Research by IEP Scholars Being Used in Thailand Spectrum Auction Debate

Research by IEP scholars Thomas Hazlett, Roberto Munoz and Diego Avanzini is now central to the debate over spectrum allocation in Thailand. A dissenting regulator, objecting to delays in the auction of 3G licenses, has used this research to estimate social losses from lack of spectrum availability. Incredibly, she is now being sued for libel by her agency.

Dr. Roberto E. Muñoz, Senior Fellow

Senior Fellow, Information Economy Project and Professor, Federico Santa María Technical University, Santiago, Chile, roberto.munoz@usm.cl.

 
Roberto E. Muñoz is an economics professor at Federico Santa María Technical University in Santiago, Chile.  He earned his Ph.D. at the University of Maryland in economics in 2003, and conducts wide-ranging academic research in game theory, experimental economics, applied econometrics, and telecommunications policy.  He has contributed path-breaking analysis in evaluating the net social benefits of spectrum allocation reform.
 
University of Maryland, Ph.D. (Economics)

What Really Matters in Spectrum Allocation Design

10 Nw. J. Tech. & Intell. Prop. 93 (2012). Thomas W. Hazlett, Professor of Law & Economics, George Mason University School of Law, Roberto E. Muñoz, Senior Fellow, Information Economy Project and Professor, Federico, Santa María Technical University, Santiago, Chile, Diego Avanzini, Visiting Scholar, Information Economy Project.

Wireless license auctions have successfully replaced “beauty contests” in many countries. Competitive bidding (1) puts spectrum rights in the hands of the most productive firms; (2) reduces rent-seeking costs; and (3) captures license values for the public, potentially reducing costly tax distortions.  Economists and policy makers have asymmetrically focused on (3). Yet, the overwhelming consumer welfare gains are produced in output (retail services) markets, not by extracting revenues from the sale of spectrum inputs. This fact leads to powerful policy implications, supporting liberal policies that permit market rivals to (quickly) access abundant bandwidth. Full Text Available at http://ssrn.com/abstract=1961225.

A Welfare Analysis of Spectrum Allocation Policies

40 RAND Journal of Economics 424–54, Autumn 2009.  Thomas W. Hazlett, Professor of Law & Economics, George Mason University School of Law, Roberto E. Muñoz, Senior Fellow, Information Economy Project and Professor, Federico Santa María Technical University, Santiago, Chile.

Economic analysis of spectrum policy focuses on government revenues derived via competitive bidding for licenses. Auctions generating high bids are identified as “successful” and those with lower receipts as “fiascoes.” Yet spectrum policies that create rents impose social costs. Most obviously, rules favoring monopoly predictably increase license values but reduce welfare. This article attempts to shift analytical focus to efficiency in output markets. In performance metrics derived by comparing 28 mobile telephone markets, countries allocating greater bandwidth to licensed operators and achieving more competitive market structures are estimated to realize efficiencies that generally dominate those associated with license sales. Policies intended to increase auction receipts (e.g., reserve prices and subsidies for weak bidders) should be evaluated in this light.

RAND Journal of Economics Abstract
The RAND Journal of Economics Download (Wiley Online)

Spectrum Allocation in Latin America: An Economic Analysis

21 Information Economics & Policy 261-78 (2009). Thomas W. Hazlett, Professor of Law & Economics, George Mason University School of Law, Roberto E. Muñoz, Senior Fellow, Information Economy Project and Professor, Federico Santa María Technical University, Santiago, Chile.

As elsewhere, wireless markets play a crucial role in Latin American economic growth. Mobile telephone networks increasingly provide the communications infrastructure that has largely been lacking throughout the region. Yet, governments have generally made only modest allocations of bandwidth available to Latin American wireless operators, either absolutely (in terms of spectrum each country could allocate at modest opportunity cost) or relative to countries in North America, Asia and the European Union. Using an empirical model estimated on mobile phone data for international markets, we show that very large social benefits are available to countries that make more spectrum available for mobile phone markets. We conduct simulations using our calibrated model to provide lower bounds for country-by-country gains from larger allocations. We also discuss the impact of alternative regulatory regimes on the feasibility to achieve those social gains.

Information Economics & Policy Abstract
Information Economics & Policy Download

The Social Value of TV Band Spectrum in European Countries

8 INFO: The journal of policy, regulation and strategy for telecommunications, information and media 62-73 (2006). Thomas W. Hazlett, Professor of Law & Economics, George Mason University School of Law, Jüergen Müller, Professor of Economics at Berlin School of Economics, Berlin, Germany, Roberto E. Muñoz, Senior Fellow, Information Economy Project and Professor, Federico Santa María Technical University, Santiago, Chile.

This paper aims to estimate the social gains from an analog TV switch-off in 13 EU countries, focusing on the value of TV band spectrum in alternative uses. By using data from existing mobile phone markets, changes are projected in retail prices for wireless voice services, assuming a reallocation (to mobile telephony) of about 42 percent of TV band spectrum. It is forecast that retail mobile phone tariffs would substantially decline if a transition to digital television led to enhanced availability of VHF/UHF spectrum for wireless telecommunications. Consumer surplus gains offset transition costs by at least 2-to-1, and as much as 45-to-1. These net benefits are conservatively estimated in that other services (apart from mobile telephony) could prove more socially valuable, and because we ignore the considerable increase in video choices the transition could provide. It is also found, however, that wireless operators’ profits sharply decline with additional spectrum, due to more intense competition. This suggests a public choice dynamic, often overlooked, that potentially helps to explain the slow pace of the digital TV transition. Regulations blocking TV band spectrum from reallocation to non-TV applications ought to be re-examined in light of the associated costs and benefits. This paper quantifies, using conservative methods, the cost of current spectrum policies.

INFO Abstract
INFO Download