Analysis of spectrum auctions in India—An application of the opportunity cost approach to explain large variations in spectrum prices

The remarkable growth of mobile communication has reinforced the significance of the radio spectrum for mobile network operators. The availability of spectrum varies considerably between different countries due to national regulatory decisions. The focus in this paper is on India where operators have access to a limited amount of spectrum. This paper analyses the value of spectrum by estimating the opportunity cost, which is calculated by the savings that can be achieved by acquiring appropriate amount of spectrum rather than investing in additional base stations. The applied approach combines network deployment, user demand levels, cost, and capacity issues, which are integrated in the application in the opportunity cost approach for spectrum. The opportunity cost of spectrum is compared with prices paid at spectrum auctions. The analysis includes a discussion of drivers that determine the willingness to pay for spectrum. The results show that the opportunity cost of spectrum in relation to auction prices is lower than prices operators paid for 3G spectrum in the metro circles (service areas) while the value derived from the opportunity cost is higher than auction prices in the remaining circles.     

Evaluation of the opportunity cost of the spectrum: Application to the digital dividend

The transition to digital television transmission (DTT) creates an opportunity for revising the current allocation and use of the spectrum, and for enhancing its efficiency. The fairly large amount of spectrum that will be freed up in the analog TV switch-off is known as the digital dividend. Many EU countries have decided to partially allocate these frequencies, through market mechanisms, to mobile use, but a large fraction of the dividend is supposed to remain in the hands of broadcasters. An efficient management of the spectrum requires that the use of this resource should be supported through appropriate incentive policies. This paper presents a techno-analytical approach to evaluate the opportunity cost of using a spectrum portion within the digital dividends’ bandwidths, for example around 800-900 MHz, for both DVB-T and UMTS services, specifically addressing the extraordinary rise in the use of mobile broadband in the European context. The methodology is then applied to Italy to derive a baseline for administered prices reflecting the cost of spectrum use. Results obtained are then compared with existing evidences from other studies and Countries’ experiences.     

Low price equilibrium in multi-unit auctions: the GSM spectrum auction in Germany

The second–generation (GSM) spectrum auction in Germany is probably the most clear cut example of a low price outcome in a simultaneous ascending-bid multi-unit auction. The present paper gives an account of the events, describes the auction rules and market conditions, and provides a game theoretic explanation of low price equilibrium in simultaneous, ascending-bid multi-unit auctions. In particular, it is shown that in the unique equilibrium that survives iterated elimination of dominated strategies, the efficient allocation is reached at minimum bids.     

Reception-oriented radio rights: Increasing the value of wireless by explicitly defining and delegating radio operating rights

The increasingly intensive coexistence of diverse radio systems and the inability of existing institutions to resolve conflicts in a timely manner require a change in the way operating rights are defined, assigned, and enforced. This paper proposes a regulatory approach that increases delegation to operators and reduces ambiguity by (1) more clearly defining operating rights and harmful interference using the Three P approach of probabilistic reception protections and transmission permissions; (2) facilitating transactions by limiting the number of parties to a negotiation, only altering the rights in a license at renewal, and implementing a registry; and (3) making rights enforcement more efficient by enabling direct enforcement of rights, separating rulemaking from adjudication, and defining remedies up-front.     

Aligning technology,business and regulatory scenarios for cognitive radio

The amount of wireless and mobile applications and devices is rapidly growing. This exponential growth might be hindered by a scarcity of suitable radio spectrum, a necessary but limited natural resource required for all wireless communications. Spectrum scarcity does not only slow down data growth, but may also disrupt existing communications. Cognitive radio may provide a solution to these issues, but although the concept seems promising, few products making use of CR have been brought to the market. This is due to significant uncertainties surrounding the appropriate economic scenario for CR, the regulatory framework and the technology enablers needed for such CR scenario. As business, regulatory and technical constraints are largely co-determined by each other, this paper proposes to align them, paving the road for the implementation of specific economic scenarios with appropriate regulation. First, from the business perspective, a taxonomy of possible economic scenarios for CR is proposed. Second, for each scenario a number of regulatory requirements – based on a European context – and characteristics are given. In doing so, it is argued that the economic scenarios are inherently distinct so that CR regulation should be customized for the type of scenario envisaged. Third, from the technology perspective, this article reviews the possible CR enablers, showing that spectrum sensing, CPC and geolocation database all have their strengths and weaknesses, and receive varying support from business and regulators. Based on the analysis it can be concluded that, although the introduction of CR does not seem problematic for the unlicensed scenario and the flexible operator scenario, more complex measures are required to enable CR to contribute to the implementation of spectrum pool—and spectrum market scenarios. It can also be concluded that, out of the three proposed alternatives, the geolocation database is the most likely candidate to be used for CR purposes. However, although this database is a clear favorite for applications within the TV White Spaces, spectrum sensing should not be discarded as a potential CR enabler for highly sensitive applications in high-density radio environments.     

