[Federal Register Volume 69, Number 122 (Friday, June 25, 2004)]
[Notices]
[Pages 35614-35626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14478]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-04-57-B; DA 04-1513]


Automated Maritime Telecommunications System Spectrum Auction 
Scheduled for September 15, 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 licenses in the Automated Maritime 
Telecommunications System (``AMTS'') spectrum. This document is 
intended to familiarize prospective bidders with the procedures and 
minimum opening bids for this auction.

DATES: Auction No. 57 is scheduled for September 15, 2004.

FOR FURTHER INFORMATION CONTACT: Auctions and Spectrum Access Division, 
WTB: For legal questions: Howard Davenport at (202) 418-0660, for 
general auction questions: Jeff Crooks at (202) 418-0660 or Lisa Stover 
at (717) 338-2888. Media Contact: Lauren Patrich at (202) 418-7944.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 57 
Procedures Public Notice released on May 26, 2004. The complete text of 
the Auction No. 57 Procedures Public Notice, including attachments, is 
available for public inspection and copying during regular business 
hours at the FCC Reference Information Center, Portals II, 445 12th 
Street, SW., Room CY-A257, Washington, DC 20554. The Auction No. 57 
Procedures Public Notice may also be purchased from the Commission's 
duplicating contractor, Best Copy and Printing, Inc. (``BCPI''), 
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, 
telephone 202-488-5300, facsimile 202-488-5563, or you may contact BCPI 
at their Web site: http://www.BCPIWEB.com. This document is also 
available on the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/57/.

I. General Information

A. Introduction

    1. The Auction No. 57 Procedures Public Notice, announces the 
procedures and minimum opening bids for the upcoming auction of 
licenses in the AMTS spectrum scheduled for September 15, 2004 (Auction 
No. 57). On April 5, 2004, in accordance with the Balanced Budget Act 
of 1997, the Wireless Telecommunications Bureau (the ``Bureau'') 
released a public notice seeking comment on reserve prices or minimum 
opening bids and the procedures to be used in Auction No. 57. The 
Bureau received two comments, three reply comments, and further 
comments ex parte in response to the Auction No. 57 Comment Public 
Notice, 69 FR 21110, April 20, 2004.
i. Background of Proceeding
    2. The Maritime Services provide for the unique distress, 
operational and personal communication needs of vessels at sea and on 
inland waterways. AMTS is a maritime service that was established in 
1981 as an alternative to VHF public coast service (``VPCS''). In the 
Public Coast Second Report and Order and Second Further Notice, 62 FR 
40281, July 28, 1997, the Commission described AMTS as a specialized 
system of public coast stations providing integrated and interconnected 
marine voice and data communications, somewhat like a cellular phone 
system, for tugs, barges, and other commercial vessels on waterways.
    3. Section 309(j)(2) of the Communications Act formerly stated that 
mutually exclusive applications for initial licenses or construction 
permits were auctionable if the principal use of the spectrum was for 
subscriber-based services, and competitive bidding would promote the 
expressed objectives of the Communications Act. The Commission 
concluded that the public coast service, including VPCS, high seas, and 
AMTS public coast stations, was a Commercial Mobile Radio Service 
(``CMRS'') and subsequently decided that mutually exclusive 
applications for public coast station licenses would be resolved 
through competitive bidding.
    4. On August 5, 1997, after release of the Public Coast Second 
Report and Order and Second Further Notice, President Clinton signed 
into law the Balanced Budget Act of 1997 (``Balanced Budget Act''), 
which expanded the Commission's auction authority by amending Section 
309(j) of the Communications Act to provide that all

[[Page 35615]]

