US AWS-3 Spectrum Auction: Back to Basics in Auction Design

Mon Aug 18 15:05:00 EDT 2014
By Richard Marsden and Jonathan Pike

The AWS-3 auction, scheduled by the Federal Communications Commission (FCC) for November 2014, will be the first major release of spectrum suitable for mobile broadband deployment in the United States since the 700 MHz auction in 2008. A total of 65 MHz of spectrum, of which 25+25 MHz is paired, will be available. As with the FCC's 600 MHz Incentive Auction, the spectrum is expected to be used for deployment of 4G mobile broadband. Industry Canada also proposes to award the same spectrum, with an auction tentatively scheduled for early 2015.

NERA Senior Vice President Richard Marsden and Analyst Jonathan Pike have published a paper that analyzes the key rules and procedures for the US AWS-3 auction. In recent years, the FCC has embraced new auction formats for spectrum awards, including "package bidding" for 700 MHz and an innovative "two-sided clock auction" design for 600 MHz. However, for AWS-3, the FCC is going 'back to basics' with the tried and tested simultaneous multiple round (SMR) auction format. The FCC continues to innovate regarding the detailed SMR rules, for example to help bidders manage aggregation risks and discourage gaming. While minor changes are proposed, the basic structure remains the same and participants would be advised to anticipate another US spectrum auction featuring significant strategic behavior by rival bidders.