This paper seeks comments
on the draft Regulations and draft Notice which provide the legal basis for the auction of
licences to use Third Generation mobile (3G) spectrum.
Comments should be received by noon on
Tuesday 8 June 1999 by:
Mike Shute
Radiocommunications Agency Auction Team
11th Floor
South Quay 3
189 Marsh Wall
London
E14 9SX
Tel 0171 211 0597
Fax 0171 211 0123
Email shutem@ra.gtnet.gov.uk
Please note that the RA returns to its
headquarters in Docklands with effect from 1 June. Telephone, fax and e-mail contact
details will be unchanged.
Introduction
2. The legal basis for any auction of
licences to be issued under the Wireless Telegraphy Act 1949 rests in the ability of the
Secretary of State to make regulations under section 3 of the Wireless Telegraphy Act
1998. Subsection 3(1) states that "…the Secretary of State may by regulations
provide that [in certain cases]… applications for the grant of wireless telegraphy
licences must be made in accordance with a procedure which—
(a) |
is set out in a notice issued by
him under the regulations, and |
(b) |
involves the
making by the applicant of a bid specifying an amount which he is willing to pay to the
Secretary of State in respect of the licence." |
Thus, in order to hold the auction for 3G licences, the
Secretary of State has to issue two documents, the Regulations and the Notice. The
Regulations state which licences shall be the subject of the auction, and set out the
matters to be dealt with in the Notice and the manner in which the Notice shall be
published. They state that detailed provisions for the auction will be found in the
Notice. The Notice deals with the details of who may apply and how, the criteria for
prequalification, the process of the auction, and the procedures for granting the licences
and making payment. It is possible to issue one or more further Notices if any additional
or amended provisions are required after the issue of the first Notice.
3. The Regulations will be made by means of a Statutory
Instrument. This involves publishing the draft Regulations for a minimum of 28 days and
considering any comments made on them within that time. The Regulations will then be made
and laid before Parliament, and will come into force after 21 days. The Notice is not
subject to the same statutory procedure, but given the complexity of the procedures it is
sensible to publish the draft Regulations and Notice together so that they can be read as
a whole.
4. This paper is not the statutory consultation.
That will take place later this summer. This paper describes how we propose to give effect
in law to the various arrangements for the auction which UACG have considered since March
1998 and on which Ministers have now taken decisions. We are therefore not seeking
comments on the underlying policy issues (for example, which auction design should be
used), but rather on whether the chosen policies (for example, the modified FCC auction
design) will be implemented effectively in law if the Regulations as drafted become a
Statutory Instrument, and the Notice as drafted is issued under the Regulations.
Inevitably there are a number of detailed points where the drafts reflect new or amended
proposals. In addition, comments are invited for the first time on the proposed reserve
prices.
5. For understanding of the main policy principles, you may
find it helpful to refer to the various earlier UACG papers (available on the web at
www.open.gov.uk/radiocom). In considering the draft Regulations and Notice, we would
particularly welcome comments on whether the procedures are clearly and unambiguously
described, whether the time limits are reasonable, and whether details of procedure that
have not previously been set down are practicable and internally consistent. You may also
find the illustrative timetable at Annex 1 helpful.
The Regulations
6. The Regulations provide for the sale of
five wireless telegraphy licences for Third Generation, with the detailed spectrum
assignment of each licence to be stated in a Schedule (see UACG(99)14 for proposals).
Third Generation is defined using relevant phrases from the UMTS Decision. The Regulations
also set out the scope of the Notice, and provide for the refunding of payments for
licences.
The Notice
7. The Notice cannot be issued before the
Regulations have come into effect. In turn, the Information Memorandum, which includes the
invitation to apply for a 3G WT Act licence and to participate in the auction, cannot be
published before the Notice. Our intention is to issue the Notice and publish the
Information Memorandum on the day that the Regulations come into effect.
8. Part 1 includes definitions of the terms used in
the Notice. A number of these are drawn from other statutes, but we would welcome comments
on those that are peculiar to the Notice.
PREQUALIFICATION – APPLICATION REQUIREMENTS
9. Applications and prequalification are dealt with in
Parts 2 and 3 of the Notice. The prequalification process remains essentially the same as
set out in UACG(98)13. Any body corporate may apply to become a bidder in the auction, and
must submit an application (containing details of the bidder, its shareholders, directors,
and advisers (listed at Appendix 1)), compliance certificates (Appendix 2 to 4), and an
initial deposit of £50 million (2.2.3).
10. In addition, the applicant must indicate the IMT-2000
technology that the bidder proposes to use in respect of each licence (2.3). An applicant
may only choose a single technology for each licence, (though need not select the same
technology for every licence it intends to bid for), and this will be disclosed to the
other bidders.
PREQUALIFICATION PROCESS
11. The Notice will specify the date, time (2.1.4) and
place (2.1.3) to which applications must be delivered. Within two business days of receipt
of applications, the Secretary of State will notify all bidders of the names of all other
bidders and the composition of each bidder’s Candidate Group (see below) (3.2.1).
Within five business days of receipt of such information, an applicant may resubmit its
application to correct any information that, in the light of the information on other
bidders’ Candidate Groups, may have been incorrect in the original application
(3.2.2). Any such corrected information on the composition of Candidate Groups will also
be published to all the bidders.
12. The Notice does not make provision for a specific time
period in which the Secretary of State must decide which bidders have pre-qualified,
although this is expected to be of the order of 20 business days after the closing date
for receipt of applications. When decisions on prequalification have been made, all
successful prequalified applicants will be informed, and will also be given the identity
of all other bidders, their Candidate Groups, each bidder’s choice of IMT-2000
technology and whether or not each bidder is allowed to bid on the reserved licence
(3.5.1). The Secretary of State must then give at least 10 business days notice of the
start of the auction to successfully prequalified bidders.
Prequalification Tests
Application Requirements
13. In order to prequalify, the applicant must comply with
the requirements for provision of information, the required certification and the deposit.
Failure to provide any element of these will lead to exclusion from the auction (3.3.2).
Ownership restrictions
14. In order to prequalify, the Secretary of State must be
satisfied that the bidder is not a "Candidate" in relation to another bidder,
and also that no person who is a "Relevant Member" of the bidder’s
"Candidate Group" is a "Relevant Member" in relation to any other
bidder. In response to comments on the previous UACG papers, the drafting of the ownership
provisions has been clarified. The Candidate Group is defined as those parties who are
"connected" to a bidder, which may be summarised as the bidder and:
i) those parties controlling or controlled by a bidder;
ii) those parties with a direct or indirect minority
ownership interest or voting power in the bidder who are "concerned" with the
bid, where "concerned" is defined as:
a) being in possession of Confidential Information in
respect of that bidder, or
b) having entered into any agreement or understanding to
finance the bidder or assist it in any other way in connection with the bid;
and;
iii) any party controlling or controlled by a party falling
within i) and ii) above.
A "Relevant Member" may be summarised as any
member of the Candidate Group other than those which possess neither a direct or indirect
ownership interest, nor voting power in the bidder, nor Confidential Information relating
to the bidder.
If a bidder is a Candidate in relation to any other bidder,
then it will not prequalify for the auction. Similarly, if a Relevant Member of a
Candidate Group is also a Relevant Member in relation to any other bidder, neither of the
bidders will be permitted to prequalify.
15. We would welcome comments on the detailed provisions of
the Notice, in particular the definitions of Candidate, Candidate Group, Participant and
Relevant Member and the terms "connected" and "concerned".
Other specific conditions in respect of Prequalification
16. In addition to the above prequalification requirements,
2G operators must also have the Roaming Condition inserted into their Mobile PTO licences
(3.3.3a). This requirement will apply to members of the same corporate group as a 2G
operator (defined in the Notice as "Relevant Group").
17. In order for BT, or a member of its corporate group, to
prequalify, it will need to have entered into an agreement with the Director General of
Telecommunications to place its 3G business into a separately accounted business for
regulatory purposes, as provided for in BT’s licence (3.3.3d).
General power of exclusion
18. The Secretary of State will also retain a general power
of exclusion in the interests of national security, or if he believes that a bidder, or
any member of the bidder’s Candidate Group, is not a fit and proper person to hold a
licence (3.3.4 and 7.1.1).
19. Compliance with the above provisions will lead to
automatic prequalification. Any 2G operator in the UK, or a member of the same corporate
group as a UK 2G operator, will however not be allowed to bid for the licence reserved for
a new entrant (3.4.2).
changes to candidate groups following submission of
applications
20. Changes to Candidate Groups will not be permitted,
except as a result of the withdrawal of a Candidate from a Candidate Group, or from
general corporate merger and acquisition activity. Additions to the Candidate Group, other
than as a result of general merger and acquisition activity, will not be permitted. If, as
a result of merger or acquisition activity, a Relevant Member in respect of one bidder
becomes a Relevant Member in respect of a second bidder, the Secretary of State will allow
a minimum of three days for reorganisation of the two Candidate Groups to eliminate the
dual-membership. Failure to eliminate this dual membership will result in expulsion from
the auction (6.3.1-6.3.7).
associated bidders
21. The principles underlying the definition of Associated
Bidders remain largely the same as originally defined in UACG(98)13. However, the
treatment of Associated Bidders has been changed, the ownership thresholds have been
raised and the drafting of the provisions in the Notice has been somewhat simplified.
These three changes are briefly summarised below:
i) Rather then dealing with associated bidders in the
auction, associations will be dealt with after the auction. This has the effect that the
auction rules need only cater for those problems of association which actually arise in
the light of the final auction result. In this case, the bidders between whom associations
exist will be required to dispose of the shareholdings giving rise to the associations, as
a precondition to award of the licence.
ii) Two bidders are deemed to be associated if:
a) a Candidate in relation to the first bidder has a direct
or indirect ownership interest of over 15% in the second bidder;
b) a third party that is not a Candidate in relation to
either bidder has a direct or indirect ownership interest of over 15% in both bidders; or
c) both bidders (or members of their Candidate Groups) have
a direct or indirect ownership interest of over 15% in a 2G operator in the UK, or any
party which controls such a 2G operator in the UK.
Previously, the ownership thresholds that would trigger
association had been set at a 10% direct or indirect interest.
iii) the drafting in UACG(98)13 defined the tests of
association outlined above in a) and b) in terms of direct ownership of a Relevant Member
in relation to any other bidder, or indirect ownership of any other bidder. The drafting
in the Notice has been simplified to refer only to indirect or direct ownership interests
in a bidder.
22. Indirect ownership interests are defined in the Notice
as "Economic Interests". The percentage Economic Interest of one person in a
body corporate shall be calculated as a multiple of the percentage of direct interest in
the chain of ownership. However, any ownership interest of 50% or more shall be treated as
100% ownership. For example:
i) if A is a shareholder in B of 40%, and B is a
shareholder in C of 30%, A’s Economic Interest in C is 40% x 30% = 12%; or
ii) if E is a shareholder in F of 60%, and F is a
shareholder in G of 40%, E’s Economic Interest in G is 100% x 40% = 40%.
Associated bidders are defined at 5.1.9 and dealt with more
fully in Part 5 of the Notice.
ratcheting deposit
23. The initial deposit of £50 million must be submitted
with a bidder’s application. As bidding in the auction raises the amount that a
successful bidder would have to pay, it is intended that the financial test of competence
and the bidder’s financial commitment to remain in the auction are extended through a
mechanism for increasing the size of the deposit. The bidder will need to lodge additional
deposits with the Secretary of State before it is allowed to bid above certain Bidding
Thresholds. The Bidding Thresholds are £300 million and each multiple of £100 million
thereafter and the total deposit must be increased to 25% of each threshold amount before
the bidder may bid any amount equal to or exceeding that threshold. Therefore, in order to
bid £300 million or more, each bidder must increase its deposit from the starting amount
of £50 million to £75 million. Before the bidder bids £400 million or more, the deposit
must be increased to £100 million, and so on. The Secretary of State must be in
possession of cleared funds for the additional deposit before the bidder will be allowed
to increase its bid. Interest accrued on existing deposits will not count towards the
amount of the new deposit. Similarly, when increasing the deposit, any penalties that may
have been deducted from the existing deposit(s) will be disregarded for the purpose of
calculating the size of additional deposit (4.3.46-50).
return of deposits
24. There are three points at which deposits will be
returned:
i) within five days of notification of failure to
prequalify. Deposits of those bidders who decide to pull out of the auction prior to this
point will be returned at the same time (3.5.2);
ii) at the start of the auction, where a bidder pulls out
of or is expelled from the process after notification that it has prequalified but before
the auction starts;
iii) at the end of the auction, for all bidders who have
been unsuccessful in, dropped out of or who have been expelled from the process during the
auction (5.4.1).
In paying interest on the deposits, the Secretary of State
will set interest periods to match the likely timing of the three points above
(2.2.14-18).
the auction process
25. The auction design is the modified FCC process
described in UACG(99)9 with the ratcheted reserve price mechanism. This is described in
Part 4 of the Notice. Section 1 defines the dates and purpose of the auction stage.
Section 2 sets out the information which the Secretary of State (in practice, the
Radiocommunications Agency) must give to bidders on timing of the first round of the
auction and means of communication, and the information required from bidders on contact
details. This draft of the Notice provides for encrypted fax, with paper back-up. The
details are in Section 4. UACG(99)16 refers.
26. Section 3 describes how rounds of the auction will take
place, including the information that must be exchanged, the action that must be taken by
each bidder in each round, and the setting of minimum bids and bid increments. It also
allows for recess days.
27. Section 5 provides for penalties to be deducted from
the deposit for acts that fall short of requiring expulsion of the bidder from the
auction. The intention of this is to see that the auction proceeds in a timely and orderly
fashion and is not distorted by bidders who wilfully or carelessly do not adhere to the
bidding rules. Section 6 deals with the provisional award of licences .
reserve prices
28. It is prudent to set reserve prices to ensure that
licences are not issued for indefensibly low sums. In trying to determine the appropriate
reserve price for each licence, we are seeking to establish the level below which the
auction objectives would be better met by not selling that licence at this time than by
selling for the highest bid for it. A reserve price of £125 million might be appropriate
for the reserved licence (Licence A). It is proposed that the reserve prices for the other
licences will be related to this price on a per MHz basis, thus ensuring consistency in
the ratcheting reserve price procedure (see below. These figures would be broadly in line
with those applied administratively for other public mobile licences. Comments on these
proposals will be welcomed. A firm figure will be announced in the Information
Memorandum, taking account of market conditions at the time.
29. We are concerned that a 2G operator should not pay less
per MHz for 3G spectrum than a new entrant. The reserve prices on the unrestricted
licences (B to E) will therefore be increased in proportion to the price of Licence A. In
the auction, bidders will be notified of the adjusted reserve prices prior to each round.
If the reserve price has increased above the current bid on any particular licence, the
bid is no longer current, and the bidder holding the current bid may bid again on that or
any other licence on which it is permitted to bid. The formula for calculating the
adjusted reserve prices may be found at 4.3.23.
Activity rules
30. The Activity Rules, which cover the Candidate Rules
consulted upon in UACG(98)12, are set out in Part 6 of the Notice. They cover:
i) Provision of false information
ii) Confidentiality of information and collusion
iii) Changes to Candidate Groups after submission of
applications (see paragraph 20 above)
iv) Agreements restricting the supply of equipment or
software, or pricing information thereon.
The Secretary of State will retain the discretion to
exclude a bidder from the auction if that bidder or a member of its Candidate Group
breaches an Activity Rule.
