[Federal Register: November 2, 2007 (Volume 72, Number 212)]
[Notices]
[Page 62359-62392]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02no07-102]
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Part IV
Federal Communications Commission
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Auction of 700 MHz Band Licenses Scheduled for January 24, 2008; Notice
and Filing Requirements, Minimum Opening Bids, Reserved Prices, Upfront
Payments and Other Procedures for Auctions 73 and 76; Notice
[[Page 62360]]
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FEDERAL COMMUNICATIONS COMMISSION
[AU Docket No. 07-157; Report No. AUC-07-73-B (Auctions 73 and 76); DA
07-4171]
Auction of 700 MHz Band Licenses Scheduled for January 24, 2008;
Notice and Filing Requirements, Minimum Opening Bids, Reserved Prices,
Upfront Payments and Other Procedures for Auctions 73 and 76
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This document announces the procedures and minimum opening
bids for the upcoming auction of certain 700 MHz Band Licenses
(Auctions 73 and 76). This document is intended to familiarize
prospective bidders with the procedures and minimum opening bids for
these auctions.
DATES: Applications to participate in 700 MHz Band Licenses Auctions 73
and 76 must be filed before 6 p.m. ET on December 3, 2007. Bidding for
Auction No. 73 is scheduled to begin on January 24, 2008. Contingent
subsequent bidding in Auction 76, if necessary, will begin on a date to
be announced after Auction 73 has closed.
FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau,
Auctions Spectrum and Access Division: For legal questions: Scott
Mackoul, Stephen Johnson or Howard Davenport at (202) 418-0660. For
general auction questions: Lisa Stover at (717) 338-2868. Mobility
Division: For service rule questions: Erin McGraft (legal), Keith
Harper (engineering) and Denise Walter (licensing) at (202) 418-0620.
To request materials in accessible formats (Braille, large print,
electronic files or audio format) for people with disabilities, send an
e-mail to fcc504@fcc.gov or call the Consumer and Governmental Affairs
Bureau at (202) 418-0530 or (202) 418-0432 (TTY).
SUPPLEMENTARY INFORMATION: This is a summary of the Auctions 73 and 76
Procedures Public Notice released on October 5, 2007. The complete text
of the Auctions 73 and 76 Procedures Public Notice, including
attachments, as well as related Commission documents are available for
public inspection and copying from 8 a.m. to 4:30 p.m. Eastern Time
(ET) Monday through Thursday or from 8 a.m. to 11:30 a.m. on Friday at
the FCC Reference Information Center, Portals II, 445 12th Street, SW.,
Room CY-A257, Washington, DC 20554. On October 19, 2007, a Public
Notice was released announcing a change in the date of the bidders'
seminar for Auctions 73 and 76 from November 19, 2007 to November 20,
2007. The Auctions 73 and 76 Procedures Public Notice and related
Commission documents may also be purchased from the Commission's
duplicating contractor, Best Copy and Printing, Inc. (BCPI), Portals
II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554,
telephone 202-488-5300, facsimile 202-488-5563, or Web site: http://www.BCPIWEB.com.
When ordering documents from BCPI, please provide the
appropriate FCC document number, for example, DA 07-4171 for the
Auctions 73 and 76 Procedures Public Notice. The Auctions 73 and 76
Procedures Public Notice and related documents are also available on
the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/73/
.
I. General Information
A. Introduction
1. The Wireless Telecommunications Bureau (the Bureau) announces
the procedures and minimum opening bid amounts for the upcoming auction
of licenses for services in the 698-806 MHz band (700 MHz Band)
scheduled to begin on January 24, 2008. This auction is designated as
Auction 73. Auction 73 will offer 700 MHz Band licenses for initial
bidding and the 700 MHz Band licenses may be offered in contingent
subsequent bidding. In the event that any licenses are offered in
contingent subsequent bidding, that event will be designated as Auction
76. On August 17, 2007, in accordance with Section 309(j)(3) of the
Communications Act of 1934, as amended, the Bureau released a public
notice seeking comment on competitive bidding procedures for both the
initial bidding and the contingent subsequent bidding for 700 MHz Band
licenses. Interested parties submitted 12 comments and 8 reply comments
in response to the 700 MHz Auction Public Notice, 72 FR 48272, August
23, 2007, as well as a number of ex parte communications.
2. In the 700 MHz Auction Public Notice, the Bureau proposed to
include all available, commercial 700 MHz Band licenses (1,099
licenses) for initial bidding in Auction 73 using the Commission's
standard simultaneous multiple-round (SMR) auction format for the A, B,
D, and E block licenses and an auction design with hierarchical package
bidding (HPB) for the C Block licenses. The 700 MHz Auction Public
Notice also proposed procedures for the contingent subsequent bidding,
now designated Auction 76, on licenses for spectrum associated with any
initially offered licenses for which the Auction 73 results do not
satisfy applicable reserve prices. Based on the record and after
considering comments provided in response to the 700 MHz Auction Public
Notice, the Bureau hereby announces the final procedures for Auctions
73 and Auction 76.
3. The Auctions 73 and 76 Procedures Public Notice provides, among
other things, procedures for the following: (1) Anonymous bidding, to
enhance competition by safeguarding against potential anti-competitive
auction strategies; (2) package bidding, to enable bidders trying to
combine multiple C Block licenses to place bids on packages of those
licenses; (3) block-specific aggregate reserve prices, to help assure
that the public recovers a portion of the value of the spectrum
resource; and (4) prompt subsequent bidding in Auction 76, to offer
licenses for relevant block(s) in the event Auction 73 results do not
satisfy applicable reserve prices.
4. Anonymous Bidding. In the 700 MHz Second Report and Order, 65 FR
17594, April, 4, 2000, the Commission found that the public interest
would be served if the auction for new 700 MHz Band licenses is
conducted using anonymous (or limited information) bidding procedures,
regardless of any pre-auction measurement of likely auction
competition. Such information procedures are intended to reduce the
potential for anti-competitive bidding behavior, including bidding
activity that aims to prevent the entry of new competitors. Having
proposed and sought comment on more detailed procedures for employing
anonymous bidding for the upcoming auction, the Bureau now announces
the anonymous bidding procedures.
5. Package Bidding for C Block Licenses. The Commission also
determined in the 700 MHz Second Report and Order that providing for
package bidding for C Block licenses would serve the public interest.
The Commission found that package bidding for these licenses should
facilitate the entry of entities seeking to create a nationwide
footprint and whose business plans require the economies of scale that
only can be obtained with nationwide operation. At Commission
direction, the Bureau previously proposed and sought comment on
detailed procedures for implementing package bidding for the C Block
licenses and not for licenses in the other blocks to be auctioned. In
the Auctions 73 and 76 Procedures Public Notice, the Bureau detailed
the process for package bidding for the C Block licenses.
6. Block-Specific Aggregate Reserve Prices. The Commission also
decided to
[[Page 62361]]
provide for aggregate reserve prices for licenses authorizing the use
of each block of the commercial 700 MHz Band yet to be licensed. The
Commission concluded that, consistent with its statutory mandate,
disclosed reserve prices would promote the recovery of a portion of the
value of the public spectrum resource. The Commission directed the
Bureau to adopt aggregate reserve prices reflecting the potential
market value of this spectrum based on a variety of factors including,
but not limited to, the characteristics of this band and the auction
prices of other recently auctioned licenses, such as licenses for
Advanced Wireless Services in the 1710-1755 MHz and 2110-2155 MHz bands
(AWS-1). Accordingly, the Bureau proposed and sought comment on the
following block-specific aggregate reserve prices: Block A, $1.807380
billion; Block B, $1.374426 billion; Block C, $4.637854 billion; Block
D, $1.330000 billion; Block E, $0.903690 billion. Further, the Bureau
proposed that if the sum of the provisionally winning bids for the
licenses in a block does not satisfy the relevant aggregate reserve
price, none of the relevant licenses for the particular block will be
assigned based on the auction results. In the Auctions 73 and 76
Procedures Public Notice, the Bureau adopted this proposal.
7. Auction 76 Overview. The Commission decided that, if licenses
initially offered for the A, B, C, or E Blocks are not assigned because
the auction results do not satisfy the applicable aggregate reserve
price(s) for those licenses, the Commission promptly will offer
alternative licenses for those blocks. More specifically, the
Commission will offer licenses for the A, B, and E Blocks subject to
alternative performance requirements. With respect to the C Block, the
Commission will offer alternative licenses without the open platform
conditions and based on different geographic areas and spectrum
bandwidth. If the D Block license is not assigned because the auction
results do not satisfy the D Block reserve price, the Commission may
re-offer that license subject to the same rules or reconsider the
applicable rules. For administrative purposes, the Bureau will
designate as Auction 76 any subsequent bidding for alternative licenses
for the A, B, C or E Blocks or for the D Block license that occurs
because Auction 73 results for licenses initially offered for the
relevant blocks do not satisfy the applicable aggregate reserve
price(s). In the Auctions 73 and 76 Procedures Public Notice, the
Bureau announced detailed procedures for conducting Auction 76, if
necessary.
8. The Commission will conduct bidding in Auction 73 and any
contingent subsequent bidding in Auction 76 for 700 MHz Band licenses
as a single auction to the extent possible, given the strong public
interest in promptly assigning all 700 MHz Band licenses for recovered
analog spectrum and the related nature of the licenses being offered in
Auctions 73 and 76. Thus, pursuant to the 700 MHz Second Report and
Order, the Bureau will permit only qualified bidders in the initial
auction to participate in the contingent subsequent auction. To enable
a prompt start to Auction 76 after Auction 73, applicants must select
any licenses on which they may bid in Auction 76 by the deadline for
filing their Auction 73 application. Applicants must select those
licenses by submitting a separate abbreviated short-form application to
participate in Auction 76. The abbreviated Auction 76 application must
be filed together with the applicant's standard application for Auction
73, following procedures described in the Auctions 73 and 76 Procedures
Public Notice. In the event that Auction 76 takes place, bidder
identity and other information on the applicant's completed Auction 73
short-form application will be combined with the licenses selected in
the abbreviated Auction 76 application to create the applicant's
Auction 76 application. This process will minimize the time period
between auctions by eliminating any need for applicants to take time
following Auction 73 to file new applications or select additional
licenses, and for the Commission to review newly-filed short-form
applications. Applicants in Auction 76, however, will have an
opportunity after Auction 73 to obtain additional eligibility for any
licenses offered in Auction 76 by supplementing their upfront monies on
deposit with the Commission pursuant to the procedures as provided for
in the 700 MHz Second Report and Order.
9. The Bureau also will use the Auction 73 design in Auction 76,
including an aggregate reserve price for each block that matches the
applicable initial reserve price. In the event that alternative
licenses for the C Block are offered for Blocks C1 and C2, the Bureau
will conduct package bidding for the C2 Block only, using the pre-
determined packages. Alternative licenses for Blocks C1 and C2 will be
subject to reserve prices. There will be a joint aggregate reserve
price equal to the initial auction C Block aggregate reserve price, and
separate aggregate reserve prices for the C1 and C2 Blocks that add to
the joint aggregate reserve price. Licenses in both blocks will be
assigned if the joint aggregate reserve price is met. If the joint
aggregate reserve price is not met but one of the block-specific
reserve prices is met, licenses in the block for which the reserve
price is met will be assigned. Licenses in the other block will not be
assigned. This will assure the aggregate reserve price in the initial
auction continues to apply while maximizing the opportunity for
licenses for either Block C1 or C2 to be assigned.
i. Background of Proceeding
10. The Commission is offering the licenses in Auction 73
consistent with the requirements of the Digital Television Transition
and Public Safety Act of 2005 (DTV Act). Pursuant to the DTV Act the
Commission must conduct the auction of licenses for recovered analog
spectrum by commencing the bidding not later than January 28, 2008. A
number of incumbent broadcasters are licensed and operating on these
frequencies (TV Channels 52-53, 56-58, 60-62, and 65-67) and adjacent
channels.
ii. Licenses To Be Offered in Auction 73
11. Auction 73 will offer a total of 1,099 licenses: 176 Economic
Area (EA) licenses in each of the A and E Blocks, 734 Cellular Market
Area (CMA) licenses in the B Block, 12 Regional Economic Area Grouping
(REAG) licenses in the C Block, and one nationwide license, to be used
as part of the 700 MHz Public/Private Partnership, in the D Block.
