[Federal Register Volume 64, Number 33 (Friday, February 19, 1999)]
[Notices]
[Pages 8361-8371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4053]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 99-266; Report No. AUC-99-23-B (Auction No. 23)]


Auction of Local Multipoint Distribution Service Spectrum; 
Auction Notice and Filing Requirements for 168 Local Multipoint 
Distribution Service Licenses Scheduled for April 27, 1999; Minimum 
Opening Bids and Other Procedural Issues

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: On January 29, 1999, the Wireless Telecommunications Bureau 
(``Bureau'') released a Public Notice announcing the minimum opening 
bids and other auction procedures for the auction of Local Multipoint 
Distribution Service (``LMDS'') spectrum, consisting of 168 licenses.

DATES: The LMDS auction will begin on April 27, 1998.

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

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division: Kathryn Garland, Operations at (717) 338-2801; Tim Salmon, 
Auctions Analysis; and Arthur Lechtman, Legal Branch at (202) 418-0660. 
Public Safety and Private Wireless Division: Ronald Quirk or Cathy Fox 
at (202) 418-0680. Media Contact: Meribeth McCarrick at (202) 418-0654.

SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice that 
was released on January 29, 1999. The complete text of this Public 
Notice is available in its entirety, including all Attachments, for 
inspection and copying during normal business hours in the Wireless 
Telecommunications Bureau Reference Center, Room 5608, 2025 M Street 
N.W., 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. It 
is also available on the Commission's website at http://www.fcc.gov.
    Synopsis of the Public Notice:

A. Introduction

    1. This Public Notice announces the procedures and minimum opening 
bids for the upcoming Local Multipoint Distribution Service (``LMDS'') 
auction. On November 6, 1998, the Wireless Telecommunications Bureau 
(``Bureau'') released a Public Notice (See ``Local Multipoint 
Distribution Service Spectrum Re-Auction of 168 Licenses Scheduled for 
April 27, 1999; Application Deadline Set for March 29, 1999; Comment 
Sought on Reserve Prices or Minimum Opening Bids and Other Auction 
Procedures,'' Public Notice, DA 98-2266 (rel. November 6, 1998) (``LMDS 
Public Notice''), 63 FR 64502-01 (November 20, 1998), seeking comment 
on the establishment of reserve prices or minimum opening bids for the 
LMDS 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 LMDS auction. The Bureau received two comments and no 
replies in response to the LMDS Public Notice. Comments were filed on 
November 30, 1998, by the Wireless Communications Association 
International, Inc. (``WCA'') and by ABS LMDS Venture, Catfish 
Communications, L.L.C., ENMR Telephone Cooperative, Inc., and SKSW LMDS 
Venture, filing jointly (collectively ``ABS et al'').
    2. The licenses available in this auction are licenses for which 
there was no winning bidder in the original LMDS auction that closed on 
March 25, 1998, or are licenses on which the winning bidder defaulted. 
The three licensees in default include Baker Creek Communications, 
L.P., New Wave Networks, L.L.C., and Pinpoint Communications, Inc. 
Licenses B038-B, B144-B, B254-B, B371-B, B372-B, and B392-B are the 
subject of a pending waiver request filed by New Wave Networks, L.L.C. 
(See New Wave Networks, L.L.C, Request for Waiver of Rule Sections 
101.1105(b) and 1.2109(a)-(c), filed August 13, 1998; Supplement filed 
September 2, 1998; Second Supplement filed September 9, 1998; Third 
Supplement filed December 9, 1998.) Licenses B185-B, B270-A, and B270-B 
are the subject of a pending Petition for Reconsideration filed by 
Pinpoint Communications, Inc. (See Pinpoint Communications, Application 
for Local Multipoint Distribution Service Licenses to Serve BTA 185, 
Hastings, Nebraska and BTA 270, McCook, Nebraska, Petition for 
Reconsideration, filed October 23, 1998.) Two blocks of spectrum are 
allocated for LMDS systems:

