Comments Re: Anonymous Bidding for Auction 86

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.