[Federal Register Volume 65, Number 12 (Wednesday, January 19, 2000)]
[Notices]
[Pages 2956-2961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1251]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 00-43]


Auction of Licenses in the 747-762 and 777-792 MHz Bands 
Scheduled for May 10, 2000; Report No. AUC-99-31-A (Auction No. 31)

AGENCY:  Federal Communications Commission.

ACTION:  Notice.

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[[Page 2957]]

SUMMARY:  This Public Notice announces the auction of licenses for 
Fixed, Mobile, and Broadcasting services in the 747-762 and 777-792 MHz 
bands (``Auction No. 31''), scheduled to commence on May 10, 2000 and 
seeks comment on a number of auction specific procedures. As discussed 
in greater detail herein, Auction No. 31 will consist of 12 licenses in 
the 747-762 and 777-792 MHz bands (``700 MHz band''). One 20 megahertz 
license (consisting of paired 10 megahertz blocks) and one 10 megahertz 
license (consisting of paired 5 megahertz blocks) will be offered in 
each of six regions to be known as the 700 MHz band economic area 
groupings (``700 MHz band EAGs'').

DATES:  Comments are due on or before January 24, 2000, and reply 
comments are due on or before January 31, 2000.

ADDRESSES:  An original and four copies of all pleadings must be filed 
with the Commission's Secretary, Magalie Roman Salas, Office of the 
Secretary, Federal Communications Commission, 445 Twelfth Street, SW, 
TW-A325, Washington, DC 20054. In addition to filing with the Office of 
the Secretary, one copy of each pleading must be delivered to each of 
the following locations:
    (1) Commission's duplicating contractor, International 
Transcription Service, Inc. (ITS), 1231 20th Street, NW, Washington, DC 
20036;
    (2) Office of Media Relations, Public Reference Center, 445 12th 
Street, SW, Suite CY-A257, Washington, DC 20554;
    (3) Amy Zoslov, Chief, Auctions and Industry Analysis Division, 
Wireless Telecommunications Bureau, 445 Twelfth Street, Suite 4-A760, 
Washington, DC 20554.
    Comments and reply comments will be available for public inspection 
during regular business hours in the FCC Public Reference Room, Room 
CY-A257, 445 12th Street SW, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT:  Auctions and Industry Analysis 
Division, Wireless Telecommunications Bureau, Howard Davenport, 
Auctions Attorney, or Craig Bomberger, Auctions Analyst, at (202) 418-
0660; or Kathy Garland, Project Manager, at (717) 338-2888.

SUPPLEMENTARY INFORMATION:  This is a summary of a Public Notice 
released January 10, 2000. The complete text of the public notice, 
including Attachments A and B, is available for inspection and copying 
during normal business hours in the FCC Reference Center (Room CY-
A257), 445 12th Street, SW, Washington, DC. It may also be purchased 
from the Commission's copy contractor, International Transcription 
Services, Inc. (ITS, Inc.) 1231 20th Street, NW, Washington, DC 20036, 
(202) 857-3800. It is also available on the Commission's website at 
http://www.fcc.gov.

I. Introduction

    1. By this public notice, the Wireless Telecommunications Bureau 
(``Bureau'') announces Auction No. 31, the auction of licenses for 
Fixed, Mobile, and Broadcasting services in the 747-762 and 777-792 MHz 
bands, scheduled to commence on May 10, 2000. See Service Rules for the 
746-764 and 776-794 MHz Bands, and Revisions to Part 27 of the 
Commission's Rules, WT Docket No. 99-168, First Report and Order, FCC 
00-5 (released January 7, 2000) (``700 MHz First Report and Order''). 
Auction No. 31 will consist of 12 licenses in the 747-762 and 777-792 
MHz bands. One 20 megahertz license (consisting of paired 10 megahertz 
blocks) and one 10 megahertz license (consisting of paired 5 megahertz 
blocks) will be offered in each of six regions to be known as the 700 
MHz band economic area groupings (700 MHz band EAGs).

