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Source link: http://archive.mises.org/5133/buying-into-the-artificially-scarce-spectrum-monopoly/

Buying into the artificially scarce spectrum monopoly

June 3, 2006 by

Last week the FCC auctioned off “licenses” to several bands of radio spectrum for in-flight wireless services. One firm purchased 3 MHz of spectrum for $31.3 million and another company received the remaining 1 MHz for $7 million.

While both BK Marcus and I have discussed the role of State intervention involved with spectrum ownership, this latest auction punctuates the rather absurd ‘public goods’ monopoly that the FCC has been given.

The FCC did not create the radio spectrum, it did not homestead it — it neither used the various frequencies first nor does it somehow maintain the varying frequencies it claims to hold title to. In fact, if the FCC somehow disappeared tomorrow, the radio spectrum would continue to exist in the same manner it has since time immemorial.

With the revenue generated from the sale of spectrum, the FCC does not wax and shine each and every frequency. It does not somehow fine-tune the harmonics of each frequency or lubricate Mother Nature for optimal performance.

Scarce resources such as land, water and air are all capable of being manipulated in terms of utility; however the FCC does not and cannot do anything to the spectrum because it does not control the nature of it. Rather, the FCC uses the monies raised to bully and force firms and individuals into an artificially constrained system, a system entirely divorced from the physics and reality of how the electromagnetic spectrum works.

Thus, while travelers may now find more communications options available to them in the future, this is just another act in a dark comedy. The frequencies had always been there and always will be — nature does not beckon to the FCC.

See also: The Spectrum Should Be Private Property and Who Owns the Internet?

{ 10 comments }

Sean Lynch June 3, 2006 at 2:18 pm

I would have no problem with the FCC auctioning off spectrum if the winner of the auction actually ended up owning what they’d paid for, but what they’re auctioning off is not ownership at all but a lease, kind of like the way land is handled in China.

If spectrum “owners” had the right to repurpose, subdivide, and resell their spectrum, we’d end up with a much better situation than we have now. But instead we have huge swaths of unused or severely underused spectrum. Analog terrestrial television spectrum would have gone to more highly valued uses long ago if the users actually owned the band in their region.

David V June 3, 2006 at 2:19 pm

The FCC does not wax and shine, but it does perform a crucial function by preventing radio frequency interference. In this sense, there is nothing “artificial” about the radio spectrum .
The problem is that the FCC does not allow the spectrum to be owned, but rents it out and imposes all kinds of restrictions on it. It is the premise that the spectrum is a “public good” that leads to all kinds of censorship and corruption.

libertyfirst June 3, 2006 at 3:49 pm

“but it does perform a crucial function by preventing radio frequency interference”

Nuisances do not require central planners to be taken care of… interference is invasion of private property.

FCC is there to politically control the media.

gmlk June 3, 2006 at 4:15 pm

Interference between frequency users is a technological problem, not a natural fact. More then that: It’s a problem which is already solved in some kinds of spread spectrum UWB.

Spread spectrum technology is disruptive because it don’t use frequency carrier waves and thus don’t fit the FCC illusion. The FCC however maintains it’s existence by regulating against these kinds of technological advances.

It’s also not the first time: The FCC did the same thing to FM at first.

Tim Swanson June 3, 2006 at 4:39 pm

David V said,

“The FCC does not wax and shine, but it does perform a crucial function by preventing radio frequency interference.”

As gmlk noted, this is purely a technological problem. Smart antenna’s have been developed to alleviate many of these problems. Furthermore, the transition from analog to precision digital signals has allowed for less interference as well.

The Economist wrote a good article on how current off-the-shelf technologies make “radio interference” a moot point, one that the FCC cannot use to justify their existence.

See also, Now On The Auction Block: Ten Lovely Unwed Hertz’s

M E Hoffer June 3, 2006 at 6:46 pm

Sean, and David V,

Sean puts forward: “what they’re auctioning off is not ownership at all but a lease, kind of like the way land is handled in China.”

And, David adds: “The problem is that the FCC does not allow the spectrum to be owned, but rents it out and imposes all kinds of restrictions on it. It is the premise that the spectrum is a “public good” that leads to all kinds of censorship and corruption.”

