[Federal Register Volume 71, Number 229 (Wednesday, November 29, 2006)]
[Notices]
[Pages 69125-69130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20241]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-06-71-A (Auction No. 71); DA 06-2298; AU Docket No. 06-
206]


Auction of Broadband PCS Spectrum Scheduled for May 16, 2007; 
Comments Sought on Competitive Bidding Procedures for Auction No. 71

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of certain broadband 
Personal Communications Services (PCS) licenses scheduled to commence 
on May 16, 2007 (Auction No. 71). This document also seeks comments on 
competitive bidding procedures for Auction No. 71.

DATES: Comments are due on or before December 4, 2006, and reply 
comments are due on or before December 11, 2006.

ADDRESSES: Comments and reply comments must be identified by AU Docket 
No. 06-206; DA 06-2298. The Bureau 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 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, 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 Bureau 
continues 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. Eastern Time (ET). 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 auctions legal questions: 
Stephen Johnson at (202) 418-0660. For general auction questions: Roy 
Knowles or Linda Sanderson at (717) 338-2888. Mobility Division, for 
service rules questions: Erin McGrath or Michael Connelly (legal) or 
Dwain Livingston (technical) at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 71 
Comment Public Notice released on November 17, 2006. The complete text 
of the Auction No. 71 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. ET Monday through Thursday or from 
8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference Information 
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 
20554. The Auction No. 71 Comment Public Notice, including attachments 
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 06-2298. The Auction No. 71 Comment Public Notice and 
related documents also are available on the Internet at the 
Commission's Web site: http://wireless.fcc.gov/auctions/71/ auctions/71/.

I. Introduction

    1. The Wireless Telecommunications Bureau (Bureau) announces an 
auction of 38 broadband PCS licenses. This auction, which is designated 
Auction No. 71, is scheduled to commence on May 16, 2007.

II. Licenses To Be Offered in Auction No. 71

    2. The spectrum to be auctioned has been offered previously in 
other auctions but was unsold and/or returned to the Commission as a 
result

[[Page 69126]]

of license cancellation or termination. A complete list of licenses 
available for Auction No. 71 is included as Attachment A of the Auction 
No. 71 Comment Public Notice.
    3. Auction No. 71 includes licenses for A, C, D, E, and F blocks of 
broadband PCS spectrum. The table referenced in the Auction No. 71 
Comment Public Notice cross-references the general rules regarding 
block/eligibility status/frequencies of broadband PCS licenses in these 
blocks. That table indicates that the C and F block licenses are 
divided into two tiers according to the population size, with Tier 1 
comprising markets with population at or above 2.5 million, based on 
2000 decennial census figures, and Tier 2 comprising the remaining 
markets. No Tier 1 licenses will be offered in Auction No. 71. C1, C2, 
C3, and C4 licenses in Tier 2 are generally available only to 
entrepreneurs in closed bidding. This eligibility restriction no longer 
applies, however, to licenses that have been made available on that 
basis, but not won, in any auction beginning on or after March 23, 
1999. Thus, certain licenses that were formerly subject to closed 
bidding and available only to entrepreneurs are now offered in open 
bidding in Auction No. 71.
    4. Attachment A of the Auction No. 71 Comment Public Notice list C 
block licenses being offered that are available to all bidders in open 
bidding, while others are available only to entrepreneurs in closed 
bidding. The A, B, E, and F block licenses, as well as certain C block 
licenses, are available in open bidding. Size-based bidding credits 
will be available for C and F block licenses won in open bidding. In 
order to qualify as an entrepreneur for closed bidding, an applicant, 
including attributable investors and affiliates, must have had gross 
revenues of less than $125 million in each of the last two years and 
must have less than $500 million in total assets. Size-based bidding 
credits are not available for C block licenses won in closed bidding or 
for licenses in the A, D, or E blocks.
    5. Because of the previous history of licenses for broadband PCS 
spectrum, certain of the licenses available in Auction No. 71 cover 
less bandwidth and fewer frequencies than noted in the table referenced 
in the Auction No. 71 Comment Public Notice. In addition, in some 
cases, licenses are available for only part of a market.
    6. Incumbency Issues. While much of the private and common carrier 
fixed microwave services (FMS) operating in the 1850-1990 MHz band (and 
other bands) have been relocated to available frequencies in higher 
bands or to other media, some FMS licensees may still be operating in 
the band. Applicants should become familiar with the status of FMS 
operation and relocation, and applicable Commission rules and orders.

