SpectrumTalk

New Report on Value of Unlicensed Spectrum

Rich Thanki of Perspective Associates, a UK consulting firm, has completed a report on the value of unlicensed spectrum, commissioned by Microsoft.

Here is an abstract from the report:

The report provides quantification of the growing popularity of unlicensed applications, the value of some existing unlicensed applications, and the potential value in the so-called 'white spaces'. It also speaks more broadly to the innovative potential of the unlicensed approach. The report suggests that shipments of devices using unlicensed spectrum will surge over the next 5 years. By 2014, it finds that hybrid devices using both unlicensed and licensed spectrum could be outselling devices relying solely on licensed spectrum, including televisions, radios and some cellular phones. Sales of both could be overtaken substantially by sales of device using only unlicensed connectivity.

The report establishes a minimum value of unlicensed by analysing three existing applications: Wi-Fi in homes, Wi-Fi in hospitals, and RFID in clothing retail outlets in the US. Conservative estimates put the existing economic value being delivered by Wi-Fi in American homes at $4.3 - 12.6 billion a year. In combination these three uses could generate an economic value of $16 - 37 billion a year over the coming 15 years. The modelled uses only account for 15% of the total projected market for unlicensed chipsets in 2014, and therefore significantly underestimates the total value being generated by unlicensed usage over this time period. The paper also estimates the economic value that might be generated from existing Wi-Fi applications improved through using the white spaces as $3.9 -7.3 billion a year over the next 15 years.

The one area where I disagree somewhat with the report is the relationship between innovation and unlicensed spectrum. I agree that there has been tremendous innovation in unlicensed spectrum and am proud to have been partially responsible for getting it rolling.

The report says (p. 43)


But I think that a lot of the explanation has to do with issues besides whether there is a license or not. In Europe there is a de jure technical monoculture of DECT for unlicensed cordless phones. Under this type of traditional CEPT regulation, there is little innovation because it is effectively forbidden. By contrast, the US has no technical regulation of the air interface of cordless phones other than those strictly related to interference. Thus you can buy many types of cordless phones here, even DECT.

Europe also has a technical monoculture for cell phones thanks to CEPT and the European Commission: only GSM and the newer UMTS/3GSM. No surprise that CDMA, a technological core of UMTS, was first developed and commercialized in the US. In Europe, CEPT and ETSI require multinational consensus before such technologies can reach the market and this is near impossible for "disruptive innovation" such as CDMA in its early days.

The report correctly points out that in commercial licensed networks such as cellular there is a contractual relationship between users and the network and innovation has to evolve so that it does not disrupt the network. In Wi-Fi systems there is more distributed ownership that can response to new technology.

But the key issue here is not the presence or absence of a license, the key issue is deregulation. A major reason why unlicensed networks have been so innovative is that the descendants of the FCC Docket 81-413 rulemaking, e.g. Wi-Fi, Bluetooth, and Zigbee have been in spectrum bands with great technical flexibility.

Cellular systems of necessity have to evolve more slowly, although the legal stricture that ETSI must approve any change to GSM and UMTS/3GSM not permitted in the current standard does not make any sense to me. With over 1 billion GSM mobiles in use, there are ample market place forces to keep evolving technology backward compatible.

If you overregulate unlicensed systems, they can stagnate just as much as licensed one often do.