Spectrum auctions : designing markets to benefit the public, industry and the economy

Access to the radio spectrum is vital for modern digital communication. It is an essential component for smartphone capabilities, the Cloud, the Internet of Things, autonomous vehicles, and multiple other new technologies. Governments use spectrum auctions to decide which companies should use what parts of the radio spectrum. Successful auctions can fuel rapid innovation in products and services, unlock substantial economic benefits, build comparative advantage across all regions, and create billions of dollars of government revenues. Poor auction strategies can leave bandwidth unsold and delay innovation, sell national assets to firms too cheaply, or create uncompetitive markets with high mobile prices and patchy coverage that stifles economic growth. Corporate bidders regularly complain that auctions raise their costs, while government critics argue that insufficient revenues are raised. The cross-national record shows many examples of both highly successful auctions and miserable failures. Drawing on experience from the UK and other countries, senior regulator Geoffrey Myers explains how to optimise the regulatory design of auctions, from initial planning to final implementation. Spectrum Auctions offers unrivalled expertise for regulators and economists engaged in practical auction design or company executives planning bidding strategies. For applied economists, teachers, and advanced students this book provides unrivalled insights in market design and public management. Providing clear analytical frameworks, case studies of auctions, and stage-by-stage advice, it is essential reading for anyone interested in designing public-interested and successful spectrum auctions. Cover Title Contents Extended contents Preface Acknowledgements About the author List of figures Glossary Part I: Spectrum auctions and public policy decision-making Chapter 1. Introducing spectrum auctions 1.1 The importance of spectrum auctions 1.2 Designing markets for public value 1.3 The plan of the book Chapter 2. Understanding the radio spectrum, auctions, and the UK case 2.1 Radio spectrum 2.2 Introduction to auctions 2.3 Overview of UK auctions Chapter 3. Market design, economic efficiency, and game theory for spectrum auctions 3.1 Market design and economic efficiency 3.2 Introduction to game theory and auction theory 3.3 Using expertise in spectrum auction design 3.4 Wider lessons for public policy Chapter 4. Regulation, public value, and policymaking 4.1 Regulation and public value 4.2 Regulatory decision-making 4.3 Wider lessons for public policy Chapter 5. Applying expertise in decision-making processes 5.1 Governance and expertise in auction design decisions 5.2 Coordination challenges for competition measures 5.3 The political economy of extending coverage 5.4 Litigation 5.5 Wider lessons for public policy Part II: Designing and implementing spectrum auctions Chapter 6. Laying foundations before the auction 6.1 Band clearance and use or misuse of impact assessments 6.2 Licensing as market design decisions Chapter 7. Auction design objectives and baseline decisions 7.1 Challenges of spectrum auctions 7.2 Objectives 7.3 Reserve prices set below market value avoid unsold spectrum 7.4 Choosing simultaneous or sequential awards depends on demand linkages 7.5 Deciding the items offered for sale and the structure of auction lots 7.6 Regulatory reputation as key market infrastructure for success Chapter 8. Choosing an auction format 8.1 How the main auction formats differ 8.2 Transparency, simplicity, and flexibility 8.3 Incentives for strategic bidding 8.4 Detailed rules 8.5 Conclusions Chapter 9. Promoting downstream competition 9.1 Promoting mobile competition through spectrum policy in the UK 9.2 Competition assessment framework 9.3 Cap and set-aside measures in Australia’s 2021 auction Chapter 10. Harnessing auctions for better-informed public policy decisions 10.1 Flexible spectrum reservation 10.2 Extending mobile coverage Chapter 11. Auction bidding and outcomes 11.1 Learning lessons from UK auctions 11.2 Practical implementation decisions, including the pace of the auction 11.3 Spectrum ownership changes outside auctions Afterword: Reflections for future auctions Using analytical frameworks to make structured judgements Stick or innovate? Avoiding undesirable practices The wider relevance of auctions Annex A: Further details of the UK’s spectrum auctions, 2000-21 A1 Supplementary information on UK auction formats and competition measures A2 Bidding and outcomes in the 2000 auction for 3G spectrum A3 Bidding and outcomes in the 2013 auction for 4G spectrum A4 Bidding and outcomes in the 2018 auction for PSSR spectrum A5 Bidding and outcomes in the 2021 auction for 5G spectrum Annex B: Further explanation of the Combinatorial Clock Auction (CCA) format and bidding in the UK’s 2013 auction B1 Bidding in the CCA format B2 Second-price rules B3 Activity rules Annex C: Additional explanation of the cost-benefit role of auctions C1 H3G’s bids for spectrum floors in the UK’s 2013 auction C2 Unbundled coverage obligations Bibliography