[Federal Register Volume 67, Number 81 (Friday, April 26, 2002)]
[Notices]
[Pages 20773-20789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10239]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-02-44-B (Auction No. 44); DA 02-563]


Auction of Licenses in the 698-746 MHz Band Scheduled for June 
19, 2002; Notice and Filing Requirements, Minimum Opening Bids, Upfront 
Payments and Other Auction Procedures

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 licenses in the 698-746 MHz band 
scheduled for June 19, 2002 (Auction No. 44). This document is intended 
to familiarize prospective bidders with the Commission's rules relating 
to the lower 700 MHz band auction.

DATES: Auction No. 44 is scheduled for June 19, 2002.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 44 
Procedures Public Notice released March 20, 2002. The complete text of 
the Auction No. 44 Procedures Public Notice, including attachments, is 
available for public inspection and copying during regular business 
hours at the FCC Reference Information Center, Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554. The Auction No. 44 
Procedures Public Notice may also be purchased from the Commission's 
duplicating contractor, Qualex International, Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC, 20554, telephone (202) 863-
2893, facsimile (202) 863-2898, or via e-mail [email protected].

I. General Information

A. Introduction

    1. By the Auction No. 44 Procedures Public Notice, the Wireless 
Telecommunications Bureau (``Bureau'') announces the procedures and 
minimum opening bids for the upcoming auction of licenses in the 698-
746 MHz (``Lower 700 MHz'') band scheduled for June 19, 2002 (Auction 
No. 44). On January 24, 2002, in accordance with the Balanced Budget 
Act of 1997, the Bureau released a public notice seeking comment on 
reserve prices or minimum opening bids and the procedures to be used in 
Auction No. 44. The Bureau received eight comments and thirteen reply 
comments in response to the Auction No. 44 Comment Public Notice, 67 FR 
5123 (February 4, 2002).
i. Background of Proceeding
    2. On January 18, 2002, the Commission released a 700 MHz Report & 
Order, 67 FR 5491 (February 6, 2002), which adopted allocation and 
service rules for the Lower 700 MHz Band. Specifically, the Commission 
reallocated the entire 48 megahertz of spectrum in the Lower 700 MHz 
Band to fixed and mobile services and retained the existing broadcast 
allocation for both new broadcast services and incumbent broadcast 
services during their transition to digital

[[Page 20774]]

television (``DTV''). The Commission established technical criteria 
designed to protect incumbent television operations in the band during 
the DTV transition period, allowed low power television (``LPTV'') and 
TV translator stations to retain secondary status and operate in the 
band after the transition, and set forth a mechanism by which pending 
broadcast applications may be amended to provide analog or digital 
service in the core television spectrum or to provide digital service 
on TV Channels 52-58.
    3. In its service rules, the Commission divided the Lower 700 MHz 
Band into three 12-megahertz blocks, with each block consisting of a 
pair of 6-megahertz segments, and two 6-megahertz blocks of contiguous, 
unpaired spectrum. The Commission will license the five blocks in the 
Lower 700 MHz Band plan as follows: the two 6-megahertz blocks of 
contiguous unpaired spectrum, as well as two of the three 12-megahertz 
blocks of paired spectrum, will be assigned over six Economic Area 
Groupings (``EAGs''); the remaining 12 megahertz block of paired 
spectrum will be licensed over 734 Metropolitan Statistical Areas 
(``MSAs'') and Rural Service Areas (``RSAs''). For the Lower 700 MHz 
band, the Commission adopted MSAs and RSAs as defined by it in a 
previous rulemaking proceeding, with the following modifications: (i) 
the service areas of cellular markets that border the U.S. coastline of 
the Gulf of Mexico extend 12 nautical miles from the U.S. Gulf 
coastline; and (ii) the service area of cellular market 306 that 
comprises the water area of the Gulf of Mexico extends from 12 nautical 
miles off the U.S. Gulf coast outward into the Gulf. See 47 CFR 
27.6(c)(2).
    4. All operations in the Lower 700 MHz Band will be generally 
regulated under the framework of part 27's technical, licensing, and 
operating rules. To permit both wireless services and certain new 
broadcast operations in the Lower 700 MHz Band, however, the Commission 
has amended the maximum power limits in part 27 to permit 50 kW 
effective radiated power (``ERP'') transmissions in the Lower 700 MHz 
Band, subject to certain conditions. Finally, the Commission 
established competitive bidding procedures and voluntary band-clearing 
mechanisms for the Lower 700 MHz Band.
    5. With respect to the MSA and RSA licenses, the Bureau notes that 
MSAs and RSAs are collectively known as Cellular Market Areas (CMAs). 
CMAs 1-306 are based on MSAs; CMAs 307-734 are based on RSAs. The CMA 
designation, not MSA/RSA, is used in the FCC Automated Auction System 
and in the Universal Licensing System.
ii. Licenses To Be Auctioned
    6. The licenses available in Auction No. 44 will include 758 
licenses in the Lower 700 MHz band. In the Auction No. 44 Comment 
Public Notice, the Bureau offered two options for grouping the 758 
licenses. The Bureau sought comment on (1) grouping all 758 licenses 
together in Auction No. 44, or (2) including only the 734 MSA/RSA 
licenses in Auction No. 44 and including the 24 Lower 700 MHz EAG 
licenses in Auction No. 31 with the 12 EAG licenses in the 747-762 and 
777-792 MHz bands (``Upper 700 MHz'' bands). The Bureau also sought 
comment on this issue in a public notice addressing procedures for 
Auction No. 31.
    2. Commenters were divided on whether to include the 24 Lower 700 
MHz band EAG licenses in Auction No. 31. Commenters favoring the 
inclusion of the Lower 700 MHz band EAG licenses in Auction No. 31 
tended to focus on separating the Lower 700 MHz band EAG licenses from 
the 734 Lower 700 MHz band MSA/RSA licenses rather than on combining 
the 24 Lower 700 MHz band EAG licenses with the 12 Upper 700 MHz band 
EAG licenses. Commenters opposing inclusion tended to focus on the 
possibility that continuing rule making proceedings in the Lower 700 
MHz band might delay auction of those licenses and any other licenses 
grouped with them, including the Upper 700 MHz band licenses.
    8. After careful review of the comments, the Bureau concludes that 
it will not include the 24 Lower 700 MHz EAG licenses in Auction No. 31 
with the Upper 700 MHz EAG licenses. The Bureau is not persuaded that 
grouping the MSA/RSA licenses in an auction with the Lower 700 MHz EAG 
licenses will create a disadvantage to small businesses and rural 
telephone companies. The Bureau does not agree with those commenters 
that believe that separating the 734 MSAs/RSAs from the 24 EAGs would 
provide greater opportunities for small businesses and rural telephone 
companies. Larger entities that do not qualify for bidding credits 
would continue to be eligible to participate in an auction of the 734 
MSA/RSA licenses. In the Lower 700 MHz Report and Order, the Commission 
adopted MSAs/RSAs as the licensing area for a portion of the Lower 700 
MHz band to promote opportunities for a wide variety of applicants, 
including small and rural wireless providers, to obtain spectrum. 
However, the Commission did not decide to restrict eligibility for 
these licenses to small and rural service providers. Because the 
Commission adopted licensing rules for the Lower 700 MHz band that 
provide for open eligibility, the Bureau declines to consider license 
groupings for the purpose of discouraging participation in the auction 
by any particular class of bidders. The Bureau disagrees with those 
commenters who suggest that grouping the MSA/RSA licenses with the EAG 
licenses in the Lower 700 MHz band may discourage many smaller carriers 
from participating in Auction No. 44. The Commission has sought to 
provide small businesses with an opportunity to successfully compete 
against larger, well-financed bidders by defining three tiers of small-
businesses that are eligible for bidding credits. As the Commission 
noted in the Lower 700 MHz Report & Order, the use of a third small 
entity definition may result in the dissemination of licenses among an 
even wider range of small business entities, consistent with its 
obligations under section 309(j)(3)(B) of the Act.
    9. Therefore, Auction No. 44 will include all 758 licenses in the 
Lower 700 MHz band. Two 12-megahertz blocks consisting of a pair of 6-
megahertz segments and two 6-megahertz blocks of contiguous, unpaired 
spectrum will be offered in each of the six 700 MHz band EAGs. 
Additionally, one 12-megahertz block consisting of a pair of 6-
megahertz segments will be offered in each of 734 MSAs/RSAs. A complete 
list of licenses available in Auction No. 44 and their descriptions is 
included in Attachment A of the Auctions No. 44 Procedures Public 
Notice.
    10. The following table contains the block/frequency cross-
reference for the 698-746 MHz band and also shows the current 
television channelization:

