[Federal Register Volume 74, Number 46 (Wednesday, March 11, 2009)]
[Notices]
[Pages 10578-10581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5244]


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

FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-09-79-A (Auction 79); AU Docket No. 09-21; DA 09-422]


Auction of FM Broadcast Construction Permits Scheduled for 
September 1, 2009; Comment Sought on Competitive Bidding Procedures for 
Auction 79

AGENCY: Federal Communications Commission.

ACTION: Notice.

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

SUMMARY: This document announces the auction of 122 FM broadcast 
construction permits scheduled to commence on September 1, 2009 
(Auction 79). This document also seeks comments on competitive bidding 
procedures for Auction 79.

DATES: Comments are due on or before March 20, 2009, and reply comments 
are due on or before April 1, 2009.

ADDRESSES: Comments and reply comments must be identified by AU Docket 
No. 09-21. Comments may be filed electronically using the Internet by 
accessing the Federal Communications Commission's (Commission) 
Electronic Comment Filing System (ECFS) at http://www.fcc.gov/cgb/ecfs. 
Filers should follow the instructions provided on the Web site for 
submitting comments. The Wireless Telecommunications and Media Bureaus 
request that a copy of all comments and reply comments be submitted 
electronically to the following address: [email protected]. In 
addition, comments and reply comments may be submitted by any of the 
following methods:
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail (although the Bureaus 
continue to experience delays in receiving U.S. Postal Service mail). 
All filings must be addressed to the Commission's Secretary, Attn: WTB/
ASAD, Office of the Secretary, Federal Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. Eastern Time (ET). All hand 
deliveries must be held together with rubber bands or fasteners. 
Commercial overnight mail (other than U.S. Postal Service Express Mail 
and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol 
Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or telephone: 202-
418-0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: For auction legal questions: 
Howard Davenport or Lynne Milne at (202) 418-0660. For general auction 
questions: Debbie Smith or Linda Sanderson at (717) 338-2868. Media 
Bureau, Audio Division: For service rule questions: Lisa Scanlan or Tom 
Nessinger at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 79 Comment 
Public Notice released on February 27, 2009. The complete text of the 
Auction 79 Comment Public Notice, including Attachment A, and related 
Commission documents, are available for public inspection and copying 
from 8:00 a.m. to 4:30 p.m. ET Monday through Thursday or from 8 a.m. 
to 11:30 a.m. ET on Fridays in the FCC Reference Information Center, 
445 12th Street, SW., Room CY-A257, Washington, DC 20554. The Auction 
79 Comment Public Notice and related Commission documents also may be 
purchased from the Commission's duplicating contractor, Best Copy and 
Printing, Inc. (BCPI), 445 12th Street, SW., Room CY-B402, Washington, 
DC 20554, telephone 202-488-5300, facsimile 202-488-5563, or you may 
contact BCPI at its Web site: http://www.BCPIWEB.com. When ordering 
documents from BCPI, please provide the appropriate FCC document 
number, for example, DA 09-422. The Auction 79 Comment Public Notice 
and related documents also are available on the Internet at the 
Commission's Web site: http://wireless.fcc.gov/auctions/79/ 79/, or by 
using the search function for AU Docket No. 09-21 on the ECFS Web page 
at http://www.fcc.gov/cgb/ecfs/.

I. Construction Permits in Auction 79

    1. Auction 79 will offer 122 construction permits in the FM 
broadcast service as specified in Attachment A of the Auction 79 
Comment Public Notice which lists vacant FM allotments, reflecting FM 
channels assigned to the Table of FM Allotments. Consistent with 47 
U.S.C. 309(j), the Wireless Telecommunications and Media Bureaus 
(Bureaus) seek comment on the following issues relating to Auction 79.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design
    2. The Bureaus propose to auction all construction permits included 
in Auction 79 using the Commission's standard simultaneous multiple-
round auction. This type of auction offers every construction permit 
for bid at the

