[Federal Register Volume 67, Number 233 (Wednesday, December 4, 2002)]
[Notices]
[Pages 72174-72185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30701]



[[Page 72174]]

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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-02-46-C (Auction No. 46); DA 02-1871]


Auction of License in the 1670-1675 MHz Band Auction Scheduled 
for April 30, 2003; 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 1670-1675 MHz band 
scheduled for April 30, 2003 (Auction No. 46). This document is 
intended to familiarize prospective bidders with the procedures and 
minimum opening bids for this auction.

DATES: Auction No. 46 is scheduled to begin on April 30, 2003.

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division: Francis Gutierrez, Legal Branch, or Lyle Ishida, Auctions 
Operations Branch, at (202) 418-0660; Lisa Stover, Auctions Operations 
Branch, at (717) 338-2888, Media Contact: Lauren Kravetz at (202) 418-
7944, Public Safety & Private Wireless Division: Keith Fickner or Brian 
Marenco, Policy and Rules Branch, at (202) 418-0680.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 46 
Procedures Public Notice released on August 5, 2002. The complete text 
of the Auction No. 46 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. 46 
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. 46 Procedures Public Notice, the Wireless 
Telecommunications Bureau (``Bureau'') announces the procedures and 
minimum opening bids for the upcoming auction of one nationwide license 
in the 1670-1675 MHz band scheduled for April 30, 2003 (Auction No. 
46).
    2. In accordance with the Balanced Budget Act of 1997, the Bureau 
released a public notice on May 24, 2002 seeking comment on reserve 
prices or minimum opening bids and the procedures to be used in Auction 
No. 46. The Bureau received two comments and one reply comment in 
response to the Auction No. 46 Comment Public Notice, 67 FR 43118 (June 
26, 2002). The Bureau subsequently released a second public notice on 
July 15, 2002, revising the license inventory, auction start date, and 
seeking comment on revisions to proposed auction procedures. The Bureau 
received one comment in response to the Auction No. 46 Further Comment 
Public Notice, 67 FR 49022 (July 29, 2002).
    3. On August 5, 2002, the Bureau released the Auction No. 46 
Procedures Public Notice that announced the procedures and minimum 
opening bids for the auction of one nationwide license in the 1670-1675 
MHz band, scheduled to begin on October 30, 2002.
    4. On September 13, 2002, the Bureau released a public notice 
seeking comment on a request for postponement of Auction No. 46 filed 
by ArrayComm, Inc. Auction No. 46 Public Notice Seeking Comment on 
Postponement, 67 FR 61104 (September 27, 2002).
    5. On September 25, 2002, the Bureau released a public notice, 
which announced that based on the record of comments it received, 
Auction No. 46 is postponed until April 23, 2003. Auction No. 46 
Postponement Public Notice, 67 FR 63095 (October 10, 2002).
i. Background of Proceeding
    6. On May 24, 2002, the Commission released the Service Rules 
Report & Order, which adopted service rules to govern the licensing of 
27 MHz of electromagnetic spectrum reallocated for non-Government use, 
including the 1670-1675 MHz band. In the Service Rules Report & Order, 
67 FR 41847, (June 20, 2002), the Commission, among other things, 
established competitive bidding procedures for the 1670-1675 MHz band; 
decided to assign, on a nationwide basis, one license for a 5-megahertz 
block of contiguous unpaired spectrum in the 1670-1675 MHz band; and 
determined that all operations in the 1670-1675 MHz band will be 
generally regulated under the framework of the Commission's Part 27 
technical, licensing, and operating rules. The Commission also 
explained that a non-government licensee in the 1670-1675 MHz band must 
comply with the provisions of Sec.  1.924(g) of the Commission's rules 
to minimize harmful interference to Geostationary Operations 
Environmental Satellite (GOES) earth stations receiving in the band 
1670-1675 MHz. The GOES earth stations are located at Wallops Island, 
Virginia; Fairbanks, Alaska; and Greenbelt, Maryland.
ii. Licenses To Be Auctioned
    7. One nationwide license consisting of a 5-megahertz block of 
contiguous unpaired spectrum in the 1670-1675 MHz band will be 
available in Auction No. 46.

