A STUDY OF SPECTRUM AUCTION IN VARIOUS COUNTRIES

Settapong Malisuwan1 , Dithdanai Milindavanij2 Wassana Kaewphanuekrungsi3

1,2,3National Broadcasting and Telecommunications Commission (NBTC), Thailand

ABSTRACT

The objective of this research is to study the results and impacts after scheduling the spectrum auction in different countries. Each country has its own different guidelines and supervision policies. The country that has provided spectrum allocation with auction method may have varied forms, process as well as condition, such as reserve price, spectrum cap, license terms, spectrum auction format, etc. It is not always necessary to apply the same spectrum auction method of one country that has already achieved it to get the same successful result. Or, some countries that achieved in spectrum auction but there may be some operators could not continue their business later. For this research, a researcher collects and explains the results after scheduling spectrum auction in different countries for both successful and unsuccessful auctions as well as analysis of the consequences in order to bring them as case studies later. This research will be beneficial to governments and telecommunications regulators in taking any lessons learned from this research to improve the spectrum auction to be properly fit to their countries later.

Keywords: Telecommunications, Spectrum, Auction, Case study, Regulatory, Policy

I. INTRODUCTION

The spectrum policy of various countries is mostly set by the telecoms regulatory organization or the Ministry related to information and communication technologies depending on the laws of each country, which is required to determine the type of spectrum allocation as well as the spectrum assignment on each spectrum range. This is because the use of this different spectrum range is possible to create interference to each other. At present, as the popularity of mobile broadband service has increased and expanded rapidly throughout the world, it effects spectrum policy formulation because the expansion of the use of such mobile broadband is considerably related to economic growth, creating opportunities for people to access information for the disadvantaged people in rural area, reducing social gaps and being as a foundation of sustainable economic growth in the long run [1], [2]. The main objective of the present spectrum management is the use of spectrum for the maximum benefit for both economic and social dimensions of inequality. Therefore, the present spectrum management is more complicated than in the past.

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The Regulators of each country will determine the type of spectrum allocation on each spectrum range. Most of them commonly follow an international harmonization approach and allocate this spectrum to the services providers appropriately. The traditional method of spectrum allocation whether the selection method chosen by administrative decision or beauty contest (feature comparison), most method depends on the principles governed by arbitrary with the time-consuming process through the "conjecture" whether which service provider could use spectrum most efficiently. The effect of this spectrum allocation aspect may fall into the hands of the services providers who would not use this resource or use it inefficiently or being as spectrum hoarding as expecting more advantages in the future. In the past, the opportunity cost of a failure of spectrum allocation may be not very high because the spectrum rage is still in a great quantity compared to demands of the market. This is completely unlike the current situation with limited quantity of spectrum which is not enough for satisfying the operators‟ requirements [3], [4]. Later, an approach to spectrum management has started to change when the spectrum management policy and economic theory have been developed. In 1989, New Zealand has initiated spectrum allocation with auction method that is followed by the United States and many countries latterly and includes countries in the emerging markets. The spectrum auction will create competition between network providers in bidding limited permits. In principle, the winner of the auction is likely to be able to use such resource to get the most efficient results. In addition, the auction revenue can allow the government to generate income from taxation. However, if spectrum is reserved without application, or auction which is designed to increase the income of the state too much, the user will finally be affected by increasing prices, reducing the number of (and/ r quality) new innovation occurring in the industry that will cause more tremendous damages on the economy and the society as a whole than the benefits that the government will receive in a short term [5]. A present approach to spectrum auction model has been developed, tested and examined considerably in different countries in the world with evidence shown from many past spectrum auctions that this present approach is proper and quicker than others methods.

