Zero doesn’t apply to spectrum

Mike at TechDirt takes issue with an article by Tom Lenard on C|Net that argues that market allocation of “white space” spectrum is more efficient than a “commons” designation. He writes that “Unlicensed spectrum is hardly a ‘centralized allocation system,’ and it’s hard to see how anyone could make such a claim with a straight face.” As I explained in a recent paper, in order to have a “commons” that works, you need to have rules that govern how devices operate in the space so that they don’t interfere with each other. For example, devices in the chunk of spectrum in which Wi-Fi operates, by regulation, cannot operate above 5 Watts EIRP. Therefore, the rules that govern the “commons” we now have are centrally planned by the government. It’s not controversial to say that central planning is inefficient because a planner cannot possibly have all the information about all the possible competing uses of the spectrum.

While there no doubt is a place for unlicensed devices, one has to admit that designating some spectrum as a commons with certain specific rules will prevent that spectrum from being used in another, perhaps more innovative way, that cannot operate within the commons’ rules. In a market you could just buy the spectrum and deploy your more innovative use; in a commons regime you would have to petition the central planner to change the rules (and we all know how well and how quickly that works.)

Second, Mike takes Lenard to task for not understanding the concept of zero, claiming that when scarcity is removed, market oriented folks have a hard time understanding policy. I tend to agree with him, and I think his is a great observation as it applies to intellectual property. Ideas truly are not scarce; their scarcity is created artificially through IP laws. However, I’m afraid that while new technologies have been able to eke out more communications capacity from existing spectrum, that capacity is still finite and, despite the rhetoric one often hears, spectrum scarcity has not been eliminated.

Mike writes that “what those who understand zero recognize, is that unlicensed spectrum turns spectrum into a free input, lowering the costs and allowing companies to provide products that serve the market at much more reasonable rates.” What he doesn’t see is that while unlicensed spectrum might be a “free input” for certain uses, a whole host of other uses are precluded. While a commons can allow low power, near range devices such as Wi-Fi, bluetooth, and cordless phones–great innovations all–you could not deploy a new national wireless competitor in voice or video over unlicensed spectrum. The only way the cost of spectrum could truly be zero is if all potential uses of spectrum could be deployed without precluding any other use. This is the case in intellectual property where I can use any idea as much as I want without ever affecting someone else’s ability to use that same idea. But it’s not the case for spectrum where one use of spectrum (even the use of spectrum for an unlicensed commons) will necessarily preclude some other potential use.

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