Free the Airwaves; or, Pump Up the Volume, SDMB

Great Debates
1

Note to self: good job on Christian Slater references :smiley:

Here there is something resembling a debate about whether or not the free market is inherently good. Many of you think you know where I stand on that, so I can let that carry on all on its own.

However, the issue of radio came up. Some of my detractors considered that radio is and should be a public good. One of my econ books defines public goods thusly: “Public goods are publicly financed and publicly consumed. Nonpayers cannot be excluded from using public goods.” Sounds reasonable enough. Three requirements are to be met, by this definition, for a “thing” to be considered a public good. Radio fails in this position by not being publicly payed for.

My other econ book defines it so (differently, I might add, than the one above but similar to the one given in the other thread): “Public goods are indivisible, involving such large units that they cannot be sold to individual buyers. More importantly, the exclusion principle does not apply; that is, there is no effective way of excluding individuals from the benefits of public goods once those goods come into existence.”[sup]*[/sup] Radio also fails to fit into this definition. True, it is difficult to sell (because “cable” style radio never took off (yet?)) and apply the exclusion principle, but perhaps more importantly radio is very divisble. I think the FCC stands testament to that.

So my question is: why are people so keen on it being considered a public good? Why should it be a public good? It seems to me that the private property definition of radio fits much better than a public watershed analysis. But I am willing to dedicate a thread to defending that opinion, and allow others to present theirs.

*[sub][sup]emphasis original[/sup][/sub]

2

Radio is not all that old. When it first came out, the world was filled with utipian schemes to use it towards public good. If you think about it, mass communication has a huge untapped potential to create educated citizens and improve the world, not just hawk us shampoo between episodes of Friends. But, public interests and private interests have some trouble co-existing here in America, and private interests won out. Note that this is not the case in all countries. Broadcast systems around the work vary greatly from ours and serve very different purposes.

Also, the airwaves are kind of primal. I mean, they are all around us. They are everywhere. It seems a little strange that you can sell the right to make certain kind of waves permeate the world. Rather than admit that the very air we breathe can be bought and sold like cattle, we tried to give them to the public to harnass and use for the good of all.

So our classification of radio as public is a legacy from our optemistic past. We believed that we could take something so new and revolutionary and use it for public good.

3

Hmm. Would you consider someone who could shout loud enough to be heard for about 70 miles a public servant? Radio is expensive to operate and maintain, and which is used for entertainment. I have absolutely no problem with having a public radio station (which we do have) that is used for educational purposes (which also can be entertaining), but I think the rest are best served for entertainment value and as such belong in the private domain.

But, I still see it mostly as private property opened to public use but private control.

Hey, land is everywhere too :slight_smile: But then, with you as a resident pinko commie I suppose that isn’t a compelling argumetn for me to use :slight_smile:

4

Government got into broadcast regulation because the enormous potential of the medium was being threatened by lack of standards and cooperation among private concerns who were exploiting it (i.e. failing to adhere to power limitations and precise frequency usage). It’s difficult to listen to the radio when you have broadcasters overlapping each others’ frequencies and drowning each other out.

Once it was decided that regulation was necessary to prevent chaos, the principle of the broadcast spectrum as a limited public resource with vast potential for good took hold. In radio’s case, much of the regulatory structure has been dismantled, and the FCC seems more interested in tracking down pirate radio operators than in encouraging novel programming, fairness in news coverage and broadcast diversity.

Talking about the “public good” marks you as having a very old-fashioned attitude in current society.

5

An unencrypted radio broadcast is a public good, but spectrum isn’t.

Let’s be a little more careful about definitions here. There are two main conditions for a good to be a pure public good. They relate to technology, not opinion. Samuelson (1951) (The Pure Theory of Public Expenditure) sets out the first condition and consequences of non-rival consumption. Once the good is in existence, additional consumers can be supplied literally without cost. Additional people can tune in to a radio broadcast at no extra cost to anybody. Presumably adding additional stations to a band eventually results in interference (which would make it a congestable jointly consumable good). Your text that mentions “indivisibilty” is misleading erislover. It has nothing inherently to do with size. Having a tidy house is a jointly consumed good within a household.