II. THE SPECTRUM MANAGEMENT REFORM

In the late 19th century, many countries began to focus on the development of guidelines for the spectrum allocation to be more efficient, such as pushing forward spectrum auctions in the United States, or the beginning stages of spectrum auction experiment in New Zealand. Those actions all have an effect on the concept of spectrum allocation on a global level. Thus, spectrum auctions are so prevalent throughout the world at a later time. However, the design of appropriate spectrum management policy does not only affect the growth of the telecommunications industry, but also the economy and society as a whole of the country. For example, the ubiquity of voice communication services on mobile networks has changed the way people communicate and do business around the world, or the broadband internet services has been estimated by the World Bank that when the rate of access to services increased 10 percent, this will push forward gross domestic product (GDP) to grow by 1.3 percent on average [8]. Moreover, in most developing countries, including countries providing broadband Internet on a regular network which has been not yet extensive enough. Access to such services has

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to rely on a cellular network. So, the opportunity in the economic growth of these countries will greatly depend on the success of mobile network providers. At present, the rates of access to those communication services are at a very high level in several countries around the world. It can be said that the success of these communication services on mobile network will offer the opportunity of economic development and society as a whole thoroughly and equally by not only focusing on the group of people who have more opportunity to access to economic resources. Therefore, if those services do not receive a response promptly, this will affect inevitably economic as well as the unemployment rate [9]. The spectrum auction took place practically first in New Zealand in 1989 and subsequently took place in the UK in 1990. In the United States, spectrum auction is officially defined in the law in 1993, with a concept related to the auction was identified as a method generating the most value for utilization. So, following to this idea, it has been applied to issue a permission to use spectrum/license. The spectrum auction is a method of allocating spectrum depending on market-based approach. The basic idea of the auction is a belief that those who propose the highest price in the spectrum auction are the one who has an ability to use spectrum most efficiently, or the one who need spectrum the most since the auction will lead to price competition automatically that will force bid winner to use such resources efficiently to bring about the utmost interests of society and economy later. The spectrum auction a variable formats and each format has its varied advantages and disadvantages. In addition, the allocation of spectrum by spectrum auction in each country has different guidelines and methods. Modifying its conditions and approaches to be appropriate to the situation of each country in order to be fit its policy, environment, law, economics, and the amount of allocated spectrum, required amount of spectrum by entrepreneurs, and competitive conditions in the telecommunications industry in the country, these will bring such spectrum use to the maximum benefit. The spectrum auction model has many different types of models, no fixed pattern. Spectrum auction model that suits one country may not be appropriate for another country. Moreover, for today‟s condition that there are a large amount of spectrum in the auction, or dividing the spectrum into lots, these make an invention for auction method more efficient than ever.

The spectrum allocation by auction method has several advantages compared with other methods as this is a method to make a precious resource like spectrum in the hands of efficient operators who can use spectrum to create network and provide comprehensive service coverage in wide spaces quickly to achieve the maximum benefit for the economy of a country. However, the design of the auction process and determine all licenses terms and conditions should be conducted carefully by governing policy transparency aspect and decision- making based on principles. According to the study, it is found that the regulators in some countries has started to give permission for a secondary spectrum trading market, which means that the companies can trade or lease spectrum or their license of rights to use it, but no longer need to use it to others under the terms and conditions of regulatory requirements in order to remain proper competitive status in the market. A secondary market will help to reduce operators‟ risks in case of economic or technology changes that will not allow business to be operated any longer for the most efficient use of spectrum and creation of the most economic and social value.

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However, a secondary spectrum trading market has not yet been recognized enough, especially in the developing countries.

