[Federal Register Volume 71, Number 77 (Friday, April 21, 2006)]
[Notices]
[Pages 20672-20694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-3819]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 06-30; Report No. AUC-06-66-B; (Auction No. 66) FCC 06-
47]


Auction of Advanced Wireless Services Licenses Scheduled for June 
29, 2006; Notice of Filing Requirements, Minimum Opening Bids, Upfront 
Payments and Other Procedures for Auction No. 66

AGENCY: Federal Communications Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This document announces the procedures and minimum opening 
bids for the upcoming auction of Advanced Wireless Services licenses in 
the 1710-1755 MHz and 21102155 MHz bands. This document is intended to 
familiarize prospective bidders with the procedures, minimum opening 
bids and reserve price for this auction.

DATES: Auction No. 66 is scheduled to begin on June 29, 2006.

FOR FURTHER INFORMATION CONTACT: For legal questions: Scott Mackoul at 
(202) 418-0660. For general auction questions: Roy Knowles or Lisa 
Stover at (717) 338-2888. For service rules questions: David Hu or John 
Spencer at (202) 418-0200; Beth Fishel at (717) 338-2649.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 66 
Procedures Public Notice released on April 12, 2006. The complete text 
of the Auction No. 66 Procedures Public Notice, including attachments 
and related Commission documents is available for public inspection and 
copying from 8 a.m. to 4:30 p.m. Monday through Thursday or from 8 a.m. 
to 11:30 a.m. on Friday at the FCC Reference Information Center, 
Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. 
The Auction No. 66 Procedures 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 06-47. 
The Auction No. 66 Procedures Public Notice and related documents are 
also available on the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/66/.

I. General Information

A. Introduction

    1. The Federal Communications Commission (FCC or Commission) 
announces the procedures, minimum opening bids, and reserve price for 
the upcoming auction of Advanced Wireless Services licenses in the 
1710-1755 MHz and 2110-2155 MHz bands (AWS-1) scheduled for June 29, 
2006 (Auction No. 66). On January 31, 2006, in accordance with section 
309(j)(3) of the Communications Act of 1934, as amended, the Wireless 
Telecommunications Bureau (Bureau) released a public notice seeking 
comment on a reserve price and minimum opening bid amounts and the 
procedures to be used in Auction No. 66. Interested parties submitted 
54 comments and 16 reply comments in response to the Auction No. 66 
Comment Public Notice, 71 FR 6486, February 8, 2006, as well as a 
number of ex parte or late-filed submissions.
    2. In the Auction No. 66 Comment Public Notice, the Bureau proposed 
to include all 1,122 AWS-1 licenses in a single auction using the 
Commission's standard simultaneous multiple-round (SMR) auction format. 
The Bureau sought comment on the feasibility and desirability of 
allocating the AWS-1 licenses among two auctions, run concurrently, 
with one of the auctions using the standard SMR format and the other 
using the Commission's package bidding format (SMR-PB). Based on the 
record and the particular circumstances of the auction of AWS-1 
licenses, the Commission, will include all 1,122 AWS-1 licenses in a 
single auction using the Commission's standard SMR format, as proposed. 
Package bidding will not be used in Auction No. 66.
    3. The Bureau also proposed in the Auction No. 66 Comment Public 
Notice to withhold certain information on bidder interests, bids and 
bidder identities that typically has been revealed prior to and during 
past Commission auctions. The proposal was made in response to analysis 
suggesting

[[Page 20673]]

that under certain circumstances the competitiveness and economic 
efficiency of an SMR auction may be enhanced if such information is 
withheld until after the close of the auction.
    4. Taking into account concerns raised in the record, the 
Commission has decided to modify its proposal. First, consistent with a 
suggested compromise between the proposal and the Commission's past 
practice that was the subject of extensive comment in the record, the 
Commission will withhold certain information unless it appears that the 
auction will be sufficiently competitive that any anti-competitive 
behavior addressed by the original proposal would be unlikely to be 
successful. To gauge the likely level of competition in this upcoming 
auction, the Commission will evaluate the level of prospective bidders' 
bidding eligibility. Specifically, if all the bidders' bidding 
eligibility, measured in bidding units (subject to a cap on the amount 
of any one bidder's eligibility) divided by all licenses in the 
auction, measured in bidding units is equal to or greater than three, 
the Commission believes the auction will be sufficiently competitive. 
For the purposes of determining the modified eligibility ratio, the 
bidding eligibility of any one bidder may be no more than 50 percent of 
the bidding units of all licenses in the auction. If the modified 
eligibility ratio is three or greater, the likely level of competition 
should be sufficient to make anti-competitive outcomes difficult to 
sustain. Second, if the modified eligibility ratio is less than three 
and, therefore, certain information is withheld, the Commission will 
follow the original proposal with two changes: (1) The Commission will 
release each bidder's eligibility and upfront payment made prior to the 
start of the auction; and (2) the Commission will release all gross 
bids for each license (including the losing bids) after each round, but 
not bidder identities. The Commission believes this compromise provides 
bidders with additional information regarding license valuations 
without compromising the proposal's goal of reducing the potential for 
anti-competitive outcomes.
    5. Pursuant to these procedures, license selection information will 
be withheld, at least initially. Therefore, to enable applicants to 
comply with the Commission's anti-collusion rules, each applicant with 
a short-form application to participate in a pending auction will 
receive a letter that lists the applicants in Auction No. 66 that have 
applied for licenses in any of the same geographic areas as the 
applicant, once the Commission has conducted its initial review of 
applications to participate in Auction No. 66.
    6. The Auction No. 66 Comment Public Notice proposed an aggregate 
reserve price of $1,029,534,343.20 for all AWS-1 licenses in order to 
implement a Congressional mandate to recover estimated relocation costs 
for government incumbent operators in the lower (1710-1755 MHz) AWS-1 
spectrum band. Under the Commercial Spectrum Enhancement Act (CSEA), 
the Commission cannot conclude any auction of statutorily-defined 
eligible frequencies if the total cash proceeds attributable to such 
spectrum are less than 110 percent of the total estimated relocation 
costs of eligible federal entities assigned to the frequencies. The 
lower half of the frequencies covered by AWS-1 licenses, 1710-1755 MHz, 
are eligible frequencies. Accordingly, the Commission will cancel the 
auction if the winning bids net of applicable discounts at the end of 
bidding that are attributable to such spectrum are less than 110 
percent of the total estimated relocation costs, or $1,029,534,343.20. 
Given that one-half of the frequencies authorized for use by each 
license are CSEA eligible frequencies, one-half of each winning bid, 
net of any applicable bidding credit discounts at the end of bidding 
(e.g., exclusive of tribal land bidding credits), will be counted 
toward meeting this reserve price. Therefore, the winning bids (net of 
bidding credits) in the auction must total at least approximately $2.06 
billion in order for the Commission to conclude the auction and award 
the licenses.
i. Background of Proceeding
    7. Growth in demand for mobile wireless services, coupled with the 
rise of the Internet and greater broadband availability, have increased 
the need for additional spectrum and advanced technologies capable of 
providing advanced wireless services, including wireless Internet 
access and other high-speed information and entertainment services. 
Enhancements to current wireless network technologies, as well as the 
development of new technologies, are continuing to improve and expand 
the deployment of wireless broadband.
    8. In order to facilitate the rapid deployment of broadband 
technologies, the Commission has allocated spectrum to meet the demand 
for advanced wireless services. In the Second Report and Order in ET 
Docket No. 00-258, 66 FR 47618, September 13, 2001, the Commission 
allocated the 1710-1755, 2110-2150 and 2150-2155 MHz bands for AWS-1 
and combined these latter two bands into a single 45-megahertz 
allocation (i.e., 2110-2155 MHz). The Commission subsequently adopted 
service rules for AWS in these bands, including application, licensing, 
operating and technical rules.
    9. Making this spectrum available requires relocating incumbent 
operations, both Federal Government (Government) and non-Federal 
Government (non-Government). Relocation of Government operations is 
subject to the CSEA. For non-Government operations, the Commission's 
Emerging Technologies proceeding adopted a relocation policy designed 
to allow early entry for new technology providers into reallocated 
spectrum by allowing providers of new services to negotiate financial 
arrangements for reaccommodation of incumbent licensees.
ii. Licenses To Be Auctioned
    10. Auction No. 66 will offer 1,122 licenses: 36 Regional Economic 
Area Grouping (REAG) licenses, 352 Economic Area (EA) licenses, and 734 
Cellular Market Area (CMA) licenses. A complete list of the AWS-1 
licenses available in Auction No. 66 can be found in Attachment A of 
Auction No. 66 Procedures Public Notice.

B. Rules and Disclaimers

i. Relevant Authority
    11. Prospective applicants must familiarize themselves thoroughly 
with the Commission's general competitive bidding rules set forth in 
Title 47, part 1, of the Code of Federal Regulations, including recent 
amendments and clarifications; rules relating to the Advanced Wireless 
Services and emerging technologies contained in Title 47, parts 27 and 
101, of the Code of Federal Regulations; and rules relating to 
applications, practice and procedure 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 contained 
in the Auction No. 66 Procedures Public Notice and the Commission's 
decisions in proceedings regarding competitive bidding procedures, 
application requirements, and obligations of Commission licensees.
    12. The terms contained in the Commission's rules, relevant orders, 
and public notices are not negotiable. The Commission may amend or 
supplement the information contained in its public notices at any time, 
and will issue public notices to convey any new or supplemental 
information to applicants. It is the responsibility of all

[[Page 20674]]

applicants to remain current with all Commission rules and with all 
public notices pertaining to this auction.
ii. Prohibition of Collusion; Compliance With Antitrust Laws
    13. To ensure the competitiveness of the auction process, Sec.  
1.2105(c) of the Commission's rules prohibit applicants competing for 
licenses in any of the same geographic license areas from communicating 
with each other about bids, bidding strategies, or settlements unless 
such applicants have identified each other on their short-form 
applications (FCC Forms 175) as parties with whom they have entered 
into agreements pursuant to Sec.  1.2105(a)(2)(viii). In Auction No. 
66, the rule would apply to any applicants bidding for the same CMA, 
EA, or REAG. The rule would also apply to applicants bidding for 
licenses in overlapping CMAs, EAs, and REAGs. In addition, the rule 
would preclude applicants that apply to bid for all markets from 
communicating with all other applicants. Applicants that have applied 
for the same markets (unless they 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)) must affirmatively avoid all 
communications with or disclosures to each other that affect or have 
the potential to affect bids or bidding strategy, which may include 
communications regarding the post-auction market structure. This 
prohibition begins at the short-form application filing deadline and 
ends at the down payment deadline after the auction. This prohibition 
applies to all applicants regardless of whether such applicants become 
qualified bidders or actually bid.
    14. For purposes of this prohibition, Sec.  1.2105(c)(7)(i) defines 
applicant as including all officers and directors of the entity 
submitting a short-form application to participate in the auction, all 
controlling interests of that entity, 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.
    15. Applicants for licenses for any of the same geographic license 
areas must not communicate directly or indirectly about bids or bidding 
strategy. Accordingly, such applicants 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 applicants, and conveys information concerning 
the substance of bids or bidding strategies between such applicants. 
Also, if the authorized bidders are different individuals employed by 
the same organization (e.g., law firm or engineering firm or consulting 
firm), a violation similarly could occur. 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. Auction participants are hereby placed on 
notice that public disclosure of information on bidder interests, bids 
and bidder identities that typically has been revealed prior to and 
during past Commission auctions may violate the anti-collusion rule. 
Bidders should use caution in their dealings with other parties, such 
as members of the press, financial analysts, or others who might become 
a conduit for the communication of prohibited bidding information.
    16. The Commission's rules do not prohibit applicants from entering 
into otherwise lawful bidding agreements before filing their short-form 
applications, as long as they disclose the existence of the 
agreement(s) in their short-form application. If parties agree in 
principle on all material terms prior to the short-form filing 
deadline, each party to the agreement must identify the other party or 
parties to the agreement on its short-form application under Sec.  
1.2105(c), even if the agreement has not been reduced to writing. If 
the parties have not agreed in principle by the short-form filing 
deadline, they should not include the names of parties to discussions 
on their applications, and they may not continue negotiations, 
discussions or communications with any other applicants after the 
short-form filing deadline. By electronically submitting its short-form 
application, each applicant certifies its compliance with Sec.  
1.2105(c). Any applicant found to have violated the anti-collusion rule 
may be subject to sanctions.
    17. By electronically submitting its short-form application, each 
applicant certified its compliance with Sec.  1.2105(c). However, the 
Commission 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. Any applicant found to have violated the 
anti-collusion rule may be subject to sanctions.
    18. Applicants are also reminded that, regardless of compliance 
with the Commission's rules, they remain subject to the antitrust laws, 
which are designed to prevent anticompetitive behavior in the 
marketplace. Compliance with the disclosure requirements of the 
Commission's anti-collusion rule will not insulate a party from 
enforcement of the antitrust laws. To the extent the Commission becomes 
aware of specific allegations that may give rise to violations of the 
federal antitrust laws the Commission may refer such allegations to the 
United States Department of Justice for investigation. If an applicant 
is found to have violated the antitrust laws or the Commission's rules 
in connection with its participation in the competitive bidding 
process, it may be subject to forfeiture of its upfront payment, down 
payment, or full bid amount and may be prohibited from participating in 
future auctions, among other sanctions.
    19. 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. Applicants are therefore required by Sec.  1.65 to report 
to the Commission any communications they have made to or received from 
another applicant after the short-form filing deadline that affect or 
have the potential to affect bids or bidding strategy unless such 
communications are made to or received from parties to agreements 
identified under Sec.  1.2105(a)(2)(viii).
    20. Applicants that are winning bidders will be required to 
disclose in their long-form applications the specific terms, 
conditions, and parties involved in all bidding consortia, joint 
ventures, partnerships, and other arrangements entered into relating to 
the competitive bidding process.
    21. A summary listing of documents issued by the Commission and the 
Bureau addressing the application of the anti-collusion rule may be 
found in Attachment G of the Auction No. 66 Procedures Public Notice.
iii. Incumbency Issues
    22. The AWS-1 bands are now being used for a variety of Government 
and non-Government services. The 1710-1755 MHz band is currently a 
Government band. The 2110-2150 MHz band is used by private (including 
state and local governmental public safety services) and common carrier 
fixed microwave services. The 2150-2155

[[Page 20675]]