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

One license will be awarded for each of these spectrum blocks in each 
of 122 Block A Basic Trading Areas (BTAs) and 46 Block B BTAs 
designated for LMDS. Rand McNally is the copyright owner of the Major 
Trading Area (MTA) and Basic Trading Area (BTA) Listings, which list 
the BTAs contained in each MTA and the counties within each BTA, as 
embodied in Rand McNally's Trading Area System MTA/BTA Diskette, and 
geographically represented in the map contained in Rand McNally's 
Commercial Atlas & Marketing Guide. The conditional use of Rand McNally 
copyrighted material by interested persons is authorized under a 
blanket license agreement dated February 10, 1994, and covers use by 
LMDS applicants. This agreement requires authorized users of the 
material to include a legend on reproductions (as specified in the 
license agreement) indicating Rand McNally ownership. These licenses 
are listed in Attachment A to this Public Notice. The BTA licenses 
designated for the LMDS auction comprise various portions of the 
following areas: (1) continental United States and (2) Puerto Rico. 
Thus, there are a total of 168 LMDS licenses to be auctioned.
    3. Auction Date: The auction will begin on April 27, 1999. 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.
    4. Auction Title: The Local Multipoint Distribution Service--
Auction No. 23.
    5. Bidding Methodology: Simultaneous multiple round bidding. 
Bidding will be permitted only from remote locations, either 
electronically (by computer) or telephonically.
    6. Pre-Auction Deadlines:
     Auction Seminar--March 10, 1999.
     Short Form Application (FCC Form 175)--March 29, 1999; 
5:30 p.m.ET.
     Upfront Payments (via wire transfer)--April 12, 1999; 6:00 
p.m. ET.
     Orders for Remote Bidding Software-- April 13, 1999; 5:30 
p.m. ET.
     Mock Auction April 22, 1999.
    7. Telephone Contacts:
     Auctions Hotline--(888) CALL-FCC ((888) 225-5322), press 
Option #2 or (717) 338-2888 (direct dial).

(For Bidder Information Packages, General Auction Information, and 
Seminar Registration. Hours of service: 8 a.m.-5:30 p.m. ET.)

[[Page 8362]]

     FCC Technical Support Hotline--(202) 414-1250 (voice), 
(202) 414-1255 (TTY).

(For technical assistance with installing or using FCC software. Hours 
of service: 8 a.m.-6 p.m. ET, Monday-Friday; 9 a.m.-5 p.m. ET, weekend 
of March 27-28.)
    8. List of Attachments:
     Attachment A--Summary of LMDS 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.
     Attachment E--Existing 28 GHz Licensee and 31 GHz 
Licensee.
     Attachment F--Location of NGSO-MSS Feeder Link Earth 
Stations in the 29.1-29.25 GHz Band.
     Attachment G--Auction Seminar Registration Form.
     Attachment H--Exponential Smoothing Formula and Example.
    9. Background: In 1997, the Commission established rules to create 
and govern the licensing and operations for Local Multipoint 
Distribution Service (LMDS), a fixed, broadband, point-to-multipoint 
microwave service. The technology developed for use in the LMDS 
frequency band provides very high subscriber capacity for two-way video 
telecommunications. The Commission also established rules for the 
distribution of LMDS licenses by means of competitive bidding. The 
initial auction for LMDS licenses began on February 18, 1998 and closed 
on March 25, 1998, with 104 bidders winning 864 of the 986 available 
licenses.
    10. Incumbent Licensees: Although LMDS operations are permitted in 
the 31,000-31,075 MHz and 31,225-31,300 MHz bands, incumbent city 
licensees and private business users operating in these two segments 
are entitled to protection against harmful interference from any LMDS 
operation in these blocks. LMDS service providers will be entitled to 
interference protection from any other presently-authorized primary 
users in the 31,075-31,225 MHz bands. More detailed information is 
provided in Attachment E.
    11. Block A of the New York BTA is encumbered by a pre-existing 
licensee in the New York Primary Metropolitan Statistical Area. The 
incumbent licensee, Winstar Wireless Fiber Corp., is entitled to 
interference protection. See Attachment E.
    12. Reminder to potential Non-geostationary Mobile Satellite 
Service applicants/licensees: Section 101.103(h) of the Commission's 
Rules requires that no more than 15 days after the release of this 
Public Notice, NGSO-MSS feeder link earth station complex applicants/
licensees planning to operate in the 29,100-29,250 MHz band pursuant to 
Section 25.257 of the rules, file with the Commission a set of 
geographical coordinates consistent with Rule Section 101.103(h)(2). 
This information should be directed to the attention of: Ronald Quirk, 
Federal Communications Commission, Wireless Telecommunications Bureau, 
1919 M Street, NW, Room 8102, Washington, D.C. 20554.
    13. Other Proceedings: Currently pending before the Bureau are 
several Petitions for Reconsideration in the matter of Requests for 
Waiver of Section 101.1003(a) of the Commission's Rules Establishing 
Eligibility Restrictions on Incumbent LECs and Cable Operators in the 
Local Multipoint Distribution Service. (See Order, 13 FCC Rcd 18694 
(1998)).
    14. Due Diligence: Potential bidders are reminded that several 
NGSO-MSS feeder link Earth stations are located in the 29.1-29.5 GHz 
band. These are identified in Attachment F.
    15. Potential bidders should be aware that certain licenses 
designated for Auction No. 23 are subject to a waiver request and 
petition for reconsideration that are pending before the Commission. 
The Bureau notes that resolution of these matters could have an impact 
on the availability of licenses for this auction. In addition, while 
the Commission will continue to act on pending requests and petitions, 
some of these matters may not be resolved before the auction. In the 
event that changes in the license inventory for Auction Event No. 23 
occur before the auction, the Commission will make an announcement by 
Public Notice.
    16. 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. In a future public notice, the Bureau will 
provide the new location for inspecting the Commission's licensing 
database in the Portals building.
    17. In addition, potential bidders may search for information 
regarding LMDS 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 at 
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 inquiries regarding 
accessing this data should be directed to the Technical Support Hotline 
at (202) 414-1250 (voice) or (202) 414-1255 (text telephone (TTY)).
    18. 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.
    19. Participation: Those wishing to participate in the auction 
must:
     Submit a short form application (FCC Form 175) by March 
29, 1999.
     Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by April 12, 1999.
     Comply with all provisions outlined in this Public Notice.
    20. 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. Bidders competing for the same license(s) 
are encouraged not to use the same individual as an 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. At a minimum, in such a case, 
applicants should certify on their applications that precautionary 
steps have been taken to prevent communication between authorized 
bidders and that applicants and their bidding agents will comply with 
the anti-collusion rule. The Bureau, however, cautions that merely 
filing a certifying statement as part of an

