Showing posts with label radio spectrum. Show all posts
Showing posts with label radio spectrum. Show all posts

Monday, June 15, 2020

Paul Milgrom corrects the record on spectrum auctions and market design

Paul Milgrom responds in detail to some scurrilous online criticisms and innuendos about market designers in general and spectrum auctions in particular.

 The Market Design Community and the Broadcast Incentive Auction: 
Fact-Checking Glen Weyl’s and Stefano Feltri’s False Claims
By Paul Milgrom*  June 3, 2020 (and republished on Digitopoly on June 14)

"In a recent Twitter rant and a pair of subsequent articles in Promarket, Glen Weyl [1] and Stefano
Feltri [2] invent a conspiratorial narrative according to which the academic market design community is secretive and corrupt, my own actions benefitted my former business associates and the hedge funds they advised in the 2017 broadcast incentive auction, and the result was that far too little TV spectrum was reassigned for broadband at far too little value for taxpayers.
The facts bear out none of these allegations. In fact, there were:

• No secrets: all of Auctionomics’ communications are on the public record,
• No benefits for hedge funds: the funds vigorously opposed Auctionomics’ proposals, which reduced their auction profits,
• No spectrum shortfalls: the number of TV channels reassigned was unaffected by the hedge funds’ bidding, and
• No taxpayer losses: the money value created for the public by the broadband spectrum auction was more than one hundred times larger than the alleged revenue shortfall.
...
[read the rest to get the facts...]

[1] “It Is Such a Small World: The Market-Design Academic Community Evolved in a Business Network.” Stefano Feltri, Promarket, May 28, 2020.
[2] “How Market Design Economists Helped to Engineer a Mass Privatization of Public Resources.” Glen Weyl, Promarket, May 28, 2020.

Friday, June 14, 2019

Will satellite companies sell C-Band spectrum by auction?

Auctionomics, the auction design company founded by my colleague Paul Milgrom, has been working with satellite broadcasters Intelsat (NYSE: I), SES (Euronext Paris: SESG), Eutelsat (Euronext Paris: ETL) and Telesat (the C- Band Alliance) to auction some of the rights to their C-Band spectrum.  Here's a press release

C-Band Alliance Filing on Proposed Commercial Auction Process

and here's a Bloomberg story:
Intelsat, SES Unveil Design for Private Sale of 5G Airwaves

It appears that the proposed auction is modeled on the FCC's incentive auction that repurposed some television broadcast spectrum licenses.  See my last year's post

Wednesday, June 13, 2018

*****************
Update: the white paper, FUEL for 5G: Flexible Use and Efficient Licensing can be found here, preceded by a cover letter to the FCC.

Tuesday, June 26, 2018

Skimishing over C-Band radio spectrum


Harnessing Satellite Spectrum for Broadband: Will Incumbents Sell, Stay, or Share?

"At its July meeting, the Federal Communications Commission (FCC) is likely to adopt an unprecedented proposal to open a large band of satellite spectrum for mobile and fixed wireless broadband.  The mid-band spectrum from 3700 to 4200 MHz has become the most sought-after resource for both future “5G” mobile networks and for extending high-capacity “fixed wireless” broadband in rural and other low-density areas where trenching fiber would cost too much or take too long.
...
"The two primary proposals under consideration involve clearing the satellite service off the lower portion of the band (boosting mobile capacity for 5G) and authorizing shared use of the unused frequencies in the remainder of the band (enabling high-capacity fixed wireless). Some stakeholders support both proposals as complementary (a “win-win”); other stakeholders oppose one or both proposals."

And this:
 Google, Intelsat spar over C-Band

"Sparks were flying almost as soon as the first keynote got underway during New America’s Open Technology Institute (OTI) event Friday that examined how things might unfold for the C-Band—the 3700-4200 MHz band that is being eyed for 5G.

"In one corner: The Google-backed effort to allow sharing in the C-Band while protecting incumbents. In another corner, a satellite industry proposal to free up 100 MHz for 5G within 18 to 36 months.

