[Federal Register Volume 63, Number 197 (Tuesday, October 13, 1998)]
[Notices]
[Pages 54693-54704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-27384]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-98-21-B (Auction No. 21); DA 98-1879]


Auction of Location and Monitoring Service Licenses; Auction 
Notice and Filing Requirements for 528 Multilateration Licenses 
Scheduled for December 15, 1998; Minimum Opening Bids and Other Auction 
Procedural Issues

AGENCY: Federal Communications Commission.


[[Page 54694]]


ACTION: Notice.

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SUMMARY: On August 13, 1998, the Wireless Telecommunications Bureau 
(``Bureau'') released a Public Notice, seeking comment on the 
establishment of reserve prices or minimum opening bids for the 
Location and Monitoring Service (``LMS'') auction, in accordance with 
the Balanced Budget Act of 1997. In addition, the Bureau sought comment 
on a number of procedures to be used in the LMS auction. The Bureau 
received comments in response to its Public Notice. This Public Notice 
announces the procedures and minimum opening bids for the upcoming LMS 
auction. The Commission will hold an auction for 528 multilateration 
LMS licenses to operate in the 902-928 MHz band.

DATES: The Location and Monitoring Service auction will begin on 
December 15, 1998.

ADDRESSES: See the text of the Public Notice and related attachments 
for information regarding important addresses.

FOR FURTHER INFORMATION CONTACT: Kathy Garland or Kenneth Burnley, 
Auctions and Industry Analysis Division, Wireless Telecommunications 
Bureau, at (202) 418-0660. More complete details about this auction are 
contained in a Bidder Information Package. To place an order for a 
Bidder Information Package, contact the FCC National Call Center at 
(888) CALL-FCC ((888) 225-5322, press option #2 at the prompt).

SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice 
released on September 23, 1998, and corrected by a subsequent Public 
Notice released on October 7, 1998. The complete text of this Public 
Notice is available in its entirety, including attachments, for 
inspection and copying during normal business hours in the FCC 
Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C., and 
also may be purchased from the Commission's copy contractor, 
International Transcription Services, (202) 857-3800, fax (202) 857-
3805, 1231 20th Street, N.W., Washington, D.C. 20036. In addition, 
copies of the Public Notice may be retrieved from the FCC World Wide 
Web Auctions site at http://www.fcc.gov/wtb/auctions.

Synopsis of the Public Notice

A. Introduction

    On August 13, 1998, the Wireless Telecommunications Bureau 
(``Bureau'') released ``Location and Monitoring Service Spectrum 
Auction Scheduled for December 15, 1998; Comment Sought on Reserve 
Prices or Minimum Opening Bids and Other Auction Procedural Issues,'' 
Public Notice, DA 98-1616 (rel. August 13, 1998), 63 FR 44456 (August 
19, 1998) (``LMS Public Notice''), seeking comment on the establishment 
of reserve prices or minimum opening bids for the Location and 
Monitoring Service (``LMS'') auction, in accordance with the Balanced 
Budget Act of 1997. The Bureau also sought comment on a number of 
procedures to be used in the LMS auction. The Bureau received comments 
in response to its Public Notice. By this Public Notice, the Bureau 
announces the procedures and minimum opening bids for the upcoming LMS 
auction. The Federal Communications Commission (``FCC'' or 
``Commission'') will hold an auction for 528 multilateration LMS 
licenses to operate in the 902-928 MHz band. Three blocks of spectrum 
are allocated for multilateration LMS systems:

(1) Block A--904.000-909.750 MHz and 927.750-928.000 MHz
(2) Block B--919.750-921.750 MHz and 927.500-927.750 MHz
(3) Block C--921.750-927.250 MHz and 927.250-927.500 MHz

One license will be awarded for each of these three spectrum blocks in 
each of 176 Economic Areas (EAs) designated for LMS. The 176 EAs 
designated for the LMS auction comprise the following areas: (1) the 
continental United States, Hawaii and Alaska (Alaska to be licensed in 
a single area); (2) Guam and the Northern Mariana Islands (to be 
licensed in a single area); (3) Puerto Rico and the U.S. Virgin Islands 
(to be licensed in a single area); (4) American Samoa; and (5) the Gulf 
of Mexico.
    The auction will begin on December 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. The LMS auction will utilize simultaneous multiple round 
bidding. Bidding will be permitted only from remote locations, either 
electronically (by computer) or telephonically. The following are 
pertinent pre-auction deadlines:

Auction Seminar--October 30, 1998
Short Form Application (FCC Form 175)--November 16, 1998; 5:30 p.m.ET
Upfront Payments (via wire transfer)--November 30, 1998; 6:00 p.m. ET
Orders for Remote Bidding Software--December 1, 1998; 5:30 p.m. ET
Mock Auction--December 10, 1998

    The following are pertinent telephone contacts:

FCC National Call Center--(888) CALL-FCC ((888) 225-5322) or (717) 338-
2888 (direct dial)

    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 (voice), (202) 414-1255 
(text telephone (TTY))

    Hours of service: 8 a.m.--6 p.m. ET, Monday--Friday; 9 a.m.--5 p.m. 
ET, weekend of November 14-15.
    List of attachments contained in the Public Notice released on 
September 23, 1998:

Attachment A--Summary of LMS Licenses to be Auctioned, Upfront 
Payments, Minimum Opening Bids
Attachment B--Guidelines for Completion of FCC Forms 175 and 159, and 
Exhibits
Attachment C--Electronic Filing and Review of FCC Form 175
Attachment D--Summary Listing of Documents from the Commission and the 
Wireless Telecommunications Bureau Addressing Application of the Anti-
Collusion Rules

    3. Due Diligence: Potential bidders are reminded that LMS operates 
in the 902-928 MHz frequency band. This band is allocated for primary 
use by Federal Government radiolocation systems. Next in order of 
priority are Industrial, Scientific and Medical devices. Federal 
Government fixed and mobile and LMS systems are secondary to both of 
these uses. The remaining uses of the 902-928 MHz band include licensed 
amateur radio operations and unlicensed Part 15 equipment, both of 
which are secondary to all other uses of the band. Part 15 low power 
devices include, but are not limited to, those used for automatic meter 
reading, inventory control, package tracking and shipping control, 
alarm services, local area networks, Internet access, and cordless 
telephones. The amateur radio service is used by technically inclined 
private citizens to engage in self-training, information exchange, and 
radio experimentation. The Commission's band plan permits secondary 
operations across the entire band by users of unlicensed Part 15 
devices and amateur licensees. At the same time, the band plan 
separates non-multilateration from multilateration LMS systems in all 
but one subband so as to avert interference. The Commission has also 
established limitations on LMS systems'

[[Page 54695]]

