Description
Competitive bidding models for 3G
KeyWords: Minimum Subsidy Bidding Model, Licensing Methodology, Auctions, Beauty Contests, First Come First Serve (FCFS), Lottery, UMTS, 3G UK auction,Controlled ascending auction, 3G US auction, India
COMPETITIVE BIDDING MODELS FOR 3G
AGENDA
?
Minimum Subsidy Bidding Model Paper Bidding Model methodologies
?
?
Bidding model for 3G in UK
Competitive Bidding Model for 3G in USA Auction of 3G spectrum in India - Progress
?
?
MINIMUM SUBSIDY BIDDING MODEL
MINIMUM SUBSIDY BIDDING MODEL
?
A model where service providers compete with each other and the enterprise that quotes the minimum subsidy requirement becomes eligible for subsidy payments subject to fulfillment of specified level of performance
?
Model used in telecom, electricity, road construction and maintenance, health, education and civil aviation sector
Used in at least 16 countries round the world.
?
SUCCESS FACTORS FOR MSB MODEL
?
Match objective to resources
?
Scope of the services should be in proportion to the funds available
?
Harness all revenue sources
?
User charges to be used to gradually move away from the subsidy support
?
Ensure credibility of support
?
To support the service providers to make confident investment decisions
?
Design optimal and attractive contracts
? ?
Scope of the contract Duration of the contract
SUCCESS FACTORS cont…
?
Choose relevant outcomes and link payment to them judiciously
?
Performance should be measureable, observable and defined before the event
?
Build safeguards to mitigate the risk of failure
?
Due diligence should be carried out to remove inexperienced bidders
?
Ring-fence allocations meant for different objectives
?
To mitigate the risk of over-spending on one objective and to detriment others
?
Allow operators to choose appropriate technology and design Empower and equip the procurement agency
?
3G TECHNOLOGY
? ?
First commercial launch of 3G by NTT Docomo in Japan, 2001
2G systems focus on voice communication, while 3G systems allow simultaneous use of speech and data services (@14.4 kbps) Mobile Internet access, entertainment, and triple-play converged communications services etc.
Greater capacity and spectrum efficiency than 2G systems
?
?
3G LICENSING METHODOLOGIES ADOPTED
?
Auction
?
Open outcry
Ascending ? Descending
?
?
Sealed bid
First Price ? Second Price
?
?
Beauty Contest
? ?
No License Fee Fixed License Fee First Come First Serve
?
Direct Award
?
?
Lotteries
PROS AND CONS OF AUCTIONS
PROS
? Speed of process ? Generally costs less to administer than a beauty contest ? Entity which places highest value on licence wins ? Spectrum is public resource so revenues benefit citizens ? Ensures transparency of/lack of bias in licensing process ? Minimizes post bid challenges/interventions
CONS
? Likely to discourage new entrants ? High licence price may restrict operator?s ability to extensively deploy network
PROS AND CONS OF BEAUTY CONTEST
PROS
? Awards licence to applicant who would best serve public interest ? Supports government objectives/initiatives e.g. providing service to remote areas, social obligations etc. ? Ensures that bulk of investment is directed at rapid network deployment
CONS
? Time consuming process ? Greater cost to administer the process ? Less transparent than other techniques ? No process to deal with a tie ? More susceptible to post bid challenges/interventions
PROS AND CONS OF FIRST COME, FIRST SERVE
PROS
? Speedy process ? Inexpensive to administer ? Less likely to be challenged
CONS
? It is possible for an unqualified party to win ? The resellers may benefit rather than the public ? May not end up in the hands of an entity who most values the licence ? The licence value is not taken into account
PROS AND CONS OF LOTTERIES
PROS
? Speedy process ? Provides rules for a tie ? Less likely to be challenged
CONS
? It is possible for an unqualified party to win ? The resellers may benefit rather than the public
COMPETITIVE BIDDING MODEL FOR 3G IN
UK
AUCTION DETAILS
?
Raised £22.12billion ($34 billion or 212% of GNP) and was widely described at the time as the biggest auction ever The auction ran from 6th March to 27th April 2000 Popularly known as `third-generation mobile spectrum licence auction', or `3G auction', or `UMTS auction'
? ?
