The Issue Of The Third-generation Mobile Licenses Of China

The third-generation mobile-phone is combined with multimedia. After Finland issued the first 3G licenses, twelve Europe countries distributed then* 3G licenses in succession. But the Chinese government doesn't express attitude about how to distribute 3G licenses up to now. How to distribute Chinese 3G licenses is a great dispute in Chinese academe. Government should be cautious about the licenses' distribution, for the licenses value thousands of million Yuan. After analyzing the success and failure of foreign country in the distribution of 3G licenses, using auction theory and game theory, I try to explain how and how many licenses to distribute. There are three chapters hi this paper. The two different methods of auction and Administrative processes are compared hi chapter one. Having concerned about the benefits of consumer, telecom firms and government, our conclusion is that the government should use auction to issue the licenses. Because auction is an effective and also the fairest method of allocating a public resource, auctions are quicker and more economical than administrative allocation. An auction cannot only raise revenue for the government, but also generate an efficient allocation: that is, assign the licenses to the firms able to make the best use of them. Auctions are not just about raising revenue; they can be used as a public-policy tool also. Auctioning requires merely that the rules be set hi advance so that the firms understand at the time of bidding what the government will require of them should they win. I also corrected some false opinion about auctions. Li chapter two, I compared the three common methods of the first price sealed auction, ascending auction and royalty auction. Based on my model, my conclusion is that the government should use the first-price sealed auction to issue licenses. A first major set of concerns for practical auction design involve the risk that participants may explicitly or tacitly collude to avoid bidding up prices. The second major area of concern of practical auction design is to attract bidders, since an auction with too few bidders risks being unprofitable for the auctioneer and potentially inefficient. The advantage of a sealed-bid design is that it is less susceptible to collusion, sealed auction may yield higher revenues when there are ex ante differences among the bidders and sealed auction also can encourage newentrants participate, for this may increase consumer welfare and increase auctionrevenue. Furthermore, I discussed that the fee of licenses should be paid one time soon after the auction finished. In part three, I discuss how many licenses should be issued. Our conclusion is that the government should issue five to six licenses to the telecom firms. Based on my model and referring to the success and failure of the foreign practical application of 3rd generation license and hi combining with the China mobile market, through technical study I find that, to insure the successful implement of auction, the number of licenses must exceed that of the current operation agents; hi comparison with the number of licenses issued hi foreign countries and hi reference to domestic technical possibilities and application environment, the optimal number of licenses should be issued is around 5 or 6.