[Federal Register Volume 65, Number 46 (Wednesday, March 8, 2000)]
[Notices]
[Pages 12251-12265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-5544]


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FEDERAL COMMUNICATIONS COMMISSION

[DA 00-292]


Auction of Licenses in the 747-762 and 777-792 MHz Bands 
Scheduled for May 10, 2000; Report No. AUC-0031-C (Auction No. 31)

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This Public Notice announces the auction and procedures 
governing the auction of licenses for Fixed, Mobile, and Broadcasting 
service in the 747-762 and 777-792 MHz bands (``Auction No. 31''), 
scheduled to commence on May 10, 2000. As discussed in greater detail 
herein, Auction No. 31 will be composed of 12 licenses in 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'').

DATES: Auction No. 31 is scheduled for May 10, 2000.

FOR FURTHER INFORMATION CONTACT: Media Contact, Meribeth McCarrick at 
(202) 418-0654; Auctions Legal Branch, Howard Davenport at (202) 418-
0660;. Kathy Garland, Project Manager, Auctions Operations Branch at 
(717) 338-2888; or Craig Bomberger, Analyst, Auctions Operations Branch 
at (202) 418-0660; Commercial Wireless Division, Roger Noel at (202) 
418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice 
released February 18, 2000. The complete text of the public notice, 
including all attachments, is available for inspection and copying 
during normal business hours in the FCC Reference Center (Room CY-
A257), 445 12th Street, SW, Washington, D.C. It may also be purchased 
from the Commission's copy contractor, International Transcription 
Services, Inc. (ITS, Inc.) 1231 20th Street, NW, Washington, D.C. 
20036, (202) 857-3800. It is also available on the Commission's website 
at http://www..fcc.gov.

List of Attachments Available at the FCC

Attachment A: Summary of 700 MHz Licenses to be Auctioned, Upfront 
Payments, Minimum Opening Bids
Attachment B: FCC Auction Seminar Registration Form
Attachment C: Electronic Filing and Review of the FCC Form 175
Attachment D: Guidelines for Completion of FCC Form 175 and Exhibits
Attachment E: Auction-Specific Instructions for FCC Remittance Advice 
(FCC Form 159)
Attachment F: FCC Bidding Preference/Remote Software Order Form
Attachment G: Bid Increments and Exponential Smoothing
Attachment H: Accessing the FCC Network Using Windows 95/98
Attachment I: Summary Listing of Documents from the Commission and the 
Wireless Telecommunications Bureau Addressing Application of the Anti-
Collusion Rules
Attachment J: Incumbent Television Licensees on Channels 59-68

I. General Information

A. Introduction

    1. The Auction Public Notice announces the procedures and minimum 
opening bids for the upcoming auction of licenses for Fixed, Mobile, 
and Broadcasting services in the 747-762 and 777-792 MHz bands 
(``Auction No. 31''). On January 10, 2000, the Wireless 
Telecommunications Bureau (``Bureau'') released a public notice, (See 
``Auction of Licenses in the 747-762 and 777-792 MHz Bands Scheduled 
for May 10, 2000; Comment Sought on Reserve Prices or Minimum Opening 
Bids and Other Auction Procedural Issues,'' Public Notice, (``Auction 
No. 31 Comment Public Notice''), 65 FR 2956 (January 19, 2000) seeking 
comment on the establishment of reserve prices or minimum opening bids 
for Auction No. 31, in accordance with the Balanced Budget Act of 1997. 
(See section 3002(a), Balanced Budget Act of 1997, Public Law 105-33, 
111 Stat. 251 (1997) (``Budget Act''); 47 U.S.C. 309(j)(4)(F). In 
addition, the Bureau sought comment on a number of procedures to be 
used in Auction No. 31. (See Auction No. 31 Comment Public Notice at 5-
6.) The Bureau received three comments and five reply comments in 
response to the Auction No. 31 Comment Public Notice.
i. Background of Proceeding
    2. The 746-806 MHz band has historically been used exclusively by 
television stations (Channels 60 through 69). Incumbent analog 
television broadcasters are permitted by statute to continue operations 
in this band until their markets are converted to digital television 
(``DTV''). (See 47 U.S.C. 337(e); See also Advanced Television Systems 
and Their Impact Upon Existing Television Broadcast Service, MM Docket 
No. 87-268, Reconsideration of Fifth Report and Order, 63 FR 15774 
(April 1, 1998), 13 FCC Rcd 6860, 6887 (1998). The Budget Act directed 
the Commission to reallocate this spectrum for public safety and 
commercial use by December 31, 1997, (See section 337(a) of the 
Communications Act, 47 U.S.C. 337(a) and to commence competitive 
bidding for the commercial licenses on the reallocated spectrum after 
January 1, 2001. (See id. at section 337(b)(2)(a). In November 1999, 
Congress enacted a consolidated appropriations statute that revised the 
latter instruction. (See Consolidated Appropriations, Appendix E, 
section 213. See also 145 Cong. Rec. H12493-94 (Nov. 17, 1999). This 
legislation accelerated the schedule for auction of the commercial 
spectrum bands, and requires that the proceeds from the auction of 
these bands be deposited in the U.S. Treasury by September 30, 2000.
ii. Licenses To Be Auctioned
    3. The licenses available in this auction consist of one 20 
megahertz license (consisting of paired 10 megahertz blocks) and one 10 
megahertz license (consisting of paired 5 megahertz blocks) in each of 
six regions to be known as the 700 MHz band economic area groupings 
(``700 MHz Band EAGs''). 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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B. Rules and Disclaimers

i. Relevant Authority
    4. Prospective bidders must familiarize themselves thoroughly with 
the Commission's rules relating to the 700 MHz band, contained in Title 
47, part 27 of the Code of Federal

[[Page 12252]]

Regulations, and those relating to application and auction procedures, 
contained in Title 47, part 1 of the Code of Federal Regulations.
    5. Prospective bidders must also be thoroughly familiar with the 
procedures, terms and conditions (collectively, ``Terms'') contained in 
this public notice; the Auction No. 31 Comment Public Notice; Service 
Rules for the 746-764 and 776-794 MHz Bands, and Revisions to Part 27 
of the Commission's Rules, First Report and Order, WT Docket No. 99-
168, FCC 00-5 (released January 7, 2000) (``700 MHz First Report & 
Order''), 65 FR 3139 (January 20, 2000); Reallocation of Television 
Channels 60-69, the 746-806 MHz Band, ET Docket No. 97-157, Report and 
Order, 12 FCC Rcd 22953 (1998), recon., 13 FCC Rcd 21578 (1998) 
(``Reallocation Reconsideration'').
    6. The terms contained in the Commission's rules, relevant orders 
and public notices are not negotiable. The Commission may amend or 
supplement the information contained in our public notices 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 Auctions 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) 
314-3070. When ordering documents from ITS, please provide the 
appropriate FCC number (for example, FCC 00-5 for the 700 MHz First 
Report & Order).
ii. Prohibition of Collusion
    7. 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. (See 700 MHz First Report & Order, 
at paragraphs 128-129.) This prohibition begins with the filing of 
short-form applications, and ends on the down payment due date after 
the auction. Bidders competing for licenses in the same geographic 
license areas 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.
    8. The Bureau, however, cautions that merely filing a certifying 
statement as part of an application will not outweigh specific evidence 
that collusive behavior has occurred nor will it preclude the 
initiation of an investigation when warranted. In Auction No. 31, for 
example, the rule would apply to any applicants bidding for the same 
700 MHz Band EAG. Therefore, applicants that apply to bid for ``all 
markets'' would be precluded from communicating with all other 
applicants after filing the FCC Form 175. However, applicants may enter 
into bidding agreements before filing their FCC Form 175 short-form 
applications, as long as they disclose the existence of the 
agreement(s) in their Form 175 short-form applications. (See 47 CFR 
1.2105(c). (Note that bidders with nationwide status are prohibited 
from entering to such agreements.) If parties agree in principle on all 
material terms prior to the short-form filing deadline, those parties 
must be identified on the short-form application under Sec. 1.2105(c), 
even if the agreement has not been reduced to writing. If the parties 
have not agreed in principle by the filing deadline, an applicant would 
not include the names of those parties on its application, and may not 
continue negotiations with other applicants for the same geographic 
license areas(s). By signing their FCC Form 175 short-form 
applications, applicants are certifying their compliance with 
Sec. 1.2105(c). In addition, Sec. 1.65 of the Commission's Rules 
requires an applicant to maintain the accuracy and completeness of 
information furnished in its pending application and to notify the 
Commission within 30 days of any substantial change that may be of 
decisional significance to that application. (See 47 CFR 1.65) Thus, 
Sec. 1.65 requires an auction applicant to notify the Commission of any 
violation of the anti-collusion rules upon learning of such violation. 
Bidders are therefore required to make such notification to the 
Commission immediately upon discovery.
iii. Protection of Television Services
    9. Licensees operating on the spectrum associated with Channels 60, 
61, 62, 65, 66, and 67 must comply with the co-channel and adjacent 
channel provisions of Sec. 27.60 of our rules. For example, a licensee 
operating on any portion of the 10 megahertz block (i.e., between 752 
MHz and 762 MHz) that coincides with Channel 61 will have to provide 
co-channel protection to television stations operating on Channel 61 
and adjacent channel protection to television stations operating on 
Channels 60 and 62; and any licensee operating on any portion of the 10 
megahertz block that coincides with Channel 62 will have to provide co-
channel protection to television stations operating on Channel 62 and 
adjacent channel protection to television stations operating on 
Channels 61 and 63. Licensees operating on spectrum between 747 MHz and 
752 MHz (Channel 60), in addition to providing co-channel protection to 
Channel 60 television stations, will have to provide adjacent channel 
protection to television stations operating on both Channel 61 and 59. 
(See 47 CFR 90.309.)
iv. Negotiations With Incumbent Broadcast Licensees
    10. As the Commission noted in the 700 MHz First Report & Order: 
``The Congressional plan set forth in sections 336 and 337 of the 
Communications Act and in the 1997 Budget Act is to transition this 
spectrum from its current use for broadcast services to commercial use 
and public safety services.'' (See 700 MHz First Report & Order at 145; 
See also 47 U.S.C. 336-337.) Congress also has directed the Commission 
to auction the 36 MHz of spectrum allocated for commercial use at least 
six years before the relocation deadline for incumbent broadcasters in 
this spectrum, while adopting interference limits and other technical 
restrictions necessary to protect full-service analog television 
service during the transition to DTV. (See Public Law 106-113 Stat. 
1501, Appendix E, Section 213; Consolidated Appropriations, Appendix E, 
Sec. 213. See also 145 Cong. Rec. at H12493-94, (Nov. 17, 1999)). In 
these circumstances, the Commission will consider specific regulatory 
requests needed to implement voluntary agreements reached between 
incumbent licensees and new licensees in these bands. In considering 
whether the public interest would be served by approving specific 
requests, the Commission would, for