"But those were just two sides represented by the keynote speakers: Andrew Clegg, spectrum engineering lead at Google; and Hazem Moakkit, vice president for spectrum strategy at Intelsat. There are many other sides as well, including video content producers, broadcast stations, cable networks, mobile carriers and rural broadband ISPs, to name a few.
************


Saturday, April 21, 2018

FCC receives Edelman award for incentive spectrum auction

Advancing wireless communication: FCC awarded the 2018 INFORMS Edelman Award, the leading award in analytics and operations research

"The FCC conducted the world’s first two-sided “Incentive Auction” to meet the exploding demand for wireless services by reclaiming valuable low-band electromagnetic spectrum from TV broadcasters. By purchasing spectrum from TV broadcasters and reselling it to wireless providers, the auction repurposed 84 MHz of TV spectrum for mobile broadband, next-generation “5-G,” and other wireless uses, raised nearly $20 billion in revenue, and contributed over $7 billion to reduce the federal deficit. In addition, operations research enabled many TV stations to remain on their original channels, saving an estimated $200 million in relocation costs.  "
*************

I have written quite a number of posts focusing on the incentive auction, and on the dream team led by Paul Milgrom; here's one of the first:

Monday, April 21, 2014

Thursday, March 22, 2018

The next radio spectrum frontier?

The allocation and reallocation of radio spectrum for modern uses has reorganized how spectrum is used.  But the growth of mobile computing, communication, entertainment, and whatever else continues to make presently usable, unassigned spectrum scarce.

Commercial satellite company Intelsat owns the rights to a lot of C-Band spectrum, and are seeking more flexibility in using it, or re-licensing it.
Here's their current proposal, probably not the last word.

Expanding Flexible Use in Mid-Band Spectrum between 3.7 and 24 GHz, GN Docket 17-183
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Update on 3.7-4.2 GHz (May 31, 2018)
CTIA Calls for FCC Vote on CBRS Band at July Meeting
"Baker also urged the commission to set an aggressive timeline to clear "hundreds of megahertz" between 3.7 GHz and 4.2 GHz, as well as establish a plan for future spectrum auctions."

More, from Bloomberg:
Intelsat Soars as Proposal for New Airwaves Uses Progresses
By Todd Shields, June 1, 2018

Wednesday, July 26, 2017

Spectrum auctions explained (by Scott Kominers in Bloomberg)

Explaining economics is something economists should do more of (especially in light of some of the silly things written about economics in the popular press by people who misunderstand what they are writing about).  Here's a good example of good explanation, written clearly, by an expert:

To Improve Wireless Networks, Auction the Airwaves:
People are watching TV on devices, so mobile companies need more spectrum and broadcasters need less. Here's how to get there.
By Scott Duke Kominers

Monday, July 10, 2017

Economics and computer science of a radio spectrum reallocation in the PNAS

A PNAS article on the recent incentive auction, by its design team.

Economics and computer science of a radio spectrum reallocation
Kevin Leyton-Brown, Paul Milgrom, and Ilya Segal
 Early Edition >  doi: 10.1073/pnas.1701997114

Abstract
The recent “incentive auction” of the US Federal Communications Commission was the first auction to reallocate radio frequencies between two different kinds of uses: from broadcast television to wireless Internet access. The design challenge was not just to choose market rules to govern a fixed set of potential trades but also, to determine the broadcasters’ property rights, the goods to be exchanged, the quantities to be traded, the computational procedures, and even some of the performance objectives. An essential and unusual challenge was to make the auction simple enough for human participants while still ensuring that the computations would be tractable and capable of delivering nearly efficient outcomes.

Conflict of interest statement: P.M. led the team of consultants on behalf of Auctionomics, which was responsible for advising the Federal Communications Commission on the design of the incentive auction. K.L.-B. and I.S. were the two other members of the Auctionomics consulting team.


