[Federal Register: November 29, 2006 (Volume 71, Number 229)]
[Notices]
[Page 69125-69130]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29no06-55]
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FEDERAL COMMUNICATIONS COMMISSION
[Report No. AUC-06-71-A (Auction No. 71); DA 06-2298; AU Docket No. 06-
206]
Auction of Broadband PCS Spectrum Scheduled for May 16, 2007;
Comments Sought on Competitive Bidding Procedures for Auction No. 71
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This document announces the auction of certain broadband
Personal Communications Services (PCS) licenses scheduled to commence
on May 16, 2007 (Auction No. 71). This document also seeks comments on
competitive bidding procedures for Auction No. 71.
DATES: Comments are due on or before December 4, 2006, and reply
comments are due on or before December 11, 2006.
ADDRESSES: Comments and reply comments must be identified by AU Docket
No. 06-206; DA 06-2298. The Bureau request that a copy of all comments
and reply comments be submitted electronically to the following
address: auction71@fcc.gov. In addition, comment and reply comments may
be submitted by any of the following methods:
Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/.
Follow the instructions for submitting comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. Filings can be sent by
hand or messenger delivery, by commercial overnight courier, or by
first-class or overnight U.S. Postal Service mail (although the Bureau
continues to experience delays in receiving U.S. Postal Service mail).
All filings must be addressed to the Commission's Secretary, Attn: WTB/
ASAD, Office of the Secretary, Federal Communications Commission.
The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing
hours at this location are 8 a.m. to 7 p.m. Eastern Time (ET). All hand
deliveries must be held together with rubber bands or fasteners.
Commercial overnight mail (other than U.S. Postal Service Express Mail
and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol
Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau,
Auctions and Spectrum Access Division, for auctions legal questions:
Stephen Johnson at (202) 418-0660. For general auction questions: Roy
Knowles or Linda Sanderson at (717) 338-2888. Mobility Division, for
service rules questions: Erin McGrath or Michael Connelly (legal) or
Dwain Livingston (technical) at (202) 418-0620.
SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 71
Comment Public Notice released on November 17, 2006. The complete text
of the Auction No. 71 Comment Public Notice, including attachments and
related Commission documents, is available for public inspection and
copying from 8 a.m. to 4:30 p.m. ET Monday through Thursday or from
8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference Information
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC
20554. The Auction No. 71 Comment Public Notice, including attachments
and related Commission documents also may 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, DA 06-2298. The Auction No. 71 Comment Public Notice and
related documents also are available on the Internet at the
Commission's Web site: http://wireless.fcc.gov/ auctions/71/.
I. Introduction
1. The Wireless Telecommunications Bureau (Bureau) announces an
auction of 38 broadband PCS licenses. This auction, which is designated
Auction No. 71, is scheduled to commence on May 16, 2007.
II. Licenses To Be Offered in Auction No. 71
2. The spectrum to be auctioned has been offered previously in
other auctions but was unsold and/or returned to the Commission as a
result
[[Page 69126]]
of license cancellation or termination. A complete list of licenses
available for Auction No. 71 is included as Attachment A of the Auction
No. 71 Comment Public Notice.
3. Auction No. 71 includes licenses for A, C, D, E, and F blocks of
broadband PCS spectrum. The table referenced in the Auction No. 71
Comment Public Notice cross-references the general rules regarding
block/eligibility status/frequencies of broadband PCS licenses in these
blocks. That table indicates that the C and F block licenses 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 decennial census figures, and Tier 2 comprising the remaining
markets. No Tier 1 licenses will be offered in Auction No. 71. C1, C2,
C3, and C4 licenses in Tier 2 are generally available only to
entrepreneurs in closed bidding. This eligibility restriction no longer
applies, however, to licenses that have been made available on that
basis, but not won, in any auction beginning on or after March 23,
1999. Thus, certain licenses that were formerly subject to closed
bidding and available only to entrepreneurs are now offered in open
bidding in Auction No. 71.
