Spectrum auction: Difference between revisions

Content deleted Content added

Inline

Revision as of 20:04, 21 April 2011

A spectrum auction is a process whereby a government uses an auction system to sell the rights (licences) to transmit signals over specific electromagnetic spectrum and to assign scarce spectrum resources. Depending on the specific auction format used, a spectrum auction can last from a single day to several months from the opening bid to the final winning bid. With a well-designed auction, resources are allocated efficiently to the parties that value them the most, the government securing revenue in the process.^[1] Spectrum auctions are a critical step in the march toward market-based spectrum management and also represent an effective solution for governments to allocate scarce resources. Alternatives to auctions include administrative licensing, such as the comparative hearings conducted historically (sometimes referred to as "beauty contests"), or lotteries.

Innovation

In past decade, telecommunications has turned into a highly competitive industry where companies are competing to put out the best gadgetry and access to their consumers. This competition has been triggered by technological advancements, privatization, and liberalization.^[2] Mobile communication is particular has made many transitions since 2000, mobile technology has moved from second generation (2G) to third generations (3G) and we are now seeing mobile communication make a transition to fourth generation (4G) technology. However, the transition to fourth generation and what is truly considered "4G" has been a hot topic because mobile companies use different technology for 4G. Some mobile networks use WiMAX which stands for Worldwide Interoperability for Microwave Access and other networks use LTE or Long Term Evolution. However, according to the ITU or International Telecommunications Union, true 4G use the International Mobile Telecommunications Advanced standard.

Countries

Sweden

On 2008-05-08 Sweden's Post- & Telestyrelsen, PTS concluded an electronic 16-day SMRA auction, (Simultaneous multiple-round ascending) for nine 15-year 4G-licenses for a total bandwidth of 190 MHz in the 2,6 GHz band. The total required minimum bids were SEK 50,000,000, but the total winning bids were SEK 2,099,450,000 or USD 38.60 / inhabitant.^[3]

USA

In the United States, the Federal Communications Commission (FCC) conducts auctions of licenses for electromagnetic spectrum. The FCC has been conducting competitive auctions since 1994 rather than assigning spectra through comparative hearings (under which the specific merits of each applicant is litigated), or through lotteries. Since July 1994, the FCC has conducted 87 spectrum auctions, which raised over $60 billion for the U.S. Treasury (not all of which has been collected). The auctions assigned thousands of licenses to hundreds of licensees. The auction approach is widely emulated throughout the world. To be considered a qualified [bidder] by the Commission, companies or individuals have to submit an application and an upfront downpayment. FCC auctions are conducted electronically and are accessible over the Internet. Bidders can follow the progress of an auction and view the results of each round.

Forms

The FCC auctions have used a Simultaneous Multiple Round Auction (SMRA) in which groups of related licenses are auctioned simultaneously over many rounds of bidding. In each round, All interdependent licenses up for bid simultaneously and bidders submit new higher price on desired number of licences, bumping the standing high bidder. The auction ends when nobody wants to change the bid; that is, no bidder is willing to raise the price on any license.

Goals

The US Congress set multiple goals for FCC when spectrum auction was first launched: "In designing auctions for spectrum licenses, the FCC is required by law to meet multiple goals and not focus simply on maximizing receipts. Those goals include ensuring efficient use of the spectrum, promoting economic opportunity and competition, avoiding excessive concentration of licenses, preventing the unjust enrichment of any party, and fostering the rapid deployment of new services, as well as recovering for the public a portion of the value of the spectrum."^[4]

Disadvantages

Despite the apparent success of spectrum auctions, an important disadvantage limiting both efficiency and revenues is demand reduction and collusive bidding. The information and flexibility in the process of auction can be used to reduce auction prices by tacit collusion. When bidder competition is weak and one bidder holds an apparent advantage to win the auction for specific licenses, other bidders will often choose not to the bid for higher prices, hence reducing the final revenue generated by the auction. In this case, the auction is best thought of as a negotiation among the bidders, who agree on who should win the auction for each discrete bit of spectrum.

Canada

The Canada 2008 Wireless Spectrum Auction beginning on 2008-05-27 Industry Canada commenced an auction for 105 MHz of spectrum with 40 MHz reserved for new entrants. The auction concluded on July 23rd, 2008 after 331 rounds and raised $4.25 billion.