Sunday, April 23, 2017

The FCC Spectrum Incentive Auction: conference at Duke

Here's a chance to hear about one of the most exciting auctions of modern times...

The FCC Spectrum Incentive Auction: Lessons for the Future

Friday, May 12, 2017, 8:30 a.m. - 1:30 p.m.
Duke University's "Duke in DC" offices
1201 Pennsylvania Avenue, NW, Suite 500 | Washington, DC 20004
The FCC is concluding the most complex auction in history, the culmination of a decade-long planning process for moving spectrum from broadcast to mobile broadband uses. On the morning of May 12, The Center for Innovation Policy at Duke Law will hold a half-day conference that will identify lessons from this auction for spectrum policy, government disposition of assets (whether of spectrum or other resources), and the future of innovation policy generally. The conference will be at Duke in DC, 1201 Pennsylvania Ave., NW, Suite 500, Washington, DC. The program is free and open to the public; due to limited space, registration is required (see the link below).
Speakers include: Lawrence Ausubel, Univ. of Maryland, Power Auctions; Jonathan Chaplin, New Street Research; Paul de Sa, Quadra Partners; Gary Epstein, FCC; Karla Hoffman, George Mason Univ.; Allan Ingraham, Economists Inc.; Edward Lazarus, Tribune Media; Michael Ostrovsky, Stanford Graduate School of Business; Preston Padden, Boulder Thinking; Charla Rath, VerizonDorothy Robyn, former Commissioner at GSA; Gregory Rosston, Stanford Univ.; David Salant, Auction Technologies; Steve Sharkey, T-Mobile; and Ilya Segal, Stanford Univ.
PRELIMINARY AGENDA
8:30 AMIntroduction
8:35 AMAuction Design
9:45 AMAuction Implementation
11:15 AMAuction Participation and
Future Directions
12:30 PMAdjourn

Thursday, April 28, 2016

Stanford celebrates Paul Milgrom and the Incentive Auction "Dream Team"

New on the SIEPR webpage, by Krysten Crawford: To secure a mobile future, Stanford expert creates an auction like no other (the url is more informative than the headline: http://siepr.stanford.edu/highlights/secure-mobile-future-stanford-expert-paul-milgrom-creates-auction).

"More than two decades ago, Stanford economist Paul Milgrom played a key role in the design of the first wireless spectrum auction. Since then, the framework he helped create has been used in more than 80 auctions in the United States, generated billions of dollars in government licensing fees — and been replicated around the world.

"So it made sense for the Federal Communications Commission to tap Milgrom in 2011 when the agency needed a new way to free up more broadband for mobile devices. It took him and a small band of fellow economists and computer scientists 18 months to design the auction, which finally opened last month after years of regulatory procedures, software development and presentations to potential bidders.

"When the auction ends later this year, the country’s wireless landscape will never look the same.
...
"For help, Milgrom pulled together an interdisciplinary “dream team” of top experts in economics and computer science: Jonathan Levin, also a SIEPR senior fellow and faculty member in economics; Ilya Segal, a professor of economics at Stanford; and Kevin Leyton-Brown, a computer scientist at the University of British Columbia who earned his PhD from Stanford."

Tuesday, April 5, 2016

FCC incentive auction


USA Today covers the earliest stage of the FCC's incentive auction: FCC's complex incentive auction could net more than $30 billion

"The most sophisticated and complex spectrum auction ever conducted by the Federal Communications Commission is officially underway.

"When the entire process comes to an end more than three years from now, big wireless carriers that provide most of our smartphone access should have more bandwidth to delivery services to mobile-hungry consumers.

"TV broadcasters by Tuesday night must have made official their intentions to accept the FCC's opening price for the rights to the spectrum they currently use for digital TV broadcasts. Once the agency knows how much spectrum can be made available in this "reverse auction," then, in a few months, the FCC will open up the bidding in the "forward auction" in which companies such as AT&T and Verizon can bid on the reallocated spectrum in each of 400-plus localities."