4. Attachment A of the Auction No. 71 Comment Public Notice list C
block licenses being offered that are available to all bidders in open
bidding, while others are available only to entrepreneurs in closed
bidding. The A, B, E, and F block licenses, as well as certain C block
licenses, are available in open bidding. Size-based bidding credits
will be available for C and F block licenses won in open bidding. In
order to qualify as an entrepreneur for closed bidding, 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. 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. Because of the previous history of licenses for broadband PCS
spectrum, certain of the licenses available in Auction No. 71 cover
less bandwidth and fewer frequencies than noted in the table referenced
in the Auction No. 71 Comment Public Notice. In addition, in some
cases, licenses are available for only part of a market.
6. Incumbency Issues. While much of the private and common carrier
fixed microwave services (FMS) operating in the 1850-1990 MHz band (and
other bands) have been relocated to available frequencies in higher
bands or to other media, some FMS licensees may still be operating in
the band. Applicants should become familiar with the status of FMS
operation and relocation, and applicable Commission rules and orders.
III. Bureau Seeks Comment on Auction Procedures
7. The Bureau seeks comment on the following issues relating to
Auction No. 71.
A. Auction Structure
i. Simultaneous Multiple-Round Auction Design
8. The Bureau proposes to auction all licenses included in Auction
No. 71 using the Commission's standard simultaneous multiple-round
(SMR) auction format. This type of auction offers every license for bid
at the same time and consists of successive bidding rounds in which
eligible bidders may place bids on individual licenses. Typically,
bidding remains open on all licenses until bidding stops on every
license. The Bureau seeks comment on this proposal.
9. Auction Format. The Bureau has considered the possibility of
using a simultaneous multiple-round auction format with package bidding
(SMR-PB), but does not believe that an SMR-PB format is likely to offer
significant advantages to bidders in Auction No. 71, given the nature
of the auction inventory. Under the Commission's SMR-PB rules, bidders
can place bids on any groups of licenses they wish to win together,
with the result that they win either all the licenses in a group or
none of them. The Bureau's standard SMR auction format offers all
licenses for bid at the same time, and allows bidders to bid on and win
multiple licenses on a license-by-license basis, thereby facilitating
aggregations. The Bureau believes use of the SMR format for Auction No.
71 will be the simplest and most efficient means of auctioning the
licenses in this inventory, and therefore, the Bureau proposes to
conduct the auction using its standard SMR auction format. However, if
commenters believe that the SMR-PB design would offer significant
benefits, the Bureau invites their comments and request that they
describe what specific factors lead them to that conclusion.
10. Information Available to Bidders Before and During an Auction.
The Bureau also seeks comment on whether to implement procedures that
would limit the disclosure of information on bidder interests and
identities relative to the information procedures that have typically
been used for Commission auctions. Commenters should indicate what
factors support the position they take on this issue and specifically,
how these factors apply to an auction of this nature, with a limited
number of localized, mostly geographically non-contiguous licenses.
Commenters should address whether technological considerations,
equipment availability, or competitive concerns weigh in favor of or
against limiting the disclosure of information on bidder interests and
identities relative to most past Commission spectrum auctions, or
whether the Commission should condition the implementation of such
limits on a measure of the competitiveness of the auction, such as the
eligibility ratio or a modified version of the eligibility ratio.
ii. Round Structure
11. The Commission will conduct Auction No. 71 over the Internet.
Alternatively, telephonic bidding will also be available via the
Auction Bidder Line. The toll-free telephone number for telephonic
bidding will be provided to qualified bidders.
12. The auction will consist of sequential bidding rounds. The
initial bidding schedule will be announced in a public notice to be
released at least one week before the start of the auction.
13. The Bureau proposes to retain the 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. Under this proposal, 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 bidding
activity levels and other factors. The Bureau seeks comment on this
proposal.
iii. Stopping Rule
14. 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. 71, 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. More specifically, bidding will close
simultaneously on all licenses after the first round in which no bidder
submits any new bids, applies a proactive waiver, or submits a
withdrawal. Thus, unless circumstances dictate otherwise, bidding will
remain
[[Page 69127]]
open on all licenses until bidding stops on every license.
