Building on an idea first floated by Federal Communications Commission chairman William Kennard at a trade show in February, the FCC is looking at allowing companies that own slices of the airwaves to trade them back and forth as needed.
That model, largely impossible under today's rules, would help free scarce wireless spectrum even on a moment-by-moment basis, an important goal as use of mobile phones and other wireless data devices skyrockets, officials said.
"All of the new technologies--mobile phones, faxes, wireless computers--are consuming spectrum faster than we can make it available, and we are in danger of a spectrum drought," Kennard said today at a meeting intended to lay the groundwork for wireless policy in the future. "The demand for spectrum is simply outstripping supply."
The FCC is reacting to an explosion of wireless technologies that have yet to filter into mainstream use but show potential for doing so in the next few years. From high-speed Internet-connected mobile phones to wireless home networks, PalmPilots, PCs and even MP3 players, the technology industry has high hopes for untethering Net use.
But unlike the wired Internet, the wireless world has a limited amount of connections to distribute. It's not as simple as laying more fiber-optic cable. The spectrum that carries cell phone conversations, TV signals and wireless data is limited, and in some cases it is already filling up.
AT&T Wireless, for example, has been hard hit in urban areas such as New York City and Los Angeles where callers have pushed the capacities of its systems to their limits, resulting in dropped calls and busy signals. Some subscribers have even sued AT&T for false advertising after being unable to use their phones at times.
The FCC is looking at several ways to ease this pressure. Regulators are selling more spectrum later this year, with more auctions planned in upcoming years that will make new slices of the airwaves available for use.
But this isn't enough, they say. And that's where the plans for a spectrum exchange come in. This would allow one company that is serving a popular one-time event to temporarily use an extra slice of the airwaves to accommodate the anticipated demand, for example.
The idea has already taken off in the fiber-optics market, in which companies such as Enron Communications and RateXchange have set up real-time bandwidth exchanges where companies can buy and sell transport on long-haul networks.
The commission convened a meeting today in Washington to discuss setting up a similar market where companies could buy bits of each others' wireless spectrum. It has yet to make any solid proposals, but it heard recommendations for and against the idea from industry and technology figures.
Most were cautiously optimistic about the idea but warned that significant technological and regulatory hurdles will have to be cleared before anything useful can appear. Nor can the entire body of regulations that govern how wireless companies use spectrum be easily uprooted, some noted.
"There should be a little constraint on how you do it and where you do it," said Rich Barth, Motorola's director of telecommunications strategy and regulation. "You're not going to redirect the entire FCC system toward a new free-spectrum marketplace."
Others echoed Barth's words of caution.
"In order to have orderly systems, we're going to have to have good rules, and automatic electronic enforcement mechanisms," said Joe Mitola, a scientist with the Mitre Corporation, a consulting group that advises several government agencies on technology issues. "It will take some well-instrumented scientific experiments to develop them."
Regulators are also looking to technology advances to help clear some of the problems. So-called software-defined radio, which is still largely in the development stages, could help add more flexibility to wireless services.
This technology would allow a device to operate in many different slices of the wireless spectrum, scanning to find an open frequency and then connecting where there is room available.
Kennard also cited ultrawideband technology, which uses a huge swath of spectrum but interferes little with other transmissions. The FCC already has a process under way that would make it legal the use of that form of wireless in the open market.
The FCC will push ahead with many of the ideas heard in today's forum in an attempt to make the spectrum market a reality, commissioners said.
"I want us to be ahead of the curve," Kennard said. "I want to have rules and policies that allow a secondary market for spectrum so that it flows as freely in the marketplace as any commodity."