Wireless Competition Under Spectrum Exhaust

22 Pages Posted: 18 Aug 2012

See all articles by Thomas Randolph Beard

Thomas Randolph Beard

Auburn University - Department of Economics

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Lawrence J. Spiwak

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Michael L. Stern

Auburn University; Phoenix Center for Advanced Legal & Economic Public Policy Studies

Date Written: February 1, 2012

Abstract

There is a growing concern that the present inventory of commercial spectrum — an essential input for providers of mobile wireless services — represents just a fraction of the amount necessary to match growing demand for mobile data services. At the same time, there has been mounting anxiety among policymakers about the number of competitors in the mobile wireless industry. What is lacking from the policy debate today is an economic theory of market performance that integrates these two key issues — spectrum exhaust and industry structure. In this paper, we provide such a theory, and our findings are significant. The addition of a spectrum constraint to the traditional model of competition turns the conventional view that high industry concentration is a bellwether of poor economic performance on its head. Indeed, under a binding spectrum constraint, a market characterized by few firms (rather than a large number of firms) is more likely to produce lower prices and possibly increase sector investment and employment. Given the FCC’s stated position on spectrum exhaust, the agency needs to re-orientate the way it thinks about spectrum policy. Policies that impede incumbent carriers from acquiring more spectrum — via either auction or acquisition — may do harm rather than good.

Keywords: Spectrum Exhaust, Spectrum, Wireless, FCC, Federal Communications Commission, Cournot

JEL Classification: D61, K21, K23, L50, L51, L52, L96, O33, O38

Suggested Citation

Beard, Thomas Randolph and Ford, George S. and Spiwak, Lawrence J. and Stern, Michael L., Wireless Competition Under Spectrum Exhaust (February 1, 2012). Phoenix Center Policy Paper No. 43. Available at SSRN: https://ssrn.com/abstract=2131445

Thomas Randolph Beard

Auburn University - Department of Economics ( email )

415 W. Magnolia
Auburn, AL 36849-5242
United States

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Lawrence J. Spiwak (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
202-274-0235 (Phone)
202-318-4909 (Fax)

HOME PAGE: http://www.phoenix-center.org

Michael L. Stern

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States

Phoenix Center for Advanced Legal & Economic Public Policy Studies

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
56
Abstract Views
579
rank
367,001
PlumX Metrics