ATTACHMENT G
EXPLANATORY STATEMENT
Radiocommunications (Spectrum Licence Allocation — 2010–2025 MHz Band) Determination 2006
Made by the Australian Communications and Media Authority under sections 60 and 294 of the Radiocommunications Act 1992
Legislative Provisions
Section 60 of the Radiocommunications Act 1992 (the Act) provides that the Australian Communications and Media Authority (ACMA) must determine, in writing, the procedures to be applied in allocating spectrum licences by auction.
Section 294 of the Act confers powers on ACMA to determine spectrum access charges payable by licensees for issuing spectrum licences and the time when spectrum access charges are payable.
Purpose
The Radiocommunications (Spectrum Licence Allocation — 2010–2025 MHz Band) Determination 2006 (the Determination) sets out the details of the procedures to be applied in allocating the spectrum licences in this band. These licences will be allocated either by simultaneous multi-round auction or, in the event of insufficient demand for an auction, for a pre-determined price.
Background
In Australia there has been growing interest in the potential of wireless broadband technologies to deliver a range of services. Demand for higher speed internet access is one of the key drivers. Broadband wireless access (BWA) can provide higher data rates over greater distances and may be deployed more rapidly than current copper cable (DSL) technologies.
In response to this demand, on 4 April 2005, the Minister for Communications, Information Technology and the Arts declared the 2010–2025 MHz band in designated areas of Australia subject to re‑allocation under section 153B of the Act by issuing spectrum licences. The designated areas are defined in the Minister’s Radiocommunications (Spectrum Re‑allocation) Declaration No.1 of 2005 (the Re-allocation Declaration).
When the Minister’s Re-allocation Declaration was made, the 2010–2025 MHz band was principally used for high speed point-to-point data transmission by a major telecommunications carrier. The seven incumbents (with 24 assignments) hold apparatus licences and have been aware of the possible change to the spectrum’s designation since 2000.
In April 2006 the Minister amended the Re-allocation Declaration to change the New South Wales / Australian Capital Territory and South Queensland boundary slightly. In addition, the re-allocation deadline and re-allocation period were extended. ACMA wrote to all incumbents in May 2006 to inform them that the Minister had extended the re-allocation period to 31 December 2007.
The re-allocation is intended to enable the further expansion of BWA services by telecommunications providers in metropolitan and regional areas of Australia. This Determination is part of a set of legal instruments to give effect to the re-allocation of spectrum identified in the Re-allocation Declaration. The complete set of instruments required for this purpose is listed below:
- Radiocommunications (Spectrum Re‑allocation) Declaration No.1 of 2005 (as amended);
- Radiocommunications Spectrum Marketing Plan (2010–2025 MHz Band) 2006;
- Radiocommunications (Spectrum Licence Allocation — 2010–2025 MHz Band) Determination 2006;
- Radiocommunications (Unacceptable Levels of Interference — 2010–2025 MHz Band ) Determination 2006;
- Radiocommunications Advisory Guidelines (Managing Out-of-Band Interference from Frequency Adjacent Transmitters in Spectrum Licensed Receivers — 2010–2025 MHz Band) 2006; and
- Radiocommunications Advisory Guidelines (Protection of Apparatus licensed and Class licensed Receivers — 2010–2025 MHz Band) 2006.
Consultation
The Radiocommunications Spectrum Marketing Plan (2010–2025 MHz Band) 2006 (the Marketing Plan) is the instrument in the package that sets the high level requirements for the allocation of the spectrum licences under the Re-allocation Declaration. One of the requirements is to specify the process for allocating the licences and it states that the spectrum will be allocated via a simultaneous multi-round auction or a pre-determined price when there is insufficient demand for an auction. ACMA consulted publicly on the draft Marketing Plan and did not receive any objections to the allocation process.
The detailed design for the auction process is set out in the Determination. As the function of the Determination is to set the administrative procedures for the auction, it was not provided for public consultation. It has been developed based on Determinations from previous auctions and in line with current legal requirements.
The ACCC was consulted under section 60(14) of the Act in relation to the allocation process and specific information was not required for this allocation process.
The Minister advised ACMA of her decision not to use her powers under section 60(10) of the Act to impose competition limits on the auction.
The Office of Regulation Review (ORR) advised that a Regulation Impact Statement (RIS) was not required for the package of instruments that set the arrangements for the auction of the spectrum as listed in the Background. The ORR notes that a RIS was prepared and assessed as adequate by the ORR for the Minister’s decision to re-allocate this part of the spectrum by spectrum licence (ORR ID 7901).
Legal and other requirements
Determinations made under sections 60 and 294 of the Act are legislative instruments for the purposes of the Legislative Instruments Act 2003. All legal and other requirements for the making of this Determination have been met.
Attachments
Details of the Determination are in Attachment 1.
