Notice of 2026 Auction of Residual Spectrum Licences

3. The Minister, through the Department of Industry Act, the Radiocommunication Act and the Radiocommunication Regulations, with due regard to the objectives of the Telecommunications Act, is responsible for spectrum management in Canada. As such, the Minister is responsible for developing national policies for spectrum utilization and ensuring effective management of the radio frequency spectrum resource.

4. The Framework for Spectrum Auctions in Canada (FSAC) describes the general approach that ISED uses to auction spectrum licences. The Streamlined Framework, published in 2021, acts as a complement to the FSAC in accordance with the policy objectives of the Telecommunications Act and the Spectrum Policy Framework for Canada (SPFC). In the Streamlined Framework, ISED adopted a notice-based approach to minimize elements requiring consultation and facilitate access to residual licences, while establishing a predictable and consistent format for future auctions of residual licences.

5. ISED periodically holds auctions for residual spectrum licences. These licences include those that were left unallocated after a previous auction, not renewed, cancelled by ISED, or voluntarily returned by a licensee before the end of the licence term. The most recent Auction of Residual Spectrum Licences was conducted in 2024.

6. The following 207 unallocated licences will be available in this auction:

• Three (3) 2 GHz licences in the Northwest Territories, Yukon, Nunavut (Tier 2), Nunavut (Tier 4), and Quebec (sub-divided Tier 3);
• Thirty-eight (38) 2300 MHz licences in Quebec, Ontario, Manitoba, Saskatchewan, and Nunavut (Tier 4);
• Seven (7) 3500 MHz licences in Ontario, the Northwest Territories, Yukon and Nunavut (Tier 4);
• One hundred fifty-nine (159) 3800 MHz licences in Prince Edward Island, Ontario, Manitoba, Alberta, and British Columbia (Tier 4).

7. In the Streamlined Framework, ISED specified that the tier sizes (i.e. the geographic areas covered by the spectrum licences) used in the initial auction process will generally be maintained when auctioning residual licences. ISED considers it appropriate to maintain the original tier sizes of each licence in this auction. An interactive map and table illustrating service areas is available online at Service areas for competitive licensing.

8. Further details regarding the specific blocks available in this auction, including prices and blocks, are provided in Annex A – Available Licences and Reserve Prices.

4.1 2 GHz (Personal Communication Services) band

9. Residual licences in the 2 GHz (PCS) band reflect the band plan established in the Licensing Framework for the Auction for Spectrum Licences for Advanced Wireless Services and other Spectrum in the 2 GHz Range. Three (3) 2 GHz licences will be available in this auction.

4.2 2300 MHz (Wireless Communications Service) band

10. Residual licences in the 2300 MHz (WCS) band reflect the band plan established in Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands in 2003. Thirty-eight (38) 2300 MHz licences will be available in this auction.

4.3 3500 MHz band

11. Residual licences in the 3500 MHz band reflect the band plan established in the Policy and Licensing Framework for Spectrum in the 3500 MHz Band. Seven (7) 3500 MHz licences will be available in this auction.

4.4 3800 MHz band

12. Residual licences in the 3800 MHz band reflect the band plan identified in the Policy and Licensing Framework for Spectrum in the 3800 MHz Band. One hundred fifty-nine (159) 3800 MHz licences will be available in this auction.

13. Certain licences in the 3800 MHz band are encumbered by fixed satellite service earth stations that have been permitted to continue operating, meaning that existing operations that must be protected may limit the population that can be served within the licence area. In areas where more than 10% of the population is affected, licences are categorized as either “unencumbered” (denoted by the suffix “-0” in the product number) and “encumbered” (denoted by the suffix “-1” in the product number). For details on encumbrances, refer to Annex D of the Policy and Licensing Framework for Spectrum in the 3800 MHz Band. Note that Annex D reflects the level of encumbrance at the time of publishing the policy framework (2022). For locations of existing earth stations, licensees are required to consult ISED’s Spectrum Management System Data search tool.

14. Additional information on boundaries and the population associated with encumbrances can be found on ISED’s 3800 MHz Spectrum Licence Maps.

15. In the Streamlined Framework, ISED indicated that it would generally not consult on pro-competitive measures before an auction of residual licences where the relevant pro-competitive measures are maintained from the initial auction process, or in cases where ISED elects to remove pro-competitive measures for licences that have already gone unallocated in at least one previous auction of residual licences. The pro-competitive measures for the licences available in this auction are therefore set out below.

5.1 2 GHz band

16. Licences initially issued in the 2 GHz band were first eligible for renewal in 2011 and are no longer subject to the initial pro-competitive measures that applied when the licences were first issued. Residual licences in this band will be available to all qualified bidders.

5.2 2300 MHz band

17. Residual licences in the 2300 MHz band will not be subject to any pro-competitive measures as previous measures have expired. Residual licences in this band will be available to all qualified bidders.

5.3 3500 MHz band

18. The 3500 MHz auction in 2021 included a set-aside determined by the amount of spectrum available in a given service area. ISED lifted the set-aside eligibility requirement for residual licences in the 3500 MHz band as part of the 2024 Auction of Residual Spectrum Licences. As such, residual licences in this band will be available to all qualified bidders.

5.4 Cross-band cap in the 3500 MHz and 3800 MHz bands

19. The Policy and Licensing Framework for the 3800 MHz Band established a pro-competitive measure in the form of a cross-band cap that limited the total of a licensee’s 3500 MHz and 3800 MHz spectrum holdings to 100 MHz for a period of five years starting from the initial licence issuance date of the 3800 MHz licences (May 29, 2024).

20. Given that the licences in the 3500 MHz and 3800 MHz bands listed in Annex A have remained unallocated in at least two previous auctions, ISED is of the view that making these licences available to all qualified bidders aligns with the policy objective of facilitating the deployment and timely availability of high-quality services nationwide. Therefore, the cross-band cap will not be applied to determine a bidder’s eligibility to bid for residual 3500 MHz and 3800 MHz licences in this auction.

21. Accordingly, all qualified bidders will be eligible to bid for residual licences in the 3500 MHz and 3800 MHz bands even if they currently hold licences equal to or in excess of this cross-band cap in a given service area. Licensees that hold spectrum in excess of the cross-band cap as a result of this auction will not be required to divest any 3500 MHz or 3800 MHz holdings in order to fall within the cross-band cap.

22. However, all licences in the 3500 MHz and 3800 MHz bands, whether issued through the initial auctions in 2021 and 2023 or through residual auctions held in 2023, 2024 or this residual auction, will remain subject to the rules of the cross-band cap for the remaining period of five years starting from the issuance of licences awarded in the original 3800 MHz auction (i.e., until May 28, 2029). No transfer of licences will be authorized until this date if it would result in a licensee exceeding the cross-band cap or cause a licensee whose holdings already exceed the spectrum cap to further exceed the cross-band cap. This includes partial licences, licences encumbered by existing grid-cell licences and protected grid-cell licences. The cross-band cap also includes all licences held by any affiliate of a licensee. See sections 10.1 and 10.2 for the definition of affiliated and associated entities. Subordinate licences will not count towards the subordinate licensee’s cross-band cap provided the primary licensee and the subordinate licensee demonstrate to the satisfaction of ISED that they will be separately and actively providing services to customers in the applicable licence area using the licensed spectrum.

5.5 Moratorium on certain spectrum licence transfers

23. In March 2023, ISED published SAB-003-23 Moratorium on Certain Spectrum Licence Transfers, informing stakeholders of a moratorium on high-impact spectrum licence transfers in commercial mobile bands. This moratorium was put in place to maintain stability of Canada’s wireless telecommunications sector while ISED conducts a review of the Framework Relating to Transfers, Divisions and Subordinate Licensing of Spectrum Licences for Commercial Mobile Spectrum.

24. In addition to the moratorium, effective as of the publication of this Notice, ISED will not be accepting requests from licensees to exchange existing licences with licences available in this auction until the issuance of licences following the completion of this auction. This is to support the administration of the auction and provide potential applicants with clarity on the licences available (Annex A).

