[Federal Register: March 28, 2007 (Volume 72, Number 59)]
[Notices]
[Page 14555-14572]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28mr07-64]
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FEDERAL COMMUNICATIONS COMMISSION
[AU Docket No. 06-214; Report No. AUC-07-72-B (Auction No. 72); DA 07-
514]
Auction of Phase II 220 MHz Service Spectrum Scheduled for June
20, 2007; Notice and Filing Requirements, Minimum Opening Bids, Upfront
Payments and Other Procedures for Auction No. 72
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 certain Phase II 220 MHz Service
Spectrum (Auction No. 72). This document is intended to familiarize
prospective bidders with the procedures and minimum opening bids for
this auction.
DATES: Applications to participate in Phase II 220 MHz Service Spectrum
Auction No. 72 must be filed before 6 p.m. ET on April 20, 2007.
Bidding for Auction No. 72 is scheduled to begin on June 20, 2007.
FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau,
Auctions Spectrum and Access Division: For legal questions: Howard
Davenport at (202) 418-0660. For general auction questions: Debbie
Smith or Barbara Sibert at (717) 338-2868.
Mobility Division: For service rule questions: Allen Barna (legal)
or Gary Devlin (technical) at (202) 418-0620. To request materials in
accessible formats (Braille, large print, electronic files, audio
format) for people with disabilities, send an e-mail to fcc504@fcc.gov
or call the Consumer and Governmental Affairs Bureau at (202) 418-0530
or (202) 418-0432 (TTY).
[[Page 14556]]
SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 72
Procedures Public Notice released on February 26, 2007. The complete
text of the Auction No. 72 Procedures Public Notice, including
attachments, as well as related Commission documents are available for
public inspection and copying from 8 a.m. to 4:30 p.m. Eastern Time
(ET) Monday through Thursday or from 8 a.m. to 11:30 a.m. on Friday at
the FCC Reference Information Center, Portals II, 445 12th Street, SW.,
Room CY-A257, Washington, DC 20554. The Auction No. 72 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 Web site: http://www.BCPIWEB.com. When ordering documents from BCPI,
please provide the appropriate FCC document number, for example, DA 07-
30 for the Auction No. 72 Procedures Public Notice. The Auction No. 72
Procedures Public Notice and related documents are also available on
the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/72/
.
I. General Information
A. Introduction
1. The Commission announces the procedures and minimum opening bid
amounts for the upcoming auction of Phase II 220 MHz Service licenses
in the paired 220-222 MHz band scheduled to begin on June 20, 2007
(Auction No. 72). On December 12, 2006, in accordance with Section
309(j)(3) of the Communications Act of 1934, as amended, the Wireless
Telecommunications Bureau (Bureau) released a public notice seeking
comment on reserve prices or minimum opening bid amounts and the
procedures to be used in Auction No. 72. The Bureau received one
comment and no reply comments in response to the Auction No. 72 Comment
Public Notice, 71 FR 76332, December 20, 2006.
2. In the Auction No. 72 Comment Public Notice, the Bureau proposed
to include all 94 Phase II 220 MHz Service licenses in a single auction
using the Commission's standard simultaneous multiple-round (SMR)
auction format. The Bureau sought comment on the feasibility and
desirability of allocating the Phase II 220 MHz Service licenses using
the Commission's package bidding format (SMR-PB). Based on the record
and the particular circumstances of the auction of Phase II 220 MHz
Service licenses, the Bureau will include all 94 Phase II 220 MHz
Service licenses in a single auction using the Commission's standard
SMR format, as proposed. Package bidding will not be used in Auction
No. 72.
3. The Bureau also sought comment in the Auction No. 72 Comment
Public Notice on whether to implement procedures that would limit the
disclosure of certain information on bidder interests, and identities
prior to the close of bidding. The Bureau asked commenters to indicate
what factors weigh for or against limiting disclosure of bidder
interests and identities, and whether the Commission should condition
the use of any disclosure limits on a measure of competition in the
auction.
4. For Auction No. 72, the Bureau will determine the information
procedures based primarily on the eligibility ratio, a measure of
likely competition in the auction. The eligibility ratio is defined as
the total number of bidding units of eligibility purchased by bidders
through their upfront payments, divided by the total number of bidding
units for the licenses in the auction. Specifically, if the eligibility
ratio equals or exceeds three, the Bureau will not use the limited
information procedures, since with sufficient likely competition, the
anti-competitive behavior that limited information procedures aim to
deter is unlikely to be successful. If the eligibility ratio is less
than three, in general the Bureau will withhold certain information on
bidder interests and bidder identities. However, if the eligibility
ratio is less than three, the Commission reserves the discretion not to
limit information on bidder interests and identities if circumstances
indicate that limited information procedures would not be an effective
tool for deterring anti-competitive behavior. Such circumstances would
occur, for example, if only two applicants became qualified to
participate in the bidding, since limited information procedures would
be ineffective in preventing bidders from knowing the identity of the
competing bidder.
5. In the event that the conditions described above result in the
use of procedures under which certain information is withheld, the
Bureau will release: (1) Each bidder's eligibility and upfront payment
made prior to the start of the auction; and (2) the amounts of all
gross bids including the losing bids for each license after each round,
but not the identities of the bidders placing the bids. The Bureau
believes this provides bidders with information regarding license
valuations without compromising the goal of reducing the potential for
anti-competitive outcomes.
6. Pursuant to these procedures, information on the license
selections of auction applicants will be withheld at least until the
upfront payment deadline has passed and the Commission determines the
information procedures that will be used for the auction. Therefore, to
enable applicants to comply with the Commission's anti-collusion rules,
once the Bureau has conducted its initial review of applications to
participate in Auction No. 72, each applicant will receive a letter
that lists the other applicants in Auction No. 72 that have applied for
licenses in any of the same geographic areas as the applicant.
i. Background of Proceeding
7. Licenses in the Phase II 220 MHz spectrum to be auctioned in
Auction No. 72 have been offered previously in other auctions but were
returned to the Commission as a result of license cancellation or
termination. In March 1997, the Commission restructured the licensing
framework that governs the 220 MHz Service. Site-specific licensing,
used in the Phase I 220 MHz Service, was replaced with a geographic-
based system in the Phase II 220 MHz Service. This geographic-based
licensing methodology is similar to that used in other commercial
mobile radio services (CMRS). The Commission developed three types of
geographic area licenses for the Phase II 220 MHz Service. The first
type of license was based upon Economic Areas (EAs), developed by the
Bureau of Economic Analysis of the U.S. Department of Commerce. In
addition, the Commission created three EA-type license areas to cover
the following United States territories: American Samoa; the U.S.
Virgin Islands and Puerto Rico; and Guam and the Northern Mariana
Islands. The second type of license, known as Economic Area Groupings
(EAGs), included 6 groups of EAs, which collectively encompassed all of
the EA and EA-type licenses. Finally, the Commission designed three
nationwide licenses, each of which encompassed all six EAGs. Service
and operational requirements for the Phase II 220 MHz Service are
contained primarily in part 90 of the Commission's Rules, 47 CFR part
90.
ii. Licenses To Be Auctioned
8. Auction No. 72 will offer 94 licenses: 93 Economic Area (EA)
licenses and one Economic Area Grouping (EAG) license.
9. Certain licenses for Phase II 220 MHz Service in Auction No. 72
are
[[Page 14557]]
available for only part of a market. In addition, one license available
for only part of a market also covers less bandwidth. The licenses
available in this auction are listed in Attachment A of the Auction No.
72 Procedures Public Notice. The Phase II 220 MHz spectrum covered by
this auction is only available to non-Government applicants.
B. Rules and Disclaimers
i. Relevant Authority
10. Prospective applicants must familiarize themselves thoroughly
with the Commission's general competitive bidding rules set forth in
Title 47 CFR including recent amendments and clarifications; rules
relating to the Phase II 220 MHz Service contained in Title 47, part 90
and rules relating to applications, practice and procedure contained in
Title 47, part 1. Prospective applicants must also be thoroughly
familiar with the procedures, terms and conditions (collectively,
terms) contained in the Auction No. 72 Procedures Public Notice and the
Commission's decisions in proceedings regarding competitive bidding
procedures, application requirements, and obligations of Commission
licensees.
11. 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 its 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; Compliance With Antitrust Laws
12. To ensure the competitiveness of the auction process Sec.
1.2105(c) of the Commission's rules prohibit applicants competing for
licenses in any of the same geographic license areas from communicating
with each other about bids, bidding strategies, or settlements unless
such applicants have identified each other on their short-form
applications (FCC Forms 175) as parties with whom they have entered
into agreements pursuant to Sec. 1.2105(a)(2)(viii). In Auction No.
72, the rule would apply to any applicants for licenses in the same EA
or EAG. The rule would also apply to applicants for licenses in
overlapping EAs and the EAG. For example, assume that one applicant
applies for an EAG license and a second applicant applies for an EA
license covering any area within that EAG. The two entities will have
applied for licenses covering the same geographic areas and would be
precluded from communicating with each other under the rule. In
addition, the rule would preclude applicants that apply to bid for all
licenses from communicating with all other applicants. Thus, applicants
that have applied for licenses covering the same markets (unless they
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)) must affirmatively avoid all communications with or
disclosures to each other that affect or have the potential to affect
bids or bidding strategy, which may include communications regarding
the post-auction market structure. This prohibition begins at the
short-form application filing deadline and ends at the downpayment
deadline after the auction. This prohibition applies to all applicants
regardless of whether such applicants become qualified bidders or
actually bid. Information concerning applicants' license selections
will not be made public at least until the upfront payment deadline has
passed and the Commission determines the information procedures that
will be used for the auction. Therefore, the Commission will inform
each applicant by letter of the identity of each of the other
applicants that has applied for licenses covering any of the same
geographic areas as the licenses that it has selected in its short-form
application.
13. For purposes of this prohibition Sec. 1.2105(c)(7)(i) defines
applicant as including all officers and directors of the entity
submitting a short-form application to participate in the auction, all
controlling interests of that entity, 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.
