False Scarcity Baran CNGN 94

   Keynote Talk Transcript, 8th Annual Conference on Next Generation
   Networks Washington, DC, November 9, 1994

   Visions of the 21st Century Communications: Is the Shortage of Radio
   Spectrum for Broadband Networks of the Future a Self Made Problem?

   by: Paul Baran, baran@com21.com

   Copyright 1994.

   INTRODUCTION

   John McQuillan:

   I would like to introduce you to our next session which I consider to
   be one of the real highlights of the Conference: our Keynote
   Presentation:

   Visions of the 21st Century Communications

   Many of us are wondering what is the role for ATM in the next decade
   and beyond. It's not far away now, and one of the questions we haven't
   talked about at this Conference, that we want to focus on now, is
   wireless and whether the spectrum for wireless is really the scarce
   resource that many of us have been familiar with all our lives or
   whether it's really an abundant one.

   One of the great challenges for the 21st Century, I believe, is to get
   all the power of broadband networking that we've been talking about,
   and, at the same time have the convenience and flexibility of wireless
   communications. This would indeed be the grand unification. ATM isn't
   the grand unification - - it's wireless ATM that is the grand
   unification. And what will it take to bring ATM into the home?

   Well I'm really delighted to be able to introduce to you this
   morning's Keynote presenter, Paul Baran, Chairman of Com21, a company
   that was formed by Paul to work on 21st Century communications.

   Paul is a really notable entrepreneur, inventor and visionary. Paul
   has started many successful companies and made many important
   inventions in this industry. Among the many companies he's started and
   he currently is a director I'd like to mention is Metricom. Metricom
   is a packet radio public company that offers wireless packet radio
   communication for personal computers and has got fairly widespread
   installation now in California.

   But to make perhaps a more personal introduction for a moment, I did
   my Ph.D. work in Adaptive Routing Algorithms at Harvard twenty years
   ago. I did my Ph.D. in 1974. At the time I tried to read everything I
   could about what had been done in packet networking up until that
   point and I came across Paul Baran's work at RAND Corporation ten
   years previous in 1964.

   When Paul sat down, and I don't know how he did this, but he wrote a
   series of ten reports describing, analyzing and predicting packet
   switches, based on hardware, adaptive routing algorithms, wireless
   links between them and really conceived of the whole way that we're
   planning to build hardware ATM based systems today. So, Paul sees
   things before other do.

   You know, in fact, one tries to describe people by their time
   constant. Some people think one day at a time. Some people are good at
   planning month by month or year by year. You know you can't ask
   someone to do a three year plan in a business if they're a one week
   kind of a person. You can think of running the military: You've got to
   have a day at a time foot soldier; you've got to have your logistics
   people be people who can plan a little bit longer; and then the
   generals who are planning the theaters of operation have got to be
   able to see out a year or two.

   Well, I've never met anybody with a longer time constant and a more
   accurate record than Paul Baran... Paul!

   PAUL BARAN:

   Thank you John!

   John entitled this talk Visions of the 21st Century. I am humbled
   trying to do justice to such an over-reaching title. I am reminded of
   that Wausau Insurance Company TV commercial. An efficiency expert is
   introduced who is supposed to give a detailed presentation on
   insurance recommendations. This guy gets up to the podium and says one
   word, "Wausau". Then he walks off the stage to an awkward silence,
   until the audience presumably gets the point.

   I have to confess that I am tempted to say the three magical letters,
   ATM (Asynchronous Transfer Mode) and then sit down. ATM pretty well
   defines where the higher level protocol portion of the network
   evolution is going in the future. At least in the mind of some of we
   ATM techno-bigots.

   Having covered so much ground so quickly, there is another part of the
   network that deserves discussion in the remaining time. That is the
   physical media itself.

   PHYSICAL MEDIA

   We have only a limited number of terrestrial transmission media to
   consider. Really, only four. For the metropolitan network, the cable
   TV network appears to be the winner, using a combination of fiber at
   the top of the tree networks, while the tails are coaxial drop cables
   to houses and businesses. This two-way path provides a lower cost
   transmission pipe to the home than twisted copper pairs and can even
   support telephony at a lower cost than in place twisted pairs. This is
   the position announced by Pac Tel in California. Thus, we expect to
   see both the telephone and TV cable companies competing using
   essentially the same technology.

   It is amusing to note that while Ethernet moves from coax to twisted
   pair at 100Mb/s, just the opposite direction of evolution may be
   occurring in the telco competition from twisted pair to coax.

   When it comes to transmission over distances greater than about a
   kilometer, fiber is the clear winner. And the capabilities of fiber
   suggest continuing significant cost declines and capability increases
   over time in terms of $/bit-kilometer.

