Why spectrum auctions still matter

Wireless spectrum is a scarce and valuable public resource, and shouldn't just be given away.

Network World’s Jon Gold recently wrote a fascinating piece quoting a variety of industry luminaries opposed to wireless spectrum auctions. The idea, apparently, is that it’s much more efficient to demand-allocate spectrum, given that current technology is getting pretty good at prioritizing traffic and avoiding interference.

BACKGROUND: Crowded U.S. airwaves desperately in search of breathing room

That sounds enticing from a technical perspective, but this isn’t really a technical issue; it’s a social, political, and economic question.

Sharing isn’t necessarily caring

Among many other sources, Gold draws from a presentation by Kevin Werbach and Aalok Mehta shared on the USC Annenberg School of Communications site: The Spectrum Opportunity: Sharing as the Solution to the Wireless Crunch.

The presentation makes the point that as demand for wireless connectivity spikes, various forms of sharing, not auctions, hold the most promise for efficiently satisfying that demand. That may be true, but efficiency is far from the only factor at play here. While new technologies may reduce the potential for interference and open up new opportunities for sharing previously exclusively licensed spectrum, that doesn’t necessarily make it a good idea. Or at least not the best idea.

Here’s the thing - pretty much by definition, wireless spectrum belongs to everyone, not just the people and companies actually using it at any given time. If the spectrum belongs to everyone, then companies hoping to make money off it should pay for the privilege of using a public resource. It doesn't necessarily have to be obtained via auction, but there has to be some mechanism where still-scarce public resources are not just given away to corporate or other interests.

In their presentation, Werbach and Mehta make a case that auctions don’t actually generate the most money for the public over all. On the one hand, they note that "auctions artificially favor large, incumbent providers," whereas "sharing ensures that spectrum is more accessible, to more people," and that "open and shared spectrum offers benefits for nearly all groups."

I would gladly pay you Tuesday…

But here’s where it gets interesting. They also say "sharing could offer more, and more useful, dividends to governments," and that "sharing could generate recurring revenue." The operative word here is "could." The authors claim shared spectrum could generate big economic benefits, but they don’t specify exactly how much, or how that would happen – or to whom the benefits would apply.

When it comes to public policy and government deals with private enterprise, unclear promises of overall economic benefits somewhere down the line are often used to justify what amounts to immediate giveaways of public resources. (Recent examples include privatizing parking revenue in Chicago and the America’s Cup in San Francisco.) But the long-term accounting doesn’t always play out as promised. In fact, that long-term accounting is often never even calculated while the immediate losses are already in place and pretty much irreversible.

I’m not saying there’s no role for spectrum sharing, of course. We should be a lot smarter about how we allocate spectrum. But, whatever plans are put in place, we do need to be sure that the public is adequately and reliably compensated for the use of its resources.

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