[Federal Register Volume 66, Number 143 (Wednesday, July 25, 2001)]
[Notices]
[Pages 38690-38704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18581]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-01-41-C (Auction No. 41); DA 01-1592]


Narrowband PCS Spectrum Auction Scheduled for October 3, 2001; 
Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments 
and Other Procedural Issues

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the procedures and minimum opening 
bids for the upcoming auction of Personal Communications Services (PCS) 
licenses in the 900 MHz band (Narrowband PCS), scheduled for October 3, 
2001 (Auction No. 41).

DATES: Auction No. 41 is scheduled for October 3, 2001.

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division: Howard Davenport, Legal Branch, or Lyle Ishida, Auctions 
Operations Branch, at (202) 418-0660; Lisa Stover, Auctions Operations 
Branch, at (717) 338-2888. Commercial Wireless Division: Gary Oshinsky, 
Policy and Rules Branch, at (202) 418-7167, or JoAnn Epps, Licensing 
and Technical Analysis Branch, at (202) 418-0620. Media Contact: 
Meribeth McCarrick at (202) 418-0654.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 41 
Procedures Public Notice released July 9, 2001. The complete text of 
the Auction No. 41 Procedures Public Notice, including attachments, is 
available for inspection and copying during normal business hours in 
the

[[Page 38691]]

FCC Reference Center (Room CY-A257), 445 12th Street, SW, Washington, 
D.C. 20554. 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 web site at http://www.fcc.gov.
    List of Attachments available at the FCC:

Attachment A--Narrowband PCS
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-February 2000 edition)
Attachment F--Accessing the FCC Network to File FCC Form 175
Attachment G--Minimum Acceptable Bids, Bid Increments, and the 
Smoothing Formula
Attachment H--Summary Listing of Document from the Commission and the 
Wireless Telecommunications Bureau Addressing Application of the Anti-
Collusion Rules

I. General Information

A. Introduction

    1. By the Auction No. 41 Procedures Public Notice, the Wireless 
Telecommunications Bureau (``Bureau'') announces the procedures and 
minimum opening bids for the upcoming auction of Personal 
Communications Services (``PCS'') licenses in the 900 MHz band 
(``Narrowband PCS''), scheduled for October 3, 2001 (Auction No. 41). 
On June 12, 2001, in accordance with the Balanced Budget Act of 1997, 
the Bureau released Auction No. 41 Comment Public Notice, 66 FR 32810 
(June 18, 2001), seeking comment on reserve prices or minimum opening 
bids and the procedures to be used in Auction No. 41. In addition, on 
June 21, 2001, the Bureau released a public notice that corrected 
Attachment A of the Auction No. 41 Comment Public Notice, 66 FR 34680 
(June 29, 2001). The Bureau received one comment in response to the 
Auction No. 41 Comment Public Notice and one comment in response to the 
Auction No. 41 Comment Public Notice. No reply comments were submitted.
i. Background of Proceeding
    2. In the PCS First Report and Order, 58 FR 42681 (August 11, 
1993), the Commission provided for the operation of narrowband PCS in 
three one-megahertz blocks in the 900 MHz band. The Commission broadly 
defined PCS as mobile and fixed communications offerings that serve 
individuals and businesses and that can be integrated with a variety of 
competing networks. The Commission also adopted a spectrum allocation 
and channelization plan, licensing rules, and technical standards for 
narrowband PCS. In the Competitive Bidding Second Report and Order, 59 
FR 22980 (May 4, 1994), the Commission determined that, pursuant to 
section 309(j) of the Communications Act of 1934, as amended, PCS is 
subject to competitive bidding in the case of mutually exclusive 
applications. The Commission also established competitive bidding rules 
specifically for narrowband PCS.
    3. Subsequently, in the Narrowband Second Report and Order and 
Second Further Notice of Proposed Rule Making, 65 FR 35843 (June 6, 
2000), the Commission adopted modifications to its service rules for 
narrowband PCS. Specifically, the Commission: (i) Adopted Major Trading 
Areas (``MTAs'') for future licensing of narrowband PCS; (ii) 
eliminated the restriction, which only applied to 100 kilohertz of the 
3 megahertz blocks allocated for narrowband PCS, that limited 
eligibility for acquiring narrowband PCS response channels to existing 
paging licensees; (iii) modified the construction and minimum coverage 
requirement for narrowband PCS spectrum by allowing licensees to meet a 
``substantial service'' alternative; (iv) adopted subpart Q of part 1 
of the Commission rules to apply to narrowband PCS; and (v) eliminated 
the narrowband PCS spectrum aggregation limit, finding that it is not 
necessary to prevent an undue concentration of licenses. In the Third 
Narrowband Report and Order and Order on Reconsideration, 66 FR 29911 
(June 4, 2001), the Commission modified its channel band plan to allow 
for the licensing of narrowband PCS spectrum for 8 nationwide licenses 
and seven licenses in each of the 51 MTAs. Further, the Commission 
channelized and licensed the one megahertz of narrowband spectrum that 
had been held in reserve and re-channelized 712 kilohertz of previously 
channelized spectrum for which licenses had not been auctioned. With 
that action, the Commission resolved the remaining issues concerning 
narrowband PCS in preparation for auctioning licenses for the remaining 
narrowband PCS spectrum.
ii. Licenses To Be Auctioned
    4. The licenses available in Auction No. 41 include 365 Personal 
Communications Service (PCS) licenses in the 900 MHz band (``narrowband 
PCS''). Eight (8) licenses will be offered on a nationwide basis and 
seven (7) licenses will be offered in each of 51 Major Trading Areas 
(MTAs), for a total of 357 MTA licenses. This table describes the 
licenses that will be auctioned:

----------------------------------------------------------------------------------------------------------------
                                                                                                      Bandwidth
         Channel  No.                  Channel description                 Frequency bands              (kHz)
----------------------------------------------------------------------------------------------------------------
                                               Nationwide Licenses
----------------------------------------------------------------------------------------------------------------
18............................  One 100 kHz unpaired channel....  940.65-940.75 MHz...............         100
19............................  One 50 kHz/50 kHz paired channel  901.3-901.35, 930.5-930.55 MHz..         100
20............................  One 50 kHz/50 kHz paired channel  901.9-901.95, 930.75-930.8 MHz..         100
21............................  One 50 kHz/150 kHz paired         901.5-901.55, 930-930.15 MHz....         200
                                 channel.
22............................  One 50 kHz/150 kHz paired         901.6-901.65, 930.15-930.3 MHz..         200
                                 channel.
23............................  One 50 kHz/100 kHz paired         901.45-901.5, 940.55-940.65 MHz.         150
                                 channel.
24............................  One 50 kHz/100 kHz paired         901.55-901.6, 940.3-940.4 MHz...         150
                                 channel.
25............................  One 50 kHz/100 kHz paired         901.85-901.9, 940.45-940.55 MHz.         150
                                 channel.
                                                                                                   -------------
  Nationwide Subtotal.........                                                                       1,150 kHz
----------------------------------------------------------------------------------------------------------------
                                                  MTA Licenses
----------------------------------------------------------------------------------------------------------------
26............................  One 50 kHz unpaired channel.....  901.35-901.4 MHz................          50