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example, consider the benefits to consumers of the provision of new 
wireless services, such as next generation mobile services or Internet 
fixed access services. The Commission would also consider whether such 
agreements would help clear spectrum for public safety use in these 
bands and could result in the provision of new wireless service in 
rural and other relatively underserved communities. On the other hand, 
the Commission would also consider loss of service to the broadcast 
community of the licensee. For example, the Commission would consider 
the availability of the licensee's former analog programming within the 
service area, through simulcast of that programming on the licensee's 
DTV channel or distribution of the programming on cable or DBS, or the 
availability of similar broadcast services within the service area 
(e.g., whether the lost service is the only network service, the only 
source for local service, or the only source for otherwise unique 
broadcast service).
v. Canadian and Mexican Border Regions
    11. There are currently separate agreements with Canada and Mexico 
covering TV broadcast use of the UHF 470-806 MHz band. Such agreements 
do not reflect the additional use or services adopted in the 700 MHz 
First Report & Order for 746-764 and 776-794 MHz bands. (See 700 MHz 
First Report & Order at 146.) While the Commission staff has been 
involved in discussions with both countries regarding coordination of 
interference criteria for the use of these bands in the border areas 
for the additional services, agreements have yet to be reached. 
Therefore, until such agreements have been finalized, the Commission 
found it necessary to adopt certain interim requirements for licenses 
in these bands along the Canada and Mexico borders. (See id. at fn 
no.17.) Accordingly, licenses issued for these bands within 120 km of 
the borders were made subject to whatever future agreements the United 
States developed with those two countries. In that the existing 
agreements for the protection of TV stations in those countries are 
still in effect and must be recognized until they are replaced or 
modified to reflect the new uses, the Commission decided that licenses 
in the border areas will be granted on the condition that harmful 
interference may not be caused to, but must accept interference from, 
UHF TV transmitters in Canada and Mexico. Furthermore, the Commission 
pointed out that modifications may be necessary to comply with whatever 
provisions are ultimately specified in future agreements with Canada 
and Mexico regarding the use of these bands. (See id. at paragraph 
146.)
vi. Due Diligence
    12. 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.
    13. Potential bidders are reminded that there are a number of 
incumbent broadcast television licensees already licensed and operating 
in the 746-764 and 776-794 MHz bands (television Channels 60-62 and 65-
67) that will be subject to the upcoming auction. As discussed herein 
in greater detail, the Commission made clear that geographic area 
licensees operating on the spectrum associated with Channels 60, 61, 
62, 65, 66, and 67 must comply with the co-channel and adjacent channel 
provision of section 90.545 of the Commission's rules. (See 47 CFR 
90.545.) In addition, geographic area licensees operating fixed 
stations in the 746-764 MHz band must comply with the relevant 
provisions for ``base stations'' in Secs. 90.309 and 90.545 of the 
Commissions Rules; and licensees operating fixed stations in the 776-
794 MHz band must comply with the relevant provisions for ``control 
stations'' in those sections of the rules. (See 47 CFR 90.309 and 
90.545.).
    14. These limitations may restrict the ability of such geographic 
licensees to use certain portions of the electromagnetic spectrum or 
provide service to certain regions in their geographic license areas. 
Listed in Attachment K are the facilities of incumbent television 
permittees and licensees on television Channels 60-62 and 65-67 as well 
as on television Channels 59 and 68. However, prospective bidders 
should not rely solely on this list, but should carefully review the 
Commission's databases and records before formulating bidding 
strategies. Records relating to these stations are available for public 
inspection during regular business hours in the Reference Information 
Center at the Federal Communications Commission, 445 Twelfth Street, 
SW, CY-A257, Washington, DC 20554. The Commission makes no 
representation or guarantees regarding the accuracy or completeness of 
the information in Attachment K. In addition, 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 databases. Potential bidders are strongly 
encouraged to physically inspect any sites located in or near the 
geographic area for which they plan to bid.
    15. Potential bidders should also be aware of the following:
    QUALCOMM Incorporated, Petition for Declaratory Ruling Giving 
Effect to the Mandate of the District of Columbia Circuit Court of 
Appeals, Service Rules for the 746-764 and 776-794 MHz Bands and 
Revisions to part 27 of the Commission's rules, Petition for 
Declaratory Ruling (filed January 28, 2000).
    ``Wireless Telecommunications Bureau Seeks Comment On QUALCOMM 
Incorporated's Petition for Declaratory Ruling Seeking 700 MHz Band 
License Pursuant to Ruling of U.S. Circuit Court of Appeals,'' Public 
Notice, DA 00-219 (released February 4, 2000); Extension of Filing 
Deadline for Comments to QUALCOMM Incorporated's Petition for 
Declaratory Ruling, Public Notice, DA 00-273, 65 FR 9266 (February 24, 
2000).
    16. Potential bidders should also be aware that certain 
applications (including those for modification), petitions for 
rulemaking, waiver requests, requests for special temporary authority 
(``STA''), petitions to deny, petitions for reconsideration, and 
applications for review may be pending before the Commission that 
relate to the facilities in Attachment K. We note that resolution of 
these pending matters could have an impact on the availability of 
spectrum for licensees in the 746-764 and 776-794 MHz bands. While the 
Commission will continue to act on pending matters, some of these 
matters may not be resolved by the time of auction. Potential bidders 
are strongly encouraged to conduct their own research prior to Auction 
No. 31 in order to determine the existence of pending proceedings that 
might affect their decisions regarding participation in the auction. 
Participants in Auction No. 31 are strongly encouraged to continue such 
research during the auction.
vi. Bidder Alerts
    17. All applicants must certify on their FCC Form 175 applications 
under penalty of perjury that they are legally,

[[Page 12254]]

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.
    18. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 31 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.
    19. 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 700 MHz proposals may also call the FCC National Call Center 
at (888) CALL-FCC ((888) 225-5322).
vii. National Environmental Policy Act (NEPA) Requirements
    20. The licensee must comply with the Commission's rules regarding 
the National Environmental Policy Act (NEPA). The construction of a 700 
MHz facility is a federal action and the licensee must comply with the 
Commission's NEPA rules for each such facility. See 47 CFR 1.1305 
through 1.1319. The Commission's NEPA rules require that, among other 
things, the licensee consult with expert agencies having NEPA 
responsibilities, including the U.S. Fish and Wildlife Service, the 
State Historic Preservation Office, the Army Corp of Engineers and the 
Federal Emergency Management Agency (through the local authority with 
jurisdiction over floodplains). The licensee must prepare environmental 
assessments for facilities that may have a significant impact in or on 
wilderness areas, wildlife preserves, threatened or endangered species 
or designated critical habitats, historical or archaeological sites, 
Indian religious sites, floodplains, and surface features. The licensee 
must also prepare environmental assessments for facilities that include 
high intensity white lights in residential neighborhoods or excessive 
radio frequency emission.

