Friday, 5th October 2012
UK: Spectrum value of 800MHz, 1800MHz and 2.6GHz [4G Auction Report]
Source: Ofcom (UK)
From Executive Summary:
In previous auctions, Ofcom’s approach was to set reserve prices at a level that would discourage frivolous bidding, but was not necessarily reflective of the market value of spectrum. Such ‘low but non-trivial’ reserve prices are entirely appropriate if competition in the auction is expected to be strong across all available lots because prices will ultimate reflect market value regardless of their starting level, and setting low reserve prices avoids the risk of pricing off efficient demand.
Although reserve prices should normally not affect final auction prices and outcomes, setting them at a level that is substantially below market value can produce inefficient outcomes because with starting prices that are substantially below market value bidders may have a stronger incentive to behave strategically to prevent prices from increasing. The proposed auction format for the upcoming award of spectrum in the 800MHz, 1800MHz and 2.6GHz bands is relatively robust in relation to such strategic behaviour, but Ofcom considers that in this particular case setting reserve prices closer to market value might be appropriate.
To inform its decision on reserve prices, Ofcom has commissioned DotEcon and Aetha to
provide estimates of the market value of the spectrum that will be offered in the forthcoming auction, using a combination of benchmarking (i.e. looking at comparable award processes that have been held elsewhere, and the prices paid by successful bidders in these awards) and business modelling; and
to recommend appropriate reserve prices should Ofcom decide to set market value reflecting reserve prices.
+ Direct link to document (PDF; 1 MB)
By Adrian Janes
Having begun his career in academic libraries, Adrian Janes is currently an Information Services Librarian with the London Borough of Havering.
In this role, he has particular responsibility for information from both the UK Government and the European Union. He wrote a detailed report on sources for the latter which was published by Free Pint Ltd. in 2007. He is also involved in training and publicising online reference resources and is a regular contributor to DocuTicker.
Adrian can be reached at firstname.lastname@example.org
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