WiMax Spectrum Fight With School Districts Highlights Market Distorting Effects Of Gov’t Monopolies

We’ve tried to point out how government granted monopolies can distort a market, whether it’s in the intellectual property space or within wireless spectrum. For example, take a look at what’s happening in the 2.5 gigahertz spectrum space. A bunch of 2.5 gigahertz spectrum was handed over to schools and non-profits, supposedly for use in education. The rules on those licenses were that it couldn’t be owned by for-profit businesses… but could be licensed to them. Of course, for many schools, the idea that they owned any spectrum rights at all was a complete mystery. Many valued the spectrum at absolutely nothing (which was its real value to them) and let the licenses expire. However, with Sprint’s latest focus on WiMax, it could make use of more 2.5 GHz spectrum. It already owns a bunch, but not enough. So, of course, now that this spectrum is suddenly valuable to Sprint, schools are scrambling to renew expired licenses to the spectrum they valued at absolutely nothing, in order to turn around and license it to Sprint for quite a bit of money. In other words, you have a natural resource given to schools absolutely free. They didn’t value it and didn’t have any use for it at all. Then, a company comes along that actually can do something useful with that spectrum, and the schools are suddenly setting roadblocks in their way. That doesn’t seem like a particularly useful thing — but thanks to another set of gov’t granted monopolies, combined with a complete lack of a comprehensive spectrum allocation policy from the FCC, it’s what we’re left with.