[[Page 38692]]

 
27............................  One 50 kHz unpaired channel.....  901.4-901.45 MHz................          50
28............................  One 50 kHz unpaired channel.....  940.4-940.45 MHz................          50
29*...........................  One 50 kHz/50 kHz paired channel  901.95-902.0, 930.8-930.85 MHz..         100
30............................  One 50 kHz/100 kHz paired         901.65-901.7, 930.3-930.4 MHz...         150
                                 channel.
31*...........................  One 50 kHz/150 kHz paired         901.7-901.75, 930.85-931 MHz....         200
                                 channel.
32*...........................  One 12.5 kHz/100 kHz paired       901.8375-901.85, 940.9-941 MHz..         112.5
                                 channel.
                                                                                                   -------------
  MTA Subtotal................                                                                             712.5
                                                                                                   =============
  Grand Total.................                                                                           1,862.5 
----------------------------------------------------------------------------------------------------------------
\*\ Narrowband PCS channels 29, 31, and 32 in MTA002 (Los Angeles-San Diego) will be available subject to
  protection of incumbent licenses held by Paging Systems, Inc. under call signs WPOI469, WPOI470, WPOI471, and
  WPOI472. See In the Matter of License Communications Services, Inc. et al., Memorandum Opinion and Order, 62
  FR 55348 October 24, 1997).

B. Rules and Disclaimers

i. Relevant Authority
    5. Prospective bidders must familiarize themselves thoroughly with 
the Commission's rules relating to the narrowband services, contained 
in title 47, parts 24 and 90 of the Code of Federal Regulations, and 
those relating to application and auction procedures, contained in 
title 47, part 1 of the Code of Federal Regulations.
    6. Prospective bidders must also be thoroughly familiar with the 
procedures, terms and conditions (collectively, ``terms'') contained in 
this Public Notice; the Auction No. 41 Comment Public Notice; the Part 
1 Fifth Report and Order, 65 FR 52401 (August 29, 2000) (as well as 
prior Commission proceedings regarding competitive bidding procedures); 
the Narrowband PCS R&O/Further Notice, 62 FR 27507 (May 20, 1997); the 
Narrowband Second Report and Order and Second Further Notice of 
Proposed Rule; and the Third Narrowband Report and Order and Order on 
Reconsideration.
    7. 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 at 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 01-135 for the Third 
Narrowband Report and Order and Order on Reconsideration).
ii. Prohibition of Collusion
    8. 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. Note that in Auction No. 41, 
applicants that apply to bid for a nationwide license would be 
precluded from communicating with all other applicants. This 
prohibition begins at the short-form application filing deadline and 
ends at the down payment deadline 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 or she is authorized to represent in the auction. Also, if 
the authorized bidders are different individuals employed by the same 
organization (e.g., law firm or consulting firm), a violation could 
similarly occur. In such a case, at a minimum, 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.
    9. However, the Bureau 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. The Commission's anti-
collusion rules allow applicants to form certain agreements during the 
auction, provided the applicants have not applied for licenses covering 
the same geographic areas. 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 pursuant to 
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 licenses covering the same geographic areas. By signing their FCC 
Form 175 short-form applications, applicants are certifying their 
compliance with Sec. 1.2105(c).
    10. In addition, Sec. 1.65 of the Commission's rules requires an 
applicant to maintain the accuracy and completeness of information 
furnished in its pending application and to notify the Commission 
within 30 days of any substantial change that may be of decisional 
significance to that application. Thus, Sec. 1.65 requires an auction 
applicant to notify the Commission of any violation of the anti-
collusion rules upon learning of such violation. Bidders therefore are 
required to make such notification to the Commission immediately upon 
discovery.
    11. A summary listing of documents from the Commission and the 
Bureau addressing the application of the anti-collusion rules may be 
found in Attachment H of the Auctions No. 41 Procedures Public Notice.
iii. Due Diligence
    12. Potential bidders are advised that there is one incumbent 
licensee already licensed and operating in MTA002 on channels that will 
be subject to the upcoming auction. Specifically,

[[Page 38693]]

narrowband PCS channels 29, 31, and 32 in MTA002 (Los Angeles-San 
Diego) will be available subject to protection of currently operational 
incumbent licenses held by Paging Systems, Inc. under the following 
call signs:

WPOI469 930.80-930.85 MHz (channel 29)
WPOI470 940.95-940.975 MHz (channel 32)
WPOI471 940.90-940.95 MHz (channel 32)
WPOI472 930.90-930.95 MHz (channel 31)

    13. MTA licensees must protect such incumbents from harmful 
interference. These limitations will restrict the ability of such MTA 
licensees to use the above-referenced channels in portions of MTA002.
    14. In addition, potential bidders seeking licenses for MTAs that 
border Canada or Mexico will be subject to on-going coordination 
arrangements with those respective countries. Potential bidders are 
also subject to the Interim Sharing Arrangement with Canada for the 
Bands 901-902 MHz, 930-931 MHz, and 940-941 MHz and to any restrictions 
that arise from future agreements with Canada or Mexico.
    15. Potential bidders also should be aware that certain 
applications (including those for modification), petitions for 
rulemaking, requests for special temporary authority (``STA'') waiver 
requests, petitions to deny, petitions for reconsideration, and 
applications for review may be pending before the Commission and relate 
to particular applicants or incumbent licensees. In addition, certain 
decisions reached in the narrowband proceeding may be subject to 
judicial appeal and may be the subject of additional reconsideration or 
appeal. We note that resolution of these matters could have an impact 
on the availability of spectrum in Auction No. 41. In addition, 
although the Commission will continue to act on pending applications, 
requests and petitions, some of these matters may not be resolved by 
the time of the auction.
    16. Potential bidders are solely responsible for identifying 
associated risks and for investigating and evaluating the degree to 
which such matters may affect their ability to bid on, otherwise 
acquire, or make use of licenses available in Auction No. 41.
    17. Potential bidders may obtain information about licenses 
available in Auction No. 41 through the Bureau's licensing databases on 
the World Wide Web at http://www.fcc.gov/wtb/uls. Potential bidders 
should direct questions regarding the search capabilities to the FCC 
Technical Support hotline at (202) 414-1250 (voice) or (202) 414-1255 
(TTY), or via e-mail at [email protected]. The hotline is available to 
assist with questions Monday through Friday, from 7:00 AM to 10 PM ET, 
Saturday, 8:00 AM to 7 PM ET, and Sunday, 12:00 noon to 6 PM ET. In 
order to provide better service to the public, all calls to the hotline 
are recorded. The Commission makes no representations or guarantees 
regarding the accuracy or completeness of information in its databases 
or any third party databases, including, for example, court docketing 
systems. Furthermore, the Commission makes no representations or 
guarantees regarding the accuracy or completeness of information that 
has been provided by incumbent licensees and incorporated into the 
database. Potential bidders are strongly encouraged to physically 
inspect any sites located in, or near, the MTA for which they plan to 
bid.
iv. Bidder Alerts
    18. All applicants must certify on their FCC Form 175 applications 
under penalty of perjury that they are legally, technically, 
financially and otherwise qualified to hold a license, and not in 
default on any payment for Commission licenses (including down 
payments) or delinquent on any non-tax debt owed to any Federal agency. 
Prospective bidders are reminded that submission of a false 
certification to the Commission is a serious matter that may result in 
severe penalties, including monetary forfeitures, license revocations, 
exclusion from participation in future auctions, and/or criminal 
prosecution.
    19. The FCC makes no representations or warranties about the use of 
this spectrum for particular services. Applicants should be aware that 
a FCC auction represents an opportunity to become a FCC licensee in 
this service, subject to certain conditions and regulations. A FCC 
auction does not constitute an endorsement by the FCC of any particular 
services, technologies or products, nor does a FCC license constitute a 
guarantee of business success. Applicants and interested parties should 
perform their own due diligence before proceeding, as they would with 
any new business venture.
    20. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 41 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 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.
    21. 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 proposals regarding Auction No. 41 may also call the FCC 
Consumer Center at (888) CALL-FCC ((888) 225-5322).
i. National Environmental Policy Act (``NEPA'') Requirements
    22. Licensees must comply with the Commission's rules regarding the 
National Environmental Policy Act (NEPA). The construction of a 
wireless antenna facility is a federal action and the licensee must 
comply with the Commission's NEPA rules for each such facility. The 
Commission's NEPA rules require, among other things, that 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

