[Federal Register Volume 72, Number 42 (Monday, March 5, 2007)]
[Notices]
[Pages 9745-9762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3786]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 06-206; Report No. AUC-07-71-B (Auction No. 71); DA 07-
30]


Auction of Broadband PCS Spectrum Scheduled for May 16, 2007; 
Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments 
and Other Procedures for Auction No. 71

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the procedures and minimum opening 
bids for the upcoming auction of certain Broadband PCS Spectrum 
(Auction No. 71). This document is intended to familiarize prospective 
bidders with the procedures and minimum opening bids for this auction.

DATES: Applications to participate in Broadband PCS Auction No. 71 must 
be filed before 6 p.m. ET on March 16, 2007. Bidding for Auction No. 71 
is scheduled to begin on May 16, 2007.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions Spectrum and Access Division: For legal questions: Stephen 
Johnson at (202) 418-0660. For general auction questions: Roy Knowles 
or Lisa Stover at (717) 338-2868. Mobility Division: For service rule 
questions: Michael Connelly (legal and licensing)

[[Page 9746]]

or Keith Harper (technical) at (202) 418-0620. To request materials in 
accessible formats (Braille, large print, electronic files, audio 
format) for people with disabilities, send an e-mail to [email protected] 
or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 
or (202) 418-0432 (TTY).

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 71 
Procedures Public Notice released on January 16, 2007. The complete 
text of the Auction No. 71 Procedures 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. Eastern Time 
(ET) 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. 71 Procedures 
Public Notice and related Commission documents may also be purchased 
from the Commission's duplicating contractor, Best Copy and Printing, 
Inc. (BCPI), Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC, 20554, telephone 202-488-5300, facsimile 202-488-5563, 
or Web site: http://www.BCPIWEB.com. When ordering documents from BCPI, 
please provide the appropriate FCC document number, for example, DA 07-
30 for the Auction No. 71 Procedures Public Notice. The Auction No. 71 
Procedures Public Notice and related documents are also available on 
the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/71/. 

I. General Information

A. Introduction

    1. The Commission announces the procedures and minimum opening bid 
amounts for the upcoming auction of 38 broadband Personal 
Communications Service (PCS) licenses scheduled to begin on May 16, 
2007 (Auction No. 71). On November 17, 2006, in accordance with Section 
309(j)(3) of the Communications Act of 1934, as amended, the Wireless 
Telecommunications Bureau (Bureau) released a public notice seeking 
comment on reserve prices or minimum opening bid amounts and the 
procedures to be used in Auction No. 71. The Commission received no 
comments in response to the Auction No. 71 Comment Public Notice 71 FR 
69125, November 29, 2006.
    2. In the Auction No. 71 Comment Public Notice, the Bureau proposed 
to include all 38 PCS licenses in a single auction using the 
Commission's standard simultaneous multiple-round (SMR) auction format. 
The Bureau sought comment on the feasibility and desirability of 
allocating the PCS licenses using the Commission's package bidding 
format (SMR-PB). Based on the record and the particular circumstances 
of the auction of these PCS licenses, the Bureau will include all 38 
PCS licenses in a single auction using the Commission's standard SMR 
format, as proposed. Package bidding will not be used in Auction No. 
71.
    3. For Auction No. 71, the Commission will determine the 
information procedures based primarily on the eligibility ratio, a 
measure of likely competition in the auction. The eligibility ratio is 
defined as the total number of bidding units of eligibility purchased 
by bidders through their upfront payments, divided by the total number 
of bidding units for the licenses in the auction. Specifically, if the 
eligibility ratio equals or exceeds three, the Commission will use the 
information procedures since with sufficient likely competition, the 
anti-competitive behavior that limited information procedures aim to 
deter is unlikely to be successful. If the eligibility ratio is less 
than three, in general the Commission will withhold certain information 
on bidder interests and bidder identities. However, if the eligibility 
ratio is less than three, the Commission reserves the discretion not to 
limit information on bidder interests and identities if circumstances 
indicate that limited information procedures would not be an effective 
tool for deterring anti-competitive behavior. Such circumstances would 
occur, for example, if only two applicants became qualified to 
participate in the bidding, since limited information procedures would 
be ineffective in preventing bidders from knowing the identity of the 
competing bidder.
    4. In the event that the conditions described above result in the 
use of procedures under which certain information is withheld, the 
Commission will release: (1) Each bidder's eligibility and upfront 
payment made prior to the start of the auction; and (2) the amounts of 
all gross bids (including the losing bids) for each license after each 
round, but not the identities of the bidders placing the bids. The 
Commission believes this provides bidders with information regarding 
license valuations without compromising the goal of reducing the 
potential for anti-competitive outcomes.
    5. Pursuant to these procedures, information on the license 
selections of auction applicants will be withheld at least until the 
upfront payment deadline has passed and the Commission determines the 
information procedures that will be used for the auction. Therefore, to 
enable applicants to comply with the Commission's anti-collusion rules, 
once the Bureau has conducted its initial review of applications to 
participate in Auction No. 71, each applicant will receive a letter 
that lists the other applicants in Auction No. 71 that have applied for 
licenses in any of the same geographic areas as the applicant.
i. Licenses To Be Auctioned
    6. Auction No. 71 will offer 38 licenses for A, C, D, E, and F 
blocks of broadband PCS spectrum. 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. 71 is included as 
Attachment A of the Auction No. 71 Procedures Public Notice.
    7. Some of the C block licenses to be offered in Auction No. 71 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.
    8. Because of the history of licenses for broadband PCS spectrum, 
certain of the licenses available in Auction No. 71 cover less 
bandwidth and fewer frequencies and in some cases, licenses are 
available for only part of a market. See Attachment A of the Auction 
No. 71 Procedures Public Notice to determine the precise scope of the 
licenses that will be offered.

B. Rules and Disclaimers

i. Relevant Authority
    9. Prospective applicants must familiarize themselves thoroughly 
with the Commission's general competitive bidding rules set forth in 
Title 47CFR part 1, including recent amendments and clarifications; 
rules relating to broadband PCS, contained in Title 47 CFR part 24; and 
rules relating to

[[Page 9747]]

applications, practice and procedure contained in Title 47 CFR part 1. 
Prospective applicants must also be thoroughly familiar with the 
procedures, terms and conditions (collectively, terms) contained in the 
Auction No. 71 Procedures Public Notice and the Commission's decisions 
in proceedings regarding competitive bidding procedures, application 
requirements, and obligations of Commission licensees.
    10. The terms contained in the Commission's rules, relevant orders, 
and public notices are not negotiable. The Commission may amend or 
supplement the information contained in its public notices at any time, 
and will issue public notices to convey any new or supplemental 
information to applicants. It is the responsibility of all applicants 
to remain current with all Commission rules and with all public notices 
pertaining to this auction.
ii. Prohibition of Collusion; Compliance With Antitrust Laws
    11. To ensure the competitiveness of the auction process, Sec.  
1.2105(c) of the Commission's rules prohibits applicants competing for 
licenses in any of the same geographic license areas from communicating 
with each other about bids, bidding strategies, or settlements unless 
such applicants have identified each other on their short-form 
applications (FCC Forms 175) as parties with whom they have entered 
into agreements pursuant to Sec.  1.2105(a)(2)(viii). In Auction No. 
71, the rule would apply to any applicants for licenses in the same BTA 
or MTA. The rule would also apply to applicants for licenses in 
overlapping BTAs and MTAs. For example, assume that one applicant 
applies for an MTA license and a second applicant applies for a BTA 
license covering any area within that MTA. The two entities will have 
applied for licenses covering the same geographic area and would be 
precluded from communicating with each other under the rule. In 
addition, the rule would preclude applicants that apply to bid for all 
licenses from communicating with all other applicants. Thus, applicants 
that have applied for licenses covering the same markets (unless they 
have identified each other on their FCC Form 175 applications as 
parties with whom they have entered into agreements under Sec.  
1.2105(a)(2)(viii)) must affirmatively avoid all communications with or 
disclosures to each other that affect or have the potential to affect 
bids or bidding strategy, which may include communications regarding 
the post-auction market structure. This prohibition begins at the 
short-form application filing deadline and ends at the down payment 
deadline after the auction. This prohibition applies to all applicants 
regardless of whether such applicants become qualified bidders or 
actually bid. Information concerning applicants' license selections 
will not be made public at least until the upfront payment deadline has 
passed and the Commission determines the information procedures that 
will be used for the auction. Therefore, the Commission will inform 
each applicant by letter of the identity of each of the other 
applicants that has applied for licenses covering any of the same 
geographic areas as the licenses that it has selected in its short-form 
application.
    12. For purposes of this prohibition, Sec.  1.2105(c)(7)(i) defines 
applicant as including all officers and directors of the entity 
submitting a short-form application to participate in the auction, all 
controlling interests of that entity, as well as all holders of 
partnership and other ownership interests and any stock interest 
amounting to 10 percent or more of the entity, or outstanding stock, or 
outstanding voting stock of the entity submitting a short-form 
application.
    13. Applicants for licenses for any of the same geographic license 
areas must not communicate directly or indirectly about bids or bidding 
strategy. Accordingly, such applicants are encouraged not to use the 
same individual as an authorized bidder. A violation of the anti-
collusion rule could occur if an individual acts as the authorized 
bidder for two or more competing applicants, and conveys information 
concerning the substance of bids or bidding strategies between such 
applicants. Also, if the authorized bidders are different individuals 
employed by the same organization (e.g., law firm or engineering firm 
or consulting firm), a violation similarly could occur. In such a case, 
at a minimum, applicants should certify on their applications that 
precautionary steps have been taken to prevent communication between 
authorized bidders and that applicants and their bidding agents will 
comply with the anti-collusion rule. A violation of the anti-collusion 
rule could occur in other contexts, such as an individual serving as an 
officer for two or more applicants. Moreover, the Commission has found 
a violation of the anti-collusion rule where a bidder used the 
Commission's bidding system to disclose its bidding strategy in a 
manner that explicitly invited other auction participants to cooperate 
and collaborate in specific markets, and has placed auction 
participants on notice that the use of its bidding system to disclose 
market information to competitors will not be tolerated and will 
subject bidders to sanctions. Bidders are cautioned that the Commission 
remains vigilant about prohibited communications taking place in other 
situations. For example, the Commission has warned that prohibited 
communications concerning bids and bidding strategies may include 
communications regarding capital calls or requests for additional funds 
in support of bids or bidding strategies to the extent such 
communications convey information concerning the bids and bidding 
strategies directly or indirectly. Applicants are hereby placed on 
notice that public disclosure of information relating to bidder 
interests and bidder identities that--although revealed prior to and 
during other Commission auctions--is confidential in this auction at 
the time of disclosure may violate the anti-collusion rule. Bidders 
should use caution in their dealings with other parties, such as 
members of the press, financial analysts, or others who might become a 
conduit for the communication of prohibited bidding information.
    14. The Commission's rules do not prohibit applicants from entering 
into otherwise lawful bidding agreements before filing their short-form 
applications, as long as they disclose the existence of the 
agreement(s) in their short-form application. If parties agree in 
principle on all material terms prior to the short-form filing 
deadline, each party to the agreement must identify the other party or 
parties to the agreement on its short-form application under Sec.  
1.2105(c), even if the agreement has not been reduced to writing. If 
the parties have not agreed in principle by the short-form filing 
deadline, they should not include the names of parties to discussions 
on their applications, and they may not continue negotiations, 
discussions or communications with any other applicants after the 
short-form filing deadline.
    15. By electronically submitting its short-form application 
following the electronic filing procedures set forth in Attachment C of 
the Auction No. 71 Procedures Public Notice, each applicant certifies 
its compliance with Sec.  1.2105(c). However, the Commission cautions 
that merely filing a certifying statement as part of an application 
will not outweigh specific evidence that collusive behavior has 
occurred, nor will it preclude the initiation of an investigation when 
warranted. The Commission has stated that it intends to scrutinize 
carefully any instances in which bidding patterns suggest that 
collusion may be occurring. Any

