Introduction

A specter is haunting spectrum policy – the specter of commons.[1]

Spectrum policy is fundamental to traditional mass communications and to the emerging digital information infrastructure. All wireless communications devices, from analog television transmitters to Internet-enabled smart mobile handsets, transmit radio waves through the air. The federal government tightly limits those devices based on its control of the electromagnetic spectrum. Yet the assumptions underlying that control are under siege.

Seventy years after the birth of governmental spectrum management, and forty years after Ronald Coase and his colleagues began a campaign to kill it, the end of history for spectrum regulation seemed close at hand. By the mid-1990s, advocating extensive propertization of the electromagnetic spectrum had become, in Eli Noam’s words, the “new orthodoxy.”[2] Even the Federal Communications Commission (FCC), which would lose much of its power if spectrum were privately owned, seemed to agree. The FCC enthusiastically adopted auctions as its preferred method for assigning spectrum licenses, proposed secondary markets for licensees to lease the spectrum they controlled, and issued statements endorsing further expansion of “market-based” spectrum reform.

In recent years, however, a new perspective on spectrum policy has emerged. The “commons” position holds that private property rights in spectrum are as unnecessary as government-issued licenses. Commons advocates claim that, thanks to advances in technology, collections of wireless devices can share spectrum effectively without exclusive rights. They therefore support expansion of “unlicensed” frequency bands, and oppose calls to turn spectrum rapidly and exhaustively into private property. Commons advocates offer two lines of support for their claims: the theoretical benefits of unlicensed operation, and the empirical success of unlicensed spread-spectrum devices.

Despite its novelty, the commons position has quickly become a significant force. The FCC’s latest comprehensive spectrum reform report endorsed greater use of commons mechanisms, along with expansion of property rights. Commons and property advocates debate each other energetically in both academic and policy circles. Recently, some scholars have claimed that the two camps are not so far apart, and have proposed approaches that encompass both mechanisms.[3] Commons advocates have so far rejected these as essentially the property regime in disguise.[4] However, they have not yet mapped out proposals with the specificity of the more extensive property literature. The debate, while fertile, is at something of an impasse.

Fortunately, there is a way out. The property and commons positions do come together, though not in the ways previously articulated. Both sides use analogies to fixed physical resources such as land that obscure more than they clarify. Consequently, both have wrongly assumed frequency exclusivity as a mandatory element of wireless communication rights.[5] In other words, rights are tied to a band of wireless frequencies, whether those frequencies are subject to ownership or shared use. Frequencies are scarce, it is said, so they must be allocated.

Yet as legendary physicist Richard Feynman once said in a different context, “there’s plenty of room at the bottom.”[6] There are many ways to communicate without disturbing other users of the same frequency band, in what I call the supercommons. The supercommons is hardly exploited today. Neither property nor commons advocates devote much attention to it. Yet it may represent the majority of potential wireless communications capacity. And any spectrum policy framework that does not expressly permit supercommons transmissions will unreasonably preclude them.

The supercommons illuminates the flaws in prior spectrum reform proposals, especially those built on exhaustive property ownership. They make assumptions about interference that may once have been justified but are irrational today. In mistakenly associating property rights with wireless frequencies, they make novel forms of communication impractical. Wireless regulation should focus not on ownership of spectrum, which is a construct, but on rights to use wireless equipment in certain ways.

The basic legal framework for wireless communication should build on bodies of law that resolve usage disputes where ownership is not a salient issue, such as tort. As an initial matter, users of wireless equipment should be permitted to transmit anywhere, any time, in any manner. This universal entry privilege should carry a duty of care backstop and a set of implied legal safe harbors to balance the interests of the transmitter and those affected by its actions. Such a tort-like regime provides a dynamic, distributed mechanism for avoiding and resolving conflicts among wireless users. It combines the deregulatory attributes of the property proposal with the openness of the commons, allowing the full range of communications possibilities to be exploited.

This article seeks to reconceptualize spectrum policy around wireless equipment rights and the supercommons model. Part I outlines the historical stages of the spectrum debate, the current situation, and where we could go from here. Part II attacks the two fallacies, reification of spectrum and assumptions about usage, that prevent a clear understanding of the problem and its solutions. Part III rebuilds wireless regulation on the new foundation of equipment usage rights. It outlines how a universal transmission privilege, limited in practice through tort and other means, provides the best and most flexible framework. Part IV returns to the property vs. commons debate, concluding that, in the near term, the commons position remains potent despite responses from property advocates. Part V offers specific recommendations.

The now-dominant government licensing approach may have been defensible in 1920, but its failings were evident by 1960. The property approach made sense in 1960 but is now questionable. The commons approach is viable today. The supercommons may become real sooner than we think.

I) The Spectrum Debate

The proper legal regime for radio frequency spectrum has been the subject of controversy since the early days of the last century. It is remarkable the debate remains recognizable. The usable spectrum today is five thousand times larger in terms of bandwidth than in 1927, when the federal Radio Act was adopted.[7] Where there were once a handful of commercial services, including broadcast radio and maritime communication, now there are a plethora of industries including television, mobile telephony, satellite communications, radio dispatch services, and wireless local area networks. Few aspects of 21st century communications would be comprehensible to a visitor from the 1920s. Yet when it comes to spectrum, we are still arguing over the same questions: does government need to manage centrally how spectrum is allocated and assigned, and can users of wireless communications devices effectively coordinate their actions to avoid ruinous interference?[8]

Perhaps the debate has endured because spectrum is so very important. Hardly any American is untouched by radio frequency communication. The relevant industries generate billions of dollars in annual revenue. And wireless communication is dominant form of speech in our electronic age.[9] The radio spectrum is the town square of our digital polity. It is a major, if not the major, channel through which we obtain our news, entertainment, social interactions, and business communications. Most participants in the spectrum debate claim the spectrum is woefully under-utilized. If this is true, reforms that foster more efficient use of spectrum would have dramatically beneficial effects on daily life.

There are three major approaches to managing the spectrum. I will refer to them as “government licensing,” “property,” and “commons.”