B. Rules and Disclaimers
i. Relevant Authority
12. Prospective applicants must familiarize themselves thoroughly
with the Commission's general competitive bidding rules set forth in
Title 47, part 1, of the CFR, including recent amendments and
clarifications; rules relating to the 700 MHz Band contained in Title
47, part 27, of the CFR; rules relating to the public/private
partnership applicable to the D Block contained in Title 47, part 90,
of the CFR; and rules relating to applications, environment, practice
and procedure contained in Title 47, part 1, of the CFR. Prospective
applicants must also be thoroughly familiar with the procedures, terms
and conditions (terms) contained in the Auctions 73 and 76 Procedures
Public Notice and the Commission's decisions in proceedings regarding
competitive bidding procedures, application requirements, and
obligations of
[[Page 62362]]
Commission licensees. For example, among other Commission orders,
prospective bidders should be familiar with the 700 MHz First Report
and Order, 65 FR 3139, January 20, 2000, and the 700 MHz Second Report
and Order.
13. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in its public notices at any time,
and will issue public notices to convey any new or supplemental
information to applicants. It is the responsibility of all applicants
to remain current with all Commission rules and with all public notices
pertaining to Auctions 73 and 76.
ii. Prohibition of Collusion; Compliance With Antitrust Laws
14. To ensure the competitiveness of the auction process, Sec.
1.2105(c) of the Commission's rules prohibits auction applicants for
licenses in any of the same geographic license areas from communicating
with each other about bids, bidding strategies, or settlements 9 unless
such applicants have identified each other on their short-form
applications (FCC Forms 175) as parties with whom they have entered
into agreements pursuant to Sec. 1.2105(a)(2)(viii).
a. Entities Subject to Anti-Collusion Rule
15. The anti-collusion rule will apply to any applicants that
submit short-form applications for Auctions 73 or 76 and select
licenses in the same or overlapping CMAs, EAs, REAGs or the nationwide
license in the D Block. For example, assume that one applicant applies
for a REAG license and a second applicant applies for an EA license
covering any area within that REAG. The two entities will have applied
for licenses covering the same geographic areas and would be precluded
from communicating with each other under the rule. The rule also
applies where one applicant has selected a license in Auction 73 and
another applicant selects a license in Auction 76 that covers any of
the same geographic area. In addition, the rule precludes applicants
that apply to bid for the nationwide license in the D Block, or all the
licenses in any other block, from communicating with all other
applicants. Thus, applicants that have applied for licenses covering
the same markets (unless they have identified each other on their FCC
Form 175 applications as parties with whom they have entered into
agreements under Sec. 1.2105(a)(2)(viii)) must affirmatively avoid all
communications with or disclosures to each other that affect or have
the potential to affect bids or bidding strategy, which may include
communications regarding the post-auction market structure. This
prohibition applies to all applicants regardless of whether such
applicants become qualified bidders or actually bid. Information
concerning applicants' license selections will not be available to the
public. Therefore, the Commission will inform each applicant by letter
of the identity of each of the other applicants that has applied for
licenses covering any of the same geographic areas as the licenses that
it has selected in its short-form application.
16. For purposes of this prohibition, Sec. 1.2105(c)(7)(i) defines
applicant as including all officers and directors of the entity
submitting a short-form application to participate in the auction, all
controlling interests of that entity, as well as all holders of
partnership and other ownership interests and any stock interest
amounting to 10 percent or more of the entity, or outstanding stock, or
outstanding voting stock of the entity submitting a short-form
application.
17. Entities and parties subject to the anti-collusion rule should
take special care in circumstances where their employees may receive
information directly or indirectly from a competing applicant relating
to any competing applicant's bids or bidding strategies. In situations
where the anti-collusion rule views the same person as the applicant
with respect to two different entities filing competing applications,
under Bureau precedent the bids and bidding strategies of one applicant
are necessarily conveyed to the other and, absent a disclosed bidding
agreement, an apparent violation of the anti-collusion rule occurs. The
Bureau has not addressed situations where employees who do not qualify
as the applicant, (e.g., are not officers or directors) receive
information regarding a competing applicant's bids or bidding
strategies and whether that information might be deemed to necessarily
convey to the applicant. The Bureau notes that the exception to the
anti-collusion rule providing that non-controlling interest holders may
have interests in more than one competing bidder without violating the
anti-collusion rule, provided specified conditions are met (including a
certification that no prohibited communications have occurred or will
occur), does not extend to controlling interest holders.
b. Prohibition Applies Until Down Payment Deadline
18. Section 1.2105(c)'s anti-collusion prohibition begins at the
short-form application filing deadline and ends at the down payment
deadline after the auction. In recognition of the related nature of the
initial auction and any contingent auction of alternative licenses, the
Commission concluded in the 700 MHz Second Report and Order that the
provisions of the anti-collusion rule would continue to apply until the
down payment deadline for the subsequent auction.
19. Some commenters argue that the Bureau should allow applicants
to opt-out from the anti-collusion prohibition in the event Auction 76
is conducted. A commenter proposed that an applicant that has no
intention to bid in the subsequent auction could inform the Commission
of its intent in writing with a certification that its decision is not
based on any discussion with other competing bidders of auction
strategy or post-auction market structure. As one commenter
acknowledges, changing the application of the rule in this way is
beyond the Bureau's delegated authority and beyond the scope of this
non-rulemaking proceeding and would require action by the Commission to
reconsider its determination in the 700 MHz Second Report and Order.
Thus, the Bureau is unable to adopt the proposed opt-out certification
procedure. If it is necessary to conduct Auction 76, the provisions of
the anti-collusion rule will apply to all applicants until the down
payment deadline, which will occur after the close of bidding on
licenses offered in Auction 76.
c. Prohibited Communications
20. Prospective applicants for upcoming Auctions 73 and 76 and
other parties that may be engaged in discussion with such prospective
applicants are cautioned of the need to comply with the Commission's
anti-collusion rule, Sec. 1.2105(c). The anti-collusion rule prohibits
not only a communication about an applicant's own bids or bidding
strategy, but also a communication of another applicant's bids or
bidding strategy. While the anti-collusion rule provisions do not
prohibit business negotiations among auction applicants, applicants
must remain vigilant so as not to communicate directly or indirectly
information that affects, or could affect, bids or bidding strategy, or
the negotiation of settlement agreements.
21. The Commission remains vigilant about prohibited communications
[[Page 62363]]
taking place in other situations. For example, the Commission has
warned that prohibited communications concerning bids and bidding
strategies may include communications regarding capital calls or
requests for additional funds in support of bids or bidding strategies
to the extent such communications convey information concerning the
bids and bidding strategies directly or indirectly.
22. Applicants are hereby placed on notice that public disclosure
of information relating to bidder interests and bidder identities that
is confidential in both Auctions 73 and 76 at the time of disclosure
may violate the anti-collusion rule. This is so even though similar
types of information were revealed prior to and during other Commission
auctions subject to different information procedures. Bidders should
use caution in their dealings with other parties, such as members of
the press, financial analysts, or others who might become a conduit for
the communication of prohibited bidding information. For example, where
limited information disclosure procedures are in place, as for Auctions
73 and 76, a qualified bidder's statement to the press that it has lost
bidding eligibility and stopped bidding in the auction could give rise
to a finding of an anti-collusion rule violation. Similarly, an
applicant's public statement of intent not to participate in Auction 76
bidding could also violate the rule.
23. Applicants for licenses for any of the same geographic license
areas must not communicate directly or indirectly about bids or bidding
strategy. Accordingly, such applicants are encouraged not to use the
same individual as an authorized bidder. A violation of the anti-
collusion rule could occur if an individual acts as the authorized
bidder for two or more competing applicants, and conveys information
concerning the substance of bids or bidding strategies between such
applicants. Also, if the authorized bidders are different individuals
employed by the same organization (e.g., law firm or engineering firm
or consulting firm), a violation similarly could occur. In such a case,
at a minimum, applicants should certify on their applications that
precautionary steps have been taken to prevent communication between
authorized bidders and that applicants and their bidding agents will
comply with the anti-collusion rule. A violation of the anti-collusion
rule could occur in other contexts, such as an individual serving as an
officer for two or more applicants. Moreover, the Commission has found
a violation of the anti-collusion rule where a bidder used the
Commission's bidding system to disclose its bidding strategy in a
manner that explicitly invited other auction participants to cooperate
and collaborate in specific markets, and has placed auction
participants on notice that the use of its bidding system to disclose
market information to competitors will not be tolerated and will
subject bidders to sanctions.
24. In addition, when completing short-form applications,
applicants should avoid any statements or disclosures that may violate
the Commission's anti-collusion rule, particularly in light of the
Commission's procedures for limited information. Specifically,
applicants should avoid including any information in their short-form
applications that might convey information regarding their license
selection, such as using applicant names that refer to licenses being
offered, referring to certain licenses or markets in describing bidding
agreements, or including any information in attachments that may
otherwise disclose applicants' license selections.
d. Disclosure of Bidding Agreements and Arrangements
25. The Commission's rules do not prohibit applicants from entering
into otherwise lawful bidding agreements before filing their short-form
applications, as long as they disclose the existence of the
agreement(s) in their short-form application. If parties agree in
principle on all material terms prior to the short-form filing
deadline, each party to the agreement must identify the other party or
parties to the agreement on its short-form application under Sec.
1.2105(c), even if the agreement has not been reduced to writing. If
the parties have not agreed in principle by the short-form filing
deadline, they should not include the names of parties to discussions
on their applications, and they may not continue negotiations,
discussions or communications with any other applicants for licenses
covering any of the same or overlapping geographic areas after the
short-form filing deadline.
e. Anti-Collusion Certification
26. By electronically submitting a short-form application following
the electronic filing procedures set forth in Attachments D and E to
the Auctions 73 and 76 Procedures Public Notice, each applicant
certifies its compliance with Sec. 1.2105(c). However, the Bureau
cautions that merely filing a certifying statement as part of an
application will not outweigh specific evidence that collusive behavior
has occurred, nor will it preclude the initiation of an investigation
when warranted. The Commission has stated that it intends to scrutinize
carefully any instances in which bidding patterns suggest that
collusion may be occurring. Any applicant found to have violated the
anti-collusion rule may be subject to sanctions.
f. Antitrust Laws
27. Applicants are also reminded that, regardless of compliance
with the Commission's rules, they remain subject to the antitrust laws,
which are designed to prevent anticompetitive behavior in the
marketplace. Compliance with the disclosure requirements of the
Commission's anti-collusion rule will not insulate a party from
enforcement of the antitrust laws. For instance, a violation of the
antitrust laws could arise out of actions taking place well before any
party submits a short-form application. The Commission has cited a
number of examples of potentially anticompetitive actions that would be
prohibited under antitrust laws: For example, actual or potential
competitors may not agree to divide territories horizontally in order
to minimize competition, regardless of whether they split a market in
which they both do business, or whether they merely reserve one market
for one and another for the other. Similarly, the Bureau has long
reminded potential applicants and others that even where the applicant
discloses parties with whom it has reached an agreement on the short-
form application, thereby permitting discussions with those parties,
the applicant is nevertheless subject to existing antitrust laws. To
the extent the Commission becomes aware of specific allegations that
suggest that violations of the federal antitrust laws may have
occurred, the Commission may refer such allegations to the United
States Department of Justice for investigation. If an applicant is
found to have violated the antitrust laws or the Commission's rules in
connection with its participation in the competitive bidding process,
it may be subject to forfeiture of its upfront payment, down payment,
or full bid amount and may be prohibited from participating in future
auctions, among other sanctions.
28. One commenter urges the Commission to adopt an auction rule
that states that a bidder cannot release any bidding information to the
public during the course of the auction, and provide notice that all
parties remain subject to the antitrust laws. As another commenter
points out, however, the
[[Page 62364]]
Commission has consistently provided such guidance in prior auctions.
The Bureau does so again here: All parties remain subject to the
antitrust laws.
g. Duty to Report Prohibited Communications
29. If an applicant makes or receives a communication that appears
to violate the anti-collusion rule, it must report such communication
in writing to the Commission immediately and in no case later than five
business days after the communication occurs. The Commission recently
clarified that each applicant's obligation to report any such
communication continues beyond the five-day period after the
communication is made, even if the report is not made within the five
day period.
