Changing priorities in spectrum auctions

Are auctions still the best way to assign spectrum? Many people have doubts.

Gerald Pogorel, for example, Professor Emeritus at Télécom Paris, told us earlier this year that auctions were well suited to opening up mobile markets that are still dominated by one incumbent. However, apart from that, their benefits are debatable.

Despite this, auctions seem to be here to stay. In a recent report compiled for the UK Spectrum Policy Forum, Analysys Mason concluded that the economic philosophy articulated in the Cave report in 2002 still supports the use of auctions (and trading).

Mobile network operators (MNOs), while they may support the principle of auctions, are rarely happy with how they are designed. The UK, for example, has seen plenty of litigation over auction formats in the last decade or so.

Significantly, when we updated our spectrum auctions dossier, which is now available to Research Service subscribers, we found that regulators were starting to change auction formats. This is at least partly in response to criticism from MNOs. Network operators often complain that regulators devise overly complex rules.

Even politicians weigh in sometimes. Portugal’s prime minister said the country’s recent spectrum award was the “worst possible” auction model. Portuguese MNOs also launched legal action over it, arguing that the regulator had changed the rules while the auction was still going on.

Auctions are also evolving to adapt to changing policy goals. These days, coverage is often deemed to be more important than competition. The potential for new market entrants to participate in auctions is also significantly lower now.

Our spectrum auctions dossier, now updated for 2022, is available to Spectrum Research Service subscribers here.•