David J. Salant

Up in the Air: GTE’s Experience in the MTA Auction for Personal Communication Services Licenses

In late 1994, GTE, one of the largest telecommunications firms in the world, entered an auction for the rights to provide personal communications services (PCS) using the electromagnetic spectrum. The administering agency, the Federal Communications Commission, adopted a novel multiple-round format for the PCS auction. The format presented GTE with a complex bidding problem. This article describes how the GTE bidding team answered the following question: Given its budget and valuations and the information available about rival bidders, how should GTE bid to achieve the best attainable outcome?