ATTACHMENT 1
Notes on sections
Part 1 Introduction
This Part deals with the formal and machinery provisions of the Determination. It also sets out the fundamental concepts for the auction, such as appointing an auction manager, the means by which ACMA provides information, how applicants must communicate with ACMA after the auction starts and details about the methods of payment that ACMA will accept in relation to the auction.
Section 1.1 Name of Determination
This section provides for the citation of the Determination.
Section 1.2 Commencement
This section provides for the Determination to commence on the day after registration.
Section 1.3 Purpose of Determination
This section states that the purpose of the Determination is to set out the procedures for allocating spectrum licences by auction and for a pre-determined price.
Section 1.4 Interpretation
This section defines terms used in this Determination. It further provides that:
● a reference to time is a reference to that time in the Australian Capital Territory;
● a reference to an amount of money is a reference to that amount in Australian currency; and
● the range of numbers that identifies a frequency band includes the higher, but not the lower, number.
This section also provides that any non-whole number is to be rounded to the nearest whole number and any number with a five in the first decimal place must be rounded up to the nearest whole number.
The section also deals with the concept of ‘active’ registered applicants. A registered applicant is defined as ‘active’ on a lot in a round where the starting bid applies and when the applicant makes a bid that equals or is greater than the starting bid. For any other round a registered applicant is considered to be active when the applicant makes a bid that equals or exceeds the minimum bid on the lot, or they hold the high bid on the lot from the previous round and do not withdraw the high bid in the current round.
Section 1.5 Approval of forms
This section provides that ACMA must approve certain forms of documents in writing. These documents are required for use as part of the application process set out in this Determination.
Section 1.6 Auction manager
This section provides that ACMA must, in writing, appoint an ‘auction manager’ to manage an auction conducted under this Determination.
Section 1.7 Ways in which ACMA gives information
This section lists the methods that ACMA may use to provide information in relation to any matter covered by this Determination.
The Determination usually refers to providing information by telephone and fax.
However, more specifically this section provides that ACMA may make information available to a registered applicant on the auction computer system or on the internet. Since the auction computer system is accessible from ACMA’s web site, this will be the most efficient method of providing information to the registered applicants.
Section 1.8 Communicating with ACMA
This section provides that communication with ACMA after the auction has started is by the fax number for giving notices as specified in the Application Information Package.
Section 1.9 Method of paying monies to ACMA
This section lists the payments and sets out how they are to be made to ACMA under the Determination.
Payments for the following purposes must be made to ACMA in Australian currency by the date required and in accordance with this Determination:
● an entry fee is imposed under section 2.1 and must be paid as part of the application process to become a registered applicant (see section 2.4);
● an eligibility payment determined by the applicant under section 2.6—calculated by adding up the lot ratings, for the lots which the applicant wishes to make bids on, and multiplying by the eligibility amount imposed under section 2.1;
● a performance payment, if required, under section 2.9—used as a deposit for any successful bids made by the registered applicant;
● any additional performance payment as required by section 4.26—where the applicant’s performance payment falls below 10% of the registered applicant’s total bids;
● 10% of the balance of the bid price as calculated in section 5.3—ACMA determines the outstanding money owing for successful bidders and requires an initial payment of 10% to show the applicant’s commitment to pay for and accept the licence;
● the remainder of the balance of the bid price as calculated in section 5.3—the remaining 90% after the 10 % has been paid;
● the balance of the pre-determined price as calculated in section 3.3(2)—the pre-determined price less the amount of eligibility payment made by the applicant.
The section also specifies that if payment is due by a specified date, it is sufficient if:
● for payment by bank cheque—payment is received by ACMA by the specified date; or
● for payment by bank transfer—the applicant does everything necessary to make the transfer by the specified date, the payment is received in ACMA’s nominated bank account within 5 working days after the specified date, and the applicant gives ACMA evidence that the transfer has been made by the specified date.
It is noted that if the amount is not received by ACMA by the specified date or the allowable time frame then the person’s application ceases to have effect and the person is not entitled to participate in the auction or to be allocated a licence.
This section further states that a payment will not be considered to have been made to ACMA unless the full amount of the payment (allowing for any applicable bank fees or charges and any government duties) is received by ACMA
Part 2 Preparing for the auction
Part 2 sets out ACMA’s and the applicants’ requirements that must be met before an auction can start.
Division 1A Definitions for Part 2
Division 1A provides definitions for activity target and eligibility.
Section 2.1A Definitions
This section defines the terms activity target and eligibility for this Part.
Activity target is a registered applicant’s eligibility for that round multiplied by the eligibility percentage for that stage. The applicant’s bidding activity must meet or exceed the activity target value calculated for that round, or the applicant will lose eligibility for the next round.
