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Basically, are you actually advocating that every square inch of the radio spectrum become private property? The obvious implication, would a homeowner have to lease/buy spectrum from company X in order to run his wireless LAN inside their own house?

Radio waves also don’t stop at some predefined property line. Additionally the radio spectrum consists of an infinite number of frequencies, not to mention a very large number of operating modes, AM,CW,TV,FM,digital etc. Given an essentially infinite mix of frequencies, distance, and operating modes how are the property rights to be defined??????

This privatization scheme seems to me more of a full employment program for the lawyers.

People won’t just be able to buy the rights to airwaves from the government–they would be able to purchase comparatively small chunks from spectrum resellers.

My point is that there is no need for the additional friction/barrier of the resellers. The government actually has considerable experience working with the retail investor.

Furthermore, reselling is going on now. However, one of these days, take a look at the fine print in your (perhaps “unlimited”) wireless data plan. You’ll likely find some interesting language about how, in order to protect its business plan – excuse me, its network – the operator reserves the right to define any application it likes as “bad” for the network. In other words: Browsing is good, (competitive) messaging et al, bad. Your barrier at work.

People won’t just be able to buy the rights to airwaves from the government–they would be able to purchase comparatively small chunks from spectrum resellers.

My point is that there is no need for the additional friction/barrier of the resellers. The government actually has considerable experience working with the retail investor.

Furthermore, reselling is going on now. However, one of these days, take a look at the fine print in your (perhaps “unlimited”) wireless data plan. You’ll likely find some interesting language about how, in order to protect its business plan – excuse me, its network – the operator reserves the right to define any application it likes as “bad” for the network. In other words: Browsing is good, (competitive) messaging et al, bad. Your barrier at work.

Also, even having several “private FCCs,” with each owning a separate chunk of spectrum, would be far superior to the status-quo. Competition would enhance social welfare by spurring product differentiation through market incentives. Currently, a single regulatory agency is in charge of the whole spectrum, and firms relying on spectrum have no choice but to work within the constraints of the current system.

Treating the spectrum like a public good for a benevolent government to parcel out is the wrong approach. Eminent domain should still apply to the spectrum, of course, as it applies to land. But like land, private ownership is key to efficient resource allocation. What if instead of buying a piece of land from a realtor, you had to convince a bureaucrat you would utilize land for a legitimate public purpose?

Dimitris, you make a good point, but many of your concerns would be addressed by spectrum liberalization. If firms could truly control the spectrum with no usage mandates or transfer limitations, secondary spectrum markets would surely emerge. People won’t just be able to buy the rights to airwaves from the government–they would be able to purchase comparatively small chunks from spectrum resellers. Again, high entry barriers resulting from the artificial scarcity imposed by the FCC preclude truly vibrant secondary spectrum markets.

Think of the Ocean, in this case the Atlantic with London and New York being two ports. The Atlantic ocean would be equivilant to the “spectrum” and the ports would be eqivilant to the sender and receiver. Ships, the information being transported.

The economic “value” of the goods being transmitted and received is between the transmitter and the receiver, the medium (the Ocean) adds no value. So why put up a toll booth at the transmitting and receiving ends??? This adds an unecomic third party that collects an unearned rent. To pay this “rent” the price of the product has to be increased which deprives the product creator of some revenue and forces the consumer to pay more. This discourages economic growth. There is an economic benefit to “free”.

Of course, my analogy above is simplistic, what about congestion management if there are too many ships in the shipping lanes? This is where the FCC does have a role. Again, I would not see any benefit of a private FCC over a government FCC. In theory the government FCC would be making decisions in the “public interest”, but we all know how slippery that is.

In recognition of the spectrum as a “public common good” certain portions of the spectrum should be set aside for public safety, military, aviation, and low powered unlicensed uses.

The assumption that everything must have a $$ value attached to it and that it can only be used if it is privately held is simplistic.

The assumption that the market will somehow be “freer” (less regulation) if in private ownership is a flawed assumption. There would be virtually no difference between an FCC regulation and a Corporate EULA.

Spectrum management is a complex issue. Currently we have the a government FCC, lets assume that the spectrum is transferred into private ownership. For interoperability to work, the corporate owners of the spectrum will need to get together and develop some ground rules. Presto, an industry association will be formed to develop rules-of-the-road to promote interoperability. In the end we will have a private FCC promulgating many of the same vilified regulations currently imposed by the government FCC.

It is a total evacuation of the idea of property rights to say that they come into existence on the day a government agency creates them. I suppose they could make a killing “auctioning” the 2.4 mhz band now, couldn’t they?

To be sure, spectrum rights should be sold on the free market, with the federal government acting as a registrar of spectrum deeds. The real question is, should every last bit of the spectrum be licensed, or is there a valid case for setting aside a small portion of the airwaves for open, unlicensed, government-regulated use?

That statement contains assumptions that perpetuate the existing system’s built-in barriers to entry.

Depending on a target area’s population desity, and with software-defined radios becoming more common in commercial devices, you don’t need a command-and-control decision about the size of the minimum biddable spectrum “quantum”. The lack of the ability to bid on just a few MHz is simply incumbent-protecting market rigging.

There are business models which can work with very very thin slices of spectrum/bandwidth. Think texting/chat, or Twitter, or walkie-talkie functionality – where not only bandwidth requirements are low but latency – and therefore spectrum contention – tolerance is higher.

However, due to the aforementioned barriers to entry, the only way to gain access to this bandwidth now is to submit to the “big picture” business model of an incumbent. Of course no telco is going to offer feasible terms to what would, for them, be a “skimming” competitor.

Another way to put this is that Soviet-style setting of the minimum biddable chunk, to something much much bigger than what dictated by radio technology, prevents efficient margin price discovery. If Verizon really needs that last MHz in, say, Atlanta, well, they really should have to bid it quite high, shouldn’t they?

Or, risk some wireless Twitter startup eating their ARPU. To which I’d say, yay for the invisible hand.

To be sure, spectrum rights should be sold on the free market, with the federal government acting as a registrar of spectrum deeds. The real question is, should every last bit of the spectrum be licensed, or is there a valid case for setting aside a small portion of the airwaves for open, unlicensed, government-regulated use?

That statement contains assumptions that perpetuate the existing system’s built-in barriers to entry.

Depending on a target area’s population desity, and with software-defined radios becoming more common in commercial devices, you don’t need a command-and-control decision about the size of the minimum biddable spectrum “quantum”. The lack of the ability to bid on just a few MHz is simply incumbent-protecting market rigging.

There are business models which can work with very very thin slices of spectrum/bandwidth. Think texting/chat, or Twitter, or walkie-talkie functionality – where not only bandwidth requirements are low but latency – and therefore spectrum contention – tolerance is higher.

However, due to the aforementioned barriers to entry, the only way to gain access to this bandwidth now is to submit to the “big picture” business model of an incumbent. Of course no telco is going to offer feasible terms to what would, for them, be a “skimming” competitor.

Another way to put this is that Soviet-style setting of the minimum biddable chunk, to something much much bigger than what dictated by radio technology, prevents efficient margin price discovery. If Verizon really needs that last MHz in, say, Atlanta, well, they really should have to bid it quite high, shouldn’t they?

Or, risk some wireless Twitter startup eating their ARPU. To which I’d say, yay for the invisible hand.