B. Rules and Disclaimers

i. Relevant Authority
    8. Prospective bidders must familiarize themselves thoroughly with 
the Commission's rules relating to the 1670-1675 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 the Auction No. 46 Procedures 
Public Notice, Auction No. 46 Comment Public Notice, Auction No. 46 
Further Comment Public Notice, Auction No. 46 Public Notice Seeking 
Comment on Postponement, Auction No. 46 Postponement Public Notice, and 
the Part 1 Fifth Report and Order 65 FR 52401 (August 29, 2000) (as 
well as prior and subsequent Commission proceedings regarding 
competitive bidding procedures).
    9. Auction participants bidding on the license in the 1670-1675 MHz 
spectrum band should also be familiar with the Service Rules Report and 
Order.
    10. 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

[[Page 72175]]

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 02-152 for the Service Rules Report and 
Order).
ii. Prohibition of Collusion
    11. 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. Because bidders in Auction No. 46 will be 
competing for the same license, they 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.
    12. 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. Applicants may enter 
into bidding agreements before filing their FCC Form 175, as long as 
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. By signing their FCC Form 175 
short-form applications, applicants are certifying their compliance 
with Sec.  1.2105(c).
    13. In addition, Sec.  1.65 of the Commission's rules requires an 
applicant to maintain the accuracy and completeness of information 
furnished in its pending application and to notify the Commission 
within 30 days of any substantial change that may be of decisional 
significance to that application. Thus, Sec. Sec.  1.65 and 1.2105 
require 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.
    14. A summary listing of documents from the Commission and the 
Bureau addressing the application of the anti-collusion rules may be 
found in Attachment G of the Auction No. 46 Procedures Public Notice.
iii. Due Diligence
    15. Potential bidders are reminded that the 1670-1675 MHz band is 
being allocated for mixed use. The Commission made clear that a 
geographic area licensee operating in the reallocated band must protect 
Federal Government operations, either indefinitely or for a given 
period of time. These requirements may affect the ability of the 
geographic licensee to use certain portions of the electromagnetic 
spectrum or provide service to certain regions in their geographic 
license area.
    16. Potential bidders are solely responsible for identifying 
associated risks and for investigating and evaluating the degree to 
which such matters may affect their ability to bid on, otherwise 
acquire, or make use of licenses available in Auction No. 46.
    17. Accordingly, the 1670-1675 MHz licensee must protect 
indefinitely the Command and Data Acquisitions stations used to 
communicate with the GOES earth stations that are located at Wallops 
Island, Virginia; Fairbanks, Alaska; and Greenbelt, Maryland. The 1670-
1675 MHz licensee must also comply with the Quiet Zone requirements of 
Sec.  1.924 of the Commission's Rules.
    18. Before planning to construct and operate a new or modified 
station within 100 kilometers of the Wallops Island, Virginia and 
Fairbanks, Alaska stations or within 65 kilometers of the Greenbelt, 
Maryland station, the 1670-1675 MHz licensee must notify the National 
Oceanic and Atmospheric Administration (NOAA) of the proposed 
operation. NOAA's GOES coordination web page, at http://www.osd.noaa.gov/radio/frequency/htm, provides the technical parameters 
of the earth stations and the point-of-contact notification 
information. Additionally, the licensee must file an application with 
the Commission requesting authority to operate the new or modified 
station. This application should be filed through the Commission's 
Universal Licensing System. The application should state the date that 
notification to NOAA was made. After the Commission receives an 
application, NOAA has 20 days to comment or object to the proposed new 
or modified station. If NOAA objects during the 20-day period, the 
Commission will take whatever action is deemed appropriate. In the 
absence of an objection by NOAA, the Commission will grant the 
application if it is otherwise acceptable.
    19. Potential bidders for ``near the border'' licenses must protect 
stations in Canada and Mexico from harmful interference. This will 
permit licensees to maximize their operations depending on the spectrum 
use, terrain, and other factors at the border areas, while still 
protecting operations across the border. However, operations in the 
1670-1675 MHz band may be subject to future agreements with Canada and 
Mexico and therefore may be subject to further modification.
    20. The Commission makes no representations or guarantees regarding 
the accuracy or completeness of the information concerning Federal 
Government incumbents that appears in the Auction No. 46 Procedures 
Public Notice or third party documents. Potential bidders who have 
questions regarding Federal Government use of the 1670-1675 MHz band 
may contact Gerald F. Hurt, Chief, Spectrum Engineering and Analysis 
Division, National Telecommunications and Information Administration, 
Room 6725, 1401 Constitution Ave., NW., Washington, DC, 20230, at (202) 
482-4107, via fax at (202) 482-4595, or at [email protected].
    21. Potential bidders also should be aware that certain 
applications, petitions for rulemaking, requests for special temporary 
authority (``STA''), waiver requests, petitions for reconsideration, 
and applications for review may be pending before the Commission and 
relate to particular applicants or incumbent Federal entities. In 
addition, certain judicial proceedings that may relate to particular 
applicants or the license available in Auction No. 46 may be commenced, 
or may be pending, or may be the subject to further review. Resolution 
of these matters could have an impact on the availability of spectrum 
in Auction No. 46. Some of these matters (whether

