Radiocommunications (Spectrum Licence Allocation-27GHz Band) Determination 2000

The  AUSTRALIAN  COMMUNICATIONS  AUTHORITY,  under

section 60 of the Radiocommunications Act 1992, determines the following procedures to be applied in allocating spectrum licences by auction and, in certain circumstances, at a pre-determined price.

Radiocommunications (Spectrum Licence Allocation-27GHz Band)

Determination 2000

made under the

Radiocommunications Act 1992

Contents

Page

Summary of Allocation System 5

Part 1 Introduction 7

1.           Name of determination 7
2.           Commencement 7
3.           Purpose of determination 7
4.           Definitions 7
5.            Approval of forms 11
6.           Auction manager 11
7.            Ways in which the ACA gives information 11
8.           Communicating with ACA 11

Page

1.           Method of payment of monies to ACA 12

Part 2 Preparing for the auction 14

Division 1  Application and registration 14

Page

Part 4 The auction 28

Division 1  Auction arrangements 28

1.           Auction procedure 28
2.           Rounds of an auction 28
3.           Schedule for a round 29
4.           Rounds on a day 29
5.           Recess days 30
6.           Auction manager may vary the length of the bidding or results

period 30

1.           Movement to next stage of auction 30

Division 2  Bidding and taking part in the auction 32

1.           Ways of taking part in the auction 32
2.           Electronic bidding procedure 32
3.       Emergency telephone bidding procedure 33
4.       Identification of registered applicants 34
5.       Starting and minimum bids 34
6.       Changing starting and minimum bids 35
7.        Automatic re-bidding 35
8.       All lots on offer simultaneously 37
9.       General rules about bidding 37
10.       Eligibility bidding cap 38
11.       Bidding activity targets 39
12.       Loss of eligibility 39
13.       Waiver 40
14.       Withdrawal of bids 41
15.       Loss of eligibility on withdrawal 41
16.       Withdrawal penalty 41
17.       Suspension of an applicant 43
18.       Payment of additional eligibility payment 43
19.       Consequences of exclusion 44

Division 3  Bringing the auction to an end 45

1.       Suspension or cancellation of auction 45
2.       Closing of auction 46

Part 5 After the auction

1.           Allocation of licence to highest bidder
2.           Calculation of balance of bid price
3.           Payment of balance of bid price
4.           Default by successful applicant
5.           Allocation of defaulted lots
6.           Refunds to unsuccessful applicants

Part 6 Miscellaneous

1.           Unsold lots
2.           Liability of ACA
3.           Recovery of damages by ACA
4.           Giving of information by ACA
5.           Information provided by applicant

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Schedule 1 Procedures for bid transmission (including automatic re-bids and withdrawal

of bids) and authentication 54

Summary of Allocation System

Note This summary is intended to give an overview of the allocation system. Readers who want to fully understand how the system works should study the entire determination in detail.

This determination makes provision for the allocation of parts of the spectrum between 26.5 GHz and 27.5 GHz throughout Australia that have been identified as being available for allocation under section 36 of the Radiocommunications Act 1992 (the Act). The ACA proposes to allocate spectrum licences by a simultaneous multiple round auction of spectrum allocation lots that then become the subject of spectrum licences. If applicants' needs in all areas can be met without going to auction, the licences will be offered for a pre-determined price. Details of the overall scheme for allocation and issue of spectrum licences are set out in the relevant Marketing Plan prepared by the ACA under section 39 or 39A of the Act, as applicable.

Each lot covers an area and a frequency band - for details, see the relevant Marketing Plan. Each lot has a lot rating reflecting its relative value, determined by the ACA. People wishing to bid are asked to nominate an aggregate amount of lot ratings for the lots they wish to acquire, and this will be regarded as their "eligibility" in the auction. People wishing to obtain a licence by this process must register, pay an entry fee and make a refundable proportional eligibility payment based on the eligibility they nominate. The eligibility payment is held against payment of bid withdrawal penalties as a means of discouraging applicants from abusing the auction process. An additional eligibility payment may also be required during the course of the auction if the amount of eligibility payment which has already been paid falls below 10 % of the total of high bids of an applicant.

The auction will be conducted electronically. Registered applicants may bid on any number of lots, in any combination, provided that their bidding activity does not exceed their eligibility. Applicants may nominate to be eligible for all lots (within the bidding limits), but they must make the necessary eligibility payment. Applicants interested in specific areas, or particular bands, need only make a sufficient eligibility payment to cover these.

Bidding will take place over several rounds with the results of each round being notified to registered applicants by the ACA. Registered applicants may withdraw bids during the round, but will forfeit some or all of their eligibility payment if the lot ultimately sells for less than the bid that was withdrawn.

Registered applicants will be subject to activity requirements that require them to be active on a percentage of their eligibility. This percentage increases in stages during the auction. Registered applicants not meeting the activity requirements will have their eligibility proportionally reduced.

At the end of the allocation process, if all necessary pre-conditions are fulfilled, the ACA will aggregate the lots into licences to be issued to the successful applicants.

Part 1 Introduction

1.1                      Name of determination

This determination is the Radiocommunications (Spectrum Licence Allocation-27GHz Band) Determination 2000.

1.2                      Commencement

This determination commences on 2000.

1.3                      Purpose of determination

This determination sets out the procedures for allocating spectrum licences:

(a)        by a simultaneous multiple round auction of spectrum allocation lots that then become the subject of spectrum licences; and

(b)        for a pre-determined price; and

(c)         in the 27 GHz band.

Note For paragraph 1.3 (b), see Part 3.

