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Auction format and auction procedures Rebecca Burdon


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Digital Dividend Auction Format

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Auction format and auction procedures Rebecca Burdon

  1. 1. Auction format andapproach toconsultation onauction proceduresRebecca BurdonPrincipal Economist, ACMA #TuneUp2011
  2. 2. #TuneUp2011 Outline • 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
  3. 3. #TuneUp2011 Reasons for choosing a CCA • 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
  4. 4. Auction format Allocation stage Yes Auction manager increases price in all categories with excess demand Excess Determines Primary rounds - demand amount ofApplication clock phase in any category? spectrum won by each bidder Supplementary round No – sealed bid round Determines Assignment stage – sealed bid round location in the band Auction ends #TuneUp2011
  5. 5. Primary rounds (clock phase) • 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 #TuneUp2011
  6. 6. Supplementary round • 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 #TuneUp2011
  7. 7. #TuneUp2011 End of Allocation stage • 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
  8. 8. #TuneUp2011 Assignment round • 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
  9. 9. Engagement timetable Pre-release of draft instruments Draft instruments released for formal consultation (late-Feb) NOV DEC JAN FEB 2011 2012Auction tune-up(4 Nov) One-day Overview Online engagement workshops (4 Nov) (mid-Dec – early Feb) (13 & 23 Jan) #TuneUp2011
  10. 10. Engagement timetable Pt 2: Engagement post-release of draft instruments Pt 3: Bidder engagement and training • Overview of draft instruments • Overview of final instruments • CCA auction system • CCA auction procedures • CCA auction procedures training (final) • Introduction to the auction • CCA auction system overview • Mock auctions system • Support materials Workshops Workshops Practical sessions MAR APR MAY JUN JUL AUG SEP OCT NOV 2012 Final allocationDraft allocation instruments instruments published Auctionreleased for comment process(late-Feb) Application Assessment Registration Auction registration #TuneUp2011