25. Licences are subject to the relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. The Minister continues to have the power to amend the terms and conditions of spectrum licences pursuant to paragraph 5(1)(b) of the Radiocommunication Act, and may do so for a variety of reasons, including furtherance of the policy objectives related to the band.

26. In the Streamlined Framework, ISED specified that it will generally not consult on the applicable conditions of licences when they align with the conditions established in the initial licensing framework for those licences or when they have been amended to align with the results of another consultation process. ISED will not be consulting on the conditions of licences for this auction as all available licences will be subject to conditions that are consistent with the initial licensing frameworks or to conditions that have been recently amended.

6.1 2 GHz band

27. Conditions of licence for spectrum in the 2 GHz band were amended in the Decision on Amending Cellular and Personal Communications Services (PCS) Licence Conditions. The licence conditions, including licence term, deployment requirements and other conditions, can also be found in I3 — PCS/Cellular Long-Term Spectrum Licences issued via the 2011 Renewal Process and K3 — PCS/Cellular Long-Term Spectrum Licences issued via the 2011 Renewal Process.

28. Given that existing 2 GHz licences have varying expiration dates, the expiration date of residual 2 GHz licences assigned through this auction will be aligned with the latest existing expiration date (March 31, 2044). As indicated in the Decision on Amending Cellular and Personal Communications Services (PCS) Licence Conditions, the deployment requirements established in annexes A and B of that decision will apply five years after the issuance of licences following this auction.

6.2 2300 MHz

29. In January 2024, ISED published its Decision on the Spectrum Licence Renewal Process for Wireless Communication Services (WCS) Licences. Given that these amendments were established through public consultation, ISED will maintain the conditions specified in this decision for the residual 2300 MHz licences available in this auction. In line with this decision, all available 2300 MHz licences will have a licence term of 10 years from the date of issuance, with the expiration date indicated on the licence.

6.3 3500 MHz band

30. Conditions of licence for spectrum in the 3500 MHz band were established in the Policy and Licensing Framework for Spectrum in the 3500 MHz Band in 2021. The licence conditions, including licence term, deployment requirements and other conditions, can also be found in L10 — 3.5 GHz Spectrum Licences issued via the 2021 Auction or Transition Process.

31. The expiration date of residual 3500 MHz licences assigned through this auction will be aligned with the expiration date of licences issued following the initial 3500 MHz auction and subsequent residual auctions (December 16, 2041). Note that this means residual licensees will need to meet the 20-year general deployment requirements established in Annex F of the Policy and Licensing Framework for Spectrum in the 3500 MHz Band by the end of the term on December 16, 2041.

32. Note that some licences in the 3500 MHz band may contain existing fixed wireless access licensees. The procedures and requirements for the process of transitioning licensees to the new 3500 MHz band plan is outlined in the 3500 MHz Transition Manual.

6.4 3800 MHz band

33. Conditions of licence for spectrum in the 3800 MHz band were established in the Policy and Licensing Framework for Spectrum in the 3800 MHz Band. The licence conditions, including licence term, deployment requirements and other conditions, can also be found in C1 — 3800 MHz Spectrum Licences issued via the 2023 Auction Process.

34. The expiration date of residual 3800 MHz licences assigned through this auction will be aligned with the expiration date of licences issued following the initial 3800 MHz auction and subsequent residual auction (May 29, 2044). Note that this means residual licensees will need to meet the 20-year general deployment requirements established in Annex A of the Policy and Licensing Framework for Spectrum in the 3800 MHz Band by the end of the term on May 29, 2044.

35. Note that some licences in the 3800 MHz band may be encumbered by existing users. Coexistence requirements between flexible use operations in the 3450-3900 MHz band and transitioning licensees in the 3650-4000 MHz band are outlined in the 3800 MHz Transition Manual and Licence Exchange Process for Flexible Use Licensees in the 3500/3800 MHz Bands.

6.5 Clarifications of conditions of licence

36. For residual licences, the “initial licence issuance date” in the conditions of licence is the date residual licences are issued following this auction process. This is the date that will be used to determine timelines for all deployment requirements specified in the relevant conditions of licence for each band with the exception of the final deployment requirement, which will become an end-of-term requirement.

37. Furthermore, consistent with the decisions established in the Streamlined Framework, the expiration date of all residual licences available in this auction will be aligned with the expiration date of existing licences that have been issued for the band or adhere to the licence term indicated in the conditions of licence established in the relevant renewal decision. Note that aligning the expiration date of licences within the same bands will require some residual licensees to meet the end-of-term deployment requirement at the same time as licensees who obtained their licences through previous auction processes.

38. As indicated in the original licensing frameworks, at the end of the term, licensees will have a high expectation that a new licence will be issued for a subsequent term through a renewal process unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises. ISED is of the view that the amount of time provided to meet the end-of-term deployment requirements is sufficiently distant that maintaining deployment requirements from the initial frameworks would not disadvantage residual licensees.

39. Additionally, L10 — 3.5 GHz Spectrum Licences issued via the 2021 Auction or Transition Process and C1 — 3800 MHz Spectrum Licences issued via the 2023 Auction Process state that under the cross-band cap that “no transfer of licences or issuance of new licences will be authorized if it would result in a licensee exceeding the 100 MHz cross-band cap during this period or cause a licensee whose prior holdings already exceed the cross-band cap to further exceed the cap”. For the purposes of 3500 MHz and 3800 MHz licences in this auction, ISED will allow the issuance of new licences to winning bidders even if they exceed or would exceed the cross-band cap in a given service area.

40. ISED will publish new conditions of licence for licences issued via this residual auction to reflect the above clarifications. This will not impact licences obtained outside of this auction process.

41. Reserve prices represent the minimum amounts that will be accepted for each licence. For licences in the 3500 MHz and 3800 MHz bands, ISED will set reserve prices equal to the opening bid prices established in the original licensing frameworks. For licences in the 2 GHz band, ISED will maintain the updated reserve prices established in the 2018 residual auction.

42. For licences in the 2300 MHz band, the prices established in the 2018 residual auction were based on a 20-year licence term. However, in accordance with the Decision on the Spectrum Licence Renewal Process for Wireless Communication Services (WCS) Licences, licences in the 2300 MHz band in this auction will be issued with a 10-year licence term. As such, ISED is adjusting the reserve prices of these licences to half of the reserve prices established in the 2018 residual auction.

43. Given that reserve prices are based on previous auction processes, the population data used has not been updated and reflects 2016 Census data. A complete list of reserve prices for all available licences can be found in Annex A.

44. As indicated in the Streamlined Framework, ISED will generally use a sealed-bid auction format for auctions of residual licences. In a sealed-bid auction, bidders simultaneously submit sealed bids on the licence(s) they are interested in so that no bidder knows the bids of any other participant.

45. ISED will also generally implement a second-price rule for auctions of residual licences while retaining the option to allow combinatorial bidding. Combinatorial bidding allows bidders to bid on packages of licences when there are complementarities or interdependencies between the licences, while the second price rule, as described in section 8.3, ensures that bidders can submit their bids knowing that winning bidders will have to pay the minimum amount necessary to ensure that no other bidder in the auction was willing to pay more for the licence(s) they won.

46. For the purposes of this residual auction, ISED will use a sealed-bid auction with combinatorial bidding and a second-price rule.

8.1 Generic licences

47. In most cases, such as in the 2 GHz and 2300 MHz bands, only one block is available in a given service area. However, there are 32 Tier 4 service areas in the 3500 MHz and the 3800 MHz spectrum bands where more than one block is available. Given the high degree of similarity between blocks across these two bands within the same service area and the same encumbrance level, bidders may benefit from being able to explore potential complementarities by bidding on packages that include multiple blocks. As such, these blocks will be offered as generic licences and combinatorial bidding will be used to facilitate the efficient allocation of these blocks.

