[Federal Register Volume 63, Number 124 (Monday, June 29, 1998)]
[Notices]
[Pages 35213-35224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17147]
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FEDERAL COMMUNICATIONS COMMISSION
[DA 98-1010; Report No. AUC-98-18-B (Auction No. 18)]
Auction of the Phase II 220 MHz Service Licenses; Scheduled for
September 15, 1998--Minimum Opening Bids and Other Procedural Issues
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This Public Notice announces the procedures and minimum
opening bids for the upcoming Phase II 220 MHz Service (``220 MHz
Service'') auction. On January 13, 1998, the Commission released a
Public Notice, (``220 MHz Public Notice''), seeking comment on the
establishment of reserve prices or minimum opening bids for the 220 MHz
Service auction. In addition, the Commission also sought comment on a
number of procedures to be used in the 220 MHz Service auction.
EFFECTIVE DATES: June 29, 1998.
FOR FURTHER INFORMATION CONTACT: Lisa Hartigan, Bob Reagle, or Frank
Stilwell, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau at (202) 418-0660, Scott A. Mackoul,
Commercial Wireless Division at (202 418-7240, or Marty Liebman, Policy
Division, Wireless Telecommunications Bureau at (202 418-1310.
SUPPLEMENTARY INFORMATION: This is the summary of a Public Notice
released May 29, 1998. The text of the public notice in its entirety,
including attachments, is available for inspection and copying during
normal business hours in the FCC Reference Center (Room 239), 1919 M
Street, NW, Washington, DC and also may be purchased from the
Commission's copy contractor, International Transcription Services,
Inc. (ITS), 1231 20th Street, NW, Washington, DC 20036, (202) 857-3800.
In addition, the text of the public notice in its entirety, including
attachments, is available on the World Wide Web at http://www.fcc.gov/
wtb/auctions/220/220.htmlPN.
1. Introduction
1. The Federal Communications Commission (``FCC'' or
``Commission'') will hold an auction for 908 licenses to operate in the
220-222 MHz band. These licenses encompass the United States, the
Northern Mariana Islands, Guam, American Samoa, the United States
Virgin Islands and Puerto Rico. Specifically, the licenses include: (1)
five licenses in each of 172 geographic areas known as Economic Areas
(EAs) and three EA-like areas; (2) five licenses in six Economic Area
Groupings (EAGs); and (3) three Nationwide licenses which encompass the
same territory as all of the EAGs combined (see Attachment A for a
complete listing of licenses). The licenses include the following
channels:
------------------------------------------------------------------------
Channels
------------------------------------------------------------------------
(1) EA Block:
A: Channel Groups 2, 13.................................... 10
B: Channel Groups 3, 16.................................... 10
C: Channel Groups 5, 18.................................... 10
D: Channel Groups 8, 19.................................... 10
E: Channel 171-180......................................... 10
(2) EAG Block:
F: Channel Groups 1, 6, 11................................. 15
G: Channel Groups 4, 9, 14................................. 15
H: Channel Groups 7, 12, 17................................ 15
I: Channel Groups 10, 15, 20............................... 15
J: Channel 186-200......................................... 15
(3) Nationwide Block:
K: Channels 51-60.......................................... 10
L: Channels 81-90.......................................... 10
M: Channels 141-150........................................ 10
------------------------------------------------------------------------
Auction Date: The auction will commence on September 15, 1998. 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: The Phase II 220 MHz Service--Auction No. 18.
Bidding Methodology: Simultaneous multiple round bidding. Bidding
will be permitted only from remote locations, either electronically (by
computer) or telephonically.
Pre-Auction Deadline
Auction Seminar..................... August 6, 1998.
Short Form Application (FCC Form August 17, 1998; 5:30
175). p.m. ET.
[[Page 35214]]
Upfront Payments (via wire transfer) August 31, 1998; 6:00
p.m. ET.
Orders for Remote Bidding Software.. September 1, 1998; 5:30
p.m. ET.
Mock Auction........................ September 11, 1998 (time
TBA).
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). Hours of
service: 8 a.m.-5:30
p.m. ET.
FCC Technical Support Hotline....... (202) 414-1250 (V), (202)
414-1255 (TTY). Hours of
service: 8 a.m.-6 p.m.
ET, Monday-Friday; 9
a.m.-5 p.m. ET, weekend
of August 15-16, 1998.
List of Attachments
Attachment A
Summary of Phase II 220 Mhz Licenses to be Auctioned
Attachment B
List of Cases Pending before the Commission Involving Non-
Nationwide Phase I 220 MHz Licensees
Attachment C
Guidelines for Completion of FCC Forms 175 and 159, and Exhibits
Attachment D
Electronic Filing and Review of FCC Form 175
Attachment E
Summary Listing of Documents from the Commission and the Wireless
Telecommunications Bureau Addressing Application of the Anti-Collusion
Rules
Attachment F
List of Commenters
I. Background
2. In March 1997, the Commission restructured the licensing
framework that governs the 220 MHz Service. Site-specific licensing,
used in the Phase I 220 MHz Service, is to be replaced with a
geographic-based system in the Phase II 220 MHz Service which is the
subject of the upcoming auction. This geographic-based licensing
methodology is similar to that used in other commercial mobile radio
services (``CMRS''). The geographic areas for the licenses were created
based upon Economic Areas (EAs), developed by the Bureau of Economic
Analysis of the U.S. Department of Commerce. The Economic Area
Groupings (EAGs), developed by the Commission, include groupings of EAs
and encompass the sum total of all EAs. Three Nationwide licenses,
including all of the EAGs, are also to be offered in the Phase II 220
MHz Service auction. Service and operational requirements for the Phase
II 220 MHz Service are contained in Part 90 of the Commission's Rules,
47 CFR Part 90.
3. On May 21, 1998, the Commission released a Memorandum Opinion
and Order on Reconsideration in PR Docket No. 89-552, 63 FR 32579; June
12, 1998. Among other things the Commission removed the spectrum
efficiency standard that applied to equipment operating in the 220-222
MHz band, eliminated installment payments for small business and very
small businesses, and increased bidding credits for such entities.
