There are a number of major types of spectrum auctions used by international
spectrum regulators. These include:
Of the many types of auctions that exist, open ascending-bid auctions and
the simultaneous multi-round ascending auctions have generally been used by the
ACMA and its predecessors, the Australian Communications Authority (ACA) and
the Spectrum Management Agency (SMA). For future auctions, the ACMA will also
consider use of the combinatorial clock auction.
These formats reflect the process for conducting bidding during the auction.
The ACMA will choose the auction format that most suits a particular spectrum
allocation. Often, following a main auction, the ACMA will sell any remaining
lots at quarterly residual auctions until no further spectrum from the original
Open ascending-bid auctions
The open ascending-bid or English open-outcry auction is a method used by
auction houses such as Sotheby's or Christie's or in many suburban real estate
auctions. This form of auction is normally considered the most efficient for
allocating spectrum at market price where there is one or a small number of
lots within a band, none of which are substitutable or complementary for their
intended business use.
Under this model lots are auctioned sequentially: that is, lot 2 is offered
for bidding after lot 1 is sold or passed in, and so on for as many lots as
exist. Participants bid openly against one another for each lot, with each
successive bid higher than the previous one, sometimes by a specified
increment. When no participant is willing to bid further the bidder with the
highest offer wins if it equals or exceeds the starting price set by the ACMA.
Otherwise the lot is passed in.
Auctions are usually, but not necessarily, conducted face to face at an ACMA
venue, where the auctioneer accepts oral bids from registered bidders. The
starting price is disclosed to registered bidders before the auction and, if
pre-arranged, the auctioneer may accept telephone or online bids from those
bidders who cannot attend the ACMA venue on the day. Where the auction involves
residual lots of little individual value, the auction may be conducted entirely
Simultaneous multi-round ascending
The simultaneous multi-round ascending (SMRA) auction format is used when
there are many spectrum lots to be allocated together across a range of
different geographic areas and different band segments.
In this type of auction, all lots are simultaneously on offer over multiple
rounds of bidding. Bidders may bid on any lot or combination of lots in each
bidding round. At the end of each round high bids are disclosed and all bidders
can bid again in the next round to become the high bidder. In general, after a
round with no more bids, the bidders holding the high bids in the previous
round win the lots.
SMRA auctions were developed for use when there are spectrum lots that are
complementary or substitutable for the buyers' business purpose, as they allow
flexibility in bidding. For example, by using multiple rounds, a bidder can
gather information about the value of individual lots and can change strategy
by shifting the bidding to another combination if one becomes too expensive.
Ideally, a bidder will have a number of fall-back business cases to facilitate
changes or reductions in the geographic area or bandwidth sought. Because of
the complexity of bidding in this type of auction, it is usually conducted
online using special auction software.
Combinatorial clock auction
The Combinatorial clock auction (CCA) is a price clock-based auction format
used to sell multiple lots for different categories in a single process. It
provides bidders with the flexibility to bid on different combinations of lots.
The CCA format also creates incentives for bidders to bid their full value for
the lots. This format has been used successfully overseas.
The CCA format often comprises two stages, an allocation stage (with two
phases known as the primary and supplementary rounds) and an assignment stage.
The allocation stage determines how many lots each bidder wins in each
category. It is designed to promote price discovery and to provide an
opportunity for bidders to express their demand for all packages of
The primary rounds follow a clock format, where the "clock" is a price clock
that sets the price for lots in each category in each round. In each primary
round, bidders bid on a single package of lots by nominating the number of lots
in each category that they wish to buy at current round prices.
After the primary rounds, there is a second phase of bidding in the
allocation stage, referred to as the supplementary round. In this phase bidders
have the opportunity to make their best and final offer for all the different
combinations of lots they want, subject to certain constraints created by their
bids in the primary rounds.
Once the auction has identified the winners and how many lots they have
purchased in each category, the assignment stage determines which lots each
winning bidder will obtain. Due to the complexity of the process this auction
format is conducted online using specialised software.
More information on the CCA format can be found here.