[[Page 8363]]

application will not outweigh specific evidence that collusive behavior 
has occurred nor will it preclude the initiation of an investigation 
when warranted. In the LMDS auction, for example, the rule would apply 
to any applicants bidding for the same BTA. 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. By signing their FCC Form 175 short form applications, 
applicants are certifying their compliance with Section 1.2105(c). In 
addition, 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 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.
    21. Bidder Information Package: No separate bidder information 
package will be published for this auction. However, some Commission 
Orders relevant to LMDS are contained in the Bidder Information Package 
for Auction Event No. 17, the first LMDS auction. Prospective bidders 
are advised not to rely upon information contained in the Bidder 
Information Package, other than the rulemaking Orders contained in Tab 
E, as it is outdated. In addition, the Commission and Bureau have 
released Orders concerning LMDS since the publication of the Bidder 
Information Package (see next section). The Commission has a limited 
number of Auction Event No. 17 Bidder Information Packages available. A 
copy may be requested by contacting the Auction Hotline at (888) CALL-
FCC ((888) 225-5322) and pressing Option 2 at the prompt. An electronic 
version of the Auction Event No. 17 Bidder Information Package can be 
accessed via the Commission website at www.fcc.gov/wtb/auctions.
    22. Relevant Authority: Prospective bidders must familiarize 
themselves thoroughly with the Commission's Rules relating to LMDS, 
contained in Title 47, Part 101 of the Code of Federal Regulations, and 
those relating to application and auction procedures, contained in 
Title 47, Part 1 of the Code of Federal Regulations.
    23. Prospective bidders must also be thoroughly familiar with the 
procedures, terms and conditions (collectively, ``Terms'') contained in 
the Second Report and Order in PP Docket No. 93-253, 9 FCC Rcd 2348 
(1994); the Second Memorandum Opinion and Order in PP Docket No. 93-
253, 9 FCC Rcd 7245 (1994); the Erratum to the Second Memorandum 
Opinion and Order in PP Docket No. 93-253 (released Oct. 19, 1994); the 
First Report and Order and Fourth Notice of Proposed Rule Making in CC 
Docket No. 97-297, 11 FCC Rcd 19005 (1996); the Second Report and 
Order, Order on Reconsideration, and Fifth Notice of Proposed Rule 
Making in CC Docket No. 96-297, 12 FCC Rcd 12545 (1997) (``LMDS Second 
R&O''); the Second Order on Reconsideration in CC Docket No. 97-297, 12 
FCC Rcd 15082 (1997); the Third Order on Reconsideration in CC Docket 
97-297, 13 FCC Rcd 4856; the Fourth Report and Order in CC Docket No. 
92-297, 13 FCC Rcd 11655 (1998); Order, Requests for Waiver of Section 
101.1003(a) of the Commission's Rules Establishing Eligibility 
Restrictions on Incumbent LECs and Cable Operators in the Local 
Multipoint Distribution Service, 13 FCC Rcd 18694 (1998) (collectively 
referred to as the ``Relevant Orders''); and Part 1, Subpart Q of the 
Commission's Rules concerning Competitive Bidding Proceedings.
    24. 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. When ordering 
documents from ITS, please provide the appropriate FCC number (e.g., 
FCC 97-323 for the Second Order on Reconsideration).
    25. 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.
    26. 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.
    27. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use the LMDS auction to 
deceive and defraud unsuspecting investors. Common warning signals of 
fraud include the following:
     The first contact is a ``cold call'' from a telemarketer, 
or is made in response to an inquiry prompted by a radio or television 
infomercial.
     The offering materials used to invest in the venture 
appear to be targeted at IRA funds, for example by including all 
documents and papers needed for the transfer of funds maintained in IRA 
accounts.
     The amount of the minimum investment is less than $25,000.
     The sales representative makes verbal representations 
that: (a) the Internal Revenue Service (``IRS''), Federal Trade 
Commission (``FTC''), Securities and Exchange Commission (``SEC''), 
FCC, or other government agency has approved the investment; (b) the 
investment is not subject to state or federal securities laws; or (c) 
the investment will yield unrealistically high short-term profits. In 
addition, the offering materials often include copies of actual FCC 
releases, or quotes from FCC personnel, giving the appearance of FCC 
knowledge or approval of the solicitation.