mutually exclusive applications for initial licenses or construction 
permits shall be auctioned, with certain exceptions not applicable 
here.
    5. In the Public Coast Second Report and Order and Second Further 
Notice, the Commission adopted AMTS rules that permit service on land, 
so long as marine-originating communications receive priority. In the 
Public Coast Second Memorandum Opinion and Order and Fifth Report and 
Order, 67 FR 48560, July 25, 2002, the Commission adopted a geographic 
licensing system for AMTS with service areas (``AMTSAs'') based upon 
maritime VPCS areas (``VPCSA''), with the modification that the inland 
VPCSAs would be consolidated into a single, inland geographic service 
area. The Commission announced that it would conduct an auction to 
resolve mutually exclusive applications for AMTS licenses. 
Additionally, the Commission concluded that the general competitive 
bidding rules, and the rules regarding the participation of small 
businesses in auctions that were applied to the auction of VPC 
licenses, should be used for auctioning AMTS licenses.
    6. On April 5, 2004, the Wireless Telecommunications Bureau 
(``Bureau'') released the Auction No. 57 Comment Public Notice, 
announcing that Auction No. 57 will commence on September 15, 2004, 
setting forth a complete list of licenses for Auction No. 57, and 
seeking comment on reserve prices or minimum opening bids and other 
auction procedures.
ii. Licenses To Be Auctioned
    7. Auction No. 57 will offer 20 licenses in the AMTS Service in the 
217/219 MHz bands. Two licenses will be offered in each of 10 AMTSAs. A 
complete list of the licenses available in Auction No. 57 is included 
in Attachment A of the Auction No. 57 Procedures Public Notice.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Geographic area     No. of
             Block                         Frequency bands (MHz)                Total bandwidth            Pairing                type         licenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
A.............................  217.5-218.0/219.5-220.0...................  1 MHz.................  2 x 500 kHz..........  AMTSA                      10
B.............................  217.0-217.5/219.0-219.5...................  1 MHz.................  2 x 500 kHz..........  AMTSA                      10
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Note: The above table displays the band edges of spectrum blocks 
A and B using the twenty 25 kHz channels that comprise each block as 
listed in 47 CFR 80.385(a)(2). It should be noted that pursuant to 
47 CFR 80.481, licensees are not required to use 25 kHz 
channelization and may choose any channelization scheme; however, 
regardless of the channelization scheme used, emissions at these 
band edges must be attenuated within the limitation that would be 
required under 47 CFR 80.211 if the licensee were using 25 kHz 
channels.

B. Rules and Disclaimers

i. Relevant Authority
    8. Prospective applicants must familiarize themselves thoroughly 
with the Commission's rules relating to the AMTS service contained in 
title 47, part 80, 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 applicants must 
also be thoroughly familiar with the procedures, terms and conditions 
(collectively, ``terms'') contained in Auction No. 57 Procedures Public 
Notice; the Auction No. 57 Comment Public Notice; Public Coast Second 
Memorandum Opinion and Order and Fifth Report and Order and the Public 
Coast Fourth Report and Order and Third Further Notice of Proposed Rule 
Making, 65 FR 77821, December 13, 2000 and 65 FR 76966, December 8, 
2000 (as well as prior and subsequent Commission proceedings regarding 
competitive bidding procedures).
    9. 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
    10. 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 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.
    11. 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.
    12. 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 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

[[Page 35616]]

