2300 MHz and 3500 MHz Bands Auction: Teleconference Presentation

Transcription

1 2300 MHz and 3500 MHz Bands Auction: Teleconference Presentation Earl Hoeg, Director Rosamond Bain, Manager December 2003 *All information regarding this auction is available online at:

2 Legal Disclaimer This presentation is for information only. The policies and rules associated with the spectrum auction are set out in their entirety in the official Policy document and in any written amendments or supplements that may be issued by the Department. 2

3 Table of Contents A. Overview of 2300 MHz and 3500 MHz Auction Policy B. Software Demonstration C. Application Form: Overview 3

4 Overview of 2300 MHz and 3500 MHz Auction Policy 4

5 Why Choose Auctions as a Means of Assigning Spectrum? Simultaneous multiple round auctions Assign spectrum authorizations to those who value them most and who are best able to offer innovative services to Canadians i.e. rely on market forces Are an open and objective assignment process Allow the government to quickly license several blocks of spectrum in several markets across the country using one process Provide a fair return to Canadian taxpayers for access to, or use of, publicly-owned or controlled resources 5

6 Overview of the Auction Process Qualification of Bidders (December 2003) Deadline for Receipt of Applications (December 8, 2003) Clarification Questions (October 17, 2003) Final Policy Paper and Call for Application is Released (September 2003) Consultation on the Proposed Policy Mock Auction (January 2004) Official Auction (January 2004) Submission of Ownership and Control Documentation (10 days after close of auction) Initial Payment Due (10 days after close of auction) Final Payment Due (30 days after close of auction) Licences Issued 6

7 What is the Objective of the 2300 MHz and 3500 MHz Auction? To make spectrum available for the provision of wireless broadband services as a complement to, or in competition with, Digital Subscriber Lines (DSL) and cable modems To increase competition in the provision of broadband services to Canadians To meet the growing demand for wireless broadband, especially in rural and remote areas where the cost of wired infrastructure may be prohibitive To respond to economic and social requirements of users of telecom services 7

8 What Exactly is Being Auctioned? 5 spectrum licences in most of the 172 service areas in Canada 1 licence in the 2300 MHz band - Wireless Communications Services (WCS) 4 licences in the 3500 MHz band - Fixed Wireless Access (FWA) Licensees will have the maximum possible flexibility in determining the services they will offer and the technologies they will employ, within the spectrum allocations and policy 8

9 Tier 4 Service Areas WCS and FWA licences will be defined geographically by Tier 4 service areas (i.e. smallest of established auction areas) 172 areas in total covering all of Canada Based on groupings of Statistics Canada s Census Divisions and Subdivisions, with some revisions by the Department Revised service areas listed on the Auction Web site 9

10 Tips for Auction Bidders Learn the auction rules Determine in advance your firm s objectives and values for the licences Perform your firm s due diligence on the spectrum being auctioned Obtain the financing Organize the bidding team Make use of the information available Run practice sessions and participate in the official mock auction Develop contingency plans 10

11 Software Demonstration 11

12 Simultaneous Multiple Round Auction How does it Work? A related set of spectrum licences is offered at the same time Bidding is organized into a series of rounds Prior to the auction, applicants must indicate on their application the total number of points worth of licences they wish to be active on in any round The identities of all bidders and their initial levels of eligibility points will be made public prior to the commencement of bidding During the auction, new bid amounts for a licence are nondiscretionary i.e. the Department will state the exact level of an acceptable new bid Bidders provide a yes/no response to an offered price 12

13 Simultaneous Multiple Round Auction How does it Work? con t When two or more bids are submitted on the same licence in the same round a tie bid occurs and the standing high bidder in the next round will be determined by a random selection process designed within the auction software Results are posted after each round In each round, bidders are allowed to withdraw bids made in previous rounds subject to a penalty A minimum pace of bidding in the auction is established by the activity rule which penalizes bidders who are inactive by reducing their bidder eligibility points. Auction closes when no new bids/no withdrawals/no waivers are submitted during the last stage of the auction Provisional winners hold the standing high bids at the auction s close 13

14 Auction Labels and Information Licence Service Area Points Bandwidth 4001d St. John s MHz 4001e St. John s MHz 4001f St. John s MHz 4001g St. John s MHz 4001w St. John s MHz Auction Label Tier 4 Service Area Spectrum Block Auction Label Lower Frequency (MHz) Upper Frequency (MHz) D/H d E/J e F/K f G g N/A W w

15 Eligibility Points Determine the applicant s required pre-auction deposit Define the initial level of a bidder s eligibility Points worth cannot be increased afterwards In the event that an applicant s requested level of points does not correspond with the amount of the deposit submitted, then the applicant s points will be determined by the value of the deposit submitted Regardless of the financial deposit submitted by any applicant, no applicant will be given more eligibility points than he/she can possibly use without violating the spectrum aggregation limits 15