48. Generic licences are blocks of spectrum that are sufficiently similar and comparable in value to one another so that they can be offered as a single category in each service area. The use of generic licences simplifies the bidding process by enabling bidders to indicate the quantities of licences desired in each area instead of identifying specific licences. This greatly reduces the number of possible combinations of licences that bidders have to consider in placing their bids. Furthermore, using generic licences facilitates the assignment of contiguous blocks of spectrum to the extent possible.

49. The use of generic licences requires a two-stage auction comprised of an allocation stage and an assignment stage. This is similar to previous ISED auction processes that used generic licences, most recently the 2024 residual auction.

8.2 The allocation stage

50. The combination of a frequency band, service area, and encumbrance level is referred to as a product. The number of blocks available in each product varies in this auction. Products that contain only one block will be auctioned as individual licences.

51. In the allocation stage, bidders will have the opportunity to submit sealed bids for specific individual licences and combinatorial bids for packages of blocks available within each Tier 4 service area where multiple blocks are available. These are referred to as allocation bids. Allocation bids on individual licences will consist of a monetary value for a specific licence in a given band and service area. Allocation bids on packages of blocks will consist of a quantity of spectrum within a service area (number of generic blocks in a product) and a monetary value. Combinatorial bidding across different service areas will not be permitted in this auction.

52. The monetary value or bid amount represents the maximum amount a bidder is willing to pay to obtain the licence or package of licences. The bid amount for each individual licence or package must be a non-negative integer and cannot exceed $999 999 000. The bid amount for an individual licence must be at least equal to the reserve price for that licence. The bid amount for a package of licences must be at least equal to the sum of the reserve prices for the licences that comprise the package. Bidders are encouraged not to bid in round figures to mitigate the possibility of a tie.

53. All allocation bids must be received by ISED in advance of the bid submission deadline for the allocation stage.

54. Bidders do not need to submit bids for all packages available to them. For example, if a bidder wants to obtain only two or four blocks in a service area and is not interested in one or three blocks, it has to submit two bids: one for two blocks and another for four blocks.

8.3 Winner and price determination in the allocation stage

55. Following the allocation stage bid submission deadline, ISED will process the bids to determine the provisional winners and determine the corresponding allocation stage prices. ISED will provide this information to provisional winners. Bidders who did not win any licences in the allocation stage will also be informed that their bids were unsuccessful.

56. For individual licences, each licence will be awarded to the highest bidder. For blocks offered as generic licences, ISED will calculate winning bidders for each product by determining the combination of bids that generates the highest sum for this product, with the bids in this combination being the winning bids. Each bidder can only win, at most, one package in a given product, regardless of the number of bids it submitted.

57. If more than one combination of valid bids has the same highest value, the tie will first be resolved by minimizing the quantity of unsold licences. If there is still a tied outcome, the tie will be broken by a pseudo-random number generator built into the allocation stage solver for the winner and price determination used by ISED for this auction.

58. As outlined in the Streamlined Framework, ISED will use a second-price rule to determine the prices that provisional winning bidders will be required to pay in the upcoming auction of residual licences. This results in each provisional winning bidder paying an amount that is sufficient to ensure that no other bidder in the auction was willing to pay more for the licence(s) they won.

59. For individual licences, the price that the provisional winning bidder will be required to pay will be determined by the second-highest bid for the licence, or the reserve price in the absence of other bids.

60. For products with generic licences, the allocation prices will be determined from the set of allocation bids for the product, and the price is for the total quantity of blocks in the package and is not divisible to the individual blocks that comprise the package. Given the pricing rules, the allocation price will be equal to or less than the corresponding bid amount but cannot be less than the sum of the reserve price of blocks in the package.

61. More specifically, ISED will apply bidder-optimal core prices and use the adjusted Vickrey approach, referred to as "nearest Vickrey" (see Annex B). This approach to determining second prices was used in previous combinatorial auctions conducted by ISED.

62. A reserve bid at the reserve price will be included in determining provisional winning bidders and the prices to be paid for each winning package in the allocation stage. In this process, it is as if ISED is a bidder in the auction, placing a bid on all licences at the reserve price. In a combinatorial auction, including a reserve bid for all licences ensures that the incremental value that a bidder would be prepared to pay for an additional licence is at least the reserve price of that licence. The reserve bids will not be treated as a package but as having been placed by different bidders. Therefore, in all instances where no other bidder in the auction was willing to pay for the same licences, the reserve prices noted in section 7 will be considered the second highest bid (see Annex C for bidding examples).

63. Bidders must consider the implications of the reserve bidder approach described above when submitting bids for multiple packages in the same product. Specifically, a bid for a package with a larger number of blocks must exceed a bid for a package with fewer blocks by the amount of the reserve prices associated with extra blocks in the larger package.

64. For example, suppose there are two unencumbered blocks in a Service Area A in the 3500 MHz and 3800 MHz bands. The reserve price of one block in this product is $20 000. Bidder 1 submits two bids for this product: a bid for one block of $40 000 and a bid for two blocks of $50 000. There are no other bids for this product. Both bids submitted by Bidder 1 are valid as they exceed reserve prices for blocks associated with them ($40 000 > 1 × $20 000 and $50 000 > 2 × $20 000). However, a bid for two blocks cannot be a winning bid. This is because a bid for one block and a reserve bid will exceed a bid for two blocks ($40 000 + $20 000 = $60 000 > $50 000). Given that Bidder 1 submitted a bid for one block worth $40 000, its bid for two blocks must be equal to at least $60 000 to be a winning bid.

8.4 The assignment stage

65. At the conclusion of the allocation stage, ISED will inform bidders of their provisional results, and winners of generic licences will be invited to submit their bids for the assignment stage. These bids will determine the assignment of specific frequency blocks.

66. All allocated blocks will be assigned in the same sealed bid assignment round. In each product, each winning bidder will be presented with a set of bidding options where the bidder has winnings from the allocation stage. There will be no assignment bids if a bidder wins all blocks in a product.

67. Provisional winning bidders do not have to place bids in the assignment stage if they do not have an assignment preference, as they are guaranteed the number of generic blocks they have won in the allocation stage. Each bidder has both a right and an obligation to obtain one of the frequency range options presented to it for each product where the bidder has winnings.

68. Recognizing that contiguous spectrum is generally more efficient, as a general rule, winners of multiple blocks in a given product will receive contiguous licences. For a given product, a bidder will be presented with all contiguous bidding options consistent with the number of blocks the bidder has won, regardless of the number of blocks won by other bidders. For example, a bidder that has won two blocks in a product with four blocks available, blocks W, X, Y, and Z, will be presented with three bidding options: W.X, X.Y, and Y.Z. The bidder might not be able to win some of its bidding options if they would preclude other bidders from a contiguous assignment in that product.

69. There will be an exception from the general rule outlined in the previous paragraph in two products where the available spectrum is not contiguous. These products are 4-099-0 Elliot Lake and 4-160-0 Kamloops. The bidders will be presented with assignment options in the products corresponding to these service areas, assuming no gap between available blocks. For example, in service area 4-160 Kamloops, available blocks are AR, AT, AU, AV, and AW, while block AS is unavailable. A bidder that won three blocks in this product will have three assignment options: AR.AT.AU, AT.AU.AV, and AU.AV.AW.

70. A bidder may specify a bid amount for each option for a given product. The bid amount must be a non-negative integer and cannot exceed $999 999 000. The auction system will treat the bid value as zero for any bidding option for which a bidder submits no bid. To mitigate the possibility of a tie, bidders are encouraged not to bid in round figures. Any ties will be broken by a pseudo-random number generator built into the assignment stage solver for the winner and price determination used by ISED as described in the next section.

8.5 Winner and price determination in the assignment stage

71. The assignment prices will be determined from the set of assignment bids for the product. The assignment price is attributable to the entire collection of blocks assigned to a given bidder in a given product and not to individual blocks that comprise the package. Given the pricing rules, the assignment price will be equal to or less than the corresponding bid amount and could even be zero.

