A comparison of spectrum auction designs in the US and in Germany - the ERMES example

This paper presents how auctions were introduced as an allocation mechanism for the award of mobile licenses and frequencies in the German telecommunications market. The substitution of tender processes and the introduction of auctions were based on the German telecommunication law which became effective on August 1(st) 1996. For the award of three paging licenses in the autumn of 1996 a spectrum auction design wets developed which took some orientation in the US design. The similarities and the differences of these approaches are shown and also the reasons for deviation are discussed. Finally, the outcome of the auctions are presented and an evaluation about the introduction of this new award mechanism is made.