[Federal Register Volume 77, Number 105 (Thursday, May 31, 2012)]
[Notices]
[Pages 32092-32111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-13223]
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FEDERAL COMMUNICATIONS COMMISSION
[AU Docket No. 12-25; DA 12-641 and DA 12-721]
Mobility Fund Phase I Auction Scheduled for September 27, 2012;
Notice and Filing Requirements and Other Procedures for Auction 901
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: In this document, the Wireless Telecommunications Bureau (WTB)
and the Wireline Competition Bureau (WCB) (collectively, the Bureaus)
announce the procedures and filing requirements for a reverse auction
to award $300 million in one-time Mobility Fund Phase I support
scheduled to commence on September 27, 2012. The Bureaus also announce
the availability of eligible area data in various formats.
DATES: Short-form applications are due prior to 6 p.m. on July 11,
2012.
FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau,
Auctions and Spectrum Access Division: for Mobility Fund Phase I
questions: Sayuri Rajapakse or Stephen Johnson at (202) 418-0660; for
auction process questions: Lisa Stover at (717) 338-2868. Wireline
Competition Bureau, Telecommunications Access Policy Division: for
general universal service
[[Page 32093]]
questions: Alex Minard at (202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of two public notices
related to the auction for Mobility Fund Phase I support (Auction 901):
(1) The Auction 901 Procedures Public Notice released on May 2, 2012,
and (2) a public notice released on May 8, 2012, announcing the
availability of additional formats for data regarding the areas
eligible for support in Auction 901. Both public notices and other
related Commission documents 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 12-641 or DA 12-721.
Both public notices and other related documents also are available on
the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/901/ or by using the search function for AU Docket No. 12-25
on the Commission's Electronic Comment Filing System (ECFS) Web page at
http://www.fcc.gov/cgb/ecfs/.
I. General Information
A. Introduction and Summary
1. The Bureaus establish the procedures that will be used for the
reverse auction that will award $300 million in one-time Mobility Fund
Phase I support. This auction, designated as Auction 901, is scheduled
to be held on September 27, 2012. The Auction 901 Procedures Public
Notice establishes the procedures, terms, and conditions governing
Auction 901 and the post-auction application process, and provides
other important information for parties that wish to seek Mobility Fund
Phase I support.
2. Auction 901 will award one-time support to carriers that commit
to provide third-generation (3G) or better mobile voice and broadband
services in census blocks where such services are unavailable. Mobility
Fund Phase I support will be allocated to maximize the road miles
covered by new mobile services without exceeding the budget of $300
million. Winning bidders will be obligated to choose whether to deploy
3G service within two years or fourth-generation (4G) service within
three years of the award of support. The term 3G refers to mobile
wireless services that provide voice telephony service on networks that
also provide services such as Internet access and email. 4G services
are those capable of meeting or exceeding certain data rates, as
discussed below.
3. Auction 901 will be the first auction to award high-cost
universal service support through competitive bidding. The USF/ICC
Transformation Order, 76 FR 73830, November 29, 2011 and 76 FR 81562,
December 28, 2011, established the Mobility Fund as a universal service
support mechanism dedicated expressly to mobile services and adopted
rules for distribution of the $300 million initial budget through
Mobility Fund Phase I. In the USF/ICC Transformation Order, the
Commission delegated authority to the Bureaus to implement Mobility
Fund Phase I, including the authority to prepare for and conduct an
auction and administer program details. On February 2, 2012, the
Bureaus released the Auction 901 Comment Public Notice, 77 FR 7152,
February 10, 2012, which identified a preliminary list of census blocks
potentially eligible for Mobility Fund Phase I support and sought
comment on whether census blocks should be added or removed from the
list of potentially eligible census blocks, on the details of auction
procedures, and on certain related program requirements for Auction
901. The Bureaus considered 69 separate filings in response to the
Auction 901 Comment Public Notice.
4. In the Auction 901 Procedures Public Notice, The Bureaus, among
other things: (1) Provide the final list of census blocks eligible for
Mobility Fund Phase I support in Auction 901; (2) conclude that, to
establish the number of qualifying road miles associated with each
eligible census block, three additional Census road categories will be
added to the three categories of roads proposed in the Auction 901
Comment Public Notice; (3) conclude that Auction 901 will be conducted
as a single round, sealed bid auction; (4) provide for bidding on
predefined aggregations of eligible census blocks by census tracts,
except in Alaska, where bidding will be permitted on individual
eligible census blocks; (5) require that each winning bidder provide
coverage, consistent with the performance requirements of the rules
adopted in the USF/ICC Transformation Order, to a minimum of 75 percent
of the road miles in each census tract for which it wins support,
calculated as the total of the road miles in the eligible census blocks
in the tract; and (6) permit winning bidders to demonstrate that they
offer supported services at rates comparable to those in urban areas by
offering one stand-alone voice and one data plan in supported area(s)
that match plans in urban areas, i.e., in top 100 Cellular Market Areas
(CMAs), and cost no more than the matching plans.
5. Moreover, the Auction 901 Procedures Public Notice reviews
important Mobility Fund Phase I program requirements, including
eligibility requirements for participation and the public interest
obligations of winning bidders; describes in detail pre-auction
procedures and deadlines, including auction application requirements;
explains requirements and details related to the structure and
procedures for bidding as outlined above; and provides an overview of
the post-auction procedures, requirements, and deadlines, including
information on the post-auction application and on payment requirements
that will be used to enforce carriers' obligations.
B. Overview of Mobility Fund Phase I
i. Background
6. In the USF/ICC Transformation Order, the Commission
comprehensively reformed and modernized the high-cost component of the
Universal Service Fund (USF) to help ensure the universal availability
of fixed and mobile communication networks capable of providing voice
and broadband services, and established a universal service support
mechanism dedicated expressly to mobile services--the Mobility Fund.
7. Phase I of the Mobility Fund will provide up to $300 million in
one-time support to address gaps in mobile services availability by
supporting the build-out of current- and next-generation mobile
networks in areas where these networks are unavailable. The support
offered under Phase I of the Mobility Fund is in addition to any
ongoing support provided under existing high-cost universal service
program mechanisms. Phase II of the Mobility Fund will provide $500
million annually for ongoing support of mobile services. The Commission
sought comment on the details for Mobility Fund Phase II in the Further
Notice of Proposed Rulemaking adopted in the USF/ICC Transformation
Order.
8. The goal for Mobility Fund Phase I is to extend the availability
of mobile voice and broadband service on networks that provide 3G or
better performance and to accelerate the deployment of 4G wireless
networks in areas where it is cost effective to do so with one-time
support. To maximize coverage in eligible unserved areas within the
established budget of $300 million, the USF/ICC Transformation Order
established general rules for a reverse auction to identify those areas
where additional investment can make
[[Page 32094]]
as large a difference as possible, in a transparent, simple, speedy,
and effective way. In this reverse auction, bidders will indicate the
amount of one-time support they require to deploy service meeting the
defined performance standard in given unserved areas. Because the
auction will generally award support based on the lowest per-unit bid
amount irrespective of geographic area, bidders will compete not only
against other carriers that may be seeking support in the same areas,
but also against carriers bidding for support in other areas
nationwide. Support will be awarded based on the lowest bid amounts
submitted, but will not be awarded to more than one provider per area.
Successful bidders will be awarded support for an area at the price
they bid.
ii. Identification of Unserved Census Blocks Eligible for Mobility Fund
Support
9. In the USF/ICC Transformation Order, the Commission decided to
target Mobility Fund Phase I support to census blocks without 3G or
better service at the geometric center of the block, referred to as the
centroid, and concluded that American Roamer data is the best available
data source for determining where such service is unavailable. (The
Auction 901 Procedures Public Notice continues to refer to the data as
American Roamer data, even though the company has since changed its
name to Mosaik Solutions.) In the USF/ICC Transformation Order, the
Commission concluded that it would consider any census block in the
2010 Census as unserved--and thus eligible for support--if an analysis
of the American Roamer data indicated that the centroid is not covered
by networks using EV-DO, EV-DO Rev A, or UMTS/HSPA or better.
10. In the Auction 901 Comment Public Notice, the Bureaus concluded
that January 2012 American Roamer data was the most recently available
for the purpose of doing an analysis to identify eligible census blocks
and described the methodology for identifying potentially eligible
blocks. The Bureaus used geographic information system (GIS) software
to determine whether the American Roamer data show 3G or better
wireless coverage at the centroid of each block. If the American Roamer
data did not show such coverage, the block was determined to be
unserved. In the Auction 901 Updated Blocks Public Notice, 77 FR 9655,
February 17, 2012, the Bureaus identified potentially eligible unserved
blocks based on their analysis of 2010 Census data and January 2012
American Roamer data. Because Mobility Fund Phase I support will be
awarded based on bid amounts and the number of road miles in each
unserved census block, the list of potentially eligible census blocks
did not include any unserved census blocks without road miles. The
updated list consisted of 467,604 census blocks that lacked 3G or
better service at the centroid of the block.
11. Pursuant to the USF/ICC Transformation Order, the Bureaus will
also make ineligible for support census blocks for which,
notwithstanding the absence of 3G service, any provider has made a
regulatory commitment to provide 3G or better wireless service, or has
received a funding commitment from a federal executive department or
agency in response to the carrier's commitment to provide 3G or better
wireless service. Such federal funding commitments include, but are not
limited to, those made under the Broadband Technology Opportunities
Program (BTOP) and Broadband Initiatives Program (BIP) authorized by
the American Recovery and Reinvestment Act of 2009 (ARRA).
12. The Commission established certain bidder-specific
restrictions. Specifically, each applicant for Mobility Fund Phase I
support is required to certify that it will not seek support for any
areas for which it has made a public commitment to deploy, by December
31, 2012, 3G or better wireless service. In determining whether an
applicant has made such a public commitment, the Bureaus anticipated
that they would consider any public statement made with some
specificity as to both geographic area and time period. This
restriction will not prevent a bidder from seeking and receiving
support for an unserved area for which another provider has made such a
public commitment.
13. In the USF/ICC Transformation Order, the Commission, responding
to concerns about potential errors in determining coverage of a
particular area, provided for a limited timeframe for challenges to
those initial determinations. The Commission explained that it would
make public a list of unserved areas as part of the pre-auction process
and afford parties a reasonable opportunity to respond by demonstrating
that specific areas identified as unserved are actually served and/or
that additional unserved areas should be included. In the Auction 901
Comment Public Notice, the Bureaus therefore asked commenters to
indicate which blocks included in the revised list should not be
eligible for Mobility Fund Phase I support and provide supporting
evidence. Similarly, the Bureaus asked commenters to indicate which
blocks not included in the revised list should be eligible for support
and provide supporting evidence.