?
The British government set the aim of fostering competition as the primary objective for the auction to run efficiently
Therefore, it developed a plan that ensured entrants would win at least one auction and, consequently, should participate in the auctions The government implemented a plan where it split the spectrum into five parcels with parcel “A” specifically reserved for new entrants No incumbent could bid on this parcel, and thus new entrants understood that the auction setup guaranteed them at least one parcel. This did in fact encourage entrants, and in total 13 companies applied to be a part of the auction
?
?
?
AUCTION DETAILS CONT…
License A
(Reserved for new entrant)
Paired Spectrum 2 X 15 MHz 2 X 15 MHz 2 X 10 MHz 2 X 10 MHz 2 X 10 MHz
Unpaired Spectrum 5 MHz 5 MHz 5 MHz 5 MHz 5 MHz
Reserve Price 125 million 107.1 million 89.3 million 89.3 million 89.3 million
B C D E
Auction Set up ? The Radio communications Agency conducted the auction of the 3G licenses
? ?
Licenses effective for 20 years until 2021 Minimum build out requirements and prohibition on trading of spectrum ensured that the agency would only sell licenses to those companies that were going into the business of offering mobile service
?
The auction was an simultaneous ascending price auction where the winning bidders would be obligated to pay their winning bid to the English treasury
This auction is like a standard `ascending' auction where in several objects are sold at the same time, with the price rising on each of them independently, and none of the objects is finally sold until no-one wishes to bid again on any of the objects.
?
AUCTION TIMELINE
Date July 31, 1997 Events ?Framework for licensing operators to provide the UK?s third generation of mobile communications systems launched ?The Radio communications Agency (RA) sought expressions of interest in tendering to provide financial management consulting services on 3 G auctions ?The Radio communications Agency (RA) appointed N M Rothschild & Sons Limited (Rothschild's) to advise on the possible auction of spectrum licenses ?Government announced its intention to use the auction to promote further competition in the mobile telecommunications industry and to encourage new businesses to enter the mobile market ?New entrants 'customers can roam onto existing second generation networks until their own networks are established, and 2) of the five licenses that were offered, a larger one being reserved for a new entrant January 16, 2000 February 21, 2000 April 27, 2000 September 1, 2000 ?Thirteen groups applied to bid in Europe?s first ever 3G Auction ?Bids invited ?The UK 3G spectrum auction ended after seven weeks - 150 bidding rounds ?The Radio communications Agency issued a Wireless Telegraphy Act License for third generation mobile telecommunications spectrum to all the winning bidders ?The licenses commenced immediately and continued in force until December 31, 2021
October 1, 1997 January 28, 1998 February 9, 1999
AIMS OF THE AUCTION
?
British govt. laid down several objectives:
?
To assign the spectrum efficiently ? To promote competition ? To `realise the full economic value
?
The competition aim was addressed by permitting no bidder to hold more than one licence, and auctioning the maximum number of licences given the available spectrum and the need to make them large enough for viable businesses Efficiency considerations over revenue considerations Efficiency meant licences should go into hands of persons with the best business plans. This can be judged by making bidders back their plans with money.
? ?
MAIN ISSUES ADDRESSED IN AUCTION DESIGN
?
Problem of entry: Encouraging new entrants to promote competition as the incumbents already enjoyed competitive advantage Royalty vs. Lump Sum Payments: Though royalty payments allows govt. to share the risk with an operator, however there is a risk of default by operator. Hence lump sum fees was adopted No of Licenses: Auction a fixed no of licenses permitting no bidder to win more than one license. Five licenses ensured that one is reserved for new entrant
?
?
?
Legal Issues: The bids were made binding with no option to withdraw and no license to be sold below reserve price even in the event of no bids
Since entry was the concern for govt., ascending price method was not ideal as incumbents enjoyed advantage in winning over new comers Since each bidder was restricted to getting at most one license, the problem of collusion of bidders were overcomed.
?
?
AUCTION OUTCOME
?