C. Auction Specifics

i. Auction Date
    21. The Auction No. 31 Comment Public Notice announced that the 
auction would begin on May 10, 2000. Two commenters ask that the 
Commission complete any proceeding associated with the terms and 
conditions for the next C and F block PCS auction before the scheduled 
commencement of Auction No. 31. Although we have begun consideration of 
these issues by seeking comment on two petitions regarding C and F 
block rules, we cannot make the auction start date dependent upon the 
conclusion of other proceedings. The Commission is under congressional 
mandate to deposit the receipts from Auction No. 31 into the United 
States Treasury by September 30, 2000. (See Public Law 106-113, 113 
Stat. 1501, Appendix E, section 213. See also Consolidated 
Appropriations, Appendix E, section 213. See also 145 Cong. Rec. at 
H12493-94, Nov. 17, 1999.) Therefore, all potential bidders, must make 
business decisions based on the environment in which they currently 
operate. The business decisions that these two companies must make are 
no different than the judgments that any other similarly situated 
potential bidder must make. Accordingly, the auction will begin on 
Wednesday, May 10, 2000. 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 on all licenses will be 
conducted on each business day until bidding has stopped on all 
licenses.
ii. Auction Title
    22. Auction No. 31--700 MHz Band
iii. Bidding Methodology
    23. The bidding methodology for Auction No. 31 will be simultaneous 
multiple round bidding. Bidding will be permitted only from remote 
locations, either electronically (by computer) or telephonically.
iv. Pre-Auction Dates and Deadlines
    24. The following are important events and deadlines related to 
Auction No. 31:

Auction Seminar: March 30, 2000
Short-Form Application (FCC FORM 175): April 10, 2000; 5:30 p.m. ET
Upfront Payments (via wire transfer): April 24, 2000; 6 p.m. ET
Orders for Remote Bidding Software: April 25, 2000; 5:30 p.m. ET
Mock Auction: May 8, 2000
Auction Begins: May 10, 2000
v. Requirements for Participation
    25. Those wishing to participate in the auction must:
     Submit a short form application (FCC Form 175) 
electronically by 5:30 pm ET, April 10, 2000.
     Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by 6:00 pm ET, April 24, 2000.
     Comply with all provisions outlined in this public notice.
vi. General Contact Information
    26. The following is general contact information relating to 
Auction No. 31:
    General Auction Information--General Auction Questions; Seminar 
Registration; Orders for Remote Bidding Software: FCC Auctions Hotline, 
(888) 225-5322, Press Option #2 or direct (717) 338-2888, Hours of 
service: 8 a.m.-5:30 p.m. ET.
    Auction Legal Information--Auction Rules, Policies, Regulations: 
Auctions and Industry Analysis Division, Legal Branch (202) 418-0660.
    Licensing Information--Rules, Policies, Regulations; Licensing 
Issues; Incumbency/Protection Issues: Commercial Wireless Division, 
(202) 418-0620.
    Technical Support--Electronic Filing Assistance; Software 
Downloading: FCC Auctions Technical Support Hotline, (202) 414-1250 
(Voice), (202) 414-1255 (TTY), Hours of service: 8 a.m.-6:00 p.m. ET.
    Payment Information--Wire Transfers; Refunds: FCC Auctions 
Accounting Branch, (202) 418-1995, (202) 418-2843 (Fax).

[[Page 12255]]

    Telephonic Bidding--Will be furnished only to qualified bidders.
    FCC Copy Contractor--Additional Copies of Commission Documents: 
International Transcription Services, Inc., 445 12th Street, SW Room 
CY--B400, Washington, DC 20554, (202) 314-3070.
    Press Information--Meribeth McCarrick (202) 418-0654.
    FCC Forms--(800) 418-3676 (outside of Washington, DC), (202) 418-
3676 (in the Washington Area), http://www.fcc.gov/formpage.
    FCC Internet Sites--http://www.fcc.gov/wtb/auctions, http://
www.fcc.gov ftp://ftp.fcc.gov,

II. Short-Form (FCC Form 175) Application Requirements

    27. Guidelines for completion of the short-form (FCC Form 175) are 
set forth on Attachment D to this public notice. The short-form 
application seeks the applicant's name and address, legal 
classification, status, bidding credit eligibility, identification of 
the authorization(s) sought, the authorized bidders, and contact 
persons.

A. Ownership Disclosure Requirements (Form 175 Exhibit A)

    28. All applicants must comply with the uniform Part 1 ownership 
disclosure standards and provide information required by Secs. 1.2105 
and 1.2112 of the Commission's rules. Specifically, in completing Form 
175, applicants will be required to file an Exhibit A providing a full 
and complete statement of the ownership of the bidding entity. The 
ownership disclosure standards for the short-form are set forth in 
Sec. 1.2112 of the Commission's rules.

B. Consortia and Joint Bidding Arrangements (Form 175 Exhibit B)

    29. Applicants will be required to identify on their short-form 
applications any parties with whom they have entered into any 
consortium arrangements, joint ventures, partnerships or other 
agreements or understandings which relate in any way to the licenses 
being auctioned, including any agreements relating to post-auction 
market structure. (See 47 CFR 1.2105(a)(2)(viii); 1.2105(c)(1); Bidders 
with nationwide bidding status are prohibited from entering such 
agreements) Applicants will also be required to certify on their short-
form applications that they have not entered into any explicit or 
implicit agreements, arrangements or understandings of any kind with 
any parties, other than those identified, regarding the amount of their 
bids, bidding strategies, or the particular construction permits on 
which they will or will not bid. See 47 CFR 1.2105(a)(2)(ix). As 
discussed herein, if an applicant has had discussions, but has not 
reached a joint bidding agreement by the short-form deadline, it would 
not include the names of parties to the discussions on its application 
and may not continue discussions with applicants for the same 
geographic license area(s) after the deadline. In cases where 
applicants have entered into consortia or joint bidding arrangements, 
applicants must submit an Exhibit B to the FCC Form 175.
    30. A party holding a non-controlling, attributable interest in one 
applicant will be permitted to acquire an ownership interest in, form a 
consortium with, or enter into a joint bidding arrangement with other 
applicants for construction permits in the same geographic license area 
provided that (i) the attributable interest holder(s) certify that it 
has not and will not communicate with any party concerning the bids or 
bidding strategies of more than one of the applicants in which it holds 
an attributable interest, or with which it has formed a consortium or 
entered into a joint bidding arrangement; and (ii) the arrangements do 
not result in a change in control of any of the applicants. See 47 CFR 
1.2105(c)(4)(I) & (ii). While the anti-collusion rules do not prohibit 
non-auction related business negotiations among auction applicants, 
bidders are reminded that certain discussions or exchanges could broach 
on impermissible subject matters because they may convey pricing 
information and bidding strategies.

