[Federal Register: July 6, 2004 (Volume 69, Number 128)]
[Notices]
[Page 40632-40637]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jy04-44]
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FEDERAL COMMUNICATIONS COMMISSION
[Report No. AUC-03-58-A (Auction No. 58); DA 04-1639]
Broadband PCS Spectrum Auction Scheduled for January 12, 2005;
Comment Sought on Reserve Prices or Minimum Opening Bids and Other
Auction Procedures
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This document announces the auction of 234 broadband Personal
Communications Service (PCS) licenses scheduled to commence on January
12, 2005 (Auction No. 58). This document also seeks comment on reserve
prices or minimum opening bids and other auction procedures for Auction
No. 58.
DATES: Comments are due on or before July 8, 2004, and reply comments
are due on or before July 15, 2004.
ADDRESSES: Comments and reply comments must be sent by electronic mail
to the following address: auction58@fcc.gov.
FOR FURTHER INFORMATION CONTACT: For legal questions: Audrey Bashkin
(202) 418-0660. For general auction questions: Jeff Crooks (202) 418-
0660 or Lisa Stover (717) 338-2888. For service rule questions, contact
the Mobility Division, Wireless Telecommunications Bureau, as follows:
Erin McGrath, (202) 418-0620; JoAnn Epps, (202) 418-1342; or Dwain
Livingston, (202) 418-1338.
SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 58
Comment Public Notice released on June 18, 2004. The complete text of
the Auction No. 58 Comment Public Notice, including attachments and of
related Commission documents 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-A257, Washington, DC
20554. The Auction No. 58 Comment Public Notice and related Commission
documents may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc. (``BCPI''), Portals II, 445
12th Street, SW., Room CY-B402, Washington, DC 20554, telephone: (202)
488-5300, facsimile: (202) 488-5563, or you may contact BCPI at its Web
site: http://www.BCPIWEB.com. When ordering documents from BCPI, please
provide the appropriate FCC document number (for example, FCC 00-313
for the C/F Block Sixth Report and Order). The Auction No. 58 Comment
Public Notice and related documents are also available on the Internet
at the Commission's Web site: http://wireless.fcc.gov/auctions/58/.
I. General Information
1. By the Auction No. 58 Comment Public Notice, the Wireless
Telecommunications Bureau (``Bureau'') announces the auction of 234
broadband Personal Communications Service (``PCS'') licenses, scheduled
to commence on January 12, 2005 (Auction No. 58). The spectrum to be
auctioned has been offered previously in other auctions but was
returned to the Commission as a result of license cancellation or
termination. A complete list of licenses available for Auction No. 58
is included as Attachment A of Auction No. 58 Comment Public Notice.
2. The following table contains the block/eligibility status/
frequency cross-reference list for Auction No. 58:
[[Page 40633]]
----------------------------------------------------------------------------------------------------------------
Eligibility status Bandwidth (MHz) (unless Frequency (MHz) (unless
Frequency block ------------------------------------------ otherwise noted in otherwise noted in
Tier 1 Tier 2 attachment A) attachment A)
----------------------------------------------------------------------------------------------------------------
A................... n/a................ n/a................ 30 1850-1865, 1930-1945
C1.................. Open............... Closed............. 15 1902.5-1910, 1982.5-
1990
C2.................. Open............... Closed............. 15 1895-1902.5, 1975-
1982.5
C3.................. Closed............. Closed............. 10 1895-1900, 1975-1980
C4.................. Open............... Closed............. 10 1900-1905, 1980-1985
C5.................. Open............... Open............... 10 1905-1910, 1985-1990
D................... n/a................ n/a................ 10 1865-1870, 1945-1950
E................... n/a................ n/a................ 10 1885-1890, 1965-1970
F................... Open............... Open............... 10 1890-1895, 1970-1975
----------------------------------------------------------------------------------------------------------------
3. In some cases, licenses are available for only part of a market
or may not include all of the spectrum associated with a particular
frequency block in Auction No. 58. Bold type indicates that no license
of the particular tier/frequency block combination will be available in
Auction No. 58. See Attachment A of Auction No. 58 Comment Public
Notice to determine which licenses will be offered.
