[Federal Register Volume 69, Number 128 (Tuesday, July 6, 2004)]
[Notices]
[Pages 40632-40637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15239]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-03-58-A (Auction No. 58); DA 04-1639]


Broadband PCS Spectrum Auction Scheduled for January 12, 2005; 
Comment Sought on Reserve Prices or Minimum Opening Bids and Other 
Auction Procedures

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of 234 broadband Personal 
Communications Service (PCS) licenses scheduled to commence on January 
12, 2005 (Auction No. 58). This document also seeks comment on reserve 
prices or minimum opening bids and other auction procedures for Auction 
No. 58.

DATES: Comments are due on or before July 8, 2004, and reply comments 
are due on or before July 15, 2004.

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

FOR FURTHER INFORMATION CONTACT: For legal questions: Audrey Bashkin 
(202) 418-0660. For general auction questions: Jeff Crooks (202) 418-
0660 or Lisa Stover (717) 338-2888. For service rule questions, contact 
the Mobility Division, Wireless Telecommunications Bureau, as follows: 
Erin McGrath, (202) 418-0620; JoAnn Epps, (202) 418-1342; or Dwain 
Livingston, (202) 418-1338.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 58 
Comment Public Notice released on June 18, 2004. The complete text of 
the Auction No. 58 Comment Public Notice, including attachments and of 
related Commission documents 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. 58 Comment Public Notice and related Commission 
documents 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 its Web 
site: http://www.BCPIWEB.com. When ordering documents from BCPI, please 
provide the appropriate FCC document number (for example, FCC 00-313 
for the C/F Block Sixth Report and Order). The Auction No. 58 Comment 
Public Notice and related documents are also available on the Internet 
at the Commission's Web site: http://wireless.fcc.gov/auctions/58/.

I. General Information

    1. By the Auction No. 58 Comment Public Notice, the Wireless 
Telecommunications Bureau (``Bureau'') announces the auction of 234 
broadband Personal Communications Service (``PCS'') licenses, scheduled 
to commence on January 12, 2005 (Auction No. 58). The spectrum to be 
auctioned has been offered previously in other auctions but was 
returned to the Commission as a result of license cancellation or 
termination. A complete list of licenses available for Auction No. 58 
is included as Attachment A of Auction No. 58 Comment Public Notice.
    2. The following table contains the block/eligibility status/
frequency cross-reference list for Auction No. 58:

[[Page 40633]]



----------------------------------------------------------------------------------------------------------------
                                 Eligibility status             Bandwidth (MHz) (unless  Frequency (MHz) (unless
  Frequency  block   ------------------------------------------    otherwise noted in       otherwise noted in
                             Tier 1               Tier 2             attachment A)            attachment A)
----------------------------------------------------------------------------------------------------------------
A...................  n/a................  n/a................  30                       1850-1865, 1930-1945
C1..................  Open...............  Closed.............  15                       1902.5-1910, 1982.5-
                                                                                          1990
C2..................  Open...............  Closed.............  15                       1895-1902.5, 1975-
                                                                                          1982.5
C3..................  Closed.............  Closed.............  10                       1895-1900, 1975-1980
C4..................  Open...............  Closed.............  10                       1900-1905, 1980-1985
C5..................  Open...............  Open...............  10                       1905-1910, 1985-1990
D...................  n/a................  n/a................  10                       1865-1870, 1945-1950
E...................  n/a................  n/a................  10                       1885-1890, 1965-1970
F...................  Open...............  Open...............  10                       1890-1895, 1970-1975
----------------------------------------------------------------------------------------------------------------

