Thomas Hazlett

• PhD
• Professor at Clemson University

In 2020 the Federal Communications Commission (FCC) revisited a spectrum allocation decision it made in 1999. The Agency found that frequencies set aside for specific technologies used by vehicles – Intelligent Transportation Services (ITS) – had been left largely unused. It crafted new rules, shifting 45 MHz of the 75 MHz allocation to newly desig...

This article presents a comprehensive summary of the regulatory environment confronting low earth orbit, non-geostationary satellite orbit (LEO NGSO) communication satellites and critically evaluates analogies from terrestrial spectrum management as possibilities for LEO NGSO satellites. This analysis provides a framework for empirical analysis of...

Radio spectrum has become central to technological progress and economic growth. While, command-and-control regulatory institutions of the early twentieth century were considered necessary to counter endemic market failure, recent regulatory reform towards a market regime with flexible licensing creates an interesting environment for examining how...

Radical transformation has come to speech platforms in the Information Society 2.0, typified by the migration from newspapers to social media. The change has been spurred by disruptive efficiencies in digital platforms. First, information distribution has been altered by near-costless electronic reproduction. Second, traditional bundles -- packagin...

The 1927 Radio Act imposed a new legal regime for radio spectrum: The Act established administrative allocations according to the “public interest.” This reform has been credited by the U.S. Supreme Court with bringing order out of chaos and thereby averting endemic market failure. Ronald Coase challenged the logic of the resulting regulatory polic...

In 1998, the U.S. began spending about $2 billion annually to help fund computer access in elementary and secondary schools. In 2013, the Federal Communications Commission, citing the experience of a school district in North Carolina, increased these annual ‘E-Rate’ subsidies to $4 billion. Do such expenditures actually improve academic achievement...

Vertical restrictions have theoretically ambiguous efficiency effects. Marketplace evidence is, therefore, required to reveal the presence of anticompetitive foreclosure. The bundling of mobile phones with cellular network service offers one such market test. One EU member, Finland, prohibited tying arrangements for mobile service and mobile handse...

In 2015, the Federal Communications Commission (FCC) imposed common carriage regulation—so-called Title II requirements—on previously unregulated broadband Internet service providers. The regime shift was premised on the FCC’s findings that such rules had demonstrably yielded economic gains. This paper evaluates the FCC’s empirical arguments and fi...

From the former chief economist of the FCC, a remarkable history of the U.S. government's regulation of the airwaves Popular legend has it that before the Federal Radio Commission was established in 1927, the radio spectrum was in chaos, with broadcasting stations blasting powerful signals to drown out rivals. In this fascinating and entertaining h...

This review essay amalgamates the economic dynamics found in the rise of the computer industry, as detailed in Martin Campbell-Kelly and Daniel D. Garcia-Swartz, From mainframes to smartphones: A history of the international computer industry (Harvard University Press, 2015), and the metamorphosis of data networks in Shane Greenstein, How the Inter...

The endemic underuse of radio spectrum constitutes a tragedy of the regulatory commons. Like other common interest tragedies, the outcome results from a legal or market structure that prevents economic actors from executing socially efficient bargains. In wireless markets, innovative applications often provoke claims by incumbent radio users that t...

The Federal Radio Commission regulated radio broadcasting, 1927–1934. With the passage of the Communications Act of 1934, the 1927 Radio Act (enabling the Commission) was re-enacted in whole. This congressional endorsement yields key evidence as to what policy outcomes were intended, differentiating competing theories for the origins of spectrum al...

Vertical restrictions have theoretically ambiguous efficiency effects. Marketplace evidence is therefore required to reveal the presence of anti-competitive foreclosure. The bundling of mobile phones with cellular network service offers one such market test. Two European nations — Finland and Belgium — prohibited tying arrangements for mobile servi...

In 2010, the U.S. Federal Communications Commission (FCC) determined that up to 20 television channels should be shifted to mobile services. If successful, the reform could generate over $1 trillion in social gains. To achieve these efficiencies, regulators rejected traditional tools, which would have terminated existing wireless licenses, as too c...

