Arnold Kling

Open Spectrum

Arnold Kling, Great Questions of Economics
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Although I only recently became aware of the Open Spectrum movement, it has been around for years. With Open Spectrum, regulators would do away with the system of licensing frequencies to different uses. Instead, all frequencies could be accessed by equipment that conforms to protocols that enable everyone's communications to get through.

An economist, Eli Noam, proposed the idea in 1995(!).

To allocate access one need not grant permanent allocation rights, but rather to charge an access fee that is set dynamically at a level where the available capacity is fully utilized...

the proposed open spectrum access system will not be adopted anytime soon. But its time will come, and fully bring the invisible hand to the invisible resource.

Noam took the view that the problem in allocating the radio waves is not "interference" but "congestion," which is known in economics as the peak-load problem. He argued that congestion could be dealt with up to a point using technology, and beyond that point using pricing to incent people to refrain from sending low-priority messages at critical times. His article cites earlier advocacy of open spectrum by Paul Baran (a co-inventor of packet switching, the fundamental concept in the Internet) and also by George Gilder. However, they did not anticipate the pricing solution to the congestion issue, and instead focused on technological solutions.

Another advocate of Open Spectrum was legal scholar Yochai Benkler, in this article published in 1998. Recently, the success of local wireless protocols, such as WI-FI, has kindled strong interest in Open Spectrum.

Discussion Question. A congestion-based surcharge also was advocated for the Internet, by Hal Varian among others, but it never was adopted. Instead, engineers focus on technology-based solutions, such as caching servers. Would not a pricing solution be less expensive?

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