Sunday, January 31, 2016

The FCC's upcoming 2016 Incentive Auction: SIEPR policy brief by Greg Rosston and Addrzej Skrzpacz


Moving from Broadcast Television to Mobile Broadband: The FCC’s 2016 Incentive Auction


Gregory Rosston, Andrzej Skrzypacz

Friday, May 29, 2015

Peter Cramton is a Chief Economist

Peter Cramton puts on a new entrepreneurial market design hat, with Rivada Networks

Rivada Networks Names Peter Cramton as Chief Economist

"Rivada Networks has appointed Prof. Peter Cramton as its Chief Economist. Rivada CEO Declan Ganley said: “Professor Cramton is one of the world’s leading authorities on auction design.” Ganley added, “Rivada’s technology will turn wireless bandwidth into the world’s next great commodity. Peter’s expertise will ensure that wireless bandwidth trades in a competitive, state-of-the-art marketplace open to all stakeholders that seek access to wireless networks in the future.”
“Rivada’s technology allows us, for the first time, to create a truly open market for wireless bandwidth access, tearing down barriers to entry and permitting new business models and new entrants to emerge.”
"In his new role, Prof. Cramton will work with the Rivada team to design and development Rivada’s patented Telecommunication Commodity Exchange. Together with Rivada’s Dynamic Spectrum Arbitrage technology, the exchange will permit the buying and selling of capacity on LTE wireless networks in discrete units of both time and space.
“I am excited to bring my market design expertise to develop Rivada’s essential idea: an open access wireless market.”” Prof. Cramton said, “The bandwidth exchange lets wholesale operators efficiently trade spectrum in annual, monthly, and real-time auctions.” He continued: “Rivada’s technology allows us, for the first time, to create a truly open market for wireless bandwidth access, tearing down barriers to entry and permitting new business models and new entrants to emerge.”

Saturday, February 21, 2015

Comments on the FCC incentive auction

Peter Cramton writes:

Dear Al,

Yesterday, I filed at the FCC some research that my team has been working on for some time. It is a good example of market design in action, combining economics, computer science, and operations research to design better markets. I am sending this to you because I thought that you may be interested and the market design community more broadly. I paste below the link and the abstract.

All the best,
Peter

“Design of the Reverse Auction in the FCC Incentive Auction” (with Hector Lopez, David Malec and Pacharasut Sujarittanonta), Working Paper, University of Maryland, 19 February 2015. [See also FCC Comment Public NoticeEOBC CommentKagan Comment]

We consider important design issues of the reverse auction, a key and innovative part of the FCC’s Incentive Auction. In the reverse auction, broadcasters compete to repurpose television broadcast spectrum for mobile broadband use. The Comment Public Notice (FCC 14-191) outlined the basic structure of the reverse auction. We take that basic structure as given and then examine critical elements of the design to maximize the FCC’s objectives of efficiency, simplicity, transparency, and fairness. Based on extensive simulation analysis of the FCC’s basic design, we identify important enhancements to the design that maintain its basic structure, yet improve the chance of a successful auction. This is accomplished by strengthening incentives for broadcaster participation and relying on competitive forces to determine auction clearing prices. Our analysis is based on a carefully-crafted reservation price model for broadcasters together with inevitable uncertainties of these reservation prices. In our simulations, we are able to clear 126 MHz of spectrum at a cost that is well within plausible revenues from the forward auction. This is accomplished with an improved scoring rule and replacing Dynamic Reserve Prices (DRP) with a much simpler Round Zero Reserve (RZR, pronounced “razor”) to promote objectives of transparency and simplicity. We also propose a much simplified method of setting the clearing target and an information policy that allows for important outcome discovery. Relative to the FCC’s proposal outlined in the Comment PN, our enhanced proposal is more robust, more efficient, simpler, more transparent, and fairer.
****************

Here is the FCC's request for comments

Comment Sought on Competitive Bidding Procedures for Broadcast Incentive Auction 1000, Including 1001 and 1002

