Freeing Spectrum: How Market Values Can Unleash Telecom Innovation

Americans use the electromagnetic spectrum (spectrum) every day through their cell phones, tablets, radios, and other devices. Although users can immediately tell when their data access is slow, what is less obvious is how government control of spectrum limits access and innovation. The Competitive Enterprise Institute argues in its new paper, A Case for Property Rights in the Electromagnetic Spectrum-How Private Markets Can Unleash Telecommunications Innovation, that because spectrum is finite, the government should open up more spectrum in the marketplace instead of maintaining control over it.

Deciding who will use spectrum and how they use it matters a great deal in determining the extent to which consumers can enjoy the benefits of wireless communication. Rigid licenses make it costly for potential users of the airwaves to collect spectrum and put it to productive use. Society suffers the opportunity cost of this underuse, losing out on productive activity that would have taken place if the spectrum had been more efficiently allocated.

Ryan Radia, co-author of A Case for Property Rights in the Electromagnetic Spectrum, said, “We should not trust federal bureaucrats with broad authority to dictate how spectrum is used, especially given the government’s poor track record of allocating spectrum to date. A freer market in spectrum will mean faster data for mobile phone and tablet users in the United States, and more opportunity for innovation from companies around the world.”

In recent years, the FCC has continued to meddle with spectrum auctions, including its recent incentive auction, which ended on March 30, 2017. Instead, opening up the spectrum to the marketplace will benefit consumers. The more it costs a private company to acquire rights in spectrum, the fewer new inventions will come to market in the first place.

Co-authored by the Competitive Enterprise Institute’s Ryan Radia and Mercatus Center Graduate Research Fellow Joseph Kane, A Case for Property Rights in the Electromagnetic Spectrum-How Private Markets Can Unleash Telecommunications Innovation can be found here.