Notes for the Spectrum Geek

Tom Hazlett had an interesting article in yesterday's Financial Times arguing that the FCC's policy of auctioning licenses, while reasonably equitable and efficient in some contexts, is at other times unfair to innovators. He's specifically upset at the treatment of Northpoint Technology, which has developed a system dubbed the Multi-Channel Video Distribution and Data Service:

…instead of allowing the innovator to launch the service and compete with established players, the FCC would hold an auction. Northpoint, like any other company, was free to bid, buying back its business plan. It had invested heavily to push this opportunity through the regulatory labyrinth -- over $10 million in regulatory costs by 2001 -- but gained no preference over companies that had done nothing, or energetically opposed it. This outcome socialises gains and privatises costs…

In other news, some of the people who started the push to legalize low-power FM broadcasting are now setting their sights on low-power AM.

Comments

[Russ]

Here's a question...

What's the "laissez-faire" solution to broadcast spectrum allocation? Since each frequency is a non-excludable, rivalrous resource, the only way for a broadcaster to protect their access to that resource is by cranking up the wattage to drown out competitors.

The "shout-louder" approach can't be considered an efficient market solution. Do we need an involuntary regulatory body to police the airwaves? What other alternatives are there?

[Warren]

Low-power AM???
Speaking as an electrical engineer, that's just stupid. With only 100 watts you might be able to cover a sub-division or collage campus... to everyone with an outdoor antenna, on a rain-free night, but that's about it. OK it's not completely without merit, so maybe stupid is a bit strong. I'm just amazed that anyone's actually fighting for something so limited.

As for Northpoint Technology, it looks like another example that highlights the, inherently flawed nature of, and need to altogether do away with, the FCC. What's needed is a system of deed and title to the spectrum so we can treat it like any other property.

[Russ D]

From the article:

"He is proposing a service in the AM band between 1610 and 1700 kHz, an area he and his fellow contributors believe would support a secondary service with a minimum of interference to existing and proposed full-power stations."

I dunno... Clear Channel just turned on a signal at 1690 in Chicago, one of the few good things they've done. I don't think they'll be fine with "a minimum of interference".

[amr]

my college tried starting a low power AM station. Located on the 10th floor of a building (with its antenna there), you could hear it pretty well on the 7th.

[Shultz]

Scale is also a free-market consideration.

I don't know Northpoint's story, but trying to take on competitors with huge scale and deep pockets is just one strategy that an entreprenuer can use; another strategy is to merge with someone that has deeper pockets than you.

If Northpoint's technology really is that good; somebody out there will be willing to pay for it...even if Northpoint is in bankruptcy because they didn't partner.

I don't see any need to slap the invisible hand on the wrist here.

P.S. Anyone else ever read Allen Greenspan's chapter in "Capitalism: the Unknown Ideal" in which he argues that the FCC ain't got no reason to live?

[Jesse Walker]

Russ: The traditional laissez-faire approach is to regard the right to broadcast at a particular frequency at a particular time and place as property, and to treat significant interference with those use rights as a tort. That still leaves a number of questions open, so there's a substantial literature consisting of economists arguing about the details; still, that's your answer in a nutshell. (There's also some relatively new technologies that have the potential to render a lot of interference issues moot, but that's a whole new topic that I don't have the energy to get into on a Friday afternoon.)

Warren: I agree that it's a strange proposal, especially given that perfectly ordinary AM licenses are getting more and more affordable. Still, if it helps more people get on the air, I figure it's all to the good.

AMR: That was probably a carrier current station. Those are notorious for their tiny range, and are mostly used by college broadcasting departments to train their students someplace where no one will hear them. Though occasionally a show will acquire a cult following in the dorms.

[Warren]

Isn't that how Weird Al got his start?

[My tinfoil hat is an antenna]

Yes, Jesse... but who assigns that property, keeps squatters off of it, etc?

I'm sure the same crypto-anarchists who think there should be no police force at all would approve of each private broadcaster having its own private police force to punish infringers... but the rest of us would consider that a mafia.

Strawmen all around, I know.

[JDM]

Soon this will all be solved by the miracle of wireless IP.

[Jesse Walker]

but who assigns that property

That's one of the issues the economists debate. The traditional (but not only) libertarian answer is that users should "homestead" previously unused portions of the spectrum, but that still leaves certain questions open, such as how big a footprint it's OK for a station to homestead. And then the debating starts again...

[Russ]

Spectrum allocation is one of the questions on which I have yet to arrive at a satisfatory anwswer. It's nice to hear that I'm in good company.

[ed]

Russ mentions "allocation." Tinfoil Hat adds "assigns." Both words presume that the state owns the airwaves, and dispenses this "property" according to its own whims and fancies. Shultz, you're right in principle, but wrong in attribution. The article you may be thinking of is by Ayn Rand: "The Property Status of the Airwaves", taken from The Objectivist Newsletter, April, 1964, and included in the collection of essays: "Capitalism - The Unknown Ideal." (1967)

If any of you are interested in a crystal-clear analysis of the subject, check it out.

[Bo]

Also read the rest of Hazlett's stuff, available from the Financial Times archives. I cited his work and Jesse Walker's (Rebels on the Air) quite a bit for my recent paper for English class.

[James Merritt]

Warren, I don't know if Weird Al was ever into carrier-current dorm radio. I do know he produced some early work (the stuff Demento first popularized) by improvising a reverb studio out of the the men's room adjacent to the main studios of KCPR, Cal Poly Radio in San Luis Obispo.

For the record, KCPR was an actual FM broadcast outlet, pumping out quite a bit stronger signal than the run-of-the-mill 10W college FM station of the day. I think they're doing over 1000 watts now, after a power increase in the late 1980s. For those who wanted freedom to pursue Al-style creativity (or not-Al-style creativity for that matter!), KCPR was the place to be in the early MTV era. It was definitely a party.

I arrived at KCPR only a couple years after Al left for greener pastures, and had occasion to use that same bathroom as a makeshift studio for some of my own (sadly less famous, but no less outrageous) radio productions. It also made a great men's room, too.

[Ron Hardin]

There's already low power AM. TIS (Traveler Information Stations) and HIS (Highway Information Stations), which are used by political bureaucrats to claim that they need a bigger budget or more more political clout by broadcasting inane messages. Apparently this bypasses the FCC. There's even a hobby grown up around it, trying to hear distant TIS stations; but then there's a hobby for LW marker beacons too, which only broadcast slow morse code identifiers.

A garbage dump in Central Ohio on 1630, 30 miles from me, now wipes out reception of Imus in the Morning with environmental messages like not littering and who to dial to report illegal cigarette butt tossing.

[Shultz]

Thanks for the correction Ed.

[My tinfoil hat is staticky]

Obviously some airwaves need to be reserved for certain things. It certainly won't do anybody any good if some assclown starts making commercial broadcasts on the same frequency an air traffic controller at O'Hare uses. Remember, when talking about the broadcast spectrum, you're not only talking about AM/FM commercial radio, but also airline (both for communication and navigation), railroad, maritime, amateur, and citizen's band uses.

Now, you can argue that the airwave rights can be homesteaded, auctioned off, etc; but who validates the claim or operates the auction? When there's a dispute over a particular frequency, who SHOULD be in charge of settling it?

[Douglas Fletcher]

I don't think we need to worry too much about broadcasters cranking up the power too high. As any fan of the old 'Outer Limits' show knows, if you crank the power too high you'll get a dissident space alien from 300 million light years away transported to your radio station. And that's nothing but trouble.