When spectrum auctions go wrong

The beauty of spectrum auctions is that they force operators to put their money where their mouth is. Operators may be able to make a compelling case of why they should be assigned spectrum, and another company should be deprived of that spectrum, but auctions can “separate the wheat from the chaff”.

Chile’s recent award of the 700 MHz band demonstrates how this works. Both Borealnet and WOM made equally good cases to gain a 2 x 10 MHz block of the spectrum. But the latter put up USD 82 million for the licence, while the former only bid USD 40,000. The clear rules, the highest bidder wins, means that Borealnet would probably fail if it tried to reverse the outcome in the courts, despite its otherwise litigious parent-company, Rivada Networks.

But as we explain in a new country profile for India, auctions can go wrong. It auctioned the 700 MHz band, among other frequencies, in early 2021, but received no bids for the spectrum. Why? The reserve prices were too high. The government did raise USD 10.6 billion in the award, but mostly for licences for other bands that were due to expire.

Sweden also lost some economic benefits from the use of spectrum. This was due to a long-delayed auction that prevented operators from using the 2.3 GHz and 3400 – 3720 MHz bands for over a year, although at least the spectrum was available for trials while operators were waiting. The issue: litigation over a prohibition on the use of equipment from Huawei or ZTE.

Given these risks, perhaps it’s no surprise that South Korea opted to negotiate with its operators when faced with expiring spectrum licences.

These issues are explained in newly-updated country profiles on India, Sweden, and South Korea available to Spectrum Research Service subscribers. We have also updated our profile for Italy.