A registered applicant’s eligibility means the applicant’s initial eligibility as varied (if at all) during the auction—refer to section 2.6 for an explanation of initial eligibility.
Division 1 Application and registration
Division 1 sets out the processes, and responsibilities of ACMA, in relation to applicant registration and the requirements on persons applying to register to participate in the auction.
Section 2.1 Entry fee and eligibility payment
This section provides that ACMA must set an entry fee and other amounts for the auction, before it publishes a notice inviting applications for an auction. The fee and the other amounts are to be paid before the auction starts.
Section 2.2 Publication of notice by ACMA
This section provides that before holding an auction, ACMA must publish a notice on its website. The information that must be included in the notice is listed. It requires that if a detail mentioned in the notice changes, ACMA must publish another notice with the changes on its website.
The section further provides ACMA may publish these notices and other information about auctions in other ways, in addition to the website.
Section 2.3 Application Information Package
This section specifies the information and documents the Application Information Package must contain, including the instruments, application documents and details necessary to making an application.
Section 2.4 Applications
This section explains that a person wanting to obtain a spectrum licence under this Determination must register with ACMA and pay the entry fee in accordance with section 1.9.
Section 2.5 Lodging of application documents
This section sets out when and how an application must be lodged with ACMA. It also specifies how ACMA must confirm receipt of the application.
Section 2.6 Initial eligibility
This section explains the requirements related to the applicant providing their initial eligibility.
Initial eligibility is nominated by the applicant before the auction starts. On their application, the applicant nominates the lots (the frequency bands and geographic areas) on which they are interested in making bids. Each lot has a lot rating or relative value associated with it to provide a basis of comparison with other lots. The applicant calculates their initial eligibility by adding up the lot ratings of their nominated lots.
Initial eligibility provides an indication by the applicant of the extent to which they are interested in the lots on offer. It will show whether the applicant is interested in a specific area and band or a number of areas and bands.
Section 2.7 Initial eligibility payment
This section sets out the requirements for making the initial eligibility payment and, if required (see section 2.9), the provision of a completed Deed of Financial Security or a performance payment.
Section 2.8 Calculating the eligibility payment
This section explains how to calculate the applicant’s eligibility payment. The applicant’s initial eligibility is multiplied by the eligibility amount set by ACMA under paragraph 2.1(b).
Section 2.9 Deed of Financial Security or performance payment
This section explains that all applicants must give ACMA either a Deed of Financial Security or a performance payment unless they satisfy ACMA that they fall within certain categories of a government organisations or they are an Australian company operating as a not for profit business.
It sets out how to calculate the performance payment or value for the Deed of Financial Security and provides the requirements for executing the Deed of Financial Security.
The amount for the Deed of Financial Security or performance payment must be at least the initial eligibility nominated by the applicant multiplied by the financial security amount set by ACMA under paragraph 2.1 (c).
The performance payment will be held by the Commonwealth and will be used to meet any undischarged financial liability of an applicant to ACMA under the Determination.
The promisors under the Deed undertake to pay ACMA, on demand, up to the value of the Deed.
At the conclusion of the auction, and after all financial obligations to ACMA have been discharged, Deeds of Financial Security will be discharged by letter, or the performance payment will be refunded to the extent of any balance not required to meet any financial obligations to ACMA.
Section 2.10 Lodging of power of attorney
This section provides that if a Deed of Financial Security is executed under a power of attorney for a corporation, a copy of the power of attorney must accompany the Deed when given to ACMA.
Section 2.11 Failure to comply with requirements concerning Original Documents and Deed of Financial Security
This section explains the consequences if an applicant fails to comply with the requirements concerning the lodging of the original documents that were faxed to ACMA (see section 2.5(2)) or ACMA believes the person giving the Deed of Financial Security does not comply with the requirements (see section 2.9(4)).
The section outlines that the applicant’s registration has no effect and what this means, along with an indication of which payments will be refunded.
Section 2.12 Performance payment
This section sets out how ACMA can use the performance payment to discharge any financial liability by the applicant under the Determination and at the end of the auction, ACMA must account to the applicant for the performance payment as set out in Part 5.
Section 2.13 Forfeiture and refund of secured monies
This section sets out certain situations where any applicant’s undischarged liability owed to ACMA in relation to the Determination will be met by their performance payment or by moneys paid, or to be paid, under their Deed of Financial Security.
Section 2.14 Withdrawal of applicant
This section provides the consequences for an applicant if they withdraw from the auction. The section outlines that the applicant’s registration has no effect, explains what this means and gives an indication of which payments will be refunded.
Section 2.15 Register of applicants
This section specifies that ACMA must maintain a register of applicants and that the register may be in electronic form. A list of details for each applicant that must be included in the register is provided. ACMA must keep these details free from disclosure until the end of the auction, unless otherwise required by the Determination or any other law.
