A review of the evolution of auctions as a method for radio spectrum assignment

Abstract

Radio spectrum is the means by which modern wireless communications are possible. It basically refers to the use of electromagnetic waves to code and transmit information. In recent years there has been an explosion in demand for spectrum, particularly because of impressive progress in digital wireless communications, including personal mobile communications. Spectrum can be regarded as a public good which can be divided in portions or bands and used on the basis of time and geography. The goals of this paper are to establish the economic principles motivating the use of auctions, to introduce main auction formats used worldwide and the deficiencies detected throughout its application in the last fifteen years. The review discusses the early days in the need for spectrum allocation and assignment; it is mainly a recount of the way spectrum organisation and administration came under regulatory control in the United States. Then it briefly mentions the methods used before the 1990s for spectrum allocation of cellular telephony bands and does a detailed description of the use of auctions as the predominant method, nowadays, for spectrum assignment, and presents a description of the currently most widely used spectrum format.