A) The Rise of Government Control

Guglielmo Marconi first patented the mechanism for radio communications in 1897.[10] Radio waves are manifestations of electromagnetic radiation that oscillate at characteristic rates, called frequencies. The radio frequency (RF) spectrum is nothing more than the series of frequencies usable for communications below the range of visible light,[11] approximately 10 kilohertz (khz) to 100 Gigahertz (GHz).[12]

Marconi’s original “spark gap” transmitters sent signals across a wide range of frequencies simultaneously.[13] Only a single radio could operate in a particular area at a particular time for its signal to be intelligible. Perhaps the single greatest enhancement to Marconi’s original invention was frequency division.[14] A tuning fork vibrating at a characteristic frequency will cause another tuning fork at a distance to vibrate at that same frequency. By impressing a radio signal on a carrier wave of a specific frequency, Marconi was able to transmit that signal to a receiver tuned to the same frequency.[15] Subsequent inventors refined the technique.

Attaching a signal to a frequency allowed other signals associated with different frequencies to be sent at the same time, without preventing mutual reception. In other words, frequency division is a mechanism for subdividing the spectrum to enhance communication. It was a design choice, like the packet-switched architecture of the Internet, rather than something present in nature. This seemingly obscure technical fact will become important in the discussion below. The point is that dividing the radio spectrum into frequencies is just a consequence of a technical approach to interference management adopted in the late 19th century.

At first, anyone could operate a radio transmitter.[16] When the first federal radio legislation passed in 1912, radio was primarily used to communicate with ships, and thus of particular interest to the Navy.[17] Under the 1912 Act, radio stations were required to obtain licenses. By the 1920s, commercial broadcast stations had developed, and disputes about interference began to arise. Secretary of Commerce Herbert Hoover sought to use the government’s licensing authority to regulate the nascent broadcast industry. He was rebuffed by the courts, which held in 1923 and 1926 that the Department of Commerce had authority only to issue licenses, not to deny or restrict them.[18] The result was several months in which radio stations jostled with each other to control the airwaves. This period of “chaos” came to a close with the passage of the Radio Act of 1927. The 1927 Act established federal control over the radio spectrum, and put in place the licensing regime that persists today.[19]

The primary rationale for government control of spectrum is that spectrum is inherently scarce. The Supreme Court has upheld the FCC’s right to determine who can use the spectrum on the grounds that, thanks to scarcity, open entry would prevent anyone from enjoying the benefits of radio communication.[20] Because of scarcity and spectrum’s fundamental importance to the public interest, decisions about who is able to use spectrum are not left to the vicissitudes of the market. At least, this is the argument.

The current dominant licensing regime involves a detailed series of top-down government decisions that determine who can build what kinds of systems, in what portion of the spectrum, for what purpose.[21] The FCC first “allocates” a band of frequencies to put into the marketplace.[22] It designs a set of technical requirements, including subdividing the band into blocks, mandating power limits for systems, and in some cases, determining the specific service to be delivered, such as mobile telephony. The FCC then “assigns” those frequencies to licensees, such as Verizon Wireless or ABC. A licensee is entitled to operate devices that transmit in the specified frequency, usually in a specific geographic area and occasionally during specified times. It is also entitled to protection against other licensees, or against non-licensed transmitters, which cause it “harmful interference.”[23] It is not entitled to sell or subdivide its license without FCC approval, and the license is officially temporary.

B) The Property Critique

The government licensing model for spectrum policy fit the zeitgeist of the first half of the 20th century. This was the high-water point for “scientific management” of economic activity. While the Soviet Union extolled the virtues of central planning, the bureaucrats of Franklin Roosevelt’s New Deal preached that expert managers could efficiently steer economic activity. And indeed, radio, television, and other forms of wireless communication became huge and hugely influential industries under the FCC’s stewardship. The FCC’s status as the benevolent ruler of the airwaves persisted unchallenged for a quarter century. In the 1950s, however, economists began to critique the rationale for government-issued spectrum licenses.

The economists argued that, instead of being managed by government, spectrum rights should be bought and sold like any other commodity. The first to articulate this view was a law student, Leo Herzel, in 1951.[24] The argument was taken up brilliantly by Ronald Coase in 1959, in an article that eventually contributed to his 1991 Nobel Prize in Economics.[25] Coase’s basic point was that markets are the most efficient mechanisms for allocating scarce resources. Spectrum is no different from any other scarce resource, so markets should be used to allocate and assign spectrum. Instead of granting licenses, he asserted, government should issue property rights that companies could then trade, subdivide, combine, or modify through mutual negotiation. Later authors, notably Arthur De Vany et al, Harvey Levin, Jora Minasian, and Milton Mueller [26] took up the challenge of defining just what those initial property rights should look like.

Along with their proposals for what form spectrum rights should take, economists following Coase suggested a mechanism to use in assigning those rights: auctions. The spectrum assignment process has used a variety of mechanisms such as first-come, first-served; comparative hearings; and lotteries. All of these could and did fall victim to inefficiencies, capture by interest groups, or out-and-out corruption. Spectrum auctions are designed to put licenses in the hands of those who value them most highly, and who will therefore make the highest bid. Auctions have become the FCC’s preferred assignment vehicle, because of their perceived efficiency and revenue-generation benefits for the US government.

The economists’ critique of spectrum policy was part of a larger project to demolish the foundations of scientific management.[27] The Austrian School led by Friedrich Hayek, and its American adherents in the Chicago School, have largely succeeded in promoting laissez-faire principles and price-based mechanisms in almost all areas of economic activity. In fact, wireless communication may be the major sector of economic activity where they have been least successful. What the FCC auctions today is still a license, not an alienable property right. In recent years, economists such as Thomas Hazlett and Lawrence White have vigorously pushed the FCC to take the final step and turn spectrum into private property.[28] The FCC, which at first dismissed Coase’s proposal, has moved closer and closer to the economists’ position. Its 2000 Spectrum Policy Statement extolled the virtues of market forces in spectrum policy, a code word for property rights.[29]

C) The Commons Critique

Just as advocates of property rights in spectrum seemed headed for their final victory, they faced a new challenge. A novel critique emerged that doesn’t defend the government licensing regime. In fact, it largely grants that property rights were superior techniques for regulating use of the spectrum when Coase proposed them. Its claim is that developments in technology make possible a still-better approach: treatment of spectrum as a commons.[30]

The commons argument recognizes that spectrum can now be shared effectively, without requiring exclusive frequency licensing. Recall that Marconi’s use of frequency division to allow signals to coexist was a particular technical choice; it wasn’t a basic property of radio communication.[31] A variety of techniques, some dating back to the 1940s, allow two or more transmitters to coexist on the same frequency. The best-known of these is spread-spectrum. As demonstrated by Bell Labs researcher Claude Shannon in his seminal 1948 papers on information theory,[32] a signal can either be sent across a narrow channel at high power, or spread across a wide channel at lower power. When the signal is spread, the lower power reduces the degree of interference another signal.