Friday, October 3, 2014

Combinatorial clock auctions

My colleagues Jon Levin and Andy Skrzypacz have an NBER paper on combinatorial clock auctions of the kind proposed by Ausubel, Cramton and Milgrom (2006), which are becoming widely used outside of the U.S. to auction spectrum. They point to it's multiplicity of equilibria, in some of which bidders can act to raise their competitors' payments without changing their own, as a source of potential problems, some of which may have been observed in practice,

Are Dynamic Vickrey Auctions Practical?: Properties of the Combinatorial Clock Auction

Jonathan LevinAndrzej Skrzypacz

NBER Working Paper No. 20487
Issued in September 2014
NBER Program(s):   IO 
The combinatorial clock auction is becoming increasingly popular for large-scale spectrum awards and other uses, replacing more traditional ascending or clock auctions. We describe some surprising properties of the auction, including a wide range of ex post equilibria with demand expansion, demand reduction and predation. These outcomes arise because of the way the auction separates allocation and pricing, so that bidders are asked to make decisions that cannot possibly affect their own auction outcome. Our results obtain in a standard homogenous good setting where bidders have well-behaved linear demand curves, and suggest some practical difficulties with dynamic implementations of the Vickrey auction.

Thursday, July 17, 2014

Golden Goose Award to Preston McAfee, Paul Milgrom and Bob Wilson

One of the 2014 Golden Goose Awards recognizes the spectrum auction work of Preston, Paul and Bob.

Of Geese and Game Theory: Auctions, Airwaves – and Applications


McAfee, Migrom and Wilson
Social scientists and now Golden Goose awardees: Preston McAfee, left, Paul Milgrom and Robert Wilson
What’s the connection between social sciences research on game theory and your ability to make calls from your cellphone anywhere in the country, watch your favorite cable TV show, find a good restaurant anywhere in the world, or live stream the “big game” on your smartphone? Meet Robert Wilson, Paul Milgrom, and Preston McAfee, whose basic theoretical research on game theory and auctions, much of it federally funded, eventually helped the Federal Communications Commission figure out how to allocate the nation’s telecommunications spectrum through sophisticated, enormously complex auctions.
The story begins with Robert Wilson, a Stanford University economics professor who earned his undergraduate degree and his Ph.D. at Harvard University. Wilson has always had a strong interest in game theory, including how it applies to formulating auctions for maximum results. Game theory uses mathematical models to study how people and organizations make decisions. It is highly theoretical but over time has had significant applications. Early in his career, in the 1960s, Wilson’s research was supported by the U.S. Atomic Energy Commission (AEC). The AEC cared little about the specific topic of Wilson’s research – auctions. As he notes today, few people did. What the AEC really cared about was advancing the field of game theory. At the time, this was obscure, curiosity-inspired basic research, supported by the federal government.
Wilson also conducted research in the 1970s for the Office of Naval Research, which wanted to improve the bidding process for contractors to construct naval ships. Eventually, in the 1980s and 1990s, Wilson’s continuing game theory research on auctions and other economic transactions would be supported by the National Science Foundation.

Golden Goose Award logoRobert Wilson, Paul Milgrom and Preston McAfee are the second set of Golden Goose winners announced this year. Sponsored by a coalition of academic, business, and scientific groups, with the active encouragement of some members of Congress, the Golden Goose Awards honor scientific researchers whose U.S. government-funded studies might have seemed strange, odd, impractical or wasteful at the time but which paid solid dividends — “major economic or other benefits to society” — in subsequent applications. Recipients are selected by a panel of scientists and researchers.The third annual Golden Goose Awards ceremony takes place in Washington, D.C., on Sept. 18. For more on the the Gooseys and this year’s earlier winner, click here.