III. SPECTRUM ALLOCATION GUIDELINES

In addition to spectrum allocation method, the regulators also have to study the corporate governance guidelines and determine policies that will suit the market in order to make the use of spectrum most effectively, examples are as follows: - Introducing a secondary spectrum trading market which means to allow those licensees who get the rights of spectrum use to sell those rights to others in order to use the market mechanism to resolve what might be mistakes in the past, such as a case of one service provider who ever thought that provider needs additional spectrum. But after improving the network with new technology, he can use the existing resources more effectively. So, additional spectrum is not required for him anymore. In this case, this service provider can trade a secondary spectrum trading market in order to provide opportunities for others to bring such resource to achieve the maximum benefit. However, at present, there are only few countries that are trading spectrum in this manner, i.e., USA, Australia, New Zealand, and Europe, etc. - The principle of “spectrum-neutrality” or "technology-neutrality" of technological neutrality which refers to the spectrum allocation without specifying the purpose of use or related technology in order to allow those entitled licensees to use such spectrum to be able to generate value from that resource to create the maximum benefits with a lot of options. Although this principle can make interference even more complex, but it is considered manageable [10]. This stage of reforms allows the service provider to choose their own technology and to provide the most efficient services despite the passage of time. - Changing perspectives on the spectrum as one type of natural resources that can be utilized diversely which is similar to land, land property ownership (in this case, it is spectrum) that may have a temporary or permanent usability quality as well as an ability to prescribe conditions for the sale and purchase of rights assets of different nature as need. The countries that use this extended principle for both introduction of a secondary spectrum trading market and principle of neutrality are Australia, USA and Europe. - Resource management & planning appropriately for the development plan of the country In the past several years, governments of many countries have focused on the development plan of the national broadband Internet which is in favor of “top-down” regulation. An ability to allocate resources and investment appropriately to this development plan for these is considered as vital importance for the achievement of government policy. The guidelines for spectrum allocation are based on market mechanism as mentioned above may not be in line with the strategy according to the development plan of national broadband internet access in some cases that are often relying on the state power which is its important driving force. In most developing countries, the development planning of broadband Internet often occurs at the same time as national construction and expansion of mobile phone network on the existing spectrum use to respond to the rapidly increasing demand for such services. However, providing high-speed Internet services on the lower spectrum use than the original one as the telecommunication market of many countries now will be beneficent for developing countries in the long term.

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- Strategic cooperation The possible guidelines for spectrum management in the future may include this strategic cooperation for spectrum auction management by reducing existing conditions of technology regulations or purpose of use on each frequency band, such as "the digital dividend spectrum auction" (remaining frequency from the transition from analog terrestrial television to digital broadcasting). In Europe, the 790 - 862 MHz spectrum band which was originally used in television broadcasting business was then converted to be used for high speed internet service on mobile network which is the significant turning point to make cooperation in the selection and use of international harmonization happen. This also makes governments in many countries able to achieve their early goals according to the development plan of broadband internet. Therefore, when the use of spectrum is structured by giving more emphasis to mobile internet services, the reform of the telecommunications market tends to occur more widely as well. - Governing a flexible and transparent policy, implementing equal regulations, and reducing interference from government agencies The governments in many countries has governed a spectrum policy to push forward others aspects of their national policies that must be keep in mind that adding the requirements or conditions in the policy might cause risk of overall performance inevitably, particularly in the market in the developing countries where their social and economic uncertainty is higher than the developed countries. Moreover, a license issuance with too restricted spectrum use may not allow operators to improve spectrum usage policies on their network in a timely manner, or to adapt to changes in the market during the time that the license is still effective that may negatively affect country development. An important notice is that spectrum is similar to other natural resources which can be used effectively when allocating through the market mechanisms. Therefore, if there is any intervention by the regulator through pricing, that is not an appropriate approach in bringing resources to the maximum benefit. As price change in a factor of business operations whether spectrum or any kind of resources will definitely cause market distortion. Therefore, appropriate economic policies are to open an opportunity to "market" to direct truly itself in order to make those limited resources in the most efficient manner. "Avoiding the intervention price" is an important lesson for both theory and practice [11]. The conditions of network coverage determination that the government of each country would like to reduce the digital divide between people, nevertheless, policymaker should determine with caution if choosing to use different regulations for each service provider as this may cause distortion in the competitive market. If the network coverage requirements are applied to all operators equally and success to encourage them to use network together in remote areas with high costs of network expansion in order to reduce the overall cost and create absolutely extensive network across the country, competition in the market will be less distorted. For the most widely seen example for an intervention in the market through state policy is setting a ceiling for holding spectrum (spectrum cap), which determines the maximum amount of spectrum that one service provider can hold for each spectrum band or entire band. The policy of this nature aims to promote competition in the market and avoid excessive storing or spectrum hoarding as ever happened in the past when spectrum allocation with beauty contest method was implanted widely. However, offering service in each spectrum range has different characteristics and create different cost to providers. So, finding balance point in determining the

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ceiling for holding spectrum is quite complicated and may cause unexpected effects if it is not an appropriate one [12].

