[Federal Register Volume 67, Number 235 (Friday, December 6, 2002)]
[Notices]
[Pages 72683-72689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30500]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-02-48-A (Auction No. 48); DA 02-1441]


Auction of Licenses for the Lower and Upper Paging Bands 
Scheduled for May 13, 2003; Comment Sought on Reserve Prices or Minimum 
Opening Bids and Other Auction Procedures

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of 8,874 licenses in the 
lower paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz, 454-460 MHz) and 
1,328 licenses in the upper paging bands (929-931 MHz) scheduled to 
commence on May 13, 2003. This document also seeks comment on reserve 
prices or minimum opening bids and other auction procedures.

DATES: Comments are due on or before December 13, 2002, and reply 
comments are due on or before December 18, 2002.

ADDRESSES: Comments and reply comments must be sent by electronic mail 
to [email protected].

FOR FURTHER INFORMATION CONTACT: For legal questions: Rosemary Cabral 
at (202) 418-0660. For general auction questions: Roy Knowles at (717) 
338-2888 or Barbara Sibert at (717) 338-2888. For service rule 
questions: Bettye Woodward at (202) 418-1345.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 48 
Comment Public Notice released on November 7, 2002. The complete text 
of the Auction No. 48 Comment Public Notice 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-A257, Washington, DC, 20554. The Auction No. 48 Comment 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]. The complete list of 
licenses available for this auction will be provided in electronic 
format only, available as ``Attachment A'' to the Auction No. 48 
Comment Public Notice at http://wireless.fcc.gov/auctions/48/.
    1. By the Auction No. 48 Comment Public Notice, the Wireless 
Telecommunications Bureau (``Bureau'') announces the auction of 8,874 
licenses in the lower paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz, 
454-460 MHz) and 1,328 licenses in the upper paging bands (929-931 MHz) 
scheduled to commence on May 13, 2003 (``Auction No. 48''). This 
auction will include licenses that remained unsold from a previous 
auction or were defaulted on by a winning bidder in a previous auction. 
Due to the large volume of licenses in Auction No. 48, the complete 
list of licenses available for this auction will be provided in 
electronic format only, available as ``Attachment A'' to the Auction 
No. 48 Comment Public Notice at http://wireless.fcc.gov/auctions/48/.
    2. In the Paging Reconsideration Order, 64 FR 33762 (June 24, 
1999), the Commission concluded that the lower bands licenses should be 
awarded in each of the 175 geographic areas known as Economic Areas 
(EAs), and the upper band licenses should be awarded in each of the 51 
geographic areas known as Major Economic Areas (MEAs). These EAs and 
MEAs both encompass the United States, Guam and Northern Mariana 
Islands, Puerto Rico and the United States Virgin Islands, and American 
Samoa.
    3. The following tables contain the Block/Frequency Cross-Reference 
List for the paging bands:

[[Page 72684]]



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


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


                            152 MHz and 158 MHz Lower Bands Unpaired Paging Channels
----------------------------------------------------------------------------------------------------------------
  Block (license                                           Block (license
     suffix)                     Frequency                     suffix)                    Frequency
----------------------------------------------------------------------------------------------------------------
          EA                        152.230-152.250                 EC                       158.090-158.110
          EB                        152.830-152.850                ED                        158.690-158.710
----------------------------------------------------------------------------------------------------------------


                                   152 MHz Lower Bands Paired Paging Channels
----------------------------------------------------------------------------------------------------------------
   Block                                                      Block
  (license                     Frequency                    (license                   Frequency
  suffix)                                                    suffix)
----------------------------------------------------------------------------------------------------------------
       FA             152.015-152.045 / 158.475-158.505          FJ           152.555-152.585 / 157.815-157.845
       FB             152.045-152.075 / 158.505-158.535          FK           152.585-152.615 / 157.845-157.875
        FC            152.075-152.105 / 158.535-158.565          FL           152.615-152.645 / 157.875-157.905
       FD             152.105-152.135 / 158.565-158.595          FM           152.645-152.675 / 157.905-157.935
       FE             152.135-152.165 / 158.595-158.625          FN           152.675-152.705 / 157.935-157.965
       FF             152.165-152.195 / 158.625-158.655          FO           152.705-152.735 / 157.965-157.995
       FG             152.195-152.225 / 158.655-158.685          FP           152.735-152.765 / 157.995-158.025
       FH             152.495-152.525 / 157.755-157.785          FQ           152.765-152.795 / 158.025-158.055
       FI             152.525-152.555 / 157.785-157.815          FR           152.795-152.825 / 158.055-158.085
----------------------------------------------------------------------------------------------------------------