Section 2.16 Registration of applicants
This section sets out the requirements that must be satisfied for ACMA to register an applicant (namely, the timely lodgment of required documents and the timely payment of required amounts). The section also provides the time frame in which ACMA must supply the applicant with specific information for participating in the auction.
Section 2.17 Publication of BINs
This section sets out the timing and the methods of publishing the bidder identification numbers (BINs) along with the information to be published.
Section 2.18 Preparation for bidding
This section provides that ACMA will give each applicant reasonable instruction and practice in using the auction computer system by which the auction (if any) will be conducted.
The auction computer system is available via the internet, so all applicants must be able to access the internet to bid. ACMA will provide instructions for access to the auction computer system and intends to provide an opportunity to participate in a trial auction to experience how an auction will operate.
The section states that each applicant must obtain an Australian Business Number Digital Signature Certificate (ABN-DSC, or digital certificate) before the start of the auction.
The digital certificate is a secure unique identifier that is consistent with the Commonwealth Gatekeeper strategy for business-to-government transactions. It will be used in the auction computer system to verify the bid instructions are from the registered applicant before accepting the instructions.
Division 2 Things ACMA and the auction manager must do before the auction
This Division provides that ACMA and the auction manager must set starting bids and increments along with a number of other items in relation to the structure and operation of the auction.
Section 2.19 Starting bids and increments
This section details certain values that are required for the start and during the auction. The values must be set by ACMA after the application closing date.
Every lot will be subject to a starting bid (or reserve price).
After the starting bid has been made on a lot, new bids on that lot will be subject to a minimum bid. This is the amount that a person wishing to bid on that lot must bid in order to make a valid bid in that round. This amount is calculated by adding an increment to the current high bid. The minimum bid value is updated for every lot and every round, based on a formula.
The formula for calculating the minimum bid on a lot in the next round takes the current high bid and adds the higher of:
● a percentage of the current high bid (increment of percentage of high bid); or
● a price per lot rating (increment of price per lot rating).
Section 2.20 Stages of auction, eligibility percentage, waivers and first round
This section explains when the auction manager must set a number of aspects in relation to the structure of the auction and inform all registered applicants.
Part 3 Allocation for a pre-determined price or a negotiated price
This Part sets out the details for when and how ACMA may allocate the spectrum licences for a pre-determined price (rather than by auction).
Section 3.1 Allocation for a pre-determined price without an auction
This section explains that ACMA may be able to allocate licences for lots without conducting an auction for a pre-determined price.
Section 3.2 ACMA must have regard to applicants’ requirements
This section sets out that ACMA must only have regard to certain information when deciding whether it may be able to allocate licences without an auction.
In their applications, applicants are required to list the lots on which they wish to bid. ACMA may consider allocating licences without conducting an auction if applicants identify interest in lots with little or no overlapping interest among the applicants’ nominated lots.
Section 3.3 The pre-determined price
This section specifies how to calculate the pre-determined price for a licence and the payment (namely, by adding up the starting bids for each lot).
Section 3.4 Offer of licence
This section specifies the manner in which ACMA will notify each applicant of the licence to be offered and lists the information that ACMA will provide.
This section also sets the time frame for the applicant to accept the offer and agree to pay the balance owing (seven days from the receipt of the offer).
Section 3.5 Payment of balance of pre-determined price
This section sets out how and by when the balance of the pre-determined price must be paid to ACMA.
Section 3.6 Allocation if some offers refused
This section provides a number of options for ACMA where an applicant does not accept a licence that has been offered to it. ACMA may withdraw all offers, may allocate spectrum by other methods, or may allocate the licences the offers for which were accepted and allocate the spectrum not accepted by other methods.
Section 3.7 Refunds if allocation process terminated
This section provides that the eligibility and refundable performance payments of all applicants are refundable if ACMA terminates the allocation process under an option in section 3.6.
Section 3.8 Default
This section sets out the consequences for an applicant, if they do not pay the balance of the pre-determined price for a licence in accordance with this Determination. An applicant will cease to be entitled to the licence and some of its payments will be forfeited.
PART 4 The auction
This Part describes the structure, process and rules of an auction.
Simultaneous multi-round auctions take place in a number of stages, each of which will comprise a number of rounds. The number of rounds in each stage is not fixed and bidding continues until the level of new bids decreases. Bidding is possible on all lots in all rounds. The auction manager will decide when the auction should move from one stage to the next, based on the overall level of bidding activity.
Each stage of the auction will require applicants to make active bids in each round on a higher percentage of their eligibility than the previous stage. Applicants will be told the number of stages for the auction and the activity percentage applying to each stage before the auction commences.
