FCC Gives Green Light on White Space Spectrum

By: Steven Hartley, Senior Analyst, Ovum
(Business News & Technology News, 10 Nov 2008)

The US Federal Communication Commission (FCC) has finally agreed to allow the White Space spectrum between TV broadcast channels in the 700MHz range to be used unlicensed by wireless devices. Despite celebrations from the proposal's supporters, this does not signal impending doom for US mobile network operators. There is still a very long way to go.

Google is the clear winner, but this is only a "careful first step"
The clear winners in this vote are the Internet players, such as Google and Microsoft, which can now start developing "Wi-Fi on steroids", as it was described by FCC Chairman Kevin Martin. Because of the frequency, the hope (according to Google's co-founder Larry Page) is for "better coverage at lower cost". This is particularly important in rural areas, which have become an important public policy issue.

Google wins twice with this decision. As well as saving cash in this year's spectrum auctions, it has now been handed the spectrum for free! Other notable beneficiaries include hardware vendors, such as Intel and Motorola, who are keen to manufacture equipment.

Yet the FCC was extremely careful to highlight that this was a "careful first step" rather than the end result. Outstanding issues remain that could limit its impact.

Interference concerns result in stringent device controls
The risk of interference from White Space services has meant broadcasters and wireless microphone users have been vehemently opposed. They were supported in their claim by the first devices tested by the FCC causing interference.

As a result, the FCC is imposing more rigorous restrictions on the devices operating in this spectrum than we have seen before. This will no doubt lead to higher equipment costs, eroding the commercial potential. There is also the question of whether the larger device vendors will commit to produce devices if they feel that it jeopardises their existing relationships with operators.

Devices will require sophisticated radios and management of those radios. They must be location aware and be able to check with a database of potential interference locations, such as entertainment venues or TV broadcast towers. Secondly, all devices will need to be tested by the FCC, those not able to access the location database even more rigorously. Thirdly, radio power will need to be halved if operating in a channel adjacent to a TV broadcast.

Bandwidth, backhaul and procedures are missing
The FCC's decision also lacked key elements that will, at a minimum, affect the timing of service deployments.

The most important is that no technology standards have been defined, suggesting a standards battle that will limit economies of scale. This also means that the potential bandwidth and services that could be deployed remain undefined.

Furthermore, no provision has been made for backhaul, so how will much-touted rural services transport their traffic? A separate Notice of Inquiry has been established to look into this issue, but this will take time.

And finally, there are no procedures to deal with interference complaints, as emphasised by the most reticent Commissioner, Deborah Tate. This is certainly not insurmountable, but highlights how much remains before services can begin.

It's all about the business model
Regardless of technology, if a service does not meet a need at an appropriate price then it is doomed. Therefore, the business model for device vendors and service providers is critical. Unfortunately, the FCC's reference to Wi-Fi brings back bad memories of failed metropolitan Wi-Fi networks.

Google's involvement strongly suggests that it will take an advertising-led approach. But, can it get enough advertising revenue from the White Spaces? If rural communities are the only segment, then no. Urban users will be key, but if the interference restrictions prove too limiting then Google could find its plans undermined.

Operators aren't doomed yet
The announcement will do little to undermine the status quo in the short term—although the newly approved Clearwire is looking increasingly isolated in its nationwide WiMAX deployment, reducing potential equipment economies of scale. Operators could even benefit from White Spaces by launching services where they currently lack coverage. In the longer term, a lot will depend on ironing out the above issues, not least from a commercial perspective.

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