15. Further, the Bureau proposes to retain the discretion to
exercise any of the following options during Auction No. 71: (a) Use 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 applies a waiver, places a withdrawal, or
submits any new bids on any license for which it is not the
provisionally winning bidder. Thus, absent any other bidding activity,
a bidder placing a new bid on a license for which it is the
provisionally winning bidder would not keep the auction open under this
modified stopping rule; (b) keep the auction open even if no bidder
submits any new bids, applies a waiver, or submits a withdrawal. In
this event, the effect will be the same as if a bidder had applied a
waiver. The activity rule, therefore, will apply as usual and a bidder
with insufficient activity will either lose bidding eligibility or use
a remaining waiver; and (c) 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) after which the auction will close.
16. 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 changing the minimum acceptable bid
percentage. The Bureau proposes to retain the discretion to use such
stopping rule with or without prior announcement during the auction.
The Bureau seeks comment on these proposals.
iv. Information Relating to Auction Delay, Suspension, or Cancellation
17. For Auction No. 71, 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, administrative or weather necessity, or for any other reason
that affects the fair and efficient conduct of competitive bidding. The
Bureau 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.
B. Auction Procedures
i. Upfront Payments and Bidding Eligibility
18. The Bureau has delegated authority and discretion to determine
an appropriate upfront payment for each license being auctioned. The
upfront payment is a refundable deposit made by each bidder to
establish eligibility to bid on licenses. Upfront payments related to
the licenses for specific spectrum subject to auction 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 factors in mind, 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 with a minimum of $500 per license.
19. The Bureau further proposes that the amount of the upfront
payment submitted by a bidder will determine the bidder's initial
bidding eligibility in bidding units. The Bureau proposes that each
license be assigned a specific number of bidding units equal to the
upfront payment listed in Attachment A of the Auction No. 71 Comment
Public Notice, on a bidding unit per dollar basis. The number of
bidding units for a given license is fixed and does not change during
the auction as prices rise. A bidder's upfront payment is not
attributed to specific licenses. Rather, a bidder may place bids on any
combination of licenses it selected on its FCC Form 175 as long as the
total number of bidding units associated with those licenses does not
exceed its current eligibility. Eligibility cannot be increased during
the auction; it can only remain the same or decrease. Thus, in
calculating its upfront payment amount and hence its initial bidding
eligibility, an applicant must determine the maximum number of bidding
units it may wish to bid on (or hold provisionally winning bids on) in
any single round, and submit an upfront payment amount covering that
total number of bidding units. Provisionally winning bids are bids that
would become final winning bids if the auction were to close in that
given round.
20. The proposed number of bidding units for each license and
associated upfront payment amounts are listed in Attachment A of the
Auction No. 71 Comment Public Notice. The Bureau seeks comment on these
proposals.
ii. Activity Rule
21. In order to ensure that the auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively
throughout the auction, rather than wait until late in the auction
before participating. A bidder's activity in a round will be the sum of
the bidding units associated with any licenses upon which it places
bids during the current round and the bidding units associated with any
licenses for which it holds provisionally winning bids. Bidders are
required to be active on a specific percentage of their current bidding
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 eligibility,
possibly curtailing or eliminating the bidder's ability to place bids
in the auction.
22. The Bureau proposes to divide the auction into two stages, each
characterized by a different 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 provisionally
winning bids, is approximately twenty percent or below for three
consecutive rounds of bidding. However, the Bureau further proposes
that the Bureau retains 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 of increase in
revenue. The Bureau seeks comment on these proposals.
23. For Auction No. 71, 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 bidding eligibility is required
to be active on licenses representing at least 80 percent of its
current bidding eligibility. Failure to maintain the required activity
level will result in a reduction in the bidder's
[[Page 69128]]
bidding eligibility in the next round of bidding (unless an activity
rule waiver is used). During Stage One, a bidder's reduced eligibility
for the next round will be calculated by multiplying the bidder's
current round activity by five-fourths (\5/4\).
Stage Two: In each round of the second stage, a bidder desiring to
maintain its current bidding eligibility is required to be active on 95
percent of its current bidding eligibility. Failure to maintain the
required activity level will result in a reduction in the bidder's
bidding eligibility in the next round of bidding (unless an activity
rule waiver is used). During Stage Two, a bidder's reduced eligibility
for the next round will be calculated by multiplying the bidder's
current round activity by twenty-nineteenths (\20/19\).