    3. In some cases, licenses are available for only part of a market 
or may not include all of the spectrum associated with a particular 
frequency block in Auction No. 58. Bold type indicates that no license 
of the particular tier/frequency block combination will be available in 
Auction No. 58. See Attachment A of Auction No. 58 Comment Public 
Notice to determine which licenses will be offered.
    4. For the C and F block licenses, Basic Trading Areas (``BTAs'') 
are divided into two tiers according to the population size, with Tier 
1 comprising markets with population at or above 2.5 million, based on 
2000 census figures, and Tier 2 comprising the remaining markets. Some 
licenses are available to all bidders in ``open'' bidding, while other 
licenses are available only to entrepreneurs in ``closed'' bidding. In 
order to qualify as an ``entrepreneur,'' an applicant, including 
attributable investors and affiliates, must have had gross revenues of 
less than $125 million in each of the last two years and must have less 
than $500 million in total assets. All of the licenses available in 
``closed'' bidding are C block licenses. The A, B, E, and F block 
licenses, as well as certain C block licenses, are available in 
``open'' bidding. The entrepreneur eligibility restriction does not 
apply to licenses that were available but not won in any auction 
beginning on or after March 23, 1999. C block licenses for BTA215, 
BTA330, and BTA470 were available but not won in Auction No. 22. 
Accordingly, even though licenses in the C3 and C4 frequency blocks in 
Tier 2 generally are designated as subject to closed bidding, CW-
BTA215-C3, CW-BTA330-C3, and CW-BTA470-C4 will be offered in open 
bidding in Auction No. 58. CW-BTA215-C3, CW-BTA330-C3, and CW-BTA470-C4 
were offered in open bidding and won in Auction No. 35; however, 
because the winners defaulted on their payment obligations, the 
licenses were never awarded. Size-based bidding credits are not 
available for C block licenses won in ``closed'' bidding or for 
licenses in the A, D, or E blocks.
    5. The Balanced Budget Act of 1997 requires the Commission to 
``ensure that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures. * * *'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, to seek comment on a variety of 
auction-specific procedures prior to the start of each auction. The 
Bureau therefore seeks comment on the following issues relating to 
Auction No. 58.

II. Auction Structure

A. Simultaneous Multiple-Round Auction Design

    6. The Bureau proposes to award all licenses included in Auction 
No. 58 in a simultaneous multiple-round auction. As described further 
below, this methodology offers every license for bid at the same time 
with successive bidding rounds in which bidders may place bids. The 
Bureau seeks comment on this proposal.

B. Upfront Payments and Bidding Eligibility

    7. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned, taking 
into account such factors as the population in each geographic license 
area and the value of similar spectrum. As described further below, the 
upfront payment is a refundable deposit made by each bidder to 
establish eligibility to bid on licenses. Upfront payments protect 
against frivolous or insincere bidding and provide the Commission with 
a source of funds from which to collect payments owed at the close of 
the auction. With these guidelines in mind for Auction No. 58, the 
Bureau proposes to calculate upfront payments on a license-by-license 
basis using a formula based on bandwidth and license area population:

$0.05 *MHz* License Area Population

    8. The specific proposed upfront payment for each license available 
in Auction No. 58 is set forth in Attachment A of the Auction No. 58 
Comment Public Notice. The Bureau seeks comment on this proposal.
    9. The Bureau further proposes that the amount of the upfront 
payment submitted by a bidder will determine the maximum number of 
bidding units on which a bidder may place bids. This limit is a 
bidder's initial eligibility. Each license is assigned a specific 
number of bidding units equal to the upfront payment listed in 
Attachment A of the Auction No. 58 Comment Public Notice, on a bidding 
unit per dollar basis. This number does not change as prices rise 
during the auction. A bidder's upfront payment is not attributed to 
specific licenses. Rather, a bidder may place bids on any combination 
of licenses as long as the total number of bidding units associated 
with those licenses does not exceed its current eligibility. 
Eligibility cannot be increased during the auction. Thus, in 
calculating its upfront payment amount, an applicant must determine the 
maximum number of bidding units it may wish to bid on (or hold high 
bids on) in any single round, and submit an upfront payment covering 
that number of bidding units. The Bureau proposes comment on this 
proposal.

