Tom Snyder: Spectrum Request Could Be Difference Between Monopoly and Innovation

In the United States, the federal government regulates how the wireless spectrum is used. Groups of radio frequencies, called “bands,” are allocated for some combination of government, commercial, and open use. There are some bands reserved for the military, some are licensed exclusively to private operators (such as cellular providers), and some are unlicensed, meaning anyone can make, sell, and operate devices on those frequencies.

Changes to established frequency allocations are relatively rare, but since technology is constantly evolving, it makes sense for the government to consider changes from time to time. You may recall that a few years ago, the government decided to end analogue TV broadcasting because digital TV was much more spectrum efficient.

The FCC reallocated the 700 MHz band, which previously held analog TV channels 52-69, to increase the total spectrum for cellular communications. In this case, private companies bid for exclusive use of the spectrum in the band. The government raised almost $20 billion from these auctions—mostly from AT&T and Verizon, which reallocated the spectrum for cellular LTE. It’s worth noting that the 20 MHz segment of the band was reserved for emergency services, but it failed to meet the government’s minimum bid requirement during the auction. Bidding for more capitalist use cases was fierce, but the “common good” had to pass the corporate profitability test.

In April of this year, NextNav, a publicly traded company offering positioning, navigation, and timing (PNT) services, filed a petition with the FCC to reallocate the 915 MHz band of wireless spectrum. NextNav argues that this portion of the radio spectrum, spanning frequencies from 902 to 928 MHz, is underutilized and would be better spent if the spectrum were allocated for private commercial use. The company also argues that the spectrum is ideal for creating redundant PNT services for those who rely on GPS.

GPS has undoubtedly transformed all segments of society. In the NextNav petition, they point out that economists estimate that GPS has generated at least $1 trillion in economic impact. GPS relies on highly accurate radio transmissions between satellites and the ground. Because we can understand the timing of radio signals with extremely high precision, when we have a device that connects to at least 3 satellites simultaneously, we can triangulate our position based on the transmission received from each one. Anywhere on the planet, if we have a clear line of sight to the sky, we can passively and without transaction costs know exactly where we are.

We don’t always have an unobstructed view of the sky, so the industry has come up with creative tricks to help us retain knowledge of our precise location, even when we’re in a car or a building. First, we supplement the GPS position with other “known” locations from which we can also perform similar radio wave timing calculations. Cell towers are at fixed positions that are known and immobile, so using a similar approach to GPS triangulation, we can also perform cellular triangulation to get a reasonable estimate of position.

There are sources of error—especially when you consider that with signals transmitted primarily horizontally (from tower to phone) versus vertically (from phone to sky), there are many more obstacles (trees, buildings, walls, hills) that bounce or otherwise affect the wireless radio path. This causes fluctuations in signal timing, which translates into positioning inaccuracies. The more obstacles there are, or the deeper you go into a building, the less accurate it becomes.

NextNav’s core business is developing and selling competitive PNT technologies that solve many of today’s indoor positioning challenges. Their technology can provide elevation information (e.g., which floor of a building you’re on) that 2D GPS positioning can’t provide. And they assume that providing significantly more accurate indoor navigation would enable new use cases and drive new innovation.

The FCC’s role is to review this petition for the purpose of issuing regulations against the current use of the 902-928 MHz band. Before 1985, this segment of the wireless band was reserved for military communications and was used primarily by the Navy. In 1985, the government rewrote the regulations to add significant new limits to this frequency band.

The government recognized the need to allocate spectrum for industrial, scientific, and medical (ISM) applications. The 915 MHz band became known as the ISM band. If you have a pacemaker with wireless monitoring, it probably operates in the ISM band. Many industrial control systems and asset monitoring systems use this spectrum. This band is used for radar wind monitoring for weather prediction, outdoor sensor networks, industrial heating applications, and medical telemetry for patient monitoring. The spectrum is a hotspot for IoT applications, including PNT applications created by NextNav.

Entire industries are built around RFID (Radio Frequency Identification Devices), which take advantage of the ability of devices to operate without a license under FCC Part 15. Most RFID applications rely on ultra-low-cost tags that cost a fraction of a penny to produce and can be deployed on a mass scale, such as to prevent theft in retail stores. Because the ISM band does not require an expensive spectrum license, it enables a large group of RFID applications that are commercially viable.

One of the most promising new wireless platforms in the ISM band is LoRa. LoRa networks, short for Long Range, enable new capabilities in asset tracking and management, smart farming, and industrial automation, among other areas of the IoT. LoRa addresses the needs of applications that take very simple, unobtrusive measurements, often at very infrequent intervals, and from devices that may require 5-10 years of battery power. An example would be reading soil moisture twice a day in a rural field. Operating in an unlicensed band, once again, enables use cases that would not generate enough data to justify the typical cost of a cellular plan. In fact, anyone can set up a LoRa network inexpensively and have zero wireless data costs.

