Auction of AM and FM Broadcast Construction Permits Scheduled for July 27, 2021; Comment Sought on Competitive Bidding Procedures for Auction 109, 12556-12563 [2021-04033]
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Federal Register / Vol. 86, No. 41 / Thursday, March 4, 2021 / Proposed Rules
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Authority: 42 U.S.C. 7401 et seq.
Dated: February 23, 2021.
John Blevins,
Acting Regional Administrator, Region 4.
[FR Doc. 2021–04060 Filed 3–3–21; 8:45 am]
BILLING CODE 6560–50–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Parts 1 and 73
[AU Docket No. 21–39; DA 21–131; FR ID
17492]
Auction of AM and FM Broadcast
Construction Permits Scheduled for
July 27, 2021; Comment Sought on
Competitive Bidding Procedures for
Auction 109
FOR FURTHER INFORMATION CONTACT:
Federal Communications
Commission.
ACTION: Proposed rule; proposed auction
procedures.
AGENCY:
The Office of Economics and
Analytics (OEA), in conjunction with
the Media Bureau (MB), announces an
auction of certain AM and FM broadcast
construction permits. This document
seeks comment on minimum opening
bid amounts and the procedures to be
used in Auction 109.
DATES: Comments are due on or before
March 15, 2021, and reply comments
are due on or before March 22, 2021.
Bidding in this auction is scheduled to
begin July 27, 2021.
ADDRESSES: Interested parties may file
comments or reply comments in AU
Docket No. 21–39. Comments may be
filed using the Commission’s Electronic
Comment Filing System (ECFS) or by
filing paper copies. All filings in
response to the Auction 109 Comment
Public Notice must refer to AU Docket
No. 21–39. The Commission strongly
encourages interested parties to file
comments electronically.
• Electronic Filers: Comments may be
filed electronically using the internet by
accessing the ECFS at https://
www.fcc.gov/ecfs/. Follow the
instructions for submitting comments.
• Paper Filers: Parties who choose to
file by paper must file an original and
one copy of each filing.
• Filings in response to the Auction
109 Comment Public Notice can be sent
by commercial courier or by the U.S.
Postal Service. All filings must be
addressed to the Commission’s
Secretary, Office of the Secretary,
Federal Communications Commission.
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SUMMARY:
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Auction legal questions: Lynne Milne
or Lyndsey Grunewald at 202–418–
0660.
General auction questions: Auctions
Hotline at 717–338–2868.
AM/FM service questions: James
Bradshaw or Lisa Scanlan or Tom
Nessinger at (202) 418–2700.
SUPPLEMENTARY INFORMATION: This is a
summary of the Auction 109 Comment
Public Notice, AU Docket No. 21–39,
DA 21–131, released on February 8,
2021. The complete text of the Auction
109 Comment Public Notice, including
its attachment, is available on the
Commission’s website at www.fcc.gov/
auction/109 or by using the search
function for AU Docket No. 21–39 on
the Commission’s ECFS web page at
www.fcc.gov/ecfs. Alternative formats
are available to persons with disabilities
by sending an email to FCC504@fcc.gov
or by calling the Consumer &
Governmental Affairs Bureau at (202)
418–0530 (voice), (202) 418–0432
(TTY).
I. Introduction
1. By the Auction 109 Comment
Public Notice, the Commission
announces an auction of four AM
construction permits and 136 FM
construction permits, with bidding to
start on July 27, 2021, and seeks
comment on the procedures to be used
to conduct Auction 109, as well as upon
minimum opening bids for the permits.
2. Auction 109 will offer all of the FM
radio permits that were previously
included in the inventory for Auction
106, as well as six additional FM
permits. Auction 106 was postponed on
March 25, 2020, with no appointed date
for resumption, due to the Covid–19
pandemic. That auction is now
canceled; applications submitted by
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entities seeking to participate in
Auction 106 have been dismissed. All
applicants wishing to participate in
Auction 109, regardless of whether they
may have previously filed a short-form
application (FCC Form 175) for Auction
106, will be required to file a new shortform application to participate in
Auction 109. A window for filing shortform applications to participate in
Auction 109 will be announced in a
subsequent public notice in this
proceeding.
II. Construction Permits
3. Auction 109 will offer four AM
construction permits and 136 FM
construction permits. Attachment A to
the Auction 109 Comment Public Notice
lists each permit to be offered. Under
the policies established in the Broadcast
Competitive Bidding Order, 63 FR
48615, September 11, 1998, an applicant
may apply for any AM construction
permit or vacant FM allotment listed in
Attachment A to the Auction 109
Comment Public Notice. If two or more
short-form applications (FCC Form 175)
specify the same AM permit or FM
allotment, they will be considered
mutually exclusive, mutual exclusivity
exists for auction purposes, and the
construction permit will be awarded by
competitive bidding procedures. Once
mutual exclusivity exists for auction
purposes, even if only one applicant is
qualified to bid for a particular
construction permit in Auction 109, that
applicant is required to submit a bid in
order to obtain the construction permit.
4. AM Construction Permits. Auction
109 will offer four construction permits
in the AM broadcast service.
Attachment A to the Auction 109
Comment Public Notice lists the
community of license, channel, class,
and coordinates for each AM permit
being offered.
5. The construction permits to be
auction are for four previously licensed
AM stations, listed in Attachment A to
the Auction 109 Comment Public
Notice, the license renewals of which
were dismissed with prejudice in a
hearing before the Commission’s
Administrative Law Judge and the call
signs deleted.
6. To facilitate the auction of the four
AM permits, the four AM facilities will
be treated as existing allotments, using
the coordinates, AM station frequency
and class, and community of license of
the respective AM facility as listed in
Attachment A to the Auction 109
Comment Public Notice. The Media
Bureau has protected these four AM
stations by freezing the filing of any
minor modification applications that
would be mutually exclusive with the
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facilities of the four AM stations.
Because protections extend to the
previously licensed facility parameters,
applicants will be limited in their
opportunities to modify these AM
permits.
7. FM Construction Permits. Auction
109 will also offer 136 construction
permits in the FM broadcast service.
The construction permits to be
auctioned include all of the 130 FM
allotments that had previously been
listed in the inventory for Auction 106
as well as six additional FM allotments.
The FM allotments offered in Auction
109 include 34 construction permits
that were offered but not sold or were
defaulted upon in prior auctions.
Attachment A identifies those
previously offered permits and the
auctions in which they were offered.
8. Attachment A to the Auction 109
Comment Public Notice lists the specific
vacant FM allotments for which the
Commission will offer construction
permits in this auction, along with the
reference coordinates for each vacant
FM allotment. These comprise FM
channels added to the Table of FM
Allotments, 47 CFR 73.202(b), pursuant
to the Commission’s established
rulemaking procedures and assigned at
the indicated communities.
9. Each applicant in the FM service
has the opportunity to submit a set of
preferred site coordinates as an
alternative to the reference coordinates
for the vacant FM allotment upon which
the applicant intends to bid. A future
public notice announcing the
procedures for Auction 109 will provide
guidelines for completing FCC Form 175
and exhibits, including detailed
instructions for specifying preferred site
coordinates.
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III. Proposed Bidding Procedures
10. Simultaneous Multiple-Round
Auction Design. OEA and MB propose
to use the Commission’s simultaneous
multiple-round auction format for
Auction 109. As described further
below, this type of auction offers every
construction permit for bid at the same
time and consists of successive bidding
rounds in which qualified bidders may
place bids on individual construction
permits. Typically, bidding remains
open on all construction permits until
bidding stops on every construction
permit. OEA and MB invite comment on
this proposal.
11. Bidding Rounds. The Commission
will conduct Auction 109 over the
internet using the FCC auction bidding
system. A bidder will also have the
option of placing bids by telephone
through a dedicated auction bidder line.
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12. Under this proposal, Auction 109
will consist of sequential bidding
rounds, each of which would be
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.
13. OEA and MB propose that the
initial bidding schedule may be
adjusted 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, such
changes may include the amount of time
for the bidding rounds, the amount of
time between rounds, or the number of
rounds per day, depending upon
bidding activity and other factors. OEA
and MB request 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 requirement(s) or bid
amount parameters, or by using other
means.
14. Stopping Rule. In accordance with
47 CFR 1.2104(e), stopping rules are
established before or during multiple
round auctions in order to complete the
auction within a reasonable time. For
Auction 109, OEA and MB propose to
employ a simultaneous stopping rule
approach, which means all construction
permits remain available for bidding
until bidding stops on every
construction permit. Specifically,
bidding will close on all construction
permits after the first round in which no
bidder submits any new bid, applies a
proactive activity rule waiver, or
withdraws any provisionally winning
bid (if bid withdrawals are permitted in
this auction). Thus, under the proposed
simultaneous stopping rule, bidding
would remain open on all construction
permits until bidding stops on every
construction permit. Consequently,
under this approach, it is not possible
to determine in advance how long the
bidding in this auction will last.
15. Further, OEA and MB propose to
retain the discretion to exercise any of
the following stopping options during
Auction 109: (1) The auction would
close for all construction permits after
the first round in which no bidder
applies a waiver, no bidder withdraws
a provisionally winning bid (if
withdrawals are permitted in this
auction), or no bidder places any new
bid on a construction permit for which
it is not the provisionally winning
bidder. Absent any other bidding
activity, a bidder placing a new bid on
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a construction permit for which it is the
provisionally winning bidder would not
keep the auction open under this
modified stopping rule. (2) The auction
would close for all construction permits
after the first round in which no bidder
applies a waiver, no bidder withdraws
a provisionally winning bid (if
withdrawals are permitted in this
auction), or no bidder places any new
bid on a construction permit that
already has a provisionally winning bid.