interconnection with the public switched network and set forth a number 
of technical requirements intended to ensure successful coexistence of 
all the services authorized to operate in the band.
    4. Potential bidders should 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 multilateration LMS 
licensees. Resolution of these matters could have an impact on the 
availability of spectrum for EA 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. Licensing information is contained in the Commission's 
licensing database, which is available for inspection in the Wireless 
Telecommunications Bureau's Public Reference Rooms, located at 2025 M 
Street, N.W., Room 5608, Washington, D.C. 20554, and 1270 Fairfield 
Road, Gettysburg, PA 17325. Potential bidders may search for 
information regarding LMS 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'' (which can be 
accessed (http://www.fcc.gov/wtb/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 inquires regarding 
accessing this data should be directed to the Technical Support Hotline 
at (202) 414-1250 (voice) or (202) 414-1255 (text telephone (TTY)).
    5. 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. Those 
wishing to participate in the auction must:
     Submit a short form application (FCC Form 175) by November 
16, 1998;
     Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by November 30, 1998; and
     Comply with all provisions outlined in the Bidder 
Information Package.
    6. 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. To comply with this rule, bidders 
competing for the same license(s) are encouraged not to use the same 
individual authorized bidder. A violation of the anti-collusion rule 
could occur if an individual acts as the authorized bidder for two or 
more competing applicants, and conveys information concerning the 
substance of bids or bidding strategies between the bidders he/she is 
authorized to represent in the auction. Also, if the authorized bidders 
are different individuals employed by the same organization (e.g., law 
firm or consulting firm), a violation could similarly occur. In such 
instances, the Bureau strongly encourages applicants to certify on 
their applications that precautionary steps (e.g., establishing a 
``Chinese wall'') have been taken to prevent communication between 
authorized bidders and that applicants and their bidding agents will 
comply with the anti-collusion rule. See, e.g., ``Wireless 
Telecommunications Bureau Responds to Questions About the Local 
Multipoint Distribution Service Auction,'' Public Notice, 13 FCC Rcd 
341 (1998); In re Application of Nevada Wireless for a License to 
Provide 800 MHz Specialized Mobile Radio Service in the Farmington, NM-
CO Economic Area (EA-155) Frequency Band A, Memorandum Opinion and 
Order, 13 FCC Rcd 11973, 11977, para. 11 (1998) (``Nevada Wireless''). 
The Bureau, however, cautions that merely filing a certifying statement 
as part of an application will not outweigh specific evidence that 
collusive behavior has occurred nor will it preclude the initiation of 
an investigation when warranted. See Nevada Wireless, 13 FCC Rcd at 
11978, para. 13 (1998). In the LMS auction, for example, the rule would 
apply to any applicants bidding for the same EA. Therefore, applicants 
that apply to bid for ``all markets'' would be precluded from 
communicating with all other applicants after filing the FCC Form 175. 
However, applicants may enter into bidding agreements before filing 
their FCC Form 175 short-form applications, as long as they disclose 
the existence of the agreement(s) in their Form 175 short-form 
applications. See 47 CFR 1.65. By signing their FCC Form 175 short form 
applications, applicants are certifying their compliance with 47 CFR 
1.2105(c). In addition, Sec. 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, Sec. 1.65 requires an auction 
applicant 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.
    7. 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 four weeks, and need not 
call again unless they wish to order additional copies.
    8. Relevant Authority: Prospective bidders must familiarize 
themselves thoroughly with the Commission's Rules relating to the 
Location and Monitoring 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. In addition, prospective bidders must be 
thoroughly familiar with the procedures, terms and conditions contained 
in Amendment of Part 90 of the Commission's Rules to Adopt Regulations 
for Automatic Vehicle Monitoring Systems, Report and Order, PR Docket 
No. 93-61, 60 FR 15248 (March 23, 1995) (``LMS Report and Order''); 
Amendment of Part 90 of the Commission's Rules to Adopt Regulations for 
Automatic Vehicle Monitoring Systems, Memorandum Opinion and Order and 
Further Notice of Proposed Rule Making, PR Docket No. 93-61, 62 FR 
52078 (October 6, 1997) (``Memorandum Opinion and Order and Further 
Notice of Proposed Rule Making''); Amendment of the Commission's Rules 
to Adopt Regulations for Automatic Vehicle Monitoring Systems, Second 
Report and Order, 63 FR 40659 (July 30, 1998) (``LMS Second Report and 
Order''); Part

[[Page 54696]]

90, Subpart M of the Commission's Rules concerning Transportation 
Infrastructure Radio Service; Subpart X of the Commission's Rules 
concerning Competitive Bidding Procedures; and Part 1, Subpart Q of the 
Commission's Rules concerning Competitive Bidding Proceedings.
    9. The terms contained in the Commission's Rules, relevant orders, 
public notices and bidder information package are not negotiable. 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 ftp @ftp.fcc.gov 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. (ITS), at (202) 857-3800.
    10. 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.
    11. 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.
    12. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use the LMS 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 LMS proposals may also call the FCC National Call Center at 
(888) CALL-FCC ((888) 225-5322).
    13. Licensees must comply with the Commission's rules regarding the 
National Environmental Policy Act (NEPA). The construction of a 
wireless antenna facility is a federal action and licensees must comply 
with the Commission's NEPA rules for each wireless facility. See 47 CFR 
1.1305-1.1319. The Commission's NEPA rules require that, among other 
things, licensees consult with expert agencies having NEPA 
responsibilities, including the U.S. Fish and Wildlife Service, the 
State Historic Preservation Office, the Army Corp of Engineers and the 
Federal Emergency Management Agency (through the local authority with 
jurisdiction over floodplains). Licensees must prepare environmental 
assessments for wireless facilities that may have a significant impact 
in or on wilderness areas, wildlife preserves, threatened or endangered 
species or designated critical habitats, historical or archaeologic 
sites, Indian religious sites, floodplains, and surface features. 
Licensees must also prepare environmental assessments for wireless 
facilities that include high intensity white lights in residential 
neighborhoods or excessive radiofrequency emission.