The second condition is impossibility of price exclusion. In the case of world peace, most disease control, national defence, environmental protection and radio broadcasts, no-one can be excluded from consumption if they decide not to pay.

Real world goods vary along these two dimensions. Consumption can be completely separate or joint (I eat an orange, it’s gone; I consume 100 hours of coastal surveillance, that same 100 hours is consumed by everyone else). Price exclusion can be easy or very difficult. A pure public good is at the extreme end of both dimensions. In large numbers cases the market fails very badly under standard economic behaviour (“Nash behaviour”). People free ride - they can and do consume without paying, so firms can’t profitable supply the efficient amount.

This doesn’t have to mean public (ie tax) finance. If direct price exclusion is very costly, it may be possible for a club to form to supply the good. But typically the only way to efficiently supply such goods is free equal provision* financed through the tax system.

All this leads to the conclusion that whilst any given radio broadcast is a public good, radio spectum isn’t. It is a common property resource. It is perfectly possible to sell a portion of the spectrum and it is possible (though costly) to exclude non-payers from using it.

The question then becomes whether to allow anybody who wants to use spectrum taking it for themselves or whether the government should say that it initially belongs to everyone and that those who wish to use it should have to pay a fee to other taxpayers for using it. Which way people would go on this question depends on three things:[li]how serious the congestion problem is likely to be (in the extreme whether competition may destroy the resource as it threatens to do in unregulated fisheries)[]How seriously you take the argument that unlicenced use of spectrum infringes on the property rights of others.[]Whether the government can extract lots of revenue from licencees without either wasting the money or focussing on the revenue to the detriment of consumer benefits.[/li]
Okay, four things: Broadcasters make money by degrading programme quality (ie they run ads and show garbage). The more stations, for a given audience, the lower quality are the programmes that can be profitably produced (of course there may be people who want to produce good stuff).

It’s not unreasonable to suppose that governments tend towards selling too few licences due to revenue motives (or trade the licences for influence). But it’s not a public good problem, it’s a public property problem.

  • [sub]“free” because price exclusion is impossible, “equal” because as long as everyone values addtional units of the good positively it makes sense for them to consume the whole amount, “provision” because the government is required to finance - but not necessarily produce - the good.[/sub]
6

Well, I think the key component of the second definition is the indivisibility not the size. Even braodcasts are divisble, however, because of radio transmission from ground-based transmitter limitations. Without boosters a good FM tower can only hope to achieve about (IIRC) 70 miles. They are not, I agree, divisible within that specific geographic location without the implementation of some form of encryption (which wouldn’t be terribly costly and shouldn’t interfere with existing bands—I can toss out an idea or two on how to implement that if anyone desires).

I would say: perhaps. I am looking at the spectrum as divisible private property, much like divisible private property we call “land.” I am looking at broadcasts like private property utilized to sell privately produced goods. I think a decent analogy is a shopping mall. The property is privately owned and maintained, the consumers—you and I walking into the mall—are not limited to entry based on paying a fee to enter. We may window shop for free, within the constraints of building and zoning ordinances for maximum occupancy (which radio has none).

I would not presume, in any fashion, that a mall is a public good. Now the question remains, how viable is this analogy? Can we really set up a parallel structure in radio broadcasting?

I believe the answer is yes, and I believe that is how radio is set up. The FCC is the zoning board and inspection committee. They ensure you stay within your “property lines” (allocated band) and that your environment “the geographic location” is safe (the transmitters do not cause damage to people or their products).

The government is free to take some property for its own use how it sees fit. This could be government broadcasting literally, or it could be public radio with content under government regulations for itself. Certainly the privately owned stations must follow some sort of content regulation, much like pornography houses must, and places that sell alcohol must, et cetera (though I disagree with these regulations as well, there is little point in arguing them here; let it be understood that such regulations are in place for real estate property already and for the analogy to hold radio broadcasts must do the same after an appropriate translation).

As such, the radio broadcast is still not a public good. You state that your text defines indivisibility and the impossiblity (or impracticality) of price exclusion as the defining factors for determining a public good. I find such a definition interesting, but were it to stick it would demand that shopping malls and parking lots are public goods, something I am pretty sure most would disagree with.

