Consultation on a Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band

Annex C — 2500 MHz Band Site-specific Grandfathered Licences in Manitoba as of June 2012

Licensee Location Latitude Longitude Corresponding Tier 3 area TX FREQ (MHz) RX FREQ (MHz)
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39   2502.25
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39   2503.75
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39   2505.25
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MAN.-ST JAMES COLLEGIATE 495239 971317 3-39   2509
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MB-JOHN TAYLOR COLLEGIATE 495326 971849 3-39   2509
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MAN.-ST JAMES COLLEGIATE 495239 971317 3-39   2515
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MB-JOHN TAYLOR COLLEGIATE 495326 971849 3-39   2515
Prairie Rose School Division ELIE MB - WALDHEIM COLONY SCHOOL 495136 974949 3-39   2521
Prairie Rose School Division ELIE MB - BON HOMME COLONY SCHOOL 495233 975330 3-39   2521
Prairie Rose School Division ST.FRANCOIS MB - LAKESIDE COL. SCH. 495440 973355 3-39   2521
Prairie Rose School Division ST.FRANCOIS MB-BARRICKMAN COL. SCH. 495609 973617 3-39   2521
Prairie Rose School Division ST.FRANCOIS MB - MAXWELL COL. SCH. 495714 973848 3-39   2521
Prairie Rose School Division ST.EUSTACHE MB -IBERVILLE COL. SCH. 495819 974118 3-39   2521
Prairie Rose School Division POPLAR PT MB - POPLAR PT COL. SCH. 500227 975641 3-39   2521
Inukshuk Wireless Partnership WINNIPEG, MAN.-SUBSCRIBER STATIONS 495345 970821 3-39   2533
Inukshuk Wireless Partnership ELIE AREA, MAN.-SUBSCRIBER STATIONS 495406 974532 3-39   2533
Inukshuk Wireless Partnership SELKIRK AREA, MAN.-SUBSCRIBER STNS. 500837 965303 3-39   2533
Inukshuk Wireless Partnership CHATFIELD AREA, MAN-SUBSCRIBER STNS 504702 973417 3-39   2533
Inukshuk Wireless Partnership WINNIPEG, MAN.-SUBSCRIBER STATIONS 495345 970821 3-39   2539
Prairie Spirit School Division #50 ST. CLAUDE, MANITOBA-ITV SYSTEM 493936 982050 3-39   2539.3
Prairie Rose School Division ELIE MB - WALDHEIM COLONY SCHOOL 495136 974949 3-39   2545
Prairie Rose School Division ELIE MB - BON HOMME COLONY SCHOOL 495233 975330 3-39   2545
Prairie Rose School Division ST.FRANCOIS MB - LAKESIDE COL. SCH. 495440 973355 3-39   2545
Prairie Rose School Division ST.FRANCOIS MB-BARRICKMAN COL. SCH. 495609 973617 3-39   2545
Prairie Rose School Division ST.FRANCOIS MB - MAXWELL COL. SCH. 495714 973848 3-39   2545
Prairie Rose School Division ST.EUSTACHE MB -IBERVILLE COL. SCH. 495819 974118 3-39   2545
Prairie Rose School Division POPLAR PT MB - POPLAR PT COL. SCH. 500227 975641 3-39   2545
Inukshuk Wireless Partnership WINNIPEG, MAN.-SUBSCRIBER STATIONS 495345 970821 3-39   2551
Inukshuk Wireless Partnership WINNIPEG, MAN.-SUBSCRIBER STATIONS 495345 970821 3-39   2557
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MAN.-ST JAMES COLLEGIATE 495239 971317 3-39   2563
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MB-JOHN TAYLOR COLLEGIATE 495326 971849 3-39   2563
PRAIRIE ROSE SCHOOL DIVISION MIAMI, MAN-MIAMI COLLEGIATE (IITV) 492222 981414 3-39   2569
PRAIRIE ROSE SCHOOL DIVISION ELM CREEK, MB-ELM CREEK COLL (IITV) 494027 980011 3-39   2569
HANOVER SCHOOL DIVISION #15 GRUNTHAL, MAN.-SCHOOL ITV SYSTEM 492409 965137 3-39   2569.75
HANOVER SCHOOL DIVISION #15 NIVERVILLE MB-COLLEGIATE ITV SYSTEM 493605 970218 3-39   2569.75
HANOVER SCHOOL DIVISION #15 LANDMARK, MAN-COLLEGIATE ITV SYSTEM 494008 964913 3-39   2569.75
HANOVER SCHOOL DIVISION #15 GRUNTHAL, MAN.-SCHOOL ITV SYSTEM 492409 965137 3-39   2571.25
HANOVER SCHOOL DIVISION #15 NIVERVILLE MB-COLLEGIATE ITV SYSTEM 493605 970218 3-39   2571.25
HANOVER SCHOOL DIVISION #15 LANDMARK, MAN-COLLEGIATE ITV SYSTEM 494008 964913 3-39   2571.25
HANOVER SCHOOL DIVISION #15 GRUNTHAL, MAN.-SCHOOL ITV SYSTEM 492409 965137 3-39   2575