MHz band is currently used by the Broadband Radio Service (BRS).
    23. Relocation of Government Incumbents; Spectrum Relocation Fund. 
The 1710-1755 MHz spectrum is covered by a Congressional mandate that 
requires that auction proceeds fund the estimated relocation costs of 
incumbent Federal entities. Specifically, the CSEA established a 
Spectrum Relocation Fund (SRF), to which the cash proceeds attributable 
to eligible frequencies in the AWS-1 license auction will be deposited.
    24. CSEA also prohibits the Commission from concluding any auction 
of eligible frequencies if the total cash proceeds attributable to such 
spectrum are less than 110 percent of the estimated relocation costs 
provided to the Commission by the National Telecommunications and 
Information Administration (NTIA). NTIA has collected estimates of the 
relocation costs for the eligible frequencies in the AWS-1 band. On 
December 27, 2005, pursuant to CSEA, NTIA notified the Commission of 
the estimated relocation costs and timelines for relocation of eligible 
Federal entities assigned to frequencies from 1710 to 1755 MHz. NTIA 
reported that the total estimated relocation costs equal $935,940,312.
    25. Relocation of Non-Government Incumbents. The Commission is in 
the process of determining how to apply the policies adopted in the 
Emerging Technologies proceeding to the relocation of incumbent fixed 
microwave and BRS licensees in the 2110-2150 and 2150-2155 MHz bands, 
respectively. In the Fifth Notice of Proposed Rule Making (AWS Fifth 
Notice) in ET Docket No. 00-258, 70 FR 61752, October 26, 2005, the 
Commission is seeking comment on the specific relocation and cost-
sharing procedures applicable to BRS operations in the 2150-2160/62 MHz 
band, which the Commission recently decided will be relocated to the 
newly restructured 2495-2690 MHz band. In the AWS Fifth Notice, the 
Commission is also seeking comment on cost-sharing obligations and 
procedures associated with relocation obligations for the 2110-2155 MHz 
band. In doing so, the AWS Fifth Notice also referenced an earlier 
request by the Commission for comments on the appropriate procedures 
for apportioning relocation costs among multiple AWS licensees in the 
2110-2150 MHz band. The Commission is also currently considering 
petitions for reconsideration that raise issues concerning the 
conditions under which the 2495-2500 MHz band would be available to BRS 
and the suitability of that spectrum for BRS operations.
iv. Protection of Incumbent Government and Non-Government Operations
    26. AWS licensees must comply with the technical and operational 
rules set forth in 47 CFR 27.50-27.66 and 27.1131-27.1135. The latter 
set of rules describes the procedures AWS licensees must follow to 
protect co-channel and adjacent channel incumbent Government and non-
Government operations from interference.
    27. The 1710-1755 MHz band. According to NTIA, this spectrum is 
used by the Federal Government for both military and non-military 
operations. Sixteen Department of Defense (DOD) facilities in the 
country are classified as protected facilities, and various types of 
systems operate at these locations. AWS licensees must protect systems 
operating at these facilities from interference until such systems are 
relocated to other spectrum. These restrictions shall apply until such 
time as the relocation of the Federal systems has been completed, and 
indefinitely in the case of systems at the Yuma, Arizona, and Cherry 
Point, North Carolina, locations. Furthermore, AWS licensees will be 
required to accept any interference received from operations at the 16 
facilities. Such interference could occur at large distances outside 
the facilities' operating radii due to airborne operations within the 
radii.
    28. The CSEA permits the Commission to grant commercial licenses in 
these bands prior to relocation of Federal government operations and 
the termination of a Federal entity's authorization. Until such time as 
the Government licensees have relocated to other spectrum, or NTIA de-
authorizes an operation pursuant to CSEA, AWS operators shall be 
required to protect non-DOD Government systems operating in the 1710-
1755 and 1755-1761 MHz bands in accordance with the provisions set 
forth in Sec.  27.1134(b) of the Commission's rules.
    29. AWS licensees operating fixed stations in the 1710-1755 MHz 
band, if notified that such stations are causing interference to 
radiosonde receivers operating in the Meteorological Aids Service in 
the 1675'1700 MHz band or meteorological-satellite earth receivers 
operating in the Meteorological-Satellite Service in the 1675-1710 MHz 
band, shall be required to modify the stations' location and/or 
technical parameters as necessary to eliminate the interference.
    30. The 2110-2155 MHz Band. Fixed point-to-point microwave systems 
authorized under part 101 of the Commission's rules will maintain 
primary status in the 2110-2150 MHz band unless and until an AWS or 
other emerging technology licensee requires use of the spectrum. AWS 
licensees are required, prior to initiating operations from any base or 
fixed station, to coordinate their frequency usage with co-channel and 
adjacent channel incumbent part 101 fixed-point-to-point microwave 
licensees operating in the 2110-2150 MHz band. Similarly, BRS 
operations in the 2150-2160/62 MHz band will be relocated to other 
spectrum. Until that occurs, AWS licensees, prior to initiating 
operations from any base or fixed station, must coordinate their 
frequency usage with co-channel and adjacent channel incumbent BRS 
licensees operating in the 2150-2160 MHz band.
    31. AWS licensees operating in the 2110-2155 MHz band must protect 
previously licensed Broadcast Auxiliary Service (BAS) and Cable 
Television Radio Service (CARS) operations in the adjacent 2025-2110 
MHz band. In satisfying this requirement AWS licensees must, before 
constructing and operating any base or fixed station, determine the 
location and licensee of all BAS or CARS stations authorized in their 
area of operation, and coordinate their planned stations with those 
licensees.
    32. The National Aeronautics and Space Administration (NASA) 
operates the Deep Space Network (DSN) in the 2110-2120 MHz band at 
Goldstone, California. NASA will continue its operations of high power 
transmitters (nominal EIRP of 105.5 dBW with EIRP up to 119.5 dBW used 
under emergency conditions) in this band at this location. AWS 
licensees must accept any interference received from the Goldstone DSN 
facility in this band.
a. International Coordination
    33. Operations in the 1710-1755 and 2110-2155 MHz bands must not 
cause harmful interference across the borders with Mexico and Canada. 
Until such time as agreements between the United States, Mexico and 
Canada become effective, the same technical restrictions at the border 
that are adopted for operation between geographic service areas will 
apply, to the extent they are not in violation of current bilateral 
agreements and arrangements. When interim arrangements or agreements 
between the United States, Mexico and Canada are final and become 
effective, licensees in the 1710-1755 and 2110-2155 MHz bands must 
comply with these agreements. In addition, if these agreements are 
modified in the future, licensees in the 1710-1755 and 2110-2155 MHz 
bands must comply with these modifications.

[[Page 20676]]

b. Quiet Zones
    34. Advanced Wireless Services licensees must protect the radio 
quiet zones set forth in the Commission's rules. Licensees are 
cautioned that they must receive the appropriate approvals directly 
from the relevant quiet zone entity prior to operating within the areas 
described in the Commission's rules.
v. Due Diligence
    35. The Commission cautions potential applicants formulating their 
bidding strategies to investigate and consider the extent to which AWS 
frequencies are occupied. Operations in the AWS-1 bands must be 
protected and/or relocated to available frequencies typically in higher 
bands or to other media. These limitations may restrict the ability of 
AWS geographic area licensees to use certain portions of the 
electromagnetic spectrum or provide service to certain areas in their 
geographic license areas. Bidders should become familiar with the 
status of these operations and relocation requirements, and applicable 
Commission rules, orders and any pending proceedings related to the 
service, in order to make reasoned, appropriate decisions about their 
participation in Auction No. 66 and their bidding strategy.
    36. Potential bidders are reminded that they are solely responsible 
for investigating and evaluating all technical and marketplace factors 
that may have a bearing on the value of the AWS-1 licenses in this 
auction. 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 the Advanced Wireless Services subject to certain conditions and 
regulations. An FCC auction does not constitute an endorsement by the 
FCC of any particular service, technology, or product, nor does an FCC 
license constitute a guarantee of business success. Applicants should 
perform their individual due diligence before proceeding as they would 
with any new business venture.
    37. Potential bidders are strongly encouraged to conduct their own 
research prior to the beginning of bidding in Auction No. 66 in order 
to determine the existence of any pending administrative or judicial 
proceedings that might affect their decision regarding participation in 
the auction. Participants in Auction No. 66 are strongly encouraged to 
continue such research throughout the auction. In addition, potential 
bidders should perform technical analyses sufficient to assure 
themselves that, should they prevail in competitive bidding for a 
specific license, they will be able to build and operate facilities 
that will fully comply with the Commission's technical and legal 
requirements.
    38. Applicants should also be aware that certain pending and future 
proceedings, including applications (including those for modification), 
petitions for rulemaking, requests for special temporary authority, 
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. 66. In addition, pending and 
future judicial proceedings may relate to particular applicants or 
incumbent licensees, or the licenses available in Auction No. 66. 
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.
    39. Applicants should perform due diligence to identify and 
consider all proceedings that may affect the spectrum licenses being 
auctioned and that could have an impact on the availability of spectrum 
for Auction No. 66. 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.
    40. 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. 66.
    41. Applicants may obtain information about non-Federal Government 
incumbent licenses that may have an effect on availability of licenses 
in Auction No. 66 through the Commission's licensing databases on the 
World Wide Web.
    42. To further assist potential bidders in determining the scope of 
the new AWS entrants' relocation obligations in the 2150-2155 MHz band, 
the Commission ordered BRS licensees in the 2150-2160/62 MHz band to 
submit information on the locations and operating characteristics of 
BRS systems in that band. Each application will need to be viewed to 
determine if it is a BRS Channel 1, 2/ 2A Notification.
    43. The Commission makes no representations or guarantees regarding 
the accuracy or completeness of information in its databases or any 
third party databases. The Commission's databases may not include all 
information deemed necessary or desirable by an applicant, applicants 
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 its databases.
    44. Potential applicants are strongly encouraged to physically 
inspect any prospective sites located in, or near, the service area for 
which they plan to bid, and also to familiarize themselves with the 
environmental assessment obligations.
vi. Use of Integrated Spectrum Auction System
    45. The Commission will make available a browser-based bidding 
system to allow bidders to participate in Auction No. 66 over the 
Internet using the Commission's Integrated Spectrum Auction System 
(ISAS or FCC Auction System). The Commission makes no warranty 
whatsoever with respect to the FCC Auction System. In no event shall 
the Commission, or any of its officers, employees or agents, be liable 
for any damages whatsoever (including, but not limited to, loss of 
business profits, business interruption, loss of business information, 
or any other loss) arising out of or relating to the existence, 
furnishing, functioning or use of the FCC Auction System that is 
accessible to bidders in connection with this auction. Moreover, no 
obligation or liability will arise out of the Commission's technical, 
programming or other advice or service provided in connection with the 
FCC Auction System.
vii. Bidder Alerts
    46. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 66 to 
deceive and defraud unsuspecting investors. Information about deceptive 
telemarketing investment schemes is available from the Federal Trade 
Commission (FTC) and from the Securities and Exchange Commission (SEC).
viii. National Environmental Policy Act Requirements
    47. Licensees must comply with the Commission's rules regarding 
implementation of the National

[[Page 20677]]

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. The Commission's NEPA 
rules require, among other things, that the licensee consult with 
expert agencies having NEPA responsibilities, including the U.S. Fish 
and Wildlife Service, the State Historic Preservation Office, the Army 
Corps of Engineers and the Federal Emergency Management Agency. In 
assessing the effect of facilities construction on historic properties, 
the licensee must follow the provisions of the Nationwide Programmatic 
Agreement Regarding the Section 106 National Historic Preservation Act 
Review Process.

C. Auction Specifics

i. Auction Date
    48. Bidding in Auction No. 66 will begin on Thursday, June 29, 
2006, as announced in the Auction No. 66 Comment Public Notice. The 
initial schedule for bidding will be announced by public notice at 
least one week before the start of the auction.
    49. Several commenters addressed the date on which bidding in 
Auction No. 66 will commence. Generally, commenters expressed support 
for commencing the auction on June 29, 2006. A few commenters, however, 
expressed concern about the start date.
    50. The Commission does not find sufficient cause to delay the 
start of Auction No. 66, and therefore, will commence the competitive 
bidding as scheduled, i.e., on June 29, 2006. The Commission agrees 
with the majority of the parties who commented on this issue that it is 
in the public interest to make AWS spectrum available as soon as it is 
both reasonable and consistent with CSEA. Therefore, the concerns 
raised by some about time needed to prepare for package bidding are 
moot. The Commission has decided to proceed with standard, single SMR 
auction for the AWS-1 licenses.
    51. Unless otherwise announced, bidding on all licenses will be 
conducted on each business day until bidding has stopped on all 
licenses.
ii. Auction Title
    52. Auction No. 66--Advanced Wireless Services (AWS-1)
iii. Bidding Methodology
    53. The bidding methodology for Auction No. 66 will be simultaneous 
multiple round bidding. The Commission will conduct this auction over 
the Internet using the FCC Auction System, and telephonic bidding will 
be available as well. Qualified bidders are permitted to bid 
electronically via the Internet or by telephone.
iv. Pre-Auction Dates and Deadlines
    54. Dates and Deadlines:
    Auction Seminar: April 24, 2006.
    Short-Form Application (FCC Form 175) Filing Window Opens: April 
24, 2006; 12 p.m. ET.
    Short-Form Application (FCC Form 175) Filing Window Deadline: May 
10, 2006; 6 p.m. ET.
    Upfront Payments (via wire transfer): June 1, 2006; 6 p.m. ET.
    Mock Auction: June 26, 2006.
    Auction Begins: June 29, 2006.
v. Requirements for Participation
    55. Those wishing to participate in the auction must: (a) Submit a 
short-form application (FCC Form 175) electronically prior to 6 p.m. 
Eastern Time (ET), May 10, 2006, following the electronic filing 
procedures set forth in Attachment D of the Auction No. 66 Procedures 
Public Notice; (b) submit a sufficient upfront payment and an FCC 
Remittance Advice Form (FCC Form 159) before 6 p.m. ET, June 1, 2006; 
and (c) comply with all provisions outlined in this Public Notice and 
applicable Commission rules.
vi. General Contact Information
    56. See Auction No. 66 Procedures Public Notice for General 
Contract information table.

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

    57. An application to participate in an FCC auction, referred to as 
a short-form application or FCC Form 175, provides information used in 
determining whether the applicant is legally, technically, and 
financially qualified to participate in Commission auctions for 
licenses or permits.
    58. Entities seeking licenses available in Auction No. 66 must file 
a short-form application electronically via the FCC Auction System 
before 6 p.m. ET on May 10, 2006, following the procedures prescribed 
in Attachment D of the Auction No. 66 Procedures Public Notice. If an 
applicant claims eligibility for a bidding credit, the information 
provided in its FCC Form 175 will be used in determining whether the 
applicant is eligible for the claimed bidding credit. Applicants bear 
full responsibility for submitting accurate, complete and timely short-
form applications. All applicants must certify on their short-form 
applications under penalty of perjury that they are legally, 
technically, financially and otherwise qualified to hold a license.
    59. An entity may not submit more than one short-form application 
for a single auction. In the event that a party submits multiple short-
form applications, only one application will be accepted for filing. 
Applicants also should note that submission of a short-form application 
constitutes a representation by the certifying official that he or she 
is an authorized representative of the applicant, that he or she has 
read the form's instructions and certifications, and that the contents 
of the application, its certifications, and any 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.

