[Federal Register Volume 62, Number 199 (Wednesday, October 15, 1997)]
[Notices]
[Pages 53629-53636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27232]


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FEDERAL COMMUNICATIONS COMMISSION


Auction of Local Multipoint Distribution Service; Auction Notice 
and Filing Requirements for 986 Basic Trading Area (``BTA'') Licenses 
in the 28 GHz and 31 GHz Bands, Scheduled for December 10, 1997

[DA 97-2081]
Released September 25, 1997

I. Introduction

    Local Multipoint Distribution Service (``LMDS'') Licenses to Be 
Auctioned: The Federal Communications Commission (``FCC'' or 
``Commission'') will hold an auction for 986 licenses to provide LMDS 
in the 28 GHz and 31 GHz bands. Two licenses will be offered in each of 
493 BTAs and BTA-like areas in the United States. One license, in 
frequency block A, will authorize service on 1,150 megahertz of 
spectrum in both the 28 GHz and 31 GHz bands. The second license, 
frequency block B, will authorize service on 150 megahertz of spectrum 
in the 31 GHz band. Each frequency block encompasses the following 
spectrum:

Block A (1,150 megahertz): 28 GHz band: 27,500-28,350 MHz and 29,100-
29,250 MHz and 31 GHz band: 31,075-31,225 MHz
Block B (150 megahertz): 31 GHz band: 31,000-31,075 MHz and 31,225-
31,300 MHz

    Note: Operations to take place in the 29,100--29,250 MHz band 
are governed by 47 CFR 101.103(g) and (h), 101.113(c), 101.133(d), 
and 101.147(t), which are new provisions designed to facilitate the 
sharing of this spectrum by LMDS, GSO/FSS gateways, and MSS feeder 
link licensees. These provisions allow only hub-to-subscribers 
transmissions by LMDS licensees in this band.

    Auction Date: The auction will commence on December 10, 1997. The 
initial schedule for bidding will be announced by public notice at 
least one week before the start of the auction. Unless otherwise 
announced, bidding will be conducted on each business day until bidding 
has stopped on all licenses.
    Auction Title: LMDS--Auction No. 17.
    Bidding Methodology: Simultaneous multiple round bidding. Bidding 
will be permitted only from remote locations, either electronically (by 
computer) or telephonically.
    Pre-Auction Deadlines:

 Auction Seminar--October 30, 1997
 Short-Form Application (FCC Form 175) November 17, 1997, 5:30 
p.m. ET (Applications are not due on November 10 as previously 
announced on July 30, 1997)
 Upfront Payments (via wire transfer)--December 1, 1997, 6:00 
p.m. ET (Payments are not due on November 24 as previously announced on 
July 30, 1997)
 Orders for Remote Bidding Software--December 1, 1997, 5:30 
p.m. ET
 Mock Auction--December 8, 1997

    Telephone Contacts:

 FCC National Call Center--888-CALL-FCC (888-225-5322) (For 
Bidder Information Packages, General Auction Information, and Seminar 
Registration, press option #2 at the prompt)
FCC Technical Support Hotline--202-414-1250

    Participation: Those wishing to participate in the auction must:

 Submit a short-form application (FCC Form 175) by the above-
listed deadline.
 Submit an upfront payment and an FCC Remittance Advice Form 
(FCC Form 159) by the above-listed deadline.
 Comply with all provisions outlined in this Public Notice.

    Prohibition of Collusion: To ensure the competitiveness of the 
auction process, the Commission's rules prohibit applicants for the 
same BTA from communicating with each other during the auction about 
bids, bidding strategies, or settlements. This prohibition begins with 
the filing of short-form applications, and ends when winning bidders 
submit their first down payments. The only exception is where 
applicants enter into a bidding agreement before filing their short-
form applications, and disclose the existence of the agreement in their 
short-form applications. See 47 CFR 1.2105(c).
    Bidder Information Package: More complete details about this 
auction are contained in a Bidder Information Package. The Commission 
will provide one copy to each company free of charge. Additional copies 
may be ordered at a cost of $16.00 each, including postage, payable by 
Visa or Master Card, or by check payable to ``Federal Communications 
Commission'' or ``FCC.'' To place an order, contact the FCC National 
Call Center at 888-CALL-FCC (888-225-5322, press option #2 at the 
prompt). Prospective bidders who have already contacted the FCC 
expressing an interest in this auction will receive a Bidder 
Information Package in two to three weeks, and need not call again 
unless they wish to order additional copies.
    Relevant Authority: Prospective bidders must familiarize themselves 
thoroughly with the Commission's rules relating to LMDS, contained in 
title 47, part 101 of the Code of Federal Regulations, and those 
relating to application and auction procedures, contained in title 47, 
part 1 of the Code of Federal Regulations.
    Prospective bidders must also be thoroughly familiar with the 
procedures, terms and conditions (collectively, ``Terms'') contained in 
the Second Report and Order in PP Docket No. 93-253, 59 FR 22980 (May 
4, 1994); the Second Memorandum Opinion and Order in PP Docket No. 93-
253, 59 FR 44272 (August 26, 1994); the Erratum to the Second 
Memorandum Opinion and Order in PP Docket No. 93-253 (released October 
19, 1994); the First Report and Order, 61 FR 44177 (August 28, 1996), 
and Fourth Notice of Proposed Rule Making in CC Docket No. 97-297, 61 
FR 39425 (July 29, 1996); the Second Report and Order, 62 FR 23148 
(April 29, 1997), Order on Reconsideration, 62 FR 28373 (May 23, 1997), 
and Fifth Notice of Proposed Rule Making in CC Docket No. 96-297, 62 FR 
16514 (April 7, 1997) (``LMDS Second R&O''); and the Second Order on 
Reconsideration in CC Docket No. 97-297, 62 FR 48787 (September 17, 
1997) (collectively referred to as the ``Relevant Orders'').
    The Terms contained in the Commission's rules, Relevant Orders, 
Public Notices and Bidder Information Package are not negotiable. 
Prospective bidders should review these auction documents thoroughly 
prior to the auction to make certain that they understand all of the 
provisions and are willing to be bound by all of the Terms before 
participating in the auction.
    Potential bidders should also be aware that petitions for 
reconsideration of the Commission's actions in the LMDS Second R&O have 
been filed; that several, but not all, matters raised in petitions for 
reconsideration have been