[[Page 9748]]

applicant found to have violated the anti-collusion rule may be subject 
to sanctions.
    16. Applicants are also reminded that, regardless of compliance 
with the Commission's rules, they remain subject to the antitrust laws, 
which are designed to prevent anticompetitive behavior in the 
marketplace. Compliance with the disclosure requirements of the 
Commission's anti-collusion rule will not insulate a party from 
enforcement of the antitrust laws. For instance, a violation of the 
antitrust laws could arise out of actions taking place well before any 
party submits a short form application. The Commission has cited a 
number of examples of potentially anticompetitive actions that would be 
prohibited under antitrust laws. The Bureau has long reminded potential 
applicants and others that even where the applicant discloses parties 
with whom it has reached an agreement on the short-form application, 
thereby permitting discussions with those parties, the applicant is 
nevertheless subject to existing antitrust laws. To the extent the 
Commission becomes aware of specific allegations that may give rise to 
violations of the federal antitrust laws, the Commission may refer such 
allegations to the United States Department of Justice for 
investigation. If an applicant is found to have violated the antitrust 
laws or the Commission's rules in connection with its participation in 
the competitive bidding process, it may be subject to forfeiture of its 
upfront payment, down payment, or full bid amount and may be prohibited 
from participating in future auctions, among other sanctions.
    17. Section 1.65 of the Commission's rules requires an applicant to 
maintain the accuracy and completeness of information furnished in its 
pending application and to notify the Commission within 30 days of any 
substantial change that may be of decisional significance to that 
application. Thus Sec.  1.65 requires an auction applicant to notify 
the Commission of any substantial change to the information or 
certifications included in its pending short-form application. 
Applicants are therefore required by Sec.  1.65 to report to the 
Commission any communications they have made to or received from 
another applicant after the short-form filing deadline that affect or 
have the potential to affect bids or bidding strategy, unless such 
communications are made to or received from parties to agreements 
identified under Sec.  1.2105(a)(2)(viii). Section 1.2105(c)(6) 
provides that any applicant that makes or receives a communication 
prohibited by Sec.  1.2105(c) must report such communication to the 
Commission in writing immediately, and in no case later than five 
business days after the communication occurs.
    18. Applicants that are winning bidders will be required to 
disclose in their long-form applications the specific terms, 
conditions, and parties involved in any bidding consortia, joint 
ventures, partnerships, and other arrangements entered into relating to 
the competitive bidding process.
    19. A summary listing of documents issued by the Commission and the 
Bureau addressing the application of the anti-collusion rule may be 
found in Attachment F of the Auction No. 71 Procedures Public Notice.
iii. Incumbency Issues
    20. 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 licenses 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.
iv. Due Diligence
    21. Potential bidders are reminded that they are solely responsible 
for investigating and evaluating all technical and marketplace factors 
that may have a bearing on the value of the broadband PCS licenses in 
this auction. The FCC makes no representations or warranties about the 
use of this spectrum for particular services. Applicants should be 
aware that an FCC auction represents an opportunity to become an FCC 
licensee in this 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 
license constitute a guarantee of business success. Applicants should 
perform their individual due diligence before proceeding as they would 
with any new business venture.
    22. Potential bidders are strongly encouraged to conduct their own 
research prior to the beginning of bidding in Auction No. 71 in order 
to determine the existence of any pending administrative or judicial 
proceedings that might affect their decision regarding participation in 
the auction. Participants in Auction No. 71 are strongly encouraged to 
continue such research throughout the auction. In addition, potential 
bidders should perform technical analyses sufficient to assure 
themselves that, should they prevail in competitive bidding for a 
specific license, they will be able to build and operate facilities 
that will fully comply with the Commission's technical and legal 
requirements.
    23. Applicants should also be aware that certain pending and future 
proceedings, including applications (including those for modification), 
petitions for rulemaking, requests for special temporary authority, 
waiver requests, petitions to deny, petitions for reconsideration, 
informal oppositions, and applications for review, before the 
Commission may relate to particular applicants or incumbent licensees 
or the licenses available in Auction No. 71. In addition, pending and 
future judicial proceedings may relate to particular applicants or 
incumbent licensees, or the licenses available in Auction No. 71. 
Prospective bidders are responsible for assessing the likelihood of the 
various possible outcomes, and considering their potential impact on 
spectrum licenses available in this auction.
    24. Applicants should perform due diligence to identify and 
consider all proceedings that may affect the spectrum licenses being 
auctioned and that could have an impact on the availability of spectrum 
for Auction No. 71. In addition, although the Commission may continue 
to act on various pending applications, informal objections, petitions, 
and other requests for Commission relief, some of these matters may not 
be resolved by the beginning of bidding in the auction.
    25. Applicants are solely responsible for identifying associated 
risks and for investigating and evaluating the degree to which such 
matters may affect their ability to bid on, otherwise acquire, or make 
use of licenses available in Auction No. 71.
    26. Applicants may obtain information about licenses available in 
Auction No. 71 through the Bureau's licensing databases at http://wireless.fcc.gov/uls. Applicants may query the database online and 
download a copy of their search results if desired.
    27. The Commission makes no representations or guarantees regarding 
the accuracy or completeness of information in its databases or any 
third party databases, including, for example, court docketing systems. 
To the extent the Commission's databases may not include all 
information deemed necessary or desirable by an applicant, applicants 
may obtain or verify such information from independent sources or 
assume the risk of any incompleteness or inaccuracy in said databases. 
Furthermore, the Commission makes no representations

[[Page 9749]]

or guarantees regarding the accuracy or completeness of information 
that has been provided by incumbent licensees and incorporated into its 
databases.
    28. Potential applicants are strongly encouraged to physically 
inspect any prospective sites located in, or near, the service area for 
which they plan to bid, and also to familiarize themselves with the 
environmental review obligations.
v. Use of Integrated Spectrum Auction System
    29. The Commission will make available a browser-based bidding 
system to allow bidders to participate in Auction No. 71 over the 
Internet using the Commission's Integrated Spectrum Auction System 
(ISAS or FCC Auction System). The Commission makes no warranty 
whatsoever with respect to the FCC Auction System. In no event shall 
the Commission, or any of its officers, employees or agents, be liable 
for any damages whatsoever (including, but not limited to, loss of 
business profits, business interruption, loss of business information, 
or any other loss) arising out of or relating to the existence, 
furnishing, functioning or use of the FCC Auction System that is 
accessible to qualified bidders in connection with this auction. 
Moreover, no obligation or liability will arise out of the Commission's 
technical, programming or other advice or service provided in 
connection with the FCC Auction System.
vi. Bidder Alerts
    30. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use Auction No. 71 to 
deceive and defraud unsuspecting investors. Information about deceptive 
telemarketing investment schemes is available from the Commission as 
well as the FTC and SEC. Complaints about specific deceptive 
telemarketing investment schemes should be directed to the FTC, the 
SEC, or the National Fraud Information Center.
vii. Environmental Review Requirements
    31. Licensees must comply with the Commission's rules regarding 
implementation of the National Environmental Policy Act and other 
federal environmental statutes. The construction of a wireless antenna 
facility is a federal action and the licensee must comply with the 
Commission's environmental rules for each such facility. The 
Commission's environmental rules require, among other things, that the 
licensee consult with expert agencies having environmental 
responsibilities, including the U.S. Fish and Wildlife Service, the 
State Historic Preservation Office, the Army Corps of Engineers and the 
Federal Emergency Management Agency (through the local authority with 
jurisdiction over floodplains). In assessing the effect of facilities 
construction on historic properties, the licensee must follow the 
provisions of the Nationwide Programmatic Agreement Regarding the 
Section 106 National Historic Preservation Act Review Process. The 
licensee must prepare environmental assessments for facilities that may 
have a significant impact in or on wilderness areas, wildlife 
preserves, threatened or endangered species or designated critical 
habitats, historical or archaeological sites, Indian religious sites, 
floodplains, and surface features. The licensee also must prepare 
environmental assessments for facilities that include high intensity 
white lights in residential neighborhoods or excessive radio frequency 
emission.

C. Auction Specifics

i. Auction Date
    32. Bidding in Auction No. 71 will begin on Wednesday, May 16, 
2007, as announced in the Auction No. 71 Comment Public Notice. The 
initial schedule for bidding will be announced by public notice at 
least one week before the start of the auction.
    33. Unless otherwise announced, bidding on all licenses will be 
conducted on each business day until bidding has stopped on all 
licenses.
ii. Auction Title
    34. Auction No. 71--Broadband PCS.
iii. Bidding Methodology
    35. The bidding methodology for Auction No. 71 will be simultaneous 
multiple round bidding. The Commission will conduct this auction over 
the Internet using the FCC Auction System, and telephonic bidding will 
be available as well. Qualified bidders are permitted to bid 
electronically via the Internet or by telephone. All telephone calls 
are recorded.
iv. Pre-Auction Dates and Deadlines
    36. Dates and Deadlines

 
Auction Seminar............................  March 7, 2007.
Short-Form Application (FCC Form 175)        March 7, 2007; 12 noon ET.
 Filing Window Opens.
Short-Form Application (FCC Form 175)        March 16, 2007; prior to 6
 Filing Window Deadline.                      p.m. ET.
Upfront Payments (via wire transfer).......  April 20, 2007; 6 p.m. ET.
Mock Auction...............................  May 14, 2007.
Auction Begins.............................  May 16, 2007.
 

v. Requirements for Participation
    37. Those wishing to participate in the auction must: (1) Submit a 
short-form application (FCC Form 175) electronically prior to 6 p.m. 
Eastern Time (ET), March 16, 2007, following the electronic filing 
procedures set forth in Attachment C of the Auction No. 71 Procedures 
Public Notice; (2) submit a sufficient upfront payment and an FCC 
Remittance Advice Form (FCC Form 159) by 6 p.m. ET, April 20, 2007, 
following the procedures and instructions set forth in the Auction No. 
71 Procedures Public Notice; and (3) comply with all provisions 
outlined in the Auction No. 71 Procedures Public Notice and applicable 
Commission rules.