A. Preferences for Small Businesses and Others

i. Size Standards for Bidding Credits
    60. A bidding credit represents the amount by which a bidder's 
winning bid will be discounted. For Auction No. 66, bidding credits 
will be available to small businesses and very small businesses, and 
consortia thereof, as follows: (1) A bidder with attributed average 
annual gross revenues that exceed $15 million and do not exceed $40 
million for the preceding three years (small business) will receive a 
15 percent discount on its winning bid; (2) a bidder with attributed 
average annual gross revenues that do not exceed $15 million for the 
preceding three years (very small business) will receive a 25 percent 
discount on its winning bid.
    61. Bidding credits are not cumulative; a qualifying applicant 
receives either the 15 percent or 25 percent bidding credit on its 
winning bid, but not both.
    62. Every applicant that claims eligibility for a bidding credit as 
either a small business or a very small business, or a consortium of 
small businesses or very small businesses, will be required to provide 
information regarding revenues attributable to the applicant, its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests on its FCC Form 175 short-form application to 
establish that it satisfies the applicable eligibility requirement. 
Applicants considering claiming eligibility as a designated entity in 
Auction No. 66 should review carefully the recently released CSEA/Part 
1 Designated Entity FNPRM, 71 FR 6992, February 10, 2006. Applicants 
considering claiming eligibility as a designated entity in Auction No. 
66 should monitor further proceedings

[[Page 20678]]

pursuant to the CSEA/Part 1 Designated Entity FNPRM to assure their 
ability to comply with any changes to the designated entity rules that 
the Commission may adopt that are applicable to applicants in Auction 
No. 66.
ii. Tribal Lands Bidding Credit
    63. To encourage the growth of wireless services in federally 
recognized tribal lands the Commission has implemented a tribal land 
bidding credit. The Commission will award pro rata tribal lands bidding 
credits in the event that the sum of all net winning bids at the close 
of bidding, exclusive of tribal lands bidding credits, is not 
sufficient funds both to meet the reserve price and to award all 
eligible applicants full tribal lands bidding credits.
iii. Installment Payments
    64. Installment payment plans will not be available in Auction No. 
66.

B. License Selection

    65. In Auction No. 66, applicants must select the licenses on which 
they want to bid from the Eligible Licenses list. In Auction No. 66, 
FCC Form 175 will include a filtering mechanism that allows an 
applicant to filter the available licenses. The applicant will make 
selections for one or more of the filter criteria and the system will 
produce a list of licenses satisfying the specified criteria. The 
applicant may select all the licenses in the customized list or select 
individual licenses from the list. Applicants also will be able to 
select licenses from one customized list and then create additional 
customized lists to select additional licenses. There will be no 
opportunity to change license selection after the short-form filing 
deadline. It is critically important that an applicant confirm its 
license selections before submitting its short-form application because 
the FCC Auction System will not accept bids on licenses that an 
applicant has not selected on its FCC Form 175.

C. Disclosure of Bidding Arrangements

    66. Applicants will be required to identify in their short-form 
applications all parties with whom they have entered into any 
agreements, arrangements, or understandings of any kind relating to the 
licenses being auctioned, including any agreements relating to post-
auction market structure. Applicants also will be required to certify 
under penalty of perjury in their short-form applications that they 
have not entered and will not enter into any explicit or implicit 
agreements, arrangements or understandings of any kind with any 
parties, other than those identified in the application, regarding the 
amount of their bids, bidding strategies, or the particular licenses on 
which they will or will not bid. If an applicant has had discussions, 
but has not reached a joint bidding agreement by the short-form 
application filing deadline, it would not include the names of parties 
to the discussions on its application and may not continue such 
discussions with any applicants after the deadline.
    67. After the filing of short-form applications, the Commission's 
rules do not prohibit a party holding a non-controlling, attributable 
interest in one applicant from acquiring an ownership interest in or 
entering into a joint bidding arrangement with other applicants 
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 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. Further, as 
discussed above, compliance with the disclosure requirements of the 
Commission's anti-collusion rule will not insulate a party from 
enforcement of the antitrust laws.

D. Ownership Disclosure Requirements

    68. 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 the short-form application, applicants will be required to 
fully disclose information on the real party or parties-in-interest and 
ownership structure of the applicant.
    69. Applicants considering claiming eligibility as a designated 
entity in Auction No. 66 should review carefully and monitor the 
recently initiated rulemaking proceeding concerning the Commission's 
designated entity rules. The Commission also sought comment on whether 
to restrict the award of designated entity benefits where an otherwise 
qualified designated entity has a material relationship with a large 
entity that has a significant interest in communications services. The 
Commission stated that it intended any changes adopted in this 
proceeding to apply to AWS licenses to be offered in Auction No. 66. 
Depending upon the outcome of that proceeding, applicants may be 
required to disclose additional ownership information in order to 
comply with any changes to the designated entity rules that the 
Commission may adopt that are applicable to applicants in Auction No. 
66.
    70. Applicants are responsible for ensuring that the information 
submitted in their Form 175 for Auction No. 66 is complete and 
accurate. Accordingly, applicants should carefully review any 
information automatically entered to confirm that it is complete and 
accurate as of the deadline for filing the short-form application. 
Applicants can update any information that was entered automatically 
and needs to be changed directly in the short-form application.

E. Bidding Credit Revenue Disclosures

    71. To determine which applicants qualify for bidding credits as 
small businesses or very small businesses, the Commission considers the 
gross revenues of the applicant, its affiliates, its controlling 
interests, and the affiliates of its controlling interests. Therefore, 
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 their FCC Form 175 short-form applications the 
gross revenues of each of the following for the preceding three years: 
(1) The applicant, (2) its affiliates, (3) its controlling interests, 
and (4) the affiliates of its controlling interests. In order to comply 
with the Commission's disclosure requirements for bidding credit 
eligibility, an applicant must provide separately for itself, its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests, the gross revenues for each of the preceding 
three years. If the applicant is applying as a consortium of small 
businesses or very small businesses, this information must be provided 
for each consortium member.
    72. Applicants considering claiming eligibility as a designated 
entity in Auction No. 66 should review carefully the recently released 
CSEA/Part 1 Designated Entity FNPRM. Depending upon the outcome of that 
proceeding, applicants may be required to disclose additional 
information regarding gross revenues of related parties in order to 
comply with any changes to the designated entity rules that the 
Commission may adopt that are

[[Page 20679]]

applicable to applicants in Auction No. 66.
    73. Controlling interests of an applicant include individuals and 
entities with either de facto or de jure control of the applicant. 
Typically, ownership of at least 50.1 percent of an entity's voting 
stock evidences de jure control. De facto control is determined on a 
case-by-case basis.
    74. Officers and directors of an applicant are also considered to 
have controlling interest in the applicant. 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.
    75. Each member of a consortium of small or very small businesses 
that applies to participate in Auction No. 66 must individually meet 
the definition of small business or very small business adopted by the 
Commission for the Advanced Wireless Services. Each consortium member 
must disclose its gross revenues along with those of its affiliates, 
its controlling interests, and the affiliates of its controlling 
interests. Although the gross revenues of the consortium members will 
not be aggregated for purposes of determining the consortium's 
eligibility as a small business or very small business, this 
information must be provided to ensure that each individual consortium 
member qualifies for any bidding credit awarded to the consortium.

F. Provisions Regarding Former and Current Defaulters

    76. Each applicant must state under penalty of perjury on its 
short-form application whether or not the applicant, its affiliates, 
its controlling interests, and 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. In addition, each applicant must certify 
under penalty of perjury on its short-form application that as of the 
short-form filing deadline, the applicant, its affiliates, its 
controlling interests, 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 that they are not 
delinquent on any non-tax debt owed to any Federal agency. Prospective 
applicants are reminded that submission of a false certification to the 
Commission is a serious matter that may result in severe penalties, 
including monetary forfeitures, license revocations, exclusion from 
participation in future auctions, and/or criminal prosecution.
    77. Former defaulters, i.e., applicants, including any of their 
affiliates, any of their controlling interests, or any of the 
affiliates of its controlling interests, 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. 66, provided that they are otherwise 
qualified.
    78. Current defaulters, i.e., applicants, including any of their 
affiliates, any of their controlling interests, or any of the 
affiliates of their controlling interests, that are in default on any 
payment for any Commission licenses (including down payments) or are 
delinquent on any non-tax debt owed to any Federal agency as of the 
filing deadline for applications to participate in this auction--are 
not eligible to bid in Auction No. 66.
    79. Applicants are encouraged to review the Commission's previous 
guidance on default and delinquency disclosure requirements in the 
context of the short-form application process. Therefore, with respect 
to regulatory or application fees, the provisions of Sec. Sec.  
1.2105(a) and 1.2106(a) regarding default and delinquency in connection 
with competitive bidding are limited to circumstances in which the 
relevant party has not complied with a final Commission payment 
deadline.
    80. The Commission considers outstanding debts owed to the United 
States Government, in any amount, to be a serious matter. The 
Commission adopted rules, including a provision referred to as the red 
light rule, that implement the Commission's obligations under the Debt 
Collection Improvement Act of 1996, which governs the collection of 
claims owed to the United States. Under the red light rule, the 
Commission will not process applications and other requests for 
benefits filed by parties that have outstanding debts owed to the 
Commission. In the same rulemaking order, the Commission explicitly 
declared, however, that the Commission's competitive bidding rules are 
not affected by the red light rule. As a consequence, the Commission's 
adoption of the red light rule does not alter the applicability of any 
of the Commission's competitive bidding rules, including the provisions 
and certifications of Sec. Sec.  1.2105 and 1.2106, with regard to 
current and former defaults or delinquencies. Applicants are reminded, 
however, that the Commission's Red Light Display System, which provides 
information regarding debts owed to the Commission, may not be 
determinative of an auction applicant's ability to comply with the 
default and delinquency disclosure requirements of Sec.  1.2105. Thus, 
while the red light rule ultimately may prevent the processing of long-
form applications by auction winners, an auction applicant's red light 
status is not necessarily determinative of its eligibility to 
participate in this auction or of its upfront payment obligation.
    81. Prospective applicants in Auction No. 66 should note that any 
long-form applications filed after the close of competitive bidding 
will be reviewed for compliance with the Commission's red light rule, 
and such review may result in the dismissal of a winning bidder's long-
form application.

G. Other Information

    82. Applicants owned by member of minority groups and/or women, as 
defined in Sec.  1.2110(c)(3), may identify themselves in filling out 
their short-form applications 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.

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

    83. After the deadline for filing short-form applications (FCC 
Forms 175) at 6 p.m. ET on May 10, 2006, applicants are permitted to 
make only minor changes to their applications. Applicants are not 
permitted to make major modifications to their applications (e.g., 
change their license selections, change control of the applicant, or 
claim eligibility for a higher bidding credit).
    84. Any application amendment and related statements of fact must 
be certified by: (1) The applicant, if the applicant is an individual, 
(2) one of the partners if the applicant is a partnership, (3) an 
officer, director, or duly authorized employee, if the applicant is a 
corporation, (4) by a member who is an officer, if the applicant is an 
unincorporated association, (5) the trustee if the applicant is an 
amateur radio service club, or (6) a duly elected or appointed official 
who is authorized to make such certifications under the laws of the 
applicable jurisdiction, if the applicant is a governmental entity.
    85. An applicant must make permissible minor changes to its short-
form application as such changes are

[[Page 20680]]

defined by Sec.  1.2105(b), on-line. In addition, in the event that 
changes cannot be made immediately in ISAS for any reason, an applicant 
should submit a letter briefly summarizing the changes and subsequently 
update their short-form applications in ISAS as soon as possible. Any 
letter describing changes to applicant's short-form application should 
be submitted by electronic mail to the following address: 
[email protected].
    86. Applicants should not submit application-specific material 
through the Commission's Electronic Comment Filing System (ECFS), which 
was used for submitting comments regarding Auction No. 66 procedures.

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

    87. 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. Changes that cause a loss of or reduction in eligibility 
for a bidding credit must be reported immediately. If an amendment 
reporting substantial changes is a major amendment as defined by 47 CFR 
1.2105, the major amendment will not be accepted and may result in the 
dismissal of the short-form application.
    88. In the event that the new rules regarding applicants and 
applications become effective after the deadline for filing short-form 
applications (FCC Form 175), applicants may be required to submit 
additional information not required in the initial form. In this 
regard, applicants considering claiming eligibility as a designated 
entity in Auction No. 66 should review carefully the recently released 
CSEA/Part 1 Designated Entity FNPRM. The Commission stated in the CSEA/
Part 1 Designated Entity FNPRM that it intends to complete that 
proceeding in time so that any resulting rule modifications will apply 
to Auction No. 66. Moreover, the Commission proposed that in the event 
that any designated entity applicants have filed an application to 
participate in an auction prior to the effective date of any designated 
entity rule changes adopted pursuant to the CSEA/Part 1 Designated 
Entity FNPRM, such applicants would be required to amend their 
applications on or after the effective date of the rule changes with a 
statement declaring, under penalty of perjury, that the applicant is 
qualified as a designated entity pursuant to Sec.  1.2110 of the 
Commission's rules effective as of the date of the statement. Finally, 
the Commission noted that under this proposal the Bureau will establish 
any detailed procedures necessary for making required amendments and 
announce such procedures by public notice. Accordingly, applicants 
considering claiming eligibility as a designated entity in Auction No. 
66 should monitor further proceedings pursuant to the CSEA/Part 1 
Designated Entity FNPRM.

III. Pre-Auction Procedures

A. Auction Seminar--April 24, 2006

    89. On Monday, April 24, 2006, the FCC will sponsor a seminar for 
parties interested in participating in Auction No. 66 at the FCC 
headquarters, located at 445 12th Street, SW., Washington, DC. For 
individuals who are unable to attend, an Audio/Video webcast of this 
seminar will be available from the FCC's Auction No. 66 Web page.
    90. To register, complete the registration form Attachment C of the 
Auction No. 66 Procedures Public Notice and submit it by Thursday, 
April 20, 2006. Registrations are accepted on a first-come, first-
served basis.