[[Page 53630]]

addressed in the Second Order on Reconsideration; and that the Terms 
adopted therein are therefore subject to change upon reconsideration or 
appeal. There are also petitions for reconsideration filed against the 
Commission's actions in the First Report and Order, these petitions are 
pending an order on reconsideration.
    The Commission may amend or supplement the information contained in 
our Public Notices or the Bidder Information Package at any time, and 
will issue public notices to convey any new or supplemental information 
to bidders. It is the responsibility of all prospective bidders to 
remain current with all Commission rules and with all public notices 
pertaining to this auction. Copies of most Commission documents, 
including public notices, can be retrieved from the FCC Internet node 
via anonymous [email protected] or the FCC World Wide Web site at http://
www.fcc.gov. Additionally, documents may be obtained for a fee by 
calling the Commission's copy contractor, International Transcription 
Service, Inc., at 202-857-3800.
    Incumbent Licensees: Although LMDS operations are permitted in the 
31,000--31,075 MHz and 31,225--31,300 MHz bands, incumbent city 
licensees and private business users operating in these two segments 
are entitled to protection against harmful interference from any LMDS 
operation in these blocks. LMDS service providers will be entitled to 
interference protection from any other presently-authorized primary 
users in the 31,075--31,225 MHz bands.
    Block A of the New York BTA is encumbered by a pre-existing 
licensee in the New York Primary Metropolitan Statistical Area. The 
incumbent licensee, CellularVision of New York, is entitled to 
interference protection.
    Reminder to potential Non-geostationary Mobile Satellite Service 
applicants/licensees: Section 101.103(h) of the Commission's rules 
requires that no more than 15 days after the release of this Public 
Notice, NGSO-MSS feeder link earth station complex applicants/licensees 
planning to operate in the 29,100--29,250 MHz band pursuant to 
Sec. 25.257 of the Commission's rules, file with the Commission a set 
of geographical coordinates consistent with section 101.103(h)(2) of 
the Commission's rules. This information should be directed to the 
attention of: Robert James, Federal Communications Commission, Wireless 
Telecommunications Bureau 1919 M Street, NW, Room 8102, Washington, 
D.C. 20554.
    Other Proceedings: Currently pending in the U.S. Court of Appeals 
for the D.C. Circuit is a consolidated petition for review of the LMDS 
Second R&O and Order on Reconsideration. See James L. Melcher v. 
Federal Communications Commission and United States of America, Case 
No. 93-110 (and consolidated cases) dealing with two issues: 
eligibility restrictions for incumbent local exchange carriers 
(``ILECs'') to own LMDS licenses ``in-region,'' and the denial of 
petitions for reconsideration of the 971 waiver applications for 
service in the 28 GHz band which were previously dismissed. Also 
pending before the Commission are several petitions for reconsideration 
of the LMDS Second R&O and Order on Reconsideration dealing with the 
issues of: the eligibility restriction on ILECs; the allocation of the 
31 GHz band to LMDS; the reinstatement of dismissed applications in the 
31 GHz band; the application of a new frequency tolerance to the 31 GHz 
band; and further reconsideration of the 971 waiver applications for 
service in the 28 GHz band which were previously dismissed; as well as 
petitions for clarification of certain technical and service rules. A 
memorandum opinion and order on reconsideration responding to these 
petitions will be released in the near future.
    Bidder Alerts: All applicants must certify on their FCC Form 175 
applications under penalty of perjury that they are legally, 
technically, financially and otherwise qualified to hold a license, and 
not in default on any payment for Commission licenses (including down 
payments) or delinquent on any non-tax debt owed to any Federal agency. 
Prospective bidders are reminded that submission of a false 
certification to the Commission is a serious matter that may result in 
severe penalties, including monetary forfeitures, license revocations, 
exclusion from participation in future auctions, and/or criminal 
prosecution.
    The FCC makes no representations or warranties about the use of 
this spectrum for particular services. Applicants should be aware that 
an FCC auction represents an opportunity to become an FCC licensee in 
this service, subject to certain conditions and regulations. An FCC 
auction does not constitute an endorsement by the FCC of any particular 
services, technologies or products, nor does an FCC license constitute 
a guarantee of business success. Applicants should perform their 
individual due diligence before proceeding as they would with any new 
business venture.
    As is the case with many business investment opportunities, some 
unscrupulous entrepreneurs may attempt to use the LMDS auction to 
deceive and defraud unsuspecting investors. Common warning signals of 
fraud include the following:
     The first contact is a ``cold call'' from a telemarketer, 
or is made in response to an inquiry prompted by a radio or television 
infomercial.
     The offering materials used to invest in the venture 
appear to be targeted at IRA funds, for example by including all 
documents and papers needed for the transfer of funds maintained in IRA 
accounts.
     The amount of the minimum investment is less than $25,000.
     The sales representative makes verbal representations 
that: (a) the Internal Revenue Service (``IRS''), Federal Trade 
Commission (``FTC''), Securities and Exchange Commission (``SEC''), 
FCC, or other government agency has approved the investment; (b) the 
investment is not subject to state or federal securities laws; or (c) 
the investment will yield unrealistically high short-term profits. In 
addition, the offering materials often include copies of actual FCC 
releases, or quotes from FCC personnel, giving the appearance of FCC 
knowledge or approval of the solicitation.
    Information about deceptive telemarketing investment schemes is 
available from the FTC at 202-326-2222 and from the SEC at 202-942-
7040. Complaints about specific deceptive telemarketing investment 
schemes should be directed to the FTC, the SEC, or the National Fraud 
Information Center at 800-876-7060. Consumers who have concerns about 
specific LMDS proposals may also call the FCC National Call Center at 
888-CALL-FCC (888-225-5322).

