[Federal Register Volume 74, Number 242 (Friday, December 18, 2009)]
[Notices]
[Pages 67221-67226]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30164]


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

FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 09-205; DA 09-2416]


Auction of Lower and Upper Paging Bands Licenses Scheduled for 
May 25, 2010; Comment Sought on Competitive Bidding Procedures for 
Auction 87

AGENCY: Federal Communications Commission.

ACTION: Notice.

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

SUMMARY: This document announces the auction of lower and upper paging 
bands licenses scheduled to commence on May 25, 2010 (Auction 87). This 
document also seeks comments on competitive bidding procedures for 
Auction 87.

DATES: Comments are due on or before December 21, 2009, and reply 
comments are due on or before January 7, 2010.

ADDRESSES: You may submit comments, identified by AU Docket No. 09-205, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     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. All filings must be 
addressed to the Commission's Secretary, Attn: WTB/ASAD, Office of the 
Secretary, Federal Communications Commission.
     Through December 24, 2009, 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.
     For filings on or after December 28, 2009, all hand-
delivered or messenger-delivered paper filings for the Commission's 
Secretary must be delivered to FCC Headquarters at 445 12th St., SW., 
Room TW-A325, Washington, DC 20554. All hand deliveries must be held 
together with rubber bands or fasteners. Any envelopes must be disposed 
of before entering the building.
     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.
     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.
     The Wireless Telecommunications Bureau requests that a 
copy of all comments and reply comments be submitted electronically to 
the following address: [email protected].
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: For auction legal questions: 
Scott Mackoul at (202) 418-0660. For general auction questions: Roy 
Knowles or Barbara Sibert at (717) 338-2868; Mobility Division: For 
paging service rule questions: Michael Connelly (legal) or Melvin Spann 
(technical) at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 87 Comment 
Public Notice released on November 30, 2009. The complete text of the 
Auction 87 Comment Public Notice, including Attachments A and B, and 
related Commission documents, are available for public inspection and 
copying from 8 a.m. to 4:30 p.m. ET Monday through Thursday or from 8 
a.m. to 11:30 a.m. ET on Fridays in the FCC Reference Information 
Center, 445 12th Street,

[[Page 67222]]

SW., Room CY-A257, Washington, DC 20554. The Auction 87 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, fax 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 09-2416. The Auction 87 Comment Public Notice and related documents 
also are available on the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/87/, or by using the search function for AU 
Docket No. 09-205 on the ECFS Web page at http://www.fcc.gov/cgb/ecfs/.

I. Introduction

    1. The Wireless Telecommunications Bureau (Bureau) announces an 
auction of 9,603 paging licenses to commence on May 25, 2010, which has 
been designated Auction 87. These licenses consist of 7,752 licenses in 
the lower paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz, 454-460 MHz) 
and 1,851 licenses in the upper paging bands (929-931 MHz).

II. Licenses To Be Offered in Auction 87

    2. Auction 87 will include licenses that remained unsold from a 
previous auction, licenses on which a winning bidder in a previous 
auction defaulted, and licenses for spectrum previously associated with 
licenses that cancelled or terminated. In a few cases, the available 
license does not cover the entire geographic area due to an excluded 
area or previous partitioning.
    3. Attachment A of the Auction 87 Comment Public Notice provides a 
summary of the licenses available in Auction 87. Due to the large 
number of licenses in Auction 87, the complete list of licenses 
available for this auction will be provided in electronic format only, 
available as separate Attachment A files at http://wireless.fcc.gov/auctions/87/ or through the Commission's duplicating contractor. Tables 
containing the block/frequency cross-reference list for the paging 
bands are included in Attachment B of the Auction 87 Comment Public 
Notice.

A. Incumbency Issues

    4. There are pre-existing paging incumbent licenses. Incumbent 
(non-geographic) paging licensees operating under their existing 
authorizations are entitled to full protection from co-channel 
interference. Geographic area licensees are likewise afforded co-
channel interference protection from incumbent licensees. Adjacent 
geographic area licensees are obligated to resolve possible 
interference concerns of adjacent geographic area licensees by 
negotiating a mutually acceptable agreement with the neighboring 
geographic licensee.

