[Federal Register Volume 68, Number 188 (Monday, September 29, 2003)]
[Notices]
[Pages 55955-55960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24730]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-03-55-A (Auction No. 55); DA 03-2897]


Auction of 900 MHz Specialized Mobile Radio Service Licenses 
Scheduled for February 11, 2004; 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 in the 
Specialized Mobile Radio (``SMR'') Service scheduled to commence on 
February 11, 2004 (Auction No. 55). This document

[[Page 55956]]

also seeks comment on reserve prices or minimum opening bids and other 
auction procedures for Auction No. 55.

DATES: Comments are due on or before October 1, 2003 and reply comments 
are due on or before October 8, 2003.

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

FOR FURTHER INFORMATION CONTACT: For legal questions: Robert Krinsky 
(202) 418-0660. For general auction questions: Lyle Ishida (202) 418-
0660 or Lisa Stover (717) 338-2888. For service rule questions, contact 
the Commercial Wireless Division, Wireless Telecommunications Bureau, 
as follows: Evan Baranoff, Policy and Rules Branch, (202) 418-0620; 
Bettye Woodward, Licensing and Technical Analysis Branch, (202) 418-
1345; or Gary Devlin, Licensing and Technical Analysis Branch, (717) 
338-2618.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 55 
Comment Public Notice released on September 17, 2003. The complete text 
of the Auction No. 55 Comment Public Notice, including the attachments, 
is available for public inspection and copying during regular business 
hours at the FCC Reference Information Center, Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554. The Auction No. 55 
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. 55 Comment Public Notice, the Wireless 
Telecommunications Bureau (``Bureau'') announces the auction of 60 
Major Trading Area (``MTA'') licenses in the SMR Service in the 896-901 
MHz and 935-940 MHz bands scheduled to commence on February 11, 2004 
(Auction No. 55). The spectrum to be auctioned was previously 
associated with licenses that have been cancelled or terminated. A 
complete list of licenses available for Auction No. 55 is included as 
Attachment A of the Auction No. 55 Comment Public Notice.
    2. The following table contains the channel block/frequency cross-
reference for the 896-901 MHz and 935-940 MHz bands:

--------------------------------------------------------------------------------------------------------------------------------------------------------
            Channel block              Channel  Nos.         Frequency (MHz)             Channel block        Channel Nos.         Frequency (MHz)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A...................................            1-10          896.00625-896.13125   B......................           21-30          896.25625-896.38125
                                                              935.00625-935.13125                                                    935.25625-935.38125
C...................................           41-50          896.50625-896.63125   D......................           61-70          896.75625-896.88125
                                                              935.50625-935.63125                                                    935.75625-935.88125
E...................................           81-90          897.00625-897.13125   F......................         101-110          897.25625-897.38125
                                                              936.00625-936.13125                                                    936.25625-936.38125
G...................................         121-130          897.50625-897.63125   H......................         141-150          897.75625-897.88125
                                                              936.50625-936.63125                                                    936.75625-936.88125
I...................................         161-170          898.00625-898.13125   J......................         181-190          898.25625-898.38125
                                                              937.00625-937.13125                                                    937.25625-937.38125
K...................................         201-210          898.50625-898.63125   L......................         221-230          898.75625-898.88125
                                                              937.50625-937.63125                                                    937.75625-937.88125
M...................................         241-250          899.00625-899.13125   N......................         261-270          899.25625-899.38125
                                                              938.00625-938.13125                                                    938.25625-938.38125
O...................................         281-290          899.50625-899.63125   P......................         301-310          899.75625-899.88125
                                                              938.50625-938.63125                                                    938.75625-938.88125
Q...................................         321-330          900.00625-900.13125   R......................         341-350          900.25625-900.38125
                                                              939.00625-939.13125                                                    939.25625-939.38125
S...................................         361-370          900.50625-900.63125   T......................         381-390          900.75625-900.88125
                                                              939.50625-939.63125                                                    939.75625-939.88125
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    Note: For Auction No. 55, licenses are not available in every 
market or for each channel block listed in the table. In one case, a 
license is available for only part of a market. See Attachment A of 
the Auction No. 55 Comment Public Notice, to determine which 
licenses will be offered.