As an undergraduate mathematics major at the University of Michigan, Paul Milgrom was inspired by the work of Nobel Prize winner William Vickrey, a pioneer in fundamental auction theory, who conducted his research in this area at Columbia University.
After several years of working as an actuary, Milgrom attended graduate school at Stanford where Robert Wilson served as his faculty adviser. The subject of Milgrom’s Ph.D. dissertation in economics was, no surprise, auction theory. Milgrom went on to conduct further research on auction theory at Northwestern University, where his work addressing the unique, but still highly speculative and theoretical, issues arising from simultaneous auctions of multiple items was supported by the National Science Foundation. A 1982 Milgrom paper on single-item auctions is still considered the state of the art. Ironically, a 1981 paper on multi-item auctions was not accepted for publication until 1999.
In 1993, in part to raise additional revenue, Congress granted the Federal Communications Commission authority to conduct auctions to allocate portions of the “spectrum,” which is the range of electromagnetic radio frequencies used to transmit sound, data, and video across the country. It carries voice between cell phones, programing from broadcasters to your TV, and all types of data wirelessly over the Internet. The FCC’s goal was to create market efficiency to ensure the most effective possible development of consumer markets for communications and media.
Auctions may seem fairly straightforward, but they are far from it. Government auctions in particular need to account both for bidders’ varying needs and for their gaming strategies. And this was an extremely complex undertaking, as some companies would want to create large interstate networks, while some wished to serve smaller regional markets. The process needed to ensure both fairness and efficiency, and ensure competitive markets for consumers. And it would be very difficult to estimate the actual value of what was being sold. It was a simultaneous auction of multiple items (multiple frequency bands in different geographic locations), the kind of auction Milgrom had studied in theory. In this instance, however, the policy and economic stakes were large and not at all theoretical.
The FCC issued a “notice of proposed rulemaking” that suggested a process for the first auction. To ensure efficient allocation, the auction would need to be designed to ensure that bidder behavior revealed the worth and value of individual elements or a “package” of the spectrum.  The FCC notice was intended to provide that framework.
It contained considerable information about auctions, including scholarly work. Among the likely bidders was Pacific Bell, the telephone company serving California. When PacBell attorneys saw that Paul Milgrom’s work was cited as a basis for the impending auction, they contacted him to ask for his advice about bidding. When Milgrom saw the FCC’s proposal, he told PacBell that he could design a far better auction that would be both fair and improve efficiency. He went to his old thesis adviser, Robert Wilson, and together they developed an auction process called a simultaneous multiple round, or SMR, auction, also known as a simultaneous ascending-bid auction.
A similar idea was independently proposed by Preston McAfee, at the time an economics professor at the University of Texas and currently chief economist of Microsoft, who was consulting for Pacific Telesis. While McAfee is an American, his early work on auctions, much of it conducted with John McMillan of Stanford and the University of California at San Diego, had been funded by the Canadian government. This work was also highly theoretical, but McAfee was a strong advocate that economic theory should be applied to solving practical problems.
The FCC, knowing that this was uncharted territory, welcomed academic proposals for improving the auction. The FCC asked the three economists to work together, and they designed the first auction. While Wilson and Milgrom contributed the fundamental idea that all of the individual auctions should conclude simultaneously, McAfee’s work was especially important for dealing with other practical issues, such as how to address defaults by bidders and how to ensure participation by women- and minority-owned businesses. (Interestingly, PacBell and Pacific Telesis were in the midst of a corporate “divorce,” so McAfee and the other two economists could communicate with each other only through the FCC.)
Designing and implementing a novel auction method in the given time frame would have been nearly impossible without the foundation laid by the research conducted over the years by Wilson, Milgrom, McAfee and others. That first auction, which occurred in 1994, was a success and SMR auctions have been the method used for dozens of spectrum auctions in the U.S. and around the world, many supported by a company formed by Wilson, Milgrom, McAfee, and McMillan. Indeed, Paul Milgrom is working with the FCC on what will likely be its most complex auction yet – an “incentive” auction, planned for 2015, designed to meet the nation’s changing communications needs and technologies by encouraging the repurposing of spectrum currently controlled by television broadcast networks.
In addition to the FCC auctions, SMR auctions have been used to auction commodities as diverse as gas stations, airport slots, telephone numbers, fishing quotas, emissions permits, and electricity and natural gas contracts.
The FCC has conducted 87 spectrum auctions and has raised over $60 billion for the federal government, while also providing a diverse offering of wireless communication services to the public. These auctions have been called collectively the greatest auction in history.
The economic activity they have made possible, and the changes they have made in the way Americans live, seem incalculable – and not at all theoretical. Game theory has come a very long way indeed.
Here's my golden goose post from before the ceremony last year (and here from after, with a video), when I shared the award with David Gale and Lloyd Shapley, and here's a picture of the goose itself (you have to figure out which one is the goose).