1.4                      Definitions

1.       In this determination, unless the contrary intention appears:

ACN or ARBN means the relevant registration numbers for a company or body under the Corporations Law.

Act means the Radiocommunications Act 1992.

activity target, for a registered applicant 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 percentage of eligibility fixed by the auction manager for that stage under paragraph 2.18 (b).

additional eligibility payment means an additional payment worked out under section 4.25.

application documents means a completed application form and a completed Deed of Acknowledgment.

application form means the document approved by the ACA under paragraph 1.5 (1) (a).

Applicant Information Package has the meaning given by section 2.3.

application closing date means the date and time mentioned as the date by which applications must be made in the notice published under subsection 2.2 (1).

area means the geographic area under the Marketing Plan.

auction means an auction held by the ACA in accordance with this determination to allocate spectrum lots.

auction centre means the auction centre located at the Canberra office of the ACA.

auction computer system means the computer system operated by the ACA for the purpose of an auction.

auction manager means the person appointed under section 1.6.

balance of the bid price means the amount worked out in accordance with section 5.2.

balance of the pre-determined price means the amount worked out in accordance with section 3.2.

bank transfer, for a payment, means making the payment by electronic or telegraphic transfer or by the real time gross settlement electronic payment system operated by the Reserve Bank of Australia.

bidder identification number means the number assigned to an applicant by the ACA under paragraph 2.14 (2) (a).

bidding instruction means:

1.         a bid on a lot; or
2.         an automatic re-bid on a lot; or
3.         a bid withdrawal on a lot; or
4.         the exercise of a waiver; or
5.         an instruction to the auction manager not to apply the automatic waiver.

Deed of Acknowledgment means the document approved by the ACA under paragraph 1.5 (1) (c).

Deed of Financial Security means the document approved by the ACA under paragraph 1.5 (1) (b).

eligibility, for a registered applicant, means the registered applicant's initial eligibility as varied during the auction.

eligibility payment means the eligibility payment worked out under section 2.7.

eligibility payment date means the date and time mentioned as the date by which eligibility payments must be made in the notice published under subsection 2.2 (1).

entry fee means the entry fee payable by an applicant.

high bid, for a round, means the highest bid made on the lot in the bidding round or the bid taken to be the high bid under subsection 4.14(4).

initial eligibility means:

1.            an applicant's initial eligibility nominated under subsection 2.5A (1); or
2.           if that eligibility is changed under subsection 2.5A (4), the changed eligibility.

lot means a part of the spectrum identified as a lot by the ACA in the Marketing Plan.

lot rating has the meaning given by the Marketing Plan.

Marketing Plan, for the auction of part of the spectrum, means the marketing plan prepared by the ACA for issuing spectrum licences in respect of that part of the spectrum.

Note Copies of the Marketing Plan are available from the ACA.

performance payment means monies lodged with the ACA under section 2.11.

pre-determined price, for a licence for 1 or more lots, means the price, determined under section 3.2, of the licence for the lot or lots.

register means the register of applicants maintained by the

ACA under section 2.13.

registered applicant means an applicant registered under section 2.14.

stage means a group of successive rounds of an auction to which the same percentage of eligibility, fixed under paragraph 2.18 (b), applies.

starting bid has the meaning given by subsection 2.17 (2).

successful applicant has the meaning given by section 5.1.

working day means a day that is not a Saturday, a Sunday or a public holiday in the Australian Capital Territory.

27 GHz band means the frequency band 26.5 GHz - 27.5 GHz.

Note The following terms, used in this determination, are defined in the Act and have the meanings given to them by that Act:

ACA

frequency band marketing plan

1.       In this determination:

spectrum spectrum licence.

1.         a reference to time is a reference to that time in the Australian Capital Territory; and
2.         a reference to an amount of money is a reference to that amount in Australian currency; and
3.         the range of numbers that identifies a frequency band includes the higher, but not the lower, number.

1.       If a number worked out in accordance with this determination is not a whole number:
   1.         the number is to be rounded to the nearest whole number; and
   2.         a number with 5 in the first decimal place is to be rounded up to the nearest whole number.
2.       A registered applicant is active on a lot in a round if:
   1.         for a round to which the starting bid applies - the applicant makes a bid that equals or exceeds the starting bid; and
   2.         for any other round:

1.         the applicant makes a bid that equals or exceeds the minimum bid on the lot worked out in accordance with section 4.12; or

1.         the applicant holds the high bid on the lot from the previous round and does not withdraw that high bid in the current round.

1.5                      Approval of forms

1.       The ACA must, by writing, approve the following documents:
   1.         an application form;
   2.         a Deed of Financial Security that complies with section 2.8;
   3.         a Deed of Acknowledgment, that includes a statement to the effect that the applicant agrees, if successful in respect of a lot, to pay the ACA the balance of the bid price for the lot as required by section 5.3.
2.        The ACA may approve more than 1 form of a document.

1.6                      Auction manager

The ACA must, by writing, appoint a person (the auction manager) to manage an auction.

1.7                      Ways in which the ACA gives information

1.        The ACA may give any information or documents to a person under this determination:
   1.         by letter; or
   2.         by telephone; or
   3.         by fax.
2.       The ACA may make information available to a person:
   1.         if the person is using the auction computer system - by making the information available on the system; or
   2.         by publishing the information on the internet.

1.8                      Communicating with ACA

Once an auction has started, a form or notice required to be given to the ACA in relation to the auction must be given by

fax to a number shown in the Applicant Information Package as the number for giving notices by fax.

Note Bidding must, except in emergencies, be done electronically: see section 4.8.

