[Federal Register Volume 68, Number 146 (Wednesday, July 30, 2003)]
[Notices]
[Pages 44785-44798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19485]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-03-51-B (Auction No. 51); DA 03-1994]


Auction of Regional Narrowband PCS Licenses Scheduled for 
September 24, 2003; Notice and Filing Requirements, Minimum Opening 
Bids, Upfront Payments, Package Bidding 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 six regional narrowband Personal 
Communications Services (``narrowband PCS'') licenses

[[Page 44786]]

in the 900 MHz band scheduled for September 24, 2003 (Auction No. 51). 
This document is intended to familiarize prospective bidders with the 
procedures and minimum opening bids for this auction.

DATES: Auction No. 51 is scheduled to begin on September 24, 2003.

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division, WTB: Legal questions: Christopher Shields at (202) 418-0660, 
or General auction questions: Lisa Stover at (717) 338-2888, Questions 
about package bidding: Martha Stancill at (202) 418-0660 or Craig 
Bomberger at (202) 418-0660. Media Contact: Press inquiries: Meribeth 
McCarrick at (202) 418-0654. Commercial Wireless Division, WTB: Service 
rule questions: Amal Abdallah at (202) 418-7307, Evan Baranoff at (202) 
418-7142, JoAnn Epps at (202) 418-0620 or Dwain Livingston at (202) 
418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 51 
Procedures Public Notice released on June 18, 2003. The complete text 
of the Auction No. 51 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-A257, Washington, DC 20554. The Auction No. 51 
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]. The 
Auction No. 51 Procedures Public Notice is also available on the 
Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/51/.

I. General Information

A. Introduction

    1. The Auction No. 51 Procedures Public Notice announces the 
procedures and minimum opening bids for the upcoming auction of six 
regional narrowband Personal Communications Services (``narrowband 
PCS'') licenses in the 900 MHz band scheduled for September 24, 2003 
(Auction No. 51). On April 3, 2003, in accordance with the Balanced 
Budget Act of 1997, the Bureau released a public notice seeking comment 
on reserve prices or minimum opening bids and the procedures to be used 
for the auction of six regional narrowband PCS licenses. The Bureau 
received no comments and no reply comments in response to the Auction 
No. 51 Comment Public Notice, 68 FR 18642 (April 16, 2003).
i. Licenses To Be Auctioned
    2. Auction No. 51 will offer six regional narrowband PCS licenses. 
The spectrum to be auctioned was previously associated with licenses 
that were awarded based on Auction No. 3 but have since been cancelled 
or terminated. A complete list of licenses available in Auction No. 51 
and their descriptions is included in Attachment A of the Auction No. 
51 Procedures Public Notice.
    3. The following table describes the licenses that will be 
auctioned:

----------------------------------------------------------------------------------------------------------------
                                     Channel                                                           Bandwidth
              Region                   No.         Channel description       Frequency bands (MHz)       (kHz)
----------------------------------------------------------------------------------------------------------------
Northeast.........................        17   12.5 kHz/50 kHz paired....  901.8250-901.8375, 930.70-       62.5
                                                                            930.75.
South.............................        16   12.5 kHz/50 kHz paired....  901.8125-901.8250, 930.65-       62.5
                                                                            930.70.
South.............................        17   12.5 kHz/50 kHz paired....  901.8250-901.8375, 930.70-       62.5
                                                                            930.75.
Midwest...........................        17   12.5 kHz/50 kHz paired....  901.8250-901.8375, 930.70-       62.5
                                                                            930.75.
Central...........................        17   12.5 kHz/50 kHz paired....  901.8250-901.8375, 930.70-       62.5
                                                                            930.75.
West..............................        17   12.5 kHz/50 kHz paired....  901.8250-901.8375, 930.70-       62.5
                                                                            930.75.
----------------------------------------------------------------------------------------------------------------

B. Rules and Disclaimers

i. Relevant Authority
    4. Prospective bidders must familiarize themselves thoroughly with 
the Commission's rules relating to narrowband PCS, contained in title 
47, part 24 and part 90 of the Code of Federal Regulations, and those 
relating to application and auction procedures, contained in title 47, 
part 1 of the Code of Federal Regulations. Prospective bidders must 
also be thoroughly familiar with the procedures, terms and conditions 
(collectively, ``terms'') contained in the Auction No. 51 Procedures 
Public Notice; the Auction No. 51 Comment Public Notice; 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); the Narrowband PCS R&O/Further Notice, 62 FR 27507 
(May 20, 1997), the Narrowband Second Report and Order and Second 
Further Notice of Proposed Rule, and the Third Narrowband Report and 
Order and Order on Reconsideration.
    5. The terms contained in the Commission's rules, relevant orders, 
and public notices are not negotiable. The Commission may amend or 
supplement the information contained in its public notices at any time, 
and will issue public notices to convey any new or supplemental 
information to bidders. It is the responsibility of all prospective 
bidders to remain current with all Commission rules and with all public 
notices pertaining to this auction. Copies of most Commission 
documents, including public notices, can be retrieved from the FCC 
Auctions Internet site at http://wireless.fcc.gov/auctions. 
Additionally, documents are available for public inspection and copying 
during regular business hours at the FCC Reference Information Center, 
Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554, 
or may be purchased from the Commission's duplicating contractor, 
Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, 
or via e-mail [email protected]. When ordering documents from Qualex, 
please provide the appropriate FCC document number (for example, FCC 
01-135 for the Third Narrowband Report and Order and Order on 
Reconsideration).
ii. Prohibition of Collusion
    6. To ensure the competitiveness of the auction process, the 
Commission's rules prohibit applicants for any of the same or 
overlapping geographic license areas from communicating with each other 
during the auction about bids, bidding strategies, or settlements. The 
Bureau has previously stated that auction applicants who have applied 
for licenses in any of the same geographic areas, and who are also 
applicants for licenses in the same or competing services must 
affirmatively avoid all discussions with each other that affect, or in 
their reasonable assessment have the potential to affect their bidding 
or their bidding strategy. Accordingly, the prohibition in Section 
1.2105(c) applies to communications between Auction No. 50 and Auction 
No. 51 applicants who have applied for licenses in any of