Innovation happens because innovators can simply buy RFID or LoRa or other 915MHz radio and start hacking and experimenting with new products and business models. There are some restrictions on spectrum usage, but they are relatively easy to manage (and there are third-party services to verify FCC Part 15 compliance).

● New devices must not interfere with older military applications. This is fairly simple because the transmission power is kept low, which is standard for RFID and LoRa.

● Radio amateurs can also use this band, but they must not interfere with ISM applications that have been given priority use of this band.

Sure, the 915MHz band isn’t unused, as NextNav would suggest. And if we consider LoRa in particular, it’s a market that’s seeing exponential growth. One day, LoRa could have outdoor coverage similar to today’s cellular and Wi-Fi networks—but for low-power, discrete sensor devices.

So why the petition to change? Let me start by saying I have no connection to NextNav, no insider knowledge of their motivations (or a grudge to hold). But I can see a few clear reasons why a petition would benefit them.

First, it would essentially give them exclusive rights to a portion of the spectrum. It’s similar to the exclusive licenses that mobile companies get when they win spectrum auctions. Monopolistic use of radio spectrum is incredibly valuable.

Second: With exclusive use, NextNav would not have onerous restrictions to ensure their devices don’t interfere with other devices sharing the same spectrum. That means they could operate at much higher power levels to transmit stronger signals over greater distances. That greatly improves the ability to support applications — like asset tracking — that might not benefit from limited coverage and patchy networks. But more specifically, NextNav notes in its petition that operating at full power, they could offer wireless services similar to cellular 5G. (You can read the full petition here .)

This appears to be a blatant demand for monopolistic use of a valuable segment of the radio spectrum, without paying a multi-billion dollar license fee, and for the basic use of 5G-like services. There is no good reason why the government should seriously consider this petition.

Innovation happens in the open. Think of how many different product categories have emerged around Bluetooth—which operates in the unlicensed 2.4 GHz band. Headphones, wireless speakers, car infotainment systems, medical monitors, home automation, game controllers, computer peripherals, smart watches, wireless printers, pet trackers, activity trackers. All of these product categories support Bluetooth, and each has dozens of competitors.

When you look at innovation in the licensed cellular spectrum, you see much less innovation. There are many different kinds of phones, but they all come from an extremely limited number of companies that make products. There are a few tablets, also from the same manufacturers. Cellular modules have been built into cars and wireless gateways (most of which then connect to Bluetooth, Wi-Fi, and other unlicensed edge application devices).

The laws of physics dictate the total amount of radio spectrum. There is no way to create more. So we have to use the available spectrum in the most beneficial way. There are only a few areas of spectrum that have been specifically set aside for unlicensed use. The main bands are 915 MHz, 2.4 GHz, 5 GHz, and 60 GHz. These few bands are where we have Bluetooth, Wi-Fi, RFID, LoRa, Zigbee, Z-Wave, NFC, Thread, DECT, Ant+, and a few others. These are protocols where there is a lot of innovation and significant market competition.

It’s really hard to understand why the FCC would change the current allocation of the 915 MHz band. So what are the chances they’ll make a change?

NextNav is a small company. It did $3.86M in revenue in 2023, and it only had $1M in annual revenue in 2021. But it has 232 institutional shareholders (per SEC 13D, G, and F filings) that have boosted the company’s market cap to $909M. Think about it — investors are considering a company that does ~$4M in revenue at a valuation of almost a billion dollars. I’d venture to guess that some of those investors are betting on the FCC granting a monopoly on free spectrum via this petition. Companies that hold a monopoly license to radio spectrum have a relatively easy path to billions of dollars in revenue in a trillion-dollar market. So many applications require wireless connectivity that whoever controls the spectrum controls the market.

It will be interesting to follow this story as established players in the ISM band have the opportunity to submit letters to the FCC in response to NextNav’s petition. But unfortunately, these are the stories that the daily press simply doesn’t cover. The only way to follow is to actively investigate as events unfold. Spectrum allocations aren’t sexy enough for the evening news.

But something as fundamental as how our country manages the limited wireless spectrum we have should be front-page news. Wireless applications are so significant that they affect the entire economy. GPS alone has a trillion-dollar global impact. IoT is becoming an equally large market. Let’s hope the FCC doesn’t hand over the ISM band to a single company. Instead, let’s leave the spectrum open to innovation and competition.