Annex 1
Illustrative auction timetable
(Days are counted in Business Days)
(In most cases the Notice does not require an activity to
occur on a particular day, so the timetable below is in most part purely illustrative)
Invitation Stage
| |
Notice comes into effect on date
of issue |
| |
No later than 2 days before
Application Date final questions to SoS |
Pre-qualification Stage
(This stage starts on the Application Date and ends on the
Auction Date)
| Day |
Event |
| 1 |
Date for receipt of Applications
(ie Application Date) |
| 3 |
SoS notifies all Bidders of names
of other bidders and composition of their Candidate Groups |
| 8 |
Bidders may re-submit
applications with corrected information |
| 13 |
SoS notifies all Bidders of any
changes to Candidate Groups |
| 19 |
Bidder Notice to each Bidder a
stating whether Bidder is a Qualified Bidder |
| 19 |
A Bidder who has not been
determined to be a Qualified Bidder ceases to be a Bidder for the purposes of the Auction
and by eg day 24 SoS will return Deposit or Deposit less Penalties |
| 20 |
SoS issues to each Bidder a
Bidder Participation Notice |
| 22 |
Each Bidder notifies SoS of
encryption method and any necessary key, address and names of Authorised Persons |
| 24 |
SoS notifies each Bidder of the
Auction Date |
| 23 to 33 |
Final testing of communications
with Qualified Bidders |
| 34 |
Auction Date (ie auction starts) |
Auction Stage
(This stage starts on the Auction Date and continues until
issue of final Provisional Award Notices)
| Day |
Event |
| 34 |
Auction Date ie day of first
round of auction |
| 34 to 54 |
(Period of 21 days assumed for
this example but could be longer or shorter) - a
typical straightforward round (starting at eg 2pm) may run as follows
- 2pm: round starts and bidders can bid, waiver or withdraw
- 2.30pm: round ends
- 3pm: notification of information from round that ended at
2.30pm, and of information for next round
- 3.30pm: next round starts and bidders can bid, waive or
withdraw
- This example does not include features that can increase
the time taken eg a tie or an incorrect/late bid resulting in a penalty |
| 54 |
Final Round (= Auction Stage
Completion Date) |
Grant Stage
(This stage starts on the issue of Provisional Award
Notices)
| Day |
Event |
| 55 |
Issue of Provisional Award
Notices |
| 56 |
Each Bidder not issued with
Provisional Award Notice is sent deposit less penalties or notification of zero balance |
| 57 |
Provisionally successful bidders
notify SoS of any Pre-Conditions |
| 65 |
Grant Licence to bidders not
subject to Pre-Conditions |
| 85 |
Bidder notifies SoS that no
longer subject to any Pre-Conditions |
| 90 |
Grant Licence to bidder that
notified on day 85 |
| 114(= 54+ 60) |
Backstop Date |
| 234 (= 54+ 60+ 120) |
Backstop Date if Backstop
Extension Notice issued |
S T A T U T O R Y I N S T R U M E N T S
___________________________________________________________
1999 No.
TELEGRAPHS
THE WIRELESS TELEGRAPHY (THIRD GENERATION LICENCES) REGULATIONS 1999
Made - - - 1999
Laid Before Parliament 1999
Coming into force - - - 1999
The Secretary of State, in exercise of the powers conferred by sections 3 and 6 of the
Wireless Telegraphy Act 1998(a) as enacted, and of all other powers
enabling him in that behalf, hereby makes the following Regulations:
Citation and commencement
1. These Regulations may be cited as the Wireless Telegraphy (Third Generation
Licences) Regulations 1999 and shall come into force on [ ] 1999.
Interpretation
2. In these Regulations
"GSM" means Global Standard for Mobile Communications, a digital mobile
communications system as defined in Council Directive 87/372/EEC;
"licences" means five wireless telegraphy licences to establish or use radio
transmitting and receiving stations or apparatus for the provision of Third Generation at
the frequencies specified in the Schedule to these Regulations and subject to the terms,
conditions and limitations specified in a notice issued pursuant to regulation 4;
"Third Generation" means a mobile and wireless communications system capable
of supporting innovative multimedia services beyond the capability of GSM, and capable of
supporting the characteristics referred to in Annex 1 of the UMTS Decision;
"UMTS Decision" means Decision No. 128/1999/EC of the European Parliament and
of the Council of 14th December 1998 on the co-ordinated introduction of a third
generation mobile and wireless communications system (UMTS) in the Community;
"wireless telegraphy licence" means any licence under the Wireless Telegraphy
Act 1949 other than a television licence as defined in section 1(7) of that Act.
Application of the Regulations
3. These Regulations shall have effect in relation to applications for, procedures for
the grant of, and the provision of refunds of fees payable in accordance with the terms
of, the licences.
Notice
4.(1) The Secretary of State shall issue a notice which-
(a) invites any body corporate to make an application to the Secretary of State to bid
for a licence, in accordance with a specified procedure;
(b) specifies criteria by which the Secretary of State shall determine whether an
applicant may participate in a bidding procedure;
(c) specifies a procedure by which qualified applicants may submit bids for licences;
(d) specifies initial reservation prices for each of the licences and provides a
formula for the Secretary of State to adjust such prices for one or more of the licences
during the bidding procedure;
(e) provides for the Secretary of State to determine minimum bids for each of the
licences during the bidding procedure;
(f) specifies criteria by which the Secretary of State shall determine which of the
qualified applicants may bid for which of the licences;
(g) provides for payment of a deposit on submission of an application and for the
payment of additional sums before a qualified applicant may submit a bid for a licence
above a specified sum;
(h) provides for the payment of interest on the deposit;
(i) provides for the circumstances in which all, or part of the deposit, and all, or
part of any interest which accrues to the deposit, is not to be refunded;
(j) specifies the conditions which must be satisfied before a licence may be issued to
a qualified applicant who submits the highest valid bid for a licence;
(k) provides for a qualified applicant who submits the highest valid bid for a licence
to elect whether he wishes to pay such sum-
(i) as a single cash sum on issue of the licence; or
(ii) as half of such sum on issue of the licence and the payment of periodic sums
calculated in accordance with a specified formula;
(l) specifies a guarantee which an applicant who elects to pay the licence fee other
than as a single cash sum is to provide to the Secretary of State on issue of the licence;
(m) provides for the other terms, provisions and limitations subject to which each of
the licences is to be issued; and
(n) provides for the other conditions with which qualified applicants must comply to
participate, or continue to participate, in the bidding procedure.
(2) A notice which is issued pursuant to paragraph (1) above shall be published on the
Radiocommunications Agency's Internet Web page at http://www.open.gov.uk/radiocom and
copies shall be available from the following address: [ ].
Refunds
5. The Secretary of State may, in such cases as he thinks fit, refund, in whole or in
part, sums which have been paid to him in accordance with any provision of the licences.
Regulation 2 SCHEDULE
[Description of frequencies of each of the licences]
[Parliamentary Under-Secretary of State
for Small Firms, Trade and Industry
1999 Department of Trade and Industry]
EXPLANATORY NOTE
(This note is not part of the Regulations)
THE WIRELESS TELEGRAPHY (THIRD GENERATION LICENCES) NOTICE [1999]
The Secretary of State in exercise of the powers conferred by section
1D(3) of the Wireless Telegraphy Act 1949( a) and
regulation 4 of the Wireless Telegraphy (Third Generation Licences) Regulations [1999( b) ] hereby issues a Notice to provide a procedure for the grant of specified
wireless telegraphy licences by auction.
Date of issue of this Notice:
The Secretary of State for Trade and Industry
PART 1 - INTRODUCTION
Commencement
1.1.1 This Notice shall come into effect on the date of issue.
Purpose of Notice
1.1.2 The purpose of this Notice is to specify the procedure to be
followed in granting the Licences by means of an auction.
Auction Stages
1.1.3 This Notice provides for a four stage procedure-
(a) an Invitation Stage as specified in Part 2;
(b) a Pre-Qualification Stage as specified in Part 3;
(c) an Auction Stage as specified in Part 4; and
(d) a Grant Stage as specified in Part 5.
Definitions
1.1.4 In this Notice, unless the contrary intention appears:
"Activity Rules" means the obligations imposed on
Bidders as set out in Part 6 ;
"Additional Deposit" means any additional sum payable
to the Secretary of State in accordance with paragraph 4.3.46;
"Adjusted Reserve Price" means the reserve prices for
Licences B,C,D and E as determined in accordance with paragraph 4.3.23;
"Application" means an application submitted by a
Bidder in accordance with section 1 of Part 2 or re-submitted in accordance with section 2
of Part 3;
"Application Date" means [x.x.1999];
"Application Form" means the form specified in
Appendix 1;
"Associated Bidder" means a Bidder falling within the
definition in paragraph 5.1.7;
"Auction" means the procedure specified in Part 4;
"Auction Date" means either the date notified to
Bidders in accordance with paragraph 4.2.1 or re-notified in accordance with paragraph
4.2.4 ;
"Auction Location" means [ ] ;
"Auction Stage Completion Date" means the date on
which the Final Round of the Auction is completed;
"Auction Web Site" means [ ];
"Authorised Officers" means two directors or a
director and company secretary who have authority from the Board of Directors to bind the
company for all purposes connected with the Auction;
"Authorised Persons" means the persons notified from
time to time to the Secretary of State in accordance with paragraph 4.2.3(c)(ii) and
paragraph 7.17;
"Bidder" means a body corporate which has made an
Application and has not been notified of its exclusion from, or otherwise withdrawn from,
the procedure specified in this Notice;
"Bidder Association Certificate" means the certificate
specified in Appendix 5
"Bidder Compliance Certificate" means the certificate
specified in Appendix 2;
"Bidder Director Compliance Certificate" means the
certificate specified in Appendix 4;
"Bidder Insider Compliance Certificate" means the
certificate specified in Appendix 3;
"Bidder Notice" means the notice issued to Bidders by
the Secretary of State in accordance with paragraph 3.5.1;
"Bidding Schedules" means the formats provided to
Bidders by the Secretary of State in accordance with paragraph 4.2.2 (d) ;
"Bidding Thresholds" means the sums determined
in accordance with paragraph 4.3.46;
"Business Day" means a day other than a Saturday,
Sunday, Bank Holiday within the meaning of the Banking and Financial Dealings Act 1971 or
[24th December to 3 December inclusive];
"Candidate" in relation to a Bidder means a person
(other than the Bidder) who is a member of the Candidate Group in relation to the Bidder;
"Candidate Group" in relation to a Bidder means the
Bidder and any person who is a Connected Person in relation to that Bidder;
"Confidential Information" shall have the meaning
given in
paragraph 6.4.4;
"Connected Person" means a person-
(a) who controls a Bidder;
(b) is a Participant in a Bidder and is concerned in any way with that
Bidder’s application for a Licence;
(c) who has an Economic Interest of more than [10 per cent.] in a
Bidder and is concerned in any way with that Bidder's application for a Licence;
(d) who controls, or is controlled by, a person falling within (a),(b)
or (c) above;
(e) who is controlled by a person who controls a person falling within
(a), (b) or (c); or
(f) who is controlled by a Bidder.
"Current Price" shall have the meaning given in
paragraph 4.3.24;
"Deferred Licence Fee" means the fees calculated in
accordance with Part 2 of Schedule 2;
"Deposit" shall have the meaning given in paragraph
2.2.1 ;
"Deposit Bank" means [ ];
"Deposit Interest" means interest accruing to a
Bidder’s Deposit in accordance with paragraph 2.2.14;
"Deposit Period" means such period as determined by
the Secretary of State as appropriate for the placing of the Deposit and the determination
of the Deposit Rate in accordance with paragraph 2.2.7;
"Deposit Rate" means the rate of interest as
determined from time to time in accordance with paragraph 2.2.21;
"Economic Interest" means, in relation to a specified
percentage, an indirect interest held by a person ("the first person"), through
one or more bodies corporate, in the share capital of another body corporate ("the
second person"), such that the percentage interest attributable to the first person
(calculated in accordance with normal accounting principles) in the share capital of the
second person exceeds the specified percentage; and for this purpose, the first person,
and every body corporate controlled by the first person, shall be treated as one person.
"Electronic Bidding Method" means a method of
participating in the Auction using paper based fax with a dial- up or leased line;
"Encryption Method" means one of the encryption
packages specified in Schedule 6;
"equity share capital" has the same meaning as in the
Companies Act 1985;
"Grant Stage" means the stage specified in Part 5;
"Guarantee" means the guarantee specified in Schedule
4 and which is to be provided to the Secretary of State on payment of the Initial Licence
Fee in accordance with section 2 of Part 5 and Part 2 of Schedule 2;
"HMG Account" means [bank account number/ sort code/
reference etc.];
"Initial Deposit" means the sum specified in paragraph
2.2.3;
"Initial Deposit Period" means the Deposit Period
starting on the Application Date and expiring after 20 Business Days;
"Initial Grant Date" means either-
(a) if one or more Bidders notifies the Secretary of State in
accordance with paragraph [5.1.2] that he is not subject to a Pre-Condition, the last date
on which a Licence is granted to such a Bidder; or
(b) if either-
(i) all Bidders notify the Secretary of State in accordance with
paragraph 5.1.2 that they are subject to Pre-Conditions; or
(ii) all of the Bidders who have notified that they are not subject to
Pre-Conditions in accordance with (a) above are excluded from the Auction before grant,
7 Business Days from the issue of the Provisional Award Notices;
"Initial Licence Fee" means 50% of the Licence Fee;
"Initial Reserve Price" means the price in relation to
each of the Licences as specified in Schedule 1;
"Insider" means any party to whom Confidential
Information is disclosed by a Candidate Group other than as a result of a breach by any
Bidder or Candidate of the Activity Rules;
"Invitation Stage" means the stage specified in Part
2;
"Licence A" means the licence specified in Schedule 1
to the Wireless Telegraphy Regulations and to be granted subject to the terms, conditions
and limitations specified in Schedule 2 to this Notice;
"Licences" means the licences to establish or use any
station for wireless telegraphy or instal or use any apparatus for wireless telegraphy at
the frequencies specified in Schedule 1 to the Wireless Telegraphy Regulations and subject
to the terms, provisions and limitations specified in Schedule 2 to this Notice;
"Licence Fee" means the sum payable in respect of each
Licence as determined by the final bid for that Licence in accordance with Parts 4 and 5;
"Message" means anything falling within paragraphs (a)
to (d) of section 4(1) of the Telecommunications Act 1984;
"Participant" means a person who, in relation to a
body corporate, holds or is beneficially entitled to shares in that body or who possesses
voting power in that body but excluding a person who:
(a) holds or is beneficially entitled to 10 per cent. or less of any
class of shares in the body corporate which are listed or traded on a Recognised Stock
Exchange; or
(b) possesses voting power in respect of 10 per cent. or less of any
such class of shares;
"Penalty" means a sum deducted from a Bidder’s
Deposit in accordance with the provisions of section 6 of Part 4 or with Part 6;
"Pre-Condition" means, in relation to a Bidder, that the
Bidder is-
(a) an Associated Bidder; or
(b) requires Prior Regulatory Approval;
"Prior Regulatory Approval" means any shareholder or
competition regulatory approval which is required before a Licence is granted to a Bidder;
"Provisional Award Notice" means a notice issued to a
Bidder under paragraph 4.6.2;
"PTO" means a person who-
(a) holds a licence which has been granted by the Secretary of State
under section 7 of the Telecommunications Act 1984-
(i) to run any such telecommunication system as is specified in the
licence or is of a description so specified and which has been designated as a public
telecommunication system under section 9 of that Act; and
(ii) which authorises that person to provide a telecommunication
service by means of that system consisting in the conveyance of Messages through the
agency of Wireless Telegraphy from or to that system directly to or from any apparatus
designed or adapted to be capable of being used whilst in motion; and
(b) holds a licence which has been granted by the Secretary of State
under section 1 of the Wireless Telegraphy Act 1949 to operate in any of the frequency
bands specified in Schedule 5.
