[Federal Register: December 4, 2002 (Volume 67, Number 233)]
[Notices]
[Page 72174-72185]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
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FEDERAL COMMUNICATIONS COMMISSION
[Report No. AUC-02-46-C (Auction No. 46); DA 02-1871]
Auction of License in the 1670-1675 MHz Band Auction Scheduled
for April 30, 2003; Notice and Filing Requirements, Minimum Opening
Bids, Upfront Payments and Other Auction Procedures
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This document announces the procedures and minimum opening
bids for the upcoming auction of licenses in the 1670-1675 MHz band
scheduled for April 30, 2003 (Auction No. 46). This document is
intended to familiarize prospective bidders with the procedures and
minimum opening bids for this auction.
DATES: Auction No. 46 is scheduled to begin on April 30, 2003.
FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis
Division: Francis Gutierrez, Legal Branch, or Lyle Ishida, Auctions
Operations Branch, at (202) 418-0660; Lisa Stover, Auctions Operations
Branch, at (717) 338-2888, Media Contact: Lauren Kravetz at (202) 418-
7944, Public Safety & Private Wireless Division: Keith Fickner or Brian
Marenco, Policy and Rules Branch, at (202) 418-0680.
SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 46
Procedures Public Notice released on August 5, 2002. The complete text
of the Auction No. 46 Procedures Public Notice, including attachments,
is available for public inspection and copying during regular business
hours at the FCC Reference Information Center, Portals II, 445 12th
Street, SW., Room CY-B402, Washington, DC 20554. The Auction No. 46
Procedures Public Notice may also be purchased from the Commission's
duplicating contractor, Qualex International, Portals II, 445 12th
Street, SW., Room CY-B402, Washington, DC 20554, telephone (202) 863-
2893, facsimile (202) 863-2898, or via e-mail qualexint@aol.com.
I. General Information
A. Introduction
1. By the Auction No. 46 Procedures Public Notice, the Wireless
Telecommunications Bureau (``Bureau'') announces the procedures and
minimum opening bids for the upcoming auction of one nationwide license
in the 1670-1675 MHz band scheduled for April 30, 2003 (Auction No.
46).
2. In accordance with the Balanced Budget Act of 1997, the Bureau
released a public notice on May 24, 2002 seeking comment on reserve
prices or minimum opening bids and the procedures to be used in Auction
No. 46. The Bureau received two comments and one reply comment in
response to the Auction No. 46 Comment Public Notice, 67 FR 43118 (June
26, 2002). The Bureau subsequently released a second public notice on
July 15, 2002, revising the license inventory, auction start date, and
seeking comment on revisions to proposed auction procedures. The Bureau
received one comment in response to the Auction No. 46 Further Comment
Public Notice, 67 FR 49022 (July 29, 2002).
3. On August 5, 2002, the Bureau released the Auction No. 46
Procedures Public Notice that announced the procedures and minimum
opening bids for the auction of one nationwide license in the 1670-1675
MHz band, scheduled to begin on October 30, 2002.
4. On September 13, 2002, the Bureau released a public notice
seeking comment on a request for postponement of Auction No. 46 filed
by ArrayComm, Inc. Auction No. 46 Public Notice Seeking Comment on
Postponement, 67 FR 61104 (September 27, 2002).
5. On September 25, 2002, the Bureau released a public notice,
which announced that based on the record of comments it received,
Auction No. 46 is postponed until April 23, 2003. Auction No. 46
Postponement Public Notice, 67 FR 63095 (October 10, 2002).
i. Background of Proceeding
6. On May 24, 2002, the Commission released the Service Rules
Report & Order, which adopted service rules to govern the licensing of
27 MHz of electromagnetic spectrum reallocated for non-Government use,
including the 1670-1675 MHz band. In the Service Rules Report & Order,
67 FR 41847, (June 20, 2002), the Commission, among other things,
established competitive bidding procedures for the 1670-1675 MHz band;
decided to assign, on a nationwide basis, one license for a 5-megahertz
block of contiguous unpaired spectrum in the 1670-1675 MHz band; and
determined that all operations in the 1670-1675 MHz band will be
generally regulated under the framework of the Commission's Part 27
technical, licensing, and operating rules. The Commission also
explained that a non-government licensee in the 1670-1675 MHz band must
comply with the provisions of Sec. 1.924(g) of the Commission's rules
to minimize harmful interference to Geostationary Operations
Environmental Satellite (GOES) earth stations receiving in the band
1670-1675 MHz. The GOES earth stations are located at Wallops Island,
Virginia; Fairbanks, Alaska; and Greenbelt, Maryland.
ii. Licenses To Be Auctioned
7. One nationwide license consisting of a 5-megahertz block of
contiguous unpaired spectrum in the 1670-1675 MHz band will be
available in Auction No. 46.
B. Rules and Disclaimers
i. Relevant Authority
8. Prospective bidders must familiarize themselves thoroughly with
the Commission's rules relating to the 1670-1675 MHz band contained in
title 47, part 27 of the Code of Federal Regulations, and those
relating to application and auction procedures, contained in title 47,
part 1 of the Code of Federal Regulations. Prospective bidders must
also be thoroughly familiar with the procedures, terms and conditions
(collectively, ``Terms'') contained in the Auction No. 46 Procedures
Public Notice, Auction No. 46 Comment Public Notice, Auction No. 46
Further Comment Public Notice, Auction No. 46 Public Notice Seeking
Comment on Postponement, Auction No. 46 Postponement Public Notice, and
the Part 1 Fifth Report and Order 65 FR 52401 (August 29, 2000) (as
well as prior and subsequent Commission proceedings regarding
competitive bidding procedures).
9. Auction participants bidding on the license in the 1670-1675 MHz
spectrum band should also be familiar with the Service Rules Report and
Order.
10. 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 bidders. It is the responsibility of all prospective
bidders to remain current with all Commission rules and with all public
notices pertaining to this auction. Copies of most Commission
documents, including public notices, can be retrieved from the FCC
Auctions Internet site at http://wireless.fcc.gov/auctions.
Additionally, documents are available for public inspection and copying
during regular business hours at the FCC Reference Information Center,
Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554 or
may be purchased from the
[[Page 72175]]
Commission's duplicating contractor, Qualex International, Portals II,
445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone
202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.
When ordering documents from Qualex, please provide the appropriate FCC
number (for example, FCC 02-152 for the Service Rules Report and
Order).
ii. Prohibition of Collusion
11. To ensure the competitiveness of the auction process, the
Commission's rules prohibit applicants for the same geographic license
area from communicating with each other during the auction about bids,
bidding strategies, or settlements. This prohibition begins at the
short-form application filing deadline and ends at the down payment
deadline after the auction. Because bidders in Auction No. 46 will be
competing for the same license, they are encouraged not to use the same
individual as an authorized bidder. A violation of the anti-collusion
rule could occur if an individual acts as the authorized bidder for two
or more competing applicants, and conveys information concerning the
substance of bids or bidding strategies between the bidders he or she
is authorized to represent in the auction. A violation could similarly
occur if the authorized bidders are different individuals employed by
the same organization (e.g., law firm or consulting firm). In such a
case, at a minimum, applicants should certify on their applications
that precautionary steps have been taken to prevent communication
between authorized bidders and that applicants and their bidding agents
will comply with the anti-collusion rule.
12. 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. Applicants may enter
into bidding agreements before filing their FCC Form 175, as long as
they disclose the existence of the agreement(s) in their Form 175. If
parties agree in principle on all material terms prior to the short-
form filing deadline, those parties must be identified on the short-
form application pursuant to Sec. 1.2105(c), even if the agreement has
not been reduced to writing. If the parties have not agreed in
principle by the filing deadline, an applicant would not include the
names of those parties on its application, and may not continue
negotiations with other applicants. By signing their FCC Form 175
short-form applications, applicants are certifying their compliance
with Sec. 1.2105(c).
