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FCC & Spectrum Gridlock

Earlier this week my colleague Ryan Young posted a blog about the FCC's proposal to increase access to and decrease the cost of broadband technology by charging consumers more for land-based telephone services.

He makes some excellent points about the pointlessness of taxing telephone usage to subsidize broadband services and the fact that it is innovation not intervention that will propagate and push new technologies while decreasing costs to consumers.  As Mr. Young notes, land-based internet is neither cost effective nor as advanced as wireless broadband technology, which as he also notes is not yet ready for mass markets. This made me wonder about the reasons behind the tech-lag in the US--why isn't our country ready for nation-wide wireless broadband? It also reminded me of a great EconTalk podcast I heard recently that suggested some possible answers.

The cause of wireless underdevelopment according to Michael Heller, author of Gridlock Economy, is that there are too many owners invested in the resource of radio frequencies; there are many owners of small slivers of spectrum which leaves the entire resource "underused". So, creating a new technology that would allow one to transmit across the country would require the utilization of all these small licensed slivers of spectrum which is simply too expensive for most companies to attempt. This leads to his concept of the "tragedy of the anticommons" where, rather than a resource becoming overused through a lack of property ownership, too many owners of a resource lead to its underutilization. At first this idea of the tragedy of the anticommons might lead one to believe Heller is suggesting we socialize radio waves for the maximum benefit, but on the contrary, Heller suggests that policy change so that ownership of frequencies resembles more closely real property rights with licenses having wider application and being much more transferable.

If government truly wants Americans to have greater access to cheaper broadband solution, they ought to stop interfering with frequency owners' right to utilize their property as they see fit. This would, presumably, result in the advancement of nation-wide wireless broadband services. This would not only result in a newer more cost-effective communication technology, but would also force competing technologies to lower their prices.