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Awarding telecom licences: the recent European experience

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  • Tilman Börgers
  • Christian Dustmann

Abstract

This paper analyses the procedures used by different European countries for awarding spectrum licences to potential operators of third generation (3G) mobile telephone networks. We contrast market-based methods, such as auctions, with bureaucratic methods, such as 'beauty contests'. They have been used for decisions about two major questions: (1) How many licences should be awarded, and how much spectrum should each licence give access to?; (2) Which companies should receive which licences, and how much should they pay for their licences? Most countries used a bureaucratic process to answer the first question. However, Germany, Austria and Greece were different, and constructed auctions in which the number and size of licences were determined by the auction itself. As for the second question, there was much variation between countries, and both auctions, and 'beauty contests' were popular methods. We have four main findings. First, the bureaucratic procedure used by most countries to answer the first question led to companies concealing relevant information from the authorities. Second, while firms may have tried to manipulate the procedures used in Germany, Austria and Greece to deter entry to their markets, they were surprisingly unsuccessful in this. Third, the traditional economic criticisms of beauty contests seem to apply to some, but not to all those that were conducted. Finally, the bidding strategies adopted by the telecom companies were often more complex than those predicted by economic theory. Copyright (c) CEPR, CES, MSH, 2003..

Suggested Citation

  • Tilman Börgers & Christian Dustmann, 2003. "Awarding telecom licences: the recent European experience," Economic Policy, CEPR;CES;MSH, vol. 18(36), pages 215-268, April.
  • Handle: RePEc:bla:ecpoli:v:18:y:2003:i:36:p:215-268
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    Cited by:

    1. Christos Genakos & Tommaso Valletti & Frank Verboven, 2017. "Evaluating Market Consolidation in Mobile Communications," CEP Discussion Papers dp1486, Centre for Economic Performance, LSE.
    2. Peter Cramton & Andrzej Skrzypacz & Robert Wilson, 2007. "Revenues in the 700 MHz Spectrum Auction," Papers of Peter Cramton 07rev700, University of Maryland, Department of Economics - Peter Cramton, revised 2007.
    3. Erik Bohlin & Gary Madden & Aaron Morey, 2010. "An Econometric Analysis of 3G Auction Spectrum Valuations," RSCAS Working Papers 2010/55, European University Institute.
    4. Calza, Alessandro & Manrique, Marta & Sousa, Joao, 2006. "Credit in the euro area: An empirical investigation using aggregate data," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(2), pages 211-226, May.
    5. Koc, Umit & Erdogdu, Oya Safinaz, 2005. "Türk Telekom A.Ş.’nin Özelleştirilmesi: Oyun Teorisi Perspektifinden Bir Değerlendirme
      [Privatization of Turkish Telecom Company: An Assessment from Game Theory Perspective]
      ," MPRA Paper 72143, University Library of Munich, Germany, revised Dec 2004.
    6. Ansari, Shahzad & Garud, Raghu, 2009. "Inter-generational transitions in socio-technical systems: The case of mobile communications," Research Policy, Elsevier, vol. 38(2), pages 382-392, March.
    7. Konrad, Kai A., 2006. "Silent interests and all-pay auctions," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 701-713, July.
    8. Maarten Janssen & Vladimir A. Karamychev & Emiel Maasland, 2009. "Auctions with Flexible Entry Fees," Tinbergen Institute Discussion Papers 09-109/1, Tinbergen Institute.

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