[Federal Register Volume 68, Number 52 (Tuesday, March 18, 2003)]
[Notices]
[Pages 12906-12911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6476]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-03-52-A (Auction No. 52); FCC 03-40]


Auction of Direct Broadcast Satellite Service Licenses Scheduled 
for August 6, 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 licenses to use the 
Direct Broadcast Satellite (``DBS'') service allocation and seeks 
comment on reserve prices or minimum opening bids and other auction 
procedures.

DATES: Comments are due on or before March 17, 2003, and reply comments 
are due on or before March 24, 2003.

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

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division, WTB: For legal questions: Brian Carter at (202) 418-0660. For 
general auction questions: Jeff Crooks at (202) 418-0660 or Lisa Stover 
at (717) 338-2888. Satellite Division, IB: For service rule questions: 
Selina Khan at (202) 418-7282 or Rockie Patterson at (202) 418-1183.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 52 
Comment Public Notice released on March 3, 2003. The complete text of 
the Auction No. 52 Comment Public Notice, including the attachment, 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. 52 
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].

I. General Information

    1. By the Auction No. 52 Comment Public Notice, the Commission 
announces the auction of licenses to use the Direct Broadcast Satellite 
(``DBS'') service allocation scheduled to commence on August 6, 2003 
(Auction No. 52). This auction will include 4 licenses for unassigned 
channels at orbital locations of 175[deg] W.L., 166[deg] W.L., 157[deg] 
W.L., and 61.5[deg] W.L. These licenses would be subject to the 
Commission's DBS service rules, including the geographic service rules 
at 47 CFR 25.148(c). Specifically, DBS licensees must provide DBS 
service to Alaska and Hawaii where such service is technically feasible 
from the authorized location. A complete list and description of the 
licenses available for Auction No. 52 is included as Attachment A of 
the Auction No. 52 Comment Public Notice.
    2. 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 seeks comment on a 
variety of auction-specific procedures relating to Auction No. 52. We 
note that the authority to establish specific procedures for Auction 
No. 52 has already been delegated to the Wireless Telecommunications 
Bureau (the ``Bureau'' or ``WTB'').
    3. In addition to the enactment of the Balanced Budget Act of 1997, 
there have been legal developments relevant to satellite services since 
the Commission last conducted DBS auctions. Specifically, in 1996 the 
Commission adopted a Report and Order, 61 FR 9946 (March 12, 1996) 
(``Disco I''), that removed FCC regulatory prohibitions on the 
provision of various satellite services beyond the borders of the 
United States. In addition, in the year 2000 Congress enacted section 
647 of the ORBIT Act, Public Law 106-180, 114 Stat. 48, which prohibits 
the Commission from using competitive bidding to assign orbital 
locations or spectrum used ``for the provision of international or 
global satellite communications services.'' In light of these 
regulatory and statutory actions, we believe it is appropriate to state 
herein our conclusion that they have not altered the Commission's 
authority to auction the DBS licenses included in Auction No. 52.
    4. The DBS licenses that will be included in Auction No. 52 are not 
subject to the auction prohibition of the ORBIT Act because they are 
not authorizations to use spectrum ``for the provision of international 
or global satellite communications services.'' These licenses are for 
the use of DBS channels that, under the Region 2 Band Plan for Ku-band 
DBS satellites initially adopted in the International Telecommunication 
Union (``ITU'') 1983 Regional Administrative Radio Conference, have 
coverage patterns that are designed to--and do in fact--serve the 
United States almost exclusively. Thus, the technical parameters of the 
ITU Region 2 Band Plan provide for coverage areas for national service 
to the United States with incidental service to neighboring 
territories.
    5. Moreover, neither the national coverage patterns nor the 
incidental international coverage patterns of the U.S. DBS satellite 
assignments may be expanded without further international agreement. A 
U.S.-licensed satellite operator at one of the orbital locations 
assigned to the United States cannot change, without the agreement of 
affected countries, any of the satellite's operations if that change 
will increase the interference potential to other countries' DBS 
satellite assignments above those levels permitted by international 
regulation. A change in the footprint to provide increased coverage of 
another country will potentially cause the modified assignment to 
exceed these levels. For a licensee to operate with such modified 
parameters, the United States, on behalf of the satellite operator, 
must request and obtain a modification to the Region 2 Band Plan 
pursuant to ITU procedures. The United States has not requested 
modifications for international service purposes to the Region 2 Band 
Plan for any of the orbital channel assignments

