The Agency is considering two alternative procedures for awarding broadband fixed wireless access licences – comparative selection (or beauty contest as it is commonly known) and auction. Below is a brief description of the two procedures and notes on the advantages and disadvantages of each.

The consultation document Wireless in the Information Age asked for views on the relative merits of the comparative selection or auction approaches. A majority (of 60%) favoured comparative selection. Their reasons are examined below.

Beauty contest – key features

Under a beauty contest applicants set out their cases for being awarded licences on the basis of the criteria set out in the invitation to bid. Criteria might include, for example, speed of deployment, project viability, spectrum efficiency and ability to stimulate competition. The criteria could be weighted.

The awarding authority is reponsible for designing and running the award procedure. It decides which criteria should be used in the selection process and how they should be weighted. It prepares the invitation to bid and follows up with applicants any points arising from their applications. It selects licensees by judging the quality of applicants’ responses against the criteria.

Payment for licences awarded by beauty contest are made on the issue of the licence and at annual intervals. Licence fees will be set on the basis of administrative pricing, as required by the Wireless Telegraphy Act 1998, taking into account spectrum management factors. These include the balance between the spectrum available and future demand, and the desirability of promoting, among other things, efficient spectrum use, the development of innovative services and competition.

Applicants are required to submit information in support of their application. This would include company details, description of services to be offered, roll out plans, business projections and costings, and a technical description of the network used to supply services.

There are many varieties of auction and their design is a specialised skill. In order to meet the auction’s objectives there will be detailed auction rules governing such things as pre-qualification, reserve prices, participation in each round and the number of licences a bidder might be allowed to win. But the essential feature of an auction is that licences are awarded to those that bid the highest price for them. Payment of the fee may be required on issue of the licence, in instalments or by royalty payments.

The awarding authority is responsible for designing the auction, setting up the procedures for running the auction, ensuring that all potential bidders have full knowledge of the rules and procedures and for running the auction to a conclusion. Auctions may be run on site with all bidders in attendance or they may be run remotely. The 3G auction is being run remotely with bids and auctioneers’ reports being exchanged by secure fax. An alternative would be to run a remote auction via the internet.

The applicant’s role in relation to the awarding authority is relatively straightforward, in that applications to enter the auction will be simple and require to be supported by only limited information. However, the applicant will need to make extensive preparations for the auction, e.g. ensuring that it understands the rules, developing a suitable strategy, putting in place sufficient finance and ensuring that it is able to fulfil the licence obligations, should it win.