[Federal Register Volume 71, Number 169 (Thursday, August 31, 2006)]
[Notices]
[Pages 51822-51827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-14527]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-06-68-A (Auction No. 68); DA 06-997; AU Docket No. 06-
101]


Auction of FM Broadcast Construction Permits Scheduled for 
January 10, 2007; Comments Sought on Competitive Bidding Procedures for 
Auction No. 68

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of nine FM broadcast 
construction permits scheduled to commence on January 10, 2007 (Auction 
No. 68). This document also seeks comments on reserve prices or minimum 
opening bids and other procedures for Auction No. 68.

DATES: Comments are due on or before September 6, 2006 and reply 
comments are due on or before September 13, 2006.

ADDRESSES: Comments and reply comments must be identified by AU Docket 
No. 06-101; DA 06-997. The Bureaus request that a copy of all comments 
and reply comments be submitted electronically to the following 
address: [email protected]. In addition, comment and reply comments may 
be submitted by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters,

[[Page 51823]]

CART, etc.) by e-mail: [email protected] or phone: 202-418-0530 or TTY: 
202-418-0432.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail (although the Bureaus 
continue to experience delays in receiving U.S. Postal Service mail). 
All filings must be addressed to the Commission's Secretary, Attn: WTB/
ASAD, Office of the Secretary, Federal Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Commercial overnight mail 
(other than U.S. Postal Service Express Mail and Priority Mail) must be 
sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division, for legal questions: Lynne Milne 
at (202) 418-0660. For general auction questions: Linda Sanderson or 
Debbie Smith at (717) 338-2888. Media Bureau, Audio Division, for 
service questions: Lisa Scanlan or Tom Nessinger at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 68 
Comment Public Notice released on August 24, 2006. The complete text of 
the Auction No. 68 Comment 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. 68 Comment Public Notice and related Commission 
documents also may 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, DA 06-997. The 
Auction No. 68 Comment Public Notice and related documents also are 
available on the Internet at the Commission's Web site:http://wireless.fcc.gov/auctions/68/.

I. Constuction Permits To Be Offered in Auction No. 68

    1. The Media and Wireless Telecommunications Bureaus (Bureaus) 
announce that Auction No. 68 is composed of nine construction permits 
in the FM broadcast service as listed in Attachment A of the Auction 
No. 68 Comment Public Notice. The construction permits to be auctioned 
are unsold FM construction permits from Auction Nos. 37 and 62, which 
closed on November 23, 2004 and January 31, 2006, respectively.
    2. These nine construction permits are vacant FM allotments, 
reflecting FM channels assigned to the Table of FM Allotments, 47 CFR 
73.202(b), pursuant to the Commission's established rulemaking 
procedures, designated for use in the indicated community. Pursuant to 
the policies established in the Broadcast Auction First Report and 
Order, 63 FR 48615, September 11, 1998, applicants may apply for any 
vacant FM allotment specified in Attachment A of the Auction No. 68 
Comment Public Notice. Applications specifying the same FM allotment 
will be considered mutually exclusive and, thus, the construction 
permit for that FM allotment will be awarded by competitive bidding 
procedures. Once mutual exclusivity exists for auction purposes, even 
if only one applicant for the same construction permit in Auction No. 
68 submits an upfront payment, that applicant is required to submit a 
bid in order to obtain the construction permit. Any applicant that 
submits a short-form application that is accepted for filing but fails 
to timely submit an upfront payment will retain its status as an 
applicant in Auction No. 68 and will remain subject to the Commission's 
anti-collusion rule, 47 CFR 1.2105(c), but, having purchased no bidding 
eligibility, will not be eligible to bid.

II. Bureaus Seek Comment on Auction Procedures

    3. Consistent with the provisions of section 309(j)(3) of the 
Communications Act of 1934, as amended, and to ensure that potential 
bidders have adequate time to familiarize themselves with the specific 
rules that will govern the day-to-day conduct of an auction, the 
Bureaus seek comment on the following issues relating to Auction No. 
68.