"Qualified Bidder" means a Bidder determined as such
in accordance with section 3 of Part 3;
"Qualifying Bank" means a bank whose long term debt
investment grade rating is one or more of the following-
(a) Moody’s A2;
(b) Standard & Poor’s A;
(c) Duff & Phelps Credit Reference Agency’s A
(d) Fitch’s A;
"Recess Day" means either-
(i) a Business Day on which there are no Rounds of the Auction; or
(ii) the remainder of a Business Day on which there are no further
Rounds of the Auction following a notification made in accordance with paragraph 4.3.13;
"Recognised Stock Exchange" means The London Stock
Exchange, the Alternative Investment Market or any other recognised investment exchange
under the Financial Services Act 1986 in the UK or any other investment exchange or
securities market outside the UK which the Secretary of State considers, in his absolute
discretion, to be a recognised exchange or securities market ;
"Recess Day Notice" means the notice specified in
Appendix 7;
"Reference Banks" means either-
(i) the principal London offices of each of Barclays Bank Plc, Midland
Bank Plc, and National Westminster Bank Plc; or
(ii) such other banks as the Secretary of State notifies Bidders in
writing from time to time in substitution for one or more of the banks referred to in (i)
above;
"Relevant Group" means, in relation to an undertaking-
(a) any parent undertaking of the undertaking;
(b) any subsidiary undertaking of the undertaking;
(c) any subsidiary undertaking of any parent referred to in (a) above;
(d) a shareholder or partner in the undertaking which beneficially owns
(directly or indirectly) shares in the undertaking in circumstances where there is one
other shareholder or partner in the undertaking which beneficially owns (directly or
indirectly) the remaining shares in circumstances where neither shareholder or partner has
control;
(e) any other undertaking of which the undertaking beneficially owns
(directly or indirectly) shares in circumstances where there is one other shareholder or
partner in that undertaking which beneficially owns (directly or indirectly) the remaining
shares;
(f) any other undertaking in circumstances where two or more of its
shareholders or partners which acting in concert together beneficially own (directly or
indirectly) more than 50% of the shares or voting rights in that undertaking, acting in
concert together beneficially own (directly or indirectly) more than 50% of the shares or
voting rights of the undertaking; and
(g) any other undertaking of which the undertaking beneficially owns
(directly or indirectly) together with one or more undertakings acting in concert more
than 50% of the shares or voting rights of that undertaking;
"Relevant Member" means a member of a Candidate Group
other than a member who-
-
(a) has no interest, whether direct or indirect, in the share capital
of the Bidder;
(b) possesses no voting power in the Bidder; and
(c) possesses no Confidential Information relating to the Bidder;
"Restricted Bidder" means a Bidder which either -
(a) is a PTO; or
(b) is a member of a Relevant Group which includes a person who is a
PTO ;
"Standards Election Notice" means the notice specified
in Appendix 6;
"Telecommunications Act Licence" means a licence
granted under section 7 of the Telecommunications Act 1984;
"Wireless Telegraphy" has the same meaning as in the
Wireless Telegraphy Act 1949;
"Wireless Telegraphy Regulations" means [the Wireless
Telegraphy (Third Generation Licences) Regulations 1999].
1.1.5 In this Notice-
(a) Any reference to a Participant with more than a specific
percentage interest in a body corporate shall be construed as a reference to a person who-
(i) holds or is beneficially entitled to more than the specified
percentage of the shares in that body; or
(ii) possesses more than the specified percentage of the voting power
in that body;
and for this purpose a person and every body corporate controlled by
him shall be treated as one person,
(b) Subject to [paragraph (c) below], any reference to a person-
(i) holding or being entitled to shares, or any amount of the shares or
equity share capital, in a body corporate; or
(ii) possessing voting power, or any amount of the voting power, in a
body corporate,
shall be construed as a reference to his doing so, or being so
entitled, whether alone or jointly with one or more other persons and whether directly or
through one or more nominees;
(c) A reference to a person's holding of shares, or possession of
voting power, in a body corporate shall be construed so as to disregard such holding or
possession if or to the extent that-
(i) he holds the shares concerned-
(aa) as a nominee;
(bb) as a custodian (whether under a trust or by a contract); or
(cc) under an arrangement pursuant to which he has issued, or is to
issue, depository receipts, as defined by section 220(1) of the Companies Act 1985, in
respect of the shares concerned, and
(ii) he is not entitled to exercise or control the exercise of voting
rights in respect of the shares concerned;
(d) For the purposes of sub-paragraph (c)(ii) above-
(i) a person is not entitled to exercise or control the exercise of
voting rights in respect of shares if he is bound (whether by contract or otherwise) not
to exercise the voting rights, or not to exercise them otherwise than in accordance with
the instructions of another; and
(ii) voting rights which a person is entitled to exercise or of which
he is entitled to control the exercise only in certain circumstances shall be taken into
account only when those circumstances have arisen and for so long as they continue to
obtain;
(e) A person shall be deemed to control a body corporate if-
(i) he has a controlling interest in it;
(ii) he has a controlling interest in a body corporate which has a
controlling interest in the body; or
(iii) although he does not have such an interest in the body, or in any
body corporate with a controlling interest in the body, it is reasonable, having regard to
all the circumstances, to expect that he will be able, by whatever means and whether
directly or indirectly, to achieve the result that the affairs of the body are conducted
in accordance with his wishes;
and for this purpose a person has a controlling interest in a body if
he holds, or is beneficially entitled to, 50 per cent. or more of the equity share capital
in the body, or possesses 50 per cent. or more of the voting power in it;
(f) For the purpose of the definition of "Connected Person" a person is
"concerned" with a Bidder’s application for a Licence if he-
(i) is in possession of Confidential Information relating to the Bidder; or
(ii) has entered into any agreement or understanding with the Bidder, or any other
member of the Candidate Group in relation to the Bidder, to finance the Bidder, or assist
the Bidder in any other way, in connection with bidding for a Licence; and
(g) For the purpose of the definition of "Relevant Group" in paragraph 1.1.4
above-
(i) "parent undertaking" and "subsidiary undertaking" shall have
the meanings given to them in section 258 of the Companies Act 1985;
(ii) "undertaking" and "shares" shall have the meaning given to
them in section 259 of the Companies Act 1985;
(iii) "acting in concert" means acting in co-operation with another
shareholder or partner to obtain or consolidate control of an undertaking; and
(iv) "control" shall have the meaning given in sub-paragraph
(e) above.
1.1.6 References to this Notice shall include references to the
Schedules and Appendices.
PART 2 - INVITATION STAGE
Section 1: Invitation to Apply
2.1.1 Any body corporate may make an Application in accordance with
this Part.
2.1.2 An Application shall be completed in the English language and
consist of the following-
(a) An Application Form in the form specified in Appendix 1;
(b) A Bidder Compliance Certificate in the form specified in
Appendix 2;
(c) A Bidder Insider Compliance Certificate in the form specified in
Appendix 3 ;
(d) A Bidder Director Compliance Certificate in the form specified in
Appendix 4;
(e) an Initial Deposit as specified in section 2 of this Part; and
(f) a Standards Election Notice in the form specified in Part 1 of
Appendix 6 and completed in accordance with section 3 of this Part.
Manner of Application
2.1.3 An Application must be-
(a) addressed to [ ]; and
(b) delivered to [ ].
Date for receipt of Applications
2.1.4 Applications must be received by the Secretary of State at the
address specified in paragraph 2.1.3 (b) above on the Application Date between the hours
of [ ] London time.
Additional information
2.1.5 Any person who proposes to submit an Application in accordance
with the requirements of this Part may at any time not later than 2 Business Days before
the Application Date notify the Secretary of State of a question relating to the
submission of an Application.
2.1.6 In responding to a request made under paragraph 2.1.5 above the
Secretary of State shall place a copy of the question and any response on the Auction Web
Page and, in doing so, shall not name the person who has notified the question.
Section 2-Deposits
References to Deposit
2.2.1 Any reference in this Notice to Deposit shall, unless otherwise
indicated, be construed as referring to-
(a) the Initial Deposit and any Additional Deposit which may have been
paid by a Bidder; and
(b) any Deposit Interest which has been accredited to a Bidder in
accordance with paragraph 2.2.14 and 2.2.15 below.
2.2.2 Any reference in this Notice to Deposit shall not be construed so
as to include any sum which has been deducted as a Penalty.
Initial Deposit
2.2.3 The Initial Deposit shall be £50 million and shall be payable to
the Secretary of State in accordance with paragraph 2.2.5 below.
2.2.4 If funds representing the Initial Deposit are not cleared on the
Application Date then the Secretary of State shall notify the Bidder that his Application
is invalid.
Method of payment of Deposit
2.2.5 The Deposit shall be payable to the Secretary of State by telegraphic transfer of
funds to the HMG Account at the Deposit Bank.
Deposit Period
2.2.6 On transfer of the Initial Deposit to the Secretary of State in
accordance with paragraph 2.2.5, the Initial Deposit Period for the calculation of Deposit
Interest shall apply.
2.2.7 Before expiry of a Deposit Period the Secretary of State may
determine a further Deposit Period of the same or different length for the payment of
Deposit Interest in relation to the Initial Deposit and any Additional Deposits received
in accordance with paragraph 4.3.46, provided that no individual Deposit Period shall be
longer than 40 Business Days.
2.2.8 Any further Deposit Period determined in accordance with
paragraph 2.27 above shall commence on the expiry of the preceding Deposit Period.
2.2.9 Subject to paragraph 2.2.10 ,when a Bidder is notified that his
Deposit, or part of his Deposit, is to be returned to him under any provision of this
Notice, the Deposit, or part of the Deposit, as the case may be, shall be repaid at the
end of the Deposit Period which the Secretary of State last determined as applying to the
Deposit in accordance with paragraph 2.2.7 above.
2.2.10 When a Bidder is notified before expiry of the Initial Deposit
Period that his Deposit, or part of his Deposit, is to be returned to him, the Deposit, or
part of the Deposit, as the case may be, shall be repaid at the expiry of the Initial
Deposit Period.
Additional Deposits
2.2.11 Any reference in this Notice to Additional Deposit shall be construed as
referring to the total of the sums paid to the Secretary of State by a Bidder in
accordance with paragraph 4.3.46.
2.2.12 Any requirement in this Notice for a Bidder to make an Additional Deposit shall
not be satisfied by set-off against any Deposit Interest which may have accrued to the
account of that Bidder.
2.2.13 Any Additional Deposit shall be payable to the Secretary of State in accordance
with paragraph 2.2.5.
Deposit Interest
2.2.14 A Bidder’s Deposit shall accrue interest at the appropriate
Deposit Rate for each Deposit Period as determined in accordance with paragraphs 2.2.21
and 2.2.22.
[2.2.15 For the purposes of paragraph 2.2.14, a Bidder’s Deposit
shall include any Deposit Interest previously accrued.]
2.2.16 Subject to paragraphs 2.2.17 and 2.2.18, where a Deposit, or
part of a Deposit, is returned to a Bidder under any provision of this Notice, the
Deposit, or part of a Deposit, which is returned shall include such Deposit Interest as
has accrued in respect of that Deposit, or part of that Deposit, from the date on which it
was received by the Secretary of State.
2.2.17 No Deposit Interest shall be returned to the Bidder which has
accrued in respect of the Deposit, or part of the Deposit, from the Initial Grant Date.
2.2.18 Where all or part of the Deposit is forfeit under any provision
of this Notice as a Penalty, all Deposit Interest which has accrued to the Deposit, or
part of the Deposit, as the case may be, shall form part of the total amount which is
forfeit
Penalties
2.2.19 If a Bidder is notified under any provision of this Notice that
all or part of his Deposit is forfeit as a Penalty, the deduction from that Bidder’s
Deposit shall be deemed to have occurred at the time of such notification by the Secretary
of State notwithstanding that the sums identified in the notification, and any interest
accrued or accruing, remain for a further period of time in the HMG Account at the Deposit
Bank.
2.2.20 In the event that a sum which has been deducted as a Penalty is
re-instated as all or part of the Bidder’s Deposit the sum shall be deemed to be so
re-instated from the time of notification of its re-instatement to the Bidder and all
interest which has accrued in respect of that sum from the date on which it was originally
notified as a Penalty shall also be deemed to be re-instated as part of the Deposit from
that date.
Deposit Rate
2.2.21 Subject to paragraph 2.2.22 below, the Secretary of State shall
set the Deposit Rate for each Deposit Period as the arithmetic mean (rounded to four
decimal places) of the quotations provided to the Deposit Bank from each of at least two
of the Reference Banks for the amount of the Deposit for that Deposit Period.
2.2.22 If less than two Reference Banks provide the quotations referred
to in paragraph 2.2.21 above, then the Deposit Rate for that Deposit Period shall be
determined as the rate of interest agreed between the Secretary of State and the Deposit
Bank.
Section 3- Standards Election Notice
2.3.1 In making an Application a Bidder is required, in accordance with
paragraph 2.1.2 (f) of this Part, to submit a completed Standards Election Notice.
2.3.2 In completing a Standards Election Notice a Bidder shall either-
(a) identify one of the standards specified in Part 2 of Appendix 6 as the standard
which that Bidder elects to be included in any Licence which that Bidder may be granted in
accordance with the provisions of Part 5 of this Notice; or
(b) subject to paragraph 2.3.3 , specify a standard listed in Part 2 of Appendix 6
against each of the Licences as the standard which that Bidder elects to be included in
that Licence should he be granted the Licence in accordance with the provisions of Part 5.
2.3.3 In choosing to comply with sub-paragraph (b) above-
(a) a Bidder who falls within the definition of a Restricted Bidder need not indicate a
standard for Licence A; and
(b) a Bidder must only select one standard for each for the Licences.
PART 3 - PRE-QUALIFICATION STAGE
Section 1: Preliminary
Period of Pre-Qualification Stage
3.1.1 The Pre-Qualification Stage shall start at the Application Date
and shall end on the Auction Date.
Section 2: Initial Assessment
3.2.1. Within 2 Business Days of the Application Date the Secretary of State shall
notify all Bidders of-
(a) the names of all other Bidders; and
(b) the composition of the Candidate Groups of all other Bidders.
3.2.2 Within 5 Business Days of the Secretary of State’s notification made in
accordance with paragraph 3.2.1 a Bidder may, subject to paragraph 3.2.3, re-submit his
Application indicating the changes which he has made.
3.2.3 In re-submitting an Application in accordance with paragraph 3.2.2 a Bidder may
only amend his original Application to correct information which he knows to be incorrect
as a result of the notification made to him under paragraph 3.2.1 and which relates to the
composition of his Candidate Group.
3.2.4 Within 5 Business Days of the expiry of the period of time specified in paragraph
3.2.2 the Secretary of State shall notify all Bidders of any changes to Candidate Groups
which have been notified to him in any re-submitted Application.