[[Page 20775]]

[GRAPHIC] [TIFF OMITTED] TN26AP02.001

B. Rules and Disclaimers

i. Relevant Authority
    1. Prospective bidders must familiarize themselves thoroughly with 
the Commission's rules relating to the Lower 700 MHz band contained in 
Title 47, Part 27 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. Prospective bidders must 
also be thoroughly familiar with the procedures, terms and conditions 
(collectively, ``Terms'') contained in this Public Notice; the Auction 
No. 44 Comment Public Notice; and the Part 1 Fifth Report & Order, 65 
FR 52401 (August 29, 2000), (as well as prior and subsequent Commission 
proceedings regarding competitive bidding procedures).
    12. Auction participants bidding on licenses in the 698-746 MHz 
spectrum band should also be familiar with the Lower 700 MHz Notice of 
Proposed Rule Making, 66 FR 19106 (April 13, 2001), and the Lower 700 
MHz Report & Order.
    3. 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 its 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 
Auctions Internet site at http://wireless.fcc.gov/auctions. 
Additionally, documents are available for public inspection and copying 
during regular business hours at the FCC Reference Information Center, 
Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554 or 
may be purchased from the Commission's duplicating contractor, Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, 
or via e-mail [email protected]. When ordering documents from Qualex, 
please provide the appropriate FCC number (for example, FCC 01-364 for 
the Lower 700 MHz Report & Order).
ii. Prohibition of Collusion
    14. To ensure the competitiveness of the auction process, the 
Commission's rules prohibit applicants for the same geographic license 
area from communicating with each other during the auction about bids, 
bidding strategies, or settlements. This prohibition begins 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. A violation could similarly 
occur if the authorized bidders are different individuals employed by 
the same organization (e.g., law firm or consulting firm). 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.
    15. 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. In Auction No. 44, for 
example, the rule would apply to any applicants bidding for the same 
MSA/RSA or EAG. Furthermore, the rule would apply to an applicant 
bidding for an EAG and another applicant bidding for an MSA/RSA within 
that EAG. In addition, applicants that apply to bid for ``all markets'' 
would be precluded from communicating with all other applicants until 
after the down payment deadline. However, applicants may enter into 
bidding agreements before filing their FCC Form 175, as long as

[[Page 20776]]