16 Calculating Eligibility Points and Financial Deposit Example A Example A: 2 paired blocks in the 3500 MHz band in St-John s 2300 MHz (2 X 15 MHz) 3500 MHz (2 X 25 MHz) 3500 MHz (25 MHz) Block G Area No. Service Area Name Population Points Opening Bids Points Opening Bids Points Opening Bids St. John's $7, $15, $7, Placentia $625 2 $1,250 1 $ Northwest Territories/Territoires du Nord-Ouest $1,250 4 $2,500 2 $1,250 Total $ 2,313, $ 4,529, $ 2,264,625 Eligibility Point Calculation 2 x 24 points = 48 points Financial Deposit Calculation 48 points x $500 = $24,000 16

17 Spectrum Auction Access Page 17

18 User Authentication 18

19 Enter Withdrawals and Bids 19

20 Step 1 Submitting Withdrawals - Click on the Selected Properties 20

21 Step 2 Submitting Bids Click on the Selected Properties 21

22 Confirmation of Bids/Withdrawals 22

23 Receipt for Accepted Bids/Withdrawals 23

24 Round Results via AMS 24

25 Round Results via AMS cont d 25

26 Round Results via AMS cont d 26

27 Application Form: Overview 27

28 Terms Used in Application Process Applicant The legal entity applying to participate in the auction Qualified Bidder The legal entity found qualified by the Department to participate in the auction (i.e. Corporation, partnership, etc.) Authorized Representative Officer authorized to sign on behalf of the qualified bidder Designated Bidders Individuals chosen by the qualified bidder who will actually be entering the bids during the auction Licensee The entity to which the licence(s) will ultimately be issued 28

29 Prohibition of Collusion Among Bidders Applicants cannot enter into any agreements or arrangements of any kind with any competitor regarding Amount to be bid Bidding strategies Particular licence(s) on which the applicant or competitors will or will not bid Competitor means any entity, other than the Applicant, its Affiliates or Associated Entities, who could potentially be a bidder in an auction based on its qualifications, abilities or experience 29

30 Submission of Applications To submit an application to participate in an auction, the following material must be physically delivered to the Manager, Wireless Networks by the deadline outlined in the Policy document Application form Deed of acknowlegement Financial deposit in the form of an irrevocable standby letter of credit Application forms are available at the time of publication of the Policy paper 30

31 Application Form Deadline for submission Dec. 8, 2003 Application is divided into 5 parts & attachments Part 1 Applicant Information Part 2 Authorized Representative Part 3 Designated Bidders Part 4 Eligibility Points and Financial Deposit Part 5 Consent and Authority Attachments 31

32 Application Form - Part 1: Details 32

33 Affiliates & Associated Entities Only one member of an Affiliate or Associated Entity is permitted to become a qualified bidder in the same service area Affiliate is defined as a person who controls the entity, or who is controlled by the entity or by any person who controls the entity Associated Entity is defined as any entity that enters into any partnerships, joint ventures, agreements (including agreements in principle), to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the licences being auctioned or relating to the post-auction market structure 33

34 Application Form - Part 2: Authorized Representative 34

35 Application Form - Part 3: Designated Bidders 35

36 Application Form - Part 4: Eligibility Points and Financial Deposit 36

37 Calculating Eligibility Points and Financial Deposit Example B Example B: 2 paired blocks in the 3500 MHz band across Canada 2300 MHz (2 X 15 MHz) 3500 MHz (2 X 25 MHz) 3500 MHz (25 MHz) Block G Area No. Service Area Name Population Points Opening Bids Points Opening Bids Points Opening Bids St. John's $7, $15, $7, Placentia $625 2 $1,250 1 $ Northwest Territories/Territoires du Nord-Ouest $1,250 4 $2,500 2 $1,250 Total $ 2,313, $ 4,529, $ 2,264,625 Eligibility Point Calculation 2 x 2,946 points = 5,892 points Financial Deposit Calculation 200 points x $500 = $100, ,692 points x $3,000 = $17,076,000 TOTAL = $17,176,000 37

38 Application Form - Part 5: Consent & Authority 38

39 Application Form - Attachment: Deed of Acknowledgement 39

40 Application Form - Attachment: Letter of Credit 40

41 Checklist for Forms 41

42 Next Steps EVENT Deadline for receipt of applications to participate in the auction Date on which the list of applicants will be published Date on which the list of qualified bidders will be published Mock auction for qualified bidders Opening day of bidding Auction close (auction typically lasts 4-6 weeks) Submission of ownership and control documentation, and initial payment (20% of high bids / 100% of penalties) Final payment (80% of high bids) TIME FRAMES December 8, 2003 December 9, 2003 Late December, 2003 One week prior to the auction Late January, 2004 Unknown 10 business days after the close of the auction 30 business days after the close of the auction 42

43 For More Information All information and documentation regarding past and upcoming auctions is available online at If you have any comments or suggestions on how to improve our training materials, please us at 43