Mobility Fund Phase I Auction Scheduled for September 27, 2012; Comment Sought on Competitive Bidding Procedures for Auction 901 and Certain Program Requirements, 7152-7162 [2012-3174]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 77, Number 28 (Friday, February 10, 2012)]
[Notices]
[Pages 7152-7162]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-3174]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 12-25; DA 12-121]


Mobility Fund Phase I Auction Scheduled for September 27, 2012; 
Comment Sought on Competitive Bidding Procedures for Auction 901 and 
Certain Program Requirements

AGENCY: Federal Communications Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: In this document, the Commission's Wireless Telecommunications 
and Wireline Competition Bureaus announce a reverse auction to award 
$300 million in one-time Mobility Fund Phase I support scheduled to 
commence on September 27, 2012. This document also seeks comment on 
competitive bidding procedures for Auction 901 and other program 
requirements.

DATES: Comments are due on or before February 24, 2012. Reply comments 
are due on or before March 9, 2012.

ADDRESSES: All filings in response to the notice must refer to AU 
Docket No. 12-25. The Wireless Telecommunications and Wireline 
Competition Bureaus strongly encourage interested parties to file 
comments electronically, and request that an additional copy of all 
comments and reply comments be submitted electronically to the 
following address: auction901@fcc.gov. Comments may be submitted by any 
of the following methods:
     Electronic Filers: 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 one copy 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. The filing hours 
are 8 a.m. to 7 p.m. Eastern Time. All hand deliveries must be held 
together with rubber bands or fasteners. Any envelopes and boxes 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.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington, DC 20554.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: 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 Mobility Fund Phase I 
questions: Sayuri Rajapakse at (202) 418-0660; for auction process 
questions: Lisa Stover at (717) 338-2868. Wireline Competition Bureau, 
Telecommunications Access Policy Division: for general universal 
service questions: Alex Minard at (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Mobility Fund Phase 
I Auction Comment Public Notice (Public Notice) released on February 2, 
2012. The Public Notice and related Commission documents 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

[[Page 7153]]

at its Web site: https://www.BCPIWEB.com. When ordering documents from 
BCPI, please provide the appropriate FCC document number, for example, 
DA 12-121. The Public Notice and related documents also are available 
on the Internet at the Commission's Web site: https://wireless.fcc.gov/auctions/901/or by using the search function for AU Docket No. 12-25 on 
the Commission's Electronic Comment Filing System (ECFS) web page at 
https://www.fcc.gov/cgb/ecfs/.

I. Introduction and Summary

    1. Auction 901 will be the first auction to award high-cost 
universal service support through reverse competitive bidding, as 
envisioned by the Commission in the USF/ICC Transformation Order, 76 FR 
73830, November 29, 2011 and 76 FR 81562, December 28, 2011. Auction 
901 will award one-time support to carriers that commit to provide 3G 
or better mobile voice and broadband services in areas where such 
services are unavailable, based on the bids that will maximize the road 
miles covered by new mobile services without exceeding the budget of 
$300 million. Because the objective of this auction is to maximize the 
expansion of advanced services with the available funds, winning bids 
will generally be those that would achieve the deployment of such 
services for relatively lower levels of support.
    2. Many of the pre-auction processes and bidding procedures for 
this auction will be similar to those regularly used for the 
Commission's spectrum license auctions. The Bureaus will announce final 
procedures and other important information such as application 
deadlines and other dates related to Auction 901 after considering 
comments provided in response to the Public Notice, pursuant to 
governing statutes and Commission rules. In the Public Notice, the 
Bureaus propose and seek comment on detailed procedures for: (1) 
Identifying geographic areas eligible for support; (2) Determining the 
basic auction design, including the round format, how eligible areas 
may be aggregated for bidding, and how awardees will be selected; and 
(3) Establishing certain other bidding procedures, including 
information disclosure and methodologies for calculating auction and 
performance default payments.
    3. In addition, the Public Notice seeks comment on two auction-
related programmatic issues. Specifically, in connection with the 
Bureaus' discussion of approaches to aggregation of eligible areas for 
bidding, they seek comment on establishing more stringent coverage 
requirements, as compared to the minimum required by the rules, which 
would apply if the Bureaus implement procedures for bidder-defined 
aggregation of eligible geographic areas. The Bureaus also seek comment 
on developing a target rate for evaluating whether recipients meet the 
terms of the required certification that their rates for supported 
services in rural, insular, and high-cost areas are reasonably 
comparable to those offered in urban areas.

II. Background

    4. In the USF/ICC Transformation Order, the Commission 
comprehensively reformed and modernized the universal service system to 
help ensure the universal availability of fixed and mobile 
communication networks capable of providing voice and broadband 
services where people live, work, and travel. The Commission's 
universal service reforms include a commitment to fiscal 
responsibility, accountability, and the use of market-based mechanisms, 
such as competitive bidding, to provide more targeted and efficient 
support than in the past. For the first time, the Commission 
established a universal service support mechanism dedicated exclusively 
to mobile services--the Mobility Fund.
    5. The terms 3G, 3G or better, current generation, and advanced are 
used interchangeably in this document to refer to mobile wireless 
services that provide voice telephony service on networks that also 
provide services such as Internet access and email. This document 
refers throughout to awarding or selecting awardees by auction for 
simplicity of expression. Each party that becomes a winning bidder in 
the auction must file an application for support. Only after review of 
the application to confirm compliance with all the applicable 
requirements will a winning bidder become authorized to receive 
support.
    6. Phase I of the Mobility Fund will provide up to $300 million in 
one-time support to address gaps in mobile services by supporting the 
build-out of current- and next-generation mobile networks in areas 
where these networks are unavailable. This support will be awarded by 
reverse auction with the objective of maximizing the coverage of road 
miles in eligible unserved areas within the established budget. We 
refer to areas without 3G or better services and the road miles within 
them as unserved. Those unserved areas and road miles eligible for 
Mobility Fund Phase I will be determined as described in this summary. 
The support offered under Phase I of the Mobility Fund is in addition 
to any ongoing support provided under existing high-cost universal 
service program mechanisms. Phase II of the Mobility Fund will provide 
$500 million annually for ongoing support of mobile services. Up to 
$100 million of this amount annually is designated for support to 
Tribal lands.
    7. The USF/ICC Transformation Order established application, 
performance, and other requirements. In order to participate in Auction 
901 and receive Mobility Fund Phase I support, an applicant must 
demonstrate for the areas on which it wishes to bid that it has been 
designated as an eligible telecommunications carrier (ETC), and has 
access to the spectrum necessary to satisfy the applicable performance 
requirements. Because of the lead time necessary to receive designation 
as an ETC and to acquire spectrum, prospective applicants that need to 
do so are strongly encouraged to initiate both processes as soon as 
possible in order to increase the likelihood that they will be able to 
participate in Auction 901. The Bureaus expect to release shortly a 
public notice summarizing existing requirements for filing an ETC 
application with the Commission. A Tribal entity may participate 
provided it has applied for designation as an ETC for the relevant area 
and that application is still pending. Any such entity must still 
receive designation prior to support being awarded. The requirement 
that parties have access to spectrum applies equally to all parties, 
including Tribal entities. In addition, an applicant must demonstrate 
that it is financially and technically capable of providing 3G or 
better service. To ensure that Mobility Fund Phase I support meets the 
Commission's public interest objectives, recipients will be subject to 
a variety of obligations, including performance, coverage, collocation, 
voice and data roaming requirements, and Tribal engagement obligations. 
Among other things, winning bidders will be required either to deploy 
services meeting the Commission's specified minimum requirements for 3G 
service within two years or 4G service within three years after the 
date on which it is authorized to receive support. Those seeking to 
participate in the auction must file a short-form application by a 
deadline to be announced, providing information and certifications as 
to their qualifications to receive support. After the close of the 
auction, winning bidders must submit a detailed long-form application 
and procure an irrevocable stand-by Letter (or Letters)