HANOVER SCHOOL DIVISION #15 LANDMARK, MAN-COLLEGIATE ITV SYSTEM 494008 964913 3-39   2575
HANOVER SCHOOL DIVISION #15 GRUNTHAL, MAN.-SCHOOL ITV SYSTEM 492409 965137 3-39   2581
HANOVER SCHOOL DIVISION #15 NIVERVILLE MB-COLLEGIATE ITV SYSTEM 493605 970218 3-39   2581
HANOVER SCHOOL DIVISION #15 NIVERVILLE MB-COLLEGIATE ITV SYSTEM 493605 970218 3-39   2587
HANOVER SCHOOL DIVISION #15 LANDMARK, MAN-COLLEGIATE ITV SYSTEM 494008 964913 3-39   2587
HANOVER SCHOOL DIVISION #15 GRUNTHAL, MAN.-SCHOOL ITV SYSTEM 492409 965137 3-39 2502.25  
BORDER LAND SCHOOL DIVISION DOMINION CITY, MB-SCHOOL ITV SYSTEM 490827 970957 3-39 2502.25 2563.75
PRAIRIE ROSE SCHOOL DIVISION ELM CREEK, MB-ELM CREEK COLL (IITV) 494027 980011 3-39 2502.25 2577.25
HANOVER SCHOOL DIVISION #15 LANDMARK, MAN-COLLEGIATE ITV SYSTEM 494008 964913 3-39 2503.75  
BORDER LAND SCHOOL DIVISION VITA, MANITOBA-SCHOOL ITV SYSTEM 490746 963347 3-39 2503.75 2562.25
HANOVER SCHOOL DIVISION #15 NIVERVILLE MB-COLLEGIATE ITV SYSTEM 493605 970218 3-39 2505.25  
PRAIRIE ROSE SCHOOL DIVISION MIAMI, MAN-MIAMI COLLEGIATE (IITV) 492222 981414 3-39 2505.25 2574.25
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MB.-STURGEON CREEK SCHOOL 495312 971607 3-39 2509  
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MB.-STURGEON CREEK SCHOOL 495312 971607 3-39 2515  
Prairie Rose School Division ELIE, MANITOBA-ST. PAUL COLLEGIATE 495427 974534 3-39 2521  
Inukshuk Wireless Partnership ELIE, MANITOBA-CHMI TV TX SITE 495226 974427 3-39 2533  
Inukshuk Wireless Partnership WINNIPEG, MANITOBA-TD CENTRE 495344 970822 3-39 2533  
Inukshuk Wireless Partnership SELKIRK, MANITOBA 500924 965839 3-39 2533  
Inukshuk Wireless Partnership CHATFIELD, MANITOBA 504945 973333 3-39 2533  
Inukshuk Wireless Partnership WINNIPEG, MANITOBA-TD CENTRE 495344 970822 3-39 2539  
Prairie Rose School Division ELIE, MANITOBA-ST. PAUL COLLEGIATE 495427 974534 3-39 2545  
Inukshuk Wireless Partnership WINNIPEG, MANITOBA-TD CENTRE 495344 970822 3-39 2551  
Inukshuk Wireless Partnership WINNIPEG, MANITOBA-TD CENTRE 495344 970822 3-39 2557  
BORDER LAND SCHOOL DIVISION WOODMORE, MANITOBA-ITV REPEATER 490804 965358 3-39 2562.25 2503.75
ST. JAMES ASSINIBOIA SCHOOL DIV. #2 WINNIPEG, MB.-STURGEON CREEK SCHOOL 495312 971607 3-39 2563
BORDER LAND SCHOOL DIVISION WOODMORE, MANITOBA-ITV REPEATER 490804 965358 3-39 2563.75 2502.25
Prairie Spirit School Division #50 ST. CLAUDE, MANITOBA-ITV SYSTEM 493936 982050 3-39 2564.15  
PRAIRIE ROSE SCHOOL DIVISION CARMAN, MB-CARMAN COLLEGIATE (IITV) 493011 975946 3-39 2569  
PRAIRIE ROSE SCHOOL DIVISION CARMAN, MB-CARMAN COLLEGIATE (IITV) 493011 975946 3-39 2569  
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39 2569.75  
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39 2571.25  
PRAIRIE ROSE SCHOOL DIVISION CARMAN, MB-CARMAN COLLEGIATE (IITV) 493011 975946 3-39 2574.25 2505.25
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39 2575  
PRAIRIE ROSE SCHOOL DIVISION CARMAN, MB-CARMAN COLLEGIATE (IITV) 493011 975946 3-39 2577.25 2502.25
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39 2581  
HANOVER SCHOOL DIVISION #15 STEINBACH, MANITOBA-RSS ITV SYSTEM 493058 964113 3-39 2587  
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2501.05
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2503.15
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2505.25
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2507.35
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2510.5
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2513.65
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2516.28
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40   2518.9
Inukshuk Wireless Partnership BRANDON AREA, MAN-SUBSCRIBER STNS. 495049 995710 3-40   2533
Inukshuk Wireless Partnership MINNEDOSA/SHOAL LAKE, MB-SUBSC STNS 502106 1001214 3-40   2533