II. Due Diligence
4. Potential bidders are reminded that there are a number of
incumbent Phase I 220 MHz licensees already licensed and operating on
frequencies that will be subject to the upcoming auction. Such
incumbents must be protected from harmful interference by Phase II 220
MHz licensees in accordance with the Commission's Rules. See 47 CFR
90.763. These limitations may restrict the ability of such geographic
area licensees to use certain portions of the electromagnetic spectrum
or provide service to certain areas in their geographic license areas.
5. In addition, potential bidders seeking licenses for geographic
areas that are near the Canadian border should be aware that the use of
some or all of the channels they acquire in the auction could be
restricted as a result of a future agreement with Canada on the use of
220-222 MHz spectrum in the border area.
6. Potential bidders should also be aware that certain applications
(including those for modification), waiver requests, petitions for
reconsideration and applications for review are pending before the
Commission that relate to particular incumbent non-nationwide 220 MHz
licensees. The Commission notes that resolution of these matters could
have an impact on the availability of spectrum for EA and EAG
licensees. In addition, while the Commission will continue to act on
pending applications, requests and petitions, some of these matters may
not be resolved by the time of the auction.
III. Potential Bidders Are Solely Responsible for Investigating and
Evaluating the Degree to Which Such Pending Matters May Affect
Spectrum Availability in Areas Where They Seek EA or EAG Licenses
7. To aid potential bidders, Attachment B to this Public Notice
lists pending matters of which the Commission is aware that relate to
licenses or applications for the 220 MHz service. The Commission makes
no representations or guarantees that the listed matters are the only
pending matters that could affect spectrum availability in the 220-222
MHz band. Parties may submit additions or corrections to the list,
provided such additions or corrections are filed with the Commission
within ten (10) business days from release of this Public Notice. Such
submissions should be limited to identifying pleadings or papers
previously filed with the Commission. No new pleadings or arguments on
the merits will be accepted as explicitly provided by Commission Rules.
8. Corrections and additions must be filed with the Office of the
Secretary, Federal Communications Commission, 1919 M Street, NW.,
Washington, DC 20554. One copy of each submission should also be sent
to International Transcription Service, Inc., 1231 20th Street, NW.,
Washington, DC 20036, while an additional courtesy copy may be sent to
Scott A. Mackoul, Policy and Rules Branch, Commercial Wireless
Division, Wireless Telecommunications Bureau, Federal Communications
Commission, 2100 M Street, NW., 7th Floor, Washington, DC 20554.
Parties filing additions or corrections should include the internal
reference number (DA 98-1010) on their submissions. Parties also are
reminded that some of the proceedings are restricted proceedings
governed by the Commission's ex parte rules. Accordingly, any
submission filed pursuant to this Public Notice that is directed to the
merits or outcome of any restricted proceeding must be served on
[[Page 35215]]
all parties to that restricted proceeding. See generally 47 CFR 1.1200-
1.1216.
9. Additional information regarding matters identified in
Attachment B is available to the public. Licensing information is
contained in the Commission's licensing database, which is available
for inspection in the Wireless Telecommunications Bureau's Pubic
Reference Rooms, located at 2025 M Street, NW., Room 5608, Washington,
DC 20554, and 1270 Fairfield Road, Gettysburg, PA 17325. In addition,
copies of the pleadings are available for public inspection only in the
Gettysburg Public Reference Room.
10. In addition, potential bidders may search for information (but
not the pleadings) regarding incumbent 220 MHz licensees on the World
Wide Web at http://www.fcc.gov/wtb. In particular, information can be
accessed by downloading databases by selecting ``WTB Database Files''
(http://www.fcc.gov/wbt/databases.html), or searching on-line by
selecting ``Search WTB Databases'' (http://gullfoss.fcc.gov:8080/cgi-
bin/ws.exe/beta/genmen/index.hts). Any telephone inquiries regarding
these matters should be directed to the Technical Support Hotline at
(202) 414-1250 (V) or (202) 414-1255 (TTY).
IV. The Commission Makes no Representations or Guarantees Regarding
the Accuracy or Completeness of Information That Has Been Provided
by Incumbent Licensees and Incorporated Into the Database.
Potential Bidders Are Strongly Encouraged to Physically Inspect any
Sites Located in or Near the Geographic Area for Which They Plan to
Bid
11. Participation: Those wishing to participate in the auction
must:
Submit a short form application (FCC Form 175) by the
above-listed deadline.
Submit a sufficient upfront payment and an FCC Remittance
Advice Form (FCC For 159) by the above-listed deadline.
Comply with all provisions outlined in this Public Notice.
12. Prohibition of Collusion: To ensure the competitiveness of the
auction process, the Commission's Rules prohibit applicants for the
same geographic license area 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
on the down payment due date. In the 220 MHz Service auction, for
example, the rule would apply to an applicant bidding for an EAG and an
applicant bidding for an EA within that EAG. Applicants that apply to
bid for ``all markets'' or a nationwide license would be precluded from
communicating with all other applicants. An 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). The Commission notes
that Section 1.65 of the Commission's Rules requires an applicant to
maintain the accuracy and completeness of information furnished in its
pending application and to notify the Commission within 30 days of any
substantial change that may be of decisional significance to that
application. Thus, Section 1.65 requires an auction applicant to bring
to the Commission's attention any communication not permissible under
the applicant's certification of compliance with Sec. 1.2105(c).
