Property Rights for Radio Spectrum Would Bring Waves of Innovation

But many challenges to reform are ahead

August 17, 2006

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WASHINGTON — While Congress dithers with broadband regulation aimed at “net neutrality,” the work needed to create new broadband competition from wireless services is not being done. And, according to a new study published by the Cato Institute, many technical difficulties lie in the path of the transition to more competitive and innovative wireless services.

In the study “Toward Property Rights in Spectrum: The Difficult Policy Choices Ahead,” University of Colorado professors Dale Hatfield and Philip Weiser, agree that property rights and secondary markets in electromagnetic spectrum will open new waves of innovation and progress in wireless, including wireless broadband that competes effectively with DSL and cable.

“The world is becoming increasingly dependent on wireless communications and broadband Internet access,” the authors note.  “Spectrum policy reform is critical to enabling wireless broadband providers to emerge as another major source of Internet access.”

However, creating a property-oriented system for electromagnetic spectrum rights will not be easy. “Even though the merits of the case for property-like rights in spectrum is beyond dispute, the details about how such a regime would work must still be defined,” argue the authors.  “Property rights in spectrum cannot operate identically to their real property counterparts.”

Variation in the way radio waves behave means that simple geographic borders cannot define how rights to use spectrum are divided. Regulation of transmitter technology and power can not be replaced wholesale with enforcement of radio “trespass.”  Rather, ownership of rights to use spectrum must be defined and enforced with a model suited to the particular characteristics of radio propagation.

“The FCC’s traditional system for managing the radio spectrum is a paradigm of economic inefficiency.”  The authors conclude that moving forward on the rules for a property-like system for radio spectrum is desperately needed if Americans are going to enjoy the benefits of competition in the use of this resource.

Policy Analysis # 575