The federal government determines how the radio spectrum is used and who can use it. Turns out, renting out the spectrum to private companies is a billion-dollar business. The spectrum business goes to the highest bidder. But what problems does that pose in the long run? Google engineer Andrew Clegg discusses this and more with Dr. Robert J. Marks and Austin Egbert in the latest episode of the Mind Matters podcast. Here’s Clegg speaking to some of these issues from the transcript:

In the decades past, there were typically enough frequencies to go around for everybody. And so pretty much the first person who applied for a particular frequency or band or whatever, would be given that frequency. And that worked for quite a while until maybe starting 40, 50 years ago. It started to become harder to find frequencies, particularly for broadcast stations, for dispatch services and other systems. And so the Federal Communications Commission (FCC) went to a process of basically comparing the different applications. People have pejoratively called this a beauty contest, but the FCC would look at the applications, look at what the applicants were planning to use the frequency for, it would make a determination as to which one served the public interest better based on a variety of factors or whatever, and then give that entity the license for that frequency or that band.

But then some economists started looking into this, and they realized that you really should find a way to give spectrum to those who value it most. And the argument would be that those who value it most are, from an economic standpoint, the most likely to put the frequency to the best and highest use. And so the economists recommended to the FCC that in cases of competing applications for frequency band or frequency, that the FCC should go to an auction process where the entities who want that band or that frequency have to bid against each other, and whoever comes up with the highest bid ends up winning that band or that frequency.

-Andrew Clegg, When the Government Controls the Spectrum | Mind Matters

Listen to the rest of the episode for more or download it for free.