Transcript 1. Executive summary

Spectrum Auction
November 2012 and March 2013
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Objectives of Auction
The first step is to identify objectives of the auction
Government set the following objectives:
 Obtain a market determined price through a
transparent process
 Ensure efficient use of spectrum and avoid hoarding
 Stimulate competition in the sector
 Promote rollout of the respective services
 Maximize revenue proceeds from the Auction within
the set parameters.
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Overview of Auction Process (1/2)
 TRAI recommendations
 EGoM/Cabinet Approvals
Issue of Auction Guidelines
Appointment of Auctioneer through competitive two part selection process
Issue of Information Memorandum (IM)
•Details about auction process; eligibility requirements
•Bidders could understand process and raise queries
Pre-bid Conferences
•Open-house session for stakeholders to raise queries and provide comments
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Overview of Auction Process (2/2)
Queries & Responses to IM
•All queries responded to through DoT Website
•Second Pre-bid Conference on auction design
Issue of Notice Inviting Applications (NIA)
•Final bidding Government document for auction
•Detailed document with auction rules, spectrum for auction, eligibility requirements
Queries & Responses to NIA
Stakeholders and Press Information Sessions
•Presentations on auction rules, formats, preparations etc. to all the stakeholders
Mock Auction
•Simulation of real auction process
•Opportunity for bidders to test their systems
Within the Government, an Inter-Ministerial Committee (IMC) constituted
to supervise auction conduct
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Auction design: Key features (1/2)
Electronic or e-auction
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Option for bidders to bid from any location
All bidding data logged into Electronic Auction System – no possibility of manipulation
Minimised requirement for human intervention
Risk of physical disruption mitigated
Robust security features
– Fully secure system with multiple levels of security
– STQC Audit
– All auction data backed-up on real time basis across multiple servers
Price setting by auction system
– Auction in the form of Ascending Clock Auction
– Bid prices not set by bidders, but by auction system, based on pre-defined algorithm
– Important safeguard against any potential collusion and risk of irrational over-bidding
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Auction design: Key features (2/2)
Simultaneous auctions, with switching flexibility
– Bidders could optimise aggregation strategy across circles
– Bidders incentivised to bid in more service areas to use budget
– Allowed bidders strategic flexibility
Activity rule through “eligibility point” system
Designation of Provisional Winning Bidders to minimise unsold lots
Extension time budgets to guard against technical issues
EMD requirement
Confidentiality, with transparency
– After every round, bidders informed about aggregate demand-supply situation and price levels –
however identities of other bidders and their positions not disclosed
– This maintained adequate transparency – also helped in sustaining competitive tension and in
reducing chances of collusion
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Auction Format (1/4)
Two stages: Clock Stage and Frequency Assignment Stage
Clock Stage:
 The winners of the number of Blocks for each Service Areas
determined through the Clock Stage.
 The Clock Stage determines a common winning price for each
Service Areas where spectrum is available.
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Auction Format (2/4)
 Simultaneous bidding in each of the Service Areas.
 The first Clock Round to begin at the Reserve Price.
 The bidders can submit their bid for the number of
blocks depending on their categorization in each Service
Area.
 The ability to make bids is subject to the number of
eligibility points, deposit requirements and activity rules.
 After each clock round, the bids in each Service Areas
will be ranked.
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Auction Format (3/4)
 Where n is the number of blocks available in a service area,
the first n Bids in that service area according to this ranking
will become Provisional Winning Bids, and the Bidders who
submitted these Bids will become the Provisional Winning
Bidders.
 If Total Demand in a Service Area for a Clock Round Price is
GREATER than the number of blocks available, in which case
the Clock Round Price will be increased in the following clock
round , with the price increment linked to the level of excess
demand.
 Total Demand will be calculated on basis of Number of
Blocks for which Bids have been received for a
particular Clock Round Price.
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Auction Format (4/4)
 In the following round, bidders state whether they wish to bid
at the new prevailing prices.
 Clock rounds continue until there is no further demand for
blocks at current clock price in each Service Area.
 Once the clock stage closes, the current provisional winners are
declared winning bidders.
 There will be a common winning price for all winners in that
Service Area.
Frequency Assignment Stage:
 Frequencies are randomly assigned to winning bidders by the
electronic auction system through pre-defined rules.
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Earnest Money Deposit Requirements
 Each block in a Service Area will have a Earnest Money
Deposit (EMD) requirement.
 Initial eligibility will be determined by the EMD
submitted by the bidder.
 Bidding is restricted based on a combination total EMD
submitted and the corresponding available eligibility
points.
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Eligibility to make bids
 Each block in a Service Area assigned a specific number
of eligibility points.
 Initial Eligibility Points for each bidders in the first round
based on the Earnest Money Deposit submitted by the
bidders.
 Depending on the bid in the current clock round, bidding
for subsequent rounds may be curtailed.
 Flexibility to switch between Service Areas.
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Activity Rules – I
 A bidder’s activity in a clock round is the sum of:
 the number of eligibility points associated with the block(s) in
the Service Areas in which the bidder has been determined to
be a provisional winner at the end of the last completed clock
round; and
 the eligibility points associated with the block(s) in the Service
Areas where the bidder has made new bids (i.e. bids where it
was not a provisional winner in the previous round)
 A bidder must demonstrate bid activity in each clock round that
equals or exceeds a certain percentage of its eligibility,
otherwise its eligibility will be reduced proportionately in the
following round
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Activity Rules – II
 The percentage (Auction Activity Requirement) will
increase over the duration of the clock stage from 80%
to 90% and then finally to 100%.
 These increases made by the auctioneer when there is a
decline in the overall bidding activity across all Service
Areas.
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Provisional Winning Bidders and Prices
 At the end of a Clock Round, and for each Service Area, each
bidder’s highest bid made so far in any round is taken and these
bids are ranked in order of the ranking rules.
 The relative ranking of any bids carried over from previous
rounds will be preserved.
 Where n is the number of blocks available in a service area, the
first n Bids in that service area according to this ranking will
become Provisional Winning Bids, and the Bidders who
submitted these Bids will become the Provisional Winning
Bidders.
 The provisional winning price associated with these bids will be
equal to the lowest clock round price at which the provisional
winning bidders submitted their bids,
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Price Increments
 Excess Demand in a Service Area is defined as the bids
received for the Number of Blocks in a Service Area for a
particular Clock Round Price minus the total number of
blocks put up for auction.
 Top-up blocks are not considered while calculating the excess
demand.
 If excess demand in a Service Area is negative, the clock
round price in the following clock round in that Service Area
will remain unchanged.
 If excess demand in a Service Area is zero or positive, the
price set in that Service area for the following clock round
will be the current clock round price plus a price increment
related to the level of excess demand.
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Spectrum Cap (1/2)
The upper limit (maximum spectrum/ blocks) for which a bidder
can bid in any Service Area in any band will be restricted by a
Cap which is as follows:
 The Overall Cap for each of the Service Areas is calculated as
25% of the Total Spectrum assigned for Telecom services in
all bands.
 The Spectrum Cap in each Service Area in each band (Band-
wise Spectrum Cap for each Service Area) is calculated as
50% of the Total Spectrum assigned for Telecom Services in
that particular band in the respective Service Area.
It is to be noted that the Total Spectrum assigned also
includes the Spectrum (excluding Top-Ups) being put in the
Current Auctions.
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Spectrum Cap (2/2)
The maximum number of blocks for which a bidder could
submit a bid for each Service Area in each band was the
LOWEST of the below given three values:
1) Overall Spectrum Cap in the Service Area minus Total
Current Holding across all bands in the particular Service
Area
2) Spectrum Cap in the band minus Current Holding of the
bidder in the respective band for a Service Area
3) Total Spectrum put to auction (excluding top-up) in a Service
Area in the respective band.
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Bidding Stipulations – November, 2012
•
•
1800MHz Band
New Entrants
Minimum
Maximum
4
5
800MHz Band
New Entrants
Minimum
Maximum
Existing Licensees
Minimum
Maximum
1
2
Existing Licensees
Minimum
Maximum
1
1
2
3
In 1800MHz band Auction, the number of blocks put up for Auction in each
Service Area was 8. The number of top-up blocks made available in each
Service Area (except Delhi & Mumbai) was 3.
In 800MHz band Auction, the number of blocks put up for Auction in each
Service Area was 3, except in AP & Punjab where it was 2. The number of
top-up blocks in each Service Area (except Delhi, Mumbai, Kolkata, AP &
Punjab) was 1.
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Bidding Stipulations – March, 2013
•
•
1800 & 900MHz Band
New Entrants / Renewal Licensees
Minimum
4
800MHz Band
New Entrants
Minimum
2
Existing Licensees
Minimum
Existing Licensees
Minimum
1
1
The maximum number of blocks which any bidder could bid was restricted based
on the Current Holding of the Bidder in the respective band and the Total Holding
across all bands in the particular Service Area.
In 1800MHz and 900MHz band auction, for the Service Area of Delhi & Mumbai,
the bidder had to meet the minimum requirement of 4 in at least one of the bands
i.e. If the bidder was bidding for 4 blocks in 1800MHz band, in which case, he
could bid for 1 block in 900MHz band and vice versa.
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Closing Rule
 The final clock round will be the first clock round in
which:
 The Auction Activity Requirement is 100%; and
 There is no bidding activity in any of the Service
Areas.
21
Round scheduling and Extensions
 Minimum round length of 60 minutes.
 Minimum time between rounds will be 20 minutes.
 Extension budget of 240 minutes (4 hrs) made
available for each bidder.
 Extension budget to be reduced in 10-minute
intervals.
 Bidders can extend any clock round by a maximum of
1 hour (6 10-minute intervals), subject to availability of
extension budget.
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Information Policy for the Clock Rounds – I
 At the end of each clock round (and for each Service Area) information
circulated to all bidders will be confined to:

Clock Round Price in the round

Aggregate demand in the round

Excess demand in the round

Clock Round Price in the following round
 At no stage during the Clock Rounds, will the names of the bidders
submitting their bids be announced.
 At the end of the Auction, all information about the bids and the bidders will
be released.
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Security Measures
 Security of electronic auction system is protected by SSL encryption, digital
certificates and various passwords.
 Qualified bidders to procure a Digital Signature Certificate issued by any of
the valid Certifying Authority approved by Controller of Certifying
Authorities in India.
 Maximum of four Users permitted from each bidding Company to access the
EAS.
 Qualified bidders to procure two Digital Signature Certificates - One for
Digital Signing and Second for Encryption for each user.
 Qualified Bidders have to provide a maximum of four Public Static IP
Address, from which only they can access the EAS.
 A login-id and password required.
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STQC Audit and Certification
The following activities carried out by STQC:
 Functional Testing / Audit
 Performance Testing
 Application Security
 Vulnerability Assessment
 Penetration Testing
 Process Audit as per ISO 27001
 Compliance verification as per CVC, IT act and GFR
guidelines.
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Changes incorporated in the 1800MHz/900MHz bands
(March, 2013) Auction
 Bidding restriction in the Service Area of Delhi &
Mumbai for bidders categorized as New Entrants or
Renewal Licensees.
 Upper limit was increased to the total number of blocks
put up for auction.
 Cap put based on band-wise holding and total holding of
the respective bidders.
 Priority Ranking to the Renewal Licensees.
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