Auction of 700 MHz Band Licenses Scheduled for July 19, 2011; Comment Sought on Competitive Bidding Procedures for Auction 92, 1158-1164 [2011-122]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 76, Number 5 (Friday, January 7, 2011)]
[Notices]
[Pages 1158-1164]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-122]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 10-248; DA 10-2298]


Auction of 700 MHz Band Licenses Scheduled for July 19, 2011; 
Comment Sought on Competitive Bidding Procedures for Auction 92

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of 16 licenses in the 698-
806 MHz band (700 MHz Band). The auction, which is designated Auction 
92, is scheduled to commence on July 19, 2011. This document also seeks 
comment on competitive bidding procedures for Auction 92.

DATES: Comments are due on or before January 12, 2011, and reply 
comments are due on or before January 27, 2011.

ADDRESSES: All filings related to procedures for Auction 92 must refer 
to AU Docket No. 10-248. The Wireless Telecommunications Bureau 
strongly encourages interested parties to file comments electronically, 
and requests that an additional copy of all comments and reply comments 
be submitted electronically to the following address: 
auction92@fcc.gov. Comments may be submitted by any of the following 
methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: https://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Attn: WTB/ASAD, Office of the 
Secretary, Federal Communications Commission.
     All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St., SW., Room TW-A325, Washington, DC 20554. All hand 
deliveries must be held together with rubber bands or fasteners. Any 
envelopes must be disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: For auction legal questions: 
Lynne Milne at (202) 418-0660; for general auction questions: Debbie 
Smith or Lisa Stover at (717) 338-2868. Mobility Division: for 700 MHz 
service rules questions: Michael Connelly (legal) or Keith Harper 
(technical) at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 92 Comment 
Public Notice released on December 15, 2010. The complete text of the 
Auction 92 Comment Public Notice, including an attachment and related 
Commission documents, is available for public inspection and copying 
from 8 a.m. to 4:30 p.m. ET Monday through Thursday or from 8 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 92 
Comment Public Notice and related Commission documents also may be 
purchased from the Commission's duplicating contractor, Best Copy and 
Printing, Inc. (BCPI), 445 12th Street SW., Room CY-B402, Washington, 
DC 20554, telephone 202-488-5300, fax 202-488-5563, or you may contact 
BCPI at its Web site: https://www.BCPIWEB.com. When ordering documents 
from BCPI, please provide the appropriate FCC document number, for 
example, DA 10-2298. The Auction 92 Comment Public Notice and related 
documents also are available on the Internet at the Commission's Web 
site: https://wireless.fcc.gov/auctions/92/, or by using the search 
function for AU Docket No. 10-248 on the ECFS Web page at https://www.fcc.gov/cgb/ecfs/.

I. Licenses in Auction 92

    1. Auction 92 will offer a total of 16 licenses. These licenses 
were offered in Auction 73 and remained unsold or were licenses on 
which a winning bidder defaulted. A complete list of licenses offered 
in Auction 92 is available in Attachment A to the Auction 92 Comment 
Public Notice.

II. Due Diligence

    2. Each potential bidder is solely responsible for investigating 
and evaluating all technical and marketplace factors that may have a 
bearing on the value of 700 MHz Band licenses that the potential bidder 
is seeking in this auction. The FCC makes no representations or 
warranties about the use of this spectrum for particular services. Each 
applicant should be aware that this FCC auction represents an 
opportunity to become an FCC licensee in the 700 MHz Band, subject to 
certain conditions and regulations. An FCC auction does not constitute 
an endorsement by the FCC of any particular service, technology, or 
product, nor does an FCC license constitute a guarantee of business 
success.
    3. An applicant should perform its due diligence research and 
analysis before proceeding, as the applicant would with any new 
business venture. Each potential bidder should perform technical 
analyses and/or refresh any previous analyses to assure the applicant 
that, should the applicant be a winning bidder for any Auction 92 
license, the applicant will be able to build and operate facilities 
that will fully comply with all current technical and legal 
requirements. Each applicant is strongly encouraged to inspect any 
prospective sites located in, or near, the geographic area for which 
the applicant plans to bid, and also to familiarize itself with the 
Commission's rules regarding the National Environmental Policy Act at 
47 CFR Chapter 1, Part 1, Subpart I.
    4. Each applicant is strongly encouraged to conduct its own 
research prior to Auction 92 in order to determine the existence of 
pending administrative, rulemaking, or judicial proceedings that might 
affect the applicant's decisions regarding participation in the 
auction.
    5. Participants in Auction 92 are strongly encouraged to continue 
such research throughout the auction. The due diligence considerations 
mentioned in the Auction 92 Comment Public Notice do not comprise an 
exhaustive list of steps that should be undertaken prior to 
participating in this auction. As always, the burden is on the 
potential bidder to determine how much research to undertake, depending 
upon the specific facts and circumstances related to its interests.

