Wireless Nation: The Frenzied Launch of the Cellular Revolution in America (review)

This is a player's fascinating account of the go-go years between 1982 and 1996 when the Federal Communications Commission gave and then auctioned away spectrum for cellular communications. It is not a tale for the fainthearted or quantitatively oriented researcher.

Spectrum distribution provided a wonderful demonstration of how technologies do not develop and diffuse in vacuums but are firmly embedded in their societies. The FCC was the main player because it ultimately decided who received which slice of spectrum and where. But many actors who had a stake in these decisions—often represented by lobbyists and members of Congress—tried to influence them. Some were more influential than others. The FCC faced several contradictory goals: quick distribution of the spectrum to allow the promising new technology of cellular communication to develop; fair and equitable distribution; creating competition; access by minorities; and, ultimately, raising money.

Moving beyond the captivating portraits of hucksters, lawyers, prophets, scam artists, engineers, gamblers, financiers, and bureaucrats, all engaged in negotiations, bargaining, finding and exploiting loopholes, James Murray—almost inadvertently, it seems—raises important questions. The most important is, how should the government allocate spectrum? He vividly demonstrates that the FCC did a poor job, but does not fully show the human forces, especially politicians and free-market ideologues, shaping and limning the FCC's options. Other important questions likewise remain unexplored: how does a regulated industry shift to a competitive market, and how can "underrepresented" groups be represented?

An ideal solution was never possible, given the conflicting goals the FCC was told to achieve. Although at times scornful of the FCC's bureaucracy, Murray shows a commission and overworked staff that "would bend, tweak and, in desperation, completely overhaul its rules" (p. 6) in frantic efforts to eliminate loopholes—some large enough to drive trailer trucks of applications through—and revise the process of applying for a piece of the action.

To a large degree, who controls the spectrum controls the cell phone industry. Technology is important, but access is essential. The popularity of cellular communications caught everyone by surprise—including the FCC, AT&T (which initially walked away from a technology it developed), Congress (which only belatedly realized spectrum was valuable and thus should be auctioned, not given away), and many telecommunications firms.

Initially, the FCC awarded licenses for slices of spectrum in a few large cities, with part going to the local phone company and, to encourage competition, part going to new entrants. As the rounds of allocations spread to other cities, the FCC tried to encourage participation by women, minorities, and small businesses. This laudable goal of inclusion inadvertently created a land rush, as people like Nicholas Wilson realized that there was money to be made by getting people to bid on a piece of spectrum. Wilson and many others established application mills, encouraging people to invest a little in the hope of gaining a lot. Many did, winning a small slice and then selling out or joining forces with firms that actually intended to provide service. Out of this chaotic situation grew the cell phone market. Luck and personalities played a role, but so did access to cash and credit and the ability to leverage them.

Murray employs the familiar but effective technique at tracking small and large players as they try to manipulate the system, expand their empires, steal a march on their competitors, realize dreams, scam their clients, and just have fun. The emphasis is on individuals and the firms they created, to the neglect of larger economic forces and technological issues.

This is not necessarily the first book you should read on the subject, but it is quite possibly the second. Readers looking for a more international approach from the perspective of one firm might find Anywhere, Anytime by Louis Galambos and Eric John Abrahamson very useful. Certainly...