became crowded out 57

Advocates for commons arrangements acknowledge the risks of interference but argue that innovative network designs can effectively mitigate these dangers They believe that, with the right solutions in place, a commons can become the most efficient option for spectrum allocation Consequently, concerns about interference should no longer dictate spectrum policy, making the commons a feasible and attractive solution.

The Design of Abundant Networks

The Commons Advocates’ Arguments Against Property Rights Spectrum

Advocates for capacious networks highlight their potential value for users, yet express concerns that the establishment of private property rights in spectrum may hinder their creation They argue that private property rights can introduce costs that deter entrepreneurs from pursuing the most efficient solutions While an abundant network is considered the optimal use of spectrum, commons advocates believe that these associated costs ultimately render the development of privately-owned abundant networks unfeasible.

Costs of Allocating Spectrum in Small Allotments

Commons advocates argue against property rights in spectrum primarily due to the high transaction costs involved For example, if the FCC divides 100 megahertz of spectrum into 100 individual one-megahertz units, creating a comprehensive network that utilizes all 100 megahertz would require extensive negotiations with each individual owner of a one-megahertz slice This complexity can hinder efficient spectrum utilization and innovation.

82 See Buck, supra note _, at 11 (

Establishing a commons for spectrum usage could provide numerous advantages, such as increased flexibility for local adaptations and a stronger motivation to innovate technologies for spectrum sharing, including spread spectrum radios and ultra-wide-band technology Moreover, this approach could leverage dispersed information on spectrum usage, enhance efficient transactions among competing users, and enable economies of scale for cross-boundary applications.

Yochai Benkler, Siren Songs and Amish Children: Autonomy, Information, and Law, 76 N.Y.U L Rev 23, 62

Spectrum commons networks are unlikely to replace fully owned wired and wireless networks for real-time communications with guaranteed quality of service However, they will support diverse applications, including Internet access, online gaming, on-demand video delivery, and potentially local video conferencing for social gatherings or community meetings.

In this discussion, I utilize 100 megahertz as a representative bandwidth for a robust network; however, it's important to note that this figure is not inherently special, as an effective network could function with a narrower or broader bandwidth Nonetheless, opting for a significantly larger bandwidth could lead to substantial expenses, ultimately increasing the overall cost of developing the proposed networks.

A significant concern in the development of broadband networks is the potential for holdouts among spectrum owners If any spectrum owner refuses to negotiate, the entire network project could be jeopardized Each owner may prefer to wait and see what others receive in terms of compensation, aiming to secure a larger share of the overall value generated by the combined spectrum This strategic behavior introduces additional costs and complexities in establishing robust broadband networks.

84 See Benkler, supra note _, at 364-65.

85 Indeed, holdout costs are often treated as a subset of transaction costs.

The fragmentation of spectrum into smaller parcels can lead to the holdout problem, where a license holder of a prime spectrum area may demand excessive compensation to relinquish their license to a potential aggregator.

Holdout costs should not turn profitable networks into unprofitable ventures for aggregators, as issues arise when holdouts overestimate the surplus to be shared and demand fees that eliminate the aggregator's profit Rational parties are expected to negotiate agreements that allow the aggregator to remain profitable, thus incentivizing the creation of abundant networks Consequently, holdout costs represent a distributional challenge regarding how much value the aggregator must concede However, transaction costs may surpass the network's surplus, as each party seeks compensation for their time, potentially leading to negotiations that yield no agreement Unlike transaction costs, holdout fees aim to capture the value generated by the enterprise, not the negotiation expenses A rational holdout would typically avoid options that hinder the creation of an abundant network, as this would mean missing out on potential gains Therefore, while transaction costs may exceed the value of a network, holdout costs should not.

The potential for rational holdouts can significantly elevate transaction costs, even if they do not intend to obstruct network creation Negotiating with a holdout often requires the buyer to demonstrate the surplus generated by the project, which adds complexity and expense to the process As highlighted by Robert Cooter, these negotiation costs can be substantial due to the need for evidence and persuasion Furthermore, the holdout's insistence on additional negotiations can lead to a situation where the costs incurred exceed the remaining surplus, ultimately resulting in a loss for both parties involved.

Higher holdout costs for one option compared to another can lead to a similar distorting effect as transaction costs, influencing entities to prefer the option with lower holdout costs.

In his 1989 article, "Economic Analysis of Legal Disputes and Their Resolution," L Rubenfeld discusses the significance of holdout costs, emphasizing that these costs diminish the probability of a party reaching a resolution in legal disputes.

Transaction and holdout costs significantly contribute to the expenses associated with developing abundant networks While certain uses may offer greater profitability despite high transaction costs, this is not universally applicable The challenge lies in the fact that, at times, the most efficient alternatives may be overlooked because their advantages do not sufficiently compensate for these additional costs.

The key takeaway is that the costs associated with selling spectrum property rights stem from the fragmentation of spectrum into smaller units, rather than the selling process itself By allotting spectrum in larger blocks, such as 100 megahertz, the government can facilitate the development of robust networks with minimal transaction and holdout costs This approach allows for a streamlined negotiation or auction process and enables the government to implement either public or private ownership models To lower the barriers for creating expansive networks, the government should consider allocating spectrum in larger chunks and distributing them accordingly.

The allocation of spectrum in large chunks does not guarantee the emergence of abundant networks, as both the policy of spectrum distribution and the prediction of network abundance are debatable Importantly, transaction and holdout costs arise not from property rights but from the fragmentation of spectrum into smaller frequency slices Consequently, entities may opt for less efficient alternatives to avoid high holdout costs, even when more efficient options are available.

88 See, e.g., Harold Demsetz, When Does the Rule of Liability Matter?, 1 J Legal Stud 13 (1972) (noting that transaction costs can have this effect); Michael A Heller & Rebecca S Eisenberg, Can Patents Deter

Innovation? The Anticommons in Biomedical Research, 280 Science 698, 698-99 (1998) (noting that the transaction costs of obtaining agreements from many different property owners can thwart efficient development).

Benkler argues that private property rights may hinder the development of abundant networks by making it difficult to assemble a wide range of frequencies, potentially resulting in the control of a single band by equipment manufacturers He suggests that without regulatory intervention, these manufacturers are unlikely to provide competitors with nondiscriminatory access to their spectrum However, this assumption relies on the notion that the spectrum will be divided into small slices, which complicates frequency assembly In contrast, the allocation of broader frequency swaths that can adequately support abundant networks is compatible with property rights, indicating that the aggregation challenges Benkler anticipates may not be an issue within a property rights framework.

Fears that, Even with Big Allotments, Property Rights

Evaluating Government Versus Private Control of Abundant Networks

Engineers may be able to develop networks capable of supporting an effectively infinite number of users through computational complexity and cooperation Such abundant networks would require devices to be designed to strict specifications and would eliminate the need for disaggregation, thereby avoiding associated costs Regarding spectrum ownership, both private and government control can lead to the creation of abundant networks, provided that the spectrum is allocated in sufficiently large portions If these networks prove to be as efficient as claimed, it is likely that private spectrum owners will invest in their development.

While private owners can establish these networks, it doesn't necessarily imply they are the most suitable entities for spectrum control The subsequent phase involves evaluating various control models.

