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, 30919-30938 [E8-12013]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 73, Number 104 (Thursday, May 29, 2008)]
[Notices]
[Pages 30919-30938]
From the Federal Register Online via the Government Printing 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 fcc504@fcc.gov 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: 
https://www.BCPIWEB.com. The Auction 78 Procedures Public Notice and 
related documents are also available on the Internet at the 
Commission's Web site: https://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 https://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 https://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 
https://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