   ON WIRELESS

   The last medium that I want to talk about is wireless. Wireless has a
   major potential role to play in the last 100 meters of network systems
   by allowing rapid easy interconnection without a jumble of wires.
   Wireless can allow the user to separate the terminal for maximum
   convenience and effectiveness. The thick umbilical cords providing
   today's lifeline connection between the computer and the network could
   be eliminated

   This morning I would like to discuss an issue that limits this
   possibility of our next generation networks. In brief, I am going to
   talk about a communications policy issue that will determine what we
   can, and won't be able to do with our emerging networks of the future.
   Our particular concern is that well meaning government administrators,
   responsible for control of the radio spectrum space, are making
   seemingly innocent decisions that could have disastrous unforeseen
   consequences. It could even cause our networks of the future to be
   unnecessarily expensive and less capable than if a wider appreciation
   of what's really happening was better understood. Of course, any
   negative consequences of such a result are totally at variance with
   the objectives sought by those responsible for telecommunication
   policy. What appears to be missing from the deliberations is an
   understanding of some basic technological issues.

   THE SHORTAGE

   The key point at issue that we will question is the widespread belief
   that we don't have enough radio spectrum to go around. This is a
   common, fundamental belief. Since we live in a world of scarcity or
   natural resources it is almost automatic that we believe that there is
   a shortage of frequencies. This particular resource is somewhat
   different.

   This morning, let's start by reviewing this presumption of a permanent
   shortage. Let's consider how, with an application of already known
   technology, we could create even a surplus of frequencies. What may be
   going on is an inadvertent shortage created by a regulatory structure
   which has yet to appreciate the potential capabilities of the new
   digital signal processing technology as applied to communications.

   A LINK IS NOT A SYSTEM

   When we talk about radio or wireless in the following, we should
   appreciate that no single communications medium is ideal in every
   situations, so we build communication networks by choosing the
   combination of various media links, optimized as a network. If our
   link requirement is for long distance transmission, then fiber optics
   tends to be ideal. If it is for distribution of signals to many users
   located only hundreds of meters apart from one another, then coax
   cable or twisted pair is the preferred medium, depending on the data
   rates. And, in the future when we deal with increasing numbers of
   users, wireless could in turn become the preferred medium,
   particularly for the network tails in an increasing number of
   instances. Conceptually this remove the constraints of being like the
   dog whose freedom of action is limited by the length of his leash.

   A PARADOX

   Of course any suggestion that there is no real shortage of UHF
   spectrum is at variance with the common wisdom. But, tune a spectrum
   analyzer across the band of UHF frequencies, and you will encounter a
   few strong signals, while most of the band at any instant is primarily
   silence, or very weak signals. (My words this morning are focused on
   the UHF range, that's the frequencies from 300 to 3,000 megahertz --
   the most valuable part of the radio spectrum for communications with
   high data rate local data devices.)

   The spectrum analyzer connected to an antenna shows that much of the
   radio band is empty almost all the time! This spectrum is
   theoretically available for sending a signal if we were to take
   measurements and know exactly when and where to send the signal. The
   frequency shortage is caused in part by thinking in terms of dumb
   transmitters and dumb receivers. With smart electronics, even occupied
   frequencies can be used. To the modern communications engineer lack of
   strong signals anywhere, no matter how distributed, represents
   theoretically unused capacity. This is capacity that could be utilized
   with the proper signal processing. With advanced signal processing
   techniques, any signal below the peak received signal represents
   potential usable transmission capacity. But, there is a catch. the
   assumption is that we are dealing with digital signals able to operate
   with very low signal to noise ratios. That means if a signal is
   slightly stronger than another that it can theoretically be received
   without error. (This game doesn't work with old fashioned analog
   modulation signals, such as high quality analog TV signals where
   interference even 40 dB below the picture is visible.) [40dB is a
   power ratio of 10,000. one part of interference to 10,000 parts of
   signal is visible. Communications systems can be built with 10dB
   ratio, or 1000 times less vulnerable to visible interference.] You can
   think in terms of a curve of energy versus frequency. A potentially
   available bandwidth curve can be visualized by inverting this received
   energy versus frequency curve and then adding a separation energy band
   level equal to the requisite signal to noise ratio. This suggests
   potential spectrum that can be reused by choosing the right form of
   modulation. This is why you need pristine pure channels for analog
   transmission like TV, but can get away with a dirtier digital channel
   . Digital transmission when properly done allows a small signal to
   noise ratio to be used successfully to retrieve an error free signal.
   And, never forget, any transmission capacity not used is wasted
   forever, like water over the dam. Not using such techniques represent
   lost opportunity.

   TABOO FREQUENCIES

   Another thing that you will see with your spectrum analyzer is that
   there is a lot of unused TV spectrum, even in the big cities. As you
   tune across the UHF TV band and there are big holes and these are
   called "taboo channels" intentionally left unoccupied because of the
   limitations of the early era television receivers. You may have
   wondered about these big black holes, particularly since we now know
   how to build far better cheap TV receivers than when this early rule
   was adopted. So leaving all this wonderful spectrum space unused seems
   to be wasteful, particularly when we know how to use better technology
   so that more of it is usable. Again, any spectrum space not being used
   is water over the dam - - and forever wasted.

