James Boyle: Network effects

Richard Epstein: A choice between licenses and ownership

Hurricane Katrina blew emergency communications away, crippling relief efforts. Now public safety radio reforms are being floated from every think tank.

It was the same after “9/11”, when 121 New York City firefighters lost their lives in the collapse of the North Tower 29 minutes after being sent an order to evacuate – over radios that were not working.

Reed Hundt, former Federal Communications Commission chair, recommends $1bn for “self-healing” Wi-Fi networks, where each radio user functions as a relay node. US congressional leaders are calling for television band frequencies to be shifted to public safety communications. Another prominent suggestion has been for the nationalisation of all fire and police radios. The consensus is that technology offers a magic bullet. Hundt writes: “Fixing this is not difficult… The pieces to put together a national emergency response are well understood.”

Apparently not. The short-hop wireless devices Hundt rallies around, for instance, could easily be swamped by a category four storm and rendered useless with area power cuts. Satellite phones with back-up batteries offer a potentially more resilient alternative.

Police and fire departments, on the other hand, have been trying to gain access to broadcast television spectrum since at least 1986. Despite over-crowding on public safety bands, most agencies use old-fashioned FM analog, hogging bandwidth. Capacity could be increased several-fold with standard digital upgrades. But blaming broadcasters is, in the political world, easier.

Throwing money, frequencies or technology at public safety radio will do little to improve the situation. To save lives, federal policy makers must resist the temptation to impose “apartheid”, treating public safety networks as so special that they must be quarantined on frequencies of their own. Emergency radio services need to exit their government technology ghetto and get onboard advanced networks – as smart customers, not Soviet-style suppliers.

Today, each county sheriff’s department fancies its own network and the slice of spectrum it occupies. That its radios don’t connect with local fire stations is of less concern. Incentives of each agency (and, particularly, each agency’s ‘radio chief’) are to protect turf. There are 50,000 such agencies scattered across the US, and some fire or police officers carry five or more phones. This is an expensive and dangerous way to ‘standardise’ communications.

Local control over networks is productive in one dimension, allowing users to tailor radios to their demands. But it is grossly inefficient in another, sacrificing powerful scale economies. Imagine shipping each police department tons of steel, plastic and rubber to make them responsible for constructing their own patrol cars. This is the path we take in allocating public safety spectrum, expecting each agency to produce efficiently.

Worse yet is to reserve the spectrum exclusively for public safety, eliminating market incentives for digital upgrades and innovative spectrum sharing. Local radio chiefs, vested in vintage technologies, also oppose digitisation as a threat to their authority. We are stuck in a hole familiar to managers of state owned enterprises.

The solution is to buy public safety radio service just as police cars are purchased from automakers. Private sector operators or system aggregators should bid to supply public safety networks. Airwaves should not be quarantined. This would open up shared use of frequencies, leveraging network economies.

Jon Peha, Carnegie Mellon engineering professor, writes: “Public safety spectrum is lightly used most of the time, but when the spectrum is needed, that need may be critically important. Peak demand from cellular customers and peak use by emergency responders often occur at different times. By allowing these organizations to share some spectrum and giving pre-emptive priority to public safety…. the carriers and public safety could all see an effective increase in available capacity.”

TV band spectrum is squandered. But pencilling in a transfer under spectrum apartheid would constitute yet another social planning blunder. Suppose that public safety users could sell access to the four TV channels (24 MHz) being considered for their estimated market value, about $15bn. The funds could be used to provide far better service for emergency radio users than the bandwidth, replacing analog systems and perhaps financing Hundt’s pick, mesh networks.

Competitive bidding for services opens up a world of efficient opportunities, as opposed to the Balkanised mini-nets of today. Standard police and fire communications could cheaply piggyback on cellphone networks, which sell minutes by the billions to “virtual” networks (Virgin Mobile is the largest, with over 3m subscribers). Crisis situation back-up could be provided via satellite networks. Innumerable twists are conceivable. Innovative services will result.