C. Activity Rules

    10. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively on a 
percentage of their current bidding eligibility during each round of 
the auction rather than waiting until the end to participate. A bidder 
that does not satisfy the activity rule

[[Page 40634]]

will either lose bidding eligibility in the next round or must use an 
activity rule waiver (if any remain).
    11. The Bureau proposes to divide the auction into two stages, each 
characterized by an increased activity requirement. The auction will 
start in Stage One. The Bureau proposes that the auction generally will 
advance from Stage One to Stage Two when the auction activity level, as 
measured by the percentage of bidding units receiving new high bids, is 
approximately twenty percent or below for three consecutive rounds of 
bidding. However, the Bureau further proposes that it retain the 
discretion to change stages unilaterally by announcement during the 
auction. In exercising this discretion, the Bureau will consider a 
variety of measures of bidder activity, including, but not limited to, 
the auction activity level, the percentage of licenses (as measured in 
bidding units) on which there are new bids, the number of new bids, and 
the percentage increase in revenue. The Bureau seeks comment on these 
proposals.
    12. For Auction No. 58, the Bureau proposes the following activity 
requirements:
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current eligibility is required to be 
active on licenses representing at least 80 percent of its current 
bidding eligibility. Failure to maintain the requisite activity level 
will result in a reduction in the bidder's bidding eligibility in the 
next round of bidding (unless an activity rule waiver is used). During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the current round activity by five-fourths (\5/4\).
    Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current eligibility is required to be active on 95 percent 
of its current bidding eligibility. In this final stage, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by twenty/nineteenths (\20/19\).
    13. The Bureau seeks comment on these proposals. Commenters that 
believe these activity rules should be modified should explain their 
reasoning and comment on the desirability of an alternative approach. 
Commenters are advised to support their claims with analyses and 
suggested alternative activity rules.

D. Activity Rule Waivers and Reducing Eligibility

    14. Use of an activity rule waiver preserves the bidder's current 
bidding eligibility despite the bidder's activity in the current round 
being below the required minimum level. An activity rule waiver applies 
to an entire round of bidding and not to a particular license. Activity 
rule waivers can be either proactive or automatic and are principally a 
mechanism for auction participants to avoid the loss of auction 
eligibility in the event that exigent circumstances prevent them from 
placing a bid in a particular round.

    Note: Once a proactive waiver is submitted, that waiver cannot 
be unsubmitted, even if the round has not yet closed.

    15.The FCC Automated Auction System assumes that bidders with 
insufficient activity would prefer to use an activity rule waiver (if 
available) rather than lose bidding eligibility. Therefore, the system 
will automatically apply a waiver (known as an ``automatic waiver'') at 
the end of any bidding period where a bidder's activity level is below 
the minimum required unless: (i) there are no activity rule waivers 
available; or (ii) the bidder overrides the automatic application of a 
waiver by reducing eligibility, thereby meeting the minimum 
requirements.

    Note: If a bidder has no waivers remaining and does not satisfy 
the required activity level, its current eligibility will be 
permanently reduced, possibly eliminating the bidder from the 
auction.

    16. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding period by using the ``reduce eligibility'' function 
in the bidding system. In this case, the bidder's eligibility is 
permanently reduced to bring the bidder into compliance with the 
activity rules as described above. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility.
    17. A bidder may proactively use an activity rule waiver as a means 
to keep the auction open without placing a bid. If a bidder submits a 
proactive waiver (using the proactive waiver function in the bidding 
system) during a bidding period in which no bids or withdrawals are 
submitted, the auction will remain open and the bidder's eligibility 
will be preserved. An automatic waiver invoked in a round in which 
there are no new valid bids or withdrawals will not keep the auction 
open.
    18. The Bureau proposes that each bidder in Auction No. 58 be 
provided with three activity rule waivers that may be used at the 
bidder's discretion during the course of the auction as set forth 
above. The Bureau seeks comment on this proposal.

