Section Part 5 - Radiocommunications (Spectrum Licence Allocation – 700 MHz Band) Determination 2016 - Allocation for a pre-determined price

Part 5—Allocation for a pre-determined price

40 Simplified outline of this Part

This Part deals with the procedures to be undertaken if, having regard to the information provided by applicants in relation to their preferred lots, the ACMA considers it can allocate spectrum licences without conducting an auction.

In these circumstances, the ACMA will offer to allocate spectrum licences to the relevant applicants. An applicant who accepts the offer will have the choice of paying an upfront pre-determined price, which is the sum of the starting prices of the lots to be included in the spectrum licence, or a delayed pre-determined price, which is the sum of the starting prices of the lots to be included in the spectrum licence plus an additional percentage of that sum. The delayed pre-determined price is to be paid in three instalments. The first instalment is to be accompanied by a bank guarantee that secures the payment of 5 per cent of the second and third instalments.

If an applicant accepts the offer, but fails to pay the upfront pre-determined price or the first instalment of the delayed pre-determined price, the applicant is not entitled to be issued the licence.

41 Allocation for a pre-determined price without an auction

(1) If, before the auction manager sets the start date and time for the first and second rounds of the auction under section 58, the ACMA considers that it may be able to identify the person willing to make the highest value payment for the allocation of a spectrum licence for a lot, the ACMA may offer to allocate the spectrum licence for a pre-determined price, as set out in this Part. (2) An offer of a spectrum licence is conditional on payment of the pre-determined price.

Note: See subsections 44(4) and (5).

42 ACMA must have regard to applicants’ requirements

In deciding under subsection 41(1) whether it is able to identify the person willing to make the highest value payment for a spectrum licence, and in identifying lots for the purposes of that subsection, the ACMA must only have regard to: (a) each applicant’s preferred lots; and (b) such other information about each applicant’s preferred lots that the applicant may provide to the ACMA.

Note: The allocation limits may affect the lots an applicant may nominate as its preferred lots.

43 The upfront pre-determined price and the delayed pre-determined price

(1) The upfront pre-determined price for a spectrum licence is worked out as follows: (a) identify each lot to be included in the spectrum licence; (b) add up the starting prices for each lot.

Note: The starting price is set by the ACMA under subsection 28(1).

(2) The balance of the upfront pre-determined price for a spectrum licence is the upfront pre-determined price less the amount of any deposit paid by the applicant. (3) The delayed pre-determined price for a spectrum licence is the sum of: (a) the deposit paid by the successful applicant for the licence under section 38 (if any); (b) the first instalment for the licence; (c) the second instalment for the licence; and (d) the third instalment for the licence.

Note: The first, second and third instalments to be paid in relation to a spectrum licence are calculated by reference to the starting prices for the lots to be included in the licence (see section 46). The starting price is set by the ACMA under subsection 28(1). The ACMA must set starting prices in a manner that is consistent with the Radiocommunications (Spectrum Licence Allocation—Residual 700 MHz Spectrum) Direction 2016.

Note 2: The sum of the present value of each of the instalments, and of the deposit (if any), is the same as the sum of the starting prices for the lots to be included in the licence, when calculated in accordance with the Radiocommunications (Spectrum Licence Allocation—Residual 700 MHz Spectrum) Direction 2016.

44 Offer of spectrum licence and decision on pre-determined price

(1) If the ACMA considers under subsection 41(1) that it may allocate a spectrum licence for lots to an applicant without having to conduct an auction, the ACMA may offer the applicant a spectrum licence for the lots to be included in that licence. (2) The ACMA will send the applicant, by registered mail: (a) a draft of the spectrum licence; and (b) a notice stating: (i) that the applicant is offered a spectrum licence for the lots to be included in that licence; and (ii) the amount of the upfront pre-determined price for the licence offered to the applicant; and (iii) the amount of the delayed pre-determined price for the licence offered to the applicant; and (iv) the amount of any deposit paid by the applicant and held by the ACMA or the Commonwealth; and (v) the balance of the upfront pre-determined price. (3) An applicant who wishes to accept the ACMA’s offer must do so by notifying the ACMA in writing within 10 working days of receiving the offer and agreeing, in writing, either: (a) to pay the balance of the upfront pre-determined price for the spectrum licence in accordance with section 45; or (b) to pay the delayed pre-determined price for the spectrum licence in accordance with section 46.

Note: The delayed pre-determined price for a spectrum licence is the sum of the deposit paid (if any) in addition to the first instalment, the second instalment and the third instalment. If a deposit has been paid, the amount of the deposit reduces the amount of the first instalment.

(4) If an applicant accepts the offer of the spectrum licence and agrees to pay the balance of the upfront pre-determined price for the spectrum licence in accordance with section 45, the applicant is entitled to be issued the spectrum licence offered to it on payment of the balance of the upfront pre-determined price in accordance with section 45. (5) Subject to subsection (6), if an applicant accepts the offer of the spectrum licence and agrees to pay the delayed pre-determined price for the spectrum licence in accordance with section 46, the applicant is entitled to be issued the spectrum licence offered to it on payment of the first instalment in accordance with section 46.