24. The Bureau seeks comment on this proposal. Commenters that
believe this activity rule 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.
iii. Activity Rule Waivers and Reducing Eligibility
25. Use of an activity rule waiver preserves the bidder's
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, not to particular licenses. Activity rule
waivers can be either proactive or automatic and are principally a
mechanism for auction participants to avoid the loss of bidding
eligibility in the event that exigent circumstances prevent them from
placing a bid in a particular round.
26. The FCC Auction System assumes that a bidder that does not meet
the activity requirement would prefer to apply an activity rule waiver
(if available) rather than lose bidding eligibility. Therefore, the
system will automatically apply a waiver at the end of any bidding
round in which a bidder's activity level is below the minimum required
unless: (1) The bidder has no activity rule waivers remaining; or (2)
the bidder overrides the automatic application of a waiver by reducing
eligibility, thereby meeting the minimum requirement. If a bidder has
no waivers remaining and does not satisfy the required activity level,
its eligibility will be permanently reduced, possibly curtailing or
eliminating the bidder's ability to place additional bids in the
auction.
27. 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 round by using the reduce eligibility function in
the FCC Auction System. In this case, the bidder's eligibility is
permanently reduced to bring the bidder into compliance with the
activity rule as described above. Reducing eligibility is an
irreversible action. Once eligibility has been reduced, a bidder will
not be permitted to regain its lost bidding eligibility, even if the
round has not yet closed.
28. A bidder may apply an activity rule waiver proactively as a
means to keep the auction open without placing a bid. If a bidder
proactively applies an activity rule waiver (using the apply waiver
function in the FCC Auction System) during a bidding round in which no
bids or withdrawals are submitted, the auction will remain open and the
bidder's eligibility will be preserved. An automatic waiver applied by
the FCC Auction System in a round in which there are no new bids,
withdrawals, or proactive waivers will not keep the auction open. A
bidder cannot submit a proactive waiver after submitting a bid in a
round, and submitting a proactive waiver will preclude a bidder from
placing any bids in that round. Applying a waiver is irreversible; once
a proactive waiver is submitted, that waiver cannot be unsubmitted,
even if the round has not yet closed.
29. The Bureau proposes that each bidder in Auction No. 71 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.
iv. Reserve Price or Minimum Opening Bids
30. The Bureau proposes to establish minimum opening bid amounts
for Auction No. 71. The Bureau believes a minimum opening bid amount,
which has been used in other auctions, is an effective bidding tool for
accelerating the competitive bidding process. The Bureau does not
propose a separate reserve price for the licenses to be offered in
Auction No. 71.
31. Specifically, for Auction No. 71, the Bureau proposes to
calculate minimum opening bid amounts on a license-by-license basis
using a formula based on bandwidth and license area population as
follows: $0.05 * MHz * License Area Population with a minimum of $500
per license. This proposed minimum opening bid amount for each license
available in Auction No. 71 is set forth in Attachment A of the Auction
No. 71 Comment Public Notice. The Bureau seeks comment on this
proposal.
32. If commenters believe that this minimum opening bid amount will
result in unsold licenses, or is not a reasonable amount, or should
instead operate as a reserve price, 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 amount levels or
formulas. In establishing minimum opening bid amounts, 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 service areas, issues of
interference with other spectrum bands and any other relevant factors
that could reasonably have an impact on valuation of the licenses being
auctioned. The Bureau seeks comment on whether, consistent with Section
309(j) of the Communications Act, the public interest would be served
by having no minimum opening bid amount or reserve price.
v. Bid Amounts
33. The Bureau proposes that, in each round, eligible bidders be
able to place a bid on a given license in any of nine different
amounts. Under this proposal, the FCC Auction System interface will
list the nine acceptable bid amounts for each license.