[[Page 44787]]

the same or overlapping geographic license areas. This prohibition 
begins at the short-form application filing deadline and ends at the 
down payment deadline after the auction. Applicants for licenses in any 
of the same or overlapping geographic license areas are encouraged not 
to use the same individual as an authorized bidder. A violation of the 
anti-collusion rule could occur if an individual acts as the authorized 
bidder for two or more competing applicants and conveys information 
concerning the substance of bids or bidding strategies between the 
applicants 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.
    7. However, the Bureau cautions that merely filing a certifying 
statement as part of an application will not outweigh specific evidence 
that collusive behavior has occurred, nor will it preclude the 
initiation of an investigation when warranted. The Commission's anti-
collusion rules allow applicants to form certain agreements during the 
auction, provided the applicants have not applied for licenses covering 
the same geographic areas. Note that Auction No. 51 applicants and 
Auction No. 50 applicants for licenses in the same or overlapping 
geographic license areas will not be able to take advantage of these 
rule provisions, even though the licenses are not completely co-
extensive. For example, assume that one applicant applies for several 
Major Trading Area (``MTA'') licenses in its Auction No. 50 FCC Form 
175 and that a second applicant applies for a regional license in its 
Auction No. 51 FCC Form 175. If the first applicant selects licenses 
for MTAs that are within the region covered by the regional license 
selected by the second applicant, the two parties will have applied for 
licenses covering the same geographic areas. Consequently, unlike 
applicants who have applied for licenses that do not cover the same 
geographic areas, these two applicants will not be permitted to form a 
consortium or bid jointly for licenses after they file FCC Form 175. 
However, all 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 section 
1.2105(c), even if the agreement has not been reduced to writing. If 
the parties have not agreed in principle by the filing deadline, an 
applicant would not include the names of those parties on its 
application, and may not continue negotiations with other applicants 
for licenses covering any of the same geographic areas. By signing 
their FCC Form 175 short-form applications, applicants are certifying 
their compliance with section 1.2105(c).
    8. In addition, section 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, sections 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.
    9. A summary listing of documents issued by the Commission and the 
Bureau addressing the application of the anti-collusion rules may be 
found in Attachment G of the Auction No. 51 Procedures Public Notice.
iii. Due Diligence
    10. Potential bidders seeking licenses for regions that are in the 
border area of Canada or Mexico will be subject to the terms of the 
coordination arrangements/protocols currently in effect with those 
respective countries.
    11. Potential bidders also should be aware that certain 
applications (including those for modification), petitions for 
rulemaking, requests for special temporary authority (``STA'') waiver 
requests, petitions to deny, petitions for reconsideration, and 
applications for review may be pending before the Commission and relate 
to particular applicants or incumbent licensees. In addition, certain 
judicial proceedings that may relate to particular applicants or 
incumbent licensees or the licenses available in Auction No. 51 may be 
commenced, may be pending, or may be subject to further review. We note 
that resolution of these matters could have an impact on the 
availability of spectrum in Auction No. 51. Some of these matters 
(whether before the Commission or the courts) may not be resolved by 
the time of the auction.
    12. 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. 51.
    13. Potential bidders may obtain information about licenses 
available in Auction No. 51 through the Bureau's licensing databases on 
the World Wide Web at http://wireless.fcc.gov/uls. Potential bidders 
should direct questions regarding the search capabilities to the FCC 
Technical Support hotline at (202) 414-1250 (voice) or (202) 414-1255 
(TTY), or via e-mail at [email protected]. The hotline is available to 
assist with questions Monday through Friday, from 8 a.m. to 6 p.m. ET. 
In order to provide better service to the public, all calls to the 
hotline are recorded. The Commission makes no representations or 
guarantees regarding the accuracy or completeness of information in its 
databases or any third party databases, including, for example, court 
docketing systems. Furthermore, the Commission makes no representations 
or guarantees regarding the accuracy or completeness of information 
that has been provided by incumbent licensees and incorporated into the 
database. Potential bidders are strongly encouraged to physically 
inspect any sites located in, or near, the region for which they plan 
to bid.
iv. Bidder Alerts
    14. 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.
    15. 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

[[Page 44788]]

diligence before proceeding, as they would with any new business 
venture.
    16. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 51 to 
deceive and defraud unsuspecting investors. 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. 51 may also call the FCC Consumer Center at (888) CALL-FCC 
((888) 225-5322).
v. National Environmental Policy Act (``NEPA'') Requirements
    17. Licensees must comply with the Commission's rules regarding the 
National Environmental Policy Act (NEPA). The construction of a 
wireless antenna facility is a federal action and the licensee must 
comply with the Commission's NEPA rules for each such facility.

C. Auction Specifics

i. Auction Date
    18. The auction will begin on Wednesday, September 24, 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 on all licenses and packages will be conducted on 
each business day until bidding has stopped on all licenses and 
packages.
ii. Auction Title
    19. Auction No. 51 `` Regional Narrowband PCS.
iii. Bidding Methodology
    20. The bidding methodology for Auction No. 51 will be simultaneous 
multiple round with package bidding (or ``package bidding''). The 
Commission will conduct this auction over the Internet, and telephonic 
bidding will be available as well. As a contingency plan, bidders may 
also dial in to the FCC Wide Area Network. Qualified bidders are 
permitted to bid telephonically or electronically.
iv. Pre-Auction Dates and Deadlines
    21. The following is a list of important dates related to Auction 
No. 51:

Auction Seminar...........................  July 31, 2003.
Short-Form (FCC Form 175) Filing Window     July 31, 2003; 12 p.m. ET.
 Opens.
Short-Form (FCC Form 175) Application       August 8, 2003; 6 p.m. ET.
 Deadline.
Upfront Payments (via wire transfer)......  August 26, 2003; 6 p.m. ET.
Mock Auction..............................  September 17 and 18, 2003.
Auction Begins............................  September 24, 2003.
 

v. Requirements for Participation
    22. Those wishing to participate in the auction must:
    [sbull] Submit a short-form application (FCC Form 175) 
electronically by 6 p.m. ET, August 8, 2003.
    [sbull] Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by 6 p.m. ET, August 26, 2003.
    [sbull] Comply with all provisions outlined in this public notice.
vi. General Contact Information
    23. The following is a list of general contact information related 
to Auction No. 51:

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 Monday through 
Friday

Technical Support

Electronic Filing; FCC Automated Auction System: FCC Auctions 
Technical Support Hotline (202) 414-1250 (Voice), (202) 414-1255 
(TTY) Hours of service: 8 a.m.-6 p.m. ET, Monday through Friday

FCC Forms

(800) 418-3676 (outside Washington, DC), (202) 418-3676 (in the 
Washington Area), http://www.fcc.gov/formpage.html

FCC Internet Sites

http://www.fcc.gov, http://wireless.fcc.gov/auctions, http://wireless.fcc.gov/uls

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

    24. Guidelines for completion of the short-form (FCC Form 175) are 
set forth in Attachment C of the Auction No. 51 Procedures Public 
Notice.

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

    25. The Commission indicated in the Broadcast First Report and 
Order, 63 FR 48615 (September 11, 1998), that, for purposed of 
determining eligibility to participate in a broadcast auction, the 
uniform part 1 ownership disclosure standards would apply. 
Specifically, in completing FCC Form 175, all applicants will be 
required to provide information required by sections 1.2105 and 1.2112 
of the Commission's rules.

