The Impact of Incumbent Bidding in Set-Aside Auctions: An Analysis of Prices in the Closed and Open Segments of FCC Auction 35

Abstract

We examine the impact of an incumbent carrier's participation in an auction set-aside for non-incumbents that was conducted simultaneously with an auction that was open to all carriers. We estimate the extent to which prices in the closed auction were inflated by the participation of incumbents. We also estimate what prices would have been in the open auction had incumbents been excluded from bidding in the closed. We find that an incumbent's participation in the closed auction through a front, Alaska Native, enabled it to win more licenses at lower prices in FCC Auction 35. In contrast, non-incumbents won fewer licenses and paid more for what they won. If the FCC's goal is to promote competition in the wireless industry, we suggest an alternative definition of control that is grounded in the antitrust literature.