[[Page 7154]]

of Credit (LOC) to secure the Commission's financial commitment.
    8. In the USF/ICC Transformation Order, the Commission delegated 
authority to the Bureaus to implement Mobility Fund Phase I, including 
the authority to prepare for and conduct an auction and administer 
program details. The Public Notice focuses on establishing the 
procedures and processes needed to conduct Auction 901 and administer 
Phase I of the Mobility Fund. Parties responding to the Public Notice 
should be familiar with the details of the USF/ICC Transformation Order 
and the established process for spectrum license auctions, which serve 
as the foundation for the process the Bureaus propose. After reviewing 
the comments requested by the Public Notice, the Bureaus will release a 
public notice detailing final procedures for Auction 901. That public 
notice will be released so that potential applicants will have adequate 
time to familiarize themselves with the specific procedures that will 
govern the conduct of the auction as well as with the obligations of 
support, including rates and coverage requirements that are addressed 
herein. The Bureaus ask that commenters, in advocating for particular 
procedures from among the options the Bureaus present for Auction 901, 
provide input on the costs and benefits of those procedures.
    9. Areas Eligible for Mobility Fund Support. To assure that support 
is being used in areas that are not covered by current or next 
generation mobile networks, the USF/ICC Transformation Order provides 
that the Bureaus will identify areas presently without such services on 
a census block basis, and publish a list of census blocks deemed 
eligible for Phase I support. A preliminary list of potentially 
eligible census blocks, which include unserved census blocks with road 
miles, as well as the number of road miles associated with each can be 
found at: https://wireless.fcc.gov/auctions/901/. The Bureaus will 
release a revised list that will seek comment on various issues 
regarding the census blocks identified as potentially eligible. The 
Bureaus will finalize which areas are eligible for support in a public 
notice establishing final procedures for Auction 901.
    10. Auction Design and Bidding Procedures. In the USF/ICC 
Transformation Order, the Commission concluded that distributing 
support through a reverse auction would be the best way to achieve its 
goal of maximizing consumer benefits with the funds available for Phase 
I of the Mobility Fund and adopted general competitive bidding rules 
for that purpose. Parties seeking support will compete in Auction 901 
by indicating the amount of support they need to meet the requirements 
of Mobility Fund Phase I in the eligible census blocks on which they 
bid. The Commission indicated that a single-round sealed bid auction 
format would be most appropriate for Mobility Fund Phase I. 
Accordingly, the Bureaus propose that support will be awarded using a 
single-round auction format. Support will be awarded to maximize the 
number of road miles in eligible census blocks that can gain 3G or 
better mobile services under the Mobility Fund Phase I budget. This 
will generally result in providing support to no more than one provider 
in a given area. Unlike the Bureaus spectrum license auctions which 
involve license-by-license competition for a fixed inventory of 
licenses, this auction will award support only for the set of areas 
that will achieve the most newly covered road miles without exceeding 
the Mobility Fund Phase I budget based on the bids submitted. Thus, 
bidders will compete not only against other carriers that may be 
bidding for support in the same areas, but against carriers bidding for 
support in other areas nationwide. Successful bidders will be awarded 
support for an area at the price they bid.
    11. The preliminary list of potentially eligible areas the Bureaus 
release in connection with the Public Notice contains approximately 
491,000 census blocks, which are, on average, far smaller than the 
minimum areas for which carriers seeking support are likely to want to 
extend service. Thus, carriers bidding for support are likely to bid on 
groups of census blocks. To address this need to aggregate census 
blocks for bidding while maintaining a manageable auction process, the 
Bureaus discuss their proposed bidder-defined aggregation approach and 
seek comment on an alternative approach using predefined aggregations. 
The Bureaus propose a single round of bidding in any case, but most 
other aspects of the auction alternatives the Bureaus discuss--
including how awardees are selected and what coverage obligations 
apply--are specific to the approach discussed.
    12. Because the Bureaus expect the limited budget will constrain 
bid amounts, the Bureaus do not propose to establish any maximum 
acceptable bid amounts, reserve amounts, or maximum opening bids. In 
addition, consistent with recent spectrum license auction practice, the 
Bureaus propose to withhold, until after the close of bidding, 
information from applicants' short-forms regarding their interests in 
particular eligible census blocks. The Bureaus seek comment on these 
proposals.
    13. Post-Auction Procedures. At the conclusion of the auction, 
winning bidders will be required to file an in-depth long-form 
application to demonstrate that they qualify for Mobility Fund Phase I 
support. The long-form application must include information regarding 
the winning bidder's ownership, eligibility to receive support, and 
network construction details. A winning bidder will be liable for an 
auction default payment if the bidder fails to timely file the long-
form application, is found ineligible, is disqualified, or otherwise 
defaults for any reason. In addition, a winning bidder that fails to 
meet certain obligations will be liable for a performance default 
payment. Accordingly, winning bidders will be required to provide an 
irrevocable stand-by LOC in an amount equal to the amount of support, 
plus an additional amount which would serve as a performance default 
payment if necessary. The Bureaus seek comment on how to establish 
auction and performance default payments.
    14. Rates. Applicants for Mobility Fund Phase I support must 
certify that they offer supported services at rates comparable to those 
for similar services in urban areas. In the Public Notice, the Bureaus 
describe and seek comment on a standard for demonstrating compliance 
with this requirement.

