Abstract :
The radio spectrum is a scarce resource, and society´s concerns in managing it are, in principle, no different than in managing other scarce resources. These basic concerns are (1) rationing, (2) conservation and (3) control of external effects, such as interference. There are two decision-making institutions which society can use in managing the spectrum: government and market. Spectrum management by government, the present approach, delegates decision-making to a small group of appointed officials and addresses the three basic issues through regulation and administrative processes, such as block allocation, technical standards and comparative hearings. Spectrum management by market would delegate decision making to a large number of individual rights holders; price would become the principal rationing force and would create incentives for voluntary conservation; and interference would be controlled by enforcement of property rights. The necessary and sufficient condition for the establishment of a market in spectrum is a system of transferable property rights. A simple system of property rights could be instituted by allowing for the free transfer of spectrum assignments as defined under existing licenses. A more flexible and efficient property right could be created by transforming existing frequency assignments, which are defined by restrictions on system inputs, to a set of output rights which stipulate permissible levels of radiation across frequency and geographical boundaries. Other steps which could be taken to improve the functioning of a spectrum market include reducing or eliminating block allocation distinction between services and permitting re-negotiation of rights packages among assignees.
