[Federal Register Volume 73, Number 104 (Thursday, May 29, 2008)]
[Notices]
[Pages 30919-30938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-12013]
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FEDERAL COMMUNICATIONS COMMISSION
[AU Docket No. 08-46; Report No. AUC-08-78-B (Auction 78); DA 08-1090]
Auction of AWS-1 and Broadband PCS Licenses Rescheduled for
August 13, 2008; Notice and Filing Requirements, Minimum Opening Bids,
Upfront Payments and Other Procedures for Auction 78
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 AWS-1 and Broadband PCS Licenses
(Auction 78). This document is intended to familiarize prospective
bidders with the procedures and minimum opening bids for the auction.
DATES: This auction has been rescheduled from July 29, 2008, to August
13, 2008. Short-form Applications to participate in Auction 78 must be
filed before 6:00 p.m. ET on June 19, 2008. The upfront payments
deadline for Auction 78 is July 17, 2008, 6:00 p.m. ET. Bidding for
Auction No. 78 is scheduled to begin on August 13, 2008.
FOR FURTHER INFORMATION CONTACT:
Wireless Telecommunications Bureau, Auctions Spectrum and Access
Division
For legal questions: Scott Mackoul or Stephen Johnson at (202) 418-
0660. For general auction questions: Barbara Sibert at (717) 338-2868.
Mobility Division
For Broadband PCS service rule questions: Erin McGrath (legal),
Keith Harper (engineering) and Denise Walter (licensing) at (202) 418-
0620.
Broadband Division
For AWS-1 service rule questions: John Spencer at (202) 418-2487.
To request materials in accessible formats (Braille, large print,
electronic files or audio format) for people with disabilities, send an
e-mail to [email protected] or call the Consumer and Governmental Affairs
Bureau at
[[Page 30920]]
(202) 418-0530 or (202) 418-0432 (TTY).
SUPPLEMENTARY INFORMATION: This is a summary of the Auction 78
Procedures Public Notice which was released on May 16, 2008. The
complete texts of the Auction 78 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. ET Monday
through Thursday or from 8 a.m. to 11:30 a.m. ET on Fridays in the FCC
Reference Information Center, 445 12th Street, SW., Room CY-A257,
Washington, DC 20554. The Auction 78 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. The Auction 78 Procedures Public Notice and
related documents are also available on the Internet at the
Commission's Web site: http://wireless.fcc.gov/auctions/78/.
I. General Information
A. Introduction
1. The Wireless Telecommunications Bureau (Bureau) announced the
procedures and minimum opening bid amounts for the upcoming auction of
Advanced Wireless Services (AWS) and broadband Personal Communications
Service (PCS) licenses. This auction, which is designated as Auction
78, is rescheduled and will start on August 13, 2008. Auction 78 will
offer 55 licenses: 35 licenses in the AWS 1710-1755 MHz and 2110-2155
MHz bands (AWS-1) and 20 broadband PCS licenses.
i. Background of Proceeding
2. The spectrum associated with licenses to be auctioned in Auction
78 has been either previously licensed and returned to the Commission
as a result of license cancellation or termination or offered
previously in other auctions but remained unsold.
3. On April 4, 2008, 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 to be used in
Auction 78. Interested parties submitted one comment and one reply
comment in response to the Auction 78 Comment Public Notice, 73 FR
20664, April 16, 2008.
ii. Licenses To Be Offered in Auction 78
4. A complete list of licenses available for Auction 78 is included
as Attachment A of the Auction 78 Procedures Public Notice. In
addition, Attachment B of the Auction 78 Procedures Public Notice
provides a map for the broadband PCS E block license in the Walla
Walla, WA-Pendleton, OR Basic Trading Area (BTA) market (BTA460) that
is available in Auction 78.
B. License Descriptions
i. AWS-1 Licenses
5. Auction 78 will offer 35 AWS-1 licenses for which there were no
winning bids in Auction 66. These licenses consist of six Regional
Economic Area Grouping (REAG) licenses, seven Economic Area (EA)
licenses, and 22 Cellular Market Area (CMA) licenses shown in Table 1
of the Auction 78 Procedures Public Notice.
ii. Broadband PCS Licenses
6. Auction 78 includes 20 broadband PCS licenses in the C, D, E and
F frequency blocks in full or partial BTA markets.
7. Certain C block licenses are subject to an eligibility
restriction making them available only to entrepreneurs in closed
bidding. In order for a bidder to qualify as an entrepreneur, it, along
with its attributable investors and affiliates, must have had gross
revenues of less than $125 million in each of the last two years and
must have less than $500 million in total assets.
8. The Commission adopted this eligibility restriction when it
originally established the framework for broadband PCS auctions in the
Competitive Bidding Fifth Report and Order, 59 FR 37566, July 22, 1994.
Specifically, it reserved all C and F block licenses in broadband PCS
as set-aside licenses for which eligibility would be limited to
entrepreneurs.
9. The Commission amended the entrepreneur eligibility restrictions
in 2000. Specifically, it reconfigured the license size for the C
block, creating three 10 megahertz licenses out of each 30 megahertz C
block license, and divided BTAs into two categories based on
population: Tier 1 markets are those BTAs with populations equal to or
greater than 2.5 million and Tier 2 markets are the BTAs with
populations below 2.5 million. The Commission then adopted open bidding
(i.e., bidding open to both entrepreneurs and non-entrepreneurs) for
two of the three newly reconfigured 10 megahertz C block licenses in
Tier 1 markets, and for one of the three newly reconfigured 10
megahertz C block licenses in Tier 2 markets. The remaining 10
megahertz C block licenses in Tier 1 and 2 were reserved for
entrepreneurs. For 15 megahertz C block licenses, the Commission
eliminated the entrepreneur eligibility requirements in Tier 1 markets,
but maintained them in Tier 2 markets. The Commission also removed the
eligibility restriction on all F block licenses regardless of market.
The Commission stated that these rules would apply to any subsequent
auctions of C or F block licenses, including any spectrum made
available or reclaimed from bankruptcy proceedings in the future.
10. Table 2 of the Auction 78 Procedures Public Notice cross-
references the general rules regarding block/eligibility status/
frequencies of broadband PCS licenses in the C, D, E, and F blocks.
11. As indicated in Table 2 of the Auction 78 Procedures Public
Notice, C1, C2, C3, and C4 block licenses in Tier 2 marked with an
asterisk are generally available only to entrepreneurs at auction in
closed bidding. However, when the Commission amended the entrepreneur
eligibility restrictions in 2000, it also decided to no longer apply
this eligibility restriction to any of these licenses that have been
previously made available through closed bidding, but not won, in any
auction beginning on or after March 23, 1999. Such licenses are instead
to be offered in open bidding. As a result, of the 20 broadband PCS
licenses available in Auction 78, 11 are open to all bidders and 9 are
available only to entrepreneurs in closed bidding.
12. A commenter argues that the Commission should reconsider this
eligibility restriction and should make all broadband PCS licenses in
Auction 78 available without restriction. The commenter contends that
circumstances have changed dramatically since the Commission amended
the C block eligibility rules in 2000 and offers a number of policy-
based arguments in support of its position.
13. The changes requested by the commenter, however, would require
modification of the Commission's rules on entrepreneur eligibility and
are therefore outside the scope of this proceeding to establish
procedures for conducting Auction 78. Moreover, the arguments put forth
by the commenter resemble those considered and rejected by the
Commission in 2004 prior to Auction 58. Absent further Commission
action, the C block eligibility rules will continue to apply for
Auction 78, as they did for licenses offered in Auction 71 last year.
[[Page 30921]]
14. Therefore, the entrepreneur eligibility requirements for the C
block licenses in Auction 78 that are closed remain in effect.
Consequently, the specific broadband PCS licenses to be offered in
Auction 78 are described in Table 3 of the Auction 78 Procedures Public
Notice.
15. Because of the history of licenses for broadband PCS spectrum,
some licenses available in Auction 78 cover less bandwidth and fewer
frequencies than noted in Table 3. In addition, in some cases, licenses
are available for only part of a market. Attachments A and B of the
Auction 78 Procedures Public Notice provide more details about the
broadband PCS licenses that will be offered in Auction 78.
C. Rules and Disclaimers
i. Relevant Authority
16. Prospective applicants must familiarize themselves thoroughly
with the Commission's general competitive bidding rules set forth in 47
CFR, part 1, Subpart Q including all amendments and clarifications;
rules relating to the Advanced Wireless Services and emerging
technologies contained in 47 CFR, parts 27 and 101; rules relating to
broadband PCS, contained in 47 CFR, part 24; and rules relating to
applications, environment, practice and procedure contained in 47 CFR,
part 1. Prospective applicants must also be thoroughly familiar with
the procedures, terms and conditions (collectively, terms) contained in
the Auction 78 Procedures Public Notice and the Commission's decisions
in proceedings regarding competitive bidding procedures, application
requirements, and obligations of Commission licensees.
17. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in its public notices at any time,
and will issue public notices to convey any new or supplemental
information to applicants. It is the responsibility of all applicants
to remain current with all Commission rules and with all public notices
pertaining to this auction.
ii. Prohibition of Collusion; Compliance With Antitrust Laws
18. To ensure the competitiveness of the auction process, 47 CFR
1.2105(c) prohibits auction applicants for licenses in any of the same
geographic license areas from communicating with each other about bids,
bidding strategies, or settlements unless such applicants have
identified each other on their short-form applications (FCC Form 175)
as parties with whom they have entered into agreements pursuant to 47
CFR 1.2105(a)(2)(viii).
a. Entities Subject to Anti-Collusion Rule
19. The anti-collusion rule will apply to any applicants that
submit short-form applications seeking to participate in a Commission
auction and select licenses in the same or overlapping markets (i.e.,
CMAs, EAs, REAGs or BTAs), regardless of the service. Therefore, in
Auction 78, for example, the rule would prohibit an applicant bidding
for an AWS-1 EA license and another applicant bidding for a PCS BTA
license within that EA from communicating absent an agreement.
20. Under the terms of the rule, applicants that have applied for
licenses covering the same or overlapping markets--unless they have
identified each other on their short form applications as parties with
whom they have entered into agreements under 47 CFR
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.
