Spectrum Abundance and the Choice between Private and Public Control

96 Pages Posted: 26 Sep 2006

See all articles by Stuart Minor Benjamin

Stuart Minor Benjamin

Duke University School of Law; Duke Innovation & Entrepreneurship Initiative

Abstract

Prominent commentators recently have proposed that the government allocate significant portions of the radio spectrum for use as a wireless commons. The problem for commons proposals is that truly open access leads to interference, which renders a commons unattractive. Those advocating a commons assert, however, that a network comprising devices that operate at low power and repeat each other's messages can eliminate the interference problem. They contend that this possibility renders a spectrum commons more efficient than privately owned spectrum, and in fact that private owners would not create these 'abundant networks' in the first place. In this Article, Professor Benjamin argues that these assertions are not well founded, and that efficiency considerations favor private ownership of spectrum.

Those advocating a commons do not propose a network in which anyone can transmit as she pleases. The abundant networks they envision involve significant control over the devices that will be allowed to transmit. On the question whether private entities will create these abundant networks, commons advocates emphasize the transaction costs of aggregating spectrum, but those costs can be avoided via allotment of spectrum in large swaths. The comparative question of the efficiency of private versus public control, meanwhile, entails an evaluation of the implications of the profit motive (enhanced ability and desire to devise the best networks, but also the desire to attain monopoly power) versus properties of government action (the avoidance of private monopoly, but also a cumbersome process that can be subject to rent-seeking). Professor Benjamin contends that, on balance, these considerations favor private control. An additional factor makes the decision clearer: Abundant networks might not develop as planned, and so the flexibility entailed by private ownership—as well as the shifting of the risk of failure from taxpayers to shareholders—makes private ownership the better option.

The unattractiveness of a commons for abundant networks casts serious doubt on the desirability of spectrum commons more generally. If private ownership is a more efficient means of creating abundant networks, then the same is almost certainly true for networks that run the risk of interference. Most uses of spectrum are subject to interference, so the failure of the commons advocates' arguments undermines the appeal of a commons for most potential uses of spectrum.

Keywords: radio spectrum, network abundance, private versus public control

JEL Classification: K00, K23

Suggested Citation

Benjamin, Stuart Minor, Spectrum Abundance and the Choice between Private and Public Control. New York University Law Review, Vol. 78, December 2003; AEI-Brookings Joint Center Working Paper No. 03-3. Available at SSRN: https://ssrn.com/abstract=408700 or http://dx.doi.org/10.2139/ssrn.408700

Stuart Minor Benjamin (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7275 (Phone)
919-613-7231 (Fax)

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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