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

    38. Entities seeking licenses available in Auction No. 71 must file 
a short-form application electronically via the FCC Auction System 
prior to 6 p.m. ET on March 16, 2007, following the procedures 
prescribed in Attachment C to the Auction No. 71 Procedures Public 
Notice. If an applicant claims eligibility for a bidding credit, the 
information provided in its FCC Form 175 will be used in determining 
whether the applicant is eligible for the claimed bidding credit. 
Applicants bear full responsibility for submitting accurate, complete 
and timely short-form applications. All applicants must certify on 
their short-form applications under penalty of perjury that they are 
legally, technically, financially and otherwise qualified to hold a 
license. Applicants should read the instructions set forth in 
Attachment C to the Auction No. 71 Procedures Public Notice carefully 
and should consult the Commission's rules to ensure that, in addition 
to the

[[Page 9750]]

materials, all the information that is required under the Commission's 
rules is included with their short-form applications.
    39. An entity may not submit more than one short-form application 
for a single auction. In the event that a party submits multiple short-
form applications, only one application will be accepted for filing.
    40. Applicants also should note that submission of a short-form 
application constitutes a representation by the certifying official 
that he or she is an authorized representative of the applicant, that 
he or she has read the form's instructions and certifications, and that 
the contents of the application, its certifications, and any 
attachments are true and correct. Applicants are not permitted to make 
major modifications to their applications; such impermissible changes 
include a change of the certifying official to the application. 
Submission of a false certification to the Commission may result in 
penalties, including monetary forfeitures, license forfeitures, 
ineligibility to participate in future auctions, and/or criminal 
prosecution.

A. Eligibility for Closed Bidding

    41. In order to be eligible to bid for one or more closed C block 
licenses, an applicant must demonstrate that it meets the eligibility 
requirements of Sec.  24.709(a) of the Commission's rules. 
Specifically, as of the FCC Form 175 filing deadline, the applicant, 
together with its affiliates and persons or entities that hold 
interests in the applicant and their affiliates, must have combined 
total assets of less than $500 million and must have had combined gross 
revenues of less than $125 million in each of the last two years. Every 
applicant that claims eligibility for closed bidding will be required 
to provide information regarding revenues attributable to the 
applicant, its affiliates, its controlling interests, and the 
affiliates of its controlling interests on its FCC Form 175 short-form 
application to establish that it satisfies the eligibility requirement.

B. Preferences for Small Businesses and Others

i. Size Standards for Bidding Credits
    42. A bidding credit represents the amount by which a bidder's 
winning bid will be discounted. For Auction No. 71, bidding credits 
will be available to small businesses and very small businesses, and 
consortia thereof, as follows: (1) A bidder with attributed average 
annual gross revenues that exceed $15 million and do not exceed $40 
million for the preceding three years (small business) will receive a 
15 percent discount on its winning bid for certain C and F block 
licenses; (2) a bidder with attributed average annual gross revenues 
that do not exceed $15 million for the preceding three years (very 
small business) will receive a 25 percent discount on its winning bid 
for certain C and F block licenses.
    43. Bidding credits are not cumulative; a qualifying applicant 
receives either the 15 percent or 25 percent bidding credit on its 
winning bid, but not both. No small and very small business bidding 
credits are provided for licenses in the A, D, and E blocks or for C 
block licenses available only to entrepreneurs in closed bidding.
    44. Every applicant that claims eligibility for a bidding credit as 
either a small business or a very small business, or a consortium of 
small businesses or very small businesses, will be required to provide 
information regarding revenues attributable to the applicant, its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests on its FCC Form 175 short-form application to 
establish that it satisfies the applicable eligibility requirement. 
Applicants claiming eligibility as a designated entity in Auction No. 
71 should review carefully the CSEA/Part 1 Designated Entity Second 
FNPRM, 71 FR 6992, February 10, 2006 and the CSEA/Part 1 Second Report 
and Order, 71 FR 26245, May 5, 2006. In that connection, the Commission 
adopted rules governing eligibility for designated entity benefits in 
the Designated Entity Second Report and Order. The Commission's new 
rules regarding applicants seeking eligibility for designated entity 
benefits require the disclosure of a list of all parties with which the 
applicant has entered into arrangements for the lease or resale 
(including wholesale agreements) of any of the capacity of any of the 
applicant's spectrum; and a list, separately and in the aggregate, of 
the gross revenues of entities with which the applicant has an 
attributable material relationship, as defined in Sec.  
1.2110(b)(3)(iv)(B).
ii. Tribal Lands Bidding Credit
    45. To encourage the growth of wireless services in federally 
recognized tribal lands, the Commission has implemented a tribal lands 
bidding credit.
iii. Installment Payments
    46. Installment payment plans will not be available in Auction No. 
71.

C. License Selection

    47. In Auction No. 71, applicants must select the licenses on which 
they want to bid from the list of available licenses. In Auction No. 
71, FCC Form 175 will include a filtering mechanism that allows an 
applicant to filter the available licenses. The applicant will make 
selections for one or more of the filter criteria and the system will 
produce a list of licenses satisfying the specified criteria. The 
applicant may select all the licenses in the customized list or select 
individual licenses from the list. Applicants also will be able to 
select licenses from one customized list and then create additional 
customized lists to select additional licenses. There will be no 
opportunity to change license selection after the short-form filing 
deadline. It is critically important that an applicant confirm its 
license selections before submitting its short-form application because 
the FCC Auction System will not accept bids on licenses that an 
applicant has not selected on its FCC Form 175.

D. Disclosure of Bidding Arrangements

    48. Applicants will be required to identify in their short-form 
applications all parties with whom they have entered into any 
agreements, arrangements, or understandings of any kind relating to the 
licenses being auctioned, including any agreements relating to post-
auction market structure. Applicants also will be required to certify 
under penalty of perjury in their short-form applications that they 
have not entered and will not enter into any explicit or implicit 
agreements, arrangements or understandings of any kind with any 
parties, other than those identified in the application, regarding the 
amount of their bids, bidding strategies, or the particular licenses on 
which they will or will not bid. If an applicant has had discussions, 
but has not reached a joint bidding agreement by the short-form 
application filing deadline, it would not include the names of parties 
to the discussions on its application and may not continue such 
discussions with any applicants after the deadline.
    49. After the filing of short-form applications, the Commission's 
rules do not prohibit a party holding a non-controlling, attributable 
interest in one applicant from acquiring an ownership interest in or 
entering into a joint bidding arrangement with other applicants 
provided that (i) the attributable interest holder certifies that it 
has not and will not communicate with any party concerning the bids or 
bidding strategies of more than one of the applicants in which it holds 
an

[[Page 9751]]

attributable interest, or with which it has entered into a joint 
bidding arrangement; and (ii) the arrangements do not result in a 
change in control of any of the applicants. While the anti-collusion 
rules do not prohibit non-auction-related business negotiations among 
auction applicants, applicants are reminded that certain discussions or 
exchanges could touch upon impermissible subject matters because they 
may convey pricing information and bidding strategies. Further 
compliance with the disclosure requirements of the Commission's anti-
collusion rule will not insulate a party from enforcement of the 
antitrust laws.

E. Ownership Disclosure Requirements

    50. All applicants must comply with the uniform part 1 ownership 
disclosure standards and provide information required by Sec. Sec.  
1.2105 and 1.2112 of the Commission's rules. Specifically, in 
completing the short-form application, applicants will be required to 
fully disclose information on the real party or parties-in-interest and 
ownership structure of the applicant. The ownership disclosure 
standards for the short form are prescribed in Sec. Sec.  1.2105 and 
1.2112 of the Commission's rules. Each applicant is responsible for 
information submitted in its short-form application being complete and 
accurate.
    51. An applicant's most current ownership information on file with 
the Commission, if in an electronic format compatible with the short-
form application (FCC Form 175) (such as information submitted in an 
online FCC Form 602 or in an FCC Form 175 filed for a previous auction 
using ISAS) will automatically be entered into the applicant's short-
form application. Applicants are responsible for ensuring that the 
information submitted in their FCC Form 175 for Auction No. 71 is 
complete and accurate. Accordingly, applicants should carefully review 
any information automatically entered to confirm that it is complete 
and accurate as of the deadline for filing the short-form application. 
Applicants can update any information that was entered automatically 
and needs to be changed directly in the short-form application.

F. Entrepreneur Revenue Disclosures

    52. To determine which entities qualify as entrepreneurs for closed 
bidding, the Commission considers the total assets and gross revenues 
of the applicant, its controlling interest holders, the affiliates of 
the applicant, and their controlling interests holders. The Commission 
does not impose specific entity requirements on parties with 
controlling interests. Once principals or entities with a controlling 
interest are determined, only the assets and revenues of those 
principals or entities, the applicant, and their affiliates will be 
counted in determining entrepreneur eligibility. Therefore, entities 
applying to bid on closed licenses will be required to disclose on 
their FCC Form 175 short-form applications, separately and in the 
aggregate, the gross revenues for the preceding two years and the total 
assets of each of the following: (1) The applicant, (2) the applicant's 
affiliates, (3) the applicant's controlling interest holders, and (4) 
the affiliates of the applicant's controlling interest holders. 
Certification that the gross revenues for each of the preceding two 
years or the total assets do not exceed the applicable limit is not 
sufficient. In order to comply with the Commission's disclosure 
requirements for entrepreneur eligibility, an applicant must provide 
separately for itself, its affiliates, its controlling interests 
holders, and their affiliates, the gross revenues for each of the 
preceding two years. Applicants for closed bidding in Auction No. 71 
should not include existing C and F block licenses in their 
calculations of total assets; however, all other Commission licenses 
must be included in such calculations.

G. Bidding Credit Revenue Disclosures

    53. To determine which applicants qualify for bidding credits as 
small businesses or very small businesses, the Commission considers the 
gross revenues of the applicant, its affiliates, its controlling 
interests, and the affiliates of its controlling interests. Therefore, 
entities applying to bid as small businesses or very small businesses 
(or consortia of small businesses or very small businesses) will be 
required to disclose on their FCC Form 175 short-form applications the 
gross revenues of each of the following for the preceding three years: 
(1) The applicant, (2) its affiliates, (3) its controlling interests, 
and (4) the affiliates of its controlling interests. Certification that 
the average annual gross revenues of such entities and individuals for 
the preceding three years do not exceed the applicable limit is not 
sufficient. In order to comply with the Commission's disclosure 
requirements for bidding credit eligibility, an applicant must provide 
separately for itself, its affiliates, its controlling interests, and 
the affiliates of its controlling interests, the gross revenues for 
each of the preceding three years. If the applicant is applying as a 
consortium of small businesses or very small businesses, this 
information must be provided for each consortium member.
    54. Controlling interests of an applicant include individuals and 
entities with either de facto or de jure control of the applicant. 
Typically, ownership of at least 50.1 percent of an entity's voting 
stock evidences de jure control. De facto control is determined on a 
case-by-case basis. The following are some common indicia of de facto 
control: (1) The entity constitutes or appoints more than 50 percent of 
the board of directors or management committee; (2) the entity has 
authority to appoint, promote, demote, and fire senior executives that 
control the day-to-day activities of the licensee; and (3) the entity 
plays an integral role in management decisions.
    55. Officers and directors of an applicant are also considered to 
have a controlling interest in the applicant. The Commission does not 
impose specific equity requirements on controlling interest holders. 
Once the principals or entities with a controlling interest are 
determined, only the revenues of those principals or entities, the 
affiliates of those principals or entities, and the applicant and its 
affiliates will be counted in determining small business eligibility.
    56. In recent years the Commission has made modifications to its 
rules governing the attribution of gross revenues for purposes of 
determining small business eligibility. These changes include exempting 
the gross revenues of the affiliates of a rural telephone cooperative's 
officers and directors from attribution to the applicant if certain 
specified conditions are met. The Commission has also clarified that, 
in calculating an applicant's gross revenues under the controlling 
interest standard, it will not attribute the personal net worth, 
including personal income, of its officers and directors to the 
applicant.
    57. A consortium of small businesses or very small businesses is a 
conglomerate organization composed of two or more entities, each of 
which individually satisfies the definition of a small business or very 
small business as those terms are defined in the service-specific 
rules. Thus, each member of a consortium of small or very small 
businesses that applies to participate in Auction No. 71 must 
individually meet the definition of a small business or a very small 
business adopted by the Commission for broadband PCS. Each consortium 
member must disclose its gross revenues along with those of its 
affiliates, its controlling interests, and the affiliates of its 
controlling interests.