In evaluating the potential models for an abundant network, we consider five distinct options: a single network managed by the government, a single network overseen by a private entity, multiple networks governed by the government, multiple networks operated by private entities, or a combination of both government and private control over various networks If a successful abundant network can be designed and implemented, it is crucial to assess the implications and effectiveness of each of these models.

The traditional rationale for favoring competition among private owners in resource allocation is widely recognized, as private companies, driven by profit motives, are incentivized to identify the most efficient and desirable uses of resources In contrast, government entities lack this incentive, often prioritizing the interests of their constituencies, which may not always align with the public good, especially when influenced by well-organized private interests A significant drawback of private ownership is the potential for concentrated power, as monopolies can emerge, undermining competition and efficiency Additionally, government involvement in the market can foster rent-seeking behavior among businesses attempting to gain favor, complicating the allocation process.

The unique dynamics of familiar arguments emerge within the spectrum context, particularly concerning commons advocates' proposals for abundant networks This distinctiveness largely stems from the characteristics of the protocols that will shape the network Therefore, it is essential to examine the relevant features of these specific protocols and the broader implications of protocols in general.

Protocols and Lobbying

For the purposes of this discussion, I will assume that proponents of the commons are accurate in their belief that the engineering of these networks will function as intended and that users will appreciate and desire to engage with them In the following section, I will explore the potential success of these networks and the implications of that outcome.

Protocols inherently come with limitations and specific technological choices For genuine open access, where anyone can transmit freely, limiting protocols are unnecessary However, when we impose restrictions based on adherence to certain rules, these limitations become integral to the protocols we implement.

Limitations in network services often lead to choices that favor certain functionalities while disadvantaging others For instance, power restrictions, similar to those imposed by the FCC in unlicensed bands, can render some services, like traditional broadcasting, unfeasible and complicate others, such as long-distance point-to-point communications Conversely, these limitations may have no impact on alternative communication methods, such as multi-hop packetized transmissions, which can thrive in an abundant network environment.

To ensure the effective operation of abundant networks, protocols must be meticulously designed with specific parameters addressing various issues User devices need to function as repeaters, necessitating designated periods of inactivity for sending or receiving messages Key considerations include determining the optimal duration and frequency of these quiet times, the required queuing mechanisms, and whether the protocol should implement a listen-before-talk or listen-while-talk approach for collision avoidance Additionally, it is essential to establish conditions under which a device may decline to act as a repeater, such as low battery levels.

When selecting protocols for a robust network, numerous factors must be considered, including antenna design, error correction standards, and methods to mitigate signal propagation challenges The complexity of these choices highlights the extensive list of potential limitations To address these intricate issues, three major international conferences are held annually, dedicated to the design of advanced networks.

The multi-hopping technique enhances network capacity by enabling spatial domain reuse of concurrent, physically separated multihop sessions in large-scale networks, effectively reducing interference This approach not only conserves transmit energy resources but also boosts overall network throughput, although it requires a more complex routing protocol design.

111 See supra note _ and accompanying text.

112 See Ian Akyildiz, Weilian Su, Yogesh Sankarasubramaniam, and Erdal Cayirci , A Survey on Sensor

Networks, IEEE C OMM 102 (Aug 2002) (describing some of the many open research questions pertaining to the design of low-power multi-hop mesh networks);

Creating protocols for abundant networks involves numerous choices and trade-offs, as highlighted by Rappaport et al The ongoing debates present competing approaches to nearly every issue related to these protocols Determining the necessary inclusions, selecting appropriate methodologies, and establishing permissible ranges constitutes a complex and challenging task, requiring careful consideration of various options.

The choices made in technology protocols highlight the inherent tradeoffs, revealing that no platform is completely neutral Each protocol influences the success of different devices and services, leading to a landscape where some companies thrive while others falter For instance, in mobile telephony, the evolution from analog to standards like CDMA, TDMA, and GSM illustrates how the selection of a standard significantly impacts the fortunes of both standard creators and service providers Even less defined standards, such as those for ultra-wideband service, can result in clear winners and losers among companies.

The protocols' characteristics create opportunities for lobbying, as the selection of networking standards for a robust network significantly impacts potential product and service providers Each provider has a vested interest in influencing these standards to benefit their offerings.

The IEEE Infocom conference, hosted annually by the IEEE Computer and Communications Societies, focuses on advancements in networking and communications Additionally, the Mobicom conference, which takes place each year, emphasizes mobile computing and networking innovations Lastly, the Mobihoc conference is dedicated to mobile ad hoc networking and computing, also held annually For more information, visit their respective websites: IEEE Infocom, Mobicom, and Mobihoc.

115 See Akyildiz et al., supra note _.

116 See Hazlett, supra note _ [The Wireless Craze], at 495, 498 (“Disputes over standards underscore that

‘open access’ is only nominally open, and that scarcity continues to force trade-offs between radiated power levels, equipment cost, functionality (e.g., mobile vs fixed), bandwidth, and signal reliability.”).

Inherent in any agreement to follow specific technical protocols is an implicit preference for particular network architectures Different protocol designs can facilitate and enhance various types of services, as discussed by Rappaport et al.

Benkler suggests that certain protocols may prioritize optimizing various forms of communication over real-time streaming video capabilities This perspective is further explored in the introduction and section II(B) of the article.

119 TDMA stands for time division multiple access.

120 GSM stands for global system for mobile communications.

1 21 See James B Speta, A Vision of Internet Openness by Government Fiat, 96 N W U L R EV 1553, 1573

Creating spectrum commons can lead to residual government authority, which may foster rent-seeking political behavior, as noted by Speta and Lessig In "The Future of Ideas," Lessig argues that establishing regulators creates targets for influence, allowing organized interests to dominate over unorganized ones This dynamic incentivizes network providers to lobby for regulatory advantages, regardless of whether the regulator is governmental or private However, a private spectrum owner, driven by profit maximization, is more likely to adopt standards that benefit consumers, unlike the government, whose actors may not be directly rewarded for market success Consequently, lobbying efforts from providers are more likely to succeed in a government-regulated environment.

The Federal Communications Commission (FCC) has often been criticized for being "firmly captured by corporations," as acknowledged by its own chairman The history of government spectrum policy reveals numerous instances where private entities have successfully lobbied for preferential treatment through regulation Broadcasters exemplify this trend in spectrum allocation, but similar lobbying efforts have occurred regarding standards as well A notable case is the competition surrounding digital television standards, where companies invested significant resources to influence the FCC's decision in favor of their preferred standard Even after the competing parties reached a consensus on a unified standard, the lobbying battles persisted.

A new conflict emerged regarding the specificity of industry standards, with television manufacturers advocating for a comprehensive standard that includes specific permissible ranges to safeguard their market from competition with computer manufacturers In contrast, the computer industry sought a minimally defined standard that would allow for greater flexibility in product development.

1 122 See Timothy F Bresnahan, New Modes of Competition: Implications for the Future Structure of the

Computer Industry, in C OMPETITION , I NNOVATION AND THE M ICROSOFT M ONOPOLY : A NTITRUST IN THE D IGITAL

Benefits of Private Competition

The previous section emphasizes that competition exists not only among companies creating devices that adhere to specific protocols but also among the protocols themselves, as different protocols can optimize various services and provide diverse options for manufacturers and users While commons advocates often highlight the advantages of competition within the established framework of chosen protocols, there is a more profound level of competition to consider—competition among the protocols themselves, which can serve as a significant source of rivalry.