[[Page 38694]]

environmental assessments for facilities that include high intensity 
white lights in residential neighborhoods or excessive radio frequency 
emission.

C. Auction Specifics

i. Auction Date
    23. The auction will begin on Wednesday, October 3, 2001. 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.
    24. The Commission announces that bidding for Auction No. 41 will 
be temporarily suspended October 8, 2001, in observance of the federal 
holiday.
ii. Auction Title
    25. Auction No. 41--Narrowband PCS
iii. Bidding Methodology
    26. The bidding methodology for Auction No. 41 will be simultaneous 
multiple round bidding. Bidding will be permitted only from remote 
locations, either telephonically or electronically (by computer via the 
Internet or the Bureau's wide area network).
iv. Pre-Auction Dates and Deadlines
    27. These are important dates relating to Auction No. 41:

Auction Seminar_____August 15, 2001
Short-Form Application (FCC Form 175)_____August 24, 2001; 6:00 p.m. ET
Upfront Payments (via wire transfer)_____September 13, 2001; 6 p.m. ET
Mock Auction_____September 28, 2001
Auction Begins_____October 3, 2001
v. Requirements for Participation
    28. Those wishing to participate in the auction must:
     Submit a short-form application (FCC Form 175) 
electronically by 6:00 p.m. ET, August 24, 2001.
     Submit a sufficient upfront payment and a FCC Remittance 
Advice Form (FCC Form 159) by 6:00 p.m. ET, September 13, 2001.
     Comply with all provisions outlined in this public notice.
vi. General Contact Information
    29. The following is a list of general contract information 
relating to Auction No. 41:
General Auctions Information:
General Auction Questions Seminar Registration:
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, Due Diligence, 
Incumbency Issues
    Commercial Wireless Division, (202) 418-0620
Technical Support:
Electronic Filing, Automated Auction System
    FCC Auctions Technical Support Hotline, (202) 414-1250 (Voice), 
(202) 414-1255 (TTY), Hours of service: Monday through Friday 7 a.m. to 
10:00 p.m. ET, Saturday, 8:00 a.m. to 7:00 p.m., Sunday, 12:00 noon to 
6:00 p.m.
Payment Information:
Wire Transfers, Refunds
     FCC Auctions Accounting Branch, (202) 418-1995, (202) 418-2843 
(Fax)
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 Washington, DC), (202) 418-3676 (in the 
Washington Area), http://www.fcc.gov/formpage.html
FCC Internet sites:
    http://www.fcc.gov, http://www.fcc.gov/wtb/auctions

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

    30. Guidelines for completion of the short-form (FCC Form 175) are 
set forth in Attachment D of the Auction No. 41 Procedures Public 
Notice. The short-form application seeks the applicant's name and 
address, legal classification, status, small or very small business 
bidding credit eligibility, identification of the license(s) sought, 
the authorized bidders and contact persons. All applicants must certify 
on their FCC Form 175 applications under penalty of perjury that they 
are legally, technically, financially and otherwise qualified to hold a 
license and, as discussed in section II.E (Provisions Regarding 
Defaulters and Former Defaulters), that they are not in default on any 
payment for Commission licenses (including down payments) or delinquent 
on any non-tax debt owed to any Federal agency.

A. License Selection

    31. The Bureau has modified Form 175 for Auction No. 41. In Auction 
No. 41, Form 175 will include a mechanism that allows an applicant to 
filter the licenses by License Area (Nationwide or MTA), Market, and/or 
Channel Number to create customized lists of licenses. The applicant 
will make selections for one or more of the filter criteria and the 
system will produce a list of licenses satisfying the specified 
criteria. The applicant may apply for all the licenses in the 
customized list by using the ``Save all filtered licenses'' option; 
select and save individual licenses separately from the list; or create 
a second customized list without selecting any of the licenses from the 
first list. Applicants also will be able to select licenses from one 
customized list and then create a second customized list to select 
additional licenses.

B. Ownership Disclosure Requirements (FCC Form 175 Exhibit A)

    32. 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 FCC 
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.

C. Consortia And Joint Bidding Arrangements (FCC Form 175 Exhibit B)

    33. 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) and 1.2105(c)(1). 
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 licenses on which they will 
or will not bid. See 47 CFR 1.2105(a)(2)(ix). As discussed, if an 
applicant has had discussions, but has not reached a joint bidding 
agreement by the short-form deadline, it would not include the

[[Page 38695]]

names of parties to the discussions on its applications and may not 
continue discussions with applicants for the same geographic license 
area(s) after the deadline. Where applicants have entered into 
consortia or joint bidding arrangements, applicants must submit an 
``Exhibit B'' to the FCC Form 175.
    34. 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 licenses in the same geographic license area provided 
that (i) the attributable interest holder certifies 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. 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 touch upon impermissible subject 
matters because they may convey pricing information and bidding 
strategies.

