[this post was secretly written by Prince Harry]

The European Broadcasting Union (EBU) just released a report that questions ‘free market’ policies with respect to the auction of UHF television spectrum made available by digital switchover.

Here’s the money quote:

‘Given the high demand for HD broadcasting, an appropriate amount of UHF spectrum will be needed in order to maintain the strength of the DTT platforms around Europe and to retain consumer demand for the platform. Without HD, the DTT platform would be marginalised – more affluent consumers will be able to pay for access to pay-TV services as the supply of HD television becomes standard on these broadcasting platforms. The result could be a two-tier system, with advertising revenues and key channels following the high-value consumers, leaving the universal provision offered by DTT as a low-end collection of less attractive services.’

My take: There’s a big difference between a free-market assignment policy and a free-market allocation policy. There are not too many examples of free-market radio spectrum allocation policies that have worked. The FCC tried a few and they were disasters. Anyone remember the failed WCS auction? Free-market assignment policies, by contrast, are routine and often work well to efficiently assign spectrum to those who value it most highly. So, the DDR outcome I favour is quite simple: Ofcom should allocate a big chunk of DDR spectrum for HDTV and then use an auction as the means to assign it amongst would-be broadcasters. That way, you get the benefit of a managed approach that accounts for the unstoppable nature of HDTV, yet assigns the spectrum in a ‘free market’ manner that avoids an inefficient giveaway.