[[Page 72176]]

before the Commission or the courts) may not be resolved by the time of 
the auction.
iv. Bidder Alerts
    22. 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.
    23. 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.
    24. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 46 to 
deceive and defraud unsuspecting investors. Common warning signals of 
fraud include the following:
    [sbull] 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.
    [sbull] 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.
    [sbull] The amount of investment is less than $25,000.
    [sbull] 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.
    25. Information about deceptive telemarketing investment schemes is 
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment 
schemes should be directed to the FTC, the SEC, or the National Fraud 
Information Center at (800) 876-7060. Consumers who have concerns about 
specific proposals regarding Auction No. 46 may also call the FCC 
Consumer Center at (888) CALL-FCC ((888) 225-5322).
v. National Environmental Policy Act (``NEPA'') Requirements
    26. The licensee must comply with the Commission's rules regarding 
the National Environmental Policy Act (``NEPA''). The construction of a 
wireless antenna facility is a federal action and the licensee must 
comply with the Commission's NEPA rules for each such facility. The 
Commission's NEPA rules require, among other things, that the licensee 
consult with expert agencies having NEPA responsibilities, including 
the U.S. Fish and Wildlife Service, the State Historic Preservation 
Office, the Army Corp of Engineers and the Federal Emergency Management 
Agency (through the local authority with jurisdiction over 
floodplains). The licensee must prepare environmental assessments for 
facilities that may have a significant impact in or on wilderness 
areas, wildlife preserves, threatened or endangered species or 
designated critical habitats, historical or archaeological sites, 
Indian religious sites, floodplains, and surface features. The licensee 
must also prepare environmental assessments for facilities that include 
high intensity white lights in residential neighborhoods or excessive 
radio frequency emission.

C. Auction Specifics

i. Auction Date
    27. The auction will begin on Wednesday, April 30, 2003. 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 will be conducted on each business day until bidding 
has stopped on the license.
ii. Auction Title
    28. Auction No. 46--1670-1675 MHz Band
iii. Bidding Methodology
    29. The bidding methodology for Auction No. 46 will be multiple 
round, ascending auction. An ascending multiple round auction is the 
same as a simultaneous multiple round auction, but with only one 
license available for bid. 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
    30. Listed are important dates associated with Auction No. 46:

Auction Seminar: September 18, 2002
Short-Form Application (FCC Form 175) Filing Window Opens: March 18, 
2003
Short-Form Application (FCC Form 175) Deadline: March 25, 2003; 6 p.m. 
ET
Upfront Payments Deadline: April 11, 2003; 6 p.m. ET
Mock Auction: April 25, 2003
Auction Begins: April 30, 2003
v. Requirements for Participation
    31. Those wishing to participate in the auction must:
    [sbull] Submit a short-form application (FCC Form 175) 
electronically by 6 p.m. ET, March 25, 2003.
    [sbull] Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by 6 p.m. ET, April 11, 2003.
    [sbull] Comply with all provisions outlined in this public notice.
vi. General Contact Information
    32. The following is a list of general contact information relating 
to Auction No. 46.
    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): Public Safety & Private Wireless Division, (202) 
418-0680.
    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 8 a.m. to 6 p.m. ET.
    Payment Information

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    (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: Qualex International.
    Additional Copies of Commission Documents: Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554, (202) 863-2893, (202) 
863-2898 (Fax) and [email protected] (E-mail).
    Press information: Meribeth McCarrick (202) 418-0654,
    FCC Forms: (800) 418-3676 (outside Washington, DC), (202) 418-3676 
(in the Washington Area) and http://www.fcc.gov/formpage.html.
    FCC Internet Sites: http://www.fcc.gov, http://wireless.fcc.gov/auctions and http://wireless.fcc.gov/uls.

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

    33. Guidelines for completion of the short-form (FCC Form 175) are 
set forth in Attachment D of the Auction No. 46 Procedures Public 
Notice. The short-form application seeks the applicant's name and 
address, legal classification, status, small or very small business 
bidding credit eligibility, identification of the license 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.D (Provisions Regarding 
Defaulters and Former Defaulters) of the Auction No. 46 Procedures 
Public Notice, 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. Ownership Disclosure Requirements (FCC Form 175 Exhibit A)

    34. All applicants must comply with the uniform part 1 ownership 
disclosure standards and provide information required by Sec. Sec.  
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.

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

    35. 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 license 
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, or bidding strategies. 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 after the 
deadline. Where applicants have entered into consortia or joint bidding 
arrangements, applicants must submit an ``Exhibit B'' to the FCC Form 
175.
    36. 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 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.

