In the prior post, Harold Feld discusses the implications of the recent AWS auction. To offer an optimistic counterpoint to Harold, let me begin with the good news of that auction for consumers–TMobile lives to fight another day. Unlike other providers, TMobile is more committed to the open Internet (in terms of its web access) and more willing to experiment (including a new wifi/cellular phone in the offing). I could go on here (they were the first to embrace the Treo, for example), but you all get the point. The good news, which Harold glosses over, is that TMobile was the big purchaser and is in a position to roll out its 3G offering and continue to be a supporter of independent innovation and, more generally, act as a maverick in this space.
Speaking of Harold and spectrum policy, I do have to correct the record based on a prior post of Harold's elsewhere. In that post, Harold expressed his disappointment that Dale Hatfield and I, in a recent paper released by Cato, did not take on the “property rights school of spectrum policy.” As Harold pointed out, Dale and I had previously written on the importance and challenges of enabling a spectrum commons model to work effectively (see here). Unfortunately, Harold misread our recent paper as calling into question our position that unlicensed spectrum is an important tool to promote innovation and consumer welfare. Rather, the recent paper–and I quote–“does not focus on whether a new regime should promote spectrum as part of a commons”; instead, the paper addresses “how promoting a property rights regime in spectrum is not nearly as simple as some people suggest.”
Personally, I believe that spectrum policy should embrace both a commitment to unlicensed spectrum and licensed spectrum. Each model has its benefits and can be used effectively to promote innovation. We did not intend to engage that debate, but rather began with the premise that there will be property rights in spectrum and policymakers will ultimately need to address the question of what it means to grant property-like rights in spectrum. One could even, if they were so inclined, read our paper as underscoring that implementing the property rights model is far more difficult than advertised. (It is, but we still think it is worth the candle.)
In terms of our analysis, the key point for present purposes is that spectrum property rights cannot function like land. If anything, they are more like water rights–fluid and difficult-to-define. Consequently, if policymakers attempt to impose strict property rights on spectrum licenses, they might well create strategic opportunities for firms to purchase spectrum rights with the sole purpose of engaging in hold-up-type behavior. (Spectrum trolls, if you will.) There are alternative property designs that could avoid this problem–a limitation on injunctions; safe harbor rules; and other measures, for example. We have not worked out all of the details, but our central point is that spectrum property rights advocates cannot simple argue “treat spectrum like land” and stop there. In fact, the differences between spectrum and land explain, in part, the reticence of implementing a more thorough-going commitment to property rights.
Harold, I assume that you will have a response, so take it away. . .