[Federal Register Volume 68, Number 194 (Tuesday, October 7, 2003)]
[Notices]
[Pages 57896-57908]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25199]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-03-53D (Auction No. 53); DA 03-2354]


Auction of Licenses in the Multichannel Video Distribution and 
Data Service (MVDDS) Rescheduled for January 14, 2004; Notice and 
Filing Requirements, Minimum Opening Bids, Upfront Payments and Other 
Auction Procedures

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the procedures and minimum opening 
bids for the upcoming auction of MVDDS licenses and announces that the 
auction has been rescheduled for January 14, 2004. This document is 
intended to familiarize prospective bidders with the procedures and 
minimum opening bids for this auction.

DATES: Auction No. 53 is scheduled to begin on January 14, 2004.

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division: Legal questions: Brian Carter at (202) 418-0660, or General 
auction questions: Roy Knowles or Barbara Sibert at (717) 338-2888. 
Media Contact: Press inquiries: Chelsea Fallon at (202) 418-0660. 
Public Safety and Private Wireless Division: Legal questions: Jennifer 
Burton at (202) 418-0680, or Technical questions: Michael Pollak at 
(202) 418-0680 or Steve Buenzow at (717) 338-2646.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 53 
Procedures Public Notice released on August 28, 2003. The complete text 
of the Auction No. 53 Procedures Public Notice, including attachments, 
as well as related Commission 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. The Auction No. 53 Procedures Public 
Notice and related Commission documents 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]. 
When ordering documents from Qualex, please provide the appropriate FCC 
document number (for example, FCC 02-116 for the Second Report and 
Order). The Auction No. 53 Procedures Public Notice and related 
documents are also

[[Page 57897]]

available on the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/53/.

I. General Information

A. Introduction

    1. The Auction No. 53 Procedures Public Notice, announces that the 
auction of licenses in the Multichannel Video Distribution and Data 
Service (``MVDDS'') (Auction No. 53) has been rescheduled for January 
14, 2004. In addition, the Wireless Telecommunications Bureau 
(``Bureau'') announces the procedures and minimum opening bids for this 
auction. On January 30, 2003, in accordance with the Balanced Budget 
Act of 1997, the Bureau released a public notice seeking comment on 
reserve prices and/or minimum opening bids and the procedures to be 
used in Auction No. 53. The Bureau received one comment and one reply 
comment in response to the Auction No. 53 Comment Public Notice, 68 FR 
6167 (February 6, 2003).
i. Background
    2. On April 15, 2003, the Commission released the Second Further 
Notice of Proposed Rule Making, 68 FR 19486 (April 21, 2003), which 
sought further comment on the appropriate service area definition for 
MVDDS and on whether the build out requirement for this service should 
be modified. On July 7, 2003, the Commission released the Third Report 
and Order, 18 FCC Rcd 13468 (2003), in which it decided to license 
MVDDS on the basis of Designated Market Areas (``DMAs'') rather than 
Component Economic Areas (``CEAs'') and adopted a five-year build out 
requirement.
    3. MVDDS licensees may provide any digital fixed one-way non-
broadcast service including direct-to-home/office wireless service. 
Mobile and aeronautical services are not authorized. Two-way services 
may be provided by using other spectrum or media for the return or 
upstream path. MVDDS providers will share the 12.2-12.7 GHz band on a 
co-primary basis with non-geostationary satellite orbit (``NGSO'') 
fixed-satellite services (``FSS'') and on a non-harmful interference 
basis with incumbent Direct Broadcast Satellite (``DBS'') providers. 
The technical criteria for sharing established in the MVDDS Second 
Report and Order, 67 FR 43031 (June 26, 2002), ET Docket No. 98-206, 
released May 23, 2002, are designed to protect NGSO FSS and DBS 
operations from harmful interference.
ii. Licenses To Be Auctioned
    4. Auction No. 53 will offer 214 licenses based on DMAs and FCC-
defined DMA-like service areas encompassing the United States, Guam and 
the Northern Mariana Islands, Puerto Rico and the United States Virgin 
Islands, and American Samoa. The 214 service areas are based on the 210 
DMAs delineated by Nielsen in its publication entitled ``U.S. 
Television Household Estimates'' dated September 2002 (which lists 
estimates of television households ``as of January 2003'' and can be 
found at Nielsen's Web site at http://www.nielsenmedia.com) plus the 
following four FCC-defined service area additions: Alaska--Balance of 
State (all geographic areas of Alaska not included in Nielsen's three 
DMAs for the state: Anchorage, Fairbanks, and Juneau), Guam and the 
Northern Mariana Islands, Puerto Rico and the United States Virgin 
Islands, and American Samoa. Potential applicants should note that the 
boundaries of the DMA-based service areas of the 214 licenses offered 
in Auction No. 53 will not change, even if Nielsen alters the 
boundaries of its DMAs in the future, as it has in the past. Each 
license will authorize the use of one block of unpaired spectrum in the 
12.2-12.7 GHz band.
    5. Applicants should note that Nielsen owns the copyright to the 
DMA listing. The Commission's assignment of MVDDS licenses will not 
confer on applicants or licensees the right to use Nielsen's DMA mark, 
regions, or data, and such right must be obtained from Nielsen. In 
addition, the Commission does not have the right to republish DMA 
regions or data. Therefore, the Commission will not provide the 
populations, counties, or a map of DMAs to applicants for Auction No. 
53 either before or during the auction. Applicants wishing to obtain 
such DMA data and maps will need to acquire them from Nielsen.
    6. A complete list of the licenses available in Auction No. 53 is 
included in Attachment A of the Auction No. 53 Procedures Public 
Notice. The characteristics of these licenses are shown in the 
following table:

----------------------------------------------------------------------------------------------------------------
                                                                                                        No. of
              Frequencies                         Bandwidth                 Geographic Area Type       Licenses
----------------------------------------------------------------------------------------------------------------
12.2-12.7 GHz.........................  500 MHz......................  DMA..........................         214
----------------------------------------------------------------------------------------------------------------