1.9                      Method of payment of monies to ACA

1.       All payments to the ACA must be made in Australian currency.
2.       Monies due to the ACA for the following purposes must be paid by the date required by this determination and in accordance with this determination:
   1.         entry fee;
   2.         eligibility payment;
   3.         any additional eligibility payment as required by section 4.25;
   4.         monies payable under a performance payment;
   5.         10% of the balance of the bid price;
   6.         the remainder of the balance of the bid price;
   7.         the balance of the pre-determined price.

1.       Monies due to the ACA for any of the purposes set out in subsection (2) must be paid:
   1.               by bank cheque; or
   2.              by bank transfer.
2.       If a payment is required to be made by a specific date, it is sufficient if, by that date, that either:
   1.         the applicant gives the ACA a bank cheque for the amount of the payment; or
   2.         if paying by bank transfer, the applicant:
      1.         does everything necessary to make the payment; and
      2.         gives the ACA evidence that the payment has been made.
3.       A payment by bank transfer must be paid into the ACA's bank account, details of which are as follows:
   1.         Bank-Reserve Bank of Australia;

1.         Branch - Canberra City;
2.         BSB number - 092-009;
3.         Account number- 92276-5;
4.         Account name - Australian Communications Authority Clearing Account.

1.       The payment must be received in the ACA's bank account within 5 working days after the required date. If it is not, the person's application ceases to have effect and the person is not entitled to take part in the auction.
2.       The applicant must pay all bank charges and Government duties imposed on a payment, and a payment will not be regarded as having been made unless the full amount net of those charges is received by the ACA.

Part 2 Preparing for the auction

Division 1 Application and registration

2.1                      Entry fee and eligibility payment

Before the ACA publishes a notice inviting applications for an auction, it must set:

(a)        the amount of the entry fee; and

(b)        the amount of the eligibility payment required for each unit of eligibility nominated by an applicant; and

(c)        the financial security amount for the auction.

2.2                       Publication of notice by ACA

1.       Before holding an auction, the ACA must publish a notice in a newspaper circulating nationally in Australia:
   1.         describing the parts of the spectrum to be auctioned; and
   2.         giving a brief description of the way the auction will be conducted; and
   3.         inviting people to apply to the ACA to take part in the auction; and
   4.         stating the date and time by which applications must be received by the ACA ( the application closing date); and
   5.         stating the date and time by which eligibility payments, and performance payments or Deeds of Financial Security, must be lodged with the ACA (the eligibility payment date); and

1.         stating that licences will be auctioned in accordance with this determination; and
2.         stating that further information (the Applicant Information Package) can be obtained from the ACA at the address given in the notice.

1.       If a matter mentioned in the notice changes, the ACA must publish another notice giving details of the change in a newspaper circulating nationally in Australia.

1.       The ACA may publish other information about auctions and may publish that information, and the notices mentioned in subsections (1) and (2), in other ways.

2.3                      Applicant Information Package

1.       The Applicant Information Package must contain the following information and documents:
   1.         if a part of the spectrum to be auctioned was the subject of a notice by the Minister under section 36 of the Act designating a part that has not previously been allocated - the notice;
   2.         if a part of the spectrum to be auctioned was the subject of a spectrum re-allocation declaration by the Minister under section 153B of the Act- the declaration;
   3.         a guide to the auction process;
   4.         the Marketing Plan;
   5.         this determination;
   6.         the application form, with instructions for completing and lodging the form;
   7.         the Deed of Financial Security;
   8.         information about the performance payment as an alternative to providing a Deed of Financial Security, if required;
   9.         the Deed of Acknowledgment;
   10.          the amount of the entry fee for the auction set by the ACA under paragraph 2.1 (a);
   11.         the amount of the eligibility payment required for each unit of eligibility nominated by the applicant set by the ACA under paragraph 2.1 (b);
       1.          the financial security amount set by the ACA under paragraph 2.l(c);

1.         the application closing date and time for making applications;
2.         the eligibility payment date and time for lodging eligibility payments, and performance payments or Deeds of Financial Security;
3.         the address of the auction centre.

1.       The Applicant Information Package may also contain other information about the auction.

2.4                      Applications

1.       A person who wants to obtain a spectrum licence under this determination must apply to the ACA for registration and pay the entry fee.
2.       The person must give the ACA the following documents (the

application documents):

1.         a completed application form;
2.         a completed Deed of Acknowledgment.

1.       The entry fee must be paid in accordance with section 1.9.

Note: By section 1.9, the entry fee may be paid by bank cheque or bank transfer. If paid by bank transfer, the applicant must give the ACA evidence that the payment has been made. If the payment is not in the ACA's bank account within 5 working days of the application date, the application ceases to have effect.

2.5                      Lodging of applications

1.       The application must be lodged with the ACA, at the auction centre, by the advertised time on the advertised application closing date.
2.       As soon as practicable after receiving the application, the ACA must confirm receipt by fax or by letter (if the ACA does not know the applicant's fax number) noting particulars of the applicant's:
   1.         name; and
   2.         address; and
   3.         ACN or ARBN; and
   4.         initial eligibility.

2.5 A Initial eligibility

(1)      An applicant must nominate its initial eligibility in the application form.

(2)      An applicant may nominate any eligibility the applicant wishes, as long as the amount does not exceed the total of the lot ratings of all lots on offer.

(3)      The ACA must ensure that the application form provides a guide to calculating initial eligibility.

(4)      If an applicant wishes to change the initial eligibility nominated in the application form, the applicant must give the ACA written notice of the applicant's new eligibility.

(5)      The notice must be given to the ACA by the advertised time on the advertised eligibility payment date.