    2. The following table contains the Block / Frequency Band Limits 
Cross Reference List for each region in Auction No. 31:

                   747-762 and 777-792 MHz Allocations
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                  License suffix                         Frequencies
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C.................................................    747--752, 777--782
D.................................................    752--762, 782--792
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    The Balanced Budget Act of 1997 requires the Commission to ``ensure 
that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures * * * .'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, (See Amendment of Part 1 of the 
Commission's Rules--Competitive Bidding Proceeding, WT Docket No. 97-
82, Order, Memorandum Opinion and Order, and Notice of Proposed Rule 
Making, 62 FR 13540 (March 21, 1997), 12 FCC Rcd 5686, 5697, para. 16 
(1997) (``Part 1 Order'')) to seek comment on a variety of auction-
specific procedures prior to the start of each auction. (See Amendment 
of Part 1 of the Commission's Rules--Competitive Bidding Procedures, 
Allocation of Spectrum Below 5 GHz Transferred from Federal Government 
Use, 4660-4685 MHz, WT Docket No. 97-82, ET Docket No. 94-32, Third 
Report and Order and Second Further Notice of Proposed Rule Making, 63 
FR 770 (January 1, 1998), 13 FCC Rcd 374, 448, para.124 (1998) (``Part 
1 Third Report and Order'').We therefore seek comment on the following 
issues relating to Auction No. 31.

II. Auction Structure

A. Simultaneous Multiple Round Auction Design

    3. We propose to award the licenses in a single, simultaneous 
multiple-round auction to allow bidders to take advantage of any 
synergies that exist among licenses.\1\ We seek comment on this 
proposal.

B. Upfront Payments and Initial Maximum Eligibility

    4. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned.\2\ 
Upfront payments related to the specific spectrum subject to auction 
protect against frivolous or insincere bidding and provide the 
Commission with a source of funds from which to collect payments owed 
at the close of the auction. See Implementation of Section 309(j) of 
the Communications Act--Competitive Bidding, PP Docket No. 93-253, 
Second Report and Order, 59 FR 22980 (May 4, 1994), 9 FCC Rcd 2348, 
2378-79, Paras.  171-176 (1994). In this case, we have information 
available in the form of a congressional estimate of the value of the 
spectrum. Accordingly, we list all licenses, including the related 
populations and proposed upfront payments, in Attachment A. We seek 
comment on this proposal.
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    \1\ See 700 MHz First Report and Order at Paras.  31, 39.
    \2\ See Part 1 Order, 12 FCC Rcd at 5697-98, para. 16 (1997).
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    5. We further propose that the amount of the upfront payment 
submitted by a bidder will determine the initial maximum eligibility 
(as measured in bidding units) for each bidder. Upfront payments will 
not be attributed to specific licenses, but instead will be translated 
into bidding units to define a bidder's initial maximum eligibility, 
which cannot be increased during the auction. The maximum eligibility 
will determine the licenses on which a bidder may bid in each round of 
the

[[Page 2958]]

auction. Thus, in calculating its upfront payment amount, an applicant 
must determine the maximum number of bidding units it may wish to bid 
on (or hold high bids on) in any single round, and submit an upfront 
payment covering that number of bidding units. We seek comment on this 
proposal.

C. Activity Rules

    6. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively on a 
percentage of their maximum bidding eligibility during each round of 
the auction rather than waiting until the end to participate. A bidder 
that does not satisfy the activity rule will either lose bidding 
eligibility in the next round or use an activity rule waiver.
    7. We propose to divide the auction into three stages: Stage One, 
Stage Two and Stage Three, each characterized by an increased activity 
requirement. The auction will start in Stage One. We propose that the 
auction will generally 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 approximately ten percent or below for 
three consecutive rounds of bidding in each stage. However, we further 
propose that the Bureau retain the discretion to change stages 
unilaterally by announcement during the auction. In exercising this 
discretion, the Bureau will consider a variety of measures of bidder 
activity, including, but not limited to, the auction activity level, 
the percentage of licenses (as measured in bidding units) on which 
there are new bids, the number of new bids, and the percentage increase 
in revenue. We seek comment on these proposals.
    8. We propose that in each round of Stage One, a bidder desiring to 
maintain its current eligibility be required to be active on licenses 
encompassing at least 50 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 two. In each round of the 
second stage of the auction, a bidder desiring to maintain its current 
eligibility is required to be active on at least 80 percent of its 
current bidding eligibility. During Stage Two, reduced eligibility for 
the next round will be calculated by multiplying the current round 
activity by five-fourths (\5/4\). In each round of Stage Three, a 
bidder desiring to maintain its current eligibility is required to be 
active on 100 percent of its current bidding eligibility. In this final 
stage, reduced eligibility for the next round will be set at current 
round activity. We seek comment on these proposals.