14. Applicants for licenses for any of the same geographic license
areas must not communicate directly or indirectly about bids or bidding
strategy. Accordingly, such applicants 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 such
applicants. Also, if the authorized bidders are different individuals
employed by the same organization (e.g., law firm or engineering firm
or consulting firm), a violation similarly could occur. 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. A violation of the anti-collusion
rule could occur in other contexts, such as an individual serving as an
officer for two or more applicants. Moreover, the Commission has found
a violation of the anti-collusion rule where a bidder used the
Commission's bidding system to disclose its bidding strategy in a
manner that explicitly invited other auction participants to cooperate
and collaborate in specific markets, and has placed auction
participants on notice that the use of its bidding system to disclose
market information to competitors will not be tolerated and will
subject bidders to sanctions. Bidders are cautioned that the Commission
remains vigilant about prohibited communications taking place in other
situations. For example, the Commission has warned that prohibited
communications concerning bids and bidding strategies may include
communications regarding capital calls or requests for additional funds
in support of bids or bidding strategies to the extent such
communications convey information concerning the bids and bidding
strategies directly or indirectly. Applicants are hereby placed on
notice that public disclosure of information relating to bidder
interests and bidder identities that--although revealed prior to and
during other Commission auctions--is confidential in this auction at
the time of disclosure may violate the anti-collusion rule. Bidders
should use caution in their dealings with other parties, such as
members of the press, financial analysts, or others who might become a
conduit for the communication of prohibited bidding information.
15. The Commission's rules do not prohibit applicants from entering
into otherwise lawful bidding agreements before filing their short-form
applications, as long as they disclose the existence of the
agreement(s) in their short-form application. If parties agree in
principle on all material terms prior to the short-form filing
deadline, each party to the agreement must identify the other party or
parties to the agreement on its short-form application under Sec.
1.2105(c), even if the agreement has not been reduced to writing. If
the parties have not agreed in principle by the short-form filing
deadline, they should not include the names of parties
[[Page 14558]]
to discussions on their applications, and they may not continue
negotiations, discussions or communications with any other applicants
after the short-form filing deadline.
16. By electronically submitting its short-form application
following the electronic filing procedures set forth in Attachment C to
the Auction No. 72 Procedures Public Notice, each applicant certifies
its compliance with Sec. 1.2105(c). 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. The
Commission has stated that it intends to scrutinize carefully any
instances in which bidding patterns suggest that collusion may be
occurring. Any applicant found to have violated the anti-collusion rule
may be subject to sanctions.
17. Applicants are also reminded that, regardless of compliance
with the Commission's rules, they remain subject to the antitrust laws,
which are designed to prevent anticompetitive behavior in the
marketplace. Compliance with the disclosure requirements of the
Commission's anti-collusion rule will not insulate a party from
enforcement of the antitrust laws. For instance, a violation of the
antitrust laws could arise out of actions taking place well before any
party submits a short form application. The Commission has cited a
number of examples of potentially anticompetitive actions that would be
prohibited under antitrust laws: for example, actual or potential
competitors may not agree to divide territories horizontally in order
to minimize competition, regardless of whether they split a market in
which they both do business, or whether they merely reserve one market
for one and another for the other. Similarly, the Bureau has long
reminded potential applicants and others that even where the applicant
discloses parties with whom it has reached an agreement on the short-
form application, thereby permitting discussions with those parties,
the applicant is nevertheless subject to existing antitrust laws. To
the extent the Commission becomes aware of specific allegations that
may give rise to violations of the federal antitrust laws, the
Commission may refer such allegations to the United States Department
of Justice for investigation. If an applicant is found to have violated
the antitrust laws or the Commission's rules in connection with its
participation in the competitive bidding process, it may be subject to
forfeiture of its upfront payment, down payment, or full bid amount and
may be prohibited from participating in future auctions, among other
sanctions.
18. 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 an auction applicant to notify
the Commission of any substantial change to the information or
certifications included in its pending short-form application.
Applicants are therefore required by Sec. 1.65 to report to the
Commission any communications they have made to or received from
another applicant after the short-form filing deadline that affect or
have the potential to affect bids or bidding strategy unless such
communications are made to or received from parties to agreements
identified under Sec. 1.2105(a)(2)(viii). In addition Sec.
1.2105(c)(6) provides that any applicant that makes or receives a
communication prohibited by Sec. 1.2105(c) must report such
communication to the Commission in writing immediately, and in no case
later than five business days after the communication occurs.
19. Applicants that are winning bidders will be required to
disclose in their long-form applications the specific terms,
conditions, and parties involved in any bidding consortia, joint
ventures, partnerships, and other arrangements entered into relating to
the competitive bidding process.
20. A summary listing of documents issued by the Commission and the
Bureau addressing the application of the anti-collusion rule may be
found in Attachment F of the Auction No. 72 Procedures Public Notice.
iii. Protection of Incumbent Operations
21. Potential applicants are advised that there are a number of
incumbent Phase I 220 MHz Service licensees already licensed and
operating on frequencies between 220 and 222 MHz. Such Phase I
incumbents must be protected from harmful interference by Phase II 220
MHz Service licensees in accordance with the Commission's rules. These
limitations may restrict the ability of Phase II geographic area
licensees to use certain portions of the electromagnetic spectrum or
provide service to certain areas in their geographic license areas.
a. International Coordination
22. Potential bidders seeking licenses for geographic areas that
are near the Canadian or Mexican borders should be aware that the use
of some or all of the channels they acquire in the auction could be
restricted by agreements with Canada or Mexico on the use of 220-222
MHz spectrum in the border area.
b. Quiet Zones
23. Phase II 220 MHz Service licensees must protect the radio quiet
zones set forth in the Commission's rules. Licensees are cautioned that
they must receive the appropriate approvals directly from the relevant
quiet zone entity prior to operating within the areas described in the
Commission's rules.
iv. Due Diligence
24. The Bureau cautions potential applicants formulating their
bidding strategies to investigate and consider the extent to which
Phase II 220 MHz frequencies are occupied. Applicants and their
investors should also understand that Commission rules and requirements
place limitations on the ability of Phase II 220 MHz Service licensees
to use this spectrum. Incumbent Phase I 220 MHz Service operations in
the 220-222 MHz band must be protected. These limitations may restrict
the ability of Phase II 220 MHz Service geographic area licensees to
use certain portions of the electromagnetic spectrum or provide service
to certain areas in their geographic license areas. Bidders should
become familiar with the status of these operations, applicable
Commission rules, orders and any pending proceedings related to the
service, in order to make reasoned, appropriate decisions about their
participation in Auction No. 72 and their bidding strategy.
25. Potential bidders are reminded that they are solely responsible
for investigating and evaluating all technical and marketplace factors
that may have a bearing on the value of the Phase II 220 MHz Service
licenses in this auction. 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 the Phase II 220 MHz Service
subject to certain conditions and regulations. An FCC auction does not
constitute an endorsement by the FCC of any particular service,
technology, or product, nor does an FCC license constitute a guarantee
of business success. Applicants should perform
[[Page 14559]]
their individual due diligence before proceeding as they would with any
new business venture.
26. Potential bidders are strongly encouraged to conduct their own
research prior to the beginning of bidding in Auction No. 72 in order
to determine the existence of any pending administrative or judicial
proceedings that might affect their decision regarding participation in
the auction. Participants in Auction No. 72 are strongly encouraged to
continue such research throughout the auction. In addition, potential
bidders should perform technical analyses sufficient to assure
themselves that, should they prevail in competitive bidding for a
specific license, they will be able to build and operate facilities
that will fully comply with the Commission's technical and legal
requirements as well as other applicable federal, state and local laws.
27. Applicants should also be aware that certain pending and future
proceedings, including applications, including those for modification,
petitions for rulemaking, requests for special temporary authority,
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. 72. In addition, pending and
future judicial proceedings may relate to particular applicants or
incumbent licensees, or the licenses available in Auction No. 72.
Prospective bidders are responsible for assessing the likelihood of the
various possible outcomes, and considering their potential impact on
spectrum licenses available in this auction.
28. Applicants should perform due diligence to identify and
consider all proceedings that may affect the spectrum licenses being
auctioned and that could have an impact on the availability of spectrum
for Auction No. 72. 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 beginning of bidding in the auction.
29. 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. 72.
30. Applicants may use the Bureau's licensing databases at http://wireless.fcc.gov/uls
to obtain information about incumbent licenses
that may affect the availability of the spectrum for which licenses are
offered in Auction No. 72.
31. 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 its databases.
32. Potential applicants are strongly encouraged to physically
inspect any prospective sites located in, or near, the service area for
which they plan to bid, and also to familiarize themselves with the
environmental review obligations.
v. Use of Integrated Spectrum Auction System
33. The Commission will make available a browser-based bidding
system to allow bidders to participate in Auction No. 72 over the
Internet using the Commission's Integrated Spectrum Auction System
(ISAS or FCC Auction System). The Commission makes no warranty
whatsoever with respect to the FCC Auction System. In no event shall
the Commission, or any of its officers, employees or agents, be liable
for any damages whatsoever (including, but not limited to, loss of
business profits, business interruption, loss of business information,
or any other loss) arising out of or relating to the existence,
furnishing, functioning or use of the FCC Auction System that is
accessible to qualified bidders in connection with this auction.
Moreover, no obligation or liability will arise out of the Commission's
technical, programming or other advice or service provided in
connection with the FCC Auction System.
vi. Bidder Alerts
34. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use Auction No. 72 to
deceive and defraud unsuspecting investors. Information about deceptive
telemarketing investment schemes is available from the Commission as
well as the FTC and SEC. Complaints about specific deceptive
telemarketing investment schemes should be directed to the FTC, the
SEC, or the National Fraud Information Center.
vii. Environmental Review Requirements
35. Licensees must comply with the Commission's rules regarding
implementation of the National Environmental Policy Act and other
federal environmental statutes. The construction of a wireless antenna
facility is a federal action and the licensee must comply with the
Commission's environmental rules for each such facility. The
Commission's environmental rules require, among other things, that the
licensee consult with expert agencies having environmental
responsibilities, including the U.S. Fish and Wildlife Service, the
State Historic Preservation Office, the Army Corps of Engineers and the
Federal Emergency Management Agency (through the local authority with
jurisdiction over floodplains). In assessing the effect of facilities
construction on historic properties, the licensee must follow the
provisions of the Nationwide Programmatic Agreement Regarding the
Section 106 National Historic Preservation Act Review Process. The
licensee must prepare environmental assessments for facilities that may
have a significant impact in or on wilderness areas, wildlife
preserves, threatened or endangered species or designated critical
habitats, historical or archaeological sites, Indian religious sites,
floodplains, and surface features. The licensee also must prepare
environmental assessments for facilities that include high intensity
white lights in residential neighborhoods or excessive radio frequency
emission.
