Setting FCC License Fees According to Frequency Spectrum Utilization: A Suggestion

Economists have argued in the past that the frequency spectrum should be sold or leased to the highest bidder. Because of technical and political problems with that suggestion, this paper proposes an alternative. As a first step, the Federal Communications Commission (FCC) should consider making license fees proportional to bandwidth times population in the area of coverage. This would create an incentive for users to transmit on smaller bandwidths and in low population areas or to switch from over-the-air transmission to transmission by wire. Some practical problems with the proposed solution are also discussed.