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1423class10 - 14.23 Government Regulation of Industry Class...

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14.23 Government Regulation ± of Industry± Class 10: Dynamic Issues in Natural Monopoly Regulation 2 1
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Outline Differences between US and European mobile phone markets. The importance of standards in competitive markets. • Spectrum Allocation and Auctions Theory. • UK, Dutch, Swiss, Danish and Turkish auctions. • Lessons on good auction design. 2
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History of Mobile Phones in US Cellular radio replaces wires with radio signals and has a series of radio relay stations (cell sites). Stations are linked via microwave transmission. Increasing capacity involves shrinking size of cells as same frequency can be used within a cell (theoretical idea in 1947). 1970s - Development of transmitters and receivers for co-ordination of cells and the development of switching equipment. 1981 - FCC allocation of 20MHz to LECs and 20MHz to McCaw Cellular (now AT&T Wireless). 1994-95 FCC auctioned 120MHz of personal communications services (PCS) wideband spectrum raising $20bn or so. Initially FCC prohibited one company from owning more than 45Mhz, of PCS, cellular radio and specialised radio spectrum. 3 • Currently we are using 2G technology, 3G coming soon.
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Developments in Mobile Telephone Markets Europe In 1969 the Nordic telecommunications conference established the Nordic Mobile Group. In 1975, the Nordic telecommunications conference recommended the NMT 450 MHz network to be built. In 1981, the first analogue - NMT 450 system - commercial cellular services started in Sweden and Finland. In the late 1980s, a common European digital standard – GSM (Global System for Mobile Communications) was approved. In 1992 the first digital cellular Commercial services in the world Started in Finland. USA In the 1960s, cellular technology was invented at Bell Labs. In the early 1970s analogue cellular technology became available, developed by AT&T and Motorola. In 1968-1983 there were regulatory hurdles by FCC in making the decision regarding wireless licensees. In 1983, cellular services started. Free competition of technologies based on different standards 4
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in the world-wide mobile communication market.’, Telecommunications Policy , Vol.22 (4/5), pp.419-441. 5
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This note was uploaded on 11/18/2011 for the course ECON 14.23 taught by Professor Daronacemoglu during the Fall '09 term at MIT.

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1423class10 - 14.23 Government Regulation of Industry Class...

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