Inukshuk Wireless Partnership FOXWARREN AREA, MAN-SUBSCRIBER STNS 503102 1010907 3-40   2533
Inukshuk Wireless Partnership RIDING MTN AREA, MB-SUBSCIBER STNS. 503155 992800 3-40   2533
Inukshuk Wireless Partnership DAUPHIN AREA, MAN.-SUBSCRIBER STNS. 510858 1000300 3-40   2533
Prairie Spirit School Division #50 BALDUR, MANITOBA-TRI LEAF COLONY 492014 991354 3-40   2539
Prairie Spirit School Division #50 PILOT MOUND, MAN.-WINDY BAY COLONY 492052 985400 3-40   2539
Prairie Spirit School Division #50 CYPRESS RIVER, MB-CYPRESS R COLONY 493447 990910 3-40   2539
Prairie Spirit School Division #50 HOLLAND, MANITOBA-OAKRIDGE COLONY 493558 984800 3-40   2539
Prairie Spirit School Division #50 GLENBORO, MANITOBA-MILLSHOF COLONY 493559 992029 3-40   2539
Prairie Spirit School Division #50 TREHERNE MANITOBA-SHADY LANE COLONY 494422 983908 3-40   2539
Inukshuk Wireless Partnership BRANDON AREA, MAN-SUBSCRIBER STNS. 495049 995710 3-40   2539
Prairie Spirit School Division #50 CARTWRIGHT, MANITOBA-IITV SYSTEM 490553 992008 3-40   2539.3
Prairie Spirit School Division #50 TREHERNE, MANITOBA-IITV SYSTEM 493720 984154 3-40   2539.3
Prairie Spirit School Division #50 NOTRE DAME DE LOURDES, MB-IITV RPTR 493449 983756 3-40   2564.15
Prairie Spirit School Division #50 GLENORA, MANITOBA-IITV REPEATER 491507 990931 3-40   2566.25
Prairie Spirit School Division #50 NOTRE DAME DE LOURDES, MB-IITV RPTR 493449 983756 3-40   2568.35
Prairie Spirit School Division #50 MANITOU, MANITOBA-IITV SYSTEM 491206 983234 3-40   2582.7
Prairie Spirit School Division #50 PILOT MOUND, MANITOBA-IITV SYSTEM 491209 985401 3-40   2582.7
Prairie Spirit School Division #50 GLENORA, MANITOBA-IITV REPEATER 491507 990931 3-40   2582.7
Prairie Spirit School Division #50 BALDUR, MANITOBA-IITV SYSTEM 492308 991418 3-40   2582.7
Prairie Spirit School Division #50 SOMERSET, MANITOBA-ITV SYSTEM 492427 983936 3-40   2582.7
Prairie Spirit School Division #50 SWAN LAKE, MANITOBA-ITV SYSTEM 492447 984733 3-40   2582.7
Prairie Spirit School Division #50 GLENBORO, MANITOBA-IITV SYSTEM 493330 991655 3-40   2582.7
Prairie Spirit School Division #50 NOTRE DAME DE LOURDES, MB-IITV RPTR 493449 983756 3-40   2582.7
Prairie Spirit School Division #50 SOMERSET, MANITOBA-ITV SYSTEM 492427 983936 3-40 2501.05  
Prairie Spirit School Division #50 PILOT MOUND, MANITOBA-IITV SYSTEM 491209 985401 3-40 2503.15  
Prairie Spirit School Division #50 MANITOU, MANITOBA-IITV SYSTEM 491206 983234 3-40 2505.25  
Prairie Spirit School Division #50 GLENBORO, MANITOBA-IITV SYSTEM 493330 991655 3-40 2507.35  
Prairie Spirit School Division #50 NOTRE DAME DE LOURDES, MB-IITV RPTR 493449 983756 3-40 2510.5  
Prairie Spirit School Division #50 GLENORA, MANITOBA-IITV REPEATER 491507 990931 3-40 2513.65  
Prairie Spirit School Division #50 BALDUR, MANITOBA-IITV SYSTEM 492308 991418 3-40 2516.28  
Prairie Spirit School Division #50 SWAN LAKE, MANITOBA-ITV SYSTEM 492447 984733 3-40 2518.9  
Inukshuk Wireless Partnership HAYFIELD, MANITOBA-CKX TV TX SITE 494005 1000042 3-40 2533  
Inukshuk Wireless Partnership NEWDALE, MANITOBA 502038 1001109 3-40 2533  
Inukshuk Wireless Partnership RIDING MOUNTAIN, MANITOBA 502840 993450 3-40 2533  
Inukshuk Wireless Partnership FOXWARREN, MANITOBA 503114 1010425 3-40 2533  
Inukshuk Wireless Partnership BALDY MOUNTAIN, MANITOBA 512814 1004312 3-40 2533  
Inukshuk Wireless Partnership HAYFIELD, MANITOBA-CKX TV TX SITE 494005 1000042 3-40 2539  
Prairie Spirit School Division #50 GLENORA, MANITOBA-IITV REPEATER 491507 990931 3-40 2539.3  
Prairie Spirit School Division #50 NOTRE DAME DE LOURDES, MB-IITV RPTR 493449 983756 3-40 2539.3  
Prairie Spirit School Division #50 CARTWRIGHT, MANITOBA-IITV SYSTEM 490553 992008 3-40 2566.25  
Prairie Spirit School Division #50 TREHERNE, MANITOBA-IITV SYSTEM 493720 984154 3-40 2568.35  
Prairie Spirit School Division #50 BRUXELLES, MANITOBA-IITV HUB SITE 492944 985200 3-40 2582.7  

