[Federal Register Volume 66, Number 52 (Friday, March 16, 2001)]
[Notices]
[Pages 15254-15260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6625]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-01-40-A (Auction No. 40); DA 01-593]


Auction of Licenses for the Lower and Upper Paging Bands 
Scheduled for June 26, 2001

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document seeks comment on reserve prices or minimum 
opening bids and other auction procedural issues.

DATES: Comments are due on or before March 19, 2001, and reply comments 
are due on or before March 26, 2001.

[[Page 15255]]


ADDRESSES: An original and four copies of all pleadings must be filed 
with the Commission's Secretary, Magalie Roman Salas, Office of the 
Secretary, Federal Communications Commission, Room TW-A325, 445 Twelfth 
Street SW., Washington DC 20554.

FOR FURTHER INFORMATION CONTACT: Erik Salovaara, Auctions Attorney, or 
Jeff Crooks, Auctions Analyst, at (202) 418-0660; or Lisa Stover, 
Project Manager, at (717) 338-2888.

SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice 
released March 7, 2001. The complete text of the Public Notice is 
available for inspection and copying during normal business hours in 
the FCC Reference Center (CY-A257), 445 12th Street, SW., Washington, 
DC. It may also be purchased from the Commission's copy contractor, 
International Transcription Serviced, Inc. (ITS, Inc.) 1231 20th 
Street, NW., Washington, DC 20036, (202) 837-3800. It is also available 
on the Commission's web site at http://www.fcc.gov.
    1. By the Public Notice, the Wireless Telecommunications Bureau 
(``Bureau'') announces the auction of 14,000 licenses in the lower 
paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz, and 454-460 MHz) 
(``Auction No. 40'') to commence on June 26, 2001. In addition, Auction 
No. 40 will include 1,514 licenses in the upper paging bands (929-931 
MHz), that remained unsold in the first paging auction (``Auction No. 
26''), which closed on March 2, 2000.
    2. In the Paging Reconsideration Order, 64 FR 33762 (June 24, 
1999), the Commission concluded that the lower bands licenses should be 
awarded in each of the 175 geographic areas known as Economic Areas 
(EAs) and the upper band licenses awarded in each of the 51 geographic 
areas known as Major Economic Areas (MEAs). These EAs and MEAs both 
encompass the United States, Guam and Northern Mariana Islands, Puerto 
Rico and the United States Virgin Islands, and American Samoa.
    3. The following tables contain the Block/Frequency Cross-Reference 
List for the paging bands:

                                                       35 MHz Lower Bands Unpaired Paging Channels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Block  (License                    Block  (License                    Block  (License
     Block  (License suffix)         Frequency          suffix)          Frequency         suffix)          Frequency         suffix)         Frequency
--------------------------------------------------------------------------------------------------------------------------------------------------------
CA...............................  35.19-35.21   CE..................  35.29-35.31   CI.................  35.45-35.47   CM.................  35.57-35.59
CB...............................  35.21-35.23   CF..................  35.33-35.35   CJ.................  35.49-35.51   CN.................  35.59-35.61
CC...............................  35.23-35.25   CG..................  35.37-35.39   CK.................  35.53-35.55   CO.................  35.61-35.63
CD...............................  35.25-35.27   CH..................  35.41-35.43   CL.................  35.55-35.57   CP.................  35.65-35.67
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                       43 MHz Lower Bands Unpaired Paging Channels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Block  (License                    Block  (License                    Block  (License
     Block  (License suffix)         Frequency          suffix)          Frequency         suffix)          Frequency         suffix)         Frequency
--------------------------------------------------------------------------------------------------------------------------------------------------------
DA...............................  43.19-43.21   DE..................  43.29-43.31   DI.................  43.45-43.47   DM.................  43.57-43.59
DB...............................  43.21-43.23   DF..................  43.33-43.35   DJ.................  43.49-43.51   DN.................  43.59-43.61
DC...............................  43.23-43.25   DG..................  43.37-43.39   DK.................  43.53-43.55   DO.................  43.61-43.63
DD...............................  43.25-43.27   DH..................  43.41-43.43   DL.................  43.55-43.57   DP.................  43.65-43.67
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                  152 MHz Lower Bands Unpaired Paging Channels
----------------------------------------------------------------------------------------------------------------
         Block  (License suffix)               Frequency           Block  (License suffix)          Frequency
----------------------------------------------------------------------------------------------------------------
EA.......................................   152.230-152.250   EC..............................   158.090-158.110
EB.......................................   152.830-152.850   ED..............................   158.690-158.710
----------------------------------------------------------------------------------------------------------------


