Rethink on bids plan for net access

May 12, 2000

Cambridge University researchers say the next auction for internet access technology demands a different structure from the one used for this month's third-generation mobile telecoms auction.

The Broadband Fixed Wireless Access auction is to be held later this year. The technology allows the delivery of high-speed internet access without a phone line.

But unlike the most recent auction, which has a simple structure involving just five national licences, the auction for BFWA will involve many regional licences, with several bidders winning licences in each and as many as 23 licence regions across the United Kingdom.

Richard Steinberg of the Judge Institute and Frank Kelly of the university's Statistical Laboratory believe that the method should reflect the probability that bidders may find a particular licence to be more valuable if it is acquired together with one or more other licences.

They suggest that bids should be permitted on groups, or combinations, of licences. If this is not allowed, bidders interested in providing BFWA service to four regions in one area, but only as a group of four, might be unwilling to risk bidding for them individually, risking lower auction revenues.

They have devised an auction procedure that allows for multiple winners in each region, exactly along the lines of the government proposal.

Their paper on the multiple winner auction design will appear in Management Science and they have been invited to explain their thesis to the US Federal Communications Commission as a basis for forthcoming spectrum auctions in America.

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