B. Eligibility for Small and Very Small Business Provisions

    As described above, this auction offers one license for each of 
three spectrum blocks in each of the 176 Economic Areas (EAs) 
designated for LMS. Our goal in adopting special small business 
provisions is to promote and facilitate the participation of small 
businesses in the LMS auction and in the provision of this and other 
commercial mobile radio services.
    15. Determination of Revenues. For purposes of determining which 
entities qualify as very small businesses or small businesses, the 
Commission will consider the gross revenues of the applicant, its 
controlling interests, and the affiliates of the applicant and its 
controlling interests. Once principals or entities with a controlling 
interest are determined, only the revenues of those principals or 
entities will be counted in determining small business eligibility. The 
term ``controlling interest'' 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.
    16. Very Small or Small Business Consortiums. A consortium of small 
businesses or very small businesses is a conglomerate organization 
formed as a joint venture between or among mutually independent 
business firms, each of which individually satisfies the definition of 
very small or small business in 47 CFR 90.1103(b)(1) or (2). Thus, each 
consortium member must disclose its gross revenues along with those of 
its affiliates, controlling interests, and controlling interests' 
affiliates. The Bureau notes that although the gross revenues of the 
consortium members will not be aggregated for purposes of determining 
eligibility for very small or small business credits, this information 
must

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be provided to ensure that each individual consortium member qualifies 
for any bidding credit awarded to the consortium.
    17. Application Showing. Applicants should note that they will be 
required to file supporting documentation as Exhibit C to their FCC 
Form 175 short form applications to establish that they satisfy the 
eligibility requirements to qualify as a very small business or small 
business (or consortiums of very small or small businesses) for this 
auction. Specifically, for the LMS auction, applicants applying to bid 
as very small or small businesses (or consortiums of very small or 
small businesses) will be required to file as Exhibit C to their FCC 
Form 175 short form applications, all information required under 47 CFR 
1.2105(a) and 1.2112(a). In addition, these applicants must disclose, 
separately and in the aggregate, the gross revenues for the preceding 
three years of each of the following: (1) The applicant; (2) the 
applicant's affiliates; (3) the applicant's controlling interests; and 
(4) the affiliates of the applicant's controlling interests. 
Certification that the average gross revenues for the preceding three 
years do not exceed the applicable limit is not sufficient. A statement 
of the total gross revenues for the preceding three years is also 
insufficient. The applicant must provide separately for itself, its 
affiliates, and its controlling interests, a schedule of gross revenues 
for each of the preceding three years, as well as a statement of total 
average gross revenues for the three-year period. If the applicant is 
applying as a consortium of very small or small businesses, this 
information must be provided for each consortium member.
    18. Bidding Credits. Qualifying LMS applicants are eligible for a 
bidding credit that represents the amount by which a bidder's winning 
bids are discounted. The size of an LMS bidding credit depends on the 
average gross revenues for the preceding three years of the bidder and 
its controlling interests and affiliates:
     A bidder with average gross revenues not to exceed $15 
million for the preceding three years receives a 25 percent discount on 
its winning bids for LMS licenses; and,
     A bidder with average gross revenues not to exceed $3 
million for the preceding three years receives a 35 percent discount on 
its winning bids for LMS licenses.
    Bidding credits are not cumulative: qualifying applicants receive 
either the 25 percent or the 35 percent bidding credit, but not both. 
The definitions of very small business and small business (or 
consortiums of very small or small businesses) (including calculation 
of average gross revenues) are set forth in 47 CFR 90.1103(b).
    19. LMS 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. Finally, LMS bidders should also note 
that there are no installment payment plans in the LMS auction.

C. Pre-Auction Procedures

    20. Short-Form Application (FCC Form 175)--Due November 16, 1998. 
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 16, 1998. 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.
    21. 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 acknowledgment 
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 therefore must bid telephonically, unless the FCC 
Form 175 is amended electronically prior to the resubmission date for 
incomplete or deficient applications. The following is a brief 
description of each filing method.
    22. Electronic Filing. Applicants wishing to file electronically 
may generally do so on a 24-hour basis beginning October 26, 1998. The 
window for filing the FCC Form 175 electronically will remain open 
until 5:30 p.m. ET on November 16, 1998. Applicants are strongly 
encouraged to file early, and applicants are responsible for allowing 
adequate time for filing their applications. Applicants may update or 
amend their electronic applications multiple times until the filing 
deadline of November 16, 1998. Applicants who file electronically must 
press the ``Submit Form 175'' button on the ``Submit'' page of the 
electronic form to successfully submit their FCC Form 175s. Information 
about installing and running the FCC Form 175 application software is 
included in Attachment C to this Public Notice. Technical support is 
available at (202) 414-1250 (voice) or (202) 414-1255 (text telephone 
(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 November 14-15.
    23. 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 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 August 1998 version of FCC Form 175 and FCC Form 175-S (if 
necessary). Earlier versions of the FCC Form 175 will not be accepted 
for filing. Copies of the FCC Form 175 can be obtained by calling the 
Commission's Forms Distribution Center at (800) 418-FORM ((800) 418-
3676) (outside Washington, D.C.) or (202) 418-FORM ((202) 418-3676) (in 
the Washington area). Copies of the FCC Form 175 can also be obtained 
via Fax-On-Demand at (202) 418-0177 (the document retrieval number for 
the FCC Form 175 is 000175, and 001751 for the FCC Form 175-S), or 
downloaded from the Commission's World Wide Web site at http://
www.fcc.gov/formpage.html. If applicants have any questions concerning 
availability of the FCC Form 175, they should call the FCC Records 
Management Branch at (202) 418-0210.
    24. Manual applications must 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. 21, 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 or 
applications sent via facsimile will not be accepted.

