What if the wireless spectrum were not allocated by the government?

OK, for some people it's obvious that Carly Foulkes is not the most important part of the AT&T/T-Mobile story.

In my previous post, you'll recall that I linked to a Google+ thread shared by Eoghann Irving. I reshared this item, and a discussion began on my own thread. Various people weighed in on the ramifications of a possible rejection of the AT&T acquisition, mentioning various scenarios (including a likely rejection of a Google attempt to take over T-Mobile, since Google now owns Motorola Mobility).

Kevin LeCureux then weighed in:

The worst thing for Telecom competition and improvement is the FCC.

To put LeCureux's comment in perspective, let me share a comment that I almost added to the thread, but didn't. My comment, which would have been addressed to Alex Scoble, would have gone something like this:

Alex, even the most doctrinaire libertarian would agree that this is good news for cell provider competition. Unlike oligopoly conditions in some other industries, the cell provider industry depends upon a scarce resource, regulated by the government - namely, the wireless spectrum. Since you can't create any more spectrum, it makes sense that the DOJ and FCC are stepping in here.

Like I said, I was thinking about writing something like this, but didn't. So when Kevin LeCureux stated that the FCC WAS the problem, I was naturally curious. So I asked:

+Kevin LeCureux, do you have a concern with the FCC's stance on the AT&T/T-Mobile merger, or are you talking about another FCC action?

As you can see from the thread, LeCureux had a problem with the idea of the FCC regulating the spectrum in the first place.

So much for my idea that hardly anyone would question the FCC's right to have jurisdiction in the AT&T/T-Mobile matter.

LeCureux promised to provide a link to a post in which this was discussed in more detail, and he did provide the link. While the main issue addressed in LeCureux's August post is rural wireless access, some of his points can be extrapolated to the allocation of all portions of the spectrum, including cellular phone access.

Let me touch on one part of the topic - if there isn't an FCC around to grant portions of the spectrum to individual companies, then how do we prevent companies from stepping on each other in the spectrum? LeCureux specifically addressed that issue:

What about interference? How would it be prevented? In the courts, just like any property rights. The company that is claiming to be interfered against could ask for an injunction against the allegedly interfering party until the matter gets a court date. The plaintiff would have to provide evidence of infringement and damages, just like any other property damage case. Each party would have to provide evidence that they were the first to use that part of the spectrum, for example by showing equipment purchases, electrical bills, independent field measurement surveys, customer invoices, and so forth.

A key part of the proposal outlined by LeCureux is homesteading - if you want a piece of the spectrum, you have to actually use it. If you stop using it, then someone else can step in and use it.

But wouldn't all of the spectrum always be in use, you may ask. Actually, Dave Burstein notes that much of the spectrum that has been allocated today is unused:

Across the vast bulk of the country, T has plenty of spectrum not used at all right now. In a very limited number of places, there's little. Across the country, the figure is probably 20-60%, but that's a wild guess. Upgrade inefficient uses and put the fallow spectrum to use, and T can easily handle five times the current demand and probably ten to twenty times without adding spectrum.

And even where the spectrum is used, it's not necessarily used efficiently. Burstein:

FCC sources tell me there's a massive efficiency improvement possible if more carriers shared spectrum but none were willing. AT&T Wireless & Cingular did a joint build in New York City that saved $100's of millions according to CFO Ron Dykes. AT&T and T-Mobile could do the same and get most of the spectrum advantage of the merger while staying independent.

And if the merger bid is rejected, that might be what AT&T and T-Mobile may have to do - although T-Mobile may not want to do so, since it would reduce the possibility of its being bought out by someone else.

Back to LeCureux's proposal. In a sense, it's a departure from the way things have been done in the past. If I buy up a whole bunch of land but don't use it, I have the perfect right to do so - well, at least until the government uses eminent domain to put a sports stadium or shopping center on my land.

And perhaps the "eminent domain" issue applies here, in a sense. Cellular provider X is sitting on a lot of spectrum but not doing anything with it. A case could be made that this harms the economy. And because of this, government needs to step in...and immediately get out of the way.

I encourage you to read LeCureux's entire proposal - there's a lot that I didn't get into here. Then I ask you to comment at LeCureux's post, or perhaps at this post or elsewhere - whether you're talking about rural wireless Internet or about the cellular phone spectrum, would a "homesteading" type of solution offer better service than the current spectrum auction system?