Hazlett on the Digital Race (Financial Times)

The benefits of spectrum efficiency in the digital television transition are slow to be realized, says Professor Thomas Hazlett, likening the digital race to a race in slow motion.

Hazlett's commentary in Financial Times states that "We have trekked to just the cusp of the Wireless Age." The day when consumers receive full advantage of spectrum efficiency has been delayed by go-slow spectrum policies, with the U.S. lagging far behind the European countries, says Hazlett.

COMMENT: A digital race run in slow motion, Financial Times, July 24, 2007. by Thomas Hazlett.

"That day is delayed by go-slow spectrum policies, accounted for by three factors. First, regulators enjoy, and profit from, control over valuable stuff. Given that no agency official stands to lose salary or share price by squandering socially valuable bandwidth, state "warehousing" of frequencies is endemic. Second, market players are generally comfortable with market stability. From the operators' perspective, cellular licence auctions do three things - cost money, yield more spectrum for them to use, yield more spectrum for their rivals to use - and two of them are bad. Finally, there is a great temptation for other political interests, including those affiliated with television broadcasters, to keep the spectrum subject to political allocation. That yields power and opportunity.

"Consumers have a strong interest in liberalisation. The US is now slated to auction licences to use chunks of the television band - after a 22-year regulatory deliberation (and at least seven cancelled auctions). Licences yielding access to about 15 per cent of the television band for non-television services are to be sold by January 2008.

"The US, which pioneered analogue cellular technology in the 1980s, dawdled in issuing digital 2G licences, starting in 1995 what most European regulators had completed by 1992. The US then slept some more, auctioning 3G licences only in 2006, again lagging behind Europe by years. These delays suppressed network development and retarded economic growth.

"The US performance on television band reallocation is not visibly improved, but the plodding elsewhere appears as bad or worse. By making some progress to advance productive use of the digital dividend, the Americans may paradoxically stumble to a first-place finish in an international race being run in slow motion."

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