The first round of the auction took place on 6 March, 2000, when a little more than the sum of the reserve prices, £500 million($750 million), was bid. The final bid took the cheapest licence price past £4 billion ($6 billion), and after 150 rounds of bidding the auction finished on 27 April, 2000, with a total of about £22.12billion on the table. The four incumbents won licences, with Vodafone paying about £6 billion ($9 billion) for licence B
?
?
ISSUES WITH UK 3G BIDDING
?
The deposit amount was too low. The rising bids gave enough incentives to bidders to default No. of rounds per day was very small. Any negative news would have severely impacted the bids Reserve price was too low Other countries simply took and replicated, doesn?t work that way – not „one size fits all?
?
? ?
COMPETITIVE BIDDING MODEL FOR 3G IN
US
AUCTIONING METHOD ADOPTED IN USA
? Controlled
? ? ? ? ?
Ascending Auction
If total number of operators to be allotted spectrum is 2 All players place Bids If 2 or more bids above base price, lowest bidder is eliminated Auction continues with others Base price in second round will be second lowest bid in last round In Next round bidders can increase bids or retain old value Process continues until 2 operators emerge as winners
? ?
3G IN THE US
?
The initial issue faced was with respect to bandwidth
?
Bandwidth recommended by ITU used for other purposes as well, including military
?
Bandwidth required was estimated to be 300 – 420 MHz
?
FCC deals with domestic use of spectrum; NTIA deals with government use
?
The NTIA examined 1710-1755 MHz band for possibility of freeing up bandwidth used by government without harming defense
The FCC examined 2110-2170 MHz band for possibility of freeing up bandwidth used by private entities.
?
3G AUCTION IN THE US
? ? ?
Auctioning in US took place between Aug – Sept „06
150 Companies bid for the license
Bids Totaled $13.7 Billion
?
T-Mobile won 120 licenses ($4.2B)
?
? ?
Comcast, Time Warner, and Cox, plus Sprint won 137 licenses ($2.4B)
Cingular won 48 licenses ($1.3B) Verizon won 13 licenses ($2.8B)
LESSONS LEARNT BY US OPERATORS FROM EUROPEAN SPECTRUM AUCTION
?
Price paid per MHz per head of population is lower as compared to other European countries Mobile Data Services not lucrative as expected Expected financial return from the spectrum is lower, so too is its value
?
?
PROBLEMS FACED BY US OPERATORS
?
Prices for national coverage differed enormously depending on how the licences were combined Companies that bid for a few large regions to obtain nationwide spectrum paid almost twice as much as firms with the equivalent amount of spectrum assembled from hundreds of licences in smaller areas
?
3G SPECTRUM ALLOCATION IN INDIA
TRAI RECOMMENDATIONS, 2006
?
Band Identification for 3G.
?
In the 450 MHz band, Block A should be allocated to one of the UASL CDMA licensees ? In the 800 MHz band, Blocks B should be allocated among the existing UASL CDMA operators ? In the 2.1 GHz band, Blocks C through G should be allocated amongst cellular mobile service provider and unified access service license holders
TRAI RECOMMENDATIONS CONT…
? ?
Auctioning as the method Simultaneous ascending auction(SAA) as the mechanism for 2.1Ghz band One- stage bidding process for 400Mhz & 800Mhz band, if more no. of operators than blocks
?
?
Features of the auction
? ? ?
?
? ?
One block/winner Multiple rounds Sealed Bids Pricing at bidder’s respective winning bid Should not permit bid withdrawal One time payment of acquisition fee
TRAI RECOMMENDATIONS CONT…
?
Reserve Price Fixation
?
Pricing should reflect relative spectrum scarcity.
? ?
For a 800 Mhz, second highest winning bid to be pro-rated into a 2x1.25Mhz price For a 400 Mhz, half the reserve price for 2.1Ghz
?
After a moratorium of 1 year, an additional annual spectrum charge of 1 per cent of the operator’s total annual gross revenue (AGR).
