Understanding Wireless Spectrum Issues

By TAP Staff Blogger

Posted on November 11, 2013


The explosion in demand for mobile and wireless devices like tablets and smartphones is driving policymakers to consider how to make more spectrum available for the growing array of wireless services. This development raises challenging spectrum policy questions.

TAP scholars have been studying wireless spectrum issues since before the FCC began to use auctions as a way to assign the right to use spectrum (in the 1990s). Below are select articles to help explain some of the tech-policy issues with spectrum allocation, auctions, and policies. To learn more about wireless topics, see TAP’s Wireless issue landing page.

Different Approaches to Allocate Spectrum

The Case for Unlicensed Spectrum

Jonathan Levin and co-authors Assaf Eilat and Paul Milgrom examine the benefits of unlicensed radio spectrum. In “The Case for Unlicensed Spectrum,” the authors point out that “the development of spectrum license auctions in the 1990s helped to pave the way for the growth of the mobile phone industry while generating billions in auction revenues for national governments. Yet some of the most valuable and important innovations in wireless communication, in particular the development of Wi-Fi, have taken place on bands of spectrum for which no exclusive licenses were issued.”

Toward Property Rights in Spectrum: The Difficult Policy Choices Ahead

Dale Hatfield and Phil Weiser support the use of the assignment of rights to spectrum more like property rights. The authors state that “property-like rights in electromagnetic spectrum and a secondary market for spectrum licenses are well recognized as the best ways to allocate spectrum to its highest and best uses.” However, “Toward Property Rights in Spectrum: The Difficult Policy Choices Ahead” emphasizes that unlike the case of real property, which is measured in two or three dimensions, “there are as many as seven dimensions by which electromagnetic frequency can be measured, and the best way to measure these dimensions remains unsettled.” Professors Hatfield and Weiser conclude that careful analysis is needed in order to determine what type of property regime would be effective to govern rights in spectrum.

The Wasteland: Anticommons, White Spaces, and the Fallacy of Spectrum

Kevin Werbach examines options for how to allocate the white spaces around broadcast TV channels. In “The Wasteland: Anticommons, White Spaces, and the Fallacy of Spectrum,” Professor Werbach explains that both exclusive property rights and unlicensed allocation can play synergistic roles in the allocation of the white space.

Spectrum Auctions

Using Spectrum Auctions to Enhance Competition in Wireless Services

Gregory L. Rosston and co-authors Peter Cramton, Evan Kwerel, and Andrzej Skrzypacz discuss how regulators can support more competition between different wireless services. A few of the key points from “Using Spectrum Auctions to Enhance Competition in Wireless Services” include:
  • Sale of the rights to the electromagnetic spectrum used by wireless services by auction has been very successful.
  • Economic efficiency should be the main goal in auctioning the right to use the spectrum. A key aspect of this is designing the auctions to enhance competition between wireless service providers.
  • Raising revenues for the government should not be the main goal of the spectrum auctions.

Winning Play in Spectrum Auctions

Jonathan Levin and co-authors Jeremy Bulow and Paul Milgrom outline strategies for bidding on spectrum. “Winning Play in Spectrum Auctions” looks at why bidders pay different prices for similar rights in FCC auctions. The authors say that since the FCC auctions are “simultaneous ascending auctions,” rights for each geographic region are sold at the same time. Because these auctions sell multiple goods, bidders face these complications:
  • Bidders, especially new entrants, often need rights nationwide, not just in one or two regions. A bidder faces “exposure” risk if he wins only some rights; if he does not win all of them, the ones he does win are of little use to him and are hard to resell.
  • A bidder who spends his whole budget to win one auction risks losing another he needs.

Increasing Wireless Spectrum

Increasing Wireless Value: Technology, Spectrum, and Incentives

Gregory Rosston examines the supply of wireless spectrum capacity and proposes opportunities for increasing capacity in the future. In “Increasing Wireless Value: Technology, Spectrum, and Incentives,” Dr. Rosston states: “Given that there is little prospect for finding currently unused spectrum, the government should institute policies that promote the economically efficient use of spectrum currently in use, which in turn could make spectrum available for alternative uses.” He outlines three ways to increase wireless capacity:
  • Increasing the amount of spectrum used (or increasing the value of the use of spectrum);
  • Increasing the use of capital involving a particular technology (e.g., more cell sites) with the spectrum; and
  • Increasing the technological capability of the capital employed (e.g., more technologically advanced cell sites) for wireless transmissions.