Economics at the FCC: 2007–2008

In any given year, the Federal Communications Commission confronts many issues of interest to economists. This paper summarizes four issues of interest during the last year: Spectrum Auctions, Media Ownership, Quality-Adjusted Cable Prices, and Leased Access. It highlights the role that economic analysis played in each and identifies areas where further research would be fruitful. This article was drafted while the first author was Chief Economist at the Federal Communications Commission. The opinions expressed here are solely those of the authors and do not necessarily reflect those of the Federal Communications Commission, its Commissioners, or its staff. We would like to thank Larry White and Tracy Waldon for helpful comments.     

Optimizing receiver performance using harm claim thresholds

More and more systems need to be squeezed together in frequency, space and time in order to satisfy the growth in demand for radio services. However, greater proximity increases the risk of service breakdowns caused both by poor interference tolerance in receivers and by inappropriate signals radiated by transmitters.     

建筑施工成本管理方法的应用与分析

施工项目成本是从投标开始,到施工、交工、保修所付出的经济价值。应把施工成本管理作为一个系统工程,克服只重视生产过程中成本管理,而忽视其他环节成本管理的倾向。建筑施工企业应把加强成本管理、挖掘企业内部潜力、降低成本等,作为提高企业的经济效益的根本途径。     

The rural telecommuter surplus in Southwestern Ontario,Canada

This paper asks the question: what kind of economic benefits do rural telecommuters experience in Southwestern Ontario? This is a relevant question in Canada where, according to Statistics Canada (2017) one in 14 people work from home. This paper presents an overview of the current literature on telecommuting. We estimate the telecommuter surplus in Southwestern Ontario where the region is currently deploying one of Canada's largest publicly-funded ultra-high-speed broadband initiatives known as SouthWest Integrated Fibre Technology Inc. (SWIFT). The analysis is based on SWIFT residential and farm surveys (n?=?3948) conducted in 2017. We find that an average telecommuter's surplus in terms of costs saved, including opportunity cost ranges from $8820 to $23964 per annum per telecommuter, depending on the number of days telecommuted per week for home and primary residence dwelling type. The social net benefits of telecommuting differ from its private net benefit (the focus of our paper) since the former includes both positive and negative externalities associated with telecommuting such as reduced traffic congestion, reduced probability of road accidents, as well as some workers shirking their duties (a negative impact). We leave this for future work.     

Allocative vs. technical spectrum efficiency

Achieving allocative and technically efficient spectrum management is a key aspect of deregulatory reforms in several OECD countries. However, reform legislation offers few clues as to how these objectives should rank when they conflict with one another. An ‘innocent’ prior acquisition of service-neutral spectrum at an efficiently run auction may prove allocative efficient but fail to be technically efficient if the spectrum is left fallow in the short term. Accountability for the productive usage of a public resource and pressures from short-term political cycles may induce regulators to mandate some minimal level of activity. Two plausible regulatory responses are considered: use it or lose it clauses and spectrum trading incentives. The former favours technical efficiency whilst the latter promotes allocative efficiency. The argument is formalised in a simple economic model buttressing the roles of uncertainty and transaction costs to assert the primacy of allocative efficiency over technical efficiency.     

Economic and policy implications of spectrum license fee payment methods

This paper argues that “Do auctions raise consumer prices?” is a misleading question. License fee payment methods, rather than spectrum assignment methods, are key factors that bring forth different market outcomes in the wireless telecommunication industry. This paper analyzes and discusses the effects of three spectrum license fee payment methods—upfront lump-sum fees, royalties, and profit sharing—on economic efficiency, spectrum supply, and government revenue. Royalties create distortions in product and factor markets but can induce the government to increase spectrum supply and encourage firms’ investments. A caveat is that the analyses are based on the model assuming monopoly market and information certainty.