Annex D — The Combinatorial Clock Auction (CCA) Format

1. Industry Canada is proposing to use a combinatorial clock auction (CCA) format for the 2500 MHz band auction. A CCA is a bidding process that includes a price discovery stage, similar to the SMRA auction format. However, the CCA format also has attributes that remove or reduce some design concerns associated with the SMRA format. In particular, in a CCA, bidders are able to bid for packages of licences instead of individual ones, eliminating the risk that bidders may win some but not all of the licences that they desire. This is particularly important given the regional nature of the licences to be auctioned and the strong and varied complementarities that exist between these licences.

2. Other attributes are being proposed for the 2500 MHz auction, such as the use of generic licences and anonymous bidding. Generic licences are blocks of spectrum that are similar in terms of frequency location in the band, block size, technology and interference constraints and are of comparable value, such that they can be grouped together in a “single category” in each service area for bidding purposes in the auction. The use of generic licences will decrease bidding complexity by reducing the number of combinations on which bids may be placed, and will enhance the possibility of substitution among licences. The use of anonymous bidding will reduce the potential for gaming strategies. Pricing rules and activity rules that encourage truthful bidding throughout the auction process, i.e. bidding in a manner that is consistent with how a bidder truly values the package, will further improve the process.

1. Overview of the CCA

3. A CCA consists of two stages, the allocation stage and the assignment stage (Figure D1). In the allocation stage, the number of spectrum licences that a bidder will win in each service area is determined, as well as the base price to be paid by each winning bidder. Where generic licences are offered, an additional stage is needed to determine the specific frequencies that will be assigned to each winning bidder. This stage is referred to as the assignment stage.

Figure D1: CCA Process

Combinatorial Clock Auction Process (the long description is located below the image)
Description of Figure D1

Figure D1 is a flow chart representing a visual description of the combinatorial clock auction (CCA) process and portraying the sequence of steps included in the process. The CCA consists of two stages, the allocation stage and the assignment stage.

The allocation stage includes two steps, the first of which is called the clock rounds and the second is called the supplementary round. The clock rounds are a series of rounds in which bidders submit bids on categories of licences. In any round, if there is excess demand in any category of licences, the price of those licences will increase and the clock rounds will continue until such a time as there is no excess demand in any category of licences. When there is no longer excess demand in any category of licences, the process will move to the supplementary round. The supplementary round is a single round where bidders have the opportunity to make additional bids.

At the end of the allocation stage, the winning bidders and the base prices are determined. If there were no generic licences offered or won in the allocation stage, an assignment stage is not necessary and the auction ends at the conclusion of the allocation stage.

If there were any generic licences offered and won in the allocation stage, the process then moves to the assignment stage. At the end of the assignment stage, winning assignments and final prices are determined. This signifies the end of the auction.

2. The Allocation Stage

4. The allocation stage of the auction determines the winning bidders and the number of licence blocks that they have won. The allocation stage is divided into two phases: the clock rounds and the supplementary round. All valid bids submitted during both phases of the allocation stage are used to determine the winning packages and base prices.

5. The clock rounds allow for price discovery, helping to reduce a bidder’s uncertainty regarding the value of the licences. Bidders are able to respond to the changes in prices accordingly, shifting their bids to licences that continue to be consistent with their business objectives.

6. During each clock round, bidders are able to bid on only one package of licences; however, there may be other packages that they would be interested in winning. The supplementary round provides bidders with an opportunity to improve bids that they placed in the clock rounds and/or to submit bids that they were eligible to bid on but unable to submit in the clock rounds.

7. All bidders are subject to a spectrum aggregation limit of 40 MHz in each service area, with the exception of the Northwest Territories, Yukon and Nunavut, where no aggregation limit applies. The aggregation limit includes both the paired and the unpaired spectrum available for auction, along with any spectrum licence holdings that bidders already have, but excludes the restricted bands at 2570-2575 MHz and 2615-2620 MHz. Therefore, with the exception of the Northwest Territories, Yukon and Nunavut, bidders will not be permitted to bid on additional licences in a service area where their spectrum aggregation limit would be exceeded. The auction software will not allow bidders to submit a bid that exceeds their spectrum aggregation limit.

3. Clock Rounds

8. The allocation stage begins with the clock rounds. Licences or sets of generic licences (substitutable licences of comparable value) are separated into categories and are defined prior to the auction.

9. For the 2500 MHz auction, Industry Canada is proposing two categories of licences, paired and unpaired, with the following blocks available in each service area of the identified regions (Table D1):

Region A (43 service areas)

  • blocks C/C’ to G/G’ (five paired generic licences of 10 + 10 MHz);
  • block I (one unpaired licence of 25 MHz);

Region B (16 service areas)

  • blocks E/E’ to G/G’(three paired generic licences of 10 + 10 MHz);

Region C (2 service areas)

  • blocks A/A’ to B/B’ and E/E’ to G/G’ (five paired generic licences of 10 + 10 MHz); and
  • block H (one unpaired licence of 25 MHz).
Table D1 — Proposed product configuration for 2500 MHz auction
  Paired Unpaired Products
Note: Products available for auction are indicated by an "X."
  A/A’ B/B’ C/C’ D/D’ E/E’ F/F’ G/G’ H I  
Region A
(43 service areas)
    x x x x x   x 86
(2 × 43)
Region B
(16 service areas)
        x x x     16
(1 × 16)
Region C
(2 service areas)
x x     x x x x   4
(2 × 2)
Total   106

10. A category in a given service area is referred to as a product. Given the proposal of two categories in Region A (43 service areas), one category in Region B (16 service areas) and two categories in Region C (two service areas), 106 products are proposed for the 2500 MHz auction.

