Why is the electromagnetic spectrum so valuable?
Because like land. They're not making any more of it.
The Government regulates the use of the electromagnetic spectrum for the 'public good'. With the 700 megahertz spectrum auction underway it is interesting to note that the public has very little influence in deciding how the spectrum will ultimately be used.
The condensed back story goes like this. The government began regulating electromagnetic transmissions because the electromagnetic spectrum is a limited resource. Transmitters that operate on the same frequency will interfere with one another making reliable communication on that frequency impossible. Reliable communication being in the public interest, the government established rules for its use and granted licenses to responsible parties. This system worked for many decades but over time as wireless communication became more widely used the government ran out of spectrum to grant and so the spectrum became extremely valuable.
It is now worth billions. With this much money at stake everybody wants a piece of the pie. The question of how to fairly apportion the spectrum remains an open problem. The government regulators unable to balance the many conflicting interests asked Congress allow them to auction the spectrum.
This solved the governments problem but it didn't solve 'the problem'. The problem of how to make the most efficient use of the limited electromagnetic spectrum? We could attempt to solve this problem through research and we do but some experiments can only be conducted on a large scale. There is no way to know how practical a new type of communication network might be unless you actually deploy it. Build it and see if they come. Cell phones where obviously a good idea but did anybody anticipate they would become more prevalent then land lines.
Experimentation is the only way to determine what technologies and business models are most efficient.
Now there is nothing inherently wrong with an auction but if the same old assumptions about how the spectrum will be used are used to set the rules of the auction we will get little innovation. The solution is to set aside a portion of the spectrum for open use. Let anyone broadcast on it as long as it isn't with malicious intent. No fair jamming anyone else's transmissions. Set a reasonable limit on transmitting power then get out of the way and let the market sort it out.
The resulting experimentation will not only lead to new communication technologies being developed but also novel business models.
It is understandable that those who wish to experiment with new communication methods have the toughest time raising capitol. Five billion dollars is a lot of money to gamble in a spectrum auction to test a new business model. So maverick, inventors and business men are left out of the game.
Established telecoms who win spectrum auctions are likely to use the spectrum in ways similar to their current business practice. They have proven business models and it's just good business for them to want a return on their investment in a timely manner.
This risk aversion has a price. We simply don't know what new ways of using that spectrum might be invented if a portion of it were open to disruptors. Are cell towers the best way to build out a network? Maybe a mesh network would work best? What about point to point communication with low power lasers? How about a combination of these or something else entirely? With a limited amount of spectrum available constant experimentation is what is needed but experimentation isn't enough. The spectrum must be available to test these systems on a large scale.
I'm not just talking about technological experimentation. I'm talking about cooperation between businesses and their customers - the public - to discover more efficient business models. The most efficient use of a limited resource is in everyones best interest.