3.9G Bands Are Going to Be Allocated with Command and Control

Japanese government is going to allocate the "3.9G mobile" licenses of 1.5 GHz band to four incumbents with command and control.

They divide 45 MHz to four bands, 10MHz*3 + 15MHz, because there are four incumbents in Japan, NTT docomo, KDDI, SoftBank, and e-Mobile. Mobile terminal manufacturers are concerned because the performance of Long-Term Evolution, the technology which is likely to be the standard of 3.9G, is maximized when it is used in 20 MHz. Consumers are also concerned because the four bands would be allocated to four incumbents for free even without beauty contests.

Once the MIC, the counterpart of the FCC, argued that there should be two or three operators in such a narrow area. But it changed mind suddenly. It's a shame that the MIC is still sticking to "spectrum socialism" that most OECD countries abandoned ten years ago.

They seek public comments. You can comment.

Werbach Was Named as the FCC Transition Team

Obama named Susan Crawford and Kevin Werbach to lead the FCC transition team with the responsibility of advising the incoming administration on policy.

Congratulations!

FCC to Vote on White Spaces

FCC Chairman Kevin Martin said OK to the white space, and the FCC will vote on November 4, according to Google. Many people guess the vote will be positive.

It's a good news for Japan because Japanese bureaucrats do whatever American counterpart did.

Open Spectrum Auctions

I proposed the Open Spectrum Auction in OpenSpectrum mailing list:

The idea is simple: the government mandate winners of auctions to open the spectrum for every MVNO with pre-determined (cheap) prices and open the terminals for every manufacturers in the world.

It would lessen the profit so that winning prices will be cheaper. I think it would be a middle ground between commons and property parties.

David P. Reed, a father of the Internet, commented:

It's an interesting proposal, but I don't quite get the technological implementation you have in mind. In particular, an MVNO is a communications service that uses a licensee's infrastructure, paying for that use a "marked up" price, and the licensee still retains the right to allow or block terminals based on any criteria they can think of.

Did you have in mind that anyone can be an MVNO without any discrimination? That would require a system that provided an MVNO interface (API or gateway) that merely took money in exchange for service, but was completely open.

In any case, the thing that worries me here is that this does nothing to facilitate innovation in actual radio technologies, since the incumbent licensee has complete control over the technology used. In that sense, it is the same as "analog TV" - the incumbent has no incentive to do a better system, and now has many, many customers (MVNOs) that will be supporting the lack of innovation.

I replied:

Thank you for a nice comment. It's true that MVNO can't change the physical layer, so the innovation would be limited. However, pushed by recent financial turmoil, Japanese politicians are hungry for money. And the MoF urges the MIC to make money themselves.

So this is a good chance to change the command-and-control framework of Japanese policy. And we can leapfrog the U.S. by exploiting this chance, because the incumbents aren't so powerful in the U.S. Google's proposal for 700-MHz auction is a good starting point:

• Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;
  
• Open devices: consumers should be able to utilize their handheld communications device with whatever wireless network they prefer;
  
• Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms;
  
• Open networks: third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.

Economically, it's legitimate for the government to mandate pro-competitive conditions for bidders in advance. For example, API should support IP and be opened with GPL to make physical layer irrelevant. And the tariff should be determined in advance so that no "markup" can be gained by resale. As it will make bidding price cheaper, operators will welcome it because they are afraid of the winner's curse.

I wrote such idea in my old article "The Spectrum as Commons".

Japanese Government Considers Spectrum Auctions

Japanese government is considering spectrum auctions for UHF and satellite bands, an official said. In 2011, when the analog broadcasting is expected to stop, nearly 100 MHz in UHF will be opened, but many would-be operators rushed to the band so that beauty contests are hard to hold.

On the other hand, the MIC is asking 200 billion yen for the transition to DTV in the budget that will be debated in the next Diet. Since Japan's public deficit is the worst in the OECD countries, the Ministry of Finance is reluctant to subsidize TV stations with public money.