A. Auction Structure

i. Simultaneous Multiple Round Auction Design
    4. The Bureaus propose to award all construction permits included 
in Auction No. 68 in a simultaneous multiple-round (SMR) auction. This 
type of auction offers every construction permit for bid at the same 
time and consists of successive bidding rounds in which eligible 
bidders may place bids on individual construction permits. A bidder may 
bid on, and potentially win, any number of construction permits. 
Typically, bidding remains open on all construction permits until 
bidding stops on every construction permit, unless a modified stopping 
rule is invoked. The Bureaus seek comment on this proposal.
ii. Round Structure
    5. The Commission will conduct Auction No. 68 over the Internet. 
Alternatively, telephonic bidding also will be available.
    6. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction. The simultaneous multiple-round format will consist of 
sequential bidding rounds, each followed by the release of round 
results.
    7. The Bureaus have the 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 Bureaus 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. The 
Bureaus seek comment on this proposal.
iii. Stopping Rule
    8. The Bureaus have discretion to establish stopping rules before 
or during multiple round auctions in order to terminate the auction 
within a reasonable time. For Auction No. 68, the Bureaus propose to 
employ a simultaneous stopping rule approach. A simultaneous stopping 
rule means that all construction permits remain available for bidding 
until bidding closes simultaneously on all construction permits. More 
specifically, bidding will close simultaneously on all construction 
permits after the first round in which no bidder submits any new bids, 
or applies a proactive waiver. Thus, unless circumstances dictate 
otherwise, bidding will remain open on all construction permits until 
bidding stops on every construction permit.
    9. The Bureaus propose to retain the discretion to exercise any of 
the

[[Page 51824]]

following options during Auction No. 68: (a) Use a modified version of 
the simultaneous stopping rule, based on the failure to submit during a 
prior round of a waiver or a new bid by a bidder who is not a 
provisionally winning bidder for that construction permit, as described 
in the Auction No. 68 Comment Public Notice; (b) keep the auction open 
even if no bidder submits any new bids or applies a waiver; and (c) 
declare that the auction will end after a specified number of 
additional rounds (special stopping rule).
    10. The Bureaus propose to exercise these options only in certain 
circumstances, for example, where the auction is proceeding very 
slowly, there is minimal overall bidding activity, or it appears likely 
that the auction will not close within a reasonable period of time. 
Before exercising these options, the Bureaus are 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 minimum acceptable bid 
percentage for the limited number of construction permits on which 
there is still a high level of bidding activity. The Bureaus seek 
comment on these proposals.
iv. Information Relating to Auction Delay, Suspension, or Cancellation
    11. For Auction No. 68, the Bureaus propose that, by public notice 
or by announcement during the auction, the Bureaus 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 efficient conduct of competitive bidding. In 
such cases, the Bureaus, 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 Bureaus to delay or 
suspend the auction. The Bureaus emphasize that exercise of this 
authority is solely within the discretion of the Bureaus, and its use 
is not intended to be a substitute for situations in which bidders may 
wish to apply their activity rule waivers. The Bureaus seek comment on 
this proposal.

B. Bidding Procedures

i. Upfront Payments and Bidding Eligibility
    12. The Bureaus have delegated authority and discretion to 
determine an appropriate upfront payment for each FM construction 
permit being auctioned, taking into account such factors as the 
efficiency of the auction process and the potential value of similar 
spectrum. The upfront payment is a refundable deposit made by each 
bidder to establish eligibility to bid on construction permits. Upfront 
payments related to the specific spectrum subject to auction protect 
against frivolous or insincere bidding and provide the Commission with 
a source of funds from which to collect payments owed at the close of 
the auction. With these guidelines in mind, the Bureaus propose the 
schedule of upfront payments for each construction permit as set forth 
in Attachment A of the Auction No. 68 Comment Public Notice. The 
Bureaus seek comment on this proposal.
    13. The Bureaus further propose that the amount of the upfront 
payment submitted by a bidder will determine the maximum number of 
bidding units on which a bidder may place bids. This limit is a 
bidder's initial bidding eligibility. Each FM construction permit is 
assigned a specific number of bidding units equal to the upfront 
payment listed in Attachment A of the Auction No. 68 Comment Public 
Notice, on a bidding unit per dollar basis. Bidding units for a given 
construction permit do not change as prices rise during the auction. A 
bidder's upfront payment is not attributed to specific construction 
permits. Rather, a bidder may place bids on any combination of 
construction permits that it selected in its short form application 
(FCC Form 175), as long as the total number of bidding units associated 
with those construction permits does not exceed the bidder's current 
eligibility. In order to bid on a construction permit, qualified 
bidders must have an eligibility level that meets the number of bidding 
units assigned to that construction permit. 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. 
Provisionally winning bids are bids that would become final winning 
bids if the auction were to close in that given round. The Bureaus seek 
comment on this proposal.
ii. Activity Rule
    14. 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. A bidder's activity in a round will be the sum of 
the bidding units associated with any construction permits upon which 
it places bids during the current round and the bidding units 
associated with any construction permits for which it holds 
provisionally winning bids. Bidders are required to be active on a 
specific percentage of their current bidding eligibility during each 
round of the auction. Failure to maintain the requisite activity level 
will result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place bids in the auction.
    15. The Bureaus propose a single stage auction with the following 
activity requirement: In each round of the auction, a bidder desiring 
to maintain its eligibility to participate in the auction is required 
to be active on one hundred (100) percent of its bidding eligibility. 
Failure to maintain the requisite activity level will result in a 
reduction in the bidder's bidding eligibility in the next round of 
bidding (unless an activity rule waiver is used).
    16. The Bureaus seeks comment on this proposal. Commenters that 
believe this activity rule should be modified should explain their 
reasoning and comment on the desirability of an alternative approach. 
Commenters are advised to support their claims with analyses and 
suggested alternative activity rules.
iii. Activity Rule Waivers and Reducing Eligibility
    17. Use of an activity rule waiver preserves the bidder's 
eligibility despite the bidder's activity in the current round being 
below the required minimum level. An activity rule waiver applies to an 
entire round of bidding and not to a particular construction permit. 
Activity rule waivers can be either proactive or automatic 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.
    18. The FCC Auction System assumes that a bidder that does not meet 
the activity requirement 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) The bidder has no activity rule waivers available; or (2) 
the bidder overrides the automatic application of a waiver by reducing

