Spectrum Property Rights and Practical Auction Design: The Australian Experience

The radiofrequency spectrum is a valuable national economic resource. Efficient use of this resource is important to national economic well-being. National administrations have traditionally relied on a centrally planned model to manage spectrum. This has involved planning the use for parts of the spectrum at a national level, consistent with international conventions, and then issuing device specific licences following these plans. Allocation of these licences has traditionally involved a combination of “over-the-counter” allocation, ballots and lotteries, comparative merit assessment, and, more recently, price-based allocation. As the pace of technological change increases, this traditional and widely practised approach is coming under increasing pressure. The time taken for national administrations to re-plan the use of spectrum for emerging new technologies can sometimes take longer than the life cycle of the technologies. This is especially true in the telecommunications sector. A goal for many years has been to develop a system that brings market responsiveness to spectrum management, so that spectrum use can be changed in direct response to market conditions and the emergence in the market place of new technologies. Australia has recently developed and implemented a property-like rights regime in radiofrequency spectrum, giving licensees unprecedented flexibility to buy and sell spectrum as a resource in an open market so that responses to technological change can be taken against a market setting. This paper outlines Australia’s general approach and its application of the technique.