    25. Completion of the FCC Form 175. Applicants should carefully 
review 47 CFR 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 B of this Public Notice. Note again that 
applicants who file electronically must press the ``Submit Form 175'' 
button on the ``Submit'' page to successfully submit their FCC Form 
175. Failure to sign a manually filed

[[Page 54698]]

FCC Form 175 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.
    26. 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 that file electronically may 
review their own completed FCC Form 175. Applicants may also 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. For this reason, it is important that applicants do 
not include their Taxpayer Identification Numbers (TINs) on any 
Exhibits to their FCC Form 175 applications. There is a fee of $2.30 
per minute for accessing this system.
    27. Application Processing and Minor Corrections. After the 
deadline for filing the FCC Form 175 applications has passed, the FCC 
will process all timely submitted 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.
    28. As described more fully in the Commission's Rules, after the 
November 16, 1998, 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.
    29. Upfront Payments--Due November 30, 1998. 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. 
Electronic filers of the FCC Form 175 will have access to an electronic 
version of Form 159 after completing the FCC Form 175. 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 November 
30, 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. 21 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 November 30, 
1998 deadline will result in dismissal of the application and 
disqualification from participation in the auction.
    30. Making Auction Payments by Wire Transfer. Wire transfer 
payments must be received by 6:00 p.m. ET on November 30, 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 910-0198
OBI Field: (Skip one space between each information item)
``AUCTIONPAY''
Taxpayer Identification No. (same as FCC Form 159, block 26)
Payment Type Code (enter ``ALMU'')
FCC Code 1 (same as FCC Form 159, block 23A: ``21'')
Payer Name (same as FCC Form 159, block 2)
Lockbox No. # 358410

    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.

    31. 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. 21.'' 
Bidders may confirm receipt of their upfront payment at Mellon Bank by 
contacting their sending financial institution.
    32. FCC Form 159. 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 will be 
included in the Bidder Information Package.
    33. Amount of Upfront Payments. The Bureau will reduce the proposed 
upfront payments per MHz-pop for the LMS auction but retain the 
previously proposed floors for the upfront payments. After considering 
comments and subsequent discussions, the Bureau agrees with commenters 
that LMS is a unique and restricted niche service that will be provided 
to smaller segments of the population. Based on this assessment, and 
the Bureau's decision to reduce minimum opening bids (see paragraphs 
65-66, infra), the Bureau believes that a reduction of the proposed 
upfront payments is reasonable. Further, based on information provided 
in these discussions, the Bureau will adopt values that are slightly 
lower than one commenter's (Comtrak) proposed upfront payments. 
Specifically, the Bureau will adopt the following levels of upfront 
payments for each LMS license:

(1) Block A--$0.00075*MHz*Pop (rounded up to the next dollar and no 
less than $2,850 per license)
(2) Block B--$0.00075*MHz*Pop (rounded up to the next dollar and no 
less than $2,500 per license)
    (3) Block C--$0.00075*MHz*Pop (rounded up to the next dollar and no 
less than $2,800 per license)

These upfront payments represent the deposits required to qualify to 
bid on LMS licenses in Auction No. 21. The Bureau finds that amounts 
higher than these might serve as a barrier to participation in the 
auction, and that upfront payments lower than these might encourage 
frivolous auction participation and insincere bidding.
    34. Please note that upfront payments are not attributed to 
specific licenses, but instead will be translated to bidding units to 
define a bidder's maximum bidding eligibility. For Auction No. 21, the 
amount of the upfront payment will be translated into bidding units on 
a one-to-one basis, 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 selected on FCC Form 
175, but rather to cover the maximum number of bidding units that are 
associated with licenses the bidder wishes to place bids on and hold 
high bids on at any given time.
    35. In order to be able to place a bid on a license, in addition to 
having specified that license on the FCC Form 175, a bidder must have 
an eligibility level that meets or exceeds the number

[[Page 54699]]

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 the FCC Form 175, or else 
the applicant will not be eligible to participate in the auction.
    36. 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. Bidders should check their calculations carefully as 
there is no provision for increasing a bidder's maximum eligibility 
after the upfront payment deadline.