II. Bidder Eligibility and Small Business Provisions

A. General Eligibility Criteria

    As described above, this auction offers two licenses: one license 
for 1,150 megahertz of spectrum in the 28 GHz and 31 GHz bands; and one 
license for 150 megahertz of spectrum in the 31 GHz band; in each of 
493 BTA and BTA-like areas, for a total of 986 licenses. General 
eligibility to provide LMDS service, subject to certain restrictions 
outlined below, is afforded to entities which are not precluded under 
47 CFR 101.7, 101.1001, and 101.1003.

(1) Eligibility Restrictions

    (a) 1,150 megahertz licenses.
    ILECs and cable television companies are subject to certain 
restrictions on their eligibility to own an attributable interest in 
the 1,150 megahertz LMDS

[[Page 53631]]

license in their authorized or franchised service areas (``in-
region''). An incumbent is defined as ``in-region'' if its authorized 
service area represents 10 percent or more of the population of the 
BTA. A 20 percent or greater ownership level constitutes an 
attributable interest in a license. ILECs and cable companies are 
permitted to participate fully in the auction of the 1,150 megahertz 
LMDS licenses, but are required to divest any overlapping interests 
within 90 days if they win a license at the auction. The eligibility 
restrictions terminate on the third anniversary of the effective date 
of the LMDS rules. These restrictions may be extended beyond the three-
year period, if, upon a review at the end of this period, the 
Commission determines that sufficient competition has not developed. 
The Commission may waive the restriction in individual cases upon a 
showing of good cause.
    (b) 150 megahertz licenses.
    All entities that meet the Commission's general eligibility 
criteria, including ILECs and cable television companies, are eligible 
to own attributable interests in the 150 megahertz license in any BTA.
(2) Determination of Revenues
    For purposes of determining which entities qualify as very small 
businesses, small businesses, and entrepreneurs, the Commission will 
attribute to the applicant the gross revenues of all of its controlling 
principals and affiliates. For purpose of this auction, the Commission 
will not impose specific equity requirements on controlling principals. 
However, in order to qualify as a very small business, small business, 
or entrepreneur an applicant's qualifying principals must maintain 
control of the applicant. The term ``control'' includes both de facto 
and de jure control of the applicant. Typically, de jure control is 
evidenced by ownership of at least 50.1 percent of an entity's voting 
stock. De facto control is determined on a case-by-case basis. The 
following are some common indicia of control:
     The entity constitutes or appoints more than 50 percent of 
the board of directors or management committee;
     The entity has authority to appoint, promote, demote, and 
fire senior executives that control the day-to-day activities of the 
licensee; or
     The entity plays an integral role in management decisions.
(3) Application Showing
    Applicants should note that they will be required to file 
supporting documentation to establish that they satisfy the eligibility 
requirements for this auction. See 47 CFR 1.2105 and 101.1109.

B. Bidding Credits

    Qualifying LMDS applicants are eligible for bidding credits. The 
size of an LMDS bidding credit depends on the annual gross revenues of 
the bidder and its controlling principles and affiliates, as averaged 
over the preceding three years:
     A bidder with gross annual revenues of not more than $15 
million receives a 45 percent discount on its winning bids for LMDS 
licenses;
     A bidder with gross annual revenues of more than $15 
million but not more than $40 million receives a 35 percent discount on 
its winning bids for LMDS licenses; and
     A bidder with gross annual revenues of more than $40 
million but not more than $75 million receives a 25 percent discount on 
its winning bids for LMDS licenses.
    Bidding credits are not cumulative: applicants that qualify receive 
either the 25 percent, the 35 percent, or the 45 percent bidding 
credit, but not all. The definitions of very small business, small 
business, and entrepreneur (including calculation of gross annual 
revenue) are set forth in 47 CFR 101.1112.
    LMDS bidders should note that unjust enrichment provisions apply to 
winning bidders that use bidding credits and subsequently assign or 
transfer control of their BTA licenses to an entity not qualifying for 
the same levels of bidding credits. See 47 CFR 101.1107(e).

III. Pre-Auction Procedures

A. Short-Form Application (FCC Form 175)--Due November 17, 1997

    In order to be eligible to bid in this auction, applicants must 
first submit an FCC Form 175 application. This application must be 
received at the Commission by 5:30 p.m. ET on November 17, 1997. Late 
applications will not be accepted.
    There is no application fee required when filing an FCC Form 175. 
However, to be eligible to bid, an applicant must submit an upfront 
payment. See Part 3.C, infra.
(1) Filing Options
    Auction applicants are strongly encouraged to file their 
applications electronically in order to take full advantage of the 
greater efficiencies and convenience of electronic filing, bidding and 
access to bidding data. For example, electronic filing enables the 
applicant to: (a) receive interactive feedback while completing the 
application; and (b) receive immediate acknowledgement that the FCC 
Form 175 has been submitted for filing. In addition, only those 
applicants who file electronically will have the option of bidding 
electronically. However, manual filing (via hard copy) is also 
permitted. Please note that manual filers will not be permitted to bid 
electronically and must bid telephonically, unless the FCC Form 175 is 
amended electronically prior to the resubmission date for incomplete or 
deficient applications. Applicants who file electronically may make 
amendments to their applications until the filing deadline. The 
following is a brief description of each filing method.
    (a) Electronic Filing.
    Applicants wishing to file electronically may generally do so on a 
24-hour basis beginning October 27, 1997. All the information required 
to file the FCC Form 175 electronically (i.e., software and help files) 
will be available over both the Internet and the FCC's Bulletin Board 
System (``BBS'').
    (b) Manual Filing.
    Auction applicants will be permitted to file their FCC Form 175 
applications in hard copy. When any manually filed FCC Form 175 and 
175-S exceeds five pages in length, the FCC additionally requires that 
all attachments be submitted on a 3.5-inch diskette, or the entire 
application be filed in a microfiche version. Manual filers must use 
the September 1997 version of FCC Form 175 and the October 1995 edition 
of the 175-S (if applicable). Earlier versions of the FCC Form 175 will 
not be accepted for filing. Copies of FCC Forms 175 and 175-S can be 
obtained by calling 202-418-FORM.
    Manual applications may be submitted by hand delivery (including 
private ``overnight'' courier), or by U.S. mail (certified mail with 
return receipt recommended), addressed to: FCC Form 175 Filing, Auction 
No. 17, Federal Communications Commission, Auctions & Industry Analysis 
Division, 1270 Fairfield Road, Gettysburg, PA 17325-7245.