72. For each product in each assignment area in a given assignment round, ISED will use a solver to identify the combination of specific assignments of licences that result in the highest bid amount while ensuring that each bidder is assigned one of the available options.

73. If the product has two or more unsold blocks, ties will be broken in two steps. First, the solver will determine whether the highest bid amount remains the same when all unsold blocks are assigned contiguously. If this is the case, the solver will select an assignment that achieves the maximum value where each bidder receives a contiguous assignment and all unsold blocks are assigned contiguously. Otherwise, the solver will select an assignment that achieves the maximum value where each bidder receives a contiguous assignment (but the unsold spectrum is not contiguous). All remaining ties will be broken by a pseudo-random number generator.

74. ISED will use a second-price rule to determine the prices to be paid by winning bidders in the assignment stage. More specifically, ISED will apply bidder-optimal core prices and use the “nearest Vickrey” approach to determine the assignment prices (similar to the approach described in Annex B for the allocation stage). A separate assignment price will be determined for each product where the bidder has winnings.

75. The final price paid by a provisional winning bidder will be the sum of the price(s) in the allocation stage for all packages the bidder won, plus any associated assignment price(s).

76. This section sets out the general process for submitting an application to participate in the upcoming residual auction, the general requirements, and the rules that apply prior to, during and after the auction.

9.1 Auction Timing

77. The schedule for the auction process, referred to as the Table of Key Dates, is available on ISED’s Spectrum Management and Telecommunications website. Items and time frames included in the schedule may be updated from time to time. Interested parties are advised to check the website regularly for any updates to the schedule of events.

9.2 Application to participate

78. To participate in an auction, all applicants must submit a completed application form, along with a financial deposit, details of the applicant's beneficial ownership, information on any affiliations and associations as discussed in section 10 of this document, and other corporate documentation as required. ISED will publish the list of applicants on its website soon after the application deadline.

79. The application forms for participating in the auction will be available on request by email. Additional documentation may be required in support of the application forms.

9.3 Pre-auction financial deposits

80. In order to enhance the integrity of the auction, ISED will require that all bidders submit a pre-auction financial deposit with their application to participate in the auction.

81. The financial deposit must be equal to or greater than the reserve prices of licences on which bids are submitted. For products available through combinatorial bidding, the bids with the maximum quantity in each product will be counted to determine eligibility in terms of the submitted financial deposit. If the total amount of reserve prices of licences on which bids are submitted exceeds the financial deposit, all bids submitted will be rejected.

82. Financial deposit(s) will be returned to any applicant not found to be a qualified bidder, any applicant that provides written notification to ISED of its withdrawal from the process prior to the auction's commencement, and any bidder that fails to win a licence during the auction.

9.4 Submissions

83. In the interest of providing ISED and other bidders with adequate information on the identity of all bidders, each applicant is required to fully disclose the beneficial ownership for every entity of which it owns, directly or indirectly, 10% or more of the applicant’s voting shares, non-voting shares, partnership interests or any other beneficial interests, as the case may be. Applicants are required to disclose any explicit or implicit arrangements or agreements where financing, security or guarantees have been, or may be, provided to the applicant or any of its affiliates, by another likely applicant or its affiliates, relating to the acquisition or use of any spectrum licences being auctioned in this process. Associated entities wishing to participate separately in this auction are required to disclose the names of their associated entities within their application, and to provide narratives describing all key elements and the nature of the association regarding the acquisition of the spectrum licences being auctioned and the post‑auction relationships of said entities. A list of applicants, their beneficial ownership information and the narrative on any associated entity relationships will be made available on ISED’s Spectrum Management and Telecommunications website, prior to the auction, so that all bidders have knowledge of the identity of the other bidders. All other application material and other material requested by ISED will be kept confidential. Applicants are not permitted to change their beneficial ownership during the period beginning 10 days prior to the sealed bid deadline and ending once the provisional results have been announced by ISED.

84. Entities are encouraged to approach ISED at least two weeks prior to the application date if seeking guidance or a predetermination as to whether their arrangement or proposed arrangement would be considered to give rise to a finding of association. Any guidance or predetermination will not constitute a binding decision; however, potential applicants may benefit from an early opportunity to approach ISED with their proposed arrangements.

85. Applicants must also provide a certificate of incorporation or other applicable documentation to demonstrate that they are eligible to hold a licence under section 9 of the Radiocommunication Regulations. For example, corporate applicants must provide a copy of their certificate of incorporation or similar documentation, partnerships must provide an up-to-date partnership agreement, and individuals must provide a copy of their passport or other applicable documentation as described in section 9 of the Radiocommunication Regulations.

9.5 Process to submit applications and financial deposit

86. The application forms, the associated documents (as per the instructions provided on the application forms), and the total pre-auction financial deposit are to be delivered to the Manager, Auction Operations (address provided in the residual auction application form), by the date and time specified in the Table of Key Dates. ISED reserves the right, under exceptional circumstances, to accept additional documentation after the deadline, but prior to the publication of the list of applicants. Applications that are received without the total financial pre-auction deposit by the date and time specified will be rejected.

87. Microsoft Teams (MS Teams) must be used for the electronic submission of application forms and associated documents, sealed bid submission forms and to send confidential messages to ISED during the auction process. Private MS Teams communications will be set up for each auction applicant by the Auction Operations Manager in advance of the application deadline.

88. Upon receipt of the application and the associated documentation, ISED will send a notification to the applicant, advising that the application materials have been received. This notice will in no way mean that the application materials or the deposit have been approved.

89. The financial deposit must be in the form of a physical certified cheque, bank draft, or money order; electronic wire transfer; or a physical irrevocable standby letter of credit, payable to the Receiver General for Canada, drawn on a financial institution that is a member of the Canadian Payments Association. The elements required in a letter of credit, as well as a sample letter of credit acceptable to ISED, will be provided as part of the application forms. Multiple letters of credit (or other forms of payment) from one or more financial institutions will be permitted within reason. ISED will treat the financial deposit for an applicant as being the sum of the amounts of each accepted letter of credit, certified cheque, bank draft, money order or wire transfer. Each letter of credit must comply with the conditions laid out herein concerning letters of credit. No letter of credit shall have any conditions requiring ISED to draw on the letters in any particular order of priority, or requiring any letter to be drawn upon completely before drawing upon any other letter. If a qualified bidder does not become a provisional licence winner, the financial deposits submitted in the form of a letter of credit will be returned. Refunds of deposits submitted in the form of a certified cheque, bank draft, money order or wire transfer will likely take longer (perhaps several weeks longer) than a refund submitted by way of a letter of credit, as a cheque from the Receiver General for Canada will need to be processed.

90. If, prior to the application deadline, an applicant wishes for any reason to amend any of the forms that it has submitted and/or its financial deposit, it may submit one or more amended forms and/or financial deposit with an accompanying letter explaining that the enclosed form(s) and/or financial deposit are to replace the one(s) previously submitted. Any such amendments are to be received by the Manager, Auction Operations, by the receipt deadline for applications to participate in the auction.

91. Upon receipt of an amended form(s) and/or financial deposit, ISED will send a notification to the applicant that the amended form(s) and/or deposit have been received. The notification will state the amount of the new deposit that has been submitted. Where the financial deposit is in the form of an irrevocable standby letter of credit, the initial irrevocable standby letter of credit will also be returned to the applicant where applicable. Where the financial deposit is in a form other than an irrevocable standby letter of credit, any partial reimbursement of the financial deposit may take several weeks.

92. A list of all applications will be made public on the Auctions section of ISED’s Spectrum Management and Telecommunications website. The publication of this list in no way means that the applicants have been approved as qualified bidders.

9.6 Bidder qualification

93. ISED will review the application forms (and any associated documents) and the accompanying financial deposit after the closing date for the submission of applications. In this initial review, ISED will identify any errors in the application forms or financial deposit. Applications that are received without the appropriate deposit by the application deadline will be rejected.

