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Strategies For Allocating Radio Frequencies: Federal Communications Commission Wireless Spectrum Auctions

Year 2011, Volume: 6 Issue: 1, 191 - 203, 01.06.2011

Rasim Ozcan

Abstract

The intensive use of wireless spectrum in communications necessitates complex allocation mechanisms for spectrum licenses. The Federal Communications Commission (FCC) uses simultaneous ascending auctions, an innovative auction mechanism, to address the complexities created by the frequencies, bandwidths and geographic locations of spectrum licenses. In this study I discuss the objectives of spectrum auctions, and analyze the strategic auction design issues faced by the FCC; including price discovery, exposure, and information disclosure problems. Finally, I analyze how the FCC addresses these issues in light of the simultaneous ascending auction mechanism, and identify areas for improvement in strategic spectrum auction design.

Keywords

FCC Radio Frequency Wireless Spectrum Auction Design

References

  • Bajari, P. and J. Yeo (2009) “Auction design and tacit collusion in FCC spectrum auctions,” Information Economics and Policy, 21 (2), 90-100.
  • Bajari, P. and J. Fox (2009) “Measuring the efficiency of an FCC spectrum auction,” NBER Working Paper Series 11671.
  • Bali, T.G., K.O. Demirtas, and H. Tehranian (2008) “Aggregate earnings, firm-level earnings, and expected stock returns,” Journal of Financial and Quantitative Analysis, 43 (3), 657-684.
  • Bulow, J., J. D. Levin and P. R. Milgrom (2009) “Winning play in spectrum auctions,” NBER Working Paper Series 14765.
  • Camera, G., and C. Selcuk (2009) “Price dispersion with directed search,” Journal of the European Economic Association 7 (6), 1193-1224.
  • Coase, R. H. (1959) “The Federal Communications Commission,” Journal of Law & Economics, 2, 1-40.
  • Cramton, P. (2009) “Spectrum auction design,” U. Maryland Working Paper. URL: http://www.cramton.umd.edu/papers2005-2009/cramton-spectrum-auction-design.pdf.
  • Cramton, P., and J. Schwartz (2002) “Collusive bidding in the FCC spectrum auctions,” Contributions to Economic Analysis & Policy, 1(1) URL:www.bepress.com/bejeap/contributions/vol1/iss1/art11.
  • Cramton, P. (1998) “The Efficiency of the FCC spectrum auctions,” Journal of Law and Economics, 41, 727- 736.
  • Dufwenberg, M., U. Gneezy (2002) “Information disclosure in auctions: an experiment,” Journal of Economic Behavior Organization, 48, 431–444.
  • Eso, P., B. Szentes (2007) “Optimal information disclosure in auction: The handicap auction,” Review of Economic Studies, 74, 705–731.
  • FCC Report (2009) Moving forward: driving investment and innovation while protecting consumers, URL: http://www.fcc.gov/fcc-moving-forward-report.pdf, Retrieved: 12.20.2010.
  • FCC Public Notice DA 07-4171 (2007) Auction of 700 MHz band licenses scheduled for January 24, 2008, URL: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-4171A1.pdf. Retrieved 12.17.2010.
  • FCC (2007) Revised 700 MHz Band Plan for Commercial Services, URL: http://wireless.fcc.gov/auctions/data/bandplans/700MHzBandPlan.pdf. Retrieved: 10/23/2010.
  • FCC Public Notice FCC 06-47 (2006) Auction of advanced wireless services licenses scheduled for June 29, 2006, URL: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-47A1.pdf. Retrieved 12.17.2010.
  • FCC (2008) Auction 73 Results, URL: http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id= 73. Retrieved: 01/30/2011.
  • Genc, T.S. and S. Sen (2008) “An analysis of capacity and price trajectories for the Ontario electricity market using dynamic Nash equilibrium under uncertainty,” Energy Economics, 30 (1), 173-191.
  • Gokpinar, B., W. J. Hopp and S. M. R. Iravani (2010) “The impact of product architecture and organization structure on efficiency and quality of complex product development,” Management Science, 56(3), 468-484.
  • Hazlett, T. and R. Munoz, (2010) “What really matters in spectrum allocation design,” AEI-Brookings Joint Center for Regulatory Studies Working Paper, 04-16.
  • Hendricks, K., J. Pinkse, and R. H. Porter (2003) “Empirical implications of equilibrium bidding in first-price, symmetric, common value auctions,” The Review of Economic Studies, 70 (1), 115-145.
  • Herzel, L. (1998) “My 1951 color television article,” Journal of Law and Economics, 41 (2), 523-528.
  • Herzel, L. (1951) “'Public interest' and the market in color television regulation,” University of Chicago Law Review, 18, 802-16.
  • Klemperer, P. (2002) “What really matters in auction design,” The Journal of Economic Perspectives, 16 (1), 169-189.
  • Mares, V., and R. Harstad (2003) “Private information revelation in common value auctions,” Journal of Economic Theory, 109, 264–282.
  • McAfee, P. (1995) Auction design for the real world, Advanced Lectures URL: http://www.mcafee.cc/Papers/Bin/Auction.pdf>, Retrieved: 12.20.2010.
  • McMillan, J. (1994) “Selling spectrum rights,” Journal of Economic Perspectives, 8, 145-162.
  • Milgrom, P. R., (2004) Putting Auction Theory to Work, Cambridge: Cambridge University Press.
  • Tu, Z. (2005) “Why do we use the Dutch auction to sell flowers?—Information disclosure in sequential auctions,” URL: http://cedr.whu.edu.cn/cedrpaper/2007101516252.pdf.
  • U.S. Congress, Omnibus Budget Reconciliation Act of 1993, Conference Report [HR 2264], Title IV, Communications and Transportation, Report 94-141, (1993).
  • Appendix: Spectrum License Mapsxxx A.
  • Regional Economic Area Groupings (REAGs)
  • Source: FCC, http://wireless.fcc.gov/auctions/data/maps/REAG.pdf B.
  • Economic Areas (EAs)
  • Source: FCC, http://wireless.fcc.gov/auctions/data/maps/EA_GOM.pdf
  • C. Cellular Market Areas (CMAs)