[[Page 10579]]

same time and consists of successive bidding rounds in which eligible 
bidders may place bids on individual construction permits. Typically, 
bidding remains open on all construction permits until bidding stops on 
every construction permit. The Bureaus seek comment on this proposal.
ii. Round Structure
    3. The Commission will conduct Auction 79 over the Internet, and 
telephonic bidding will be available as well. The initial bidding 
schedule will be announced in a public notice to be released at least 
one week before the start of the auction.
    4. The auction will consist of sequential bidding rounds, each 
followed by the release of round results. The Bureaus propose to retain 
the discretion to change the bidding schedule in order to foster an 
auction pace that reasonably balances speed with the bidders' need to 
study round results and adjust their bidding strategies. Under this 
proposal, the Bureaus may change the amount of time for the bidding 
rounds, amounts of time between rounds, or the number of rounds per day 
depending upon bidding activity and other factors. The Bureaus seek 
comment on this proposal.
iii. Stopping Rule
    5. For Auction 79, the Bureaus propose to employ a simultaneous 
stopping rule approach. A simultaneous stopping rule means that bidding 
will close simultaneously on all construction permits after the first 
round in which no bidder submits any new bids, applies a proactive 
waiver, or withdraws a provisionally winning bid (if bid withdrawals 
are permitted). Thus, unless the Bureaus announce alternative 
procedures during the auction, bidding will remain open on all 
construction permits until bidding stops on every construction permit. 
However, the Bureaus propose to retain the discretion to exercise any 
of the following options during Auction 79: (a) Use a modified version 
of the simultaneous stopping rule. The modified stopping rule would 
close the auction for all construction permits after the first round in 
which no bidder applies a waiver, withdraws a provisionally winning bid 
(if bid withdrawals are permitted) or places any new bids on any 
construction permit for which it is not the provisionally winning 
bidder. Thus, absent any other bidding activity, a bidder placing a new 
bid on a construction permit for which it is the provisionally winning 
bidder would not keep the auction open under this modified stopping 
rule; (b) declare that the auction will end after a specified number of 
additional rounds (which is called a special stopping rule). If the 
Bureaus invoke this special stopping rule, they will accept bids in the 
specified final round(s) after which the auction will close, and (c) 
keep the auction open even if no bidder submits any new bids, applies a 
waiver or withdraws any provisionally winning bids (if permitted). In 
this event, the effect will be the same as if a bidder had applied a 
waiver. The activity rule will apply as usual, and a bidder with 
insufficient activity will either lose bidding eligibility or use a 
waiver. The Bureaus seek comment on these stopping rule proposals.
iv. Information Relating to Auction Delay, Suspension, or Cancellation
    6. For Auction 79, the Bureaus propose that, by public notice or by 
announcement during the auction, the Bureaus may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
obstacle, 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 Bureaus, in their sole discretion, may elect to resume 
the auction starting from the beginning of the current round, resume 
the auction starting from some previous round, or cancel the auction in 
its entirety. Network interruption may cause the Bureaus to delay or 
suspend the auction. The Bureaus emphasize that exercise of this 
authority is solely within the discretion of the Bureaus, and its use 
is not intended to be a substitute for situations in which bidders may 
wish to apply their activity rule waivers. The Bureaus seek comment on 
this proposal.

B. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    7. The Bureaus have delegated authority and discretion to determine 
an appropriate upfront payment for each FM construction permit being 
auctioned. A bidder's upfront payment is a refundable deposit made by 
each bidder to establish eligibility to bid on construction permits. 
Upfront payments protect against frivolous or insincere bidding and 
provide the Commission with a source of funds from which to collect 
payments owed at the close of the auction. With these considerations in 
mind, the Bureaus propose the upfront payments set forth in Attachment 
A of the Auction 79 Comment Public Notice.
    8. The Bureaus further propose that the amount of the upfront 
payment submitted by a bidder will determine the bidder's initial 
bidding eligibility in bidding units. The Bureaus propose that each 
construction permit be assigned a specific number of bidding units 
equal to the upfront payment listed in Attachment A of the Auction 79 
Comment Public Notice. The Bureaus seek comment on these proposals.
ii. Activity Rule
    9. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. A bidder's activity in a round will be the sum of 
the bidding units associated with any construction permits upon which 
it places bids during the current round and the bidding units 
associated with any construction permits for which it holds 
provisionally winning bids. Bidders are required to be active on a 
specific percentage of their current bidding eligibility during each 
round of the auction. Failure to maintain the requisite activity level 
will result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction.
    10. The Bureaus propose to divide the auction into at least two 
stages, each characterized by a different activity requirement. The 
auction will start in Stage One with a required 75 percent activity 
level. The Bureaus propose to advance the auction to the next stage 
with a required 95 percent activity level by announcement during the 
auction. In exercising this discretion, the Bureaus will consider a 
variety of measures of auction activity, including but not limited to 
the percentage of construction permits (as measured in bidding units) 
on which there are new bids, the number of new bids, and the increase 
in revenue. The Bureaus seek comment on this proposal.
iii. Activity Rule Waivers and Reducing Eligibility
    11. Use of an activity rule waiver preserves the bidder's 
eligibility despite the bidder's activity in the current round being 
below the required minimum level. An activity rule waiver applies to an 
entire round of bidding, not to a particular construction permit. 
Activity rule waivers can be either proactive or automatic and are 
principally a mechanism for auction

