Spectrum Auction

First Spectrum Auction 2005

First Steps Toward a Liberalized Telecommunications Sector

Toward the fulfillment of its primary mandate to liberalize and regulate Trinidad and Tobago’s telecommunications and broadcasting sectors, the Authority held an online auction to select two additional providers of mobile telecommunications services for the country. The successful bidders in the auction were Laqtel Limited, and Digicel Trinidad and Tobago Limited.

The selection process commenced ln August 2004 when Cabinet agreed to award two (2) additional concessions to provide public domestic mobile telecommunications services and granted approval for the Authority to invite suitable applicants to pre-qualify for concessions. It was agreed that a two-staged process would be utilized:

Stage one – a pre-qualification of interested parties; and
Stage two – an auction among pre-qualified applicants.
In September 2004 the Authority through the local press, issued a Request for Proposals (RFP) for interested parties to pre-qualify for concessions. The Board of the Authority subsequently appointed a committee to evaluate all proposals received to ensure consistency with established criteria outlined in the Request for Proposals and determine the financial and technical competence of the companies. The committee, which was approved by the Central Tenders Board (CTB), comprised members of the Board and staff of the Authority and one representative of the International Telecommunications Union (ITU).

The Authority received proposals from five companies namely:

Telkom Caribe ( Trinidad) Limited,
New Cingular Wireless International,
Laqtel Limited,
NatTel, LLC, and
Digicel Trinidad and Tobago Limited.
Bids from these companies were opened on December 17 th 2004 followed by an evaluation process. All five companies pre-qualified to proceed to the auction stage.

Prior to initiating the second stage of the process the Authority sought the advice of several regional and international partners, including the Federal Communications Commission, National Telecommunications and Information Administration, Industry Canada and the ITU, in selecting a suitable independent consultant to develop an auction framework and conduct the auction. Twelve organizations were identified and invited to submit Expressions of Interest.

The CTB, on behalf of the Authority, issued a Request for Proposals to seven of these companies to develop an auction framework for spectrum licences to provide public mobile telecommunications services and conduct an auction of specified blocks of spectrum.

The Board of the Authority appointed another evaluation committee, again comprising members of the Board and staff of the Authority along with a representative of the ITU. This committee, approved by the CTB, was specifically responsible for evaluating the proposals received, consistent with the evaluation criteria established in the Request for Proposals document.

Based on the evaluation of proposals received, Market Design Inc. (MDI) was recommended and approved by the CTB to be awarded the contract to establish the auction framework and subsequently to conduct the auction.

The Authority approved the auction framework developed by MDI. This stipulated that the auction would be held online, via the Internet, and managed remotely at the office of the Authority by MDI.

While five companies pre-qualified to proceed to the auction phase, only Laqtel Limited, and Digicel Trinidad and Tobago Limited took part in the final process, having complied fully with the requirement to provide a letter of credit by midday of Tuesday June 21 st, 2005. The other three companies did not participate.

To ensure integrity and familiarity of the process by all parties involved, a mock auction was conducted on Tuesday June 21 st, managed by MDI at the Authority’s offices. The actual auction was conducted on 23 rd June 2005, managed by MDI at the Authority’s offices. The auction took place in two stages:-

Stage one of the process, commenced at 10:00 am and consisted of a simultaneous ascending clock auction comprising a sequence of bidding rounds. This stage concluded at approximately 11:45 A.M.

Stage two was a single round combinatorial auction in which the winning bidders’ preferred blocks of radio frequency spectrum was determined. This stage commenced immediately after the conclusion of Stage One and ended at approximately 2:00 P.M. with two (2) participants placing winning bids for their preferred blocks of spectrum having attained the reserve price.

As with all auctions, there was a reserve price for the commodity. The commodity in this case was blocks of spectrum. The reserve price for the Auction was calculated by Dr. John Prince the Authority’s Executive Director, in consultation with Dr. Fritz Ringling, a senior consultant at International Telecommunications Union and certified by MDI.

The reserve price was lodged with a notary public from J.D. Sellier and kept confidential until the morning of the auction.

At the end of the auction it was revealed that Digicel Trinidad and Tobago Limited’s winning bid amounted to US$15,756,003 and LaqTel Limited’s was US$9,300,007.

Based on official results of the auction released by MDI, the Evaluation Committee officially advised the Board of the Authority that two (2) concessions, and associated licences, should be recommended to the Minister of Public Administration and Information.

The online auction could indeed be considered a momentous event not only for the equal opportunity afforded bidders to become providers of mobile telecommunications services, but because of its historical significance, as the first known online auction to be held in the region utilizing a cutting edge technique at the dawn of this country’s telecommunications revolution

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