In the century since the Radio Act of 1912 initiated U.S. spectrum allocation rules, a precise definition of “harmful interference” – the control of which forms the rationale for regulation – has eluded policymakers. In one sense, that result is unsurprising; rights are always defined incompletely. In another sense, however, the regulatory system i...

After 85 years of government regulation, the specification of “harmful interference” between radio spectrum users continues to elude U.S. policy makers. In one sense, that result is unsurprising; property rights are always defined incompletely. In another sense, however, regulators are flummoxed by the result. A narrow regulatory focus on technical...

Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the world. Wireless networks, having sunk considerable capital in the creation of phone systems, must not only compete among themselves for subscribers, but also need to form strategic alliances with emerging handset application platforms (HAPs) created by su...

In “The Federal Communications Commission,” Ronald Coase exposed deep theoretical foundations via normative argument. The government controlled scarce frequencies; spillovers were said to be otherwise endemic. Coase saw that regulators limited conflicts by restricting uses and that property owners routinely perform such functions via the price syst...

The Federal Communications Commission's Network Neutrality Order regulates how broadband networks explain their services to customers, mandates that subscribers be permitted to deploy whatever computers, mobile devices, or applications they like for use with the network access service they purchase, imposes a prohibition upon unreasonable discrimin...

Tragedy of the anti-commons occurs when property rules fail to enable efficient social coordination. In radio spectrum, rights issued to airwave users have traditionally been severely truncated, leaving gains from trade unexploited. The social losses that Ronald Coase (1959) asserted, appealing to basic theories of resource allocation, are now reve...

The traditional system of radio spectrum allocation has inefficiently restricted wireless services. Alternatively, liberal licenses ceding de facto spectrum ownership rights yield incentives for operators to maximize airwave value. These authorizations have been widely used for mobile services in the U.S. and internationally, leading to the develop...

As elsewhere, wireless markets play a crucial role in Latin American economic growth. Mobile telephone networks increasingly provide the communications infrastructure that has largely been lacking throughout the region. Yet, governments have generally made only modest allocations of bandwidth available to Latin American wireless operators, either a...

Strategic investments by wireless carriers and others are generating rapid development of the “mobile ecology,” increasing modularity even while embracing and extending vertical controls. Coordination among complementary asset owners and simultaneous rivalry among platforms suggests that the process of creative destruction is robust. Moreover, inno...

The signatories to this document are economists who have studied telecommunications, auctions, and competition policy. While we may disagree about the stimulus package, we believe that it is important to implement mechanisms that make stimulus spending as efficient as possible. To that end, we have come together to encourage the National Telecommun...

The US residential broadband market is commonly characterized as a duopoly consisting of telephone carriers (digital subscriber lines) and cable TV operators (cable modems). The implication is drawn that market power obtains; this, in turn, drives recommendations for new competition policy remedies. Yet, market power cannot be directly deduced from...

The U.S. telecommunications industry has come under scrutiny amid concerns that regulatory policies have been too permissive. These concerns are perhaps most prominent in the residential broadband market where there is a perception that the “duopoly” between telephone carriers (DSL suppliers) and cable TV operators (cable modem services) has given...

In the Federal Communications Commission, Ronald Coase exposed deep foundations via normative argument buttressed by astute historical observation. The government controlled scarce frequencies, issuing sharply limited use rights. Spillovers were said to be otherwise endemic. Coase saw that Government limited conflicts by restricting uses; property...

While extending the scope of spectrum property rights promotes efficiency, such reforms are often deterred by equity concerns. Theoretically, however, the windfalls may be negative. Relaxing license restrictions may increase profits by allowing enhanced productivity, yet liberalization across a class of licensees can reduce the expected profits by...

Horizontal merger evaluation is heavily reliant on market definition. An SSNIP framework formats the analysis, and demand elasticity evidence used to apply the test is often sparse, as is often found in high-technology industries. This paper examines other sources of evidence that reveal the dynamics of market structure, data that are also probativ...

Ronald Coase based his 1959 call for spectrum markets on theoretical conjecture. Today abundant evidence supports his case. Targeted liberalization in cellular markets, as contrasted with regulatory planning of the digital TV transition and other traditional policies, suggest enormous efficiency gains are available from wider use of "the price syst...

