NCPA - National Center for Policy Analysis

FCC Contemplates Radical Change: Bidding For Spectrum

March 13, 2000

Free-market economists have long urged that airwaves be bought and sold through auctions, just like any other commodity. Now the Federal Communications Commission is considering rule changes that would encourage development of such a system.

  • Telecommunications companies of all kinds could bid for underused slivers of the spectrum that are already under the control of other companies.
  • Currently, the government licenses each user of spectrum and regulates the frequencies and signal power used, with rights usually being sold to the industry -- although the oldest license-holders got them free.
  • But they have never been bought and sold in an open market like so many bushels of grain.
  • The plan envisions the utilization of spectrum brokers working with licensees who own the rights to a given slice of the spectrum and to make money from any surplus they have.

Experts fear that the heavy use of the airwaves will begin to create bottlenecks and interference that could greatly frustrate the further development of technology, such as wireless Internet access. The FCC reports that the volume of traffic on the Internet is doubling every 100 days -- a stunning increase considering that telephone traffic has traditionally risen about 5 percent a year.

Source: Stephen Labaton, "FCC to Promote a Trading System to Sell Airwaves," New York Times, March 13, 2000.


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