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WiFi: The Great Communist Conspiracy?
from the evil,-I-tell-you...-eeeeeeeevil dept
The Progress and Freedom Foundation is a Washington DC-based think tank that we've discussed quite a bit recently, mostly because it's hard to match what they keep claiming back to reality. A few weeks ago, I noted that it seemed like a big part of the reason why they seemed to diverge from many others when it came to understanding free market economics was their failure to understand the concept of "zero." It sounds silly, but historically zero has been one of the most difficult concepts to grasp -- stunting the development of math and physics for thousands of years in some cases. Lately, it seems to be stunting PFF's understanding of economics. Basically, it appears that PFF believes that any time you enter a zero into an economic equation, the economics break down completely. This isn't that surprising if you think of economics solely as the study of resource allocation under conditions of scarcity. The "zero" takes away the scarcity, so you might think it's a problem. However, in many cases, that's not true at all. The zero means there's no scarcity, but it doesn't mean the basic economics fails (as we've shown repeatedly with intellectual property issues). This misunderstanding of zero seems to extend beyond just intellectual property at PFF, to another of their pet causes: spectrum allocation. Earlier this year, they came out with a report saying that unlicensed spectrum stunted innovation -- despite a variety of counter-examples of products (WiFi, cordless phones, etc.) that make use of unlicensed spectrum, and have clearly created huge, innovative, industries, while also aiding in innovation throughout many other industries (think of how much WiFi has contributed to increased productivity). Meanwhile, on the closed spectrum side of things, development and innovation has moved at a much slower pace. The folks at PFF are back beating this drum again, focusing on how the FCC shouldn't turn "white space" spectrum into open spectrum, but instead auction it off to the highest bidder. White space spectrum is (more or less) spectrum the TV broadcasters have been granted, but don't use, which the FCC is looking to get into the hands of those who might actually use it.
The article then goes into a discussion about just what a bad idea unlicensed spectrum is, again, suggesting that it somehow harms innovation by not effectively allocating the spectrum -- and repeatedly hinting at the fact unlicensed spectrum supporters are somehow socialists, talking about how it's supported by those who believe in the "commons" model, and saying that unlicensed spectrum is "just a new version of a centralized allocation system." In other words, WiFi is communism and central planning, whereas selling the spectrum to a few oligopolists is capitalism and free markets. Of course, for anyone who understands this stuff, such claims are ludicrous. Unlicensed spectrum is hardly a "centralized allocation system," and it's hard to see how anyone could make such a claim with a straight face. The level of competition and continued innovation within open spectrum should make that pretty clear. The problem, again, is the failure to understand zero. PFF is interpreting unlicensed spectrum to be a government hand out, and filling in that there must be scarcity issues, even when there aren't. Most existing open spectrum developments have been much more focused on applications where interference (scarcity) isn't an issue -- and there's no reason to believe that the same wouldn't be true with this spectrum as well. The real question is whether or not the spectrum will be put to good, and efficient, use. Whereas PFF believes it only gets put to good use when it's been paid for (giving incentives to those who paid for it to get the returns), what those who understand zero recognize, is that unlicensed spectrum turns spectrum into a free input, lowering the costs and allowing companies to provide products that serve the market at much more reasonable rates. It's not about socialism, communism, central planning or anything like that: but about making the inputs into the system less of a barrier to providing the market with products that they want.
21 Comments | Leave a Comment..
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Reader Comments (rss)
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Spot On...
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Yay First Post!
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Yay First Post!
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Right on
1. open source
2. open spectrum
3. products without patents
4. countries without strong patent monopoly regimes
All of the above, according to the PFF, must inherently suck. There is not need to examine any of them in detail to see if they measure up against "non-free" competitors. They can't, because they all use zero. So there is no need to try Linux out before dismissing it, no need to talk about 900Mhz cordless phones, no need to mention other frequencies which are already in the commons and well used. No need to look at countries that do well economically without oppressive patent systems. We can dismiss all of these out of hand, because they don't align with the "zero is bad" doctrine.
The doctrine is what really matters, after all. It doesn't matter how much evidence there is that contradicts the doctrine. The PFF is all about doctrine.
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Deja Vu
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All Right
It's time to compile the official TechDirt Enemies List!
bastards...
MjM
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Common
I seriously doubt it's a 'misunderstanding.' It's more likely a deliberate twisting of the facts in order to reach a pre-determined conclusion. The only thing we don't know is, 'what are they trying to promote?'
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Economics
When you create property rights in spectrum you do one of two things:
1. you exclude every other potential innovator from that space; or
2. you impose transaction costs for a potential user in negotiating the use of the spectrum - that is there are costs of the negotiation itself, quite apart from any licencing fees which are agreed to be paid. The transaction costs become a hurdle for any new entrants.
It makes perfect economic sense to leave part of the spectum open for experimental products. If the product is a success and needs exclusive access to bandwidth then it can move over to a different, allocated, part of the spectrum.
In some ways innovators and small scale users are the 'long tail" of spectrum users and there has to be room for them.
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Re: All Right
It's time to compile the official TechDirt Enemies List!
While I know you're joking... this isn't accurate at all. Most of those on your list are companies that we think are making business mistakes. I wouldn't call them enemies, but those who are looking at things from a short-sighted viewpoint, which we actually believe will hurt them in the long run.
We're trying to *help* them, not destroy them.
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True but one point
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Re: Economics
Hmm. The source of being able to charge for value is scarcity. That's not the same thing... A lack of scarcity could simply cheapen the inputs of other products, which can definitely be seen as having great value.
The rest of your comment, however, I agree with.
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Less government is regulation is communist?
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NOOOO!
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Re: Re: Economics
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Basically what a spectrum auction is is the government selling off something that belongs to the people - selling it to someone so they can then sell it BACK to the people at a profit. As if they sold off Yellowstone to Disney, so that Disney could then charge everyone admission.
It's a license to print money, essentially.
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you got cojones
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Re: you got cojones
If you laid all the economists in the world end to end, they wouldn't reach a conclusion.
The fact that the guy has a Ph.D. in economics doesn't stand for much if he is out there parrottng nonsense on behalf of a lobby group.
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I'm afraid a 'commons' does require central planni
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Re: I'm afraid a 'commons' does require central pl
In some cases that's true, but it need not be in all.
Still, in the case of WiFi, I think you'd agree that it worked out quite well. They set a simple rule to minimize interference questions and then stayed pretty much out of it... and that's quite a success story. We weren't seeing anything like it in closed spectrum, were we?
Setting up a few simple boundary rules is hardly "central planning."
Also, when it comes to wide area networks, where interference is more of a concern, I'm still not convinced you're going to have so many entrants that they won't be able to work out interference issues through mutual agreements. In many cases the interference harms everyone (it's not a case of one company hurting another, but one company hurting everyone including themselves). So, there are incentives in place for companies to work out ways to play nicely together, without necessarily involving gov't "central planning."
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Re: I'm afraid a 'commons' does require central pl
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For example, why should I be able to search massive amounts of Internet data via a third-party technology for free? It doesn't make sense. That company spent hundreds of millions on that technology, but I get to use it for free?
Inconceivable!
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