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Optimal Abolition of FCC Spectrum Allocation

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  • Thomas W. Hazlett

Abstract

Ronald Coase based his 1959 call for spectrum markets on theoretical conjecture. Today abundant evidence supports his case. Targeted liberalization in cellular markets, as contrasted with regulatory planning of the digital TV transition and other traditional policies, suggest enormous efficiency gains are available from wider use of "the price system." With exclusive frequency rights assigned to owners, markets widely reconfigure spectrum use, coordinating complex spectrum sharing. Resulting social gains include increased consumer surplus from enhanced technological innovation and wireless service competition. A social bonus arrives in the benefits associated with wider scope for free speech. Yet, the administrative allocation system continues to distribute rents and garner political support. Liberal reforms, in contrast, produce large but broadly dispersed efficiency gains and are undersupplied. This paper proposes an incremental extension of property rights in spectrum to move beyond the current rent-seeking equilibrium, eliminating the Federal Communications Commission's centralized spectrum allocation process and, with it, an "attractive nuisance" generating anticonsumer outcomes.

Suggested Citation

  • Thomas W. Hazlett, 2008. "Optimal Abolition of FCC Spectrum Allocation," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 103-128, Winter.
    • Handle: RePEc:aea:jecper:v:22:y:2008:i:1:p:103-128
    Note: DOI: 10.1257/jep.22.1.103
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.22.1.103
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    References listed on IDEAS

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    Cited by:

    1. Hazlett, Thomas W. & Muñoz, Roberto E., 2009. "Spectrum allocation in Latin America: An economic analysis," Information Economics and Policy, Elsevier, vol. 21(4), pages 261-278, November.
    2. Elizabeth Hoffman & Matthew L. Spitzer, 2011. "The Enduring Power of Coase," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 63-76.
    3. Vogelsang, Ingo, 2019. "Has Europe missed the endgame of telecommunications policy?," Telecommunications Policy, Elsevier, vol. 43(1), pages 1-10.
    4. Cao, Xiaoyong & Gong, Jiong, 2017. "The tradeoff of the commons under stochastic use," Journal of Public Economics, Elsevier, vol. 145(C), pages 150-161.
    5. Darrah Blackwater & Ilia Murtazashvili & Martin B. H. Weiss, 2024. "Polycentric systems for spectrum management: the case of Indigenous and tribal spectrum sovereignty," European Journal of Law and Economics, Springer, vol. 57(3), pages 465-491, June.
    6. Thomas W. Hazlett & Roberto E. Muñoz, 2009. "A welfare analysis of spectrum allocation policies," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 424-454, September.
    7. Amnon Levy & Benoit Freyens, 2011. "Optimal Control of Broadcasting Spectrum with a Variety-Reception Tradeoff and Consumers’ Income Sensitivity," Economics Working Papers wp11-03, School of Economics, University of Wollongong, NSW, Australia.
    8. Gregory L. Rosston, 2013. "Increasing Wireless Value: Technology, Spectrum, and Incentives," Discussion Papers 12-015, Stanford Institute for Economic Policy Research.
    9. Minervini, Leo Fulvio, 2014. "Spectrum management reform: Rethinking practices," Telecommunications Policy, Elsevier, vol. 38(2), pages 136-146.
    10. Jain, Rekha & Dara, Rishabh, 2017. "Framework for evolving spectrum management regimes: Lessons from India," Telecommunications Policy, Elsevier, vol. 41(5), pages 473-485.
    11. Teckshawer Tom, 2023. "5G Impacts, Internet of Things (IoT) and Businesses in Developing Countries," Technium Social Sciences Journal, Technium Science, vol. 46(1), pages 87-104, August.
    12. Amnon Levy & Michael R. Caputo & Benoît Pierre Freyens, 2013. "Royalties, Entry and Spectrum Allocation to Broadcasting," Economics Working Papers wp13-02, School of Economics, University of Wollongong, NSW, Australia.

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