[Federal Register: October 28, 2004 (Volume 69, Number 208)]
[Notices]
[Page 62884-62896]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28oc04-55]
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FEDERAL COMMUNICATIONS COMMISSION
[Report No. AUC-04-58-C; DA 04-3005; Report No. AUC-04-58-D; DA 04-3270
(Auction No. 58)]
Broadband PCS Spectrum Auction Start Date Re-Scheduled for
January 26, 2005; New Pre-Auction Dates and Deadlines Established;
Notice and Filing Requirements, Minimum Opening Bids, Upfront Payment
and Other Auction Procedures
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This document announces the procedures and minimum opening
bids for the upcoming auction of 242 Broadband Personal Communications
Service (PCS) licenses and announces that the auction initially
scheduled to commence on January 12, 2005 is rescheduled to begin on
January 26, 2005. In addition, this document announces the rescheduling
of certain pre-auction events and deadlines. This document is intended
to familiarize prospective bidders with the procedures and minimum
opening bids for this auction.
DATES: Auction No. 58 is scheduled to begin on January 26, 2005.
FOR FURTHER INFORMATION CONTACT: Auctions and Spectrum Access Division
(WTB): For legal questions: Audrey Bashkin or Scott Mackoul at (202)
418-0660. For general auction questions: Jeff Crooks at (202) 418-0660
or Lisa Stover at (717) 338-2888. For service rule questions: Mobility
Division, WTB, Kathy Harris or Erin McGrath at (202) 418-0620. For
technical questions: Chris Miller or JoAnn Epps at (202) 418-0620.
Media Contact: Lauren Patrich at (202) 418-7944.
SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 58
Procedures Public Notice released on September 16, 2004, and the public
notice released October 15, 2004, rescheduling the upcoming auction and
certain pre-auction events and deadlines. In light of the Commission's
decision in the Memorandum Opinion and Order, FCC 04-249, released
October 15, 2004, the Bureau rescheduled the start date and the pre-
auction dates and deadlines for Auction No. 58 in order to provide
additional time for bidder preparation and planning. The Bureau
originally provided more than six months for bidders to prepare for
Auction No. 58, which normally should provide more than sufficient time
for planning purposes. Requests to amend or waive the Commission's
eligibility rules for certain broadband PCS licenses, however, created
some uncertainty regarding whether such licenses would be available in
open or closed bidding. Now that a final decision has been made on
those matters, the Commission therefore believes a slight modification
to its auction schedule is warranted. The complete text of the Auction
No. 58 Procedures Public Notice, including attachments, as well as
related Commission documents, are available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC
20554. The Auction No. 58 Procedures Public Notice and related
Commission documents may also be purchased from the Commission's
duplicating contractor, Best Copy and Printing, Inc. (``BCPI''),
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554,
telephone 202-488-5300, facsimile 202-488-5563, or you may contact BCPI
at its Web site: http://www.BCPIWEB.com. The Auction No. 58 Procedures
Public Notice and related documents are also available on the Internet
at the Commission's Web site: http://wireless.fcc.gov/auctions/58/.
I. General Information
A. Introduction
1. The Auction No. 58 Procedures Public Notice, announces the
procedures and minimum opening bids for the upcoming auction of
licenses in the broadband personal communication services (``PCS'')
scheduled for January 26, 2005 (Auction No. 58). On June 18, 2004, in
accordance with the Balanced Budget Act of 1997, the Wireless
Telecommunications Bureau (``WTB'') released a public notice seeking
comment on reserve prices or minimum opening bids and the procedures to
be used for the auction of broadband PCS licenses in Auction No. 58.
The Bureau released a second public notice on August 3, 2004, revising
the list of licenses available and seeking comment on procedures for
the auction of those licenses. The Bureau received 19 comments and five
reply comments in response to the Auction No. 35 Comment Public Notice,
65 FR 55243, September 13, 2000, and no comments in response to the
Auction No. 58 Revised Inventory Public Notice, 69 FR 49897, August 12,
2004.
[[Page 62885]]
i. Background of Proceeding
2. Auction No. 58 includes licenses for A, C, D, E, and F blocks of
broadband PCS spectrum. This auction will be the fifth auction of C
block broadband PCS spectrum and the fourth auction of F block
broadband PCS spectrum. The Commission initially designated the C and F
block licenses to be held only by those entities that qualified as
``entrepreneurs'' under the Commission's rules. Specifically, only
those entities that qualified as entrepreneurs could bid on the C and F
block licenses and hold the licenses for the first five years following
the date of the initial license grant. The initial C block licenses
were awarded through two auctions, Auction No. 5, which ended on May 6,
1996, and Auction No. 10, which concluded on July 16, 1996. Auction No.
11, the initial F block auction, ended on January 14, 1997, and also
included D and E block licenses. Auction No. 22, which concluded on
April 15, 1999, made available C, E and F block licenses that had been
returned to, or reclaimed by, the Commission.
3. In 2000, the Commission revised certain service and auction
rules for the C and F block licenses. Among the modifications to the
Commission's rules, the C/F Block Sixth Report and Order, 65 FR 53624,
September 5, 2000, reconfigured the size of 30 megahertz C block
licenses available for auction, creating three 10 megahertz licenses.
The Commission also removed the entrepreneur eligibility restrictions
for some C block licenses. It did so by first establishing two
categories for licenses: Tier 1 being comprised of those Basic Trading
Areas (BTAs) with populations that, according to the 1990 census, are
equal to or greater than 2.5 million and Tier 2 being comprised of the
remaining BTAs. The Commission then established ``open bidding'' (i.e.,
bidding without entrepreneur eligibility restrictions) for two of the
three newly reconfigured 10 megahertz C block licenses in Tier 1 and
for one of the three newly reconfigured 10 megahertz C block licenses
in Tier 2. The remaining 10 megahertz C block licenses in Tier 1 and 2
were reserved for entrepreneurs. Finally, with respect to available 15
megahertz C block licenses, the Commission eliminated eligibility
restrictions for such licenses in Tier 1, but maintained the
eligibility requirements in Tier 2.
4. Following the adoption of the C/F Block Sixth Report and Order,
the Commission held Auction No. 35, which included 422 C and F block
broadband PCS licenses. Certain of the licenses won at auction,
however, were not granted because the spectrum was the subject of
litigation and/or bankruptcy proceedings. Recent settlement in a number
of those matters has made C and F block spectrum available again for
licensing. This spectrum, along with spectrum associated with other
licenses that cancelled or were otherwise returned to the Commission,
is now included in the inventory for Auction No. 58.
5. Additionally, following the announcement of Auction No. 58,
CTIA--The Wireless Association TM (``CTIA'') filed a
petition for rulemaking, or in the alternative, a request for waiver of
the eligibility restrictions placed on certain C block licenses (``CTIA
Petition''). This petition was placed on public notice and will be
addressed in a proceeding separate from the instant one which is
intended to establish procedures for the conduct of Auction No. 58. The
eligibility issue raised in the CTIA Petition was also addressed in
nearly all of the comments filed pursuant to the Auction No. 58 Comment
Public Notice, as well as in the Verizon Wireless petition for
reconsideration. As explained in more detail below, this issue is
beyond the scope of that public notice and will be addressed
separately. Accordingly, unless the Commission decides otherwise, the
current eligibility structure for C block licenses (i.e., closed
bidding for certain C block licenses by only those entities that
qualify as entrepreneurs) will remain in effect for Auction No. 58.
ii. Licenses To Be Auctioned
6. Auction No. 58 will offer 242 broadband PCS licenses. A complete
list of the licenses available in Auction No. 58 and their description
is included in Attachment A of the Auction No. 58 Procedures Public
Notice.
7. While most licenses are available to all bidders in open
bidding, 119 C block licenses are available only to entrepreneurs in
closed bidding. In order to qualify as an ``entrepreneur,'' an
applicant, together with its affiliates and persons or entities that
hold interests in the applicant and their affiliates, must have had
gross revenues of less than $125 million in each of the last two years
and must have less than $500 million in total assets.
8. For C and F block licenses available in open bidding, bidding
credits are available to small and very small businesses, or consortia
thereof, as defined in the Commission's rules. Specifically, an entity
will be considered a small business if it, together with its
affiliates, has less than $40 million in average annual gross revenues
for the preceding three years. An entity will be considered a very
small business if it, together with its affiliates, has less than $15
million in average annual gross revenues for the preceding three years.
Small business and very small business bidding credits are not
available for C block licenses won in closed bidding or for licenses in
the A, D, or E blocks.
