Questions about the auction | ACMA

Questions about the auction

The ACMA welcomes questions from stakeholders about the 1800 MHz band auction. All correspondence is subject to the strict probity arrangements we have in place for the auction, which are designed to ensure it is conducted in a fair and impartial manner.

Generally responses to any auction-related queries will be available to all stakeholders by publishing them here without attribution.

Stakeholders who consider that the ACMA’s response should not be published (for confidentiality reasons) should notify the ACMA when submitting their query. Any such claims will be considered on a case-by-case basis.

This list of questions is updated from time to time. The last update was 29 September 2015.

Withdrawal penalties

In the following scenario, Bidder A bids for and was winning on a lot which had a reserve price of $191,000 and if had then raised its bid to $434,000.  Bidder A then withdrew that bid and in the next round it reverted to the next highest bid which happened to be $241,000 (with the ACMA taken to be the high bidder). Therefore Bidder A’s final penalty of 10% of the withdrawn high bid of $43,400.

A couple of rounds later Bidder B bid for and was winning on this same lot at the round price of $253,000, which did not meet the withdrawn price. Bidder B will now become eligible for a withdrawal penalty of $181,000. This is outlined in Table 1.

Is this correct. That is, the high bid withdrawal penalty is not reduced even if there is a subsequent bid on the lot has increased?

Table 1 - Scenario

Round

Bidder A

Bidder B

ACMA

Provisional Bidder A penalty

X

434K

 

 

 

X +1

W

 

241K

43.4K

X + 4

 

253K

 

181K

X + 5

 

253K

 

181K

Final

 

253K

 

181K

 

Answer: The withdrawal penalties outlined in the allocation determination are applicable for the 1800 MHz band auction. The calculation of withdrawal penalties from any previous auctions, whilst helpful in establishing guidelines, are no longer considered appropriate. The ACMA has studied SMRA auction rules around the world and found differing approaches to withdrawal penalties. Penalties have depended on the circumstances surrounding each particular auction. For example whether the use of reserve prices has been used as a benchmark for the penalty, any limit on the number of bid withdrawals and the likelihood of subsequent auctions for unsold lots.

The ACMA has designed the withdrawal penalties for the 1800 MHz band auction to provide bidders some flexibility in bidding strategies and enable them to change strategies if required. That is, bidders are able, if changing bidding strategies, to withdraw bids without an excessive penalty. However, the need for flexibility must be balanced by a withdrawal penalty that is sufficient to serve as a deterrent to bidders gaming and impacting on the efficiency of the auction. In addition the withdrawal penalty calculation must be relatively simple to enable bidders to establish the level of their potential withdrawal penalties during the auction.

The 10% withdrawal penalty only applies if the lot remains unallocated at the end of the auction. The ACMA considers that it is not ‘over-recovering’ in this level of penalty, particularly as this lot still remains available for allocation. If the lot is allocated in the 1800 MHz band auction, the withdrawal penalty is the shortfall between the price paid by the winning bidder and the withdrawn bid.

Importantly, the withdrawal penalty is only finalised and applied once the auction is completed. Therefore, in the scenario outlined the withdrawal penalty has not increased as such – until the end of the auction it is only a provisional penalty. What has occurred in this instance is that the circumstances surrounding the lot have changed. At the end of the auction, where the lot is allocated for $253K, the ACMA no longer has the lot to allocate and accordingly the penalty reflects the fact that the community still benefits from the value that a reneging bidder has placed on the lot.

Note the answer above relates to the particular circumstance of this example.

Auction Forms

Is there a word version of the auction forms so applicants can type in responses rather than hand write them?

Answer:  As provided in the Digital Dividend auction, Form 1 (the application form) and Form 8 (the eligibility nomination form) are available on the ACMA website in writable PDF format.  

                http://www.acma.gov.au/Industry/Spectrum/Spectrum-projects/1800-MHz-band/applicant-information-package-1800-mhz-band-auction

All other forms will be required to handwritten.

