Vice President Robert Earle, Principal David Sosa Release Study on Spectrum Auctions around the World

August 07, 2013

The Federal Communications Commission (FCC) is seeking to address the rapid demand for access to wireless spectrum by reallocating up to 500 MHz of additional bandwidth for commercial wireless service by 2020. To that end, the agency is in the process of designing an "incentive auction" and determining the rules of participation.

In their just-released white paper "Spectrum Auctions around the World: An Assessment of International Experiences with Auction Restrictions," Analysis Group Vice President Robert Earle and Principal David Sosa examine the impact of spectrum auction design and rule-making on the wireless industry and on consumer welfare. The authors assessed data from past spectrum auctions in Europe, Canada, and the United States and found that the use of spectrum caps and other restrictions on bidder participation can be harmful to consumers, and can thwart competition and innovation in the industry.

For example, restrictive and preferential participation rules in place for the 1994 U.S. PCS spectrum auctions resulted in lost consumer welfare of as much as $70 billion. And in the German 3G auctions in 2000, policies intended to encourage market entry resulted in a 10-year delay in the assignment of one-third of the 3G spectrum, delaying the benefits consumers would have otherwise enjoyed.

Spectrum repurposing and a well-functioning secondary market have proven to be much more effective in expanding competition, encouraging innovation and investment, and improving consumer welfare, the authors say. In the years since the PCS auctions, for instance, all significant new entry into the U.S. wireless market has been through spectrum repurposing or mergers and acquisitions, the authors note.

The white paper was commissioned by Mobile Future, a coalition of communications companies and nonprofit groups.

Read the white paper