Discussion Papers

Lorenz Nett, Ulrich Stumpf

New spectrum auction designs : Methodologies and international experience

No. 360/November 2011

(Full version only available in German)

Summary

Since the mid-nineties, spectrum auctions became a standard tool to assign frequency user rights worldwide. In Europe, Germany was the pioneer in using an electronic simultaneous multiple round auction for the allocation of ERMES-licences. Meanwhile other European countries like Austria, Denmark, the Netherlands, Sweden, Switzerland and the United Kingdom auctioned off spectrum.

Since 1996, the German regulatory authority BNetzA (then RegTP) conducted five spectrum auctions. The BNetzA always used an auction format classified as the traditional simultaneous multiple round auction. Beyond common basic elements that characterize this auction format, specific auction rules have been designed to cover the specific assignment situation. Several innovative elements have been introduced over the years, some of them also adopted by other spectrum management institutions: auctioning generic instead of specific blocks, flexible spectrum packaging instead of fixed structured spectrum packages, essential amounts of frequency user rights etc. Judging the results of the spectrum auctions, the respective auction designs proved to be effective. According to the judgment of the Bundesnetzagentur the approach and the corresponding results have been in line with the objectives of the German Telecommunications Act.

Meanwhile other European countries applied different spectrum auction designs. The most popular alternative designs are the simultaneous multiple round auction with augmented switching (SMA-S) and the combinatorial clock auction (CCA). While the first one is mainly applied in Northern Europe, the CCA was recently used in the Netherlands, Austria, Denmark, the United Kingdom and will be used in Switzerland at the spectrum auction forthcoming this year. The present paper presents the auction formats and discusses the main characteristics of their designs.

Discussion Paper is available for download.

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