Strategies For Allocating Radio Frequencies: Federal Communications Commission Wireless Spectrum Auctions

Year 2011, Volume: 6 Issue: 1, 191 - 203, 01.06.2011

Rasim Ozcan

Abstract

The intensive use of wireless spectrum in communications necessitates complex allocation mechanisms for spectrum licenses. The Federal Communications Commission (FCC) uses simultaneous ascending auctions, an innovative auction mechanism, to address the complexities created by the frequencies, bandwidths and geographic locations of spectrum licenses. In this study I discuss the objectives of spectrum auctions, and analyze the strategic auction design issues faced by the FCC; including price discovery, exposure, and information disclosure problems. Finally, I analyze how the FCC addresses these issues in light of the simultaneous ascending auction mechanism, and identify areas for improvement in strategic spectrum auction design.

Keywords

FCC Radio Frequency Wireless Spectrum Auction Design

References

  • Bajari, P. and J. Yeo (2009) “Auction design and tacit collusion in FCC spectrum auctions,” Information Economics and Policy, 21 (2), 90-100.
  • Bajari, P. and J. Fox (2009) “Measuring the efficiency of an FCC spectrum auction,” NBER Working Paper Series 11671.
  • Bali, T.G., K.O. Demirtas, and H. Tehranian (2008) “Aggregate earnings, firm-level earnings, and expected stock returns,” Journal of Financial and Quantitative Analysis, 43 (3), 657-684.
  • Bulow, J., J. D. Levin and P. R. Milgrom (2009) “Winning play in spectrum auctions,” NBER Working Paper Series 14765.
  • Camera, G., and C. Selcuk (2009) “Price dispersion with directed search,” Journal of the European Economic Association 7 (6), 1193-1224.
  • Coase, R. H. (1959) “The Federal Communications Commission,” Journal of Law & Economics, 2, 1-40.
  • Cramton, P. (2009) “Spectrum auction design,” U. Maryland Working Paper. URL: http://www.cramton.umd.edu/papers2005-2009/cramton-spectrum-auction-design.pdf.
  • Cramton, P., and J. Schwartz (2002) “Collusive bidding in the FCC spectrum auctions,” Contributions to Economic Analysis & Policy, 1(1) URL:www.bepress.com/bejeap/contributions/vol1/iss1/art11.
  • Cramton, P. (1998) “The Efficiency of the FCC spectrum auctions,” Journal of Law and Economics, 41, 727- 736.
  • Dufwenberg, M., U. Gneezy (2002) “Information disclosure in auctions: an experiment,” Journal of Economic Behavior Organization, 48, 431–444.
  • Eso, P., B. Szentes (2007) “Optimal information disclosure in auction: The handicap auction,” Review of Economic Studies, 74, 705–731.
  • FCC Report (2009) Moving forward: driving investment and innovation while protecting consumers, URL: http://www.fcc.gov/fcc-moving-forward-report.pdf, Retrieved: 12.20.2010.
  • FCC Public Notice DA 07-4171 (2007) Auction of 700 MHz band licenses scheduled for January 24, 2008, URL: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-07-4171A1.pdf. Retrieved 12.17.2010.
  • FCC (2007) Revised 700 MHz Band Plan for Commercial Services, URL: http://wireless.fcc.gov/auctions/data/bandplans/700MHzBandPlan.pdf. Retrieved: 10/23/2010.