4. For the C and F block licenses, Basic Trading Areas (``BTAs'')
are divided into two tiers according to the population size, with Tier
1 comprising markets with population at or above 2.5 million, based on
2000 census figures, and Tier 2 comprising the remaining markets. Some
licenses are available to all bidders in ``open'' bidding, while other
licenses are available only to entrepreneurs in ``closed'' bidding. In
order to qualify as an ``entrepreneur,'' an applicant, including
attributable investors and affiliates, must have had gross revenues of
less than $125 million in each of the last two years and must have less
than $500 million in total assets. All of the licenses available in
``closed'' bidding are C block licenses. The A, B, E, and F block
licenses, as well as certain C block licenses, are available in
``open'' bidding. The entrepreneur eligibility restriction does not
apply to licenses that were available but not won in any auction
beginning on or after March 23, 1999. C block licenses for BTA215,
BTA330, and BTA470 were available but not won in Auction No. 22.
Accordingly, even though licenses in the C3 and C4 frequency blocks in
Tier 2 generally are designated as subject to closed bidding, CW-
BTA215-C3, CW-BTA330-C3, and CW-BTA470-C4 will be offered in open
bidding in Auction No. 58. CW-BTA215-C3, CW-BTA330-C3, and CW-BTA470-C4
were offered in open bidding and won in Auction No. 35; however,
because the winners defaulted on their payment obligations, the
licenses were never awarded. Size-based bidding credits are not
available for C block licenses won in ``closed'' bidding or for
licenses in the A, D, or E blocks.
5. The Balanced Budget Act of 1997 requires the Commission to
``ensure that, in the scheduling of any competitive bidding under this
subsection, an adequate period is allowed * * * before issuance of
bidding rules, to permit notice and comment on proposed auction
procedures. * * *'' Consistent with the provisions of the Balanced
Budget Act and to ensure that potential bidders have adequate time to
familiarize themselves with the specific rules that will govern the
day-to-day conduct of an auction, the Commission directed the Bureau,
under its existing delegated authority, to seek comment on a variety of
auction-specific procedures prior to the start of each auction. The
Bureau therefore seeks comment on the following issues relating to
Auction No. 58.
II. Auction Structure
A. Simultaneous Multiple-Round Auction Design
6. The Bureau proposes to award all licenses included in Auction
No. 58 in a simultaneous multiple-round auction. As described further
below, this methodology offers every license for bid at the same time
with successive bidding rounds in which bidders may place bids. The
Bureau seeks comment on this proposal.
B. Upfront Payments and Bidding Eligibility
7. The Bureau has delegated authority and discretion to determine
an appropriate upfront payment for each license being auctioned, taking
into account such factors as the population in each geographic license
area and the value of similar spectrum. As described further below, the
upfront payment is a refundable deposit made by each bidder to
establish eligibility to bid on licenses. Upfront payments protect
against frivolous or insincere bidding and provide the Commission with
a source of funds from which to collect payments owed at the close of
the auction. With these guidelines in mind for Auction No. 58, the
Bureau proposes to calculate upfront payments on a license-by-license
basis using a formula based on bandwidth and license area population:
$0.05 *MHz* License Area Population
8. The specific proposed upfront payment for each license available
in Auction No. 58 is set forth in Attachment A of the Auction No. 58
Comment Public Notice. The Bureau seeks comment on this proposal.
9. The Bureau further proposes that the amount of the upfront
payment submitted by a bidder will determine the maximum number of
bidding units on which a bidder may place bids. This limit is a
bidder's initial eligibility. Each license is assigned a specific
number of bidding units equal to the upfront payment listed in
Attachment A of the Auction No. 58 Comment Public Notice, on a bidding
unit per dollar basis. This number does 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 combination
of licenses 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. 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 high
bids on) in any single round, and submit an upfront payment covering
that number of bidding units. The Bureau proposes comment on this
proposal.
