TelecomTV TelecomTV
  • News
  • Videos
  • Channels
  • Events
  • Network Partners
  • Industry Insights
  • Directory
  • Newsletters
  • Open RAN
  • Digital Platforms and Services
  • 5G
  • Access Evolution
  • Private Networks
  • Cloud Native
  • Edge
  • Open Networking
  • Sustainability
  • AI, Analytics and Automation
  • 6G Research and Innovation
  • Security
  • More Topics
  • Network Partners
  • Industry Insights
  • Directory
  • Newsletters
  • |
  • About
  • Contact
  • |
  • Connect with us
  • 5G
  • 6G Research and Innovation
  • Access Evolution
  • AI, Analytics and Automation
  • Cloud Native
  • Digital Platforms and Services
  • Edge
  • Open Networking
  • Open RAN
  • Private Networks
  • Security
  • Sustainability
  • Connect with TelecomTV
  • About
  • Privacy
  • Help
  • Contact
  • Sign In Register Subscribe
    • Subscribe
    • Sign In
    • Register
  • Search

Spectrum

Spectrum

Going, going, gone: how to preserve competition where spectrum goes (eventually) to the highest bidder?

Ian Scales
By Ian Scales

Aug 5, 2014

via Flickr © State Library of Victoria Collections (CC BY 2.0)

via Flickr © State Library of Victoria Collections (CC BY 2.0)

The Federal Communications Commission (FCC) has, like most other regulatory bodies around the world, a bit of a problem when it comes to spectrum. That is: auctioning it fairly while at the same time controlling the process to ensure its allocation is a stimulus for competition rather than a way of bashing it on the head. Everyone understands how crucial this.

No matter how carefully it is initially allocated, how do you keep the biggest operators from bagging more and more of the precious stuff as the process of consolidation sees it being concentrated in fewer and fewer hands?

If you put strong conditions around the initial allocation - such as winners having to give the spectrum back should their ownership change - it reduces the attraction by upping the financial risk of entry, since there is no good way out for a floundering operator. 

In Europe, of course, the EU competition authority has recently been insisting on mandated MVNOs to take the competitive place of any small network that gets swallowed. In most of Europe this involves a four network territory being consolidated to a three network territory, but popping out an MVNO to share spectrum with. It’s probably too early to tell how well this approach is going to work.  Some close observers believe it won’t work at all.   

The FCC is taking a different tack. One is to find a way to encourage very small businesses to enter the market - the Mom and Pop telco approach perhaps? - which can also be applied to minority groups (like ‘women’?) implies the FCC in a move to assuage the grass roots organisations which no doubt lobby it just as hard as the big corporates.  

On the face of it this flies very much against the ‘Connected Continent’ line the European Information commissioner, Neelie Kroes, was pushing earlier this year, where the prescription for digital health was defragmentation.  According to this view Europe had too many networks and they all needed to be connected up and consolidated. No robust evidence was advanced for this approach however. 

In contra-distinction the FCC, in a blog posted by  Roger C. Sherman the Wireless Telecommunications Bureau Chief, says its goal is to “promote the participation of as many parties as possible [in upcoming auctions].”  In other words, let's foster more networks with different business models. As always, though, the FCC policy is to foster “facilities-based” competition: arrangements which smack of unbundling (as do the latest MVNO requirements in Europe) are often given a wide birth. 
But if you must have facilities-based competition, then you get other problems to see off. One is joint bidding by the big boys.

“If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition,” says the same blog with admirable understatement. 

Obviously joint bidding is undesirable but how can it be restricted? That is already a live issue since it’s been mooted that Sprint and T-Mobile (the next most likely consolidation move in the US market, despite the cheeky intervention from Illiad) is likely to have a go at a joint bid for spectrum, in advance of their actually getting together. 

The FCC is welcoming helpful suggestions. 
 
The biggest problem with the spectrum auction process in a consolidating market, though, is straight-forward collusion. It has its own language and is so widespread that participants in many markets make no attempt to hide what’s going on. Experts in telecoms auctions and game theory talk of incumbents “blocking” new entrants and incumbents “taking responsibility” for blocking.

Here’s just one instance of several (names and territories withheld) that I’ve had pass through my email.

“All the incumbents have an incentive to block new market entry. However, in an ideal world an incumbent would prefer to “freeride” and rely on another incumbent to pay any premium for market entry. This creates a coordination problem for the incumbents and this risk is that they fail to “reach agreement” through their bidding strategies as to who will take the responsibility for blocking.”

Obviously it’s all very well coming up with cunning and carefully designed measures, but if the bidding parties are involved in well-worn auction gaming, then you’re likely back to regulatory square one. 

Related Topics
  • 4G LTE,
  • 5G,
  • Access Evolution,
  • Analysis & Opinion,
  • Business Models,
  • News,
  • Policy & Regulation,
  • Spectrum,
  • Telco & CSP

More Like This

Edgenomics Summit

Edgenomics After Show Live - Day 2 (on-demand)

Apr 1, 2022

Private Networks

Do we really need private network spectrum?

Feb 9, 2022

5G

South Africa hits yet another spectrum allocation hurdle

Jan 6, 2022

6G R&I

UK mobile operators slam Ofcom’s expensive new annual licence fees

Dec 14, 2021

Open RAN

UK government outlines Open RAN traffic ambition, sets deadline for 2G/3G retirement

Dec 8, 2021

Email Newsletters

Stay up to date with the latest industry developments: sign up to receive TelecomTV's top news and videos plus exclusive subscriber-only content direct to your inbox – including our daily news briefing and weekly wrap.

Subscribe

Top Picks

Highlights of our content from across TelecomTV today

10:14

Executive Interview: Vodafone’s Lucia De Miguel Albertos on the ultimate RAN Intelligent Controller

39:34

Figuring out the TCO of Open RAN

6:47

Dell's Role in Open RAN

4:24

Executive Interview: Neil McRae on BT's Open RAN Plans

TelecomTV
Company
  • About Us
  • Media Kit
  • Contact Us
Our Brands
  • DSP Leaders World Forum
  • Great Telco Debate
  • TelecomTV Events
Get In Touch
[email protected]
+44 (0) 207 448 1070
Connect With Us
  • Privacy
  • Cookies
  • Terms of Use
  • Legal Notices
  • Help

TelecomTV is produced by the team at Decisive Media.

© Decisive Media Limited 2022. All rights reserved. All brands and products are the trademarks of their respective holder(s).