B. Rules and Disclaimers

i. Relevant Authority
    7. Prospective bidders must familiarize themselves thoroughly with 
the Commission's rules relating to MVDDS contained in title 47, part 
101, 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. 53 Procedures 
Public Notice; the Auction No. 53 Comment Public Notice; and the Part 1 
Fifth Report and Order, 65 FR 52323 (August 29, 2000), as well as prior 
and subsequent Commission proceedings regarding competitive bidding 
procedures.
    8. 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 our public notices at any time, 
and will issue public notices to convey any new or supplemental 
information to applicants. It is the responsibility of all applicants 
to remain current with all Commission rules and with all public notices 
pertaining to this auction.
ii. Prohibition of Collusion
    9. To ensure the competitiveness of the auction process, Sec.  
1.2105(c) of the Commission's rules prohibits applicants for any of the 
same geographic license areas from communicating with each other during 
the auction about bids, bidding strategies, or settlements unless such 
applicants have identified each other on their FCC Form 175 
applications as parties with whom they have entered into agreements 
under Sec.  1.2105(a)(2)(viii). Thus, applicants for any of the same 
geographic license areas must affirmatively avoid all discussions with 
each other that affect, or in their reasonable assessment have the 
potential to affect, bidding or bidding strategy. This prohibition 
begins at the short-form application filing deadline and ends at the 
down payment deadline after the auction. For purposes of this 
prohibition, Sec.  1.2105(c)(7)(i) defines applicant as including all 
controlling interests in the entity submitting a short-form application 
to participate in

[[Page 57898]]

the auction, as well as all holders of partnership and other ownership 
interests and any stock interest amounting to 10 percent or more of the 
entity, or outstanding stock, or outstanding voting stock of the entity 
submitting a short-form application, and all officers and directors of 
that entity.
    10. Applicants for licenses in any of the same 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. 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.
    11. 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. In Auction No. 
53, for example, the rule will apply to any applicants that apply for 
the same DMA-based service area. In addition, applicants that apply to 
bid for all markets will be precluded from communicating with all other 
applicants until after the down payment deadline. 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 Sec.  1.2105(c), 
even if the agreement has not been reduced to writing. If the parties 
have not agreed in principle by the filing deadline, an applicant would 
not include the names of those parties on its application, and may not 
continue negotiations with other applicants for licenses covering any 
of the same geographic areas. By signing their FCC Form 175 short-form 
applications, applicants are certifying their compliance with Sec.  
1.2105(c).
    12. In addition, Sec.  1.65 of the Commission's rules requires an 
applicant to maintain the accuracy and completeness of information 
furnished in its pending application and to notify the Commission 
within 30 days of any substantial change that may be of decisional 
significance to that application. Thus, Sec. Sec.  1.65 and 1.2105 
require an auction applicant to notify the Commission of any violation 
of the anti-collusion rules upon learning of such violation. Bidders 
therefore are required to make such notification to the Commission 
immediately upon discovery.
    13. 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. 53 Procedures Public Notice.
iii. Interference Protection
    14. Among other licensing and technical rules, MVDDS licensees must 
comply with the interference protection and coordination requirements 
set forth in Sec. Sec.  101.105, 101.1421, and 101.1440 of the 
Commission's rules. Generally, Sec. Sec.  101.105, 101.1421, and 
101.1440 establish standards for protection of co-primary NGSO FSS 
earth stations, incumbent and adjacent area licensees and co-primary 
DBS earth stations. MVDDS shall be licensed on a non-harmful 
interference co-primary basis to existing DBS operations and on a co-
primary basis with NGSO FSS stations in this band. MVDDS licensees must 
also protect and/or develop sharing agreements with neighboring 
licensees.
a. Incumbent Licensees
    15. Terrestrial private operational fixed point-to-point stations 
in the 12.2-12.7 GHz band which were licensed prior to MVDDS are 
incumbent point-to-point stations. However, only those stations 
licensed as public safety must be protected from harmful interference 
caused by later MVDDS entrants in the 12.2-12.7 GHz band. MVDDS 
operators have the responsibility of resolving any harmful interference 
problems that their operations may cause to these public safety 
incumbent point-to-point operations in the 12.2-12.7 GHz band. To aid 
potential bidders, a list of public safety incumbents in this band can 
be found at Appendix I to the MVDDS Second Report and Order.
b. Canadian and Mexican Border Regions
    16. MVDDS systems in the United States within 56 km (35 miles) of 
the Canadian and Mexican border will be granted conditional licenses, 
until final international agreements are approved. MVDDS systems may 
not cause harmful interference to stations in Canada or Mexico. No 
stations are allowed within 5 miles of the borders.
c. Quiet Zone
    17. MVDDS stations must protect the radio quiet zones. Stations are 
cautioned that they must receive the appropriate approvals directly 
from the relevant quiet zone entity prior to operating.
iv. Due Diligence
    18. Potential applicants 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. 53.
    19. Potential applicants 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. 53, may 
be commenced, or 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. 53. In addition, although the 
Commission will continue to act on pending applications, requests and 
petitions, some of these matters may not be resolved by the time of the 
auction.
    20. In addition, potential applicants may research the licensing 
database for the Wireless Telecommunications Bureau on the Internet in 
order to determine which frequencies are already licensed to incumbent 
licensees. 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

