[Federal Register Volume 59, Number 103 (Tuesday, May 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13258]


[[Page Unknown]]

[Federal Register: May 31, 1994]


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FEDERAL COMMUNICATIONS COMMISSION
[Report No. ABC-94-02, Auction No. 2]

 

Private Radio Bureau Information; Notice and Filing Requirements 
for the First Auction of Interactive Video Data Service Licenses

May 23, 1994.
    The Federal Communications Commission (``FCC'') plans to hold a 
series of oral and sealed bid auctions for approximately 1400 
Interactive Video Data Service (IVDS) licenses. The first auction, 
which will be an oral auction, will be for 297 IVDS markets. The 
auction will begin promptly at 9 a.m. each day on July 28-29, 1994, and 
will be held in the Regency Ballroom at the Omni Shoreham Hotel at 2500 
Calvert Street, NW., in Washington, DC. As explained in more detail 
below, those wishing to participate in the first auction must submit an 
application in accordance with the Commission's rules and the 
instructions in this Public Notice on or before Monday, June 27, 1994, 
and must bring to the auction a cashier's check payable to ``FCC'' or 
``Federal Communications Commission'' in the amount of $2500 for each 
five licenses that they expect to win in order to be eligible to bid.

Summary of Licenses To Be Auctioned

    The first auction will cover 297 IVDS markets: markets 5 and 11-
306.\1\ Two licenses are available in each market, license A and 
license B.\2\ Bidders may only hold one IVDS license in each market. 
The Commission will not auction the licenses strictly by largest to 
smallest IVDS market. Rather, the licenses will first be grouped to 
conform as closely as possible with Areas of Dominant Influence 
(ADIs)\3\. The IVDS license group associated with the largest ADIs will 
be auctioned first. Within ADIs, the largest IVDS markets will be 
auctioned first, with smaller markets following. The exact order in 
which the markets are to be auctioned is listed as an Appendix to this 
Public Notice.\4\
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    \1\Licenses for IVDS markets 1-10 except for market 5 (Detroit) 
were awarded pursuant to a lottery held last year. Licenses for IVDS 
markets 307-734 will be conducted later by sealed bid.
    \2\License A is at 218-218.5 MHz; License B is at 218.5-219 MHz.
    \3\ADIs are geographic areas that are designed to reflect the 
coverage of a broadcast television station. This standard market 
definition, developed by the Arbitron Ratings Company, places each 
county in the continental U.S. within one of 210 ADIs. Usually, an 
ADI is composed of several IVDS markets (Metropolitan Statistical 
Areas or MSAs). A list which reflects the exact order in which the 
Commission intends to auction the MSAs can be found in the far left 
hand column of the attached Appendix under the heading ``Auction 
No.'' and will also be included in the Bidder's Package discussed 
below.
    \4\The following IVDS areas being auctioned are located along 
the US/Canadian or US/Mexican borders: 5, 16, 18, 20, 25, 34, 48, 
53, 77, 81, 128, 130, 136, 141, 162, 248, 270, 281, 285 and 306 and 
are also identified as ``Border'' in the right hand column of the 
list of IVDS markets attached as an Appendix to this Public Notice. 
Applicants should be aware that there may be licensing delays and/or 
additional restrictions on operation in these areas because of the 
need to coordinate with foreign governments. IVDS markets 1-4 and 6-
10 were awarded by lottery. The IVDS licenses associated with the 
ADIs for IVDS markets 1-4 and 6-10 but which were not lotteried will 
be auctioned last in the oral auction.
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    During the auction, both license A and license B will be auctioned 
at the same time, with the two highest bidders generally\5\ awarded a 
license. The highest bidder will receive first choice between the two 
licenses at its bid price and the next highest bidder will receive the 
other license at its bid price.
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    \5\The only exception will be when the two high bidders are 
designated entities using bidding credits. In that event the highest 
bidder will be offered the license of its choice and the second 
highest bidder will be given the option of accepting the license 
without the credit or declining the remaining license. In the latter 
event, the second license will be reauctioned without the use of 
bidding credits.
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Procedures, Terms, and Conditions