34. The first of the nine acceptable bid amounts is called the
minimum acceptable bid amount. The minimum acceptable bid amount for a
license will be equal to its minimum opening bid amount until there is
a provisionally winning bid for the license. After there is a
provisionally winning bid for a license, the minimum acceptable bid
amount for that license will be equal to the amount of the
provisionally winning bid plus a percentage of that bid amount
calculated using the formula. In general, the percentage will be higher
for a license receiving many bids than for a license receiving few
bids. In the case of a license for which the provisionally winning bid
has been withdrawn, the minimum acceptable bid amount will equal the
second highest bid received for the license.
35. The percentage of the provisionally winning bid used to
establish the minimum acceptable bid amount (the additional percentage)
is calculated at the end of each round,
[[Page 69129]]
based on an activity index which is a weighted average of the number of
bids in that round and the activity index from the prior round.
Specifically, the activity index is equal to a weighting factor times
the number of bids on the license in the most recent bidding round plus
one minus the weighting factor times the activity index from the prior
round. The additional percentage is determined as one plus the activity
index times a minimum percentage amount, with the result not to exceed
a given maximum. The additional percentage is then multiplied by the
provisionally winning bid amount to obtain the minimum acceptable bid
for the next round. The Commission will initially set the weighting
factor at 0.5, the minimum percentage at 0.1 (10%), and the maximum
percentage at 0.2 (20%). Hence, at these initial settings, the minimum
acceptable bid for a license will be between ten percent and twenty
percent higher than the provisionally winning bid, depending upon the
bidding activity for the license. Equations and examples are shown in
Attachment B of the Auction No. 71 Comment Public Notice.
36. The eight additional bid amounts are calculated using the
minimum acceptable bid amount and a bid increment percentage. The first
additional acceptable bid amount equals the minimum acceptable bid
amount times one plus the bid increment percentage, rounded. If, for
example, the bid increment percentage is ten percent, the calculation
is (minimum acceptable bid amount) * (1 + 0.1), rounded, or (minimum
acceptable bid amount) * 1.1, rounded; the second additional acceptable
bid amount equals the minimum acceptable bid amount times one plus two
times the bid increment percentage, rounded, or (minimum acceptable bid
amount) * 1.2, rounded; the third additional acceptable bid amount
equals the minimum acceptable bid amount times one plus three times the
bid increment percentage, rounded, or (minimum acceptable bid amount) *
1.3, rounded; etc. The Bureau will round the results of these
calculations, as well as the calculations to determine the minimum
acceptable bid amounts, using its standard rounding procedures. For
Auction No. 71, the Bureau proposes to use a bid increment percentage
of ten percent to calculate the eight additional acceptable bid
amounts.
37. The Bureau retains the discretion to change the minimum
acceptable bid amounts, the parameters of the formula to determine the
percentage of the provisionally winning bid used to determine the
minimum acceptable bid, and the bid increment percentage if it
determines that circumstances so dictate. The Bureau will do so by
announcement in the FCC Auction System during the auction. The Bureau
seeks comment on its proposals for minimum acceptable bids amount and
additional percentages as described in the Auction No. 71 Comment
Public Notice.
vi. Provisionally Winning Bids
38. Provisionally winning bids are bids that would become final
winning bids if the auction were to close in that given round. At the
end of a bidding round, a provisionally winning bid for each license
will be determined based on the highest bid amount received for the
license. In the event of identical high bid amounts being submitted on
a license in a given round (i.e., tied bids), the Bureau will use a
random number generator to select a single provisionally winning bid
from among the tied bids. The remaining bidders, as well as the
provisionally winning bidder, can submit higher bids in subsequent
rounds. However, if the auction were to end with no other bids being
placed, the winning bidder would be the one that placed the
provisionally winning bid. If any bids are received on the license in a
subsequent round, the provisionally winning bid again will be
determined by the highest bid amount received for the license.
39. A provisionally winning bid will remain the provisionally
winning bid until there is a higher bid on the license at the close of
a subsequent round, unless the provisionally winning bid is withdrawn.
Bidders are reminded that provisionally winning bids count toward
activity for purposes of the activity rule.
vii. Bid Removal and Bid Withdrawal
40. For Auction No. 71, the Bureau proposes the following bid
removal procedures. Before the close of a bidding round, a bidder has
the option of removing any bid placed in that round. By removing
selected bids in the FCC Auction System, a bidder may effectively
unsubmit any bid placed within that round. In contrast to the bid
withdrawal provisions, 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.