                                   454 MHz Lower Bands Paired Paging Channels
----------------------------------------------------------------------------------------------------------------
   Block                                                    Block
 (license                    Frequency                    (license                    Frequency
  suffix)                                                  suffix)
----------------------------------------------------------------------------------------------------------------
      GA        454.0125-454.0375 / 459.0125-459.0375          GN        454.3375-454.3625 / 459.3375-459.3625
      GB        454.0375-454.0625 / 459.0375-459.0625          GO        454.3625-454.3875 / 459.3625-459.3875
       GC       454.0625-454.0875 / 459.0625-459.0875          GP        454.3875-454.4125 / 459.3875-459.4125
      GD        454.0875-454.1125 / 459.0875-459.1125          GQ        454.4125-454.4375 / 459.4125-459.4375
      GE        454.1125-454.1375 / 459.1125-459.1375          GR        454.4375-454.4625 / 459.4375-459.4625
      GF        454.1375-454.1625 / 459.1375-459.1625          GS        454.4625-454.4875 / 459.4625-459.4875
      GG        454.1625-454.1875 / 459.1625-459.1875          GT        454.4875-454.5125 / 459.4875-459.5125
      GH        454.1875-454.2125 / 459.1875-459.2125          GU        454.5125-454.5375 / 459.5125-459.5375
      GI        454.2125-454.2375 / 459.2125-459.2375          GV        454.5375-454.5625 / 459.5375-459.5625
      GJ        454.2375-454.2625 / 459.2375-459.2625          GW        454.5625-454.5875 / 459.5625-459.5875
      GK        454.2625-454.2875 / 459.2625-459.2875          GX        454.5875-454.6125 / 459.5875-459.6125
      GL        454.2875-454.3125 / 459.2875-459.3125          GY        454.6125-454.6375 / 459.6125-459.6375
      GM        454.3125-454.3375 / 459.3125-454.3375          GZ        454.6375-454.6625 / 459.6375-459.6625
----------------------------------------------------------------------------------------------------------------


[[Page 72685]]


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


    Note: For Auction No. 48, licenses are not available in every 
block listed in the tables. The complete list of licenses available 
for Auction No. 48 will be provided in electronic format only, 
available as ``Attachment A'' to the Auction No. 48 Comment Public 
Notice at http://wireless.fcc.gov/auctions/48/.

    4. The Balanced Budget Act of 1997 requires the Commission to 
``ensure that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures * * *.'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, to seek comment on a variety of 
auction-specific procedures prior to the start of each auction. The 
Bureau seeks comment on the following issues relating to Auction No. 
48.

I. Auction Structure

A. Simultaneous Multiple Round (SMR) Auction Design

    5. The Bureau proposes to award the licenses included in Auction 
No. 48 in a simultaneous multiple-round auction. As described further, 
this methodology offers every license for bid at the same time with 
successive bidding rounds in which bidders may place bids. The Bureau 
seeks comment on this proposal.

