Arnold Kling

Economics of the Wireless Last Mile

Arnold Kling, Great Questions of Economics
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In this essay, I discuss the economic issues related to spectrum allocation and wireless Internet access. Near the end, I write,

Perhaps one solution would be for the FCC to hold another auction. In the new auction, current license owners could put their spectrum up for sale, and the spectrum could be bid on by new or existing owners. Once the spectrum has been re-auctioned, it could be used for any purpose, and it could be sold at any time.

A similar suggestion has been made by David Farber, as reported by Business Week.

Instead of having the FCC allocate the spectrum, Farber and another U Penn professor, Gerry Faulhaber, think Washington should let any organization that now controls spectrum auction it to the highest bidder.

All of this harkens back to Ronald Coase, who first suggested that the private sector could resolve the issue of allocating spectrum.

Discussion Question. Would current spectrum owners realize capital gains or capital losses if their spectrum were put up for auction along the lines suggested?

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