13. In addition, Sec. 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. Sec. 1.65 and 1.2105
require an auction applicant to notify the Commission of any violation
of the anti-collusion rules upon learning of such violation. Bidders
therefore are required to make such notification to the Commission
immediately upon discovery.
14. A summary listing of documents from the Commission and the
Bureau addressing the application of the anti-collusion rules may be
found in Attachment G of the Auction No. 46 Procedures Public Notice.
iii. Due Diligence
15. Potential bidders are reminded that the 1670-1675 MHz band is
being allocated for mixed use. The Commission made clear that a
geographic area licensee operating in the reallocated band must protect
Federal Government operations, either indefinitely or for a given
period of time. These requirements may affect the ability of the
geographic licensee to use certain portions of the electromagnetic
spectrum or provide service to certain regions in their geographic
license area.
16. Potential bidders 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. 46.
17. Accordingly, the 1670-1675 MHz licensee must protect
indefinitely the Command and Data Acquisitions stations used to
communicate with the GOES earth stations that are located at Wallops
Island, Virginia; Fairbanks, Alaska; and Greenbelt, Maryland. The 1670-
1675 MHz licensee must also comply with the Quiet Zone requirements of
Sec. 1.924 of the Commission's Rules.
18. Before planning to construct and operate a new or modified
station within 100 kilometers of the Wallops Island, Virginia and
Fairbanks, Alaska stations or within 65 kilometers of the Greenbelt,
Maryland station, the 1670-1675 MHz licensee must notify the National
Oceanic and Atmospheric Administration (NOAA) of the proposed
operation. NOAA's GOES coordination web page, at http://www.osd.noaa.gov/radio/frequency/htm
, provides the technical parameters
of the earth stations and the point-of-contact notification
information. Additionally, the licensee must file an application with
the Commission requesting authority to operate the new or modified
station. This application should be filed through the Commission's
Universal Licensing System. The application should state the date that
notification to NOAA was made. After the Commission receives an
application, NOAA has 20 days to comment or object to the proposed new
or modified station. If NOAA objects during the 20-day period, the
Commission will take whatever action is deemed appropriate. In the
absence of an objection by NOAA, the Commission will grant the
application if it is otherwise acceptable.
19. Potential bidders for ``near the border'' licenses must protect
stations in Canada and Mexico from harmful interference. This will
permit licensees to maximize their operations depending on the spectrum
use, terrain, and other factors at the border areas, while still
protecting operations across the border. However, operations in the
1670-1675 MHz band may be subject to future agreements with Canada and
Mexico and therefore may be subject to further modification.
20. The Commission makes no representations or guarantees regarding
the accuracy or completeness of the information concerning Federal
Government incumbents that appears in the Auction No. 46 Procedures
Public Notice or third party documents. Potential bidders who have
questions regarding Federal Government use of the 1670-1675 MHz band
may contact Gerald F. Hurt, Chief, Spectrum Engineering and Analysis
Division, National Telecommunications and Information Administration,
Room 6725, 1401 Constitution Ave., NW., Washington, DC, 20230, at (202)
482-4107, via fax at (202) 482-4595, or at ghurt@ntia.doc.gov.
21. Potential bidders also should be aware that certain
applications, petitions for rulemaking, requests for special temporary
authority (``STA''), waiver requests, petitions for reconsideration,
and applications for review may be pending before the Commission and
relate to particular applicants or incumbent Federal entities. In
addition, certain judicial proceedings that may relate to particular
applicants or the license available in Auction No. 46 may be commenced,
or may be pending, or may be the subject to further review. Resolution
of these matters could have an impact on the availability of spectrum
in Auction No. 46. Some of these matters (whether
[[Page 72176]]
before the Commission or the courts) may not be resolved by the time of
the auction.
iv. Bidder Alerts
22. All applicants must certify on their FCC Form 175 applications
under penalty of perjury that they are legally, technically,
financially and otherwise qualified to hold a license, and not in
default on any payment for Commission licenses (including down
payments) or delinquent on any non-tax debt owed to any Federal agency.
Prospective bidders 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.
23. The FCC makes no representations or warranties about the use of
this spectrum for particular services. Applicants should be aware that
an FCC auction represents an opportunity to become an FCC licensee in
this service, subject to certain conditions and regulations. An FCC
auction does not constitute an endorsement by the FCC of any particular
services, technologies or products, nor does an FCC license constitute
a guarantee of business success. Applicants and interested parties
should perform their own due diligence before proceeding, as they would
with any new business venture.
24. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use Auction No. 46 to
deceive and defraud unsuspecting investors. Common warning signals of
fraud include the following:
[sbull] The first contact is a ``cold call'' from a telemarketer,
or is made in response to an inquiry prompted by a radio or television
infomercial.
[sbull] The offering materials used to invest in the venture appear
to be targeted at IRA funds, for example, by including all documents
and papers needed for the transfer of funds maintained in IRA accounts.
[sbull] The amount of investment is less than $25,000.
[sbull] The sales representative makes verbal representations that:
(a) the Internal Revenue Service (``IRS''), Federal Trade Commission
(``FTC''), Securities and Exchange Commission (``SEC''), FCC, or other
government agency has approved the investment; (b) the investment is
not subject to state or federal securities laws; or (c) the investment
will yield unrealistically high short-term profits. In addition, the
offering materials often include copies of actual FCC releases, or
quotes from FCC personnel, giving the appearance of FCC knowledge or
approval of the solicitation.
25. Information about deceptive telemarketing investment schemes is
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment
schemes should be directed to the FTC, the SEC, or the National Fraud
Information Center at (800) 876-7060. Consumers who have concerns about
specific proposals regarding Auction No. 46 may also call the FCC
Consumer Center at (888) CALL-FCC ((888) 225-5322).
v. National Environmental Policy Act (``NEPA'') Requirements
26. The licensee must comply with the Commission's rules regarding
the National Environmental Policy Act (``NEPA''). The construction of a
wireless antenna facility is a federal action and the licensee must
comply with the Commission's NEPA rules for each such facility. The
Commission's NEPA rules require, among other things, that the licensee
consult with expert agencies having NEPA responsibilities, including
the U.S. Fish and Wildlife Service, the State Historic Preservation
Office, the Army Corp of Engineers and the Federal Emergency Management
Agency (through the local authority with jurisdiction over
floodplains). 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
must also 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
27. The auction will begin on Wednesday, April 30, 2003. The
initial schedule for bidding will be announced by public notice at
least one week before the start of the auction. Unless otherwise
announced, bidding will be conducted on each business day until bidding
has stopped on the license.
ii. Auction Title
28. Auction No. 46--1670-1675 MHz Band
iii. Bidding Methodology
29. The bidding methodology for Auction No. 46 will be multiple
round, ascending auction. An ascending multiple round auction is the
same as a simultaneous multiple round auction, but with only one
license available for bid. The Commission will conduct this auction
over the Internet. Telephonic bidding will also be available. As a
contingency, the FCC Wide Area Network, which requires access to a 900
number telephone service, will be available as well. Qualified bidders
are permitted to bid telephonically or electronically.
iv. Pre-Auction Dates and Deadlines
30. Listed are important dates associated with Auction No. 46:
Auction Seminar: September 18, 2002
Short-Form Application (FCC Form 175) Filing Window Opens: March 18,
2003
Short-Form Application (FCC Form 175) Deadline: March 25, 2003; 6 p.m.