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. By signing their FCC Form 175 short-form applications, 
applicants are certifying their compliance with Sec.  1.2105(c).
    13. Section 1.65 of the Commission's rules requires an applicant to 
maintain the accuracy and completeness of information furnished in its 
pending application and to notify the Commission within 30 days of any 
substantial change that may be of decisional significance to that 
application. Thus, Sec.  1.65 requires auction applicants that engage 
in communications of bids or bidding strategies that result in a 
bidding agreement, arrangement or understanding not already identified 
on their short-form applications to promptly disclose any such 
agreement, arrangement or understanding to the Commission by amending 
their pending applications. In addition, Sec.  1.2105(c)(6) requires 
all auction applicants to report prohibited discussions or disclosures 
regarding bids or bidding strategy to the Commission in writing 
immediately but in no case later than five business days after the 
communication occurs, even if the communication does not result in an 
agreement or understanding regarding bids or bidding strategy that must 
be reported under Sec.  1.65.
    14. Any applicant found to have violated the anti-collusion rule 
may be subject to sanctions, including forfeiture of its upfront 
payment, down payment or full bid amount, and may be prohibited from 
participating in future auctions.
    15. 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. 57 Procedures Public Notice.
iii. Interference Protection
    16. Incumbent AMTS site-based licensees are entitled to co-channel 
protection by AMTS geographic area licenses. Among other licensing and 
technical rules, AMTS geographic area licensees will be required to 
afford interference protection to incumbent systems, on a fixed 
separation basis as provided in Sec.  80.385(b)(1) of the Commission's 
rules. Geographic area licensees must also provide co-channel 
interference protection to other geographic area licensees in 
accordance with Sec.  80.479(b) and Sec.  80.70(a).
    17. Incumbents will be prohibited from renewing, transferring, 
assigning, or modifying their licenses in any manner that extends their 
system's service area or results in their acquiring additional 
frequencies, unless there is consent from each affected geographic area 
licensee. If an incumbent fails to construct, discontinues operations, 
or otherwise has its license terminated, the spectrum covered by the 
incumbent's authorization will automatically revert to the geographic 
area licensee.
    18. In addition, AMTS licensees that cause interference to 
television reception or to the U.S. Navy SPASUR system must cure the 
problem or discontinue operations.
iv. Coordination Requirements
    19. AMTS geographic area licensees may place stations anywhere 
within their service areas to serve vessels or units on land, so long 
as incumbent operations are protected, marine-originating traffic is 
given priority and certain major waterways are served. However, 
geographic area licensees must individually license any base station 
that requires an Environmental Assessment pursuant to Sec.  1.1307 of 
the Commission's Rules or international coordination, or would affect 
the radio frequency quiet zones described in Sec.  80.21 of the 
Commission's rules, or would require broadcaster notification and an 
engineering study described in Sec.  80.215(h).
    20. For instance, AMTS applicants proposing to locate a transmitter 
(i) within 169 kilometers (105 miles) of a Channel 13 television 
station, (ii) within 105 kilometers (80 miles) of a Channel 10 
television station, or (iii) with an antenna height greater than 61 
meters (200 feet), must file an application with the Commission, 
including an engineering study showing how harmful interference to 
television reception will be avoided, and must also give written notice 
of the application to the television stations that may be affected so 
that the broadcaster can comment on the proposed construction.
    21. Additionally, AMTS licensees must obtain written consent from 
all affected licensees prior to using AMTS frequencies for mobile-to-
mobile communications.
v. Due Diligence
    22. Potential applicants are reminded that there are a number of 
incumbent licensees already licensed and operating on frequencies that 
will be subject to the upcoming auction, such as AMTS Station 
licensees. Such incumbents must be protected from harmful interference 
by AMTS Station geographic area licensees in accordance with the 
Commission's Rules. These limitations may restrict the ability of such 
AMTS geographic area licensees to use certain portions of the 
electromagnetic spectrum or provide service to certain areas in their 
geographic license areas. We therefore caution potential applicants in 
formulating their bidding strategies to investigate and consider the 
extent to which AMTS frequencies are occupied by incumbents.
    23. 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. 57.
    24. In establishing the AMTS service, the Commission considered the 
potential for interference to television reception, particularly 
Channels 13 and 10. Consequently, geographic licensees will be required 
to file individual applications for authority to operate a new AMTS 
transmitter within 169 kilometers (105 miles) of a Channel 13 
television station or 129 kilometers (80 miles) of a Channel 10 
television station, or with an antenna height greater than 61 meters 
(200 feet) above ground. Such applications must include an engineering 
study showing how harmful interference to television reception will be 
avoided, and the applicant must notify each television station that may 
be affected so that the broadcaster can comment on the proposed 
construction. Moreover, any AMTS licensee that causes such interference 
must cure the problem or cease operations. AMTS licensees are permitted 
to construct ``fill-in'' sites without filing individual applications, 
but such sites are fully subject to the requirement that AMTS stations 
cause no harmful interference to television reception, and must 
discontinue operations if unable to meet this requirement.
    25. In addition, AMTS operations must not cause harmful 
interference to the United States Navy's Space Surveillance System 
(SPASUR), which operates in the 216.880-217.080 MHz band. Also, law 
enforcement tracking operations are currently authorized on a primary 
basis in certain markets in AMTSAs 3, 4, 6, 9 and 10 on a frequency in 
block A. These operations are scheduled to be converted to non-AMTS 
frequencies by 2007. It is the responsibility of bidders to be aware of 
these and all other technical or

[[Page 35617]]

