‘Spectrum is too important a resource for administrative distribu...

at Wharton School of U. of Pa., also was FCC chief economist 2 years ago. He reconciled view of economists and engineers on govt. spectrum policy, saying both groups disliked spectrum allocation by “administrative fiat” but had “diametrically opposed” solutions on policy. Economists view U.S. system of distributing spectrum as analogous to former Soviet Union system of planned economy, Faulhaber said: “Spectrum scarcity is artificial, induced by regulation.” Economists have called for spectrum auctions for decades, he said, citing testimony to FCC by economist Ronald Coase in 1959: “Finally in 1993, Congress decided to experiment with the first auctions.” But to date auctions “have distributed a very small portion of available spectrum, only 120 MHz,” he said. He called for auctions of all spectrum including that used by Dept. of Defense and public safety. “Governments usually buy their own units -- police cars, computers, etc. - - with tax dollars. Why should spectrum be different?” Faulhaber asked. He compared Part 15 unregulated spectrum with public park. “This is a place where anyone can play as long as they follow the rules. Governments build parks by buying land, or in the case of Part 15, they would buy spectrum for public use.” Turning to engineers, he said as group they were as frustrated economists except that “they critique the system based on new radio technologies.” Examples include ultra-wide band, which “trades power for bandwidth,” and software defined radio. “These new technologies suggest many users can use the same bandwidth, a ‘commons’ model vs. the ownership model preferred by economists.” Despite inertia of current system in which license holders have vested interest, Faulhaber proposed 2 models for spectrum in free market: (1) Ownership without interference. Others would be allowed to use spectrum but not interfere with owner’s “absolute use priority.” “This is the spectrum equivalent of an easement on land,” he said. Model would depend on agile radio devices that could check whether spectrum was free and “ask” permission to make transmission. Proposal raised many questions from TAC group on enforcement of noninterference. Disputes would move from FCC to courts, Faulhaber admitted, suggesting that special “spectrum courts” be established. Spectrum “property rights need to be spelled out in great detail,” he said. (2) Ownership with leasing. Owners of spectrum would be allowed to lease under variety of terms -- including in real time, the equivalent of “spot market,” Faulhaber said. In either scenario, moving all spectrum to markets in combination with dynamic allocation “would free up so much spectrum its cost essentially would be zero.” With exception of “prime” spectrum such as cellular-friendly and legacy applications such as broadcast, which still would have value, wide availability of nearly free spectrum “would be a de facto commons model,” he said. Next scheduled meeting of TAC is Sept. 18.