Open Spectrum Auctions

I proposed the Open Spectrum Auction in OpenSpectrum mailing list:

The idea is simple: the government mandate winners of auctions to open the spectrum for every MVNO with pre-determined (cheap) prices and open the terminals for every manufacturers in the world.

It would lessen the profit so that winning prices will be cheaper. I think it would be a middle ground between commons and property parties.

David P. Reed, a father of the Internet, commented:

It's an interesting proposal, but I don't quite get the technological implementation you have in mind. In particular, an MVNO is a communications service that uses a licensee's infrastructure, paying for that use a "marked up" price, and the licensee still retains the right to allow or block terminals based on any criteria they can think of.

Did you have in mind that anyone can be an MVNO without any discrimination? That would require a system that provided an MVNO interface (API or gateway) that merely took money in exchange for service, but was completely open.

In any case, the thing that worries me here is that this does nothing to facilitate innovation in actual radio technologies, since the incumbent licensee has complete control over the technology used. In that sense, it is the same as "analog TV" - the incumbent has no incentive to do a better system, and now has many, many customers (MVNOs) that will be supporting the lack of innovation.

I replied:

Thank you for a nice comment. It's true that MVNO can't change the physical layer, so the innovation would be limited. However, pushed by recent financial turmoil, Japanese politicians are hungry for money. And the MoF urges the MIC to make money themselves.

So this is a good chance to change the command-and-control framework of Japanese policy. And we can leapfrog the U.S. by exploiting this chance, because the incumbents aren't so powerful in the U.S. Google's proposal for 700-MHz auction is a good starting point:

• Open applications: consumers should be able to download and utilize any software applications, content, or services they desire;
  
• Open devices: consumers should be able to utilize their handheld communications device with whatever wireless network they prefer;
  
• Open services: third parties (resellers) should be able to acquire wireless services from a 700 MHz licensee on a wholesale basis, based on reasonably nondiscriminatory commercial terms;
  
• Open networks: third parties (like Internet service providers) should be able to interconnect at any technically feasible point in a 700 MHz licensee's wireless network.

Economically, it's legitimate for the government to mandate pro-competitive conditions for bidders in advance. For example, API should support IP and be opened with GPL to make physical layer irrelevant. And the tariff should be determined in advance so that no "markup" can be gained by resale. As it will make bidding price cheaper, operators will welcome it because they are afraid of the winner's curse.

I wrote such idea in my old article "The Spectrum as Commons".