Regulations governing broadband networks are being considered. Natural experiments conducted with respect to 'open access' rules yield probative marketplace evidence. Using the metric of subscribership, policy regimes are compared. Prior to 1Q2003, cable modem service was unregulated (and has remained so), while digital subscriber lines (DSL) were...

Two recent court rulings have forced both law and economics to seriously reevaluate emerging marketplaces. In Sony Corporation v. Universal Studios (1983), the U.S. Supreme Court ruled that videocassette recorders do not infringe upon the patent rights of a movie producer whose creation is viewed but not purchased (i.e., not bought from the produce...

In most countries, wireless communications rely on administrative allocation of radio spectrum. The inefficiencies associated with this centralized approach have led economists, starting with Coase in 1959, to suggest "propertyzing" radio spectrum. Critics of this approach assert that property rights impose prohibitive transaction costs and inhibit...

The standard approach to radio-spectrum allocation in the US posits three alternative models from which regulators choose (on a case-by-case basis) to impose basic rules for coordinating wireless activities. However, this regulatory framework often yields anticonsumer outcomes. The author argues that public policy should instead permit competitive...

Traditionally, municipal cable TV franchises were advanced as consumer protection to counter natural monopoly video providers. Yet historical evidence has demonstrated that franchise regulation - fraught with conflicts and delays, while ultimately proving ineffective in constraining rates - failed to improve consumer welfare. Now, marketplace chang...

A new regulatory debate has sprung up around the pricing of TV networks on cable and satellite systems. Many argue that bundling networks on tiers, rather than selling channels individually, is anti-consumer and forces families to purchase programming they don't value and often find offensive. The Federal Communications Commission, after issuing sh...

In this statement, a group of economists assembled by the AEI-Brookings Joint Center makes the following two recommendations to improve the competitive provision of broadband services. First, Congress should eliminate local franchising regulations, which serve as a barrier to new entry. Second, Congress and the Federal Communications Commission sho...

The Federal Communications Commission rule making for low power FM radio was widely reported as an instance where Congress sharply rebuked a regulatory agency for enacting rules too favorable to entrants. Theories of bureaucratic control generally agree that when such events occur, policy differences of Congress and the agency must be large. Becaus...

The 1996 Telecoms Act featured policy successes and failures. Among the former are federal rules pre-empting state monopolies and the mandate for network interconnection. Among the latter is the mandatory sharing regime for fixed line telephone networks, over-turned by federal courts after eight years. Such regulation required delicate balancing in...

Purpose This paper aims to estimate the social gains from an analog TV switch‐off in 13 EU countries, focusing on the value of TV band spectrum in alternative uses. Design/methodology/approach By using data from existing mobile phone markets, changes are projected in retail prices for wireless voice services, assuming a reallocation (to mobile tel...

Analysis of spectrum allocation policies in the economics literature focuses on competitive bidding for wireless licenses. Auctions generating high bids, as in Germany and the UK, are identified as "successful," while those producing lower receipts, as in Switzerland and the Netherlands, are deemed "fiascoes." Yet, even full and costless extraction...

Since initiated in the U.S. in July 1994, auctions have replaced "beauty contests" in the assignment of wireless licenses in many countries. Economists have been involved in constructing the competitive bidding mechanisms chosen, and have devoted considerable analysis to the problems involved. Generally, auction methods have been evaluated accordin...

In the US, adjudication of wireless entry under the "public interest" standard protects incumbent service providers. Excess demand exists for access to radio spectrum, despite a common misperception that license auctions held by regulators are tantamount to selling spectrum. Would-be suppliers are slowed by the regulatory process. After discussing...

Incumbent telecommunications carriers have been mandated to share their networks with new retail service providers at regulated wholesale rates. This regulatory structure creates options which incumbent systems must write and which all potential entrants are awarded at a price of zero. Intense debate revolves around the effect of the policy in prom...