Three aspects are key. First, network sharing must be legal. Building tiny castles for each department is ridiculously expensive. Second, public safety spectrum must be available to the marketplace. Agencies benefit from selling airwave access during non-emergency moments, enabling (financially and functionally) the sharing of advanced networks. Finally, local radio fiefdoms must be conquered. Only with regional or perhaps state-wide systems will police in one town achieve mission critical coordination with police in the next.

Throwing money – or radio spectrum – at police and fire departments will not prevent the next unnatural disaster in radio communications. Turning first responders from uncompetitive network providers into smart shoppers of advanced technology, will. “Waving around internet buzz words and hinting that there is a tech fix,” writes Gerry Faulhaber, Wharton economist, “is not only not helpful, it is counterproductive.”

The writer is professor of law economics at George Mason University, where he is director of the Information Economy Project of the National Center for Technology and Law


James Boyle: Network effects

James Boyle
© Financial Times

Tom Hazlett knows a lot more than me about communications policy. And we both agree that the current communications systems of the emergency services in the United States are irremediably broken. They do not work well at the best of times, and they fail catastrophically when they are most needed. One of the simultaneously tragic and ridiculous sights after Hurricane Katrina was to watch people trying to blog on www.nola.com – the site that hosts the New Orleans Times-Picayune, surely the newspaper with the best name in the world – in order to direct emergency services to people still trapped. The emergency services’ communications did not work, and when they did they did not connect with each other. For many of those outside the area, the blog was the only hope.

Professor Hazlett’s answer is to make public safety spectrum available to the marketplace, and let the market work it out. Markets work well in many situations. How well would they work here? Professor Hazlett describes the people who make the decisions on how to build communications networks - the local sheriffs, fire chiefs, etc. - as technologically inept empire-builders, with scant interest in network connectivity. A market would change this how? He says these fiefdoms may need to be “conquered” – but by whom? One presumes that government standards are in order. That seems fine to me, but it means we are not comparing “the market solution” to “the government solution.”

Professor Hazlett compares the purchase of network services to the purchase of cars. We do not ship police chiefs rubber and steel and let them build their own. They buy in the market. That is true. But cars have an important difference from communications networks. If the police buy Chevys, it has no relevance to whether the firefighters buy Fords. But what if the police buy communications networks that work on one standard, and the firefighters buy an incompatible standard from a competing vendor? Consider cell phones. The US, which loves market-based solutions to network coordination issues, has multiple incompatible standards. Europe, and much of the rest of the world, does not. Hmm. And then there is the issue of reclaiming bandwidth during emergencies from the private companies who are now using it. That might work well. Or not.

Issues like this should be matters of empirical trial, not political ideology. A lot of technologists I know are much more sanguine about decentralised self-healing networks than Professor Hazlett, and Professor Faulhaber. But perhaps the technologists are wrong. Certainly the point Professor Hazlett uses to dismiss the idea of such a network – there would be no power – would be a problem for all networks, not just the ones he describes. Which would better survive a cataclysmic event? A decentralised system of rechargeable individual units, designed according to a specified common standard, each of which was both a transmitter and a relay. (And whose components of which would presumably be bought in the marketplace?) Or the unspecified competing systems that the market would design and deliver in Professor Hazlett’s plan, over newly privatized spectrum? In prior disasters, decentralized networks have worked rather well. That is the robustness built into the internet, which functions because of a common, non-proprietary series of standards. Firms then compete to add value on top of the standard.

I am agnostic on which system would work better. The answer, surely, is some kind of trial. This is too important to be left to faith - whether in markets, in governments or in decentralised networks.

This writer is professor of law at Duke Law School, a board member of Creative Commons and the co-founder of the Center for the Study of the Public Domain


Richard Epstein: A choice between licenses and ownership

Richard Epstein
© FTcom

Tom Hazlett’s instructive essay on the communications fallout out from Hurricane Katrina shows the social price we pay when general lessons about property rights are not conscientiously applied to particular cases.