    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.

    37. 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 will use wire transfers for all Auction No. 21 
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 paragraph 94, infra.
    38. Auction Registration. Approximately ten days before the 
auction, the Commission 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.
    39. 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.
    40. 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 Wednesday, December 9, 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.
    41. 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.
    42. Remote Electronic Bidding Software. 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 December 1, 1998. (Auction software is tailored to a 
specific auction, so software from prior auctions will not work for 
Auction No. 21.) A software order form is included in the Bidder 
Information Package.
    43. Auction Seminar. On October 30, 1998, the FCC will sponsor a 
seminar for the LMS auction at the Ana Hotel, located at 2401 M 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 LMS service and auction rules.
    44. To register, complete the registration form to be included in 
the upcoming 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.
    45. Mock Auction. All applicants whose FCC Form 175 and 175-S have 
been accepted for filing will be eligible to participate in a mock 
auction beginning December 10, 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. Participation by all bidders is strongly recommended. 
Details will be announced by public notice.

D. Auction Event

    46. The first round of the auction will begin on December 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.
    47. Auction Structure--Simultaneous Multiple Round Auction. The 528 
multilateration LMS licenses 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. This 
approach, the Bureau believes, allows bidders to take advantage of any 
synergies that exist among licenses and is most administratively 
efficient.
    48. Maximum Eligibility and Activity Rules. The amount of the 
upfront payment submitted by a bidder would determine the initial 
maximum eligibility (as measured in bidding units) for each bidder. The 
amount of the upfront payment submitted by a bidder determines the 
initial maximum eligibility (in bidding units) for each bidder. Note 
again that 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. There is no provision for increasing a bidder's 
maximum eligibility during the course of an auction, as described under 
``Auction Stages,'' set forth in paragraph 55, infra.
    49. 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.
    50. 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,'' paragraph 67 , infra). A bidder's activity level in a round is 
the sum of the bidding units associated with

[[Page 54700]]

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.
    51. Activity Rule Waivers and Reducing Eligibility. 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.
    52. 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.
    53.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 
Stages'' (see paragraph 55, infra). Once eligibility has been reduced, 
a bidder will not be permitted to regain its lost bidding eligibility.
    54. 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.
    55. Auction Stages. The Bureau will conduct the auction in stages 
and employ an activity rule. Further, in each round of Stage One, a 
bidder desiring to maintain its current eligibility will be required to 
be active on licenses encompassing at least 80 percent of its current 
bidding eligibility. In each round of Stage Two, a bidder desiring to 
maintain its current eligibility will be required to be active on at 
least 90 percent of its current bidding eligibility. Finally, a bidder 
in Stage Three, in order to maintain eligibility, will be required to 
be active on 98 percent of its current bidding eligibility.
    56. The FCC reserves the discretion to further alter the activity 
percentages before and/or during the auction. The following are the 
proposed activity levels for each stage of 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 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\).
    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\).
    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.

    57. 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 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 Bureau believes that these stage transition rules, 
having proven successful in prior auctions, are appropriate for use in 
the LMS auction.
    58. 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.
    59. 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 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).
    60. 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.
    61. Adoption of these rules, the Bureau believes, is most 
appropriate for the LMS auction because our experience in prior 
auctions demonstrates that the simultaneous stopping rule balanced the

[[Page 54701]]