   SPREAD SPECTRUM

   Today, spread spectrum modulation approaches can allow many more users
   to share a common band of channels. This means spreading the
   transmitted energy over a large number of frequencies and living with
   more interference. But, there is a regulatory lag in allowing such
   technology, such as spread spectrum, because it seems to require more
   spectrum space, albeit commonly shared among many users. The idea of
   preferring to use signals that take up more bandwidth is at variance
   with the mind set of most regulators, whose objective has always in
   the past been to minimize the occupied bandwidth.

   NEGROPONTE'S SUGGESTION

   We can save a vast amount of bandwidth by at least starting to off
   load applications that hog bandwidth and that could be better served
   by using alternative media. For example, TV cable now passes about 96%
   of the US households and could allow many more TV channels to be
   delivered to the home than can be supported over the air and could
   release a vast amount of spectrum space. The use of TV cable started
   primarily in the US and is also now rapidly growing internationally.
   Professor Negroponte of MIT oft quoted half facetious words to the
   effect that the way to solve this problem is Ôthat everything now sent
   by radio should be sent over wires and everything now sent by wire
   should be sent by radioÕ does have some merit. And the transfer need
   not be 100%. Shorter range rf transceivers connected to fiber could
   produce a significant improvement - - tremendous improvement, really.
   Let's talk about the ...

   EVOLUTION TO DIGITAL

   Digital modulation is the key. It is far more bandwidth efficient than
   todayÕs analog modulation. Digital modulation in lieu of the present
   analog modulation allows ten times as many TV signals to be sent over
   an existing TV cable and of better quality. If a TV cable carries 50
   analog channels, then the same cable would now carry 500 channels. The
   500 channel digital TV cable systems are in early manufacturing stage
   today. The demand for this capability is not to present 500 different
   channels of TV, but rather to allow the transmission of pay-per-view
   movies with multiple start-times to make them more attractive to
   potential viewers. So, the same program would start on the hour,
   thirty minutes after the hour, on the next hour... so when you come
   in, you would be able to see a movie right from the beginning.

   RANGE REDUCTION

   Another direction that promises great improvement in bandwidth
   efficiency is in the reduction of the transmitted power. In the UHF
   band the number of geographically dispersed users that can be
   simultaneously accommodated in a fixed spectrum space varies as the
   inverse square of distance. Cut the range in half, and the number of
   users that can be supported is doubled. Cut the range by a factor of
   ten, and 100 times as many users can be served. Reduce the power
   further, and essentially any number of users can be fit into the exact
   same spectrum space presently tied up supporting a few longer distance
   users. Thus, a mixture of terrestrial links plus shorter range radio
   links has the effect of increasing by orders and orders of magnitude
   the amount of frequency spectrum that can be made available. We speak
   of inverse square ranges. While true for free space signals, when it
   comes to the real world, the payoff is even more dramatic. For
   example, radio signal attenuation within concrete office buildings,
   such as a building like this one we are in now is closer to the
   inverse 4Õth power of the transmitted power. Given the attenuation
   encountered in these type of buildings means that increasing radiated
   power doesnÕt buy much in the way of range, anyway. By authorizing
   high power to support a few users to reach slightly longer distances
   we deprive ourselves of the opportunity to serve the many.

   Now, how realistic is it to reduce the range of transmission for the
   relatively few to allow a greater number to benefit? Consider todayÕs
   millions of short range cordless telephones, all sharing a minuscule
   slice of the radio spectrum, while a small number of licensed users
   hog most of the spectrum. Most of these long range devices could be
   served by using shorter range radios plus fiber to provide the longer
   distances sought. Of course, the resulting path is not all wireless,
   but neither is todayÕs cellular systems. The advantage of tetherless
   operation is retained for the userÕs convenience, so that there is
   very little Ògive up" here. There is no shortage of TV coaxial cable
   nor of telephone line capacity to provide the wired medium portion of
   the pair. Assuming that we did move in this direction, we could then
   create a vast new radio communications capability to allow the support
   of a far greater number of users and with greater bandwidths than
   possible with today's present day regulatory constraints.

   SMART TRANSMITTERS

   A key technology in our new tool bag that should be mentioned is the
   microcontroller that allows creating cost effective smart transmitters
   and smart receivers. For example, a smart transmitter can first listen
   and then automatically choose those frequencies that avoid the other
   signals in the band. Think of it as just being a matter of being a
   good neighbor. The smart transmitter reduces its power level to just
   that needed to produce an error free signal and no greater. You donÕt
   require that pristine pure slice of spectrum to have error-free
   performance. Digital logic in the chip supports error correcting codes
   to convert a small amount of redundancy in transmission, allowing
   corrupted signals to be cleaned up to emerge error free.

