Hazlett on the Economic Benefit to Canada of TV Bandwidth Auction

An auction of Canada's entire TV bandwidth would provide its citizens with $6 billion dollars in revenue, allow cheaper cellular phone service, and drive the wireless economy, according to an article carried in Canada's Globe and Mail. Its author references the research and comments of Professor Thomas Hazlett in providing substance for his argument.

Put our TV bands to better use: Sell them, Globe and Mail, November 17, 2006. By Neil Reynolds.

"Once chief economist for the U.S. Federal Communications Commission, Mr. Hazlett is now a professor of law and economics at George Mason University in Virginia. Recognized internationally as an authority on the economics of broadcasting, he serves as director of the university's Information Economy Project, which -- in its mission statement -- recommends that governments get out of the way and permit the 'wireless century' to develop without needless bureaucracy and anachronistic regulation.

"In his analysis of Canadian airwave use, Mr. Hazlett cited Italy as an example of a country in which government did get out of the way -- though inadvertently. Deregulation, Italian style, occurred in the mid-seventies when courts permitted unlicensed entry into cable TV. The Italians spontaneously extended this liberty to all TV broadcasting. At the time, the country had 90 TV stations. Within 10 years, it had 1,300 -- the highest TV station density in the world. (Canada and the U.S. have 0.05 TV stations per 10,000 people; Italy has 1.0). Italian TV stations get 20 times as much use from bandwidth as Canadian or American stations. Cable TV scarcely exists; it was never needed and serves less than 1 per cent of households.

"Mr. Hazlett calculated 'the enormous economic benefits' that would result were Canada to sell at auction the country's entire TV bandwidth. The country's remaining roof-top antennas would need to be replaced with satellite dishes at a cost of $600-million. But the TV band auction (based on Canada's sale of 40 MHz for $1.5-billion in 2001) would clear almost $6-billion. If it wanted to do so, the government could invest this profit and assign the income -- very conservatively, $200-million a year forever -- for subsidies to Canadian video production."