OTTAWA – Participants in the 700 MHz spectrum auction will run amok of anti-collusion rules if they speak with the media after they file their applications on June 11 and until they make their final licence payments, Industry Canada has determined.
The revelation comes in the department’s answers to clarification questions which were published Tuesday, May 21. Question 2.13 asks “When is the ‘auction process’ considered to have started?”
The following is what Industry Canada had to say.
“Any communications from an applicant and its affiliates, associates or beneficial owners or their representatives that discloses or comments on the amount to be bid; bidding strategies; licence selection, including but not limited to the intent of bidding, post-auction market structure and communications with or via the media, are prohibited until the deadline for the final payment on winning bids,” reads the answer.
“This rule is set out in order to preserve the integrity of the auction process. The rule is such that any discussions occurring at any time prior to the deadline for the final payment are prohibited. All such discussions having occurred, including those prior to the publication of the Framework would have to be disclosed,” the department adds.
Auction consulting companies would also be limited in their ability to work with multiple bidders. “Therefore, bidders should ensure that auction consultants being approached to provide consulting services or workshop sessions are not employed by another participant in the 700 MHz auction,” states the answer to question 2.12.
Industry Canada has determined that multiple participants can use “generic auction software platforms – such as simulation tools, tracking tools and others” and wouldn’t be found to contravene the anti-collusion rules.
With respect to associated entities participating separately in the auction and having the spectrum cap apply to separately, the department will determine on a case by case basis prior to the start of the auction whether this can happen. But even with this determination, Industry Canada may decide after the close of the auction to conduct a further review.
“Associated entities that become licensees may also be subject to further reviews post-auction, in order to demonstrate to Industry Canada's satisfaction that they separately and actively provide services in the applicable licence area and that they remain eligible to have the spectrum aggregation limits apply separately,” says Industry Canada.
Several questions focused on how the anti-collusion rules would affect participants bidding as associated entities but wanting the spectrum aggregation limit (spectrum cap) to apply to separately. Industry Canada noted in response to one such question that applicants may be able to bid separately in the auction while at the same time entering into discussions around joint network builds, spectrum sharing or joint equipment purchases but only under limited circumstances (this would certainly seem to apply to network-sharing Bell and Telus).
However, once a bidding consortium has been established and parties in that group contravene anti-collusion rules, they would no longer be able to participate in the auction separately.
“The same entities would therefore no longer be deemed competitors for the purpose of the auction, and discussions regarding issues such as bidding strategies could then take place. Should the consortium be dissolved prior to the auction, only one of the entities would be eligible to participate in the auction, and all parties would continue to be subject to the prohibition of collusion rules,” writes Industry Canada.
The department also sought to clarify the rule around the spectrum cap for multiple parties bidding as one. It notes that when a large national service provider is involved, its cap will apply. But in the case where a provincial large service provider and a non-large provider are involved, the cap would only apply at the provincial level.
Requirements for rural rollout also came up in the clarification questions. In question 3.2, one party wondered how the rural deployment would work when two carriers have an agreement to share spectrum. In the case where Carrier A has an HSPA network in the West and Carrier B an HSPA footprint in the East, how would the rural rollout condition apply if Carrier A acquired two paired blocks across the entire country?
Since Carrier A purchased two paired blocks across the country and has an HSPA footprint in the West, it would be required to the rural deployment rule in the West, says Industry Canada. Even though Carrier B didn’t acquire any spectrum, it would be required to follow the rural deployment condition of licence because it “has access to two blocks of spectrum (through its association with Carrier A) in the East.”
The department notes that where parties have pooled their spectrum giving the other control over the spectrum, a subordinate licence will be required. In the case where the entities are integrating the use of the spectrum within a Multi-Operator Core Network (MOCN), “a subordinate licence may be required.”
Long story short? Be careful to whom you speak, if you`re in on the auction this November.