III. Areas Eligible for Mobility Fund Support

A. Identifying Eligible Unserved Census Blocks

    15. In the USF/ICC Transformation Order, the Commission decided to 
target Mobility Fund Phase I support to census blocks without 3G or 
better service, and determined that American Roamer data is the best 
available data source for determining the availability of such service. 
Auction 901 will offer Mobility Fund Phase I support in eligible 
unserved census blocks, i.e., those census blocks from the 2010 Census 
with road miles in particular road categories and where, based on the 
American Roamer data most recently available for this purpose, there is 
no coverage by 3G or better services at the centroid. The Bureaus use 
the term ``centroid'' to refer to the internal point latitude/longitude 
of a census block polygon. For the 2010 Census, the Census Bureau has 
tabulated data for each of the more than 11 million census blocks 
covering the 50 states, Washington, DC, Puerto Rico, American

[[Page 7155]]

Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands. 
The Bureaus conclude that, for Auction 901, they will use the most 
recently available American Roamer data, from January 2012. The Bureaus 
have not concluded their analysis of the January 2012 American Roamer 
data, but expect to do so shortly after release of the Public Notice. 
In preparation for the release of the Public Notice, however, the 
Bureaus have completed an analysis of the October 2011 American Roamer 
data using the same methodology that the Bureaus will use with the 
January 2012 American Roamer data, and are releasing a preliminary list 
of potentially eligible census blocks based on that earlier data. Once 
the Bureaus have completed their analysis of the January 2012 data, 
they will release a revised list of potentially eligible census blocks.
    16. As the first step in the Bureaus' methodology they identified 
unserved blocks based on the 2010 Census blocks and October 2011 
American Roamer data. The Bureaus used geographic information system 
(GIS) software to determine whether the American Roamer data shows 3G 
or better wireless coverage at the centroid of each block. 
Specifically, the Bureaus used ArcGIS software from Esri to determine 
whether the American Roamer data showed 3G or better coverage at each 
block's centroid. The following technologies were considered 3G or 
better: EV-DO, EV-DO Rev A, UMTS/HSPA, HSPA+, WiMAX, and LTE. If the 
American Roamer data did not show such coverage, the block was 
determined to be unserved. Because Mobility Fund Phase I support will 
be awarded based on bid amounts and the number of road miles in each 
unserved census block, the preliminary list of potentially eligible 
census blocks does not include any unserved census blocks without road 
miles. The preliminary list includes unserved census blocks with road 
miles in any of the road categories in the TIGER data made available by 
the Census Bureau. For Auction 901, the Bureaus will limit the final 
list of unserved census blocks eligible for support to only those that 
contain road miles in any of the chosen road categories.
    17. Pursuant to the USF/ICC Transformation Order, the Bureaus will 
also make ineligible for support census blocks for which, 
notwithstanding the absence of 3G service, any provider has made a 
regulatory commitment to provide 3G or better wireless service, or has 
received a funding commitment from a federal executive department or 
agency in response to the carrier's commitment to provide 3G or better 
wireless service. Such federal funding commitments may have been made 
under, but are not limited to, the Broadband Technology Opportunities 
Program (BTOP) and Broadband Initiatives Program (BIP) authorized by 
the American Recovery and Reinvestment Act of 2009 (ARRA). Furthermore, 
the Commission established certain bidder-specific restrictions. 
Specifically, each applicant for Mobility Fund Phase I support is 
required to certify that it will not seek support for any areas in 
which it has made a public commitment to deploy, by December 31, 2012, 
3G or better wireless service. In determining whether an applicant has 
made such a public commitment, the Bureaus anticipate that they would 
consider any public statement made with some specificity as to both 
geographic area and time period. This restriction will not prevent a 
bidder from seeking and receiving support for an unserved area for 
which another provider has made such a public commitment.
    18. Attachment A released with the Public Notice provides a summary 
of the preliminary list of potentially eligible census blocks 
determined based on October 2011 American Roamer data. For each state 
and territory, Attachment A provides the total number of potentially 
eligible census blocks (unserved census blocks with road miles), the 
total number of block groups with such blocks, the total number of 
tracts with such blocks, the total number of counties with such blocks, 
and the number of cellular market areas (CMAs) with such blocks. For 
each state and territory, Attachment A also provides the total 
population and area of the potentially eligible blocks, and the total 
number of road miles in each of the road mile categories. Due to the 
large number of potentially eligible blocks, the complete list will be 
provided in electronic format only, available as separate Attachment A 
files at https://wireless.fcc.gov/auctions/901/. For each potentially 
eligible block, individually identified by its Federal Information 
Processing Series (FIPS) code, these files provide the population and 
area of the block; the associated state, county, tract, and block 
group; any associated Tribe and Tribal land; and the number of road 
miles in each road mile category. The U.S. Census Bureau has not yet 
released 2010 Census block-level population data for American Samoa, 
the Commonwealth of the Northern Mariana Islands, Guam, and the U.S. 
Virgin Islands. Consequently, the population of the unserved blocks in 
these territories is not provided in the Attachment A files.
    19. The Bureaus will release a revised list of potentially eligible 
census blocks, i.e., revised Attachment A files, as well as a revised 
Attachment A. If commenters think certain blocks included in the 
revised list should not be eligible for support, they should indicate 
which blocks and provide supporting evidence. Similarly, if commenters 
think certain blocks not included in the revised list should be 
eligible for support, they should indicate which blocks and provide 
supporting evidence. In particular, the Bureaus note that, in the USF/
ICC Transformation Order, the Commission required all wireless 
competitive ETCs in the high cost program to review the list of 
eligible census blocks for the purpose of identifying any areas for 
which they have made a regulatory commitment to provide 3G or better 
service or received a federal executive department or agency funding 
commitment in exchange for their commitment to provide 3G or better 
service. The Bureaus will entertain challenges to the revised list of 
potentially eligible census blocks only in the form of comments to the 
Public Notice.
    20. Based on a review of the comments and any related information, 
the Bureaus will provide a final list of the specific census blocks 
eligible for support in Auction 901 when they release the public notice 
announcing procedures for Auction 901. In addition to providing files 
containing this final list of census blocks and related data, the 
Bureaus anticipate providing an interactive mapping interface for this 
information on the Commission Web site. The Bureaus seek comment on the 
type of information and interface that would be most helpful to 
bidders, in light of the tools carriers use or can develop for their 
business and deployment planning.

B. Establishing Unserved Road Mile Units

    21. In Auction 901, the Bureaus will use road miles as the basis 
for calculating the number of units in each eligible census block for 
purposes of comparing bids and measuring the performance of Mobility 
Fund Phase I support recipients. To establish the road miles associated 
with each census block eligible for Mobility Fund Phase I support, as 
suggested by the Commission in the USF/ICC Transformation Order, the 
Bureaus will use the TIGER road miles data made available by the Census 
Bureau. The 2010 Census TIGER/Line[supreg] Shapefiles

[[Page 7156]]