Note 1: If an applicant does not accept the offer of a spectrum licence, section 47 applies.

Note 2: For the issue of spectrum licences, see section 62 of the Act.

(6) If an applicant accepts the offer of the spectrum licence and agrees to pay the delayed pre-determined price for the spectrum licence in accordance with section 46, the applicant is not entitled to be issued a spectrum licence unless the applicant gives the ACMA an irrevocable bank guarantee securing the secured amount, issued by an Australian-owned authorised deposit-taking institution (as defined in the Banking Act 1959) which is a bank, in a form approved by the ACMA (delayed pre-determined price bank guarantee), by no later than the date mentioned in paragraph 46(2)(a).

Note 1: If the applicant fails to pay an instalment other than the first instalment, the applicant may be in breach of the licence condition required to be included in a spectrum licence by section 67 of the Act.

Note 2: If either, or both, the second instalment and third instalment are not paid in accordance with section 46, the ACMA or the Commonwealth may require the authorised deposit-taking institution that has issued the delayed pre-determined price bank guarantee to pay the amount secured by the delayed pre-determined price bank guarantee.

Note 3: See section 90, in relation to the rights of the ACMA and the Commonwealth.

(7) If a spectrum licence is issued to an applicant in accordance with subsection (5), each of the first instalment, the second instalment and the third instalment is not refundable in any circumstances. (8) If a delayed pre-determined price bank guarantee is given to the ACMA by email or fax before the date mentioned in subsection (6), the original guarantee must be received by the ACMA no later than 3 working days after that date (or, if the ACMA agrees to a later time, the agreed time) for the guarantee to be taken to have been given to the ACMA. (9) For the purposes of subsection (6), the secured amount is: (a) in the period commencing on the date mentioned in paragraph 46(2)(a) and ending on the date (if any) the second instalment is paid – 5 per cent of the sum of the second instalment and the third instalment; (b) in the period commencing on the day after the date the second instalment is paid and ending on the date (if any) the third instalment is paid – 5 per cent of the third instalment.

45 Payment of the balance of the upfront pre-determined price

(1) If an applicant accepts the offer of a spectrum licence and agrees to pay the balance of the upfront pre-determined price for the licence, the ACMA must notify the applicant by registered mail that the ACMA has received the applicant’s acceptance. (2) The balance of the upfront pre-determined price for a spectrum licence is payable no later than 31 January 2018.

Note: For information on how the balance of the upfront pre-determined price is paid, see section 7.

46 Payment of the delayed pre-determined price

(1) If an applicant accepts the offer of a spectrum licence and agrees to pay the delayed pre-determined price for the licence, the ACMA must notify the applicant by registered mail that the ACMA has received the applicant’s acceptance. (2) The delayed pre-determined price for a spectrum licence is payable in accordance with the following schedule: (a) an instalment of: (i) 48.0051 per cent of the gross price for the licence; less (ii) the deposit (if any) paid by the applicant under section 38; (the first instalment for the licence) must be paid no later than 31 January 2018; (b) an instalment of 26.6315 per cent of the gross price for the licence, multiplied by 1.05 (the second instalment for the licence) must be paid no later than 31 January 2019; (c) an instalment of 25.3634 per cent of the gross price for the licence, multiplied by 1.1025 (the third instalment for the licence) must be paid no later than 31 January 2020.

Note: For information on how the delayed pre-determined price is paid, see section 7.

(3) If an applicant accepts the offer of a spectrum licence and agrees to pay the delayed pre-determined price for the licence, the applicant must give the ACMA the delayed pre-determined price bank guarantee in accordance with subsection 44(6) by the date mentioned in paragraph (2)(a). (4) For the purposes of subsection (2), the gross price for a licence is worked out as follows: (a) identify each lot to be included in the licence; (b) add up the starting price of each such lot.

47 Allocation if offer refused

If an applicant does not accept, in accordance with subsection 44(3), a spectrum licence that has been offered to it, the ACMA may: (a) allocate the lots for that spectrum licence by auction under this instrument; or (b) remove the lots from the allocation process.

48 Default

(1) If an applicant: (a) accepts the offer of a spectrum licence and agrees to pay the balance of the upfront pre-determined price for the licence; and (b) does not pay the balance of the upfront pre-determined price for the licence in accordance with section 45; then: (c) the spectrum licence is not allocated to the applicant; and (d) the allocation of spectrum licences under this instrument to other applicants is not affected; and (e) section 80 applies to spectrum that, but for this subsection, would have been allocated to the applicant. (2) If an applicant: (a) accepts the offer of a spectrum licence and agrees to pay the delayed pre-determined price for the licence; and (b) either, or both: (i) does not pay the first instalment in accordance with section 46; or (ii) does not give the ACMA the delayed pre-determined price bank guarantee in accordance with subsection 44(6); then: (c) the spectrum licence is not allocated to the applicant; and (d) the allocation of spectrum licences under this instrument to other applicants is not affected; and (e) section 80 applies to spectrum that, but for this subsection, would have been allocated to the applicant.