Should the federal government auction the best parts of the radio spectrum that are currently leased at nominal cost to the major networks?
The idea was floated over the weekend, and it immediately struck Elon Musk as a great idea. I’m in the same boat: This seems very reasonable given changed technology and the needs of the future.
The radio spectrum is the part of the electromagnetic spectrum that pertains to broadcasting. It includes AM and FM radio bands, television broadcasts, wireless communications (such as Wi-Fi, Bluetooth, cellular networks), satellite communications, and radar. The major networks on TV occupy beachfront property.
“The major broadcast networks (ABC, CBS, NBC) operate on free licenses of public spectrum in exchange for requirements to serve the public interest. They no longer do, and this is an obsolete model anyway. The spectrum should be auctioned off, with the proceeds used to pay down the national debt. Of course, the networks can bid on the spectrum, and they will win if broadcast networks are still the most highly valued use. What’s more likely to happen is that valuable spectrum will be reapportioned to the next generation of wireless applications, unleashing many more interesting options for consumers and businesses. The networks can continue to operate on cable, like hundreds of other redundant channels.”
Back when television first came about, the best and strongest signals went to three networks, the ones with which I grew up as a boy. They are ABC, NBC, and CBS. The owners of the leases are local, but through complicated contract rights, the major networks, now including Fox, are in control. This is the beachfront property on the spectrum—between 30 MHz to 300 MHz, channels 3 to 13—and the most powerful, called very high frequency or VHF.
The networks have to apply for the licenses and maintain them, but this means spending a pittance as compared with what they are actually worth. This deal was made in the early days as a public service, and the networks had to agree to serve the public with programming and news. All these years later, the agreements still stand, and they have virtual monopolies. All the rest of the channels, including CNN and MSNBC and the rest, operate on cable.
It very well could be time for a change. There are a number of reasons why, but the technological ones dominate. There are better uses for this property, most likely, but the only way to find out is through an open auction.
Very likely, they are worth billions, and it makes sense that the highest bid should win. Maybe control remains the same, or, as Sacks suggests, the space will go to other companies running new-generation wireless services such as streaming. In any case, the revenue would go directly to the federal government and should be allocated toward paying off the debt and lowering taxes.
Another factor plays into this: political bias based on a narrowly elite appeal. It has become unbearably obvious that the major networks are skewing coverage in ways that favor some over others, in all in service of a tiny class of viewers.
It’s one thing to have a point of view but another to manipulate content in ways that deceive viewers. That is precisely what happened with the “60 Minutes” interview with the vice president: She gave one answer to a question on the Middle East, but they aired a different answer. This struck many as a bridge too far.
How can they get away with this? Well, they have free speech, and that’s good and great. It must be protected, even for fiction that masquerades as news. What is not right are the conditions under which these main networks control the most valuable property on the airwaves. It’s a legacy problem that dates back three-quarters of a century. It needs to be dealt with now.
Consider all the ways in which this problem mirrors the economic issues of the late 1980s that confronted former Soviet client status. They had long experimented with state ownership and called it socialism. With the collapse of regime control, they confronted a problem of how to divvy up ownership rights in a post-socialist world.
Hardly anyone had anticipated this problem, so reformers had to act fast and think out of the box. They had varying levels of success, but generally all of these countries depended on public auctions of factories, buildings, services, and more. They went to private owners. Sometimes, the process was fair, and other times, it created a new class of oligarchs. In any case, such a transition was made necessary by the demand for dramatic economic reform.
It was called de-socialization at the time, and was generally successful as a method of cobbling together vibrant economic sectors out of a failing and reactionary system of state ownership. The reformers split up the companies into shares and opened up auctions, granting private control to the winners. That was only the first round because the new owners themselves were now in a position to sell again in public markets that became the first stock markets many of these countries had ever experienced.
At the time, I did indeed wonder if this process would ever come to the United States as a possible solution to the post office, public schools, trains, and transit systems, and more. The reform could be called privatization, but remember that there are two kinds: real ownership or mere contracting out. The option of genuine ownership is the only non-corrupt and workable process, and this is precisely what the United States needs in a range of areas subject to state ownership.
It had not occurred to me that such a solution needed to be applied to the television networks. That’s because it is not generally known how it is that such a tiny number of legacy channels ended up with such dominant control over the public mind. I had long assumed that this was just legacy network effects: People stick with what they know. What I had not known is that this reflects monopolistic privilege.
It seems like a reasonable path forward to auction off the very high frequency bands of the spectrum rather than give them away. Of course, the networks will protest that this amounts to a kind of expropriation. But as the old-time Marxists used to say, it is merely expropriating the expropriators. They have enjoyed 75 years of unearned privilege, and it is time that we move from that cartelized system to one of genuine competition.
These are times of genuine paradigm shift when the public is ready for new ideas, particularly as it affects media structure and content. The future is already here, but our systems are stuck in the past. It’s time to rethink everything in ways that are more consistent with competitive markets and freedom itself.