D. Eligibility

i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)
    35. In the Narrowband Second Report and Order and Second Further 
Notice of Proposed Rule Making, the Commission adopted bidding credits 
on a ``tiered'' basis to all small businesses in the narrowband PCS 
service.
    36. Bidding credits are available to small and very small 
businesses, or consortia thereof, (as defined in 47 CFR 1.2110(c). A 
bidding credit represents the amount by which a bidder's winning bids 
are discounted. The size of the bidding credit depends on the average 
of the aggregated annual gross revenues for each of the preceding three 
years of the bidder, its affiliates, its controlling interests, and the 
affiliates of its controlling interests:
     A bidder with attributed average annual gross revenues of 
not more than $40 million for the preceding three years receives a 15 
percent discount on its winning bids for narrowband PCS licenses;
     A bidder with attributed average annual gross revenues of 
not more than $15 million for the preceding three years receives a 25 
percent discount on its winning bids for narrowband PCS licenses.
    37. Bidding credits are not cumulative; qualifying applicants 
receive either the 15 percent or the 25 percent bidding credit, but not 
both.
ii. Tribal Land Bidding Credit
    38. To encourage the growth of wireless services in federally 
recognized tribal lands, the Commission has implemented a tribal land 
bidding credit. See Part V.C.
iii. Applicability of Part 1 Attribution Rules
    39. Controlling interest standard. On August 14, 2000, the 
Commission released the Part 1 Fifth Report and Order, in which the 
Commission, inter alia, adopted a ``controlling interest'' standard for 
attributing to auction applicants the gross revenues of their investors 
and affiliates in determining small business eligibility for future 
auctions. The Commission observed that the rule modifications adopted 
in the various part 1 orders would result in discrepancies and/or 
redundancies between certain of the new part 1 rules and existing 
service-specific rules, and the Commission delegated to the Bureau the 
authority to make conforming edits to the Code of Federal Regulations 
(CFR) consistent with the rules adopted in the part 1 proceeding. Part 
1 rules that superseded inconsistent service-specific rules will 
control in Auction No. 41. Accordingly, the ``controlling interest'' 
standard as set forth will be in effect for Auction No. 41, even if 
conforming edits to the CFR are not made prior to the auction.
    40. Control. 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 de facto 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.
    41. Attribution for small and very small business eligibility. In 
determining which entities qualify as small or very small businesses, 
the Commission will consider the gross revenues of the applicant, its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests. The Commission does not impose specific equity 
requirements on controlling interest holders. Once the principals or 
entities with a controlling interest are determined, only the revenues 
of those principals or entities, the affiliates of those principals or 
entities, the applicant and its affiliates, will be counted in 
determining small business eligibility.
    42. A consortium of small or very small businesses is a 
``conglomerate organization formed as a joint venture between or among 
mutually independent business firms,'' each of which individually must 
satisfy the definition of small or very small business in 
Sec. 1.2110(f). Thus, each consortium member must disclose its gross 
revenues along with those of its affiliates, its controlling interests, 
and the affiliates of its controlling interests. 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.
iv. Supporting Documentation
    43. Applicants should note that they will be required to file 
supporting documentation to their FCC Form 175 short-form applications 
to establish that they satisfy the eligibility requirements to qualify 
as small or very small businesses (or consortia of small or very small 
businesses) for this auction.
    44. Applicants should further note that submission of an FCC Form 
175 application constitutes a representation by the certifying official 
that he or she is an authorized representative of the applicant, has 
read the form's instructions and certifications, and that the contents 
of the application and its attachments are true and correct. Submission 
of a false certification to the Commission may result in penalties, 
including monetary forfeitures, license forfeitures, ineligibility to 
participate in future auctions, and/or criminal prosecution.
    45. Small or very small business eligibility (Exhibit C). Entities 
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) its affiliates, (iii) its 
controlling interests, and (iv) the affiliates of its controlling 
interests. Certification that the average

[[Page 38696]]

annual gross revenues for the preceding three years do not exceed the 
applicable limit is not sufficient. A statement of the total gross 
revenues for the preceding three years is also insufficient. The 
applicant must provide separately for itself, its affiliates, its 
controlling interests, and the affiliates of 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 small or very 
small businesses, this information must be provided for each consortium 
member.

E. Provisions Regarding Defaulters and Former Defaulters (FCC Form 175 
Exhibit D)

    46. Each applicant must certify on its FCC Form 175 application 
that it is not in default on any Commission licenses and that it is not 
delinquent on any non-tax debt owed to any Federal agency. In addition, 
each applicant must attach to its FCC Form 175 application a statement 
made under penalty of perjury indicating whether or not the applicant 
has ever been in default on any Commission licenses or has ever been 
delinquent on any non-tax debt owed to any federal agency. Applicants 
must include this statement as Exhibit D of the FCC Form 175. If any of 
an applicant's controlling interests holders or their affiliates, as 
defined by Sec. 1.2110 of the Commission's rules (as recently amended 
in the Part 1 Fifth Report and Order) have ever been in default on any 
Commission license or have ever been delinquent on any non-tax debt 
owed to any Federal agency, the applicant must include such information 
as part of the same attached statement. Prospective bidders are 
reminded that the statement must be made under penalty of perjury and, 
further, 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.
    47. ``Former defaulters''--i.e., applicants, including their 
attributable interest holders, that in the past have defaulted on any 
Commission licenses or been delinquent on any non-tax debt owed to any 
Federal agency, but that have since remedied all such defaults and 
cured all of their outstanding non-tax delinquencies--are eligible to 
bid in Auction No. 41, provided that they are otherwise qualified. 
However, as discussed infra in section III.D.iii, former defaulters are 
required to pay upfront payments that are fifty percent more than the 
normal upfront payment amounts.

F. Installment Payments

    48. Installment payment plans will not be available in Auction No. 
41.

G. Other Information (FCC Form 175 Exhibits E and F)

    49. Applicants owned by minorities or women, as defined in 47 CFR 
1.2110(c)(2), may attach an exhibit (Exhibit E) 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 on Exhibit F (Miscellaneous 
Information) to the FCC Form 175.

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

    50. After the short-form filing deadline (August 24, 2001), 
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 or proposed service areas, 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 Margaret Wiener, 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.

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

    51. 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

    52. On Wednesday, August 15, 2001, the FCC will sponsor a free 
seminar for Auction No. 41 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 Automated Auction System, and the 
narrowband PCS and auction rules. The seminar will also provide an 
opportunity for prospective bidders to ask questions of FCC staff.
    53. To register, complete the registration form, Attachment B of 
the Auction No. 41 Procedures Public Notice and submit it by Monday, 
August 13, 2001. Registrations are accepted on a first-come, first-
served basis.

B. Short-Form Application (FCC Form 175)--Due August 24, 2001

    54. In order to be eligible to bid in this auction, applicants must 
first submit a FCC Form 175 application. This application must be 
submitted electronically and received at the Commission no later than 6 
p.m. ET on August 24, 2001. Late applications will not be accepted.
    55. There is no application fee required when filing a FCC Form 
175. However, to be eligible to bid, an applicant must submit an 
upfront payment. See Part III.D.
i. Electronic Filing
    56. Applicants must file their FCC Form 175 applications 
electronically. Applications may generally be filed at any time 
beginning at noon ET on August 15, 2001, until 6:00 p.m. ET on August 
24, 2001. Applicants are strongly encouraged to file early and 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 August 24, 2001.
    57. Applicants must press the ``SUBMIT Application'' button on the 
``Submission'' page of the electronic form to successfully submit their 
FCC Form 175s. 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 of the Auction No. 41 Procedures Public Notice. Technical 
support is available at (202) 414-1250 (voice) or (202) 414-1255 (text 
telephone (TTY)); the hours of service Monday through Friday, from 7 
A.M. to 10 P.M. ET, Saturday, 8 A.M. to 7 P.M. ET, and Sunday, 12 noon 
to 6 P.M. ET. In order to provide better service to the

[[Page 38697]]

public, all calls to the hotline are recorded.
    58. Applicants can also contact Technical Support via e-mail. To 
obtain the address, click the Support tab on the Form 175 Homepage.
ii. Completion of the FCC Form 175
    59. 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 of the Auction No. 41 Procedures 
Public Notice. Applicants are encouraged to begin preparing the 
required attachments for FCC Form 175 prior to submitting the form. 
Attachments C and D Auction No. 41 Procedures Public Notice provide 
information on the required attachments and appropriate formats.
iii. Electronic Review of FCC Form 175
    60. The FCC Form 175 electronic review system may be used to locate 
and print applicants' FCC Form 175 information. Applicants may also 
view other applicants' completed FCC Form 175s after the filing 
deadline has passed and the FCC has issued a public notice explaining 
the status of the applications. For this reason, it is important that 
applicants do not include their Taxpayer Identification Numbers (TINs) 
on any exhibits to their FCC Form 175 applications. There is no fee for 
accessing this system. See Attachment C of the Auction No. 41 
Procedures Public Notice for details on accessing the review system.