C. Small Business Bidding Credits (Form 175 Exhibit C)

    31. In the 700 MHz First Report & Order, the Commission adopted 
small business provisions to promote and facilitate the participation 
of small businesses in competitive bidding for licenses in the 700 MHz 
band. (See 47 CFR 27.502.)
i. Eligibility
    32. Bidding credits are available to small businesses and very 
small businesses as defined in 47 CFR 27.502(a). For purposes of 
determining which entities qualify as very small businesses or small 
businesses, the Commission will consider the gross revenues of the 
applicant, its controlling interests, and affiliates of the applicant 
and its controlling interests. The Commission does not impose specific 
equity requirements on controlling interests. Once principals or 
entities with a controlling interest are determined, only the revenues 
of those principals or entities, the applicant and its affiliates will 
be counted in determining small business eligibility. The term 
``control'' includes both de facto and de jure control of the 
applicant. Typically, ownership of at least 50.1 percent of an entity's 
voting stock evidences de jure control. 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. A consortium of small businesses, or very small businesses is a 
conglomerate organization formed as a joint venture between or among 
mutually independent business firms, each of which individually 
satisfies the definition of small or very small business in 
Sec. 27.502. Thus, each consortium member must disclose its gross 
revenues along with those of its affiliates, controlling interests, and 
controlling interests' affiliates. We note that although the gross 
revenues of the consortium members will not be aggregated for purposes 
of determining eligibility for small or very small business credits, 
this information must be provided to ensure that each individual 
consortium member qualifies for any bidding credit awarded to the 
consortium.
ii. Application Showing
    34. Applicants should note that they will be required to file 
supporting documentation as Exhibit C to their FCC Form 175 short form 
applications to establish that they satisfy the eligibility 
requirements to qualify as a small business or very small business (or 
consortia of small or very small businesses) for this auction. (See 47 
CFR 27.502 and 1.2105.) Specifically, for Auction No. 31, applicants 
applying to bid as small or very small businesses (or consortia of 
small or very small businesses) will be required to disclose on Exhibit 
C to their FCC Form 175 short-form applications, separately and in the 
aggregate, the gross revenues for the preceding three years of each of 
the following: (i) the applicant; (ii) the applicant's affiliates; 
(iii) the applicant's controlling interests; and (iv) the affiliates of 
the applicant's controlling interests. Certification that the average 
gross revenues for the preceding three years do not exceed the 
applicable limit is not sufficient. A statement of the total

[[Page 12256]]

gross revenues for the preceding three years is also insufficient. The 
applicant must provide separately for itself, its affiliates, and its 
controlling interests, a schedule of gross revenues for each of the 
preceding three years, as well as a statement of total average gross 
revenues for the three-year period. If the applicant is applying as a 
consortium of very small or small businesses, this information must be 
provided for each consortium member.
iii. Bidding Credits
    35. Applicants that qualify under the definitions of small business 
and very small business (or consortia of small or very small 
businesses) as are set forth in 47 CFR 27.502, are eligible for a 
bidding credit that represents the amount by which a bidder's winning 
bids are discounted. (See 47 CFR 27.502) The size of a 700 MHz band 
bidding credit depends on the average gross revenues for the preceding 
three years of the bidder and its controlling interests and affiliates:
     A bidder with average gross revenues of not more than $40 
million for the preceding three years receives a 15 percent discount on 
its winning bids for 700 MHz band licenses (``small business''); (See 
47 CFR 27.502 and 1.2110(e)(iii)).
     A bidder with average gross revenues of not more than $15 
million for the preceding three years receives a 25 percent discount on 
its winning bids for 700 MHz band licenses (``very small business''). 
(See 47 CFR 27.502 and 1.2110(e)(ii)).
    36. Bidding credits are not cumulative: qualifying applicants 
receive either the 15 percent or the 25 percent bidding credit, but not 
both.
    37. Bidders in Auction No. 31 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, bidders 
should also note that there are no installment payment plans in Auction 
No. 31.

D. Other Information (Form 175 Exhibits D and E)

    38. Applicants owned by minorities or women, as defined in 47 CFR 
1.2110(b)(2), may attach an exhibit (Exhibit D) regarding this status. 
This applicant status information is collected for statistical purposes 
only and assists the Commission in monitoring the participation of 
``designated entities'' in its auctions. Applicants wishing to submit 
additional information may do so in Exhibit E, Miscellaneous 
Information to the FCC Form 175.

E. Minor Modifications to Short-Form Applications (FCC Form 175)

    39. After the short-form filing deadline (April 10, 2000), 
applicants may make only minor changes 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 or change bidding credits). See 47 CFR 1.2105. Permissible 
minor changes include, for example, deletion and addition of authorized 
bidders (to a maximum of three) and revision of exhibits. Applicants 
should make these changes on-line, and submit a letter to Amy Zoslov, 
Chief, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau, Federal Communications Commission, 445 12th 
Street, SW, Suite 4-A760 Washington, DC 20554, briefly summarizing the 
changes. Questions about other changes should be directed to Howard 
Davenport of the Auctions and Industry Analysis Division at (202) 418-
0660.

F. Maintaining Current Information in Short-Form Applications (FCC Form 
175)

    40. Applicants have an obligation under 47 CFR 1.65, to maintain 
the completeness and accuracy of information in their short-form 
applications. Amendments reporting substantial changes of possible 
decisional significance in information contained in FCC Form 175 
applications, as defined by 47 CFR 1.2105(b)(2), will not be accepted 
and may in some instances result in the dismissal of the FCC Form 175 
application.

III. Pre-Auction Procedures

A. Auction Seminar

    41. On March 30, 2000, the FCC will sponsor a free seminar for 
Auction No. 31 at the Federal Communications Commission, located at 445 
12th Street, SW, Washington, DC. The seminar will provide attendees 
with information about pre-auction procedures, conduct of the auction, 
FCC remote bidding software, and the 700 MHz band service and auction 
rules. The seminar will also provide an opportunity for prospective 
bidders to ask questions of FCC staff. To register, complete the 
appropriate registration form and submit it by Tuesday, March 28, 2000. 
Registrations are accepted on a first-come, first-served basis.

B. Short-Form Application (FCC Form 175)--Due April 10, 2000

    42. In order to be eligible to bid in this auction, applicants must 
first submit an FCC Form 175 application. This application must be 
submitted electronically and received at the Commission by 5:30 p.m. ET 
on April 10, 2000. Late applications will not be accepted.
    43. 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.
i. Electronic Filing
    44. Applicants must file their FCC Form 175 applications 
electronically. (See 47 CFR 1.2105(a).) Applications may generally be 
filed at any time from March 30, 2000 until 5:30 p.m. ET on April 10, 
2000. 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 April 10, 
2000.
    45. Applicants must press the ``Submit Form 175'' button on the 
``Submit'' page of the electronic form to successfully submit their FCC 
Forms 175. Any form that is not submitted will not be reviewed by the 
FCC. Information about accessing the FCC Form 175 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. to 6 p.m. ET, Monday through Friday.
ii. Completion of the FCC Form 175
    46. Applicants should carefully review 47 CFR 1.2105, and must 
complete all items on the FCC Form 175. Instructions for completing the 
FCC Form 175 are in Attachment D. Applicants are encouraged to begin 
preparing the required attachments for FCC Form 175 prior to submitting 
the form. Attachments C and D provide information on the required 
attachments and appropriate formats.
iii. Electronic Review of FCC Form 175
    47. The FCC Form 175 electronic review system 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)

[[Page 12257]]

on any Exhibits to their FCC Form 175 applications. There is no fee for 
accessing this system. See Attachment C for details on accessing the 
review system.

C. Application Processing and Minor Corrections

    48. 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: (i) Those applications accepted for filing 
(including FCC account numbers and the licenses for which they 
applied); (ii) those applications rejected; and (iii) those 
applications that have minor defects that may be corrected, and the 
deadline for filing such corrected applications.
    49. As described more fully in the Commission's rules, after the 
April 10, 2000, 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, 
change control of the applicant, or change bidding credit eligibility). 
(See 47 CFR 1.2105.)

D. Upfront Payments--Due April 24, 2000

    50. 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 that can be printed 
and faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must 
be received at Mellon Bank by 6:00 p.m. ET on April 24, 2000.
    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. 31 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 24, 
2000 deadline will result in dismissal of the application and 
disqualification from participation in the auction.
i. Auction Payments by Wire Transfer
    51. Wire transfer payments must be received by 6:00 p.m. ET on 
April 24, 2000. To avoid untimely payments, applicants should discuss 
arrangements (including bank closing schedules) with their banker 
several days before they plan to make the wire transfer, and allow 
sufficient time for the transfer to be initiated and completed before 
the deadline. Applicants will need the following information:

ABA Routing Number: 043000261
Receiving Bank: Mellon Pittsburgh
BNF: FCC/AC 910-0171
OBI Field: (Skip one space between each information item)
``AUCTIONPAY''
TAXPAYER IDENTIFICATION NO. (same as FCC Form 159, block 26)
PAYMENT TYPE CODE (enter ``A31U'')
FCC CODE 1 (same as FCC Form 159, block 23A: ``31'')
PAYER NAME (same as FCC Form 159, block 2)
LOCKBOX NO. # 358430

