New Zealand Spectrum Policy: A Model for the United States?

In 1989, the New Zealand government began to auction “management rights” to the electromagnetic spectrum, using sealed‐bid, second‐price (“Vickrey”) auctions. Subsequently, the United States began to auction spectrum through ascending‐bid, multiple‐round auctions. Although students of auction proces...

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Bibliographic Details
Published in:The Journal of law & economics 1998-10, Vol.41 (S2), p.821-840
Main Author: Crandall, Robert W.
Format: Article
Language:English
Subjects:
Auction markets
Auctions
Broadcasting
Commerce
Direct broadcast satellites
Economic theory
Efficient markets
Incumbents
New Zealand
News content
Public Policy
Radio spectrum
Spectral bands
Spectrum allocation
Telecommunications
Telecommunications policy
Television broadcasting
United States
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Summary:In 1989, the New Zealand government began to auction “management rights” to the electromagnetic spectrum, using sealed‐bid, second‐price (“Vickrey”) auctions. Subsequently, the United States began to auction spectrum through ascending‐bid, multiple‐round auctions. Although students of auction processes find the latter type of auction to be the more efficient form, I find that the prices realized in the New Zealand cellular auctions are very similar to those realized in the U.S. Personal Communications Services auctions after adjusting for differences in demographics. The flexibility of the New Zealand management rights should theoretically allow the winning bidders to find the highest‐valued use for the spectrum, but many of the auctioned rights remain unused several years later. A country as small as New Zealand simply cannot be as innovative in finding new uses for the spectrum because of the large initial costs of developing the requisite equipment for using it.
ISSN:0022-2186
1537-5285
DOI:10.1086/467415