[[Page 57899]]

into the database. Potential applicants are strongly encouraged to 
physically inspect any sites located in, or near, the service area for 
which they plan to bid.
    21. Licensing records for terrestrial private operational fixed 
point-to-point public safety are contained in the Bureau's Universal 
Licensing System (``ULS'') and may be researched on the Internet at 
http://wireless.fcc.gov/uls. Potential applicants may query the 
database online and download a copy of their search results if desired. 
Detailed instructions on using License Search (including frequency 
searches and the GeoSearch capability) and downloading query results 
are available online by selecting the ``?'' button at the upper right-
hand corner of the License Search screen.
    22. Potential applicants 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.
v. Bidder Alerts
    23. The FCC makes no representations or warranties about the use of 
this spectrum for particular services. Applicants should be aware that 
an FCC auction represents an opportunity to become an FCC licensee in 
this service, subject to certain conditions and regulations. An FCC 
auction does not constitute an endorsement by the FCC of any particular 
services, technologies or products, nor does an FCC license constitute 
a guarantee of business success. Applicants and interested parties 
should perform their own due diligence before proceeding, as they would 
with any new business venture.
    24. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 53 to 
deceive and defraud unsuspecting investors.
    25. Information about deceptive telemarketing investment schemes is 
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment 
schemes should be directed to the FTC, the SEC, or the National Fraud 
Information Center at (800) 876-7060. Consumers who have concerns about 
specific proposals regarding Auction No. 53 may also call the FCC 
Consumer Center at (888) CALL-FCC ((888) 225-5322).
vi. National Environmental Policy Act Requirements
    26. 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
    27. The auction will begin on Wednesday, January 14, 2004. 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 will be conducted on each business 
day until bidding has stopped on all licenses.
ii. Auction Title
    28. Auction No. 53--Multichannel Video Distribution and Data 
Service
iii. Bidding Methodology
    29. The bidding methodology for Auction No. 53 will be simultaneous 
multiple round 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
    30. The following is a list of important dates related to Auction 
No. 53:

Auction Seminar........................  October 29, 2003.
Short-Form Application (FCC FORM 175)    October 29, 2003; 12 p.m. ET.
 Filing Window Opens.
Short-Form Application (FCC FORM 175)    November 12, 2003; 6 p.m. ET.
 Filing Window Deadline.
Upfront Payments (via wire transfer)...  December 8, 2003; 6 p.m. ET.
Mock Auction...........................  January 9, 2004.
Auction Begins.........................  January 14, 2004.
 

v. Requirements For Participation
    31. Those wishing to participate in the auction must:
    [sbull] Submit a short-form application (FCC Form 175) 
electronically by 6:00 p.m. ET, November 12, 2003.
    [sbull] Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by 6:00 p.m. ET, December 8, 2003.
    [sbull] Comply with all provisions outlined in the Auction No. 53 
Procedures Public Notice.
vi. General Contact Information
    32. The following is a list of general contact information related 
to Auction No. 53:
    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.
    Auction Legal Information: Auction Rules, Policies, Regulations--
Auctions and Industry Analysis Division, Legal Branch (202) 418-0660.
    Licensing Information: Rules, Policies, Regulations, Licensing 
Issues, Due Diligence, Incumbency Issues--Public Safety and Private 
Wireless Division (202) 418-0680.
    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.
    Payment Information: Wire Transfers, Refunds--FCC Auctions 
Accounting Branch (202) 418-0578, (202) 418-2843 (Fax).
    Telephonic Bidding: Will be furnished only to qualified bidders.
    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

    33. Guidelines for completion of the short-form (FCC Form 175) are 
set forth in Attachment D of the Auction No. 53 Procedures Public 
Notice.

A. License Selection

    34. In Auction No. 53, FCC Form 175 will include a mechanism that 
allows an applicant to create customized lists of licenses. The 
applicant will select the filter criteria and the system will produce a 
list of licenses satisfying the specified criteria. The applicant may 
apply for all the licenses in the list (by using the ``Save all 
filtered licenses'' option) or select and save individual licenses 
separately from the list.

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

    35. All applicants must comply with the uniform part 1 ownership 
disclosure standards and in completing FCC Form 175 provide information 
required by Sec. Sec.  1.2105 and 1.2112 of the Commission's rules.

[[Page 57900]]

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

    36. 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.
    37. A party holding a non-controlling, attributable interest in one 
applicant will be permitted to acquire an ownership interest in, form a 
consortium with, or enter into a joint bidding arrangement with other 
applicants for licenses in the same geographic license area provided 
that (i) the attributable interest holder certifies that it has not and 
will not communicate with any party concerning the bids or bidding 
strategies of more than one of the applicants in which it holds an 
attributable interest, or with which it has formed a consortium or 
entered into a joint bidding arrangement; and (ii) the arrangements do 
not result in a change in control of any of the applicants. While the 
anti-collusion rules do not prohibit non-auction related business 
negotiations among auction applicants, applicants are reminded that 
certain discussions or exchanges could touch upon impermissible subject 
matters because they may convey pricing information and bidding 
strategies.

