Tuesday, June 26, 2007


Transcript: John Kneuer at Supernova

I was part of a great interactive session at Supernova with John Kneuer, the head of NTIA that was grossly mischaracterized in The Register in an article entitled, Bush Official Goes Nuclear in Net Neutrality Row, and in other subsequent articles, e.g., this one.

I think the headlines exaggerated what actually happened. Kneuer stayed cool, for the most part, and made some very important and revealing statements in response to our concerns.

You can see what happened yourself from this video, which Stephanie Booth shot from the audience, which captures much of the back-and-forth. Here's my transcript of what's on her tape. Comments later!

Kneuer [to David Weinberger]: [Asking the government to set rates and conditions] is precisely what you're asking when you say, "Open Access." The outcome is exactly that. [Audience: vocal objections.] It is the exactly the issue in the unbundling of network architecture. [Audience: No!] Yes it absolutely was the outcome. It had to be unbundled and those terms were litigated and regulated. The government was setting rates, terms and conditions. It was litigated for a decade without any resolution on what those terms and conditions could be. The marketplace could not act efficiently. It was entirely focussed in Washington.

Weinberger: So the attempt to open up the lines so there could be genuine competition, open up the lines to competitors at fair rates to those who were providing lines . . .

Kneuer [speaking over Weinberger]: Fair rates as determined by whom?

Weinberger: . . . was regulated out.

Kneuer: Fair rates as determined by whom? Did the marketplace set those rates? When you've got multiple platforms . . .

Audience: There is no marketplace.

[Intervention by moderator Kevin Werbach]

Kneuer [with a "bring it on" gesture]: I'm ready!

Audience: applause, cheers.

Other Questioner [fragments due to unintelligible audio]: . . . you're suggesting that folks at the applications layer should participate in the access layer potentially through the 700 MHz spectrum auctions . . . what other alternatives you might be talking about . . .

Kneuer: What I'm talking about is, there is an opportunity to, if open access is a consumer good, if it is an efficient outcome, then the marketplace will bear that out, so if you want open access, if you think that is a viable business model, participate in the auction, build a network, offer open access, and consumers should flock to your door. If there isn't an underlying consumer benefit, what you're seeking is a regulatory arbitrage opportunity, which is massively inefficient. With the cable providers, incumbent landline providers, we've put spectrum available, not just 700 MHz but we auctioned 90 MHz just last year, which gave the opportunity for four nationwide wireless carriers to be broadband providers as well. We added 254 MHz in the unlicensed case, doubling the amount of spectrum for Wi-Fi. The entire objective is to have multiple carriers. With multiple carriers, [and? in?] competition in the access layer, if there is a consumer benefit, these carriers will introduce it as a comparative advantage and as a product differentiation. If there isn't a consumer benefit, if you can't make your case for the marketplace, and rely on Washington to make your case for you, I think you are going to find it is the innovative lawyers that beat the path to success, not the innovative software engineers and spectrum [hackers?].

Doc Searls: Two Questions. First, what were the rates, terms and conditions for Wi-Fi? And the second is, what would have happened if the Wi-Fi channels had been auctioned?

Kneuer: Well Wi-Fi [unintelligible] and it did auction the Wi-Fi spectrum making Wi-Fi spectrum available on an unlicensed basis.

Audience [I think this was me]: So much for the marketplace.

Kneuer: I'm not sure what that means. I am willing to take all of the challenging questions you have. It would be helpful if you would get up behind the microphone rather than shouting from [unintelligible].

Searls: [unintelligible] . . . seeking to understand here. What was auctioned in Wi-Fi, those three channels, for example [unintelligible] 2.4 GHz spectrum. What was auctioned there?

Kneuer: They weren't auctioned.

Searls: OK, why couldn't we do that in the 700 space somewhere?

Kneuer: [unintelligible] The unlicensed spectrum, whether it's Wi-Fi 2.5 GHz [unintelligible] is really the technical characteristics that drive that. 700 is really going to be a wide open green field space, so you're going to have [competitive?] lots of different people, more people wanting the use of it than can make use of it in an efficient way. So the way you resolve the competing applications, the competing interests is to put it out for auction. It's been enormously successful in bringing different cell phones to us, in bringing 3G and all the rest of it. [unintelligible] tech-neutral policies, the spectrum marketplace where the carriers who have the best business models prevail, let the carriers choose the most competing technologies, so we don't have a government mandated GSM standard. We've got a very messy, difficult CDMA versus TDMA versus GSM. All of these issues and the criticisms that we have around our current broadband policies which are to encourage a pro-investment, pro-innovation, very chaotic competitive environment. Those were the same principles that we received when we didn't choose a single standard for the air interface for digital systems. And the result was we have an environment here where there is massive investment in Wi-Fi, massive investment in OFDM and Wi-Max and others. That investment doesn't take place -- that innovation doesn't take place -- if there isn't an environment that says you're going to go in the market and you're going to take your chances.

Searls: Why not open up some of that higher spectrum that is long range?

Kneuer: Which spectrum is that? [unintelligible] adding 254 MHz to 5 GHz anytime there is, has been a technology component that says, I can come in and utilize that spectrum on a non-interfering basis [unintelligible].

Werbach: Can I jump in? [unintelligible] the idea at the FCC, whitespace underlay, the idea of some unlicensed low powered space within the 700 MHz band that [unintelligible] at the FCC right now.

Kneuer: I think that process is very similar to what we did in 5GHz, open up the white space to exactly the kind of efficient use of the spectrum you want to have to have a [unintelligible] technology to say there's spectrum lying fallow over here [?] various concerns, and I can demonstrate that I won't interfere, you ought to allow those innovators to access that spectrum. I think the important thing is doing the hard technical work to make sure it is not a promise of non-interference, but you can demonstrate it, you can do it in the lab, you can create it in the field, and you can test it. But those are exactly the kind of efficiencies that you want to gain. But it's exact . . . when it is an innovator that comes in and says, this is an otherwise unused resource, but with my innovation you can leverage that resource, that is precisely the kind of spectrum policy we should pursue.

Werbach: You want to make a comment David, and then I know you've gotta go.

Kneuer: I'll risk being late [unintelligible] red-eye.

Isenberg: The point the previous questioner was trying to make, I am not sure you addressed it. Wi-Fi isn't, wasn't auctioned. It isn't owned by any company any carrier, yet I think that everybody in this room, most people in this room, and perhaps yourself, would agree that Wi-Fi is the most . . .

[end of video]

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I'm afraid the video ended because either my camera has a 10-minute video limit, or the memory card was full (it claimed that). Very annoying!

I'm sure, however, other people filmed this. It was full of video cameras in the audience. It would be nice to have a more complete version.
The entire session is viewable at http://conversationhub.com/2007/06/27/video-john-kneuer-on-spectrum-policy-and-network-neutrality/
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