Supply and Demand in Search of a Market: The Case of Secondary Spectrum Markets Scott Wallsten June 2, 2011 Spectrum Markets: Challenges Ahead What are ? And Whats Their Role in Promoting Efficiency?

wrong How much trading should there be?

Auctions ensure newly released spectrum goes to most efficient use. But then what?

Potentially available for secondary trades.

What are secondary spectrum markets?Whats our objective? Ensure that spectrum can flow to its highest-value use.

What are secondary spectrum markets? Any market transaction after the initial allocation except those involving retail sales by initial leaseholder to end users.

Wholesale spectrum and network access

Secondary Trades in Spectrum Licenses

Federal Radio Act: Declared spectrum a public resource comparative hearings 1982 Lotteries FCC created, given right to assign spectrum 1994 auctions 1959 Ronald Coase suggests using property rights to assign spectrum 2000 FCC begins laying the groundwork for secondary markets. Spectrum Allocation Methods in the U.S.

Spectrum license trades and leases FCC first attempted to promote secondary market with a policy statement in 2000 defining necessary framework: 1.Clearly defined economic rights 2.Easy entry and exit 3.Full information on prices and products 4.Mechanisms for bringing buyers and sellers together 5.Many buyers and sellers How are we doing?

1. Clearly defined economic rights? or YESNO

- Peter Cramton (paraphrasing)

2. Easy entry and exit?

3. Full information on prices and products?

Information probably not a binding constraint.

4. Mechanisms for bringing buyers and sellers together?

Website in December 2009

Website June 2011

5. Many buyers and sellers?

Number of Spectrum Leases

What do those numbers mean?

How to measure latent demand?

Number of STA Requests and Grants

Demand and supply curves?

Secondary trades come in many forms. License sales and leases are common. We dont know what a working market should look like. Importance of secondary markets grows with each auction. Minimize costs associated with all types of transactions, not just license transfers.

Thank you!