C. Application Processing and Minor Corrections

    61. 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; (ii) those applications rejected; and (iii) those applications 
which have minor defects that may be corrected, and the deadline for 
filing such corrected applications.
    62. As described more fully in the Commission's rules, after the 
August 24, 2001, 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).

D. Upfront Payments--Due September 13, 2001

    63. In order to be eligible to bid in the auction, applicants must 
submit an upfront payment accompanied by a 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 September 13, 2001.
    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. 41 go to a lockbox number 
different from the lockboxes 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 September 
13, 2001, deadline will result in dismissal of the application and 
disqualification from participation in the auction.
i. Making Auction Payments by Wire Transfer
    64. Wire transfer payments must be received by 6:00 p.m. ET on 
September 13, 2001. To avoid untimely payments, applicants should 
discuss arrangements (including bank closing schedules) with their 
banker several days before they plan to make the wire transfer, and 
allow sufficient time for the transfer to be initiated and completed 
before the deadline. Applicants will need the following information:

ABA Routing Number: 043000261
Receiving Bank: Mellon Pittsburgh
BNF: FCC/AC 910-0180
OBI Field: (Skip one space between each information item)
``Auctionpay''
Taxpayer Identification No.: (same as FCC Form 159, block 12)
Payment Type Code (same as FCC Form 15, block 24A: A41U)
FCC Code 1 (same as FCC Form 159, block 28A: ``41'')
Payer Name (same as FCC Form 159, block 2)
Lockbox No. # 358420

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

    65. Applicants must fax a completed FCC Form 159 (Revised 2/00) to 
Mellon Bank at (412) 209-6045 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. 41.'' Bidders should confirm receipt of their upfront 
payment at Mellon Bank by contacting their sending financial 
institution.
i. FCC Form 159
    66. A completed FCC Remittance Advice Form (FCC Form 159, Revised 
2/00) must be faxed to Mellon Bank in order to accompany each upfront 
payment. Proper completion of FCC Form 159 (Revised 2/00) is critical 
to ensuring correct credit of upfront payments. Detailed instructions 
for completion of FCC Form 159 are included in Attachment E of the 
Auction No. 41 Procedures Public Notice. An electronic version of the 
FCC Form 159 is available after filing 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
    67. In the Part 1 Order, Memorandum Opinion and Order, and Notice 
of Proposed Rule Making, 62 FR 13540 (March 21, 1997) the Commission 
delegated to the Bureau the authority and discretion to determine 
appropriate upfront payment(s) for each auction. In addition, in the 
Part 1 Fifth Report and Order, the Commission ordered that ``former 
defaulters,'' i.e., applicants that have ever been in default on any 
Commission license or have ever been delinquent on any non-tax debt 
owed to any Federal agency, be required to pay upfront payments fifty 
percent greater than non-'former defaulters.''
    68. In the Auction No. 41 Comment Public Notice, we proposed 
translating bidders' upfront payments to bidding units to define a 
bidder's maximum eligibility. In order to bid on a license, otherwise 
qualified bidders who applied for that license on Form 175 must have an 
eligibility level that meets or exceeds the number of bidding units 
assigned to that license. At a minimum, therefore, an applicant's total 
upfront payment must be enough to establish eligibility to bid on at 
least one of the licenses applied for on Form 175, or else the 
applicant will not be eligible to participate in the auction. An 
applicant does not have to make an upfront payment to cover all 
licenses for which the applicant has applied on 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.
    69. In the Auction No. 41 Comment Public Notice, the Bureau 
proposed upfront payments on a license-by-

[[Page 38698]]

license basis using the following formula:

$.00002 * kHz * License Area Population with a minimum of $1,000 per 
license.

Moir & Hardman and Space Data addressed whether the Bureau should adopt 
its proposed formula for calculating upfront payments for Narrowband 
PCS. Both contend that the proposed upfront payments are excessively 
high and recommend that they be significantly reduced. No other 
comments or reply comments were received.
    70. Upon careful consideration of the comments received, the Bureau 
has decided to exercise its discretion to adjust the upfront payments. 
The revised figures are approximately one-half of the original 
proposal. The new formula for upfront payments is:

$.00001 * kHz * License Area Population with a minimum of $1,000 per 
license.

    The specific upfront payments and bidding units for each license 
are set forth in Attachment A of the Auction No. 41 Comment Public 
Notice.
    71. 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.

                                Example: Upfront Payments and Bidding Flexibility
----------------------------------------------------------------------------------------------------------------
                                                                                          Bidding      Upfront
            Market No.               Ch. No.           Market name          Population     units       payment
----------------------------------------------------------------------------------------------------------------
MTA009...........................           30  Philadelphia.............    8,927,748       13,000      $13,000
MTA010...........................           30  Washington-Baltimore.....    7,777,875       12,000      12,000
----------------------------------------------------------------------------------------------------------------
If a bidder wishes to bid on both licenses in a round, it must have selected both on its FCC Form 175 and
  purchased at least 25,000 bidding units (13,000 + 12,000). If a bidder only wishes to bid on one, but not
  both, purchasing 13,000 bidding units would meet the requirement for either license. The bidder would be able
  to bid on either license, but not both at the same time. If the bidder purchased only 12,000 bidding units, it
  would have enough eligibility for the Washington-Baltimore license but not for the Philadelphia license.

    72. Former defaulters should calculate their upfront payment for 
all licenses by multiplying the number of bidding units they wish to 
purchase by 1.5. In order to calculate the number of bidding units to 
assign to former defaulters, the Commission will divide the upfront 
payment received by 1.5 and round the result up to the nearest bidding 
unit.

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

iv. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    73. The Commission will use wire transfers for all Auction No. 41 
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 can provide 
the information electronically during the initial short-form filing 
window after the form has been submitted. Wire Transfer Instructions 
can also be manually faxed to the FCC, Financial Operations Center, 
Auctions Accounting Group, ATTN: Tim Dates or Gail Glasser, at (202) 
418-2843 by September 13, 2001. All refunds will be returned to the 
payer of record as identified on the FCC Form 159 unless the payer 
submits written authorization instructing otherwise. 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
Taxpayer Identification Number
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 Part V.E.