                                                       152 MHz Lower Bands Paired Paging Channels
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Block  (License suffix)                          Frequency                    Block  (License suffix)                   Frequency
--------------------------------------------------------------------------------------------------------------------------------------------------------
FA.........................................       152.015-152.045/158.475-158.505   FJ............................       152.555-152.585/157.815-157.845
FB.........................................       152.045-152.075/158.505-158.535   FK............................       152.585-152.615/157.845-157.875
FC.........................................       152.075-152.105/158.535-158.565   FL............................       152.615-152.645/157.875-157.905
FD.........................................       152.105-152.135/158.565-158.595   FM............................       152.645-152.685/157.905-157.935
FE.........................................       152.135-152.165/158.595-158.625   FN............................       152.685-152.705/157.935-157.965
FF.........................................       152.165-152.195/158.625-158.655   FO............................       152.705-152.735/157.965-157.995
FG.........................................       152.195-152.225/158.655-158.685   FP............................       152.735-152.765/157.995-158.025
FH.........................................       152.495-152.525/157.755-157.785   FQ............................       152.765-152.795/158.025-158.055
FI.........................................       152.525-152.555/157.785-157.815   FR............................       152.795-152.825/158.055-158.085
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                       454 MHz Lower Bands Paired Paging Channels
--------------------------------------------------------------------------------------------------------------------------------------------------------
        Block  (License suffix)                          Frequency                   Block  (License suffix)                   Frequency
--------------------------------------------------------------------------------------------------------------------------------------------------------
GA....................................        454.0125-454.0375/459.0125-459.0375   GN.......................        454.3375-454.3625/459.3375-459.3625
GB....................................        454.0375-454.0625/459.0375-459.0625   GO.......................        454.3625-454.3875/459.3625-459.3875

[[Page 15256]]

 
GC....................................        454.0625-454.0875/459.0625-459.0875   GP.......................        454.3875-454.4125/459.3875-459.4125
GD....................................        454.0875-454.1125/459.0875-459.1125   GQ.......................        454.4125-454.4375/459.4125-459.4375
GE....................................        454.1125-454.1375/459.1125-459.1375   GR.......................        454.4375-454.4625/459.4375-459.4625
GF....................................        454.1375-454.1625/459.1375-459.1625   GS.......................        454.4625-454.4875/459.4625-459.4875
GG....................................        454.1625-454.1875/459.1625-459.1875   GT.......................        454.4875-454.5125/459.4875-459-5125
GH....................................        454.1875-454.2125/459.1875-459.2125   GU.......................        454.5125-454.5375/459.5125-459.5375
GI....................................        454.2125-454.2375/459.2125-459.2375   GV.......................        454.5375-454.5625/459.5375-459.5625
GJ....................................        454.2375-454.2625/459.2375-459.2625   GW.......................        454.5625-454.5875/459.5625-459.5875
GK....................................        454.2625-454.2875/459.2625-459.2875   GX.......................        454.5875-454.6125/459.5875-459.6125
GL....................................        454.2875-454.3125/459.2875-459.3125   GY.......................        454.6125-454.6375/459.6125-459.6375
GM....................................        454.3125-454.3375/459.3125-454.3375   GZ.......................        454.6375-454.6625/459.6375-459.6625
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                         929-931 MHz Upper Bands Paging Channels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Block  (License                    Block  (License                    Block  (License
     Block  (License suffix)         Frequency          suffix)          Frequency         suffix)          Frequency         suffix)         Frequency
--------------------------------------------------------------------------------------------------------------------------------------------------------
A................................     929.0125   AA..................     931.0125   AN.................     931.3375   BA.................     931.6625
B................................     929.1125   AB..................     931.0375   AO.................     931.3625   BB.................     931.6875
C................................     929.2375   AC..................     931.0625   AP.................     931.3875   BC.................     931.7125
D................................     929.3125   AD..................     931.0875   AQ.................     931.4125   BD.................     931.7375
E................................     929.3875   AE..................     931.1125   AR.................     931.4375   BE.................     931.7625
F................................     929.4375   AF..................     931.1375   AS.................     931.4625   BF.................     931.7875
G................................     929.4625   AG..................     931.1625   AT.................     931.4875   BG.................     931.8125
H................................     929.6375   AH..................     931.1875   AU.................     931.5125   BH.................     931.8375
I................................     929.6875   AI..................     931.2125   AV.................     931.5375   BI.................     931.8625
J................................     929.7875   AJ..................     931.2375   AW.................     931.5625   BJ.................     931.9625
K................................     929.9125   AK..................     931.2625   AX.................     931.5875   BK.................     931.9875
L................................     929.9625   AL..................     931.2875   AY.................     931.6125
                                                 AM..................     931.3125   AZ.................     931.6375
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Note: (For Auction No. 40, licenses are not available in every 
block listed in the above 929-931 MHz Upper Bands Paging Channels 
table in every market as the Commission sold 985 upper bands 
licenses in Auction No. 26. See Attachment A of the Public Notice to 
determine what licenses will be offered for sale in Auction No. 40.)