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

    26. Applicants will be required to identify on their short-form 
applications any parties with whom they have entered into any 
consortium arrangements, joint ventures, partnerships or other 
agreements or understandings which relate in any way to the licenses 
being auctioned, including any agreements relating to post-auction 
market structure. Applicants will also be required to certify on their 
short-form applications that they have not entered into any explicit or 
implicit agreements, arrangements or understandings of any kind with 
any parties, other than those identified, regarding the amount of their 
bids, bidding strategies, or the particular licenses on which they will 
or will not bid.
    27. 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)
    28. A bidding credit represents the amount by which a bidder's 
winning bids are discounted. The size of the bidding credit depends on 
the average of the aggregated annual gross revenues for each of the 
preceding three years of the bidder, its affiliates, its controlling 
interests, and the affiliates of its controlling interests.
    29. In the Narrowband Second Report and Order, the Commission 
adopted two tiers of bidding credits to promote and facilitate the 
participation of small businesses in the competitive bidding for 
licenses in the narrowband PCS service. Therefore, bidding credits are 
available to small and very small businesses, or consortia thereof, as 
follows for Auction No. 51:
    [sbull] A bidder with attributed average annual gross revenues of 
not more than $40 million for the preceding three years (``small 
business'') will receive a 15 percent discount on its winning bids;
    [sbull] A bidder with attributed average annual gross revenues of 
not more than $15 million for the preceding three years (``very small 
business'') will receive a 25 percent discount on its winning bids.
    30. Bidding credits are not cumulative; a qualifying applicant 
receives either the 15 percent or 25

[[Page 44789]]

percent bidding credit on its winning bid, but only one credit per 
license.
ii. Tribal Land Bidding Credit
    31. To encourage the growth of wireless services in federally 
recognized tribal lands the Commission has implemented a tribal land 
bidding credit. See section V.E. of the Auction No. 51 Procedures 
Public Notice.
iii. Applicability of Part 1 Attribution Rules
    32. 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. More 
recently, the Commission made further modifications to its rules 
governing the attribution of gross revenues for purposes of determining 
small business eligibility. These changes included exempting the gross 
revenues of the affiliates of a rural telephone cooperative's officers 
and directors from attribution to the applicant if certain specified 
conditions are met. The Commission also clarified that in calculating 
an applicant's gross revenues under the controlling interest standard, 
the personal net worth, including personal income, of its officers and 
directors will not be attributed to the applicant.
    33. Eligibility for small business preferences will be determined 
based on the attribution rules in effect at the short-form application 
deadline. Accordingly, the ``controlling interest'' standard as 
recently modified, and the part 1 rules that superseded inconsistent 
service-specific rules, will control in Auction No. 51.
    34. 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.
    35. 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.
    36. A consortium of small or very small businesses is a 
``conglomerate organization formed as a joint venture between or among 
mutually independent business firms,'' each of which individually must 
satisfy the definition of small or very small business in Sections 
1.2110(f) and 24.321. Thus, each consortium member must disclose its 
gross revenues along with those of its affiliates, its controlling 
interests, and the affiliates of its controlling interests. We note 
that although the gross revenues of the consortium members will not be 
aggregated for purposes of determining eligibility for small or very 
small business credits, this information must be provided to ensure 
that each individual consortium member qualifies for any bidding credit 
awarded to the consortium.
iv. Supporting Documentation
    37. 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.
    38. 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.
    39. 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)

    40. 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, 
its affiliates, its controlling interests, and the affiliates of its 
controlling interests, as defined by Section 1.2110 of the Commission's 
rules. Applicants must include this statement as Exhibit D of the FCC 
Form 175.
    41. ``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-

[[Page 44790]]

tax delinquencies--are eligible to bid in Auction No. 51, provided that 
they are otherwise qualified. However, as discussed infra in section 
III.D.iii, former defaulters are required to pay upfront payments that 
are fifty percent more than the normal upfront payment amounts.

E. Installment Payments

    42. Installment payment plans will not be available in Auction No. 
51.

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

    43. 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.

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

    44. After the short-form filing deadline (August 8, 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 their license 
selections, change the certifying official or change control of the 
applicant or change bidding credits). See 47 CFR 1.2105. Permissible 
minor changes include, for example, deletion and addition of authorized 
bidders (to a maximum of three) and revision of exhibits. Applicants 
should make these modifications to their FCC Form 175 electronically 
and submit a letter, briefly summarizing the changes, by electronic 
mail to the attention of Margaret Wiener, Chief, Auctions and Industry 
Analysis Division, at the following address: [email protected]. The 
electronic mail summarizing the changes must include a subject or 
caption referring to Auction No. 51. The Bureau requests that parties 
format any attachments to electronic mail as Adobe[reg] Acrobat[reg] 
(pdf) or Microsoft[reg] Word documents.
    45. A separate copy of the letter should be faxed to the attention 
of Kathryn Garland at (717) 338-2850.

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

    46. Applicants have an obligation under 47 CFR1.65, to maintain the 
completeness and accuracy of information in their short-form 
applications. Amendments reporting substantial changes of possible 
decisional significance in information contained in FCC Form 175 
applications, as defined by 47 CFR 1.2105(b)(2), will not be accepted 
and may in some instances result in the dismissal of the FCC Form 175 
application.

III. Pre-Auction Procedures

A. Auction Seminar

    47. On Thursday, July 31, 2003, the FCC will sponsor a free seminar 
for Auction No. 51 at the Federal Communications Commission, located at 
445 12th Street, SW, Washington, DC. The seminar will provide attendees 
with information about pre-auction procedures, conduct of the auction, 
the FCC Automated Auction System, and the narrowband PCS and auction 
rules.

B. Short-Form Application (FCC Form 175)--Due August 8, 2003

    48. 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 August 8, 2003. Late applications will not be accepted.
    49. There is no application fee required when filing an FCC Form 
175.
i. Electronic Filing
    50. Applicants must file their FCC Form 175 applications 
electronically. Applications may generally be filed at any time 
beginning at noon ET on July 31, 2003, until 6 p.m. ET on August 8, 
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 August 8, 2003.
    51. 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. 51 Procedures Public Notice. Technical 
support is available at (202) 414-1250 (voice) or (202) 414-1255 (text 
telephone (TTY)); hours of service Monday through Friday, from 8 AM to 
6 PM ET. In order to provide better service to the public, all calls to 
the hotline are recorded.
ii. Completion of the FCC Form 175
    52. 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. 51 Procedures 
Public Notice.
iii. Electronic Review of FCC Form 175
    53. The FCC Form 175 electronic review system may be used to locate 
and print applicants' FCC Form 175 information. There is no fee for 
accessing this system. See Attachment C of the Auction No. 51 
Procedures Public Notice for details on accessing the review system.
    54. 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.

C. Application Processing and Minor Corrections

    55. 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.

D. Upfront Payments--Due August 26, 2003

    56. 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 August 26, 2003. For 
specific details regarding upfront payments, see section III. D of the 
Auction No. 51 Procedures Public Notice.
i. Making Auction Payments by Wire Transfer
    57. Wire transfer payments must be received by 6 p.m. ET on August 
26, 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.