    Note: Manual applications delivered to any other locations will 
not be accepted.

(2) Completion of the FCC Form 175
    Applicants should carefully review 47 CFR 1.2105 and 101.1104, and 
must complete all items on the FCC Form 175 (and 175-S, if applicable).
    Failure to sign a manually filed FCC Form 175 or failure to submit 
the required ownership information (for both electronic and manual 
filers) will result in dismissal of the application and loss of the 
ability to participate in the auction. Only original signatures

[[Page 53632]]

will be accepted for manually filed applications.
(3) Electronic Review of FCC Form 175
    The FCC Form 175 review software may be used to review and print 
applicants' FCC Form 175 applications. In other words, applicants who 
file electronically may review their own completed FCC Forms 175. 
Applicants also have access to view other applicants' completed FCC 
Forms 175, after the filing deadline has passed and the FCC has issued 
a public notice explaining the status of the applications. There is a 
fee of $2.30 per minute for accessing this system.

B. Application Processing and Minor Corrections

    After the deadline for filing the FCC Form 175 applications has 
passed, the FCC will process all timely applications to determine which 
are acceptable for filing, and subsequently will issue a public notice 
identifying: (1) Those applications accepted for filing (including FCC 
account numbers and the licenses for which they applied); (2) those 
applications rejected; and (3) those applications that have minor 
defects that may be corrected, and the deadline for filing such 
corrected applications.
    As described more fully in the Commission's rules, after the 
November 17, 1997, short-form filing deadline, applicants may make only 
minor corrections to their FCC Form 175 applications. Applicants will 
not be permitted to make major modifications to their applications 
(e.g., change their license selections, change the certifying official 
or change control of the applicant). See 47 CFR 1.2105.

C. Upfront Payments--Due December 1, 1997

    In order to be eligible to bid in the auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice (FCC 
Form 159). Manual filers must use the July 1997 version of FCC Form 
159. Earlier versions of this form will not be accepted. All upfront 
payments must be received at Mellon Bank in Pittsburgh, Pennsylvania, 
by 6:00 p.m. ET on December 1, 1997.
    Please note that:
     All payments must be made in U.S. dollars.
     All payments must be made by wire transfer. No other form 
of payment will be accepted.
     Upfront payments for Auction No. 17 go to a lockbox number 
different from the ones used in previous FCC auctions, and different 
from the lockbox number to be used for post-auction payments.
     Failure to deliver the upfront payment by the December 1, 
1997 deadline will result in dismissal of the application and 
disqualification from participation in the auction.
(1) Wire Transfers
    For this auction, the FCC requires applicants to make their upfront 
payments by wire transfer, which experience has shown provides the 
greatest reliability and efficiency. Wire transfer payments must be 
received by 6:00 p.m. ET on December 1, 1997. To avoid untimely 
payments, applicants should discuss arrangements (including bank 
closing schedules) with their banker several days before they plan to 
make the wire transfer, and allow sufficient time for the transfer to 
be initiated and completed before the deadline. Applicants will need 
the following information:

ABA Routing Number: 043000261
Receiving Bank: Mellon Pittsburgh
BNF: FCC/AC--9100180
OBI Field: (Skip one space between each information item) 
``AUCTIONPAY''
TAXPAYER IDENTIFICATION NO. (same as FCC Form 175, block 7)
PAYMENT TYPE CODE (enter ``AWLU'')
FCC CODE (same as FCC Form 159, Block 23A: ``17'')
PAYER NAME (same as FCC Form 175, Block 1)
LOCKBOX NO. 358420

    Note: The BNF and Lockbox number are specific to the upfront 
payments for this auction; do not use BNF or Lockbox numbers from 
previous auctions.

    Applicants must fax a completed FCC Form 159 to Mellon Bank at 412-
236-5702 at least one hour before placing the order for the wire 
transfer (but on the same business day). On the cover sheet of the fax, 
write ``Wire Transfer--Auction Payment for Auction Event No. 17.''
(2) FCC Form 159
    Each upfront payment must be accompanied by a completed FCC 
Remittance Advice (FCC Form 159). Proper completion of FCC Form 159 is 
critical to ensuring correct credit of upfront payments. Detailed 
instructions for completion of FCC Form 159 will be included in the 
Bidder Information Package.
(3) Amount of Upfront Payment
    The amount of the upfront payment required to bid on a particular 
license(s) in Auction No. 17 has been calculated in three tiers, based 
on the population (``pop'') figures for the BTA(s), and adjusted to 
take into account the spectrum bandwidth that is being licensed in 
frequency block A and in frequency block B.
    The formula utilized to calculate upfront payments is as follows:

                                                Frequency Block A                                               
----------------------------------------------------------------------------------------------------------------
                                                                            Per pop                   Frequency 
                      BTA population                              x        multiple*         x         block B* 
----------------------------------------------------------------------------------------------------------------
Over 1,000,000............................................           x          $0.90           x            10%
100,000-1,000,000.........................................           x          $0.60           x            10%
Under 100,000.............................................           x          $0.30           x            10%
----------------------------------------------------------------------------------------------------------------
* All upfront payments are rounded up to the nearest dollar. A minimum upfront payment amount has been set at   
  $2,500 per license.                                                                                           

    Please note that upfront payments are not attributed to specific 
licenses, but instead will be translated to bidding units to define the 
bidder's maximum bidding eligibility. Thus, an applicant does not have 
to make an upfront payment to cover all licenses for which the 
applicant has applied. Rather, the total upfront payment defines the 
maximum amount of bidding units on which the applicant will be 
permitted to bid (including standing high bids) in any single round of 
bidding. In order to be able to place a bid on a license, in addition 
to having specified that license on FCC Form 175, a bidder must have an 
eligibility level that meets or exceeds the number of bidding units 
assigned to that license. At a minimum, an applicant's total upfront 
payment must be enough to establish eligibility to bid on at least one 
of the licenses applied for on FCC Form 175, or else the

[[Page 53633]]

applicant will not be eligible to participate in the auction.
    In calculating the upfront payment amount, an applicant should 
determine the maximum number of bidding units it may wish to bid on in 
any single round, and submit an upfront payment covering that number of 
bidding units.