[[Page 9752]]

Although the gross revenues of the consortium members will not be 
aggregated for purposes of determining the consortium's eligibility as 
a small business or very small business, this information must be 
provided to ensure that each individual consortium member qualifies for 
any bidding credit awarded to the consortium.

H. Provisions Regarding Former and Current Defaulters

    58. Each applicant must state under penalty of perjury on its 
short-form application whether or not the applicant, its affiliates, 
its controlling interests, and the affiliates of its controlling 
interests, as defined by Sec.  1.2110, have ever been in default on any 
Commission licenses or have ever been delinquent on any non-tax debt 
owed to any Federal agency. In addition, each applicant must certify 
under penalty of perjury on its short-form application that as of the 
short-form filing deadline, the applicant, its affiliates, its 
controlling interests, and the affiliates of its controlling interests, 
as defined by Sec.  1.2110, are not in default on any payment for 
Commission licenses (including down payments) and that they are not 
delinquent on any non-tax debt owed to any Federal agency. Prospective 
applicants are reminded that submission of a false certification to the 
Commission is a serious matter that may result in severe penalties, 
including monetary forfeitures, license revocations, exclusion from 
participation in future auctions, and/or criminal prosecution.
    59. Former defaulters--i.e., applicants, including any of their 
affiliates, any of their controlling interests, or any of the 
affiliates of their controlling interests, that in the past have 
defaulted on any Commission licenses or been delinquent on any non-tax 
debt owed to any Federal agency, but that have since remedied all such 
defaults and cured all of their outstanding non-tax delinquencies--are 
eligible to bid in Auction No. 71, provided that they are otherwise 
qualified. However former defaulters are required to pay upfront 
payments that are fifty percent more than the normal upfront payment 
amounts.
    60. Current defaulters--i.e., applicants, including any of their 
affiliates, any of their controlling interests, or any of the 
affiliates of their controlling interests, that are in default on any 
payment for any Commission licenses (including down payments) or are 
delinquent on any non-tax debt owed to any Federal agency as of the 
filing deadline for applications to participate in this auction--are 
not eligible to bid in Auction No. 71.
    61. Applicants are encouraged to review the Bureau's previous 
guidance on default and delinquency disclosure requirements in the 
context of the short-form application process. For example, it has been 
determined that to the extent that Commission rules permit late payment 
of regulatory or application fees accompanied by late fees, such debts 
will become delinquent for purposes of Sec. Sec.  1.2105(a) and 
1.2106(a) only after the expiration of a final payment deadline. 
Therefore, with respect to regulatory or application fees, the 
provisions of Sec. Sec.  1.2105(a) and 1.2106(a) regarding default and 
delinquency in connection with competitive bidding are limited to 
circumstances in which the relevant party has not complied with a final 
Commission payment deadline.
    62. The Commission considers outstanding debts owed to the United 
States Government, in any amount, to be a serious matter. The 
Commission adopted rules, including a provision referred to as the red 
light rule, that implement the Commission's obligations under the Debt 
Collection Improvement Act of 1996, which governs the collection of 
claims owed to the United States. Under the red light rule, the 
Commission will not process applications and other requests for 
benefits filed by parties that have outstanding debts owed to the 
Commission. In the same rulemaking order, the Commission explicitly 
declared, however, that the Commission's competitive bidding rules are 
not affected by the red light rule. As a consequence, the Commission's 
adoption of the red light rule does not alter the applicability of any 
of the Commission's competitive bidding rules, including the provisions 
and certifications of Sec. Sec.  1.2105 and 1.2106, with regard to 
current and former defaults or delinquencies. Applicants are reminded, 
however, that the Commission's Red Light Display System, which provides 
information regarding debts owed to the Commission, may not be 
determinative of an auction applicant's ability to comply with the 
default and delinquency disclosure requirements of Sec.  1.2105. Thus, 
while the red light rule ultimately may prevent the processing of long-
form applications by auction winners, an auction applicant's red light 
status is not necessarily determinative of its eligibility to 
participate in this auction or of its upfront payment obligation.
    63. Prospective applicants in Auction No. 71 should note that any 
long-form applications filed after the close of competitive bidding 
will be reviewed for compliance with the Commission's red light rule, 
and such review may result in the dismissal of a winning bidder's long-
form application.

I. Other Information

    64. Applicants owned by member of minority groups and/or women, as 
defined in Sec.  1.2110(c)(3), may identify themselves in filling out 
their short-form applications regarding this status. This applicant 
status information is collected for statistical purposes only and 
assists the Commission in monitoring the participation of designated 
entities in its auctions.

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

    65. As of the deadline for filing short-form applications (FCC 
Forms 175) prior to 6 p.m. ET on March 16, 2007, applicants are 
permitted to make only minor changes to their applications. Applicants 
are not permitted to make major modifications to their applications 
(e.g., change their license selections, change control of the 
applicant, change the certifying official, or change their size to 
claim eligibility for a higher bidding credit). Permissible minor 
changes include, for example, deletion and addition of authorized 
bidders (to a maximum of three) and revision of addresses and telephone 
numbers of the applicants and their contact persons.
    66. Any application amendment and related statements of fact must 
be certified by:
    (1) The applicant, if the applicant is an individual, (2) one of 
the partners if the applicant is a partnership, (3) an officer, 
director, or duly authorized employee, if the applicant is a 
corporation, (4) by a member who is an officer, if the applicant is an 
unincorporated association, (5) the trustee if the applicant is an 
amateur radio service club, or (6) a duly elected or appointed official 
who is authorized to make such certifications under the laws of the 
applicable jurisdiction, if the applicant is a governmental entity.
    67. An applicant must make permissible minor changes to its short-
form application, as such changes are defined by Sec.  1.2105(b), 
electronically using the FCC Auction System. Applicants must click on 
the SUBMIT button in the FCC Auction System for the changes to be 
submitted and considered by the Commission. After the revised 
application has been submitted, a confirmation page will be displayed 
that states the submission

[[Page 9753]]

time and date, along with a unique file number.
    68. In addition, an applicant should submit a letter briefly 
summarizing the changes and subsequently update their short-form 
applications in ISAS as soon as possible. Note: After the filing window 
has closed, the auction system will not permit applicants to make 
certain changes, such as legal classification and bidding credit. Any 
letter describing changes to an applicant's short-form application 
should be submitted by electronic mail to the following address: 
[email protected].
    69. Applicants must not submit application-specific material 
through the Commission's Electronic Comment Filing System (ECFS).

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

    70. Section 1.65 of the Commission's rules requires an applicant to 
maintain the accuracy and completeness of information furnished in its 
pending application and to notify the Commission within 30 days of any 
substantial change that may be of decisional significance to that 
application. Changes that cause a loss of or reduction in eligibility 
for a bidding credit must be reported immediately. If an amendment 
reporting substantial changes is a major amendment as defined by Sec.  
1.2105, the major amendment will not be accepted and may result in the 
dismissal of the short-form application.
    71. After the short-form filing deadline, applicants may make only 
minor changes to their FCC Form 175 applications, for example, deletion 
and addition of authorized bidders (to a maximum of three). Applicants 
must click on the SUBMIT button in the FCC Auction System for the 
changes to be submitted and considered by the Commission. In addition, 
applicants must submit a letter, briefly summarizing the changes, by 
electronic mail at the following address: [email protected]. The 
electronic mail summarizing the changes must include a subject or 
caption referring to Auction No. 71 and the name of the applicant.
    72. Applicants must not submit application-specific material 
through ECFS into the record of the proceeding concerning Auction No. 
71 procedures.

III. Pre-Auction Procedures

A. Auction Seminar--March 7, 2007

    73. On Wednesday, March 7, 2007, the FCC will sponsor a seminar for 
parties interested in participating in Auction No. 71 at the FCC 
headquarters, located at 445 12th Street, SW., Washington, DC. The 
seminar will provide attendees with information about pre-auction 
procedures, completing FCC Form 175, auction conduct, the FCC Auction 
System, auction rules, and the broadband PCS rules. The seminar will 
also provide an opportunity for prospective bidders to ask questions of 
FCC staff concerning the auction, auction procedures, filing 
requirements and other matters related to this auction.
    74. To register, please provide the information listed on 
Attachment B of the Auction No. 71 Procedures Public Notice by Monday, 
March 5, 2007. Registrations are accepted on a first-come, first-served 
basis. The seminar is free of charge. For individuals who are unable to 
attend, an Audio/Video webcast of this seminar will be available from 
the FCC's Auction No. 71 Web page at http://wireless.fcc.gov/auctions/71/.

B. Short-Form Application (FCC Form 175)--Due Prior to 6 p.m. ET on 
March 16, 2007

    75. In order to be eligible to bid in this auction, applicants must 
first follow the procedures set forth in Attachment C to the Auction 
No. 71 Procedures Public Notice to submit an FCC Form 175 application 
electronically via the FCC Auction System. This application must be 
received at the Commission prior to 6 p.m. ET on March 16, 2007. Late 
applications will not be accepted. There is no application fee required 
when filing an FCC Form 175. However, to be eligible to bid, an 
applicant must submit an upfront payment.
    76. Applications may generally be filed at any time beginning at 
noon ET on March 7, 2007, and the filing window will close at 6 p.m. ET 
on March 16, 2007. Applicants are strongly encouraged to file early and 
are responsible for allowing adequate time for filing their 
applications. Applicants may update or amend their applications 
multiple times until the filing deadline on March 16, 2007.
    77. Applicants must always click on the SUBMIT button on the 
Certify & Submit screen of the electronic form to successfully submit 
or modify their FCC Form 175. Any form that is not submitted will not 
be reviewed by the FCC. Additional information about accessing, 
completing, and viewing the FCC Form 175 is included in Attachment C of 
the Auction No. 71 Procedures Public Notice. FCC Auctions Technical 
Support is available at (877) 480-3201, option nine; (202) 414-1250; or 
(202) 414-1255 (text telephone (TTY)); hours of service are Monday 
through Friday, from 8 a.m. to 6 p.m. E.T. In order to provide better 
service to the public, all calls to Technical Support are recorded.

