Evolution of my “Considerations”

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So, it looks like I may have been a little unfair to Gruber in my last post. Or, at the least, a bit premature. I took advantage of the sun’s emergence this afternoon to sit outside and finish reading the final chapter in The Economics of Mobile Telecommunications. Though I had assumed that a final chapter before the Appendix would offer a conclusion and not a lot of further analysis, I found some very interesting observations and Gruber addressed many of the concerns I raised at the end of my last post.

The final chapter, ‘The evolution of market structure in mobile telecommunication markets’, also reinforced my acknowledgment that I’m not a natural economist. It took me about half an hour to really wrap my head around about 3 pages of material. To be fair to me, some of that was while in transit, which is not the easiest way to think about the implications of formulas like Π(n*, s, F) > 0 > Π(n* + 1, s, F) — the zero entry condition used to help determine the Cournot equilibrium number of firms in a homogeneous goods industry. [Note to self: need to read up more on industrial organization and oligopoly theory.]

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Economic Considerations of Mobile Telecom Markets

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Part of my self-directed efforts to get ready for ComCult this fall includes trying to increase my foundational knowledge of telecoms policy. One thing that’s become apparent is although I still consume a lot of information through various feeds (and share some of the telecom relevant stuff on one of my Twitter accounts), it’s been a while since I’ve done a lot of dense, academic reading. As such — and along with my other commitments — it’s taken longer than I expected to get through The Economics of Mobile Telecommunications by Harald Gruber.

One of the things I enjoyed was gaining some sense of the development of mobile telecommunication networks from a policy viewpoint. As my undergrad focused on political science, Gruber’s economic handling of the material also added to some of my struggles. I only took a couple macro economics courses at post-secondary and a political science stats class. When discussing strengths and weaknesses of policy choices by various states, I could follow along fairly well. When he started getting into formulas in the chapters on ‘Determinants of diffusion of services’ and ‘Market conduct and pricing issues’, not quite so smoothly.

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Spectrum Wirless Crunch

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FCC commissioner Julius Genachowski’s comments on the spectrum wireless crunch were interesting to me, if in part because Canada seems to be about 5 years behind the US in recent spectrum auctions. While we in Canada are currently preparing for a likely 2012 auction in the 700 MHz band, the US is starting to increase discussions of even more allotment as part of their National Broadband Plan, identifying 500 MHz by 2020 as necessary to meet connectivity demand.

It’ll be interesting to see how Industry Canada determines to set up our next auction rules and whether they plan to hold any aside for new market entrants, current small market share providers or retain any portion as unlicensed for innovation generation.

Questions about spectrum governance

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With the upcoming 700MHz spectrum auction, I’m looking to start doing more of a critical reading on governance issues and how that impacts policy. I picked up Toward an Evolutionary Regime for Spectrum Governance – Licensing or Unrestricted Entry? [PDF] from the library. The work is put out by American Enterprise Institute for Public Policy Research and The Brookings Institution, co-authered by William J. Baumol and Dorothy Robyn.

The text has Baumol and Robyn evaluating governance models for spectrum, comparing a market-based approach with an unlicensed commons regime. They offer pros and cons to each model and suggest a modified market approach brings the most amount of gain while minimizing negative outcomes. While the book is specifically examining the FCC, I found overall the book was helpful in thinking about the underlying models of governance that inform the Canadian policy debates that are taking place in my feed reader around ICT development.

Being economists, Baumol and Robyn present their argument largely as theoretical models with selected references to major policies to demonstrate points. Coming from a political scientist framework, I find the models to be too clean and they don’t take into account enough pragmatism. I also find some of the examples they use tend to be a bit disingenuous, employing a straw man quality.

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Progressive Canadian Telecom Policy Views

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Finally finished reading ‘For Sale to the Highest Bidder: Telecom Policy in Canada’, put out by the Canadian Centre for Policy Alternatives. I had come across it last fall while starting to do some investigation into spectrum issues in Canada.

My main interest was the chapter ‘Spectrum Matters: Clearing and Reclaiming the Spectrum Commons’ by Graham Langford. Sadly, this chapter was very topical when written in 2007/early 2008 but not so much after the 2008 spectrum auction in Canada.

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