IV. CASE STUDIES OF SPECTRUM AUCTION

For the past spectrum auction, some countries succeeded, some countries failed more or less depending on the situations; whether cancellation of the auction or non-participation of bidders. Or, in some countries, the spectrum auction was successful as generating a lot of revenues to the state, but at the end, it made entrepreneurs to experience economic problems that not possible to allow them to continue further business operations until setting merger or being bankrupt. However, there are still not many researches about the reasons of these auctions failures. This is probably because the bidders are required under the agreement not to disclose any information. Therefore, researcher has to study the lessons concerned from the case studies of the spectrum auctions in some countries as follows.

Bangladesh In 2013, The Bangladesh Telecommunication Regulatory Commission (BTRC) organized spectrum auction in the 2.1 GHz band for a total of 50 MHz spectrum band by allocating such spectrum band to the government sector for 10 MHz and the remaining 40 MHz to the private sectors. However, it appears that the spectrum of only 25 MHz can be auctioned off and the remaining spectrum of 15 MHz is not interested by any bidders. Teletalk, state-run cellphone operator obtained 10 MHz spectrum, worth 210 million U.S. dollars. Grameenphone, the country‟s top cellphone company in the country has won bids for 2.1 GHz spectrum for amount of 10 MHz, worth 210 U.S. dollars. Robi, Banglalink and Airtel each acquired 5 MHz of spectrum at a price of 105 million U.S. dollars. The total spectrum allocation is 35 MHz, net worth 735 million U.S. dollars. CityCell, the oldest operator has not participated in this auction as the company was not capable of providing investment fund [13].

Federal Republic of Germany In 2000, the spectrum auction in 2.1 GHz spectrum band was held and it created very competitive bidding price making the auction price was higher up to 92 times from the starting price. The value of the auction is worth 45 billion U.S. dollars. The 6 bidding winner are 6 T-Mobile, Mannesmann Mobilfunk (or Vodafone at present), E-Plus, Viag interkom, Group, and 3G Mobilcom. The results of that auction caused 2 new operators announce dissolution their business in the mid of 2002. Moreover, Mobilecom had to return its license to the regulatory authority in 2003 that made one third of 2.1 GHz band unutilized. Meanwhile, the other four operators tried to cut costs of service operations. However, the remaining 2.1 GHz spectrum band was reallocated again in 2010 [14], [34].

The United Kingdom The regulatory authority of the United Kingdom has organized the spectrum auction in 2.1 GHz spectrum band in March 2000. There were five bidding winners; BT Cellnet, Orange, One2One (O2), Vodafone which are the same operators and the TIW or 3UK which was the new one. The highest auction value reached 22.47 billion pounds or 35.4 billion U.S. dollars. Since the value of the auction was too high, 3UK as new operator in

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the market but this company was not capable of making profits during 10 years after the auction. Subsequently, that failure caused later a merger in the market as some operators could not continue business operations; there was a merger between T-mobile and Organge in 2010 to become Everything Everywhere Comapny. This situation shows that although the British government had earned a lot of money from spectrum auctions. But later that period the operator could not carry out coverage network or experienced further problems that affected considerably investment conditions in the telecommunications market [14].

Austria There are 6 bidders in the Austria's spectrum auction; 4 former operators are Mobilkom Austria, Connect Austria, Max.mobil (or T-Mobile), Tele.ring and new operators Telefonica and Hutchison 3. That spectrum auction was not very competitive. Each bidder gained 2 x 10 MHz of spectrum, net value worth 706 million Euros. The reason causing the decreasing number of operators in the Austria‟s market was that some operators were unable to continue business operations. In 2003, Telefonica could not continue business operations, then left the market, and sold the license to Mobilkom Austria and Max.mobil (or T-Mobile). In 2005, T-mobile acquired Tele.ring, and in 2012 Hutchison acquired Orange assets (the buyer of Connect Austria) and its obligations as well. It is evident that during the 12 years after the spectrum auction, Austria had mobile operators decrease, just only three companies left due to the fact that the European telecommunications market at that time had main reasons for a merger; to increase network investment, to expand customer base, to build a strong infrastructure, and to offer services promptly which were all very necessary for network service providers in Europe at that time, and they are preparations for 4G technology investment in the future [14], [16].