they disclose the existence of the agreement(s) in their Form 175. 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).
    16. 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, Secs. 1.65 and 1.2105 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.
    17. A summary listing of documents from the Commission and the 
Bureau addressing the application of the anti-collusion rules as 
identified in Attachment G of the Auction No. 44 Procedures Public 
Notice, are available for public inspection and copying during normal 
reference room hours at: Consumer & Governmental Affairs Bureau (CGB), 
Reference Operations Division, 445 12th Street, SW., Room CY-C314, 
Washington, D.C. 20554.
iii. Interference Protection of Television Services
    18. Among other licensing and technical rules, new Lower 700 MHz 
licensees must comply with the interference protection requirements set 
forth in Sec. 27.60 of the Commission's rules. Generally, Sec. 27.60 
establishes standards for protection of co- and adjacent-channel analog 
TV and DTV facilities. Thus, for example, a new licensee seeking to 
operate on the 698-740 MHz portion of the Lower 700 MHz band must 
provide co-channel protection to nearby TV and DTV operations on 
Channel 59 and adjacent-channel protection to stations on Channels 58 
and 60. In addition, Appendix D of the Lower 700 MHz Report and Order 
describes additional adjacent-channel interference considerations that 
are designed to mitigate the possibility of base-to-base interference 
that may arise at base receive stations that are in close proximity to 
high power transmitters operating on adjacent channels. Moreover, 
licensees intending to operate a facility at a power level of greater 
than 1 kilowatt must provide advance notice to the Commission and to 
licensees authorized in their area of operation. New Lower 700 MHz 
licensees also will have to comply with any additional technical 
requirements or interference protection requirements that may be 
adopted in the future as a result of pending and future rulemaking 
proceedings.
    19. Potential bidders should recognize that the interference 
protection requirements for the Lower 700 MHz band are more stringent 
in certain respects relative to the interference standards that apply 
to the Upper 700 MHz band. These interference obligations will remain 
in force until the end of the DTV transition period at which time 
analog TV and DTV broadcasters will be required to vacate both the 
Upper and Lower 700 MHz bands.
    20. Potential bidders should be aware that a greater number of 
broadcast incumbents exist in the Lower 700 MHz band relative to the 
Upper 700 MHz band. The Commission has also observed that, although 
there is approximately the same number of analog incumbents in both the 
Upper and Lower 700 MHz bands, the Lower 700 MHz consists of less 
spectrum and, therefore, incumbent licensees are more densely situated 
across the band. Further, there is a significantly greater number of 
DTV assignments on the eight television channels in the Lower 700 MHz 
band, including licenses, construction permits, pending applications, 
and pending allotment petitions, than exist in the Upper 700 MHz band. 
The Commission may also permit certain Channel 60-69 broadcasters to 
relocate temporarily into Channels 52-58 pursuant to a voluntary 
clearing arrangement.
a. Negotiations With Incumbent Broadcast Licensees
    21. The Commission has established a policy of facilitating 
voluntary clearing of the 700 MHz bands to allow for the introduction 
of new wireless services and to promote the transition of incumbent 
analog television licensees to DTV service. Generally speaking, this 
policy provides that the Commission will consider specific regulatory 
requests needed to implement voluntary agreements between incumbent 
broadcasters and new licensees to clear the Lower 700 MHz Band early, 
if consistent with the public interest. The fundamentals of the 
Commission's voluntary clearing policy for the 700 MHz bands were 
established in a series of decisions beginning with the adoption of the 
Upper 700 MHz First Report and Order in January 2000, 65 FR 3139 
(January 20, 2000). However, in light of certain differences between 
the Upper and Lower 700 MHz Bands, the Commission decided not to extend 
certain aspects of its voluntary clearing policy to the Lower 700 MHz 
band, including the presumptions that were established in the Upper 700 
MHz Band for analyzing voluntary band-clearing proposals and the 
extended DTV construction period that was provided to certain single-
channel broadcasters in connection with the arrangements for early 
clearing of the Upper 700 MHz band. In considering such regulatory 
requests, the Commission will consider whether grant of the request 
would result in public interest benefits, such as making new or 
expanded public safety or other wireless services available to 
consumers or deploying wireless service to rural or other underserved 
communities. The Commission intends to weigh these benefits against any 
likely public interest costs, such as the loss of any of the four 
stations in the designated market area with the largest audience share, 
the loss of the sole service licensed to the local community, the loss 
of a community's sole service on a channel reserved for noncommercial 
educational broadcast service, or a negative effect on the pace of the 
DTV transition in the market.
b. Canadian and Mexican Border Regions (Auction # 44)
    22. The United States has bilateral agreements with both Canada and 
Mexico setting forth allotment and assignment plans for TV broadcast 
stations covering the 698-746 MHz band (Channels 52-59). While the U.S. 
has identified this band for reallocation to new services, neither 
Canada nor Mexico has done so to date. Pursuant to these agreements, 
the U.S. must protect the signals of Canadian and Mexican TV broadcast 
stations located in the border areas, and such operations will 
therefore affect U.S. non-broadcast use and services in this band. 
Accordingly, licenses issued for this band will be subject to whatever 
future agreements the U. S. develops with these two countries. 
Furthermore, until such time as existing agreements are replaced or 
modified to reflect the new uses, licensees in the band will be subject 
to existing agreements and the condition that harmful interference not 
be caused

[[Page 20777]]