Section 3: Determination as a Qualified Bidder
3.3.1 In accordance with paragraphs 3.3.2, the Secretary of State shall
determine whether a Bidder is a Qualified Bidder.
3.3.2 Subject to paragraphs 3.3.3 and 3.3.4, the Secretary of State
shall determine that a Bidder is a Qualified Bidder if in his opinion such Bidder-
(a) has submitted an Application, or re-submitted an Application in
accordance with section 2 above, which complies with all of the requirements of paragraph
2.1.2 of section 1 of Part 2;
(b) is not a Candidate in relation to another Bidder; and
(c) has no person who is a Relevant Member of its Candidate Group who
is also a Relevant Member in relation to the Candidate Group of another Bidder.
3.3.3 The Secretary of State shall not determine a Bidder as a
Qualified Bidder if such Bidder is -
(a) a PTO whose Telecommunications Act Licence does not include the
condition set out in Schedule 3 to this Notice;
(b) an undertaking which is a member of a Relevant Group which includes
a PTO whose Telecommunications Act Licence does not include the condition set out in the
Schedule 3 to this Notice;
(c) either-
(i) an undertaking which is subject to any agreement, arrangement or
understanding (whether or not legally binding) with a PTO or with an undertaking which is
a member of a Relevant Group which includes a PTO; or
(ii) an undertaking which is a member of a Relevant Group which
includes an undertaking which is subject to an agreement, arrangement or understanding
(whether or not legally binding) with a PTO or with an undertaking which is a member of a
Relevant Group which includes a PTO,
and, in either case, -
(aa) the PTO or the undertaking which is a member of a Relevant Group
which includes a PTO has or will have an interest in the [Bidder’s Third Generation
operations]; and
(bb) the PTO’s Telecommunications Act Licence does not include the
condition set out in Schedule 3 to this Notice-; or
(d) either-
(i) British Telecommunications Plc; or
(ii) an undertaking which is a member of a Relevant Group which
includes British Telecommunications Plc,
and, in either case, British Telecommunications Plc has not entered
into the agreement set out in Schedule 8 to this Notice with the Director General of
Telecommunications for the purposes of condition [42.2 (a)] of its Telecommunications Act
Licence.
3.3.4 The Secretary of State may in his discretion determine that a
Bidder is not a Qualified Bidder if in his opinion-
(a) the grant of a Licence to that Bidder would be prejudicial to the
interests of national security; or
(b) the Bidder, or any Member of the Bidder’s Candidate Group,
would not be a fit and proper person to hold a Licence.
Section 4: Determination as Restricted Bidder
3.4.1 In making a determination under section 3 above that a Bidder is
a Qualified Bidder, the Secretary of State shall also determine whether such Bidder is a
Restricted Bidder.
3.4.2 Any Bidder which has been determined as a Restricted Bidder in
accordance with paragraph 3.4.1 above shall not, in accordance with Part 4 of this Notice,
be entitled to bid for Licence A.
Section 5: Notification of status as a Qualified Bidder
3.5.1 The Secretary of State shall, within 2 Business Days of making
his final determination under sections 3 and 4 above issue to each of the Bidders a Bidder
Notice which shall state whether that Bidder has been determined to be a Qualified Bidder
and, if the Bidder has been so determined-
(a) the identity of all other Qualified Bidders;
(b) the composition of Candidates of all other Qualified Bidders;
(c) the identity of any Qualified Bidders which have been determined to
be Restricted Bidders; and
(d) the standards specified in Part 2 of Appendix 6 which each
Qualified Bidder has elected in relation to each of the Licences in accordance with the
provisions of section 3 of Part 2.
3.5.2 On the issue of a Bidder Notice to a Bidder which has not been
determined to be a Qualified Bidder that Bidder shall immediately cease to be a Bidder for
the purposes of the Auction and the Secretary of State shall at the end of the Initial
Deposit Period, send to that Bidder either-
(a) the Deposit submitted by that Bidder with his Application; or
(b) such Deposit less any Penalties which may have been deducted by the
Secretary of State.
Section 6- Numbers of Qualified Bidders
3.6.1 If either-
(a) the Secretary of State determines in accordance with section 3 of
this Part that the number of Qualified Bidders is less than six; or
(b) at any time before the Auction Date the number of such Bidders is
less than six,
the Secretary of State may, at his discretion, notify each of the
Bidders that the Auction Stage shall not take place.
3.6.2 The Secretary of State shall, at the end of the Deposit Period
during which he notifies Bidders in accordance with paragraph 3.6.1, return to each Bidder
either-
(a) the Deposit submitted by that Bidder with his Application;
or
(b) such Deposit less any Penalties which may have been deducted by the
Secretary of State.
Section 7-General
Additional Information
3.7.1 The Secretary of State may, during the Pre-Qualification Stage,
notify any Bidder of a request for additional information or documents relating to his
application with a time limit for the Bidder to submit such information or documents to
the Secretary of State.
+
3.7.2 On receipt of a request made pursuant to paragraph 3.7.1 a Bidder
shall use his best endeavours to provide the information or documents within the time
limit specified.
PART 4 - AUCTION STAGE
Section 1-Preliminary
Commencement
4.1.1 The Auction Stage shall start on the Auction Date and continue
until the issue of the Provisional Award Notices..
4.1.2 The purpose of the Auction Stage is to provide a procedure to
determine-
(a) which of the Bidders qualifies for a provisional grant of each of
the Licences; and
(b) the final bids which, subject to the requirements of Part 5, shall
form the Licence Fee payable in respect of each of the Licences.
Section 2- Preparation for the Auction
4.2.1 At least ten Business Days before the Auction Date the Secretary
of State shall notify each Bidder of-
(a) the date of the Auction Date;
(b) the time at which the First Round shall start; and
(c) the period of time for the First Round.
4.2.2 Within 1 Business Day of issuing a Bidder Notice under section 5
of Part 3 of this Notice, the Secretary of State shall issue to each of the Bidders a
Bidder Participation Notice which shall-
(a) provide each Bidder with a set of numbered passwords which a Bidder
shall use to confirm to the Secretary of State that any communication which the Secretary
of State receives in accordance with the provisions of this Part have originated from that
Bidder;
(b) specify the Secretary of State’s fax numbers for that Bidder
for the purposes of paragraph 4.4.1;
(c) specify the Secretary of State’s telephone numbers for that
Bidder for the purposes of paragraph 4.4.2; and
(d) provide the Bidding Schedules.
4.2.3 Within 2 Business Days of the Business Day of receipt of a Bidder
Participation Notice issued in accordance with paragraph 4.2.2 , the Bidder shall-
(a) either-
(i) notify the Secretary of State of one of the Encryption Methods
specified in Schedule 6 to this Notice as the Encryption Method which that Bidder elects
to use with the specified Electronic Bidding Method; or
(ii) notify the Secretary of State of his decision not to employ
encryption with the specified Electronic Bidding Method;
(b) if the Bidder makes a notification in accordance with sub-paragraph
(a) (i) above, provide the Secretary of State with any necessary decryption key and any
other information which he will require to read and understand communications sent by that
Bidder using the Encryption Method which he has elected to use ;
(c) notify the Secretary of State of-
(i ) an address within [ ] of the Auction Location at which the
Secretary of State may deliver by messenger any notification or other document during the
Auction; and
(ii) the names of three Authorised Persons each of whom the Bidder has
provided with authority to participate, either jointly or severally, in any way in the
Auction on behalf of the Bidder and who will be available at the address notified at (i)
above on all Business Days when any Round of the Auction is in progress.
4.2.4 If, after the Secretary of State has notified Bidders of the
Auction Date under paragraph 4.2.1, the Secretary of State is of the opinion that it is
impractical that the First Round of the Auction should commence on the date notified, the
Secretary of State may notify Bidders of a different date as the Auction Date provided
that such date shall not be a date earlier than that originally notified.
Section 3- Auction Structure
Rounds of the Auction
4.3.1 The Auction shall consist of a sequence of Rounds and shall start
with the First Round at the time, place and date notified to the Bidders in accordance
with paragraph 4.2.1 above.
4.3.2 Each Round shall consist of the period of time notified in
accordance with paragraph either paragraph 4.2.1(c) or 4.3.6(f) during which all Bidders
which are not Current Price Bidders shall notify the Secretary of State of one of the
following-
(a) a bid for a Licence in accordance with paragraph 4.3.38 to 4.3.45;
(b) withdrawal in accordance with paragraph 4.3.27;
(c) a waiver made in accordance with paragraph 4.3.29 to 4.3.32.
Consequences of failure to notify
4.3.3 If a Bidder fails to notify the Secretary of State in accordance with the
provisions of paragraph 4.3.2, the Secretary of State may notify the Bidder of a further
10 minutes period during which he is required to comply with the requirements of that
paragraph .
4.3.4 Following the expiry of the further 10 minutes period notified in accordance with
paragraph 4.3.3 above, the Secretary of State may separately notify two further 10 minutes
periods during which the Bidder must comply with paragraph 4.3.2.
4.3.5 If a Bidder has failed to comply with paragraph 4.3.2 at the end of the third ten
minutes period notified in accordance with paragraph 4.3.4, the Secretary of State shall
notify that Bidder of his exclusion from the Auction.
.
Results and Notification of Next Round
4.3.6 After the First Round, the Secretary of State shall, at least 30
minutes before the start of each subsequent Round, notify each Bidder of-
(a) any Current Price in respect of each of the Licences;
(b) the identity of any Bidders who have notified their withdrawal from
the Auction;
(c) the identity of any Bidder who has exercised a waiver in accordance
with paragraph 4.3.29;
(d) the identity of any Bidder who has been excluded from the Auction
by the Secretary of State;
(e) the time at which, subject to any subsequent notification of a
Recess, the next Round shall start;
(f) the period of time for the next Round;
(g) the minimum bid for each Licence as determined in accordance with
paragraph 4.3.16;
(h) the Adjusted Reservation Prices as determined in accordance with
paragraph 4.3.23;
(i) the identify of any Current Price Bidders in relation to each of
the Licences; and
(j) the identity of any Bidders who have ceased to be Current Price
Bidders in accordance with paragraph 4.3.26.
Final Round
4.3.7 The Final Round shall be the Round at the end of which no Bidder
has notified the Secretary of State of either-
(a) a bid; or
(b) a waiver.
Number of Rounds
4.3.8 There shall be at least 1 Round on each Business Day unless
that day is a Recess Day.
4.3.9 The number of Rounds on each Business Day which is not a Recess
Day shall be at the discretion of the Secretary of State.
Recess Days
4.3.10 Subject to paragraph 4.3.11, the Secretary of State may at his
discretion notify Bidders that the next Business Day shall be a Recess Day.
4.3.11 Subject to paragraphs 4.3.12 and 4.3.13, following the end of
each Round, except the Final Round, when there are eight or fewer Bidders remaining, each
Bidder shall be accorded a unilateral opportunity to require the following Business Day to
be notified by the Secretary of State as a Recess Day.
4.3.12 A Bidder shall be entitled to require the next Business Day to be notified by
the Secretary of State as a Recess Day in accordance with paragraph 4.3.11 on two
occasions only.
4.3.13 If a Bidder notifies the Secretary of State of his intention that the following
Business Day shall be a Recess Day in accordance with the provisions of paragraphs 4.3.11
before 2 p.m. on that day, the reference to the following Business Day in that paragraph
shall be read as a reference to the remainder of the Business Day on which such
notification is made, and that day shall take effect as a Recess Day.
4.3.14 Following a Recess Day the Auction shall continue on the next
following Business Day.
4.3.15 A Bidder may only notify the Secretary of State of his request that a day be
notified by the Secretary of State as a Recess Day by sending him a Recess Day Notice as
specified in Appendix 7.
Minimum bids
4.3.16 Before the start of each Round except the First Round and any Tie Round, the
Secretary of State shall determine the minimum bid for each of the Licences in accordance
with paragraphs 4.3.21 and 4.3.22 below.
4.3.17 The Secretary of State shall first determine the minimum raise for each Licence
in relation to which a bid has been made at the end of the previous Round. In relation to
each Licence the minimum raise shall be determined as the higher of-
(a) £1 million; or
(b) 5 % s of the relevant Current Price or such lower percentage as the Secretary of
State may specify (rounded
up to the nearest £100,000).
4.3.18 If no bid was made in the previous Round for a Licence in relation to which
there is a Current Price, the minimum raise shall be deemed to be that which was last
determined in accordance with paragraph 4.3.17.
4.3.19 If there is no Current Price for a Licence, the Secretary of State shall not be
required to determine a minimum raise for that Licence.
4.3.20 After he has made his determinations in accordance with paragraph 4.3.17, the
Secretary of State shall then determine the minimum bid for each of the Licences in
accordance with paragraphs 4.3.21 and 4.3.22.
4.3.21 The Secretary of State shall determine the minimum bid for Licence A as either-
(a) if there is no Current Price for Licence A, the Initial Reserve Price for that
Licence; or
(b) if there is a Current Price for Licence A, the total of-
(i) the Current Price; and
(ii) the minimum raise last determined for that Licence in accordance with paragraph
4.3.17.
4.3.22 The Secretary of State shall determine the minimum bid for Licences B, C, D and
E, as either-
(a) if there is no Current Price for the Licence, the greater of-
(i) the Initial Reserve Price; and
(ii) the Adjusted Reserve Price; or
(b) if there is a Current Price for the Licence, the greater of-
(i) the greater of-
(aa) the Initial Reserve Price; and
(bb) the Adjusted Reserve Price; and
(ii) the total of-
(aa) the Current Price; and
(bb) the minimum raise last determined for that Licence in accordance the paragraph
4.3.17 .
Adjusted Reserve Prices
4.3.23 After each Round except the Final Round, the Secretary of State
shall determine Adjusted Reserve Prices for Licences B, C, D and E by applying the
following formula-
(rounded up to the nearest £100,000)
Whereby-
(a) X is equal to either-
(i) if there is a Current Price for Licence A, that bid; or
(ii) if there is no Current Price for Licence A, the Initial Reserve Price for Licence
A.
(b) Y is the total number of MHz comprised in Licence A; and
(c) Z is the total number of MHz comprised in Licence B, C, D or E as
the case may be.
Current Price
4.3.24 The Current Price shall, in relation to each of the Licences, be
the highest bid made by a Bidder for that Licence in the previous Round during which a bid
was made for that Licence.
Current Price Bidder
4.3.25 Subject to paragraph 4.3.26, the Current Price Bidder is the
Bidder who, in relation to a particular Licence, last made the Current Price for that
Licence.
4.3.26 If an Adjusted Reserve Price is subsequently notified for a Licence which
exceeds the Current Price for that Licence, the Bidder shall cease to be the Current Price
Bidder for that Licence.
Withdrawal
4.3.27 Any Bidder who is not a Current Price Bidder may, during any
Round notify his withdrawal from the Auction.
4.3.28 If a Bidder notifies his withdrawal from the Auction that Bidder
shall not be entitled to participate in future Rounds.
Waiver
4.3.29 A Bidder who is not a Current Price Bidder may, in accordance
with paragraph 4.3.2, notify a waiver as an alternative to making a bid or notifying
withdrawal.
4.3.30 Each Bidder may notify only three waivers during the Auction.
4.3.31. Following the notification by a Bidder of its third waiver,
that Bidder shall, in all subsequent Rounds, notify either a bid or withdrawal from the
Auction, unless in that particular Round the Bidder is the Current Price Bidder.