11. The licences are auctioned simultaneously over multiple clock rounds. In each round, bidders indicate the number of licences in each product on which they would like to bid given the prevailing prices. The bid could be for “0,” “1” or “2” licences for a product in any category containing multiple generic licences except for products in the Northwest Territories, Yukon and Nunavut, where bids of “3,” “4” or “5” licences are also permitted (since these service areas are not subject to the spectrum aggregation limit of 40 MHz in the 2500 MHz band). For a product in an unpaired block category, which contains only one licence, the bid could be for “0” or “1” licence. All of the individual bids placed by a bidder in a given round are considered to be a single package bid, creating an all-or-nothing bid. The price of the package bid is equal to the sum of the bids for individual products, evaluated at the prevailing clock prices.

12. When there is excess demand for a product, its price increases in the next round. There is excess demand for a product when the number of bids exceeds the number of licences available.

13. To remain in the auction, a bidder must submit a valid bid for at least one licence in the first clock round. This bid cannot be withdrawn and will be part of the bids considered in determining the assignment of licences at the end of the allocation stage. All valid bids submitted during the clock rounds are binding and will be considered in determining both winning packages and base prices after the supplementary round ends.

14. In the clock rounds, bidding remains open on all products until there is no excess demand for any of the products.

4. Conclusion of Bidding in the Clock Rounds

15. The clock rounds end when there is a round in which there is no excess demand for any of the products. This round is referred to as the final clock round. The package on which a bidder placed a bid in the final clock round is referred to as its final clock package. At this point, Industry Canada will announce that the clock rounds have ended and that the auction will proceed to the supplementary round (see Section 9).

16. In the final clock round, all licences may be tentatively allocated. Conversely, there may be some unallocated licences in the final clock round due to a licence never having received a bid, and/or bidders reducing or substituting their demands in any clock round, including the final clock round.

17. If all of the licences are tentatively allocated, then the bids placed in the final clock round are the provisional winning bids. If there are still some unallocated licences, a bidder can guarantee that it will win its final clock package by submitting a supplementary bid that increases the dollar amount of its final clock package bid by at least the final clock price of the unallocated licences minus the opening bid prices of the unallocated licences. This guarantee may be compromised if all other supplementary bids do not include, at a minimum, all licences contained in the bidder’s final clock package.

5. Information in the Clock Rounds

18. At the beginning of each clock round, bidders have access to sufficient information to permit price discovery and inform their bidding strategy. This information includes their own bids from the previous round and the number of eligibility points that they will have in the next round, as well as the aggregate demand for each product from the previous round and the prices for each product in the next round. It is proposed that bidders would not be informed about the individual bids submitted by other bidders or the remaining eligibility of other bidders.

6. Bid Increments

19. Industry Canada is consulting on the opening bid amounts for each of the licences being auctioned. The opening bid amounts being proposed can be found in Table 5, Section 8.2 of the main document. In the first clock round, the price of each licence is equal to the opening bid price as stated in the final licensing document.

20. During subsequent clock rounds, if there is excess demand for a given product, the prices for the given product increase in the next round. Industry Canada will use activity-based increments as a mechanism to determine the bid increments. The increment for each product is based on the excess demand for the product during the previous round. Products that generate greater excess demand are subject to a larger bid increment than products that generate less excess demand, all other things being equal. Bid increments increase more quickly for products with higher demand, potentially shortening the length of the auction. If there is no excess demand, the price for the product does not increase in the next round.

21. Industry Canada will decide on the bid increments for the 2500 MHz auction. Details concerning the calculation of bid increments will be included in the final licensing framework.

7. Eligibility Points

22. Each of the 318 licences has been assigned a specific number of eligibility points that are related to the population covered by the licence and the estimated value of the spectrum. One eligibility point has been assigned per 50,000 in population for each 20 MHz block of spectrum (either paired or unpaired) in a service area. The eligibility points per spectrum block were then adjusted to reflect the estimated value of the spectrum licences as indicated by the opening bid price base rate. Section 8.3 of the main document lists the proposed eligibility points associated with the paired and unpaired blocks of spectrum being auctioned, as well as the population of their respective service areas.

23. In their applications, applicants must indicate the total number of “points” worth of licences on which they wish to bid. This number defines a bidder’s initial level of eligibility points and hence, the maximum number of licences a bidder is eligible to bid on at the start of the auction. Eligibility points are also used to determine the financial deposit that must be submitted with the application.

24. Bidder eligibility points cannot be increased once the auction has started.

8. Activity Rules in the Clock Rounds

25. Activity rules have been established to encourage truthful bidding throughout the clock rounds. This facilitates the price discovery process, allowing bidders to make changes to their bidding strategies dynamically throughout the auction, in response to increasing prices. The activity rules discourage a bidder from misrepresenting its preferred package, as doing so will limit the bidder’s ability to bid on what it really wants later in the auction.

26. The activity rules in the clock rounds consist of an eligibility point rule and a revealed preference rule. The two rules work in combination to accommodate their relative shortcomings. The motivation for using both rules is to ensure that the activity rules do not prohibit bidders from bidding on their most preferred package.

27. Bidders begin each round with a set number of eligibility points and these determine the maximum activity level for that round. For example, a bidder with 100 eligibility points can bid on licences whose total sum of associated points is 100 or less.

28. The eligibility point rule considers the size of the package that the bidder is bidding on, where size is the sum of the eligibility points for each licence in the package. The eligibility point activity rule requires bidders to bid on packages of the same size or smaller as prices rise. When a bidder switches to a package that is smaller than the package it has previously bid on, (that is, with licences that are worth fewer eligibility points), its eligibility is reduced. A round in which a bidder’s eligibility is reduced is called an eligibility-reducing round. These rounds play a special role in the proposed activity rules of the 2500 MHz auction.

