The FCC's rural infrastructure auction: What is hidden in the weeds?

Examines reverse auction designed by the Federal Communications Commission to fund deployment of broadband infrastructure in high-cost, mainly rural areas. We assess the effectiveness of the auction's three main objectives: 1) To attract new providers that are willing to provide broadband service in unserved areas; 2) To expand the acceptable service speed and latency levels to achieve public interest objectives; 3) To lower costs of providing service through competitive bidding. We will show using summary data from the auctions and an econometric model that captures the effects of auction characteristics that the auction achieves all three objectives. We also suggest future uses for reverse auctions.

[Victor Glass is a Professor of Professional Practice and Director of the Center for Research in Regulated Industries at Rutgers Business School. Timothy Tardiff is associated with Advanced Analytical Consulting Group]