94. Following the initial review period, ISED will provide applicants with an opportunity to correct any errors or inconsistencies in their application, and will request any additional information related to affiliated or associated entities if required. A copy of the original applications may be returned to the applicant with a brief statement outlining any discrepancies and/or omissions, or requesting additional information. The applicant will be invited, in writing, to resubmit the corrected form and/or the additional information and to electronically deliver this to the Manager, Auction Operations, via MS Teams, by the date specified in the written statement.

95. Applicants that do not comply with this request will have their application to participate in the auction rejected. Applications that are rejected, including those for which an opportunity has been provided to correct errors or inconsistencies identified by ISED but are still found to be deficient, may be returned to the applicant outlining the deficiencies, along with the applicant’s deposit.

96. Those applicants that have submitted acceptable application materials, including the accompanying financial deposit, will receive a confirmation letter confirming that they are considered a qualified bidder.

97. A list of all qualified bidders, along with information related to their beneficial ownership, affiliates and associated entities will be made public via ISED’s website, in accordance with the timelines stated in the Table of Key Dates. The financial deposit amounts will not be published prior to the auction as the information could provide an indication of bidding intentions. Sharing this information is strictly prohibited in accordance with the anti-collusion rules outlined in section 10.4. Qualified bidders will be sent all information and instructions required to submit their bids, including auction bid forms.

9.7 Withdrawal of application forms

98. Applicants who wish to withdraw their application materials and have their financial deposits returned may do so without prejudice, by submitting a written request to the Manager Auction Operations, before 12:00 p.m. noon (EST) on the business day preceding the receipt deadline for sealed bids for the allocation stage.

9.8 Change of information

99. An Auction Authorized Representative is an individual authorized by the applicant, for this Residual auction, to sign, submit information and make any changes on behalf of the applicant or bidder.

100. Only the Auction Authorized Representative of the applicant or bidder may notify the Manager, Auction Operations, of any material changes in the information submitted in the application documents. Written notification must be sent by the Auction Authorized Representative within five business days of such changes.

9.9 Submission of auction bids

101. Completed bid form(s), which include the bid amount for each licence for which the bidder is placing a bid(s), must be received by the Manager, Auction Operations, by the receipt deadline for each of the allocation and assignment stages of the auction. The amount of each bid must reflect the amount that the bidder is willing to pay for the associated licence(s) and frequency(ies). All bids must be in dollars only, not cents. No bids will be accepted after 12:00 p.m., EST, on the receipt deadline for sealed bids for the allocation and assignment stages. Following the auction, ISED will publish a list of all bids received on its website.

9.10 Determination of provisional licence winners

102. Bids will be examined by ISED officials following the receipt deadlines for the allocation and assignment stages. To be considered valid for the allocation stage, a bid must be at least equal to the reserve price; the previously submitted deposit must be at least equal to the sum of the reserve prices of each licence being bid upon; the bid form(s) must be completed correctly; and the bid must be submitted by a qualified bidder. Where a bid is placed on a licence on which the bidder is not eligible to bid, that bid will be ignored. To be considered valid for the assignment stage, the bid form(s) must be completed correctly; and must be submitted by a qualified bidder.

103. The auction will be considered closed upon the publication of provisional winning bidder(s).

104. The following information will be made publicly available on the ISED website following the conclusion of the auction process:

• the list of winning bidders, licences won, and the prices to be paid; and
• the list of all bids received in the auction, and the licence(s), if any, that were not assigned.

9.11 Final payment

105. Each provisional licence winner will be required to submit 20% of its final payment within 10 business days following the publication of provisional licence winners. The remaining portion, 80% of the final payment, will be due within 30 business days of the announcement of the provisional licence winners. Failure by the winning bidder to make these final payments in a timely fashion will result in the licence not being issued, and the bidder will be subject to the applicable forfeiture penalty (see section 9.12). Final payments will be non-refundable. If the licence winner fails to make these payments within the specified period, then the provisional winner’s irrevocable standby letter of credit will be drawn upon.

106. All payments must be made by certified cheque, bank draft, or wire transfer, payable to the Receiver General for Canada, drawn on a financial institution that is a member of the Canadian Payments Association.

107. These bid payments for the initial licence terms are in lieu of any fees fixed for radio authorization under the Radiocommunication Act or any other act.

9.12 Forfeiture penalties

108. Following the conclusion of the auction, winning bidders that fail to comply with the specified payment schedule or fail to come into compliance with the eligibility requirements of the Radiocommunication Regulations, will be considered disqualified and will forfeit their ability to obtain licences through this process. Furthermore, non‑compliant bidders will be subject to a forfeiture penalty in the amount of the difference between the forfeited bid and the ultimate price of the licence – to be determined by a subsequent licensing process.

109. In the event of licence forfeiture, the bidder’s irrevocable standby letter of credit will be drawn upon for the full amount of the interim proxy forfeiture penalty, which will be the full amount bid for the licence(s) forfeited. If the interim proxy forfeiture penalty is greater than the full amount of the bidder’s irrevocable standby letter of credit, combined with any partial payment, or if the letter of credit has been returned or has expired, then the difference will be owing and payable to the Receiver General for Canada.

110. A winning bidder that forfeits on a licence (or any of that bidder’s affiliated and associated entities) will not be eligible to bid on any subsequent licensing process for the related band.

111. In addition to forfeiture penalties, the bidder and/or its representatives may be subject to administrative monetary penalties under the Radiocommunication Act if auction rules set out in this Notice are breached.

9.13 Enforcement of auction rules

112. Applicants and/or their representatives who fail to comply with the requirements or rules set out in any section of this Notice or applicable Licensing Frameworks may be subject to one or more of the following depending on the circumstances:

1. the applicant may be disqualified from bidding or continuing to bid;
2. the applicant's bids may be deemed invalid;
3. any and all licences issued to the applicant as a result of this auction may be revoked;
4. the applicant may be subject to the appropriate forfeiture penalties as outlined in section 9.12; and
5. the applicant may be subject to administrative monetary penalties or prosecution under the Radiocommunication Act.

113. This section describes the general rules relating to participation of affiliated and associated entities in order to ensure that each bidder is an independent bidder.

114. Affiliated entities will not be allowed to participate separately in the auction. Associated entities will only be allowed to participate separately if, following a review of their application, ISED is satisfied that their participation would not have an adverse impact on auction integrity. Applicants will be required to publicly disclose information about their beneficial ownership, affiliations and associations.

10.1 Affiliated entities

115. Definition of affiliated entities: Any entity will be deemed to be affiliated with a bidder if it controls the bidder, is controlled by the bidder, or is controlled by any other entity that controls the bidder. “Control” means the ongoing power or ability, whether exercised or not, to determine or decide the strategic decision-making activities of an entity, or to manage or run its day-to-day operations.

116. Presumption of affiliate status: If a person - which includes any individual, partnership, corporation, unincorporated organization, government, government agency and trust- owns, directly or indirectly, at least 20% of the entity’s voting shares (or where the entity is not a corporation, at least 20% of the beneficial ownership in such entity), ISED will generally presume that the person can exercise a degree of control over the entity to establish a relation of affiliation. The ability to exercise control may also be demonstrated by other evidence. ISED may, at any time, ask a prospective bidder for information in order to satisfy any question of affiliation.

117. Applicants may provide information to ISED to rebut the presumption of affiliate status. Applicants must notify ISED in writing if they are rebutting the presumption and must file material that will enable ISED to review the question and make that determination. It is the responsibility of the applicant to file the appropriate material. Such material may include: copies of the relevant corporate documentation relating to both entities; a description of their relationship; copies of any agreements and arrangements between the entities and affidavits or declarations, signed by officers from the two entities, dealing with the control as outlined in the definition of “affiliate” above.

118. Upon receipt of the material, ISED will either make a ruling based on submitted materials or ask the applicant for further information (and provide a timeline within which to do so).

119. Should the entities fail to provide the relevant information in a timely fashion in order to allow ISED to complete its determination, ISED may make a ruling on eligibility that the entities in question are affiliated.