    4. The Balanced Budget Act of 1997 requires the Commission to 
``ensure that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures. * * *'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, to seek comment on a variety of 
auction-specific procedures prior to the start of each auction. We 
therefore seek comment on the following issues relating to Auction No. 
40.

I. Auction Structure

A. Simultaneous Multiple Round Auction Design

    5. We propose to award the licenses in a single, simultaneous 
multiple-round auction. As described further, this methodology offers 
every license for bid at the same time with successive bidding rounds 
in which bidders may place bids. We seek comment on this proposal.

B. Upfront Payments and Initial Maximum Eligibility

    6. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned, taking 
into account such factors as the population in each geographic license 
area, and the value of similar spectrum. As described further, the 
upfront payment is a refundable deposit made by each bidder to 
establish eligibility to bid on licenses. For Auction No. 40, we 
propose to make the upfront payments equal to the minimum opening bids, 
which are established based on similar factors as described in section 
II.B. The specific upfront payments for each license are set forth in 
Attachment A of the Public Notice. We seek comment on this proposal.
    7. We further propose that the amount of the upfront payment 
submitted by a bidder will determine the number of bidding units on 
which a bidder may place bids--this limit is a bidder's ``maximum 
initial eligibility.'' Each license is assigned a specific number of 
bidding units equal to the upfront payment listed in Attachment A of 
the Public Notice, on a bidding unit per dollar basis. This number does 
not change as prices rise during the auction. A bidder's upfront 
payment is not attributed to specific licenses. Rather, a bidder may 
place bids on any combination of licenses as long as the total number 
of bidding units associated with those licenses does not exceed its 
maximum initial eligibility. Eligibility cannot be increased during the 
auction. Thus, in calculating its upfront payment amount, an applicant 
must determine the maximum number of bidding units it may wish to bid 
on (or hold high bids on) in any single round, and submit an upfront 
payment covering that number of bidding units. We seek comment on this 
proposal.

C. Activity Rules

    8. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively on a 
percentage of their

[[Page 15257]]

maximum bidding eligibility during each round of the auction rather 
than waiting until the end to participate. A bidder that does not 
satisfy the activity rule either will lose bidding eligibility in the 
next round or must use an activity rule waiver (if any remain).
    9. We propose to divide the auction into three stages, each 
characterized by an increased activity requirement. The auction will 
start in Stage One. We propose that the auction will generally advance 
to the next stage (i.e., from Stage One to Stage Two, and from Stage 
Two to Stage Three) when the auction activity level, as measured by the 
percentage of bidding units receiving new high bids, is approximately 
ten percent or below for three consecutive rounds of bidding in Stages 
One and Two. However, we further propose that the Bureau retain the 
discretion to change stages unilaterally by announcement during the 
auction. In exercising this discretion, the Bureau will consider a 
variety of measures of bidder activity including, but not limited to, 
the auction activity level, the 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 seek comment on these proposals.
We Propose the Following Activity Requirements
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current eligibility is required to be 
active on licenses representing at least 80 percent of its current 
bidding eligibility. Failure to maintain the requisite activity level 
will result in a reduction in the bidder's bidding eligibility in the 
next round of bidding (unless an activity rule waiver is used). During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the current round activity by five-fourths (5/4).
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current eligibility is required to be active on 90 percent 
of its current bidding eligibility. During Stage Two, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by ten-ninths (10/9).
    Stage Three: In each round of the third stage, a bidder desiring to 
maintain its current eligibility is required to be active on 98 percent 
of its current bidding eligibility. In this final stage, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by fifty/forty-ninths (50/49). We seek comment 
on these proposals.