C. Auction Specifics
i. Auction Date
36. Bidding in Auction No. 72 will begin on Wednesday, June 20,
2007, as announced in the Auction No. 72 Comment Public Notice.
37. In response to the Auction No. 72 Comment Public Notice, a
commenter seeks a delay of several months in the start of Auction No.
72. The Bureau does not believe that it would be in the public interest
to do so. The commenter argues for a delay to enable the Commission to
complete the processing of applications for the assignment of certain
220 MHz licenses to an affiliate of the commenter. Generally, the
Commission has held that the existence of related pending proceedings
is not a sufficient reason to delay an auction. Similarly, the
Commission has observed that Section 309(j)(3)(E)(ii)'s statutory
[[Page 14560]]
requirement to provide prospective bidders with time to develop
business plans and evaluate the availability of equipment does not
require the Commission to postpone an auction until every external
factor that might influence a bidder's business plan is resolved with
absolute certainty. Further, the Bureau notes that the application
identified by the commenter has been acted upon. The commenter provides
no legal or policy reason, other than its concern about the processing
of the identified assignment application, in support of its request for
postponement. In furtherance of the statutory objectives underlying the
Commission's auctions process, including promoting the rapid deployment
of new technologies and services to the public, and enhancing economic
opportunity and competition, the Bureau determined that the public
interest would be served by proceeding with the auction as scheduled.
The initial schedule for bidding will be announced by public notice at
least one week before the start of the auction.
38. Unless otherwise announced, bidding on all licenses will be
conducted on each business day until bidding has stopped on all
licenses.
ii. Auction Title
39. Auction No. 72--Phase II 220 MHz.
iii. Bidding Methodology
40. The bidding methodology for Auction No. 72 will be simultaneous
multiple round bidding. The Commission will conduct this auction over
the Internet using the FCC Auction System, and telephonic bidding will
be available as well. Qualified bidders are permitted to bid
electronically via the Internet or by telephone. All telephone calls
are recorded.
iv. Pre-Auction Dates and Deadlines
41. Dates and Deadlines
Auction Seminar: April 11, 2007.
Short-Form Application (FCC Form 175) Filing Window Opens: April 11,
2007; 12 noon ET.
Short-Form Application (FCC Form 175) Filing Window Deadline: April
20, 2007; prior to 6 p.m. ET.
Upfront Payments (via wire transfer): May 21, 2007; 6 p.m. ET.
Mock Auction: June 18, 2007.
Auction Begins: June 20, 2007.
v. Requirements for Participation
42. Those wishing to participate in the auction must: (1) Submit a
short-form application (FCC Form 175) electronically prior to 6 p.m.
Eastern Time (ET), April 20, 2007, following the electronic filing
procedures set forth in Attachment C to the Auction No. 72 Procedures
Public Notice; (2) submit a sufficient upfront payment and an FCC
Remittance Advice Form (FCC Form 159) by 6 p.m. ET, May 21, 2007,
following the procedures and instructions set forth in Attachment D to
the Auction No. 72 Procedures Public Notice; and (3) comply with all
provisions outlined in the Auction No. 72 Procedures Public Notice and
applicable Commission rules. For example, the Phase II 220 MHz spectrum
covered by this auction is only available to non-Government applicants
under Sec. 90.721(b) of those rules, 47 CFR 90.721(b).
II. Short-Form Application (FCC Form 175) Requirements
43. Entities seeking licenses available in Auction No. 72 must file
a short-form application electronically via the FCC Auction System
prior to 6 p.m. ET on April 20, 2007, following the procedures
prescribed in Attachment C to the Auction No. 72 Procedures Public
Notice. If an applicant claims eligibility for a bidding credit, the
information provided in its FCC Form 175 will be used in determining
whether the applicant is eligible for the claimed bidding credit.
Applicants bear full responsibility for submitting accurate, complete
and timely short-form applications. All applicants must certify on
their short-form applications under penalty of perjury that they are
legally, technically, financially and otherwise qualified to hold a
license. Applicants should read the instructions set forth in
Attachment C to the Auction No. 72 Procedures Public Notice carefully
and should consult the Commission's rules to ensure that, in addition
to the materials all the information that is required under the
Commission's rules is included with their short-form applications.
44. An entity may not submit more than one short-form application
for a single auction. In the event that a party submits multiple short-
form applications, only one application will be accepted for filing.
45. Applicants also should note that submission of a short-form
application and any amendments thereto constitutes a representation by
the certifying official that he or she is an authorized representative
of the applicant, that he or she has read the form's instructions and
certifications, and that the contents of the application, its
certifications, and any attachments are true and correct. Applicants
are not permitted to make major modifications to their applications;
such impermissible changes include a change of the certifying official
to the application. 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.
A. Preferences for Small Businesses and Others
i. Size Standards for Bidding Credits
46. A bidding credit represents the amount by which a bidder's
winning bid will be discounted. For Auction No. 72, bidding credits
will be available to small businesses and very small businesses, and
consortia thereof, as follows: (1) A bidder with attributed average
annual gross revenues that exceed $3 million and do not exceed $15
million for the preceding three years (small business) will receive a
25 percent discount on its winning bid and (2) a bidder with attributed
average annual gross revenues that do not exceed $3 million for the
preceding three years (very small business) will receive a 35 percent
discount on its winning bid.
47. Bidding credits are not cumulative; a qualifying applicant
receives either the 25 percent or 35 percent bidding credit on its
winning bid, but not both.
48. Every applicant that claims eligibility for a bidding credit as
either a small business or a very small business, or a consortium of
small businesses or very small businesses, will be required to provide
information regarding revenues attributable to the applicant, its
affiliates, its controlling interests, and the affiliates of its
controlling interests on its FCC Form 175 short-form application to
establish that it satisfies the applicable eligibility requirement.
Applicants claiming eligibility as a designated entity in Auction No.
72 should review carefully the CSEA/Part 1 Designated Entity FNPRM, 71
FR 6992, February 10, 2006, and the Designated Entity Second Report and
Order, 71 FR 26245, May 5, 2006. In that connection, the Commission
adopted rules governing eligibility for designated entity benefits in
the Designated Entity Second Report and Order. The Commission's new
rules regarding applicants seeking eligibility for designated entity
benefits requires the disclosure of a list of all parties with which
the applicant has entered into arrangements for the lease or resale
including wholesale agreements of any of the capacity of any of the
applicant's spectrum; and a list, separately and in the aggregate, of
the gross revenues of entities with which the applicant has an
[[Page 14561]]
attributable material relationship, as defined in Sec.
1.2110(b)(3)(iv)(B).
49. The Commission has adopted a narrow exemption from the
attribution rule for the officers and directors of a rural telephone
cooperative pursuant to which the gross revenues of the affiliates of
the cooperative's officers and directors are not attributed to the
applicant. An applicant (or controlling interest) seeking to claim this
exemption must include in its short-form application a certification
that it is validly organized under the most closely applicable
organizing statute for a cooperative, and that such organization is
reflected in its articles of incorporation, by-laws, and/or other
relevant organic documents. Applicants seeking to claim this exemption
must meet all of the conditions specified in Sec. 1.2110(b)(3)(iii) of
the Commission's rules. Additional guidance on completing the FCC Form
175 to claim this exemption may be found in Attachment C to the
Auctions No. 72 Procedures Public Notice.
ii. Tribal Lands Bidding Credit
50. To encourage the growth of wireless services in federally
recognized tribal lands, the Commission has implemented a tribal lands
bidding credit.
iii. Installment Payments
51. Installment payment plans will not be available in Auction No.
72.
B. License Selection
52. In Auction No. 72, applicants must select the licenses on which
they want to bid from the Eligible Licenses list. In Auction No. 72,
FCC Form 175 will include a filtering mechanism that allows an
applicant to filter the available licenses. The applicant will make
selections for one or more of the filter criteria and the system will
produce a list of licenses satisfying the specified criteria. The
applicant may select all the licenses in the customized list or select
individual licenses from the list. Applicants also will be able to
select licenses from one customized list and then create additional
customized lists to select additional licenses. There will be no
opportunity to change license selection after the short-form filing
deadline. It is critically important that an applicant confirm its
license selections before submitting its short-form application because
the FCC Auction System will not accept bids on licenses that an
applicant has not selected on its FCC Form 175.
C. Disclosure of Bidding Arrangements
53. Applicants will be required to identify in their short-form
applications all parties with whom they have entered into any
agreements, arrangements, or understandings of any kind relating to the
licenses being auctioned, including any agreements relating to post-
auction market structure. Applicants also will be required to certify
under penalty of perjury in their short-form applications that they
have not entered and will not enter into any explicit or implicit
agreements, arrangements or understandings of any kind with any
parties, other than those identified in the application, regarding the
amount of their bids, bidding strategies, or the particular licenses on
which they will or will not bid. If an applicant has had discussions,
but has not reached a joint bidding agreement by the short-form
application filing deadline, it would not include the names of parties
to the discussions on its application and may not continue such
discussions with any applicants after the deadline.
54. After the filing of short-form applications, the Commission's
rules do not prohibit a party holding a non-controlling, attributable
interest in one applicant from acquiring an ownership interest in or
entering into a joint bidding arrangement with other applicants
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 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. Further, as
discussed above, compliance with the disclosure requirements of the
Commission's anti-collusion rule will not insulate a party from
enforcement of the antitrust laws.
D. Ownership Disclosure Requirements
55. 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 the short-form application, applicants will be required to
fully disclose information on the real party or parties-in-interest and
ownership structure of the applicant. The ownership disclosure
standards for the short form are prescribed in Sec. Sec. 1.2105 and
1.2112 of the Commission's rules. Each applicant is responsible for
information submitted in its short-form application being complete and
accurate.
56. An applicant's most current ownership information on file with
the Commission, if in an electronic format compatible with the short-
form application (FCC Form 175) (such as information submitted in an
on-line FCC Form 602 or in an FCC Form 175 filed for a previous auction
using ISAS) will automatically be entered into the applicant's short-
form application. Applicants are responsible for ensuring that the
information submitted in their FCC Form 175 for Auction No. 72 is
complete and accurate. Accordingly, applicants should carefully review
any information automatically entered to confirm that it is complete
and accurate as of the deadline for filing the short-form application.
Applicants can update any information that was entered automatically
and needs to be changed directly in the short-form application.