D. Activity Rule Waivers and Reducing Eligibility

    9. 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. Activity 
waivers are principally a mechanism for auction participants to avoid 
the loss of auction eligibility in the event that exigent circumstances 
prevent them from placing a bid in a particular round.
    10. The FCC auction system assumes that bidders with insufficient 
activity would prefer to use an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver (known as an ``automatic waiver'') at the 
end of any bidding period where a bidder's activity level is below the 
minimum required unless: (1) There are no activity rule waivers 
available; or (2) the bidder overrides the automatic application of a 
waiver by reducing eligibility, thereby meeting the minimum 
requirements.
    11. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding period by using the reduce eligibility function in 
the software. In this case, the bidder's eligibility is permanently 
reduced to bring the bidder into compliance with the activity rules as 
described. Once eligibility has been reduced, a bidder will not be 
permitted to regain its lost bidding eligibility.
    12. A bidder may proactively use an activity rule waiver as a means 
to keep the auction open without placing a bid. If a bidder submits a 
proactive waiver (using the proactive waiver function in the bidding 
software) during a bidding period in which no bids are submitted, the 
auction will remain open and the bidder's eligibility will be 
preserved. An automatic waiver invoked in a round in which there are no 
new valid bids will not keep the auction open.
    13. We propose that each bidder in Auction No. 31 be provided with 
five activity rule waivers that may be used at the bidder's discretion 
during the course of the auction as set forth above. We seek comment on 
this proposal.

E. Information Relating to Auction Delay, Suspension or Cancellation

    14. For Auction No. 31, we propose 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.\3\ 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. We emphasize 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. We seek comment on this 
proposal.
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    \3\ See 47 CFR 1.2104(i).
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III. Bidding Procedures

F. Round Structure

    15. The Commission will use its Automated Auction System to conduct 
the electronic simultaneous multiple round auction format for auction 
No. 31. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction, and will be included in the registration mailings. The 
simultaneous multiple round format will consist of sequential bidding 
rounds, each followed by the release of round results. Details 
regarding the location and format of round results will be included in 
the same public notice.
    16. The Bureau 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 Bureau 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. We seek 
comment on this proposal.

G. Reserve Price or Minimum Opening Bid

    17. The Balanced Budget Act calls upon the Commission to prescribe

[[Page 2959]]

methods by which a reasonable reserve price will be required or a 
minimum opening bid established when FCC licenses are subject to 
auction (i.e., because the Commission has accepted mutually exclusive 
applications for those licenses), unless the Commission determines that 
a reserve price or minimum bid is not in the public interest.\4\ 
Consistent with this mandate, the Commission has directed the Bureau to 
seek comment on the use of a minimum opening bid and/or reserve price 
prior to the start of each auction.\5\
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    \4\ See Balanced Budget Act, Section 3002(a). The Commission's 
authority to establish a reserve price or minimum opening bid is set 
forth in 47 CFR 1.2104 (c) and (d).
    \5\ See Part 1 Third Report and Order, 13 FCC Rcd at 454455, 
para. 141 (1998).
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    18. Normally, a reserve price is an absolute minimum price below, 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It is generally used to accelerate 
the competitive bidding process. Also, in a minimum opening bid 
scenario, the auctioneer generally has the discretion to lower the 
amount later in the auction. It is also possible for the minimum 
opening bid and the reserve price to be the same amount.
    19. In light of the Balanced Budget Act, the Bureau proposes to 
establish minimum opening bids for Auction No. 31. The Bureau believes 
a minimum opening bid, which has been utilized in other auctions, is an 
effective bidding tool. See, e.g., Auction of 800 MHz SMR Upper 10 MHz 
Band, Minimum Opening Bids or Reserve Prices, DA 97-2147, Order, 62 FR 
55251 (October 23, 1997), 12 FCC Rcd 16354 (1997); Auction of the Phase 
II 220 MHz Service Licenses, Auction Notice and Filing Requirements for 
908 Licenses Consisting of Economic Area (EA), Economic Area Grouping 
(EAG), and Nationwide Licenses, Scheduled for September 15, 1998, 
Minimum Opening Bids and Other Procedural Issues, Public Notice, 63 FR 
35213 (June 29, 1998) 13 FCC Rcd 16445 (1998). A minimum opening bid, 
rather than a reserve price, will help to regulate the pace of the 
auction and provides flexibility.
    20. For Auction No. 31, we have information available in the form 
of a Congressional estimate of the value of the spectrum. Accordingly, 
we list all licenses, including the related populations and proposed 
minimum opening bids, in Attachment A . We seek comment on this 
proposal.
    21. If commenters believe that these minimum opening bids will 
result in substantial numbers of unsold licenses, or is not a 
reasonable amount, or should instead operate as a reserve price, they 
should explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, we 
particularly seek comment on such factors as, among other things, the 
amount of spectrum being auctioned, levels of incumbency, the 
availability of technology to provide service, the size of the 
geographic service areas, issues of interference with other spectrum 
bands and any other relevant factors that could reasonably have an 
impact on valuation of the 747-762 and 777-792 MHz bands. 
Alternatively, comment is sought on whether, consistent with the 
Balanced Budget Act, the public interest would be served by having no 
minimum opening bid or reserve price.