D. Activity Rule Waivers and Reducing Eligibility

    10. Use of an activity rule waiver preserves the bidder's current 
bidding eligibility despite the bidder's activity in the current round 
being below the required minimum level. An activity rule waiver applies 
to an entire round of bidding and not to a particular license. Activity 
waivers are principally a mechanism for auction participants to avoid 
the loss of auction eligibility in the event that exigent circumstances 
prevent them from placing a bid in a particular round.
    11. The FCC auction system assumes that bidders with insufficient 
activity would prefer to use an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver (known as an ``automatic waiver'') at the 
end of any bidding period where a bidder's activity level is below the 
minimum required unless: (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.
    12. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding period by using the reduce eligibility function in 
the bidding software. In this case, the bidder's eligibility is 
permanently reduced to bring the bidder into compliance with the 
activity rules as described. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility.
    13. A bidder may proactively use an activity rule waiver as a means 
to keep the auction open without placing a bid. If a bidder submits a 
proactive waiver (using the proactive waiver function in the bidding 
software) during a bidding period in which no bids are submitted, the 
auction will remain open and the bidder's eligibility will be 
preserved. An automatic waiver invoked in a round in which there are no 
new valid bids will not keep the auction open.
    14. We propose that each bidder in Auction No. 40 be provided with 
five activity rule waivers that may be used at the bidder's discretion 
during the course of the auction. We seek comment on this proposal.

E. Information Relating to Auction Delay, Suspension, or Cancellation

    15. For Auction No. 40, we propose that, by public notice or by 
announcement during the auction, the Bureau may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
obstacle, evidence of an auction security breach, unlawful bidding 
activity, administrative or weather necessity, or for any other reason 
that affects the fair and competitive conduct of 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. We seek comment on this proposal.

F. Information Available to Bidders During the Course of the Auction

    16. In the Paging Second Report and Order, 62 FR 11616 (March 12, 
1997), the Commission concluded that, due to the large number of 
licenses to be auctioned, limiting the disclosure of information to 
bidders during the course of paging auctions (e.g., revealing only high 
bids and total number of bids on each license and withholding bidder 
identities) might help to speed the pace of the auctions. In the Paging 
Reconsideration Order, the Commission directed the Bureau to seek 
further comment on this issue. Based on its experience in Auction No. 
26, in which the information was disclosed, the Bureau tentatively 
concludes that it is unnecessary to withhold bidder identities in 
Auction No. 40. We seek comment on this tentative conclusion. In 
addition, as in Auction No. 26, we propose to disclose all information 
relating to the bids during Auction No. 40 after each round of bidding 
closes, including all bids and withdrawals placed in each round, the 
identity of the bidder placing each bid or withdrawal, and the net and 
gross amounts of each bid or withdrawal. We seek comment on this 
proposal.

II. Bidding Procedures

A. Round Structure

    17. The Commission will use its Automated Auction System to conduct 
the electronic simultaneous multiple round auction for Auction No. 40. 
In contrast to prior auctions, Auction No. 40 will be conducted over 
the Internet. However, the Bureau's wide area network will be available 
at the standard charge, as in prior auctions. Prospective bidders 
concerned about

[[Page 15258]]

their access to the Internet may want to establish a connection to the 
Bureau's wide area network as a backup. Full information regarding how 
to establish such a connection, and related charges, will be provided 
in the public notice announcing details of auction procedures. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of the auction and will be 
included in the registration mailings. The simultaneous multiple round 
format will consist of sequential bidding rounds, each followed by the 
release of round results. Details regarding the location and format of 
round results will be included in the same public notice.
    18. In past auctions, we have used the timing of bids to select a 
high bidder when multiple bidders submit identical high bids on a 
license in a given round. Given that bidders will access the Internet 
at differing speeds, we will not use this procedure in Auction No. 40. 
For Auction No. 40, we propose to use a National Institute of Standards 
and Technology (``NIST'') tested pseudo-random generator to select a 
high bidder at random from among such bidders. As with prior auctions, 
remaining bidders will be able to submit higher bids in subsequent 
rounds.
    19. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors. We seek 
comment on this proposal.