B. Upfront Payments and Initial Maximum Eligibility

    6. The Bureau has been delegated authority and discretion to 
determine an appropriate upfront payment for each license being 
auctioned, taking into account such factors as the population in each 
geographic license area, and the value of similar spectrum. As 
described further, the upfront payment is a refundable deposit made by 
each bidder to establish eligibility to bid on licenses. Upfront 
payments related to the specific spectrum subject to auction protect 
against frivolous or insincere bidding and provide the Commission with 
a source of funds from which to collect payments owed at the close of 
the auction.
    7. The Bureau proposes to make the upfront payments equal to the 
minimum opening bids, which are established based on similar facts as 
described in section II.B. The specific upfront payments for each 
license are set forth in the list of licenses available for Auction No. 
48 (``Attachment A''), available with the Auction No. 48 Comment Public 
Notice at http://wireless.fcc.gov/auctions/48/. The Bureau seeks 
comment on this proposal.
    8. The Bureau further propose that the amount of the upfront 
payment submitted by a bidder will determine the number of bidding 
units on which a bidder may place bids. This limit is a bidder's 
``maximum initial eligibility.'' Each license is assigned a specific 
number of bidding units equal to the upfront payment, listed in the 
license inventory available for Auction No. 48 (``Attachment A''), 
available with the Auction No. 48 Comment Public Notice at http://wireless.fcc.gov/auctions/48/, on a bidding unit per dollar basis. This 
number does not change as prices rise during the auction. A bidder's 
upfront payment is not attributed to specific licenses. Rather, a 
bidder may place bids on any combination of licenses as long as the 
total number of bidding units associated with those licenses does not 
exceed its maximum initial eligibility. Eligibility cannot be increased 
during the auction. Thus, in calculating its upfront payment amount, an 
applicant must determine the maximum number of bidding units it may 
wish to bid on (or hold high bids on) in any single round, and submit 
an upfront payment covering that number of bidding units. The Bureau 
seeks comment on this proposal.

C. Activity Rules

    9. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively on a 
percentage of their maximum bidding eligibility during each round of 
the auction rather than wait until the end to participate. A bidder 
that does not satisfy the activity rule will either lose bidding 
eligibility in the next round or must use an activity rule waiver (if 
any remain).
    10. The Bureau proposes to divide the auction into three stages, 
each characterized by an increased activity requirement. The auction 
will start in Stage One. The Bureau proposes that the auction generally 
will advance to the next stage (i.e., from Stage One to Stage Two, and 
from Stage Two to Stage Three) when the auction activity level, as 
measured by the percentage of bidding units receiving new high bids, is 
approximately twenty percent or below for three consecutive rounds of 
bidding. However, the Bureau further proposes that it the discretion to 
change stages unilaterally by announcement during the auction. In 
exercising this discretion, the Bureau will consider a variety of 
measures of bidder activity, including, but not limited to, the auction 
activity level, the percentages of licenses (as measured in bidding 
units) on which there are new bids, the number of new bids, and the 
percentage increase in revenue. The Bureau seeks comment on these 
proposals.
    11. For Auction No. 48, the Bureau proposes the following activity 
requirements:

[[Page 72686]]

    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current eligibility is required to be 
active on licenses representing at least 80 percent of its current 
bidding eligibility. Failure to maintain the requisite activity level 
will result in a reduction in the bidder's bidding eligibility in the 
next round of bidding (unless an activity rule waiver is used). During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the current round activity by five-fourths (5/4).
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current eligibility is required to be active on 90 percent 
of its current bidding eligibility. During Stage Two, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by ten-ninths (10/9).
    Stage Three: In each round of the third stage, a bidder desiring to 
maintain its current eligibility is required to be active on 98 percent 
of its current bidding eligibility. In this final stage, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by fifty/forty-ninths (\50/49\).
    12. The Bureau seeks comment on these proposals. Commenters that 
believe these activity rules should be modified should explain their 
reasoning and comment on the desirability of an alternative approach. 
Commenters are advised to support their claims with analyses and 
suggested alternative activity rules.

D. Activity Rule Waivers and Reducing Eligibility

    13. Use of an activity rule waiver preserves the bidder's current 
bidding eligibility despite the bidder's activity in the current round 
being below the required minimum level. An activity rule waiver applies 
to an entire round of bidding and not to a particular license. Activity 
waivers can be either proactive or automatic and are principally a 
mechanism for auction participants to avoid the loss of auction 
eligibility in the event that exigent circumstances prevent them from 
placing a bid in a particular round.