Thursday, June 5, 2014

Making a market for "dark Wi-Fi"

Just as AirBnb makes a market for underused bedrooms, and Lyft makes a market for underused passenger seats in cars, BandwidthX seeks to make a market in underused ("dark") Wi-Fi, so that your phone provider can link you up through available Wi-Fi when you are on the move (and thus delay having to add expensive extra capacity). BandwidthX's 'dark Wi-Fi' capacity marketplace is in trials, says CEO 

Sunday, May 18, 2014

FCC Adopts Rules for Incentive Auction

Here's the news from the FCC:

"The Federal Communications Commission today adopted rules to implement the Broadcast Television Incentive Auction. The two-sided auction will use market forces to recover spectrum from television broadcasters who voluntarily choose to give up some or all of their spectrum usage rights in exchange for incentive payments, in order to auction new spectrum licenses to wireless providers."

and here's a news story: The 4G incentive auction rules are set, and a lot of people aren’t happy with them.

Here's my previous post on the incentive auction... 

Monday, April 21, 2014

The FCC's upcoming incentive auction, and I propose a new adjective (Milgromesque)

I've blogged before (here) about the FCC's incentive auction being designed by Paul Milgrom and the team he's assembled at Auctionomics. Now it's on the FCC blog, in a post that makes me think we may need to introduce a new adjective into market design. But first, here's the FCC post:

 Getting the Incentive Auction Right, by: Tom Wheeler, FCC Chairman

"Few FCC policies have generated more attention than the Incentive Auction. “Groundbreaking,” “revolutionary,” and “first-in-the-world” are just a few common descriptions of this innovative approach to making efficient, market-driven use of our spectrum resources.

Such attention is warranted. The Incentive Auction is a once-in-a-lifetime opportunity to expand the benefits of mobile wireless coverage and competition to consumers across the Nation – particularly consumers in rural areas – offering more choices of wireless providers, lower prices, and higher quality mobile services.

Spectrum is a finite public resource, and refers to the public airwaves that carry all forms of wireless communication Americans use every day. Twenty-first century consumers in both rural and urban areas of our country have a seemingly insatiable appetite for wireless services, and thus, for spectrum.

Getting the Incentive Auction right will revolutionize how spectrum is allocated. By marrying the economics of demand (think wireless providers) with the economics of current spectrum holders (think television broadcasters), the Incentive Auction will allow market forces to determine the highest and best use of spectrum.

More immediately, the Incentive Auction will deliver tremendous benefits for U.S. consumers across the country.

In developing such an auction, we must also be guided by the rules of physics. Not all spectrum frequencies are created equal. Spectrum below 1 GHz – such as the Incentive Auction spectrum – has physical properties that increase the reach of mobile networks over long distances. The effect of such properties is that fewer base stations and other infrastructure are required to build out a mobile network. This makes low-band particularly important in rural areas. A legacy of earlier spectrum assignments, however, is that two national carriers control the vast majority of low-band spectrum. As a result, rural consumers are denied the competition and choice that would be available if more wireless competitors also had access to low-band spectrum.

Low-band physics also makes this slice of spectrum essential in urban areas, since it permeates into buildings better than does high-band spectrum. With more and more Americans opting for wireless-only connectivity, they should not run the risk of being unable to place a 911 call from the interior of a building just because their wireless company has the wrong spectrum.