    3. The Balanced Budget Act of 1997 requires the Commission to 
``ensure that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures * * *.'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, to seek comment on a variety of 
auction-specific procedures prior to the start of each auction. We 
therefore seek comment on the following issues relating to Auction No. 
55.

II. Auction Structure

A. Simultaneous Multiple-Round Auction Design

    4. The Bureau proposes to award all licenses included in Auction 
No. 55 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 Bidding Eligibility

    5. 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. As described further, the 
upfront payment is a refundable deposit made by each bidder to 
establish eligibility to bid on licenses. Upfront payments related to 
the specific spectrum subject to auction protect against frivolous or 
insincere bidding and provide the Commission with a source of funds 
from which to collect payments owed at the close of the auction. In 
this case we have information available from the prior auction of 900 
MHz SMR licenses (Auction No. 7). For Auction No. 55, we propose to 
calculate upfront payments on a license-by-license basis using the 
following formula: 5% (five percent) of the net amount of the winning 
bid in

[[Page 55957]]

Auction No. 7 for the corresponding license (same MTA and channel 
block).\1\
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    \1\ For the license that is available for part of a market, the 
net amount of the winning bid from Auction No. 7. is first 
multiplied by the proportion of the population covered by the 
partial market to the population of the entire MTA.
---------------------------------------------------------------------------

    6. Accordingly, in Attachment A of the Auction No. 55 Comment 
Public Notice, we list all licenses included in Auction No. 55 and the 
proposed upfront payment for each license. We seek comment on this 
proposal.
    7. We further propose that the amount of the upfront payment 
submitted by a bidder will determine the maximum number of bidding 
units on which a bidder may place bids. This limit is a bidder's 
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. 55 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 its current eligibility. Eligibility cannot be 
increased during the auction. Thus, in calculating its upfront payment 
amount, an applicant must determine the maximum number of bidding units 
it may wish to bid on (or hold high bids on) in any single round, and 
submit an upfront payment covering that number of bidding units. We 
seek comment on this proposal.

C. Activity Rules

    8. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively on a 
percentage of their maximum bidding eligibility during each round of 
the auction rather than waiting until the end to participate. A bidder 
that does not satisfy the activity rule will either lose bidding 
eligibility in the next round or must use an activity rule waiver (if 
any remain).
    9. We propose 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 generally will advance 
to the next stage (i.e., from Stage One to Stage Two, and from Stage 
Two to Stage Three) when the auction activity level, as measured by the 
percentage of bidding units receiving new high bids, is approximately 
twenty percent or below for three consecutive rounds of bidding. 
However, we further propose that the Bureau retain the discretion to 
change stages unilaterally by announcement during the auction. In 
exercising this discretion, the Bureau will consider a variety of 
measures of bidder activity, including, but not limited to, the auction 
activity level, the 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.
    10. For Auction No. 55, 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 80 percent of its current 
bidding eligibility. Failure to maintain the requisite activity level 
will result in a reduction in the bidder's bidding eligibility in the 
next round of bidding (unless an activity rule waiver is used). During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the current round activity by five-fourths (5/4).
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current eligibility is required to be active on 90 percent 
of its current bidding eligibility. During Stage Two, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by ten-ninths (10/9).
    Stage Three: In each round of the third stage, a bidder desiring to 
maintain its current eligibility is required to be active on 98 percent 
of its current bidding eligibility. In this final stage, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by fifty/forty-ninths (50/49).
    11. 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