(6)       An applicant cannot change its initial eligibility after the eligibility payment date.

Note I An applicant cannot bid so as to exceed its eligibility: see section 4.17 - but nothing prevents an applicant from obtaining eligibility to cover all lots up to the limits in subsection (2), as long as the applicant pays the appropriate eligibility payment.

Note 2 Subject to the limits set by section 4.17, an applicant may bid on any combination of lots. In particular, an applicant is not restricted to bidding only on the lots that relate to the areas the applicant nominated on the application form.

2.6                       Initial eligibility payment

(1)      An applicant must, by the advertised time on the advertised eligibility payment date:

(a)        pay the ACA an eligibility payment, worked out in accordance with section 2.7; and

(b)        either:

(i)            give the ACA a completed Deed of Financial Security, if required under section 2.8; or

(ii)          pay the ACA a performance payment.

(2)      The eligibility payment and performance payment must be paid in accordance with section 1.9.

Note: By section 1.9, the eligibility payment and performance payment may be paid by bank cheque or bank transfer. If paid by bank transfer, the applicant must give the ACA evidence that the payment has been made. If the payment is not in the ACA's bank account within 5 working days of the closing date, the application ceases to have effect.

(3)      Acceptance of a payment is not acceptance of the application documents.

2.7                       Calculating the eligibility payment

The amount of eligibility payment payable by an applicant is the amount in dollars worked out by multiplying the amount of the applicant's initial eligibility by the amount set by the ACA under paragraph 2.1 (b).

2.8                     Deed of Financial Security or performance payment

(1)      A person who wishes to be registered as an applicant must give the ACA a Deed of Financial Security or performance payment unless:

(a)        the applicant satisfies the ACA that it is an authority of the Commonwealth, a State or a Territory; or

(b)        the applicant satisfies the ACA that it is a subsidiary, within the meaning of the Corporations Law, of an authority of the Commonwealth, a State or a Territory; or

(c)        the ACA decides, under subsection (2), that the applicant need not give the ACA a Deed of Financial Security or performance payment.

(2)      If a company (other than a company incorporated outside Australia) satisfies the ACA that it does not carry on business for profit, the ACA:

(a)        may decide that the company need not give the ACA a Deed of Financial Security or a performance payment; and

(b)        must notify the company in writing of the decision as soon as practicable after making the decision.

(3)      Each person giving a Deed of Financial Security is bound by force of this determination to indemnify the ACA according to the terms of the Deed.

(4)      The amount secured under the Deed of Financial Security or the performance payment must be at least an amount in dollars calculated as the initial eligibility nominated by the applicant multiplied by the financial security amount set by the ACA under paragraph 2.1(c).

(5)      A person giving a Deed of Financial Security must be:

(a)        a bank licensed to operate in Australia; or

(b)        a person authorised to carry on business in Australia as an insurer under the Insurance Act 1973; or

(c)        if Part VII of that Act has not ceased to have effect - a Lloyd's underwriter.

(6)      For this section, a corporation makes a Deed of Financial Security by executing the Deed in accordance with section 127 of the Corporations Law.

2.9                       Lodging of power of attorney

If a Deed of Financial Security is made under a power of attorney for a corporation, the applicant must ensure that a copy of the power of attorney is lodged with the Deed.

2.1 O Failure to comply with requirements concerning Deed of Financial Security

(1)      This section applies if the ACA is not satisfied that the person giving the Deed is a person who complies with subsection 2.8 (5).

(2)      The applicant's registration is of no effect.

(3)      The applicant is excluded from taking part (or any further part) in the auction and from obtaining a spectrum licence.

(4)      The applicant's eligibility payment is refundable.

(5)      The applicant's entry fee is not refundable.

2.11                  Performance payment

1.       This section applies if an applicant gives the ACA a performance payment instead of a Deed of Financial Security.
2.       Performance payment monies lodged with the ACA may be dealt with in accordance with this determination as security for the timely discharge of the applicant's financial obligations to the ACA under this determination.

1.       If an applicant defaults in making payment for a successful bid, the performance payment is forfeited to the ACA to discharge the liability of the applicant in accordance with section 5.4.
2.       The ACA must account to the applicant for the application of monies referred to in subsection (2) after completion of the auction as set out in Part 5.

2.12                  Forfeiture and refund of secured monies

(1)      To meet any undischarged liability owed by an applicant to the ACA for the matters mentioned in subsection (2), monies will be forfeited to the ACA that:

(a)        are secured by the performance payment; or

(b)        are secured by, and paid to the ACA, under the Deed of Financial Security; or

(c)        have been paid by the promisor to the ACA under section 1.4 of the Deed of Financial Security.

(2)      For subsection (1), the matters include:

(a)        any act or omission by the applicant, its officers, employees, agents, volunteers, subcontractors or associates in connection with the applicant's participation m an allocation process conducted under this determination; or

(b)        any breach or default by the applicant of its obligations or warranties under the Deed of Acknowledgment, this determination, or both.

2.13                  Register of applicants

(1)      The ACA must maintain a register of applicants.

(2)      The register may be in electronic form.

(3)      For each applicant, the register must contain details of:

(a)        the name and address of the applicant; and

(b)        the applicant's telephone and fax numbers; and

(c)        the applicant's eligibility; and

(d)        the applicant's bidder identification number; and

(e)        if the applicant is a company or a registrable body- the applicant's ACN or ARBN.

(4)      The register may also contain any other information that the ACA considers necessary for the running of the auction.

(5)      The ACA must make the changes to the register that the ACA considers necessary or convenient as soon as practicable after:

(a)        an applicant tells the ACA of any change of name, address, or telephone or fax numbers; or

(b)        the ACA becomes aware that any information on the register is not correct.

