A Study of Spectrum Auction in Various Countries

A Study of Spectrum Auction in Various Countries

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. 153 | P a g e 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 154 | P a g e 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. 155 | P a g e However, a secondary spectrum trading market has not yet been recognized enough, especially in the developing countries.

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