Absent any other bidding activity, a
bidder placing a new bid on an FCCheld construction permit (a construction
permit that does not already 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 (1) and (2) above. (4) The
auction would close after a specified
number of additional rounds (special
stopping rule) to be announced in
advance in the FCC auction bidding
system. If this special stopping rule is
invoked, bids will be accepted in the
specified final round(s), after which the
auction will close. (5) The auction
would remain open even if no bidder
places any new bid, applies a waiver, or
withdraws any provisionally winning
bid (if withdrawals are permitted in this
auction). 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 either lose bidding
eligibility or use a waiver.
16. OEA and MB propose to 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, OEA and MB will likely
attempt to change the pace of the
auction by changing the number of
bidding rounds per day or the minimum
acceptable bids, for example. OEA and
MB propose to retain the discretion to
exercise any of these options with or
without prior announcement during the
auction. OEA and MB request comment
on these proposals. Commenters should
provide specific reasons for supporting
or objecting to these proposals.
17. Auction Delay, Suspension, or
Cancellation. Pursuant to 47 CFR
1.2104(i), OEA and MB may delay,
suspend, or cancel bidding in the
auction, at any time before or during the
bidding process of Auction 109, in the
event of a natural disaster, technical
obstacle, network interruption,
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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. Notification of any such delay,
suspension, or cancellation will be
provided by public notice or through
the FCC auction bidding system’s
messages function. If bidding is delayed
or suspended, the auction may resume
starting from the beginning of the
current round or from some previous
round, or the auction may be cancelled
in its entirety. This authority will be
exercised solely at the discretion of OEA
and MB, and not as a substitute for
situations in which bidders may wish to
apply activity rule waivers. OEA and
MB seek comment on this proposal.
18. Upfront Payments and Bidding
Eligibility. In keeping with the usual
practice in spectrum auctions, OEA and
MB propose that applicants be required
to submit upfront payments in
accordance with 47 CFR 1.2106 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 construction
permits. Upfront payments that are
related to the specific construction
permits being auctioned protect against
frivolous or insincere bidding and
provide the Commission with a source
of funds from which to collect payments
owed at the close of the bidding. As
required by 47 CFR 1.2106(a), a former
defaulter must submit an upfront
payment equal to 50 percent more than
the amount that would otherwise be
required.
19. OEA and MB seek comment on an
appropriate upfront payment for each
construction permit being auctioned,
taking into account such factors as the
efficiency of the auction process and the
potential value of similar construction
permits. With these considerations in
mind, upfront payments are specified in
Attachment A to the Auction 109
Comment Public Notice. OEA and MB
seek comment on those proposed
upfront payment amounts.
20. It is proposed also 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. OEA and MB propose
to assign each construction permit a
specific number of bidding units, equal
to one bidding unit per dollar of the
upfront payment amount listed in
Attachment A to the Auction 109
Comment Public Notice. The number of
bidding units for a given construction
permit is fixed and does not change
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during the auction as prices change. If
an applicant is found to be qualified to
bid on more than one permit being
offered in Auction 109, such bidder may
place bids on multiple construction
permits, provided that the total number
of bidding units associated with those
construction permits does not exceed
that bidder’s current eligibility. A
bidder cannot increase its eligibility
during the auction; it can only maintain
its eligibility or decrease its eligibility.
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. OEA and MB
request comment on these proposals.
21. Any applicant that submits a
short-form application, but fails to
timely submit an upfront payment, will
retain its status as an applicant in
Auction 109 and will remain subject to
the rules prohibiting certain
communications but, having purchased
no bidding eligibility, will not be
eligible to bid. An applicant that fails to
become a qualified bidder for any other
reason also will retain its status as an
Auction 109 applicant and will remain
subject to the rules prohibiting certain
communications.
22. Activity Rule. 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
purposes of the activity rule, the FCC
auction bidding system calculates a
bidder’s activity in a round as the sum
of the bidding units associated with any
construction permits upon which it
places bids during the current round
and the bidding units associated with
any construction permits for which it
holds provisionally winning bids. See
47 CFR 1.2104(f). Bidders are required
to be active on a specific percentage of
their current bidding eligibility during
each round of the auction. OEA and MB
propose a single-stage auction with the
following activity requirement: In each
bidding round, a bidder desiring to
maintain its current bidding eligibility
is required to be active on 100% of its
bidding eligibility. Thus, the activity
requirement would be satisfied when a
bidder has bidding activity on
construction permits with bidding units
that total 100% 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. Failure to
maintain the requisite activity level will
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result in the use of an activity rule
waiver, if any remain, or a reduction in
the bidder’s eligibility for the next
round of bidding, possibly curtailing or
eliminating the bidder’s ability to place
additional bids in the auction. OEA and
MB seek comment on these activity
requirements. Commenters that oppose
a 100% activity requirement should
explain their reasons with specificity.
23. Activity Rule Waivers and
Reducing Eligibility. Pursuant to the
proposed simultaneous multiple round
auction format, 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 construction permit.
Activity rule waivers can be either
proactive or automatic. Activity rule
waivers are primarily 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.
24. 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 waiver
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.
25. 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.
26. Under the proposed simultaneous
stopping rule, a bidder would be
permitted to apply an activity rule
waiver proactively as a means to keep
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the auction open without placing a bid.
If a bidder proactively applies an
activity rule waiver (using the proactive
waiver function in the FCC auction
bidding system) during a bidding round
in which no bid is placed or withdrawn
(if bid withdrawals are permitted in this
auction), 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 this auction), or no
proactive waiver would not keep the
auction open.
27. Consistent with prior Commission
auctions of broadcast construction
permits, OEA and MB propose that each
bidder in Auction 109 be provided with
three activity rule waivers that may be
used as set forth above at the bidder’s
discretion during the course of the
auction. Comment is sought on this
proposal of three activity rule waivers.
28. Reserve Price or Minimum
Opening Bids. Pursuant to 47 U.S.C.
309(j)(4)(F) and 47 CFR 1.2104(c), (d),
OEA and MB seek comment on the use
of a minimum opening bid amount and
a reserve price prior to the start of
bidding in this auction. Normally, a
reserve price is an absolute minimum
price below which a construction
permit or license will not be sold in a
given auction. A minimum opening bid,
on the other hand, is the minimum bid
price set at the beginning of the auction
below which no bids are accepted. It is
generally used to accelerate the
competitive bidding process.
29. OEA and MB propose not to
establish separate reserve prices for the
construction permits offered in this
auction. OEA and MB propose to
establish minimum opening bid
amounts for Auction 109. Based on
experience in past broadcast auctions,
setting a minimum opening bid amount
judiciously is an effective bidding tool
for accelerating the competitive bidding
process.
30. For Auction 109, proposed
minimum opening bid amounts were
determined by taking into account the
type of service and class of facility
offered, market size, population covered
by the proposed broadcast facility, and
recent broadcast transaction data, to the
extent such information is available.
Attachment A to the Auction 109
Comment Public Notice lists a proposed
minimum opening bid amount for each
construction permit available in
Auction 109. OEA and MB seek
comment on the minimum opening bid
amounts specified in Attachment A to
the Auction 109 Comment Public
Notice.
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31. If commenters believe that these
minimum opening bid amounts will
result in unsold construction permits,
are not reasonable amounts at which to
start bidding, 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. In establishing the minimum
opening bid amounts, OEA and MB seek
comment particularly on factors that
could reasonably have an impact on
bidders’ valuation of the broadcast
spectrum, including the type of service
and class of facility offered, market size,
population covered by the proposed AM
or FM broadcast facility and any other
relevant factors. Commenters also may
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 for
construction permits to reach their final
prices—to other means of controlling
auction pace, such as changes to
bidding schedules, percentage
increments, or activity requirements.
32. Bid Amounts. OEA and MB
propose that if a qualified bidder has
sufficient eligibility to place a bid on a
particular construction permit, in each
round, the bidder will be able to place
a bid on the given construction permit
in any of up to nine different amounts:
The minimum acceptable bid amount or
one of the additional bid amounts.
33. Minimum Acceptable Bid
Amounts. The first of the acceptable bid
amounts is called the minimum
acceptable bid amount. The minimum
acceptable bid amount for a
construction permit will be equal to its
minimum opening bid amount until
there is a provisionally winning bid for
the construction permit. Once there is a
provisionally winning bid for a
construction permit, the minimum
acceptable bid amount for that
construction permit will be equal to the
amount of the provisionally winning bid
plus a specified percentage of that bid
amount. The percentage used for this
calculation, the minimum acceptable
bid increment percentage, is multiplied
by the provisionally winning bid
amount, and the resulting amount is
added to the provisionally winning bid
amount. If, for example, the minimum
acceptable bid increment percentage is
10%, then the provisionally winning
bid amount is multiplied by 10%. The
result of that calculation is added to the
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provisionally winning bid amount, and
that sum is rounded using the
Commission’s standard rounding
procedure for auctions as described in
the public notice. If bid withdrawals are
permitted in this auction, in the case of
a construction permit for which the
provisionally winning bid has been
withdrawn, the minimum acceptable
bid amount will equal the second
highest bid received for the construction
permit.
34. Additional Bid Amounts. Under
this proposal, the FCC auction bidding
system will calculate the eight
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. The result then
will be rounded using the Commission’s
standard rounding procedures for
auctions as described in the public
notice. That result 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. If, for example, the
additional bid increment percentage is
5%, then the calculation of the
additional increment amount would be
(minimum acceptable bid amount) *
(0.05), rounded. The first additional
acceptable bid amount equals
(minimum acceptable bid amount) +
(additional increment amount); the
second additional acceptable bid
amount equals (minimum acceptable
bid amount) + (2*(additional increment
amount)); the third additional
acceptable bid amount equals
(minimum acceptable bid amount) +
(3*(additional increment amount)); etc.
