Policy Lessons from Personal Communications Services: Licensed vs. Unlicensed Spectrum Access

Abstract

This article examines Personal Communications Services, (PCS) in an effort to develop rules of thumb concerning the advantages and disadvantages of implementing either a licensed or an unlicensed regime in the modernization of spectrum policy. Much of the debate in the on going reformulation of spectrum policy is being couched in terms of how spectrum rights are defined, viz., a property rights approach versus a commons approach. Proponents on each side of this debate espouse that their regime will promote efficiency, flexibility, and social welfare. Spectrum policy modernization faces the difficult task of integrating rules for both types of property rights approaches, as opposed to opting for one regime over the other. A careful consideration of trade-offs and unintended consequences will offering guidance to spectrum policy reformers who much choosing from a range of options incorporating licensed and unlicensed approaches.

Fortunately for such analysis, in 1993, the FCC allocated 160 MHz of spectrum to PCS. The FCC assigned PCS spectrum both by licenses awarded in competitive bidding auctions and by an unlicensed approach. Licensed PCS would be offered by a handful of commercial service providers which retailed service on its regional or national network. In contrast, unlicensed PCS would resemble an equipment market where endusers buy their own network gear and connectivity and provision service for their own use. After a regulatory history and a market analysis, this article offers a comparison of the two classes of service to advance some rules of thumb for spectrum policy, such as a finding that Unlicensed PCS was inadvertently subject to a form of licensing.

Keywords: Personal Communications Services (PCS), Unlicensed Spectrum, Federal Communications Commission (FCC), Part 15 Rules