C. Activity Rules
10. In order to ensure that the auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively on a
percentage of their current bidding eligibility during each round of
the auction rather than waiting until the end to participate. A bidder
that does not satisfy the activity rule
[[Page 40634]]
will either lose bidding eligibility in the next round or must use an
activity rule waiver (if any remain).
11. The Bureau proposes to divide the auction into two stages, each
characterized by an increased activity requirement. The auction will
start in Stage One. The Bureau proposes that the auction generally will
advance from Stage One to Stage Two when the auction activity level, as
measured by the percentage of bidding units receiving new high bids, is
approximately twenty percent or below for three consecutive rounds of
bidding. However, the Bureau further proposes that it retain the
discretion to change stages unilaterally by announcement during the
auction. In exercising this discretion, the Bureau will consider a
variety of measures of bidder activity, including, but not limited to,
the auction activity level, the percentage 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 seeks comment on these
proposals.
12. For Auction No. 58, the Bureau proposes the following activity
requirements:
Stage One: In each round of the first stage of the auction, a
bidder desiring to maintain its current eligibility is required to be
active on licenses representing at least 80 percent of its current
bidding eligibility. Failure to maintain the requisite activity level
will result in a reduction in the bidder's bidding eligibility in the
next round of bidding (unless an activity rule waiver is used). During
Stage One, reduced eligibility for the next round will be calculated by
multiplying the current round activity by five-fourths (\5/4\).
Stage Two: In each round of the second stage, a bidder desiring to
maintain its current eligibility is required to be active on 95 percent
of its current bidding eligibility. In this final stage, reduced
eligibility for the next round will be calculated by multiplying the
current round activity by twenty/nineteenths (\20/19\).
13. The Bureau seeks comment on these proposals. Commenters that
believe these activity rules should be modified should explain their
reasoning and comment on the desirability of an alternative approach.
Commenters are advised to support their claims with analyses and
suggested alternative activity rules.
D. Activity Rule Waivers and Reducing Eligibility
14. 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. An activity rule waiver applies
to an entire round of bidding and not to a particular license. Activity
rule waivers can be either proactive or automatic and are principally a
mechanism for auction participants to avoid the loss of auction
eligibility in the event that exigent circumstances prevent them from
placing a bid in a particular round.
Note: Once a proactive waiver is submitted, that waiver cannot
be unsubmitted, even if the round has not yet closed.
15.The FCC Automated Auction System assumes that bidders with
insufficient activity would prefer to use an activity rule waiver (if
available) rather than lose bidding eligibility. Therefore, the system
will automatically apply a waiver (known as an ``automatic waiver'') at
the end of any bidding period where a bidder's activity level is below
the minimum required unless: (i) there are no activity rule waivers
available; or (ii) the bidder overrides the automatic application of a
waiver by reducing eligibility, thereby meeting the minimum
requirements.
Note: If a bidder has no waivers remaining and does not satisfy
the required activity level, its current eligibility will be
permanently reduced, possibly eliminating the bidder from the
auction.
16. A bidder with insufficient activity may wish to reduce its
bidding eligibility rather than use an activity rule waiver. If so, the
bidder must affirmatively override the automatic waiver mechanism
during the bidding period by using the ``reduce eligibility'' function
in the bidding system. In this case, the bidder's eligibility is
permanently reduced to bring the bidder into compliance with the
activity rules as described above. Once eligibility has been reduced, a
bidder will not be permitted to regain its lost bidding eligibility.
17. 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 bidding period in which no bids or withdrawals are
submitted, the auction will remain open and the bidder's eligibility
will be preserved. An automatic waiver invoked in a round in which
there are no new valid bids or withdrawals will not keep the auction
open.
18. The Bureau proposes that each bidder in Auction No. 58 be
provided with three activity rule waivers that may be used at the
bidder's discretion during the course of the auction as set forth
above. The Bureau seeks comment on this proposal.