The auction continues from round to round until such time as a round passes, in the final stage, in which no new bid is made on any lot in that round, and no bidder exercises a waiver. Exercising a waiver allows the bidder to remain active without meeting its activity target in a round. The auction can also be brought to an end by the auction manager at a specified round (section 4.29(5) of the Determination.)
Each round has two discrete components, and these follow a schedule, which is published in advance for every round. There is:
● a bidding period, when bidders may lodge their bidding instructions; and
● a calculation period, when ACMA calculates the highest bid on every lot on offer, based on these bidding instructions, and makes results available. Bidders can review the results and consider their strategy for the next round.
After considering the results for one round, bidders bid again on their preferred lots or make a different set of bids in the next round.
Division 1A Definitions for Part 4
This Division provides the additional definitions for this Part.
Section 4.1A Definitions
This section provides definitions for a registered applicant’s activity target and their eligibility for a round in a stage during the auction.
Division 1 Auction arrangements
This Division provides the auction structure and process.
Section 4.1 Auction procedure
This section provides that an auction operates in a number of stages and each stage consists of a number of rounds.
The section specifies that the auction manger sets the date and time for the start of the first round.
Section 4.2 Rounds of an auction
This section describes the structure of each round and what is meant by the results for a round.
Section 4.3 Schedule for a round
This section sets out the details that must be included in the schedule for a round.
Section 4.4 Rounds on a day
This section sets out the number of rounds that can be conducted each working day.
Section 4.5 Recess days
This section specifies that the auction manager may declare a recess day and the requirements associated with this task.
Section 4.6 Auction manager may vary the length of the bidding period or results period
This section provides that the length of the bidding and results period for a round may be varied by the auction manager. The section also sets out the process the auction manager must follow before making any variation to these periods (for example, the applicants must be informed of, and be able to comment on, proposed variations).
Section 4.7 Movement to next stage of auction
This section provides that the auction manager may move the auction to the next stage. The section also sets out the process the auction manager must follow before moving to the next stage (for example, the applicants must be informed of, and be able to comment on, proposed variations).
Division 2 Bidding and taking part in the auction
This Division outlines the rules and how registered applicants can participate in the auction.
Section 4.8 Ways of taking part in the auction
This section specifies the means by which an applicant must take part in the auction, namely, by the auction computer system available on the internet. If there is an emergency, this section provides an alternative means to take part (by telephone).
Section 4.9 Electronic bidding procedure
This section sets out the bidding procedure for registered applicants to participate in the auction electronically and directs the reader to Schedule 1 where further details for the bid transmission and authentication are set out.
Section 4.10 Emergency telephone bidding procedure
If the registered applicant has problems accessing the auction computer system for a reason that ACMA considers is an emergency, or if certain applicant information has been compromised, then the auction manager will accept a bid instruction by telephone.
This section sets out the emergency telephone bidding procedure and adds that further details for the bid transmission and authentication are set out in Schedule 1.
Section 4.11 Identification of registered applicants
This section directs the reader to Schedule 1 for the identification requirements that all registered applicants must satisfy. In addition, they must provide any additional identification that the auction manager specifies.
Section 4.12 Starting and minimum bids
A starting bid is set for each lot before the auction starts. Each following round a minimum bid is set for each lot. The minimum bid is based on the high bid from the previous round. If no valid bids have been made, the starting bid remains as the minimum bid, otherwise the minimum bid will be calculated for the next round.
Setting a minimum bid for the next round encourages bidding to either continue at a certain rate or stall.
This section also sets out the situations where a starting bid is retained as the minimum bid for a lot in the next round and explains how a minimum bid is calculated for the next round where valid bids have been made on a lot for the round.
The section directs the reader to section 2.2 for how to work out the minimum bid if a bid for a lot is withdrawn.
This section also explains when bids are considered invalid and will not be accepted.
Section 4.13 Changing starting bids
This section provides that the Chair may change the starting bid amount on a lot at any time.
The section also sets out the process the Chair must follow before changing any starting bids (for example, the applicants must be informed of, and be able to comment on, proposed variations).
Section 4.14 Changing minimum bids
This section gives the auction manger the right to change the increment amounts under section 2.19 to vary the minimum bid on a lot at any time. A reason for this might be that the auction is slowing down and it may allow the auction to continue at a different bidding rate with the effect of encouraging bidding.
The process that the auction manager must follow before changing any minimum bid is set out in this section (for example, the applicants must be informed of, and be able to comment on, proposed variations).
Section 4.15 Automatic re-bidding
This section outlines that the auction computer system provides a facility for automatic re-bidding. This section explains how automatic re-bidding works and the high bid is determined when one or more applicants make automatic re-bids on a lot in a round. This facility is provided to speed the auction process.
In simple terms, a person may nominate to automatically re-bid on a lot. They may do this so that if another bidder also bids on that lot, or makes a higher bid on that lot, they can be sure to counter that bid, up to a limit which they nominate. There is no obligation on any applicant to use the automatic re-bid facility. Applicants using the facility, however, may speed the auction along because it effectively allows a number of bidding actions on a lot to be compressed into a single round.
