As Mark Twain might have said if he followed spectrum policy: the reports of the death of central planning in Washington have been greatly exaggerated. As early as next week, the Federal Communications Commission may vote on a plan mooted by Chairman Kevin Martin to auction off 25 MHz of spectrum to the highest bidder, with a catch: reportedly, the licensee will have to use the spectrum to offer free broadband service, with a network to be built out on a timetable specified by the FCC, and with content that doesn’t offend the regulators in Washington.
For most of the last century, the FCC was in the business of defining how spectrum would be used – deciding not only who would get it, but what services they would use it for, and under what conditions. Over the past 20 years, however, the idea of central planning has fallen into disrepute, not only internationally (see Soviet Union) but in Washington. The idea that five individuals in Washington – no matter how intelligent and well-dressed – could know the proper uses and methods of providing wireless services for millions of people became increasingly hard to defend. After a disastrous start to the cell phone era – which was delayed by a decade or more do to FCC delays, the central planning model was largely replaced by markets, with licenses assigned by open auction, and (more importantly) uses and business models defined by consumer demand.
By the turn of the 21st century, the FCC’s planning colossus had been effectively toppled, with some of the biggest tugs at the ropes by the Clinton era-FCC. The rest, as they say, is economic history. Over the last 20 years, the number of Americans with wireless has grown from two to 255 million, while the devices they use have transmogrified from brick phones to multipurpose units that do everything but the user’s laundry.
Chairman Martin’s proposal would take a giant leap backward from this marketplace success. It isn’t the first attempt by the present FCC to try to direct spectrum use. In auctions earlier this year of former analog television spectrum, the FCC set aside blocks for “open access” uses, and for spectrum to be used in partnership with public safety users. The auctions were remarkably unsuccessful – with the one block failing to meet its reserve price, and the other fetching far less than similar, unencumbered, spectrum. Continue reading →