9. The following table contains the block/eligibility status/
frequency cross-reference list for Auction No. 58:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eligibility status Bandwidth
--------------------------------------------------- (MHz) (unless
Frequency block otherwise Frequency (MHz) (unless otherwise noted in
Tier 1 Tier 2 noted in Attachment A)
Attachment A)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A................................... n/a..................... n/a.................... 30 1850-1865, 1930-1945
C1.................................. Open.................... Closed................. 15 1902.5-1910, 1982.5-1990
C2.................................. Open.................... Closed................. 15 1895-1902.5, 1975-1982.5
C3.................................. Closed.................. Closed................. 10 1895-1900, 1975-1980
C4.................................. Open.................... Closed................. 10 1900-1905, 1980-1985
C5.................................. Open.................... Open................... 10 1905-1910, 1985-1990
D................................... n/a..................... n/a.................... 10 1865-1870, 1945-1950
E................................... n/a..................... n/a.................... 10 1885-1890, 1965-1970
F................................... Open.................... Open................... 10 1890-1895, 1970-1975
--------------------------------------------------------------------------------------------------------------------------------------------------------
10. In some cases, licenses are available for only part of a market
or may not include all of the spectrum associated with a particular
frequency block in Auction No. 58. Dark gray boxes indicate that no
license of the
[[Page 62886]]
particular tier/frequency block combination will be available in
Auction No. 58. See Attachment A of the Auction No. 58 Procedures
Public Notice to determine which licenses will be offered.
B. Rules and Disclaimers
i. Relevant Authority
11. Prospective applicants must familiarize themselves thoroughly
with the Commission's rules relating to broadband PCS, contained in
Title 47, part 24, of the Code of Federal Regulations, and those
relating to application and auction procedures, contained in Title 47,
part 1, of the Code of Federal Regulations. Prospective applicants must
also be thoroughly familiar with the procedures, terms and conditions
(collectively, ``terms'') contained in the Auction No. 58 Procedures
Public Notice; the Auction No. 58 Comment Public Notice; the Auction
No. 58 Revised Inventory Public Notice; the C/F Block Sixth Report and
Order, (as well as any other prior and subsequent Commission
proceedings regarding competitive bidding procedures).
12. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in our public notices at any time,
and will issue public notices to convey any new or supplemental
information to applicants. It is the responsibility of all applicants
to remain current with all Commission rules and with all public notices
pertaining to this auction.
ii. Prohibition of Collusion
13. To ensure the competitiveness of the auction process, Sec.
1.2105(c) of the Commission's rules prohibits applicants for any of the
same geographic license areas from communicating with each other during
the auction about bids, bidding strategies, or settlements unless such
applicants have identified each other on their FCC Form 175
applications as parties with whom they have entered into agreements
under Sec. 1.2105(a)(2)(viii). Thus, applicants for any of the same
geographic license areas must affirmatively avoid all discussions with
each other that affect, or in their reasonable assessment have the
potential to affect, bidding or bidding strategy. This prohibition
begins at the short-form application filing deadline and ends at the
down payment deadline after the auction. This prohibition applies to
all applicants regardless of whether such applicants become qualified
bidders or actually bid. For purposes of this prohibition, Sec.
1.2105(c)(7)(i) defines applicant as including all controlling
interests in the entity submitting a short-form application to
participate in the auction, as well as all holders of partnership and
other ownership interests and any stock interest amounting to 10
percent or more of the entity, or outstanding stock, or outstanding
voting stock of the entity submitting a short-form application, and all
officers and directors of that entity.
14. Applicants for licenses in any of the same geographic license
areas are encouraged not to use the same individual as an authorized
bidder. A violation of the anti-collusion rule could occur if an
individual acts as the authorized bidder for two or more competing
applicants, and conveys information concerning the substance of bids or
bidding strategies between the applicants he or she is authorized to
represent in the auction. A violation could similarly occur if the
authorized bidders are different individuals employed by the same
organization (e.g., law firm or consulting firm). In such a case, at a
minimum, applicants should certify on their applications that
precautionary steps have been taken to prevent communication between
authorized bidders and that applicants and their bidding agents will
comply with the anti-collusion rule. However, the Bureau cautions that
merely filing a certifying statement as part of an application will not
outweigh specific evidence that collusive behavior has occurred, nor
will it preclude the initiation of an investigation when warranted.
15. The Commission's anti-collusion rules allow applicants to form
certain agreements during the auction, provided the applicants have not
applied for licenses covering the same geographic areas. In addition,
applicants that apply to bid for all markets will be precluded from
communicating with all other applicants until after the down payment
deadline. However, all applicants may enter into bidding agreements
before filing their FCC Form 175, as long as they disclose the
existence of the agreement(s) in their Form 175. If parties agree in
principle on all material terms prior to the short-form filing
deadline, those parties must be identified on the short-form
application pursuant to Sec. 1.2105(c), even if the agreement has not
been reduced to writing. If the parties have not agreed in principle by
the filing deadline, an applicant would not include the names of those
parties on its application, and may not continue negotiations. By
signing their FCC Form 175 short-form applications, applicants are
certifying their compliance with Sec. 1.2105(c).
16. Section 1.65 of the Commission's rules requires an applicant to
maintain the accuracy and completeness of information furnished in its
pending application and to notify the Commission within 30 days of any
substantial change that may be of decisional significance to that
application. Thus, Sec. 1.65 requires auction applicants that engage
in communications of bids or bidding strategies that result in a
bidding agreement, arrangement or understanding not already identified
on their short-form applications to promptly disclose any such
agreement, arrangement or understanding to the Commission by amending
their pending applications. In addition, Sec. 1.2105(c)(6) requires
all auction applicants to report prohibited discussions or disclosures
regarding bids or bidding strategy to the Commission in writing
immediately but in no case later than five business days after the
communication occurs, even if the communication does not result in an
agreement or understanding regarding bids or bidding strategy that must
be reported under Sec. 1.65.
17. A summary listing of documents issued by the Commission and the
Bureau addressing the application of the anti-collusion rules may be
found in Attachment G of the Auction No. 58 Procedures Public Notice.
iii Due Diligence
18. The FCC makes no representations or warranties about the use of
this spectrum for particular services. Applicants should be aware that
an FCC auction represents an opportunity to become an FCC licensee in
this service, subject to certain conditions and regulations. An FCC
auction does not constitute an endorsement by the FCC of any particular
services, technologies or products, nor does an FCC license constitute
a guarantee of business success. Applicants should perform their
individual due diligence before proceeding as they would with any new
business venture.
19. Applicants are reminded that private and common carrier fixed
microwave services (``FMS'') operating in the 1850-1990 MHz band (and
other bands) are being relocated to available frequencies in higher
bands or to other media. Applicants should become familiar with the
status of FMS operation and relocation, and applicable Commission rules
and orders, in order to make a reasoned, appropriate decision about
their participation in Auction No. 58 and their bidding strategy.
[[Page 62887]]
20. Applicants are solely responsible for identifying associated
risks and for investigating and evaluating the degree to which such
matters may affect their ability to bid on, otherwise acquire, or make
use of licenses available in Auction No. 58.
21. Applicants should also be aware that certain pending and future
applications (including those for modification), petitions for
rulemaking, requests for special temporary authority (``STA''), waiver
requests, petitions to deny, petitions for reconsideration, informal
oppositions, and applications for review before the Commission may
relate to particular applicants or incumbent licensees or the licenses
available in Auction No. 58. In addition, pending and future judicial
proceedings may relate to particular applicants or incumbent licensees,
or the licenses available in Auction No. 58. Applicants are responsible
for assessing the likelihood of the various possible outcomes, and
considering their potential impact on spectrum licenses available in
this auction.
22. Applicants should perform due diligence to identify and
consider all proceedings that may affect the spectrum licenses being
auctioned. We note that resolution of such matters could have an impact
on the availability of spectrum for Auction No. 58. In addition,
although the Commission may continue to act on various pending
applications, informal objections petitions, and other requests for
Commission relief, some of these matters may not be resolved by the
time of the auction or by the time of license grant.
23. Applicants may obtain information about licenses available in
Auction No. 58 through the Bureau's licensing databases on the World
Wide Web at http://wireless.fcc.gov/uls. Applicants may query the
database online and download a copy of their search results if desired.
Detailed instructions on using License Search (including frequency
searches and the GeoSearch capability) and downloading query results
are available online by selecting the ``?'' button at the upper right-
hand corner of the License Search screen. Applicants should direct
questions regarding the search capabilities to the FCC Technical
Support hotline at (202) 414-1250 (voice) or (202) 414-1255 (TTY), or
via e-mail at ulscomm@fcc.gov.
24. The Commission makes no representations or guarantees regarding
the accuracy or completeness of information in its databases or any
third party databases, including, for example, court docketing systems.
To the extent the Commission's databases may not include all
information deemed necessary or desirable by an applicant, applicants
may obtain or verify such information from independent sources or
assume the risk of any incompleteness or inaccuracy in said databases.
Furthermore, the Commission makes no representations or guarantees
regarding the accuracy or completeness of information that has been
provided by incumbent licensees and incorporated into the database.
Applicants are strongly encouraged to physically inspect any sites
located in, or near, the service area(s) for which they plan to bid.
iv. Bidder Alerts
25. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use Auction No. 58 to
deceive and defraud unsuspecting investors. Information about deceptive
telemarketing investment schemes is available from the FTC at (202)
326-2222 and from the SEC at (202) 942-7040. Complaints about specific
deceptive telemarketing investment schemes should be directed to the
FTC, the SEC, or the National Fraud Information Center at (800) 876-
7060. Consumers who have concerns about specific proposals regarding
Auction No. 58 may also call the FCC Consumer Center at (888) CALL-FCC
((888) 225-5322).
v. National Environmental Policy Act Requirements
26. Licensees must comply with the Commission's rules regarding the
National Environmental Policy Act (``NEPA''). The construction of a
wireless antenna facility is a federal action and the licensee must
comply with the Commission's NEPA rules for each such facility.