    The auction will be conducted by Tradewinds International, Inc. and 
Larry Latham Auctioneers, Inc. Prospective bidders are urged to 
thoroughly familiarize themselves with the Procedures, Terms and 
Conditions in the Bidder's Package (collectively, ``Terms''), the 
Second Report and Order in FCC Docket No. 93-253, FCC 94-61, released 
April 20, 1994, and the Fourth Report and Order in Docket No. 93-253, 
FCC 94-99, released May 10, 1994. Copies of the Second Report and Order 
are available for a fee from International Transcription Services, Inc. 
at (202) 857-3800. The Terms and the auction documents in the Bidder's 
Information Package (``Bidder's Package'') discussed below are not 
negotiable. Prospective bidders are urged to read, review and analyze 
the auction documents prior to bidding at the auction, to make certain 
that they completely understand the provisions therein, and are willing 
to be bound by all of the Terms before making any bid.

1. Bidder's Information Package

    The Bidder's Package (as amended and supplemented from time to 
time) may be obtained by a prospective bidder by contacting the 
Commission's contractor, Tradewinds International, Inc. at General 
Aviation Terminal, suite 200, No. 7 Thomas Avenue, Washington National 
Airport, Washington, DC 20001, telephone (202) 637-FCC1 (3221) and 
(202) 637-FCC2 (3222).
    The Bidder's Package will contain the following information:
    (1) List of licenses to be offered in the sequence they will be 
offered;
    (2) Procedures, Terms and Conditions of the auction;
    (3) Application form to participate in an FCC auction (``FCC Form 
175'' (and 175-S)\6\ or ``Short Form'') including instructions on 
filling out the form and a sample form 175 correctly filled out;
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    \6\Form 175-S is a continuation of Form 175 for those who wish 
to bid on more markets than there is space for on Form 175.
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    (4) High Bid Acknowledgment Form\7\;
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    \7\The High Bid Acknowledgment Form is a form that the high 
bidders must sign at the conclusion of each round of bidding 
confirming the amount of their bid and the license they have won.
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    (5) Wire transfer instructions for winning bidders wishing to use 
wire transfer of funds;
    (6) Application form for an IVDS license (``FCC Form 574'' or 
``Long Form'') to be submitted by winning bidders only;
    (7) Copies of the FCC decision on auction rules for IVDS (the 
Fourth Report and Order) and of the general auction rules established 
in the Second Report and Order; and
    (8) Other general auction information.

