Next Generation Spectrum Regulation : Price-Guided Radio Policy

This article explains how market signals in the form of pricing information can be introduced into spectrum management in order to optimally guide not only assignment, but also determinations concerning type of use, emissions characteristics and exclusivity. It presents a mathematical model to illuminate how one possible implementation of such price-guided policy might function to make these determinations. As compared to conventional spectrum auctions, price-guided mechanisms for determining allocation and policy would arrive at an assignment of spectrum rights to the highest value users as well as ensure that the contours of those rights were the most efficient possible. In the mathematical model, participants in a hypothetical auction are free to express their demand for spectrum licences which are different on several dimensions such as permissible power output and bandwidth. The most actionable initial implementations of this new approach include determinations of maximum power limits, bandwidth, duration of rights and channelisation. Other early potential implementations include boundary interference standards and possibly congestion-based protocols. Price-guided policy holds substantial promise because it encourages allocative efficiency of spectrum due to the fact that bidders can acquire exactly the set of spectrum rights they need. Further, price-guided policy mitigates the allocation errors inherent in administrative determinations