What do you find wrong with this analogy that you feel radio brodcasts are still public goods? Or, instead, do you feel that shopping malls (for example, but there are others) are public goods as well?

As far as your equating it as a public property problem, I will need to address that after I get home.

7

erislover, thanks for creating this thread; pld I enjoyed hearing your thoughts on radio very much and would have liked to parlay more on the subject; jshore, kimstu, always a pleasure. waterj2, I thought your last reply on the free market thread was really interesting. Unfortunately, I am about to hunker down into major deadline mode and will have to leave the latter thread as well as this one, behind. It may be as long as a few weeks before I’m back. My loss!

8

Mandelstam :frowning: That’s ok, I expect jshore to come in and trounce me. Meanwhile…

Back to hawthorne. hi! :slight_smile:

Am I to understand that your mention of public property means that you would assume radio is a case of a natural monopoly? If not, on what grounds do you find it to be public property?

9

Well, historically, erislover, the radio airwaves used to be public property. They were given away–almost literally–to private interests. Which doesn’t answer your question, but provides some background as to why people might consider radio more public than private.

10

I sneaked back in for a very quick peek. :smiley: Gadarene, things aren’t quite so bad as that: in practice perhaps, but not in principle.

Though its impact has been all but decimated, the “public interest doctrine” remains the law of the land. That is, the airwaves (for TV as well as radio) remain ours: and access to broadcasting over those airwaves is granted to private interests through licensing. What Rupert Murdoch owns is not the airwaves, but the licenses to broadcast through them. And the law still says that he holds that license as a trust and must use it to serve our “needs” and our “interests.”

The problem has been that since Reagan’s day (but with the core problem already implicit in the privatization of licensing back in the 1930s), the public’s “needs” and “interests” have been defined in terms of consumption rather than citizenship. So if people have little choice but to listen to the same ten songs played over and over again plus 300 commericials (Top 40 radio), or the same 50 oldies played over and over again plus 300 commercials (Classic Rock/Oldies/Eighties), or the same locker room jokes told over and over again plus 300 commercials(“shock” radio), the sum total of this is seen to constitute the market’s way of pronouncing on what the needs and interests of consumers are. What’s never taken into account is that many people–especially people erislover’s age and younger–have ceased listening to the radio because it sucks so bad. (Internet radio may save us in certain respects but that’s a complicated issue since it delocalizes radio in a way that many people hate to give up.)

So, as some of us were saying in the first thread, the so-called “free market” isn’t free at all. And, in broadcasting, it’s getting less free every day. Erislover, it’s your duty as a good libertarian to write to Rupert and his ilk every day of the week, to plague your representatives and let them know that the airwaves still belong to you, and that you don’t like 5 fatcats and their executive minions telling you how to spend your time.

11

I’m surprised no one has mentioned Citizen’s Band radio yet. I thought that portion of the RF spectrum was intentionally set aside for anyone to use and is largely unregulated.

CB radio doesn’t put to rest most of what is being written here but it does seem a nod from our government toward the notion of a public good available to all without restriction.

12

Depends on what you mean, Whack. For instance, I can’t use a CB frequency to broadcast music from my CD collection, and I’m sure it would be frowned upon if I was running my personal alternative to Rush Limbaugh’s show on a CB channel. Also, my CB transmitter is expected to adhere to certain power limits. Really, all you’re allowed to do on CB, IIRC, is carry on conversations within a certain limited geographical range. So I’d consider that to be pretty regulated.

13

No, it’s not a natural monopoly*. What I meant is pretty well handled by Mandelstam:

Property rights in various things including spectrum are hard to deal with. They are costly to define and subject to strategic behaviour in trade. Imagine before radio and TV. Could it be said that each person (or at least each landowner) owned a portion of the rights and that no-one could use those rights without their consent? Or could it be said that no-one owned the rights until the first person claimed them? This is the question to which I was alluding when I said

Note that in the first case a market would struggle to emerge since a putative spectrum owner would have to buy the rights from every last person to use them. This encourages everyone to “hold out” for the biggest slice of the loot in the strategic flip-side to the free-rider problem. In passing, note that this is the economic justification for what we call “resumption” and what I believe you call “eminent domain” - the compulsory acquisition of land for roads and sundry development purposes. In the second case, the rights of ordinary citizens are basically being stolen.