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

    19. For Auction No. 58, the Bureau proposes that, by public notice 
or by announcement during the auction, the Bureau may delay, suspend, 
or cancel the auction in the event of natural disaster, technical 
obstacle, evidence of an auction security breach, unlawful bidding 
activity, or administrative or weather necessity, or for any other 
reason that affects the fair and efficient conduct of competitive 
bidding. In such cases, the Bureau, in its sole discretion, may elect 
to resume the auction starting from the beginning of the current round, 
resume the auction starting from some previous round, or cancel the 
auction in its entirety. Network interruption may cause the Bureau to 
delay or suspend the auction. The Bureau emphasizes that exercise of 
this authority is solely within the discretion of the Bureau, and its 
use is not intended to be a substitute for situations in which bidders 
may wish to apply their activity rule waivers. The Bureau seeks comment 
on this proposal.

III. Bidding Procedures

A. Round Structure

    20. The Commission will conduct Auction No. 58 over the Internet. 
Telephonic bidding will also be available. As a contingency plan, the 
FCC Wide Area Network will be available as well. The telephone number 
through which the backup FCC Wide Area Network may be accessed will be 
announced in a later public notice. Full information regarding how to 
establish such a connection will be provided in the public notice 
announcing details of auction procedures.
    21. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction, and will be included in the registration mailings. The 
simultaneous multiple-round format will consist of sequential bidding 
rounds, each followed by the release of round results. Details 
regarding the location and format of round results will be included in 
the same public notice.
    22. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding

[[Page 40635]]

activity level and other factors. The Bureau seeks comment on this 
proposal.

B. Reserve Price or Minimum Opening Bid

    23. The Balanced Budget Act calls upon the Commission to prescribe 
methods for establishing a reasonable reserve price or a minimum 
opening bid when FCC licenses are subject to auction, unless the 
Commission determines that a reserve price or minimum opening bid is 
not in the public interest. Consistent with this mandate, the 
Commission has directed the Bureau to seek comment on the use of a 
minimum opening bid and/or reserve price prior to the start of each 
auction.
    24. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It is generally used to accelerate 
the competitive bidding process. Also, the auctioneer often has the 
discretion to lower the minimum opening bid amount later in the 
auction. It is also possible for the minimum opening bid and the 
reserve price to be the same amount.
    25. In light of the Balanced Budget Act's requirements, the Bureau 
proposes to establish minimum opening bids for Auction No. 58 based on 
factors that could have an impact on the value of the spectrum. The 
Bureau believes a minimum opening bid, which has been used in other 
auctions, is an effective bidding tool. With these guidelines in mind 
for Auction No. 58, the Bureau proposes to calculate minimum opening 
bids on a license-by-license basis using formulas based on bandwidth 
and license area population. Furthermore, the Bureau proposes to 
differentiate these formulas based on the population of each license 
area.

Population [gteqt] 2,000,000:$0.50 *MHz* License Area Population

Population [gteqt] 500,000:$0.25 *MHz* License Area Population
Population < 500,000:$0.15 *MHz* License Area Population
    26. The specific minimum opening bid for each license available in 
Auction No. 58 is set forth in Attachment A of the Auction No. 58 
Comment Public Notice. The Bureau seeks comment on this proposal.
    27. If commenters believe that these minimum opening bids will 
result in substantial numbers of ``unwon'' licenses, or are not 
reasonable amounts, or should instead operate as reserve prices, they 
should explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, the 
Bureau particularly seeks comment on such factors as the amount of 
spectrum being auctioned, levels of incumbency, the availability of 
technology to provide service, the size of the geographic service 
areas, issues of interference with other spectrum bands and any other 
relevant factors that could reasonably have an impact on valuation of 
these PCS licenses. The Bureau also seeks comment on whether, 
consistent with the Balanced Budget Act, the public interest would be 
served by having no minimum opening bid or reserve price.