III. Bureau Seeks Comment on Auction Procedures

    7. The Bureau seeks comment on the following issues relating to 
Auction No. 71.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design
    8. The Bureau proposes to auction all licenses included in Auction 
No. 71 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. Typically, 
bidding remains open on all licenses until bidding stops on every 
license. The Bureau seeks comment on this proposal.
    9. Auction Format. The Bureau has considered the possibility of 
using a simultaneous multiple-round auction format with package bidding 
(SMR-PB), but does not believe that an SMR-PB format is likely to offer 
significant advantages to bidders in Auction No. 71, given the nature 
of the auction inventory. Under the Commission's SMR-PB rules, bidders 
can place bids on any groups of licenses they wish to win together, 
with the result that they win either all the licenses in a group or 
none of them. The Bureau's standard SMR auction format offers all 
licenses for bid at the same time, and allows bidders to bid on and win 
multiple licenses on a license-by-license basis, thereby facilitating 
aggregations. The Bureau believes use of the SMR format for Auction No. 
71 will be the simplest and most efficient means of auctioning the 
licenses in this inventory, and therefore, the Bureau proposes to 
conduct the auction using its standard SMR auction format. However, if 
commenters believe that the SMR-PB design would offer significant 
benefits, the Bureau invites their comments and request that they 
describe what specific factors lead them to that conclusion.
    10. Information Available to Bidders Before and During an Auction. 
The Bureau also seeks comment on whether to implement procedures that 
would limit the disclosure of information on bidder interests and 
identities relative to the information procedures that have typically 
been used for Commission auctions. Commenters should indicate what 
factors support the position they take on this issue and specifically, 
how these factors apply to an auction of this nature, with a limited 
number of localized, mostly geographically non-contiguous licenses. 
Commenters should address whether technological considerations, 
equipment availability, or competitive concerns weigh in favor of or 
against limiting the disclosure of information on bidder interests and 
identities relative to most past Commission spectrum auctions, or 
whether the Commission should condition the implementation of such 
limits on a measure of the competitiveness of the auction, such as the 
eligibility ratio or a modified version of the eligibility ratio.
ii. Round Structure
    11. The Commission will conduct Auction No. 71 over the Internet. 
Alternatively, telephonic bidding will also be available via the 
Auction Bidder Line. The toll-free telephone number for telephonic 
bidding will be provided to qualified bidders.
    12. The auction will consist of sequential bidding rounds. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of the auction.
    13. The Bureau proposes to retain 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. Under this proposal, 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 bidding 
activity levels and other factors. The Bureau seeks comment on this 
proposal.
iii. Stopping Rule
    14. The Bureau has discretion to establish stopping rules before or 
during multiple round auctions in order to terminate the auction within 
a reasonable time. For Auction No. 71, the Bureau proposes to employ a 
simultaneous stopping rule approach. A simultaneous stopping rule means 
that all licenses remain available for bidding until bidding closes 
simultaneously on all licenses. More specifically, bidding will close 
simultaneously on all licenses after the first round in which no bidder 
submits any new bids, applies a proactive waiver, or submits a 
withdrawal. Thus, unless circumstances dictate otherwise, bidding will 
remain

[[Page 69127]]

open on all licenses until bidding stops on every license.
    15. Further, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 71: (a) Use a 
modified version of the simultaneous stopping rule. The modified 
stopping rule would close the auction for all licenses after the first 
round in which no bidder applies a waiver, places a withdrawal, or 
submits any new bids on any license for 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; (b) keep the auction open even if no bidder 
submits any new bids, applies a waiver, or submits a withdrawal. In 
this event, the effect will be the same as if a bidder had applied a 
waiver. The activity rule, therefore, will apply as usual and a bidder 
with insufficient activity will either lose bidding eligibility or use 
a remaining waiver; and (c) 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) after which the auction will close.
    16. The Bureau proposes to exercise these options only in certain 
circumstances, for example, where the auction is proceeding very 
slowly, there is minimal overall bidding activity, or it appears likely 
that the auction will not close within a reasonable period of time. 
Before exercising these options, the Bureau is likely to attempt to 
increase the pace of the auction by, for example, increasing the number 
of bidding rounds per day and/or changing the minimum acceptable bid 
percentage. The Bureau proposes to retain the discretion to use such 
stopping rule with or without prior announcement during the auction. 
The Bureau seeks comment on these proposals.
iv. Information Relating to Auction Delay, Suspension, or Cancellation
    17. For Auction No. 71, the Bureau proposes that, by public notice 
or by announcement during the auction, the Bureau may delay, suspend, 
or cancel the auction in the event of natural disaster, technical 
obstacle, evidence of an auction security breach, unlawful bidding 
activity, administrative or weather necessity, or for any other reason 
that affects the fair and efficient conduct of competitive bidding. The 
Bureau may elect to resume the auction starting from the beginning of 
the current round, resume the auction starting from some previous 
round, or cancel the auction in its entirety. Network interruption may 
cause the Bureau to delay or suspend the auction. The Bureau emphasizes 
that exercise of this authority is solely within the discretion of the 
Bureau, and its use is not intended to be a substitute for situations 
in which bidders may wish to apply their activity rule waivers. The 
Bureau seeks comment on this proposal.

B. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    18. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned. The 
upfront payment is a refundable deposit made by each bidder to 
establish eligibility to bid on licenses. Upfront payments related to 
the licenses for 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 factors in mind, the Bureau proposes to calculate 
upfront payments on a license-by-license basis using a formula based on 
bandwidth and license area population: $0.05 * MHz * License Area 
Population with a minimum of $500 per license.
    19. The Bureau further proposes that the amount of the upfront 
payment submitted by a bidder will determine the bidder's initial 
bidding eligibility in bidding units. The Bureau proposes that each 
license be assigned a specific number of bidding units equal to the 
upfront payment listed in Attachment A of the Auction No. 71 Comment 
Public Notice, on a bidding unit per dollar basis. The number of 
bidding units for a given license is fixed and does not change during 
the auction as prices rise. A bidder's upfront payment is not 
attributed to specific licenses. Rather, a bidder may place bids on any 
combination of licenses it 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 and hence its initial bidding 
eligibility, 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.
    20. The proposed number of bidding units for each license and 
associated upfront payment amounts are listed in Attachment A of the 
Auction No. 71 Comment Public Notice. The Bureau seeks comment on these 
proposals.
ii. Activity Rule
    21. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. A bidder's activity in a round will be the sum of 
the bidding units associated with any licenses upon which it places 
bids during the current round and the bidding units associated with any 
licenses 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.
    22. The Bureau proposes to divide the auction into two stages, each 
characterized by a different activity requirement. The auction will 
start in Stage One. The Bureau proposes that the auction generally will 
advance from Stage One to Stage Two when the auction activity level, as 
measured by the percentage of bidding units receiving new provisionally 
winning bids, is approximately twenty percent or below for three 
consecutive rounds of bidding. However, the Bureau further proposes 
that the Bureau retains the discretion to change stages unilaterally by 
announcement during the auction. In exercising this discretion, the 
Bureau will consider a variety of measures of bidder activity, 
including, but not limited to, the auction activity level, the 
percentage of licenses (as measured in bidding units) on which there 
are new bids, the number of new bids, and the percentage of increase in 
revenue. The Bureau seeks comment on these proposals.
    23. For Auction No. 71, the Bureau proposes the following activity 
requirements:
    Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current bidding eligibility is required 
to be active on licenses representing at least 80 percent of its 
current bidding eligibility. Failure to maintain the required activity 
level will result in a reduction in the bidder's

[[Page 69128]]