C. Auction Specifics
i. Auction Date
27. The auction will begin on Wednesday, January 26, 2005. The
initial schedule for bidding will be announced by public notice at
least one week before the start of the auction. Unless otherwise
announced, bidding on all licenses will be conducted on each business
day until bidding has stopped on all licenses.
ii. Auction Title
28. Auction No. 58--Broadband PCS.
iii. Bidding Methodology
29. The bidding methodology for Auction No. 58 will be simultaneous
multiple round bidding. The Commission will conduct this auction over
the Internet, and telephonic bidding will be available as well. As a
contingency plan, bidders may also dial in to the FCC Wide Area
Network. Qualified bidders are permitted to bid telephonically or
electronically.
iv. Pre-Auction Dates and Deadlines
30. Listed are important dates associated with Auction No. 58:
Auction Seminar--November 1, 2004.
Short-Form Application (FCC Form 175) Filing Window Opens--November
16, 2004; 9 a.m. ET.
Short-Form Application (FCC Form 175) Filing Window Deadline--
November 30, 2004; 6 p.m. ET.
Upfront Payments (via wire transfer)--December 29, 2004; 6 p.m. ET.
Mock Auction--January 21, 2005.
Auction Begins--January 26, 2005.
v. Requirements for Participation
31. Those wishing to participate in the auction must:
Submit a short-form application (FCC Form 175)
electronically by 6 p.m. ET, November 30, 2004.
Submit a sufficient upfront payment and an FCC Remittance
Advice Form (FCC Form 159) by 6 p.m. ET, December 29, 2004.
Comply with all provisions outlined in the Auction No. 58
Procedures Public Notice and applicable Commission rules.
vi. Any Filings Related to Auction No. 58
32. An electronic copy of any filings that are submitted to the
Commission related to Auction No. 58, including filings made with the
Commission's Office of the Secretary, should also be submitted by
electronic mail to the following address: auction58@fcc.gov.
vii. General Contact Information
33. The following is a list of general contact information relating
to Auction 58.
General Auction Information: General Auction Questions, Seminar
Registration
FCC Auctions Hotline, (888) 225-5322, Press Option 2, or
direct (717) 338-2888, Hours of service: 8 a.m.--5:30 p.m. ET, Monday
through Friday. Auction Legal Information:
Auction Rules, Policies, Regulations
Auctions and Spectrum Access Division, (202) 418-0660.
Licensing Information: Rules, Policies, Regulations, Licensing Issues,
Due Diligence, Incumbency Issues
Mobility Division, (202) 418-0620.
[[Page 62888]]
Technical Support: Electronic Filing, FCC Automated Auction System
FCC Auctions Technical Support Hotline, (202) 414-1250, (202) 414-
1255 (TTY), Hours of service: 8 a.m.--6 p.m. ET, Monday through Friday.
Payment Information: Wire Transfers, Refunds
FCC Auctions Accounting Branch, (202) 418-0578, (202) 418-2843
(Fax).
Telephonic Bidding:
Will be furnished only to qualified bidders.
Press Information:
Lauren Patrich (202) 418-7944.
FCC Forms:
(800) 418-3676 (outside Washington, DC), (202) 418-3676 (in the
Washington Area), http://www.fcc.gov/formpage.html.
FCC Internet Sites:
http://www.fcc.gov, http://wireless.fcc.gov/auctions, http://
wireless.fcc.gov/uls.
II. Short-Form (FCC Form 175) Application Requirements
34. Guidelines for completion of the short-form (FCC Form 175) are
set forth in Attachment D of the Auction No. 58 Procedures Public
Notice. All applicants must certify on their FCC Form 175 applicants
under penalty of perjury that they are legally, technically,
financially and otherwise qualified to hold a license.
A. Ownership Disclosure Requirements (FCC Form 175 Exhibit A)
35. All applicants must comply with the uniform Part 1 ownership
disclosure standards and provide information required by Sec. Sec.
1.2105 and 1.2112 of the Commission's rules. Specifically, in
completing FCC Form 175, applicants will be required to file an
``Exhibit A'' providing a full and complete statement of the ownership
of the bidding entity. The ownership disclosure standards for the
short-form are set forth in Sec. 1.2112 of the Commission's rules.
B. Consortia and Joint Bidding Arrangements (FCC Form 175 Exhibit B)
36. Applicants will be required to identify on their short-form
applications any parties with whom they have entered into any
consortium arrangements, joint ventures, partnerships or other
agreements or understandings that relate in any way to the licenses
being auctioned, including any agreements relating to post-auction
market structure. Applicants will also be required to certify on their
short-form applications that they have not entered into any explicit or
implicit agreements, arrangements or understandings of any kind with
any parties, other than those identified, regarding the amount of their
bids, bidding strategies, or the particular licenses on which they will
or will not bid.
37. A party holding a non-controlling, attributable interest in one
applicant will be permitted to acquire an ownership interest in, form a
consortium with, or enter into a joint bidding arrangement with other
applicants for licenses in the same geographic license area provided
that (i) the attributable interest holder certifies that it has not and
will not communicate with any party concerning the bids or bidding
strategies of more than one of the applicants in which it holds an
attributable interest, or with which it has formed a consortium or
entered into a joint bidding arrangement; and (ii) the arrangements do
not result in a change in control of any of the applicants. While the
anti-collusion rules do not prohibit non-auction related business
negotiations among auction applicants, applicants are reminded that
certain discussions or exchanges could touch upon impermissible subject
matters because they may convey pricing information and bidding
strategies.
C. Eligibility
i. Eligibility for Closed Bidding (FCC Form 175 Exhibit C)
38. In order to be eligible to bid for one or more closed C block
licenses, an applicant must demonstrate that it meets the eligibility
requirements of Sec. 24.709(a) of the Commission's rules. 47 CFR
24.709(a). Specifically, as of the FCC Form 175 filing deadline, the
applicant, together with its affiliates and persons or entities that
hold interests in the applicant and their affiliates, must have
combined total assets of less than $500 million and must have had
combined gross revenues of less than $125 million in each of the last
two years. Id. Applicants should make this showing in ``Exhibit C'' to
the FCC Form 175.
39. The majority of comments filed in response to the Auction No.
58 Comment Public Notice address the eligibility restrictions placed on
the C block licenses, referred to as set-aside licenses, reserved to
only entities that qualify as entrepreneurs. Some parties advocate a
change in the current rules to allow all entities to bid on the set-
aside licenses. On the other hand, a number of commenters oppose any
change to the eligibility structure, and at least one party advocates a
change in the current structure to increase the number of licenses
limited to entrepreneurs. The requests made in comments filed to the
Auction No. 58 Comment Public Notice to change the eligibility rules
are beyond the scope of this public notice regarding the procedures for
Auction No. 58. As noted above, the eligibility issue was also raised
in a petition for rulemaking and a request for waiver filed by CTIA,
and in the Verizon Wireless petition for reconsideration. Those
petitions have been addressed separately.
40. Included in its Auction No. 58 comments, another commenter also
seeks a waiver of the Commission's rules to extend the expired
entrepreneur eligibility provisions of Sec. 24.709(a)(5)(i) to allow
it and other entities to participate in closed bidding in Auction No.
58. This matter has also been addressed separately.
ii. Bidding Credit Eligibility (FCC Form 175 Exhibit D)
41. Bidding credits are available to small and very small
businesses, or consortia thereof, (as defined in 47 CFR 24.720(b)) that
win C and F block licenses in open bidding. A bidding credit represents
the amount by which a bidder's winning bids are discounted. The size of
the bidding credit depends on the average of the aggregated annual
gross revenues for each of the preceding three years of the bidder, its
affiliates, its controlling interests, and the affiliates of its
controlling interests.
42. For Auction No. 58, bidding credits will be available to small
businesses or consortia thereof, as follows:
A bidder with attributable average annual gross revenues
of not more than $40 million for the preceding three years (``small
business'') will receive a 15 percent discount on its winning bids for
C and F block licenses;
A bidder with attributable average annual gross revenues
of not more than $15 million for the preceding three years (``very
small business'') will receive a 25 percent discount on its winning
bids for C and F block licenses.
43. Small business bidding credits are not cumulative; a qualifying
applicant receives the 15 percent or 25 percent bidding credit on its
winning bid, but only one credit per license. No small and very small
business bidding credits are provided for licenses in the A, E and D
blocks or C block licenses available only to entrepreneurs in closed
bidding.
44. To encourage the growth of wireless services in federally
recognized tribal lands the Commission has implemented a tribal land
bidding credit. See section V.E. of the Auction No. 58 Procedures
Public Notice.