Competition among protocols and platforms can lead to significant inefficiencies and wasted resources, particularly when the market ultimately converges on a single standard When multiple inferior standards compete, firms invest in developing these subpar options while users spend time learning them, resulting in a deadweight loss The resources allocated to weaker standards are essentially squandered Additionally, the presence of multiple platforms inherently creates costs, as manufacturers must invest more to ensure compatibility across several standards rather than just one If devices operating on different standards cannot interconnect, users face the dilemma of either purchasing services for all platforms or missing out on communication with some individuals.

The primary costs emerge when the market converges on a single standard; however, as long as multiple competing protocols exist, the resources invested in their development, implementation, and usage are not considered wasted Despite the potential for a unified standard, the costs associated with competition will persist.

121134 See Robert P Merges & Richard R Nelson, On the Complex Economics of Patent Scope, 90 Colum

L Rev 839, 870 (1990) (stating that “rivalrous inventive efforts generate a great deal of inefficiency”).

The prevailing belief is that the advantages of competition surpass its disadvantages, particularly in industries with abundant networks where innovation and uncertainty are prevalent In such cases, the benefits of competition are even more pronounced, as it helps identify the most effective protocols amidst varying approaches While inefficiencies may arise if one assumes that the best standard can be predetermined and will remain static, the reality is that it is challenging to ascertain the optimal system beforehand This uncertainty underscores the importance of competition, which serves to generate real-world feedback and drive innovation.

Choosing the right protocols for a robust network can be overwhelming, as no single entity can definitively determine the best options due to the complexity and numerous tradeoffs involved The existence of multiple networks fosters competition among standards and allows for real-world testing, ultimately providing valuable insights into consumer preferences and effective implementations on a large scale With a single network, there is a risk of settling for one set of protocols, leaving other potentially superior options unexplored In contrast, diverse networks enable various standards to compete, allowing users to select their preferred features while engineers can assess the effectiveness of different protocols This competitive environment also facilitates the introduction of new protocols by rival networks, enhancing innovation and user choice.

Competition among network protocols is expected to drive innovation and dynamic efficiency Research indicates that monopolies often hinder innovation, a trend that also applies to networking standards Therefore, a competitive wireless market is likely to foster the development of valuable new services.

Kenneth J Arrow emphasizes that competition serves as the primary driver of innovation, highlighting its role in enhancing economic welfare and resource allocation for invention Additionally, research by Langlois indicates that competition among platforms fosters numerous opportunities for innovation to emerge.

In the context of the Internet and information industries, competition among standards can foster innovation, surpassing the outcomes of cooperative efforts that often lead to minimal, least effective standards This competitive environment is crucial for advancing technology and preserving the fundamental architecture of the Internet.

Empirical evidence indicates that competition, rather than monopoly, is a significant driver of creativity (Era, 2001) This raises questions about the balance of standards in fostering interoperability within the National Information Infrastructure (Aiken & Cavallini).

The overzealous establishment and implementation of official standards, whether through formal processes or government purchasing practices, can hinder the adoption of essential new technologies and services (Kahin & Abbate, 1995).

(such as abundant networks, if they are as wonderful as promised), but also a competitive market for abundant networks is likely to produce continuing innovation 142

The European Community's decision to adopt GSM as the sole standard for wireless telephony contrasts with the FCC's choice to encourage standards competition, which has fostered significant innovation through competing standards like CDMA and TDMA While Europe's approach ensured initial compatibility, it resulted in the selection of a less effective standard Similarly, the competitive landscape in video game platforms among major players like Nintendo, Sega, Sony, and Microsoft has driven both price reductions and innovation This trend continues in wireless networking standards, where competition among private firms and standard-setting bodies has led to enhanced options and improvements for users Although interference poses challenges for these wireless standards, a more structured protocol could mitigate such issues if abundant networks function as intended.

Even in a scenario where testing and innovation are deemed unnecessary, the initial selection of protocols for a dominant network may still optimize services for the majority of users However, competition among multiple networks provides users with more choices, allowing them to cater to the specific desires of smaller population segments For instance, while only a small percentage of users may want the ability to engage in a multi-user, real-time discussion during a live television episode, a single protocol might impose significant trade-offs that could limit this capability Thus, a diverse network landscape can better accommodate varied user preferences.

124143 See See Kathleen M.H Wallman, The Role of Government in Telecommunications Standard-Setting, 8

C OMM L AW C ONSPECTUS 235, 246-47 (2000); Weiser, supra note _, at 586; Theodore S Rappaport, A

Annamalai, R M Buehrer, & William H Tranter, Wireless Communications: Past Events and a Future Perspective,

Technology suppliers can acquire spectrum rights individually or through consortia, allowing for the standardization of preferred systems In the ongoing debate about unlicensed local area networks, a competitive environment would lead to a natural standards competition among HomeRF, Wi-Fi, and Bluetooth networks However, the FCC's block allocation imposes a single set of transmission rules that are a compromise and not optimized for any specific system This approach is based on a theoretical model of public interest, which ultimately preempts a genuine market test.

126150 See Langlois, supra note _, at 217 (noting that competition among platforms allows for

Experimenting with various organizational and design alternatives can lead to disparities in interest representation among different user groups A dominant small segment may exert enough political and economic influence to skew protocol choices in favor of their preferred services, potentially neglecting the needs of less powerful groups The existence of a single set of protocols can intensify conflicts, as the stakes are high, often sidelining the interests of marginalized users Conversely, a diverse array of networks increases the likelihood that niche preferences will be addressed, as providers seek to maximize profit opportunities While a service favored by a larger but less influential group might initially be overlooked, the introduction of multiple protocol-choosers enhances the chances of identifying profitable offerings that cater to these users.

The benefits of competition are significant enough that even if a single network standard emerges, selecting that standard through competitive processes remains advantageous We cannot predict whether multiple networks will ultimately adopt a unified standard, but competition is likely to yield a superior standard If a single governing body, whether a government or the dominant network post-competition, is to oversee the standard, opting for a market-driven approach is preferable, as it is more likely to result in the most valuable network.

Benefits of Private Control of Abundant Networks

Implementing and Updating Successful Protocols

The previous section emphasizes the advantages of competition in developing protocols for a complex network, highlighting the diverse options available This complexity suggests that private firms hold an edge over government entities, as the engineering resources at the FCC are limited compared to those in the private sector Additionally, private companies lack motivation to share their expertise with government actors unless they see a tangible benefit.

Private control offers significant benefits for implementing and updating network protocols While designing a functional network is essential, understanding user responses is equally critical—such as whether users engage with the network, utilize its services as intended, and express preferences for additional or optimized services Furthermore, as technology evolves and consumer preferences shift, network creators face the challenge of adopting protocols that not only meet current needs but also incorporate desirable features This necessitates careful consideration of how and when to update protocols in response to technological advancements and changing user expectations.