Finally, bidders are reminded that they have a duty to notify the
Commission of any violation of the anti-collusion rules upon learning
of such violation. Bidders are therefore required to make such
notification to the Commission immediately upon discovery.
13. 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 that have already contacted the FCC at
this number expressing an interest in this auction will receive a
Bidder Information Package in approximately three weeks, and need not
call again unless they wish to order additional copies.
14. Relevant Authority: Prospective bidders must familiarize
themselves thoroughly with the Commission's Rules relating to the Phase
II 220 MHz Service, contained in Title 47, Part 90 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.
15. Prospective bidders must also be thoroughly familiar with the
procedures, terms and conditions (collectively, ``Terms'') contained in
Amendment of Part 90 of the Commission's Rules to Provide for the Use
of the 220-222 MHz Band by the Private Land Mobile Radio Service, PR
Docket No. 89-552, RM-8506, GN Docket No. 93-252, PP Docket No. 93-253,
Third Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC
Rcd 10943 (1997), 62 FR 15978 (April 3, 1997) (``220 MHz Third Report
and Order''). The Commission resolved petitions for reconsideration of
the 220 MHz Third Report and Order in Amendment of Part 90 of the
Commission's Rules to Provide for the Use of the 220-222 MHz Band by
the Private Land Mobile Radio Service, Implementation of Sections 3(n)
and 332 of the Communications Act, Regulatory Treatment of Mobile
Services, Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, PR Docket No. 89-552, GN Docket No. 93-252, PP
Docket No. 93-253, FCC 98-93, Memorandum Opinion and Order on
Reconsideration (rel. May 21, 1998), 63 FR 32580 (June 12, 1998) (``220
MHz MO&O'').
16. For general background on the Phase I 220 MHz Service, see,
among other materials: Amendment of Part 90 of the Commission's Rules
to Provide for the Use of the 220-222 MHz Band by the Private Land
Mobile Radio Services, PR Docket No. 89-552, Report and Order, 6 FCC
Rcd 2356 (1991), 56 FR 19598 (April 29, 1991); Amendment of Part 90 of
the Commission's Rules to Provide for the Use of the 220-222 MHz Band
by the Private Land Mobile Radio Services, PR Docket No. 80-552,
Memorandum Opinion and Order, 7 FCC Rcd 4484 (1992), 57 FR 32448 (July
22, 1992).
17. For further information about the 220 MHz Service, see
Amendment of Part 90 of the Commission's Rules to Provide for the Use
of the 220-222 MHz Band by the Private Land Mobile Radio Service, PR
Docket No. 89-552, GN Docket No. 93-252, Second Report and Order, 11
FCC Rcd 3668 (1996), 61 FR 3841 (Feb. 2, 1996) (``220 MHz Second Report
and Order''); Amendment of Part 90 of the Commission's Rules to Provide
for the Use of the 220-222 MHz Band by the Private Land Mobile Radio
Service, PR Docket No. 89-552, Fourth Report and Order, 12 FCC Rcd
13453 (1997), 62 FR 46211 (Sept. 2, 1997).
18. The Terms contained in the Commission's Rules, relevant orders,
public notices and bidder information package are not negotiable.
Potential bidders are reminded that the 220 MHz MO&O, released May 21,
1998, which resolved petitions for reconsideration filed in response to
the 220 MHz Second Report and Order and the 220 MHz Third Report and
Order altered some of the decisions and rules adopted in those orders.
In addition, the decisions reached in the 220 MHz proceeding are
[[Page 35216]]
the subject of a judicial appeal and may be the subject of additional
reconsideration or appeal. See, e.g., PLMRS Narrowband Corp., et al. v.
Federal Communications Commission, No. 92-1432, et al. (D.C. Cir.,
filed September 18, 1992).
19. The Commission may amend or supplement the information
contained in its 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/wtb/auctions. Additionally,
documents may be obtained for a fee by calling the Commission's copy
contractor, International Transcription Service, Inc., at (202) 857-
3800.
20. 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.
V. 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
21. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use the Phase II 220 MHz
Service 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.
22. 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 Phase II 220 MHz Service proposals may also call the FCC
National Call Center at (888) CALL-FCC ((888) 225-5322).
2. Bidder Eligibility and Small Business Provisions
A. General Eligibility Criteria
23. As described above, this auction offers: (1) Five licenses in
each of 172 geographic areas known as Economic Areas (EAs) and three
EA-like areas; (2) five licenses in six Economic Area Groupings (EAGs);
and (3) three Nationwide licenses which encompass the same territory as
all of the EAGs combined (see Attachment A for a complete listing of
licenses).
(1) Determination of Revenues
24. For purposes of determining which entities qualify as very
small businesses or small businesses, the Commission will attribute to
the applicant the gross revenues of all of its controlling principals
and affiliates. For purposes of this auction, the Commission will not
impose specific equity requirements on controlling principals. However,
in order to qualify as a very small business or small business, 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.
(2) Application Showing
25. Applicants should note that they will be required to file
supporting documentation to establish that they satisfy the eligibility
requirements to qualify as a very small business or small business for
this auction. See 47 CFR 90.1009 and 1.2105.
B. Bidding Credits
26. Qualifying Phase II 220 MHz applicants are eligible for bidding
credits. The size of a Phase II 220 MHz bidding credit depends on the
annual gross revenues of the bidder and its controlling principals and
affiliates, as averaged over the preceding three years:
A bidder with gross annual revenues of not more than $15
million receives a 25 percent discount on its winning bids for Phase II
220 MHz Service licenses; and,
A bidder with gross annual revenues of not more than $3
million receives a 35 percent discount on its winning bids for Phase II
220 MHz Service licenses.
27. Bidding credits are not cumulative: applicants that qualify
receive either the 25 percent or the 35 percent bidding credit, but not
both. The definitions of very small business and small business
(including calculation of gross annual revenue) are set forth in 47 CFR
90.1021(b).