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

    52. Applicants must fax a completed FCC Form 159 to Mellon Bank at 
(412) 209-6045 or (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. 31.'' Bidders should confirm receipt of their upfront 
payment at Mellon Bank by contacting their sending financial 
institution.
ii. FCC Form 159
    53. A completed FCC Remittance Advice Form (FCC Form 159) must 
accompany each upfront payment. 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 
E. An electronic version of the FCC form 159 is available after 
submitting the FCC Form 175. The FCC Form 159 can be completed 
electronically, but must be filed with Mellon Bank via facsimile.
iii. Amount of Upfront Payment
    54. In the Part 1 Order, Memorandum Opinion and Order, and Notice 
of Proposed Rule Making, the Commission delegated to the Bureau the 
authority and discretion to determine an appropriate upfront payment 
for each license being auctioned. (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, 5697-5698, paragraph 16 
(1997)). In the Auction No. 31 Comment Public Notice, the Bureau 
proposed upfront payments for Auction No. 31. (See Auction No. 31 
Comment Public Notice at 2-3.) Specifically, the Bureau proposed 
calculating the upfront payment based on information available in the 
form of a Congressional estimate of the value of the spectrum. There 
were no comments filed on the proposed upfront payments set forth in 
the Auction No. 31 Comment Public Notice.
    55. 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. 31, the 
amount of the upfront payment will be translated into bidding units on 
a one-to-one basis, e.g., a $28,000,000 upfront payment provides the 
bidder with 28,000,000 bidding units. The total upfront payment defines 
the maximum number 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 that an 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.
    56. 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.
    57. In calculating its 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. In order to make this calculation, an applicant should 
add together the upfront payments for all licenses on which it seeks to 
bid in any given round. Bidders should check their calculations 
carefully as there is no provision for increasing a bidder's maximum 
eligibility after the upfront payment deadline.


    Note: An applicant may, on its FCC Form 175, apply for every 
license being offered, but its actual bidding in any round will be 
limited by the bidding units reflected in its upfront payment.



[[Page 12258]]


iv. Applicant's Wire Transfer Information for Purposes of Refunds
    58. The Commission will use wire transfers for all Auction No. 31 
refunds. To ensure that refunds of upfront payments are processed in an 
expeditious manner, the Commission is requesting that all pertinent 
information as listed be supplied to the FCC. Applicants may either 
submit the information electronically after filing their short-form 
application or fax the Wire Transfer Instructions by April 24, 2000, to 
the FCC, Financial Operations Center, Auctions Accounting Group, ATTN: 
Michelle Bennett or Gail Glasser, at (202) 418-2843. Should the payer 
fail to submit the requested information, the refund will be returned 
to the original payer. For additional information, please call (202) 
418-1995.

Name of Bank
ABA Number
Contact and Phone Number
Account Number to Credit
Name of Account Holder
Correspondent Bank (if applicable)
ABA Number
Account 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 Section V.D.

E. Auction Registration

    59. 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.
    60. 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 contact address 
listed in the FCC Form 175.
    61. 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 Friday, May 5, 2000, 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.
    62. 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 445 12th St., SW, 
Washington, DC 20554. 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. Qualified 
bidders requiring replacement codes must call technical support prior 
to arriving at the FCC to arrange preparation of new codes.

F. Remote Electronic Bidding Software

    63. Qualified bidders are allowed to bid electronically or by 
telephone. If choosing to bid electronically, each bidder must purchase 
their own copy of the remote electronic bidding software. Electronic 
bids will only be accepted from those applicants purchasing the 
software. However, the software may be copied by the applicant for use 
by its authorized bidders at different locations. The price of the 
FCC's remote bidding software is $175.00 and must be ordered by 
Tuesday, April 25, 2000. For security purposes, the software is only 
mailed to the contact person at the contact address listed on the FCC 
Form 175. Please note that auction software is tailored to a specific 
auction, so software from prior auctions will not work for Auction No. 
31. If bidding telephonically, the telephonic bidding phone number will 
be supplied in the second Federal Express mailing of confidential login 
codes. Qualified bidders that do not purchase the software may only bid 
telephonically. To indicate your bidding preference, an FCC Bidding 
Preference/Remote Software Order Form can be accessed and 
electronically completed when submitting the FCC Form 175. This form is 
Attachment F.

G. Mock Auction

    64. All qualified bidders will be eligible to participate in a mock 
auction on May 8, 2000. 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.

IV. Auction Event

    65. The first round of bidding for Auction No. 31 will begin on May 
10, 2000. The initial bidding schedule will be announced in the public 
notice listing the qualified bidders which is released approximately 10 
days before the start of the auction.

A. Auction Structure

i. Simultaneous Multiple Round Auction
    66. In the Auction No. 31 Comment Public Notice at 2, we proposed 
to award 12 licenses in the 700 MHz bands in a single, simultaneous 
multiple round auction. We received no comment on this issue. We 
conclude that it is operationally feasible and appropriate to auction 
the 700 MHz band licenses 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, we believe, 
allows bidders to take advantage of any synergies that exist among 
licenses and is most administratively efficient.
ii. Maximum Eligibility and Activity Rules
    67. In the Auction No. 31 Comment Public Notice at 2-3, we 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. We received no comments on this issue.
    68. For Auction No. 31 we 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 Section IV.A.iv), prospective 
bidders are cautioned to calculate their upfront payments carefully. 
The total upfront payment does not define the total dollars a bidder 
may bid on any given license.
    69. 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

[[Page 12259]]

maximum eligibility during each round of the auction.
    70. A bidder's activity level in a round is the sum of the bidding 
units associated with licenses on which the bidder is active. 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 
Section IV.B.iii). The minimum required activity level is expressed as 
a percentage of the bidder's maximum bidding eligibility, and increases 
by stage as the auction progresses. Because these procedures have 
proven successful in maintaining the pace of previous auctions as set 
forth under ``Auction Stages'' in Section IV.A.iv and ``Stage 
Transitions'' in Section IV.A.v, we adopt them for Auction No. 31.
iii. Activity Rule Waivers and Reducing Eligibility
    71. In the Auction No. 31 Comment Public Notice, we proposed that 
each bidder in the auction would be provided five activity rule waivers 
that may be used in any round during the course of the auction. We 
received no comment on this issue.
    72. Based upon our experience in previous auctions, we adopt our 
proposal that each bidder 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. We are satisfied that 
our practice of providing five waivers over the course of the auction 
provides a sufficient number of waivers and maximum flexibility to the 
bidders, while safeguarding the integrity of the auction.
    73. The FCC automated 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: (i) There are no activity rule waivers 
available; or (ii) the bidder overrides the automatic application of a 
waiver by reducing eligibility, thereby meeting the minimum 
requirements.
    74. 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.'' Once eligibility has been reduced, a bidder will not be 
permitted to regain its lost bidding eligibility.
    75. 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.
iv. Auction Stages
    76. In the Auction No. 31 Comment Public Notice at 3-4, we proposed 
to conduct the auction in three stages and employ an activity rule. We 
further proposed that, in each round of Stage One, a bidder desiring to 
maintain its current eligibility would be required to be active on 
licenses encompassing at least 50 percent of its current bidding 
eligibility. In each round of Stage Two, a bidder desiring to maintain 
its current eligibility would be required to be active on at least 80 
percent of its current bidding eligibility. Finally, we proposed that a 
bidder in Stage Three, in order to maintain eligibility, would be 
required to be active on 100 percent of its current bidding 
eligibility. We received no comment on these proposals.
    77. We conclude that the auction will be composed of three stages, 
which are each defined by an increasing activity rule. We will adopt 
our proposals for the activity rules as follows. The FCC reserves the 
discretion to further alter the activity percentages before and/or 
during the auction.
    Stage One: During the first stage of the auction, a bidder desiring 
to maintain its current eligibility will be required to be active on 
licenses that represent at least 50 percent of its current bidding 
eligibility in each bidding round. Failure to maintain the required 
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 sum of bidding units of the 
bidder's standing high bids and valid bids during the current round by 
two.
    Stage Two: During the second stage of the auction, a bidder 
desiring to maintain its current eligibility is required to be active 
on 80 percent of its current bidding eligibility. Failure to maintain 
the required 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 Two, reduced eligibility for the 
next round will be calculated by multiplying the sum of bidding units 
of the bidder's standing high bids and valid bids during the current 
round by five-fourths (5/4).
    Stage Three: During the third stage of the auction, a bidder 
desiring to maintain its current eligibility is required to be active 
on 100 percent of its current bidding eligibility. Failure to maintain 
the required 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). In this final stage, reduced eligibility for the 
next round will be set at current round activity.
    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 re-verify 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.
    78. Because the foregoing procedures have proven successful in 
maintaining proper pace in previous auctions, we adopt them for Auction 
No. 31.
v. Stage Transitions
    79. In the Auction No. 31 Comment Public Notice at 3-4, we proposed 
that the auction would 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 below 10 percent for three consecutive 
rounds of bidding in each stage. However, we further proposed that the 
Bureau would retain the discretion to change stages unilaterally by 
announcement during the auction. This determination, we proposed, would 
be based on a variety of measures of bidder activity, including, but 
not

