The auction for 4G telecommunication service licenses begins today, with combined tenders estimated to top NT$50 billion (US$1.6 billion).
The auction’s seven qualified bidders are Chunghwa Telecom (CHT), Taiwan Mobile, Far Eastone Telecommunication, Asia Pacific Telecom, Ambit Microsystems Corp of Hon Hai Group and two management teams backed by Ting Hsin International Group and Shinkong Group respectively.
The National Communications Commission, the administrative agency overseeing the auction, has prepared seven bidding rooms and five backup rooms in case the computers in any of the bidding rooms do not work.
The auction will be conducted at the commission’s branch office on Jinan Road in Taipei.
According to the commission’s rules, 10 bidding rounds will be conducted each day. The bidding will continue the next day if no party wins the bid by the end of the session. A total of 270MHz of radio frequencies in the 700MHz, 900MHz and 1,800MHz spectrums for 4G services are on offer.
The rules stipulate that each bidding unit consist of 5MHz. Each bidder can bid for no less than 10 MHz and no more than 35MHz, and these restrictions apply to both upstream and downstream spectrums.
The commission said that a bid will be considered invalid if it exceeds the cap for radio frequencies that each bidder is allowed or falls below the minimum bidding price. Those who place invalid bids will lose their right to bid.
A bidder will also waive that right by skipping a round without permission, or by withdrawing altogether and will be disqualified if they waive the right four times.
Most of the frequency blocks in 900MHz and 1,800Mhz spectrums are used by operators offering the Global System for Mobile Communications service, also known as the 2G network.
Frequency blocks in 700MHz have higher starting prices than those in 900MHz and 1,800MHz,s as the former are not used by any operator and have better transmission efficiency. The total starting price in the spectrum tops NT$20.7 billion.
The commission set the starting price of all the frequency spectrum reserved for use of 4G service at NT$35.9 billion, but the industry expects that total bids could exceed NT$50 billion, since the auction for 3G licenses generated NT$48.9 billion.
Current 2G operators can upgrade to 4G if they succeed in keeping frequency blocks through the bidding process. If any of the 2G frequency blocks is won by a new telecom and the current user is unwilling to return the blocks early, then the carrier must wait until June 30, 2017, when the 2G licenses are scheduled to expire.
The auction is expected to be completed by November.