H. Minimum Accepted Bids and Bid Increments

    22. Once there is a, standing high bid on a license, a bid 
increment will be applied to that license to establish a minimum 
acceptable bid for the following round. For Auction No. 31, we propose 
to use a smoothing methodology to calculate bid increments, as we have 
done in several other auctions. The Bureau retains the discretion to 
change the minimum bid increment if it determines circumstances so 
dictate. The Bureau will do so by announcement in the Automated Auction 
System. We seek comment on these proposals.
    23. The exponential smoothing formula calculates the bid increment 
for each license based on a weighted average of the activity received 
on each license in 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 using the exponential smoothing formula.
    24. The calculation of the percentage bid increment for each 
license in a given round is made at the end of the previous round. The 
computation is based on an activity index, which is calculated as the 
weighted average of the activity in that round and the activity index 
from the prior 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 most recent bidding round plus one minus the weighting factor 
times the activity index from the prior round. The activity index is 
then used to calculate a percentage increment by multiplying a minimum 
percentage increment by one plus the activity index with that result 
being subject to a maximum percentage increment. The Commission will 
initially set the weighting factor at 0.5, the minimum percentage 
increment at 0.1, and the maximum percentage increment at 0.2.
Equations
Ai = (C*Bi ) + ((1-C)*Ai-1)
Ii+1 = 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+1 = percentage bid increment for the next round (round 
i+1)
N = minimum percentage increment or bid increment floor
M = maximum percentage increment or bid increment ceiling

    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+1 = 
from above times the high bid). This result will be rounded to the 
nearest thousand if it is over ten thousand or to the nearest hundred 
if it is under ten thousand.
Examples
License 1
C = 0.5, N = 0.1, M = 0.2

    Round 1 (2 new bids, high bid = $1,000,000)
    i. Calculation of percentage increment for round 2 using 
exponential smoothing:

A1  = (0.5 * 2) + (0.5 * 0) = 1

    The smaller of I2  = (1 + 1) * 0.1 = 0.2 or 0.2 (the 
maximum percentage increment)

    ii. Minimum bid increment for round 2 using the percentage 
increment (I2 from above)

0.2 *$1,000,000 = $200,000

    iii. Minimum acceptable bid for round 2 = 1,200,000
    Round 2 (3 new bids, high bid = 2,000,000)
    i. Calculation of percentage increment for round 3 using 
exponential smoothing:


[[Page 2960]]


A2  = (0.5 * 3) + (0.5 * 1) = 2

    The smaller of I3 =(1 + 2) * 0.1 = 0.3 or 0.2 (the 
maximum percentage increment)

    ii. Minimum bid increment for round 3 using the percentage 
increment (I3 from above)

