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Volume 65; 2012-2013 • Issue 3

Full Issue

Editor’s Note


Avoiding Rent-Seeking in Secondary Market Spectrum Transactions
by Jeffrey A. Eisenach & Hal J. Singer

Since at least the early 1990s, policymakers have recognized the benefits of using market-based mechanisms to allocate spectrum usage rights, including relying on auctions to award spectrum licenses and, more importantly, allowing secondary markets to reallocate licenses among existing uses and licensees. One of the benefits of market-based approaches is that they reduce incentives for parties to expend lobbying resources to secure self-serving outcomes, i.e., to engage in rent-seeking. This article assesses the role of rent-seeking in secondary market transactions over the past decade, and concludes that rent-seeking is commonplace in large transactions despite secondary market reforms implemented by the Federal Communications Commission (FCC) in 2003–2004. The FCC’s unlimited discretion to intervene on behalf of rivals induces the rent-seeking behavior that the authors document. The article concludes that if this discretion is curbed competitors will reallocate their resources to more productive affairs.

Book Reviews

Cloudonomics: The Business Value of Cloud Computing – A Review
by Deborah J. Salons

Welcome to the rise of the Cloud. Where does the Cloud fit in to contemporary computer ecosystem? In this book review, Deborah Salons explores the framework for analyzing the complementary roles of cloud computing and traditional information technology by Joe Weinman in Cloudonomics: The Business Value of Cloud Computing. The review examines key aspects and potential issues that contribute to the economics of cloud computing, as raised by Weinman, such as the on-demand properties of cloud computing, latency issues in the cloud, and availability. The review also touches on Weinman’s views regarding behavioral cloudonomics, the future of cloud computing, and the legal implications of cloud computing.

In Search of a Captive Audience: Susan Crawford’s Captive Audience!
by Harold Furchtgott-Roth

High-speed broadband is an increasingly essential component for Americans to operate in the twenty-first century economy. Susan Crawford, in her book Captive Audience, proposes that, at present, cable modem systems have a stranglehold on high-bandwidth, low-latency broadband access and that public policy needs to address this market concentration. In this book review, Harold Furchtgott-Roth, a Senior Fellow at the Hudson Institute and the founder of the Center for Economics on the Internet examines the claims set forth in Captive Audience, taking issue with Crawford’s characterization of the high-speed broadband market. This review argues that Crawford’s economic analysis is lacking and that her international comparisons do not hold up to scrutiny. Specifically, Furchtgott-Roth finds that cable companies do not have a “captive audience” for high-speed broadband because of the existence of inter-modal competition from fiber, wireless, and satellite. He concludes that Crawford does not provide a compelling argument that Washington should interfere with a competitive sector absent a more rigorous showing of market failure.

Response to Harold Furchtgott-Roth
by Susan Crawford

In this essay, Susan Crawford responds to Harold Furchtgott-Roth’s criticisms. In her response, Crawford notes the many assumptions that she and Furchtgott-Roth share: U.S. presidential administrations have not often considered the FCC an important agency; communications policy is not often made on the merits; and the federal government would probably be terrible at running a nationwide network itself. However, given this agreedon background, Crawford differs markedly from her reviewer in her prescriptions. Taking into account the experiences of high-speed Internet access consumers in America, and based on current data, she explains why mobile wireless access is not a substitute for fixed wired Internet access and why the right option for global high-speed Internet access competitiveness is driving an upgrade to competitive fiber. She concludes by reiterating her call for federal, state, and local governments to craft policy designed to foster the building of fiber-optic networks and guarantee that all Americans have affordable, high-speed Internet access.