C. Eligibility

i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)
    37. Bidding credits will be available to small and very small 
businesses, or consortia, thereof, as defined in 47 CFR 27.906, for the 
1670-1675 MHz band. A bidding credit represents the amount by which the 
bidder's winning bid is 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:
    [sbull] 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 bid;
    [sbull] 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 bid;
    Bidding credits are not cumulative; a qualifying applicant receives 
either the 15 percent or 25 percent bidding credit on its winning bid, 
but not both.
ii. Tribal Land Bidding Credit
    38. To encourage the growth of wireless services in federally 
recognized tribal lands the Commission has implemented a tribal land 
bidding credit. See part V.D. of the Auction No. 46 Procedures Public 
Notice.
iii. Applicability of Part 1 Attribution Rules
    39. Controlling interest standard. On August 14, 2000, the 
Commission released the Part 1 Fifth Report and Order, in which the 
Commission, inter alia, adopted a ``controlling interest'' standard for 
attributing to auction applicants the gross revenues of their investors 
and affiliates in determining small business eligibility for future 
auctions. The Commission observed that the rule modifications adopted 
in the various Part 1 orders would result in discrepancies and/or 
redundancies between certain of the new Part 1 rules and existing 
service-specific rules, and the Commission delegated to the Bureau the 
authority to make conforming edits to the Code of Federal Regulations 
(CFR) consistent with the rules adopted in the Part 1 proceeding. Part 
1 rules that supersede inconsistent service-specific rules will control 
in Auction No. 46. Accordingly, the ``controlling interest'' standard 
as set forth in the Part 1 rules will be in effect for Auction No. 46.
    40. Control. The term ``control'' includes both de facto and de 
jure control of the applicant. Typically, ownership of at least 50.1 
percent of an entity's voting stock evidences de jure control. De facto 
control is determined on a case-by-case basis. The following are some 
common indicia of de facto control:
    [sbull] The entity constitutes or appoints more than 50 percent of 
the board of directors or management committee;
    [sbull] The entity has authority to appoint, promote, demote, and 
fire senior executives that control the day-to-day activities of the 
licensee; or
    [sbull] The entity plays an integral role in management decisions.

[[Page 72178]]

    Attribution for small and very small business eligibility. In 
determining which entities qualify as small or very small businesses, 
the Commission will consider the gross revenues of the applicant, its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests. The Commission does not impose specific equity 
requirements on controlling interest holders. Once the principals or 
entities with a controlling interest are determined, only the revenues 
of those principals or entities, the affiliates of those principals or 
entities, the applicant and its affiliates, will be counted in 
determining small business eligibility.
    41. A consortium of small or very small businesses is a 
``conglomerate organization formed as a joint venture between or among 
mutually independent business firms,'' each of which individually must 
satisfy the definition of small and very small business in Sec. Sec.  
1.2110(f), 27.906 of the Commission's rules. 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. Although the gross revenues of the consortium 
members will not be aggregated for purposes of determining eligibility 
for small or very small business credits, this information must be 
provided to ensure that each individual consortium member qualifies for 
any bidding credit awarded to the consortium.
iv. Supporting Documentation
    42. Applicants should note that they will be required to file 
supporting documentation to their FCC Form 175 short-form applications 
to establish that they satisfy the eligibility requirements to qualify 
as small or very small businesses (or consortia of small or very small 
businesses) for this auction.
    43. 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.
    44. Small or very small business eligibility (Exhibit C). Entities 
applying to bid as small or very small businesses (or consortia of 
small or very small businesses) will be required to disclose on Exhibit 
C to their FCC Form 175 short-form applications, separately and in the 
aggregate, the gross revenues for the preceding three years of each of 
the following: (i) The applicant, (ii) its affiliates, (iii) its 
controlling interests, and (iv) the affiliates of its controlling 
interests. Certification that the average annual gross revenues for the 
preceding three years do not exceed the applicable limit is not 
sufficient. A statement of the total gross revenues for the preceding 
three years is also insufficient. The applicant must provide separately 
for itself, its affiliates, its controlling interests, and the 
affiliates of its controlling interests, a schedule of gross revenues 
for each of the preceding three years, as well as a statement of total 
average gross revenues for the three-year period. If the applicant is 
applying as a consortium of small or very small businesses, this 
information must be provided for each consortium member.

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

    45. 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. 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.
    46. ``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. 46, provided that they are otherwise qualified. 
However, as discussed in section III.D.iii, former defaulters are 
required to pay upfront payments that are fifty percent more than the 
normal upfront payment amounts.

E. Installment Payments

    47. Installment payment plans will not be available in Auction No. 
46.

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

    48. 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.

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

    49. After the short-form filing deadline (March 25, 2003), 
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 the certifying 
official, 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. 
46. The Bureau requests that parties format any attachments to 
electronic mail as Adobe[reg] Acrobat[reg] (pdf) or Microsoft[reg] Word 
documents.
    50. 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 Francis Gutierrez of the Auctions and Industry 
Analysis Division at (202) 418-0660.