28. Phase II 220 MHz Service bidders should note that unjust
enrichment provisions apply to winning bidders that use bidding credits
and subsequently assign or transfer control of their licenses to an
entity not qualifying for the same levels of bidding credits. See 47
CFR 90.1017(b). Finally, Phase II 220 MHz Service bidders should also
note that there are no
[[Page 35217]]
installment payment plans in the 220 MHz Service auction.
3. Pre-Auction Procedures
A Short-form Application (FCC Form 175)--Due August 17, 1998
29. 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 August 17, 1998. Late
applications will not be accepted.
30. 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 3.C. infra.
(1) Filing Options
31. 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 that 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 that 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
32. Applicants wishing to file electronically may generally do so
on a 24-hour basis beginning July 20, 1998. The window for filing the
FCC Form 175 electronically will remain open until 5:30 p.m. ET on
August 17, 1998. Information about installing and running the FCC Form
175 application software is included in Attachment D to this Public
Notice. Technical support is available at (202) 414-1250 (V) or (202)
414-1255 (TTY); the hours of service are 8 a.m.-6 p.m. ET, Monday-
Friday, and 9 a.m.-5 p.m. ET, the weekend of August 15-16.
(b) Manual Filing
33. 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 May 1998 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.
34. 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. 18, Federal Communications Commission, Wireless
Telecommunications Bureau, Auctions & Industry Analysis Division, 1270
Fairfield Road, Gettysburg, PA 17325-7245.
Note: Manual applications delivered to any other location will
not be accepted.
(2) Completion of the FCC Form 175
35. Applicants should carefully review 47 CFR 90.1009 and 1.2105,
and must complete all items on the FCC Form 175 (and Form 175-S, if
applicable). Instructions for completing the FCC Form 175 are in
Attachment C of this Public Notice.
36. Failure to sign a manually filed FCC Form 175 (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 will be accepted for manually filed applications.
(3) Electronic Review of FCC Form 175
37. The FCC Form 175 review software may be used to review and
print applicants' FCC Form 175 applications. In other words, applicants
that file electronically may review their own completed FCC Form 175.
Applicants also have access to view other applicants' completed FCC
Form 175s, 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 the system. See Attachment D for
details.
B. Application Processing and Minor Corrections
38. 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 which have minor
defects that may be corrected, and the deadline for filing such
corrected applications.
39. As described more fully in the Commission's Rules, after the
August 17, 1998, short form filing deadline, applicants may make only
minor corrections to the 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 90.1009 and 1.2105.
C. Upfront Payments--Due August 31, 1998
40. In order to be eligible to bid in the auction, applicants must
submit an upfront payment accompanied by an FCC Remittance Advice Form
(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, PA, by
6:00 p.m. ET on August 31, 1998.
Please note that:
All payments must be made in U.S. dollars.
All payments must be made by wire transfer.
Upfront payments for Auction No. 18 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 August 31,
1998 deadline will result in dismissal of the application and
disqualification from participation in the auction.
(1) Making Auction Payments by Wire Transfers
41. Wire transfer payments must be received by 6:00 p.m. ET on
August 31, 1998. 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 910-0171.
OBI Field: (Skip one space between each information item)
``Auctionpay''.
Taxpayer Identification No.: (Same as FCC Form 159, block 26).
Payment Type Code: (Enter ``A22U'').
[[Page 35218]]
FCC Code: 1 (Same as FCC Form 159, block 23A: ``18'').
Payer Name: (Same as FCC Form 159, block 2).
Lockbox No.: 358430.
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.
42. 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. 18.''
Bidders may confirm receipt of their upfront payment at Mellon Bank by
contacting their sending financial institution.
(2) FCC Form 159
43. Each upfront payment must be accompanied by a completed FCC
Remittance Advice Form (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 are included in
Attachment C to this Public Notice and will also be included in the
Bidder Information Package.
(3) Amount of Upfront Payment
44. In the 220 MHz Third Report and Order, the Commission delegated
to the Bureau the authority and discretion to determine an appropriate
upfront payment for each license being auctioned. 62 FR at 15981. In
the 220 MHz Public Notice, (63 FR 2976, January 20, 1998) the
Commission proposed for the Phase II 220 MHz Service auction an upfront
payment of one cent per MHz/POP with no amount less than $2,500. 63 FR
at 2978.
45. For the Phase II 220 MHz Service auction the Commission will
adopt its proposal of one cent per MHz/POP with no amount less than
$2,500. This upfront payment amount, based upon the data in Attachment
A, will be the amount required to bid on a particular license(s) in
Auction No. 18. The Commission believes that this is the appropriate
upfront payment formula, considering such factors as the population in
each geographic license area, and the value of spectrum similar to that
being offered in the 220 MHz Service. The Commission notes that this
upfront payment amount is lower than that used in many previous
auctions--e.g., the PCS spectrum auctions--but believes a reduction is
appropriate, for the reasons expressed by a commenter, namely, the size
of the likely participants in the 220 MHz Service auction.
46. The upfront payments are not attributed to specific licenses,
but instead will be translated to bidding units to define the bidder's
maximum bidding eligibility. For Auction No. 18, the total number of
bidding units assigned to each bidder is equal to the amount of the
upfront payment, e.g., a $25,000 upfront payment provides the bidder
with 25,000 bidding units. 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. Thus, an applicant does not have to make an upfront payment to
cover all licenses for which the applicant has applied, but rather to
cover the maximum number of bidding units associated with licenses the
bidder wishes to place bids on and hold high bids on at any given time.
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 applicant will
not be eligible to participate in the auction.
47. 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.