    12. Use of an activity rule waiver preserves the bidder's current 
bidding eligibility despite the bidder's activity in the current round 
being below the required minimum level. An activity rule waiver applies 
to an entire round of bidding and not to a particular license. Activity 
waivers can be either proactive or automatic and are principally a 
mechanism for auction participants to avoid the loss of auction 
eligibility in the event that exigent circumstances prevent them from 
placing a bid in a particular round. Note: Once a proactive waiver is 
submitted during a round, that waiver cannot be unsubmitted.
    13. The FCC Automated Auction System assumes that bidders with 
insufficient activity would prefer to use an activity rule waiver (if 
available) rather than lose bidding eligibility. Therefore, the system 
will automatically apply a waiver (known as an ``automatic waiver'') at 
the end of any bidding period where a bidder's activity level is below 
the minimum required unless: (i) There are no activity rule waivers 
available; 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.
    14. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding period by using the ``reduce eligibility'' function 
in the bidding system. In this case, the bidder's eligibility is 
permanently reduced to bring the bidder into compliance with the 
activity rules as described. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility.
    15. 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.
    16. We propose that each bidder in Auction No. 55 be provided with 
three activity rule waivers that may be used at the bidder's discretion 
during the course of the auction as set forth. We seek comment on this 
proposal.

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

    17. For Auction No. 55, 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

[[Page 55958]]

reason that affects the fair and efficient conduct of competitive 
bidding. In such cases, the Bureau, in its sole discretion, may elect 
to resume the auction starting from the beginning of the current round, 
resume the auction starting from some previous round, or cancel the 
auction in its entirety. Network interruption may cause the Bureau to 
delay or suspend the auction. 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

    18. The Commission will conduct Auction No. 55 over the Internet. 
Telephonic bidding will also be available. As a contingency, the FCC 
Wide Area Network will be available as well. The telephone number 
through which the backup FCC Wide Area Network may be accessed will be 
announced in a later public notice. Full information regarding how to 
establish such a connection, and related charges, will be provided in 
the public notice announcing details of auction procedures.
    19. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction, and will be included in the registration mailings. The 
simultaneous multiple-round format will consist of sequential bidding 
rounds, each followed by the release of round results. Details 
regarding the location and format of round results will be included in 
the same public notice.
    20. 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

    21. The Balanced Budget Act calls upon the Commission to prescribe 
methods for establishing a reasonable reserve price or a minimum 
opening bid when FCC licenses are subject to auction, unless the 
Commission determines that a reserve price or minimum opening bid is 
not in the public interest. Consistent with this mandate, the 
Commission has directed the Bureau to seek comment on the use of a 
minimum opening bid and/or reserve price prior to the start of each 
auction.
    22. 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.
    23. In light of the Balanced Budget Act's requirements, the Bureau 
proposes to establish minimum opening bids for Auction No. 55. The 
Bureau believes a minimum opening bid, which has been used in other 
auctions, is an effective bidding tool.
    24. Specifically, for Auction No. 55, the Commission proposes the 
following license-by-license formula for calculating minimum opening 
bids: 5% (five percent) of the net amount of the winning bid in Auction 
No. 7 for the corresponding license (same MTA and channel block). \2\
---------------------------------------------------------------------------

    \2\ For the license that is available for part of a market, the 
net amount of the winning bid from Auction No. 7 is first multiplied 
by the proportion of the population covered by the partial market to 
the population of the entire MTA.
---------------------------------------------------------------------------

    25. The specific minimum opening bid for each license available in 
Auction No. 55 is set forth in Attachment A of the Auction No. 55 
Comment Public Notice. We seek comment on this proposal.
    26. If commenters believe that these minimum opening bids will 
result in substantial numbers of unsold licenses, or are not reasonable 
amounts, or should instead operate as reserve prices, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, we 
particularly seek comment on such factors as the amount of spectrum 
being auctioned, levels of incumbency, the availability of technology 
to provide service, the size of the geographic service areas, issues of 
interference with other spectrum bands and any other relevant factors 
that could reasonably have an impact on valuation of the 900 MHz SMR 
band spectrum. We also seek comment 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

    27. In each round, eligible bidders will be able to place bids on a 
given license in any of nine different amounts. The FCC 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.
    28. Once there is a standing high bid on a license, the FCC 
Automated Auction System will calculate a minimum acceptable bid for 
that license for the following round, as described. 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.).
    29. 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 for licenses that have not yet received 
a bid will be calculated differently, as explained.
    30. For Auction No. 55, we propose to calculate minimum acceptable 
bids by using a smoothing methodology, as we have done in several other 
auctions. The smoothing formula calculates minimum acceptable bids by 
first calculating a percentage increment, not to be confused with the 
bid increment. The percentage increment for each license is based on 
bidding activity on that license in all prior rounds; therefore, a 
license that has received many bids throughout the auction will have a 
higher percentage increment than a license that has received few bids.
    31. The calculation of the percentage increment used to determine 
the minimum acceptable bids for each license for the next round is made 
at the end of each round. The computation is based on an activity 
index, which is a

