The Use of Statistical Risk Assessment by the FCC in Spectrum Regulation

Abstract

This paper explores the FCC’s approach to spectrum regulation by examining its quantification of harmful interference, analysis of service rules in its rule-making process, and the content of its final service rules. The paper was developed to support the Interference Studies project of the FCC TAC 2013 Spectrum and Receivers working group. The FCC has traditionally used worst-case analysis to determine whether new service rules will cause interference, and the FCC’s final service rules have traditionally been single-value. However, a worst case-analysis and single-valued rules arguably creates unnecessarily conservative rules that may not result in the maximum benefit to society. Thus, a number of analysts and regulators have argued for statistical approaches to spectrum policy. This paper continues as follows: Section I identifies the FCC’s regulation of interference in the following three contexts: 1. The discussion and definition of harmful interference. 2. The technical analysis of service rules done during the rule-making process. 3. The content of final service rules. In order to better understand the status quo in the FCC’s spectrum policy, Section I examines the three contexts based on the following five distinctions. The first option in each distinction is the FCC’s traditional approach: 1. The definition of harmful interference can be qualitative or quantitative. 2. Analyses of service rules can be worst-case or multi-case. 3. Analyses of service rules can be qualitative or quantitative. 4. Final service rules can be single-value or statistical. 5. Final service rules can be quantitative or qualitative. Section II explains our four findings. In summary, the FCC’s: 1. Technical analysis and final rules fail to quantify harmful interference. 2. Customary analysis of service rules is worst-case. 3. Resulting service rules are almost always single-value. 4. Analysis of service rules is generally qualitative and resulting service rules are usually quantitative. Section III presents the Northpoint case to illustrate the application of the above criteria and findings. “Northpoint” was a controversy about the FCC’s approval of Multichannel Video Distribution and Data Service (MVDDS) — a terrestrial wireless broadband technology. Northpoint, a developer of MVDDS, tried to obtain approval to operate terrestrial transmitters in the face of objections from the incumbent operators of direct broadcast satellite receivers. In Northpoint, the FCC never quantified harmful interference in its technical analysis nor final rules, and it started with a multi-case analysis of service rules that ended in single-value service rules.