III. Bureau Seeks Comment on Auction Procedures

A. Auction Design

i. Auction Format
    5. The Bureau proposes to auction all licenses included in Auction 
87 using the Commission's standard simultaneous multiple-round auction 
format. This type of auction offers every license for bid at the same 
time and consists of successive bidding rounds in which eligible 
bidders may place bids on individual licenses. Typically, bidding 
remains open on all licenses until bidding stops on every license. The 
Bureau seeks comment on this proposal.
ii. Anonymous Bidding
    6. The Bureau proposes to conduct Auction 87 using certain 
procedures for limited information disclosure, also referred to as 
anonymous bidding. Specifically, the Bureau proposes to withhold, until 
after the close of bidding, public release of (1) Bidders' license 
selections on their short-form applications (FCC Form 175), (2) the 
amounts of bidders' upfront payments and bidding eligibility, and (3) 
information that may reveal the identities of bidders placing bids and 
taking other bidding-related actions. Under these proposed limited 
information procedures, the amount of every bid placed and whether a 
bid was withdrawn would be disclosed after the close of every round, 
but the identities of bidders placing specific bids or withdrawals and 
the net bid amounts would not be disclosed until after the close of the 
auction. Bidders, moreover, would have access to additional information 
about their own bids. After the close of bidding, bidders' license 
selections, upfront payment amounts, bidding eligibility, bids, and 
other bidding-related actions would be made publicly available.
    7. The Bureau seeks comment on the details regarding its proposal 
for implementation of anonymous bidding in Auction 87. The Bureau also 
seeks comment on alternatives to the use of anonymous bidding 
procedures for Auction 87. Because of the large number of licenses 
available in Auction 87 and the circumstances the Bureau anticipates 
for this paging auction, the potential gains to economic efficiency and 
competitiveness from using limited information procedures may not 
warrant the costs and burdens of those procedures in this case. The 
Bureau encourages parties to provide information about the benefits and 
costs of complying with limited information procedures as compared with 
the benefits and costs of alternative procedures that would provide for 
the disclosure of more information on bidder identities and interests 
in the auction. If commenters believe that the Bureau should not adopt 
procedures to limit the disclosure of certain bidder-specific 
information until after the auction, they should explain their 
reasoning.

B. Auction Structure

i. Round Structure
    8. Auction 87 will consist of sequential bidding rounds. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of the auction.
    9. The Commission will conduct Auction 87 over the Internet, and 
telephonic bidding will be available as well. The toll-free telephone 
number for the Auction Bidder Line will be provided to qualified 
bidders.
    10. The Bureau proposes to retain the discretion to change the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. Under this proposal, the Bureau may change 
the amount of time for bidding rounds, the amount of time between 
rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. The Bureau seeks comment on this proposal. 
Commenters may wish to address the role of the bidding schedule in 
managing the pace of the auction and the tradeoffs in managing auction 
pace by bidding schedule changes, by changing the activity requirements 
or bid amount parameters, or by using other means.
ii. Stopping Rule
    11. For Auction 87, the Bureau proposes to employ a simultaneous 
stopping rule approach. A simultaneous stopping rule means that all 
licenses remain available for bidding until bidding closes 
simultaneously on all licenses. More specifically, bidding will close 
simultaneously on all licenses after the first round in which no bidder 
submits any new bids, applies a proactive waiver, or withdraws any 
provisionally winning bids. Thus,

[[Page 67223]]