14. The Bureaus received numerous comments, reply comments, ex
parte and other submissions relating to census block eligibility. Three
states requested that the Bureaus add census blocks to the revised list
based on State Broadband Initiative data. Five BIP and/or BTOP awardees
submitted comments requesting that the Bureaus remove census blocks.
Twenty-two other providers also requested that the Bureaus either add
or remove census blocks from their updated list of potentially eligible
blocks.
15. Three state agencies requested that the Bureaus include census
blocks that the states identify as unserved based on the State
Broadband Initiative data gathered by the individual states for the
National Broadband Map. In the USF/ICC Transformation Order, the
Commission rejected the use of the National Broadband Map generally
because of inconsistencies in the initial phase relating to wireless
services data. While the Bureaus appreciate that data submitted for and
displayed in the National Broadband Map may have improved, the Bureaus
conclude that the states did not provide enough information to justify
a conclusion that the states' data is more reliable than the Bureaus'
analysis of American Roamer and other data, which the Commission
determined to use as a consistent basis for determining eligible census
blocks across all states. The Bureaus therefore decline to add as
eligible census blocks those listed by the three state agencies in
their filings.
16. In light of the Commission's determination to make ineligible
for support census blocks where a carrier had made a commitment to
provide 3G or better mobile service in return for a federal funding
commitment (such as those made under BIP and BTOP), the Bureaus
requested information on awards proposing mobile wireless projects
using 3G or better technology. In response, the U.S. Department of
Agriculture's Rural Utilities Service (USDA RUS) and the U.S.
Department of Commerce's National Telecommunications and Information
Administration (NTIA) submitted information on the location of their
BIP and BTOP awards. Five carriers also submitted comments listing
census blocks to be removed from the Bureaus' list of potentially
eligible blocks based
[[Page 32095]]
on their receipt of BIP and/or BTOP awards to provide 3G or better
service.
17. USDA RUS provided the Bureaus with a list of Census 2000 census
blocks associated with BIP awards for mobile wireless projects. After
converting the data to 2010 census blocks and comparing the results to
the 2010 census blocks submitted by the three carriers claiming BIP
awards, the Bureaus find that the blocks submitted by the carriers were
also reported on the list. This consistency leads the Bureaus to
conclude that the full list of census blocks receiving BIP awards
should be removed from the list of eligible census blocks to comply
with the USF/ICC Transformation Order. As a result, the Census 2000
census blocks which relate to seven awards made to six parties,
including three that commented in this proceeding, will be converted to
2010 census blocks as described and removed.
18. NTIA provided the Bureaus with a list of Census 2000 census
tracts associated with BTOP awards potentially for mobile wireless
projects. The BTOP list may be over inclusive because the list
describes areas at the census tract rather than the census block level,
and it may include middle mile infrastructure projects rather than
projects expressly expanding mobile services. The Bureaus compared this
list with the 2010 equivalents of the census tracts associated with the
2010 census blocks submitted by the three commenters claiming BTOP
awards. The census block data submitted by two of the three commenters
corresponded closely to areas identified on the list. Based on that
correspondence, the Bureaus remove the census blocks submitted by the
two commenters from the list of eligible census blocks. However,
because the likely over inclusiveness of the submitted data reduces the
Bureaus' ability to ensure that they would be targeting areas with
planned expansion of 3G or better coverage, the Bureaus did not remove
all of the areas on the list from consideration for Mobility Fund Phase
I support. Further, the Bureaus decline to remove the blocks that a
third commenter identified as associated with a BTOP award, because the
award and areas referenced by the commenter are not included in the
list.
19. The Bureaus also received comments from 22 carriers requesting
changes to their list of potentially eligible blocks--either removals
based on assertions that census blocks listed as potentially eligible
currently have 3G or better service (or would in the relatively near
future) or additions based on assertions that census blocks not listed
as potentially eligible actually lack 3G or better service. First, the
Bureaus note that three parties filed comments listing census blocks
for removal from the potentially eligible list based on assertions, at
least in part, that they would be covered in the future, i.e., after
the close of the record on March 26, 2012. The Bureaus conclude that
they will not make census blocks ineligible based on these assertions.
Pursuant to the USF/ICC Transformation Order, the Bureaus provided
parties with an opportunity to demonstrate that specific areas
identified as unserved are actually served or that parties had made a
regulatory commitment to serve particular areas. The Bureaus finds that
these assertions of coverage after the close of the record do not
demonstrate actual service or a regulatory commitment that should be
reflected in the Bureaus final list of eligible census blocks. Although
two carriers also claimed that they currently provide service with
respect to some of their listed census blocks, the Bureaus reject their
requested exclusions because they do not differentiate between current
and future coverage in their submissions.
20. The Bureaus received comments from 15 carriers identifying
census blocks for removal and/or addition to the list of potentially
eligible census blocks based on demonstrations of current coverage at
the centroid, or the lack thereof, in the form of maps, discussions of
drive tests, explanation of methodologies for determining coverage and
in numerous cases, certifications by one or more individuals as to the
veracity of the material provided. The Bureaus find these
demonstrations to be sufficiently credible and convincing to meet the
requirements of the USF/ICC Transformation Order and incorporate the
requested changes in the final list of eligible census blocks, to the
extent that they contain road miles in any of the six categories
identified by the Bureaus in the Auction 901 Procedures Public Notice.
21. Finally, the Bureaus received comments from five carriers
listing census blocks for removal from the potentially eligible list
based on bare assertions that their own coverage maps show they serve
census blocks on the Bureaus potentially eligible list. In contrast to
the submissions of the 15 carriers, these five did not provide any
information regarding the basis for their assertions. Reply commenters
challenged several such submissions as inadequate. The Bureaus conclude
that these assertions without supporting evidence do not demonstrate
actual service, as envisioned by the USF/ICC Transformation Order, that
provides a basis for the Bureaus to depart from their determination of
potentially eligible census blocks.
22. The list of census blocks released with the Auction 901
Procedures Public Notice is the Bureaus' final list of eligible census
blocks that were identified by analyzing U.S. Census data, January 2012
American Roamer data, and information submitted by third parties. The
difference between this list and the list provided with the Auction 901
Updated Blocks Public Notice is that the Bureaus have removed and added
blocks based on the comments of the 15 carriers that provided
sufficiently credible and convincing demonstrations, the Bureaus
removed blocks based on BTOP and BIP awards, and the Bureaus removed
blocks that did not have road miles in any of the six road categories.
Accordingly, the list of census blocks the Bureaus released in the
Auction 901 Procedures Public Notice contains the final determinations
with respect to the areas eligible for Mobility Fund Phase I support.
These census blocks will, in most cases, be aggregated into their
associated census tracts for bidding purposes. Concurrent with the
release of the Auction 901 Procedures Public Notice, the Bureaus
released an interactive map of the eligible census blocks. The map is a
visual representation of data from the Attachment A files, which
contain more information and generally more detail than is displayed on
the map. The map is available at http://wireless.fcc.gov/auctions/901/
and at http://www.fcc.gov/maps/. The Bureaus have also announced the
availability of a spreadsheet of biddable geographic areas for Auction
901 and geographic information system (GIS) data for the census blocks
eligible for Mobility Fund Phase I support to be offered in Auction
901. These data in additional formats are available at http://wireless.fcc.gov/auctions/901/.
23. The Bureaus remind those interested in seeking Mobility Fund
Phase I support that applicants for Auction 901 are required to certify
that they will not seek support for any areas in which they have made a
public commitment to deploy 3G or better service by December 31, 2012.
iii. Establishing Unserved Road Mile Units
24. In the Auction 901 Comment Public Notice, the Bureaus proposed
to establish road mile units based on three road categories defined and
reported by the U.S. Census Bureau: S1100, primary roads; S1200,
secondary roads; and
[[Page 32096]]
S1400, local and rural roads and city streets. The Bureaus sought
comment on this proposal and provided data on nine categories--the
proposed three categories and six more categories. Several commenters
asked us to include additional road categories. Specifically, parties
requested the addition of road categories S1500, 4WD vehicular trails;
S1640, service drives; and S1740, private roads for service vehicles.
Based on these comments and an analysis of 2010 census blocks and TIGER
road mile data, the Bureaus decide to include these additional road
categories. These categories will add three types of roads that are
particularly important in some rural areas: unpaved dirt trails where a
four-wheel drive vehicle is required, service drives that typically
connect to highways and other types of roads, and private roads that
are used in areas with logging, mining, oil fields, and ranches. Adding
these categories provides a better representation of roads where people
live, work, and travel since it means that, in every state and
territory, the Bureaus are making support possible for 98 percent or
more of the total road miles in eligible blocks. Furthermore, adding
these three categories includes more unserved road miles in almost all
states and, comparing the road miles in the selected categories to the
road miles for all nine categories, increases the parity among the
states of the proportion of unserved road miles that are included.
25. The list of census blocks released with the Auction 901
Procedures Public Notice includes, for each block, the number of road
miles in each of the six selected road categories.
iv. Public Interest Obligations
26. Voice and Broadband Service. All Mobility Fund Phase I
recipients must satisfy specified public interest obligations in
exchange for the support they receive, as must all recipients of any
Connect America Fund (CAF) support for fixed locations. Specifically,
all CAF recipients, including Mobility Fund Phase I recipients, must
offer stand-alone voice service to the public. Mobility Fund Phase I
recipients must offer voice service with coverage of at least 75
percent or more of the designated road miles within the area for which
support is provided. Furthermore, receipt of Mobility Fund Phase I
support is conditioned upon the recipient providing service over a
network that achieves particular data rates under particular
conditions, which the Commission, for this purpose, refers to as third
generation (3G) networks or better.
27. Data Rates. To provide specificity, and solely for purposes of
Mobility Fund Phase I, the Commission refers to a network as a 3G
network if it achieves outdoor minimum data transmission rates of 50
kilobits per second (kbps) uplink and 200 kbps downlink at vehicle
speeds appropriate for the roads covered. Also solely for purposes of
Mobility Fund Phase I, the Commission refers to a network as a fourth
generation (4G) network if it achieves outdoor minimum data
transmissions rates of 200 kbps uplink and 768 kbps downlink at vehicle
speeds appropriate for the roads covered. With respect to both 3G and
4G networks, transmission latency must be low enough to enable the use
of real-time applications, such as Voice over Internet Protocol (VoIP).
28. Performance Deadlines. Winning bidders in Auction 901 will
commit to provide service over either a 3G or a 4G network, as those
terms are used with respect to Mobility Fund Phase I, in their post-
auction long-form applications for support. Those parties committing to
provide service over a 3G network must do so for at least 75 percent or
more of the designated road miles within the relevant area within two
(2) years of being authorized to receive support. Winning bidders
committing to provide service over a 4G network must do so for at least
75 percent or more of the designated road miles within the relevant
area within three (3) years of being authorized to receive support. To
the extent that a recipient covers road miles in excess of the minimum,
support will be available for up to 100 percent of the designated road
miles for which the recipient demonstrates coverage within the required
timeframe associated with the technology deployed.
