Kenneth H. Tiedemann
cell phone, personal communications services, spectrum allocation, licensing, auction
From 1983 through 1995, the Government of Canada allocated cellphone spectrum through administrative hearings, but it has subsequently held auctions to allocate cellphone spectrum. This paper uses statistical modeling and cost benefit analysis to examine the economic impacts of Canada’s cellphone spectrum auctions. There are four main findings. First, the supply side of the market was examined through an econometric model of the determinants of the log of price. This analysis found that an increase in sector assets employed and the presence of the spectrum auction reduces price, while an increase in market concentration increases price. Second, the demand side of the market was examined through an econometric model of the determinants of the log of the number of accounts. This analysis found that an increase in price and the presence of the spectrum auction reduces quantity, while an increase in GDP increases quantity. Third, the level of market concentration was examined through an econometric model of the determinants of the log of the Herfindahl index. This analysis found that an increase in GDP and the presence of the spectrum auction reduces market concentration. Fourth, the impact on Federal Government revenues was examined using cost benefit analysis. The cost benefit analysis found that net Federal Government benefits discounted to 1999 were $4.0 billion.
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