The Political Spectrum, book review: How wireless deregulation gave us the iPhone

Fred (Alfred E) Kahn kept fretting about the size of his fake nose. It was the 1973 Cornell Savoyards production of Gilbert & Sullivan's Iolanthe, and he was playing the Lord Chancellor -- the little man who prances around and sings the 'Nightmare Song'. A few years later, he championed airline industry deregulation as part of the Carter administration.

In The Political Spectrum, Thomas Winslow Hazlett -- a professor at Clemson University and a frequent contributor to the libertarian magazine Reason -- reminds us that the job Kahn really wanted was chair of the Federal Communications Commission (FCC). If he'd gotten that job rather than one on the Civil Aeronautics Board, Hazlett says, we'd have cheaper and better wireless service -- but airfares on the "government-protected cartel of carriers" would be really expensive. One could retort: Dr David Dao. However.

This particular 'what-if' is a vignette in Hazlett's history of wireless spectrum regulation, which covers American telecommunications regulation from the Radio Act of 1912 to the present. Hazlett's basic argument is that government-regulated spectrum rights are slowly allocated (over six to 13 years) and endemically and wastefully underused.

The focus is mainly on the US, although Hazlett regards the story as having broader applicability. As he told an audience at the Adam Smith Institute in June: "Every country has its own story, but they tend to have patterns." One of these, and the one that perhaps annoys Hazlett the most, is 'technical reasons' -- the excuse that's always given for not changing how things are done.

A vast wasteland

Deregulation, Hazlett argues, gave us FM radio, HBO, wi-fi, and the iPhone. Regulation was meant to provide TV services in the public interest -- news, education, and so on. Instead, it gave us a TV landscape that FCC chair Newton N Minow, in a famous 1961 speech to broadcasters in Las Vegas, called a "vast wasteland". Anyone in Britain might say: 'But the BBC!' Hazlett mentions it three times: once as a censor, once as a public utility studied by the economist Ronald Coase, and once (as BBC America) as one of the diverse news and information sources enabled by deregulating cable and ending the "artificial scarcity" of TV channels.

If the book has a hero, it may be Coase. In 1960, he proposed an idea, now known as the Coase theorem, that regulating the airwaves to avoid interference was unnecessary, because as long as property rights in the frequencies were well-defined, the broadcaster to whom the rights were most valuable would pay competitors not to interfere. The market, in other words, would find the most efficient frequency allocation for itself.

Coase, then 50, was much derided for this idea at the time, but lived long enough to receive the Nobel Prize in economics in 1991 and enjoy two decades of vindication before he died in 2013 at the age of 102.

Obviously this is a book that anyone involved with spectrum policy would want as a reference. What's unexpected is that, whether or not you agree with Hazlett's conclusions, it's also reasonably entertaining to read -- no small feat with a subject as esoteric as this.

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