30. Section 1.65 of the Commission's rules requires an applicant to
maintain the accuracy and completeness of information furnished in its
pending application and to notify the Commission within 30 days of any
substantial change that may be of decisional significance to that
application. Thus, Sec. 1.65 requires an auction applicant to notify
the Commission of any substantial change to the information or
certifications included in its pending short-form application.
Applicants are therefore required by Sec. 1.65 to report to the
Commission any communications they have made to or received from
another applicant after the short-form filing deadline that affect or
have the potential to affect bids or bidding strategy unless such
communications are made to or received from parties to agreements
identified under Sec. 1.2105(a)(2)(viii).
31. Applicants must be aware that failure to comply with the
Commission's rules can result in enforcement action.
h. Winning Bidders Must Disclose Terms of Agreements
32. Applicants that are winning bidders will be required to
disclose in their long-form applications the specific terms,
conditions, and parties involved in any bidding consortia, joint
ventures, partnerships, and other arrangements entered into relating to
the competitive bidding process.
i. Additional Information Concerning Anti-Collusion Rule
33. A summary listing of documents issued by the Commission and the
Bureau addressing the application of the anti-collusion rule may be
found in Attachment I of the Auctions 73 and 76 Procedures Public
Notice. These documents are available on the Commission's auction anti-
collusion Web page.
iii. Protection of Incumbent Operations
34. A number of incumbent broadcasters are licensed and operating
on these frequencies (TV Channels 52-53, 56-58, 60-62, and 65-67) and
adjacent channels. In accordance with the Commission's rules, 700 MHz
Band licensees must protect analog and digital TV incumbents from
harmful interference through February 17, 2009, the end of the DTV
transition period. After February 17, 2009, 700 MHz licensees must
continue to operate in accordance with the Commission's rules to reduce
the potential for interference to public reception of the signals of
DTV broadcast stations transmitting on DTV Channel 51. These
limitations may restrict the ability of such geographic area licensees
to use certain portions of the electromagnetic spectrum or provide
service to some parts of their geographic license areas.
35. In the 700 MHz Second Report and Order, the Commission
grandfathered an incumbent guard band B Block licensee in Major
Economic Areas (MEAs) 21 and 39 at 761-763 MHz and 791-793 MHz of the D
Block. The new D Block licensee will be authorized on a secondary basis
at 761-763 MHz and 791-793 MHz in these markets, and it may not cause
interference to the primary operations of the grandfathered licensee.
If the grandfathered licensee, or a successor or assignee, cancels
either of the grandfathered licenses, or if either license cancels
automatically, is terminated by the Commission, or expires, then the
licensed geographic area will revert to the D Block licensee
automatically.
a. International Coordination
36. Potential bidders seeking licenses for geographic areas that
are near the Canadian or Mexican borders are subject to international
agreements with Canada and Mexico. Pursuant to these agreements, the
U.S. must protect the signals of Canadian and Mexican television
broadcast stations located in the border area. Unless otherwise
modified by international treaty, licensees must not cause interference
to, and must accept harmful interference from, television broadcast
operations in Mexico and Canada. Further, until such time as existing
agreements are replaced or modified to reflect the new uses, licensees
in the band will be subject to existing agreements.
b. Quiet Zones
37. 700 MHz Band licensees must protect the radio quiet zones set
forth in the Commission's rules. Licensees are cautioned that they must
receive the appropriate approvals directly from the relevant quiet zone
entity prior to operating within the areas described in the
Commission's rules.
iv. Due Diligence
38. The Bureau cautions potential applicants formulating their
bidding strategies to investigate and consider the extent to which 700
MHz Band frequencies are occupied. Applicants and their investors
should also understand that Commission rules and requirements place
limitations on the ability of 700 MHz Band licensees to use this
spectrum. There are a number of incumbent broadcast television
licensees already licensed and operating in the band that will be
subject to the upcoming auction. Geographic area licensees operating on
the spectrum associated with Channels 52-53, 56-58, 60-62, and 65-67
must comply with the co-channel and the adjacent channel provision of
Sec. 27.60 of the Commission's rules. These limitations may restrict
the ability of such geographic area licensees to use certain portions
of the electromagnetic spectrum or provide service to certain areas in
their geographic license areas. For example, bidders should become
familiar with any petitions or other pleadings filed in response to the
700 MHz First Report and Order, 700 MHz Second Report and Order, and
any other orders that have been or may be released affecting the 700
MHz Band.
39. Potential bidders are reminded that they are solely responsible
for investigating and evaluating all technical and marketplace factors
that may have a bearing on the value of 700 MHz Band licenses. The FCC
makes no representations or warranties about the use of this spectrum
for particular services. Applicants should be aware that an FCC auction
represents an opportunity to become an FCC licensee in the 700 MHz Band
subject to certain conditions and regulations. An FCC auction does not
constitute an endorsement by the FCC of any particular service,
technology, or product, nor does an FCC license constitute a guarantee
of business success. Applicants should perform their individual due
diligence before proceeding as they would with any new business
venture.
40. Potential bidders are strongly encouraged to conduct their own
research prior to the beginning of
[[Page 62365]]
bidding in Auction 73 in order to determine the existence of any
pending legislative, administrative or judicial proceedings that might
affect their decision regarding participation in the auction, including
any subsequent auction (if necessary). Participants in Auctions 73 and
76 are strongly encouraged to continue such research throughout the
auction. In addition, potential bidders should perform technical
analyses sufficient to assure themselves that, should they prevail in
competitive bidding for a specific license, they will be able to build
and operate facilities that will fully comply with the Commission's
technical and legal requirements as well as other applicable Federal,
state, and local laws.
41. Applicants should also be aware that certain pending and future
proceedings, including rulemaking proceedings or petitions for
rulemaking, applications (including those for modification), requests
for special temporary authority, waiver requests, petitions to deny,
petitions for reconsideration, informal oppositions, and applications
for review, before the Commission may relate to particular applicants
or incumbent licensees or the licenses available in Auctions 73 and 76.
For example, bidders should note that petitions have been filed for
reconsideration of certain decisions made in the 700 MHz First Report
and Order and the 700 MHz Second Report and Order. In addition,
applicants should be aware that the Commission has sought comment on a
range of proposals concerning consumer education about the DTV
transition, including the possible imposition of reporting requirements
on winning bidders for 700 MHz band licenses. Of course, pending and
future judicial proceedings may relate to particular applicants or
incumbent licensees, or the licenses available in Auctions 73 and 76.
Prospective bidders are responsible for assessing the likelihood of the
various possible outcomes, and considering their potential impact on
spectrum licenses available in Auctions 73 and 76.
42. Applicants should perform due diligence to identify and
consider all proceedings that may affect the spectrum licenses being
auctioned and that could have an impact on the availability of spectrum
for Auction 73. In addition, although the Commission may continue to
act on various pending applications, informal objections, petitions,
and other requests for Commission relief, some of these matters may not
be resolved by the beginning of bidding in the auction.
43. Applicants are solely responsible for identifying associated
risks and for investigating and evaluating the degree to which such
matters may affect their ability to bid on, otherwise acquire, or make
use of licenses being offered.
44. Applicants may use the licensing database for the Media Bureau
on the Internet in order to determine which frequencies are already
licensed to incumbent licensees. Licensing records for the Media Bureau
are contained in the Media Bureau's Consolidated Data Base System
(CDBS) and may be researched on the Internet at http://www.fcc.gov/mb/cdbs.html.
Potential bidders should direct questions regarding the
search capabilities of CDBS to the Media Bureau help line at (202) 418-
2662, or via e-mail at cdbshelp@fcc.gov.
45. The Commission makes no representations or guarantees regarding
the accuracy or completeness of information in its databases or any
third party databases, including, for example, court docketing systems.
To the extent the Commission's databases may not include all
information deemed necessary or desirable by an applicant, applicants
may obtain or verify such information from independent sources or
assume the risk of any incompleteness or inaccuracy in said databases.
Furthermore, the Commission makes no representations or guarantees
regarding the accuracy or completeness of information that has been
provided by incumbent licensees and incorporated into its databases.
46. Potential applicants are strongly encouraged to physically
inspect any prospective sites located in, or near, the geographic area
for which they plan to bid, and also to familiarize themselves with the
environmental review obligations.
v. Use of Integrated Spectrum Auction System
47. The Commission will make available a browser-based bidding
system to allow bidders to participate in Auction 73 over the Internet
using the Commission's Integrated Spectrum Auction System (ISAS or FCC
Auction System). The Commission makes no warranty 21 whatsoever with
respect to the FCC Auction System. In no event shall the Commission, or
any of its officers, employees or agents, be liable for any damages
whatsoever (including, but not limited to, loss of business profits,
business interruption, loss of business information, or any other loss)
arising out of or relating to the existence, furnishing, functioning or
use of the FCC Auction System that is accessible to qualified bidders
in connection with Auctions 73 and 76. Moreover, no obligation or
liability will arise out of the Commission's technical, programming or
other advice or service provided in connection with the FCC Auction
System.
vi. Fraud Alert
48. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use Auction 73 to
deceive and defraud unsuspecting investors. Information about deceptive
telemarketing investment schemes is available from the Commission as
well as the FTC and SEC. Complaints about specific deceptive
telemarketing investment schemes should be directed to the FTC, the
SEC, or the National Fraud Information Center at (800) 876-7060.
vii. Environmental Review Requirements
49. Licensees must comply with the Commission's rules regarding
implementation of the National Environmental Policy Act and other
federal environmental statutes. The construction of a wireless antenna
facility is a federal action and the licensee must comply with the
Commission's environmental rules for each such facility. The
Commission's environmental rules require, among other things, that the
licensee consult with expert agencies having environmental
responsibilities, including the U.S. Fish and Wildlife Service, the
State Historic Preservation Office, the Army Corps of Engineers and the
Federal Emergency Management Agency (through the local authority with
jurisdiction over floodplains). In assessing the effect of facilities
construction on historic properties, the licensee must follow the
provisions of the Nationwide Programmatic Agreement Regarding the
Section 106 National Historic Preservation Act Review Process. The
licensee must prepare environmental assessments for facilities that may
have a significant impact in or on wilderness areas, wildlife
preserves, threatened or endangered species or designated critical
habitats, historical or archaeological sites, Indian religious sites,
floodplains, and surface features. The licensee also must prepare
environmental assessments for facilities that include high intensity
white lights in residential neighborhoods or excessive radio frequency
emission.
[[Page 62366]]
C. Auction Specifics
i. Auction 73 Start Date
50. Bidding in Auction 73 will begin on Thursday, January 24, 2008.
51. This change of the previously-announced start date for Auction
73 will provide interested parties with additional time after this
announcement of competitive bidding procedures to develop business
plans, assess market conditions, and evaluate the availability of
equipment for new 700 MHz Band services.
52. Some commenters had sought a postponement of the previously-
announced start date until January 25 or 28, 2008. Pursuant to the
Congressional mandate, the Commission must conduct the auction of
licenses for recovered analog spectrum in the 700 MHz Band by
commencing the bidding not later than January 28, 2008. Starting the
auction on the statutory deadline for commencing the auction, or one
business day prior to the deadline would provide insufficient time to
address unexpected matters that might arise just prior to the start of
bidding.
53. The initial schedule for bidding will be announced by public
notice at least one week before the start of the auction. Moreover,
unless otherwise announced, bidding on all licenses and packages will
be conducted on each business day until bidding has stopped on all
licenses and packages.
ii. Auction Title
54. The auction in which the 700 MHz Band licenses will initially
be offered is designated as Auction 73--700 MHz Band. In the event that
any licenses, including alternative licenses, are offered in contingent
subsequent bidding, that will be designated as Auction 76.
iii. Bidding Methodology
55. The bidding methodology for Auction 73 will be simultaneous
multiple round (SMR) bidding for the A, B, D, and E Block licenses and
an auction design with hierarchical package bidding (HPB) for the C
Block licenses. The Commission will conduct Auctions 73 and 76 over the
Internet using the FCC Auction System, and telephonic bidding will be
available as well. Qualified bidders are permitted to bid
electronically via the Internet or by telephone. All telephone calls
are recorded.
iv. Pre-Auction Dates and Deadlines
56. The following dates and deadlines apply:
Auction Seminar........................ November 20, 2007.
