How to reduce transaction costs in spectrum markets
Author
Key Points
Press Release
R Street Policy Report: Transaction Costs Are Killing the Spectrum Market
INTRODUCTION
All wireless devices rely on access to radio frequencies over which they send and receive data. In the United States, private access to the radio spectrum is controlled by the Federal Communications Commission (FCC), which licenses spectrum users. The FCC is currently moving toward allocating mid- and high-band spectrum that has not yet been a major component of commercial wireless services. As the wireless market grows, the FCC will need to consider how the regulatory regime that governs spectrum licenses may help or hinder the connectivity of tomorrow. And as private companies move into new bands, the FCC must ensure that conditions are ripe for an innovative and dynamic marketplace.
One of the most significant barriers to this robust spectrum marketplace of the future is the existence of transaction costs that inhibit the ability of frequencies to be used productively. Accordingly, this paper seeks to evaluate alternative allocation schemes in light of the transaction costs they elicit and suggests concrete policy reforms that would reduce these costs, thereby enhancing the efficiency of markets for the benefit of everyone who uses wireless services.