B. Short-Form Application (FCC Form 175)--Due Before 6:00 p.m. ET on 
May 10, 2006

    91. In order to be eligible to bid in this auction, applicants must 
first submit an FCC Form 175 application electronically via the FCC 
Auction System. This application must be received at the Commission 
prior to 6 p.m. ET on May 10, 2006. Late applications will not be 
accepted. There is no application fee required when filing an FCC Form 
175. However, to be eligible to bid, an applicant must submit an 
upfront payment.
    92. Applications may generally be filed at any time beginning at 
noon ET on April 24, 2006, until 6 p.m. ET on May 10, 2006. Applicants 
are strongly encouraged to file early and are responsible for allowing 
adequate time for filing their applications. Applicants may update or 
amend their applications multiple times until the filing deadline on 
May 10, 2006. Information about accessing, completing, and viewing the 
FCC Form 175 is included in Attachment D of the Auction No. 66 
Procedures Public Notice.

C. Application Processing and Minor Corrections

    93. 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: (1) Those applications accepted for 
filing; (2) those applications rejected; and (3) those applications 
which have minor defects that may be corrected, and the deadline for 
resubmitting corrected applications.

D. Upfront Payments--Due June 1, 2006

    94. 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 sent by facsimile to Mellon Bank in Pittsburgh, PA. All upfront 
payments must be received in the proper account at Mellon Bank before 6 
p.m. ET on June 1, 2006.
i. Making Auction Payments by Wire Transfer
    95. Wire transfer payments must be received before 6 p.m. ET on 
June 1, 2006. To avoid untimely payments, applicants should discuss 
arrangements (including bank closing schedules) with their banker 
several days before they plan to make the wire transfer, and allow 
sufficient time for the transfer to be initiated and completed before 
the deadline.
    96. At least one hour before placing the order for the wire 
transfer (but on the same business day), applicants must send by 
facsimile a completed FCC Form 159 (Revised 2/03) to Mellon Bank at 
(412) 209-6045. On the cover sheet of the facsimile, write Wire 
Transfer--Auction Payment for Auction No. 66. In order to meet the 
Commission's upfront payment deadline, an applicant's payment must be 
credited to the Commission's account before the deadline.
    97. Please note that: (a) All payments must be made in U.S. 
dollars; (b) All payments must be made by wire transfer; (c) upfront 
payments for Auction No. 66 go to a lockbox number different from the 
lockboxes used in previous FCC auctions, and different from the lockbox 
number to be used for post-auction payments and (d) failure to deliver 
the upfront payment by the June 1, 2006, deadline will result in 
dismissal of the application and disqualification from participation in 
the auction.
ii. FCC Form 159
    98. A completed FCC Remittance Advice Form (FCC Form 159, Revised 
2/03) must be faxed to Mellon Bank to accompany each upfront payment. 
Proper completion of FCC Form 159

[[Page 20681]]

(Revised 2/03) is critical to ensuring correct crediting of upfront 
payments. Detailed instructions for completion of FCC Form 159 are 
included in Attachment E of the Auction No. 66 Procedures Public 
Notice. An electronic pre-filled version of the FCC Form 159 is 
available after submitting the FCC Form 175. The FCC Form 159 can be 
completed electronically, but must be filed with Mellon Bank via 
facsimile.
iii. Upfront Payments and Bidding Eligibility
    99. 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 applicants that are former defaulters 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 47 CFR 1.2110 of 
the Commission's rules.
    100. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed that the amount of the upfront payment would determine a 
bidder's initial bidding eligibility, the maximum number of bidding 
units on which a bidder may place bids. In order to bid on a license, 
otherwise qualified bidders that selected that license on Form 175 must 
have a current 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 selected on its 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 the applicant selected on its 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 
provisionally winning bids at any given time.
    101. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed to calculate upfront payments for Auction No. 66 on a license-
by-license basis using the following formula:
    $0.05 * MHz * License Area Population.
    The Bureau set forth the specific upfront payments and bidding 
units for each license in Attachment A of the Auction No. 66 Comment 
Public Notice and sought comment on the proposal.
    102. Commenters presented a number of views on the proposed level 
of upfront payments. Some comments support the proposed upfront 
payments. Others argue for lowering upfront payments for specific 
licenses, usually either for all CMA licenses (Metropolitan Statistical 
Service Areas (MSAs) and Rural Service Areas (RSAs)) or only for the 
rural RSA licenses. Other comments propose lowering upfront payments 
for bidders that qualify as designated entities or replacing the 
upfront payment proposal with a straight percentage deposit.
    103. Upfront payments help deter frivolous or insincere bidding. In 
addition, upfront payments provide the Commission with a source of 
funds in the event that the bidder incurs liability during the auction. 
Applicants must make upfront payments sufficient to obtain bidding 
eligibility on the licenses on which they will bid.
    104. In connection with minimum opening bids, the Commission is 
persuaded by the arguments of numerous commenters that for Auction No. 
66, the formula to determine upfront payments and minimum opening bids 
should not apply the same figure to a rural population unit as it does 
to an urban population unit. Commenters assert that because of higher 
buildout costs, upfront payments and minimum opening bids for less 
densely populated areas should be calculated at a lower rate than those 
for higher density areas. More specifically, many commenters contend 
that upfront payments on licenses covering RSAs should be lowered from 
$0.05 per MHz*Pop to $0.01, 0.02, or 0.025 per MHz*Pop.
    105. The Commission will reduce upfront payments for RSA licenses 
by forty percent (40%) from the initial proposal, i.e., to $0.03 per 
MHz*Pop. While some commenters argue for an even greater reduction, the 
Commission is not persuaded that it should lower upfront payments any 
further. With respect to licenses for the more densely populated MSAs, 
the Commission will not reduce the proposed upfront payments. The 
Commission adopts the initial proposal with respect to such licenses 
and set the upfront payments for MSAs using the proposed formula, i.e., 
$0.05 per MHz*Pop.
    106. The Commission also will lower the number of bidding units 
associated with the RSA licenses by 40%, in order to maintain the one-
to-one relationship between bidding units and upfront payment amounts. 
The number of bidding units associated with the MSA licenses will 
remain unchanged since the upfront payment amounts for those licenses 
are unchanged.
    107. In order to take into account that rural and urban populations 
are mixed within a single license in the larger geographic licensing 
areas, the Commission will apply the lower upfront payment formula for 
rural areas on a county-by-county basis for all licenses. More 
specifically, the Commission will first break down the larger 
geographic areas into their component counties. The lower upfront 
payment formula of $0.03 per MHz*Pop will be applied to the population 
of those counties that are included in an RSA. The formula of $0.05 per 
MHz*Pop will be applied to the population of the remaining counties. 
The upfront payment amount for an EA or REAG license will be calculated 
as the sum of upfront payments for the counties in the EA or REAG. The 
Commission will maintain the one-to-one relationship between bidding 
units and upfront payment amounts, so that bidding unit amounts will 
change with the changes in upfront payments.
    108. The Commission is not persuaded by comments proposing that the 
Commission alter its upfront payment proposal in other ways. A 
commenter argues that designated entities should be able to make lower 
upfront payments than other bidders. In light of the purpose of the 
upfront payments, the Commission does not believe a different upfront 
payment for designated entities is appropriate. Finally, another 
commenter suggests that the Commission forego its usual procedure of 
determining upfront payments and bidding eligibility and replace it 
with a requirement that bidders have a certain percentage of their bids 
on deposit with the Commission. The Commission believes, however, that 
the use of upfront payments in connection with bidding eligibility in 
past auctions has been successful and no radical departure is needed.
    109. The specific upfront payment amounts and associated bidding 
units for each license available in Auction No. 66 calculated pursuant 
to the procedures as well as the aggregate reserve price for all AWS-1 
licenses, are set forth in Attachment A of the Auction No. 66 
Procedures Public Notice.
    110. In calculating its upfront payment amount, an applicant should 
determine the maximum number of bidding units on which it may wish to 
be active (bid on or hold provisionally winning bids on) in any single 
round, and submit an upfront payment amount covering that number of 
bidding units.

[[Page 20682]]

In order to make this calculation, an applicant should add together the 
upfront payments for all licenses on which it seeks to be active in any 
given round. Applicants should check their calculations carefully, as 
there is no provision for increasing a bidder's eligibility after the 
upfront payment deadline.
    111. Former defaulters should calculate their upfront payment for 
all licenses by multiplying the number of bidding units on which they 
wish to be active 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. If a former defaulter fails to submit a sufficient 
upfront payment to establish eligibility to bid on at least one of the 
licenses applied for on its Form 175, the applicant will not be 
eligible to participate in the auction.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    112. The Commission will use wire transfers for all Auction No. 66 
refunds. To ensure that refunds of upfront payments are processed in an 
expeditious manner, the Commission is requesting that all pertinent 
information listed below be supplied to the FCC. Applicants can provide 
the information electronically during the initial short-form filing 
window after the form has been submitted.

E. Auction Registration

    113. 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.
    114. All qualified bidders are automatically registered for the 
auction. Registration materials will be distributed prior to the 
auction by overnight mail. The mailing will be sent only to the contact 
person at the contact address listed in the FCC Form 175 and will 
include the SecurID[reg] cards that will be required to place bids, the 
Integrated Spectrum Auction System (ISAS) Bidder's Guide, and the 
Auction Bidder Line phone number.
    115. Qualified bidders that do not receive this registration 
mailing will not be able to submit bids. Therefore, any qualified 
bidder that has not received this mailing by noon on Thursday, June 22, 
2006, should call (717) 338-2868. Receipt of this registration mailing 
is critical to participating in the auction, and each applicant is 
responsible for ensuring it has received all of the registration 
material.
    116. In the event that SecurID[supreg] cards are lost or damaged, 
only a person who has been designated as an authorized bidder, the 
contact person, or the certifying official on the applicant's short-
form application may request replacement registration material. 
Qualified bidders requiring the replacement of these items must call 
Technical Support.

F. Remote Electronic Bidding

    117. The Commission will conduct this auction over the Internet, 
and telephonic bidding will be available as well. Qualified bidders are 
permitted to bid electronically and telephonically. 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[supreg] 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[supreg] cards, the 
telephonic bidding phone number, and the Integrated Spectrum Auction 
System (ISAS) Bidder's Guide are only mailed to the contact person at 
the contact address listed on the FCC Form 175. Please note that each 
SecurID[supreg] card is tailored to a specific auction; therefore, 
SecurID[supreg] cards issued for other auctions or obtained from a 
source other than the FCC will not work for Auction No. 66.

G. Mock Auction--June 26, 2006

    118. All qualified bidders will be eligible to participate in a 
mock auction on Monday, June 26, 2006. The mock auction will enable 
applicants to become familiar with the FCC Auction System prior to the 
auction. Participation by all bidders is strongly recommended. Details 
will be announced by public notice.

IV. Auction Event

    119. The first round of bidding for Auction No. 66 will begin on 
Thursday, June 29, 2006. The initial bidding schedule will be announced 
in a public notice listing the qualified bidders, which is to be 
released approximately 10 days before the start of the auction.

A. Auction Structure

i. Simultaneous Multiple Round Auction
    120. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed to auction all AWS-1 licenses in a single auction using the 
Commission's standard simultaneous multiple-round (SMR) auction format. 
This type of auction offers every license for bid at the same time and 
consists of successive bidding rounds in which eligible bidders may 
place bids on individual licenses. A bidder may bid on, and potentially 
win, any number of licenses. Typically, bidding remains open on all 
licenses until bidding stops on every license, unless a modified 
stopping rule is invoked.
    121. The Bureau also sought comment on the feasibility and 
desirability of allocating the AWS-1 licenses among two auctions, run 
concurrently, with one of the auctions using the standard SMR format 
and the other using the FCC's package bidding format (SMR-PB). Under 
the SMR-PB format, bidders can place bids on groups of licenses they 
wish to win in combination, with the result that they win either all of 
the licenses in a group or none of them, in contrast to the license-by-
license bidding in the FCC's SMR format. In the SMR-PB auction format, 
each bidder can have at most a single winning bid, so that in order to 
win any particular license combination, the bidder must have placed a 
package bid on that license or specific group of licenses.
    122. Based on the record and the Commission's belief that a single 
SMR auction offers bidders a simple and effective means of bidding on 
single or multiple licenses without the additional complications that 
participating in two concurrent auctions would involve, the Commission 
will proceed with its proposal to auction all AWS-1 licenses in a 
single auction using the Commission's standard SMR auction format.
    123. Nearly all of the parties commenting on the issue of auction 
format support its proposal for one SMR auction for AWS-1. While some 
express concern or opposition to using package bidding generally, 
nearly all commenters oppose the option of running a package bidding 
auction concurrently with an SMR auction. Those concerned with the 
complexity in bidding in two auctions at the same time stress 
difficulty in managing eligibility between the two, submitting upfront 
payments to participate in both, and keeping track of bidding among the 
auctions. The complexity level increases further given that the two 
concurrent

