Wi-fi, Commons, and Exclusion Costs

Lynne Kiesling

One of the main policy questions in our use of radio spectrum is whether or not to manage the spectrum as a commons. Leaving the 802.11 portion of the spectrum as a commons has created a rich network of wireless access points. Some idealists envision being able to traverse the country and have a continuous wireless connection.

Hang on … isn’t one of the lessons of common pasture, of overfishing, of air and water pollution, that such open access leads to congestion, overuse, and exploitation? And dynamically speaking, who would invest in the wireless network, with no expectation of profit? This is the tragedy of open access.

Thinking about property rights and exclusion costs sheds some light on this conundrum. One fundamental determinant of whether or not we treat a resource as a commons is the cost of defining and enforcing property rights. Another way to put this: what is the cost of excluding non-authorized users? If you can exclude, then you can avoid the tragedy of open access. We do this, through commercial services like T-Mobile, Wayport, and other subscription services. And for people installing wireless networks in our homes, we can exclude via password protection. Thus even though the underlyhing legal treatment of 802.11 is a commons, low costs of exclusion enable us to manage it in such a way to avoid the tragedy of open access while still using the resource productively.

I noticed an interesting twist on the exclusion cost point yesterday at O’Hare. Many frequent travelers have memberships in clubs, like American’s Admiral’s Club. One benefit of the Admiral’s Club is that they provide a T-Mobile Hot Spot for their members. When the airport is crowdes (particularly on days like yesterday with bad weather), you routinely see people siktting on the hall floor outside of the Admiral’s Club, poaching the T-Mobile Hot Spot. They’re not Admiral’s Club members, but they have T-Mobile subscriptions. The cost to American Airlines of excluding people from using it is too high to be worth it (by, say, blocking the signal at the wall, which is expensive). Generally there aren’t enough poachers to create enough congestion to degrade service to Admiral’s Club members. In other words, the hallway poaching is an irrelevant externality. Even without being able either to charge the poachers or to exclude them fully, American Airlines still finds it profitable to provide the T-Mobile Hot Spot.

Much of the discussion of spectrum as a commons treats it as an either-or: etiher commons or pure private property rights. Such a treatment is too simplistic. Low exclusion costs mean we can manage the 802.11 commons to avoid the tragedy of open access, while still enabling us to contruct wireless networks within the commons.


9 thoughts on “Wi-fi, Commons, and Exclusion Costs

  1. The low cost of exclusion can cause other problems. For example, the popularity of devices in my neighborhood that use the 2.4 GHz spectrum (including 802.11b devices, 802.11g devices, many cordless phones, and others) means that they frequently fight over the spectrum and interfere with each other. When I turn on my 802.11g wireless access point, it can be hours before I can do anything productive using it. Unrestricted anonymous access to the Internet is not the only tragedy of the 2.4 GHz commons.

  2. “low costs of exclusion enable us to manage it in such a way to avoid the tragedy of open access while still using the resource productively.”
    Hmm IIRC it’s not quite like that. You cannot have multiple networks using the same spectrum infinitely, every time you add another overlapping network the noise over all the networks goes up, and thus the speed of the networks is degraded.
    But OTOH since 802.11 networks are generally physically seperated via the very non-commons ownership of property, 802.11 networks can reasonably be expected to work well.

  3. You’re making too sweeping a generalization. Whether you are inside the club or not, it is still a T-Mobile hotspot. It’s not a free hotspot. In fact, even if you are a Mileage Plus person with paying access to the Admiral Club, you need to have a subscription to T-Mobile to use the hotspot.

    It would be a more interesting situation if the Admiral Club provided free wi-fi to their customers. If that were the case, they would be more interested in stopping the poachers outside their door.

  4. Good illustration of the important difference between pure public goods and club goods, or to render it in less obscure language, the difference between a good for which consumption is nonrival and exclusion too costly, and a good for which exclusion is possible.

    Well, I’m not sure that my second attempt was any less obscure. Actually, you were pretty clear in the first place.

  5. Not really a good analogy, because 802.11 is self-limited by range. Thus, hot spots in ublic places can survive via passwords, etc. And your home is pretty stable (I can’t pick up in many rooms in my own house due to the short range).

    This does apply to longer range spectrum segments, which have to be restricted just to make them work due to interference, though there are ways to share carrier frequencies and thus increase capacity.

    I don’t see a big problem, frankly. The market will out.

  6. Not really a good analogy, because 802.11 is self-limited by range. Thus, hot spots in ublic places can survive via passwords, etc. And your home is pretty stable (I can’t pick up in many rooms in my own house due to the short range).

    This does apply to longer range spectrum segments, which have to be restricted just to make them work due to interference, though there are ways to share carrier frequencies and thus increase capacity.

    I don’t see a big problem, frankly. The market will out.

  7. Not really a good analogy, because 802.11 is self-limited by range. Thus, hot spots in ublic places can survive via passwords, etc. And your home is pretty stable (I can’t pick up in many rooms in my own house due to the short range).

    This does apply to longer range spectrum segments, which have to be restricted just to make them work due to interference, though there are ways to share carrier frequencies and thus increase capacity.

    I don’t see a big problem, frankly. The market will out.

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