Meta-ironic because it is in the article :)

It's rev-share vs pay upfront with financing right?

A telco could never be overburdened by the rev-share in the same way as a upfront payment. If the rev share is too high so using the spectrum isn't economical, the telco could simply not build out (and probably lose their license, which is OK for them, it wasn't economical). If the prepaid price was too high, they still have to pay it from spectrum activities and other activities; but they probably can't sell the spectrum to retire the debt, because the price was too high.

Isn't that incentivizing companies without much existing market share in the area to just bid high revenue shares? At best they get some money and at worst they close up shop thus coming back close to neutral. Maybe they even get to screw a competitor for a few years as they stall build out. Of course the population gets hurt if the latter happens since they get no infrastructure.

You can adjust the auction terms to try to avoid bad outcomes. A) bid out smaller alocations to allow more networks B) require a deployment plan to bid, and progress on the plan to keep the allocation C) some equitable way to periodically rebid in absence of abandoned spectrum D) some sort of open access provisions (maybe spring this on the market after it's largely built out)

Of course, some of that requires a competetent regulator with clear authority, as well as not too much corruption and reasonably swift court systems to handle disputes. But a point in time, single payment auction works better with those things too.

You will find in any rev-share agreement, a requirement that the Co. actually make "best efforts" or the like towards actually generating revenue or they lose the license rights. Best efforts is not some fluffy term, but basically requires the company to move heaven and earth if necessary otherwise they are in violation of the agreement.

I can totally understand how rev-share can be better in comparison but I don’t think your argument here addresses the constraint of greater government revenue derived from the rev-share model.

I suspect that part of that may be market growth beyond expectations. If telcos were bidding about the same net present value for the one time auction and the rev-share auction, with their revenue projections and revenue came in higher, that's going to be better for the government.

It's also easier to bid higher in rev-share, because you don't need to finance that net present value; it's just going to be built into the price of service, and your competitors will likely have similar rev-shares (depending on the auction process), so it's going to be built into everyone's prices.

I think there's also some value in a stream of payments rather than a one time payment. Although you can exchange one for the other with financial tools, a government may find a stream of payments to it matches well with the stream of payments it's making.

If the government auctions off spectrum at a flat price then it gets certainty, which normally comes at a premium; doing revenue share the government retains more of the risk, so orthodox economics would say that it will get a better price on average.

There's also an argument that the government doesn't actually realise any advantage from selling off the risk: if the telecom companies fail, it's still the government's problem. So the government ends up paying extra for something it can't actually use.