Auctions

700 MHz, 900 MHz and 2300 MHz auction

The Danish Energy Agency has decided to postpone the 700 MHz, 900 MHz and 2300 MHz auction until further notice.

Auction material

On 14 June 2018, the Danish Minister for Energy, Utilities and Climate, Lars Chr. Lilleholt, decided on the framework for the 700 MHz, 900 MHz and 2300 MHz auction. On this basis, the Danish Energy Agency made its final decision on the specific auction rules. The final auction material can be found below.

The deadline for submitting application for participating in the auction is 21 August 2018 at 3:00 PM

Online bids processor

Potential bidders can get access to an online bids processor that can be used to evaluate different combinations of bids and thereby test different auction scenarios prior to the auction, and also to a description (along with examples) of the data files that bidders will be able to upload to and download from the EAS during the second auction stage. Please contact the Danish Energy Agency in order to get access to the material. Contact details are available below. Please note that increased processing time may occur between 13 July and 3 August 2018.

Information Memorandum with annexes

Information Memorandum - updated 19 September 2018
Annex A – Minister's decision
Annex B – Danish Energy Agency Decision
Annex C – Draft Licence – 700 MHz and 900 MHz frequency bands
Annex D – Draft Licence – 2300 MHz frequency band
Annex E – Application Form (word format)
Annex E – Application Form (pdf format)
Annex F – Template for payment guarantee (word format)
Annex F – Template for payment guarantee (pdf format)
Annex G – Bidder Declaration
Annex H – Ownership Structure
Annex I – 700 MHz and 900 MHz coverage obligation (ZIP-file)
Annex J – 2300 MHz coverage obligation 
Annex K – Additional coverage obligation 
Annex L – Border coordination agreements between Denmark and Sweden (700 MHz and 900 MHz frequency bands)
Annex M – Border coordination agreements between Denmark and Germany (700 MHz and 900 MHz frequency bands) - updated August 17th 2018
Annex N – Border coordination agreements with Russia (700 MHz frequency band)
Annex O – Implementing Decision 2016-687-EU
Annex P – CEPT ECC Decision (14) 02
Example of guarantee for deposit - updated August 17th 2018
Mathematical description of second auction stage
Mathematical description of fourth auction stage

The result of the public procurement regarding consultancy services and auction software in connection with the 700 MHz, 900 MHz and 2300 MHz auction(s)

The Danish Energy Agency has during the spring 2017 completed a procurement process for the purpose of entering into an agreement with consultants who must assist the Danish Energy Agency with preparing and completing the 700 MHz, 900 MHz and 2300 MHz auction(s).

In total the Danish Energy Agency has received two tenders within the deadline. The agency has completed a thorough evaluation of the two tenders, and the result is that the Danish Energy Agency assesses that the tender from the British consultancy company DotEcon Ltd is the most economically advantageous based on the award criterion “the best price-quality ratio” of the two tenders. Hence, the Danish Energy Agency has entered into agreement with DotEcon Ltd.

The consultant shall assist the Danish Energy Agency with the following tasks:

  • Market analysis
  • Coverage obligation analysis
  • Auction rules and auction design, including the number of auctions to be held
  • Auction software
  • Completion of the auction

The overall indicative time schedule (key milestones) for the preparation and completion of the auction(s) is as follows:

Milestone Time period
Consultant’s analyses regarding market opportunities and demand, coverage obligations and PPDR Summer/Fall 2017
Preparation of auction rules, auction design and auction material Fall 2017/Winter 2018
Public consultation Spring 2018
Publication of final auction documents Spring 2018

 

Questions and answers regarding the 700 MHz, 900 MHz and 2300 MHz auction

Question 1: The level of the annual spectrum fees

Is there a minor error in the Information Memorandum regarding the annual spectrum fees? It appears that:

”As an example in 2018 the fixed component will be DKK 600 per licence, and the variable component of the fee will be DKK 56,405 per MHz for the licences. Thus, the total annual spectrum fee in 2020 for a licence consisting of 2x10 MHz is expected to be DKK 1,128,100 and for a 2x5 MHz licence it is expected to be DKK 554,050. The spectrum fees are also published on the Danish Energy Agency’s website."

