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Strategies for a discontinuous future.












Thursday, August 26, 2004
 


Dave (aka dhd), below, agrees with Shirky that spectrum should be deregulated, and points to a future of smart devices that will intelligently juggle spectrum.

I disagree - I think this is a technically possible future, but an economically improbable one.

First, let's start by noting that, in the real world, spectrum interference is currently an issue (as my panoply of interfering machines tell me). So spectrum is, as far as I can naively tell, scarce - perhaps not as scarce as the FCC says it is, but certainly, still scarce.

So, second, I can't imagine a scenario where firms incentives' are to build machines that juggle spectrum nicely with other machines - I can only imagine the opposite; the incentive to build machines that try and co-opt as much spectrum as possible. That's because in a Shirky world, you're always and everywhere better off owning more spectrum than not.

So simply deregulating spectrum would have all kinds of costly consequences - spectrum squatting, spectrum litigation, etc, etc. Basically, it would encourage a whole new range of spectrum rent-seeking strategies aimed at eating as much spectrum as possible as soon as possible. Think about the current patent thicket strategies that non-innovators like IBM are resorting to right now in order to stake their claims in idea space.

If we really want to think about this economically, we should seek to balance the costs of non-productive uses of spectrum against the benefits of productive uses of spectrum. That is, to make it expensive to simply hold spectrum. The most obvious solution is to trade spectrum credits which have some kind of time value attached to them, just like bandwidth is (was) traded.

So, here's an absolute monster of a business model - to be to spectrum trading what plays like Arbinet are to bandwidth trading. If you have the resources, the time, and the balls - it would be a hell of a fun ride.

I copyright this and if you, your heirs, or your friendly local ibank tries to put it into action, you owe me 175% of the $$.

-- umair // 11:36 PM //


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