Spectrum auction

From Wikipedia, the free encyclopedia

A spectrum auction is a process whereby a government uses an auction system to sell the
rights (licences) 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.[1] 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. Alternatives to auctions include administrative
licensing, such as the comparative hearings conducted historically (sometimes referred to as
"beauty contests"), or lotteries.

Innovation[edit]

In 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.[2] 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,[3] 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.[4] 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.[4]

Advantages and disadvantages[edit]

Advantages of auctions:[5]

 A well-designed auction is the method most likely to allocate resources to those who can use
them most valuably. Rather than rely on government to assess the merits of competing firms'
business plans, an auction forces businessmen to put their "money where their mouths are"
when they make their bids.
 An auction is more transparent, and gives rise to less political controversy when compared to
other allocation mechanisms, since there is no room for subjectivity in assessing whether an
undertaking accomplishes criteria for allocation (unlike a beauty contest or the direct
allocation of a license).
 Auctions usually raise important sums of money provided there is competition among many
bidders.
India[edit]
Further information: Indian Telecom Spectrum Auction

India was among the early adopters of spectrum auctions beginning auctions in 1991. Despite
the early start in auctions, services have been slow to roll out caused by unforeseen problems
with the design and rules of the auction.[9] Potential service providers were required to seek
foreign partners, as the Department of Telecom (DoT) felt that no Indian company alone had the
financial means to enter the industry. Bidding for all licenses required a two-stage screening
process. After the new government came into power it has streamlined the auction process. It
wants the effective allocation of frequency so that programmes like digital India, smart city etc.
are realized. During March 2015 auctions the government has earned a revenue of Rs. 82,000
crore ($13 billion) from spectrum allocation.