29. Reasonably Comparable Rates. Recipients of Mobility Fund Phase
I support must certify annually that they offer service in areas with
support at rates that are within a reasonable range of rates for
similar service plans offered by mobile wireless providers in urban
areas. This requirement extends for a period ending five years after
the date of award of support.
30. Collocation. In exchange for the support provided, Mobility
Fund Phase I recipients shall allow for reasonable collocation by other
providers of services that would meet the voice and data requirements
of Mobility Fund Phase I on newly constructed towers that the recipient
owns or manages in the area for which it receives support. Consistent
with this requirement, a recipient may not enter into facilities access
arrangements regarding relevant facilities that restrict any party to
the arrangement from allowing others to collocate on the facilities.
31. Voice and Data Roaming. Recipients of Mobility Fund Phase I
support must provide voice and data roaming on networks built with the
support, consistent with the requirements of 47 CFR 20.12 as those
rules were in effect on the date the Commission adopted the USF/ICC
Transformation Order. This condition of support is independent of
subsequent changes to the Commission's rules on voice and data roaming,
though to the extent any new rules are generally applicable, recipients
of Mobility Fund Phase I support may be subject to those as well. As
these requirements, as well as all the public interest obligations, are
a condition of Mobility Fund Phase I support, violations may result in
the withholding or clawing back of universal service support in
addition to any other applicable sanctions.
v. Mobility Fund Phase I Eligibility Requirements
32. In order to participate in Auction 901 and receive Mobility
Fund Phase I support, an applicant must demonstrate, for the areas on
which it wishes to bid, that it has been designated as an eligible
telecommunications carrier (ETC) and has access to the spectrum
necessary to satisfy the applicable performance requirements. In
addition, an applicant must certify that it is financially and
technically capable of providing 3G or better service.
33. One commenter advocates restricting eligibility to participate
in the auction based on additional factors, primarily related to the
size of the applicant. The Commission previously considered and
rejected similar proposals in the USF/ICC Transformation Order. The
Commission concluded that the competitive bidding rules and the
procedures to be developed by the Bureaus would promote its objectives
for the Mobility Fund and provide a fair opportunity for serious,
interested parties to participate. The Bureaus cannot modify the
eligibility requirements because the changes the commenter advocates
are beyond the scope of the Bureaus' delegated authority and the scope
of this proceeding and would require action by the Commission to
reconsider its determination in the USF/ICC Transformation Order.
34. On a related note, in connection with the USF/ICC
Transformation Order, the Commission prepared a Final Regulatory
Flexibility Analysis concerning the possible impact on small entities
of, among other things, the Mobility Fund Phase I rules, as
[[Page 32097]]
implemented by the Bureaus in the Auction 901 Procedures Public Notice.
vi. Annual Reporting and Record Retention Requirements
35. Winning bidders that are authorized to receive Mobility Fund
Phase I support are required to submit to the Commission an annual
report each year for the five years after being so authorized. The
information and certifications required to be included in the annual
report are described in 47 CFR 54.1009. In addition, authorized winning
bidders are required to submit certain reports before receiving
disbursements of support. Mobility Fund Phase I support will be
available for disbursement to authorized winning bidders in three
stages, with the first disbursement made when the winning bidder is
authorized to receive support. A recipient will be eligible to receive
the second disbursement when it submits a report demonstrating coverage
of 50 percent of the applicable coverage requirements of 47 CFR
54.1006. A recipient will be eligible to receive the final disbursement
when it submits a report demonstrating coverage meeting the applicable
requirements of 47 CFR 54.1006.
36. A winning bidder authorized to receive Mobility Fund Phase I
support and all of its agents are required to retain any documentation
prepared for, or in connection with, the award of Mobility Fund Phase I
support for a period of not less than ten years after the date on which
the winning bidder receives its final disbursement of Mobility Fund
Phase I support.
C. Auction Specifics
i. Auction Start Date
37. Bidding in Auction 901 will be held on Thursday, September 27,
2012. Two commenters contend that the auction should be delayed in
light of pending litigation regarding the source of funds to be
disbursed based on the auction and in light of pending petitions for
reconsideration of various aspects of the USF/ICC Transformation Order.
Neither pending litigation nor the pending petitions are a sufficient
basis for the Bureaus to delay the scheduled auction start date. The
Commission already has considered the issues in the pending litigation
at length in proceedings before it, and no action taken in the Auction
901 Procedures Public Notice would prejudge the Commission's review of
the petitions seeking reconsideration of the USF/ICC Transformation
Order.
38. The start and finish time of bidding in Auction 901 will be
announced by public notice approximately one week before the start of
the auction. Unless otherwise announced, bidding for all census blocks
will be offered at the same time.
ii. Bidding Methodology
39. The bidding methodology for Auction 901 will be single-round
reverse format. The Commission will conduct this auction over the
Internet using the FCC Auction System. Qualified bidders are permitted
to bid electronically via the Internet. Telephonic bidding will not be
available for Auction 901 because it will not be feasible given the
number of eligible geographic areas and the manner in which bids will
be uploaded.
iii. Pre-Auction Dates and Deadlines
40. The following dates and deadlines apply to Auction 901: (1) An
auction tutorial will available (via Internet) by June 27, 2012; (2)
short-form application (FCC Form 180) filing window opens on June 27,
2012, at 12 noon ET; (3) short-form application (FCC Form 180) filing
window closes on July 11, 2012, at 6:00 p.m. ET; (4) a mock auction
will be held on September 25, 2012; and (5) Auction 901 will be held on
September 27, 2012.
iv. Requirements for Participation
41. Those wishing to participate in this auction must: (1) submit a
short-form application (FCC Form 180) electronically prior to 6 p.m. ET
on July 11, 2012, following the electronic filing procedures that will
be provided in a future public notice; and (2) comply with all
provisions outlined in the Auction 901 Procedures Public Notice and
applicable Commission rules.
D. Rules and Disclaimers
i. Relevant Authority
42. Prospective applicants in Auction 901 must familiarize
themselves with the Commission's general universal service rules,
contained in 47 CFR part 54, and the Mobility Fund specifically, 47 CFR
54.1001- 54.1010. They should also familiarize themselves with the
Commission's decision in the USF/ICC Transformation Order to implement
the Mobility Fund Phase I. Prospective bidders in Auction 901 must be
familiar with the specific competitive bidding rules for universal
service support contained in 47 CFR 1.21000--1.21004, as well as the
procedures, terms and conditions contained in the Auction 901
Procedures Public Notice, the Auction 901 Comment Public Notice, and
all other public notices related to Auction 901 (AU Docket No. 12-25).
Additionally, prospective Auction 901 bidders will find it helpful to
familiarize themselves with the Commission's general competitive
bidding rules, including recent amendments and clarifications, as well
as Commission decisions in proceedings regarding competitive bidding
procedures, application requirements, and obligations of Commission
licensees.
43. 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. Prohibited Communications and Compliance With Antitrust Laws
44. To ensure the competitiveness of the auction process, 47 CFR
1.21002 prohibits an applicant in a Mobility Fund auction from
cooperating or collaborating with any other applicant with respect to
its own, or one another's, or any other competing applicant's bids or
bidding strategies, and from communicating with any other applicant in
any manner the substance of its own, or one another's, or any other
competing applicant's bids or bidding strategies, until after the post-
auction deadline for winning bidders to submit applications for
support, unless such applicants are members of a joint bidding
arrangement identified on the short form application(s) pursuant to 47
CFR 1.21001(b)(3)-(4).
45. 47 CFR 1.21002 is based on a similar rule used by the
Commission in competitive bidding for spectrum licenses, 47 CFR
1.2105(c). Potential bidders should familiarize themselves with 47 CFR
1.2105(c) and 1.21002, as well as the judicial, Commission and Wireless
Bureau decisions addressing application of the rule prohibiting certain
communications listed in Attachment E of the Auctions 901 Procedures
Public Notice. The Bureaus encourage applicants to review information
regarding the Commission's interpretation of 47 CFR 1.2105(c) to gain
insight into its views on prohibited communications during competitive
bidding for Mobility Fund support.
a. Entities Subject to Section 1.21002, the Rule on Prohibited
Communications
46. The prohibition on certain communications contained in 47 CFR
1.21002 will apply to any applicant that submits a short-form
application to participate in Auction 901. Thus, unless they have
identified each other on their
[[Page 32098]]
short-form applications as parties with whom they have entered into
agreements under 47 CFR 1.21001(b)(3), applicants in Auction 901 must
affirmatively avoid all communications with or disclosures to each
other that affect or have the potential to affect bids or bidding
strategy. In some instances, this prohibition extends to communications
regarding the post-auction market structure. This prohibition applies
to all applicants regardless of whether such applicants become
qualified bidders or actually bid.
47. For the Mobility Fund Phase I auction, all bidders will compete
for support with all other bidders in Auction 901, regardless of the
geographic areas they seek to serve with Mobility Fund support.
Therefore, applicants will be prohibited from making certain
communications with all other applicants in Auction 901 regardless of
the geographic areas they select, unless the parties disclose
agreements reached between the parties on their short-form
applications.
48. For purposes of the prohibition on certain communications, 47
CFR 1.21002 defines applicant broadly to include the applicant, each
party capable of controlling the applicant, including all officers and
directors, and each party that may be controlled by the applicant or by
a party capable of controlling the applicant.
49. Individuals and entities subject to 47 CFR 1.21002 should take
special care in circumstances where their officers, directors and
employees may receive information directly or indirectly relating to
any competing applicant's bids or bidding strategies.
50. Moreover, Auction 901 applicants are encouraged not to use the
same individual as an authorized bidder. A violation of 47 CFR 1.21002
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., a 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 the applicant and its bidders will comply with 47 CFR
1.21002.
b. Prohibition Applies Until Long Form Application Deadline
51. 47 CFR 1.21002 prohibition on certain communications begins at
the short-form application filing deadline and ends at the long form
application deadline after the auction closes, which will be announced
in a future public notice.
c. Prohibited Communications
52. Applicants must not communicate directly or indirectly about
bids or bidding strategy to other applicants. 47 CFR 1.21002 prohibits
not only communication about an applicant's own bids or bidding
strategy, it also prohibits communication of another applicant's bids
or bidding strategy. While the rule does not prohibit non-auction-
related business negotiations among auction applicants, each applicant
must remain vigilant so as not to directly or indirectly communicate
information that affects, or could affect, bids, bidding strategy, or
the negotiation of settlement agreements.
53. Applicants are cautioned that the Commission remains vigilant
about prohibited communications taking place outside of the auction
itself. 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. Moreover, the Commission has found a violation of the rule
against prohibited communications where an applicant 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. Applicants also should use caution in
their dealings with other parties, such as members of the press,
financial analysts, or others who might become conduits for the
communication of prohibited bidding information. For example, an
applicant's statement to the press that it intends to stop bidding in
the auction could give rise to a finding of 47 CFR 1.21002 violation.