Auction 73 and 76 Short-Form November 19, 2007; 12 noon ET.
Application (FCC Form 175) Filing
Window Opens.
Auction 73 and 76 Short-Form December 3, 2007; prior to 6 p.m. ET.
Application (FCC Form 175) Filing
Window Deadline.
Auction 73 Upfront Payments (via wire December 28, 2007; 6 p.m. ET.
transfer).
Mock Auction........................... January 18, 2008.
Auction 73 Begins...................... January 24, 2008.
57. If contingent subsequent bidding is necessary, the Bureau
intends to announce the start date for Auction 76 and the deadline for
additional upfront payments within five business days after the end of
bidding in Auction 73. The Bureau expects that Auction 76 would begin
within three weeks of that announcement.
v. Requirements for Participation in Auction 73 and 76
58. Those wishing to participate in Auction 73 and 76 (should any
subsequent auction become necessary), must: (1) For Auction 73, submit
a short-form application (FCC Form 175) electronically prior to 6 p.m.
ET, December 3, 2007, following the electronic filing procedures set
forth in Attachment D to the Auctions 73 and 76 Procedures Public
Notice; (2) for Auction 76, submit short-form applications (FCC Form
175) electronically prior to 6 p.m. ET, December 3, 2007, for each
auction following the electronic filing procedures set forth in
Attachments D and E to the Auctions 73 and 76 Procedures Public Notice.
Bidding in Auction 76 is open only to applicants that qualify to
participate in Auction 73, and that comply with all of the requirements
for participating in Auction 76, including submitting a separate short-
form application; (3) for Auction 73, submit a sufficient upfront
payment and an FCC Remittance Advice Form (FCC Form 159) by 6 p.m. ET,
December 28, 2007, following the procedures and instructions set forth
in Attachment F to the Auctions 73 and 76 Procedures Public Notice; (4)
for Auction 76 (if necessary), submit a sufficient upfront payment and
an FCC Remittance Advice Form (FCC Form 159) by the deadline to be
announced following the end of bidding in Auction 73; and (5) comply
with all provisions outlined in this Public Notice and applicable
Commission rules.
D. Other Issues Raised by Commenters
59. Two commenters raised issues that are unrelated to those raised
in the 700 MHz Auction Public Notice. One commenter proposes that the
Commission should require that all licenses offered in Auction 73 be
made available to public safety personnel for priority use during
critical emergencies. The commenter also suggests that such a
requirement be considered in the event of a contingent auction, if any.
Another commenter urges the Commission to require applicants to
disclose on their short-form applications whether winning the licenses
they have selected would cause their spectrum holdings to exceed 70 MHz
of spectrum in the markets of the selected licenses. In the event that
any applicants indicate that their spectrum holdings would exceed this
amount, the commenter proposed that their short-form applications
should be dismissed before the commencement of Auction 73. The
commenter also requests that the Commission investigate alleged
violations of the Commission's ex parte rules by a wireless company
concerning policy on the open platform provisions for C Block licenses,
and proposes excluding that company from Auction 73 as a possible
sanction for violating the Commission's rules.
60. These issues are outside the scope of this non-rulemaking
proceeding, which is confined to establishing competitive bidding
procedures for Auction 73. The Bureau notes that some of these issues
have been presented to the Commission in petitions for reconsideration
of the 700 MHz Second Report and Order and will be addressed in that
proceeding.
II. Short-Form Application (FCC Form 175) Requirements
61. Entities seeking licenses available in Auction 73 must file a
short-form application electronically via the FCC Auction System prior
to 6 p.m. ET on December 3, 2007, following the procedures prescribed
in Attachment D to the Auctions 73 and 76 Procedures Public Notice.
Applicants filing a short-form application are subject to the
Commission's anti-collusion rules beginning on the deadline for filing.
For Auctions 73 and 76, applicants filing a short-form application for
Auction 73 will remain subject to the Commission's anti-collusion rules
through the
[[Page 62367]]
completion of Auction 76, if conducted. If an applicant claims
eligibility for a bidding credit, the information provided in its FCC
Form 175 will be used in determining whether the applicant is eligible
for the claimed bidding credit. Applicants bear full responsibility for
submitting accurate, complete and timely short-form applications. All
applicants must certify on their short-form applications under penalty
of perjury that they are legally, technically, financially and
otherwise qualified to hold a license. Applicants should read the
instructions set forth in Attachment D to the Auctions 73 and 76
Procedures Public Notice carefully and should consult 26 the
Commission's rules to ensure that all the information that is required
under the Commission's rules is included with their short-form
applications.
62. Entities seeking licenses that may be offered in Auction 76, if
Auction 76 is conducted, must file electronically via the FCC Auction
System prior to 6 p.m. ET on December 3, 2007 both a short-form
application for Auction 73, following the procedures prescribed in
Attachment D to the Auctions 73 and 76 Procedures Public Notice, and an
abbreviated short-form application for Auction 76, following the
procedures prescribed in Attachment E to the Auctions 73 and 76
Procedures Public Notice. Applicants filing short-form applications for
both Auctions 73 and 76 are subject to the Commission's anti-collusion
rules beginning on the deadline for filing both applications.
63. To streamline the application process, other than license
selection requirements, all relevant information for the application to
participate in Auction 76 must be submitted as part of the application
to participate in Auction 73. The Auction 76 abbreviated application
will request--and will accept--only information that the FCC Auction
System requires in order to enable applicants to submit license
selections for Auction 76. For example, applicants seeking to submit
information regarding bidding agreements with respect to licenses
offered in Auction 76 will not be able to access the bidding agreement
screens that are usually part of the short-form application in the
Auction 76 abbreviated application. Instead, such applicants must
submit information regarding those agreements as part of their Auction
73 short-form application.
64. To comply with FCC Auction System requirements, however,
applicants will be required to repeat some information submitted in
their Auction 73 application, e.g., their FCC Registration Number
(FRN), their name and address, certification of the form's contents,
etc. As noted in the procedures for filing the abbreviated short-form
application for Auction 76, applicants must provide the same
information submitted in their application for Auction 73 as they
provide in their Auction 76 application. Most importantly, if an entity
wishes to submit a short-form application for Auction 76, it must do so
using the same FRN that it uses for its short-form application for
Auction 73. In addition, the same person must certify both
applications, as the certification applies to information submitted in
both applications.
65. An entity may not submit more than one short-form application
for Auction 73. Similarly, an entity may not submit more than one
short-form application for Auction 76. If a party submits multiple
short-form applications for either Auction 73 or Auction 76, only one
application for each will be accepted for filing.
66. Applicants also should note that submission of a short-form
application (and any amendments thereto) constitutes a representation
by the certifying official that he or she is an authorized
representative of the applicant, that he or she has read the form's
instructions and certifications, and that the contents of the
application, its certifications, and any attachments are true and
correct. Applicants are not permitted to make major modifications to
their applications; such impermissible changes include a change of the
certifying official to the application. Submission of a false
certification to the Commission may result in penalties, including
monetary forfeitures, license forfeitures, ineligibility to participate
in future auctions, and/or criminal prosecution.
A. Preferences for Small Businesses and Others
i. Size Standards for Bidding Credits
67. A bidding credit represents the amount by which a bidder's
winning bid will be discounted. For Auction 73 and Auction 76, bidding
credits will be available to small businesses and very small
businesses, and consortia thereof, as follows: (1) A bidder with
attributed average annual gross revenues that exceed $15 million and do
not exceed $40 million for the preceding three years (small business)
will receive a 15 percent discount on its winning bid; and (2) a bidder
with attributed average annual gross revenues that do not exceed $15
million for the preceding three years (very small business) will
receive a 25 percent discount on its winning bid.
68. 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.
69. Every applicant that claims eligibility for a bidding credit as
either a small business or a very small business, or a consortium of
small businesses or very small businesses, will be required to provide
information regarding revenues attributable to the applicant, its
affiliates, its controlling interests, and the affiliates of its
controlling interests on its FCC Form 175 short-form application for
Auction 73 to establish that it satisfies the applicable eligibility
requirement. An applicant's disclosure of this information in the
short-form application for Auction 73 will become part of the
applicant's Auction 76 application, in the event the Commission
conducts Auction 76. Accordingly, applicants are not required--and will
not be able to--submit this information in their abbreviated Auction 76
application. Applicants claiming eligibility as a designated entity in
Auction 73 and Auction 76 should review carefully the CSEA/Part 1
Report and Order, 71 FR 6992, February 10, 2006, the Designated Entity
Second Report and Order, 71 FR 26245, May 5, 2006, and the Order on
Reconsideration of the Designated Entity Second Report and Order, 71 FR
34272, June 14, 2006. In that connection, the Commission adopted rules
governing eligibility for designated entity benefits in the Designated
Entity Second Report and Order. The Commission's rules regarding
applicants seeking eligibility for designated entity benefits require
the disclosure of: (1) All parties with which the applicant has entered
into arrangements for the lease or resale (including wholesale
agreements) of any of the capacity of any of the applicant's spectrum;
and (2) the gross revenues, separately and in the aggregate, of
entities with which the applicant has an attributable material
relationship, as defined in Sec. 1.2110(b)(3)(iv)(B).
70. The Commission has adopted a narrow exemption from the
attribution rule for the officers and directors of a rural telephone
cooperative pursuant to which the gross revenues of the affiliates of
the cooperative's officers and directors are not attributed to the
applicant. An applicant (or controlling interest) seeking to claim this
exemption must include in its short-form application a certification
that it is validly organized under the most
[[Page 62368]]
closely applicable organizing statute for a cooperative, and that such
organization is reflected in its articles of incorporation, bylaws,
and/or other relevant organic documents. Applicants seeking to claim
this exemption must meet all of the conditions specified in Sec.
1.2110(b)(3)(iii) of the Commission's rules. Additional guidance on
completing the FCC Form 175 to claim this exemption may be found in
Attachment D to the Auctions 73 and 76 Procedures Public Notice.
ii. Tribal Lands Bidding Credit
71. To encourage the growth of wireless services in federally
recognized tribal lands, the Commission has implemented a tribal lands
bidding credit. Applicants do not provide information regarding tribal
lands bidding credits on their FCC Form 175 short-form applications.
Instead, winning bidders may apply for the tribal lands bidding credit
after the auction when they file their FCC Form 601 long-form
applications.
iii. Installment Payments
72. Installment payment plans will not be available in Auction 73
or in Auction 76.
B. License Selection
73. An applicant must select the initially offered licenses on
which it wants to bid individually or as part of a pre-defined package
in Auction 73 from the Eligible Licenses list on its short-form
application for Auction 73. An applicant interested in bidding on
licenses in the contingent subsequent auction must select those
licenses from the Eligible Licenses list on its short-form application
for Auction 76. Applicants will be able to bid on pre-defined packages
of initially offered C Block licenses and alternative C2 Block
licenses, if offered in subsequent bidding, pursuant to the package
bidding procedures, only if they have selected all the individual
licenses that comprise the relevant package on their respective short-
form applications.
74. To assist applicants in identifying licenses of interest that
will be available in Auctions 73 and 76, FCC Form 175 will include a
filtering mechanism that allows an applicant to filter the Eligible
Licenses list. The applicant will make selections for one or more of
the filter criteria and the system will produce a list of licenses
satisfying the specified criteria. The applicant may select all the
licenses in the customized list or select individual licenses from the
list. Applicants also will be able to select licenses from one
customized list and then create additional customized lists to select
additional licenses.
75. Applicants will not be able to change their license selections
for either Auction 73 or Auction 76 after the short-form application
filing deadline. Applicants interested in participating in Auctions 73
and 76 must have selected license(s) available in the respective
auction by the short-form application deadline. Applicants must confirm
their license selections before the deadline for submitting FCC Form
175. The FCC Auction System will not accept bids from an applicant on
individual licenses that the applicant has not selected on its FCC Form
175. In addition, the FCC Auction System will not accept bids from an
applicant on a pre-defined hierarchical package unless the applicant
selected on its FCC Form 175 all the individual licenses that comprise
the package.
C. Disclosure of Bidding Arrangements
76. Applicants will be required to identify in their short-form
application for Auction 73 all parties with whom they have entered into
any agreements, arrangements, or understandings of any kind relating to
the licenses being auctioned in Auctions 73 and 76, including any
agreements relating to post-auction market structure. The agreements
identified in the short-form application for Auction 73 will become
part of the applicant's Auction 76 application, in the event the 31
Commission conducts Auction 76. Accordingly, applicants are not
required--and will not be able to--disclose bidding agreements in their
abbreviated Auction 76 application.
