In the race towards high-speed mobile broadband spectrum allocation is not only a matter of auction revenue

Abstract

The already conventional way of allocating spectrum to parties interested in becoming mobile communications service providers is the simultaneous ascending auction (SAA), a mechanism that has been used and perfected over the last twenty years. A large amount of literature on spectrum auctions and key recent insights into the weaknesses of the SAA, have led researchers to propose and governments to adopt a new format which is known as the combinatorial clock auction (CCA). The auction is being popularised throughout its application in Europe, Australia and New Zealand and announcements by several other governments. As critical as the capacity of an auction to raise revenue for the government may be, its design and particular rules should respond – whenever feasible - to the broader goals set by governments, the history and current state of the mobile markets, the regulator’s goals for competition in the new or affected markets, the evolution and potential of new technologies to modify spectrum utilization efficiency and new spectrum exploitation forms allowed by authorities and sponsored by non-traditional market players. Inspired by the Colombian mobile telecommunications market, this paper reviews the process by which the government’s spectrum agency decides on the allocation of new spectrum bands to the mobile communications markets, including 4G and mobile broadband. Recent government decisions across the world on the future of the digital dividend and the search for new spectrum, on the one hand, and the increasing adoption of mobile devices everywhere, on the other, demand a serious rethinking of the processes involved in deciding how much spectrum, what frequency bands, when to allocate it and the mechanisms for allocation and assignment. This paper explores the above mentioned elements to propose a framework to the analysis of the mobile broadband spectrum allocation and assignment process. In doing so it discusses the elements the spectrum agency needs to consider in order to assess the most important issues that may have a potential impact on the efficient allocation of spectrum and, consequently, on future market development.