mjunction services limited, who have been selected by DoT for conduct of eAuction of telecom spectrum, have successfully conducted the auctions for the second time in a row. The auction which continued for 5 days, from 1st of October to 6th of October, has brought an overall 3.35% appreciation in auction value over the reserve price for the Spectrum sold.
mjunction used Simultaneous Multiple Round Auction (SMRA) methodology – an internationally well accepted methodology, to conduct the eAuction.
Under this system all the offerings were opened simultaneously, and were subsequently closed together, to enable the operators to switch across the offerings in real time . Also, in such an auction open over multiple rounds it generates an increase in price with optimum revenue realization in a fair manner. The Auction Activity Requirement ensures sustained bidding activity, limiting any ambush bidding tendency. This rolls out a level playing field based on initial Earnest Money Deposits.
The mjunction CEO, Mr Vinaya Varma, said that, “We paid close attention to improving the overall experience of the operators, with easy bidding screen, dashboards and call centre assistance. A custom ‘watchlist’ was designed to help operators keep a close tab on LSAs of strategic importance to them”
A three-stage authentication process was installed along with a tamper-proof Database Activity Monitoring. Mock auctions were conducted prior to the final auctions to familiarize the bidders with the process and ease them into the real-time virtual platform, in accordance to the NIA stipulation. In another significant improvisation over the last edition, in cases where contiguous spectrum was available, frequency identification accorded preference to winners who have won 5MHz or more but not at the cost of lower ranked eligible winners. The system attempted to rationalize frequency assignment by – allocating continuous spectrum to the extent possible and also by trying to assign best fit spectrum chunks so as not to cause unnecessary fragmentation of spectrum.
mjunction has leveraged its implementation strengths to extend an internationally accepted auction methodology for Spectrum Auctions, to an ever increasing number of simultaneous offerings, which increases the complexity by several orders of magnitude than before. By successfully managing this complexity, first in 69 offerings across 4 bands & 22 circles in 2015 and then in 126 offerings across 7 bands and 22 circles in 2016, mjunction has given evidence of its strong hold in conducting such high value auctions.
The SMRA strategy has two parts, where the first discovers winners and winning prices and the second establishes allocation. The bidding for each takes place in iterations or rounds. For each lot, a single price is generated by the system across all bidders and also during the price discovery stage – ranks/intimations are displayed to the bidders intimating them of their win. There are certain quantity capping rules.The SMRA strategy has two parts, where the first discovers winners and winning prices and the second establishes allocation.
The methodology also synchronizes lots through common clock – start and stop together. The lots were arranged near substitutes resulting in switching behavior. Each bid quality under this system is validated by EMD and eligibility point and time budget is provided to bidders for round extensions. Also, activity rules could clamp down on ‘wait and watch’ behavior. All this increases the probability of an optimum demand-supply match based on market dynamics, where the round price increases and ends only when all bidders for the lot regret to bid.
At the end of each round, if demand exceeds available quantity, the price is increased by a fixed percentage/quantum for the next round. The auction ends when there is no excess demand and no further price increments can be applied.
(mjunction has repeatedly proven its mettle by successfully implementing complex auction methodologies to solve allocation problems. The company has past experience of conducting various high value auctions, Mr. Varma said. This includes spot and forward auctions for commodities such as coal and steel. Such auction processes are applied in various scenarios to generate healthy competition within same industry segments, selling big volume of inventories across verticals. In many cases the auction is conducted in multiple stages to achieve objectives such as – maximizing price and volume and facilitating faster clearance of inventory)
The efforts put in by mjunction team for Spectrum Auctions came to fruition when bidders responded with warm mails at the close of a five day period of system orientation.
This auction system was tested and audited by STQC on functional grounds, penetration, vulnerability assessment, network security and application security over and above data security with IT Act and CVC compliance required for running the auction.