[[Page 10580]]

participants to avoid the loss of bidding eligibility in the event that 
exigent circumstances prevent them from bidding in a particular round.
    12. The Bureaus propose that each bidder in Auction 79 be provided 
with three activity rule waivers that may be used at the bidder's 
discretion during the course of the auction. The Bureaus seek comment 
on this proposal.
iv. Reserve Price or Minimum Opening Bids
    13. In light of 47 U.S.C. 309(j), the Bureaus propose to establish 
minimum opening bid amounts for Auction 79 as an effective bidding tool 
for accelerating the competitive bidding process. The Bureaus do not 
propose to establish a separate reserve price for the construction 
permits to be offered in Auction 79.
    14. For Auction 79, the Bureaus propose minimum opening bid amounts 
determined by taking into account the type of service and class of 
facility offered, market size, population covered by the proposed FM 
broadcast facility, and recent broadcast transaction data. This 
proposed minimum opening bid amount for each construction permit is set 
forth in Attachment A of the Auction 79 Comment Public Notice. The 
Bureaus seek comment on this proposal.
v. Bid Amounts
    15. The Bureaus propose that, in each round, eligible bidders be 
able to place a bid on a given construction permit in any of up to nine 
different amounts. Under this proposal, the FCC Auction System 
interface will list the acceptable bid amounts for each construction 
permit.
    16. The first of these nine acceptable bid amounts is called the 
minimum acceptable bid amount. The minimum acceptable bid amount for a 
construction permit will be equal to its minimum opening bid amount 
until there is a provisionally winning bid for the construction permit. 
After there is a provisionally winning bid for a construction permit, 
the minimum acceptable bid amount will be calculated by multiplying the 
provisionally winning bid amount times one plus the minimum acceptable 
bid percentage.
    17. For Auction 79, the Bureaus propose to use a minimum acceptable 
bid percentage of 10 percent. This means that the minimum acceptable 
bid amount for a construction permit will be approximately 10 percent 
greater than the provisionally winning bid amount for the construction 
permit. To calculate the eight additional acceptable bid amounts, the 
Bureaus propose to use a bid increment percentage of 5 percent.
    18. The Bureaus retain the discretion to change the minimum 
acceptable bid amounts, the minimum acceptable bid percentage, the bid 
increment percentage, and the number of acceptable bid amounts if the 
Bureaus determine that circumstances so dictate. Further, the Bureaus 
retain the discretion to do so on a construction permit-by-construction 
permit basis. The Bureaus also retain the discretion to limit (a) the 
amount by which a minimum acceptable bid for a construction permit may 
increase compared with the corresponding provisionally winning bid, and 
(b) the amount by which an additional bid amount may increase compared 
with the immediately preceding acceptable bid amount. The Bureaus seek 
comment on the circumstances under which the Bureaus should employ such 
a limit, factors it should consider when determining the dollar amount 
of the limit, and the tradeoffs in setting such a limit or changing 
other parameters, such as changing the minimum acceptable bid 
percentage, the bid increment percentage, or the number of acceptable 
bid amounts. If the Bureaus exercise this discretion, they will alert 
bidders by announcement in the FCC Auction System during the auction. 
The Bureaus seek comment on these proposals.
vi. Provisionally Winning Bids
    19. Provisionally winning bids are bids that would become final 
winning bids if the auction were to close in a specific round. At the 
end of a bidding round, the winning bid for each construction permit 
will be determined based on the highest bid amount received for the 
construction permit. In the event of identical high bid amounts being 
submitted on a construction permit in a given round (i.e., tied bids), 
the Bureaus will use a random number generator to select a single 
provisionally winning bid from among the tied bids. The remaining 
bidders, as well as the provisionally winning bidder, can submit higher 
bids in subsequent rounds. However, if the auction were to end with no 
other bids being placed, the winning bidder would be the one that 
placed the provisionally winning bid. If any bids are received on the 
construction permit in a subsequent round, the provisionally winning 
bid again will be determined by the highest bid amount received for the 
construction permit.
    20. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the construction permit at 
the close of a subsequent round, unless the provisionally winning bid 
is withdrawn (if bid withdrawals are permitted). Bidders are reminded 
that provisionally winning bids count toward activity for purposes of 
the activity rule.
vii. Bid Removal and Bid Withdrawal
    21. For Auction 79, the Bureaus propose the following bid removal 
procedures. Before the close of a bidding round, a bidder has the 
option of removing any bid placed in that round. By removing selected 
bids in the FCC Auction System, a bidder may effectively unsubmit any 
bid placed within that round. In contrast to the bid withdrawal 
provisions, a bidder removing a bid placed in the same round is not 
subject to a withdrawal payment. Once a round closes, a bidder may no 
longer remove a bid. The Bureaus seek comment on this bid removal 
proposal.
    22. Where permitted in an auction, bid withdrawals provide a bidder 
with the option of withdrawing bids placed in prior rounds that have 
become provisionally winning bids. If permitted, a bidder that 
withdraws its provisionally winning bid(s) is subject to the bid 
withdrawal payment provisions of the Commission's rules. Based on 
rulemaking order guidance and the experience of the Bureaus in prior FM 
auctions, the Bureaus propose to prohibit bidders in this auction from 
withdrawing any bids after the round in which bids were placed has 
closed. The Bureaus seek comment on whether bid withdrawals should be 
permitted in Auction 79.