E. Bidding Credit Revenue Disclosures
57. To determine which applicants qualify for bidding credits as
small businesses or very small businesses, the Commission considers the
gross revenues of the applicant, its affiliates, its controlling
interests, and the affiliates of its controlling interests. Therefore,
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 their FCC Form 175 short-form applications the
gross revenues of each of the following for the preceding three years:
(1) The applicant, (2) its affiliates, (3) its controlling interests,
and (4) the affiliates of its controlling interests. Certification that
the average annual gross revenues of such entities and individuals for
the preceding three years do not exceed the applicable limit is not
sufficient. In order to comply with the Commission's disclosure
requirements for bidding credit eligibility, an applicant must provide
separately for itself, its affiliates, its controlling interests, and
the affiliates of its controlling interests, the gross revenues for
each of the preceding three years. 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 14562]]
58. Controlling interests of an applicant include individuals and
entities with either de facto or de jure control of the applicant.
Typically, ownership of at least 50.1 percent of an entity's voting
stock evidences de jure control. De facto control is determined on a
case-by-case basis. The following are some common indicia of de facto
control: (1) The entity constitutes or appoints more than 50 percent of
the board of directors or management committee; (2) the entity has
authority to appoint, promote, demote, and fire senior executives that
control the day-to-day activities of the licensee and (3) the entity
plays an integral role in management decisions.
59. Officers and directors of an applicant are also considered to
have controlling interest in the applicant. 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.
60. In recent years the Commission has made modifications to its
rules governing the attribution of gross revenues for purposes of
determining small business eligibility. These changes include 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 has also clarified that,
in calculating an applicant's gross revenues under the controlling
interest standard, it will not attribute the personal net worth,
including personal income, of its officers and directors to the
applicant.
61. A consortium of small businesses or very small businesses is a
conglomerate organization composed of two or more entities, each of
which individually satisfies the definition of a small business or very
small business as those terms are defined in the service-specific
rules. Thus, each member of a consortium of small or very small
businesses that applies to participate in Auction No. 72 must
individually meet the definition of small business or very small
business adopted by the Commission for the Phase II 220 MHz Service.
Each consortium member must disclose its gross revenues along with
those of its affiliates, its controlling interests, and the affiliates
of its controlling interests. Although the gross revenues of the
consortium members will not be aggregated for purposes of determining
the consortium's eligibility as a small business or very small
business, this information must be provided to ensure that each
individual consortium member qualifies for any bidding credit awarded
to the consortium.
F. Provisions Regarding Former and Current Defaulters
62. Each applicant must state under penalty of perjury on its
short-form application whether or not the applicant, its affiliates,
its controlling interests, and 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. In addition, each applicant must certify
under penalty of perjury on its short-form application that as of the
short-form filing deadline, the applicant, its affiliates, its
controlling interests, 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 that they are not
delinquent on any non-tax debt owed to any Federal agency. Prospective
applicants are reminded that submission of a false certification to the
Commission is a serious matter that may result in severe penalties,
including monetary forfeitures, license revocations, exclusion from
participation in future auctions, and/or criminal prosecution.
63. Former defaulters--i.e., applicants, including any of their
affiliates, any of their controlling interests, or any of the
affiliates of their controlling interests, 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. 72, provided that they are otherwise
qualified. However, former defaulters are required to pay upfront
payments that are fifty percent more than the normal upfront payment
amounts.
64. Current defaulters--i.e., applicants, including any of their
affiliates, any of their controlling interests, or any of the
affiliates of their controlling interests, that are in default on any
payment for any Commission licenses including down payments or are
delinquent on any non-tax debt owed to any Federal agency as of the
filing deadline for applications to participate in this auction--are
not eligible to bid in Auction No. 72.
65. Applicants are encouraged to review the Bureau's previous
guidance on default and delinquency disclosure requirements in the
context of the short-form application process. For example, it has been
determined that to the extent that Commission rules permit late payment
of regulatory or application fees accompanied by late fees, such debts
will become delinquent for purposes of Sec. Sec. 1.2105(a) and
1.2106(a) only after the expiration of a final payment deadline.
Therefore, with respect to regulatory or application fees, the
provisions of Sec. Sec. 1.2105(a) and 1.2106(a) regarding default and
delinquency in connection with competitive bidding are limited to
circumstances in which the relevant party has not complied with a final
Commission payment deadline.
66. The Commission considers outstanding debts owed to the United
States Government, in any amount, to be a serious matter. The
Commission adopted rules, including a provision referred to as the red
light rule, that implement the Commission's obligations under the Debt
Collection Improvement Act of 1996, which governs the collection of
claims owed to the United States. Under the red light rule, the
Commission will not process applications and other requests for
benefits filed by parties that have outstanding debts owed to the
Commission. In the same rulemaking order, the Commission explicitly
declared, however, that the Commission's competitive bidding rules are
not affected by the red light rule. As a consequence, the Commission's
adoption of the red light rule does not alter the applicability of any
of the Commission's competitive bidding rules, including the provisions
and certifications of Sec. Sec. 1.2105 and 1.2106, with regard to
current and former defaults or delinquencies. Applicants are reminded,
however, that the Commission's Red Light Display System, which provides
information regarding debts owed to the Commission, may not be
determinative of an auction applicant's ability to comply with the
default and delinquency disclosure requirements of Sec. 1.2105. Thus,
while the red light rule ultimately may prevent the processing of long-
form applications by auction winners, an auction applicant's red light
status is not necessarily determinative of its eligibility to
participate in this auction or of its upfront payment obligation.
67. Prospective applicants in Auction No. 72 should note that any
long-form applications filed after the close of competitive bidding
will be reviewed
[[Page 14563]]
for compliance with the Commission's red light rule, and such review
may result in the dismissal of a winning bidder's long-form
application.
G. Other Information
68. Applicants owned by member of minority groups and/or women, as
defined in Sec. 1.2110(c)(3), may identify themselves in filling out
their short-form applications 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.
H. Minor Modifications to Short-Form Applications (FCC Form 175)
69. As of the deadline for filing short-form applications (FCC
Forms 175) prior to 6 p.m. ET on April 20, 2007, applicants are
permitted to make only minor changes to their applications. Applicants
are not permitted to make major modifications to their applications
(e.g., change their license selections, change control of the
applicant, change the certifying official, or change their size to
claim eligibility for a higher bidding credit). Permissible minor
changes include, for example, deletion and addition of authorized
bidders (to a maximum of three) and revision of addresses and telephone
numbers of the applicants and their contact persons.
70. An applicant must make permissible minor changes to its short-
form application, as such changes are defined by Sec. 1.2105(b),
electronically using the FCC Auction System. Applicants must click on
the SUBMIT button in the FCC Auction System for the changes to be
submitted and considered by the Commission. After the revised
application has been submitted, a confirmation page will be displayed
that states the submission time and date, along with a unique file
number.
71. In addition, during those periods outside of the initial and
resubmission filing windows (i.e., when you cannot electronically
update your FCC Form 175), an applicant should submit a letter briefly
summarizing the changes and subsequently update their short-form
applications in ISAS as soon as possible. Note: After the filing window
has closed, the auction system will not permit applicants to make
certain changes, such as legal classification and bidding credit. Any
letter describing changes to an applicant's short-form application
should be submitted by electronic mail to the following address:
auction72@fcc.gov
72. Applicants must not submit application-specific material
through the Commission's Electronic Comment Filing System (ECFS).
I. Maintaining Current Information in Short-Form Applications (FCC Form
175)
73. 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. Changes that cause a loss of or reduction in eligibility
for a bidding credit must be reported immediately. If an amendment
reporting substantial changes is a major amendment as defined by Sec.
1.2105, the major amendment will not be accepted and may result in the
dismissal of the short-form application.
74. After the short-form filing deadline, applicants may make only
minor changes to their FCC Form 175 applications, for example, deletion
and addition of authorized bidders (to a maximum of three). Applicants
must click on the SUBMIT button in the FCC Auction System for the
changes to be submitted and considered by the Commission. In addition,
applicants must submit a letter, briefly summarizing the changes, by
electronic mail at the following address: auction72@fcc.gov.
75. Applicants must not submit application-specific material
through ECFS into the record of the proceeding concerning Auction No.
72 procedures.
III. Pre-Auction Procedures
A. Auction Seminar--April 11, 2007
76. On Wednesday, April 11, 2007, the FCC will sponsor a free
seminar for parties interested in participating in Auction No. 72 at
the FCC headquarters, located at 445 12th Street, SW., Washington, DC.
The seminar will provide attendees with information about pre-auction
procedures, completing FCC Form 175, auction conduct, the FCC Auction
System, auction rules, and the Phase II 220 MHz Service rules. The
seminar will also provide an opportunity for prospective bidders to ask
questions of FCC staff concerning the auction, auction procedures,
filing requirements and other matters related to this auction.
77. To register, please provide the information listed on
Attachment B of the Auction No. 72 Procedures Public Notice by fax, e-
mail or telephone to the FCC by Monday, April 9, 2007. The seminar is
free of charge and for individuals who are unable to attend, an Audio/
Video webcast of this seminar will be available from the FCC's Auction
No. 72 web page at http://wireless.fcc.gov/auctions/72/.
B. Short-Form Application (FCC Form 175)--Due Prior to 6 p.m. ET on
April 20, 2007
78. In order to be eligible to bid in this auction, applicants must
first follow the procedures set forth in Attachment C to the Auction
No. 72 Procedures Public Notice to submit an FCC Form 175 application
electronically via the FCC Auction System. This application must be
received at the Commission prior to 6 p.m. ET on April 20, 2007. Late
applications will not be accepted. 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.
79. Applications may generally be filed at any time beginning at
noon ET on April 11, 2007, and the filing window will close prior to 6
p.m. ET on April 20, 2007. Applicants are strongly encouraged to file
early and are responsible for allowing adequate time for filing their
applications. Applicants may update or amend their applications
multiple times until the filing deadline on April 20, 2007.
80. Applicants must always click on the SUBMIT button on the
Certify & Submit screen of the electronic form to successfully submit
or modify their FCC Form 175. Any form that is not submitted will not
be reviewed by the FCC. Additional information about accessing,
completing, and viewing the FCC Form 175 is included in Attachment C of
the Auction No. 72 Procedures Public Notice. FCC Auction Technical
Support is available at (877) 480-3201, option nine; (202) 414-1250; or
(202) 414-1255 (text telephone (TTY)); hours of service are Monday
through Friday, from 8 a.m. to 6 p.m. E.T. In order to provide better
service to the public, all calls to Technical Support are recorded.