4.3.32 If, in contravention of the requirements of paragraph 4.3.30, a
Bidder notifies the Secretary of State of a fourth waiver, the Bidder shall have failed to
notify the Secretary of State in accordance with the requirements of paragraph 4.3.2 and
paragraphs 4.3.3 to 4.3.5 shall apply to that Bidder.-
Ties
4.3.33 If in any Round two or more Bidders bid the same highest bid
(the "Tie Bid") in respect of a Licence, the Secretary of State shall
immediately notify all Bidders that a further Round (the "Tie Round") shall be
held in which only the Bidders who have submitted the Tie Bid shall be entitled to
participate.
4.3.34 There shall be no minimum raise requirements for the Tie Round;
4.3.35 Any bids submitted shall be at or above the Tie Bid;
4.3.36 In the event that two or more Bidders submit Tie Bids at the end
of the Tie Round, the Secretary of State shall employ a random method to determine which
of the Bidders who participated in the Tie Round shall be deemed the Current Price Bidder
in respect of the previous Round.
4.3.37 The highest bid which is made at the end of the Tie Round,
whether or not a Tie Bid, shall be the Current Price for the next Round.
Valid Bids
4.3.38 A bid shall consist of identifying a Licence by assigning the
letter A, B, C, D or E and a sum of money which that Bidder undertakes to pay in respect
of that Licence.
4.3.39 A Bidder shall not bid a sum for a Licence which is less than
the minimum bid last notified for that Licence.
4.3.40 For the purposes of the First Round, the Initial Reserve Prices
are notified as the minimum bids for that Round.
4.3.41 All bids shall be made in multiples of £100,000.
4.3.42 During any one Round, no Bidder shall be entitled to make a bid
for more than one Licence.
4.3.43 A bid shall only be valid if submitted to the Secretary of State
in accordance with the provisions of section 5 of this Part.
4.3.44 No bid for Licence A shall be accepted from a Bidder who has
been notified as a Restricted Bidder in accordance with section 4 of Part 3.
4.3.45 No bid for a Licence shall be accepted from a Bidder who has not
complied with the provisions of paragraphs 4.3.46 to 4.3.50.
Additional Deposits
4.3.46 Where a Bidder makes a bid in accordance with any provision of
this Section which is at or above a Bidding Threshold, that bid shall only be accepted as
a valid bid if the Bidder has, in advance of making the bid, provided the Secretary of
State with an Additional Deposit which is sufficient to bring that Bidder’s total
Deposit equal to 25% of the relevant Bidding Threshold.
4.3.47 For the purposes of paragraph 4.3.46, the Bidding Thresholds
shall be £300 million and include all sums in excess of £300 million which are multiples
of £100 million.
4.3.48 For the purposes of paragraph 4.3.46, any Additional Deposit
shall be provided to the Secretary of State in accordance with the provisions of section 2
of Part 2 and may in part consist of sums which have been previously paid to the Secretary
of State as an Additional Deposit.
4.3.49 For the purposes of paragraph 4.3.46 an Additional Deposit shall
not be regarded as provided to the Secretary of State until such time as the relevant sums
are cleared in the HMG Account at the Deposit Bank.
4.3.50 Before a Bidder transfers any sum to the HMG Account for the purposes of
paragraph 4.3.46 above, the Bidder shall notify the Secretary of State of the time at
which he proposes to make the transfer and inform him of the amount of the sum.
Section 4 - Electronic Bidding
Electronic Bidding Method
4.4.1 Subject to paragraphs 4.4.2, all Bidders shall participate in the Auction by
means of the Electronic Bidding Method.
Emergency back-up bidding procedures
4.4.2 If at any time during the Auction Stage the Secretary of State is of the opinion
that the Electronic Bidding Method is no longer effective for the purposes of continuing
the Auction with the participation of one or more Bidders, he may notify all Bidders of
one or more of the following-
(a) that one or more Bidders shall continue to participate in the Auction by telephone
using the number notified to the relevant Bidder in the Bidder Participation Notice;
(b) that one or more Bidders shall send one or more of his Authorised Persons to the
Auction Location for the purpose of continuing the Auction manually; and
(c) that one or more Bidders shall send by messenger the Bidding Schedules to the
Auction Location from a location which is within [ ] of the Auction Location.
Validation
4.4.3 On receipt of any Bidding Schedule which is sent by a Bidder to the Secretary of
State in accordance with any provision of this Part, the Secretary of State shall
acknowledge receipt and correct reading and understanding of the contents of the Schedule.
Identification of Bidders
4.4.4 Where any Bidder participates in the Auction using any of the following-
(a) the Electronic Bidding Method;
(b) the delivery of documents by a messenger;
(c) telephone participation ;
the Secretary of State may at any time require the Bidder to confirm his identity by
providing a specified numbered password which has been notified to the Bidder in the
Bidder Participation Notice.
4.4.5 If any Bidder should failure to provide the Secretary of State with the correct
password in accordance with paragraph 4.4.4, the Secretary of State may refuse to accept
any further communication from that person.
Bidding Schedules
4.4.6 Where any Bidder participates in the Auction using any of the following -
(a) the Electronic Bidding Method ;
(b) the delivery of documents by messenger;
(c) manual participation at the Auction Location in accordance with paragraph 4.4.2(b);
that Bidder may only validly participate by use of the appropriate Bidding Schedules
which have been provided to the Bidders in accordance with paragraph 4.2.2(d).
Telephone Participation
4.4.7 If any Bidder participates in the Auction under any provision of this Part by use
of the telephone number notified to that Bidder under paragraph 4.2.2.(c), the Secretary
of State may make a tape or electronic recording of any conversation between himself and
that Bidder for the purposes of maintaining a record.
Section 5- Penalties
4.5.1 The Secretary of State may, at his discretion, deduct a sum by way of Penalty
from a Bidder’s Deposit in accordance with the provisions of paragraphs 4.5.2 and
4.5.3.
4.5.2 Subject to paragraph 4.5.3, the Secretary of State may deduct a sum of £10,000
from a Bidder’s Deposit in each of the following circumstances-
(a) if a Bidder submits a bid when, in accordance with the provisions of this Part, a
Bidder is not entitled to submit a bid for a Licence;
(b) if , in accordance with the provisions of this Part, a Bidder is required within a
specified time period either to submit a bid, or otherwise notify the Secretary of State
of a waiver or withdrawal, and the Bidder fails to comply within the specified time
period;
(c) if a Bidder notifies the Secretary of State of a waiver or a Recess Day otherwise
than in accordance with the provisions of paragraph 4.3.30 or paragraph 4.3.11;
(d) if, during a Round, a Bidder submits a bid at below the Minimum Bid notified for
that Round or the bid is not a multiple of £100,000;
(e) if a Bidder submits a bid with an incorrect password ;
(f) if a Bidder submits a bid which is illegible or which is otherwise unclear;
(g) if a Bidder notifies the Secretary of State using a method or format in
contravention of a requirement in this Part to use a particular Electronic Bidding Method,
Bidding Schedule, or other specified format;
(h) if a Bidder acts in a manner which disrupts the procedure specified in this Part,
and which does not otherwise fall within sub-paragraphs (a) to (g) above.
4.5.3 If a Bidder has been subject to nine Penalties, then any future Penalty, as
specified in paragraph 4.5.2, shall be £20,000.
Section 6- Procedure after Final Round
Provisional Award of Licences
4.6.1. At the end of the Final Round, a Bidder shall be entitled to the
provisional award of a Licence in accordance with the provisions of this section providing
that-
(a) if the Licence is Licence A-
(i) such Bidder is the Current Price Bidder for Licence A; and
(ii) such Bidder is not a Restricted Bidder; and
(b) if the Licence is Licence, B, C, D or E, -
such Bidder is the Current Price Bidder for the relevant Licence.
Provisional Award Notice
4.6.2 Within 2 Business Days of the end of the Final Round the
Secretary of State shall issue to each Bidder entitled to the provisional award of a
Licence in accordance with paragraph 4.6.1, a Provisional Award Notice which shall notify
that Bidder of-
(a) the Licence which that Bidder is provisionally awarded;
(b) the final bid which, subject to the satisfaction of any
Pre-Conditions as specified in Part 5 of this Notice, that Bidder shall pay in respect of
the Licence notified in paragraph (a) above;
(c) the identity of all other Bidders notified in accordance with
paragraphs (a) and (b) above.
PART 5 GRANT OF LICENCES
Section 1: Preliminary
5.1.1 The Grant Stage shall start on the issue of the Provisional Award
Notices and end on the earlier of-
(a) the date on which the last of the Licences notified under paragraph 4.72 is granted
to a Bidder;
or
(b) the Backstop Date.
Notification of any Pre-Conditions
5.1.2 Within 2 Business Days of receipt of a Provisional Award Notice
the Bidder shall notify the Secretary of State -
(a) whether it is an Associated Bidder in relation to any other Bidder
specified in the Provisional Award Notice;
(b) whether it is subject to a Prior Regulatory Approval; and
(c) the details of any associations or Prior Regulatory Approval
notified in accordance with paragraph (a) or (b) above.
5.1.3 A Bidder which notifies the Secretary of State under
paragraph 5.1.2 that it is not subject to any Pre-Conditions shall be
entitled to a grant of the relevant Licence in accordance with paragraph 5.3.1.
5.1.4 Subject to section 5 of this Part, a Bidder which notifies the
Secretary of State under paragraph 5.1.2 above that it is subject to one or more
Pre-Conditions shall not be entitled to grant of the relevant Licence until such time as
it has notified the Secretary of State that it is no longer subject to any Pre-Conditions.
5.1.5 On notifying the Secretary of State in accordance with paragraph
5.1.4 the Bidder shall provide written evidence that the Pre-Conditions notified by that
Bidder have been satisfied.
5.1.6 A Bidder which notifies the Secretary of State in accordance with
paragraphs 5.1.2 or 5.1.4 above that it is not, or is no longer, an Associated Bidder,
shall at the same time submit the Bidder Association Certificate specified in Appendix 5.
5.1.7 Subject to paragraph 5.1.18 a Bidder who fails to
notify the Secretary of State in accordance with paragraph 5.1.2 above shall be subject to
a daily Penalty of £10,000.
5.1.8 A Bidder who fails to notify the Secretary of State in
accordance with paragraph 5.1.2 above within 7 Business Days of receipt of a Provisional
Award Notice shall not be entitled to the grant of a Licence and all of that Bidder’s
Deposit shall be forfeit as a Penalty.
Meaning of Associated Bidder
5.1.9 For the purposes of paragraph 5.1.2 above, a Bidder ("the
first Bidder") is an Associated Bidder in relation to another Bidder ("the
second Bidder") if-
(a) a Candidate in relation to the first Bidder-
(i) is a Participant with more than a 15 per cent. interest in the
second Bidder; or
(ii) has an Economic Interest of more than 15 per cent. in the second
Bidder;
(b) a person, not being a Candidate in relation to the first or second
Bidders:
(i) is a Participant with more than a 15 per cent. interest in both the
first Bidder and the second Bidder;
(ii) is a Participant with more than a 15% interest in the first Bidder
and has an Economic Interest of more than 15% in the second Bidder;
(iii) is a Participant with more than a 15% interest in the second
Bidder and has an Economic Interest of more than 15% in the first Bidder; or
(iv) has an Economic Interest of more than 15 per cent. in both the
first and the second Bidder; or
(c) a member of the Candidate Group in relation to the first Bidder and
a member of the Candidate Group in relation to the second Bidder:
(i) are both Participants with more than a 15 per cent. interest in a
body corporate which is a PTO, or in a body corporate which controls a PTO; or
(ii) both have an Economic Interest of more than 15 per cent. in a PTO,
or in a body corporate which controls a PTO.
Section 2 : Licence Fee Payment Election
5.2.1 At the time a Bidder notifies the Secretary of State in
accordance with paragraph 5.1.2, that Bidder shall also notify the Secretary of State
whether it elects, at the time of grant of the Licence-
(a) to pay the Licence Fee as a single amount; or
(b) to pay the Initial Licence Fee and provide the Guarantee as
specified in Schedule 4.
5.2.2 A Bidder which either-
(a) does not make an election in accordance with paragraph 5.2.1; or
(b) does not provide the Guarantee as specified in Schedule 4,
shall be deemed to have elected to pay the Licence Fee as a single
amount.
Section 3 : Grant of licences
Grant of Licence to Bidders
5.3.1 Within 20 Business Days of either-
(a) receipt of notification from a Bidder in accordance with paragraph
5.1.2. that he is not subject to any Pre-Conditions; or
(b) receipt of notification from a Bidder in accordance with paragraph
5.1.4 that he is no longer subject to any Pre-Conditions,
the Secretary of State shall grant that Bidder the relevant Licence.
Duties of Bidders on Grant
5.3.2 Subject to paragraph 5.3.4, on the grant of a Licence to a Bidder
which has made an election in accordance with paragraph 5.2.1(a) that Bidder shall pay to
the Secretary of State a sum which shall be equal to the Licence Fee less either-
(a) the Deposit; or
(b) if the Deposit has been subject to the deduction of Penalties,
a sum representing the balance of the Deposit, if any.
5.3.3 Subject to paragraphs 5.3.5 and 5.3.6, on the Grant of a Licence
to a Bidder which has made an election in accordance with paragraph 5.2.1(b) that Bidder
shall-
(a) pay to the Secretary of State a sum which shall be equal to the
Initial Licence Fee less either-
(i) the Deposit; or
(ii) if the Deposit has been subject to the deduction of Penalties, a sum representing
the balance of the Deposit, if any; and
(b) ensure that a Qualifying Bank provides a Guarantee in the form specified in
Schedule 4.
5.3.4 If the Deposit referred to in sub-paragraph (a) of paragraph 5.3.2, or the sum
calculated in accordance with sub-paragraph (b) of paragraph 5.3.2, as the case may be, is
greater than the Licence Fee, the Secretary of State shall deduct an amount equal to the
sum of the Licence Fee and shall, at the end of the Deposit Period last determined by him,
pay to the Bidder the balance of such sum.
5.3.5 If the Deposit referred to in sub-paragraph (a) of paragraph 5.3.3, or the sum
calculated in accordance with sub-paragraph (b) of paragraph 5.3.3, as the case may be, is
greater than the Initial Licence Fee, the Secretary of State shall deduct an amount equal
to the sum of the Initial Licence Fee and shall, at the end of the Deposit Period last
determined by him in, pay to the Bidder the balance of such sum.
5.3.6 The Secretary of State shall not pay the sum referred to in paragraph 5.3.5 above
unless the Bidder has provided a Guarantee in the form specified in Schedule 4.
Section 4- Bidders not issued with a Provisional Award Notice
Return of Deposits
5.4.1 The Secretary of State shall at the end of the Deposit Period
last determined by him, send to each Bidder which has participated in the Auction, but
which has not been issued with a Provisional Award Notice, either-
(a) the Deposit; or
(b) either-
(i) the balance of the relevant Bidder’s Deposit less any
deductions by way of Penalties; or
(ii) if such deductions have resulted in a zero balance, notification
of that fact.
Section 5-Backstop Date
Date of Backstop Date
5.5.1 Subject to paragraph 5.5.2, the Backstop Date shall be the date
which is 60 Business Days after the Auction Stage Completion Date.
5.5.2 The Secretary of State may, at any time before the date
determined in accordance with paragraph 5.5.1. above, extend the period so specified by
issuing to each of the Bidders a Backstop Date Extension Notice, provided that any such
extension does not exceed 180 Business Days after the Auction Stage Completion Date.