[[Page 20683]]

auctions would have different auction designs.
    124. A number of commenters express concern that smaller bidders, 
including rural carriers and new entrants, would be hardest hit by the 
increased complexity of two concurrent auctions and package bidding. 
Some commenters raise the possibility that an auction using a package 
bidding format, due to the so-called threshold problem, may not assign 
licenses to the entities that value them most highly. Only two 
commenters favor allocating some AWS-1 licenses to a second auction 
with package bidding. A commenter suggests that package bidding would 
allow bidders to aggregate licenses more efficiently in order to 
acquire a nationwide footprint. The Commission agrees with those 
commenters who assert that an SMR auction of the AWS-1 licenses, which 
includes several large regional area blocks, will provide opportunities 
for bidders to aggregate licenses in order to obtain nationwide 
coverage.
    125. While a commenter supports package bidding for the E and F 
Block AWS-1 licenses, it advocates that the auctions be run 
sequentially, not concurrently. In particular, the commenter suggests 
that the Commission run the SMR auction for A to D Blocks first using 
the standard SMR auction, followed shortly by an auction for the E and 
F blocks, allowing for package bidding. Comments filed jointly agree in 
principle with sequential auctions, but specifically advocate the 
reverse order--i.e., run the SMR-PB auction before the standard SMR 
one.
    126. The Commission finds the choice of sequential auctions 
undesirable in these circumstances. First, it eliminates flexibility 
for the bidders, as the results from the first auction will stand 
regardless of how the second auction plays out. Second, the AWS-1 
licenses are subject to the CSEA aggregate reserve. Determining whether 
this is met is made much more difficult if two sequential auctions are 
held.
    127. The Commission concludes that it is operationally feasible and 
appropriate to auction the AWS-1 licenses through a single auction 
using the Commission's standard SMR auction format. Unless otherwise 
announced, bids will be accepted on all licenses in each round of the 
auction until bidding stops on every license. This approach, the 
Commission believes, allows bidders to take advantage of synergies that 
exist among licenses and is administratively efficient.
    128. The Commission's decision not to employ an SMR-PB format for 
some AWS-1 licenses does not reflect on future use of package bidding 
in Commission auctions.
ii. Information Available to Bidders Before and During the Auction
    129. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed to withhold certain information on bidder interests, bids and 
bidder identities that typically has been revealed prior to and during 
past FCC auctions, in the event that a single SMR auction is held. In 
particular, the Bureau proposed not to reveal until the close of the 
auction: (1) Bidders' license selections on their short form 
applications and the amount of their upfront payments; (2) the amounts 
of non-provisionally winning bids and the identities of bidders placing 
those bids; and (3) the identities of bidders making provisionally 
winning bids.
    130. The proposal attracted a number of comments, both in support 
of the Bureau's proposal and opposed to it. The Commission believes, as 
the Bureau noted in the Auction No. 66 Comment Public Notice, that 
there are benefits as well as potential harms from publicly revealing 
all information during the auction process. Also as stated in the 
Auction No. 66 Comment Public Notice, the Commission believes that the 
potential harms from anti-competitive behavior facilitated by the 
release of extensive information relating to bidder interests, bids, 
and bidder identities is likely to be greater when the auction is less 
competitive--that is, when the number of bidders and the level of 
upfront payments are relatively low compared to the number of licenses 
offered. Therefore, in balancing the likely disadvantages of making 
such information available with the potential advantages to bidders 
from being able to formulate more accurate assessments of license 
values, the Commission will make its approach contingent on the likely 
competitiveness of the auction. If the Commission determines that the 
auction is likely to be highly competitive based on the number of 
bidders and upfront payments, and therefore, that the risk of 
successful collusion is low, the Commission will make available bidding 
information that the Commission typically have made available in 
previous Commission auctions. If, on the other hand, it appears that 
the auction may be less competitive, making it easier for bidders to 
signal and enforce cooperative divisions of the market, the Commission 
will limit the information relating to bids and bidder identities in a 
manner that is largely consistent with its proposal in the Auction No. 
66 Comment Public Notice. In this way, unless it appears that the costs 
to providing information is likely to be particularly high, the 
Commission will provide bidders with information that may enhance their 
abilities to participate confidently and effectively in the auction.
    131. The Commission will estimate the level of competition in the 
auction by calculating a modified eligibility ratio based on upfront 
payments submitted by bidders. Using this estimate, the Commisssion 
will determine the information procedures that will apply during 
bidding rounds. Specifically, if a modified eligibility ratio, defined 
as the total number of bidding units of eligibility purchased by 
bidders, relative to the total number of bidding units for the licenses 
in the auction, is equal to at least three, the auction will proceed 
under the information procedures typically used for past FCC auctions. 
For the purposes of calculating the modified eligibility ratio, a 
single bidder's eligibility will be capped at 50% of the total bidding 
units in the auction.
    132. Alternatively, if the level of competition appears 
insufficient, that is if the modified eligibility ratio is less than 
three, the Commission will limit the information that is released prior 
to and during the auction in a way that is substantially consistent 
with, but not identical to its proposal in the Auction No. 66 Comment 
Public Notice. The Commission will make available the total eligibility 
level for the auction as well as bidder-specific eligibility, although 
the Commission will not identify bidders' license selections. After 
each round of bidding, the amounts of each bid placed will be made 
available, but not the identities of the bidders. Under the the 
original proposal, for each license only the amounts of the 
provisionally winning bids and the number of bids on the license, not 
the amounts of non-provisionally winning bids, were to have been made 
available.
    133. Discussion. As stated in the Auction No. 66 Comment Public 
Notice, the Commission has reserved the option to limit the 
availability of information on an auction-by-auction basis, and the 
Bureau retains discretion to limit the information disclosed to 
bidders. With a single early exception, the Commission has elected not 
to limit such information. Notwithstanding past decisions, the 
Commission believes that the public interest will best be served by 
limiting certain information relating to bidder interests, bids, and 
bidder identities in Auction No. 66, when it appears that the 
competitiveness of the auction is likely to be relatively low, as

[[Page 20684]]

measured by the modified eligibility ratio.
    134. This decision to make the availability of information 
contingent upon competitiveness is supported by a number of commenters. 
The notion of using a measure of likely competitiveness to determine 
how much information would be made available was first proposed by a 
commenter. Subsequently, other commenters have voiced support for 
compromise proposals that involve, among other criteria, basing the 
decision on information availability on a similar measure of total 
eligibility.
    135. A number of commenters oppose the proposal to withhold certain 
information for the AWS-1 licenses, challenging the need to undertake 
measures to deter anti-competitive behavior in FCC auctions generally, 
and in particular, they question making changes to an established 
auction process immediately prior to a large auction of licenses 
suitable for high-valued uses. Some commenters note that the Commission 
has already modified its auction design to deter signaling, and claim 
that there is little or no evidence of coordinated bidding behavior in 
recent auctions.
    136. In response, the Commission notes that it is in large part 
because the upcoming AWS-1 auction will make available a significant 
number of potentially valuable licenses that the Commission will modify 
its usual bid and bidder information procedures at this time, if it 
appears that the auction may not be sufficiently competitive. With 
fewer bidders, the chances are greater that signaling and retaliatory 
behavior will be successful, with the result that licenses may not be 
assigned to the entities that value them most highly. The AWS-1 
licenses open up a new band to commercial wireless services, and 
represent a sizeable portion of existing spectrum available for 
innovative wireless services. Licensees will have considerable 
flexibility to respond to consumer demand for innovative advanced 
services, and the Commission feels particularly obligated to assure 
that these licenses are assigned to those entities that will put them 
to their highest valued uses.
    137. With respect to arguments that the Commission has already 
eliminated the possibility of bid signaling and has no evidence on 
which to base its beliefs that such behavior may occur in Auction No. 
66, the Commission notes that at least two papers mentioned in this 
proceeding rely on signaling consistent with the Commission's current 
standard SMR auction format. Furthermore, since some types of signaling 
and coordinated bidding are very hard to detect in auction data, making 
it difficult to pursue enforcement actions after such alleged activity 
has occurred, it is important to reduce the potential for such 
collusive bidding behavior to occur in the first place, in 
circumstances in which the Commission believes collusion is most likely 
to occur.
    138. At the same time, the Commission recognizes that the 
information that has typically been provided during FCC auctions may be 
of value in helping bidders to form more accurate and confident 
assessments of license values, thus allowing them to participate more 
effectively in the auction. The Commission believes that, under 
circumstances in which collusion is less likely to be successful, the 
benefits to bidders from making information available are likely to 
outweigh the potential harms from facilitating collusive behavior. As a 
result, the Commission will not adopt its proposal to limit information 
when the auction is expected to be competitive as indicated by the 
modified eligibility ratio of three or more--that is, when coordinated 
bidding activity is unlikely to be sustainable.
    139. A number of commenters addressed the various benefits that 
information provides to bidders, especially to bidders with fewer 
resources, including many new entrants and rural carriers. In 
particular, these commenters suggest that knowing the identities of 
bidders active in particular markets yields useful data on such factors 
as the potential for negotiating roaming agreements; on the likelihood 
that infrastructure and equipment for certain technologies will be 
available; and on whether the structure of competition in a given 
market is likely to support the bidder's business plan. Some of the 
commenters also claim that the uncertainty inherent in opening up a new 
spectrum band for as yet unknown services and technologies makes it all 
the more useful to participants to have such information as may be 
available, including round-by-round information on bids and bidders 
identities.
    140. Some commenters opposing the proposal to withhold information 
state that the advantages gained by knowing bidder identities are 
particularly important to small and mid-sized entities and to new 
entrants and that consequently, they argue, limiting bid and bidder 
information will disadvantage those bidders disproportionately. 
Specifically, commenters suggest that smaller businesses rely more 
heavily on the need to negotiate agreements with neighboring service 
providers and therefore have a greater interest in knowing who adjacent 
licensees are likely to be. Some point out that niche service 
providers, and their financial backers, are particularly interested in 
knowing whether another entity targeting the same demographic 
population is likely to be competing in a given market. In addition, 
commenters say that financial backers of smaller firms trust that a bid 
by a market leader reflects a well-researched valuation and are more 
likely to be comfortable investing in a smaller entity if the smaller 
firm's bids are not out of line with those of the large entities. 
Accordingly, they claim, if investors do not have the reassurance of 
knowing how the large bidders are bidding, the additional risk will 
reduce the amount of capital they are willing to lend and, 
consequently, reduce what smaller firms are able to bid for and win at 
auction.
    141. Commenters also suggest that the additional uncertainty about 
the value of licenses introduced by the lack of information on bidder 
identities will increase bidders' fear of the winners curse, leading 
them to bid below their valuations for the licenses. Some assert that 
those most affected by the uncertainty will scale back their bids more 
than proportionately and that therefore, small bidders may fail to win 
licenses for which they are the highest valuing bidder, thereby 
lowering auction efficiency.
    142. The costs to releasing information as some commenters request, 
however, likely will outweigh the potential advantages of releasing the 
information, if the level of competition in the auction seems 
insufficient to make cooperative divisions of the market difficult to 
signal and sustain. Accordingly, if the auction is not sufficiently 
competitive as indicated by the modified eligibility ratio, the 
Commission will not provide the information, notwithstanding any 
potential benefits doing so might provide to some bidders.
    143. Parties opposing the proposal to limit information point out a 
number of other factors which the Commission also does not regard as 
sufficient to dissuade it from its decision to limit the information 
that will be made available if the modified eligibility ratio is below 
three for Auction No. 66. Some commenters warn that deliberate and 
inadvertent disclosures of information may represent a threat to the 
validity of the auction. The Commission does not believe that 
significant disclosures are

[[Page 20685]]

likely to occur, in part because revealing bids or bid strategies 
violates the Commission's anti-collusion rules, and in part because 
bidders will regard it as being in their interest to preserve the 
secrecy of their bidding activity. Furthermore, if an occasional 
disclosure does occur, the Commission does not believe the auction is 
likely to be affected in a way which will compromise its validity. With 
respect to bidding data, much of the data that is generated after a 
round of a large SMR auction is superseded by data for the next round, 
so that the advantage to a bidder from knowing improperly disclosed 
information is likely to disappear within several hours.
    144. Several commenters suggest that a policy of limiting 
information relating to bidder interests prior to the auction, and 
limiting bidder identities during the auction constitutes a departure 
from the Commission's traditional commitment to a transparent auction 
process. The Commission disagrees. As discussed in the Auction No. 66 
Comment Public Notice, the Commission plans to release all withheld 
information at the close of the auction. Bidders and the public will be 
able to examine all round-by-round bidding activity, and any 
allegations of irregular bidding conduct will be investigated. The 
Commission notes that, even when bid and bidder information is not 
withheld, it is its policy generally to address any such concerns after 
the close of an auction, when there is greater opportunity for 
investigation of such allegations.
    145. Commenters present various arguments regarding what 
information should be released and when, in the event that the 
Commission limits the information revealed in any way, as will be the 
case if the modified eligibility ratio is less than three. Some argue 
that particular information should be released, while others argue that 
the Commission should release all information but do so only at 
intervals. While these proposals may achieve some benefits by 
disclosing information, the Commission is not persuaded any of them 
would be effective in preventing coordinated and retaliatory bidding, 
especially when competition in the auction is relatively weak, e.g., 
the modified eligibility ratio is less than three, and, therefore, the 
risk of collusion is greatest.
    146. The Commission notes again that even if the limited 
information procedures are in effect, it plans to make available during 
the auction the amounts of all bids placed on each license in each 
round. Even absent bidder identities, this information will give 
bidders an indication of demand for the licenses. Bidders and their 
investors will be able to observe the bids for licenses in the six 
offered spectrum blocks, which will help them assess whether their bids 
are likely to be consistent with the valuations of other bidders. This 
information will reduce uncertainty about license valuations, 
mitigating fear of the winner's curse for bidders and their financial 
backers.
    147. Other Issues. The Commission does not believe that the 
information disclosure procedures established for this auction will 
interfere with the administration of or compliance with the 
Commission's anti-collusion rule. Sec.  1.2105(c)(1) of the 
Commission's rules provides that after the short-form application 
filing deadline, all applicants for licenses in any of the same 
geographic license areas are prohibited from disclosing to each other 
in any manner the substance of bids or bidding strategies until after 
the down payment deadline, subject to specified exceptions. In past 
auctions, each applicant's selection of licenses has been publicly 
available through the Commission's on-line short-form application 
database. In Auction No. 66, however, the Commission may not disclose 
information regarding license selection until after the auction closes. 
As in the past, the Commission will disclose the other portions of 
applicants' short-form applications, through its on-line database and 
certain application-based information through public notices. Thus, 
even without information regarding license selection, applicants would 
be able to comply with Sec.  1.2105(c) by not disclosing bids or 
bidding strategies to any other applicants in the auction. This 
approach, however, could inhibit otherwise lawful communications with 
applicants for licenses in other geographic license areas, which the 
Commission's rule permits. Consequently, the Commission will notify 
separately each applicant with short-form applications to participate 
in a pending auction, including but not limited to Auction No. 66, 
whether applicants in Auction No. 66 have applied for licenses in any 
of the same geographic areas as that applicant. After the Commission 
conducts its initial review of applications to participate in Auction 
No. 66, each applicant with a short-form application to participate in 
a pending auction will receive a letter that lists the applicants in 
Auction No. 66 that have applied for licenses in any of the same 
geographic areas as the applicant. The list will identify the Auction 
No. 66 applicant(s) by name but will not list the license selections of 
the Auction No. 66 applicant(s). As in past auctions, additional 
information regarding applicants in Auction No. 66 that is needed to 
comply with Sec.  1.2105(c), e.g., the identities of controlling 
interest in the applicant and ownership interests greater than ten 
percent (10%), will be available through the publicly accessible on-
line short-form application database.
    148. Finally, the Commission does not agree with commenters that 
suggest that SEC rules requiring bidders to disclose material financial 
information might require bidders to disclose bidding information 
during the auction. Until the SEC addresses the issue, the Commission 
will not presume that SEC rules require public disclosure of 
information about bidding while an auction is still underway.
iii. Eligibility and Activity Rules
    149. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed that the amount of the upfront payment submitted by a bidder 
would determine the initial (maximum) eligibility (as measured in 
bidding units) for each bidder. One commenter suggested that the 
Commission eliminate the use of bidding units. A commenter suggests 
that the Commission define a bidder's eligibility simply as a multiple 
of the amount the bidder places on deposit with the Commission. This 
proposal ignores the Commission's use of bidding units to measure 
bidder participation in the auction pursuant to the Commission's 
activity rules. The Commission uses activity rules to move the auction 
at an appropriate speed while providing sufficient flexibility to 
permit bidders to pursue a wide range of alternative bidding 
strategies. The Commission believes its activity rules serve an 
important purpose and decline to adopt the suggestion of the commenter, 
which would undermine those rules.
    150. Accordingly, the Commission adopts the proposed use of upfront 
payments to determine initial (maximum) eligibility (as measured in 
bidding units) for Auction No. 66. The amount of the upfront payment 
submitted by a bidder determines initial bidding eligibility, the 
maximum number of bidding units on which a bidder may be active. Each 
license is assigned a specific number of bidding units equal to the 
upfront payment listed in Attachment A of the Auction No. 66 Procedures 
Public Notice on a bidding unit per dollar basis. Bidding units for a 
given license do not change as prices rise during the auction. A 
bidder's upfront payment is not attributed to specific licenses. 
Rather, a

