Hazlett in Financial Times: Freedom Drives Productive Solutions

The real payoff for the U.S.'s recent auction of 700 MHz licenses, says Professor Thomas Hazlett, is that "the chunk of prime spectrum made available will fuel-inject the wireless turbines of the information economy."

Writing in the Financial Times, Hazlett points out that Bush Administration policies delayed the spectrum allocations, causing voice and data networks to suffer and stunting an array of wireless products. Yet in spite of those delays, carriers have been able to create new broadband networks that share bandwidth among tens of millions of voice and data customers.

It's the spectrum, stupid, Financial Times, April 7, 2008. By Thomas Hazlett.

"On one stratagem or another, regulators have bottled up the rich, bountiful spectrum of the TV band for decades. This is senseless carnage for the high-tech economy. Over the past 22 years, the 'digital TV' transition – now scheduled for midnight, Feb. 17, 2009, when over-the-air analogue broadcasting is to cease – has been the prime culprit. But for the last seven years this perpetrator had inside help.

"The Bush administration, getting settled into its new digs in March 2001, began reading up and found out about the dreadfully slow-moving process to release TV airwaves for competitive use. They quickly moved to slow it down further.

"In 1997, legislation mandated that auctions of licences allocated TV band spectrum take place by June 2002. The George W. Bush White House investigated. It found the economy was bad and the stock market was worse. The wireless carriers said that they preferred not to have more competitive bandwidth released, and the government revenue forecasters advised that licence bids would be modest. The administration declared an additional multi-year auction delay a 'win-win'.

"It is easy to lose things; here regulators saw only the receipts and the incumbent interests, and lost about 300m consumers in the crowd. Voice and data networks have suffered, and the anti-technology policy has stunted an array of wireless products.

"Where lust for auction revenue has been tamed, better rules have unleashed torrents of innovation. In 1988, the FCC abandoned mandates that cellular operators deploy particular technologies. This was a 'giveaway' to cellular licensees, who acquired valuable rights. But freedom drives productive solutions. A stunning example is found in wireless broadband. As of June 2007 (the latest figures available), the FCC reported some 35m high-speed mobile subscribers, up from zero three years earlier. Even without the long-delayed spectrum allocations, carriers are able to create new broadband networks that intensely share bandwidth among tens of millions of voice and data customers.

"Such efficiencies are precisely what we ought to be facilitating. Dribbling out key inputs so as to hear tax collectors cackle is the government equivalent of fool’s gold. It is only a 'win-win' if you are forgetting to count what really matters."

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