I have noticed that some of the reports coming out of the first day of the spectrum auction may be based on some confusion about the auction process.
Let me try to help.
Yes, it is true that after the first two rounds, Shaw and Globalive are currently leading with ‘standing high bids’, but that is not necessarily the best measure of who will end up with the most spectrum.
This isn’t an auction where people are sitting around in a room cautious about scratching their noses or rubbing their brows. Each round, the incremental price for a block of spectrum in a specific geography is offered for about 15% more than the current high bid. Qualified bidders decide if they want to put their names into that piece of spectrum. If there are multiple bidders for a specific block, then the system chooses a temporary winner at random. That is the ‘standing high bidder’.
One of the articles says “Telus Corp. is expected to win the most amount of licenses as it is the top bidder for 60 licenses.” It may be true that TELUS will ends up with the most licenses, but it is way too early to see that from the bidding after just 2 rounds.
You need to look deeper at bidder activity to see that Globalive has actually bid more money than Shaw among all auction participants, and Rogers has bid more than TELUS among the incumbents. You can also detect interesting gaming going on by looking deeper at lot-by-lot bidding activity.
This tournament has a long way to go. We’re still in the preliminaries. Two more rounds are scheduled for today.