Auction design is hot. The Economist reports on 4G auction design in the UK:
The government will want to squeeze as much revenue as it can from the sell-off, but it must also preserve competition in a consolidating industry. The recent merger of Orange and T-Mobile has left Britain with four mobile-phone operators: Everything Everywhere (the imperious name for the newly merged company), Vodafone, O2 and Three. That is a healthy number compared with some countries, such as America, where AT&T’s proposed acquisition of T-Mobile USA would create what some regard as, in effect, a duopoly. But Three warns that it would struggle in an unrestrained bidding war with its larger rivals for the new spectrum. Without 4G services, it might be forced out of the market, cutting the number of operators to three.
Ed Richards, head of Ofcom, the telecommunications regulator, appears to share this concern. The draft auction rules surprised many in the industry by explicitly aiming to preserve four providers. Ofcom plans to do this by capping how much spectrum any one company can buy, and by forcing the auction to be repeated if four separate bids are not successful.