C. Application Processing and Minor Corrections

    78. After the deadline for filing the FCC Form 175 applications has 
passed, the FCC will process all timely submitted applications to 
determine which are acceptable for filing, and subsequently will issue 
a public notice identifying: (1) Those applications accepted for 
filing; (2) those applications rejected; and (3) those applications 
which have minor defects that may be corrected, and the deadline for 
resubmitting corrected applications.
    79. As described more fully in the Commission's rules, after the 
March 16, 2007, short-form filing deadline, applicants may make only 
minor corrections to their FCC Form 175 applications. Applicants will 
not be permitted to make major modifications to their applications 
(e.g., change their license selections, change control of the 
applicant, change certifying official, or change their size to claim 
eligibility for a higher bidding credit).

D. Upfront Payments--Due April 20, 2007

    80. In order to be eligible to bid in the auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice Form 
(FCC Form 159). After completing the FCC Form 175, filers will have 
access to an electronic version of the FCC Form 159 that can be printed 
and sent by facsimile to Mellon Bank in Pittsburgh, PA. All upfront 
payments must be sent by wire transfer and received in the proper 
account at Mellon Bank by 6 p.m. ET on April 20, 2007.
i. Making Auction Payments by Wire Transfer
    81. Wire transfer payments must be received by 6 p.m. ET on April 
20, 2007. To avoid untimely payments, applicants should discuss 
arrangements (including bank closing schedules) with their banker 
several days before they plan to make the wire transfer, and allow 
sufficient time for the transfer to be initiated and completed before 
the deadline.
    82. At least one hour before placing the order for the wire 
transfer (but on the same business day), applicants must send by 
facsimile a completed FCC Form 159 (Revised 2/03) to Mellon Bank. On 
the cover sheet of the facsimile, write Wire Transfer--Auction Payment 
for Auction No. 71. In order to

[[Page 9754]]

meet the Commission's upfront payment deadline, an applicant's payment 
must be credited to the Commission's account before the deadline. 
Applicants are responsible for obtaining confirmation from their 
financial institution that Mellon Bank has timely received their 
upfront payment and deposited it in the proper account.
    83. Please note that: (1) All payments must be made in U.S. 
dollars; (2) all payments must be made by wire transfer; (3) upfront 
payments for Auction No. 71 go to a lockbox number different from the 
lockboxes used in previous FCC auctions, and different from the lockbox 
number to be used for post-auction payments and (4) failure to deliver 
the upfront payment as instructed by the April 20, 2007, deadline, will 
result in dismissal of the application and disqualification from 
participation in the auction.
ii. FCC Form 159
    84. A completed FCC Remittance Advice Form (FCC Form 159, Revised 
2/03) must be sent by facsimile to Mellon Bank to accompany each 
upfront payment. Proper completion of FCC Form 159 (Revised 2/03) is 
critical to ensuring correct crediting of upfront payments. Detailed 
instructions for completion of FCC Form 159 are included in Attachment 
D to the Auction No. 71 Procedures Public Notice. An electronic pre-
filled version of the FCC Form 159 is available after submitting the 
FCC Form 175. Payors using a pre-filled FCC Form 159 are responsible 
for ensuring that all of the information on the form, including payment 
amounts, is accurate. The FCC Form 159 can be completed electronically, 
but must be filed with Mellon Bank via facsimile.
iii. Upfront Payments and Bidding Eligibility
    85. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed that the amount of the upfront payment would determine a 
bidder's initial bidding eligibility, the maximum number of bidding 
units on which a bidder may place bids. In order to bid on a license, 
otherwise qualified bidders that selected that license on Form 175 must 
have a current eligibility level that meets or exceeds the number of 
bidding units assigned to that license. At a minimum, therefore, an 
applicant's total upfront payment must be enough to establish 
eligibility to bid on at least one of the licenses selected on its Form 
175, or else the applicant will not be eligible to participate in the 
auction. An applicant does not have to make an upfront payment to cover 
all licenses the applicant selected on its Form 175, but rather to 
cover the maximum number of bidding units that are associated with 
licenses on which the bidder wishes to place bids and hold 
provisionally winning bids at any given time. A qualified bidder's 
maximum eligibility will not exceed the sum of the bidding units 
associated with the total number of licenses selected on its FCC Form 
175 application. In some cases a qualified bidder's maximum eligibility 
may be less than the amount of its upfront payment because the 
qualified bidder has either previously been in default on a Commission 
license or delinquent on a non-tax debt owed to a Federal Agency, or 
has submitted an upfront payment that exceeds the total amount of 
bidding units associated with the licenses selected on its FCC Form 175 
application.
    86. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed to calculate upfront payments for Auction No. 71 on a license-
by-license basis using the following formula based on bandwidth and 
license area population: $0.05 * MHz * License Area Population with a 
minimum of $500 per license. The Bureau set forth the specific upfront 
payments and bidding units for each license in Attachment A of the 
Auction No. 71 Comment Public Notice and sought comment on this 
proposal. The Bureau received no comments in response to the proposed 
upfront payments. The specific upfront payments and bidding units for 
each license are set forth in Attachment A of the Auction No. 71 
Procedures Public Notice.
    87. Applicants must make upfront payments sufficient to obtain 
bidding eligibility on the licenses on which they will bid.
    88. In calculating its upfront payment amount, an applicant should 
determine the maximum number of bidding units on which it may wish to 
be active (bid on or hold provisionally winning bids on) in any single 
round, and submit an upfront payment amount covering that number of 
bidding units. In order to make this calculation, an applicant should 
add together the upfront payments for all licenses on which it seeks to 
be active in any given round. Applicants should check their 
calculations carefully, as there is no provision for increasing a 
bidder's eligibility after the upfront payment deadline.
    89. Former defaulters should calculate their upfront payment for 
all licenses by multiplying the number of bidding units on which they 
wish to be active by 1.5. In order to calculate the number of bidding 
units to assign to former defaulters, the Commission will divide the 
upfront payment received by 1.5 and round the result up to the nearest 
bidding unit.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    90. To ensure that refunds of upfront payments are processed in an 
expeditious manner, the Commission is requesting that all pertinent 
information listed in the Auction No. 71 Procedures Public Notice 
supplied to the FCC. All refunds will be returned to the payer of 
record as identified on the FCC Form 159 unless the payer submits 
written authorization instructing otherwise.

E. Auction Registration

    91. Approximately ten days before the auction, the FCC will issue a 
public notice announcing all qualified bidders for the auction. 
Qualified bidders are those applicants whose FCC Form 175 applications 
have been accepted for filing and have timely submitted upfront 
payments sufficient to make them eligible to bid.
    92. All qualified bidders are automatically registered for the 
auction. Registration materials will be distributed prior to the 
auction by overnight mail. The mailing will be sent only to the contact 
person at the contact address listed in the FCC Form 175 and will 
include the SecurID[supreg] tokens that will be required to place bids, 
the Integrated Spectrum Auction System (ISAS) Bidder's Guide, and the 
Auction Bidder Line phone number.
    93. Qualified bidders that do not receive this registration mailing 
will not be able to submit bids. Therefore, any qualified bidder that 
has not received this mailing by noon on Thursday, May 10, 2007, should 
call (717) 338-2868. Receipt of this registration mailing is critical 
to participating in the auction, and each applicant is responsible for 
ensuring it has received all of the registration material.
    94. In the event that SecurID[supreg] tokens are lost or damaged, 
only a person who has been designated as an authorized bidder, the 
contact person, or the certifying official on the applicant's short-
form application may request replacement registration material.

F. Remote Electronic Bidding

    95. The Commission will conduct this auction over the Internet, and 
telephonic bidding will be available as well. Qualified bidders are 
permitted to bid electronically and telephonically. Each applicant 
should indicate its bidding preference--electronic or telephonic--on 
the FCC Form 175. In

[[Page 9755]]

either case, each authorized bidder must have its own SecurID[supreg] 
token, which the FCC will provide at no charge. Each applicant with one 
authorized bidder will be issued two SecurID[supreg] tokens, while 
applicants with two or three authorized bidders will be issued three 
tokens. For security purposes, the SecurID[supreg] tokens, the 
telephonic bidding telephone number, and the Integrated Spectrum 
Auction System (ISAS) Bidder's Guide are only mailed to the contact 
person at the contact address listed on the FCC Form 175.

G. Mock Auction--May 14, 2007

    96. All qualified bidders will be eligible to participate in a mock 
auction on Monday, May 14, 2007. The mock auction will enable 
applicants to become familiar with the FCC Auction System prior to the 
auction. Participation by all bidders is strongly recommended. Details 
will be announced by public notice.

IV. Auction Event

    97. The first round of bidding for Auction No. 71 will begin on 
Wednesday, May 16, 2007. The initial bidding schedule will be announced 
in a public notice listing the qualified bidders, which is to be 
released approximately 10 days before the start of the auction.

A. Auction Structure

i. Simultaneous Multiple Round Auction
    98. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed to auction all licenses in Auction No. 71 in a single auction 
using the Commission's standard simultaneous multiple-round (SMR) 
auction format. This type of auction offers every license for bid at 
the same time and consists of successive bidding rounds in which 
eligible bidders may place bids on individual licenses. A bidder may 
bid on, and potentially win, any number of licenses. Typically, bidding 
remains open on all licenses until bidding stops on every license, 
unless a modified stopping rule is invoked.
    99. The standard SMR auction format will meet the needs of bidders 
in Auction No. 71. The Bureau will use a simultaneous multiple-round 
auction format without package bidding. Unless otherwise announced, 
bids will be accepted on all licenses in each round of the auction 
until bidding stops on every license. This approach, the Commission 
believes, allows bidders to take advantage of synergies that exist 
among licenses.
ii. Information Available to Bidders Before and During the Auction
    100. In the Auction No. 71 Comment Public Notice, the Bureau sought 
comment on whether to implement procedures that prior to and during the 
auction would limit the disclosure of information on bidder interests 
and identities. The Commission received no comments on this issue.
    101. For Auction No. 71, the Commission will use limited 
information procedures if it appears likely that the competitiveness of 
the auction will be low, and if the Commission believes that limited 
information procedures will be effective in making anti-competitive 
behavior less likely to be successful. Alternatively, if the Commission 
determines that the auction is likely to be sufficiently competitive, 
and therefore, that the risk of successful collusion is low, the 
Commission will not implement procedures that would limit the 
disclosure of information on bidder interest and identities before the 
close of bidding.
    102. Specifically, the Commission will estimate the likely level of 
competition in the auction by considering the eligibility ratio, 
defined as the total number of bidding units of eligibility purchased 
by bidders through their upfront payments divided by the total number 
of bidding units for the licenses in the auction. If the eligibility 
ratio equals or exceeds three, the Commission will not use limited 
information procedures. If the eligibility ratio is less than three, in 
general the Commission will withhold certain information on bidder 
interest and bidder identities prior to and during the auction.
    103. However, if the eligibility ratio is less than three, the 
Commission reserves the discretion not to use limited information 
procedures if circumstances indicate that limited information 
procedures would be not be an effective tool for deterring anti-
competitive behavior. For example, if only two applicants become 
qualified to participate in the bidding, limited information procedures 
would be ineffective in preventing bidders from knowing the identity of 
the competing bidder and, therefore, limited information procedures 
would not serve to deter attempts at signaling and retaliatory bidding 
behavior. The Commission anticipates announcing the information 
disclosure procedures to be used at or about the time that the 
Commission releases a public notice announcing the applicants that are 
qualified to participate in the bidding.
    104. If the Commission determines that limited information 
procedures will be used, it will make available prior to the auction 
the total eligibility level for the auction as well as the eligibility 
of each bidder but will not identify bidders' license selections. After 
each round of bidding, the amounts of each bid placed will be made 
available, but not the identities of the bidders. This information will 
give bidders an indication of demand for the licenses, so that bidders 
and their investors will be able to assess whether their bids are 
likely to be consistent with the valuations of other bidders, 
mitigating fear of the winner's curse. In addition, after each round 
bidders logged in to the FCC Auction System will be able to see whether 
their own bids are provisionally winning.
    105. Other Issues. The Commission does not believe that the 
information disclosure procedures established for this auction will 
interfere with the administration of or compliance with the 
Commission's anti-collusion rule. Section 1.2105(c)(1) of the 
Commission's rules provides that after the short-form application 
filing deadline, all applicants for licenses in any of the same 
geographic license areas are prohibited from disclosing to each other 
in any manner the substance of bids or bidding strategies until after 
the down payment deadline, subject to specified exceptions. When 
limited information procedures are not in effect for a particular 
auction, each applicant's selection of licenses has been publicly 
available through the Commission's on-line short-form application 
database. In Auction No. 71, however, the Commission will not disclose 
information regarding license selection at least until the upfront 
payment deadline has passed and the Commission determines the 
information disclosure procedures to be used for the auction. As in the 
past, the Commission will disclose the other portions of applicants' 
short-form applications, through its on-line database and certain 
application-based information through public notices. Thus, even 
without information regarding license selection, applicants would be 
able to comply with Sec.  1.2105(c) by not disclosing bids or bidding 
strategies to any other applicants in the auction. This approach, 
however, could inhibit otherwise lawful communications with applicants 
for licenses in other geographic license areas, which the Commission's 
rule permits. Consequently, the Bureau will notify separately each 
applicant with short-form applications to participate in a