The fundamental choice with respect to the radio frequency is the choice between licenses and ownership. The former are wholly different from the latter even when these licenses are renewed without interruption time after time.

The central social judgment in a licensing system is that the state will be able to make better judgments about a full range of deployment issues than any private owner acting in its self interest. Want to develop a technology? Mandate it as a condition of the license - and freeze development on such matters as digital communications and high-definition TV. Think that you know the relative demand across different sectors? Then designate particular end use for each chunk of spectrum. Make a mistake on either the choice of technology or function? Then take ten years to sort out the error by an administrative review which is in turn subject to legal challenges within the courts.

Not the way to run a railroad, or the high-tech industries that are so dependent on spectrum. Property rights, which allow individuals to readjust techniques and ends so long as there is no interference with the like spectrum use by other, avoid both these problems.

We can see the consequences of this peculiar affection for state licenses with catastrophic losses. Systems that need huge peak-load protections are unable to maintain the most elementary functions in times of stress. The ability to create by contract back-up protection over spectrum normally devoted to other purposes is effectively squelched by the legal system before it gets off the ground. Yet the rigidities introduced by regulation are chalked up to the shortcomings of the private market, so that further schemes for special set-asides gain ground in a Congress that should, but never will, know better.

I am no expert on the short-term fixes that are needed to get this issue back on track. But as to the long-term, one can only offer this gloomy assessment. So long as people think that all forms of intangible property are special, they will not adopt solutions that give certain individuals (preferably by auction) exclusive rights to possess, use and develop, a given portion of spectrum.

That trio of rights was well established in land in Roman law. There is no reason to lose sight of the great efficiencies associated with efficient bundles of rights just because we have moved into a newer technological age. Legal stability and technological progress are partners, not opponents.

Richard A. Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago, and the Peter and Kirsten Bedford Senior Fellow at the Hoover Institution.


Thomas W. Hazlett: A debate about the limits of central planning

Thomas W. Hazlett
© FTcom

I thank Professors James Boyle and Richard Epstein for their thoughtful responses. I embrace Prof. Epstein’s preference for expanded property rights to radio spectrum, and share Prof. Boyle’s preference for evidence over faith. In fact, the latter explains why I favour the former. The reality is that a blind faith in pork-barrel solutions today blocks a common sense reading of the trials being conducted before our very eyes.

This is a debate about the limits of central planning, and the dire results – literally, loss of life – when obsolete networks are imposed on emergency first responders by political actors. The solution is to embrace efficiencies available via market competition. This does not vacate a role for government. Fire and police departments are funded by tax dollars. The question is whether those funds will be squandered, with radio services that cost too much and do too little, or be used to maximum advantage.

I agree with Prof. Boyle that cars and communications networks are not identical – their differences bolster the need for market-based service contracts. Police and fire department radios should interconnect, but this is exactly what the current system of public safety radio “apartheid” prevents. Commercial networks, under the constraints of market competition, share spectrum widely and interconnect ubiquitously.

Take the example proffered. Standards competition in cellphones in the US has delivered advanced technologies (including the worldwide platform for 3G), and phones that work nationwide. Callers access multiple networks coast-to-coast through scores of carrier-to-carrier roaming agreements, and any one may talk to any other. It is a fact that four nationwide wireless networks have emerged, offering seamless communications, by piecing together more than 50,000 wireless telephone licenses. Markets have reconstructed the Humpty Dumpty that Washington regulators cavalierly pushed off the wall, sinking $175 billion in network infrastructure to serve some 200 million subscribers in the bargain.

But, among America’s thousands of public safety agencies, incompatibility is the standard. Moreover, networks are crude, offering functionality far below what is feasible. His is not cured simply by “letting the market work it out,” but by organising public sector demand for wireless so that competitive service providers can supply better networks.

This is not a technology problem, but one of economic organisation. Political incentives now in place sabotage effective emergency rescue operations. Tragic consequences will continue until we act on the evidence of failure now at hand.

The writer is professor of law economics at George Mason University, where he is director of the Information Economy Project of the National Center for Technology and Law

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