Interlicense Competition Spectrum Deregulation Without Confiscation or Giveaways

15 Pages Posted: 10 May 2012

See all articles by Michael H. Rothkopf

Michael H. Rothkopf

Rutgers University, Piscataway

Coleman Bazelon

The Brattle Group

Date Written: August 15, 2003

Abstract

The right to use US radio frequency spectrum is extremely valuable. Unlike most property rights, licenses to use radio spectrum are granted for limited terms and carry significant restrictions on how the radio spectrum is used. Economic efficiency suggests that existing license rights should be expanded to give users the flexibility to redeploy spectrum to its most valuable use and to trade licenses or unused capacity on secondary markets. Distributing these expanded rights to use radio spectrum raises questions of both efficiency and equity. This paper proposes an auction mechanism for distributing additional usage rights: interlicense competition. Derived from an auction procedure used by the Interior Department for the auction of mining leases, this mechanism grants license relaxation rights using competition, while ensuring that the government still obtains the fair value of the licenses it is granting. Interlicense competition overcomes the fact that the holders of existing usage rights have a strong competitive advantage over any challengers. This auction mechanism could be a useful addition to the arsenal of tools available to the FCC. Its availability means that it is not necessary to give away spectrum to incumbents to gain the advantages of fully flexible license rights.

Suggested Citation

Rothkopf, Michael H. and Bazelon, Coleman, Interlicense Competition Spectrum Deregulation Without Confiscation or Giveaways (August 15, 2003). TPRC 2003. Available at SSRN: https://ssrn.com/abstract=2054121

Michael H. Rothkopf (Contact Author)

Rutgers University, Piscataway ( email )

Rutgers Business School and RUTCOR
Rutcor Modular Bldg, Room 121
Piscataway, NJ 08854
United States
732-445-0266 (Phone)
732-445-5472 (Fax)

Coleman Bazelon

The Brattle Group ( email )

44 Brattle Street
3rd Floor
Cambridge, MA 02138-3736
United States
202-955-5050 (Phone)

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