Similarly, an applicant's public statement of intent not to participate
in Auction 901 bidding could also violate the rule. Applicants are
hereby placed on notice that public disclosure of information relating
to bids, or bidding strategies, or to post auction market structures
may violate 47 CFR 1.21002.
d. Disclosure of Bidding Agreements and Arrangements
54. 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 applications. Applicants must 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 Mobility Fund Phase I support they seek, including
any agreements relating to post-auction market structure.
55. If parties agree in principle on all material terms prior to
the short-form application filing deadline, each party to the agreement
must identify the other party or parties to the agreement on its short-
form application under 47 CFR 1.21001(b)(3), 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 negotiation, discussion or communication with any other
applicants after the short-form application filing deadline.
56. 47 CFR 1.21002 does not prohibit non-auction-related business
negotiations among auction applicants. However, certain discussions or
exchanges could touch upon impermissible subject matters because they
may convey pricing information and bidding strategies. Such subject
areas include, but are not limited to, issues such as management,
sales, local marketing agreements, and other transactional agreements.
e. Section 1.21001(b)(4)-(5) Applicant Certifications
57. By electronically submitting a short-form application, each
applicant in Auction 901 certifies its compliance with 47 CFR
1.21001(b)(3) and 1.21002. In particular, an applicant must certify
under penalty of perjury that the application discloses all real
parties in interest to any agreements involving the applicant's
participation in the competitive bidding for Mobility Fund support.
Also, the applicant must certify that it and all applicable parties
have complied with and will continue to comply with 47 CFR 1.21002.
58. The Bureaus caution, however, that merely filing a certifying
statement as part of an application will not
[[Page 32099]]
outweigh specific evidence that a prohibited communication 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 applicant found to have violated 47 CFR
1.21001(b)(4) and (5) may be subject to sanctions.
f. Duty To Report Prohibited Communications
59. 47 CFR 1.21002(c) provides that any applicant that makes or
receives a communication that appears to violate 47 CFR 1.21002 must
report such communication in writing to the Commission immediately, and
in no case later than five business days after the communication
occurs. An applicant's obligation to make such a report continues until
the report has been made.
60. In addition, 47 CFR 1.65 requires an applicant to maintain the
accuracy and completeness of information furnished in its pending
application and to notify the Commission of any substantial change that
may be of decisional significance to that application. Thus, the rule
requires an Auction 901 applicant to notify the Commission of any
substantial change to the information or certifications included in its
pending short-form application. An applicant is therefore required by
47 CFR 1.65 to report to the Commission any communication the applicant
has made to or received from another applicant after the short-form
application filing deadline that affects or has the potential to affect
bids or bidding strategy, unless such communication is made to or
received from a party to an agreement identified under 47 CFR
1.21001(b)(4).
61. 47 CFR 1.65(a) and 1.21002 require each applicant in
competitive bidding proceedings to furnish additional or corrected
information within five days of a significant occurrence, or to amend
its short-form application no more than five days after the applicant
becomes aware of the need for amendment. These rules are intended to
facilitate the auction process by making the information available
promptly to all participants and to enable the Bureaus to act
expeditiously on those changes when such action is necessary.
g. Procedure for Reporting Prohibited Communications
62. A party reporting any prohibited communication pursuant to 47
CFR 1.65, 1.21001(b), or 1.21002(c) must take care to ensure that any
report of the prohibited communication does not itself give rise to a
violation of 47 CFR 1.21002. For example, a party's report of a
prohibited communication could violate the rule by communicating
prohibited information to other applicants through the use of
Commission filing procedures that would allow such materials to be made
available for public inspection.
63. Parties must file only a single report concerning a prohibited
communication and must file that report with Commission personnel
expressly charged with administering the Commission's auctions. This
rule is designed to minimize the risk of inadvertent dissemination of
information in such reports. Any reports required by 47 CFR 1.21002(c)
must be filed consistent with the instructions set forth in the Auction
901 Procedures Public Notice. For Auction 901, such reports must be
filed with the Chief of the Auctions and Spectrum Access Division,
Wireless Telecommunications Bureau, by the most expeditious means
available. Any such report should be submitted by email to the
following email address: [email protected]. If you choose instead to
submit a report in hard copy, any such report must be delivered only
to: Margaret W. Wiener, Chief, Auctions and Spectrum Access Division,
Wireless Telecommunications Bureau, Federal Communications Commission,
445 12th Street SW., Room 6423, Washington, DC 20554.
64. A party seeking to report such a prohibited communication
should consider submitting its report with a request that the report or
portions of the submission be withheld from public inspection by
following the procedures specified in 47 CFR 0.459. The Bureaus
encourage such parties to coordinate with the Auctions and Spectrum
Access Division staff about the procedures for submitting such reports.
h. Winning Bidders May Need To Disclose Terms of Agreements
65. Each applicant that is a winning bidder may be required to
disclose in its long-form application the specific terms, conditions,
and parties involved in any agreement it has entered into. This may
apply to any bidding consortia, joint venture, partnership, or
agreement, understanding, or other arrangement entered into relating to
the competitive bidding process, including any agreement relating to
the post-auction market structure. Failure to comply with the
Commission's rules can result in enforcement action.
i. Antitrust Laws
66. The Bureaus also remind applicants 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 47
CFR 1.21002 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 submitted a short-form
application. Similarly, the Wireless Bureau previously 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.
67. To the extent the Commission becomes aware of specific
allegations that suggest that violations of the federal antitrust laws
may have occurred, 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 a forfeiture and may be prohibited from
participating in future auctions, among other sanctions.
iii. Due Diligence
68. The Bureaus remind each potential bidder that it has sole
responsibility for investigating and evaluating all technical and
marketplace factors that may have a bearing on the level of Mobility
Fund Phase I support it submits as a bid in Auction 901. Each bidder is
responsible for assuring that, if it wins the support, it will be able
to build and operate facilities in accordance with the Mobility Fund
obligations and the Commission's rules generally.
69. Applicants should be aware that Auction 901 represents an
opportunity to apply for Mobility Fund support, subject to certain
conditions and regulations. Auction 901 does not constitute an
endorsement by the FCC of any particular service, technology, or
product, nor does Mobility Fund support constitute a guarantee of
business success.
70. An applicant should perform its due diligence research and
analysis before proceeding, as it would with any new business venture.
In particular, the Bureaus strongly encourage each
[[Page 32100]]
potential bidder to review all underlying Commission orders, including
the USF/ICC Transformation Order. Each potential bidder should perform
technical analyses or refresh its previous analyses to assure itself
that, should it become a winning bidder for Mobility Fund Phase I
support, it will be able to build and operate facilities that will
fully comply with all applicable technical and legal requirements. The
Bureaus strongly encourage each applicant to inspect any prospective
transmitter sites located in, or near, the service area for which it
plans to construct transmitters with Mobility Fund support, to confirm
the availability of such sites, and to familiarize itself with the
Commission's rules regarding environmental compliance.
71. The Bureaus strongly encourage each applicant to conduct its
own research prior to Auction 901 in order to determine the existence
of pending administrative or judicial proceedings, including pending
allocation rulemaking proceedings that might affect its decision to
participate in the auction. The due diligence considerations mentioned
in the Auction 901 Procedures Public Notice do not comprise an
exhaustive list of steps that should be undertaken prior to
participating in this auction. As always, the burden is on the
potential bidder to determine how much research to undertake, depending
upon specific facts and circumstances related to its interests.
72. The Bureaus also remind each applicant that pending and future
judicial proceedings, as well as certain pending and future proceedings
before the Commission--including applications, applications for
modification, petitions for rulemaking, requests for special temporary
authority, waiver requests, petitions to deny, petitions for
reconsideration, informal objections, and applications for review--may
relate to particular licensees or applicants for support in Auction
901. Each prospective applicant is responsible for assessing the
likelihood of the various possible outcomes and for considering the
potential impact on Mobility Fund Phase I support available through
this auction.
73. Each applicant is solely responsible for identifying associated
risks and for investigating and evaluating the degree to which such
matters may affect its ability to bid on or otherwise receive Mobility
Fund Phase I support. Each potential bidder is responsible for
undertaking research to ensure that any support won in this auction
will be suitable for its business plans and needs. Each potential
bidder must undertake its own assessment of the relevance and
importance of information gathered as part of its due diligence
efforts.
74. 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, it must
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 or guarantees
regarding the accuracy or completeness of information that has been
provided by incumbent licensees and incorporated into its databases.
iv. Use of FCC Auction System
75. Bidders will be able to participate in Auction 901 over the
Internet using the 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.
v. Environmental Review Requirements
76. Recipients of Mobility Fund support, like all 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 any entity constructing a wireless antenna facility must
comply with the Commission's environmental rules for each such
facility. The Commission's environmental rules require, among other
things, that the entity constructing the facility 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
entity constructing the facility must follow the provisions of the
Nationwide Programmatic Agreement Regarding the Section 106 National
Historic Preservation Act Review Process. The entity 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 entity also must prepare environmental assessments for
facilities that include high intensity white lights in residential
neighborhoods or excessive radio frequency emission, or that are over
450 feet in height. Facilities that require antenna registration will
also be required to complete an environmental notification process.
II. Short-Form Application Requirements
A. General Information Regarding Short-Form Applications
77. An application to participate in Auction 901, referred to as a
short-form application or FCC Form 180, provides information used to
determine whether the applicant is legally, technically, and
financially qualified to participate in Commission auctions for
universal service funding support. The short-form application is the
first part of the Commission's two-phased auction application process.
In the first phase, each party desiring to participate in the auction
must file a streamlined, short-form application in which it certifies
under penalty of perjury as to its qualifications. Each applicant must
take seriously its duties and responsibilities and carefully determine
before filing an application that it has the legal, technical and
financial resources to participate in the auction and be able to meet
the public interest obligations associated with Mobility Fund Phase I
support. Eligibility to participate in bidding is based on the
applicant's short-form application and certifications. In the second
phase of the process, each winning bidder must file a more
comprehensive long-form application (FCC Form 680).
78. Every entity seeking support available in Auction 901 must file
a short-form application electronically via the FCC Auction System
prior to 6 p.m.
