Mark Goldberg


www.mhgoldberg.com





#CTS20

Cone of silence

At noon on Tuesday September 17, applications are due for Canada’s upcoming auction of 700 MHz spectrum. At that time, deposits of 5% of the initial bid price are to be remitted – roughly $8M for a national block of spectrum.

According to the current schedule, we can expect to see the release of the preliminary list of applicants next Monday, September 23. The controversial Licensing Framework, the subject of much discussion this past summer, can be found on the Industry Canada website.

Noon on September 17 also represents the beginning of a quiet period, intended to prevent collusion between auction participants. News was emerging about plans by various companies to submit deposits. That kind of communication is considered on-side: “Discussions regarding the mere intent to participate in the auction will not be deemed to have contravened the collusion rules.” But some companies have also made announcements about their intent to restrict bidding to specific regions. Publicizing bidding strategies is not permitted.

As described in the Licensing Framework, and clarified in supplementary materials from Industry Canada, bidders are not to share information related to their participation in the auction or signal other bidders.

All applicants, including affiliated and associated entities, are prohibited from cooperating, collaborating, discussing or negotiating agreements with competitors, relating to the licences being auctioned or relating to the post-auction market structure, including frequency selection, bidding strategy and post-auction market strategy, until the deadline for the final payment.

As a cone of silence gets lowered between bidders, this anti-collusion rule likely means discussions regarding potential industry consolidation and financing will be stunted among registered bidders in the auction.

The current deposits are fully refundable. As the list gets published next week, keep in mind that: not all applicants will remit the remaining 95% balance over the coming month; not all applications will necessarily be accepted by Industry Canada; and not all qualified bidders will necessarily participate when the auction gets started in January.

While the coming week will satisfy the curiosity of some, many more questions are certain to emerge.

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