0.2 * $2,000,000 = $400,000

    iii. Minimum acceptable bid for round 3=2,400,000
    Round 3 (1 new bid, high bid=2,400,000)
    i. Calculation of percentage increment for round 4 using 
exponential smoothing:

A3  = (0.5 * 3) + (0.5 * 2) = 1.5

    The smaller of I4 = 1+1.5) *0.1=0.25 or 0.2 (the maximum 
percentage increment)
    ii. Minimum bid increment for round 4 using the percentage 
increment (I4 from above)

0.2 * $2,400,000 = $480,000

    iii. Minimum acceptable bid for round 4 = $2,880,000

I. Information Regarding Bid Withdrawal and Bid Removal

a. General Bid Withdrawal Procedures
    25. For Auction No. 31, we propose the following bid removal and 
bid withdrawal procedures. Before the close of a bidding period, a 
bidder has the option of removing any bids placed in that round. By 
using the remove bid function in the software, a bidder may effectively 
``unsubmit'' any bid placed within that round. A bidder removing a bid 
placed in the same round is not subject to withdrawal payments.
    26. Once a round closes, a bidder may no longer remove a bid. 
However, in the next round, a bidder may withdraw standing high bids 
from previous rounds using the withdraw bid function. A high bidder 
that withdraws its standing high bid from a previous round is subject 
to the bid withdrawal payment provisions.\6\ We seek comment on these 
bid removal and bid withdrawal procedures.
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    \6\ See 47 CFR 1.2104(g); 1,2109.
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    27. In the Part 1 Third Report and Order, 63 FR 770 (January 1, 
1998) the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and the pursuit of 
efficient backup strategies as information becomes available during the 
course of an auction. The Commission noted, however, that, in some 
instances, bidders may seek to withdraw bids for improper reasons. The 
Bureau, therefore, has discretion, in managing the auction, to limit 
the number of withdrawals to prevent any bidding abuses. The Commission 
stated that the Bureau should assertively exercise its discretion, 
consider limiting the number of rounds in which bidders may withdraw 
bids, and prevent bidders from bidding on a particular market if the 
Bureau finds that a bidder is abusing the Commission's bid withdrawal 
procedures.\7\
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    \7\ Part 1 Third Report and Order, 13 FCC Rcd at 460, para. 150.
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    28. Applying this reasoning, we propose to limit each bidder in 
Auction No. 31 to withdraw standing high bids in no more than two 
rounds during the course of the auction. To permit a bidder to withdraw 
bids in more than two rounds would likely encourage insincere bidding 
or the use of withdrawals for anti-competitive strategic purposes. The 
two rounds in which withdrawals are utilized will be at the bidder's 
discretion; withdrawals otherwise must be in accordance with the 
Commission's rules. There is no limit on the number of standing high 
bids that may be withdrawn in either of the rounds in which withdrawals 
are utilized. Withdrawals will remain subject to the bid withdrawal 
payment provisions specified in the Commission's rules. We seek comment 
on this proposal.
1. Special 30 MHz Nationwide Bid Withdrawal Procedure
a. Nationwide Bidders
    29. Additionally, for the licenses being offered in Auction No. 31, 
we recognize that there may be entities whose business plans are such 
that they may not wish to acquire any licenses if they are unable to 
aggregate them all. Our current rules are designed to facilitate the 
aggregation of licenses, and we believe they are adequate to facilitate 
the aggregation of all the 10 MHz or all 20 MHz licenses or any subset 
thereof. The bid withdrawal provisions of our part 1 rules could, 
however, potentially discourage bidders from attempting a 30 MHz 
nationwide aggregation in an auction where there are divergent business 
plans. This is because, were such an aggregation attempt ultimately to 
fail, a bidder might be left with a subset of licenses for which its 
bids exceeded the value it places on that subset absent the complete 
aggregation. The bidder would then be forced to withdraw any high bids 
it holds and pay a bid withdrawal payment, or perhaps retain licenses 
for which it cannot recoup the price paid. We therefore propose a 
nationwide bid withdrawal procedure for the 747-762 MHz and 777-792 MHz 
bands to limit the exposure of bidders seeking a 30 MHz nationwide 
aggregation.
    30. Bidders may still aggregate licenses subject to our standard 
bid withdrawal provisions.\8\ The following proposed procedure would be 
available, however, to limit the exposure associated with bid 
withdrawal for those seeking a 30 MHz nationwide aggregation, while 
still discouraging insincere bidding. Under this approach, an applicant 
would be required to declare on its short-form application whether it 
is seeking a 30 MHz nationwide aggregation and wishes to be subject to 
the nationwide bid withdrawal provisions. An applicant that chooses to 
be such a nationwide bidder would not be allowed to bid on anything 
other than all licenses comprising the 30 MHz nationwide aggregation, 
and must win either this nationwide aggregation or no licenses at all. 
(However, in any given round, the bidder would not be required to place 
new bids on any licenses for which it is the standing high bidder.) 
Thus, once such a nationwide bidder withdraws from a market, it must 
withdraw from all markets and will be ineligible to continue bidding 
for any licenses.
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    \8\ 47 CFR 1.2104(g).
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    31. The bid withdrawal payment for a 30 MHz nationwide bidder that 
withdraws from the auction would be calculated as the difference 
between the sum of the withdrawn bids and the sum of the subsequent 
high bids on the withdrawn licenses. Calculating the payment this way 
may result in a payment that is lower than a payment calculated on a 
license-by-license basis. In addition, nationwide bid withdrawal 
payments would be limited to 5 percent of the aggregate withdrawn bids. 
The withdrawn licenses would be offered in the next round at the second 
highest bid price, which may be less than, or equal to, the amount of 
the withdrawn bid, without any bid increment. The FCC would serve as 
the ``place holder'' on the license until a new acceptable bid is 
submitted.