[[Page 12907]]

included in Auction No. 52. Thus, the auction will assign licenses for 
DBS satellites that can provide almost exclusively national service, 
with only incidental coverage outside the U.S. borders.
    6. DISCO I removed FCC regulatory prohibitions on the provision of 
DBS service, as well as other types of satellite service, beyond the 
borders of the United States. However, DISCO I did not change the fact 
that the ITU Region 2 Band Plan provides for only an incidental signal 
outside U.S. borders. The technical parameters established under the 
ITU Region 2 Band Plan provide for national service to the United 
States, with incidental service to neighboring territories. DBS 
providers who operate under licenses for the eight orbital locations 
assigned to the United States under the Plan must comply with these 
technical parameters.
    7. The incidental provision of transborder service does not convert 
an otherwise auctionable license to an unauctionable one. The 
legislative history of the ORBIT Act auction exemption, which consists 
of a House Commerce Committee Report on an earlier, unenacted bill 
containing an auction exemption identical to that of section 647 of the 
ORBIT Act, expresses concern for the effect that auctions could have on 
the viability and availability of global and international satellite 
services. The Committee indicated that an auctions exemption could help 
such service providers avoid financial burdens they might otherwise 
face if a U.S. auction regime precipitated a succession of auctions in 
numerous countries in which the operators might seek to provide 
service. The auctioning of U.S. DBS licenses that comply with the ITU 
Region 2 Band Plan does not implicate these concerns, given the fact 
that the Plan was designed to maintain the distinctly national 
character of the DBS service. We seek comment on these conclusions.
    8. We also note that the Commission has not adopted any blanket 
eligibility restrictions on the licenses included in this auction. In 
the Part 100 R&O, 67 FR 51110 (August 7, 2002), proceeding, the 
Commission had the opportunity to address issues relating to ownership 
restrictions and implementation of services. The Commission considered 
comments filed raising such eligibility and ownership issues and 
declined to adopt any specific restrictions. In this regard, we note 
that, in some services, the Commission has used a standard for 
determining whether an eligibility restriction is warranted. In those 
cases, we have determined that an eligibility restriction may be 
imposed only when there is significant likelihood of substantial harm 
to competition in specific markets and when the restriction will be 
effective in eliminating that harm. This approach results in reliance 
on competitive market forces to guide license assignment absent a 
compelling showing that regulatory intervention to exclude potential 
participants is necessary. We seek comment as to the use of that 
standard for this service.
    9. Nonetheless, one of the four licenses scheduled for auction 
authorizes the use of only two channels. The Commission has previously 
noted that with so few authorized channels it may be difficult for a 
DBS licensee to provide sufficient capacity to operate a viable system. 
Generally, does this concern warrant any modification of our existing 
open eligibility regime? We request comment on whether we should adopt 
any specific eligibility criteria for licenses at the 61.5Sec. [deg] 
W.L. location such as: (i) Whether the applicant should be an existing 
permittee at the 61.5Sec. [deg] W.L. location; (ii) whether the 
channels should be assigned to an applicant that holds no other DBS 
channel resources capable of serving the continental United States; and 
(iii) whether the applicant should be required to demonstrate an 
ability to launch in the near future. Should the Commission consider 
eligibility restrictions on particular orbital locations based on 
entities' market position in the provision of terrestrial multichannel 
video programming? Finally, we seek comment on any other proposed 
eligibility requirements for each of the orbital locations, including 
the rationale for any such requirements.

II. Auction Structure

A. Simultaneous Multiple Round (SMR) Auction Design

    10. The Commission proposes to award all licenses included in 
Auction No. 52 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. We seek 
comment on this proposal.

B. Upfront Payments and Initial Maximum Eligibility

    11. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned, taking 
into account such factors as the population in each geographic license 
area, and the value of similar spectrum. 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. With these guidelines in mind for 
Auction No. 52, the Commission proposes to set upfront payments on a 
license-by-license basis as follows:

                                                Upfront Payments
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Orbital Location...............  175[deg] W.L.......  166[deg] W.L......  157[deg] W.L......  61.5[deg] ;W.L.
Per Channel....................  $50,000............  $50,000...........  $100,000..........  $400,000
No. of Channels................  32.................  32................  32................  2
Upfront Payment................  $1,600,000.........  $1,600,000........  $3,200,000........  $800,000
----------------------------------------------------------------------------------------------------------------

    Additionally, we list all licenses and the proposed upfront payment 
for each in Attachment A of the Auction No. 52 Comment Public Notice. 
We seek comment on this proposal.
    12. The Commission further proposes that the amount of the upfront 
payment submitted by a bidder will determine the number of bidding 
units on which a bidder may place bids. This limit is a bidder's 
``maximum initial eligibility.'' Each license is assigned a specific 
number of bidding units equal to the upfront payment listed in 
Attachment A of the Auction No. 52 Comment Public Notice, on a bidding 
unit per dollar basis. This number does not change as prices rise 
during the auction. A bidder's upfront payment is not attributed to 
specific licenses. Rather, a bidder may place bids on any combination 
of licenses as long as the total number of bidding units associated 
with those licenses does not exceed the bidder's eligibility. 
Eligibility cannot be increased during the auction. Thus, in 
calculating its upfront payment amount,

[[Page 12908]]

an applicant should determine the maximum number of bidding units it 
may wish to bid on (or hold high bids on) in any single round and 
submit an upfront payment covering that number of bidding units. We 
seek comment on this proposal.