The practical consequence is that no government regulator or property owner need decide which signal is entitled to use the frequency; both of them can use it simultaneously. More generally, the spectrum, or portions of it, can be treated as a commons, in which anyone is free to enter. In such an environment, property rights are at best unnecessary and at worst deleterious.[33] The main real-world manifestations of spectrum commons are the unlicensed bands, where any device certified to meet specified technical criteria may operate.[34] Unlicensed bands are products of the same FCC allocation process as other frequency bands, but instead of being assigned to an exclusive user or users they are left open to any devices certified to meet specified technical criteria.[35]

The commons critique was first voiced in the early 1990s by technology pundit George Gilder and renowned network engineer Paul Baran.[36] It was expanded and formalized by two academics, Eli Noam and Yochai Benkler.[37] Noam used the possibility of spectrum sharing to demonstrate the failings of auctions, and to show that the economists’ critique did not necessarily lead to exclusive property rights to transmit on specified frequencies.[38] Benkler argued that spread-spectrum techniques allowed for institutional arrangements that did away with the need for price signaling in transmission rights entirely.[39] He further claimed that such commons regimes were normatively superior to property regimes, because they allowed more speech and served the preference functions of a wider range of users.[40] Others who have built on the commons critique include myself,[41] cyberlaw scholar Lawrence Lessig,[42] technologist David Reed,[43] and attorney Stuart Buck.[44]

Two elements of the commons critique bear noting. First, it rests on two independent rationales: greater efficiency in optimizing the social welfare gains from wireless communication,[45] and better fidelity to social values such as autonomy, diversity, and innovation.[46] Second, commons advocates accept the economists’ diagnosis of the problem, just not their solution. The commons critique acknowledges that scarcity doe not justify government control of spectrum, and is in fact exacerbated by it. It concurs that spectrum should be managed through market forces rather than government dictates.[47] Instead, it shifts the debate. It highlights the common assumption of exclusivity between government licensing and property rights,[48] and opposes it with lightly controlled forms of shared access.

Despite its relative novelty and the widespread acceptance of the spectrum-as-property position, the commons critique has rapidly gained traction. Advocates of expanded property rights in spectrum have felt the need to critique it, though initially these attacks were dismissive.[49]

D) The FCC Spectrum Task Force Report

The FCC, the object of all this intellectual give-and-take, hasn’t been a passive bystander. Though the Commission initially dismissed the economists’ critique,[50] it gradually came around to the view that a market-based spectrum policy, and particularly spectrum auctions, were preferable to the tools it had previously used.[51] The FCC won authority from Congress in 1993 to issue licenses through auctions.[52] It held its first major auctions, for Personal Communications Service, in 1995.[53] By 1997, auctions had become the FCC’s preferred mechanism for spectrum assignment, and the Commission was well on its way toward adopting the rest of the economists’ proposals: flexibility, secondary markets, and ultimately full property rights.[54] The word “unlicensed” does not appear in the November 1999 FCC press release announcing its comprehensive Spectrum Policy Statement.[55] As recently as November 2000, the FCC’s major spectrum reform initiative was a proceeding to authorize secondary markets.[56]

Given this history, the FCC’s November 2002 Spectrum Policy Task Force Report is surprising.[57] The Task Force worked for several months to develop a detailed comprehensive blueprint for future FCC spectrum decisions. The report endorsed expansion of property rights in spectrum, or as it preferred, “exclusive use.” It also, however, devoted a significant portion of its analysis to the commons model, treating it as a promising approach on par with exclusive use.[58] The report suggested that exclusive use should generally be the primary mechanism for desirable lower-frequency spectrum, while commons should be the primary mechanism above 50 GHz.[59] Following the Spectrum Task Force Report, the Commission launched several proceedings to make available more unlicensed spectrum, including the allocation of an additional 255 MHz in the 5 GHz range,[60] and a proposal to allow unlicensed “underlays” in the broadcast television bands.[61]

There are several reasons for the rapid legitimation of the commons argument, beyond the rhetorical persuasiveness of its proponents: lingering fears about the consequences and irreversibility of spectrum propertization; excitement about unlicensed wireless data networks due to the business success of WiFi;[62] and desire for fresh approaches given the collapse of the telecom sector and the problems with some spectrum auctions in the US and Europe.[63] Regardless, the commons position is now entrenched as a factor in spectrum policy. The debate is now among two rival proposals instead of over whether to change from the status quo.

E) Seeing Clearly

Unfortunately, the argument is being framed in the wrong way. The common picture of the spectrum debate as a winner-take-all battle over whether to treat frequency bands as private property or unlicensed commons is problematic. Property and commons are not polar opposites. They are different, and the differences matter, but both will almost certainly be part of spectrum policy for the foreseeable future. More important is what the simplistic property vs. commons description leaves out. It ignores an array of new techniques that could transform use of the radio spectrum. Both proposals structure rights too coarsely, creating insurmountable transaction costs for novel communications mechanisms. An expanded formulation of the commons critique reveals not just an alternate way to manage frequency bands, but an entirely different way to look at wireless communication. Understood property, spectrum is more than frequencies, and less than a scarce physical resource.