may be found at https://www.census.gov/geo/www/tiger/tgrshp2010/tgrshp2010.html. Attachment B of the Public Notice provides nine 
categories of roads in the TIGER data, their descriptions, and the 
total number of miles of each category in the potentially eligible 
unserved census blocks on the preliminary list released with the Public 
Notice. The information on TIGER road categories is from Appendix F--
MAF/TIGER Feature Class Code (MTFCC) Definitions, pages F-186 and F-187 
at https://www.census.gov/geo/www/tiger/tgrshp2010/documentation.html. 
The preliminary Attachment A files at https://wireless.fcc.gov/auctions/901/include, for each potentially eligible census block, the number of 
road miles for each of the categories. The Bureaus will release a 
revised Attachment B at the time it releases a revised Attachment A and 
revised Attachment A files.
    22. For the Bureaus' calculation of the number of road miles 
associated with each unserved census block, they include the linear 
road miles summed within the block plus half of the sum of any linear 
road miles that form a border with an adjacent block. The Bureaus 
include half of the sum of the border roads so these linear miles are 
not double counted and are appropriately attributed to each unserved 
block. Regarding which roads to include, the Bureaus propose to use the 
following TIGER road categories: S1100, primary roads; S1200, secondary 
roads; and S1400, local and rural roads and city streets. Providing 
support for these classes of roads will include 84 percent of all roads 
captured in the nine TIGER road categories and moreover, will target 
support to those areas that tend to be most regularly traveled, and 
thus, where the benefits of new advanced services will be most widely 
enjoyed. The Bureaus seek comment on these proposals. If commenters 
propose to use different road categories, they should explain their 
reasoning and describe the costs and benefits of the position they 
advocate.
    23. The Bureaus propose to include as eligible census blocks only 
those unserved census blocks in which there are road miles in any of 
the road categories the Bureaus use for calculating unserved units. The 
Bureaus note that many of the unserved census blocks only have road 
miles in some of the road categories. Thus, if the Bureaus use the road 
categories proposed eligible census blocks will include unserved census 
blocks with road miles in the road categories S1100, S1200, and S1400. 
Support could only be awarded for such eligible census blocks and not 
for unserved census blocks that have no road miles or have road miles 
only in categories other than those the Bureaus use for calculating 
unserved units. The Bureaus seek comment on these proposals.

IV. Establishing Auction Procedures

    24. The Bureaus seek comment on establishing specific auction 
procedures that will govern the conduct of Auction 901.

A. Auction Design

i. Single-Round Reverse Auction Design
    25. The Bureaus propose to select awardees for Mobility Fund Phase 
I support in Auction 901 using a single-round reverse auction.
    26. The Bureaus propose a single-round format because it is simple 
and quick, and because they believe multiple bidding rounds are 
unnecessary in this auction for bidders to make informed bid decisions 
or submit competitive bids. The purpose of the Mobility Fund Phase I 
auction mechanism is to identify whether and, if so, at what price, 
providers are willing to extend advanced wireless coverage over 
unserved areas in exchange for a one-time support payment. These bid 
decisions largely depend upon internal cost structures, private 
assessments of risk, and other factors related to the providers' 
specific circumstances. The bid amounts of other auction participants 
are unlikely to contain information that will significantly affect an 
individual bidder's own cost assessments and bid decisions. Thus, the 
Bureaus propose a single-round format because they anticipate that 
bidders do not need to know or have the opportunity to react to the 
bids of others as would be possible in a multiple-round format. The 
Bureaus seek comment on this proposed auction format.
    27. The Bureaus discuss and seek comment on their proposal for 
facilitating bids on aggregations of eligible census blocks in a 
single-round format and on an alternative aggregation approach. The 
Bureaus also ask for input on a third possibility. The Bureaus also 
discuss auction design options related to each of these approaches, 
including package bidding and awardee determination. The Bureaus also 
seek comment on applying a specific coverage requirement under its 
proposed bidder-defined aggregation approach more stringent than the 
minimum coverage requirement applicable under the alternative 
aggregation approach. The Bureaus ask for input on these approaches and 
options, and request that commenters include as support for their 
positions explanations of how their suggestions will promote the 
Commission's objective in Mobility Fund Phase I of maximizing, within 
the $300 million budget, the number of road miles with newly available 
3G or better service.
ii. Census Blocks and Aggregations
    28. The Commission determined that the census block should be the 
minimum geographic building block for which support is provided, but 
left to the Bureaus the task of deciding how to facilitate bidding on 
aggregations of eligible census blocks. Some aggregation of census 
blocks will be necessary, since the blocks eligible for support under 
the program are on average far smaller than the average area covered by 
a single cell tower, which is likely to be the minimum incremental 
geographic area of expanded coverage with Mobility Fund Phase I 
support. As released with the Public Notice, the preliminary list of 
census blocks that may be eligible for support under Mobility Fund 
Phase I contains approximately 491,000 census blocks, and the average 
area of these blocks is approximately 1.8 square miles. The Bureaus 
propose bidding procedures that will allow bidders to create their own 
aggregations of census blocks, within certain limits. The Bureaus also 
seek comment on predefining a basic bidding unit larger than a block--
and for this purpose suggest using census tracts.
    29. With each approach the Bureaus describe related auction design 
and programmatic implications and options. In particular, pursuant to 
the USF/ICC Transformation Order, a recipient of Mobility Fund Phase I 
support will be obligated to provide voice and broadband service 
meeting the established minimum standards over at least 75 percent of 
the aggregate road miles associated with the census blocks covered by 
any individual bid, but the Commission delegated to the Bureaus whether 
to require a higher coverage threshold such as 95 or 100 percent if the 
Bureaus establish auction procedures that allow bidders to create their 
own aggregations of individual census blocks. The required minimum 
standards for service will depend on whether a winning bidder elects to 
deploy 3G or 4G service. Accordingly, in connection with the Bureaus 
proposed aggregation approach, they seek comment on applying a higher 
coverage requirement of 95 or 100 percent.
    30. The Bureaus lay out their preferred approach--bidder-defined 
aggregations--and the alternatives, including predefined aggregations, 
in

[[Page 7157]]