2. Short Form (FCC Form 175) License Application

    Bidding at the oral IVDS auction is open only to bidders who submit 
an application on FCC Form 175 to participate in an FCC auction that 
complies with FCC rules that is received by Tradewinds no later 5:30 
p.m. EDT Monday, June 27, 1994. If you have not submitted a Form 175 by 
that time, you cannot bid. Instructions for filling out the Form 175 
are on the back of that form; please read them before completing the 
Form. We call special attention to several items on the Form 175.
    1. In item 6 of Form 175, Auction No., applicants should enter 
``2''.
    2. Item 7 requires you to make up a ten digit FCC Account Number, a 
personal identification number that we will use to identify and track 
your application. You have two options to create this FCC Account 
Number. Option 1--you may use your taxpayer identification number (TIN) 
with a prefix of ``O'', i.e., 0123456789. Option 2--you may use your 
ten digit telephone number (i.e. 5552345678). You should use this same 
number when submitting additional information/material regarding this 
application, including any required fees submitted to the Commission on 
FCC 159, FCC Remittance Advice, (i.e. use the same number for the Form 
175 and the FCC Account Number of FCC 159). Please use this number 
whenever you write, call, or otherwise inquire about your application. 
You will need that number to register for the auction on auction day.
    3. Items 9 and 10 ask whether the applicant is claiming a 
preference in the bidding process. As discussed more fully below, 
certain preferential measures are available to entities listed in item 
9. Please ensure that you qualify for a preference before checking 
``yes'' in item 10; the Commission has specific rules defining a 
``minority'' and ``small business.''
    4. For item 11, Market No., the Market No. for each IVDS license to 
be auctioned is listed in the second column of the Appendix to this 
Public Notice under the heading ``MSA''; please list the markets you 
are interested in bidding on in the first column under item 11 labeled 
``Market No.'' If you want to bid on more than five markets, you must 
continue on Form 175-S. For the Frequency Block No. in item 11, 
applicants should check Block No. 1 if they wish to bid on license A 
(218-218.5-MHz) Block No. 2 if they wish to bid on license B (218.5-
219MHz). Applicants who wish to hold either license in a particular 
market should check both Block No. 1 and Block No. 2. Leave the other 
Frequency Block Nos. blank.
    5. In item 12, applicants should list the name(s) of a person(s) 
they want to represent them at the auction. Only one of the 
individual(s) listed in item 12 will be permitted to display the 
bidding card.
    6. Please read the ``Certifications'' carefully before signing. 
These certifications help to ensure a fair and open auction and 
require, among other things, the disclosure to the Commission of 
certain information on applicant ownership and agreements or 
arrangements concerning the licenses. Submission of a false 
certification to the Commission is a serious matter that may result in 
severe penalties, including monetary forfeitures, license 
revocation(s), being barred from future auctions, and/or criminal 
prosecution.
    A sample Form 175, properly completed, will be provided as part of 
the Bidder's Package.
    No microfiche copies of the Form 175 or 175-S are required.
Where To Send the Form 175
    Each individual application (Form 175 and attachments, including 
Form 175-S, if needed), whether mailed or hand delivered, must be in an 
individual sealed envelope and properly addressed. Multiple 
applications, properly packaged, may be delivered in one larger, 
properly addressed container.
    In order to be eligible to bid, Tradewinds must receive your Form 
175 application by 5:30 p.m. EDT on Monday, June 27, 1994. Late 
applications will not be accepted.
    Whether mailed, hand delivered, or sent by private courier, they 
must be addressed only to: Tradewinds International, Inc., General 
Aviation Terminal, suite 200, No. 7 Thomas Avenue, Washington National 
Airport, Washington, DC 20001, Attention: IVDS Auction, (202) 637-3221 
in an envelope addressed as above and marked ``IVDS Auction'' on the 
outside. The business hours of Tradewinds International are between 9 
a.m. and 6 p.m. Applications taken or sent to any other location will 
not be accepted.
    We strongly recommended that you use certified mail, return receipt 
requested or a delivery service that obtains a receipt showing when, 
where, and to whom the application was delivered. Tradewinds 
International will time stamp file copies of applications upon request.
When To Submit Form 175
    The completed Form 175, application to participate in an FCC 
auction, can be submitted only to the address above anytime after 
release of this Public Notice but must be received by 5:30 p.m. EDT on 
Monday, June 27, 1994. The Form 175 requires the bidder to supply 
certain information which is explained more fully in the instructions 
accompanying that application. Please read the instructions thoroughly 
before attempting to complete the form. Certain information necessary 
to complete Form 175, such as the Auction No., and IVDS Market Nos., 
can be found either at the top of or in the Appendix to this Public 
Notice.\8\
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    \8\Applicants interested in bidding on licenses for more than 
five IVDS licenses must use FCC Form 175-S to list the additional 
markets on which they wish to bid. Applicants may bid only on 
licenses for which they applied, and may only be awarded one of the 
two IVDS licenses in each market.
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Application Fee
    No application fee or fee form need accompany the Form 175 for the 
IVDS auction, but you must bring an upfront payment with you to the 
auction as described below in order to be able to bid. As discussed 
further below, winning bidders will have to submit an application on 
FCC Form 574 to be an IVDS licensee.
Upfront Payment
    You must have at least one cashier's check in the amount of two 
thousand five hundred dollars ($2,500.00) U.S. at the auction in order 
to bid. One cashier's check in the amount of $2,500 entitles you to be 
the successful high bidder on up to five licensees. If you intend to 
win more than five licenses, you must bring additional $2,500.00 
cashier's checks, each of which will cover up to five additional 
licenses. For example, if you wish to win seven IVDS licenses, bring 
two $2,500.00 cashier's checks. If you wish to win twelve IVDS 
licenses, bring three $2,500.00 cashier's checks. If you wish to win 
thirty two IVDS licenses, bring seven $2,500.00 cashier's checks.
    The cashier's check(s) must be drawn on a bank insured by the 
Federal Deposit Insurance Corporation (FDIC) and be made payable to 
``FCC'' or ``Federal Communications Commission''. No cash will be 
accepted.
    Please calculate carefully the number of IVDS licenses you expect 
to bid on before the auction, as you will not be permitted to bid on 
additional licenses if you do not have sufficient cashier's checks. 
Also, if you plan to bid on more than five licenses, please do not 
bring a single cashier's check in an amount that is a multiple of 
$2,500. Bring several cashier's checks, each in the amount of 
$2,500.00. The Commission cannot process upfront payments in amounts 
other than $2,500.00 and you may not be able to bid on more than five 
licenses without checks of $2,500.000. Furthermore, the Commission will 
not refund any monies if you bring cashier's checks in amounts larger 
than $2,500.00. Your upfront payment(s) will be credited towards the 
balance due on the license(s) you win, but FCC cannot make refunds on 
auction day if the amount of your check(s) exceeds the value of the 
license(s).
    You will be required to show your cashier's check(s) on auction day 
in order to receive the bidding card enabling you to bid. If you are 
the successful high bidder on a license, the auctioneer will take your 
check from you although you will still be able to win up to four more 
licenses without having to submit another cashier's check. The amount 
of your cashier's check(s) will be credited towards the balance due the 
Commission on the license(s) you have won.