35. For Auction 109, a minimum
acceptable bid increment percentage of
10% is proposed. This means that the
minimum acceptable bid amount for a
construction permit will be
approximately 10% greater than the
provisionally winning bid amount for
the construction permit. To calculate
the additional acceptable bid amounts,
a bid increment percentage of 5% is
proposed. OEA and MB request
comment on these proposals.
36. Bid Amount Changes. Consistent
with past practice, OEA and MB
propose to retain the discretion to
change the minimum acceptable bid
amounts, the minimum acceptable bid
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percentage, the additional bid increment
percentage, and the number of
acceptable bid amounts if circumstances
so dictate. See 47 CFR 1.2104(d). OEA
and MB propose to retain the discretion
to do so on a construction permit-byconstruction permit basis. OEA and MB
propose also to retain the discretion to
limit (a) the amount by which a
minimum acceptable bid for a
construction permit 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, a $1,000 limit
could be set on increases in minimum
acceptable bid amounts over
provisionally winning bids. In this
example, if calculating a minimum
acceptable bid using the minimum
acceptable bid increment percentage
results in a minimum acceptable bid
amount that is $1,200 higher than the
provisionally winning bid on a
construction permit, the minimum
acceptable bid amount would instead be
capped at $1,000 above the
provisionally winning bid. OEA and MB
also seek comment on the circumstances
under which such a limit should be
employed, factors to consider when
determining the dollar amount of the
limit, and the tradeoffs in setting such
a limit or changing other parameters,
such as changing the minimum
acceptable bid percentage, the bid
increment percentage, or the number of
acceptable bid amounts. Bidders would
be notified by announcement in the FCC
auction bidding system during the
auction if this discretion is exercised.
37. OEA and MB seek comment on
these proposals. If commenters disagree
with the proposal to begin the auction
with nine acceptable bid amounts per
construction permit, they should
suggest an alternative number of
acceptable bid amounts to use.
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 requirement, bid
amounts, or by using other means.
38. Provisionally Winning Bids. The
FCC auction bidding system will
determine provisionally winning bids
consistent with practice in past
auctions. At the end of a bidding round,
the bidding system will determine a
provisionally winning bid for each
construction permit based on the
highest bid amount received for that
permit. The FCC auction bidding system
will advise bidders of the status of their
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bids when round results are released. A
provisionally winning bid will remain
the provisionally winning bid until
there is a higher bid on the same
construction permit at the close of a
subsequent round, unless the
provisionally winning bid is withdrawn
(if bid withdrawals are permitted in this
auction). Provisionally winning bids at
the end of the auction become the
winning bids. As a reminder,
provisionally winning bids count
toward activity for purposes of the
activity rule.
39. The FCC auction bidding system
assigns a pseudo-random number
generated by an algorithm to each bid
when the bid is entered. If identical
high bid amounts are submitted on a
construction permit 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 tied bid with the
highest pseudo-random number wins
the tiebreaker and becomes 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 construction permit receives any
bids in a subsequent round, the
provisionally winning bid again will be
determined by the highest bid amount
received for the construction permit.
40. Bid Removal. 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. Consistent
with the design of the bidding system,
bidders in Auction 109 would be
permitted to remove bids placed in a
round before the close of that round.
41. Bid Withdrawal. OEA and MB
propose not to permit bidders in
Auction 109 to withdraw bids. 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
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bid(s), if permitted, is subject to the bid
withdrawal payment provisions of 47
CFR 1.2104(g), 1.2109.
42. 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
increased opportunities for undesirable
strategic bidding in certain
circumstances. The Commission stated
that this discretion should be exercised
assertively, with consideration of
limiting the number of rounds in which
bidders may withdraw bids and
preventing bidders from bidding on a
particular market if a bidder is abusing
the Commission’s bid withdrawal
procedures. In managing the auction,
therefore, OEA and MB have discretion
to limit the number of withdrawals to
prevent bidding abuses.
43. Based on this guidance and on
experience with past auctions of
broadcast construction permits, the
public notice proposes to prohibit
bidders from withdrawing any bid after
the close of the round in which that bid
was placed. In light of the site-specific
nature and wide geographic dispersion
of the permits available in this auction,
which suggests that potential applicants
for this auction may have fewer
incentives to aggregate permits through
the auction process (as compared with
bidders in many auctions of wireless
licenses), it is unlikely that bidders will
have a need to withdraw bids in this
auction. Further, bid withdrawals,
particularly if they were made late in
this auction, could result in delays in
licensing new broadcast stations and
attendant delays in the offering of new
broadcast service to the public. OEA
and MB seek comment on this proposal
to prohibit bid withdrawals in Auction
109. Commenters advocating alternative
approaches should support their
arguments by taking into account the
construction permits offered, the impact
of auction dynamics and the pricing
mechanism, and the effects on the
bidding strategies of other bidders.
44. Post Auction Payment: Interim
Withdrawal Payment Percentage. In the
event bid withdrawals are permitted in
Auction 109, OEA and MB propose that
the interim bid withdrawal payment be
20% of the withdrawn bid. As required
by 47 CFR 1.2104(g)(1), a bidder that
withdraws a provisionally winning 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
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auction. However, if a construction
permit for which a bid has been
withdrawn does not receive a
subsequent higher bid or winning bid in
the same auction, the Commission
cannot calculate the final withdrawal
payment until that construction permit
receives a higher bid or winning bid in
a subsequent auction. In such cases,
when that final withdrawal payment
cannot yet be calculated, the
Commission 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.
45. The percentage amount of the
interim bid withdrawal payment is
established in advance of bidding in
each auction and may range from 3% to
20% of the withdrawn bid amount. The
Commission has determined that the
level of 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. In light of these
considerations with respect to the
construction permits being offered in
this auction, OEA and MB propose to
use the maximum interim bid
withdrawal payment percentage
permitted by 47 CFR 1.2104(g)(1) in the
event bid withdrawals are allowed in
this auction. OEA and MB request
comment on using 20% for calculating
an interim bid withdrawal payment
amount in Auction 109. Commenters
advocating the use of bid withdrawals
should also address the percentage of
the interim bid withdrawal payment.
46. Post Auction Payment: Additional
Default Payment Percentage. 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 make full and timely final payment,
fails to submit a timely long-form
application, or whose long-form
application is not granted for any
reason, or is otherwise disqualified) is
liable for a default payment under 47
CFR 1.2104(g)(2). As required by 47 CFR
1.2109, this payment consists of a
deficiency payment, equal to the
difference between the amount of the
Auction 109 bidder’s winning bid and
the amount of the winning bid the next
time a construction permit covering the
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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.
47. In advance of each auction, a
percentage between 3% and 20% of the
applicable winning bid is set pursuant
to 47 CFR 1.2104(g)(2) 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 construction permits
being offered.
48. Consistent with the percentage in
prior auctions of broadcast construction
permits, OEA and MB propose for
Auction 109 to establish an additional
default payment of 20%. As the
Commission has noted, defaults weaken
the integrity of the auction process and
may impede the deployment of service
to the public, and an additional 20%
default payment will be more effective
in deterring defaults than the 3% used
in some earlier auctions. In light of
these considerations, for Auction 109 an
additional default payment of 20% of
the relevant bid is proposed. OEA and
MB seek comment on this proposal.
IV. Procedural Matters
49. Paperwork Reduction Act. The
Office of Management and Budget
(OMB) has approved the information
collections in the Application to
Participate in an FCC Auction, FCC
Form 175. OMB Control No. 3060–0600.
The Auction 109 Comment Public
Notice does not propose new or
modified information collection
requirements subject to the Paperwork
Reduction Act of 1995 (PRA), Public
Law 104–13. Therefore, it does not
contain any new or modified
information collection burden for small
business concerns with fewer than 25
employees pursuant to the Small
Business Paperwork Relief Act of 2002,
Public Law 107–198. See 44 U.S.C.
3506(c)(4).
50. Ex Parte Rules. This proceeding
has been designated as a permit but
disclose proceeding in accordance with
the ex parte rules. Participants in this
proceeding should familiarize
themselves with the Commission’s ex
parte rules, especially 47 CFR 1.1200(a)
and 1.1206.
IV. Supplemental Initial Regulatory
Flexibility Analysis
51. As required by the Regulatory
Flexibility Act of 1980, as amended
(RFA), 5 U.S.C. 601—612, the
Commission prepared Initial Regulatory
Flexibility Analyses (IRFAs) in
connection with the Broadcast
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Competitive Bidding Notice of Proposed
Rulemaking (NPRM), 62 FR 65392,
December 12, 1997, and other
Commission NPRMs (collectively,
Competitive Bidding NPRMs) pursuant
to which Auction 109 will be
conducted. Final Regulatory Flexibility
Analyses (FRFAs) likewise were
prepared in the Broadcast Competitive
Bidding Order, 63 FR 48615, September
11, 1998, and other Commission
rulemaking orders (collectively,
Competitive Bidding Orders) pursuant
to which Auction 109 will be
conducted. The Office of Economics and
Analytics (OEA), in conjunction with
the Media Bureau (MB), 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
Auction 109 Comment Public Notice, to
supplement the Commission’s Initial
and Final Regulatory Flexibility
Analyses completed in the Competitive
Bidding NPRMs and the Competitive
Bidding Orders pursuant to which
Auction 109 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 filing deadlines for
comments specified on the first page of
the Auction 109 Comment Public
Notice. Pursuant to 5 U.S.C. 603(a), the
Commission will send a copy of the
Auction 109 Comment Public Notice,
including this Supplemental IRFA, to
the Chief Counsel for Advocacy of the
Small Business Administration (SBA).