While many factors go into determining the quality of wireless service, access to a sufficient amount of low-band spectrum is a threshold requirement for extending and improving service in both rural and urban areas.

As part of the Incentive Auction process, we will also make available on a nationwide basis spectrum for unlicensed use (think Wi-Fi). With the increased use of Wi-Fi, this spectrum has also become congested. Opening up more spectrum for unlicensed use provides economic value to businesses and consumers alike.

Whether television broadcasters participate in the Incentive Auction will be purely voluntary, but participation in the Incentive Auction does not mean they have to leave the TV business. New channel-sharing technologies offer broadcasters a once-in-a-lifetime opportunity for an infusion of cash to expand their business model and explore new innovations, while continuing to provide their traditional services to consumers. We will ensure that broadcasters have all of the information they need to make informed business decisions about whether and how to participate.

Yesterday, I provided my fellow Commissioners a draft Report and Order that will determine many significant issues and policy decisions related to the Incentive Auction. The Commission will also make additional decisions to implement details pertaining to the Incentive Auction in the coming months.

Reaching this stage is a major accomplishment, and was only possible thanks to outstanding work of public servants from across the FCC.

A policy that has never been tried before comes with the perception of risk. We all know, however, that risk is the partner of reward. I will continue working with my fellow Commissioners, FCC staff, and all other interested parties to minimize the risk and maximize the reward of the Incentive Auction. I am confident we will get this right, and the rewards will be great for all Americans."
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Now for that new adjective, prompted by the first sentence of chairman Wheeler's post:

Mil·grom·esque: adjective. of or related to market design. “Groundbreaking,” “revolutionary,” and “first-in-the-world.”

First Known Use of MILGROMESQE

2014

Rhymes with MILGROMESQE

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Update: Paul Milgrom writes (in an email whose subject line is "Evan Kwerel"):

Hi Al:
Thanks for your friendly review of the incentive auction, but while I am excited about my role as the consulting team leader, you give me far too big a share of the credit. And, I don't even mean the contributions of the amazing professors on my Auctionomics team -- Jon Levin, Ilya Segal and Kevin Leyton-Brown -- without their huge contributions, our part of this project would not be possible. What they have done is very important, but among the many folks in and out of the FCC who have contributed to this enormous project, the biggest economics hero is Evan Kwerel, who not only had the vision and chutzpah to push for a full market solution to the problem of spectrum reallocation, but also the insight to get the property rights settled in a way that enables competition among broadcasters who offer to relinquish their their broadcast licenses for cash.
The property rights are an absolutely essential and widely under-appreciated part of this story! Until 2012, there was disagreement and confusion about what rights the broadcasters had to their licenses: Did they own them? Could the FCC cancel the licenses or allow them to expire? What rights did the licensees have? In that situation, endless legal and political battles could have delayed the urgently needed spectrum reallocation for years or even decades. Instead, Evan Kwerel's vision included a political solution by which broadcasters would get the right to SOME channel in their home band (UHF or VHF), but not to their particular channel. That way, if the FCC eventually clears channels from Y to Z nationwide for wireless broadband, it can do so either by buying those rights or by buying broadcast rights from broadcasters in lower numbered channel from X to Y-1 and and retuning the broadcasters in the higher channels to use the newly available lower channels. There are lots more details to this because the engineering problems are hard ones, but the core fact is that this definition of rights makes an auction possible, and creates the possibility of a Pareto improvement with voluntary transfers of licenses. Nothing in the whole design is more important than this!
Incidentally, the political deal built into the 2012 legislation also provides a retuning fund of up to $1.75 billion to pay broadcasters who must change to another channel, plus protection to ensure that the new channel is as good for reaching viewers as the old one. The whole structure sets the stage for a Pareto improvement. If we can solve the challenges that this auction poses, I'm hopeful that it may eventually live up to the hype it is getting.