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

    14. The FCC Automated Auction System assumes that bidders with 
insufficient activity would prefer to use an activity rule waiver (if 
available) rather than lose bidding eligibility. Therefore, the system 
will automatically apply a waiver (known as an ``automatic waiver'') at 
the end of any bidding period 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.

    Note:  If a bidder has no waivers remaining and does not satisfy 
the required activity level, its current eligibility will be 
permanently reduced, possibly eliminating the bidder from the 
auction.

    15. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding period by using the reduce eligibility function in 
the bidding system. In this case, the bidder's eligibility is 
permanently reduced to bring the bidder into compliance with the 
activity rules as described. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility.
    16. 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 bidding period in which no bids or withdrawals are 
submitted, the auction will remain open and the bidder's eligibility 
will be preserved. An automatic waiver invoked in a round in which 
there are no new valid bids or withdrawals will not keep the auction 
open.
    17. The Bureau proposes that each bidder in Auction No. 48 be 
provided with five activity rule waivers that may be used at the 
bidder's discretion during the course of the auction as set forth. The 
Bureau seeks comment on this proposal.

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

    18. The Bureau proposes that, by public notice or by announcement 
during the auction, the Bureau may delay, suspend, or cancel the 
auction in the event of natural disaster, technical obstacle, evidence 
of an auction security breach, unlawful bidding activity, 
administrative or weather necessity, or for any other reason that 
affects the fair and efficient 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. The Bureau seeks comment on this proposal.

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

    19. In the Paging Second Report and Order, 62 FR 11616 (March 12, 
1997), the Commission concluded that, due to the large number of 
licenses to be auctioned, limiting the disclosure of information to 
bidders during the course of paging auctions (e.g., revealing only high 
bids and total number of bids on each license and withholding bidder 
identities) might help to speed the pace of the auctions. In the Paging 
Reconsideration Order, the Commission directed the Bureau to seek 
further comment on this issue. Based on its experience in Auctions No. 
26 and No. 40, in which the information was disclosed, the Bureau 
tentatively concludes that it is unnecessary to withhold bidder 
identities in Auction No. 48. The Bureau seeks comment on this 
tentative conclusion. In addition, as in Auctions No. 26 and No. 40, 
the Bureau proposes to disclose all information relating to the bids 
during Auction No. 48 after each round of bidding closes, including all 
bids and withdrawals placed in each round, the identity of the bidder 
placing each bid or withdrawal, and the net and gross amounts of each 
bid or withdrawal. The Bureau seeks comment on this proposal.

II. Bidding Procedures

A. Round Structure

    20. The Commission will conduct Auction No. 48 over the Internet. 
Telephonic Bidding will also be available. As a contingency, the FCC 
Wide Area Network, will be available as well. The telephone number 
through which the backup FCC Wide Area Network may be accessed will be 
announced in a later public notice. Full information regarding how to 
establish such a connection, and related charges, will be provided in 
the public notice announcing details of auction procedures.
    21. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction, and will be included in the registration mailings. The 
simultaneous multiple round format will consist of sequential bidding 
rounds, each followed by the release of round results. Details 
regarding the

[[Page 72687]]

location and format of round results will be included in the same 
public notice.
    22. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors. The Bureau 
seeks comment on this proposal.

