Sunday, January 3, 2016

Reverse Auction for Wi Fi

Engineering projects are routinely executed by the public sector through tenders. A closed bid for a project such as bridge is invited, often through an e-tender framework, and the agency agreeing to do it at lowest bid cost is awarded the work.

Land allotments are often done through e-auctions. In New Town, land plots are e-auctioned where on the day of e-auction, each bidder can see the highest bid made so far in the day (they can't see the name / details of who is bidding) and decide to outbid it. Even at the close of tender time (suppose 2pm on a given date) any new bid extends the time by eight minutes or so: thus it leaves enough time for other bidders to outbid. One quoting the highest bid gets the plot.

We are now discussing with our Transaction Advisor as to whether we could do a reverse auction for setting up a Wi Fi network in New Town as a part of the Smart City programme. A Wi Fi needs optical fibre cables, routers, access points, power, control centre besides bandwidth and operation / maintenance. Let us say, it costs Rs x per km to lay out the Wi Fi network. Through a reverse auction method, there can be a competition between service providers (like Vodafone, Aircel, Reliance, Airtel etc), hardware firms (like Optial Fibre companies, equipment manufacturers like Cisco) or system integrators so that the cost to Hidco could be less than Rs x per km. By seeing the reverse auction bids of others on their computer screens on the day of auction, competition can drive costs lower. The possibility of a negative cost to Hidco (ie the successful bidder agrees to pay Rs y per km to Hidco) as it will enable it to earn revenues by providing not only by Wi Fi but also cable TV etc cannot be ruled out.
Transaction Advisor  will soon come up with a draft document.
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ToI dt 3 Jan 2016

HT dt 3 Jan 2016

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