    Note: An applicant may, on its FCC Form 175, apply for every 
license being offered, but its actual bidding in any round will be 
limited by the bidding units reflected in its upfront payment. As 
explained in Parts 4.A(2) and 4.A(4), infra, bidders will be 
required to remain active in each round of the auction on a 
specified percentage of the bidding units reflected in their upfront 
payments in order to retain their current eligibility.
(4) Applicant's Wire Transfer Information for Purposes of Refunds
    Because experience with prior auctions has shown that in most cases 
wire transfers provide quicker and more efficient refunds than paper 
checks, the Commission plans to use wire transfers for all Auction No. 
17 refunds. To avoid delays in processing refunds, applicants should 
include wire transfer instructions with any refund request they file; 
they may also provide this information in advance by faxing it to the 
FCC Billings and Collections Branch, ATTN: Regina Dorsey or Linwood 
Jenkins, at 202-418-2843. (Applicants should also note that 
implementation of the Debt Collection Improvement Act of 1996 requires 
the FCC to obtain a Taxpayer Identification Number (TIN) before it can 
disburse refunds.) Eligibility for refunds is discussed in Part 5.D, 
infra.

D. Auction Registration

    Approximately five business days before the auction, the FCC will 
issue a public notice announcing all qualified bidders for the auction. 
Qualified bidders are those applicants whose FCC Form 175 applications 
have been accepted for filing and who have timely submitted upfront 
payments sufficient to make them eligible to bid on at least one of the 
licenses for which they applied.
    All qualified bidders are automatically registered for the auction. 
Registration materials will be distributed prior to the auction by two 
separate overnight mailings, each containing part of the confidential 
identification codes required to place bids. These mailings will be 
sent only to the contact person at the applicant address listed in the 
FCC Form 175.
    Applicants who do not receive both registration mailings will not 
be able to submit bids. Therefore, any qualified applicant who has not 
received both mailings by noon on Monday, December 8, 1997 should 
contact the FCC National Call Center at 888-CALL-FCC (888-225-5322, 
press option #2 at the prompt). Receipt of both registration mailings 
is critical to participating in the auction and each applicant is 
responsible for ensuring it has received all of the registration 
material.
    Qualified bidders should note that lost login codes, passwords or 
bidder identification numbers can be replaced only by appearing in 
person at the FCC Auction Headquarters located at 2 Massachusetts 
Avenue, N.E., Washington, D.C. 20002. Only an authorized representative 
or certifying official, as designated on an applicant's FCC Form 175, 
may appear in person with two forms of identification (one of which 
must be a photo identification) in order to receive replacement codes.

E. Remote Electronic Bidding Software

    Qualified bidders who file or amend the FCC Form 175 electronically 
are allowed to bid electronically, but must purchase remote electronic 
bidding software for $175.00, including shipping and handling, by 
December 1, 1997. (Auction software is tailored to a specific auction, 
so software from prior auctions will not work for Auction No. 17.) 
Bidders who order remote bidding software by the ordering deadline will 
receive it with the registration mailings. A software order form will 
appear in a subsequent public notice.

F. Auction Seminar

    On October 30, 1997 the FCC will sponsor a seminar for the LMDS 
auction. This seminar will be held at the Renaissance Hotel, 999 9th 
Street, N.W., Washington, D.C. The seminar will provide attendees with 
information about pre-auction procedures, conduct of the auction, FCC 
remote bidding software, and the LMDS service and auction rules. 
Additionally, there will be an opportunity for interested parties to 
display equipment at this event. If interested, please contact the FCC 
at 888-CALL-FCC (888-225-5322, press option #2 at the prompt).
    Please note that a maximum of two representatives from each company 
may attend, first-come first-served, on a reservation basis until room 
capacity is filled. To register, complete the registration form 
included in the Bidder Information Package.

G. Mock Auction

    All applicants whose FCC Forms 175 have been accepted for filing 
will be eligible to participate in a mock auction beginning December 8, 
1997. The mock auction will enable applicants to become familiar with 
the electronic software prior to the auction. Free demonstration 
software will be available for use in the mock auction. Due to 
different bidding procedures in the LMDS auction from previous 
Commission auctions, participation by all bidders is strongly 
recommended. Details will be announced by public notice.

IV. Auction Event

    The first round of the auction will begin on December 10, 1997.

A. Auction Structure

(1) Simultaneous Multiple Round Auction
    The 986 LMDS BTAs will be awarded through a single, simultaneous 
multiple round auction. Unless otherwise announced, bids will be 
accepted on all licenses in each round of the auction.
(2) Maximum Eligibility and Activity Rules
    As explained in Part 3.C(3), supra, the amount of the upfront 
payment submitted by a bidder determines the initial maximum 
eligibility (in bidding units) for each bidder. In order to ensure that 
the auction closes within a reasonable period of time, an activity rule 
requires bidders to bid actively throughout the auction, rather than 
wait until the end before participating. Bidders are required to be 
active on a percentage of their maximum eligibility during each round 
of the auction. Details of the specific percentages for each stage are 
set forth under Auction Stages in Part 4.A(4), infra. A bidder that 
does not satisfy the activity rule will either lose bidding eligibility 
or use an activity rule waiver, as explained by Activity Rule Waivers 
and Reducing Eligibility in Part 4.A(3), infra.
    A bidder is considered active on a license in the current round if 
it is either the high bidder at the end of the previous bidding period 
and does not withdraw the high bid in the current round, or if it 
submits an acceptable bid in the current round (see Minimum Acceptable 
Bids in Part 4.B(2), infra). A bidder's activity level in a round is 
the sum of the bidding units associated with licenses on which the 
bidder is active. The minimum required activity level is expressed as a 
percentage of the bidder's maximum bidding eligibility, and increases 
as the auction progresses, as set forth under Auction Stages in Parts 
4.A(4) and 4.A(5), infra.
(3) Activity Rule Waivers and Reducing Eligibility
    Each bidder will be provided five activity rule waivers that may be 
used