77. Applicants also will be required to certify under penalty of
perjury in their short-form applications that they have not entered and
will not enter into any explicit or implicit agreements, arrangements
or understandings of any kind with any parties, other than those
identified in the application to participate in Auction 73, regarding
the amount of their bids, bidding strategies, or the particular
licenses on which they will or will not bid. If an applicant has had
discussions, but has not reached an agreement by the short-form
application filing deadline, it would not include the names of parties
to the discussions on its application and may not continue such
discussions with any applicants after the deadline.
78. After the filing of short-form applications, the Commission's
rules do not prohibit a party holding a non-controlling, attributable
interest in one applicant from acquiring an ownership interest in or
entering into a joint bidding arrangement with other applicants,
provided that: (1) The attributable interest holder certifies that it
has not and will not communicate with any party concerning the bids or
bidding strategies of more than one of the applicants in which it holds
an attributable interest, or with which it has entered into a joint
bidding arrangement; and (2) the arrangements do not result in a change
in control of any of the applicants. While the anti-collusion rules do
not prohibit non-auction-related business negotiations among auction
applicants, applicants are reminded that certain discussions or
exchanges could touch upon impermissible subject matters because they
may convey pricing information and bidding strategies. Compliance with
the disclosure requirements of the Commission's anti-collusion rule
will not insulate a party from enforcement of the antitrust laws.
D. Ownership Disclosure Requirements
79. All applicants must comply with the uniform part 1 ownership
disclosure standards and provide information required by Sec. 1.2105
and 1.2112 of the Commission's rules. Specifically, in completing the
short-form application for Auction 73, applicants will be required to
fully disclose information on the real party or parties-in-interest and
ownership structure of the applicant. The ownership disclosure
standards for the short-form application are prescribed in Sec. 1.2105
and 1.2112 of the Commission's rules. Each applicant is responsible for
information submitted in its short-form application being complete and
accurate. An applicant's disclosure of ownership information in the
short-form application for Auction 73 will become part of the
applicant's Auction 76 application, in the event the Commission
conducts Auction 76. Accordingly, applicants are not required--and will
not be able to--submit ownership disclosure information in their
abbreviated Auction 76 application.
80. An applicant's most current ownership information on file with
the Commission, if in an electronic format compatible with the short-
form application (FCC Form 175) (such as information submitted in an
online FCC Form 602 or in an FCC Form 175 filed for a previous auction
using ISAS) will automatically be entered into the applicant's short-
form application. An applicant is responsible for ensuring that the
information submitted in its short-form application for Auction 73 is
complete and accurate. Accordingly, applicants should carefully review
any information automatically entered to confirm that it is complete
and accurate
[[Page 62369]]
as of the deadline for filing the short-form application. Applicants
can update any information that was entered automatically and needs to
be changed directly in the short-form application.
E. Bidding Credit Revenue Disclosures
81. To determine which applicants qualify for bidding credits as
small businesses or very small businesses, the Commission considers the
gross revenues of the applicant, its affiliates, its controlling
interests, and the affiliates of its controlling interests. Therefore,
entities applying to bid as small businesses or very small businesses
(or consortia of small businesses or very small businesses) will be
required to disclose on their short-form applications for Auction 73
the gross revenues of the preceding three years for each of the
following: (1) The applicant; (2) its 33 affiliates; (3) its
controlling interests; and (4) the affiliates of its controlling
interests. Certification that the average annual gross revenues of such
entities and individuals for the preceding three years do not exceed
the applicable limit is not sufficient. Applicants must also disclose
the gross revenues of the entities with which they have attributable
material relationships, as defined by the Commission's rules.
Additionally, if an applicant is applying as a consortium of small
businesses or very small businesses, this information must be provided
for each consortium member. An applicant's disclosure of bidding credit
revenue information in the short-form application for Auction 73 will
become part of the applicant's Auction 76 application, in the event the
Commission conducts Auction 76. Accordingly, applicants are not
required and will not be able to submit bidding credit revenue
information in their abbreviated Auction 76 application.
82. Controlling interests of an applicant include individuals and
entities with either de facto or de jure control of the applicant.
Typically, ownership of at least 50.1 percent of an entity's voting
stock evidences de jure control. De facto control is determined on a
case-by-case basis. The following are some common indicia of de facto
control: (1) The entity constitutes or appoints more than 50 percent of
the board of directors or management committee; (2) the entity has
authority to appoint, promote, demote, and fire senior executives that
control the day-to-day activities of the licensee; and (3) the entity
plays an integral role in management decisions.
83. Officers and directors of an applicant are also considered to
have controlling interest in the applicant. The Commission does not
impose specific equity requirements on controlling interest holders.
Once the principals or entities with a controlling interest are
determined, only the revenues of those principals or entities; the
affiliates of those principals or entities; the applicant and its
affiliates; and any parties having an attributable material
relationship with the applicant will be counted in determining small
business eligibility.
84. In the Designated Entity Second Report and Order, the
Commission adopted material relationship rules. The Commission now
requires the consideration of certain leasing and resale (including
wholesale) relationships--material relationships--in determining
designated entity eligibility. Material relationships fall into two
categories: impermissible and attributable. An applicant or licensee
has an impermissible material relationship when it has agreements with
one or more other entities for the lease or resale (including under a
wholesale agreement) of, on a cumulative basis, more than 50 percent of
the spectrum capacity of any of its licenses. If an applicant or a
licensee has an impermissible material relationship, it is, as a
result, (1) ineligible for the award of designated entity benefits, and
(2) subject to unjust enrichment on a license-bylicense basis.
85. An applicant or licensee has an attributable material
relationship when it has one or more agreements with any individual
entity for the lease or resale (including under a wholesale agreement)
of, on a cumulative basis, more than 25 percent of the spectrum
capacity of any individual license held by the applicant or licensee.
The attributable material relationship will cause the gross revenues
and, if applicable, total assets of that entity and its attributable
interest holders to be attributed to the applicant or licensee for the
purposes of determining the applicant's or licensee's (1) eligibility
for designated entity benefits and (2) liability for unjust enrichment
on a license-by-license basis.
86. The Commission grandfathered material relationships in
existence before the release of the Designated Entity Second Report and
Order, meaning that those preexisting relationships would not alone
cause the Commission to examine a designated entity's ongoing
eligibility for benefits or its liability for unjust enrichment. The
Commission did not, however, grandfather preexisting material
relationships for determinations of an applicant's or licensee's
designated entity eligibility for future auctions or in the context of
future assignments, transfers of control, spectrum leases, or other
reportable eligibility events. Rather, the occurrence of any of those
35 eligibility events after the release date of the Designated Entity
Second Report and Order triggers a reexamination of the applicant's or
licensee's designated entity eligibility, taking into account all
existing material relationships, including those previously
grandfathered.
87. In recent years the Commission has also made other
modifications to its rules governing the attribution of gross revenues
for purposes of determining small business eligibility. These changes
include exempting the gross revenues of the affiliates of a rural
telephone cooperative's officers and directors from attribution to the
applicant if certain specified conditions are met. The Commission has
also clarified that, in calculating an applicant's gross revenues under
the controlling interest standard, it will not attribute the personal
net worth, including personal income, of its officers and directors to
the applicant.
88. A consortium of small businesses or very small businesses is a
conglomerate organization composed of two or more entities, each of
which individually satisfies the definition of a small business or very
small business as those terms are defined in the service-specific
rules. Thus, each member of a consortium of small or very small
businesses that applies to participate in Auction 73 must individually
meet the definition of small business or very small business adopted by
the Commission for the 700 MHz Band. Each consortium member must
disclose its gross revenues along with those of its affiliates, its
controlling interests, the affiliates of its controlling interests, and
any entities having an attributable material relationship with the
member. Although the gross revenues of the consortium members will not
be aggregated for purposes of determining the consortium's eligibility
as a small business or very small business, this information must be
provided to ensure that each individual consortium member qualifies for
any bidding credit awarded to the consortium.
F. Provisions Regarding Former and Current Defaulters
89. Each applicant must state under penalty of perjury on its
short-form application whether or not the applicant, its affiliates,
its controlling interests, and the affiliates of its 36 controlling
interests, as defined by Sec. 1.2110, have ever been in default on any
Commission licenses or have ever
[[Page 62370]]
been delinquent on any non-tax debt owed to any Federal agency. In
addition, each applicant must certify under penalty of perjury on its
short-form application that, as of the short-form filing deadline, the
applicant, its affiliates, its controlling interests, and the
affiliates of its controlling interests, as defined by Sec. 1.2110,
are not in default on any payment for Commission licenses (including
down payments) and that they are not delinquent on any non-tax debt
owed to any Federal agency. Prospective applicants are reminded that
submission of a false certification to the Commission is a serious
matter that may result in severe penalties, including monetary
forfeitures, license revocations, exclusion from participation in
future auctions, and/or criminal prosecution. These statements and
certifications are prerequisites to submitting an application in the
FCC Auction System. Accordingly, applicants seeking licenses that may
be offered in Auction 76 will be required to make these statements and
certifications in both their short-form application for Auction 73 and
their abbreviated Auction 76 application.
90. Former defaulters--i.e., applicants, including any of their
affiliates, any of their controlling interests, or any of the
affiliates of their controlling interests, that in the past have
defaulted on any Commission licenses or been delinquent on any non-tax
debt owed to any Federal agency, but that have since remedied all such
defaults and cured all of their outstanding non-tax delinquencies--are
eligible to bid in Auctions 73 and 76, provided that they are otherwise
qualified. Former defaulters are required to pay upfront payments that
are fifty percent more than the normal upfront payment amounts.
91. Current defaulters--i.e., applicants, including any of their
affiliates, any of their controlling interests, or any of the
affiliates of their controlling interests, that are in default on any
payment for any Commission licenses (including down payments) or are
delinquent on any non-tax debt owed to any Federal agency as of the
filing deadline for short-form applications--are not eligible to bid in
either Auction 73 or Auction 76.
92. Applicants are encouraged to review the Bureau's previous
guidance on default and delinquency disclosure requirements in the
context of the short-form application process. For example, it has been
determined that to the extent that Commission rules permit late payment
of regulatory or application fees accompanied by late fees, such debts
will become delinquent for purposes of Sec. 1.2105(a) and 1.2106(a)
only after the expiration of a final payment deadline. Therefore, with
respect to regulatory or application fees, the provisions of Sec.
1.2105(a) and 1.2106(a) regarding default and delinquency in connection
with competitive bidding are limited to circumstances in which the
relevant party has not complied with a final Commission payment
deadline.
93. The Commission considers outstanding debts owed to the United
States Government, in any amount, to be a serious matter. The
Commission adopted rules, including a provision referred to as the red
light rule, that implement the Commission's obligations under the Debt
Collection Improvement Act of 1996, which governs the collection of
claims owed to the United States. Under the red light rule, the
Commission will not process applications and other requests for
benefits filed by parties that have outstanding debts owed to the
Commission. In the same rulemaking order, the Commission explicitly
declared, however, that the Commission's competitive bidding rules are
not affected by the red light rule. As a consequence, the Commission's
adoption of the red light rule does not alter the applicability of any
of the Commission's competitive bidding rules, including the provisions
and certifications of Sec. 1.2105 and 1.2106, with regard to current
and former defaults or delinquencies. Applicants are reminded, however,
that the Commission's Red Light Display System, which provides
information regarding debts owed to the Commission, may not be
determinative of an auction applicant's ability to comply with the
default and delinquency disclosure requirements of Sec. 1.2105. Thus,
while the red light rule ultimately may prevent the processing of long-
form 38 applications by auction winners, an auction applicant's red
light status is not necessarily determinative of its eligibility to
participate in an auction or of its upfront payment obligation.
94. Prospective applicants should note that any long-form
applications filed after the close of competitive bidding will be
reviewed for compliance with the Commission's red light rule, and such
review may result in the dismissal of a winning bidder's long-form
application.
G. Other Information
95. Applicants owned by members of minority groups and/or women, as
defined in Sec. 1.2110(c)(3), may identify themselves in filling out
their short-form applications regarding this status. This applicant
status information is collected for statistical purposes only and
assists the Commission in monitoring the participation of designated
entities in its auctions.