B. Reserve Price or Minimum Opening Bid

    23. The Balanced Budget Act calls upon the Commission to prescribe 
methods for establishing a reasonable reserve price or a minimum 
opening bid when FCC licenses are subject to auction, unless the 
Commission determines that a reserve price or minimum opening bid is 
not in the public interest. Consistent with this mandate, the 
Commission has directed the Bureau to seek comment on the use of a 
minimum opening bid and/or reserve price prior to the start of each 
auction.
    24. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It is generally used to accelerate 
the competitive bidding process. Also, the auctioneer often has the 
discretion to lower the minimum opening bid amount later in the 
auction. It is also possible for the minimum opening bid and the 
reserve price to be the same amount.
    25. In light of the Balanced Budget Act's requirements, the Bureau 
proposes to establish minimum opening bids for Auction No. 48. The 
Bureau believes a minimum opening bid, which has been utilized in other 
auctions, is an effective auction tool.
    26. Because multiple licenses in the same geographic area are being 
auctioned at the same time, under the same general conditions, the 
Commission believes that it is appropriate to use a common baseline to 
establish the minimum opening bid formula for all the licenses in the 
auction. The gross high bids from the prior Lower and Upper Paging 
Bands Auction (Auction No. 40) provide the most comprehensive paging 
baseline. Therefore, the Bureau proposes to base the minimum opening 
bid for each license available in Auction No. 48 on the average of the 
corresponding gross high bids received in Auction No. 40, as follows:
    [sbull] For a license being auctioned by MEA, the minimum opening 
bid will be 20% of the average gross high bid received in Auction No. 
40 in the same MEA.
    [sbull] For a license being auctioned by EA, the minimum opening 
bid will be 20% of the average gross high bid received in Auction No. 
40 in the same EA.
    The Commission will set a ``floor'' for minimum opening bids at 
$500 for licenses in both the upper paging bands (929-931 MHz) and the 
lower paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz, and 454-460 
MHz).
    27. This formula is intended to apply to all geographic paging 
licenses in Auction No. 48, and takes into account considerations 
discussed. The specific proposed minimum opening bid for each license 
available in Auction No. 48 is set forth in the list of licenses 
provided in electronic format as ``Attachment A'' of the Auction No. 48 
Comment Public Notice at http://wireless.fcc.gov/auctions/48/. Comment 
is sought on this proposal.
    28. If commenters believe that these minimum opening bids will 
result in substantial numbers of unsold licenses, or are not reasonable 
amounts, or should instead operate as reserve prices, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, the 
Bureau particularly seeks comment on such factors as the amount of 
spectrum being auctioned, levels of incumbency, the availability of 
technology to provide service, the size of the geographic service 
areas, issues of interference with other spectrum bands and any other 
relevant factors that could reasonably have an impact on valuation of 
the paging bands. Alternatively, comment is sought on whether, 
consistent with the Balanced Budget Act, the public interest would be 
served by having no minimum opening bid or reserve price.

C. Minimum Acceptable Bids and Bid Increments

    29. In each round, eligible bidders will be able to place bids on a 
given license in any of nine different amounts. The Automated Auction 
System interface will list the nine acceptable bid amounts for each 
license. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. In the rounds after an acceptable bid is placed on a license, the 
minimum acceptable bid for that license will be equal to the standing 
high bid plus the defined increment.
    30. For Auction No. 48, the Bureau proposes to set the defined 
increment for each license based on a percentage of the standing high 
bid on the license or, if no bid has been placed on the license, a 
percentage of the minimum opening bid for the license. The defined 
increment will be calculated as follows. Presuming, for example, that 
the percentage being used is 20 percent, we will multiply the standing 
high bid (or, if no standing high bid exists for the particular 
license, the minimum opening bid) by 1.2. (If the percentage being used 
is 30 percent, we would multiply by 1.3, etc.) The product will be 
rounded as follows: amounts below $1,000 will be rounded to the nearest 
$10; amounts above $1,000 but below $10,000 will be rounded to the 
nearest $100; and amounts above $10,000 will be rounded to the nearest 
$1,000. The defined increment then will be determined by subtracting 
the standing high bid (or, if applicable, the minimum opening bid) from 
the rounded result. At the start of the auction, the Bureau proposes to 
use 20 percent to calculate the defined increment. The Bureau also 
proposes to retain discretion to change the percentage used to 
calculate the defined increment if we determine that circumstances so 
dictate. Further, the Bureau proposes to retain discretion to set a 
floor for the increment used to calculate the minimum acceptable bid at 
an absolute dollar amount.
    31. In addition, the Bureau proposes that it have discretion to use 
a smaller defined increment to calculate acceptable bids higher than 
the minimum acceptable bid. The smaller defined increment would be 
calculated using a smaller percentage than the percentage used to 
calculate the defined increment that sets the minimum acceptable bid. 
For example, 20 percent might be used to calculate the defined 
increment for the minimum acceptable bid and 10 percent might be used 
to calculate the smaller defined increment used to calculate higher 
acceptable bids. In all other respects, the smaller defined increment 
would be calculated in exactly the manner described for the initial 
defined increment, including rounding.
    32. For example, the Bureau could calculate bids using 20 percent 
to calculate the defined increment for the minimum acceptable bid and 
10 percent to calculate the smaller defined increment. Assuming that 
the standing

