With the digital transition, spectrum management entered a new age. Full conversion to digital TV by 17 February 2009 (
Digital Transition and Public Safety Act of 2005) allows broadcasters to use spectrum more efficiently and save space for the possibility of sharing spectrum. Spectrum sharing is the subject of heated discussion. Exponential growth of commercial wireless calls for additional spectrum to accommodate more traffic. As a regulator, the FCC responded to these needs by making more spectrum available. A secondary market has been allowed to emerge and licensees are encouraged to lease use of the spectrum to third parties temporarily. Making licenses transferable is an important attempt by the FCC to create incentives for broadcasters to share unused spectrum. Another proposed solution to the spectrum scarcity problem is to enable communications systems to occupy spectrum that was previously allocated for radar use and to
cooperatively share spectrum. This approach has received increased attention recently with several research programs, including
DARPA projects, investigating several methods of cooperative radar-communications spectrum sharing. More alternatives are underway such as spectrum sharing in cellular networks. Spectrum scarcity has emerged as a primary problem encountered when trying to launch new wireless services. The effects of this scarcity are most noticeable in spectrum auctions where the operators often need to invest billions of dollars to secure access to specified bands in the available spectrum. In spite of this scarcity, recent spectrum utilization measurements have shown that the available spectrum opportunities are severely underutilized, i.e. left unused. This artificial "access limitation"-based scarcity is often considered to result from the static and rigid nature of the command and control governance regime. Interested parties have started to consider possible improvements in the governance regime by relaxing the constraints on spectrum access. Two prevailing models are the "spectrum commons" and the "spectrum property rights" approaches.
Spectrum commons theory Under US law, the spectrum is not considered to be the property of the private sector nor of the government except insofar as the term "government" is used to be synonymous with "the people". The original use of the term "the commons" was the practice by which the public at large had limited rights to use the commons; each person then had an interest in their own usage rights, but the commons themselves were not property, nor were the rights "property" since they could not be traded. The term "
tragedy of the commons" was popularized by
Garrett Hardin in a 1968 article which appeared in
Science. The tragedy of the commons illustrates the philosophy that destructive use of public reservations ("the commons") by private interests can result when the best strategy for individuals conflicts with the "common good". In such a scenario, it asserts that even though the contribution of each "bad actor" may be minute, when the results of these actions are combined the resource could be degraded to the point of uselessness. This concern has led to the regulation of the spectrum.
Spectrum property rights model The spectrum property rights model advocates that the spectrum resources should be treated like land, i.e. private ownership of spectrum portions should be permitted. The allocation of these portions should be implemented by means of market forces. The spectrum owners should be able to trade these portions in secondary markets. Alternatively, the spectrum owners would be able to use their bands in any way they want through any technology they prefer (service and technology neutrality). Although the spectrum property rights model advocates exclusive allocation of transmission rights, it is not the same as a licensed regime. The main difference is the service and technology neutrality advocated in the spectrum property rights approach, as opposed to strict requirements on services and communications technologies inherent in licensed governance regimes. The basic idea of spectrum property rights was first proposed by Leo Herzel in 1951, who was a law student at the time, preparing a critique of the US FCC policies in spectrum management.
Ronald Coase, a Nobel Prize–winning economist, championed the idea of auctioning off spectrum rights as a superior alternative to the status quo in 1959. Coase argued that, though initial distributions may affect matters, property rights in a frequency will lead to the most efficient usage thereof. When he first presented his vision to the FCC, he was asked whether he was making a joke. The supporters of the spectrum property rights model argue that such a management scheme would potentially promote innovation and more efficient use of spectrum resources, as the spectrum owners would potentially want to economize on their resources. The spectrum property rights model is often critiqued for potentially leading to artificial scarcity and the
hold-up problem. The hold-up problem refers to the difficulty in aggregation of the spectrum resources (which would be required for high bandwidth applications), as the individual spectrum owners could ask for very high compensation in return for their contribution. Since spectrum is a scarce finite good, there is a
perverse incentive to not use it at all. Participants and existing spectrum owners in the spectrum market can preemptively buy spectrum, then warehouse it to prevent existing or newcomer competitors from utilizing it. The existing spectrum owner's official plans for this warehoused spectrum would be save it for an unknown future use, and therefore not utilize it at all for the foreseeable future. In a partial or incomplete "spectrum as property" regulatory regime, incumbent and grandfathered owners who obtained spectrum under the old cause and merit policy, can obtain windfalls in selling the spectrum they obtained for no cost under the earlier regulatory regime. When a regulatory regime changes to the property model, the original merit and cause guidelines for incumbent and grandfathered users are often removed. No regulatory review mechanism exists to check if the merit guidelines are still being followed, and if not, to then revoke the spectrum license from the incumbent spectrum owner and reissue the spectrum to a new user under old merit guidelines, or sell the spectrum inline with the new "spectrum as property" policy. ==U.S. regulatory agencies==