Tuesday, August 23, 2005 - The Progress & Freedom Foundation Blog

Spectrum Driving Innovation in Business Models

This morning, a panel is tackling the issues of "Property Rights in the Air: Approaches to Spectrum Reform."

Most interesting set of legal questions I've heard so far just came from Tom Sugrue, VP at T-Mobile. Tom brought up the negotiations his firm is having with some airports. They believe they have arrangements to be the singular provider of broadband within some of the airline clubs through the unlicensed spectrum. Yet, the airline clubs lease space from the airport or airport authority. So, who has the ability to contract with and enforce the right of T-Mobile to be that provider?

In other contexts, T-Mobile provides broadband on an exclusive basis at Starbucks stores. Starbucks owns the storefront and can make the exclusive deal. Airports, in the best sense, ought to be profit making entities. Their management incentive is to earn revenue from their renters as well as from other services provided (parking comes to mind). Thus, a real tension has developed because travelers demand access to Wi-Fi and potential providers want to capitalize on the demand.

A market should be able to work out the problem. The airline clubs should be willing to pay a premium to the airport in order for the airport to set the conditions that allow the airline clubs to have a deal with T-Mobile. But new contracts take time to negotiate and implement. In the interim, the availability of unlicensed spectrum spurs innovation in the technology as well as in the business models of many organizations – from Starbucks and WalMart to airports and other more "public" areas.

posted by @ 1:25 PM | Economics , Innovation , Spectrum