Slashdot Mirror
A Case Against Further Government Spectrum Auctions
dkatana points out an article arguing that the governments should stop further auctions of 4G spectrum because it reduces infrastructure investment from carriers and makes net neutrality more difficult to regulate. Quoting:
The FCC recently raised more than $34 billion for six blocks of airwaves, totaling 65 megahertz of the electromagnetic spectrum. This is good news for the treasury coffers, but government auctions threaten the ability of the FCC and similar agencies to manage the spectrum, impose net neutrality rules, and allow new businesses to compete.
Carriers and internet companies who won the auction might believe the spectrum is theirs to do as they please, blocking access or charging huge fees to others. Issues such as speed throttling and preferential access come to mind. If governments insist in auctions of the newly available frequencies, it could hurt the industry and potentially destroy any possibility of negotiating universal access and net neutrality.
Carriers and internet companies who won the auction might believe the spectrum is theirs to do as they please, blocking access or charging huge fees to others. Issues such as speed throttling and preferential access come to mind. If governments insist in auctions of the newly available frequencies, it could hurt the industry and potentially destroy any possibility of negotiating universal access and net neutrality.
Spectrum is a natural monopoly (for that particular spectrum). Much in the way that real estate is a natural monopoly (for that particular patch of land). Giving a private party ownership in perpetuity of a natural monopoly breaks capitalism. A recurring cost needs to be added to encourage effective use. Property taxes accomplish that for real estate (when used properly, and not hijacked by the government as a source of revenue). If the property taxes are appropriate for the location, people making effective use of the land are able to pay it with little pain. People not making effective use of the land (e.g. a strawberry farm in the middle of a city) are unable to pay, and thus are encouraged to either change how they're using the land to generate revenue more appropriate for the location's potential, or to sell the land to someone who can/plans to generate such revenue.
The same needs to happen with spectrum. The government shouldn't be selling it. It should be leasing it. Every 5-10 years, it should reappraise how much revenue all spectrum is generating, and the annual lease amount raised to something commensurate with that revenue potential. Companies which are doing a thriving business with that spectrum will be able to pay the increased lease. Companies sitting on the spectrum just to keep it out of the hands of their competitors will indirectly be paying their competitors (via the government, which should use the funds for enforcement and to encourage development of technologies that use spectrum). And companies struggling will be forced to adopt newer (hopefully better) business models to use the spectrum, or be forced to sell to someone else who can. If they can't make it work, someone else should be given the chance.
You can even get fancy to thwart corner cases. e.g. To discourage sitting on spectrum to block competitors, tie the annual lease to the amount that the spectrum is used. If it's utilized 75% or more, you get the normal lease. If it's 50%-75% utilization, you pay 1.5x the rate. If it's 25%-50% utilization you pay 2x the rate. Less than 25% utilization and you pay 5x the rate. To discourage monopolization of large amounts of spectrum by a few companies, increase the annual lease depending on how many blocks you're leasing. But it all hinges on leasing spectrum instead of auctioning it off.
so the government is just selling the spectrum without any preconditions, rules, regulations?
No, of course not. Frequency auctions may, or may not, be a good idea, but they have nothing to do with "net neutrality", and TFA is just a bunch of assertions with no explanation. I have seen better analysis from Bennett Haselton.
I agree. Auctioning creates a "pay to play" system. Spectrum is a fixed resource - it should be allocated based on social policy - not based on who can pay the most. And when someone pays for it, they have every right to feel that they "own" it - and that undermines the government's ability to manage it: to adjust rules as situations change over time. Auctioning a fixed public resource is nothing less than prostitution of our public assets.