Competitive tender or ‘beauty contest’

Written on 10:33 AM by ooe

An alternative method of awarding block licences is commonly known as a ‘beauty contest’. In most cases, an annual fee is charged for the licences, but this is an administrative charge, much lower than the likely auction price. The award is based not on which operator is willing to pay the most, but rather the operator who undertakes to make best use of the spectrum.

In a similar way to the minimum permitted performance licence conditions often imposed on auction winning operators, the beauty contest attempts to ensure that the government's original objectives in issuing the spectrum are met. While an auction process limits itself to specifying a minimum set of desirable parameters that the resultant network must exhibit, the beauty contest award decision is given to the operator whose proposed network offers the most desirable features. Exactly how these desirability criteria are judged will again depend on the original objectives.

One obvious flaw with this process is that an operator could over-promise in an attempt to secure a licence. For this reason, the promises usually form the basis of the winner's licence conditions. Additionally it is common for a detailed business plan to be required which shows achievable forecasts for revenue and expenditure.