DOT’S RESPONSE
Issue DOT’s Response
Band
Due to non availability of spectrum in 450 and 800 MHz, spectrum will be allocated only in 2.1 GHz Doubled the reserve price for each of the regions DoT has decided that the eligibility criteria for participating in 3G auction will be as follows: 1. Anyone who holds UAS / CMTS license 2. Anyone who has previous experience in running 3G Telecom services and gives an undertaking to obtain UASL as per DoT guidelines before starting Telecom Ops
Reserve Price Players
2G + 3G
The segregation of 2G and 3G is extremely complex and is thus ruled out. The spectrum charge shall be paid on total Adjusted Gross Revenue of 2G + 3G
CURRENT SCENARIO
? ?
Many rounds of modifications and re-considerations
Empowered group of ministers (EGoM) fixed the reserve at Rs. 3500 cr. (TRAI had recommended Rs. 2020 cr.)
5 players to be allowed in each circle with one slot reserved for MTNL/BSNL Auctions for GSM to be held on December 7, and after two days for EVDO(CDMA for 3G) & BWA
?
?
THANK YOU…
AUCTION DETAILS CONT…
?
The organization of the auction was fairly simple. In the first round, each bidder must make a bid at least as great as the reserve price on one of the parcels, use a waiver for that round, or withdraw from the auction completely. After that round, the highest bid for a parcel became that parcels “current price” and the firm that made that bid was the “current price bidder.” In the case of a tie, the agency selected the “current price bidder” randomly from those who made the high bid In the following round, the agency only allowed the bidders who were not “current price bidders” to participate. The agency locked in the current price bidders with their bid from the previous round. The firms had three choices in each round: (1) they could place a bid on one of the parcels that was at least X% higher than the current bid, where X was initially 5% and later chosen by the Radio communications Agency; (2) the firms could use one of their three waivers and not have to perform an action; however, once a firm exhausted its three waivers, it could no longer use this option; or (3) they could withdraw from the auction completely which was a final decision The agency certified the auction as complete when there were no more bids in a round. At that point, the parcels where then allotted to the “current price bidders” at the “current price.” The winner could either pay immediately or choose to defer some of the payment at a set interest rate
?
?
Back
doc_724606703.pptx
Competitive bidding models for 3G
KeyWords: Minimum Subsidy Bidding Model, Licensing Methodology, Auctions, Beauty Contests, First Come First Serve (FCFS), Lottery, UMTS, 3G UK auction,Controlled ascending auction, 3G US auction, India
COMPETITIVE BIDDING MODELS FOR 3G
AGENDA
?
Minimum Subsidy Bidding Model Paper Bidding Model methodologies
?
?
Bidding model for 3G in UK
Competitive Bidding Model for 3G in USA Auction of 3G spectrum in India - Progress
?
?
MINIMUM SUBSIDY BIDDING MODEL
MINIMUM SUBSIDY BIDDING MODEL
?
A model where service providers compete with each other and the enterprise that quotes the minimum subsidy requirement becomes eligible for subsidy payments subject to fulfillment of specified level of performance
?
Model used in telecom, electricity, road construction and maintenance, health, education and civil aviation sector
Used in at least 16 countries round the world.
?
SUCCESS FACTORS FOR MSB MODEL
?
Match objective to resources
?
Scope of the services should be in proportion to the funds available
?
Harness all revenue sources
?
User charges to be used to gradually move away from the subsidy support
?
Ensure credibility of support
?
To support the service providers to make confident investment decisions
?
Design optimal and attractive contracts
? ?
Scope of the contract Duration of the contract
SUCCESS FACTORS cont…
?
Choose relevant outcomes and link payment to them judiciously
?
Performance should be measureable, observable and defined before the event
?
Build safeguards to mitigate the risk of failure
?
Due diligence should be carried out to remove inexperienced bidders
?
Ring-fence allocations meant for different objectives
?
To mitigate the risk of over-spending on one objective and to detriment others
?
Allow operators to choose appropriate technology and design Empower and equip the procurement agency
?
3G TECHNOLOGY
? ?
First commercial launch of 3G by NTT Docomo in Japan, 2001
2G systems focus on voice communication, while 3G systems allow simultaneous use of speech and data services (@14.4 kbps) Mobile Internet access, entertainment, and triple-play converged communications services etc.