B. Reserve Price or Minimum Opening Bid

    20. The Balanced Budget Act calls upon the Commission to prescribe 
methods for establishing a reasonable reserve price or a minimum 
opening bid when FCC licenses are subject to auction, unless the 
Commission determines that a reserve price or minimum bid is not in the 
public interest. Consistent with this mandate, the Commission has 
directed the Bureau to seek comment on the use of a minimum opening bid 
and/or reserve price prior to the start of each auction.
    21. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It generally is used to accelerate 
the competitive bidding process. Also, the auctioneer often has the 
discretion to lower the minimum opening bid amount later in the 
auction.
    22. In light of the Balanced Budget Act's requirements, the Bureau 
proposes to establish minimum opening bids for Auction No. 40. The 
Bureau believes a minimum opening bid, which has been utilized in other 
auctions, is an effective auction tool.
    23. Because multiple licenses in the same geographic area are being 
auctioned at the same time, under the same general conditions, the 
Commission believes that it is appropriate to use a common baseline to 
establish the minimum opening bid formula for all the licenses in the 
auction. The gross high bids from the prior 929-931 MHz Paging Auction 
(Auction No. 26) provide the most comprehensive paging baseline. 
Therefore, we propose to base the minimum opening bid for each license 
available in Auction No. 40 on the average of the corresponding gross 
high bids received in Auction No. 26, as follows:
     For a license being auctioned by MEA, the minimum opening 
bid will be 20% of the average gross high bid received in Auction No. 
26 in the same MEA.
     For a license being auctioned by EA, the minimum opening 
bid will be the EA population multiplied by 20% of the gross average 
dollars per population received in Auction No. 26 for the corresponding 
MEA.
    24. The Commission will set a ``floor'' for minimum opening bids at 
$1000 for licenses in the upper paging bands (929-931 MHz) and $500 for 
the licenses in the lower paging bands (35-36 MHz, 43-44 MHz, 152-159 
MHz, and 454-460 MHz).
    25. This formula is intended to apply to all geographic paging 
licenses in Auction No. 40, and takes into account the considerations 
discussed. The specific proposed minimum opening bid for each license 
is set forth in Attachment A of the Public Notice. We seek comment on 
this proposal.
    26. If commenters believe that these minimum opening bids will 
result in substantial numbers of unsold licenses, or are not reasonable 
amounts, or should instead operate as reserve prices, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, we 
particularly seek comment on such factors as the amount of spectrum 
being auctioned, levels of incumbency, the availability of technology 
to provide service, the size of the geographic service areas, issues of 
interference with other spectrum bands and any other relevant factors 
that could reasonably have an impact on valuation of the paging bands. 
Alternatively, comment is sought on whether, consistent with the 
Balanced Budget Act, the public interest would be served by having no 
minimum opening bid or reserve price.

C. Minimum Acceptable Bids and Bid Increments

    27. In each round, eligible bidders will be able to place 
acceptable bids on a given license in any of ten different amounts. The 
Automated Auction System interface will list as acceptable bids for 
each license a minimum acceptable bid and nine higher bids equal to the 
minimum acceptable bid plus one to nine times a defined increment. 
Until a bid has been placed on a license, the minimum acceptable bid 
for that license will be equal to its minimum opening bid. In the 
rounds after an acceptable bid is placed on a license, the minimum 
acceptable bid for that license will be equal to the standing high bid 
plus the defined increment.
    28. For Auction No. 40, we propose to set the defined increment for 
each license based on a percentage of the standing high bid on the 
license or, if no bid has been placed on the license, a percentage of 
the minimum opening bid for the license. The defined increment will be 
calculated as follows. Presuming, for example, that the percentage 
being used is 20 percent, we will multiply the standing high bid (or, 
if no standing high bid exists for the particular license, the minimum 
opening bid) by 1.2. (If the percentage being used is 30 percent, we 
would multiply by 1.3, etc.) We will round the result to the nearest 
$100 for results below $10,000 and to the nearest $1,000 for amounts 
above $10,000. The defined increment then will be determined by 
subtracting the standing high bid (or, if applicable, the minimum 
opening bid) from the rounded result. At the start of the auction, we 
propose to use 20 percent to calculate the defined increment. We also 
propose to retain discretion to change the percentage used to calculate 
the defined increment. Further, we propose to retain discretion to set 
a floor for the increment used to calculate the minimum acceptable bid 
at an absolute dollar amount.
    29. In addition, we propose that in Stage Three the Bureau have 
discretion to use a smaller defined increment to