Automatic re-bids are calculated to raise the high bid value on a lot by one bid increment at a time, up to a limit set by each bidder nominating to automatically re-bid (the automatic re-bid limit).
To use the automatic re-bid facility, applicants will nominate an automatic re-bid limit for each of the lots they want to win. The automatic re-bid limit must be greater than the minimum bid set by ACMA for the lot. It can be as far over the minimum bid as the applicant is prepared to risk.
This section restricts a registered applicant from making an automatic re-bid on a lot in a round unless the applicant has made a bid on the lot in that round or the applicant is the high bidder on that lot from the previous round.
Section 4.16 All lots on offer simultaneously
This section provides that all lots on offer at the auction will be available for bidding in each round of the auction.
This style of auction allows participants to bid simultaneously on any or all of the lots on offer in each round of the auction. It allows flexibility when lots are complimentary or substitutable for the intended business purpose. For example, a simultaneous multi-round auction allows individual lots to be aggregated to form a national network of 5 or 10 MHz, or a 15 MHz licence for a geographic area.
Section 4.17 General rules about bidding
The rules in this section determine which bid is the high bid on the round when two or more identical high bids are made on the same lot and provide that non-registered applicant’s bids will be ignored.
Following the publication of the results for a round a registered applicant must seriously consider their bidding instruction in the following round as they are limited to making only one bidding instruction in a round. In addition, they must ensure their bidding activity is restricted to between their maximum and minimum levels set by their eligibility cap and activity target.
Other rules include restrictions on an applicant’s bidding and identification of the arbiter (namely, the auction manager) when a bid is disputed.
Section 4.18 Eligibility bidding cap
This section provides the rules for how the bids are processed to ensure an applicant’s eligibility is not exceeded.
This section restricts a registered applicant from making bids in any round exceeding its eligibility at the time of the bid. The applicant’s eligibility at the time of the bid will either be its initial eligibility as nominated in its application form or its reduced eligibility as calculated during the auction by ACMA in accordance with section 4.20
An applicant may bid on any lot or any combination of lots, provided that the total of the lot ratings of the lots on which they bid never exceeds its eligibility. However, bidders are not restricted to bidding on the particular lots that they considered when nominating their eligibility for the application form.
ACMA’s web-based auction interface provides information to bidders during the auction to assist them to manage their bidding within this limit.
Section 4.19 Bidding activity targets
To ensure an applicant continues to make serious bids, section 4.19 provides that unless a registered applicant exercises a waiver in the round, it must bid so the total lot ratings on which it is bidding must be equal to or greater than its activity target for the round.
A registered applicant’s activity target during a round in a stage means the figure obtained by multiplying the amount of the registered applicant’s eligibility for that round by the eligibility percentage fixed by the auction manager for that stage under paragraph 2.20 (b).
To prevent the auction from stalling, bidders will have to be active on lots with a lot rating that exceeds the relevant activity target set by the auction manager for the stage in which they are bidding. ‘Active’ means they must either:
● be recorded as the highest bidder on a lot in the previous round’s results and not withdraw that bid in the current round; or
● make a new valid bid on a lot (which need not be the highest bid made during the round) in the current round.
For new bids made in a round, any valid bid will count, not just those bids that are the highest for the round.
Section 4.20 Loss of eligibility
This section sets out how a registered applicant’s eligibility may be reduced for the next round if it does not meet its activity target and does not exercise a waiver for the round.
The section provides the formula for calculating the new reduced eligibility for the next round and performs an example to demonstrate the effect.
This section restricts the registered applicant, who has had its eligibility reduced, from making bids in any round exceeding its reduced eligibility in all future rounds.
Bidders not complying with activity requirements will have their eligibility for licences reduced unless they exercise a waiver. Bidders who lose eligibility for under-activity will, in future rounds, only be able to bid in accordance with their reduced eligibility level. Once lost, eligibility cannot be recovered.
ACMA’s web-based auction interface incorporates a facility to give bidders a running total of their activity during the auction. The system provides a warning notification if a bid instruction does not contain enough activity to meet the bidder’s current activity target.
Section 4.21 Waiver
In paragraph 2.20 (c) the auction manager sets a number of waivers for each applicant for the auction. Exercising a waiver avoids losing eligibility for that round.
This section sets out when an applicant or the auction manager may exercise waivers in relation to the applicant and how waivers are considered an alternative to making bids or meeting the applicant’s activity target.
Section 4.22 Withdrawal of bids
This form of auction allows bidders to change their bidding strategies and the lots they hope to win. To do this they may need to withdraw their high bids on some lots. An applicant is only allowed to withdraw a bid if it was the high bid of the previous round.