[[Page 8364]]

    28. Information about deceptive telemarketing investment schemes is 
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment 
schemes should be directed to the FTC, the SEC, or the National Fraud 
Information Center at (800) 876-7060. Consumers who have concerns about 
specific LMDS proposals may also call the FCC National Call Center at 
(888) CALL-FCC ((888) 225-5322).

B. Bidder Eligibility and Small Business Provisions

    29. General Eligibility Criteria. As described above, this auction 
offers one license in each of 122 Block A Basic Trading Areas (BTAs) 
and 46 Block B BTAs designated for LMDS. For LMDS, the Commission 
adopted small business provisions to promote and facilitate the 
participation of small businesses in the LMDS auction and in the 
provision of this and other commercial mobile radio services. General 
eligibility to provide LMDS service, subject to certain restrictions 
outlined below, is afforded to entities that are not precluded under 47 
CFR Secs. 101.7, 101.1001, and 101.1003.
    30. Eligibility Restrictions: 1,150 megahertz licenses. ILECs and 
cable television companies are subject to certain restrictions on their 
eligibility to own an attributable interest in the 1,150 megahertz LMDS 
license in their authorized or franchised service areas (``in-
region''). An incumbent is defined as ``in-region'' if its authorized 
service area represents 10 percent or more of the population of the 
BTA. A 20 percent or greater ownership level constitutes an 
attributable interest in a license. ILECs and cable companies are 
permitted to participate fully in the auction of the 1,150 megahertz 
LMDS licenses, but are required to divest any overlapping interests 
within 90 days if they win a license at the auction. The eligibility 
restrictions terminate on the third anniversary of the effective date 
of the LMDS rules. These restrictions may be extended beyond the three-
year period, if, upon a review at the end of this period, the 
Commission determines that sufficient competition has not developed. 
The Commission may waive the restriction in individual cases upon a 
showing of good cause.
    31. 150 megahertz licenses. All entities that meet the Commission's 
general eligibility criteria, including ILECs and cable television 
companies, are eligible to own attributable interests in the 150 
megahertz license in any BTA.
    32. Determination of Revenues. For purposes of determining which 
entities qualify as very small businesses, small businesses, or 
entrepreneurs, the Commission will consider the gross revenues of the 
applicant, its controlling principals, and the affiliates of the 
applicant. Therefore, the gross revenues of all of the above entities 
must be disclosed separately and in the aggregate as Exhibit C to an 
applicant's FCC Form 175. The Commission does not impose specific 
equity requirements on controlling principals. 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 ``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.
    33. Entrepreneur or Very Small or Small Business Consortia. A 
consortium of entrepreneurs, 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 entrepreneur or very small or small 
business in Section 101.1112(b), (c), or (d). Thus, each consortium 
member must disclose its gross revenues along with those of its 
affiliates, controlling principals, and controlling principals' 
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 be provided to ensure that each individual consortium member 
qualifies for any bidding credit awarded to the consortium.
    34. 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 an entrepreneur or a very small 
business or small business (or consortiums of entrepreneurs, very 
small, or small businesses) for this auction. Specifically, for the 
LMDS auction, applicants applying to bid as entrepreneurs, very small, 
or small businesses (or consortiums of entrepreneurs, 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 
Sections 1.2105(a) and Section 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 
principals; and (4) the affiliates of the applicant's controlling 
principals. 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 principals, 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.
    35. Bidding Credits. Applicants that qualify under the definitions 
of entrepreneur, very small business, and small business (or consortia 
of entrepreneurs, very small, or small businesses) (including 
calculation of average gross revenues) as are set forth in 47 CFR 
Sec. 101.1112, are eligible for a bidding credit that represents the 
amount by which a bidder's winning bids are discounted. The size of an 
LMDS bidding credit depends on the average gross revenues for the 
preceding three years of the bidder and its controlling principals and 
affiliates:
     A bidder with average gross revenues of not more than $15 
million for the preceding three years receives a 45 percent discount on 
its winning bids for LMDS licenses;
     A bidder with average gross revenues of more than $15 
million but not more than $40 million for the preceding three years 
receives a 35 percent discount on its winning bids for LMDS licenses.
     A bidder with average gross revenues of more than $40 
million but not more than $75 million for the preceding three years 
receives a 25 percent discount on its winning bids for LMDS licenses.
    36. Bidding credits are not cumulative: qualifying applicants 
receive either the 25 percent, the 35