[[Page 15259]]

calculate acceptable bids higher than the minimum acceptable bid. The 
smaller defined increment would be calculated using a smaller 
percentage than the percentage used to calculate the defined increment 
that sets the minimum acceptable bid. For example, 20 percent might be 
used to calculate the defined increment for the minimum acceptable bid 
and 10 percent might be used to calculate the smaller defined increment 
used to calculate higher acceptable bids. In all other respects, the 
smaller defined increment would be calculated in exactly the manner 
described for the initial defined increment, including rounding.
    30. For example, the Bureau could calculate Stage Three bids using 
20 percent to calculate the defined increment for the minimum 
acceptable bid and 10 percent to calculate the smaller defined 
increment. Assuming that the standing high bid on a given license is 
$50,000, in the next round of Stage Three,

Defined Increment
    = Rounded (Standing High Bid * 1.2) - Standing High Bid
    = Rounded ($50,000 * 1.2) - $50,000
    = Rounded ($60,000) - $50,000
    = $60,000 - $50,000
    = $10,000
Minimum Acceptable Bid
    = Standing High Bid + Defined Increment
    = $50,000 + $10,000
    = $60,000
Smaller Defined Increment
    = Rounded (Standing High Bid * 1.1) - Standing High Bid
    = Rounded ($50,000 * 1.1) - $50,000
    = Rounded ($55,000) - $50,000
    = $55,000 - $50,000
    = $5,000
One Increment Higher Than Minimum Acceptable Bid
    = Minimum Acceptable Bid + (Smaller Defined Increment * 1)
    = $60,000 + ($5,000 * 1)
    = $60,000 + $5,000
    = $65,000
Two Increments Higher Than Minimum Acceptable Bid
    = Minimum Acceptable Bid + (Smaller Defined Increment * 2)
    = $60,000 + ($5,000 * 2)
    = $60,000 + $10,000
    = $70,000

This procedure would enable bidders unwilling to raise the standing 
high bid by twice the defined increment to place bids higher than the 
minimum acceptable bid. Thus, in the example, a bidder wanting to bid 
above the minimum acceptable bid but unwilling to raise the standing 
high bid of $50,000 by twice the defined increment of $10,000 ($20,000 
or 40 percent) would have the flexibility to bid $65,000, raising the 
standing high bid by $15,000. Bidders may want the flexibility to place 
such bids as licenses approach their final price. However, such 
precision earlier in the auction only would create unnecessary delay, 
and we therefore propose to limit this procedure to Stage Three of the 
auction.
    31. In summary, we propose the Bureau have discretion at any time 
during the auction to change the initial 20 percent used to calculate 
the defined increment and/or to set an absolute dollar amount floor for 
the increment used to calculate the minimum acceptable bid. We also 
propose that the Bureau have additional discretion in Stage Three to 
calculate the minimum acceptable bid using one percentage and to 
calculate higher acceptable bids using another percentage. Advanced 
notice of the Bureau's decision to exercise its discretion with regard 
to acceptable bids in any manner would be announced via the Automated 
Auction System. We seek comment on these proposals.

D. Information Regarding Bid Withdrawal and Bid Removal

    32. For Auction No. 40, we propose the following bid removal and 
bid withdrawal procedures. Before the close of a bidding period, a 
bidder has the option of removing any bid placed in that round. By 
using the remove bid function in the bidding 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 a withdrawal 
payment.
    33. Once a round closes, a bidder may no longer remove a bid. 
However, in any subsequent round, a high bidder may withdraw its 
standing high bids from previous rounds using the withdraw bid function 
in the bidding software. A high bidder that withdraws its standing high 
bid from a previous round is subject to the bid withdrawal payment 
provisions of the Commission rules. We seek comment on these bid 
removal and bid withdrawal procedures.
    34. In the Part 1 Third Report and Order, 63 FR 770 (January 7, 
1998), the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and the pursuit of 
efficient backup strategies as information becomes available during the 
course of an auction. The Commission noted, however, that, in some 
instances, bidders may seek to withdraw bids for improper reasons. The 
Bureau, therefore, has discretion, in managing the auction, to limit 
the number of withdrawals to prevent any bidding abuses. The Commission 
stated that the Bureau should assertively exercise its discretion, 
consider limiting the number of rounds in which bidders may withdraw 
bids, and prevent bidders from bidding on a particular market if the 
Bureau finds that a bidder is abusing the Commission's bid withdrawal 
procedures.
    35. Applying this reasoning, we propose to limit each bidder in 
Auction No. 40 to withdrawing standing high bids in no more than two 
rounds during the course of the auction. To permit a bidder to withdraw 
bids in more than two rounds would likely encourage insincere bidding 
or the use of withdrawals for anti-competitive purposes. The two rounds 
in which withdrawals are utilized will be at the bidder's discretion; 
withdrawals otherwise must be in accordance with the Commission's 
rules. There is no limit on the number of standing high bids that may 
be withdrawn in either of the rounds in which withdrawals are utilized. 
Withdrawals will remain subject to the bid withdrawal payment 
provisions specified in the Commission's rules. We seek comment on this 
proposal.