41. A bidder may withdraw its provisionally winning bids using the
withdraw bids function in the FCC Auction System. A bidder that
withdraws its provisionally winning bid(s) is subject to the bid
withdrawal payment provisions of the Commission rules. The Bureau seeks
comment on these bid removal and bid withdrawal procedures.
42. The Bureau proposes to limit each bidder to withdrawing
provisionally winning bids in no more than two rounds during the course
of the auction. The two rounds in which withdrawals may be used 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
provisionally winning bids that may be withdrawn in either of the
rounds in which withdrawals are used. Withdrawals will remain subject
to the bid withdrawal payment provisions specified in the Commission's
rules.
C. Post-Auction Procedures
i. Establishing the Interim Withdrawal Payment Percentage
43. The Bureau seeks comment on the appropriate percentage of a
withdrawn bid that should be assessed as an interim withdrawal payment,
in the event that a final withdrawal payment cannot be determined at
the close of the auction. In general, the Commission's rules provide
that a bidder that withdraws a bid during an auction is subject to a
withdrawal payment equal to the difference between the amount of the
withdrawn bid and the amount of the winning bid in the same or
subsequent auction(s). However, if a license for which there has been a
withdrawn bid is neither subject to a subsequent higher bid nor won in
the same auction, the final withdrawal payment cannot be calculated
until a corresponding license is subject to a higher bid or won in a
subsequent auction. When that final payment cannot yet be calculated,
the bidder responsible for the withdrawn bid is assessed an interim bid
withdrawal payment, which will be applied toward any final bid
withdrawal payment that is ultimately assessed. The Commission recently
amended its rules to provide that in advance of the auction, the
Commission shall establish the percentage of the withdrawn bid to be
assessed as an interim bid withdrawal payment between three percent and
twenty percent.
44. The Commission has indicated that the level of the interim
withdrawal payment in a particular auction will be based on the nature
of the service and the inventory of the licenses being offered.
Balancing the potential need for bidders to use withdrawals to avoid
winning incomplete combinations of licenses with interest in deterring
abuses of its bidding, the Bureau proposes a percentage below the
[[Page 69130]]
maximum twenty percent permitted under the current rules but above the
three percent previously provided by the Commission's rules.
Specifically, the Bureau proposes to establish the percentage of the
withdrawn bid to be assessed as an interim bid withdrawal payment at
fifteen percent for this auction. The Bureau seeks comment on this
proposal.
ii. Establishing the Additional Default Payment Percentage
45. Any winning bidder that defaults or is disqualified after the
close of an 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) is liable for a default payment under 47 CFR
1.2104(g)(2). This payment consists of a deficiency payment, equal to
the difference between the amount of the bidder's bid and the amount of
the winning bid the next time a license covering the same spectrum is
won in an auction, plus an additional payment equal to a percentage of
the defaulter's bid or of the subsequent winning bid, whichever is
less. Until recently this additional payment for non-combinatorial
auctions has been set at three percent of the defaulter's bid or of the
subsequent winning bid, whichever is less.
46. The CSEA/Part 1 Report and Order, 71 FR 6214, February 7, 2006,
modified Sec. 1.2104(g)(2) by, inter alia, increasing the three
percent limit on the additional default payment for non-combinatorial
auctions to twenty percent. Under the modified rule, the Commission
will, in advance of each non-combinatorial auction, establish an
additional default payment for that auction of three percent up to a
maximum of twenty percent. As the Commission has indicated, the level
of this payment in each case will be based on the nature of the service
and the inventory of the licenses being offered.
47. For Auction No. 71, the Bureau proposes to establish an
additional default payment of ten percent. Balancing these
considerations, the Bureau proposes an additional default payment of
ten percent of the relevant bid. The Bureau seeks comment on this
proposal.
IV. Conclusion
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 D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E6-20241 Filed 11-28-06; 8:45 am]
BILLING CODE 6712-01-P