III. Bureau Seeks Comment on Auction Procedures

    6. Consistent with the provisions of 47 U.S.C. 309(j)(3), and to 
ensure that potential bidders have adequate time to familiarize 
themselves with the specific rules that will govern the day-to-day 
conduct of an auction, the Bureau seeks comment on the following issues 
relating to Auction 92.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design
    7. The Bureau proposes to auction all licenses included in Auction 
92 using the Commission's standard simultaneous multiple-round 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

[[Page 1160]]

on individual licenses. Typically, bidding remains open on all licenses 
until bidding stops on every license. The Bureau seeks comment on this 
proposal.
ii. Anonymous Bidding
    8. In a number of recent auctions, the Commission has adopted 
procedures to limit the disclosure of certain bidder-specific 
information until after the auction. Consistent with that practice, the 
Bureau proposes to conduct Auction 92 using certain procedures for 
limited information disclosure, or anonymous bidding. Specifically, the 
Bureau proposes to withhold, until after the close of bidding, public 
release of: (1) Bidders' license selections on their short-form 
applications (FCC Form 175); (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.
    9. Under these proposed limited information procedures, the amount 
of every bid placed and whether a bid was withdrawn would be disclosed 
after the close of every round, but the identities of bidders placing 
specific bids or withdrawals and the net bid amounts would not be 
disclosed until after the close of the auction.
    10. Bidders would have access to additional information about their 
own bids. For example, bidders would be able to view their own level of 
eligibility, before and during the auction, through the Commission's 
Integrated Spectrum Auction System (FCC Auction System).
    11. For purposes of complying with 47 CFR 1.2105(c), the 
Commission's rule prohibiting certain communications between applicants 
(formerly referred to as the anti-collusion rule), applicants would be 
made aware of other applicants with which they will not be permitted to 
cooperate, collaborate, or communicate--including discussing bids, 
bidding strategies, or post-auction market structure. Specifically, the 
Bureau would notify separately each applicant in Auction 92 whether 
applicants with short-form applications to participate in pending 
auctions, including but not limited to Auction 92, have applied for 
licenses in any of the same or overlapping geographic areas as that 
applicant.
    12. After the close of bidding, bidders' license selections, 
upfront payment amounts, bidding eligibility, bids, and other bidding-
related actions would be made publicly available.
    13. The Bureau seeks comment on its proposal to implement anonymous 
bidding in Auction 92. The Bureau also seeks comment on alternatives to 
the use of anonymous bidding procedures for Auction 92. When the 
Commission proposed limited information disclosure procedures in 2006, 
it did so in response to analysis suggesting that under certain 
circumstances the competitiveness and economic efficiency of a 
simultaneous multiple-round auction may be enhanced if such information 
is withheld until after the close of the auction. The Bureau encourages 
parties to provide information about the benefits and costs of 
complying with limited information procedures as compared with the 
benefits and costs of alternative procedures that would provide for the 
disclosure of more information on bidder identities and interests in 