21. For purposes of this prohibition, 47 CFR 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.
22. 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 or overlapping
geographic areas as the licenses that it has selected in its short-form
application.
23. 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 be
necessarily conveyed 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
24. 47 CFR 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.
25. A commenter recommends modifying and/or clarifying the
application of the anti-collusion rule and anonymous bidding procedures
after the close of bidding. The commenter proposes that the anti-
collusion rule be modified to remain in effect only until the
Commission issues the public notice identifying the winning bidders and
the high bid amounts. This request seeks amendment of 47 CFR 1.2105(c)
and is therefore outside of the scope of this proceeding. The
Commission has observed that prohibiting such communications between
applicants during the proscribed auction period protects a valid
governmental interest without infringing unduly on the First Amendment
rights of auction participants.
26. The commenter also requests, in the alternative, that the
Commission make clear that applicants can disclose bidding-related
information that the Commission has already made public after the close
of the auction but before the down-payment deadline. Information
contained in a public notice announcing the winning bidders would be
public upon release. It is difficult to envision a case in which
communication of the bare facts contained in such public information by
[[Page 30922]]
an applicant could result in violation of the anti-collusion rule. The
Bureau notes, however, that it is the substance and timing of specific
communications that are key in determining whether there has been a
violation of 47 CFR 1.2105(c). In the absence of such factual context,
and given the importance of the anti-collusion rules, the Bureau
declines to make further clarification.
27. The Bureau continues to strongly caution applicants that the
communication of information that has been made public by the
Commission could violate the anti-collusion rule, even if its
disclosure might not infringe its limited information procedures.
Therefore, applicants should consider the potential consequences of any
disclosures. In this regard, the Bureau notes that, upon the release of
information after the close of an auction, the applicants in an auction
conducted under anonymous bidding procedures are in the same position
with regard to the application of the anti-collusion rule as the
applicants in an auction conducted without such procedures.
c. Prohibited Communications
28. Applicants for the upcoming Auction 78 and other parties that
may be engaged in discussion with such applicants are cautioned of the
need to comply with the Commission's anti-collusion rule, 47 CFR
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.
29. The Commission remains vigilant about prohibited communications
taking place in other situations. For example, the Commission has
warned that prohibited communications concerning bids and bidding
strategies may include communications regarding capital calls or
requests for additional funds in support of bids or bidding strategies
to the extent such communications convey information concerning the
bids and bidding strategies directly or indirectly.
30. Applicants are hereby placed on notice that public disclosure
of information relating to bidder interests and bidder identities that
is confidential 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 Auction 78, 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 78 bidding could also
violate the rule.
31. Applicants for licenses for any of the same or overlapping
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.
32. 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.
33. 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
limited information procedures in effect for Auction 78. 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
34. 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 applications. 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 47 CFR
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
35. By electronically submitting a short-form application following
the electronic filing procedures set forth in Attachment C of the
Auction 78 Procedures Public Notice, each applicant certifies its
compliance with 47 CFR 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
36. 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
[[Page 30923]]
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.
g. Duty To Report Prohibited Communications; Reporting Procedure
37. 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.
38. 47 CFR 1.65 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, 47 CFR 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 47
CFR 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 47 CFR 1.2105(a)(2)(viii).
39. Parties reporting communications pursuant to 47 CFR
1.2105(a)(2) must take care to ensure that any such reports of
prohibited communications do not themselves give rise to a violation of
the anti-collusion rule. For example, a party's report of a prohibited
communication could violate the rule by communicating prohibited
information to other applicants through the use of Commission filing
procedures that would allow such materials to be made available for
public inspection. A party seeking to report such prohibited
communications should consider submitting its report with a request
that the report or portions of the submission be withheld from public
inspection. Such parties are also encouraged to consult with the
Auctions and Spectrum Access Division staff if they have any questions
about the procedures for submitting such reports. The Auction 78
Procedures Public Notice provides additional guidance on procedures for
submitting application-related information.
40. 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
41. 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
42. A summary listing of documents issued by the Commission and the
Bureau addressing the application of the anti-collusion rule may be
found in Attachment F of the Auction 78 Procedures Public Notice.
iii. Incumbency Issues
a. AWS-1
43. The AWS-1 bands are now being used for a variety of government
and non-government services. The 1710-1755 MHz band is currently a
government band, which is in the process of transitioning to a
commercial band. The incumbents in the 2110-2150 MHz band are private
services (including state and local governmental public safety
services) and common carrier fixed microwave services. The 2150-2155
MHz band contains incumbents in the Broadband Radio Service (BRS). The
Commission previously provided information on incumbency issues for the
AWS-1 bands in the Auction 66 Procedures Public Notice, 71 FR 20672,
April 21, 2006.
44. Spectrum Relocation Fund. The Commission established a reserve
amount in Auction 66 in order to comply with a statutory requirement
aimed at funding the relocation of federal government entities that
currently operate in the 1710-1755 MHz band. In order for Auction 66 to
close in compliance with the statute, the total winning bids in that
auction, net of bidding credits applicable at the close of bidding,
were required to equal or exceed a reserve amount of approximately
$2.059 billion. At the close of Auction 66, the net total winning bids
far exceeded the reserve amount. The Bureau proposes to not establish
reserve prices for the 35 AWS-1 licenses being offered in Auction 78.
45. Relocation of Government Incumbents. The Commission also issued
guidance, along with the National Telecommunications and Information
Administration, to assist AWS-1 licensees to begin implementing service
during the transition of federal operations from the band while
providing interference protection to incumbent federal government
operations until they have been relocated to other frequency bands or
technologies.
46. Relocation of Non-Government Incumbents. On the same day it
released the Auction 66 Procedures Public Notice, the Commission, among
other things, adopted relocation procedures that AWS-1 licensees will
follow when relocating incumbent BRS licensees from the 2150-2160/62
MHz portion of the band.
b. Broadband PCS
47. While most of the private and common carrier fixed microwave
services (FMS) formerly operating in the 1850-1990 MHz band (and other
bands) have been relocated to available frequencies in higher bands or
to other media, some FMS licensees may still be operating in the band.
Any remaining FMS entities operating in the 1850-1990 MHz band,
however, are secondary to PCS operations. FMS licensees, absent
[[Page 30924]]
an agreement with the applicable PCS entities or an extension pursuant
to 47 CFR 101.79(b) of the Commission's rules, must turn in their
authorizations six months following written notice from a PCS entity
that such entity intends to turn on a system within the interference
range of the incumbent FMS licensee. Further, broadband PCS licensees
are no longer responsible for costs associated with relocating an
incumbent FMS operation.
c. International Coordination
48. AWS-1 and broadband PCS licensees must not cause harmful
interference across the borders with Mexico and Canada. Potential
bidders seeking licenses in Auction 78 for geographic areas that are
near the Canadian or Mexican borders are encouraged to consult all
international agreements with Canada and Mexico. If agreements between
the United States, Mexico and Canada have not yet become effective, the
same technical restrictions at the border that are adopted for
operation between geographic service areas will apply, to the extent
they are not in violation of current bilateral agreements and
arrangements. When interim arrangements or agreements between the
United States, Mexico and Canada are final and become effective,
licensees must comply with these agreements. If these agreements are
modified in the future, licensees must likewise comply with these
modifications.
d. Quiet Zones
49. All 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
50. The Bureau cautions potential applicants formulating their
bidding strategies to investigate and consider the extent to which
these frequencies are occupied. Potential bidders are reminded that
they are solely responsible for investigating and evaluating all
technical and marketplace factors that may have a bearing on the value
of the licenses being offered in Auction 78. Applicants should perform
their individual due diligence before proceeding as they would with any
new business venture.
51. Potential bidders are strongly encouraged to conduct their own
research prior to the beginning of bidding in Auction 78 in order to
determine the existence of any pending legislative, administrative or
judicial proceedings that might affect their decision regarding
participation in the auction.
52. 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 Auction 78. Pending
and future judicial proceedings may also relate to particular
applicants or incumbent licensees, or the licenses available in Auction
78. Prospective bidders are responsible for assessing the likelihood of
the various possible outcomes, and considering their potential impact
on spectrum licenses available in this auction.
53. 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 78. 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.
54. 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.
55. Applicants may obtain information about licenses available in
Auction 78, including non-Federal Government incumbent licenses that
may have an effect on availability of the AWS-1 licenses, through the
Bureau's online licensing databases at http://wireless.fcc.gov/uls.
Applicants should direct questions regarding the ULS search
capabilities to the FCC ULS Technical Support hotline at (877) 480-
3201, option two. The hotline is available to assist with questions
Monday through Friday, from 8:00 a.m. to 6:00 p.m. ET. In order to
provide better service to the public, all calls to the hotline are
recorded.
56. In addition, to further assist potential bidders in determining
the scope of the new AWS entrants' relocation obligations in the 2150-
2155 MHz band, the Commission ordered BRS licensees in the 2150-2160/62
MHz band to submit information on the locations and operating
characteristics of BRS systems in that band. That information may also
be found on ULS at http://wireless.fcc.gov/uls.
57. 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.
58. 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
59. The Commission will make available a browser-based bidding
system to allow bidders to participate in Auction 78 over the Internet
using the Commission's Integrated Spectrum Auction System (ISAS or FCC
Auction System). The Commission makes no warranty whatsoever with
respect to the FCC Auction System. In no event shall the Commission, or
any of its officers, employees or agents, be liable for any damages
whatsoever (including, but not limited to, loss of business profits,
business interruption, loss of business information, or any other loss)
arising out of or relating to the existence, furnishing, functioning or
use of the FCC Auction System that is accessible to qualified bidders
in connection with this auction. Moreover, no obligation or liability
will arise out of the Commission's technical, programming or other
advice or service provided in connection with the FCC Auction System.
vi. Fraud Alert
60. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use Auction 78 to
deceive and defraud unsuspecting investors. Information about deceptive
telemarketing investment schemes is available from the Commission as
well
[[Page 30925]]
as the FTC and SEC. Additional sources of information for potential
bidders and investors may be obtained from: (1) the FCC by going to
http://wireless.fcc.gov/csinfo/#fraud or by telephone at (888) 225-5322
(FCC's Consumer Call Center); (2) the FTC by telephone at (877) FTC-
HELP ((877) 382-4357); and (3) the SEC by telephone at (202) 942-7040.