In this article, we assume that a robust network can function effectively However, key questions remain regarding who possesses the greatest motivation and capability to establish and adapt the most efficient system It is crucial to ensure that the entity managing specific wireless frequencies has both the incentive and the ability to make optimal initial choices and to adjust the usage of those frequencies as new opportunities emerge.

Private ownership offers significant advantages, primarily driven by the profit motive, which incentivizes owners to select and adapt the most effective systems to maximize profitability This economic principle suggests that the same profit-driven dynamics will enhance spectrum usage as seen in other sectors Additionally, private owners possess the flexibility to modify their operations swiftly, adhering only to government regulations or contractual agreements With the potential for broad governmental flexibility, private firms can quickly adopt new protocols, evidenced by the rapid technological advancements in cellular services and wireless Internet Ultimately, private companies are motivated to upgrade their networks efficiently to maintain a competitive edge, demonstrating both the incentive and ability to innovate rapidly.

Government officials lack the profit motive that drives efficiency in the private sector, leading to different incentives for finding solutions Instead of market forces, political dynamics influence their decisions This highlights a key aspect of political theory: for government employees, improving a network often translates to increased workload without additional compensation.

Government officials typically lack the flexibility of private owners due to the constraints of public deliberation For instance, the federal Sunshine Act mandates that multi-member agencies, such as the FCC, must provide seven days' advance public notice before holding meetings, which must also be conducted in public Additionally, establishing protocols for a new network constitutes significant agency action that requires adherence to notice-and-comment rulemaking This process involves publishing a notice of proposed rulemaking, allowing interested parties to comment, and issuing a final rule accompanied by a statement of its basis and purpose, all of which necessitates a lengthy and thorough procedure.

The "ossification" of agency processes leads to straightforward decisions taking years to navigate procedural hurdles, resulting in significant agency actions requiring extensive time and resources to complete, often followed by litigation The adoption of protocols for abundant networks is expected to follow this same lengthy process, as the FCC will utilize notice-and-comment rulemaking, which is notably time-consuming and can span several months.

The flexibility disparity between private and government entities is not fixed; Congress could empower the FCC or another agency to select protocols for abundant networks without procedural limits, although this is unlikely and unattractive While private owners are bound by market forces, government actors lack such constraints Procedural requirements impose public-regarding obligations that enhance transparency and accountability Granting unchecked authority to government officials is challenging to justify, which explains why Congress has never pursued this option.

127160 See 5 U.S.C § 551(4) (defining “rule”); id § 553 (setting out the requirements for informal, or notice- and-comment, rulemaking); see also Jeffrey H Rohlfs & J Gregory Sidak,

Exporting Telecommunications Regulation: The United States-Japan Negotiations on Interconnection Pricing, 43

The majority of the Federal Communications Commission's (FCC) policy initiatives are implemented through the notice-and-comment process outlined in the Administrative Procedure Act, with few exceptions for major policy changes Notably, certain exceptions to the notice-and-comment rulemaking exist, such as for interpretative rules and general policy statements; however, these exceptions do not seem applicable in this context.

In 1994, it was established that a standard constitutes a substantive rule that necessitates notice and comment, distinguishing it from a mere policy statement when an agency aims to commit to a specific legal policy position This principle was further illustrated in the case of Tennessee Gas Pipeline v FERC, 969 F.2d.

The good cause exception is restricted to emergency situations, as noted in 1141 (D.C Cir 1992) The FCC aligns with this view, consistently utilizing notice-and-comment rulemaking to establish standards for new networks.

128163 See Richard B Stewart, The Reformation of American Administrative Law, 88 Harv L Rev 1669 (1975).

Benkler proposes that the government should mandate a review of all spectrum uses every ten years, acknowledging the experimental nature of the system He advocates for the establishment of an abundant network, with a contingency to abandon it if it fails to meet expectations after a decade Additionally, Benkler suggests that any spectrum auctioned should also undergo re-evaluation after ten years to determine if it should transition to a government-sponsored abundant network.

The flexibility of public firms is limited compared to private firms, as changes can only occur at designated intervals, even if issues arise earlier, such as the failure to develop an abundant commons by years five or seven Additionally, any review process requires significant time and effort, especially if it involves deliberation, which can lead to delays For instance, the FCC's biennial reviews of media regulations frequently extend beyond two years, and the initial triennial review of the AT&T breakup faced lengthy legal challenges, preventing subsequent reviews from occurring as planned.

The proposed ten-year reviews fail to empower government actors to adapt to evolving technology and consumer preferences It's crucial for the government to have the flexibility to switch between public and private control, as well as the capability and motivation to update network standards However, these reviews leave the government in a stagnant position, requiring cumbersome processes to implement changes while lacking sufficient incentive to do so.

Adjusting Spectrum Usage and Pricing Schemes

Private ownership offers several benefits, including the ability to leverage technological advancements that enhance protocol updates and enable the transmission of increased information within the same bandwidth A notable trend in wireless technology is the continuous improvement in these capabilities.

129 165 Id Of course, he assumes that the private rights holder will not have created a privately-sponsored abundant network See supra section II(B).

The ongoing evolution in engineering technology is significantly reducing the amount of spectrum needed to transmit signals, which is a crucial factor in the development of abundant networks Recent advancements have enabled higher bit rates within the same frequency range, enhancing the feasibility of these networks Notably, engineers are currently designing networks capable of achieving 1 Gbps throughput using only 25 MHz of spectrum, as opposed to the previously required 100 MHz This trend underscores the continuous progress in telecommunications, further optimizing spectrum utilization.

The creation of 100-megahertz abundant networks followed by advancements that reduce the required bandwidth to just 20 megahertz could yield significant benefits By freeing up 80 megahertz, this updated network design would enable the provision of valuable new services, such as optimizing real-time video, supporting additional competing abundant networks, or facilitating entirely new applications.

The potential for private control over the original 100-megahertz spectrum encourages efficient use, as government entities lack the profit incentive to conserve bandwidth This issue arises from cumbersome procedures for changing spectrum use and highlights a key argument in property theory: transferable spectrum rights motivate rights-holders to adopt bandwidth-efficient technologies In contrast, unlicensed or shared spectrum fails to incentivize conservation, leading to waste by both government and private entities without profit motives Given these circumstances, it is unsurprising that bandwidth conservation often falls short.

Closely related to the possibility of a network needing fewer megahertz as technology improves is a possibility raised by commons advocates: that, even without changing protocols,

Advocates for Commons emphasize the importance of ongoing advancements in network design to facilitate the creation of abundant networks However, they overlook the crucial potential that, once these networks are established, further innovations could allow them to operate on reduced megahertz This highlights a significant aspect of the future of network efficiency that deserves attention.

132173 One might imagine that abundant networks could render the spectrum so abundant as to be valueless,

Opening up 80 megahertz for alternative uses may not significantly enhance competition, even if it allows for the addition of four 20-megahertz networks The idea that abundant networks can fully meet all our spectrum needs is unrealistic The spectrum required for effective network operation fluctuates constantly, necessitating flexibility among spectrum rights controllers Private owners can negotiate prearranged agreements for immediate sharing or establish mechanisms for such sharing, providing them with a greater incentive and ability to adapt In contrast, government efforts to create similar arrangements face procedural challenges and lack motivation Therefore, the benefits of private ownership in facilitating dynamic spectrum usage remain evident.