some detail so that commenters can weigh the advantages and 
disadvantages of each approach. The Bureaus seek to establish bidding 
procedures that provide the best way to achieve the Commission's 
objective--to maximize the number of additional road miles where 
advanced wireless service is available without exceeding its budget of 
$300 million. The Bureaus invite specific comment on whether their 
proposed approach will allow bidders to bid on areas that fit well with 
their business plans and effectively promote the Commission's objective 
of expanding advanced wireless coverage. Bidders would not, under 
either approach described in this document be precluded from serving an 
area if they do not win support for the area. If commenters prefer an 
alternative, the Bureaus ask them to describe in detail why the 
alternative would better achieve the Commission's objectives for the 
Mobility Fund Phase I.
a. Bidder-Defined Aggregations
    31. The bidder-defined aggregation approach would permit bidders to 
create their own aggregations of the eligible census blocks and submit 
all-or-nothing package bids on those aggregations. Under the bidder-
defined aggregation approach, the Bureaus would give bidders 
considerable flexibility to aggregate the specific census blocks they 
propose to serve with Mobility Fund Phase I support. The Bureaus' 
intent is to provide bidders an opportunity to closely configure their 
bids to the geographic coverage of the specific cell sites that they 
would upgrade or build out to provide advanced wireless service with 
support. Such areas vary across regions and from provider to provider 
and are not likely to be known in advance by the Commission. A bidder 
could specify a set of census blocks to be covered and a total amount 
of support needed to cover the road miles in the eligible census blocks 
included in the bid. Under this approach a bid could cover an area as 
small as one census block or an area as large as a Cellular Market Area 
(CMA). CMAs are the areas in which the Commission initially granted 
licenses for cellular service. Cellular markets comprise Metropolitan 
Statistical Areas (MSAs) and Rural Service Areas (RSAs). There are a 
total of 734 CMAs covering the United States and the Territories. If a 
bidder submitted multiple bids that partially overlapped--that is, if 
some of the same eligible census blocks were included in more than one 
bid--only one of the overlapping bids could be awarded to the bidder. 
Aside from this restriction, which would give a bidder a means of 
submitting mutually exclusive bids to avoid winning support for more 
areas than it wishes, a bidder could win any or all of its package 
bids.
    32. The auction would determine winning bids so as to maximize the 
number of road miles in eligible census blocks that could be supported 
with the Mobility Fund Phase I budget of $300 million. Because such 
optimization can be difficult to solve with large numbers of partially 
overlapping package bids, the Bureaus would limit the maximum 
geographic scope and the total number of package bids that a bidder can 
make under this approach. In the USF/ICC Transformation Order, the 
Commission noted that it would not expect that any aggregation would 
exceed the bounds of one CMA and its proposal would require that all 
the census blocks covered by any given bid be within a single CMA. 
Moreover, the Bureaus would permit bidders to submit at most three bids 
per CMA. Based on the preliminary list of potentially eligible census 
blocks in Attachment A released with the Public Notice, the 603 CMAs 
that contain at least one potentially eligible census block have an 
average of approximately 815 potentially eligible census blocks, and in 
some cases several thousands, so that without limitations, the possible 
number of partially overlapping package bids per CMA could easily reach 
high numbers, which could make the auction process difficult to manage 
for both bidders and the Commission.
    33. The Bureaus also seek comment on whether, under this approach, 
bidders should be permitted to place bids on individual census blocks 
in addition to the limited number of package bids per CMA. If so, 
should the Bureaus impose a limit on the number of bids on individual 
blocks that may be submitted?
    34. Determining awardees with bidder-defined aggregations. To 
determine winning bids, the auction system would use a mathematical 
optimization procedure to identify the set of bids that maximizes the 
number of road miles in eligible census blocks without exceeding the 
$300 million budget. That is, the auction system would consider all the 
bids submitted and determine which combination of bids could be awarded 
so as to cover as many eligible road miles as possible. Under this 
approach, there may be some limited cases where multiple winners could 
receive support to cover the same eligible road miles. A single bidder 
cannot win duplicative support because, if its bids overlap, it can win 
support for only one of the bids. The Commission concluded in the USF/
ICC Transformation Order that as a general matter Phase I of the 
Mobility Fund should not support more than one provider per area unless 
doing so would increase the number of road miles served, which is 
possible with partially overlapping package bids where the optimization 
determines that assigning support for more than one package maximizes 
the total road miles covered by advanced wireless services. Duplicative 
support for large areas is likely to be rare because the optimization 
would count the eligible unserved road miles in the duplicative area 
only once but would count the amount of support awarded to each winning 
bidder for the overlapping area.
    35. If there is substantial overlap in the areas specified by two 
or more competing bidders and more than one bidder is selected, then 
the presence of competing providers in the same area could 
significantly reduce the revenues a bidder expects from customers. The 
Bureaus seek comment on whether this is of sufficient concern to 
bidders that the Bureaus should allow them to make bids contingent on 
the overlap being less than some percentage of the total road miles 
associated with their package bid.
    36. Coverage requirement with bidder-defined aggregations. Because 
this approach would allow bidders to tailor their aggregations based on 
individual census blocks, the Bureaus seek comment on a requirement 
that each awardee meet a coverage threshold of 100 percent of the road 
miles associated with the blocks for which it is awarded support. The 
Bureaus also seek comment on using a different coverage requirement, 
such as 95 percent. Any commenter proposing a coverage requirement of 
less than 100 percent should justify this in light of a bidder's 
ability to create packages of the specific eligible blocks for which it 
seeks support.
    37. If the auction awards support to more than one bidder for an 
area, the coverage requirement would apply to each winning bidder, 
i.e., each recipient would have to deploy to the required percentage of 
road miles service meeting the specified minimum performance 
requirements associated with the type of network that recipient elected 
to deploy.
b. Predefined Aggregations
    38. The Bureaus also seek comment on an alternative approach that 
would require bidding on predefined aggregations of census blocks, with 
support to be awarded for the eligible unserved blocks that lie within 
the predefined aggregations. For purposes of

[[Page 7158]]

bidding, all eligible census blocks would be grouped by the census 
tract in which they are located, and bidders would bid by tracts, not 
on individual blocks.
    39. Under this approach, for each tract a bidder bids on, the 
bidder would indicate a per-unit price to cover the road miles in the 
eligible census blocks within that tract. The auction would assign 
support to awardees equal to the per-road mile rate of their bid 
multiplied by the number of road miles associated with the eligible 
census blocks within the tract as shown in the information that will be 
provided by the Bureaus prior to the auction. Under this approach, 
bidders would be able to bid on multiple tracts and win support for any 
or all of them.
    40. The preliminary list the Bureaus release with the Public Notice 
includes approximately 491,000 unserved census blocks that would be 
considered potentially eligible under its criteria. If the Bureaus 
bundled these unserved blocks into tracts for bidding, there would be 
approximately 6,200 tracts. The Bureaus' goal in suggesting census 
tracts for this purpose is to create geographic areas closer in scale 
to minimum buildout areas than census blocks, making it less essential 
that bidders have the ability to place all-or-nothing package bids than 
when the basic bidding unit is a census block. Further, this approach 
would lend itself to a very simple method of determining winning bids.
    41. In the USF/ICC Transformation Order, the Commission noted that 
the large size of census blocks in Alaska may require that bidding be 
permitted in individual census blocks. Accordingly, under the 
predefined aggregation approach, the Bureaus seek comment on not 
aggregating census blocks in Alaska--that is, allowing bids for support 
on individual eligible blocks. The average area of the Alaska census 
blocks on the preliminary list released with the Public Notice is 
approximately 40 square miles compared to an average area of 
approximately 1.1 square miles in the rest of the country. The 
previously stated overall average of 1.8 square miles per unserved 
block included the Alaska census blocks in the calculation. Since 
census blocks in Alaska may be closer in size to a minimum scale of 
buildout than are most blocks in the rest of the country, bidders on 
areas in Alaska may wish to have the flexibility to bid on individual 
census blocks. The Bureaus also seek comment on whether outside of 
Alaska they should use another geographic area, in addition to tracts, 
to predefine aggregations of eligible census blocks. For instance, 
should the Bureaus shift from grouping blocks by census tracts to 
grouping them in smaller geographic units such as census block groups 
where a tract exceeds a certain size, such as 100 square miles?
    42. The Bureaus ask whether commenters believe that package bidding 
of predefined aggregations would be helpful, and if so, they seek input 
on the specific need for package bidding and whether that need could be 
met by providing for limited packaging of up to three contiguous 
tracts.
    43. Determining awardees with predefined aggregations. Under this 
approach, to determine awardees, the auction system would rank all bids 
from lowest to highest based on the per-road mile bid amount, and 
assign support first to the bidder making the lowest per-road mile bid. 
The auction system would continue to assign support to the next lowest 
per-unit bids in turn, as long as support had not already been assigned 
for that geographic area, and would continue until the sum of support 
funds of the winning bids was such that no further winning bids could 
be supported given the funds available. When calculating how much of 
the budget remains, for each winning bid the auction system will 
multiply the per-unit rate bid by the total number of road miles in the 
uncovered blocks. This is because an awardee may receive support for up 
to 100 percent of the road miles in the blocks for which it receives 
support. Ties among identical bids--in the same amount for covering the 
same census tract--would be resolved by assigning a random number to 
each bid and then assigning support to the tied bid with the highest 
random number. A bidder would be eligible to receive support for each 
of its winning bids equal to the per-unit rate of a winning bid 
multiplied by the number of road miles in the eligible census blocks 
covered by the bid, subject to meeting the obligations associated with 
receiving support.
    44. Because using the ranking method would likely result in monies 
remaining available from the budget after identifying the last lowest 
per-unit bid that does not exceed the funds available, the Bureaus 
propose to continue to consider bids in order of per-unit bid amount 
while skipping bids that would require more support than is available. 
The Bureaus would award such bids as long as support is available and 
the per-unit bid amount does not exceed the previously awarded bid by 
more than twenty percent. In the event that there are two or more bids 
for the same per-unit amount but for different areas and remaining 
funds are insufficient to satisfy all of the tied bids, the Bureaus 
seek comment on awarding support to that combination of such tied bids 
that would most nearly exhaust the available funds. In the highly 
unlikely event that such tied bids would use the available funds to an 
equal extent, the Bureaus would use a random number tie breaker.
    45. Coverage requirement with predefined aggregations. Under this 
approach, awardees would be required to cover at least 75 percent of 
the road miles associated with the eligible blocks in the tracts for 
which they receive support. This requirement would apply to the total 
number of road miles in the eligible census blocks in each census tract 
or other predefined aggregation on which bids are based, and counting 
the road categories used for unserved units. Pursuant to the USF/ICC 
Transformation Order awardees meeting the minimum coverage requirement 
could receive their winning bid amount for those road miles and for any 
road miles covered in excess of the 75 percent minimum, up to 100 
percent of the road miles associated with the unserved blocks, subject 
to the rules on disbursement of support.
c. Other Aggregation Options
    46. In connection with these questions about alternative approaches 
to census block aggregation, the Bureaus note that they also may 
consider a package bidding auction design. Each bid would specify a set 
of census blocks, a fixed amount of support to be paid if any of the 
census blocks identified in the bid is selected for an award, and a 
separate individual amount of support specific to each census block in 
the package. Unlike the package bids under its proposed bidder-defined 
approach where a package bid would constitute an all-or-nothing bid to 
cover a group of eligible census blocks, under this option, a package 
bid would consist of an offer to serve any subset of the areas included 
in the package. To select awardees, an optimization would consider the 
bids on all potential subsets of areas and select winners so as to 
maximize the number of road miles covered without exceeding the $300 
million budget. If awarded support, a bidder would be eligible to 
receive an amount equal to the fixed price associated with the bid plus 
the sum of the individual area-specific prices in the awarded 
combination of areas. Because this approach would allow bidders to 
tailor their aggregations based on individual census blocks, the 
Bureaus seek comment on whether each awardee would have to meet a 
coverage requirement of 100 percent, or a lower

[[Page 7159]]

percentage such as 95 percent, of the road miles associated with the 
blocks for which it is awarded support. While this bidding structure 
imposes some limitations on bidders, it provides them a relatively 
simple means of expressing the support they would require for the 
various combinations of areas in each package bid they submit. Such an 
aggregation option could be used with census blocks as the minimum 
geographic areas. Or it could be used to provide for package bidding of 
predefined aggregations of eligible census blocks--e.g., census tracts.
d. Evaluating the Aggregation Options
    47. The Bureaus seek comment on the aggregation options. Commenters 
should consider the related issues such as package bidding limits, 
determination of awardees, and coverage requirements, in advocating the 
desirability of any particular approach. In addition, commenters should 
include an evaluation of the benefits and costs associated with the 
position they take on these options.
    48. Under the Bureaus proposed bidder-defined aggregation approach, 
bidders could tailor their bids to include specific eligible census 
blocks within certain limits. They would be subject to a coverage 
requirement more stringent than the minimum of 75 percent required by 
the rules, and potentially as high as 100 percent, because bidders 
would be free to define the census blocks they wish to cover. The 
Bureaus ask commenters to provide input on the proposed limit of three 
packages within a CMA and the restriction that no package be larger 
than a CMA. Would such limits on the number and size of packages enable 
efficient providers seeking support only on very small packages to win 
support for those packages in the auction? The Bureaus also seek 
comment on whether this approach would help bidders to closely 
configure their bids to the geographic coverage of the cell sites that 
they would upgrade or build out to provide advanced wireless service.
    49. Commenters should also provide input on whether the predefined 
aggregation approach would allow bidders enough granularity to 
incorporate Mobility Fund Phase I support into their business plans 
considering that awardees would be required to cover at least 75 
percent of the road miles associated with the eligible blocks in the 
tracts for which they receive support. The Bureaus also ask whether the 
predefined aggregation approach would meet the needs of bidders to take 
advantage of significant geographic economies of scale or scope. In 
addition, the Bureaus invite input on whether this approach would allow 
carriers to manage adequately any potential risks relating to 
aggregating the areas on which they seek support.
    50. In considering these interrelated questions of minimum unit 
size, packaging, the process for selecting winners, and coverage 
requirements, the Bureaus ask commenters to keep in mind the 
constraints that conducting an auction with a very large number of 
eligible areas may impose.

B. Auction Information Procedures

    51. Under the Commission's rules on competitive bidding for high-
cost universal service support adopted in the USF/ICC Transformation 
Order, the Bureaus have discretion to limit public disclosure of 
certain bidder-specific application and bidding information until after 
the auction, as it does in the case of spectrum license auctions. 
Consistent with recent spectrum license auction practice, the Bureaus 
propose to conduct Auction 901 using procedures for limited information 
disclosure. That is, for Auction 901, the Bureaus propose to withhold, 
until after the close of bidding and announcement of auction results, 
the public release of (1) information from bidders' short-form 
applications regarding their interests in particular eligible census 
blocks and (2) information that may reveal the identities of bidders 
placing bids and taking other bidding-related actions. Because the 
Bureaus propose to conduct Auction 901 using a single round of bidding, 
they do not anticipate that there will be a need for release of 
bidding-related actions during the auction as there would be in a 
multiple around auction. If such circumstances were to arise prior to 
the release of non-public information and auction results, however, the 
proposal would mean that the Bureaus would not indicate the identity of 
any bidders taking such actions. After the close of bidding, bidders' 
area selections, bids, and any other bidding-related actions and 
information would be made publicly available.
    52. The Bureaus seek comment on their proposal to implement limited 
information procedures in Auction 901.

C. Auction Structure

i. Bidding Period
    53. The Bureaus will conduct Auction 901 over the Internet. Given 
the likelihood that this auction will involve large numbers of bids 
(based on the number of potentially eligible areas and the possibility 
of bidder-specific package bids), and because the Bureaus can provide 
ample time for on-line bidding during the proposed single round, 
telephonic bidding will not be available for Auction 901.
    54. The single-round format will consist of one bidding round. The 
start and finish time of the bidding round will be announced in a 
public notice to be released at least one week before the start of the 
auction. The Bureaus seek comment on this proposal.
ii. Information Relating to Auction Delay, Suspension, or Cancellation
    55. For Auction 901, the Bureaus propose that, by public notice or 
by announcement during the auction, they may delay, suspend, or cancel 
the auction in the event of natural disaster, technical failures, 
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 Bureaus, in their sole discretion, may elect to resume the 
auction or cancel the auction in its entirety. Network interruption may 
cause the Bureaus to delay or suspend the auction. The Bureaus 
emphasize that exercise of this authority would be solely within their 
discretion. The Bureaus seek comment on this proposal.

D. Bidding Procedures

i. Maximum Bids and Reserve Prices
    56. Under the Commission's rules on competitive bidding for high-
cost universal service support adopted in the USF/ICC Transformation 
Order, the Bureaus have discretion to establish maximum acceptable per-
unit bid amounts and reserve amounts, separate and apart from any 
maximum opening bids.
    57. The Bureaus propose not to establish any maximum acceptable 
per-unit bid amounts, reserve amounts, or maximum opening bid amounts. 
Because this auction is being conducted with a budget that is not 
likely to cover support for all of the areas receiving bids, the 
Bureaus believe that the competition across the eligible areas will 
constrain the bid amounts. Nevertheless, the Bureaus seek comment on 
whether to establish reserve and/or maximum or minimum bids in Auction 
901. The Bureaus further seek comment on what methods should be used to 
calculate reserve prices and/or maximum or minimum bids if they are 
adopted. Commenters are advised to support their claims with valuation 
analyses and suggested amounts or formulas.

[[Page 7160]]

ii. Bid Removal
    58. For Auction 901, the Bureaus propose and seek comment on the 
following bid removal procedures. Before the end of the single round of 
bidding, a bidder would have the option of removing any bid it has 
placed. By removing a selected bid(s), a bidder may effectively undo 
any of its bids placed within the single round of bidding. Once the 
single round of bidding ends, a bidder may no longer remove any of its 
bids. The Bureaus seek comment on this proposal.

E. Default Payments

    59. In the USF/ICC Transformation Order, the Commission determined 
that a winning bidder in a reverse auction for high-cost universal 
service support that defaults on its bid or on its performance 
obligations will be liable for a default payment. Under the competitive 
bidding rules adopted in the USF/ICC Transformation Order, bidders 
selected by the auction process to receive support have a binding 
obligation to file a post-auction long-form application--by the 
applicable deadline and consistent with other requirements of the long-
form application process--and failure to do so will constitute an 
auction default. In addition, the Mobility Fund Phase I rules provide 
that the failure, by any winning bidder authorized to receive support, 
to meet its minimum coverage requirement or adequately comply with 
quality of service or any other requirements will constitute a 
performance default. The Bureaus have delegated authority to determine 
in advance of Auction 901 the methodologies for determining the auction 
and performance default payments. Here the Bureaus seek comment on how 
to calculate the auction default payments that will be applicable for 
Auction 901.
i. Auction Default Payment
    60. As noted in the USF/ICC Transformation Order, failure to 
fulfill auction obligations, including those undertaken prior to the 
award of any support funds, may undermine the stability and 
predictability of the auction process and impose costs on the 
Commission and the Universal Service Fund (USF). To safeguard the 
integrity of the Mobility Fund Phase I auction, the Bureaus seek 
comment on an appropriate payment for auction defaults, which will be 
deemed to occur if a bidder selected by the auction mechanism does not 
become authorized to receive support after the close of the bidding, 
e.g., fails to timely file a long form application, is found ineligible 
or unqualified to be a recipient of Mobility Fund Phase I support, has 
its long-form application dismissed for any reason, or otherwise 
defaults for any reason after the close of the auction. An auction 
default could occur at any time between the close of the bidding and 
the authorization of support for each of the winning bidders. Aside 
from not awarding support to the defaulting bidder, the Bureaus note 
that a defaulted bid would not otherwise result in a change to the set 
of awardees originally selected by the auction mechanism.
    61. The Bureaus propose to calculate the auction default payment 
using a percentage, not to exceed 20 percent, of the total defaulted 
bid. Specifically, the Bureaus would use a rate of five percent of the 
total defaulted bid. The Bureaus would apply the percentage to the 
total amount of support assigned based on the bid amount for the 
geographic area covered by the defaulted bid(s). The Bureaus believe 
that this amount, below their maximum percentage, will protect against 
the costs to the Commission and the USF of auction defaults and provide 
bidders sufficient incentive to fully inform themselves of the 
obligations associated with participation in the Mobility Fund Phase I 
and to commit to fulfilling those obligations. Under this method of 
calculating the default payment, bidders would be aware ahead of time 
of the exact amount of their potential liability based on their bids.
    62. The Bureaus seek comment on this proposal. The Bureaus ask 
commenters to assess whether their proposal to use a default payment 
percentage of five percent will be adequate to deter insincere or 
uninformed bidding, and safeguard against costs to the Commission and 
the USF that may result from such auction defaults without unduly 
discouraging auction participation, particularly given that liability 
for the auction default payment will be imposed without regard to the 
intentions or fault of any specific defaulting bidder. The Bureaus also 
seek comment on whether they should use an alternative methodology, 
such as basing the auction default payment on the difference between 
the defaulted bid and the next best bid(s) to cover the same number of 
road miles as without the default. Commenters advocating such an 
approach should explain with specificity how such an approach might 
work under the options the Bureaus present for auction design. In 
addition, the Bureaus seek comment on whether, prior to bidding, all 
applicants for Auction 901 should be required to furnish a bond or 
place funds on deposit with the Commission in the amount of the maximum 
anticipated auction default payment. The Bureaus ask for specific input 
on whether a bond or deposit would be preferable for this purpose and 
on methodologies for anticipating the maximum auction default payment.
ii. Performance Default Payment
    63. Pursuant to the Mobility Fund Phase I rules adopted in the USF/
ICC Transformation Order, a winning bidder will be subject to a 
performance default payment if it fails or is unable to meet its 
minimum coverage requirement, other service requirements, or any other 
condition of Mobility Fund Phase I support. In addition to being liable 
for a performance default payment, the recipient will be required to 
repay the Mobility Fund all of the support it has received and, 
depending on the circumstances involved, could be disqualified from 
receiving any additional Mobility Fund or other USF support. The 
Bureaus may obtain their performance default payment and repayment of a 
recipient's Mobility Fund Phase I support by drawing upon the 
irrevocable stand-by LOC that winning bidders will be required to 
provide.
    64. The Bureaus propose to assess a 10 percent default payment 
where a winning bidder fails to satisfy its performance obligations. 
The percentage would be applied to the total level of support for which 
a winning bidder is eligible. Under this proposal, the LOC would 
include an additional 10 percent based on the total level of support 
for which a winning bidder is eligible. While both auction defaults and 
performance defaults may threaten the integrity of the auction process 
and impose costs on the Commission and the USF, an auction default 
occurs earlier in the process and may facilitate an earlier use of the 
funds that were assigned to the defaulted bid consistent with the 
purposes of the universal service program. Thus, the Bureaus believe 
that the amount of a performance default payment should be somewhat 
higher than the amount of the auction default payment. The Bureaus seek 
comment on their proposal for calculating the performance default 
payment. Will a performance default payment of 10 percent of the 
defaulted support level be effective in ensuring that those authorized 
to receive support will be capable of meeting their obligations and 
protect against costs to the Commission and the USF without unduly 
discouraging auction participation?

[[Page 7161]]

F. Reasonably Comparable Rates

    65. Reasonably Comparable Rates. Mobility Fund Phase I recipients 
must certify that they offer service in areas with support at consumer 
rates that are within a reasonable range of rates for similar service 
plans offered by mobile wireless providers in urban areas. Recipients 
will be subject to this requirement for five years after the date of 
award of support. Recipients must offer service plans in supported 
areas that meet the public interest obligations specified in the 
Commission's Mobility Fund rules and that include a stand-alone voice 
service plan. The Commission delegated authority to the Bureaus to 
specify how support recipients could demonstrate compliance with this 
rate certification. The Commission has undertaken to have the Bureaus 
develop surveys of voice and broadband rates generally that should be 
completed before the later phases of the Connect America Fund and the 
Mobility Fund. In order to offer Mobility Fund I support at the 
earliest time feasible, however, the Commission recognized that the 
Bureaus might have to implement an approach to the reasonably 
comparable rates requirement without being able to rely upon the 
information that will be collected through the surveys. The Bureaus 
propose to do so in implementing Mobility Fund Phase I. Commenters 
offering alternatives to their proposal should address the feasibility 
of implementing their alternative in advance of the deadlines for 
parties to participate in competitive bidding for Mobility Fund Phase I 
support. In addition, the Bureaus request that commenters describe the 
costs and benefits associated with the position they advocate.
    66. To provide recipients with flexibility to tailor their 
offerings to consumer demand while complying with the rule, the Bureaus 
propose that they deem a Mobility Fund Phase I support recipient 
compliant with the terms of the required certification if it can 
demonstrate that its rates for services satisfy the requirements and if 
it provides supporting documentation. The Bureaus seek comment on all 
aspects of this proposal, in particular whether it meets the goal of 
assuring that supported services are provided at rates reasonably 
comparable to those in urban areas, while allowing recipients to have 
appropriate flexibility in structuring their offerings. The Bureaus 
also seek comment on any potential alternatives. For example, is there 
a readily available set of benchmark urban rates for mobile voice and 
broadband service that the Bureaus could use with respect to Phase I of 
the Mobility Fund, pending the Commission's planned implementation of 
surveys with respect to voice and broadband rates for assuring 
reasonably comparable rates with respect to supported on-going service?
    67. Under the Bureaus' proposed approach, a recipient could 
demonstrate compliance with the required certification that its rates 
are reasonably comparable if each of its service plans in supported 
areas is substantially similar to a service plan offered by at least 
one mobile wireless service provider in an urban area and is offered 
for the same or a lower rate than the matching urban service plan. This 
document discusses how urban areas should be defined for this purpose 
below. Any provider that itself offers the same service plan for the 
same rate in a support area and in an urban area would be able to meet 
this requirement. The Bureaus seek comment on whether a support 
recipient should be required to make this comparison for all of its 
service plans. Would it be sufficient if it could make this comparison 
for its required stand-alone voice plan and one of its other plans 
offering broadband? Or should it be required to make this comparison 
for a set of its plans adopted by a specified percentage of its 
customers, for example 50 percent?
    68. Solely for purposes of Phase I of the Mobility Fund, any rate 
equal to or less than the highest rate for a matching service charged 
in an urban area would be reasonably comparable to, i.e., within a 
reasonable range of, rates for similar service in urban areas. Urban 
areas are generally served by multiple and diverse providers offering a 
range of rates and service offerings in competition with one another. 
Consequently, the Bureaus presume that even the highest rate would 
qualify as being within a reasonable range of rates for similar service 
in urban areas, because the rates for the matching urban services 
reflect the effects of competition in the urban area. Under this 
approach, the supported party must offer services at rates within the 
range but that do not exceed one particular rate that is presumed to be 
a part of that range. Should the Bureaus require additional information 
to validate this assumption? For example, should an urban service used 
for matching be required to have a certain number of subscribers or 
percentage of the relevant market in order to demonstrate its market 
acceptance? Do the Bureaus need to be concerned that recipients may 
seek to game this standard by using an urban rate for comparison that 
does not reflect a true market rate? How can the Bureaus address any 
such concerns?
    69. The Bureaus would retain discretion to consider whether and how 
variable rate structures should be taken into account. For example, 
should a supported stand-alone voice plan that offers 1,000 minutes a 
month for $50 and additional minutes at $0.08 per minute be considered 
more expensive than a plan in an urban area that offers 2,000 minutes a 
month for $100 and additional minutes at $0.10 per minute? Similarly, 
there may be circumstances under which data plans with equivalent 
prices-per-unit match each other even if there are other differences in 
the plans. The Bureaus propose to address such issues on a case-by-case 
basis and welcome comment on how to address such circumstances.
    70. Urban Areas. For purposes of this requirement, the Bureaus 
propose defining ``urban area'' as one of the 100 most populated CMAs 
in the United States. A list of the top 100 CMAs is included in 
Appendix C of the Public Notice. Multiple providers currently serve 
these areas--99.2 percent of the population in these markets is covered 
by between four to six operators--offering a range of different service 
plans at prices generally constrained by the numerous providers. Are 
there other definitions of ``urban area'' that commenters believe the 
Bureaus should consider for purposes of this requirement? In addition, 
the Bureaus seek comment on whether parties should be required to make 
comparisons only to a subset of the most populated CMAs that are 
geographically closest to the supported area, such as the 30 or 50 of 
the top 100 CMAs that are closest to the supported service area. This 
might protect against regional economic variations distorting the range 
of prices useable for comparison.

V. Presentations Subject to Ex Parte Rules

    71. The proceeding the Public Notice initiates shall be treated as 
a permit-but-disclose proceeding in accordance with the Commission's ex 
parte rules. Persons making ex parte presentations must file a copy of 
any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2)

[[Page 7162]]

summarize all data presented and arguments made during the 
presentation. If the presentation consisted in whole or in part of the 
presentation of data or arguments already reflected in the presenter's 
written comments, memoranda or other filings in the proceeding, the 
presenter may provide citations to such data or arguments in his or her 
prior comments, memoranda, or other filings (specifying the relevant 
page and/or paragraph numbers where such data or arguments can be 
found) in lieu of summarizing them in the memorandum. Documents shown 
or given to Commission staff during ex parte meetings are deemed to be 
written ex parte presentations and must be filed consistent with 47 CFR 
1.1206(b). In proceedings governed by 47 CFR 1.49(f) or for which the 
Commission has made available a method of electronic filing, written ex 
parte presentations and memoranda summarizing oral ex parte 
presentations, and all attachments thereto, must be filed through the 
electronic comment filing system available for that proceeding, and 
must be filed in their native format. Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2012-3174 Filed 2-9-12; 8:45 am]
BILLING CODE 6712-01-P