ET
Upfront Payments Deadline: April 11, 2003; 6 p.m. ET
Mock Auction: April 25, 2003
Auction Begins: April 30, 2003
v. Requirements for Participation
31. Those wishing to participate in the auction must:
[sbull] Submit a short-form application (FCC Form 175)
electronically by 6 p.m. ET, March 25, 2003.
[sbull] Submit a sufficient upfront payment and an FCC Remittance
Advice Form (FCC Form 159) by 6 p.m. ET, April 11, 2003.
[sbull] Comply with all provisions outlined in this public notice.
vi. General Contact Information
32. The following is a list of general contact information relating
to Auction No. 46.
General Auction Information
(General Auction Questions, Seminar Registration): FCC Auctions
Hotline, (888) 225-5322, Press Option 2 or direct (717) 338-
2888. Hours of service: 8 a.m.-5:30 p.m. ET.
Auction Legal Information
(Auction Rules, Policies, Regulations): Auctions and Industry
Analysis Division, Legal Branch (202) 418-0660.
Licensing Information
(Rules, Policies, Regulations, Licensing Issues, Due Diligence,
Incumbency Issues): Public Safety & Private Wireless Division, (202)
418-0680.
Technical Support
Electronic Filing, Automated Auction System): FCC Auctions
Technical Support Hotline, (202) 414-1250 (Voice), (202) 414-1255
(TTY). Hours of service: Monday through Friday 8 a.m. to 6 p.m. ET.
Payment Information
[[Page 72177]]
(Wire Transfers, Refunds): FCC Auctions Accounting Branch, (202)
418-1995, (202) 418-2843 (Fax).
Telephonic Bidding: Will be furnished only to qualified bidders.
FCC Copy Contractor: Qualex International.
Additional Copies of Commission Documents: Portals II, 445 12th
Street, SW., Room CY-B402, Washington, DC 20554, (202) 863-2893, (202)
863-2898 (Fax) and qualexint@aol.com (E-mail).
Press information: Meribeth McCarrick (202) 418-0654,
FCC Forms: (800) 418-3676 (outside Washington, DC), (202) 418-3676
(in the Washington Area) and http://www.fcc.gov/formpage.html.
FCC Internet Sites: http://www.fcc.gov, http://wireless.fcc.gov/auctions
and http://wireless.fcc.gov/uls.
auctions and http://wireless.fcc.gov/uls.
II. Short-Form (FCC Form 175) Application Requirements
33. Guidelines for completion of the short-form (FCC Form 175) are
set forth in Attachment D of the Auction No. 46 Procedures Public
Notice. The short-form application seeks the applicant's name and
address, legal classification, status, small or very small business
bidding credit eligibility, identification of the license sought, the
authorized bidders and contact persons. All applicants must certify on
their FCC Form 175 applications under penalty of perjury that they are
legally, technically, financially and otherwise qualified to hold a
license and, as discussed in section II.D (Provisions Regarding
Defaulters and Former Defaulters) of the Auction No. 46 Procedures
Public Notice, that they are not in default on any payment for
Commission licenses (including down payments) or delinquent on any non-
tax debt owed to any Federal agency.
A. Ownership Disclosure Requirements (FCC Form 175 Exhibit A)
34. All applicants must comply with the uniform part 1 ownership
disclosure standards and provide information required by Sec. Sec.
1.2105 and 1.2112 of the Commission's rules. Specifically, in
completing FCC Form 175, applicants will be required to file an
``Exhibit A'' providing a full and complete statement of the ownership
of the bidding entity. The ownership disclosure standards for the
short-form are set forth in Sec. 1.2112 of the Commission's rules.
B. Consortia and Joint Bidding Arrangements (FCC Form 175 Exhibit B)
35. Applicants will be required to identify on their short-form
applications any parties with whom they have entered into any
consortium arrangements, joint ventures, partnerships or other
agreements or understandings which relate in any way to the license
being auctioned, including any agreements relating to post-auction
market structure. Applicants will also be required to certify on their
short-form applications that they have not entered into any explicit or
implicit agreements, arrangements or understandings of any kind with
any parties, other than those identified, regarding the amount of their
bids, or bidding strategies. If an applicant has had discussions, but
has not reached a joint bidding agreement by the short-form deadline,
it would not include the names of parties to the discussions on its
applications and may not continue discussions with applicants after the
deadline. Where applicants have entered into consortia or joint bidding
arrangements, applicants must submit an ``Exhibit B'' to the FCC Form
175.
36. A party holding a non-controlling, attributable interest in one
applicant will be permitted to acquire an ownership interest in, form a
consortium with, or enter into a joint bidding arrangement with other
applicants provided that (i) the attributable interest holder certifies
that it has not and will not communicate with any party concerning the
bids or bidding strategies of more than one of the applicants in which
it holds an attributable interest, or with which it has formed a
consortium or entered into a joint bidding arrangement; and (ii) the
arrangements do not result in a change in control of any of the
applicants. While the anti-collusion rules do not prohibit non-auction
related business negotiations among auction applicants, bidders are
reminded that certain discussions or exchanges could touch upon
impermissible subject matters because they may convey pricing
information and bidding strategies.
C. Eligibility
i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)
37. Bidding credits will be available to small and very small
businesses, or consortia, thereof, as defined in 47 CFR 27.906, for the
1670-1675 MHz band. A bidding credit represents the amount by which the
bidder's winning bid is discounted. The size of the bidding credit
depends on the average of the aggregated annual gross revenues for each
of the preceding three years of the bidder, its affiliates, its
controlling interests, and the affiliates of its controlling interests:
[sbull] A bidder with attributed average annual gross revenues of
not more than $15 million for the preceding three years (``very small
business'') receives a 25 percent discount on its winning bid;
[sbull] A bidder with attributed average annual gross revenues of
not more than $40 million for the preceding three years (``small
business'') receives a 15 percent discount on its winning bid;
Bidding credits are not cumulative; a qualifying applicant receives
either the 15 percent or 25 percent bidding credit on its winning bid,
but not both.
ii. Tribal Land Bidding Credit
38. To encourage the growth of wireless services in federally
recognized tribal lands the Commission has implemented a tribal land
bidding credit. See part V.D. of the Auction No. 46 Procedures Public
Notice.
iii. Applicability of Part 1 Attribution Rules
39. Controlling interest standard. On August 14, 2000, the
Commission released the Part 1 Fifth Report and Order, in which the
Commission, inter alia, adopted a ``controlling interest'' standard for
attributing to auction applicants the gross revenues of their investors
and affiliates in determining small business eligibility for future
auctions. The Commission observed that the rule modifications adopted
in the various Part 1 orders would result in discrepancies and/or
redundancies between certain of the new Part 1 rules and existing
service-specific rules, and the Commission delegated to the Bureau the
authority to make conforming edits to the Code of Federal Regulations
(CFR) consistent with the rules adopted in the Part 1 proceeding. Part
1 rules that supersede inconsistent service-specific rules will control
in Auction No. 46. Accordingly, the ``controlling interest'' standard
as set forth in the Part 1 rules will be in effect for Auction No. 46.
40. Control. The term ``control'' includes both de facto and de
jure control of the applicant. Typically, ownership of at least 50.1
percent of an entity's voting stock 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:
[sbull] The entity constitutes or appoints more than 50 percent of
the board of directors or management committee;
[sbull] The entity has authority to appoint, promote, demote, and
fire senior executives that control the day-to-day activities of the
licensee; or
[sbull] The entity plays an integral role in management decisions.
[[Page 72178]]
Attribution for small and very small business eligibility. In
determining which entities qualify as small or very small businesses,
the Commission will consider the gross revenues of the applicant, its
affiliates, its controlling interests, and the affiliates of its
controlling interests. The Commission does not impose specific equity
requirements on controlling interest holders. Once the principals or
entities with a controlling interest are determined, only the revenues
of those principals or entities, the affiliates of those principals or
entities, the applicant and its affiliates, will be counted in
determining small business eligibility.
