The unholy alliance of NAB, News Corporation, and the Wall Street Journal’s Holman W. Jenkins, Jr.

[Commentary] On March 23, Holman Jenkins wrote in the Wall Street Journal: “… AT&T, whose network in New York is sagging from all its iPhone users, could walk over to any broadcaster in New York with the following proposition: You aren't getting much value from your broadcast spectrum because most of your viewers are on cable or satellite. Why not lease some of that spectrum to us for mobile broadband?…. Unfortunately, this would require the FCC to show some willingness effectively to deregulate broadcast license holders to do new things with their spectrum…. The only substantive objection is that taxpayers, who own the public airwaves, wouldn't get a fair shake if broadcast licensees were set free to redeploy their spectrum to mobile broadband. But this is misleading. Under existing law, taxpayers are already entitled to 5% of the revenues if broadcasters turn their spectrum to new uses. If that’s not enough, Congress could always raise it to 10% or 15%.”

Let’s apply Jenkins’s economic logic to a licensed hot dog vendor in Central Park who pays a 5% sales tax on all sales. Jenkins would grant the vendor ownership rights to the area covered by his vending license and call this “deregulation.” By granting the vendor ownership rights the vendor could do whatever he wanted with the land covered by his license. Jenkins describes this as a win-win deal. Since selling hot dogs is hardly the most valuable use of the land, the vendor would earn a lot more revenue by building a high rise condominium complex where his hot dog stand once stood. The public would win doubly: first, because there is a desperate shortage of housing in Manhattan, especially adjacent to Central Park, and second, because the government would get more revenue from the 5% sales tax on the much higher revenues generated from a condominium complex within Central Park. Leaving aside the question whether Central Park should remain a park (read “unlicensed spectrum” here), the problem with this economic reasoning is that the public could still get both the condominium complex and the 5% fee on the increased condominium sales even if the land was auctioned to the highest bidder. In short, giving the land to the licensed hot dog vendor is an awful deal for the public.