Is the price for FDD frequencies (cf. the examples with 2x10 MHz and 2x5 MHz) under 1 GHz twice of what appears in the text? The price should be correct for 2300 MHz, however you don’t use 2x.

Answer

There is an error in the examples in section 3.10 of the Information Memorandum regarding annual spectrum fees. The Danish Energy Agency will publish an updated version of the Information Memorandum on the website, where the examples will be corrected so that the following will appear:

”As an example, in 2018 the fixed component will be DKK 600 per licence.

The variable component of the fee will be DKK 112,811 per MHz for the licences in the 700 MHz and 900 MHz frequency bands. Thus, the total annual spectrum fee in 2020 for a licence consisting of 2x10 MHz is expected to be DKK 2,256,220 and for a 2x5 MHz licence it is expected to be DKK 1,128,110.

The variable component of the fee will be DKK 56,405 per MHz for the licences in the 2300 MHz frequency band. Thus, the total annual spectrum fee in 2020 for a licence consisting of 10 MHz is expected to be DKK 564,050 and for a 40 MHz licence it is expected to be DKK 2,256,200.

The spectrum fees are also published on the Danish Energy Agency’s website.”

Questions and answers regarding the 700 MHz, 900 MHz og 2300 MHz auction

Question 2: Guarantee for deposit

In relation to the 1800 MHz template, it is now stated that a signature must be affixed to "[the licensee]":

Illustration: Template text

I assume that this in reality means "[bidder]" – can you confirm or clarify?

Answer

The Danish Energy Agency can confirm that the bidder's signature is requested and in the example of guarantee for deposit the text should have stated "[the bidder]" instead of "[the licensee]".

The Danish Energy Agency will therefore upload an updated version of the template on the website where "[the licensee]" is changed to "[the bidder]".


Question 3: Bidder seminar and mock auctions

According to the Information Memorandum, a bidder seminar and two mock auctions are planned in September and October, respectively.

Should this be understood as bidders having two opportunities to test the stages 1, 2, 3 and 4 or do you expect it to be divided so that the first mock auction deals with the first stage and the second deals with stages 2, 3 and 4?

Answer

In the first mock auction, held in September, qualified bidders will be allowed to test stage 1, stage 2, stage 3 and stage 4.

In the second mock auction, held in October, qualified bidders will be able to test stage 2, stage 3, and stage 4.


Question 4: Bank guarantee

Is it necessary to verify that the signers for the financial institute has the right to sign the bank guarantee and if so how should this be done?

Answer

The persons from the financial institute or the insurance company, who sign the bank guarantee for deposit, shall be verified in the same way as persons from the bidder shall verify their signature. That means that the authenticity of the signatures shall be appended, and it shall be appended that the persons who signed, has authority to sign, cf. section 35 in the Danish Energy Agency’s decision.

In the Danish Energy Agency’s decision, section 35 referres to section 38 (b), of which it appears that “details and documentation of the names, positions and signatures of the natural persons who are empowered to sign for the bidder or who are otherwise authorised to bind the bidder in any respect regarding the application and the auction, and documentation of such power or authority.”

Question 5

On page 82 in the Information Memorandum the following regarding price increments appears:

“If none of these lot categories required a price increment when considered individually, then we increase the price of all the lot categories included in the headline bid.”

Could the Danish Energy Agency please provide an example on when such a situation will occur – preferably with three bidders?

Answer

One example is as follows:

Assume that in the second stage of the auction no A lots are offered, and that there are two B lots and four C lots available. There are three bidders participating in the auction. Suppose that at some point after the first round, the price for C lots is set at DKK 100 million, and for D and F lots at DKK 30 million, and that the price for other lots is still at reserve.

Consider the following three packages:

  • Package X: three C lots and four D lots
  • Package Y: three C lots and six F lots
  • Package Z: four D lots and six F lots

Suppose that each of the three bidders bids for all three packages X, Y and Z at round prices, and has not made bids for any other packages. This means that bids for package X are at DKK 420 million, for package Y at DKK 480 million and for package Z at DKK 300 million.

Regardless of their choice of headline bid (for X, Y or Z), all three bidders are identified as omitted bidders. However, when checking the need to increase prices for lot categories individually for each bidder in turn we do not identify any lot category as requiring a price increment

To illustrate this, suppose that all three bidders have selected package X for their headline bid. In this case the assessment of price increments is as follows.