52. Need for, and Objectives of, the
Public Notice. The proposed procedures
for the conduct of Auction 109 as
described in the Auction 109 Comment
Public Notice would constitute the more
specific implementation of the
competitive bidding rules contemplated
by Parts 1 and 73 of the Commission’s
rules, adopted by the Commission in
multiple notice-and-comment
rulemaking proceedings, including the
Commission’s establishing in the
underlying rulemaking orders
additional procedures to be used on
delegated authority. More specifically,
the Auction 109 Comment Public Notice
seeks comment on proposed procedures,
terms and conditions governing Auction
109, and the post-auction application
and payment processes, as well as
seeking comment on the minimum
opening bid amounts for the specified
construction permits, and is fully
consistent with the underlying
rulemaking orders, including the
Broadcast Competitive Bidding Order
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and other relevant competitive bidding
orders.
53. The Auction 109 Comment Public
Notice provides notice of proposed
auction procedures and adequate time
for Auction 109 applicants to comment
on those proposed procedures. See 47
U.S.C. 309(j)(3)(E)(i). To promote the
efficient and fair administration of the
competitive bidding process for all
Auction 109 participants, including
small businesses, the Auction 109
Comment Public Notice seeks comment
on the following proposed procedures:
Use of a simultaneous multiple-round
auction format, consisting of sequential
bidding rounds with a simultaneous
stopping rule (with discretion to
exercise alternative stopping rules
under certain circumstances); a specific
minimum opening bid amount for each
construction permit to be offered in this
auction; a specific number of bidding
units for each construction permit; a
specific upfront payment amount for
each construction permit; 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 construction permit; use of an
activity requirement so that bidders
must bid actively during the auction
rather than waiting until late in the
auction before participating; a singlestage auction in which a bidder is
required to be active on 100% of its
bidding eligibility in each bidding
round; provision of three activity
waivers for each bidder to allow it to
preserve eligibility during the course of
the auction; use of minimum acceptable
bid amounts and additional bid
increments, along with a proposed
methodology for calculating such
amounts, while retaining discretion to
change the methodology if
circumstances dictate; a procedure for
breaking ties if identical high bid
amounts are submitted on a
construction permit in a given round;
whether to permit use of bid
withdrawals; establishment of an
interim bid withdrawal percentage of
20% of the withdrawn bid in the event
bid withdrawals are allowed in Auction
109; and establishment of an additional
default payment of 20% under 47 CFR
1.2104(g)(2) in the event that a winning
bidder defaults or is disqualified after
the auction closes.
54. Legal Basis. The Commission’s
statutory obligations to small businesses
participating in a spectrum auction are
found in 47 U.S.C. 309(j)(3)(B) and
309(j)(4)(D). The statutory basis for the
Commission’s competitive bidding rules
is found in 47 U.S.C. 154(i), 301, 303(e),
303(f), 303(r), 304, 307, and 309(j). The
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Commission has established a
framework of competitive bidding rules
pursuant to which it has conducted
auctions since the inception of the
auction program in 1994 and would
conduct Auction 109, including 47 CFR
part 1, subpart Q. See 47 CFR 73.5000,
73.5002–73.5003, 73.5005–73.5009. In
promulgating those rules, the
Commission conducted numerous
Initial Regulatory Flexibility Act
Analyses (IRFAs) 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
Auction 109 Comment Public Notice.
The Commission has directed that OEA,
in conjunction with MB, under
delegated authority, seek comment on a
variety of auction-specific procedures
prior to the start of bidding in each
auction. See 47 CFR 1.2104(c), (d), (e),
(f), (g), (i).
55. Description and Estimate of the
Number of Small Entities to Which the
Proposed Procedures Will Apply. 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
procedures, if adopted. 5 U.S.C.
603(b)(3). The RFA generally defines the
term small entity as having the same
meaning as the terms small business,
small organization, and small
government jurisdiction. 5 U.S.C.
601(6). In addition, the term small
business has the same meaning as the
term small business concern under the
Small Business Act. See 5 U.S.C. 601(3)
(adopting by reference the definition of
small business concern in the Small
Business Act, 15 U.S.C. 632). 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. See 15 U.S.C.
632.
56. The specific procedures and
minimum opening bid amounts on
which comment is sought in the
Auction 109 Comment Public Notice
will directly affect all applicants
participating in Auction 109. The
number of entities that may apply to
participate in Auction 109 is unknown.
Based on the number of applicants in
prior FM auctions, OEA and MB
estimate that the number of applicants
for Auction 109 may range from
approximately 130 to 260. This estimate
is based on the number of applicants
who filed short-form applications to
participate in previous open auctions of
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FM construction permits held to date,
an average of 1.8 short-form
applications were filed per construction
permit offered, with a median of 1.2
applications per permit. The actual
number of applicants for Auction 109
could vary significantly as any
individual’s or entity’s decision to
participate may be affected by a number
of factors beyond the Commission’s
control.
57. Radio Stations. This U.S.
Economic Census category comprises
establishments primarily engaged in
broadcasting aural programs by radio to
the public. Programming may originate
in their own studio, from an affiliated
network, or from external sources.
According to the most recent Report and
Order, 85 FR 37364, June 22, 2020, to
assess annual regulatory fees,
Commission staff identified from the
Media Bureau’s licensing databases
9,636 licensed radio facilities subject to
annual regulatory fees as of October 1,
2019, excluding from this count radio
stations exempt from required annual
regulatory fees.
58. In 13 CFR 121.201, the SBA
established a small business size
standard for this category, NAICS code
515112, as firms having $41.5 million or
less in annual receipts. Economic
Census data from 2012 shows that 2,849
radio station firms operated during that
year. Of that number, 2,806 firms
operated with annual receipts of less
than $25 million per year, 17 with
annual receipts between $25 million
and $49,999,999, and 26 with annual
receipts of $50 million or more.
Therefore, based on the SBA’s size
standard, the majority of such entities
are small entities.
59. According to Commission staff
review of the BIA/Kelsey, LLC’s Media
Access Pro Radio Database (BIA) as of
January 26, 2021, nearly all AM and FM
full-service radio stations
(approximately 15,478 of 15,483 total
stations, or 99.97%) had revenues of
$41.5 million or less and thus qualify as
small entities under the SBA definition.
The SBA size standard data, however,
does not enable a meaningful estimate
of the number of small entities who may
participate in Auction 109.
60. Also, in assessing whether a
business entity qualifies as small under
the SBA definition, 13 CFR
121.103(a)(1), business control
affiliations must be included. Business
concerns are affiliates of each other
when one concern controls or has the
power to control the other, or a third
party or parties controls or has the
power to control both. The estimate
therefore likely overstates the number of
small entities that might be affected by
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this auction because the revenue figure
on which it is based does not include or
aggregate revenues from affiliated
companies. Moreover, the definition of
small business also requires that an
entity not be dominant in its field of
operation and that the entity be
independently owned and operated.
The estimate of small businesses to
which the proposed competitive
bidding rules may apply does not
exclude any radio station from the
definition of a small business on these
bases and is therefore over-inclusive to
that extent. Furthermore, it is not
possible at this time to define or
quantify the criteria that would
establish whether a specific radio
station is dominant in its field of
operation. In addition, it is difficult to
assess these criteria in the context of
media entities and therefore estimates of
small businesses to which they apply
may be over-inclusive to this extent.
61. Further, it is not possible to
accurately develop an estimate of how
many of the entities in this auction
would be small businesses based on the
number of small entities that applied to
participate in prior broadcast auctions,
because that information is not collected
from applicants for broadcast auctions
in which bidding credits are not based
on an applicant’s size (as is the case in
auctions of licenses for wireless
services).
62. In 2013, the Commission
estimated that 97% of radio
broadcasters met the SBA’s prior
definition of small business concern,
based on annual revenues of $7 million.
The SBA has since increased in NAICS
code 515112 of 13 CFR 121.201 that
revenue threshold to $41.5 million,
which suggests that an even greater
percentage of radio broadcasters would
fall within the SBA’s definition. The
Commission has estimated the number
of licensed commercial AM radio
stations to be 4,347 and the number of
commercial FM radio stations to be
6,699 for a total number of 11,046. As
of January 2021, 4,347 AM stations and
6,694 FM stations had revenues of $41.5
million or less, according to
Commission staff review of the BIA
Database. Accordingly, based on this
data, OEA and MB estimate that the
majority of Auction 109 applicants
would likely meet the SBA’s definition
of a small business concern.
63. Description of Projected
Reporting, Recordkeeping, and Other
Compliance Requirements for Small
Entities. In the Auction 109 Comment
Public Notice, no new reporting,
recordkeeping, or other compliance
requirements for small entities or other
auction applicants are proposed. The
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Commission designed the auction
application process itself to minimize
reporting and compliance requirements
for applicants, including small business
applicants. To participate in this
auction, parties will 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
auction process, there are additional
compliance requirements for winning
bidders. Thus, a small business that 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.
64. Steps Taken to Minimize the
Significant Economic Impact of Small
Entities, and Significant Alternatives
Considered. 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. 5 U.S.C.
603(c)(1)–(4).
65. OEA and MB intend that the
proposals of the Auction 109 Comment
Public Notice to facilitate participation
in Auction 109 will result in both
operational and administrative cost
savings for small entities and other
auction participants. In light of the
numerous resources that will be
available from the Commission at no
cost, the processes and procedures
proposed in the Auction 109 Comment
Public Notice should result in minimal
economic impact on small entities. For
example, prior to the start of bidding,
the Commission will hold a mock
auction to allow qualified bidders the
opportunity to familiarize themselves
with both the bidding processes and
systems that will be used in Auction
109. During the auction, participants
will be able to access and participate in
bidding via the internet using a webbased system, or telephonically,
providing two cost-effective methods of
participation and avoiding the cost of
travel for in-person participation.