[[Page 51825]]

eligibility, thereby meeting the minimum requirement. If a bidder has 
no waivers remaining and does not satisfy the required activity level, 
its eligibility will be permanently reduced, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction.
    19. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding 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 above. Reducing eligibility is an 
irreversible action. 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.
    20. 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 rule waiver (using the apply waiver 
function in the FCC Auction System) during a bidding round in which no 
bids are submitted, the auction will remain open and the bidder's 
eligibility will be preserved. An automatic waiver applied by the FCC 
Auction System in a round in which there are no new bids 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. Applying a 
waiver is irreversible; once a proactive waiver is submitted, that 
waiver cannot be unsubmitted, even if the round has not yet closed.
    21. The Bureaus propose that each bidder in Auction No. 68 be 
provided with three activity rule waivers that may be used at the 
bidder's discretion during the course of the auction. The Bureaus seek 
comment on this proposal.
iv. Reserve Price or Minimum Opening Bid
    22. The Bureaus seek comment on the use of a minimum opening bid 
amount and/or a reserve price in Auction No. 68. Normally, a reserve 
price is an absolute minimum price below which an item will not be sold 
in a given auction. Reserve prices can be either published or 
unpublished. A minimum opening bid amount, on the other hand, is the 
minimum bid price set at the beginning of the auction below which no 
bids are accepted. It is generally used to accelerate the competitive 
bidding process. Also, the auctioneer, however, has the discretion to 
lower the minimum opening bid amount during the course of the auction. 
It is also possible for the minimum opening bid amount and the reserve 
price to be the same amount.
    23. The Bureaus propose to establish minimum opening bid amounts 
for Auction No. 68. The Bureaus believe a minimum opening bid amount, 
which has been used in other auctions, is an effective bidding tool for 
accelerating the competitive bidding process.
    24. For Auction No. 68, the proposed minimum opening bids were 
determined by taking into account various factors related to the 
efficiency of the auction and the potential value of the spectrum, 
including the type of service and class of facility offered, market 
size, population covered by the proposed FM broadcast facility, 
industry cash flow data and recent broadcast transactions. The specific 
minimum opening bid for each construction permit available in Auction 
No. 68 is set forth in Attachment A of the Auction No. 68 Comment 
Public Notice. The Bureaus seek comment on this proposal.
    25. If commenters believe that these minimum opening bid amounts 
will result in unsold construction permits, or are not reasonable 
amounts, or should instead operate as reserve prices, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid amount levels or formulas. In establishing the minimum opening bid 
amounts, the Bureaus particularly seek comment on such factors as the 
potential value of the spectrum being auctioned, including the type of 
service and class of facility offered, market size, population covered 
by the proposed FM broadcast facility and other relevant factors that 
could reasonably have an impact on valuation of the broadcast spectrum. 
The Bureaus also seek comment on whether, consistent with section 
309(j), the public interest would be served by having no minimum 
opening bid amount or reserve price.
v. Bid Amounts
    26. The Bureaus propose that, in each round, eligible bidders be 
able to place bids on a given construction permit in any of nine 
different amounts, if a bidder has sufficient eligibility to place a 
bid on that construction permit. Under this proposal, the FCC Auction 
System interface will list the nine acceptable bid amounts for each 
construction permit.
    27. The first of the nine acceptable bid amounts is called the 
minimum acceptable bid amount. The minimum acceptable bid amount for a 
construction permit will be equal to its minimum opening bid amount 
until there is a provisionally winning bid for the construction permit. 
After there is a provisionally winning bid for a construction permit, 
the minimum acceptable bid amount will be calculated by multiplying the 
provisionally winning bid amount times one plus the minimum acceptable 
bid percentage. If, for example, the minimum acceptable bid percentage 
is 10 percent, the minimum acceptable bid amount will equal 
(provisionally winning bid amount) * (1.10), rounded.
    28. The eight additional bid amounts are calculated using the 
minimum acceptable bid amount and a bid increment percentage, which 
need not be the same as the percentage used to calculate the minimum 
acceptable bid amount. The first additional acceptable bid amount 
equals the minimum acceptable bid amount times one plus the bid 
increment percentage, rounded. If, for example, the bid 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 Bureaus will round the result using our 
standard rounding procedures.
    29. For Auction No. 68, the Bureaus propose to use a minimum 
acceptable bid percentage of 10 percent. This means that the minimum 
acceptable bid amount for a construction permit will be approximately 
10 percent greater than the provisionally winning bid amount for the 
construction permit. The Bureaus also propose to use a bid increment 
percentage of 10 percent to calculate the eight additional acceptable 
bid amounts.
    30. The Bureaus retain 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 Bureaus will do so by