If a person has signed a ‘confidentiality deed’ are they able to also act as a witness for another person who is signing a ‘confidentiality deed’?

Answer:  This is best explained by the following example

Employee A gives the ACMA a deed of confidentiality that is witnessed by Employee C.

Employee B gives the ACMA a deed of confidentiality that is witnessed by Employee A.

Both Employee A and Employee B have individual obligations under their respective deeds given to the ACMA, and both deeds are not dependent on the other. Therefore, both deeds can be treated as separate agreements, as Employee A has not given a deed on the basis of Employee B also giving a deed on the same terms.

 

Each bidder should consider its own circumstances and consider whether a witness should be a party to a deed. However this is a matter for the bidder and it should seek its own legal advice.

 

Jump bids

Do jump bids constrain a bidder’s ability to bid its own amount on individual lots in all rounds?   For example, in traditional SMRAs there is a general understanding that a bidder can bid any amount so long as it meets the minimum bid increment. Jump bids appear to remove the option to place a bid of $1,001 on a lot that has minimum bid increment requiring minimum bids of $1,000 and jump bid options of $1,200, $1,400 and $1,600.

 

Answer:  Yes, under paragraphs 1(2)(e) and 11(a) of Schedule 1 to the Determination, there is a specified list of bids from which bids may be made and if not made from that list, the bid will be invalid. The auction system will offer a ‘drop-down list’ of specified bids of which the bidder will chose one.

 

The Auction Guide notes that the auction system that will nominate up to eight jump bids for each lot. The example provided only shows how jump bids for one lot will be calculated.  Can the ACMA clarify how it envisions jump bids to work? That is;

 

  • Will the same approach to jump bids be taken in all rounds and for all lots?  
  • Will the same jump bid increment percentage and number of jump bids be provided for all lots?
  • On what basis will the jump bid increment percentage be determined and will bidders know the increment percentage with several rounds notice?  
  • Is the jump bid increment percentage something that remains at the auction manager’s discretion or subject to consultation during the auction?

Answer:  The rule for generating jump bids apply for all lots in a round. That is, in a particular round, the percentage of jump bid increment and the number of jump bids will be the same for all lots. Depending on how the auction progresses, the auction manager may change the jump bid increment percentage and number of jump bids from round to round. While there is no such requirement in the allocation determination, the auction manager will endeavour to give prior notice of the changes to the parameters for generating jump bids.

 

The Auction Guide notes that bidders can only bid at the amounts indicated in the auction system. Does this mean that if no jump bids are provided for the next round, bidders will only have the option to bid at the minimum bid increment for the lot as offered for that round?  

Answer:   Jump bids will be provided for each lot in each round during the auction.

 

Is it possible for the ACMA to provide registered applicants with a briefing on the concept of jump bids, including examples to explain how it works?

Answer:  If after reviewing these responses above, registered applicants still have questions on jump bids, the ACMA is happy to provide further clarification. However, it is important to note that the ACMA is not able to provide any information to assist in developing a bidding strategy.

 

Sample files

Can the ACMA provide a ‘result output file’ example so bidders are able to test reporting tools?

 

Answer: Sample files will be provided to registered bidders closer to the auction.

Registered bidders will also have the opportunity to familiarise themselves with the results files (and download the files) during mock auction. The results will be contained in a number of different files, each file in both csv and excel spreadsheet formats. The ACMA will not provide files before bidders have been registered.

 

Mock auctions

Is the ACMA able to confirm when it will hold mock auctions?

Answer: At this stage the ACMA is not able to confirm the exact date for the mock auction. However the ACMA will hold a mock auction for registered bidders after the eligibility deadline date of 9 November 2015. Although there are tight timeframes, the ACMA would endeavour to hold a mock auction at a reasonable time before the commencement of the auction anticipated to be 30 November.

Last updated: 15 April 2016