C. Activity Rules

    13. 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 current bidding eligibility during each round of 
the auction rather than waiting until the end to participate. A bidder 
that does not satisfy the activity rule will either use an activity 
rule waiver (if any remain) or lose bidding eligibility for the next 
round.
    14. The Commission proposes to divide the auction into three 
stages, each characterized by an increased activity requirement. The 
auction will start in Stage One. We propose that the auction will 
advance to the next stage (i.e., from Stage One to Stage Two, and from 
Stage Two to Stage Three) after two consecutive rounds in which only 
one new high bid is placed in each round. The Bureau will notify 
bidders by announcement when a stage transition takes place during the 
auction. We also propose that the Bureau retain discretion to change 
stages unilaterally by announcement during the auction, and further 
propose that the Bureau retain the discretion not to make a transition 
to the next stage when the conditions described above are met. 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 percentage of licenses (as measured in bidding 
units) on which there are new bids, the number of new bids, and the 
percentage increase in revenue. We seek comment on these proposals.
    15. For Auction No. 52, we propose the following activity 
requirements:
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current eligibility is required to be 
active on licenses representing at least 50 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 two.
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current eligibility is required to be active on 75 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 four-thirds (\4/3\).
    Stage Three: In each round of the third stage, a bidder desiring to 
maintain its current eligibility is required to be active on 100 
percent of its current bidding eligibility. In this final stage, 
reduced eligibility for the next round will be set at current round 
activity. For example, if a bidder is not the standing high bidder and 
did not place a bid in the current round its eligibility would be 
reduced to zero. If it had no waivers remaining, it would be eliminated 
from the auction.
    16. We seek 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

    17. 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 
rule 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 submitted during a round, that 
waiver cannot be unsubmitted.
    18. 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 bidding round in which a bidder's activity level is 
below the minimum required unless: (i) the bidder has no activity rule 
waivers remaining; or (ii) 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.
    19. 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 above. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility.
    20. 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.
    21. The Commission proposes that each bidder in Auction No. 52 be 
provided with three activity rule waivers that may be used at the 
bidder's discretion during the course of the auction. We seek comment 
on this proposal.

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

    22. For Auction No. 52, we propose that, by public notice or by 
announcement during the auction, the Bureau may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
obstacle, evidence of an auction security breach, unlawful bidding 
activity, administrative or weather necessity, or for any other reason 
that affects the fair and efficient conduct of competitive bidding. In 
such cases, the Bureau may elect to resume the auction starting from 
the beginning of the current round, resume the auction starting from 
some previous round, or cancel the auction in its entirety. Network 
interruption may cause the Bureau to delay or suspend the auction. We 
emphasize that exercise of this authority is solely within the 
discretion of the Bureau and its use is not intended to be a substitute 
for situations in which bidders may wish to apply their activity rule 
waivers. We seek comment on this proposal.

III. Bidding Procedures

A. Round Structure

    23. The Commission will conduct Auction No. 52 over the Internet.

[[Page 12909]]

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.
    24. 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. The simultaneous multiple 
round format will consist of sequential bidding rounds, each followed 
by the release of round results. Details regarding the location and 
format of round results will also be included in the qualified bidders 
public notice.
    25. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors. We seek 
comment on this proposal.

B. Reserve Price or Minimum Opening Bid

    26. 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. 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.
    27. In light of the Balanced Budget Act's requirements, the 
Commission proposes to establish minimum opening bids for Auction No. 
52. We believe that a minimum opening bid, which has been utilized in 
other auctions, is an effective bidding tool.
    28. Specifically, for Auction No. 52, the Commission proposes to 
set minimum opening bids on a license-by-license basis as follows:

                                              Minimum Opening Bids
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Orbital Location...............  175[deg] W.L.......  166[deg] W.L......  157[deg] W.L......  61.5[deg] W.L.
Per Channel....................  $100,000...........  $100,000..........  $200,000..........  $800,000
No. of Channels................  32.................  32................  32................  2
Minimum Opening Bid............  $3,200,000.........  $3,200,000........  $6,400,000........  $1,600,000
----------------------------------------------------------------------------------------------------------------