Significance of Backstop Date
5.5.3 If any Bidder which has notified the Secretary of State in
accordance with paragraph 5.1.2 that it is subject to one or more Pre-Conditions has not,
by the Backstop Date, notified the Secretary of State in accordance with paragraphs 5.1.4.
and 5.1.5 that all such Pre-Conditions have been satisfied then, notwithstanding paragraph
5.3.1, that Bidder shall not be entitled to the grant of a Licence in accordance with the
procedures specified in this Notice and his Deposit, or the balance of his Deposit, if
any, shall be forfeit
PART 6 - ACTIVITY RULES
Section 1-General
Breach of Activity Rules
6.1.1 If a Bidder, a member of that Bidder’s Candidate Group, or
its Insiders, breaches one or more of the Activity Rules specified in this Part, the
Secretary of State may, at his discretion, notify that Bidder of its exclusion from the
Auction.
6.1.2 In the event that a Bidder is excluded from the Auction under
paragraph 6.1.1 above the Secretary of State may, at his discretion, notify the Bidder
that all of part of that Bidder’s Deposit has been forfeit as a Penalty.
6.1.3 If a Bidder which is a Current Price Bidder is notified in
accordance with paragraph 6.1.1 above, that Bidder shall no longer be entitled to grant of
a Licence.
Section 2- Submission of False or Misleading Information
6.2.1 No Bidder shall submit to the Secretary of State an Application
under the provisions of Part 2, or re-submit an Application under the provisions of Part
3, which contains any information which that Bidder knows to be false or misleading.
6.2.2 Subject to paragraph 6.2.3, no Bidder shall submit to the
Secretary of State an Application under the provisions of Part 2, or re-submit an
Application under the provisions of Part 3, which contains any information which is false
or misleading and which has been provided negligently by the Bidder.
6.2.3 If a Bidder submits an Application under Part 2 which contains
information which is false or misleading and the provision of such information would
otherwise breach the provisions in paragraph 6.2.2, the Secretary of State shall not be
entitled to exclude that Bidder from the Auction or forfeit all or part of that
Bidder’s Deposit as a Penalty providing that all the information in question has been
corrected in a re-submitted Application made under Part 3.
Section 3- Changes to Composition
Application of rules in this section
6.3.1 The Activity Rules specified in this Part shall apply to a Bidder
from submission of an Application under section 1 of Part 2 until the end of the Final
Round of the Auction.
Changes to Candidate Group Composition
6.3.2 No change shall occur in the composition of a Bidder’s
Candidate Group as has been notified to the Secretary of State in that Bidder’s
Application except as a result of:
(a) the withdrawal of a Candidate; or
(b) the corporate merger or acquisition activity of a Bidder or
Candidate in accordance with paragraph 6.3..4 .
6.3.3 If any Bidder has re-submitted an Application in accordance with
the provisions of section 2 of Part 3, the reference in paragraph 6.3.2 to the
Bidder’s Application shall be to the Application as re-submitted.
Merger and acquisition activity
6.3.4 Subject to paragraph 6.3.5, any change in the composition of, or
ownership structure of, a Bidder’s Candidate Group which results from merger or
acquisition activity shall be deemed to take place from the date when the transaction
becomes unconditional or the sale or purchase of shares takes place, whichever is the
earlier.
6.3.5 If as a result of merger or acquisition activity a Relevant
Member of any Candidate Group becomes a Relevant Member of any other Candidate Group, the
Bidders in relation to each of the Candidate Groups shall re-organise their Candidate
Groups so as to eliminate the double-membership within three days or such longer period as
the Secretary of State may notify.
Duty to notify Secretary of State
6.3.6 If any change shall occur, or is proposed, in a Bidder’s
Candidate Group or ownership structure, whether or not such change is, or would otherwise
be, a breach of the Activity Rules, that Bidder shall immediately notify the Secretary of
State and, within two days of such change shall, subject to paragraph 6.3.7. below, submit
to the Secretary of State-
(a) a revised Application Form;
(b) a Bidder Compliance Certificate; and
(c) a Bidder Insider Compliance Certificate in respect of any new
Insiders who have not yet provided such a certificate.
6.3.7 Where the information contained in any revised Application Form
has not changed since the Bidder’s last submission, the Bidder need only provide
information which has changed, and may cross-refer on the revised Application Form to that
which was previously submitted.
Section 4- Non-Collusion and Confidentiality
Application of Activity Rules in this Section
6.4.1 The Activity Rules specified in this Section shall apply to a
Bidder from submission of his Application in accordance with section 1 of Part 2 until the
Auction Stage Completion Date.
Confidential Information
6.4.2 A Bidder, any member of that Bidder’s Candidate Group, or
its Insiders, shall not convey any Confidential Information to any other Bidder or member
of that Bidder’s Candidate Group or Insiders or enter into any arrangement, agreement
or understanding for that purpose.
6.4.3 A Bidder, any member of that Bidder’s Candidate Group or its
Insiders, shall not receive advice regarding the Auction from persons who are acting as
advisors to the Government with regard to the Auction
Meaning of Confidential Information
6.4.4 Confidential Information means information of whatever nature
relating to any proposed bid, whether in writing or oral, which if it were made public
would be likely to have an effect on the price which any other Bidder proposes to bid,
including a Candidate Group’s business case, auction strategy and the highest price
they are willing to bid but excluding-
(a) such information which is, in or which comes into, the public
domain other than as a breach by any Bidder, member of that Bidder’s Candidate group,
or its Insiders, of the Activity Rules;
(b) such information as a director or employee of a member of a
Candidate Group (the "First Candidate Group") received prior to the Application
Date which relates to another Candidate Group (the "Second Candidate Group") of
which he is also a director or employee for the purpose of considering whether the [member
of the First Candidate Group should participate as a member of the Second Candidate Group;
Directors and employees
6.4.5 If any person who is a director, or employee, of a member of the
Bidder’s Candidate Group is also a director, or employee, of a member of another
Candidate Group, the Bidder shall ensure that the person-
(a) does not take part in preparing both Candidate Groups for
participation in the Auction;
(b) is not in possession, and does not receive, Confidential
Information relating to both Candidate Groups; and
(c) does not pass Confidential Information relating to one Candidate
Group to a member of another Candidate Group or its Insiders.
Section 5 -Anti-Competitive Activity
Application of Activity Rules in this Section
6.5.1 The Activity Rules in this Section shall apply to a Bidder on the
submission of an Application made in accordance with Section 1 of Part 2 until [ ].
Prohibited arrangements
6.5.2 A Bidder, or any member of that Bidder’s Candidate Group,
shall not enter into, or maintain in force, any agreement, arrangement or understanding
with an equipment provider or software supplier which-
(a) places, or would place, any restriction on the supplier as to the
quantities of equipment or software which it supplies or offers to supply to another
Bidder or any member of another Bidder’s Candidate Group for the purposes of
planning, building or operating a network which is to be operated in accordance with one
of the Licences; or
(b) places, or would place, any restriction as to the prices or other
terms and conditions upon which such equipment or software is supplied or offered to be
supplied for the purpose referred to in (a) above to any other Bidder or member of another
Bidder’s Candidate Group.
Section 6- Duty to inform Secretary of State of errors
6.6.1 The Activity Rules in this Section shall apply to a Bidder during
the Auction Stage.
6.6.2 If at any time during the Auction Stage a Bidder knows, or ought
reasonably to have known, that the Secretary of State has made an error with regard to a
bid, or any other information which that Bidder has communicated to the Secretary of
State, the Bidder shall be under a duty to inform the Secretary of State of the error at
the earliest opportunity.
6.6.3 If a Bidder fails to comply with paragraph 6.6.2 that Bidder
shall be deemed to have accepted the error as if the bid, or other information which
constitutes the error, had been intentionally communicated to the Secretary of State by
that Bidder.
PART 7 - MISCELLANEOUS
General Power of Exclusion
7.1.1 The Secretary of State may at any time notify any Bidder of his
exclusion from the Auction if, in his opinion, the grant of a Licence to that Bidder would
be prejudicial to the interests of national security or if that Bidder is not a fit and
proper person to hold a Licence.
7.1.2 If the Secretary of State excludes a Bidder in accordance with
paragraph 7.1.1 he shall return that Bidder’s Deposit, or such part of that Bidders
Deposit as remains after deduction of any Penalties.
Means of notification by Secretary of State
7.1.3 If in accordance with any provision of this Notice the Secretary of State is
required, or wishes to notify a Bidder of any fact or circumstance, he may do so, unless
otherwise specified, by any means.
Means of notification to Secretary of State
7.1.4 Subject to the provisions of Part 4, if in accordance with any provision of this
Notice a Bidder is required, or wishes to notify the Secretary of State of any fact or
circumstance he shall do so by-[ ].
7.1.5 If a Bidder sends any notification to the Secretary of State, except a
notification made in accordance with any provision of Part 4, and notification is received
after 6 p.m. on a Business Day, such notification shall be deemed to have been received by
the Secretary of State at 9.a.m. on the next Business Day.
Publication of Information
7.1.6 Where the Secretary of State provides any information to a
Bidder under any provision of this Notice, whether or not that information originated from
that Bidder, he may publish such information in any manner which he thinks fit.
Change of Authorised Persons
7.1.7 If a Bidder wishes to substitute one or more of the Authorised
Persons notified to the Secretary of State in accordance with paragraph 4.2.3(c)(ii) he
may do so at any time on notification of the details of such change to the Secretary of
State.
SCHEDULE 1
Initial Reservation Prices
The Initial Reservation Prices for each of the Licences shall be as
follows-
Licence A- [ ];
Licence B- [ ];
Licence C- [ ];
Licence D- [ ];
Licence E- [ ].
SCHEDULE 2
Terms and Conditions of Licences
Part 1- Licence terms
1.1 On grant, each of the Licences shall include the following -
Licence terms
(a) a term providing that the Licence shall commence on the
date of its grant and continue in force until 31 December 2021 unless earlier revoked by
the Secretary of State in accordance with the terms specified in paragraph (b) below or
surrendered by the Licensee.
Licence Variation and Revocation
(b) a term providing that the Secretary of State may not revoke
or vary the Licence save at the request or with the consent of the Licensee except:
(i) if there is no longer in force a licence granted to the Licensee
under section 7 of the Telecommunications Act 1984;
(ii) in accordance with [paragraph 6 of this licence];
(iii) in accordance with section 4(5) of the 1998 Act ;
(iv) if there has been a material breach of any of the terms of the
Licence or the provisions in the Licence schedules;
(v) if the Licensee is found, to the reasonable satisfaction of the
Secretary of State, to have been involved in any act, or omission of any act, constituting
a material breach of the rules and procedures as set out in this Notice; or
(vi) if, where the Licensee has elected, under the provisions of [ ] of
this Notice, to defer payments, the Licensee fails to maintain in force a Guarantee as
specified in Schedule 4 of this Notice.
Assignment
(c) a term providing that the Licence may not be assigned;
Fees
(d) a term providing that the Licensee shall pay to the Secretary
of State in cash and without set-off or counter-claim either-
(i) the Licence Fee as a single amount on the date of grant of the
Licence; or
(ii) the Initial Licence Fee on the date of grant and the Deferred
Licence Fees as calculated in accordance with and on the dates specified in paragraphs [ ]
of Part 2 of this Schedule.
(e) a term providing for the calculation of the final Deferred Licence
Fee if the licensee has elected to pay the Licence Fee as Deferred Licence Fees and the
Licence is surrendered or revoked as calculated in accordance with paragraph [ ] of Part 2
of this Schedule.
Refunds of fees
(f) a term providing that there will be no refund of the Licence
Fee, whether in full or in part except at the absolute discretion of the Secretary of
State in accordance with regulation [ ] of the Wireless Telegraphy Regulations; and
Access and Inspection
(g) a term providing that the licensee shall permit a person
authorised by the Secretary of State:
(i) to have access to the Radio Equipment; and
(ii) to inspect the Licence and the Radio Equipment,
at any and all reasonable times or, when in the opinion of that person
an urgent situation exists, at any time to ensure the [Radio Equipment] is being used in
accordance with the terms of the Licence.
Modification, Restriction and Closedown
(h) a term providing that a person authorised by the Secretary
of State may require the Radio Equipment, or any part thereof, to be modified or
restricted in use, or temporarily or permanently closed down immediately if in the opinion
of the person authorised by the Secretary of State:
(a) a material breach of the Licence has occurred; and/or
(b) the use of the Radio Equipment is, or may be, causing or
contributing to undue interference to the use of other authorised radio equipment.
(i) a term providing that the Secretary of State may in the event of a
national or local state of emergency being declared require the Radio Equipment to be
modified or restricted in use, or temporarily or permanently closed down either
immediately or on the expiry of such period as he may specify and that he shall exercise
this power by a written notice served on the licensee or by a general notice applicable to
holders of this class of Licence published by public broadcast or in the London, Edinburgh
and Belfast Gazettes.
Geographical Boundaries
(j). a term providing that the Licence-
(i) only authorises the licensee in relation to Radio Equipment
operating in the frequency ranges specified for that Licence in the Schedule to the
Wireless Telegraphy Regulations; and
(ii) only authorise the licensee in relation to Radio Equipment which
is established, installed or used within specified geographic boundaries..
Standards
(k) a term providing that the Radio Equipment is required to comply
with the standard which the licensee elected for the Licence in the Standards Election
Notice submitted in accordance with [ ] of this Notice.
Roll-out
(l) a term providing that the licensee shall install,
maintain and use Radio Equipment in such a way as to enable the provision of, by no later
than 31 December 2007, and to maintain thereafter, services (as defined in paragraph two
of Schedule 1), by means of the standard (as specified in paragraph 10 of Schedule 1) to
an area where at least 80% of the population of the UK live.
1.2 On grant each of the Licences shall also include terms and
conditions relating to-
(a) technical requirements for the Radio Equipment;
(b) site clearance;
(c) notifications by the licensee to the Secretary of State of changes
to the detail of the licensee; and
(d) the maintenance of records and other information and the provision
of such records and information to the Secretary of State.
Part 2
2.1 On grant each of the Licences shall also include the following-
(a) a term providing that if the licensee has elected to pay the Initial Licence Fee
then Deferred Licence Fees shall, subject to paragraph [ ] below, be payable on the sixth,
seventh, eighth, ninth and tenth anniversaries of the date of Grant Date of the Licence
and that the instalments to be paid as Deferred Licence Fees shall be calculated in
accordance with the formula:
In = (R/ 5) x 1.0865 n
Where:
In is the instalment falling due at the nth
anniversary of the date of the grant of the Licence to the licensee;
R is the Remaining Licence Fee]; and
n is the number of completed years after the [Grant Date].