This section sets out how the new high bid is determined when the old high bid is withdrawn and explains that an applicant may lose eligibility by withdrawing a bid.
This section also describes the information that is provided in the results for the round when a bid is withdrawn and no other applicant makes a bid during the round.
Section 4.23 Loss of eligibility on withdrawal
Section 4.23 specifies that by withdrawing a bid the registered applicant is not considered active on that lot and may lose eligibility.
Section 4.24 Withdrawal penalty
This section sets out when and how a registered applicant is determined to be liable for the withdrawal penalty. The section goes on to outline how the withdrawal penalties are taken from the payments made to ACMA before the start of the auction.
To discourage bidders making frivolous bids and then withdrawing them, each bid withdrawal may be subject to a bid withdrawal penalty.
The penalty works like this: a “bid” is like a promise of a certain amount of money for the lot. If the bid is withdrawn, and the lot is ultimately sold for less than that bid, the ‘promise’ is broken.
Unless a lot is eventually sold for more than a withdrawn bid, a person who withdraws a bid will always be liable to ACMA for at least the difference between the withdrawn bid and the subsequent winning bid, and in some circumstances may be liable for as much as the whole amount of the withdrawn bid (if there is no subsequent winning bid). Applicants who have incurred a withdrawal penalty will be informed of their obligations at the end of the auction.
Section 4.25 Suspension of an applicant
This section provides the circumstances in which ACMA may suspend a registered applicant’s participation (if ACMA considers that certain information has been compromised) and requires the auction manager to inform the applicant of the period and reason for their suspension.
Section 4.26 Further Deed of Financial Security or additional performance payment
This section sets out the circumstances when ACMA must tell the applicant to provide a further Deed of Financial Security or an additional performance payment to extend their security for the auction. It also details how ACMA must notify the applicant of this requirement.
The section outlines two scenarios where a registered applicant decides to extend their security by Deed of Financial Security and specifies the time by which the Deed must be given to ACMA.
This section also outlines two scenarios for when a registered applicant chooses to extend their security by a performance payment and nominates the time and method by which the payment must be made to ACMA.
The section goes on to specify how the amounts for the further Deed or additional payment are calculated.
The section explains the consequences for a registered applicant that fails to comply with ACMA’s notification and do not meet the extended security requirements.
If an applicant’s bidding takes the value of their high bids to more than ten times the value of the original performance payment or Deed of Financial Security held by ACMA since the start of the auction process, ACMA will issue a notice requiring the applicant to lodge an additional payment, or a new Deed of Financial Security, equal to the amount already held. The applicant must submit the additional payment or Deed within three working days of the date of the notice. If the applicant chooses not to make the payment or not to give the Deed, then the applicant will be excluded from participating further in the auction. All the applicant’s high bids will be treated as withdrawn bids and bid withdrawal penalties will be calculated for those withdrawn bids at the end of the auction. Bid withdrawal penalties will be deducted from the eligibility payment held.
To illustrate how this would work in practice, if an applicant had lodged a performance payment of $1 million, and in a round made bids that exceeded $10 million, ACMA would issue a notice to that client asking that they either pay another $1 million in performance payment, or provide an additional Deed of Financial Security for that amount. That would bring their total performance payments, or the total covered by the applicant’s Deeds of Financial Security, to $2 million. If at some later time in the auction, the same applicant’s bids exceeded $20 million, ACMA would issue another notice requiring deposit of a further $2 million, or the provision of a further Deed of Financial Security, bringing the total amounts held or secured to $4 million.
Through this process, an applicant’s performance payment on deposit (or Deed of Financial Security) with ACMA will always fall in the range of 10% to 20% of the value of their bids.
Section 4.27 Consequences of exclusion
This section sets out the consequences for an applicant if they are excluded from continuing to participate in the auction because they failed to extend their security.
The section explains which applicant’s payments are refundable taking into consideration any bid withdrawal penalties.
Division 3 Bringing the auction to an end
This Division outlines the ways in which the auction may come to an end.
Section 4.28 Suspension or cancellation of auction
This section gives ACMA or the auction manager the right to suspend or cancel an auction or a round of an auction at any time and provides a list of the circumstances where this right may be exercised.
The section provides ACMA or the auction manager with two options for the way forward if the auction is suspended (namely, resumption of the auction or cancellation of the auction).
The section sets out the refunds that apply if the auction is cancelled and the options available to ACMA to allocate the lots.
Section 4.29 Closing of auction
This section sets out the requirements in relation to the closing of the auction.
The section describes the conditions where an auction may be closed and provides clarification on specific actions that do not constitute as bidder activity for the last round.
The section also sets out the auction manager’s actions to be performed before declaring the auction to be closing and how the high bid and successful applicant for lot is determined for the final round.
