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Hazlett in WSJ: Another Way to Free the Airwaves

Writing in a Wall Street Journal op-ed, Professor Thomas Hazlett says Google's "free the airwaves" campaign designed to open TV band frequencies for innovative wireless services would have the effect of freezing the valuable airwaves allocated to television prior to World War II and would block new technologies due to artificial spectrum scarcity.  

As the Federal Communications Commission asks what devices can share the TV band without disturbing current broadcasts, they should be asking how to reorganize TV broadcasts to maximize wireless benefits, says Hazlett. 

Don't Let Google Freeze the Airwaves, Wall Street Journal, October 3, 2008. By Thomas W. Hazlett and Vernon L. Smith.  

Excerpt:
"Market transactions reveal how efficiencies are unleashed. TV stations that tell the FCC that any dollop of static will cause catastrophe have eagerly negotiated with Qualcomm, owner of (analog) TV channel 55 (auctioned in 2003), which pays broadcasters to accept interference from its new mobile video service, MediaFlo. These deals have pushed TV stations out of old assignments to make room for a 21st century application -- precisely what should be happening all through the TV band.

"But such efficiencies will be impossible if 'Free the Airwaves' results in government controls (under the Google plan regulators must approve specific devices) in lieu of spectrum ownership. These rights would logically be auctioned, as were select frequencies pulled away from TV channels 52-69, which sold for $19.6 billion in March 2008.

"Google chose not to bid in that auction, exhibiting a crucial point. If Google believed that TV frequencies were productively used via the spectrum sharing approach they ask the FCC to impose, they could have purchased TV 'white spaces' and imposed just such a plan. Revenues could have been extracted from the sales of devices, advertising, or other means. Yet, they rejected this play, outbid by rivals seeking to deploy alternative models.

"Therein lies the beauty of competitive bidding: resources, including spectrum, go to their highest valued use. Other options, notably wide area wireless broadband networks, generate far more consumer interest. In FCC data now over a year old, some 35 million customers subscribe to wireless broadband offered by the four national wireless carriers. Google itself, partnering with Intel, Sprint, and others in Clearwire, has joined this fray. With more access to licensed and liberally regulated spectrum, they -- and entrants to come -- will have a fair chance of succeeding.

"Sen. Pressler's May 1996 proposal could powerfully energize this competitive rivalry. Allot all TV band frequencies to, say, seven national licenses, and auction them. (Competition could be ensured by a one-to-a-customer rule.) TV stations would be grandfathered, and continue to broadcast on current channels. But they would also be able to change channels or accept some interference with their broadcast signals. They would happily accept payments to make way for new wireless stuff. Band usage would be radically transformed.

"This procedure greases the skids for efficiency, downloading politically arduous tasks to market specialists. Many wireless services, from PCS to Blackberry to MediaFlo, have been launched through such spectrum trades. Those deals only happen when owners can bargain."

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