WASHINGTON-The Bush administration and the high-tech sector oppose Japan’s proposal to add a user fee to unlicensed wireless devices, arguing it would undercut consumer demand and stifle development of wireless technologies in the world’s second largest economy.
The U.S., which expressed its views in written comments through its embassy in Japan, said fees on licensed spectrum could lead to more efficient use of frequencies but added that the same is not true for unlicensed spectrum.
The U.S. told Japan’s Ministry of Public Management, Home Affairs, Posts and Telecommunication that unlicensed users-which by definition do not have specific frequency assignments-lack the ability to warehouse spectrum.
In addition, the U.S. said unlicensed spectrum tends to be used intensively and therefore incentives to maximize efficiency are already high. “Creating what essentially amounts to a `tax’ on purchasing unlicensed devices would lower demand, thus resulting in less spectrum usage and reduced efficiencies,” the U.S. stated. “Given the low regulatory burden involved in the license-exempt sector (i.e. there are no licenses to process or adjudicate, nor records to keep, and other expenses can be recouped by an equipment certification fee) `spectrum management’ is not a convincing rationale for imposing a usage fee.”
The U.S. urged Japan to consider spectrum use flexibility and licensed wireless leasing to promote greater spectrum efficiency.
The Japanese Embassy declined to comment on U.S. criticism of the proposed unlicensed spectrum fee. However, an embassy spokesperson said a study group working on the spectrum fee proposal in Japan would issue a final report at the end of this month.
The tech industry fears Japan could set an example for other countries if it approves an unlicensed spectrum user fee.
Japan’s current spectrum user fee, governed by the country’s radio law, was enacted in 1993 to support the administrative costs associated with managing and maintaining spectrum allocation and radio facilities. According to MPHPT, revenue from the new spectrum user fees would be allocated for spectrum administration and research and development costs.
The U.S. and tech sector said linking expanded spectrum user fees to R&D is bad policy.
The Information Industry Council, representing Intel Corp., Cisco Systems Inc., Microsoft Corp., Hewlett-Packard Co. and other tech firms, also filed comments with the MPHPT voicing concerns about the planned unlicensed spectrum fee. ITI’s members are big backers of Wi-Fi technology.
“Japan’s proposed new tax on unlicensed radio use may greatly compromise the development of wireless communications technologies and impede the deployment of these technologies to Japanese consumers,” said ITI President Rhett Dawson. “Taxing unlicensed spectrum is inconsistent with common international practices and, to date, no country has adopted such a tax. If Japan creates a new system, it could set a dangerous precedent for other countries and have a severe impact on the growth and expansion of global markets.”
ITI disagreed with the Japanese government that expanding user fees from licensed to unlicensed users would provide further incentives for more efficient spectrum use. The trade group said a fee on unlicensed spectrum could drive up the cost of wireless information technology products for consumers and have the opposite of its intended effect. In its comments, ITI said it asked for further clarification regarding the definition of which wireless devices might be subject to this fee.
A U.S. trade group that speaks for wireless Internet service providers also criticized Japan’s proposal, but it did not submit formal comments to the MPHPT.
“Such a tax appears to be unprecedented in the world, and would undermine the great progress being made deploying advanced new services in unlicensed bands that are eagerly sought by the public. We join with other opponents of this initiative in seeking alternatives,” said Andrew Kreig, president of the Wireless Communications Association.
In 2002, former Cellular Telecommunications & Internet Association president Thomas Wheeler decried a government proposal to allocate unlicensed spectrum to foster broadband deployment as a spectrum subsidy. Instead, he said a better way to stimulate wireless broadband in the U.S. would be for the government to return auction revenue to mobile-phone carriers that bid successfully on licenses. Last November, the Federal Communications Commission freed up 255 megahertz of unlicensed spectrum in the 5 GHz for Wi-Fi and other services.
CTIA, under new President Steve Largent, has toned down its rhetoric on the issue. John Walls, vice president of public affairs, said the CTIA board has not taken an official position on unlicensed spectrum user fees. But, he added, “It is certainly the considered opinion it is worth exploring here.”
The idea of spectrum user fees has been bandied about from time to time in the United States. The Clinton and Bush II administrations each proposed a broadcast spectrum fee to encourage TV stations to free up valuable analog frequencies they continue to hold as they transition to new channels set aside for digital TV. But such proposals have gone nowhere fast, owing to the powerful broadcast lobby and the lawmakers who fear it.
In the mid-1990s, some private wireless licensees pressed for spectrum user fees as an alternative to auctions. Instead, the Federal Communications Commission adopted an approach where private wireless spectrum is auctioned to band managers that lease frequencies to entities that need communications but lack the financial wherewithal to bid for spectrum.