Part 5 After the auction
This Part provides the details for the administration once the auction has closed.
Section 5.1 Allocation of licence to highest bidder
This section describes how the successful applicant is determined for each lot and outlines what they must do to retain their entitlement to a particular lot. The section states when the licence will take effect (1 January 2008).
Section 5.2 Calculation of balance of bid price
This section sets out how the balance of bid price is determined for the successful applicant. It takes into account the final bid, withdrawal penalties (if any), and the eligibility payment.
Section 5.3 Payment of balance of bid price
This section specifies the method ACMA must use to notify each successful applicant of the balance of the bid price and sets out the manner in which the payments must be made to ACMA. The section also covers what ACMA must do in a situation where an erroneous notice is sent to a successful applicant and the payment scenarios in this event.
Section 5.4 Default by successful applicant
This section outlines ACMA’s rights and the consequences for the successful applicant if they default on the payments for the balance of bid price. If the successful applicant defaults, it ceases to be entitled to the licence, and its highest bids will be treated as withdrawn (possibly incurring withdrawal penalties).
Section 5.5 Allocation of defaulted lots
This section sets out how defaulted lots will be treated and that ACMA may offer them for allocation at another time.
Section 5.6 Refunds to unsuccessful applicants
This section specifies that ACMA must provide a refund to an unsuccessful applicant and outlines how to determine the value of the refund in relation to the auction.
Part 6 Miscellaneous
This Part contains miscellaneous provisions. It outlines what can happen to unallocated lots, further information ACMA may obtain from applicants, the information ACMA may provide publicly and the ownership of original documents provided to ACMA. This Part also deals with some issues of liability, recovery of damages and refunds under a Deed of Financial Security.
Section 6.1 Unallocated lots
This section lists the options available to ACMA to allocate unallocated lots from the auction. ACMA may conduct another auction or a tender process, or may allocate lots for a pre-determined or negotiated price.
Section 6.2 Liability of ACMA
This section excludes ACMA’s liability to applicants in relation to the allocation procedures set out under this Determination.
Section 6.3 Recovery of damages by ACMA
This section provides that nothing in the Determination limits or excludes ACMA’s rights against any person, including any rights arising under a Deed of Financial Security or Deed of Acknowledgment.
Section 6.4 ACMA may obtain information from applicants
This section allows ACMA to obtain relevant information or documents from an applicant in relation to the Determination.
Section 6.5 Giving of information by ACMA
This section provides ACMA with the right to publish certain information relating to licences before they have been allocated, such as the highest final bid price.
Section 6.6 Information provided by applicant
This section provides that any original document (excluding those establishing an individual’s identity) provided to ACMA for the purposes of this Determination becomes the property of the Commonwealth. In addition, ACMA may use information provided to it by the applicant for ACMA’s purposes.
Section 6.7 Refunds of payments under Deed of Financial Security
This section sets out where an amount paid under a Deed of Financial Security is refundable under this Determination; ACMA must pay that amount to the person who gave ACMA the Deed under which the payment was made.
Schedule 1 Procedures for bid transmission (including automatic re-bids and withdrawal of bids) and authentication
This Schedule describes the procedures to ensure that the bidding instructions for the auction from a registered applicant have actually come from that applicant.
Item 1 Connection to the auction computer system
Item 1 sets out the requirements for the applicant to access ACMA’s auction website and connect to the auction computer system. It also lists the transactions the applicant can perform while connected to the auction computer system.
Item 2 Encryption of data for transmission
Item 2 describes how ACMA secure the privacy and integrity of the registered applicant’s bidding instructions during transmission.
Item 3 Bidding instructions
This item provides an overview of the transaction process for making a secure electronic bidding instruction. This covers the registered applicant’s interaction with entering bid instructions through to the auction computer system issuing the applicant a receipt of the instruction.
Item 4 How to get an ABN-DSC
This item explains which Certification Authorities (CA) providing digital certificates will be accepted by ACMA’s auction system and directs applicants to a website that lists these CAs. The item specifies that ACMA is not responsible for the management of the digital certificate and it is up to the applicant to ensure its security and use by authorised persons in their organisation.
Item 5 Emergency one-time transaction code keys
In case of an emergency where the applicant is unable to access the auction computer system via the internet, an applicant is provided with an alternative method for giving bid instructions, by telephone. Before the auction starts, transaction code keys are provided by ACMA to the applicant to use to verify their identity as a registered applicant when placing bid instructions by telephone.
This item gives an example of what ACMA may consider an emergency and describes the format of the transaction code keys.
Item 6 Using Transaction Code Keys
This item explains how the transaction code keys are used to identify an applicant bidding by telephone and describes the actions that occur when the transaction code keys are used incorrectly or when the registered applicant notifies ACMA that their transaction code keys have been compromised.