[[Page 9756]]

pending auction whether applicants in Auction No. 71 have applied for 
licenses in any of the same geographic areas as that applicant. 
Specifically, after the Bureau conducts its initial review of 
applications to participate in Auction No. 71, each applicant with a 
pending short-form application will receive a letter that lists the 
other applicants in Auction No. 71 that have applied for licenses in 
any of the same geographic areas as the applicant. The list will 
identify the Auction No. 71 applicant(s) by name but will not list the 
license selections of the Auction No. 71 applicant(s). As in past 
auctions, additional information regarding applicants in Auction No. 71 
that is needed to comply with Sec.  1.2105(c), e.g., the identities of 
controlling interest in the applicant and ownership interests greater 
than ten percent, will be available through the publicly accessible on-
line short-form application database.
iii. Eligibility and Activity Rules
    106. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed that the amount of the upfront payment submitted by a bidder 
would determine the initial (maximum) eligibility (as measured in 
bidding units) for each bidder. The Commission received no comments on 
this issue.
    107. The Commission will use upfront payments to determine initial 
(maximum) eligibility (as measured in bidding units) for Auction No. 
71. The amount of the upfront payment submitted by a bidder determines 
initial bidding eligibility, the maximum number of bidding units on 
which a bidder may be active. Each license is assigned a specific 
number of bidding units listed in Attachment A of the Auction No. 71 
Procedures Public Notice. Bidding units for a given license do not 
change as prices rise during the auction. A bidder's upfront payment is 
not attributed to specific licenses. Rather, a bidder may place bids on 
any of the licenses selected on its FCC Form 175 as long as the total 
number of bidding units associated with those licenses does not exceed 
its current eligibility. Eligibility cannot be increased during the 
auction; it can only remain the same or decrease. Thus, in calculating 
its upfront payment amount, an applicant must determine the maximum 
number of bidding units it may wish to bid on or hold provisionally 
winning bids on in any single round, and submit an upfront payment 
amount covering that total number of bidding units. The total upfront 
payment does not affect the total dollar amount a bidder may bid on any 
given license.
    108. In order to ensure that an auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. Bidders are required to be active on a specific 
percentage of their current bidding eligibility during each round of 
the auction.
    109. A bidder's activity level in a round is the sum of the bidding 
units associated with licenses on which the bidder is active. A bidder 
is considered active on a license in the current round if it is either 
the provisionally winning bidder at the end of the previous bidding 
round and does not withdraw the provisionally winning bid in the 
current round, or if it submits a bid in the current round. The minimum 
required activity is expressed as a percentage of the bidder's current 
eligibility, and increases by stage as the auction progresses. Because 
these procedures have proven successful in maintaining the pace of 
previous auctions, the Commission adopts them for Auction No. 71. 
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.
iv. Auction Stages
    110. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed to conduct the auction in two stages and employ an activity 
rule. The Bureau further proposed that, in each round of Stage One, a 
bidder desiring to maintain its current bidding eligibility would be 
required to be active on licenses representing at least 80 percent of 
its current bidding eligibility. Finally, the Bureau proposed that in 
each round of Stage Two, a bidder desiring to maintain its current 
bidding eligibility would be required to be active on at least 95 
percent of its current bidding eligibility. The Commission received no 
comments on this proposal.
    111. The Commission adopts the proposals for the activity rules and 
stages. Below are the activity levels for each stage of the auction. 
The Bureau reserves the discretion to further alter the activity 
percentages before and/or during the auction.
    112. Stage One: During the first stage of the auction, a bidder 
desiring to maintain its current bidding eligibility will be required 
to be active on licenses representing at least 80 percent of its 
current bidding eligibility in each bidding round. Failure to maintain 
the required activity level will result in the use of an activity rule 
waiver or, if the bidder has no activity rule waivers remaining, a 
reduction in the bidder's bidding eligibility in the next round. During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the bidder's current round activity (the sum of bidding 
units of the bidder's provisionally winning bids and bids during the 
current round) by five-fourths (5/4).
    113. Stage Two: During the second stage of the auction, a bidder 
desiring to maintain its current bidding eligibility is required to be 
active on 95 percent of its current bidding eligibility. Failure to 
maintain the required activity level will result in the use of an 
activity rule waiver or, if the bidder has no activity rule waivers 
remaining, a reduction in the bidder's bidding eligibility in the next 
round. During Stage Two, reduced eligibility for the next round will be 
calculated by multiplying the bidder's current round activity (the sum 
of bidding units of the bidder's provisionally winning bids and bids 
during the current round) by twenty-nineteenths (20/19).
    114. CAUTION: Since activity requirements increase in Stage Two, 
bidders must carefully check their activity during the first round 
following a stage transition to ensure that they are meeting the 
increased activity requirement. This is especially critical for bidders 
that have provisionally winning bids and do not plan to submit new 
bids. In past auctions, some bidders have inadvertently lost bidding 
eligibility or used an activity rule waiver because they did not re-
verify their activity status at stage transitions. Bidders may check 
their activity against the required activity level by logging into the 
FCC Auction System.
    115. Because the foregoing procedures have proven successful in 
maintaining the proper pace in previous auctions, the Commission adopts 
them for Auction No. 71.
v. Stage Transitions
    116. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed that the auction would generally advance to the next stage 
(i.e., from Stage One to Stage Two) when the auction activity level, as 
measured by the percentage of bidding units receiving new provisionally 
winning bids, is approximately 20 percent or lower for three 
consecutive rounds of bidding. The Bureau further proposed that it 
would retain the discretion to change stages unilaterally by 
announcement during the auction. This determination,

[[Page 9757]]

the Bureau proposed, would be based on a variety of measures of bidder 
activity, including, but not limited to, the auction activity level, 
the percentages of licenses (as measured in bidding units) on which 
there are new bids, the number of new bids, and the percentage increase 
in revenue. The Commission received no comments on this issue.
    117. The Commission adopts the proposal. Thus, the auction will 
start in Stage One and will generally advance to Stage Two when, in 
each of three consecutive rounds of bidding, the provisionally winning 
bids have been placed on 20 percent or less of the licenses being 
auctioned (as measured in bidding units). In addition, the Bureau will 
retain the discretion to regulate the pace of the auction by 
announcement. This determination will be based on a variety of measures 
of bidder activity, including, but not limited to, the auction activity 
level, the percentages of licenses (as measured in bidding units) on 
which there are new bids, the number of new bids, and the percentage 
increase in revenue. The Commission believes that these stage 
transition rules, having proven successful in prior auctions, are 
appropriate for use in Auction No. 71.
vi. Activity Rule Waivers
    118. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed that each bidder in the auction be provided with three 
activity rule waivers. The Commission received no comments on this 
issue. Therefore, the Commission adopts the proposal that each bidder 
be provided three activity rule waivers. The Commission is satisfied 
that providing three waivers over the course of the auction will give 
bidders a sufficient number of waivers and flexibility, while also 
safeguarding the integrity of the auction.
    119. Bidders may use an activity rule waiver in any round during 
the course of the auction. Use of an activity rule waiver preserves the 
bidder's current bidding eligibility despite the bidder's activity in 
the current round being below the required minimum activity level. An 
activity rule waiver applies to an entire round of bidding and not to a 
particular license. Activity rule waivers can be either applied 
proactively by the bidder (a proactive waiver) or applied automatically 
by the FCC Auction System (an automatic waiver) and are principally a 
mechanism for auction participants to avoid the loss of bidding 
eligibility in the event that exigent circumstances prevent them from 
placing a bid in a particular round.
    120. The FCC Auction System assumes that bidders with insufficient 
activity would prefer to apply an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver at the end of any bidding round where a 
bidder's activity level is below the minimum required unless: (1) There 
are no activity rule waivers available; or (2) the bidder overrides the 
automatic application of a waiver by reducing eligibility. If a bidder 
has no waivers remaining and does not satisfy the activity requirement, 
the FCC Auction System will permanently reduce the bidder's 
eligibility, possibly curtailing or eliminating the bidder's ability to 
place additional bids in the auction.
    121. A bidder with insufficient activity that wants to reduce its 
bidding eligibility rather than use an activity rule waiver must 
affirmatively override the automatic waiver mechanism during the 
bidding round by using the reduce eligibility function in the FCC 
Auction System. In this case, the bidder's eligibility is permanently 
reduced to bring the bidder into compliance with the activity rules. 
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.
    122. Finally, a bidder may apply an activity rule waiver 
proactively as a means to keep the auction open without placing a bid. 
If a bidder proactively applies an activity waiver (using the apply 
waiver function in the FCC Auction System) during a bidding round in 
which no bids are placed or withdrawn, the auction will remain open and 
the bidder's eligibility will be preserved. However, an automatic 
waiver applied by the FCC Auction System in a round in which there are 
no new bids, 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. Note: Applying a 
waiver is irreversible; once a proactive waiver is submitted that 
waiver cannot be unsubmitted, even if the round has not yet closed.
vii. Auction Stopping Rules
    123. For Auction No. 71, the Bureau proposed 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 withdraws any 
provisionally winning bids.
    124. The Bureau also sought comment on a modified version of the 
simultaneous stopping rule (modified stopping rule). The modified 
stopping rule would close the auction for all licenses after the first 
round in which no bidder applies a proactive waiver, withdraws a 
provisionally winning bid, or places any new bids on any license on 
which it is not the provisionally winning bidder. Thus, absent any 
other bidding activity, a bidder placing a new bid on a license for 
which it is the provisionally winning bidder would not keep the auction 
open under this modified stopping rule.
    125. The Bureau further proposed retaining the discretion to keep 
the auction open even if no bidder places any new bids, applies a 
proactive waiver, or withdraws any provisionally winning bids in a 
round. In this event, the effect will be the same as if a bidder had 
applied a waiver. Thus, the activity rule will apply as usual, and a 
bidder with insufficient activity will either use an activity rule 
waiver (if it has any left) or lose bidding eligibility.
    126. In addition, the Bureau proposed that it reserve the right to 
declare that the auction will end after a specified number of 
additional rounds (special stopping rule). If the Bureau invokes this 
special stopping rule, it will accept bids in the specified final 
round(s) and the auction will close.
    127. The Bureau proposed to exercise these options only in 
circumstances such as where the auction is proceeding very slowly, 
where there is minimal overall bidding activity or where it appears 
likely that the auction will not close within a reasonable period of 
time. The Bureau noted that before exercising these options, the Bureau 
is likely to attempt to increase the pace of the auction by, for 
example, increasing the number of bidding rounds per day, and/or 
changing the minimum acceptable bids.
    128. The Commission believes that the proposed stopping rules are 
appropriate for Auction No. 71 because the Commission's experience in 
prior auctions demonstrates that these stopping rules balance interests 
of administrative efficiency and maximum bidder participation. The 
Commission received no comments concerning the auction stopping rules, 
therefore it adopts the proposals made in the Auction No. 71 Comment 
Public Notice. Auction No. 71 will begin under the simultaneous 
stopping rule approach, and the Bureau will retain the discretion to 
employ the other versions of the

