700 MHz Spectrum Auction FAQs

700 MHz Spectrum Auction FAQs

NOTE: This document provides plain language information about the 700 MHz auction process but is not a substitute for the actual auction policies, rules and licensing framework.

When does the auction begin?
The deadline for bidders to submit applications for the 700 MHz auction and a 5-percent deposit is noon EDT on September 17, 2013. Actual bidding in the auction begins January 14, 2014.

How is a bidder's deposit determined?
Each spectrum block is assigned a certain number of eligibility points, which generally reflect the relative value of the licences. Each eligibility point is worth $130,000. Prospective bidders must decide which blocks they are interested in bidding on, tally up the total value of the eligibility points for those blocks, and then submit an initial deposit worth 5 percent of that amount along with their application on September 17, 2013.

Deposits can be counted toward the total cost of the winning bid. If a company is unsuccessful in its bid, the deposit is refunded.

What is the deadline for companies to pay the remainder of the deposit?
The deadline for companies to pay the remaining 95 percent of their deposit is noon EDT on October 29, 2013.

What are eligibility points?
Eligibility points generally reflect the relative value of licences and are the basis for pre-auction deposits. Each eligibility point is worth $130,000.

When will the list of applicants be available?
The list of applicants will be published on Industry Canada's 700 MHz auction homepage on September 23, 2013, before markets open.

What happens between September 17 and September 23?
During this time, Industry Canada processes the applications. It also begins its review of all the information in each application and follows up with applicants where necessary.

What information will be disclosed on September 23?
The list of applicants, with information on their ownership structure and associated entities—which are the companies the applicant has a relationship or agreement with regarding the 700 MHz auction—will be posted to Industry Canada's 700 MHz auction homepage on September 23, 2013.

During this time, are bidders able to discuss strategies for the auction?
No. After September 17, 2013, bidders that have applied to take part in the auction, as well as affiliated or associated companies and the owners of the company, are not allowed to publicly discuss bidding strategies, how they intend to bid, what the market might look like after the auction, or other subjects that could jeopardize the fairness of the auction. The ban on discussing this information, which also covers media interviews, is in effect until after the deadline for final payments for winning bids, which will be 35 business days after the bidding ends.

Discussions regarding the intention to participate in the auction are not considered to contravene the rules.

What rules are in place to prevent this?
Bidders that publicly discuss the sensitive information mentioned above could be disqualified from taking part in the auction, as well as possibly lose their deposit.

How long will the auction last?
Auction bidding begins on January 14, 2014, and ends when all licence assignments and winning prices have been determined. It is difficult to speculate on the duration since it depends on the level of competition.

Will there be updates posted during the bidding process?
Once the auction begins, no further public information will be provided by the Government of Canada until provisional winners are published (up to five business days after the auction concludes).

Is there a dedicated website for information on the auction?
Official material, including policy, technical and licensing information relating to the 700 MHz spectrum auction, can be found on Industry Canada's 700 MHz auction homepage.

How does the auction process work?
The auction uses a format known as a combinatorial clock auction. For a detailed explanation of how it works, visit the glossary page. This format has been widely used to auction spectrum internationally, including recent auctions in Australia, New Zealand and the U.K.

In brief, a combinatorial clock auction allows bidders to bid on a package of items (in this case, spectrum licences) instead of bidding on an item-by-item basis. This eliminates the risk that bidders may win some but not all of the licences needed for their business case.

There will be 68 MHz of spectrum available in this auction, representing 15 percent of the total commercial mobile spectrum currently licensed in Canada. The auction covers 14 licence areas in Canada; each is divided into seven blocks of spectrum. Four of these blocks are designated as prime spectrum, due to the availability of more advanced equipment for use in those blocks.

Geographic details on each licence area are available.

How do participants bid?
Bidding in a combinatorial clock auction consists of an allocation stage, which determines the number of spectrum licences a bidder wins. The allocation stage is divided into two phases: the clock rounds and the supplementary round. During each of the clock rounds, bidders put forward a single bid for a package of licences. At the end of each clock round, the price increases on licences with excess demand. The clock rounds end when there is no excess demand for any licences. The supplementary round then allows bidders to top up their clock round bids and place bids for other packages on which they are eligible to bid.

The allocation stage is followed by the assignment stage, where bidders who have won generic licences can make additional bids on the specific generic licences they prefer. At the end of the assignment stage, all licence assignments and winning prices will have been determined.

Bidders are restricted based on their initial deposits. All bidders are free to choose the preferred blocks they wish to bid on; no blocks have been pre-designated as "set-aside." However, caps will be applied to limit how much spectrum each bidder can bid for. An additional limit on the prime spectrum blocks will be imposed on Canada's large wireless service providers. This will provide an opportunity for a fourth player to be able to obtain spectrum and will effectively reserve, in each licence area, one block of prime spectrum for new entrants or regional providers. The remaining spectrum will be open to all bidders.

For a detailed explanation of how the combinatorial clock auction format works, see Annex B.

How are winning bidders determined?
The combinatorial clock auction format, which is used in many major spectrum auctions internationally, was adopted to eliminate the risk that bidders could get some but not all of the licences they need. Successful bidders are determined at the allocation stage of the auction (see "How do participants bid?"), when the auction software considers all bids and selects the highest combination of valid bids.

When will we know who the winners are?
Once the auction officially begins on January 14, 2014, no further public information will be made available by the Government of Canada until the provisional licence winners have been published (up to five business days after the auction concludes).

After the results are final, Industry Canada will also publish the following:

  • a list of all winning bidders, licences won and prices paid;
  • the bids submitted by each bidder in every clock round, including the identity of the bidders;
  • the supplementary bids submitted by each bidder, including the identity of the bidders; and
  • the assignment bids submitted by each bidder, including the identity of the bidders.

How much money does Industry Canada expect to generate from the 700 MHz spectrum auction?
The Government of Canada does not speculate on auction revenues. This auction is a competitive process; the final revenue generated will not be known until after the auction.

What will the Government do with the 700 MHz spectrum auction revenues?
As has been the case with all previous spectrum auctions, funds generated by the auction will be remitted to the Government's Consolidated Revenue Fund, which is administered by the Receiver General.

When will the licences be issued?
Licences will be issued once all payments are made and it has been determined that provisional winners meet ownership and control requirements, where applicable. The deadline for final payments for winning bids will be 35 business days after the bidding ends. Failure to make these final payments in a timely fashion will result in the licence not being issued and a possible forfeiture penalty.

When can we expect to see new services rolled out by the winners?
The Government of Canada expects licensees to begin rolling out services to meet the needs of Canadians in a timely fashion. At a minimum, the Government requires all companies that acquire 700 MHz spectrum licences to deploy to 20–50 percent of the population within 10 years, depending on the area.

In addition to general deployment conditions, Industry Canada has also set strong rural deployment conditions—the first of their kind in Canada. Bidders that win or get access to two or more paired blocks of spectrum in the 700 MHz band have special coverage requirements. They must bring the next-generation services they'll roll out using the 700 MHz spectrum to at least 90 percent of the population covered by their 2012 HSPA network within five years of receiving their licence, and 97 percent of the population covered within seven years.