Larry Garfield doesn't think auctioning off wireless spectrum is such a good idea. Not when there are more fair and more profitable ways to handle it.
In the next two years, the US Federal Communications Commission (FCC) will be auctioning off large chunks of wireless spectrum to private wireless carriers. In theory, such a move is supposed to improve service and stimulate the growth of new wireless services, but in fact it's a very bad way to go about allocating public resources (wireless spectrum). On the one hand, there's the problem of taking a public resource like spectrum or airspace and selling it to a private corporation. What exactly does the voting public, the actual owners of that spectrum, get for that, aside from a one time check? Not a great deal, necessarily. It also means that it's harder to regulate, since it's then "owned" by some private company rather than by the public. Regulating the radiowaves, on a technical level, is an important task of the FCC. But even ignoring the philosophical problems of privatizing the air, it makes very poor economic sense, too.
Current estimates for the sale value of the intended spectrum are about $70 billion USD. That's not pocket change, to be sure, but it's only a one time windfall. And in a multi-trillion dollar annual federal budget, with a half-trillion dollar deficit, it's a drop in the bucket. So the US government, in fact, won't make any appreciable money off of it. However, at billions of dollars per auction, the spectrum will be priced out of the reach of anyone but large existing carriers. New carriers will not be able to get into the market without billions of dollars of backing from somewhere. That raises the barrier to entry in a market that is already consolidating to fewer competitors, reducing competition and customer choice. That's bad for the economy.
At the same time, selling spectrum has not proven advantageous before. European governments auctioned off huge chunks of spectrum for 3G services a few years ago for giant sums of money, so much that the large companies that were able to afford it were left with little money to then spend building networks with it. That's not a mistake to repeat.
Traditional licensing programs make more sense. Instead of a one-time lump sum, a company leases spectrum for an annual fee. TV and radio broadcasters both do that now. It's more cost effective for the companies, as it leaves them with more money to invest in using that spectrum. If a leasee is not using the spectrum but sitting on it, the lease can be revoked and reissued to someone who will put it to good public use. It also lowers the price per spectrum, lowering the cost of entry for new companies. Competition is good. It also gives the government a continuous income, smaller than $70 billion USD per year but still something they can budget for.
Another alternative that some have suggested is deregulating at least a portion of the soon-to-be-reclaimed VHF and UHF television bands. The 2.4 GHz band is entirely unregulated for transmissions under 1 watt (as stronger signals become dangerous, see also, microwave ovens), but it's a very poor quality band. (That's why it's unregulated.) Given what multiplexing power has been harnessed by Wi-Fi, Bluetooth, and others in that space to make very effective use of it for peer-to-peer, community, and distributed communication, imagine what could be done with a spectrum that isn't only barely useful. All of those designs are inherently more socially beneficial than centralized top-down broadcast. Democracies are supposed to favor bottom-up activity and empowering the citizen rather than the corporation, right?
Naturally, there are significant technical challenges to such a deregulation. Wi-Fi and Bluetooth still don't play perfectly together, and there's a limit to the number of networks that can overlap. But imagine the potential of multiplexed broadband networks with ranges in the kilometers rather than meters. These are the bands that reach out to almost the entire country. Without huge licensing fees, anyone could, for the cost of equipment, set up a wireless ISP covering whole cities and compete with others doing the same, offering VoIP phone access over a broadband wireless connection competing with conventional 3G. Or imagine a rebirth of community television and radio stations with actual reach. Competition and democracy are good.
Of course, such bottom-up community wireless potential threatens established wireless corporations with (gasp!) competition. No wonder the existing carriers and the FCC don't like the idea.
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