[[Page 8365]]

percent bidding credit, or the 45 percent bidding credit but not all 
three or any combination thereof.
    37. LMDS 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 level of bidding credit. Finally, LMDS bidders 
should also note that there are no installment payment plans in the 
LMDS auction.

C. Pre-Auction Procedures

    38. Short-Form Application (FCC Form 175)--Due March 29, 1999. 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 March 29, 1999. Late applications 
will not be accepted.
    39. 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 Paragraph 45 below.
    40. Electronic Filing. Applicants must file their FCC Form 175 
applications electronically. (See 47 CFR Section 1.2105(a).) 
Applications may generally be filed at any time from March 5, 1999 
until 5:30 p.m. ET on March 29, 1999. 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 on March 29, 1999. Applicants must press the ``Submit Form 
175'' button on the ``Submit'' page of the electronic form to 
successfully submit their FCC Forms 175. Information about installing 
and running the FCC Form 175 application software is included in 
Attachment C. 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 
March 27-28, 1999.
    41. Completion of the FCC Form 175. Applicants should carefully 
review 47 CFR Sec. 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.
    42. Electronic Review of FCC Form 175. The FCC Form 175 review 
software may be used to review and print applicants' FCC Form 175 
information. 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. See Attachment C for details.
    43. 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.
    44. As described more fully in the Commission's Rules, after the 
March 29, 1999, 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 Section 1.2105.
    45. Upfront Payments--Due April 12, 1999. 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). After 
completing the FCC Form 175, filers will have access to an electronic 
version of the FCC Form 159. If filing the Form 159 manually, the July 
1997 version must be used. 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 April 12, 1999.
    46. 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. 23 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 April 12, 
1999 deadline will result in dismissal of the application and 
disqualification from participation in the auction.
    47. Making Auction Payments by Wire Transfer. Wire transfer 
payments must be received by 6:00 p.m. ET on April 12, 1999. 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 910-0180
OBI Field: (Skip one space between each information item)
``AUCTIONPAY''
TAXPAYER IDENTIFICATION NO. (same as FCC Form 159, block 26)
PAYMENT TYPE CODE (enter ``A23U'')
FCC CODE 1 (same as FCC Form 159, block 23A: ``23'')
PAYER NAME (same as FCC Form 159, block 2)
LOCKBOX NO. # 358420