Benkler proposes that the cost of technology for abundant networks could be integrated into user device prices, enabling free transmission without additional charges While this pricing model may be efficient, flexibility in pricing strategies is essential for experimenting with various business models to identify the most effective system Competitive firms are driven by profit motives to discover optimal pricing regimes that facilitate successful network deployment, a motivation that government entities typically lack.

Concentration of Private Power

While competition offers significant benefits and private ownership has advantages over government sponsorship, there is a potential downside to private control of abundant networks: the concentration of economic power that can lead to anticompetitive behavior If a single entity controls the available spectrum, it may seek to eliminate potential competitors to secure monopoly profits For instance, if company X monopolizes a crucial slice of spectrum for creating a robust network, it might attempt to block access for other companies, raising concerns about the implications of a vertically integrated monopolist in the spectrum ownership landscape.

Benkler discusses the economics of wireless communications, suggesting that while his analysis may appear to argue against private property rights in spectrum, it actually supports the notion of such rights.

134180 See supra notes _ to _ and accompanying text. manufacture all the user devices itself, rather than leaving room for competitors to sell them as well 183

The potential for a monopolist owner of spectrum to discriminate in the equipment market remains uncertain There is significant debate regarding the conditions under which a vertically integrated entity might harm competitors in related markets, with many experts arguing that such an incentive is minimal if the monopolist can fully leverage its primary market value Even if we assume that a monopolist has the motivation to discriminate, the reality is that such monopolies should be prevented from forming in the first place.

The government should auction sufficient spectrum rights to establish five to ten robust networks While there is no definitive amount of megahertz required for an effective network, a bandwidth of 100 megahertz is ideal for achieving high throughput, potentially exceeding 1 Gbps However, increasing bit rates beyond this may have limited benefits due to delays caused by multiple hops in the network Fortunately, ample frequency ranges are available for allocation.

135 184 See, e.g., Christopher S Yoo, Vertical Integration and Media Regulation in the New Economy, 19 Y ALE

J ON R EG 171, 187-206 (2002) (discussing this debate); David Gilo, Retail Competition Percolating Through to Suppliers and the Use of Vertical Integration, Tying, and Vertical Restraints To Stop it, 20 Y ALE J ON R EG 25, 43-

There is ongoing debate regarding the motivation of cable Internet providers to restrict unaffiliated Internet service providers from accessing their networks Some argue that these providers may not fully benefit from their infrastructure solely through cable line rentals due to concerns over regulatory price controls Additionally, cable Internet providers may prefer to maintain control over their networks, which could lead them to favor an affiliated ISP for better oversight and management.

In the context of access rules and the broadband race, spectrum ownership rights grant control over pricing for owners The algorithms designed for abundant networks suggest that adding users is beneficial, as each new user contributes to overall capacity Additionally, heavy users do not pose interference issues since their transmission power levels remain low.

Spectrum owners can maximize profits by leveraging their control over the spectrum rather than monopolizing the equipment market By allowing other companies to manufacture user devices, spectrum owners can potentially expand the market for their spectrum, leading to faster and greater profit increases than if they relied on a single-source supply This approach has been successfully adopted by cellular service providers, who profit from selling cellular time while letting third parties produce compatible telephones Additionally, if spectrum rights were auctioned as private property, it could enable the utilization of unutilized or underutilized spectrum, fostering the growth of abundant networks.

A recent FCC report highlights underutilized spectrum bands that can be restructured, focusing on frequencies from 300 MHz to 3 GHz, which are in high demand and not allocated for broadcasting or government use The study identified 438 megahertz of spectrum that could support valuable new services, indicating that with the right flexibility, owners could develop several 100 MHz-wide networks.

The spectrum allocated for broadcast television could be more effectively utilized, as noted by Nicholas Negroponte, who highlighted that wireless frequencies better serve mobile services like telephony Thomas Hazlett argues for auctioning this spectrum, suggesting that doing so could generate significant funds to provide multichannel services to the 10% of households lacking access, while also contributing billions to public finances This auctioning would free up an additional 324 megahertz of spectrum.

The spectrum above 3 GHz, particularly in the 5 GHz band, presents an opportunity for abundant networks, offering an additional 3,000 megahertz suitable for various applications Frequencies between 3 GHz and 6 GHz are less utilized and more amenable to restructuring, making them prime candidates for auction The government has demonstrated flexibility in this spectrum range by implementing changes to existing allocations, indicating that further opportunities for auctioning hundreds of megahertz exist in the relatively freer spectrum above 3 GHz.

The military manages a significant portion of the spectrum, encompassing hundreds of megahertz that are seldom used Despite this, there has been a notable reluctance to make much of this spectrum available for public use.

In his 1995 book "Being Digital," Nicholas Negroponte introduces the concept of the "Negroponte Switch," which suggests a transformative shift in how information is transmitted He predicts that information currently delivered via wires will eventually be transmitted through the air, while airborne data will transition to ground-based delivery systems.

The military has the ability to quickly reclaim spectrum through eminent domain and innovative methods, such as a proposed beacon system that would allow it to control frequency usage This system would involve the military sending out regular signals that devices relying on those frequencies would need to operate, making the spectrum interruptible Although interruptions may be infrequent due to the military's limited use of most of its spectrum, this approach resembles existing models for interruptible utilities like electricity and gas Ultimately, even without a comprehensive auction of spectrum rights, the government could efficiently allocate sufficient spectrum to support various networks.

Concerns regarding the risks of vertical integration are primarily based on the presence of monopolies or collusive oligopolies However, in this scenario, there is no justification for allowing any single entity to wield significant market power With multiple available market segments, a robust network can thrive Therefore, there is no reason to believe that this market will function any differently from other competitive markets Our apprehension about vertical integration and the potential loss of competitive advantages arises only in the context of monopolistic control, which is absent in this case.

Concerns about a single company monopolizing spectrum are unfounded, as the high costs and numerous competing bidders make such a scenario unlikely Just as it is improbable for one entity to purchase all of Manhattan, the same applies to spectrum ownership Currently, while a significant amount of spectrum is available through private auctions, no single organization holds more than a small share The financial burden of acquiring a substantial portion of spectrum is too great, and there is no evidence to suggest that a private company would fare any better in public auctions compared to private ones.

138 192 See, e.g., Thomas Frank, A Failure to Communicate, Newsday, Dec 8, 2002, at A6 (noting the Defense Department’s reluctance to give up any of its unused spectrum).

139 194 Mark M Bykowsky and Michael J Marcus, Facilitating Spectrum Management Reform via

Benefits of Government Control: The Value of a Free Network

Should Spectrum for Abundant Networks Be Free of Charge?

Some advocates argue that networks should be established for free public use, raising concerns about the auction model where individuals pay for spectrum access, which can limit network availability They contend that government control could eliminate the need for purchasing spectrum, allowing for the creation of an abundant network that is accessible to everyone without charge This perspective questions the necessity of private ownership and fees associated with spectrum rights, suggesting that a government-operated network could better serve public interests.