  1. There are no feasible combinations that include more than one bid, and thus the second auction stage must continue. The maximum value is achieved when accepting a bid for package Z from any of the bidders (as the value of unsold lots at reserve is included in this calculation), so all three bidders are omitted as there are possible value-maximising outcomes where each bidder would not win (if the bid for package Z from another bidder is selected instead);
  2. When we check for price increments for the lots included in the headline bids (C and D) of each bidder in turn, we do not identify the need to increase the price for any of these lot categories individually:
    • When considering lot category C, we use a hypothetical bid for three C lots with a bid amount of DKK 300 million. This bid can be selected as a winning bid alongside an additional bid for package Z from another bidder, yielding the highest possible value. Therefore the bidder would no longer be omitted with this hypothetical bid, and thus we do not identify lot category C as requiring a price increase.
    • When considering lot category D, we use a hypothetical bid for four D lots with a bid amount of DKK 120 million. This bid can be selected as a winning bid alongside an additional bid for package Y from another bidder, yielding the highest possible value. Therefore the bidder would no longer be omitted with this hypothetical bid, and thus we do not identify lot category D as requiring a price increase.

Therefore, we need to increase the price for all the lot categories for which the bidder had included lots in its headline bid.

Notice that in the absence of this rule the auction would have reached a point where it does not end, as none of the value-maximising feasible bid combinations includes a bid from each bidder, but where no prices need to increase and thus bidders cannot increase their bids.

1800 MHz auction

The result of the 1800 MHz auction

The 1800 MHz auction, which began the 20th September 2016, has now ended.

The result of the auction was as follows:

  • Hi3G Denmark ApS has won 2x20 MHz for a total licence price at DKK 300.159.486.
  • TDC A/S has won 2x20 MHz for a total licence price at DKK 300.159.486.
  • TT-Netværket P/S has won 2x25 MHz for a total licence price at DKK 425.239.229.

Regarding the coverage obligation the coverage area groups are assigned in this way:

  • TT-Netværket P/S – coverage area group 1.
  • TDC A/S – coverage area group 2.
  • Hi3G Denmark ApS  – coverage area group 3.

On 28 June 2016, the Danish Minister for Energy, Utilities and Climate, Lars Chr. Lilleholt, decided on the framework for the 1800 MHz auction. On this basis, the Danish Energy Agency made its final decision on the specific auction rules. The final auction material can be found below.

Auction material

Information memorandum with annexes

Information Memorandum (pdf)

Annex A: Definitions and Glossery of Terms (pdf)

Annex B: Minister Decision of 28 June 2016 (pdf)

Annex C: Danish Energy Agency Decision of 28 June 2016 (pdf)

Annex D: Draft Licenses (pdf)

Annex E: Application Form (pdf)

Annex E. Application Form (word)

Annex F: Template for payment guarantee (pdf)

Annex G: Bidder Declaration (pdf)

Annex H: Ownership Structure (pdf)

Annex I: Coordination Agreement with Sweden (pdf)

Annex J: Coordination Agreement with Germany (pdf)

Annex K: Coverage Area Groups (pdf)

Example of guarantee for deposit

Example of guarantee for deposit (pdf)

Mathematical description

Mathematical Description (pdf)

Examples of bid evaluation in the third auction stage

Examples of bid evaluation in the third auction stage (pdf)

Online bid processor

Potential bidders can get access to an online bid processor that can be used to evaluate different combinations of bids and thereby test different auction scenarios prior to the auction. Please contact the Danish Energy Agency in order to get access to the online bid processor. Contact details are available above.

Questions and answers regarding the 1800 MHz auction

Question 10

With reference to Appendix G section 5 in the Bidder Declaration and Appendix C section 67 and 100 in Decision by the Danish Energy Agency, we shall kindly ask the Danish Energy Agency if the bidder during the auction, according to the auction rules, is allowed on an ongoing basis to inform the bank about the Auction bidding sizes of the bidder, without being in the imposition of a penalty and exclusion from the Auction?

