Supply and Demand in Search of a Market: The Case of Secondary Spectrum Markets
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Supply and Demand in Search of a Market: The Case of Secondary Spectrum Markets Scott Wallsten [email protected] June 2, 2011 Spectrum Markets: Challenges Ahead What are ? And What’s Their Role in Promoting Efficiency?
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Supply and Demand in Search of a Market: The Case of Secondary Spectrum Markets. What are. ?. And What’s Their Role in Promoting Efficiency? . Scott Wallsten [email protected] June 2, 2011 Spectrum Markets: Challenges Ahead. wrong. How much trading should there be?. - PowerPoint PPT Presentation
Transcript of Supply and Demand in Search of a Market: The Case of Secondary Spectrum Markets
Supply and Demand in Search of a Market:
The Case of Secondary Spectrum Markets
Scott [email protected]
June 2, 2011Spectrum Markets: Challenges Ahead
What are ?And What’s Their Role in Promoting Efficiency?
wrong
How much trading should there be?
Auctions ensure newly released spectrumgoes to most efficient use.
But then what?
Cellular
700 M
HzAWS-1 PC
S
EBS/B
RS
Availab
le for
mobile
broad
band
Incen
tive au
ctions
0
100
200
300
400
500
600M
Hz
Potentially available for secondary trades.
What are secondary spectrum markets?What’s our objective?
Ensure that spectrum can flow to its highest-value use.
What are secondary spectrum markets?
Any market transaction after the initial allocation
except
those involving retail sales by initial leaseholder to end users.
Wholesale spectrum and network access
Wholesale spectrum and network access
Secondary Trades in Spectrum Licenses
Federal Radio Act: Declared spectrum a public resource
1927 1934
comparative hearings
1982
Lotteries
FCC created, given right to assign spectrum
1994
auctions
1959
Ronald Coase suggests using property rights to assign spectrum
2000
FCC begins laying the groundwork for secondary markets.
Spectrum Allocation Methods in the U.S.
Spectrum license trades and leases
FCC first attempted to promote secondary market with a policy statement in 2000 defining necessary framework:
1. Clearly defined economic rights
2. Easy entry and exit
3. Full information on prices and products
4. Mechanisms for bringing buyers and sellers together
5. Many buyers and sellers
How are we doing?
1. Clearly defined economic rights?
orYES NO
≠- Peter Cramton (paraphrasing)
2. Easy entry and exit?
3. Full information on prices and products?
Information probably not a binding constraint.
4. Mechanisms for bringing buyers and sellers together?
Website in December 2009
Website June 2011
5. Many buyers and sellers?
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
500
1,000
1,500
2,000
2,500
3,000
3,500
Number of Spectrum License Trades by Year
Cellular mobile Other
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080
5
10
15
20
25
30
35
Cellular Mobile Trades in Billions of MHz-Pops
2004 2005 2006 2007 20080
100
200
300
400
500
600
700
Number of Spectrum Leases
What do those numbers mean?
How to measure latent demand?
1995 19961997 19981999 20002001 20022003 20042005 20062007 20082009 20100
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
requests granted
Number of STA Requests and Grants
Demand and supply curves?
Secondary trades come in many forms.License sales and leases are common.We don’t know what a working market should look like.Importance of secondary markets grows with each auction.Minimize costs associated with all types of transactions, not just license transfers.
Thank you!