[[Page 32101]]
ET on July 11, 2012. The short-form application requires each applicant
to establish its eligibility for bidding for Mobility Fund Phase I
support. Among other things, to establish eligibility at the short-form
stage, an applicant must certify that it is a designated ETC in any
geographic area for which it will seek support, or that it is a
Tribally-owned or controlled entity with a pending application for ETC
designation, and provide the Study Area Code(s) (SAC(s)) associated
with its ETC designation and/or provide the name(s) of its
corresponding Tribal land(s) in lieu of a SAC. Each applicant will also
be required to provide a general narrative description of its access to
the spectrum it plans to use to meet Mobility Fund obligations in the
particular area(s) for which it plans to bid and certify that it will
retain its access to the spectrum for at least five years from the date
of award of support. If an applicant claims eligibility for a Tribal
land bidding credit as a Tribally-owned or controlled entity, the
information provided in its FCC Form 180 will be used in determining
whether the applicant is eligible for the claimed bidding credit. Each
applicant filing a short-form application is subject to the
Commission's rule prohibiting certain communications beginning on the
deadline for filing.
79. Each applicant bears full responsibility for submitting an
accurate, complete, and timely short-form application. Each applicant
must certify on its short-form application under penalty of perjury
that it is legally, technically, financially and otherwise qualified to
receive universal service support funding. Each applicant should
consult the Commission's rules to ensure that all the information
required is included in its short-form application.
80. A party may not submit more than one short-form application for
Auction 901. If a party submits multiple short-form applications, only
one application may be accepted for filing.
81. Each applicant also should note that submission of a short-form
application (and any amendments thereto) 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. An applicant is not permitted to make major modifications to
its application; 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, the forfeiture of universal service support,
license forfeitures, ineligibility to participate in future auctions,
and/or criminal prosecution.
B. SAC Identification
82. An applicant will not be required to select the specific census
blocks on which it wishes to bid when submitting its short-form
application. Based on the SAC(s) or Tribal land(s) information entered
by an applicant, the FCC Auction System will identify eligible tracts
and blocks in the associated state(s) or Tribal land(s) for each
applicant during the application process.
C. Disclosure of Bidding Arrangements
83. An applicant will be required to identify in its short-form
application all real parties-in-interest to any agreements relating to
the participation of the applicant in the competitive bidding for
Mobility Fund support.
84. Each applicant will also be required to certify under penalty
of perjury in its short-form application that it has disclosed all real
parties-in-interest to any agreements involving the applicant's
participation in the competitive bidding for Mobility Fund support. If
an applicant has had discussions, but has not reached an agreement by
the short-form application filing deadline, it should not include the
names of parties to the discussions on its application and may not
continue such discussions with any applicants after the deadline.
85. Moreover, each applicant will also be required to certify under
penalty of perjury in its short-form application that it and all
applicable parties have complied with and will continue to comply with
47 CFR 1.21002. While 47 CFR 1.21002 does not prohibit non-auction-
related business negotiations among auction applicants, the Bureaus
remind applicants that certain discussions or exchanges could touch
upon impermissible subject matters because they may convey pricing
information and bidding strategies. Compliance with the disclosure
requirements of 47 CFR 1.21002 will not insulate a party from
enforcement of the antitrust laws.
D. Ownership Disclosure Requirements
86. Each applicant must comply with the uniform Part 1 ownership
disclosure standards and provide information required by 47 CFR
54.1005(a)(1) and 1.2112(a). Specifically, in completing the short-form
application, an applicant will be required to fully disclose
information on the real party- or parties-in-interest and the ownership
structure of the applicant, including both direct and indirect
ownership interests of 10 percent or more, as prescribed in 47 CFR
1.2112(a). Each applicant is responsible for ensuring that information
submitted in its short-form application is complete and accurate.
87. In certain circumstances, 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 180) (such as
information submitted in an FCC Form 602 or in an FCC Form 175 filed
for a previous Commission spectrum license auction using the FCC
Auction System), will automatically be entered into the applicant's
short-form application. Each applicant must carefully review any
information automatically entered to confirm that it is complete and
accurate as of the deadline for filing the short-form application. Any
information that needs to be corrected or updated must be changed
directly in the short-form application.
E. Specific Mobility Fund Phase I Eligibility Requirements and
Certifications
i. ETC Designation Certification
88. In the USF/ICC Transformation Order, the Commission concluded
that, in order to apply to participate in an auction offering Mobility
Fund support, any entity first had to be designated as an ETC pursuant
to section 214 of the Communications Act in any geographic area for
which it seeks support, with one narrow exception for Tribally-owned or
controlled entities. An applicant must be the entity designated by a
State or the Commission as an ETC in that geographic area. For example,
if a designated ETC is a subsidiary of a parent holding company, only
the subsidiary that is designated an ETC, and not the holding company,
would be eligible to participate in the auction. For purposes of
participation in the Mobility Fund, a party's ETC designation may not
be limited in any way. Accordingly, a party designated as an ETC solely
for purposes of the Low Income Program cannot satisfy the ETC
eligibility requirement for the Mobility Fund on that basis. Of course,
nothing prohibits such a party from seeking a general designation as an
ETC and then, if it receives such a designation, participating in the
Mobility Fund.
89. ETC status carries with it certain obligations. So that a party
might obtain the required ETC designation but not be subject to those
obligations unless and
[[Page 32102]]
until it wins any Mobility Fund support, the Commission further
determined that a party might participate with an ETC designation
conditioned upon the party winning support in the auction. At the
short-form application stage, an applicant will be required to state
that it is designated as an ETC in any area for which it will seek
support, or is a Tribal entity with a pending application to become an
ETC in any such area, and certify that the disclosure is accurate. A
winning bidder will be required to provide proof of its ETC designation
in all of the areas in which it will receive support before it may
receive support.
90. Pending ETC Designations. The Commission further decided to
permit participation by a Tribally-owned or controlled entity that at
the short-form application deadline has an application for ETC
designation pending for the provision of service within the boundaries
of the associated Tribal land. The Commission did so to afford Tribes
an increased opportunity to participate at auction, in recognition of
their interest in self-government and self-provisioning on their own
lands. A Tribally-owned or controlled entity whose application for ETC
designation remains pending at the short-form application deadline is
requested to provide the date the application was filed, with whom
(i.e. the Commission or relevant state regulatory agency), any file or
case number associated with the application, and its current status.
ii. Access to Spectrum Description and Certification
91. Pursuant to the USF/ICC Transformation Order, any applicant for
Auction 901 must have access to the necessary spectrum to fulfill any
obligations related to support. In an application to participate in
Auction 901, each applicant must describe its required spectrum access
and certify that the description is accurate and the applicant will
retain such access for at least five (5) years from the date on which
it is authorized to receive support. Specifically, an applicant will be
required to disclose whether it currently holds or leases the spectrum
and whether such spectrum access is contingent on obtaining support in
Auction 901. For the described spectrum access to be sufficient as of
the date of the short-form application, the applicant must obtain any
necessary approvals from the Commission for the spectrum access prior
to filing the application. A pending request for such an approval is
not sufficient to satisfy this requirement. Furthermore, only assured
access is sufficient, which means that the access must be to licensed
spectrum subject to limited access. Accordingly, the applicant should
identify the license applicable to the spectrum to be accessed, the
licensee, and, if the licensee is a different party than the applicant,
the relationship between the applicant and the licensee that provides
the applicant with the required access. With the exception of the
certification, the terms of which are set forth in FCC Form 180, an
applicant must provide all required information relating to spectrum
access in an attachment to FCC Form 180.
iii. Financial and Technical Capability Certification
92. The Commission requires that an applicant certify in the pre-
auction short-form application that it is financially and technically
capable of providing 3G or better service within the specified
timeframe in the geographic areas for which it seeks support. This
certification indicates that an applicant for Mobility Fund Phase I
funds can provide the requisite service without any assurance of
ongoing support for the areas in question after Mobility Fund Phase I
support has been exhausted. An applicant should be aware that in making
a certification to the Commission it exposes itself to liability for a
false certification. An applicant should take care to review its
resources and its plans before making the required certification and be
prepared to document its review, if necessary.
iv. Certification That Applicant Will Not Seek Support for Areas in
Which It Has Made a Public Commitment To Deploy 3G or Better Service by
December 31, 2012
93. The Commission requires each applicant for Mobility Fund Phase
I support to certify that the applicant will not seek support for any
areas in which it has made a public commitment to deploy 3G or better
wireless service by December 31, 2012. In determining whether an
applicant has made such a public commitment, the Bureaus would consider
any public statement made with some specificity as to both geographic
area and time period as well as level of service. For example, in the
public record generated in response to the Auction 901 Comment Public
Notice, which sought comment on a list of census blocks potentially
eligible for Mobility Fund Phase I support, more than one party
publicly identified areas that they intend to cover with 3G or better
service no later than December 31, 2012. This requirement helps to
assure that Mobility Fund Phase I support will not go to finance
coverage that carriers would have provided in the near term without any
subsidy. Furthermore, the requirement may conserve funds and avoid
displacing private investment by making a carrier that made such a
commitment ineligible for Mobility Fund Phase I support with respect to
the identified geographic area(s). Because circumstances are more
likely to change over a longer term, the Bureaus do not hold providers
to any statements for any time period beyond December 31, 2012.
Applicants should note that this restriction does not prevent a party
from seeking and receiving support for an eligible geographic area
where another provider has announced such a commitment to deploy 3G or
better.
F. Tribally-Owned or Controlled Providers--25 Percent Reverse Bidding
Credit
94. The Commission adopted a 25 percent reverse bidding credit for
Tribally-owned or controlled providers seeking either general or Tribal
Mobility Fund Phase I support. In order to be eligible for the bidding
credit, a qualifying Tribally-owned or controlled provider must certify
in its short-form application that it is qualified and identify the
applicable Tribe and Tribal lands.
95. The bidding credit will effectively reduce the Tribal entity's
bid amount by 25 percent for the purpose of comparing it to other bids,
thus increasing the likelihood that Tribally-owned and controlled
entities will receive funding. If the Tribally-owned or controlled
entity were to win, support would be calculated at the full,
undiscounted bid amount. The preference is available with respect to
the eligible census blocks located within the geographic area defined
by the boundaries of the Tribal land associated with the Tribally-owned
or controlled provider seeking support.
G. Commission Red Light Rules
96. Applications to participate in Auction 901 are subject to the
Commission's rules regarding an applicant with delinquent debts, often
referred to as the Commission Red Light Rules. Pursuant to these rules,
unless otherwise expressly provided for, the Commission will withhold
action on an application by any entity found to be delinquent in its
debt to the Commission for purposes of the Red Light Rules.
Accordingly, parties interested in filing applications to participate
in Auction 901 should review the status of any debts that they owe the
Commission before submitting their application and resolve any
[[Page 32103]]
delinquent debts. The Commission maintains a Red Light Display System
(RLD) to enable entities doing business with the FCC to determine if
they have any outstanding delinquent debt. The RLD enables a party to
check the status of its account by individual FCC Registration Numbers
(FRNs), and links other FRNs sharing the same Tax Identification Number
(TIN) when determining whether there are outstanding delinquent debts.
The RLD is available at http://www.fcc.gov/redlight/. Additional
information is available at http://transition.fcc.gov/debt_collection/.