3. What Happens After the Form 175 Applications Are Filed?

    After the period for filing applications has closed on Monday, June 
27, 1994 at 5:30 p.m. EDT, the Commission will process the received 
applications and issue a Public Notice listing all accepted and 
rejected applications and also listing those which have minor defects 
that can be corrected. The Public Notice will also announce the time 
and manner for correcting these defects. As described more fully in the 
Commission's general auction rules, you may only make minor changes to 
your application such as the correction of typographical errors. You 
may not make major modifications such as changes in ownership to your 
application. Failure to sign the Form 175 cannot be corrected and will 
cause the application to be dismissed and the applicant ineligible to 
participate in the auction. See Sec. 1.2105 of the Commission's general 
auction rules.
    Later, the Commission will release another Public Notice announcing 
the names of all applicants, including applicants who have corrected 
their defective applications, whose applications have been accepted for 
filing and who are therefore eligible to participate in the auction.\9\ 
Bidder numbers and cards will be assigned at registration. Further 
information, such as directions to the auction location and auction 
registration procedures, will be provided in the Bidder's Package. All 
bidders will be required to bring two forms of identification (one form 
of photo identification, e.g. a valid driver's license or passport, and 
one additional form of identification.)
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    \9\If the Commission receives only one application for an 
available IVDS license or licenses in a particular market, it will 
not auction that license and will invite the applicant or applicants 
for those licenses to file an application on FCC Form 574 to acquire 
those licenses without having to participate in an auction.
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4. Auction Day and Post-Auction Procedures

Registration
    You must register at the auction site in order to bid either the 
night before the first day of the auction or on the morning of both 
auction days before 9 a.m. Details of registration will be in the 
Bidder's Package. You may bid on both license A and license B in a 
single IVDS market, but you may only win one license. The FCC will 
verify and inspect the number and validity of your cashier's check(s) 
at registration.
Collection of High Bid Acknowledgment Form and Upfront Payments
    At the end of each round of bidding, the two high bidders will be 
required to sign a High Bid Acknowledgment Form. The upfront payment 
($2,500 cashier's check) will be collected from the successful bidder 
immediately after the first license is won in each group of five 
licenses. No interest will be paid on any funds deposited with the 
Commission.
Payment of Down Payment and Remaining Balance Due
    The winning bidder for each license must submit sufficient 
additional funds (a ``down payment'') to bring the amount of money on 
deposit with the government to 20% of their winning bid within five (5) 
business days after the auction. This down payment must be deposited at 
the Commission's lockbox bank. Winning bidders that are qualified small 
businesses, however, need only submit an amount sufficient to bring 
their monies on deposit with the government up to 10% of their winning 
bid within five (5) business days after close of bidding, with the 
remaining 10% due within five (5) business days after grant of the 
license. Further details are in the Commission's general auction rules 
and its IVDS specific auction rules and will be supplied in the 
Bidder's Package. Except for winners entitled to installment financing, 
payment of the 80% remaining balance will be due after the Commission 
processes the winning bidder's Form 574 (see below) and grants its 
license. No interest will be paid on any funds deposited with the 
Commission.
Filing of FCC Form 574
    As detailed in the IVDS and general auction rules, winning bidders 
must timely submit a properly completed FCC application for an IVDS 
license (FCC Form 574) within ten business days after being notified 
that they are the winning bidder(s). Send the Form 574 to: Office of 
the Secretary, Federal Communications Commission, 1919 M St., NW., room 
222, Washington, DC 20554, Attention: Auction Application Processing 
Section.
    The Commission has decided to waive Sec. 1.1102(7)(a) of its rules 
on its own motion so that winning bidders need not submit an 
application fee or Form 159.
    After submission of the 574, the Commission will determine whether 
there are any reasons why the license should not be granted; if there 
are none, it will grant the license. The continuing validity of the 
license will be conditioned upon full payment of the remaining balance 
of the winning bid within five business days after license grant.
Default Penalties
    Certain penalties apply if a bidder withdraws a high bid or 
defaults (e.g. is unable to pay the balance due) after winning the 
bidding. These penalties are designed to ensure that only serious, 
qualified bidders participate in the auction and are explained more 
fully in the Commission's Fourth Report and Order and in its general 
auction rules.