to, and must be accepted from, television broadcast operations in those 
countries.
iv. Due Diligence
    23. Potential bidders are reminded that there are a number of 
incumbent broadcast television licensees already licensed and operating 
in the 698-746 MHz band (television Channels 52-59) that will be 
subject to the upcoming auction. As discussed, the Commission made 
clear that geographic area licensees operating on the spectrum 
associated with Channels 52, 53, 54, 55, 56, 57, 58 and 59 must comply 
with the co-channel and the adjacent channel provision of Sec. 27.60 of 
the Commission's rules. These limitations may restrict the ability of 
such geographic licensees to use certain portions of the 
electromagnetic spectrum or provide service to certain regions in their 
geographic license areas.
    24. 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. 44.
    25. To aid potential bidders, the Bureau will issue Due Diligence 
Announcement listing incumbent licensees operating in these bands. The 
Commission makes no representations or guarantees that the matters 
listed in this Due Diligence Announcement are the only pending matters 
that could affect spectrum availability in these services.
    26. 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 this proceeding may be subject to judicial appeal 
and may be the subject of additional reconsideration or appeal. The 
Bureau notes that resolution of these matters could have an impact on 
the availability of spectrum in Auction No. 44. 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. To aid potential bidders, the Bureau will issue shortly a 
Due Diligence Announcement listing matters pending before the 
Commission that relate to licenses or applications in these services. 
The Commission makes no representations or guarantees that the listed 
matters are the only pending matters that could affect spectrum 
availability in these services.
    27. In addition, potential bidders may research the licensing 
database for the Media Bureau on the Internet in order to determine 
which frequencies are already licensed to incumbent licensees. 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.
    28. Potential bidders are strongly encouraged to physically inspect 
any sites located in, or near, the EAG, MSA, or RSA for which they plan 
to bid.
    29. Licensing records for the Mass Media Bureau are contained in 
the Mass Media Bureau's Consolidated Data Base System (CDBS) and may be 
researched on the Internet at http://www.fcc.gov/mb. Potential bidders 
may query the database online and download a copy of their search 
results if desired. Detailed instructions on using Search for Station 
Information, Search for Ownership Report Information and Search for 
Application Information and downloading query results are available 
online by selecting the CDBS Public Access (main) button at the bottom 
of the Electronic Filing and Public Access list section. The database 
searches return either station or application data. The application 
search provides an application link that displays the complete 
electronically filed application in application format. An AL/TC search 
under the application search link permits searching for Assignment of 
License/Transfer of Control groups using the AL/TC group lead 
application. For further details, click on the Help file.
    30. Potential bidders should direct questions regarding the search 
capabilities of CDBS to the Mass Media Bureau help line at (202) 418-
2662, or via e-mail at [email protected].
v. Bidder Alerts
    31. 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.
    32. The FCC makes no representations or warranties about the use of 
this spectrum for particular services. Applicants should be aware that 
an FCC auction represents an opportunity to become an FCC licensee in 
this service, subject to certain conditions and regulations. An FCC 
auction does not constitute an endorsement by the FCC of any particular 
services, technologies or products, nor does an FCC license constitute 
a guarantee of business success. Applicants and interested parties 
should perform their own due diligence before proceeding, as they would 
with any new business venture.
    33. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 44 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.
    34. 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

[[Page 20778]]

No. 44 may also call the FCC Consumer Center at (888) CALL-FCC ((888) 
225-5322).
vi. National Environmental Policy Act (``NEPA'') Requirements
    35. 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. See 47 
CFR 1.1305 through 1.1319. 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 environmental assessments for 
facilities that include high intensity white lights in residential 
neighborhoods or excessive radio frequency emission.

C. Auction Specifics

i. Auction Date
    36. The auction will begin on Wednesday, June 19, 2002. The initial 
schedule for bidding will be announced by public notice at least one 
week before the start of the auction. Unless otherwise announced, 
bidding on all licenses will be conducted on each business day until 
bidding has stopped on all licenses.
ii. Auction Title
    37. Auction No. 44--Lower 700 MHz Band
iii. Bidding Methodology
    38. The bidding methodology for Auction No. 44 will be simultaneous 
multiple round bidding. The Commission will conduct this auction over 
the Internet. Telephonic bidding will also be available. As a 
contingency, the FCC Wide Area Network, which requires access to a 900 
number telephone service, will be available as well. Qualified bidders 
are permitted to bid telephonically or electronically.
iv. Pre-Auction Dates and Deadlines
Auction Seminar--May 1, 2002
Short-Form Application (FCC FORM 175)--May 8, 2002; 6 p.m. ET
Upfront Payments (via wire transfer)--May 28, 2002; 6 p.m. ET
Mock Auction--June 14, 2002
Auction Begins--June 19, 2002
v. Requirements for Participation
    39. Those wishing to participate in the auction must:
     Submit a short-form application (FCC Form 175) 
electronically by 6 p.m. ET, May 8, 2002.
     Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by 6 p.m. ET, May 28, 2002.
     Comply with all provisions outlined in this public notice.
vi. General Contact Information
    40. The following is a list of general contract information 
relating to Auction No. 44.
General Auction 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 p.m. 
ET, Saturday, 8 a.m. to 7 p.m., Sunday, 12 noon to 6 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--Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, (202) 863-2893, (202) 863-2898 (Fax) 
[email protected] (E-mail)
Press Information: Maribeth 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://wireless.fcc.gov/auctions
    http://wireless.fcc.gov/uls

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

    41. Guidelines for completion of the short-form (FCC Form 175) are 
set forth in Attachment D of the Auction No. 44 Procedures Public 
Notice. The short-form application seeks the applicant's name and 
address, legal classification, status, small, very small business or 
entrepreneur 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

    42. In Auction No. 44, Form 175 will include a mechanism that 
allows an applicant to filter the licenses by License Area (either 
``EAG'' or ``CMA''), Market Number, and/or Block 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)

    43. 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.

[[Page 20779]]

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

    44. 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. 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. 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 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.
    45. 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)
    46. Bidding credits will be available to small and very small 
businesses and entrepreneurs, or consortia, thereof, as defined in 47 
CFR 27.702 for the Lower 700 MHz band. 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 (``small 
business'') receives a 15 percent discount on its winning bids for the 
Lower 700 MHz licenses;
     A bidder with attributed average annual gross revenues of 
not more than $15 million for the preceding three years (``very small 
business'') receives a 25 percent discount on its winning bids for the 
Lower 700 MHz licenses;
     A bidder with attributed average annual gross revenues of 
not more than $3 million for the preceding three years 
(``entrepreneur'') receives a 35 percent discount on its winning bids 
for the 734 MSA/RSA licenses in the Lower 700 MHz band. This definition 
applies only with respect to licenses in Block C (710-716 MHz and 740-
746 MHz) as specified in 47 CFR 27.5(c)(1).
    47. A bidder that qualifies as an entrepreneur may bid on EAG 
licenses, but will receive a 25 percent bidding credit on any EAG 
license that it wins. Bidding credits are not cumulative; a qualifying 
applicant receives either the 15 percent, 25 percent, or 35 percent 
bidding credit on its winning bid, but only one of them per license.
ii. Tribal Land Bidding Credit
    48. 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. of the Auction No. 44 Procedures Public 
Notice. 
iii. Applicability of Part 1 Attribution Rules
    49. 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. 44. Accordingly, the ``controlling interest'' 
standard as set forth in the part 1 rules will be in effect for Auction 
No. 44, even if conforming edits to the CFR are not made prior to the 
auction. 
    50. 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.
    51. Attribution for small, very small business and entrepreneur 
eligibility. In determining which entities qualify as small, very small 
businesses or entrepreneur, 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.
    52. A consortium of small, very small businesses or entrepreneurs 
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, very small business and 
entrepreneur in Secs. 1.2110(f), 27.702. 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. The Bureau notes that although the gross revenues of the 
consortium members will not be aggregated for purposes of determining 
eligibility for small, very small business or entrepreneur credits, 
this information must be provided to ensure that each individual 
consortium member qualifies for any bidding credit awarded to the 
consortium.