Pakistan Pakistan Telecommunication Authority (PTA) has canceled the license of the company M/S Pakcom (Instaphone) immediately when Instaphone was unable to pay the license fee for the 2nd installment. Instaphone renewed its license for another term of 15 years on April 19, 2005 and was required under the agreement to pay licensing fee worth 291 million U.S .dollars within three years. As a result, Instaphone agreed to comply with license fee for a half payment (at a price of 145.5 million U.S. dollars) by dividing payment into7 installments (7 months); the first 3 installments, each installment was at 14.5 million U.S. dollars and the next 3 installments at 29.1 million U.S. dollars each, and the final installment was at 14.7 million U.S. dollars. The half of the remaining payment was at the price of 145.5 U.S. dollars, which was divided into a monthly payment by 29. However, Instaphone was able to pay only 20 million U.S. dollars for only the first three months. After that, Instaphone failed to pay its outstanding dues. PTA asked Instaphone to declare reason of inability to pay but did not receive any reply from the company. Finally, PTA had no choice except recalling the license and asking Instaphone to stop business operations with immediate effect, and allowed existing 329,743 users to change from Instaphone (present service provider) to other 5 service providers by using Mobile Phone Number Portability (MNP) [17].

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Belgium The belgium government decided to use the auction method for bidding a license in the 2.1 GHz spectrum band with the preparation of 4 licenses but there were only 3 bidders joining in this auction; Belgacom, Mobistar and KPN Group Belgium (Base), which were existing operators who owned license in the 900 MHz and 1800 MHz bands. Then, the government would like to issue remaining licenses to the new operators. Subsequently, on March 15, 2011, BIPT (Belgian Institute for Postal and Telecommunication Services) launched an announcement to search for bidders for the remaining.1 GHz spectrum. There was only one company, Telenet Tecteo Bidco NV who is interested in bidding despite extending agenda and additional conditions for obtaining of 900 MHz spectrum license (2 x 4.8 MHz) and 1800 MHz spectrum license (2 x 10 MHz) since Nov 27, 2015 but no more bidders participate in this bidding. As a result, Telenet Tecteo Bidco NV obtained the license at the starting price [18]. However, both 2.1 GHz spectrum license that BIPT has already issued and just recently issued in 2011 (including license in the 900 MHz and 1800 MHz bands that BIPT issued to Telenet Tecteo Bidco NV would expire simultaneously on March 15, 2021 Additionally, in November 2011, Belgium still held the spectrum auction in 2.6 GHz band. There are 5 bidders participate in bidding and 4 operators obtained the licenses; Belgacom, Mobistar, KPN Group Belgium and BUCD BVBA (the new operators), worth 77.79 million Euros at auction. This license was valid for 15 years from the date of July 1, 2012 and the remaining 2x15 MHz FDD spectrum was unable to be sold [19], [20].

Netherlands The auction results for Multiband, such as spectrum in 800 MHz, 900 MHz, 1800 MHz, 1900 MHz, 2100 MHz and 2600 MHz. The companies who won the auction are as follows; KPN, Vodafone, T-Mobile and Tele2, licenses values worth 3.8 billion Euros which is 480 million Euros over estimated than what the government has estimated. The joint venture between UPC and Ziggo has left the auction due to too high auction price. After the auction ended, CEO of Tele2 Netherlands has analyzed that the situation of the telecommunication market in the Netherlands where spectrum prices was very high, this reason could possibly affect the development of innovative technologies for mobile broadband of the country. Moreover, KPN, one of the operators who has paid much for 3G license in 2000, has announced that the company would reduce the amount of the dividend paid to its shareholders in 2013 and cut costs in order to avoid bankruptcy. Additionally, KPN has issued new shares and KPN with support by the government in November 2012. KPN decided to sell the business in foreign countries, such as selling BASE in Belgium to telenet, selling Spanish Simyo Operator to France Telecom, etc. to enhance company liquidity due to thinking that national investment was more important [21], [22].