bidding eligibility in the next round of bidding (unless an activity 
rule waiver is used). During Stage One, a bidder's reduced eligibility 
for the next round will be calculated by multiplying the bidder's 
current round activity by five-fourths (\5/4\).
    Stage Two: In each round of the second stage, 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, a bidder's reduced eligibility 
for the next round will be calculated by multiplying the bidder's 
current round activity by twenty-nineteenths (\20/19\).
    24. The Bureau 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
    25. 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, not to particular licenses. 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.
    26. 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 in which a bidder's activity level is below the minimum required 
unless: (1) The bidder has no activity rule waivers remaining; or (2) 
the bidder overrides the automatic application of a waiver by reducing 
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.
    27. 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 rule 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.
    28. 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 or withdrawals 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, 
withdrawals, or proactive waivers 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.
    29. The Bureau proposes that each bidder in Auction No. 71 be 
provided with three activity rule waivers that may be used at the 
bidder's discretion during the course of the auction as set forth 
above. The Bureau seeks comment on this proposal.
iv. Reserve Price or Minimum Opening Bids
    30. The Bureau proposes to establish minimum opening bid amounts 
for Auction No. 71. The Bureau believes a minimum opening bid amount, 
which has been used in other auctions, is an effective bidding tool for 
accelerating the competitive bidding process. The Bureau does not 
propose a separate reserve price for the licenses to be offered in 
Auction No. 71.
    31. Specifically, for Auction No. 71, the Bureau proposes to 
calculate minimum opening bid amounts on a license-by-license basis 
using a formula based on bandwidth and license area population as 
follows: $0.05 * MHz * License Area Population with a minimum of $500 
per license. This proposed minimum opening bid amount for each license 
available in Auction No. 71 is set forth in Attachment A of the Auction 
No. 71 Comment Public Notice. The Bureau seeks comment on this 
proposal.
    32. If commenters believe that this minimum opening bid amount will 
result in unsold licenses, or is not a reasonable amount, or should 
instead operate as a reserve price, 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 minimum opening bid amounts, the Bureau 
particularly seeks comment on such factors as the amount of spectrum 
being auctioned, levels of incumbency, the availability of technology 
to provide service, the size of the service areas, issues of 
interference with other spectrum bands and any other relevant factors 
that could reasonably have an impact on valuation of the licenses being 
auctioned. The Bureau seeks comment on whether, consistent with Section 
309(j) of the Communications Act, the public interest would be served 
by having no minimum opening bid amount or reserve price.
v. Bid Amounts
    33. The Bureau proposes that, in each round, eligible bidders be 
able to place a bid on a given license in any of nine different 
amounts. Under this proposal, the FCC Auction System interface will 
list the nine acceptable bid amounts for each license.
    34. The first of the nine acceptable bid amounts is called the 
minimum acceptable bid amount. 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 a percentage of that bid amount 
calculated using the formula. In general, the percentage will be higher 
for a license receiving many bids than for a license receiving few 
bids. 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.
    35. The percentage of the provisionally winning bid used to 
establish the minimum acceptable bid amount (the additional percentage) 
is calculated at the end of each round,

[[Page 69129]]

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. 
Specifically, the activity index is equal to a weighting factor times 
the number of 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 additional percentage is determined as one plus the activity 
index times a minimum percentage amount, with the result not to exceed 
a given maximum. The additional percentage is then multiplied by the 
provisionally winning bid amount to obtain the minimum acceptable bid 
for the next round. The Commission will initially set the weighting 
factor at 0.5, the minimum percentage at 0.1 (10%), and the maximum 
percentage at 0.2 (20%). Hence, at these initial settings, the minimum 
acceptable bid for a license will be between ten percent and twenty 
percent higher than the provisionally winning bid, depending upon the 
bidding activity for the license. Equations and examples are shown in 
Attachment B of the Auction No. 71 Comment Public Notice.
    36. The eight additional bid amounts are calculated using the 
minimum acceptable bid amount and a bid increment percentage. 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 ten percent, the calculation 
is (minimum acceptable bid amount) * (1 + 0.1), rounded, or (minimum 
acceptable bid amount) * 1.1, 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) * 1.2, 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) * 
1.3, rounded; etc. The Bureau will round the results of these 
calculations, as well as the calculations to determine the minimum 
acceptable bid amounts, using its standard rounding procedures. For 
Auction No. 71, the Bureau proposes to use a bid increment percentage 
of ten percent to calculate the eight additional acceptable bid 
amounts.
    37. The Bureau retains the discretion to change the minimum 
acceptable bid amounts, the parameters of the formula to determine the 
percentage of the provisionally winning bid used to determine the 
minimum acceptable bid, 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 
seeks comment on its proposals for minimum acceptable bids amount and 
additional percentages as described in the Auction No. 71 Comment 
Public Notice.
vi. Provisionally Winning Bids
    38. 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 for each license 
will be determined based on the highest bid amount received for the 
license. In the event of identical high bid amounts being submitted on 
a license in a given round (i.e., tied bids), the Bureau will use a 
random number generator to select a single provisionally winning bid 
from among the tied bids. 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 
provisionally winning bid. If any bids are received on the license in a 
subsequent round, the provisionally winning bid again will be 
determined by the highest bid amount received for the license.
    39. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the license at the close of 
a subsequent round, unless the provisionally winning bid is withdrawn. 
Bidders are reminded that provisionally winning bids count toward 
activity for purposes of the activity rule.
vii. Bid Removal and Bid Withdrawal
    40. For Auction No. 71, the Bureau proposes 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. In contrast to the bid 
withdrawal provisions, a bidder removing a bid placed in the same round 
is not subject to a withdrawal payment. Once a round closes, a bidder 
may no longer remove a bid.
    41. A bidder may withdraw its provisionally winning bids using the 
withdraw bids function in the FCC Auction System. A bidder that 
withdraws its provisionally winning bid(s) is subject to the bid 
withdrawal payment provisions of the Commission rules. The Bureau seeks 
comment on these bid removal and bid withdrawal procedures.
    42. The Bureau proposes to limit each bidder to withdrawing 
provisionally winning bids in no more than two rounds during the course 
of the auction. The two rounds in which withdrawals may be used will be 
at the bidder's discretion; withdrawals otherwise must be in accordance 
with the Commission's rules. There is no limit on the number of 
provisionally winning bids that may be withdrawn in either of the 
rounds in which withdrawals are used. Withdrawals will remain subject 
to the bid withdrawal payment provisions specified in the Commission's 
rules.