(6)      Except as authorised by this determination, or as otherwise authorised by law, the ACA must ensure that any details about applicants are not disclosed until the auction is closed.

2.14                  Registration of applicants

(1)      The ACA must register an applicant only if:

(a)        the applicant has:

(i)        lodged completed application documents; and

(ii)        paid the entry fee in accordance with section 1.9; and

(iii)        paid the eligibility payment, and lodged a Deed of Financial Security or paid a performance payment, in accordance with section 1.9; and

(b)        if a Deed of Financial Security is required - the ACA is satisfied that the person who made the Deed is a person who complies with subsection 2.8 (5); and

(c)        if a performance payment is given instead of a Deed of Financial Security - the ACA is satisfied that the payment meets the ACA's requirements for this determination.

(2)      The ACA must assign to each registered applicant:

(a)        a bidder identification number (BIN); and

(b)        a password and encryption code keys linked to that BIN to use with the auction computer system; and

(c)        a set of transaction code keys to be used if the applicant needs to bid by telephone in an emergency.

(3)      At least 5 working days before the start of the auction, the ACA must, by writing, tell each registered applicant:

(a)        that the applicant has been registered; and

(b)        the applicant's initial eligibility, as shown on the register; and

(c)        the starting date and time of the first round of the auction; and

(d)        the ACA's telephone and fax numbers available for use by registered applicants; and

(e)        the applicant's bidder identification number, password and transaction code keys.

(4)      At least 5 working days before the start of the auction, the ACA must give each registered applicant the relevant encryption code keys.

2.15                  Publication of bidder identification numbers

(1)      After the closing date but at least 5 working days before the start of the auction, the ACA must publish a notice m a newspaper circulating in Australia setting out:

(a)        if the registered applicant 1s a company, for each company:

(i)        its name; and

(ii)        its registered address; and

(iii)        its ACN or ARBN; and

(b)        if the registered applicant is an individual, the name of the person, if the person has consented to the publication of his or her name; and

(c)        the initial eligibility of all registered applicants; and

(d)        the bidder identification numbers of all registered applicants.

(2)      After the notice has been published, the ACA may give out the information in the notice in other ways.

2.16                  Preparation for bidding

(1)      A registered applicant who bids must use software made available by the ACA.

Note See section 4.8 for ways of taking part in the auction.

(2)      The ACA will give each applicant:

(a)        assistance in installing the software for the auction computer system; and

(b)        training in using the software.

(3)      However, subsection (2) does not apply to an applicant who proposes to bid from outside Australia.

Note The ACA will make an auction guide available to each registered applicant to help the applicant take part in the auction: see paragraph 2.3 (1) (c).

Division 2 Things the auction manager must do before the auction

2.17                  Starting bids and increments

(1)      After the closing date, the ACA must set the following 3 amounts:

(a)        the starting price per lot rating;

(b)        the increment of price per lot rating;

(c)        the increment of percentage of high bid.

(2)      The starting bid for each lot is the amount worked out by multiplying the starting price per lot rating by the lot rating for the lot.

Note The auction manager may vary the amounts fixed under subsection 2.17 (1): see section 4.13.

2.18                  Stages of auction, eligibility percentage, waivers and first round

After the closing date, the auction manager must:

1.         fix the number of stages for the auction; and
2.         fix a percentage of eligibility as the percentage to be applied in calculating the activity target during each stage of the auction; and
3.         fix the number of waivers for each registered applicant, being the same number for all applicants; and
4.         set the amount of time allocated for the bidding period for each round of the auction; and
5.         set the amount of time allocated for the results period of each round of the auction; and
6.         set the schedule for the first and second rounds, based on the amounts referred to in paragraphs (d) and (e), taking into account the effect of section 4.4; and
7.         tell all registered applicants of these matters.

Part 3 Allocation for a pre-determined price

3.1                      Allocation for a pre-determined price without an auction

(1)      If, for each area available for allocation as described in the Marketing Plan, the total amount of bandwidth nominated for the area by all applicants for the area is equal to or less than the bandwidth available for that area, the ACA will offer to allocate licences for the area for a pre-determined price, as set out in this Part.

(2)      The offer of a licence will be conditional on payment of the pre-determined price.

3.2                      The pre-determined price

(1)      The pre-determined price for a licence is worked out as follows:

(a)        the ACA will identify each lot to be included in the licence;

(b)        the ACA will work out the starting bid for each lot;

(c)        the ACA will add up the starting bids for each lot.

Note The starting bid is worked out in accordance with subsection 2.17 (2).

(2)      The balance of the pre-determined price payable by an applicant is the pre-determined price less the amount of the eligibility payment paid by the applicant.

3.3                      Offer of licence

(1)       The ACA will offer each applicant a licence or licences for a bandwidth in the area nominated by the applicant.

(2)      The ACA will send each applicant, by receipted mail:

(a)        a draft of the licence or licences; and

(b)        a notice stating:

(i)        that the applicant is offered a licence or licences for a bandwidth in the area nominated by the applicant; and

(ii)        the amount of the pre-determined price payable for each licence and the total pre-determined price; and

(iii)        the amount of the eligibility payment made by the applicant and held by the ACA; and

· (iv) the balance of the pre-determined price payable for the licence or licences; and

(v) that the offer is conditional on each other applicant accepting the licence or licences offered or telling the ACA that it withdraws its application for a licence.

(3)      The licence or licences offered will cover the lots that include the bandwidth nominated by the applicant.