Complaints about specific deceptive telemarketing investment schemes
should be directed to the FTC, the SEC, or the National Fraud
Information Center at (800) 876-7060.
vii. Environmental Review Requirements
61. 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.
D. Auction Specifics
i. Auction Start Date
62. Bidding in Auction 78 will begin on Wednesday, August 13, 2008.
63. Commenters request that the Bureau postpone the start of
bidding in Auction 78. A commenter suggests delaying the start of
Auction 78 by four or five weeks, i.e., until September 2008. A
commenter contends that participation in an FCC auction presents
resource challenges for small and medium-sized companies and notes that
conducting bidding during August is difficult when businesses are
thinly staffed due to employee vacation schedules. The commenter also
asserts that potential bidders need more time to finance licenses won
in the recently-concluded 700 MHz auction (Auction 73) and resume
business. A commenter supports postponing the auction, noting that a
brief delay will afford potential bidders, including small and mid-
sized bidders, more time to prepare.
64. The Bureau is not persuaded by the commenters' arguments that a
four-or five-week postponement is warranted. Interested parties were
able to begin preparations for this auction when the auction was first
announced on April 4, 2008, with the release of the Auction 78 Comment
Public Notice. Nevertheless, the Bureau finds that providing an
additional two weeks prior to the start of Auction 78 will promote
efficient administration of the auction and provide prospective
applicants with additional time for planning and preparation.
65. 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 will be conducted
on each business day until bidding has stopped on all licenses.
ii. Bidding Methodology
66. The bidding methodology for Auction 78 will be simultaneous
multiple round (SMR) bidding. The Commission will conduct this auction
over the Internet using the FCC Auction System, and telephonic bidding
will be available as well. Qualified bidders are permitted to bid
electronically via the Internet or by telephone.
iii. Pre-Auction Dates and Deadlines
67. The following dates and deadlines apply:
Auction Seminar--June 10, 2008
Short-Form Application (FCC Form 175)
Filing Window Opens--June 10, 2008; 12:00 noon ET
Short-Form Application (FCC Form 175)
Filing Window Deadline--June 19, 2008; prior to 6:00 p.m. ET
Upfront Payments (via wire transfer)--July 17, 2008; 6:00 p.m. ET
Mock Auction--August 11, 2008
Auction Begins--August 13, 2008
iv. Requirements for Participation
68. Those wishing to participate in this auction must: (1) Submit a
short-form application (FCC Form 175) electronically prior to 6:00 p.m.
ET, June 19, 2008, following the electronic filing procedures set forth
in Attachment C of the Auction 78 Procedures Public Notice; (2) submit
a sufficient upfront payment and an FCC Remittance Advice Form (FCC
Form 159) by 6:00 p.m. ET, July 17, 2008, following the procedures and
instructions set forth in Attachment D of the Auction 78 Procedures
Public Notice; (3) comply with all provisions outlined in the Public
Notice and applicable Commission rules.
II. Short-Form Application (FCC Form 175) Requirements
A. General Information Regarding Short-Form Applications
69. An application to participate in an FCC auction, referred to as
a short-form application or FCC Form 175, provides information used in
determining whether the applicant is legally, technically, and
financially qualified to participate in Commission auctions for
licenses or permits. The short-form application is the first part of
the Commission's two-phased auction application process. In the first
phase of this process, parties desiring to participate in the auction
must file streamlined, short-form applications in which they certify
under penalty of perjury as to their qualifications. Eligibility to
participate in bidding is based on the applicants' short-form
applications and certifications as well as their upfront payments. In
the second phase of the process, winning bidders must file a more
comprehensive long-form application (FCC Form 601) and have a complete
and accurate ownership disclosure information report (FCC Form 602) on
file with the Commission.
70. Entities seeking licenses available in Auction 78 must file a
short-form application electronically via the FCC Auction System prior
to 6:00 p.m. ET on June 19, 2008, following the procedures prescribed
in Attachment C of the Auction 78 Procedures Public Notice. Applicants
filing a short-form application are subject to the Commission's anti-
collusion rules beginning on the deadline for filing. The information
provided in its short-form application will be used in determining,
among other things, if the applicant is eligible for entrepreneur
status and/or for a bidding credit.
71. 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,
[[Page 30926]]
financially and otherwise qualified to hold a license. Applicants
should read the instructions set forth in Attachment C of the Auction
78 Procedures Public Notice carefully and should consult the
Commission's rules to ensure that, in addition to the materials
described herein, all the information that is required under the
Commission's rules is included with their short-form applications.
72. An entity may not submit more than one short-form application
for a single auction. If a party submits multiple short-form
applications, only one application may become qualified to bid.
73. 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. An applicant cannot change the certifying official to its
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.
B. License Selection
74. An applicant must select the licenses on which it wants to bid
from the Eligible Licenses list on its short-form application. To
assist applicants in identifying licenses of interest that will be
available in Auction 78, the FCC Auction System includes 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
after the short-form application filing deadline. Applicants interested
in participating in Auction 78 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 short-form applications. The FCC Auction System will not
accept bids from an applicant on licenses that the applicant has not
selected on its short-form application.
C. Disclosure of Bidding Arrangements
76. Applicants will be required to identify in their short-form
application all parties with whom they have entered into any
agreements, arrangements, or understandings of any kind relating to the
licenses being auctioned, including any agreements relating to post-
auction market structure.
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, 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. Further
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 47 CFR 1.2105
and 1.2112. Specifically, in completing the short-form application,
applicants will be required to fully disclose information on the real
party or parties-in-interest and ownership structure of the applicant.
The ownership disclosure standards for the short-form application are
prescribed in 47 CFR 1.2105 and 1.2112. Each applicant is responsible
for information submitted in its short-form application being complete
and accurate.
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 with an
ownership disclosure information report (FCC Form 602) or in a short-
form application (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 78 is
complete and accurate. Accordingly, applicants should carefully review
any information automatically entered to confirm that it is complete
and accurate as of the Auction 78 deadline for filing the short-form
application. If any information that was entered automatically needs to
be changed, applicants must do so directly in the short-form
application.
E. Designated Entity Provisions
81. Eligible applicants in Auction 78 may claim designated entity
status, as an entrepreneur eligible to bid on closed C block broadband
licenses and/or as a small or very small business eligible for bidding
credits. Applicants should review carefully the Commission's recent
decisions regarding the designated entity provisions.
i. Entrepreneur Eligibility for Closed Bidding
82. Nine broadband PCS C block licenses available in Auction 78
(i.e., certain C1, C3, and C4 block licenses) are restricted to
entities that qualify as entrepreneurs.
a. Entrepreneur Eligibility Criteria
83. In determining if an entity qualifies as an entrepreneur, the
Commission considers both the total assets and gross revenues of the
applicant, its affiliates, its controlling interests, the affiliates of
its controlling interests, and the entities with which it has an
attributable material relationship. Specifically, as of the short-form
application filing deadline, the applicant and its attributable
interests must have combined total assets of less than $500 million and
must have had combined gross revenues of less than
[[Page 30927]]
$125 million in each of the last two years.
b. Asset and Revenue Disclosure on Short-Form Application
84. An entity applying to bid on closed licenses must disclose on
its short-form application the total assets and gross revenues for the
preceding two years for each of the following: (1) The applicant; (2)
its affiliates; (3) its controlling interests; (4) the affiliates of
its controlling interests; and (5) the entities with which it has an
attributable material relationship. Certification that the gross
revenues for each of the preceding two years or the total assets do not
exceed the applicable limit is not sufficient.
85. Applicants for closed bidding in Auction 78 should not include
existing broadband PCS C and F block licenses in their calculations of
total assets; all other Commission licenses, however, must be included
in such calculations. 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.
ii. Bidding Credits for Small and Very Small Businesses
86. A bidding credit represents the amount by which a bidder's
winning bid will be discounted. For Auction 78, bidding credits will be
available to small businesses and very small businesses, and consortia
thereof, for all 35 AWS-1 licenses and six broadband PCS licenses--the
three C block licenses available in open bidding and the three F block
licenses.
a. Bidding Credit Eligibility Criteria
87. The level of bidding credit is determined 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.
88. 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.
89. Bidding credits for applicants that qualify as small or very
small businesses will be available for those C block licenses that are
available in open bidding and for all F block licenses. Bidding credits
are not available for C block licenses subject to closed bidding or for
broadband PCS licenses in the D or E blocks.
b. Revenue Disclosure on Short-Form Application
90. An entity applying as a small or very small business must
provide gross revenues for the preceding three years for each of the
following: (1) The applicant; (2) its affiliates; (3) its controlling
interests; (4) the affiliates of its controlling interests; and (5) the
entities with which it has an attributable material relationship.
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. 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.
iii. Attributable Interests
a. Controlling Interests
91. Controlling interests of an applicant include individuals and
entities with either de facto or de jure control of the applicant.
Typically, ownership of greater than 50 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.
92. Applicants should refer to 47 CFR 1.2110(c)(2) of the
Commission's rules and Attachment C of the Auction 78 Procedures Public
Notice to understand how certain interests are calculated in
determining control. For example, pursuant to 47 CFR
1.2110(c)(2)(ii)(F), officers and directors of an applicant are
considered to have controlling interest in the applicant.
b. Affiliates
93. Affiliates of an applicant or controlling interest include an
individual or entity that: (1) directly or indirectly controls or has
the power to control the applicant; (2) is directly or indirectly
controlled by the applicant; (3) is directly or indirectly controlled
by a third party that also controls or has the power to control the
applicant; or (4) has an identity of interest with the applicant. The
Commission's definition of an affiliate of the applicant encompasses
both controlling interests of the applicant and affiliates of
controlling interests of the applicant. For more information regarding
affiliates, applicants should refer to 47 CFR 1.2110(c)(5) and
Attachment C of the Auction 78 Procedures Public Notice.
c. Material Relationships
94. The Commission requires the consideration of certain leasing
and resale (including wholesale) relationships--referred to as material
relationships--in determining designated entity eligibility, i.e., for
bidding credits and entrepreneur status. Material relationships fall
into two categories: impermissible and attributable.
95. 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-by-license basis.
96. 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.
