Auction of Advanced Wireless Services (AWS-3) Licenses Scheduled for November 13, 2014; Notice and Filing Requirements, Reserve Prices, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 97, 47106-47130 [2014-19080]
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FEDERAL COMMUNICATIONS
COMMISSION
[AU Docket No. 14–78; DA 14–1018]
Auction of Advanced Wireless
Services (AWS–3) Licenses Scheduled
for November 13, 2014; Notice and
Filing Requirements, Reserve Prices,
Minimum Opening Bids, Upfront
Payments, and Other Procedures for
Auction 97
Federal Communications
Commission.
ACTION: Notice.
AGENCY:
This document announces the
procedures, reserve prices, and
minimum opening bids for the
upcoming auction of AWS–3 licenses
(Auction 97). This document is
intended to familiarize prospective
applicants with the procedures and
other requirements for participation in
the auction.
DATES: Applications to participate in
Auction 97 must be filed prior to 6:00
p.m. Eastern Time (ET) on September
12, 2014. Bidding in Auction 97 is
scheduled to begin on November 13,
2014.
FOR FURTHER INFORMATION CONTACT:
Wireless Telecommunications Bureau,
Auctions and Spectrum Access Division:
For legal and general auction questions:
Valerie Barrish (attorney) at (202) 418–
0660; Broadband Division: For licensing
and service rule questions: Genevieve
Ross (attorney) or Janet Young
(engineer) at (202) 418–2487. To request
materials in accessible formats (Braille,
large print, electronic files, or audio
format) for people with disabilities,
send an email to fcc504@fcc.gov or call
the Consumer and Governmental Affairs
Bureau at (202) 418–0530 or (202) 418–
0432 (TTY).
SUPPLEMENTARY INFORMATION: This is a
summary of the Auction 97 Procedures
Public Notice released on July 23, 2014.
The complete text of the Auction 97
Procedures Public Notice, including all
attachments and related Commission
documents, is available for public
inspection and copying from the FCC
Reference Information Center, 445 12th
Street SW., Room CY–A257,
Washington, DC 20554 during its
regular business hours. The Auction 97
Procedures 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 Web site: https://
www.BCPIWEB.com. The Auction 97
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SUMMARY:
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Procedures Public Notice and related
documents also are available on the
Internet at the Commission’s Web site:
https://wireless.fcc.gov/auctions/97/, or
by using the search function for AU
Docket No. 14–78 Commission’s
Electronic Comment Filing System
(ECFS) Web page at https://www.fcc.gov/
cgb/ecfs/.
I. General Information
A. Introduction
1. The Wireless Telecommunications
Bureau (Bureau) established the
procedures, reserve prices, and
minimum opening bid amounts for the
upcoming auction of 1,614 Advanced
Wireless Services licenses in the 1695–
1710 MHz, 1755–1780 MHz, and 2155–
2180 MHz bands (collectively, the
AWS–3 bands). This auction, which is
designated as Auction 97, is scheduled
to start on November 13, 2014. The
Auction 97 Procedures Public Notice
provided an overview of the procedures,
terms, and conditions governing
Auction 97 and the post-auction
application and payment processes.
2. The Federal Communications
Commission (Commission or FCC) is
offering the licenses in Auction 97
pursuant to the Middle Class Tax Relief
and Job Creation Act of 2012 (Spectrum
Act). The Spectrum Act requires, among
other things, that the Commission
allocate for commercial use and license
spectrum in certain specified frequency
bands using a system of competitive
bidding no later than February 2015. In
February 2013, the National
Telecommunications and Information
Administration (NTIA) identified the
1695–1710 MHz band for reallocation
from Federal use to non-Federal use in
satisfaction of its Spectrum Act
obligation. In the AWS–3 Report and
Order, 79 FR 32365, June 4, 2014, the
Commission identified the 1755–1780
MHz band in satisfaction of the
Spectrum Act’s requirement that it
identify fifteen megahertz of contiguous
spectrum in addition to the bands
specifically identified in the Spectrum
Act.
3. On May 19, 2014, the Bureau
released the Auction 97 Comment
Public Notice 79 FR 31327, June 2, 2014,
seeking comment on competitive
bidding procedures to be used in
Auction 97. Ten comments, eight reply
comments, ten ex parte filings, and four
brief comments were submitted in
response to the Auction 97 Comment
Public Notice.
4. Based on the record and after
considering comments provided in
response to the Auction 97 Comment
Public Notice, the Auction 97
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Procedures Public Notice, establishes
procedures for, among other things: (1)
Using the Commission’s standard
simultaneous multiple-round (SMR)
auction format in a single auction event
subject to uniform bidding procedures
for the unpaired 1695–1710 MHz band
and the paired 1755–1780 MHz/2155–
2180 MHz bands, except that bidding
will close on a band after five
consecutive rounds in which no bidding
activity occurs on licenses in that band
provided that the reserve for that band
has been met; (2) filing short-form
applications to participate in Auction 97
during a ten-business day window that
closes on September 12, 2014; (3)
limited information disclosure, to
enhance competition by safeguarding
against potential anti-competitive
auction strategies; (4) submission of a
statement by each applicant for any
license in the 1755–1780 MHz band
acknowledging that it has considered
and accepts the risks of potential
interference from Federal systems to its
planned operations in certain
geographic zones; (5) an aggregate
reserve price for the 1695–1710 MHz
license of approximately $580 million
and a separate aggregate reserve price
for the paired 1755–1780 MHz/2155–
2180 MHz licenses of approximately
$10.07 billion; (6) minimum opening
bids for each license using a calculation
based on $0.15 per MHz-pop for paired
licenses and $0.05 per MHz-pop for
unpaired licenses with a revision to the
Bureau’s method for incorporating price
information from past auctions; (7)
minimum acceptable bid amounts based
on an activity-based formula under
which bids in subsequent rounds may
be between 10–20% higher than the
provisionally winning bid; and (8) filing
long-form applications in accordance
with the schedule specified in the
Commission’s rules, but establishing a
deadline for down payments and final
payments from winning bidders that
will occur no earlier than January 2015.
5. In addition, the Auction 97
Procedures Public Notice concludes that
any requests for temporary, limited
relief from the former defaulter rule are
beyond the scope of this proceeding and
notes that such requests are being
addressed separately.
B. Description of Licenses To Be Offered
in Auction 97
6. The 65 megahertz of AWS–3
spectrum available in Auction 97 will
be licensed on a geographic area basis.
Of the 1,614 licenses offered in Auction
97, 880 will be Economic Area (EA)
licenses and 734 will be Cellular Market
Area (CMA) licenses. The AWS–3
frequencies will be licensed in five and
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ten megahertz blocks, with each license
having a total bandwidth of five, ten, or
twenty megahertz.
7. The 1695–1710 MHz band will be
licensed in an unpaired configuration
for low-power mobile transmit (i.e.,
uplink) operations. The 1755–1780 MHz
band will be licensed paired with the
2155–2180 MHz band, with the 1755–
1780 MHz band authorized for lowpower mobile transmit (i.e., uplink)
operations and the 2155–2180 MHz
band authorized for base station and
fixed (i.e., downlink) operations. A
complete list of the licenses offered in
Auction 97 is available in Attachment A
to the Auction 97 Procedures Public
Notice.
C. Rules and Disclaimers
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1. Relevant Authority
8. Prospective applicants must
familiarize themselves thoroughly with
the Commission’s general competitive
bidding rules, including Commission
decisions in proceedings regarding
competitive bidding procedures,
application requirements, and
obligations of Commission licensees.
Prospective bidders should also
familiarize themselves with the
Commission’s rules relating to the
AWS–3 frequencies, including
incumbency issues for AWS–3
licensees, Federal and non-Federal
relocation and sharing and cost sharing
obligations, protection of Federal and
non-Federal incumbent operations, and
rules relating to applications,
environment, practice and procedure.
All bidders must also be thoroughly
familiar with the procedures, terms and
conditions contained in the Auction 97
Procedures Public Notice and any future
public notices that may be issued in this
proceeding.
9. The terms contained in the
Commission’s rules, relevant orders,
and public notices are not negotiable.
The Commission may amend or
supplement the information contained
in its public notices at any time, and
will issue public notices to convey any
new or supplemental information to
applicants. It is the responsibility of all
applicants to remain current with all
Commission rules and with all public
notices pertaining to this auction.
Copies of most auctions-related
Commission documents, including
public notices, can be retrieved from the
FCC Auctions Internet site at https://
www.wireless.fcc.gov/auctions.
2. Prohibited Communications and
Compliance With Antitrust Laws
10. To ensure the competitiveness of
the auction process, 47 CFR 1.2105(c)
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prohibits auction applicants for licenses
in any of the same or overlapping
geographic license areas from
communicating with each other about
bids, bidding strategies, or settlements
unless such applicants have identified
each other on their short-form
applications (FCC Form 175) as parties
with whom they have entered into
agreements pursuant to 47 CFR
1.2105(a)(2)(viii).
a. Entities Subject to 47 CFR 1.2105
11. 47 CFR 1.2105(c)’s prohibition on
certain communications will apply to
any applicants that submit short-form
applications seeking to participate in a
Commission auction for licenses in the
same or overlapping geographic license
area. Thus, unless they have identified
each other on their short-form
applications as parties with whom they
have entered into agreements under 47
CFR 1.2105(a)(2)(viii), applicants for
any of the same or overlapping
geographic license areas must
affirmatively avoid all communications
with or disclosures to each other that
affect or have the potential to affect bids
or bidding strategy. In some instances,
this prohibition extends to
communications regarding the postauction market structure. This
prohibition applies to all applicants that
submit short-form applications
regardless of whether such applicants
ultimately become qualified bidders or
actually bid.
12. Applicants are also reminded that,
for purposes of this prohibition on
certain communications, 47 CFR
1.2105(c)(7)(i) defines ‘‘applicant’’ as
including all officers and directors of
the entity submitting a short-form
application to participate in the auction,
all controlling interests of that entity, as
well as all holders of partnership and
other ownership interests and any stock
interest amounting to 10 percent or
more of the entity, or outstanding stock,
or outstanding voting stock of the entity
submitting a short-form application. For
example, where an individual served as
an officer for two or more applicants,
the Bureau has found that the bids and
bidding strategies of one applicant are
conveyed to the other applicant, and,
absent a disclosed bidding agreement,
an apparent violation of 47 CFR
1.2105(c) occurs.
13. Individuals and entities subject to
47 CFR 1.2105(c) should take special
care in circumstances where their
employees may receive information
directly or indirectly relating to any
competing applicant’s bids or bidding
strategies. The Bureau has not addressed
a situation where non-principals (i.e.,
those who are not officers or directors,
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and thus not considered to be the
applicant) receive information regarding
a competing applicant’s bids or bidding
strategies and whether that information
should be presumed to be
communicated to the applicant.
14. An exception to the prohibition on
certain communications allows noncontrolling interest holders to obtain
interests in more than one competing
applicant without violating 47 CFR
1.2105(c) provided specified conditions
are met (including a certification that no
prohibited communications have
occurred or will occur), but that
exception does not extend to controlling
interest holders.
15. Auction 97 applicants selecting
licenses for any of the same or
overlapping geographic license areas are
encouraged not to use the same
individual as an authorized bidder. A
violation of 47 CFR 1.2105(c) could
occur if an individual acts as the
authorized bidder for two or more
competing applicants, and conveys
information concerning the substance of
bids or bidding strategies between such
applicants. Similarly, if the authorized
bidders are different individuals
employed by the same organization
(e.g., law firm, engineering firm or
consulting firm), a violation likewise
could occur. In such a case, at a
minimum, applicants should certify on
their applications that precautionary
steps have been taken to prevent
communication between authorized
bidders, and that the applicant and its
bidders will comply with 47 CFR
1.2105(c).
b. Prohibition Applies Until Down
Payment Deadline
16. 47 CFR 1.2105(c)’s prohibition on
certain communications begins at the
short-form application filing deadline
and ends at the down payment deadline
after the auction closes, which will be
announced in a future public notice.
c. Prohibited Communications
17. Applicants must not communicate
directly or indirectly about bids or
bidding strategy to other applicants in
this auction. 47 CFR 1.2105(c) prohibits
not only communication about an
applicant’s own bids or bidding
strategy, it also prohibits
communication of another applicant’s
bids or bidding strategy. While 47 CFR
1.2105(c) does not prohibit non-auctionrelated business negotiations among
auction applicants, each applicant must
remain vigilant so as not to directly or
indirectly communicate information
that affects, or could affect, bids,
bidding strategy, or the negotiation of
settlement agreements.
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18. Applicants are cautioned that the
Commission remains vigilant about
prohibited communications taking place
in other situations. For example, the
Commission has warned that prohibited
communications concerning bids and
bidding strategies may include
communications regarding capital calls
or requests for additional funds in
support of bids or bidding strategies to
the extent such communications convey
information concerning the bids and
bidding strategies directly or indirectly.
Moreover, the Commission has found a
violation of 47 CFR 1.2105(c) where an
applicant used the Commission’s
bidding system to disclose its bidding
strategy in a manner that explicitly
invited other auction participants to
cooperate and collaborate in specific
markets, and has placed auction
participants on notice that the use of its
bidding system to disclose market
information to competitors will not be
tolerated and will subject bidders to
sanctions. Applicants also should use
caution in their dealings with other
parties, such as members of the press,
financial analysts, or others who might
become conduits for the communication
of prohibited bidding information. For
example, where limited information
disclosure procedures are in place, as is
the case for Auction 97, an applicant’s
statement to the press that it has lost
bidding eligibility and intends to stop
bidding in the auction could give rise to
a finding of a 47 CFR 1.2105(c)
violation. Similarly, an applicant’s
public statement of intent not to
participate in Auction 97 bidding could
also violate the rule.
19. Applicants are also hereby placed
on notice that public disclosure of
information relating to bidder interests
and bidder identities that has not yet
been made public by the Commission at
the time of disclosure may violate the
provisions of 47 CFR 1.2105(c) that
prohibit certain communications. This
is so even though similar types of
information were revealed prior to and
during other Commission auctions
subject to different information
procedures.
20. In addition, when completing
short-form applications, each applicant
should avoid any statements or
disclosures that may violate 47 CFR
1.2105(c), particularly in light of the
limited information procedures in effect
for Auction 97. Specifically, an
applicant should avoid including any
information in its short-form
applications that might convey
information regarding its license
selection, such as using applicant names
that refer to licenses being offered,
referring to certain licenses or markets
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in describing bidding agreements, or
including any information in
attachments that may otherwise disclose
the applicant’s license selections.
Likewise, an Auction 97 applicant must
not disclose to others whether it has
filed the acknowledgement concerning
interference obligations that is required
of each applicant that seeks to bid on
any license in the 1755–1780 MHz
band, as that information would reveal
information regarding its license
selection. The Bureau intends to
withhold from public disclosure all
information concerning the existence of
such applicant statements until after the
close of the auction.
d. Disclosure of Bidding Agreements
and Arrangements
21. The Commission’s rules do not
prohibit applicants from entering into
otherwise lawful bidding agreements
before filing their short-form
applications, as long as they disclose the
existence of the agreement(s) in their
short-form applications. Applicants
must identify in their short-form
applications all parties with whom they
have entered into any agreements,
arrangements, or understandings of any
kind relating to the licenses being
auctioned, including any agreements
relating to post-auction market
structure.
22. If parties agree in principle on all
material terms prior to the short-form
application filing deadline, each party
to the agreement must identify the other
party or parties to the agreement on its
short-form application under 47 CFR
1.2105(c), even if the agreement has not
been reduced to writing. If the parties
have not agreed in principle by the
short-form filing deadline, they should
not include the names of parties to
discussions on their applications, and
they may not continue negotiation,
discussion or communication with any
other applicants after the short-form
application filing deadline.
23. 47 CFR 1.2105(c) does not prohibit
non-auction-related business
negotiations among auction applicants.
However, certain discussions or
exchanges could touch upon
impermissible subject matters because
they may convey pricing information
and bidding strategies. Such subject
areas include, but are not limited to,
issues such as management, sales, local
marketing agreements, and other
transactional agreements.
e. 47 CFR 1.2105(c) Certification
24. By electronically submitting a
short-form application, each applicant
in Auction 97 certifies its compliance
with 47 CFR 1.2105(c). In particular, an
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applicant must certify under penalty of
perjury it has not entered and will not
enter into any explicit or implicit
agreements, arrangements or
understandings of any kind with any
parties, other than those identified in
the application, regarding the amount of
the applicant’s bids, bidding strategies,
or the particular licenses on which it
will or will not bid. However, the
Bureau cautions that merely filing a
certifying statement as part of an
application will not outweigh specific
evidence that a prohibited
communication has occurred, nor will it
preclude the initiation of an
investigation when warranted. The
Commission has stated that it intends to
scrutinize carefully any instances in
which bidding patterns suggest that
collusion may be occurring. Any
applicant found to have violated 47 CFR
1.2105(c) may be subject to sanctions.
f. Duty To Report Prohibited
Communications
25. 47 CFR 1.2105(c)(6) provides that
any applicant that makes or receives a
communication that appears to violate
47 CFR 1.2105(c) must report such
communication in writing to the
Commission immediately, and in no
case later than five business days after
the communication occurs. The
Commission has clarified that each
applicant’s obligation to report any such
communication continues beyond the
five-day period after the communication
is made, even if the report is not made
within the five-day period.
26. In addition, 47 CFR 1.65 requires
an applicant to maintain the accuracy
and completeness of information
furnished in its pending application and
to notify the Commission of any
substantial change that may be of
decisional significance to that
application. Thus, 47 CFR 1.65 requires
an auction applicant to notify the
Commission of any substantial change
to the information or certifications
included in its pending short-form
application. An applicant is therefore
required by 47 CFR 1.65 to report to the
Commission any communication the
applicant has made to or received from
another applicant after the short-form
application filing deadline that affects
or has the potential to affect bids or
bidding strategy, unless such
communication is made to or received
from a party to an agreement identified
under 47 CFR 1.2105(a)(2)(viii).
27. 47 CFR 1.65(a) and 1.2105(c)
require each applicant in competitive
bidding proceedings to furnish
additional or corrected information
within five days of a significant
occurrence, or to amend its short-form
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application no more than five days after
the applicant becomes aware of the need
for amendment. These rules are
intended to facilitate the auction
process by making the information
available promptly to all participants
and to enable the Bureau to act
expeditiously on those changes when
such action is necessary.
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g. Procedure for Reporting Prohibited
Communications
28. A party reporting any
communication pursuant to 47 CFR
1.65, 1.2105(a)(2), or 1.2105(c)(6) must
take care to ensure that any report of a
prohibited communication does not
itself give rise to a violation of 47 CFR
1.2105(c). For example, a party’s report
of a prohibited communication could
violate the rule by communicating
prohibited information to other
applicants through the use of
Commission filing procedures that
would allow such materials to be made
available for public inspection.
29. 47 CFR 1.2105(c) requires parties
to file only a single report concerning a
prohibited communication and to file
that report with Commission personnel
expressly charged with administering
the Commission’s auctions. This rule is
designed to minimize the risk of
inadvertent dissemination of
information in such reports. Any reports
required by 47 CFR 1.2105(c) must be
filed consistent with the instructions set
forth in the Auction 97 Procedures
Public Notice. For Auction 97, such
reports must be filed with Margaret W.
Wiener, the Chief of the Auctions and
Spectrum Access Division, Wireless
Telecommunications Bureau, by the
most expeditious means available. Any
such report should be submitted by
email to Ms. Wiener at the following
email address: auction97@fcc.gov. If you
choose instead to submit a report in
hard copy, any such report must be
delivered only to Margaret W. Wiener,
Chief, Auctions and Spectrum Access
Division, Wireless Telecommunications
Bureau, Federal Communications
Commission, 445 12th Street SW., Room
6423, Washington, DC 20554.
30. A party seeking to report such a
prohibited communication should
consider submitting its report with a
request that the report or portions of the
submission be withheld from public
inspection by following the procedures
specified in 47 CFR 0.459. Such parties
also are encouraged to coordinate with
the Auctions and Spectrum Access
Division staff about the procedures for
submitting such reports. The Auction 97
Procedures Public Notice provides
additional guidance on procedures for
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submitting application-related
information.
h. Winning Bidders Must Disclose
Terms of Agreements
31. Each applicant that is a winning
bidder will be required to disclose in its
long-form applications the specific
terms, conditions, and parties involved
in any agreement it has entered into.
This applies to any bidding consortia,
joint venture, partnership, or agreement,
understanding, or other arrangement
entered into relating to the competitive
bidding process, including any
agreement relating to the post-auction
market structure. Failure to comply with
the Commission’s rules can result in
enforcement action.
i. Additional Information Concerning
Rule Prohibiting Certain
Communications
32. A summary listing of documents
issued by the Commission and the
Bureau addressing the application of 47
CFR 1.2105(c) may be found in
Attachment F to the Auction 97
Procedures Public Notice. These
documents are available on the
Commission’s auction Web page at
https://wireless.fcc.gov/auctions/
prohibited_communications.
j. Antitrust Laws
33. Regardless of compliance with the
Commission’s rules, applicants remain
subject to the antitrust laws, which are
designed to prevent anticompetitive
behavior in the marketplace.
Compliance with the disclosure
requirements of 47 CFR 1.2105(c) will
not insulate a party from enforcement of
the antitrust laws. For instance, a
violation of the antitrust laws could
arise out of actions taking place well
before any party submitted a short-form
application. The Commission has cited
a number of examples of potentially
anticompetitive actions that would be
prohibited under antitrust laws: For
example, actual or potential competitors
may not agree to divide territories in
order to minimize competition,
regardless of whether they split a market
in which they both do business, or
whether they merely reserve one market
for one and another market for the other.
Similarly, the Bureau previously
reminded potential applicants and
others that even where the applicant
discloses parties with whom it has
reached an agreement on the short-form
application, thereby permitting
discussions with those parties, the
applicant is nevertheless subject to
existing antitrust laws.
34. To the extent the Commission
becomes aware of specific allegations
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that suggest that violations of the federal
antitrust laws may have occurred, the
Commission may refer such allegations
to the United States Department of
Justice for investigation. If an applicant
is found to have violated the antitrust
laws or the Commission’s rules in
connection with its participation in the
competitive bidding process, it may be
subject to forfeiture of its upfront
payment, down payment, or full bid
amount and may be prohibited from
participating in future auctions, among
other sanctions.
3. Incumbency Issues
35. The AWS–3 bands are currently
being used for a variety of government
and non-government services. In the
AWS–3 Report and Order, the
Commission allocated the 1695–1710
MHz and 1755–1780 MHz bands for
commercial use. Licenses in 1695–1710
MHz band are being made available on
a shared basis with incumbent Federal
meteorological-satellite (MetSat) data
users. The Commission adopted twentyseven Protection Zones for the 1695–
1710 MHz band in the AWS–3 Report
and Order. Pursuant to 47 CFR 2.106,
US note 88, forty-seven Federal earth
stations located in these zones will
operate on a co-equal, primary basis
with commercial AWS–3 licensees. To
facilitate coordination, uplink/mobile
transmit devices in the 1695–1710 MHz
band must be under the control of, or
associated with, a base station as a
means to facilitate shared use of the
band and prevent interference to
Federal operations. Licenses in the
1755–1780 MHz band are being made
available on a shared basis with a
limited number of Federal incumbents
indefinitely, while some of the Federal
systems will over time relocate out of
the band. Pursuant to 47 CFR 2.106, US
note 91, Federal systems located in the
Protection Zones adopted by the
Commission for the 1755–1780 MHz
band in the AWS–3 Report and Order
will operate on a co-equal, primary basis
with commercial AWS licensees. The
Federal systems that will relocate from
this band pursuant to an approved
transition plan will operate on a
primary basis until they are
reaccommodated. To facilitate
coordination, uplink/mobile transmit
devices in the 1755–1780 MHz band
must be under the control of, or
associated with, a base station as a
means to facilitate shared use of the
band and prevent interference to
Federal operations. Licenses to operate
in the 1695–1710 MHz and 1755–1780
MHz bands are subject to the condition
that the licensee must not cause harmful
interference to an incumbent Federal
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entity relocating from these bands under
an approved Transition Plan. This
condition remains in effect until NTIA
terminates the applicable authorization
of the incumbent Federal entity. In
addition, AWS–3 licensees in the 1755–
1780 MHz band must agree to accept
interference from incumbent Federal
users while they remain authorized to
operate in the band. The 2155–2180
MHz band is already allocated for
exclusive non-Federal, commercial use.
Although there are no Federal users
currently licensed or operating in this
band, there are non-Federal incumbent
Fixed Microwave and Broadband Radio
Service licensees in the band. AWS–3
licensees will have to protect or relocate
and/or share in the cost of relocating
such incumbent licensees.
36. AWS–3 licensees in the 1695–
1710 MHz and 1755–1780 MHz bands
are required to successfully coordinate
with Federal incumbent users in these
bands prior to operating in designated
protection zones. The AWS–3 Report
and Order established that 1695–1710
MHz licensees operating at certain
power levels would be required to
coordinate with Federal incumbents in
those protection zones, and higherpowered operations would generally
require nationwide coordination.
Similarly, operations in the 1755–1780
MHz band are subject to successful
coordination with Federal incumbents
in the protection zones adopted for that
band, with the default coordination
zone being nationwide. Prior to
commencing operations in the 1755–
1780 MHz band, an AWS–3 licensee
must reach a coordination arrangement
on an operator-to-operator basis with
each Federal agency that has an
assignment with United States and
Possessions (USP) authority. The FCC/
NTIA Coordination Procedures Public
Notice contains various refinements to
the previously-defined protection zones
for each of these bands. That Public
Notice also provides information and
guidance on the overall coordination
process for these bands, as
contemplated by the AWS–3 Report and
Order, including informal precoordination discussion and the formal
process of submitting coordination
requests to, and receiving responses to
coordination requests from, relevant
Federal agencies. The Bureau
encourages each potential applicant to
carefully review these coordination
requirements and the policies and
procedures adopted by the Commission
to implement them, and to consider the
impact of those requirements and
policies on its business plans.
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4. Commercial Spectrum Enhancement
Act/Spectrum Act Requirements
37. The spectrum in the 1695–1710
MHz and 1755–1780 MHz bands is
covered by a Congressional mandate
that requires that auction proceeds fund
the estimated relocation or sharing costs
of incumbent Federal entities. In 2004,
the Commercial Spectrum Enhancement
Act (CSEA) established a Spectrum
Relocation Fund (SRF) to reimburse
eligible Federal agencies operating on
certain frequencies that have been
reallocated from Federal to non-Federal
use for the cost of relocating their
operations. The SRF is funded with cash
proceeds attributable to ‘‘eligible
frequencies’’ in an auction of licenses
involving such frequencies. The
Spectrum Act amendments to the CSEA
require Federal agencies authorized to
use eligible frequencies to submit a
transition plan no later than 240 days
before an auction for such frequencies is
scheduled to begin. The CSEA requires
the NTIA to notify the Commission at
least six months in advance of a
scheduled auction of eligible
frequencies of eligible Federal entities’
estimated relocation or sharing costs
and the timelines for such relocation or
sharing. The NTIA must make the
transition plans available on its Web site
(with the exception of any classified
information contained therein) no later
than 120 days before the auction’s
scheduled start date.
38. On May 13, 2014, pursuant to the
CSEA, the NTIA notified the
Commission of the estimated relocation
or sharing costs and relocation timelines
for eligible Federal entities assigned to
frequencies in the 1695–1710 MHz and
1755–1780 MHz bands. The NTIA
reported that the total estimated
relocation or sharing costs for the 1695–
1710 MHz band equal $527,069,000,
and that the total estimated relocation or
sharing costs for the 1755–1780 MHz
band equal $4,575,603,000.
39. In addition to requiring that
specified auction proceeds be deposited
in the SRF, the CSEA, as amended by
the Spectrum Act, requires that the total
cash proceeds from any auction of
eligible frequencies must equal at least
110 percent of the estimated relocation
or sharing costs provided to the
Commission by NTIA, and prohibits the
Commission from concluding any
auction of eligible frequencies that falls
short of this revenue requirement. In the
CSEA/Part 1 Declaratory Ruling, the
Commission determined, among other
things, that total cash proceeds for
purposes of meeting the CSEA’s revenue
requirement means winning bids net of
any applicable bidding credit discounts
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at the end of bidding. Thus, whether
CSEA’s revenue requirements regarding
eligible frequencies have been met at the
end of an auction involving such
frequencies depends upon whether
winning bids that are attributable to
such spectrum, net of any applicable
bidding credit discounts, equal at least
110 percent of estimated relocation
costs. In the CSEA/Part 1 Report and
Order, the Commission, among other
things, modified its reserve price rule
pursuant to the CSEA to ensure that the
CSEA’s revenue requirement would be
met.
5. International Coordination
40. Potential bidders seeking licenses
for geographic areas adjacent to the
Canadian and Mexican border should be
aware that the use of some or all of the
AWS–3 frequencies they acquire in the
auction are subject to international
agreements with Canada and Mexico. As
the Commission noted in the AWS–3
Report and Order, the Commission
routinely works with the United States
Department of State and Canadian and
Mexican government officials to ensure
the efficient use of the spectrum as well
as interference-free operations in the
border areas near Canada and Mexico.
Until such time as any adjusted
agreements, as needed, between the
United States, Mexico and/or Canada
can be agreed to, operations in the
AWS–3 frequency bands must not cause
harmful interference across the border,
consistent with the terms of the
agreements currently in force.
6. Quiet Zones
41. AWS–3 licensees must
individually apply for and receive a
separate license for each transmitter if
the proposed operation would affect the
radio quiet zones set forth in the
Commission’s rules.
7. Spectrum Screen for Competitive
Review of Secondary Market
Transactions
42. In its recent Mobile Spectrum
Holdings Report and Order, the
Commission concluded that, instead of
administering its case-by-case review of
auction winners’ mobile spectrum
holdings at the long-form application
stage, it would determine prior to an
auction whether an ex ante application
of a band-specific mobile spectrum
holding limit is necessary for the initial
licensing of a band through competitive
bidding. For the initial licensing of the
AWS–3 band through competitive
bidding, the Commission found that, on
balance, it is not in the public interest
to adopt a band-specific mobile
spectrum holdings limit.
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43. The Commission’s spectrum
screen is a tool used to help achieve the
Commission’s policy of facilitating
access to spectrum in a manner that
promotes competition. In its
competitive review of secondary market
transactions, the Commission applies an
initial screen to help identify for caseby-case review local markets where
changes in spectrum holdings resulting
from the proposed transaction may be of
particular concern. The Commission
observed in the Mobile Spectrum
Holdings Report and Order that,
notwithstanding whether a bandspecific mobile spectrum holding limit
is applied to the initial licensing of a
band through competitive bidding, the
band would be included in the
Commission’s application of its
spectrum screen for competitive review
of subsequent secondary market
transactions if the band is deemed
suitable and available for the provision
of mobile telephony/mobile broadband
services. Further, in the Mobile
Spectrum Holdings Report and Order,
the Commission updated its spectrum
screen to reflect the current suitability
and availability of spectrum for the
provision of mobile telephony/
broadband services. In particular, in its
consideration of AWS–3 spectrum, the
Commission added the 65 megahertz of
AWS–3 spectrum being offered in
Auction 97 to the spectrum screen on a
market-by-market basis as it becomes
available. Thus, the spectrum in these
bands will be counted in the spectrum
screen in a particular market once all
relocating Federal incumbent systems in
that market are within three years of
completing relocation according to the
Federal agency Transition Plans.
Spectrum in the 2155–2180 MHz band
will be counted in the spectrum screen
for a particular market at the same time
the Commission counts the paired
1755–1780 MHz band in that market in
the screen. The Bureau encourages each
potential Auction 97 applicant to
carefully review the Mobile Spectrum
Holdings Report and Order to
understand how these policies might
apply to its particular situation.
8. Due Diligence
44. The Bureau reminds each
potential bidder that it is solely
responsible for investigating and
evaluating all technical and marketplace
factors that may have a bearing on the
value of the licenses that it is seeking in
this auction. Each bidder is responsible
for assuring that, if it wins a license, it
will be able to build and operate
facilities in accordance with the
Commission’s rules. The Commission
makes no representations or warranties
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about the use of this spectrum for
particular services. Applicants should
be aware that a Commission auction
represents an opportunity to become a
Commission licensee, subject to certain
conditions and regulations, and that the
Commission’s statutory authority, under
the Communications Act, to add,
modify and eliminate rules governing
spectrum use, as the public interest
warrants, applies equally to all licenses,
whether acquired through the
competitive bidding process or
otherwise. In addition, a Commission
auction does not constitute an
endorsement by the Commission of any
particular service, technology, or
product, nor does a Commission license
constitute a guarantee of business
success.
45. An applicant should perform its
due diligence research and analysis
before proceeding, as it would with any
new business venture. In particular, the
Bureau strongly encourages each
potential bidder to review all
Commission orders and public notices
establishing rules and policies for the
AWS–3 bands, including incumbency
issues for AWS–3 licensees, Federal and
non-Federal relocation and sharing and
cost sharing obligations, and protection
of Federal and non-Federal incumbent
operations. Additionally, each potential
bidder should perform technical
analyses or refresh their previous
analyses to assure itself that, should it
become a winning bidder for any
Auction 97 license, it will be able to
build and operate facilities that will
fully comply with all applicable
technical and regulatory requirements.
The Bureau strongly encourages each
applicant to inspect any prospective
transmitter sites located in, or near, the
service area for which it plans to bid,
confirm the availability of such sites,
and to familiarize itself with the
Commission’s rules regarding the
National Environmental Policy Act.
46. The Bureau strongly encourages
each applicant to conduct its own
research prior to Auction 97 in order to
determine the existence of pending
administrative or judicial proceedings,
including pending allocation
rulemaking proceedings, that might
affect its decision to participate in the
auction. The Bureau strongly
encourages each participant in Auction
97 to continue such research throughout
the auction. The due diligence
considerations mentioned in the
Auction 97 Procedures 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
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undertake, depending upon specific
facts and circumstances related to its
interests.
47. The Bureau also reminds each
applicant that pending and future
judicial proceedings, as well as pending
and future proceedings before the
Commission—including applications,
applications for modification,
rulemaking proceedings, requests for
special temporary authority, waiver
requests, petitions to deny, petitions for
reconsideration, informal objections,
and applications for review—may relate
to particular applicants or the licenses
available in Auction 97 (or the terms
and conditions thereof, including all
applicable Commission rules and
regulations). Each prospective applicant
is responsible for assessing the
likelihood of the various possible
outcomes and for considering the
potential impact on licenses available in
this auction.
48. The Bureau calls special attention
in this auction to the requirements
presented by the temporary and
indefinite sharing of portions of the
AWS–3 bands by incumbent Federal
users and AWS–3 licensees, which may
vary by geography and frequency. The
FCC/NTIA Coordination Procedures
Public Notice contains additional
information regarding the extent of
sharing in the AWS–3 bands,
refinements to the protection zones
adopted in the AWS–3 Report and
Order, and information and guidance on
the overall coordination process
between commercial and Federal users.
Additionally, the CSEA, as amended by
the Spectrum Act, stipulates that
Federal agencies will receive
reimbursement for their costs in
relocating their operations from, or
sharing, the ‘‘eligible frequencies’’
offered in this auction based on their
approved transition plans, which the
NTIA will make available to the public.
The Bureau expects that the information
in both the FCC/NTIA Coordination
Procedures Public Notice and the
federal agency transition plans will be
material to an applicant’s potential
participation in Auction 97. Therefore,
the Bureau strongly encourages each
applicant to closely review these
materials, as well as future releases from
the Commission and the NTIA
concerning these issues, and to carefully
consider the technical and economic
implications for commercial use of the
AWS–3 bands.
49. Applicants are solely responsible
for identifying associated risks and for
investigating and evaluating the degree
to which such matters may affect their
ability to bid on, otherwise acquire, or
make use of the licenses available in
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Auction 97. Each potential bidder is
responsible for undertaking research to
ensure that any licenses won in this
auction will be suitable for its business
plans and needs. Each potential bidder
must undertake its own assessment of
the relevance and importance of
information gathered as part of its due
diligence efforts.
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9. Use of Integrated Spectrum Auction
System
50. Bidders will be able to participate
in Auction 97 over the Internet using
the Commission’s Web-based Integrated
Spectrum Auction System (ISAS or FCC
Auction System). The Commission
makes no warranty whatsoever with
respect to the FCC Auction System. In
no event shall the Commission, or any
of its officers, employees, or agents, be
liable for any damages whatsoever
(including, but not limited to, loss of
business profits, business interruption,
loss of business information, or any
other loss) arising out of or relating to
the existence, furnishing, functioning,
or use of the FCC Auction System that
is accessible to qualified bidders in
connection with this auction. Moreover,
no obligation or liability will arise out
of the Commission’s technical,
programming, or other advice or service
provided in connection with the FCC
Auction System.
10. Environmental Review
Requirements
51. Licensees must comply with the
Commission’s rules regarding
implementation of the National
Environmental Policy Act and other
federal environmental statutes. The
construction of a wireless antenna
facility is a federal action, and the
licensee must comply with the
Commission’s environmental rules for
each such facility. These environmental
rules require, among other things, that
the licensee consult with expert
agencies having environmental
responsibilities, including the U.S. Fish
and Wildlife Service, the State Historic
Preservation Office, the U.S. Army
Corps of Engineers, and the Federal
Emergency Management Agency
(through the local authority with
jurisdiction over floodplains). In
assessing the effect of facility
construction on historic properties, the
licensee must follow the provisions of
the FCC’s Nationwide Programmatic
Agreement Regarding the Section 106
National Historic Preservation Act
Review Process. The licensee must
prepare an environmental assessment
for any facility that may have a
significant impact in or on wilderness
areas, wildlife preserves, threatened or
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endangered species, designated critical
habitats, historical or archaeological
sites, Native American religious sites,
floodplains, surface features, or
migratory birds. In addition, the
licensee must prepare an environmental
assessment for any facility that includes
high intensity white lights in residential
neighborhoods or excessive radio
frequency emission.
D. Auction Specifics
1. Bidding Methodology
52. The bidding methodology for
Auction 97 will be a simultaneous
multiple round format. The Commission
will conduct this auction over the
Internet using the FCC Auction System.
Qualified bidders are permitted to bid
electronically via the Internet or by
telephone using the telephonic bidding
option. All telephone calls are recorded.
2. Pre-Auction Dates and Deadlines
53. The following dates and
deadlines, as announced in the Auction
97 Procedures Public Notice apply: (1)
Auction tutorial available (via Internet)
by August 28, 2014; (2) short-Form
Application (FCC Form 175) Filing
Window Opens on August 28, 2014;
12:00 noon ET; (3) short-Form
Application (FCC Form 175) Filing
Window Deadline closes on September
12, 2014; 6:00 p.m. ET; (4) upfront
Payments (via wire transfer) due by
October 15, 2014; 6:00 p.m. ET; (5)
Mock Auction begins on November 10,
2014; and (6) Auction 97 begins on
November 13, 2014.
54. In order to provide sufficient time
for Commission staff to complete review
of short-form applications and for
Auction 97 applicants to work with staff
to address any deficiencies with their
applications, the Bureau is unable to
grant in full the joint request of CCA,
CTIA, and NTCA to set a short-form
deadline of September 24, 2014. Those
parties assert setting the deadline near
the end of that month would facilitate
the association members’ ability to
participate in business negotiations and
panel discussions, including panels on
the AWS–3 auction, at industry
conferences scheduled during
September 2014 without risk of running
afoul of 47 CFR 1.2105(c)’s prohibited
communications period. The Bureau
understands that two of three of those
events will have concluded by
September 12, 2014, which is the
alternative date they request.
3. Requirements for Participation
55. Those wishing to participate in
this auction must: (1) Submit a shortform application (FCC Form 175)
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electronically prior to 6:00 p.m. ET, on
September 12, 2014, following the
electronic filing procedures set forth in
Attachment D to the Auction 97
Procedures Public Notice; (2) submit a
sufficient upfront payment and an FCC
Remittance Advice Form (FCC Form
159) by 6:00 p.m. ET, on October 15,
2014, following the procedures and
instructions set forth in Attachment E;
and (3) comply with all provisions
outlined in the Auction 97 Procedures
Public Notice and applicable
Commission rules.
II. Short-Form Application (FCC Form
175) Requirements
A. General Information Regarding
Short-Form Applications
56. An application to participate in an
FCC auction, referred to as a short-form
application or FCC Form 175, provides
information used to determine whether
the applicant is legally, technically, and
financially qualified to participate in
Commission auctions for licenses or
permits. The short-form application is
the first part of the Commission’s twophased auction application process. In
the first phase, parties desiring to
participate in the auction must file a
streamlined, short-form application in
which they certify under penalty of
perjury as to their qualifications.
Eligibility to participate in bidding is
based on the applicant’s short-form
application and certifications and on its
upfront payment. In the second phase,
each winning bidder must file a more
comprehensive long-form application
(FCC Form 601) and have a complete
and accurate ownership disclosure
information report (FCC Form 602) on
file with the Commission.
57. Every entity and individual
seeking a license available in Auction
97 must file a short-form application
electronically via the FCC Auction
System prior to 6:00 p.m. ET on
September 12, 2014, following the
procedures prescribed in Attachment D
to the Auction 97 Procedures Public
Notice. If an applicant claims eligibility
for a bidding credit, the information
provided in its FCC Form 175 will be
used to determine whether the applicant
is eligible for the claimed bidding
credit. Applicants filing a short-form
application are subject to the
Commission’s anti-collusion rules
beginning at the deadline for filing.
58. Applicants bear full responsibility
for submitting accurate, complete and
timely short-form applications. All
applicants must certify on their shortform applications under penalty of
perjury that they are legally, technically,
financially and otherwise qualified to
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hold a license. Each applicant should
read carefully the instructions set forth
in Attachment D to the Auction 97
Procedures Public Notice and should
consult the Commission’s rules to
ensure that, in addition to the materials,
all the information required is included
within its short-form application.
59. An individual or entity may not
submit more than one short-form
application for a single auction. If a
party submits multiple short-form
applications for any license(s) in the
same or overlapping geographic area(s),
only one of its applications can be
found to be complete when reviewed for
completeness and compliance with the
Commission’s rules.
60. Applicants should note that
submission of a short-form application
(and any amendments thereto)
constitutes a representation by the
person certifying the application that he
or she is an authorized representative of
the applicant with authority to bind the
applicant, that he or she has read the
form’s instructions and certifications,
and that the contents of the application,
its certifications, and any attachments
are true and correct. Applicants are not
permitted to make major modifications
to their applications; such
impermissible changes include a change
of the certifying official to the
application. Submission of a false
certification to the Commission may
result in penalties, including monetary
forfeitures, license forfeitures,
ineligibility to participate in future
auctions, and/or criminal prosecution.
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B. License Selection
61. An applicant must select the
licenses on which it wants to bid from
the ‘‘Eligible Licenses’’ list on its shortform application. Applicants must
review and verify their license
selections before the deadline for
submitting short-form applications.
License selections cannot be changed
after the short-form application filing
deadline. The FCC Auction System will
not accept bids on licenses that were not
selected on the applicant’s short-form
application.
C. Disclosure of Bidding Arrangements
62. An applicant will be required to
identify in its short-form application all
real parties in interest with whom it has
entered into any agreements,
arrangements, or understandings of any
kind relating to the licenses being
auctioned, including any agreements
relating to post-auction market
structure.
63. Each applicant will also be
required to certify under penalty of
perjury in its short-form application that
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it has not entered and will not enter into
any explicit or implicit agreements,
arrangements or understandings of any
kind with any parties, other than those
identified in the application, regarding
the amount of its bids, bidding
strategies, or the particular licenses on
which it will or will not bid. If an
applicant has had discussions, but has
not reached an agreement by the shortform application filing deadline, it
should not include the names of parties
to the discussions on its application and
may not continue such discussions with
any applicants after the deadline.
64. After the filing of short-form
applications, the Commission’s rules do
not prohibit a party holding a noncontrolling, attributable interest in one
applicant from acquiring an ownership
interest in or entering into a joint
bidding arrangement with other
applicants, provided that (i) the
attributable interest holder certifies that
it has not and will not communicate
with any party concerning the bids or
bidding strategies of more than one of
the applicants in which it holds an
attributable interest, or with which it
has entered into a joint bidding
arrangement; and (ii) the arrangements
do not result in a change in control of
any of the applicants. While 47 CFR
1.2105(c) does not prohibit non-auctionrelated business negotiations among
auction applicants, the Bureau reminds
applicants that certain discussions or
exchanges could touch upon
impermissible subject matters because
they may convey pricing information
and bidding strategies. Further,
compliance with the disclosure
requirements of 47 CFR 1.2105(c) will
not insulate a party from enforcement of
the antitrust laws.
information submitted in an FCC Form
602 or in an FCC Form 175 filed for a
previous auction using ISAS) will
automatically be entered into the
applicant’s short-form application. Each
applicant must carefully review any
information automatically entered to
confirm that it is complete and accurate
as of the deadline for filing the shortform application. Any information that
needs to be corrected or updated must
be changed directly in the short-form
application.
D. Ownership Disclosure Requirements
65. Each applicant must comply with
the uniform Part 1 ownership disclosure
standards and provide information
required by 47 CFR 1.2105 and 1.2112.
Specifically, in completing the shortform application, an applicant will be
required to fully disclose information on
the real party- or parties-in-interest and
the ownership structure of the
applicant, including both direct and
indirect ownership interests of 10
percent or more, as prescribed in 47
CFR 1.2105 and 1.2112. Each applicant
is responsible for ensuring that
information submitted in its short-form
application is complete and accurate.
66. In certain circumstances, an
applicant’s most current ownership
information on file with the
Commission, if in an electronic format
compatible with the short-form
application (FCC Form 175) (such as
F. National Security Certification
Requirement for Auction 97 Applicants
68. Section 6004 of the Spectrum Act
prohibits a person who has been, for
reasons of national security, barred by
any agency of the Federal Government
from bidding on a contract, participating
in an auction, or receiving a grant from
participating in any auction that is
required or authorized to be conducted
pursuant to the Spectrum Act. In 2013,
the Commission amended its rules to
implement this mandate by adding a
certification to the various other
certifications that a party must make in
any short-form application. Pursuant to
this rule, any applicant seeking to
participate in Auction 97 must certify in
its short-form application, under
penalty of perjury, that the applicant
and all of the related individuals and
entities required to be disclosed on its
application are not person(s) who have
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E. Foreign Ownership Disclosure
Requirements
67. Section 310 of the
Communications Act requires the
Commission to review foreign
investment in radio station licenses and
imposes specific restrictions on who
may hold certain types of radio licenses.
The provisions of section 310 apply to
applications for initial radio licenses,
applications for assignments and
transfers of control of radio licenses,
and spectrum leasing arrangements
under the Commission’s secondary
market rules. In completing the shortform application (FCC Form 175), an
applicant will be required to disclose
information concerning any foreign
ownership of the applicant. An
applicant must certify in its short-form
application that, as of the deadline for
filing a short-form application to
participate in Auction 97, the applicant
either is in compliance with the foreign
ownership provisions of section 310 or
has filed a petition for declaratory ruling
requesting Commission approval to
exceed the applicable foreign ownership
limit or benchmark in section 310(b)
that is pending before, or has been
granted by, the Commission.
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been, for reasons of national security,
barred by any agency of the Federal
Government from bidding on a contract,
participating in an auction, or receiving
a grant, and who are thus statutorily
prohibited from participating in such a
Commission auction. As with other
required certifications, an auction
applicant’s failure to include the
required certification in its short-form
application by the applicable filing
deadline would render its application
unacceptable for filing, and its
application would be dismissed with
prejudice.
G. Acknowledgement Statement for
Auction 97 Applicants
69. The Bureau adopts its proposal to
require each applicant selecting any
license in the 1755–1780 MHz band to
submit with its short-form application a
signed statement acknowledging that
the applicant’s operations the 1755–
1780 MHz band may be subject to
interference from Federal systems, that
the applicant must accept interference
from incumbent Federal operations, and
that the applicant has considered these
risks before submitting any bids for
applicable licenses in Auction 97. The
specific text that must be included in
the required acknowledgement
statement is contained in Attachment G
to the Auction 97 Procedures Public
Notice. The acknowledgement statement
must be signed by the same individual
that signs the application on behalf of
the applicant. Guidance on submitting
the acknowledgement statement can be
found in Attachment D to the Auction
97 Procedures Public Notice.
70. Incumbent Federal users are
currently operating in the 1695–1710
MHz and 1755–1780 MHz bands. In the
AWS–3 Report and Order, the
Commission adopted rules to address
commercial operations in these bands in
light of the temporary and indefinite
sharing of the bands by Federal
incumbent users and commercial
licensees, including a requirement that
commercial licensees operate on a coequal, primary operations with Federal
systems, and a requirement that
licensees in the 1755–1780 MHz band
accept interference from Federal
systems as long as such systems remain
in the band.
71. The Bureau disagrees with the
recommendation of Spectrum Financial
Partners that it should not require an
acknowledgement on the grounds that
this would be an unnecessary
paperwork burden and applicant’s
acceptance of such interference
obligations is already adequately
covered by the due diligence
instructions that apply to all auctions.
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As both T-Mobile and AT&T recognize,
it may be useful for each bidder for
these frequencies to sign a statement
acknowledging that it has given
consideration to potential interference
issues for this band. AT&T and TMobile request that the required
statement be narrowly drafted, and seek
assurances that the acknowledgement
does not give rise to any new obligations
for the 1755–1780 MHz band beyond
those set out in the Commission’s rules.
They also encourage the Commission to
promote disclosure by federal agencies
of as much information as possible
about the potential interference
environment. The Bureau notes that the
text of the acknowledgement statement
is narrowly tailored and expressly states
that it does not supersede the licensee’s
rights and obligations specified by law,
rule, or other Commission action.
H. Designated Entity Provisions
72. Eligible applicants in Auction 97
may claim small business bidding
credits and applicants should review
carefully the Commission’s decisions
regarding the designated entity
provisions.
1. Bidding Credits for Small Businesses
73. A bidding credit represents an
amount by which a bidder’s winning
bid will be discounted. For Auction 97,
bidding credits will be available to
small businesses and consortia thereof.
a. Bidding Credit Eligibility Criteria
74. In the AWS–3 Report and Order,
the Commission adopted small business
bidding credits to promote and facilitate
the participation of small businesses in
competitive bidding for licenses in the
AWS–3 bands.
75. The level of bidding credit is
determined as follows: (1) a bidder with
attributed average annual gross revenues
that do not exceed $40 million for the
preceding three years will receive a 15
percent discount on its winning bid;
and (2) a bidder with attributed average
annual gross revenues that do not
exceed $15 million for the preceding
three years will receive a 25 percent
discount on its winning bid.
76. Bidding credits are not
cumulative; qualifying applicants
receive either the 15 percent or the 25
percent bidding credit on its winning
bid, but not both. Applicants should
note that unjust enrichment provisions
apply to a winning bidder that utilizes
a bidding credit and subsequently seeks
to assign or transfer control of its license
to an entity not qualifying for the same
level of bidding credit.
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b. Revenue Disclosure on Short-Form
Application
77. An entity applying as a small
business must provide gross revenues
for the preceding three years of each of
the following: (1) The applicant, (2) its
affiliates, (3) its controlling interests, (4)
the affiliates of its controlling interests,
and (5) the entities with which it has an
attributable material relationship.
Certification that the average annual
gross revenues of such entities and
individuals for the preceding three years
do not exceed the applicable limit is not
sufficient. Additionally, if an applicant
is applying as a consortium of small
businesses, this information must be
provided for each consortium member.
2. Attributable Interests
a. Controlling Interests
78. Controlling interests of an
applicant include individuals and
entities with either de facto or de jure
control of the applicant. Typically,
ownership of greater than 50 percent of
an entity’s voting stock evidences de
jure control. De facto control is
determined on a case-by-case basis. The
following are some common indicia of
de facto control: (1) The entity
constitutes or appoints more than 50
percent of the board of directors or
management committee; (2) the entity
has authority to appoint, promote,
demote, and fire senior executives that
control the day-to-day activities of the
licensee; and (3) the entity plays an
integral role in management decisions.
79. Applicants should refer to 47 CFR
1.2110(c)(2) and Attachment D to the
Auction 97 Procedures Public Notice to
understand how certain interests are
calculated in determining control. For
example, pursuant to 47 CFR
1.2110(c)(2)(ii)(F), officers and directors
of an applicant are considered to have
controlling interest in the applicant.
b. Affiliates
80. Affiliates of an applicant or
controlling interest include an
individual or entity that (1) directly or
indirectly controls or has the power to
control the applicant, (2) is directly or
indirectly controlled by the applicant,
(3) is directly or indirectly controlled by
a third party that also controls or has the
power to control the applicant, or (4)
has an ‘‘identity of interest’’ with the
applicant. The Commission’s definition
of an affiliate of the applicant
encompasses both controlling interests
of the applicant and affiliates of
controlling interests of the applicant.
For more information regarding
affiliates, applicants should refer to 47
CFR 1.2110(c)(5) and Attachment D to
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the Auction 97 Procedures Public
Notice.
c. Material Relationships
81. The Commission requires the
consideration of certain leasing and
resale (including wholesale)
relationships—referred to as
‘‘attributable material relationships’’—in
determining designated entity eligibility
for bidding credits. An applicant or
licensee has an ‘‘attributable material
relationship’’ when it has one or more
agreements with any individual entity
for the lease or resale (including under
a wholesale agreement) of, on a
cumulative basis, more than 25 percent
of the spectrum capacity of any
individual license held by the applicant
or licensee. The attributable material
relationship will cause the gross
revenues of that entity and its
attributable interest holders to be
attributed to the applicant or licensee
for the purposes of determining the
applicant’s or licensee’s (i) eligibility for
designated entity benefits and (ii)
liability for ‘‘unjust enrichment’’ on a
license-by-license basis.
82. The Commission grandfathered
material relationships in existence
before the release of the Designated
Entity Second Report and Order,
meaning that those preexisting
relationships alone would not cause the
Commission to examine a designated
entity’s ongoing eligibility for existing
benefits or its liability for unjust
enrichment. The Commission did not,
however, grandfather preexisting
material relationships for
determinations of an applicant’s or
licensee’s designated entity eligibility
for future auctions or in the context of
future assignments, transfers of control,
spectrum leases, or other reportable
eligibility events. Rather, in such
circumstances, the Commission
reexamines the applicant’s or licensee’s
designated entity eligibility, taking into
account all existing material
relationships, including those
previously grandfathered. The
Commission has recently waived the
bright-line application of 47 CFR
1.2110(b)(3)(iv)’s attributable material
relationship rule that would otherwise
trigger the automatic attribution of the
lessee’s gross revenues to a designated
entity (DE) applicant, where its leased
licenses were not subject to DE benefits
and, at the time the leases became
effective, the DE applicant held no other
licenses subject to DE benefits. To the
extent that the requesting entity and any
other similarly situated parties certify
that they are qualified to claim DE
benefits in any upcoming auction and
become winning bidders, they will be
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required to demonstrate at the long-form
application stage that the specific facts
and circumstances of their spectrum
lease agreements do not require
attribution of the lessees’ gross revenues
in their respective cases.
d. Gross Revenue Exceptions
83. The Commission has also made
other modifications to its rules
governing the attribution of gross
revenues for purposes of determining
designated entity eligibility. For
example, the Commission has clarified
that, in calculating an applicant’s gross
revenues under the controlling interest
standard, it will not attribute to the
applicant the personal net worth,
including personal income, of its
officers and directors.
84. The Commission has also
exempted from attribution to the
applicant the gross revenues of the
affiliates of a rural telephone
cooperative’s officers and directors, if
certain conditions specified in 47 CFR
1.2110(b)(3)(iii) are met. An applicant
claiming this exemption must provide,
in an attachment, an affirmative
statement that the applicant, affiliate
and/or controlling interest is an eligible
rural telephone cooperative within the
meaning of 47 CFR 1.2110(b)(3)(iii), and
the applicant must supply any
additional information as may be
required to demonstrate eligibility for
the exemption from the attribution rule.
Applicants seeking to claim this
exemption must meet all of the
conditions. Additional guidance on
claiming this exemption may be found
in Attachment D to the Auction 97
Procedures Public Notice.
e. Bidding Consortia
85. A consortium of small businesses
is a conglomerate organization
composed of two or more entities, each
of which individually satisfies the
definition of a small business. Thus,
each member of a consortium of small
businesses that applies to participate in
Auction 97 must individually meet the
criteria for small businesses. Each
consortium member must disclose its
gross revenues along with those of its
affiliates, its controlling interests, the
affiliates of its controlling interests, and
any entities having an attributable
material relationship with the member.
Although the gross revenues of the
consortium members will not be
aggregated for purposes of determining
the consortium’s eligibility as a small
business, this information must be
provided to ensure that each individual
consortium member qualifies for any
bidding credit awarded to the
consortium.
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I. Tribal Lands Bidding Credit
86. To encourage the growth of
wireless services in federally recognized
tribal lands, the Commission has
implemented a tribal lands bidding
credit. Applicants do not provide
information regarding tribal lands
bidding credits on their short-form
applications. Instead, winning bidders
may apply for the tribal lands bidding
credit after the auction when they file
their more detailed, long-form
applications.
J. Provisions Regarding Former and
Current Defaulters
87. Current defaulters or delinquents
are not eligible to participate in Auction
97, but former defaulters or delinquents
can participate so long as they are
otherwise qualified and make upfront
payments that are fifty percent more
than would otherwise be necessary. An
applicant is considered a ‘‘current
defaulter’’ or a ‘‘current delinquent’’
when it, any of its affiliates, any of its
controlling interests, or any of the
affiliates of its controlling interests, is in
default on any payment for any
Commission construction permit or
license (including a down payment) or
is delinquent on any non-tax debt owed
to any Federal agency as of the filing
deadline for short-form applications. An
applicant is considered a ‘‘former
defaulter’’ or a ‘‘former delinquent’’
when it, any of its affiliates, any of its
controlling interests, or any of the
affiliates of its controlling interests,
have defaulted on any Commission
construction permit or license or been
delinquent on any non-tax debt owed to
any Federal agency, but have since
remedied all such defaults and cured all
of the outstanding non-tax
delinquencies.
88. Four trade associations have
jointly requested that the Commission
grant a limited, temporary waiver of the
Commission’s ‘‘former defaulter’’ rule,
47 CFR 1.2106(a), as to two categories of
debt for Auction 97 applicants. The
Bureau concludes that any requests for
temporary, limited relief from the
‘‘former defaulter’’ rule are beyond the
scope of the Auction 97 Procedures
Public Notice, which is limited to
establishing procedures for the
upcoming auction of AWS–3 licenses.
The Bureau notes, however, that such
requests are being addressed separately.
89. On the short-form application, an
applicant must certify under penalty of
perjury that it, its affiliates, its
controlling interests, and the affiliates of
its controlling interests, as defined by 47
CFR 1.2110, are not in default on any
payment for a Commission construction
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permit or license (including down
payments) and that it is not delinquent
on any non-tax debt owed to any
Federal agency. Each applicant must
also state under penalty of perjury
whether it, its affiliates, its controlling
interests, and the affiliates of its
controlling interests, have ever been in
default on any Commission construction
permit or license or have ever been
delinquent on any non-tax debt owed to
any Federal agency. Prospective
applicants are reminded that
submission of a false certification to the
Commission is a serious matter that may
result in severe penalties, including
monetary forfeitures, license
revocations, exclusion from
participation in future auctions, and/or
criminal prosecution.
90. Applicants are encouraged to
review the Bureau’s previous guidance
on default and delinquency disclosure
requirements in the context of the shortform application process. For example,
it has been determined that, to the
extent that Commission rules permit
late payment of regulatory or
application fees accompanied by late
fees, such debts will become delinquent
for purposes of 47 CFR 1.2105(a) and
1.2106(a) only after the expiration of a
final payment deadline. Therefore, with
respect to regulatory or application fees,
the provisions of 47 CFR 1.2105(a) and
1.2106(a) regarding default and
delinquency in connection with
competitive bidding are limited to
circumstances in which the relevant
party has not complied with a final
Commission payment deadline. Parties
are also encouraged to consult with the
Wireless Telecommunications Bureau’s
Auctions and Spectrum Access Division
staff if they have any questions about
default and delinquency disclosure
requirements.
91. The Commission considers
outstanding debts owed to the United
States Government, in any amount, to be
a serious matter. The Commission
adopted rules, including a provision
referred to as the ‘‘red light rule,’’ that
implement its obligations under the
Debt Collection Improvement Act of
1996, which governs the collection of
debts owed to the United States. Under
the red light rule, applications and other
requests for benefits filed by parties that
have outstanding debts owed to the
Commission will not be processed. In
the same rulemaking order, the
Commission explicitly declared,
however, that its competitive bidding
rules ‘‘are not affected’’ by the red light
rule. As a consequence, the
Commission’s adoption of the red light
rule does not alter the applicability of
any of its competitive bidding rules,
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including the provisions and
certifications of 47 CFR 1.2105 and
1.2106, with regard to current and
former defaults or delinquencies.
92. Applicants are reminded,
however, that the Commission’s Red
Light Display System, which provides
information regarding debts currently
owed to the Commission, may not be
determinative of an auction applicant’s
ability to comply with the default and
delinquency disclosure requirements of
47 CFR 1.2105. Thus, while the red light
rule ultimately may prevent the
processing of long-form applications by
auction winners, an auction applicant’s
lack of current ‘‘red light’’ status is not
necessarily determinative of its
eligibility to participate in an auction or
of its upfront payment obligation.
93. Moreover, prospective applicants
in Auction 97 should note that any longform applications filed after the close of
bidding will be reviewed for compliance
with the Commission’s red light rule,
and such review may result in the
dismissal of a winning bidder’s longform application.
K. Optional Applicant Status
Identification
94. Applicants owned by members of
minority groups and/or women, as
defined in 47 CFR 1.2110(c)(3), and
rural telephone companies, as defined
in 47 CFR 1.2110(c)(4), may identify
themselves regarding this status in
filling out their short-form applications.
This applicant status information is
collected for statistical purposes only
and assists the Commission in
monitoring the participation of
‘‘designated entities’’ in its auctions.
L. Minor Modifications to Short-Form
Applications
95. After the deadline for filing initial
applications, an Auction 97 applicant is
permitted to make only minor changes
to its application. Permissible minor
changes include, among other things,
deletion and addition of authorized
bidders (to a maximum of three) and
revision of addresses and telephone
numbers of the applicants and their
contact persons. An applicant is not
permitted to make a major modification
to its application (e.g., change of license
selection, change control of the
applicant, change the certifying official,
or claim eligibility for a higher
percentage of bidding credit) after the
initial application filing deadline. Thus,
any change in control of an applicant—
resulting from a merger, for example—
will be considered a major modification,
and the application will consequently
be dismissed.
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96. If an applicant wishes to make
permissible minor changes to its shortform application, such changes should
be made electronically to its short-form
application using the FCC Auction
System whenever possible. For the
change to be submitted and considered
by the Commission, be sure to click on
the SUBMIT button. After the revised
application has been submitted, a
confirmation page will be displayed
stating the submission time, submission
date, and a unique file number.
97. An applicant cannot use the FCC
Auction System outside of the initial
and resubmission filing windows to
make changes to its short-form
application for other than
administrative changes (e.g., changing
certain contact information or the name
of an authorized bidder). If these or
other permissible minor changes need to
be made outside of these windows, the
applicant must submit a letter briefly
summarizing the changes and
subsequently update its short-form
application in the FCC Auction System
once it is available. Moreover, after the
filing window has closed, the system
will not permit applicants to make
certain changes, such as the applicant’s
legal classification and license
selections.
98. Any letter describing changes to
an applicant’s short-form application
must be submitted by email to
auction97@fcc.gov. The email
summarizing the changes must include
a subject or caption referring to Auction
97 and the name of the applicant, for
example, ‘‘Re: Changes to Auction 97
Short-Form Application of ABC Corp.’’
The Bureau requests that parties format
any attachments to email as Adobe®
Acrobat® (PDF) or Microsoft® Word
documents. Questions about short-form
application amendments should be
directed to the Auctions and Spectrum
Access Division at (202) 418–0660.
99. As with the short-form
application, any application amendment
and related statements of fact must be
certified by an authorized representative
of the applicant with authority to bind
the applicant. Applicants should note
that submission of any such amendment
or related statement of fact constitutes a
representation by the person certifying
that he or she is an authorized
representative with such authority, and
that the contents of the amendment or
statement of fact are true and correct.
100. Applicants must not submit
application-specific material through
the Commission’s Electronic Comment
Filing System, which was used for
submitting comments regarding Auction
97. Further, parties submitting
information related to their applications
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should use caution to ensure that their
submissions do not contain confidential
information or communicate
information that would violate 47 CFR
1.2105(c) or the limited information
procedures adopted for Auction 97. A
party seeking to submit information that
might reflect non-public information,
such as an applicant’s license
selections, upfront payment amount, or
bidding eligibility, should consider
submitting any such information along
with a request that the filing or portions
of the filing be withheld from public
inspection until the end of the
prohibition of certain communications
pursuant to 47 CFR 1.2105(c).
M. Maintaining Current Information in
Short-Form Applications
101. 47 CFR 1.65 and 1.2105(b)
requires an applicant to maintain the
accuracy and completeness of
information furnished in its pending
application and in competitive bidding
proceedings to furnish additional or
corrected information to the
Commission within five days of a
significant occurrence, or to amend a
short form application no more than five
days after the applicant becomes aware
of the need for the amendment. Changes
that cause a loss of or reduction in the
percentage of bidding credit specified
on the originally-submitted application
must be reported immediately, and no
later than five business days after the
change occurs. If an amendment
reporting changes is a ‘‘major
amendment,’’ as defined by 47 CFR
1.2105, the major amendment will not
be accepted and may result in the
dismissal of the application. After the
short-form filing deadline, applicants
may make only minor changes to their
applications. For changes to be
submitted and considered by the
Commission, be sure to click on the
SUBMIT button in the FCC Auction
System. In addition, an applicant cannot
update its short-form application using
the FCC Auction System after the initial
and resubmission filing windows close.
If information needs to be submitted
pursuant to 47 CFR 1.65 after these
windows close, a letter briefly
summarizing the changes must be
submitted by email to auction97@
fcc.gov. This email must include a
subject or caption referring to Auction
97 and the name of the applicant. The
Bureau requests that parties format any
attachments to email as Adobe®
Acrobat® (PDF) or Microsoft® Word
documents. A party seeking to submit
information that might reflect nonpublic information, such as an
applicant’s license selections, upfront
payment amount, or bidding eligibility,
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should consider submitting any such
information along with a request that
the filing or portions of the filing be
withheld from public inspection until
the end of the prohibition of certain
communications pursuant to 47 CFR
1.2105(c).
III. Pre-Auction Procedures
A. Online Auction Tutorial—Available
August 28, 2014
102. No later than Thursday, August
28, 2014, an auction tutorial will be
available on the Auction 97 Web page
for prospective bidders to familiarize
themselves with the auction process.
This online tutorial will provide
information about pre-auction
procedures, completing short-form
applications, auction conduct, the FCC
Auction Bidding System, auction rules,
and AWS–3 service rules. The tutorial
will also provide an avenue to ask
Commission staff questions about the
auction, auction procedures, filing
requirements, and other matters related
to this auction.
103. The Bureau believes parties
interested in participating in this
auction will find the interactive, online
tutorial an efficient and effective way to
further their understanding of the
auction process. The tutorial will allow
viewers to navigate the presentation
outline, review written notes, listen to
audio recordings of the notes, and
search for topics using a text search
function. Additional features of this
web-based tool include links to auctionspecific Commission releases, email
links for contacting Commission
licensing and auctions staff, a timeline
with deadlines for auction preparation,
and screen shots of the online
application and bidding system. The
tutorial will be accessible through a web
browser with Adobe Flash Player.
104. The auction tutorial will be
accessible from the Commission’s
Auction 97 Web page at https://
wireless.fcc.gov/auctions/97/ through an
‘‘Auction Tutorial’’ link. Once posted,
this tutorial will remain available and
accessible anytime for reference in
connection with the procedures
outlined in the Auction 97 Procedures
Public Notice.
105. Spectrum Financial Partners asks
that the Bureau clarify the online
interactive auction tutorial to include a
clear description of the various fields in
the downloadable reports, which might
not be familiar to those taking part in a
Commission auction for the first time.
Spectrum Financial Partners also urges
the Bureau to do more to make the
auction tutorial more broadly available,
perhaps even by posting a video version
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of the interactive tutorial on YouTube.
The Bureau finds the description of the
various fields in the downloadable
reports contained in its auction
materials to be sufficiently clear, even
for first-time bidders. The Bureau’s
ISAS Bidder’s Guide’’—which is sent by
overnight delivery to all qualified
bidders in advance of the mock auction
and which is also available to the public
in the FCC Auction System—provides
additional information. The Bureau
therefore declines to make the changes
to the tutorial materials requested by
Spectrum Financial Partners. In
addition, because the Bureau’s auction
tutorial is publicly-available on the
Auction 97 Web site and is accessible 24
hours a day, 7 days a week, it is already
widely accessible, and the Bureau is not
persuaded that there is any need to
create other formats of the tutorial.
B. Short-Form Applications—Due Prior
to 6:00 p.m. ET on September 12, 2014
106. In order to be eligible to bid in
this auction, applicants must first follow
the procedures set forth in Attachments
D and E to the Auction 97 Procedures
Public Notice to submit a short-form
application (FCC Form 175)
electronically via the FCC Auction
System. This short-form application
must be submitted prior to 6:00 p.m. ET
on September 12, 2014. Late
applications will not be accepted. No
application fee is required, but an
applicant must submit a timely upfront
payment to be eligible to bid.
107. Applications may generally be
filed at any time beginning at noon ET
on August 28, 2014, until the filing
window closes at 6:00 p.m. ET on
September 12, 2014. Applicants are
strongly encouraged to file early and are
responsible for allowing adequate time
for filing their applications. There are
no limits or restrictions on the number
of times an application can be updated
or amended until the filing deadline on
September 12, 2014.
108. An applicant must always click
on the SUBMIT button on the ‘‘Certify
& Submit’’ screen to successfully submit
its FCC Form 175 and any
modifications; otherwise the application
or changes to the application will not be
received or reviewed by Commission
staff. Additional information about
accessing, completing, and viewing the
FCC Form 175 is included in
Attachment D to the Auction 97
Procedures Public Notice. FCC Auctions
Technical Support is available at (877)
480–3201, option nine; (202) 414–1250;
or (202) 414–1255 (text telephone
(TTY)); hours of service are Monday
through Friday, from 8:00 a.m. to 6:00
p.m. ET. In order to provide better
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service to the public, all calls to
Technical Support are recorded.
C. Application Processing and Minor
Corrections
109. After the deadline for filing
short-form applications, the
Commission will process all timely
submitted applications to determine
which are complete, and subsequently
will issue a public notice identifying (1)
those that are complete, (2) those that
are rejected, and (3) those that are
incomplete or deficient because of
minor defects that may be corrected.
The public notice will include the
deadline for resubmitting corrected
applications.
110. After the application filing
deadline on September 12, 2014,
applicants can make only minor
corrections to their applications. They
will not be permitted to make major
modifications (e.g., change license
selection, change control of the
applicant, change the certifying official,
or claim eligibility for a higher
percentage of bidding credit).
111. Commission staff will
communicate only with an applicant’s
contact person or certifying official, as
designated on the short-form
application, unless the applicant’s
certifying official or contact person
notifies the Commission in writing that
applicant’s counsel or other
representative is authorized to speak on
its behalf. Authorizations may be sent
by email to auction97@fcc.gov.
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D. Upfront Payments—Due October 15,
2014
112. In order to be eligible to bid in
this auction, an upfront payment must
be submitted and accompanied by an
FCC Remittance Advice Form (FCC
Form 159). After completing its shortform application, an applicant will have
access to an electronic version of the
FCC Form 159 that can be printed and
sent by fax to U.S. Bank in St. Louis,
Missouri. All upfront payments must be
made as instructed in this Public Notice
and must be received in the proper
account at U.S. Bank before 6:00 p.m.
ET on October 15, 2014.
1. Making Upfront Payments by Wire
Transfer
113. Wire transfer payments must be
received before 6:00 p.m. ET on October
15, 2014. No other payment method is
acceptable. To avoid untimely
payments, applicants should discuss
arrangements (including bank closing
schedules) with their bankers several
days before they plan to make the wire
transfer, and allow sufficient time for
the transfer to be initiated and
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completed before the deadline. The
specific information needed to make
upfront payments is outlined in the
Auction 97 Procedures Public Notice.
114. At least one hour before placing
the order for the wire transfer (but on
the same business day), applicants must
fax a completed FCC Form 159 (Revised
2/03) to U.S. Bank at (314) 418–4232.
On the fax cover sheet, write ‘‘Wire
Transfer—Auction Payment for Auction
97.’’ In order to meet the upfront
payment deadline, an applicant’s
payment must be credited to the
Commission’s account for Auction 97
before the deadline.
115. Each applicant is responsible for
ensuring timely submission of its
upfront payment and for timely filing of
an accurate and complete FCC
Remittance Advice Form (FCC Form
159). An applicant should coordinate
with its financial institution well ahead
of the due date regarding its wire
transfer and allow sufficient time for the
transfer to be initiated and completed
prior to the deadline. The Commission
repeatedly has cautioned auction
participants about the importance of
planning ahead to prepare for
unforeseen last-minute difficulties in
making payments by wire transfer. Each
applicant also is responsible for
obtaining confirmation from its
financial institution that its wire
transfer to U.S. Bank was successful and
from Commission staff that its upfront
payment was timely received and that it
was deposited into the proper account.
To receive confirmation from
Commission staff, contact Gail Glasser
of the Office of Managing Director’s
Auctions Accounting Group at (202)
418–0578, or alternatively, Theresa
Meeks at (202) 418–2945.
116. Please note the following
information regarding upfront
payments: (1) All payments must be
made in U.S. dollars; (2) all payments
must be made by wire transfer; (3)
upfront payments for Auction 97 go to
a lockbox number different from the
lockboxes used in previous Commission
auctions; and (4) failure to deliver a
sufficient upfront payment as instructed
by the October 15, 2014, deadline will
result in dismissal of the short-form
application and disqualification from
participation in the auction.
2. FCC Form 159
117. An accurate and complete FCC
Remittance Advice Form (FCC Form
159, Revised 2/03) must be faxed to U.S.
Bank to accompany each upfront
payment. Proper completion of this
form is critical to ensuring correct
crediting of upfront payments. Detailed
instructions for completion of FCC Form
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159 are included in Attachment E to the
Auction 97 Procedures Public Notice.
An electronic pre-filled version of the
FCC Form 159 is available after
submitting the FCC Form 175. Payers
using the pre-filled FCC Form 159 are
responsible for ensuring that all of the
information on the form, including
payment amounts, is accurate. The FCC
Form 159 can be completed
electronically, but it must be filed with
U.S. Bank by fax.
3. Upfront Payments and Bidding
Eligibility
118. The Commission has delegated to
the Bureau the authority and discretion
to determine appropriate upfront
payments for each auction. An upfront
payment is a refundable deposit made
by each bidder to establish its eligibility
to bid on licenses. Upfront payments
help deter frivolous or insincere
bidding, and provide the Commission
with a source of funds in the event that
the bidder incurs liability during the
auction.
119. Applicants that are former
defaulters must make upfront payments
that are fifty percent greater than nonformer defaulters. For purposes of this
calculation, the ‘‘applicant’’ includes
the applicant itself, its affiliates, its
controlling interests, and affiliates of its
controlling interests, as defined by 47
CFR 1.2110.
120. An applicant must make an
upfront payment sufficient to obtain
bidding eligibility for the licenses on
which it will bid. The Bureau proposed
in the Auction 97 Comment Public
Notice that the amount of the upfront
payment would determine a bidder’s
initial bidding eligibility, i.e., the
maximum number of bidding units on
which a bidder may place bids. Under
the Bureau’s proposal, in order to bid on
a particular license, a qualified bidder
must have selected the license on its
FCC Form 175 and must have a current
eligibility level that meets or exceeds
the number of bidding units assigned to
that license. At a minimum, therefore,
an applicant’s total upfront payment
must be enough to establish eligibility to
bid on at least one of the licenses
selected on its FCC Form 175 for
Auction 97, or else the applicant will
not be eligible to participate in the
auction. An applicant does not have to
make an upfront payment to cover all
licenses the applicant selected on its
FCC Form 175, but only enough to cover
the maximum number of bidding units
that are associated with licenses on
which it wishes to place bids and hold
provisionally winning bids in any given
round. The total upfront payment does
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not affect the total dollar amount the
bidder may bid on any given license.
121. In the Auction 97 Comment
Public Notice, the Bureau proposed to
make the upfront payments equal to
approximately one-half of the minimum
opening bids. The Bureau further
proposed that each license be assigned
a specific number of bidding units,
equal to one bidding unit per dollar of
the upfront payment listed for the
license. The number of bidding units for
each license will remain constant
throughout the auction. The Bureau did
not receive any comments on its
proposals for calculating upfront
payments or assigning bidding units to
each license, and thus adopts upfront
payments that are approximately onehalf of the minimum opening bids. The
Bureau notes that, because the
minimum opening bids the Bureau
adopts in the Auction 97 Procedures
Public Notice differ from those
proposed, the number of bidding units
and the upfront payment amount
associated with each license are
different than those that were proposed
in the Auction 97 Comment Public
Notice. The complete list of licenses for
Auction 97 and the specific number of
bidding units and associated upfront
payment for each license are set forth in
Attachment A _to the Auction 97
Procedures Public Notice.
122. In calculating its upfront
payment amount, an applicant should
determine the maximum number of
bidding units on which it may wish to
be active (bid on or hold provisionally
winning bids on) in any single round,
and submit an upfront payment amount
covering that number of bidding units.
In order to make this calculation, an
applicant should add together the
bidding units for all licenses on which
it seeks to be active in any given round.
Each applicant should check its
calculations carefully, as there is no
provision for increasing a bidder’s
eligibility after the upfront payment
deadline.
123. If a bidder wishes to bid on
License A (with 30,000 bidding units)
and License B (with 28,000 bidding
units) in a round, it must have selected
both of these licenses on its FCC Form
175 and purchased at least 58,000
bidding units (30,000 + 28,000) of
bidding eligibility. If a bidder only
wishes to bid on one of these licenses,
purchasing 30,000 bidding units would
allow the bidder to bid on either license,
but not both at the same time. If the
bidder purchased only 28,000 bidding
units, it would have enough eligibility
to bid on License B but could not bid
on License A.
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124. If an applicant is a former
defaulter, it must calculate its upfront
payment for all of its identified licenses
by multiplying the number of bidding
units on which it wishes to be active by
1.5. In order to calculate the number of
bidding units to assign to former
defaulters, the Commission will divide
the upfront payment received by 1.5 and
round the result up to the nearest
bidding unit.
E. Applicant’s Wire Transfer
Information for Purposes of Refunds of
Upfront Payments
125. To ensure that refunds of upfront
payments are processed in an
expeditious manner, the Commission is
requesting that all pertinent information
be supplied. Applicants can provide the
information electronically during the
initial short-form application filing
window after the form has been
submitted. (Applicants are reminded
that information submitted as part of an
FCC Form 175 will be available to the
public. For that reason, wire transfer
information should not be included in
an FCC Form 175. Wire transfer
instructions can also be faxed to the
Commission using the instructions
provided in the Auction 97 Procedures
Public Notice.
F. Auction Registration
126. Approximately ten days before
the auction, the Bureau will issue a
public notice announcing all qualified
bidders for the auction. Qualified
bidders are those applicants with
submitted short-form applications that
are deemed timely-filed, accurate, and
complete, provided that such applicants
have timely submitted an upfront
payment that is sufficient to qualify
them to bid.
127. All qualified bidders are
automatically registered for the auction.
Registration materials will be
distributed prior to the auction by
overnight mail. The mailing will be sent
only to the contact person at the contact
address listed in the FCC Form 175 and
will include the SecurID® tokens that
will be required to place bids, the
‘‘Integrated Spectrum Auction System
(ISAS) Bidder’s Guide,’’ and the
Auction Bidder Line phone number.
128. Qualified bidders that do not
receive this registration mailing will not
be able to submit bids. Therefore, if this
mailing is not received by noon on
Thursday, November 6, 2014, call the
Auctions Hotline at (717) 338–2868.
Receipt of this registration mailing is
critical to participating in the auction,
and each applicant is responsible for
ensuring it has received all of the
registration material.
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129. In the event that SecurID® tokens
are lost or damaged, only a person who
has been designated as an authorized
bidder, the contact person, or the
certifying official on the applicant’s
short-form application may request
replacements. To request replacement of
these items, call Technical Support at
(877) 480–3201, option nine; (202) 414–
1250; or (202) 414–1255 (TTY).
G. Remote Electronic Bidding
130. The Commission will conduct
this auction over the Internet, and
telephonic bidding will be available as
well. Only qualified bidders are
permitted to bid. Each applicant should
indicate its bidding preference—
electronic or telephonic—on its FCC
Form 175. In either case, each
authorized bidder must have its own
SecurID® token, which the Commission
will provide at no charge. Each
applicant with one authorized bidder
will be issued two SecurID® tokens,
while applicants with two or three
authorized bidders will be issued three
tokens. For security purposes, the
SecurID® tokens, the telephonic bidding
telephone number, and the ‘‘Integrated
Spectrum Auction System (ISAS)
Bidder’s Guide’’ are only mailed to the
contact person at the contact address
listed on the FCC Form 175. Each
SecurID® token is tailored to a specific
auction. SecurID® tokens issued for
other auctions or obtained from a source
other than the FCC will not work for
Auction 97.
131. Please note that the SecurID®
tokens can be recycled, and the Bureau
encourages bidders to return the tokens
to the FCC. Pre-addressed envelopes
will be provided to return the tokens
once bidding has closed.
H. Mock Auction—November 10, 2014
132. All qualified bidders will be
eligible to participate in a mock auction
on Monday, November 10, 2014. The
mock auction will enable bidders to
become familiar with the FCC Auction
System prior to the auction. The Bureau
strongly recommends that all bidders
participate in the mock auction. Details
will be announced by public notice.
133. DISH requests that the Bureau
conduct at least one, but preferably two,
mock auctions at least one week before
the auction begins, and that the mock
auction(s) offer the same number of
licenses as the auction itself to match
the actual auction’s scenarios as closely
as possible. In keeping with the
Bureau’s practice in most auctions, it
will hold a mock auction shortly before
the start of Auction 97 that will offer a
sampling of licenses available in the
auction. Based on the Bureau’s
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experience, this approach provides
adequate practice and avoids the need
to lengthen the time period between the
short-form application deadline and the
start of bidding.
IV. Auction
134. The first round of bidding for
Auction 97 will begin on Thursday,
November 13, 2014. The initial bidding
schedule will be announced in a public
notice listing the qualified bidders,
which is released approximately 10
days before the start of the auction.
A. Auction Structure
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1. Simultaneous Multiple Round
Auction
135. In the Auction 97 Comment
Public Notice, the Bureau proposed to
auction all licenses in Auction 97 in a
single auction using a standard
simultaneous multiple-round (SMR)
auction format. This format offers every
license for bid at the same time and
consists of successive bidding rounds in
which eligible bidders may place bids
on individual licenses. A bidder may
bid on, and potentially win, any number
of licenses.
136. With one exception, all
commenters that discussed this issue
support using a standard SMR auction
format without any form of package
bidding. AT&T notes that this format
has been used successfully for two
decades and that the wireless industry
is extremely familiar with it. AT&T
maintains that using this design for
Auction 97 will promote a competitive
and fair auction where both large and
small bidders are familiar with the
format and can make informed choices
in an efficient manner. Verizon Wireless
supports the use of package bidding in
Auction 97, and proposes allowing
applicants to bid on a nationwide
package of licenses in the H, I, and J
Blocks. Verizon Wireless maintains that
package bidding will increase
participation and bidding competition
because it allows bidders to bid on both
the value of the individual EA licenses
and the value of obtaining spectrum
nationwide over a consistent set of
frequencies. Verizon Wireless also
claims that the risk of failing to acquire
all licenses in a business plan (the
‘‘exposure problem’’) may inhibit
participation because, for some bidders,
the potential for acquisition of all
desired licenses is needed to support
individual license bid amounts.
However, US Cellular asserts that
Verizon Wireless has previously made
clear that the availability of larger
license areas, such as the EA-based
licenses being offered in Auction 97,
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would significantly mitigate the
‘‘exposure risks’’ it would face if it
could not bid on packages of smaller
license areas.
137. The Bureau concludes, based on
the record and in light of its experience
with previous spectrum auctions,
including auctions of Advanced
Wireless Services (AWS) licenses, that a
standard SMR format will provide
bidders with a simple and efficient
means of bidding on single or multiple
licenses and will offer adequate
opportunity for bidders in Auction 97 to
aggregate licenses in order to obtain the
level of coverage they desire consistent
with their business plans. The Bureau
therefore adopts a standard SMR
auction format for Auction 97.
Accordingly, bids will be accepted on
all licenses in each round of the auction
until bidding stops on every license
unless otherwise announced.
2. Single Auction With a Single Set of
Procedures and Requirements for the
Unpaired and Paired Bands
138. A number of commenters ask (to
varying degrees) that the Bureau
recognize the differences between the
unpaired and paired bands when
adopting procedures and requirements
for Auction 97 by establishing separate
bidding eligibility, activity waivers, and
stopping rules for the bands. They
submit that it is not likely that licenses
in the bands could be used as close
substitutes because they have different
technical characteristics and likely uses,
and that combined procedures could
enable bidders to use bidding strategies
designed to hurt smaller competitors
and new entrants, which could deter
competition. These commenters
advocate establishing separate upfront
payment requirements and bidding
eligibility for the unpaired and paired
bands to prevent a bidder from gaming
eligibility and activity requirements by
‘‘parking’’ bidding eligibility on licenses
in one band to lock competitors out of
that spectrum or distract from its real
interests. They argue that such strategic
parking enables larger competitors to
drive up the cost of spectrum they have
no real interest in winning, and could
cause smaller competitors or new
entrants to drop out of the auction early,
thereby potentially depressing auction
revenues. They maintain that separate
eligibility and activity requirements will
avoid such results.
139. AT&T and Verizon Wireless
support a single auction with a single
set of procedures. Verizon Wireless
submits that separate auctions would
significantly increase auction
complexity, limit applicants’ bidding
flexibility, inhibit competition for the
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1695–1710 MHz band, and decrease
auction revenues. AT&T argues that
commenters’ arguments in support of
adopting separate procedures and
requirements are premised on the false
assumptions that the different technical
characteristics of the bands warrant
separate auction treatment, and that
employing common auction procedures
for both bands will encourage parking.
Both AT&T and Verizon Wireless
maintain that other bidders may view
the bands as substitutable or
complementary and, if so, public
interest objectives are best promoted by
allowing the market to reflect
substitutability through a single set of
auction procedures. They also contend
that commenters’ concerns about
parking are misplaced, because an
applicant bidding solely on the 1695–
1710 MHz band to preserve eligibility
will quickly move its bids as soon as the
reserve is met, and thus eligibility
‘‘parkers’’ will not drive up the price
any higher than otherwise required to
meet the reserve.
140. Auction 97 will offer paired and
unpaired licenses in a single auction
subject to one set of procedures and
requirements. Particularly where, as
here, interested parties are divided on
whether licenses being offered may be
characterized as substitutes, such
information may best be discovered
through a competitive bidding process.
Offering both the paired and unpaired
bands in the same auction will allow
market forces to determine the degree to
which market participants view the
AWS–3 spectrum blocks as
substitutable. The Bureau’s approach is
grounded in its experience with past
auctions where the degree to which
licenses may be characterized as
substitutable or complementary differs
depending upon the perspective of each
auction participant. Providing for two
different sets of bidding eligibility,
activity waivers, and stopping rules
would disadvantage bidders interested
in both paired and unpaired blocks by
forcing them to manage two separate
pools of eligibility, which would reduce
their ability to pursue backup strategies
as prices rise. Whether in one auction or
two simultaneous auctions, requiring
bidders interested in both blocks to deal
with separate sets of bidding actions
would invite confusion and could lead
to mistakes in bidding. Elsewhere in the
Auction 97 Procedures Public Notice,
the Bureau describes procedures that are
intended to ameliorate the parking
concerns raised by commenters.
Accordingly, the Bureau will conduct
Auction 97 under a single set of
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procedures and requirements covering
both the unpaired and paired bands.
3. Limited Information Disclosure
Procedures: Information Available to
Bidders Before and During the Auction
141. Consistent with its practice in
several prior wireless spectrum
auctions, the Bureau proposed in the
Auction 97 Comment Public Notice 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.
The Bureau sought comment on the
proposal to implement limited
information disclosure procedures and
on any alternatives for Auction 97.
142. The Bureau received several
comments on its proposal to employ
limited information disclosure
procedures for Auction 97, both in
support and in opposition. The limited
information disclosure procedures used
in past auctions have helped safeguard
against potential anticompetitive
behavior such as retaliatory bidding and
collusion, and after carefully
considering the record on this issue, the
Bureau finds nothing that persuades it
to depart from its now-established
practice of implementing these
procedures in wireless spectrum
auctions. The Bureau disagrees with the
assertions of commenters that argue that
limited information disclosure
procedures are unnecessary or harmful
to smaller bidders, and concludes that
the competitive benefits associated with
limiting information disclosure support
adoption of such procedures and
outweigh the potential benefits of full
disclosure. Accordingly, the Bureau
adopts the limited information
disclosure procedures proposed in the
Auction 97 Comment Public Notice.
Thus, after the conclusion of each
round, the Bureau will disclose all
relevant information about the bids
placed and/or withdrawn except the
identities of the bidders performing the
actions and the net amounts of the bids
placed or withdrawn. As in past
auctions conducted with limited
information procedures, the Bureau will
indicate, for each license, the minimum
acceptable bid amount for the next
round and whether the license has a
provisionally winning bid. After each
round, the Bureau will also release, for
each license, the number of bidders that
placed a bid on the license and the
amounts of those bids. Furthermore, the
Bureau will indicate whether any
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proactive waivers were submitted in
each round, and the Bureau will release
the stage transition percentage — the
percentages of licenses (as measured in
bidding units) on which there were new
bids — for the round. In addition,
bidders can log in to the FCC Auction
System to see, after each round, whether
their own bids are provisionally
winning. The Bureau will provide
descriptions and/or samples of publiclyavailable and bidder-specific (nonpublic) results files prior to the start of
the auction.
143. The Bureau, however, retains the
discretion not to use limited
information procedures if it, after
examining the level of potential
competition based on the short-form
applications filed for Auction 97,
determines that the circumstances
indicate that limited information
procedures would not be an effective
tool for deterring anti-competitive
behavior. For example, if only two
applicants become qualified to
participate in the bidding, limited
information procedures would be
ineffective in preventing bidders from
knowing the identity of the competing
bidder and, therefore, limited
information procedures would not serve
to deter attempts at signaling and
retaliatory bidding behavior.
144. Other Issues. Information
disclosure procedures established for
this auction will not interfere with the
administration of, or compliance with,
the Commission’s prohibition of certain
communications. 47 CFR 1.2105(c)(1)
provides that, after the short-form
application filing deadline, all
applicants for licenses in any of the
same or overlapping geographic license
areas are prohibited from disclosing to
each other in any manner the substance
of bids or bidding strategies until after
the down payment deadline, subject to
specified exceptions.
145. In Auction 97, the Commission
will not disclose information regarding
license selection or the amounts of
bidders’ upfront payments and bidding
eligibility. The Commission will
disclose the other portions of
applicants’ short-form applications
through its online database, and certain
application-based information through
public notices.
146. To assist applicants in
identifying other parties subject to 47
CFR 1.2105(c), the Bureau will notify
separately each applicant in Auction 97
whether applicants with short-form
applications to participate in pending
auctions, including but not limited to
Auction 97, have applied for licenses in
any of the same or overlapping
geographic areas as that applicant.
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Specifically, after the Bureau conducts
its initial review of applications to
participate in Auction 97, it will send to
each applicant in Auction 97 a letter
that lists the other applicants that have
pending short-form applications for
licenses in any of the same or
overlapping geographic areas. The list
will identify the other applicants by
name but will not list their license
selections. As in past auctions,
additional information regarding other
applicants that is needed to comply
with 47 CFR 1.2105(c)—such as the
identities of other applicants’
controlling interests and entities with a
greater than ten percent ownership
interest—will be available through the
publicly-accessible online short-form
application database.
147. When completing short-form
applications, applicants should avoid
any statements or disclosures that may
violate the Commission’s prohibition of
certain communications, pursuant to 47
CFR 1.2105(c), particularly in light of
the Commission’s procedures regarding
the availability of certain information in
Auction 97. While applicants’ license
selections will not be disclosed until
after Auction 97 closes, the Commission
will disclose other portions of shortform applications through its online
database and public notices.
Accordingly, applicants should avoid
including any information in their
short-form applications that might
convey information regarding license
selections. For example, applicants
should avoid using applicant names that
refer to licenses being offered, referring
to certain licenses or markets in
describing bidding agreements, or
including any information in
attachments that may otherwise disclose
applicants’ license selections.
148. If an applicant is found to have
violated the Commission’s rules or the
antitrust laws in connection with its
participation in the competitive bidding
process, the applicant may be subject to
various sanctions, including forfeiture
of its upfront payment, down payment,
or full bid amount and prohibition from
participating in future auctions.
149. The Bureau hereby warns
applicants that the direct or indirect
communication to other applicants or
the public disclosure of non-public
information (e.g., bid withdrawals,
proactive waivers submitted, reductions
in eligibility) could violate the
Commission’s limited information
disclosure procedures and 47 CFR
1.2105(c). To the extent an applicant
believes that such a disclosure is
required by law or regulation, including
regulations issued by the SEC, the
Bureau strongly urges that the applicant
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consult with the Commission staff in the
Auctions and Spectrum Access Division
before making such disclosure.
4. Eligibility and Activity Rules
150. The Bureau will use upfront
payments to determine initial
(maximum) eligibility (as measured in
bidding units) for Auction 97. The
amount of the upfront payment
submitted by a bidder determines initial
bidding eligibility, the maximum
number of bidding units on which a
bidder may be active. Each license is
assigned a specific number of bidding
units as listed in Attachment A to the
Auction 97 Procedures Public Notice.
Bidding units assigned to each license
do not change as prices change during
the auction. Upfront payments are not
attributed to specific licenses. Rather, a
bidder may place bids on any of the
licenses selected on its FCC Form 175
as long as the total number of bidding
units associated with those licenses
does not exceed its current eligibility.
Eligibility cannot be increased during
the auction; it can only remain the same
or decrease. Thus, in calculating its
upfront payment amount, an applicant
must determine the maximum number
of bidding units it may wish to bid on
or hold provisionally winning bids on
in any single round, and submit an
upfront payment amount covering that
total number of bidding units. At a
minimum, an applicant’s upfront
payment must cover the bidding units
for at least one of the licenses it selected
on its FCC Form 175. The total upfront
payment does not affect the total dollar
amount a bidder may bid on any given
license.
151. In order to ensure that an auction
closes within a reasonable period of
time, an activity rule requires bidders to
bid actively throughout the auction,
rather than wait until late in the auction
before participating. Bidders are
required to be active on a specific
percentage of their current bidding
eligibility during each round of the
auction. A bidder’s activity level in a
round is the sum of the bidding units
associated with licenses covered by the
bidder’s new bids in the round and its
provisionally winning bids from the
previous round. If a bidder removes bids
in the current round or withdraws
provisionally winning bids, those bids
no longer count towards the bidder’s
activity.
152. The minimum required activity
is expressed as a percentage of the
bidder’s current eligibility, and
increases by stage as the auction
progresses. Because these auction stage
and stage transition procedures have
proven successful in maintaining the
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pace of previous auctions, the Bureau
adopts them for Auction 97. 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.
5. Auction Stages
153. In the Auction 97 Comment
Public Notice, the Bureau proposed to
conduct the auction in two stages and
employ an activity rule. Under the
Bureau’s proposal, a bidder desiring to
maintain its current bidding eligibility
would be required to be active on
licenses representing at least 80 percent
of its current bidding eligibility during
each round of Stage One, and at least 95
percent of its current bidding eligibility
in Stage Two. US Cellular supports the
Bureau’s proposal to divide the auction
into two stages, and opposes adopting a
third stage with a 98 percent activity
requirement. Aloha Partners asks the
Bureau to add a third stage with a 100
percent activity requirement and would
require that minimum acceptable bids
be 20 percent higher than provisionally
winning bids, and recommends that this
third stage be implemented when the
number of new provisionally winning
bids falls below ten bids.
154. The Bureau sees no need to
establish, at this time, a third stage with
a 100 percent eligibility requirement as
requested by Aloha Partners. Based on
its past experience, the Bureau believes
that two stages with 80 percent and 95
percent activity requirements should
facilitate the auction progressing at a
reasonable pace. In some of the Bureau’s
earlier auctions, it established three
stages using 80 percent, 90 percent, and
98 percent activity requirements. In
many of these auctions, however,
implementing Stage Two had little
effect in terms of increasing bidding
activity, and Stage Three was
implemented shortly thereafter. Based
on this experience, the Bureau has
generally moved away from three-stage
auctions in favor of two-stage auctions.
Moreover, a 95 percent threshold allows
bidders slightly more flexibility than a
higher requirement would in fulfilling
their activity requirements during the
final stage of the auction. Accordingly,
the Bureau declines to establish a third
stage with a 100 percent activity
threshold at this time. The Bureau notes
that it has the discretion to further alter
the activity requirements (by, for
example, establishing a 98 or 100
percent threshold) before and/or during
the auction as circumstances warrant.
The Bureau also has other mechanisms
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by which to influence the speed of the
auction if it determines that such steps
are necessary. Therefore, the Bureau
will conduct the auction in two stages
as follows:
155. Stage One: During the first stage
of the auction, a bidder desiring to
maintain its current bidding eligibility
will be required to be active on licenses
representing at least 80 percent of its
current bidding eligibility in each
bidding round. Failure to maintain the
required activity level will result in the
use of an activity rule waiver or, if the
bidder has no activity rule waivers
remaining, a reduction in the bidder’s
bidding eligibility in the next round.
During Stage One, reduced eligibility for
the next round will be calculated by
multiplying the bidder’s current round
activity (the sum of bidding units of the
bidder’s provisionally winning bids and
bids during the current round) by fivefourths (5/4).
156. Stage Two: During the second
stage of the auction, a bidder desiring to
maintain its current bidding eligibility
is required to be active on 95 percent of
its current bidding eligibility. Failure to
maintain the required activity level will
result in the use of an activity rule
waiver or, if the bidder has no activity
rule waivers remaining, a reduction in
the bidder’s bidding eligibility in the
next round. During Stage Two, reduced
eligibility for the next round will be
calculated by multiplying the bidder’s
current round activity (the sum of
bidding units of the bidder’s
provisionally winning bids and bids
during the current round) by twentynineteenths (20/19).
157. CAUTION: Since activity
requirements increase in Stage Two,
bidders must carefully check their
activity during the first round following
a stage transition to ensure that they are
meeting the increased activity
requirement. This is especially critical
for bidders that have provisionally
winning bids and do not plan to submit
new bids. In past auctions, some bidders
have inadvertently lost bidding
eligibility or used an activity rule
waiver because they did not re-verify
their activity status at stage transitions.
Bidders may check their activity against
the required activity level by logging
into the FCC Auction System.
158. When the Bureau moves the
auction from Stage One to Stage Two, it
will first alert bidders by announcement
in the bidding system. The Bureau has
the discretion to further alter the
activity requirements before and/or
during the auction as circumstances
warrant.
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6. Stage Transitions
159. In the Auction 97 Comment
Public Notice, the Bureau proposed that
it would advance the auction to the next
stage (i.e., from Stage One to Stage Two)
after considering a variety of measures
of auction activity, including, but not
limited to, the percentages of licenses
(as measured in bidding units) on which
there are new bids, the number of new
bids, and the increase in revenue. The
Bureau further proposed that it would
retain the discretion to change the
activity requirements during the
auction. For example, the Bureau could
decide not to transition to Stage Two if
it believes the auction is progressing
satisfactorily under the Stage One
activity requirement, or to transition to
Stage Two with an activity requirement
that is higher or lower than 95 percent.
The Bureau proposed to alert bidders of
stage advancements by announcement
during the auction. The Bureau received
no comments on this issue.
160. The Bureau adopts its proposal
for stage transitions. Thus, the auction
will start in Stage One. The Bureau will
regulate the pace of the auction by
announcement. The Bureau retains the
discretion to transition the auction to
Stage Two, to add an additional stage
with a higher activity requirement, not
to transition to Stage Two, and to
transition to Stage Two with an activity
requirement that is higher or lower than
95 percent. This determination will be
based on a variety of measures of
auction activity, including, but not
limited to, the number of new bids and
the percentages of licenses (as measured
in bidding units) on which there are
new bids.
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7. Activity Rule Waivers
161. The Bureau proposed in the
Auction 97 Comment Public Notice that
each bidder in the auction be provided
with three activity rule waivers. The
Bureau received no comments on this
issue. Therefore, the Bureau adopts its
proposal to provide bidders with three
activity rule waivers. Bidders may use
an activity rule waiver in any round
during the course of the auction. Use of
an activity rule waiver preserves the
bidder’s eligibility despite its activity in
the current round being below the
required minimum activity level. An
activity rule waiver applies to an entire
round of bidding and not to a particular
license. Waivers can be either proactive
or automatic and are principally a
mechanism for auction participants to
avoid the loss of bidding eligibility in
the event that exigent circumstances
prevent them from placing a bid in a
particular round.
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162. The FCC Auction System
assumes that a bidder with insufficient
activity would prefer to apply 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. If no waivers
remain and the activity requirement is
not satisfied, the FCC Auction System
will permanently reduce the bidder’s
eligibility, possibly curtailing or
eliminating the ability to place
additional bids in the auction.
163. 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 it 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.
164. Finally, a bidder may apply an
activity rule waiver proactively as a
means to keep the auction open without
placing a bid. If a proactive waiver is
applied (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.
However, 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 submit a proactive waiver after
bidding in a round, and applying a
proactive waiver will preclude it from
placing any bids in that round.
Applying a waiver is irreversible: Once
a bidder submits a proactive waiver, the
bidder cannot unsubmit the waiver even
if the round has not yet ended.
8. Auction Stopping Rules
165. In the Auction 97 Comment
Public Notice, the Bureau proposed to
employ a simultaneous stopping rule
under its SMR proposal. Under this
rule, all licenses remain available for
bidding until bidding stops
simultaneously on every license. More
specifically, bidding will close on all
licenses after the first round in which
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no bidder submits any new bids, applies
a proactive waiver, or withdraws any
provisionally winning bids. Thus, under
the Bureau’s SMR proposal, unless it
announce alternative stopping
procedures, the simultaneous stopping
rule will be used in this auction, and
bidding will remain open on all licenses
until bidding stops on every license.
166. The Bureau also proposed that it
retain discretion to exercise and of the
following alternative versions of the
simultaneous stopping rule for Auction
97: (1) The auction would close for all
licenses after the first round in which
no bidder applies a waiver, withdraws
a provisionally winning bid, or places
any new bids on a 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; (2)
the auction would close for all licenses
after the first round in which no bidder
applies a waiver, withdraws a
provisionally winning bid, or places any
new bids on a license that is not FCCheld; thus, absent any other bidding
activity, a bidder placing a new bid on
a license that does not already have a
provisionally winning bid (an FCC-held
license) would not keep the auction
open under this modified stopping rule;
(3) the auction would close using a
modified version of the simultaneous
stopping rule that combines Option (1)
and Option (2); (4) the auction would
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; or (5) the auction
would remain open even if no bidder
places any new bids, applies a waiver,
or withdraws any provisionally winning
bids; in this event, the effect will be the
same as if a bidder had applied a
waiver, and the activity rule will apply
as usual, and a bidder with insufficient
activity will either lose bidding
eligibility or use a waiver.
167. The Bureau proposed to exercise
alternative versions of the simultaneous
stopping rule only in certain
circumstances, for example, where the
auction is proceeding unusually slowly
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 (e.g., before bidder have
had an adequate opportunity to satisfy
any applicable reserve prices). The
Bureau noted that before exercising
these options, the Bureaus is likely to
attempt to change the pace of the
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auction by, for example, changing the
number of bidding rounds per day and/
or the minimum acceptable bids. The
Bureau also proposed to retain the
discretion to exercise any of these
options with or without prior
announcement during the auction.
168. As part of their general request
that the Bureau adopt separate
procedures and requirements for the
paired and unpaired bands, several
parties ask the Bureau to apply its
stopping rules separately to the paired
and unpaired bands. T-Mobile suggests
the Bureau apply the stopping rules
based on activity within a particular
band rather than the activity across all
licenses. Under T-Mobile’s proposal, if
bidding stops on one of the bands, the
auction for that band would close. TMobile submits that this will add
certainty to the auction process and
avoid delaying the close of the auction
any longer than necessary, and claims
that leaving the entire auction open
even when interest in one band
diminishes may prompt insincere
bidding by allowing bidders interested
in one band to park bids in another
merely to preserve eligibility, thereby
artificially prolonging the auction. DISH
and New America Foundation/Public
Knowledge advocate separate stopping
rules for the unpaired and paired bands,
arguing that combined procedures for
bands that they consider to be nonsubstitutable could enable bidders to
employ bidding strategies designed to
hurt smaller competitors and new
entrants, which could deter competition
and suppress revenues. Like T-Mobile,
DISH and New America Foundation/
Public Knowledge are concerned that
applying the stopping rules based on
activity across all licenses could
facilitate strategic parking and permit
bidders to pursue the very ‘‘wait and
see’’ approach the eligibility and
activity rules are designed to prevent.
CCA echoes the sentiments of T-Mobile,
DISH, and New America Foundation/
Public Knowledge regarding parking
and argues that such behavior could be
prevented by adopting separate stopping
rules for the bands.
169. The Bureau adopts procedures to
address these commenters’ concerns
that bidding activity could stop on one
band well before it stops on the other.
The Bureau generally adopts its
proposed stopping rules but does so on
a per-band basis described as follows.
After no more than five consecutive
rounds in which no bids have been
placed or withdrawn for licenses in one
of the two bands (i.e., the unpaired
1695–1710 MHz band and the paired
1755–1780/2155–280 MHz band), no
bidder has placed a proactive waiver,
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and the associated reserve price has
been met, the Bureau will close the
bidding for that band. Accordingly,
bidders will no longer be able to place
new bids for licenses in the band, nor
will they be able to withdraw any
provisional winning bids for licenses in
the band. The Bureau’s decision to end
the auction for a given band in this
manner for Auction 97 does not prejudge how we may approach stopping
rules in any future auctions, including
those in which the same or similar facts
and circumstances exist. The Bureau
reserves the right to close bidding for a
band after fewer than five consecutive
rounds without bidding activity. The
Bureau will notify bidders with an
announcement in the FCC Auction
System before bidding closes for one of
the bands.
170. Aloha Partners agrees that there
should be a mechanism to end the
auction when the number of bids
decreases to low levels, but expresses
concern that the proposed special
stopping rule could be misused by a
bidder that has remaining eligibility in
the last round by bidding on licenses
that it may not have shown an interest
in previously. As an alternative, Aloha
Partners recommends the Bureau
instead add a third stage, to be
implemented when the number of new
winning bids falls below ten bids, that
would require a bidder to have activity
covering 100 percent of its eligibility
and would require minimum acceptable
bids be 20 percent higher than
provisionally winning bids. The Bureau
declines to adopt Aloha Partners’
request for a third stage with a 100
percent eligibility requirement in lieu of
its special stopping rule.
171. Aside from the per-band
departure from its past procedure, the
Bureau retains the discretion to employ
the alternative versions of the stopping
rule, with or without prior
announcement during the auction. The
Bureau will not, however, employ the
first alternative (Option 1) for a band if
the reserve price for that band has not
been met. Bidders will continue to have
the opportunity to place bids in a given
band at least until the reserve price for
that band is met.
activity, or for any other reason that
affects the fair and efficient conduct of
competitive bidding. The Bureau
received no comment on this issue.
173. Because this approach has
proven effective in resolving exigent
circumstances in previous auctions, the
Bureau adopts these proposals regarding
auction delay, suspension, or
cancellation. 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 or 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 emphasize that
it will exercise of this authority solely
at its discretion, and not as a substitute
for situations in which bidders may
wish to apply their activity rule waivers.
9. Auction Delay, Suspension, or
Cancellation
172. In the Auction 97 Comment
Public Notice, the Bureau proposed that,
by public notice or by announcement
during the auction, it may delay,
suspend, or cancel the auction in the
event of natural disaster, technical
obstacle, administrative or weather
necessity, evidence of an auction
security breach or unlawful bidding
2. Reserve Price and Minimum Opening
Bids
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B. Bidding Procedures
1. Round Structure
174. The initial schedule of bidding
rounds will be announced in the public
notice listing the qualified bidders,
which is released approximately ten
days before the start of the auction. Each
bidding round is followed by the release
of round results. Details regarding
formats and locations of round results
will also be included in the qualified
bidders public notice. Multiple bidding
rounds may be conducted each day.
175. The Bureau has the discretion to
change the bidding schedule in order to
foster an auction pace that reasonably
balances speed with the bidders’ needs
to study round results and adjust their
bidding strategies. The Bureau may
change the amount of time for the
bidding rounds, the amount of time
between rounds, or the number of
rounds per day, depending upon
bidding activity and other factors.
a. Reserve Price
176. The Commission is statutorily
obliged to consider and balance a
variety of public interests and objectives
when establishing service rules and
licensing procedures with respect to the
public spectrum resource. These
objectives include promoting recovery
for the public a portion of the value of
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that resource. Certain of the frequencies
in the AWS–3 bands are ‘‘eligible
frequencies’’ under the CSEA, and the
CSEA requires that auction proceeds
fund the estimated relocation or sharing
costs of incumbent federal entities
operating on these frequencies. In view
of this, the Bureau establishes reserve
prices for the AWS–3 licenses offered in
Auction 97.
177. The CSEA requires that the total
cash proceeds attributable to ‘‘eligible
frequencies’’ be at least 110 percent of
the total estimated relocation or sharing
costs provided to the Commission
pursuant to the CSEA before the
Commission may conclude an auction
involving such frequencies. If this
condition is not met, the CSEA requires
the Commission to cancel the auction.
For purposes of determining whether
the CSEA’s revenue requirement has
been met, the Commission has
determined that ‘‘total cash proceeds’’
means winning bids net of any
applicable bidding credit discounts at
the end of bidding (e.g., exclusive of any
Tribal lands bidding credit).
178. Pursuant to the CSEA, on May
13, 2014, the NTIA notified the
Commission that the total estimated
relocation or sharing costs for the 1695–
1710 MHz band equal $527,069,000,
and that the total estimated relocation or
sharing costs for the 1755–1780 MHz
band equal $4,575,603,000.
Accordingly, in the Auction 97
Comment Public Notice, the Bureau
proposed to establish one aggregate
reserve price for the 1695–1710 MHz
band and a separate aggregate reserve
price for the paired 1755–1780/2155–
2180 MHz band.
179. The Bureau proposed to establish
an aggregate reserve price of
$579,775,900 for the licenses in the
1695–1710 MHz band. This aggregate
reserve price is 110 percent of total
estimated relocation or sharing costs of
$527,069,000 provided by the NTIA for
this band and, therefore, the minimum
reserve price required by the CSEA.
Given that the 1695–1710 MHz band
consists entirely of ‘‘eligible
frequencies,’’ the Bureau propose that
the winning bid for each license in this
band, net of any applicable bidding
credit discounts at the end of bidding
(e.g., exclusive of any Tribal lands
bidding credit), will be counted toward
meeting the reserve price for the band.
Thus, the aggregate reserve price will be
met if the total winning bids for the
licenses in the 1695–1710 MHz band,
net of any applicable bidding credit
discounts at the end of bidding (e.g.,
exclusive of any Tribal lands bidding
credit), is at least $579,775,900.
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180. The 1755–1780 MHz band will
be licensed paired with the 2155–2180
MHz band. The lower half of the
frequencies in each paired license, i.e.,
those in the 1755–1780 MHz band, are
‘‘eligible frequencies’’ and are thus
subject to CSEA requirements. To meet
CSEA’s requirements, the Bureau
proposed to establish an aggregate
reserve price of $5,033,163,300 for the
1755–1780 MHz frequencies. This
aggregate reserve price is 110 percent of
total estimated relocation or sharing
costs of $4,575,603,000 for the 1755–
1780 MHz band provided by the NTIA
and, therefore, the minimum reserve
price required by CSEA. Because these
frequencies are one half of the
frequencies authorized for use by each
of the 1755–1780/2155–2180 MHz
paired licenses, the Bureau propose that
one-half of each winning bid for each of
the paired 1755–1780/2155–2180 MHz
licenses, net of any applicable bidding
credit discounts at the end of bidding,
will be counted toward meeting the
reserve price. The aggregate reserve
price will be met if one half of the total
winning bids for the licenses in the
1755–1780/2155–2180 MHz band, net of
any applicable bidding credit discounts
at the end of bidding (e.g., exclusive of
any Tribal lands bidding credit), is at
least $5,033,163,300. Therefore, the
winning ‘‘net’’ bids for the paired 1755–
1780/2155–2180 MHz licenses must be
at least twice that amount, or
$10,066,326,600, in order for the
Commission to conclude the auction.
181. C Spire supports the Bureau’s
proposal to use an aggregate reserve for
the AWS–3 spectrum bands. A few
commenters asked the Bureau to treat
the unpaired and paired bands
differently with respect to meeting the
reserve prices. T-Mobile argues that
there is no reason that the entire auction
should be declared invalid if the reserve
price is not met for one band and that,
consistent with CSEA, only the auction
for the particular band that failed to
meet the reserve should be cancelled.
182. The Bureau adopts its proposed
reserve prices for Auction 97 and its
proposals for implementing them.
Consistent with the Bureau’s past
treatment of spectrum bands that are
subject to separate reserve prices, and
based on its reading of CSEA, the
Bureau will treat the unpaired and
paired bands separately with respect to
meeting their respective reserve prices.
Thus, if the reserve price is met or
exceeded for a given band, the auction
for that band will be deemed to be
successful and licenses in that band will
be assigned. If the reserve price for the
other band is not met, the auction for
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that band will, as required by CSEA, be
cancelled as to only that band.
183. In light of the Bureau’s proposal
to adopt procedures for limited
information disclosure for Auction 97, if
information regarding net bid amounts
is not provided during the auction, the
Bureau proposed in the Auction 97
Comment Public Notice to issue an
announcement in the FCC Auction
System, viewable by bidders and the
general public, stating that a reserve
price has been met immediately
following the first round in which that
occurs. The Bureau received no
comment this proposal, and therefore
adopts it for Auction 97. As the Bureau
noted in the Auction 97 Comment
Public Notice, due to factors such as bid
withdrawals and the effect of bidding
credits, an announcement that the
reserve price has been met following a
round of the auction does not guarantee
that the reserve price will continue to be
met. Accordingly, the Bureau will make
a further announcement in the FCC
Auction System after any round in
which the reserve price status changes.
184. When determining whether a
reserve price has been met, the Bureau
will use net bid amounts that take into
account bidding credits. The Bureau
will not count any withdrawn bids
toward meeting a reserve price. Thus,
the Bureau will count only the current
provisionally winning bid on a license
when determining whether a reserve
price has been met.
b. Minimum Opening Bids
185. In addition to proposing
aggregate reserve prices, the Bureau
proposed in the Auction 97 Comment
Public Notice to establish minimum
opening bid amounts for each license in
Auction 97. The Bureau believes a
minimum opening bid amount, which
has been used in other auctions, is an
effective bidding tool for accelerating
the competitive bidding process.
186. In the Auction 97 Comment
Public Notice, the Bureau proposed to
calculate minimum opening bid
amounts on a license-by-license basis
using a formula based on bandwidth
and license area population, similar to
its approach in many previous spectrum
auctions. The Bureau proposed to use a
calculation based on $0.15 per
megahertz of bandwidth per population
(per MHz-pop) for paired licenses and
$0.05 per MHz-pop for unpaired
licenses. Additionally, the Bureau
proposed, as it did for Auction 96, to
adjust minimum opening bid amounts
based on past auction results, in order
to reflect historical price differences
among different geographic areas. The
Bureau further proposed a minimum of
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$2,500 per license. For the license
covering the Gulf of Mexico, the Bureau
proposed to set the minimum opening
bid at $2,000 per megahertz.
187. Commenters presented a number
of perspectives on the Bureau’s
proposal. Verizon Wireless, CCA,
C Spire, and NTCA advocate using
$0.05 per MHz-pop to set the minimum
opening bids. Verizon Wireless also
objects to the Bureau’s proposal to vary
the calculation of minimum opening bid
amounts across license areas. Spectrum
Financial Partners recommends a
change to the Bureau’s proposed
method for reflecting historical price
differences by excluding the results of
Auction 96. AT&T acknowledges the
merits of the Bureau’s proposal to vary
the calculation of minimum opening bid
amounts across license areas, but
suggests an alternative method. AT&T
recognizes the value of adjusting
minimum opening bids to account for
regional price differences, but contends
that making these adjustments on a
license-by-license basis perpetuates
anomalous bidding patterns from past
auctions (which may have involved
eligibility parking and inefficient
pricing) into Auction 97. For these
reasons, AT&T offers refinements that it
believes would help prevent both
inefficient allocation of bidding units
and eligibility parking during the
auction. AT&T proposes that the Bureau
rank the licenses by population; group
them into deciles; sum its proposed
minimum opening bid amounts for the
licenses in the decile; and then, based
on population, redistribute that subtotal
among the licenses in the decile. After
careful consideration of the record, the
Bureau finds AT&T’s arguments
compelling and adopts AT&T’s proposal
in a modified form.
188. The Bureau will calculate
minimum opening bid amounts as
follows. The Bureau continues to use
underlying prices of $0.15 per MHz-pop
for paired licenses and $0.05 per MHzpop for unpaired licenses, and the
Bureau continues to adjust amounts
based on relative price information from
previous auctions. The Bureau changes
its method of incorporating past price
information, however, in several ways.
The Bureau will no longer use the
relative price information from Auction
96 in its calculations for the EA
licenses. The Bureau revises its method
of incorporating past price information
by using a variation of the decile-based
approach suggested by AT&T. Rather
than grouping by population decile, the
Bureau will group the licenses by
historical MHz-pop price deciles. For
each decile the Bureau uses the lowest
index price value and apply it to all of
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the markets in that decile. As proposed
in the Auction 97 Comment Public
Notice, the Bureau will round the
results using its standard rounding
procedures. Finally, the Bureau adopts
a minimum of $1,000 per license, and
adopts its proposal to set the minimum
opening bids for licenses covering the
Gulf of Mexico at $2,000 per megahertz.
189. The Bureau finds that this
approach accommodates several of the
concerns raised in the record. The use
of deciles smooths the opening bid
amounts in a way that reduces the
impact of price variation from previous
auctions. Basing the deciles on a price
index (rather than a population index),
however, ensures that the Bureau does
not exclude significant past price
differences between similarly-sized
markets in its calculations. The use of
the lowest unit price for each decile,
rather than the average price, ensures
that minimum opening bids for licenses
within a decile are not averaged up to
the arithmetic mean price of the decile.
As a result of these changes, the
minimum opening bids the Bureau
adopts are over 25 percent less than the
ones proposed in the Auction 97
Comment Public Notice. The Bureau
does not believe that it risks overpricing
licenses by basing the minimum
opening bid amounts on $0.15 and
$0.05 per MHz-pop, especially given the
substantial reserve prices adopted for
this auction. These minimum opening
bid amounts should, as intended, help
to accelerate the competitive bidding
process. The minimum opening bid
amount for each AWS–3 license
available in Auction 97, calculated
pursuant to the procedures is set forth
in Attachment A to the Auction 97
Procedures Public Notice.
3. Bid Amounts
190. In the Auction 97 Comment
Public Notice, the Bureau proposed that
in each round, eligible bidders be able
to place a bid on a given license using
one or more pre-defined bid amounts.
Under the proposal, the FCC Auction
System interface will list the acceptable
bid amounts for each license. The
Bureau received no comment on this
proposal and therefore adopts it for
Auction 97.
a. Minimum Acceptable Bids
191. The first of the acceptable bid
amounts is called the minimum
acceptable bid amount. The minimum
acceptable bid amount for a license will
be equal to its minimum opening bid
amount until there is a provisionally
winning bid on the license. After there
is a provisionally winning bid for a
license, the minimum acceptable bid
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amount for that license will be equal to
the amount of the provisionally winning
bid plus a percentage of that bid amount
calculated using the activity-based
formula. In general, the percentage will
be higher for a license receiving many
bids than for a license receiving few
bids. In the case of a license for which
the provisionally winning bid has been
withdrawn, the minimum acceptable
bid amount will equal the second
highest bid received for the license.
192. The percentage of the
provisionally winning bid used to
establish the minimum acceptable bid
amount (the additional percentage) is
calculated based on an activity index at
the end of each round. The activity
index is a weighted average of (a) the
number of distinct bidders placing a bid
on the license, and (b) the activity index
from the prior round. 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. The
additional percentage is then multiplied
by the provisionally winning bid
amount to obtain the minimum
acceptable bid for the next round. The
formula and examples are shown in
Attachment B to the Auction 97
Procedures Public Notice. The Bureau
proposed in the Auction 97 Comment
Public Notice to initially 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 covering the license.
193. All parties that commented on
the Bureau’s proposal to initially set the
maximum acceptable bid percentage at
30 percent advocate lowering the
maximum to 20 percent because they
are concerned that the proposed
maximum of up to 30 percent would
accelerate prices too quickly, thereby
discouraging bidder participation and/
or causing bidders to drop out of the
auction. The Bureau recognizes
commenters’ concerns that very rapid
increases in minimum acceptable bids
may potentially discourage bidder
participation, inhibit price discovery,
and create bid approval issues. At the
same time, since the Bureau is under a
statutory mandate to license the
spectrum being offered in Auction 97 by
February 2015, it is necessary that the
auction move at a reasonably fast pace.
Taking commenter concerns into
account, the Bureau concludes that an
initial maximum acceptable bid
percentage of 20 percent will allow the
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auction to proceed at a reasonably fast
pace while at the same time providing
bidders the flexibility to bid up to the
full value they assign to licenses. The
Bureau therefore adopts an initial
maximum acceptable bid percentage of
20 percent for Auction 97. The Bureau
will begin the auction with the
weighting factor set at 0.5, the minimum
percentage at 0.1 (10%), and the
maximum percentage at 0.2 (20%). The
Bureau reiterates that it has the
discretion to modify minimum
acceptable bid amounts—by changing
the activity-based formula parameters or
by imposing or modifying a cap on the
dollar amount of bid increments—as the
Bureau sees fit during the auction.
b. Additional Bid Amounts
194. Consistent with the Bureau’s
practice in past wireless spectrum
auctions, it proposed in the Auction 97
Comment Public Notice 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 five
percent, the calculation of the first
additional acceptable bid amount is
(minimum acceptable bid amount)
* (1 + 0.05), rounded or (minimum
acceptable bid amount) * 1.05, rounded;
the second additional acceptable bid
amount equals the minimum acceptable
bid amount times one plus two times
the bid increment percentage, rounded,
or (minimum acceptable bid amount)
* 1.10, rounded; etc. The Bureau will
round the results using the
Commission’s standard rounding
procedures for auctions. The Bureau
proposed in the Auction 97 Comment
Public Notice initially to set the bid
increment percentage at five percent.
The Bureau received no comment on
this proposal and therefore adopts it for
Auction 97.
195. The Bureau also proposed in the
Auction 97 Comment Public Notice to
begin the auction with nine acceptable
bid amounts per license (the minimum
acceptable bid amount and eight
additional bid amounts). The Bureau
received no comment on this proposal.
The Bureau therefore adopts nine
acceptable bid amounts per license,
which is consistent with its past
practice for most spectrum auctions.
c. Bid Amount Changes
196. The Bureau retains the discretion
to change the minimum acceptable bid
amounts, the additional bid amounts,
the number of acceptable bid amounts,
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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 do so on
a license-by-license basis. 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, if the Bureau set a $10 million
limit on increases in minimum
acceptable bid amounts over
provisionally winning bids, and the
activity-based formula calculates a
minimum acceptable bid amount that is
$20 million higher than the
provisionally winning bid on a license,
the minimum acceptable bid amount
would instead be capped at $10 million
above the provisionally winning bid.
The Bureau sought comment in the
Auction 97 Comment Public Notice on
the circumstances under which it
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 other parameters—such as
changing the minimum acceptable bid
percentage, the bid increment
percentage, or the number of acceptable
bid amounts.
197. The Bureau received no
comment on this proposal. Therefore,
the Bureau will start the auction
without a limit on the dollar amount by
which minimum acceptable bids and
additional bid amounts may increase.
The Bureau retains the discretion to
change the minimum acceptable bid
amounts, the minimum acceptable bid
percentage, the bid increment
percentage, and the number of
acceptable bid amounts if the Bureau
determine that circumstances so dictate.
Further, the Bureau retains the
discretion to do so on a license-bylicense basis. If the Bureau exercises
this discretion, it will alert bidders by
announcement in the FCC Auction
System during the auction.
4. Provisionally Winning Bids
198. At the end of each bidding
round, a ‘‘provisionally winning bid’’
will be determined based on highest bid
amount received for each license. A
provisionally winning bid will remain
the provisionally winning bid until
there is a higher bid on the license at the
close of a subsequent round.
Provisionally winning bids at the end of
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47127
the auction become the winning bids.
Bidders are reminded that provisionally
winning bids count toward activity for
purposes of the activity rule.
199. In the Auction 97 Comment
Public Notice, the Bureau proposed to
use a random number generator to select
a single provisionally winning bid in
the event of identical high bid amounts
being submitted on a license in a given
round (i.e., tied bids). Under this
approach, the FCC Auction System will
assign a random number to each bid
upon submission. The tied bid with the
highest random number wins the
tiebreaker, and becomes the
provisionally winning bid. Bidders,
regardless of whether they hold a
provisionally winning bid, can submit
higher bids in subsequent rounds.
However, if the auction were to end
with no other bids being placed, the
winning bidder would be the one that
placed the provisionally winning bid.
The Bureau received no comment on its
tied bids proposal and therefore adopts
it for Auction 97.
5. Bidding
200. All bidding will take place
remotely either through the FCC
Auction System or by telephonic
bidding. There will be no on-site
bidding during Auction 97. Please note
that telephonic bid assistants are
required to use a script when entering
bids placed by telephone. Telephonic
bidders are therefore reminded to allow
sufficient time to bid by placing their
calls well in advance of the close of a
round. The length of a call to place a
telephonic bid may vary; please allow a
minimum of ten minutes.
201. A bidder’s ability to bid on
specific licenses is determined by two
factors: (1) the licenses selected on the
bidder’s FCC Form 175 and (2) the
bidder’s eligibility. The bid submission
screens will allow bidders to submit
bids on only those licenses the bidder
selected on its FCC Form 175.
202. In order to access the bidding
function of the FCC Auction System,
bidders must be logged in during the
bidding round using the passcode
generated by the SecurID® token and a
personal identification number (PIN)
created by the bidder. Bidders are
strongly encouraged to print a ‘‘round
summary’’ for each round after they
have completed all of their activity for
that round.
203. In each round, eligible bidders
will be able to place bids on a given
license in any of up to nine pre-defined
bid amounts. For each license, the FCC
Auction System will list the acceptable
bid amounts in a drop-down box.
Bidders use the drop-down box to select
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from among the acceptable bid amounts.
The FCC Auction System also includes
an ‘‘upload’’ function that allows text
files containing bid information to be
uploaded.
204. Until a bid has been placed on
a license, the minimum acceptable bid
amount for that license will be equal to
its minimum opening bid amount. Once
there are bids on a license, minimum
acceptable bids for the following round
will be determined.
205. During a round, an eligible
bidder may submit bids for as many
licenses as it wishes (providing that it
is eligible to bid on the specific license),
remove bids placed in the current
bidding round, withdraw provisionally
winning bids from previous rounds, or
permanently reduce eligibility. If a
bidder submits multiple bids for the
same license in the same round, the
system takes the last bid entered as that
bidder’s bid for the round. Bidding units
associated with licenses for which the
bidder has removed or withdrawn bids
do not count towards current activity.
206. Finally, bidders are cautioned to
select their bid amounts carefully
because bidders that withdraw a
provisionally winning bid from a
previous round, even if the bid was
mistakenly or erroneously made, are
subject to bid withdrawal payments.
emcdonald on DSK67QTVN1PROD with NOTICES
6. Bid Removal and Bid Withdrawal
207. In the Auction 97 Comment
Public Notice, the Bureau proposed bid
removal and bid withdrawal
procedures. The Bureau sought
comment on permitting a bidder to
remove a bid before the close of the
round in which the bid was placed.
With respect to bid withdrawals, the
Bureau proposed limiting each bidder to
withdrawing provisionally winning bids
in no more than two rounds during the
auction. The rounds in which a bidder
withdraws provisionally winning bids—
if it chooses to do so—are at each
bidder’s discretion.
208. The Bureau received no
comment on its proposals. The
proposed procedures will provide each
bidder with appropriate flexibility
during the auction; therefore, the
Bureau adopts these proposals for
Auction 97.
a. Bid Removal
209. Before the close of a bidding
round, a bidder has the option of
removing any bids placed in that round.
By using the ‘‘remove bids’’ function in
the FCC Auction System, a bidder may
effectively ‘‘undo’’ any bid placed
within that round. A bidder removing a
bid placed in the same round is not
subject to withdrawal payments. If a bid
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is placed on a license during a round,
it will count towards the activity for that
round; but when that bid is then
removed during the same round it was
placed, the activity associated with it is
also removed, i.e., a bid that is removed
does not count toward bidding activity.
b. Bid Withdrawal
210. Once a round closes, a bidder
may no longer remove a bid. However,
in a later round, a bidder may withdraw
provisionally winning bids from
previous rounds using the ‘‘withdraw
bids’’ function in the FCC Auction
System. A provisionally winning bidder
that withdraws its provisionally
winning bid from a previous round
during the auction is subject to the bid
withdrawal payments specified in 47
CFR 1.2104(g). Once a bid withdrawal is
submitted during a round, that
withdrawal cannot be unsubmitted even
if the round has not yet ended.
211. If a provisionally winning bid is
withdrawn, the minimum acceptable
bid amount will equal the amount of the
second highest bid received for the
license, which may be less than, or in
the case of tied bids, equal to, the
amount of the withdrawn bid. The
Commission will serve as a placeholder
provisionally winning bidder on the
license until a new bid is submitted on
that license.
c. Calculation of Bid Withdrawal
Payment
212. Generally, the Commission
imposes payments on bidders that
withdraw provisionally winning bids
during the course of an auction. If a
bidder withdraws its bid and there is no
higher bid in the same or subsequent
auction(s), the bidder that withdrew its
bid is responsible for the difference
between its withdrawn bid and the
winning bid in the same or subsequent
auction(s). If there are multiple bid
withdrawals on a single license and no
subsequent higher bid is placed and/or
the license is not won in the same
auction, the payment for each bid
withdrawal will be calculated based on
the sequence of bid withdrawals and the
amounts withdrawn. No withdrawal
payment will be assessed for a
withdrawn bid if either the subsequent
winning bid or any subsequent
intervening withdrawn bid, in either the
same or subsequent auction(s), equals or
exceeds that withdrawn bid. Thus, a
bidder that withdraws a bid will not be
responsible for any final withdrawal
payment if there is a subsequent higher
bid in the same or subsequent
auction(s).
213. 47 CFR 1.2104(g)(1) sets forth the
payment obligations of a bidder that
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withdraws a provisionally winning bid
on a license during the course of an
auction, and provides for the assessment
of interim bid withdrawal payments. In
the Auction 97 Comment Public Notice,
the Bureau proposed to establish an
interim withdrawal payment of ten
percent of the withdrawn bid for
Auction 97.
214. The Bureau received no
comment on this proposal and therefore
adopts it for Auction 97. The
Commission will assess an interim
withdrawal payment equal to ten
percent of the amount of the withdrawn
bids. The ten percent interim payment
will be applied toward any final bid
withdrawal payment that will be
assessed after subsequent auction of the
license. Assessing an interim bid
withdrawal payment ensures that the
Commission receives a minimal
withdrawal payment pending
assessment of any final withdrawal
payment. 47 CFR 1.2104(g) provides
specific examples showing application
of the bid withdrawal payment rule.
7. Round Results
215. Limited information about the
results of a round will be made public
after the conclusion of the round.
Specifically, after a round closes, the
Bureau will make available for each
license its current provisionally
winning bid amount, the minimum
acceptable bid amount for the following
round, the amounts of all bids placed on
the license during the round, and
whether the license is FCC-held. The
system will also provide an entire
license history detailing all activity that
has taken place on a license with the
ability to sort by round number. The
reports will be publicly accessible.
Moreover, after the auction closes, the
Bureau will make available complete
reports of all bids placed during each
round of the auction, including bidder
identities.
216. DISH proposes several
refinements to the Bureau’s standard
round result information and
procedures. Specifically, DISH
recommends that the Bureau (1) publish
auction system specifications at least
four weeks before the start of Auction 97
and consider releasing sample data files;
(2) provide an auction application
programming interface (API) for several
different types of auction statistics and
bid actions; (3) provide, after the close
of each round, the total current bidder
eligibility by bidding unit, the number
of bidders that have reduced eligibility,
and information about the total number
of waivers used in the prior round.
Spectrum Financial Partners requests
that, in addition to making round result
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reports available in TXT and XML
formats in the FCC Auction System, the
Bureau also make them available on an
FTP site (preferably in XLS or CVS
format) that can be automatically polled
for updates and downloaded and
processed more mechanically.
217. The Bureau respectfully declines
to adopt any of these proposals. Any
modifications to the FCC Auction
System or related infrastructure must be
considered in the context of priorities,
resources, and time for testing prior to
the auction. Additionally, some of the
information requested by DISH is
purposefully not provided as part of the
Bureau’s limited information
procedures.
emcdonald on DSK67QTVN1PROD with NOTICES
8. Auction Announcements
218. The Commission will use auction
announcements to report necessary
information such as schedule changes
and stage transitions. All auction
announcements will be available by
clicking a link in the FCC Auction
System. DISH asks that, in addition to
posting notices to the FCC Auction
System, the Bureau communicate new
auction announcements in several ways,
to include at least emails and text
messages. While communicating new
auction announcements in this manner
might be convenient for participants,
the Bureau declines to do so. Using
email and/or text messages would
introduce risk by increasing reliance on
systems outside of the Commission’s
control. As with DISH’s suggested
changes to the Bureau’s round results
procedures, modifications to the FCC
Auction System, related infrastructure,
or procedures must also be considered
in the context of priorities, resources,
and time for testing prior to the auction.
The Bureau concludes that providing
auction announcements in the FCC
Auction System, has been an effective
and efficient way to communicate
necessary information to auction
participants in past auctions, and that
this will be the case for Auction 97 as
well.
V. Post-Auction Procedures
219. Shortly after bidding has ended,
the Commission will issue a public
notice declaring the auction closed,
identifying the winning bidders, and
establishing the deadlines for
submitting down payments, final
payments, long-form applications, and
ownership disclosure information
reports.
A. Down Payments
220. The Commission’s rules provide
that, unless otherwise specified by
public notice, within ten business days
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after release of the auction closing
public notice, each winning bidder must
submit sufficient funds (in addition to
its upfront payment) to bring its total
amount of money on deposit with the
Commission for Auction 97 to twenty
percent of the net amount of its winning
bids (gross bids less any applicable
small business bidding credit). Since it
is currently not known when Auction
97 will end and thus whether postauction payments will be due in late
2014 or early 2015, several commenters
request that the Bureau announce in
advance of the auction that down
payments will be due in early 2015 to
enable potential bidders to make the
necessary financial arrangements to
ensure their ability to participate in
Auction 97. The Bureau recognizes that
uncertainties regarding the year in
which down payments will be due
could affect potential applicants from a
capital planning perspective, which
could in turn affect participation in the
auction. Accordingly, the Bureau
exercises its discretion under 47 CFR
1.2107(b) to set the down payment
deadline for Auction 97 to be the later
of January 7, 2015, or ten business days
after release of the auction closing
public notice.
B. Final Payments
221. The Commission’s rules provide
that each winning bidder must submit
the balance of the net amount of its
winning bids within ten business days
after the applicable deadline for
submitting down payments. The same
parties that ask the Bureau to announce
in advance of the auction that down
payments will be due in early 2015
request that the Bureau make a similar
announcement concerning the due date
for final payments. Because the Bureau
exercises its discretion to set the down
payment deadline in early 2015, it sets
the final payment deadline to be the
later of January 21, 2015 or ten business
days after the applicable deadline for
submitting down payments.
C. Long-Form Application (FCC Form
601)
222. The Commission’s rules provide
that, within ten business days after
release of the auction closing notice,
winning bidders must electronically
submit a properly completed long-form
application (FCC Form 601) for the
license(s) they won through Auction 97.
CCA and US Cellular request that the
Bureau clarify that long-form
applications will be due in 2015. Given
the Spectrum Act’s mandate to license
the spectrum being offered in Auction
97 by February 2015, the Bureau
declines to modify the timing for
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winning bidders to submit their longform applications and will require these
forms to be filed according to the
schedule specified in the Commission’s
rules.
223. Winning bidders claiming
eligibility for a small business bidding
credit must demonstrate their eligibility
for the bidding credit. Further
instructions on these and other filing
requirements will be provided to
winning bidders in the auction closing
public notice.
224. Winning bidders organized as
bidding consortia must comply with the
long-form application procedures
established in the CSEA/Part 1 Report
and Order. Specifically, each member
(or group of members) of a winning
consortium seeking separate licenses
will be required to file a separate longform application for its respective
license(s). If the license is to be
partitioned or disaggregated, the
member (or group) filing the long-form
application must provide the relevant
partitioning or disaggregation agreement
in its long-form application. In addition,
if two or more consortium members
wish to be licensed together, they must
first form a legal business entity, and
any such entity must meet the
applicable designated entity criteria.
D. Ownership Disclosure Information
Report (FCC Form 602)
225. Within ten business days after
release of the auction closing public
notice, each winning bidder must also
comply with the ownership reporting
requirements in 47 CFR 1.913, 1.919,
and 1.2112 by submitting an ownership
disclosure information report for
wireless telecommunications services
(FCC Form 602) with its long-form
application.
226. If an applicant already has a
complete and accurate FCC Form 602 on
file in ULS, it is not necessary to file a
new report, but applicants must verify
that the information on file with the
Commission is complete and accurate. If
the applicant does not have an FCC
Form 602 on file, or if it is not complete
and accurate, the applicant must submit
one.
227. When an applicant submits a
short-form application, ULS
automatically creates an ownership
record. This record is not an FCC Form
602, but may be used to pre-fill the FCC
Form 602 with the ownership
information submitted on the
applicant’s short-form application.
Applicants must review the pre-filled
information and confirm that it is
complete and accurate as of the filing
date of the long-form application before
certifying and submitting the FCC Form
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602. Further instructions will be
provided to winning bidders in the
auction closing public notice.
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E. Tribal Lands Bidding Credit
228. A winning bidder that intends to
use its license(s) to deploy facilities and
provide services to federally recognized
tribal lands that are unserved by any
telecommunications carrier or that have
a wireline penetration rate equal to or
below 85 percent is eligible to receive a
tribal lands bidding credit as set forth in
47 CFR 1.2107 and 1.2110(f). A tribal
lands bidding credit is in addition to,
and separate from, any other bidding
credit for which a winning bidder may
qualify.
229. Unlike other bidding credits that
are requested prior to the auction, a
winning bidder applies for the tribal
lands bidding credit after the auction
when it files its long-form application
(FCC Form 601). When initially filing
the long-form application, the winning
bidder will be required to advise the
Commission whether it intends to seek
a tribal lands bidding credit, for each
license won in the auction, by checking
the designated box(es). After stating its
intent to seek a tribal lands bidding
credit, the applicant will have 180 days
from the close of the long-form
application filing window to amend its
application to select the specific tribal
lands to be served and provide the
required tribal government
certifications. Licensees receiving a
tribal lands bidding credit are subject to
performance criteria as set forth in 47
CFR 1.2110(f)(3)(vii).
230. For additional information on the
tribal lands bidding credit, including
how the amount of the credit is
calculated, applicants should review the
Commission’s rulemaking proceeding
regarding tribal lands bidding credits
and related public notices. Relevant
documents can be viewed on the
Commission’s Web site by going to
https://wireless.fcc.gov/auctions/ and
clicking on the Tribal Lands Credits
link.
F. Default and Disqualification
231. Any winning bidder that defaults
or is disqualified after the close of the
auction (i.e., fails to remit the required
down payment within the prescribed
period of time, fails to submit a timely
long-form application, fails to make full
payment, or is otherwise disqualified)
will be subject to the payments
described in 47 CFR 1.2104(g)(2). This
payment consists of a deficiency
payment, equal to the difference
between the amount of the Auction 97
bidder’s winning bid and the amount of
the winning bid the next time a license
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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.
232. As noted in the Auction 97
Comment Public Notice, the percentage
of the bid that a defaulting bidder must
pay in addition to the deficiency will
depend on the auction format ultimately
chosen for a particular auction. The
amount can range from three percent up
to a maximum of twenty percent,
established in advance of the auction
and based on the nature of the service
and the inventory of the licenses being
offered. As the Bureau noted in the
Auction 97 Comment Public Notice, the
Commission explained in the CSEA/
Part 1 Report and Order that defaults
weaken the integrity of the auction
process and may impede the
deployment of service to the public, and
that an additional default payment of up
to twenty percent will be more effective
in deterring defaults than the three
percent used in some earlier auctions.
However, the Bureau does not believe
the detrimental effects of any defaults in
Auction 97 are likely to be unusually
great. Balancing these considerations,
the Bureau proposed to establish an
additional default payment for Auction
97 of fifteen percent of the applicable
bid. The Bureau received no comment
on this proposal and therefore adopts it
for Auction 97.
233. Finally, in the event of a default,
the Commission has the discretion to reauction the license or offer it to the next
highest bidder (in descending order) at
its final bid amount. In addition, if a
default or disqualification involves
gross misconduct, misrepresentation, or
bad faith by an applicant, the
Commission may declare the applicant
and its principals ineligible to bid in
future auctions, and may take any other
action that it deems necessary,
including institution of proceedings to
revoke any existing authorizations held
by the applicant.
G. Refund of Remaining Upfront
Payment Balance
234. After the auction, applicants that
are not winning bidders or are winning
bidders whose upfront payment
exceeded the total net amount of their
winning bids may be entitled to a
refund of some or all of their upfront
payment. All refunds will be returned to
the payer of record, as identified on the
FCC Form 159, unless the payer submits
written authorization instructing
otherwise. Bidders should not request a
refund of their upfront payments before
the Commission releases a public notice
declaring the auction closed, identifying
PO 00000
Frm 00049
Fmt 4703
Sfmt 4703
the winning bidders, and establishing
the deadlines for submitting down
payments, long-form applications, and
final payments.
235. Bidders are encouraged to file
their refund information electronically
using the Refund Information icon
found on the Auction Application
Manager page or through the Wire
Transfer for Refund Purposes link
available on the Auction Application
Submit Confirmation page in the FCC
Auction System. If an applicant has
completed the refund instructions
electronically, the refund will be sent
automatically. If an applicant has not
completed the refund instructions
electronically, the applicant must send
a written request.
Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access
Division, WTB.
[FR Doc. 2014–19080 Filed 8–11–14; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL COMMUNICATIONS
COMMISSION
[DA 14–995]
Notice of Debarment
Federal Communications
Commission.
ACTION: Notice.
AGENCY:
The Enforcement Bureau (the
‘‘Bureau’’) debars Bryan J. Cahoon from
the schools and libraries universal
service support mechanism (or ‘‘E-Rate
Program’’) for a period of three years.
The Bureau takes this action to protect
the E-Rate Program from waste, fraud,
and abuse.
DATES: Debarment commences on the
date Mr. Bryan J. Cahoon receives the
debarment letter or August 12, 2014,
whichever date comes first, for a period
of three years.
FOR FURTHER INFORMATION CONTACT: Joy
M. Ragsdale, Attorney Advisor, Federal
Communications Commission,
Enforcement Bureau, Investigations and
Hearings Division, Room 4–C330, 445
12th Street SW., Washington, DC 20554.
Joy Ragsdale may be contacted by
telephone at (202) 418–1697 or by email
at Joy.Ragsdale@fcc.gov. If Ms. Ragsdale
is unavailable, you may contact Ms.
Theresa Cavanaugh, Chief,
Investigations and Hearings Division, by
telephone at (202) 418–1420 and by
email at Terry.Cavanaugh@fcc.gov.
SUPPLEMENTARY INFORMATION: The
Bureau debarred Mr. Bryan J. Cahoon
from the schools and libraries service
support mechanism for a period of three
SUMMARY:
E:\FR\FM\12AUN1.SGM
12AUN1
Agencies
[Federal Register Volume 79, Number 155 (Tuesday, August 12, 2014)]
[Notices]
[Pages 47106-47130]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-19080]
[[Page 47106]]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
[AU Docket No. 14-78; DA 14-1018]
Auction of Advanced Wireless Services (AWS-3) Licenses Scheduled
for November 13, 2014; Notice and Filing Requirements, Reserve Prices,
Minimum Opening Bids, Upfront Payments, and Other Procedures for
Auction 97
AGENCY: Federal Communications Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This document announces the procedures, reserve prices, and
minimum opening bids for the upcoming auction of AWS-3 licenses
(Auction 97). This document is intended to familiarize prospective
applicants with the procedures and other requirements for participation
in the auction.
DATES: Applications to participate in Auction 97 must be filed prior to
6:00 p.m. Eastern Time (ET) on September 12, 2014. Bidding in Auction
97 is scheduled to begin on November 13, 2014.
FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau,
Auctions and Spectrum Access Division: For legal and general auction
questions: Valerie Barrish (attorney) at (202) 418-0660; Broadband
Division: For licensing and service rule questions: Genevieve Ross
(attorney) or Janet Young (engineer) at (202) 418-2487. To request
materials in accessible formats (Braille, large print, electronic
files, or audio format) for people with disabilities, send an email to
fcc504@fcc.gov or call the Consumer and Governmental Affairs Bureau at
(202) 418-0530 or (202) 418-0432 (TTY).
SUPPLEMENTARY INFORMATION: This is a summary of the Auction 97
Procedures Public Notice released on July 23, 2014. The complete text
of the Auction 97 Procedures Public Notice, including all attachments
and related Commission documents, is available for public inspection
and copying from the FCC Reference Information Center, 445 12th Street
SW., Room CY-A257, Washington, DC 20554 during its regular business
hours. The Auction 97 Procedures 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 Web site: https://www.BCPIWEB.com. The Auction 97
Procedures Public Notice and related documents also are available on
the Internet at the Commission's Web site: https://wireless.fcc.gov/auctions/97/, or by using the search function for AU Docket No. 14-78
Commission's Electronic Comment Filing System (ECFS) Web page at https://www.fcc.gov/cgb/ecfs/.
I. General Information
A. Introduction
1. The Wireless Telecommunications Bureau (Bureau) established the
procedures, reserve prices, and minimum opening bid amounts for the
upcoming auction of 1,614 Advanced Wireless Services licenses in the
1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz bands (collectively,
the AWS-3 bands). This auction, which is designated as Auction 97, is
scheduled to start on November 13, 2014. The Auction 97 Procedures
Public Notice provided an overview of the procedures, terms, and
conditions governing Auction 97 and the post-auction application and
payment processes.
2. The Federal Communications Commission (Commission or FCC) is
offering the licenses in Auction 97 pursuant to the Middle Class Tax
Relief and Job Creation Act of 2012 (Spectrum Act). The Spectrum Act
requires, among other things, that the Commission allocate for
commercial use and license spectrum in certain specified frequency
bands using a system of competitive bidding no later than February
2015. In February 2013, the National Telecommunications and Information
Administration (NTIA) identified the 1695-1710 MHz band for
reallocation from Federal use to non-Federal use in satisfaction of its
Spectrum Act obligation. In the AWS-3 Report and Order, 79 FR 32365,
June 4, 2014, the Commission identified the 1755-1780 MHz band in
satisfaction of the Spectrum Act's requirement that it identify fifteen
megahertz of contiguous spectrum in addition to the bands specifically
identified in the Spectrum Act.
3. On May 19, 2014, the Bureau released the Auction 97 Comment
Public Notice 79 FR 31327, June 2, 2014, seeking comment on competitive
bidding procedures to be used in Auction 97. Ten comments, eight reply
comments, ten ex parte filings, and four brief comments were submitted
in response to the Auction 97 Comment Public Notice.
4. Based on the record and after considering comments provided in
response to the Auction 97 Comment Public Notice, the Auction 97
Procedures Public Notice, establishes procedures for, among other
things: (1) Using the Commission's standard simultaneous multiple-round
(SMR) auction format in a single auction event subject to uniform
bidding procedures for the unpaired 1695-1710 MHz band and the paired
1755-1780 MHz/2155-2180 MHz bands, except that bidding will close on a
band after five consecutive rounds in which no bidding activity occurs
on licenses in that band provided that the reserve for that band has
been met; (2) filing short-form applications to participate in Auction
97 during a ten-business day window that closes on September 12, 2014;
(3) limited information disclosure, to enhance competition by
safeguarding against potential anti-competitive auction strategies; (4)
submission of a statement by each applicant for any license in the
1755-1780 MHz band acknowledging that it has considered and accepts the
risks of potential interference from Federal systems to its planned
operations in certain geographic zones; (5) an aggregate reserve price
for the 1695-1710 MHz license of approximately $580 million and a
separate aggregate reserve price for the paired 1755-1780 MHz/2155-2180
MHz licenses of approximately $10.07 billion; (6) minimum opening bids
for each license using a calculation based on $0.15 per MHz-pop for
paired licenses and $0.05 per MHz-pop for unpaired licenses with a
revision to the Bureau's method for incorporating price information
from past auctions; (7) minimum acceptable bid amounts based on an
activity-based formula under which bids in subsequent rounds may be
between 10-20% higher than the provisionally winning bid; and (8)
filing long-form applications in accordance with the schedule specified
in the Commission's rules, but establishing a deadline for down
payments and final payments from winning bidders that will occur no
earlier than January 2015.
5. In addition, the Auction 97 Procedures Public Notice concludes
that any requests for temporary, limited relief from the former
defaulter rule are beyond the scope of this proceeding and notes that
such requests are being addressed separately.
B. Description of Licenses To Be Offered in Auction 97
6. The 65 megahertz of AWS-3 spectrum available in Auction 97 will
be licensed on a geographic area basis. Of the 1,614 licenses offered
in Auction 97, 880 will be Economic Area (EA) licenses and 734 will be
Cellular Market Area (CMA) licenses. The AWS-3 frequencies will be
licensed in five and
[[Page 47107]]
ten megahertz blocks, with each license having a total bandwidth of
five, ten, or twenty megahertz.
7. The 1695-1710 MHz band will be licensed in an unpaired
configuration for low-power mobile transmit (i.e., uplink) operations.
The 1755-1780 MHz band will be licensed paired with the 2155-2180 MHz
band, with the 1755-1780 MHz band authorized for low-power mobile
transmit (i.e., uplink) operations and the 2155-2180 MHz band
authorized for base station and fixed (i.e., downlink) operations. A
complete list of the licenses offered in Auction 97 is available in
Attachment A to the Auction 97 Procedures Public Notice.
C. Rules and Disclaimers
1. Relevant Authority
8. Prospective applicants must familiarize themselves thoroughly
with the Commission's general competitive bidding rules, including
Commission decisions in proceedings regarding competitive bidding
procedures, application requirements, and obligations of Commission
licensees. Prospective bidders should also familiarize themselves with
the Commission's rules relating to the AWS-3 frequencies, including
incumbency issues for AWS-3 licensees, Federal and non-Federal
relocation and sharing and cost sharing obligations, protection of
Federal and non-Federal incumbent operations, and rules relating to
applications, environment, practice and procedure. All bidders must
also be thoroughly familiar with the procedures, terms and conditions
contained in the Auction 97 Procedures Public Notice and any future
public notices that may be issued in this proceeding.
9. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in its public notices at any time,
and will issue public notices to convey any new or supplemental
information to applicants. It is the responsibility of all applicants
to remain current with all Commission rules and with all public notices
pertaining to this auction. Copies of most auctions-related Commission
documents, including public notices, can be retrieved from the FCC
Auctions Internet site at https://www.wireless.fcc.gov/auctions.
2. Prohibited Communications and Compliance With Antitrust Laws
10. To ensure the competitiveness of the auction process, 47 CFR
1.2105(c) prohibits auction applicants for licenses in any of the same
or overlapping geographic license areas from communicating with each
other about bids, bidding strategies, or settlements unless such
applicants have identified each other on their short-form applications
(FCC Form 175) as parties with whom they have entered into agreements
pursuant to 47 CFR 1.2105(a)(2)(viii).
a. Entities Subject to 47 CFR 1.2105
11. 47 CFR 1.2105(c)'s prohibition on certain communications will
apply to any applicants that submit short-form applications seeking to
participate in a Commission auction for licenses in the same or
overlapping geographic license area. Thus, unless they have identified
each other on their short-form applications as parties with whom they
have entered into agreements under 47 CFR 1.2105(a)(2)(viii),
applicants for any of the same or overlapping geographic license areas
must affirmatively avoid all communications with or disclosures to each
other that affect or have the potential to affect bids or bidding
strategy. In some instances, this prohibition extends to communications
regarding the post-auction market structure. This prohibition applies
to all applicants that submit short-form applications regardless of
whether such applicants ultimately become qualified bidders or actually
bid.
12. Applicants are also reminded that, for purposes of this
prohibition on certain communications, 47 CFR 1.2105(c)(7)(i) defines
``applicant'' as including all officers and directors of the entity
submitting a short-form application to participate in the auction, all
controlling interests of that entity, as well as all holders of
partnership and other ownership interests and any stock interest
amounting to 10 percent or more of the entity, or outstanding stock, or
outstanding voting stock of the entity submitting a short-form
application. For example, where an individual served as an officer for
two or more applicants, the Bureau has found that the bids and bidding
strategies of one applicant are conveyed to the other applicant, and,
absent a disclosed bidding agreement, an apparent violation of 47 CFR
1.2105(c) occurs.
13. Individuals and entities subject to 47 CFR 1.2105(c) should
take special care in circumstances where their employees may receive
information directly or indirectly relating to any competing
applicant's bids or bidding strategies. The Bureau has not addressed a
situation where non-principals (i.e., those who are not officers or
directors, and thus not considered to be the applicant) receive
information regarding a competing applicant's bids or bidding
strategies and whether that information should be presumed to be
communicated to the applicant.
14. An exception to the prohibition on certain communications
allows non-controlling interest holders to obtain interests in more
than one competing applicant without violating 47 CFR 1.2105(c)
provided specified conditions are met (including a certification that
no prohibited communications have occurred or will occur), but that
exception does not extend to controlling interest holders.
15. Auction 97 applicants selecting licenses for any of the same or
overlapping geographic license areas are encouraged not to use the same
individual as an authorized bidder. A violation of 47 CFR 1.2105(c)
could occur if an individual acts as the authorized bidder for two or
more competing applicants, and conveys information concerning the
substance of bids or bidding strategies between such applicants.
Similarly, if the authorized bidders are different individuals employed
by the same organization (e.g., law firm, engineering firm or
consulting firm), a violation likewise could occur. In such a case, at
a minimum, applicants should certify on their applications that
precautionary steps have been taken to prevent communication between
authorized bidders, and that the applicant and its bidders will comply
with 47 CFR 1.2105(c).
b. Prohibition Applies Until Down Payment Deadline
16. 47 CFR 1.2105(c)'s prohibition on certain communications begins
at the short-form application filing deadline and ends at the down
payment deadline after the auction closes, which will be announced in a
future public notice.
c. Prohibited Communications
17. Applicants must not communicate directly or indirectly about
bids or bidding strategy to other applicants in this auction. 47 CFR
1.2105(c) prohibits not only communication about an applicant's own
bids or bidding strategy, it also prohibits communication of another
applicant's bids or bidding strategy. While 47 CFR 1.2105(c) does not
prohibit non-auction-related business negotiations among auction
applicants, each applicant must remain vigilant so as not to directly
or indirectly communicate information that affects, or could affect,
bids, bidding strategy, or the negotiation of settlement agreements.
[[Page 47108]]
18. Applicants are cautioned that the Commission remains vigilant
about prohibited communications taking place in other situations. For
example, the Commission has warned that prohibited communications
concerning bids and bidding strategies may include communications
regarding capital calls or requests for additional funds in support of
bids or bidding strategies to the extent such communications convey
information concerning the bids and bidding strategies directly or
indirectly. Moreover, the Commission has found a violation of 47 CFR
1.2105(c) where an applicant used the Commission's bidding system to
disclose its bidding strategy in a manner that explicitly invited other
auction participants to cooperate and collaborate in specific markets,
and has placed auction participants on notice that the use of its
bidding system to disclose market information to competitors will not
be tolerated and will subject bidders to sanctions. Applicants also
should use caution in their dealings with other parties, such as
members of the press, financial analysts, or others who might become
conduits for the communication of prohibited bidding information. For
example, where limited information disclosure procedures are in place,
as is the case for Auction 97, an applicant's statement to the press
that it has lost bidding eligibility and intends to stop bidding in the
auction could give rise to a finding of a 47 CFR 1.2105(c) violation.
Similarly, an applicant's public statement of intent not to participate
in Auction 97 bidding could also violate the rule.
19. Applicants are also hereby placed on notice that public
disclosure of information relating to bidder interests and bidder
identities that has not yet been made public by the Commission at the
time of disclosure may violate the provisions of 47 CFR 1.2105(c) that
prohibit certain communications. This is so even though similar types
of information were revealed prior to and during other Commission
auctions subject to different information procedures.
20. In addition, when completing short-form applications, each
applicant should avoid any statements or disclosures that may violate
47 CFR 1.2105(c), particularly in light of the limited information
procedures in effect for Auction 97. Specifically, an applicant should
avoid including any information in its short-form applications that
might convey information regarding its license selection, such as using
applicant names that refer to licenses being offered, referring to
certain licenses or markets in describing bidding agreements, or
including any information in attachments that may otherwise disclose
the applicant's license selections. Likewise, an Auction 97 applicant
must not disclose to others whether it has filed the acknowledgement
concerning interference obligations that is required of each applicant
that seeks to bid on any license in the 1755-1780 MHz band, as that
information would reveal information regarding its license selection.
The Bureau intends to withhold from public disclosure all information
concerning the existence of such applicant statements until after the
close of the auction.
d. Disclosure of Bidding Agreements and Arrangements
21. The Commission's rules do not prohibit applicants from entering
into otherwise lawful bidding agreements before filing their short-form
applications, as long as they disclose the existence of the
agreement(s) in their short-form applications. Applicants must identify
in their short-form applications all parties with whom they have
entered into any agreements, arrangements, or understandings of any
kind relating to the licenses being auctioned, including any agreements
relating to post-auction market structure.
22. If parties agree in principle on all material terms prior to
the short-form application filing deadline, each party to the agreement
must identify the other party or parties to the agreement on its short-
form application under 47 CFR 1.2105(c), even if the agreement has not
been reduced to writing. If the parties have not agreed in principle by
the short-form filing deadline, they should not include the names of
parties to discussions on their applications, and they may not continue
negotiation, discussion or communication with any other applicants
after the short-form application filing deadline.
23. 47 CFR 1.2105(c) does not prohibit non-auction-related business
negotiations among auction applicants. However, certain discussions or
exchanges could touch upon impermissible subject matters because they
may convey pricing information and bidding strategies. Such subject
areas include, but are not limited to, issues such as management,
sales, local marketing agreements, and other transactional agreements.
e. 47 CFR 1.2105(c) Certification
24. By electronically submitting a short-form application, each
applicant in Auction 97 certifies its compliance with 47 CFR 1.2105(c).
In particular, an applicant must certify under penalty of perjury it
has not entered and will not enter into any explicit or implicit
agreements, arrangements or understandings of any kind with any
parties, other than those identified in the application, regarding the
amount of the applicant's bids, bidding strategies, or the particular
licenses on which it will or will not bid. However, the Bureau cautions
that merely filing a certifying statement as part of an application
will not outweigh specific evidence that a prohibited communication has
occurred, nor will it preclude the initiation of an investigation when
warranted. The Commission has stated that it intends to scrutinize
carefully any instances in which bidding patterns suggest that
collusion may be occurring. Any applicant found to have violated 47 CFR
1.2105(c) may be subject to sanctions.
f. Duty To Report Prohibited Communications
25. 47 CFR 1.2105(c)(6) provides that any applicant that makes or
receives a communication that appears to violate 47 CFR 1.2105(c) must
report such communication in writing to the Commission immediately, and
in no case later than five business days after the communication
occurs. The Commission has clarified that each applicant's obligation
to report any such communication continues beyond the five-day period
after the communication is made, even if the report is not made within
the five-day period.
26. In addition, 47 CFR 1.65 requires an applicant to maintain the
accuracy and completeness of information furnished in its pending
application and to notify the Commission of any substantial change that
may be of decisional significance to that application. Thus, 47 CFR
1.65 requires an auction applicant to notify the Commission of any
substantial change to the information or certifications included in its
pending short-form application. An applicant is therefore required by
47 CFR 1.65 to report to the Commission any communication the applicant
has made to or received from another applicant after the short-form
application filing deadline that affects or has the potential to affect
bids or bidding strategy, unless such communication is made to or
received from a party to an agreement identified under 47 CFR
1.2105(a)(2)(viii).
27. 47 CFR 1.65(a) and 1.2105(c) require each applicant in
competitive bidding proceedings to furnish additional or corrected
information within five days of a significant occurrence, or to amend
its short-form
[[Page 47109]]
application no more than five days after the applicant becomes aware of
the need for amendment. These rules are intended to facilitate the
auction process by making the information available promptly to all
participants and to enable the Bureau to act expeditiously on those
changes when such action is necessary.
g. Procedure for Reporting Prohibited Communications
28. A party reporting any communication pursuant to 47 CFR 1.65,
1.2105(a)(2), or 1.2105(c)(6) must take care to ensure that any report
of a prohibited communication does not itself give rise to a violation
of 47 CFR 1.2105(c). For example, a party's report of a prohibited
communication could violate the rule by communicating prohibited
information to other applicants through the use of Commission filing
procedures that would allow such materials to be made available for
public inspection.
29. 47 CFR 1.2105(c) requires parties to file only a single report
concerning a prohibited communication and to file that report with
Commission personnel expressly charged with administering the
Commission's auctions. This rule is designed to minimize the risk of
inadvertent dissemination of information in such reports. Any reports
required by 47 CFR 1.2105(c) must be filed consistent with the
instructions set forth in the Auction 97 Procedures Public Notice. For
Auction 97, such reports must be filed with Margaret W. Wiener, the
Chief of the Auctions and Spectrum Access Division, Wireless
Telecommunications Bureau, by the most expeditious means available. Any
such report should be submitted by email to Ms. Wiener at the following
email address: auction97@fcc.gov. If you choose instead to submit a
report in hard copy, any such report must be delivered only to Margaret
W. Wiener, Chief, Auctions and Spectrum Access Division, Wireless
Telecommunications Bureau, Federal Communications Commission, 445 12th
Street SW., Room 6423, Washington, DC 20554.
30. A party seeking to report such a prohibited communication
should consider submitting its report with a request that the report or
portions of the submission be withheld from public inspection by
following the procedures specified in 47 CFR 0.459. Such parties also
are encouraged to coordinate with the Auctions and Spectrum Access
Division staff about the procedures for submitting such reports. The
Auction 97 Procedures Public Notice provides additional guidance on
procedures for submitting application-related information.
h. Winning Bidders Must Disclose Terms of Agreements
31. Each applicant that is a winning bidder will be required to
disclose in its long-form applications the specific terms, conditions,
and parties involved in any agreement it has entered into. This applies
to any bidding consortia, joint venture, partnership, or agreement,
understanding, or other arrangement entered into relating to the
competitive bidding process, including any agreement relating to the
post-auction market structure. Failure to comply with the Commission's
rules can result in enforcement action.
i. Additional Information Concerning Rule Prohibiting Certain
Communications
32. A summary listing of documents issued by the Commission and the
Bureau addressing the application of 47 CFR 1.2105(c) may be found in
Attachment F to the Auction 97 Procedures Public Notice. These
documents are available on the Commission's auction Web page at https://wireless.fcc.gov/auctions/prohibited_communications.
j. Antitrust Laws
33. Regardless of compliance with the Commission's rules,
applicants remain subject to the antitrust laws, which are designed to
prevent anticompetitive behavior in the marketplace. Compliance with
the disclosure requirements of 47 CFR 1.2105(c) will not insulate a
party from enforcement of the antitrust laws. For instance, a violation
of the antitrust laws could arise out of actions taking place well
before any party submitted a short-form application. The Commission has
cited a number of examples of potentially anticompetitive actions that
would be prohibited under antitrust laws: For example, actual or
potential competitors may not agree to divide territories in order to
minimize competition, regardless of whether they split a market in
which they both do business, or whether they merely reserve one market
for one and another market for the other. Similarly, the Bureau
previously reminded potential applicants and others that even where the
applicant discloses parties with whom it has reached an agreement on
the short-form application, thereby permitting discussions with those
parties, the applicant is nevertheless subject to existing antitrust
laws.
34. To the extent the Commission becomes aware of specific
allegations that suggest that violations of the federal antitrust laws
may have occurred, the Commission may refer such allegations to the
United States Department of Justice for investigation. If an applicant
is found to have violated the antitrust laws or the Commission's rules
in connection with its participation in the competitive bidding
process, it may be subject to forfeiture of its upfront payment, down
payment, or full bid amount and may be prohibited from participating in
future auctions, among other sanctions.
3. Incumbency Issues
35. The AWS-3 bands are currently being used for a variety of
government and non-government services. In the AWS-3 Report and Order,
the Commission allocated the 1695-1710 MHz and 1755-1780 MHz bands for
commercial use. Licenses in 1695-1710 MHz band are being made available
on a shared basis with incumbent Federal meteorological-satellite
(MetSat) data users. The Commission adopted twenty-seven Protection
Zones for the 1695-1710 MHz band in the AWS-3 Report and Order.
Pursuant to 47 CFR 2.106, US note 88, forty-seven Federal earth
stations located in these zones will operate on a co-equal, primary
basis with commercial AWS-3 licensees. To facilitate coordination,
uplink/mobile transmit devices in the 1695-1710 MHz band must be under
the control of, or associated with, a base station as a means to
facilitate shared use of the band and prevent interference to Federal
operations. Licenses in the 1755-1780 MHz band are being made available
on a shared basis with a limited number of Federal incumbents
indefinitely, while some of the Federal systems will over time relocate
out of the band. Pursuant to 47 CFR 2.106, US note 91, Federal systems
located in the Protection Zones adopted by the Commission for the 1755-
1780 MHz band in the AWS-3 Report and Order will operate on a co-equal,
primary basis with commercial AWS licensees. The Federal systems that
will relocate from this band pursuant to an approved transition plan
will operate on a primary basis until they are reaccommodated. To
facilitate coordination, uplink/mobile transmit devices in the 1755-
1780 MHz band must be under the control of, or associated with, a base
station as a means to facilitate shared use of the band and prevent
interference to Federal operations. Licenses to operate in the 1695-
1710 MHz and 1755-1780 MHz bands are subject to the condition that the
licensee must not cause harmful interference to an incumbent Federal
[[Page 47110]]
entity relocating from these bands under an approved Transition Plan.
This condition remains in effect until NTIA terminates the applicable
authorization of the incumbent Federal entity. In addition, AWS-3
licensees in the 1755-1780 MHz band must agree to accept interference
from incumbent Federal users while they remain authorized to operate in
the band. The 2155-2180 MHz band is already allocated for exclusive
non-Federal, commercial use. Although there are no Federal users
currently licensed or operating in this band, there are non-Federal
incumbent Fixed Microwave and Broadband Radio Service licensees in the
band. AWS-3 licensees will have to protect or relocate and/or share in
the cost of relocating such incumbent licensees.
36. AWS-3 licensees in the 1695-1710 MHz and 1755-1780 MHz bands
are required to successfully coordinate with Federal incumbent users in
these bands prior to operating in designated protection zones. The AWS-
3 Report and Order established that 1695-1710 MHz licensees operating
at certain power levels would be required to coordinate with Federal
incumbents in those protection zones, and higher-powered operations
would generally require nationwide coordination. Similarly, operations
in the 1755-1780 MHz band are subject to successful coordination with
Federal incumbents in the protection zones adopted for that band, with
the default coordination zone being nationwide. Prior to commencing
operations in the 1755-1780 MHz band, an AWS-3 licensee must reach a
coordination arrangement on an operator-to-operator basis with each
Federal agency that has an assignment with United States and
Possessions (USP) authority. The FCC/NTIA Coordination Procedures
Public Notice contains various refinements to the previously-defined
protection zones for each of these bands. That Public Notice also
provides information and guidance on the overall coordination process
for these bands, as contemplated by the AWS-3 Report and Order,
including informal pre-coordination discussion and the formal process
of submitting coordination requests to, and receiving responses to
coordination requests from, relevant Federal agencies. The Bureau
encourages each potential applicant to carefully review these
coordination requirements and the policies and procedures adopted by
the Commission to implement them, and to consider the impact of those
requirements and policies on its business plans.
4. Commercial Spectrum Enhancement Act/Spectrum Act Requirements
37. The spectrum in the 1695-1710 MHz and 1755-1780 MHz bands is
covered by a Congressional mandate that requires that auction proceeds
fund the estimated relocation or sharing costs of incumbent Federal
entities. In 2004, the Commercial Spectrum Enhancement Act (CSEA)
established a Spectrum Relocation Fund (SRF) to reimburse eligible
Federal agencies operating on certain frequencies that have been
reallocated from Federal to non-Federal use for the cost of relocating
their operations. The SRF is funded with cash proceeds attributable to
``eligible frequencies'' in an auction of licenses involving such
frequencies. The Spectrum Act amendments to the CSEA require Federal
agencies authorized to use eligible frequencies to submit a transition
plan no later than 240 days before an auction for such frequencies is
scheduled to begin. The CSEA requires the NTIA to notify the Commission
at least six months in advance of a scheduled auction of eligible
frequencies of eligible Federal entities' estimated relocation or
sharing costs and the timelines for such relocation or sharing. The
NTIA must make the transition plans available on its Web site (with the
exception of any classified information contained therein) no later
than 120 days before the auction's scheduled start date.
38. On May 13, 2014, pursuant to the CSEA, the NTIA notified the
Commission of the estimated relocation or sharing costs and relocation
timelines for eligible Federal entities assigned to frequencies in the
1695-1710 MHz and 1755-1780 MHz bands. The NTIA reported that the total
estimated relocation or sharing costs for the 1695-1710 MHz band equal
$527,069,000, and that the total estimated relocation or sharing costs
for the 1755-1780 MHz band equal $4,575,603,000.
39. In addition to requiring that specified auction proceeds be
deposited in the SRF, the CSEA, as amended by the Spectrum Act,
requires that the total cash proceeds from any auction of eligible
frequencies must equal at least 110 percent of the estimated relocation
or sharing costs provided to the Commission by NTIA, and prohibits the
Commission from concluding any auction of eligible frequencies that
falls short of this revenue requirement. In the CSEA/Part 1 Declaratory
Ruling, the Commission determined, among other things, that total cash
proceeds for purposes of meeting the CSEA's revenue requirement means
winning bids net of any applicable bidding credit discounts at the end
of bidding. Thus, whether CSEA's revenue requirements regarding
eligible frequencies have been met at the end of an auction involving
such frequencies depends upon whether winning bids that are
attributable to such spectrum, net of any applicable bidding credit
discounts, equal at least 110 percent of estimated relocation costs. In
the CSEA/Part 1 Report and Order, the Commission, among other things,
modified its reserve price rule pursuant to the CSEA to ensure that the
CSEA's revenue requirement would be met.
5. International Coordination
40. Potential bidders seeking licenses for geographic areas
adjacent to the Canadian and Mexican border should be aware that the
use of some or all of the AWS-3 frequencies they acquire in the auction
are subject to international agreements with Canada and Mexico. As the
Commission noted in the AWS-3 Report and Order, the Commission
routinely works with the United States Department of State and Canadian
and Mexican government officials to ensure the efficient use of the
spectrum as well as interference-free operations in the border areas
near Canada and Mexico. Until such time as any adjusted agreements, as
needed, between the United States, Mexico and/or Canada can be agreed
to, operations in the AWS-3 frequency bands must not cause harmful
interference across the border, consistent with the terms of the
agreements currently in force.
6. Quiet Zones
41. AWS-3 licensees must individually apply for and receive a
separate license for each transmitter if the proposed operation would
affect the radio quiet zones set forth in the Commission's rules.
7. Spectrum Screen for Competitive Review of Secondary Market
Transactions
42. In its recent Mobile Spectrum Holdings Report and Order, the
Commission concluded that, instead of administering its case-by-case
review of auction winners' mobile spectrum holdings at the long-form
application stage, it would determine prior to an auction whether an ex
ante application of a band-specific mobile spectrum holding limit is
necessary for the initial licensing of a band through competitive
bidding. For the initial licensing of the AWS-3 band through
competitive bidding, the Commission found that, on balance, it is not
in the public interest to adopt a band-specific mobile spectrum
holdings limit.
[[Page 47111]]
43. The Commission's spectrum screen is a tool used to help achieve
the Commission's policy of facilitating access to spectrum in a manner
that promotes competition. In its competitive review of secondary
market transactions, the Commission applies an initial screen to help
identify for case-by-case review local markets where changes in
spectrum holdings resulting from the proposed transaction may be of
particular concern. The Commission observed in the Mobile Spectrum
Holdings Report and Order that, notwithstanding whether a band-specific
mobile spectrum holding limit is applied to the initial licensing of a
band through competitive bidding, the band would be included in the
Commission's application of its spectrum screen for competitive review
of subsequent secondary market transactions if the band is deemed
suitable and available for the provision of mobile telephony/mobile
broadband services. Further, in the Mobile Spectrum Holdings Report and
Order, the Commission updated its spectrum screen to reflect the
current suitability and availability of spectrum for the provision of
mobile telephony/broadband services. In particular, in its
consideration of AWS-3 spectrum, the Commission added the 65 megahertz
of AWS-3 spectrum being offered in Auction 97 to the spectrum screen on
a market-by-market basis as it becomes available. Thus, the spectrum in
these bands will be counted in the spectrum screen in a particular
market once all relocating Federal incumbent systems in that market are
within three years of completing relocation according to the Federal
agency Transition Plans. Spectrum in the 2155-2180 MHz band will be
counted in the spectrum screen for a particular market at the same time
the Commission counts the paired 1755-1780 MHz band in that market in
the screen. The Bureau encourages each potential Auction 97 applicant
to carefully review the Mobile Spectrum Holdings Report and Order to
understand how these policies might apply to its particular situation.
8. Due Diligence
44. The Bureau reminds each potential bidder that it is solely
responsible for investigating and evaluating all technical and
marketplace factors that may have a bearing on the value of the
licenses that it is seeking in this auction. Each bidder is responsible
for assuring that, if it wins a license, it will be able to build and
operate facilities in accordance with the Commission's rules. The
Commission makes no representations or warranties about the use of this
spectrum for particular services. Applicants should be aware that a
Commission auction represents an opportunity to become a Commission
licensee, subject to certain conditions and regulations, and that the
Commission's statutory authority, under the Communications Act, to add,
modify and eliminate rules governing spectrum use, as the public
interest warrants, applies equally to all licenses, whether acquired
through the competitive bidding process or otherwise. In addition, a
Commission auction does not constitute an endorsement by the Commission
of any particular service, technology, or product, nor does a
Commission license constitute a guarantee of business success.
45. An applicant should perform its due diligence research and
analysis before proceeding, as it would with any new business venture.
In particular, the Bureau strongly encourages each potential bidder to
review all Commission orders and public notices establishing rules and
policies for the AWS-3 bands, including incumbency issues for AWS-3
licensees, Federal and non-Federal relocation and sharing and cost
sharing obligations, and protection of Federal and non-Federal
incumbent operations. Additionally, each potential bidder should
perform technical analyses or refresh their previous analyses to assure
itself that, should it become a winning bidder for any Auction 97
license, it will be able to build and operate facilities that will
fully comply with all applicable technical and regulatory requirements.
The Bureau strongly encourages each applicant to inspect any
prospective transmitter sites located in, or near, the service area for
which it plans to bid, confirm the availability of such sites, and to
familiarize itself with the Commission's rules regarding the National
Environmental Policy Act.
46. The Bureau strongly encourages each applicant to conduct its
own research prior to Auction 97 in order to determine the existence of
pending administrative or judicial proceedings, including pending
allocation rulemaking proceedings, that might affect its decision to
participate in the auction. The Bureau strongly encourages each
participant in Auction 97 to continue such research throughout the
auction. The due diligence considerations mentioned in the Auction 97
Procedures 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 specific facts and circumstances
related to its interests.
47. The Bureau also reminds each applicant that pending and future
judicial proceedings, as well as pending and future proceedings before
the Commission--including applications, applications for modification,
rulemaking proceedings, requests for special temporary authority,
waiver requests, petitions to deny, petitions for reconsideration,
informal objections, and applications for review--may relate to
particular applicants or the licenses available in Auction 97 (or the
terms and conditions thereof, including all applicable Commission rules
and regulations). Each prospective applicant is responsible for
assessing the likelihood of the various possible outcomes and for
considering the potential impact on licenses available in this auction.
48. The Bureau calls special attention in this auction to the
requirements presented by the temporary and indefinite sharing of
portions of the AWS-3 bands by incumbent Federal users and AWS-3
licensees, which may vary by geography and frequency. The FCC/NTIA
Coordination Procedures Public Notice contains additional information
regarding the extent of sharing in the AWS-3 bands, refinements to the
protection zones adopted in the AWS-3 Report and Order, and information
and guidance on the overall coordination process between commercial and
Federal users. Additionally, the CSEA, as amended by the Spectrum Act,
stipulates that Federal agencies will receive reimbursement for their
costs in relocating their operations from, or sharing, the ``eligible
frequencies'' offered in this auction based on their approved
transition plans, which the NTIA will make available to the public. The
Bureau expects that the information in both the FCC/NTIA Coordination
Procedures Public Notice and the federal agency transition plans will
be material to an applicant's potential participation in Auction 97.
Therefore, the Bureau strongly encourages each applicant to closely
review these materials, as well as future releases from the Commission
and the NTIA concerning these issues, and to carefully consider the
technical and economic implications for commercial use of the AWS-3
bands.
49. Applicants are solely responsible for identifying associated
risks and for investigating and evaluating the degree to which such
matters may affect their ability to bid on, otherwise acquire, or make
use of the licenses available in
[[Page 47112]]
Auction 97. Each potential bidder is responsible for undertaking
research to ensure that any licenses won in this auction will be
suitable for its business plans and needs. Each potential bidder must
undertake its own assessment of the relevance and importance of
information gathered as part of its due diligence efforts.
9. Use of Integrated Spectrum Auction System
50. Bidders will be able to participate in Auction 97 over the
Internet using the Commission's Web-based Integrated Spectrum Auction
System (ISAS or FCC Auction System). The Commission makes no warranty
whatsoever with respect to the FCC Auction System. In no event shall
the Commission, or any of its officers, employees, or agents, be liable
for any damages whatsoever (including, but not limited to, loss of
business profits, business interruption, loss of business information,
or any other loss) arising out of or relating to the existence,
furnishing, functioning, or use of the FCC Auction System that is
accessible to qualified bidders in connection with this auction.
Moreover, no obligation or liability will arise out of the Commission's
technical, programming, or other advice or service provided in
connection with the FCC Auction System.
10. Environmental Review Requirements
51. Licensees must comply with the Commission's rules regarding
implementation of the National Environmental Policy Act and other
federal environmental statutes. The construction of a wireless antenna
facility is a federal action, and the licensee must comply with the
Commission's environmental rules for each such facility. These
environmental rules require, among other things, that the licensee
consult with expert agencies having environmental responsibilities,
including the U.S. Fish and Wildlife Service, the State Historic
Preservation Office, the U.S. Army Corps of Engineers, and the Federal
Emergency Management Agency (through the local authority with
jurisdiction over floodplains). In assessing the effect of facility
construction on historic properties, the licensee must follow the
provisions of the FCC's Nationwide Programmatic Agreement Regarding the
Section 106 National Historic Preservation Act Review Process. The
licensee must prepare an environmental assessment for any facility that
may have a significant impact in or on wilderness areas, wildlife
preserves, threatened or endangered species, designated critical
habitats, historical or archaeological sites, Native American religious
sites, floodplains, surface features, or migratory birds. In addition,
the licensee must prepare an environmental assessment for any facility
that includes high intensity white lights in residential neighborhoods
or excessive radio frequency emission.
D. Auction Specifics
1. Bidding Methodology
52. The bidding methodology for Auction 97 will be a simultaneous
multiple round format. The Commission will conduct this auction over
the Internet using the FCC Auction System. Qualified bidders are
permitted to bid electronically via the Internet or by telephone using
the telephonic bidding option. All telephone calls are recorded.
2. Pre-Auction Dates and Deadlines
53. The following dates and deadlines, as announced in the Auction
97 Procedures Public Notice apply: (1) Auction tutorial available (via
Internet) by August 28, 2014; (2) short-Form Application (FCC Form 175)
Filing Window Opens on August 28, 2014; 12:00 noon ET; (3) short-Form
Application (FCC Form 175) Filing Window Deadline closes on September
12, 2014; 6:00 p.m. ET; (4) upfront Payments (via wire transfer) due by
October 15, 2014; 6:00 p.m. ET; (5) Mock Auction begins on November 10,
2014; and (6) Auction 97 begins on November 13, 2014.
54. In order to provide sufficient time for Commission staff to
complete review of short-form applications and for Auction 97
applicants to work with staff to address any deficiencies with their
applications, the Bureau is unable to grant in full the joint request
of CCA, CTIA, and NTCA to set a short-form deadline of September 24,
2014. Those parties assert setting the deadline near the end of that
month would facilitate the association members' ability to participate
in business negotiations and panel discussions, including panels on the
AWS-3 auction, at industry conferences scheduled during September 2014
without risk of running afoul of 47 CFR 1.2105(c)'s prohibited
communications period. The Bureau understands that two of three of
those events will have concluded by September 12, 2014, which is the
alternative date they request.
3. Requirements for Participation
55. Those wishing to participate in this auction must: (1) Submit a
short-form application (FCC Form 175) electronically prior to 6:00 p.m.
ET, on September 12, 2014, following the electronic filing procedures
set forth in Attachment D to the Auction 97 Procedures Public Notice;
(2) submit a sufficient upfront payment and an FCC Remittance Advice
Form (FCC Form 159) by 6:00 p.m. ET, on October 15, 2014, following the
procedures and instructions set forth in Attachment E; and (3) comply
with all provisions outlined in the Auction 97 Procedures Public Notice
and applicable Commission rules.
II. Short-Form Application (FCC Form 175) Requirements
A. General Information Regarding Short-Form Applications
56. An application to participate in an FCC auction, referred to as
a short-form application or FCC Form 175, provides information used to
determine whether the applicant is legally, technically, and
financially qualified to participate in Commission auctions for
licenses or permits. The short-form application is the first part of
the Commission's two-phased auction application process. In the first
phase, parties desiring to participate in the auction must file a
streamlined, short-form application in which they certify under penalty
of perjury as to their qualifications. Eligibility to participate in
bidding is based on the applicant's short-form application and
certifications and on its upfront payment. In the second phase, each
winning bidder must file a more comprehensive long-form application
(FCC Form 601) and have a complete and accurate ownership disclosure
information report (FCC Form 602) on file with the Commission.
57. Every entity and individual seeking a license available in
Auction 97 must file a short-form application electronically via the
FCC Auction System prior to 6:00 p.m. ET on September 12, 2014,
following the procedures prescribed in Attachment D to the Auction 97
Procedures Public Notice. If an applicant claims eligibility for a
bidding credit, the information provided in its FCC Form 175 will be
used to determine whether the applicant is eligible for the claimed
bidding credit. Applicants filing a short-form application are subject
to the Commission's anti-collusion rules beginning at the deadline for
filing.
58. Applicants bear full responsibility for submitting accurate,
complete and timely short-form applications. All applicants must
certify on their short-form applications under penalty of perjury that
they are legally, technically, financially and otherwise qualified to
[[Page 47113]]
hold a license. Each applicant should read carefully the instructions
set forth in Attachment D to the Auction 97 Procedures Public Notice
and should consult the Commission's rules to ensure that, in addition
to the materials, all the information required is included within its
short-form application.
59. An individual or entity may not submit more than one short-form
application for a single auction. If a party submits multiple short-
form applications for any license(s) in the same or overlapping
geographic area(s), only one of its applications can be found to be
complete when reviewed for completeness and compliance with the
Commission's rules.
60. Applicants should note that submission of a short-form
application (and any amendments thereto) constitutes a representation
by the person certifying the application that he or she is an
authorized representative of the applicant with authority to bind the
applicant, that he or she has read the form's instructions and
certifications, and that the contents of the application, its
certifications, and any attachments are true and correct. Applicants
are not permitted to make major modifications to their applications;
such impermissible changes include a change of the certifying official
to the application. Submission of a false certification to the
Commission may result in penalties, including monetary forfeitures,
license forfeitures, ineligibility to participate in future auctions,
and/or criminal prosecution.
B. License Selection
61. An applicant must select the licenses on which it wants to bid
from the ``Eligible Licenses'' list on its short-form application.
Applicants must review and verify their license selections before the
deadline for submitting short-form applications. License selections
cannot be changed after the short-form application filing deadline. The
FCC Auction System will not accept bids on licenses that were not
selected on the applicant's short-form application.
C. Disclosure of Bidding Arrangements
62. An applicant will be required to identify in its short-form
application all real parties in interest with whom it has entered into
any agreements, arrangements, or understandings of any kind relating to
the licenses being auctioned, including any agreements relating to
post-auction market structure.
63. Each applicant will also be required to certify under penalty
of perjury in its short-form application that it has not entered and
will not enter into any explicit or implicit agreements, arrangements
or understandings of any kind with any parties, other than those
identified in the application, regarding the amount of its bids,
bidding strategies, or the particular licenses on which it will or will
not bid. If an applicant has had discussions, but has not reached an
agreement by the short-form application filing deadline, it should not
include the names of parties to the discussions on its application and
may not continue such discussions with any applicants after the
deadline.
64. After the filing of short-form applications, the Commission's
rules do not prohibit a party holding a non-controlling, attributable
interest in one applicant from acquiring an ownership interest in or
entering into a joint bidding arrangement with other applicants,
provided that (i) the attributable interest holder certifies that it
has not and will not communicate with any party concerning the bids or
bidding strategies of more than one of the applicants in which it holds
an attributable interest, or with which it has entered into a joint
bidding arrangement; and (ii) the arrangements do not result in a
change in control of any of the applicants. While 47 CFR 1.2105(c) does
not prohibit non-auction-related business negotiations among auction
applicants, the Bureau reminds applicants that certain discussions or
exchanges could touch upon impermissible subject matters because they
may convey pricing information and bidding strategies. Further,
compliance with the disclosure requirements of 47 CFR 1.2105(c) will
not insulate a party from enforcement of the antitrust laws.
D. Ownership Disclosure Requirements
65. Each applicant must comply with the uniform Part 1 ownership
disclosure standards and provide information required by 47 CFR 1.2105
and 1.2112. Specifically, in completing the short-form application, an
applicant will be required to fully disclose information on the real
party- or parties-in-interest and the ownership structure of the
applicant, including both direct and indirect ownership interests of 10
percent or more, as prescribed in 47 CFR 1.2105 and 1.2112. Each
applicant is responsible for ensuring that information submitted in its
short-form application is complete and accurate.
66. In certain circumstances, an applicant's most current ownership
information on file with the Commission, if in an electronic format
compatible with the short-form application (FCC Form 175) (such as
information submitted in an FCC Form 602 or in an FCC Form 175 filed
for a previous auction using ISAS) will automatically be entered into
the applicant's short-form application. Each applicant must carefully
review any information automatically entered to confirm that it is
complete and accurate as of the deadline for filing the short-form
application. Any information that needs to be corrected or updated must
be changed directly in the short-form application.
E. Foreign Ownership Disclosure Requirements
67. Section 310 of the Communications Act requires the Commission
to review foreign investment in radio station licenses and imposes
specific restrictions on who may hold certain types of radio licenses.
The provisions of section 310 apply to applications for initial radio
licenses, applications for assignments and transfers of control of
radio licenses, and spectrum leasing arrangements under the
Commission's secondary market rules. In completing the short-form
application (FCC Form 175), an applicant will be required to disclose
information concerning any foreign ownership of the applicant. An
applicant must certify in its short-form application that, as of the
deadline for filing a short-form application to participate in Auction
97, the applicant either is in compliance with the foreign ownership
provisions of section 310 or has filed a petition for declaratory
ruling requesting Commission approval to exceed the applicable foreign
ownership limit or benchmark in section 310(b) that is pending before,
or has been granted by, the Commission.
F. National Security Certification Requirement for Auction 97
Applicants
68. Section 6004 of the Spectrum Act prohibits a person who has
been, for reasons of national security, barred by any agency of the
Federal Government from bidding on a contract, participating in an
auction, or receiving a grant from participating in any auction that is
required or authorized to be conducted pursuant to the Spectrum Act. In
2013, the Commission amended its rules to implement this mandate by
adding a certification to the various other certifications that a party
must make in any short-form application. Pursuant to this rule, any
applicant seeking to participate in Auction 97 must certify in its
short-form application, under penalty of perjury, that the applicant
and all of the related individuals and entities required to be
disclosed on its application are not person(s) who have
[[Page 47114]]
been, for reasons of national security, barred by any agency of the
Federal Government from bidding on a contract, participating in an
auction, or receiving a grant, and who are thus statutorily prohibited
from participating in such a Commission auction. As with other required
certifications, an auction applicant's failure to include the required
certification in its short-form application by the applicable filing
deadline would render its application unacceptable for filing, and its
application would be dismissed with prejudice.
G. Acknowledgement Statement for Auction 97 Applicants
69. The Bureau adopts its proposal to require each applicant
selecting any license in the 1755-1780 MHz band to submit with its
short-form application a signed statement acknowledging that the
applicant's operations the 1755-1780 MHz band may be subject to
interference from Federal systems, that the applicant must accept
interference from incumbent Federal operations, and that the applicant
has considered these risks before submitting any bids for applicable
licenses in Auction 97. The specific text that must be included in the
required acknowledgement statement is contained in Attachment G to the
Auction 97 Procedures Public Notice. The acknowledgement statement must
be signed by the same individual that signs the application on behalf
of the applicant. Guidance on submitting the acknowledgement statement
can be found in Attachment D to the Auction 97 Procedures Public
Notice.
70. Incumbent Federal users are currently operating in the 1695-
1710 MHz and 1755-1780 MHz bands. In the AWS-3 Report and Order, the
Commission adopted rules to address commercial operations in these
bands in light of the temporary and indefinite sharing of the bands by
Federal incumbent users and commercial licensees, including a
requirement that commercial licensees operate on a co-equal, primary
operations with Federal systems, and a requirement that licensees in
the 1755-1780 MHz band accept interference from Federal systems as long
as such systems remain in the band.
71. The Bureau disagrees with the recommendation of Spectrum
Financial Partners that it should not require an acknowledgement on the
grounds that this would be an unnecessary paperwork burden and
applicant's acceptance of such interference obligations is already
adequately covered by the due diligence instructions that apply to all
auctions. As both T-Mobile and AT&T recognize, it may be useful for
each bidder for these frequencies to sign a statement acknowledging
that it has given consideration to potential interference issues for
this band. AT&T and T-Mobile request that the required statement be
narrowly drafted, and seek assurances that the acknowledgement does not
give rise to any new obligations for the 1755-1780 MHz band beyond
those set out in the Commission's rules. They also encourage the
Commission to promote disclosure by federal agencies of as much
information as possible about the potential interference environment.
The Bureau notes that the text of the acknowledgement statement is
narrowly tailored and expressly states that it does not supersede the
licensee's rights and obligations specified by law, rule, or other
Commission action.
H. Designated Entity Provisions
72. Eligible applicants in Auction 97 may claim small business
bidding credits and applicants should review carefully the Commission's
decisions regarding the designated entity provisions.
1. Bidding Credits for Small Businesses
73. A bidding credit represents an amount by which a bidder's
winning bid will be discounted. For Auction 97, bidding credits will be
available to small businesses and consortia thereof.
a. Bidding Credit Eligibility Criteria
74. In the AWS-3 Report and Order, the Commission adopted small
business bidding credits to promote and facilitate the participation of
small businesses in competitive bidding for licenses in the AWS-3
bands.
75. The level of bidding credit is determined as follows: (1) a
bidder with attributed average annual gross revenues that do not exceed
$40 million for the preceding three years will receive a 15 percent
discount on its winning bid; and (2) a bidder with attributed average
annual gross revenues that do not exceed $15 million for the preceding
three years will receive a 25 percent discount on its winning bid.
76. Bidding credits are not cumulative; qualifying applicants
receive either the 15 percent or the 25 percent bidding credit on its
winning bid, but not both. Applicants should note that unjust
enrichment provisions apply to a winning bidder that utilizes a bidding
credit and subsequently seeks to assign or transfer control of its
license to an entity not qualifying for the same level of bidding
credit.
b. Revenue Disclosure on Short-Form Application
77. An entity applying as a small business must provide gross
revenues for the preceding three years of each of the following: (1)
The applicant, (2) its affiliates, (3) its controlling interests, (4)
the affiliates of its controlling interests, and (5) the entities with
which it has an attributable material relationship. Certification that
the average annual gross revenues of such entities and individuals for
the preceding three years do not exceed the applicable limit is not
sufficient. Additionally, if an applicant is applying as a consortium
of small businesses, this information must be provided for each
consortium member.
2. Attributable Interests
a. Controlling Interests
78. Controlling interests of an applicant include individuals and
entities with either de facto or de jure control of the applicant.
Typically, ownership of greater than 50 percent of an entity's voting
stock evidences de jure control. De facto control is determined on a
case-by-case basis. The following are some common indicia of de facto
control: (1) The entity constitutes or appoints more than 50 percent of
the board of directors or management committee; (2) the entity has
authority to appoint, promote, demote, and fire senior executives that
control the day-to-day activities of the licensee; and (3) the entity
plays an integral role in management decisions.
79. Applicants should refer to 47 CFR 1.2110(c)(2) and Attachment D
to the Auction 97 Procedures Public Notice to understand how certain
interests are calculated in determining control. For example, pursuant
to 47 CFR 1.2110(c)(2)(ii)(F), officers and directors of an applicant
are considered to have controlling interest in the applicant.
b. Affiliates
80. Affiliates of an applicant or controlling interest include an
individual or entity that (1) directly or indirectly controls or has
the power to control the applicant, (2) is directly or indirectly
controlled by the applicant, (3) is directly or indirectly controlled
by a third party that also controls or has the power to control the
applicant, or (4) has an ``identity of interest'' with the applicant.
The Commission's definition of an affiliate of the applicant
encompasses both controlling interests of the applicant and affiliates
of controlling interests of the applicant. For more information
regarding affiliates, applicants should refer to 47 CFR 1.2110(c)(5)
and Attachment D to
[[Page 47115]]
the Auction 97 Procedures Public Notice.
c. Material Relationships
81. The Commission requires the consideration of certain leasing
and resale (including wholesale) relationships--referred to as
``attributable material relationships''--in determining designated
entity eligibility for bidding credits. An applicant or licensee has an
``attributable material relationship'' when it has one or more
agreements with any individual entity for the lease or resale
(including under a wholesale agreement) of, on a cumulative basis, more
than 25 percent of the spectrum capacity of any individual license held
by the applicant or licensee. The attributable material relationship
will cause the gross revenues of that entity and its attributable
interest holders to be attributed to the applicant or licensee for the
purposes of determining the applicant's or licensee's (i) eligibility
for designated entity benefits and (ii) liability for ``unjust
enrichment'' on a license-by-license basis.
82. The Commission grandfathered material relationships in
existence before the release of the Designated Entity Second Report and
Order, meaning that those preexisting relationships alone would not
cause the Commission to examine a designated entity's ongoing
eligibility for existing benefits or its liability for unjust
enrichment. The Commission did not, however, grandfather preexisting
material relationships for determinations of an applicant's or
licensee's designated entity eligibility for future auctions or in the
context of future assignments, transfers of control, spectrum leases,
or other reportable eligibility events. Rather, in such circumstances,
the Commission reexamines the applicant's or licensee's designated
entity eligibility, taking into account all existing material
relationships, including those previously grandfathered. The Commission
has recently waived the bright-line application of 47 CFR
1.2110(b)(3)(iv)'s attributable material relationship rule that would
otherwise trigger the automatic attribution of the lessee's gross
revenues to a designated entity (DE) applicant, where its leased
licenses were not subject to DE benefits and, at the time the leases
became effective, the DE applicant held no other licenses subject to DE
benefits. To the extent that the requesting entity and any other
similarly situated parties certify that they are qualified to claim DE
benefits in any upcoming auction and become winning bidders, they will
be required to demonstrate at the long-form application stage that the
specific facts and circumstances of their spectrum lease agreements do
not require attribution of the lessees' gross revenues in their
respective cases.
d. Gross Revenue Exceptions
83. The Commission has also made other modifications to its rules
governing the attribution of gross revenues for purposes of determining
designated entity eligibility. For example, the Commission has
clarified that, in calculating an applicant's gross revenues under the
controlling interest standard, it will not attribute to the applicant
the personal net worth, including personal income, of its officers and
directors.
84. The Commission has also exempted from attribution to the
applicant the gross revenues of the affiliates of a rural telephone
cooperative's officers and directors, if certain conditions specified
in 47 CFR 1.2110(b)(3)(iii) are met. An applicant claiming this
exemption must provide, in an attachment, an affirmative statement that
the applicant, affiliate and/or controlling interest is an eligible
rural telephone cooperative within the meaning of 47 CFR
1.2110(b)(3)(iii), and the applicant must supply any additional
information as may be required to demonstrate eligibility for the
exemption from the attribution rule. Applicants seeking to claim this
exemption must meet all of the conditions. Additional guidance on
claiming this exemption may be found in Attachment D to the Auction 97
Procedures Public Notice.
e. Bidding Consortia
85. A consortium of small businesses is a conglomerate organization
composed of two or more entities, each of which individually satisfies
the definition of a small business. Thus, each member of a consortium
of small businesses that applies to participate in Auction 97 must
individually meet the criteria for small businesses. Each consortium
member must disclose its gross revenues along with those of its
affiliates, its controlling interests, the affiliates of its
controlling interests, and any entities having an attributable material
relationship with the member. Although the gross revenues of the
consortium members will not be aggregated for purposes of determining
the consortium's eligibility as a small business, this information must
be provided to ensure that each individual consortium member qualifies
for any bidding credit awarded to the consortium.
I. Tribal Lands Bidding Credit
86. To encourage the growth of wireless services in federally
recognized tribal lands, the Commission has implemented a tribal lands
bidding credit. Applicants do not provide information regarding tribal
lands bidding credits on their short-form applications. Instead,
winning bidders may apply for the tribal lands bidding credit after the
auction when they file their more detailed, long-form applications.
J. Provisions Regarding Former and Current Defaulters
87. Current defaulters or delinquents are not eligible to
participate in Auction 97, but former defaulters or delinquents can
participate so long as they are otherwise qualified and make upfront
payments that are fifty percent more than would otherwise be necessary.
An applicant is considered a ``current defaulter'' or a ``current
delinquent'' when it, any of its affiliates, any of its controlling
interests, or any of the affiliates of its controlling interests, is in
default on any payment for any Commission construction permit or
license (including a down payment) or is delinquent on any non-tax debt
owed to any Federal agency as of the filing deadline for short-form
applications. An applicant is considered a ``former defaulter'' or a
``former delinquent'' when it, any of its affiliates, any of its
controlling interests, or any of the affiliates of its controlling
interests, have defaulted on any Commission construction permit or
license or been delinquent on any non-tax debt owed to any Federal
agency, but have since remedied all such defaults and cured all of the
outstanding non-tax delinquencies.
88. Four trade associations have jointly requested that the
Commission grant a limited, temporary waiver of the Commission's
``former defaulter'' rule, 47 CFR 1.2106(a), as to two categories of
debt for Auction 97 applicants. The Bureau concludes that any requests
for temporary, limited relief from the ``former defaulter'' rule are
beyond the scope of the Auction 97 Procedures Public Notice, which is
limited to establishing procedures for the upcoming auction of AWS-3
licenses. The Bureau notes, however, that such requests are being
addressed separately.
89. On the short-form application, an applicant must certify under
penalty of perjury that it, its affiliates, its controlling interests,
and the affiliates of its controlling interests, as defined by 47 CFR
1.2110, are not in default on any payment for a Commission construction
[[Page 47116]]
permit or license (including down payments) and that it is not
delinquent on any non-tax debt owed to any Federal agency. Each
applicant must also state under penalty of perjury whether it, its
affiliates, its controlling interests, and the affiliates of its
controlling interests, have ever been in default on any Commission
construction permit or license or have ever been delinquent on any non-
tax debt owed to any Federal agency. Prospective applicants are
reminded that submission of a false certification to the Commission is
a serious matter that may result in severe penalties, including
monetary forfeitures, license revocations, exclusion from participation
in future auctions, and/or criminal prosecution.
90. Applicants are encouraged to review the Bureau's previous
guidance on default and delinquency disclosure requirements in the
context of the short-form application process. For example, it has been
determined that, to the extent that Commission rules permit late
payment of regulatory or application fees accompanied by late fees,
such debts will become delinquent for purposes of 47 CFR 1.2105(a) and
1.2106(a) only after the expiration of a final payment deadline.
Therefore, with respect to regulatory or application fees, the
provisions of 47 CFR 1.2105(a) and 1.2106(a) regarding default and
delinquency in connection with competitive bidding are limited to
circumstances in which the relevant party has not complied with a final
Commission payment deadline. Parties are also encouraged to consult
with the Wireless Telecommunications Bureau's Auctions and Spectrum
Access Division staff if they have any questions about default and
delinquency disclosure requirements.
91. The Commission considers outstanding debts owed to the United
States Government, in any amount, to be a serious matter. The
Commission adopted rules, including a provision referred to as the
``red light rule,'' that implement its obligations under the Debt
Collection Improvement Act of 1996, which governs the collection of
debts owed to the United States. Under the red light rule, applications
and other requests for benefits filed by parties that have outstanding
debts owed to the Commission will not be processed. In the same
rulemaking order, the Commission explicitly declared, however, that its
competitive bidding rules ``are not affected'' by the red light rule.
As a consequence, the Commission's adoption of the red light rule does
not alter the applicability of any of its competitive bidding rules,
including the provisions and certifications of 47 CFR 1.2105 and
1.2106, with regard to current and former defaults or delinquencies.
92. Applicants are reminded, however, that the Commission's Red
Light Display System, which provides information regarding debts
currently owed to the Commission, may not be determinative of an
auction applicant's ability to comply with the default and delinquency
disclosure requirements of 47 CFR 1.2105. Thus, while the red light
rule ultimately may prevent the processing of long-form applications by
auction winners, an auction applicant's lack of current ``red light''
status is not necessarily determinative of its eligibility to
participate in an auction or of its upfront payment obligation.
93. Moreover, prospective applicants in Auction 97 should note that
any long-form applications filed after the close of bidding will be
reviewed for compliance with the Commission's red light rule, and such
review may result in the dismissal of a winning bidder's long-form
application.
K. Optional Applicant Status Identification
94. Applicants owned by members of minority groups and/or women, as
defined in 47 CFR 1.2110(c)(3), and rural telephone companies, as
defined in 47 CFR 1.2110(c)(4), may identify themselves regarding this
status in filling out their short-form applications. This applicant
status information is collected for statistical purposes only and
assists the Commission in monitoring the participation of ``designated
entities'' in its auctions.
L. Minor Modifications to Short-Form Applications
95. After the deadline for filing initial applications, an Auction
97 applicant is permitted to make only minor changes to its
application. Permissible minor changes include, among other things,
deletion and addition of authorized bidders (to a maximum of three) and
revision of addresses and telephone numbers of the applicants and their
contact persons. An applicant is not permitted to make a major
modification to its application (e.g., change of license selection,
change control of the applicant, change the certifying official, or
claim eligibility for a higher percentage of bidding credit) after the
initial application filing deadline. Thus, any change in control of an
applicant--resulting from a merger, for example--will be considered a
major modification, and the application will consequently be dismissed.
96. If an applicant wishes to make permissible minor changes to its
short-form application, such changes should be made electronically to
its short-form application using the FCC Auction System whenever
possible. For the change to be submitted and considered by the
Commission, be sure to click on the SUBMIT button. After the revised
application has been submitted, a confirmation page will be displayed
stating the submission time, submission date, and a unique file number.
97. An applicant cannot use the FCC Auction System outside of the
initial and resubmission filing windows to make changes to its short-
form application for other than administrative changes (e.g., changing
certain contact information or the name of an authorized bidder). If
these or other permissible minor changes need to be made outside of
these windows, the applicant must submit a letter briefly summarizing
the changes and subsequently update its short-form application in the
FCC Auction System once it is available. Moreover, after the filing
window has closed, the system will not permit applicants to make
certain changes, such as the applicant's legal classification and
license selections.
98. Any letter describing changes to an applicant's short-form
application must be submitted by email to auction97@fcc.gov. The email
summarizing the changes must include a subject or caption referring to
Auction 97 and the name of the applicant, for example, ``Re: Changes to
Auction 97 Short-Form Application of ABC Corp.'' The Bureau requests
that parties format any attachments to email as Adobe[supreg]
Acrobat[supreg] (PDF) or Microsoft[supreg] Word documents. Questions
about short-form application amendments should be directed to the
Auctions and Spectrum Access Division at (202) 418-0660.
99. As with the short-form application, any application amendment
and related statements of fact must be certified by an authorized
representative of the applicant with authority to bind the applicant.
Applicants should note that submission of any such amendment or related
statement of fact constitutes a representation by the person certifying
that he or she is an authorized representative with such authority, and
that the contents of the amendment or statement of fact are true and
correct.
100. Applicants must not submit application-specific material
through the Commission's Electronic Comment Filing System, which was
used for submitting comments regarding Auction 97. Further, parties
submitting information related to their applications
[[Page 47117]]
should use caution to ensure that their submissions do not contain
confidential information or communicate information that would violate
47 CFR 1.2105(c) or the limited information procedures adopted for
Auction 97. A party seeking to submit information that might reflect
non-public information, such as an applicant's license selections,
upfront payment amount, or bidding eligibility, should consider
submitting any such information along with a request that the filing or
portions of the filing be withheld from public inspection until the end
of the prohibition of certain communications pursuant to 47 CFR
1.2105(c).
M. Maintaining Current Information in Short-Form Applications
101. 47 CFR 1.65 and 1.2105(b) requires an applicant to maintain
the accuracy and completeness of information furnished in its pending
application and in competitive bidding proceedings to furnish
additional or corrected information to the Commission within five days
of a significant occurrence, or to amend a short form application no
more than five days after the applicant becomes aware of the need for
the amendment. Changes that cause a loss of or reduction in the
percentage of bidding credit specified on the originally-submitted
application must be reported immediately, and no later than five
business days after the change occurs. If an amendment reporting
changes is a ``major amendment,'' as defined by 47 CFR 1.2105, the
major amendment will not be accepted and may result in the dismissal of
the application. After the short-form filing deadline, applicants may
make only minor changes to their applications. For changes to be
submitted and considered by the Commission, be sure to click on the
SUBMIT button in the FCC Auction System. In addition, an applicant
cannot update its short-form application using the FCC Auction System
after the initial and resubmission filing windows close. If information
needs to be submitted pursuant to 47 CFR 1.65 after these windows
close, a letter briefly summarizing the changes must be submitted by
email to auction97@fcc.gov. This email must include a subject or
caption referring to Auction 97 and the name of the applicant. The
Bureau requests that parties format any attachments to email as
Adobe[supreg] Acrobat[supreg] (PDF) or Microsoft[supreg] Word
documents. A party seeking to submit information that might reflect
non-public information, such as an applicant's license selections,
upfront payment amount, or bidding eligibility, should consider
submitting any such information along with a request that the filing or
portions of the filing be withheld from public inspection until the end
of the prohibition of certain communications pursuant to 47 CFR
1.2105(c).
III. Pre-Auction Procedures
A. Online Auction Tutorial--Available August 28, 2014
102. No later than Thursday, August 28, 2014, an auction tutorial
will be available on the Auction 97 Web page for prospective bidders to
familiarize themselves with the auction process. This online tutorial
will provide information about pre-auction procedures, completing
short-form applications, auction conduct, the FCC Auction Bidding
System, auction rules, and AWS-3 service rules. The tutorial will also
provide an avenue to ask Commission staff questions about the auction,
auction procedures, filing requirements, and other matters related to
this auction.
103. The Bureau believes parties interested in participating in
this auction will find the interactive, online tutorial an efficient
and effective way to further their understanding of the auction
process. The tutorial will allow viewers to navigate the presentation
outline, review written notes, listen to audio recordings of the notes,
and search for topics using a text search function. Additional features
of this web-based tool include links to auction-specific Commission
releases, email links for contacting Commission licensing and auctions
staff, a timeline with deadlines for auction preparation, and screen
shots of the online application and bidding system. The tutorial will
be accessible through a web browser with Adobe Flash Player.
104. The auction tutorial will be accessible from the Commission's
Auction 97 Web page at https://wireless.fcc.gov/auctions/97/ through an
``Auction Tutorial'' link. Once posted, this tutorial will remain
available and accessible anytime for reference in connection with the
procedures outlined in the Auction 97 Procedures Public Notice.
105. Spectrum Financial Partners asks that the Bureau clarify the
online interactive auction tutorial to include a clear description of
the various fields in the downloadable reports, which might not be
familiar to those taking part in a Commission auction for the first
time. Spectrum Financial Partners also urges the Bureau to do more to
make the auction tutorial more broadly available, perhaps even by
posting a video version of the interactive tutorial on YouTube. The
Bureau finds the description of the various fields in the downloadable
reports contained in its auction materials to be sufficiently clear,
even for first-time bidders. The Bureau's ISAS Bidder's Guide''--which
is sent by overnight delivery to all qualified bidders in advance of
the mock auction and which is also available to the public in the FCC
Auction System--provides additional information. The Bureau therefore
declines to make the changes to the tutorial materials requested by
Spectrum Financial Partners. In addition, because the Bureau's auction
tutorial is publicly-available on the Auction 97 Web site and is
accessible 24 hours a day, 7 days a week, it is already widely
accessible, and the Bureau is not persuaded that there is any need to
create other formats of the tutorial.
B. Short-Form Applications--Due Prior to 6:00 p.m. ET on September 12,
2014
106. In order to be eligible to bid in this auction, applicants
must first follow the procedures set forth in Attachments D and E to
the Auction 97 Procedures Public Notice to submit a short-form
application (FCC Form 175) electronically via the FCC Auction System.
This short-form application must be submitted prior to 6:00 p.m. ET on
September 12, 2014. Late applications will not be accepted. No
application fee is required, but an applicant must submit a timely
upfront payment to be eligible to bid.
107. Applications may generally be filed at any time beginning at
noon ET on August 28, 2014, until the filing window closes at 6:00 p.m.
ET on September 12, 2014. Applicants are strongly encouraged to file
early and are responsible for allowing adequate time for filing their
applications. There are no limits or restrictions on the number of
times an application can be updated or amended until the filing
deadline on September 12, 2014.
108. An applicant must always click on the SUBMIT button on the
``Certify & Submit'' screen to successfully submit its FCC Form 175 and
any modifications; otherwise the application or changes to the
application will not be received or reviewed by Commission staff.
Additional information about accessing, completing, and viewing the FCC
Form 175 is included in Attachment D to the Auction 97 Procedures
Public Notice. FCC Auctions Technical Support is available at (877)
480-3201, option nine; (202) 414-1250; or (202) 414-1255 (text
telephone (TTY)); hours of service are Monday through Friday, from 8:00
a.m. to 6:00 p.m. ET. In order to provide better
[[Page 47118]]
service to the public, all calls to Technical Support are recorded.
C. Application Processing and Minor Corrections
109. After the deadline for filing short-form applications, the
Commission will process all timely submitted applications to determine
which are complete, and subsequently will issue a public notice
identifying (1) those that are complete, (2) those that are rejected,
and (3) those that are incomplete or deficient because of minor defects
that may be corrected. The public notice will include the deadline for
resubmitting corrected applications.
110. After the application filing deadline on September 12, 2014,
applicants can make only minor corrections to their applications. They
will not be permitted to make major modifications (e.g., change license
selection, change control of the applicant, change the certifying
official, or claim eligibility for a higher percentage of bidding
credit).
111. Commission staff will communicate only with an applicant's
contact person or certifying official, as designated on the short-form
application, unless the applicant's certifying official or contact
person notifies the Commission in writing that applicant's counsel or
other representative is authorized to speak on its behalf.
Authorizations may be sent by email to auction97@fcc.gov.
D. Upfront Payments--Due October 15, 2014
112. In order to be eligible to bid in this auction, an upfront
payment must be submitted and accompanied by an FCC Remittance Advice
Form (FCC Form 159). After completing its short-form application, an
applicant will have access to an electronic version of the FCC Form 159
that can be printed and sent by fax to U.S. Bank in St. Louis,
Missouri. All upfront payments must be made as instructed in this
Public Notice and must be received in the proper account at U.S. Bank
before 6:00 p.m. ET on October 15, 2014.
1. Making Upfront Payments by Wire Transfer
113. Wire transfer payments must be received before 6:00 p.m. ET on
October 15, 2014. No other payment method is acceptable. To avoid
untimely payments, applicants should discuss arrangements (including
bank closing schedules) with their bankers several days before they
plan to make the wire transfer, and allow sufficient time for the
transfer to be initiated and completed before the deadline. The
specific information needed to make upfront payments is outlined in the
Auction 97 Procedures Public Notice.
114. At least one hour before placing the order for the wire
transfer (but on the same business day), applicants must fax a
completed FCC Form 159 (Revised 2/03) to U.S. Bank at (314) 418-4232.
On the fax cover sheet, write ``Wire Transfer--Auction Payment for
Auction 97.'' In order to meet the upfront payment deadline, an
applicant's payment must be credited to the Commission's account for
Auction 97 before the deadline.
115. Each applicant is responsible for ensuring timely submission
of its upfront payment and for timely filing of an accurate and
complete FCC Remittance Advice Form (FCC Form 159). An applicant should
coordinate with its financial institution well ahead of the due date
regarding its wire transfer and allow sufficient time for the transfer
to be initiated and completed prior to the deadline. The Commission
repeatedly has cautioned auction participants about the importance of
planning ahead to prepare for unforeseen last-minute difficulties in
making payments by wire transfer. Each applicant also is responsible
for obtaining confirmation from its financial institution that its wire
transfer to U.S. Bank was successful and from Commission staff that its
upfront payment was timely received and that it was deposited into the
proper account. To receive confirmation from Commission staff, contact
Gail Glasser of the Office of Managing Director's Auctions Accounting
Group at (202) 418-0578, or alternatively, Theresa Meeks at (202) 418-
2945.
116. Please note the following information regarding upfront
payments: (1) All payments must be made in U.S. dollars; (2) all
payments must be made by wire transfer; (3) upfront payments for
Auction 97 go to a lockbox number different from the lockboxes used in
previous Commission auctions; and (4) failure to deliver a sufficient
upfront payment as instructed by the October 15, 2014, deadline will
result in dismissal of the short-form application and disqualification
from participation in the auction.
2. FCC Form 159
117. An accurate and complete FCC Remittance Advice Form (FCC Form
159, Revised 2/03) must be faxed to U.S. Bank to accompany each upfront
payment. Proper completion of this form is critical to ensuring correct
crediting of upfront payments. Detailed instructions for completion of
FCC Form 159 are included in Attachment E to the Auction 97 Procedures
Public Notice. An electronic pre-filled version of the FCC Form 159 is
available after submitting the FCC Form 175. Payers using the pre-
filled FCC Form 159 are responsible for ensuring that all of the
information on the form, including payment amounts, is accurate. The
FCC Form 159 can be completed electronically, but it must be filed with
U.S. Bank by fax.
3. Upfront Payments and Bidding Eligibility
118. The Commission has delegated to the Bureau the authority and
discretion to determine appropriate upfront payments for each auction.
An upfront payment is a refundable deposit made by each bidder to
establish its eligibility to bid on licenses. Upfront payments help
deter frivolous or insincere bidding, and provide the Commission with a
source of funds in the event that the bidder incurs liability during
the auction.
119. Applicants that are former defaulters must make upfront
payments that are fifty percent greater than non-former defaulters. For
purposes of this calculation, the ``applicant'' includes the applicant
itself, its affiliates, its controlling interests, and affiliates of
its controlling interests, as defined by 47 CFR 1.2110.
120. An applicant must make an upfront payment sufficient to obtain
bidding eligibility for the licenses on which it will bid. The Bureau
proposed in the Auction 97 Comment Public Notice that the amount of the
upfront payment would determine a bidder's initial bidding eligibility,
i.e., the maximum number of bidding units on which a bidder may place
bids. Under the Bureau's proposal, in order to bid on a particular
license, a qualified bidder must have selected the license on its FCC
Form 175 and must have a current eligibility level that meets or
exceeds the number of bidding units assigned to that license. At a
minimum, therefore, an applicant's total upfront payment must be enough
to establish eligibility to bid on at least one of the licenses
selected on its FCC Form 175 for Auction 97, or else the applicant will
not be eligible to participate in the auction. An applicant does not
have to make an upfront payment to cover all licenses the applicant
selected on its FCC Form 175, but only enough to cover the maximum
number of bidding units that are associated with licenses on which it
wishes to place bids and hold provisionally winning bids in any given
round. The total upfront payment does
[[Page 47119]]
not affect the total dollar amount the bidder may bid on any given
license.
121. In the Auction 97 Comment Public Notice, the Bureau proposed
to make the upfront payments equal to approximately one-half of the
minimum opening bids. The Bureau further proposed that each license be
assigned a specific number of bidding units, equal to one bidding unit
per dollar of the upfront payment listed for the license. The number of
bidding units for each license will remain constant throughout the
auction. The Bureau did not receive any comments on its proposals for
calculating upfront payments or assigning bidding units to each
license, and thus adopts upfront payments that are approximately one-
half of the minimum opening bids. The Bureau notes that, because the
minimum opening bids the Bureau adopts in the Auction 97 Procedures
Public Notice differ from those proposed, the number of bidding units
and the upfront payment amount associated with each license are
different than those that were proposed in the Auction 97 Comment
Public Notice. The complete list of licenses for Auction 97 and the
specific number of bidding units and associated upfront payment for
each license are set forth in Attachment A --to the Auction 97
Procedures Public Notice.
122. In calculating its upfront payment amount, an applicant should
determine the maximum number of bidding units on which it may wish to
be active (bid on or hold provisionally winning bids on) in any single
round, and submit an upfront payment amount covering that number of
bidding units. In order to make this calculation, an applicant should
add together the bidding units for all licenses on which it seeks to be
active in any given round. Each applicant should check its calculations
carefully, as there is no provision for increasing a bidder's
eligibility after the upfront payment deadline.
123. If a bidder wishes to bid on License A (with 30,000 bidding
units) and License B (with 28,000 bidding units) in a round, it must
have selected both of these licenses on its FCC Form 175 and purchased
at least 58,000 bidding units (30,000 + 28,000) of bidding eligibility.
If a bidder only wishes to bid on one of these licenses, purchasing
30,000 bidding units would allow the bidder to bid on either license,
but not both at the same time. If the bidder purchased only 28,000
bidding units, it would have enough eligibility to bid on License B but
could not bid on License A.
124. If an applicant is a former defaulter, it must calculate its
upfront payment for all of its identified licenses by multiplying the
number of bidding units on which it wishes to be active by 1.5. In
order to calculate the number of bidding units to assign to former
defaulters, the Commission will divide the upfront payment received by
1.5 and round the result up to the nearest bidding unit.
E. Applicant's Wire Transfer Information for Purposes of Refunds of
Upfront Payments
125. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information be supplied. Applicants can provide the information
electronically during the initial short-form application filing window
after the form has been submitted. (Applicants are reminded that
information submitted as part of an FCC Form 175 will be available to
the public. For that reason, wire transfer information should not be
included in an FCC Form 175. Wire transfer instructions can also be
faxed to the Commission using the instructions provided in the Auction
97 Procedures Public Notice.
F. Auction Registration
126. Approximately ten days before the auction, the Bureau will
issue a public notice announcing all qualified bidders for the auction.
Qualified bidders are those applicants with submitted short-form
applications that are deemed timely-filed, accurate, and complete,
provided that such applicants have timely submitted an upfront payment
that is sufficient to qualify them to bid.
127. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by overnight mail. The mailing will be sent only to the contact
person at the contact address listed in the FCC Form 175 and will
include the SecurID[supreg] tokens that will be required to place bids,
the ``Integrated Spectrum Auction System (ISAS) Bidder's Guide,'' and
the Auction Bidder Line phone number.
128. Qualified bidders that do not receive this registration
mailing will not be able to submit bids. Therefore, if this mailing is
not received by noon on Thursday, November 6, 2014, call the Auctions
Hotline at (717) 338-2868. Receipt of this registration mailing is
critical to participating in the auction, and each applicant is
responsible for ensuring it has received all of the registration
material.
129. In the event that SecurID[supreg] tokens are lost or damaged,
only a person who has been designated as an authorized bidder, the
contact person, or the certifying official on the applicant's short-
form application may request replacements. To request replacement of
these items, call Technical Support at (877) 480-3201, option nine;
(202) 414-1250; or (202) 414-1255 (TTY).
G. Remote Electronic Bidding
130. The Commission will conduct this auction over the Internet,
and telephonic bidding will be available as well. Only qualified
bidders are permitted to bid. Each applicant should indicate its
bidding preference--electronic or telephonic--on its FCC Form 175. In
either case, each authorized bidder must have its own SecurID[supreg]
token, which the Commission will provide at no charge. Each applicant
with one authorized bidder will be issued two SecurID[supreg] tokens,
while applicants with two or three authorized bidders will be issued
three tokens. For security purposes, the SecurID[supreg] tokens, the
telephonic bidding telephone number, and the ``Integrated Spectrum
Auction System (ISAS) Bidder's Guide'' are only mailed to the contact
person at the contact address listed on the FCC Form 175. Each
SecurID[supreg] token is tailored to a specific auction.
SecurID[supreg] tokens issued for other auctions or obtained from a
source other than the FCC will not work for Auction 97.
131. Please note that the SecurID[supreg] tokens can be recycled,
and the Bureau encourages bidders to return the tokens to the FCC. Pre-
addressed envelopes will be provided to return the tokens once bidding
has closed.
H. Mock Auction--November 10, 2014
132. All qualified bidders will be eligible to participate in a
mock auction on Monday, November 10, 2014. The mock auction will enable
bidders to become familiar with the FCC Auction System prior to the
auction. The Bureau strongly recommends that all bidders participate in
the mock auction. Details will be announced by public notice.
133. DISH requests that the Bureau conduct at least one, but
preferably two, mock auctions at least one week before the auction
begins, and that the mock auction(s) offer the same number of licenses
as the auction itself to match the actual auction's scenarios as
closely as possible. In keeping with the Bureau's practice in most
auctions, it will hold a mock auction shortly before the start of
Auction 97 that will offer a sampling of licenses available in the
auction. Based on the Bureau's
[[Page 47120]]
experience, this approach provides adequate practice and avoids the
need to lengthen the time period between the short-form application
deadline and the start of bidding.
IV. Auction
134. The first round of bidding for Auction 97 will begin on
Thursday, November 13, 2014. The initial bidding schedule will be
announced in a public notice listing the qualified bidders, which is
released approximately 10 days before the start of the auction.
A. Auction Structure
1. Simultaneous Multiple Round Auction
135. In the Auction 97 Comment Public Notice, the Bureau proposed
to auction all licenses in Auction 97 in a single auction using a
standard simultaneous multiple-round (SMR) auction format. This format
offers every license for bid at the same time and consists of
successive bidding rounds in which eligible bidders may place bids on
individual licenses. A bidder may bid on, and potentially win, any
number of licenses.
136. With one exception, all commenters that discussed this issue
support using a standard SMR auction format without any form of package
bidding. AT&T notes that this format has been used successfully for two
decades and that the wireless industry is extremely familiar with it.
AT&T maintains that using this design for Auction 97 will promote a
competitive and fair auction where both large and small bidders are
familiar with the format and can make informed choices in an efficient
manner. Verizon Wireless supports the use of package bidding in Auction
97, and proposes allowing applicants to bid on a nationwide package of
licenses in the H, I, and J Blocks. Verizon Wireless maintains that
package bidding will increase participation and bidding competition
because it allows bidders to bid on both the value of the individual EA
licenses and the value of obtaining spectrum nationwide over a
consistent set of frequencies. Verizon Wireless also claims that the
risk of failing to acquire all licenses in a business plan (the
``exposure problem'') may inhibit participation because, for some
bidders, the potential for acquisition of all desired licenses is
needed to support individual license bid amounts. However, US Cellular
asserts that Verizon Wireless has previously made clear that the
availability of larger license areas, such as the EA-based licenses
being offered in Auction 97, would significantly mitigate the
``exposure risks'' it would face if it could not bid on packages of
smaller license areas.
137. The Bureau concludes, based on the record and in light of its
experience with previous spectrum auctions, including auctions of
Advanced Wireless Services (AWS) licenses, that a standard SMR format
will provide bidders with a simple and efficient means of bidding on
single or multiple licenses and will offer adequate opportunity for
bidders in Auction 97 to aggregate licenses in order to obtain the
level of coverage they desire consistent with their business plans. The
Bureau therefore adopts a standard SMR auction format for Auction 97.
Accordingly, bids will be accepted on all licenses in each round of the
auction until bidding stops on every license unless otherwise
announced.
2. Single Auction With a Single Set of Procedures and Requirements for
the Unpaired and Paired Bands
138. A number of commenters ask (to varying degrees) that the
Bureau recognize the differences between the unpaired and paired bands
when adopting procedures and requirements for Auction 97 by
establishing separate bidding eligibility, activity waivers, and
stopping rules for the bands. They submit that it is not likely that
licenses in the bands could be used as close substitutes because they
have different technical characteristics and likely uses, and that
combined procedures could enable bidders to use bidding strategies
designed to hurt smaller competitors and new entrants, which could
deter competition. These commenters advocate establishing separate
upfront payment requirements and bidding eligibility for the unpaired
and paired bands to prevent a bidder from gaming eligibility and
activity requirements by ``parking'' bidding eligibility on licenses in
one band to lock competitors out of that spectrum or distract from its
real interests. They argue that such strategic parking enables larger
competitors to drive up the cost of spectrum they have no real interest
in winning, and could cause smaller competitors or new entrants to drop
out of the auction early, thereby potentially depressing auction
revenues. They maintain that separate eligibility and activity
requirements will avoid such results.
139. AT&T and Verizon Wireless support a single auction with a
single set of procedures. Verizon Wireless submits that separate
auctions would significantly increase auction complexity, limit
applicants' bidding flexibility, inhibit competition for the 1695-1710
MHz band, and decrease auction revenues. AT&T argues that commenters'
arguments in support of adopting separate procedures and requirements
are premised on the false assumptions that the different technical
characteristics of the bands warrant separate auction treatment, and
that employing common auction procedures for both bands will encourage
parking. Both AT&T and Verizon Wireless maintain that other bidders may
view the bands as substitutable or complementary and, if so, public
interest objectives are best promoted by allowing the market to reflect
substitutability through a single set of auction procedures. They also
contend that commenters' concerns about parking are misplaced, because
an applicant bidding solely on the 1695-1710 MHz band to preserve
eligibility will quickly move its bids as soon as the reserve is met,
and thus eligibility ``parkers'' will not drive up the price any higher
than otherwise required to meet the reserve.
140. Auction 97 will offer paired and unpaired licenses in a single
auction subject to one set of procedures and requirements. Particularly
where, as here, interested parties are divided on whether licenses
being offered may be characterized as substitutes, such information may
best be discovered through a competitive bidding process. Offering both
the paired and unpaired bands in the same auction will allow market
forces to determine the degree to which market participants view the
AWS-3 spectrum blocks as substitutable. The Bureau's approach is
grounded in its experience with past auctions where the degree to which
licenses may be characterized as substitutable or complementary differs
depending upon the perspective of each auction participant. Providing
for two different sets of bidding eligibility, activity waivers, and
stopping rules would disadvantage bidders interested in both paired and
unpaired blocks by forcing them to manage two separate pools of
eligibility, which would reduce their ability to pursue backup
strategies as prices rise. Whether in one auction or two simultaneous
auctions, requiring bidders interested in both blocks to deal with
separate sets of bidding actions would invite confusion and could lead
to mistakes in bidding. Elsewhere in the Auction 97 Procedures Public
Notice, the Bureau describes procedures that are intended to ameliorate
the parking concerns raised by commenters. Accordingly, the Bureau will
conduct Auction 97 under a single set of
[[Page 47121]]
procedures and requirements covering both the unpaired and paired
bands.
3. Limited Information Disclosure Procedures: Information Available to
Bidders Before and During the Auction
141. Consistent with its practice in several prior wireless
spectrum auctions, the Bureau proposed in the Auction 97 Comment Public
Notice 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. The
Bureau sought comment on the proposal to implement limited information
disclosure procedures and on any alternatives for Auction 97.
142. The Bureau received several comments on its proposal to employ
limited information disclosure procedures for Auction 97, both in
support and in opposition. The limited information disclosure
procedures used in past auctions have helped safeguard against
potential anticompetitive behavior such as retaliatory bidding and
collusion, and after carefully considering the record on this issue,
the Bureau finds nothing that persuades it to depart from its now-
established practice of implementing these procedures in wireless
spectrum auctions. The Bureau disagrees with the assertions of
commenters that argue that limited information disclosure procedures
are unnecessary or harmful to smaller bidders, and concludes that the
competitive benefits associated with limiting information disclosure
support adoption of such procedures and outweigh the potential benefits
of full disclosure. Accordingly, the Bureau adopts the limited
information disclosure procedures proposed in the Auction 97 Comment
Public Notice. Thus, after the conclusion of each round, the Bureau
will disclose all relevant information about the bids placed and/or
withdrawn except the identities of the bidders performing the actions
and the net amounts of the bids placed or withdrawn. As in past
auctions conducted with limited information procedures, the Bureau will
indicate, for each license, the minimum acceptable bid amount for the
next round and whether the license has a provisionally winning bid.
After each round, the Bureau will also release, for each license, the
number of bidders that placed a bid on the license and the amounts of
those bids. Furthermore, the Bureau will indicate whether any proactive
waivers were submitted in each round, and the Bureau will release the
stage transition percentage -- the percentages of licenses (as measured
in bidding units) on which there were new bids -- for the round. In
addition, bidders can log in to the FCC Auction System to see, after
each round, whether their own bids are provisionally winning. The
Bureau will provide descriptions and/or samples of publicly-available
and bidder-specific (non-public) results files prior to the start of
the auction.
143. The Bureau, however, retains the discretion not to use limited
information procedures if it, after examining the level of potential
competition based on the short-form applications filed for Auction 97,
determines that the circumstances indicate that limited information
procedures would not be an effective tool for deterring anti-
competitive behavior. For example, if only two applicants become
qualified to participate in the bidding, limited information procedures
would be ineffective in preventing bidders from knowing the identity of
the competing bidder and, therefore, limited information procedures
would not serve to deter attempts at signaling and retaliatory bidding
behavior.
144. Other Issues. Information disclosure procedures established
for this auction will not interfere with the administration of, or
compliance with, the Commission's prohibition of certain
communications. 47 CFR 1.2105(c)(1) provides that, after the short-form
application filing deadline, all applicants for licenses in any of the
same or overlapping geographic license areas are prohibited from
disclosing to each other in any manner the substance of bids or bidding
strategies until after the down payment deadline, subject to specified
exceptions.
145. In Auction 97, the Commission will not disclose information
regarding license selection or the amounts of bidders' upfront payments
and bidding eligibility. The Commission will disclose the other
portions of applicants' short-form applications through its online
database, and certain application-based information through public
notices.
146. To assist applicants in identifying other parties subject to
47 CFR 1.2105(c), the Bureau will notify separately each applicant in
Auction 97 whether applicants with short-form applications to
participate in pending auctions, including but not limited to Auction
97, have applied for licenses in any of the same or overlapping
geographic areas as that applicant. Specifically, after the Bureau
conducts its initial review of applications to participate in Auction
97, it will send to each applicant in Auction 97 a letter that lists
the other applicants that have pending short-form applications for
licenses in any of the same or overlapping geographic areas. The list
will identify the other applicants by name but will not list their
license selections. As in past auctions, additional information
regarding other applicants that is needed to comply with 47 CFR
1.2105(c)--such as the identities of other applicants' controlling
interests and entities with a greater than ten percent ownership
interest--will be available through the publicly-accessible online
short-form application database.
147. When completing short-form applications, applicants should
avoid any statements or disclosures that may violate the Commission's
prohibition of certain communications, pursuant to 47 CFR 1.2105(c),
particularly in light of the Commission's procedures regarding the
availability of certain information in Auction 97. While applicants'
license selections will not be disclosed until after Auction 97 closes,
the Commission will disclose other portions of short-form applications
through its online database and public notices. Accordingly, applicants
should avoid including any information in their short-form applications
that might convey information regarding license selections. For
example, applicants should avoid using applicant names that refer to
licenses being offered, referring to certain licenses or markets in
describing bidding agreements, or including any information in
attachments that may otherwise disclose applicants' license selections.
148. If an applicant is found to have violated the Commission's
rules or the antitrust laws in connection with its participation in the
competitive bidding process, the applicant may be subject to various
sanctions, including forfeiture of its upfront payment, down payment,
or full bid amount and prohibition from participating in future
auctions.
149. The Bureau hereby warns applicants that the direct or indirect
communication to other applicants or the public disclosure of non-
public information (e.g., bid withdrawals, proactive waivers submitted,
reductions in eligibility) could violate the Commission's limited
information disclosure procedures and 47 CFR 1.2105(c). To the extent
an applicant believes that such a disclosure is required by law or
regulation, including regulations issued by the SEC, the Bureau
strongly urges that the applicant
[[Page 47122]]
consult with the Commission staff in the Auctions and Spectrum Access
Division before making such disclosure.
4. Eligibility and Activity Rules
150. The Bureau will use upfront payments to determine initial
(maximum) eligibility (as measured in bidding units) for Auction 97.
The amount of the upfront payment submitted by a bidder determines
initial bidding eligibility, the maximum number of bidding units on
which a bidder may be active. Each license is assigned a specific
number of bidding units as listed in Attachment A to the Auction 97
Procedures Public Notice. Bidding units assigned to each license do not
change as prices change during the auction. Upfront payments are not
attributed to specific licenses. Rather, a bidder may place bids on any
of the licenses selected on its FCC Form 175 as long as the total
number of bidding units associated with those licenses does not exceed
its current eligibility. Eligibility cannot be increased during the
auction; it can only remain the same or decrease. Thus, in calculating
its upfront payment amount, an applicant must determine the maximum
number of bidding units it may wish to bid on or hold provisionally
winning bids on in any single round, and submit an upfront payment
amount covering that total number of bidding units. At a minimum, an
applicant's upfront payment must cover the bidding units for at least
one of the licenses it selected on its FCC Form 175. The total upfront
payment does not affect the total dollar amount a bidder may bid on any
given license.
151. In order to ensure that an auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively
throughout the auction, rather than wait until late in the auction
before participating. Bidders are required to be active on a specific
percentage of their current bidding eligibility during each round of
the auction. A bidder's activity level in a round is the sum of the
bidding units associated with licenses covered by the bidder's new bids
in the round and its provisionally winning bids from the previous
round. If a bidder removes bids in the current round or withdraws
provisionally winning bids, those bids no longer count towards the
bidder's activity.
152. The minimum required activity is expressed as a percentage of
the bidder's current eligibility, and increases by stage as the auction
progresses. Because these auction stage and stage transition procedures
have proven successful in maintaining the pace of previous auctions,
the Bureau adopts them for Auction 97. 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.
5. Auction Stages
153. In the Auction 97 Comment Public Notice, the Bureau proposed
to conduct the auction in two stages and employ an activity rule. Under
the Bureau's proposal, a bidder desiring to maintain its current
bidding eligibility would be required to be active on licenses
representing at least 80 percent of its current bidding eligibility
during each round of Stage One, and at least 95 percent of its current
bidding eligibility in Stage Two. US Cellular supports the Bureau's
proposal to divide the auction into two stages, and opposes adopting a
third stage with a 98 percent activity requirement. Aloha Partners asks
the Bureau to add a third stage with a 100 percent activity requirement
and would require that minimum acceptable bids be 20 percent higher
than provisionally winning bids, and recommends that this third stage
be implemented when the number of new provisionally winning bids falls
below ten bids.
154. The Bureau sees no need to establish, at this time, a third
stage with a 100 percent eligibility requirement as requested by Aloha
Partners. Based on its past experience, the Bureau believes that two
stages with 80 percent and 95 percent activity requirements should
facilitate the auction progressing at a reasonable pace. In some of the
Bureau's earlier auctions, it established three stages using 80
percent, 90 percent, and 98 percent activity requirements. In many of
these auctions, however, implementing Stage Two had little effect in
terms of increasing bidding activity, and Stage Three was implemented
shortly thereafter. Based on this experience, the Bureau has generally
moved away from three-stage auctions in favor of two-stage auctions.
Moreover, a 95 percent threshold allows bidders slightly more
flexibility than a higher requirement would in fulfilling their
activity requirements during the final stage of the auction.
Accordingly, the Bureau declines to establish a third stage with a 100
percent activity threshold at this time. The Bureau notes that it has
the discretion to further alter the activity requirements (by, for
example, establishing a 98 or 100 percent threshold) before and/or
during the auction as circumstances warrant. The Bureau also has other
mechanisms by which to influence the speed of the auction if it
determines that such steps are necessary. Therefore, the Bureau will
conduct the auction in two stages as follows:
155. Stage One: During the first stage of the auction, a bidder
desiring to maintain its current bidding eligibility will be required
to be active on licenses representing at least 80 percent of its
current bidding eligibility in each bidding round. Failure to maintain
the required activity level will result in the use of an activity rule
waiver or, if the bidder has no activity rule waivers remaining, a
reduction in the bidder's bidding eligibility in the next round. During
Stage One, reduced eligibility for the next round will be calculated by
multiplying the bidder's current round activity (the sum of bidding
units of the bidder's provisionally winning bids and bids during the
current round) by five-fourths (5/4).
156. Stage Two: During the second stage of the auction, a bidder
desiring to maintain its current bidding eligibility is required to be
active on 95 percent of its current bidding eligibility. Failure to
maintain the required activity level will result in the use of an
activity rule waiver or, if the bidder has no activity rule waivers
remaining, a reduction in the bidder's bidding eligibility in the next
round. During Stage Two, reduced eligibility for the next round will be
calculated by multiplying the bidder's current round activity (the sum
of bidding units of the bidder's provisionally winning bids and bids
during the current round) by twenty-nineteenths (20/19).
157. CAUTION: Since activity requirements increase in Stage Two,
bidders must carefully check their activity during the first round
following a stage transition to ensure that they are meeting the
increased activity requirement. This is especially critical for bidders
that have provisionally winning bids and do not plan to submit new
bids. In past auctions, some bidders have inadvertently lost bidding
eligibility or used an activity rule waiver because they did not re-
verify their activity status at stage transitions. Bidders may check
their activity against the required activity level by logging into the
FCC Auction System.
158. When the Bureau moves the auction from Stage One to Stage Two,
it will first alert bidders by announcement in the bidding system. The
Bureau has the discretion to further alter the activity requirements
before and/or during the auction as circumstances warrant.
[[Page 47123]]
6. Stage Transitions
159. In the Auction 97 Comment Public Notice, the Bureau proposed
that it would advance the auction to the next stage (i.e., from Stage
One to Stage Two) after considering a variety of measures of auction
activity, including, but not limited to, the percentages of licenses
(as measured in bidding units) on which there are new bids, the number
of new bids, and the increase in revenue. The Bureau further proposed
that it would retain the discretion to change the activity requirements
during the auction. For example, the Bureau could decide not to
transition to Stage Two if it believes the auction is progressing
satisfactorily under the Stage One activity requirement, or to
transition to Stage Two with an activity requirement that is higher or
lower than 95 percent. The Bureau proposed to alert bidders of stage
advancements by announcement during the auction. The Bureau received no
comments on this issue.
160. The Bureau adopts its proposal for stage transitions. Thus,
the auction will start in Stage One. The Bureau will regulate the pace
of the auction by announcement. The Bureau retains the discretion to
transition the auction to Stage Two, to add an additional stage with a
higher activity requirement, not to transition to Stage Two, and to
transition to Stage Two with an activity requirement that is higher or
lower than 95 percent. This determination will be based on a variety of
measures of auction activity, including, but not limited to, the number
of new bids and the percentages of licenses (as measured in bidding
units) on which there are new bids.
7. Activity Rule Waivers
161. The Bureau proposed in the Auction 97 Comment Public Notice
that each bidder in the auction be provided with three activity rule
waivers. The Bureau received no comments on this issue. Therefore, the
Bureau adopts its proposal to provide bidders with three activity rule
waivers. Bidders may use an activity rule waiver in any round during
the course of the auction. Use of an activity rule waiver preserves the
bidder's eligibility despite its activity in the current round being
below the required minimum activity level. An activity rule waiver
applies to an entire round of bidding and not to a particular license.
Waivers can be either proactive or automatic and are principally a
mechanism for auction participants to avoid the loss of bidding
eligibility in the event that exigent circumstances prevent them from
placing a bid in a particular round.
162. The FCC Auction System assumes that a bidder with insufficient
activity would prefer to apply 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. If no waivers remain and the activity requirement is not
satisfied, the FCC Auction System will permanently reduce the bidder's
eligibility, possibly curtailing or eliminating the ability to place
additional bids in the auction.
163. 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 it 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.
164. Finally, a bidder may apply an activity rule waiver
proactively as a means to keep the auction open without placing a bid.
If a proactive waiver is applied (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. However, 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 submit a proactive waiver after bidding in a round, and
applying a proactive waiver will preclude it from placing any bids in
that round. Applying a waiver is irreversible: Once a bidder submits a
proactive waiver, the bidder cannot unsubmit the waiver even if the
round has not yet ended.
8. Auction Stopping Rules
165. In the Auction 97 Comment Public Notice, the Bureau proposed
to employ a simultaneous stopping rule under its SMR proposal. Under
this rule, all licenses remain available for bidding until bidding
stops simultaneously on every license. More specifically, bidding will
close on all licenses after the first round in which no bidder submits
any new bids, applies a proactive waiver, or withdraws any
provisionally winning bids. Thus, under the Bureau's SMR proposal,
unless it announce alternative stopping procedures, the simultaneous
stopping rule will be used in this auction, and bidding will remain
open on all licenses until bidding stops on every license.
166. The Bureau also proposed that it retain discretion to exercise
and of the following alternative versions of the simultaneous stopping
rule for Auction 97: (1) The auction would close for all licenses after
the first round in which no bidder applies a waiver, withdraws a
provisionally winning bid, or places any new bids on a 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; (2) the auction would close for
all licenses after the first round in which no bidder applies a waiver,
withdraws a provisionally winning bid, or places any new bids on a
license that is not FCC-held; thus, absent any other bidding activity,
a bidder placing a new bid on a license that does not already have a
provisionally winning bid (an FCC-held license) would not keep the
auction open under this modified stopping rule; (3) the auction would
close using a modified version of the simultaneous stopping rule that
combines Option (1) and Option (2); (4) the auction would 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; or (5)
the auction would remain open even if no bidder places any new bids,
applies a waiver, or withdraws any provisionally winning bids; in this
event, the effect will be the same as if a bidder had applied a waiver,
and the activity rule will apply as usual, and a bidder with
insufficient activity will either lose bidding eligibility or use a
waiver.
167. The Bureau proposed to exercise alternative versions of the
simultaneous stopping rule only in certain circumstances, for example,
where the auction is proceeding unusually slowly 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 (e.g., before bidder have had an adequate opportunity to
satisfy any applicable reserve prices). The Bureau noted that before
exercising these options, the Bureaus is likely to attempt to change
the pace of the
[[Page 47124]]
auction by, for example, changing the number of bidding rounds per day
and/or the minimum acceptable bids. The Bureau also proposed to retain
the discretion to exercise any of these options with or without prior
announcement during the auction.
168. As part of their general request that the Bureau adopt
separate procedures and requirements for the paired and unpaired bands,
several parties ask the Bureau to apply its stopping rules separately
to the paired and unpaired bands. T-Mobile suggests the Bureau apply
the stopping rules based on activity within a particular band rather
than the activity across all licenses. Under T-Mobile's proposal, if
bidding stops on one of the bands, the auction for that band would
close. T-Mobile submits that this will add certainty to the auction
process and avoid delaying the close of the auction any longer than
necessary, and claims that leaving the entire auction open even when
interest in one band diminishes may prompt insincere bidding by
allowing bidders interested in one band to park bids in another merely
to preserve eligibility, thereby artificially prolonging the auction.
DISH and New America Foundation/Public Knowledge advocate separate
stopping rules for the unpaired and paired bands, arguing that combined
procedures for bands that they consider to be non-substitutable could
enable bidders to employ bidding strategies designed to hurt smaller
competitors and new entrants, which could deter competition and
suppress revenues. Like T-Mobile, DISH and New America Foundation/
Public Knowledge are concerned that applying the stopping rules based
on activity across all licenses could facilitate strategic parking and
permit bidders to pursue the very ``wait and see'' approach the
eligibility and activity rules are designed to prevent. CCA echoes the
sentiments of T-Mobile, DISH, and New America Foundation/Public
Knowledge regarding parking and argues that such behavior could be
prevented by adopting separate stopping rules for the bands.
169. The Bureau adopts procedures to address these commenters'
concerns that bidding activity could stop on one band well before it
stops on the other. The Bureau generally adopts its proposed stopping
rules but does so on a per-band basis described as follows. After no
more than five consecutive rounds in which no bids have been placed or
withdrawn for licenses in one of the two bands (i.e., the unpaired
1695-1710 MHz band and the paired 1755-1780/2155-280 MHz band), no
bidder has placed a proactive waiver, and the associated reserve price
has been met, the Bureau will close the bidding for that band.
Accordingly, bidders will no longer be able to place new bids for
licenses in the band, nor will they be able to withdraw any provisional
winning bids for licenses in the band. The Bureau's decision to end the
auction for a given band in this manner for Auction 97 does not pre-
judge how we may approach stopping rules in any future auctions,
including those in which the same or similar facts and circumstances
exist. The Bureau reserves the right to close bidding for a band after
fewer than five consecutive rounds without bidding activity. The Bureau
will notify bidders with an announcement in the FCC Auction System
before bidding closes for one of the bands.
170. Aloha Partners agrees that there should be a mechanism to end
the auction when the number of bids decreases to low levels, but
expresses concern that the proposed special stopping rule could be
misused by a bidder that has remaining eligibility in the last round by
bidding on licenses that it may not have shown an interest in
previously. As an alternative, Aloha Partners recommends the Bureau
instead add a third stage, to be implemented when the number of new
winning bids falls below ten bids, that would require a bidder to have
activity covering 100 percent of its eligibility and would require
minimum acceptable bids be 20 percent higher than provisionally winning
bids. The Bureau declines to adopt Aloha Partners' request for a third
stage with a 100 percent eligibility requirement in lieu of its special
stopping rule.
171. Aside from the per-band departure from its past procedure, the
Bureau retains the discretion to employ the alternative versions of the
stopping rule, with or without prior announcement during the auction.
The Bureau will not, however, employ the first alternative (Option 1)
for a band if the reserve price for that band has not been met. Bidders
will continue to have the opportunity to place bids in a given band at
least until the reserve price for that band is met.
9. Auction Delay, Suspension, or Cancellation
172. In the Auction 97 Comment Public Notice, the Bureau proposed
that, by public notice or by announcement during the auction, it may
delay, suspend, or cancel the auction in the event of natural disaster,
technical obstacle, administrative or weather necessity, evidence of an
auction security breach or unlawful bidding activity, or for any other
reason that affects the fair and efficient conduct of competitive
bidding. The Bureau received no comment on this issue.
173. Because this approach has proven effective in resolving
exigent circumstances in previous auctions, the Bureau adopts these
proposals regarding auction delay, suspension, or cancellation. 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
or 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 emphasize that it will exercise of this authority
solely at its discretion, and not as a substitute for situations in
which bidders may wish to apply their activity rule waivers.
B. Bidding Procedures
1. Round Structure
174. The initial schedule of bidding rounds will be announced in
the public notice listing the qualified bidders, which is released
approximately ten days before the start of the auction. Each bidding
round is followed by the release of round results. Details regarding
formats and locations of round results will also be included in the
qualified bidders public notice. Multiple bidding rounds may be
conducted each day.
175. The Bureau has the discretion to change the bidding schedule
in order to foster an auction pace that reasonably balances speed with
the bidders' needs to study round results and adjust their bidding
strategies. The Bureau may change the amount of time for the bidding
rounds, the amount of time between rounds, or the number of rounds per
day, depending upon bidding activity and other factors.
2. Reserve Price and Minimum Opening Bids
a. Reserve Price
176. The Commission is statutorily obliged to consider and balance
a variety of public interests and objectives when establishing service
rules and licensing procedures with respect to the public spectrum
resource. These objectives include promoting recovery for the public a
portion of the value of
[[Page 47125]]
that resource. Certain of the frequencies in the AWS-3 bands are
``eligible frequencies'' under the CSEA, and the CSEA requires that
auction proceeds fund the estimated relocation or sharing costs of
incumbent federal entities operating on these frequencies. In view of
this, the Bureau establishes reserve prices for the AWS-3 licenses
offered in Auction 97.
177. The CSEA requires that the total cash proceeds attributable to
``eligible frequencies'' be at least 110 percent of the total estimated
relocation or sharing costs provided to the Commission pursuant to the
CSEA before the Commission may conclude an auction involving such
frequencies. If this condition is not met, the CSEA requires the
Commission to cancel the auction. For purposes of determining whether
the CSEA's revenue requirement has been met, the Commission has
determined that ``total cash proceeds'' means winning bids net of any
applicable bidding credit discounts at the end of bidding (e.g.,
exclusive of any Tribal lands bidding credit).
178. Pursuant to the CSEA, on May 13, 2014, the NTIA notified the
Commission that the total estimated relocation or sharing costs for the
1695-1710 MHz band equal $527,069,000, and that the total estimated
relocation or sharing costs for the 1755-1780 MHz band equal
$4,575,603,000. Accordingly, in the Auction 97 Comment Public Notice,
the Bureau proposed to establish one aggregate reserve price for the
1695-1710 MHz band and a separate aggregate reserve price for the
paired 1755-1780/2155-2180 MHz band.
179. The Bureau proposed to establish an aggregate reserve price of
$579,775,900 for the licenses in the 1695-1710 MHz band. This aggregate
reserve price is 110 percent of total estimated relocation or sharing
costs of $527,069,000 provided by the NTIA for this band and,
therefore, the minimum reserve price required by the CSEA. Given that
the 1695-1710 MHz band consists entirely of ``eligible frequencies,''
the Bureau propose that the winning bid for each license in this band,
net of any applicable bidding credit discounts at the end of bidding
(e.g., exclusive of any Tribal lands bidding credit), will be counted
toward meeting the reserve price for the band. Thus, the aggregate
reserve price will be met if the total winning bids for the licenses in
the 1695-1710 MHz band, net of any applicable bidding credit discounts
at the end of bidding (e.g., exclusive of any Tribal lands bidding
credit), is at least $579,775,900.
180. The 1755-1780 MHz band will be licensed paired with the 2155-
2180 MHz band. The lower half of the frequencies in each paired
license, i.e., those in the 1755-1780 MHz band, are ``eligible
frequencies'' and are thus subject to CSEA requirements. To meet CSEA's
requirements, the Bureau proposed to establish an aggregate reserve
price of $5,033,163,300 for the 1755-1780 MHz frequencies. This
aggregate reserve price is 110 percent of total estimated relocation or
sharing costs of $4,575,603,000 for the 1755-1780 MHz band provided by
the NTIA and, therefore, the minimum reserve price required by CSEA.
Because these frequencies are one half of the frequencies authorized
for use by each of the 1755-1780/2155-2180 MHz paired licenses, the
Bureau propose that one-half of each winning bid for each of the paired
1755-1780/2155-2180 MHz licenses, net of any applicable bidding credit
discounts at the end of bidding, will be counted toward meeting the
reserve price. The aggregate reserve price will be met if one half of
the total winning bids for the licenses in the 1755-1780/2155-2180 MHz
band, net of any applicable bidding credit discounts at the end of
bidding (e.g., exclusive of any Tribal lands bidding credit), is at
least $5,033,163,300. Therefore, the winning ``net'' bids for the
paired 1755-1780/2155-2180 MHz licenses must be at least twice that
amount, or $10,066,326,600, in order for the Commission to conclude the
auction.
181. C Spire supports the Bureau's proposal to use an aggregate
reserve for the AWS-3 spectrum bands. A few commenters asked the Bureau
to treat the unpaired and paired bands differently with respect to
meeting the reserve prices. T-Mobile argues that there is no reason
that the entire auction should be declared invalid if the reserve price
is not met for one band and that, consistent with CSEA, only the
auction for the particular band that failed to meet the reserve should
be cancelled.
182. The Bureau adopts its proposed reserve prices for Auction 97
and its proposals for implementing them. Consistent with the Bureau's
past treatment of spectrum bands that are subject to separate reserve
prices, and based on its reading of CSEA, the Bureau will treat the
unpaired and paired bands separately with respect to meeting their
respective reserve prices. Thus, if the reserve price is met or
exceeded for a given band, the auction for that band will be deemed to
be successful and licenses in that band will be assigned. If the
reserve price for the other band is not met, the auction for that band
will, as required by CSEA, be cancelled as to only that band.
183. In light of the Bureau's proposal to adopt procedures for
limited information disclosure for Auction 97, if information regarding
net bid amounts is not provided during the auction, the Bureau proposed
in the Auction 97 Comment Public Notice to issue an announcement in the
FCC Auction System, viewable by bidders and the general public, stating
that a reserve price has been met immediately following the first round
in which that occurs. The Bureau received no comment this proposal, and
therefore adopts it for Auction 97. As the Bureau noted in the Auction
97 Comment Public Notice, due to factors such as bid withdrawals and
the effect of bidding credits, an announcement that the reserve price
has been met following a round of the auction does not guarantee that
the reserve price will continue to be met. Accordingly, the Bureau will
make a further announcement in the FCC Auction System after any round
in which the reserve price status changes.
184. When determining whether a reserve price has been met, the
Bureau will use net bid amounts that take into account bidding credits.
The Bureau will not count any withdrawn bids toward meeting a reserve
price. Thus, the Bureau will count only the current provisionally
winning bid on a license when determining whether a reserve price has
been met.
b. Minimum Opening Bids
185. In addition to proposing aggregate reserve prices, the Bureau
proposed in the Auction 97 Comment Public Notice to establish minimum
opening bid amounts for each license in Auction 97. The Bureau believes
a minimum opening bid amount, which has been used in other auctions, is
an effective bidding tool for accelerating the competitive bidding
process.
186. In the Auction 97 Comment Public Notice, the Bureau proposed
to calculate minimum opening bid amounts on a license-by-license basis
using a formula based on bandwidth and license area population, similar
to its approach in many previous spectrum auctions. The Bureau proposed
to use a calculation based on $0.15 per megahertz of bandwidth per
population (per MHz-pop) for paired licenses and $0.05 per MHz-pop for
unpaired licenses. Additionally, the Bureau proposed, as it did for
Auction 96, to adjust minimum opening bid amounts based on past auction
results, in order to reflect historical price differences among
different geographic areas. The Bureau further proposed a minimum of
[[Page 47126]]
$2,500 per license. For the license covering the Gulf of Mexico, the
Bureau proposed to set the minimum opening bid at $2,000 per megahertz.
187. Commenters presented a number of perspectives on the Bureau's
proposal. Verizon Wireless, CCA, C Spire, and NTCA advocate using $0.05
per MHz-pop to set the minimum opening bids. Verizon Wireless also
objects to the Bureau's proposal to vary the calculation of minimum
opening bid amounts across license areas. Spectrum Financial Partners
recommends a change to the Bureau's proposed method for reflecting
historical price differences by excluding the results of Auction 96.
AT&T acknowledges the merits of the Bureau's proposal to vary the
calculation of minimum opening bid amounts across license areas, but
suggests an alternative method. AT&T recognizes the value of adjusting
minimum opening bids to account for regional price differences, but
contends that making these adjustments on a license-by-license basis
perpetuates anomalous bidding patterns from past auctions (which may
have involved eligibility parking and inefficient pricing) into Auction
97. For these reasons, AT&T offers refinements that it believes would
help prevent both inefficient allocation of bidding units and
eligibility parking during the auction. AT&T proposes that the Bureau
rank the licenses by population; group them into deciles; sum its
proposed minimum opening bid amounts for the licenses in the decile;
and then, based on population, redistribute that subtotal among the
licenses in the decile. After careful consideration of the record, the
Bureau finds AT&T's arguments compelling and adopts AT&T's proposal in
a modified form.
188. The Bureau will calculate minimum opening bid amounts as
follows. The Bureau continues to use underlying prices of $0.15 per
MHz-pop for paired licenses and $0.05 per MHz-pop for unpaired
licenses, and the Bureau continues to adjust amounts based on relative
price information from previous auctions. The Bureau changes its method
of incorporating past price information, however, in several ways. The
Bureau will no longer use the relative price information from Auction
96 in its calculations for the EA licenses. The Bureau revises its
method of incorporating past price information by using a variation of
the decile-based approach suggested by AT&T. Rather than grouping by
population decile, the Bureau will group the licenses by historical
MHz-pop price deciles. For each decile the Bureau uses the lowest index
price value and apply it to all of the markets in that decile. As
proposed in the Auction 97 Comment Public Notice, the Bureau will round
the results using its standard rounding procedures. Finally, the Bureau
adopts a minimum of $1,000 per license, and adopts its proposal to set
the minimum opening bids for licenses covering the Gulf of Mexico at
$2,000 per megahertz.
189. The Bureau finds that this approach accommodates several of
the concerns raised in the record. The use of deciles smooths the
opening bid amounts in a way that reduces the impact of price variation
from previous auctions. Basing the deciles on a price index (rather
than a population index), however, ensures that the Bureau does not
exclude significant past price differences between similarly-sized
markets in its calculations. The use of the lowest unit price for each
decile, rather than the average price, ensures that minimum opening
bids for licenses within a decile are not averaged up to the arithmetic
mean price of the decile. As a result of these changes, the minimum
opening bids the Bureau adopts are over 25 percent less than the ones
proposed in the Auction 97 Comment Public Notice. The Bureau does not
believe that it risks overpricing licenses by basing the minimum
opening bid amounts on $0.15 and $0.05 per MHz-pop, especially given
the substantial reserve prices adopted for this auction. These minimum
opening bid amounts should, as intended, help to accelerate the
competitive bidding process. The minimum opening bid amount for each
AWS-3 license available in Auction 97, calculated pursuant to the
procedures is set forth in Attachment A to the Auction 97 Procedures
Public Notice.
3. Bid Amounts
190. In the Auction 97 Comment Public Notice, the Bureau proposed
that in each round, eligible bidders be able to place a bid on a given
license using one or more pre-defined bid amounts. Under the proposal,
the FCC Auction System interface will list the acceptable bid amounts
for each license. The Bureau received no comment on this proposal and
therefore adopts it for Auction 97.
a. Minimum Acceptable Bids
191. The first of the acceptable bid amounts is called the minimum
acceptable bid amount. The minimum acceptable bid amount for a license
will be equal to its minimum opening bid amount until there is a
provisionally winning bid on the license. After there is a
provisionally winning bid for a license, the minimum acceptable bid
amount for that license will be equal to the amount of the
provisionally winning bid plus a percentage of that bid amount
calculated using the activity-based formula. In general, the percentage
will be higher for a license receiving many bids than for a license
receiving few bids. In the case of a license for which the
provisionally winning bid has been withdrawn, the minimum acceptable
bid amount will equal the second highest bid received for the license.
192. The percentage of the provisionally winning bid used to
establish the minimum acceptable bid amount (the additional percentage)
is calculated based on an activity index at the end of each round. The
activity index is a weighted average of (a) the number of distinct
bidders placing a bid on the license, and (b) the activity index from
the prior round. 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. The additional percentage is then
multiplied by the provisionally winning bid amount to obtain the
minimum acceptable bid for the next round. The formula and examples are
shown in Attachment B to the Auction 97 Procedures Public Notice. The
Bureau proposed in the Auction 97 Comment Public Notice to initially
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 covering the license.
193. All parties that commented on the Bureau's proposal to
initially set the maximum acceptable bid percentage at 30 percent
advocate lowering the maximum to 20 percent because they are concerned
that the proposed maximum of up to 30 percent would accelerate prices
too quickly, thereby discouraging bidder participation and/or causing
bidders to drop out of the auction. The Bureau recognizes commenters'
concerns that very rapid increases in minimum acceptable bids may
potentially discourage bidder participation, inhibit price discovery,
and create bid approval issues. At the same time, since the Bureau is
under a statutory mandate to license the spectrum being offered in
Auction 97 by February 2015, it is necessary that the auction move at a
reasonably fast pace. Taking commenter concerns into account, the
Bureau concludes that an initial maximum acceptable bid percentage of
20 percent will allow the
[[Page 47127]]
auction to proceed at a reasonably fast pace while at the same time
providing bidders the flexibility to bid up to the full value they
assign to licenses. The Bureau therefore adopts an initial maximum
acceptable bid percentage of 20 percent for Auction 97. The Bureau will
begin the auction with the weighting factor set at 0.5, the minimum
percentage at 0.1 (10%), and the maximum percentage at 0.2 (20%). The
Bureau reiterates that it has the discretion to modify minimum
acceptable bid amounts--by changing the activity-based formula
parameters or by imposing or modifying a cap on the dollar amount of
bid increments--as the Bureau sees fit during the auction.
b. Additional Bid Amounts
194. Consistent with the Bureau's practice in past wireless
spectrum auctions, it proposed in the Auction 97 Comment Public Notice
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 five percent, the calculation of the first
additional acceptable bid amount is (minimum acceptable bid amount) *
(1 + 0.05), rounded or (minimum acceptable bid amount) * 1.05, rounded;
the second additional acceptable bid amount equals the minimum
acceptable bid amount times one plus two times the bid increment
percentage, rounded, or (minimum acceptable bid amount) * 1.10,
rounded; etc. The Bureau will round the results using the Commission's
standard rounding procedures for auctions. The Bureau proposed in the
Auction 97 Comment Public Notice initially to set the bid increment
percentage at five percent. The Bureau received no comment on this
proposal and therefore adopts it for Auction 97.
195. The Bureau also proposed in the Auction 97 Comment Public
Notice to begin the auction with nine acceptable bid amounts per
license (the minimum acceptable bid amount and eight additional bid
amounts). The Bureau received no comment on this proposal. The Bureau
therefore adopts nine acceptable bid amounts per license, which is
consistent with its past practice for most spectrum auctions.
c. Bid Amount Changes
196. 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 do so on a license-by-license basis.
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, if the Bureau set a $10
million limit on increases in minimum acceptable bid amounts over
provisionally winning bids, and the activity-based formula calculates a
minimum acceptable bid amount that is $20 million higher than the
provisionally winning bid on a license, the minimum acceptable bid
amount would instead be capped at $10 million above the provisionally
winning bid. The Bureau sought comment in the Auction 97 Comment Public
Notice on the circumstances under which it 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 other
parameters--such as changing the minimum acceptable bid percentage, the
bid increment percentage, or the number of acceptable bid amounts.
197. The Bureau received no comment on this proposal. Therefore,
the Bureau will start the auction without a limit on the dollar amount
by which minimum acceptable bids and additional bid amounts may
increase. The Bureau retains the discretion to change the minimum
acceptable bid amounts, the minimum acceptable bid percentage, the bid
increment percentage, and the number of acceptable bid amounts if the
Bureau determine that circumstances so dictate. Further, the Bureau
retains the discretion to do so on a license-by-license basis. If the
Bureau exercises this discretion, it will alert bidders by announcement
in the FCC Auction System during the auction.
4. Provisionally Winning Bids
198. At the end of each bidding round, a ``provisionally winning
bid'' will be determined based on highest bid amount received for each
license. A provisionally winning bid will remain the provisionally
winning bid until there is a higher bid on the license at the close of
a subsequent round. Provisionally winning bids at the end of the
auction become the winning bids. Bidders are reminded that
provisionally winning bids count toward activity for purposes of the
activity rule.
199. In the Auction 97 Comment Public Notice, the Bureau proposed
to use a random number generator to select a single provisionally
winning bid in the event of identical high bid amounts being submitted
on a license in a given round (i.e., tied bids). Under this approach,
the FCC Auction System will assign a random number to each bid upon
submission. The tied bid with the highest random number wins the
tiebreaker, and becomes the provisionally winning bid. Bidders,
regardless of whether they hold a provisionally winning bid, can submit
higher bids in subsequent rounds. However, if the auction were to end
with no other bids being placed, the winning bidder would be the one
that placed the provisionally winning bid. The Bureau received no
comment on its tied bids proposal and therefore adopts it for Auction
97.
5. Bidding
200. All bidding will take place remotely either through the FCC
Auction System or by telephonic bidding. There will be no on-site
bidding during Auction 97. Please note that telephonic bid assistants
are required to use a script when entering bids placed by telephone.
Telephonic bidders are therefore reminded to allow sufficient time to
bid by placing their calls well in advance of the close of a round. The
length of a call to place a telephonic bid may vary; please allow a
minimum of ten minutes.
201. A bidder's ability to bid on specific licenses is determined
by two factors: (1) the licenses selected on the bidder's FCC Form 175
and (2) the bidder's eligibility. The bid submission screens will allow
bidders to submit bids on only those licenses the bidder selected on
its FCC Form 175.
202. In order to access the bidding function of the FCC Auction
System, bidders must be logged in during the bidding round using the
passcode generated by the SecurID[supreg] token and a personal
identification number (PIN) created by the bidder. Bidders are strongly
encouraged to print a ``round summary'' for each round after they have
completed all of their activity for that round.
203. In each round, eligible bidders will be able to place bids on
a given license in any of up to nine pre-defined bid amounts. For each
license, the FCC Auction System will list the acceptable bid amounts in
a drop-down box. Bidders use the drop-down box to select
[[Page 47128]]
from among the acceptable bid amounts. The FCC Auction System also
includes an ``upload'' function that allows text files containing bid
information to be uploaded.
204. Until a bid has been placed on a license, the minimum
acceptable bid amount for that license will be equal to its minimum
opening bid amount. Once there are bids on a license, minimum
acceptable bids for the following round will be determined.
205. During a round, an eligible bidder may submit bids for as many
licenses as it wishes (providing that it is eligible to bid on the
specific license), remove bids placed in the current bidding round,
withdraw provisionally winning bids from previous rounds, or
permanently reduce eligibility. If a bidder submits multiple bids for
the same license in the same round, the system takes the last bid
entered as that bidder's bid for the round. Bidding units associated
with licenses for which the bidder has removed or withdrawn bids do not
count towards current activity.
206. Finally, bidders are cautioned to select their bid amounts
carefully because bidders that withdraw a provisionally winning bid
from a previous round, even if the bid was mistakenly or erroneously
made, are subject to bid withdrawal payments.
6. Bid Removal and Bid Withdrawal
207. In the Auction 97 Comment Public Notice, the Bureau proposed
bid removal and bid withdrawal procedures. The Bureau sought comment on
permitting a bidder to remove a bid before the close of the round in
which the bid was placed. With respect to bid withdrawals, the Bureau
proposed limiting each bidder to withdrawing provisionally winning bids
in no more than two rounds during the auction. The rounds in which a
bidder withdraws provisionally winning bids--if it chooses to do so--
are at each bidder's discretion.
208. The Bureau received no comment on its proposals. The proposed
procedures will provide each bidder with appropriate flexibility during
the auction; therefore, the Bureau adopts these proposals for Auction
97.
a. Bid Removal
209. Before the close of a bidding round, a bidder has the option
of removing any bids placed in that round. By using the ``remove bids''
function in the FCC Auction System, a bidder may effectively ``undo''
any bid placed within that round. A bidder removing a bid placed in the
same round is not subject to withdrawal payments. If a bid is placed on
a license during a round, it will count towards the activity for that
round; but when that bid is then removed during the same round it was
placed, the activity associated with it is also removed, i.e., a bid
that is removed does not count toward bidding activity.
b. Bid Withdrawal
210. Once a round closes, a bidder may no longer remove a bid.
However, in a later round, a bidder may withdraw provisionally winning
bids from previous rounds using the ``withdraw bids'' function in the
FCC Auction System. A provisionally winning bidder that withdraws its
provisionally winning bid from a previous round during the auction is
subject to the bid withdrawal payments specified in 47 CFR 1.2104(g).
Once a bid withdrawal is submitted during a round, that withdrawal
cannot be unsubmitted even if the round has not yet ended.
211. If a provisionally winning bid is withdrawn, the minimum
acceptable bid amount will equal the amount of the second highest bid
received for the license, which may be less than, or in the case of
tied bids, equal to, the amount of the withdrawn bid. The Commission
will serve as a placeholder provisionally winning bidder on the license
until a new bid is submitted on that license.
c. Calculation of Bid Withdrawal Payment
212. Generally, the Commission imposes payments on bidders that
withdraw provisionally winning bids during the course of an auction. If
a bidder withdraws its bid and there is no higher bid in the same or
subsequent auction(s), the bidder that withdrew its bid is responsible
for the difference between its withdrawn bid and the winning bid in the
same or subsequent auction(s). If there are multiple bid withdrawals on
a single license and no subsequent higher bid is placed and/or the
license is not won in the same auction, the payment for each bid
withdrawal will be calculated based on the sequence of bid withdrawals
and the amounts withdrawn. No withdrawal payment will be assessed for a
withdrawn bid if either the subsequent winning bid or any subsequent
intervening withdrawn bid, in either the same or subsequent auction(s),
equals or exceeds that withdrawn bid. Thus, a bidder that withdraws a
bid will not be responsible for any final withdrawal payment if there
is a subsequent higher bid in the same or subsequent auction(s).
213. 47 CFR 1.2104(g)(1) sets forth the payment obligations of a
bidder that withdraws a provisionally winning bid on a license during
the course of an auction, and provides for the assessment of interim
bid withdrawal payments. In the Auction 97 Comment Public Notice, the
Bureau proposed to establish an interim withdrawal payment of ten
percent of the withdrawn bid for Auction 97.
214. The Bureau received no comment on this proposal and therefore
adopts it for Auction 97. The Commission will assess an interim
withdrawal payment equal to ten percent of the amount of the withdrawn
bids. The ten percent interim payment will be applied toward any final
bid withdrawal payment that will be assessed after subsequent auction
of the license. Assessing an interim bid withdrawal payment ensures
that the Commission receives a minimal withdrawal payment pending
assessment of any final withdrawal payment. 47 CFR 1.2104(g) provides
specific examples showing application of the bid withdrawal payment
rule.
7. Round Results
215. Limited information about the results of a round will be made
public after the conclusion of the round. Specifically, after a round
closes, the Bureau will make available for each license its current
provisionally winning bid amount, the minimum acceptable bid amount for
the following round, the amounts of all bids placed on the license
during the round, and whether the license is FCC-held. The system will
also provide an entire license history detailing all activity that has
taken place on a license with the ability to sort by round number. The
reports will be publicly accessible. Moreover, after the auction
closes, the Bureau will make available complete reports of all bids
placed during each round of the auction, including bidder identities.
216. DISH proposes several refinements to the Bureau's standard
round result information and procedures. Specifically, DISH recommends
that the Bureau (1) publish auction system specifications at least four
weeks before the start of Auction 97 and consider releasing sample data
files; (2) provide an auction application programming interface (API)
for several different types of auction statistics and bid actions; (3)
provide, after the close of each round, the total current bidder
eligibility by bidding unit, the number of bidders that have reduced
eligibility, and information about the total number of waivers used in
the prior round. Spectrum Financial Partners requests that, in addition
to making round result
[[Page 47129]]
reports available in TXT and XML formats in the FCC Auction System, the
Bureau also make them available on an FTP site (preferably in XLS or
CVS format) that can be automatically polled for updates and downloaded
and processed more mechanically.
217. The Bureau respectfully declines to adopt any of these
proposals. Any modifications to the FCC Auction System or related
infrastructure must be considered in the context of priorities,
resources, and time for testing prior to the auction. Additionally,
some of the information requested by DISH is purposefully not provided
as part of the Bureau's limited information procedures.
8. Auction Announcements
218. The Commission will use auction announcements to report
necessary information such as schedule changes and stage transitions.
All auction announcements will be available by clicking a link in the
FCC Auction System. DISH asks that, in addition to posting notices to
the FCC Auction System, the Bureau communicate new auction
announcements in several ways, to include at least emails and text
messages. While communicating new auction announcements in this manner
might be convenient for participants, the Bureau declines to do so.
Using email and/or text messages would introduce risk by increasing
reliance on systems outside of the Commission's control. As with DISH's
suggested changes to the Bureau's round results procedures,
modifications to the FCC Auction System, related infrastructure, or
procedures must also be considered in the context of priorities,
resources, and time for testing prior to the auction. The Bureau
concludes that providing auction announcements in the FCC Auction
System, has been an effective and efficient way to communicate
necessary information to auction participants in past auctions, and
that this will be the case for Auction 97 as well.
V. Post-Auction Procedures
219. Shortly after bidding has ended, the Commission will issue a
public notice declaring the auction closed, identifying the winning
bidders, and establishing the deadlines for submitting down payments,
final payments, long-form applications, and ownership disclosure
information reports.
A. Down Payments
220. The Commission's rules provide that, unless otherwise
specified by public notice, within ten business days after release of
the auction closing public notice, each winning bidder must submit
sufficient funds (in addition to its upfront payment) to bring its
total amount of money on deposit with the Commission for Auction 97 to
twenty percent of the net amount of its winning bids (gross bids less
any applicable small business bidding credit). Since it is currently
not known when Auction 97 will end and thus whether post-auction
payments will be due in late 2014 or early 2015, several commenters
request that the Bureau announce in advance of the auction that down
payments will be due in early 2015 to enable potential bidders to make
the necessary financial arrangements to ensure their ability to
participate in Auction 97. The Bureau recognizes that uncertainties
regarding the year in which down payments will be due could affect
potential applicants from a capital planning perspective, which could
in turn affect participation in the auction. Accordingly, the Bureau
exercises its discretion under 47 CFR 1.2107(b) to set the down payment
deadline for Auction 97 to be the later of January 7, 2015, or ten
business days after release of the auction closing public notice.
B. Final Payments
221. The Commission's rules provide that each winning bidder must
submit the balance of the net amount of its winning bids within ten
business days after the applicable deadline for submitting down
payments. The same parties that ask the Bureau to announce in advance
of the auction that down payments will be due in early 2015 request
that the Bureau make a similar announcement concerning the due date for
final payments. Because the Bureau exercises its discretion to set the
down payment deadline in early 2015, it sets the final payment deadline
to be the later of January 21, 2015 or ten business days after the
applicable deadline for submitting down payments.
C. Long-Form Application (FCC Form 601)
222. The Commission's rules provide that, within ten business days
after release of the auction closing notice, winning bidders must
electronically submit a properly completed long-form application (FCC
Form 601) for the license(s) they won through Auction 97. CCA and US
Cellular request that the Bureau clarify that long-form applications
will be due in 2015. Given the Spectrum Act's mandate to license the
spectrum being offered in Auction 97 by February 2015, the Bureau
declines to modify the timing for winning bidders to submit their long-
form applications and will require these forms to be filed according to
the schedule specified in the Commission's rules.
223. Winning bidders claiming eligibility for a small business
bidding credit must demonstrate their eligibility for the bidding
credit. Further instructions on these and other filing requirements
will be provided to winning bidders in the auction closing public
notice.
224. Winning bidders organized as bidding consortia must comply
with the long-form application procedures established in the CSEA/Part
1 Report and Order. Specifically, each member (or group of members) of
a winning consortium seeking separate licenses will be required to file
a separate long-form application for its respective license(s). If the
license is to be partitioned or disaggregated, the member (or group)
filing the long-form application must provide the relevant partitioning
or disaggregation agreement in its long-form application. In addition,
if two or more consortium members wish to be licensed together, they
must first form a legal business entity, and any such entity must meet
the applicable designated entity criteria.
D. Ownership Disclosure Information Report (FCC Form 602)
225. Within ten business days after release of the auction closing
public notice, each winning bidder must also comply with the ownership
reporting requirements in 47 CFR 1.913, 1.919, and 1.2112 by submitting
an ownership disclosure information report for wireless
telecommunications services (FCC Form 602) with its long-form
application.
226. If an applicant already has a complete and accurate FCC Form
602 on file in ULS, it is not necessary to file a new report, but
applicants must verify that the information on file with the Commission
is complete and accurate. If the applicant does not have an FCC Form
602 on file, or if it is not complete and accurate, the applicant must
submit one.
227. When an applicant submits a short-form application, ULS
automatically creates an ownership record. This record is not an FCC
Form 602, but may be used to pre-fill the FCC Form 602 with the
ownership information submitted on the applicant's short-form
application. Applicants must review the pre-filled information and
confirm that it is complete and accurate as of the filing date of the
long-form application before certifying and submitting the FCC Form
[[Page 47130]]
602. Further instructions will be provided to winning bidders in the
auction closing public notice.
E. Tribal Lands Bidding Credit
228. A winning bidder that intends to use its license(s) to deploy
facilities and provide services to federally recognized tribal lands
that are unserved by any telecommunications carrier or that have a
wireline penetration rate equal to or below 85 percent is eligible to
receive a tribal lands bidding credit as set forth in 47 CFR 1.2107 and
1.2110(f). A tribal lands bidding credit is in addition to, and
separate from, any other bidding credit for which a winning bidder may
qualify.
229. Unlike other bidding credits that are requested prior to the
auction, a winning bidder applies for the tribal lands bidding credit
after the auction when it files its long-form application (FCC Form
601). When initially filing the long-form application, the winning
bidder will be required to advise the Commission whether it intends to
seek a tribal lands bidding credit, for each license won in the
auction, by checking the designated box(es). After stating its intent
to seek a tribal lands bidding credit, the applicant will have 180 days
from the close of the long-form application filing window to amend its
application to select the specific tribal lands to be served and
provide the required tribal government certifications. Licensees
receiving a tribal lands bidding credit are subject to performance
criteria as set forth in 47 CFR 1.2110(f)(3)(vii).
230. For additional information on the tribal lands bidding credit,
including how the amount of the credit is calculated, applicants should
review the Commission's rulemaking proceeding regarding tribal lands
bidding credits and related public notices. Relevant documents can be
viewed on the Commission's Web site by going to https://wireless.fcc.gov/auctions/ and clicking on the Tribal Lands Credits
link.
F. Default and Disqualification
231. Any winning bidder that defaults or is disqualified after the
close of the auction (i.e., fails to remit the required down payment
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise
disqualified) will be subject to the payments described in 47 CFR
1.2104(g)(2). This payment consists of a deficiency payment, equal to
the difference between the amount of the Auction 97 bidder's winning
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.
232. As noted in the Auction 97 Comment Public Notice, the
percentage of the bid that a defaulting bidder must pay in addition to
the deficiency will depend on the auction format ultimately chosen for
a particular auction. The amount can range from three percent up to a
maximum of twenty percent, established in advance of the auction and
based on the nature of the service and the inventory of the licenses
being offered. As the Bureau noted in the Auction 97 Comment Public
Notice, the Commission explained in the CSEA/Part 1 Report and Order
that defaults weaken the integrity of the auction process and may
impede the deployment of service to the public, and that an additional
default payment of up to twenty percent will be more effective in
deterring defaults than the three percent used in some earlier
auctions. However, the Bureau does not believe the detrimental effects
of any defaults in Auction 97 are likely to be unusually great.
Balancing these considerations, the Bureau proposed to establish an
additional default payment for Auction 97 of fifteen percent of the
applicable bid. The Bureau received no comment on this proposal and
therefore adopts it for Auction 97.
233. Finally, in the event of a default, the Commission has the
discretion to re-auction the license or offer it to the next highest
bidder (in descending order) at its final bid amount. In addition, if a
default or disqualification involves gross misconduct,
misrepresentation, or bad faith by an applicant, the Commission may
declare the applicant and its principals ineligible to bid in future
auctions, and may take any other action that it deems necessary,
including institution of proceedings to revoke any existing
authorizations held by the applicant.
G. Refund of Remaining Upfront Payment Balance
234. After the auction, applicants that are not winning bidders or
are winning bidders whose upfront payment exceeded the total net amount
of their winning bids may be entitled to a refund of some or all of
their upfront payment. All refunds will be returned to the payer of
record, as identified on the FCC Form 159, unless the payer submits
written authorization instructing otherwise. Bidders should not request
a refund of their upfront payments before the Commission releases a
public notice declaring the auction closed, identifying the winning
bidders, and establishing the deadlines for submitting down payments,
long-form applications, and final payments.
235. Bidders are encouraged to file their refund information
electronically using the Refund Information icon found on the Auction
Application Manager page or through the Wire Transfer for Refund
Purposes link available on the Auction Application Submit Confirmation
page in the FCC Auction System. If an applicant has completed the
refund instructions electronically, the refund will be sent
automatically. If an applicant has not completed the refund
instructions electronically, the applicant must send a written request.
Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2014-19080 Filed 8-11-14; 8:45 am]
BILLING CODE 6712-01-P