C. Minimum Acceptable Bids and Bid Increments

    28. In each round, eligible bidders will be able to place bids on a 
given license in any of nine different amounts. The FCC Automated 
Auction System interface will list the nine acceptable bid amounts for 
each license. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. In the rounds after a bid is placed on a license, the minimum 
acceptable bid for that license will be equal to the standing high bid 
plus the defined increment.
    29. 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 below. The 
difference between the minimum acceptable bid and the standing high bid 
for each license will define the bid increment. The nine acceptable bid 
amounts for each license consist of the minimum acceptable bid (the 
standing high bid plus one bid increment) and additional amounts 
calculated using multiple bid increments (i.e., the second bid amount 
equals the standing high bid plus two times the bid increment, the 
third bid amount equals the standing high bid plus three times the bid 
increment, etc.).
    30. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. The additional bid amounts for licenses that have not yet received 
a bid will be calculated differently, as explained below.
    31. For Auction No. 58, the Bureau proposes to calculate minimum 
acceptable bids by using a smoothing methodology, as the Bureau has 
done in several other auctions. The smoothing formula calculates 
minimum acceptable bids by first calculating a percentage increment, 
not to be confused with the bid increment. The percentage increment for 
each license is based on bidding activity on that license in all prior 
rounds; therefore, a license that has received many bids throughout the 
auction will have a higher percentage increment than a license that has 
received few bids.
    32. The calculation of the percentage increment used to determine 
the minimum acceptable bids for each license for the next round is made 
at the end of each round. The computation is based on an activity 
index, which is a weighted average of the number of bids in that round 
and the activity index from the prior round. The current activity index 
is equal to a weighting factor times the number of new bids received on 
the license in the most recent bidding round plus one minus the 
weighting factor times the activity index from the prior round. The 
activity index is then used to calculate a percentage increment by 
multiplying a minimum percentage increment by one plus the activity 
index with that result being subject to a maximum percentage increment. 
The Commission will initially set the weighting factor at 0.5, the 
minimum percentage increment at 0.1 (10%), and the maximum percentage 
increment at 0.3 (30%). Hence, at these initial settings, the 
percentage increment will fluctuate between 10% and 30% depending upon 
the number of bids for the license.
Equations
    Ai = (C*Bi ) + ( (1-C)*Ai-1)

    Ii+1 = smaller of ( (1 + Ai)*N) and M

    Xi+1 = Ii+1*Yi
    where,

    Ai = activity index for the current round (round i)

    C = activity weight factor

    Bi = number of bids in the current round (round i)

    Ai-1 = activity index from previous round (round i-1), 
A0 is 0

    Ii+1 = percentage increment for the next round (round 
i+1)

    N = minimum percentage increment or percentage increment floor

    M = maximum percentage increment or percentage increment ceiling

    Xi+1 = dollar amount associated with the percentage 
increment

    Yi = high bid from the current round

    33. Under the smoothing methodology, once a bid has been

[[Page 40636]]

received on a license, the minimum acceptable bid for that license in 
the following round will be the high bid from the current round plus 
the dollar amount associated with the percentage increment, with the 
result rounded to the nearest thousand if it is over ten thousand or to 
the nearest hundred if it is under ten thousand.
Examples
License 1

    C = 0.5, N = 0.1, M = 0.3

Round 1 (2 new bids, high bid = $1,000,000)

i. Calculation of percentage increment for round 2 using the smoothing 
formula:

    A1 = (0.5*2) + (0.5*0) = 1

    I2 = The smaller of ( (1 + 1)*0.1) = 0.2 or 0.3 (the 
maximum percentage increment).

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

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

iii. Minimum acceptable bid for round 2 = $1,200,000.

Round 2 (3 new bids, high bid = $2,000,000)

i. Calculation of percentage increment for round 3 using the smoothing 
formula:

    A2 = (0.5*3) + (0.5*1) = 2

    I3 = The smaller of ( (1 + 2)*0.1) = 0.3 or 0.3 (the 
maximum percentage increment).