D. Eligibility

i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)
    38. 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.
    39. In the Second Report and Order, the Commission determined that 
three levels of bidding credits are appropriate for MVDDS. Therefore, 
bidding credits will be available to entrepreneurs, small businesses, 
and very small businesses, and consortia thereof, as follows for 
Auction No. 53:
    [sbull] A bidder with attributed average annual gross revenues of 
not more than $40 million for the preceding three years 
(``entrepreneur'') 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 (``small 
business'') will receive a 25 percent discount on its winning bids;
    [sbull] A bidder with attributed average annual gross revenues of 
not more than $3 million for the preceding three years (``very small 
business'') will receive a 35 percent discount on its winning bids.
    Bidding credits are not cumulative; a qualifying applicant receives 
the 15 percent, 25 percent, or 35 percent bidding credit on its winning 
bid, but only one credit per license.
    40. Bidders should note that unjust enrichment provisions apply to 
a winning bidder that utilizes a bidding credit and subsequently seeks 
to assign or transfer control of its license or construction permit to 
an entity not qualifying for the same level of bidding credit.
ii. Tribal Land Bidding Credit
    41. To encourage the growth of wireless services in federally 
recognized tribal lands the Commission has implemented a tribal land 
bidding credit. See section V.F. of the Auction No. 53 Procedures 
Public Notice.
    42. Attribution for entrepreneur, small business, and very small 
business eligibility. In determining which entities qualify as 
entrepreneurs, small businesses, or very small business, 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.
    43. Each member of a consortium of entrepreneurs, small businesses 
or very small businesses must disclose its gross revenues along with 
those of its affiliates, its controlling interests, and the affiliates 
of its controlling interests.
iii. Eligibility Restrictions for Cable Operators
    44. Applicants should note that Sec.  101.1412 of the Commission's 
rules provide certain eligibility restrictions for cable operators. 
Specifically, no cable operator, nor any entity owning an attributable 
interest in a cable operator, shall have an attributable interest in an 
MVDDS license if such cable operator's service area significantly 
overlaps the MVDDS license area.
iv. Supporting Documentation
    45. 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 entrepreneurs, small businesses, or very small businesses (or 
consortia of entrepreneurs, small businesses, or very small businesses) 
for this auction. Applicants should also note that they must fulfill 
the certification requirements of Sec.  101.1412(g)(2) of the 
Commission's rules relating to complying with the eligibility 
restrictions for cable operators.
    46. 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.
    47. Entrepreneur, small business, or very small business 
eligibility (Exhibit C). Entities applying to bid as entrepreneurs, 
small businesses, or very small businesses (or consortia of 
entrepreneurs, small businesses, 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 entrepreneurs, 
small

[[Page 57901]]

businesses, or very small businesses, this information must be provided 
for each consortium member.

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

    48. Each applicant must certify on its FCC Form 175 application 
under penalty of perjury that the applicant, its controlling interests, 
its affiliates, and the affiliates of its controlling interests, as 
defined by Sec.  1.2110, are not in default on any payment for 
Commission licenses (including down payments) and 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 interests, as defined by Sec.  1.2110, have ever been in 
default on any Commission licenses or have ever been delinquent on any 
non-tax debt owed to any Federal agency. Applicants must include this 
statement as Exhibit D of the FCC Form 175.
    49. ``Former defaulters''--i.e., applicants, including their 
attributable interest holders, that in the past have defaulted on any 
Commission licenses or been delinquent on any non-tax debt owed to any 
Federal agency, but that have since remedied all such defaults and 
cured all of their outstanding non-tax delinquencies--are eligible to 
bid in Auction No. 53, 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.

F. Installment Payments

    50. Installment payment plans will not be available in Auction No. 
53.

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

    51. Applicants owned by minorities or women, as defined in 47 CFR 
1.2110(c)(2), may attach an exhibit (Exhibit E) regarding this status. 
This applicant status information is collected for statistical purposes 
only and assists the Commission in monitoring the participation of 
``designated entities'' in its auctions. Applicants wishing to submit 
additional information may do so on Exhibit F (Miscellaneous 
Information) to the FCC Form 175. Applicants must also certify as an 
exhibit to their short-form application that they, and all parties to 
the application, will come into compliance with Sec.  101.1412(a) 
regarding eligibility restrictions for cable operators. This 
certification should be included as Exhibit F.

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

    52. After the short-form filing deadline (6:00 p.m. ET on November 
12, 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, 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. 53. The Bureau requests that parties 
format any attachments to electronic mail as Adobe[reg] Acrobat[reg] 
(pdf) or Microsoft[reg] Word documents.
    53. A separate copy of the letter should be faxed to the attention 
of Kathryn Garland at (717) 338-2850.

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

    54. 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. Amendments reporting substantial changes of possible 
decisional significance in information contained in FCC Form 175 
applications, as defined by 47 CFR 1.2105(b)(2), will not be accepted 
and may in some instances result in the dismissal of the FCC Form 175 
application.

II. Pre-Auction Procedures

A. Auction Seminar

    55. On Wednesday, October 29, 2003, the FCC will sponsor a free 
seminar for Auction No. 53 at the Federal Communications Commission, 
located at 445 12th Street, SW., Washington, DC. The seminar will 
provide attendees with information about pre-auction procedures, 
auction conduct, the FCC Automated Auctions System, auction rules, and 
the MVDDS service rules. A registration form is attached as Attachment 
D of the Auction No. 53 Procedures Public Notice.

B. Short-Form Application (FCC Form 175)--Due November 12, 2003

    56. 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 November 12, 2003. Late applications will not be accepted.
    57. There is no application fee required when filing an FCC Form 
175.
i. Electronic Filing
    58. Applicants must file their FCC Form 175 applications 
electronically. Applications may generally be filed at any time 
beginning at noon ET on October 29, 2003, until 6 p.m. ET on November 
12, 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 November 12, 2003.
    59. 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. Technical support is available at (202) 414-1250 (voice) 
or (202) 414-1255 (text telephone (TTY)); hours of service are 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
    60. 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. 53 Procedures 
Public Notice.
iii. Electronic Review of FCC Form 175
    61. 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. 53 
Procedures Public Notice for details on accessing the review system.

[[Page 57902]]

