Auction format and approach to consultation on auction proceduresRebecca BurdonPrincipal Economist, ACMA #TuneUp2011

• Overview of combinatorial clock auction (CCA)

• Reasons for choosing the CCA

• Structure of the auction

• Allocation stage

• Assignment stage

• Timetable and approach to consultation and bidder training

Outline

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• Aim is an efficient allocation – the auction format should allow bidders to bid effectively for different combinations of spectrum

• Multiband auction – complementarities across bands and within a band

• CCA:

• Bidders can bid for packages of lots – no exposure risk

• Pricing and activity rules - simpler to develop bidding strategy

• Generic lots –assists in assigning contiguous lots to winners

Reasons for choosing a CCA

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Yes Auction manager increases price in all categories with excess

demand

Auction format

ApplicationPrimary rounds - clock phase

Assignment stage – sealed bid round

Determines amount of spectrum won by each bidder

Determines location in the band

Excess demand in any category?

Supplementary round – sealed bid round

Auction ends

Allocation stage

No

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• A series of open rounds

• In each subsequent round the auction manager increases prices for all categories of lots where there is excess demand

• Bidders state the quantity of lots they most want in each category at the current round price – each bid is a package bid

• Bids are subject to activity rules:

• Round 1 – eligibility is set in the application process• Subsequent rounds - eligibility equals activity in the

previous round

• Primary rounds end when there is no excess demand in any category

Primary rounds (clock phase)

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• A single sealed bid round

• Bidders submit a list of bids for all the packages of lots they are interested in winning

• Each bid specifies:

• The number of lots in each category

• The price for that package

• Activity rule: supplementary round bids must be consistent with relative preferences expressed in primary round bids

Supplementary round

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• Process for determining winners:

• Winning bids are the highest value combination of bids for the available lots

• All bids from primary and supplementary round are included

• Each bidder can win only one of its bids

• Pricing: Each winner must pay a price that is:

• Greater than the reserve price for the lots in the package but no more than the amount of its bid

• Sufficiently high that no subset of bidders would be willing to pay more than the winners to acquire the spectrum instead

End of Allocation stage

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• This stage is used to assign specific frequencies to winning bidders from the allocation stage

• A single sealed bid round

• Winning bidders are shown all possible assignment options for each band that conform to the auction rules (e.g. contiguous assignment)

• Each bidder can submit a list of bids that states the additional amount they are willing to pay for each of the assignment options

• Process to determine frequency assignment and additional payments is similar to the process for determining winners and base prices in the allocation stage

Assignment round

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Engagement timetablePre-release of draft instruments

Auction tune-up (4 Nov)

Draft instruments released for formal consultation

(late-Feb)

2011 2012

Overview(4 Nov)

Online engagement(mid-Dec – early Feb)

One-day workshops

(13 & 23 Jan)

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Draft allocation instruments released for comment (late-Feb)

Engagement timetablePt 2: Engagement post-release of draft instrumentsPt 3: Bidder engagement and training

2012

• Overview of final instruments• CCA auction procedures• CCA auction system overview

• CCA auction system training (final)

• Mock auctions• Support materials

Final allocation instruments published

Auction registration

Auction process

• Overview of draft instruments• CCA auction procedures• Introduction to the auction

system

Workshops Workshops Practical sessions

Application Assessment Registration

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