Answer to question 10

Under clause 17 in the Decision by the Danish Energy Agency a bidder may disclose confidential infor-mation to its connected persons or to persons who, prior to such disclosure, are insiders in relation to the same bidder. Furthermore the bidder shall take all reasonable measures for the purpose of ensuring that the person who receives the confidential information complies with clauses 18-21 in the Decision by the Danish Energy Agency.

Information about the bidder’s bid is covered by the definition of “confidential information” under clause 100 in the Decision by the Danish Energy Agency. Furthermore, the bank of a bidder is covered by the definition of “insider” under clause 101 in the Decision by the Danish Energy Agency, because an insider can be a person who in connection with the auction has undertaken to finance, wholly or partly, or otherwise assists a bidder.  

A bidder can therefore disclose information about his bid to the bank of the bidder during the auction without being in the imposition of a penalty and/or exclusion from the Auction. However, the bidder has to secure that the bank complies with 18-21 in the Decision by the Danish Energy Agency.

Question 11

With reference to Appendix C section 24 in the Decision by the Danish Energy Agency, we shall kindly ask the Danish Energy Agency if it is possible for the bidder to extend the list of insiders after the Application deadline?  

Answer to question 11<

The bidder shall as part of the application send an exhaustive list of the bidder's insiders, cf. clause 37 d in the Decision by the Danish Energy Agency. Under clause 40 in the Decision by the Danish Energy Agency the bidder has an obligation to notify the Danish Energy Agency of any change in the matters referred to in clause 37 after submission of the application and until the licence has been issued.

The bidder has therefore an obligation to inform the Danish Energy Agency of new insiders after the application has been submitted. It is noted that an insider can be a legal person (for example a bank). It will therefore not be necessary to change the list of insiders, because different people in the bank is handling a task for the bidder, cf. clause 101 as related to clause 105 in the Decision by the Danish Energy Agency.

Question 12

What is the consequence if the bidder is not able to provide the demand guarantee under clause 67 and 68 in the Decision by the Danish Energy Agency? 

Answer to question 12

Clause 67 in the Decision by the Danish Energy Agency concerns the terms of partial payment of the price of the licence. Under the clause the bidder shall among other things provide the demand guarantee not later than 10 days after having received the price the bidder has to pay for the licence.

If the bidder fails to provide the payment guarantee on time, the Danish Energy Agency will set a new time limit within the bidder must provide the payment guarantee, cf. clause 71 in the Decision by the Danish Energy Agency.

It is noted that if a bidder does not comply with the new deadline set by the Danish Energy Agency with reference to clause 71 the licence will not be issued to the bidder.

It is noted that the Danish Energy Agency will have a dialogue with the bidder regarding fixing of the new time limit under clause 71 to avoid that clause 72 will be used.

Question 13:

Upon review of the overall auction material it is kindly requested that the Danish Energy Agency provides additional information with regards to the understanding of the Information Memorandum.

The following appears from page 10 and 11 in the Information Memorandum:

“As for the required provision of a mobile voice service, the coverage obligation may be fulfilled by offering Wi-Fi-calling or a similar service.

As for the required provision of a mobile broadband service, the coverage obligation may be fulfilled by using WLAN technology in the licence-exempt frequency bands (2.4 and 5 GHz). However, this is conditional on the WLAN technology being integrated seamlessly with terrestrial systems capable of providing electronic communications services as stated in the annex to Commission Decision 2009/766/EC as amended by Commission Implementing Decision 2011/251/EU. As an example, WLAN may be used integrated with an LTE network using LTE-WLAN Aggregation (LWA) as specified by 3GPP. This means for example, that the user shall not activate the WLAN connection or for example have a password for a WLAN access point or the like. It is not the intention that the coverage obligation can be met, for example, by connecting a standard Wi-Fi router to an xDSL or coax connection. This means that an ordinary Wi-Fi connection cannot be used to meet the coverage obligation. However, section 3.7.2 about amending coverage requirements in the license may apply.

Documentation of compliance with the coverage obligation shall consist of coverage calcula-tions/simulations   supplemented   with   measurements   confirming   such calculations/simulations. When preparing calculations/simulations, the Licensee can use the method that it finds most suitable, taking into account the technology used and the implementation of the network.  Documentation cannot depend on whether customers have bought a subscription from the Licensee in question.”