(4) Applicant's Wire Transfer Information for Purposes of Refunds
48. Because experience with prior auctions has shown that in most
cases wire transfers provide quicker and more efficient refunds than
paper checks, the Commission will use wire transfers for all Auction
No. 18 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: Linwood Jenkins or
Geoffrey Idika, at (202) 418-2843. Please include the following
information:
Name of Bank
ABA Number
Account Number to Credit
Correspondent Bank (if applicable)
ABA Number
Account Number
Contact and Phone Number
(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 5.D., infra.
D. Auction Registration
49. Approximately ten 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 that have timely submitted upfront
payments sufficient to make them eligible to bid on at least one of the
licenses for which they applied.
50. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by two separate 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.
51. Applicants that do not receive both registration mailings will
not be able to submit bids. Therefore, any qualified applicant that has
not received both mailings by noon on Thursday, September 10, 1998
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, NE., Washington, DC 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
52. Qualified bidders that file or amend the FCC Form 175
electronically are allowed to bid electronically, but must purchase
remote electronic bidding software for $175.00 by September 1, 1998.
(Auction software is tailored to a specific auction, so software from
prior auctions will not
[[Page 35219]]
work for Auction No. 18.) A software order form is included in the
Bidder Information Package.
F. Auction Seminar
53. On August 6, 1998, the FCC will sponsor a seminar for the Phase
II 220 MHz Service auction in Washington, DC. The seminar will provide
attendees with information about pre-auction procedures, conduct of the
auction, FCC remote bidding software, and the 220 MHz Service and
auction rules.
54. To register, complete the registration form to be included in
the upcoming Phase II 220 MHz Service auction Bidder Information
Package. The registration form will include details about the time and
location of the seminar. Registrations are accepted on a first-come,
first-served basis.
G. Mock Auction
55. All applicants whose FCC Form 175 and 175-S have been accepted
for filing will be eligible to participate in a mock auction beginning
September 11, 1998. 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 Phase II 220 MHz Service
auction from previous Commission auctions, participation by all bidders
is strongly recommended. Details will be announced by public notice.
4. Auction Event
56. The first round of the auction will begin on September 15,
1998. The initial round schedule will be announced in a Public Notice
listing the qualified bidders, to be released approximately 10 days
before the start of the auction.
A. Auction Structure
(1) Simultaneous Multiple Round Auction
57. The Commission adopts its proposal, in the 220 MHz Public
Notice, to award the 908 licenses in the Phase II 220 MHz Service in a
single, simultaneous multiple round auction. 63 FR at 2977. Unless
otherwise announced, bids will be accepted on all licenses in each
round of the auction. This approach, the Commission believes, is most
administratively efficient. In addition, the Commission believes that
the Phase II 220 MHz licenses are interdependent and bidders may prefer
to substitute different types of licenses during the same auction.
(2) Maximum Eligibility and Activity Rules
58. In the 220 MHz Public Notice, the Commission proposed that the
amount of the upfront payment submitted by a bidder would determine the
initial maximum eligibility (as measured in bidding units) for each
bidder. For the Phase II 220 MHz Service auction the Commission will
adopt this proposal. The amount of the upfront payment submitted by a
bidder determines the initial maximum eligibility (in bidding units)
for each bidder. Upfront payments are not attributed to specific
licenses, but instead will be translated into bidding units to define a
bidder's initial maximum eligibility. The total upfront payment defines
the maximum number of bidding units on which the applicant will
initially be permitted to bid. The Commission notes that there is no
provision for increasing a bidder's maximum eligibility during the
course of an auction.
59. 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 specific
percentage of their maximum eligibility during each round of the
auction.
60. 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
round and does not withdraw the high bid in the current round, or if it
submits an acceptable bid in the current round (see ``Minimum Accepted
Bids'' in Part 4.B.(3), 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. Because these procedures have proven
successful in maintaining the pace of previous auctions as set forth
under ``Auction Stages'' in Part 4.A.(4) and ``Stage Transitions'' in
Part 4.A.(5), infra, the Commission adopts them for the 220 MHz Service
auction.
(3) Activity Rule Waivers and Reducing Eligibility
61. In the 220 MHz Public Notice, the Commission proposed that each
bidder in the auction would be provided five activity rule waivers that
may be used in any round during the course of the auction.
62. Based upon the Commission's experience in previous auctions,
the Commission concludes that each bidder will be provided five
activity rule waivers that may be used 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.
63. 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 round 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.
64. A bidder with insufficient activity that wants to reduce its
bidding eligibility rather than use an activity rule waiver must
affirmatively override the automatic waiver mechanism during the round
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
States,'' Part 4.A.(4). Once eligibility has been reduced, a bidder
will not be permitted to regain its lost bidding eligibility.
65. 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 round 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 or withdrawals will not keep the auction open.
(4) Auction Stages
66. In the 220 MHz Public Notice, the Commission proposed to
conduct the auction in stages and employ an activity rule. The
Commission concludes that the auction will be 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/or
during the auction.
67. Stage One: In each round of the first stage of the auction, a
bidder desiring to maintain its current
[[Page 35220]]
eligibility is required to be active on licenses encompassing at least
80 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-fourths (\5/4\).
68. Stage Two: In each round of the second stage, a bidder desiring
to maintain its current eligibility is required to be active on 90
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 ten-ninths (\10/9\).
69. 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 round of the first round following a stage transition. This is
especially critical for bidders that have standing high bids and do not
plan to submit new bids. In past auctions, some bidders have
inadvertently lost bidding eligibility or used an activity rule waiver
because they did not 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.
70. Because the foregoing procedures have proven successful in
maintaining proper tempo in previous auctions, the Commission will
adopt them for the Phase II 220 MHz Service auction.
(5) Stage Transitions
71. In the 220 MHz Public Notice, the Commission proposed that the
auction would 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).
