We have already seen that DoT has raised questions on TRAI’s recommendations to cut spectrum auction reserve prices – even asking the latter to ‘reconsider’ its proposals.
We know that the telecom commission (TC) is the final ‘bureaucrat’ level decision making body on spectrum prices. Next, the matter will be passed on to the group of ministers / Cabinet, who have the highest power in changing auction rules. So thinking out of the box, we have the following suggestion for the decision makers.
Descending Price Spectrum Auction
TRAI has suggested a Floor Price and Participants go on bidding Higher until the final price is discovered. However, we now suggest the DoT / Ministry to opt for a a descending price auction. The idea here is to start with a high-as-you-like (say 2x 3G Auction in 2010) reserve price and seek participation, if there are no bidders, reduce the price by a certain percentage amount and seek participation again and loop until you have the minimum number of bids needed to declare the auctions closed. Since this is a descending auction, there is no risk of failure either— spectrum would be sold at some price.
This way Mr. Kapil Sibal need not strive to come up with another Zero Loss Theory 🙂