Czech Republic The spectrum auction for technology 4G (spectrum in 800 MHz, 1800 MHz and 2600 MHz) was held by by Czech Telecommunication Office (CTU) in November 2012. CTU expected income gained from auction only 8.72 billion CZK or 450 million U.S. dollars only but the auction price was reaching up to 20 billion CZK or 1,030 million U.S. dollars. This situation make CTU to decide to cancel this spectrum auction in March 2013

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by reasoning that if the bidding spectrum price was too high, it would be adversely affected network investment or service price service to users. Analysts gave their opinions that this very high bidding price made hardly new operators occur in the market. Later, CTU has adjusted new condition in the auction. And in the new spectrum auction was held once again in year 2013, the total net bidding value was worth 8.5 billion CZK or 418.8 million U.S. dollars [23], [24], [25].

Spain The auction results of spectrum in 800 MHz, 900 MH and 2.6 GHz in Spain in 2011, total net bidding value is worth 1.647 billion euros, which is underestimation of the regulatory agency who has forecasted the total net bidding value worth: 2 billion Euros. Telefonica, Orange and Vodafone won the bids. And each company was granted spectrum licenses in the 800 MHz band (2 x 10 MHz), net worth: 1,305.3 million euros, and the ones in 2.6 GHz band (2 x 20 MHz), net worth: 172.7 million euros. Moreover, Telefonica was granted spectrum license in the 900 MHz band (2 x 5 MHz), worth 169 million euros respectively which is according to the forecast that low spectrum band‟s cost was higher than the high spectrum band‟s one. Meanwhile, low spectrum band give high returns with low operation costs. This was the reason why Yoigo decided not to join the spectrum auction in 800MHz band as was afraid that its participation would affect the company investment due to the fact that a minimum price set by the government was high and the licensor was not yet allowed to use that spectrum until the year 2015. Moreover, Yoigo has previously been granted a license of 2x14.8 MHz of 1800 MHz spectrum by beauty contest method and would have to quickly build networks based on LTE [26], [27].

Italy The 4G spectrum auction, held in September 2011, consisted of 469 rounds of bidding for 22 days in total. The auction ended on September 29, 2011. This spectrum auction was held for 4 spectrum bands in the 800 MHz, 1800 MHz, 2000 MHz and 2600 MHz, the total amount was 240 MHz with the total net bidding value worth 3.9 billion euros from 1.7 billion euros as starting price. In this auction, no bidders were interested in bidding in the 2000 MHz spectrum band. On the other hand, it was found that bidding values of others spectrum bands were higher than other spectrum auctions in European countries during similar time. The Italian government said that this spectrum auction was greatly successful bringing more advanced prosperity to the country than any other countries in Europe. Moreover, this success also made a great investment in the telecommunications industry and communications technologies happen in the country. Previously, the government had forecasted that the spectrum auction value would be worth only 2.4 billion euros. The winning bidders would not be able to use the spectrum immediately as the 1800 MHz spectrum band would be allowed to use since the end of 2011, the 2.6 GHz spectrum band would be able to be used from the end of 2012, and Spectrum Digital Dividend in the 800 MHz band would be able to be used in January 2013 after a completion of transition of TV system from analogue to digital. All licenses will expire on December 31, 2029 [28], [29].

