6. Auction alternative

58. The rightholder may decline the offer for any reason. The Crown will then offer the rights at auction, with the eventual purchaser paying the market (auction) value for the rights.
59. There has been no decision as to what auction methodology would be used if rightholders reject the renewal offers but the design would need to meet the policy objectives of approximating a market value for the rights and producing a fair return to the Crown.
60. In recent allocations of large commercial spectrum rights, the Ministry adopted an open simultaneous multiple round auction design. The rules are those adopted for Auction 6, conducted in 2003, which can be found at Radio Spectrum Auction No. 6: Auction Catalogue [link to RSM website]. The final price is determined at the point at which the highest losing bidder withdraws from the auction.
61. Reserve prices at previous auctions have been set to recover the costs of running the auction. 
     

Questions on the auction alternative

4. The auction alternative

Issue 4.1
What would be the most appropriate design of auctioning spectrum, following a rejection by incumbent rightholders of renewal price offers from the Government?

Issue 4.2
Do you have any comments on the use of an open, simultaneous multiple round auction design previously adopted by the Ministry for large commercial rights and licences (e.g. Auction 6 rules)?

Issue 4.3
Do you have any other comments on auction as an alternative to the renewal process?