Empirical study of US CMRS spectrum auctions

Abstract

Spectrum is a scarce natural resource like water and efficient allocation of spectrum is important for the growth of any county. Today communications is impacting all aspects of human life whether it is communication for personal reasons or for business transactions. The Department of Telecommunications has the responsibility to allocate spectrum licences to operators in India. Telecom Regulatory Authority of India is the regulatory body which looks after the policy issues related to the telecommunications industry and has the responsibility to come up with recommendations on the policies for the industry. The last spectrum auction in India resulted in very less participation and the licences were not sold. This delay in allocation has a cost to the society. The objective of this study is to come up with a model which can be used for predicting the price of spectrum. The US markets had lot of spectrum auctioned, so we have chosen US for empirically studying the data of spectrum auctions. Data was compiled for 6 auctions in US. Regression analysis was carried out using STATA. Though we are not able to come up with a model for predicting the price but we have found that most of the independent variables were statistically significant and in one model we were able to explain the variation in the price of spectrum by 69%, since the model is based on the data which is 14 years old it cannot be applied in practice.