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 the use of a 
simultaneous stopping rule.
    62. Auction Delay, Suspension, or Cancellation. By public 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. 
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 Bureau 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.
    63. Round Structure. 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.
    64. 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.
    65. Reserve Price or Minimum Opening Bid. The Bureau will adopt 
minimum opening bids for each of the licenses in the LMS auction that 
are reducible at the discretion of the Bureau. Commenters, however, 
have persuaded the Bureau that its proposed levels are significantly 
too high. Therefore, the Bureau will reduce the price per MHz-pop 
proposed in the LMS Public Notice, but retain the proposed floors for 
the minimum opening bids. Congress has enacted a presumption that 
unless the Commission determines otherwise, minimum opening bids or 
reserve prices are in the public interest. Based on the Bureau's 
experience in using minimum opening bids in the 800 MHz Specialized 
Mobile Radio and LMDS auctions, the Bureau believes that minimum 
opening bids speed the course of the auction and ensure that valuable 
assets are not sold for nominal prices, without unduly interfering with 
the efficient assignment of licenses. Accordingly, the Bureau adopts 
the following revised formulae for calculating minimum opening bids:

(1) Block A--$0.0008*MHz*Pop (rounded up to the next dollar and no less 
than $2,850 per license)
(2) Block B--$0.0008*MHz*Pop (rounded up to the next dollar and no less 
than $2,500 per license)
(3) Block C--$0.0008*MHz*Pop (rounded up to the next dollar and no less 
than $2,800 per license)

The revised formulae presented here best meet the objectives of our 
auction authority in establishing reasonable minimum opening bids. The 
Bureau 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. In addition, the Bureau must balance the revenue raising 
objective against the Bureau's other public interest objectives in 
setting the minimum bid level. LMS is a restricted service with unique 
dynamics and recognizes that LMS winning bidders are prohibited from 
using non-vehicular location service except where the primary purpose 
is to locate vehicles. In addition, LMS auction winners must share and 
accept interference from other services. LMS operates in the 902-928 
MHz frequency band. The band is allocated for primary use by Federal 
Government radiolocation systems. Next in order of priority are 
Industrial, Scientific and Medical devices. Federal Government fixed 
and mobile and LMS systems are secondary to both of these uses. The 
remaining uses of the 902-928 MHz band include licensed amateur radio 
operations and unlicensed Part 15 equipment, both of which are 
secondary to all other uses of the band. The Commission's band plan 
permits secondary operations across the entire band by users of 
unlicensed Part 15 devices and amateur licensees. All of these facts, 
together with projections of the likely revenues and costs of providing 
multilateration LMS service, convince the Bureau that the proposed 
minimum opening bids should be substantially reduced. In sum, the 
Bureau finds that these minimum opening bids will speed the course of 
the auction and ensure that valuable assets are not sold for nominal 
prices without unduly interfering with the efficient assignment of 
licenses.
    66. Minimum opening bids are reducible at the discretion of the 
Bureau. This will allow the Bureau flexibility to adjust the minimum 
opening bids if circumstances warrant. The Bureau emphasizes, however, 
that such discretion will be exercised, if at all, sparingly and early 
in the auction, i.e., before bidders lose all waivers and begin to lose 
substantial eligibility. During the course of the auction, the Bureau 
will not entertain any bidder requests to reduce the minimum opening 
bid on specific licenses.
    67. Minimum Accepted Bids. The Bureau will use an exponential 
smoothing methodology to calculate minimum bid increments and retains 
the discretion to change the minimum bid increment if circumstances so 
dictate. For every license that receives a bid, the bid increment for 
the next round for that license will be established as a percentage 
increment that is determined using the exponential smoothing formula.
    68. Exponential Smoothing. 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. For every license that receives a bid, the bid increment for 
the next round for that license will be established as a percentage 
increment that is determined using the exponential smoothing formula.
    69. Using exponential smoothing, the calculation of the percentage 
bid increment for each license will be based 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 weighting factor times the number of new bids 
received on the license in the current bidding period 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.
    70. In the 220 MHz Service auction the increment ranged from a 
minimum of 0.10 percent to a maximum of 0.20

[[Page 54702]]

percent. The proposal for the LMS auction follows this precedent. In 
addition, that increment will ensure the auction is conducted at a 
reasonable pace and will result in reasonable prices for LMS spectrum. 
Accordingly, the Bureau will initially set the weighting factor at 0.5, 
the minimum percentage increment at 0.1, and the maximum percentage 
increment at 0.2.

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 10,000 or to the nearest hundred if it is under 
10,000.