regulatory matters affecting the spectrum licenses available in this 
auction.
    26. With respect to the geographic boundaries for Automated 
Maritime Telecommunications System areas (AMTSAs), the Commission 
defined the AMTSA boundaries to include ``the adjacent waters under the 
jurisdiction of the United States.'' Regarding the boundary between 
AMTSA 3, which includes the west coast of Florida, and AMTSA 4, which 
includes the Gulf of Mexico EA-like area, we hereby clarify that, for 
AMTSA 3, the boundary extends only to the limit of the U.S. territorial 
waters in the Gulf (12-nautical mile limit); and the boundary for AMTSA 
4 extends from the 12-nautical mile line outward to the broadest 
geographic limits consistent with international agreements.
    27. To date, no existing agreements between the United States and 
Mexico or Canada restrict AMTS channel availability in the Mexican and 
Canadian border areas. Licensees will, however, be subject to any 
future agreements regarding international assignments and coordination 
of such channels; and it is the responsibility of bidders to be 
familiar with all relevant governing international agreements; and that 
such agreements and amendments thereto may affect the use, utility or 
value of the spectrum at issue.
    28. Potential bidders should also be aware that certain pending and 
future applications (including those for modification), petitions for 
rulemaking, requests for special temporary authority (``STA''), waiver 
requests, petitions to deny, petitions for reconsideration, informal 
oppositions, and applications for review before the Commission may 
relate to particular applicants or incumbent licensees or the licenses 
available in Auction No. 57. In addition, pending and future judicial 
proceedings may relate to particular applicants or incumbent licensees, 
or the licenses available in Auction No. 57. Prospective bidders are 
responsible for assessing the likelihood of the various possible 
outcomes, and considering their potential impact on spectrum licenses 
available in this auction.
    29. Prospective bidders should perform due diligence to identify 
and consider all proceedings that may affect the spectrum licenses 
being auctioned. We note that resolution of such matters could have an 
impact on the availability of spectrum for Auction No. 57. In addition, 
although the Commission may continue to act on various pending 
applications, informal objections, petitions, and other requests for 
Commission relief, some of these matters may not be resolved by the 
time of the auction.
    30. Potential bidders may obtain information about licenses 
available in Auction No. 57 through the Bureau's licensing databases on 
the World Wide Web 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.
    31. 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. 
To the extent the Commission's databases may not include all 
information deemed necessary or desirable by a bidder, bidders may 
obtain or verify such information from independent sources or assume 
the risk of any incompleteness or inaccuracy in said databases. 
Furthermore, the Commission makes no representations or guarantees 
regarding the accuracy or completeness of information that has been 
provided by incumbent licensees and incorporated into the database. 
Potential applicants are strongly encouraged to physically inspect any 
sites located in, or near, the service area for which they plan to bid.
vi. Bidder Alerts
    32. 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.
    33. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 57 to 
deceive and defraud unsuspecting investors.
    34. 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. 57 may also call the FCC 
Consumer Center at (888) CALL-FCC ((888) 225-5322).
vii. National Environmental Policy Act Requirements
    35. 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
    36. The auction will begin on Wednesday, September 15, 2004, as 
announced in the Auction No. 57 Comment Public Notice. We do not 
believe a delay of the start of Auction No. 57 would be in the public 
interest. Mobex argues for a four month delay in the auction schedule 
so that potential bidders can analyze the significant technical 
requirements and financial issues involved with providing maritime 
service on a co-primary basis and to ``grasp'' the heavy presence of 
incumbents associated with the spectrum. Additionally, Mobex argues 
that uncertainty regarding the subject spectrum's service rules could 
improperly skew the auction results and artificially restrict the 
optimal public interest benefit obtained through the auction process.
    37. We do not find the comments arguing for a delay persuasive. 
Potential bidders have already had more than three years to ``grasp'' 
the heavy presence of incumbents in this spectrum, given that the 
Commission froze new licenses in 2000. Moreover, although they have 
been subject to modification since, the Commission adopted technical 
rules for AMTS over two years ago. Finally, the commenters that argued 
for delay are already providing AMTS services, and thus, already have 
business plans, presumably have assessed market conditions, and 
certainly evaluated the availability of equipment for the AMTS service. 
With respect to the existence of pending litigation, the Bureau has 
previously concluded that, in general, this is not a sufficient reason 
to delay an auction. We expect that applicants bidding on licenses 
subject to litigation take such litigation into account in

[[Page 35618]]