[[Page 55959]]

weighted average of the number of bids in that round and the activity 
index from the prior round. The current activity index is equal to a 
weighting factor times the number of new bids received on the license 
in the most recent bidding round plus one minus the weighting factor 
times the activity index from the prior round. The activity index is 
then used to calculate a percentage increment by multiplying a minimum 
percentage increment by one plus the activity index with that result 
being subject to a maximum percentage increment. The Commission will 
initially set the weighting factor at 0.5, the minimum percentage 
increment at 0.1 (10%), and the maximum percentage increment at 0.2 
(20%). Hence, at these initial settings, the percentage increment will 
fluctuate between 10% and 20% depending upon the number of bids for the 
license.
Equations
Ai = (C * Bi) + ((1-C) * Ai-1)
Ii+1 = smaller of ( (1 + Ai) * N) and M
Xi+1 = Ii+1 * Yi

Where,

Ai = activity index for the current round (round i)
C = activity weight factor
Bi = number of bids in the current round (round i)
Ai-1 = activity index from previous round (round i-1), 
A0 is 0
Ii+1 = percentage increment for the next round (round i+1)
N = minimum percentage increment or percentage increment floor
M = maximum percentage increment or percentage increment ceiling
Xi+1 = dollar amount associated with the percentage 
increment
Yi = high bid from the current round

    Under the smoothing methodology, once a bid has been received on a 
license, the minimum acceptable bid for that license in the following 
round will be the high bid from the current round plus the dollar 
amount associated with the percentage increment, with the result 
rounded to the nearest thousand if it is over ten thousand or to the 
nearest hundred if it is under ten thousand.
Examples
License 1
C = 0.5, N = 0.1, M = 0.2

    Round 1 (2 new bids, high bid = $1,000,000)--
    i. Calculation of percentage increment for round 2 using the 
smoothing formula:

A1 = (0.5 * 2) + (0.5 * 0) = 1
I2 = The smaller of ((1 + 1) * 0.1) = 0.2 or 0.2 (the 
maximum percentage increment)

    ii. Calculation of dollar amount associated with the percentage 
increment for round 2 (using I2):

X2 = 0.2 * $1,000,000 = $200,000

    iii. Minimum acceptable bid for round 2 = $1,200,000
    Round 2 (3 new bids, high bid = $2,000,000)--
    i. Calculation of percentage increment for round 3 using the 
smoothing formula:

A2 = (0.5 * 3) + (0.5 * 1) = 2
I3 = The smaller of ( (1 + 2) * 0.1) = 0.3 or 0.2 (the 
maximum percentage increment)

    ii. Calculation of dollar amount associated with the percentage 
increment for round 3 (using I3):

X3 = 0.2 * $2,000,000 = $400,000

    iii. Minimum acceptable bid for round 3 = $2,400,000
    Round 3 (1 new bid, high bid = $2,400,000)--
    i. Calculation of percentage increment for round 4 using the 
smoothing formula:

A3 = (0.5 * 1) + (0.5 * 2) = 1.5
I4 = The smaller of ((1 + 1.5) * 0.1) = 0.25 or 0.2 (the 
maximum percentage increment)

    ii. Caculation of dollar amount associated with the percentage 
increment for round 4 (using I4):

X4 = 0.2 * $2,400,000 = $480,000

    iii. Minimum acceptable bid for round 4 = $2,880,000

    32. As stated, 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, and the minimum opening 
bid. That is, I = (minimum opening bid)(1 + N){rounded{time} -(minimum 
opening bid). 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.
    33. 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.
    34. 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 FCC Automated 
Auction System. We seek comment on these proposals.

