An Analysis of the Sale and Valuation of PCS Spectrum in the United States

This paper analyzes U.S. PCS spectrum auctions in several key ways. First, a history of how the FCC came to the decision to auction spectrum rather than assign it using a different method is provided. Then, the specific rules and procedures used in the auctions are explained and the strengths and flaws of each significant auction trait are exposed. Auctions in the U.S. are compared to 3G auctions that occurred during roughly the same time period in Europe. Because certain European auctions chose methods that contrast those used in the U.S., a clearer understanding of what tactics work well and why is obtained. Also, certain flaws found in both sets of auctions reinforce the need for changes in the auction design. Next, a series of detailed regressions are run from data obtained in the U.S. PCS auctions. Within each auction, the effect of demographic components on license values is measured along with a variable designed to gauge changes in competitiveness associated with each separate license in the auction. Also, an attempt is made to understand what factors affect overall price levels from auction to auction. Ultimately, the paper expands on work performed by prior scholars in several ways. It extends the analysis of spectrum auction success by comparing U.S. auctions to European auctions and by incorporating the FCC’s plans for the upcoming AWS auctions into the study. Also, it provides regression analysis for recent auctions and attempts to discover precisely what factors change price levels from auction to auction.