H. Minor Modifications to Short-Form Applications (FCC Form 175)
96. Applicants are not permitted to make major modifications to
their short-form applications (e.g., change their license selections,
change control of the applicant, change the certifying official, or
change their size to claim eligibility for a higher bidding credit)
after the short-form application deadline. Thus, any change in control
of an applicant, resulting from a merger for example, will be
considered a major modification to the applicant's FCC Form 175, which
will consequently be dismissed.
97. Applicants are, however, permitted to make only minor changes
to their FCC Form 175 after the short-form application deadline.
Permissible minor changes include, for example, deletion and addition
of authorized bidders (to a maximum of three) and revision of addresses
and telephone numbers of the applicants and their contact persons.
98. If an applicant wishes to make permissible minor changes to its
short-form application, such changes should be made electronically to
its Auction 73 short-form application using the FCC Auction System.
Applicants should not make changes to short-form applications 39
associated with Auction 76. Applicants are reminded to click on the
SUBMIT button in the FCC Auction System for the changes to be submitted
and considered by the Commission. After the revised application has
been submitted, a confirmation page will be displayed that states the
submission time and date, along with a unique file number.
99. In addition, during those periods outside of the initial and
resubmission filing windows (i.e., when an applicant cannot
electronically update its FCC Form 175), an applicant should submit a
letter briefly summarizing the changes and subsequently update its
short-form applications in ISAS as soon as possible. After the filing
window has closed, the auction system will not permit applicants to
make certain changes, such as legal classification and bidding credit.
Any letter describing changes to an applicant's short-form application
should be submitted by electronic mail to the following address:
auction73@fcc.gov. The electronic mail summarizing the changes must
include a subject or caption referring to Auction 73 and the name of
the applicant (e.g.,
[[Page 62371]]
RE: Changes to Auction 73 Short-Form Application of ABC Corp.), and
should not reference Auction 76.
100. Applicants must not submit application-specific material
through the Commission's Electronic Comment Filing System (ECFS).
I. Maintaining Current Information in Short-Form Applications (FCC Form
175)
101. Section 1.65 of the Commission's rules requires an applicant
to maintain the accuracy and completeness of information furnished in
its pending application and to notify the Commission within 30 days of
any substantial change that may be of decisional significance to that
application. Changes that cause a loss of or reduction in eligibility
for a bidding credit must be reported immediately. If an amendment
reporting substantial changes is a major amendment as defined by Sec.
1.2105, the major amendment will not be accepted and may result in the
dismissal of the short-form application.
102. After the short-form filing deadline, applicants may make only
minor changes to their short-form applications, such as deleting or
adding authorized bidders (to a maximum of three). Applicants must
click on the SUBMIT button in the FCC Auction System for the changes to
be submitted and considered by the Commission. In addition, applicants
must submit a letter, briefly summarizing the changes, by electronic
mail at the following address: auction73@fcc.gov. The electronic mail
summarizing the changes must include a subject or caption referring to
Auction 73 and the name of the applicant. Applicants must not submit
application-specific material through ECFS.
III. Pre-Auction Procedures
A. Auction Seminar--November 20, 2007
103. On Tuesday November 20, 2007, the FCC will sponsor a free
seminar for parties interested in participating in Auctions 73 and 76
at the FCC headquarters, located at 445 12th Street, SW., Washington,
DC. The seminar will provide attendees with information about pre-
auction procedures, completing FCC Form 175, auction conduct, the FCC
Auction System, auction rules, and the 700 MHz Band service rules. The
seminar will also provide an opportunity for prospective bidders to ask
questions of FCC staff concerning the auction, auction procedures,
filing requirements and other matters related to Auctions 73 and 76.
104. To register, please provide the information listed on the
Auctions 73 and 76 Public Notice released October 19, 2007 (DA 07-
4236), by fax (717) 338-2850, e-mail Auchelp@fcc.gov or telephone (717)
338-2868 to the FCC by Friday, November 16, 2007. For individuals who
are unable to attend, an Audio/Video webcast of this seminar will be
available from the FCC's Auction 73 Web page at http://wireless.fcc.gov/auctions/73/
.
B. Short-Form Applications (FCC Form 175)--Due Prior to 6 p.m. ET on
December 3, 2007
105. In order to be eligible to bid in Auction 73 or Auction 76,
applicants must first follow the procedures set forth in Attachments D
and E to the Auctions 73 and 76 Procedures Public Notice to submit an
FCC Form 175 application electronically via the FCC Auction System. The
application must be received at the Commission prior to 6 p.m. ET on
December 3, 2007. Late applications will not be accepted. There is no
application fee required when filing an FCC Form 175, but an applicant
must submit an upfront payment to be eligible to bid.
106. Applications may generally be filed at any time beginning at
noon ET on November 19, 2007, and the filing window will close prior to
6 p.m. ET on December 3, 2007. Applicants are strongly encouraged to
file early and are responsible for allowing adequate time for filing
their applications. Applicants may update or amend their applications
multiple times until the filing deadline on December 3, 2007.
107. Applicants must always click on the SUBMIT button on the
Certify & Submit screen of the electronic form to successfully submit
or modify their FCC Form 175. Any form that is not submitted will not
be reviewed by the FCC. Additional information about accessing,
completing, and viewing the FCC Form 175 is included in Attachments D
and E of the Auctions 73 and 76 Procedures Public Notice. FCC Auctions
Technical Support is available at (877) 480-3200, or (202) 414-1255
(text telephone (TTY)); hours of service are Monday through Friday,
from 8 a.m. to 6 p.m. ET.
C. Application Processing and Minor Corrections
108. After the deadline for filing short-form applications, the
Commission will process all timely submitted applications to determine
which are acceptable for filing, and subsequently will issue a public
notice identifying: (1) Those applications accepted for filing; (2)
those applications rejected; and (3) those applications which have
minor defects that may be corrected, and the deadline for resubmitting
corrected applications.
109. After the December 3, 2007, short-form filing deadline,
applicants may make only minor corrections to their applications.
Applicants will not be permitted to make major modifications to their
applications (e.g., change their license selections, change control of
the applicant, change certifying official, or change their size to
claim eligibility for a higher bidding credit). Accordingly, applicants
interested in participating in any potential contingent subsequent
bidding must have selected license(s) available in the initial bidding
as well as licenses that may be available in contingent subsequent
bidding, including alternative licenses, by the deadline for submitting
their application to participate in Auction 73. FCC personnel will
communicate regarding a short-form application only with an applicant's
contact person or certifying official, as designated on the applicant's
FCC Form 175, unless the applicant's certifying official or contact
person notifies the Commission in writing that applicant's counsel or
other representative is authorized to speak on its behalf.
D. Upfront Payments--Due December 28, 2007
110. In order to be eligible to bid in Auction 73 and any
contingent subsequent auction, applicants must submit an upfront
payment accompanied by an FCC Remittance Advice Form (FCC Form 159).
Only applicants that become qualified bidders in Auction 73, by, among
other things, making upfront payments to be eligible to bid in Auction
73, will be eligible to participate in any contingent subsequent
auction. However, qualified bidders in Auction 73 will be permitted to
make additional upfront payments with respect to licenses being offered
in any contingent subsequent auction at a later date. After completing
the FCC Form 175, filers will have access to an electronic version of
the FCC Form 159 that can be printed and sent by facsimile to Mellon
Bank in Pittsburgh, PA. All upfront payments for Auction 73 must be
received in the proper account at Mellon Bank by 6 p.m. ET on December
28, 2007.
i. Making Upfront Payments by Wire Transfer
111. Wire transfer payments for Auction 73 must be received by 6
p.m.
[[Page 62372]]
ET on December 28, 2007. No other payment method is acceptable. 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. The
BNF and Lockbox number are specific to the upfront payments for Auction
73. Do not use BNF or Lockbox numbers from previous auctions. Wire
transfer information for Auction 76 will be made available in a future
public notice.
112. At least one hour before placing the order for the wire
transfer (but on the same business day), applicants must send by
facsimile a completed FCC Form 159 (Revised 2/03) to Mellon Bank at
(412) 209-6045. On the cover sheet of the facsimile, write Wire
Transfer--Auction Payment for Auction 73. In order to meet the
Commission's upfront payment deadline, an applicant's payment must be
credited to the Commission's account before the deadline. Applicants
are responsible for obtaining confirmation from their financial
institution that Mellon Bank has timely received their upfront payment
and deposited it in the proper account.
113. Please note that: (1) All payments must be made in U.S.
dollars; (2) all payments must be made by wire transfer; (3) upfront
payments for Auction 73 go to a lockbox number different from the
lockboxes used in previous FCC auctions, and different from the lockbox
number to be used for post-auction payments; and (4) failure to deliver
the upfront payment as instructed by the December 28, 2007, deadline
will result in dismissal of the application and disqualification from
participation in the auction as well as ineligibility for participation
in any contingent subsequent bidding for 700 MHz Band licenses.
ii. FCC Form 159
114. A completed FCC Remittance Advice Form (FCC Form 159, Revised
2/03) must be sent by facsimile to Mellon Bank to accompany each
upfront payment. Proper completion of FCC Form 159 (Revised 2/03) is
critical to ensuring correct crediting of upfront payments. Detailed
instructions for completion of FCC Form 159 are included in Attachment
F to the Auctions 73 and 76 Procedures Public Notice. An electronic
pre-filled version of the FCC Form 159 is available after submitting
the FCC Form 175. Payors using a pre-filled FCC Form 159 are
responsible for ensuring that all of the information on the form,
including payment amounts, is accurate. The FCC Form 159 can be
completed electronically, but must be filed with Mellon Bank via
facsimile.
iii. Upfront Payments and Bidding Eligibility
115. In the 700 MHz Auction Public Notice, the Bureau proposed that
the amount of the upfront payment would determine a bidder's initial
bidding eligibility, the maximum number of bidding units on which a
bidder may place bids. In addition, consistent with the Commission's
direction in the 700 MHz Second Report and Order, the Bureau proposed
that qualified bidders in Auction 73 would have an opportunity to
submit additional upfront payments to obtain bidding eligibility for
licenses in any contingent subsequent auction (Auction 76).
116. Under the Bureau's proposal, in order to bid on a particular
license or package, qualified bidders must have selected the license(s)
on FCC Form 175 and must have a current eligibility level that meets or
exceeds the number of bidding units assigned to that license or
package. For a package, the bidding units are calculated by adding
together the bidding units of the individual licenses that make up the
package. At a minimum, therefore, an applicant's total upfront payment
must be enough to establish eligibility to bid on at least one of the
licenses selected on its FCC Form 175 for Auction 73, or else the
applicant will not be eligible to participate in Auction 73 or in
Auction 76. An applicant does not have to make an upfront 45 payment to
cover all licenses the applicant selected on its FCC Form 175, but
rather to cover the maximum number of bidding units that are associated
with licenses on which the bidder wishes to place bids and hold
provisionally winning bids (via bids on licenses and/or packages) at
any given time in Auction 73. If contingent subsequent bidding is
necessary, qualified bidders for Auction 73 will be given an
opportunity to supplement their upfront payments in order to increase
their bidding eligibility for Auction 76.
117. In the 700 MHz Auction Public Notice, the Bureau proposed to
calculate upfront payments as follows: (1) For licenses covering CMAs
in the 50 states in which the licenses offered in Auction 66 were sold,
$0.05 per MHz per population (MHz-pop) for Metropolitan Statistical
Area (MSA) licenses and $0.03/MHz-pop for Rural Service Area (RSA)
licenses; (2) for licenses covering EAs in the 50 states in which the
corresponding licenses in both EA blocks offered in Auction 66 were
sold, the sum of $0.05/MHz-pop for counties contained within an MSA and
$0.03/MHz-pop for counties contained within an RSA; (3) for licenses
covering REAGs in the 50 states in which the corresponding licenses in
all three REAG blocks offered in Auction 66 were sold, the sum of
$0.05/MHz-pop for counties contained within an MSA and $0.03/MHz-pop
for counties contained within an RSA; (4)for licenses covering
geographic areas for which an Auction 66 license was unsold, $0.01/MHz-
pop; (5)for licenses covering the Gulf of Mexico, $1,000 per MHz; and
(6) for all remaining licenses, $0.01/MHz-pop. For all licenses, the
results of the above calculations are subject to a minimum of $500 per
license and are rounded using its standard rounding procedure.
