Wireless Signal Auction
The article above details the importance and strategy of the nation’s upcoming Wireless Signal Auction. The Federal Communications Commission is auctioning bandwidth, which will allow major wireless providers to extend their networks, ultimately increasing their customer base. While there are many corporations expected to participate, a few have made it publicly known that they will not be bidding. The article then goes into the risks associated with new comers, like Google, joining the action. It also mentions the risk of expected bidders not participating. Either scenario would be an issue because companies are not allowed to communicate before bidding.
This article correlates to the idea of markets and auctions that we went over last week. The auction performed by the FCC is a first price auction, with a twist. Bids are adjusted for bidding credits, which specific companies can apply for when the enter the auction. These credits then strengthen the bid of some bidders (more credits leads to a higher bid), which ultimately changes the outcome. Rather than just focusing on outbidding the competition, those without Bidding Credits should bid their true value, but realize that their bid will not have the same buying power as those with buying credits. Similarly, those with Bidding Credits should bid their true value as well because many bidders have the Bidding Credits and thus can outbid them, especially since companies are not allowed to disclose how many credits they have. Another interesting aspect of this auction is its role in the stock market. Analysts seeking to invest in the industry will have to speculate about the winners of the auction, before bidding on stocks in a completely different type of auction, the Stock Market.