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

    48. 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. 23.'' 
Bidders may confirm receipt of their upfront payment at Mellon Bank by 
contacting their sending financial institution.
    49. 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 are 
included in Attachment B to this Public Notice.
    50. Amount of Upfront Payment. The Bureau adopts the proposed 
upfront payments for the LMDS auction. Specifically, the the upfront 
payments adopted for Auction Event No. 23 are:

(1) Block A: $0.06 * Pops (rounded up to the next dollar)
(2) Block B: $0.03 * Pops (rounded up to the next dollar)

The Bureau does not share WCA's concern that these upfront payments are 
too low, and thus invite defaults. The Bureau believes that the default 
payment rule is sufficient to deter high bidders from not meeting their 
payment obligations. The adopted upfront payment amounts have been 
calculated for each license and are listed in Attachment A. These 
amounts represent the deposits required to qualify to bid on the LMDS 
licenses in Auction No. 23. The Bureau finds that amounts

[[Page 8366]]

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.
    51. 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. 23, 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 on which the bidder wishes to place bids and 
hold high bids at any given time.
    52. 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 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.
    53. 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.
    54. 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.
    55. 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. 23 
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 114, infra.
    56. Auction Registration. 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.
    57. 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.
    58. 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, April 21, 1999 should 
contact the Auctions Hotline at (717) 338-2888. 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.
    59. 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.
    60. Remote Electronic Bidding Software. Qualified bidders are 
allowed to bid electronically or telephonically. Those choosing to bid 
electronically must purchase remote electronic bidding software for 
$175.00 by April 13, 1999. (Auction software is tailored to a specific 
auction, so software from prior auctions will not work for Auction No. 
23.) A software order form is included in this public notice. If 
bidding telephonically, the appropriate phone number will be supplied 
in the second Federal Express mailing of confidential login codes.
    61. Auction Seminar. On March 10, 1999, the FCC will sponsor a 
seminar for the LMDS auction at the Park Hyatt Washington Hotel, 
located at 1201 24th Street, N.W., Washington, D.C. The seminar will 
provide attendees with information about pre-auction procedures, 
conduct of the auction, FCC remote bidding software, and the LMDS 
service and auction rules. The seminar will also provide a unique 
opportunity for prospective bidders to ask questions of FCC staff.
    62. To register, complete the registration form included with this 
Public Notice and submit it by March 8, 1999. Registrations are 
accepted on a first-come, first-served basis.
    63. 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 on April 22, 1999. 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

    64. The first round of the auction will begin on April 27, 1999. 
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.
    65. Auction Structure--Simultaneous Multiple Round Auction. In the 
LMDS Public Notice, the Bureau proposed to award the 168 licenses in 
LMDS in a single, simultaneous multiple round auction. Neither 
commenter specifically addressed this issue, although WCA generally 
supported all proposals in the LMDS Public Notice. The Bureau concludes 
that the 168 LMDS 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.

[[Page 8367]]

    66. Maximum Eligibility and Activity Rules. In the LMDS Public 
Notice, the Bureau 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. The Commission received 
no comments on this issue.
    67. For the LMDS auction the Bureau 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. 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. As there is no provision for increasing a bidder's 
maximum eligibility during the course of an auction (as described under 
``Auction Stages'' as set forth in Paragraph 74), prospective bidders 
are cautioned to calculate their upfront payments carefully.
    68. 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.
    69. 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 Paragraph 89, 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 Paragraph 74 and ``Stage Transitions'' in 
Paragraph 76, infra, the Bureau adopts them for the LMDS auction.
    70. Activity Rule Waivers and Reducing Eligibility. Based upon our 
experience in previous auctions, the Bureau adopts its proposal and 
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.
    71. 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.
    72. 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 74 discussion below). Once eligibility has been 
reduced, a bidder will not be permitted to regain its lost bidding 
eligibility.
    73. 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.
    74. Auction Stages. The Bureau concludes that the auction will be 
composed of three stages, which are each defined by an increasing 
activity rule. The Bureau will adopt its proposals for the activity 
rules. These are the same rules the Bureau will employ for the upcoming 
LMS auction. Below are the activity levels for each stage of the 
auction. The FCC reserves the discretion to further alter the activity 
percentages before and/or during the auction.
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current eligibility is required to be 
active on licenses encompassing at least 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 period 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.
    75. Because the foregoing procedures have proven successful in 
maintaining proper pace in previous auctions, the Bureau adopts them 
for the LMDS auction.
    76. Stage Transitions. In the LMDS Public Notice, the Bureau 
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 the 
auction activity level, as measured by the percentage of bidding units 
receiving new high bids, is below 10 percent for three consecutive 
rounds of bidding in each Stage. However, the Bureau further proposed 
that the Bureau would retain the discretion to change stages 
unilaterally by announcement during the auction. This determination, 
the Bureau proposed, would 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 received no comments on this subject.

