Speed kills, but spectrum bureaucracy failed to apply the brakes

June 12, 2015
By Harold Feld and Thomas W. Hazlett

The tragic derailment of Amtrak Northeast Regional train #188, killing at least eight passengers in May,would likely have been prevented by a technology mandated by a 2008 law. Alas, the safety system, called Positive Train Control (PTC), has faced delays. Amtrak has tried to shift the blame to the Federal Communications Commission (FCC), claiming that the FCC refused to allocate the spectrum it sought.

The charge is dangerously misleading. The FCC’s determination to let Amtrak buy the wireless rights it needed in an active secondary market avoided a contentious and time-consuming reallocation process, and ultimately solved Amtrak’s spectrum problem. If the company had embraced it years earlier, when many private railroad lines were buying wireless licenses for PTC, the tragedy of Amtrak #188 might have been avoided.

To implement PTC, which charts railroad car speeds and remotely governs them in emergency situations, thus keeping trains from careening into curves at 106 MPH, American freight and passenger train lines need new radios, new base stations to communicate with these radios, and radio frequency space for the signals. Dozens of train companies are involved in creating PTC, which should allow communication across networks, and much confusion has accompanied the choice of radio standards and software.

The key missing element, however, has proven to be radio spectrum – listed as the Number One challenge for Amtrak’s troubled PTC program in a 2012 report from the government firm’s Inspector General. The same 2012 report foresaw no need to wait on the FCC to make a specific allocation of spectrum for PTC, concluding that Amtrak had “several means available for acquiring spectrum.”

The FCC, an independent regulatory agency, is tasked with managing “the public airwaves.” Historically, the FCC did this by awarding licenses for very specific uses – a special band for AM radio, another for police radios and so on. Pressure from new services made this top-down approach unsustainable. Eventually, the FCC moved to a more market-oriented approach. Those desiring exclusive spectrum rights pay for them, either in FCC auctions or (thereafter) in secondary trades. Parties eschewing exclusive rights can avail themselves of “unlicensed” bands, supporting apps like WiFi and Bluetooth, no payment required. Either way, the FCC has moved to permit “flexible use,” allowing users and suppliers to select wireless services. This more liberal system better accommodates innovation and technological progress than the rigid set-aside approach that locked-in particular spectrum uses.

Emerging networks now allow myriad services, including mission critical applications, to be deployed, seizing new possibilities dreamed up in the wireless laboratory. But rather than build PTC by buying required bandwidth, Amtrak clung to history. It dispatched its lobbyists to the FCC, and then to Congress, arguing that it should be given licenses on account of its public safety needs. But that objective could best be met without the political delays and inter-agency warfare (the Federal Railroad Administration took the fight to the Federal Communications Commission) emblematic of “command and control” at the old FCC.

In 1998, three national licenses were sold by the FCC allowing access to the bandwidth Amtrak finally decided it needed (100 kHz in the 220 MHz band). They sold for just $3 million apiece. In December 2014, Amtrak finally entered an agreement to buy one such license; the deal, approved by regulators in March, was said to have carried a price of less than $10 million. In contrast, the total cost of the PTC upgrade for railroads nationwide is put at about $9.5 billion. In reality, the budgetary impact of the spectrum buy is near trivial.

Yet, while FCC rules have been reformed, the underlying spectrum allocation regime continues to constitute an “attractive nuisance.” Amtrak sought “free” licenses. Then, when it did seek to deal, competing license holders held up the sale, asserting interference concerns. In addition, the licenses that Amtrak sought were initially required to serve a variety of traffic, including maritime radios, conflicting with its PTC operations. The FCC, after some years, eventually cleared that underbrush away. Cleaner license reforms and much faster adjudication of disputes form an important FCC “to do” list.

With Washington conducting business as usual, precious years ticked away. Meanwhile, life-saving technology went undeployed, and prime radio spectrum went unused. That this bureaucratic snafu ended in the deaths of innocent American train commuters underscores the social cost of failing to fix public policies that shift productive activity to jockeying for special favors.

Feld is senior vice president of Public Knowledge and writes a popular blog on regulatory issues: Tales of the Sausage Factory. Hazlett is H.H. Macaulay Endowed Professor of Economics at Clemson University and formerly served as chief economist of the Federal Communications Commission.

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