41. A consortium of small or very small businesses is a
``conglomerate organization formed as a joint venture between or among
mutually independent business firms,'' each of which individually must
satisfy the definition of small and very small business in Sec. Sec.
1.2110(f), 27.906 of the Commission's rules. Thus, 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 eligibility
for small or very small business credits, this information must be
provided to ensure that each individual consortium member qualifies for
any bidding credit awarded to the consortium.
iv. Supporting Documentation
42. Applicants should note that they will be required to file
supporting documentation to their FCC Form 175 short-form applications
to establish that they satisfy the eligibility requirements to qualify
as small or very small businesses (or consortia of small or very small
businesses) for this auction.
43. Applicants should further note that submission of an FCC Form
175 application constitutes a representation by the certifying official
that he or she is an authorized representative of the applicant, has
read the form's instructions and certifications, and that the contents
of the application and its attachments are true and correct. Submission
of a false certification to the Commission may result in penalties,
including monetary forfeitures, license forfeitures, ineligibility to
participate in future auctions, and/or criminal prosecution.
44. Small or very small business eligibility (Exhibit C). Entities
applying to bid as small or very small businesses (or consortia of
small or very small businesses) will be required to disclose on Exhibit
C to their FCC Form 175 short-form applications, separately and in the
aggregate, the gross revenues for the preceding three years of each of
the following: (i) The applicant, (ii) its affiliates, (iii) its
controlling interests, and (iv) the affiliates of its controlling
interests. Certification that the average annual gross revenues for the
preceding three years do not exceed the applicable limit is not
sufficient. A statement of the total gross revenues for the preceding
three years is also insufficient. The applicant must provide separately
for itself, its affiliates, its controlling interests, and the
affiliates of its controlling interests, a schedule of gross revenues
for each of the preceding three years, as well as a statement of total
average gross revenues for the three-year period. If the applicant is
applying as a consortium of small or very small businesses, this
information must be provided for each consortium member.
D. Provisions Regarding Defaulters and Former Defaulters (FCC Form 175
Exhibit D)
45. Each applicant must certify on its FCC Form 175 application
that it is not in default on any Commission licenses and that it is not
delinquent on any non-tax debt owed to any Federal agency. In addition,
each applicant must attach to its FCC Form 175 application a statement
made under penalty of perjury indicating whether or not the applicant,
its affiliates, its controlling interests, or the affiliates of its
controlling interest have ever been in default on any Commission
licenses or have ever been delinquent on any non-tax debt owed to any
Federal agency. The applicant must provide such information for itself,
for each of its controlling interests and affiliates, and for each
affiliate of its controlling interests, as defined by Sec. 1.2110 of
the Commission's rules. Applicants must include this statement as
Exhibit D of the FCC Form 175. Prospective bidders are reminded that
the statement must be made under penalty of perjury and, further,
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.
46. ``Former defaulters''--i.e., applicants, including their
attributable interest holders, that in the past have defaulted on any
Commission licenses or been delinquent on any non-tax debt owed to any
Federal agency, but that have since remedied all such defaults and
cured all of their outstanding non-tax delinquencies--are eligible to
bid in Auction No. 46, provided that they are otherwise qualified.
However, as discussed in section III.D.iii, former defaulters are
required to pay upfront payments that are fifty percent more than the
normal upfront payment amounts.
E. Installment Payments
47. Installment payment plans will not be available in Auction No.
46.
F. Other Information (FCC Form 175 Exhibits E and F)
48. Applicants owned by minorities or women, as defined in 47 CFR
1.2110(c)(2), may attach an exhibit (Exhibit E) regarding this status.
This applicant status information is collected for statistical purposes
only and assists the Commission in monitoring the participation of
``designated entities'' in its auctions. Applicants wishing to submit
additional information may do so on Exhibit F (Miscellaneous
Information) to the FCC Form 175.
G. Minor Modifications to Short-Form Applications (FCC Form 175)
49. After the short-form filing deadline (March 25, 2003),
applicants may make only minor changes to their FCC Form 175
applications. Applicants will not be permitted to make major
modifications to their applications (e.g., change the certifying
official, change control of the applicant, or change bidding credits).
See 47 CFR 1.2105. Permissible minor changes include, for example,
deletion and addition of authorized bidders (to a maximum of three) and
revision of exhibits. Applicants should make these modifications to
their FCC Form 175 electronically and submit a letter, briefly
summarizing the changes, by electronic mail to the attention of
Margaret Wiener, Chief, Auctions and Industry Analysis Division, at the
following address: auction46@fcc.gov. The electronic mail summarizing
the changes must include a subject or caption referring to Auction No.
46. The Bureau requests that parties format any attachments to
electronic mail as Adobe[reg] Acrobat[reg] (pdf) or Microsoft[reg] Word
documents.
50. A separate copy of the letter should be faxed to the attention
of Kathryn Garland at (717) 338-2850. Questions about other changes
should be directed to Francis Gutierrez of the Auctions and Industry
Analysis Division at (202) 418-0660.
[[Page 72179]]
H. Maintaining Current Information in Short-Form Applications (FCC Form
175)
51. Applicants have an obligation under 47 CFR 1.65 to maintain the
completeness and accuracy of information in their short-form
applications. Amendments reporting substantial changes of possible
decisional significance in information contained in FCC Form 175
applications, as defined by 47 CFR 1.2105(b)(2), will not be accepted
and may in some instances result in the dismissal of the FCC Form 175
application.
II. Pre-Auction Procedures
A. Auction Seminar
52. On Wednesday, September 18, 2002, the FCC sponsored a free
seminar for Auction No. 46 at the Federal Communications Commission,
located at 445 12th Street, SW., Washington, DC. The seminar provided
attendees with information about pre-auction procedures, conduct of the
auction, the FCC Automated Auction System, and the 1670-1675 MHz band
and auction rules. The seminar also provided an opportunity for
prospective bidders to ask questions of FCC staff.
B. Short-Form Application (FCC Form 175)--Due March 25, 2003
53. In order to be eligible to bid in this auction, applicants must
first submit an FCC Form 175 application. This application must be
submitted electronically and received at the Commission no later than 6
p.m. ET on March 25, 2003. Late applications will not be accepted.
54. There is no application fee required when filing an FCC Form
175. However, to be eligible to bid, an applicant must submit an
upfront payment. See Part III.D of the Auction No. 46 Procedures Public
Notice.
i. Electronic Filing
55. Applicants must file their FCC Form 175 applications
electronically. Applications may generally be filed at any time
beginning at noon ET on March 18, 2003, until 6 p.m. ET on March 25,
2003. Applicants are strongly encouraged to file early and are
responsible for allowing adequate time for filing their applications.
Applicants may update or amend their electronic applications multiple
times until the filing deadline on March 25, 2003.
56. Applicants must press the ``SUBMIT Application'' button on the
``Submission'' page of the electronic form to successfully submit their
FCC Form 175s. Any form that is not submitted will not be reviewed by
the FCC. Information about accessing the FCC Form 175 is included in
Attachment C of the Auction No. 46 Procedures Public Notice. Technical
support is available at (202) 414-1250 (voice) or (202) 414-1255 (text
telephone (TTY)); the hours of service Monday through Friday, from 8:00
AM to 6:00 PM ET. In order to provide better service to the public, all
calls to the hotline are recorded.