[[Page 62889]]
iii. Applicability of Part 1 Attribution Rules
45. Controlling interest standard. On August 14, 2000, the
Commission released the Part 1 Fifth Report and Order, 65 FR 52323,
August 29, 2000, in which the Commission, inter alia, adopted a
``controlling interest'' standard for attributing to auction applicants
the total assets and/or gross revenues of their investors and
affiliates in determining entrepreneur and small business eligibility
for future C and F block auctions. The Commission observed that the
rule modifications adopted in the various Part 1 orders would result in
discrepancies and/or redundancies between certain of the new Part 1
rules and existing service-specific rules, and the Commission delegated
to the Bureau the authority to make conforming edits to the Code of
Federal Regulations (CFR) consistent with the rules adopted in the Part
1 proceeding. More recently, the Commission made further modifications
to its rules governing the attribution of gross revenues for purposes
of determining small business eligibility. These changes included
exempting the gross revenues of the affiliates of a rural telephone
cooperative's officers and directors from attribution to the applicant
if certain specified conditions are met. The Commission also clarified
that in calculating an applicant's gross revenues under the controlling
interest standard, the personal net worth, including personal income,
of its officers and directors will not be attributed to the applicant.
46. The Commission will thoroughly review the information provided
in applicants' FCC Form 175 in determining eligibility for designated
entity status. Eligibility for small business preferences will be
determined based on the attribution rules in effect at the short-form
application deadline. Accordingly, the ``controlling interest''
standard, as recently modified, and the Part 1 rules that superseded
inconsistent service-specific rules, will apply in Auction No. 58.
47. ``Control'' for purposes of controlling interest standard. The
term ``control'' includes both de facto and de jure control of the
applicant. Typically, ownership of at least 50.1 percent of an entity's
voting stock indicates de jure control. De facto control is determined
on a case-by-case basis. The following are some common indicia of de
facto control:
The entity constitutes or appoints more than 50 percent of
the board of directors or management committee;
The entity has authority to appoint, promote, demote, and
fire senior executives that control the day to-day activities of the
licensee; or
The entity plays an integral role in management decisions.
48. Attribution for entrepreneur eligibility. For purposes of
determining which entities qualify as entrepreneurs for closed bidding,
the Commission will consider the total assets and gross revenues of the
applicant, its controlling interest holders, the affiliates of the
applicant, and their controlling interest holders. The Commission does
not impose specific equity requirements on parties with controlling
interests. Once principals or entities with a controlling interest are
determined, only the assets and revenues of those principals or
entities, the applicant, and their affiliates will be counted in
determining entrepreneur eligibility. Applicants for closed bidding in
Auction No. 58 should not include existing C and F block licenses in
their calculations of total assets; however, all other Commission
licenses must be included in such calculations.
49. Attribution for small business and very small business
eligibility. Similarly, in determining which entities qualify as small
businesses or very small businesses, the Commission will consider the
gross revenues of the applicant, its affiliates, its controlling
interests, and the affiliates of its controlling interests. The
Commission does not impose specific equity requirements on controlling
interest holders. Once the principals or entities with a controlling
interest are determined, only the revenues of those principals or
entities, the affiliates of those principals or entities, and the
applicant and its affiliates, will be counted in determining small
business eligibility.
50. A consortium of small businesses or very small businesses is a
``conglomerate organization formed as a joint venture between or among
mutually independent business firms,'' each of which individually must
satisfy one of the definitions of small business or very small business
in Sec. 24.720(b) of the Commission's rules.
iv. Supporting Documentation
51. Applicants should note that they will be required to file
supporting documentation to their FCC Form 175 short-form applications
to establish that they satisfy the eligibility requirements to qualify
as entrepreneurs and/or small business or very small business (or
consortia of small businesses or very small businesses) for this
auction.
52. Applicants should further note that submission of an FCC Form
175 application constitutes a representation by the certifying official
that he or she is an authorized representative of the applicant, has
read the form's instructions and certifications, and that the contents
of the application and its attachments are true and correct. Submission
of a false certification to the Commission may result in penalties,
including monetary forfeitures, license forfeitures, ineligibility to
participate in future auctions, and/or criminal prosecution.
53. Entrepreneur eligibility (Exhibit C). Entities applying to bid
on closed licenses will be required to disclose on Exhibit C to their
FCC Form 175 short-form applications, separately and in the aggregate,
the gross revenues for the preceding two years and the total assets of
each of the following: (i) The applicant, (ii) the applicant's
affiliates, (iii) the applicant's controlling interest holders, and
(iv) the affiliates of the applicant's controlling interest holders.
Certification that the gross revenues for each of the preceding two
years or the total assets do not exceed the applicable limit is not
sufficient. The applicant must provide separately for itself, its
affiliates, its controlling interest holders, and their affiliates a
schedule of gross revenues for each of the preceding two years.
54. Small business or very small business eligibility (Exhibit D).
Entities applying to bid as small businesses or very small businesses
(or consortia of small businesses or very small businesses) will be
required to disclose on Exhibit D to their FCC Form 175 short-form
applications, separately and in the aggregate, the gross revenues for
the preceding three years of each of the following: (i) The applicant,
(ii) its affiliates, (iii) its controlling interests, and (iv) the
affiliates of its controlling interests. Certification that the average
annual gross revenues for the preceding three years do not exceed the
applicable limit is not sufficient. A statement of the total gross
revenues for the preceding three years is also insufficient. The
applicant must provide separately for itself, its affiliates, its
controlling interests, and the affiliates of its controlling interests,
a schedule of gross revenues for each of the preceding three years, as
well as a statement of total average gross revenues for the three-year
period. If the applicant is applying as a consortium of small
businesses or very small businesses, this information must be provided
for each consortium member.
[[Page 62890]]
D. Provisions Regarding Defaulters and Former Defaulters (FCC Form 175
Exhibit E)
55. Each applicant must certify on its FCC Form 175 application
under penalty of perjury that the applicant, its controlling interests,
its affiliates, and the affiliates of its controlling interests, as
defined by Sec. 1.2110, are not in default on any payment for
Commission licenses (including down payments) and not delinquent on any
non-tax debt owed to any Federal agency. In addition, each applicant
must attach to its FCC Form 175 application a statement made under
penalty of perjury indicating whether or not the applicant, its
affiliates, its controlling interests, or the affiliates of its
controlling interests, as defined by Sec. 1.2110, have ever been in
default on any Commission licenses or have ever been delinquent on any
non-tax debt owed to any Federal agency. Applicants must include this
statement as Exhibit E to the FCC Form 175.
56. ``Former defaulters''--i.e., applicants, including their
attributable interest holders, that in the past have defaulted on any
Commission licenses or been delinquent on any non-tax debt owed to any
Federal agency, but that have since remedied all such defaults and
cured all of their outstanding non-tax delinquencies--are eligible to
bid in Auction No. 58, provided that they are otherwise qualified.
However, as discussed infra in section III.D.iii, former defaulters are
required to pay upfront payments that are fifty percent more than the
normal upfront payment amounts.
E. Transfer and Assignment Restrictions on Licenses Won in Closed
Bidding
57. Licenses won in closed bidding generally may be transferred or
assigned only to an entity that meets the entrepreneur financial caps
or that holds another C or F block license that it acquired while
meeting the entrepreneur financial caps. This restriction ends five
years after the date of the initial license grant or upon notification
by the licensee that it has satisfied its five-year construction
requirement under 47 CFR 24.203(c), whichever comes first. Licenses won
in open bidding are not subject to this restriction and may be
transferred or assigned any time after grant to any qualified entity,
subject to Commission consent.
F. Unjust Enrichment Payments
58. C or F block licensees that use a small or very small business
bidding credit, and during the first five years of their license term
seek to assign or transfer control of a license to an entity that does
not meet the eligibility criteria for a small or very small business
bidding credit, or that is eligible for a lower bidding credit, will
have to reimburse the U.S. Government for a percentage of the amount of
the bidding credit, plus interest.
G. Installment Payments
59. Installment payment plans will not be available in Auction No.
58.
H. Other Information (FCC Form 175 Exhibits F and G)
60. Applicants owned by minorities or women, as defined in 47 CFR
1.2110(c)(2), may attach an exhibit (Exhibit F) regarding this status.
This applicant status information is collected for statistical purposes
only and assists the Commission in monitoring the participation of
``designated entities'' in its auctions. Applicants wishing to submit
additional information may do so on Exhibit G.
J. Minor Modifications to Short-Form Applications (FCC Form 175)
61. After the short-form filing deadline (6 p.m. ET November 30,
2004), applicants may make only minor changes to their FCC Form 175
applications. Applicants will not be permitted to make major
modifications to their applications (e.g., change their license
selections, change the certifying official, change control of the
applicant, or change bidding credits). See 47 CFR 1.2105. Permissible
minor changes include, for example, deletion and addition of authorized
bidders (to a maximum of three) and revision of exhibits. Applicants
should make these modifications to their FCC Form 175 electronically
and submit a letter, briefly summarizing the changes, by electronic
mail to the attention of Margaret Wiener, Chief, Auctions and Spectrum
Access Division, at the following address: auction58@fcc.gov. The
electronic mail summarizing the changes must include a subject or
caption referring to Auction No. 58. The Bureau requests that parties
format any attachments to electronic mail as Adobe[reg] Acrobat[reg]
(pdf) or Microsoft[reg] Word documents.