   SOME KINDERGARTEN RULES

   To take the fullest advantage of our new technology with its sharing
   of a common resource requires that our smart transmitters and
   receivers cooperate. This may sound complicated, but the rules to make
   maximum effective use of the shared band are simple -- primarily a
   matter of common decency in sharing resources. The rules are somewhat
   similar to those you learned in kindergarten, assuming you lived in a
   tough neighborhood.

   Rule #1. Keep away from the big bullies in the playground. (Avoid the
   strongest signals.)

   Rule #2. Share your toys. (Minimize your transmitted power. Use the
   shortest hop distances feasible. Minimize average power density per
   Hertz.)

   Rule #3. If you have nothing to say, keep quiet.

   Rule #4. DonÕt pick on the big kids. (DonÕt step on strong signals.
   You're going to get clobbered.)

   Rule #5. If you feel you absolutely must beat up somebody, be sure to
   pick someone smaller than yourself. (Now this is a less obvious one,
   as weak signals represent far away transmissions; so your signals will
   likely be attenuated the same amount in the reverse direction and
   probably not cause significant interference.)

   Rule #6. DonÕt get too close to your neighbor. Even the weakest
   signals are very strong when they are shouted in your ear.

   Rule #7. Lastly, donÕt be a cry baby. (If you insist on using obsolete
   technology that is highly sensitive to interfering signals, donÕt
   expect much sympathy when you complain about interfering signals in a
   shared band.)

   That about summarizes that subject other than to note that this isn't
   the way we presently handle frequency assignments.

   REGULATORY HISTORY

   The hang-up here today is that our highly institutionalized regulatory
   structures contain implicit assumptions about technology that once
   were true; less so today, and probably not at all tomorrow. The
   regulatory game is run by lawyers, while the issues are primarily
   technical. Lawyers tend to view the frequency similar to a piece of
   real estate. If I owned a frequency, then you canÕt use my frequency.
   ItÕs mine, all mine. Frequencies today are treated as a property
   right. Yet, communications engineers know that statistical averaging
   of larger blocks of frequencies allow far better usage. That's
   something we all know about. This is the heart of the concept of
   sharing an ATM network. We all win as each shared user encounters far
   better economics than if we had to dedicate a separate network to each
   group of users. We did that in the old days. This concept of sharing
   is what cellular radio is all about. Of course we finally did get
   cellular, but over a decade was wasted because of the regulatory lag
   between the time that technology was feasible until the time that it
   was implemented. In fairness, newer thinking is increasingly being
   incorporated in our regulatory decisions. But, from the point of view
   of a technologist, the process is agonizingly slow. I think we can do
   better.

   WHERE WE ARE

   Today the pioneer who proposes to use the radio spectrum in any truly
   innovative way faces a bureaucratic hoop jumping game, interrupted
   with interminable delays. Underneath it all is the implicit assumption
   that there is a God given shortage of frequencies. That being so, the
   government must dole out the slivers with great care. It does so using
   a set of rules based on concepts inherited from an earlier era, but
   now cast in administrative laws. The lawyerÕs real estate model of
   frequencies is but a zero sum game; while the communications engineer
   views it as a game where many more can win.

   ORIGIN OF THE FREQUENCY SHORTAGE

   Lack of frequencies is not a new problem. Next year, radio is going to
   be 100 years old counting back from the time Marconi, as a teen
   teenager, ran his first experiments in his back yard. Yes, we got
   radio as a byproduct of an experimental hobby activity; not as the
   result of any major corporation's research department. The first
   experiments in radio were funded by Marconi's mother as his father
   refused to come across with the pocket change for such foolishness --
   at least until the time radio worked. Then, his father became a great
   supporter -- with an excess of advice.

   The issue of spectrum efficiency has been with us right from the
   outset, starting with the early question, "Would it ever be possible
   to allow more than one radio transmitter to operate at one time?"
   Sharing the channel was one of the first challenge to early radio
   technology development. Ever since the turn of this Century much of
   the history of radio technology has focused on living within an
   over-crowded radio spectrum. Given the limitations of past technology,
   the shortage of preferred frequencies was real. Very real. And, with
   an excess of potential users, it was mandatory for governments to
   create the necessary rationing mechanism. National and international
   regulatory structures evolved, concerned in major measure with the
   ever present issue of scarcity of bandwidth. And, so it was
   institutionalized into regulatory policy. And once institutionalized,
   the basic assumptions that got us there are very rarely ever
   re-examined. And, when they were, changes tended to occur at glacial
   speeds. .

   CREATING MONOPOLIES

   To put things into perspective, let's take a moment to understand how
   the game was played in the past, leading up to today and consider a
   likely scenario or two. Early spectrum was acquired by the pioneer
   user, but with the government use assuming priority. As additional
   spectrum was awarded, it tended to be granted in response to economic
   and political power of the applicants. Whatever organization held most
   power obviously was serving most users. Economists regard regulation
   as a substitute for competition and preferred its use whenever a
   natural monopoly exists. Whenever a government issues frequency, it
   creates a monopoly. Become a regulated monopoly, and the government
   will keep out your competitors.

