ABSTRACT
The natural resource of radio spectrum was first discovered and used over a century ago. The auction design adopted there was the ‘second price auction’: the band goes to the highest bidder but at the price offered by the second highest bidder. It led to unexpectedly low prices in some bands for which there was little competition but was otherwise considered a success. The auction rules can include caps on what the largest operators can buy in any auction, intended to restrain them from buying up all the available spectrum and thus eliminating or weakening their smaller rivals. Running a billion-dollar spectrum auction is a very complex business, requiring the drafting of meticulous rules to govern the behaviour of bidders and the auctioneer, the data to be exchanged by pre-specified deadlines and decisions about how to package the available spectrum.