E. Stopping Rule

    36. For Auction No. 40, the Bureau proposes to employ a 
simultaneous stopping rule approach. The Bureau has discretion to 
establish stopping rules before or during multiple round auctions in 
order to terminate the auction within a reasonable time. A simultaneous 
stopping rule means that all licenses remain open until the first round 
in which no new acceptable bids or proactive waivers are received. 
After the first such round, bidding closes simultaneously on all 
licenses. Thus, unless circumstances dictate otherwise, bidding would 
remain open on all licenses until bidding stops on every license.
    37. However, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 40:
    (i) Utilize a modified version of the simultaneous stopping rule. 
The modified stopping rule would close the auction for all licenses 
after the first round in which no bidder submits a proactive waiver or 
a new bid on any license on which it is not the standing high bidder. 
Thus, absent any other bidding activity, a bidder placing a new bid on 
a license for which it is the standing high bidder would not keep the 
auction open under this modified stopping rule. The Bureau further 
seeks comment on whether this modified stopping rule should be used at 
any

[[Page 15260]]

time or only in stage three of the auction.
    (ii) Keep the auction open even if no new acceptable bids or 
proactive waivers are submitted. In this event, the effect will be the 
same as if a bidder had submitted a proactive waiver. The activity 
rule, therefore, will apply as usual, and a bidder with insufficient 
activity will either lose bidding eligibility or use a remaining 
activity rule waiver.
    (iii) 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 specified final 
round(s) only for licenses on which the high bid increased in at least 
one of the preceding specified number of rounds.
    38. The Bureau proposes to exercise these options only in certain 
circumstances, such as, for example, where the auction is proceeding 
very slowly, there is minimal overall bidding activity, or it appears 
likely that the auction will not close within a reasonable period of 
time. Before exercising these options, the Bureau is likely to attempt 
to increase the pace of the auction by, for example, increasing the 
number of bidding rounds per day, and/or increasing the amount of the 
minimum bid increments for the limited number of licenses where there 
is still a high level of bidding activity. We seek comment on these 
proposals.

III. Conclusion

    39. Comments are due on or before March 19, 2001, and reply 
comments are due on or before March 26, 2001. An original and four 
copies of all pleadings must be filed with the Commission's Secretary, 
Magalie Roman Salas, Office of the Secretary, Federal Communications 
Commission, Room TW-A325, 445 Twelfth Street SW., Washington DC 20554, 
in accordance with Sec. 1.51(c) of the Commission's rules. In addition, 
one copy of each pleading must be delivered to each of the following 
locations: (i) The Commission's duplicating contractor, International 
Transcription Service, Inc. (ITS), 1231 20th Street NW., Washington DC 
20036; (ii) Office of Media Relations, Public Reference Center, Room 
CY-A257, 445 Twelfth Street SW., Washington DC 20554; (iii) Rana 
Shuler, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau, Room 4-A628, 445 Twelfth Street SW., 
Washington DC 20554. Comments and reply comments will be available for 
public inspection during regular business hours in the FCC Public 
Reference Room, Room CY-A257, 445 12th Street SW.., Washington DC 
20554.
    40. This proceeding is a ``permit-but-disclose'' proceeding in 
accordance with the Commission's ex parte rules. Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentations must contain summaries of the substance of the 
presentations and not merely a listing of the subjects discussed. More 
than a one or two sentence description of the views and arguments 
presented is generally required. Other rules pertaining to oral and 
written ex parte presentations in permit-but-disclose proceedings are 
set forth in Sec. 1.1206(b) of the Commission's rules.

Federal Communications Commission.
Margaret Wiener,
Chief, Auctions and Industry Analysis Division.
[FR Doc. 01-6625 Filed 3-15-01; 8:45 am]
BILLING CODE 6712-01-U