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in any round during the course of the auction. Use of an activity rule 
waiver preserves the bidder's current bidding eligibility despite the 
bidder's activity in the current round being below the required minimum 
level. An activity rule waiver applies to an entire round of bidding 
and not to a particular license.
    The FCC auction system assumes that bidders with insufficient 
activity would prefer to use an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver (known as an ``automatic waiver'') at the 
end of any bidding period where a bidder's activity level is below the 
minimum required unless: (1) there are no activity rule waivers 
available; or (2) the bidder overrides the automatic application of a 
waiver by reducing eligibility, thereby meeting the minimum 
requirements.
    A bidder with insufficient activity who wants to reduce its bidding 
eligibility rather than use an activity rule waiver must affirmatively 
override the automatic waiver mechanism during the bidding period by 
using the reduce eligibility function in the software. In this case, 
the bidder's eligibility is permanently reduced to bring the bidder 
into compliance with the activity rules as described in Auction Stages, 
Part 4.A(4), infra. Once eligibility has been reduced, a bidder will 
not be permitted to regain its lost bidding eligibility.
    Finally, a bidder may proactively use an activity rule waiver as a 
means to keep the auction open without placing a bid. If a bidder 
submits a proactive waiver (using the proactive waiver function in the 
bidding software) during a bidding period in which no bids are 
submitted, the auction will remain open and the bidder's eligibility 
will be preserved. An automatic waiver invoked in a round in which 
there are no new valid bids will not keep the auction open.
(4) Auction Stages
    The auction is composed of three stages, which are each defined by 
an increasing activity rule. Below are the proposed activity levels for 
each stage of the auction. The FCC reserves the discretion to alter the 
activity percentages before and during the auction.
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current eligibility is required to be 
active on licenses encompassing at least 60 percent of its current 
bidding eligibility. Failure to maintain the requisite activity level 
will result in a reduction in the bidder's bidding eligibility in the 
next round of bidding (unless an activity rule waiver is used). During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the current round activity by five-thirds (5/3).
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current eligibility is required to be active on 80 percent 
of its current bidding eligibility. During Stage Two, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by five-fourths (5/4).
    Stage Three: In each round of the third stage, a bidder desiring to 
maintain its current eligibility is required to be active on 98 percent 
of its current bidding eligibility. In this final stage, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by fifty-fortyninths (50/49).
    Caution: Since activity requirements increase in each auction 
stage, bidders must carefully check their current activity during the 
bidding period of the first round following a stage transition. This is 
especially critical for bidders who have standing high bids and do not 
plan to submit new bids. In past auctions, some bidders inadvertently 
lost bidding eligibility or used an activity rule waiver because they 
did not reverify their activity status at stage transitions. Bidders 
may check their activity against the required minimum activity level by 
using the bidding software's bidding module.
(5) Stage Transitions
    The auction will start in Stage One. Under the FCC's general 
guidelines it will advance to the next stage (i.e., from Stage One to 
Stage Two, and from Stage Two to Stage Three) when in each of three 
consecutive rounds of bidding, the high bid has increased on 10 percent 
or less of the licenses being auctioned (as measured in bidding units). 
However, the FCC retains the discretion to accelerate the auction by 
announcement. This determination will be based on a variety of measures 
of bidder activity including, but not limited to, the auction activity 
level, the percentages of licenses (measured in terms of bidding units) 
on which there are new bids, the number of new bids, and the percentage 
increase in revenue.
(6) Auction Stopping Rules
    Barring extraordinary circumstances, bidding will remain open on 
all licenses until bidding stops on every license. Thus, the auction 
will close for all licenses when one round passes during which no 
bidder submits a new acceptable bid on any license, applies a proactive 
waiver, or withdraws a previous high bid.
    The FCC retains the discretion, however, to keep an auction open 
even if no new acceptable bids or proactive waivers are submitted, and 
no previous high bids are withdrawn. In this event, the effect will be 
the same as if a bidder had submitted a proactive waiver. Thus, the 
activity rule will apply as usual, and a bidder with insufficient 
activity will either lose bidding eligibility or use an activity rule 
waiver (if it has any left).
    Further, in its discretion, the FCC reserves the right to declare 
that the auction will end after a specified number of additional rounds 
(``special stopping rule''). If the FCC invokes this special stopping 
rule, it will accept bids in the final round(s) only for licenses on 
which the high bid increased in at least one of the preceding specified 
number of rounds. The FCC intends to exercise this option only in 
extreme circumstances, such as where the auction is proceeding very 
slowly, where there is minimal overall bidding activity, or where it 
appears likely that the auction will not close within a reasonable 
period of time. Before exercising this option, the FCC is likely to 
attempt to increase the pace of the auction by, for example, moving the 
auction into the next stage (where bidders would be required to 
maintain a higher level of bidding activity), increasing the number of 
bidding rounds per day, and/or increasing the amount of the minimum bid 
increments for the limited number of licenses where there is still a 
high level of bidding activity.
(7) Auction Delay, Suspension, or Cancellation
    By public notice or by announcement during the auction, the FCC may 
delay, suspend or cancel the auction in the event of natural disaster, 
technical obstacle, evidence of an auction security breach, unlawful 
bidding activity, administrative or weather necessity, or for any other 
reason that affects the fair and competitive conduct of competitive 
bidding. In such cases, the FCC, in its sole discretion, may elect to: 
resume the auction starting from the beginning of the current round; 
resume the auction starting from some previous round; or cancel the 
auction in its entirety. Network interruption may cause the FCC to 
delay or suspend the auction.