29. In Round 1, a bidder’s eligibility is established by its pre-auction financial deposit submitted at the time of application. In subsequent rounds, a bidder’s eligibility is determined by its activity level in the previous round. Therefore, if a bidder wishes to maintain the same eligibility level as in the previous round, its activity level must correspond to the same number of eligibility points in each round. A bidder’s eligibility points can never increase.

30. If a bidder falls short of the required activity level in any round, its eligibility point level is reduced accordingly, so that the total points worth of licences on which it can bid in the next round are limited in relation to its actual activity level in the current round. For example, consider an eligibility point rule where the activity level is 100%. If a bidder starts the round with 100 eligibility points but bids on licences worth only 80 eligibility points, in the subsequent round that bidder’s eligibility will drop to 80 points. The bidder’s eligibility remains at 80 points until a round in which it bids on a package worth fewer than 80 points, at which time its eligibility would be reduced accordingly.

31. However, there are some shortcomings with using only the eligibility point rule. Price discovery might be lessened, as there is an incentive for bidders to choose only larger packages when prices are low, rather than a package that may work better for them, so that they maintain a higher number of eligibility points for later in the auction. Furthermore, an eligibility point rule may prevent a bidder from making a desirable substitution to a package that is larger in terms of associated eligibility points, but which has become relatively less expensive. In such a case, the eligibility point rule would prevent the bidder from bidding on its most preferred package.

32. A revealed preference rule would lessen these problems, as it allows bidders to exceed their eligibility points in order to bid on packages that have become comparatively less expensive. Revealed preference refers to the information that a bidder discloses regarding its inclination toward one package versus another. In particular, if a bidder chooses one package over another given a certain price differential between the two packages, then the bidder should always choose the same package given the same price differential. This rule would afford bidders greater flexibility to fully express their preferences in the clock rounds of the auction, ensuring that activity rules do not prevent a bidder from bidding on its most preferred package.

33. For example, suppose that a bidder desires either a smaller package, X, or a larger package, Y, but not both. At the current prices, X is preferred, but in subsequent rounds, the prices for the licences in X increase much faster than the prices for the licences in Y. As a result, the bidder prefers Y to X at the new prices. The revealed preference rule allows the bidder to switch from X to Y because Y is now the better value. In contrast, the eligibility point rule would not allow the switch because Y is larger than X. This example illustrates the problem with using the eligibility point rule exclusively and the advantage of using the eligibility point rule in combination with the revealed preference rule.

Revealed Preference/Eligibility Point Hybrid Activity Rule

34. A revealed preference/eligibility point hybrid activity rule is being proposed for each clock round. It comprises both an eligibility point rule and a revealed preference rule.

35. The proposed eligibility point activity requirement for the 2500 MHz auction is 100%. Specifically, in each round, a bidder is required to bid on licences whose total sum of associated points is equal to 100% of its eligibility points if it wishes to maintain that eligibility level in the subsequent round.

36. The bidder can always place a bid for any package that is within its current eligibility. However, as prices increase, a bidder’s eligibility is generally reduced. There may be a point in the auction where the bidder wishes to switch to another package that is larger, but is relatively less expensive. With the revealed preference rule, the bidder can bid on a larger package than would be permitted by the bidder’s current eligibility provided that the package satisfies the revealed preference rule with respect to each prior eligibility-reducing round.

37. However, bidding on a larger package will not increase the bidder’s eligibility in subsequent rounds. Furthermore, a bidder will be unable to bid on a package with associated eligibility points that exceeds its initial eligibility. For an algebraic description of the revealed preference rule in the clock rounds, see Annex F. For an example of the revealed preference rule in the clock rounds, refer to Annex E.

38. The combination of the two activity rules will allow a bidder to bid on its most preferred package in every clock round. A bidder can continue to bid just as it would under the eligibility point rule. The only difference is that the bidder is given some extra flexibility to bid on a larger package provided that the bid on the larger package satisfies revealed preference, i.e. the bid involves a switch to a package that has become relatively less expensive.

39. As a result, price discovery is improved and the final clock allocation becomes a better predictor of the auction outcome.

9. Supplementary Round

40. The second phase of the allocation stage is the supplementary round. The supplementary round is a single round process, in which bidders have the opportunity to place additional bids for packages, subject to constraints that are based on the bids that they placed in the clock rounds (Section 10 of Annex D). These additional bids could be used to improve bids on packages previously submitted in the clock rounds and/or to submit bids for which they were eligible to bid on, but unable to in the clock rounds.

41. In the clock rounds, a bidder is allowed to bid on only one package of licences per round. As there may be other packages that a bidder would be interested in winning, the supplementary round provides bidders with an opportunity to submit bids on multiple packages that they were willing and eligible to bid on in the clock rounds, but did not necessarily bid on.

42. If there are licences that remain unallocated at the end of the clock rounds, the supplementary round provides bidders with the opportunity to win some or all of the unallocated licences. Bidders also have the opportunity to guarantee that they win their final clock package by submitting a supplementary bid that increases the dollar amount of their final clock package by at least the value of the unallocated licences as evaluated at the final clock prices minus the opening bid prices of the unallocated licences. This guarantee may be compromised if all other supplementary bids do not include at a minimum, all licences contained in the bidder’s final clock package.

43. If all of the licences are allocated at the end of the clock stage, then the supplementary round will not affect the final clock allocation. However, the supplementary round provides an opportunity for bidders to be reassured that they themselves were not prepared to pay more than the winning bidders for the licences in question.