(b) a term providing that where a Licensee elects at any point after the Licence Issue
Date to pay the outstanding instalments of the Licence Fee in full, or where the Licence
is revoked by the Secretary of State or surrendered, any outstanding instalments will
become immediately payable in full (the "Early Payment Date"). The amount
payable on the Early Repayment Date will be calculated in accordance with the following
formula:
E = ((L / 5) x p) x 1.0865 (n+(d/365))
E The Early Repayment amount
L is the Remaining Licence Fee
n is the number of completed years after the Initial Grant Date.
p is the number of instalments outstanding at the Full Payment Date
d is the number of complete days which have passed since the previous
anniversary of the Initial Grant Date
SCHEDULE 3
DRAFT NATIONAL ROAMING CONDITION
Condition [ ]
National roaming
[ ].1 If and for so long as the Licensee or any member of its Group is authorised under
the Wireless Telegraphy Acts 1949 to 1998 to use radio spectrum within the ranges
1900-1980 MHz, 2110-2170 MHz for the transmission of signals and for so long as it is
authorised to use spectrum within the 880-915 MHz, 925-960 MHz, 1710-1785 MHz or 1805-1880
MHz bands under the Wireless Telegraphy Acts 1949 to 1998, it shall negotiate an agreement
with a Relevant Mobile Operator or negotiate an amendment to such an agreement, as the
case may be, within a reasonable period, if that Relevant Mobile Operator requires it to
provide such National Roaming as may be reasonable. A National Roaming Agreement
negotiated under this Condition shall take effect at the latest from the date on which the
Relevant Mobile Operator has rolled out its 3G network to cover an area in which 20% of
the United Kingdom population lives and shall be capable of having effect at least until
31st December 2009. It shall cover at least Teleservices and Bearer Services
supported over the Licensee’s 2G network.
[ ].1.1 Where the Licensee is under a duty to negotiate an agreement under paragraph [
].1 above, it shall, in addition, be obliged when requested to do so by the Relevant
Mobile Operator, to co-operate with it to ensure the Relevant Mobile Operator is in a
position to take reasonable advantage of the National Roaming Agreement being or to be
negotiated under paragraph [ ].1.
[ ].2 The Director may, if requested by either party, make a direction in order:
- to specify issues which must be covered in a National Roaming Agreement; or
- to lay down specific conditions to be observed by one or more parties to a
National Roaming Agreement; or
- if he thinks fit, to set time limits within which negotiations of a National
Roaming Agreement are to be completed. Any such direction shall also set out the steps to
be taken if agreement is not reached within these time limits.
This paragraph [ ].2 shall not apply where the parties have concluded a National
Roaming Agreement under paragraph [ ].1.
[ ].3 The Licensee shall ensure that a National Roaming Agreement entered into or an
amendment made under paragraph [ ].1 contains terms and conditions which are reasonable.
To the extent that all or any of the terms and conditions of a National Roaming Agreement
made under paragraph [ ].1 (whether on or after the coming into force of this condition)
cease to be reasonable, the Licensee shall, within a reasonable period, negotiate with the
Relevant Mobile Operator an amendment to the National Roaming Agreement so that the terms
and conditions of the National Roaming Agreement are reasonable. In the event of a dispute
as to the reasonableness of any term or condition under this paragraph [ ].3, either party
may refer the dispute to the Director for determination. The provisions of paragraph [ ].6
of this Condition shall apply to such a determination.
[ ].4. The Licensee shall comply with:
- the requirements of any direction made by the Director under paragraph [ ].2 or any
determination under paragraph [].3 in relation to any National Roaming Agreement, or any
negotiation of a National Roaming Agreement to which it is or is intended to be a party;
and
- the requirements of any determination made by the Director under paragraph [
].6 in relation to any dispute over the terms of a National Roaming Agreement under
paragraph [ ].1.
[ ].5 For the avoidance of doubt:
(a) any question as to whether any term or condition (including a charge) of a National
Roaming Agreement is reasonable, shall be decided by the Director having regard to
paragraph [ ].6 and any guidelines on the application of this Condition issued from time
to time by the Director; and
(b) in considering whether a term or condition (including a charge) of a National
Roaming Agreement is reasonable, the Director may take into account, inter alia, the
effective date of the term or condition and the period during which that term or condition
may already have been in effect; the Director may conclude that a reasonable charge is one
which is offered or agreed, as the case may be, on terms that it takes effect in National
Roaming Agreements made under paragraph [ ].1 from the date of a complaint or the date on
which the term was first offered or accepted by the Licensee or a Relevant Mobile Operator
or from any other date which is considered by the Director to be appropriate in the
circumstances.
[ ].6 Where there is a dispute concerning National Roaming the Director shall, at the
request of either party, take steps to resolve the dispute within six months of the date
of the request. The determination which the Director makes to resolve the dispute shall
represent a fair balance between the legitimate interests of both parties. In so doing,
the Director shall take into account, inter alia:
- the interests of users;
- regulatory obligations or constraints imposed on the Licensee or the Relevant
Mobile Operator;
- the desirability of stimulating innovative market offerings, and of providing
users with a wider range of telecommunications services;
- the need to maintain the integrity of the public telecommunications network
and the interoperability of services;
- the nature of the request in relation to the resources available to meet the
request;
- the relative market positions of the Licensee and the Relevant Mobile
Operator;
- the public interest, such as the protection of the environment;
- the promotion of competition; and
- the desirability of the Licensee providing National Roaming to Relevant Mobile
Operators at a price based on Retail Minus.
The determination shall be published in accordance with paragraph [ ].7 and shall be
binding on the parties.
The Director shall not be required to take steps to resolve any dispute referred to him
under this paragraph in respect of a Relevant Mobile Operator, where any other dispute has
been referred to him under this paragraph or where he has previously resolved a dispute
relating to a National Roaming Agreement involving that Relevant Mobile Operator in
circumstances where that National Roaming Agreement is:
- (i)still valid and in existence; and
- (ii)remains in substantially the same form.
[ ].7 The Director shall ensure that up to date and specific information in accordance
with paragraph [ ].6 is made available on request to interested parties, free of charge,
during normal working hours.
[ ].8 In this Condition:
"Authorised Mobile" means an item of telecommunications apparatus or a
telecommunications system that is Compliant Terminal Equipment designed or adapted to be
capable of being used while in motion for the transmission or reception of messages at
frequencies in the range 1900-1980 MHz, 2110-2170 MHz.
"Group" means for the purposes of this Condition, in relation to the
Licensee:
- any parent undertaking of the Licensee;
- any subsidiary undertaking of the Licensee;
- any subsidiary undertaking of any parent undertaking referred to in (a);
- a shareholder or partner in the Licensee which beneficially owns (directly or
indirectly) shares in the Licensee in circumstances where there is one other shareholder
or partner in the Licensee which beneficially owns (directly or indirectly) the remaining
shares in circumstances where neither shareholder or partner has control;
- any undertaking of which the Licensee beneficially owns (directly or
indirectly) shares in circumstances where there is one other shareholder or partner in
that undertaking which beneficially owns (directly or indirectly) the remaining shares in
circumstances where neither shareholder nor partner has control;
- any undertaking in circumstances where two or more of its shareholders or
partners which acting in concert together beneficially own (directly or indirectly) more
than 50% of the shares or voting rights in that undertaking, acting in concert together
beneficially own (directly or indirectly) more than 50% of the shares, or voting rights of
the Licensee; and
- any undertaking of which the Licensee beneficially owns (directly or
indirectly) together with one or more undertakings acting in concert more than 50% of the
shares or voting rights of that undertaking,
and:
(i) "parent undertaking" and "subsidiary undertaking" shall have
the meanings given to them in section 258 of the Companies Act 1985;
- "undertaking" and "shares" shall have the meanings given to them in
section 259 of the Companies Act 1985;
- "acting in concert" means acting in co-operation with another
shareholder or partner to obtain or consolidate control of an undertaking; and
- "control" means the holding of a majority of the voting rights in
that undertaking, the right to appoint or remove a majority of the board of directors of
that undertaking, the right to exercise a dominant influence over that undertaking by
virtue of provisions contained in that undertaking’s memorandum or articles of
association or by virtue of a control contract, or the holding of the majority of the
voting rights in that undertaking pursuant to an agreement with other shareholders or
members.
"National Roaming" means the provision of Connection Services by means of the
Applicable Systems to Authorised Mobiles in respect of Teleservices and Bearer Services
pursuant to a National Roaming Agreement between the Licensee and a Relevant Mobile
Operator.
"National Roaming Agreement" means an agreement which provides for Connection
Services by means of the Applicable Systems to Authorised Mobiles in respect of
Teleservices and Bearer Services.
Teleservices and Bearer Services means services defined within the relevant ETSI/GSM
standards.
"Relevant Mobile Operator" means any operator which is authorised to use
radio spectrum within 1900-1980 MHz, 2110-2170 MHz under the Wireless Telegraphy Acts 1949
to 1998 and licensed under section 7 of the Telecommunications Act 1984 to provide Mobile
Radio Telecommunication Services other than such an operator which has been authorized to
run systems and provide Mobile Radio Telecommunication Services before 1 April 1999 at
frequencies in the ranges 880-915 MHz, 925-960 MHz, 1710-1785 MHz or 1805-1880 MHz bands
or an operator which is a member of the Group of an operator authorized to run systems and
provide Mobile Radio Telecommunications Services before 1 April 1999 at frequencies in the
ranges 880-915 MHz, 925-960 MHz, 1710-1785 MHz or 1805-1880 MHz.
"Retail Minus" means the price charged by the Licensee for the provision of a
service to end users less any elements of cost that are not incurred in providing the same
service to a Relevant Mobile Operator; and
"2G" means, for the purposes of this Condition spectrum within the 880-915 MHz,
925-960 MHz, 1710-1785 MHz or 1805-1880 MHz bands
"3G" means, for the purposes of this Condition spectrum within the 1900-1980
MHz, or 2110-2170 MHz.
[ ].9 This Condition shall cease to have effect after 31 December 2009.
Annex A Bis
Proposed amendment to Condition 8 of the (draft) Mobile PTO Licence
Condition 8.1(a) of the (draft) Mobile PTO licence will, subject to the
outcome of this statutory consultation, be amended by the insertion of the number of the
national roaming condition, as indicated in the text shown below as underlined:
PROHIBITION ON UNDUE PREFERENCE AND UNDUE DISCRIMINATION
8.1 The Licensee shall not (whether in respect of the charges
or other terms of conditions applied or otherwise) show undue preference to, or exercise
undue discrimination against, particular persons or persons of any class or description
(including in particular persons in rural areas) as respects:
(a) the provision by means of the Applicable Systems of any
telecommunication service which the Licensee is obliged to provide under Conditions 2, 3,
4 and [number of the roaming condition] to the extent that such Conditions are
applicable to the Licensee.
SCHEDULE 4
Guarantee
TO: Secretary of State for Trade and Industry (the "Secretary of State")
1. [ ]( the "Licensee")
[ ]
[ ]
[ ]
[ ]
[ ](the "Bank ")
[ ]
[ ]
[ ]
[ ]
2. Guarantee
In consideration of the Secretary of State granting to the Licensee a licence under
the Wireless Telegraphy Acts 1949 to 1998 to operate Third Generation Services in the
United Kingdom and in consideration of any other valuable consideration whatsoever, the
Bank, on the Secretary of State's written demand or demands from time to time, agrees by
way of deed (a) to guarantee the payment when due and the prompt performance and
observance of the Liabilities (as defined below) and (b) to pay, perform or procure
performance of the Liabilities when due.
3. Liabilities covered
In this Guarantee "Liabilities" means:
(a) all present and future obligations and liabilities whatsoever in respect of the
Deferred Licence Fee (as defined in the Wireless Telegraphy (Third Generation Licences)
Notice 1999 made by the Secretary of State pursuant to powers conferred by the Wireless
Telegraphy Act 1998 and the Wireless Telegraphy (Third Generation Licences) Regulations
1999 payable by the Licensee to the Secretary of State, whether or not accrued,
contingent, sole, joint and/or several or otherwise howsoever, and shall include, without
limitation the Deferred Payments [(as defined in those Regulations)]; and
(b) all expenses (including any interest, banking and other charges or fees) incurred
by the Secretary of State in connection with the Secretary of State protecting its rights
under this Guarantee or seeking to recover or enforce any of the above on a full indemnity
basis.
4. Indemnity
In addition to the above, the Bank will keep the Secretary of State indemnified
against all loss and damage the Secretary of State may sustain as a result of any
non-payment, for any reason, of the Liabilities. Without prejudice to the Secretary of
State's rights against the Licensee as principal debtor, as a separate and independent
stipulation, the Bank agrees that any Liabilities, which may not be recoverable on the
footing of a guarantee, whether by reason of any legal limitation, disability or
incapacity on or of the Licensee, or any other fact or circumstance, or which are or
become illegal, void, voidable, unenforceable, discharged by insolvency proceedings or
dissolution or irrecoverable, and whether or not known to the Bank or the Secretary of
State, shall nevertheless be recoverable from the Bank as sole or principal debtor in
respect thereof and shall be paid by the Bank on demand. The Bank shall not be discharged
nor shall its liability be affected by any act, thing, omission or means whatsoever
whereby such liability would not have been discharged or affected if the Bank had been a
principal debtor.
[5. Maximum limit
This is a guarantee and indemnity in respect of all the Liabilities but the maximum
amount for which the Bank shall be liable under this Guarantee in respect of the
Liabilities shall not exceed the aggregate of:
(a) £[ ];
(b) all interest, commissions, banking, legal and other charges and expenses included
in the Liabilities; and
(c) all sums payable under the following provisions of this Guarantee.]
6. Interest and costs
The Bank will pay interest on each amount demanded of it under this Guarantee from
the date of demand to payment in full compounded quarterly (both before and after
judgment) at the higher of the following rates per annum:
(a) two per cent. per annum over the Bank of England's prevailing base rate; and
(b) the rate(s) which are payable (or which would be payable but for any insolvency,
interest limitation or law) from time to time by the Licensee on the corresponding
Liabilities so demanded.
Such interest shall be payable on demand and accrue from day to day on the basis of the
number of days elapsed and a 365 day year.
7. Continuing guarantee
This shall be a continuing Guarantee, shall extend to the ultimate balance of the
Liabilities and shall continue in force notwithstanding any intermediate payment in whole
or in part of the Liabilities.
8. Waiver of defences
The liability of the Bank under this Guarantee shall not be prejudiced, affected or
diminished by any act, omission or circumstance which but for this condition might
prejudice, discharge, impair or diminish such liability, including but not limited to and
whether or not known to the Bank:
(a) any time or waiver granted to, or release of or composition with, the Licensee or
any other person;
(b) any extension, variation, increase, compromise, exchange, acceleration, renewal,
surrender, release or loss of or failure to perfect or enforce, or negligence in relation
to, any of the Liabilities or any present or future security granted by or rights against
the Licensee, or any other person and any non-presentment or non-observance of any
formality or other requirement in respect of any instruments;
(c) the liquidation, administration, dissolution, lack of capacity or authority, or any
change in the name or constitution of the Licensee or the Bank ; or
(d) any present or future law or order of any government or authority (whether of right
or in fact) purporting to reduce or otherwise prejudice any of the Liabilities or any of
the Liabilities being or becoming illegal, void, voidable or unenforceable or the maturity
of any of the Liabilities being postponed by resolution, order, or law or otherwise. This
Guarantee and "Liabilities" shall be construed as if there were no such law,
order, defect or postponement.
9. Application of receipts
Until the Liabilities have been irrevocably paid and discharged in full, the
Secretary of State may:
(a) refrain from applying or enforcing any other security, money or rights, held or
received by the Secretary of State in respect of the Liabilities or apply and enforce the
same in such manner and order as the Secretary of State sees fit (whether against the
Liabilities or otherwise) and the Bank shall not be entitled to the benefit of or to share
in all or any part of the same; and
(b) after demand under this Guarantee, hold in an interest-bearing suspense account any
moneys received from the Bank or on account of the Bank's liability under this Guarantee.