Greater capacity and spectrum efficiency than 2G systems
?
?
3G LICENSING METHODOLOGIES ADOPTED
?
Auction
?
Open outcry
Ascending ? Descending
?
?
Sealed bid
First Price ? Second Price
?
?
Beauty Contest
? ?
No License Fee Fixed License Fee First Come First Serve
?
Direct Award
?
?
Lotteries
PROS AND CONS OF AUCTIONS
PROS
? Speed of process ? Generally costs less to administer than a beauty contest ? Entity which places highest value on licence wins ? Spectrum is public resource so revenues benefit citizens ? Ensures transparency of/lack of bias in licensing process ? Minimizes post bid challenges/interventions
CONS
? Likely to discourage new entrants ? High licence price may restrict operator?s ability to extensively deploy network
PROS AND CONS OF BEAUTY CONTEST
PROS
? Awards licence to applicant who would best serve public interest ? Supports government objectives/initiatives e.g. providing service to remote areas, social obligations etc. ? Ensures that bulk of investment is directed at rapid network deployment
CONS
? Time consuming process ? Greater cost to administer the process ? Less transparent than other techniques ? No process to deal with a tie ? More susceptible to post bid challenges/interventions
PROS AND CONS OF FIRST COME, FIRST SERVE
PROS
? Speedy process ? Inexpensive to administer ? Less likely to be challenged
CONS
? It is possible for an unqualified party to win ? The resellers may benefit rather than the public ? May not end up in the hands of an entity who most values the licence ? The licence value is not taken into account
PROS AND CONS OF LOTTERIES
PROS
? Speedy process ? Provides rules for a tie ? Less likely to be challenged
CONS
? It is possible for an unqualified party to win ? The resellers may benefit rather than the public
COMPETITIVE BIDDING MODEL FOR 3G IN
UK
AUCTION DETAILS
?
Raised £22.12billion ($34 billion or 212% of GNP) and was widely described at the time as the biggest auction ever The auction ran from 6th March to 27th April 2000 Popularly known as `third-generation mobile spectrum licence auction', or `3G auction', or `UMTS auction'
? ?
?
The British government set the aim of fostering competition as the primary objective for the auction to run efficiently
Therefore, it developed a plan that ensured entrants would win at least one auction and, consequently, should participate in the auctions The government implemented a plan where it split the spectrum into five parcels with parcel “A” specifically reserved for new entrants No incumbent could bid on this parcel, and thus new entrants understood that the auction setup guaranteed them at least one parcel. This did in fact encourage entrants, and in total 13 companies applied to be a part of the auction
?
?
?
AUCTION DETAILS CONT…
License A
(Reserved for new entrant)
Paired Spectrum 2 X 15 MHz 2 X 15 MHz 2 X 10 MHz 2 X 10 MHz 2 X 10 MHz
Unpaired Spectrum 5 MHz 5 MHz 5 MHz 5 MHz 5 MHz
Reserve Price 125 million 107.1 million 89.3 million 89.3 million 89.3 million
B C D E
Auction Set up ? The Radio communications Agency conducted the auction of the 3G licenses
? ?
Licenses effective for 20 years until 2021 Minimum build out requirements and prohibition on trading of spectrum ensured that the agency would only sell licenses to those companies that were going into the business of offering mobile service
?
The auction was an simultaneous ascending price auction where the winning bidders would be obligated to pay their winning bid to the English treasury
This auction is like a standard `ascending' auction where in several objects are sold at the same time, with the price rising on each of them independently, and none of the objects is finally sold until no-one wishes to bid again on any of the objects.
?