72. The Commission concludes that 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 Bureau will retain the
discretion to regulate the pace of 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 (as measured in bidding units) on which
there are new bids, the number of new bids, and the percentage increase
in revenue. The Commission believes that these stage transition rules,
having proven successful in prior auctions, are appropriate for use in
the Phase II 220 MHz Service auction.
(6) Auction Stopping Rules
73. In the 220 MHz Public Notice, the Commission proposed to retain
the discretion to keep the auction open, even if no new acceptable bids
or proactive waivers are submitted and no previous high bids are
withdrawn. In addition, the Commission proposed that the Bureau reserve
the right to declare that the auction will end after a specified number
of additional rounds (``special stopping rule'').
74. 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 withdrawns a previous high bid.
75. The Bureau 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 has 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).
76. Further, in its discretion, the Bureau 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.
77. Adoption of these rules, the Commission believes, is most
appropriate for the Phase II 220 MHz auction because our experience in
prior auctions demonstrates that the simultaneous stopping rule
balanced the interests of administrative efficiency and maximum bidder
participation. The substitutability between and among licenses in
different geographic areas and the importance of preserving the ability
of bidders to pursue backup strategies support of use of a simultaneous
stopping rule.
(7) Auction Delay, Suspension, or Cancellation
78. In the 220 MHz Public Notice, the Commission proposed that, by
police notice or by announcement during the auction, the Bureau 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.
79. Because this approach has proven effective in resolving exigent
circumstances in previous auctions, the Commission will adopt our
proposed auction cancellation rules. By public notice or by
announcement during the action, the Burean 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 Bureau, 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 Bureau to delay or
suspend the auction. The Commission emphasizes that exercise of this
authority is solely within the discretion of the Bureau, and its use is
not intended to be a substitute for situations in which bidders may
wish to apply their activity rule waivers.
[[Page 35221]]
B. Bidding Procedures
(1) Round Structure
80. The initial bidding schedule will be announced by public notice
at least one week before the start of the auction, and will be included
in the registration mailings. The round structure for each bidding
round contains a single bidding round followed by the release of the
round results.
81. 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
bidding rounds and review periods, or the number of rounds per day,
depending upon the bidding activity level and other factors.
(2) Reserve Price or Minimum Opening Bid
82. The Balanced Budget Act of 1997 calls upon the Commission to
prescribe methods by which a reasonable reserve price will be required
or a minimum opening bid established with FCC licenses are subject to
auction (i.e., because they are mutually exclusive), unless the
Commission determines that a reserve price or minimum opening bid is
not in the public interest. Consistent with this mandate, the
Commission has directed the Wireless Telecommunications Bureau
(``Bureau'') to seek comment on the use of a minimum opening bid and/or
reserve price prior to the start of each auction. The Bureau was
directed to seek comment on the methodology to be employed in
establishing each of these mechanisms. Among other factors, the Bureau
should consider the amount of spectrum being auctioned, levels of
incumbency, the availability of technology to provide service, the size
of the geographic service areas, the extent of inference with other
spectrum bands, and any other relevant factors that could have an
impact on valuation of the spectrum being auctioned. The Commission
concluded that the Bureau should have the discretion to employ either
or both of these mechanisms for future auctions.
83. In the 220 MHz Public Notice, the Bureau proposed to establish
minimum opening bids for the 220 MHz Service auction and to retain
discretion to lower the minimum opening bids. Specifically, the Bureau
proposed the following formula for calculating minimum opening bids for
Auction 18:
1. EA Licenses
$0.0175 MHz * POP
2. EAG Licenses
$0.015 MHz * POP
3. Nationwide Licenses
$0.02 MHz * POP
with a minimum of no less than $2,500 per license. In the alternative,
the Bureau sought comment on whether, consistent with the Balanced
Budget Act, the public interest would be served by having no minimum
opening bid or reserve price.
84. The Commission adopts minimum opening bids for each of the
licenses in the Phase II 220 MHz Service auction that are reducible at
the discretion of the Bureau. The levels will be set as follows:
1. EA Licenses
$0.015 MHz * POP
2. EAG License
$0.0125 MHz * POP
3. Nationwide Licenses
$0.0175 MHz * POP
with a minimum of no less than $2,500 per license.
85. As was the case in prescribing minimum opening bids in the
auction of the upper channels in the 800 MHz SMR service and the LMDS
auctions, Congress has enacted a presumption that unless the Commission
determines otherwise, minimum opening bids or reserve prices are in the
public interest. The Bureau is unpersuaded by commenters' assertions
that minimum opening bids for the Phase II 220 MHz Service auction are
not in the public interest. Setting the level of the minimum opening
bids is a difficult task, especially in the case of the Phase II 220
MHz Service where the channels are narrow, encumbered and the potential
uses of the band remain to be explored. To address this concern, the
minimum opening bids adopted here are reducible. This will allow the
Bureau flexibility to adjust the minimum opening bids if circumstances
warrant. The Commission emphasizes, however, that such discretion will
be exercised sparingly and early in the auction, ie., before bidders
lose all waivers and begin the lose eligibility. During the course of
the auction, the Bureau will not entertain any bidder requests to
reduce the minimum opening bids on specific licenses.
86. The Commission concludes that the revised formula presented
here best meets the objectives of our auction authority in establishing
a reasonable minimum opening bid. The Commission has noted in the past
that the reserve price and minimum opening bid provision is not a
requirement to maximize auction revenue but rather a protection against
assigning licenses at unacceptably low prices and that the Commission
must balance the revenue raising objective against its other public
interest objectives in setting the minimum bid level. In doing so, the
Commission agree with commenters that the 220 MHz channels are narrow
and the likely auction participants will be small business
entrepreneurs. In addition, the Commission recognizes that the EAG
licenses are more substantially encumbered than are the other license
types. The Commission has adjusted its minimum opening bids
accordingly. In sum, the Commission's experience in using minimum
opening bids in the 800 MHz SMR auction and the LMDS auction supports
the fact that minimum opening bids promote efficient allocation of
licenses and speed the course of the auction while ensuring that
valuable assets are not sold for nominal prices.
