Re: Shovel-ready broadband stimulus

[David Farber <dave () farber net>]

Begin forwarded message:

From: dewayne () warpspeed com (Dewayne Hendricks)
Date: May 10, 2009 10:17:34 AM EDT
To: Dewayne-Net Technology List <xyzzy () warpspeed com>
Subject: [Dewayne-Net] Re: Shovel-ready broadband stimulus

[Note:  This comment comes from friend Tom Hazlett.  DLH]

From: Thomas Hazlett <twhazlett () gmail com>
Date: May 8, 2009 8:43:11 AM PDT
To: Dewayne Hendricks <dewayne () warpspeed com>
Subject: Re: [Dewayne-Net] Re: Shovel-ready broadband stimulus

Hi Dewayne-

Thanks for posting my FT.com piece.

A quick response to Bob, if you'd care to distribute:

In fact, economists are well aware of the fact that not all problems  
are best suited to resolution by auction.  Ronald Coase wrote a famous  
1937 paper which launched a general inquiry as to why some activities  
are undertaken more efficiently within the firm than via use of "the  
price system" -- i.e., auctions.  Many others have investigated how  
property rights are efficiently awarded and, in many cases, show  
competitive bidding to not be the superior system.  My research ("The  
Rationality of U.S. Regulation of the Broadcast Spectrum," J Law &  
Econ [April 1990]) specifically criticizes Coase's paper on the FCC  
where he argued that auctions should have been used in the 1920s to  
distribute radio broadcasting rights.  That ignored the more efficient  
path that had actually been adopted (and was then pre-empted in the  
1927 Radio Act), priority-in-use rights.

But auctions are highly socially advantageous across a large class of  
cases.  The reason why reverse auctions make eminent sense in spending  
so-called broadband stimulus monies is that they force performance  
criteria to be explicitly established and then generate information as  
to the most economical path.  The former imposes transparency,  
reducing political gamesmanship; the latter saves taxpayer funds.

What's not to like?

Thomas Hazlett


> On Thu, May 7, 2009 at 12:37 PM, Dewayne Hendricks <dewayne () warpspeed com 
> > wrote:
> [Note:  This comment comes from friend Bob Frankston.  DLH]
>
> From: "Bob Frankston" <Bob19-0501 () bobf frankston com>
> Date: May 7, 2009 9:08:55 AM PDT
> To: <dave () farber net>
> Cc: "'Dewayne Hendricks'" <dewayne () warpspeed com>
> Subject: RE: [IP] Shovel-ready broadband stimulus
>
> Why am I not surprised that economists claim that they can solve any  
> problem by holding an auction according to rules they define? And  
> bureaucrats say they can act as soon as they get measurements (even  
> if they are meaningless)? And same-old business just see another  
> revenue source. We’ve seen this show before and we’re in reruns.
>
> I’d like to shift the focus to liberating the value in the  
> infrastructure rather than leaving it locked into the same-old  
> “value chain” we call telecom services.
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