700 MHz Wireless Spectrum Auction Begins Today

OTTAWA, ONTARIO--(Marketwired - Jan. 14, 2014) - Industry Canada

Canadians have been clear that they want their government to make decisions that will lead to more choice, lower prices and better service in the wireless sector. Today, the Government of Canada officially launched the 700 MHz spectrum auction. These high-quality wireless airwaves will soon be made available to carriers to provide Canadians with improved, high-speed wireless services on the latest technologies.

The Government is committed to protecting the best interests of Canadian consumers in the wireless sector. The 700 MHz spectrum auction builds on the Harper Government's commitment and actions to encourage more choice and lower prices in Canada's wireless sector. Those actions include:

• auctioning off 2500 MHz spectrum band in April 2015;
• instituting monetary penalties for companies that violate rules on tower sharing, deployment of spectrum and service to rural areas;
• preventing undue concentration of wireless spectrum; and
• clarifying the rules for transferring spectrum licences between companies, with decisions on proposed licence transfers to be announced by the government in a more transparent fashion.

As of today, no further information on the auction's progress will be publicly released until after the auction is over.

Quick facts

• A dynamic mix of Canadian companies are competing in the 700 MHz auction.
• A list of provisional winners will be released within five days of the end of bidding.

Quotes

"The 700 MHz spectrum auction is an important milestone for Canada. Soon, this high-quality spectrum will be accessible to Canadian consumers for use on the latest smartphones and tablets. The rules for this auction were designed to support more choice in our wireless market while putting the interests of consumers first."

- James Moore, Industry Minister

Related products

- Backgrounder

Associated links

- Qualified bidders in the 700 MHz auction

- Key dates in the 700 MHz auction

- 700 MHz auction homepage

- http://news.gc.ca/web/article-en.do?nid=809159

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Backgrounder

Start of Bidding-700 MHz Spectrum Auction

The 700 MHz auction will provide critical additional spectrum for wireless providers. As announced in 2012, the Government of Canada has applied caps in the auctions, effectively reserving spectrum for a fourth service provider in each region. Auction rules include rural deployment requirements for carriers with access to two blocks of paired spectrum and existing networks so that rural Canadians may benefit from the timely availability of advanced wireless services.

The last major auction of spectrum in Canada-the Advanced Wireless Services auction in 2008-used the simultaneous multiple round ascending (SMRA) format. In this type of auction, all licences are open to bidding at the same time, participants may bid on as many licences as they like (or can afford to win), and the auction continues until there are no more licences left to bid on or no more bidders.

For the700 MHz wireless spectrum auction, Industry Canada will use the new Combinatorial Clock Auction (CCA) format. The CCA format is now commonly used internationally for major spectrum auctions. In a CCA, bidders can bid on the entire package of licences they require for their business strategy on an all-or-nothing basis, rather than bidding on individual licences.

This approach is designed so that the spectrum goes to those who value it the most and are most likely to deploy, and it eliminates the risk that bidders may win some but not all of the licences needed to support their business model. The latter is particularly important, given that there are 14 licence areas for this auction and there are caps in place that effectively reserve spectrum for a fourth service provider in each region.

There are 98 licences being made available in this auction. Some licences are considered "generic" meaning they are similar enough and of comparable value such that they can be offered in a single category.

A CCA consists of two stages: an allocation stage and an assignment stage. The allocation stage is made up of a number of clock rounds, followed by a single supplementary round. During the clock rounds, bidders bid on one package of licences at a time. Clock rounds continue until there is no excess demand for any of the licences.

At the end of the clock rounds, the supplementary round starts. The supplementary round allows bidders to increase the bids they put forward during the clock rounds, as well as compete for the other packages they want but could not bid on due to the limit of one package in each clock round.

After the supplementary round, the assignment stage starts. This is the stage of the auction where winners of generic licences can place a bid to indicate the additional value they place on a specific block of spectrum. Bidders who are content with any generic licence in a certain area may choose not to participate in this stage of the auction. Bidding ends after the assignment stage.

Spectrum is awarded to the bidders with the highest value for the spectrum. Winning bidders will pay a second price-an amount that is enough to ensure that no other bidders or group of bidders were prepared to pay more for the licences.

Within five days of the end of bidding, Industry Canada will publish a list of provisional licence winners on the 700 MHz auction website.

The licences will be awarded to winners once final payments have been made and Industry Canada has completed its due diligence.