E. Information Relating to Auction Delay, Suspension, or Cancellation
19. For Auction No. 58, the Bureau proposes 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, evidence of an auction security breach, unlawful bidding
activity, or administrative or weather necessity, 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. The Bureau seeks comment
on this proposal.
III. Bidding Procedures
A. Round Structure
20. The Commission will conduct Auction No. 58 over the Internet.
Telephonic bidding will also be available. As a contingency plan, the
FCC Wide Area Network will be available as well. The telephone number
through which the backup FCC Wide Area Network may be accessed will be
announced in a later public notice. Full information regarding how to
establish such a connection will be provided in the public notice
announcing details of auction procedures.
21. The initial bidding schedule will be announced in a public
notice to be released at least one week before the start of the
auction, and will be included in the registration mailings. The
simultaneous multiple-round format will consist of sequential bidding
rounds, each followed by the release of round results. Details
regarding the location and format of round results will be included in
the same public notice.
22. 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 and review periods, or the number of rounds per day,
depending upon the bidding
[[Page 40635]]
activity level and other factors. The Bureau seeks comment on this
proposal.
B. Reserve Price or Minimum Opening Bid
23. The Balanced Budget Act calls upon the Commission to prescribe
methods for establishing a reasonable reserve price or a minimum
opening bid when FCC licenses are subject to auction, unless the
Commission determines that a reserve price or minimum opening bid is
not in the public interest. Consistent with this mandate, the
Commission has 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.
24. Normally, a reserve price is an absolute minimum price below
which an item will not be sold in a given auction. Reserve prices can
be either published or unpublished. A minimum opening bid, on the other
hand, is the minimum bid price set at the beginning of the auction
below which no bids are accepted. It is generally used to accelerate
the competitive bidding process. Also, the auctioneer often has the
discretion to lower the minimum opening bid amount later in the
auction. It is also possible for the minimum opening bid and the
reserve price to be the same amount.
25. In light of the Balanced Budget Act's requirements, the Bureau
proposes to establish minimum opening bids for Auction No. 58 based on
factors that could have an impact on the value of the spectrum. The
Bureau believes a minimum opening bid, which has been used in other
auctions, is an effective bidding tool. With these guidelines in mind
for Auction No. 58, the Bureau proposes to calculate minimum opening
bids on a license-by-license basis using formulas based on bandwidth
and license area population. Furthermore, the Bureau proposes to
differentiate these formulas based on the population of each license
area.
Population [gteqt] 2,000,000:$0.50 *MHz* License Area Population
Population [gteqt] 500,000:$0.25 *MHz* License Area Population
Population < 500,000:$0.15 *MHz* License Area Population
26. The specific minimum opening bid for each license available in
Auction No. 58 is set forth in Attachment A of the Auction No. 58
Comment Public Notice. The Bureau seeks comment on this proposal.
27. If commenters believe that these minimum opening bids will
result in substantial numbers of ``unwon'' licenses, or are not
reasonable amounts, or should instead operate as reserve prices, they
should explain why this is so, and comment on the desirability of an
alternative approach. Commenters are advised to support their claims
with valuation analyses and suggested reserve prices or minimum opening
bid levels or formulas. In establishing the minimum opening bids, the
Bureau particularly seeks comment on such factors as the amount of
spectrum being auctioned, levels of incumbency, the availability of
technology to provide service, the size of the geographic service
areas, issues of interference with other spectrum bands and any other
relevant factors that could reasonably have an impact on valuation of
these PCS licenses. The Bureau also seeks comment on whether,
consistent with the Balanced Budget Act, the public interest would be
served by having no minimum opening bid or reserve price.
C. Minimum Acceptable Bids and Bid Increments
28. In each round, eligible bidders will be able to place bids on a
given license in any of nine different amounts. The FCC Automated
Auction System interface will list the nine acceptable bid amounts for
each license. Until a bid has been placed on a license, the minimum
acceptable bid for that license will be equal to its minimum opening
bid. In the rounds after a bid is placed on a license, the minimum
acceptable bid for that license will be equal to the standing high bid
plus the defined increment.