[[Page 72179]]

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

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

II. Pre-Auction Procedures

A. Auction Seminar

    52. On Wednesday, September 18, 2002, the FCC sponsored a free 
seminar for Auction No. 46 at the Federal Communications Commission, 
located at 445 12th Street, SW., Washington, DC. The seminar provided 
attendees with information about pre-auction procedures, conduct of the 
auction, the FCC Automated Auction System, and the 1670-1675 MHz band 
and auction rules. The seminar also provided an opportunity for 
prospective bidders to ask questions of FCC staff.

B. Short-Form Application (FCC Form 175)--Due March 25, 2003

    53. 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 
p.m. ET on March 25, 2003. Late applications will not be accepted.
    54. 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 of the Auction No. 46 Procedures Public 
Notice.
i. Electronic Filing
    55. Applicants must file their FCC Form 175 applications 
electronically. Applications may generally be filed at any time 
beginning at noon ET on March 18, 2003, until 6 p.m. ET on March 25, 
2003. 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 March 25, 2003.
    56. 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. 46 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 8:00 
AM to 6:00 PM ET. In order to provide better service to the public, all 
calls to the hotline are recorded.
    57. 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
    58. 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. 46 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. 46 Procedures Public Notice 
provide information on the required attachments and appropriate 
formats.
iii. Electronic Review of FCC Form 175
    59. 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 Auction 
No. 46 Procedures Public Notice for details on accessing the review 
system.

C. Application Processing and Minor Corrections

    60. 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.
    61. As described more fully in the Commission's rules, after the 
March 25, 2003, 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 the certifying official, change control of the applicant, 
or change bidding credit eligibility).

D. Upfront Payments--Due April 11, 2003

    62. 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 p.m. ET on April 11, 2003.
    63. Please note that:
    [sbull] All payments must be made in U.S. dollars.
    [sbull] All payments must be made by wire transfer.
    [sbull] Upfront payments for Auction No. 46 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.
    [sbull] Failure to deliver the upfront payment by the April 11, 
2003, deadline will result in dismissal of the application and 
disqualification from participation in the auction.
i. Making Auction Payments by Wire Transfer
    64. Wire transfer payments must be received by 6 p.m. ET on April 
11, 2003. 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  910-0180
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: A46U)
FCC CODE 1 (same as FCC Form 159, block 28A: ``46'')
PAYOR NAME (same as FCC Form 159, block 2)
LOCKBOX NO.  358420

    Note: The BNF and Lockbox number are specific to the upfront 
payments for this

[[Page 72180]]

auction; do not use BNF or Lockbox numbers from previous auctions.

    65. Applicants must fax a completed FCC Form 159 (Revised 2/00) to 
Mellon Bank at (412) 209-6045 at least one hour before placing the 
order for the wire transfer (but on the same business day). On the 
cover sheet of the fax, write ``Wire Transfer--Auction Payment for 
Auction Event No. 46.'' Bidders should confirm receipt of their upfront 
payment at Mellon Bank by contacting their sending financial 
institution.
ii. FCC Form 159
    66. A completed FCC Remittance Advice Form (FCC Form 159, Revised 
2/00) must be faxed to Mellon Bank in order to accompany each upfront 
payment. Proper completion of FCC Form 159 (Revised 2/00) is critical 
to ensuring correct credit of upfront payments. Detailed instructions 
for completion of FCC Form 159 are included in Attachment E of the 
Auction No. 46 Procedures Public Notice. An electronic version of the 
FCC Form 159 is available after filing the FCC Form 175. The FCC Form 
159 can be completed electronically, but must be filed with Mellon Bank 
via facsimile.
iii. Amount of Upfront Payment
    67. In the Part 1 Order 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).
    68. In the Auction No. 46 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 the license, 
otherwise qualified bidders must have an eligibility level that meets 
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 the license or else the applicant will 
not be eligible to participate in the auction.
    69. In the Auction No. 46 Comment Public Notice, the Bureau 
proposed an upfront payment of $12,628,000 for the nationwide 1670-1675 
MHz license using the following formula: $0.01 * MHz * License Area 
Population with a minimum of $1,000.
    ArrayComm and AeroAstro submitted comments regarding the Bureau's 
proposed formula for calculating the upfront payment for Auction No. 
46. ArrayComm supports the Bureau's proposed upfront payment because it 
is appropriate given the nationwide scope of the license. AeroAstro, on 
the other hand, suggests that the proposed upfront payment is 
excessively high and may reduce potential participation and competition 
in the auction. AeroAstro recommends that the Commission reduce the 
upfront payment by a factor of ten, resulting in an upfront payment of 
$1,262,800.
    70. The Bureau adopts its upfront payment as proposed. Given the 
nationwide scope of the 1670-1675 MHz license, the Bureau believes that 
the proposed upfront payment, as validated by the comments of 
ArrayComm, is appropriate.
    71. The specific upfront payments and bidding units for the 
nationwide 1670-1675 MHz license is set forth in Attachment A of the 
Auction No. 46 Procedures Public Notice.
    72. Former defaulters should calculate their upfront payment by 
multiplying the number of bidding units 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.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    73. The Commission will use wire transfers for all Auction No. 46 
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 April 11, 2003. All refunds will be returned to the payor 
of record as identified on the FCC Form 159 unless the payor 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.F. of the Auction No. 46 
Procedures Public Notice.

