An Economist on Spectrum Allocation

Economists like the idea of letting the market allocate spectrum. However, they do not like the idea of restricting spectrum uses. Thomas Hazlett makes this poin.

The block allocation system is the sine qua non of FCC spectrum regulation. It uses an economically crude, and technically obsolete, framework to separate various services in frequency space. The system...affords great opportunities for incumbent service providers to truncate entry...But the system is clearly inept at maximizing consumer welfare, as vast portions of spectrum space is left vacant and virtually all the remaining portions are under-utilized.

For more articles on this topic, see David Reed's resource page.

Discussion Question. If the government eliminated restrictions on how the owners of existing spectrum could use the spectrum that is allocated to them, would this increase or decrease the value of their spectrum?