On the economic objectives of spectrum policy reforms

Reforms to spectrum management seek to improve the efficiency with which the radio spectrum is allocated and used through higher reliance on market forces (market pricing, property rights, trading). These reforms have helped specific spectrum-intensive industries achieve higher allocative efficiency through improved spectrum valuation and investor certainty about long-term spectrum holdings. However, the high degree of resource exclusivity conferred by property rights potentially crowds out access by innovative services, affecting dynamic efficiency. Reforms may also undermine technical efficiency if the owner makes scant use of the privatised spectrum. The paper takes stock of action research performed in the regulatory agency of a reforming country to present the economic trade-offs involved, and argue for a more piecemeal approach to reforms based on a flexible licensing system.