(3) Minimum Accepted Bids
87. In the 220 MHz Public Notice, the Commission proposed to use an
exponential smoothing methodology to calculate minimum bid increments.
The Commission further proposed to retain the discretion to change the
minimum bid increment if circumstances so dictate.
88. Because these techniques have proven effective in prior
auctions, the Commission adopts its proposal for the 220 MHz Service
auction. 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. For the Phase II 220 MHz
Service auction, the Commission will utilize, as described immediately
below, an exponential smoothing methodology to calculate minimum bid
increments. The Bureau retains the discretion to change the minimum bid
increment if it determines that circumstances so dictate. The
exponential smoothing methodology has been used in previous auctions,
including the WCS auction and the 800 MHz SMR auction.
Exponential Smoothing
89. The exponential smoothing formula calculates the bid increment
for each license 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 based
on activity, rather than setting a global increment for all licenses.
For every license that receives a bid, the bid increment for the next
round for that license will be established using the exponential
smoothing formula.
90. Using exponential smooting, the calculation of the percentage
bid increment for each license will be based
[[Page 35222]]
on an activity index, which is calculated as the weighted average of
the current activity and the activity index from the previous round.
The activity index at the start of the auction (round 0) will be set at
0. The current activity index is equal to a weighing factor times the
number of new bids received on the license in the current bidding round
plus one minus the weighting factor times the activity index from the
previous round. The activity index is then used to calculate a
percentage increment by multiplying a minimum percentage increment by
one plus the activity index with that result being subject to a maximum
percentage increment. The Commission will initially set the weighting
factor at 0.5, the minimum percentage increment at 0.05, and the
maximum percentage increment at 0.15.
Equations
Ai=(C*Bi)+((1-
C)*Ai-1)
Ii=smaller of (1+Ai)*N) and M
Where:
Ai=activity index for the current round (round i)
C=activity weight factor
Bi=number of bids in the current round (round i)
Ai-1=activity index from previous round (round
i-1), A0 is 0
Ii=percentage bid increment for the current round (round i)
N=minimum percentage increment
M=maximum percentage increment
Under the exponential smoothing methodology, once a bid has been
received on a license, the minimum acceptable bid for that license in
the following round will be the new high bid plus the dollar amount
associated with the percentage increment (variable Ii from
above times the high bid). This result will be rounded to the nearest
thousand if it is over ten thousand or to the nearest hundred it it is
under ten thousand.
Examples
License 1
C=0.5, N=0.05, M=0.15
Round 1 (2 new bids, high bid = $1,000,000)
1. Calculation of percentage increment using exponential smoothing:
A1=(0.5*2) + (0.5*0) = 1
I1 = (1+1) *0.05=0.1
2. Minimum bid increment using the percentage increment
(I1 from above)
0.1*$1,000,000=$100,000
3. Minimum acceptable bid for round 2=1,100,000
Round 2 (3 new bids, high bid=2,000,000)
1. Calculation of percentage increment using exponential smooting:
A2=(0.5 * 3) + (0.5 * 1) = 2
I2=(1 +2) * 0.05 = 0.15
2. Minimum bid increment using the percentage increment
(I2 from above)
0.15 * $2,000,000 = $300,000
3. Minimum acceptable bid for round 3 = 2,300,000
Round 3 (1 new bid, high bid = 2,300,000)
1. Calculation of percentage increment using exponential smoothing:
A3 = (0.5 * 1) + (0.5 * 2) = 1.5
I3 = (1 + 1.5) * 0.05 + 0.125
2. Minimum bid increment using the percentage increment
(I3 from above)
0.125 * $2,300,000 = $287,500
3. Minimum acceptable bid for round 4 = 2,588,000
(4) High Bids
91. 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. As
each bid is individually date and time-stamped according to when it was
submitted, bids submitted by a bidder earlier in a round will have an
earlier date- and time-stamped than bids submitted later in a round.
(5) Bidding
92. During a bidding round, a bidder may submit bids for as many
licenses for which it is eligible, as well as withdraw high bids from
previous bidding rounds, remove bids placed in the same bidding round,
or permanently reduce eligibility. Bidders also have the option of
making multiple submissions and withdrawals in each bidding round, and
will not have a separate period to withdraw bids. If a bidder submits
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-stamped of that bid reflect the latest time the bid was
submitted.
93. Please note that all bidding will take place either through the
automated bidding software or by telephonic bidding (Telephonic bid
assistants are required to use a script when handling bids placed by
telephone. Telephonic bidders are therefore reminded to allow
sufficient time to bid, by placing their calls well in advance of the
close of a round, because four to five minutes are necessary to
complete a bid submission.) There will be no on-site bidding during
Auction No. 18.
94. A bidder's maximum eligibility in the first round of the
auction is determined by two factors: (1) the licenses applied for on
FCC Form 175; and (2) 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.
95. The bidding software requires each bidder to log in to the FCC
auction system during the bidding round using the FCC account number,
bidder identification number, and the confidential security codes
provided in the registration materials. Bidders are strongly encouraged
to download and print bid confirmations after they submit their bids.
96. The bid entry screen of the Automated Auction System software
for the Phase II 220 MHz Service auction allows bidders to place
multiple increment bids which will let bidders increase high bids from
one to nine bid increments. A single bid increment is defined as the
difference between the standing high bid and the minimum acceptable bid
for a license.