E. Auction Registration

    74. 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 have timely submitted upfront 
payments sufficient to make them eligible to bid on at least one of the 
licenses for which they applied.
    75. All qualified bidders are automatically registered for the 
auction. Registration materials will be distributed prior to the 
auction by two separate overnight mailings, one containing the 
confidential bidder identification number (BIN) required to place bids 
and the other containing the SecurID cards. These mailings will be sent 
only to the contact person at the contact address listed in the FCC 
Form 175.
    76. 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 Thursday, September 27, 2001 
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.
    77. Qualified bidders should note that lost bidder identification 
numbers or SecurID cards 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 replacements must call technical support prior to 
arriving at the FCC.

F. Remote Electronic Bidding

    78. This is the first auction that the Commission will conduct over 
the Internet. Telephonic bidding and access via the Bureau's wide area 
network will also be available, as in prior auctions. Qualified bidders 
are permitted to bid telephonically or electronically, i.e., over the 
Internet or the Bureau's wide area network. In either case, each 
authorized bidder must have its own Remote Security Access SecurID 
card,

[[Page 38699]]

which the FCC will provide at no charge. Each applicant with less than 
three authorized bidders will be issued two SecurID cards, while 
applicants with three authorized bidders will be issued three cards. 
For security purposes, the SecurID cards and the instructions for using 
them are only mailed to the contact person at the contact address 
listed on the FCC Form 175. Please note that each SecurID card is 
tailored to a specific auction, therefore, SecurID cards issued for 
other auctions or obtained from a source other than the FCC will not 
work for Auction No. 41. The telephonic bidding phone number will be 
supplied in the first Federal Express mailing of the confidential 
bidder identification number. Your bidding preference--electronic or 
telephonic--is specified on the FCC Form 175.
    79. Please note that the SecurID cards can be recycled, and we 
encourage bidders to return the cards to the FCC. We will provide pre-
addressed envelopes that bidders may use to return the cards once the 
auction is over.

G. Mock Auction

    80. All qualified bidders will be eligible to participate in a mock 
auction on Friday, September 28, 2001. The mock auction will enable 
applicants to become familiar with the electronic system prior to the 
auction. Participation by all bidders is strongly recommended. Details 
will be announced by public notice.

IV. Auction Event

    81. The first round of bidding for Auction No. 41 will begin on 
Wednesday, October 3, 2001. The initial bidding schedule will be 
announced in a 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
    82. In the Auction No. 41 Comment Public Notice, we proposed to 
award all licenses in Auction No. 41 in a single, simultaneous multiple 
round auction. We received no comments on this issue. Therefore, we 
conclude that it is operationally feasible and appropriate to auction 
the narrowband PCS 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 administratively efficient.
ii. Maximum Eligibility and Activity Rules
    83. In the Auction No. 41 Comment Public Notice, 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.
    84. For Auction No. 41 we 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 (see ``Amount of Upfront Payment'' in Part III.D.iii). The 
total upfront payment defines the maximum number of bidding units on 
which the applicant will be permitted to bid and hold high bids. As 
there is no provision for increasing a bidder's maximum eligibility 
during the course of an auction (as described under ``Auction Stages'' 
in Part IV.A.iii), prospective bidders are cautioned to calculate their 
upfront payments carefully. The total upfront payment does not affect 
the total dollars a bidder may bid on any given license.
    85. 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 current eligibility during each round of the 
auction.
    86. 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 ``Bid Increments and Minimum 
Accepted Bids'' in Part 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 Part 
IV.A.iii and ``Stage Transitions'' in Part IV.A.iv), we adopt them for 
Auction No. 41.
iii. Auction Stages
    87. In the Auction No. 41 Comment Public Notice, 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 80 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 90 
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 98 percent of its current bidding eligibility. 
We received no comments on this proposal.
    88. We adopt our proposals for the activity rules. Here are the 
activity levels for each stage of the auction. The FCC reserves the 
discretion to further alter the activity percentages before and/or 
during the auction.
    Stage One: 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 80 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 bidder's current activity 
(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 Two: During the second stage of the auction, a bidder 
desiring to maintain its current eligibility is required to be active 
on 90 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 bidder's current 
activity (the sum of bidding units of the bidder's standing high bids 
and valid bids during the current round) by ten-ninths (\10/9\).
    Stage Three: During the third stage of the auction, a bidder 
desiring to maintain its current eligibility is required to be active 
on 98 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

[[Page 38700]]

is used). In this stage, reduced eligibility for the next round will be 
calculated by multiplying the bidder's current activity (the sum of 
bidding units of the bidder's standing high bids and valid bids during 
the current round) by fifty-fortyninths (\50/49\).

    Caution: Since activity requirements increase in each auction 
stage, bidders must carefully check their current activity during 
the bidding period of the first round following a stage transition. 
This is especially critical for bidders that have standing high bids 
and do not plan to submit new bids. In past auctions, some bidders 
have inadvertently lost bidding eligibility or used an activity rule 
waiver because they did not re-verify their activity status at stage 
transitions. Bidders may check their activity against the required 
minimum activity level by using the bidding system's bidding module.

    89. Because the foregoing procedures have proven successful in 
maintaining proper pace in previous auctions, we adopt them for Auction 
No. 41.
iv. Stage Transitions
    90. In the Auction No. 41 Comment Public Notice, 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. 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 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.
    91. We adopt our proposal. Thus, the auction will start in Stage 
One and it will advance to the next stage (i.e., from Stage One to 
Stage Two, and from Stage Two to Stage Three) when, in each of three 
consecutive rounds of bidding, the high bid has increased on 10 percent 
or less of the licenses being auctioned (as measured in bidding units). 
In addition, 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. 41.
v. Activity Rule Waivers and Reducing Eligibility
    92. In the Auction No. 41 Comment Public Notice, we proposed that 
each bidder in the auction would be provided five activity rule 
waivers. Bidders may use an activity rule waiver in any round during 
the course of the auction. We received no comment on this issue.
    93. 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.
    94. 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.
    95. 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 bidding system. In this 
case, the bidder's eligibility is permanently reduced to bring the 
bidder into compliance with the activity rules as described in 
``Auction Stages'' (see Part IV.A.iii). Once eligibility has been 
reduced, a bidder will not be permitted to regain its lost bidding 
eligibility.
    96. 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 system) during a round in which no bids are submitted, the 
auction will remain open and the bidder's eligibility will be 
preserved. However, an automatic waiver triggered during a round in 
which there are no new valid bids or withdrawals will not keep the 
auction open.
vi. Auction Stopping Rules
    97. For Auction No. 41, the Bureau proposed to employ a 
simultaneous stopping rule. Under this 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.
    98. The Bureau also proposed retaining discretion to implement a 
modified version of the simultaneous stopping rule. The modified 
version will 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 will not keep the 
auction open under this modified stopping rule.
    99. The Bureau further proposed retaining 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).
    100. In addition, we proposed that the Bureau reserve the right to 
declare that the auction will end after a designated 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. 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

