IfI Colloquium: An Open Access Wireless Market, May 18, 2017

Speaker: Prof. Peter Cramton, Ph.D.
University of Maryland, U.S.A.

Date: Thursday, May 18, 2017, 17:15 h

Location: BIN 2.A.01


We present a market design for an open access wireless market. Open access means that in real time, network capacity cannot be withheld—network throughput is priced dynamically by the marginal demand during congestion. In unconstrained times and locations, a nominal fee is paid for network throughput. As in electricity markets, the real-time market provides the foundation for forward markets. Monthly forwards are auctioned before the start of each month; yearly forwards are auctioned before the start of each year. Market participants, both operators and traders, take positions in forward auctions to manage risk and optimize portfolios. Deviations from forward positions are settled at real-time prices based on actual use. The independent system operator runs the network and conducts the real-time, monthly, and yearly auctions of network throughput. An independent market monitor observes the market, identifies problems, and suggests solutions. A board—including affiliated directors representing important stakeholders together with independent directors with subject matter expertise—governs the market. A goal of the market is to provide a secure, robust, wide-coverage platform for mobile communications supporting public safety and universal service. Public safety has pre-emptive rights during emergencies and otherwise has economic use like wholesale operators. A complementary goal is competition. The open access provision brings vibrant competition through low-cost, non-discriminatory entry into the wireless market. The market provides a natural remedy for mergers, allowing operational efficiency gains while increasing competition. Critical funding is provided through efficient congestion pricing that balances supply and demand at every time and location. The market, enabled by flexible handsets and the LTE technology, radically reforms current spectrum policy. The
market coexists and complements the dedicated networks of incumbent carriers, promoting efficient spectrum use and essential innovation.


Prof. Peter Cramton, Ph.D., is Professor of Economics at the University of Maryland and European University Institute, and on the International Faculty at the University of Cologne. Since 1983, he has conducted research on auction theory and practice. This research appears in the leading economics journals. The main focus is the design of auctions for many related items. Applications include spectrum, energy, and financial auctions. On the practical side, he is an independent director on the board of the Electric Reliability Council of Texas, chief economist of Rivada, and chairman of Market Design Inc., an economics consultancy founded in 1995, focusing on the design of auction and matching markets. Since 1993, he has advised 12 governments and 40 bidders in spectrum auctions. He is a co-inventor of the spectrum auction design used in Canada, Australia, and many European countries to auction 4G spectrum. Since 2001, he has played a lead role in the design and implementation of electricity and gas auctions in North America, South America, and Europe. He has advised on the design of carbon auctions in Europe, Australia, and the United Sates, including conducting the world’s first greenhouse-gas auction held in the UK in 2002. He has led the development of innovative auctions in new applications, such as auctions for airport slots, wind rights, diamonds, medical equipment, and Internet top-level domains. He received his B.S. in Engineering from Cornell University in 1980 and his Ph.D. in Business from Stanford University in 1984.