unless the Bureau announces alternative stopping procedures, bidding 
will remain open on all licenses until bidding stops on every license. 
Consequently, it is not possible to determine in advance how long the 
auction will last.
    12. Further, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction 87: (1) Use a 
modified version of the simultaneous stopping rule. The modified 
stopping rule would close the auction for all licenses after the first 
round in which no bidder applies a waiver, withdraws a provisionally 
winning bid, or places any new bids on any license for which it is not 
the provisionally winning bidder. Thus, absent any other bidding 
activity, a bidder placing a new bid on a license for which it is the 
provisionally winning bidder would not keep the auction open under this 
modified stopping rule; (2) declare that the auction will end after a 
specified number of additional rounds (special stopping rule). If the 
Bureau invokes this special stopping rule, it will accept bids in the 
specified final round(s) after which the auction will close; and (3) 
keep the auction open even if no bidder submits any new bids, applies a 
waiver, or withdraws any provisionally winning bids. In this event, the 
effect will be the same as if a bidder had applied a waiver. The 
activity rule, therefore, will apply as usual and a bidder with 
insufficient activity will either lose bidding eligibility or use a 
waiver.
    13. The Bureau proposes to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly or quickly, there is minimal overall bidding activity, or it 
appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. Before exercising certain of 
these options, the Bureau is likely to attempt to change the pace of 
the auction by, for example, changing the number of bidding rounds per 
day and/or changing minimum acceptable bids. The Bureau proposes to 
retain the discretion to exercise any of these options with or without 
prior announcement during the auction. The Bureau seeks comment on 
these proposals.
iii. Information Relating to Auction Delay, Suspension, or Cancellation
    14. For Auction 87, the Bureau proposes that, by public notice or 
by announcement during the auction, the Bureau may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
obstacle, 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. The 
Bureau seeks comment on this proposal.

C. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    15. For Auction 87, the Bureau proposes to make the upfront 
payments equal to the minimum opening bids. The specific upfront 
payments for each license are set forth in the complete list of 
licenses available for Auction 87, available as separate Attachment A 
files at http://wireless.fcc.gov/auctions/87/. The Bureau seeks comment 
on this proposal.
    16. The Bureau proposes that the amount of the upfront payment 
submitted by a bidder will determine the bidder's initial bidding 
eligibility in bidding units. The Bureau proposes that each license be 
assigned a specific number of bidding units equal to the upfront 
payment listed for the license, on a bidding unit per dollar basis. The 
specific bidding units for each license are set forth in the complete 
list of licenses available for Auction 87, available as separate 
Attachment A files at http://wireless.fcc.gov/auctions/87/. The number 
of bidding units for a given license is fixed and does not change 
during the auction as prices rise. A bidder's upfront payment is not 
attributed to specific licenses. Rather, a bidder may place bids on any 
combination of licenses it selected on its short-form application (FCC 
Form 175) as long as the total number of bidding units associated with 
those licenses does not exceed its current eligibility.
    17. Eligibility cannot be increased during the auction; it can only 
remain the same or decrease. Thus, in calculating its upfront payment 
amount and hence its initial bidding eligibility, an applicant must 
determine the maximum number of bidding units it may wish to bid on (or 
hold provisionally winning bids on) in any single round, and submit an 
upfront payment amount covering that total number of bidding units. 
Provisionally winning bids are bids that would become final winning 
bids if the auction were to close in that given round.
    18. The Bureau seeks comment on these proposals.
ii. Activity Rule
    19. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. A bidder's activity in a round will be the sum of 
the bidding units associated with any licenses upon which it places 
bids during the current round and the bidding units associated with any 
licenses for which it holds provisionally winning bids. Bidders are 
required to be active on a specific percentage of their current bidding 
eligibility during each round of the auction. Failure to maintain the 
requisite activity level will result in the use of an activity rule 
waiver, if any remain, or a reduction in the bidder's eligibility, 
possibly curtailing or eliminating the bidder's ability to place 
additional bids in the auction.
    20. The Bureau proposes to divide the auction into at least two 
stages, each characterized by a different activity requirement. The 
auction will start in Stage One. The Bureau proposes to advance the 
auction to the next stage by announcement during the auction. In 
exercising this discretion, the Bureau will consider a variety of 
measures of auction activity, including but not limited to the 
percentage of licenses (as measured in bidding units) on which there 
are new bids, the number of new bids, and the increase in revenue. The 
Bureau seeks comment on these proposals.
    21. The Bureau proposes the following activity requirements, while 
noting again that the Bureau retains the discretion to change stages 
unilaterally by announcement during the auction. In each round of the 
first stage of the auction (Stage One), a bidder desiring to maintain 
its current bidding eligibility is required to be active on licenses 
representing at least 80 percent of its current bidding eligibility. 
Failure to maintain the required activity level will result in the use 
of an activity rule waiver or a reduction in the bidder's bidding 
eligibility for the next round of bidding. During Stage One, a bidder's 
reduced eligibility for the next round will be calculated by 
multiplying the bidder's current round activity by five-fourths (\5/
4\). In each round of the second stage (Stage Two), 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 a reduction in the bidder's bidding eligibility for the next 
round of bidding. During Stage Two, a bidder's reduced eligibility for 
the next round will be calculated by multiplying the bidder's current 
round activity by twenty-nineteenths (\20/19\).