120. Eligibility to participate in the auction: Only one member of an affiliate relationship will be permitted to become a qualified bidder in the auction or the affiliated entities may apply to participate jointly as a single bidder. Affiliated entities must decide prior to the application deadline which entity will apply to participate in the auction. All affiliations must be disclosed at the time of the application.

10.2 Associated entities

121. Definition of associated entities: Any entities that enter into any partnerships, joint ventures, agreements to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the acquisition or use of any of the spectrum licences being auctioned in this process will be treated as associated entities. Typical roaming and tower sharing agreements would not cause entities to be deemed associated.

122. As in past auctions, the rules will allow prospective bidders to form a bidding consortium and to participate in the auction as a single bidder if they wish to coordinate their bids through a single bidder. In such a case, the eligibility rules will apply jointly in each licence area. Rules regarding communication between prospective bidders who are seeking to form a consortium are discussed further in section 10.6 below.

123. Depending on the nature of the association, it may not preclude the ability of the entities to participate separately in the auction. It should be noted that under the definition above, entities are only deemed to be associated with respect to arrangements that relate to the acquisition or use of spectrum licences being auctioned in this process. For example, agreements related to joint equipment purchases or joint backhaul networks would not be captured under the definition unless they relate to the licences being auctioned.

124. Eligibility to participate separately in the auction: Associated entities may apply to participate separately. Allowing associated entities which demonstrate that they are competitors in the market to bid separately would likely not have an adverse impact on the integrity of the auction provided that auction participants comply with the information disclosure and anti-collusion rules (see sections 10.3 and 10.4).

125. To obtain approval to participate separately in the auction, associated entities will be required to demonstrate to ISED’s satisfaction that they intend to separately and actively provide services in the applicable licence area. Associated entities wishing to participate in the auction separately are required to submit their application at least two weeks in advance of the final application deadline. This requirement provides ISED with the additional time necessary to assess the nature of the association between the entities. Should the request be denied, only one of the associated entities will be eligible to apply to participate in the auction.

126. Bidders are reminded that the provisions of the Competition Act apply independently of, and in addition to, the Notice.

127. All entities participating in the auction will be subject to the same prohibition of collusion rules, as stated in this Notice.

128. ISED’s review would not extend to an overall assessment of the effects of the agreement between associated entities on competition in the marketplace.

129. Assessment factors: ISED will consider a broad range of criteria so as to determine the associated entities’ intent and actions to actively and independently provide wireless services. Assessment criteria may include, but are not limited to:

1. associated entities’ intent and actions to provide services (coverage) in the area in which the sharing occurs;
2. the level of investment, including in distribution, marketing and customer service, in order to acquire and serve customers; and
3. associated entities’ demonstration of separate presences in the marketplace.

130. Documentation: Associated entities would be invited to provide all relevant documentation to ISED in regard to the above-noted assessment factors. These may include, but would not be limited to:

1. all agreements relating to the transfer of, use of and access to the bands available in this auction;
2. business plans for the area in which the agreement(s) will provide access to spectrum; and
3. business and financial results, including investments and customer acquisition.

131. ISED may request additional documentation to complete its assessment and may require that documents be certified by an officer of the company. Where associated entities are competing, each associated entity may provide its documentation separately on a confidential basis. The material related to the request, except for the narrative described in section 10.3 below, will remain confidential.

10.3 Auction integrity and transparency

132. In order to ensure auction integrity and transparency, all entities wishing to participate in the auction process are required to disclose in writing, as part of their application, the names of affiliated and associated entities. A narrative must also be submitted, describing all key elements and the nature of the affiliation or association in relation to the acquisition of the spectrum licences being auctioned and, the post-auction relationships of the said entities. The narrative must include arrangements with another potential bidder that relate in any way to the future use of the spectrum being auctioned in this process directly or indirectly.

133. Some examples of arrangements that would require disclosure include, but are not limited to, agreements to establish a joint network using spectrum licences in this auction that may be acquired by each of the entities, and agreements with respect to a joint backhaul network if they relate to the use of the licences being auctioned. Typical roaming and tower sharing agreements and other agreements, such as the purchase of backhaul capacity, would not cause entities to be deemed associated entities and hence need not be disclosed. Where a prospective bidder has previously attempted to form or has dissolved a consortium, that bidder must disclose this fact and indicate the other entities that were part of the consortium or negotiations thereto.

134. The submitted narrative will be made available to other bidders and to the public on ISED’s website prior to the auction in order to ensure transparency of the licensing process.

10.4 Prohibition of collusion and other communications rules

135. In order to ensure the integrity of the bidding process, all applicants are prohibited from cooperating, collaborating, discussing or negotiating agreements with competitors regarding the licences being auctioned or the post-auction market structure. As a general rule, any such discussions occurring at any time prior to the public announcement of provisional licence winners by ISED are prohibited.

136. In order to maintain the integrity of the auction, bidders are prohibited from signalling, either publicly or privately, their bidding intentions or planned post-auction market structure related to the spectrum licences being auctioned. This includes, for example, comments or any communication with or via the media, other government departments, or government officials that do not have a mandated or delegated authority related to the auction process, including at the municipal, provincial, territorial and federal levels. An example would be making a public announcement regarding which licences the company intends to bid on or its rollout intentions.

137. Given that ISED is allowing the participation of some associated entities as separate bidders in this auction process, the prohibition of collusion rules are as follows:

1. All applicants, including affiliated and associated entities, are prohibited from cooperating, collaborating, discussing or negotiating agreements with competitors, relating to the licences being auctioned or relating to the post‑auction market structure, including frequency selection, bidding strategy and post‑auction market strategy, until after the public announcement of provisional licence winners by ISED.
2. Prospective bidders will note that the auction application forms contain a declaration that the applicant will be required to sign certifying that the applicant has not entered into and will not enter into any agreements or arrangements of any kind with any competitor regarding the amount to be bid, bidding strategies or the particular licence(s) on which the applicant or competitors will or will not bid. For the purposes of this certification, "competitor" means any entity, other than the applicant or its affiliates, which is a bidder or could potentially be a bidder in this auction based on its qualifications, abilities or experience.
3. Prospective bidders should note that the definition of "affiliate" for the purposes of this licensing process (defined by reference to "control in fact") differs from "affiliate" for the purposes of the Competition Act. The provisions of the Competition Act apply independently of, and in addition to, the policies contained in this Notice.

10.5 Communication during the auction process

138. In order to preserve the integrity of the auction process, any communications from an applicant, its affiliates, associates or beneficial owners or their representatives that disclose or comment on bidding strategies, including but not limited to, the intent of bidding and post-auction market structures, the progress of the auction such as the status of stages, and potential auction revenues shall be considered contrary to the Notice and may result in disqualification and/or forfeiture penalties. Statements that indicate national or particular licence areas of interest will generally be found to be in contravention of the rules on prohibition of collusion. This will include communications with or via the media. This prohibition of communication applies until the public announcement of provisional licence winners by ISED.

139. Prior to the auction, an applicant who wishes to participate separately in the licensing process but has approached another competitor to discuss a joint infrastructure build, a joint equipment purchasing agreement or a potential spectrum sharing agreement related to the spectrum being auctioned, such that communications that fall within the definition of associated entities have taken place, must disclose the nature of this association. Entities applying to participate separately are required to make a declaration that they have not entered into and will not enter into any agreements or arrangements of any kind with any competitor regarding the amount to be bid, bidding strategies or the particular licence(s) on which the applicant or competitor will or will not bid. In the case where discussions that contravene the prohibition of collusion rules have occurred, the entities would only be permitted to participate in the auction as one single bidder, or only one of the entities could participate.