    The specific minimum opening bid for each license available in 
Auction No. 52 is also set forth in Attachment A of the Auction No. 52 
Comment Public Notice. Comment is sought on this proposal.
    29. If commenters believe that these minimum opening bids will 
result in a substantial percentage of unsold licenses, or are not 
reasonable amounts, or should instead operate as reserve prices, they 
should explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, we 
particularly seek comment on such factors as the orbital location and 
the number of channels being auctioned, the size of the area being 
served, issues of interference with other spectrum bands and any other 
relevant factors that could reasonably have an impact on valuation of 
the DBS licenses. 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

    30. 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.
    31. Once there is a standing high bid on a license, the Automated 
Auction System will calculate a minimum acceptable bid for that license 
for the following round. The difference between the minimum acceptable 
bid and the standing high bid for each license will define the bid 
increment. The nine acceptable bid amounts for each license consist of 
the minimum acceptable bid (the standing high bid plus one bid 
increment) and additional amounts calculated using multiple bid 
increments (i.e., the second bid amount equals the standing high bid 
plus two times the bid increment, the third bid amount equals the 
standing high bid plus three times the bid increment, etc.).
    32. For Auction No. 52, the Commission proposes to use a 10 percent 
bid increment. This means that the minimum acceptable bid for a license 
will be approximately 10 percent greater than the previous standing 
high bid received on the license. The minimum acceptable bid amount 
will be calculated by multiplying the standing high bid times one plus 
the increment percentage--i.e., (standing high bid) * (1.10). We will 
round the result using our standard rounding procedures for minimum 
acceptable bid calculations: results above $10,000 are rounded to the 
nearest $1,000; results below $10,000 but above $1,000 are rounded to 
the nearest $100; and results below $1,000 are rounded to the nearest 
$10.
    33. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. The additional bid amounts are calculated using the difference 
between the minimum opening bid times one plus the minimum percentage 
increment, rounded as described above, and the minimum opening bid. 
That is, I = (minimum opening bid)(1 + N){rounded{time} -(minimum 
opening bid).

[[Page 12910]]

Therefore, when N equals 0.1, the first additional bid amount will be 
approximately ten percent higher than the minimum opening bid; the 
second, twenty percent; the third, thirty percent; etc.
    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 difference between the second highest bid times 
one plus the minimum percentage increment, rounded, and the second 
highest bid.
    35. The Bureau retains the discretion to change the minimum 
acceptable bids and bid increments if it determines that circumstances 
so dictate. The Bureau will do so by announcement in the Automated 
Auction System. We seek 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. A high 
bid from a previous round is sometimes referred to as a ``standing high 
bid.'' A ``standing high bid'' will remain the high bid until there is 
a higher bid on the same license at the close of a subsequent round. 
Bidders are reminded that standing high bids confer bidding activity.
    37. In the event of identical high bids on a license in a given 
round (i.e., tied bids), we propose 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 again will be determined by the highest gross bid amount received 
for the license.

E. Information Regarding Bid Withdrawal and Bid Removal

    38. For Auction No. 52, the Commission 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 removing selected bids 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 ``withdraw 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. We seek 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 Commission proposes to limit each 
bidder in Auction No. 52 to withdrawing standing high bids in no more 
than one round during the course of the auction. To permit a bidder to 
withdraw bids in more than one round would likely encourage insincere 
bidding or the use of withdrawals for anti-competitive purposes. The 
round 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 the round in which withdrawals are 
utilized. Withdrawals will remain subject to the bid withdrawal payment 
provisions specified in the Commission's rules. We seek comment on this 
proposal.

F. Stopping Rule

    42. The Commission 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. 52, the Commission 
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 Commission proposes that the Bureau retain 
discretion to exercise any of the following options during Auction No. 
52:
    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 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 
Commission 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 Commission proposes that the Bureau 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 for which there is still a high level of bidding 
activity. We seek comment on these proposals.

[[Page 12911]]

IV. Conclusion

    46. Comments are due on or before March 17, 2003, and reply 
comments are due on or before March 24, 2003. Because of the disruption 
of regular mail and other deliveries in Washington, DC, the Bureaus 
require 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. 52 Comments. The Commission 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.
    47. In addition, the Commission requests that commenters fax a 
courtesy copy of their comments and reply comments to the attention of 
Kathryn Garland at (717) 338-2850.
    48. 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.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-6476 Filed 3-13-03; 3:22 am]
BILLING CODE 6712-01-P