On September 17, 2015, the Federal Institute of Telecommunications in Mexico (IFT) published the rules for the upcoming AWS auction, set to start in January 2016.
The AWS auction is taking place against a backdrop of related activity:
- First, in an effort to increase retail competition, there will be a public tender process later in 2015 for the Red Compartida (Shared Network). This award will see the 700 MHz band allocated to one wholesaler that will have coverage obligations, and the network will be made available to retail service providers. The wholesale network is intended to be in operation in early 2018.
- Second, the telecom sector is in transformation. During 2015, AT&T acquired two existing operators, Nextel (NII) and Iusacell, and is re-branding them to AT&T. This consolidates the industry to three main players: Telcel (América Móvil), Telefonica and AT&T.
For the AWS auction IFT has proposed the sale of 80 MHz of spectrum in the 1.7/2.1 GHz bands: 30 MHz of AWS-1 and 50 MHz of AWS-3. Blocks will all be national. There will be a limit on how many blocks bidders can acquire, based on their existing holdings. Some AWS-1 spectrum is already in service following an auction held in 2010. As a result of that auction the AWS-1 D Block is held on a regional basis – three regions by Telcel and six by Telefonica. If both of these operators participate in the auction, then the D Block will also be included, but the two operators will both be guaranteed one national block and will not have to re-pay for what they already owned.
After considering past auctions in other countries, IFT decided that the auction will use the combinatorial clock auction (CCA) format.
The CCA format that is planned is very close to that which was used in the last two Canadian spectrum auctions. In particular, it will include the main features:
- Clock rounds with generic licenses,
- Spectrum cap and other activity rules,
- Supplementary round with packages constrained by revealed preference,
- Combinatorial winner determination with second pricing,
- Assignment Phase with optimization algorithms for contiguity and constraints on types of bids that can be made.
The LYA Auction Platform fully supports the CCA auction format being planned. Bidders have used our auction platform to help develop a better assessment of budget requirements and competitive dynamics as part of auction preparation. The LYA platform provides for bidding in a real setting – allowing users to test strategies against robotic bidders, to develop an understanding of how to exploit auction rules, to assess different ways of bidding, and to be able to validate auction results in terms of both winner determination and final pricing.
LYA brings extensive auction experience and expertise, with both SMRA and CCA auction formats and their variations. LYA’s consulting services focus on providing support for participants in spectrum auctions and related matters, including expert testimony. The LYA Auction Platform has been used extensively by bidders for simulations and mock auctions in preparation for spectrum auctions.