Spectrum auction

Okay kiddo, let’s imagine you are a store owner and you have a lot of toys to sell. Now, there are many people who want to buy your toys but you can’t sell them to everyone at the same time. So, you decide to have an auction where people can bid for the toy they want to buy.

Now, imagine the government owns something called a “spectrum”. Spectrum is like the airwaves that carry signals for our phones, TVs and radios to work. The government can’t just give it away to everyone who wants it, they have to make sure it goes to the people willing to pay the most money for it.

So, the government does something like what you do as a store owner, and conducts a “spectrum auction”. This is where different companies (like Verizon, AT&T and T-Mobile) come together and bid for the spectrum.

They use a lot of money to compete with each other and the highest bidder gets the best spectrum. This way, the government makes a lot of money selling the spectrum and the companies get to use it to provide better service to you and me.

Just like how you have to wait your turn to buy a toy at the store, the companies also have to wait their turn to buy the spectrum they want at the spectrum auction.