They’re spectrum auctions, but not as we know them

Mobile network operators (MNOs) rarely pass up an opportunity to complain about their declining revenues. They claim to be so strapped for cash that they can barely afford to invest in network rollout.

On Monday, for example, at the Mobile World Congress in Barcelona, the chief executives of Europe’s four biggest telcos appeared on stage together to plead for a “new deal” for the industry.

The choice of slogan, echoing the Great Depression of the 1930s, was instructive.

The cost of spectrum is a big part of the problem. MNOs have spent a fortune on frequencies in the past and say they now need regulators to keep auction prices down.

All this means it’s no surprise that mobile industry association the GSMA has endorsed the idea of “cashless” spectrum auctions. Instead of asking for large piles of cash in easy-to-carry bags when auctioning spectrum, regulators could impose stronger coverage obligations or seek investment commitments to promote faster network rollout.

Sounds like a bargain? Alas, things are never so simple. Cashless auctions need to be designed carefully if they are to work, and there have been precious few sightings of them in the wild.

For a better understanding of cashless auctions, read our new research note, which is now available to Spectrum Research Service subscribers.

• What are cashless spectrum auctions?