the auction. If commenters believe that the Bureau should not adopt 
procedures to limit the disclosure of certain bidder-specific 
information until after the auction, they should explain their 
reasoning.
iii. Bidding Rounds
    14. Auction 92 will consist of sequential bidding rounds. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of the auction.
    15. The Commission will conduct Auction 92 over the Internet, and 
telephonic bidding will be available as well. The toll-free telephone 
number for the Auction Bidder Line will be provided to qualified 
bidders.
    16. The Bureau proposes to retain the discretion to change the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. Under this proposal, the Bureau may change 
the amount of time for bidding rounds, the amount of time between 
rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. The Bureau seeks comment on this proposal. 
Commenters may wish to address the role of the bidding schedule in 
managing the pace of the auction, specifically discussing the tradeoffs 
in managing auction pace by bidding schedule changes, by changing the 
activity requirements or bid amount parameters, or by using other 
means.
iv. Stopping Rule
    17. The Bureau has discretion to establish stopping rules before or 
during a multiple round auction in order to end the auction within a 
reasonable time. For Auction 92, the Bureau proposes to employ a 
simultaneous stopping rule approach. A simultaneous stopping rule means 
that all licenses remain available for bidding until bidding closes 
simultaneously on all licenses. More specifically, bidding will close 
simultaneously on all licenses after the first round in which no bidder 
submits any new bid, applies a proactive waiver, or withdraws any 
provisionally winning bid, a bid that would become a final winning bid 
if the auction were to close in that given round. Thus, unless the 
Bureau announces alternative stopping procedures, bidding will remain 
open on all licenses until bidding stops on every license. It is not 
possible to determine in advance how long the auction will last.
    18. Further, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction 92. (A) Use a 
modified version of the simultaneous stopping rule that would close the 
auction 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 for which it is not the provisionally winning 
bidder. Thus, absent any other bidding activity, a bidder placing a new 
bid on a license for which it is the provisionally winning bidder would 
not keep the auction open under this modified stopping rule. (B) Use a 
modified version of the simultaneous stopping rule that would close the 
auction 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 that is not FCC held. Thus, absent any other 
bidding activity, a bidder placing a new bid on an FCC-held license (a 
license that does not already have a provisionally winning bid) would 
not keep the auction open under this modified stopping rule. (C) Use a 
modified version of the simultaneous stopping rule that combines (A) 
and (B). (D) Declare that the auction will end after a specified number 
of additional rounds (special stopping rule). If the Bureau invokes 
this special stopping rule, it will accept bids in the specified final 
round(s) after which the auction will close. (E) Keep the auction open 
even if no bidder submits 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. The activity rule, therefore, 
will apply as usual and a bidder with insufficient activity will either 
use a waiver or lose bidding eligibility.
    19. The Bureau proposes to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly

[[Page 1161]]

or quickly, there is minimal overall bidding activity, or it appears 
likely that the auction will not close within a reasonable period of 
time or will close prematurely. Before exercising certain of these 
options, the Bureau 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. The Bureau proposes to retain 
the discretion to exercise any of these options with or without prior 
announcement during the auction. The Bureau seeks comment on these 
proposals.
v. Information Relating to Auction Delay, Suspension, or Cancellation
    20. For Auction 92, the Bureau proposes that, by public notice or 
by announcement during the auction, the Bureau may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
obstacle, 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. In 
such cases, the Bureau, in its sole discretion, may elect to resume the 
auction starting from the beginning of the current round, resume the 
auction starting from some previous round, or cancel the auction in its 
entirety. Network interruption may cause the Bureau to delay or suspend 
the auction. The Bureau emphasizes that exercise of this authority is 
solely within the discretion of the Bureau, and its use is not intended 
to be a substitute for situations in which bidders may wish to apply 
their activity rule waivers. The Bureau seeks comment on this proposal.

B. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    21. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned, taking 
into account such factors as the efficiency of the auction process and 
the potential value of similar licenses. The upfront payment is a 
refundable deposit made by each bidder to establish eligibility to bid 
on licenses. Upfront payments that are related to the specific licenses 
being auctioned protect against frivolous or insincere bidding and 
provide the Commission with a source of funds from which to collect 
payments owed at the close of the auction. With these considerations in 
mind, the Bureau proposes the upfront payments set forth in Attachment 
A to the Auction 92 Comment Public Notice. The Bureau seeks comment on 
this proposal.
    22. The Bureau further proposes that the amount of the upfront 
payment submitted by a bidder will determine the bidder's initial 
bidding eligibility in bidding units. The Bureau proposes that each 
license be assigned a specific number of bidding units equal to one 
bidding unit per dollar of the upfront payment listed in Attachment A 
of the Auction 92 Comment Public Notice. The number of bidding units 
for a given license is fixed and does not change during the auction as 
prices change. A bidder may place bids on multiple licenses, provided 
that the total number of bidding units associated with those licenses 
does not exceed the bidder's current eligibility. Eligibility cannot be 
increased during the auction; it can only remain the same or decrease. 
Thus, in calculating its upfront payment amount and hence its initial 
bidding eligibility, an applicant must determine the maximum number of 
bidding units it may wish to bid on (or hold provisionally winning 
bids) in any single round, and submit an upfront payment amount 
covering that total number of bidding units. The Bureau seeks comment 
on these proposals.
ii. Activity Rule
    23. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. A bidder's activity in a round will be the sum of 
the bidding units associated with any licenses upon which it places 
bids during the current round and the bidding units associated with any 
licenses for which it holds provisionally winning bids placed in 
previous rounds. Bidders are required to be active on a specific 
percentage of their current bidding eligibility during each round of 
the auction. Failure to maintain the requisite activity level will 
result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction.
    24. The Bureau proposes to divide the auction into at least two 
stages, each characterized by a different activity requirement. The 
auction will start in Stage One. The Bureau proposes to advance the 
auction to the next stage by announcement during the auction. In 
exercising this discretion, the Bureau will consider a variety of 
measures of auction activity, including but not limited to the 
percentage of licenses (as measured in bidding units) on which there 
are new bids, the number of new bids, and the increase in revenue. The 
Bureau seeks comment on these proposals.
    25. While noting that the Bureau retains the discretion to change 
stages unilaterally by announcement during the auction, the Bureau 
proposes in each round of the first stage of the auction that 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. Failure to maintain the required activity 
level will result in the use of an activity rule waiver or a reduction 
in the bidder's bidding eligibility for the next round of bidding. 
During Stage One, a bidder's reduced eligibility for the next round 
will be calculated by multiplying the bidder's current round activity 
by five-fourths (\5/4\). The Bureau proposes further that in each round 
of 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 a 
reduction in the bidder's bidding eligibility for the next round of 
bidding. During Stage Two, a bidder's reduced eligibility for the next 
round will be calculated by multiplying the bidder's current round 
activity by twenty-nineteenths (\20/19\).
    26. The Bureau requests comment on these activity requirements. 
Under this proposal, the Bureau will retain the discretion to change 
the activity requirements during the auction. For example, the Bureau 
could decide to add an additional stage with a higher activity 
requirement, 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 proposed herein. If the Bureau 
exercises this discretion, it will alert bidders by announcement in the 
FCC Auction System. Moreover, if the Bureau implements stages with 
activity requirements other than the ones listed above, a bidder's 
reduced eligibility for the next round will be calculated by 
multiplying the bidder's current round activity by the reciprocal of 
the activity requirement. For example, with a 98 percent activity 
requirement, the bidder's current round activity would be multiplied by 
\50/49\; with a 100 percent activity requirement, the bidder's current 
round activity would become its bidding eligibility (current round 
activity would be multiplied by \1/1\).

[[Page 1162]]

