Brave New World Has A Price Tag
They all laughed at economist Milton Friedman when he suggested a generation ago that the federal government auction off broadcast licenses, instead of giving them away to political favorites.
The last laugh is his; last week, in the greatest auction in history, bidders for wireless places on a tiny fragment of the broadband spectrum committed nearly $8 billion to the U.S. Treasury.
And that’s only the beginning of the taxpayers’ bonanza in the sale of our valuable thin air.
Remember all the talk, eight years ago, of highdefinition television, the Japanese invention that was supposed to force us all to replace our 200 million TV sets? U.S. manufacturers, with antitrusters’ blessing, formed a “Grand Alliance” to match the Japanese advance.
Along came an unexpected scientific breakthrough. We leapfrogged the analog competition into the brave new digital world. This not only produces a knock-your-socks-off picture but expands each TV channel into five or six wireless channels for video, audio, computer data transmission, telephones and every form of communication short of mental telepathy.
Broadcasters smacked their lips at the bonanza. “Advanced television is not just about pretty pictures anymore,” FCC chairman Reed Hundt told Edmund Andrews of The New York Times, one of the few reporters on top of this story. “It’s about the digitization of television and a huge range of new services.”
It’s as if one old oil well gave birth to six new gushers. Broadcasting lobbyists have descended on Congress and the FCC to insure “flexibility” - that is, to exploit exclusively all the new technology, and to charge viewers for the “ancillary and supplementary” services.
Even if accompanied by payment of rent to the government, the exclusive arrangement sought by broadcasters would be an outrageous taxpayer ripoff.
What is the digitized, divisible channel worth? Senate Commerce Committee chairman Larry Pressler gave a hint in an op-ed piece last week, suggesting that non-commercial licensees had a huge hidden asset: “Public broadcasting stations could rent, sell or make use of the additional channels for other telecommunications and information services.”
Based only on current uses, which are primitive, the market value of the VHF, UHF, cellular, broadband and narrowband spectrum ranges around $120 billion.
But in the near future, your television set will combine with your computers and telephone and fax machine into a single unit you can hang on the wall or fold up in your pocket. That’s soon - possibly in the next presidential term.
I’ve seen not-for-attribution estimates that the market value of the digitized spectrum in that onrushing era will be - hold your breath - a halftrillion dollars, give or take a hundred billion.
Before rushing into any giveaway, or any longterm exclusive rentaway, we need extended, wideopen, thoroughly debated hearings to make certain of three outcomes:
First, we want a guarantee of spectrum competition. The criterion to determine competition must be scrupulously economic, not jiggered by the government to introduce sexual or racial or ethnic or ideological favoritism. An appeals court yesterday stayed the FCC from holding auctions that favored minority fronts.
Next, we want a holdback of certain rights. For example, we can solve the campaign finance dilemma just-like-that by putting a right-of-way in the deed setting aside air time, on-line time and direct E-mail advertising for candidates, which could be used or traded or sold by them in election campaigns.
Finally, we want top dollar for our public property. That means a series of Friedman-style auctions. After the purchases, sophisticated risktakers and their banking backers can enhance the value of their property at no cost to the taxpayer and with great benefit to the consumer.
Where should the spectrum-sale money go? Toward reduction of the crushing national debt. By recognizing our hidden asset of the spectrum, Americans can ride the wave of the future.
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