(4)      An applicant who wishes to accept the ACA's offer must do so by notifying the ACA in writing within 10 days of receiving the offer, agreeing to pay the balance of the pre-determined pnce.

(5)      If an applicant withdraws, the ACA may proceed to allocate licences to the other applicants in accordance with subsection (6).

(6)      If every applicant accepts the licence offered to the applicant, each applicant is entitled to be allocated the licence offered on payment of the balance of the pre-determined price in accordance with this determination.

(7)      The ACA must write to each applicant about each applicant's entitlement under subsection (6).

Note For the issue of licences, see section 62 of the Act

3.4                      Payment of balance of pre-determined price

The balance of the pre-determined price is payable:

1.         at the auction centre within 10 working days of the date of the letter sent to the applicant under subsection 3.3 (7); and
2.         in accordance with section 1.9.

3.5                      Withdrawal of offers

If an applicant refuses to accept the licence or licences offered, and does not withdraw its application:

1.         the offer of all other licences is taken to be withdrawn; and
2.         all lots will be allocated by auction, in accordance with this determination.

3.6                      Default

If an applicant does not pay the balance of the pre-determined price for a licence or licences in accordance with section 3.4:

1.         the applicant ceases to be entitled to be allocated the licence or licences; and
2.         the eligibility payment paid by the applicant is forfeited to the ACA; and
3.         the allocation of licences under this Part to other applicants is not affected; and
4.         the lots included in the licence or licences are to be treated as unsold lots under section 6.1.

Part 4 The auction

Division 1 Auction arrangements

4.1                       Auction procedure

(1)       An auction consists of a number of stages, made up of a number of rounds.

(2)      The first round of the auction starts on the date and time for that round set by the auction manager under paragraph 2.18 (f).

4.2                      Rounds of an auction

(1)      Each round of an auction is made up of the following periods and activities:

(a)        the bidding period - during which registered applicants make their bidding instructions;

(b)        the results period - during which the auction manager works out the high bids on each lot offered, using the auction computer system and then publishes, using the auction computer system and the internet, the results for the round.

Note For paragraph (a), the following provisions are relevant:

(a)        in the case of electronic bidding - a bid is taken to have been made when the bidding instruction file containing the bid has been authenticated by the ACA's auction computer system in accordance with paragraph 4.9 (1) (f);

(b)       in the case of emergency telephone bidding - a bid is taken to have been made when the bidding instruction file containing the bid has been authenticated by the ACA's auction computer system in accordance with paragraph 4.10 (1) (f);

(c)       in the case of withdrawing bids - withdrawal may be subject to

penalties, as set out in section 4.23.

Auction arrangements

Division 1

Section 4.4

(2)      In this section:

results, for a round, means the following results and information:

(a)        all bids rounded down to 4 significant digits and bid withdrawals made during the round;

(b)        the amount of the high bid on each lot at the end of the round, rounded down to 4 significant digits, and the bidder identification number of each high bidder;

(c)        the minimum bid on each lot for the next round;

(d)        the total value of high bids held by an applicant at the end of the round;

(e)        each registered applicant's eligibility at the beginning of the next round;

(f)        the schedule for the next round and the round after that, worked out from the times set by the auction manager under paragraphs 2.18 (d) and (e), having regard to the matters set out in section 4.4;

(g)        any other information necessary for the smooth running of the auction.

(3)      The information about a bid published under this section must not identify the automatic re-bid limit of any applicant unless that re-bid limit becomes a bid for the round.

4.3                       Schedule for a round

The schedule for a round must include:

1.         the date and time at which the round is to start and bidding opens; and
2.         the date and time when the bidding period ends and the results period starts; and
3.         the date and time when the results period ends and the round ends.

4.4                      Rounds on a day

(1)       Once the auction opens, there will be at least 1 round each working day unless the day is a recess day.

(2)      No round on a day will start before 9.00 am.

(3)     If, after the end of a round, the auction manager thinks that there will be time to finish another round before 5.30 pm on that day, he or she may decide to hold another round for that day.

4.5                      Recess days

(1)      The auction manager may declare a day to be a recess day.

(2)      Before declaring a recess day, the auction manager must give registered applicants an opportunity to comment on the proposed declaration and take into account any comments received.

(3)      If the auction manager decides to declare a day to be a recess day, the auction manager must tell all registered applicants of this.

4.6                       Auction manager may vary the length of the bidding or results period

(1)      The auction manager may vary the length of the bidding period or the results period of a round in the auction.

(2)      Before varying the length of time set for the bidding period or the results period of a round in the auction, the auction manager must give registered applicants an opportunity to comment on the proposed variation and take into account any comments received.

(3)     If the auction manager decides to vary the length of time set for the bidding period or the results period of a round in the auction, the auction manager must tell all registered applicants of this and specify the round when the change will take effect.

4.7                       Movement to next stage of auction

(1)      The auction manager may move the auction to the next stage.

(2)      Before moving the auction to the next stage, the auction manager must give registered applicants an opportunity to

Auction arrangements

Section 4.7

comment on a proposal to do this, and take into account any comments received.

(3)      If the auction manager decides to move to the next stage he or she must tell all registered applicants of this and specify the round when the change will take effect.

Division 2 Bidding and taking part in the auction

4.8                      Ways of taking part in the auction

(1)      The way for a registered applicant to take part in an auction is by electronic means.

(2)      A registered applicant taking part in an auction must use only the software made available by the ACA.

(3)      However, a registered applicant may take part by telephone if, because of what the ACA considers to be an emergency, the registered applicant is unable to take part electronically.

(4)      In this Division:

taking part means bidding, making automatic re-bids, withdrawing a bid, exercising a waiver or giving instructions not to exercise a waiver.