[[Page 38701]]

bidders will be required to maintain a higher level of bidding 
activity), increasing the number of bidding rounds per day, and/or 
adjusting the amount of the minimum bid increments for the licenses.
    101. We received no comments on the subject, therefore, we adopt 
all of the proposals concerning the auction stopping rules. Auction No. 
41 will begin under the simultaneous stopping rule and the Bureau will 
retain the discretion to invoke the other versions of the stopping 
rule. We believe that these stopping rules are most appropriate for 
Auction No. 41, because our experience in prior auctions demonstrates 
that the auction stopping rules balance the interests of administrative 
efficiency and maximum bidder participation.
vii. Auction Delay, Suspension, or Cancellation
    102. In the Auction No. 41 Comment Public Notice, 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 conduct of competitive bidding.
    103. Because this approach has proven effective in resolving 
exigent circumstances in previous auctions, we 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
    104. 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 in 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 
also be included in the public notice referenced.
    105. 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
    106. Background. The Balanced Budget Act 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 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.
    107. In the Auction No. 41 Comment Public Notice, the Bureau 
proposed to establish minimum opening bids for Auction No. 41 and to 
retain discretion to lower the minimum opening bids. Specifically, for 
Auction No. 41, the Bureau proposed the following license-by-license 
formula for calculating minimum opening bids:

$.00004 * kHz * License Area Population with a minimum of $1,000 per 
license.

    In the alternative, the Bureau sought comment on whether, 
consistent with the Balanced Budget Act, the public interest would be 
served by having no minimum opening bid or reserve price. Moir & 
Hardman and Space Data addressed whether the Bureau should adopt its 
proposed formula for calculating minimum opening bids for Narrowband 
PCS. Both contend that the proposed minimum opening bids are 
excessively high and recommend that they be significantly reduced. No 
other comments or reply comments were received.
    108. As in the case of the amount of upfront payments, the Bureau 
is persuaded by the comments that a downward revision to minimum 
opening bids is appropriate. Accordingly, the Bureau has lowered the 
amount of minimum opening bids, and they are now approximately one-half 
of the original proposal. The revised minimum opening bid figures were 
determined using the following formula:

$.00002 * kHz * License Area Population with a minimum of $1,000 per 
license.

The specific minimum opening bids for each license are set forth in 
Attachment A of the Auction No. 41 Procedures Public Notice.
    109. The minimum opening bids that we adopt are reducible at the 
discretion of the Bureau. We emphasize, however, that such discretion 
will be exercised, if at all, sparingly and early in the auction, i.e., 
before bidders lose all waivers and begin to lose substantial 
eligibility. During the course of the auction, the Bureau will not 
entertain any requests to reduce the minimum opening bid on specific 
licenses.
iii. Bid Increments and Minimum Accepted Bids
    110. In the Auction No. 41 Comment Public Notice, we proposed to 
use a smoothing methodology to calculate minimum acceptable bids. We 
further proposed to retain the discretion to change the minimum 
acceptable bids and bid increments if circumstances so dictate. We 
received no comment on this issue.
    111. We 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 included as Attachment G.

[[Page 38702]]

    112. We adopt our proposal of initially setting the weighing factor 
at 0.5, the minimum percentage increment at 0.1 (10 percent of the 
license value), and the maximum at 0.2 (20 percent of the license 
value). The Bureau retains the discretion to change the minimum 
acceptable bids and bid increments if it determines that circumstance 
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. The Bureau also retains the discretion to use alternate 
methodologies, such as a flat percentage increment for all licenses, 
for Auction No. 41 if circumstances warrant.
iv. High Bids
    113. At the end of each round, the Automated Auction System 
determines the standing high bid for each license based on the gross 
dollar amounts of the bids received for each license.
    114. In the case of tied high bids, an implementation of the 
Lecuyer pseudo-random generator will be used to determine the standing 
high bid. A random number will be assigned to each bid. The tie bid 
having the highest random number will become the standing high bid. As 
noted in the Auction No. 41 Comment Public Notice, we have adopted this 
method of breaking ties for this auction because, unlike prior 
auctions, bidders in Auction No. 41 will be able to bid via the 
Internet. Breaking ties by reference to the timing of the bids, as in 
prior auctions, is inappropriate in Auction No. 41 because bidders may 
access the Internet at widely varying speeds.
v. Bidding
    115. During a bidding round, a bidder may submit bids for as many 
licenses as it wishes (subject to its eligibility), 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.
    116. Please note that all bidding will take place remotely either 
through the Automated Auction System 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. 41.
    117. 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 allow bidders to submit bids 
on only those licenses for which the bidder applied on its FCC Form 
175.
    118. The FCC Automated Auction System requires each bidder to be 
logged in during the bidding round using the bidder identification 
number provided in the registration materials, and the generated 
SecurID code. Bidders are strongly encouraged to print bid 
confirmations after they submit their bids.
    119. In each round, eligible bidders will be able to place bids on 
a given license in any of nine different amounts. For each license, the 
Automated Auction System interface will list the nine acceptable bid 
amounts in a drop-down box. Bidders may use the drop-down box to select 
from among the nine acceptable bid amounts. The Automated Auction 
System also includes an import function that allows bidders to upload 
text files containing their bid information.
    120. Once there is a standing high bid on a license, the Automated 
Auction System will calculate a minimum acceptable bid for that license 
for the following round. The difference between the minimum acceptable 
bid and the standing high bid for each license will define the bid 
increment. The nine acceptable bid amounts for each license consist of 
the minimum acceptable bid (the standing high bid plus one bid 
increment) and additional amounts calculated using multiple bid 
increments (i.e., the second bid amount equals the standing high bid 
plus two times the bid increment, the third bid amount equals the 
standing high bid plus three times the bid increment, etc.).
    121. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. The additional bid amounts for licenses that have not yet received 
a bid are calculated using the difference between the minimum opening 
bid times one plus the minimum percentage increment, rounded, and the 
minimum opening bid. Therefore, when the minimum percentage increment 
equals 0.1, the first additional bid amount will be approximately ten 
percent higher than the minimum opening bid; the second, twenty 
percent; the third, thirty percent; etc.
    122. In the case of a license for which the standing high bid has 
been withdrawn, the minimum acceptable bid will equal the second 
highest bid received for the license. The additional bid amounts are 
calculated using the difference between the second highest bid times 
one plus the minimum percentage increment, rounded, and the second 
highest bid. See Attachment G of the Auction No. 41 Procedures Public 
Notice for more detail on the calculation of the various bid amounts.
    123. Finally, bidders are cautioned in selecting their bid amounts 
because, as explained in the following section, bidders who withdraw a 
standing high bid from a previous round, even if mistakenly or 
erroneously made, are subject to bid withdrawal payments.
vi. Bid Removal and Bid Withdrawal
    124. In the Auction No. 41 Comment Public Notice, we proposed bid 
removal and bid withdrawal rules. 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 comments on this issue.
    125. 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 bidding system, 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 adopt these procedures for Auction No. 41.
    126. Once a round closes, a bidder may no longer remove a bid. 
However, in later rounds, 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).

