Subject: [NEXTEL-1] SPECTRUM MANAGEMENT: PROPERTY RIGHTS, MARKETS, AND THE COMMONS

From: Marcel <[email-masked]>
Date: Thu, 23 Jan 2003 18:44:51 -0500

SPECTRUM MANAGEMENT: PROPERTY RIGHTS, MARKETS, AND THE COMMONS
Gerald R. Faulhaber and David Farber *
Introduction

Since 1927, the electromagnetic spectrum has been allocated to uses and users by the
Federal government, covering broadcast radio, microwave communications systems,
broadcast television, satellites, dispatch, police and national defense needs, among many
others. Assignees receive a license to broadcast certain material (say, taxi dispatch) at
a
specified frequency and a specified power level (and perhaps direction). For many
purposes, this license is time-limited, but with a presumption of renewal; in fact, radio
licenses are almost always renewed. Licensees can only use the spectrum for the
specified purpose and may not sell or lease it to others.

Economists since Ronald Coase (1959) have argued strongly and persuasively that
allocating a scarce resource by administrative fiat makes little sense; establishing a
market for spectrum, in which owners could buy, sell, subdivide and aggregate spectrum
parcels would lead to a much more efficient allocation of this scarce resource. The
Federal Communications Commission (FCC) has gradually been allocating more
spectrum for flexible use and since 1993 has been using auctions to award most new
spectrum licenses. However, this experiment in bringing market forces to bear to allocate
radio spectrum has been applied to only about 10 percent of the most valuable spectrum.
Economists continue to press for “marketizing” spectrum as the surest means to use this
important national resource efficiently (White (2001)).

Meanwhile, substantial strides have been made in radio technology, including wideband
radio (such as spread spectrum and ultra wideband (UWB)), “agile” radio (one of several
applications of software defined radio (SDR)) and mesh networks (including ad hoc
networks and other forms of peer-to-peer infrastructure architectures). The developers of
these technologies note that the products based on these technologies undermine the
current system of administrative allocation of exclusive-use licenses, and call for an
“open range,” or commons, approach to the spectrum that would do away with exclusive
use. “Removing the fences,” in this view, will lead to more efficient use of the spectrum.

http://rider.wharton.upenn.edu/~faulhabe/SPECTRUM_MANAGEMENTv51.pdf

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