The author of the piece in the link, Douglas V. Gnazzo, puts together a greater totality that y’all may appreciate.

http://www.financialsense.com/fsu/editorials/gnazzo/2006/0530.html

His expressed view squares with my previous understanding of the subject. Otherwise, I wouldn’t further circulate it. If any has information to the contra, of the author’s, please advise.

Curt Howland June 3, 2006 at 7:44 pm

David V., what did people do before the FCC?

They “homesteaded” a frequency, and interference between broadcasters was handled just like trespassing. And it worked. The basics of spacing and distance were well worked out prior to the FCC simply setting things in stone.

I lived in western Colorado for a while. The local college station was constantly being “bled over” by one of the local commercial broadcast stations. I was well known, deliberate, and obvious, but there was no recourse except to complain to the FCC.

The reality was that these (never actually proven to be deliberate, but somehow never happening while the FCC was monitoring) attacks were pointless because the commercial station was “Top 40″, and the college station had a policy of not playing anything on the “Top 40″ list.

So here is a very specific case where the existence of the FCC _caused_ problems. Without the FCC, it would have been a simple matter of local courts dealing with local problems.

Hugh Akston June 3, 2006 at 8:58 pm

It really is tragic how huge bands of spectrum are occupied by obviously inefficient uses. Flat rate unlimited cell phones would have been a reality years ago if spectrum wasn’t so artificially scarce. Wireless broadband would be giving DSL and cable a run for their money instead of being the perennial “up and coming” technology. WiFi deployments are constantly plagued by there only being 3 non-overlapping channels in the 2.4GHz band. Just another example of how everywhere government goes it creates disasters that ripple throughout the economy and make people poorer.

David C June 4, 2006 at 10:25 am

From a physics point of view, spectrum is the same as light, and similar to sound. If the government forced everyone in a public stidum to be silent, so that certain approved speakers could be herd clearly – most people could see the intrusion. If two people put flickering green lights on top of their house to comminucate with each other, and the government assigned ownership of the color green to prevent interference most people could see the intrusion there too. Light waves don’t distort each other when the cross each other (except on a quantum scale) – interference, is a technology problem, not a limited resource problem. In fact, the fcc by allocating spectrum entrenches old technology. Not to mention that even if it was a limited resource problem, using spectrum uses energy – and if two tv stations were interfering with each other, both would have powerfull incentives to minimize that interference anyhow. It is not about allocation of spectrum property, but really about Janet Jacksons wardrobe failure. When you think of spectrum as a limited national resource, then it baeomes in the national interest for the FCC to manage it.

Artisan June 7, 2006 at 5:29 am

The case of the wave spectrum has been analyzed by Rothbard thoroughly. While technology found a way around the scarce length of the wave spectrum… it may not be a proper argument for denying regulation, as the old fixed frequency system is still useable by people NOT relying on that technology. Can you enforce the use of a certain new technology just because it causes less property conflicts? It’s like saying everyone MUST use mp3 with earplugs in his yard because it’s less noisy than a ghetto blaster… you’d need a government police to do that I think…

Moreover the – all too common – idea of governments selling (phone or radio) waves on auctions is completely unethical even if it wasn’t a lease, since the government doesn’t “own” them in the first place… while it is clearly building a monopoly, it is also clearly raising taxes without any social justification, as regulation can be achieved through private agreement.

Rothbard suggests regulation should be made with private agreements of homesteading: wave spectrum is a resource so the first use of it determines its ownership… (not just the theoretical use). Range limitation has to be set such as allowing new an old technology at a given moment to cohabitate and to satisfy all interested parties. If there was too many of them, then a (free) lottery would insure the fairness of the allocation process. However, this may still result in a certain form of “monopoly”, since newcomers would be a priori deprived from their rights to participate to the lottery. Still, the right to participate to a lottery is not a libertarian right (it is tied to the idea of equality only), while the right of the first arrived settler is!!! Fact is, no one can pretend to be deprived of his property rights by anyone else here.

The only problem raised thus is that the allocation process must be decently publicized so that no one must be intentionally kept out.

A person without luck at the lottery could certainly decide – as some IP opponents are never tired to mention – to still enforce his “freedom of using his transmitter in his backyard” to disrupt other wave lengths … but this conflict ressembles very much that of a man building his own airport with a huge control tower at the end of an existing landing track… not interesting.

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