Note For general rules about bidding, see section 4.16; for rules on using a waiver of the activity rules, see section 4.20; and for withdrawing a bid, see section 4.21.

4.9                      Electronic bidding procedure

(1)      The procedure for taking part in the auction electronically is as follows:

(a)        a registered applicant must use the bidding software available from the ACA to prepare its bidding instruction file for the round;

(b)        the bidding instruction file will be encrypted for transmission and digitally signed using keys provided by the ACA to authenticate the file as having been created by the registered applicant;

(c)        the bidding software will permit the registered applicant to print out a report of the bidding instructions contained in the bidding instruction file before transmission;

(d)        the registered applicant must use the software to connect to the ACA's auction computer system;

(e)        the registered applicant must initiate a file transfer of the bidding instruction file to the ACA's auction computer system;

(f)        once the bidding instruction file is authenticated, the ACA's auction centre computer will generate a receipt file which will be returned to the registered applicant during the connection;

(g)        the ACA's auction computer system will process the bidding instructions contained in the bidding instruction file.

(2)      Details of procedures for bid transmission and authentication are set out in Schedule 1.

4.10                 Emergency telephone bidding procedure

(1)      The procedure for emergency telephone bidding is as follows:

(a)        a registered applicant must use the telephone number notified by the auction manager as the number for telephone bidding;

(b)        the registered applicant's call will be taken by an ACA operator;

(c)        the registered applicant must quote the bidder identification number and transaction code key, as described in Schedule 1, assigned to the applicant by the ACA;

(d)        the registered applicant must meet any additional identification requirements imposed by the ACA, as set out in Schedule 1;

(e)        the ACA must enter the bidding instructions, as directed by the registered applicant, into the auction computer system as soon as practicable;

(f)        the time that bidding instructions contained in a bidding instruction file are made is taken to be the time that the file was authenticated by the ACA's auction computer system;

(g)        the ACA must print out a confirmation of the bidding instructions from the auction computer system;

(h)        the ACA must send this to the registered applicant by fax, if the applicant has nominated a fax number;

(i)        the ACA must process the bidding instructions in the same way as it processes the bids made electronically by registered applicants.

(2)      Details of the procedures for bid transmission and authentication are set out in Schedule 1.

4.11                 Identification of registered applicants

(1)      A registered applicant must use its bidder identification number when bidding, and must comply with the other identification requirements set out in Schedule 1.

(2)      If the auction manager tells registered applicants to use additional identification, they must do so.

4.12                  Starting and minimum bids

(1)      A bid on a lot below the starting bid for that lot will not be accepted.

Note For starting bids, see section 2.17.

(2)      After a starting bid has been made on a lot in a round, a bid on the lot below the minimum bid for that lot in a later round will not be accepted.

(3)      The minimum bid for a lot is the sum of the high bid on that lot in the previous round, as published in the results and information for the round, and the higher of:

(a)        the increment of price per lot rating set under section 2.17, multiplied by the lot rating for the lot; and

(b)        the increment of percentage of high bid set under section 2.17, multiplied by that high bid.

(4)      However, if a bid on a lot is withdrawn, the minimum bid on that lot is worked out in accordance with section 4.21.

(5)      A registered applicant who holds the high bid on a lot from a previous round is not required by subsection (2) to raise its own high bid, but may do so.

4.13                 Changing starting and minimum bids

(1)       Despite section 4.12, at any time during the auction the auction manager may change the amounts fixed under subsection 2.17(1):

(a)        to vary the amount of the starting bid on a lot; or

(b)        to vary the minimum bid on a lot.

(2)      Before doing this, the auction manager must:

(a)        tell registered applicants of the proposed change; and

(b)        give registered applicants the opportunity to comment on the proposal.

(3)       When changing the amounts, the auction manager must have regard to registered applicants' comments so far as the comments are relevant to the issue.

(4)      The auction manager must notify all registered applicants of the change before the round when the change takes effect.

4.14                 Automatic re-bidding

(1)      A registered applicant may not make an automatic re-bid on a lot in a round unless the applicant:

(a)        makes a bid on the lot in the round; or

(b)        is the high bidder on the lot from the previous round.

(2)      An automatic re-bid:

(a)        only applies in the round in which it is made; and

(b)        must be:

1.         if the registered applicant makes the starting bid on a lot - at least 1 minimum bid increment above the starting bid; or
2.          if the registered applicant makes a bid on a lot other than the starting bid - at least 1 minimum bid increment more than the applicant's own bid; or
3.          if the registered applicant is already the high bidder on that lot - at least 2 minimum bid increments above the applicant's high bid as published in the results and information for the previous round.

(3)      In working out the high bid in a round, an automatic re-bid made by the bidder who made the next highest bid to the automatic re-bid is disregarded.

(4)      If only 1 bidder makes an automatic re-bid that exceeds the high bid made or held on the lot in the round by another bidder:

(a)        the bidder is taken to be the high bidder for the lot in the round; and

(b)        the amount of the high bid for the round is taken to be the lesser of:

1.         1 minimum bid increment more than the highest bid recorded for the lot in the round; or
2.         the amount of the automatic re-bid.

(5)     If more than 1 bidder makes an automatic re-bid that exceeds the high bid made on the lot in the round by another bidder:

(a)        the bidder who nominated the highest amount to which the automatic re-bid was limited is taken to be the high bidder for the lot; and

(b)        the amount of the high bid for the round is taken to be the lesser of:

1.         1 minimum bid increment more than the next highest amount to which an automatic re-bid was limited for the lot in that round; or
2.         the highest amount to which an automatic re-bid was limited for the lot in that round; and

(c)        the amount of the next highest bid is taken to be the next highest amount to which an automatic re-bid was limited for the lot in that round; and

(d)        any bid instruction, including an automatic re-bid, is to be regarded as a bid for the lot at the amount of the automatic re-bid.