Now back to this business of public goods. As I thought I already said, spectrum isn’t one. And of course you can charge a fee to get into a shopping complex (although those that do are typically once off sales and others uninterested in repeat business). Mall owners don’t charge a fee because they recoup through higher rents due to economies of scope in shopping.

The shopping mall analogy is pretty good. Certainly the government could auction the spectrum to the highest bidder (or, better, portions of the spectrum using more complicated auction procedures to avoid the winner’s curse problem in such auctions). The owner would then licence users or operate stations themselves. But then you do run into public good, monopoly and spatial competition problems.

First, if the signal is broadcast, you have the quality degradation problem I mentioned before. Secondly, if you run cable-type encryption, you are excluding users who have some valuation of the broadcast who can in fact be supplied without cost. This is a typical intellectual property problem: once the thing is created, it is jointly consumable. To charge any price is inefficient, but not to charge a price reduces the quantity supplied. It’s a trade-off and we don’t know the terms.

The monopoly problem is that the spectrum owner will try to maximise returns. This will result in lower output and higher (access to spectrum) prices. Now it may be that this effect and the quality degradation effect balance each other out - since they work in opposite directions - but there’s no particular reason to think they would.

The other problem is variety, otherwise known as “Why is there so much fucking Billy Joel on the radio?” In competing for audiences, radio stations tend to serve the oldies and the vapid teen markets. A lot of niches seem unfilled. My old band, for example, only got commercial airplay after we went top ten - before that it was all community and public radio. A story - due to Hotelling - gives the general flavour of what’s going on here (although this area remains controversial in economics and you should bear in mind that I’m not an Industrial Organisation economist). Suppose there is a mile-long beach with two (or however many you like) icecream stalls on it (and the beach owner prohibits Eskies). They will tend to locate close together, since they can get the biggest market share by so doing. This is clearly not optimal since average walking times are higher than if the stalls were placed at 1/3/ 2/3 along the beach. Allowing people to bring their own cold stuff (cf people who don’t like radio substituting to CDs) is unlikely to be optimal either. (BTW you can apply this story to the positioning of political parties in a fairly obvious way.)

Now at the end of a rather long post, you’re going to get what you should expect from an economist: I don’t really disagree with what you say, but the situation’s a bit more complicated than it first seems (and we haven’t even brought in the question of whether consumers really know what they want). Is a privatisation of spectrum and the conversion of broadcast to encryption a viable option? Sure. Would you expect niche narrowcasting to replace broadcasting in such a system? Probably not unless you banned broadcasting, they’re too well established. Would it be better if you did? Hard to say, too many competing considerations, not enough hard information discernible from current market behaviour. Is one obviously preferable from a property rights/ natural rights/ libertarian perspective? I don’t think so unless you’re prepared to ignore consent where it doesn’t suit pro-market arguments. But: Do markets and governments have incentives to provide too little variety? Yes, but there’s no clear way to do anything about it.

  • [sub]I might as well define this as well. Certain products get cheaper to produce if you produce more of them and certain combinations of products get cheaper to produce if you produce more of them together. These are respectively economies of scale and scope. The point where average costs are a minimum is called minimum efficient scale. When product variety is terribly important for consumers this tends to produce an industry featuring a small number of large firms and some (usually non-price) competition, with all firms producing less than minimum efficient scale (the modern beer industry).

When product variety is not important and scale economies are large compared to the size of the market, the industry is a natural monopoly. From society’s point of view it is better to have only one firm in the market since it uses fewer resources to produce the product, but a single firm in the industry tend to restrict quantity and innovation, be subject to organisational slack (“X-inefficiency”) and drive up prices to the detriment of consumers. Electricity, water and gas distribution fall into this category (others - like the wide-bodied aircraft industry are more debatable). These industries are typically subject to regulation (or public ownership) to curb monopoly practices but not attempts to introduce competition (since two pipes cost heaps more than one and competition is likely to be unsustainable). Although there are significant economies of scope in news collection, I doubt that this rather than the spatial competition question addressed above is the main reason for the apparent lack of variety in news coverage.[/sub]

14

Well there’s the rub…you can’t have it both ways.