10. Activity Rules in the Supplementary Round

44. Activity rules in the supplementary round encourage truthful bidding throughout the allocation stage of the auction, not just in the latter stages. The proposed activity rules ensure that supplementary bids are consistent with bids from the previous rounds.

45. Any bidder that placed at least one valid bid in the clock rounds may submit bids in the supplementary round. A bidder is not required to submit bids in the supplementary round if it does not so desire.

46. All licences are available for bidding in the supplementary round so that bidders can improve on bids submitted during the clock rounds, or submit bids for packages of licences not expressed in the clock rounds.

47. A bidder can only make one supplementary bid for a given package of licences. For the 2500 MHz auction, the limit on the number of different packages for which a bidder will be allowed to place supplementary bids will be no lower than 500 different packages and will be announced after the bidder qualification period.

48. The bid amount for a supplementary bid must be at least the sum of the opening bid prices for all the licences included in the package. Furthermore, if a bidder submitted a bid for a certain package in the clock rounds, the supplementary bid amount must be at least the bidder’s highest bid for that package.

Revealed Preference Limit

49. Each bid in the supplementary round must satisfy the following revealed preference limit activity rule.

50. Revealed Preference Limit: There is no limit on the supplementary bid amount for the final clock package, which is the package that the bidder bid on in the final clock round. All other supplementary bids must satisfy revealed preference with respect to the final clock round, regardless of whether the supplementary bid package is larger or smaller than the final clock package.

51. In addition, supplementary bids for packages that are larger than the final clock package, as measured by eligibility points, must satisfy revealed preference with respect to each eligibility-reducing round, beginning with the last round in which the bidder had sufficient eligibility to bid on the package. The application of the revealed preference limit to limit bids on packages larger than the final clock package could have the effect of creating a chain of constraints on the dollar amount of a supplementary bid relative to the dollar amount of other supplementary bids submitted by the bidder.

52. There is an exception to the above. A supplementary bid for a package comprised solely of the bidder’s final clock package plus some or all of the unallocated licences only needs to satisfy revealed preference with respect to the final clock round. This is to provide bidders with additional flexibility in bidding on licences that are unallocated as of the final clock round. By relaxing the constraints on bids for such packages, the probability of awarding unallocated licences can be improved without reducing the probability that any bidder receives its final clock package.

53. These activity rules guarantee that the final clock allocation will not change if there are no unallocated licences. Each winner is guaranteed to win its final clock package without making any supplementary bids. If there are unallocated licences, each winner is guaranteed to win at least its final clock package by submitting a supplementary bid that increases the dollar amount of its final clock package by at least the value of the unallocated licences as evaluated at the final clock prices minus the opening bid prices of the unallocated licences. This guarantee may be compromised if all other supplementary bids do not include at a minimum, all licences contained in the bidder’s final clock package.

54. The revealed preference limit with respect to the final clock package provides the bidder with an incentive to bid on the most preferred package throughout the clock rounds. This is because supplementary bids are limited by bids submitted in the clock rounds. Given that the bidder does not know which round will be the final clock round, the bidder will be motivated to always bid truthfully to improve its chance of winning its most preferred package; otherwise the bidder will be constrained in the supplementary round.

55. Industry Canada will decide on the process for submitting supplementary bids. Details concerning the process will be included in the final licensing framework.

11. Determining the Winning Packages in the Allocation Stage

56. All valid bids received from bidders in the clock rounds and the supplementary round are considered for the determination of winning packages. In addition, a reserve bid for every licence, at the opening bid price, will be included in the determination of winning bidders at the end of the allocation stage. This process will act as though Industry Canada is a bidder in the auction, placing a bid on every licence at the opening bid price. The inclusion of a reserve bid for every licence is to ensure that the incremental value that a bidder would be prepared to pay for an additional licence is at least the opening bid price of that licence. The reserve bids will not be treated as a package, but rather as having been placed by different bidders so that any number of reserve bids can be selected in the winning combination.

57. An algorithm will be used to identify the highest value combination of valid bids with each bidder winning at most one of its packages. If there is only one combination of bids that meets the criterion, this will be the winning outcome that determines the winning packages and winning bidders.

58. If there is more than one set of valid bids having the equal highest value, the tie will be resolved, first, by minimizing the number of "lost licences," where a lost licence is a licence that was included in the bidder’s final clock package but is not included in an alternate package that could be assigned to the bidder. The rationale for selecting the combination of valid bids that minimizes the number of lost licences as the first tie-breaking rule is to select an assignment that is the most similar to the final clock allocation.

59. If there is still a tie, the second tie-breaking rule is to select the combination of valid bids which includes the greatest quantity of spectrum, measured in terms of eligibility points. Note: If reserve bids are part of the winning combination, the eligibility points associated with the reserve bids will not count towards the eligibility points of the winning combination. This is to maximize the quantity of spectrum that is allocated. If, subsequently, there is still a tied outcome, the tie will be broken by a pseudo-random number generator built into the auction software.

60. Industry Canada will decide how best to validate the results following the use of the algorithm. Further details will be included in the final licensing framework. This will include details of the algorithm to be used and also how Industry Canada intends to validate the results following the use of this applicable algorithm.

12. Determining the Base Price in the Allocation Stage

61. The base price is the minimum amount that the winning bidder will pay for its generic winning packages. It does not include the additional, incremental amount that the winning bidders may pay to be assigned specific licences in the assignment stage. The base price is determined using all valid bids submitted by all bidders during the allocation stage.

