DP2810 The European UMTS/IMT-2000 Licence Auctions

Author(s): Philippe Jehiel, Benny Moldovanu
Publication Date: May 2001
Keyword(s): Licence Auctions, Market Entry, UMTS
JEL(s): D44, D45, L13, L96
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2810

Europe has taken the global lead in the issuance of third generation (3G) licences for mobile telecommunications according to the UMTS/IMT-2000 family of standards. We survey the recent European UMTS licence auctions and compare their outcomes with the predictions of a simple auction model that emphasises future market structure as a main determinant of valuations for licenses. Since the main goal of most spectrum allocation procedures is economic efficiency, and since consumers (who are affected by the ensuing market structure) do not participate at the auction stage, good designs must alleviate the asymmetry among incumbents and potential entrants by actively encouraging entry.