Free marketers are giving voice to a rising chorus of demands to privatize electromagnetic spectrum and overturn the 60-year-old regulatory regime enshrined at the Federal Communications Commission.
At its heart, the debate is about whether a system of centralized planning created in the “vacuum tube” era can handle-or even keep pace with-the emerging microprocessor-driven digital information age.
“Spectrum management must be modernized for the 21st century,” said David Colton, telecommunications attorney and author of a new policy study from the Los Angeles-based Reason Foundation.
In “Spectrum Privatization: Removing the Barriers to Telecommunications Competition,” the think tank lays out a 10-year plan for transferring spectrum to the private market.
The first step is to stop allocating spectrum in blocks of frequencies for specific services.
“Microprocessors eliminate the economic and technical rationale for spectrum segregation into service classifications,” the report said. “Any portion of the spectrum*…*can carry digital signals including data, voice, video or text messages to be processed by a single device, a microprocessor.”
Colton notes that the current block allocation system replaces market signals with administrative decisions, forcing bureaucrats to pick technological winners and losers.
The lengthy licensing process also delays the introduction of new technologies, creating a growing disparity between spectrum allocation and the ever shorter product life cycles of the digital era.
“Even if a start-up or other party were to persevere, a proceeding at the FCC may result in a company emerging with permission to introduce obsolete technology,” the report said.
Similar proposals to end the block allocation system have been met with a backfire of interference worries.
Colton argues that de-zoned spectrum can be coordinated and managed by expanded use of existing private frequency coordinators and backed up by arbitration and litigation to enforce property rights, if necessary.
In implementing the second phase of his plan, distributing spectrum to the market through mass privatization, Colton holds out a big carrot for the government that incumbent spectrum users might choke on.
Under his property rights model, spectrum auctioned since 1994 would be quick-deeded and transferred to the bidder, but all other existing and new users would have to submit applications for their spectrum-excepting bandwidth reserved for public safety, national defense and emergency services.
“In the event of multiple applicants, auctions will be held to determine the most efficient allocation of the spectrum,” the report said.
Colton estimates mass privatization of spectrum could generate as much as $300 billion in auction revenue.
However, he insists such a mass distribution of spectrum would drive the cost down on a megahertz per population equivalent basis.
The goal “is to privatize spectrum as rapidly as possible rather than dribble portions of spectrum out to the market to maximize revenues for the government,” he said.