[[Page 8368]]

    77. The Commission adopts its proposal. Thus, 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 LMDS auction.
    78. Auction Stopping Rules. The Bureau adopts its proposals 
concerning the stopping rule. Thus, bidding will remain open on all 
licenses until bidding stops on every license (a simultaneous stopping 
rule). 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. In 
addition, however, the Bureau retains the discretion to close the 
auction for all licenses after the first round in which no bidder 
submits a proactive waiver, a withdrawal, or a new bid on any license 
on which it is not the standing high bidder. Thus, absent any other 
bidding activity, a bidder placing a new bid on a license for which it 
is the standing high bidder would not keep the auction open under this 
stopping rule procedure. The Bureau will notify bidders in advance of 
implementing any change to our simultaneous stopping rule.
    79. 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).
    80. 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.
    81. Adoption of these rules, the Bureau believes, is most 
appropriate for the LMDS 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 the use of a 
simultaneous stopping rule.
    82. Auction Delay, Suspension, or Cancellation. In the LMDS Public 
Notice, the Bureau proposed that, 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. The 
Commission received no comments on this proposal.
    83. Because this approach has proven effective in resolving exigent 
circumstances in previous auctions, the Bureau will adopt its proposed 
auction cancellation rules. 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.
    84. Bidding Procedures--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.
    85. 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.
    86. Reserve Price or Minimum Opening Bid. The Bureau will adopt the 
minimum opening bids proposed for each of the licenses in the LMDS 
auction, which are reducible at the discretion of the Bureau. Congress 
has enacted a presumption that unless the Commission determines 
otherwise, minimum opening bids or reserve prices are in the public 
interest. Based on our experience in using minimum opening bids in the 
800 MHz SMR, VHF Public Coast, and first 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 will use the following formulae for calculating 
minimum opening bids:

    (1) Block A: $0.06 * Pops (rounded up to the next dollar)
    (2) Block B: $0.03 * Pops (rounded up to the next dollar)

    87. The Bureau concludes that the adopted formulae presented here 
best meet the objectives of our auction authority in establishing 
reasonable minimum opening bids. 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 we must balance 
the revenue raising objective against our other public

[[Page 8369]]