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Further, small entities as well as other
auction participants will be able to avail
themselves of a telephone hotline for
assistance with auction processes and
procedures as well as a telephone
technical support hotline to assist with
issues such as access to or navigation
within the electronic FCC Form 175 and
use of the FCC’s auction system. In
addition, all auction participants,
including small business entities, will
have access to various other sources of
information and databases through the
Commission that will aid in both their
understanding of and participation in
the process. These mechanisms are
made available to facilitate participation
by all qualified bidders and may result
in significant cost savings for small
business entities that utilize these
mechanisms. These steps, coupled with
the advance description of the bidding
procedures, should ensure that the
auction will be administered efficiently
and fairly, thus providing certainty for
small entities, as well as other auction
participants.
66. Federal Rules That May Duplicate,
Overlap, or Conflict With the Proposed
Rules. None.
Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2021–04033 Filed 3–1–21; 4:15 pm]
BILLING CODE 6712–01–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
[Docket No. FWS–R2–ES–2020–0130;
FF09E21000 FXES11110900000 212]
RIN 1018–BF21
Endangered and Threatened Wildlife
and Plants; Endangered Species
Status for Arizona Eryngo and
Designation of Critical Habitat
Fish and Wildlife Service,
Interior.
ACTION: Proposed rule.
AGENCY:
We, the U.S. Fish and
Wildlife Service (Service), announce a
12-month finding on a petition to list
the Arizona eryngo (Eryngium
sparganophyllum), a plant species
native to Arizona and New Mexico in
the United States, and to Sonora and
Chihuahua in Mexico, as an endangered
species and to designate critical habitat
in Arizona under the Endangered
Species Act of 1973, as amended (Act).
After a review of the best available
scientific and commercial information,
SUMMARY:
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04MRP1
Agencies
[Federal Register Volume 86, Number 41 (Thursday, March 4, 2021)]
[Proposed Rules]
[Pages 12556-12563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04033]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1 and 73
[AU Docket No. 21-39; DA 21-131; FR ID 17492]
Auction of AM and FM Broadcast Construction Permits Scheduled for
July 27, 2021; Comment Sought on Competitive Bidding Procedures for
Auction 109
AGENCY: Federal Communications Commission.
ACTION: Proposed rule; proposed auction procedures.
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SUMMARY: The Office of Economics and Analytics (OEA), in conjunction
with the Media Bureau (MB), announces an auction of certain AM and FM
broadcast construction permits. This document seeks comment on minimum
opening bid amounts and the procedures to be used in Auction 109.
DATES: Comments are due on or before March 15, 2021, and reply comments
are due on or before March 22, 2021. Bidding in this auction is
scheduled to begin July 27, 2021.
ADDRESSES: Interested parties may file comments or reply comments in AU
Docket No. 21-39. Comments may be filed using the Commission's
Electronic Comment Filing System (ECFS) or by filing paper copies. All
filings in response to the Auction 109 Comment Public Notice must refer
to AU Docket No. 21-39. The Commission strongly encourages interested
parties to file comments electronically.
Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS at https://www.fcc.gov/ecfs/.
Follow the instructions for submitting comments.
Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
Filings in response to the Auction 109 Comment Public
Notice can be sent by commercial courier or by the U.S. Postal Service.
All filings must be addressed to the Commission's Secretary, Office of
the Secretary, Federal Communications Commission.
Commercial deliveries (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Dr.,
Annapolis Junction, MD 20701.
U.S. Postal Service first-class, Express, or Priority mail
must be addressed to 45 L Street NE, Washington, DC 20554.
Until further notice, the Commission no longer accepts any
hand or messenger delivered filings. This is a temporary measure taken
to help protect the health and safety of individuals and to mitigate
the transmission of COVID-19.
Email: OMB and MB also request that a copy of all comments
and reply comments be submitted electronically to the following
address: [email protected].
FOR FURTHER INFORMATION CONTACT:
Auction legal questions: Lynne Milne or Lyndsey Grunewald at 202-
418-0660.
General auction questions: Auctions Hotline at 717-338-2868.
AM/FM service questions: James Bradshaw or Lisa Scanlan or Tom
Nessinger at (202) 418-2700.
SUPPLEMENTARY INFORMATION: This is a summary of the Auction 109 Comment
Public Notice, AU Docket No. 21-39, DA 21-131, released on February 8,
2021. The complete text of the Auction 109 Comment Public Notice,
including its attachment, is available on the Commission's website at
www.fcc.gov/auction/109 or by using the search function for AU Docket
No. 21-39 on the Commission's ECFS web page at www.fcc.gov/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).
I. Introduction
1. By the Auction 109 Comment Public Notice, the Commission
announces an auction of four AM construction permits and 136 FM
construction permits, with bidding to start on July 27, 2021, and seeks
comment on the procedures to be used to conduct Auction 109, as well as
upon minimum opening bids for the permits.
2. Auction 109 will offer all of the FM radio permits that were
previously included in the inventory for Auction 106, as well as six
additional FM permits. Auction 106 was postponed on March 25, 2020,
with no appointed date for resumption, due to the Covid-19 pandemic.
That auction is now canceled; applications submitted by entities
seeking to participate in Auction 106 have been dismissed. All
applicants wishing to participate in Auction 109, regardless of whether
they may have previously filed a short-form application (FCC Form 175)
for Auction 106, will be required to file a new short-form application
to participate in Auction 109. A window for filing short-form
applications to participate in Auction 109 will be announced in a
subsequent public notice in this proceeding.
II. Construction Permits
3. Auction 109 will offer four AM construction permits and 136 FM
construction permits. Attachment A to the Auction 109 Comment Public
Notice lists each permit to be offered. Under the policies established
in the Broadcast Competitive Bidding Order, 63 FR 48615, September 11,
1998, an applicant may apply for any AM construction permit or vacant
FM allotment listed in Attachment A to the Auction 109 Comment Public
Notice. If two or more short-form applications (FCC Form 175) specify
the same AM permit or FM allotment, they will be considered mutually
exclusive, mutual exclusivity exists for auction purposes, and the
construction permit will be awarded by competitive bidding procedures.
Once mutual exclusivity exists for auction purposes, even if only one
applicant is qualified to bid for a particular construction permit in
Auction 109, that applicant is required to submit a bid in order to
obtain the construction permit.
4. AM Construction Permits. Auction 109 will offer four
construction permits in the AM broadcast service. Attachment A to the
Auction 109 Comment Public Notice lists the community of license,
channel, class, and coordinates for each AM permit being offered.
5. The construction permits to be auction are for four previously
licensed AM stations, listed in Attachment A to the Auction 109 Comment
Public Notice, the license renewals of which were dismissed with
prejudice in a hearing before the Commission's Administrative Law Judge
and the call signs deleted.
6. To facilitate the auction of the four AM permits, the four AM
facilities will be treated as existing allotments, using the
coordinates, AM station frequency and class, and community of license
of the respective AM facility as listed in Attachment A to the Auction
109 Comment Public Notice. The Media Bureau has protected these four AM
stations by freezing the filing of any minor modification applications
that would be mutually exclusive with the
[[Page 12557]]
facilities of the four AM stations. Because protections extend to the
previously licensed facility parameters, applicants will be limited in
their opportunities to modify these AM permits.
7. FM Construction Permits. Auction 109 will also offer 136
construction permits in the FM broadcast service. The construction
permits to be auctioned include all of the 130 FM allotments that had
previously been listed in the inventory for Auction 106 as well as six
additional FM allotments. The FM allotments offered in Auction 109
include 34 construction permits that were offered but not sold or were
defaulted upon in prior auctions. Attachment A identifies those
previously offered permits and the auctions in which they were offered.
8. Attachment A to the Auction 109 Comment Public Notice lists the
specific vacant FM allotments for which the Commission will offer
construction permits in this auction, along with the reference
coordinates for each vacant FM allotment. These comprise FM channels
added to the Table of FM Allotments, 47 CFR 73.202(b), pursuant to the
Commission's established rulemaking procedures and assigned at the
indicated communities.
9. Each applicant in the FM service has the opportunity to submit a
set of preferred site coordinates as an alternative to the reference
coordinates for the vacant FM allotment upon which the applicant
intends to bid. A future public notice announcing the procedures for
Auction 109 will provide guidelines for completing FCC Form 175 and
exhibits, including detailed instructions for specifying preferred site
coordinates.
III. Proposed Bidding Procedures
10. Simultaneous Multiple-Round Auction Design. OEA and MB propose
to use the Commission's simultaneous multiple-round auction format for
Auction 109. As described further below, this type of auction offers
every construction permit for bid at the same time and consists of
successive bidding rounds in which qualified bidders may place bids on
individual construction permits. Typically, bidding remains open on all
construction permits until bidding stops on every construction permit.
OEA and MB invite comment on this proposal.
11. Bidding Rounds. The Commission will conduct Auction 109 over
the internet using the FCC auction bidding system. A bidder will also
have the option of placing bids by telephone through a dedicated
auction bidder line.
12. Under this proposal, Auction 109 will consist of sequential
bidding rounds, each of which would be 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.
13. OEA and MB propose that the initial bidding schedule may be
adjusted 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, such changes may include the
amount of time for the bidding rounds, the amount of time between
rounds, or the number of rounds per day, depending upon bidding
activity and other factors. OEA and MB request 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 requirement(s) or bid amount
parameters, or by using other means.
14. Stopping Rule. In accordance with 47 CFR 1.2104(e), stopping
rules are established before or during multiple round auctions in order
to complete the auction within a reasonable time. For Auction 109, OEA
and MB propose to employ a simultaneous stopping rule approach, which
means all construction permits remain available for bidding until
bidding stops on every construction permit. Specifically, bidding will
close on all construction permits after the first round in which no
bidder submits any new bid, applies a proactive activity rule waiver,
or withdraws any provisionally winning bid (if bid withdrawals are
permitted in this auction). Thus, under the proposed simultaneous
stopping rule, bidding would remain open on all construction permits
until bidding stops on every construction permit. Consequently, under
this approach, it is not possible to determine in advance how long the
bidding in this auction will last.