E. Auction Registration

    74. Approximately ten days before the auction, the FCC will issue a 
public notice announcing all qualified bidders for the auction. 
Qualified bidders are those applicants whose FCC Form 175 applications 
have been accepted for filing and have timely submitted upfront 
payments sufficient to make them eligible to bid on the license.
    75. All qualified bidders are automatically registered for the 
auction. Registration materials will be distributed prior to the 
auction by two separate overnight mailings, one containing the 
confidential bidder identification number (BIN) required to place bids 
and the other containing the SecurID cards. These mailings will be sent 
only to the contact person at the contact address listed in the FCC 
Form 175.
    76. Applicants that do not receive both registration mailings will 
not be able to submit bids. Therefore, any qualified applicant that has 
not received both mailings by noon on Wednesday, April 23, 2003, should 
contact the Auctions Hotline at (717) 338-2888. Receipt of both 
registration mailings is critical to participating in the auction and 
each applicant is responsible for ensuring it has received all of the 
registration material.
    77. Qualified bidders should note that lost bidder identification 
numbers or SecurID cards can be replaced only by appearing in person at 
the FCC Auction Headquarters located at 445 12th St., SW., Washington, 
DC 20554. Only an authorized representative or certifying official, as 
designated on an applicant's FCC Form 175, may appear in person with 
two forms of identification (one of which must be a photo 
identification) in order to receive replacements. Qualified bidders 
requiring replacements must call technical support prior to arriving at 
the FCC.

F. Electronic Bidding

    78. The Commission will conduct this auction over the Internet. 
Telephonic

[[Page 72181]]

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. 46. 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.
    79. 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

    80. All qualified bidders will be eligible to participate in a mock 
auction on Friday, April 25, 2003. 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

    81. The first round of bidding for Auction No. 46 will begin on 
Wednesday, April 30, 2003. 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. Ascending Multiple Round Auction
    82. In the Auction No. 46 Comment Public Notice, the Bureau 
proposed to award all licenses in Auction No. 46 in a single, 
simultaneous multiple round auction. The Bureau received one comment on 
this issue. ArrayComm agrees with the Bureau's proposal stating that 
the simultaneous multiple round structure is most likely to result in 
efficient bidding, thereby awarding the license to the party with the 
greatest ability to bring innovative services to consumers. An 
``ascending multiple round auction'' is the same as a simultaneous 
multiple round auction, but with only one license available for bid. 
The Bureau concludes that it is operationally feasible and appropriate 
to auction the license in the 1670-1675 MHz band through a single, 
ascending multiple round auction. Unless otherwise announced, bids will 
be accepted on the license in each round of the auction.
ii. Maximum Eligibility and Activity Rules
    83. In the Auction No. 46 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.
    84. For Auction No. 46, the Bureau will adopt its proposal that the 
amount of upfront payment submitted by a bidder would determine the 
eligibility (in bidding units) for participation in Auction No. 46. 
Bidders are reminded that the upfront payment is a refundable deposit 
made by each bidder to determine and establish eligibility to bid on 
the license. The upfront payment does not affect the total dollars a 
bidder may bid on the license.
    85. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until the end before 
participating. Bidders are required to be active on a specific 
percentage of their current eligibility during each round of the 
auction. In the Auction No. 46 Further Comment Public Notice, because 
only one license will be available for auction, the Bureau proposed a 
single stage auction with each bidder required to be active on one 
hundred (100) percent of its bidding eligibility in each round.
    86. Only one commenter addressed the Bureau's revised proposal. 
ArrayCom states that monitoring the bidding activity of only one 
license makes the evaluation and bidding process of necessity more 
straightforward for participants. Therefore, in order to ensure that 
the auction closes within a reasonable period of time, the Bureau 
adopts its proposal with the following activity requirements: a bidder 
must either place a valid bid and/or be the standing high bidder during 
each round of the auction rather than wait until the end before 
participating. Bidders are required to be active on 100 percent of 
their maximum eligibility during each round of the auction. Failure to 
maintain the requisite activity level will result in the use of an 
activity rule waiver, if any remain, or a reduction in the bidder's 
bidding eligibility, thus eliminating the bidder from the auction.
iii. Activity Rule Waivers and Reducing Eligibility
    87. In the Auction No. 46 Further Comment Public Notice, the Bureau 
proposed that each bidder in the auction would be provided two activity 
rule waivers. Bidders may use an activity rule waiver in any round 
during the course of the auction. ArrayComm agreed with the Bureau's 
proposal that two waivers would be appropriate in light of the 
auction's narrowed scope.
    88. Based upon the Bureau's experience in previous auctions, it 
adopts its proposal that each bidder be provided two 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. The Bureau is satisfied that its 
practice of providing two 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.
    89. 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. If there are no activity rule waivers available, the 
bidder's eligibility will be reduced, eliminating them from the auction
    90. 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

