ation, and as traffic grows, Losing by Winning: Wireless License Auctions capacity can be increased by splitting these cells into even smaller areas, adding more base stations and reducing the area covered by each. Thus instead of using a single radio frequency-pair only once within a given market area, a frequency pair can be reused in different cells. In the prototypical layout, cells are arranged in a hexagonal grid pattern, each cell surrounded by six others using different frequencies, allowing a nominal 7:1 frequency reuse pattern. Thus a network operator only needed seven sets of frequency pairs and could cell-split its way to ever-increasing capacity. Well, that was the idea, but in reality it was not quite that easy. The first cellular telephones were based on FM analog radio transmission, and radio waves do not stop on command. Cell splitting works only SO far, and cell sites are costly to construct. In an urban area, cells could shrink to a matter of blocks, and it might not be possible to find a new cell site in the desired location. So analog first-generation (1G) cellular telephone networks, which began to roll out in the 1980s, became capacity limited. The original analog system in the United States was called Advanced Mobile Telephone Service (AMPS). European countries adapted the idea to their own available frequencies (radio frequency allocations above 30 MHz, the top of the shortwave spectrum, differ widely between world regions), resulting in several incompatible variations. So while roaming between the AMPS systems in, say, NYNEX Mobile and Franklin County Cellular in Massachusetts could result in lost incoming calls and high "gotcha" rates for outgoing calls, roaming between Germany and Denmark was not even possible using the same equip- ment, not that it would originally have been permitted. Original License Lotteries Led to Farcical Resale Before the first commercial cellular networks could be rolled out, someone had to determine who got to operate them. AT&T had originally hoped to build 