C. Application Processing and Minor Corrections
81. 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: (1) Those applications accepted for
filing; (2) those applications rejected; and (3) those applications
which have minor defects that may be corrected, and the deadline for
resubmitting corrected applications.
[[Page 14564]]
82. After the April 20, 2007, short-form filing deadline,
applicants may make only minor corrections 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 control of the applicant, change certifying
official, or change their size to claim eligibility for a higher
bidding credit).
D. Upfront Payments--Due May 21, 2007
83. 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 sent by facsimile to Mellon Bank in Pittsburgh, PA. All upfront
payments must be received in the proper account at Mellon Bank by 6
p.m. ET on May 21, 2007.
i. Making Auction Payments by Wire Transfer
84. Wire transfer payments must be received by 6 p.m. ET on May 21,
2007. No other payment method is acceptable for this auction. 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.
85. At least one hour before placing the order for the wire
transfer (but on the same business day), applicants must send by
facsimile a completed FCC Form 159 (Revised 2/03) to Mellon Bank at
(412) 209-6045. On the cover sheet of the facsimile, write Wire
Transfer--Auction Payment for Auction No. 72. In order to meet the
Commission's upfront payment deadline, an applicant's payment must be
credited to the Commission's account before 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.
86. Please note that: (1) All payments must be made in U.S.
dollars; (2) all payments must be made by wire transfer; (3) upfront
payments for Auction No. 72 go to a lockbox number different from the
lockboxes used in previous FCC auctions, and different from the lockbox
number to be used for post-auction payments; and (4) failure to deliver
the upfront payment as instructed by the May 21, 2007, deadline, will
result in dismissal of the application and disqualification from
participation in the auction.
ii. FCC Form 159
87. A completed FCC Remittance Advice Form (FCC Form 159, Revised
2/03) must be sent by facsimile to Mellon Bank to accompany each
upfront payment. Proper completion of FCC Form 159 (Revised 2/03) is
critical to ensuring correct crediting of upfront payments. Detailed
instructions for completion of FCC Form 159 are included in Attachment
D of the Auction No. 72 Procedures Public Notice. An electronic pre-
filled version of the FCC Form 159 is available after submitting the
FCC Form 175. Payors using a pre-filled FCC Form 159 are responsible
for ensuring that all of the information on the form, including payment
amounts, is accurate. The FCC Form 159 can be completed electronically,
but must be filed with Mellon Bank via facsimile.
iii. Upfront Payments and Bidding Eligibility
88. In the Auction No. 72 Comment Public Notice, the Bureau
proposed that the amount of the upfront payment would determine a
bidder's initial bidding eligibility, the maximum number of bidding
units on which a bidder may place bids. In order to bid on a license,
otherwise qualified bidders that selected that license on Form 175 must
have a current 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 selected on its 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 the applicant selected on its 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
provisionally winning bids at any given time.
89. In the Auction No. 72 Comment Public Notice, the Bureau
proposed to calculate upfront payments for Auction No. 72 on a license-
by-license basis using the following formulas:
EA Licenses: $500 per license.
EAG License: $0.01 * 0.15 MHz * License Area Population.
The Bureau set forth the specific upfront payments and bidding
units for each license in Attachment A of the Auction No. 72 Comment
Public Notice and sought comment on this proposal. The Bureau received
no comments in response to the proposed upfront payments. The specific
upfront payments and bidding units for each license are set forth in
Attachment A of the Auction No. 72 Procedures Public Notice.
90. Applicants must make upfront payments sufficient to obtain
bidding eligibility on the licenses on which they will bid.
91. In calculating its upfront payment amount, an applicant should
determine the maximum number of bidding units on which it may wish to
be active (bid on or hold provisionally winning bids on) in any single
round, and submit an upfront payment amount 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
be active in any given round. Applicants should check their
calculations carefully, as there is no provision for increasing a
bidder's eligibility after the upfront payment deadline.
92. Former defaulters should calculate their upfront payment for
all licenses by multiplying the number of bidding units on which they
wish to be active 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.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of
Upfront Payments
93. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information be supplied to the FCC. 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
94. 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.
95. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by overnight mail. The mailing will be sent only to the contact
person at the contact
[[Page 14565]]
address listed in the FCC Form 175 and will include the SecurID[supreg]
tokens that will be required to place bids, the Integrated Spectrum
Auction System (ISAS) Bidder's Guide, and the Auction Bidder Line phone
number.
96. Qualified bidders that do not receive this registration mailing
will not be able to submit bids. Therefore, any qualified bidder that
has not received this mailing by noon on Thursday, June 14, 2007,
should call (717) 338-2868. Receipt of this registration mailing is
critical to participating in the auction, and each applicant is
responsible for ensuring it has received all of the registration
material.
97. In the event that SecurID[supreg] tokens are lost or damaged,
only a person who has been designated as an authorized bidder, the
contact person, or the certifying official on the applicant's short-
form application may request replacement registration material.
F. Remote Electronic Bidding
98. The Commission will conduct this auction over the Internet, and
telephonic bidding will be available as well. Qualified bidders are
permitted to bid electronically and telephonically. 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[supreg] token, which the FCC will provide at no charge.
Each applicant with one authorized bidder will be issued two
SecurID[supreg] tokens, while applicants with two or three authorized
bidders will be issued three tokens. For security purposes, the
SecurID[supreg] tokens, the telephonic bidding telephone number, and
the Integrated Spectrum Auction System (ISAS) Bidder's Guide are only
mailed to the contact person at the contact address listed on the FCC
Form 175.
G. Mock Auction--June 18, 2007
99. All qualified bidders will be eligible to participate in a mock
auction on Monday, June 18, 2007. The mock auction will enable
applicants to become familiar with the FCC Auction System prior to the
auction. Participation by all bidders is strongly recommended. Details
will be announced by public notice.
IV. Auction Event
100. The first round of bidding for Auction No. 72 will begin on
Wednesday, June 20, 2007. The initial bidding schedule will be
announced in a public notice listing the qualified bidders, which is to
be released approximately 10 days before the start of the auction.
A. Auction Structure
i. Simultaneous Multiple Round Auction
101. In the Auction No. 72 Comment Public Notice, the Bureau
proposed to auction all Phase II 220 MHz Service licenses in a single
auction using the Commission's standard simultaneous multiple-round
(SMR) auction format. This type of auction offers every license for bid
at the same time and consists of successive bidding rounds in which
eligible bidders may place bids on individual licenses. A bidder may
bid on, and potentially win, any number of licenses. Typically, bidding
remains open on all licenses until bidding stops on every license,
unless a modified stopping rule is invoked.
102. The Bureau also sought comment on using a simultaneous
multiple-round with package bidding (SMR-PB) format for Auction No. 72.
The Bureau does not believe that a package bidding format would
significantly enhance the ability of bidders to create efficient
aggregations of licenses in Auction No. 72. Therefore, the Bureau will
not use an SMR-PB format for Auction No. 72.
103. The Bureau concludes that the Bureau's standard SMR auction
format will meet the needs of bidders in Auction No. 72, and the Bureau
adopts the proposal to use a simultaneous multiple-round auction format
without package bidding. Unless otherwise announced, bids will be
accepted on all licenses in each round of the auction until bidding
stops on every license. This approach, the Bureau believes, allows
bidders to take advantage of synergies that exist among licenses.
ii. Information Available to Bidders Before and During the Auction
104. In the Auction No. 72 Comment Public Notice, the Bureau sought
comment on whether to implement procedures that prior to and during the
auction would limit the disclosure of information on bidder interests
and identities. The Bureau received no comments on this issue.
105. For Auction No. 72, the Bureau will use limited information
procedures if it appears likely that the competitiveness of the auction
will be low, and if the Bureau believes that limited information
procedures will be effective in making anti-competitive behavior less
likely to be successful. Alternatively, if the Bureau determines that
the auction is likely to be sufficiently competitive, and therefore,
that the risk of successful collusion is low, the Bureau will not
implement procedures that would limit the disclosure of information on
bidder interests and identities before the close of bidding.
106. Specifically, the Bureau will estimate the likely level of
competition in the auction by considering the eligibility ratio,
defined as the total number of bidding units of eligibility purchased
by bidders through their upfront payments divided by the total number
of bidding units for the licenses in the auction. If the eligibility
ratio equals or exceeds three, the Bureau will not use limited
information procedures. If the eligibility ratio is less than three, in
general the Bureau will withhold certain information on bidder
interests and bidder identities prior to and during the auction.
107. However, if the eligibility ratio is less than three, the
Bureau reserves the discretion not to use limited information
procedures if circumstances indicate that limited information
procedures would not be an effective tool for deterring anti-
competitive behavior. For example, if only two applicants become
qualified to participate in the bidding, limited information procedures
would be ineffective in preventing bidders from knowing the identity of
the competing bidder and, therefore, limited information procedures
would not serve to deter attempts at signaling and retaliatory bidding
behavior. The Bureau anticipates announcing the information disclosure
procedures to be used at or about the time that the Bureau releases a
public notice announcing the applicants that are qualified to
participate in the bidding.
108. If the Commission determines that limited information
procedures will be used, it will make available prior to the auction
the total eligibility level for the auction as well as the eligibility
of each bidder but will not identify bidders' license selections. After
each round of bidding, the amounts of each bid placed will be made
available, but not the identities of the bidders. This information will
give bidders an indication of demand for the licenses, so that bidders
and their investors will be able to assess whether their bids are
likely to be consistent with the valuations of other bidders, allowing
them to bid more confidently. In addition, after each round bidders
logged in to the FCC Auction System will be able to see whether their
own bids are provisionally winning.