[[Page 72182]]

which there are no new valid bids will not keep the auction open.

    Note: Once a proactive waiver is placed during a round, that 
waiver cannot be unsubmitted.

iv. Auction Stopping Rules
    91. For Auction No. 46, the Bureau proposed to employ a 
simultaneous stopping rule approach. The Bureau also sought comment on 
a modified version of the stopping rule. The modified version of the 
stopping rule would close the auction after the first round in which no 
bidder submits a proactive waiver or a new bid on the license when it 
is not the standing high bidder. Thus, absent any other bidding 
activity, a bidder placing a new bid on the license for which it is the 
standing high bidder would not keep the auction open under this 
modified stopping rule.
    92. The Bureau further proposed retaining the discretion to keep 
the auction open even if no new acceptable bids or proactive waivers 
are submitted. In this event, the effect will be the same as if a 
bidder had submitted a proactive waiver. Thus, the activity rule will 
apply as usual, and a bidder with insufficient activity will either use 
an activity rule waiver (if it has any left) or lose bidding 
eligibility, thus eliminating the bidder from the auction.
    93. In addition, the Bureau proposed to reserve the right to 
declare that the auction will end after a designated number of 
additional rounds (``special stopping rule''). 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, 
increasing the number of bidding rounds per day and/or adjusting the 
amount of the minimum bid increments for the license.
    94. The Bureau received no comments concerning the auction stopping 
rules and therefore, it adopts the proposals. Auction No. 46 will begin 
under the simultaneous stopping rule, and the Bureau will retain the 
discretion to invoke the other versions of the stopping rule. These 
stopping rules are most appropriate for Auction No. 46, because the 
Bureau's experience in prior auctions demonstrates that the auction 
stopping rules balance the interests of administrative efficiency and 
maximum bidder participation.
v. Auction Delay, Suspension, or Cancellation
    95. In the Auction No. 46 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.
    96. 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. 
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
    97. 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 herein.
    98. 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
    99. 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.
    100. In the Auction No. 46 Comment Public Notice, the Bureau 
proposed to establish minimum opening bids for Auction No. 46. 
Specifically, for Auction No. 46, the Bureau proposed a minimum opening 
bid of $12,628,000 for the nationwide license using the following 
formula: $0.01 * MHz * License Area Population with a minimum of 
$1,000.
    In the alternative, the Bureau sought comment on whether, 
consistent with the Balanced Budget Act, the public interest would be 
served by having no minimum opening bid or reserve price. ArrayComm and 
AeroAstro submitted comments regarding the Bureau's proposed formula 
for calculating minimum opening bids for Auction No. 46. ArrayComm 
supports the Bureau's proposed minimum opening bid, stating that it 
will ensure a successful outcome overall for the auction. AeroAstro, on 
the other hand, suggests that the multi-million dollar minimum opening 
bid for the license in the 1670-1675 MHz Band is an artificially high 
barrier to entry and may defeat the purpose of the auction by 
eliminating bidders. AeroAstro proposes the following formula for 
calculating minimum opening bids for the nationwide license: $ 0.002 * 
MHz * License Area Population.
    101. The Bureau adopts its minimum opening bid as proposed. The 
Bureau believes that the minimum opening bid, as adopted, is 
appropriate.