Examples

License 1
C=0.5, N = 0.1, M = 0.2

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
    The smaller of I1 = (1 + 1) * 0.1 = 0.2 or 0.2 (the 
maximum percentage increment)
2. Minimum bid increment using the percentage increment (I1 
from above)
    0.2 * $1,000,000 = $200,000
3. Minimum acceptable bid for round 2 = 1,200,000

Round 2 (3 new bids, high bid = $2,000,000)
1. Calculation of percentage increment using exponential smoothing:
    A2 = (0.5 * 3) + (0.5 * 1) = 2
    The smaller of I2 = (1 + 2) * 0.1 = 0.3 or 0.2 (the 
maximum percentage increment)
2. Minimum bid increment using the percentage increment is 
(I2 from above)
    0.2 * $2,000,000 = $400,000
3. Minimum acceptable bid for round 3 = $2,400,000

Round 3 (1 new bid, high bid = $2,400,000)
1. Calculation of percentage increment using exponential smoothing:
    A3 = (0.5 * 1) + (0.5 * 2) = 1.5
    The smaller of I3 = (1 + 1.5) * 0.1 = 0.25 or 0.2 (the 
maximum percentage increment)
2. Minimum bid increment using the percentage increment (I3 
from above)
    0.2 * $2,400,000 = $480,000
3. Minimum acceptable bid for round 4 = $2,880,000

    71. Bidding. Each bid will be date- and time-stamped when it is 
entered into the FCC computer system. All bidding will take place 
either through the automated bidding software or by telephonic bidding. 
There will be no on-site bidding during Auction No. 21. The bidding 
software requires each bidder to login 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.
    72. High Bids. Each bid will be date- and time-stamped when it is 
entered into the FCC 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-stamp than bids 
submitted later in a round.
    73. Bidding. 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. 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-stamp of that bid reflect the 
latest time the bid was submitted.
    74. 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.)
    75. A bidder's ability to bid on specific licenses 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.
    76. The bidding software requires each bidder to login 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.
    77. The bid entry screen of the Automated Auction System software 
for the LMS 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.
    78. 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 ``1'' in the bid increment multiplier column and press 
submit.
    79. 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, in these 
cases, any whole number between 1 and 9 entered in the

[[Page 54703]]

multiplier column will result in a bid value at the minimum acceptable 
bid amount. 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.
    80. Bid Removal and Bid Withdrawal Procedures. 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 auction.
    82. 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 withdraws its standing high bid from a previous round is subject 
to the bid withdrawal payments specified in 47 CFR 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'' (see paragraph 72, supra).
    82. In previous auctions, the Bureau has detected bidder conduct 
that, arguably, may have constituted strategic bidding through the use 
of bid withdrawals. While the Bureau 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 Bureau concludes that, for the LMS auction, 
adoption of a limit on their use to two rounds is the most appropriate 
outcome. By doing so the Bureau believes it strikes a reasonable 
compromise that will allow bidders to use withdrawals. The Bureau'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 the Bureau's view 
regarding the likelihood of any speculation or ``gaming'' in the LMS 
auction.
    83. 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 
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.
    84. 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.
    85. Bid Removal and Bid Withdrawal Calculation. 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 1.2104(g) and 1.2109. No 
withdrawal payment will be assessed if the subsequent winning bid 
exceeds the withdrawn bid.
    86. Round Results. 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, new minimum accepted bids, and bidder eligibility status 
(bidding eligibility and activity rule waivers), and post the reports 
for public access.
    87. Reports reflecting bidders' identities and bidder 
identification numbers for Auction No. 21 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.
    88. Round Results and 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.
    89. Other Matters. As noted above, 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 Kenneth Burnley, Auctions and Industry Analysis 
Division), briefly summarizing the changes. Questions about other 
changes should be directed to Kenneth Burnley of the FCC Auctions and 
Industry Analysis Division at (202) 418-0660.

E. Post-Auction Procedures

    90. 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.
    91. 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 1.2107(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'' (see paragraphs 80-85, supra). (Upfront payments are 
applied first to satisfy any withdrawn bid liability, before being 
applied toward down payments.)
    92. 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 LMS 
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 
1.2112(b). Further filing instructions will be provided to auction 
winners at the close of the auction.
    93. 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 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

[[Page 54704]]

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).
    94. Refund of Remaining Upfront Payment Balance. All applicants 
that submitted upfront payments but were not winning bidders for a LMS 
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 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, N.W., Room 452, 
Washington, D.C. 20554.
    95. Bidders can also fax their request to the Billings and 
Collections Branch (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.
Amy Zoslov,
Chief, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau.
[FR Doc. 98-27384 Filed 10-9-98; 8:45 am]
BILLING CODE 6712-01-P