It's rare enough that we've an unambiguously good piece of public policy to celebrate so when we see one it's best that we do so. It might be wise for me to slightly modify that with the caveat that I very rarely see what I regard as unambiguously good public policy so I'll celebrate it when I do. And that good policy is the current AWS-3 auction of cellphone (mobile phone to us Brits) spectrum.
My colleagues over at The Register have the details of what's happening. I wanty to comment solely on the public policy part of what's happening:
US watchdog the
FCC has raised at least US$36bn from telcos by auctioning off a load of radio frequencies for improving wireless broadband.That's more than three times the $10.1bn it expected – remember that next time your cellphone bill goes up.
While Uncle Sam banks the massive windfall, cell networks can use their newly purchased spectrum space to extend 3G and 4G/LTE coverage in cities.
Frequencies in three bands of unused government spectrum space are up for grabs in the FCC's Auction 97
That this was unused spectrum that is now going to be coming into use is a good thing. In fact, it's the very definition of wealth creation. Whenever we move an asset from a low valued (in this case, zero) use to a higher valued one (in this case $36 billion and counting) then that is, by definition, an increase ($36 billion and counting here) in the general wealth of humanity.
That it was government owned isn't really all that relevant: except perhaps for whatever snide remarks we might want to make about government never actually knowing what to do with the vast amounts of our wealth that it sits upon.
We can go a little deeper into economic theory as well. Spectrum is a natural resource and it's a standard thought that such resources should be taxed until the very pips squeak. Sure, we want companies (or whoever) to make a profit by exploiting those resources: but we don't in fact want to hand them a profit by just handing them the resource itself. This is all very closely tied into the idea of Ricardian Rents and so on. The resource itself should be sold for the maximum market price and the government should be the recipient of that cash. They can use it to fund government services for the rest of us and thereby reduce the taxes that we have to pay (yes, I know, hollow laughter, but that's the theory).
So far so good: but what about that idea ("next time your cellphone bill goes up") that consumers will have to pay the price being paid for this spectrum? Well, in a competitive market this shouldn't happen. Because we generally believe that capitalist companies are capitalist. They're already charging us the maximum amount they possibly can on our cellphone plans. If they've got to pay more for their spectrum well, that's just going to have to come from the investors: the consumers are already being charged the maximum they will pay. So, this is really a transfer from investors in cell phone companies to the taxpayer: lucky us taxpayers, eh?
And this is how all such resources should be dealt with too. Oil and coal, any other mineral resources, all that Federal land out West, spectrum, any natural resource that just sits there should be sold at the highest possible market price. That will be a transfer from the investors in it to us taxpayers.
So perhaps one cheer for this quite excellent, if too rare, piece of public policy. Now all we've got to do is get it extended to all those other natural resources that currently languish un- or under-used and also apply it to those currently being given away for free.