[[Page 72183]]

    102. The specific minimum opening bid for the license is set forth 
in Attachment A of the Auction No. 46 Procedures Public Notice.
iii. Minimum Accepted Bids and Bid Increments
    103. In the Auction No. 46 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.
    104. ArrayComm suggests that because the license inventory for 
Auction No. 46 is reduced to one license, a smaller bid increment is 
more appropriate. It notes that while higher bid increments can 
maintain the pace of large-scale auctions, they are not necessary under 
a single-license auction event such as Auction No. 46. ArrayComm 
further asserts that a reduced minimum bid increment may, in fact, 
increase auction efficiency in this scenario.
    105. 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 as Attachment F of the Auction 
No. 46 Procedures Public Notice.
    106. Upon consideration of ArrayComm's comments, the weighting 
factor will be set at 0.5, the minimum percentage increment at 0.05 (5 
percent), and the maximum at 0.2 (20 percent). Because only a single 
license is available in Auction No. 46, it is appropriate to set the 
minimum bid increment at 5 percent. The Bureau reiterates that it 
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 Auction No. 46 if circumstances warrant.
iv. High Bid
    107. At the end of each bidding round, the Automated Auction System 
determines the standing high bid for the license based on the gross 
dollar amounts of the bids received.
    108. 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
    109. During a bidding round, a bidder may submit a bid (subject to 
its eligibility) as well as remove a bid placed in the same bidding 
round. If a bidder submits multiple bids for the 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 
the license for which the bidder has removed its bid do not count 
towards the bidder's activity at the close of the round.
    110. 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. 46.
    111. 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 bid.
    112. In each round, eligible bidders will be able to place a bid on 
the license in any of nine different amounts. 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.
    113. Once there is a standing high bid on the license, the 
Automated Auction System will calculate a minimum acceptable bid for 
the following round. The difference between the minimum acceptable bid 
and the standing high bid will define the bid increment. The nine 
acceptable bid amounts 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.).
    114. Until a bid has been placed on the license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. The additional bid amounts 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 0.05, the first additional bid 
amount will be approximately five percent higher than the minimum 
opening bid; the second, ten percent; the third, fifteen percent; etc.
    115. See Attachment F of the Auction No. 46 Procedures Public 
Notice for more detail on the calculation of the various bid amounts.
vi. Bid Removal and Bid Withdrawal
    116. In the Auction No. 46 Comment Public Notice, the Bureau 
proposed bid removal and bid withdrawal rules. The Bureau however 
revised its proposal concerning withdrawals in the Auction No. 46 
Further Comment Public Notice. It proposed that bidders would not be 
permitted to withdraw bids in any round since Auction No. 46 had been 
limited to a single license. No commenters disagreed with the Bureau's 
proposal. Therefore, the Bureau will adopt its proposal and will not 
permit bidders to withdraw bids in any rounds during the auction.
    117. Procedures. Before the close of a bidding round, a bidder has 
the option of removing any bid placed in that round. By using the 
``remove bid'' function in the bidding system, a bidder may effectively 
``unsubmit'' a bid placed within that round. 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. Once a round closes, a bidder may no longer 
remove a bid.
vii. Round Results
    118. 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, current high bid, new minimum 
accepted bid, and bidder eligibility status (bidding eligibility and 
activity rule waivers), and post the reports for public access. Reports

[[Page 72184]]

reflecting bidders' identities and bidder identification numbers for 
Auction No. 46 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
    119. The FCC will use auction announcements to announce items such 
as schedule changes. 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
    120. As noted in Part II.G. of the Auction No. 46 Procedures Public 
Notice, 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. 46. The Bureau 
requests that parties format any attachments to electronic mail as 
Adobe[reg] Acrobat[reg] (pdf) or Microsoft[reg] Word documents.
    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 Francis Gutierrez of the Auctions and Industry Analysis 
Division at (202) 418-0660.

I. Post-Auction Procedures

A. Down Payments

    121. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed, identifying the winning bid and 
bidder.
    122. Within ten business days after release of the auction closing 
notice, the 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 bid (actual bid less 
any applicable small or very small business bidding credit). See 47 CFR 
1.2107(b).

B. Auction Discount Voucher

    123. 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. 
46.

C. Long-Form Application

    124. Within ten business days after release of the auction closing 
notice, the winning bidder must electronically submit a properly 
completed long-form application (FCC Form 601) and required exhibits 
for the license won through Auction No. 46. A winning bidder that is a 
small or very small business must include an exhibit demonstrating 
their eligibility for the bidding credit. See 47 CFR 1.2112(b). Further 
filing instructions will be provided to the auction winner at the close 
of the auction.

D. Tribal Land Bidding Credit

    125. 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.
    126. 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).
    127. 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

    128. 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

    129. All applicants that submitted upfront payments but were not 
winning bidders for the license in Auction No. 46 may be entitled to a 
refund of their remaining upfront payment balance after the conclusion 
of the auction. All refunds will be returned to the payor of record, as 
identified on the FCC Form 159, unless the payor submits written 
authorization instructing otherwise.
    130. Bidders that drop out of the auction completely may be 
eligible for a refund of their upfront payments before the close of the 
auction. Qualified bidders that have exhausted all of their activity 
rule waivers, and have no remaining bidding eligibility, 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

[[Page 72185]]

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.
    131. 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. 02-30701 Filed 12-3-02; 8:45 am]
BILLING CODE 6712-01-P