Technically, the coverage obligation can be fulfilled with WLAN technology that is integrated seamlessly, if the required equipment can be installed at specific addresses (for example to receive the mobile broad-band signal with a sufficient antenna and higher in terrain, and then convert it to a Wi-Fi signal that is seamlessly integrated). However, such installations will require the consent of the property owners, and the possibility of conducting the installations will therefore probably be limited to cases where the owners want to subscribe with the operator that is required to cover the address.

It is stated in the above quotation that "Documentation cannot depend on whether customers have bought a subscription from the Licensee in question". However, this will in practice prevent operators from fulfilling the coverage obligation by using the above described WLAN solution, because property owners presumably will only be prepared to have installations on their property once they subscribe with the Licensee in question.

It is therefore requested that the Danish Energy Agency informs whether the coverage obligation will be considered fulfilled if specific addresses can obtain the required coverage through the installation of a seamlessly integrated WLAN solution, but only at the time where an operator obtains permission (either without or in relation to a new subscription) to install the necessary equipment at the addresses. The user will not bear any expenses related to the installation of the equipment.

If the Danish Energy Agency finds that the coverage obligation with the above mentioned solution will not be considered fulfilled, the Danish Energy Agency is requested to provide an example of how the coverage obligation in practice can be fulfilled using a seamless WLAN solution, which the Danish Energy Agency in the above quotation emphasizes as a possibility.

Furthermore, using WLAN technology to fulfil the coverage obligation makes it possible to give users high data connectivity indoors, providing a better user experience, while the outdoor signal will be weaker at the address. The Danish Energy Agency is requested to answer whether the coverage obligation will be considered fulfilled if users at a specific address can experience a download speed of 30 Mbit/second and an upload speed of 3 Mbit/second indoors, while the experienced speed is lower outdoors on the address.

Answer to question 13

With regard to the description of the use of WLAN technology in the Information Memorandum (p. 11), this is only an example of how the coverage obligation can be fulfilled. The coverage obligation will be considered fulfilled by means of WLAN when the necessary equipment is installed (not later than 13 December 2019) at a given address included in the coverage obligation regardless of whether the owner has subscribed with the operator in question or not. It is noted that WLAN technology must be integrated seamlessly with terrestrial systems capable of providing electronic communications services and that the users are not required to actively activate the WLAN connection.

If an operator cannot obtain permission to install the necessary WLAN equipment at a given address in-cluded in the coverage obligation, it will be necessary that this address is covered by a different technology.
The coverage obligation is considered fulfilled if it is possible to achieve a download speed of at least 30 Mbit/second and an upload speed of at least 3 Mbit/second either indoors or outdoors at an address in-cluded in the coverage obligation. Thus, the Licensee can decide if the obligation is fulfilled indoors or outdoors. However, it is noted that it must be possible for the Licensee to document the fulfilment of the coverage obligation in accordance with the rules specified in the Information Memorandum (p. 11).

Question 14

In the answer to question 13, the word ”seamless” appears. How is this to be understood?

Answer to question 14

It is the word ”seamless” that has been translated to the Danish word ”sømløst”. In brief, this means that shifting from mobile network to WLAN and back again shall happen unnoticed for the user, i.e. without the user has to do anything, and without interrupting a conversation that then will have to be re-established. It is like seamless roaming.

Prior auctions and tenders

Auctions and tenders have been held in the following frequency bands:

  • 800 MHz (2012)
  • 450-470 MHz (2010)
  • 410-430 MHz (2010)
  • 900 og 1800 (2010)
  • 2,5 GHz (2010)
  • 870 MHz (2007)
  • 450 MHz (2006)
  • 3G (2005)
  • 3G (2001)
  • TETRA (2001)
  • 2G (2000/2001)
  • FWA (2000)
  • 2G (1997)

If you are interested in frequency licences or other material regarding these auctions and tenders please contact The Danish Energy Agency on e-mail ens@ens.dk.

Contact

Henriette Stang Meulengracht
Special Advisor (+45) 3392 7568
Peter Johnson
Advisor (+45) 3392 7551
Andreas Da Cunha-Bang
Advisor (+45) 3392 7603
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