Germany

From 2000-07-31 to 2000-08-18, the German government conducted an auction for 12 frequency blocks for the new UMTS mobile telephony standard. The total of the bids exceeded expectations by reaching the staggering amount of DEM 98.8 billions (EUR 50.8 billions). (See de:Versteigerung der UMTS-Lizenzen in Deutschland)

United Kingdom

From 2000-03-06 to 2000-04-27, the Radiocommunications Agency of the UK government raised £22.5 billions (EUR 38.3 billions) from an auction of five licences for radio spectrum to support the 3G mobile telephony standard.^[5] ^[6]

References

^ Cramton, Peter (2001-02). "Spectrum Auctions" (PDF). Handbook of Telecommunications Economics: 605–649. {{cite journal}}: |chapter= ignored (help); Check date values in: |date= (help)
^ Gerhard Illing and Ulrich Kluh, ed. (2003). Spectrum Auctions and Competition in Telecommunications. Cambridge, Massachusetts: The MIT Press. ISBN 31293024555751. {{cite book}}: Check |isbn= value: length (help)
^ "Sweden rents out 190 MHz chunk for 226 million euros". Blog.anta.net. 2008-05-08. ISSN 1797-1993. Retrieved 2008-05-08.
^ Rose, Gregory F. (2006-05). "The Failure of FCC Spectrum Auctions" (PDF). CENTER FOR AMERICAN PROGRESS. {{cite journal}}: Check date values in: |date= (help); Unknown parameter |coauthor= ignored (|author= suggested) (help)
^ Binmore, Ken (2002-03-01). "The Biggest Auction Ever: the Sale of the British 3G Telecom Licences" (PDF). The Economic Journal. 112 (478): C74–C96. doi:10.1111/1468-0297.00020. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
^ "Radiocommunications Agency : The Auction of Radio Spectrum for the Third Generation of Mobile Telephones". National Audit Office. 2001-10-19.

External links

This broadcasting-related article is a stub. You can help Wikipedia by expanding it.

[1] Cramton, Peter (2001-02). "Spectrum Auctions" (PDF). Handbook of Telecommunications Economics: 605–649. {{cite journal}}: |chapter= ignored (help); Check date values in: |date= (help)

[2] Gerhard Illing and Ulrich Kluh, ed. (2003). Spectrum Auctions and Competition in Telecommunications. Cambridge, Massachusetts: The MIT Press. ISBN 31293024555751. {{cite book}}: Check |isbn= value: length (help)

[3] "Sweden rents out 190 MHz chunk for 226 million euros". Blog.anta.net. 2008-05-08. ISSN 1797-1993. Retrieved 2008-05-08.

[4] Rose, Gregory F. (2006-05). "The Failure of FCC Spectrum Auctions" (PDF). CENTER FOR AMERICAN PROGRESS. {{cite journal}}: Check date values in: |date= (help); Unknown parameter |coauthor= ignored (|author= suggested) (help)

[5] Binmore, Ken (2002-03-01). "The Biggest Auction Ever: the Sale of the British 3G Telecom Licences" (PDF). The Economic Journal. 112 (478): C74–C96. doi:10.1111/1468-0297.00020. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)

[6] "Radiocommunications Agency : The Auction of Radio Spectrum for the Third Generation of Mobile Telephones". National Audit Office. 2001-10-19.

[1]

[2]

[3]

[4]

[5]

[6]

@@ Line 11: / Line 11: @@
 </ref> Spectrum auctions are a critical step in the march toward market-based spectrum management and also represent an effective solution for governments to allocate scarce resources.
 Alternatives to auctions include administrative licensing, such as the comparative hearings conducted historically (sometimes referred to as "beauty contests"), or lotteries.
+==Innovation==
+In past decade, telecommunications has turned into a highly competitive industry where companies are competing to put out the best gadgetry and access to their consumers. This competition has been triggered by technological advancements, privatization, and liberalization.<ref>{{cite book|title=Spectrum Auctions and Competition in Telecommunications|year=2003|publisher=The MIT Press|location=Cambridge, Massachusetts|isbn=31293024555751|editor=Gerhard Illing and Ulrich Kluh}}</ref> Mobile communication is particular has made many transitions since 2000, mobile technology has moved from second generation (2G) to third generations (3G) and we are now seeing mobile communication make a transition to fourth generation (4G) technology. However, the transition to fourth generation and what is truly considered "4G" has been a hot topic because mobile companies use different technology for 4G. Some mobile networks use WiMAX which stands for Worldwide Interoperability for Microwave Access and other networks use LTE or Long Term Evolution. However, according to the ITU or International Telecommunications Union, true 4G use the International Mobile Telecommunications Advanced standard.