Spectrum Management and Mobile Telephone Service Markets

  • Johannes M. Bauer
Part of the Contributions to Economics book series (CE)


In 2002 global mobile telephony subscription surpassed fixed-line subscription.1 Within this context, emerging mobile computing and data services are expected to enhance existing services with the blending of wireless, computing and digital information industry innovation. Visions of opportunity arising from new wireless platforms (e.g., meshed networks), intelligent devices (e.g., agile radio) and wireless applications abound (Lightman and Rojas 2002). Accordingly, industry experts predict mobile data communication to generate more than half wireless service market revenue by 2010 (Wireless Data 2000). Additionally, in many countries, including Western Europe, parts of Asia and many developing countries, mobile telephony networks are more widespread than fixed-line service. In these countries, mobile devices rather than personal or laptop computers are likely to be the dominant Internet access devices. Despite wireless platform bandwidth limitations, mobile Internet subscription is growing rapidly. However, substantial variations in mobile Internet activity exist internationally. For instance, 72.3% of mobile subscribers in Japan and 59.1% in Korea access the Internet via mobile telephone, whereas the corresponding use for the US and Western Europe is 7.9% and 6.4%, respectively (ITU 2002: 44). Network operators are currently upgrading network platforms to provide bandwidth necessary to support more advanced multi-media applications. Evolving second generation (2G) mobile service, or 2.5G service, that provide to 171.2 kbps are well suited to deliver mobile data applications, including basic Internet access. Some network operators are offering third generation service (3G)—designed to provide 384 kbps in fully mobile mode and to 2 Mbps in stationary mode—sufficient to allow video streaming and multimedia applications. Wireless local area networks, e.g., WiFi or Hiperlan, typically operate in unlicensed spectrum bands, provide to 54 Mbps and are deployed for local connectivity. Platforms such as Bluetooth provide very short range personal area networks. While such technology requires further testing and experimentation, and their compatibility and interoperability pose challenges, they promise to radically transform communication markets.


