Discussion Papers

Alfons Keuter, Lorenz Nett, Ulrich Stumpf

Regeln für das Verfahren zur Versteigerung von ERMES-Lizenzen/Frequenzen sowie regionaler ERMES-Frequenzen
Nr. 165 / September 1996


This paper is the result of consultancy work carried out by WIK for the Bundesamt für Post und Telekommunikation (BAPT). The consultancy consisted in working out the rules for auctioning off the rights to licences and the required frequencies for the operation of a paging network according to the ERMES (European Radio MEssaging System) Standard.

The first part of the study discusses the market conditions for introducing the ERMES standard. It addresses those readers who are interested in the economic features of paging services on the basis of ERMES. The technical properties of the standard as well as the initial market conditions for the deployment of such a service are discussed in detail. Services on the basis of ERMES are characterized by a number of better and new features (roaming etc.) in comparison to the POCSAG-standard that has been in use for some time. It is expected that ERMES will be deployed not only in Europe but also in many countries throughout the world within the next few years.

The second and main part of the study is on auction design. We provide an overview over the various possible types of auctions and compare them in respect of their economic implications. Following this, we summarize the experiences gained with auctions in the telecommunications sector in various countries and analyze them for the purpose of identifying successful auction designs. A relatively large space is devoted to the PCS auctions in the United States which received worldwide attention because of the huge revenues that were raised with them by the FCC.

At the end of the paper we present our proposal for the required auction mechanism. The proposal was accepted by the Federal Ministry of Posts and Telecommunications. The formal rules derived from this proposal for the auctioning off of the ERMES licenses/frequencies in September 1996 were published in the official journal (Amtsblatt 17/96) of the Ministry. Besides presenting the rules for the auction mechanism, the paper provides for each step within this set of rules an explicit explanation why this specific arrangement was chosen. In addition to documenting the German ERMES auction design, the study thus also aims to provide a general overview over the body of knowledge on auctions relevant for an auction design in the telecommunications sector.

The main text of the paper contains an extended summary of the main results in English language. It is placed following the corresponding summary in German at the beginning of the paper.

Only German language version available.

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