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The United States of America (USA) In 1996, FCC held the spectrum auction for Personal Communications Services (PCS) by setting aside some amount of spectrum for small operators. That auction caused some operators liquidity crisis, such as Nextwave Urban and Comm, etc. Nextwave is a small operator was the winner of spectrum auction for the most PCS band. In that auction, Nextwave was granted 63 licenses 63, the total net value was worth 4.74 billion. FCC granted Nextwave the C- Block licenses in February 1997 under the conditions that Nextwave had to arrange minimum payment at 10 percent of bidding price, worth approximately 500 million U.S dollars and the pending dues could be divided into 10- year payment. Unfortunately, Nextwave faced financial problems in less than year, being unable to pay the remaining dues until it became bankrupt. FCC have tried to asked Nextwave to return licenses but Nextwave asked the protection from the bankruptcy court and hope that the court would help it to reduce its underlying debts to the FCC and to consider that debt value should be equal to asset value by claiming that these arising problems caused by FCC‟s fraud as the licenses prices of these C-Block, D-Block and F-Block were very much different (prices setting in later auctions). The spectrum price for C-Block licenses was 4times higher than the price for D-Block and F-Block licenses. However, the appeal court considered that FCC‟s actions was not fraud anyhow but the Nextwave‟s burden debts happening during the similar time as the arrangement of auction for C-Block licenses. As a result, the appeal court decided that FCC had to cancel all 63 Nextwave‟s licenses and allow FCC to bring them for the new auctions. The judges of the Supreme Court considered this case that revoking the Nextwave‟s licenses violated the Article 525 of the revocation of the debtor's bankruptcy for just only because of payment due failures. Eventually, Nextwave could win the case in the Supreme Court and were entitled to continue further business operations under PCS licenses after about 8-year court battle and was able to pay the total pending dues, and to sell some spectrum to Verizon Wireless, Cingular (Presently know as AT & T) and MetroPCS year in 2004 with the higher net value than the bidding prices. Later, Nextwave has established a new company namely NextWave Wireless with a registered capital of 550 million U.S. Dollars. However, Nextwave gradually closed its subsidiaries due to its financial problems. Latterly, AT & T decided to buy Nextwave with total liabilities which were worth 600 million U.S. Dollars on August 2, 2012 as requiring spectrum usage rights of Nextwave. The Urban Comm. who obtained 10 C-Block auction licenses. Urban Comm. has paid 10% of the total licensing fees and the remaining amount of 67.2 million U.S. Dollars would be settled within 10 years. However, just right before the payment due for second installment, Urban Comm. became bankrupt. Then, FCC asked for those licenses back from Urban Comm. Later, when the Supreme Court finalized the case of Nextwave, the court grant also instructions to FCC to return the license to the FCC Urban Comm. At a later time, Urban Comm. sold its licenses to Verison Wireless and Leap Wireless [14], [30].

Brazil Brazil's 700 MHz spectrum auction for 4G LTE on September 30, 2014 generated lower revenues to the government less than estimated because investors are interested in bidding for only 4 licenses from scheduled 6 licenses that included 4 nationwide licenses and 2 local licenses.

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As a result of the auction, Algar was the local winning bidder (services are covered in 87 districts in these states; Goias, Minas Gerais, Mato Grosso do Sul and Sao Paulo), and Claro, Vivo and TIM were the nationwide winning bidders. Licensing value was similar to the minimum bidding price set by Anatel, the Brazilian Telecom Regulator. Consolidated revenue from this auction was 5.85 billion BRL or 2.39 billion U.S. dollar which is less than what the government had predicted at 8.2 billion BRL (3.34 billion U.S. dollar) due to the fact that there were remaining 1 local license and 1 nationwide license (services are covered in Londrina and Tamarana districts and Parana state) that have not been yet allocated. As a result, Claro, Vivo and TIM would be responsible for payment due for 368 million U.S. Dollars in order to solve interference problems in certain range of 700 MHz spectrum band that they have been granted the right of use, and also for compensation to the television service providers who were currently use this spectrum band. However, Oi announced that it would not join spectrum auction because of massive debt related to the business. In addition, Anatel with the estimated would return some licensing charges to reduce costs for operators who were won in bidding 3 local licenses, and the estimated total value was at 850 million BRL. OVUM‟s Analyst opinion toward the results of the auction was that would make 4G services in Brazil less competitive because Oi did not join bidding. Frost & Sullivan‟s Analysts analyzed that the future situation of the telecommunications industry would be based on the current investment, and operators should share common infrastructure as well as use of the spectrum jointly. It was also likely that the operators would enter into telecommunication merger to make their company bigger and more efficient. There were also some Analysts considered that Brazil was in too much of a hurry to hold the 700 MHz band spectrum auction because the 700 MHz band for analog television broadcast was still in use. The operator who obtained the license would be capable to provide 4G LTE in the 700 MHz spectrum band after analog television broadcast stopped broadcasting for 12 months. Then, the operators would start to provide 4G services in some areas after year 2016, and would further use those services in most parts of the country in 2019 [31], [32].

