On March 24th, Brooking’s Hamilton Project hosted a forum and released a new policy proposal addressing the key challenges of regulating wireless spectrum during a time of rapid change and increasing demand. Former U.S. Treasury Secretary Roger Altman opened the forum, and Federal Communications Commission Chairman Thomas Wheeler gave keynote remarks.

Brookings summarized Wheeler as follows:

This week, he came to Brookings for a Hamilton Project forum to discuss several of his ideas for moving America forward. Foremost among the items is the need to free up spectrum for wireless applications. Speaking about the issue, the Chairman praised the emergence of what he called the fourth network revolution for wireless connectivity of computer devices (the successor wave to the printing press, railroad, and telegraph).

He predicted that the upcoming incentive auction and sharing technology would “revolutionize the way we manage our air waves” and promote economic growth and innovation in education, health care, energy, and transportation. At this point, he said the task was to remove unnecessary obstacles that limit advances and ensure the availability of ingredients to modern networks, such as wireless spectrum.

The Hamilton Project released a new proposal by authors Pierre de Vries and Phil Weiser for improving the allocation and adjudication of wireless spectrum by redesigning regulations and simplifying the trade of spectrum resources through the use of market forces. The proposal describes four policy challenges hampering the economic potential of wireless spectrum:

• Inefficient allocation of spectrum operating rights
• Underinvestment in high-quality signal transmission and reception technology.
• Reconciliation of government spectrum uses and private-sector demand.
• Moving beyond “Command-and-Control” to Licensed and Unlicensed Use of Spectrum.

The proposal concludes:

Economists have long argued for a market-based approach to allocating spectrum, in the spirit of the argument made by Nobel laureate Ronald Coase in his seminal 1959 paper. Coase’s solution to the allocation problem was to create sufficient property rights in spectrum so that they could be sold to private owners who would then be free to buy, sell and lease spectrum rights. Prices would be set by the market, in accordance with the demand and supply for spectrum, and in particular, for more or less valuable frequencies.

The FCC has gradually allocated more spectrum rights for flexible use; since 1993 it has been using auctions toaward most new spectrum licenses. Still, there is much scope for continued improvements in the allocation and administration of spectrum policy.

Your blogger agrees in nearly all of the above. However, he would add that there are serious doubts whether FCC and NTIA, as currently structured, have the resources and “decision making throughput” to make real progress in these areas.

FCC is so paralyzed now with incentive auctions issues that it is questionable if they have time to look at such fundamental questions as proposed here.

Tags: FCC Reform