Commons advocates argue that it is crucial for certain networks to operate without payment for spectrum access, but this raises questions about the rationale behind such a stance While the government could potentially take control of resources and offer free access, the concern lies in the capacity these networks create without incurring costs However, this view oversimplifies the concept of "cost." The true cost of establishing an abundant network is the lost opportunity for alternative networks that may provide different services, such as broadcast television, which might not be delivered with the same quality by an abundant network Therefore, while adding users to a network may not displace existing users, it can displace other networks and the services they could offer.

Abundant networks may lead to the perception that spectrum holds no value, as the abundance could deter payment for access However, this notion is flawed, as not all forms of communication will be optimized in such networks Particularly, transmissions sensitive to delay will experience diminished quality of service due to the latency introduced by multiple hops.

As network size increases, delays in message transmission also grow, making real-time streaming, such as video, challenging on abundant networks and resulting in lower quality compared to traditional television Commons advocates recognize that not all services will be adequately supported by these networks, suggesting that demand for alternative services will persist, ensuring that spectrum retains its value and remains priced positively.

Commons advocates may argue that while abundant networks won't eliminate the value of spectrum, the government should allow free access to these frequencies, effectively providing a substantial subsidy However, if the spectrum still holds value, the government could generate significant revenue by selling transmission rights, as demonstrated by recent auctions that have brought in billions to support government initiatives By opting to forgo these potential earnings and granting transmission rights to select individuals or entities, the government is essentially transferring the value of lost auction revenue to those beneficiaries instead of utilizing it for public services.

The demand for government subsidies in network creation arises from the desire of various sectors, such as cellular telephony, broadcast television, and car dealerships, to receive free support for costly network components Network operators often assert that their networks provide societal benefits However, it is standard practice for the government not to allocate spectrum or infrastructure to communications networks without charge This raises the question: why should the government provide free spectrum for extensive networks?

Lowering costs for network providers could enable them to offer more affordable prices to users By giving away spectrum, it can be argued that this would facilitate reduced pricing for consumers.

159236 See supra note _ and accompanying text; supra note _ and accompanying text

As of March 5, 2002, the Federal Communications Commission (FCC) had conducted 45 spectrum auctions, awarding a total of 21,853 licenses and generating nearly $42 billion in government receipts For detailed information on the winning bids from these auctions, you can visit the FCC's official summary page at http://wireless.fcc.gov/auctions/summary.html.

Avoiding payment for spectrum to support low-income individuals raises significant concerns, as this approach could apply to any network or good If the objective is to assist those who cannot afford market rates for communication services, it would be more logical to subsidize established networks that have demonstrated their value, rather than unproven ones Established networks are more likely to provide genuine benefits to the poor, especially since abundant networks rely on a large user base While reducing costs for providers, such as giving away resources to cable companies or spectrum to cellular and satellite firms, may lower prices for consumers, it is crucial to ensure that the subsidies lead to tangible value for low-income users.

Free access to the spectrum could enhance the performance of abundant networks as user participation increases, creating positive externalities that boost social welfare Just as each additional fax machine, email user, or webpage adds value to a network, subsidizing the growth of these networks by providing spectrum at no cost could be beneficial However, to justify this approach, it is essential to clarify what makes abundant networks uniquely valuable compared to others The question remains: why should the government prioritize and subsidize abundant networks specifically?

To determine the uniqueness of abundant networks, it is essential to identify specific differences that set them apart from other networks, particularly cellular networks Simply recognizing distinctions is inadequate; the key lies in whether these differences are significant enough to warrant special subsidies for abundant networks While free access to the spectrum is desirable, it does not inherently distinguish abundant networks, as the justification for such access relies on the presence of additional advantages that these networks offer.

Is Government Control More Likely To Produce

Abundant networks are believed to serve the interests of citizens without imposing filters, as highlighted by Benkler, who emphasizes that autonomy is essential for the First Amendment and a democratic society He warns that private ownership can undermine this autonomy, as owners prioritize commercial interests over public welfare, resulting in networks designed for consumers rather than users Benkler argues that as digital networks evolve, regulatory choices will determine whether they foster peer interactions or merely provide prepackaged information for consumers He asserts that government-created abundant networks are not only more efficient but also cultivate superior networks and communication methods, challenging the notion that subsidizing such networks is an effective way to assist low-income individuals.

The central concept is that citizens should have access to networks tailored to their needs instead of those primarily designed for consumerism This perspective suggests that government oversight can lead to networks that prioritize open communication over advertising and profit Ultimately, proponents of this view argue that private control can hinder free communication among citizens, highlighting the drawbacks of profit-driven motives in network management.

The revenue-driven distortions in media raise questions about the responsiveness of privately controlled networks Despite concerns, there is little evidence to suggest that these networks will be less attuned to users' independently selected interests compared to those governed by the state.

A crucial takeaway from Part I is that the debate is not simply about having a controlled versus an uncontrolled network Genuine open access, allowing users to transmit freely, would not yield the intended network outcomes Therefore, users won't be building their networks independently; rather, a governing body will dictate the network's structure The essential issue at hand is the distribution of control between governmental authorities and private entities.

Abundant networks will not serve as fully open platforms that enable individuals to create their own protocols and transmission methods Instead, they will function as neutral platforms, facilitating communication as freely as possible within the constraints of these networks While users won't have the ability to design their own communication systems, they will be able to engage without filters, advertisements, or additional limitations beyond the inherent algorithms and power restrictions of abundant networks.

The comparison suggests that government control may be more attuned to user interests and impose fewer restrictions than private firms It raises the possibility that government responsiveness to user desires could surpass that of private entities However, this perspective underestimates the government's incentives and overlooks the potential for the market to deliver the networks that citizens truly desire.

There is a debate among theorists about how much of public actors’ motivationss are guided by their private interests Public choice theorists argue that everyone tries to maximize

Yochai Benkler discusses the shift from consumer to user in the context of sustainable commons and user access, highlighting that public actors often pursue their own interests, whether that be power or financial gain Critics of public choice theory argue that it oversimplifies motivations by overlooking ideological or public interest factors, asserting that altruistic motives also influence government officials However, there is a consensus that private interests do play a significant role in governmental decision-making It is unrealistic to assume that while private owners manipulate networks for personal gain, government officials operate free from similar motivations While the objectives may differ—private companies focusing on sales and government officials on reelection—manipulation is present in both scenarios.

Even if the assumption about government control is flawed, it doesn't justify increased comfort with such oversight Critics of public choice theory argue that ideology is a significant alternative to private interests, with some elected officials driven by genuine convictions to promote specific political agendas However, this ideological pursuit can foster networks that support those agendas, leading to a situation where the manipulation remains, whether it endorses private interests or a particular ideological vision.

Regulatory decisions regarding technology platforms are influenced by the preferences of government officials For example, the government's localism policy in broadcasting hindered the growth of cable television and mandated the inclusion of local broadcasters This approach primarily stems from Congress members' desire to guarantee that their constituents have access to local news, including coverage of their own activities.

Congress imposed regulations that prohibited broadcasters from utilizing radio waves for point-to-point communications or subscription services, despite the absence of technological constraints The FCC determined that these practices were not aligned with its objectives for radio communications and subsequently banned them.