iii. Activity Rule Waivers and Reducing Eligibility
    27. Use of an activity rule waiver preserves the bidder's 
eligibility despite the bidder's activity in the current round being 
below the required minimum level. An activity rule waiver applies to an 
entire round of bidding, not to a particular license. Activity rule 
waivers can be either proactive or automatic and are principally a 
mechanism for an auction participant to avoid the loss of bidding 
eligibility in the event that exigent circumstances prevent the 
participant from bidding in a particular round.
    28. The FCC Auction System assumes that a bidder that does not meet 
the activity requirement would prefer to use an activity rule waiver 
(if available) rather than lose bidding eligibility. Therefore, the 
system will automatically apply a waiver at the end of any bidding 
round in which a bidder's activity level is below the minimum required 
unless: (1) The bidder has no activity rule waivers remaining; or (2) 
the bidder overrides the automatic application of a waiver by reducing 
eligibility, thereby meeting the activity requirement. If a bidder has 
no waivers remaining and does not satisfy the required activity level, 
its current eligibility will be permanently reduced, possibly 
curtailing or eliminating the bidder's ability to place additional bids 
in the auction.
    29. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding round by using the reduce eligibility function in 
the FCC Auction System. In this case, the bidder's eligibility is 
permanently reduced to bring the bidder into compliance with the 
activity rule. Reducing eligibility is an irreversible action; once 
eligibility has been reduced, a bidder will not be permitted to regain 
its lost bidding eligibility, even if the round has not yet closed.
    30. Under the proposed simultaneous stopping rule, a bidder may 
apply an activity rule waiver proactively as a means to keep the 
auction open without placing a bid. If a bidder proactively applies an 
activity rule waiver (using the apply waiver function in the FCC 
Auction System) during a bidding round in which no bids are placed or 
withdrawn, the auction will remain open and the bidder's eligibility 
will be preserved. An automatic waiver applied by the FCC Auction 
System in a round in which there are no new bids, withdrawals, or 
proactive waivers will not keep the auction open. A bidder cannot apply 
a proactive waiver after bidding in a round, and applying a proactive 
waiver will preclude a bidder from placing any bids in that round. In 
fact, once a bidder places a proactive waiver during a round, the FCC 
Auction System does not allow the bidder to take other bidding-related 
action in that round, including placing or withdrawing bids. Applying a 
waiver is irreversible; once a proactive waiver is submitted, that 
waiver cannot be unsubmitted, even if the round has not yet closed.
    31. Consistent with recent auctions of wireless spectrum, the 
Bureau proposes that each bidder in Auction 92 be provided with three 
activity rule waivers that may be used at the bidder's discretion 
during the course of the auction. The Bureau seeks comment on this 
proposal.
iv. Reserve Price or Minimum Opening Bids
    32. Consistent with the mandate of 47 U.S.C. 309(j), the Bureau 
seeks comment on the use of a minimum opening bid amount and/or reserve 
price for this auction.
    33. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It is generally used to accelerate 
the competitive bidding process. It is possible for the minimum opening 
bid and the reserve price to be the same amount.
    34. The Bureau proposes to establish minimum opening bid amounts 
for Auction 92 as an effective bidding tool for accelerating the 
competitive bidding process. The Bureau does not propose to establish a 
separate reserve price for the licenses to be offered in Auction 92.
    35. For Auction 92, the Bureau proposes to calculate minimum 
opening bid amounts on a license-by-license basis using a method that 
takes into consideration the amounts bid for the same licenses in 
Auction 73, when these licenses received multiple bids. Specifically, 
for each license the Bureau proposes to calculate the minimum opening 
bid amount as the greater of (1) the minimum opening bid amount for the 
same license in Auction 73, or (2) 10% of the highest bid amount 
received for the license in Auction 73. This approach makes it possible 
to establish somewhat higher minimum opening bids for licenses that may 
likely sell for relatively higher prices, thereby potentially reducing 
the number of bidding rounds necessary for licenses to reach their 
final auction prices. The proposed minimum opening bid amount for each 
license is available in Attachment A of the Auction 92 Comment Public 
Notice. The Bureau seeks comment on this proposal.
    36. If commenters believe that these minimum opening bid amounts 
will result in unsold licenses, are not reasonable amounts, or should 
instead operate as reserve prices, they should explain why this is so, 
and comment on the desirability of an alternative approach. If 
requesting a lower minimum opening bid amount for a specific license 
offered in this auction, a commenter should justify the requested 
amount in detail. Commenters are advised to support their claims with 
valuation analyses and suggested amounts or formulas for reserve prices 
or minimum opening bids. In establishing minimum opening bid amounts, 
the Bureau particularly seeks comment on factors that could reasonably 
have an impact on valuation of the spectrum being auctioned, including 
levels of incumbency within these spectrum bands, the availability of 
technology to provide service, the size of the geographic service 
areas, issues of interference with other spectrum bands, and any other 
relevant factors. The Bureau seeks comment on this approach, and on 
whether, consistent with 47 U.S.C. 309(j), the public interest would be 
served by having no minimum opening bid amount or reserve price.
v. Bid Amounts
    37. The Bureau proposes that, in each round, eligible bidders be 
able to place a bid on a given license using one or more pre-defined 
bid amounts (provided the bidder has sufficient eligibility to place a 
bid on the particular license). Under this proposal, the FCC Auction 
System interface will list the acceptable bid amounts for each license.
vi. Minimum Acceptable Bids
    38. The first of the 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 by the Bureau using a 
specified formula. In general, the percentage will be higher for a 
license

[[Page 1163]]