Increased regulation of wireless telephone service is being proposed by both federal and state policy makers, raising the question of optimal jurisdiction. The case for decentralization (state rules) is strongest when the economic activity being regulated is localized and market spillovers relatively small. Alternatively, the case for uniformity (f...

Fifteen scholars on auctions and telecommunications regulation urge the FCC to cancel bids made in, or permit winning bidders to opt out of, the reauction of the NextWave licenses in Auction 35. For auctions to function efficiently, buyers and sellers must follow basic rules, including the rule that a seller deliver in a timely manner what the winn...

“Open access” would allow ISPs to use a cable operator's broadband connection under regulated terms and conditions. Advocates stress the desirability of an “end-to-end” architecture for the Internet and the danger that cable operators will use their control over the last mile to limit consumer choice and stifle innovation. Opponents contend that wh...

Advocates of "open access" claim that Internet Service Providers (ISPs) should be able to use a cable TV system's bandwidth on the same terms offered to ISPs owned by the cable system. On that view, "open access" mitigates a monopoly bottleneck and encourages the growth of broadband. This paper shows that cable operators do enjoy market power, and...

Formal regulatory parity can entail counterintuitive effects. In a series of state statutes, municipal governments have been directed to issue cable TV franchises to new competitors only after (a) formal hearings considering the 'public interest' in competition; and (b) imposing terms and conditions which are at least as burdensome as those contain...

Anticipated effects of rate controls are best observed in abnormalreturns in sectors providing complements and substitutes to the sector targeted for regulation. Further, risk may rise in response to rate controls, increasing the cost of capital and lowering investment. We examine stock price movements during events tied to the 1992 Cable Act, whic...

This opinion piece examines the politics and economics of California's failed experiment with managing electricity markets.

Economists note that the spectrum allocation system rigidly overprotects the airwaves, and that liberalization could significantly reduce barriers to entry for new competitors and innovative wireless technologies. This paper applies this policy insight, demonstrating that market mechanisms can be used to salvage the digital TV transition.Year's end...

In 1959 the Federal Communications Commission invited economist Ronald Coase to testify about his proposal for market allocation of radio spectrum rights. The FCC's first question: 'Is this all a big joke'' Today, however, leading policy makers, including the current FCC Chair, decry the 'spectrum drought' produced by administrative allocation and...

The Telecommunications Act of 1996 marked a fundamental departure in U.S. regulation. Monopoly market structures were officially deemed inefficient, and extensive rules were authorized to jump-start competition. Canada opened long-distance markets to entrants in 1992, and did likewise with local telephone access five years later, but employed disti...

The effects of antitrust policy are illuminated in an extensive series of enforcement actions against Microsoft. As antitrust intervention promises to benefit a broad spectrum of publicly traded firms, stock market reactions to enforcement "events" constitute forecasts of the net benefits created for such firms. Firms manufacturing complements to M...

The recent zero-priced award of $11-70 billion in digital TV (DTV) licenses by the federal government occurred when auctions had been initiated for non-broadcast licenses and when the seven decade-old regime of 'public trusteeship' in broadcasting had become famous for licensee reneging on promised obligations. Policymakers nonetheless declined to...

On March 31, 1997, the U. S. Supreme Court issued its second and final verdict in Turner Broadcasting v. FCC. By a 5-4 vote, the case decided the constitutionality of "must-carry," rules mandating that cable television operators give carriage to all local TV broadcast stations. The Court, deferring to Congress to determine substantial government in...

See Crandall and Hazlett for a more recent analysis.This paper investigates the economic and political consequences of the 1996 Telecommunications Act by examining relevant marketplace data. In key segments of the telephone and cable television industries, the reform appears to be encouraging competition. Interestingly, stock price data indicate th...

Occupational licensing laws erect barriers to entry into various labor markets, impeding the upward mobility of welfare recipients seeking to transition into employment. This paper, recognizing that labor market interventions have often been used precisely because of this effect, proceeds to examine various restrictions which directly affect low-sk...

The connection between property rights and free-speech rights has most often surfaced in conflicts between the two. In his classic formulation of the problem, journalist A. J. Liebling mocked the First Amendment's free-press clause by noting that ownership of a printing press was required in order to actually enjoy the constitutional protection. In...

