Richard Thaler wrote an extremely important piece in the New York Times this past weekend on wireless spectrum auctions. This may sound like the stuff of fantasy or boredom, take your pick, but selling off archaic TV spectrum could net the US government $100 billion:
Professor Hazlett estimates that selling off this spectrum could raise at least $100 billion for the government and, more important, create roughly $1 trillion worth of value to users of the resulting services. Those services would include ultrahigh-speed wireless Internet access (including access for schools, of course) much improved cellphone coverage and fewer ugly cell towers. And they would include other new things we can’t imagine any more than we could have imagined an iPhone just 10 years ago.
The last time we held an auction for 17 channels, it went for $20 billion (about the annual federal tax revenue from South Carolina), with the juiciest chunk going to Verizon for $5 billion. Few people know about it, but this is an extremely expensive high-stakes game for the private sector and a lucrative one for the federal government. Acquiring a new band of spectrum can open the door to new wireless services and faster data, allowing a company to leapfrog competitors. The last auction turned into a game of brinksmanship between the telecoms and Google. At the end of the day, Google had offered a minimum bid of $4.6 billion, and Verizon sued the FCC to block Google’s proposed “open access” terms for the sale. Google won the court case, and Verizon won the auction.
The pundits and political classes love jousting over their pet political causes, but there are far more important things in the air than Carly Fiorina’s demon sheep ad. The outcome and rules of wireless auctions may sound esoteric, but how they play out is vital for the technological progress and innovation that the internet age promises. Not only can more spectrum availability open the door to more and better internet access, but $100 billion is more than a drop in the bucket for the federal budget. This proposition is, as Thomas Friedman loves saying, not just win-win, but win-win-win-win. Upset that your iPhone keeps dropping calls, that you can’t use wifi on your laptop everywhere you go? Or more importantly, why do rural schools still have poor internet access, and why can’t doctors do surgery in high definition across the country via robot? Well, the answer lies in wireless auctions.
Photo Credit: Ian Miller on Flickr.