By challenging the assumption that interference risk necessitates legally-enforced exclusivity, the commons argument opens the door to a fundamental reframing of wireless regulation. We’ve been engaged in the wrong debate about the wrong things. The wrong debate, because both property and commons are configurations of the same matrix: a web of rights, privileges, and duties assigned to certain types of equipment. The wrong things, because as Part II will demonstrate, concepts such as “spectrum,” “interference,” and “frequency bands” are deeply misleading. Removing those veils makes possible a new theory of wireless regulation that best promotes efficiency, equity, and freedom.

Both the property and commons approaches propose that users of wireless transmitters and receivers be subject to special legal conditions not applicable to other forms of private property.[64] For, example, transmitters may only operate on certain frequencies. The government licensing model has the same effect. It differs in the restrictiveness of the conditions (for example, specifying services and protocols) and, most importantly, in forbidding any changes to the property rights without government authorization. The major innovation of the commons mechanism is in what the property rights do not grant. They do not impose duties upon other equipment as a corollary to the transmission rights.[65]

A broadcast license allows the licensee to build a transmission tower, and to summon federal marshals to tear down pirate antennas in the same region. This power extends even to pirate broadcasters operating in adjacent locales or bands, if those cause harmful interference to the licensee. A fee simple ownership right granted to that broadcaster would have the same benefits. The fact that the right is now “private,” and can be traded or altered through the market, does not alter its basic structure. Government isn’t just giving something to the broadcaster; it’s taking something away from all potential pirate radio operators, even though they aren’t party to the agreement. Using a commons approach, however, the property right would still include an entitlement to transmit, but not the corollary ability to exclude other transmitters in the same band. Every WiFi user is both an authorized transmitter and a “pirate” to other authorized transmitters.

Why should rights granted to one user imply obligations on other users not subject to that grant?[66] The reason is that rights are social. They have no value if others take actions that render those rights worthless. Whether and how that should be factored into the legal allocation, however, is a contingent decision. Law offers many configurations for different situations. Ownership of land conveys a right to exclude others from that land (trespass), and rights to regulate actions taken elsewhere (nuisance). Trademarks convey rights to prevent others from engaging in similar uses, but not to prevent different uses or descriptive utterances. The Fifth Amendment protection against self-incrimination conveys a privilege to remain silent, a duty on the government not to interrogate you, but no right to prevent others from incriminating you.

So, where on the spectrum (pardon the pun) does spectrum fit? My claim is that spectrum is at worst like trademark and at best like self-incrimination, yet it is being treated like land. The common metaphor of trespass to spectrum oversimplifies the diverse mechanisms for structuring legal obligations around wireless devices.

Computational technology has enjoyed such huge improvements that today’s wireless devices are qualitatively different from those of Marconi’s day. Even the technology and usage patterns of the 1950s and 1960s, when Coase issued his critique and others elaborated upon how it could be implemented, are barely relevant today. Wireless rights look the way they do because of assumptions about interference.[67] Modern wireless systems, and those just over the horizon, are not just orders of magnitude more efficient at minimizing interference. They turn interference into a different kind of problem. In so doing, they turn the spectrum debate upside down.[68] Instead of strengthening exclusive control of frequencies through perpetual property rights, we should be making it broadly possible to share spectrum in ways we cannot even imagine today.

II) The Spectrum Fallacy

To rebuild the legal framework for wireless communication, we must first remove the façades that obscure clear thinking. Spectrum policy falls victim to several fallacies. Each is demonstrably false, yet remarkably durable. The most damaging is the notion that there is such a thing as spectrum, and that it behaves as a fixed physical resource like land. Establishing a legal regime under such a misconception is like sailing West from Europe to find a shorter trade route to India. You might find something interesting along the way, but you’ll never achieve your objective.

The fallacy is not confined to any side in the spectrum debate. However, overcoming the confusion provides ammunition for the commons position.

A) There Is No Cat

1) Spectrum

Albert Einstein, asked to explain radio, is reported to have replied:

You see, wire telegraph is a kind of a very, very long cat. You pull his tail in New York and his head is meowing in Los Angeles. Do you understand this? And radio operates exactly the same way: you send signals here, they receive them there. The only difference is that there is no cat.[69]

Einstein’s analogy is accurate, because it says only what spectrum is not. There is no proper way to explain what spectrum is, because there is no such thing as spectrum. It is an illusion we grasp hold of to avoid concepts that trouble our intuitions about how the world works. Radio transmissions are tied to frequencies only because that is the mechanism Marconi developed for multiplexing simultaneous signals in the same physical space. The spectrum as a progression of frequencies tied to services exists nowhere in nature. It is analogous to the periodic table of elements, helpful for understanding but purely an intellectual construct. The reification of that construct into a concrete physical manifestation causes nothing but confusion.[70]

In any wireless communications system, there are only three elements: transmitters, receivers, and electromagnetic radiation passing between them.[71] The waves do not ride on any medium; they are the medium. In information theory and engineering practice what lies between transmitter and receiver is called a channel. A channel is just another convenient way to describe the interaction of transmitters, receivers, and electromagnetic waves. It does not exist outside those interactions.

The popular notion that radio waves travel through the spectrum does not reflect the deep physical structure of reality. It recalls the luminiferous aether, the universal fluid that Isaac Newton postulated to explain how bodies moved through space. The world’s leading scientists accepted Newton’s construct for centuries, until it became clear that it did not accord with experimental results.[72] It took Einstein’s theory of relativity to demonstrate that the aether was a fiction, and to offer a new mechanism to do with that fiction had done.

It is no more rational to talk about rights in the spectrum than rights in the musical scale.[73] What government is assigning are rights to use certain types of equipment. That is true whether the legal regime is licensing, property, commons, or anything else that can be imagined.[74] Government cannot issue rights in radio frequencies themselves, because those frequencies are just properties of electromagnetic waves emitted and received by particular devices. Yet the literature is replete with articles that declare “the spectrum” imaginary and proceed to treat it as a concrete physical asset.