15. Further, OEA and MB propose to retain the discretion to
exercise any of the following stopping options during Auction 109: (1)
The auction would close for all construction permits after the first
round in which no bidder applies a waiver, no bidder withdraws a
provisionally winning bid (if withdrawals are permitted in this
auction), or no bidder places any new bid on a construction permit for
which it is not the provisionally winning bidder. Absent any other
bidding activity, a bidder placing a new bid on a construction permit
for which it is the provisionally winning bidder would not keep the
auction open under this modified stopping rule. (2) The auction would
close for all construction permits after the first round in which no
bidder applies a waiver, no bidder withdraws a provisionally winning
bid (if withdrawals are permitted in this auction), or no bidder places
any new bid on a construction permit that already has a provisionally
winning bid. Absent any other bidding activity, a bidder placing a new
bid on an FCC-held construction permit (a construction permit that does
not already 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 (1) and (2) above. (4) The auction would close after a
specified number of additional rounds (special stopping rule) to be
announced in advance in the FCC auction bidding system. If this special
stopping rule is invoked, bids will be accepted in the specified final
round(s), after which the auction will close. (5) The auction would
remain open even if no bidder places any new bid, applies a waiver, or
withdraws any provisionally winning bid (if withdrawals are permitted
in this auction). 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 either lose bidding
eligibility or use a waiver.
16. OEA and MB propose to 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, OEA and MB will likely attempt to change the pace of the
auction by changing the number of bidding rounds per day or the minimum
acceptable bids, for example. OEA and MB propose to retain the
discretion to exercise any of these options with or without prior
announcement during the auction. OEA and MB request comment on these
proposals. Commenters should provide specific reasons for supporting or
objecting to these proposals.
17. Auction Delay, Suspension, or Cancellation. Pursuant to 47 CFR
1.2104(i), OEA and MB may delay, suspend, or cancel bidding in the
auction, at any time before or during the bidding process of Auction
109, in the event of a natural disaster, technical obstacle, network
interruption,
[[Page 12558]]
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.
Notification of any such delay, suspension, or cancellation will be
provided by public notice or through the FCC auction bidding system's
messages function. If bidding is delayed or suspended, the auction may
resume starting from the beginning of the current round or from some
previous round, or the auction may be cancelled in its entirety. This
authority will be exercised solely at the discretion of OEA and MB, and
not as a substitute for situations in which bidders may wish to apply
activity rule waivers. OEA and MB seek comment on this proposal.
18. Upfront Payments and Bidding Eligibility. In keeping with the
usual practice in spectrum auctions, OEA and MB propose that applicants
be required to submit upfront payments in accordance with 47 CFR 1.2106
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 construction permits. Upfront
payments that are related to the specific construction permits being
auctioned protect against frivolous or insincere bidding and provide
the Commission with a source of funds from which to collect payments
owed at the close of the bidding. As required by 47 CFR 1.2106(a), a
former defaulter must submit an upfront payment equal to 50 percent
more than the amount that would otherwise be required.
19. OEA and MB seek comment on an appropriate upfront payment for
each construction permit being auctioned, taking into account such
factors as the efficiency of the auction process and the potential
value of similar construction permits. With these considerations in
mind, upfront payments are specified in Attachment A to the Auction 109
Comment Public Notice. OEA and MB seek comment on those proposed
upfront payment amounts.
20. It is proposed also 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. OEA and MB propose to assign each construction permit a
specific number of bidding units, equal to one bidding unit per dollar
of the upfront payment amount listed in Attachment A to the Auction 109
Comment Public Notice. The number of bidding units for a given
construction permit 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 permit being offered in Auction 109, such bidder may place
bids on multiple construction permits, provided that the total number
of bidding units associated with those construction permits does not
exceed that bidder's current eligibility. A bidder cannot increase its
eligibility during the auction; it can only maintain its eligibility or
decrease its eligibility. 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. OEA and MB
request comment on these proposals.
21. Any applicant that submits a short-form application, but fails
to timely submit an upfront payment, will retain its status as an
applicant in Auction 109 and will remain subject to the rules
prohibiting certain communications but, having purchased no bidding
eligibility, will not be eligible to bid. An applicant that fails to
become a qualified bidder for any other reason also will retain its
status as an Auction 109 applicant and will remain subject to the rules
prohibiting certain communications.
22. Activity Rule. 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 purposes of the activity rule, the
FCC auction bidding system calculates a bidder's activity in a round as
the sum of the bidding units associated with any construction permits
upon which it places bids during the current round and the bidding
units associated with any construction permits for which it holds
provisionally winning bids. See 47 CFR 1.2104(f). Bidders are required
to be active on a specific percentage of their current bidding
eligibility during each round of the auction. OEA and MB propose a
single-stage auction with the following activity requirement: In each
bidding round, a bidder desiring to maintain its current bidding
eligibility is required to be active on 100% of its bidding
eligibility. Thus, the activity requirement would be satisfied when a
bidder has bidding activity on construction permits with bidding units
that total 100% 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. 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 for the next round of bidding,
possibly curtailing or eliminating the bidder's ability to place
additional bids in the auction. OEA and MB seek comment on these
activity requirements. Commenters that oppose a 100% activity
requirement should explain their reasons with specificity.
23. Activity Rule Waivers and Reducing Eligibility. Pursuant to the
proposed simultaneous multiple round auction format, 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 construction permit. Activity
rule waivers can be either proactive or automatic. Activity rule
waivers are primarily 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.
24. 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 waiver
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.
25. 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.
26. Under the proposed simultaneous stopping rule, a bidder would
be permitted to apply an activity rule waiver proactively as a means to
keep
[[Page 12559]]
the auction open without placing a bid. If a bidder proactively applies
an activity rule waiver (using the proactive waiver function in the FCC
auction bidding system) during a bidding round in which no bid is
placed or withdrawn (if bid withdrawals are permitted in this auction),
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 this auction), or no proactive waiver
would not keep the auction open.
27. Consistent with prior Commission auctions of broadcast
construction permits, OEA and MB propose that each bidder in Auction
109 be provided with three activity rule waivers that may be used as
set forth above at the bidder's discretion during the course of the
auction. Comment is sought on this proposal of three activity rule
waivers.
28. Reserve Price or Minimum Opening Bids. Pursuant to 47 U.S.C.
309(j)(4)(F) and 47 CFR 1.2104(c), (d), OEA and MB seek comment on the
use of a minimum opening bid amount and a reserve price prior to the
start of bidding in this auction. Normally, a reserve price is an
absolute minimum price below which a construction permit or license
will not be sold in a given auction. A minimum opening bid, on the
other hand, is the minimum bid price set at the beginning of the
auction below which no bids are accepted. It is generally used to
accelerate the competitive bidding process.
29. OEA and MB propose not to establish separate reserve prices for
the construction permits offered in this auction. OEA and MB propose to
establish minimum opening bid amounts for Auction 109. Based on
experience in past broadcast auctions, setting a minimum opening bid
amount judiciously is an effective bidding tool for accelerating the
competitive bidding process.
30. For Auction 109, proposed minimum opening bid amounts were
determined by taking into account the type of service and class of
facility offered, market size, population covered by the proposed
broadcast facility, and recent broadcast transaction data, to the
extent such information is available. Attachment A to the Auction 109
Comment Public Notice lists a proposed minimum opening bid amount for
each construction permit available in Auction 109. OEA and MB seek
comment on the minimum opening bid amounts specified in Attachment A to
the Auction 109 Comment Public Notice.
31. If commenters believe that these minimum opening bid amounts
will result in unsold construction permits, are not reasonable amounts
at which to start bidding, 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. In establishing the minimum opening bid
amounts, OEA and MB seek comment particularly on factors that could
reasonably have an impact on bidders' valuation of the broadcast
spectrum, including the type of service and class of facility offered,
market size, population covered by the proposed AM or FM broadcast
facility and any other relevant factors. Commenters also may 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 for construction permits to reach their
final prices--to other means of controlling auction pace, such as
changes to bidding schedules, percentage increments, or activity
requirements.
32. Bid Amounts. OEA and MB propose that if a qualified bidder has
sufficient eligibility to place a bid on a particular construction
permit, in each round, the bidder will be able to place a bid on the
given construction permit in any of up to nine different amounts: The
minimum acceptable bid amount or one of the additional bid amounts.
33. Minimum Acceptable Bid Amounts. The first of the acceptable bid
amounts is called the minimum acceptable bid amount. The minimum
acceptable bid amount for a construction permit will be equal to its
minimum opening bid amount until there is a provisionally winning bid
for the construction permit. Once there is a provisionally winning bid
for a construction permit, the minimum acceptable bid amount for that
construction permit will be equal to the amount of the provisionally
winning bid plus a specified percentage of that bid amount. The
percentage used for this calculation, the minimum acceptable bid
increment percentage, is multiplied by the provisionally winning bid
amount, and the resulting amount is added to the provisionally winning
bid amount. If, for example, the minimum acceptable bid increment
percentage is 10%, then the provisionally winning bid amount is
multiplied by 10%. The result of that calculation is added to the
provisionally winning bid amount, and that sum is rounded using the
Commission's standard rounding procedure for auctions as described in
the public notice. If bid withdrawals are permitted in this auction, in
the case of a construction permit for which the provisionally winning
bid has been withdrawn, the minimum acceptable bid amount will equal
the second highest bid received for the construction permit.
