[Federal Register Volume 71, Number 244 (Wednesday, December 20, 2006)]
[Notices]
[Pages 76332-76336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-21637]



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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-06-72-A (Auction No. 72); DA 06-2437; AU Docket No. 06-
214]


Auction of Phase II 220 MHz Spectrum Scheduled For June 20, 2007; 
Comments Sought on Competitive Bidding Procedures for Auction No. 72

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of certain Phase II 220 
MHz Spectrum licenses (Phase II 220 MHz) scheduled to commence on June 
20, 2007 (Auction No. 72). This document also seeks comments on 
competitive bidding procedures for Auction No. 72.

DATES: Comments are due on or before December 29, 2006, and reply 
comments are due on or before January 8, 2007.

ADDRESSES: Comments and reply comments must be identified by AU Docket 
No. 06-214; DA 06-2437. The Bureau requests 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: 
Howard Davenport at (202) 418-0660. For general auction questions: 
Debbie Smith or Barbara Sibert at (717) 338-2888. Mobility Division: 
For service rules questions: Allen Barna (legal) or Gary Devlin 
(technical) at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 72 
Comment Public Notice released on December 12, 2006. The complete text 
of the Auction No. 72 Comment Public Notice, including attachments, as 
well as related Commission documents, are available for public 
inspection and copying from 8 a.m. to 4:30 p.m. ET Monday through 
Thursday or from 8 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. 72 Comment Public 
Notice, including attachments, as well as 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 06-2437. The Auction 
No. 72 Comment Public Notice and related documents also are available 
on the Internet at the Commission's Web site: http://www.wireless.fcc.gov/auctions/72/.

I. Licenses To Be Offered in Auction No. 72

    1. The Wireless Telecommunications Bureau (Bureau) announces an 
auction of 94 Phase II 220 MHz Service licenses. This auction, which is 
designated Auction No. 72, is scheduled to commence on June 20, 2007.
    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 of license cancellation or termination. A complete list of 
licenses available for Auction No. 72 is included as Attachment A of 
the Auction No. 72 Comment Public Notice.
    3. Because of the previous history of licenses for 220 MHz 
spectrum, certain licenses available in Auction No. 72 are only 
available, in some cases, for part of a market. See table referenced in 
Attachment A of the Auction No. 72 Comment Public Notice.
    4. Incumbency Issues. In the markets covered by the licenses to be 
offered in this auction, there are a number of incumbent Phase I 220 
MHz licenses already licensed and operating on frequencies that were 
subject to earlier auctions. Such Phase I incumbents must be protected 
from harmful interference by Phase II 220 MHz licenses in accordance 
with the Commission's rules. These limitations may restrict the ability 
of Phase II geographic area licenses to use certain portions of the 
electromagnetic spectrum or provide service to certain areas in their 
geographic license areas.

II. Bureau Seeks Comment on Auction Procedures

    5. The Bureau seeks comment on the following issues relating to 
Auction No. 72.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design
    6. The Bureau proposes to auction all licenses included in Auction 
No. 72 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.
    7. Auction Format. The Bureau has considered the possibility of 
using a simultaneous multiple-round auction format with package bidding 
(SMR-CPB), but does not believe that an SMR-PB format is likely to 
offer significant advantages to bidders in Auction No. 72, 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

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Auction No. 72 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 requests 
that they describe what specific factors lead them to that conclusion.
    8. 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 prior to the close of bidding. 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
    9. The Commission will conduct Auction No. 72 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.
    10. 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.
    11. 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
    12. 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. 72, 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 open on all licenses until bidding stops on every license.
    13. Further, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 72: (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.
    14. 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
    15. For Auction No. 72, 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
    16. 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 the following 
formulas:

EA Licenses $500.00 per license
EAG License $0.01 * 0.15 MHz * License Area Population

    17. 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. 72 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

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combination of licenses it selected on its short form application 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.
    18. The proposed number of bidding units for each license and 
associated upfront payment amounts are listed in Attachment A of the 
Auction No. 72 Comment Public Notice. The Bureau seeks comment on these 
proposals.
ii. Activity Rule
    19. 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.
    20. 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.
    21. For Auction No. 72, 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 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\).
    22. 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
    23. 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.
    24. 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.
    25. 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.
    26. 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.
    27. The Bureau proposes that each bidder in Auction No. 72 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
    28. The Bureau proposes to establish minimum opening bid amounts 
for Auction No. 72. 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

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Bureau does not propose a separate reserve price for the licenses to be 
offered in Auction No. 72.
    29. Specifically, for Auction No. 72, 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:

EA Licenses $500.00 per license
EAG License $0.01 * 0.15 MHz * License Area Population

    This proposed minimum opening bid amount for each license available 
in Auction No. 72 is set forth in Attachment A of the Auction No. 72 
Comment Public Notice. The Bureau seeks comment on this proposal.
    30. 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
    31. 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.
    32. 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.
    33. 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, 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. 72 Comment Public Notice.
    34. 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. 72, the Bureau proposes to use a bid increment percentage 
of ten percent to calculate the eight additional acceptable bid 
amounts.
    35. 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. 72 Comment 
Public Notice.
vi. Provisionally Winning Bids
    36. 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.
    37. 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
    38. For Auction No. 72, 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

[[Page 76336]]

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.
    39. 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.
    40. 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. Interim Withdrawal Payment Percentage
    41. 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 a percentage between three percent and 
twenty percent of the withdrawn bid to be assessed as an interim bid 
withdrawal payment.
    42. 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. The 
Commission noted that it may impose a higher interim withdrawal payment 
percentage to deter the anti-competitive use of withdrawals when, for 
example, bidders likely will not need to aggregate licenses offered, 
such as when few licenses are offered, the licenses offered are not on 
adjacent frequencies or in adjacent areas, or there are few synergies 
to be captured by combining licenses.
    43. With respect to the licenses being offered in Auction No. 72, 
the service rules permit a variety of fixed, mobile, and paging 
services, though the opportunities for combining licenses on adjacent 
frequencies or in adjacent areas are more limited than has been the 
case in previous auctions of licenses in the Phase II 220 MHz service. 
Balancing the potential need for bidders to use withdrawals to avoid 
winning incomplete combinations of licenses with the Bureau's interest 
in deterring abuses of our bidding, the Bureau proposes a percentage 
below the 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 an interim bid 
withdrawal payment of ten percent of the withdrawn bid for this 
auction. The Bureau seeks comment on this proposal.
ii. Additional Default Payment Percentage
    44. 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.
    45. 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.
    46. For Auction No. 72, the Bureau proposes to establish an 
additional default payment of ten percent. As noted in the CSEA/Part 1 
Report and Order, defaults weaken the integrity of the auction process 
and impede the deployment of service to the public, and an additional 
default payment of more than three percent will be more effective in 
deterring defaults. At the same time, the Bureau does not believe the 
detrimental effects of any defaults in Auction No. 72 are likely to be 
unusually great. The Bureau seeks comment on this proposal.
    47. 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. E6-21637 Filed 12-19-06; 8:45 am]
BILLING CODE 6712-01-P