The problem is not that spectrum rights are an administrative creation associated with an intangible asset. So are pollution emission credits.[75] The trouble with assigning rights to the administratively created spectrum resource is that it serves no useful purpose. The equivalent would be to assign rights in masses rather than in physical objects such as cars and books that possess those masses. Standing behind the spectrum construct is frequency, which is just a property of electromagnetic waves, which are just energy radiated by equipment with particular properties.[76] Nothing is gained through this indirection. We can consider the equipment properties directly, and in an age of cheap computation and flexible devices, equipment is the better locus for regulation.

Even worse is the pervasive analogy to real estate. Courts considering the exotic realm of cyberspace frequently grasp at familiar common law doctrines designed for land.[77] Spectrum policy experts make the same connection.[78] Yet land is not only a thing, but a thing with very particular qualities. Comparing wireless communication to grazing sheep in a meadow suggests that a whole series of legal and economic constructs applied to meadows can usefully be applied to spectrum. They cannot. A meadow has a specific amount of grass, and one sheep eats so much of that grass each day. Wireless communication works differently.[79]

Even if one were to grant that interference among wireless communications devices is similar to nuisances that adjacent land owners impose on one another, that would not make spectrum analogous to land. The proper analogy would be between wireless communications rights and certain uses of land. Ownership of private property always includes limitations on how that property can be used. A murderer, for example, cannot claim he was merely exercising his right to use his legitimately owned gun.[80] A hog farm or tannery may be subject to restrictions for the benefit of adjacent homeowners, not because it somehow invades their land, but because its use of its own land is inconsistent with their enjoyment of theirs. The land is still property, with the same physical boundaries, but the bundle of right associated with that land has changed.

Crucially, the contours of the land-owner’s usage rights are defined in a social context, with reference to other owners who may be affected.[81] So too with spectrum. Interference is a function of collective uses and equipment choices, not of the medium involved.

A better, but still misleading, analogy is between spectrum and natural resources. This view appears most prominently in the work of Harvey Levin.[82] Yet even Levin acknowledges that, in precise terms, the spectrum is “a three-dimensional capability for transmitting information with electromagnetic energy.”[83] A capability is not the same as a resource. The spectrum resource Levin imagines still has an independent existence from the devices that engage in transmission. Levin admits that, unlike other resources, spectrum is perfectly and costlessly renewable, but suggests this is only a difference of degree.[84] He argues that spectrum is a common property resource that, like oil or fisheries, must be subject to administrative regulation or exclusive property rights to avoid over-use and depletion.[85] In other words, spectrum is a resource because it is subject to interference. Lawrence White makes the same linkage.[86] This assumption is false, for reasons I explain in the next section.

Not all scholars of spectrum policy treat spectrum as corporeal. Benkler repeatedly emphasizes that spectrum is not a thing. He goes so far as to label his preferred solution as “open wireless networks” to avoid references to a “spectrum commons.”[87] Benkler wants to avoid the spectrum fallacy because he argues for an industry model based around end-user purchases of equipment that operates without licensing. If spectrum is a thing, granting property rights in that thing seems only natural. Better to compare exclusive transmission rights and opportunities for manufacturers to build and sell frequency-sharing equipment.[88]

Coase also clearly understood that spectrum wasn’t a thing. As he explained in his seminal article on the FCC:

Every regular wave motion may be described as a frequency. The various musical notes correspond to frequencies in sound waves. The various colors correspond to frequencies in light waves. But it has not been thought necessary to allocate to different persons or to create property rights in the notes of the musical scale or the colors of the rainbow. ... What does not seem to have been understood is that what is being allocated by the Federal Communications Commission, or, if there was a market, what would be sold, is the right to use a piece of equipment to transmit signals in particular way.[89]

Coase needed this point to counter a different argument than Benkler. The FCC licensing system bases government control not only on interference avoidance, but on the idea that the spectrum is a “public trust.” If there is a thing called spectrum that belongs to the American people, government should regulate access to it in the same way it regulates access to the Grand Canyon. Privatizing the Grand Canyon is abhorrent to most Americans. How could government turn over a public treasure in perpetuity to the rapacious interests of private companies? Hence, Coase first had to replace the public airwaves with a set of private transmission rights. He could then convincingly argue that markets should allocate those transmission rights.

2) Interference

Coase in the 1950s understood that spectrum was an incoherent concept. A related point, the incoherence of interference, would have to wait until technology evolved beyond the analog broadcast systems prevalent at that time.[90] Coase’s property rights solution made sense when he developed it, though his work on transaction cost economics revealed just how contingent the determination was. With what we know today, the same analysis leads to a very different conclusion.

It turns out that interference, like spectrum, is a convenient fiction. As a physical matter, radio waves do not bounce off one another. They continue merrily on their way, propagating through free space forever, though attenuating in strength until they become undetectable. In a sense, therefore, interference is always present. No transmitter on Earth is perfectly immune from other signals.[91] What matters in communications systems, however, is not the waves themselves, but the ability to extract information from them. If two waves are nearby in frequency and location, it may be difficult for a receiver to determine which is which.[92] This is no different than the difficulty the receiver has in distinguishing a single wave from the ever-present background noise produced by everything from electric motors to cosmic radiation.[93]

Interference manifests itself in the receiver, not in the radio transmissions themselves. Moreover, it is a function of the receiver’s computational intelligence. A digital mobile phone handset sold today would pick up crystal-clear conversations where devices built in 1960 hear only static. The issue is not merely sensitivity. Claude Shannon’s capacity theorem, developed in his classic papers that established the foundations of information theory, holds that the capacity of a communications channel is proportional to the width of the channel and the transmission power used.[94] In other words, more bandwidth, all things being equal, means more capacity. Bandwidth is therefore commonly used as a synonym for capacity.

However, the concepts are not equivalent, because the other variables can change. A system may offer more capacity with less bandwidth, so long as it increases power. Or it can keep capacity constant at lower power by increasing bandwidth. This last scenario is important because high transmission power overwhelms receivers and causes what we call interference. Faced with a high-power and a low-power signal, the receiver will detect the high-power signal or some combination of the two. If the first signal is spread across a wider bandwidth and sent with very low power, however, the receiver may be able to pick up the second signal cleanly. The most common technique for trading off bandwidth and power in this way is known as spread-spectrum.