K. Maintaining Current Information in Short-Form Applications (FCC Form
175)
62. Section 1.65 of the Commission's rules requires an applicant to
maintain the accuracy and completeness of information furnished in its
pending application and to notify the Commission within 30 days of any
substantial change that may be of decisional significance to that
application. Amendments reporting substantial changes of possible
decisional significance in information contained in FCC Form 175
applications, as defined by 47 CFR 1.2105(b)(2), will not be accepted
and may in some instances result in the dismissal of the FCC Form 175
application. An electronic copy of any filings that are submitted to
the Commission related to Auction No. 58, including filings made with
the Commission's Office of the Secretary, should also be submitted by
electronic mail to the following address: auctions58@fcc.gov.
III. Pre-Auction Procedures
A. Auction Seminar
63. On Monday, November 1, 2004, the FCC will sponsor a seminar for
Auction No. 58 at the Federal Communications Commission, located at 445
12th Street, SW., Washington, DC. The seminar will provide attendees
with information about pre-auction procedures, auction conduct, the FCC
Automated Auction System, auction rules, and the broadband PCS rules.
64. For individuals who are unable to attend, Audio/Video of this
seminar will be Web cast live from the FCC's Audio/Video Events page at
http://www.fcc.gov/realaudio/. A recording of the Web cast will also be
available for playback from the FCC's A/V Archives Page following the
meeting.
B. Short-Form Application (FCC Form 175)--Due November 30, 2004
65. In order to be eligible to bid in this auction, applicants must
first submit an FCC Form 175 application. This application must be
submitted electronically and received at the Commission no later than 6
p.m. ET on November 30, 2004. Late applications will not be accepted.
66. There is no application fee required when filing an FCC Form
175. However, to be eligible to bid, an applicant must submit an
upfront payment. See section III.D.
i. Electronic Filing
67. Applicants must file their FCC Form 175 applications
electronically. Applications may generally be filed at any time
beginning at 9 a.m. ET on November 16, 2004, until 6 p.m. ET on
November 30, 2004. Applicants are strongly encouraged to file early and
are responsible for allowing adequate time for filing their
applications. Applicants may update or amend their electronic
applications multiple times until the filing deadline on November 30,
2004.
[[Page 62891]]
68. Applicants must press the ``SUBMIT Application'' button on the
``Submission'' page of the electronic form to successfully submit their
FCC Form 175s. Any form that is not submitted will not be reviewed by
the FCC. Information about accessing the FCC Form 175 is included in
Attachment C of the Auction No. 58 Procedures Public Notice. Technical
support is available at (202) 414-1250 (voice) or (202) 414-1255 (text
telephone (TTY)); hours of service are Monday through Friday, from 8
a.m. to 6 p.m. ET. In order to provide better service to the public,
all calls to the hotline are recorded.
ii. Completion of the FCC Form 175
69. Applicants should carefully review 47 CFR 1.2105, and must
complete all items on the FCC Form 175. Instructions for completing the
FCC Form 175 are in Attachment D of the Auction No. 58 Procedures
Public Notice.
iii. Electronic Review of FCC Form 175
70. The FCC Form 175 electronic review system may be used to locate
and print applicants' FCC Form 175 information. There is no fee for
accessing this system. See Attachment C of the Auction No. 58
Procedures Public Notice for details on accessing the review system.
71. Applicants may also view other applicants' completed FCC Form
175s after the filing deadline has passed and the FCC has issued a
public notice explaining the status of the applications.
Note: Applicants should not include sensitive information (i.e.,
TIN/EIN) on any exhibits to their FCC Form 175 applications.
C. Application Processing and Minor Corrections
72. After the deadline for filing the FCC Form 175 applications has
passed, the FCC will process all timely submitted applications to
determine which are acceptable for filing, and subsequently will issue
a public notice identifying: (i) Those applications accepted for
filing; (ii) those applications rejected; and (iii) those applications
which have minor defects that may be corrected, and the deadline for
filing such corrected applications.
D. Upfront Payments--Due December 29, 2004
73. In order to be eligible to bid in the auction, applicants must
submit an upfront payment accompanied by an FCC Remittance Advice Form
(FCC Form 159). After completing the FCC Form 175, filers will have
access to an electronic version of the FCC Form 159 that can be printed
and faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must
be received at Mellon Bank by 6 p.m. ET on December 29, 2004. Failure
to deliver the upfront payment by the December 29, 2004, deadline will
result in dismissal of the application and disqualification from
participation in the auction.
i. Making Auction Payments by Wire Transfer
74. Wire transfer payments must be received by 6 p.m. ET on
December 29, 2004. To avoid untimely payments, applicants should
discuss arrangements (including bank closing schedules) with their
banker several days before they plan to make the wire transfer, and
allow sufficient time for the transfer to be initiated and completed
before the deadline.
75. Applicants must fax a completed FCC Form 159 (Revised 2/03) to
Mellon Bank at (412) 209-6045 at least one hour before placing the
order for the wire transfer (but on the same business day). On the
cover sheet of the fax, write ``Wire Transfer--Auction Payment for
Auction Event No. 58.'' In order to meet the Commission's upfront
payment deadline, an applicant's payment must be credited to the
Commission's account by the deadline. Applicants are responsible for
obtaining confirmation from their financial institution that Mellon
Bank has timely received their upfront payment and deposited it in the
proper account.
ii. Amount of Upfront Payment
76. In the Part 1 Order, 62 FR 13540 (March 21, 1997), the
Commission delegated to the Bureau the authority and discretion to
determine appropriate upfront payment(s) for each auction. In addition,
in the Part 1 Fifth Report and Order, the Commission ordered that
``former defaulters,'' i.e., applicants that have ever been in default
on any Commission license or have ever been delinquent on any non-tax
debt owed to any Federal agency, be required to pay upfront payments 50
percent greater than non-``former defaulters.'' For purposes of this
calculation, the ``applicant'' includes the applicant itself, its
affiliates, its controlling interests, and affiliates of its
controlling interests, as defined by Sec. 1.2110 of the Commission's
rules (as amended in the Part 1 Fifth Report and Order).
77. The amount of the upfront payment will determine the number of
bidding units on which a bidder may place bids. In order to bid on a
license, otherwise qualified bidders that applied for that license on
Form 175 must have an eligibility level that meets or exceeds the
number of bidding units assigned to that license. At a minimum,
therefore, an applicant's total upfront payment must be enough to
establish eligibility to bid on at least one of the licenses applied
for on Form 175, or else the applicant will not be eligible to
participate in the auction. An applicant does not have to make an
upfront payment to cover all licenses for which the applicant has
applied on Form 175, but rather to cover the maximum number of bidding
units that are associated with licenses on which the bidder wishes to
place bids and hold high bids at any given time.
78. For Auction No. 58 the Commission adopts upfront payments on a
license-by-license basis using a formula based on bandwidth and license
area population: $0.05 * MHz * License Area Population.
79. The specific upfront payments and bidding units for each
license are set forth in Attachment A of the Auction No. 58 Procedures
Public Notice.
80. In calculating its upfront payment amount, an applicant should
determine the maximum number of bidding units on which it may wish to
be active (bidding units associated with licenses on which the bidder
has the standing high bid from the previous round and licenses on which
the bidder places a bid in the current round) in any single round, and
submit an upfront payment covering that number of bidding units. In
order to make this calculation, an applicant should add together the
upfront payments for all licenses on which it seeks to bid in any given
round. Applicants should check their calculations carefully, as there
is no provision for increasing a bidder's maximum eligibility after the
upfront payment deadline.
81. Former defaulters should calculate their upfront payment for
all licenses by multiplying the number of bidding units they wish to
purchase by 1.5. In order to calculate the number of bidding units to
assign to former defaulters, the Commission will divide the upfront
payment received by 1.5 and round the result up to the nearest bidding
unit.
iii. Applicant's Wire Transfer Information for Purposes of Refunds of
Upfront Payments
82. The Commission will use wire transfers for all Auction No. 58
refunds. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information as listed be supplied to the FCC. Applicants can provide
the information electronically during the initial short-form filing
window after the form has
[[Page 62892]]
been submitted. Wire Transfer Instructions can also be manually faxed
to the FCC, Financial Operations Center, Auctions Accounting Group,
ATTN: Gail Glasser, at (202) 418-2843 by December 29, 2004. All refunds
will be returned to the payer of record as identified on the FCC Form
159 unless the payer submits written authorization instructing
otherwise.
E. Auction Registration
83. Approximately ten days before the auction, the FCC will issue a
public notice announcing all qualified bidders for the auction.
Qualified bidders are those applicants whose FCC Form 175 applications
have been accepted for filing and have timely submitted upfront
payments sufficient to make them eligible to bid on at least one of the
licenses for which they applied.
84. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by two separate overnight mailings, one containing the
confidential bidder identification number (BIN) and the other
containing the SecurID cards, both of which are required to place bids.
