Italian 4G Spectrum "auctions"

News reports that Italy has raised 2.6B euros for the sale of its 800 MHz spectrm (digital dividend) with only three of the four existing operators being successful. The auctions for some remaining 1800 GHz and 200 Ghz along with all the 2.6 GHz will resume this week.

In bidding to Friday the 2.6 GHz has raised under 500 million euros. The relativity between the two bands woon't really be known until the auction completes.

For comparison to the French auction the population of Italy is 60 million.

The Italian and French prices should be comparable, but, as an analysis of all European auctions notes

Attempting to make sense of these results requires the consideration of a great many factors. The timing of the auctions is important as some occurred before the start of the on-going financial crisis. The licence conditions attached to the spectrum, such as coverage requirement, should also be considered. These vary from regulator to regulator and the more onerous the coverage requirements, for example, the less valuable the spectrum.

Despite a reasonable number of 2.6GHz auctions having taken place, it is almost impossible to draw any firm conclusions, especially as the design of each auction is also subtly different. This can have a major impact on participant’s bidding strategies and ultimately the price paid. As a result, for any operator facing a 2.6GHz auction, little conclusive insight can be drawn from the results of the 2.6GHz spectrum auctions to date. Therefore in order to prepare for an auction a country, operator and auction specific business case will be required to value the spectrum and to allow the operator to bid with confidence.

Bizarrely the author still asserts "the final price paid in an efficient auction will be determined by relative levels of spectrum supply and demand"

Novae Meridianae Demetae Dexter delenda est

Spectrum Policy

The ACMA has launched a consultation on spectrum requirements for mobile broadband to 2020. I'll admit to not having read the documents yet, but think there is a lot to be said for keeping the availability constrained to spur innovation.

Meanwhile over in the US the ITIF is about to hold a seminar that seems to be on the topic; Waves of Innovation: Spectrum Allocation in the Age of the Mobile Internet
Event (details below). If anyone wants to engage a researcher to attend on their behalf ... I am available.

I spend a lot of my life dealing with "false dichotomy", and spectrum policy is one such area. The dichotomy is between having government ownership and direct regulation of spectrum or of allocating the rights to a market. This is the traditional approach to considering solutions to the so-called "tragedy of the commons". While the initial concept was about over-grazing of cattle in common fields, the same is true of "unregulated" spectrum.

In his book Governing the Commons Elinor Ostrom notes that management of the commons by either government or a market implies omniscience by either bureaucrats or firms. He notes that there are many real-world examples where "common pooled resources" are managed by systems more dynamic than either of the two standards.

In general markets work better than central control because they work to communicate information between participants. But much of the theory of "auctions" as efficient allocation mechanisms assumes that the bidding firms are omniscient about both the market demand characteristics and the technology evolution for the entire life of the spectrum licence.

A further interesting twist is added by a very brief analysis of the history of mobile phones. In the first generation (analog) the USA had effectively a mandated standard (AMPS) while Europe had a proliferation of standards. The USA developed faster and stronger.

With the advent of 2nd generation (digital) Europe mandated a standard (GSM) while the US pursued the first spectrum auctions. This resulted in a fragmented market between GSM and D-AMPS (or TDMA). In this phase the Europeans (and Asian economies that followed) rapidly outpaced the US.

The advent of 3G has seen a more unified technology approach on UMTS with a number of variants. Differences are apparent in some spectrum choices. The only other candidate was TD-CDMA from China.

LTE (4th generation) seems to be settling on one standard in two variants - FD and TD. Devices will probably work on both, and TD-LTE will supplant the Mobile WiMax base. But the fact remains that service adoption has been better in markets with active regulatory involvement rather than those that don't.

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Waves of Innovation: Spectrum Allocation in the Age of the Mobile Internet
Event

For many of us the term "spectrum policy" has to do with allocating relatively small parts of the radio frequency space to specific applications such as AM and FM radio, television, and public safety. It is a notion more apt for a time when we watched TV over the air and made phone calls over a wireline network. Today these patterns of usage are reversed, and we live in a world where mobile broadband has emerged as a general-purpose technology that can support a wide range of applications. We need a general-purpose spectrum and a spectrum policy that is ready for this and future technological advances. Join ITIF for an exploration of lessons learned in wireless networking that impact spectrum assignment policies and contemporary issues in spectrum policy, such as the development of 3G and 4G networks, the rise of Wi-Fi and other unlicensed technologies, the role of microwave, the impact of dynamic spectrum allocation, the utility of spectrum auctions, secondary uses, and secondary markets.

Date/Time:
Tuesday, May 17, 2011
12:00 PM-1:30 PM (add to calendar)

Location:
2168 Rayburn House Office Building
45 Independence Ave SW
Washington, DC 20515 (map)

Moderator:
Richard Bennett
Senior Research Fellow, Information Technology and Innovation Foundation

Steven J. Crowley
Consulting Engineer, Steven J. Crowley P.E.

Thomas W. Hazlett
Professor of Law and Economics, George Mason University

Matthew Hussey
Legislative Assistant, Office of Senator Olympia Snowe (R-ME)

Charles Jackson
Adjunct Professor of Electrical Engineering, George Washington University

Register for the event.




Novae Meridianae Demetae Dexter delenda est