Farber and Faulhaber's argument for commons spectrum allocation

Gerry "Former Chief Economist of the FCC" Faulhaber is presenting a paper he and Dave "Former CTO of the FCC" Farber wrote. Starting with Coase's problem: FCC allocated Spectrum by administrative fiat, in exclusive use blocks. This created massive inefficiencies. Coase proposed moving to a market allocation, with exclusive use. Given the technology of the day, it was all that was workable.

We've given away all the spectrum, granting licenses that we can't take back. We've auctioned off a little cellular spectrum, but not really, since license-holders can't flexibly use their spectrum.

Most spectrum is now not in use (except for the WiFi band).

New tech promises more efficient use of the spectrum, by breaking with exclusivity — mesh/UWB and cognitive radio don't interfere with each other, but require the end of exclusivity.

This is enabled best by spectrum commons, but how will it be managed and who will manage it?

Fact is, it need not be either/or. You could market property rights in spectrum that were subject to a "noninterfering easement" — anyone can use my spectrum as long as they do not interfere with my use of it. Cognitive radios can opportunisitically use the parts of my spectrum that I'm not using, providing you vacate within 2ms of my attempt to use the signal.

This creates a commons across the entire spectrum to accommodate the new tech, as well as protecting incumbents, like FM radio and airport radar.

Ownership is subject only to technical limitations, and this encourages "private commons." Motorola could buy spectrum in all the major cities and produce a meshing phone that is free to use — they'd capitalize the cost of the spectrum into the cost of the handset. (Ed: Does this mean that Nokia would have to buy another lump of spectrum to run its meshnet?)

This gets rid of bureaucratic/political allocation and gets rid of total reliance on exclusive use.

We don't have the experimental results or the market info that would tell us who likes what and whether any of this stuff works. The new regime has to be adaptive.

How do you keep monopolies from driving out the commons? Monopolies only thrive on government controls and scarcity. Abundance and deregulation are the cure for monopolies. The easement commons creates abundance.

If a commons can deliver value to customers, then there will be a way to make money from it, and it will survive in direct relation to its ability to deliver customer value.