This video (by Chuck Needy, OEA) illustrates the "clock auction" proposed in OEA's Working Paper #43, "A Market-Based Approach to Establishing Licensing Rules: Licensed Versus Unlicensed Use of Spectrum." The authors -- Mark Bykowsky and William Sharkey (OEA) and Mark Olson (with FCC under contract) -- address the issue of how to identify the most desirable set of licensing rules for spectrum. They focus on the FCC rules applied to licensed use and unlicensed operations.
Under its current procedure, the FCC typically uses an auction to assign spectrum licenses to competing bidders. This market-based approach is quite effective at revealing the value bidders place on the use to which the spectrum can be employed.
When apportioning spectrum between licensed and unlicensed use, however, the FCC employs an administrative process. The problem with this approach, the authors argue, is that interested parties have an incentive to exaggerate the value they place on having spectrum designated to either licensed or unlicensed use.
To address this problem, the authors propose that the FCC base this spectrum designation procedure on a market-based approach that would induce those parties to more accurately reveal the true values of the various alternative uses of spectrum. Specifically, the authors examine the merits of using a clock auction to determine the efficient designation of spectrum between licensed and unlicensed use.