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

Thomas W. Hazlett, Sarah Oh
2012 Social Science Research Network  
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 yearslong border disputes. These disagreements have, in turn,
more » ... have, in turn, triggered calls to develop brighter lines and fuller engineering specifications of harmful interference. However, this emphasis on exact definitions is misguided. Spectrum use rights generate more robust market development when they feature technically fuzzy borders but are awarded in economically efficient bundles. The key ingredients are (a) exclusive, flexible rights; (b) frequency borders set via standardized edge emission limits; (c) large bundles of complementary rights that limit fragmentation; and (d) fluid secondary trading that allows 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 anticommons). Many episodes illustrate these lessons, 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, drive-or block-productive coordination of radio spectrum use.
doi:10.2139/ssrn.2135098 fatcat:kymlyh73uvdopjtdzml23re35y