10.6 Forming a consortium

140. If a consortium has been established, any entity involved in the discussions related to the formation of the consortium would no longer be eligible to participate separately in the auction. However, the entity participating in the auction would not be deemed to have contravened the collusion rules. In this case, the entities forming the consortium would no longer be deemed competitors for the purpose of the auction, and discussions regarding issues that would otherwise contravene the anti-collusion rules, such as bidding strategies, may then take place. However, each entity in the consortium would continue to be subject to the prohibition of collusion rules outside of the consortium itself.

141. Where potential bidders enter into negotiations toward forming a consortium, those communications may breach collusion rules and will also fall within the definition of making the entities associated. As noted in section 10.3, this association must be disclosed. In a case where consortium discussions are not successful, entities involved in these discussions will not be allowed to participate as separate bidders in the auction; only one of the entities could participate and that entity must disclose the existence and nature of the consortium discussions.

10.7 Discussion regarding beneficial ownership

142. Information regarding the beneficial ownership of each applicant will be made publicly available so that all bidders have knowledge of the identity of other bidders. Any discussions involving two applicants or bidders or any of their affiliates or associates regarding an addition or a significant change of beneficial ownership of an applicant or bidder, including matters such as mergers and acquisitions, from the receipt deadline for applications until the public announcement of provisional licence winners by ISED, would fall into the area of prohibited discussions and would be considered contrary to the auction rules.

143. However, an applicant or bidder may discuss changes in beneficial ownership with parties who are completely unrelated to other applicants or bidders during the period noted above, as long as:

• any change to the beneficial ownership of the applicant that provides a new party with a beneficial interest or which significantly alters the beneficial ownership structure is effected at least 10 days before the commencement of bidding.
• the applicant informs the Minister immediately in writing of any change in beneficial ownership, which will be reflected in its published qualified bidder information on ISED’s Spectrum management and telecommunications website.
• the applicant informs the Minister in writing in advance of any pending change in beneficial ownership that may enter the public domain via an announcement or by public release.

144. Bidders must cease all such negotiations at least 10 days before the commencement of bidding until the public announcement of provisional licence winners by ISED.

10.8 Other communication rules

145. Discussions on tower sharing: The prohibition of communication includes discussions about tower and site sharing regarding the licences that are the subject of this auction until after the public announcement of provisional licence winners by ISED. Discussions concerning new arrangements or the expansion of existing sharing arrangements that relate to spectrum outside of licences being offered in this auction process are not prohibited.

146. Communication with local exchange carriers: The prohibition of communication includes discussions regarding interconnection services with a local exchange carrier (LEC) that is a qualified bidder (or one of its affiliates/associates) in this auction, where the services relate to spectrum in the bands offered in this auction process.

147. Consulting services, legal and regulatory advice: Separate bidders may not receive consulting advice from the same auction consulting company. Separate bidders may receive legal and regulatory advice from the same law firm provided that the law firm complies with the conflict of interest and confidential information requirements of the applicable law society and that the applicants otherwise comply with the provisions set forth in the licensing framework.

148. ISED will consider making unallocated licences available for licensing through an alternative process, which could include another auction or some other process. The timing and form of such a process will depend on the demand for remaining licences. ISED may conduct a public consultation should it consider it necessary.

149. ISED will accept written questions soliciting clarification of the rules and policies set out in this Notice from the date of publication up to the deadline specified in the Table of Key Dates. Written questions and ISED responses will be made available on ISED’s website. Questions of a similar nature and subject matter may be grouped and summarized. Questions regarding bidding procedures will be addressed in packages intended for qualified bidders, and will not be included in this clarification process unless they are deemed to be critical information for potential bidders requiring an immediate response. Applicants are encouraged to submit questions as soon as possible.

150. ISED may also amend or supplement any of the rules or procedures contained in this Notice. Any such amendment or supplement will be published on ISED’s website and will be sent to all qualified bidders.

151. All spectrum-related documents referred to in this paper are available on ISED’s Spectrum Management and Telecommunications website.

152. For further information concerning the process outlined in this document or related matters, contact:

Innovation, Science and Economic Development Canada
c/o Senior Director, Spectrum Policy Branch
235 Queen Street (6th Floor, East Tower)
Ottawa, Ontario K1A 0H5
Telephone: 343-551-0539
TTY: 1-866-694-8389
Email: spectrumauctions-encheresduspectre@ised-isde.gc.ca

This annex includes the list of all licences available in this auction of residual licences, including band, product number, service area name, block details, 2016 Census population, and reserve prices.

1. ISED will use a second‑price rule to determine the prices to be paid such that the price for a provisional winning bidder will be at least the reserve price but no higher than the actual bid amount. Second prices are often referred to as Vickrey prices and represent the opportunity cost of the bidder winning a licence or a package. More specifically, ISED will apply bidder‑optimal core prices and use the “nearest Vickrey” approach in determining the prices.

2. The second or Vickrey price for each provisional winning bidder (known as “Bidder J” in this explanation) is calculated as follows. First, from the value of the winning combination, subtract Bidder J’s winning bid (value A). Next, recalculate the winning combination for the hypothetical situation in which all Bidder J’s bids are excluded, as if Bidder J had not participated (value B). The Vickrey price for Bidder J is calculated as the value of the winning combination with all Bidder J’s bids excluded (value B) minus the sum of the winning bids for all bidders other than Bidder J (value A); that is, value B minus value A. This is the minimum amount that the winning bidder could have bid in order to still have won, given the bids of all other bidders.

3. For a combinatorial auction, Vickrey price(s) could depend on package bids and the reserve prices. In addition, with package bidding, an extra payment beyond the Vickrey prices is sometimes required due to interaction between overlapping bids. If an additional payment is required, the payment will be proportionate to the number of blocks in the bidder’s package.

4. The prices to be paid by the winning bidders for the combinatorial bidding in each product must satisfy the following conditions:

1. First condition: The price for a winning bid must be greater than or equal to the reserve price(s) for the licence(s) included in the bid but not more than the dollar amount of the winning bid.
2. Second condition: The set of prices must be sufficiently high so that no alternative bidder or group of bidders is prepared to pay more than any winning bidder or group of winning bidders. If only one set of prices meets the first and second conditions, this determines the prices to be paid.
3. Third condition: If more than one set of prices fulfils the first and second conditions, the set (or sets) of prices minimizing the sum of prices across winning bidders is (are) selected. If only one set of prices satisfies these three conditions, this set determines the prices.
4. Fourth condition: If more than one set of prices satisfies the first three conditions, the set of prices that minimizes the weighted sum of squares of differences between the prices and the Vickrey prices will be selected. The weighting is proportionate to the number of blocks in the bidder’s package. This approach for selecting among sets of prices that minimize the sum of prices across winning bidders is referred to as the “nearest Vickrey” approach.

5. These conditions characterize a unique set of prices such that each provisional winning bidder pays no more than the dollar amount of its winning bid and pays at least the reserve price(s). ISED staff will calculate the prices for the allocation stage in each product, where available, that meet the conditions outlined above.

6. The following is an example of how prices are calculated. This example is based on the Spectrum Auction Design paper by P. Cramton.

7. Suppose there are four bidders, 1, 2, 3, and 4, bidding for two blocks in a product where only two blocks are available. The following bids are submitted (“b” designates the bidder, and the figure in brackets indicates the number of blocks in a package):

• b₁{1} = $28
• b₂{1} = $20
• b₃{2} = $32
• b₄{1} = $14

8. The bids of the four bidders are represented in Figure B1.

9. In this example, the highest value combination of bids would allocate one block to Bidder 1 and one block to Bidder 2, generating $48 in value. There is no other allocation that yields a higher value.

10. To calculate the Vickrey price for Bidder 1, its winning bid ($28) is subtracted from the value of the winning combination ($48), resulting in $20. Next, the winning combination of packages is recalculated for the hypothetical situation in which Bidder 1’s bids are excluded. The best assignment, excluding Bidder 1, assigns one block to Bidder 4 at $14 and one block to Bidder 2 at $20, resulting in $34. The Vickrey price for Bidder 1 is the value of the winning combination of packages with all Bidder 1’s bids excluded ($34) less the sum of the winning allocation stage bids for all bidders other than Bidder 1 ($20); that is, its Vickrey price is $14 ($34 – $20).

