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Maximizing Efficiency with Secondary Spectrum Markets

Explore the concept of secondary spectrum markets and their role in promoting efficiency in spectrum allocation. Learn about challenges, trading dynamics, and the importance of well-functioning secondary markets. Evaluate the impact on spectrum flow and allocation methods in the U.S.

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Maximizing Efficiency with Secondary Spectrum Markets

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  1. 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 scott@wallsten.net June 2, 2011 Spectrum Markets: Challenges Ahead

  2. wrong How much trading should there be?

  3. Auctions ensure newly released spectrum goes to most efficient use. But then what?

  4. Potentially available for secondary trades.

  5. What are secondary spectrum markets? What’s our objective? Ensure that spectrum can flow to its highest-value use.

  6. What are secondary spectrum markets? Any market transaction after the initial allocation except those involving retail sales by initial leaseholder to end users.

  7. Wholesale spectrum and network access

  8. Wholesale spectrum and network access

  9. Secondary Trades in Spectrum Licenses

  10. Spectrum Allocation Methods in the U.S. FCC created, given right to assign spectrum Federal Radio Act: Declared spectrum a public resource Ronald Coase suggests using property rights to assign spectrum FCC begins laying the groundwork for secondary markets. 1927 1934 1982 1994 2000 1959 comparative hearings Lotteries auctions

  11. Spectrum license trades and leases • FCC first attempted to promote secondary market with a policy statement in 2000 defining necessary framework: • Clearly defined economic rights • Easy entry and exit • Full information on prices and products • Mechanisms for bringing buyers and sellers together • Many buyers and sellers How are we doing?

  12. 1. Clearly defined economic rights? YES or NO

  13. ≠ - Peter Cramton (paraphrasing)

  14. 2. Easy entry and exit?

  15. 3. Full information on prices and products?

  16. Information probably not a binding constraint.

  17. 4. Mechanisms for bringing buyers and sellers together?

  18. Website in December 2009

  19. Website June 2011

  20. 5. Many buyers and sellers?

  21. Number of Spectrum Leases

  22. What do those numbers mean?

  23. How to measure latent demand?

  24. Number of STA Requests and Grants

  25. Demand and supply curves?

  26. 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.

  27. Thank you!

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