[[Page 72688]]

high bid on a given license is $50,000, in the next round,

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

    33. This procedure would enable bidders unwilling to raise the 
standing high bid by twice the defined increment to place bids higher 
than the minimum acceptable bid. Thus, in the example, a bidder wanting 
to bid above the minimum acceptable bid but unwilling to raise the 
standing high bid of $50,000 by twice the defined increment of $10,000 
($20,000 or 40 percent) would have the flexibility to bid $65,000, 
raising the standing high bid by $15,000.
    34. 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 defined increment, as stated.
    35. In summary, the Bureau proposes it have discretion at any time 
during the auction to change the initial 20 percent used to calculate 
the defined increment and/or to set an absolute dollar amount floor for 
the increment used to calculate the minimum acceptable bid. The Bureau 
also proposes that it have additional discretion to calculate the 
minimum acceptable bid using one percentage and to calculate higher 
acceptable bids using another percentage, as described. The Bureau's 
decision to exercise its discretion with regard to minimum acceptable 
bids and bid increments would be announced via the Automated Auction 
System. The Bureau seeks comment on these proposals.

D. High Bids

    36. At the end of a bidding round, the high bids will be determined 
based on the highest gross bid amount received for each license. In the 
event of identical high bids on a license in a given round (i.e., tied 
bids), the Bureau proposes to use a random number generator to select a 
high bid from among the tied bids. The remaining bidders, as well as 
the high bidder, will be able to submit a higher bid in a subsequent 
round. If no bidder submits a higher bid in a subsequent round, the 
high bid from the previous round will win the license. If any bids are 
received on the license in a subsequent round, the high bid will again 
be determined on the highest gross bid amount received for the license. 
The Bureau seeks comment on this proposal.
    37. A high bid will remain the high bid until there is a higher bid 
on the same license at the close of a subsequent round. A high bid from 
a previous round is sometimes referred to as a ``standing high bid.'' 
Bidders are reminded that standing high bids confer activity credit.

E. Information Regarding Bid Withdrawal and Bid Removal

    38. For Auction No. 48, the Bureau proposes the following bid 
removal and bid withdrawal procedures. Before the close of a bidding 
period, a bidder has the option of removing any bid placed in that 
round. By using the remove selected bids 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 a withdrawal payment. Once a round closes, a bidder may no 
longer remove a bid.
    39. A high bidder may withdraw its standing high bids from previous 
rounds using the withdrawal function in the bidding system. A high 
bidder that withdraws its standing high bid from a previous round is 
subject to the bid withdrawal payment provisions of the Commission 
rules. The Bureau seeks comment on these bid removal and bid withdrawal 
procedures.
    40. In the Part 1 Third Report and Order, 63 FR 770 (January 7, 
1998), the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and the pursuit of 
efficient backup strategies as information becomes available during the 
course of an auction. The Commission noted, however, that, in some 
instances, bidders may seek to withdraw bids for improper reasons. The 
Bureau, therefore, has discretion, in managing the auction, to limit 
the number of withdrawals to prevent any bidding abuses. The Commission 
stated that the Bureau should assertively exercise its discretion, 
consider limiting the number of rounds in which bidders may withdraw 
bids, and prevent bidders from bidding on a particular market if the 
Bureau finds that a bidder is abusing the Commission's bid withdrawal 
procedures.
    41. Applying this reasoning, the Bureau proposes to limit each 
bidder in Auction No. 48 to withdrawing standing high bids in no more 
than two rounds during the course of the auction. To permit a bidder to 
withdraw bids in more than two rounds would likely encourage insincere 
bidding or the use of withdrawals for anti-competitive purposes. The 
two rounds in which withdrawals are utilized will be at the bidder's 
discretion; withdrawals otherwise must be in accordance with the 
Commission's rules. There is no limit on the number of standing high 
bids that may be withdrawn in either of the rounds in which withdrawals 
are utilized. Withdrawals will remain subject to the bid withdrawal 
payment provisions specified in the Commission's rules. The Bureau 
seeks comment on this proposal.