AUCTION TIMELINE
Date July 31, 1997 Events ?Framework for licensing operators to provide the UK?s third generation of mobile communications systems launched ?The Radio communications Agency (RA) sought expressions of interest in tendering to provide financial management consulting services on 3 G auctions ?The Radio communications Agency (RA) appointed N M Rothschild & Sons Limited (Rothschild's) to advise on the possible auction of spectrum licenses ?Government announced its intention to use the auction to promote further competition in the mobile telecommunications industry and to encourage new businesses to enter the mobile market ?New entrants 'customers can roam onto existing second generation networks until their own networks are established, and 2) of the five licenses that were offered, a larger one being reserved for a new entrant January 16, 2000 February 21, 2000 April 27, 2000 September 1, 2000 ?Thirteen groups applied to bid in Europe?s first ever 3G Auction ?Bids invited ?The UK 3G spectrum auction ended after seven weeks - 150 bidding rounds ?The Radio communications Agency issued a Wireless Telegraphy Act License for third generation mobile telecommunications spectrum to all the winning bidders ?The licenses commenced immediately and continued in force until December 31, 2021
October 1, 1997 January 28, 1998 February 9, 1999
AIMS OF THE AUCTION
?
British govt. laid down several objectives:
?
To assign the spectrum efficiently ? To promote competition ? To `realise the full economic value
?
The competition aim was addressed by permitting no bidder to hold more than one licence, and auctioning the maximum number of licences given the available spectrum and the need to make them large enough for viable businesses Efficiency considerations over revenue considerations Efficiency meant licences should go into hands of persons with the best business plans. This can be judged by making bidders back their plans with money.
? ?
MAIN ISSUES ADDRESSED IN AUCTION DESIGN
?
Problem of entry: Encouraging new entrants to promote competition as the incumbents already enjoyed competitive advantage Royalty vs. Lump Sum Payments: Though royalty payments allows govt. to share the risk with an operator, however there is a risk of default by operator. Hence lump sum fees was adopted No of Licenses: Auction a fixed no of licenses permitting no bidder to win more than one license. Five licenses ensured that one is reserved for new entrant
?
?
?
Legal Issues: The bids were made binding with no option to withdraw and no license to be sold below reserve price even in the event of no bids
Since entry was the concern for govt., ascending price method was not ideal as incumbents enjoyed advantage in winning over new comers Since each bidder was restricted to getting at most one license, the problem of collusion of bidders were overcomed.
?
?
AUCTION OUTCOME
?
The first round of the auction took place on 6 March, 2000, when a little more than the sum of the reserve prices, £500 million($750 million), was bid. The final bid took the cheapest licence price past £4 billion ($6 billion), and after 150 rounds of bidding the auction finished on 27 April, 2000, with a total of about £22.12billion on the table. The four incumbents won licences, with Vodafone paying about £6 billion ($9 billion) for licence B
?
?
ISSUES WITH UK 3G BIDDING
?
The deposit amount was too low. The rising bids gave enough incentives to bidders to default No. of rounds per day was very small. Any negative news would have severely impacted the bids Reserve price was too low Other countries simply took and replicated, doesn?t work that way – not „one size fits all?
?
? ?
COMPETITIVE BIDDING MODEL FOR 3G IN
US
AUCTIONING METHOD ADOPTED IN USA
? Controlled
? ? ? ? ?
Ascending Auction
If total number of operators to be allotted spectrum is 2 All players place Bids If 2 or more bids above base price, lowest bidder is eliminated Auction continues with others Base price in second round will be second lowest bid in last round In Next round bidders can increase bids or retain old value Process continues until 2 operators emerge as winners
? ?
3G IN THE US
?
The initial issue faced was with respect to bandwidth
?
Bandwidth recommended by ITU used for other purposes as well, including military
?
Bandwidth required was estimated to be 300 – 420 MHz
?
FCC deals with domestic use of spectrum; NTIA deals with government use
?
The NTIA examined 1710-1755 MHz band for possibility of freeing up bandwidth used by government without harming defense
The FCC examined 2110-2170 MHz band for possibility of freeing up bandwidth used by private entities.
?
3G AUCTION IN THE US
? ? ?
Auctioning in US took place between Aug – Sept „06
150 Companies bid for the license
Bids Totaled $13.7 Billion
?
T-Mobile won 120 licenses ($4.2B)
?
? ?
Comcast, Time Warner, and Cox, plus Sprint won 137 licenses ($2.4B)
Cingular won 48 licenses ($1.3B) Verizon won 13 licenses ($2.8B)
LESSONS LEARNT BY US OPERATORS FROM EUROPEAN SPECTRUM AUCTION
?