[[Page 20686]]

bidder may place bids on any of the licenses selected on its FCC Form 
175 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; it can only remain the same or decrease. 
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 provisionally winning bids on in any single round, and submit an 
upfront payment amount covering that total number of bidding units. The 
total upfront payment does not affect the total dollar amount a bidder 
may bid on any given license.
    151. In order to ensure that an auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. Bidders are required to be active on a specific 
percentage of their current bidding eligibility during each round of 
the auction.
    152. 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 provisionally winning bidder at the end of the previous bidding 
round and does not withdraw the provisionally winning bid in the 
current round, or if it submits a bid in the current round. The minimum 
required activity is expressed as a percentage of the bidder's current 
eligibility, and increases by stage as the auction progresses. A 
commenter urges that no minimum activity requirements be imposed on 
designated entities that apply to bid on less than one percent (1%) of 
the licenses available in Auction No. 66. In addition, the commenter 
urges that a reduced minimum activity requirement should apply to all 
designated entities. No persuasive reason has been presented for 
applying different activity requirements to bidders that are designated 
entities than to other bidders. The Commission's activity rule paces 
the auction by requiring bidders to bid actively. There is no reason to 
modify this requirement based on either the number of licenses for 
which the bidder has applied or the bidder's status as a designated 
entity. Bidders applying for few licenses or that are designated 
entities suffer no disadvantage from complying with the same activity 
rule as other bidders. Because these procedures have proven successful 
in maintaining the pace of previous auctions the Commission adopts them 
for Auction No. 66.
iv. Auction Stages
    153. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed to conduct the auction in two stages and employ an activity 
rule. The Bureau further proposed that, in each round of Stage One, a 
bidder desiring to maintain its current bidding eligibility would be 
required to be active on licenses representing at least 80 percent of 
its current bidding eligibility. Finally, the Bureau proposed that in 
each round of Stage Two, a bidder desiring to maintain its current 
bidding eligibility would be required to be active on at least 95 
percent of its current bidding eligibility. One commenter directly 
addresses the Bureau's proposal, expressing support.
    154. The Commission adopts the proposals for the activity rules and 
stages. The Commission reserves the discretion to further alter the 
activity percentages before and/or during the auction.
    155. Stage One: During the first stage of the auction, a bidder 
desiring to maintain its current bidding eligibility will be required 
to be active on licenses representing 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 round 
activity (the sum of bidding units of the bidder's provisionally 
winning bids and bids during the current round) by five-fourths (5/4).
    156. Stage Two: During the second stage of the auction, a bidder 
desiring to maintain its current bidding 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 
round activity (the sum of bidding units of the bidder's provisionally 
winning bids and bids during the current round) by twenty-nineteenths 
(20/19).
    157. CAUTION: Since activity requirements increase in Stage Two, 
bidders must carefully check their activity during the first round 
following a stage transition to ensure that they are meeting the 
increased activity requirement. This is especially critical for bidders 
that have provisionally winning 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 logging into the 
FCC Auction System.
    158. Because the foregoing procedures have proven successful in 
maintaining the proper pace in previous auctions, the Commission adopts 
them for Auction No. 66.
v. Stage Transitions
    159. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed that 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 provisionally 
winning bids, is approximately 20 percent or lower for three 
consecutive rounds of bidding. The Bureau further proposed that it 
would retain the discretion to change stages unilaterally by 
announcement during the auction. This determination, the Bureau 
proposed, would be based on a variety of measures of bidder activity, 
including, but not limited to, the auction activity level, the 
percentages of licenses (as measured in bidding units) on which there 
are new bids, the number of new bids, and the percentage increase in 
revenue. The one commenter addressing the proposal directly supports 
it.
    160. The Commission adopts the proposal. Thus, the auction will 
start in Stage One and will generally advance to Stage Two when, in 
each of three consecutive rounds of bidding, the provisionally winning 
bids have been placed on 20 percent or less of the licenses being 
auctioned (as measured in bidding units). In addition, the Commission 
will retain the discretion to regulate the pace of the auction by 
announcement.
vi. Activity Rule Waivers
    161. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed that each bidder in the auction be provided with three 
activity rule waivers. Three commenters address the proposal. One 
commenter supports the proposal and two argue that designated entities 
should receive additional waivers, to have the ability to take a time 
out during the late stages of the auction. The comments requesting 
additional waivers do not demonstrate why the proposed three waivers 
are insufficient, or why designated entities might have a greater need 
for a time out than any other bidder. The Commission adopts the

[[Page 20687]]

proposal that each bidder be provided three activity rule waivers. The 
Commission is satisfied that providing three waivers over the course of 
the auction will give bidders a sufficient number of waivers and 
flexibility, while also safeguarding the integrity of the auction.
    162. Bidders may use an activity rule waiver 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 minimum activity level. An 
activity rule waiver applies to an entire round of bidding and not to a 
particular license. Activity rule waivers can be either applied 
proactively by the bidder (a proactive waiver) or applied automatically 
by the FCC Auction System (an automatic waiver) and are principally a 
mechanism for auction participants to avoid the loss of bidding 
eligibility in the event that exigent circumstances prevent them from 
placing a bid in a particular round.
    163. The FCC Auction System assumes that bidders with insufficient 
activity would prefer to apply an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver at the end of any bidding round where a 
bidder's activity level is below the minimum required unless: (1) There 
are no activity rule waivers available; or (2) the bidder overrides the 
automatic application of a waiver by reducing eligibility. If a bidder 
has no waivers remaining and does not satisfy the activity requirement, 
the FCC Auction System will permanently reduce the bidder's 
eligibility, possibly curtailing or eliminating the bidder's ability to 
place additional bids in the auction.
    164. 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 
bidding round by using the reduce eligibility function in the FCC 
Auction 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. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility 
even if the round has not yet closed.
    165. Finally, a bidder may apply an activity rule waiver 
proactively as a means to keep the auction open without placing a bid. 
If a bidder proactively applies an activity waiver (using the apply 
waiver function in the FCC Auction System) during a bidding round in 
which no bids or withdrawals are submitted, the auction will remain 
open and the bidder's eligibility will be preserved. However, an 
automatic waiver applied by the FCC Auction System in a round in which 
there are no new bids or withdrawals will not keep the auction open. A 
bidder cannot submit a proactive waiver after submitting a bid in a 
round, and submitting a proactive waiver will preclude a bidder from 
placing any bids in that round.

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

vii. Auction Stopping Rules
    166. For Auction No. 66, the Bureau proposed to employ a 
simultaneous stopping rule approach. The Bureau also sought comment on 
a modified version of the simultaneous stopping rule. The modified 
version of the stopping rule would close the auction for all licenses 
after the first round in which no bidder applies a waiver, places a 
withdrawal, or submits any new bids on any license on which it is not 
the provisionally winning bidder. Thus, absent any other bidding 
activity, a bidder placing a new bid on a license for which it is the 
provisionally winning bidder would not keep the auction open under this 
modified stopping rule.
    167. The Bureau further proposed retaining the discretion to keep 
the auction open even if no new bids or proactive waivers are submitted 
and no provisionally winning bids are withdrawn in a round. In this 
event, the effect will be the same as if a bidder had applied a waiver. 
Thus, the activity rule will apply as usual, and a bidder with 
insufficient activity will either use an activity rule waiver (if it 
has any left) or lose bidding eligibility.
    168. In addition, the Bureau proposed that it reserve the right to 
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) and the auction will close.
    169. The Bureau proposed to exercise these options 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. The Bureau noted that 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.
    170. In comments filed in response to the Auction No. 66 Comment 
Public Notice, a commenter asserts that the Commission should modify 
its simultaneous stopping rule to avoid the possibility that the 
stopping rule might close bidding before the net winning bids meet the 
reserve price. The commenter suggests that in the event the net winning 
bids do not meet the reserve price at the close of a round that would 
otherwise trigger the stopping rule, the Commission should announce 
that fact and hold the auction open for at least one more round. If 
subsequently the net winning bids do not meet the reserve price at the 
close of a round that would otherwise trigger the stopping rule, the 
Commission could close bidding and, if necessary, cancel the auction 
pursuant to statute. In a subsequent reply comment, a comment supported 
the suggestion.
    171. The Commission believes that it would retain its discretion to 
keep the auction open even if no new bids or proactive waivers are 
submitted and no provisionally winning bids are withdrawn in a round is 
sufficient to address the concerns raised in the comments. This differs 
from the commenter's proposal to the extent that the decision to keep 
bidding open will be within the Bureau's discretion. Unlike a fixed 
rule that the auction will remain open at least one more round, this 
discretionary approach will not unnecessarily encourage bidders to wait 
and see if other bidders will raise bids to meet the reserve.
    172. The Commission believes that the proposed stopping rules are 
appropriate for Auction No. 66, because of the Commission's experience 
in prior auctions demonstrates that these stopping rules balance 
interests of administrative efficiency and maximum bidder 
participation. Therefore the Commission adopts the proposals made in 
the Auction No. 66 Comment Public Notice. Auction No. 66 will begin 
under the simultaneous stopping rule approach, and the Commission will 
retain the discretion to employ the other versions of the stopping 
rule.
viii. Auction Delay, Suspension, or Cancellation
    173. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed 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

[[Page 20688]]

breach, unlawful bidding activity, administrative or weather necessity, 
or for any other reason that affects the fair conduct of competitive 
bidding. The Commission received no comment on this issue.
    174. Because the Commission's approach to notification of delay 
during an auction has proven effective in resolving exigent 
circumstances in previous auctions, the Commission adopts the proposed 
rules regarding auction delay, suspension, or cancellation. By public 
notice or by announcement during the auction, the Commission 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 and competitive conduct of competitive 
bidding. In such cases, the Commission or the Bureau, in their 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 Commission to delay or suspend the auction. The Commission 
emphasizes that exercise of this authority is solely within the 
discretion of the Commission or 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.

B. Bidding Procedures

i. Round Structure
    175. 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.
    176. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors.
ii. Reserve Price and Minimum Opening Bids
    177. Section 309(j) of the Communications Act of 1934, as amended, 
calls upon the Commission to prescribe methods by which a reasonable 
reserve price will be required or a minimum opening bid established 
when applications for FCC licenses are subject to auction (i.e., 
because they are mutually exclusive), unless the Commission determines 
that a reserve price or minimum opening bid is not in the public 
interest. Consistent with this mandate, the Commission 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. Among other factors, 
the Commission must consider the amount of spectrum being auctioned, 
levels of incumbency, the availability of technology to provide 
service, the extent of interference with other spectrum bands, and any 
other relevant factors that could have an impact on the spectrum being 
auctioned. The Commission concluded that the Bureau should have the 
discretion to employ either or both of these mechanisms for future 
auctions.
    178. Congress recently required the Commission to revise existing 
regulations regarding reserve prices for auctions involving eligible 
frequencies subject to CSEA. CSEA defines eligible frequencies as 
including frequencies from 1710-1755 MHz. Thus, each AWS-1 license 
authorizes use of frequencies, one-half of which are subject to CSEA 
requirements. In CSEA, Congress directed the Commission to make 
revisions that would to prescribe methods by which the total cash 
proceeds from any auction of licenses authorizing use of eligible 
frequencies shall equal at least 110 percent of the total estimated 
relocation costs provided to the Commission pursuant to CSEA. 
Accordingly, the Commission recently revised its reserve price rule.
    179. CSEA also imposes other related requirements regarding the 
proceeds from an auction involving eligible frequencies. Pursuant to 
CSEA, the total cash proceeds attributable to eligible spectrum must be 
at least 110 percent of the total estimated relocation costs before the 
Commission may conclude the auction. If this condition is not met, CSEA 
requires that the Commission shall cancel the auction.
a. Reserve Price
    180. Pursuant to CSEA, on December 27, 2005, NTIA notified the 
Commission of the estimated relocation costs and timelines for 
relocation of eligible Federal entities assigned to frequencies from 
1710 to 1755 MHz. NTIA reported that the total estimated relocation 
costs equal $935,940,312.
    181. Accordingly, in the Auction No. 66 Comment Public Notice, the 
Bureau proposed to establish an aggregate reserve price of 
$1,029,534,343.20 for all AWS-1 licenses. This aggregate reserve price 
is 110 percent of total estimated relocation costs of $935,940,312 and 
therefore the minimum reserve price required by CSEA.
    182. For purposes of determining whether a CSEA revenue requirement 
has been met, the Commission has determined that total cash proceeds 
means winning bids net of any applicable bidding credit discounts at 
the end of bidding (e.g., exclusive of tribal land bidding credits). 
Given that one-half of the frequencies authorized for use by each AWS-1 
license is subject to CSEA, the Bureau proposed in the Auction No. 66 
Comment Public Notice, that one-half of each relevant bid for each 
license would be considered attributable to eligible frequencies for 
purposes of CSEA. Accordingly, for determining whether the reserve 
price is met in Auction No. 66, one-half of each winning bid, net of 
any applicable bidding credit discounts at the end of bidding (e.g., 
exclusive of tribal land bidding credits) would be counted toward 
meeting the reserve price. Furthermore, consistent with the statute, 
the same amount would determine whether the auction may conclude 
pursuant to CSEA.
    183. A few commenters disagree with the Bureau's proposal to 
consider one-half of each relevant bid when determining whether the 
reserve price has been met. A commenter objects that the proposal 
wrongly ``assumes that precisely one-half of any AWS-1 bid can be 
attributed to one-half the spectrum.'' The Commenter also argues that 
by attributing only half of each relevant bid to meeting the reserve, 
the Commission is improperly ``mandat[ing] how those funds should be 
apportioned over the 45 MHz of spectrum that will be cleared'' and 
``ensur[ing] that a minimum of additional funds be secured for 
auctioning other spectrum separate from this band [i.e., the other half 
of each license.'' This, according to the commenter, amounts to the 
Commission ``attempt[ing] to assess a value [of] the spectrum being 
auctioned.'' In reply comments, two commenters second the arguments. 
The Commission is not persuaded by these arguments.
    184. CSEA plainly provides that the Commission may attribute a 
portion of bids for licenses that authorize use of both eligible and 
non-eligible