118. The Bureau set forth the specific upfront payments and bidding
units for each license in Attachment A of the 700 MHz Auction Public
Notice and sought comment on this proposal. The Bureau did not receive
any comments in response to the proposed upfront payments, or on its
proposal that the upfront payment amount would determine a bidder's
initial bidding eligibility. Therefore, the Bureau adopt the upfront
payments and bidding units for each 46 license in Auction 73 as
proposed and set forth in Attachment A of the Auctions 73 and 76
Procedures Public Notice.
119. In calculating its upfront payment amount, an applicant
interested in bidding only on individual licenses should determine the
maximum number of bidding units on which it may wish to be active (bid
on or hold provisionally winning bids on) in any single round in
Auction 73, and submit an upfront payment amount covering that number
of bidding units. Applicants interested in bidding on packages should
determine their upfront payment amount by calculating the sum of
bidding units associated with each discrete license they wish to
include in new bids (package or individual bids) or have included in
provisionally winning bids in any single round. The bidding units
associated with a given license, even if the license is included in
more than one bid, will be counted only once per bidder per round. In
order to make this calculation, an applicant should add together the
upfront payments for all licenses comprising all combinations of
licenses and packages of licenses on which it seeks to be active in any
given round. If a bidder has enough eligibility to bid on certain
licenses, it can place bids on the licenses individually and on
packages containing those licenses without needing additional
eligibility. For example, if licenses A, B, and C
[[Page 62373]]
each have 10,000 bidding units, and a bidder wishes in a single round
to be able to bid on licenses A, B, and C individually and on packages
AB and ABC, the bidder needs 30,000 bidding units of eligibility.
Applicants should check their calculations carefully, as there is no
provision for increasing a bidder's eligibility for Auction 73 after
the upfront payment deadline.
120. The Bureau reiterates that, in the event it is necessary to
conduct Auction 76, bidders will have an opportunity to supplement
their upfront payments in order to increase their bidding eligibility
for Auction 76. The instructions and deadline for doing so would be
announced within five business days after the end of bidding in Auction
73.
121. For Auction 73 and any contingent subsequent auction, former
defaulters must calculate their upfront payment for all licenses and
packages by multiplying the number of bidding units on which they wish
to be active by 1.5. In order to calculate the number of bidding units
to assign to former defaulters, the Commission will divide the upfront
payment received by 1.5 and round the result up to the nearest bidding
unit.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of
Upfront Payments
122. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information be supplied to the FCC. Applicants can provide the
information electronically during the initial short-form application
filing window after the form has been submitted. Applicants are
reminded that information submitted as part of an FCC Form 175 will be
available to the public; for that reason, wire transfer information
should not be included in an FCC Form 175.
E. Auction Registration
123. Approximately ten days before the auction, the FCC will issue
a public notice announcing all qualified bidders for Auction 73.
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 license(s)
initially offered in Auction 73.
124. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by overnight mail. The mailing will be sent only to the contact
person at the contact address listed in the FCC Form 175 and will
include the SecurID [supreg] tokens that will be required to place
bids, the Integrated Spectrum Auction System (ISAS) Bidder's Guide, and
the Auction Bidder Line phone number.
125. Qualified bidders that do not receive this registration
mailing will not be able to submit bids. Therefore, any qualified
bidder that has not received this mailing by noon on Tuesday, January
15, 2008, should call (717) 338-2868. Receipt of this registration
mailing is critical to participating in the auction, and each applicant
is responsible for ensuring it has received all of the registration
material.
126. In the event that SecurID [supreg] tokens are lost or damaged,
only a person who has been designated as an authorized bidder, the
contact person, or the certifying official on the applicant's short-
form application may request replacement registration material.
Qualified bidders requiring the replacement of these items must call
Technical Support at (877) 480-3201 or (202) 414-1255 (TTY).
F. Remote Electronic Bidding
127. The Commission will conduct Auctions 73 and 76 over the
Internet and telephonic bidding will be available as well. Qualified
bidders are permitted to bid electronically and telephonically. Each
applicant should indicate its bidding preference--electronic or
telephonic--on the FCC Form 175. In either case, each authorized bidder
must have its own SecurID [supreg] token, which the FCC will provide at
no charge. Each applicant with one authorized bidder will be issued two
SecurID [supreg] tokens, while applicants with two or three authorized
bidders will be issued three tokens. For security purposes, the SecurID
[supreg] tokens, the telephonic bidding telephone number, and the
Integrated Spectrum Auction System (ISAS) Bidder's Guide are only
mailed to the contact person at the contact address listed on the FCC
Form 175. Please note that each SecurID [supreg] token is tailored to a
specific auction; therefore, SecurID [supreg] tokens issued for other
auctions or obtained from a source other than the FCC will not work for
Auction 73. In the event that it is necessary to conduct Auction 76,
qualified bidders for Auction 76 will use the same SecurID [supreg]
tokens as they used for Auction 73.
128. Please note that the SecurID [supreg] tokens can be recycled,
and the Bureau encourages bidders to return the tokens to the FCC. The
Bureau will provide pre-addressed envelopes that bidders may use to
return the tokens once the auction is closed.
G. Mock Auction--January 18, 2008
129. All qualified bidders will be eligible to participate in a
mock auction on Friday, January 18, 2008. The mock auction will enable
applicants to become familiar with the FCC Auction System prior to the
auction. Participation by all bidders is strongly recommended. Details
will be announced by public notice.
IV. Auction 73
130. The first round of bidding for Auction 73 will begin on
Thursday, January 24, 2008. The initial bidding schedule will be
announced in a public notice listing the qualified bidders, which is to
be released approximately 10 days before the start of the auction.
A. Auction 73 Structure
i. Simultaneous Multiple Round Auction With Package Bidding on C Block
Licenses
131. In the 700 MHz Auction Public Notice, the Bureau proposed
using the Commission's standard simultaneous multiple-round (SMR)
auction format for the A, B, D, and E Block licenses, while enabling
package bidding for C Block licenses using an auction design with
hierarchical package bidding (HPB). An SMR-HPB auction format 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 and on certain pre-defined packages of specified licenses,
which, for Auction 73, only include C Block licenses. A bidder may bid
on, and potentially win, any number of licenses and/or packages.
Typically, bidding remains open on all licenses until bidding stops on
every license, unless an alternative version of the stopping rule is
invoked.
132. The 700 MHz Auction Public Notice proposed pre-defined
packages for C Block licenses according to a hierarchical structure.
The initial level consists of individual licenses, and the next level
consists of non-overlapping packages of those licenses, such that a
given license is included only once in each level. The winning set of
bids could therefore consist of bids from various levels as long as
each license is included in only one winning bid. The Bureau proposed
to accept individual bids on C Block licenses for REAGs 1-12 (Level 1)
and package bids on the following combinations of C Block REAG licenses
(Level 2): (1) REAGs 1-8 (the 50 States package); (2) REAGs 10 and 12,
comprising Puerto Rico, the U.S. Virgin Islands and the Gulf of Mexico
(the Atlantic package); and (3) REAGs 9
[[Page 62374]]
and 11, comprising the U.S. Pacific territories (the Pacific package).
133. The Bureau also sought comment on alternative levels or
alternative ways of packaging licenses within levels. Additionally, the
Bureau proposed to conduct the auction using standard SMR procedures
for all of the licenses, including the C Block licenses in the event
that currently unforeseen difficulties make it impracticable to
implement package bidding.
134. The majority of commenters support package bidding for C Block
licenses either in general or for the HPB auction format specifically.
Some commenters, however, urge the Bureau to abandon package bidding
for Auction 73 under the unforeseen difficulties exception to the
Commission's directive to use package bidding for the C Block licenses.
These parties assert that the SMR-HPB format is too complex, will
disadvantage bidders interested in only individual licenses, and will
not be fully understood by bidders or implemented by the Bureau in time
for the start of the auction. When the Commission directed the Bureau
to adopt package bidding for the C Block, it noted that package bidding
minimizes exposure risk for applicants whose business plans require the
economies of scale that only can be obtained with nationwide operation,
but would not preclude the participation of entities wishing to bid on
individual licenses. The HPB auction format was chosen in part because
it mitigates issues inherent in some other package bidding formats that
give bidders interested in large packages an advantage over bidders
interested in individual licenses. Of course, to the extent that
providing bidders the option of package bidding favors those bidders
seeking packages over those seeking individual licenses, the Bureau
notes that the same argument could be applied in reverse to the other
1,087 licenses in Auction 73 that bidders will not have the option to
package in order to decrease their exposure risk. After review of the
record, the Bureau concluded that considerations raised in the comments
opposing package bidding are not the kinds of unforeseen difficulties
regarding the feasibility of package bidding for the C Block licenses
that the Commission envisioned in the 700 MHz Second Report and Order.
135. Therefore, the Bureau concludes that the SMR format for A, B,
E and D Block licenses, and the HPB auction format for the C Block
licenses, will best meet the needs of bidders in Auction 73, and
therefore adopt them as proposed. As is typical with both formats, bids
will be accepted on all individual licenses and on pre-defined packages
of licenses in each round of the auction until bidding stops on every
license, allowing bidders to take advantage of synergies that exist
among licenses.
136. With regard to the proposed pre-defined packages for C Block
licenses, the Bureau declines to adopt the alternate packages suggested
by two commenters. One commenter asserts that it sees value in adopting
a 12 REAG package or even allowing bidders to choose their own package.
The second commenter proposed adopting packages of regions larger than
REAGs (e.g., East, Midwest, West Coast) and a package of only the lower
48 States. The commenter bases its proposal for a lower 48 State
package on the premise that prospective nationwide bidders have limited
interest in Hawaii and Alaska, and that these states would be better
served if they are not included in a nationwide package. The State of
Hawaii submitted reply comments challenging the assertion that
nationwide carriers have little interest in providing coverage to
Hawaii, noting several major carriers already do in fact operate in
Hawaii. The State of Hawaii also asserts that any nationwide package
without Hawaii and Alaska unfairly discriminates against these states
and its inhabitants, which would not only be inconsistent with the
Communications Act, but also with Commission precedent. The commenter
also suggests that the Bureau eliminate the Atlantic and Pacific
packages on the grounds that bidders would not obtain any benefits from
bidding on the licenses as packages. The Bureau sees no disadvantages
to including the packages.
137. The Commission adopted package bidding for C Block licenses to
reduce the exposure problem that might otherwise inhibit bidders
seeking to create a nationwide footprint. At the same time, the
Commission directed the Bureau to implement package bidding without
imposing disadvantages on parties that wish to bid on individual
licenses comprising the nationwide footprint. The Bureau finds that
offering three packages--the 50 States, Atlantic, and Pacific
packages--meets this balance by reducing exposure risk of bidders
seeking to provide nationwide coverage without disadvantaging those
bidders seeking individual licenses. Therefore, the Bureau adopts the
pre-defined packages as proposed in the 700 MHz Auction Public Notice.
ii. Information Available to Bidders Before and During the Auctions
138. In the 700 MHz Second Report and Order, the Commission found
that the public interest would be served if the auction for new 700 MHz
Band licenses is conducted using anonymous (or limited information)
bidding procedures, regardless of any pre-auction measurement of likely
auction competition. Such information procedures are intended to reduce
the potential for anti-competitive bidding behavior, including bidding
activity that aims to prevent the entry of new competitors. The
Commission therefore directed the Bureau to propose and seek comment on
more detailed procedures for employing anonymous bidding for the 700
MHz auction.
139. In the 700 MHz Auction Public Notice, the Bureau proposed to
withhold, until after the close of bidding, public release of (1)
bidders' license selections on their short-form applications, (2) the
amounts of bidders' upfront payments and bidding eligibility, and (3)
information that may reveal the identities of bidders placing bids and
taking other bidding-related actions. In contrast to procedures
implemented for anonymous bidding in past auctions, and consistent with
the 700 MHz Second Report and Order, the Bureau proposed to withhold
this information irrespective of any pre-auction measurement of likely
auction competition.