Auctions can solve both problems. It's a self-selection mechanism in which the operators who use the spectrum most efficiently will win the bid, as many economists have researched extensively. It's purpose is to make the spectrum market competitive, but it enables the government to make huge money. In Japan, Prof. Hajime Oniki of Osaka Gakuin University estimated the value of spectrum 13 billion yen per MHz. There are many vacant bands:

• 470-710MHz: 200MHz is the white space or evacuated by SFN
  
• 710-770MHz: allocated to mobile operators
  
• 770-806MHz: vacant

Bottomline: more than 300MHz can be opened. If it's run most efficiently, the spectrum auction can raise enormous windfall revenues more than 3 trillion yen (30 billion dollars) for the government.

New entrants get spectrum, the government receive money, and broadcasters can be subsidized by the auction fee for their transition costs. Nobody will lose. Why don't they do it?

"Dubbing Ten" Is Illegal

As reported in this blog, B-CAS is dead. Larry Lessig welcomed it. However, the MIC considers to prolong the DRM named "Dubbing Ten" for free broadcasting. This is strange because the Broadcast Law forbids NHK from such regulation:

Article 9(11): NHK shall not take any action, whatever the pretext may be, to regulate or interfere with the business of the manufacturers of, dealers in or repairers of radio devices, such as to certify broadcast radio receiving devices or vacuum tubes or component parts thereof, or to designate authorized repairers of broadcast radio receivers.

As I pointed out, such DRM for free broadcasting is the non-tariff barrier to exclude foreign manufacturers such as Vizio and Samsung - larger makers than Sony in American market. The USTR is watching the MIC's conclusion.

Broadcasters Are Wasting 36 MHz

In the hearing held at the MIC last month, Japanese National Broadcasting Association admitted "it is possible to consider the new entry" to 770-806 MHz band. We found that the band is used only for marathon broadcasting, 10-20 hours per month.

Since the band is already white, it can be used as a white space. Japan can be ahead of the U.S., where Google is struggling with ILECs.

Two Good News about Copyright in Japan

Japanese government seems to be changing its industry-oriented policy toward consumers.

Last week the Council of Information and Communication decided to scrap the B-CAS, the notorious conditional access system for free broadcasting (link in Japanese). Due to this change, "Dubbing Ten", which forbids copying the programs of digital broadcasting more than ten times, would be abolished, because it is enforced by the encryption of B-CAS. It might be the result of accusation by many people (including me) on the Web that B-CAS is violating the Anti-Monopoly Act.

On Sep. 18, the Council of Culture gave up the extension of copyright from 50 years after the death of the author to 70 years (link in Japanese). Two years ago, the Council proposed the extension to follow the "global standard", but many people on the Web objected against the legislation. A Council member confessed that he didn't imagine such strong objection from overwhelming majority on the Web.

These might be signals that the Web is becoming the "Fifth Estate" to compete against mass media. In Japan, since broadcasting stations are tied with major newspapers, they are so strong that B-CAS nor copyright extension has scarcely been reported in media. However, this taboo is strongly attacked by many blogs and bulletin boards. They organized NPO and accused B-CAS to Fair Trade Commission.

As a result, the tide is changing, but it's only a beginning. We should unite to open the spectrum and abolish the monopoly of broadcasters.

From Broadcasting to the Network Age

Kevin Werbach's speech at ICPF symposium on July 25 in Tokyo.

"Dubbing Ten" Is Dead

As I reported in a previous entry, B-CAS encryption system was broken with various technologies. The easiest way was found by a code breaker Friio, which sends the encryption key via the Internet. In the earlier version, Friio box needed a B-CAS card, but now users can download the encryption key by which they can copy MPEG2-TS indefinitely.

Thus "Dubbing Ten", new copy control system that allows users to make only 10 copies but prohibits editing which was introduced last month, is dead, too. TV stations are lobbying to enforce Dubbing Ten by legislation, but few bureaucrats agree to make a new obstacle for the DTV transition until 2011.

In fact Friio didn't break the encryption code but only dug the bug in the protocol of B-CAS. The bug was made because ARIB added copy protection to the encryption. Usually they are integrated as in the CSS of DVD, but ARIB tried to "enforce" the copy-control flag with encryption. It's nonsense because, after decryption, B-CAS generates the raw flag in the video stream that can be ignored easily.

Anyway Japanese government will give up B-CAS and Dubbing Ten. It's their own fault that implemented stupid CAS to free broadcasting.