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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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March 14, 2005

Spectrum Law Is Not Property Law

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Posted by Dana Blankenhorn

When John W. Berresford speaks, the Bush Administration listens.

Berresford is the FCC's senior antitrust lawyer and a professor at the right's favorite school, George Mason. He has power and the connections to turn his statements into policy.

So when he came out with a paper today about spectrum policy, it was bound to be read avidly.

In his paper Berresford favorably compares the law of land property to that of spectrum. He notes how property rights and spectrum rights are limited under the law, often in the same ways, and states that "efficiency" should be the watchword in spectrum policy.

We should know what we're in for when, in his first paragraph, he mischaracterizes the debate:

Debate rages about whether the allocation and management of the radio frequency spectrum should be mostly a political process, treating it as “The People’s Airwaves,” or mostly market-driven, treating it as private property.

That's not the debate. The debate boils down to science and markets. What treatment of spectrum best serves the market, that of a government-owned monopoly or a carefully-managed resource?

We haven't just "discovered" how to use vast new areas of spectrum in the last 20 years. We've learned a lot about how such spectrum can be re-used, again-and-again.

Thus the argument of property vs. commons isn't a left-right argument (as Berresford supposes in his introduction). It's an argument over science and efficiency.

And the plain fact is that the spectrum which is most efficiently used in this country, which makes the most money per hertz, by far, is the unlicensed spectrum.

Berresford ignores both the science and market forces behind this fact.

First, the science. By limiting the power a device can put out, we are able to increase the number of uses for the spectrum exponentially. And we're learning how to do that better, more intelligently, all the time, as well as make use of these techniques in higher-and-higher frequency bands. (UWB, after all, works under the "noise floor" of licensed spectrum. It doesn't exist at all in Berresford's analysis.)

A city block may have garage doors, data systems, and cordless phones all sharing the same 2.4 GHz spectrum. Some of these are point solutions, some are networked. Some are voice, some are data. The market decides which by letting people freely buy goods and services using the spectrum.

Now, as to market forces. The sad fact is that spectrum which is sold is subject to hoarding. Mobile telephony companies hoard spectrum for future growth. Broadcasters hoard it to keep out competitors. The number of players on the spectrum is strictly limited by selling it. Since it is in the nature of capitalism that markets move toward oligopoly (unless there is some countervailing force placed on it, say by antitrust policy) it's no surprise that we have, on sold spectrum, oligopoly.

We have two big radio broadcasters. We have three big TV networks. We have four big cellular providers.

Treating the spectrum as government property, in other words, leads to inefficiency, to antitrust problems, and to lower values for all, than treating it as a resource. The charge placed on spectrum by the government "owner" represents a tax paid by all users, but not to the government -- it's a tax paid to a private party.

It's not just science that leads to greater efficiency with shared spectrum, although the science in this area keeps improving. (Cognitive radios do a better job of avoiding interference than the WiFi set-ups of even four years ago.)

The market is better served by treating spectrum as a commons than by treating it as government property.

And if spectrum is anyone's property, Berresford makes clear, it's government property.

By standing for "property" treatment of spectrum, Berresford stands for government power over the individual, for limited choice in the market, and for inefficiency in the use of the resource.

Comments (2) + TrackBacks (0) | Category: 802.11 | Always On | Economics | Futurism | Politics | Telecommunications | law


COMMENTS

1. Steve Stroh on March 14, 2005 07:53 PM writes...

Clueless is John W. Berresford for all the reasons Dana cited.
Clued-in is Dana Blankenhorn, for all the counter-arguments (ALL of which are spot-ON) he cites against Berresford's specious positions.

Seriously Dana... this is fantastic work! Despite my deep study of this industry, you GOT this one and I missed it. I cannot add a single point to your very thorough analysis. The BWIA industry Thanks you!

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2. Tom Mariner on March 25, 2005 10:46 AM writes...

LoJack

The story on how the anti-car theft product got its spectrum goes that the frequencies were originally set aside for use by a Federal law enforcement agency. LoJack set up monitoring receivers in metropolitan areas for years before they appled to the FCC. When the three letter agency yelled that they were being deprived of a vital resource, the deafening silence the radios recorded forced the FCC to listen to LoJack's argument that the band was vacant. You know that caused the spending of tens of millions of our taxes to hire folks like Mr. Berresford to keep us taxpayers from stealing the goverment's property!

Hell, I'd spend on attorneys rather than techies in a department that oversees a technical resource. Not!

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