[[Page 2961]]

b. Eligibility Restoration
32. If a 30 MHz nationwide bidder were to withdraw, eligibility and 
waivers for all other bidders would be restored to beginning auction 
levels, except for those nationwide bidders that have withdrawn from 
the auction by withdrawing their high bids. Without this restoration, 
few bidders would likely be eligible to bid on licenses withdrawn late 
in the auction. See Allocation of Spectrum Below 5 GHz Transferred from 
Federal Government Use, ET Docket No. 94-32, Second Report and Order, 
60 FR 40712 (August 9, 1995), 11 FCC Rcd 624, 652-53, Paras. 71-73 
(1995). Finally, if the Bureau implements the bid withdrawal procedure 
outlined here, it will suspend the Part 1 bid withdrawal rule for those 
applicants that choose to become 30 MHz nationwide bidders. We seek 
comment on this proposal.

J. Stopping Rule

    33. For Auction No. 31, the Bureau proposes to employ a 
simultaneous stopping rule approach. The Bureau has discretion ``to 
establish stopping rules before or during multiple round auctions in 
order to terminate the auction within a reasonable time.''\9\ A 
simultaneous stopping rule means that all licenses remain open until 
the first round in which no new acceptable bids, proactive waivers or 
withdrawals are received. After the first such round, bidding closes 
simultaneously on all licenses. Thus, unless circumstances dictate 
otherwise, bidding would remain open on all licenses until bidding 
stops on every license.
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    \9\ 47 CFR 1.2104(e).
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    34. The Bureau seeks comment on a modified version of the 
simultaneous stopping rule. The modified stopping rule would 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 
modified stopping rule. The Bureau further seeks comment on whether 
this modified stopping rule should be used unilaterally or only in 
stage three of the auction.
    35. We propose that the Bureau retain the discretion 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. The activity rule, therefore, will apply as usual, and a bidder 
with insufficient activity will either lose bidding eligibility or use 
a remaining activity rule waiver.
    36. Finally, we propose that the Bureau reserve the right to 
declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the Bureau 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 Bureau proposes to 
exercise this option only in certain circumstances, such as, for 
example, where the auction is proceeding very slowly, there is minimal 
overall bidding activity, or it appears likely that the auction will 
not close within a reasonable period of time. Before exercising this 
option, the Bureau 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. We seek comment on these proposals.

Federal Communications Commission.
Louis J. Sigalos,
Deputy Chief, Auctions & Industry Analysis Division.
[FR Doc. 00-1251 Filed 1-18-00; 8:45 am]
BILLING CODE 6712-01-P