Halting the air raid.

• Author: Cohen, Warren
• Position: Auctioning the air waves

The legacy of the great Manhattan swindle - when Dutch traders bought the island for just $24 - haunts more than Native Americans. For centuries thereafter, swashbuckling entrepreneurs and massive corporations have paid only a pittance for public land rights. Even today, mining companies and ranchers pay far below fair value for the rights to public resources.

But with the inventions of radio, television, and the latest corporate toy, the cellular phone, it is no longer just the country's land being usurped by business, but its air as well. Last year, the industries that utilize electromagnetic airspace brought in roughly $100 billion in revenues. Call it beachfront property in the sky - and it has been given away for next to nothing.

In the early days of radio, broadcasters tried to jam this coastline, often blocking out each other's signals. In 1934, Congress authorized the government to dole out portions of the radiowave spectrum. This way, every user would have a unique frequency to operate. Any infringement on that signal was against the law, to be enforced by a new Federal Communications Commission.

Because of the enormous potential for profit, commercial interests have always fallen over themselves to obtain exclusive rights to frequencies. In the past, the government has parceled out these ethereal gold mines through legal hearings or lotteries. In each case, the government collected only negligible application fees while the recipients almost instantly began reaping profits.

But the Federal Communications Commission and Congress have finally come to their senses. Last year, the commission changed tack and began to auction portions of the spectrum to the highest bidder. The latest spectrum auction will clear a path for the creation of new wireless gizmos such as advanced paging systems and super-light portable telephones. The auction is the most efficient method of distributing spectrum space. And in the four auctions already completed (at least two more will follow), the government has collected nearly $9 billion. The billions more that these new technologies are expected to earn in the coming years has led FCC chairman Reed Hundt to call the auction the biggest land deaf since the Louisiana Purchase.

The crime here is that government auctions could have been - and should have been - started years ago. In 1959, Nobel laureate Ronald Coase first proposed that the government sell the frequencies through auctions like those held to...