F. Stopping Rule

    42. The Bureau has discretion ``to establish stopping rules before 
or during multiple round auctions in order to terminate the auction 
within a reasonable time.'' For Auction No. 48, the Bureau proposes to 
employ a simultaneous stopping rule approach. A simultaneous stopping 
rule means that all licenses remain open until bidding closes 
simultaneously on all licenses.
    43. Bidding will close simultaneously on all licenses after the 
first round in which no new acceptable bids, proactive waivers, or 
withdrawals are received. Thus, unless circumstances dictate otherwise, 
bidding will remain open on all licenses until bidding stops on every 
license.
    44. However, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 48:
    i. Utilize a modified version of the simultaneous stopping rule. 
The modified stopping rule would close the auction for all licenses 
after the first round in which no bidder submits a proactive waiver, 
withdrawal, or a new bid on any license on which it is not the standing 
high bidder. Thus, absent any

[[Page 72689]]

other bidding activity, a bidder placing a new bid on a license for 
which it is the standing high bidder would not keep the auction open 
under this modified stopping rule. The Bureau further seeks comment on 
whether this modified stopping rule should be used at any time or only 
in stage three of the auction.
    ii. Keep the auction open even if no new acceptable bids or 
proactive waivers are submitted and no previous high bids are 
withdrawn. In this event, the effect will be the same as if a bidder 
had submitted a proactive waiver. The activity rule, therefore, will 
apply as usual, and a bidder with insufficient activity will either 
lose bidding eligibility or use a remaining activity rule waiver.
    iii. Declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the Bureau invokes 
this special stopping rule, it will accept bids in the specified final 
round(s) only for licenses on which the high bid increased in at least 
one of a specified preceding number of rounds.
    45. The Bureau proposes to exercise these options only in certain 
circumstances, such as, for example, where the auction is proceeding 
very slowly, there is minimal overall bidding activity, or it appears 
likely that the auction will not close within a reasonable period of 
time. Before exercising these options, the Bureau is likely to attempt 
to increase the pace of the auction by, for example, increasing the 
number of bidding rounds per day, and/or increasing the amount of the 
minimum bid increments for the limited number of licenses where there 
is still a high level of bidding activity. The Bureau seeks comment on 
these proposals.

III. Conclusion

    46. Comments are due on or before December 13, 2002, and reply 
comments are due on or before December 18, 2002. Because of the 
disruption of regular mail and other deliveries in Washington, DC, the 
Bureau requires that all comments and reply comments be filed 
electronically. Comments and reply comments must be sent by electronic 
mail to the following address: [email protected]. The electronic mail 
containing the comments or reply comments must include a subject or 
caption referring to Auction No. 48 Comments. The Bureau requests that 
parties format any attachments to electronic mail as Adobe[reg] 
Acrobat[reg] (pdf) or Microsoft[reg] Word documents. Copies of comments 
and reply comments will be available for public inspection during 
regular business hours in the FCC Public Reference Room, Room CY-A257, 
445 12th Street, SW., Washington, DC 20554. In addition, the Bureau 
requests that commenters fax a courtesy copy of their comments and 
reply comments to the attention of Kathryn Garland at (717) 338-2850. 
Parties that have previously filed comments or reply comments for 
Auction No. 48 need not refile them.
    47. This proceeding has been designated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentations must contain summaries of the 
substance of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in Sec.  1.1206(b) of the Commission's rules.

    Federal Communications Commission.
Margaret Wiener,
Chief, Auctions & Industry Analysis Division.
[FR Doc. 02-30500 Filed 12-5-02; 8:45 am]
BILLING CODE 6712-01-P