- Person
- Paul Milgrom
- Lived
- b. 1948
- Field
- Economics, auction design
- From
- American
The story
Paul Milgrom, a Stanford economist born in Detroit in 1948 to a Jewish family, had already co-designed the auction format the U.S. Federal Communications Commission used from 1994 to sell radio spectrum licenses. By the 2010s, demand for mobile data was soaring, while much of the valuable low-frequency spectrum, which carries signals far and through walls, was still used by television broadcasters.
In 2012 Congress directed the FCC to run an incentive auction: buy broadcast rights from TV stations willing to sell, repack the remaining stations into fewer channels, and sell the freed airwaves to mobile companies, all in one linked process. Milgrom called it the most complicated auction problem in history. The FCC asked him to assemble a team through his company, Auctionomics, to design the auction and its software.
Two problems stood out. First, deciding whether a given set of TV stations could be squeezed into a given set of channels without interference is a notoriously hard computing problem; the auction had more than a million constraints and had to solve thousands of such problems as it ran. Milgrom brought in the computer scientist Kevin Leyton-Brown to build customized algorithms, and the economist Ilya Segal to help write auction rules that would still work well when a problem could not be solved in time. Second, because every station and every mobile license is different, the auction needed thousands of prices rather than one, to find how much spectrum could be cleared.
The auction ran from March 2016 until April 2017. It raised about 19.8 billion dollars from wireless carriers and paid more than 10 billion dollars to 175 broadcasters that gave up their channels, moved to new ones or agreed to share a channel with another station. It freed 84 megahertz of spectrum: 70 megahertz for mobile broadband and 14 megahertz for wireless microphones and unlicensed use. Much of the remaining revenue went to the U.S. Treasury.
In 2024 Auctionomics received a technical Emmy Award for its contributions to spectrum auction design.
Why it matters
The incentive auction moved valuable airwaves from television broadcasting to mobile broadband, improving wireless coverage while paying broadcasters and returning money to taxpayers.
About Paul Milgrom
Stanford economist who co-invented the spectrum auctions that raised hundreds of billions for governments and moved airwaves into mobile broadband. Nobel Prize 2020.
More about Paul Milgrom
Sources
- Paul R. Milgrom, Biographical NobelPrize.org
- FCC announces results of world’s first broadcast incentive auction TelecomTV
- Paul Milgrom Wikipedia
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.