Tragedy of the anticommons occurs when property rules fail to enable efficient social coordination. In radio spectrum, rights issued to airwave users have traditionally been severely truncated, leaving gains from trade unexploited. The social losses that Ronald Coase asserted, appealing to basic theories of resource allocation, are now revealed via intense under-utilization of the TV Band.
Following the end of analog TV transmissions in June 2009, vast spectrum continues to be allocated to terrestrial broadcasting despite the fact that broadcast video delivery could inexpensively shift to cable and satellite. Making the TV Band (forty-nine channels spanning 294 MHz) available for new services is worth $107 billion to service providers (at 2008 auction prices) and at least ten times that in consumer welfare.
Instead, U.S. regulators treat TV airwaves as a “junk band.” Analogizing to Wi-Fi radios accessing frequencies not allocated to exclusive licenses, the FCC seeks to permit government-approved devices to transmit in unoccupied TV Band “white spaces.” No radios have been approved, however, in eight years of rule makings, reflecting regulatory difficulty in weighing economic trade-offs.
Common interest tragedy, already visible in the long under-utilized TV Band, predictably locks in once white space devices are approved. By preempting exclusive spectrum rights, the opportunity for market reallocation of frequencies is lost. Specifically, fragmented and overlapping property rights cannot support investments to efficiently mitigate broadcast TV pollution, cleaning up the “junk band.” Alternatively, if rights to use white spaces were assigned via exclusive overlay licenses, spectrum owners could contract with cable and satellite operators for TV program distribution, releasing valuable airwaves for new services. Gains from reducing airwave pollution would induce cooperation, replacing political gridlock.