determining their bidding strategies, lowering the level of risk that 
results from bidding on licenses subject to pending proceedings.
    38. Section 309(j)(3)(E)(ii) provides, in pertinent part, that 
after the issuance of bidding rules the Commission shall ``ensure that 
interested parties have a sufficient time to develop business plans, 
assess market conditions, and evaluate the availability of equipment 
for the relevant services.'' The Commission decided in 2002 that the 
general bidding rules found in subpart Q of part 1 of the Commission's 
Rules should apply to the auction of public coast spectrum. We do not 
believe that the statutory requirement to provide prospective bidders 
with time to develop a business plan and evaluate the availability of 
equipment requires the Commission to postpone an auction until every 
external factor that might influence a bidder's business plan is 
resolved with absolute certainty. We also note that, while Sec.  
309(j)(3)(E) directs the Commission to provide interested parties 
adequate time to prepare prior to an auction, the statute also requires 
that the Commission promote several other objectives in exercising its 
competitive bidding authority, including the rapid deployment of new 
technologies and services to the public, promotion of economic 
opportunity and competition, recovery for the public of a portion of 
the value of the spectrum, and efficient and intensive use of the 
spectrum. In balancing these objectives, we determine that the public 
interest would be served by proceeding with the auction as scheduled.
    39. 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
    40. Auction No. 57--AMTS.
iii. Bidding Methodology
    41. The bidding methodology for Auction No. 57 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
    42. The following is a list of important dates related to Auction 
No. 57:

Auction Seminar--July 1, 2004
Short-Form Application (FCC Form 175) Filing Window Opens--July 1, 
2004; 12 p.m. ET
Short-Form Application (FCC Form 175) Filing Window Deadline--July 19, 
2004; 6 p.m. ET
Upfront Payments (via wire transfer)--August 20, 2004; 6 p.m. ET
Mock Auction--September 10, 2004
Auction Begins--September 15, 2004
v. Requirements for Participation
    43. Those wishing to participate in the auction must:
     Submit a short-form application (FCC Form 175) 
electronically by 6 p.m. ET, July 19, 2004.
     Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC Form 159) by 6 p.m. ET, August 20, 2004.
     Comply with all provisions outlined in this Auction No. 57 
Procedures Public Notice.
vi. General Contact Information
    44. The following is a list of general contact information related 
to Auction No. 57:

General Auction Information,         FCC Auctions Hotline, (888) 225-
 General Auction Questions, Seminar   5322, Press Option 2, or
 Registration.                        direct (717) 338-2888, Hours of
                                      service: 8 a.m.-5:30 p.m. ET,
                                      Monday through Friday.
Auction Legal Information, Auction   Auctions and Spectrum Access
 Rules, Policies, Regulations.        Division, Legal Branch (202) 418-
                                      0660.
Licensing Information, Rules,        Public Safety and Critical
 Policies, Regulations, Licensing     Infrastructure Division, (202) 418-
 Issues, Due Diligence, Incumbency    0680.
 Issues.
Technical Support, Electronic        FCC Auctions Technical Support
 Filing, FCC Automated Auction        Hotline, (202) 414-1250, (202) 414-
 System.                              1255 (TTY), Hours of service: 8
                                      a.m.-6 p.m. ET, Monday through
                                      Friday.
Payment Information, Wire Transfers  FCC Auctions Accounting Branch,
 Refunds.                             (202) 418-0578, (202) 418-2843
                                      (Fax)
Telephonic Bidding.................  Will be furnished only to qualified
                                      bidders
Press Information..................  Lauren Patrich (202) 418-7944
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

    45. Guidelines for completion of the short-form (FCC Form 175) are 
set forth in Attachment D of the Auction No. 57 Procedures Public 
Notice.

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

    46. All applicants must comply with the uniform Part 1 ownership 
disclosure standards and provide information required by Sec. Sec.  
1.2105 and 1.2112 of the Commission's rules. Specifically, in 
completing FCC Form 175, applicants will be required to file an 
``Exhibit A'' providing a full and complete statement of the ownership 
of the bidding entity. The ownership disclosure standards for the 
short-form are set forth in Sec.  1.2112 of the Commission's rules.

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

    47. 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 that 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

[[Page 35619]]

licenses on which they will or will not bid.
    48. 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.