[[Page 67224]]

    22. Under this proposal, the Bureau would retain the discretion to 
change the activity requirements during the auction. For example, the 
Bureau could decide to add an additional stage with a higher activity 
requirement, not to transition to Stage Two if it believes the auction 
is progressing satisfactorily under the Stage One activity requirement, 
or to transition to Stage Two with an activity requirement that is 
higher or lower than the 95 percent proposed herein. If the Bureau 
exercised this discretion, it would alert bidders by announcement in 
the FCC Auction System.
iii. Activity Rule Waivers and Reducing Eligibility
    23. Use of an activity rule waiver preserves the bidder's 
eligibility despite the bidder's activity in the current round being 
below the required minimum level. An activity rule waiver applies to an 
entire round of bidding, not to particular licenses. Activity rule 
waivers can be either proactive or automatic and are principally a 
mechanism for bidders to avoid the loss of bidding eligibility in the 
event that exigent circumstances prevent them from bidding in a 
particular round. The Auction 87 Comment Public Notice provides 
additional, more detailed information on how activity rule waivers 
operate.
    24. The Bureau proposes that each bidder in Auction 87 be provided 
with three activity rule waivers that may be used as set forth above at 
the bidder's discretion during the course of the auction. The Bureau 
seeks comment on this proposal.
iv. Reserve Price or Minimum Opening Bids
    25. The Bureau proposes to establish minimum opening bid amounts 
for Auction 87. The Bureau believes a minimum opening bid amount, which 
has been used in other auctions, is an effective bidding tool for 
accelerating the competitive bidding process. The Bureau does not 
propose a separate reserve price for the licenses to be offered in 
Auction 87.
    26. For previous auctions of paging licenses (Auctions 40 and 48), 
the Commission set minimum opening bid amounts based on the winning bid 
amounts from a previous auction for paging licenses in the same area. 
The results of these calculations were subject to a minimum amount--
e.g., a floor of $500 in Auction 48. In Auction 48, a large proportion 
of the licenses won were won at or near the minimum opening bid amount. 
Given the history of these licenses, the Bureau proposes to set the 
minimum opening bid for each license available in Auction 87 at $500.
    27. The Bureau seeks comment on this proposal. If commenters 
believe that these minimum opening bid amounts will deter substantial 
numbers of bidders from placing bids on licenses, or are not reasonable 
amounts, or should instead operate as a reserve price, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid amount levels or formulas. In establishing minimum opening bid 
amounts, the Bureau particularly seeks comment on such factors as the 
amount of spectrum being auctioned, levels of incumbency within these 
spectrum bands, the availability of technology to provide service, the 
size of the service areas, issues of interference with other spectrum 
bands and any other relevant factors that could reasonably have an 
impact on valuation of the licenses being auctioned. The Bureau has not 
attempted to adjust minimum opening bid amounts for licenses based on 
precise levels of incumbency within particular geographic areas, and 
has instead proposed a formula that is more easily administered, and 
that is intended to reflect overall incumbency levels. The Bureau seeks 
comment on this approach and on whether the public interest would be 
served by having no minimum opening bid amount or reserve price.
v. Bid Amounts
    28. The Bureau proposes that, in each round, eligible bidders be 
able to place a bid on a given license using one or more pre-defined 
bid amounts. Under this proposal, the FCC Auction System interface will 
list the acceptable bid amounts for each license. The first of the 
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 
on the license. After there is a provisionally winning bid for a 
license, the minimum acceptable bid amount will be a certain percentage 
higher. That is, the minimum acceptable bid amount will be calculated 
by multiplying the provisionally winning bid amount times one plus the 
minimum acceptable bid percentage. If, for example, the minimum 
acceptable bid percentage is 10 percent, the minimum acceptable bid 
amount will equal (provisionally winning bid amount) * (1.10), rounded. 
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.
    29. For Auction 87, the Bureau proposes to use a minimum acceptable 
bid percentage of 10 percent. This means that the minimum acceptable 
bid amount for a license will be approximately 10 percent greater than 
the provisionally winning bid amount for the license.
    30. Any additional bid amounts are calculated using the minimum 
acceptable bid amount and a bid increment percentage, which need not be 
the same as the percentage used to calculate the minimum acceptable bid 
amount. The first additional acceptable bid amount equals the minimum 
acceptable bid amount times one plus the bid increment percentage, 
rounded. If, for example, the bid increment percentage is 5 percent, 
the calculation is (minimum acceptable bid amount) * (1 + 0.05), 
rounded, or (minimum acceptable bid amount) * 1.05, 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) * 1.10, rounded; etc. The Bureau 
will round the results using the Commission's standard rounding 
procedures for auctions.
    31. The Bureau seeks comment on whether to start with eight 
additional bid amounts (for a total of nine bid amounts), or with fewer 
or no additional bid amounts, in the event that anonymous bidding is 
implemented for Auction 87. In particular, commenters should address 
the issue of additional bid amounts in light of particular 
circumstances of Auction 87, including the nature of the license 
inventory. If the Bureau allows additional bid amounts, it proposes to 
use a bid increment percentage of 5 percent. If the Bureau does not 
adopt anonymous bidding procedures for Auction 87, the Bureau proposes 
to start with only one bid amount per license (the minimum acceptable 
bid amount and no additional bid amounts).
    32. The Bureau retains 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 
Bureau determines that circumstances so dictate. Further, the Bureau 
retains the discretion to make such changes on a license-by-license 
basis.
    33. The Bureau seeks comment on the above proposals. Commenters may 
wish to address the role of the minimum