109. Other Issues. The Bureau does not believe that the information
disclosure procedures established for this auction will interfere with
the administration of or compliance with the Commission's anti-
collusion rule. Section 1.2105(c)(1) of the
[[Page 14566]]
Commission's rules provides that after the short-form application
filing deadline, all applicants for licenses in any of the same
geographic license areas are prohibited from disclosing to each other
in any manner the substance of bids or bidding strategies until after
the down payment deadline, subject to specified exceptions. When
limited information procedures are not in effect for a particular
auction, each applicant's selection of licenses has been publicly
available through the Commission's on-line short-form application
database. In Auction No. 72, however, the Commission will not disclose
information regarding license selection at least until the upfront
payment deadline has passed and the Commission determines the
information disclosure procedures to be used for the auction. As in the
past, the Commission will disclose the other portions of applicants'
short-form applications, through its on-line database and certain
application-based information through public notices. Thus, even
without information regarding license selection, applicants would be
able to comply with Sec. 1.2105(c) by not disclosing bids or bidding
strategies to any other applicants in the auction. This approach,
however, could inhibit otherwise lawful communications with applicants
for licenses in other geographic license areas, which the Commission's
rule permits. Consequently, the Bureau will notify separately each
applicant with short-form applications to participate in a pending
auction whether applicants in Auction No. 72 have applied for licenses
in any of the same geographic areas as that applicant. Specifically,
after the Bureau conducts its initial review of applications to
participate in Auction No. 72, each applicant with a pending short-form
application will receive a letter that lists the applicants in Auction
No. 72 that have applied for licenses in any of the same geographic
areas as the applicant. The list will identify the Auction No. 72
applicant(s) by name but will not list the license selections of the
Auction No. 72 applicant(s). As in past auctions, additional
information regarding applicants in Auction No. 72 that is needed to
comply with Sec. 1.2105(c), e.g., the identities of controlling
interest in the applicant and ownership interests greater than ten
percent, will be available through the publicly accessible on-line
short-form application database.
iii. Eligibility and Activity Rules
110. In the Auction No. 72 Comment Public Notice, the Bureau
proposed that the amount of the upfront payment submitted by a bidder
would determine the initial (maximum) eligibility (as measured in
bidding units) for each bidder. The Bureau received no comments on this
issue.
111. The Commission will use upfront payments to determine initial
(maximum) eligibility (as measured in bidding units) for Auction No.
72. The amount of the upfront payment submitted by a bidder determines
initial bidding eligibility, the maximum number of bidding units on
which a bidder may be active. As noted earlier, each license is
assigned a specific number of bidding units listed in Attachment A of
the Auction No. 72 Procedures Public Notice. Bidding units for a given
license do not change as prices rise during the auction. A bidder's
upfront payment is not attributed to specific licenses. Rather, a
bidder may place bids on any of the licenses selected on its FCC Form
175 as long as the total number of bidding units associated with those
licenses does not exceed its current eligibility. Eligibility cannot be
increased during the auction; it can only remain the same or decrease.
Thus, in calculating its upfront payment amount, an applicant must
determine the maximum number of bidding units it may wish to bid on or
hold provisionally winning bids on in any single round, and submit an
upfront payment amount covering that total number of bidding units. The
total upfront payment does not affect the total dollar amount a bidder
may bid on any given license.
112. In order to ensure that an 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. Bidders are required to be active on a specific
percentage of their current bidding eligibility during each round of
the auction.
113. 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 provisionally winning bidder at the end of the previous bidding
round and does not withdraw the provisionally winning bid in the
current round, or if it submits a bid in the current round. The minimum
required activity is expressed as a percentage of the bidder's current
eligibility, and increases by stage as the auction progresses. Because
these procedures have proven successful in maintaining the pace of
previous auctions, the Commission adopts them for Auction No. 72.
Failure to maintain the requisite activity level will result in the use
of an activity rule waiver, if any remain, or a reduction in the
bidder's eligibility, possibly curtailing or eliminating the bidder's
ability to place bids in the auction.
iv. Auction Stages
114. In the Auction No. 72 Comment Public Notice, the Bureau
proposed to conduct the auction in two stages and employ an activity
rule. The Bureau further proposed that, in each round of Stage One, a
bidder desiring to maintain its current bidding eligibility would be
required to be active on licenses representing at least 80 percent of
its current bidding eligibility. Finally, the Bureau proposed that in
each round of Stage Two, a bidder desiring to maintain its current
bidding eligibility would be required to be active on at least 95
percent of its current bidding eligibility. The Bureau received no
comments on this proposal.
115. The Commission adopts the Bureau's proposals for the activity
rules and stages. The Bureau reserves the discretion to further alter
the activity percentages before and/or during the auction.
116. Stage One: During the first stage of the auction, a bidder
desiring to maintain its current bidding eligibility will be required
to be active on licenses representing at least 80 percent of its
current bidding eligibility in each bidding round. Failure to maintain
the required activity level will result in the use of an activity rule
waiver or, if the bidder has no activity rule waivers remaining, a
reduction in the bidder's bidding eligibility in the next round. During
Stage One, reduced eligibility for the next round will be calculated by
multiplying the bidder's current round activity (the sum of bidding
units of the bidder's provisionally winning bids and bids during the
current round) by five-fourths (\5/4\).
117. Stage Two: During the second stage of the auction, a bidder
desiring to maintain its current bidding eligibility is required to be
active on 95 percent of its current bidding eligibility. Failure to
maintain the required activity level will result in the use of an
activity rule waiver or, if the bidder has no activity rule waivers
remaining, a reduction in the bidder's bidding eligibility in the next
round. During Stage Two, reduced eligibility for the next round will be
calculated by multiplying the bidder's current round activity (the sum
of bidding units of the bidder's provisionally winning bids and bids
during the current round) by twenty-nineteenths (\20/19\).
[[Page 14567]]
118. CAUTION: Since activity requirements increase in Stage Two,
bidders must carefully check their activity during the first round
following a stage transition to ensure that they are meeting the
increased activity requirement. This is especially critical for bidders
that have provisionally winning 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 logging into the
FCC Auction System.
119. Because the foregoing procedures have proven successful in
maintaining the proper pace in previous auctions, the Bureau adopts
them for Auction No. 72.
v. Stage Transitions
120. In the Auction No. 72 Comment Public Notice, the Bureau
proposed that the auction would 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 provisionally
winning bids, is approximately 20 percent or lower for three
consecutive rounds of bidding. The Bureau further proposed that the
Bureau would retain the discretion to change stages unilaterally by
announcement during the auction. This determination, the Bureau
proposed, would 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 Bureau received no comments on this issue.
121. The Bureau adopts this proposal. Thus, the auction will start
in Stage One and will generally advance to Stage Two when, in each of
three consecutive rounds of bidding, the provisionally winning bids
have been placed on 20 percent or less of the licenses being auctioned
(as measured in bidding units). In addition, 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 Bureau believes that these stage transition rules,
having proven successful in prior auctions, are appropriate for use in
Auction No. 72.
vi. Activity Rule Waivers
122. In the Auction No. 72 Comment Public Notice, the Bureau
proposed that each bidder in the auction be provided with three
activity rule waivers. The Bureau received no comments on this issue.
Therefore, the Bureau adopts the proposal that each bidder be provided
three activity rule waivers. The Bureau is satisfied that providing
three waivers over the course of the auction will give bidders a
sufficient number of waivers and flexibility, while also safeguarding
the integrity of the auction.
123. Bidders may use an activity rule waiver 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 minimum activity level. An
activity rule waiver applies to an entire round of bidding and not to a
particular license. Activity rule waivers can be either applied
proactively by the bidder (a proactive waiver) or applied automatically
by the FCC Auction System (an automatic waiver) and are principally a
mechanism for auction participants to avoid the loss of bidding
eligibility in the event that exigent circumstances prevent them from
placing a bid in a particular round.
124. The FCC Auction System assumes that bidders with insufficient
activity would prefer to apply an activity rule waiver (if available)
rather than lose bidding eligibility. Therefore, the system will
automatically apply a waiver at the end of any bidding round where a
bidder's activity level is below the minimum required unless: (1) There
are no activity rule waivers available; or (2) the bidder overrides the
automatic application of a waiver by reducing eligibility. If a bidder
has no waivers remaining and does not satisfy the activity requirement,
the FCC Auction System will permanently reduce the bidder's
eligibility, possibly curtailing or eliminating the bidder's ability to
place additional bids in the auction.
125. 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
bidding round by using the reduce eligibility function in the FCC
Auction System. In this case, the bidder's eligibility is permanently
reduced to bring the bidder into compliance with the activity rules.
Once eligibility has been reduced, a bidder will not be permitted to
regain its lost bidding eligibility even if the round has not yet
closed.
126. Finally, a bidder may apply an activity rule waiver
proactively as a means to keep the auction open without placing a bid.
If a bidder proactively applies an activity waiver (using the apply
waiver function in the FCC Auction System) during a bidding round in
which no bids are placed or withdrawn, the auction will remain open and
the bidder's eligibility will be preserved. However, an automatic
waiver applied by the FCC Auction System in a round in which there are
no new bids, withdrawals, or proactive waivers will not keep the
auction open. A bidder cannot submit a proactive waiver after
submitting a bid in a round, and submitting a proactive waiver will
preclude a bidder from placing any bids in that round. Note: Applying a
waiver is irreversible; once a proactive waiver is submitted that
waiver cannot be unsubmitted, even if the round has not yet closed.
vii. Auction Stopping Rules
127. For Auction No. 72, the Bureau proposed to employ a
simultaneous stopping rule approach. A simultaneous stopping rule means
that all licenses remain available for bidding until bidding closes
simultaneously on all licenses. More specifically, bidding will close
simultaneously on all licenses after the first round in which no bidder
submits any new bids, applies a proactive waiver, or withdraws any
provisionally winning bids.
128. The Bureau also sought comment on a modified version of the
simultaneous stopping rule (modified stopping rule). The modified
stopping rule would close the auction for all licenses after the first
round in which no bidder applies a proactive waiver, withdraws a
provisionally winning bid, or places any new bids on any license on
which it is not the provisionally winning bidder. Thus, absent any
other bidding activity, a bidder placing a new bid on a license for
which it is the provisionally winning bidder would not keep the auction
open under this modified stopping rule.
129. The Bureau further proposed retaining the discretion to keep
the auction open even if no bidder places any new bids, applies a
proactive waiver, or withdraws any provisionally winning bids in a
round. In this event, the effect will be the same as if a bidder had
applied a waiver. Thus, the activity rule will apply as usual, and a
bidder with insufficient activity will either use an activity rule
waiver (if it has any left) or lose bidding eligibility.
[[Page 14568]]
130. In addition, the Bureau proposed that the Bureau reserve the
right to declare that the auction will end after a specified number of
additional rounds (special stopping rule). If the Bureau invokes this
special stopping rule, it will accept bids in the specified final
round(s) and the auction will close.