97. The Commission grandfathered material relationships in
existence before the release of the Designated Entity Second Report and
Order, 71 FR 26245, May 5, 2006, meaning that those preexisting
relationships alone would not 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,
[[Page 30928]]
spectrum leases, or other reportable eligibility events. Rather, the
occurrence of any of those 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.
d. Gross Revenue Exceptions
98. In recent years the Commission has also made other
modifications to its rules governing the attribution of gross revenues
for purposes of determining designated entity eligibility. For example,
the Commission has 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.
99. The Commission has also exempted, from attribution to the
applicant, the gross revenues of the affiliates of a rural telephone
cooperative's officers and directors if certain conditions specified in
47 CFR 1.2110(b)(3)(iii) of the Commission's rules are met. An
applicant claiming this exemption must provide in an attachment an
affirmative statement that the applicant, affiliate and/or controlling
interest is an eligible rural telephone cooperative within the meaning
of 47 CFR 1.2110(b)(3)(iii) and supply any additional information as
may be required to demonstrate eligibility for the exemption from the
attribution rule. Applicants seeking to claim this exemption must meet
all of the conditions. Additional guidance on claiming this exemption
may be found in Attachment C of the Auction 78 Procedures Public
Notice.
e. Bidding Consortia
100. A consortium of small businesses, very small businesses, or
entrepreneurs is a conglomerate organization composed of two or more
entities, each of which individually satisfies the definition of a
small business, very small business, or entrepreneur. Thus, each member
of a consortium of small businesses, very small businesses, or
entrepreneurs that applies to participate in Auction 78 must
individually meet the criteria for small businesses, very small
businesses, or entrepreneurs. 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. Tribal Lands Bidding Credit
101. 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 short-form applications. Instead,
winning bidders may apply for the tribal lands bidding credit after the
auction when they file their more detailed, long-form applications.
G. Provisions Regarding Former and Current Defaulters
102. Current defaulters are not eligible to participate in Auction
78, but former defaulters can participate so long as they are otherwise
qualified and make upfront payments that are fifty percent more than
the normal upfront payment amounts. An applicant is considered a
current defaulter when it, its affiliates, its controlling interests,
or the affiliates of its controlling interests, 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. An applicant is considered
a former defaulter when it, its affiliates, its controlling interests,
or the affiliates of its controlling interests, have defaulted on any
Commission licenses or been delinquent on any non-tax debt owed to any
Federal agency, but have since remedied all such defaults and cured all
of the outstanding non-tax delinquencies.
103. On the short-form application, an applicant must certify under
penalty of perjury that it, its affiliates, its controlling interests,
and the affiliates of its controlling interests, as defined by 47 CFR
1.2110 of the Commission's rules, 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. Each
applicant must also state under penalty of perjury whether or not it,
its affiliates, its controlling interests, and the affiliates of its
controlling interests, have ever been in default on any Commission
licenses or have ever been 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 to participate in an FCC
auction.
104. 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 47 CFR 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 47 CFR
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. Parties are also encouraged to coordinate with the
Commission's Office of Managing Director or the Bureau's Auctions and
Spectrum Access Division staff if they have any questions about default
and delinquency disclosure requirements.
105. 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 47 CFR 1.2105 and 1.2106, with regard to current
and former defaults or delinquencies.
106. Applicants are reminded, however, that the Commission's Red
[[Page 30929]]
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 47 CFR 1.2105. Thus, while the red light rule
ultimately may prevent the processing of long-form applications by
auction winners, an auction applicant's red light status is not
necessarily determinative of its eligibility to participate in an
auction or of its upfront payment obligation.
H. Optional Applicant Status Identification
107. Applicants owned by members of minority groups and/or women,
as defined in 47 CFR 1.2110(c)(3), and rural telephone companies, as
defined in 1.2110(c)(4), 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.
I. Minor Modifications to Short-Form Applications
108. 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 short-form
application, which will consequently be dismissed.
109. Applicants are, however, permitted to make only minor changes
to their short-form applications after the filing 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.
110. If an applicant wishes to make permissible minor changes to
its short-form application, such changes should be made electronically
to its short-form application using the FCC Auction System whenever
possible.
111. An applicant cannot update its short-form application using
the FCC Auction System outside of the initial and resubmission filing
windows. In that case, the applicant must submit a letter briefly
summarizing the changes and subsequently update its short-form
applications in ISAS as soon as possible. Moreover, after the filing
window has closed, ISAS will not permit applicants to make certain
changes, such as legal classification and bidding credit.
112. Any letter describing changes to an applicant's short-form
application should be submitted by e-mail to the following address:
[email protected].
113. Applicants must not submit application-specific material
through the Commission's Electronic Comment Filing System (ECFS).
Parties submitting information related to their applications should use
caution to ensure that information contained in their submissions does
not contain confidential information or communicate information that
would violate the Commission's anti-collusion rule or limited
information procedures adopted for Auction 78. A party seeking to
submit information that might reflect non-public information, such as
an applicant's license selections, upfront payment amount or bidding
eligibility, should consider submitting any such information along with
a request that the filing or portions of the filing be withheld from
public inspection until the end of the anti-collusion period.
J. Maintaining Current Information in Short-Form Applications
114. 47 CFR 1.65 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 47 CFR 1.2105, the major amendment
will not be accepted and may result in the dismissal of the short-form
application.
115. After the short-form filing deadline, applicants may make only
minor changes to their short-form applications. In addition, applicants
must submit a letter, briefly summarizing the changes, by e-mail at the
following address: [email protected]. The e-mail summarizing the
changes must include a subject or caption referring to Auction 78 and
the name of the applicant.
III. Pre-Auction Procedures
A. Auction Seminar--June 10, 2008
116. On Tuesday, June 10, 2008, the Commission will conduct a
seminar for parties interested in participating in Auction 78 at FCC
headquarters, located at 445 12th Street, SW., Washington, DC. The
seminar will also provide an opportunity for prospective bidders to ask
questions of FCC staff concerning the auction, auction procedures,
filing requirements, and other matters related to this auction. To
register, please provide the information listed on Attachment G of the
Auction 78 Procedures Public Notice by fax, e-mail or telephone to the
FCC by Friday, June 6, 2008.
B. Short-Form Applications--Due Prior to 6:00 p.m. ET on June 19, 2008
117. In order to be eligible to bid in this auction, applicants
must first follow the procedures set forth in Attachment C of the
Auction 78 Procedures Public Notice to submit a short-form application
(FCC Form 175) electronically via the FCC Auction System. This
application must be received at the Commission prior to 6:00 p.m. ET on
June 19, 2008. Late applications will not be accepted. There is no
application fee required when filing a FCC Form 175, but an applicant
must submit an upfront payment to be eligible to bid.
118. Applications may generally be filed at any time beginning at
noon ET on June 10, 2008, until the filing window closes at 6:00 p.m.
ET on June 19, 2008. 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 June 19, 2008.
119. An applicant must always click on the SUBMIT button on the
Certify & Submit screen to successfully submit its short-form
application and any modifications, otherwise the application or changes
to the application will not be reviewed. Additional information about
accessing, completing, and viewing the FCC Form 175 is included in
Attachment C of the Auction 78 Procedures Public Notice. FCC Auctions
Technical Support is available at (877) 480-3201, option nine; (202)
414-1250; or (202) 414-1255 (text telephone (TTY)).
C. Application Processing and Minor Corrections
120. After the deadline for filing short-form applications, the
Commission will process all timely submitted applications to determine
which are complete, and subsequently will issue a public notice
identifying: (1) Those applications that are complete; (2) those
applications rejected; and (3) those applications that are incomplete
because of minor defects that may be
[[Page 30930]]
corrected. The public notice will include the deadline for resubmitting
corrected applications.
121. After the June 19, 2008, 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).
122. Applicants should be aware the Commission staff will
communicate only with an applicant's contact person or certifying
official, as designated on the applicant's short-form application,
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. Authorizations may
be submitted by e-mail at the following address: [email protected].
D. Upfront Payments--Due July 17, 2008
123. In order to be eligible to bid in this auction, applicants
must submit an upfront payment accompanied by an FCC Remittance Advice
Form (FCC Form 159). After completing its short-form application, an
applicant will have access to an electronic version of the FCC Form 159
that can be printed and sent by fax to Mellon Bank in Pittsburgh, PA.
All upfront payments must be received in the proper account at Mellon
Bank by 6 p.m. ET on July 17, 2008.
i. Making Upfront Payments by Wire Transfer
124. Wire transfer payments must be received by 6:00 p.m. ET on
July 17, 2008. 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.
125. An applicant must fax a completed FCC Form 159 (Revised 7/05)
to Mellon Bank at (412) 209-6045 at least one hour before placing the
order for the wire transfer (but on the same business day). On the fax
cover sheet, applicants should write Wire Transfer--Auction Payment for
Auction 78. 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. The applicant is responsible for obtaining
confirmation from its financial institution that Mellon Bank has timely
received its upfront payment and deposited it in the proper account.
126. 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 78 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 July 17, 2008 deadline will
result in dismissal of the application and disqualification from
participation in the auction.
ii. FCC Form 159
127. A completed FCC Remittance Advice Form (FCC Form 159, Revised
7/05) must be faxed to Mellon Bank to accompany each upfront payment.
Proper completion of FCC Form 159 is critical to ensuring correct
crediting of upfront payments. Detailed instructions for completion of
FCC Form 159 are included in Attachment D of the Auction 78 Procedures
Public Notice. An electronic pre-filled version of the FCC Form 159 is
available after submitting the short-form application. Payors using the
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 by fax.
iii. Upfront Payments and Bidding Eligibility
128. The Commission has delegated to the Bureau the authority and
discretion to determine appropriate upfront payments for each auction.
Upfront payments help deter frivolous or insincere bidding, and provide
the Commission with a source of funds in the event that the bidder
incurs liability during the auction.
129. Applicants that are former defaulters must pay upfront
payments 50 percent greater than non-former defaulters. For purposes of
this calculation, the applicant includes the applicant itself, its
affiliates, its controlling interests, and affiliates of its
controlling interests, as defined by 47 CFR 1.2110.