  • FCC Public Notice FCC 06-47 (2006) Auction of advanced wireless services licenses scheduled for June 29, 2006, URL: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-06-47A1.pdf. Retrieved 12.17.2010.
  • FCC (2008) Auction 73 Results, URL: http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id= 73. Retrieved: 01/30/2011.
  • Genc, T.S. and S. Sen (2008) “An analysis of capacity and price trajectories for the Ontario electricity market using dynamic Nash equilibrium under uncertainty,” Energy Economics, 30 (1), 173-191.
  • Gokpinar, B., W. J. Hopp and S. M. R. Iravani (2010) “The impact of product architecture and organization structure on efficiency and quality of complex product development,” Management Science, 56(3), 468-484.
  • Hazlett, T. and R. Munoz, (2010) “What really matters in spectrum allocation design,” AEI-Brookings Joint Center for Regulatory Studies Working Paper, 04-16.
  • Hendricks, K., J. Pinkse, and R. H. Porter (2003) “Empirical implications of equilibrium bidding in first-price, symmetric, common value auctions,” The Review of Economic Studies, 70 (1), 115-145.
  • Herzel, L. (1998) “My 1951 color television article,” Journal of Law and Economics, 41 (2), 523-528.
  • Herzel, L. (1951) “'Public interest' and the market in color television regulation,” University of Chicago Law Review, 18, 802-16.
  • Klemperer, P. (2002) “What really matters in auction design,” The Journal of Economic Perspectives, 16 (1), 169-189.
  • Mares, V., and R. Harstad (2003) “Private information revelation in common value auctions,” Journal of Economic Theory, 109, 264–282.
  • McAfee, P. (1995) Auction design for the real world, Advanced Lectures URL: http://www.mcafee.cc/Papers/Bin/Auction.pdf>, Retrieved: 12.20.2010.
  • McMillan, J. (1994) “Selling spectrum rights,” Journal of Economic Perspectives, 8, 145-162.
  • Milgrom, P. R., (2004) Putting Auction Theory to Work, Cambridge: Cambridge University Press.
  • Tu, Z. (2005) “Why do we use the Dutch auction to sell flowers?—Information disclosure in sequential auctions,” URL: http://cedr.whu.edu.cn/cedrpaper/2007101516252.pdf.
  • U.S. Congress, Omnibus Budget Reconciliation Act of 1993, Conference Report [HR 2264], Title IV, Communications and Transportation, Report 94-141, (1993).
  • Appendix: Spectrum License Mapsxxx A.
  • Regional Economic Area Groupings (REAGs)
  • Source: FCC, http://wireless.fcc.gov/auctions/data/maps/REAG.pdf B.
  • Economic Areas (EAs)
  • Source: FCC, http://wireless.fcc.gov/auctions/data/maps/EA_GOM.pdf
  • C. Cellular Market Areas (CMAs)
There are 35 citations in total.

Details

Primary Language Turkish
Journal Section Articles
Authors

Rasim Ozcan This is me

Publication Date June 1, 2011
Published in Issue Year 2011 Volume: 6 Issue: 1

Cite

APA Ozcan, R. (2011). Strategies For Allocating Radio Frequencies: Federal Communications Commission Wireless Spectrum Auctions. Bilgi Ekonomisi Ve Yönetimi Dergisi, 6(1), 191-203.