Technology neutral auction format debuts in Ireland

ComReg, the Irish communications regulator, has completed its award of 26GHz spectrum. An innovative auction format, designed by DotEcon, used combinatorial bidding to enable the market to determine the efficient split between point-to-point (P2P) and point-to-multipoint (PMP) applications. The auction format also ensured that all bidders winning multiple 2x28MHz lots received contiguous assignments, and that there was adequate separation between the two technologies so as to avoid harmful interference.

This was amongst the first of a new wave of auction formats which allow the market to determine how spectrum bands are divided up between competing technologies, replacing the need for difficult and often arbitrary decisions by regulators on spectrum allocation. Other auctions in which the market is allowed a say in how spectrum is used as well as who uses it include: the UK L-band auction (high power vs low power technologies); and the forthcoming Dutch and UK 2.6GHz auctions (FDD vs TDD technolgies). Unlike these other awards, which will use the multiple round, combinatorial clock auction format, the ComReg award used a sealed bid combinatorial format. Although multiple round auctions are often preferred to sealed bids, as greater price discovery can improve efficiency, sealed bids are faster and cheaper to run, so can offer a cost-effective option for lower value spectrum bands, such as 26GHz, where the level of demand is uncertain.

The key features of the auction were as follows:

  • Bidders were invited to make binding applications for their maximum level of P2P and PMP lots of 2x28MHz. They could bid for up to 6 lots across the two categories.
  • Total demand (3 PMP lots and 11 P2P lots) was slightly below supply, so all applicants won their first choice number of lots.
  • Had their been excess demand for lots, there would have been a first stage, sealed bid in which bidders would have been able to make multiple, exclusive bids for packages of generic P2P and PMP lots. The auctioneer would then have determined the most valuable combination of winning bids.
  • PMP lots were allocated to the lower part of the band and P2P lots to the upper part of the band, with a guard block between them.
  • There were multiple winners in both categories. Thus, a second stage, sealed bid round was required to determine which frequencies were allocated to which winning bidders. Each bidder was able to submit multiple, exclusive bids for every possible contiguous frequency assignment that would also enable all other bidders to receive contiguous assignments. This stage allowed bidders to express modest preferences for particular frequencies within the band.
  • On the basis of the second stage bids, ComReg determined the optimal assignment of lots, with all bidders receiving contiguous assignments corresponding to the amount fo spectrum that they applied for.

For details on winners, and the 26 GHz Band Plan, see ComReg’s website.

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