Arnold Kling

Reversing the Spectrum Allocation

Arnold Kling, Great Questions of Economics
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And now David Reed joins the movement to stop allocating spectrum by use. signals don't interfere with each other! That may seem surprising, because engineers and regulators use the metaphor of "interference" to get their work done. But in fact, radio signals just add to each other, non-destructively. And it turns out that what we call "interference" is actually best thought of as "limitations of a particular receiver technology".

What does that mean? Well, it means that better radio technologies eliminate interference. There's no question there.

Yet that insight means that the idea of "spectrum regulation" has a serious problem. If technology improves, the regulations become unnecessarily strict. When we make better radio systems, the old ones become obsolescent, and wasteful. We could improve the entire system by junking the old stuff, and replacing it all with functionally compatible systems, based on new insights and design...

In a separate comment, Reed says,

IMO, the FCC presides over a dramatically broken, dramatically monopolistic market. The monopoly "owners" try to look like entrepreneurs because they like money, but in fact most of them spend most of their time lobbying for favors from government, rather than innovating.

What is becoming clear is that the FCC needs to think about buying back the spectrum that currently is the property of phone companies, television stations, and so forth. Then put some engineers together to set standards for the "wireless Internet." Then let every device that adheres to those standards use the spectrum, just as any computer that adheres to the TCP/IP protocols can use the Internet.

We need to figure out a fair price at which the FCC can buy back spectrum from its current owners. The price could be zero (pure confiscation). Or it could be set at a reverse auction. Or it could be a price determined by an independent arbitration panel that comes up with a "just price."

Another thing we need to think about is a transition plan. I don't think we can break radio and TV reception in 2002 and wait until 2006 to figure out a way to get it working again under the new regime.

Discussion Question.

In the spectrum buy-back idea, should TV stations be compensated for the cost of buying equipment that complies with new standards?

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