11. Similarly, to calculate the Vickrey price for Bidder 2, its winning bid ($20) is subtracted from the value of the winning combination ($48), resulting in $28. Next, the winning combination of packages is recalculated for the hypothetical situation in which Bidder 2’s bids are excluded. The best assignment, excluding Bidder 2, assigns one block to Bidder 1 and one block to Bidder 4, resulting in a value of $42. The Vickrey price for Bidder 2 is the value of the winning combination of packages with all Bidder 2’s bids excluded ($42) less the sum of the winning allocation stage bids for all bidders other than Bidder 2 ($28); that is, its Vickrey price is $14 ($42 - $28).

12. Hence, the Vickrey outcome is for Bidder 1 to pay $14 for one block and for Bidder 2 to pay $14 for one block. Total revenues with these payments are $14 + $14 = $28. As shown in Figure B1, Bidder 1 can reduce its bid to $14 before being displaced by Bidder 4. Similarly, Bidder 2 can reduce its bid to $14 before being displaced by Bidder 4.

Figure 1: Example of Calculating Prices (in Dollars)

13. However, these payments sum to $28, which is less than Bidder 3’s bid of $32 for two blocks. Therefore, Bidder 1 and Bidder 2 must split an additional payment of $4 ($32 − $28) to ensure that their combined payment is greater than that of Bidder 3, satisfying the condition that no other bidder or group of bidders was prepared to pay more for the licences in question. That is, Bidder 1 and Bidder 2 must collectively pay at least $32. The additional payment of $4 is split equally between the two bidders. Each bidder is, therefore, paying an additional $2 above its Vickrey price, with Bidder 1 paying $16 ($14 + $2) and Bidder 2 paying $16 ($14 + $2), as shown in Figure B1.

14. As in the example above, two bidders won the same number of blocks; the additional payment of $4 is split equally between the two bidders. However, if bidders win a different number of blocks, the two bidders must split the extra payment proportionately to the number of blocks in their winning packages (the fourth condition).

1. The following examples illustrate different bidding scenarios, the provisional winning bid(s), and the price calculations for each.

Example C1

2. Assume that three bidders are interested in the 3800 MHz band AP block in Service Area 4-006. Only one block is available in this service area across the 3500 MHz and the 3800 MHz bands, and it will be auctioned individually (no package bidding). Bidder 1 places a bid of $180,101, Bidder 2 places a bid of $167,627 and Bidder 3 places a bid of $250,125. Bidder 3 would be declared the provisional winner and must pay the second-highest bid value of $180,101.

Example C2 (Allocation Stage)

3. Suppose three bidders are interested in the 3800 MHz band licences covering Service Area 4-167, Prince George. Four blocks are available in this service area across the 3500 MHz and the 3800 MHz bands (blocks AH, AJ, AK and AL). These blocks will be auctioned in a combinatorial format. In the allocation stage, bidders can submit bids on packages of 1, 2, 3, or 4 blocks.

4. Bidder 1 submits one bid of $240 000 for a package of all four licences. Bidder 2 submits three bids: $50 000 for one block, $100 000 for two blocks, and $200 000 for three blocks. Bidder 3 submits two bids: $60 000 for one block and $110 000 for two blocks.

5. Bidder 2 would be declared the provisional winner for a package of three blocks, and Bidder 3 would be declared the provisional winner for one block, as the combination of their bids on these packages is higher than any other feasible combination of submitted bids.

6. To calculate the Vickrey price for Bidder 2, its winning bid ($200 000) is subtracted from the value of the winning combination ($260 000), resulting in $60 000. Next, the winning combination is recalculated for the hypothetical situation in which Bidder 2’s bids are excluded. The best allocation, excluding Bidder 2, grants all four licences to Bidder 1 at $240 000. The Vickrey price for Bidder 2 is the value of the winning combination with all of Bidder 2’s bids excluded ($240 000) less the sum of the winning bids for all bidders other than Bidder 2 ($60 000); that is, its Vickrey price is $180 000 ($240 000 - $60 000).

7. To calculate the Vickrey price for Bidder 3, its winning bid ($60 000) is subtracted from the value of the winning combination ($260 000), resulting in $200 000. Next, the winning combination is recalculated for the hypothetical situation in which Bidder 3’s bids are excluded. The best allocation, excluding Bidder 3, grants three licences to Bidder 2 at $200 000 and one licence to a reserve bidder (one licence remains unsold). The Vickrey price for Bidder 3 is the value of the winning combination with all of Bidder 3’s bids excluded ($248 000) less the sum of the winning bids for all bidders other than Bidder 3 ($200 000); that is, its Vickrey price is $48 000 ($248 000 - $200 000).

8. In some cases, the Vickrey price may not be high enough to ensure that no alternative bidder or group of bidders is prepared to pay more for the licences in question, so an additional payment above Vickrey prices is required. If such a payment is necessary, ISED will weigh the portion of the additional payment on the winning package sizes in terms of the number of blocks.

9. In this example, the total amount of Vickrey prices calculated for Bidder 2 and Bidder 3 is $228 000 ($180 000 + $48 000), which is less than Bidder 1’s bid of $240 000 for all four licences. Therefore, Bidder 2 and Bidder 3 must split an additional payment of $12 000 ($240 000 - $228 000) to satisfy the condition that no other bidder or group of bidders were prepared to pay more for the licences in question. Since Bidder 2 won three licences and Bidder 3 won one, the additional payment of Bidder 2 is $9 000 ($12 000 × 3 / 4) for a final payment of $189 000. Similarly, the additional payment of Bidder 3 is $3 000 ($12 000 × 1 / 4) for a final payment of $51 000 ($48 000 + $3 000).

Example C3 (Assignment Stage)

10. For the service area considered in Example C2, there will be an assignment stage (Example C3). Bidders 2 and 3 will be invited to bid on the assignment stage options. Bidder 2, which won three blocks in the allocation stage, will be presented with two assignment options: AH.AJ.AK and AJ.AK.AL. Bidder 3, which won one block in the allocation stage, will be presented with four assignment options: AH, AJ, AK, and AL.

11. Bidder 2 submits one bid of $5 000 for AH.AJ.AK assignment. Bidder 3 submits three bids: $6 000 for assignment of AH, $20 000 for AJ, and $2 000 for AL.

12. Bidder 3’s $20 000 bid for AJ assignment is inconsistent with the contiguous spectrum assignment to Bidder 2. Therefore, this bid will not be a part of the solution for the winner and price determination.

13. The winning combination that respects the contiguity rules is the bids for assigning AH.AJ.AK to Bidder 2 and AL to Bidder 3 for a total of $7 000 ($5 000 + $2 000).

14. To calculate the Vickrey price for Bidder 2, its winning bid ($5 000) is subtracted from the value of the winning combination ($7 000), resulting in $2 000. Next, the winning combination is recalculated for the hypothetical situation in which Bidder 2’s bids are set to zero. The best assignment, excluding Bidder 2, assigns AH to Bidder 3 at $6 000. The Vickrey price for Bidder 2 is the value of the winning combination with all of Bidder 2’s bids set to zero ($6 000) less the sum of the winning bids for all bidders other than Bidder 2 ($2 000); that is, its Vickrey price is $4 000.

15. To calculate the Vickrey price for Bidder 3, its winning bid ($2 000) is subtracted from the value of the winning combination ($7 000), resulting in $5 000. Next, the winning combination is recalculated for the hypothetical situation in which Bidder 3’s bids prices are set to zero. The best assignment, excluding Bidder 3, assigns AH.AJ.AK to Bidder 2 at $5 000. The Vickrey price for Bidder 3 is the value of the winning combination with all of Bidder 3’s bids set to zero ($5 000) less the sum of the winning bids for all bidders other than Bidder 3 ($5 000); that is, its Vickrey price is $0 ($5 000 - $5 000).