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.
    39. 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 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 covering the license in the 
most recent bidding round plus one minus the weighting factor times the 
activity index from the prior round, except for Round 1 calculations, 
when the activity index is set at 0 because there is no prior round. 
The additional percentage is determined as one plus the activity index 
times a minimum percentage amount, with the result not to exceed a 
given maximum percentage. The additional percentage is then multiplied 
by the provisionally winning bid amount, with the results rounded using 
the Commission's standard procedure for auctions, to obtain the minimum 
acceptable bid for the next round. The Bureau proposes initially to set 
the weighting factor at 0.5, the minimum percentage at 0.1 (10%), and 
the maximum percentage at 0.3 (30%). Hence, at these initial settings, 
the minimum acceptable bid for a license will be between ten percent 
and thirty percent higher than the provisionally winning bid, depending 
upon the bidding activity for the license. Equations and examples of 
calculations are shown in Attachment B of the Auction 92 Comment Public 
Notice.
vii. Additional Bid Amounts
    40. The Bureau proposes to calculate any additional bid amounts 
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 5 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 proposes to use a bid increment percentage of 5 percent.
    41. The Bureau proposes to start with eight additional bid amounts 
(for a total of nine bid amounts), and seeks comment on whether to use 
fewer or no additional bid amounts. In particular, commenters should 
address the issue of additional bid amounts in light of particular 
circumstances of Auction 92, including the nature of the licenses 
offered.
viii. Bid Amount Changes
    42. The Bureau retains the discretion to change the minimum 
acceptable bid amounts, the additional 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 
the Bureau determines that circumstances so dictate. Further, the 
Bureau retains the discretion to make such changes on a license-by-
license basis.
    43. The Bureau also retains the discretion to limit (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. For example, the Bureau 
could set a $1 million limit on increases in minimum acceptable bid 
amounts over provisionally winning bids. Thus, if the activity-based 
formula calculates a minimum acceptable bid amount that is $2 million 
higher than the provisionally winning bid on a license, the minimum 
acceptable bid amount would instead be capped at $1 million above the 
provisionally winning bid. The Bureau seeks comment on the 
circumstances under which the Bureau should employ such a limit, 
factors it should consider when determining the dollar amount of the 
limit, and the tradeoffs in setting such a limit or changing parameters 
of the activity-based formula, such as changing the minimum percentage. 
If the Bureau exercises this discretion, it will alert bidders by 
announcement in the FCC Auction System.
    44. The Bureau seeks comment on its bid amount proposals. 
Commenters may wish to address the role of the minimum acceptable bids 
and the number of acceptable bid amounts in managing the pace of the 
auction and the tradeoffs in managing auction pace by changing the 
bidding schedule, activity requirements, or bid amounts, or by using 
other means.
ix. Provisionally Winning Bids
    45. Provisionally winning bids are bids that would become final 
winning bids if the auction were to close in that given round. At the 
end of a bidding round, a provisionally winning bid for each license 
will be determined based on the highest bid amount received for the 
license. In the event of identical high bid amounts being submitted on 
a license in a given round (i.e., tied bids), the Bureau will use a 
random number generator to select a single provisionally winning bid 
from among the tied bids. (Each bid is assigned a random number, and 
the tied bid with the highest random number wins the tiebreaker.) The 
remaining bidders, as well as the provisionally winning bidder, can 
submit higher bids in subsequent rounds. However, if the auction were 
to end with no other bids being placed, the winning bidder would be the 
one that placed the provisionally winning bid. If any bids are received 
on the license in a subsequent round, the provisionally winning bid 
again will be determined by the highest bid amount received for the 
license.
    46. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the license at the close of 
a subsequent round, unless the provisionally winning bid is withdrawn. 
Bidders are reminded that provisionally winning bids count toward 
activity for purposes of the activity rule.
x. Bid Removal
    47. For Auction 92, the Bureau proposes and seeks comment on the 
following bid removal procedures. Before the close of a bidding round, 
a bidder has the option of removing any bid placed in that round. By 
removing selected bids in the FCC Auction System, a bidder may 
effectively undo any of its bids placed within that round. In contrast 
to a bid withdrawal, a bidder removing a bid placed in the same round 
is not subject to a withdrawal payment. Once a round closes, a bidder 
may no longer remove a bid.
xi. Bid Withdrawal
    48. The Bureau also seeks comment on the following bid withdrawal 
procedures. When permitted in an auction, bid withdrawals provide a 
bidder with the option of withdrawing bids placed in prior rounds that 
have become provisionally winning bids. A bidder may withdraw its 
provisionally winning bids using the withdraw bids function in the FCC 
Auction System. A bidder that withdraws its provisionally winning 
bid(s) is subject to the bid

