Friday, June 10, 2005 - The Progress & Freedom Foundation Blog

Spectrum Reform: The UK Perspective in Guatemala

An interesting talk at the Guatemala spectrum conference by Martin Cave. Martin teaches at the Warwick Business School and is the author of a report that provided the basis for the UK's spectrum reform proposal which, as he puts it, is "a success story so far - in conception." The 2003 U.K. Communications Act included provision for efficient use of spectrum and trading. Ofcom, the responsible agency, has produced a strategy, an implementation plan and trading procedures. Martin made a few points that are not often discussed. One concerns the issue of windfall gains. The typical economist's solution to a problem like spectrum is to grandfather incumbents. This solution - which essentially makes explicit the property rights that the incumbents already implicitly have - is viewed as a way of buying off those with a vested interest in the status quo, while still realizing the efficiency benefits of moving to a property rights a regime. But Martin makes the point (one that I have recently come to believe myself) that this is not really a politically viable solution, because politicians are extremely reluctant to be viewed as giving private interests what are perceived as undeserved windfall gains. This, of course, makes the transition more difficult. He also talked about the issue of the large amounts of spectrum the government holds for defense, public safety and other uses. He made the point that it is important for the government agencies, as much as possible, to incorporate the opportunity costs of the spectrum they are using into their decision making. I made a similar point in a recent filing at the FCC.

posted by Tom Lenard @ 7:44 PM | Communications , Spectrum , Wireless