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.