[[Page 12260]]

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. We received no 
comments on this subject.
    80. We adopt our proposal. Thus, the auction will start in Stage 
One. Under the FCC's general guidelines the auction 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. We believe that these stage transition rules, 
having proven successful in prior auctions, are appropriate for use in 
Auction No. 31.
vi. Auction Stopping Rules
    81. For Auction No. 31, the Bureau proposed to employ a 
simultaneous stopping rule. The Bureau also sought comment on a 
modified version of the simultaneous stopping rule. The modified 
version of the 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 sought comment on whether this modified stopping rule should be 
used unilaterally or only in stage three of the auction.
    82. The Bureau further proposed retaining 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 addition, we 
proposed 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. We proposed to exercise this option only in 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. (See Auction No. 31 
Comment Public Notice at 11). We received no comment on these issues.
    83. We adopt our proposals concerning the stopping rule. Adoption 
of these rules, we believe, is most appropriate for Auction No. 31 
because our experience in prior auctions demonstrates that the 
simultaneous stopping rule balances 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.
    84. Under the simultaneous stopping rule, bidding will remain open 
on all licenses until bidding stops on every license. 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. After the first such round, 
bidding closes simultaneously on all licenses. In addition, 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. Under this modified stopping rule, 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. We will notify bidders in advance of 
implementing any change to our simultaneous stopping rule.
    85. The Bureau also retains the discretion to keep the auction open 
even if no new acceptable bids or proactive waivers are submitted, and 
no previous high bids are withdrawn in a round. 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).
    86. Further, in its discretion, the Bureau reserves the right to 
invoke the ``special stopping rule,'' whereby 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. 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.
vii. Auction Delay, Suspension, or Cancellation
    87. In the Auction No. 31 Comment Public Notice at 4, we 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.
    88. Because this approach has proven effective in resolving exigent 
circumstances in previous auctions, we will adopt our 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. 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.

B. Bidding Procedures

i. Round Structure
    89. The initial bidding schedule will be announced in the public 
notice listing the qualified bidders which is released approximately 10 
days before the start of the auction. This public notice will be 
included with the registration mailings. The round structure for each 
bidding round contains a single bidding round followed by the release 
of the round results. Multiple bidding rounds may be conducted in a 
given day. Details regarding round results formats and locations will 
be included in the Qualified Bidder Public Notice.

[[Page 12261]]

    90. 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.
ii. Reserve Price or Minimum Opening Bid
    91. The Balanced Budget Act of 1997 calls upon the Commission to 
prescribe methods by which a reasonable reserve price will be required 
or a minimum opening bid established when FCC licenses are subject to 
auction (i.e., because they are mutually exclusive), unless the 
Commission determines that a reserve price or minimum opening bid is 
not in the public interest. Consistent with this mandate, the 
Commission 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. 
Among other factors, the Bureau must consider the amount of spectrum 
being auctioned, levels of incumbency, the availability of technology 
to provide service, the size of the geographic service areas, the 
extent of interference with other spectrum bands, and any other 
relevant factors that could have an impact on valuation of the spectrum 
being auctioned. The Commission concluded that the Bureau should have 
the discretion to employ either or both of these mechanisms for future 
auctions. (See Amendment of Part of the Commission's Rules-Competitive 
Bidding Procedures, WT Docket No. 97-82, Third Report and Order and 
Second Further Notice of--Proposed Rule Making, 63 FR 770 (January 7, 
1998), 13 FCC Rcd. at 141, 455-456) (1998).
    92. In the Auction No. 31 Comment Public Notice at 5-6, the Bureau 
proposed to establish minimum opening bids for Auction No. 31 and to 
retain discretion to lower the minimum opening bids. Specifically, for 
Auction No. 31, the Commission proposed calculating the minimum opening 
bid based on information available in the form of a Congressional 
estimate of the value of the spectrum.
    93. In its comments, U S West Wireless, LLC (U S West) argues that 
the proposed minimum opening bid amounts have failed to account for the 
``overly stringent'' limitations adopted in the 700 MHz First Report & 
Order on out-of-band emissions (``OOBE'') and permissible transmit 
power. (See U S West Comments at 3-4). We are not persuaded that the 
proposed minimum opening bids are too high. We note that in 
establishing OOBE, the Commission took into account the impact of 
limitations on interference from new commercial licensees on public 
safety service licensees. (See 700 MHz First Report & Order at 103-
107). The Commission stated: ``[W]e recognize the need to adopt 
technical rules that provide adequate protection to public safety 
entities operating in this band. We are mindful, however that Congress 
also intended that we establish rules that will enable viable 
commercial operations here.'' (See id.). Thus, the Commission set OOBE 
limits that, while achieving the primary goal of protecting public 
safety, also struck a reasonable balance between protecting public 
safety and maintaining the commercial viability of this band.
    94. Further, we note that no other parties commented on either the 
OOBE and transmit power limits or on the proposed minimum opening bids. 
Significantly, U S West did not submit an alternative proposal or 
substantiate its position with an alternate valuation or quantitative 
analysis. Moreover, U S West did not even comment on this issue in the 
service rule proceeding. Taking all of these factors into account, we 
will adopt the minimum opening bids, as proposed, for the licenses in 
Auction No. 31, 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. (See section 3002(F) of the Budget Act). Based on our 
experience in using minimum opening bids in other auctions, we believe 
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. (See 47 U.S.C. 
309(j)(3)(C)).
iii. Bid Increments and Minimum Accepted Bids
    95. In the Auction No. 31 Comment Public Notice at 6, we proposed 
to use a smoothing methodology to calculate minimum bid increments. We 
further proposed to retain the discretion to change the minimum bid 
increment if circumstances so dictate. (See id.). We received no 
comment on this issue.
    96. We will adopt our proposal for a smoothing formula. The 
smoothing 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. This methodology allows the increments to be 
tailored to the activity level of a license, decreasing the time it 
takes for active licenses to reach their final value. The formula used 
to calculate this increment is in Attachment G.
    97. We adopt our proposal of initial values for the maximum of 0.2, 
or 20 percent of the license value, and a minimum of 0.1, or 10 percent 
of the license value. The Bureau retains the discretion to change the 
minimum bid increment if it determines that circumstances so dictate. 
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, such as a flat percentage increment for all licenses, 
for Auction No. 31 if circumstances warrant.
iv. High Bids
    98. 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 the 
Commission receives bids. 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.
v. Bidding
    99. 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.
    100. Please note that all bidding will take place remotely either 
through the

[[Page 12262]]

automated bidding software or by telephonic bidding. (Telephonic bid 
assistants are required to use a script when entering 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. Normally, four to five minutes are necessary to 
complete a bid submission.) There will be no on-site bidding during 
Auction No. 31.
    101. A bidder's ability to bid on specific licenses in the first 
round of the auction is determined by two factors: (i) The licenses 
applied for on FCC Form 175; and (ii) 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.
    102. 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.
    103. The bid entry screen of the automated auction system software 
for Auction No. 31 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. The 
bidding software will display the bid increment for each license.
    104. To place a bid on a license, the bidder must increase the 
standing high bid by one to nine times the bid increment. This is done 
by entering a whole number between 1 and 9 in the bid increment 
multiplier (Bid Mult) field in the software. This value will determine 
the amount of the bid (Amount Bid) by multiplying the bid increment 
multiplier by the bid increment and adding the result to the high bid 
amount according to the following formula:

Amount Bid = High Bid + (Bid Mult * Bid Increment)