131. The Bureau proposed to exercise these options only in
circumstances such as where the auction is proceeding very slowly,
where there is minimal overall bidding activity or where it appears
likely that the auction will not close within a reasonable period of
time. The Bureau noted that before exercising these options, the Bureau
is likely to attempt to increase the pace of the auction by, for
example, increasing the number of bidding rounds per day, and/or
changing the minimum acceptable bids.
132. The Bureau believes that the proposed stopping rules are
appropriate for Auction No. 72 because our experience in prior auctions
demonstrates that these stopping rules balance interests of
administrative efficiency and maximum bidder participation. The Bureau
received no comments concerning the auction stopping rules. Therefore
the Bureau adopts the proposals made in the Auction No. 72 Comment
Public Notice. Auction No. 72 will begin under the simultaneous
stopping rule approach, and the Bureau will retain the discretion to
employ the other versions of the stopping rule. Moreover, the Bureau
will retain the discretion to use the modified stopping rule with or
without prior announcement during the auction.
viii. Auction Delay, Suspension, or Cancellation
133. In the Auction No. 72 Comment Public Notice, the Bureau
proposed that, 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, administrative or weather
necessity, evidence of an auction security breach or unlawful bidding
activity, or for any other reason that affects the fair and efficient
conduct of competitive bidding. The Bureau received no comment on this
issue.
134. Because the Bureau's approach to notification of delay during
an auction has proven effective in resolving exigent circumstances in
previous auctions, the Bureau adopts the Bureau's proposed rules
regarding auction delay, suspension, or cancellation. 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, administrative or weather necessity, evidence of an auction
security breach or unlawful bidding activity, or for any other reason
that affects the fair and efficient 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. The Bureau emphasizes 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
135. 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.
136. The Bureau 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, the amount of time between rounds, or the number of
rounds per day, depending upon bidding activity and other factors.
ii. Reserve Price and Minimum Opening Bids
137. Section 309(j) of the Communications Act of 1934, as amended,
calls upon the Commission to prescribe methods by which a reasonable
reserve price will be required or a minimum opening bid established
when applications for FCC licenses are subject to auction (i.e.,
because they are mutually exclusive), unless the Commission determines
that a reserve price or minimum opening bid is not in the public
interest. Consistent with this mandate, the Commission directed the
Bureau to seek comment on the use of a minimum opening bid and/or
reserve price prior to the start of each auction. Among other factors,
the Bureau must consider the amount of spectrum being auctioned, levels
of incumbency, the availability of technology to provide service, the
size of the geographic service areas, the extent of interference with
other spectrum bands, and any other relevant factors that could have an
impact on the spectrum being auctioned. The Commission concluded that
the Bureau should have the discretion to employ either or both of these
mechanisms for future auctions.
138. The Bureau proposed in the Auction No. 72 Comment Public
Notice to establish minimum opening bids for each license, while
retaining discretion to lower the minimum opening bids. Specifically,
for Auction No. 72, the Bureau proposed the following formulas for
calculating license-by-license minimum opening bids:
EA Licenses: $500 per license.
EAG License: $0.01 * 0.15 MHz * License Area Population.
139. The Bureau sought comment on this proposal and, in the
alternative, whether, consistent with the Section 309(j), the public
interest would be served by having no minimum opening bids. A commenter
filed comments in which it sought a reduction in the minimum opening
bids by 50 percent. The commenter argues that lowering minimum opening
bids will increase the likelihood that these licenses will be sold at
auction. The commenter notes that the auction will make available
spectrum that licensees will seek to aggregate in order to satisfy a
particular viable market opportunity. The commenter also contends that
the licenses being offered in Auction No. 72 have low market value, and
asserts that it does not know of market indications of higher values,
or developments in the near term that would cause higher values.
140. The Bureau continues to believe that the minimum opening bid
amounts proposed in the Auction No. 72 Comment Public Notice are
appropriate. The proposed minimum opening bid amounts better enable the
Commission to meet the statutory objective of recovering for the public
a portion of the value of the spectrum resource made available for
commercial use. Moreover, the Bureau observed in the Auction No. 72
Comment Public Notice that the proposed minimum opening bid of $500
will not impede any party willing and able to offer wireless service to
the public. The commenter offers little support for its contention that
the licenses being offered have low market value.
141. The Bureau believes that the minimum opening bids for this
auction are reasonable. Accordingly, the Bureau will adopt the proposed
minimum opening bid amounts and set the
[[Page 14569]]
minimum opening bids using the proposed formulas.
142. The Commission did not receive any comments addressing its
proposal that the Bureau retain the discretion to reduce minimum
opening bid amounts. The Bureau adopts this proposal. The minimum
opening bid amounts the Bureau adopts for Auction No. 72 are reducible
at the discretion of the Bureau. The Bureau emphasizes, however, that
such discretion will be exercised, if at all, sparingly and early in
the auction, i.e., before bidders lose all activity waivers. During the
course of the auction, the Bureau will not entertain requests to reduce
the minimum opening bid amount on specific licenses. The Bureau notes
that effectively the minimum opening bids operate as reserve prices.
143. The specific minimum opening bid amounts for each license
available in Auction No. 72 calculated pursuant to the procedure are
set forth in Attachment A of the Auction No. 72 Procedures Public
Notice.
iii. Bid Amounts
144. In the Auction No. 72 Comment Public Notice, the Bureau
proposed that in each round, eligible bidders be able to place a bid on
a given license in any of nine different amounts. Under the proposal,
the FCC Auction System interface will list the acceptable bid amounts
for each license. The Bureau received no comment on this issue. Based
on the Bureau's experience in prior auctions, the Bureau adopts its
proposals for Auction No. 72.
145. The first of the acceptable bid amounts is called the minimum
acceptable bid amount. The minimum acceptable bid amount for a license
will be equal to its minimum opening bid amount until there is a
provisionally winning bid for the license. After there is a
provisionally winning bid for a license, the minimum acceptable bid
amount for that license will be equal to the amount of the
provisionally winning bid plus a percentage of that bid amount
calculated using the formula. In general, the percentage will be higher
for a license receiving many bids than for a license receiving few
bids. In the case of a license for which the provisionally winning bid
has been withdrawn, the minimum acceptable bid amount will equal the
second highest bid received for the license.
146. The percentage of the provisionally winning bid used to
establish the minimum acceptable bid amount (the additional percentage)
is calculated at the end of each round, based on an activity index
which is a weighted average of the number of bids in that round and the
activity index from the prior round. Specifically, the activity index
is equal to a weighting factor times the number of bids on the license
in the most recent bidding round plus one minus the weighting factor
times the activity index from the prior round. The additional
percentage is determined as one plus the activity index times a minimum
percentage amount, with the result not to exceed a given maximum. The
additional percentage is then multiplied by the provisionally winning
bid amount to obtain the minimum acceptable bid for the next round. The
Commission will initially set the weighting factor at 0.5, the minimum
percentage at 0.1 (10%), and the maximum percentage at 0.2 (20%).
Hence, at these initial settings, the minimum acceptable bid for a
license will be between 10% and 20% higher than the provisionally
winning bid, depending upon the bidding activity for the license.
Equations and examples are shown in Attachment E of the Auction No. 72
Procedures Public Notice.
147. The additional bid amounts are calculated using the minimum
acceptable bid amount and a bid increment percentage. The first
additional acceptable bid amount equals the minimum acceptable bid
amount times one plus the bid increment percentage, rounded. If, for
example, the bid increment percentage is ten percent, the calculation
is (minimum acceptable bid amount) * (1 + 0.1), rounded, or (minimum
acceptable bid amount) * 1.1, rounded; the second additional acceptable
bid amount equals the minimum acceptable bid amount times one plus two
times the bid increment percentage, rounded, or (minimum acceptable bid
amount) * 1.2, rounded; the third additional acceptable bid amount
equals the minimum acceptable bid amount times one plus three times the
bid increment percentage, rounded, or (minimum acceptable bid amount) *
1.3, rounded; etc. The Bureau will round the results of these
calculations, as well as the calculations to determine the minimum
acceptable bid amounts, using our standard rounding procedures. For
Auction No. 72, the Bureau proposed to use a bid increment percentage
of ten percent to calculate the additional acceptable bid amounts. The
Bureau received no comment on this issue and will begin the auction
with a bid increment percentage of ten percent and eight additional bid
amounts.
148. The Bureau did not receive any comments on its proposal. The
Bureau retains the discretion to change the minimum acceptable bid
amounts, the minimum acceptable bid formula parameters, the bid
increment percentage, and the number of acceptable bid amounts if it
determines that circumstances so dictate. The Bureau will do so by
announcement in the FCC Auction System during the auction if
circumstances warrant.
iv. Provisionally Winning Bids
149. At the end of each bidding round, a provisionally winning bid
will be determined based on the highest bid amount received for each
license. A provisionally winning bid will remain the provisionally
winning bid until there is a higher bid on the same license at the
close of a subsequent round. Provisionally winning bids at the end of
the auction become the winning bids. Bidders are reminded that
provisionally winning bids count toward activity for purposes of the
activity rule.
150. In the Auction No. 72 Comment Public Notice, the Bureau
proposed to use a random number generator to select a single
provisionally winning bid in the event of identical high bid amounts
being submitted on a license in a given round (i.e., tied bids). No
comments were received on this proposal. Therefore, the Bureau adopts
its proposal. A pseudo-random number generator based on the L'Ecuyer
algorithms will be used to assign a random number to each bid. The tied
bid with the highest random number wins the tiebreaker, and becomes the
provisionally winning bid. The remaining eligible bidders, as well as
the provisionally winning bidder, can submit higher bids in subsequent
rounds. However, if the auction were to end with no other bids being
placed, the winning bidder would be the one that placed the selected
provisionally winning bid.
151. During a round, a bidder may submit bids for as many licenses
as it wishes (providing that it is eligible to bid), withdraw
provisionally winning bids from previous rounds, remove bids placed in
the current bidding round, or permanently reduce eligibility. Bidders
also have the option of submitting and removing multiple bids and
withdrawing multiple provisionally winning bids during a 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 current activity.
152. All bidding will take place remotely either through the FCC
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Auction System or by telephonic bidding. There will be no on-site
bidding during Auction No. 72. Note that 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. The
length of a call to place a telephonic bid may vary; please allow a
minimum of ten minutes.
153. A bidder's ability to bid on specific licenses is determined
by two factors: (1) The licenses selected on the bidder's FCC Form 175
and (2) the bidder's eligibility. The bid submission screens will allow
bidders to submit bids on only those licenses the bidder selected on
its FCC Form 175.
