Spectrum Management and Regulation: Towards a Full-Fledged Market for Spectrum Bands?

The increase in spectrum demand, which has occurred internationally in the last 10-15 years as a consequence of booming wireless communications, has placed considerable pressure on traditional regulatory arrangements for spectrum access and use. Regulators, especially in industrial countries, have taken a number of steps of remedial policy vis-`a-vis these difficulties, by increasing the share of spectrum made available for commercial use as well as by injecting some flexibility into command-and-control regulation. These are, however, steps of a temporary, palliative nature and do not make for a wider spectrum management reform. Starting from a discussion of the limitations of command-and-control regulation, this paper deals with the two main, alternative approaches which have been proposed: a (Coasian) market regime, and a commons regime. After taking sides in favour of the market regime, consideration is given to some implementation issues, and to a regulatory formula—called administrative incentive pricing—which could help ensure a smooth transition from command-and-control to market arrangements.