[[Page 9758]]

stopping rule. Moreover, the Bureau will retain the discretion to use 
the modified stopping rule with or without prior announcement during 
the auction.
viii. Auction Delay, Suspension, or Cancellation
    129. Because the Commission's approach to notification of delay 
during an auction has proven effective in resolving exigent 
circumstances in previous auctions, the Commission adopts its proposed 
rules regarding auction delay, suspension, or cancellation. 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, administrative or weather necessity, evidence of an 
auction security breach or unlawful bidding activity, or for any other 
reason that affects the fair and efficient conduct of competitive 
bidding. In such cases, the Bureau, in its sole discretion, may elect 
to resume the auction starting from the beginning of the current round, 
resume the auction starting from some previous round, or cancel the 
auction in its entirety. Network interruption may cause the Bureau to 
delay or suspend the auction. The Commission 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.

B. Bidding Procedures

i. Round Structure
    130. The initial schedule of bidding rounds will be announced in 
the public notice listing the qualified bidders, which is released 
approximately 10 days before the start of the auction. Each bidding 
round is followed by the release of round results. Multiple bidding 
rounds may be conducted in a given day. Details regarding round results 
formats and locations will also be included in the qualified bidders 
public notice.
    131. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds, the amount of time between rounds, or the number of 
rounds per day, depending upon bidding activity and other factors.
ii. Reserve Price or Minimum Opening Bids
    132. Section 309(j) of the Communications Act of 1934, as amended, 
calls upon the Commission to prescribe methods by which a reasonable 
reserve price will be required or a minimum opening bid established 
when applications for FCC licenses are subject to auction (i.e., 
because they are mutually exclusive), unless the Commission determines 
that a reserve price or minimum opening bid is not in the public 
interest. Consistent with this mandate, the Commission directed the 
Bureau to seek comment on the use of a minimum opening bid and/or 
reserve price prior to the start of each auction. Among other factors, 
the Bureau must consider the amount of spectrum being auctioned, levels 
of incumbency, the availability of technology to provide service, the 
size of the geographic service areas, the extent of interference with 
other spectrum bands, and any other relevant factors that could have an 
impact on the spectrum being auctioned. The Commission concluded that 
the Bureau should have the discretion to employ either or both of these 
mechanisms for future auctions.
    133. The Bureau proposed in the Auction No. 71 Comment Public 
Notice to establish minimum opening bids for each license, while 
retaining discretion to lower the minimum opening bids. Specifically, 
for Auction No. 71, the Bureau proposed the following formula for 
calculating license-by-license minimum opening bids based on bandwidth 
and license area population: $0.05 * MHz * License Area Population with 
a minimum of $500 per license.
    134. The Bureau sought comment on this proposal and, in the 
alternative, whether, consistent with the Section 309(j), the public 
interest would be served by having no minimum opening bid.
    135. In Commission auctions, minimum opening bids are intended to 
serve as useful starting points for bidding. Minimum opening bids are 
not intended to be estimates of final auction prices or to reflect all 
differences between license values. Accordingly, differences in license 
characteristics, such as population density, that may result in 
different final prices do not always necessitate different minimum 
opening bids for the licenses.
    136. The Commission received no comments addressing the proposed 
minimum opening bid amounts or the formula proposed to calculate them. 
Accordingly, the Commission will adopt the proposal and set the minimum 
opening bids using the proposed formula of $0.05 * MHz * license area 
population with a minimum of $500 per license.
    137. The Commission received no comments addressing the proposal 
that the Bureau retain the discretion to reduce minimum opening bid 
amounts. The Commission adopts this proposal. The minimum opening bid 
amounts adopted for Auction No. 71 are reducible at the discretion of 
the Bureau. The Commission emphasizes, however, that such discretion 
will be exercised, if at all, sparingly and early in the auction, i.e., 
before bidders lose all activity waivers. During the course of the 
auction, the Bureau will not entertain requests to reduce the minimum 
opening bid amount on specific licenses. The Commission notes that 
effectively the minimum opening bids operate as reserve prices.
    138. The specific minimum opening bid amounts for each license 
available in Auction No. 71 calculated pursuant to the procedure 
described above are set forth in Attachment A of the Auction No. 71 
Procedures Public Notice.
iii. Bid Amounts
    139. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed that in each round, eligible bidders be able to place a bid on 
a given license in any of nine different amounts. Under the proposal, 
the FCC Auction System interface will list the nine acceptable bid 
amounts for each license. The Commission received no comment on this 
issue. Based on the Commission's experience in prior auctions, the 
Commission adopts the proposals for Auction No. 71.
    140. 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 described below. 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.
    141. 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 9759]]

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 10% and 20% higher than 
the provisionally winning bid, depending upon the bidding activity for 
the license. Equations and examples are shown in Attachment E of the 
Auction No. 71 Procedures Public Notice.
    142. 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 Commission will round the results of these 
calculations, as well as the calculations to determine the minimum 
acceptable bid amounts, using the Bureau's standard rounding 
procedures. For Auction No. 71, the Bureau proposed to use a bid 
increment percentage of ten percent to calculate the eight additional 
acceptable bid amounts. The Commission received no comment on this 
issue and will begin the auction with a bid increment percentage of ten 
percent.
    143. The Commission received no comments on the Bureau's proposal 
to retain 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 if circumstances warrant. The Commission 
adopts this proposal.
iv. Provisionally Winning Bids
    144. At the end of each bidding round, a provisionally winning bid 
will be determined based on the highest bid amount received for each 
license. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the same license at the 
close of a subsequent round. Provisionally winning bids at the end of 
the auction become the winning bids. Bidders are reminded that 
provisionally winning bids count toward activity for purposes of the 
activity rule.
    145. In the Auction No. 71 Comment Public Notice, the Bureau 
proposed to use a random number generator to select a single 
provisionally winning bid in the event of identical high bid amounts 
being submitted on a license in a given round (i.e., tied bids). No 
comments were received on this proposal. Therefore, the Bureau adopts 
its proposal. A pseudo-random number generator based on the L'Ecuyer 
algorithms will be used to assign a random number to each bid. The tied 
bid with the highest random number wins the tiebreaker, and becomes the 
provisionally winning bid. The remaining eligible 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.
    146. During a round, a bidder may submit bids for as many licenses 
as it wishes (providing that it is eligible to bid), withdraw 
provisionally winning bids from previous rounds, remove bids placed in 
the current bidding round, or permanently reduce eligibility. Bidders 
also have the option of submitting and removing multiple bids and 
withdrawing multiple provisionally winning bids (subject to the 
limitation on withdrawal rounds discussed below) during a round. If a 
bidder submits multiple bids for a single license in the same round, 
the system takes the last bid entered as that bidder's bid for the 
round. Bidders should note that the bidding units associated with 
licenses for which the bidder has removed or withdrawn its bid do not 
count towards the bidder's current activity.
    147. All bidding will take place remotely either through the FCC 
Auction System or by telephonic bidding. There will be no on-site 
bidding during Auction No. 71. Note that telephonic bid assistants are 
required to use a script when entering bids placed by telephone. 
Telephonic bidders are therefore reminded to allow sufficient time to 
bid by placing their calls well in advance of the close of a round. The 
length of a call to place a telephonic bid may vary; please allow a 
minimum of 10 minutes.
    148. A bidder's ability to bid on specific licenses is determined 
by two factors: (1) the licenses selected on the bidder's FCC Form 175 
and (2) the bidder's eligibility. The bid submission screens will allow 
bidders to submit bids on only those licenses the bidder selected on 
its FCC Form 175.
    149. In order to access the bidding function of the FCC Auction 
System, bidders must be logged in during the bidding round using the 
passcode generated by the SecurID[supreg] token and a personal 
identification number (PIN) created by the bidder. Bidders are strongly 
encouraged to print a round summary for each round after they have 
completed all of their activity for that round.
    150. In each round, eligible bidders will be able to place bids on 
a given license in any of nine different amounts. For each license, the 
FCC Auction System will list the nine acceptable bid amounts in a drop-
down box. Bidders use the drop-down box to select from among the 
acceptable bid amounts. The FCC Auction System also includes an upload 
function that allows bidders to upload text files containing bid 
information.
    151. Until a bid has been placed on a license, the minimum 
acceptable bid amount for that license will be equal to its minimum 
opening bid amount. Once there are bids on a license, minimum 
acceptable bids for a license will be determined.
    152. Finally, bidders are cautioned to select their bid amounts 
carefully because, as explained below, bidders that withdraw a 
provisionally winning bid from a previous round, even if the bid was 
mistakenly or erroneously made, are subject to bid withdrawal payments.
v. Bid Removal and Bid Withdrawal
    153. In the Auction No. 71 Comment Public Notice, the Commission 
proposed bid removal and bid withdrawal procedures. With respect to bid 
withdrawals, the Commission

