Japanese Government Considers Spectrum Auctions

Japanese government is considering spectrum auctions for UHF and satellite bands, an official said. In 2011, when the analog broadcasting is expected to stop, nearly 100 MHz in UHF will be opened, but many would-be operators rushed to the band so that beauty contests are hard to hold.

On the other hand, the MIC is asking 200 billion yen for the transition to DTV in the budget that will be debated in the next Diet. Since Japan's public deficit is the worst in the OECD countries, the Ministry of Finance is reluctant to subsidize TV stations with public money.

Auctions can solve both problems. It's a self-selection mechanism in which the operators who use the spectrum most efficiently will win the bid, as many economists have researched extensively. It's purpose is to make the spectrum market competitive, but it enables the government to make huge money. In Japan, Prof. Hajime Oniki of Osaka Gakuin University estimated the value of spectrum 13 billion yen per MHz. There are many vacant bands:

• 470-710MHz: 200MHz is the white space or evacuated by SFN
  
• 710-770MHz: allocated to mobile operators
  
• 770-806MHz: vacant

Bottomline: more than 300MHz can be opened. If it's run most efficiently, the spectrum auction can raise enormous windfall revenues more than 3 trillion yen (30 billion dollars) for the government.

New entrants get spectrum, the government receive money, and broadcasters can be subsidized by the auction fee for their transition costs. Nobody will lose. Why don't they do it?