34. Additional Bid Amounts. Under this proposal, the FCC auction
bidding system will calculate the eight 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. The result then will be rounded
using the Commission's standard rounding procedures for auctions as
described in the public notice. That result 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. If, for example,
the additional bid increment percentage is 5%, then the calculation of
the additional increment amount would be (minimum acceptable bid
amount) * (0.05), rounded. The first additional acceptable bid amount
equals (minimum acceptable bid amount) + (additional increment amount);
the second additional acceptable bid amount equals (minimum acceptable
bid amount) + (2*(additional increment amount)); the third additional
acceptable bid amount equals (minimum acceptable bid amount) +
(3*(additional increment amount)); etc.
35. For Auction 109, a minimum acceptable bid increment percentage
of 10% is proposed. This means that the minimum acceptable bid amount
for a construction permit will be approximately 10% greater than the
provisionally winning bid amount for the construction permit. To
calculate the additional acceptable bid amounts, a bid increment
percentage of 5% is proposed. OEA and MB request comment on these
proposals.
36. Bid Amount Changes. Consistent with past practice, OEA and MB
propose to retain the discretion to change the minimum acceptable bid
amounts, the minimum acceptable bid
[[Page 12560]]
percentage, the additional bid increment percentage, and the number of
acceptable bid amounts if circumstances so dictate. See 47 CFR
1.2104(d). OEA and MB propose to retain the discretion to do so on a
construction permit-by-construction permit basis. OEA and MB propose
also to retain the discretion to limit (a) the amount by which a
minimum acceptable bid for a construction permit 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, a $1,000
limit could be set on increases in minimum acceptable bid amounts over
provisionally winning bids. In this example, if calculating a minimum
acceptable bid using the minimum acceptable bid increment percentage
results in a minimum acceptable bid amount that is $1,200 higher than
the provisionally winning bid on a construction permit, the minimum
acceptable bid amount would instead be capped at $1,000 above the
provisionally winning bid. OEA and MB also seek comment on the
circumstances under which such a limit should be employed, factors to
consider when determining the dollar amount of the limit, and the
tradeoffs in setting such a limit or changing other parameters, such as
changing the minimum acceptable bid percentage, the bid increment
percentage, or the number of acceptable bid amounts. Bidders would be
notified by announcement in the FCC auction bidding system during the
auction if this discretion is exercised.
37. OEA and MB seek comment on these proposals. If commenters
disagree with the proposal to begin the auction with nine acceptable
bid amounts per construction permit, they should suggest an alternative
number of acceptable bid amounts to use. 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
requirement, bid amounts, or by using other means.
38. Provisionally Winning Bids. The FCC auction bidding system will
determine provisionally winning bids consistent with practice in past
auctions. At the end of a bidding round, the bidding system will
determine a provisionally winning bid for each construction permit
based on the highest bid amount received for that permit. The FCC
auction bidding system will advise bidders of the status of their bids
when round results are released. A provisionally winning bid will
remain the provisionally winning bid until there is a higher bid on the
same construction permit at the close of a subsequent round, unless the
provisionally winning bid is withdrawn (if bid withdrawals are
permitted in this auction). Provisionally winning bids at the end of
the auction become the winning bids. As a reminder, provisionally
winning bids count toward activity for purposes of the activity rule.
39. The FCC auction bidding system assigns a pseudo-random number
generated by an algorithm to each bid when the bid is entered. If
identical high bid amounts are submitted on a construction permit 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 tied bid with the highest
pseudo-random number wins the tiebreaker and becomes 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 construction permit receives any bids in a subsequent round, the
provisionally winning bid again will be determined by the highest bid
amount received for the construction permit.
40. Bid Removal. 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. Consistent with the design of the bidding
system, bidders in Auction 109 would be permitted to remove bids placed
in a round before the close of that round.
41. Bid Withdrawal. OEA and MB propose not to permit bidders in
Auction 109 to withdraw bids. 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 47 CFR 1.2104(g), 1.2109.
42. 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 increased opportunities for undesirable strategic bidding in
certain circumstances. The Commission stated that this discretion
should be exercised assertively, with consideration of limiting the
number of rounds in which bidders may withdraw bids and preventing
bidders from bidding on a particular market if a bidder is abusing the
Commission's bid withdrawal procedures. In managing the auction,
therefore, OEA and MB have discretion to limit the number of
withdrawals to prevent bidding abuses.
43. Based on this guidance and on experience with past auctions of
broadcast construction permits, the public notice proposes to prohibit
bidders from withdrawing any bid after the close of the round in which
that bid was placed. In light of the site-specific nature and wide
geographic dispersion of the permits available in this auction, which
suggests that potential applicants for this auction may have fewer
incentives to aggregate permits through the auction process (as
compared with bidders in many auctions of wireless licenses), it is
unlikely that bidders will have a need to withdraw bids in this
auction. Further, bid withdrawals, particularly if they were made late
in this auction, could result in delays in licensing new broadcast
stations and attendant delays in the offering of new broadcast service
to the public. OEA and MB seek comment on this proposal to prohibit bid
withdrawals in Auction 109. Commenters advocating alternative
approaches should support their arguments by taking into account the
construction permits offered, the impact of auction dynamics and the
pricing mechanism, and the effects on the bidding strategies of other
bidders.
44. Post Auction Payment: Interim Withdrawal Payment Percentage. In
the event bid withdrawals are permitted in Auction 109, OEA and MB
propose that the interim bid withdrawal payment be 20% of the withdrawn
bid. As required by 47 CFR 1.2104(g)(1), a bidder that withdraws a
provisionally winning 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
[[Page 12561]]
auction. However, if a construction permit for which a bid has been
withdrawn does not receive a subsequent higher bid or winning bid in
the same auction, the Commission cannot calculate the final withdrawal
payment until that construction permit receives a higher bid or winning
bid in a subsequent auction. In such cases, when that final withdrawal
payment cannot yet be calculated, the Commission 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.
45. The percentage amount of the interim bid withdrawal payment is
established in advance of bidding in each auction and may range from 3%
to 20% of the withdrawn bid amount. The Commission has determined that
the level of 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. In light of
these considerations with respect to the construction permits being
offered in this auction, OEA and MB propose to use the maximum interim
bid withdrawal payment percentage permitted by 47 CFR 1.2104(g)(1) in
the event bid withdrawals are allowed in this auction. OEA and MB
request comment on using 20% for calculating an interim bid withdrawal
payment amount in Auction 109. Commenters advocating the use of bid
withdrawals should also address the percentage of the interim bid
withdrawal payment.
46. Post Auction Payment: Additional Default Payment Percentage.
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 make full and timely final payment, fails
to submit a timely long-form application, or whose long-form
application is not granted for any reason, or is otherwise
disqualified) is liable for a default payment under 47 CFR
1.2104(g)(2). As required by 47 CFR 1.2109, this payment consists of a
deficiency payment, equal to the difference between the amount of the
Auction 109 bidder's winning bid and the amount of the winning bid the
next time a construction permit 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.
47. In advance of each auction, a percentage between 3% and 20% of
the applicable winning bid is set pursuant to 47 CFR 1.2104(g)(2) 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 construction permits being
offered.
48. Consistent with the percentage in prior auctions of broadcast
construction permits, OEA and MB propose for Auction 109 to establish
an additional default payment of 20%. As the Commission has noted,
defaults weaken the integrity of the auction process and may impede the
deployment of service to the public, and an additional 20% default
payment will be more effective in deterring defaults than the 3% used
in some earlier auctions. In light of these considerations, for Auction
109 an additional default payment of 20% of the relevant bid is
proposed. OEA and MB seek comment on this proposal.
IV. Procedural Matters
49. Paperwork Reduction Act. The Office of Management and Budget
(OMB) has approved the information collections in the Application to
Participate in an FCC Auction, FCC Form 175. OMB Control No. 3060-0600.
The Auction 109 Comment Public Notice does not propose new or modified
information collection requirements subject to the Paperwork Reduction
Act of 1995 (PRA), Public Law 104-13. Therefore, it does not contain
any new or modified information collection burden for small business
concerns with fewer than 25 employees pursuant to the Small Business
Paperwork Relief Act of 2002, Public Law 107-198. See 44 U.S.C.
3506(c)(4).
50. Ex Parte Rules. This proceeding has been designated as a permit
but disclose proceeding in accordance with the ex parte rules.
Participants in this proceeding should familiarize themselves with the
Commission's ex parte rules, especially 47 CFR 1.1200(a) and 1.1206.
IV. Supplemental Initial Regulatory Flexibility Analysis
51. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), 5 U.S.C. 601--612, the Commission prepared Initial
Regulatory Flexibility Analyses (IRFAs) in connection with the
Broadcast Competitive Bidding Notice of Proposed Rulemaking (NPRM), 62
FR 65392, December 12, 1997, and other Commission NPRMs (collectively,
Competitive Bidding NPRMs) pursuant to which Auction 109 will be
conducted. Final Regulatory Flexibility Analyses (FRFAs) likewise were
prepared in the Broadcast Competitive Bidding Order, 63 FR 48615,
September 11, 1998, and other Commission rulemaking orders
(collectively, Competitive Bidding Orders) pursuant to which Auction
109 will be conducted. The Office of Economics and Analytics (OEA), in
conjunction with the Media Bureau (MB), 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 Auction 109 Comment Public Notice, to
supplement the Commission's Initial and Final Regulatory Flexibility
Analyses completed in the Competitive Bidding NPRMs and the Competitive
Bidding Orders pursuant to which Auction 109 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 filing deadlines for comments specified on the first page
of the Auction 109 Comment Public Notice. Pursuant to 5 U.S.C. 603(a),
the Commission will send a copy of the Auction 109 Comment Public
Notice, including this Supplemental IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration (SBA).