140. Commenters generally support the proposal to implement limited
information disclosure procedures for the 700 MHz auction, though they
differ on the disclosure of specific data elements. Some commenters
suggest that the Commission should inform bidders of the license(s) or
license block(s) for which an overlap occurs with other applicants,
citing fundamental differences between the different 700 MHz license
blocks and the particular needs of small and rural bidders to better
identify those bidders interested in nationwide/open access licenses. A
commenter opposes disclosure of this information. The Bureau finds that
revealing information on license blocks selected by competing
applicants would be inconsistent with the goals of limiting information
disclosure. Thus, the Bureau will not release information on licenses
or license blocks selected until after the close of bidding.
141. Commenters also recommend releasing each bidder's upfront
payment amount and initial bidding eligibility before the auction on
the grounds that this information would help small companies better
gauge the level of competition. Some entities also seek disclosure of
an aggregate eligibility ratio after each round. A commenter advocates
releasing the total number of
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active bidders and, for each license and package, the number of bids
and amount of the bids after each round. While these parties contend
that release of this information would not facilitate anticompetitive
practices and would not disclose bidder identities, the Bureau
disagrees. As a commenter notes, release of bidder eligibility before
the auction could be used by incumbents to block new entrants or for
other strategic purposes. Similarly, a commenter contends that release
of this information weakens anonymous bidding. This information could
potentially be used to discern the identities of individual bidders.
Moreover, the Bureau is particularly concerned that release of such
information could foster anticompetitive bidding activity, particularly
in light of the use of reserve prices in this auction.
142. Two commenters urge the Commission to release names of auction
applicants and provide access to the ownership information in
applicants' short form applications. This information has been made
publicly available in past auctions even where limited information
procedures have been implemented. The Bureau plans to continue to make
available the names of applicants and their ownership information, as
release of that information is necessary for other applicants to comply
with the anti-collusion rules and does not undermine the purpose of its
anonymous bidding procedures. To enable applicants to comply with the
Commission's anti-collusion rules, once the Bureau has conducted its
initial review of applications to participate in Auction 73 and Auction
76, each applicant will receive a letter that lists the other
applicants in Auction 73 and Auction 76 that have applied for licenses
in any of the same geographic areas as the applicant.
143. The Bureau adopts the proposals set out in the 700 MHz Auction
Public Notice. Thus, the Bureau will disclose after the conclusion of
each round the amount of every bid placed and whether a bid was
withdrawn. More generally, the Bureau will disclose, after the
conclusion of each round, all relevant information about all bids
placed, withdrawn, or dropped except for the identities of the bidders
performing the actions and the net amounts of the bids placed,
withdrawn, or dropped. As in past auctions conducted with limited
information procedures, for each license the Bureau will indicate the
minimum acceptable bid amount for the next round and whether the
license has a provisionally winning bid. After each round, the Bureau
will also release for each license the number of bidders that placed a
bid on the license. Furthermore, the Bureau will indicate whether any
proactive waivers were submitted in each round, and the Bureau will
release the stage transition percentage--the percentages of licenses
(as measured in bidding units) on which there were new bids--for the
round. In addition, after each round, bidders logged in to the FCC
Auction System will be able to see whether their own bids are
provisionally winning. The Bureau will provide samples of publicly-
available and bidder-specific (non-public) results files prior to the
start of the auction.
144. Several commenters argue that information about the initial
auction results (for Auction 73) should not be withheld in the event
that a contingent auction (Auction 76) must be conducted. Some
commenters urge disclosure of initial auction results for blocks that
meet their reserve prices before the contingent auction, claiming that
such information may be necessary to meet Securities and Exchange
Commission and other regulatory requirements, to allow bidders to
communicate with financial institutions, and to facilitate network
build-out. Similarly, other commenters favor allowing bidders to
announce that they won licenses in a block that has met its reserve
price if required by law or regulation. These parties do not, however,
cite any specific regulatory requirements that would compel such
disclosures, and the Bureau is not aware of any such regulations. To
the extent that any such requirements are related to winning bidders'
payments, the Bureau notes that if Auction 76 were to be held, winning
bidders in Auction 73 of licenses in the A, B, C, or E Blocks will not
be required to make down payments until after the subsequent bidding.
The Bureau finds that premature disclosure to financial institutions,
vendors, and others of identities of successful bidders in Auction 73
would undermine the purposes of the limited information procedures.
145. Regarding Auction 76 and the timing of information disclosure,
the Bureau adopts its proposal not to release until after the close of
bidding in both auctions: (a) Information on the winning bidders for
licenses in blocks for which the reserve price was met in the first
auction, (b) information on bidder license selections and eligibility,
and (c) any other information that may reveal the identities of bidders
placing bids and taking other bidding-related actions on licenses in
all blocks. For the D Block, however, in the event there is a winning
bidder for the D Block license in Auction 73, the Bureau will make
public before the close of bidding in an Auction 76 only such
information as may be necessary to proceed with promptly facilitating
the D Block winner's obligations to negotiate a Network Sharing
Agreement with the national Public Safety Broadband Licensee in the
adjacent spectrum block.
146. Commenting parties also urge the Commission to allow
applicants to opt-out of Auction 76 in order to be free of anti-
collusion prohibition, so long as bidder certifies that its decision
has not been based on discussion with other parties concerning auction
strategy or post-auction market structure. As one commenter
acknowledges, reversal of the Commission's determination on this issue
would need to be addressed by full Commission. As such, the Bureau
cannot implement such a change in this proceeding.
147. Other Issues. The Bureau concluded in the rulemaking
proceeding that the information disclosure procedures established for
this auction will not interfere with the administration of or
compliance with the Commission's anti-collusion rule. Section
1.2105(c)(1) of the Commission's rules provides that after the short-
form application filing deadline, all applicants for licenses in any of
the same geographic license areas are prohibited from disclosing to
each other in any manner the substance of bids or bidding strategies
until after the down payment deadline, subject to specified exceptions.
When limited information procedures are not in effect for a particular
auction, each applicant's selection of licenses has been publicly
available through the Commission's online short-form application
database. In Auction 73 and Auction 76, however, the Commission will
not disclose information regarding license selection or the amounts of
bidders'' upfront payments and bidding eligibility. As in the past, the
Commission will disclose the other portions of applicants'' short-form
applications, through its online database and certain application-based
information through public notices. Thus, even without information
regarding license selection, applicants would be able to comply with
Sec. 1.2105(c) by not disclosing bids or bidding strategies to any
other applicants in the auction. This approach, however, could inhibit
otherwise lawful communications with applicants for licenses in other
geographic license areas, which the Commission's anti-collusion rule
permits.
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148. Consequently, the Bureau will notify separately each applicant
with short-form applications to participate in a pending auction
whether applicants in Auction 73 and Auction 76 have applied for
licenses in any of the same geographic areas as that applicant.
Specifically, after the Bureau conducts its initial review of
applications to participate in Auction 73 and Auction 76, each
applicant with a pending short-form application will receive a letter
that lists the applicants in Auction 73 and Auction 76 that have
applied for licenses in any of the same geographic areas as the
applicant. The list will identify the Auction 73 and Auction 76
applicant(s) by name but will not list the license selections of the
Auction 73 and Auction 76 applicant(s). As in past auctions, additional
information regarding applicants in Auction 73 and Auction 76 that is
needed to comply with Sec. 1.2105(c), e.g., the identities of
controlling interest(s) in an applicant and ownership interests greater
than ten percent, will be available through the publicly accessible
online short-form application database.
149. When completing short-form applications, applicants should
avoid any statements or disclosures that may violate the Commission's
anti-collusion rule, particularly in light of the Commission's
procedures regarding the availability of certain information in Auction
73 and Auction 76. While applicants'' license selection will not be
disclosed until after Auction 73 and Auction 76 close, the Commission
will disclose other portions of short-form applications through its on-
line database and public notices. Accordingly, applicants should avoid
including any information in their short-form applications that might
convey information regarding license selections. For example,
applicants should avoid using applicant names that refer to licenses
being offered, referring to certain licenses or markets in describing
bidding agreements, or including any information in attachments that
may otherwise disclose applicants'' license selections. If an applicant
is found to have violated the Commission's rules or antitrust laws in
connection with its participation in the competitive bidding process,
the applicant may be subject to various sanctions, including forfeiture
of its upfront payment, down payment, or full bid amount and
prohibition from participating in future auctions.
iii. Eligibility and Activity Rules
150. The Bureau will use upfront payments to determine initial
(maximum) eligibility (as measured in bidding units) for Auction 73.
The amount of the upfront payment submitted by a bidder determines
initial bidding eligibility, the maximum number of bidding units on
which a bidder may be active. Each license is assigned a specific
number of bidding units listed in Attachment A of the Auctions 73 and
76 Procedures Public Notice. Bidding units for a given license do not
change as prices rise during the auction. A bidder's upfront payment is
not attributed to specific licenses or packages. Rather, a bidder may
place bids on any of the licenses selected on its FCC Form 175 as long
as the total number of bidding units associated with those licenses
does not exceed its current eligibility. Eligibility cannot be
increased during Auction 73; it can only remain the same or decrease.
Thus, in calculating its upfront payment amount, an applicant must
determine the maximum number of bidding units it may wish to bid on or
hold provisionally winning bids on in any single round, and submit an
upfront payment amount covering that total number of bidding units. At
a minimum, an applicant's upfront payment must cover the bidding units
for at least one of the licenses it selected on its FCC Form 175 for
Auction 73. The total upfront payment does not affect the total dollar
amount a bidder may bid on any given license or package of licenses.
151. A bidder is eligible to bid on a package of licenses if it
selected all the licenses in the package on its FCC Form 175 and has
sufficient eligibility. The bidding units for a package are calculated
by adding together the bidding units of the individual licenses that
make up the package.
152. In order to ensure that an auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively
throughout the auction, rather than wait until late in the auction
before participating. Bidders are required to be active on a specific
minimum percentage of their current bidding eligibility during each
round of the auction.
153. A bidder's activity level in a round is the sum of the bidding
units associated with any licenses covered by new and provisionally
winning bids. The bidding units associated with a given license will be
counted only once in a bidder's activity calculation for the round,
even if the bidder places a bid on the license and a bid on a package
containing the license. For example, consider two licenses, A and B,
each having 10,000 bidding units. Assuming a bidder bids on license A
as well as the package AB in a given round, the bidder's activity would
be 20,000 bidding units, calculated as the sum of the bidding units of
licenses A and B. Note that the bidding units for license A are not
counted twice. A bidder is considered active on a license in the
current round if it is either the provisionally winning bidder at the
end of the previous bidding round and does not withdraw the
provisionally winning bid in the current round, or if it submits a bid
in the current round.
154. The minimum required activity is expressed as a percentage of
the bidder's current eligibility, and increases by stage as the auction
progresses. Because these procedures have proven successful in
maintaining the pace of previous auctions, the Commission adopts them
for Auction 73. 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 additional bids in the
auction.
155. With package bidding in the C Block, it is possible that a
bidder may have an activity level that exceeds its eligibility, since
the FCC Auction System considers bids placed in 60 previous rounds when
determining the provisionally winning set. If a non-winning bid placed
in a previous round later becomes provisionally winning, the bidder
will receive activity for the newly provisionally winning bid. When
added to the activity for the bidder's provisionally winning bids from
the previous round and its new bids--which were limited by the bidder's
current bidding eligibility--the total activity may exceed the bidder's
current bidding eligibility. If this occurs, the bidder's current
bidding eligibility will not increase to accommodate the additional
activity. In subsequent rounds, the bidder will not be permitted to
place new bids if its total activity from provisionally winning bids
exceeds its bidding eligibility.
156. A commenter argues that the Bureau should allow bidders
limited additional eligibility so that they can continue to bid on
licenses or packages that become provisionally winning in later rounds.
The Bureau finds that allowing maximum eligibility to be increased in
this way may provide an incentive for bidders to intentionally place
bids that are likely to become provisionally winning in later rounds,
so as to increase their eligibility outside of the usual pre-auction
process that requires them to purchase eligibility with upfront
payments. Thus, the Bureau will not modify its procedures as suggested.
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157. A commenter proposes that the Bureau modify the activity rules
to reduce the difference between the number of bidding units associated
with the C Block licenses and the bidding units associated with the D
Block license. It maintains that the C and D Blocks are in many ways
substitutes, but notes that since the C Block has a bandwidth of 22 MHz
compared to 10 MHz for the D Block, the C Block has many more bidding
units. The commenter