130. Applicants must make upfront payments sufficient to obtain
bidding eligibility on the licenses on which they will bid. The Bureau
proposed, in the Auction 78 Comment Public Notice, 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. Under the Bureau's proposal, in order to bid on a
particular license, a qualified bidder must have selected the
license(s) on its short-form application and must have a current
eligibility level that meets or exceeds the number of bidding units
assigned to that license. At a minimum, therefore, an applicant's total
upfront payment must be enough to establish eligibility to bid on at
least one of the licenses selected on its short-form application, or
else the applicant will not be eligible to participate in the auction.
An applicant does not have to make an upfront payment to cover all
licenses the applicant selected on its short-form application, but only
enough to cover the maximum number of bidding units that are associated
with licenses on which the bidder wishes to place bids and hold
provisionally winning bids at any given time.
131. In the Auction 78 Comment Public Notice, the Bureau proposed
to calculate upfront payments for Auction 78 on a license-by-license
basis using the following formulas based on bandwidth and license area
population, with a minimum of $500 per license. The Bureau also
proposed to use upfront payment formulas similar to those used in the
most recent auctions for AWS-1 licenses (Auction 66) and broadband PCS
licenses (Auction 71).
a. AWS-1
132. For AWS-1 licenses offered in Auction 78, the Bureau proposed
upfront payments as follows: (1) for licenses covering CMAs or EAs in
the 50 states, upfront payment amounts will be calculated as $0.03 per
MHz per population (MHz-pop); (2) for the REAG that covers the Gulf of
Mexico, the upfront payment amount will be $20,000; and (3) for all
remaining licenses, upfront payment amounts will be calculated as
$0.01/MHz-pop.
b. Broadband PCS
133. For broadband PCS licenses offered in Auction 78, the Bureau
proposed upfront payments as follows: (1) for licenses covering BTAs in
the 50 states, upfront payment amounts will be calculated as $0.03/MHz-
pop; and (2) for all remaining licenses, upfront payment amounts will
be calculated as $0.01/MHz-pop.
134. The Bureau set forth the specific proposed upfront payments
and bidding units for each license in Attachment A of the Auction 78
Comment 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
[[Page 30931]]
amount would determine a bidder's initial bidding eligibility.
Therefore, the Bureau adopts the upfront payments and bidding units it
proposed for each license in Auction 78, which are set forth in
Attachment A of the Auction 78 Procedures Public Notice.
135. In calculating its upfront payment amount, an applicant should
determine the maximum number of bidding units on which it may wish to
be active (bid on or hold provisionally winning bids on) in any single
round, and submit an upfront payment amount covering that number of
bidding units. In order to make this calculation, an applicant should
add together the upfront payments for all licenses on which it seeks to
be active in any given round. Applicants should check their
calculations carefully, as there is no provision for increasing a
bidder's eligibility after the upfront payment deadline.
136. If an applicant is a former defaulter, it must calculate its
upfront payment for all licenses by multiplying the number of bidding
units on which it wishes 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
137. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information listed in the Auction 78 Procedures Public Notice be
supplied. Applicants can provide the information electronically during
the initial short-form application filing window after the form has
been submitted.
E. Auction Registration
138. Approximately ten days before the auction, the Bureau will
issue a public notice announcing all qualified bidders for the auction.
Qualified bidders are those applicants with submitted short-form
applications that are deemed complete and upfront payments that are
sufficient to make them eligible to bid.
139. 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 short-form application and
will include the SecurID(r) tokens that will be required to place bids,
the Integrated Spectrum Auction System (ISAS) Bidder's Guide, and the
Auction Bidder Line phone number.
140. Qualified bidders that do not receive this registration
mailing will not be able to submit bids. Therefore, any qualified
bidder that has not received this mailing by noon on Thursday, August
7, 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.
F. Remote Electronic Bidding
141. The Commission will conduct this auction over the Internet,
and telephonic bidding will be available as well. Only qualified
bidders are permitted to bid. Each applicant should indicate its
bidding preference--electronic or telephonic--on its short-form
application. In either case, each authorized bidder must have its own
SecurID(r) token, which the Commission will provide at no charge.
G. Mock Auction--August 11, 2008
142. All qualified bidders will be eligible to participate in a
mock auction on Monday, August 11, 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 Event
143. The first round of bidding for Auction 78 will begin on
Wednesday, August 13, 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 Structure
i. Simultaneous Multiple Round Auction
144. In the Auction 78 Comment Public Notice, the Bureau proposed
to auction all licenses in Auction 78 in a single auction using the
Commission's standard simultaneous multiple-round (SMR) auction format.
This type of auction offers every license for bid at the same time and
consists of successive bidding rounds in which eligible bidders may
place bids on individual licenses. A bidder may bid on, and potentially
win, any number of licenses. Typically, bidding remains open on all
licenses until bidding stops on every license.
145. The Bureau also sought comment on using some form of package
bidding design for Auction 78. A commenter supported the Bureau's
recommendation to not employ package bidding for this auction, arguing
that the Auction 78 licenses have no readily identifiable inter-
relationships or inter-dependencies with each other. The Bureau agrees
and continues to believe that a package bidding design is not likely to
offer significant advantages to bidders in Auction 78. Given the nature
of the auction inventory, the Bureau concludes that the standard SMR
auction format will best meet the needs of bidders in Auction 78.
Therefore, the Bureau adopts its proposal to use a SMR auction format
without package bidding. Unless otherwise announced, bids will be
accepted on all licenses in each round of the auction until bidding
stops on every license, allowing bidders to take advantage of synergies
that exist among licenses.
ii. Information Available to Bidders Before and During the Auction
146. In the Auction 78 Comment 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. The Bureau proposed to withhold
this information irrespective of any pre-auction measurement of likely
auction competition.
147. Commenters urge the Commission to not adopt anonymous bidding
for Auction 78. The commenters assert that anonymous bidding deprives
small to mid-size bidders of valuable information, which in turn
reduces the level of participation in the auction and ultimately
depresses revenues. A commenter argues that knowing who is bidding
during an auction helps bidders determine the value of the licenses,
assess whether or not equipment for build-out will be available, and
estimate the potential for negotiating roaming agreements--all of which
can help small to mid-size bidders acquire favorable financing. A
commenter also adds that disclosure of bids and bidders during an
auction can help bidders estimate possible signal interference.
148. The Bureau disagrees with the commenters that the results of
Auction 73 demonstrate the harms of withholding bidding information
were significant to the point where the balance has shifted in favor of
[[Page 30932]]
disclosing bidder information in Auction 78. While the Commission has
previously acknowledged that revealing bidder identities may provide
useful information to some bidders, there is no evidence apart from the
commenter's statement that any class of bidders in Auction 73 suffered
a competitive disadvantage due to the use of limited information
procedures. The Bureau believes that the overall competitive benefits
of limited information procedures in Auction 73--from reduced
opportunities for bid signaling, retaliatory bidding, or other anti-
competitive strategic bidding--far outweigh the disadvantages.
149. The Bureau also notes that the commenter's allegations
regarding Auction 73 would not necessarily apply to Auction 78, given
the differences between the two auctions. The licenses being offered in
Auction 78 are very different from those offered in Auction 73 in terms
of the numbers of licenses, amount of spectrum, adjacencies, and the
nature of the services. Auction 78 is offering licenses in discrete
locations for which adjacent neighbors are already known. In many
cases, information on the technologies and services in adjacent license
areas may also be available. The Bureau concludes that the pro-
competitive benefits of using limited information procedures far
outweigh the potential value of revealing bidder identities during this
auction of PCS and AWS licenses.
150. More generally, while well-prepared FCC auction participants
likely will utilize all information available to them when calculating
license values, including, in some cases, information revealed during
the auction, the Bureau does not believe that knowing bidder identities
and other bidder-related information during the auction process is an
essential prerequisite to confident bidding and successful auction
participation. The Bureau notes in the Auction 78 Procedures Public
Notice, and other auction public notices, that the Bureau expects
bidders to conduct careful pre-auction due diligence before bidding on
a license. There is an increasing amount of external market data
available on spectrum license values, as more and more licenses have
been auctioned and others traded in secondary transactions, which
should help auction participants and their financial backers determine
their willingness to pay for licenses.
Hence, the Bureau is not persuaded that disclosure of bidder
identity information during the auction is necessary to facilitate
bidder license evaluation in Auction 78.
151. Therefore, the Bureau adopts the limited information
procedures proposed in the Auction 78 Comment Public Notice. Thus,
after the conclusion of each round, the Bureau will disclose all
relevant information about the bids placed and/or withdrawn except the
identities of the bidders performing the actions and the net amounts of
the bids placed or withdrawn. As in past auctions conducted with
limited information procedures, the Bureau will indicate, for each
license, 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 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, bidders can log in to the FCC Auction System to
see, after each round, whether their own bids are provisionally
winning. The Bureau will provide descriptions and/or samples of
publicly-available and bidder-specific (non-public) results files prior
to the start of the auction.
152. Other Issues. Information disclosure procedures established
for this auction will not interfere with the administration of or
compliance with the Commission's anti-collusion rule. 47 CFR
1.2105(c)(1) provides that after the short-form application filing
deadline, all applicants for licenses in any of the same or overlapping
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.
153. In Auction 78, 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.
154. To assist applicants in identifying other parties subject to
the anti-collusion rule, the Bureau will notify separately each
applicant that has filed a short-form application to participate in a
pending auction whether applicants in Auction 78 have applied for
licenses in any of the same or overlapping geographic areas as the
applicant. Specifically, after the Bureau conducts its initial review
of applications to participate in Auction 78, it will send to each
applicant in Auction 78 a letter that lists the other applicants that
have pending short-form applications for licenses in any of the same or
overlapping geographic areas. The list will identify the other
applicants by name but will not list their license selections. As in
past auctions, additional information regarding other applicants that
is needed to comply with 47 CFR 1.2105(c)--such as the identities of
other applicants' controlling interests and entities with a greater
than ten percent ownership interest--will be available through the
publicly accessible online short-form application database.
155. 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
78. While applicants' license selection will not be disclosed until
after Auction 78 closes, the Commission will disclose other portions of
short-form applications through its online 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.
156. 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. A commenter advocates a safe-harbor for auction-related
statements made by bidders in filings with the U.S. Securities and
Exchange Commission (SEC). The commenter suggests that creating this
safe harbor would avoid a potential conflict between a bidder's attempt
to comply with the Commission's anonymous bidding procedures and SEC
disclosure regulations.