These mailings will be sent only to the contact person at the contact
address listed in the FCC Form 175.
85. Qualified bidders that do not receive both registration
mailings will not be able to submit bids. Therefore, any qualified
bidder that has not received both mailings by noon on Wednesday,
January 5, 2005, should contact the Auctions Hotline at (717) 338-2888.
Receipt of both registration mailings is critical to participating in
the auction, and each qualified bidder is responsible for ensuring it
has received all of the registration material.
86. Qualified bidders should note that lost bidder identification
numbers or SecurID cards can be replaced only by appearing in person at
the FCC headquarters, located at 445 12th St., SW., Washington, DC
20554. Only an authorized representative or certifying official, as
designated on an applicant's FCC Form 175, may appear in person with
two forms of identification (one of which must be a photo
identification) in order to receive replacements. Qualified bidders
requiring replacements must call technical support prior to arriving at
the FCC.
F. Remote Electronic Bidding
87. The Commission will conduct this auction over the Internet, and
telephonic bidding will be available as well. As a contingency plan,
bidders may also dial in to the FCC Wide Area Network. Qualified
bidders are permitted to bid telephonically or electronically. Each
applicant should indicate its bidding preference--electronic or
telephonic--on the FCC Form 175. In either case, each authorized bidder
must have its own SecurID card, which the FCC will provide at no
charge. Each applicant with one authorized bidder will be issued two
SecurID cards, while applicants with two or three authorized bidders
will be issued three cards. For security purposes, the SecurID cards
and the FCC Automated Auction System user manual are only mailed to the
contact person at the contact address listed on the FCC Form 175.
Please note that each SecurID card is tailored to a specific auction;
therefore, SecurID cards issued for other auctions or obtained from a
source other than the FCC will not work for Auction No. 58. The
telephonic bidding phone number will be supplied in the first overnight
mailing, which also includes the confidential bidder identification
number.
G. Mock Auction
88. All qualified bidders will be eligible to participate in a mock
auction on Friday, January 21, 2005. The mock auction will enable
applicants to become familiar with the FCC Automated Auction System
prior to the auction. Participation by all bidders is strongly
recommended.
IV. Auction Event
89. The first round of bidding for Auction No. 58 will begin on
Wednesday, January 26, 2005. The initial bidding schedule will be
announced in a public notice listing the qualified bidders, which is
released approximately 10 days before the start of the auction.
A. Auction Structure
i. Simultaneous Multiple Round Auction
90. The Bureau will award all licenses in Auction No. 58 in a
simultaneous multiple round auction. The Bureau concludes that it is
operationally feasible and appropriate to auction the PCS licenses
through a simultaneous multiple round auction. Unless otherwise
announced, bids will be accepted on all licenses in each round of the
auction. This approach, we believe, allows bidders to take advantage of
synergies that exist among licenses and is administratively efficient.
ii. Maximum Eligibility and Activity Rules
91. The amount of the upfront payment submitted by a bidder would
determine the initial (maximum) eligibility (as measured in bidding
units) for each bidder.
92. Note again that each license is assigned a specific number of
bidding units equal to the upfront payment listed in Attachment A of
the Auction No. 58 Procedures Public Notice on a bidding unit per
dollar basis. The total upfront payment defines the maximum number of
bidding units on which the applicant will be permitted to bid and hold
high bids in a round. As there is no provision for increasing a
bidder's eligibility after the upfront payment deadline, applicants are
cautioned to calculate their upfront payments carefully. The total
upfront payment does not affect the total dollar amount a bidder may
bid on any given license.
93. In order to ensure that the auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively
throughout the auction, rather than wait until late in the auction
before participating.
94. A bidder's activity level in a round is the sum of the bidding
units associated with licenses on which the bidder is active. A bidder
is considered active on a license in the current round if it is either
the high bidder at the end of the previous bidding round and does not
withdraw the high bid in the current round, or if it submits a bid in
the current round (see ``Minimum Acceptable Bids and Bid Increments''
in section IV.B.iii). The minimum required activity is expressed as a
percentage of the bidder's current bidding eligibility, and increases
by stage as the auction progresses. Because these procedures have
proven successful in maintaining the pace of previous auctions (as set
forth under ``Auction Stages'' in section IV.A.iii and ``Stage
Transitions'' in section IV.A.iv), we adopt them for Auction No. 58.
iii. Auction Stages
95. The Commission will conduct the auction in two stages and
employ an activity rule. In each round of Stage One, a bidder desiring
to maintain its current eligibility would be required to be active on
licenses encompassing at least 80 percent of its current bidding
eligibility. Finally, in each round of Stage Two, a bidder desiring to
maintain its current eligibility would be required to be active on at
least 95 percent of its current bidding eligibility.
96. The Bureau reserves the discretion to further alter the
activity requirements
[[Page 62893]]
before and/or during the auction. We also note that the Bureau has
other mechanisms by which it may influence the speed of an auction.
When determining the bidding schedule, the Bureau takes into
consideration the desirability of concluding the auction reasonably
swiftly, and the Bureau also attempts to ensure that bidders have
sufficient time for placing bids during rounds and for analysis between
rounds. For Auction No. 58, the Bureau has already taken steps to
adjust bid increments in a manner that should help speed the auction:
the Bureau has proposed a maximum percentage increment of 0.3 (30%).
This relatively high maximum percentage increment will allow licenses
for which there is greater demand--i.e., those receiving many bids--to
rise in price faster than if a lower maximum percentage increment were
used. Additionally, the minimum opening bids adopted by the Bureau
should help to avoid a protracted auction.
97. The Commission adopts its proposals for the activity rules and
stages. Listed are the activity levels for each stage of the auction.
The Bureau reserves the discretion to further alter the activity
percentages before and/or during the auction.
Stage One: During the first stage of the auction, a bidder desiring
to maintain its current eligibility will be required to be active on
licenses encompassing at least 80 percent of its current bidding
eligibility in each bidding round. Failure to maintain the required
activity level will result in a reduction in the bidder's bidding
eligibility in the next round of bidding (unless an activity rule
waiver is used). During Stage One, reduced eligibility for the next
round will be calculated by multiplying the bidder's current activity
(the sum of bidding units of the bidder's standing high bids and bids
during the current round) by five-fourths (5/4).
Stage Two: During the second stage of the auction, a bidder
desiring to maintain its current eligibility is required to be active
on 95 percent of its current bidding eligibility. Failure to maintain
the required activity level will result in a reduction in the bidder's
bidding eligibility in the next round of bidding (unless an activity
rule waiver is used). During Stage Two, reduced eligibility for the
next round will be calculated by multiplying the bidder's current
activity (the sum of bidding units of the bidder's standing high bids
and bids during the current round) by twenty-nineteenths (20/19).
Caution: Since activity requirements increase in each auction
stage, bidders must carefully check their current activity during the
bidding period of the first round following a stage transition. This is
especially critical for bidders that have standing high bids and do not
plan to submit new bids. In past auctions, some bidders have
inadvertently lost bidding eligibility or used an activity rule waiver
because they did not re-verify their activity status at stage
transitions. Bidders may check their activity against the required
activity level by using the bidding system's bidding module.
98. Because the foregoing procedures have proven successful in
maintaining proper pace in previous auctions, we adopt them for Auction
No. 58.
iv. Stage Transitions
99. The auction will generally advance to the next stage (i.e.,
from Stage One to Stage Two) when the auction activity level, as
measured by the percentage of bidding units receiving new high bids, is
below 20 percent for three consecutive rounds of bidding in each Stage.
The Bureau will retain the discretion to change stages unilaterally by
announcement during the auction.
100. Thus, the Bureau will retain the discretion to regulate the
pace of the auction by announcement. This determination will be based
on a variety of measures of bidder activity, including, but not limited
to, the auction activity level, the percentages of licenses (as
measured in bidding units) on which there are new bids, the number of
new bids, and the percentage increase in revenue. The Commission
believes that these stage transition rules are appropriate for use in
Auction No. 58.
v. Activity Rule Waivers and Reducing Eligibility
101. Each bidder in the auction will be provided three activity
rule waivers that may be used in any round during the course of the
auction. Use of an activity rule waiver preserves the bidder's current
bidding eligibility despite the bidder's activity in the current round
being below the required level. An activity rule waiver applies to an
entire round of bidding and not to a particular license.
102. The FCC Automated Auction System assumes that bidders with
insufficient activity would prefer to use an activity rule waiver (if
available) rather than lose bidding eligibility. Therefore, the system
will automatically apply a waiver (known as an ``automatic waiver'') at
the end of any round where a bidder's activity level is below the
minimum required unless: (i) There are no activity rule waivers
available; or (ii) the bidder overrides the automatic application of a
waiver by reducing eligibility, thereby meeting the minimum
requirements. If a bidder has no waivers remaining and does not satisfy
the required activity level, the current eligibility will be
permanently reduced, possibly eliminating the bidder from further
bidding in the auction.