   TERMINATING MONOPOLIES

   When a better technology comes along that allows the feasibility of
   multiple suppliers, it invalidates the natural monopoly argument. The
   end of a monopoly is rarely a swift process and it is never painless
   -- particularly if it were well run and highly profitable. After long
   running anti-trust battles the US telephone monopoly, AT&T, was in
   part fractured into seven local area monopolies and competition was
   permitted in the long distance telephone and data communications
   field. This was an extremely controversial move at the time, and was
   met by all sorts of Chicken Little sky falling predictions. The sky
   didn't fall. Instead we saw a major increase in effectiveness in long
   distance services, fostered by the new competition. And this was
   perceived as being so successful by other countries, that similar long
   distance services are being deregulated throughout the world, even by
   those nations with a long history of sole governmental control.

   DEREGULATION OF THE REST OF THE SYSTEM

   The first wave of deregulation was limited to long distance
   communications, as the technology at the time could only support the
   deregulation of the long distance carriers. Missing was the technology
   to make local area competition feasible and permit deregulation of the
   local carriers. This is now in the process of change. With cable TV
   now passing almost every house in the US and spreading throughout the
   world, an alternative and more cost effective channel will soon be in
   place to support alternative local communications suppliers. The
   combination of fiber/coaxial cable and perhaps radio appears to be the
   lowest cost way of providing local communications and even telephony,
   so the new competition is particularly threatening.

   THE MOVE TO DEREGULATION

   Pressure to deregulate the local carriers is underway. The local
   telephone companies and the cable companies are in an unstable truce
   before the all out war, with cross-merger discussions underway. The
   fear of loosing one's monopoly is never a pleasant prospect to a
   company. It means competition and the necessity to increase
   efficiency; leading to big layoffs of long-term employees, giving up
   perks and that sort of thing. Every month the newspaper carries
   articles about another telephone company laying off another 10,000
   people to become more efficient. The press has been surprisingly
   polite in not asking what these tens of thousands of employees were
   doing prior to the threat of competition.

   CREATION OF A NEW MONOPOLY

   If you spent all your life working in a monopoly and it is going away,
   it is understandable that you may want to create another one. But,
   where? If the technology is going to be a combination of TV cable
   technology plus radio tails, a monopoly protection defense line might
   be the regulated spectrum ownership of the tails of the network.
   Maintenance of the monopoly then hinges on maintenance of a spectrum
   shortage. Those that "own" today's frequencies face a diminished value
   of their asset unless the shortage can be maintained.

   THE AUCTIONING GAME

   An idea evolved, first tried in New Zealand and now in the US, to
   auction off small portions of the spectrum in response to the
   unsatisfactory alternative involved in issuing frequencies in the
   past. The era of granting frequencies as political favors ended with
   the increased diligence of the press. A substitute mechanism, random
   drawing, was then tried. This process was also grossly misused, as
   thousands of applications were filed and the winners sold their
   licenses to the legitimate users -- who in turn built their
   monopolies. The overall history of the regulation of the radio
   spectrum is the sort of thing that tends to give government a bad name
   when it comes to running a business.

   The frequencies being auctioned off today (and there's going to be a
   big sale of these next month) came partially from a give-up of the
   frequencies reserved by the military and partially from point to point
   users who are to be assigned alternative frequencies, and who will
   receive payment for new equipment in the process. While auctioning
   might seem to be an answer to an unsolved problem, I believe that it
   will exacerbate the problem and is more likely to lead to the creation
   of new monopolies. He with the most up-front money gets to lock up
   frequencies to create an oligopolistic position with a legal barrier
   to competitive entry. It can be argued, on the other hand, that enough
   blocks of frequencies are being auctioned simultaneously to insure
   competition. But, history has shown that in a capital intensive game,
   he who comes in second, but with most dollars wins by buying out the
   early players. Everyone walks away happy. The early license holders
   get a windfall and the last guy gets to milk the public cow with
   minimum interference.

   Next month an odd combination of formally competitive bedfellows will
   gather together to jointly buy up big slices of the radio spectrum.
   The November 7th issue of Time quotes Stahlman, an industry observer,
   as saying "the behemoths who can afford to bid are the least likely to
   be innovative." The same article also quotes TCI CEO John Malone as
   saying in effect, "We are starting a new national telephone company."
   And, so the seeds of a re-monopolization are being sowed -- all based
   on the assumption of a shortage of spectrum space.

   AN ALTERNATIVE APPROACH

   A counter hypothesis that I would like to raise for your consideration
   this morning is that there is really no real shortage and what we are
   seeing is a manifestation of a self made problem that would go away if
   we made better use of our present known technology.

   In the words of Pogo, "We have met the enemy, and it is us."

   If the present approach is lacking, what might we do differently? If
   our hypothesis is correct, then there is a potential for a limited
   amount of spectrum to carry all the traffic imaginable (provided the
   power and the range of the transmitters is limited), then public
   policy is better served by moving to an environment of near zero
   regulation. In such an environment anyone would be allowed to use the
   spectrum, without the high front-end costs that keep out the true
   innovators. Of course, the allowable power and power densities would
   have to be realistically restricted.

