Spectrum Auction Tragedies : The Case of the Mexico Spectrum Auction for AWS Services

Last July 19th the Mexican Federal Government concluded the auction of the 1.9/2.1 GHz band blocks for Advance Wireless Services (AWS). The auction design and the spectrum cap impose by the Federal Competition Commission led to the participation of only one bidder with a price at the minimum posted by the government for one of the two national coverage blocks put to auction. The remained nation block was not assigned because no bidders qualified and a third block identical to the national blocks was divided in 27 regional blocks but the auction final value was 28 times the minimum posted price for the national block. The social cost and the implicit subsidy generated by the auction result obey to an industrial policy in telecommunication oriented to pick winners and modify the market structure from the regulators goals instead of the market evolution