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

    X3 = 0.3*$2,000,000 = $600,000.

iii. Minimum acceptable bid for round 3 = $2,600,000.

Round 3 (1 new bid, high bid = $2,600,000)

i. Calculation of percentage increment for round 4 using the smoothing 
formula:

    A3 = (0.5*1) + (0.5*2) = 1.5

    I4 = The smaller of ( (1 + 1.5)*0.1) = 0.25 or 0.3 (the 
maximum percentage increment).

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

    X4 = 0.25*$2,600,000 = $650,000.

iii. Minimum acceptable bid for round 4 = $3,250,000.

    34. As stated above, until a bid has been placed on a license, the 
minimum acceptable bid for that license will be equal to its minimum 
opening bid. The additional bid amounts are calculated using the 
difference between the minimum opening bid times one plus the minimum 
percentage increment, rounded as described above, and the minimum 
opening bid. That is, I = (minimum opening bid)(1 + N){rounded{time}  - 
(minimum opening bid). Therefore, when N equals 0.1, the first 
additional bid amount will be approximately ten percent higher than the 
minimum opening bid; the second, twenty percent; the third, thirty 
percent; etc.
    35. 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.
    36. The Bureau retains the discretion to change the minimum 
acceptable bids and bid increments if it determines that circumstances 
so dictate. The Bureau will do so by announcement in the FCC Automated 
Auction System. The Bureau seeks comment on these proposals.

D. High Bids

    37. At the end of a bidding round, a high bid for each license will 
be determined based on the highest gross bid amount received for the 
license. In the event of identical high bids on a license in a given 
round (i.e., tied bids), the Bureau proposes to use a random number 
generator to select a single high bid from among the tied bids. If the 
auction were to end with no higher bids being placed for that license, 
the winning bidder would be the one that placed the selected high bid. 
However, the remaining bidders, as well as the high bidder, can submit 
higher bids in subsequent rounds. If any bids are received on the 
license in a subsequent round, the high bid again will be determined by 
the highest gross bid amount received for the license. The Bureau seeks 
comment on this proposal.
    38. A high bid will remain the high bid until there is a higher bid 
on the same license at the close of a subsequent round. A high bid from 
a previous round is sometimes referred to as a ``standing high bid.'' 
Bidders are reminded that standing high bids count towards bidding 
activity.

E. Information Regarding Bid Withdrawal and Bid Removal

    39. For Auction No. 58, the Bureau proposes the following bid 
removal and bid withdrawal procedures. Before the close of a bidding 
period, a bidder has the option of removing any bid placed in that 
round. By removing selected bids in the bidding system, a bidder may 
effectively ``unsubmit'' any bid placed within that round. A bidder 
removing a bid placed in the same round is not subject to a withdrawal 
payment. Once a round closes, a bidder may no longer remove a bid.
    40. A high bidder may withdraw its standing high bids from previous 
rounds using the withdraw function in the bidding system. A high bidder 
that withdraws its standing high bid from a previous round is subject 
to the bid withdrawal payment provisions of the Commission rules. The 
Bureau seeks comment on these bid removal and bid withdrawal 
procedures.
    41. In the Part 1 Third Report and Order, 63 FR 770, January 7, 
1998, the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and the pursuit of 
efficient backup strategies as information becomes available during the 
course of an auction. The Commission noted, however, that, in some 
instances, bidders may seek to withdraw bids for improper reasons. The 
Bureau, therefore, has discretion, in managing the auction, to limit 
the number of withdrawals to prevent any bidding abuses. The Commission 
stated that the Bureau should assertively exercise its discretion, 
consider limiting the number of rounds in which bidders may withdraw 
bids, and prevent bidders from bidding on a particular market if the 
Bureau finds that a bidder is abusing the Commission's bid withdrawal 
procedures.
    42. Applying this reasoning, the Bureau proposes to limit each 
bidder in Auction No. 58 to withdrawing standing high bids in no more 
than two rounds during the course of the auction. To permit a bidder to 
withdraw bids in more than two rounds would likely encourage insincere 
bidding or the use of withdrawals for anti-competitive purposes. The 
two rounds in which withdrawals are utilized will be at the bidder's 
discretion; withdrawals otherwise must be in accordance with the 
Commission's rules. There is no limit on the number of standing high 
bids that may be withdrawn in either of the rounds in which withdrawals 
are utilized. Withdrawals will remain subject to the bid withdrawal 
payment provisions specified in the Commission's rules. The Bureau 
seeks comment on this proposal.

