Industry Canada opts for Vickery auction of air-to-ground spectrum

Industry Canada has rejected calls to use the traditional spectrum auction method for air-to-ground spectrum and will instead use its proposed sealed-bid, second-price auction process, known as Vickery. The spectrum in question will be used to offer high-speed Internet on domestic flights. Aircell, a provider of Internet service on airplanes in the US, criticized Industry Canada’s plan as “unproven”, saying it should stick to its knitting of using a simultaneous multiple round ascending (SMRA) auction format. Bell Mobility also criticized the department over the auction policy, saying since there is no evidence to suggest that demand for this bandwidth exceeds supply – a trigger for an auction – Industry Canada should first determine if there is demand for air-to-ground spectrum. But the department defended the auction and its proposal concluding that the Vickery process would better suit this particular airwaves sale. “In view of the fact that only two licences are being offered and limited interest is anticipated, the sealed-bid, second-price design presents a simplified, expedient and transactionally efficient alternative to the SMRA auction design, without any anticipated loss in outcome efficiency,” reads DBRG-006-09. “With the Vickrey design, the optimal bidding strategy is for bidders to bid the true licence values rather than over- or under-bidding. This bidding will facilitate an outcome where the bidder with the highest valued use will win and pay the second highest price.” What’s up for grabs? Two licences: There is 3 MHz (A-band – 849-850.5 / 894-895.5 MHz) and one 1 MHz (B-band – 850.5-851 / 895.5-896 MHz). Participants can bid either on single licences or on a package of both licences. Licence term: 10 years with a high expectation of renewal for a further 10 years. Eligibility requirements: Entities that are deemed to be a radiocommunication carrier, radiocommunication service provider or radiocommunication user are allowed to participate. Reserve bids: A-band is $850,000 B-band is $200,000 A+B is $1,050,000 Spectrum usage requirement: The department will assess spectrum utilization prior to licence renewal. “Two years prior to the end of the licence term, the licensee must demonstrate implementation of stations covering 75% of Canadian air routes. Any deployment below 75% or using another indicator will be taken into consideration by the Department in determining whether to renew the licence in whole, in part or not at all and will be addressed in the renewal consultation.” R&D Requirement: Licensees will be required to spend 2% of gross adjusted revenues on R&D related to this spectrum. Key dates: Deadline to submit applications to participate – April 24, 2009 Publication of the list of applicants – April 27, 2009 Publication of the list of qualified bidders – May 8, 2009 Receipt deadline of sealed bids – May 20, 2009 Posting of provisional winners – May 25, 2009 Submission of eligibility documentation as per Attachment D and E – June 8, 2009 Final payment – June 8, 2009

Industry Canada opts for Vickery auction of air-to-ground spectrum

News | 03/30/2009 5:09 pm EDT

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