[[Page 44791]]

    58. 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. 51.'' In order to meet the Commission's upfront 
payment deadline, an applicant's payment must be credited to the 
Commission's account by the deadline. Applicants are responsible for 
obtaining confirmation from their financial institution that Mellon 
Bank has timely received their upfront payment and deposited it in the 
proper account. Detailed instructions for completion of FCC Form 159 
are included in Attachment E of the Auction No. 51 Procedures Public 
Notice.
ii. Amount of Upfront Payment
    59. 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.'' In the Auction No. 51 Comment Public Notice, the 
Bureau proposed that the amount of the upfront payment would determine 
the initial maximum eligibility (as measured in bidding units) for each 
bidder. Each license is assigned a specific number of bidding units 
equal to the upfront payment, on a bidding unit per dollar basis. For a 
package, the Bureau proposed to calculate the bidding units by adding 
together the bidding units of the individual licenses that make up the 
package. In order to bid on a license or package, otherwise qualified 
bidders that applied for the license(s) on Form 175 must have an 
eligibility level that meets or exceeds the number of bidding units 
assigned to the license or package. At a minimum, therefore, an 
applicant's total upfront payment must be enough to establish 
eligibility to bid on at least one of the licenses applied for on Form 
175, or else the applicant will not be eligible to participate in the 
auction. An applicant does not have to make an upfront payment to cover 
all licenses for which the applicant has applied on Form 175, but 
rather to cover the maximum number of bidding units that are associated 
with licenses on which the bidder wishes to bid (via bids on licenses 
and/or packages) at any given time.
    60. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed to calculate upfront payments on a license-by-license basis 
using the following formula:

$.00001 * kHz * License Area Population rounded.

    The Bureau received no comments on this issue. Therefore, the 
Bureau adopts its proposed upfront payments. The specific upfront 
payments and bidding units for each license are set forth in Attachment 
A of the Auction No. 51 Procedures Public Notice.
    61. In calculating its upfront payment amount, an applicant should 
determine the bidding units of all the licenses it may wish to win at 
one time and submit an upfront payment covering that number of bidding 
units. In order to make this calculation, an applicant should add 
together the upfront payments for all of these licenses. Applicants 
should check their calculations carefully, as there is no provision for 
increasing a bidder's maximum eligibility after the upfront payment 
deadline.

                                Example: Upfront Payments and Bidding Flexibility
----------------------------------------------------------------------------------------------------------------
                                                                                          Bidding      Upfront
               Market No.                 Channel No.            Market name               units       payment
----------------------------------------------------------------------------------------------------------------
RPC001..................................           17  Northeast......................       34,000      $34,000
RPC002..................................           17  South..........................       38,000      38,000
----------------------------------------------------------------------------------------------------------------
If a bidder wishes to bid on both licenses in a round or on a package of both licenses, it must have selected
  both on its FCC Form 175 and purchased at least 72,000 bidding units (34,000 + 38,000). If a bidder only
  wishes to bid on one license, but not both, purchasing 38,000 bidding units would meet the requirement for
  either license. The bidder would be able to bid on either license, but not both at the same time. If the
  bidder purchased only 34,000 bidding units, it would have enough eligibility for the Northeast license but not
  for the South license.

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

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

iii. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    63. The Commission will use wire transfers for all Auction No. 51 
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: Gail Glasser or Tim Dates, at (202) 
418-2843 by August 26, 2003. All refunds will be returned to the payer 
of record as identified on the FCC Form 159 unless the payer submits 
written authorization instructing otherwise. For additional 
information, please call Gail Glasser at (202) 418-0578 or Tim Dates at 
(202) 418-0496. 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.

E. Auction Registration

    64. Approximately ten days before the auction, the FCC will issue a 
public notice announcing all qualified bidders for the auction. 
Qualified bidders are those applicants whose FCC Form 175 applications 
have been accepted for filing and have timely submitted upfront 
payments sufficient to make them eligible to bid on at least one of the 
licenses for which they applied.
    65. 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) and the

[[Page 44792]]

other containing the SecurID cards, both of which are required to place 
bids. These mailings will be sent only to the contact person at the 
contact address listed in the FCC Form 175.
    66. 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 Monday, September 15, 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.
    67. Qualified bidders should note that lost bidder identification 
numbers or SecurID cards can be replaced only by appearing in person at 
the FCC 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. Remote Electronic Bidding

    68. The Commission will conduct this auction over the Internet, and 
telephonic bidding will be available as well. As a contingency plan, 
bidders may also dial in to the FCC Wide Area Network. Qualified 
bidders are permitted to bid telephonically or electronically. Each 
applicant should indicate its bidding preference--electronic or 
telephonic--on the FCC Form 175. In either case, each authorized bidder 
must have its own SecurID card, which the FCC will provide at no 
charge. 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. 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. 51. The telephonic bidding phone number will be 
supplied in the first overnight mailing, which also includes the 
confidential bidder identification number.
    69. 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

    70. All qualified bidders will be eligible to participate in a mock 
auction on Wednesday, September 17, and Thursday, September 18, 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

    71. The first round of bidding for Auction No. 51 will begin on 
Wednesday, September 24, 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. Simultaneous Multiple Round Auction With Package Bidding
    72. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed to award all licenses in Auction No. 51 in a simultaneous 
multiple round auction with package bidding. The Bureau received no 
comments on this issue. The Bureau concludes that it is operationally 
feasible and appropriate to auction the regional narrowband PCS 
licenses through a simultaneous multiple round auction with package 
bidding. Unless otherwise announced, bids will be accepted on all 
individual licenses and on packages of licenses in each round of the 
auction. The Bureau believes this approach allows bidders to express 
complementarities among licenses, and the Bureau believes this approach 
does not unreasonably disadvantage bidders who do not wish to win 
packages of licenses. The Bureau also believes this approach is 
administratively efficient.
ii. Maximum Eligibility
    73. In the Auction No. 51 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.
    74. For Auction No. 51 the Bureau adopts this proposal. The amount 
of the upfront payment submitted by a bidder determines the maximum 
eligibility (in bidding units) for each bidder. The total upfront 
payment defines the initial maximum number of bidding units on which 
the applicant will be permitted to bid in a given round. As there is no 
provision for increasing a bidder's eligibility during the course of an 
auction, prospective bidders are cautioned to calculate their upfront 
payments carefully. The total upfront payment does not affect the total 
dollars a bidder may bid on any given license or package.
iii. Activity Rule
    75. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule provides incentives for bidders to 
participate throughout the auction. The activity rule requires each 
bidder to have active bids in each round that account for a specified 
fraction of the bidder's current eligibility, as measured in bidding 
units. 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. Losing eligibility matters to bidders because a 
bidder's bidding activity cannot exceed its current eligibility.
    76. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed to measure a bidder's bidding activity in a round as the 
maximum number of bidding units the bidder can win considering new bids 
placed and provisionally winning bids renewed in that round. Thus, when 
a bidder submits bids in a round the FCC Automated Auction System will 
determine the set of bids, among the bidder's new bids and renewed 
provisionally winning bids, that contains the most bidding units and 
has no overlap among the licenses. The Bureau also proposed that a 
bidder be considered active if the bidder has provisionally winning 
bids from the previous round. A bidder's bids made in different rounds 
will be considered mutually exclusive, so the bidding units associated 
with provisionally winning bids must be viewed independently from the 
bidding units associated with current round bids. The Bureau proposed 
to define a bidder's eligibility activity in a round as the greater of 
(i) its bidding activity in the round and (ii) the bidding units 
associated with the bidder's provisionally winning bids from the prior 
round.
    77. For Auction No. 51, we proposed that, in each round of the 
auction, a bidder desiring to maintain its current eligibility would be 
required to have eligibility activity equal to sixty percent (three-
fifths) of its current eligibility. For a bidder that failed to meet 
the activity requirement in a given round, the Automated Auction System 
would reduce the bidder's eligibility for the next round to five-thirds 
times its eligibility activity in the current round. Thus, a bidder's 
eligibility in the current