[[Page 1164]]

withdrawal payment provisions of 47 CFR 1.2104(g) and 1.2109.
    49. For Auction 92, the Bureau proposes to limit each bidder to 
withdrawing provisionally winning bids in only one round during the 
course of the auction. To permit a bidder to withdraw bids in more than 
one round may encourage insincere bidding or the use of withdrawals for 
anti-competitive purposes. The round in which withdrawals may be used 
will be at the bidder's discretion, and there is no limit on the number 
of provisionally winning bids that may be withdrawn during that round. 
Withdrawals must be in accordance with the Commission's rules, 
including the bid withdrawal payment provisions specified in 47 CFR 
1.2104(g). The withdrawal payment amount is deducted from any upfront 
payments or down payments that the withdrawing bidder has deposited 
with the Commission.
    50. The Bureau seeks comment on these bid withdrawal procedures. If 
commenters believe that each bidder should be allowed to withdraw 
provisionally winning bids in more than one round during the course of 
the auction, they should state how many bid withdrawal rounds they seek 
and explain what specific factors lead them to that conclusion. If 
commenters believe that bidders in this auction should not be permitted 
to withdraw any bids, they should discuss their reasoning for this 
suggestion.

C. Post-Auction Payments

i. Interim Withdrawal Payment Percentage
    51. The Bureau seeks comment on the appropriate percentage of a 
withdrawn bid that should be assessed as an interim withdrawal payment 
in the event that a final withdrawal payment cannot be determined at 
the close of the auction. In general, 47 CFR 1.2104(g) provides that a 
bidder that withdraws a bid during an auction is subject to a 
withdrawal payment equal to the difference between the amount of the 
withdrawn bid and the amount of the winning bid in the same or 
subsequent auction(s). If a bid is withdrawn and no subsequent higher 
bid is placed and/or the license is not won in the same auction, the 
final withdrawal payment cannot be calculated until after the close of 
a subsequent auction in which a higher bid for the license (or the 
equivalent to the license) is placed or the license is won. When that 
final payment cannot yet be calculated, the bidder responsible for the 
withdrawn bid is assessed an interim bid withdrawal payment, which will 
be applied toward any final bid withdrawal payment that is ultimately 
assessed. 47 CFR 1.2104(g)(1) requires that the percentage of the 
withdrawn bid to be assessed as an interim bid withdrawal payment be 
between 3 percent and 20 percent and that it be set in advance of the 
auction.
    52. The Commission has determined that the level of the interim 
withdrawal payment in a particular auction will be based on the nature 
of the service and the inventory of the licenses being offered. The 
Commission has noted that it may impose a higher interim withdrawal 
payment percentage to deter the anti-competitive use of withdrawals 
when, for example, bidders likely will not need to aggregate the 
licenses being offered in the auction, such as when few licenses are 
offered that are on adjacent frequencies or in adjacent areas, or when 
there are few synergies to be captured by combining licenses.
    53. With respect to the licenses being offered in Auction 92, the 
opportunities for combining in this auction licenses on adjacent 
frequencies or in adjacent areas may be limited, so there is likely to 
be little need to use withdrawals to protect against incomplete 
aggregations. Therefore, the Bureau proposes to establish the 
percentage of the withdrawn bid to be assessed as an interim bid 
withdrawal payment at 15 percent for this auction. The Bureau seeks 
comment on this proposal.
ii. Additional Default Payment Percentage
    54. Any winning bidder that defaults or is disqualified after the 
close of an auction (i.e., fails to remit the required down payment 
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise 
disqualified) is liable for a default payment under 47 CFR 
1.2104(g)(2). This payment consists of a deficiency payment, equal to 
the difference between the amount of the bidder's bid and the amount of 
the winning bid the next time a license covering the same spectrum is 
won in an auction, plus an additional payment equal to a percentage of 
the defaulter's bid or of the subsequent winning bid, whichever is 
less.
    55. The Commission's rules provide that, in advance of each 
auction, a percentage shall be established for the additional default 
payment. This percentage must be between 3 percent and 20 percent of 
the applicable bid. As the Commission has indicated, the level of this 
additional payment in each auction will be based on the nature of the 
service and the inventory of the licenses being offered.
    56. For Auction 92, the Bureau proposes to establish an additional 
default payment of 15 percent. Given the nature of the service and the 
inventory of the licenses being offered in Auction 92, the Bureau 
believes that an additional default payment of 15 percent of the 
relevant bid will provide a sufficient deterrent to defaults. The 
Bureau seeks comment on this proposal.

IV. Ex Parte Procedures

    57. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other
    rules pertaining to oral and written ex parte presentations in 
permit-but-disclose proceedings are set forth in 47 CFR 1.1206(b).

William W. Huber,
Associate Chief, Auctions and Spectrum Access Division, WTB, Federal 
Communications Commission.
[FR Doc. 2011-122 Filed 1-6-11; 8:45 am]
BILLING CODE 6712-01-P