Flexible Spectrum Markets Would Improve The Wireless Marketplace

from the spectrum-for-sale dept

Mathew Ingram notes that Google is continuing its campaign to use television "white spaces" for Internet connectivity, a promising concept that hasn't panned out so far. I think the most interesting tidbit in Ingram's post comes from an interview with Richard Wiley, the guy who chaired the committee that developed what became the current digital television standard. Ingram says Wiley told him that one of the broadcasters' criteria for the new standard is that it use as much spectrum as possible. That sounds backwards, but it made sense for the broadcasters, because they knew they'd have to give back any spectrum they didn't use. And it's consistent with past experience; we've written before about the broadcasters' spectrum-hoarding tendencies.

Perverse incentives like this are an inevitable consequence of the FCC's Soviet-style process for assigning spectrum usage. As long as the uses for spectrum are decided by fiat by the FCC, current licensees are going to play these kinds of games to ensure they get the biggest slice they can, even if they waste spectrum in the process. A better way to handle the transition (and still a good idea today, for that matter) would have been to give the broadcasters a fixed spectrum allocation and then allowed them broad flexibility on how to use it—including the right to lease or sell unused portions to third parties. That way, if they found a way to transmit television signals with less spectrum, they would have been able to lease out the unusued portions to third parties who could put it to more productive use.

In addition to promoting more efficient spectrum use in the short run, putting more spectrum on the market (as they're doing in the UK) would have positive effects on the overall telecom market. By driving down the price of spectrum it would make it easier for new firms to get into the wireless market. So far, the relatively small number of licenses that have been put on the market has allowed incumbents to snapped them up and keep out new entrants. Putting more spectrum on the market would make this strategy a lot more difficult to pull off.

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Filed Under: markets, spectrum

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  1. identicon
    Mogilny, 26 Aug 2008 @ 11:50pm

    Auctioning spectrum isn't enough!

    In Canada, new spectrum was auctioned recently. The government pocketed billions (a big wow, in canadian standards). However, in order to maximize the potential of a better wireless marketplace, the government needs to DO much more than auctioning spectrum. We are starting to see that it is next to impossible to have a new nationwide wireless player. Also, some smaller auction winners are planning to "peggy-back" on existing infrastructure, which means dependence on existing players -> not good for competition.

    The government should financially aid new carriers setup their networks. Old networks had help in the past, so should the new. In terms of the google's FREE ALL SPECTRUM, SO THE GPHONE CAN RULE plan, i think that's too extreme and it just isn't economical or practical. Who is going to keep up the infrastructure? Sounds like another one of google's wet dreams.

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