Hazlett in Barron's: Most Intensely Shared Spectrum is Licensed

"The Bush administration put technology over ideologyand produced policies that actually undermined economic progress," says Professor Thomas Hazlett. "In spectrum policy, at least, the Obama administration likewise has set ideology aside, but done much better by pointing the way to policies that spur innovation, unleash bandwidth, invigorate networks, enhance free speech, and make Americans wealthier."

Writing in Barron's, Hazlett argues that the Bush administration's policies denying wireless markets needed spectrum created an artificial scarcity that actually proved harmful, while decisions made under Federal Communications Commission (FCC) Chairman Michael Powell and Republican regulators provided little, if any, social benefit.

The FCC's National Broadband Plan has correctly identified today's foremost policy challenge to be increasing bandwidth for mobile networks in the form of licensed spectrum, says Hazlett. In its support for market-based spectrum deployments, "the FCC articulates a serious case for pro-consumer policy reform," he concludes.

Putting Economics Above Ideology, Barron's, July 10, 2010. By Thomas Hazlett.

"Republican regulators under Chairman Powell moved aggressively to reorient policy. In 2002, the FCC formally announced its intention to open TV-band 'white spaces' for unlicensed use. Another FCC ruling that same year enabled unlicensed 'ultra-wide band' (UWB) services. A 2003 order added 255 megahertz of unlicensed spectrum to the 5-gigahertz allocation, while a 2005 decision devoted the 3.65-GHz band to unlicensed Wi-Max.

"Today, these decisions provide virtually no social benefit. The FCC hasn't approved a single radio device to use the TV bands, so complicated is the regulatory task of determining how TV stations and low-power radios can share frequencies. UWB has gone nowhere. The economic effect of the 255 MHz supplement is scarcely detectable. Only a handful of U.S. subscribers use the 3.65 GHz unlicensed frequencies.

"In short, the Bush-era commission's strategy has flopped. Unlicensed spectrum works for simple short-range applications such as baby monitors and remote controls, or those that plug into larger networks. But cordless phones and Wi-Fi don't replace telephone systems or Internet service providers.

"Wide-area networks, wired or wireless, thrive on private-property rights to radio spectrum. Just as land ownership protects farmers producing valuable crops, the right to exclude creates vast social wealth in networks. More than $200 billion in fixed capital has been invested by U.S. carriers placing radios (base stations and handsets) into owned spectrum; at least $200 billion in annual gains are now received by cellular customers. Starving mobile networks of licensed spectrum was penny stupid and pound foolish."

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