C. Eligibility

i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)
    49. 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.
    50. In the Public Coast Third Report and Order and Memorandum 
Opinion and Order, 63 FR 40059, July 27, 1998, the Commission adopted 
bidding credits to promote and facilitate the participation of small 
businesses in auctions of public coast licenses. For Auction No. 57, 
bidding credits will be available to small businesses or consortia 
thereof, as follows:
     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;
     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.
    51. Small business bidding credits are not cumulative; a qualifying 
applicant receives the 25 percent or 35 percent bidding credit on its 
winning bid, but only one credit per license.
    52. To encourage the growth of wireless services in federally 
recognized tribal lands the Commission has implemented a tribal land 
bidding credit. See Section V.E. of the Auction Number 57 Procedures 
Public Notice.
    53. Attribution for small business and very small business 
eligibility. In determining which entities qualify as small businesses 
or very small businesses, the Commission will consider the gross 
revenues of the applicant, its affiliates, its controlling interests, 
and the affiliates of its controlling interests. The Commission does 
not impose specific equity requirements on controlling interest 
holders. Once the principals or entities with a controlling interest 
are determined, only the revenues of those principals or entities, the 
affiliates of those principals or entities, and the applicant and its 
affiliates, will be counted in determining small business eligibility.
    54. Each consortium member of a small business or very small 
business must disclose its gross revenues along with those of its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests.
ii. Supporting Documentation
    55. Applicants should note that they will be required to file 
supporting documentation to their FCC Form 175 short-form applications 
to establish that they satisfy the eligibility requirements to qualify 
as small business or very small business (or consortia of small 
businesses or very small businesses) for this auction.
    56. 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.
    57. Small business or very small business eligibility (Exhibit C). 
Entities applying to bid as small businesses or very small businesses 
(or consortia of 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 small 
businesses or very small businesses, this information must be provided 
for each consortium member.

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

    58. 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.
    59. ``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. 57, provided that they are otherwise qualified. 
However, as discussed infra in section III.D.iii, former defaulters are 
required to pay upfront payments that are fifty percent more than the 
normal upfront payment amounts.

E. Installment Payments

    60. Installment payment plans will not be available in Auction No. 
57.

[[Page 35620]]

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

    61. Applicants owned by minorities or women, as defined in 47 CFR 
1.2110(c)(2), may attach an exhibit (Exhibit E) regarding this status. 
This applicant status information is collected for statistical purposes 
only and assists the Commission in monitoring the participation of 
``designated entities'' in its auctions. Applicants wishing to submit 
additional information may do so on Exhibit F.

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

    62. After the short-form filing deadline (6:00 p.m. ET July 19, 
2004), 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 Spectrum 
Access Division, at the following address: [email protected]. The 
electronic mail summarizing the changes must include a subject or 
caption referring to Auction No. 57. The Bureau requests that parties 
format any attachments to electronic mail as Adobe[reg] 
Acrobat[reg] (pdf) or Microsoft[reg] Word 
documents.
    63. A separate copy of the letter should be faxed to the attention 
of Kathryn Garland at (717) 338-2850.

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

    64. 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.

III. Pre-Auction Procedures

A. Auction Seminar

    65. On Thursday, July 1, 2004, the FCC will sponsor a seminar for 
Auction No. 57 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 Auction System, auction rules, and the AMTS service rules.

B. Short-Form Application (FCC Form 175)--Due July 19, 2004

    66. 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 
6:00 p.m. ET on July 19, 2004. Late applications will not be accepted.
iii. Electronic Filing
    67. Applicants must file their FCC Form 175 applications 
electronically. Applications may generally be filed at any time 
beginning at noon ET on July 1, 2004, until 6:00 p.m. ET on July 19, 
2004. 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 July 19, 2004.
    68. Applicants must press the ``SUBMIT Application'' button on the 
``Submission'' page of the electronic form to successfully submit their 
FCC Form 175s. Any form that is not submitted will not be reviewed by 
the FCC. Information about accessing the FCC Form 175 is included in 
Attachment C of the Auction No. 57 Procedures Public Notice. 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 
a.m. to 6 p.m. ET. However, because the Initial application filing 
window for Auction 57 closes on Monday, July 19, the FCC will provide 
Technical Support on Saturday, July 17, and Sunday, July 18, from 9 
a.m. to 5 p.m. ET. In order to provide better service to the public, 
all calls to the hotline are recorded.
iv. Completion of the FCC Form 175
    69. 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. 57 Procedures 
Public Notice. Applicants are encouraged to begin preparing the 
required attachments for FCC Form 175 prior to submitting the form.
v. Electronic Review of FCC Form 175
    70. 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. 57 
Procedures Public Notice for details on accessing the review system.
    71. 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

    72. After the deadline for filing the FCC Form 175 applications has 
passed, the FCC will process all timely submitted applications to 
determine which are acceptable for filing, and subsequently will issue 
a public notice identifying: (i) Those applications accepted for 
filing; (ii) those applications rejected; and (iii) those applications 
which have minor defects that may be corrected, and the deadline for 
filing such corrected applications.