India In November 201, the spectrum allocation for supporting 2G technology was held. But due to the starting price set in bidding was too high, especially a spectrum allocation in some blocks of 1800 MHz, no bidders were interested in bidding and income from the auction is lower than expected. Later in the year 2013, although the starting price of spectrum was reduced from the price of year 2012; 1800MHz spectrum band‟s price was discount at 30%, and 800 MHz‟s one was discount at 50%, there were still no bidders interested in some blocks of 1800 MHz as those discount price were still too high that operators could afford them. This was why spectrum allocation must face further delays. Therefore, the government had to reduce more auction starting price before the auction in 900/1800 MHz spectrum lots would be held in February 2014 [33].

V. CONCLUSION

The general theory of spectrum management, it has been recognized that the auction spectrum is a good method in issuing spectrum licenses to those who are capable of using spectrum most efficiently. However,

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many countries with unsuccessful spectrum auctions as following problems; too high price that demotivates operators, too high bidding value until winning bidders become lack of financial liquidity causing bankruptcy eventually. Moreover, the policymakers have tried to achieve policy goals of other areas beside appropriate price and spectrum allocation such as determining some spectrum bands to the new operators who have pay too high license fee than expected that may make operators decide not to bid, or legal intervention, and rules and regulations, etc. Additionally, appropriate and sufficient amount of spectrum is another main factor as this may be allowed to be mutually used spectrum sharing or a secondary spectrum trading market methods to facilitate the creation of networks and business operations under these limited resources. In some cases, a communications policy may affect the spectrum auction policy, such as interconnection policy (interconnection charges) and roaming agreements. Many countries have focused on encouraging the creation of a rapid network to expand widely availability of mobile broadband services during the past few years. The national policy will facilitate new operators to create new networks, be capable of competing in price with existing operators, and also gives consumers the advantage in terms of price for more options in the market. However, it may affect network expansion to slow down and not meet user requirements. In addition, if the government focuses mainly on income generated from the auction that is a goal to prescribe guidelines of spectrum, this will surely lead to market distortion and reduce economic growth. If the operators must pay high for the auction price, this will make mobile broadband services seem less widely as expected due to higher price than consumers will be able to purchase it. In this case, the short-term‟s revenue for government is high due to a spectrum auction but it turns adversely not to be good long-term effects to the market and the society. Moreover, the terms of higher price also means a decrease of economic growth rate and income in the future. In conclusion, a high economic growth is caused by the widespread use of the broadband internet will obviously impact on the economy and society, including long-term government income. This means that in prescribing a spectrum policy needs to consider others factors beyond cost and technics. These policies affect the citizens‟ quality of life and income distribution to various sectors. When the spectrum is one of the main economic resources, the Ministries related to the economy pay inevitably particular attention to process and outcome of the spectrum allocation. However, regulators in other industries must be involved in decision making on the spectrum policy on telecommunications. Policymakers and regulators need to consider weighing overall factors of all aspects, for examples; to weigh between the attractive interests for operators to stimulate network investment and purchasing prices that consumers should pay, or expanding the network in remote areas where might gain less profitable compared to urban areas, generating the short-term‟s revenue for government from spectrum auctions and the economic growth in the future to increase long-term revenue, and how to use the spectrum for both short-term and long-term benefits in future.

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