A renting system for radio spectrum?

Four methods of managing the radio spectrum are considered as possible solutions to the problem of a shortage of useful spectrum, which has arisen with the growth of demand due to rapid developments in electronics. The objectives of the solution to this problem and the choice between the methods are analysed by a six-step methodology defined by Sir John Hoskyns. The constraints arising from technical limitations, international obligations and social factors are included in the analysis. The first method is the current method in the UK; it was criticised in the Merriman Report in 1983. The second would be based on cost-benefit analyses, but the conceptual and economic bases are too indefinite for it to be applied. The other two invoke the disciplines of price mechanisms to induce the users to adopt technical and operational improvements to reduce their demands, either in a free market or under a continuing central authority charging rents for spectrum assignments, depending on the amount of spectrum demanded and the strength of competing demands. The renting method is less hampered by the technical and international constraints than a free market. Publication of the rents and the method of calculation are essential features.