D. High Bids

    35. At the end of a bidding round, a high bid for each license will 
be determined based on the highest gross bid amount received for the 
license. 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 single high bid from among the tied bids. If the auction were 
to end with no higher bids being placed for that license, the winning 
bidder would be the one that placed the selected high bid. However, the 
remaining bidders, as well as the high bidder, can submit higher bids 
in subsequent rounds. 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.
    36. A high bid will remain the high bid until there is a higher bid 
on the same license at the close of a subsequent round. A high bid from 
a previous round is sometimes referred to as a ``standing high bid.'' 
Bidders are reminded that standing high bids confer activity credit.

E. Information Regarding Bid Withdrawal and Bid Removal

    37. For Auction No. 55, we propose 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.
    38. 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.
    39. 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

[[Page 55960]]

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.
    40. Applying this reasoning, we propose to limit each bidder in 
Auction No. 55 to withdrawing standing high bids in no more than two 
rounds during the course of the auction. To permit a bidder to withdraw 
bids in more than two rounds would likely encourage insincere bidding 
or the use of withdrawals for anti-competitive purposes. The two rounds 
in which withdrawals are utilized will be at the bidder's discretion; 
withdrawals otherwise must be in accordance with the Commission's 
rules. There is no limit on the number of standing high bids that may 
be withdrawn in either of the rounds in which withdrawals are utilized. 
Withdrawals will remain subject to the bid withdrawal payment 
provisions specified in the Commission's rules. We seek comment on this 
proposal.

F. Stopping Rule

    41. The Bureau has discretion ``to establish stopping rules before 
or during multiple round auctions in order to terminate the auction 
within a reasonable time.'' For Auction No. 55, the Bureau proposes to 
employ a simultaneous stopping rule approach. A simultaneous stopping 
rule means that all licenses remain open until bidding closes 
simultaneously on all licenses.
    42. 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.
    43. However, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 55:
    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 Bureau 
further seeks comment on whether this modified stopping rule should be 
used at any time or only in stage three of the auction.
    ii. Keep the auction open even if no new acceptable bids or 
proactive waivers are submitted and no previous high bids are 
withdrawn. In this event, the effect will be the same as if a bidder 
had submitted a proactive waiver. The activity rule, therefore, will 
apply as usual and a bidder with insufficient activity will either lose 
bidding eligibility or use a remaining activity rule waiver.
    iii. Declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the Bureau invokes 
this special stopping rule, it will accept bids in the specified final 
round(s) only for licenses on which the high bid increased in at least 
one of a specified preceding number of rounds.
    44. The Bureau proposes to exercise these options only in certain 
circumstances, for example, where the auction is proceeding very 
slowly, there is minimal overall bidding activity, or it appears likely 
that the auction will not close within a reasonable period of time. 
Before exercising these options, the Bureau is likely to attempt to 
increase the pace of the auction by, for example, increasing the number 
of bidding rounds per day, and/or increasing the amount of the minimum 
bid increments for the limited number of licenses where there is still 
a high level of bidding activity. We seek comment on these proposals.

IV. Conclusion

    45. Comments are due on or before October 1, 2003, and reply 
comments are due on or before October 8, 2003. Because of the 
disruption of regular mail and other deliveries in Washington, DC, the 
Bureau requires that all comments and reply comments be filed 
electronically. Comments and reply comments must be sent by electronic 
mail to the following address: [email protected]. The electronic mail 
containing the comments or reply comments must include a subject or 
caption referring to Auction No. 55 Comments and the name of the 
commenting party. The Bureau requests that parties format any 
attachments to electronic mail as Adobe[reg] Acrobat[reg] (pdf) or 
Microsoft[reg] Word documents. Copies of comments and reply comments 
will be available for public inspection during regular business hours 
in the FCC Public Reference Room, Room CY-A257, 445 12th Street, SW., 
Washington, DC 20554. In addition, the Bureau requests that commenters 
fax a courtesy copy of their comments and reply comments to the 
attention of Kathryn Garland at (717) 338-2850.
    46. 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.
Gary Michaels,
Legal Branch Chief, Auctions and Industry Analysis Division, WTB.
[FR Doc. 03-24730 Filed 9-26-03; 8:45 am]
BILLING CODE 6712-01-P