H. USF Debarment
97. The Commission's rules provide for the debarment of those
convicted of or found civilly liable for defrauding the high-cost
support program. Applicants are reminded that those rules apply with
equal force to the Mobility Fund Phase I.
I. Minor Modifications to Short-Form Applications
98. After the deadline for filing initial applications, an Auction
901 applicant is permitted to make only minor changes to its
application. Permissible minor changes include, among other things,
deletion and addition of authorized bidders (to a maximum of three) and
revision of the addresses and telephone numbers of the applicant and
its contact person. An applicant is not permitted to make a major
modification to its application (e.g., change in control of the
applicant or change of the certifying official) after the initial
application filing deadline. Thus, any change in control of an
applicant, resulting from a merger, for example, will be considered a
major modification, and the application will consequently be dismissed.
99. If an applicant wishes to make permissible minor changes to its
short-form application, such changes should be made electronically to
its short-form application using the FCC Auction System whenever
possible. For the change to be submitted and considered by the
Commission, be sure to click on the SUBMIT button. After the revised
application has been submitted, a confirmation page will be displayed
that states the submission time, submission date and a unique file
number.
100. An applicant cannot use the FCC Auction System outside of the
initial and resubmission filing windows to make changes to its short-
form application other than administrative changes (e.g., changing
certain contact information or the name of an authorized bidder). If
these or other permissible minor changes need to be made outside of
these windows, the applicant must submit a letter briefly summarizing
the changes and subsequently update its short-form application in the
FCC Auction System once it is available. Moreover, after the filing
window has closed, the system will not permit applicants to make
certain changes, such as the applicant's legal classification.
101. Any letter describing changes to an applicant's short-form
application must be submitted by email to [email protected]. The email
summarizing the changes must include a subject or caption referring to
Auction 901 and the name of the applicant, for example, ``RE: Changes
to Auction 901 Short-Form Application of ABC Corp.'' Questions about
short-form application amendments should be directed to the Auctions
and Spectrum Access Division at (202) 418-0660.
102. Any application amendment and related statements of fact must
be certified by an appropriate party. For example, one of the partners
if the applicant is a partnership; or an officer, director, or duly
authorized employee, if the applicant is a corporation; or a member who
is an officer, if the applicant is an unincorporated association.
103. Applicants must not submit application-specific material
through the Commission's Electronic Comment Filing System (ECFS), which
was used for submitting comments regarding Auction 901. Parties
submitting information related to their applications should use caution
to ensure that their submissions do not contain confidential
information or communicate information that would violate 47 CFR
1.21002 or the limited information procedures adopted for Auction 901.
A party seeking to submit information that might reflect non-public
information should consider submitting any such information along with
a request that the filing or portions of the filing be withheld from
public inspection until the end of the prohibition of certain
communications pursuant to 47 CFR 1.21002.
J. Maintaining Current Information in Short-Form Applications
104. 47 CFR 1.65 requires an applicant to maintain the accuracy and
completeness of information furnished in its pending application. If an
amendment reporting changes is a major amendment, as defined by 47 CFR
1.21001(d)(4), the major amendment will not be accepted and may result
in the dismissal of the application. After the application filing
deadline, applicants may make only minor changes to their applications.
For changes to be submitted and considered by the Commission, be sure
to click on the SUBMIT button in the FCC Auction System. In addition,
an applicant cannot update its short-form application using the FCC
Auction System after the initial and resubmission filing windows close.
If information needs to be submitted pursuant to 47 CFR 1.65 after
these windows close, a letter briefly summarizing the changes must be
submitted by email to [email protected]. This email must include a
subject or caption referring to Auction 901 and the name of the
applicant. Applicants must not submit application-specific material
through ECFS. A party seeking to submit information that might reflect
non-public information should consider submitting any such information
along with a request that the filing or portions of the filing be
withheld from public inspection until the end of the prohibition of
certain communications pursuant to 47 CFR 1.21002.
III. Pre-Auction Procedures
A. Online Auction Tutorial--Available June 27, 2012
105. No later than Wednesday, June 27, 2012, the Commission will
post an educational auction tutorial on the Auction 901 web page for
prospective bidders to familiarize themselves with the auction process.
This online tutorial will provide information about pre-auction
procedures, completing short-form applications, auction conduct, the
FCC Auction System, auction rules, and Mobility Fund rules. The
tutorial will also provide an avenue to ask FCC staff questions about
the auction, auction procedures, filing requirements, and other matters
related to this auction.
106. This interactive, online tutorial should provide an efficient
and effective way for interested parties to further their understanding
of the auction process. The Auction 901 online tutorial will allow
viewers to navigate the presentation outline, review written notes,
listen to audio of the notes, and search for topics using a text search
function. Additional features of this web-based tool include links to
auction-specific Commission releases, email links for contacting
Commission licensing and auction staff, and a timeline with deadlines
for auction preparation. The online tutorial will be accessible through
a web browser with Adobe Flash Player. As always, Commission staff will
be available to promptly answer questions posed by telephone and email
throughout the
[[Page 32104]]
auction process. The auction tutorial will be accessible from the FCC's
Auction 901 Web page at http://wireless.fcc.gov/auctions/901/ through
an Auction Tutorial link.
B. Short-Form Applications--Due Prior to 6 p.m. ET on July 11, 2012
107. In order to be eligible to bid in this auction, applicants
must first follow the procedures to submit a short-form application
(FCC Form 180) electronically via the FCC Auction System. This short-
form application must be submitted prior to 6 p.m. ET on July 11, 2012.
Late applications will not be accepted. No application fee is required.
108. Applications may generally be filed at any time beginning at
noon ET on June 27, 2012, until the filing window closes at 6 p.m. ET
on July 11, 2012. Applicants are strongly encouraged to file early and
are responsible for allowing adequate time for filing their
applications. Applications can be updated or amended multiple times
until the filing deadline on July 11, 2012.
109. An applicant must always click on the SUBMIT button on the
Certify & Submit screen to successfully submit its FCC Form 180 and any
modifications; otherwise the application or changes to the application
will not be received or reviewed by Commission staff. Additional
information about accessing, completing, and viewing the FCC Form 180
will be provided in a future 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 8:00 a.m. to 6:00 p.m. ET. In order to provide
better service to the public, all calls to Technical Support are
recorded.
C. Application Processing and Minor Corrections
110. After the deadline for filing FCC Form 180 applications,
Commission staff will process all timely submitted applications to
determine which are complete, and subsequently will issue a public
notice identifying (1) those that are complete; (2) those that are
rejected; and (3) those that are incomplete or deficient because of
minor defects that may be corrected. The public notice will include the
deadline for resubmitting corrected applications.
111. After the application filing deadline on July 11, 2012,
applicants can make only minor corrections to their applications. They
will not be permitted to make major modifications (e.g., change control
of the applicant or change of the certifying official).
112. Commission staff will communicate only with an applicant's
contact person or certifying official, as designated on the short-form
application, unless the applicant's certifying official or contact
person notifies the Commission in writing that applicant's counsel or
other representative is authorized to speak on its behalf.
Authorizations may be sent by email to [email protected].
D. Auction Registration
113. Approximately ten days before the auction, the Bureaus will
issue a public notice announcing all qualified bidders for the auction.
Qualified bidders are those applicants with submitted FCC Form 180
applications that are deemed timely-filed, accurate, and complete.
114. 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 180 and will
include the SecurID[supreg] tokens that will be required to place bids,
the FCC Auction System Bidder's Guide, and the Auction Bidder Line
phone number.
115. 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,
September 20, 2012, should call the Auctions Hotline at (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.
116. 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 replacements. To request replacement of
these items, call Technical Support at (877) 480-3201, option nine;
(202) 414-1250; or (202) 414-1255 (TTY).
E. Remote Electronic Bidding
117. The Commission will conduct this auction over the Internet.
Only qualified bidders are permitted to bid. Each authorized bidder
must have its own SecurID[supreg] token, which the Commission 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. A bidder cannot bid
without their SecurID[supreg] tokens. For security purposes, the
SecurID[supreg] tokens, a telephone number for bidding questions, and
the FCC Auction System Bidder's Guide are only mailed to the contact
person at the contact address listed on the FCC Form 180. Each
SecurID[supreg] token is tailored to a specific auction.
SecurID[supreg] tokens issued for other auctions or obtained from a
source other than the FCC will not work for Auction 901.
118. Please note that the SecurID[supreg] tokens can be recycled
and the Bureaus encourage bidders to return the tokens to the FCC. Pre-
addressed envelopes will be provided to return the tokens once the
auction has ended.
F. Mock Auction--September 25, 2012
119. All qualified bidders will be eligible to participate in a
mock auction on Tuesday, September 25, 2012. The mock auction will
enable qualified bidders to become familiar with the FCC Auction System
and to practice submitting bids prior to the auction. The Bureaus
strongly recommend that all qualified bidders participate to gain
experience with the bidding procedures. Details will be announced in a
future public notice.
IV. Auction Event
A. Auction Structure--Reverse Auction Mechanism
120. Auction 901 will be held on Thursday, September 27, 2012. The
start and finish time of the bidding round will be announced in a
public notice listing the qualified bidders, which will be released
approximately 10 days before the start of the auction. The Bureaus
choice of auction design for Auction 901 is specific to the particular
context of the Mobility Fund Phase I auction. The choices made in the
Auction 901 Procedures Public Notice do not prejudge future auction
design choices for other phases of the Mobility Fund or other
competitive bidding mechanisms related to the USF.
i. Single Round Sealed Bid Reverse Auction Format
121. The Bureaus will conduct Auction 901 using a single round of
bidding. The Bureaus concluded in the Auction 901 Procedures Public
Notice that a multiple round auction would not be appropriate in the
context of the Mobility Fund Phase I, especially in light of the
complications involved in conducting multiple rounds with many
thousands of items. The Bureaus recognized that multiple round auctions
can have important advantages, and in fact, the Commission generally
uses a multiple round format for its spectrum license auctions.
However, the Bureaus
[[Page 32105]]
did not believe that the circumstances favoring a multiple round
auction--i.e., when there are strong interactions among items and when
bidders are unsure as to the market value of the item--are significant
enough here to outweigh concerns about the complexity it would add to
the auction. As a result, the Bureaus will conduct Auction 901 using a
single round of bidding.
ii. Aggregation Method--Predefined Aggregations
a. Census Blocks Aggregated to Census Tracts
122. Consistent with the framework laid out by the Commission in
the USF/ICC Transformation Order, the Bureaus discussed in the Auction
901 Comment Public Notice several approaches to aggregating census
blocks for bidding, noting that some aggregation of census blocks will
be necessary because census blocks are on average far smaller than the
average area covered by a single cell tower, which is likely to be the
minimum incremental geographic area of expanded coverage. The Auction
901 Comment Public Notice proposed an approach that would give bidders
the ability to create a limited number of package bids of blocks within
a CMA--the bidder-defined option--and also described a predefined
aggregation option whereby bidders would bid to cover the eligible
blocks within census tracts. The record the Bureaus received in
response to the Auction 901 Comment Public Notice was mixed.