B. Bidding Procedures

(1) Round Structure
    The initial bidding schedule will be announced by public notice at 
least one week before the start of the auction, and

[[Page 53635]]

will be included in the registration mailings. The round structure for 
each bidding round contains a single bidding period followed by the 
release of the round results.
    The FCC has discretion to change the bidding schedule in order to 
foster an auction pace that reasonably balances speed with the bidders' 
need to study round results and adjust their bidding strategies. The 
FCC may increase or decrease the amount of time for the performance and 
review periods, or the number of rounds per day, depending upon the 
bidding activity level and other factors.
(2) Minimum Opening Bid/Reserve Prices
    When FCC licenses are subject to auction (i.e., because they are 
mutually exclusive) the recently enacted Balanced Budget Act of 1997 
calls upon the Commission to prescribe methods by which a reasonable 
reserve price is required or minimum opening bid established, unless it 
determines that such an assessment is not in the public interest. 
Balanced Budget Act of 1997, Public Law 105-33, 111 Stat. 251 (1997); 
47 U.S.C. Sec. 309(j)(4)(F). In light of the Balanced Budget Act, the 
Commission will release a subsequent Public Notice which will seek 
comment on a proposal that a reserve price and/or minimum opening bid 
be established for the LMDS auction.
(3) Minimum Acceptable Bids
    Once there is a standing high bid on a license, a bid increment 
will be applied to that license to establish a minimum acceptable bid 
for the following round. The Commission will use its exponential 
smoothing methodology to calculate minimum bid increments. The 
exponential smoothing formula calculates the bid increment based on a 
weighted average of the activity received on each license in the 
current and all previous rounds. This methodology will tailor the bid 
increment for each license based on activity, rather than setting a 
global increment for all licenses. A detailed description of the 
exponential smoothing bid increment will be included in the forthcoming 
Bidder Information Package.
(4) High Bids
    Each bid will be date-and time-stamped when it is entered into the 
computer system. In the event of tie bids, the Commission will identify 
the high bidder on the basis of the order in which bids are received by 
the Commission, starting with the earliest bid. The bidding software 
allows bidders to make multiple submissions in a round. Each bid is 
date-and time-stamped according to when it was submitted. Thus, bids 
submitted by a bidder earlier in a round will have an earlier date-and 
time-stamp than bids submitted later in a round.
(5) Bidding
    During a bidding period, a bidder may submit bids for as many 
licenses as it is eligible, as well as withdraw high bids from previous 
bidding periods, remove bids placed in the same bidding period, or 
permanently reduce eligibility. Bidders also have the option of making 
multiple submissions and withdrawals in each bidding period, and will 
not have a separate period to withdraw bids. If a bidder enters 
multiple bids for a single license in the same round, the system takes 
the last bid entered as that bidder's bid for the round, and the date 
and time stamp of that bid reflect the latest time the bid was entered.
    A bidder's maximum eligibility in the first round of the auction is 
determined by: (a) the licenses applied for on FCC Form 175; and (b) 
the upfront payment amount deposited. The bid submission screens will 
be tailored for each bidder to include only those licenses for which 
the bidder applied on its FCC Form 175. A bidder also has the option to 
further tailor its bid submission screens to call up specified groups 
of licenses.
    The bidding software requires each bidder to login to the FCC 
Auction System during the bidding period using the FCC Account Number, 
Bidder Identification Number, and confidential security codes provided 
in the registration materials. Bidders are encouraged to download and 
print bid confirmations after they submit their bids.
    In Auction No. 17, the screen will display a ``Click on Check Box 
to Bid'' column that provides a check box for each Minimum Bid Accepted 
amount in place of the bid entry field. To place a bid at the minimum 
acceptable bid amount for a license, a bidder must click the 
appropriate box to put a check mark in it and then press submit to 
enter the bid into the auction system. Bidders may not type in a bid 
for any license.
    Once the click box is checked, the Bid Submission screen updates 
the Group Total (total dollars bid), Bid-Units, and Activity amounts, 
as if a bid amount had been typed. However, by using the check boxes, 
there is no risk of mistyping bids. Other auction screens are 
unchanged, as are the reports.
(6) Bid Withdrawal and Bid Removal
    (a) Procedures.
    Before the close of a bidding period, a bidder has the option of 
removing any bids placed in that round. By using the remove bid 
function in the software, a bidder may effectively `unsubmit' any bid 
placed within that round. A bidder removing a bid placed in the same 
round is not subject to withdrawal payments. Note that removing a bid 
will affect a bidder's activity for the round in which it is removed.
    Once a round closes, a bidder may no longer remove a bid. However, 
in the next round, a bidder may withdraw standing high bids from 
previous rounds using the withdraw bid function. A high bidder that 
withdraws its standing high bid from a previous round is subject to the 
bid withdrawal payments specified in 47 CFR 101.1103(f), 1.2104(g), and 
1.2109. The procedure for withdrawing a bid and receiving a withdrawal 
confirmation is essentially the same as the bidding procedure described 
in Bidding, Part 4.B(4), supra.
    The FCC will limit the number of rounds in which bidders may place 
withdrawals to two rounds. These rounds will be at the bidder's 
discretion and there will be no limit on the number of bids that may be 
withdrawn in either of these rounds. Withdrawals will still be subject 
to the bid withdrawal payments specified in 47 CFR 101.1103(f), 
1.2104(g), and 1.2109. Bidders should note that abuse of the 
Commission's bid withdrawal procedures could result in the denial of 
the ability to bid on a market.
    If a high bid is withdrawn, the license will be offered in the next 
round at the second highest bid price, which may be less than, or equal 
to, in the case of tie bids, the amount of the withdrawn bid, without 
any bid increment. The FCC will serve as a ``place holder'' on the 
license until a new acceptable bid is submitted on that license.
    (b) Calculation.
    Generally, a bidder who withdraws a standing high bid during the 
course of an auction will be subject to a payment equal to the lower 
of: (1) the difference between the net withdrawn bid and the subsequent 
net winning bid; or (2) the difference between the gross withdrawn bid 
and the subsequent gross winning bid for that license. See 47 CFR 
101.1103(f), 1.2104(g), and 1.2109. No withdrawal payment will be 
assessed if the subsequent winning bid exceeds the withdrawn bid.
(7) Round Results.
    The bids placed during a bidding period are not published until the 
conclusion of that bidding period. After a bidding period closes, the 
FCC will