   CHAOS?

   Would this lead to chaos? In my opinion, the answer is, probably not.
   Consider the many millions of cordless telephones, burglar alarms,
   wireless house controllers and other appliances that operate within a
   minuscule portion of the spectrum and with limited interference to one
   another. These early devices are "dumb devices" compared to equipment
   being developed able to change the frequencies and minimize radiated
   power to better avoid interference to themselves and to others. Of
   course this means that there will have to be enough frequency spectrum
   set aside to do so. But, once having done so we would have created a
   communications environment able to handle orders of magnitude more
   communications today.

   ARENÕT WE DOING THAT ALREADY?

   In the US the FCC has allowed unlicensed operation in the Industrial
   Scientific and Medical bands These are "garbage bands" -- the home of
   radar ovens and diathermy machines. Some say "too little and too
   late." Nevertheless access to the ISM bands has proved to be of
   tremendous value in the creation of truly innovative major new
   services -- such as noise free high quality cordless telephones and
   wireless burglar alarm services. However, a shadow is growing as some
   in the FCC are proposing chopping up this band even into smaller
   pieces, and then artificially limiting the use of this band to force
   users over to the auctioned frequencies to increase the monopoly value
   of the frequencies being auctioned.

   POSTSCRIPT

   Now, do we need all the regulation where each slice of frequency in
   each geographical area is tightly controlled by Washington? Or might
   we be better off if we used the Internet as our model? No central
   node. Local decision control with a minimum of restrictions. The
   Internet is growing rapidly. It is inexpensive and it allows the
   broadest access to the world's information to a greater number of
   people than ever initially imagined. Yet, it is theoretically chaotic,
   as would be sharing a common band of frequencies by all comers. We
   know that both examples of distributed networks can be made to work.

   Nevertheless, today we see our regulators considering slicing up the
   ISM band. In comparison to successful example of the freewheeling
   Internet type model that works so remarkably well for huge numbers of
   users, slicing up this common bank is like a move back to a
   centralized control reminiscent of the old Soviet economy. And we know
   so well today, that particular centralized system didn't work all that
   well.

   SUMMARY

   So, in conclusion, I'd like to say that the role that wireless can
   play in the ATM world of the 21st Century is bounded by just two
   things:

   1) the imagination of the system designer, and 2) our ability to
   explain the implication of the emerging technologies to those
   responsible for passing out the radio frequencies.

   Unless the long range implications are better understood, we could
   significantly delay the availability of technology of major economic
   importance.

   Thank you!

     _________________________________________________________________

   QUESTIONS (Submitted on cards and selected and read by John
   McQuillan:)

   John McQuillan: Thank you very much Paul, that's real food for
   thought. It's a little depressing in a way to think that we've wasted
   so much opportunity already. But, perhaps we can look forward to doing
   a better job going forward.

   We have a couple of questions here from the audience:

   One promise of broadcast spectrum that you didn't touch on but that
   certainly appeals to all of us is that we've tended to think of it as
   "free" when we turn on our broadcast TV. It doesn't cost us anything
   and when we do our garage opener, it's free. Isn't that going to
   present a problem in moving some people out of radio spectrum and onto
   cable because you have to pay for cable television unlike broadcast
   television?

   Baran: In short, the answer is "yes". But, it's more likely a matter
   of providing a low tier free coverage for the broadcast channels. It
   may well be in the cable company's interest to provide free access to
   solely "over the air" signals. Once the cable is in-house, then the
   cable operator could sell incremental other services.1 While the
   answer is "yes", that nobody likes paying for services they can get
   off the air free. But, the movement in growth of cable is very real
   and I think its advantage increases with time, so, it is not out of
   question. This is not something that's going to happen right away, and
   we don't need 100% penetration everywhere, as the shortage bind is
   only in the big cities.

   McQuillan: Considering where we are in the U.S. with an embedded base
   of dumb TVs, broadcasting monopolies and the general inertia of our
   regulatory system, do you think it's possible that your ideas are
   going to be adopted in other countries before they are in the U.S.?
   Possibly in some emerging countries in the third world?

   Baran: Could be! You know, when you said 21st Century, that covers an
   awfully long period of time. What can happens over such a long period
   is hard to imagine. All I can talk about is the trend line. It is hard
   to pick an exact date and who's going to do what -- particularly when
   you deal with political type decisions. We can predict technology
   quite well, but historically it has been found nearly impossible to
   predict political decisions as they tend to be a function of a single
   person's whim, rather than the composite result of a large number of
   separate actions that all combine together in the case of a technology
   evolution direction.

   McQuillan: Well here's a good question that picks up on one of your
   very last thoughts. Paul, how can we improve our ability to explain
   the implication of these emerging technologies to those responsible to
   handing out spectrum?