Not being able to play your CD collection I don’t think falls in the regulated airwaves category. Using other peoples work without paying for the priviledge is a whole different set of laws.

However, camping on a frequency intended for public use is regulated in the DB spectrum. Anyone and everyone should be allowed to use the CB radio and if you camp a frequency for your own personal radio show you have deprived how x-thousands of people from using that space themselves.

How can you have it both ways? Either give or sell frequencies to an individual (or corporation) for their sole use or leave it unregulated and get whatever mish-mosh of stuff people care to throw out there.

It seems the government has split the difference (even if unevenly).

15

"It seems the government has split the difference (even if unevenly).

Unevenly indeed.

There is no need to construct any false antithesis between the anarchy of a totally unlicensed spectrum, and the status quo. Although it wasn’t perfect, the pre-deregulation idea of limiting the number of stations owned by any one entity was a reasonable compromise. To wit: we had far better (if not stellar) radio prior to deregulation than we do now. Radio and TV were deregulated to serve corporate interests–not the public’s. Radio listeners and TV watchers were not clamoring to have their stations bought up by Clear Channel et.al.

With TV the effects of dereg have been obscured somewhat b/c of the additional stations afforded by cable (which isn’t to say that there’s a helluva lot of diversity out there given the number of channels). The giving away of the new digital spectrum for free to the existing industry was a national scandal (most will not have heard anything about this 1996 theft and I bet you can guess why!). With radio, though, we hear the disastrous effects of deregulation loud and clear.

hawthorne, I wish I had time to respond in full to your interesting post, but I don’t. Briefly though, I don’t know if an Australian can appreciate just how much worse the situation in the US has gotten since deregulation. I don’t know a great deal about the Australian Broadcasting Corp.–I know it’s not the BBC. But it does have some impact. Remember that in the US there is no equivalent of even the ABC.

16

I simply don’t follow this thread anymore. Why is the radio spectrum common property? If you are going to give me an economic answer, then the economic model will define certain things as common property. We will then find that radio falls nicely into it without much stretching.

I see no indication yet that the radio spectrum cannot be treated as private property, apart from the simple desire to make it so. I can live with that. The government just seizes it and say’s “This is now public property.” Fine. I just want to understand— is there really a reason why the radio spectrum is or should be public? I don’t see one.

I literally don’t care about radio programming quality. Complaining about programming quality for a free product is about the most asinine thing I’ve ever heard, and I am also not afraid to say so.

As far as pay radio went, I think cable versus free television is an obvious parallel that shows exactly why I think what I think. And there are still commercials on cable!

Again, the economic potential for broadcasting is enormous. Some here have mentioned that to accomplish this programming has to be dumbed down to reach a significant portion of the population. in politics we call this compromise; in the economic world it suddenly is called greed? :shrug:

Perhaps there is really some key concept I am missing. I am not certain in will lie in economic definitions.

hawthorne, I was aware of what a natural monopoly is; that is why I suggested it. I see little reason otherwise to call something public property unless it manages to be a natural monopoly, the government simply takes it, or the government declares it so. I was simply trying to understand why you feel a broadcast is public property.

17

It was my impression that, in the United States, the airwaves (to be specific, the use of frequencies) was unregulated in the earliest days of radio, and, in order to avoid stations tromping all over each other, particularly across national borders (with the resulting potential for international incidents), the U.S. government, in company with many others, assumed authority over them and began to license their use in the early to mid 1920s.

So whatever philosophical grounds you can work up for the airwaves being the common property of mankind, or any portion thereof, the fact remains that in this Union they are restricted by some arcane provision of the U.S.C. and the regulations of the F.C.C.

