whether there is a maximum limit placed on the spectrum any one 

bidder can obtain or whether the spectrum package sizes are pre 

defined, 

whether there are any time limitations on the duration of access to 

the spectrum, 

whether there is a minimum pre qualification requirement and how 

this is specified, and 

the rules for the running of the auction. 

Avoidance of collusion 

In some auction designs it is possible for the participants, through their bids, 

to signal to others, when prices are still low, which blocks of spectrum or 

geographic regions they are interested in.  This can then limit the 

competitiveness of the bidding and the prices paid may be significantly less 

than would have occurred without such collusion. Likelihood of collusion is 

less in a single stage format of auction. 

Encouraging sufficient bidders  

One of the concerns raised by auctions is the potential for anti competitive 

effects because Dominant Service Providers or other large organisations can 

buy all the available spectrum in an area and therefore prevent the entry of 

new players into the market.  There are a number of approaches that can be 

used to assist in avoiding such instances: 

Spectrum cap.  This can be used to ensure that no single 

organisation can dominate the market by limiting the amount of 

spectrum that can be awarded to an individual Service Provider in 

a specific area.  It is also possible to limit the number of areas in 

which an organisation could win access to spectrum. 

Restricting one or more spectrum blocks to new market entrants. 

The type of auction that is used.  In ascending auctions it is likely 

that the dominant service providers will beat all other bids because 

there is considerably more commercial pressure on them to win 

and they are able to leverage their existing network infrastructure, 

reducing their rollout costs relative to a new entrant.  They can 

outbid any new entrant in the final stages of the auction and any 

new entrant will seriously consider whether it is worth the cost of 

bidding.  A different type of auction design, such as a sealed bid 

may encourage the participation of new players. 

Reserve prices 

It is essential to set a proper reserve price to avoid winning bidders obtaining 

access to spectrum at well below market prices.  Reserve prices can be 

determined, for example, by: 

Comparison with other countries which have auctioned the spectrum.  

Clearly the prices paid will need to be modified to take into account any 

67