[[Page 20689]]

frequencies to the amounts used to determine whether CSEA requirements 
have been met. Furthermore, it is reasonable to attribute one-half of 
relevant bids to determine whether the CSEA-required reserve price is 
met given that every AWS-1 license authorizes use of frequencies of 
which one-half are eligible frequencies. The fact that some parties may 
not value a license authorizing use of one-half of the frequencies of 
an AWS-1 license at precisely one-half the value of the corresponding 
AWS-1 license does not make this proposal unreasonable.
    185. Attributing one-half of relevant bids to meeting the CSEA-
required reserve price means that the reserve price only will be met if 
the full amount of relevant bids is double the reserve price. As 
reflected by the commenters arguments, this could be viewed as 
effectively establishing a reserve price on the non-CSEA-eligible 
frequencies covered by the AWS-1 licenses. Contrary to the commenter, 
however, any effective reserve price for non-CSEA-eligible spectrum is 
well within the Commission's authority. Moreover, under present 
circumstances, the amount of the effective reserve is appropriate.
    186. The Communications Act expressly contemplates that the 
Commission may adopt a reserve price in any competitive bidding for 
licenses and construction permits, not only when CSEA eligible 
frequencies are involved. The Commission's authority to do so furthers 
the Commission's statutory mandate to recover for the public a portion 
of the value of the public spectrum resource. The commenter alleges 
that the proposed reserve price attempts to set the value of non-CSEA-
eligible frequencies, which the commenter contends the Commission 
should not do. In the present circumstances, however, the amount of the 
effective reserve price on non-CSEA-eligible spectrum is determined by 
the reserve price on CSEA eligible spectrum. That amount, in turn, is 
based on NTIA's estimates of relocation costs to reimburse eligible 
federal entities. Thus, the reserve price does not attempt to, and does 
not set the value of the non-CSEA eligible spectrum, any more than it 
sets the value of the CSEA eligible spectrum.
    187. Finally, the Commission believes that effectively requiring 
that the full amount of relevant bids to be twice the estimated 
relocations costs of eligible federal entities is consistent with CSEA. 
The AWS-1 licenses were defined prior to the adoption of CSEA and 
Congress knew when it referred to proceeds attributable to eligible 
frequencies that the Commission intended to make available licenses 
combining eligible and non-eligible frequencies.
    188. The Commission adopts the proposal in the Auction No. 66 
Comment Public Notice. The Commission will apply an aggregate reserve 
price of $1,029,534,343.20 to all AWS-1 licenses in Auction No. 66. 
Given that one-half of the frequencies authorized for use by each 
license are CSEA eligible frequencies, one-half of each winning bid, 
net of any applicable bidding credit discounts at the end of bidding 
(e.g., exclusive of tribal land bidding credits), will be counted 
toward meeting the reserve price.
    189. In light of the proposed procedures regarding information 
available to bidders, the Bureau also sought comment in the Auction No. 
66 Comment Public Notice on whether the Commission should announce 
before the close of bidding whether the reserve price has been met. In 
comments, a commenter stated that if the Commission proceeds with its 
proposal to limit information regarding provisionally winning bids, it 
should make an announcement when the reserve price has been met.
    190. If information on net bids is withheld during the auction 
(i.e., if the modified eligibility ratio is less than three), the 
Commission agrees with the commenter that an announcement should be 
made when the reserve price has been met. Therefore, if information 
regarding net bids is not provided, the Commission will issue an 
announcement in the FCC Auction System stating that the reserve has 
been met immediately following the first round in which that occurs. 
Both the registered bidders and the general public will be able to view 
such announcements through the Commission's website. The Commission 
cautions, however, that an announcement that the reserve price has been 
met following a round of the auction does not guarantee that the 
reserve price will continue to be met. Accordingly, after making the 
initial announcement that the reserve has been met, the Commission will 
make a further announcement in the FCC Auction System after any round 
in which the reserve price status changes. As noted in the Auction No. 
66 Comment Public Notice, the amount of net winning bids may decline 
during an auction, if either provisionally winning bids are withdrawn 
or a higher gross but lower net bid displaces a prior provisional 
winner.
b. Minimum Opening Bids
    191. In addition to proposing an aggregate reserve price, the 
Bureau proposed in the Auction No. 66 Comment Public Notice to 
establish minimum opening bids for each license, while retaining 
discretion to lower the minimum opening bids. Specifically, for Auction 
No. 66, the Bureau proposed the following formula for calculating 
license-by-license minimum opening bids: $0.05 * MHz * License Area 
Population.
    The Bureau sought comment on this proposal and, in the alternative, 
whether, consistent with the section 309(j), the public interest would 
be served by having no minimum opening bid.
    192. The Bureau received a variety of comments on the proposed 
level of minimum opening bids. Some commenters support the Bureau's 
proposal. A few commenters assert that no minimum opening bids should 
be established, given the use of a reserve price. Numerous commenters 
believe that the formula to determine upfront payments and minimum 
opening bids should not apply the same figure to a rural population as 
it does to an urban population. They assert that because of higher 
buildout costs, upfront payments and minimum opening bids for less 
densely populated areas should be lower than those for more densely 
populated areas. More specifically, many commenters contend that 
minimum opening bids for licenses covering RSAs should be lowered from 
$0.05 per MHz*Pop to $0.01, 0.02, or 0.025 per MHz*Pop.
    193. In addition, some commenters have argued that prior auction 
results and private market sales indicate that the proposed minimum 
opening bids for sparsely populated areas may exceed the market price 
of the license, potentially resulting in a number of unsold licenses.
    194. In Commission auctions, minimum opening bids are intended to 
serve as useful starting points for bidding. Minimum opening bids are 
not intended to be estimates of final auction prices or to reflect all 
differences between license values. Accordingly, differences in license 
characteristics, such as population density, that may result in 
different final prices do not always necessitate different minimum 
opening bids for the licenses.
    195. The Commission is persuaded by the record, however, that 
minimum opening bids based on its proposal may be too high for licenses 
covering low density RSAs. The Commission concludes that it is 
appropriate to

[[Page 20690]]

reduce minimum opening bids for RSAs by forty percent (40%) from its 
initial proposal, i.e. to $0.03 per MHz*Pop. While some commenters 
argue for an even greater reduction, the Commission is not persuaded 
that it should lower minimum opening bids any further.
    196. No equivalent evidence supports a similar reduction in the 
minimum opening bids for licenses covering MSAs. Accordingly, the 
Commission will adopt its initial proposal with respect to such 
licenses and set the minimum opening bids using the proposed formula, 
i.e., $0.05 per MHz*Pop.
    197. In order to take into account that rural and urban populations 
are covered by a single license in larger geographic area licenses, the 
Commission will apply the lower minimum opening bid formula for rural 
areas on a county-by-county basis for all licenses. More specifically, 
the Commission first will break down the larger geographic areas into 
their component counties. The lower minimum opening bid formula of 
$0.03 per MHz*Pop will be applied to the population of those rural 
counties that are included in an RSA. The formula of $0.05 per MHz*Pop 
will be applied to the population of the remaining counties. The 
minimum opening bid for an EA or REAG license will be calculated as the 
sum of minimum opening bids for the counties in the EA or REAG. 
Finally, the Commission has made corresponding changes in the upfront 
payments and bidding units for each license.
    198. The Bureau did not receive any comments addressing its 
proposal that it retain the discretion to reduce minimum opening bid 
amounts. The Commission adopts this proposal. The minimum opening bid 
amounts the Commission adopts for Auction No. 66 is reducible at the 
discretion of the Bureau. The Commission emphasizes, however, that such 
discretion will be exercised, if at all, sparingly and early in the 
auction, i.e., before bidders lose all activity waivers. During the 
course of the auction, the Commission will not entertain requests to 
reduce the minimum opening bid amount on specific licenses.
    199. The specific minimum opening bid amounts for each license 
available in Auction No. 66 calculated pursuant to the procedure 
describe above, as well as the aggregate reserve price for all AWS-1 
licenses, are set forth in Attachment A of the Auction No. 66 
Procedures Public Notice.
iii. Bid Amounts
    200. 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 Auction System will list the nine bid 
amounts for each license. The nine bid amounts for each license consist 
of the minimum acceptable bid amount calculated using an activity-based 
formula and additional amounts calculated using a bid increment 
percentage.
a. Minimum Acceptable Bid Amounts and Bid Increment Amounts
    201. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed that the minimum acceptable bid amount for a license would be 
equal to its minimum opening bid amount until there is a provisionally 
winning bid for the license. After there is a provisionally winning bid 
for a license, the minimum acceptable bid amount for that license would 
be equal to the amount of the provisionally winning bid plus an 
additional amount calculated using an activity-based formula described 
below. The Bureau further proposed to retain the discretion to change 
the minimum acceptable bid amounts and bid increment amounts if 
circumstances so dictated. A commenter supports the proposal. Another 
commenter suggests that the Commission should reduce the percentage 
used to determine the minimum acceptable bid as the ratio of bidder 
eligibility to licenses, measured in bidding units, declines. In 
subsequent reply comments, a commenter supports this suggestion. In 
light of the Bureau's discretion to change the percentages during the 
auction, this suggestion can be taken into account without modifying 
the original proposal. The Commission will consider the suggestion as 
it exercises its discretion during the auction.
    202. A commenter argues that the Commission should use a smaller 
percentage to determine acceptable bids for designated entities, in 
order to encourage designated entities to remain in the auction. 
Pursuant to the proposal, the Bureau has discretion to change the 
percentage in appropriate circumstances. It may be appropriate to 
reduce the percentage to encourage bidders to continue bidding on a 
license in certain circumstances. However, the Commission is not 
persuaded that the percentage should be reduced solely for designated 
entities, or any other particular class of bidder. The Commission does 
not believe it is necessary or appropriate to supplement the bidding 
credits the Commission provides to designated entities with customized 
bidding procedures.
    203. As another alternative, a commenter argues that the Commission 
should simplify the determination of minimum acceptable bids using a 
simple percentage in place of an activity-based formula. It further 
argues that the Commission should permit bidders to bid in any amount 
above the minimum. The Commission declines to adopt these alternatives. 
Determining minimum acceptable bid amounts based in part on bidding 
activity on a license helps pace the auction. The Commission cannot be 
certain in advance of an auction that using a simple percentage will 
approximate results based on activity. Accordingly, the Commission 
believes it is appropriate to use an activity-based formula to 
determine minimum acceptable bids, as well as additional bid amounts. 
Finally, with respect to amounts greater than the minimum acceptable 
bid, providing specified bid amounts both prevents bidders from sending 
signals in their bids and helps bidders avoid errors when inputting 
their bids. The Commission has successfully used this procedure to help 
achieve these purposes.
    204. Based on the Commission's experience in prior auctions and 
taking into account the comments submitted on this issue, the 
Commission adopts its original proposals for Auction No. 66. The 
activity-based formula calculates minimum acceptable bid amounts by 
first calculating a percentage increment. The percentage increment for 
each license is a function of bidding activity on that license in prior 
rounds; therefore, a license that has received many bids will have a 
higher percentage increment than a license that has received few bids. 
This allows the minimum acceptable bid amounts to be tailored to the 
activity on a license, decreasing the number of rounds it takes for 
license receiving many bids to reach their final prices. Equations and 
examples are shown in Attachment F of the Auction No. 66 Procedures 
Public Notice.
    205. The calculation of the percentage increment used to determine 
the minimum acceptable bid amounts 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 
bidders that submit bids 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

[[Page 20691]]