D. Upfront Payments--Due August 20, 2004

    73. In order to be eligible to bid in the auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice Form 
(FCC Form 159). After completing the FCC Form 175, filers will have 
access to an electronic version of the FCC Form 159 that can be printed 
and faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must 
be received at Mellon Bank by 6 p.m. ET on August 20, 2004. Failure to 
deliver the upfront payment by the August 20, 2004, deadline will 
result in dismissal of the application and disqualification from 
participation in the auction. For specific details regarding upfront 
payments, see III.D. of the Auction No. 57 Procedures Public Notice.
i. Making Auction Payments By Wire Transfer
    74. Wire transfer payments must be received by 6 p.m. ET on August 
20, 2004. To avoid untimely payments, applicants should discuss 
arrangements (including bank closing schedules) with their banker 
several days before they

[[Page 35621]]

plan to make the wire transfer, and allow sufficient time for the 
transfer to be initiated and completed before the deadline.
    75. 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. 57.'' 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.
ii. Amount of Upfront Payment
    76. In the Part 1 Order, 62 FR 13540, March 21, 1997, 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, 65 FR 52323, August 29, 2000, 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 50 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.
    77. The amount of the upfront payment will 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.
    78. For Auction No. 57 the Commission adopts upfront payments on a 
license-by-license basis using the following formula: $0.005 * MHz * 
License Area Population with a minimum of $1,000 per license.
    79. The specific upfront payments and bidding units for each 
license are set forth in Attachment A of the Auction No. 57 Procedures 
Public Notice.
    80. 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.
    81. 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.
iii. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    82. The Commission will use wire transfers for all Auction No. 57 
refunds. To ensure that refunds of upfront payments are processed in an 
expeditious manner, the Commission is requesting that all pertinent 
information 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); Account Number. 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.

E. Auction Registration

    83. 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.
    84. 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.
    85. 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, September 8, 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.
    86. 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

    87. 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. Each applicant with one authorized bidder will be issued two 
SecurID cards, while applicants with two or three authorized bidders 
will be issued three cards. 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. 
Please note that each SecurID card is tailored to a specific auction; 
therefore, SecurID cards issued for other auctions or

[[Page 35622]]

obtained from a source other than the FCC will not work for Auction No. 
57. The telephonic bidding phone number will be supplied in the first 
overnight mailing, which also includes the confidential bidder 
identification number.

G. Mock Auction

    88. All qualified bidders will be eligible to participate in a mock 
auction on Friday, September 10, 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

    89. The first round of bidding for Auction No. 57 will begin on 
Wednesday, September 15, 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.

H. Auction Structure

i. Simultaneous Multiple Round Auction
    90. We conclude that it is operationally feasible and appropriate 
to auction the AMTS 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
    91. We propose that the amount of the upfront payment submitted by 
a bidder will determine the initial (maximum) eligibility (as measured 
in bidding units) for each bidder.
    92. Note that each license is assigned a specific number of bidding 
units equal to the upfront payment listed in Attachment A of the 
Auction No. 57 Procedures Public Notice on a bidding unit per dollar 
basis. 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.
    93. 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.
    94. 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. 57.
iii. Auction Stages
    95. The Commission will conduct the auction in two stages and 
employ an activity rule. Listed are the activity levels for each stage 
of the auction. The FCC 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 95 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 twenty-nineteenths (20/19).

    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.

    96. Because the foregoing procedures have proven successful in 
maintaining proper pace in previous auctions, we adopt them for Auction 
No. 57.
iv. Stage Transitions
    97. The auction would generally advance to the next stage (i.e., 
from Stage One to Stage Two) 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. 
The Bureau will retain the discretion to change stages unilaterally by 
announcement during the auction.
    98. Thus, 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 are appropriate for use in Auction No. 57.
v. Activity Rule Waivers and Reducing Eligibility
    99. Each bidder will be provided three 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.
    100. 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

[[Page 35623]]

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 further bidding in the auction.
    101. 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 discussion). Once eligibility 
has been reduced, a bidder will not be permitted to regain its lost 
bidding eligibility.
    102. 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
    103. For Auction No. 57, the Commission will employ a simultaneous 
stopping rule, and retain discretion to invoke 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.
    104. In addition, the Bureau may 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. The Bureau may 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.
vii. Auction Delay, Suspension, or Cancellation
    105. 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. 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. 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.

