A spectrum auction is a process whereby a government uses an auction system to sell the rights to transmit signals over specific bands of the 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. Spectrum auctions are a step toward market-based spectrum management and privatization of public airwaves, and are a way for governments to allocate scarce resources.
In the past decade, telecommunications has turned into a highly competitive industry where companies are competing to buy valuable spectrum. This competition has been triggered by technological advancements, privatization, and liberalization. Mobile communication in particular has made many transitions since 2000, mobile technology has moved from second generation (2G) to third generation (3G) to fourth generation (4G) and is now in transition to fifth generation (5G) technology.
With more providers in the mobile industry, the competition during spectrum auctions has increased due to more demand from consumers. When the United States made the transition in June 2009 from analog to digital broadcast television signals, the valuable 700 MHz spectrum became available because it was no longer being used by analog TV signals.In 2007, search giant Google announced that they would be entering the mobile business with their highly popular Android operating system and plans for a mobile broadband system.Google said that they planned to bid for the \"C\" block of the spectrum auction which correspond to channels 54, 55, and 59 of the lower 700 MHz spectrum and channels 60, 61, 65, and 66 of the upper spectrum 700 MHz which are normally used to construct nationwide broadband services. Around the time of Google's announcement, AT&T and Verizon also announced plans to enter the spectrum auction in order to purchase \"C\" block spectrum.
In August 2011, Canada made the switch from analog to digital television, freeing up spectrum in the 700 MHz band for other uses. In February 2014, the country auctioned additional spectrum in the 700 MHz and 2500 MHz bands to the four major telecommunications players in the country and raised over $5.3 billion. Christian Paradis, Minister of Industry at the time, was quoted as hoping that the auctioning of these two bands (sometimes referred to as \"prime location\") would help foster more competition in the telecom sector, particularly the wireless sector, where Canada is just beginning to feel the effects of competition from new wireless companies from the 2008 auction.
On 2012-11-15 the Commission for Communications Regulation (ComReg) announced the results of its multi-band spectrum auction (Primarily for 4G (LTE)). This auction awarded spectrum rights of use in the 800 MHz, 900 MHz and 1800 MHz bands in Ireland from 2013 to 2030. The winners of spectrum were 3, Meteor, O2 Ireland and Vodafone. All of the winning bidders in the auction have indicated that they intend to move rapidly to deploy advanced services.
The existing licences in the 900 MHz and 1800 MHz bands were restricted to GSM use only. As the licences to be issued on foot of the auction are liberalised licences permitting use of the spectrum for UMTS, 4G and other technologies, existing licensees were permitted to bid to win their existing spectrum holdings on a liberalised basis and a rebate is payable in respect of the residual value of existing licences where this was done.
New Zealand's 1989 Radiocommunications Act of 1989 authorized Radio Spectrum Management (RSM) to create private property rights for spectrum and to use market-driven allocation mechanisms for the granting of these newly created licenses. Initially, spectrum licenses were sold using a tender system, but the first New Zealand spectrum auction was held in 1996, \"making New Zealand the first country to sell rights to use spectrum in this way.\"An internet-based computer system was developed for the second auction, held in 1998.
During the year 2013 Telecommunications Regulatory Authority of the Slovak Republic concluded a CCA electronic auction for spectrum licences from the 800 MHz, 1800 MHz and 2600 MHz frequency bands. These frequencies are reserved for operation of 4G networks (especially LTE technology).The auction was accompanied by strict information embargo. Neither the public nor the auctioneers did not know who are the auctioneers nor how many auctioneers participates in the auction. During the primary clock rounds the auctioneers knew only a limited aggregate demand at the end of auction day.
Most frequencies from the 1800 MHz band had been already used to provide public electronic communication services in the Slovak republic. Before the auction three existing national mobile operators had leased 2 x 15.2 MHz each. Remaining fragments of frequencies with a total size of 2 x 20.4 MHz became the subject of the auction. These fragments ranged from 2 x 0.4 MHz to 2 x 10.6 MHz. The Authority created a total of 8 blocks in 7 categories with the largest blocks of 2 x 5 MHz. The reserve price ranged from EUR 200,000 to EUR 2,200,000 per block. The maximum frequency spectrum that could be assigned to one company on the 1800 MHz band was 2 x 20 MHz, thus existing mobile operators could gain only 2 x 4.8 MHz each.
According to ECC decision 2600 MHz band was split into two categories: FDD with 14 blocks of 2 x 5 MHz and TDD with 10 blocks of 1 x 5 MHz each. Reserve price was set at EUR 1.1 million per FDD block and EUR 400,000 per TDD block. In 2600 MHz frequency range no operator had leased the spectrum before the auction. The maximum frequency spectrum that could be assigned to one company on the 2600 MHz band was not limited.
In 2000, the Radiocommunications Agency of the UK government (now Ofcom) raised 22.5 billion (EUR 36.9 billion (2000)) from an auction of five licences for radio spectrum to support the 3G mobile telephony standard.The auction was conducted in a simultaneous ascending auction, similar to the US format with a slight deviation. In the UK's version of the simultaneous individual auction, each high bidder is only allowed to win one of the five auctions whereas in the US, many regions have multiple licences which multiple bidders can win.After the auction in the UK, a severe recession in the telecom development industry was seen.
On 13 April 2018, the UK telecoms regulator, Ofcom, announced the results of a spectrum auction of the 2.3 GHz band (for improved 4G capacity) and the 3.4 GHz band for future 5G mobile services. The results are:
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). When initially planning and designing the spectrum auction, major telephone companies and the federal government relied on the input of various theorists including Paul Milgrom, Charles Plott, Barry Nalebuff, Preston McAfee, and John McMillan among others. 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.
The FCC auctions have used a Simultaneous Multiple Round Auction (SMRA, also referred to as the Simultaneous Ascending Auction) in which groups of related licenses are auctioned simultaneously over many rounds of bidding. At the start of each round, bidders simultaneously make sealed bids for any licenses in which they are interested. When the bidding for the round has concluded, round results are posted, which include the identities of the new bids and bidders along with the standing high bid and the corresponding bidder. The initial standing high bid at the start of an auction is zero ($0) and the corresponding bidder is the auctioneer. As the auction progresses, the standing high bid changes to highest new bid and the corresponding bidder is the person who makes said bid. In addition to posting the round results, minimum bids for the next round are also posted. A minimum bid is computed from taking the standard high bid and adding a predetermined bid increment, such as 5% or 10%.For an auction to come to a close there are several different options. McAfee, suggested that auctions should come to a close after a predetermined number of rounds, in which the license receives no new bids. Wilson and Paul Milgrom of Stanford University proposed that all auctions should end simultaneously, when there is no new bid on a license. To date, the latter is used in the spectrum auctions.
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.\" 59ce067264