97. To place a bid on a license, the bidder must enter a whole
number between 1 and 9 in the bid increment multiplier (Bid Mult)
field. This value will determine the amount of the bid (Amount Bid) by
multiplying the bid increment multiplier by the bid increment and
adding the result to the high bid amount according to the following
formula:
Amount Bid = High Bid + (Bid Mult * Bid Increment)
Thus, bidders may place a bid that exceeds the standing high bid by
between one and nine times the bid increment. For example, to bid the
minimum acceptable bid, which is equal to one bid increment, a bidder
will enter ``16'' in the bid increment multiplier column and press
submit.
98. For any license on which the FCC is designated as the high
bidder (i.e., a license that has not yet received a bid in the auction
or where the high bid was withdrawn and a new bid has not yet been
placed), bidders will be limited to bidding only the minimum acceptable
bid. In both of these cases no increment exists for the licenses, and
bidders should enter ``1'' in the Bid Mult field. Note that any whole
number between 1 and 9 entered in the multiplier column will result in
a bid value at the minimum acceptable bid amount.
[[Page 35223]]
Finally, bidders are cautioned in entering numbers in the Bid Mult
field because, as explained in the following section, a high bidder
that withdraws its standing high bid from a previous round, even if
mistakenly or erroneously made, is subject to bid withdrawal payments.
(6) Bid Removal and Bid Withdrawal
99. In the 20 MHz Public Notice, the Commission proposed bid
removal and bid withdrawal rules. With respect to bid withdrawals, the
Commission proposed limiting each bidder to withdrawals in no more than
two rounds during the course of the auction.
a. Procedures
100. Before the close of a bidding round, 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. Removing a bid will affect
a bidder's activity for the round in which it is removed. This
procedure will enhance bidder flexibility and, may serve to expedite
the course of the action. Therefore, the Commission will adopt these
procedures for the 220 MHz Service auction.
101. 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 (assuming that the
bidder has not exhausted its withdrawal allowance). A high bidder that
withdraw its standing high bid from a previous round is subject to the
bid withdrawal payments specified in 47 CFR 90.1007, 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 ``High Bids,'' Part 4.B.2.c.(4).
102. In previous auctions, the Commission has detected bidder
conduct that, arguably, may have constituted strategic bidding through
the use of bid withdrawals. While the Commission continues to recognize
the important role that bid withdrawals play in an auction, i.e.
reducing risk associated with efforts to secure various geographic area
licenses in combination, the Commission concludes that, for the 220 MHz
Service auction, adoption of a limit on their use to two rounds is the
most appropriate outcome. By doing so the Commission believes it
strikes a reasonable compromise that will allow bidders to use
withdrawals. The Commission's decision on this issue is based upon its
experience in prior auctions, particularly the PCS D, E and F block
auction, 800 MHz SMR auction, and LMDS auction, and is in no way a
reflection of its view regarding the likelihood of any speculation or
``gaming'' in the 220 MHz Service auction.
103. The Bureau will therefore 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
90.1007, 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.
104. 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
105. Generally, a bidder that 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 90.1007, 1.2104(g), and 1.2109. No withdrawal payment will
be assessed if the subsequent winning bid exceeds the withdrawn bid.
(7) Round Results
106. The bids placed during a round are not published until the
conclusion of that bidding period. After a round closes, the FCC will
compile reports of all bids placed, bids withdrawn, current high bids,
a new minimum accepted bids, and bidder eligibility status (bidding
eligibility and activity rule waivers), and post the reports for public
access.
107. Reports reflecting bidders' identities and bidder
identification numbers for Auction No. 18 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 Announcement
108. 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
109. As noted in 3.B., 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 Amy Zoslov, 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 Frank Stilwell, Auctions and Industry Analysis
Division), briefly summarizing the changes. Questions about other
changes should be directed to Frank Stilwell of the FCC Auctions and
Industry Analysis Division at (202) 418-0660.
5. Post-Auction Procedures
A. Down Payments and Withdrawn Bid Payments
110. 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.
111. Within ten business days after release of the 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 90.1011(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 ``Bid Removal and
Bid Withdrawal,'' Part 4.B.2.c(6). (Upfront payments are applied first
to satisfy any withdrawn bid liability, before being applied toward
down payments.)
B. Long-Form Application
112. 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 Phase II 220
[[Page 35224]]
MHz Service license won through the auction. Winning bidders that are
small businesses or very small businesses must include an exhibit
demonstrating their eligibility for bidding credits. See 47 CFR
90.1013. Further filing instructions will be provided to auction
winners at the close of the auction.
C. Default and Disqualification
113. 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
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
114. All applicants that submitted upfront payments but were not
winning bidders for any Phase II 220 MHz Service 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.
115. Bidders that drop out of the auction completely may be
eligible for a refund of their upfront payments before the close of the
auction. However, bidders that 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 that have exhausted
all of 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, NW. Room 452, Washington, DC 20554.
116. 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
Linwood Jenkins or Geoffrey Idika at (202) 418-1995.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Attachment A--Summary of Phase II 220 MHZ Licenses to be Auctioned
Attachment B--List of Cases Pending Before the Commission Involving
Non-Nationwide Phase I 220 MHZ Licensees
Attachment C--Guidelines for completion of FCC Forms 175 and 159, and
Exhibits
Attachment D--Electronic Filing and Review of FCC Form 175
Attachment E--Summary Listing of Documents From the Commission and the
Wireless Telecommunications Bureau Addressing Application of The Anti-
Collusion Rules
Attachment F--List of Commenters
Note: Attachments A through F are not printed in the Federal
Register. See the beginning of the Supplementary Information section
for availability.
[FR Doc. 98-17147 Filed 6-26-98; 8:45 am]
BILLING CODE 6712-01-M