The Radio Act of 1927 was enacted so as to preempt the common law property rights then being asserted over radio waves, thus facilitating a political equilibrium where broadcasters and regulators shared license rents. The Oak Leaves case of November 1926, awarding AM frequency rights to a private broadcaster on the homesteading principle, helped mo...

While Leo Herzel (1951) and Ronald Coase (1959) persuasively argued for auctioning licenses issued by the Federal Communications Commission (FCC), not until 1993 did the U.S. Congress grant the FCC authority to assign wireless operating permits via competitive bidding. Why were auctions, with obvious efficiency and equity advantages, so long in com...

As Ronald Coase posited in his famous article on the nature of the firm, there are situations in which decentralized markets are relatively efficient for coordinating economic activity, and situations in which they are not. With spectrum access, assigning property rights to clearly specified private owners is the socially efficient policy because t...

The disparate treatment of the print and electronic media under federal regulation has been a curiosity to lawyers and economists for decades. Now, dynamic technical change in telecommunications markets is credited with bringing a new tension to the underlying premises of the law, calling into question the "physical scarcity" doctrine, which has lo...

Cable television reregulation in October 1992 did succeed in constraining subscriber bills about 9% below trend by October 1994. Yet, the growth rate of basic cable television subscribership fell sharply during the period of rate reductions. Only when real rates began rising in the period following October 1994--after an explicit relaxation of cont...

The stated rationale for the Fairness Doctrine was to encourage more information to be aired by radio and TV stations, on the theory that private broadcasters would tend to underprovide a public good - news about important social issues. Yet, the danger has been seen, at the U.S. Supreme Court, the FCC, and elsewhere, that there exists a potentiall...

In the 1984 Cable Communications Policy Act, cable television operators were effectively freed from rate regulation, and subsequently enjoyed monopoly franchise protection with free market pricing. In 1992, however, reregulation of basic cable service rates was established in the Cable Consumer Protection and Competition Act. The argument for reimp...

The inventors of the theory of rent-seeking used an analogy with competitive markets to conclude that all monopoly rents would be dissipated in the competition to obtain the property rights to them [23; 29]. Subsequent theorists showed that this conclusion is quite sensitive to assumptions about foresight, risk aversion, conjectures, and bias [15;...

According to Robert Bork's influential analysis, the Sherman Act was expressly instituted by the 51st Congress to advance consumer welfare, but has often been misinterpreted by federal courts handing down anticonsumer decisions. This paper suggests that the political coalition backing the 1890 antitrust statute sought multiple social ends and did n...

This chapter reviews the development of cable television as an industry, with emphasis on its current state of economic health. It also examines the likely impact of fiber optic technology on the distribution of video services and the cable television industry. Community Antenna Television (CATV) has experienced enormous economic growth in the past...

The motivation to price control a franchise monopoly is examined in the context of three distinct economic views of regulatory behavior. These views are tested against data from the California cable television market over the years 1980-85, during which a subset of monopoly firms converted from regulated to unregulated pricing for basic cable servi...

Probable effects of policy reform are thought to be observable through critical evaluation of interest group positioning in the competition to gain favourable public policies. In the current debate in the USA regarding possible elimination of the cable/telco cross-ownership restrictions, strong positions have been taken by several interested partie...

Professors Swoboda and Steiner have prepared a formidable paper for this conference, which carefully works through various aspects of the question: does progressivity of the income tax code affect optimal allocation of resources? In general, the answer is one familiar to those who have dwelled in financial economics: it depends upon the relevant ut...

South African apartheid is a social system arising from the economic conflict of competitive interest groups. During the past four centuries, this struggle has not been linear: Changing economic and demographic conditions have tended to make white and non-white subclasses net complementary factors at certain times and net substitute factors at othe...

The traditional approach to monopoly posits a dead-weight loss, a classic inefficiency, wherever market power is discovered. Critics such as Joseph Schumpeter argue that such dead-weight losses are inconsequential in a dynamic setting, where long-run trade-offs are said to dominate them with postive sum gains, which are also claimed to flow from ma...