[[Page 53636]]

compile reports of all bids placed, bids withdrawn, current high bids, 
new minimum accepted bids, and bidder eligibility status (bidding 
eligibility and activity rule waivers), and post the reports for public 
access.
    Reports reflecting bidders' identities and bidder identification 
numbers for Auction No. 17 will be available before and during the 
auction. Thus, bidders will know in advance of this auction the 
identities of the bidders against which they are bidding.
(8) Auction Announcements
    The FCC will use auction announcements to announce items such as 
schedule changes and stage transitions. All FCC auction announcements 
will be available on the FCC remote electronic bidding system, as well 
as the Internet and the FCC Bulletin Board System.
(9) Other Matters
    As noted in Part 3.B, supra, after the short-form filing deadline, 
applicants may make only minor changes to their FCC Form 175 
applications. For example, permissible minor changes include deletion 
and addition of authorized bidders (to a maximum of three) and revision 
of exhibits. Filers should make these changes on-line, and submit a 
letter to Kathleen O'Brien Ham, Chief, Auctions and Industry Analysis 
Division, Wireless Telecommunications Bureau, Federal Communications 
Commission, 2025 M Street, N.W., Room 5202, Washington, D.C. 20554 (and 
mail a separate copy to Matthew Moses, Auctions and Industry Analysis 
Division), briefly summarizing the changes. Questions about other 
changes should be directed to the FCC Auctions and Industry Analysis 
Division at 202-418-0660.

V. Post-Auction Procedures

A. Down Payments and Withdrawn Bid Payments

    After bidding has ended, the Commission will issue a public notice 
declaring the auction closed, identifying the winning bids and bidders 
for each license, and listing withdrawn bid payments due.
    Within five business days after release of this auction closing 
notice, each winning bidder must submit sufficient funds (in addition 
to its upfront payment) to bring its total amount of money on deposit 
with the Government to 20 percent of its net winning bids (actual bids 
less any applicable bidding credits). See 47 CFR 101.1102(b). In 
addition, by the same deadline all bidders must pay any withdrawn bid 
amounts due under 47 CFR 1.2104(g), as discussed in Part 4.B(5), supra. 
(Upfront payments are applied first to satisfy any withdrawn bid 
liability, before being applied toward down payments.)

B. Long-Form Application

    Within ten business days after release of the auction closing 
notice, winning bidders must submit a properly completed long-form 
application and required exhibits for each LMDS license won through the 
auction. Winning very small businesses, small businesses, and 
entrepreneurs must include an exhibit demonstrating their eligibility 
for bidding credits. See 47 CFR 101.1109(b). Further filing 
instructions will be provided to auction winners at the close of the 
auction.

C. Default and Disqualification

    Any high bidder that defaults or is disqualified after the close of 
the auction (i.e., fails to remit the required down payment within the 
prescribed period of time, fails to submit a timely long-form 
application, fails to make full payment, or is otherwise disqualified) 
will be subject to the payments described in 47 CFR 1.2104(g)(2). In 
such event the Commission may re-auction the license to existing or new 
applicants or offer it to the next highest bidders (in descending 
order) at their final bids. See 47 CFR 1.2109(b) and (c). In addition, 
if a default or disqualification involves gross misconduct, 
misrepresentation, or bad faith by an applicant, the Commission may 
declare the applicant and its principals ineligible to bid in future 
auctions, and may take any other action that it deems necessary, 
including institution of proceedings to revoke any existing licenses 
held by the applicant. See 47 CFR 1.2109(d).

D. Refund of Remaining Upfront Payment Balance

    All applicants who submitted upfront payments but were not winning 
bidders for any LMDS license may be entitled to a refund of their 
remaining upfront payment balance after the conclusion of the auction. 
No refund will be made unless there are excess funds on deposit from 
that applicant after any applicable bid withdrawal payments have been 
paid.
    Bidders who drop out of the auction completely may be eligible for 
a refund of their upfront payments before the close of the auction. 
However, bidders who reduce their eligibility and remain in the auction 
are not eligible for partial refunds of upfront payments until the 
close of the auction. Qualified bidders who have exhausted all their 
activity rule waivers, have no remaining bidding eligibility, and have 
not withdrawn a high bid during the auction must submit a written 
refund request which includes wire transfer instructions, a Taxpayer 
Identification Number (``TIN''), and a copy of their bidding 
eligibility screen print, to: Federal Communications Commission, 
Billings and Collections Branch, Attn: Regina Dorsey or Linwood 
Jenkins, 1919 M Street, N.W., Room 452, Washington, D.C. 20554.
    Bidders can also fax their request to the Billings and Collections 
Branch at (202) 418-2843. Once the request has been approved, a refund 
will be sent to the address provided on the FCC Form 159.

    Note: Refund processing generally takes up to two weeks to 
complete. Bidders with questions about refunds should contact Regina 
Dorsey or Linwood Jenkins at 202-418-1995.

    Media Contact: Audrey Spivack at (202) 418-0654.
    Public Safety and Private Wireless Division: Susan Magnotti or Bob 
James at (202) 418-0680; Auctions and Industry Analysis Division: Mark 
Bollinger, Matthew Moses, or Louis Sigalos at (202) 418-0660.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-27232 Filed 10-14-97; 8:45 am]
BILLING CODE 6712-01-P