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Is the FCC making venture capital investment in unlicensed spectrum risky?

Posted May 19th, 2016 in spectrum, unlicensed spectrum and tagged , by Alton Drew

Venture capital investing in device makers that use unlicensed spectrum have a number of challenges. One challenge is interference from other networks operating in unlicensed spectrum bands. For example, the Federal Communications Commission has in circulation an item containing a request by Globalstar to deploy a low power broadband network in the 2473-2483.5 MHz band where certain devices using unlicensed spectrum operate. The Commission needs to determine whether this service will interfere with devices using unlicensed spectrum.  A number of providers, like Bluetooth, that use unlicensed spectrum to provide services have raised their concerns with the Commission. If consumers find they cannot use devices due to interference, smaller revenue streams may result, putting the device maker’s business model in jeopardy.

Another challenge comes from using unlicensed spectrum itself. Not only is its use less protected from interference as opposed to licensed spectrum, but since the provider also has no license to use as collateral for financing. Will a venture capitalist want to pick up the financing slack (and risk) when additional financing can’t be obtained from banks?

Also, since devices simply need certification that they meet Commission operational rules for unlicensed spectrum, barriers to entry in the unlicensed device space are lower than that in the licensed space. The potential for increased competition means potential reduced revenue streams which lowers returns on a venture capitalist’s investment.

The Commission can’t do much in terms of upfront capital costs or encouraging investment in proprietary technology, the kind of moats that providers of devices using unlicensed spectrum could create to protect their turf. The Commission has to come up with workable definitions of acceptable interference in the unlicensed spectrum space. The Commission should also ensure that deployment of a broadband network in unlicensed space doesn’t result in privatization or a gatekeeper scenario that keeps other unlicensed device providers out of the unlicensed spectrum space.

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Driver-less cars and the nanny state on steroids

Posted May 12th, 2016 in spectrum, unlicensed spectrum, Wi-Fi, wireless communications and tagged by Alton Drew

I’m not a fan of the driver-less car concept. What’s the fun of a driver-less car unless the car itself is not fun to drive to begin with. What’s not so fun is a brewing fight over the best uses for unlicensed spectrum as driver-less car producers bump heads with communications providers. In this article from The Washington Post, there is a discussion about a proposal from Transportation secretary Anthony Foxx that would require all new cars be equipped with car-to-car communications devices. These devices would operate within 75 Mhz of the 5,9 Ghz band. Groups, like the National Cable and Telecommunications Association, argue that spectrum is running out and unlicensed spectrum needs to be made available to fill the gap.

Unlicensed spectrum has been touted as a space for technology and communications innovation. It’s the area in the electromagnetic spectrum where certain wireless devices play including WiFi hot spots, medical equipment, wireless headsets, remote car door openers, wireless keyboards, and cordless phones. With cognitive radio technology, unlicensed spectrum’s vulnerability to interference can be addressed making unlicensed spectrum an emerging alternative for carrying communications.

The only long-term benefit I see from driver-less cars is that flowing to companies like Zip Car. Uber drivers should be scared shitless because why get in a car with a driver with a criminal record when all you have to do is call up a driver-less car from Google. And while the State makes an argument that driver-less cars can reduce the number of non-alcohol related accidents by 80%, shouldn’t drivers (and the insurance companies that issue policies) be prepared to take on the costs of accidents?

I would rather see every available piece of spectrum provided to households that pursue a self-sustainable path. For example, using unlicensed spectrum for their internal needs like monitoring electricity usage or connecting their homes to their rooftop solar panels or wind turbines. Or using unlicensed spectrum to connect with neighbors and public safety.

The Obama administration’s nanny-state approach to the use of unlicensed spectrum by going to bat for initiatives like driver-less cars is a waste of a valuable resource.