123. Given the schedule for the Mobility Fund Phase I auction, the
record received, and the amount of support being provided here, the
Bureaus adopt a predefined aggregation approach, largely on
considerations of speed and simplicity of implementation. Under that
approach, all eligible census blocks will be grouped by the census
tract in which they are located, and bidders will be able to bid for
support for the eligible census blocks in a census tract, not on
individual blocks. For each tract a bidder bids on, the bidder will
indicate a per-unit price to cover the road miles in the eligible
census blocks within that tract. The auction will assign support to
awardees equal to the per-road mile rate of their bid multiplied by the
number of road miles associated with the eligible census blocks within
the tract as shown in the files provided by the Bureaus. Bidders may
bid on multiple tracts and win support for any or all of them. Awardees
will be required to cover a given percentage of the total eligible
units in the tract--that is, a percentage of the total road miles that
are in the eligible census blocks in the tract. Blocks in Alaska will
not be aggregated for bidding, however, and bidders can place bids for
support on individual census blocks in Alaska. The Bureaus also modify
their tract aggregation approach for some tracts that include census
blocks covering Tribal lands.
124. The Bureaus conclude that aggregating census blocks into
tracts for bidding, except in Alaska, will provide a manageable bidding
process, both for participants and the Commission, particularly in
light of the speed with which the Bureaus want to proceed in
distributing this one-time support. As noted in the Auction 901 Updated
Blocks Public Notice, the Bureaus' list of potentially eligible census
blocks includes over 460,000 blocks; bundled into tracts for bidding,
there are approximately 6,100 tracts.
125. The predefined aggregation option that the Bureaus adopt does
not permit package bidding--that is, it does not permit bidders to
create their own groupings of census tracts on which to submit all-or-
nothing bids. It does allow bidders to bid on as many individual tracts
as they wish, and to win support for any or all of those tracts. The
absence of explicit package bidding simplifies the process of
determining which bids will be awarded support, relative to the
proposed bidder-defined option (that allows bidders to create packages
of census blocks), and consequently, may simplify the bidding process.
b. Exception, for Alaska, to Aggregation by Census Tract
126. The Bureaus will not aggregate eligible census blocks in
Alaska into tracts for bidding, but will permit bidders to bid for
support for individual census blocks. Bidders seeking support for
eligible blocks in Alaska will indicate a per-unit price to cover the
road miles in the eligible census block. The auction will assign
support to awardees equal to the per-road mile rate of their bid
multiplied by the number of road miles associated with the eligible
census block, as shown in the files provided by the Bureaus. Bidders
may bid on multiple blocks--including, if they wish, all the eligible
census blocks in a tract, but they will have to bid on the blocks
individually--and may win support for any or all of them.
127. In the Auction 901 Comment Public Notice, the Bureaus sought
comment on this alternative approach for areas in Alaska under the
suggested predefined aggregation option, which the Bureaus adopt here.
In the USF/ICC Transformation Order, the Commission noted the large
size of census blocks in Alaska, and in the Auction 901 Comment Public
Notice, the Bureaus further pointed out that the average area of the
Alaska census blocks on the preliminary list of eligible areas is
approximately 40 square miles compared to an average area of
approximately 1.1 square miles for blocks in the rest of the country.
Given the extreme difference in average size of census areas in Alaska
relative to those in the rest of the country, and because census blocks
in Alaska may be closer in size to a minimum scale of buildout than are
most blocks elsewhere, the Bureaus believe it will be helpful to give
bidders the flexibility to bid on individual census blocks in Alaska.
128. The Bureaus do not make a more general size-based exception to
the decision to conduct bidding on a census tract basis. Specifically,
the Auction 901 Comment Public Notice asked whether, outside of Alaska,
the Commission should use a geographic area other than tracts in areas
where tracts exceed a certain size. The Bureaus received only limited
response. An analysis of the census blocks in the list from the Auction
901 Updated Blocks Public Notice demonstrates that the average size of
the blocks in Alaska are much larger than the average size of the
blocks in other states. Based on the record (including the absence of
any input on an appropriate size cutoff point at which the Bureaus
would switch from bidding on a tract basis to bidding on a block
basis), the Bureaus decline to extend their provisions for block-by-
block bidding beyond Alaska.
c. Census Block Aggregation for Tracts With Tribal Lands
129. Another exception to aggregation by census tract will exist
for some tracts that include census blocks covering Tribal lands. For
tracts that contain some eligible blocks that are in a Tribal land and
other eligible blocks that are not in a Tribal land, there will be
separate aggregations of the Tribal blocks and the non-Tribal blocks.
If the Tribal blocks in a tract are located in more than one Tribal
area, there will be separate aggregations for each Tribal area.
d. Coverage Requirement
130. A winning bidder will be required to provide coverage to a
minimum of 75 percent of the road miles associated with the eligible
blocks in each tract for which it is awarded support within two years
after its award of support is authorized for 3G deployments or three
years for 4G deployments. If a winning bidder covers more than the
minimum 75 percent of
[[Page 32106]]
qualifying road miles within the required timeframe, it may collect
support for up to 100 percent of the qualifying road miles in each
tract. This requirement is consistent with the coverage requirement
associated with the predefined approach described in the Auction 901
Comment Public Notice.
iii. Winner Selection Process
131. Under the auction format that the Bureaus adopt, during the
single bidding round, bidders will be able to submit bids that indicate
a per-road mile support price at which they are willing to meet the
Mobility Fund requirements to cover the qualifying road miles in a
given tract. The qualifying road miles in a tract are the road miles in
the selected road categories in the eligible census blocks in the
tract.
132. After the single bidding round closes, in order to select
winning bidders, the FCC Auction System will rank bids from lowest to
highest per-road mile bid amount and assign support first to the bidder
making the lowest per-road mile bid. For bidders claiming eligibility
for a Tribal land bidding credit, the auction system will reduce the
Tribal entity's bid amount by 25 percent for the purpose of comparing
it to other bids, thus increasing the likelihood that Tribally-owned
and controlled entities will receive funding. For all selected bids, an
amount equal to the per-mile bid times the number of qualifying road
miles in the area will be deducted from the total available funds. The
auction system will continue to assign support to the next lowest per-
unit bids in turn, as long as support has not already been assigned for
that geographic area, deducting assigned support funds from the
remaining available funds, and will continue until the sum of support
funds of the winning bids is such that no further winning bids can be
supported given the funds available. If there are any identical bids--
in the same per-unit amounts to cover the same tract, submitted by
different bidders--only one such bid, chosen randomly, will be
considered in the ranking. A bidder will be eligible to receive support
for each of its winning bids equal to the per-unit rate of a winning
bid multiplied by the number of road miles in the eligible census
blocks covered by the bid, subject to meeting the obligations
associated with receiving support.
133. This method of identifying winning bidders will likely result
in monies remaining in the fund after identifying the last lowest per-
unit bid that does not exceed the funds available. When the auction
reaches this point, the FCC Auction System will continue to consider
bids in order of per-unit bid amount while skipping bids that would
require more support than is available. In the unlikely event that the
winner selection procedure arrives at a situation where there are two
or more bids for the same per-unit amount but for different areas and
remaining funds are insufficient to satisfy all of the tied bids, the
auction system will award support to that combination of tied bids that
will most nearly exhaust the available funds.
134. The Bureaus recognize that this approach may result in some
unused funds when support awardees do not fully build out, but the
Bureaus wish to encourage the extension of services as completely as
possible within the tracts that are awarded support, and therefore the
Bureaus must reserve funds sufficient to fully cover the supported
tracts. The Bureaus anticipate that funds unused under Mobility Fund
Phase I will be put to productive use under later stages of the
Mobility Fund program or other USF reform efforts.
iv. Limited Information Disclosure Procedures: Information Available to
Bidders Before and During the Auction
135. The Bureaus will conduct Auction 901 using procedures for
limited information disclosure. That is, for Auction 901, the Bureaus
will withhold, until after the close of bidding and announcement of
auction results, the public release of (1) information from applicants'
short-form applications regarding their interests in eligible census
tracts and/or blocks in particular states and/or Tribal lands and (2)
information that may reveal the identities of bidders placing bids and
taking other bidding-related actions. Because the Bureaus will conduct
Auction 901 using a single round of bidding, the Bureaus do not
anticipate a need to release bidding-related actions during the auction
as they would in a multiple round auction. If such circumstances arise
prior to the release of non-public information and auction results,
however, the Bureaus will not indicate the identity of any bidders
taking such actions. After the close of bidding, information regarding
applicants' interests in eligible geographic areas in particular state
and/or Tribal lands, their bids, and any other bidding-related actions
and information will be made publicly available.
v. Auction Delay, Suspension, or Cancellation
136. In the Auction 901 Comment Public Notice, the Bureaus proposed
that, by public notice or by announcement during the auction, they 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 Bureaus received no comments on this issue.
137. Because this approach has proven effective in resolving
exigent circumstances in previous auctions, the Bureaus adopt these
proposals regarding auction delay, suspension, or cancellation. 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 point at which the
auction was suspended, or cancel the auction in its entirety. Network
interruption may cause the Bureaus to delay or suspend the auction. The
Bureaus emphasize that they will exercise this authority solely at
their discretion.
B. Bidding Procedures
i. Bidding
138. All bidding in Auction 901 will take place through the web-
based FCC Auction System. To place bids, a bidder will upload a text
file that includes, for each tract in the bid file, the tract number
and the bid for the tract, expressed in dollars per road mile. For
areas in Alaska, bids will include block numbers instead of tract
numbers. When a bidder uploads a bid file, the FCC Auction System will
provide a verification that includes the tract and/or block numbers,
the dollars per road mile bid for each tract and/or block, the number
of road miles in each tract and/or block, the total bid amount for each
tract and/or block, and the county and state for each tract and/or
block. The bidder then submits the bids, or the bidder can cancel the
bids if it wishes to make changes.
139. Bidders must submit their bids before the finish time of the
bidding round, which will be announced in a public notice listing the
qualified bidders, which will be released approximately 10 days before
the start of the auction.
[[Page 32107]]
ii. Reserve Prices
140. Under the Commission's rules on competitive bidding for high-
cost universal service support adopted in the USF/ICC Transformation
Order, the Bureaus have discretion to establish maximum acceptable per-
unit bid amounts and reserve amounts, separate and apart from any
maximum opening bids. As proposed, the Bureaus choose not to establish
any maximum acceptable per-unit bid amounts or reserve prices. Although
two commenters suggest that the Bureaus may want to consider some sort
of reserve price, the Bureaus continue to believe that cross-area
competition for support from a budget that is not likely to cover
support for all of the areas receiving bids will constrain the bid
amounts, and that a reserve price is not needed to guard against any
unreasonably high winning bids.
iii. Bid Removal
141. For Auction 901, before the end of the single round of
bidding, a bidder will have the option of removing any bid it has
placed. By removing a selected bid(s), a bidder may effectively
``undo'' any of its bids placed within the single round of bidding.