    62. 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

    63. 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 December 8, 2003

    64. 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 December 8, 2003. For 
specific instructions regarding upfront payments, see section III.D. of 
the Auction No. 53 Procedures Public Notice. Failure to deliver the 
upfront payment by the December 8, 2003, deadline will result in 
dismissal of the application and disqualification from participation in 
the auction.
i. Making Auction Payments by Wire Transfer
    65. Wire transfer payments must be received by 6 p.m. ET on 
December 8, 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.
    66. Applicants must fax a completed FCC Form 159 (Revised 2/03) 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. 53.'' 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. 53 Procedures Public 
Notice.
ii. Amount of Upfront Payment
    67. In the Part 1 Order the Commission delegated to the Bureau the 
authority and discretion to determine appropriate upfront payment(s) 
for each auction. In addition, in the Part 1 Fifth Report and Order, 
the Commission ordered that ``former defaulters,'' i.e., applicants 
that have ever been in default on any Commission license or have ever 
been delinquent on any non-tax debt owed to any Federal agency, be 
required to pay upfront payments fifty percent greater than non-
``former defaulters.'' For purposes of this calculation, the 
``applicant'' includes the applicant itself, its affiliates, its 
controlling interests, and affiliates of its controlling interests, as 
defined by Sec.  1.2110 of the Commission's rules (as amended in the 
Part 1 Fifth Report and Order).
    68. In the Auction No. 53 Comment Public Notice, we proposed that 
the amount of the upfront payment would determine the number of bidding 
units on which a bidder may place bids. In order to bid on a license, 
otherwise qualified bidders that applied for that license on Form 175 
must have an eligibility level that meets or exceeds the number of 
bidding units assigned to that license. At a minimum, therefore, an 
applicant's total upfront payment must be enough to establish 
eligibility to bid on 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 place bids and hold high 
bids at any given time.
    69. In the Auction No. 53 Comment Public Notice, the Bureau 
proposed upfront payments on a license-by-license basis for both CEAs 
and DMAs. Upfront payment calculations for DMA licenses are based upon 
CEA upfront payment calculations. With respect to CEAs we proposed to 
use the following formula: $0.025 * License Area Population with a 
minimum of $1,000 per license. 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. 53 Procedures Public Notice.
    70. In calculating its upfront payment amount, an applicant should 
determine the maximum number of bidding units on which it may wish to 
be active (bidding units associated with licenses on which the bidder 
has the standing high bid from the previous round and licenses on which 
the bidder places a bid in the current round) in any single round, 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 licenses on which it seeks to bid in any given 
round. 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.                                  Market Name                  Units       Payment
----------------------------------------------------------------------------------------------------------------
DMA001........................................  New York..............................      480,000     $480,000
DMA004........................................  Philadelphia..........................      187,000    $187,000
----------------------------------------------------------------------------------------------------------------
Note: If a bidder wishes to bid on both licenses in a round, it must have selected both on its FCC Form 175 and
  purchased at least 667,000 bidding units (480,000 + 187,000). If a bidder only wishes to bid on one, but not
  both, purchasing 480,000 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 187,000 bidding units,
  it would have enough eligibility for the Philadelphia license but not for the New York license.


[[Page 57903]]

    71. 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
    72. The Commission will use wire transfers for all Auction No. 53 
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.

Name of Bank
ABA Number
Contact and Phone Number
Account Number to Credit
Name of Account Holder
FCC Registration Number (FRN)
Taxpayer Identification Number
Correspondent Bank (if applicable)
ABA Number
Account Number

    Applicants 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, at (202) 418-2843 by December 8, 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.

E. Auction Registration

    73. 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.
    74. 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 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.
    75. Applicants that do not receive both registration mailings will 
not be able to submit bids. Therefore, any qualified applicant that has 
not received both mailings by noon on Wednesday, January 7, 2004, 
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.
    76. 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

    77. 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. 53. The telephonic bidding phone number will be 
supplied in the first overnight mailing, which also includes the 
confidential bidder identification number.
    78. 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

    79. All qualified bidders will be eligible to participate in a mock 
auction on Friday, January 9, 2004. 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

    80. The first round of bidding for Auction No. 53 will begin on 
Wednesday, January 14, 2004. 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
    81. In the Auction No. 53 Comment Public Notice, we proposed to 
award all licenses in Auction No. 53 in a simultaneous multiple round 
auction. We received no comments on this issue. We conclude that it is 
operationally feasible and appropriate to auction the MVDDS licenses 
through a simultaneous multiple round auction. Unless otherwise 
announced, bids will be accepted on all licenses in each round of the 
auction. This approach, we believe, allows bidders to take advantage of 
synergies that exist among licenses and is administratively efficient.
ii. Maximum Eligibility and Activity Rules
    82. In the Auction No. 53 Comment Public Notice, we 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. We received no comments on this issue.
    83. For Auction No. 53 we adopt this proposal. The amount of the 
upfront payment submitted by a bidder determines the initial 
eligibility (in bidding units) for each bidder. The total upfront 
payment defines the maximum number of bidding units on which the 
applicant will be permitted to bid and hold high bids in a round. As 
there is no provision for increasing a bidder's eligibility after the 
upfront payment deadline, applicants are cautioned to calculate their 
upfront payments carefully. The total upfront payment does not affect 
the total dollar amount a bidder may bid on any given license.

[[Page 57904]]

    84. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. Bidders are required to be active on a specific 
percentage of their current eligibility during each round of the 
auction.
    85. A bidder's activity level in a round is the sum of the bidding 
units associated with licenses on which the bidder is active. A bidder 
is considered active on a license in the current round if it is either 
the high bidder at the end of the previous bidding round and does not 
withdraw the high bid in the current round, or if it submits a bid in 
the current round (see ``Minimum Acceptable Bids and Bid Increments'' 
in section IV.B.iii). The minimum required activity is expressed as a 
percentage of the bidder's current bidding eligibility, and increases 
by stage as the auction progresses. Because these procedures have 
proven successful in maintaining the pace of previous auctions (as set 
forth under ``Auction Stages'' in section IV.A.iii and ``Stage 
Transitions'' in section IV.A.iv), we adopt them for Auction No. 53.
iii. Auction Stages
    86. In the Auction No. 53 Comment Public Notice, we proposed to 
conduct the auction in three stages and employ an activity rule. We 
further proposed that, in each round of Stage One, a bidder desiring to 
maintain its current eligibility would be required to be active on 
licenses encompassing at least 80 percent of its current bidding 
eligibility. In each round of Stage Two, a bidder desiring to maintain 
its current eligibility would be required to be active on at least 90 
percent of its current bidding eligibility. Finally, we proposed that a 
bidder in Stage Three, in order to maintain its current eligibility, 
would be required to be active on 98 percent of its current bidding 
eligibility. We received no comments on this proposal.
    87. We adopt our proposals for the activity rules and stages. Here 
are the activity levels for each stage of the auction. The Bureau 
reserves the discretion to further alter the activity percentages 
before and/or during the auction.
    Stage One: During the first stage of the auction, a bidder desiring 
to maintain its current eligibility will be required to be active on 
licenses encompassing at least 80 percent of its current bidding 
eligibility in each bidding round. Failure to maintain the required 
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 bidder's current activity 
(the sum of bidding units of the bidder's standing high bids and bids 
during the current round) by five-fourths (5/4).
    Stage Two: During the second stage of the auction, a bidder 
desiring to maintain its current eligibility is required to be active 
on 90 percent of its current bidding eligibility. Failure to maintain 
the required 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 Two, reduced eligibility for the 
next round will be calculated by multiplying the bidder's current 
activity (the sum of bidding units of the bidder's standing high bids 
and bids during the current round) by ten-ninths (10/9).
    Stage Three: During the third stage of the auction, a bidder 
desiring to maintain its current eligibility is required to be active 
on 98 percent of its current bidding eligibility. Failure to maintain 
the required 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). In this final stage, reduced eligibility for the 
next round will be calculated by multiplying the bidder's current 
activity (the sum of bidding units of the bidder's standing high bids 
and bids during the current round) by fifty-fortyninths (50/49).