Spread spectrum is not the only method for mitigating interference. The simplest version of Shannon’s theorem provides the capacity of a communications channel between a single transmitter and a single receiver.[95] In the real world, though, we are concerned with radio communications systems, which can involve many transmitters, many receivers, and many intervening factors such as walls that reflect or distort the signals. This might seem to make the interference problem worse. And indeed it does, if we limit ourselves to the primitive radio technology of the 1920s. Fortunately, technology has come a long way. We are nearly three times as far in time from the 1927 Radio Act and the birth of regulated broadcasting as it was from Marconi’s experiments.

Research in multi-user information theory has identified numerous mechanisms to enhance capacity and avoid interference.[96] For example, receivers can be designed to function simultaneously as relay transmitters, allowing messages to hop from node to node like packets across the Internet, an architecture known as meshed networking.[97] This and other techniques exploit what David Reed calls cooperation gain and what multi-user information theory labels diversity gain.[98] They share the property that additional nodes in the network add capacity as well as consuming it.

How far back can the interference frontier be pushed? We don’t know. It is an open research question whether the capacity of a physically-bounded network with an arbitrary number of transmitters and receivers can scale linearly with the number of nodes.[99] If it could, each new user would add as much to the network as it took away. Even if it can’t, interference might become such a minor problem that legal regimes to cope with it are overkill. How close usage comes to some theoretical optimum matters less than whether, in practice, the benefits from more users exceed the costs. The more likely it is that interference will be a practical problem, the more transaction costs we should tolerate to avoid it.

Even the baseline for interference is not where it seems. Virtually every frequency through the 5 GHz range has been assigned either to a licensee, unlicensed operation, scientific activity such as radio astronomy, or government. The fact that there are few if any unassigned spaces on the frequency dial, even as wireless services become more popular and varied, reinforces the popular notion of a spectrum drought.[100]

Examining actual usage reveals a very different picture. Most frequencies are idle in most places most of the time. They may be off-limits to protect against interference with adjacent channels, the licensee may not actually be transmitting (as with many UHF television licensees), or the authorized service may not saturate the channel. A cellular phone tower, for example, is only active when communicating with a handset in its range. A recent survey by Shared Spectrum Inc., sponsored by the New America Foundation, found that two-thirds of the most desirable “beachfront” spectrum was “immediately available for shared, unlicensed use.” And that was during peak hours in a dense urban area.[101]

One final point about interference. Because it is solely a phenomenon of receivers, the receivers are legitimate subjects for allocation of legal rights. Our intuitive notion is that interference results from unauthorized transmissions that “block” other transmissions. However, the same “interfering” transmission may be totally unnoticeable to a more robust receiver.

Say A has a mobile phone license, and B establishes a wireless Internet link nearby over adjacent frequencies. It suddenly becomes difficult for A’s customers to receive calls when they are near B’s transmitter. One interpretation is that B is “causing” the interference and should be shut down. Another interpretation, however, is that A should bear the responsibility. A decided to use receivers that could not distinguish B’s signal. Society could make a choice to protect A rather than B. However, that choice would be based not on causation but on some calculation of the welfare effects of assigning the right to one side or the other.[102]

Coase engaged in exactly this analysis in both his FCC article and his seminal paper, The Problem of Social Cost.[103] For illustration, Coase used a 19th century case involving a confectioner and a doctor who builds an examining room at the edge of an adjacent property.[104] The doctor finds his work impaired amid the vibrations from the confectioner’s machinery. As Coase pointed out, we could say the confectioner caused injury to the doctor, or that the doctor is excessively sensitive to vibrations. We can choose, but to do so is a value decision among two legitimate activities.[105] Any claim about interference can be expressed either in terms of transmitter intrusiveness or receiver sensitivity. We can choose to impose a duty on the transmitter, or we can impose a duty on the receiver, but either way we make a choice.[106]

Surprisingly, the FCC’s rules implicitly acknowledge the contingency of interference. They define interference as “[t]he effect of unwanted energy....”[107] Interference is not an action, or even a state; it is an “effect.” Moreover, it occurs only when energy is “unwanted.” Unwanted by whom? The erstwhile receiver of some other “wanted” energy. The transmissions themselves have no idea whether they are welcome or not.

The collective nature of wireless communications rights is clearly apparent in the FCC’s definition. I can emit the same radio waves a hundred times, but if you decide the next emission is “unwanted” for your simultaneous communications, it suddenly becomes interference. Interference is a social construct arising from collective uses of wireless devices. It depends on the technical capabilities of those devices as well as the applications and services for which they are employed.

The ultimate policy goal is not to eliminate interference. That is hopeless. Some energy will always propagate where it is not desired. More fundamentally, though, interference is not an evil that must be eradicated at all costs. Interference is a by-product of the very phenomenon policy-makers hope to achieve: more value from wireless communication. If there were only two radio stations using the entire spectrum there would be little opportunity for interference. The widespread possibility for interference is a sign of success, not failure. Focusing too hard on eliminating it would be like killing off an annoying animal species, only to have a worse pest which the first species had kept in check multiply.[108]

The proper goal is to optimize interference.[109] A transmission should take place if the marginal value it adds exceeds its marginal cost, with interference counting as a cost. This analysis becomes complicated because interference is neither a localized nor an all-or-nothing phenomenon. The interfering “noise” for any transmission is a combination of intentional and unintentional emissions from many other sources, which affect reception both individually and collectively.[110] A degradation of reception may mean a slight hiss in the background of a phone call or a lost message between an air traffic controller and a jumbo jet pilot. The proper analysis is not whether a regime prevents or tolerates interference, but how it resolves boundary cases and allows for tradeoffs along many dimensions.