C. Post-Auction Procedures

i. Establishing the Interim Withdrawal Payment Percentage
    43. The Bureau seeks comment on the appropriate percentage of a 
withdrawn bid that should be assessed as an interim withdrawal payment, 
in the event that a final withdrawal payment cannot be determined at 
the close of the auction. In general, the Commission's rules provide 
that a bidder that withdraws a bid during an auction is subject to a 
withdrawal payment equal to the difference between the amount of the 
withdrawn bid and the amount of the winning bid in the same or 
subsequent auction(s). However, if a license for which there has been a 
withdrawn bid is neither subject to a subsequent higher bid nor won in 
the same auction, the final withdrawal payment cannot be calculated 
until a corresponding license is subject to a higher bid or won in a 
subsequent auction. When that final payment cannot yet be calculated, 
the bidder responsible for the withdrawn bid is assessed an interim bid 
withdrawal payment, which will be applied toward any final bid 
withdrawal payment that is ultimately assessed. The Commission recently 
amended its rules to provide that in advance of the auction, the 
Commission shall establish the percentage of the withdrawn bid to be 
assessed as an interim bid withdrawal payment between three percent and 
twenty percent.
    44. The Commission has indicated that the level of the interim 
withdrawal payment in a particular auction will be based on the nature 
of the service and the inventory of the licenses being offered. 
Balancing the potential need for bidders to use withdrawals to avoid 
winning incomplete combinations of licenses with interest in deterring 
abuses of its bidding, the Bureau proposes a percentage below the

[[Page 69130]]

maximum twenty percent permitted under the current rules but above the 
three percent previously provided by the Commission's rules. 
Specifically, the Bureau proposes to establish the percentage of the 
withdrawn bid to be assessed as an interim bid withdrawal payment at 
fifteen percent for this auction. The Bureau seeks comment on this 
proposal.
ii. Establishing the Additional Default Payment Percentage
    45. 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 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. Until recently this additional payment for non-combinatorial 
auctions has been set at three percent of the defaulter's bid or of the 
subsequent winning bid, whichever is less.
    46. The CSEA/Part 1 Report and Order, 71 FR 6214, February 7, 2006, 
modified Sec.  1.2104(g)(2) by, inter alia, increasing the three 
percent limit on the additional default payment for non-combinatorial 
auctions to twenty percent. Under the modified rule, the Commission 
will, in advance of each non-combinatorial auction, establish an 
additional default payment for that auction of three percent up to a 
maximum of twenty percent. As the Commission has indicated, the level 
of this payment in each case will be based on the nature of the service 
and the inventory of the licenses being offered.
    47. For Auction No. 71, the Bureau proposes to establish an 
additional default payment of ten percent. Balancing these 
considerations, the Bureau proposes an additional default payment of 
ten percent of the relevant bid. The Bureau seeks comment on this 
proposal.

IV. Conclusion

    48. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in Sec.  1.1206(b) of the Commission's rules.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E6-20241 Filed 11-28-06; 8:45 am]
BILLING CODE 6712-01-P