[[Page 67225]]

acceptable bids and the number of acceptable bid amounts in managing 
the pace of the auction and the tradeoffs in managing auction pace by 
changing the bidding schedule, activity requirements, or bid amounts, 
or by using other means.
vi. Provisionally Winning Bids
    34. Provisionally winning bids are bids that would become final 
winning bids if the auction were to close in that given round. At the 
end of a bidding round, a provisionally winning bid for each license 
will be determined based on the highest bid amount received for the 
license. In the event of identical high bid amounts being submitted on 
a license in a given round (i.e., tied bids), the Bureau will use a 
random number generator to select a single provisionally winning bid 
from among the tied bids. (Each bid is assigned a random number, and 
the tied bid with the highest random number wins the tiebreaker.) The 
remaining bidders, as well as the provisionally winning bidder, can 
submit higher bids in subsequent rounds. However, if the auction were 
to end with no other bids being placed, the winning bidder would be the 
one that placed the provisionally winning bid. If any bids are received 
on the license in a subsequent round, the provisionally winning bid 
again will be determined by the highest bid amount received for the 
license.
    35. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the license at the close of 
a subsequent round, unless the provisionally winning bid is withdrawn. 
Bidders are reminded that provisionally winning bids count toward 
activity for purposes of the activity rule.
vii. Bid Removal
    36. For Auction 87, the Bureau proposes and seeks comment on 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 undo any of its bids placed within that round. Once a round 
closes, a bidder may no longer remove a bid.
viii. Bid Withdrawal
    37. A bidder may withdraw its provisionally winning bids using the 
withdraw bids function in the FCC Auction System. A bidder that 
withdraws its provisionally winning bid(s) is subject to the bid 
withdrawal payment provisions of the Commission rules.
    38. For Auction 87, the Bureau proposes to limit each bidder to 
withdrawing provisionally winning bids in only one round during the 
course of the auction. To permit a bidder to withdraw bids in more than 
one round may encourage insincere bidding or the use of withdrawals for 
anti-competitive purposes. The round in which withdrawals may be used 
will be at the bidder's discretion, and there is no limit on the number 
of provisionally winning bids that may be withdrawn during that round. 
Withdrawals must be in accordance with the Commission's rules, 
including the bid withdrawal payment provisions specified in 47 CFR 
1.2104(g). The Bureau seeks comment on these bid withdrawal procedures. 
If commenters believe that each bidder should be allowed to withdraw 
provisionally winning bids in more than one round during the course of 
the auction, or should not be permitted to withdraw any bids, they 
should state how many bid withdrawal rounds they seek and explain what 
specific factors lead them to that conclusion.