Thus, bidders may place a bid that exceeds the standing high bid by 
between one and nine times the bid increment. For example, to bid the 
minimum acceptable bid, which is equal to one bid increment, a bidder 
will enter ``1'' in the bid increment multiplier column and press 
submit.
    105. 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.
vi. Bid Removal and Bid Withdrawal
    106. In the Auction No. 31 Comment Public Notice, we proposed bid 
removal and bid withdrawal rules. (See Auction No. 31 Comment Public 
Notice at 8.) With respect to bid withdrawals, we proposed limiting 
each bidder to withdrawals in no more than two rounds during the course 
of the auction. The two rounds in which withdrawals are utilized, we 
proposed, would be at the bidder's discretion. We received no comment 
on this issue.
    107. In previous auctions, we have detected bidder conduct that, 
arguably, may have constituted strategic bidding through the use of bid 
withdrawals. While we continue 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, we 
conclude that, for Auction No. 31, adoption of a limit on their use to 
two rounds is the most appropriate outcome. By doing so we believe we 
strike 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 auctions, and 800 
MHz SMR auction, and is in no way a reflection of our view regarding 
the likelihood of any speculation or ``gaming'' in this auction.
    108. 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 
during the auction will still be subject to the bid withdrawal payments 
specified in 47 CFR 1.2104(g). Bidders should note that abuse of the 
Commission's bid withdrawal procedures could result in the denial of 
the ability to bid on a market. If a high bid is withdrawn, the license 
will be offered in the next round at the second highest bid price, 
which may be less than, or equal to, in the case of tie bids, the 
amount of the withdrawn bid, without any bid increment. The Commission 
will serve as a ``place holder'' on the license until a new acceptable 
bid is submitted on that license.
    109. 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, i.e. a bid that is subsequently removed does not count 
toward the bidder's activity requirement. This procedure, about which 
we received no comments, will enhance bidder flexibility during the 
auction. Therefore, we will adopt these procedures for Auction No. 31.
    110. 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 during the 
auction is subject to the bid withdrawal payments specified in 47 CFR 
1.2104(g). The procedure for withdrawing a bid and receiving a 
withdrawal confirmation is essentially the same as the bidding 
procedure described in ``High Bids,'' Section IV.B.iv.
    111. Calculation. Generally, the Commission imposes payments on 
bidders that withdraw high bids during the course of an auction. (See 
47 CFR 1.2104(g) and 1.2109.) Specifically, a bidder (``Bidder X'') 
that withdraws a high bid during the course of an auction is subject to 
a bid withdrawal payment equal to the difference between the amount 
withdrawn and the amount of the subsequent winning bid. If a high bid 
is withdrawn on a license that remains unsold at the close of the 
auction, Bidder X will be required to make an interim payment equal to 
three (3) percent of the net amount of the withdrawn bid. This payment 
amount is deducted from any upfront payments or down payments that 
Bidder X has deposited with the Commission. If, in a

[[Page 12263]]

subsequent auction, that license receives a valid bid in an amount 
equal to or greater than the withdrawn bid amount, then no final bid 
withdrawal payment will be assessed, and Bidder X may request a refund 
of the interim three (3) percent payment. If, in a subsequent auction, 
the selling price for that license is less than Bidder X's withdrawn 
bid amount, then Bidder X will be required to make a final bid 
withdrawal payment, less the three percent interim payment, equal to 
either the difference between Bidder X's net withdrawn bid and the 
subsequent net winning bid, or the difference between Bidder X's gross 
withdrawn bid and the subsequent gross winning bid, whichever is less.
vii. Special 30 MHz Nationwide Bid Withdrawal Procedure

(a) Background

    112. For the licenses being offered in Auction No. 31, we noted 
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. (See Auction No 31 Comment Public Notice at 9.) 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 a 
large aggregation attempt ultimately to fail, a bidder might be left 
with a potentially large subset of licenses that it does not wish to 
win given its all-or-nothing strategy. The bidder would then be forced 
to withdraw all of the high bids it holds and pay a bid withdrawal 
payment. We therefore proposed and have determined to adopt 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.

(b) Discussion

    113. In its comments, PSINet Inc. (PSINet) asks that we allow 
applicants that choose to bid for a 30 MHz nationwide aggregation to 
maintain the ability to also bid on regional 30 MHz aggregations and 
that the ``Commission adopt a similar scheme for entities that desire 
to participate in regional 30 MHz aggregations to that proposed by the 
Commission for the nationwide 30 MHz aggregation.'' Cisco Systems, Inc. 
(Cisco) submitted reply comments in which it strongly urged the 
Commission to limit withdrawal penalties for regional 30 MHz bidders by 
adopting the bidding rule proposed by PSINet. On reply, PSINet 
emphasizes that the Commission should apply limited withdrawal 
penalties to applicants seeking to aggregate 30 MHz by obtaining both 
the 10 MHz and 20 MHz licenses in a region and contends that it is 
``extremely unlikely that an entity will win a nationwide 30 MHz 
aggregation.'' Bell Atlantic Mobile, Inc. (BAM) takes the opposite 
position in its reply comments. According to BAM, we should not change 
long-standing auction procedures for either nationwide or regional 
bidders. AT&T Wireless Services, Inc.'s (AT&T) reply comments strongly 
suggest that the Commission should reject PSINet's request to impose 
reduced bid withdrawal penalties on bidders for regional, rather than 
nationwide, 30 MHz licenses.
    114. In the 700 MHz First Report & Order, the Commission directed 
the Bureau to create a modified withdrawal procedure for those bidders 
seeking a 30 megahertz nationwide aggregation, i.e., those who have the 
greatest exposure under the standard bid withdrawal payment rule. (See 
700 MHz First Report & Order at 126-127.) Neither PSINet nor Cisco 
presents compelling reasons why the Bureau can or should apply the 
special rule to those bidders that face less exposure. In fact, bidders 
in the past auctions have successfully aggregated licenses under the 
existing withdrawal rules. However, the Bureau notes that the existence 
of all-or-nothing nationwide business plans presents a unique situation 
for bidders. Likewise, BAM has not persuaded the Bureau to exercise its 
limited discretion not to make this procedure available to 30 MHz 
nationwide bidders. Accordingly, the Bureau will adopt the bid 
withdrawal provisions as stated in this section.
    115. Bidders not choosing to avail themselves of the nationwide bid 
withdrawal provision may still aggregate licenses subject to our 
standard bid withdrawal provisions. (See 47 CFR 1.2104(g).) The 
nationwide bid withdrawal procedure is made available to limit the 
exposure associated with bid withdrawal payments for those bidders 
whose business plans require an all-or-nothing aggregation of all 
licenses in the auction, while still discouraging insincere bidding. 
Under the nationwide bid withdrawal procedure, an applicant will 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. Instructions for doing so will be 
part of the electronic filing system for the short-form application.
    116. An applicant that chooses to be a nationwide bidder will be 
required to be active in each round of bidding on all licenses (a 100 
percent activity requirement). A nationwide bidder must win either the 
entire 30 MHz nationwide aggregation (all 12 licenses) or no licenses 
at all. (Note that a nationwide bidder does not necessarily have to be 
the standing high bidder on every license at the end of each round in 
order to fulfill the 100 percent activity requirement. Activity on a 
license in a given round is defined as a bidder either holding the high 
bid from the previous round or placing a valid bid in the current 
round.) Nationwide bidders that decide to no longer pursue the 
nationwide aggregation and hold any high bids may withdraw those high 
bids subject to the modified withdrawal payment described herein. Once 
a nationwide bidder withdraws a high bid from any market, it must 
withdraw any remaining high bids it holds from all other markets. (The 
automated auction system will allow a nationwide bidder only to 
withdraw all of its standing high bids and not any subset thereof.) The 
nationwide bidder will then have its eligibility reduced to zero, thus 
making the bidder ineligible to continue bidding for any licenses.
    117. If a 30 MHz nationwide bidder withdraws, eligibility, activity 
rule waivers, and withdrawal round allowances will be restored to 
beginning auction levels for all other bidders except for any 
nationwide bidders that have withdrawn from the auction by either 
withdrawing their high bids or failing to meet the activity requirement 
(and thus having their high bids withdrawn for them). Without this 
restoration, few bidders would likely be eligible to bid on licenses 
withdrawn late in the auction. Upon the withdrawal of a nationwide 
bidder, the auction will pause for 24 hours to allow for the 
restoration of eligibility, activity rules waivers, and withdrawal 
allowances, and for the notification of all auction participants that 
such a withdrawal has occurred. The Bureau will contact the contact 
person listed on the FCC Form 175 for each qualified bidder that is 
eligible for the restoration of eligibility. Note that non-nationwide 
bidders that have already dropped out of the auction will also have 
their eligibility, activity rules waivers, and withdrawal allowances 
restored, and any nationwide bidders still in the

