An Insiders' View of FCC Spectrum Auctions

After a long period of awarding spectrum licenses inefficiently, changes in the budget and budgetary process coupled with increases in the value of the spectrum for non-broadcast use led Congress to allow the Federal Communications Commission to award licenses through competitive bidding. Contrary to the perceived view of government bureaucracies as excessively cautious, the FCC used the newfound authority to adopt a novel approach to auction design--simultaneous multiple round auctions. The innovative auction design would not have been adopted without the successful collaboration between government economists and academic economists, who helped to formulate and refine the design so that decision makers at the FCC could be convinced that the novel technique was both superior and practical. The FCC's implementation of competitive bidding was not only rapid as mandated by Congress, but also much less costly than outside alternatives and allowed the integration of spectrum policy decisions and auction design. Experience from several auctions has led to a number of open questions and refinements. The FCC is trying to replicate the success with the original auction design by facilitating dialog between the agency and outside auction experts in order to address these issues. Copyright 2000 by Kluwer Academic Publishers