On behalf of the Public Interest Spectrum Coalition, Public Knowledge submits these
comments in response to the Public Notice in the above docketed proceeding. We
commend the Wireless Telecommunications Bureau (Bureau) for proposing to adopt
anonymous bidding for Auction 86. As demonstrated by the use of anonymous bidding in
Auction 73 (the "700 MHz Auction"), anonymous bidding eliminates the ability of
bidders to engage in certain types of strategic behavior. This promotes increased
competition for licenses and greater return to the public for use of the spectrum public
asset. A study conducted by Dr. Gregory Rose bearing out the benefits of anonymous
bidding in Auction 73 is attached with these comments.
The Bureau Should Adopt Anonymous Bidding Rules for Auction 86
In previous spectrum auctions, bidders have used open bidding to engage in signaling
behavior aimed at reducing demand for licenses and keeping out new entrants. Signaling
has been described as collusive behavior where "bidders signal their willingness to
abstain from competing over certain objects, provided they are not challenged on
others." A study by Prof. Peter Cramton and Prof. Jesse Schwartz found extensive use of
such signaling in the PCS D, E, and F auction (auction 11). The study indicates that
signaling resulted in a significant revenue loss.
Similarly, a study of the AWS -1 auction (Auction 66) by Dr. Gregory Rose found that
incumbents used the open auction to keep new entrants from obtaining licenses. They
achieved this result by a practice called retaliatory bidding i.e. concentrating collectively
on newcomers who posed a competitive threat and using superior economic power to
outbid them.
In response to these concerns, the Commission adopted anonymous bidding
rules for
Auction 73. As demonstrated by the attached study by Dr. Gregory Rose,
an analysis of
the results in Auction 73 bear out the prediction that anonymous
bidding increased the
overall efficiency of the auction by reducing the ability of bidders to
engage in certain types of strategic behavior. In view of its proven
benefits in Auction 73, PISC urges the
Bureau to adopt anonymous bidding in auction 86.
To read the full filing, download the PDF below.