157. The Bureau declines to create blanket immunity for statements
filed with the SEC because that would violate the intent of the limited
information
[[Page 30933]]
procedures that the Bureau adopted for Auction 78. The commenter has
not persuaded us that the Commission's anonymous bidding procedures are
irreconcilable with SEC reporting requirements. The Bureau continues to
believe that premature disclosure of the identities of successful
bidders in Auction 78, whether to financial institutions, vendors, or
others, would undermine the purposes of the Bureau's limited
information procedures. Therefore, the Bureau declines to create an
exception to its limited information procedures. The Bureau hereby
warns applicants that the direct or indirect communication to other
applicants or the public disclosure of non-public information, (e.g.,
bid withdrawals, proactive waivers submitted, reductions in
eligibility) could violate the Commission's anonymous bidding
procedures and the anti-collusion rule. To the extent an applicant
believes that such a disclosure is required by law or regulation,
including regulations issued by the Securities and Exchange Commission,
the Bureau strongly urges that the applicant consult with the
Commission before making such disclosure.
iii. Eligibility and Activity Rules
158. The Bureau will use upfront payments to determine initial
eligibility for Auction 78. 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 Auction 78 Procedures Public Notice. Bidding units for a given
license do not change as prices rise during the auction. A bidder's
upfront payment is not attributed to specific licenses. Rather, a
bidder may place bids on any of the licenses selected on its short-form
application as long as the total number of bidding units associated
with those licenses does not exceed its current eligibility.
Eligibility cannot be increased during the auction; it can only remain
the same or decrease. Thus, in calculating its upfront payment amount,
an applicant must determine the maximum number of bidding units it may
wish to bid on or hold provisionally winning bids on in any single
round, and submit an upfront payment amount covering that total number
of bidding units. At a minimum, an applicant's upfront payment must
cover the bidding units for at least one of the licenses it selected on
its short-form application. The total upfront payment does not affect
the total dollar amount a bidder may bid on any given license.
159. 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.
160. 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. 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.
161. 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 78. 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.
iv. Auction Stages
162. In the Auction 78 Comment Public Notice, the Bureau proposed
to conduct the auction in two stages and employ an activity rule. Under
the Bureau's proposal a bidder desiring to maintain its current bidding
eligibility would be required to be active on licenses representing at
least 80 percent of its current bidding eligibility, during each round
of Stage One, and at least 95 percent of its current bidding
eligibility in Stage Two. The Commission received no comments on this
proposal.
163. The Bureau has the discretion to further alter the activity
requirements before and/or during the auction as circumstances warrant,
and also has other mechanisms by which it may influence the speed of an
auction. The Bureau finds that two stages for an activity requirement
adequately balances the desire to conclude the auction quickly with
giving sufficient time for bidders to consider the status of the
bidding and to place bids. Therefore, the Bureau adopts the two stages.
164. Stage One: During the first stage of the auction, a bidder
desiring to maintain its current bidding eligibility will be required
to be active on licenses representing at least 80 percent of its
current bidding eligibility in each bidding round. Failure to maintain
the required activity level will result in the use of an activity rule
waiver or, if the bidder has no activity rule waivers remaining, a
reduction in the bidder's bidding eligibility in the next round. During
Stage One, reduced eligibility for the next round will be calculated by
multiplying the bidder's current round activity (the sum of bidding
units of the bidder's provisionally winning bids and bids during the
current round) by five-fourths (5/4).
165. Stage Two: During the second stage of the auction, a bidder
desiring to maintain its current bidding eligibility is required to be
active on 95 percent of its current bidding eligibility. Failure to
maintain the required activity level will result in the use of an
activity rule waiver or, if the bidder has no activity rule waivers
remaining, a reduction in the bidder's bidding eligibility in the next
round. During Stage Two, reduced eligibility for the next round will be
calculated by multiplying the bidder's current round activity (the sum
of bidding units of the bidder's provisionally winning bids and bids
during the current round) by twenty-nineteenths (20/19).
CAUTION: Since activity requirements increase in Stage Two, bidders
must carefully check their activity during the first round following a
stage transition to ensure that they are meeting the increased activity
requirement. This is especially critical for bidders that have
provisionally winning bids and do not plan to submit new bids. In past
auctions, some bidders have inadvertently lost bidding eligibility or
used an activity rule waiver because they did not re-verify their
activity status at stage transitions. Bidders may check their activity
against the required activity level by logging into the FCC Auction
System. [GPO end indent]
166. Because the foregoing procedures have proven successful in
maintaining the proper pace in previous auctions, the Bureau adopts
them for Auction 78.
v. Stage Transitions
167. In the Auction 78 Comment Public Notice, the Bureau proposed
that it would advance the auction to the next stage (i.e., from Stage
One to Stage Two) after considering a variety of measures of auction
activity, including, but not limited to, the percentages of licenses
(as measured in bidding units) on which there are new bids, the number
of new
[[Page 30934]]
bids, and the increase in revenue. The Bureau further proposed that it
would retain the discretion to change the activity requirements during
the auction. For example, the Bureau could decide not to transition to
Stage Two if it believes the auction is progressing satisfactorily
under the Stage One activity requirement, or to transition to Stage Two
with an activity requirement that is higher or lower than the 95
percent. The Bureau proposed to alert bidders of stage advancements by
announcement during the auction. The Bureau received no comments on
this issue.
168. The Bureau adopts its proposal for stage transitions. Thus,
the auction will start in Stage One. The Bureau will regulate the pace
of the auction by announcement. The Bureau retains the discretion to
transition the auction to Stage Two, to add an additional stage with a
higher activity requirement, not to transition to Stage Two, and to
transition to Stage Two with an activity requirement that is higher or
lower than 95 percent. This determination will be based on a variety of
measures of auction activity, including, but not limited to, the number
of new bids and the percentages of licenses (as measured in bidding
units) on which there are new bids.
vi. Activity Rule Waivers
169. In the Auction 78 Comment Public Notice, the Bureau proposed
that each bidder in the auction be provided with three activity rule
waivers.
170. The Bureau adopts its proposal to provide bidders with three
activity rule waivers.
vii. Auction Stopping Rules
171. For Auction 78, the Bureau proposed to employ a simultaneous
stopping rule approach. A simultaneous stopping rule means that all
licenses remain available for bidding until bidding closes
simultaneously on all licenses. More specifically, bidding will close
simultaneously on all licenses after the first round in which no bidder
submits any new bids, applies a proactive waiver, or withdraws any
provisionally winning bids.
172. The Bureau also sought comment on alternative versions of the
simultaneous stopping rule for Auction 78:
Option 1. The auction would close for all licenses after the first
round in which no bidder applies a waiver, withdraws a provisionally
winning bid, or places any new bids on any license on which it is not
the provisionally winning bidder. Thus, absent any other bidding
activity, a bidder placing a new bid on a license for which it is the
provisionally winning bidder would not keep the auction open under this
modified stopping rule.
Option 2. The auction would end after a specified number of
additional rounds. If the Bureau invokes this special stopping rule, it
will accept bids in the specified final round(s) and the auction will
close.
Option 3. The auction would remain open even if no bidder places
any new bids, applies a waiver, or withdraws any provisionally winning
bids. In this event, the effect will be the same as if a bidder had
applied a waiver. Thus, the activity rule will apply as usual, and a
bidder with insufficient activity will either lose bidding eligibility
or use a waiver.
173. The Bureau proposed to exercise these options only in
circumstances such as where the auction is proceeding unusually slowly
or quickly, where there is minimal overall bidding activity, or where
it appears likely that the auction will not close within a reasonable
period of time or will close prematurely. The Bureau noted that before
exercising these options, it is likely to attempt to change the pace of
the auction by, for example, changing the number of bidding rounds per
day and/or changing minimum acceptable bids.
viii. Auction Delay, Suspension, or Cancellation
174. In the Auction 78 Comment Public Notice, the Bureau proposed
that, by public notice or by announcement during the auction, it may
delay, suspend, or cancel the auction in the event of natural disaster,
technical obstacle, administrative or weather necessity, evidence of an
auction security breach or unlawful bidding activity, or for any other
reason that affects the fair and efficient conduct of competitive
bidding. The Bureau received no comment on this issue. The Bureau
adopts its proposed rules regarding auction delay, suspension, or
cancellation.
B. Bidding Procedures
i. Round Structure
175. The initial schedule of bidding rounds will be announced in
the public notice listing the qualified bidders, which is released
approximately 10 days before the start of the auction. Each bidding
round is followed by the release of round results. Multiple bidding
rounds may be conducted in a given day. Details regarding round results
formats and locations will also be included in the qualified bidders
public notice.
176. The Bureau has discretion to change the bidding schedule in
order to foster an auction pace that reasonably balances speed with the
bidders' need to study round results and adjust their bidding
strategies. The Bureau may increase or decrease the amount of time for
the bidding rounds, the amount of time between rounds, or the number of
rounds per day, depending upon bidding activity and other factors.
ii. Reserve Price and Minimum Opening Bids
177. Section 309(j) of the Communications Act of 1934, as amended,
calls upon the Commission to prescribe methods by which a reasonable
reserve price will be required or a minimum opening bid established
when applications for FCC licenses are subject to auction (i.e.,
because they are mutually exclusive), unless the Commission determines
that a reserve price or minimum opening bid is not in the public
interest.
a. Reserve Prices
178. In the Auction 78 Comment Public Notice, the Bureau
recommended that no reserve price be imposed in Auction 78, noting that
when the PCS licenses were offered initially there was no reserve price
and that the reserve price for AWS licenses was met in Auction 66. The
Bureau adopts its proposal not to establish a reserve price in Auction
78.
b. Minimum Opening Bids
179. The Bureau proposed in the Auction 78 Comment Public Notice to
establish minimum opening bids for each license, while retaining
discretion to lower the minimum opening bids. Specifically, for Auction
78, the Bureau proposed to calculate minimum opening bids on a license-
by-license basis.
