Government to privatise air?

The government body responsible for the future of the radio spectrum has published a consultation paper today - and top of the agenda is the effective 'privatisation' of the airwaves.

Radio spectrum is currently allocated in a number of different ways, but any organisation which now owns the rights to a portion of spectrum does not have the right to sell it directly to someone else.

In other words, it is far from being a free market.

The Radio Spectrum Management Review will look at setting up a system that allows the rights over certain parts of the spectrum to be freely traded as if they were an ordinary commodity, such as energy or paper.

Martin Cave, professor of economics and vice principal at Brunel University, who is leading the review, said: "It's definitely on the agenda."

The discussion in the UK hasn't currently got as far as a full-scale privatisation of the entire spectrum, but such a move has been proposed in the US.

In 1995 the Progress and Freedom Foundation (PFF), closely linked to former Republican speaker of the House of Representatives Newt Gingrich, published a report calling for the conversion of the entire electromagnetic spectrum into freely tradable "real estate", and the abolition of the US telecoms regulator, the Federal Communications Commission.

The Radio Spectrum Management Review has consulted with the PFF on this matter, Cave confirmed.

Free speech opponents have attacked the notion of effectively privatising the spectrum. Prominent among them are Jeremy Rifkin, president of the Foundation on Economic Trends think-tank in Washington DC.

Rifkin sees a future in which the majority of the spectrum is monopolised by a few powerful corporations - he named Vivendi Universal, Silvio Berlusconi's Fininvest, AOL Time Warner, Disney and News Corporation as examples.

Citing the growing importance of wireless communications, he said: "They would effectively dictate the terms on which the rest of us communicate.

"This battle is going to be as bitterly fought as the battle over who controls the human gene pool," he added. "The human genome should be held in trust for humanity, and the same should happen to the radio spectrum."

Rifkin fears the question may eventually become a "free trade issue," with the US government using the WTO as a lever to force other nations to privatise radio spectrum in their own territories.

For Martin Cave, however, a system for the free trading of privately held or licensed spectrum is simply the best way to make sure it is used as efficiently as possible.

Of tradable licences, he said: "If a portion of the spectrum is not being allocated sensibly, then the body which owns it can lease it to someone who can use it - generating revenue for them, and making that resource available to someone else. It's a classic win-win situation."

The main obstacle to the privatisation of the airwaves is the small size of the UK, and the closeness of its neighbours. Many areas of spectrum cannot be used in one territory without the risk of spilling over into a neighbouring one - so new ways of managing them will have to be developed on a Europe-wide basis.

Certain areas of the spectrum, such as the 100 GHz band, can be used in a highly localised way, and could be 'privatised' on a national basis. This area is ideal for high data rate point-to-point communications.

Dr Jim Norton, currently head of ebusiness policy at the Institute of Directors, who worked on the allocation of the 3G licences, suggests that this area is a likely first stop for the introduction of tradable licences.

The review is due to publish its findings by the end of the year.