[[Page 20780]]

iv. Supporting Documentation
    53. 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, very small businesses or entrepreneurs (or consortia of 
small, very small businesses or entrepreneurs) for this auction.
    54. 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.
    55. Small business, very small business, or entrepreneur 
eligibility (Exhibit C). Entities applying to bid as small or very 
small businesses or entrepreneurs (or consortia of small or very small 
businesses or entrepreneurs) 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: (1) the applicant, (2) its affiliates, (3) its 
controlling interests, and (4) the affiliates of its controlling 
interests. Certification that the average 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, very small businesses or 
entrepreneur, this information must be provided for each consortium 
member.

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

    56. 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, 
its affiliates, its controlling interests, or the affiliates of its 
controlling interest have ever been in default on any Commission 
licenses or have ever been delinquent on any non-tax debt owed to any 
Federal agency. The applicant must provide such information for itself, 
for each of its controlling interests and affiliates, and for each 
affiliate of its controlling interests, as defined by Sec. 1.2110 of 
the Commission's rules (as amended in the Part 1 Fifth Report and 
Order). Applicants must include this statement as Exhibit D of the FCC 
Form 175. 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.
    57. ``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. 44, provided that they are otherwise qualified. 
However, as discussed infra in section III.D.3, former defaulters are 
required to pay upfront payments that are fifty percent more than the 
normal upfront payment amounts.

F. Installment Payments

    58. Installment payment plans will not be available in Auction No. 
44.

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

    59. 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)

    60. After the short-form filing deadline (May 8, 2002), 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 modifications to their FCC Form 175 electronically 
and submit a letter, briefly summarizing the changes, by electronic 
mail to the attention of Margaret Wiener, Chief, Auctions and Industry 
Analysis Division, at the following address: [email protected]. The 
electronic mail summarizing the changes must include a subject or 
caption referring to Auction No. 44. The Bureau requests that parties 
format any attachments to electronic mail as Adobe 
Acrobat (pdf) or Microsoft Word documents.
    61. A separate copy of the letter should be faxed to the attention 
of Kathryn Garland at (717) 338-2850. 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)

    62. 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

    63. On Wednesday, May 1, 2002, the FCC will sponsor a free seminar 
for Auction No. 44 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, the FCC Automated Auction System, and the lower 700 MHz and 
auction rules. The seminar will also provide an opportunity for 
prospective bidders to ask questions of FCC staff.
    64. To register, complete Attachment B of the Auction No. 44 
Procedures Public Notice and submit it by Monday,

[[Page 20781]]

April 29, 2002. Registrations are accepted on a first-come, first-
served basis.

B. Short-Form Application (FCC Form 175)--Due May 8, 2002

    65. In order to be eligible to bid in this auction, applicants must 
first submit an FCC Form 175 application. This application must be 
submitted electronically and received at the Commission no later than 
6:00 p.m. ET on May 8, 2002. Late applications will not be accepted.
    66. There is no application fee required when filing an FCC Form 
175. However, to be eligible to bid, an applicant must submit an 
upfront payment. See Part III.D.
i. Electronic Filing
    67. Applicants must file their FCC Form 175 applications 
electronically. Applications may generally be filed at any time 
beginning at noon ET on May 1, 2002, until 6 p.m. ET on May 8, 2002. 
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 May 8, 2002.
    68. 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. 44 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 7:00 
AM to 10:00 PM ET, Saturday, 8:00 AM to 7:00 PM ET, and Sunday, 12:00 
noon to 6:00 PM ET. In order to provide better service to the public, 
all calls to the hotline are recorded.
    69. 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
    70. 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. 44 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 of the Auction No. 44 Procedures Public Notice 
provide information on the required attachments and appropriate 
formats.
iii. Electronic Review of FCC Form 175
    71. 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.

    Note: Applicants should not include sensitive information (i.e., 
TIN/EIN) on any exhibits to their FCC Form 175 applications. There 
is no fee for accessing this system. See Attachment C of the 
Auctions No. 44 Procedures Public Notice for details on accessing 
the review system.

C. Application Processing and Minor Corrections

    72. 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.
    73. As described more fully in the Commission's rules, after the 
May 8, 2002, 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 May 28, 2002

    74. In order to be eligible to bid in the auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice Form 
(FCC Form 159). After completing the FCC Form 175, filers will have 
access to an electronic version of the FCC Form 159 that can be printed 
and faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must 
be received at Mellon Bank by 6:00 p.m. ET on May 28, 2002.
    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. 44 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 May 28, 
2002, deadline will result in dismissal of the application and 
disqualification from participation in the auction.
i. Making Auction Payments by Wire Transfer
    75. Wire transfer payments must be received by 6:00 p.m. ET on May 
28, 2002. 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
    Beneficiary: FCC/Account # 910-1182
    OBI Field: (Skip one space between each information item) 
``AUCTIONPAY''
    FCC Registration Number (FRN): (same as FCC Form 159, block 11 and/
or 21)
    Payment Type Code: (same as FCC Form 159, block 24A: A44U)
    FCC CODE 1: (same as FCC Form 159, block 28A: ``44'')
    Payer Name (same as FCC Form 159, block 2)
    Lockbox No. # 358415

    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.

