Discussion Papers

No. 463: The negative auction as an instrument for supply of white spots with mobile services

Authors: Bernd Sörries, Lorenz Nett, Matthias Wissner

(full version only available in German)

Summary

A white-spot auction is a method of identifying companies that will ensure coverage with high performance mobile services. With the white-spot auction, companies would be determined in a transparent, comprehensible and non-discriminatory procedure to supply previously unserved households or areas in return for the lowest subsidy. In such an auction, the companies voluntarily bid for a supply obligation for precisely defined white spots (unsupplied areas), which is linked to a maximum compensation payment determined in advance. If they bid successfully for the supply obligation for the area, they must meet the specific supply requirements. Therefore, the auction requires not only the exact determination of the white spots but also specific supply obligations.

International experiences and own conceptual considerations show that white-spot auctions are an option to generate an objective, transparent, non-discriminatory and comprehensible supply of white spots by the mobile network operator who can do this most efficiently.

The design of a so called negative auction must be such that the maximum compensation amounts for the white spots or clusters provide an incentive to participate in the auction. Analytically and empirically sound methods are required for the calculation. A sufficient determination of the relevant costs can take a considerable amount of time.

The verification of compliance with the commitments made is mandatory after the auction. It must be possible to effectively sanction any delay or non-compliance with the supply obligations entered into, for example through monetary penalties.

Besides the white-spots auction, there are other measures that contribute to the supply of broadband services for white spots. Support programs for mobile communications, such as those currently being launched at the federal level in Bavaria and Hessen in Germany, are also aimed at providing mobile broadband in unserved areas. It is also possible to impose corresponding coverage obligations in the context of frequency assignments. A voluntary self-commitment for the supply of white spots is made by the companies. All these measures have their advantages and disadvantages.

Discussion Paper is available for download.

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