Federalist Society’s Engage Magazine: Hazlett Weighs in on Spectrum Crisis

The wireless industry has been one of the brightest spots in what has been a relatively stagnant post-recession economy. Yet, industry observers have noted that the diminishing availability of radio spectrum has hampered potential growth in the mobile sector. Moreover, the spectrum shortage is predicted to only worsen with increased demand for mobile broadband. The ability for a shortage in radio spectrum to constrain one of the economy’s leading sectors has brought increased attention to the crisis in recent months. In June, a Senate Commerce Committee hearing on the mobile industry focused on numerous issues associated with the spectrum shortage.

IEP’s scholars have not only attempted to raise awareness about the spectrum crisis, they have also recently explained the need for the federal government to move underused spectrum into spectrum auctions. One such area of underuse is within the federal government, as many federal agencies face no price pressures to economize on use. The need to “repurpose federal spectrum” has been discussed in a recent research paper and op-ed by the IEP’s Brent Skorup.

Dr. Thomas Hazlett, director of the IEP, likewise published an article in the Federalist Society’s Engage publication about alleviating the spectrum crisis. Hazlett argues in “Allocating Radio Spectrum for the Mobile Data Tsunami”, that due to price mechanisms the mobile sector will inherently be allowed to produce more products at cheaper prices if the sector is allowed greater access to one of its key inputs, spectrum. As Dr. Hazlett states in the introduction:

“Additional Bandwidth loosens constraints. Whatever level of service might be supplied when a minute of network access costs five cents can now be supplemented by a range of new outputs when that cost drops to say, three cents. A price shift signals the existence of more abundant capacity. Volumes increase, and the quality of service improves. More applications launch. Whole new business models become viable. Unforeseen innovation occurs.”

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