On September 23, the Federal Communications Commission approved new rules allowing so-called white space spectrum to be used for what has come to be called “WiFi on steroids.” White spaces refer to radio airwaves that are not used by broadcasters. According to FCC chairman Julius Genachowski, the opening up of this spectrum will provide a major “platform for innovators and entrepreneurs.” What are likely to be some of the first uses of this technology? What impact will the rules have on wireless operators and on companies such as Microsoft, Dell and Google, which have been pushing the FCC to implement the new rules? Wharton legal studies and business ethics professor Kevin Werbach, who has been working closely with the FCC on its latest action and other initiatives, answers these questions during an interview with Knowledge at Wharton.

An edited version of the transcript appears below:

Knowledge at Wharton:  On September 23, the Federal Communications Commission (FCC) approved new rules allowing white space spectrum to be used for what is being called “Wi-Fi on steroids.” Could you please explain what this white space is, and what the new rules will mean for wireless users?

Kevin Werbach: This is an incredibly important decision because it’s the first time that the FCC has allowed a new kind of spectrum use. Traditionally in wireless communications the FCC exclusively licensed spectrum. The FCC said, for example, that a television station has the right to transmit on a certain channel, and no one else can transmit there. About 20 years ago, the FCC allowed for a different kind of spectrum use, which was called unlicensed. This meant they took some bands that were very congested and seemed to be fairly useless and just opened them up. They said anyone who wants to transmit can transmit there, as long as they follow certain technical mechanisms to allow the spectrum to be shared. That latter category is what allowed Wi-Fi to exist. Even though this was considered junk spectrum, a tremendous market grew up around Wi-Fi because it was open to innovation, because devices could be made and share the spectrum, as opposed to one licensee having total control and dominance over how that spectrum got used.

White space is a hybrid of the two. The FCC has allocated spectrum for television broadcasting, but you have to remember that that spectrum was first allocated back in the 1950s and 1960s when technology was much less sophisticated than it is today. The FCC set up large sectors of the spectrum that were actually dark, that could not be used for transmission, in order to protect different broadcasters. If you think about the way a TV station works, it broadcasts from one location. For example, if I have a television station broadcasting in Philadelphia and another station is broadcasting on the same frequency in New York, those signals would seem to interfere because the televisions were not sophisticated enough to tell them apart. What the FCC basically did was say, in Philadelphia, “You can transmit on channel three,” and in New York, “You can transmit on channel four.” But [that also means that] channel four in Philadelphia is dark and channel three in New York is dark. That’s an extraordinary waste of spectrum. Spectrum is so terribly important to so many services and so much economic development today, but the FCC had to make it completely unused.

Technology has come a long way since then. White space is about unlocking the potential of those unused corners of the broadcast spectrum. What the FCC has done for the first time in this decision is to say, “We’re not going to get rid of the exclusively licensed spectrum. All the broadcasters are still licensed where they are, but we can allow unlicensed devices to operate around those licensed frequencies.” That’s potentially revolutionary.

Knowledge at Wharton:  The broadcasters had opposed the FCC’s approach [towards white space]. Are they satisfied now with the new rules or are there still concerns?

Werbach: Broadcasters have expressed very strong concerns all along about the white spaces proposal. But the FCC has been working at this since 2002. It spent eight years. The FCC also has some excellent technical expertise, and it has open proceedings, so they’ve had technical experts on all sides submit prototype devices, test them and do the technical analysis. And what they found is that the interference concerns that the broadcasters raise are wildly overblown. So the FCC in this proceeding put into place various mechanisms to protect both incumbent broadcasters as well as some other users, for example, wireless microphones at sporting events and theatre and so forth. The FCC put a number of restrictions in place to protect the broadcast industry, but I would not expect the industry to say they are happy with this. But the FCC has been very cognizant of their concerns, because they certainly don’t want to have a situation where people’s televisions get interrupted because of these other services.

Knowledge at Wharton:  What are likely to be some of the first deployments of the new spectrum? Do you see implications in areas such as health care and education?

Werbach: There have actually already been experimental deployments. For example, Microsoft has developed a research technology called WhiteFi, which is a set of protocols to build Wi-Fi-like systems on white spaces. They got an experimental license and they’ve actually deployed it on the Microsoft campus in Washington. And then there are some other companies that have deployed white spaces systems in rural areas where it’s hard to reach people with traditional broadband mechanisms.

One of the great advantages of white space is that it uses low-frequency spectrum. The television broadcast bands are very good in terms of propagation. A signal can reach through trees and through buildings in a way that higher frequency, cellular frequencies and Wi-Fi frequencies can’t, so some rural areas are looking at it for that use. There’s also been great interest in using it for smart grid energy deployments in terms of monitoring distributed power networks. The potential is really quite broad. Again, because it’s an unlicensed technology, any company can make devices that can share the spectrum. And then anyone can take those devices and use them for different kinds of applications.

Knowledge at Wharton:  FCC Chairman Julius Genachowski recently said that the opening up of the spectrum would provide what he called “a platform for innovators and entrepreneurs.” What kind of innovation opportunities do you foresee coming out of this?

