Evaluating Security Implications of Spectrum Allocation in Licensed and Unlicensed Use: 5G vs. Wi-Fi

Abstract

The Federal Communications Commission (FCC) declares that 5G and Wi-Fi are complementary technologies. This sanguine observation belies the intense competition between policy actors to secure finite radio spectrum for these technologies. While consumers may experience the “seamlessness” enabled by wireless technologies, there are important economic, spectrum, and security differences between 5G and Wi-Fi which have policy implications. 5G spectrum is acquired by a competitive bidding or other market process (e.g., auction or secondary transaction); Wi-Fi spectrum is designated by the FCC’s administrative decree and does not require a license. The former frequently involves a sizable payment to the Treasury for usage rights while the latter does not. The technical elements of 5G and Wi-Fi have different security vulnerabilities in protocols, infrastructure, encryption, authentication, and equipment. The FCC has limited statutory authority to address security issues, but its spectrum allocation decisions have inherent security implications, particularly when it can deem an entire band for licensed or unlicensed use. To demonstrate the differences and the policy implications, the paper reviews the FCC’s C-band auction for 280 MHz for 5G and the FCC’s 6 GHz proceeding for 1200 MHz for unlicensed use, though Wi-Fi is considered the leading application. The C-band auction drove $94 billion in gross proceeds, the net proceeds of which, $81 billion, are deposited to the Treasury. One projection is that economic value derived from the C-band spectrum will bring $191.80 billion over 7 years. For the 6 GHz proceeding, this amount contrasts with zero which is realized by the Treasury through unlicensed spectrum, though over 6 years the spectrum brings $153.76 billion in direct and indirect economic benefits. While an imperfect analysis, a preliminary comparison suggests that the C-band spectrum provides 4.5 times more economic value per MHz than Wi-Fi in the 6 GHz band. The paper briefly explores the role of institutional entrepreneurship to suggest that the FCC’s spectrum decisions are not necessarily a straightforward comparison of the cost and benefits of the technologies but rather the outcome of a complex interplay of policy actors, particularly their respective trade associations. The recent experience offers a counterpoint to the regulatory enthusiasm for unlicensed use and suggests a revisiting the calculations of opportunity cost in spectrum allocation models.