163 246 See, e.g., Neil Komesar, Imperfect Alternatives: Choosing Institutions in Law, Economics and Public Policy 3-8 (1994); Cynthia R Farina & Jeffrey J Rachlinski, Foreword: Post-Public Choice?, 87 Cornell L Rev

164 248 See Daniel Farber & Philip Frickey, Law and Public Choice 12-33 (1991).

In 1941, the FCC made an exception to its prohibition on subscription services by permitting the Muzak Corporation to conduct a limited and temporary trial of a subscription radio service.

Commons advocates often underestimate government incentives while overestimating the likelihood of private actors limiting user freedom or advertising in abundant networks Economic theory suggests that profit-maximizing companies will offer neutral, ad-free platforms if there is demand for them Critics may argue that this theory fails in practice, citing the prevalence of ads on many websites; however, this perspective overlooks instances where companies have successfully generated revenue without advertising, such as pay-per-view and pay-per-channel cable services Notably, private companies have also developed networks like cellular systems and instant messaging platforms that facilitate unfiltered, real-time communication, aligning with the neutral communication environments that commons advocates desire While these platforms may not be as expansive as some hope, they effectively enable users to express themselves freely.

In the early 1990s, major online service providers like Prodigy, Compuserve, and America Online operated with closed content systems, limiting users to material created or affiliated with the companies However, as the World Wide Web evolved, these companies realized they needed to offer open access to attract and retain customers By embracing this shift, they allowed users to connect to the most participatory and open platform ever created.

Commons advocates may worry that companies will not create truly neutral platforms due to a lack of demand, suggesting that citizens may prefer networks that prioritize commerce over neutrality This raises a paternalistic concern that advocates believe they know what is best for citizens, who may not recognize or desire what is genuinely beneficial for them However, this argument is particularly weak in the context of the abundance of available networks.

The demand for neutral platforms may be limited, leading to a scenario where the majority of users do not gravitate towards them As a result, the creation of such neutral platforms could be unlikely.

Should the Government Allot Frequencies in Large Bands?

The analysis suggests that if abundant networks function effectively, private ownership could lead to multiple networks, provided the government conducts a substantial auction and allocates spectrum in large frequency bands Additionally, it indicates that private management of these networks is likely more advantageous than government oversight However, this does not imply that the government should automatically create large allotments, as the feasibility of such actions remains uncertain We must consider whether large band allocations are indeed better than the current system of smaller allotments by weighing the costs against the potential benefits.

Parcel Size, Transaction Costs, and Combinatorial Bidding

To maximize the benefits of auctioned spectrum, it's crucial to allocate it in large parcels, allowing winning bidders to utilize the frequencies for their most valued purposes without the need for complex aggregation or disaggregation However, if abundant networks are not the primary use for all the spectrum, transaction costs can become a significant concern Private owners may face the dilemma of either maintaining a large spectrum allotment for suboptimal uses or incurring costs to subdivide it into smaller, more profitable segments For instance, if the spectrum is auctioned in 100 megahertz blocks, but bidders find that smaller allocations (ranging from one to ten megahertz) would be more beneficial, the costs associated with determining the optimal sizes and conducting subsequent auctions can be substantial.

The issue is not the transaction costs associated with dividing the spectrum; these costs would be incurred by the government when allocating spectrum in smaller bands Ultimately, if the decision is made to distribute spectrum in various smaller sizes, it is essential to consider the implications of this approach.

—either the government or a private party—is going to bear those costs 256

Holding an auction for 100 megahertz slices may seem cost-free, suggesting that if the government spends X to auction twenty-five parcels worth Y to bidders, the highest bidder could alternatively bid Y-X and run their own auction However, this perspective overlooks the potential inefficiencies of creating a two-stage auction process Ultimately, it merely shows that a private entity can conduct an auction under the same conditions and costs as the government.

Each auction incurs costs for both the auctioneer and bidders, particularly when larger spectrum bands are auctioned instead of smaller, more valued segments The auctioneer faces administrative expenses and time commitments, which, while not excessive, are significant For "big swath bidders," the costs of evaluating the spectrum and securing financing could be avoided if the spectrum were auctioned directly to "small parcel bidders." These larger bidders often invest considerable resources in assessing the spectrum's value and may prefer negotiating with potential small parcel buyers prior to the auction While this may seem to merely shift the timing of negotiations, unsuccessful bidders for the larger allotment ultimately face wasted time and resources, resulting in a deadweight loss when they cannot auction off their segments effectively.

Holding multiple unnecessary auctions for spectrum can lead to significant cumulative costs, even if each auction seems minor If the highest valued use of the spectrum is for one megahertz allotments, conducting a series of auctions—first for 400 megahertz, then for four 100 megahertz allotments, and so on—results in inefficiencies These auctions incur real costs for both the auctioneer and bidders, ultimately creating a deadweight loss To achieve an efficient outcome, the auctioneer should directly auction one megahertz allotments instead of going through multiple rounds.

This discussion emphasizes the dual costs associated with spectrum division: the expenses incurred from creating too small segments, known as transaction costs of aggregating, and the costs arising from not dividing the spectrum into sufficiently small pieces, referred to as disaggregating costs Minimizing these costs is challenging, as the government must navigate the difficulty of obtaining information on bidders' preferences for small versus large spectrum swaths, which bidders tend to protect Although the government could auction a portion of the spectrum in varying sizes to gauge bidder value, this approach requires two separate auctions, negating the advantages of a unified auction process Additionally, a smaller initial auction may lead bidders to withhold their true preferences, while a larger auction risks limiting the available spectrum for subsequent sales.

Auction theorists suggest that combinatorial bidding could enhance government auctions by allowing entities to bid on both individual parcels (such as six or ten megahertz allotments) and packages of multiple parcels (like ten individual parcels totaling 60-100 megahertz).

168260 See Procedures Implementing Package Bidding For Auction No 31, 65 Fed Reg 43361-01 (July 13,

When the total bid for a package of spectrum exceeds the combined bids for individual parcels, the spectrum is awarded to the highest bidder for the entire package Conversely, if the individual bids are higher, the parcels are assigned to their respective top bidders This approach allows the market to determine whether a set of frequencies is more valuable as a whole or as separate units The FCC has implemented package bidding in some spectrum auctions to enable bidders to express the value of potential synergies and mitigate risks associated with acquiring multiple licenses This method addresses uncertainties about the optimal use of spectrum and facilitates aggregation without incurring the transaction costs associated with individual acquisitions.

Combinatorial bidding introduces certain costs and potential biases in auction outcomes, as acknowledged by the FCC A bidder for an entire package may gain an advantage, leading individual bidders for parts of that package to hold back in hopes of increasing their bids collectively While the government can structure auctions to mitigate these biases, doing so incurs additional costs Moreover, the FCC has yet to implement package bidding on a scale comparable to a big bang auction, raising concerns about the complexity and coordination required Managing two simultaneous auctions with various parcels entails significant administrative challenges, potentially hindering the government's ability to design an effective auction process.

169 262 See Procedures Implementing Package Bidding For Auction No 31, 65 Fed Reg 43361-01 (July 13,

The auction of licenses in the 747-762 and 777-792 MHz bands has been scheduled multiple times, with significant events on September 6, 2000, and June 19, 2002 These auctions involved detailed procedures for package bidding, as outlined in the Federal Communications Commission's reports, specifically 15 F.C.C.R 8809 and 17 F.C.C.R 8128, which discuss the round results and replication processes associated with the bidding.