[[Page 38703]]

    127. 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 licenses in combination, we conclude that, 
for Auction No. 41, 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.
    128. 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 minimum 
accepted bid in the next round will be the prior round's second highest 
bid price, which may be less than, or equal to, in the case of tie 
bids, the amount of the withdrawn bid. The additional bid amounts are 
calculated using the difference between the second highest bid times 
one plus the minimum percentage increment, rounded, and the second 
highest bid. The Commission will serve as a ``place holder'' on the 
license until a new acceptable bid is submitted on that license.
    129. Calculation. Generally, the Commission imposes payments on 
bidders that withdraw high bids during the course of an auction. If a 
bidder withdraws its bid and there is no higher bid in the same or 
subsequent auction(s), the bidder that withdrew its bid is responsible 
for the difference between its withdrawn bid and the net high bid in 
the same or subsequent auction(s). In the case of multiple bid 
withdrawals on a single license, within the same or subsequent 
auctions(s), the payment for each bid withdrawal will be calculated 
based on the sequence of bid withdrawals and the amounts withdrawn. No 
withdrawal payment will be assessed for a withdrawn bid if either the 
subsequent winning bid or any of the intervening subsequent withdrawn 
bids, in either the same or subsequent auctions(s), equals or exceeds 
that withdrawn bid. Thus, a bidder that withdraws a bid will not be 
responsible for any withdrawal payments if there is a subsequent higher 
bid in the same or subsequent auction(s). This policy allows bidders 
most efficiently to allocate their resources as well as to evaluate 
their bidding strategies and business plans during an auction while, at 
the same time, maintaining the integrity of the auction process. The 
Bureau retains the discretion to scrutinize multiple bid withdrawals on 
a single license for evidence of anti-competitive strategic behavior 
and take appropriate action when deemed necessary.
    130. In the Part 1 Fifth Report and Order, the Commission modified 
Sec. 1.2104(g)(1) of the rules regarding assessments of interim bid 
withdrawal payments. As amended, Sec. 1.2104(g)(1) provides that in 
instances in which bids have been withdrawn on a license that is not 
won in the same auction, the Commission will assess an interim 
withdrawal payment equal to 3 percent of the amount of the withdrawn 
bids. The 3 percent interim payment will be applied toward any final 
bid withdrawal payment that will be assessed after subsequent auction 
of the license. Assessing an interim bid withdrawal payment ensures 
that the Commission receives a minimal withdrawal payment pending 
assessment of any final withdrawal payment. The Part 1 Fifth Report and 
Order provides specific examples showing application of the bid 
withdrawal payment rule.
vii. Round Results
    131. In the Auction No. 41 Comment Public Notice, we proposed 
disclosing all information relating to the bids during Auction No. 41 
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 
received no comments concerning this proposal. Accordingly, the Bureau 
adopts the proposal in the Auction No. 41 Comment Public Notice. 
    132. Bids placed during a round will not be published until the 
conclusion of that bidding period. After a round closes, the Bureau 
will post the results of the round for public access. Reports 
reflecting bidders' identities and bidder identification numbers for 
Auction No. 41 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.
viii. Auction Announcements
    133. The FCC will use auction announcements to announce items such 
as schedule changes and stage transitions. All FCC auction 
announcements will be available by clicking a link on the FCC Automated 
Auction System.
ix. Maintaining the Accuracy of FCC Form 175 Information
    134. As noted in Part II.H., 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 
revision of exhibits. Filers must make these changes on-line, and 
submit a letter summarizing the changes to: Margaret Wiener, Chief, 
Auctions and Industry Analysis Division, Wireless Telecommunications 
Bureau, Federal Communications Commission 445 12th Street, SW., Room 4-
A760, Washington, DC 20554.
    A separate copy of the letter should be mailed to Howard Davenport, 
Auctions and Industry Analysis Division, Wireless Telecommunications 
Bureau, Federal Communications Commission, 445 12th Street, SW., Room 
4-A435, Washington, DC 20554. Questions about other changes should be 
directed to Howard Davenport at (202) 418-0660.

V. Post-Auction Procedures

A. Down Payments and Withdrawn Bid Payments

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

[[Page 38704]]

B. Long-Form Application

    137. Within ten business days after release of the auction closing 
notice, winning bidders must electronically submit a properly completed 
long-form application (FCC Form 601) and required exhibits for each 
license won through Auction No. 41. Winning bidders that are small or 
very small businesses must include an exhibit demonstrating their 
eligibility for small and very small business bidding credits. See 47 
CFR 1.2112(b). Further filing instructions will be provided to auction 
winners at the close of the auction.

C. Tribal Land Bidding Credit

    138. A winning bidder that intends to use its license(s) to deploy 
facilities and provide services to federally-recognized tribal lands 
that are unserved by any telecommunications carrier or that have a 
telephone service penetration rate equal to or below 70 percent is 
eligible to receive a tribal land bidding credit as set forth in 47 CFR 
1.2107 and 1.2110(f). A tribal land bidding credit is in addition to, 
and separate from, any other bidding credit for which a winning bidder 
may qualify.
    139. Unlike other bidding credits that are requested prior to the 
auction, a winning bidder applies for the tribal land bidding credit 
after winning the auction when it files its long-form application (FCC 
Form 601). When filing the long-form application, the winning bidder 
will be required to advise the Commission whether it intends to seek a 
tribal land bidding credit, for each market won in the auction, by 
checking the designated box(es). After stating its intent to seek a 
tribal land bidding credit, the applicant will have 90 days from the 
close of the long-form filing window to amend its application to select 
the specific tribal lands to be served and provide the required tribal 
government certifications. Licensees receiving a tribal land bidding 
credit are subject to performance criteria as set forth in 47 CFR 
1.2110(f).
    140. For additional information on the tribal land bidding credit, 
including how the amount of the credit is calculated, applicants should 
review the Commission's rule making proceeding regarding tribal land 
bidding credits and related public notices. Relevant documents can be 
viewed on the Commission's web site by going to 
http://www.fcc.gov/wtb/auctions and clicking on Information on Tribal 
Land Bidding Credits.

D. Default and Disqualification

    141. 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).

E. Refund of Remaining Upfront Payment Balance

    142. All applicants that submitted upfront payments but were not 
winning bidders for a license in Auction No. 41 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. All refunds will be returned to the payer of 
record, as identified on the FCC Form 159, unless the payer submits 
written authorization instructing otherwise.
    143. 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. If you have completed the refund instructions electronically, 
then only a written request for the refund is necessary. If not, the 
request must also include wire transfer instructions and a Taxpayer 
Identification Number (TIN). Send refund request to: Federal 
Communications Commission, Financial Operations Center, Auctions 
Accounting Group, Michelle Bennett, 445 12th Street, SW., Room 1-C864, 
Washington, DC 20554.
    144. 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 information to the Auctions 
Accounting Group at (202) 418-2843. Once the information 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 Tim 
Dates or Gail Glasser at (202) 418-1995.


Federal Communications Commission.
Margaret Wiener,
Chief, Auctions and Industry Analysis Division, WTB.
[FR Doc. 01-18581 Filed 7-24-01; 8:45 am]
BILLING CODE 6712-01-P