(i) AWS-1
180. For AWS-1 licenses offered in Auction 78, the Bureau proposed
minimum opening bids as follows: (1) For licenses covering CMAs or EAs
in the 50 states, minimum opening bid amounts will be calculated as
$0.03/MHz-pop; (2) for the REAG that covers the Gulf of Mexico, the
minimum opening bid amount will be $20,000; and (3) for all remaining
licenses, minimum opening bid amounts will be calculated as $0.01/MHz-
pop.
(ii) Broadband PCS
181. For broadband PCS licenses offered in Auction 78, the Bureau
[[Page 30935]]
proposed minimum opening bids as follows: (1) For licenses covering
BTAs in the 50 states, minimum opening bid amounts will be calculated
as $0.03/MHz-pop; and (2) for all remaining licenses, minimum opening
bid amounts will be calculated as $0.01/MHz-pop.
182. For all licenses, the results of these calculations are
subject to a minimum of $500 per license and are rounded using the
Bureau's standard rounding procedure. The Bureau sought comment on this
proposal and, in the alternative, on whether, consistent with Section
309(j), the public interest would be served by having no minimum
opening bids.
183. The Commission did not receive any comments addressing the
proposed minimum opening bid amounts or the formula proposed to
calculate them. Accordingly, the Bureau adopts the proposed minimum
opening bids and formulas, with a minimum of $500 per license.
184. The Commission did not receive any comments addressing the
proposal that the Bureau retains the discretion to reduce minimum
opening bid amounts. The Bureau therefore adopts this proposal, noting
that the Bureau retains the discretion to reduce the minimum opening
bid amounts. The Bureau emphasizes, however, that such discretion will
be exercised, if at all, sparingly and early in the auction, i.e.,
before bidders lose all activity waivers. During the course of the
auction, the Bureau will not entertain requests to reduce the minimum
opening bid amount on specific licenses.
185. The specific minimum opening bid amounts for each license
available in Auction 78 calculated pursuant to the procedure described
herein are set forth in Attachment A of the Auction 78 Procedures
Public Notice.
iii. Bid Amounts
186. In the Auction 78 Comment Public Notice, the Bureau proposed
that in each round, eligible bidders be able to place a bid on a given
license using one or more pre-defined bid amounts. Under the proposal,
the FCC Auction System interface will list the acceptable bid amounts
for each license. The Commission received no comment on this issue.
Based on the Commission's experience in prior auctions, the Bureau
adopts the proposals for Auction 78.
a. Minimum Acceptable Bids
187. Under the Bureau's proposed procedures, the first of the
acceptable bid amounts is called the minimum acceptable bid amount. The
minimum acceptable bid amount for a license will be equal to its
minimum opening bid amount until there is a provisionally winning bid
on the license. After there is a provisionally winning bid for a
license, the minimum acceptable bid amount for that license will be
equal to the amount of the provisionally winning bid plus a percentage
of that bid amount calculated using the formula. In general, the
percentage will be higher for a license receiving many bids than for a
license receiving few bids. In the case of a license for which the
provisionally winning bid has been withdrawn, the minimum acceptable
bid amount will equal the second highest bid received for the license.
188. The percentage of the provisionally winning bid used to
establish the minimum acceptable bid amount (the additional percentage)
is calculated at the end of each round, based on an activity index. The
activity index is a weighted average of (a) the number of distinct
bidders placing a bid on the license, and (b) the activity index from
the prior round. Specifically, the activity index is equal to a
weighting factor times the number of bidders placing a bid on the
license in the most recent bidding round plus one minus the weighting
factor times the activity index from the prior round. The additional
percentage is determined by adding one to the activity index, and
multiplying that sum by a minimum percentage, with the result not to
exceed a maximum percentage. The additional percentage is then
multiplied by the provisionally winning bid amount to obtain the
minimum acceptable bid for the next round.
189. The Bureau proposed initially to set the weighting factor at
0.5, the minimum percentage (floor) at 0.1 (10%), and the maximum
percentage (ceiling) at 0.2 (20%). At these initial settings, the
minimum acceptable bid for a license will generally be between ten
percent and twenty percent higher than the provisionally winning bid,
depending upon the bidding activity for the license. Equations and
examples are shown in Attachment E of the Auction 78 Procedures Public
Notice.
b. Additional Bid Amounts
190. Any additional bid amounts are calculated using the minimum
acceptable bid amount and a bid increment percentage--more
specifically, by multiplying the minimum acceptable bid by one plus
successively higher multiples of the bid increment percentage. If, for
example, the bid increment percentage is five percent, the calculation
of the first additional acceptable bid amount is (minimum acceptable
bid amount) * (1 + 0.05), or (minimum acceptable bid amount) * 1.05;
the second additional acceptable bid amount equals the minimum
acceptable bid amount times one plus two times the bid increment
percentage, or (minimum acceptable bid amount) * 1.1, etc. The Bureau
will round the results of these calculations and the minimum acceptable
bid calculations using the Bureau's standard rounding procedures.
191. For Auction 78, the Bureau proposed to set the bid increment
percentage at 0.05, so that any additional bid amounts above the
minimum acceptable bid would each be 5 percent higher. The Bureau
received no comments on this proposal and therefore adopts its proposal
to begin the auction with a bid increment percentage of 0.05.
192. The Bureau sought comment on whether it should start Auction
78 with no additional bid amounts or eight additional bid amounts (for
a total of nine bid amounts) per license. A commenter recommends
starting with eight additional bid amounts, arguing that this would
allow bidders to bid closer to their valuation of the spectrum, which,
in turn, increases the chance that the licenses will be awarded to
those who value them the most.
193. Auction 78 will begin with eight additional bid amounts per
license. The Bureau is not persuaded that these additional bid amounts
are necessary to provide bidders with adequate ability to express their
valuations. The Bureau's experience with past auctions conducted
without anonymous bidding procedures indicates that bidders rarely use
multiple increment bids as the commenters suggest--to express their
final valuations more precisely--but more frequently use jump bids as a
means of signaling other bidders. However, given the limited nature of
the inventory of licenses offered in Auction 78 and the use of
anonymous bidding, the Bureau is not particularly concerned that the
additional bid amounts will effectively be used for signaling in this
auction.
c. Cap on Increases in Bid Amounts
194. The Bureau also sought comment on whether it should cap (a)
the amount by which a minimum acceptable bid for a license may increase
compared with the corresponding provisionally winning bid, and (b) the
amount by which an additional bid amount may increase compared with the
immediately preceding acceptable bid amount. No commenters addressed
this question.
195. The Bureau will start the auction with a cap of $1 million.
This will limit
[[Page 30936]]
the amount by which minimum acceptable bids and additional bid amounts
may increase. Given the inventory of Auction 78, the Bureau believes
that this cap may be useful in preventing very rapid price increases on
some licenses, which could potentially discourage bidder participation,
inhibit price discovery, and create bid approval issues for bidders.
196. The Bureau retains the discretion to change the minimum
acceptable bid amounts, the additional bid amounts, the cap on bid
amounts, the number of acceptable bid amounts, and the parameters of
the formulas used to calculate minimum acceptable bid amounts and
additional bid amounts if it determines that circumstances so dictate.
Further, the Bureau retains the discretion to do so on a license-by-
license basis.
iv. Provisionally Winning Bids
197. At the end of each bidding round, a provisionally winning bid
will be determined based on the highest bid amount received for each
license. A provisionally winning bid will remain the provisionally
winning bid until there is a higher bid on the same license at the
close of a subsequent round. Provisionally winning bids at the end of
the auction become the winning bids. Bidders are reminded that
provisionally winning bids count toward activity for purposes of the
activity rule.
198. In the Auction 78 Comment Public Notice, the Bureau proposed
to use a random number generator to select a single provisionally
winning bid in the event of identical high bid amounts being submitted
on a license in a given round (i.e., tied bids). No comments were
received on this proposal.
199. Hence, the Bureau adopts the proposal. The FCC Auction System
will assign a random number to each bid upon submission. The tied bid
with the highest random number wins the tiebreaker, and becomes the
provisionally winning bid. Bidders, regardless of whether they hold a
provisionally winning bid, can submit higher bids in subsequent rounds.
However, if the auction were to end with no other bids being placed,
the winning bidder would be the one that placed the provisionally
winning bid.
200. All bidding will take place remotely either through the FCC
Auction System or by telephonic bidding. There will be no on-site
bidding during Auction 78.
201. A bidder's ability to bid on specific licenses is determined
by two factors: (1) The licenses selected on the bidder's short-form
application and (2) the bidder's eligibility. The bid submission
screens will allow bidders to submit bids on only those licenses the
bidder selected on its short-form application.
202. In each round, eligible bidders will be able to place bids on
a given license in one or more pre-defined bid amounts. For each
license, the FCC Auction System will list the acceptable bid amounts in
a drop-down box. Bidders use the drop-down box to select from among the
acceptable bid amounts. The FCC Auction System also includes an upload
function that allows bidders to upload text files containing bid
information.
203. Until a bid has been placed on a license, the minimum
acceptable bid amount for that license will be equal to its minimum
opening bid amount. Once there are bids on a license, minimum
acceptable bids for a license will be determined.
204. During a round, an eligible bidder may submit bids for as many
licenses as it wishes, remove bids placed in the current bidding round,
withdraw provisionally winning bids from previous rounds, or
permanently reduce eligibility. If a bidder submits multiple bids for
the same license in the same round--multiple bids on the exact same
license, the system takes the last bid entered as that bidder's bid for
the round. Bidders should note that the bidding units associated with
licenses for which the bidder has removed or withdrawn its bid do not
count towards the bidder's current activity.
205. Finally, bidders are cautioned to select their bid amounts
carefully because bidders that withdraw a provisionally winning bid
from a previous round, even if the bid was mistakenly or erroneously
made, are subject to bid withdrawal payments.
v. Bid Removal and Bid Withdrawal
206. In the Auction 78 Comment Public Notice, the Commission
proposed bid removal and bid withdrawal procedures. The Bureau sought
comment on permitting a bidder to remove a bid before the close of the
round in which the bid was placed. With respect to bid withdrawals, the
Commission proposed limiting each bidder to withdrawals of
provisionally winning bids on licenses in no more than one round during
the course of the auction. The round in which withdrawals are used
would be at each bidder's discretion.