    CAUTION: Since activity requirements increase in each auction 
stage, bidders must carefully check their current activity during 
the bidding period of the first round following a stage transition. 
This is especially critical for bidders that have standing high bids 
and do not plan to submit new bids. In past auctions, some bidders 
have inadvertently lost bidding eligibility or used an activity rule 
waiver because they did not re-verify their activity status at stage 
transitions. Bidders may check their activity against the required 
activity level by using the bidding system's bidding module.

    88. Because the foregoing procedures have proven successful in 
maintaining proper pace in previous auctions, we adopt them for Auction 
No. 53.
iv. Stage Transitions
    89. In the Auction No. 53 Comment Public Notice, we proposed that 
the auction would generally 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 below 20 percent for three consecutive 
rounds of bidding in each Stage. We further proposed that the Bureau 
would retain the discretion to change stages unilaterally by 
announcement during the auction. This determination, we proposed, would 
be based on a variety of measures of bidder activity, including, but 
not limited to, the auction activity level, the percentages of licenses 
(as measured in bidding units) on which there are new bids, the number 
of new bids, and the percentage increase in revenue. We received no 
comments on this issue.
    90. We adopt our proposal. Thus, the auction will start in Stage 
One and will generally advance to the next stage (i.e., from Stage One 
to Stage Two, and from Stage Two to Stage Three) when, in each of three 
consecutive rounds of bidding, the high bid has increased on 20 percent 
or less of the licenses being auctioned (as measured in bidding units). 
In addition, the Bureau will retain the discretion to regulate the pace 
of the auction by announcement. This determination will be based on a 
variety of measures of bidder activity, including, but not limited to, 
the auction activity level, the percentages of licenses (as measured in 
bidding units) on which there are new bids, the number of new bids, and 
the percentage increase in revenue. We believe that these stage 
transition rules, having proven successful in prior auctions, are 
appropriate for use in Auction No. 53.
v. Activity Rule Waivers and Reducing Eligibility
    91. 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 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.
    92. 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 round 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. If a bidder has no waivers remaining and does not satisfy 
the required activity level, the current eligibility will be 
permanently reduced, possibly eliminating the bidder from the auction.

[[Page 57905]]

    93. 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 
``Auction Stages'' (see section IV.A.iii). Once eligibility has been 
reduced, a bidder will not be permitted to regain its lost bidding 
eligibility.
    94. Finally, a bidder may proactively use an activity rule waiver 
as a means to keep the auction open without placing a bid. If a bidder 
submits a proactive waiver (using the proactive waiver function in the 
FCC Automated Auction System) during a round in which no bids are 
submitted, the auction will remain open and the bidder's eligibility 
will be preserved. However, an automatic waiver triggered during a 
round in which there are no new bids or withdrawals will not keep the 
auction open. Note: Once a proactive waiver is submitted during a 
round, that waiver cannot be unsubmitted.
vi. Auction Stopping Rules
    95. For Auction No. 53, the Bureau proposed to employ a 
simultaneous stopping rule. The Bureau also sought comment on a 
modified version of the stopping rule. The modified version of the 
stopping rule would close the auction for all licenses after the first 
round in which no bidder submits a proactive waiver, a withdrawal, or a 
new bid on any license on which it is not the standing high bidder.
    96. In addition, we proposed that the Bureau reserve the right to 
declare that the auction will end after a designated number of 
additional rounds (``special stopping rule''). If the Bureau invokes 
this special stopping rule, it will accept bids in the final round(s) 
only for licenses on which the high bid increased in at least one of 
the preceding specified number of rounds. We 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.
    97. We adopt the proposals concerning the auction stopping rules. 
Auction No. 53 will begin under the simultaneous stopping rule, and the 
Bureau will retain the discretion to invoke the other versions of the 
stopping rule.
vii. Auction Delay, Suspension, or Cancellation
    98. By public notice or by announcement during the auction, the 
Bureau may delay, suspend, or cancel the auction in the event of 
natural disaster, technical obstacle, evidence of an auction security 
breach, unlawful bidding activity, administrative or weather necessity, 
or for any other reason that affects the fair 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
    99. 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. Details regarding round results formats and 
locations will also be included in the qualified bidders public notice.
    100. The FCC has discretion to change the bidding schedule in order 
to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors.
ii. Reserve Price or Minimum Opening Bid
    101. For Auction No. 53, the Bureau proposed the following license-
by-license basis for calculating minimum opening bids: $0.05 * License 
Area Population with a minimum of $1,000 per license.
    102. The Bureau received no comments on this issue. Consequently, 
the Bureau adopts its proposed minimum opening bids for Auction No. 53. 
The minimum opening bids we adopt for Auction No. 53 are reducible at 
the discretion of the Bureau. We emphasize, 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 requests to reduce the minimum opening bid on 
specific licenses.
    103. The specific minimum opening bids for each license available 
in Auction No. 53 are set forth in Attachment A of the Auction No. 53 
Procedures Public Notice.
iii. Minimum Acceptable Bids and Bid Increments
    104. In Auction No. 53 we will use a smoothing methodology to 
calculate minimum acceptable bids. The smoothing methodology is 
designed to vary the increment for a given license between a maximum 
and minimum percentage based on the bidding activity on that license. 
This methodology allows the increments to be tailored to the activity 
on a license, decreasing the time it takes for licenses receiving many 
bids to reach their final prices. The formula used to calculate this 
increment is included as Attachment F of the Auction No. 53 Procedures 
Public Notice. We 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.
    105. In each round, each eligible bidder will be able to place a 
bid on a particular license for which it applied in any of nine 
different amounts. The FCC Automated Auction System will list the nine 
bid amounts for each license.
    106. 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 in Attachment F of 
the Auction No. 53 Procedures Public Notice. The difference between the 
minimum acceptable bid and the standing high bid for each license will 
define the bid increment--i.e., bid increment = (minimum acceptable 
bid)--(standing high bid). 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.).
    107. At the start of the auction and until a bid has been placed on 
a license, the minimum acceptable bid for that license will be equal to 
its minimum