increment by one plus the activity index with that result being subject 
to a maximum percentage increment. The Bureau proposed to 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 
Commission will round the result using its standard rounding 
procedures.
    206. In the case of a license for which the provisionally winning 
bid has been withdrawn, the minimum acceptable bid amount will equal 
the second highest bid received for the license.
    207. The minimum acceptable bid amount for a license will be equal 
to its minimum opening bid amount until there is a provisionally 
winning bid for the license. After there is a provisionally winning bid 
for a license, the minimum acceptable bid amount for that license will 
be equal to the amount of the provisionally winning bid plus an 
additional amount. Using the activity-based formula described above, 
the FCC Auction system will calculate a percentage increment at the end 
of each round to determine the minimum acceptable bid amount for each 
license for the next round.
b. Additional Bid Amounts
    208. The acceptable bid amounts in addition to the minimum 
acceptable bid amount for each license are calculated using a bid 
increment percentage. The first additional acceptable bid amount equals 
the minimum acceptable bid amount times one plus the bid increment 
percentage, rounded--e.g., if the increment percentage is 10 percent, 
the calculation is (minimum acceptable bid amount) * (1 + 0.10), 
rounded, or (minimum acceptable bid amount) * 1.10, rounded; the second 
additional acceptable bid amount equals the minimum acceptable bid 
amount times one plus two times the bid increment percentage, rounded, 
or (minimum acceptable bid amount) * 1.20, rounded; the third 
additional acceptable bid amount equals the minimum acceptable bid 
amount times one plus three times the bid increment percentage, 
rounded, or (minimum acceptable bid amount) * 1.30, rounded; etc. The 
Bureau will begin the auction with a bid increment percentage of 10 
percent.
    209. The Bureau retains the discretion to change the minimum 
acceptable bid amounts, the parameters of the formula to determine the 
percentage increment, and the bid increment percentage if it determines 
that circumstances so dictate. The Bureau will do so by announcement in 
the FCC Auction System during the auction. The Bureau may also use its 
discretion to adjust the minimum bid increment amount without prior 
notice if circumstances warrant.
iv. Provisionally Winning Bids
    210. At the end of each bidding round, a provisionally winning bid 
will be determined based on the highest bid amount received for each 
license. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the same license at the 
close of a subsequent round. Provisionally winning bids at the end of 
the auction become the winning bids. Bidders are reminded that 
provisionally winning bids count toward activity for purposes of the 
activity rule.
    211. In the Auction No. 66 Comment Public Notice, the Bureau 
proposed to use a random number generator to select a single 
provisionally winning bid in the event of identical high bid amounts 
being submitted on a license in a given round (i.e., tied bids). One 
commenter addressed the Bureau's proposed method for breaking ties. A 
commenter asserts that the use of a random number generator to break 
ties among bids amounts to using a system of random selection beyond 
the Commission's statutory authority to assign licenses. The Commission 
disagrees. Using a random number generator to break ties among bids 
submitted as part of a system of competitive bidding does not amount to 
random assignment of licenses. The statutory provision cited by the 
commenter, which terminates the Commission's prior authority pursuant 
to section 309(i) of the Communications Act, simply does not apply to 
the Commission's authority to conduct competitive bidding pursuant to 
section 309(j) of the Communications Act. Moreover, the random number 
generator only determines the provisionally winning bid after a round 
in which bidders submit tie bids. Bidders that lose a tie-break in one 
round are able to raise their bids in subsequent rounds. Consequently, 
a license only will be awarded to a bid that wins a tie-break if other 
bidders decline to raise their bids. This does not amount to a system 
of random selection. The Commission did not receive any comments 
addressing the merits of the proposed method of breaking ties. In light 
of its successful use in prior auctions, the Commission adopts the 
proposal.
v. Bid Removal and Bid Withdrawal
    212. In the Auction No. 66 Comment Public Notice, the Commission 
proposed bid removal and bid withdrawal procedures. With respect to bid 
withdrawals, the Commission proposed limiting each bidder to 
withdrawals in no more than two rounds during the course of the 
auction. The round in which withdrawals are used would be at each 
bidder's discretion. One commenter expressed support for the Bureau's 
proposal concerning bid withdrawals. The Commission adopts the 
proposal.
    213. Procedures. Before the close of a bidding round, a bidder has 
the option of removing any bids placed in that round. Removing a bid 
will affect a bidder's activity for the round in which it is removed, 
i.e., a bid that is removed does not count toward bidding activity. 
These procedures will enhance bidder flexibility during the auction, 
and therefore the Commission adopts them for Auction No. 66.
    214. Once a round closes, a bidder may no longer remove a bid. 
However, in later rounds, a bidder may withdraw provisionally winning 
bids from previous rounds using the withdraw bids function in the FCC 
Auction System. A provisionally winning bidder that withdraws its 
provisionally winning bid from a previous round during the auction is 
subject to the bid withdrawal payments specified in 47 CFR 1.2104(g).
    215. In previous auctions, the Commission has detected bidder 
conduct that, arguably, may have constituted anti-competitive behavior 
through the use of bid withdrawals. While the Commission continues to 
recognize the important role that bid withdrawals may play in an 
auction, the Commission concludes that, for Auction No. 66, adoption of 
a limit on the use of withdrawals to two rounds per bidder is 
appropriate. By doing so the Commission believes it strikes a 
reasonable compromise that will allow bidders to use withdrawals. The 
Commission based its decision on this issue upon its experience with 
bid withdrawals in prior auctions, including PCS D, E and F block and 
800 MHz SMR, and FM broadcast auctions.
    216. The Commission will therefore limit the number of rounds in 
which bidders may place withdrawals to two rounds. These rounds will be 
at the bidder's discretion and there will be no limit on the number of 
bids that may be withdrawn in either of these rounds. Withdrawals 
during the auction will be subject to the bid withdrawal payments 
specified in 47 CFR 1.2104(g). Bidders should note that abuse of the 
Commission's bid withdrawal procedures could result in the denial of 
the ability to bid on a market.

[[Page 20692]]

    217. If a provisionally winning bid is withdrawn, the minimum 
acceptable bid amount will equal the amount of the second highest bid 
received for the license, which may be less than, or in the case of 
tied bids, equal to, the amount of the withdrawn bid. To set the 
additional bid amounts, the second highest bid amount also will be used 
in place of the provisionally winning bid in the formula used to 
calculate bid increment amounts. The Commission will serve as a place 
holder provisionally winning bidder on the license until a new bid is 
submitted on that license.
    218. 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 provisionally 
winning 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). 
This policy allows bidders most efficiently to allocate their resources 
as well as to evaluate their bidding strategies and business plans 
during an auction while, at the same time, maintaining the integrity of 
the auction process. The Bureau retains the discretion to scrutinize 
multiple bid withdrawals on a single license for evidence of anti-
competitive strategic behavior and take appropriate action when deemed 
necessary.
    219. Section 1.2104(g)(1) of the rules sets forth the payment 
obligations of a bidder that withdraws a high bid on a license during 
the course of an auction, and provides for the assessment of interim 
bid withdrawal payments. The Commission recently revised Sec.  
1.2104(g)(1) to provide that in advance of each auction it shall 
establish the percentage of the withdrawn bid to be assessed as an 
interim bid withdrawal payment between three percent (3%) and twenty 
percent (20%). Further, the rule provides that the Commission will set 
the percentage of withdrawn bids to be assessed as interim bid 
withdrawal payments prior to each auction. In the Auction No. 66 
Comment Public Notice, the Bureau proposed to establish the percentage 
at ten percent (10%) for the AWS-1 auction and sought comment on the 
proposal.
    220. Commenters divided on the proposed interim bid withdrawal 
percentage, with some arguing that it would be too high, others too 
low, and others supporting the Bureau's proposal.
    221. The Commission adopts the proposal. The Commission will assess 
an interim withdrawal payment equal to ten percent (10%) of the amount 
of the withdrawn bids. The ten percent (10%) interim payment will be 
applied toward any final bid withdrawal payment that will be assessed 
after subsequent auction of the license. Assessing an interim bid 
withdrawal payment ensures that the Commission receives a minimal 
withdrawal payment pending assessment of any final withdrawal payment. 
Sec.  1.2104(g) provides specific examples showing application of the 
bid withdrawal payment rule.
vi. Round Results
    222. The information available after each round will vary depending 
on whether the modified eligibility ratio indicates the strong 
likelihood of a highly competitive auction. If the modified eligibility 
ratio is less than three and information is withheld in accordance with 
the proposed as modified above, information about the results of a 
round will be made public after the conclusion of the round. 
Specifically, after a round closes, the Commission will compile a 
report listing each license, its current provisionally winning bid 
amount, the minimum acceptable bid amount for the following round, the 
number of bids placed on the license during the round, and whether the 
license is FCC held. The Commission will post the report so that it is 
publicly accessible. Moreover, after the auction, the Commission will 
release complete reports of all bids placed during each round of the 
auction, including bidder identities. The Commission will post those 
reports so that they are publicly accessible.
    223. If, however, the modified eligibility ratio indicates the 
strong likelihood of a highly competitive auction (i.e., the modified 
eligibility ratio is three or greater), information will be provided in 
the same fashion typically provided after each round in the auction. 
Bids placed during a round will be made public at the conclusion of 
that round. Specifically, after a round closes, the Commission will 
compile reports of all bids placed and which bidders made them, current 
provisionally winning bids, new minimum acceptable bid amounts, and 
bidder eligibility status (bidding eligibility and activity rule 
waivers) and will post the reports for public access.
vii. Auction Announcements
    224. The Commission will use auction announcements to announce 
items such as schedule changes and stage transitions. All Commission 
auction announcements will be available by clicking a link in the FCC 
Auction System.
viii. Maintaining the Accuracy of FCC Form 175 Information
    225. After the short-form filing deadline, applicants may make only 
minor changes to their FCC Form 175 applications. In addition, 
applicants should 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. 66 and the name 
of the applicant.
    226. Applicants should not submit application-specific material 
through ECFS into the record of the proceeding concerning Auction No. 
66 procedures.

V. Post-Auction Procedures

A. Down Payments

    227. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed and identifying winning bidders, 
down payments and final payments due.
    228. 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. 66 to 20 percent of the net amount 
of its winning bids (gross bids less any applicable small business or 
very small business bidding credits).

B. Final Payments

    229. 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)

    230. Within ten business days after release of the auction closing 
notice, winning bidders must electronically

[[Page 20693]]

submit a properly completed long-form application (FCC Form 601) for 
each license won through Auction No. 66. Winning bidders that are small 
businesses or very small businesses must demonstrate their eligibility 
for a small business or very small business bidding credit.
    231. The recently adopted CSEA/Part 1 Report and Order, 71 FR 6214, 
February 7, 2006, modifies the procedure by which a consortium that is 
a winning bidder in Auction No. 66 will apply for a license. In 
particular, (a) each member or group of members of a winning consortium 
seeking separate licenses will be required to file a separate long-form 
application for its respective license(s) and, in the case of a license 
to be partitioned or disaggregated, the member or group filing the 
applicable long-form application shall provide the parties' 
partitioning or disaggregation agreement in its long-form application; 
(b) two or more consortium members seeking to be licensed together 
shall first form a legal business entity; and (c) any such entity must 
meet the applicable eligibility requirements in the Commission's rules 
for small business or entrepreneur status. Applicants applying as 
consortia should review the CSEA/Part 1 Report and Order in detail and 
monitor any relevant future proceedings to understand how the members 
of the consortia will apply for a license in the event they are winning 
bidders.

D. Ownership Disclosure Information Report (FCC Form 602)

    232. At the time it submits its long-form application (FCC Form 
601), each winning bidder also must comply with the ownership reporting 
requirements as set forth in 47 CFR 1.913, 1.919, and 1.2112. An 
ownership disclosure record is automatically created in the Universal 
Licensing System (ULS) for any applicant that submits an FCC Form 175. 
However, winning bidders will be required to review and confirm that it 
is complete and accurate as of the date of filing Form 601.

E. Tribal Lands Bidding Credit

    233. A winning bidder that intends to use its license(s) to deploy 
facilities and provide services to federally recognized tribal lands 
that are unserved by any telecommunications carrier or that have a 
wireline penetration rate equal to or below 85 percent is eligible to 
receive a tribal lands bidding credit (TLBC) as set forth in 47 CFR 
1.2107 and 1.2110(f). A TLBC is in addition to, and separate from, any 
other bidding credit for which a winning bidder may qualify.
    234. Unlike other bidding credits that are requested prior to the 
auction, a winning bidder applies for the TLBC after winning the 
auction when it files its long-form application (FCC Form 601). When 
initially filing the long-form application, the winning bidder will be 
required to advise the Commission whether it intends to seek a TLBC, 
for each market won in the auction, by checking the designated box(es). 
After stating its intent to seek a TLBC, the applicant will have 180 
days from the close of the long-form filing window to amend its 
application to select the specific tribal lands to be served and 
provide the required tribal government certifications. Licensees 
receiving a TLBC are subject to performance criteria as set forth in 47 
CFR 1.2110(f)(3)(vi).
    235. After all such applications have been finally resolved, the 
Commission will recalculate the amount of pro rata credits using the 
aggregate amount of actual full credits--i.e., the TLBCs for which the 
applicants would have qualified absent the limitations resulting from 
the reserve price--rather than the hypothetical maximum aggregate 
amount for which all applicants might have qualified. In other words, 
the ratio of (a) each applicant's recalculated pro rata credit to (b) 
the total funds available for TLBCs will equal the ratio of (a) the 
applicant's full credit (the TLBC for which that applicant would have 
qualified absent limitations resulting from the reserve price) to (b) 
the aggregate amount of the actual full credits. In the event that the 
recalculated pro rata credit is larger than the initial pro rata 
credit, the Commission will award the difference. If the second 
calculation produces a different result from the first, it will reflect 
the fact that when the amount of any one applicant's portion of the 
fixed funds available for TLBCs decreases, the amounts of other 
applicants' portions should increase. An applicant's portion of the 
fixed funds might decrease, for example, if it reaches agreements with 
tribal governments regarding service for less than the full area of 
tribal land covered by the license. Consequently, that applicant may be 
eligible for a credit smaller than the largest credit possible.

F. Default and Disqualification

    236. 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). The payments include both a deficiency payment, equal to 
the difference between the amount of the bidder's bid and the amount of 
the winning bid the next time a license covering the same spectrum is 
won in an auction, plus an additional payment equal to a percentage of 
the defaulter's bid or of the subsequent winning bid, whichever is 
less. Pursuant to recent modifications to the rule governing default 
payments, the percentage of the applicable bid to be assessed as an 
additional payment for defaults in a particular auction will be 
established in advance of the auction. Accordingly, in the Auction No. 
66 Comment Public Notice, the Bureau proposed to set the additional 
default payment for the auction of AWS-1 licenses at ten percent (10%) 
of the applicable bid. The Bureau sought comment on its proposal.
    237. Some commenters supported the proposal as setting an 
appropriate deterrent to default. Others contend that there is no 
reason to increase the percentage of the additional default payment 
from three percent (3%) as provided under prior rules. As these 
comments reflect, the primary purpose of setting the additional default 
payment is to deter defaults. The precise level of deterrence provided 
by any particular percentage is difficult to determine. However, 
continued defaults in past Commission auctions indicate that the prior 
level of three percent (3%) is not sufficient. Moreover, as noted in 
the Auction No. 66 Comment Public Notice, the public interest in rapid 
deployment of new advanced wireless services using licenses available 
for the first time in Auction No. 66 would be adversely affected by 
defaults. The Commission continues to believe its proposal to increase 
the percentage from three percent (3%) to ten percent (10%) is in the 
public interest. The Commission therefore adopts its proposal and set 
the additional default payment for the auction of AWS-1 licenses at ten 
percent (10%) of the applicable bid.
    238. Finally, the Commission notes that in the event of a default, 
it may re-auction the license or offer it to the next highest bidder 
(in descending order) at its final bid amount. 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.

[[Page 20694]]

G. Refund of Remaining Upfront Payment Balance

    239. All applicants that submit upfront payments but after the 
close of the auction are not winning bidders for a license in Auction 
No. 66 may be entitled to a refund of their remaining upfront payment 
balance after the conclusion of the auction.
    240. Bidders that drop out of the auction completely may be 
eligible for a refund of their upfront payments before the close of the 
auction. Qualified bidders that have exhausted all of their activity 
rule waivers, have no remaining bidding eligibility, and have not 
withdrawn a provisionally winning bid during the auction must submit a 
written refund request. If the applicant has completed the refund 
instructions electronically, then a written request for the refund is 
not necessary. If not, the request must be in writing and include wire 
transfer instructions, Taxpayer Identification Number (TIN) and FCC 
Registration Number (FRN). Send refund requests to: Federal 
Communications Commission, Financial Operations Center, Auctions 
Accounting Group, Attn: Gail Glasser, 445 12th Street, SW., Room 1-
C864, Washington, DC 20554.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 06-3819 Filed 4-20-06; 8:45 am]
BILLING CODE 6712-01-P