The Lie Of Proprietary Spectrum
The simplest answer to the nonsense of proprietary spectrum advocates is pretty simple.
The bidding was rigged.
The golden age for spectrum auctions, the 1990s, were marked by outright fraud, some of it perpetrated by investor (and frequent TV guest) Mario Gabelli. A charming fellow. Knows how to fill out a suit. Even has executive-style hair.
And a fraud. Gabelli set up a set of phony "minority" companies which were able to get frequencies at discount, because they were run by minorities, then turned around and sold them.
My point is not to pick on Mario Gabelli, or anyone else. (The courts will deal with the truth of the allegations, whatever they are.) The point is this kind of market manipulation is natural to the auction process. As is hoarding by those with the most frequency. All the incentives in the proprietary market are on the side of high prices, central control, lack of innovation, and a market which is as small as possible.
On the other hand, unlicensed frequencies encourage innovation. They set ground rules and let the equipment makers go to town. Hardware, software, and services quickly emerge that represent economic growth.
This is incontrovertible. There is no effective counterargument. When anyone claims to have one, follow the money.
Some of it is leading to people like Mario Gabelli.
What preceded spectrum auctions was land grabs strictly restricted to the politically connected. The raw rumor has it that the only way that Lo Jack got the proprietary frequencies necessary for their operation was to surreptitially place interfering transmitters in major metropolitan areas. Two years later when they came up for a hearing at the FCC the law enforcement agency that was hoarding the spectrum claimed the bands were indispensibly being utilized. The fact that they hadn't even bothered to listen in any geographical area killed their argument and got Lo Jack the frequencies.
However, the fact is that ALL innovation and usefulness is going on in "unlicensed" bands. Those who have paid, stolen or been rewarded "thin air" have no incentive to go beyond AM or FM modulation. Yeah, make it all free -- The FCC already has rules that say who takes precedence in a band.
Posted by: Tom Mariner | March 24, 2006 at 08:43 AM
>The raw rumor has it that the only way that Lo Jack got the proprietary frequencies necessary for their operation was to surreptitially place interfering transmitters in major metropolitan areas.
Not really.
LoJack's operations were entirely licensed by the FCC both before and after they got the frequency allocated to stolen vehicle recovery. That is, during the development stage as well as the operational stage.
>Two years later when they came up for a hearing at the FCC the law enforcement agency that was hoarding the spectrum claimed the bands were indispensibly being utilized.
It was a single frequency (173.075 MHz). The FBI was using it for body wires, and did protest vociferously. But thanks to an expertly run campaign by LoJack, which included incumbent experimental operations and Congressional pressure on regulators -- a formula others have used to achieve much the same thing -- the FBI had to settle for sharing the frequency with LoJack as a legal matter.
Posted by: jackjett | March 30, 2006 at 12:46 PM