Package bidding allows for a market evaluation of mutually exclusive band plans by enabling bidders to simultaneously bid on multiple plans This auction process identifies the single band plan that optimizes auction revenue.

171 266 See Kwerel & Williams, supra note _, at 16-17; see also Owen & Rosston, supra note _, at [12 of the manuscript] (suggesting that package bidding makes sense for small numbers of licenses).

Failing to auction optimal spectrum sizes incurs significant costs, including aggregation and disaggregation expenses, as well as administrative costs associated with package bidding and information gathering from private entities These costs can hinder the highest valued use of the spectrum, which largely depends on the likelihood that abundant networks represent the best use When the potential for abundant networks is high, the costs associated with allocating spectrum in larger bands decrease, while the costs for smaller bands increase.

The Importance of Uncertainty

Determining the viability of abundant networks is fraught with uncertainty, primarily due to engineering challenges and user adoption concerns Engineers face significant hurdles in designing effective protocols, and the real-world implementation of these networks remains untested Even if the networks function as intended, their success hinges on user participation; without a substantial number of users, the system cannot operate effectively The presence of repeaters is crucial for message transmission, making user engagement essential Moreover, for abundant networks to justify the allocation of large spectrum swaths, they must prove to be more valuable than existing uses of that spectrum, such as television broadcasting If users prioritize traditional broadcasting over abundant networks, the rationale for allocating spectrum for these networks diminishes significantly.

This discussion highlights two key considerations regarding spectrum allocation Firstly, if the costs of enabling private abundant networks outweigh the benefits, the government should refrain from establishing them independently Additionally, if large-scale spectrum allocation for private property rights is deemed unappealing, then government-mandated abundant networks would be an even less favorable option Ultimately, the feasibility of facilitating private abundant networks must be carefully evaluated.

172268 See supra note _ [discussing the role of repeaters]; Seapahn Meguerdichian, Farinaz Koushanfar, Miodrag Potkonjak, & Mani B Srivastava, Coverage Problems in Wireless Ad-hoc Sensor Networks, Proc IEEE

According to Infocom (2001), determining the optimal number of nodes and hops in a dense network poses significant challenges If the inefficiency of spectrum usage in these networks outweighs the costs imposed by policies that render them prohibitively expensive, then there is insufficient justification for favoring policies that not only enable but also require government intervention in the establishment of such extensive networks.

Uncertainty surrounding abundant networks fundamentally supports the argument for private over public control The potential failure of these networks to function as intended or to attract users increases the costs associated with government-imposed solutions Previous discussions highlighted the pros and cons of private versus public control, assuming successful network design and user engagement However, the risk of failure significantly raises the cost for the government to implement such networks Unlike government decisions, which can be reversed through lengthy processes, private entities have the flexibility to abandon or redesign networks quickly or opt not to build them at all This agility allows private parties to select services more effectively, underscoring the advantage of selling spectrum to private owners in light of uncertainties regarding service efficacy.

To mitigate uncertainty about the effectiveness of an abundant network, the government could allow private networks to develop first and evaluate their performance However, this approach may pose risks, as the government network might struggle to attract users if it lacks distinct advantages over existing private networks Additionally, the overall benefits of a government network could diminish in a crowded market, as its value may be perceived as lower compared to a singular offering Ultimately, the introduction of a new government-controlled abundant network in a competitive landscape raises questions about its potential benefits and could lead to market distortions, highlighting the inherent uncertainties associated with new entrants, whether public or private.

174 271 See supra notes _ to _ and accompanying text.

The first entrant creates the market, and the second creates competition, but the fifth or tenth may not add anything.

The government may find it efficient to create abundant networks only after private firms have successfully established them, as the uncertainties surrounding government initiatives decrease in such scenarios However, this does not justify government involvement in creating networks prior to the success of private enterprises Until these successful networks are in place, the costs associated with uncertainty remain, and the benefits of government control remain ambiguous at best.

The government may consider establishing a comprehensive network prior to the success of private firms if there's doubt about their willingness to do so However, as previously mentioned, private companies are likely to be motivated to develop these networks if spectrum is allocated in substantial portions In light of the potential for private development, the costs associated with uncertainty become significant.

Commons advocates argue that low-power wideband communication devices, which relay messages, can offer virtually unlimited network capacity They assert that establishing these networks represents the most efficient use of the spectrum and will greatly benefit users However, since private entities are unlikely to develop such networks, they believe it is the government's responsibility to take on this initiative.

Commons advocates argue that dividing the spectrum into small parcels hinders the development of wideband networks due to the high costs associated with aggregating spectrum This division conflicts with the goal of creating abundant networks, which thrive on a broader range of frequencies However, this critique is not aimed at private ownership itself, but rather at the practice of allotting spectrum in small bands If the spectrum were auctioned in larger segments, it would facilitate the creation of abundant networks, allowing more efficient solutions to prevail Therefore, larger spectrum auctions should ultimately lead to the development of more efficient, abundant networks.

The decision between privately and publicly created abundant networks involves trade-offs, particularly regarding the concentration of private power versus the potential for private firms to effectively implement and update successful protocols, conserve spectrum, and create attractive pricing schemes While government involvement may lead to rent-seeking behavior, the disadvantages of government management may not outweigh the benefits offered by private entities, especially in scenarios contrasting an unregulated commons with a regulated private network Given that abundant networks necessitate a certain level of regulation and control, a private entity is likely the more favorable option compared to government oversight.

The benefits of private control become evident when considering the potential shortcomings of government-created abundant networks While the government can allocate spectrum for these networks, relying on them is risky unless we are certain about the effectiveness of specific protocols, the government's design choices, and user adoption Given the uncertainty surrounding these factors, private entities are better positioned to experiment and innovate, allowing for rapid adjustments or discontinuation of services This approach not only promotes efficiency but also ensures that the financial risks are borne by private owners instead of taxpayers Therefore, empowering engineers and private stakeholders to develop abundant networks is a more prudent strategy.

The implications for spectrum policy are significant, as the creation of abundant networks, which can mitigate congestion, raises questions about the viability of establishing a government commons If these networks cannot be effectively managed as a commons, it becomes unlikely that spectrum services, which are more prone to interference, would be suitable candidates for such a model The primary concern with a spectrum commons has always been the potential for interference, and if open access leads to substantial interference, the associated costs become prohibitively high While advocates of commons argue they have successfully minimized these costs by reducing interference risks, their failure to support abundant networks undermines the case for a government commons, especially in scenarios where services are more susceptible to interference.

While property rights can be efficient, they are not universally superior In many scenarios, government-created commons can be both efficient and beneficial.

In the context of real property, such as public parks, and intellectual property, where the goal is to expand the public domain by limiting patent applicability and copyright terms, the concept of commons plays a crucial role Specifically, commons are beneficial in frequency bands where interference is minimal, as private ownership can lead to high transaction costs The establishment of property rights is warranted only when interference is a concern; otherwise, individuals should be free to transmit as they choose Additionally, unlicensed transmissions hold appeal in various contexts, supporting the commons advocates' argument for the efficiency of abundant resources.