What Do The Titanic And Your Smartphone Have In Common? – Forbes.
The FCC’s command-and-control model of regulation resulted in the rigid “zoning” of spectrum. To this day, the rules keep innovators from using the spectrum flexibly or rededicating it to different, perhaps more effective uses. In essence, an FCC spectrum license says that you may do X, and only X, with that spectrum allocation — even when the market might cry out for something different.
As media visionary Ithiel de Sola Pool argued in his 1983 classic Technologies of Freedom: “The scheme of granting free licenses for use of a frequency band, though defended on the supposition that scarce channels had to be husbanded for the best social use, was in fact what created a scarcity.” Pool concluded: “it was policy, not physics, that led to the scarcity of frequencies. Those who believed otherwise fell into a simple error in economics.”
Moreover, even if spectrum is scarce in some nominal sense, that fact hardly makes the case for government control. As generations of economists, engineers, and other spectrum policy experts have repeatedly argued, every natural resource is inherently scarce in some sense: there is only so much coal, timber, or oil on the planet, but that does not mean the government should own or license those resources. In the 1986 D.C. Circuit case,Telecommunication Research & Action Center v. FCC, which overturned the FCC’s infamous “Fairness Doctrine,” then-Judge Robert Bork argued that “[a]ll economic goods are scarce… Since scarcity is a universal fact, it can hardly explain regulation in one context and not another.”
While some resources are scarcer in nature than others, property rights, pricing mechanisms, contracts, and free markets provide the most effective way to determine who values resources most highly and allocate them efficiently. With spectrum, however, the government created artificial scarcity by exempting spectrum from market trading and the pricing system.
Thus, government ownership and control of spectrum exacerbates, rather than solves, the scarcity problem — a problem that still haunts us today.