52. Need for, and Objectives of, the Public Notice. The proposed
procedures for the conduct of Auction 109 as described in the Auction
109 Comment Public Notice would constitute the more specific
implementation of the competitive bidding rules contemplated by Parts 1
and 73 of the Commission's rules, adopted by the Commission in multiple
notice-and-comment rulemaking proceedings, including the Commission's
establishing in the underlying rulemaking orders additional procedures
to be used on delegated authority. More specifically, the Auction 109
Comment Public Notice seeks comment on proposed procedures, terms and
conditions governing Auction 109, and the post-auction application and
payment processes, as well as seeking comment on the minimum opening
bid amounts for the specified construction permits, and is fully
consistent with the underlying rulemaking orders, including the
Broadcast Competitive Bidding Order
[[Page 12562]]
and other relevant competitive bidding orders.
53. The Auction 109 Comment Public Notice provides notice of
proposed auction procedures and adequate time for Auction 109
applicants to comment on those proposed procedures. See 47 U.S.C.
309(j)(3)(E)(i). To promote the efficient and fair administration of
the competitive bidding process for all Auction 109 participants,
including small businesses, the Auction 109 Comment Public Notice seeks
comment on the following proposed procedures: Use of a simultaneous
multiple-round auction format, consisting of sequential bidding rounds
with a simultaneous stopping rule (with discretion to exercise
alternative stopping rules under certain circumstances); a specific
minimum opening bid amount for each construction permit to be offered
in this auction; a specific number of bidding units for each
construction permit; a specific upfront payment amount for each
construction permit; 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
construction permit; use of an activity requirement so that bidders
must bid actively during the auction rather than waiting until late in
the auction before participating; a single-stage auction in which a
bidder is required to be active on 100% of its bidding eligibility in
each bidding round; provision of three activity waivers for each bidder
to allow it to preserve eligibility during the course of the auction;
use of minimum acceptable bid amounts and additional bid increments,
along with a proposed methodology for calculating such amounts, while
retaining discretion to change the methodology if circumstances
dictate; a procedure for breaking ties if identical high bid amounts
are submitted on a construction permit in a given round; whether to
permit use of bid withdrawals; establishment of an interim bid
withdrawal percentage of 20% of the withdrawn bid in the event bid
withdrawals are allowed in Auction 109; and establishment of an
additional default payment of 20% under 47 CFR 1.2104(g)(2) in the
event that a winning bidder defaults or is disqualified after the
auction closes.
54. Legal Basis. The Commission's statutory obligations to small
businesses participating in a spectrum auction are found in 47 U.S.C.
309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the Commission's
competitive bidding rules is found in 47 U.S.C. 154(i), 301, 303(e),
303(f), 303(r), 304, 307, and 309(j). The Commission has established a
framework of competitive bidding rules pursuant to which it has
conducted auctions since the inception of the auction program in 1994
and would conduct Auction 109, including 47 CFR part 1, subpart Q. See
47 CFR 73.5000, 73.5002-73.5003, 73.5005-73.5009. In promulgating those
rules, the Commission conducted numerous Initial Regulatory Flexibility
Act Analyses (IRFAs) 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 Auction 109 Comment Public Notice. The
Commission has directed that OEA, in conjunction with MB, under
delegated authority, seek comment on a variety of auction-specific
procedures prior to the start of bidding in each auction. See 47 CFR
1.2104(c), (d), (e), (f), (g), (i).
55. Description and Estimate of the Number of Small Entities to
Which the Proposed Procedures Will Apply. 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 procedures, if
adopted. 5 U.S.C. 603(b)(3). The RFA generally defines the term small
entity as having the same meaning as the terms small business, small
organization, and small government jurisdiction. 5 U.S.C. 601(6). In
addition, the term small business has the same meaning as the term
small business concern under the Small Business Act. See 5 U.S.C.
601(3) (adopting by reference the definition of small business concern
in the Small Business Act, 15 U.S.C. 632). 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. See 15 U.S.C. 632.
56. The specific procedures and minimum opening bid amounts on
which comment is sought in the Auction 109 Comment Public Notice will
directly affect all applicants participating in Auction 109. The number
of entities that may apply to participate in Auction 109 is unknown.
Based on the number of applicants in prior FM auctions, OEA and MB
estimate that the number of applicants for Auction 109 may range from
approximately 130 to 260. This estimate is based on the number of
applicants who filed short-form applications to participate in previous
open auctions of FM construction permits held to date, an average of
1.8 short-form applications were filed per construction permit offered,
with a median of 1.2 applications per permit. The actual number of
applicants for Auction 109 could vary significantly as any individual's
or entity's decision to participate may be affected by a number of
factors beyond the Commission's control.
57. Radio Stations. This U.S. Economic Census category comprises
establishments primarily engaged in broadcasting aural programs by
radio to the public. Programming may originate in their own studio,
from an affiliated network, or from external sources. According to the
most recent Report and Order, 85 FR 37364, June 22, 2020, to assess
annual regulatory fees, Commission staff identified from the Media
Bureau's licensing databases 9,636 licensed radio facilities subject to
annual regulatory fees as of October 1, 2019, excluding from this count
radio stations exempt from required annual regulatory fees.
58. In 13 CFR 121.201, the SBA established a small business size
standard for this category, NAICS code 515112, as firms having $41.5
million or less in annual receipts. Economic Census data from 2012
shows that 2,849 radio station firms operated during that year. Of that
number, 2,806 firms operated with annual receipts of less than $25
million per year, 17 with annual receipts between $25 million and
$49,999,999, and 26 with annual receipts of $50 million or more.
Therefore, based on the SBA's size standard, the majority of such
entities are small entities.
59. According to Commission staff review of the BIA/Kelsey, LLC's
Media Access Pro Radio Database (BIA) as of January 26, 2021, nearly
all AM and FM full-service radio stations (approximately 15,478 of
15,483 total stations, or 99.97%) had revenues of $41.5 million or less
and thus qualify as small entities under the SBA definition. The SBA
size standard data, however, does not enable a meaningful estimate of
the number of small entities who may participate in Auction 109.
60. Also, in assessing whether a business entity qualifies as small
under the SBA definition, 13 CFR 121.103(a)(1), business control
affiliations must be included. Business concerns are affiliates of each
other when one concern controls or has the power to control the other,
or a third party or parties controls or has the power to control both.
The estimate therefore likely overstates the number of small entities
that might be affected by
[[Page 12563]]
this auction because the revenue figure on which it is based does not
include or aggregate revenues from affiliated companies. Moreover, the
definition of small business also requires that an entity not be
dominant in its field of operation and that the entity be independently
owned and operated. The estimate of small businesses to which the
proposed competitive bidding rules may apply does not exclude any radio
station from the definition of a small business on these bases and is
therefore over-inclusive to that extent. Furthermore, it is not
possible at this time to define or quantify the criteria that would
establish whether a specific radio station is dominant in its field of
operation. In addition, it is difficult to assess these criteria in the
context of media entities and therefore estimates of small businesses
to which they apply may be over-inclusive to this extent.
61. Further, it is not possible to accurately develop an estimate
of how many of the entities in this auction would be small businesses
based on the number of small entities that applied to participate in
prior broadcast auctions, because that information is not collected
from applicants for broadcast auctions in which bidding credits are not
based on an applicant's size (as is the case in auctions of licenses
for wireless services).
62. In 2013, the Commission estimated that 97% of radio
broadcasters met the SBA's prior definition of small business concern,
based on annual revenues of $7 million. The SBA has since increased in
NAICS code 515112 of 13 CFR 121.201 that revenue threshold to $41.5
million, which suggests that an even greater percentage of radio
broadcasters would fall within the SBA's definition. The Commission has
estimated the number of licensed commercial AM radio stations to be
4,347 and the number of commercial FM radio stations to be 6,699 for a
total number of 11,046. As of January 2021, 4,347 AM stations and 6,694
FM stations had revenues of $41.5 million or less, according to
Commission staff review of the BIA Database. Accordingly, based on this
data, OEA and MB estimate that the majority of Auction 109 applicants
would likely meet the SBA's definition of a small business concern.
63. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities. In the Auction 109 Comment
Public Notice, no new reporting, recordkeeping, or other compliance
requirements for small entities or other auction applicants are
proposed. The Commission designed the auction application process
itself to minimize reporting and compliance requirements for
applicants, including small business applicants. To participate in this
auction, parties will 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 auction process, there are additional
compliance requirements for winning bidders. Thus, a small business
that 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.
64. Steps Taken to Minimize the Significant Economic Impact of
Small Entities, and Significant Alternatives Considered. 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. 5 U.S.C. 603(c)(1)-(4).
65. OEA and MB intend that the proposals of the Auction 109 Comment
Public Notice to facilitate participation in Auction 109 will result in
both operational and administrative cost savings for small entities and
other auction participants. In light of the numerous resources that
will be available from the Commission at no cost, the processes and
procedures proposed in the Auction 109 Comment Public Notice should
result in minimal economic impact on small entities. For example, prior
to the start of bidding, the Commission will hold a mock auction to
allow qualified bidders the opportunity to familiarize themselves with
both the bidding processes and systems that will be used in Auction
109. During the auction, participants will be able to access and
participate in bidding via the internet using a web-based system, or
telephonically, providing two cost-effective methods of participation
and avoiding the cost of travel for in-person participation. Further,
small entities as well as other auction participants will be able to
avail themselves of a telephone hotline for assistance with auction
processes and procedures as well as a telephone technical support
hotline to assist with issues such as access to or navigation within
the electronic FCC Form 175 and use of the FCC's auction system. In
addition, all auction participants, including small business entities,
will have access to various other sources of information and databases
through the Commission that will aid in both their understanding of and
participation in the process. These mechanisms are made available to
facilitate participation by all qualified bidders and may result in
significant cost savings for small business entities that utilize these
mechanisms. These steps, coupled with the advance description of the
bidding procedures, should ensure that the auction will be administered
efficiently and fairly, thus providing certainty for small entities, as
well as other auction participants.
66. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules. None.
Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2021-04033 Filed 3-1-21; 4:15 pm]
BILLING CODE 6712-01-P