57. Applicants can also contact Technical Support via e-mail. To
obtain the address, click the Support tab on the Form 175 Homepage.
ii. Completion of the FCC Form 175
58. Applicants should carefully review 47 CFR 1.2105, and must
complete all items on the FCC Form 175. Instructions for completing the
FCC Form 175 are in Attachment D of the Auction No. 46 Procedures
Public Notice. Applicants are encouraged to begin preparing the
required attachments for FCC Form 175 prior to submitting the form.
Attachments C and D of the Auction No. 46 Procedures Public Notice
provide information on the required attachments and appropriate
formats.
iii. Electronic Review of FCC Form 175
59. The FCC Form 175 electronic review system may be used to locate
and print applicants' FCC Form 175 information. Applicants may also
view other applicants' completed FCC Form 175s after the filing
deadline has passed and the FCC has issued a public notice explaining
the status of the applications.
Note: Applicants should not include sensitive information (i.e.,
TIN/EIN) on any exhibits to their FCC Form 175 applications. There
is no fee for accessing this system. See Attachment C of the Auction
No. 46 Procedures Public Notice for details on accessing the review
system.
C. Application Processing and Minor Corrections
60. After the deadline for filing the FCC Form 175 applications has
passed, the FCC will process all timely submitted applications to
determine which are acceptable for filing, and subsequently will issue
a public notice identifying: (i) Those applications accepted for
filing; (ii) those applications rejected; and (iii) those applications
which have minor defects that may be corrected, and the deadline for
filing such corrected applications.
61. As described more fully in the Commission's rules, after the
March 25, 2003, 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 the certifying official, change control of the applicant,
or change bidding credit eligibility).
D. Upfront Payments--Due April 11, 2003
62. In order to be eligible to bid in the auction, applicants must
submit an upfront payment accompanied by an FCC Remittance Advice Form
(FCC Form 159). After completing the FCC Form 175, filers will have
access to an electronic version of the FCC Form 159 that can be printed
and faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must
be received at Mellon Bank by 6 p.m. ET on April 11, 2003.
63. Please note that:
[sbull] All payments must be made in U.S. dollars.
[sbull] All payments must be made by wire transfer.
[sbull] Upfront payments for Auction No. 46 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.
[sbull] Failure to deliver the upfront payment by the April 11,
2003, deadline will result in dismissal of the application and
disqualification from participation in the auction.
i. Making Auction Payments by Wire Transfer
64. Wire transfer payments must be received by 6 p.m. ET on April
11, 2003. 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. Applicants will need the following information:
ABA Routing Number: 043000261
Receiving Bank: Mellon Pittsburgh
BENEFICIARY: FCC/Account 910-0180
OBI Field: (Skip one space between each information item)
``AUCTIONPAY''
FCC REGISTRATION NUMBER (FRN): (same as FCC Form 159, block 11 and/or
21)
PAYMENT TYPE CODE (same as FCC Form 159, block 24A: A46U)
FCC CODE 1 (same as FCC Form 159, block 28A: ``46'')
PAYOR NAME (same as FCC Form 159, block 2)
LOCKBOX NO. 358420
Note: The BNF and Lockbox number are specific to the upfront
payments for this
[[Page 72180]]
auction; do not use BNF or Lockbox numbers from previous auctions.
65. Applicants must fax a completed FCC Form 159 (Revised 2/00) to
Mellon Bank at (412) 209-6045 at least one hour before placing the
order for the wire transfer (but on the same business day). On the
cover sheet of the fax, write ``Wire Transfer--Auction Payment for
Auction Event No. 46.'' Bidders should confirm receipt of their upfront
payment at Mellon Bank by contacting their sending financial
institution.
ii. FCC Form 159
66. A completed FCC Remittance Advice Form (FCC Form 159, Revised
2/00) must be faxed to Mellon Bank in order to accompany each upfront
payment. Proper completion of FCC Form 159 (Revised 2/00) is critical
to ensuring correct credit of upfront payments. Detailed instructions
for completion of FCC Form 159 are included in Attachment E of the
Auction No. 46 Procedures Public Notice. An electronic version of the
FCC Form 159 is available after filing the FCC Form 175. The FCC Form
159 can be completed electronically, but must be filed with Mellon Bank
via facsimile.
iii. Amount of Upfront Payment
67. In the Part 1 Order the Commission delegated to the Bureau the
authority and discretion to determine appropriate upfront payment(s)
for each auction. In addition, in the Part 1 Fifth Report and Order,
the Commission ordered that ``former defaulters,'' i.e., applicants
that have ever been in default on any Commission license or have ever
been delinquent on any non-tax debt owed to any Federal agency, be
required to pay upfront payments fifty percent greater than non-
``former defaulters.'' For purposes of this calculation, the
``applicant'' includes the applicant itself, its affiliates, its
controlling interests, and affiliates of its controlling interests, as
defined by Sec. 1.2110 of the Commission's rules (as amended in the
Part 1 Fifth Report and Order).
68. In the Auction No. 46 Comment Public Notice, the Bureau
proposed translating bidders' upfront payments to bidding units to
define a bidder's maximum eligibility. In order to bid on the license,
otherwise qualified bidders must have an eligibility level that meets
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 the license or else the applicant will
not be eligible to participate in the auction.
69. In the Auction No. 46 Comment Public Notice, the Bureau
proposed an upfront payment of $12,628,000 for the nationwide 1670-1675
MHz license using the following formula: $0.01 * MHz * License Area
Population with a minimum of $1,000.
ArrayComm and AeroAstro submitted comments regarding the Bureau's
proposed formula for calculating the upfront payment for Auction No.
46. ArrayComm supports the Bureau's proposed upfront payment because it
is appropriate given the nationwide scope of the license. AeroAstro, on
the other hand, suggests that the proposed upfront payment is
excessively high and may reduce potential participation and competition
in the auction. AeroAstro recommends that the Commission reduce the
upfront payment by a factor of ten, resulting in an upfront payment of
$1,262,800.
70. The Bureau adopts its upfront payment as proposed. Given the
nationwide scope of the 1670-1675 MHz license, the Bureau believes that
the proposed upfront payment, as validated by the comments of
ArrayComm, is appropriate.
71. The specific upfront payments and bidding units for the
nationwide 1670-1675 MHz license is set forth in Attachment A of the
Auction No. 46 Procedures Public Notice.
72. Former defaulters should calculate their upfront payment by
multiplying the number of bidding units 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
73. The Commission will use wire transfers for all Auction No. 46
refunds. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information as listed be supplied to the FCC. Applicants can provide
the information electronically during the initial short-form filing
window after the form has been submitted. Wire Transfer Instructions
can also be manually faxed to the FCC, Financial Operations Center,
Auctions Accounting Group, ATTN: Tim Dates or Gail Glasser, at (202)
418-2843 by April 11, 2003. All refunds will be returned to the payor
of record as identified on the FCC Form 159 unless the payor submits
written authorization instructing otherwise. For additional
information, please call (202) 418-1995.
Name of Bank
ABA Number
Contact and Phone Number
Account Number to Credit
Name of Account Holder
FCC Registration Number (FRN)
Taxpayer Identification Number
Correspondent Bank (if applicable)
ABA Number
Account Number
(Applicants should also note that implementation of the Debt Collection
Improvement Act of 1996 requires the FCC to obtain a Taxpayer
Identification Number (TIN) before it can disburse refunds.)
Eligibility for refunds is discussed in Part V.F. of the Auction No. 46
Procedures Public Notice.
E. Auction Registration
74. Approximately ten days before the auction, the FCC will issue a
public notice announcing all qualified bidders for the auction.
Qualified bidders are those applicants whose FCC Form 175 applications
have been accepted for filing and have timely submitted upfront
payments sufficient to make them eligible to bid on the license.
75. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by two separate overnight mailings, one containing the
confidential bidder identification number (BIN) required to place bids
and the other containing the SecurID cards. These mailings will be sent
only to the contact person at the contact address listed in the FCC
Form 175.
76. Applicants that do not receive both registration mailings will
not be able to submit bids. Therefore, any qualified applicant that has
not received both mailings by noon on Wednesday, April 23, 2003, should
contact the Auctions Hotline at (717) 338-2888. Receipt of both
registration mailings is critical to participating in the auction and
each applicant is responsible for ensuring it has received all of the
registration material.
77. Qualified bidders should note that lost bidder identification
numbers or SecurID cards can be replaced only by appearing in person at
the FCC Auction Headquarters located at 445 12th St., SW., Washington,
DC 20554. Only an authorized representative or certifying official, as
designated on an applicant's FCC Form 175, may appear in person with
two forms of identification (one of which must be a photo
identification) in order to receive replacements. Qualified bidders
requiring replacements must call technical support prior to arriving at
the FCC.
F. Electronic Bidding
78. The Commission will conduct this auction over the Internet.
Telephonic
[[Page 72181]]
bidding will also be available. As a contingency, the FCC Wide Area
Network, which requires access to a 900 number telephone service, will
be available as well. Qualified bidders are permitted to bid
telephonically or electronically, i.e., over the Internet or the FCC's
Wide Area Network at $2.30 per minute. In either case, each authorized
bidder must have its own Remote Security Access SecurID card, which the
FCC will provide at no charge. Each applicant with one authorized
bidder will be issued two SecurID cards, while applicants with two or
three authorized bidders will be issued three cards. For security
purposes, the SecurID cards and the FCC Automated Auction System User
Manual are only mailed to the contact person at the contact address
listed on the FCC Form 175. Please note that each SecurID card is
tailored to a specific auction, therefore, SecurID cards issued for
other auctions or obtained from a source other than the FCC will not
work for Auction No. 46. The telephonic bidding phone number will be
supplied in the first overnight mailing, which also includes the
confidential bidder identification number. Each applicant should
indicate its bidding preference'electronic or telephonic'on the FCC
Form 175.
79. Please note that the SecurID cards can be recycled, and the
Bureau encourages bidders to return the cards to the FCC. The Bureau
will provide pre-addressed envelopes that bidders may use to return the
cards once the auction is over.
G. Mock Auction
80. All qualified bidders will be eligible to participate in a mock
auction on Friday, April 25, 2003. The mock auction will enable
applicants to become familiar with the FCC Automated Auction System
prior to the auction. Participation by all bidders is strongly
recommended. Details will be announced by public notice.
IV. Auction Event
81. The first round of bidding for Auction No. 46 will begin on
Wednesday, April 30, 2003. The initial bidding schedule will be
announced in a public notice listing the qualified bidders, which is
released approximately 10 days before the start of the auction.
A. Auction Structure
i. Ascending Multiple Round Auction
82. In the Auction No. 46 Comment Public Notice, the Bureau
proposed to award all licenses in Auction No. 46 in a single,
simultaneous multiple round auction. The Bureau received one comment on
this issue. ArrayComm agrees with the Bureau's proposal stating that
the simultaneous multiple round structure is most likely to result in
efficient bidding, thereby awarding the license to the party with the
greatest ability to bring innovative services to consumers. An
``ascending multiple round auction'' is the same as a simultaneous
multiple round auction, but with only one license available for bid.
The Bureau concludes that it is operationally feasible and appropriate
to auction the license in the 1670-1675 MHz band through a single,
ascending multiple round auction. Unless otherwise announced, bids will
be accepted on the license in each round of the auction.
ii. Maximum Eligibility and Activity Rules
83. In the Auction No. 46 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.
84. For Auction No. 46, the Bureau will adopt its proposal that the
amount of upfront payment submitted by a bidder would determine the
eligibility (in bidding units) for participation in Auction No. 46.
Bidders are reminded that the upfront payment is a refundable deposit
made by each bidder to determine and establish eligibility to bid on
the license. The upfront payment does not affect the total dollars a
bidder may bid on the license.
85. In order to ensure that the auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively
throughout the auction, rather than wait until the end before
participating. Bidders are required to be active on a specific
percentage of their current eligibility during each round of the
auction. In the Auction No. 46 Further Comment Public Notice, because
only one license will be available for auction, the Bureau proposed a
single stage auction with each bidder required to be active on one
hundred (100) percent of its bidding eligibility in each round.
86. Only one commenter addressed the Bureau's revised proposal.
ArrayCom states that monitoring the bidding activity of only one
license makes the evaluation and bidding process of necessity more
straightforward for participants. Therefore, in order to ensure that
the auction closes within a reasonable period of time, the Bureau
adopts its proposal with the following activity requirements: a bidder
must either place a valid bid and/or be the standing high bidder during
each round of the auction rather than wait until the end before
participating. Bidders are required to be active on 100 percent of
their maximum eligibility during each round of the auction. 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
bidding eligibility, thus eliminating the bidder from the auction.
iii. Activity Rule Waivers and Reducing Eligibility
87. In the Auction No. 46 Further Comment Public Notice, the Bureau
proposed that each bidder in the auction would be provided two activity
rule waivers. Bidders may use an activity rule waiver in any round
during the course of the auction. ArrayComm agreed with the Bureau's
proposal that two waivers would be appropriate in light of the
auction's narrowed scope.
88. Based upon the Bureau's experience in previous auctions, it
adopts its proposal that each bidder be provided two activity rule
waivers that may be used in any round during the course of the auction.
Use of an activity rule waiver preserves the bidder's current bidding
eligibility despite the bidder's activity in the current round being
below the required minimum level. The Bureau is satisfied that its
practice of providing two waivers over the course of the auction
provides a sufficient number of waivers and maximum flexibility to the
bidders, while safeguarding the integrity of the auction.
89. The Automated Auction System assumes that bidders with
insufficient activity would prefer to use an activity rule waiver (if
available) rather than lose bidding eligibility. Therefore, the system
will automatically apply a waiver (known as an ``automatic waiver'') at
the end of any round where a bidder's activity level is below the
minimum required. If there are no activity rule waivers available, the
bidder's eligibility will be reduced, eliminating them from the auction
90. Finally, a bidder may proactively use an activity rule waiver
as a means to keep the auction open without placing a bid. If a bidder
submits a proactive waiver (using the proactive waiver function in the
bidding system) during a round in which no bids are submitted, the
auction will remain open and the bidder's eligibility will be
preserved. However, an automatic waiver triggered during a round in
[[Page 72182]]
which there are no new valid bids will not keep the auction open.
Note: Once a proactive waiver is placed during a round, that
waiver cannot be unsubmitted.
iv. Auction Stopping Rules
91. For Auction No. 46, the Bureau proposed to employ a
simultaneous stopping rule approach. The Bureau also sought comment on
a modified version of the stopping rule. The modified version of the
stopping rule would close the auction after the first round in which no
bidder submits a proactive waiver or a new bid on the license when it
is not the standing high bidder. Thus, absent any other bidding
activity, a bidder placing a new bid on the license for which it is the
standing high bidder would not keep the auction open under this
modified stopping rule.
92. The Bureau further proposed retaining the discretion to keep
the auction open even if no new acceptable bids or proactive waivers
are submitted. In this event, the effect will be the same as if a
bidder had submitted a proactive 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, thus eliminating the bidder from the auction.
93. In addition, the Bureau proposed to reserve the right to
declare that the auction will end after a designated number of
additional rounds (``special stopping rule''). The Bureau proposed to
exercise this option only in circumstances such as where the auction is
proceeding very slowly, where there is minimal overall bidding activity
or where it appears likely that the auction will not close within a
reasonable period of time. Before exercising this option, 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 adjusting the
amount of the minimum bid increments for the license.
