On March 28, 2018, the Canadian spectrum regulator, ISED, initiated a process that will lead to an auction of 600 MHz spectrum licenses in March 2019.
Canadian auctions typically have bidding restrictions, in this case there will be a “set aside” of three 10 MHz blocks for non-national carriers. Set-aside eligible bidders can bid on all blocks, whereas non-set-aside eligible bidders – notably Bell, TELUS and Rogers, the three national incumbents – are limited to bidding on four blocks.
Canada follows the US
Canada had agreed to adopt the US 600 MHz band plan prior to the US Incentive Auction. This means there will be seven paired blocks of 10 MHz each for 70 MHz total capacity. Unlike the US Incentive Auction, the band has been freed up without a Reverse Auction so the new process is focused only on selling licenses to mobile carriers.
Licenses will be available in each of 16 regional areas. In 2014, with licenses similarly on a regional basis and with similar bidding rules, the 700 MHz auction resulted in C$5.27 billion or C$2.32 per MHz-pop, about six times the opening bid amount. The opening bid for all 70 MHz of 600 MHz spectrum will be C$1.536 billion or C$0.625 per MHz-pop.
Auction Rules
Recent auctions in Canada have been run using the Combinatorial Clock Auction (CCA) process, which is a user-defined package auction of generic licenses and includes a second price (opportunity cost) discount for winning bidders. The 600 MHz auction will use the CCA format, but with somewhat more restrictive rules for bidding.
These rules place limits on how bidders can move from one package to another during the bidding rounds. Managing bidding in this type of auction and winning licenses at the best price possible requires focused planning and careful execution.
LYA provides Auction Consulting Services to bidders in spectrum auctions and brings expertise in Combinatorial Clock Auctions, SMRA auctions and experience with complex processes including the US 600 MHz Auction.
Our services range from providing support in public consultations via expert evidence, research, drafting of filings, to development of spectrum business plans and valuation, to support during the auction process itself. This includes management training, mock auctions, auction simulations and bid room support, including round tracking tools.
LYA’s independently developed secure Auction Platform is also available for regulators and for private sellers of spectrum assets.