[[Page 12264]]

auction will have their activity rule waivers restored.
    118. The automated auction system will not allow bidders that 
identify themselves as nationwide bidders to submit a group of bids 
that does not result in the bidder being active on all licenses in the 
auction. Nationwide bidders, like all other bidders in the auction, 
will be provided 5 activity rule waivers to preserve their maximum 
eligibility level in the instance that they do not meet the 100% 
activity requirement. In each round of bidding that a nationwide bidder 
fails to meet the activity rule requirement, an automatic waiver will 
be applied to preserve the bidder's maximum eligibility. If a 
nationwide bidder fails to meet the activity rule requirement and has 
no activity rule waivers remaining, the bidder's maximum eligibility 
will be reduced to zero and any high bids will automatically be 
withdrawn. In such a case, the system will treat the bidder as if the 
bidder had placed a withdrawal itself--making the bidder subject to the 
special withdrawal payments--and the auction will pause to allow for 
the restoration of eligibility, activity rules waivers, and withdrawal 
allowances, as described herein.
    119. The bid withdrawal payment for a 30 MHz nationwide bidder that 
withdraws from the auction will be calculated as the difference between 
the sum of the standing high bids that the nationwide bidder withdraws 
and the sum of the subsequent winning bids on those withdrawn licenses. 
In addition, nationwide bid withdrawal payments will be limited to 5 
percent of the aggregate withdrawn bids. The withdrawn licenses will 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 will serve as the ``place holder'' on the license 
until a new acceptable bid is submitted.
    120. In the 700 MHz First Report & Order, the Commission stated 
that nationwide bidders cannot win anything less than a nationwide 30 
MHz aggregation. (See 700 MHz First Report & Order at 127.). Thus, in 
the event that there is no other bidding activity in a given round so 
that the auction would otherwise close under the simultaneous stopping 
rule, but a nationwide bidder holds the high bid on licenses that 
comprise less than a 30 MHz nationwide aggregation, the auction will 
not close. Rather, the auction will proceed another round and the 
nationwide bidder (and all other bidders failing to meet the activity 
requirement) will use an activity rule waiver, if any remain. Once all 
the nationwide bidder's activity rule waivers are used, its standing 
high bids will be withdrawn, and eligibility will be restored to other 
bidders, as described herein.
    121. In its comments, BAM asks that if the Bureau decides to adopt 
a special withdrawal penalty rule for nationwide bidders, any such 
bidder should not be allowed to have any affiliation or bidding 
arrangement with any other bidder that is pursuing a regional or 
individual market bidding strategy. We agree with BAM on this point. In 
the Public Notice, we stated that any applicant who chooses nationwide 
bidder status will not be allowed to bid on anything other than all 
licenses comprising the 30 MHz nationwide aggregation. (See Auction No. 
31 Comment Public Notice at 10.) We will not allow a bidder to do 
indirectly that which we have directly prohibited. Thus, any bidder who 
seeks nationwide bidding status shall not have any controlling interest 
in, or affiliate relationship with, any other applicant or any 
agreement of any kind relating to the licenses being auctioned.
    122. AT&T raises a similar point in seeking clarification that upon 
withdrawal of a nationwide bidder from the auction, the eligibility of 
all other bidders, except ``bidding partners'' of the withdrawing 
nationwide bidder, will be restored to beginning auction levels. Since 
nationwide bidders are not permitted to enter into agreements regarding 
the licenses, AT&T's point is moot.
    123. In reply comments, Omnipoint Corporation (Omnipoint) states 
that the bid withdrawal process for a nationwide bidder is not yet 
sufficiently clear. In support of its position, Omnipoint states that 
it is unclear whether the FCC requires nationwide bidders to exercise 
bid withdrawal. Contrary to Omnipoint's contention, the Commission 
clearly stated: ``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 megahertz nationwide aggregation, and must win either 
this nationwide aggregation or no licenses at all. 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.'' 
(See 700 MHz First Report & Order at 127.) If a nationwide bidder has 
standing high bids on some licenses but decides not to continue bidding 
on other licenses, then the bidder withdraws its standing high bids. 
This may be accomplished one of two ways: (i) A nationwide bidder may 
withdraw standing high bids using the bidding software. The bidding 
software will only allow a nationwide bidder to remove all or none of 
its standing high bids. Once a nationwide bidder exercises this option, 
it is out of the auction. (ii) A nationwide bidder may decide not to 
bid on licenses on which it is not already the standing high bidder. 
Once such a bidder's activity rule waivers expire, the FCC will 
withdraw the standing high bids for the bidder--which has the same 
effect as if the bidder had withdrawn its own bids.
    124. The Bureau provides the following additional information in 
response to Omnipoint's Reply Comments. When a 30 megahertz nationwide 
bidder withdraws a standing high bid, initial maximum eligibility, 
activity rule waivers, and withdrawal allowances for all other bidders 
are restored to beginning auction levels, except for those nationwide 
bidders that have withdrawn from the auction. Once a nationwide bidder 
is out of the auction, it cannot have its eligibility restored. 
Eligibility restoration does not affect the activity requirements of 
the different stages. For example, if a bidder has eligibility restored 
due to the withdrawal from the auction of a nationwide bidder, the 
bidder with restored eligibility would be subject to the activity rule 
of whatever stage the auction is in when the eligibility is restored. 
Finally, we reiterate that the activity rules for Stages I, II, and III 
do not apply to nationwide bidders. A nationwide bidder will not be 
allowed to be active on anything less than all licenses comprising the 
30 megahertz nationwide aggregation. The bidder must be active on every 
license in every round, or employ an activity rule waiver.
    125. Also, PSINet seeks clarification on two items. First, PSINet 
asks that the Bureau confirm that the withdrawal payment would be 
calculated as the difference between the sum of the withdrawn bids and 
the sum of the ``subsequent winning bids'' on the withdrawn licenses. 
PSI Net is correct. The withdrawal payment would be calculated based on 
the amount of the winning bids and not based upon the subsequent high 
bids in the next round of bidding. (See Auction No. 31 Comment Public 
Notice at 10.) PSI Net also seeks clarification that the withdrawal 
payment for a nationwide aggregation will be calculated using the sum 
of all twelve withdrawn bids and the sum of subsequent bids. In that 
regard, PSINet is incorrect. The withdrawal payment will be calculated 
using the sum of only the withdrawn standing high bids and the sum of 
the

[[Page 12265]]

subsequent winning bids for those licenses. (See Auction No. 31 Comment 
Public Notice at 10.)
viii. Round Results
    126. Bids placed during a round will not be published until the 
conclusion of that bidding period. After a round closes, the Commission 
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. Reports reflecting bidders' identities and bidder 
identification numbers for Auction No. 31 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.
ix. Auction Announcements
    127. 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 on the Internet.
x. Maintaining the Accuracy of FCC Form 175 Information
    128. As noted in Section II.E., 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 certain 
revisions to 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, 445 12th Street, SW, Washington, DC 20554.
    A separate copy of the letter should be mailed to Howard Davenport, 
Auctions and Industry Analysis Division), briefly summarizing the 
changes. Questions about other changes should be directed to Howard 
Davenport, Auctions and Industry Analysis Division at (202) 418-0660.

V. Post-Auction Procedures 

A. Down Payments and Withdrawn Bid Payments

    129. 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 bid withdrawal payments due.
    130. Within ten business days after release of the auction closing 
public notice, each winning bidder must submit sufficient funds (in 
addition to its upfront payment) to bring its total amount of money on 
deposit with the Government to 20 percent of its net winning bids 
(actual bids less any applicable bidding credits). See 47 CFR 
1.2107(b). In addition, by the same deadline all bidders must pay any 
withdrawn bid amounts due under 47 CFR 1.2104(g), as discussed in ``Bid 
Removal and Bid Withdrawal,'' Section IV.B.vi. (Upfront payments are 
applied first to satisfy any withdrawn bid liability, before being 
applied toward down payments.)

B. Long-Form Application 

    131. Within ten business days after release of the auction closing 
public notice, winning bidders must electronically submit a properly 
completed long-form application and required exhibits for each 700 MHz 
band license won through the auction. Winning bidders that are small 
businesses or very small businesses must include an exhibit 
demonstrating their eligibility for bidding credits. See 47 CFR 
1.2112(b). Further filing instructions will be provided to auction 
winners at the close of the auction.

C. Default and Disqualification 

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

D. Refund of Remaining Upfront Payment Balance 

    133. All applicants that submitted upfront payments but were not 
winning bidders for a 700 MHz 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.
    134. 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, Financial Operations Center, Auctions Accounting Group, 
Shirley Hanberry 445 12th Street, SW, Room 1-A824, Washington, DC 
20554.
    135. Bidders are encouraged to file their refund information 
electronically using the Refund Information portion of the FCC Form 
175, but bidders can also fax their request to the Auctions Accounting 
Group at (202) 418-2843. Once the request has been approved, a refund 
will be sent to the party identified in the refund information.

    Note: 
    Refund processing generally takes up to two weeks to complete. 
Bidders with questions about refunds should contact Michelle Bennett 
or Gail Glasser at (202) 418-1995.


Federal Communications Commission.
Louis Sigalos,
Deputy Chief, Auctions and Industry Analysis Division.
[FR Doc. 00-5544 Filed 3-7-00; 8:45 am]
BILLING CODE 6712-01-P