Spectrum Auctions at the FCC

The Integrated Spectrum Auction System (ISAS) manages the FCC’s entire auctions process – from the receipt of applications to the assignment of spectrum.

Introduction:

When it comes to allocating spectrum, the FCC’s numbers speak for themselves. Since 1994, auctions of licenses for electromagnetic spectrum constitute the most profitable asset sales ever conducted by the U.S. Government. In fact, the FCC’s 2008 700MHz auction resulted in $19.6 billion, more money than any auction in the agency’s history and almost double original Congressional estimates.

Challenges:

After running electronic auctions for 10-years, the FCC has many lessons learned relative to improving its auction process.  For one, the length of an auction was getting longer as the industry had learned to exploit previous auction design, in one case stringing an auction along for months.  Additionally, the FCC staff need to gather significantly more real time auction detail.  It is time for a refresh.

Solution:

Computech builds a revolutionary system known as the Integrated Spectrum Auction System (ISAS).  Almost two years in the making, ISAS employs a single web-based control module to manage the entire auctions process – from the receipt of auction applications to the assignment of winning bidders.  We build ISAS with the flexibility to conduct auctions using all of the features of the FCC’s non-package auctions, as well as combinatorial auctions.  The system offers unequaled scalability and versatility that continues to support the FCC’s Auctions program.  With ISAS, Computech responds to the FCC’s desire to automate routine tasks wherever possible, (i.e. ISAS eliminated the manual elements of round results processing), allowing FCC staff members to focus their attention on other matters.

Notable Results:

ISAS substantially improves the user experience and allows the FCC to manage auctions more efficiently by optimizing certain functions.  As a result, the complicated multiple round auctions that generated optimal revenue can be run in 1/3 the time as under AAS [from 6 to 16 rounds a day].  For auctions that take weeks, the time-savings to FCC staff and the staffs of the hundreds of industry firms who participate in each auction is difficult to quantify, but certainly substantial, perhaps millions of dollars per auction.

Of note, the Commission uses ISAS for Auction 66-AWS in the summer of 2005, and receives over $13.8 billion in gross bids.  Later, the FCC relies of ISAS to run Auction 73, known as the 700-MHz auction.  After 261 rounds, the auction comes to a end in mid-March 2008.  This auction proved to be one of the most significant (and contested), with numerous companies bidding for spectrum well suited to long-range broadband data transmissions. It also validated — once again — that Computech-built auction systems work faultlessly and fluidly, without interruption or failure.

By the numbers: since 1994, the # of licenses auctioned by the FCC using Computech-built auction systems totals 58,599.  30,849 licenses are awarded — and after 5,095 rounds are run, $86,812,168,133 is deposited into the U.S. Treasury.