Werbach: Well, look at what’s already happened with Wi-Fi. It started off as a protocol for enterprise networking, and now it’s in every device you can think of. It’s in your iPhone, it’s in laptops, it’s in entertainment devices and being used for all sorts of applications. The reason is because it’s distributed. The case for innovation and use is not dependent on one service provider saying, “This is spectrum for the following use.” I think we’ll see the same thing with white spaces. In particular, I think we’ll see great innovation in areas where the existing wireless technologies don’t go. There are lots of rural areas in the United States and worldwide that don’t have affordable solutions. Again, part of the advantage of this unlicensed approach is that companies can make large volumes of devices, which push the unit cost down. That allows for situations where maybe there’s another technology that theoretically could serve that use, but the costs are so low because the devices are cheap and someone doesn’t need to acquire a license to the spectrum, that people will pick them up and use them for interesting things. So I think we’ll start to see them in these edge cases and then we’ll see, just as we saw with Wi-Fi, where large companies like Cisco and Intel got on the bandwagon and ramp them up for more traditional mainstream uses. I think we’ll see the same thing.

Knowledge at Wharton:  You referred to Microsoft’s WhiteFi project and Microsoft, of course, has been a big champion of the new rules. But also companies like Google and Dell have been pushing the FCC to pass these rules. What are some of the uses that companies like Google and Dell could put these new rules to?

Werbach: I’ve said in the past that wireless communications capacity is the oil of the 21st century. It’s the fundamental input that the information and network economy runs on. And increasingly we’re seeing explosive demand for wireless in all sorts of areas. This includes traditional kinds of uses like communication, wireless broadband, entertainment applications, both in the home and outside the home, as well as things like smart grid, remote health care and all sorts of sensor applications.

All of those need wireless capacity, and so all the major companies that are in the technology realm recognize that everything’s going to be wireless enabled. And it’s going to be wireless enabled in multiple ways. If you’re a company like Dell that’s building devices, you’re selling millions and millions of laptops and other kinds of mobile devices. You want to wireless enable those in the most flexible possible way. That means you don’t want to have a situation where you’re beholden to a wireless carrier that’s going to control how that’s going to be used. You want to put a cheap chip into your laptop and then build software around it and build a platform around it. It’s the same thing with Microsoft and Google. They’re looking at various applications and opportunities in different markets. Philips has also been involved using it for high speed media shifting around the home. The possibilities are really endless.

Knowledge at Wharton:  Do you see any downside around the new rules? For example, are there any security issues that we should be concerned about?

Werbach: There are always security issues. They’re not inherent in the FCC mandates, but systems that are built on this technology, especially if they’re in mission critical areas like, for example, smart grid monitoring, are going to need good security. But there’s nothing fundamentally insecure about unlicensed wireless. It’s sort of like saying there’s nothing fundamentally insecure about open source software, which for a long time people would also say, but you look now and it’s being used by banks and governments and so forth. So security is important but not a fundamental problem.

There are real issues. There are legitimate worries about interference and systems need to be built to ensure they don’t do that. There also are legitimate worries that the FCC was too restrictive, and that the power limits and other kinds of restrictions that it put into place to prevent interference with the incumbent systems might overly limit where this could be used. I get concerned when people talk about this as Wi-Fi on steroids or super Wi-Fi because it is different. Wi-Fi doesn’t have those limitations.

So, for example, you’re not going to be able to use a white space system around the Broadway region of New York City because there are so many wireless microphones there for the theatre production. There’s nothing like that in Wi-Fi. Maybe there are various ways around it. But the point is the expectations may be a little ahead of the reality. We’ve got to realize there are those limits and get devices into the field and see how realistic the concerns are. I’m hopeful that the FCC will look at the data and potentially, if it sees that some of the interference concerns haven’t happened, then it could go back and loosen the rules.

Knowledge at Wharton:  Could you outline what you see as some of the immediate effects of the new rules and also the longer term impact that will roll out more gradually?

Werbach: The immediate effect is that companies that have been involved in this proceeding for up to eight years are going to start building devices. Companies like Cisco, Intel, Philips and Dell and others are going to start developing chips and hardware. And the technical community, the networking community, which has already been involved in developing technical standards and protocols, is going to kick that into overdrive. Companies like Google and Microsoft will start doing interesting deployments, and we’ll see this start to roll out. It won’t happen overnight — just as Wi-Fi was authorized by the FCC in the mid 1980s, but really took until the mid 1990s until the protocols and the devices were there in mass-market volumes. I think we’re going to see this flow through and this kind of wave that’s going to build and build in this area.

The longer term question is still open. If we look at white space as not just as one particular authorization of a particular technology, but a new model for how we do spectrum allocation, the opportunities are even greater. In particular, one rule that the FCC put into place to protect against interference is what’s called a geo-location database. The FCC has said each white space device must have or be connected to a database with a map of the spectral environment. Here is a television station that’s licensed in this area. Here is a wireless microphone. And wireless microphone companies could actually add to the database. And it needs to check that database and use that to say, “Okay, in this particular area at this particular time I can transmit on of this frequency or not.” And that’s something that helps prevent interference because it’s such a complex dynamic environment.

I think it actually has great potential to be used much more broadly. Because when you think about it, again, go back to what I said at the beginning, the problem is we have this traditional fixed spectrum allocation system where lots and lots of providers in all different areas have gotten allocations based on historical technologies. If we actually look at transmission, if we actually put up an antenna and a spectrum analyzer, we find that most of the spectrum is empty most of the time in most of the United States and the rest of the world. So how do we unlock that? And we have to unlock that. I mean there’s such extraordinary economic investment going behind all these applications, both consumer and business.

I think one way that we do that is to develop mechanisms sort of the way the domain name system works for the Internet, that are intermediation points that help identify what’s available and match up demand and capacity on a real-time basis. We don’t need to do that through a market, although some of those mechanisms might be economic mechanisms. But we need infrastructure to fulfill that demand on a real time basis. I think the white spaces database could become that. That’s not what the FCC proposed or mandated, in fact they did it for very different reasons. But when we look back 20 or 30 years from now, this might be the foundation of an entirely different regime for wireless communication.