I. Bidding Procedures

i. Round Structure
    106. The initial schedule of bidding rounds 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.
    107. 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
    108. For Auction No. 57, the Bureau adopts the following license-by 
license formula for calculating minimum opening bids: $0.0075 * MHz * 
License Area Population with a minimum of $1,000 per license.
    109. The Bureau sought comment on whether, consistent with the 
Balanced Budget Act, the public interest would be served by having no 
minimum opening bid or reserve price.
    110. Two parties submitted comments with respect to minimum opening 
bids. In his comments, Havens recommends a 50% reduction of minimum 
opening bids. Moreover, Havens recommends that population incumbency 
factors be used in the minimum opening bid formula on a license-by-
license basis. In reply comments, Mobex also asserts that minimum 
opening bid levels are too high based on high incumbency levels. Mobex 
also compares results from the Multichannel Video Distribution and Data 
Service auction (Auction No. 53) and minimum opening bids for the 24 
GHz Service auction (Auction No. 56) as comparative rationale for 
lowering the minimum opening bids for this auction.
    111. The Commission is not persuaded by the argument that adjacent 
spectrum values are necessarily an indicator of appropriate minimum 
opening bid levels for licenses with different service rules and 
geographical licensing schemes. Additionally, we reject the application 
of a license-by-license incumbency factoring of minimum opening bids. 
Nevertheless, upon re-examination of the proposed minimum opening bid 
formula, we exercise our discretion to modify it as follows: $0.005 * 
MHz * License Area Population with a minimum of $1,000 per license.
The revised formula cuts by one-third the initial proposal for minimum 
opening bids.
    112. The minimum opening bids we adopt for Auction No. 57 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.
    113. The specific minimum opening bids for each license available 
in Auction No. 57 are set forth in Attachment A of the Auction No. 57 
Procedures Public Notice.
iii. Minimum Acceptable Bids and Bid Increments
    114. In the Auction No. 57 Comment Public Notice, 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

[[Page 35624]]

reach their final prices. The formula used to calculate this increment 
is included as Attachment F of the Auction No. 57 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. The Bureau will retain the discretion to 
change the minimum acceptable bids and bid increments if circumstances 
so dictate.
    115. 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.
    116. 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. 57 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.).
    117. 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 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. 57 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).
    118. 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.
    119. 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
    120. 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 are 
counted as activity for purposes of the activity rule.
    121. In the event of identical high bids on a license in a given 
round (i.e., tied bids). A Sybase[reg] SQL pseudo-random number 
generator will be used to assign a random number to each 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
    122. 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.
    123. Please note that all bidding will take place remotely either 
through the FCC Automated Auction System or by telephonic bidding. 
(Telephonic bid assistants are required to use a script when entering 
bids placed by telephone. Telephonic bidders are therefore 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).
    124. 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.
    125. 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.
    126. 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.
    127. 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
    128. For Auction No. 57 the Commission adopts bid removal and bid 
withdrawal procedures. With respect to bid withdrawals, the Commission 
will limit each bidder to withdrawals in no more than two rounds during 
the course

[[Page 35625]]

of the auction. The rounds in which withdrawals are used will be at the 
bidder's discretion.
    129. 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. These procedures will enhance bidder flexibility 
during the auction.
    130. 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.
    131. 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.
    132. 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).
    133. 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 Result
    134. 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. 57 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
    135. 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

    136. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed and identifying winning bidders, 
down payments, final payments, and any withdrawn bid payments due.
    137. Within ten business days after release of the auction closing 
notice, each winning bidder must submit sufficient funds (in addition 
to its upfront payment) to bring its total amount of money on deposit 
with the Commission for Auction No. 57 to 20 percent of the net amount 
of its winning bids (gross bids less any applicable 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

    138. 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. Long-Form Application (FCC Form 601)

    139. Within ten business days after release of the auction closing 
notice, winning bidders must electronically submit a properly completed 
long-form application (FCC Form 601) and required exhibits for each 
license won through Auction No. 57. Further filing instructions will be 
provided to auction winners at the close of the auction.

D. Default and Disqualification

    140. 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.

E. Refund of Remaining Upfront Payment Balance

    141. All applicants that submit upfront payments but are not 
winning bidders for a license in Auction No. 57 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.
    142. Bidders that drop out of the auction completely may be 
eligible for

[[Page 35626]]

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-
C864, Washington, DC 20554.
    143. 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.
Gary Michaels,
Deputy Chief, Auction and Spectrum Access Division, WTB.
[FR Doc. 04-14478 Filed 6-24-04; 8:45 am]
BILLING CODE 6712-01-P