The purpose of this paper is to characterise opportunity cost associated with the development of spectrum.
Differential Ricardian rent theory is used in the paper to explain the relationship between the development of spectrum along internal and external margins. Opportunity cost is introduced to characterise the link between spectrum and spectrum substitutes.
The study finds that workable strategies for spectrum reform require that economic externalities be internalised. Opportunity cost considerations can serve to improve spectrum management policy by justifying policy constraints and distribute the spectrum to the user with the best relative use.
Ricardian rent theory assumes that the “best” spectrum would be utilised first. In addition, there is no objective value‐based unit of spectrum and this limits the efficacy of Ricardo's theory.
The paper provides a more coherent explanation spectrum development and the spectrum management reform process.
The study provides a model for policy makers to introduce incremental change in the advent of novel wireless technologies