Needless to say, there is absolutely no reason why one cannot build a million-watt transmitter on a ship, sail out to a point 1,200 miles southwest of Easter Island, and broadcast episodes of the Lone Ranger, punk rock, Gregorian chant, or 24-hours-a-day of the Carpenters if you so desire. Of course, your audience will be a bit on the sparse side…

18

Actually, I would ask you to defend the converse: Why is it not? After all, who owns air? Or, more to the point, who owns light? That’s part of the EM spectrum, albeit not usable in the way the radio portion is. So who owns it?

The FCC’s FY 2001 budget was about $250 million. That money came from you and me, and goes partly to protect behemoths like Clear Channel Communications from 10W Spanish-language stations broadcasting for 4 city blocks. Explain to me again how it is free?

To make it plain, your tax money is spent by the FCC on efforts to erect such enormous barriers that you are effectively prohibited from making use of large portions of the spectrum. The people who do get to use those portions of the spectrum are essentially no longer accountable to the public at all, and define “the public interest, convenience or necessity” as “lowest-common-denominator programming that supports a consumerist standpoint.” And they do it on your dime.

19

Interesting analysis, pld.

Ah, but it isn’t “owning” the spectrum itself, it is owning the ability to utilize that spectrum over a given geographic area. They don’t own that portion of the spectrum, they own the ability to turn it into a useful product. At every point you are free to not use that product, just like you are free to move to Texas if you don’t like Ohio’s gun laws, or like you are free to shop at a different comic book store if they don’t carry your favorit comic in good condition.

Again, the idea is one of property. Much like you own your house (for example, dunno—maybe you rent ;)), they own a portion of the radio spectrum over a given area. That area is not infinite. Specifically, apart from being limited by the practicality of broadcasting radio waves, they are limited in broadcasting power itself.

Lesse… lets pretend the government’s budget was a mere 1 trillion dollars and was perfectly balanced by tax revenue (hah, fat chance of that). I calculate that to be about 0.025% of the budget… and, accordingly, about 0.025% of your taxes. You’d have to pay about 40,000 in taxes for radio to cost you $10 a year. Now, I know some dopers are pretty wealthy, but sheesh. And that comes with television, too. And cell phones which don’t regularly interfere with each other (except for switching problems at the routers and cell receivers, possibly).

I think radio and television are about the least costly thing we have. I pay more for water.

:confused: Well, they could pay millions of dollars for liscencing and buildings and the electricity and then have no one listen (the public), have no advertisers want to support them, and then go belly up. I believe this is an instance of market forces shutting people down who don’t use their property effectively.

Oh, wait… that would rquire that people stoped using a product when it displeased them. :wink: (sorry, i know that sounds harsh— I am trying to be jovial here)

20

$250m is a lot of money. What percentage it is of anything is irrelevant.

Don’t confuse price and cost. In a competitive, for profit industry price x quantity gives a minimum value for cost, but where we have funny things going on it’s less of a guide. The only real costs are opportunity costs - for the benefit of lurkers ;), the opportunity cost of something is the next highest valued use a set of resources could be put to - and a poorly organised radio industry could be producing many hundreds of millions of dollars less in consumer satisfaction. The fact that a low price is paid does not mean that the price represents consumer valuation (because of the free rider problem).

It’s not the same. Someone close to me who starts transmitting on a frequency that I previously used to listen to a station further away is removing my choice to do that. The granting of (even temporary) property rights to someone over-rules the rights enjoyed by all others. The point about accountability follows directly: they usurp the rights of others and restrict choice. The fact that some people’s preferences as to programming or advertised goods affects their profits is not the same as each consumer/ citizen having a voice.

The debate’s turned interesting. pldennison asks a very interesting question **Why is it not? **. He seems to be coming from the position that everyone owns the spectrum and should be rather more free to use it. erislover seems to be advocating the granting of property rights to private enterprise confident in the belief that that configuration of property rights would lead to a good outcome. This BTW is why I said

Myself and (I think) Mandelstam are going for a non-libertarian middle ground. IMHO excessive competition is liable to dissipate many of the benefits, but unregulated transfer of property rights to private interests is likely to produce too little variety and too much power in too few hands. Government should be able to do better in licencing and regulating and the fact that they currently fail so to do is not a knock-down argument for giving up entirely.