[[Page 51826]]

announcement in the FCC Auction System during the auction. The Bureaus 
seek comment on these proposals.
vi. Provisionally Winning Bids
    31. Provisionally winning bids are bids that would become final 
winning bids if the auction were to close in that given round. At the 
end of a bidding round, a provisionally winning bid amount for each 
construction permit will be determined based on the highest bid amount 
received for the construction permit. In the event of identical high 
bid amounts being submitted on a construction permit in a given round 
(i.e., tied bids), the Bureaus will use a random number generator to 
select a single provisionally winning bid from among the tied bids. 
(Each bid is assigned a random number, and the tied bid with the 
highest random number wins the tiebreaker.) The remaining bidders, as 
well as the provisionally winning bidder, can submit higher bids in 
subsequent rounds. However, if the auction were to end with no other 
bids being placed, the winning bidder would be the one that placed the 
selected provisionally winning bid. If any bids are received on the 
construction permit in a subsequent round, the provisionally winning 
bid again will be determined by the highest bid amount received for the 
construction permit.
    32. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the same construction permit 
at the close of a subsequent round. Bidders are reminded that 
provisionally winning bids count toward activity for purposes of the 
activity rule.
vii. Bid Removal and Bid Withdrawal
    33. For Auction No. 68, the Bureaus propose the following bid 
removal procedures. Before the close of a bidding round, a bidder has 
the option of removing any bid placed in that round. By removing 
selected bids in the FCC Auction System, a bidder may effectively 
unsubmit any bid placed within that round. A bidder removing a bid 
placed in the same round is not subject to any penalties. Once a round 
closes, a bidder may no longer remove a bid.
    34. In the Part 1 Third Report and Order, 63 FR 2315, January 15, 
1998, the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and construction permits 
and the pursuit of backup strategies as information becomes available 
during the course of an auction. Given the limited number and wide 
geographic dispersion of the permits available in this auction, 
however, these rationales are less compelling. The Commission also 
noted that, in some instances, bidders may seek to withdraw bids for 
improper reasons. The permits being offered in Auction No. 68 are, in 
fact, permits for which provisionally winning bids were withdrawn in 
previous FM Broadcast auctions, in some cases in successive auctions by 
the same bidders. The Bureaus have discretion, in managing the auction, 
to limit the number of withdrawals to prevent any bidding abuses. The 
Commission stated that the Bureaus should assertively exercise their 
discretion, consider limiting the number of rounds in which bidders may 
withdraw bids, and prevent bidders from bidding on a particular 
construction permit if the Bureaus find that a bidder is abusing the 
Commission's bid withdrawal procedures.
    35. Applying this reasoning, the Bureaus propose that bidders in 
Auction No. 68 not be permitted to withdraw bids placed in any round 
after it has closed. To permit bidders further opportunities to 
withdraw bids may encourage insincere bidding or the use of withdrawals 
for anti-competitive purposes. Moreover, given that the permits offered 
in Auction No. 68 have already been subject to bid withdrawals in at 
least one auction, our paramount concern is that the permits be awarded 
and broadcast service be initiated to the public in the communities 
listed. The Bureaus seek comment on this proposal.