   Baran: That is my key objective of this discussion this morning. The
   more people that are aware of the problem, the faster we're going to
   work our way towards a solution. I think it behooves all of us who are
   aware of the problem to pass the word around; to study it, to see
   whether it makes sense to you. And, if it does, then it increases our
   base of those that appreciate the nature of the game being played. I
   think when this understanding becomes more widespread, we increase our
   chances to see some movement over time.

   McQuillan: One way of understanding your remarks is to say that there
   are two themes. One is that there's a revolution in digital
   technologies, especially digital signal processing, which is going to
   allow us to completely rethink how we move information through the
   radio frequencies and the other is that at the same time and for
   rather different reasons, we're considering the deregulation or
   re-regulation of these frequencies. Which do you really think is
   really going to happen first: the large scale use of digital signal
   processing technology giving us better frequency utilization, or an
   effective deregulation of the spectrum we are currently using?

   Baran: Either of these two directions can allow us to win the game.

   If we can make much better use of our existing channel using digital
   signal processing, then the pressure for saying there's a shortage of
   frequency goes away. Or, it can be done by smarter regulation. Either
   way we end up at the same point. So, are many paths - any one of which
   can get us there. But, all can be blocked by intentionally unwise
   regulation.

   McQuillan: You know, for years I've had the mental model that
   broadband and wireless were two orthogonal axes and you could get more
   and more high performance in your network with a better and better
   wire and better and better switching. Or, you could have more and more
   convenience and portability in wirelessness if you were willing to
   accept lighter weight, less power and more primitive devices. So in
   the one limit, you have the Silicon Graphics work station on fiber
   getting ATM at the other limit you've got the little pocket pager that
   just basically delivers one bit saying "you've been paged" and you
   carry that everywhere. Isn't it really utopian to suggest that we can
   just throw away that model and we'll be able to have any communication
   anywhere?

   Baran: The answer is yes, but you can go high data rates very short
   distances; or lower data rates further distances. Remember that we
   don't need to build a system using only a single medium. We can use
   combinations of media. So in this case, it will be radio for just that
   portion where it's a pain to carry signals by physical wires and then
   as quickly as possible, move over to a wired medium or fiber or coax
   and then go the rest of the way by electrons or photons. It is a
   matter of mixing, combining the two to get the advantage of both and
   minimize the disadvantage of each.

   McQuillan: So the vision of the 21st Century communications might be a
   hybrid fiber coax or a fiber to the curb arrangement to the business
   and the home. And then, broadband wireless within the last few hundred
   meters within the building.

   Baran: It could be only a few feet for very high data rate radio
   devices or a mile or two for low data rate devices such as a PCN
   telephone.

   McQuillan: Paul's too much of a gentleman to go into this, but his
   company, Com21 is pursuing this vision commercially. Paul has acquired
   a number of patents in this area and so he's actually putting his
   money where his ideas are on this point.

   Timely subject, we've cleverly planned this conference so that this
   session and the subsequent one on "Discussion of Washington" seem to
   happen the day after the elections.....what do you think?

   We've got a whole new ball game in Washington now - - all new House
   and Senate - - Republican controlled. (I'm not going to pause for
   applause or for any other kinds of comments - this is a non-partisan
   event.) [LAUGHTER] I'm just asking Paul - - well, what do you think?
   Does that change your views of how we might be proceeding here?

   Baran: No, no. The concept of selling off of the frequencies seems to
   have political acceptance by both parties, but for different reasons.
   I think that the Democrats it looks like the new way of raising
   taxes...

   McQuillan: Yes, I noticed that...without using that word!

   Baran: ... and to the Republicans, it appears to be a way of
   privatizing government assets. So this move is politically acceptable
   by both those that like raising taxes by stealth, and by those that
   believe that government has no role here as this is something best
   left to the marketplace.

   McQuillan: So why wait for regulatory change? If signals can sneak in
   and coexist on the bands, then no one else will really notice when you
   occupy an unused tiny slice of spectrum in the neighborhood.
   [LAUGHTER]

   But wait, there's more, so start now - - develop a base of important
   users - - don't worry about the dinosaurs, the mice are fleet afoot
   and hard to spot in the grass.

   Baran: Very good! Great idea!

   McQuillan: It's pretty radical!

   Baran: We're getting to see some bootleg stations in the FM band. Once
   upon a time the FCC was very tough about it. But so much of this sort
   of stuff is going on that they're sort of looking the other way. It
   could be like marijuana - - where you have tight rules but they don't
   get enforced. And, after a while the rules become unenforceable. I'd
   hate to see us move in that direction. I'd prefer to have us face up
   to the fact that there's a change needed here, and we would much
   prefer to work within the laws.

   But the point you raise is a very good one. There's a heck of a lot of
   stuff you can do (using the spectrum) without getting caught.
   [LAUGHTER]

   McQuillan: In a way that might be the American way or the free market
   way: that we the users have to demonstrate with action to the
   government the right way to go and then they'll regulate almost in
   hindsight or in afterthought.

