The role of markets in spectrum policy


Joe Kane
Former Fellow, Technology & Innovation

Key Points

U.S. spectrum policy failed to utilize markets for a long time because it mistakenly viewed spectrum as a uniquely scarce resource.

Over time, government command and control of spectrum has gradually given way to more market-based spectrum management, but vestiges of the old model still plague the system.

The U.S. should seek to further enhance the role of markets in spectrum policy by enacting reforms like greater license flexibility, perpetual license terms, and strong first amendment protections for broadcast.


Today, almost everyone depends on, or at least uses, a wireless device every day. We use our smartphones to stream videos and text friends, we fly on airplanes that navigate with radar and we look at weather maps constructed by satellites. The future of wireless devices is even more exciting and will include the expansion of the Internet of things, improved telemedicine and increasingly connected cars. But in order to reach the best possible wireless future, we must grapple with the technically difficult, legally complicated and politically contested medium of the electromagnetic spectrum.

Electromagnetic radiation has long been harnessed to engage in communications. Over time, we have increased the efficiency with which we use the spectrum of electromagnetic frequencies and the parts of the spectrum that are usable. The techniques and innovations that make wireless devices work both shape and depend on spectrum policy.

That policy has endured a checkered history—one characterized by invasive government control that is justified by mistaken economic reasoning. As a result, the role for markets has been minimized and this has held spectrum back from its maximum productivity. While the roots of these mistakes have been effectively refuted, their effects still persist in statutes and regulations.

By implementing further market-based reforms, the federal government can greatly increase the productive use of spectrum to the benefit of American consumers and entrepreneurs. To this end, improving the terms of spectrum licenses to incentivize innovation and efficiency, thinking critically about the role for both licensed and unlicensed spectrum and removing government regulation of speech over broadcast spectrum should be priorities for policymakers in every branch of government.

Accordingly, this paper discusses how wireless communication using spectrum works. It then recounts the history of spectrum regulation in the United States and the policy shortcomings that it created. Finally, it suggests a market-based lens through which to view future spectrum reforms and then applies that lens to several current policy issues.

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