[[Page 9760]]

proposed limiting each bidder to withdrawals in no more than two rounds 
during the course of the auction. The round in which withdrawals are 
used would be at each bidder's discretion. The Commission received no 
comments on this issue. In previous auctions, the Commission detected 
bidder conduct that, arguably, may have constituted anti-competitive 
behavior through the use of bid withdrawals. While the Commission 
continues to recognize the important role that bid withdrawals may play 
in an auction, i.e., reducing risk associated with efforts to secure 
various licenses in combination, the Commission concludes that, for 
Auction No. 71, adoption of a limit on the use of withdrawals to two 
rounds per bidder is appropriate. By doing so the Commission believes 
it strikes a reasonable compromise that will allow bidders to use 
withdrawals. The Commission bases the decision on this issue upon its 
experience with bid withdrawals in prior auctions, including PCS D, E 
and F block, 800 MHz SMR, and other auctions. The Commission will 
therefore limit the number of rounds in which bidders may place 
withdrawals to two rounds, as previously proposed.
    154. Procedures. Before the close of a bidding round, a bidder has 
the option of removing any bids placed in that round. By using the 
remove bids function 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 withdrawal 
payments. Removing a bid will affect a bidder's activity for the round 
in which it is removed, i.e., a bid that is removed does not count 
toward bidding activity. These procedures will enhance bidder 
flexibility during the auction, and therefore the Commission adopts 
them for Auction No. 71.
    155. Once a round closes, a bidder may no longer remove a bid. 
However, in later rounds, a bidder may withdraw provisionally winning 
bids from previous rounds using the withdraw bids function in the FCC 
Auction System (assuming that the bidder has not already withdrawn bids 
in two previous rounds). A provisionally winning bidder that withdraws 
its provisionally winning bid from a previous round during the auction 
is subject to the bid withdrawal payments specified in Sec.  1.2104(g). 
Note: Once a withdrawal is submitted during a round, that withdrawal 
cannot be unsubmitted even if the round has not yet ended.
    156. The rounds in which a bidder may withdraw its bids will be at 
the bidder's discretion and there will be no limit on the number of 
bids that may be withdrawn in either of these rounds. Withdrawals 
during the auction will be subject to the bid withdrawal payments 
specified in Sec.  1.2104(g). Bidders should note that abuse of the 
Commission's bid withdrawal procedures could result in the denial of 
the ability to bid on a market.
    157. If a provisionally winning bid is withdrawn, the minimum 
acceptable bid amount will equal the amount of the second highest bid 
received for the license, which may be less than, or in the case of 
tied bids, equal to, the amount of the withdrawn bid. To set the 
additional bid amounts, the second highest bid amount also will be used 
in place of the provisionally winning bid in the formula used to 
calculate additional bid amounts. The Commission will serve as a place 
holder provisionally winning bidder on the license until a new bid is 
submitted on that license.
    158. Calculation of Bid Withdrawal Payment. Generally, the 
Commission imposes payments on bidders that withdraw high bids during 
the course of an auction. If a bidder withdraws its bid and there is no 
higher bid in the same or subsequent auction(s), the bidder that 
withdrew its bid is responsible for the difference between its 
withdrawn bid and the provisionally winning bid in the same or 
subsequent auction(s). In the case of multiple bid withdrawals on a 
single license, within the same or subsequent auctions(s), the payment 
for each bid withdrawal will be calculated based on the sequence of bid 
withdrawals and the amounts withdrawn. No withdrawal payment will be 
assessed for a withdrawn bid if either the subsequent winning bid or 
any subsequent intervening withdrawn bid, in either the same or 
subsequent auctions(s), equals or exceeds that withdrawn bid. Thus, a 
bidder that withdraws a bid will not be responsible for any withdrawal 
payments if there is a subsequent higher bid in the same or subsequent 
auction(s). This policy allows bidders most efficiently to allocate 
their resources as well as to evaluate their bidding strategies and 
business plans during an auction while, at the same time, maintaining 
the integrity of the auction process. The Bureau retains the discretion 
to scrutinize multiple bid withdrawals on a single license for evidence 
of anti-competitive strategic behavior and take appropriate action when 
deemed necessary.
    159. Section 1.2104(g)(1) of the rules sets forth the payment 
obligations of a bidder that withdraws a high bid on a license during 
the course of an auction, and provides for the assessment of interim 
bid withdrawal payments. In the Auction No. 71 Comment Public Notice, 
the Bureau proposed to establish the percentage at fifteen percent for 
the broadband PCS auction and sought comment on the proposal.
    160. The Commission received no comments on this issue and adopts 
the proposal. The Commission will assess an interim withdrawal payment 
equal to fifteen percent of the amount of the withdrawn bids. The 
fifteen percent interim payment will be applied toward any final bid 
withdrawal payment that will be assessed after subsequent auction of 
the license. Assessing an interim bid withdrawal payment ensures that 
the Commission receives a minimal withdrawal payment pending assessment 
of any final withdrawal payment. Section 1.2104(g) provides specific 
examples showing application of the bid withdrawal payment rule.
vi. Round Results
    161. If limited information procedures described above are in 
effect, limited information about the results of a round will be made 
public after the conclusion of the round. Specifically, after a round 
closes, the Bureau will make available for each license, its current 
provisionally winning bid amount, the minimum acceptable bid amount for 
the following round, the amounts of all bids placed on the license 
during the round, and whether the license is FCC held. The reports will 
be publicly accessible. Moreover, after the auction, the Bureau will 
make available complete reports of all bids placed during each round of 
the auction, including bidder identities.
    162. If, however, limited information procedures are not used, more 
information will be provided after each round in the auction. Bids 
placed during a round, including bidder identities, will be made public 
at the conclusion of that round. Specifically, after a round closes, 
the Bureau will compile reports of all bids placed and which bidders 
made them, current provisionally winning bids, new minimum acceptable 
bid amounts, and bidder eligibility status (bidding eligibility and 
activity rule waivers) and will post the reports for public access.
vii. Auction Announcements
    163. The Commission will use auction announcements to announce 
items such as schedule changes and stage transitions. All auction 
announcements will be available by clicking a link in the FCC Auction 
System.

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V. Post-Auction Procedures

A. Down Payments

    164. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed and identifying winning bidders, 
down payments and final payments due.
    165. Within ten business days after release of the auction closing 
notice, each winning bidder must submit sufficient funds (in addition 
to its upfront payment) to bring its total amount of money on deposit 
with the Commission for Auction No. 71 to 20 percent of the net amount 
of its winning bids (gross bids less any applicable small business or 
very small business bidding credits).

B. Final Payments

    166. Each winning bidder will be required to submit the balance of 
the net amount of its winning bids within 10 business days after the 
deadline for submitting down payments.

C. Long-Form Application (FCC Form 601)

    167. Within ten business days after release of the auction closing 
notice, winning bidders must electronically submit a properly completed 
long-form application (FCC Form 601) for each license won through 
Auction No. 71. Winning bidders that are entrepreneurs and/or small 
businesses or very small businesses must demonstrate their 
qualifications to be considered an entrepreneur and/or their 
eligibility for a small business or very small business bidding credit. 
Further filing instructions will be provided to auction winners at the 
close of the auction.
    168. The CSEA/Part 1 Report and Order modifies the procedure by 
which a consortium that is a winning bidder in Auction No. 71 will 
apply for a license. In particular, (a) each member or group of members 
of a winning consortium seeking separate licenses will be required to 
file a separate long-form application for its respective license(s) 
and, in the case of a license to be partitioned or disaggregated, the 
member or group filing the applicable long-form application shall 
provide the parties' partitioning or disaggregation agreement in its 
long-form application; (b) two or more consortium members seeking to be 
licensed together shall first form a legal business entity; and (c) any 
such entity must meet the applicable eligibility requirements in the 
Commission's rules for small business status. Applicants applying as 
consortia should review the CSEA/Part 1 Report and Order in detail and 
monitor any relevant future proceedings to understand how the members 
of the consortia will apply for a license in the event they are winning 
bidders.

D. Ownership Disclosure Information Report (FCC Form 602)

    169. At the time it submits its long-form application (FCC Form 
601), each winning bidder also must comply with the ownership reporting 
requirements as set forth in Sec. Sec.  1.913, 1.919, and 1.2112. 
Further instructions will be provided to winning bidders at the close 
of the auction.

E. Tribal Lands Bidding Credit

    170. A winning bidder that intends to use its license(s) to deploy 
facilities and provide services to federally recognized tribal lands 
that are unserved by any telecommunications carrier or that have a 
wireline penetration rate equal to or below 85 percent is eligible to 
receive a tribal lands bidding credit as set forth in Sec. Sec.  1.2107 
and 1.2110(f). A tribal lands bidding credit is in addition to, and 
separate from, any other bidding credit for which a winning bidder may 
qualify.
    171. Unlike other bidding credits that are requested prior to the 
auction, a winning bidder applies for the tribal lands bidding credit 
after winning the auction when it files its long-form application (FCC 
Form 601). When initially filing the long-form application, the winning 
bidder will be required to advise the Commission whether it intends to 
seek a tribal lands bidding credit, for each license won in the 
auction, by checking the designated box(es). After stating its intent 
to seek a tribal lands bidding credit, the applicant will have 180 days 
from the close of the long-form filing window to amend its application 
to select the specific tribal lands to be served and provide the 
required tribal government certifications. Licensees receiving a tribal 
lands bidding credit are subject to performance criteria as set forth 
in Sec.  1.2110(f)(3)(vi).
    172. For additional information on the tribal lands bidding credit, 
including how the amount of the credit is calculated, applicants should 
review the Commission's rule making proceeding regarding tribal lands 
bidding credits and related public notices.

F. Default and Disqualification

    173. Any winning bidder that defaults or is disqualified after the 
close of the auction (i.e., fails to remit the required down payment 
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise 
disqualified) will be subject to the payments described in Sec.  
1.2104(g)(2). The payments include both a deficiency payment, equal to 
the difference between the amount of the bidder's bid and the amount of 
the winning bid the next time a license covering the same spectrum is 
won in an auction, plus an additional payment equal to a percentage of 
the defaulter's bid or of the subsequent winning bid, whichever is 
less. Pursuant to recent modifications to the rule governing default 
payments, the percentage of the applicable bid to be assessed as an 
additional payment for defaults in a particular auction is established 
in advance of the auction. Accordingly, in the Auction No. 71 Comment 
Public Notice, the Bureau proposed to set the additional default 
payment for the auction of broadband PCS licenses at ten percent of the 
applicable bid. The Bureau sought comment on the proposal and no 
comments were received on this issue. The Commission therefore adopts 
the proposal and sets the additional default payment for the auction of 
broadband PCS licenses at ten percent of the applicable bid.
    174. Finally, the Commission notes that in the event of a default, 
the Commission may re-auction the license or offer it to the next 
highest bidder (in descending order) at its final bid amount. In 
addition, if a default or disqualification involves gross misconduct, 
misrepresentation, or bad faith by an applicant, the Commission may 
declare the applicant and its principals ineligible to bid in future 
auctions, and may take any other action that it deems necessary, 
including institution of proceedings to revoke any existing licenses 
held by the applicant.

G. Refund of Remaining Upfront Payment Balance

    175. All applicants that submit upfront payments but after the 
close of the auction are not winning bidders for a license in Auction 
No. 71 may be entitled to a refund of their remaining upfront payment 
balance after the conclusion of the auction. All refunds will be 
returned to the payer of record, as identified on the FCC Form 159, 
unless the payer submits written authorization instructing otherwise.
    176. Bidders that drop out of the auction completely may be 
eligible for a refund of their upfront payments before the close of the 
auction.
    177. Following the close of the auction, the Commission may refund 
upfront monies on deposit that exceed the required total of payments 
owed by winning bidders. Such refunds will be made to the payer of 
record as identified on the FCC Form 159, provided the

[[Page 9762]]

necessary refund request and wire transfer instructions have been 
received.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
 [FR Doc. E7-3786 Filed 3-2-07; 8:45 am]
BILLING CODE 6712-01-P