IFC 46/2011 - Digital dividend auction - Fees and deposits | ACMA

IFC 46/2011 - Digital dividend auction - Fees and deposits

Digital dividend auction - Fees and deposits

The purpose of this informal engagement is to seek information and views from stakeholders (particularly prospective auction participants) as to the most appropriate fee and deposit arrangements for the digital dividend auction.

The feedback provided by stakeholders during this informal process will help inform the ACMA's draft allocation determination for the digital dividend auction.

To assist stakeholders in commenting on this issue, the ACMA has included an outline of its- preliminary proposed approach to fees and deposits for this auction.

Please note the approach presented provides an initial idea of the ACMA's thinking on this issue. This represents one of the possible ways in setting fee and deposit arrangements, as the basis for discussion and feedback from stakeholders. Views expressed here are the provisional views of ACMA staff members only. They do not necessarily reflect the opinions of the ACMA as a whole or commit it to a particular course of action.

Preliminary proposed approach to fees and deposits

There are various fees and deposits which may apply to applicants seeking to participate in the digital dividend auction. The ACMA is proposing three separate types of payments:

  • application fee
  • initial deposit
  • additional deposits (if required)

Application fee

The ACMA is proposing that all applicants will be required to pay an initial non-refundable application fee in order to apply to participate in the auction. The application fee would be set at a relatively moderate amount and the ACMA is currently considering a figure somewhere in the range of $25,000-$75,000. This fee would be payable upon application, in the form of either a cheque or an Electronic Funds Transfer (EFT).

In previous spectrum auctions the ACMA has required applicants to submit a non-refundable entry fee ranging from $10,000 to $50,000.

Initial deposit

The ACMA is proposing that all applicants will be required to pay an initial deposit in order to participate in the auction. Applicants would be required to pay a single deposit in the form of an Electronic Funds Transfer (EFT) or a deed of financial security. The sum of the initial deposit will be directly related to an applicant's lot selection. This payment would most likely need to be made after the announcement of reserve prices, which is expected to be 3-6 weeks prior to the auction.

Unlike previous auctions which have required an applicant to make two separate payments - an eligibility payment and a financial security payment - the ACMA's current thinking is to require an applicant to submit only one deposit-type payment prior to the auction.

The amount of the initial deposit will likely be related to an applicant's lot selection. Each lot will be attributed a relative value. The sum of the initial deposit will be calculated by adding up all of the values for lots an applicant wishes to acquire at auction. The value of each lot will be the reserve price set by the ACMA. The ACMA's preliminary view is that an applicant's initial deposit would cover 100% of the reserve price for all of the lots they nominate.

Additional deposits (if required)

The ACMA is considering whether additional deposits may be required during the auction. These deposits may be required from an applicant if the value of lots that an applicant placed bids for increase beyond the amount of the initial deposit secured by the ACMA.

The ACMA is considering whether additional deposits should be required if an applicant's initial deposit falls below a set percentage of its highest value package bid (for example somewhere in the range of 25-75%).

If additional deposits were to be required during the auction, the ACMA would require payment in the form of either an EFT or deed of financial security.

Previous ACMA spectrum auctions have required a further financial security payment to be submitted by an applicant where the sum of their initial deposit fell below 10% of their highest bid placed at auction.

Timing of payments

As a guide, the following diagram sets out the ACMA's preliminary proposal regarding fees and deposits, and provides indicative timings of when these payments would fall due.

Questions for stakeholder consideration

The ACMA is interested in hearing your views with regard to the proposed arrangements for fees and deposits.

The ACMA would welcome comment on any aspect of the proposed arrangements.

We would be particularly interested to know how well the arrangement would align with the corporate finance and governance practices of potential applicants.

If stakeholders are interested in providing a response to the ACMA on these matters, please submit an online response by email to majorspectrumallocations@acma.gov.au.

Last updated: 25 June 2015