IDEAS home Printed from https://ideas.repec.org/a/eee/telpol/v49y2025i6s0308596125000722.html
   My bibliography  Save this article

Estimating private costs in a descending clock auction: The FCC’s rural digital opportunity fund

Author

Listed:
  • Núñez, Ignacio J.

Abstract

In the United States, the Federal Communications Commission (FCC) distributes subsidies to broadband providers to offer high-speed broadband in unserved areas. This article examines the FCC’s largest program to date, the 2020 Rural Digital Opportunity Fund (RDOF) auction, which distributed billions of dollars and replaced a subsidy mechanism based on engineering cost estimates. I propose a novel model to estimate the private costs of an incumbent wireline provider in areas adjacent to the incumbent’s existing infrastructure. In the model, the incumbent bids for each area up to their private cost, whereas rival bidders include entrant providers that solve a dynamic bidding problem accounting for fixed and interconnection costs. I apply the model to a major incumbent in the RDOF. The findings show that the incumbent received modest rents, almost 70% lower than under the engineering cost estimates.

Suggested Citation

  • Núñez, Ignacio J., 2025. "Estimating private costs in a descending clock auction: The FCC’s rural digital opportunity fund," Telecommunications Policy, Elsevier, vol. 49(6).
    • Handle: RePEc:eee:telpol:v:49:y:2025:i:6:s0308596125000722
    DOI: 10.1016/j.telpol.2025.102975
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0308596125000722
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.telpol.2025.102975?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:telpol:v:49:y:2025:i:6:s0308596125000722. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/30471/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.