D. Post-Auction Procedures

i. Establishing the Interim Withdrawal Payment Percentage
    39. The Bureau seeks comment on the appropriate percentage of a 
withdrawn bid that should be assessed as an interim withdrawal payment 
in the event that a final withdrawal payment cannot be determined at 
the close of the auction. In general, the Commission's rules provide 
that a bidder that withdraws a bid during an auction is subject to a 
withdrawal payment equal to the difference between the amount of the 
withdrawn bid and the amount of the winning bid in the same or 
subsequent auction(s). If a bid is withdrawn and no subsequent higher 
bid is placed and/or the license is not won in the same auction, the 
final withdrawal payment cannot be calculated until after the close of 
a subsequent auction in which a higher bid for the license (or the 
equivalent to the license) is placed or the license is won. 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. 47 CFR 1.2104(g)(1) of the Commission rules requires that the 
percentage of the withdrawn bid to be assessed as an interim bid 
withdrawal payment be between three percent and twenty percent and that 
it be set in advance of the auction.
    40. The Commission has determined that the level of the interim 
withdrawal payment in a particular auction will be based on the nature 
of the service and the inventory of the licenses being offered. The 
Commission has 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 the 
licenses being offered in the auction, such as when few licenses are 
offered that are on adjacent frequencies or in adjacent areas, or when 
there are few synergies to be captured by combining licenses.
    41. With respect to the licenses being offered in Auction 87, the 
service rules permit a variety of fixed, mobile, and paging services, 
though the opportunities for combining licenses on adjacent frequencies 
or in adjacent areas are more limited than has been the case in 
previous auctions of paging licenses. Balancing the potential need for 
bidders to use withdrawals to avoid winning incomplete combinations of 
licenses with the Bureau's interest in deterring undesirable strategic 
use of withdrawals, the Bureau proposes a percentage below the maximum 
twenty percent permitted under the current rules but above the three 
percent previously provided by the Commission's rules. Specifically, 
the Bureau proposes to establish an interim bid withdrawal payment of 
ten percent of the withdrawn bid for this auction. The Bureau seeks 
comment on this proposal.
ii. Establishing the Additional Default Payment Percentage
    42. Any winning bidder that, after the close of an auction, 
defaults--by, for example, failing to remit the required down payment 
within the prescribed period of time, failing to submit a timely long-
form application, or failing to make full payment--or is otherwise 
disqualified is liable for a default payment under 47 CFR 1.2104(g)(2) 
of the Commission's rules. This payment consists of a deficiency 
payment, equal to the difference between the amount of the bidder's bid 
and the amount of the winning bid the next time a license covering the 
same spectrum is won in an auction, plus an additional payment equal to 
a percentage of the defaulter's bid or of the subsequent winning bid, 
whichever is less.
    43. For Auction 87, the Bureau proposes to establish an additional 
default payment of ten percent. As previously noted by the Commission, 
defaults weaken the integrity of the auction process and impede the 
deployment of service to the public.

[[Page 67226]]

Given the nature of the service and the inventory of the licenses being 
offered in Auction 87, the Bureau does not believe the detrimental 
effects of any defaults in Auction 87 are likely to be unusually great. 
The Bureau seeks comment on this proposal.

IV. Commission Ex Parte Rules

    44. 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 Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E9-30164 Filed 12-17-09; 8:45 am]
BILLING CODE 6712-01-P