New Phoenix Center study finds that government should transfer management of spectrum to private sector

Today, the Federal Government has assignments for about half of what is considered to be “beachfront” spectrum. However, most agree Government agencies, and the Government as a whole, use and manage spectrum resources inefficiently. In a new study entitled Market Mechanisms and the Efficient Use and Management of Scarce Spectrum Resources, the Phoenix Center examines the difficult yet key question of how policymakers can improve Federal Government use and management of scarce spectrum resources so as to possibly free up and repurpose some spectrum for commercial use.

After review, the Phoenix Center concludes that if the goal of spectrum use and management is economic efficiency, then policymakers should expand the private sector’s management of the nation’s scarce spectrum resources. To begin, the Phoenix Center evaluates whether or not several proposed “ghost market” solutions to the efficiency problem will be effective. Next, the Phoenix Center finds that even when the Federal Government is assumed to act rationally, Government management of spectrum resources is not desirable beyond some minimum level. “Efficiency in spectrum management is far more important than efficiency in spectrum use,” says study co-author and Phoenix Center Senior Fellow Professor Randy Beard. “The fact that the Pentagon pays $750 for a hammer does not mean a consumer can’t purchase one for $10 at the local hardware store. In contrast, if the Government is an inefficient manager of spectrum, then the consequences of its inefficiency are realized across the entire spectrum ecosystem.”