3) Frequency blocks

A third aspect of the spectrum fallacy is the emphasis on frequency blocks as the unit of allocation.[111] Frequency is indeed a physical property of radio waves.[112] The relevant legal structures, however, are designed not for science experiments but for communications systems. Frequency, like bandwidth, is but one aspect of those systems. Though every wireless license or property right includes other constraints as well, frequency has been the central delimiter among systems since Marconi’s day.[113]

The commons critique coalesced with the development of spread-spectrum systems in the unlicensed 900 MHz, 2.4 GHz, and 5 GHz bands. Benkler’s touchstone was the FCC’s 1997 decision to allocate spectrum at 5 GHz for unlicensed National Information Infrastructure (U-NII) devices.[114] Subsequently, the rapid growth of the market for WiFi devices, primarily in the 2.4 GHz Industrial, Scientific, and Medical (ISM) band, has proved both the feasibility and dynamism of a commons-like arrangement. In both cases, the commons exists within a “park” designated exclusively for unlicensed operation. Emphasis on these developments has created the misconception that the commons critique relies on dedicated unlicensed frequency bands.

Hence, property advocates claim that governments will fall victim to the same failings in allocating bands for unlicensed use as they do in allocating bands for licensed systems.[115] They assert that if unlicensed parks such as the U-NII band are valuable, they will appear in a property-rights world either through government creation of “public parks” or manufacturers buying rights to create “private parks.”[116] I address these arguments in Part IV. Even if they are true, though, they fail to rebut the commons critique. The wireless commons involves more than unlicensed bands.

There are several technical mechanisms to communicate without assigning dedicated frequency bands to each channel. All of them provide pathways to expand wireless communications capacity other than exploiting higher frequencies or using existing frequencies more intensively, which are the primary techniques property advocates have considered.[117]

o Wideband underlay

Take spread-spectrum to its logical conclusion, and the result is ultra-wideband (UWB). UWB transmissions use such large bandwidth that they can transmit at power levels below the “noise floor” for other devices. In other words, a licensed system operating in a band covered by the UWB system won’t even know it was there. The FCC authorized such “underlay” techniques in its February 2002 UWB order.[118] Most UWB systems are carrierless: in contrast to virtually all other radios since Marconi’s day, they do not operate by impressing messages upon carrier waves of a specified frequency. Instead, they use extremely short electrical pulses.[119]

The FCC’s UWB order effectively created a commons without setting aside a dedicated unlicensed band. It had to. As a matter of physics, the shorter the duration of a wireless signal, the wider it spreads. To achieve its full potential, UWB cannot be confined to traditional frequency blocks of a few Megahertz. The FCC’s order, for example, authorizes UWB across a range of seven Gigahertz, though not every system will use the entire range.[120] There is no way a prospective UWB system manufacturer could possibly negotiate with all the constituent frequency bands for authorization.[121] The problem is not that a particular allocation mechanism involves too-narrow blocks; it is that any limitation on frequency range will constrain some UWB systems which may be optimal to permit.

o Opportunistic sharing or interweaving

Many frequencies, even those ostensibly licensed for established services, are actually empty some of all of the time. For example, television channels 3 and 6 are occupied in Philadelphia, while 2 and 4 are vacant. The reverse is true in New York City. At the time broadcast television was introduced, receivers in Philadelphia couldn’t distinguish between signals on channel 2 and channel 3, or between the local channel 2 and channel 2 in New York. So some channels simply lie fallow. In other cases, such as UHF television and ITFS fixed wireless, licensees may have the right to transmit but are not doing so for economic reasons. Or a system, such as a cellular telephone network, may operate throughout the licensed band, but not transmit in all places at all times.

Current technologies can exploit some of these holes, a process known as opportunistic sharing or interweaving.[122] In particular, software-defined radio, which uses reconfigurable software to tune radios to different frequencies and encoding schemes, holds great promise for facilitating more powerful opportunistic sharing strategies, should the law change to permit them.[123] The Defense Advanced Research Projects Agency (DARPA), which funded much of the basic networking research that led to the Internet, is actively exploring one opportunistic sharing mechanism through its XG research program.[124] In the future, “cognitive radios” may be able to scan the local spectral environment, find an open frequency, transmit there using an efficient encoding mechanism, and move to another frequency so quickly that a coexisting system won’t even know it’s there.[125] Allocation according to frequency blocks would hamstring such devices.

Though the “holes” opportunistically exploited are usually frequency-based, this is not necessarily the case. For example, some meteorological radar systems are in operation only a few minutes per hour. Another system could split use of the frequency purely on a time basis.[126]

o Intelligent coding and smart antennas

Smart digital devices can employ many techniques other than frequency diversity to improve the performance of wireless systems.[127] These mechanisms use factors such as the physical location of transmitters, motion, or the scattering effects of intervening obstacles that portions of the signal bounce off, to better lock onto signals and distinguish them from noise.[128] For example, the BLAST system developed at Bell Laboratories uses multiple antennas on both the transmitter and receiver. By tracking the multiple signal paths between the antenna arrays, BLAST obtains a better understanding of the signal characteristics.[129] This type of approach is known as space-time coding or multiple in, multiple out (MIMO).

These are not just theoretical ideas. Airgo Networks, a Silicon Valley startup, announced MIMO chipsets in Summer 2003 that extend the range and capacity of WiFi systems.[130] Companies such as Northpoint Technology have demonstrated “angle of arrival” systems that allow for terrestrial wireless communications on the same frequencies used for satellite uplink and downlink, with neither service subject to interference.[131] The “new” spectrum, which could in theory be a commons, perfectly overlaps the frequencies of the satellite system, and uses similar power levels.

Intelligence can be built not just into the software that processes signals at the transmitter or receiver, but into the antennas they use. The classic TV aerial on the roof of a house is exceedingly simple. It uses horizontal bars of lengths that match the periodic frequencies of a broadcast channel. Modern electronic antennas can be highly directional and adaptive. They can even be tuned dynamically to lock on and shape a narrow directional beam to a signal, preventing it from spreading widely where it might impinge on other signals.[132]

o Physical space

Wireless systems can also be divided by physical location.[133] A low-power wireless transmitter in a house may not create noticeable interference to any system outside that house.[134] That is true regardless of what frequency band the transmitter uses. Under longstanding doctrines of property law and the Fourth Amendment, people are permitted to engage in many forms of conduct in their own homes that would be impermissible in public.