   Baran: That's right! That's the history of the Internet.

   McQuillan: Indeed, yes!

   Baran: Chaos up!

   McQuillan: Right, and now President Clinton says "I want everybody in
   the administration to have a mailbox in the Internet". Whereas a few
   years before that would have been unheard of. Partly because no one
   knew what it was and partly because everybody thought it was a joke.
   It's funny how things can transition from being a joke or being wrong
   to being the middle of the road accepted idea.

   Well in your vision of the future, there are these potentially large
   number of end stations which contending for spectrum by using spread
   spectrum technology and by using a lot of very clever electronics,
   doesn't this end up meaning that the end stations need to be quite
   expensive to be so smart?

   Baran: No! With silicon the complexity is no longer a factor. As long
   as the numbers are big, and they will be in this case, you can pile an
   awful lot of capability into a very inexpensive chip or a few chips.
   And the cost of the chips is pretty much a matter of dividing a fixed
   cost by a number. If the number is big then the cost per chip can be
   fairly low.

   McQuillan: Do you think that can get so cheap that it can go into
   telephones?

   Baran: Oh, yes!

   McQuillan: Putting you on the spot here, do you think we'll see ATM
   telephones?

   Baran Yes!

   McQuillan: That's really the end game here isn't it?

   Baran Yeah, I could see cells going right down to the telephone
   instrument itself. We've looked at that one and it seems to make
   sense.

   McQuillan That's the logical conclusion of this line of thinking is
   that you build fiber to the curb or hybrid fiber coax. You deliver
   video and data but you're also delivering telephony and then all the
   devices in the home or the business that televisions and the computer,
   but also the telephones have to be peers, have to be wireless, so that
   means they have to have wireless ATM. Thought for the day.

   Baran: The ATM cell is the key.

   McQuillan: For those of you in the chip business, this is a good
   thought for the day.

   Is the FCC examining this question of the last mile becoming wireless
   for broadband services for the home?

   Baran: I don't know. I don't think that's very high on their agenda.
   The FCC has a few very good technical people, but they're totally
   outnumbered by the lawyers. [LAUGHTER]

   McQuillan: I'm sorry to hear that, but I'm not at all surprised. I
   mean, that's what we get in Washington and I don't know, what do we do
   to change it? You seem to be advocating a kind of a public awareness
   and education campaign. Is there any reason to believe that would work
   or do we have any example of that working before?

   Baran: Well, it worked yesterday! [LAUGHTER & APPLAUSE]

   McQuillan: If only we had direct election of FCC Commissioners that
   would really be something.

   So, I know this is a difficult question, but being an optimist for a
   moment, when do you think that we might get a significant adoption of
   your ideas?

   Baran: I think that this is one of these multiple S shaped curves....
   these things always take a hell of a lot longer than you think they
   should. Someone pointed out that no truly new communications system
   ever got from laboratory to full field implementation in less than
   fifteen years. So we're talking pretty long time constants. But that
   doesn't mean we can't see some thinks occurring very early. There's
   the bottom of the pyramid and then we start moving up.

   McQuillan: It also doesn't mean that we can't use that insight to be
   quite clear about what's strategic and what's counter strategic in
   moving over the next few years. There's a lot of efforts I see as
   pretty counter strategic to this line of thinking in this whole
   revolution of cable companies doing telephony and telephone companies
   doing cable. Clearly, I think one's view of what are the important
   assets to protect needs to get revised from this prospective that
   spectrum is abundant rather than scarce and that digital signal
   processing is one of the key technologies, rather than a, let's say,
   HDTV being one of the key technologies, you know, in this view, which
   I share, compression isn't really the issue. While fiber's very
   important, that's not really the issue either because we've been
   living with fiber for a long time, but we can't afford to put fiber
   everywhere. The real issue is, what do you do to get to the user and I
   think Paul's contribution here is to suggest that we've solved a lot
   of the other problems but we don't really have a good solution yet for
   getting all the way to the user and that wireless represents the
   solution that people aren't thinking of for that.

   So, Paul, thank you very much for being with us this morning!
     _________________________________________________________________

   Footnote added after the talk:

   Assuming fewer 100 million TV households of which 65% already take
   cable then fewer than 35 million households would require access to
   the cable. Cable systems generally are wired for taps for 100%
   penetration (because they don't know who will and won't take cable.)
   The missing items is running coax drop cables to the houses without
   cable. Assuming a cost of about $30 per house in a mass contracted out
   installation, the total cost would be about $1 Billion to free up over
   400 MHz of high quality bandwidth for the entire country. This is
   about 1/10 the cost of the amount that is expected for the PCS
   licenses being auctioned off. And, it is only 5% of the $20 Billion
   annual cable TV revenues. If this approach was limited solely to those
   few large cities where any semblance of scarcity can be said to exist,
   the cost would then be correspondingly lower.
     _________________________________________________________________

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