207. A commenter recommends allowing each bidder to withdraw an
unlimited number of bids in a single round, as proposed in the Auction
78 Comment Public Notice, or up to three bids in more than one round.
The commenter characterizes the limitation of one bid withdrawal round
as ``severe restrictions'' that may have seemed to be necessary in
Auction 73 where combinatorial bidding was used for some licenses.
208. The Bureau is not convinced by this line of reasoning. The
Commission has conducted some past auctions--particularly those with
limited opportunities for license aggregation--with one or no
withdrawal rounds. Therefore, the Bureau adopts its proposal.
209. Bid Removal. Before the close of a bidding round, a bidder has
the option of removing any bids placed in that round. By using the
remove bids function in the FCC Auction System, a bidder may
effectively unsubmit any bid placed within that round. A bidder
removing a bid placed in the same round is not subject to withdrawal
payments. Removing a bid will affect a bidder's activity for the round
in which it is removed, i.e., a bid that is removed does not count
toward bidding activity.
210. Bid Withdrawal. Once a round closes, a bidder may no longer
remove a bid. However, in a later round, a bidder may withdraw
provisionally winning bids from previous rounds for licenses using the
withdraw bids function in the FCC Auction System. A provisionally
winning bidder that withdraws its provisionally winning bid from a
previous round during the auction is subject to the bid withdrawal
payments specified in 47 CFR 1.2104(g). Once a withdrawal is submitted
during a round, that withdrawal cannot be unsubmitted even if the round
has not yet ended.
211. If a provisionally winning bid is withdrawn, the minimum
acceptable bid amount will equal the amount of the second highest bid
received for the license, which may be less than, or in the case of
tied bids, equal to, the amount of the withdrawn bid. The Commission
will serve as a ``place holder'' provisionally winning bidder on the
license until a new bid is submitted on that license.
212. These procedures will permit bidder flexibility during the
auction, and therefore the Bureau adopts them for Auction 78.
213. Calculation of Bid Withdrawal Payment. Generally, the
Commission imposes payments on bidders that withdraw high bids during
the course of an auction. If a bidder withdraws its bid and there is no
higher bid in the same or subsequent auction(s), the bidder that
withdrew its bid is responsible for the difference between its
withdrawn bid and the provisionally winning bid in the same or
subsequent auction(s). If a bid
[[Page 30937]]
is withdrawn on a license and no subsequent higher bid is placed and/or
the license is not won in the same auction, the payment for each bid
withdrawal will be calculated based on the sequence of bid withdrawals
and the amounts withdrawn. No withdrawal payment will be assessed for a
withdrawn bid if either the subsequent winning bid or any subsequent
intervening withdrawn bid, in either the same or subsequent
auctions(s), equals or exceeds that withdrawn bid. Thus, a bidder that
withdraws a bid will not be responsible for any final withdrawal
payment if there is a subsequent higher bid in the same or subsequent
auction(s).
214. 47 CFR 1.2104(g)(1) of the rules sets forth the payment
obligations of a bidder that withdraws a high bid on a license during
the course of an auction, and provides for the assessment of interim
bid withdrawal payments. In the Auction 78 Comment Public Notice, the
Bureau proposed to establish the percentage at fifteen percent (15%)
for Auction 78 and sought comment on the proposal.
215. The Bureau received no comments on this issue and adopts its
proposal. The Commission will assess an interim withdrawal payment
equal to fifteen percent (15%) of the amount of the withdrawn bids. The
fifteen percent (15%) interim payment will be applied toward any final
bid withdrawal payment that will be assessed after subsequent auction
of the license. Assessing an interim bid withdrawal payment ensures
that the Commission receives a minimal withdrawal payment pending
assessment of any final withdrawal payment. 47 CFR 1.2104(g) provides
specific examples showing application of the bid withdrawal payment
rule.
vi. Round Results
216. Limited information about the results of a round will be made
public after the conclusion of the round. Specifically, after a round
closes, the Bureau will make available for each license, its current
provisionally winning bid amount, the minimum acceptable bid amount for
the following round, the amounts of all bids placed on the license
during the round, and whether the license is FCC held. The system will
also provide an entire license history detailing all activity that has
taken place on a license with the ability to sort by round number. The
reports will be publicly accessible. Moreover, after the auction, the
Bureau will make available complete reports of all bids placed during
each round of the auction, including bidder identities.
vii. Auction Announcements
217. The Commission will use auction announcements to announce
items such as schedule changes and stage transitions. All auction
announcements will be available by clicking a link in the FCC Auction
System.
V. Post-Auction Procedures
218. Shortly after bidding has ended, the Commission will issue a
public notice declaring the auction closed, identifying the winning
bidders, and establishing the deadlines for submitting down payments,
the long-form application (FCC Form 601), the ownership disclosure
information report (FCC Form 602), and final payments.
A. Down Payments
219. Within ten business days after release of the auction closing
notice, each winning bidder must submit sufficient funds (in addition
to its upfront payment) to bring its total amount of money on deposit
with the Commission for Auction 78 to 20 percent of the net amount of
its winning bids (gross bids less any applicable small business or very
small business bidding credits).
B. Final Payments
220. Each winning bidder will be required to submit the balance of
the net amount of its winning bids within 10 business days after the
applicable deadline for submitting down payments.
C. Long-Form Application (FCC Form 601)
221. Within ten business days after release of the auction closing
notice, winning bidders must electronically submit a properly completed
long-form application (FCC Form 601) for the license(s) they won
through Auction 78. Winning bidders that are entrepreneurs and/or small
businesses or very small businesses must demonstrate their
qualifications to be considered an entrepreneur and/or their
eligibility for a small business or very small business bidding credit.
Further filing instructions will be provided to winning bidders in the
auction closing notice.
222. Winning bidders organized as bidding consortia must comply
with the long-form application procedures established in the CSEA/Part
1 Report and Order, 71 FR 6992, February 10, 2006. Specifically, each
member (or group of members) of a winning consortium seeking separate
licenses will be required to file a separate long-form application for
its respective license(s). If the license is to be partitioned or
disaggregated, the member (or group) filing the long-form application
must provide the relevant partitioning or disaggregation agreement in
its long-form application. In addition, if two or more consortium
members wish to be licensed together, they must first form a legal
business entity, and any such entity must meet the applicable
designated entity criteria.
D. Ownership Disclosure Information Report (FCC Form 602)
223. Within ten business days after release of the auction closing
notice, each winning bidder must also comply with the ownership
reporting requirements in 47 CFR 1.913, 1.919, and 1.2112 by submitting
an ownership disclosure information report (FCC Form 602) with its
long-form application.
224. If an applicant already has a complete and accurate FCC Form
602 on file in ULS, it is not necessary to file a new report, but
applicants must verify that the information on file with the Commission
is complete and accurate. If the applicant does not have an FCC Form
602 on file, or if it is not complete and accurate, the applicant must
submit one.
225. When an applicant submits a short-form application, ULS
automatically creates an ownership record. This record is not an FCC
Form 602, but may be used to pre-fill the FCC Form 602 with the
ownership information submitted on the applicant's short-form
application. Applicants must review the pre-filled information and
confirm that it is complete and accurate as of the filing date of the
long-form application before certifying and submitting the FCC Form
602. Further instructions will be provided to winning bidders in the
auction closing notice.
E. Tribal Lands Bidding Credit
226. A winning bidder that intends to use its license(s) to deploy
facilities and provide services to federally recognized tribal lands
that are unserved by any telecommunications carrier or that have a
wireline penetration rate equal to or below 85 percent is eligible to
receive a tribal lands bidding credit as set forth in 47 CFR 1.2107 and
1.2110(f). A tribal lands bidding credit is in addition to, and
separate from, any other bidding credit for which a winning bidder may
qualify.
227. Unlike other bidding credits that are requested prior to the
auction, a winning bidder applies for the tribal lands bidding credit
after winning the auction when it files its long-form
[[Page 30938]]
application (FCC Form 601). When initially filing the long-form
application, the winning bidder will be required to advise the
Commission whether it intends to seek a tribal lands bidding credit,
for each license won in the auction, by checking the designated
box(es). After stating its intent to seek a tribal lands bidding
credit, the applicant will have 180 days from the close of the long-
form filing window to amend its application to select the specific
tribal lands to be served and provide the required tribal government
certifications. Licensees receiving a tribal lands bidding credit are
subject to performance criteria as set forth in 47 CFR
1.2110(f)(3)(vi).
F. Default and Disqualification
228. Any winning bidder that defaults or is disqualified after the
close of the auction (i.e., fails to remit the required down payment
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise
disqualified) will be subject to the payments described in 47 CFR
1.2104(g)(2). The payments include both a deficiency payment, equal to
the difference between the amount of the bidder's bid and the amount of
the winning bid the next time a license covering the same spectrum is
won in an auction, plus an additional payment equal to a percentage of
the defaulter's bid or of the subsequent winning bid, whichever is
less.
229. The percentage of the applicable bid to be assessed as an
additional payment for defaults in a particular auction is established
in advance of the auction. Accordingly, in the Auction 78 Comment
Public Notice, the Bureau proposed to set the additional default
payment for this auction at ten percent of the applicable bid,
consistent with Auctions 66 and 71. The Bureau received no comments on
this proposal, and therefore, adopts the proposal.
230. Finally, in the event of a default, the Commission may re-
auction the license or offer it to the next highest bidder (in
descending order) at its final bid amount. In addition, if a default or
disqualification involves gross misconduct, misrepresentation, or bad
faith by an applicant, the Commission may declare the applicant and its
principals ineligible to bid in future auctions, and may take any other
action that it deems necessary, including institution of proceedings to
revoke any existing licenses held by the applicant.
G. Refund of Remaining Upfront Payment Balance
231. All applicants that submit upfront payments but after the
close of the auction are not winning bidders for a license in Auction
78 may be entitled to a refund of their remaining upfront payment
balance after the conclusion of the auction. All refunds will be
returned to the payer of record, as identified on the FCC Form 159,
unless the payer submits written authorization instructing otherwise.
232. Refunds will not be made until after the conclusion of bidding
because providing refunds could disclose the activity of particular
applicants which would be inconsistent with the anonymous bidding
procedures applicable to Auction 78. For these reasons, applicants
should not request refunds until after the close of the auction.
Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E8-12013 Filed 5-28-08; 8:45 am]
BILLING CODE 6712-01-P