94. The Bureau received no comments concerning the auction stopping
rules and therefore, it adopts the proposals. Auction No. 46 will begin
under the simultaneous stopping rule, and the Bureau will retain the
discretion to invoke the other versions of the stopping rule. These
stopping rules are most appropriate for Auction No. 46, because the
Bureau's experience in prior auctions demonstrates that the auction
stopping rules balance the interests of administrative efficiency and
maximum bidder participation.
v. Auction Delay, Suspension, or Cancellation
95. In the Auction No. 46 Comment Public Notice, the Bureau
proposed that, by public notice or by announcement during the auction,
it may delay, suspend, or cancel the auction in the event of natural
disaster, technical obstacle, evidence of an auction security breach,
unlawful bidding activity, administrative or weather necessity, or for
any other reason that affects the fair conduct of competitive bidding.
96. Because this approach has proven effective in resolving exigent
circumstances in previous auctions, the Bureau adopts its proposed
auction cancellation rules. By public notice or by announcement during
the auction, the Bureau may delay, suspend, or cancel the auction in
the event of natural disaster, technical obstacle, evidence of an
auction security breach, unlawful bidding activity, administrative or
weather necessity, or for any other reason that affects the fair and
competitive 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.
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
97. The initial bidding schedule will be announced in the public
notice listing the qualified bidders, which is released approximately
10 days before the start of the auction. The round structure for each
bidding round contains a single bidding round followed by the release
of the 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 public notice referenced herein.
98. The FCC has discretion to change the bidding schedule in order
to foster an auction pace that reasonably balances speed with the
bidders' need to study round results and adjust their bidding
strategies. The Bureau may increase or decrease the amount of time for
the bidding rounds and review periods, or the number of rounds per day,
depending upon the bidding activity level and other factors.
ii. Reserve Price or Minimum Opening Bid
99. Background. The Communications Act, 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 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 should 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.
100. In the Auction No. 46 Comment Public Notice, the Bureau
proposed to establish minimum opening bids for Auction No. 46.
Specifically, for Auction No. 46, the Bureau proposed a minimum opening
bid of $12,628,000 for the nationwide license using the following
formula: $0.01 * MHz * License Area Population with a minimum of
$1,000.
In the alternative, the Bureau sought comment on whether,
consistent with the Balanced Budget Act, the public interest would be
served by having no minimum opening bid or reserve price. ArrayComm and
AeroAstro submitted comments regarding the Bureau's proposed formula
for calculating minimum opening bids for Auction No. 46. ArrayComm
supports the Bureau's proposed minimum opening bid, stating that it
will ensure a successful outcome overall for the auction. AeroAstro, on
the other hand, suggests that the multi-million dollar minimum opening
bid for the license in the 1670-1675 MHz Band is an artificially high
barrier to entry and may defeat the purpose of the auction by
eliminating bidders. AeroAstro proposes the following formula for
calculating minimum opening bids for the nationwide license: $ 0.002 *
MHz * License Area Population.
101. The Bureau adopts its minimum opening bid as proposed. The
Bureau believes that the minimum opening bid, as adopted, is
appropriate.
[[Page 72183]]
102. The specific minimum opening bid for the license is set forth
in Attachment A of the Auction No. 46 Procedures Public Notice.
iii. Minimum Accepted Bids and Bid Increments
103. In the Auction No. 46 Comment Public Notice, the Bureau
proposed to use a smoothing methodology to calculate minimum acceptable
bids. The Bureau further proposed to retain the discretion to change
the minimum acceptable bids and bid increments if circumstances so
dictate.
104. ArrayComm suggests that because the license inventory for
Auction No. 46 is reduced to one license, a smaller bid increment is
more appropriate. It notes that while higher bid increments can
maintain the pace of large-scale auctions, they are not necessary under
a single-license auction event such as Auction No. 46. ArrayComm
further asserts that a reduced minimum bid increment may, in fact,
increase auction efficiency in this scenario.
105. The Bureau adopts its proposal for a smoothing formula. The
smoothing methodology is designed to vary the increment for a given
license between a maximum and minimum value based on the bidding
activity on that license. This methodology allows the increments to be
tailored to the activity level of a license, decreasing the time it
takes for active licenses to reach their final value. The formula used
to calculate this increment is included as Attachment F of the Auction
No. 46 Procedures Public Notice.
106. Upon consideration of ArrayComm's comments, the weighting
factor will be set at 0.5, the minimum percentage increment at 0.05 (5
percent), and the maximum at 0.2 (20 percent). Because only a single
license is available in Auction No. 46, it is appropriate to set the
minimum bid increment at 5 percent. The Bureau reiterates that it
retains the discretion to change the minimum acceptable bids and bid
increments if it determines that circumstance so dictate. The Bureau
will do so by announcement in the Automated Auction System. Under its
discretion, the Bureau may also implement an absolute dollar floor for
the bid increment to further facilitate a timely close of the auction.
The Bureau may also use its discretion to adjust the minimum bid
increment without prior notice if circumstances warrant. The Bureau
also retains the discretion to use alternate methodologies, such as a
flat percentage increment, for Auction No. 46 if circumstances warrant.
iv. High Bid
107. At the end of each bidding round, the Automated Auction System
determines the standing high bid for the license based on the gross
dollar amounts of the bids received.
108. In the case of tied high bids, a random number generator will
be used to determine the standing high bid. A random number will be
assigned to each bid. The tie bid having the highest random number will
become the standing high bid.
v. Bidding
109. During a bidding round, a bidder may submit a bid (subject to
its eligibility) as well as remove a bid placed in the same bidding
round. If a bidder submits multiple bids for the 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
the license for which the bidder has removed its bid do not count
towards the bidder's activity at the close of the round.
110. All bidding will take place remotely either through the
Automated Auction System or by telephonic bidding. (Telephonic bid
assistants are required to use a script when entering bids placed by
telephone. Telephonic bidders are therefore reminded to allow
sufficient time to bid by placing their calls well in advance of the
close of a round. Normally, five to ten minutes are necessary to
complete a bid submission.) There will be no on-site bidding during
Auction No. 46.
111. The Automated Auction System requires each bidder to be logged
in during the bidding round using the bidder identification number
provided in the registration materials, and the generated SecurID code.
Bidders are strongly encouraged to print bid confirmations after they
submit their bid.
112. In each round, eligible bidders will be able to place a bid on
the license in any of nine different amounts. The Automated Auction
System interface will list the nine acceptable bid amounts in a drop-
down box. Bidders may use the drop-down box to select from among the
nine acceptable bid amounts.
113. Once there is a standing high bid on the license, the
Automated Auction System will calculate a minimum acceptable bid for
the following round. The difference between the minimum acceptable bid
and the standing high bid will define the bid increment. The nine
acceptable bid amounts consist of the minimum acceptable bid (the
standing high bid plus one bid increment) and additional amounts
calculated using multiple bid increments (i.e., the second bid amount
equals the standing high bid plus two times the bid increment, the
third bid amount equals the standing high bid plus three times the bid
increment, etc.).
114. Until a bid has been placed on the license, the minimum
acceptable bid for that license will be equal to its minimum opening
bid. The additional bid amounts are calculated using the difference
between the minimum opening bid times one plus the minimum percentage
increment, rounded, and the minimum opening bid. Therefore, when the
minimum percentage increment equals 0.05, the first additional bid
amount will be approximately five percent higher than the minimum
opening bid; the second, ten percent; the third, fifteen percent; etc.
