3G Spectrum Auctions in India: Have We Learnt the Right Lessons?

Abstract:     
India’s telecom sector can justifiably be classified as a success story judged by standards of rapid but inclusive growth and industry competitiveness. The Indian government has recently announced an auction to award licenses for the spectrum enabling rollout of the 3G and Broadband Wireless Access [BWA] in 20 of the 22 telecom circles of India. The use of auctions to enhance allocative efficiency of a scarce resource such as telecom spectrum is indisputable. However, the desired efficiencies shall not be realized unless the auction design and spectrum management policies are both optimal. This paper critically examines whether the design of the proposed auction for the 3G/BWA spectrum shall prove adequate in meeting the stated policy goals of the Government of India.We conclude that while there are many commendable features in the design opted, but also that there is considerable room for improvement in the design of the auction rules if the stated policy ends of allocative efficiency, post-auction market competitiveness and maximization of auction revenue are to be met.

Number of Pages in PDF File: 17

Keywords: 3G Auctions, India, Spectrum Auctions, Clock Auctions, Market Design

JEL Classification: D44, L96

working papers series