Mobile Service Universal Mobile Telecommunication System Universal Mobile Telecommunication System Spectrum Management Network Platform 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aoki M (2001) Toward a comparative institutional analysis. MIT Press, CambridgeGoogle Scholar
  2. Antonelli C (1992) The economic theory of information networks. In: Antonelli C (ed) The economics of information networks. Elsevier Science, Amsterdam, pp 5–27Google Scholar
  3. Antonelli C (2001) The microeconomics of technological systems. Oxford University Press, OxfordGoogle Scholar
  4. Bar F, Cohen S, Cowhey P, DeLong B, Kleeman M, Zysman J (2000) Access and innovation policy for third-generation Internet. Telecommunications Policy 24: 489–518CrossRefGoogle Scholar
  5. Bauer JM (2002) A comparative analysis of spectrum management regimes. Presented at 30th Research Conference on Communication, Information and Internet Policy, Alexandria, September 28–30Google Scholar
  6. Bauer JM (2003) Impact of license fees on the prices for mobile service. Telecommunications Policy 27: 417–34CrossRefGoogle Scholar
  7. Benkler Y (2002) Some economics of wireless communications. Presented at 30th Research Conference on Communication, Information and Internet Policy, Alexandria, September 28–30Google Scholar
  8. Buchanan JM, Yoon YJ (2000) Symmetric tragedies: Commons and anticommons. Journal of Law and Economics 43: 1–13CrossRefGoogle Scholar
  9. Buck S (2002) Replacing spectrum auctions with a spectrum commons. Stanford Technology Law Review, 2,
  10. Coase RH (1959) The Federal Communications Commission. Journal of Law and Economics 2: 1–40CrossRefGoogle Scholar
  11. Coase RH (1960) The problem of social cost. Journal of Law and Economics 3: 1–44CrossRefGoogle Scholar
  12. Cramton P, Kwerel E, Williams J (1998) Efficient reallocation of spectrum incumbents. Journal of Law and Economics 41: 647–75CrossRefGoogle Scholar
  13. Cramton P (2002) Spectrum auctions. In: Cave ME, Majumdar SK, Vogelsang I (eds) Handbook of telecommunications economics vol 1. North Holland, Amsterdam, pp 606–39Google Scholar
  14. Farrell J, Weiser PJ (2002) Modularity, vertical integration, and open access policies: Towards a convergence of antitrust and regulation in the Internet age. Competition Policy Center, Paper CPC02-035, at
  15. Faulhaber GR, Farber DJ (2002) Spectrum management: Property rights, markets and the commons. Presented at 30th Research Conference on Communication, Information and Internet Policy, Alexandria, September 28–30Google Scholar
  16. Fransman M (2002) Telecommunications in the Internet age: From boom to bust to...? Oxford University Press, OxfordGoogle Scholar
  17. Galambos L, Abrahamson EJ (2002) Anytime, anywhere: Entrepreneurship and the creation of a wireless world. Cambridge University Press, CambridgeGoogle Scholar
  18. Gruber H (2001) Spectrum limits and competition in mobile markets: The role of license fees. Telecommunications Policy 25: 59–70CrossRefGoogle Scholar
  19. Hazlett TW (2001) The wireless craze, the unlimited bandwidth myth, the spectrum auction faux pas, and the punchline to Ronald Coase’s ‘Big Joke’: An essay on airwave allocation policy. Harvard Journal of Law and Technology 14: 335–567Google Scholar
  20. Herzel L (1951) Public interest and the market in color television regulation. University of Chicago Law Review 9: 802–16Google Scholar
  21. ITU (2002) Internet for a mobile generation. ITU, GenevaGoogle Scholar
  22. Klemperer P (2002a) How (not) to run auctions: The European 3G telecom auctions. European Economic Review 46: 829–45CrossRefGoogle Scholar
  23. Klemperer P (2002b) What really matters in auction design. Journal of Economic Perspectives 16: 169–89CrossRefGoogle Scholar
  24. Kwerel E, Williams J (2002) A proposal for a rapid transition to market allocation of spectrum. OPP Working Paper Series 38, FCC, WashingtonGoogle Scholar
  25. Langlois RN (2002) Modularity in technology and organization. Journal of Economic Behavior and Organization 49: 19–37CrossRefGoogle Scholar
  26. Lehr W, Merino Artalejo MF, Eisner Gillett S (2003) Software radio: Implications for wireless services, industry structure, and public policy. Communications & Strategies 49: 15–42Google Scholar
  27. Lemley M, Lessig L (2001) The end of end-to-end: Preserving the architecture of the Internet in the broadband era. UCLA Law Review 48: 925–72Google Scholar
  28. Lessig L (2001) The future of ideas: The fate of the commons in a connected world. Random House, New YorkGoogle Scholar
  29. Liebowitz SJ, Margolis SE (2002) Network effects. In: Cave ME, Majumdar SK, Vogelsang I (eds) Handbook of telecommunications economics vol 1. North Holland, Amsterdam, pp 75–96Google Scholar
  30. Lightman A, Rojas W (2002) Brave new unwired world: The digital big bang and the infinite Internet. Wiley, New YorkGoogle Scholar
  31. Lipsey RG, Lancaster K (1956) The general theory of second best. Review of Economic Studies 24: 11–32CrossRefGoogle Scholar
  32. Maitland CF, Bauer JM, Westerveld R (2002) The European market for mobile data: Evolving value chains and industry structure. Telecommunications Policy 26: 485–505CrossRefGoogle Scholar
  33. Melody WH (1980) Radio spectrum allocation: Role of the market. American Economic Review 70: 393–7Google Scholar
  34. Melody WH (2001) Spectrum auctions and efficient resource allocation: Learning from the 3G experience in Europe. Info 3: 5–10CrossRefGoogle Scholar
  35. Noam EM (1998) Spectrum auctions: Yesterday’s heresy, today’s orthodoxy, tomorrow’s anachronism: Taking the next step to open spectrum access. Journal of Law and Economics 56: 765–90CrossRefGoogle Scholar
  36. Noam EM (2001) Access issues for wireless content. Presented at 29th Research Conference on Communication, Information and Internet Policy, Alexandria, October 27–29Google Scholar
  37. North DC (1990) Institutions, institutional change and economic performance. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  38. Oniki H (2003) Modified lease auction and relocation: Proposal of a new system for efficient allocation of radio-spectrum resources. Revised version of paper presented at 14th Biennial Conference of the International Telecommunications Society, Seoul, Korea, August 18–21Google Scholar
  39. Ostrom E (1990) Governing the commons. Cambridge University Press, CambridgeGoogle Scholar
  40. Reed DP (2002) How wireless networks scale: The illusion of spectrum scarcity. Presented at International Symposium on Advanced Radio Technology, Boulder, March 4Google Scholar
  41. Rosston GL, Hazlett TW (2001) Comments of 37 concerned economists. Filed before the FCC, in the matter of promoting efficient use of spectrum through elimination of barriers to the development of secondary markets, WT Docket No. 00-230, February 7Google Scholar
  42. Schumpeter JA (1942) Capitalism, socialism, and democracy. Harper, New YorkGoogle Scholar
  43. Spiller PT, Cardilli C (1999) Towards a property rights approach to communications spectrum. Yale Journal on Regulation 16: 53–83Google Scholar
  44. Stevenson GG (1991) Common property economics: A general theory and land use applications. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  45. Sutton J (1991) Sunk cost and market structure: Price competition, advertising, and the evolution of concentration. MIT Press, CambridgeGoogle Scholar
  46. Valletti TM (2001) Spectrum trading. Telecommunications Policy 25: 655–70CrossRefGoogle Scholar
  47. Wireless Data (2000) Wireless data: The world in your hand. JP Morgan and Arthur Andersen, LondonGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Johannes M. Bauer
    • 1
  1. 1.Department of TelecommunicationInformation Studies and MediaEast Lansing, MIUSA

Personalised recommendations