29. Once there is a standing high bid on a license, the FCC
Automated Auction System will calculate a minimum acceptable bid for
that license for the following round, as described below. The
difference between the minimum acceptable bid and the standing high bid
for each license will define the bid increment. The nine acceptable bid
amounts for each license consist of the minimum acceptable bid (the
standing high bid plus one bid increment) and additional amounts
calculated using multiple bid increments (i.e., the second bid amount
equals the standing high bid plus two times the bid increment, the
third bid amount equals the standing high bid plus three times the bid
increment, etc.).
30. Until a bid has been placed on a license, the minimum
acceptable bid for that license will be equal to its minimum opening
bid. The additional bid amounts for licenses that have not yet received
a bid will be calculated differently, as explained below.
31. For Auction No. 58, the Bureau proposes to calculate minimum
acceptable bids by using a smoothing methodology, as the Bureau has
done in several other auctions. The smoothing formula calculates
minimum acceptable bids by first calculating a percentage increment,
not to be confused with the bid increment. The percentage increment for
each license is based on bidding activity on that license in all prior
rounds; therefore, a license that has received many bids throughout the
auction will have a higher percentage increment than a license that has
received few bids.
32. The calculation of the percentage increment used to determine
the minimum acceptable bids for each license for the next round is made
at the end of each round. The computation is 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. The current activity index
is equal to a weighting factor times the number of new bids received on
the license in the most recent bidding round plus one minus the
weighting factor times the activity index from the prior round. The
activity index is then used to calculate a percentage increment by
multiplying a minimum percentage increment by one plus the activity
index with that result being subject to a maximum percentage increment.
The Commission will initially set the weighting factor at 0.5, the
minimum percentage increment at 0.1 (10%), and the maximum percentage
increment at 0.3 (30%). Hence, at these initial settings, the
percentage increment will fluctuate between 10% and 30% depending upon
the number of bids for the license.
Equations
Ai = (C*Bi ) + ( (1-C)*Ai-1)
Ii+1 = smaller of ( (1 + Ai)*N) and M
Xi+1 = Ii+1*Yi
where,
Ai = activity index for the current round (round i)
C = activity weight factor
Bi = number of bids in the current round (round i)
Ai-1 = activity index from previous round (round i-1),
A0 is 0
Ii+1 = percentage increment for the next round (round
i+1)
N = minimum percentage increment or percentage increment floor
M = maximum percentage increment or percentage increment ceiling
Xi+1 = dollar amount associated with the percentage
increment
Yi = high bid from the current round
33. Under the smoothing methodology, once a bid has been
[[Page 40636]]
received on a license, the minimum acceptable bid for that license in
the following round will be the high bid from the current round plus
the dollar amount associated with the percentage increment, with the
result rounded to the nearest thousand if it is over ten thousand or to
the nearest hundred if it is under ten thousand.
Examples
License 1
C = 0.5, N = 0.1, M = 0.3
Round 1 (2 new bids, high bid = $1,000,000)
i. Calculation of percentage increment for round 2 using the smoothing
formula:
A1 = (0.5*2) + (0.5*0) = 1
I2 = The smaller of ( (1 + 1)*0.1) = 0.2 or 0.3 (the
maximum percentage increment).
ii. Calculation of dollar amount associated with the percentage
increment for round 2 (using I2 from above):
X2 = 0.2*$1,000,000 = $200,000
iii. Minimum acceptable bid for round 2 = $1,200,000.
Round 2 (3 new bids, high bid = $2,000,000)
i. Calculation of percentage increment for round 3 using the smoothing
formula:
A2 = (0.5*3) + (0.5*1) = 2
I3 = The smaller of ( (1 + 2)*0.1) = 0.3 or 0.3 (the
maximum percentage increment).
ii. Calculation of dollar amount associated with the percentage
increment for round 3 (using I3 from above):
X3 = 0.3*$2,000,000 = $600,000.
iii. Minimum acceptable bid for round 3 = $2,600,000.