[[Page 44793]]

round is equal to either its eligibility in the previous round (bidder 
met the activity requirement) or five-thirds of its eligibility 
activity in the previous round (bidder did not meet the activity 
requirement), whichever is less:

Eligibility (t) = Min (Eligibility (t-1), \5/3\ * Eligibility Activity 
(t-1))

    78. Activity rule waivers provide an exception to this rule and are 
discussed in the next section, ``Activity Rule Waivers and Reducing 
Eligibility.''
    79. In addition, the Bureau proposed to retain the discretion to 
increase to eighty percent (four-fifths) the proportion of bidding 
units on which bidders must be active to retain their current 
eligibility. Any such change will be announced to bidders prior to the 
beginning of the round in which the change takes effect. For a bidder 
that failed to meet an eighty percent activity requirement in a given 
round, the Automated Auction System would reduce the bidder's 
eligibility for the next round to five-fourths times its eligibility 
activity in the current round.

    Caution: If the Bureau exercises its discretion to increase the 
activity requirement to eighty percent, bidders must carefully check 
their current activity during the bidding period of the first round 
following the change. In past auctions, some bidders have 
inadvertently lost bidding eligibility or used an activity rule 
waiver because they did not re-verify their activity after an 
increase in the activity requirement. Bidders may check their 
activity against the required activity level by using the bidding 
system's bidding module.

    80. The Bureau received no comments on these proposals. Because 
employing an activity rule has proven successful in maintaining proper 
pace in previous auctions, the Bureau adopts its proposal for Auction 
No. 51.
iv. Activity Rule Waivers and Reducing Eligibility
    81. Each bidder will be provided five activity rule waivers that 
may be used in any round during the course of the auction. Use of an 
activity rule waiver preserves the bidder's current bidding eligibility 
despite the bidder's eligibility activity in the current round being 
below the required level. An activity rule waiver applies to an entire 
round of bidding and not to a particular license or package.
    82. The FCC Automated Auction System assumes that bidders with 
insufficient eligibility 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 eligibility activity 
is below the activity requirement 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. If a bidder has no waivers remaining 
and does not satisfy the activity requirement, its current eligibility 
will be permanently reduced, possibly eliminating the bidder from 
further bidding in the auction.
    83. A bidder with insufficient activity that wants to reduce its 
bidding eligibility rather than use an activity rule waiver must 
affirmatively override the automatic waiver mechanism during the round 
by using the ``reduce eligibility'' function in the bidding system. In 
this case, the bidder's eligibility is permanently reduced to bring the 
bidder into compliance with the activity rules as described in 
``Activity Rule'' (see section IV.A.iii discussion). Once eligibility 
has been reduced, a bidder will not be permitted to regain its lost 
bidding eligibility.
    84. Finally, the Bureau adopts its proposal not to permit bidders 
to submit an activity rule waiver proactively as a means to keep the 
auction open absent bidding activity.
v. Auction Stopping Rules
    85. For Auction No. 51, the Bureau proposed to employ a two-round 
simultaneous stopping rule; that is, the auction would close after two 
consecutive rounds with no new bids. The Bureau also proposed that, for 
purposes of the stopping rule, last and best bids would be considered 
new bids (i.e., would keep the auction open) but renewed bids would 
not.
    86. In addition, the Bureau proposed that it 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 activity requirement (where bidders will be required to 
maintain a higher level of bidding activity), increasing the number of 
rounds per day, and/or adjusting the minimum acceptable bids and bid 
increments for the licenses.
    87. The Bureau received no comment on this issue. The Bureau adopts 
the proposals. Auction No. 51 will begin under the two-round 
simultaneous stopping rule, and the Bureau will retain the discretion 
to invoke the special stopping rule.
vi. Auction Delay, Suspension, or Cancellation
    88. Public notice or by announcement during the auction, the Bureau 
may delay, suspend, or cancel the auction in the event of natural 
disaster, technical obstacle, evidence of an auction security breach, 
unlawful bidding activity, administrative or weather necessity, or for 
any other reason that affects the fair conduct of competitive bidding. 
Because this approach has proven effective in resolving exigent 
circumstances in previous auctions, we adopt our proposed auction 
cancellation rules. 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.

B. Bidding Procedures

i. Round Structure
    89. 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. Each bidding round is followed 
by the release of round results. Multiple bidding rounds may be 
conducted in a given day.
    90. 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. Packages
    91. The Bureau proposed that, in addition to bidding on individual 
licenses, bidders be permitted to create and bid on up to twelve 
different packages of their own choosing during the course of the 
auction. A bid on an individual license does not count as a bid on a 
package; packages consist of two or more licenses. Bidders will not be 
required to identify or create their packages before the start of the 
auction, but may create their packages as the auction progresses. A 
bidder may modify or delete a package it has created up until the point 
where it has bid on the package and the round has closed. If the bidder 
submits a bid on a package and subsequently removes the bid during the 
same round, the bidder has

[[Page 44794]]

