September 2009 -- Tragedy of the anti-commons occurs when property rules fail to enable efficient social coordination. In radio spectrum, rights issued to airwave users have traditionally been severely truncated, leaving gains from trade unexploited. The social losses that Ronald Coase (1959) asserted, appealing to basic theories of resource allocation, are now revealed via intense under-utilization of the TV Band.
Despite the end of analog TV transmissions in June 2009, vast spectrum continues to be allocated to terrestrial broadcasting. Broadcast video content could, however, inexpensively shift to cable and satellite. Making the TV Band (49 channels spanning 294 MHz) available for new services is worth $120 billion to service providers (at 2008 auction prices) and at least ten times more in consumer welfare.
Instead, U.S. regulators treat TV airwaves as a “junk band.” Analogizing to wi-fi radios accessing frequencies without exclusive licenses, the FCC seeks to permit government-approved devices to transmit in unoccupied TV Band “white spaces.”
No radios have been approved in seven years of rule makings, reflecting regulatory difficulty in weighing economic trade-offs.
Yet common interest tragedy, already visible in the long under-utilized TV Band, predictably locks in once white space devices are approved. By pre-empting exclusive spectrum ownership, the opportunity for market reallocation of
frequencies is lost. Specifically, fragmented and overlapping use rights cannot support investments to efficiently mitigate broadcast TV pollution, cleaning up the “junk band.” Were, alternatively, white spaces assigned via exclusive overlay
rights, spectrum owners would contract with cable and satellite operators to guarantee broadcast video distribution, releasing valuable airwaves for new services. Gains from reducing airwave pollution would induce cooperation, replacing political gridlock.
Citation
"Tragedy T.V.: Rights Fragmentation and the Junk Band Problem" by Thomas Hazlett, October 2, 2009, Quick Links: Gridlock Economy Conference
Related Scholarship
"A Welfare Analysis of Spectrum Allocation Policies” by Thomas W. Hazlett & Roberto E. Muñoz, 40 RAND Journal of Economics 424 - 454 (2009), Quick Links: Thomas Hazlett, Roberto E. Muñoz
"U.S. Wireless License Auctions: 1994-2009" by Thomas Hazlett, ACCC Conference in Brisbane, Australia, July 14, 2009, Quick Links: Thomas Hazlett
"Property Rights and Wireless License Values" by Thomas W. Hazlett, 51 Journal of Law and Economics 563-98 (August 2008), Quick Links: Thomas Hazlett
"A Law & Economics Approach to Spectrum Property Rights: A Response to Professors Weiser & Hatfield" by Thomas W. Hazlett, 15 George Mason Law Review 975-1023 (June 2008), a response to "Spectrum Policy Reform and the Next Frontier of Property Rights" by Philip J. Weiser & Dale Hatfield, 15 George Mason Law Review 549-609 (Spring 2008), Quick Links: Thomas Hazlett
"A Rejoinder to Weiser and Hatfield on Spectrum Rights" by
Thomas W. Hazlett, 15 George Mason Law Review 1031-39 (June 2008), a rejoinder to: "Property Rights in Spectrum: A Reply to Hazlett" by Philip J. Weiser & Dale Hatfield, 15 George Mason Law Review 1025-30 (June 2008), Quick Links: Thomas Hazlett
"Optimal Abolition of FCC Spectrum Allocation" by
Thomas W. Hazlett, 22 Journal of Economic Perspectives 103-28 (Winter 2008), Quick Links: Thomas Hazlett
"Heller's Gridlock Economy In Perspective" by Richard Epstein, October 2, 2009, Quick Links: Gridlock Economy Conference
"The Wasteland: Anticommons, White Spaces, and the Fallacy of Spectrum" by Kevin Werbach, October 2, 2009, Quick Links: Gridlock Economy Conference
"Google Book Search in the Gridlock Economy" by Doug Lichtman, October 2, 2009, Quick Links: Gridlock Economy Conference
"Autonomy and Independence: The Normative Face of Transaction Costs" by Robert Merges, October 2, 2009, Quick Links: Gridlock Economy Conference
"On Being Misled by Transaction Cost Economics: Externalities, Commons, and Gridlocks" by Harold Demsetz, October 2, 2009, Quick Links: Gridlock Economy Conference