Round 3 (1 new bid, high bid = $2,600,000)
i. Calculation of percentage increment for round 4 using the smoothing
formula:
A3 = (0.5*1) + (0.5*2) = 1.5
I4 = The smaller of ( (1 + 1.5)*0.1) = 0.25 or 0.3 (the
maximum percentage increment).
ii. Calculation of dollar amount associated with the percentage
increment for round 4 (using I4 from above):
X4 = 0.25*$2,600,000 = $650,000.
iii. Minimum acceptable bid for round 4 = $3,250,000.
34. As stated above, until a bid has been placed on a 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 as described above, and the minimum
opening bid. That is, I = (minimum opening bid)(1 + N){rounded{time} -
(minimum opening bid). Therefore, when N equals 0.1, the first
additional bid amount will be approximately ten percent higher than the
minimum opening bid; the second, twenty percent; the third, thirty
percent; etc.
35. In the case of a license for which the standing high bid has
been withdrawn, the minimum acceptable bid will equal the second
highest bid received for the license. The additional bid amounts are
calculated using the difference between the second highest bid times
one plus the minimum percentage increment, rounded, and the second
highest bid.
36. The Bureau retains the discretion to change the minimum
acceptable bids and bid increments if it determines that circumstances
so dictate. The Bureau will do so by announcement in the FCC Automated
Auction System. The Bureau seeks comment on these proposals.
D. High Bids
37. At the end of a bidding round, a high bid for each license will
be determined based on the highest gross bid amount received for the
license. In the event of identical high bids on a license in a given
round (i.e., tied bids), the Bureau proposes to use a random number
generator to select a single high bid from among the tied bids. If the
auction were to end with no higher bids being placed for that license,
the winning bidder would be the one that placed the selected high bid.
However, the remaining bidders, as well as the high bidder, can submit
higher bids in subsequent rounds. If any bids are received on the
license in a subsequent round, the high bid again will be determined by
the highest gross bid amount received for the license. The Bureau seeks
comment on this proposal.
38. A high bid will remain the high bid until there is a higher bid
on the same license at the close of a subsequent round. A high bid from
a previous round is sometimes referred to as a ``standing high bid.''
Bidders are reminded that standing high bids count towards bidding
activity.
E. Information Regarding Bid Withdrawal and Bid Removal
39. For Auction No. 58, the Bureau proposes the following bid
removal and bid withdrawal procedures. Before the close of a bidding
period, a bidder has the option of removing any bid placed in that
round. By removing selected bids in the bidding system, a bidder may
effectively ``unsubmit'' any bid placed within that round. A bidder
removing a bid placed in the same round is not subject to a withdrawal
payment. Once a round closes, a bidder may no longer remove a bid.
40. A high bidder may withdraw its standing high bids from previous
rounds using the withdraw function in the bidding system. A high bidder
that withdraws its standing high bid from a previous round is subject
to the bid withdrawal payment provisions of the Commission rules. The
Bureau seeks comment on these bid removal and bid withdrawal
procedures.
41. In the Part 1 Third Report and Order, 63 FR 770, January 7,
1998, the Commission explained that allowing bid withdrawals
facilitates efficient aggregation of licenses and the pursuit of
efficient backup strategies as information becomes available during the
course of an auction. The Commission noted, however, that, in some
instances, bidders may seek to withdraw bids for improper reasons. The
Bureau, therefore, has discretion, in managing the auction, to limit
the number of withdrawals to prevent any bidding abuses. The Commission
stated that the Bureau should assertively exercise its discretion,
consider limiting the number of rounds in which bidders may withdraw
bids, and prevent bidders from bidding on a particular market if the
Bureau finds that a bidder is abusing the Commission's bid withdrawal
procedures.
