Unclogging the 3rd Pipe

So this panel continues to applaud Europe & Asia on the issue of broadband, but is a lack of subsidy, neutrality, and public ownership/regulation really to blame for our lack of a 3rd (wireless) pipe.

Let’s do a little imagining to help think about the broadband landscape in America. The wired landscape is like a bustling city. Though franchising laws and other regulations keep building from going on as much as it might, the landscape is fairly well developed.

Then picture the wireless landscape. Because of the FCC’s iron grip on wireless allocation, this landscape has acres set aside for aging, archaic buildings from bygone eras while other narrow tracts are being feverishly developed with modern skyscrapers. But the most notable thing about this landscape are the brown fields. Mile after mile of land laying fallow and undeveloped.



I don’t know if this mental picture painting helps, but the point is that wireless 3rd pipes don’t arise or at least don’t arise in the quality we’d like because they aren’t allowed to. The FCC allocation system–though it now involves auctions–is a command and control central allocation system that resembles similar board that have existed in places like the USSR or the People’s Republic of China. The FCC is not too far away from a government board that allocates who gets a ton of pig iron this month or a shipment of aluminum next week.

Until wireless spectrum has no restrictions on use and can be bought and sold in a free market, we shouldn’t expect it to be all that efficient.

Side note: I’m trying to find some good policy papers that talk about what Korea actually does with spectrum, which I imagine is similar to the FCC. So far the only thing I have been able to Google is this presentation from Hyun-young Yoon of Seoul National University. It describes what sounds a lot like the FCC’s central planning regime, except that Korea doesn’t seem to have the auction component of the FCC, a reform introduced in 1994 that has eliminated the past practice of favorite picking or what what Hyun-young describes as a “rigid beauty contest.”

Speaking of, perhaps we ought to view subsidies in the same light we view the auction process. Eliminating FCC choice in who gets what spectrum eliminated a lot of corruption and spectrum has been arguably allocated more fairly and efficiently. Subsidies are a step backwards in that they would reintroduce favoritism, allowing government bureaucrats or perhaps Congress to choose who gets the millions in research grants.

That said, I’m interested in good papers that lay out how other countries allocate their spectrum. I know that New Zealand has privatized much of their airwaves with success, but are there other good examples? Please share in the comments section!