I was not the first to advocate for spectrum auctions, only the most vociferous.
The Japanese wireless market must be for Evan Kwerel akin to what the Duck-billed Platypus is for Charles Darwin. The Platypus is an egg-laying, venomous, duck-billed, beaver-tailed, otter-footed mammal, and would seem defy evolutionary theory.
The Japanese wireless market is well developed, with at least 5 competitors offering some of the lowest priced, highest speed, and most advanced networks of anywhere in the world. Yet, according modern economic theory, this should not be. The Japanese government has never held an auction to assign spectrum licenses. Economic theory suggests that auctions are more efficient (see, Cool Stuff) at assigning spectrum rights to their highest monetary value use than other means such as comparative hearings (currently used in Japan) or lotteries. If you are interested in auctions in Tokyo have been in Tsukiji – the 5 AM fish market – has traditionally been your best bet.
If it walks like a duck, and talks like a duck… this makes no sense, it can’t be a mammal.
I have head rumors that the reason the Japanese government has never held spectrum auctions was not for fear of creating distortions in the market but so as not to upset the balance of power among the various ministries (i.e. Finance, Industry, Posts and Telecommunications). The US Treasury and the FCC got along fine once the FCC started sending enormous checks.
That might all change as the government of Japan is considering how it might employ spectrum auctions. A friend in Tokyo sent me a recently published copy of the Cabinet’s decision on a new strategy for growth. Item 35 on page reads as follows:
電波の有効利用のための制度の見直し （１）割り当て済みの電波について、より必要性の高い用途に利用できるよう、既存の利用者を他の周波数へ速やかに移行させ、迅速かつ円滑に周波数を再編するための方策について平成22年度に検討、結論を得、平成23年度に措置する。 （２）再編に要するコストについて、再編後の周波数を新たに利用する者が、市場原理を活用して負担する等、オークション制度の考え方も取り入れた措置について平成22年度に検討、結論を得、平成23年度に措置する。
Maguro auctions at Tskiji.
My Japanese is not so strong, but if you read this in context as Kasumigaseki Bungaku (roughly, “Beltway Literature”), as I was admonished, you can interpret this mean that the Cabinet is directing the Ministry of Information and Communications to review how market forces can be employed to rapidly and efficiently reassign radio usage rights. According to my vague understanding of what is suggested, the MIC will pursue a limited use of auctions to reassign spectrum licenses. Auction prices will be limited to the costs of relocating the existing users from the band. The MIC will then auction participant’s bids as part of its analysis in some sort of comparative hearing. License winners will have to pay their bid eventually.
Ken, we want you to rework the Part 15 Rules for sashimi - we'll call it “Unlicensed and Uncooked.”
Insight: To be fair, I think this is a really clever idea, but am not convinced it will work. For my Next Generation Spectrum Policy study, I considered a very similar idea, whereby the spectrum management authority would have access to pricing information to make band-planning determinations. This idea is, in fact, the origin of the term I coined for the study, “price-guided policy.” I eventually rejected the idea before concluding the study because I became convinced that as long as you are going through the trouble to hold the auction, you might as well have it do all of the hard work up to and including assignment. I am very curious to see how this develops. I am not sure whether auctions will make the Japanese wireless market more advanced, or whether they will simply screw things up. I will keep you posted.