62. Industry Canada is proposing to use a second-price rule to calculate the base prices such that winning bidders, individually and collectively, will pay the lowest amount that they could have bid on their package of licences and still have won. In other words, a winning bidder will pay an amount that is sufficient to ensure that there is no other bidder or group of bidders prepared to pay more for the licences. This amount is typically less than the actual winning bid submitted in the allocation stage, either in the clock rounds or the supplementary round, and must be greater than or equal to the total sum of the opening bid prices for the combination of licences included in their winning package. The benefit of using a second-price rule is that it encourages bidders to bid truthfully, potentially leading to a more efficient outcome.

63. Industry Canada is proposing to apply bidder-optimal core prices and to use the "nearest Vickrey" approach to determine the base prices. Further information on the determination of base prices can be found in Annex G.

13. Information at the End of the Allocation Stage

64. At this point, bidders will know with certainty the number of licences that they have won; however, where there are generic licences, bidders will not necessarily know the specific licences that have been assigned to them.

65. At the end of the allocation stage, each bidder will be informed of its own winning package, along with the base price that it will pay for its package. All bidders will be informed of the number of winning bidders and the number of licences within each product that have been allocated.

14. The Assignment Stage

66. As there are generic licences, the auction will then advance to the assignment stage, where the specific assignment of the generic licences will be determined. Only bidders that have won one or more generic licences during the allocation stage will participate in the assignment stage.

67. The assignment stage will consist of a sequence of assignment rounds. In each assignment round, bidders will be presented with a set of frequency range options available to them for the products being assigned in the round. The options will comprise contiguous frequency ranges of a product, corresponding to the number of licences that the bidder won in the allocation stage and taking into consideration the number of licences allocated to other bidders.

68. Industry Canada is considering how best to structure the assignment rounds to enable winning bidders to bid effectively for their preferred frequency assignments across multiple service areas. Industry Canada is proposing to run product-by-product assignment rounds in descending order of the populations of the associated service areas, conducting a separate round for each product that requires an assignment round. This process would enable bidders to know which specific frequencies they have won in the most populated service areas before they participate in the assignment rounds for the adjacent, less populated service areas. However, two or more products would be aggregated into a single assignment round if all of the following criteria are met: the products are in the same region (i.e. Region A, Region B or Region C); their service areas form a contiguous geographic area; and the winners, and the number of generic licences they have won are sufficiently similar across service areas, according to predefined criteria.

69. Winning bidders will be allowed to submit top-up bids for the specific licence(s) that they most prefer in each service area. This bid reflects the incremental value that the bidders place on winning these particular frequency blocks.

70. Winning bidders do not have to place bids in the assignment stage if they do not have an assignment preference, as they are guaranteed the number of generic licences that they have already been allocated. Each winning bidder has both a right and an obligation to purchase one of the frequency range options presented to it in the assignment round.

71. An algorithm will be used to identify the combination of specific assignments of licences that result in the highest bid amount. In the event of a tied outcome with more than one specific assignment producing the same total value, the tie will be broken by a pseudo-random number generator built into the auction software.

72. Similar to the determination of base prices in the allocation stage, a second-price rule will be used to determine the assignment price to be paid for the assignment of specific licences such that winning bidders will pay an amount sufficient to ensure that there is no other bidder or group of bidders prepared to pay more for the licence(s).

73. The additional amount paid for the assignment of specific licences, known as the assignment price, is calculated for the package of licences assigned in a given assignment round and not for each individual licence. The assignment price for each winning assignment stage bid will be no greater than the corresponding winning bid amount; however, given the pricing rule, it is likely that the assignment price will be less than the winning bid amount and could even equal zero. As there will be multiple assignment rounds, an individual bidder may have multiple assignment prices. The final price paid by a bidder is equal to the bidder’s base price plus the sum of all associated assignment prices. If the sum of a bidder's assignment prices is zero, then its final price will be equal to its base price, determined at the end of the allocation stage.

74. Industry Canada is proposing to apply bidder-optimal core prices and to use a “nearest Vickrey” approach to determine assignment prices. Further information on the determination of assignment prices can be found in Annex G.

15. Restrictions in the Assignment Stage

75. Industry Canada is proposing that the assignment options be limited such that if there is more than one unallocated licence in a product, the unallocated licences within the product will be retained as a contiguous block. This proposal may affect the specific frequency options available in the assignment rounds and the possibility of obtaining the same blocks of spectrum across service areas.

76. Industry Canada will decide on the process for submitting assignment bids. Details concerning the process for submitting bids in the assignment stage will be included in the final licensing framework.

16. Information After each Assignment Round

77. After each assignment round, Industry Canada will determine the winning assignment bids and the assignment prices for the given round. Each bidder in the assignment round will be informed of the specific licences it was assigned in the given round and the associated assignment price.

17. Final Price

78. At the end of the assignment stage, Industry Canada will determine the final price to be paid by each winning bidder. The final price to be paid by a winning bidder is equal to the bidder’s base price for its generic licences plus the sum of the assignment price(s) associated with the bidder’s specific licence assignments.

18. Information at the End of the Auction

79. Industry Canada is proposing to make the following information publicly available following the conclusion of the auction:

  • the list of winning bidders, licences won and final prices to be paid;
  • the bid submitted by each bidder in every clock round, including the bidder’s identity;
  • the supplementary bids submitted by each bidder, including the bidder’s identity; and
  • the assignment bids submitted by each bidder, including the bidder’s identity.
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