the option of also deleting or modifying the package. However, once a 
bidder bids on a package and the round closes, the package may not be 
modified or deleted and counts as one of the bidder's twelve allowable 
packages.
    92. The Bureau received no comments on this issue. The Bureau 
adopts the proposals regarding packages.
iii. Reserve Price or Minimum Opening Bid
    93. For Auction No. 51, the Bureau proposed the following license-
by-license formula for calculating minimum opening bids: $.00001 * kHz 
* License Area Population, rounded.
    94. For a package, the Bureau proposed to calculate the minimum 
opening bid by adding together the minimum opening bids of the 
individual licenses that make up the package.
    95. The Bureau received no comments on this issue. Consequently, 
the Bureau adopts its proposed minimum opening bids for Auction No. 51. 
The minimum opening bids the Bureau adopts for Auction No. 51 are 
reducible at the discretion of the Bureau. The Bureau emphasizes, 
however, that such discretion will be exercised, if at all, sparingly 
and early in the auction, i.e., before bidders lose all waivers and 
begin to lose substantial eligibility. During the course of the 
auction, the Bureau will not entertain any requests to reduce the 
minimum opening bid on specific licenses.
    96. The specific minimum opening bids for each license available in 
Auction No. 51 are set forth in Attachment A of the Auction No. 51 
Procedures Public Notice.
iv. Minimum Acceptable Bids and Bid Increments
    97. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed that in each round, eligible bidders will be able to place 
bids on a given license or package in any of nine different amounts. 
The Automated Auction System interface will list the nine acceptable 
bid amounts for each license and package. In the first round of the 
auction, the minimum acceptable bid for a license or package will be 
equal to its minimum opening bid. The Bureau proposed that in all 
subsequent rounds, the minimum acceptable bid for a license or package 
will be the greatest of: (i) The minimum opening bid; (ii) the bidder's 
own previous high bid on a license or package plus x%, where the Bureau 
will specify the value of x in each round; and (iii) the current price 
estimate of the license plus z%, or for a package, the sum of the 
current price estimates for the licenses in the package plus z%, where 
the Bureau will specify the value of z in each round.
    98. Current price estimates are estimates of the individual prices 
of the licenses being auctioned. The estimates take into account the 
minimum opening bids for the licenses as well as all the bids placed in 
the auction and, therefore, reflect all available information that has 
been revealed in the auction about the relative demands for the 
licenses. For a provisionally winning package, the current price 
estimates for the licenses that make up the package are set such that 
the sum of those current price estimates equals the provisionally 
winning bid on the package. These estimates are generated during round 
results following every round of the auction as part of the 
mathematical optimization process used by the Bureau to determine the 
provisionally winning bids. The precise methodology used to calculate 
current price estimates is described in Attachment F of the Auction No. 
51 Procedures Public Notice. Until a bid is placed on a license or on a 
package containing that license, by any bidder in any round, the 
current price estimate is the FCC bid amount.
    99. The Bureau proposed to retain an exception to part (iii) for 
calculating the minimum acceptable bid for a ``global'' package--a 
package consisting of all six of the licenses available in the auction. 
After the first round of the auction, part (iii) of the minimum 
acceptable bid rule for a global package will always be the revenue 
generated by the provisionally winning bid set in the previous round 
plus w%, where the Bureau will specify the value of w in each round.
    100. The result of the minimum acceptable bid calculation will be 
rounded using our standard rounding procedure. The Bureau proposed to 
initially set x at ten, z at five and w at five, and to retain the 
discretion to adjust these variables during the course of the auction.
    101. For bids higher than the minimum acceptable bid--i.e., multi-
increment bids--the Bureau proposed to define the amount of the 
additional bid increments as v% of the minimum acceptable bid, where 
the minimum acceptable bid is determined. The Bureau proposed to 
initially set v at ten and to retain the discretion to adjust the 
amount during the course of the auction. Thus, when v equals ten, a 
bidder will be able to place multi-increment bids of the minimum 
acceptable bid plus approximately 10%, 20%, etc. with the maximum bid 
being approximately equal to the minimum acceptable bid plus 80%.
    102. The Bureau received no comments on these issues. The Bureau 
adopts the proposals. The Bureau retains the discretion to change 
minimum acceptable bids, and to do so on a license-by-license and 
package-by-package basis, if circumstances so dictate. If the Bureau 
exercises this discretion, it will announce any change in the Automated 
Auction System.
v. Winning and Provisionally Winning Bids
    103. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed the procedures set forth.
    104. Winning bids in a package bidding auction are the set of 
``consistent'' bids (non-overlapping, and for each winning bidder, only 
bids made or renewed in the same round) on individual licenses and 
packages that maximizes total revenue when the auction closes. 
Provisionally winning bids are the set of consistent bids that 
maximizes total revenue in a particular round (they would win if the 
auction were to close in that round), assigning each license to either 
a bidder or the FCC. When determining winning and provisionally winning 
bids, all bids made in every round throughout the course of the auction 
(except for bids that are placed and subsequently removed during the 
same round) will be considered. In addition, each license is treated as 
having a bid placed by the FCC at $1000 less than the minimum opening 
bid. This procedure will ensure that a bid on a license or package at 
the minimum opening bid always beats the FCC bid.
    105. Since there can be more than one set of consistent bids that 
produces the maximum revenue, we proposed to use a procedure that 
randomly selects among these tied sets when determining the 
provisionally winning bids. This tie breaking procedure involves two 
steps: (i) The assignment of a selection number to each bid, and (ii) 
the determination of, among all tied bid sets, the set that produces 
the maximum sum of selection numbers.
    106. A bid's selection number is the sum of n pseudo-random numbers 
where n is the number of licenses comprising the bid's package. A bid's 
selection number will be included in the publicly-available round 
results released after each round.
    107. Selection numbers will be generated for each license in each 
bid in each round. In the event that more than one set of consistent 
bids produces the maximum revenue, the second step of the tie breaking 
procedure will determine the provisionally winning bid set. Computer 
software will be used to

[[Page 44795]]