154. In order to access the bidding function of the FCC Auction
System, bidders must be logged in during the bidding round using the
passcode generated by the SecurID[reg] token and a personal
identification number (PIN) created by the bidder. Bidders are strongly
encouraged to print a round summary for each round after they have
completed all of their activity for that round.
155. 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 Auction System will list the nine acceptable bid amounts in a drop-
down box. Bidders use the drop-down box to select from among the
acceptable bid amounts. The FCC Auction System also includes an upload
function that allows bidders to upload text files containing bid
information.
156. Until a bid has been placed on a license, the minimum
acceptable bid amount for that license will be equal to its minimum
opening bid amount. Once there are bids on a license, minimum
acceptable bids for a license will be determined.
157. Finally, bidders are cautioned to select their bid amounts
carefully because, as explained below, bidders that withdraw a
provisionally winning bid from a previous round, even if the bid was
mistakenly or erroneously made, are subject to bid withdrawal payments.
v. Bid Removal and Bid Withdrawal
158. In the Auction No. 72 Comment Public Notice, the Commission
proposed bid removal and bid withdrawal procedures. With respect to bid
withdrawals, the Commission proposed limiting each bidder to
withdrawals in no more than two rounds during the course of the
auction. The round in which withdrawals are used would be at each
bidder's discretion. The Bureau received no comments on this issue. In
previous auctions, the Bureau has detected bidder conduct that,
arguably, may have constituted anti-competitive behavior through the
use of bid withdrawals. While the Bureau continues to recognize the
important role that bid withdrawals may play in an auction, i.e.,
reducing risk associated with efforts to secure various licenses in
combination, the Bureau concludes that, for Auction No. 72, adoption of
a limit on the use of withdrawals to two rounds per bidder is
appropriate. By doing so the Bureau strikes a reasonable compromise
that will allow bidders to use withdrawals. The Bureau based its
decision on its experience with bid withdrawals in prior auctions,
including PCS D, E and F block, 800 MHz SMR, and other auctions. The
Bureau will therefore limit the number of rounds in which bidders may
place withdrawals to two rounds, as previously proposed.
159. 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 bids function in the FCC Auction 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, and therefore the Bureau adopts them
for Auction No. 72.
160. Once a round closes, a bidder may no longer remove a bid.
However, in later rounds, a bidder may withdraw provisionally winning
bids from previous rounds using the withdraw bids function in the FCC
Auction System (assuming that the bidder has not already withdrawn bids
in two previous rounds). A provisionally winning bidder that withdraws
its provisionally winning bid from a previous round during the auction
is subject to the bid withdrawal payments specified in 47 CFR .2104(g).
Note: Once a withdrawal is submitted during a round, that withdrawal
cannot be unsubmitted even if the round has not yet ended.
161. The rounds in which a bidder may withdraw its bids 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 Sec. 1.2104(g). Bidders should note that evidence of
abuse of the Commission's bid withdrawal procedures could result in the
denial of the ability to bid on a market.
162. If a provisionally winning bid is withdrawn, the minimum
acceptable bid amount will equal the amount of the second highest bid
received for the license, which may be less than, or in the case of
tied bids, equal to, the amount of the withdrawn bid. To set the
additional bid amounts, the second highest bid amount also will be used
in place of the provisionally winning bid in the formula used to
calculate additional bid amounts. The Commission will serve as a place
holder provisionally winning bidder on the license until a new bid is
submitted on that license.
163. Calculation of Bid Withdrawal Payment. 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 provisionally winning 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 subsequent intervening withdrawn bid, 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). This policy allows bidders most efficiently to allocate
their resources as well as to evaluate their bidding strategies and
business plans during an auction while, at the same time, maintaining
the integrity of the auction process. The Bureau retains the discretion
to scrutinize multiple bid withdrawals on a single license for evidence
of anti-competitive strategic behavior and take appropriate action when
deemed necessary.
164. Section 1.2104(g)(1) of the rules sets forth the payment
obligations of a bidder that withdraws a high bid on a license during
the course of an auction, and provides for the assessment of interim
bid withdrawal payments. In the Auction No. 72 Comment Public Notice,
the Bureau proposed to establish the percentage at ten percent (10%)
for the
[[Page 14571]]
Phase II 220 MHz Service auction and sought comment on the proposal.
165. The Bureau received no comments on this issue and adopts its
proposal. The Commission will assess an interim withdrawal payment
equal to ten percent (10%) of the amount of the withdrawn bids. The ten
percent (10%) interim payment will be applied toward any final bid
withdrawal payment that will be assessed after subsequent auction of
the license. Assessing an interim bid withdrawal payment ensures that
the Commission receives a minimal withdrawal payment pending assessment
of any final withdrawal payment. Section 1.2104(g) provides specific
examples showing application of the bid withdrawal payment rule.
vi. Round Results
166. If limited information procedures described above are in
effect, limited information about the results of a round will be made
public after the conclusion of the round. Specifically, after a round
closes, the Bureau will make available for each license, its current
provisionally winning bid amount, the minimum acceptable bid amount for
the following round, the amounts of all bids placed on the license
during the round, and whether the license is FCC held. The reports will
be publicly accessible. Moreover, after the auction, the Bureau will
make available complete reports of all bids placed during each round of
the auction, including bidder identities.
167. If, however, limited information procedures are not used, more
information will be provided after each round in the auction. Bids
placed during a round, including bidder identities, will be made public
at the conclusion of that round. Specifically, after a round closes,
the Bureau will compile reports of all bids placed and which bidders
made them, current provisionally winning bids, new minimum acceptable
bid amounts, and bidder eligibility status (bidding eligibility and
activity rule waivers) and will post the reports for public access.
vii. Auction Announcements
168. The Commission will use auction announcements to announce
items such as schedule changes and stage transitions. All auction
announcements will be available by clicking a link in the FCC Auction
System.
V. Post-Auction Procedures
A. Down Payments
169. After bidding has ended, the Commission will issue a public
notice declaring the auction closed and identifying winning bidders,
down payments and final payments due.
170. 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. 72 to 20 percent of the net amount
of its winning bids (gross bids less any applicable small business or
very small business bidding credits).
B. Final Payments
171. Each winning bidder will be required to submit the balance of
the net amount of its winning bids within 10 business days after the
deadline for submitting down payments.
C. Long-Form Application (FCC Form 601)
172. 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) for each license won through
Auction No. 72. Winning bidders that are small businesses or very small
businesses must demonstrate their eligibility for a small business or
very small business bidding credit. Further filing instructions will be
provided to auction winners at the close of the auction.
173. The CSEA/Part 1 Report and Order modifies the procedure by
which a consortium that is a winning bidder in Auction No. 72 will
apply for a license. In particular, (a) each member or group of members
of a winning consortium seeking separate licenses will be required to
file a separate long-form application for its respective license(s)
and, in the case of a license to be partitioned or disaggregated, the
member or group filing the applicable long-form application shall
provide the parties' partitioning or disaggregation agreement in its
long-form application; (b) two or more consortium members seeking to be
licensed together shall first form a legal business entity; and (c) any
such entity must meet the applicable eligibility requirements in our
rules for small business status. Applicants applying as consortia
should review the CSEA/Part 1 Report and Order in detail and monitor
any relevant future proceedings to understand how the members of the
consortia will apply for a license in the event they are winning
bidders.
D. Ownership Disclosure Information Report (FCC Form 602)
174. 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 Sec. Sec. 1.913, 1.919, and 1.2112 of the
Commission's rules. Further instructions will be provided to winning
bidders at the close of the auction.
E. Tribal Lands Bidding Credit
175. 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
wireline penetration rate equal to or below 85 percent is eligible to
receive a tribal lands bidding credit as set forth in 47 CFR 1.2107 and
1.2110(f). A tribal land bidding credit is in addition to, and separate
from, any other bidding credit for which a winning bidder may qualify.
176. Unlike other bidding credits that are requested prior to the
auction, a winning bidder applies for the tribal lands bidding credit
after winning the auction when it files its long-form application (FCC
Form 601). When initially filing the long-form application, the winning
bidder will be required to advise the Commission whether it intends to
seek a tribal lands bidding credit, for each license won in the
auction, by checking the designated box(es). After stating its intent
to seek a tribal lands bidding credit, the applicant will have 180 days
from the close of the long-form filing window to amend its application
to select the specific tribal lands to be served and provide the
required tribal government certifications. Licensees receiving a tribal
lands bidding credit are subject to performance criteria as set forth
in Sec. 1.2110(f)(3)(vi).
177. For additional information on the tribal lands bidding credit,
including how the amount of the credit is calculated, applicants should
review the Commission's rule making proceeding regarding tribal lands
bidding credits and related public notices.
F. Default and Disqualification
178. Any winning 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 Sec.
1.2104(g)(2). The payments include both a deficiency payment, equal to
the difference between the amount of the bidder's bid and the amount of
the winning bid the next time a license covering the same spectrum is
won in an auction, plus an additional payment equal to a percentage of
the defaulter's bid or of the subsequent winning bid, whichever
[[Page 14572]]
is less. Pursuant to recent modifications to the rule governing default
payments, the percentage of the applicable bid to be assessed as an
additional payment for defaults in a particular auction is established
in advance of the auction. Accordingly, in the Auction No. 72 Comment
Public Notice, the Bureau proposed to set the additional default
payment for the auction of Phase II 220 MHz Service licenses at ten
percent of the applicable bid. The Bureau sought comment on its
proposal and no comments were received on this issue. The Bureau
therefore adopts its proposal and sets the additional default payment
for the auction of Phase II 220 MHz spectrum licenses at ten percent of
the applicable bid.
179. Finally, the Bureau notes that in the event of a default, the
Commission may re-auction the license or offer it to the next highest
bidder (in descending order) at its final bid amount. 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
180. All applicants that submit upfront payments but after the
close of the auction are not winning bidders for a license in Auction
No. 72 may be entitled to a refund of their remaining upfront payment
balance after the conclusion of the auction. 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.
181. Bidders that drop out of the auction completely may be
eligible for a refund of their upfront payments before the close of the
auction.
182. Following the close of the auction, the Commission may refund
upfront monies on deposit that exceed the required total payments owned
by the winning bidders. Such refunds will be made to the payer of
record as identified on the FCC Form 159, provided the necessary refund
request and wire transfer instructions have been received.
Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E7-5639 Filed 3-27-07; 8:45 am]
BILLING CODE 6712-01-P