5. Designated Entities

Benefits for Designated Entities
    The Commission has provided three basic benefits, described below, 
for IVDS auction participants who are ``minorities'', ``women'' or 
``small businesses'' (collectively, the ``Designated Entities''). 
Definitions of these entities are listed in subpart Q of part 1 of the 
Commission's Rules and in the Bidder's Package.
    The first of these benefits is government sponsored installment 
financing, which is available only to small businesses. The FCC is 
offering to finance up to 80 percent of a small business's winning bid 
(high bid minus the monies on deposit with the FCC) over the 5 year 
term of their IVDS license. Interest will be charged at a fixed rate 
equal to that in effect for 5 year treasury notes on the day the 
license is issued. Payments will be interest only for the first two 
years, with principal amortized over the remaining three years of the 
license term. The FCC will provide coupon payment books.
    The second of these benefits is a bidding credit. Businesses owned 
by minorities of women are entitled to a 25% bidding credit to win one 
of the two IVDS licenses in each market. A bidding credit allows the 
winning bidder to pay less than the amount of its bid. For example, if 
the winning bid is $1,000, a business owned by a minority or a woman 
need actually pay only $750 for the license. A bidding credit is 
available for either license A or license B in each IVDS market, but 
not both. If the two high bidders for licenses A and B are both 
designated entities using bidding credits, the highest bidder will be 
offered the license of its choice and the second highest bidder will be 
given the option of accepting the license without the credit or 
declining the remaining license. In the latter event, the second 
license will be reauctioned, this time without the use of bidding 
credits.
    If a bidder is both a small business and a minority/woman owned 
business, it can obtain installment financing and use bidding 
credits.\10\ Bidding credits will not be available on the second IVDS 
license in a market if the other IVDS license was already won using a 
bidding credit, however.
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    \10\For those designated entities utilizing both installment 
financing and bidding credits, the down payment requirements and 
installment financing would apply to amounts due after application 
of the bidding credit.
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    The third benefit is the availability of tax certificates to 
initial investors in minority and women-owned IVDS licensees upon 
divestiture of their non-controlling investment interests in an IVDS 
license. Tax certificates are also available to IVDS licensees who 
transfer or assign their licenses to minority or women-owned businesses 
who are also designated entities. Tax certificates enable initial 
investors or the IVDS licensee to defer the taxable gain upon sale of 
their interest or license. More information on tax credits in the 
Fourth Report and Order.
Unjust Enrichment
    Certain penalties apply if a designated entity obtains an IVDS 
license using the benefits available to designated entities and 
subsequently transfers or sells its license prematurely. These 
penalties are explained more fully in the Commission's Fourth Report 
and Order and in its general auction rules.
    For additional information on IVDS auctions, please call Tradewinds 
International, Inc. at (202) 637-FCC1 (3221) or FCC2 (3222) between 9 
a.m. and 6 p.m. EDT. Messages can be left after business hours.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 94-13258 Filed 5-27-94; 8:45 am]
BILLING CODE 6712-01-M