Auction

Written on 10:32 AM by ooe

Block spectrum allocations are often awarded using a competitive auction. Holders of such licences can use the spectrum wherever and as often as they like, within a given country or region. Such awards usually last for a set number of years, with the issuing authority then claiming back the spectrum for reissue or an alternative use.

There have been many successful auctions for FWA spectrum around the world with considerable income being generated, for instance the 1998 US LMDS auctions (spectrum in the 28–31 GHz range) raised $600 million. However, the UK 28 GHz auction held in 2000 illustrates the risk to governments of using this process – 26 of the 42 licences offered failed to attract any bids, leaving large parts of the UK without any broadband FWA operators to compete with existing access providers.

Other risks occur depending on the government's original motivation in offering the spectrum for FWA usage. In many cases the objective is to increase competition in the access market by using the potentially low cost of entry offered by wireless networks compared to wired networks. One possibility is that the licence winner will ‘cherry pick’, only offering service in the highest profit areas. This can mean that only the most densely populated business districts will obtain the benefit of increased access competition. Alternatively, the spectrum might be used for infrastructure connections, such as point-to-point backhaul connections within the operator's network, rather than for its intended application in access networks. Outcomes such as these can be guarded against by introducing licence conditions such as minimum coverage areas that must be achieved within a given time and strict definitions on the permitted use of the spectrum.