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Out of Thin Air

February 5, 2013

Given the near-constant international economic angst over energy security, you would think that the discovery of trillions of dollars of oil in Australia could be the most significant geopolitical development in the recent past. For a frame of reference, the estimated 133,000,000,000-233,000,000,000 barrels of oil that was discovered = 7,000-12,000 days of America’s aggregate oil consumption = 20 years worth of American oil consumption = approximately 4 years of global oil consumption.

That’s a pretty big deal, considering the implications that has on the predictions of some doomsayers who predicted the world would not be able to find a replacement for oil before it ran out in our lifetimes. And its an even bigger deal when you consider the find’s effects on the ability of OPEC to control prices when another non-member state like Australia becomes a major net exporter and can break up the oligopolistic control over pricing that has kept consumers simultaneously addicted to oil and resistant to change for so long.

Interestingly enough, the Australian find comes at the heels of similarly major discoveries and innovations in the exploitation of shale oil in the United States. These discoveries and new techniques may lead to the United States surpassing Saudi Arabia as the world’s leading producer of petroleum, which has other obvious geopolitical implications for a slightly less oil-hungry United States. And let’s not forget the non-outsourceable jobs that will be created to harness and process those reserves. Now there’s a big gain.

However, if these oil discoveries are like every other such discovery, it is likely that most of the positive externalities of additional oil reserves are likely to be mostly internalized by private entities that will be exploit those reserves for their own profit. By contrast, there is another giant, natural resource with incredible potential may soon be tapped: the wireless spectrum.

The FCC has recently proposed that portions of the electromagnetic spectrum be reserved for large free public use, that consumers could eventually use to make calls or access the Internet. Unlike those seemingly trollish networks labelled “Free Public Wi-Fi,”

The airwaves that FCC officials want to hand over to the public would be much more powerful than existing WiFi networks that have become common in households. They could penetrate thick concrete walls and travel over hills and around trees. If all goes as planned, free access to the Web would be available in just about every metropolitan area and in many rural areas.

The new WiFi networks would also have much farther reach, allowing for a driverless car to communicate with another vehicle a mile away or a patient’s heart monitor to connect to a hospital on the other side of town.

(Note, most of that should have used the word “could” rather than “would”). You might ask why the FCC hasn’t already done this, and the reason is that it was assumed that people wouldn’t be able to figure out how to use free spectrum without the FCC telling people which frequencies they may use. Until now, the FCC has accepted the economists’ logic that, in the face of the tragedy of the commons that is electromagnetic spectrum, the public is best served by slicing up the spectrum and selling it to various stewards who can make sure it gets commercially exploited by someone with an interest in efficient levels of use.

However, when it comes to a resource like the electromagnetic spectrum (and the transmission of information, in particular), traditional arguments don’t fare so well. Device makers have been figuring out how to use even extremely limited spectrum without interfering with the usage of others since the advent of WiFi itself, which was invented on–and continues to operate on–the sliver of electromagnetic spectrum the FCC left open for garage door openers. And now, the truth of technology has finally caught up to logic and the historic justification for regulation of the electromagnetic spectrum: the FCC is finally treating the spectrum like the public resource it is, and we may see that it gets used for the public’s maximal benefit.

The result of legitimately free (as in freedom, if not as in beer) access to the spectrum would be an explosion of communication, innovation, culture, socio-economic fairness, and yes, even commerce. Though the proposal doesn’t necessarily mean that free (as in beer) internet access will be provided, it seems likely if companies like Apple, Google, Cisco or Microsoft can build in technology on their devices that can figure out ways to connect to an Internet backbone. Think about how much money could go directly back into the pockets of how many people who pay telecommunications providers, and how much innovation and freedom would be promoted by allowing companies to try new things in the most free environment possible.

If it wasn’t already obvious enough that this move would have serious benefits to consumers, just look at who’s opposing it: the $178 billion wireless industry. These are the same guys making 97 percent profit margins on their “almost comically profitable” internet services because there are only a few major players in the market and prices can be fixed relatively easily. Remind you of any other industry that seems to get a lot of its crazy profits from exorbitant and seemingly unavoidable charges to consumers?

The ISPs also oppose basically any new innovation or change in the marketplace on the grounds that they “have to capitalize on what [they]’ve invested.” Which is to say, the official policy is that the telecommunications companies plan no more innovation until they’re forced to innovate further as a result of competition. And until the FCC’s latest proposal, it seems like Google was the only company with the size to give the ISPs a reason to even consider improving their infrastructure in a way that would pass the benefits along to the consumer. And even a company as large as Google is only rolling out Fiber in Kansas City as a way of testing the water.

So, for the rest of us, we’ll have to put some public trust in the FCC, and hope that the difference between spectrum and oil is that the spillover benefits will flow to the public.

2 Comments leave one →
  1. February 18, 2013 1:22 pm
    • zjafri06 permalink
      February 18, 2013 1:22 pm

      Susan Crawford on Why U.S. Internet Access is Slow, Costly, and Unfair

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