    76. 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. 44.'' Bidders should confirm receipt of their upfront 
payment at Mellon Bank by contacting their sending financial 
institution.
ii. FCC Form 159
    77. 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. 44 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.

[[Page 20782]]

iii. Amount of Upfront Payment
    78. 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.'' For purposes of this 
calculation, the ``applicant'' includes the applicant itself, its 
affiliates, its controlling interests, and affiliates of its 
controlling interests, as defined by Sec. 1.2110 of the Commission's 
rules (as amended in the Part 1 Fifth Report and Order).
    79. In the Auction No. 44 Comment Public Notice, the Bureau 
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.
    80. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed upfront payments on a license-by-license basis using the 
following formula:

$0.0125 * MHz * License Area Population with a minimum of $1,000 per 
license.

    81. The Bureau did not receive any comments on the general levels 
of the upfront payments. The Bureau notes that there are numerous 
factors affecting the relative costs of build-out, and elects to adopt 
the proposed formula for determining upfront payments.
    82. The specific upfront payments and bidding units for each 
license are set forth in Attachment A of the Auction No 44 Procedures 
Public Notice.
    83. In calculating its upfront payment amount, an applicant should 
determine the maximum number of bidding units on which it may wish to 
be active (bidding units associated with licenses on which the bidder 
has the standing high bid from the previous round and licenses on which 
the bidder places a bid in the current round) 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: Lower 700 MHz Band Upfront Payments and Bidding Flexibility
----------------------------------------------------------------------------------------------------------------
                                                                                          Bidding      Upfront
           Market No.                  Block            Market name         Population     units       payment
----------------------------------------------------------------------------------------------------------------
CMA153..........................  C               Columbus, GA-AL........      243,072       36,000      $36,000
CMA311..........................  C               Alabama 5--Cleburne....      206,735       31,000     $31,000
----------------------------------------------------------------------------------------------------------------
 Note.--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 67,000 bidding units (36,000 + 31,000). If a bidder only wishes to bid on one, but not
  both, purchasing 36,000 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 31,000 bidding units, it
  would have enough eligibility for the Alabama 5--Cleburne license but not for the Columbus, GA-AL license.

    84. 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
    85. The Commission will use wire transfers for all Auction No. 44 
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 May 28, 2002. 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
FCC Registration Number (FRN)
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

    86. 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.
    87. 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

[[Page 20783]]

contact address listed in the FCC Form 175.
    88. Applicants that do not receive both registration mailings will 
not be able to submit bids. Therefore, any qualified applicant that has 
not received both mailings by noon on Wednesday, June 12, 2002, 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.
    89. 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 replacements. Qualified bidders 
requiring replacements must call technical support prior to arriving at 
the FCC.

F. Electronic Bidding

    90. The Commission will conduct this auction over the Internet. 
Telephonic bidding will also be available. As a contingency, the FCC 
Wide Area Network, which requires access to a 900 number telephone 
service, will be available as well. Qualified bidders are permitted to 
bid telephonically or electronically, i.e., over the Internet or the 
FCC's Wide Area Network at $2.30 per minute. In either case, each 
authorized bidder must have its own Remote Security Access SecurID 
card, which the FCC will provide at no charge. Each applicant with one 
authorized bidder will be issued two SecurID cards, while applicants 
with two or three authorized bidders will be issued three cards. For 
security purposes, the SecurID cards and the FCC Automated Auction 
System User Manual 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. 44. The telephonic bidding phone number will be 
supplied in the first overnight mailing, which also includes the 
confidential bidder identification number. Each applicant should 
indicate its bidding preference--electronic or telephonic--on the FCC 
Form 175.
    91. Please note that the SecurID cards can be recycled, and the 
Bureau encourages bidders to return the cards to the FCC. The Bureau 
will provide pre-addressed envelopes that bidders may use to return the 
cards once the auction is over.

G. Mock Auction

    92. All qualified bidders will be eligible to participate in a mock 
auction on Friday, June 14, 2002. The mock auction will enable 
applicants to become familiar with the FCC Automated Auction System 
prior to the auction. Participation by all bidders is strongly 
recommended. Details will be announced by public notice.

IV. Auction Event

    93. The first round of bidding for Auction No. 44 will begin on 
Wednesday, June 19, 2002. 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
    94. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed to award all licenses in Auction No. 44 in a single, 
simultaneous multiple round auction. Taking all the commenters 
submissions into account, the Bureau concludes that it is operationally 
feasible and appropriate to auction the licenses in the Lower 700 MHz 
band through a single, simultaneous multiple round auction. Unless 
otherwise announced, bids will be accepted on all licenses in each 
round of the auction. This approach, the Bureau believes, allows 
bidders to take advantage of any synergies that exist among licenses 
and is administratively efficient.
ii. Maximum Eligibility and Activity Rules
    95. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed that the amount of the upfront payment submitted by a bidder 
would determine the initial maximum eligibility (as measured in bidding 
units) for each bidder. The Bureau received no comments on this issue.
    96. For Auction No. 44 the Bureau adopts 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 
each license is assigned a specific number of bidding units equal to 
the upfront payment listed in Attachment A on a bidding unit per dollar 
basis. The total upfront payment defines the maximum number of bidding 
units on which the applicant will be permitted to bid and hold high 
bids during any given round. As there is no provision for increasing a 
bidder's maximum eligibility during the course of an auction, 
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.
    97. 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.
    98. 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), the Bureau adopts 
them for Auction No. 44.
iii. Auction Stages
    99. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed to conduct the auction in three stages and employ an activity 
rule. The Bureau 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, the Bureau 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. The Bureau received no comments on 
this proposal.
    100. The Bureau adopts its proposals for the activity rules. Listed 
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.