(6)     If more than 1 bidder makes an automatic re-bid that exceeds the high bid made on the lot in the round by another bidder by the same amount, and that automatic re-bid amount exceeds any other automatic re-bid made on the lot in the round:

(a)        the bidder whose re-bid is recorded in the computer system as being first made is taken to be the high bidder for the lot in that round; and

(b)        the amount of the high bid for the round is taken to be the amount to which an automatic re-bid was limited for the lot in that round; and

(c)        any bid instruction, including an automatic re-bid, is to be regarded as a bid for the lot at the amount of the automatic re-bid.

(7)      In this section:

minimum bid increment for a lot in a round means the higher of:

(a)        the increment of price per lot rating set under section 2.17, multiplied by the lot rating for the lot; and

(b)        the increment of percentage of high bid set under section 2.17 multiplied by:

1.         the high bid on that lot in the previous round as published in the results and information for that round; or
2.         if there is no high bid published in the results and information for that round - zero.

Note The ACA must not disclose automatic re-bid limits: see subsection 4.2 (3).

4.15                 All lots on offer simultaneously

All of the lots on offer at an auction will be open for bidding in each round of the auction.

4.16                 General rules about bidding

(1)      Subject to sections 4.17 and 4.18, a registered applicant may bid on any combination of lots.

(2)      In particular, an applicant is not restricted to bidding only on the lots that relate to the areas the applicant nominated in the application form.

(3)      In a round, an applicant may lodge only 1 file containing the applicant's bidding instructions.

Note An automatic re-bid may be made once only in a round: see section 4.14.

(4)      If 2 or more registered applicants make identical bids on the same lot and the bids are the high bids for the round, the bid that is recorded in the auction computer system as being made first in time will be taken to be the high bid on that lot for the round.

(5)     If a bid is disputed:

(a)        the auction manager is the sole arbiter; and

(b)        the auction manager's decision is final.

(6)     If a person who is not a registered applicant makes a bid for a lot:

(a)        the bid is to be ignored; and

(b)        the bid does not, by itself, affect further bidding on that lot or the validity of the licence that includes that lot.

Note For the emergency telephone bidding procedure, see section 4.10.

4.17                  Eligibility bidding cap

(1)      A registered applicant is not entitled to bid in such a way that the total of the lot ratings of the lots on which the applicant is active in any 1 round exceeds the applicant's eligibility at the time of the bid.

Note As to when an applicant is active, see subsection 1.4 (4).

(2)      To ensure that an applicant's eligibility is not exceeded, the ACA will process the applicant's bids as follows:

(a)        bidding instructions will be processed in order of lot number, starting with the lowest number;

(b)        bidding instructions will only be processed so that the total of the lot ratings for those bids does not exceed the applicant's eligibility;

(c)        if the lot rating for a bid to be processed would result in the progressive total of lot ratings exceeding the applicant's eligibility- the ACA will not process that bid or any further bids of the applicant and will treat the bid and those further bids as if they had not been made.

4.18                 Bidding activity targets

Subject to the waiver provisions in section 4.20, a registered applicant must bid in such a way during a round that the total of the lot ratings on the lots on which the applicant is active in that round is equal to or greater than the applicant's activity target for the round.

Note 1 For activity target, see subsection 1.4 (1).

Note 2 A registered applicant who does not bid in the way mentioned in this section is liable to lose eligibility, in accordance with section 4.19.

4.19                  Loss of eligibility

(1)       A registered applicant's eligibility for the next round will be reduced to an amount worked out in accordance with subsection (2), if:

(a)        the registered applicant does not meet its activity target; and

(b)        the registered applicant does not exercise a waiver in that round.

(2)      The amount of a registered applicant's eligibility under subsection 1 for the next round is to be worked out as follows:

where:

E =  R

E is the registered applicant's eligibility for the next round; and

R is the sum of the lot ratings of the lots on which the registered applicant was active in the current round; and

P is the percentage of eligibility (fixed by the auction manager under section 2.18) that applied in the round.

Example

A registered applicant's eligibility at the start of a round is 30,000 units. The activity requirement for the round is 75%, (ie 22,500 units). In the round, the registered applicant's activity is only 15,000 units and the applicant has not exercised a waiver, so eligibility will be reduced as a penalty for under-activity.

The registered applicant's new eligibility will be current activity (15,000) divided by the current activity requirement (0.75). This equals 15,000 divided by 0.75, which is 20,000 units. There is nothing the registered applicant can do once the auction is under way to recover eligibility.

(3)      A registered applicant who loses eligibility in a round is only entitled to bid in future rounds in such a way that the total lot ratings of the lots on which the applicant is active does not exceed its eligibility as reduced in accordance with this section.

4.20                  Waiver

(1)      During the bidding period of a round, a registered applicant who would otherwise not meet its activity target may exercise a waiver of the effect of section 4.19.

(2)       A registered applicant may continue to exercise waivers until the applicant has used all its waivers fixed by the auction manager under section 2.18.

(3)      A registered applicant who exercises a waiver does not lose eligibility in that round.

(4)      If an auction manager exercises a waiver on an applicant's behalf, the applicant's eligibility for that round is not lost.

(5)      The auction manager will exercise a waiver on a registered applicant's behalf unless the registered applicant tells the auction manager, during the bidding process, that the waiver is not to be exercised, if: