Auctions of Upper Microwave Flexible Use Licenses for Next-Generation Wireless Services; Comment Sought on Competitive Bidding Procedures for Auctions 101 (28 GHz) and 102 (24 GHz); Bidding in Auction 101 Scheduled To Begin November 14, 2018, 19660-19677 [2018-09415]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 83, Number 87 (Friday, May 4, 2018)]
[Proposed Rules]
[Pages 19660-19677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09415]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1, 2, 15, 25, 30, and 101

[AU Docket No. 18-85; FCC 18-43]


Auctions of Upper Microwave Flexible Use Licenses for Next-
Generation Wireless Services; Comment Sought on Competitive Bidding 
Procedures for Auctions 101 (28 GHz) and 102 (24 GHz); Bidding in 
Auction 101 Scheduled To Begin November 14, 2018

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: In this document, the Commission announces auctions of Upper 
Microwave Flexible Use Service licenses in the 27.5-28.35 GHz (28 GHz) 
and 24.25-24.45 and 24.75-25.25 GHz (24 GHz) bands, designated as 
Auctions 101 and 102, respectively. This document proposes and seeks 
comment on competitive bidding procedures and minimum opening bids to 
be used for Auctions 101 and 102.

DATES: Comments are due on or before May 9, 2018, and reply comments 
are due on or before May 23, 2018. Bidding in Auction 101 for licenses 
in the 28 GHz band is scheduled to commence on November 14, 2018. 
Bidding in Auction 102 for licenses in the 24 GHz band is scheduled to 
commence subsequent to the conclusion of bidding in Auction 101.

ADDRESSES: Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies. Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (May 1, 
1998). All filings in response to the Auctions 101 and 102 Comment 
Public Notice must refer to AU Docket No.18-85. The Commission strongly 
encourages interested parties to file comments electronically, 
specifying the particular auction(s) (i.e., Auction 101 and/or Auction 
102) to which their comments are directed, and request that an 
additional copy of all comments and reply comments be submitted 
electronically to the following email address: [email protected].
    Electronic Filers: Comments may be filed electronically using the 
internet by accessing the ECFS: https://www.fcc.gov/ecfs/. Filers 
should follow the instructions provided on the website for submitting 
comments. In completing the transmittal screen, filers should include 
their full name, U.S. Postal Service mailing address, and the 
applicable docket number, AU Docket No. 18-85.
    Paper Filers: Parties who choose to file by paper must file an 
original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    All hand-delivered or messenger-delivered paper filings for the 
Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building. Commercial overnight mail (other than 
U.S. Postal Service Express Mail and Priority Mail) must be sent to 
9050 Junction Drive, Annapolis Junction, MD 20701.
    U.S. Postal Service first-class, Express, and Priority mail must be 
addressed to 445 12th Street SW, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: For auction legal questions, Erik 
Beith or Kathryn Hinton in the Wireless Telecommunications Bureau's 
Auctions and Spectrum Access Division at (202) 418-0660. For general 
auction questions, the Auctions Hotline at (717) 338-2868. For Upper 
Microwave Flexible Use Service questions, Nancy Zaczek or Janet Young 
in the Wireless Telecommunications Bureau's Broadband Division at (202) 
418-2487.

SUPPLEMENTARY INFORMATION: This is a summary of the Public Notice 
(Auctions 101 and 102 Comment Public Notice), AU Docket No. 18-85, FCC 
18-43, adopted and released on April 17, 2018. The Auctions 101 and 102 
Comment Public Notice includes the following attachments: Attachment A, 
Summary of Licenses to be Auctioned; and Attachment B, Bid Formula for 
Auction 101. The complete text of the Auctions 101 and 102 Comment 
Public Notice, including all attachments, is available for public 
inspection and copying from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) 
Monday through Thursday or from 8:00 a.m. to 11:30 a.m. ET on Fridays 
in the FCC Reference Information Center, 445 12th Street SW, Room CY-
A257, Washington, DC 20554. The complete text is also available on the 
Commission's website at www.fcc.gov/auction/101-102/ or by using the 
search function for AU Docket No. 18-85 on the Commission's ECFS web 
page at www.fcc.gov/cgb/ecfs/. Alternative formats are available to 
persons with disabilities by sending an email to [email protected] or by 
calling the Consumer & Governmental Affairs Bureau at (202) 418-0530 
(voice), (202) 418-0432 (TTY). Pursuant to sections 1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates

[[Page 19661]]

indicated in the Auctions 101 and 102 Comment Public Notice in AU 
Docket No. 18-85.

I. Introduction

    1. By the Auctions 101 and 102 Comment Public Notice, the 
Commission announces that it will auction a total of 5,986 Upper 
Microwave Flexible Use Service (UMFUS) licenses in the 27.5-28.35 GHz 
(28 GHz) and 24.25-24.45 and 24.75-25.25 GHz (24 GHz) bands 
(collectively, the UMFUS bands), and it seeks comment on the procedures 
to be used for these auctions. The bidding in the auction for licenses 
in the 28 GHz band, which is designated as Auction 101, is scheduled to 
commence on November 14, 2018. Bidding in the auction for licenses in 
the 24 GHz band, which is designated as Auction 102, will be scheduled 
to commence subsequent to the conclusion of bidding in Auction 101. As 
discussed below, the Commission proposes to use its standard 
simultaneous multiple-round (SMR) auction format for Auction 101 (28 
GHz) and a clock auction format for Auction 102 (24 GHz).

II. Licenses To Be Offered in Auctions 101 and 102

A. Description of Licenses

    2. The 1.55 gigahertz of UMFUS spectrum available in Auctions 101 
and 102 will be licensed on a geographic area basis. The Second Further 
Notice of Proposed Rulemaking in the Spectrum Frontiers proceeding 
raised issues with respect to Fixed-Satellite Services (FSS) use in a 
portion of the 24 GHz band, operability in the 24 GHz band, whether to 
add an alternative performance requirement metric for UMFUS services in 
the millimeter wave (mmW or mmWave) bands, and certain issues related 
to mobile spectrum holdings policies for UMFUS services in the mmW 
bands. The Commission plans to make a decision on these issues before 
the start of Auction 101. The 3,074 licenses in the 28 GHz band offered 
in Auction 101 will be county-based licenses. The 28 GHz band will be 
licensed as two 425 megahertz blocks (27.500- 27.925 GHz and 27.925-
28.350 GHz). For each county in which 28 GHz licenses will be available 
for auction, both blocks of the 28 GHz band will be available.
    3. Auction 102 will offer 2,912 licenses in the 24 GHz band, and 
the licenses will be based on PEAs. The lower segment of the 24 GHz 
band (24.25-24.45 GHz) will be licensed as two 100 megahertz blocks, 
while the upper segment (24.75-25.25 GHz) will be licensed as five 100 
megahertz blocks.
    4. Each of the bands available in Auctions 101 and 102 will be 
licensed on an unpaired basis. A licensee in these bands may provide 
any services permitted under a fixed or mobile allocation, as set forth 
in the non-Federal Government column of the Table of Frequency 
Allocations in Section 2.106 of the Commission's rules.
    5. Table 1 in the Auctions 101 and 102 Comment PN contains summary 
information regarding the UMFUS licenses available in Auction 101. 
Table 2 in the Auctions 101 and 102 Comment PN contains summary 
information regarding the UMFUS licenses available in Auction 102.
    6. A summary of the licenses to be offered in Auctions 101 and 102 
is available in Attachment A to the Auctions 101 and 102 Comment Public 
Notice. The 28 GHz licenses listed in Attachment A as available in 
Auction 101 do not include counties within the boundaries of existing 
active 28 GHz licenses. Due to the large number of licenses offered in 
Auctions 101 and 102, the complete list of licenses to be offered in 
these auctions will be provided in electronic format only, available as 
separate Attachment A files at www.fcc.gov/auction/101-102.

B. Incumbents in 28 GHz and 24 GHz Bands

    7. Active licenses in the 28 GHz band cover 1,695 full counties and 
two partial counties. Active licenses in the 24 GHz band cover nine 
PEAs.

C. Sharing Issues

1. 28 GHz Band
    8. As background that should guide decisions to participate in the 
auctions, the Commission set up a sharing scheme for the 28 GHz band. 
Specifically, licenses for UMFUS in the 28 GHz band are being made 
available on a shared basis with FSS earth stations on a co-primary 
basis. Up to three transmitting FSS earth stations may be located in 
each county that are not required to protect UMFUS operations within a 
specified interference zone. In the 2016 Spectrum Frontiers Order, 81 
FR 79894, November 14, 2016, the Commission grandfathered all existing 
28 GHz FSS earth stations authorized as of the adoption date, July 14, 
2016, and granted them the right to operate under the terms of their 
existing authorizations without taking into account possible 
interference to UMFUS operations. That decision also grandfathered 
pending applications for 28 GHz earth stations filed prior to the 
adoption date of the 2016 Spectrum Frontiers Order if such applications 
were subsequently granted pursuant to the existing Part 25 rules. The 
Commission also gave FSS operators multiple mechanisms for deploying 
earth stations. First, it granted status to any FSS earth stations for 
which the FSS operator also holds the UMFUS license, whether through 
participation in an auction or the secondary markets, that covers the 
earth station's permitted interference. To the extent FSS operators and 
UMFUS licensees enter into private agreements, the Commission held that 
their relationship will be governed by those agreements. The Commission 
also determined that FSS earth stations may continue to be authorized 
without the benefit of an interference zone, i.e., on a secondary 
basis.
    9. In the 2017 Spectrum Frontiers Order, 83 FR 37, January 2, 2018, 
the Commission decided that it would continue to authorize satellite 
earth stations on a first-come, first-served basis in the 28 GHz band, 
but modified the guidelines for their deployment. The current rule for 
sharing between UMFUS and FSS earth stations in the 28 GHz band is 
Section 25.136(a) of the Commission's rules.
2. 24 GHz Band
    10. Similarly, the Commission adopted a sharing regime for the 24 
GHz band as well. Specifically, licenses for UMFUS in the upper segment 
of the 24 GHz band (24.75-25.25 GHz) are being made available on a 
shared basis with incumbent Broadcast Satellite Service (BSS) feeder 
link stations. The upper segment of the 24 GHz band (24.75-25.25 GHz) 
is divided into two parts. Satellite use of the upper part (25.05-25.25 
GHz) is currently restricted to BSS feeder link earth stations in EAs 
where there is no Fixed Service licensee. The lower part (24.75-25.05 
GHz), which has no terrestrial licensees, is open for all FSS use, 
though BSS feeder links have priority. BSS feeder link earth stations 
can be licensed to operate in the 24.75-25.05 GHz and 25.05-25.25 GHz 
bands. In the 2017 Spectrum Frontiers FNPRM, 83 FR 85, January 2, 2018, 
the Commission sought comment on licensing FSS earth stations in the 
24.75-25.25 GHz band on a co-primary basis under the provisions in 
Section 25.136(d). This means that the 24.75-25.25 GHz band would be 
available only for individually-licensed FSS earth stations that meet 
specific requirements applicable to earth stations in other bands 
shared with UMFUS (e.g., limitations on population covered, number of 
earth station locations in a PEA, and a prohibition on earth stations

[[Page 19662]]

in places where they would preclude terrestrial service to people or 
equipment that are in transit or are present at mass gatherings).

III. Application and Bidding Processes: Implementation of Part 1 Rules 
for Auctions 101 and 102

A. Separate Auction Application and Bidding Processes

    11. The Commission proposes to offer the 5,986 licenses described 
above through two separate auctions, Auctions 101 and 102, 
respectively. Bidding in Auction 101 for 28 GHz band licenses is 
scheduled to commence on November 14, 2018. The Commission proposes to 
commence bidding in Auction 102 for 24 GHz band licenses subsequent to 
the close of bidding in Auction 101.
    12. The Commission proposes to use separate application and bidding 
processes for Auctions 101 and 102. The Commission proposes separate 
auctions so that it can use different auction formats for Auctions 101 
and 102, which will accommodate differences in the characteristics of 
the specific inventories of licenses available in these two bands and 
simplify the bidding process for participants. For example, the 
similarities among blocks in the 24 GHz band facilitate using a clock 
auction with generic blocks, which will speed up the bidding relative 
to license-by-license bidding, which is needed when blocks in the band 
are less uniformly available, as in 28 GHz. With respect to bidding, 
the Commission proposes to use its standard SMR auction format for 
Auction 101 (28 GHz) and a clock auction format, similar to that used 
for the forward auction portion (Auction 1002) of the Broadcast 
Incentive Auction, for Auction 102 (24 GHz), as described and explained 
in greater detail below. The Commission proposes to accept auction 
applications during separate application filing windows--one for 
Auction 101 and one for Auction 102. The Commission also seeks comment 
on whether the filing window for Auction 102 should occur prior to the 
close of bidding in Auction 101.
    13. The Commission seeks comment on issues related to the timing of 
the proposed, separate application and bidding processes. Commenters 
should address how the sequence and timing for Auctions 101 and 102 
processes, including pre- and post-auction procedures, may affect 
bidder participation in one or both auctions. Specifically, how can the 
Commission coordinate the timing of auction application and bidding 
procedures so as to minimize burdens on auction applicants and maximize 
participation and competition in both auctions? Should the Commission 
open both windows before bidding begins in Auction 101? Or should the 
Commission wait to open the filing window for Auction 102 until after 
bidding in Auction 101 has begun? Alternatively, should the Commission 
wait to open the application window for Auction 102 until after the 
close of bidding in Auction 101?
    14. The Commission notes that, if the filing window for Auction 102 
occurs prior to the close of bidding in Auction 101, entities wishing 
to participate in either auction would be applicants during overlapping 
periods of time. Further, because the licenses to be offered in both 
Auctions 101 and 102 cover UMFUS spectrum and are subject to many of 
the same service rules, applicants may view the licenses to be offered 
in these auctions as substitutes, at least to some extent, and 
therefore may be interested in participating in both auctions. 
Therefore, the Commission encourages commenters to consider how the 
timing of the separate application windows and bidding processes for 
Auctions 101 and 102 might affect the ban on joint bidding agreements 
and prohibition of certain communications by auction applicants during 
these overlapping auctions, as well as information disclosure 
procedures during the auction process, as discussed in greater detail 
below. Commenters should provide specific reasons for supporting or 
objecting to any approach.

B. Information Procedures During the Auction Process

    15. As with most recent Commission spectrum license auctions, the 
Commission proposes to limit information available in Auctions 101 and 
102 in order to prevent the identification of bidders placing 
particular bids until after the bidding has closed. More specifically, 
the Commission proposes to not make public until after bidding has 
closed: (1) The licenses or license areas that an applicant selects for 
bidding in its auction application (FCC Form 175), (2) the amount of 
any upfront payment made by or on behalf of an applicant for Auction 
101 or 102, (3) any applicant's bidding eligibility, and (4) any other 
bidding-related information that might reveal the identity of the 
bidder placing a bid.
    16. Under these proposed limited information procedures (sometimes 
also referred to as anonymous bidding), information to be made public 
after each round of bidding in Auction 101 would include the amount of 
every bid placed and whether a bid was withdrawn (if withdrawals are 
permitted). In Auction 102, information to be made public would 
include, for each category of license in each geographic area, the 
supply, the aggregate demand, the price at the end of the last 
completed round, and the price for the next round. In both auctions, 
however, the identities of bidders placing specific bids or withdrawals 
(if permitted) and the net bid amounts (reflecting bidding credits) 
would not be disclosed until after the close of bidding.
    17. Bidders would have access to additional information related to 
their own bidding and bid eligibility. For example, bidders would be 
able to view their own level of eligibility, before and during the 
respective auction, through the FCC auction bidding system.
    18. After the close of bidding, bidders' license and/or PEA 
selections, as applicable, upfront payment amounts, bidding 
eligibility, bids, and other bidding-related actions would be made 
publicly available. Under the Commission's proposed SMR auction design 
for Auction 101, an applicant would identify on its auction application 
the licenses offered on which it may wish to bid during the auction. 
Under the Commission's proposed clock auction design for Auction 102, 
an applicant would select on its auction application all of the PEA(s) 
on which it may want to bid from the list of available PEAs.
    19. Because applicants may be interested in participating in both 
auctions, if the Auction 102 application window occurs before the close 
of Auction 101, the Commission proposes that information relating to 
either auction that is non-public under its limited information 
procedures would remain non-public until after bidding has closed in 
both auctions. This approach will protect against disclosure, prior to 
the close of both auctions, of information relating to either auction 
that may indicate bidding strategies in the other. Under this 
scheduling scenario, should the Commission instead release results and 
make available all bidding information related to Auction 101 after the 
close of that auction is announced by public notice? Commenters should 
discuss the potential impact of the approach they favor on 
participation and competition in both auctions. If the Commission 
adopts an alternative scheduling approach and opens the Auction 102 
application window after the close of bidding in Auction 101, however, 
the Commission proposes to apply the limited information procedures

[[Page 19663]]

discussed above to each auction separately, and would make non-public 
information relating to Auction 101 available after the close of that 
auction and before the application filing window for Auction 102.
    20. The Commission seeks comment on the above details of its 
proposal for implementing limited information procedures, or anonymous 
bidding, in Auctions 101 and 102, under a scenario in which the 
Commission schedules the application window for Auction 102 to occur 
prior to the close of bidding in Auction 101. The Commission also seeks 
comment on the implementation alternatives under alternative scenarios 
for the timing of the auction application windows. Concerns about anti-
competitive bidding and other factors that the Commission relied on as 
a basis for using anonymous bidding in prior auctions also would appear 
to apply to Auctions 101 and 102. The Commission encourages parties to 
provide information about the benefits and costs of complying with 
limited information procedures in Auctions 101 and 102, as compared 
with the benefits and costs of alternative procedures that would 
provide for the disclosure of more information on bidder identities and 
interests in the auctions. Commenters opposing the use of anonymous 
bidding in Auctions 101 and 102 should explain their reasoning and 
propose alternative information rules.

C. Application of Prohibition of Certain Communications

    21. Section 1.2105(c)(1) of the Commission's rules provides that, 
subject to specified exceptions, after the short-form application 
filing deadline, all applicants are prohibited from cooperating or 
collaborating with respect to, communicating with or disclosing, to 
each other or any nationwide provider of communications services that 
is not an applicant, or, if the applicant is a nationwide provider, any 
non-nationwide provider that is not an applicant, in any manner the 
substance of their own, or each other's, or any other applicants' bids 
or bidding strategies (including post-auction market structure), or 
discussing or negotiating settlement agreements, until after the down 
payment deadline. For purposes of Section 1.2105(c)'s prohibition, 
Section 1.2105(c)(5)(i) defines ``applicant'' as including all officers 
and directors of the entity submitting a short-form application to 
participate in the auction, all controlling interests of that entity, 
as well as all holders of partnership and other ownership interests and 
any stock interest amounting to 10 percent or more of the entity, or 
outstanding stock, or outstanding voting stock of the entity submitting 
a short-form application.
    22. If, based on the Commission's final procedures for these 
auctions, the short-form window for Auction 102 occurs before the close 
of Auction 101, entities wishing to participate in either auction will 
be applicants during overlapping periods of time. In this scenario, 
based on the relationship between the two auctions, the Commission 
proposes to apply the prohibition of Section 1.2105(c)(1) across both 
auctions. Thus, an applicant in either auction that communicates its 
bids or bidding strategies to an applicant to participate in the other 
auction would violate the Commission's prohibited communication rule, 
which will apply to ``all applicants'' to participate in either 
auction, and not only to applicants for the same auction. That is, the 
rule prohibiting certain communications will apply to any applicant in 
either Auction 101 or 102. Accordingly, no Auction 101 applicant may 
discuss bids or bidding strategies with any other Auction 101 applicant 
or with an Auction 102 applicant. Conversely, no Auction 102 applicant 
may discuss bids or bidding strategies with any other Auction 102 
applicant or with an Auction 101 applicant. In addition, the down 
payment deadline for Auction 102 would be the relevant down payment 
deadline for determining when the prohibition ends for each applicant 
in either auction. This approach should provide clarity with respect to 
permitted and prohibited communications by establishing a single end 
point for the prohibition.
    23. If the Commission adopts an alternative approach and schedules 
the Auction 102 application window to occur after the close of bidding 
in Auction 101, the Commission proposes to apply the prohibition of 
certain communications separately to each auction, using each auction's 
post-auction down payment deadline to determine when the prohibition 
ends for applicants in that auction.
    24. The Commission seeks comment on the details of its proposals 
for applying the prohibition of certain communications across Auctions 
101 and 102 in the scenario in which the Auction 102 application window 
occurs before the close of bidding in Auction 101. If commenters 
support alternatives for applying the prohibition in this scenario they 
should provide implementation details and explain how such suggestions 
promote the purpose of the prohibition. The Commission also seeks 
comment on its suggestion for applying the prohibition under the 
alternative scenario in which the Auction 102 application window occurs 
after the close of bidding in Auction 101. The Commission requests that 
commenters address costs and benefits of each of these alternative ways 
of implementing the prohibition, and any other alternatives they may 
suggest, including any potential effects on auction participation and 
competition as well as any burden on applicants.

D. Application Requirements and Certifications Relating to Joint 
Bidding and Other Agreements

    25. As recently amended in the 2015 Part I Report and Order, 80 FR 
56764, September 18, 2015, the Commission's rules generally prohibit 
joint bidding and other arrangements involving auction applicants 
(including any party that controls or is controlled by such 
applicants). For purposes of the prohibition on joint bidding 
arrangements, ``joint bidding arrangements'' include arrangements 
relating to the licenses being auctioned that address or communicate, 
directly or indirectly, bidding at the auction, bidding strategies, 
including arrangements regarding price or the specific licenses on 
which to bid, and any such arrangements relating to the post-auction 
market structure. This prohibition applies to joint bidding 
arrangements involving two or more nationwide providers, as well as 
joint bidding arrangements involving a nationwide and one or more non-
nationwide providers, where any party to the arrangement is an 
applicant for the auction. A ``non-nationwide provider'' refers to any 
provider of communications services that is not a ``nationwide 
provider.''
    26. For the purpose of implementing its competitive bidding rules 
in Auctions 101 and 102, the Commission proposes to identify AT&T, 
Sprint, T-Mobile, and Verizon Wireless as ``nationwide providers.'' 
Because the Commission's rules allow an UMFUS licensee in the 28 GHz 
and 24 GHz bands to provide flexible terrestrial wireless services, 
including mobile services, the Commission bases its proposal on its 
identification of nationwide providers in the 20th Annual Mobile 
Competition Report, FCC 17-126. Commenters who disagree with this 
proposal should identify alternative ``nationwide providers'' and 
explain why the Commission should depart from the list of nationwide 
providers identified in the 20th Annual Mobile Competition Report.
    27. To implement the prohibition on joint bidding arrangements, the 
Commission's rules require each auction

[[Page 19664]]

applicant in its short-form application to certify that it has 
disclosed any arrangements or understandings of any kind relating to 
the licenses being auctioned to which it (or any party that controls or 
is controlled by it) is a part; the applicant must also certify that it 
(or any party that controls or is controlled by it) has not entered and 
will not enter into any arrangement or understanding of any kind 
relating directly or indirectly to bidding at auction with, among 
others, ``any other applicant'' or a nationwide provider.
    28. If, based on the Commission's final procedures for these 
auctions, the Auction 102 short-form window occurs before the close of 
bidding in Auction 101, because entities wishing to participate in 
either auction would be applicants during overlapping periods of time, 
the Commission proposes to apply the rule prohibiting joint bidding 
arrangements to any applicant for Auction 101 or 102. Moreover, an 
entity wishing to participate in either auction would be required to 
disclose in its short-form application any bidding arrangements or 
understandings of any kind relating to the licenses being auctioned in 
either Auction 101 or 102. That is, under this scenario, for the 
purpose of implementing its competitive bidding rules in Auctions 101 
and 102, the Commission proposes to apply the prohibition against joint 
bidding agreements such that the ``licenses being auctioned'' and 
``licenses at auction'' include all of the licenses being offered in 
Auctions 101 and 102. The Commission seeks comment on this proposal. 
If, in the alternative, the Commission were to adopt procedures to 
schedule the Auction 102 application window to occur after the close of 
bidding in Auction 101, the Commission proposes that it would apply the 
prohibition separately to the specific licenses in each auction. The 
Commission seeks comment on this alternative. Commenters should give 
specific reasons for preferring one approach or the other and address 
the potential effects of each approach on applicants as well as the 
potential effect of each on auction participation and competition.

E. Bidding Credit Caps

    29. The Commission seeks comment on establishing reasonable caps on 
the total amount of bidding credits that an eligible small business or 
rural service provider may be awarded for either Auction 101 or 102.
    30. In the 2016 Spectrum Frontiers Order, the Commission determined 
that an entity with average annual gross revenues for the preceding 
three years not exceeding $55 million would be designated as a ``small 
business'' eligible for a 15 percent bidding credit, and that an entity 
with average annual gross revenues for the preceding three years not 
exceeding $20 million would be designated as a ``very small business'' 
eligible for a 25 percent bidding credit. The Commission further 
determined that entities providing commercial communication services to 
a customer base of fewer than 250,000 combined wireless, wireline, 
broadband, and cable subscribers in primarily rural areas would be 
eligible for the 15 percent rural service provider bidding credit.
    31. The Commission, in the 2015 Part 1 Report and Order, 
established a process to implement a reasonable cap on the total amount 
of bidding credits that an eligible small business or rural service 
provider may be awarded in any auction, based on an evaluation of the 
expected capital requirements presented by the particular service and 
inventory of licenses being auctioned. Specifically, the Commission 
determined that bidding credit caps would be implemented on an auction-
by-auction basis, but resolved that, for any particular auction, the 
total amount of the bidding credit cap for small businesses would not 
be less than $25 million, and the bidding credit cap for rural service 
providers would not be less than $10 million. For the Broadcast 
Incentive Auction, the Commission adopted a $150 million cap on small 
business bidding credits and a $10 million cap on rural service 
provider bidding credits.
    32. For Auction 101 and Auction 102, the Commission proposes a $25 
million cap on the total amount of bidding credits that may be awarded 
to an eligible small business in each auction (i.e., $25 million in 
each auction). As noted in the 2015 Part 1 Report and Order, the 
Commission set the $150 million cap for the Broadcast Incentive Auction 
at a higher level than anticipated for future auctions, given the 
significant advantages of the low-band spectrum licenses in the 
Incentive Auction and the capital requirements associated with low-band 
spectrum. By comparison, Auction 101 and Auction 102 will offer 
licenses in the mmW spectrum, which has less robust propagation 
characteristics than the 600 MHz spectrum offered in the Incentive 
Auction. Moreover, the Commission anticipates that the range of 
potential use cases suitable for the UMFUS bands, including localized 
fiber replacement and IoT, combined with the small license areas in 
these bands, may permit deployment of smaller scale networks with lower 
total costs. Further, based on past auction data, the Commission 
expects that a $25 million cap on small business bidding credits will 
allow the substantial majority of small businesses in the auction to 
take full advantage of the bidding credit program. The Commission 
therefore believes that its proposed cap will promote the statutory 
goals of providing meaningful opportunities for bona fide small 
businesses to compete in auctions and in the provision of spectrum-
based services, without compromising its responsibility to prevent 
unjust enrichment and ensure efficient and intensive use of spectrum.
    33. The Commission proposes to adopt a $10 million cap on the total 
amount of bidding credits that may be awarded to an eligible rural 
service provider in Auction 101 and Auction 102 (i.e., $10 million in 
each auction). An entity is not eligible for a rural service provider 
bidding credit if it has already claimed a small business bidding 
credit. Based on its analysis of data from the Broadcast Incentive 
Auction, in which no rural service provider exceeded the $10 million 
cap, the Commission anticipates that a $10 million cap on rural service 
provider bidding credits will not constrain the ability of any rural 
service provider to participate fully and fairly in Auction 101 or 
Auction 102. In addition, to create parity in Auctions 101 and 102 
among eligible small businesses and rural service providers competing 
against each other in smaller markets, the Commission proposes a $10 
million cap on the overall amount of bidding credits that any winning 
small business bidder in either auction may apply to winning licenses 
in markets with a population of 500,000 or less.
    34. The Commission seeks comment on these proposals. Specifically, 
do the expected capital requirements associated with operating in the 
UMFUS bands, the potential number and value of UMFUS licenses, past 
auction data, or any other considerations justify the proposed caps or 
a higher or lower cap for either type of bidding credit in either 
auction? Commenters are encouraged to identify circumstances and 
characteristics of these mmW auctions that should guide the Commission 
in establishing bidding credit caps, and to provide specific, data-
driven arguments in support of their proposals.

IV. Due Diligence

    35. Each potential bidder 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 Auctions 101 
and 102. Each bidder is

[[Page 19665]]

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. Each applicant should be aware 
that a Commission auction represents an opportunity to become a 
Commission licensee, subject to certain conditions and regulations. 
This includes the established authority of the Commission to alter the 
terms of existing licenses by rulemaking, which is equally applicable 
to licenses awarded by auction. 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.
    36. An applicant should perform its due diligence research and 
analysis before proceeding, as it would with any new business venture. 
Each potential bidder should perform technical analyses and/or refresh 
any previous analyses to assure itself that, should it become a winning 
bidder for any Auction 101 or Auction 102 license, it will be able to 
build and operate facilities that will comply fully with all applicable 
technical and regulatory requirements. The Commission strongly 
encourages each applicant to inspect any prospective sites for 
communications facilities located in, or near, the geographic area for 
which it plans to bid; confirm the availability of such sites; and 
familiarize itself with the Commission's rules regarding the National 
Environmental Policy Act.
    37. The Commission strongly encourages each applicant to conduct 
its own research prior to Auctions 101 and 102, as applicable, in order 
to determine the existence of pending administrative, rulemaking, or 
judicial proceedings that might affect its decisions regarding 
participation in the auction.
    38. The Commission also strongly encourages participants in 
Auctions 101 and 102 to continue such research throughout the auctions. 
The due diligence considerations mentioned in the Auctions 101 and 102 
Comment Public Notice do not constitute an exhaustive list of steps 
that should be undertaken prior to participating in these auctions. As 
always, the burden is on the potential bidder to determine how much 
research to undertake, depending upon the specific facts and 
circumstances related to its interests.
    39. In addition to the foregoing due diligence considerations, 
which the Commission encourages of bidders in all auctions, the 
Commission calls particular attention in Auctions 101 and 102 to the 
spectrum-sharing issues described above. Each applicant should follow 
closely releases from the Commission concerning these issues and to 
consider carefully the technical and economic implications for 
commercial use of the UMFUS bands.
    40. The Commission also reminds bidders of the Commission's mobile 
spectrum holding policies applicable to the mmW bands. Specifically, 
for purposes of reviewing proposed secondary market transactions, the 
Commission adopted a threshold of 1850 megahertz of combined mmW 
spectrum in the 24 GHz, 28 GHz, 37 GHZ, 39 GHz, and 47 GHz bands. In 
addition, the Commission proposed in the 2017 Spectrum Frontiers FNPRM 
to eliminate the pre-auction limit of 1250 megahertz that had been 
adopted for the 28 GHz, 37 GHz, and 39 GHz bands, consistent with the 
Commission's conclusion not to adopt a pre-auction limit for the 24 GHz 
and 47 GHz bands. Further, the Commission sought comment on whether, in 
the absence of pre-auction limits for mmW spectrum, it should adopt a 
post-auction, case-by-case review of mmW spectrum holdings for long-
form applications for initial mmW licenses.

V. Proposed Bidding Procedures

A. Auction 101--28 GHz

1. Simultaneous Multiple-Round Auction Design
    41. The Commission proposes to use its standard SMR auction format 
for Auction 101, which offers license-by-license bidding. As described 
further below, this type of auction offers every license for bid at the 
same time and consists of successive bidding rounds in which bidders 
may place bids on individual licenses. Typically, bidding remains open 
on all licenses until bidding stops on every license. The Commission 
seeks comment on this proposal.
2. Bidding Rounds
    42. Under this proposal, Auction 101 will consist of sequential 
bidding rounds, each followed by the release of round results. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of bidding. Details on 
viewing round results, including the location and format of 
downloadable round results files will be included in the same public 
notice.
    43. The Commission will conduct Auction 101 over the internet using 
the FCC auction bidding system. Bidders will also have the option of 
placing bids by telephone through a dedicated auction bidder line. The 
toll-free telephone number for the auction bidder line will be provided 
to qualified bidders prior to the start of bidding in the auction.
    44. The Commission proposes that the Wireless Telecommunications 
Bureau (Bureau) would retain the discretion to change the bidding 
schedule in order to foster an auction pace that reasonably balances 
speed with the bidders' need to study round results and adjust their 
bidding strategies. This will allow the Bureau to change the amount of 
time for bidding rounds, the amount of time between rounds, or the 
number of rounds per day, depending upon bidding activity and other 
factors. The Commission seeks comment on this proposal. Commenters on 
this issue should address the role of the bidding schedule in managing 
the pace of the auction, specifically discussing the tradeoffs in 
managing auction pace by bidding schedule changes, by changing the 
activity requirements or bid amount parameters, or by using other 
means.
3. Stopping Rule
    45. The Commission has discretion to establish stopping rules 
before or during multiple round auctions in order to complete the 
auction within a reasonable time. For Auction 101, the Commission 
proposes to employ a simultaneous stopping rule approach, which means 
all licenses remain available for bidding until bidding stops on every 
license. 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 (if bid 
withdrawals are permitted in Auction 101). Under the proposed 
simultaneous stopping rule, bidding would remain open on all licenses 
until bidding stops on every license. Consequently, under this 
approach, it is not possible to determine in advance how long the 
bidding in Auction 101 would last.
    46. Further, the Commission proposes that the Bureau would retain 
the discretion to exercise any of the following stopping options during 
Auction 101: (1) The auction would close for all licenses after the 
first round in which no bidder applies a waiver, no bidder withdraws a 
provisionally winning bid (if withdrawals are permitted in Auction 
101), or no bidder places any new bid 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

[[Page 19666]]

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, no bidder withdraws a provisionally winning 
bid (if withdrawals are permitted in Auction 101), or no bidder places 
any new bid on a license that already has a provisionally winning bid. 
Thus, absent any other bidding activity, a bidder placing a new bid on 
a FCC-held license (a license that does not have a provisionally 
winning bid) 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 options (1) and (2); (4) 
The auction would close after a specified number of additional rounds 
(special stopping rule) to be announced by the Bureau. If the Bureau 
invokes this special stopping rule, it will accept bids in the 
specified final round(s), after which the auction will close; and (5) 
The auction would remain open even if no bidder places any new bid, 
applies a waiver, or withdraws any provisionally winning bids (if 
withdrawals are permitted in Auction 101). In this event, the effect 
will be the same as if a bidder had applied a waiver. The activity rule 
will apply as usual, and a bidder with insufficient activity will lose 
bidding eligibility or use a waiver.
    47. The Commission proposes that the Bureau would exercise these 
options 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. Before 
exercising these options, the Bureau is likely to attempt to change the 
pace of Auction 101. For example, the Bureau may adjust the pace of 
bidding by changing the number of bidding rounds per day and/or the 
minimum acceptable bids. The Commission proposes that the Bureau retain 
continuing discretion to exercise any of these options with or without 
prior announcement by the Bureau during the auction. The Commission 
seeks comment on these proposals.
4. Information Relating to Auction Delay, Suspension, or Cancellation
    48. For Auction 101, the Commission proposes that at any time 
before or during the bidding process, the Bureau may delay, suspend, or 
cancel bidding in the auction in the event of a natural disaster, 
technical obstacle, network interruption, 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 will notify participants of 
any such delay, suspension or cancellation by public notice and/or 
through the FCC auction bidding system's announcement function. If the 
bidding is delayed or suspended, the Bureau may, in its sole 
discretion, 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. The Commission emphasizes that the Bureau will exercise 
this authority solely at its discretion, and not as a substitute for 
situations in which bidders may wish to apply their activity rule 
waivers. The Commission seeks comment on this proposal.
5. Upfront Payments and Bidding Eligibility
    49. In keeping with the Commission's usual practice in spectrum 
license auctions, the Commission proposes that applicants be required 
to submit upfront payments as a prerequisite to becoming qualified to 
bid. As described below, the upfront payment is a refundable deposit 
made by an applicant to establish its eligibility to bid on licenses. 
Upfront payments related to the inventory of licenses being auctioned 
protect against frivolous or insincere bidding and provide the 
Commission with a source of funds from which to collect payments owed 
at the close of bidding. With these considerations in mind, the 
Commission proposes upfront payments based on $0.001 per megahertz of 
bandwidth per population (per ``MHz-pop''). The results of these 
calculations are subject to a minimum of $100 and will be rounded using 
the Commission's standard rounding procedures for auctions: Results 
above $10,000 are rounded to the nearest $1,000; results below $10,000 
but above $1,000 are rounded to the nearest $100; and results below 
$1,000 are rounded to the nearest $10. The proposed upfront payments 
equal approximately half the proposed minimum opening bids. The 
Commission seeks comment on these upfront payment amounts, which are 
specified in the Attachment A files.
    50. The Commission further proposes that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units, which are a measure of bidder eligibility 
and bidding activity. The Commission proposes to assign each license a 
specific number of bidding units, equal to one bidding unit per dollar 
of the upfront payment. The number of bidding units for a given license 
is fixed and does not change during the auction as prices change. If an 
applicant is found to be qualified to bid on more than one license 
being offered in Auction 101, such bidder may place bids on multiple 
licenses, provided that the total number of bidding units associated 
with those licenses does not exceed its current eligibility. A bidder 
cannot increase its eligibility during the auction; it can only 
maintain its eligibility or decrease its eligibility. Thus, in 
calculating its upfront payment amount and hence its initial bidding 
eligibility, an applicant must determine the maximum number of bidding 
units on which it may wish to bid (or hold provisionally winning bids) 
in any single round, and submit an upfront payment amount covering that 
total number of bidding units. The Commission seeks comment on these 
proposals.
    51. Congress recently passed legislation amending the 
Communications Act to provide that upfront auction payments for future 
auctions are to be deposited in the U.S. Treasury. Accordingly, upfront 
payments for Auctions 101 and 102 will be deposited in the U.S. 
Treasury.
6. Activity Rule
    52. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. The bidding system calculates a bidder's activity 
in a round as the sum of the bidding units associated with any licenses 
upon which it places bids during the current round and the bidding 
units associated with any licenses for which it holds provisionally 
winning bids. Bidders are required to be active on a specific 
percentage of their current bidding eligibility during each round of 
the auction. Failure to maintain the requisite activity level will 
result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction.
    53. The Commission proposes to divide the auction into at least two 
stages, each characterized by a different activity requirement. The 
auction will start in Stage One. The Commission proposes that the 
Bureau will have the discretion to advance the auction to the next 
stage by announcement during the auction. In exercising this 
discretion, the Commission anticipates that the Bureau will consider a 
variety of measures of auction activity, including

[[Page 19667]]

but not limited to, the percentage of bidding units associated with 
licenses on which there are new bids, the number of new bids, and the 
increase in revenue. The Commission seeks comment on these proposals.
    54. The Commission proposes the following stages and corresponding 
activity requirements:
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current bidding eligibility is required 
to be active on bidding units associated with licenses representing at 
least 80 percent of its current bidding eligibility. Failure to 
maintain the required activity level will result in the use of an 
activity rule waiver or a reduction in the bidder's bidding eligibility 
for the next round of bidding. During Stage One, a bidder's reduced 
eligibility for the next round will be calculated by multiplying the 
bidder's current round activity by five-fourths (\5/4\).
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current bidding eligibility is required to be active on 95 
percent of its current bidding eligibility. Failure to maintain the 
required activity level will result in the use of an activity rule 
waiver or a reduction in the bidder's bidding eligibility for the next 
round of bidding. During Stage Two, a bidder's reduced eligibility for 
the next round will be calculated by multiplying the bidder's current 
round activity by twenty-nineteenths (20/19).
    55. The Commission seeks comment on these activity requirements. 
Under this proposal, the Bureau will also retain the discretion to 
change the activity requirements during the auction. For example, the 
Bureau could decide to add an additional stage with a higher activity 
requirement, not to transition to Stage Two if it believes the auction 
is progressing satisfactorily under the Stage One activity requirement, 
or to transition to Stage Two with an activity requirement that is 
higher or lower than the 95 percent proposed herein. If the Bureau 
implements stages with activity requirements other than the ones listed 
above, a bidder's reduced eligibility for the next round will be 
calculated by multiplying the bidder's current round activity by the 
reciprocal of the activity requirement. For example, with a 98 percent 
activity requirement, the bidder's current round activity would be 
multiplied by 50/49; with a 100 percent activity requirement, the 
bidder's current round activity would become its bidding eligibility 
(current round activity would be multiplied by \1/1\). If the Bureau 
exercises this discretion, it will alert bidders by announcement in the 
FCC auction bidding system.
7. Activity Rule Waivers and Reducing Eligibility
    56. For its proposed SMR auction format, the Commission proposes 
that when a bidder's activity in the current round is below the 
required minimum level, it may preserve its current level of 
eligibility through an activity rule waiver, if available. An activity 
rule waiver applies to an entire round of bidding, not to a particular 
license. Activity rule waivers can be either proactive or automatic. 
Activity rule waivers are principally a mechanism for a bidder to avoid 
the loss of bidding eligibility in the event that exigent circumstances 
prevent it from bidding in a particular round.
    57. Consistent with recent FCC spectrum auctions, the Commission 
proposes that each bidder in Auction 101 be provided with three 
activity rule waivers that may be used as set forth at the bidder's 
discretion during the course of the auction. The FCC auction bidding 
system will assume that a bidder that does not meet the activity 
requirement would prefer to use an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver at the end of any bidding round in which a 
bidder's activity level is below the minimum required unless (1) the 
bidder has no activity rule waivers remaining; or (2) the bidder 
overrides the automatic application of a waiver by reducing 
eligibility, thereby meeting the activity requirement. If a bidder has 
no waivers remaining and does not satisfy the required activity level, 
the bidder's current eligibility will be permanently reduced, possibly 
curtailing or eliminating the ability to place additional bids in the 
auction.
    58. 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 bidding system. In this case, the bidder's eligibility 
would be permanently reduced to bring it into compliance with the 
activity rule described above. Reducing eligibility is an irreversible 
action; once eligibility has been reduced, a bidder cannot regain its 
lost bidding eligibility.
    59. Under the proposed simultaneous stopping rule, a bidder would 
be permitted to apply an activity rule waiver proactively as a means to 
keep the auction open without placing a bid. If a bidder proactively 
were to apply an activity rule waiver (using the proactive waiver 
function in the FCC auction bidding system) during a bidding round in 
which no bids are placed or withdrawn (if bid withdrawals are permitted 
in Auction 101), the auction will remain open and the bidder's 
eligibility will be preserved. An automatic waiver applied by the FCC 
auction bidding system in a round in which there is no new bid, no bid 
withdrawal (if bid withdrawals are permitted in Auction 101), or no 
proactive waiver will not keep the auction open. The Commission seeks 
comment on this proposal.
8. Reserve Price or Minimum Opening Bids
    60. The Commission seeks comment on the use of a minimum opening 
bid amount and/or reserve price prior to the start of each auction. A 
reserve price is an amount below which an item, or group of items, may 
not be won. A reserve price may be higher than the minimum opening bid, 
or for a group of items, the sum of minimum opening bids.
    61. The Commission proposes to establish minimum opening bid 
amounts for Auction 101. The bidding system will not accept bids lower 
than these amounts. Based on the Commission's experience in past 
auctions, setting minimum opening bid amounts judiciously is an 
effective tool for accelerating the competitive bidding process. The 
Commission does not propose to establish an aggregate reserve price or 
license reserve prices different from minimum opening bid amounts for 
the licenses to be offered in Auction 101.
    62. For Auction 101, the Commission proposes 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 Commission proposes to use a 
calculation based on $0.002 per MHz-pop. The results of these 
calculations are subject to a minimum of $200 and will be rounded. The 
Commission seeks comment on these minimum opening bid amounts, which 
are specified in the Attachment A files. If commenters believe that 
these minimum opening bid amounts will result in unsold licenses or are 
not reasonable amounts, they should explain why this is so and comment 
on the desirability of an alternative approach. Commenters should 
support their claims with valuation analyses and suggested amounts or 
formulas for

[[Page 19668]]

reserve prices or minimum opening bids.
    63. In establishing minimum opening bid amounts, the Commission 
particularly seeks comment on factors that could reasonably have an 
impact on bidders' valuation of the spectrum, including the type of 
service offered, market size, population covered by the proposed 
facility, and any other relevant factors.
    64. Commenters may also wish to address the general role of minimum 
opening bids in managing the pace of the auction. For example, 
commenters could compare using minimum opening bids--e.g., by setting 
higher minimum opening bids to reduce the number of rounds it takes 
licenses to reach their final prices--to other means of controlling 
auction pace, such as changes to bidding schedules or activity 
requirements.
9. Bid Amounts
    65. The Commission proposes that, in each round, an eligible bidder 
will be able to place a bid on a given license in any of up to nine 
different amounts. Under this proposal, the FCC auction bidding system 
interface will list the acceptable bid amounts for each license.
a. Minimum Acceptable Bid Amounts
    66. 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 described below. 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 (if 
withdrawals are allowed in Auction 101), the minimum acceptable bid 
amount will equal the second highest bid received for the license.
    67. 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 in that round, and (b) the 
activity index from the prior round. Specifically, the activity index 
is equal to a weighting factor times the number of bidders placing a 
bid covering the license in the most recent bidding round plus one 
minus the weighting factor times the activity index from the prior 
round. For Round 1 calculations, because there is no prior round (i.e., 
no round 0), the activity index from the prior round is set at 0. 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 result will be rounded using the Commission's 
standard rounding procedures for auctions. The Commission proposes to 
set the weighting factor initially at 0.5, the minimum percentage at 
0.1 (10 percent), and the maximum percentage at 0.2 (20 percent). 
Hence, at these initial settings, the minimum acceptable bid for a 
license would be between 10 percent and 20 percent higher than the 
provisionally winning bid, depending upon the bidding activity for the 
license. Equations and examples are shown in Attachment B to the 
Auctions 101 and 102 Comment Public Notice. The Commission seeks 
comment on whether to use this activity-based formula or a different 
approach.
b. Additional Bid Amounts
    68. The FCC auction bidding system calculates any additional bid 
amounts using the minimum acceptable bid amount and an additional bid 
increment percentage. The minimum acceptable bid amount is multiplied 
by the additional bid increment percentage, and that result (rounded) 
is the additional increment amount. The first additional acceptable bid 
amount equals the minimum acceptable bid amount plus the additional 
increment amount. The second additional acceptable bid amount equals 
the minimum acceptable bid amount plus two times the additional 
increment amount; the third additional acceptable bid amount is the 
minimum acceptable bid amount plus three times the additional increment 
amount; etc. The Commission proposes to set the additional bid 
increment percentage at five percent initially. Hence, the calculation 
of the additional increment amount would be (minimum acceptable bid 
amount) * (0.05), rounded. The Commission seeks comment on this 
proposal.
c. Bid Amount Changes
    69. The Commission proposes that the Bureau would retain 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 Commission proposes that the Bureau retain the 
discretion to do so on a license-by-license basis. The Commission also 
proposes for the Bureau to retain the discretion to limit (a) the 
amount by which a minimum acceptable bid for a license may increase 
compared with the corresponding provisionally winning bid, and (b) the 
amount by which an additional bid amount may increase compared with the 
immediately preceding acceptable bid amount. For example, the Bureau 
could set a $100,000 limit on increases in minimum acceptable bid 
amounts over provisionally winning bids. Thus, if calculating a minimum 
acceptable bid using the activity-based formula results in a minimum 
acceptable bid amount that is $200,000 higher than the provisionally 
winning bid on a license, the minimum acceptable bid amount would 
instead be capped at $100,000 above the provisionally winning bid. The 
Commission seeks comment on the circumstances under which the Bureau 
should employ such a limit, factors the Bureau should consider when 
determining the dollar amount of the limit, and the tradeoffs in 
setting such a limit or changing other parameters--such as the minimum 
and maximum percentages of the activity-based formula. If the Bureau 
exercises this discretion, it will alert bidders by announcement in the 
FCC auction bidding system. The Commission seeks comment on these 
proposals.
    70. The Commission seeks comment on the above proposals, including 
whether to use the activity-based formula to establish the additional 
percentage or a different approach. If commenters disagree with the 
proposal to begin the auction with nine acceptable bid amounts per 
license, they should suggest an alternative number of acceptable bid 
amounts to use at the beginning of the auction and an alternative 
number to use later in the auction. Commenters may wish to address the 
role of the minimum acceptable bids and the number of acceptable bid 
amounts in managing the pace of the auction and the tradeoffs in 
managing auction pace by changing the bidding schedule, activity 
requirements, or bid amounts, or by using other means.

[[Page 19669]]

10. Provisionally Winning Bids
    71. The FCC auction bidding system will determine provisionally 
winning bids consistent with practices in past auctions. At the end of 
each bidding round, the bidding system will determine a provisionally 
winning bid for each license based on the highest bid amount received 
for the license. A provisionally winning bid will remain the 
provisionally winning bid until there is a higher bid on the same 
license at the close of a subsequent round. Provisionally winning bids 
at the end of Auction 101 become the winning bids.
    72. If identical high bid amounts are submitted on a license in any 
given round (i.e., tied bids), the FCC auction bidding system will use 
a pseudo-random number generator to select a single provisionally 
winning bid from among the tied bids. The auction bidding system 
assigns a pseudo-random number to each bid when the bid is entered. The 
tied bid with the highest pseudo-random number will become the 
provisionally winning bid. The remaining bidders, as well as the 
provisionally winning bidder, can submit higher bids in subsequent 
rounds. However, if the auction were to end with no other bids being 
placed, the winning bidder would be the one that placed the 
provisionally winning bid. If the license receives any bids in a 
subsequent round, the provisionally winning bid again will be 
determined by the highest bid amount received for the license.
    73. A provisionally winning bid will be retained until there is a 
higher bid on the license at the close of a subsequent round, unless 
the provisionally winning bid is withdrawn (if bid withdrawals are 
permitted in Auction 101). As a reminder, for Auction 101, 
provisionally winning bids count toward activity for purposes of the 
activity rule.
11. Bid Removal and Bid Withdrawal
    74. The FCC auction bidding system allows each bidder to remove any 
of the bids it placed in a round before the close of that round. By 
removing a bid placed within a round, a bidder effectively 
``unsubmits'' the bid. In contrast to the bid withdrawal provisions 
described below, a bidder removing a bid placed in the same round is 
not subject to a withdrawal payment. Once a round closes, a bidder may 
no longer remove a bid.
    75. The Commission seeks comment on whether bid withdrawals should 
be permitted in Auction 101. When permitted in an auction, bid 
withdrawals provide a bidder with the option of withdrawing bids placed 
in prior rounds that have become provisionally winning bids. A bidder 
would be able to withdraw its provisionally winning bids using the 
withdraw function in the FCC auction bidding system. A bidder that 
withdraws its provisionally winning bid(s), if permitted, is subject to 
the bid withdrawal payment provisions of the Commission's rules.
    76. The Commission has recognized that bid withdrawals may be a 
helpful tool for bidders seeking to efficiently aggregate licenses or 
implement backup strategies in certain auctions. The Commission has 
also acknowledged that allowing bid withdrawals may encourage insincere 
bidding or increase opportunities for undesirable strategic bidding in 
certain circumstances.
    77. Applying this reasoning to Auction 101, the Commission proposes 
to allow each bidder to withdraw provisionally winning bids in no more 
than two rounds during the course of the auction. To permit a bidder to 
withdraw bids in more than two rounds may encourage insincere bidding 
or the use of withdrawals for undesirable strategic bidding purposes. 
The two rounds in which a bidder may withdraw provisionally winning 
bids will be at the bidder's discretion, and there is no limit on the 
number of provisionally winning bids that a bidder may withdraw in 
either of the rounds in which it withdraws bids. Withdrawals must be in 
accordance with the Commission's rules, including the bid withdrawal 
payment provisions specified in Section 1.2104(g).
    78. The Commission seeks comment on this proposal. If commenters 
disagree with this proposal, the Commission asks them to support their 
arguments by taking into account the licenses available, the impact on 
auction dynamics and the pricing mechanism, and the effects on the 
bidding strategies of other bidders.

B. Auction 102--24 GHz

1. Clock Auction Design
    79. The Commission proposes to conduct Auction 102 using an 
ascending clock auction design. Under this proposal, the first phase of 
the auction will consist of successive clock bidding rounds in which 
bidders indicate their demands for categories of generic license blocks 
in specific geographic areas, followed by a second phase with bidding 
for frequency-specific license assignments.The Commission also directs 
the Bureau to prepare and release, concurrent with the Auctions 101 and 
102 Comment Public Notice, technical guides that provide the 
mathematical details of the proposed auction design and algorithms for 
the clock and assignment phases of Auction 102. Pursuant to the 
Commission's direction, the Bureau released the Technical Guides on 
Proposed Bidding Procedures for Auction 102 (24 GHz) Public Notice, DA 
18-386, on April 17, 2018, announcing the availability of the Clock 
Phase Technical Guide and Assignment Phase Technical Guide on the 
Commission's website at www.fcc.gov/auction/101-102/. The Clock Phase 
Technical Guide details proposals for the clock phase of Auction 102. 
The Assignment Phase Technical Guide details proposals for the 
assignment phase. The information in the technical guides supplements 
the proposals in the Auctions 101 and 102 Comment Public Notice. For 
bidding in the clock phase, the Commission proposes to establish two 
categories of generic blocks in most PEAs; the first will consist of 
the two blocks between 24.25-24.45 GHz and the second category will 
consist of the five blocks between 24.75-25.25 GHz. In a limited number 
of PEAs, the Commission proposes to include one or more additional 
bidding categories to include any blocks with less than the full 100 
megahertz of spectrum due to relocation of the incumbent licensees.
    80. Consistent with the clock auction design used in the forward 
auction portion of the Broadcast Incentive Auction, Auction 1002, the 
Commission's proposed clock auction format would proceed in a series of 
rounds, with bidding being conducted simultaneously for all spectrum 
blocks available in the auction. During the clock phase, the Bureau 
would announce prices for blocks in each category in each geographic 
area, and qualified bidders would submit quantity bids for the number 
of blocks they seek. Bidding rounds would be open for predetermined 
periods of time, during which bidders would indicate their demands for 
blocks at the clock prices associated with the current round. As in SMR 
auctions, bidders would be subject to activity and eligibility rules 
that govern the pace at which they participate in the auction.
    81. Under the Commission's proposal, in each geographic area, the 
clock price for a license category would increase from round to round 
if bidders indicate total demand that exceeds the number of blocks 
available in the category. The clock rounds would continue until, for 
all categories of blocks in all geographic areas, the number of blocks 
demanded does not exceed the supply of available blocks. At that point, 
those bidders indicating demand for a block in a

[[Page 19670]]

category at the final clock price would be deemed winning bidders.
    82. The Commission expects that using a clock auction format with 
bidding for generic blocks followed by an assignment phase will 
considerably speed up Auction 102 relative to a typical FCC SMR 
auction. The relatively unencumbered nature of the 24 GHz band means 
that the blocks can be treated as largely interchangeable, or generic, 
within a bidding category and a PEA. Bidding for generic blocks in the 
clock phase rather than for multiple frequency-specific licenses 
greatly reduces auction duration since bidders no longer need to 
iteratively bid on the least expensive of several specific but 
substitutable licenses, as in an SMR auction. An assignment phase 
allows winners of generic blocks the opportunity to bid for specific 
frequency assignments. Given the number of licenses being offered in 
Auction 102 and the generic nature of the licenses, the Commission 
believes that the time savings of a clock auction relative to an SMR 
auction will offer significant benefits to bidders and the Commission, 
and enable the 24 GHz band spectrum to be put to effective use more 
quickly. In particular, speeding up the auction will reduce the cost of 
bidder participation, which typically involves internal and external 
staff resources dedicated to auction monitoring and strategy, as well 
as the opportunity costs of foregoing communications and arrangements 
that otherwise would be permitted outside of the ``quiet period'' under 
the Commission's Part 1 rules.
    83. The Commission seeks comment on this proposal and on 
alternative approaches to conducting, in a timely manner, an auction of 
24 GHz licenses.
2. Determining Categories of Generic Blocks for Bidding
    84. The 2017 Spectrum Frontiers Order determined that the 24 GHz 
band would be licensed uniformly in 100 megahertz blocks, with the 
lower segment (24.25-24.45 GHz) licensed as two 100 megahertz blocks, 
and the upper segment (24.75-25.25) as five 100 megahertz blocks, in 
each of 416 PEAs. Given the 300 megahertz separation between the two 
segments of the band, the Commission proposes to conduct bidding in 
most PEAs in the clock phase of Auction 102 for generic blocks in two 
categories. Under this proposal, there will be two generic blocks in 
the lower 24 GHz segment (Category L) and five generic blocks in the 
upper 24 GHz segment (Category U). In nine PEAs, an incumbent licensee 
will be relocated to part of one, and potentially two, 100 megahertz 
blocks, leaving those blocks with less available bandwidth to be 
licensed in the auction. Therefore, the Commission proposes to include 
an additional bidding category, or potentially two additional bidding 
categories, to accommodate any blocks with reduced bandwidth. The 
Commission anticipates that a reduced-bandwidth block will be located 
in the upper block of the lower segment and a possible second reduced 
block will be in the uppermost block of the upper segment. The bidding 
categories for these blocks will be referred to as Category LI and 
Category UI, respectively.
    85. Accordingly, in each round of the clock phase, a bidder will 
have the opportunity to bid for up to two blocks of spectrum in 
Category L and for up to five blocks in Category U, in each of 407 
PEAs. In nine PEAs, bidders may bid for one fewer block in either 
Category L or Category U (and possibly in both categories), and for one 
block in Category LI and/or UI. Bidding in the auction will determine a 
single price for all of the generic blocks in each category in each 
PEA. Winners of generic blocks in the clock phase will then have the 
opportunity to bid for specific frequency license assignments during 
the assignment phase of the auction.
    86. The Commission seeks comment on its proposal to conduct bidding 
in two categories of generic blocks, corresponding to the two segments 
of the band, in the unencumbered PEAs during the clock phase of the 
auction. The Commission also seeks comment on conducting bidding on an 
additional category or categories when a block in a PEA has less than 
100 megahertz of bandwidth. Is there a minimum number of megahertz 
below which the Commission should not offer a block? If there is a 
reduced bandwidth block in the lower segment of the band and another in 
the upper segment of the band, should the Commission include both 
blocks in a single category, instead of its proposal to create a 
separate category for each? Commenters that believe the Commission 
should instead conduct bidding for a single category of generic blocks 
in the unencumbered PEAs, or for more than two categories, should 
explain their reasoning and address issues of auction length and bidder 
manageability.
3. Bidding Rounds
    87. Under this proposal, Auction 102 will consist of sequential 
bidding rounds, each followed by the release of round results. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of bidding.
    88. The Commission will conduct Auction 102 over the internet using 
the FCC auction bidding system. Bidders will also have the option of 
placing bids by telephone through a dedicated auction bidder line. The 
toll-free telephone number for the auction bidder line will be provided 
to qualified bidders prior to the start of bidding in the auction.
    89. The Commission proposes that the Bureau retain the discretion 
to change the bidding schedule in order to foster an auction pace that 
reasonably balances speed with the bidders' need to study round results 
and adjust their bidding strategies. Under this proposal, the Bureau 
may change the amount of time for bidding rounds, the amount of time 
between rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. The Commission seeks comment on this 
proposal. Commenters on this issue should address the role of the 
bidding schedule in managing the pace of the auction, specifically 
discussing the tradeoffs in managing auction pace by bidding schedule 
changes, by changing the activity requirements or bid amount 
parameters, or by using other means.
4. Stopping Rule
    90. The Commission proposes a simultaneous stopping rule for 
Auction 102, under which all categories of licenses in all PEAs would 
remain available for bidding until the bidding stops on every category. 
Specifically, the Commission proposes that the clock phase of bidding 
will close for all categories of blocks after the first round in which 
there is no excess demand in any category in any PEA. Consequently, 
under this approach, it is not possible to determine in advance how 
long Auction 102 would last. The Commission seeks comment on its 
proposed simultaneous stopping rule.
5. Information Relating to Auction Delay, Suspension, or Cancellation
    91. For Auction 102, the Commission proposes that at any time 
before or during the bidding process, the Bureau may delay, suspend, or 
cancel bidding in Auction 102 in the event of a natural disaster, 
technical obstacle, network interruption, 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 will notify participants of 
any such delay, suspension, or cancellation by public notice and/or 
through the FCC auction bidding system's announcement function. If the 
bidding is delayed or

[[Page 19671]]

suspended, the Bureau may, in its sole discretion, 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. The Commission 
emphasizes that the Bureau will exercise this authority solely at its 
discretion. The Commission seeks comment on this proposal.
6. Upfront Payments and Bidding Eligibility
    92. In keeping with the Commission's usual practice in spectrum 
license auctions, the Commission proposes that applicants be required 
to submit upfront payments as a prerequisite to becoming qualified to 
bid. The upfront payment is a refundable deposit made by an applicant 
to establish its eligibility to bid on licenses. Upfront payments that 
are related to the inventory of licenses being auctioned protect 
against frivolous or insincere bidding and provide the Commission with 
a source of funds from which to collect payments owed at the close of 
bidding. With these considerations in mind, the Commission proposes 
upfront payments based on $0.001 per MHz-pop. The results of these 
calculations will be rounded using the Commission's standard rounding 
procedures for auctions. Additionally, the proposed upfront payment 
amount for Gulf of Mexico licenses is $1,000. The proposed upfront 
payments equal approximately half the proposed minimum opening bids. 
The Commission seeks comment on these upfront payment amounts, which 
are specified in Attachment A to the Auctions 101 and 102 Comment 
Public Notice.
    93. The Commission further proposes that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units, which are a measure of bidder eligibility 
and bidding activity. The Commission proposes to assign each PEA a 
specific number of bidding units, equal to one bidding unit per dollar 
of the upfront payment listed in Attachment A to the Auctions 101 and 
102 Comment Public Notice. The number of bidding units for a given PEA 
is fixed and does not change during the auction as prices change. The 
bidding unit amount assigned to a specific PEA will pertain to a single 
generic block for that PEA. To the extent that bidders wish to bid on 
multiple generic blocks simultaneously, they will need to ensure that 
their upfront payment provides enough eligibility to cover multiple 
blocks. Under this proposed approach to calculating bidding units, the 
generic Category L and Category U blocks in a PEA will be assigned the 
same number of bidding units, which will facilitate bidding across 
categories. Any Category LI and Category UI blocks in a PEA will be 
assigned proportionally fewer bidding units than the 100 megahertz 
blocks.
    94. Under the Commission's proposed approach, a bidder's upfront 
payment will not be attributed to blocks in a specific PEA or PEAs. If 
an applicant is found to be qualified to bid on more than one block 
being offered in Auction 102, such bidder may place bids on multiple 
blocks, provided that the total number of bidding units associated with 
those blocks does not exceed its current eligibility. A bidder cannot 
increase its eligibility during the auction; it can only maintain its 
eligibility or decrease its eligibility. Thus, in calculating its 
upfront payment amount and hence its initial bidding eligibility, an 
applicant must determine the maximum number of bidding units on which 
it may wish to bid in any single round, and submit an upfront payment 
amount covering that total number of bidding units. The Commission 
seeks comment on these proposals.
    95. For Auction 102, the Commission anticipates setting a deadline 
for the submission of upfront payments that will occur after bidding in 
Auction 101 concludes even if the Auction 102 auction application 
window is scheduled to occur prior to the close of bidding in Auction 
101. Under this approach, an Auction 102 applicant that participated in 
Auction 101 could take into account the licenses it won in Auction 101 
when determining the amount of its upfront payment. The Commission 
seeks comment on the anticipated timing for upfront payments for 
Auction 102.
7. Activity Rule, Activity Rule Waivers, and Reducing Eligibility
    96. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. For a clock auction, a bidder's activity in a 
round for purposes of the activity rule will be the sum of the bidding 
units associated with the bidder's demands as applied by the auction 
system during bid processing. Bidders are required to be active on a 
specific percentage of their current bidding eligibility during each 
round of the auction. Failure to maintain the requisite activity level 
will result in a reduction in the bidder's eligibility, possibly 
curtailing or eliminating the bidder's ability to place additional bids 
in the auction.
    97. The Commission proposes to require that bidders maintain a 
fixed, high level of activity in each round of Auction 102 in order to 
maintain bidding eligibility. Specifically, the Commission proposes to 
require that bidders be active on between 92 and 97 percent of their 
bidding eligibility in all regular clock rounds. Thus, the activity 
rule would be satisfied when a bidder has bidding activity on blocks 
with bidding units that total 92 to 97 percent of its current 
eligibility in the round. If the activity rule is met, then the 
bidder's eligibility does not change in the next round. The Commission 
proposes to calculate bidding activity based on the bids that are 
accepted by the FCC auction bidding system. That is, if a bidder 
requests a reduction in the quantity of blocks it demands in a 
category, but the FCC auction bidding system does not accept the 
request because demand for the category would fall below the available 
supply, the bidder's activity will reflect its unreduced demand. If the 
activity rule is not met in a round, a bidder's eligibility 
automatically would be reduced. Under the Commission's proposal, the 
Bureau will retain the discretion to change the activity requirements 
during the auction.
    98. The Commission invites comment on this proposal, in particular 
on where to set the activity requirement between 92 and 97 percent. 
Commenters may wish to address the relationship between the proposed 
activity rule and the ability of bidders to switch their demands across 
PEAs or across categories of blocks within a PEA. The Commission 
encourages any commenters that oppose an activity rule in this range to 
explain their reasons with specificity.
    99. The Commission points out that under its proposed clock 
auction, bidders are required to indicate their demands in every round, 
even if their demands at the new round's prices are unchanged from the 
previous round. Missing bids--bids that are not reconfirmed--are 
treated by the auction bidding system as requests to reduce to a 
quantity of zero blocks for the category. If these requests are 
applied, or applied partially, a bidder's bidding activity, and hence 
its bidding eligibility for the next round, will be reduced.
    100. For Auction 102, the Commission does not propose to provide 
for activity rule waivers to preserve a bidder's eligibility. This 
proposal is consistent with the ascending clock auction procedures used 
in Auction 1002. In previous FCC multiple round auctions, when a 
bidder's eligibility in the current round

[[Page 19672]]

was below a required minimum level, the bidder was able to preserve its 
current level of eligibility with a limited number of activity rule 
waivers. The clock auction, however, relies on precisely identifying 
the point at which demand falls to equal supply to determine winning 
bidders and final prices. Allowing waivers would create uncertainty 
with respect to the exact level of bidder demand, interfering with the 
basic clock price-setting and winner determination mechanism. Moreover, 
uncertainty about the level of demand would affect the way bidders' 
requests to reduce demand are processed by the FCC auction bidding 
system, as discussed below. The Commission seeks comment on this 
proposal.
8. Acceptable Bids
a. Reserve Price or Minimum Opening Bids
    101. The Commission seeks comment on the use of a minimum opening 
bid amount and/or reserve price prior to the start of each auction.
    102. The Commission proposes to establish minimum opening bid 
amounts for Auction 102. The bidding system will not accept bids lower 
than these amounts. At the beginning of the clock phase, a bidder will 
indicate how many blocks in a generic license category in a PEA it 
demands at the minimum opening bid price. For Auction 102, the 
Commission proposes to establish initial clock prices, or minimum 
opening bids, as set forth in the following paragraph. The Commission 
does not propose to establish an aggregate reserve price or block 
reserve prices that are different from minimum opening bid amounts for 
the licenses to be offered in Auction 102.
    103. For Auction 102, the Commission proposes to calculate minimum 
opening bid amounts using a formula based on bandwidth and license area 
population, similar to its approach in many previous spectrum auctions. 
Accordingly, blocks with less than the full 100 megahertz of bandwidth 
would have lower minimum opening bid amounts than the other blocks in a 
PEA. The Commission proposes to use a calculation based on $0.002 per 
MHz-pop. Additionally, the minimum opening bid amount for Gulf of 
Mexico licenses is $1,000. The Commission seeks comment on these 
minimum opening bid amounts, which are specified in Attachment A to the 
Auctions 101 and 102 Comment PN. If commenters believe that these 
minimum opening bid amounts will result in unsold licenses, are not 
reasonable amounts, or should instead operate as reserve prices, they 
should explain why this is so and comment on the desirability of an 
alternative approach. Commenters should support their claims with 
valuation analyses and suggested amounts or formulas for reserve prices 
or minimum opening bids.
    104. In establishing minimum opening bid amounts, the Commission 
particularly seeks comment on factors that could reasonably have an 
impact on bidders' valuation of the spectrum, including the type of 
service offered, market size, population covered by the proposed 
facility, and any other relevant factors.
    105. Commenters may also wish to address the general role of 
minimum opening bids in managing the pace of the auction. For example, 
commenters could compare using minimum opening bids--e.g., by setting 
higher minimum opening bids to reduce the number of rounds it takes 
licenses to reach their final prices--to other means of controlling 
auction pace, such as changes to bidding schedules or activity 
requirements.
b. Clock Price Increments
    106. Under the Commission's proposed clock auction format for 
Auction 102, after bidding in the first round and before each 
subsequent round, the FCC auction bidding system will announce a clock 
price for the next round, which is the highest price to which bidders 
can respond during the round. The Commission proposes to set the clock 
price for each category available in each specific PEA for a round by 
adding a fixed percentage increment to the price for the previous 
round. As long as total demand for blocks in a category exceeds the 
supply of blocks, the percentage increment will be added to the clock 
price from the prior round. If demand equaled supply at an intra-round 
bid price in a previous round, then the clock price for the next round 
will be set by adding the percentage increment to the intra-round bid 
price. Final clock prices, however, will not increase above the price 
at which there is no excess demand.
    107. The Commission proposes to apply an increment that is between 
five and fifteen percent and generally to apply the same increment 
percentage to all categories in all PEAs. The Commission proposes to 
set the initial increment within this range, and to adjust the 
increment as rounds continue. The proposed five-to-fifteen percent 
increment range will allow the FCC to set a percentage that manages the 
auction pace, taking into account bidders' needs to evaluate their 
bidding strategies while moving the auction along quickly. The 
Commission also proposes that increments may be changed during the 
auction on a PEA-by-PEA or category-by-category basis based on bidding 
activity to assure that the system can offer appropriate price choices 
to bidders.
c. Intra-Round Bids
    108. The Commission proposes to permit a bidder to make intra-round 
bids by indicating a point between the previous round's price and the 
new clock price at which its demand for blocks in a category changes. 
In placing an intra-round bid, a bidder would indicate a specific price 
and a quantity of blocks it demands if the price for blocks in the 
category should increase beyond that price.
    109. Intra-round bids would be optional; a bidder may choose to 
express its demands only at the clock prices. This proposal to permit 
intra-round bidding would allow the auction system to use relatively 
large clock increments, thereby speeding the clock phase, without 
running the risk that a jump in the clock price will overshoot the 
market clearing price--the point at which demand for blocks equals the 
available supply.
9. Reducing Demand, Bid Types, and Bid Processing
    110. Here the Commission proposes specific bidding procedures for 
the clock phase of Auction 102, and addresses how the FCC auction 
bidding system will process the proposed types of permitted bids. As an 
initial matter, the Commission proposes that the FCC auction bidding 
system not allow a bidder to reduce the quantity of blocks it demands 
in a category if the reduction will result in aggregate demand falling 
below the available supply of blocks in the category.
    111. Under the ascending clock format the Commission proposes for 
Auction 102, a bidder will indicate in each round the quantity of 
blocks in each category in each PEA that it demands at a given price, 
indicating that it is willing to pay up to that price for the specified 
quantity. A bidder can express its demands at the clock price or at an 
intra-round price, and bid quantities can represent an increase or a 
decrease over the bidder's previous demands for blocks in a category.
    112. Under the Commission's proposal, if a bidder demands fewer 
blocks in a category than it did in the previous round, the FCC auction 
bidding system will treat the bid as a request to reduce demand that 
will be

[[Page 19673]]

implemented only if aggregate demand would not fall below the available 
supply of blocks in the category.
    113. The Commission also proposes to process bids in order of price 
point after a round ends, where the price point represents the 
percentage of the bidding interval for the round. For example, if the 
price for the previous round is $5,000 and the new clock price is 
$6,000, a price of $5,100 will correspond to the 10 percent price 
point, since it is 10 percent of the bidding interval between $5,000 
and $6,000. Under this proposal, once a round ends, the FCC auction 
bidding system will process bids in ascending order of price point, 
first considering intra-round bids in order of price point and then 
bids at the clock price. The system will consider bids at the lowest 
price point for all categories in all PEAs, then look at bids at the 
next price point in all areas, and so on. In processing the bids 
submitted in the round, the FCC auction bidding system will determine 
the extent to which there is excess demand for each category in each 
PEA in order to determine whether a bidder's requested change(s) in 
demand can be implemented.
    114. For a given category in a given PEA, the uniform price for all 
of the blocks in the category will stop increasing when aggregate 
demand no longer exceeds the available supply of blocks in the 
category. If no further bids are placed, the final clock phase price 
for the category will be the stopped price.
    115. In order to facilitate bidding for multiple blocks in a PEA, 
the Commission proposes that bidders will be permitted to make two 
types of bids: Simple bids and switch bids.
    116. A ``simple'' bid indicates a desired quantity of licenses in a 
category at a price (either the clock price or an intra-round price). 
Simple bids may be applied partially. A simple bid that involves a 
reduction from the bidder's previous demands may be implemented 
partially if aggregate excess demand is insufficient to support the 
entire reduction. A simple bid to increase a bidder's demands in a 
category may be applied partially if the total number of bidding units 
associated with the bidder's demand exceeds the bidder's bidding 
eligibility for the round.
    117. A ``switch'' bid allows the bidder to request to move its 
demand for a quantity of licenses from the L category to the U 
category, or vice versa, within the same PEA. Switch bids may not 
include a block in Category LI or UI. A switch bid may be applied 
partially, but the increase in demand in the ``to'' category will 
always match in quantity the reduction in the ``from'' category.
    118. The proposed bid types will allow bidders to express their 
demand for blocks in the next clock round without running the risk that 
they will be forced to purchase more spectrum at a higher price than 
they wish. When a bid to reduce demand can be applied only partially, 
the uniform price for the category will stop increasing at that point, 
since the partial application of the bid results in demand falling to 
equal supply. Hence, a bidder that makes a simple bid or a switch bid 
that cannot be fully applied will not face a price for the remaining 
demand that is higher than its bid price.
    119. Because in any given round some bidders may increase demands 
for licenses in a category while others may request reductions, the 
price point at which a bid is considered by the auction bidding system 
can affect whether it is accepted. In addition to proposing that bids 
be considered by the system in order of increasing ``price point,'' the 
Commission further proposes that bids not accepted because of 
insufficient aggregate demand or insufficient eligibility be held in a 
queue and considered, again in order, if there should be excess supply 
or sufficient eligibility later in the processing after other bids are 
processed.
    120. More specifically, under the Commission's proposed procedures, 
once a round closes, the auction system will process the bids by first 
considering the bid submitted at the lowest price point and determine 
whether it can be accepted given aggregate demand as determined most 
recently and given the associated bidder's eligibility. If the bid can 
be accepted, or partially accepted, the number of licenses the bidder 
demands will be adjusted, and aggregate demand will be recalculated 
accordingly. If the bid cannot be accepted in part or in full, the 
unfulfilled bid, or portion thereof, will be held in a queue to be 
considered later during bid processing for that round. The FCC auction 
bidding system will then consider the bid submitted at the next highest 
price point, accepting it in full, in part, or not at all, given 
recalculated aggregate demand and given the associated bidder's 
eligibility. Any unfulfilled requests will again be held in a queue, 
and aggregate demand will again be recalculated. Every time a bid or 
part of a bid is accepted and aggregate demand has been recalculated, 
the unfulfilled bids held in queue will be reconsidered, in the order 
of their original price points (and by pseudo-random number, in the 
case of tied price points). The auction bidding system will not carry 
over unfulfilled bid requests to the next round, however. The bidding 
system will advise bidders of the status of their bids when round 
results are released.
    121. After the bids are processed in each round, the FCC auction 
bidding system will announce new clock prices to indicate a range of 
acceptable bids for the next round. Each bidder will be informed of the 
number of blocks in a category on which it holds bids, the extent of 
excess demand for each category, and, if demand fell to equal supply 
during the round, the intra-round price point at which that occurred.
    122. No Bidding Aggregation. Because of the additional complexity 
such procedures would introduce into the auction, the Commission does 
not propose to incorporate any package bidding procedures into Auction 
102. A bidder may bid on multiple blocks in a PEA and in multiple PEAs. 
As set forth below, the Commission proposes that the assignment phase 
will assign contiguous blocks to winners of multiple blocks in a 
category in a PEA, and give bidders an opportunity to express their 
preferences for specific frequency blocks, thereby facilitating 
aggregations of licenses.
    123. The Commission seeks comment on its proposals regarding 
reducing demand, bid types, and bid processing for Auction 102.
10. Winning Bids in the Clock Phase
    124. Under the Commission's proposed clock auction format for 
Auction 102, bidders that are still expressing demand for a quantity of 
blocks in a category in a PEA at the time the stopping rule is met will 
become the winning bidders, and will be assigned specific frequencies 
in the assignment phase.
11. Bid Removal and Bid Withdrawal
    125. The FCC auction bidding system allows each bidder to remove 
any of the bids it placed in a round before the close of that round. By 
removing a bid placed within a round, a bidder effectively 
``unsubmits'' the bid. Once a round closes, a bidder may no longer 
remove a bid.
    126. Unlike an SMR auction, there are no provisionally winning bids 
in a clock auction. As a result, the concept of bid withdrawals is 
inapplicable to a clock auction. As proposed above, however, bidders in 
Auction 102 may request to reduce demand for generic blocks.
12. Assignment Phase
    127. The Commission proposes procedures to implement the

[[Page 19674]]

assignment phase, for which the Assignment Phase Technical Guide 
provides the mathematical details. Under the Commission's proposal, 
winning bidders from the clock phase that have a preference for 
specific frequencies will have an opportunity to submit sealed bids for 
particular frequency blocks in a separate single assignment round for 
each particular PEA or group of PEAs. The Commission proposes that this 
assignment phase be voluntary: Winning bidders in the clock phase of 
Auction 102 need not participate in order to be assigned a number of 
licenses corresponding to the outcome of the clock phase. Moreover, a 
bidder that wins multiple blocks in a category in a PEA will be 
assigned contiguous blocks of licenses, even without participating in 
the assignment phase. A winner of a block in a category that includes 
only a single block will not need to bid for an assignment in the 
assignment phase. The Commission proposes to group bidding for multiple 
PEAs in some circumstances, so as to reduce the number of separate 
assignment rounds required, and to sequence the bidding for the various 
PEAs.
    128. The Commission seeks comment below on this proposed approach 
to structure bidding and bid processing in each assignment round.
a. Sequencing and Grouping of PEAs
    129. The Commission proposes to sequence assignment rounds so as to 
make it easier for bidders to incorporate frequency assignments from 
previously-assigned areas into their bid preferences for other areas, 
recognizing that bidders winning multiple blocks of licenses generally 
will prefer contiguous blocks across adjacent PEAs. The Commission 
proposes to conduct rounds for the largest markets first to enable 
bidders to establish a ``footprint'' from which to work.
    130. Specifically, the Commission proposes to conduct a separate 
assignment round for each of the top 40 PEAs and to conduct these 
assignment rounds sequentially, beginning with the largest PEAs. Once 
the top 40 PEAs have been assigned, the Commission proposes to conduct, 
for each Regional Economic Area Grouping (REAG), a series of assignment 
rounds for the remaining PEAs within that region. The Commission 
further proposes, where feasible, to group into a single market for 
assignment any non-top 40 PEAs within a region in which the supply of 
blocks is the same in each category, the same bidders won the same 
number of blocks in each category, and all are subject to the small 
markets bidding cap or all not subject to the cap, which will also help 
maximize contiguity across PEAs. The Commission proposes to sequence 
the assignment rounds within a REAG in descending order of population 
for a PEA group or individual PEA. The Commission further proposes, to 
the extent practical, to conduct the bidding for the different REAGs in 
parallel, to reduce the total amount of time required to complete the 
assignment phase.
    131. The Commission seeks comment on these proposals for sequencing 
assignment rounds, and on its proposal to group PEAs for bidding under 
some circumstances within REAGs.
b. Acceptable Bids and Bid Processing
    132. Under the Commission's proposal, in each assignment round, a 
bidder will be asked to assign a price to one or more possible 
frequency assignments for which it wishes to express a preference, 
consistent with its winning bid(s) for generic blocks in the clock 
phase. The price will represent a maximum payment that the bidder is 
willing to pay, in addition to the base price established in the clock 
phase for the generic blocks, for the frequency-specific license or 
licenses in its bid. The Commission proposes that a bidder will submit 
its preferences for blocks it won in the upper and lower segments 
separately, rather than submitting bids for preferences that include 
blocks in both segments. That is, if a bidder won one block in the 
lower segment and two blocks in the upper segment, it would not be able 
to submit a single bid amount for an assignment that included all three 
blocks. Instead, it would submit its bid for an assignment in the lower 
segment separately from its bid or bids for assignments in the upper 
segment.
    133. The Commission proposes to use an optimization approach to 
determine the winning frequency assignment for each category in each 
assignment round. The Commission proposes that the auction system will 
select the assignment that maximizes the sum of bid amounts among all 
assignments that satisfy the contiguity requirements. Furthermore, if 
multiple blocks in Category U in a PEA remain unsold, the unsold 
licenses will be contiguous. The Commission proposes that the 
additional price a bidder will pay for a specific frequency assignment 
(above the base price) will be calculated consistent with a generalized 
``second price'' approach--that is, the winner will pay a price that 
would be just sufficient to result in the bidder receiving that same 
winning frequency assignment while ensuring that no group of bidders is 
willing to pay more for an alternative assignment that satisfies the 
contiguity restrictions. This price will be less than or equal to the 
price the bidder indicated it was willing to pay for the assignment. 
The Commission proposes to determine prices in this way because it 
facilitates bidding strategy for the bidders, encouraging them to bid 
their full value for the assignment, knowing that if the assignment is 
selected, they will pay no more than would be necessary to ensure that 
the outcome is competitive.
    134. The Commission seeks comment on these proposed procedures. In 
particular, the Commission asks whether bidders would find it useful to 
be able to submit a single bid for assignments that include frequencies 
in the lower segment and frequencies in the upper segment, in cases 
where the bidder won blocks in both segments.

VI. Post-Auction Payments

A. Interim Withdrawal Payment Percentage

    135. In the event the Commission allows bid withdrawals in Auction 
101, the Commission proposes the interim bid withdrawal payment be 15 
percent of the withdrawn bid. A bidder that withdraws a bid during an 
auction is subject to a withdrawal payment equal to the difference 
between the amount of the withdrawn bid and the amount of the winning 
bid in the same or a subsequent auction. The withdrawal payment amount 
is deducted from any upfront payments or down payments that the 
withdrawing bidder has deposited with the Commission. No withdrawal 
payment is assessed for a withdrawn bid if either the subsequent 
winning bid or any of the intervening subsequent withdrawn bids equals 
or exceeds that withdrawn bid. However, if a license for which a bid 
had been withdrawn does not receive a subsequent higher bid or winning 
bid in the same auction, the FCC cannot calculate the final withdrawal 
payment until that license receives a higher bid or winning bid in a 
subsequent auction. In such cases, when that final withdrawal payment 
cannot yet be calculated, the FCC imposes on the bidder responsible for 
the withdrawn bid an interim bid withdrawal payment, which will be 
applied toward any final bid withdrawal payment that is ultimately 
assessed.
    136. The amount of the interim bid withdrawal payment is 
established in advance of bidding in each auction and may range from 
three percent to twenty percent of the withdrawn bid amount. The 
Commission has determined that

[[Page 19675]]

the level of the interim withdrawal payment in a particular auction 
will be based on the nature of the service and the inventory of the 
licenses being offered. The Commission noted specifically that a higher 
interim withdrawal payment percentage is warranted to deter the anti-
competitive use of withdrawals when, for example, bidders will not need 
to aggregate the licenses being offered in the auction or when there 
are few synergies to be captured by combining licenses. With respect to 
the flexible-use UMFUS licenses being offered in Auction 101, the 
service rules permit a variety of advanced spectrum-based services, 
some of which may best be offered by combining licenses on adjacent 
frequencies or in adjacent areas. Balancing the potential need for 
bidders to use withdrawals to avoid winning incomplete combinations of 
licenses with the Commission's interest in deterring undesirable 
strategic use of withdrawals, the Commission proposes to establish an 
interim bid withdrawal payment of 15 percent of the withdrawn bid for 
Auction 101. The Commission seeks comment on this proposal.

B. Additional Default Payment Percentage

    137. Any winning bidder that defaults or is disqualified after the 
close of an auction (i.e., fails to remit the required down payment by 
the specified deadline, fails to submit a timely long-form application, 
fails to make full and timely final payment, or is otherwise 
disqualified) is liable for a default payment under Section 
1.2104(g)(2) of the rules. This payment consists of a deficiency 
payment, equal to the difference between the amount of the 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.
    138. The Commission's rules provide that, in advance of each 
auction, it will establish a percentage between three and twenty 
percent of the applicable winning bid to be assessed as an additional 
default payment. As the Commission has indicated, the level of this 
additional payment in each auction will be based on the nature of the 
service and the licenses being offered.
    139. For Auctions 101 and 102, the Commission proposes to establish 
an additional default payment of 15 percent. As noted in the CSEA/Part 
1 Report and Order, 71 FR 6214, February 7, 2006, defaults weaken the 
integrity of the auction process and may impede the deployment of 
service to the public, and an additional default payment of up to 20 
percent will be more effective in deterring defaults than the 3 percent 
used in some earlier auctions. At the same time, the Commission does 
not believe the detrimental effects of any defaults in Auctions 101 and 
102 are likely to be unusually great. In light of these considerations, 
the Commission proposes for Auctions 101 and 102 an additional default 
payment of 15 percent of the relevant bid. The Commission seeks comment 
on this proposal.
    140. In case they are needed for post-auction administrative 
purposes, the bidding system will calculate individual per-license 
prices that are separate from final auction payments, which are 
calculated on an aggregate basis. The bidding system will apportion to 
individual licenses any assignment phase payments and any capped 
bidding credit discounts, since in both cases, a single amount may 
apply to multiple licenses.

VII. Tutorial and Additional Information for Applicants

    141. The Commission intends to provide additional information on 
the bidding system and to offer demonstrations and other educational 
opportunities for applicants in Auctions 101 and 102 to familiarize 
themselves with the FCC auction application system and the auction 
bidding system. For example, the Commission intends to release an 
online tutorial for each auction that will help applicants understand 
the procedures to be followed in the filing of their auction short-form 
applications (FCC Form 175) for Auctions 101 and 102, respectively.

VIII. Procedural Matters

A. Supplemental Initial Regulatory Flexibility Analysis

    142. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Supplemental Initial 
Regulatory Flexibility Analysis (Supplemental IRFA) of the possible 
significant economic impact on small entities of the policies and rules 
addressed in the Auctions 101 and 102 Comment Public Notice to 
supplement the Commission's Initial and Final Regulatory Flexibility 
Analyses completed in the Spectrum Frontiers Orders and other 
Commission orders pursuant to which Auctions 101 and 102 will be 
conducted. Written public comments are requested on this Supplemental 
IRFA. Comments must be identified as responses to the Supplemental IRFA 
and must be filed by the same deadline for comments specified on the 
first page of the Auctions 101 and 102 Comment Public Notice. The 
Commission will send a copy of the Auctions 101 and 102 Comment Public 
Notice, including this Supplemental IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).
1. Need for, and Objectives of, the Proposed Rules
    143. The Auctions 101 and 102 Comment Public Notice seeks comment 
on proposed procedural rules to govern Auctions 101 and 102, two 
auctions of 5,986 Upper Microwave Flexible Use Service (UMFUS) 
licenses. This process is intended to provide notice of and adequate 
time for potential applicants to comment on proposed auction 
procedures. To promote the efficient and fair administration of the 
competitive bidding process for all Auction 101 and Auction 102 
participants, the Commission seeks comment on the following proposed 
procedures: (1) Use of separate application and bidding processes for 
Auctions 101 and 102, including separate application filing windows; 
(2) application of the current rules prohibiting certain communications 
among applicants in the same auction (i.e., Auction 101 or Auction 
102), and between Auction 101 applicants and Auction 102 applicants; 
(3) identification of ``nationwide providers'' for the purpose of 
implementing the Commission's competitive bidding rules in Auctions 101 
and 102; (4) establishment of bidding credit caps for eligible small 
businesses and rural service providers in Auctions 101 and 102; (5) use 
of a simultaneous multiple-round auction format for Auction 101, 
consisting of sequential bidding rounds with a simultaneous stopping 
rule (with discretion by the Bureau to exercise alternative stopping 
rules under certain circumstances); (6) use of a clock auction format 
for Auction 102 under which each qualified bidder will indicate in 
successive clock bidding rounds its demands for categories of generic 
blocks in specific geographic areas; (7) a specific minimum opening bid 
amount for each license available in Auction 101 and for generic blocks 
in each PEA available in Auction 102; (8) a specific upfront payment 
amount for each license available in Auction 101 and for generic blocks 
in each PEA available in Auction 102; (9) establishment of a bidder's 
initial bidding eligibility in bidding units based on that bidder's 
upfront payment through assignment of a specific number of bidding 
units for each license

[[Page 19676]]

(Auction 101) or generic block (Auction 102); (10) use of an activity 
rule that would require bidders to bid actively during the auction 
rather than waiting until late in the auction before participating; 
(11) for Auction 101, a two-stage auction in which a bidder is required 
to be active on 80 percent of its bidding eligibility in each round of 
the first stage, and on 95 percent of its bidding eligibility in each 
round of the second stage; (12) for Auction 102, a requirement that 
bidders be active on between 92 and 97 percent of their bidding 
eligibility in all regular clock rounds; (13) for Auction 101, 
provision of three activity rule waivers for each bidder to allow it to 
preserve eligibility during the course of the auction; (14) for Auction 
101, use of minimum acceptable bid amounts and additional bid 
increments, along with a proposed methodology for calculating such 
amounts, with the Bureau retaining discretion to change its methodology 
if circumstances dictate; (15) for Auction 102, establishment of 
acceptable bid amounts, including clock price increments and intra-
round bids, along with a proposed methodology for calculating such 
amounts; (16) for Auction 102, use of two bid types, along with a 
proposed methodology for processing bids and requests to reduce demand; 
(17) for Auction 101, a procedure for breaking ties if identical high 
bid amounts are submitted on a license in a given round; (18) bid 
removal procedures; (19) whether to permit bid withdrawals; (20) for 
Auction 102, establishment of an assignment phase that will determine 
which frequency-specific licenses will be won by the winning bidders of 
generic blocks during the clock phase; (21) establishment of an interim 
bid withdrawal percentage of 15 percent of the withdrawn bid in the 
event the Commission allows bid withdrawals in Auction 101; and (22) 
establishment of an additional default payment of 15 percent under 
Section 1.2104(g)(2) of the rules in the event that a winning bidder 
defaults or is disqualified after either auction.
2. Legal Basis
    144. The Commission's statutory obligations to small businesses 
under the Communications Act of 1934, as amended, are found in Sections 
309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the Commission's 
competitive bidding rules is found in various provisions of the 
Communications Act of 1934, as amended, including 47 U.S.C. 154(i), 
301, 302, 303(e), 303(f), 303(r), 304, 307, and 309(j). The Commission 
has established a framework of competitive bidding rules, updated most 
recently in 2015, pursuant to which it has conducted auctions since the 
inception of the auction program in 1994 and would conduct Auctions 101 
and 102. In promulgating those rules, the Commission conducted numerous 
RFA analyses to consider the possible impact of those rules on small 
businesses that might seek to participate in Commission auctions. In 
addition, multiple Final Regulatory Flexibility Analyses (FRFAs) were 
included in the rulemaking orders which adopted or amended rule 
provisions relevant to the Auctions 101 and 102 Comment Public Notice.
3. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply
    145. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and policies, if adopted. The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small business concern'' under the 
Small Business Act. A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    146. As noted above, FRFAs were incorporated into the Spectrum 
Frontiers Orders. In those analyses, the Commission described in detail 
the small entities that might be significantly affected. In the 
Auctions 101 and 102 Comment Public Notice, the Commission incorporates 
by reference the descriptions and estimates of the number of small 
entities from the previous FRFAs in the Spectrum Frontiers Orders.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    147. The Commission designed the auction application process itself 
to minimize reporting and compliance requirements for applicants, 
including small business applicants. In the first part of the 
Commission's two-phased auction application process, parties desiring 
to participate in an auction file streamlined, short-form applications 
in which they certify under penalty of perjury as to their 
qualifications. Eligibility to participate in bidding is based on an 
applicant's short-form application and certifications, as well as its 
upfront payment. In the second phase of the process, winning bidders 
file a more comprehensive long-form application. Thus, an applicant 
which fails to become a winning bidder does not need to file a long-
form application and provide the additional showings and more detailed 
demonstrations required of a winning bidder.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    148. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): (1) The establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.
    149. The Commission has taken steps to minimize any economic impact 
of its auction procedures on small businesses through among other 
things, the many resources it provides potential auction participants. 
Small entities and other auction participants may seek clarification of 
or guidance on complying with competitive bidding rules and procedures, 
reporting requirements, and the FCC's auction bidding system. An FCC 
Auctions Hotline provides access to Commission staff for information 
about the auction process and procedures. The FCC Auctions Technical 
Support Hotline is another resource which provides technical assistance 
to applicants, including small business entities, on issues such as 
access to or navigation within the electronic FCC Form 175 and use of 
the FCC's auction bidding system. Small entities may also utilize the 
web-based, interactive online tutorial produced by Commission staff for 
each auction to familiarize themselves with auction procedures, filing 
requirements, bidding procedures, and other matters related to an 
auction.
    150. The Commission also makes various databases and other sources 
of information, including the Auctions program websites, and copies of 
Commission decisions, available to the public without charge, providing 
a low-cost mechanism for small businesses to conduct research prior to 
and

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throughout the auction. Prior to and at the close of Auctions 101 and 
102, the Commission will post public notices on the Auctions website, 
which articulate the procedures and deadlines for the respective 
auctions. The Commission makes this information easily accessible and 
without charge to benefit all Auction 101 and Auction 102 applicants, 
including small businesses, thereby lowering their administrative costs 
to comply with the Commission's competitive bidding rules.
    151. Prior to the start of bidding in each auction, eligible 
bidders are given an opportunity to become familiar with auction 
procedures and the bidding system by participating in a mock auction. 
Further, the Commission intends to conduct Auctions 101 and 102 
electronically over the internet using its web-based auction system 
that eliminates the need for bidders to be physically present in a 
specific location. Qualified bidders also have the option to place bids 
by telephone. These mechanisms are made available to facilitate 
participation in Auction 101 and Auction 102 by all eligible bidders, 
and may result in significant cost savings for small business entities 
who utilize these alternatives. Moreover, the adoption of bidding 
procedures in advance of the auctions, consistent with statutory 
directive, is designed to ensure that the auctions will be administered 
predictably and fairly for all participants, including small 
businesses.
    152. For Auction 101 and Auction 102, the Commission proposes a $25 
million cap on the total amount of bidding credits that may be awarded 
to an eligible small business and a $10 million cap on the total amount 
of bidding credits that may be awarded to a rural service provider in 
each auction. In addition, the Commission proposes a $10 million cap on 
the overall amount of bidding credits that any winning small business 
bidder in either auction may apply to winning licenses in markets with 
a population of 500,000 or less. Based on the technical characteristics 
of the UMFUS bands and its analysis of past auction data, the 
Commission anticipates that its proposed caps will allow the majority 
of small businesses in each auction to take full advantage of the 
bidding credit program, thereby lowering the relative costs of 
participation for small businesses.
    153. These proposed procedures for the conduct of Auctions 101 and 
102 constitute the more specific implementation of the competitive 
bidding rules contemplated by Parts 1 and 30 of the Commission's rules 
and the underlying rulemaking orders, including the Spectrum Frontiers 
Orders and relevant competitive bidding orders, and are fully 
consistent therewith.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    154. None.

B. Ex Parte Rules

    155. This proceeding has been designated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making oral ex parte presentations must file a copy of 
any written presentations or memoranda summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine Period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to the Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2018-09415 Filed 5-3-18; 8:45 am]
 BILLING CODE 6712-01-P