C. Due Diligence

    36. Potential bidders are solely responsible for investigating and 
evaluating all technical and market place factors that may have a 
bearing on the value of the broadcast facilities 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 permittee in the 
broadcast service, 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 
construction permit or license constitute a guarantee of business 
success. Applicants should perform their individual due diligence 
before proceeding as they would with any new business venture. In 
particular, potential bidders are strongly encouraged to review all 
underlying Commission orders, such as the specific Report and Order 
amending the FM Table of Allotments and allotting the FM channel(s) on 
which they plan to bid. Reports and Orders adopted in FM allotment 
rulemaking proceedings often include anomalies such as site 
restrictions or expense reimbursement requirements. Additionally, 
potential bidders should perform technical analyses sufficient to 
assure them that, should they prevail in competitive bidding for a 
given FM construction permit, they will be able to build and operate 
facilities that will fully comply with the Commission's technical and 
legal requirements. Applicants are strongly encouraged to inspect any 
prospective transmitter sites located in, or near, the service area for 
which they plan to bid, and also to familiarize themselves with the 
Commission's rules regarding the National Environmental Policy Act.
    37. Potential bidders are strongly encouraged to conduct their own 
research prior to Auction No. 68 in order to determine the existence of 
pending proceedings, including pending rulemaking proceedings that 
might affect their decisions regarding participation in the auction. 
Participants in Auction No. 68 are strongly encouraged to continue such 
research during the auction.

D. Post-Auction Procedures

i. Default and Disqualification
    38. Any winning bidder that defaults or is disqualified after the 
close of an 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) is liable for a default payment under 47 CFR 
1.2104(g)(2). This payment consists of 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 construction permit 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. Until recently this additional payment for most 
auctions has been set at 3 percent of the defaulter's bid or of the 
subsequent winning bid, whichever is less.
    39. On January 24, 2006, the Commission released the Commercial 
Spectrum Enhancement Act Report and Order, 71 FR 6214, February 7, 
2006, in which it modified Sec.  1.2104(g)(2) by, inter alia, 
increasing the 3 percent limit on the additional default payment for 
non-combinatorial auctions to 20 percent. Under the modified rule, the 
Commission will, in advance of each auction, establish an additional 
default

[[Page 51827]]

payment for that auction of 3 percent up to a maximum of 20 percent. 
The level of this payment in each case will be based on the nature of 
the service and the inventory of the construction permits being 
offered.
    40. As noted in this rulemaking order, defaults weaken the 
integrity of the auctions process and impede the deployment of service 
to the public, and an additional default payment of more than the 
previous 3 percent will be more effective in deterring defaults. 
Accordingly, for Auction No. 68, the Bureaus propose an additional 
default payment of 10 percent of the relevant bid. The Bureaus seek 
comment on this proposal.

III. Conclusion

    41. Comments are due on or before September 6, 2006, and reply 
comments are due on or before September 13, 2006. All filings related 
to the auction of FM broadcast construction permits must refer to AU 
Docket No. 06-101. Comments may be submitted using the Commission's 
Electronic Comment Filing System (ECFS) or by filing paper copies. The 
Bureaus encourage interested parties to file electronically. The 
Bureaus also request that all comments and reply comments be filed 
electronically to the following address: [email protected]. In 
addition, commenters should format any attachments to electronic mail 
as Adobe[supreg] Acrobat[supreg] (pdf) or Microsoft[supreg] Word 
documents.
    42. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in 47 CFR 1.1206(b).

Federal Communications Commission.
William W. Huber,
Associate Chief, Auctions and Spectrum Access Division, WTB.
 [FR Doc. E6-14527 Filed 8-30-06; 8:45 am]
BILLING CODE 6712-01-P