determine the consistent set that produces the maximum revenue and the 
maximum sum of selection numbers. Each license in each bid will be 
assigned a new selection number in every round. Consequently, if there 
are ties, the set of provisionally winning bids may change even after a 
round in which there are no new bids. The solver will not be run after 
the last round of the auction, so that the winning set is the same as 
the set of provisional winners generated after the next-to-the-last 
round (i.e., there won't be any surprise winners).
    108. Please note that it is possible that a provisionally winning 
bid might not be the highest bid on the particular license or package. 
This possibility is primarily due to each bidder's bids being 
considered mutually exclusive across rounds. For example, if one bidder 
has placed the highest bid on each of two different licenses in two 
different rounds (and did not renew the earlier of the two bids), then 
those two bids are considered as mutually exclusive and only one of 
them can be a provisionally-winning bid.
    109. The Bureau received no comments on these proposals. The Bureau 
adopts the procedures regarding winning and provisionally winning bids.
vi. Last and Best Bids
    110. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed to allow bidders that wish to drop out of the auction or that 
believe they are about to lose their bidding eligibility to have an 
opportunity before they drop out to place up to two mutually exclusive 
sets of ``last and best'' bids on any licenses or packages for which 
they remain eligible. This is a limited exception to minimum acceptable 
bids and to click-box bidding. Such bids may be of any amount (in 
thousand dollar increments) between the bidder's previous high bid on 
the license or package and the amount of the highest acceptable bid for 
the license or package in the current round (the eighth increment above 
the minimum acceptable bid). If a bidder chooses this option, it will 
not be permitted to make any further bids during the auction.
    111. The Bureau received no comments on this issue. Therefore, we 
adopt our proposal.
vii. Renewed Bids
    112. Without regard to the minimum acceptable bid requirement, the 
Bureau proposed to allow a bidder to ``renew'' in the current round the 
highest previous bid it made on any license or package; that is, it may 
resubmit the bid without increasing the amount bid. No eligibility 
activity or bidding activity is conferred for renewing a non-
provisionally winning bid. Renewed provisionally winning bids confer 
bidding activity (non-renewed provisionally winning bids count toward 
eligibility activity). Renewed bids will be treated as being made in 
the current round.
    113. Renewals provide bidders a means to ensure that bids from 
previous rounds are considered in addition to the bids placed in the 
current round. Otherwise, bids made in different rounds are treated as 
mutually exclusive, so that the bidder may win some or all of the bids 
from the current round, or a previous round, but not both.
    114. The Bureau received no comments on this issue. Therefore, the 
Bureau adopts its proposal.
viii. Bidding
    115. During a round, a bidder may submit new bids or renewed bids 
for as many licenses and packages as it wishes (subject to eligibility 
requirements, its FCC Form 175 license selection, and the twelve 
package limitation); remove bids placed in the same bidding round; or 
permanently reduce eligibility. Bidders also have the option of making 
multiple submissions in each round. If a bidder submits multiple bids 
for a single license or package in the same round, the system takes the 
last bid entered as that bidder's bid for the round. Bidders should 
note that the bidding units associated with licenses for which the 
bidder has removed its bid do not count towards the bidder's activity 
at the close of the round.
    116. Bidding is constrained by the eligibility and activity rules, 
which determine both minimum and maximum permissible levels of bidding, 
as measured in bidding units. As previously discussed, minimum bidding, 
as measured in bidding units, is constrained by the activity rules. In 
each round, a bidder desiring to maintain its current eligibility and 
not use an activity rule waiver must be active, based on eligibility 
activity, on licenses associated with enough bidding units to meet the 
activity requirement for the current round. For more details, please 
refer to section IV.A.iii. ``Activity Rule.''
    117. Maximum bidding, as measured in bidding units, is constrained 
by the eligibility rules. Bidding activity for a round, defined as the 
maximum number of bidding units a bidder can win considering new bids 
and renewed provisionally winning bids placed in that round, cannot 
exceed current eligibility. That is, when a bidder submits a set of 
bids in a round, the system will not accept the set of bids if it 
determines that the bidding activity generated by those bids exceeds 
the bidder's current eligibility. Bidding in a round is further limited 
by the requirement that a bidder's bidding exposure in a round must be 
less than or equal to its initial eligibility. Bidding exposure is the 
maximum number of bidding units a bidder can win considering all the 
bids (new, renewed provisionally winning or non-provisionally winning) 
placed in the round. Similarly, when a bidder submits a set of bids in 
a round, the system will not accept the set of bids if it determines 
that the bidding exposure generated by those bids exceeds the bidder's 
initial eligibility. In either case, if a set of bids is rejected, the 
system will notify the bidder that its bids have not been accepted and 
report which rule is in violation.
    118. Bidders are permitted only to bid on the specific licenses 
they selected on their FCC Form 175. Any packages they create must be 
comprised entirely of licenses selected on their Form 175. The bid 
submission screens are customized using the bidder's Form 175 
information, and will not permit bidding on non-selected licenses (or 
packages of those licenses).
    119. Please note that all bidding will take place remotely either 
through the FCC Automated Auction System or by telephonic bidding. 
Telephonic bidders are therefore reminded to allow sufficient time to 
bid by placing their calls well in advance of the close of a round.
    120. In order to access the bidding functions of the FCC Automated 
Auction System, bidders must be logged in during the bidding round 
using the bidder identification number provided in the registration 
materials, and the passcode generated by the SecurID card. Bidders are 
strongly encouraged to print bid confirmations for each round after 
they have completed all of their activity for that round.
    121. In each round, eligible bidders will be able to place bids on 
a given license or package in any of nine different amounts. Bidders 
may use the drop-down box to select from among the nine bid amounts; to 
renew any bids (if applicable); or to remove any bids made within the 
current round.
    122. Finally, bidders are cautioned in selecting their bid amounts 
because, as explained in the following section, bidders are not 
permitted to withdraw bids from a previous round, even if mistakenly or 
erroneously made. As explained previously, when

[[Page 44796]]

determining winning and provisionally winning bids, the Bureau 
considers all bids made throughout the course of the auction.
ix. Bid Removal and Bid Withdrawal
    123. In the Auction No. 51 Comment Public Notice, the Bureau 
proposed not to allow any bid withdrawals in Auction No. 51. The Bureau 
received no comments on this issue. Therefore, the Bureau adopts its 
proposal.
    124. Bid Removal Procedures. Before the close of a bidding round, a 
bidder has the option of removing any bids placed in that round. By 
using the ``remove bid'' function in the bidding system, a bidder may 
effectively ``unsubmit'' any bid placed within that round. Removing a 
bid will affect a bidder's activity for the round in which it is 
removed, i.e., a bid that is removed does not count towards bidding 
activity. This procedure will enhance bidder flexibility during the 
auction, and therefore, the Bureau adopts these procedures for Auction 
No. 51.
x. Round Results
    125. Bids placed during a round will not be made public until the 
conclusion of that bidding period. After a round closes, the Bureau 
will compile reports of all bids made in that round, the set of bids 
considered when determining the current provisionally winning bids, 
current price estimates, new minimum acceptable bids for all bidders, 
current provisionally winning bids, and bidder eligibility status 
(bidding eligibility and activity rule waivers), and post the reports 
for public access. Reports reflecting bidders' identities for Auction 
No. 51 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. Details regarding round results formats 
and locations will be included in a subsequent public notice.
xi. Auction Announcements
    126. 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 FCC Automated Auction System.
xii. Default
    127. The Commission recently adopted a special rule for calculating 
default payments in connection with package bidding. In the event a 
winning bidder defaults on payments due after an auction closes or is 
disqualified after the auction, a default payment will be assessed. The 
default payment will consist of a deficiency portion and an additional 
25% payment. The special default rule is modeled on the default rule 
used in other auctions. However, there are substantial differences, 
perhaps most significantly in the amount of the additional payment. The 
default rule used in other auctions sets the additional payment at 
three percent (3%) of the lesser of the subsequent winning bid and the 
defaulted bid. In contrast, the default rule for use with package 
bidding sets the additional payment at twenty-five percent (25%) of the 
lesser of the subsequent winning bid and the defaulted bid.
    128. The deficiency portion will make up any loss to the Commission 
that results when defaulted bid(s) are replaced by subsequent winning 
bid(s). If the subsequent winning bid(s) exceed the defaulted bid(s), 
no deficiency portion will be assessed. Even in the absence of a 
deficiency portion, however, an additional 25% payment will be due. 
Where a defaulting bidder held winning bids on individual licenses 
(i.e., not as part of a package), and in a subsequent auction the 
licenses are also won individually, the deficiency portion will be 
calculated by subtracting the subsequent winning bid from the defaulted 
bid. The deficiency portion for such bids will be calculated on a 
license-by-license basis (i.e., in the event of defaults on multiple 
bids, the differences between the amounts originally bid and the 
amounts subsequently bid will not be aggregated to determine a net 
amount owed).
    129. Where a defaulting bidder won licenses in package(s), and in a 
subsequent auction the licenses are won either (a) In the same 
package(s), or (b) in smaller packages or as individual licenses that 
correlate to the defaulted package(s), the deficiency portion will be 
determined on a package-by-package basis. In the event a defaulting 
bidder defaults on more than one such bid, the differences between the 
amount originally bid and the amount(s) subsequently bid will not be 
aggregated to determine a net amount owed. Thus, in this situation, the 
deficiency portion will be calculated in a manner analogous to where 
the licenses are sold individually. However, with regard to each 
individual package, where the licenses are subsequently sold 
individually or as part of smaller packages, the amounts received in 
the subsequent auction will be aggregated in order to determine any 
deficiency.
    130. Where a defaulting bidder or bidders won licenses either 
individually or as part of packages, and in a subsequent auction the 
licenses are won as larger packages or different packages (not 
including the situation described in the preceding paragraph), the 
deficiency portion will be calculated by subtracting the aggregate 
amount originally bid for the licenses from the aggregate amount bid in 
the subsequent auction for the licenses. Thus, in this situation, the 
deficiency portion will not be calculated on a bid-by-bid basis.
    131. If, in a situation requiring that bids be aggregated in order 
to determine the deficiency portion of the default payments for the 
bids, there are multiple defaulting bidders, the default payment (both 
the deficiency portion and the additional 25% payment portion) will be 
allocated to the defaulting bidders in proportion to their share of the 
aggregated default bids.
    132. In the event that a bidding credit applies to any applicable 
bid(s), the Bureau will assess the deficiency portion of the default 
payment using the lesser of the difference between gross bids and the 
difference between net bids. (In the event that a bidder does not have 
a bidding credit, the bidder's gross bid and net bid are the same.) In 
other words, the Bureau will compare (i) The sum of the gross defaulted 
Auction No. 51 bid(s) minus the gross subsequent winning bid(s) and 
(ii) the sum of the net defaulted Auction No. 51 bid(s) minus the net 
subsequent winning bid(s). The Bureau will impose the lesser of (i) and 
(ii) as the deficiency portion.
    133. As noted at the outset, the default payment consists of the 
deficiency portion and an additional 25% payment. The additional 
payment will be 25% of the lesser of the subsequent winning bid(s) and 
the defaulted bid(s). The Bureau will use the same gross or net bid(s) 
that it used to calculate the deficiency portion when assessing the 
additional 25% payment. That is, the Bureau will compare the defaulted 
and subsequent bid(s) according to the methods described for 
calculation of the deficiency portion of the default payment when 
determining whether the defaulted bid(s) or the subsequent winning 
bid(s) is the lesser amount. Should there be no difference between the 
gross or net bid(s) for purposes of assessing the deficiency portion, 
the Bureau will assess the additional 25% payment using the lesser of 
the gross or net bid(s).
xiii. Maintaining the Accuracy of FCC Form 175 Information
    134. As noted in section II.G, after the short-form filing 
deadline, applicants may make only minor changes to their FCC Form 175 
applications. Applicants must make these modifications to their FCC 
Form 175 electronically and submit

