Lessons From Spectrum Auctions : A Benchmark Approach

An examination of spectrum auctions in a number of countries in Africa and beyond, suggests that many have failed, while others can be viewed as problematic. In many cases auctions have failed because reserve prices were set too high, and because the amount of spectrum on offer was limited. Most spectrum that was auctioned landed in the hands of incumbent licensees, effectively strengthening market concentration and benefitting dominant operators. Most attempts to secure new entrants through spectrum auctions have failed. Most auctions have failed to pay attention to universal access and service, and to ensuring that auction outcomes were in the public interest and promoted broader economic growth, social development and benefits for consumers. It is, therefore, clear that a focus on revenue maximisation through the auctioning of spectrum is short-sighted and detrimental to the sector. Instead, it is the ready availability of spectrum that generates long-term economic benefits. Further, auctions rarely increase competition and usually entrench market dominance. In addition, universal access and service imperatives are too often overlooked in auctions, whilst high auction fees may increase the cost to communicate. Finally, poor auction design can lead to auction failure and log-term harm to the economy and the sector