March 14, 2003  ·  Lessig

There’s a new piece by Eli Noam posted (for free for 2 weeks) at the FT about spectrum policy. This follows the brilliant and much discussed piece by David Weinberger on Salon explaining David Reed’s views about “interference.”

Noam has been in the middle of the debate between the spectrum-as-property types and the spectrum-as-commons types for a long time. As his piece concludes, “spectrum should be free to access but not free of charge.” The reason is an assumption that is at the core of his and the spectrum-as-property school of thought: “Eventually, any resource whose utili[z]ation is of value, yet whose use is without a charge, will be over-utili[z]ed.”

The more I hear these property and quasi-property types talk, the more I believe that this is the core assumption that needs to be attacked. There are two possible lines of attack, both, in my view, true, but only one which is useful.

The true and not useful line argues that new spectrum technologies will eliminate scarcity. Maybe, but that argument will not convince anyone but those closest to the technology (if them). Instead, the better line, I believe, is to grant the assumption that “eventually” this resource could be “over-utilized,” but then ask: when?

For what is most striking about this debate is that at the same time the property types argue that property is necessary, they are also arguing that at present there is no spectrum scarcity. (More accurately, they argue that the actual amount of spectrum that is used is tiny, and that any scarcity is solely a function of stupid allocation decisions by the government). But if there is no scarcity, then why we should build an immensely complicated system for pricing and charging for spectrum? Especially why, when we are in a time when the resource, if set free in a commons, could be “shared” through technology without any constraint. Perhaps someday there will be a need to propertize some spectrum. But just because that’s true someday does not mean it is true today.

Two examples to make the point:

(1) Oxygen in the atmosphere is a resource “whose utilization is of value” and at the moment, humans get to use it “without a charge.” Yet even though it may “eventually” be “over-utilized,” no one would argue that we should auction off the oxygen rights now, or charge user fees for breathing just now, simply because “eventually” the use of oxygen may well become “over-utilized.”

(2) The Internet when born was a resource “whose utilization is of value” and yet which did not include protocols that required that people using it be “charged.” Instead, the network simple facilitated coordination without worrying about a price. Economists criticized that from the start, but it would have been a terrible mistake for designers of the internet to listen to the economists and wait for a functioning pricing system before they deployed the network. Instead, the better solution was to begin with the simpler technology (tcp/ip) and layer on more complicated protocols (like a pricing protocol) as they become necessary.

Here again, we should be following the meta-lesson of the end-to-end network: simple network, smart applications. Open the spectrum to free use with minimal protocol regulation, and let’s see whether and when we need to add long-distance charges to the air.

For other resources, check out the web page on our Spectrum Conference, which will have the video from the conference soon, but does have a great paper by Yochai Benkler as well as a great set of links about the spectrum debate.

  • Kevin Werbach

    You’ve hit on a key issue. Property and commons advocates differ in their instinctive beliefs about scarcity in practice. However, I don’t think your second line of argument will necessarily be more effective than the first.

    Those on the property side say that the moment we have a commons, someone will blast constant max-power signals that prevent everyone else from communicating. The response to that is either that we’ll have etiquettes (which they attack as bad old FCC regulation) or there will be enough room for others to route around the damage (which puts us back in the first argument about technology and capacity).

    Yochai’s paper is indeed terrific, in that it parries the pro-property argument about scarcity within the idiom of economics. But it doesn’t speak to the issue of what will happen in practice.

  • Doug Lichtman

    The oxygen analogy also has some problems, what with problems like air pollution (a form of over-use) and the difficulties that have come as we have tried to develop regulatory responses.

    And note that we do charge for the use of oxygen in some settings; out there in California, for instance, firms can buy and sell “pollution credits” that allow their holders to put certain amounts of harmful material into the air.

    These issues lead me to think that the pricing concerns raised by Noam, and the practical strategic concerns raised by Werbach, deserve further, serious attention.

  • Lessig

    Some minimal regulation, maybe jus of power, will be required, no doubt. But again, I don’t think the fact that we exercise some control (e.g., oxygen) means that we should exercise complete control. The question is what the default should be.

  • Francis Norton

    Not only is the oxygen analogy less straightforward than it appears, so is the colour one. The painter Yves Klein apparently patented “International Klein Blue” in 1960, which, if he was truly given a patent on the colour rather than, say, a paint which expressed that colour, would certainly be an example of govenment licensing part of the colour spectrum.

    But I agree entirely with the main thrust of your article. Economists’ intuitions sometimes need to be examined. When I first explained the then new-fangled internet to one merchant banker he was really quite shocked that that it should cost no more to access a computer on the other side of the world than on the other side of town. It’s true that such inefficient pricing encourages people to squander a resource, but if the resource gets cheaper the more people squander it then inefficient pricing is a good thing, and will remain so as long as the economies of scale continue to accumulate.

    The success of Wi-Fi suggests that we could be at a similar stage where an explosion of usage could lead to an explosion of supply – unless tha demand is strangled at birth by some clunky licensing mechanism whose cost-per-byte is exceeded only by its cost of implementation and the perhaps incalculable cost in lost opportunies.