[[Page 57906]]

opening bid. Corresponding additional bid amounts will be calculated 
using bid increments defined as the difference between the minimum 
opening bid times one plus the percentage increment, rounded as 
described in Attachment F of the Auction No. 53 Procedures Public 
Notice, and the minimum opening bid--i.e., bid increment = (minimum 
opening bid) (1 + percentage increment) {rounded{time} --(minimum 
opening bid). At the start of the auction and until a bid has been 
placed on a license, the nine acceptable bid amounts for each license 
consist of the minimum opening bid and additional amounts calculated 
using multiple bid increments (i.e., the second bid amount equals the 
minimum opening bid plus the bid increment, the third bid amount equals 
the minimum opening bid plus two times the bid increment, etc).
    108. 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.
    109. The Bureau retains the discretion to change the minimum 
acceptable bids and bid increments and the methodology for determining 
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. The Bureau may also use its discretion to 
adjust the minimum bid increment without prior notice if circumstances 
warrant.
iv. High Bids
    110. At the end of each bidding round, the high bids will be 
determined based on the highest gross bid amount received for each 
license. A high bid from a previous round is sometimes referred to as a 
``standing high bid.'' A ``standing high bid'' will remain the high bid 
until there is a higher bid on the same license at the close of a 
subsequent round. Bidders are reminded that standing high bids count 
towards bidding activity.
    111. A Sybase[reg] SQL pseudo-random number generator based on the 
L'Ecuyer algorithms will be used to select a high bid in the event of 
identical high bids on a license in a given round (i.e., tied bids). 
The tied bid having the highest random number will become the standing 
high bid. The remaining bidders, as well as the high bidder, will be 
able to submit a higher bid in a subsequent round. If no bidder submits 
a higher bid in a subsequent round, the high bid from the previous 
round will win the license. If any bids are received on the license in 
a subsequent round, the high bid will once again be determined on the 
highest gross bid amount received for the license.
v. Bidding
    112. During a round, a bidder may submit bids for as many licenses 
as it wishes (subject to its eligibility), withdraw high bids from 
previous bidding rounds, remove bids placed in the same bidding round, 
or permanently reduce eligibility. Bidders also have the option of 
making multiple submissions and withdrawals in each round. If a bidder 
submits multiple bids for a single license in the same round, the 
system takes the last bid entered as that bidder's bid for the round. 
Bidders should note that the bidding units associated with licenses for 
which the bidder has removed or withdrawn its bid do not count towards 
the bidder's activity at the close of the round.
    113. Please note that all bidding will take place remotely either 
through the FCC Automated Auction System or by telephonic bidding. 
Telephonic bidders are reminded to allow sufficient time to bid by 
placing their calls well in advance of the close of a round. (Normally, 
five to ten minutes are necessary to complete a bid submission).
    114. A bidder's ability to bid on specific licenses in the first 
round of the auction is determined by two factors: (i) The licenses 
applied for on FCC Form 175 and (ii) the upfront payment amount 
deposited. The bid submission screens will allow bidders to submit bids 
on only those licenses for which the bidder applied on its FCC Form 
175.
    115. In order to access the bidding function 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 password 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.
    116. In each round, eligible bidders will be able to place bids on 
a given license in any of nine different amounts. For each license, the 
FCC Automated Auction System interface will list the nine acceptable 
bid amounts in a drop-down box. Bidders may use the drop-down box to 
select from among the nine bid amounts. The FCC Automated Auction 
System also includes an import function that allows bidders to upload 
text files containing bid information and a Type Bids function that 
allows bidders to enter specific licenses for filtering.
    117. Finally, bidders are cautioned to select their bid amounts 
carefully because, as explained in the following section, bidders that 
withdraw a standing high bid from a previous round, even if the bid was 
mistakenly or erroneously made, are subject to bid withdrawal payments.
vi. Bid Removal and Bid Withdrawal
    118. In the Auction No. 53 Comment Public Notice, the Bureau 
proposed limiting each bidder to withdrawals in no more than two rounds 
during the course of the auction. The two rounds in which withdrawals 
are used, we proposed, would be at the bidder's discretion. We received 
no comments on this issue.
    119. 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. A bidder removing a bid 
placed in the same round is not subject to withdrawal payments. 
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 toward 
bidding activity. This procedure, about which we received no comments, 
will enhance bidder flexibility during the auction, and therefore we 
adopt these procedures for Auction No. 53.
    120. Once a round closes, a bidder may no longer remove a bid. 
However, in later rounds, a bidder may withdraw standing high bids from 
previous rounds using the withdraw bid function in the FCC Automated 
Auction System (assuming that the bidder has not reached its withdrawal 
limit). A high bidder that withdraws its standing high bid from a 
previous round during the auction is subject to the bid withdrawal 
payments specified in 47 CFR 1.2104(g). Note: Once a withdrawal is 
submitted during a round, that withdrawal cannot be unsubmitted.
    121. The Bureau will limit the number of rounds in which bidders 
may place withdrawals to two rounds. These rounds will be at the 
bidder's discretion and there will be no limit on the number of bids 
that may be withdrawn in either of these rounds. Withdrawals during the 
auction will be subject to the bid withdrawal payments specified in 47 
CFR 1.2104(g). Bidders should note that abuse of the Commission's bid 
withdrawal procedures could result in the denial of the ability to bid 
on a market.