103. A bidder with insufficient activity that wants to reduce its
bidding eligibility rather than use an activity rule waiver must
affirmatively override the automatic waiver mechanism during the round
by using the reduce eligibility function in the bidding system. In this
case, the bidder's eligibility is permanently reduced to bring the
bidder into compliance with the activity rules as described in
``Auction Stages'' (see section IV.A.iii discussion). Once eligibility
has been reduced, a bidder will not be permitted to regain its lost
bidding eligibility.
104. Finally, a bidder may proactively use an activity rule waiver
as a means to keep the auction open without placing a bid. If a bidder
submits a proactive waiver (using the proactive waiver function in the
FCC Automated Auction System) during a round in which no bids are
submitted, the auction will remain open and the bidder's eligibility
will be preserved. However, an automatic waiver triggered during a
round in which there are no new bids or withdrawals will not keep the
auction open.
Note: Once a proactive waiver is submitted during a round, that
waiver cannot be unsubmitted.
vi. Auction Stopping Rules
105. For Auction No. 58, the Bureau will employ a simultaneous
stopping rule, and retain discretion to invoke a modified version of
the stopping rule. The modified version of the stopping rule would
close the auction for all licenses after the first round in which no
bidder submits a proactive waiver, a withdrawal, or a new bid on any
license on which it is not the standing high bidder.
106. In addition, the Bureau reserves the right to declare that the
auction will end after a designated number of additional rounds
(``special stopping rule''). If the Bureau invokes this special
stopping rule, it will accept bids in the final round(s) only for
licenses on which the high bid increased in at least one of the
preceding specified number of rounds. The Bureau may exercise this
option only in circumstances such as where the auction is proceeding
very slowly, where there is minimal overall bidding activity or where
it appears
[[Page 62894]]
likely that the auction will not close within a reasonable period of
time.
vii. Auction Delay, Suspension, or Cancellation
107. By public notice or by announcement during the auction, the
Bureau may delay, suspend, or cancel the auction in the event of
natural disaster, technical obstacle, evidence of an auction security
breach, unlawful bidding activity, administrative or weather necessity,
or for any other reason that affects the fair conduct of competitive
bidding. In such cases, the Bureau, in its sole discretion, may elect
to resume the auction starting from the beginning of the current round,
resume the auction starting from some previous round, or cancel the
auction in its entirety. Network interruption may cause the Bureau to
delay or suspend the auction. We emphasize that exercise of this
authority is solely within the discretion of the Bureau, and its use is
not intended to be a substitute for situations in which bidders may
wish to apply their activity rule waivers.
B. Bidding Procedures
i. Round Structure
108. The initial schedule of bidding rounds will be announced in
the public notice listing the qualified bidders, which is released
approximately 10 days before the start of the auction. Each bidding
round is followed by the release of round results. Multiple bidding
rounds may be conducted in a given day. Details regarding round results
formats and locations will also be included in the qualified bidders
public notice.
109. The FCC has discretion to change the bidding schedule in order
to foster an auction pace that reasonably balances speed with the
bidders' need to study round results and adjust their bidding
strategies. The Bureau may increase or decrease the amount of time for
the bidding rounds and review periods, or the number of rounds per day,
depending upon the bidding activity level and other factors.
ii. Reserve Price or Minimum Opening Bid
110. In establishing minimum opening bids for Auction No. 58, the
Bureau adopts the following license-by license formulas based on
bandwidth and license area population.
Population >= 2,000,000: $0.50 * MHz * License Area Population.
Population >= 500,000: $0.25 * MHz * License Area Population.
Population < 500,000: $0.15 * MHz * License Area Population.
111. The Bureau adopts the minimum opening bids proposed in the
Auction No. 58 Comment Public Notice and the Auction No. 58 Revised
Inventory Public Notice. By comparing the minimum opening bids proposed
in Auction No. 58 only to those of Auction No. 35, commenters have not
adequately substantiated their argument that the minimum opening bids
are excessive. On average, for the licenses for spectrum that was
available in Auction No. 35, the Auction No. 58 minimum opening bids
are significantly lower than the net amount of winning bids from
Auction No. 35.
112. The minimum opening bids we adopt for Auction No. 58 are
reducible at the discretion of the Bureau. We emphasize, however, that
such discretion will be exercised, if at all, sparingly and early in
the auction, i.e., before bidders lose all waivers and begin to lose
substantial eligibility. During the course of the auction, the Bureau
will not entertain requests to reduce the minimum opening bid on
specific licenses.
113. The specific minimum opening bids for each license available
in Auction No. 58 are set forth in Attachment A of the Auction No. 58
Procedures Public Notice.
iii. Minimum Acceptable Bids and Bid Increments
114. In Auction No. 58 we will use a smoothing methodology to
calculate minimum acceptable bids. The smoothing methodology is
designed to vary the increment for a given license between a maximum
and minimum percentage based on the bidding activity on that license.
This methodology allows the increments to be tailored to the activity
on a license, decreasing the time it takes for licenses receiving many
bids to reach their final prices. The formula used to calculate this
increment is included as Attachment F of the Auction No. 58 Procedures
Public Notice. We will initially set the weighting factor at 0.5, the
minimum percentage increment at 0.1 (10%), and the maximum percentage
increment at 0.3 (30%). Hence, at these initial settings, the
percentage increment will fluctuate between 10% and 30% depending upon
the number of bids for the license. The Bureau will retain the
discretion to change the minimum acceptable bids and bid increments if
circumstances so dictate.
115. In each round, each eligible bidder will be able to place a
bid on a particular license for which it applied in any of nine
different amounts. The FCC Automated Auction System will list the nine
bid amounts for each license.
116. Once there is a standing high bid on a license, the FCC
Automated Auction System will calculate a minimum acceptable bid for
that license for the following round, as described in Attachment F of
the Auction No. 58 Procedures Public Notice. The difference between the
minimum acceptable bid and the standing high bid for each license will
define the bid increment--i.e., bid increment = (minimum acceptable
bid)-(standing high bid). The nine acceptable bid amounts for each
license consist of the minimum acceptable bid (the standing high bid
plus one bid increment) and additional amounts calculated using
multiple bid increments (i.e., the second bid amount equals the
standing high bid plus two times the bid increment, the third bid
amount equals the standing high bid plus three times the bid increment,
etc.).
117. At the start of the auction and until a bid has been placed on
a license, the minimum acceptable bid for that license will be equal to
its minimum opening bid. Corresponding additional bid amounts will be
calculated using bid increments defined as the difference between the
minimum opening bid times one plus the percentage increment, rounded as
described in Attachment F of the Auction No. 58 Procedures Public
Notice, and the minimum opening bid--i.e., bid increment = (minimum
opening bid) (1 + percentage increment) {rounded{time} -(minimum
opening bid). At the start of the auction and until a bid has been
placed on a license, the nine acceptable bid amounts for each license
consist of the minimum opening bid and additional amounts calculated
using multiple bid increments (i.e., the second bid amount equals the
minimum opening bid plus the bid increment, the third bid amount equals
the minimum opening bid plus two times the bid increment, etc).
118. In the case of a license for which the standing high bid has
been withdrawn, the minimum acceptable bid will equal the second
highest bid received for the license. The additional bid amounts are
calculated using the difference between the second highest bid times
one plus the minimum percentage increment, rounded, and the second
highest bid.
119. The Bureau retains the discretion to change the minimum
acceptable bids and bid increments and the methodology for determining
the minimum acceptable bids and bid increments if it determines that
circumstances so dictate. The Bureau will do so by announcement in the
FCC Automated Auction System. The Bureau
[[Page 62895]]
may also use its discretion to adjust the minimum bid increment without
prior notice if circumstances warrant.
iv. High Bids
120. At the end of each bidding round, the high bids will be
determined based on the highest gross bid amount received for each
license. A high bid from a previous round is sometimes referred to as a
``standing high bid.'' A ``standing high bid'' will remain the high bid
until there is a higher bid on the same license at the close of a
subsequent round. Bidders are reminded that standing high bids are
counted as activity for purposes of the activity rule.
121. In the event of identical high bids on a license in a given
round (i.e., tied bids) a Sybase[reg] SQL pseudo-random number
generator will be used to assign a random number to each bid. The
remaining bidders, as well as the high bidder, will be able to submit a
higher bid in a subsequent round. If no bidder submits a higher bid in
a subsequent round, the high bid from the previous round will win the
license. If any bids are received on the license in a subsequent round,
the high bid will once again be determined on the highest gross bid
amount received for the license.
v. Bidding
122. During a round, a bidder may submit bids for as many licenses
as it wishes (subject to its eligibility), withdraw high bids from
previous bidding rounds, remove bids placed in the same bidding round,
or permanently reduce eligibility. Bidders also have the option of
making multiple submissions and withdrawals in each round. If a bidder
submits multiple bids for a single license in the same round, the
system takes the last bid entered as that bidder's bid for the round.
Bidders should note that the bidding units associated with licenses for
which the bidder has removed or withdrawn its bid do not count towards
the bidder's activity at the close of the round.
123. Please note that all bidding will take place remotely either
through the FCC Automated Auction System or by telephonic bidding.