[[Page 44797]]

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. 51. The Bureau requests that parties format 
any attachments to electronic mail as Adobe[reg] Acrobat[reg] (pdf) or 
Microsoft[reg] Word documents.
    135. 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 Christopher Shields of the Auctions and Industry 
Analysis Division at (202) 418-0660.

V. Post-Auction Procedures

A. Down Payments

    136. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed, identifying winning bidders and 
down payments due.
    137. Within ten business days after release of the auction closing 
notice, each winning bidder must submit sufficient funds (in addition 
to its upfront payment) to bring its total amount of money on deposit 
with the Commission for Auction No. 51 to 20 percent of its net winning 
bids (actual bids less any applicable small or very small business 
bidding credits).

B. Auction Discount Voucher

    138. On June 8, 2000, the Commission awarded Qualcomm, Inc. a 
transferable Auction Discount Voucher (``ADV'') in the amount of 
$125,273,878.00. Subject to the terms and conditions set forth in the 
Commission's Order, Qualcomm or its transferee could use this ADV, in 
whole or in part, to adjust a winning bid in any spectrum auction prior 
to June 8, 2003. On April 28, 2003, the Bureau granted Qualcomm an 
additional year, until June 8, 2004, to use the remaining amount of its 
ADV. Qualcomm transferred $10,848,000.00 of the ADV to a winning bidder 
in FCC Auction No. 35. The transferee used this amount to pay a portion 
of one of its winning bids in Auction No. 35. Qualcomm also transferred 
$50,536,998.75 of the ADV to an assignee of broadband PCS licenses that 
requests this amount be applied to pay the unpaid principal and 
interest accrued on the licenses. The remaining $63,888,879.25 of 
Qualcomm's ADV could be used to adjust winning bids in another FCC 
Auction, including Auction No. 51.

C. Long-Form Application (FCC Form 601)

    139. Within ten business days after release of the auction closing 
notice, winning bidders must electronically submit a properly completed 
long-form application (FCC Form 601) and required exhibits for each 
license won through Auction No. 51. Winning bidders that are small or 
very small businesses must include an exhibit demonstrating their 
eligibility for small or very small business bidding credits. See 47 
CFR 1.2112(b). Further filing instructions will be provided to auction 
winners at the close of the auction.

D. Ownership Disclosure Information Report (FCC Form 602)

    140. At the time it submits its long-form application (FCC Form 
601), each winning bidder also must comply with the ownership reporting 
requirements as set forth in 47 CFR 1.913, 1.919, and 1.2112. 
Applicants are reminded that the FCC Form 602 must now be filed 
electronically. Accordingly, forms filed manually will not be accepted. 
Winning bidders without a current Form 602 already on file with the 
Commission must submit a properly completed Form 602 at the time they 
submit their long-form applications. Further filing instructions will 
be provided to auction winners at the close of the auction.

E. Tribal Land Bidding Credit

    141. 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.
    142. 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).
    143. 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 the Tribal Land Credits link.

F. Default and Disqualification

    144. 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.

G. Refund of Remaining Upfront Payment Balance

    145. All applicants that submitted upfront payments but were not 
winning bidders for a license in Auction No. 51 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 payer of record, as 
identified on the FCC Form 159, unless the payer submits written 
authorization instructing otherwise.
    146. At the end of the auction, those bidders who are eligible for 
a refund must submit a written refund request. If you have completed 
the refund instructions electronically, then only a written request for 
the refund is necessary. If not, the request must also include wire 
transfer instructions, Taxpayer Identification Number (TIN) and FCC 
Registration Number (FRN). Send refund request to: Federal 
Communications Commission, Financial Operations Center, Auctions 
Accounting Group, Gail Glasser or Tim Dates, 445 12th Street, SW., Room 
1-C863, Washington, DC 20554.

[[Page 44798]]

    147. 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 Gail 
Glasser at (202) 418-0578 or Tim Dates at (202) 418-0496.


Federal Communications Commission.
Margaret Wiener,
Chief, Auctions and Industry Analysis Division.
[FR Doc. 03-19485 Filed 7-29-03; 8:45 am]
BILLING CODE 6712-01-P