[[Page 20784]]

    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 is used). In this final 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.
    101. Because the foregoing procedures have proven successful in 
maintaining proper pace in previous auctions, the Bureau adopts them 
for Auction No. 44.
iv. Stage Transitions
    102. In the Auction No. 44 Comment Public Notice, the Bureau 
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 20 percent for three 
consecutive rounds of bidding in each Stage. The Bureau further 
proposed that it would retain the discretion to change stages 
unilaterally by announcement during the auction. This determination, 
the Bureau proposed, would be based on a variety of measures of bidder 
activity, including, but not limited to, the auction activity level, 
the percentages of licenses (as measured in bidding units) on which 
there are new bids, the number of new bids, and the percentage increase 
in revenue. The Bureau received no comments on this subject.
    103. The Bureau adopts its 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 20 
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. The Bureau believes 
that these stage transition rules, having proven successful in prior 
auctions, are appropriate for use in Auction No. 44.
v. Activity Rule Waivers and Reducing Eligibility
    104. In the Auction No. 44 Comment Public Notice, the Bureau 
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. The Bureau received no comments 
on this issue.
    105. Based upon its experience in previous auctions, the Bureau 
adopts its 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. The Bureau is 
satisfied that its 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.
    106. The 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: (1) there are no activity rule waivers 
available; or (2) the bidder overrides the automatic application of a 
waiver by reducing eligibility, thereby meeting the minimum 
requirements. If a bidder has no waivers remaining and does not satisfy 
the required activity level, the current eligibility will be 
permanently reduced, possibly eliminating them from the auction.
    107. 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 discussion). Once eligibility has 
been reduced, a bidder will not be permitted to regain its lost bidding 
eligibility.
    108. 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. Note: Once a proactive waiver is placed during a round, 
that waiver cannot be unsubmitted.
vi. Auction Stopping Rules
    109. For Auction No. 44, 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

[[Page 20785]]

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.
    110. 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.
    111. 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).
    112. In addition, the Bureau proposed that it reserves 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. The Bureau 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 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.
    113. A Commenter recommends that the Bureau retain its current 
stopping rule. Another commenter suggests that the Bureau not utilize 
its 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, claiming that any additional rounds impose 
monitoring costs on small businesses. The Bureau emphasizes that it 
will only utilize an alternative stopping rule when unusual 
circumstances suggest that the public interest is better served by 
deviating from the standard simultaneous stopping rule. Therefore, the 
Bureau adopts the proposals concerning the auction stopping rules. 
Auction No. 44 will begin under the simultaneous stopping rule, and the 
Bureau will retain the discretion to invoke the other versions of the 
stopping rule. The Bureau believes that these stopping rules are most 
appropriate for Auction No. 44, because its 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
    114. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed that, by public notice or by announcement during the auction, 
it 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.
    115. Because this approach has proven effective in resolving 
exigent circumstances in previous auctions, the Bureau adopts its 
proposed auction cancellation rules. By public notice or by 
announcement during the auction, the Bureau may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
obstacle, evidence of an auction security breach, unlawful bidding 
activity, administrative or weather necessity, or for any other reason 
that affects the fair and competitive conduct of competitive bidding. 
In such cases, the Bureau, in its sole discretion, may elect to resume 
the auction starting from the beginning of the current round, resume 
the auction starting from some previous round, or cancel the auction in 
its entirety. Network interruption may cause the Bureau to delay or 
suspend the auction. The Bureau emphasizes that exercise of this 
authority is solely within the discretion of the Bureau, and its use is 
not intended to be a substitute for situations in which bidders may 
wish to apply their activity rule waivers.

B. Bidding Procedures

i. Round Structure
    116. 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. 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 in this paragraph.
    117. 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 Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors.
ii. Reserve Price or Minimum Opening Bid
    118. Background. The Communications Act, as amended, 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 should 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.
    119. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed to establish minimum opening bids for Auction No. 44. 
Specifically, for Auction No. 44, the Bureau proposed the following 
license-by-license formula for calculating minimum opening bids:

$0.0250 * MHz * License Area Population with a minimum of $1,000 per 
license.

    120. In the alternative, the Bureau sought comment on whether, 
consistent with the Balanced Budget Act, the public interest would be 
served by

[[Page 20786]]

having no minimum opening bid or reserve price.
    121. Following consideration of comments received, the Bureau 
adopts its proposed minimum opening bids for Auction No. 44. The Bureau 
believes the minimum opening bids are well below the levels of the 
likely winning bids, and are not so high as to discourage competition. 
The commenters have provided no evidence to support their contention 
that the Bureau's proposed minimum opening bids are too high. Moreover, 
the Commission has sought to provide small businesses with an 
opportunity to successfully compete against larger, well-financed 
bidders for the Lower 700 MHz band, defining three tiers of small 
businesses for MSA/RSA licenses, and two tiers of small businesses for 
EAG licenses, that are eligible for bidding credits. Because the Bureau 
is not persuaded that the proposed minimum opening bids are 
unreasonable, the Bureau adopts its proposal.
    122. The specific minimum opening bids for each license are set 
forth in Attachment A of the Auction No. 44 Procedures Public Notice.
    123. The minimum opening bids the Bureau adopts are reducible at 
the discretion of the Bureau. The Bureau emphasizes, however, that such 
discretion will be exercised, if at all, sparingly and early in the 
auction, i.e., before bidders lose all waivers and begin to lose 
substantial eligibility. During the course of the auction, the Bureau 
will not entertain requests to reduce the minimum opening bid on 
specific licenses.
iii. Minimum Accepted Bids and Bid Increments
    124. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed to use a smoothing methodology to calculate minimum acceptable 
bids. The Bureau further proposed to retain the discretion to change 
the minimum acceptable bids and bid increments if circumstances so 
dictate.
    125. Several commenters requested that the Bureau use a simple 
percentage increment to calculate minimum acceptable bids, rather than 
the smoothing formula. While the Bureau recognizes that the smoothing 
methodology is computationally more complex, it is the Bureau that 
performs the calculations and provides the appropriate bid increment 
amounts to bidders. Furthermore, regardless of whether the smoothing 
formula or a simple percentage increment is used, minimum acceptable 
bid amounts depend upon the bids actually placed in the previous round, 
and therefore cannot be predicted in advance.
    126. The Bureau adopts its 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 in Attachment F of the Auction 
No. 44 Procedures Public Notice.
    127. The Bureau adopts its proposal of initially setting the 
weighing factor at 0.5, the minimum percentage increment at 0.1 (10 
percent), and the maximum at 0.2 (20 percent). 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. 44 if 
circumstances warrant.
iv. High Bids
    128. At the end of each bidding 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.
    129. In the case of tied high bids, a random number 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.
v. Bidding
    130. 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. Bidders should note that the bidding units associated with 
licenses for which the bidder has removed or withdrawn its bid do not 
count towards the bidder's activity at the close of the round.
    131. 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, five to ten minutes are necessary to 
complete a bid submission.) There will be no on-site bidding during 
Auction No. 44.
    132. A bidder's ability to bid on specific licenses in the first 
round of the auction is determined by two factors: (ii) 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.
    133. The 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.
    134. 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.
    135. 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.).
    136. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its