Price paid per MHz per head of population is lower as compared to other European countries Mobile Data Services not lucrative as expected Expected financial return from the spectrum is lower, so too is its value
?
?
PROBLEMS FACED BY US OPERATORS
?
Prices for national coverage differed enormously depending on how the licences were combined Companies that bid for a few large regions to obtain nationwide spectrum paid almost twice as much as firms with the equivalent amount of spectrum assembled from hundreds of licences in smaller areas
?
3G SPECTRUM ALLOCATION IN INDIA
TRAI RECOMMENDATIONS, 2006
?
Band Identification for 3G.
?
In the 450 MHz band, Block A should be allocated to one of the UASL CDMA licensees ? In the 800 MHz band, Blocks B should be allocated among the existing UASL CDMA operators ? In the 2.1 GHz band, Blocks C through G should be allocated amongst cellular mobile service provider and unified access service license holders
TRAI RECOMMENDATIONS CONT…
? ?
Auctioning as the method Simultaneous ascending auction(SAA) as the mechanism for 2.1Ghz band One- stage bidding process for 400Mhz & 800Mhz band, if more no. of operators than blocks
?
?
Features of the auction
? ? ?
?
? ?
One block/winner Multiple rounds Sealed Bids Pricing at bidder’s respective winning bid Should not permit bid withdrawal One time payment of acquisition fee
TRAI RECOMMENDATIONS CONT…
?
Reserve Price Fixation
?
Pricing should reflect relative spectrum scarcity.
? ?
For a 800 Mhz, second highest winning bid to be pro-rated into a 2x1.25Mhz price For a 400 Mhz, half the reserve price for 2.1Ghz
?
After a moratorium of 1 year, an additional annual spectrum charge of 1 per cent of the operator’s total annual gross revenue (AGR).
DOT’S RESPONSE
Issue DOT’s Response
Band
Due to non availability of spectrum in 450 and 800 MHz, spectrum will be allocated only in 2.1 GHz Doubled the reserve price for each of the regions DoT has decided that the eligibility criteria for participating in 3G auction will be as follows: 1. Anyone who holds UAS / CMTS license 2. Anyone who has previous experience in running 3G Telecom services and gives an undertaking to obtain UASL as per DoT guidelines before starting Telecom Ops
Reserve Price Players
2G + 3G
The segregation of 2G and 3G is extremely complex and is thus ruled out. The spectrum charge shall be paid on total Adjusted Gross Revenue of 2G + 3G
CURRENT SCENARIO
? ?
Many rounds of modifications and re-considerations
Empowered group of ministers (EGoM) fixed the reserve at Rs. 3500 cr. (TRAI had recommended Rs. 2020 cr.)
5 players to be allowed in each circle with one slot reserved for MTNL/BSNL Auctions for GSM to be held on December 7, and after two days for EVDO(CDMA for 3G) & BWA
?
?
THANK YOU…
AUCTION DETAILS CONT…
?
The organization of the auction was fairly simple. In the first round, each bidder must make a bid at least as great as the reserve price on one of the parcels, use a waiver for that round, or withdraw from the auction completely. After that round, the highest bid for a parcel became that parcels “current price” and the firm that made that bid was the “current price bidder.” In the case of a tie, the agency selected the “current price bidder” randomly from those who made the high bid In the following round, the agency only allowed the bidders who were not “current price bidders” to participate. The agency locked in the current price bidders with their bid from the previous round. The firms had three choices in each round: (1) they could place a bid on one of the parcels that was at least X% higher than the current bid, where X was initially 5% and later chosen by the Radio communications Agency; (2) the firms could use one of their three waivers and not have to perform an action; however, once a firm exhausted its three waivers, it could no longer use this option; or (3) they could withdraw from the auction completely which was a final decision The agency certified the auction as complete when there were no more bids in a round. At that point, the parcels where then allotted to the “current price bidders” at the “current price.” The winner could either pay immediately or choose to defer some of the payment at a set interest rate
?
?
Back
doc_724606703.pptx