• Yochai Benkler
• Berkman Center for Internet & Society

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09 November 2011The paper reviews evidence from eight wireless markets: mobile broadband; wireless healthcare; smart grid communications; inventory management; access control; mobile payments; fleet management; and secondary markets in spectrum.  The author finds that markets are adopting unlicensed wireless strategies in mission-critical applications, in many cases more so than they are building on licensed strategies.

Eighty percent of wireless healthcare; seventy percent of smart grid communications; and forty to ninety percent of mobile broadband data to smartphones and tablets use unlicensed strategies.  Unlicensed technologies are entirely dominant in inventory management and access control. For mobile payments, current major applications use unlicensed, and early implementations of mobile phone payments suggest there is no particular benefit to licensed strategies in this space.  Fleet management is the one area where licensed technologies are predominant. However, UPS, owner of the second largest commercial fleet in the U.S., has implemented its fleet management system purely with unlicensed wireless, suggesting that even here unlicensed may develop attractive alternatives.  By contrast to these dynamic markets, secondary markets in licensed spectrum have been anemic.

Market evidence suggests that unlicensed wireless strategies are becoming the primary approach for implementing wireless communications technology.  Actual market deployments of wireless technologies suggests that unlicensed follows the innovation model of the Internet, applied to wireless communications.  Licensed-spectrum, by contrast, replicates the telephone system model. 

Policy Implications
The evidence from the most dynamic and critical markets in wireless communications suggests that unlicensed wireless technologies have been underrated in the regulatory calculus.  Future spectrum policy debates, in particular those surrounding TV band auctions and reallocation of federal spectrum, should secure an adequate development path for unlicensed technologies, devices, and services at least as much as they emphasize flexibly-licensed exclusive rights.  

The most immediate implication is that any authorization for the FCC to conduct incentive auctions, and any plans to permit civilian use of federal spectrum, should include substantial discretion for the agency to provide adequate room for unlicensed strategies to develop new generations of innovation.