10. Discharges
Where any discharge or settlement (whether in respect of the Liabilities, this Guarantee
or otherwise) is made in whole or in part or any arrangement is made in reliance on any
payment, security or other disposition which is void or voidable or must be restored on
liquidation, administration or otherwise without limitation, the liability of the Bank
under this Guarantee shall continue as if there had been no such discharge, settlement or
arrangement.
- The Secretary of State shall be entitled to concede or compromise any claim that any
such payment, security or other disposition is liable to avoidance or restoration. Each
such discharge, settlement or arrangement made by the Secretary of State shall be
conditional upon the relevant payment, security or disposition not being or becoming void,
voidable or subject to restoration.
11. Non-competition
Until the Liabilities have been irrevocably paid and discharged in full, the Bank
shall not:
(a) by virtue of or in respect of any payment made, security realised or moneys
received for or on account of the Bank's liability under this Guarantee, be subrogated to,
benefit from, succeed to or share in any rights, security or moneys held or received by
the Secretary of State or be entitled to any right of contribution or claim any right of
indemnity, or exercise any other rights or legal remedies; or
(b) exercise any right of set-off against the Licensee or receive, claim or have the
benefit of any payment, distribution or security from or on account of the Licensee in
respect of the Banks' liability under this Guarantee or any obligation of the Licensee to
counter-indemnify or reimburse the Bank in relation to that liability or exercise any
other right or remedy which the Bank may have in respect thereof; or
(c) (in the event of any liquidation, rehabilitation, moratorium or other insolvency
proceedings whatsoever relating to the Licensee) claim or prove as creditor or otherwise
in competition with the Secretary of State in respect of any moneys owing to the Bank by
the Licensee on any account whatsoever. The Secretary of State shall be entitled to prove
or claim for all the Liabilities (including any part thereof covered by moneys paid under
this Guarantee).
12. Additional security
This Guarantee is in addition to and not in substitution for any present and future
guarantee, lien or other security held by the Secretary of State. The Secretary of State's
rights under this Guarantee are in addition to and not exclusive of those provided by law.
13. Set-off
The Secretary of State may set off any amount due from the Bank under this
Guarantee against any debts or obligations owing by the Secretary of State to the Bank
(whether or not mature) in any currency and at any place.
14. Immediate recourse
The Secretary of State shall not be bound first to enforce any rights against the
Licensee or any other person or any guarantee, collateral or other security before
enforcing this Guarantee.
15. No deductions and taxes
(a) All sums payable under this Guarantee shall be paid in full without set-off or
counter-claim and free and clear of and without deduction of or withholding for or on
account of any present or future taxes, duties or other charges. If any such payment shall
be subject to any such tax or if the Bank shall be required by law to make any such
deduction or withholding, the Bank will pay such tax and will pay to the Secretary of
State such additional amounts as will result in the Secretary of State receiving a net
amount equal to the full amount which it would have received had no such payment,
deduction or withholding been required.
(b) The Bank will pay all stamp duties and other documentary taxes payable in
connection with this Guarantee and will keep the Secretary of State indemnified against
failure to pay the same.
16. Warranty
The Bank warrants that this Guarantee constitutes its legally binding obligations
enforceable in accordance with its terms and does not conflict with any law, regulation or
instrument binding on or relating to the Bank and that this Guarantee is within its powers
and has been duly authorised by it.
17. Information and consents
The Bank will (a) supply the Secretary of State with such information as to itself
and (if applicable) its subsidiaries as the Secretary of State may reasonably request, and
(b) promptly obtain all such exchange control, official and other consents, licences and
authorisations necessary or desirable for the entry into and performance of its
obligations under this Guarantee, whether or not performance has become due. The Bank
warrants that all such consents, licences and authorisations required or desirable under
existing law have been obtained.
18. Certificate
A certificate in writing signed by one of the Secretary of State's officers and
certifying the amount of all or any of the Liabilities due from the Licensee shall be
conclusive evidence of the matters so certified for all purposes, including any legal
proceedings.
19. Notices
(a) Any notice, demand or communication given or sent to the Secretary of State or
the Bank in connection with this Guarantee shall be given in writing (which includes telex
and facsimile) addressed to the recipient at its address stated in this Guarantee or at
such other address as may be notified by a party to the others, from time to time, for
that purpose.
(b) Any notice, demand or communication sent to the Secretary of State or the Bank as
provided in this clause shall be deemed to have been given, if sent by post, two weekdays
after posting (and in proving delivery it shall be sufficient to provide that the same was
properly addressed and put in the post), if delivered by hand, at the time of delivery or,
if sent by telex or facsimile at the time of despatch.
[20. Assignments
(a) The Secretary of State may at any time and from time to time assign to one or
more other persons all or any part of the Secretary of State's rights and benefits under
this Guarantee.
(b) To the extent of any such assignment the expression "Secretary of State"
wherever used in this Guarantee shall include any assignee of the Secretary of State and
every successor in title of any such assignee or of the Secretary of State.]
21. Remedies and Waivers
No delay or omission of the Secretary of State in exercising any right, power or
remedy under this Guarantee shall impair such right, power or remedy or constitute a
waiver thereof nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other right, power
or remedy. The rights, powers and remedies provided in this Guarantee are cumulative and
not exclusive of any rights, powers or remedies which the Secretary of State would
otherwise have.
22. Miscellaneous
(a) A reference in this Guarantee to any document shall include that document as it
may be amended, novated or supplemented from time to time
(b) Headings are for ease of reference only.
23. Governing law and forum
(a) This Guarantee shall be governed by English law.
(b) For the benefit of the Secretary of State only, the Bank (i) agrees to the
jurisdiction of the English Courts in connection with all proceedings in relation to this
Guarantee and (ii) irrevocably appoints [......................................]
of [..................................................] as its agent for service of
process in connection with proceedings in the English Courts and agrees that any such
process shall be sufficiently and effectively served on it if delivered to such agent at
such address, or in any other manner permitted by law. Nothing in this clause is to limit
right of the Secretary of State to take proceedings against the Bank in any other court of
competent jurisdiction but this provision applies only to the extent that it does not
prejudice the above agreement as to the jurisdiction of the English Courts.
(c) The Bank irrevocably and generally consents in respect of any legal action or
proceedings anywhere (whether for an injunction, specific performance, damages or
otherwise) arising out of or in connection with this Guarantee to the giving of any relief
or the issue of any process in connection therewith including, without limitation, the
making enforcement or execution against any assets whatsoever (irrespective of their use
or intended use) of any order (whether or not pre-judgment) or judgment which may be made
or given therein, and irrevocably and unconditionally waives, in any such action or
proceedings anywhere, any immunity from such action or proceedings, from attachment of its
assets prior to judgment, other attachment of assets and from execution of judgment or
other enforcement.
IN WITNESS whereof this Guarantee was duly entered into as a deed on the [ ]
SIGNATORIES
The Common Seal of )
)
was affixed to this Guarantee )
in the presence of: )
Signed ................................................
Name and Title ...................................
Signed ................................................
Name and Title ...................................
Address of Bank:
SCHEDULE 5
Frequencies
(i) 1710 to 1785 MHz
(ii) 1805 to 1880 MHz
(iii) 872 to 915 MHz
(iv) 917 to 960 MHz
SCHEDULE 6
[Encryption Packages]
SCHEDULE 7
[BT Agreement]
APPENDIX 1 - APPLICATION FORM
Application Form
Contents of Applications
On submission of an Application, a Bidder should provide all
of the following:
A) Application Form and supporting documents containing the information
set out below:
(a) General Information
(i) The full name, address, telephone and facsimile numbers of
the Bidder and the names and titles of the Authorised Officers
(b) Details of the Bidder:
(i) The legal form of the Bidder
(ii) The registered office of the Bidder
(iii) Details of the capital structure of the Bidder, the form of its
share capital and other authorised and/or issued capital instruments and the voting rights
and other controlling rights attaching to them, and the owners thereof
(iv) Name, title and address of any Directors
(v) A copy of the Memorandum and Articles of Association of the Bidder
(vi) Latest Annual Report & Accounts of the Bidder (if such exist)
c) Details of the Candidate Group and Candidates
(i) Details of the structure of the Candidate Group and its
members and their ownership structures, including a list of all Candidates and Relevant
Members
(ii) Details of control exercised by each member over the Bidder and of
any agreements between shareholders and other parties holding influence over the Bidder
(iii) The full name, address, telephone and facsimile number of each
Candidate and the principal contacts at that Candidate
(iv) Name, title and address of any Directors of the Relevant Members
of the Candidate Group
(v) Latest Annual Report & Accounts of any ultimate parent
companies within the Candidate Group
(vi) Details of current or proposed strategic alliances and other
arrangements into which members of Candidates have entered in the telecommunications
industry
d) Details of the Candidate Group’s Insiders
(i) A list of Insiders
(ii) A statement of the role played by each Insider
(iii) Notification of any arrangements between the Candidate’s
Insiders and other Candidates, if known to the Candidate
(e) Details of Directors who are also Directors of members of
other Candidate Groups
(i) A list of Directors of the Candidate Group who also hold
directorships or other employment in a member of another Candidate Group.
(ii) the details of the directorships or other employment specified in
(i) above.
f) Information required for Financial Evaluation
Certification that the Bidder and the members of the Candidate
are not subject to any insolvency or similar proceedings or litigation that might have a
material impact on the Bidder or the Candidate’s ability to bid and subsequent
ability to satisfy the Bidder’s obligations under the Licence.
APPENDIX 2 - BIDDER COMPLIANCE CERTIFICATE
Principles of Bidder’s Compliance Certificate
The Bidder certifies that:
(i) the Authorised Officers of the Bidder have read and understood the
Wireless Telegraphy Acts 1949 and 1998, the Telecommunications Act 1984, the Licences to
be issued pursuant to those Acts in relation to the Auction, the Wireless Telegraphy
(Third Generation Licences) Regulations [1999], the Wireless Telegraphy (Third Generation
Licences) Notice [1999], as issued on [ ] ("the Notice"), and the Information
Memorandum .
(ii) the Bidder is legally capable of bidding in the Auction and has in
place all necessary consents, permissions and board approvals for this purpose, save those
which, by virtue of legal or regulatory process, are not obtainable until after the
results of the Auction are known.
(iii) the Bidder understands and will be legally capable of satisfying
its obligations under the terms and conditions of the Licence granted pursuant to the
Auction and the terms of any Telecommunications Act Licence granted as a consequence of
winning a Wireless Telegraphy Act Licence in the Auction.
(iv) the factual information provided in, or in support of, the
Application is to the best of the Bidder’s and its Candidates’ knowledge and
belief true accurate and complete in all material respects and that any opinion expressed
is honestly held.
(v) the Bidder will comply and ensure that all of its Candidates will
comply with the provisions of the Notice (and any amendments made from time to time)
(vi) neither the Bidder nor its Candidates have or will collude or
otherwise manipulate or attempt to manipulate the outcome of the Auction with any other
Bidder or any person who is a Candidate in respect of any other Bidder, and shall not from
the time of submission of this Application disclose any Confidential Information to any
other Candidate.
(vii) neither the Bidder nor its Candidates have entered into, and will
not seek to enter into, any exclusive agreements in contemplation of the Auction which
might restrict the ability of any other Bidder or any other Bidder’s Candidates to
build and operate a network efficiently or which might restrict their means of determining
a business case.
(viii) the Bidder has received certification in the form set out in
Appendix [ ] to the Notice from the Candidate Group’s Insiders that no Confidential
Information has or will be passed by any Insider in relation to it and any of its
Candidates to any person who is a member of the Candidate Group in relation to any other
Bidder.
(ix) neither the Bidder nor its Candidates are the subject, and none of
their Directors, officers or representatives are the subject, of criminal investigations
or proceedings in the UK or abroad which might reasonably be expected to adversely affect
their business or materially affect the Bidder’s ability to bid in the Auction and
that there is no reason to believe that such investigations or proceedings might occur
during the Auction.
(x) neither the Bidder nor the Candidates have had any
telecommunications or radiocommunications licence, consent, authority, permission,
concession agreement, or other such document or allocation of radio spectrum in the UK or
abroad removed or revoked owing to default or breach by the Bidder or the Candidates of
the terms of that licence consent, authority, permission, concession agreement, or other
such document or allocation of radio spectrum in the UK or abroad.
(xi) neither the Bidder nor its Candidates are party to any civil
litigation or proceedings which may be expected to have a material adverse impact on the
Bidder’s ability to bid in the Auction or to satisfy the terms of any Licence awarded
pursuant to the Auction.
(xii) no Relevant Member in relation to the Bidder is a Relevant Member
in relation of any other Bidder.
(xiii) a person who is a director, [or employee], of a member of the
Bidder’s Candidate Group who is also a director [or employee] of a member of another
Candidate Group-
(a) has not taken part, and will not take part, in preparing both
Candidate Groups for participation in the Auction;
(b) has not been in possession, and is not now in possession, of
Confidential Information relating to both Candidate Groups; and
(c) has not passed, and will not pass, Confidential Information
relating to one Candidate Group to a member of another Candidate Group.
APPENDIX 3-BIDDER INSIDER COMPLIANCE CERTIFICATE
The Insider certifies that:
(i) no Confidential Information in respect of the Bidder’s bid has
been disclosed, deliberately or inadvertently, to any party other than those expressly
permitted by the Bidder and the members of its Candidate Group;
(ii) it has in place sufficient mechanisms to prevent any such
disclosure of Confidential Information, and shall use its best endeavours at all times
until the Auction is completed to ensure that no such disclosure takes place.
APPENDIX 4- BIDDER DIRECTOR COMPLIANCE CERTIFICATE
The Bidder certifies that, any person who is a director of a
Candidate in relation to the Bidder does not hold a directorship of any Candidate in
relation to another Bidder.
APPENDIX 5- BIDDER ASSOCIATION CERTIFICATE
The Bidder certifies that, , the Bidder is not an Associated Bidder
within the meaning set out in Section 1 of Part 5 of the Wireless Telegraphy (Third
Generation Licences) Notice [1999] as issued by the Secretary of State on [ ] in relation
to another Bidder.
APPENDIX 6- STANDARDS ELECTION
Part 1- The Notice
___________________________________________
The Bidder must complete either Part A or Part B of this Notice.
_____________________________________________
Part A
In accordance with paragraph [2.3.2(a)] of the Wireless Telegraphy (Third Generation
Licences Notice) [1999] ("the Notice") the Bidder identifies
...................... (a standard listed in Part 2 of Appendix 6 of the Notice) as the
standard which he elects to be included in any of the Licences (as defined in Part 1 of
the Notice) which he may be granted under the provisions of Part 5 of the Notice.
Part B
In accordance with the provisions of paragraph [2.3.2.(b)] of the Wireless Telegraphy
(Third Generation Licences Notice) [1999] (" the Notice") the Bidder hereby
identifies two or more of the standards (from the standards listed in Part 2 of Appendix 6
of the Notice) as the standards which, in relation to each of the Licences* (as defined in
Part 1 of the Notice), he elects to be included in a Licence should be granted the Licence
in accordance with the provisions of Part 5 of the Notice-
Licence A** ............
Licence B ............
Licence C ............
Licence D ............
Licence E ............
* A Bidder must only identify one standard for each of the Licences.
* * A Bidder which falls within the definition of a Restricted Bidder (as defined in [
] of the Notice] need not identify a standard for Licence A.
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Part 2- The IMT 2000 standards
APPENDIX 7
RECESS DAY NOTICE
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