Michael Chartier of Intel has proposed a rule that wireless transmission rights should be “fixtures” to private property in certain bands.[135] This principle could be adopted more broadly. If a transmission within a house does not radiate outside to the point at which it affects other signals, why should there be any constrains on that transmission? Property owners are entitled to knock down walls of their houses or decorate their bedrooms in a manner others would find garish. If I choose to operate a wireless system in my house whose only negative externality is that I knock out my own broadcast TV reception, perhaps that should be my choice.

o Endless possibilities?

There is no reason to think all possible mechanisms for sharing spectrum on a basis other than frequency division have been invented. Computers continue to become more powerful, opening up new possibilities that were not feasible before. Multi-user information theory is a particularly fertile research area in which several major questions remain unsolved. Many of the intelligent coding mechanisms have the interesting property that they take phenomena that once “caused” interference and use it to improve reception. For example, when portions of a signal bounce off walls or other obstacles, they arrive at a receiver slightly after signals that passed straight through the air. Such “multipath fading” is the bane of wireless systems, because receivers don’t realize the second signal is a copy of the first. If, however, the system is smart enough, it can correlate the two signals and combine them, improving reception. This suggests we may just be seeing the beginning of the post-frequency wireless era.[136]

4) Architecture

The spectrum fallacy is pernicious not only in placing too much focus on frequency, but also in directing attention away from characteristics that matter a great deal, such as architecture. Architecture is an essential element of any communications system.[137] In this context, architecture refers to the organizing principles and structure of relationships among the network’s components.[138] Focusing on the spectrum rather than the devices obscures the different ways those devices can be designed and connected. This in turn produces a blind spot about how architecture can enhance wireless capacity and value.[139]

Wireless communications systems are more than isolated transmitter/receiver pairs. Two systems in the same frequency and location may deliver very different services if their architectures are different. For example, a broadcast service such as television sends the same signal from a central transmitter to many passive receivers. A cellular service such as mobile telephony uses many smaller transmitters which connect locally to two-way handsets. Each user may get less capacity in the cellular model, but the total capacity of the system is much greater because so many different transmissions can occur simultaneously. The broadcast and cellular networks may be alternative uses for the same location, time, and frequency, but they are not interchangeable.[140] Each produces a different utilization pattern. And each produces a different boundary along which other communications systems could theoretically coexist.

The development of cellular systems was a key innovation in wireless technology, because it allowed many small networks to operate as one big network.[141] Meshed networking takes that concept even further, turning receivers into repeaters that add capacity as they consume it. Another new architecture is ad hoc networking, in which new nodes anywhere automatically become part of the network, compared to the planned expansion of traditional systems. How spectrum is made available influences network architectures, which in turn affect how spectrum can be used. A commons, which substitutes open entry for exclusive control, tends to foster decentralized networks of many transmitters, with capital expenditures centered on user purchases of commodity equipment. Exclusive licensing or property rights favor centralized infrastructure investment by an operator.[142]

5) Implications for the property vs. commons debate

The spectrum fallacy puts the debate on the wrong terms. Analyzing property and commons models for rights in a spectrum resource is an interesting intellectual exercise, but it’s not a discussion about the real world. The only thing that matters is the effects of the two regimes when seen for what they really are: different configurations of the rights in wireless transmitters and receivers. And in that context, many arguments for property rights are only valid under particular factual assumptions which are increasingly questionable.

The property critique falls headlong into the spectrum fallacy.[143] Granted, property advocates understand the basic physics of wireless communication. Their arguments, however, ineluctably lead to a model of spectrum as land.[144] It is difficult to advocate ownership without a tangible resource to be owned. The land metaphor allows property advocates to fit extensions such as easements and subdivisions into a consistent cognitive map.[145] However, as I discuss below in Part IV, there are reasons to be skeptical the property system can accommodate the wealth of additional possibilities that are now becoming real for wireless communication. The only way to treat frequency blocks like land is to ignore the mechanisms under which spectrum can be used differently.

The debate between property and commons is not a fight over spectrum; it’s a fight about different configurations of rights. The policy question, therefore, is which constellation of rights is most efficient and socially desirable. As Coase demonstrated, there is no “correct” place to assign rights. Once the right is assigned the parties may bargain to reassign it. The assignment does, however, affect the likelihood and transaction costs in getting to that equilibrium point. The property and commons regimes for wireless communication involve different kinds of transaction costs in modifying transmission rights. By placing all the burden on the potential entrant to aggregate information and negotiate the purchase of the necessary rights, the exclusive property rights model imposes a bias toward established uses and techniques. By making boundary definition between systems necessarily a market-based transaction, it adds rigidity and cost to the evolving process of determining the most efficient configuration of devices.[146]

Exclusive property rights are superior to unconstrained entry for most physical resources. Wireless is different.[147] It is different because spectrum is not a physical resource, and because users can add capacity or avoid conflicts dynamically. If spectrum were a thing, the transaction cost analysis for a property regime would be relatively simple. The FCC-defined constraints on licenses could be converted into private property rights to transmit in certain frequency bands. If, as seems likely, the existing boundaries were not completely efficient, rights-holders could buy or sell them. The spectrum market would reshuffle the ownership of frequency blocks, much as the real estate market reshuffles title to land.

Eliminate the spectrum fallacy, and the picture becomes more complicated. Frequencies are not the only dimension for transactions, because they are far from the only variable that determines interference. Underlay mechanisms, to take one example, depend on non-exclusivity of frequency blocks. So does opportunistic sharing through cognitive radios, but in a completely different manner. The more different ways there are to configure wireless communications systems in order to increase capacity, the more complex the transactional regime to implement those mechanisms becomes, assuming each time there must be a financial transaction. A property regime may still be a good answer, but the choice is not so clear ex ante.

B) Deep Uncertainties

1) What we don’t know could hurt us

Closely related to the false vision of a spectrum resource is an epistemological fallacy. We think we know how wireless communications systems will be used. Though rules are described in general terms, we typically have a particular service, or group of services, in mind when we talk about them.

Historically, wireless policy was about broadcast. Broadcast radio was the primary commercial application that drove the government to assert control over the airwaves in the 1920s. Broadcast television, which supplanted radio as the most lucrative method of wireless communication, was the initial animating service for the economists’ critique.[148] In the 1980s and 1990s, cellular telephony