C. Post-Auction Payments

i. Interim Withdrawal Payment Percentage
    23. If withdrawals are allowed in this auction, the Bureaus seek 
comment on the appropriate percentage of a withdrawn bid that should be 
assessed as an interim withdrawal payment, in the event that a final 
withdrawal payment cannot be determined at the close of the auction. In 
general, the Commission's rules provide that a bidder that withdraws a 
bid during an auction is subject to a withdrawal payment equal to the 
difference between the amount of the withdrawn bid and the amount of 
the winning bid in the same or a subsequent auction. However, if a 
construction permit for which a bid has been withdrawn does not receive 
a subsequent higher bid or winning bid in the same auction, the final 
withdrawal payment cannot be calculated until a corresponding 
construction permit

[[Page 10581]]

receives a higher bid or winning bid in a subsequent auction. When that 
final payment cannot yet be calculated, the bidder responsible for the 
withdrawn bid is assessed an interim bid withdrawal payment, which will 
be applied toward any final bid withdrawal payment that is ultimately 
assessed. The Commission's rules provide that in advance of each 
auction, the Commission shall establish a percentage between three 
percent and twenty percent of the withdrawn bid to be assessed as an 
interim bid withdrawal payment.
    24. The Commission has indicated that the level of the interim 
withdrawal payment in a particular auction will be based on the nature 
of the service and the inventory of the construction permits being 
offered. The Commission noted that it may impose a higher interim 
withdrawal payment percentage to deter the anti-competitive use of 
withdrawals when, for example, bidders likely will not need to 
aggregate construction permits offered, such as when few construction 
permits are offered, the construction permits offered are not on 
adjacent frequencies or in adjacent areas, or there are few synergies 
to be captured by combining construction permits.
    25. Applying the reasoning that a higher interim withdrawal payment 
percentage is appropriate when aggregation of construction permits is 
not expected, as with the construction permits subject to competitive 
bidding in Auction 79, if the Bureaus allow bid withdrawals in this 
auction, the Bureaus propose an interim bid withdrawal payment of 
twenty percent of the withdrawn bid for this auction. The Bureaus seek 
comment on this proposal.
ii. Additional Default Payment Percentage
    26. Any winning bidder that defaults or is disqualified after the 
close of an auction (i.e., fails to remit the required down payment 
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise 
disqualified) is liable for a default payment under 47 CFR 
1.2104(g)(2). This payment consists of a deficiency payment, equal to 
the difference between the amount of the bidder's bid and the amount of 
the winning bid the next time a construction permit covering the same 
spectrum is won in an auction, plus an additional payment equal to a 
percentage of the defaulter's bid or of the subsequent winning bid, 
whichever is less.
    27. As previously noted by the Commission, defaults weaken the 
integrity of the auction process and may impede the deployment of 
service to the public. In light of these considerations for Auction 79, 
the Bureaus propose to establish an additional default payment of 
twenty percent of the relevant bid as more effective in deterring 
defaults than a smaller percentage. The Bureaus seek comment on this 
proposal.

II. Commission ex parte Rules

    28. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in 47 CFR 1.1206(b).

Federal Communications Commission.
Gary D. Michaels,
Deputy Division Chief, Auctions and Spectrum Access Division, WTB.
 [FR Doc. E9-5244 Filed 3-10-09; 8:45 am]
BILLING CODE 6712-01-P