Exclusivity, Externalities & Easements: Dynamic Spectrum Access and Coasean Bargaining

Abstract

This paper explores the possibility of realising Coasean bargains to remove the presence of externalities in a libertarian system of exclusive spectrum rights through the creation of various economically motivated easements. We advocate that dynamic spectrum access (DSA) techniques can be used to enable rights holders reduce or eliminate the effects of externalities through local bargaining. Many of the objections to the promotion of market-based exclusive-rights assignment systems concern the ability of rights holders to enforce their spectrum rights, so as to extract maximal value. In an increasingly fragmented and less-regulated spectrum landscape, there will be an inevitable chafing of rights at the boundaries between the users of neighbouring blocks of spectrum; the spectral activities of one network may impinge on the ability of a neighbouring network to extract maximum value from its exclusively assigned spectrum. Nonetheless, it is argued that it is possible to reduce, or eliminate, the existence of such externalities through the adjustment and exchange of rights through value- extraction-focussed bargaining. In essence, this represents a shift from a mindset of unilaterally enforcing rights to one of mutual remediation of any encroachment. Such an approach may offer a non-Pigouvian remedy to both the under-utilisation and over-utilisation of packages of exclusive rights to spectrum, allowing neighbours to find a tolerable level (a balance) of interference. This paper posits that DSA techniques will have a key role to play in the development of new DSA-based Coasean bargains which will be necessary to address a variety of coexistence issues that will arise between systems operating in neighbouring blocks of exclusively assigned spectrum.