115. See Attachment F of the Auction No. 46 Procedures Public
Notice for more detail on the calculation of the various bid amounts.
vi. Bid Removal and Bid Withdrawal
116. In the Auction No. 46 Comment Public Notice, the Bureau
proposed bid removal and bid withdrawal rules. The Bureau however
revised its proposal concerning withdrawals in the Auction No. 46
Further Comment Public Notice. It proposed that bidders would not be
permitted to withdraw bids in any round since Auction No. 46 had been
limited to a single license. No commenters disagreed with the Bureau's
proposal. Therefore, the Bureau will adopt its proposal and will not
permit bidders to withdraw bids in any rounds during the auction.
117. Procedures. Before the close of a bidding round, a bidder has
the option of removing any bid placed in that round. By using the
``remove bid'' function in the bidding system, a bidder may effectively
``unsubmit'' a bid placed within that round. Removing a bid will affect
a bidder's activity for the round in which it is removed, i.e., a bid
that is subsequently removed does not count toward the bidder's
activity requirement. Once a round closes, a bidder may no longer
remove a bid.
vii. Round Results
118. Bids placed during a round will not be published until the
conclusion of that bidding period. After a round closes, the Bureau
will compile reports of all bids placed, current high bid, new minimum
accepted bid, and bidder eligibility status (bidding eligibility and
activity rule waivers), and post the reports for public access. Reports
[[Page 72184]]
reflecting bidders' identities and bidder identification numbers for
Auction No. 46 will be available before and during the auction. Thus,
bidders will know in advance of this auction the identities of the
bidders against which they are bidding.
viii. Auction Announcements
119. The FCC will use auction announcements to announce items such
as schedule changes. All FCC auction announcements will be available by
clicking a link on the Automated Auction System.
ix. Maintaining the Accuracy of FCC Form 175 Information
120. As noted in Part II.G. of the Auction No. 46 Procedures Public
Notice, after the short-form filing deadline, applicants may make only
minor changes to their FCC Form 175 applications. For example,
permissible minor changes include deletion and addition of authorized
bidders (to a maximum of three) and certain revision of exhibits.
Applicants should make these modifications to their FCC Form 175
electronically and submit a letter, briefly summarizing the changes, by
electronic mail to the attention of Margaret Wiener, Chief, Auctions
and Industry Analysis Division at the following address:
auction46@fcc.gov. The electronic mail summarizing the changes must
include a subject or caption referring to Auction No. 46. The Bureau
requests that parties format any attachments to electronic mail as
Adobe[reg] Acrobat[reg] (pdf) or Microsoft[reg] Word documents.
A separate copy of the letter should be faxed to the attention of
Kathryn Garland at (717) 338-2850. Questions about other changes should
be directed to Francis Gutierrez of the Auctions and Industry Analysis
Division at (202) 418-0660.
I. Post-Auction Procedures
A. Down Payments
121. After bidding has ended, the Commission will issue a public
notice declaring the auction closed, identifying the winning bid and
bidder.
122. Within ten business days after release of the auction closing
notice, the winning bidder must submit sufficient funds (in addition to
its upfront payment) to bring its total amount of money on deposit with
the Government to 20 percent of its net winning bid (actual bid less
any applicable small or very small business bidding credit). See 47 CFR
1.2107(b).
B. Auction Discount Voucher
123. On June 8, 2000, the Commission awarded Qualcomm, Inc. a
transferable Auction Discount Voucher (``ADV'') in the amount of
$125,273,878.00. This ADV may be used by Qualcomm or its transferee, in
whole or in part, to adjust a winning bid in any spectrum auction prior
to June 8, 2003, subject to terms and conditions set forth in the
Commission's Order. Qualcomm transferred $10,848,000.00 of the ADV to a
winning bidder in FCC Auction No. 35 and the transferee used its
portion of the ADV to pay a portion of one of its winning bids in
Auction No. 35. The remaining portion of Qualcomm's ADV could be used
to adjust winning bids in another FCC auction, including Auction No.
46.
C. Long-Form Application
124. Within ten business days after release of the auction closing
notice, the winning bidder must electronically submit a properly
completed long-form application (FCC Form 601) and required exhibits
for the license won through Auction No. 46. A winning bidder that is a
small or very small business must include an exhibit demonstrating
their eligibility for the bidding credit. See 47 CFR 1.2112(b). Further
filing instructions will be provided to the auction winner at the close
of the auction.
D. Tribal Land Bidding Credit
125. A winning bidder that intends to use its license(s) to deploy
facilities and provide services to federally-recognized tribal lands
that are unserved by any telecommunications carrier or that have a
telephone service penetration rate equal to or below 70 percent is
eligible to receive a tribal land bidding credit as set forth in 47 CFR
1.2107 and 1.2110(f). A tribal land bidding credit is in addition to,
and separate from, any other bidding credit for which a winning bidder
may qualify.
126. Unlike other bidding credits that are requested prior to the
auction, a winning bidder applies for the tribal land bidding credit
after winning the auction when it files its long-form application (FCC
Form 601). When filing the long-form application, the winning bidder
will be required to advise the Commission whether it intends to seek a
tribal land bidding credit, for each market won in the auction, by
checking the designated box(es). After stating its intent to seek a
tribal land bidding credit, the applicant will have 90 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 land bidding
credit are subject to performance criteria as set forth in 47 CFR
1.2110(f).
127. For additional information on the tribal land bidding credit,
including how the amount of the credit is calculated, applicants should
review the Commission's rule making proceeding regarding tribal land
bidding credits and related public notices. Relevant documents can be
viewed on the Commission's web site by going to http://wireless.fcc.gov/auctions
and clicking on Tribal Land Credits.
E. Default and Disqualification
128. Any high bidder that defaults or is disqualified after the
close of the auction (i.e., fails to remit the required down payment
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise
disqualified) will be subject to the payments described in 47 CFR
1.2104(g)(2). In such event the Commission may re-auction the license
or offer it to the next highest bidder (in descending order) at their
final bid. In addition, if a default or disqualification involves gross
misconduct, misrepresentation, or bad faith by an applicant, the
Commission may declare the applicant and its principals ineligible to
bid in future auctions, and may take any other action that it deems
necessary, including institution of proceedings to revoke any existing
licenses held by the applicant. See 47 CFR 1.2109(d).
F. Refund of Remaining Upfront Payment Balance
129. All applicants that submitted upfront payments but were not
winning bidders for the license in Auction No. 46 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 payor of record, as
identified on the FCC Form 159, unless the payor submits written
authorization instructing otherwise.
130. Bidders that drop out of the auction completely may be
eligible for a refund of their upfront payments before the close of the
auction. Qualified bidders that have exhausted all of their activity
rule waivers, and have no remaining bidding eligibility, must submit a
written refund request. If you have completed the refund instructions
electronically, then only a written request for the refund is
necessary. If not, the request must also include wire transfer
instructions, Taxpayer Identification Number (TIN) and FCC
[[Page 72185]]
Registration Number (FRN). Send refund request to: Federal
Communications Commission, Financial Operations Center, Auctions
Accounting Group, Gail Glasser or Tim Dates, 445 12th Street, SW., Room
1-C863, Washington, DC 20554.
131. Bidders are encouraged to file their refund information
electronically using the refund information portion of the FCC Form
175, but bidders can also fax their information to the Auctions
Accounting Group at (202) 418-2843. Once the information has been
approved, a refund will be sent to the party identified in the refund
information.
Note: Refund processing generally takes up to two weeks to
complete. Bidders with questions about refunds should contact Tim
Dates or Gail Glasser at (202) 418-1995.
Federal Communications Commission.
Margaret Wiener,
Chief, Auctions and Industry Analysis Division, WTB.
[FR Doc. 02-30701 Filed 12-3-02; 8:45 am]
BILLING CODE 6712-01-P