Exactitude in Defining Rights: Radio Spectrum and the 'Harmful Interference' Conundrum

80 Pages Posted: 23 Aug 2012 Last revised: 25 Dec 2013

Thomas W. Hazlett

Clemson University

Sarah Oh

George Mason University, Department of Economics, Students

Date Written: August 14, 2012

Abstract

In the century since the Radio Act of 1912 initiated U.S. spectrum allocation rules, a precise definition of “harmful interference” – the control of which forms the rationale for regulation – has eluded policymakers. In one sense, that result is unsurprising; rights are always defined incompletely. In another sense, however, the regulatory system is dysfunctional, severely limiting the productive use of spectrum while locked down in years-long border disputes. These disagreements have, in turn, triggered calls to develop brighter lines and fuller engineering specifications of “harmful interference.” Yet, spectrum use rights featuring technically fuzzy borders, awarded in economically efficient bundles, generate robust market development. The key ingredients are (a) exclusive, flexible use rights; (b) frequency borders set via standardized edge emission limits; (c) large bundles of complementary rights, limiting fragmentation; and (d) fluid secondary trading, allowing mergers to end border disputes by eliminating borders. Regulators should focus less on delineating precise interference contours, and instead expeditiously distribute standard bandwidth rights to economically responsible agents, taking care to avoid undue fragmentation (and tragedy of the anti-commons). These lessons are illustrated in many episodes, including those involving reallocation of the broadcast TV band, the emergence of HD radio, the Nextel/public safety “spectrum swap,” and the ongoing WCS/SDARS dispute. Each instance reveals that economic incentives, not engineering complexity, drives productive coordination of radio spectrum use – or blocks it.

Keywords: 3G, 4G, Adele Morris, attractive nuisance, cellular, data networks, DeVany, FCC, Federal Communications Commission, gridlock, Harold Demsetz, iPhone, Kaleb Sieh, LTE, licenses, licensees, mobile, Pierre De Vries, private property, Robert Matheson, Ronald Coase, TAS package, white spaces, wireless

JEL Classification: K21, K23, L41, L42, L43, L96

Suggested Citation

Hazlett, Thomas W. and Oh, Sarah, Exactitude in Defining Rights: Radio Spectrum and the 'Harmful Interference' Conundrum (August 14, 2012). Berkeley Technology Law Journal, Forthcoming; George Mason Law & Economics Research Paper No. 12-55. Available at SSRN: https://ssrn.com/abstract=2135098 or http://dx.doi.org/10.2139/ssrn.2135098

Thomas W. Hazlett (Contact Author)

Clemson University ( email )

Clemson, SC 29634
United States
8646563430 (Phone)
8646564192 (Fax)

HOME PAGE: http://hazlett.people.clemson.edu/

Sarah Oh

George Mason University, Department of Economics, Students ( email )

Fairfax, VA
United States

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