[[Page 20787]]

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.
    137. 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.
    138. See Attachment F of the Auction No. 44 Procedures Public 
Notice for more detail on the calculation of the various bid amounts.
    139. 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
    140. In the Auction No. 44 Comment Public Notice, the Bureau 
proposed bid removal and bid withdrawal rules. With respect to bid 
withdrawals, the Bureau 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, the Bureau proposed, would be 
at the bidder's discretion. The Bureau received no comments on this 
issue.
    141. 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 
the Bureau received no comments, will enhance bidder flexibility during 
the auction. Therefore, the Bureau adopts these procedures for Auction 
No. 44.
    142. 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). Note: Once a withdrawal is placed during a round, that 
withdrawal cannot be unsubmitted.
    143. In previous auctions, the Bureau has detected bidder conduct 
that, arguably, may have constituted strategic bidding through the use 
of bid withdrawals. While the Bureau continues to recognize the 
important role that bid withdrawals play in an auction, i.e., reducing 
risk associated with efforts to secure various licenses in combination, 
the Bureau concludes that, for Auction No. 44, adoption of a limit on 
their use to two rounds is the most appropriate outcome. By doing so 
the Bureau believes it strikes a reasonable compromise that will allow 
bidders to use withdrawals. The Bureau's decision on this issue is 
based upon its 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 its view regarding the likelihood of any speculation or 
``gaming'' in this auction.
    144. 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.
    145. Calculation. Generally, the Commission imposes payments on 
bidders that withdraw high bids during the course of an auction. See 47 
CFR 1.2104(g) and 1.2109. 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.
    146. 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
    147. Bids placed during a round will not be published until the 
conclusion of that bidding period. After a round closes, the Bureau 
will compile reports of all bids placed, bids withdrawn, current high 
bids, new minimum accepted bids, and bidder eligibility

[[Page 20788]]

status (bidding eligibility and activity rule waivers), and post the 
reports for public access. Reports reflecting bidders' identities and 
bidder identification numbers for Auction No. 44 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
    148. 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 Automated 
Auction System.
ix. Maintaining the Accuracy of FCC Form 175 Information
    149. 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. Applicants should make these modifications to 
their FCC Form 175 electronically and submit a letter, briefly 
summarizing the changes, by electronic mail to the attention of 
Margaret Wiener, Chief, Auctions and Industry Analysis Division at the 
following address: [email protected]. The electronic mail summarizing 
the changes must include a subject or caption referring to Auction No. 
44. The Bureau requests that parties format any attachments to 
electronic mail as Adobe Acrobat (pdf) or 
Microsoft Word documents.
    150. A separate copy of the letter should be faxed to the attention 
of Kathryn Garland at (717) 338-2850. Questions about other changes 
should be directed to Howard Davenport of the Auctions and Industry 
Analysis Division at (202) 418-0660.

V. Post-auction Procedures

A. Down Payments and Withdrawn Bid Payments

    151. 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.
    152. 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, very small business or entrepreneur 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.)

B. Auction Discount Voucher

    153. On June 8, 2000, the Commission awarded Qualcomm, Inc. a 
transferable Auction Discount Voucher (``ADV'') in the amount of 
$125,273,878.00. This ADV may be used by Qualcomm or its transferee, in 
whole or in part, to adjust a winning bid in any spectrum auction prior 
to June 8, 2003, subject to terms and conditions set forth in the 
Commission's Order. Qualcomm transferred $10,848,000.00 of the ADV to a 
winning bidder in FCC Auction No. 35 and the transferee used its 
portion of the ADV to pay a portion of one of its winning bids in 
Auction No. 35. The remaining portion of Qualcomm's ADV could be used 
to adjust winning bids in another FCC auction, including Auction No. 
44.

C. Long-Form Application

    154. 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. 44. Winning bidders that are small, 
very small businesses or entrepreneurs must include an exhibit 
demonstrating their eligibility for small, very small business or 
entrepreneur bidding credits. See 47 CFR 1.2112(b). Further filing 
instructions will be provided to auction winners at the close of the 
auction.

D. Tribal Land Bidding Credit

    155. 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.
    156. 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).
    157. 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://wireless.fcc.gov/auctions and clicking on Tribal Land Credits.

E. Default and Disqualification

    158. 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. 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).

F. Refund of Remaining Upfront Payment Balance

    159. All applicants that submitted upfront payments but were not 
winning bidders for a license in Auction No. 44 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

[[Page 20789]]

of record, as identified on the FCC Form 159, unless the payer submits 
written authorization instructing otherwise.
    160. 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, Taxpayer 
Identification Number (TIN) and FCC Registration Number (FRN). Send 
refund request to: Federal Communications Commission, Financial 
Operations Center, Auctions Accounting Group, Gail Glasser or Tim 
Dates, 445 12th Street, SW., Room 1-C863, Washington, DC 20554.
    161. 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. 02-10239 Filed 4-25-02; 8:45 am]
BILLING CODE 6712-01-P