Allocating spectrum through auction is a fundamentally wrong method as it creates entry barriers for new entrants. Allocating spectrum through auction creates oligopoly/trigopoly type situation. The type of situation which we are seeing in India where we have Oligopoly with just 2 key players. This goes against interest of consumers due to lack of competition. It leads to frequent price rise and consumers are at disadvantage due to lack of choice.
It is more prudent for government to go for revenue sharing mechanism as spectrum inherently has no monetary value. Its commercial value comes when it is used for wireless communication. The revenue generated from such operation is often difficult to predict and so unwise to get into spectrum related obligation by telcos. Howevr, the government across the counties and more importantly in India have chosen auction method and led to the dismal state of the Indian telecom sector where just 2 key private players have corned around 80% revenue markets hare.