[[Page 57907]]

    122. Calculation. Generally, the Commission imposes payments on 
bidders that withdraw high bids during the course of an auction. If a 
bidder withdraws its bid and there is no higher bid in the same or 
subsequent auction(s), the bidder that withdrew its bid is responsible 
for the difference between its withdrawn bid and the high bid in the 
same or subsequent auction(s). In the case of multiple bid withdrawals 
on a single license, within the same or subsequent auctions(s), the 
payment for each bid withdrawal will be calculated based on the 
sequence of bid withdrawals and the amounts withdrawn. No withdrawal 
payment will be assessed for a withdrawn bid if either the subsequent 
winning bid or any of the intervening subsequent withdrawn bids, in 
either the same or subsequent auctions(s), equals or exceeds that 
withdrawn bid. Thus, a bidder that withdraws a bid will not be 
responsible for any withdrawal payments if there is a subsequent higher 
bid in the same or subsequent auction(s).
    123. In instances in which bids have been withdrawn on a license 
that is not won in the same auction, the Commission will assess an 
interim withdrawal payment equal to 3 percent of the amount of the 
withdrawn bids. The 3 percent interim payment will be applied toward 
any final bid withdrawal payment that will be assessed after subsequent 
auction of the license. The Part 1 Fifth Report and Order provides 
specific examples showing application of the bid withdrawal payment 
rule.
vii. Round Results
    124. 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 placed, bids withdrawn, current high 
bids, new minimum acceptable 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. 53 will be available before and during the auction. Thus, bidders 
will know in advance of this auction the identities of the bidders 
against which they are bidding.
viii. Auction Announcements
    125. The FCC will use auction announcements to announce items such 
as schedule changes and stage transitions. All FCC auction 
announcements will be available by clicking a link on the FCC Automated 
Auction System.

V. Post-Auction Procedures

A. Down Payments and Withdrawn Bid Payments

    126. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed and identifying winning bidders, 
down payments and any withdrawn bid payments due.
    127. 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. 53 to 20 percent of the net amount 
of its winning bids (gross bids less any applicable entrepreneur, small 
business, or very small business bidding credits). In addition, by the 
same deadline, all bidders must pay any bid withdrawal payments due 
under 47 CFR 1.2104(g), as discussed in ``Bid Removal and Bid 
Withdrawal,'' section IV.B.vi. (Upfront payments are applied first to 
satisfy any withdrawn bid liability, before being applied toward down 
payments.)

B. Final Payments

    128. Each winning bidder will be required to submit the balance of 
the net amount of its winning bids within 10 business days after the 
deadline for submitting down payments.

C. Auction Discount Voucher

    129. 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 
used this amount to pay the unpaid principal and interest accrued on 
the licenses. Qualcomm also transferred $4,020,165.65 of the ADV to an 
entity that made installment payments on behalf of several of the 
entity's affiliates, that are broadband PCS C Block licensees. On July 
30, 2003, Qualcomm transferred an additional $4,020,165.65 of the ADV 
to the same entity. Qualcomm also used $7,607,200.00 of its ADV to make 
its down payment on licenses it won in Auction No. 49. The remaining 
$48,240,565.96 of Qualcomm's ADV could be used to adjust winning bids 
in another FCC Auction, including Auction No. 53.

D. Long-Form Application (FCC Form 601)

    130. 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. 53. Winning bidders that are 
entrepreneurs, small businesses, or very small businesses must include 
an exhibit demonstrating their eligibility for entrepreneur, small 
business, 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.

E. Ownership Disclosure Information Report (FCC Form 602)

    131. 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. We remind 
applicants that effective December 10, 2002, electronic filing of the 
Ownership Disclosure Information Report (FCC Form 602) became 
mandatory. 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.

F. Tribal Land Bidding Credit

    132. 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.
    133. 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).

[[Page 57908]]

    134. 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.

G. Default and Disqualification

    135. 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 its 
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.

H. Refund of Remaining Upfront Payment Balance

    136. All applicants that submit upfront payments but are not 
winning bidders for a license in Auction No. 53 may be entitled to a 
refund of their remaining upfront payment balance after the conclusion 
of the auction. No refund will be made unless there are excess funds on 
deposit from the applicant after any applicable bid withdrawal payments 
have been paid. 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.
    137. Bidders that drop out of the auction completely may be 
eligible for a refund of their upfront payments before the close of the 
auction. Qualified bidders that have exhausted all of their activity 
rule waivers, have no remaining bidding eligibility, and have not 
withdrawn a high bid during the auction 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, 445 12th 
Street, SW., Room 1-C863, Washington, DC 20554.
    138. 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.


Federal Communications Commission.
Margaret Wiener,
Chief, Auctions and Industry Analysis Division, WTB.
[FR Doc. 03-25199 Filed 10-6-03; 8:45 am]
BILLING CODE 6712-01-P