(Telephonic bid assistants are required to use a script when entering
bids placed by telephone. Telephonic bidders are therefore reminded to
allow sufficient time to bid by placing their calls well in advance of
the close of a round. Normally, five to ten minutes are necessary to
complete a bid submission).
124. A bidder's ability to bid on specific licenses in the first
round of the auction is determined by three factors: (i) The licenses
applied for on FCC Form 175 and (ii) the eligibility restrictions on
those licenses, if any, and (iii) the upfront payment amount deposited.
The bid submission screens will allow bidders to submit bids on only
those licenses for which the bidder applied on its FCC Form 175.
125. In order to access the bidding function of the FCC Automated
Auction System, bidders must be logged in during the bidding round
using the bidder identification number provided in the registration
materials, and the password generated by the SecurID card. Bidders are
strongly encouraged to print bid confirmations for each round after
they have completed all of their activity for that round.
126. In each round, eligible bidders will be able to place bids on
a given license in any of nine different amounts. For each license, the
FCC Automated Auction System interface will list the nine acceptable
bid amounts in a drop-down box. Bidders may use the drop-down box to
select from among the nine bid amounts. The FCC Automated Auction
System also includes an import function that allows bidders to upload
text files containing bid information.
127. Finally, bidders are cautioned to select their bid amounts
carefully because, as explained in the following section, bidders that
withdraw a standing high bid from a previous round, even if the bid was
mistakenly or erroneously made, are subject to bid withdrawal payments.
vi. Bid Removal and Bid Withdrawal
128. For Auction No. 58 the Commission adopts bid removal and bid
withdrawal procedures. With respect to bid withdrawals, the Commission
will limit each bidder to withdrawals in no more than two rounds during
the course of the auction. The two rounds in which withdrawals are used
would be at the bidder's discretion.
129. Procedures. Before the close of a bidding round, a bidder has
the option of removing any bids placed in that round. By using the
``remove bid'' function in the bidding system, a bidder may effectively
``unsubmit'' any bid placed within that round. A bidder removing a bid
placed in the same round is not subject to withdrawal payments.
Removing a bid will affect a bidder's activity for the round in which
it is removed, i.e., a bid that is removed does not count toward
bidding activity. These procedures will enhance bidder flexibility
during the auction.
130. Once a round closes, a bidder may no longer remove a bid.
However, in later rounds, a bidder may withdraw standing high bids from
previous rounds using the withdraw bid function in the FCC Automated
Auction System (assuming that the bidder has not reached its withdrawal
limit). A high bidder that withdraws its standing high bid from a
previous round during the auction is subject to the bid withdrawal
payments specified in 47 CFR 1.2104(g).
Note: Once a withdrawal is submitted during a round, that
withdrawal cannot be unsubmitted.
131. The Bureau will limit the number of rounds in which bidders
may place withdrawals to two rounds. These rounds will be at the
bidder's discretion and there will be no limit on the number of bids
that may be withdrawn in either of these rounds. Withdrawals during the
auction will be subject to the bid withdrawal payments specified in 47
CFR 1.2104(g). Bidders should note that abuse of the Commission's bid
withdrawal procedures could result in the denial of the ability to bid
on a market.
132. Calculation. Generally, the Commission imposes payments on
bidders that withdraw high bids during the course of an auction. If a
bidder withdraws its bid and there is no higher bid in the same or
subsequent auction(s), the bidder that withdrew its bid is responsible
for the difference between its withdrawn bid and the high bid in the
same or subsequent auction(s). In the case of multiple bid withdrawals
on a single license, within the same or subsequent auctions(s), the
payment for each bid withdrawal will be calculated based on the
sequence of bid withdrawals and the amounts withdrawn. No withdrawal
payment will be assessed for a withdrawn bid if either the subsequent
winning bid or any of the intervening subsequent withdrawn bids, in
either the same or subsequent auctions(s), equals or exceeds that
withdrawn bid. Thus, a bidder that withdraws a bid will not be
responsible for any withdrawal payments if there is a subsequent higher
bid in the same or subsequent auction(s).
133. In instances in which bids have been withdrawn on a license
that is not won in the same auction, the Commission will assess an
interim withdrawal payment equal to 3 percent of the amount of the
withdrawn bids. The 3 percent interim payment will be applied toward
any final bid withdrawal payment that will be assessed after subsequent
auction of the license. The Part 1 Fifth Report and Order provides
specific examples showing application of the bid withdrawal payment
rule.
[[Page 62896]]
vii. Round Results
134. Bids placed during a round will not be made public until the
conclusion of that bidding period. After a round closes, the Bureau
will compile reports of all bids placed, bids withdrawn, current high
bids, new minimum acceptable bids, and bidder eligibility status
(bidding eligibility and activity rule waivers), and post the reports
for public access. Reports reflecting bidders' identities for Auction
No. 58 will be available before and during the auction. Thus, bidders
will know in advance of this auction the identities of the bidders
against which they are bidding.
viii. Auction Announcements
135. The FCC will use auction announcements to announce items such
as schedule changes and stage transitions. All FCC auction
announcements will be available by clicking a link on the FCC Automated
Auction System.
V. Post-Auction Procedures
A. Down Payments and Withdrawn Bid Payments
136. After bidding has ended, the Commission will issue a public
notice declaring the auction closed and identifying winning bidders,
down payments, final payments, and any withdrawn bid payments due.
137. Within ten business days after release of the auction closing
notice, each winning bidder must submit sufficient funds (in addition
to its upfront payment) to bring its total amount of money on deposit
with the Commission for Auction No. 58 to 20 percent of the net amount
of its winning bids (gross bids less any applicable small business or
very small business bidding credits). In addition, by the same
deadline, all bidders must pay any bid withdrawal payments due under 47
CFR 1.2104(g), as discussed in ``Bid Removal and Bid Withdrawal,''
section IV.B.vi. (Upfront payments are applied first to satisfy any
withdrawn bid liability, before being applied toward down payments.)
B. Final Payments
138. Each winning bidder will be required to submit the balance of
the net amount of its winning bids within ten business days after the
deadline for submitting down payments.
C. Long-Form Application (FCC Form 601)
139. Within ten business days after release of the auction closing
notice, winning bidders must electronically submit a properly completed
long-form application (FCC Form 601) and required exhibits for each
license won through Auction No. 58.
D. Ownership Disclosure Information Report (FCC Form 602)
140. At the time it submits its long-form application (FCC Form
601), each winning bidder also must comply with the ownership reporting
requirements as set forth in 47 CFR 1.913, 1.919, and 1.2112.
E. Tribal Land Bidding Credit
141. A winning bidder that intends to use its license(s) to deploy
facilities and provide services to federally recognized tribal lands
that are unserved by any telecommunications carrier or that have a
telephone service penetration rate equal to or below 70 percent is
eligible to receive a tribal land bidding credit as set forth in 47 CFR
1.2107 and 1.2110(f). A tribal land bidding credit is in addition, and
separate from, any other bidding credit for which a winning bidder may
qualifiy.
F. Default and Disqualification
142. Any high bidder that defaults or is disqualified after the
close of the auction (i.e., fails to remit the required down payment
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise
disqualified) will be subject to the payments described in 47 CFR
1.2104(g)(2). In such event the Commission may re-auction the license
or offer it to the next highest bidder (in descending order) at its
final bid. In addition, if a default or disqualification involves gross
misconduct, misrepresentation, or bad faith by an applicant, the
Commission may declare the applicant and its principals ineligible to
bid in future auctions, and may take any other action that it deems
necessary, including institution of proceedings to revoke any existing
licenses held by the applicant.
G. Refund of Remaining Upfront Payment Balance
143. All applicants that submit upfront payments but are not
winning bidders for a license in Auction No. 58 may be entitled to a
refund of their remaining upfront payment balance after the conclusion
of the auction. No refund will be made unless there are excess funds on
deposit from the applicant after any applicable bid withdrawal payments
have been paid. All refunds will be returned to the payer of record, as
identified on the FCC Form 159, unless the payer submits written
authorization instructing otherwise.
144. Bidders that drop out of the auction completely may be
eligible for a refund of their upfront payments before the close of the
auction. Qualified bidders that have exhausted all of their activity
rule waivers, have no remaining bidding eligibility, and have not
withdrawn a high bid during the auction must submit a written refund
request. If you have completed the refund instructions electronically,
then only a written request for the refund is necessary. If not, the
request must also include wire transfer instructions, Taxpayer
Identification Number (TIN) and FCC Registration Number (FRN). Send
refund request to: Federal Communications Commission, Financial
Operations Center, Auctions Accounting Group, Gail Glasser, 445 12th
Street, SW., Room 1-C864, Washington, DC 20554.
145. Bidders are encouraged to file their refund information
electronically using the refund information portion of the FCC Form
175, but bidders can also fax their information to the Auctions
Accounting Group at (202) 418-2843. Once the information has been
approved, a refund will be sent to the party identified in the refund
information.
Note: Refund processing generally takes up to two weeks to
complete. Bidders with questions about refunds should contact Gail
Glasser at (202) 418-0578.
Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 04-24118 Filed 10-27-04; 8:45 am]
BILLING CODE 6712-01-P