Free the Airwaves: All of Them

capitol1Today the Federal Communication Commission will vote on two large wireless mergers and issue rules regarding a proposal to create an alternative wireless broadband network in the unused spectrum between digital television stations. Between the white spaces issue championed by Google (s GOOG) and other tech titans, approving the Sprint-Clearwire joint venture to create a nationwide WiMAX network and approving the Verizon-Alltel merger, there will be a lot of winners and losers. So it’s a big day at the FCC and for the wireless industry in general, which is why I found an editorial published on Ars Technica so worthwhile.
The author, Thomas W. Hazlett, a professor of law and economics who serves as Director of the Information Economy Project at George Mason University School of Law, argues that by allowing TV broadcasters access to so much spectrum for an old-time way of business (broadcasting might be better done over satellites and the web, he argues), the 294 MHz of spectrum used by television is wasted. That spectrum could and should be licensed for a 21st century technology, Hazlett argues. From his editorial:

Radio spectrum is the life blood of the wireless era. Television broadcasting squanders it, crowding out incredibly productive alternatives, including improved voice networks, high-speed Internet access, and a phalanx of Silicon Valley dreams yet unknown. Valued at recent prices in Federal Communications Commission auctions, digital TV frequencies would fetch about $120 billion. Yet, consumer gains are at least ten times higher.

He points out the current wireless spectrum for phone calls use 190 MHz of spectrum, and generated $140 billion in revenue last year for companies. His plan is to break the existing digital TV band into seven licenses of seven 42 MHz channels, and license that spectrum to the highest bidder — provided they don’t interfere with existing broadcasters. That bidder can then buy out current broadcasters and raise the funds necessary to offer a new service in the spectrum.
However, depending on how those new channels are licensed, there would be no guarantee of a new 21st century service. The current spectrum holders would be willing and able to snap up new spectrum to protect their own interests, which might not be the type of 21st century service Hazlett envisions. Because spectrum is so valuable, economic interests override technology and even utility in some cases. Hazlett’s not accounting for the incumbent players’ economic interests, which could overrun any thoughts of future technologies and utility.