Another View: Wi-Fi, permissionless innovation and competitive advantage

Inventor Nikola Tesla predicted that “When wireless is fully applied, the Earth will be converted into a huge brain, capable of response in every one of its parts.”

A key part of wireless internet service is Wi-Fi, which has expanded Americans’ broadband access in countless locations, including homes, schools, hotels, coffee shops, offices and airports. It hasn’t quite converted the whole Earth to a huge brain, but with over 18 billion devices in operation, Wi-Fi is always there and everywhere.

Wi-Fi’s beginnings are humble. In 1985, the FCC opened a limited number of spectrum bands for unlicensed use. While licensed spectrum forms the core of cellular networks and is auctioned by the FCC for exclusive use, with unlicensed there’s no payment to use the spectrum and no centralized control or exclusivity, enabling the freedom to innovate.

So little was expected from these spectrum bands that they were deemed “junk bands.” Initially, unlicensed spectrum supported baby monitors, cordless phones and garage door openers. Today, Wi-Fi uses it to connect iPhones, tablets, smart TVs and many other devices.

Wi-Fi’s success is rooted in the freedom of unlicensed spectrum. In the U.S. it is used to access an internet fundamentally uncensored by the government. Wi-Fi is therefore an example of “permissionless innovation,” an optimistic theory embracing human innovation and ingenuity as overall good things. It allows that harms from innovation can be addressed as they occur, so the government need not attempt to anticipate or attempt to prevent potential harms in large part because it is rarely possible to accurately predict what will go wrong.

In stark contrast is the precautionary principle, which refers to the belief that regulation is required whenever an activity creates a substantial possible risk to health, safety or the environment, even if the supporting evidence is speculative. It holds that a regulator such as the FCC can discern actual risks and potential harms before devising regulations limiting innovation that will either ameliorate the risks or block the innovation altogether. The precautionary principle is pessimistic and technocratic.

Fortunately, the FCC embraced permissionless innovation by opening spectrum bands for unlicensed use. It has been so successful that according to The Internet and Television Association, 53% of all U.S. internet traffic is delivered over Wi-Fi. The Wi-Fi advocacy group WifiFORWARD sponsored a study predicting that the economic value of Wi-Fi will reach $2.4 trillion dollars in 2027, which includes a consumer benefit forecasted to be $514 billion dollars.

The association also states that more than 80% of cable operators’ mobile data traffic is now offloaded to Wi-Fi networks. Carrying 80% of the traffic means that Wi-Fi is the primary choice for this wireless data and the cellular network is secondary. Wi-Fi has allowed cable companies to effectively compete with cellular providers, increasing consumer choice.

Permissionless innovation gives the United States a competitive advantage, particularly regarding the internet and internet-related services such as Wi-Fi. This is especially so in comparison to America’s prime global economic and security competitor: China.

Former Chairman Deng Xiaoping famously said, “If you open the window for fresh air, you have to expect some flies to blow in.” When it comes to the internet, present day China has no tolerance for flies. Its internet is characterized by top down, centralized control. For example, the “Great Firewall” combines technological and regulatory tools to monitor, filter, and restrict internet traffic within China. It acts as a digital barrier between China and the rest of the world so well that the Internet Society says it is “more accurately described as a national intranet.”

Heavily censoring and controlling its internet may be advantages for the Chinese government when it comes to control, but it stifles innovation. Permissionless innovation for Wi-Fi has created competitive advantages for our economy because the unlicensed structure and low cost provide space to create and experiment – there’s no heavy-handed, prescriptive regulation or other barriers to entry to get in the way. It leads to innovation and technological advancement that China’s internet model restricts or prevents.

In China’s internet, permissionless innovation is anathema. In the United States it’s a success story that the rest of the economy ought to follow.

Brian Rankin is Adjunct Fellow at the Competitive Enterprise Institute. ©2024 Tribune Content Agency, LLC.