For many observers, the 2015 German mobile broadband spectrum auction was a surprise: at first, it looked as if the potentially very valuable 700MHz spectrum would be sold for the extremely low reserve price, and 900MHz spectrum would fetch not much more. This was not unexpected, given that the number of bidders was very small and the format was susceptible to strategies that could keep prices very low.
But then, excess demand for 1800MHz frequencies triggered further bidding in the lower frequency bands, eventually resulting in prices for the sub-1GHz spectrum that were still low by international standards, but at least substantially above reserve. The 1800MHz spectrum by contrast fetched a price at the upper end of international comparisons, and more than double the price of spectrum in the lower frequency bands. This may have been a good outcome for the German regulator, but made the auction more expensive for bidders than many would have expected.
This paper looks in more detail at the auction dynamics and offers some suggestions that could explain why bidders failed to succeed in keeping prices low.