[[Page 40637]]

F. Stopping Rule

    43. The Bureau has discretion ``to establish stopping rules before 
or during multiple round auctions in order to terminate the auction 
within a reasonable time.'' For Auction No. 58, the Bureau proposes to 
employ a simultaneous stopping rule approach. A simultaneous stopping 
rule means that all licenses remain available for bidding until bidding 
closes simultaneously on all licenses.
    44. Bidding will close simultaneously on all licenses after the 
first round in which no new bids, proactive waivers, or withdrawals are 
received. Thus, unless circumstances dictate otherwise, bidding will 
remain open on all licenses until bidding stops on every license.
    45. However, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 58:
    i. Utilize a modified version of the simultaneous stopping rule. 
The modified stopping rule would close the auction for all licenses 
after the first round in which no bidder submits a proactive waiver, 
withdrawal, or a new bid on any license on which it is not the standing 
high bidder. Thus, absent any other bidding activity, a bidder placing 
a new bid on a license for which it is the standing high bidder would 
not keep the auction open under this modified stopping rule. The Bureau 
further seeks comment on whether this modified stopping rule should be 
used at any time or only in stage two of the auction.
    ii. Keep the auction open even if no new bids or proactive waivers 
are submitted and no previous high bids are withdrawn. In this event, 
the effect will be the same as if a bidder had submitted a proactive 
waiver. The activity rule, therefore, will apply as usual and a bidder 
with insufficient activity will either lose bidding eligibility or use 
a remaining activity rule waiver.
    iii. Declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the Bureau invokes 
this special stopping rule, it will accept bids in the specified final 
round(s) only for licenses on which the high bid increased in at least 
one of a specified preceding number of rounds.
    46. The Bureau proposes to exercise these options only in certain 
circumstances, for example, where the auction is proceeding very 
slowly, there is minimal overall bidding activity, or it appears likely 
that the auction will not close within a reasonable period of time. 
Before exercising these options, the Bureau is likely to attempt to 
increase the pace of the auction by, for example, increasing the number 
of bidding rounds per day, and/or increasing the amount of the minimum 
bid increments for the limited number of licenses where there is still 
a high level of bidding activity. The Bureau seeks comment on these 
proposals.

IV. Conclusion

    47. Comments are due on or before July 8, 2004, and reply comments 
are due on or before July 15, 2004. Because of the disruption of 
regular mail and other deliveries in Washington, DC, the Bureau 
requires that all comments and reply comments be filed electronically. 
Comments and reply comments must be sent by electronic mail to the 
following address: [email protected]. The electronic mail containing 
the comments or reply comments must include a subject or caption 
referring to Auction No. 58 Comments and the name of the commenting 
party. The Bureau requests that parties format any attachments to 
electronic mail as Adobe[reg] Acrobat[reg] (pdf) or Microsoft[reg] Word 
documents. Copies of comments and reply comments will be available for 
public inspection during regular business hours in the FCC Reference 
Information Center, Room CY-A257, 445 12th Street, SW., Washington, DC 
20554.
    In addition, the Bureau requests that commenters fax a courtesy 
copy of their comments and reply comments to the attention of Kathryn 
Garland at (717) 338-2850.
    48. This proceeding has been designated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentations must contain summaries of the 
substance of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in Sec.  1.1206(b) of the Commission's rules.

Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 04-15239 Filed 7-2-04; 8:45 am]
BILLING CODE 6712-01-P