42. Applying this reasoning, the Bureau proposes to limit each
bidder in Auction No. 58 to withdrawing standing high bids in no more
than two rounds during the course of the auction. To permit a bidder to
withdraw bids in more than two rounds would likely encourage insincere
bidding or the use of withdrawals for anti-competitive purposes. The
two rounds in which withdrawals are utilized will be at the bidder's
discretion; withdrawals otherwise must be in accordance with the
Commission's rules. There is no limit on the number of standing high
bids that may be withdrawn in either of the rounds in which withdrawals
are utilized. Withdrawals will remain subject to the bid withdrawal
payment provisions specified in the Commission's rules. The Bureau
seeks comment on this proposal.
[[Page 40637]]
F. Stopping Rule
43. The Bureau has discretion ``to establish stopping rules before
or during multiple round auctions in order to terminate the auction
within a reasonable time.'' For Auction No. 58, the Bureau proposes 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.
44. Bidding will close simultaneously on all licenses after the
first round in which no new bids, proactive waivers, or withdrawals are
received. Thus, unless circumstances dictate otherwise, bidding will
remain open on all licenses until bidding stops on every license.
45. However, the Bureau proposes to retain the discretion to
exercise any of the following options during Auction No. 58:
i. Utilize a modified version of the simultaneous stopping rule.
The modified stopping rule would close the auction for all licenses
after the first round in which no bidder submits a proactive waiver,
withdrawal, or a new bid on any license on which it is not the standing
high bidder. Thus, absent any other bidding activity, a bidder placing
a new bid on a license for which it is the standing high bidder would
not keep the auction open under this modified stopping rule. The Bureau
further seeks comment on whether this modified stopping rule should be
used at any time or only in stage two of the auction.
ii. Keep the auction open even if no new bids or proactive waivers
are submitted and no previous high bids are withdrawn. In this event,
the effect will be the same as if a bidder had submitted a proactive
waiver. The activity rule, therefore, will apply as usual and a bidder
with insufficient activity will either lose bidding eligibility or use
a remaining activity rule waiver.
iii. 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) only for licenses on which the high bid increased in at least
one of a specified preceding number of rounds.
46. The Bureau proposes to exercise these options only in certain
circumstances, for example, where the auction is proceeding very
slowly, there is minimal overall bidding activity, or it appears likely
that the auction will not close within a reasonable period of time.
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 increasing the amount of the minimum
bid increments for the limited number of licenses where there is still
a high level of bidding activity. The Bureau seeks comment on these
proposals.
IV. Conclusion
47. Comments are due on or before July 8, 2004, and reply comments
are due on or before July 15, 2004. Because of the disruption of
regular mail and other deliveries in Washington, DC, the Bureau
requires that all comments and reply comments be filed electronically.
Comments and reply comments must be sent by electronic mail to the
following address: auction58@fcc.gov. The electronic mail containing
the comments or reply comments must include a subject or caption
referring to Auction No. 58 Comments and the name of the commenting
party. The Bureau requests that parties format any attachments to
electronic mail as Adobe[reg] Acrobat[reg] (pdf) or Microsoft[reg] Word
documents. Copies of comments and reply comments will be available for
public inspection during regular business hours in the FCC Reference
Information Center, Room CY-A257, 445 12th Street, SW., Washington, DC
20554.
In addition, the Bureau requests that commenters fax a courtesy
copy of their comments and reply comments to the attention of Kathryn
Garland at (717) 338-2850.
48. This proceeding has been designated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte
rules. Persons making oral ex parte presentations are reminded that
memoranda summarizing the presentations must contain summaries of the
substance of the presentations and not merely a listing of the subjects
discussed. More than a one or two sentence description of the views and
arguments presented is generally required. Other rules pertaining to
oral and written ex parte presentations in permit-but-disclose
proceedings are set forth in Sec. 1.1206(b) of the Commission's rules.
Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 04-15239 Filed 7-2-04; 8:45 am]
BILLING CODE 6712-01-P