interest objectives in setting the minimum bid level. The Bureau 
further believes that when conducting second auctions for particular 
licenses, the public interest is best served by setting minimum opening 
bids that will maximize the likelihood that all licenses are 
distributed. The Bureau does not grant ABS et al's request to use the 
minimum opening bids from Auction Event No. 17 for their 13 licenses. 
The Bureau does not believe that their arguments are persuasive. 
Minimum opening bids cannot reflect the amount of the bid withdrawal 
payment for which a winning bidder may ultimately be liable. The 
Commission has never indicated that it would use the same minimum 
opening bids for subsequent auctions of any given licenses. Each 
auction event is unique and the Commission establishes minimum opening 
bids and other auction procedures that are most appropriate for the 
given circumstances. Using the original minimum opening bids for 
licenses that were subject to bid withdrawal is impractical. For the 
sake of auction integrity and fairness, minimum opening bids must be 
set in a manner that is consistent across licenses. The commenters' 
proposal, if implemented, could result in similar licenses having very 
different valuations at the start of the auction. ABS et al err in 
claiming that the value of the licenses they withdrew from is 
demonstrated by the second highest bid. If that were true, another 
bidder would have claimed the license. Furthermore, ABS et al recognize 
that minimum opening bids might have to be reduced during the course of 
the auction. This illustrates that they are aware of the potential for 
wide variations in withdrawal payments, and that is a risk all bidders 
assume when they withdraw bids.
    88. 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.
    89. Minimum Accepted Bids. In the LMDS Public Notice, the Bureau 
proposed to use a smoothing methodology to calculate minimum bid 
increments. The Bureau further proposed to retain the discretion to 
change the minimum bid increment if circumstances so dictate. The 
Commission received no comments on this particular issue.
    90. Because these techniques have proven effective in prior 
auctions, the Bureau adopts its proposal for the LMDS 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. The formula used to calculate this increment is 
included as Attachment H. This methodology is designed to vary the 
increment for a given license between a maximum and minimum value based 
on the bidding activity on that license. A similar methodology was used 
in previous auctions, including the original LMDS auction and the 220 
MHz auction.
    91. The Bureau adopts its proposal of initial values for the 
maximum of 0.2 or 20% of the license value, and a minimum of 0.1 or 10% 
of the license value. The Bureau retains the discretion to change the 
minimum bid increment if it determines that circumstances so dictate, 
such as raising the minimum increment toward the end of the auction to 
enable bids to reach their final values more quickly. The Bureau will 
do so by announcement in the Automated Auction System. Under its 
discretion the Bureau may also implement an absolute dollar floor for 
the bid increment to further facilitate a timely close of the auction. 
The Bureau may also use its discretion to adjust the minimum bid 
increment without prior notice if circumstances warrant. As an 
alternative approach, the Bureau may, in its discretion, adjust the 
minimum bid increment gradually over a number of rounds as opposed to 
single large changes in the minimum bid increment (e.g., by raising the 
increment floor by one percent every round over the course of ten 
rounds). The Bureau also retains the discretion to use alternate 
methodologies for the LMDS auction if circumstances warrant.
    92. 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.
    93. Bidding. During a bidding round, a bidder may submit bids for 
as many licenses as it wishes, subject to its eligibility, 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 
reflects the latest time the bid was submitted.
    94. 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. 23.
    95. 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.
    96. 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.
    97. The bid entry screen of the Automated Auction System software 
for the LMDS 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.
    98. 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)


[[Page 8370]]


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.
    99. 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 this 
case, any whole number between 1 and 9 entered in the 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.
    100. 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, about which the 
Commission received no comments, will enhance bidder flexibility and, 
the Bureau believes, may serve to expedite the course of the auction. 
Therefore, the Bureau will adopt these procedures for the LMDS 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 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,'' Part 4.B.(4).
    102. 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 LMDS 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. Our decision on 
this issue is based upon our experience in prior auctions, particularly 
the PCS D, E and F block auction, 800 MHz SMR auction, and first LMDS 
auction, and is in no way a reflection of our view regarding the 
likelihood of any speculation or ``gaming'' in this LMDS 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 
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.
    105. 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 Sections 1.2104(g), and 1.2109. No withdrawal 
payment will be assessed if the subsequent winning bid exceeds the 
withdrawn bid.
    106. 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.
    107. Reports reflecting bidders' identities and bidder 
identification numbers for Auction No. 23 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.
    108. 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.
    109. Other Matters. As noted above [FLAG], 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 must 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 Arthur Lechtman, Auctions and Industry Analysis 
Division), briefly summarizing the changes. Questions about other 
changes should be directed to Arthur Lechtman of the FCC Auctions and 
Industry Analysis Division at (202) 418-0660.

E. Post-Auction Procedures

    110. 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.
    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 Section 1.2107(b). In 
addition, by the same deadline all bidders must pay any withdrawn bid 
amounts due under 47 CFR Sec. 1.2104(g), as discussed in ``Bid Removal 
and Bid Withdrawal,'' Paragraph 100. (Upfront payments are applied 
first to satisfy any withdrawn bid liability, before being applied 
toward down payments.)
    112. Long-Form Application. Within ten business days after release 
of the auction closing notice, winning bidders must electronically 
submit a properly

[[Page 8371]]

completed long-form application and required exhibits for each LMDS 
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 Section 
1.2112(b). Further filing instructions will be provided to auction 
winners at the close of the auction.
    113. 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 Sec. 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 Section 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).
    114. Refund of Remaining Upfront Payment Balance. All applicants 
that submitted upfront payments but were not winning bidders for a LMDS 
license may be entitled to a refund of their remaining upfront payment 
balance after the conclusion of the auction. No refund will be made 
unless there are excess funds on deposit from that applicant after any 
applicable bid withdrawal payments have been paid.
    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, 445 12th Street, S.W., Room 1-A824, Washington, D.C. 
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.
Mark R. Bollinger,
Deputy Chief, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau.
[FR Doc. 99-4053 Filed 2-18-99; 8:45 am]
BILLING CODE 6712-01-U