Once the single round of bidding ends, a bidder may no longer remove
any of its bids.
142. To remove bids a bidder will upload a text file that includes
the tract or block number for each bid it wants to remove. When a
bidder uploads such a file, the FCC Auction System will provide a
verification that includes the tract and/or block numbers, and the
county and state for each tract and/or block.
iv. Auction Announcements
143. The Bureaus will use auction announcements to report necessary
information. All auction announcements will be available by clicking a
link in the FCC Auction System.
v. Auction Results
144. The Bureaus will determine the winning bids based on the
lowest per-road mile bids. After the Bureaus announce the auction
results, the Bureaus will provide downloadable files of the bidding and
results data.
V. Post-Auction Procedures
A. General Information Regarding Long-Form Applications
145. For the Mobility Fund Phase I auction, the Commission adopted
a two-phased auction application process. Pursuant to 47 CFR
54.1005(b), winning bidders for Mobility Fund Phase I support are
required to file an application for support, referred to as a long-form
application, no later than 10 business days after the public notice
identifying them as winning bidders. Shortly after bidding has ended,
the Commission will issue a public notice declaring the auction closed,
identifying the winning bidders, and establishing the deadline for the
long-form application. Winning bidders will use the new FCC Form 680
and the FCC Auction System to submit the long-form application. Details
regarding the submission and processing of the long-form application
will be provided in the public notice issued after the close of the
auction.
146. In addition to the long-form application process, any bidder
winning support for areas within Tribal lands must notify the relevant
Tribal government no later than five business days after being
identified by public notice as such a winning bidder. Information
identifying the appropriate point of contact for the Tribal governments
will be available through the Commission's Office of Native Affairs and
Policy (ONAP), in coordination with the Wireless Bureau.
B. Long-Form Application: Disclosures and Certifications
147. Unless otherwise provided by public notice, within ten
business days after release of the public notice announcing the close
of Auction 901, a winning bidder must electronically submit a properly
completed long-form application (FCC Form 680) for the areas for which
it submitted winning bids. A Tribally-owned or controlled provider
claiming eligibility for a Tribal land bidding credit must certify as
to its eligibility for the bidding credit. Further filing instructions
will be provided to winning bidders in the auction closing public
notice.
i. Ownership Disclosure
148. In the USF/ICC Transformation Order, the Commission adopted
for the Mobility Fund the existing Part 1 ownership disclosure
requirements that already apply to short-form applicants to participate
in spectrum license auctions and long-form applicants for licenses in
wireless services. Under these requirements, an applicant for Mobility
Fund support must fully disclose its ownership structure as well as
information regarding the real party- or parties-in-interest of the
applicant or application. To minimize the reporting burden on winning
bidders, the Bureaus will allow them to use ownership information
stored in existing Commission databases and update that information as
necessary.
ii. Documentation of ETC Designation
149. A winning bidder is required to submit with its long-form
application appropriate documentation of its ETC designation in all of
the areas for which it will receive support and certify that its proof
is accurate. Appropriate documentation should include the original
designation order, any relevant modifications, e.g., expansion of
service area or inclusion of wireless, along with any name-change
orders. Any relevant information provided as an attachment to the long-
form application must be designated as an Eligible Telecommunications
Carrier attachment.
iii. Financial and Technical Capability Certification
150. As in the pre-auction short-form application stage, a long-
form applicant must certify that it is financially and technically
capable of providing 3G or better service within the specified
timeframe in the geographic areas in which it seeks support. This
certification indicates that an applicant for Mobility Fund Phase I
funds can provide the requisite service without any assurance of
ongoing support for the areas in question after Mobility Fund Phase I
support has been exhausted. An applicant should be aware that in making
a certification to the Commission it exposes itself to liability for a
false certification. An applicant should take care to review its
resources and its plans before making the required certification and be
prepared to document its review, if necessary.
iv. Project Construction Schedule/Specifications
151. Applicants are required to provide in their long-form
application an attachment for each winning bid with a detailed project
description which describes the network, identifies the proposed
technology, demonstrates that the project is technically feasible,
discloses the complete project budget and describes each specific phase
of the project, e.g., network design, construction, deployment, and
maintenance. A complete project schedule, including timelines,
milestones and costs must be provided. Milestones should include the
start and end date for network design; start and end date for drafting
and posting requests for proposal (RFPs); start and end date for
selecting vendors and negotiating contracts; start date for commencing
construction and end date for completing construction; and the
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dates by which it will meet applicable requirements to receive the
installments of Mobility Fund support.
152. Applicants will indicate for each winning bid whether the
supported network will provide 3G mobile service within the period
prescribed by 47 CFR 54.1006(a) or 4G mobile service within the period
prescribed by 47 CFR 54.1006(b). The description of the proposed
technology should include information on whether the network will
qualify as either a 3G or 4G network.
v. Spectrum Access
153. Applicants are required to provide a description of the
spectrum access that the applicant will use to meet its obligations in
areas for which it is the winning bidder, including whether the
applicant currently holds a license for or leases the spectrum. The
description should identify the license applicable to the spectrum to
be accessed. The description of the license must include the type of
service, e.g., AWS, 700 MHz, BRS, PCS, the particular frequency bands
and the call sign. If the licensee is a different party than the
applicant, the description should include the licensee name and the
relationship between the applicant and the licensee that provides the
applicant with the required access. If the applicant is leasing
spectrum, the lease number should be provided along with the license
information. An applicant must provide this required information
relating to spectrum access in an attachment to the long-form
application that is designated as a Spectrum Access attachment.
154. Applicants must also certify that the description of the
spectrum access is accurate and that the applicant will retain such
access for at least five (5) years after the date on which it is
authorized to receive support. Applications will be reviewed to assess
the reasonableness of the certification.
vi. Letter of Credit Commitment Letter
155. Within ten business days after release of the auction closing
public notice, a winning bidder must submit with its long-form
application either a Letter of Credit (LOC) for each winning bid or a
written commitment letter from an acceptable bank to issue such an LOC.
If the applicant submits a commitment letter, the letter will at a
minimum provide the dollar amount of the LOC and the issuing bank's
agreement to follow the terms and conditions of the Commission's model
LOC, found in Appendix N of the USF/ICC Transformation Order. The
commitment letter must be from an acceptable bank, as defined in 47 CFR
54.1007(a)(1).
vii. Letter of Credit and Bankruptcy Code Opinion Letter
156. After receipt and review of the long-form applications, the
Commission will issue a public notice identifying each winning bidder
that may be authorized to receive Mobility Fund Phase I support. Upon
notice from the Commission, a winning bidder for Mobility Fund Phase I
support must submit an irrevocable stand-by LOC, issued in
substantially the same form as set forth in the model LOC provided in
Appendix N of the USF/ICC Transformation Order by a bank that is
acceptable to the Commission. An LOC must be submitted for each winning
bid in an amount equal to one-third of the winning bid amount, plus an
additional 10 percent of the winning bid amount which shall serve as a
performance default payment. The Commission's rules provide specific
requirements, as defined in 47 CFR 54.1007(a)(1), for a bank to be
acceptable to the Commission to issue the LOC. Those requirements vary
for United States banks and non-U.S. banks.
157. In addition, a winning bidder will be required to provide with
the LOC an opinion letter from legal counsel clearly stating, subject
only to customary assumptions, limitations and qualifications, that, in
a proceeding under the Bankruptcy Code, the bankruptcy court would not
treat the LOC or proceeds of the LOC as property of winning bidder's
bankruptcy estate, or the bankruptcy estate of any other bidder-related
entity requesting issuance of the LOC, under section 541 of the
Bankruptcy Code.
viii. Certification as to Program Requirements
158. The long-form application contains certifications that the
applicant has available funds for all project costs that exceed the
amount of support to be received and will comply with all program
requirements. The requirements include the public interest obligations
contained in the Commission's rules. Applicants must certify that they
will meet the applicable deadline for construction of a network meeting
the coverage and performance requirements set forth in the rules, that
they will comply with the Mobility Fund Phase I collocation obligations
specified in the rules, and that they will comply with the voice and
data roaming obligations the Commission has established with respect to
Phase I of the Mobility Fund. With respect to demonstrating compliance
with the coverage requirements, the Commission rules set forth the
standards for applicable drive test data.
ix. Reasonably Comparable Rate Certification
159. To satisfy one of the public interest obligations that an
applicant will have if it receives support, the long-form application
also must contain a certification that the applicant will offer service
in supported areas at rates that are within a reasonable range of rates
for similar service plans offered by mobile wireless providers in urban
areas for a period extending until five (5) years after the date on
which it is authorized to receive support. As noted in the Auction 901
Comment Public Notice, the Commission delegated authority to the
Bureaus to specify how support recipients could demonstrate compliance
with this rate certification, in light of the fact that the voice and
broadband rates survey data the Commission will collect pursuant to the
USF/ICC Transformation Order will not be available prior to the
Mobility Fund Phase I auction. The approach adopted for Phase I of the
Mobility Fund in no way prejudges the approach to be taken with respect
to Phase II of the Mobility Fund or the CAF generally. The appropriate
approach for purposes of later phases of the Mobility Fund or other
components of the CAF will be determined after review of the record
developed in response to the Further Notice of Proposed Rulemaking
portion of the USF/ICC Transformation Order.
160. The Bureaus proposed in the Auction 901 Comment Public Notice
that a Mobility Fund Phase I support recipient could demonstrate
compliance with the required certification that its rates are
reasonably comparable if each of its service plans in supported areas
is substantially similar to a service plan offered by at least one
mobile wireless service provider in an urban area and is offered for
the same or a lower rate than the matching urban service plan. The
Bureaus expressly noted that any provider that itself offers the same
service plan for the same rate in a supported area and in an urban area
would meet this requirement.
161. The Bureaus crafted this proposal in order to provide
recipients with flexibility to tailor their offerings to consumer
demand while complying with the rule. Solely for purposes of Phase I of
the Mobility Fund, the proposal would treat any rate equal to or less
than the highest rate for a matching service charged in an urban area
as reasonably comparable to, i.e., within a reasonable range of rates
for similar service in urban areas. Urban
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areas are generally served by multiple and diverse providers offering a
range of rates and service offerings in competition with one another.
Consequently, even the highest rate might be considered as being within
a reasonable range of rates for similar service in urban areas, because
the rates for the matching urban services reflect the effects of
competition in the urban area. For purposes of this requirement, the
Bureaus proposed defining urban area as one of the 100 most populated
CMAs in the United States. Multiple providers currently serve these
areas--99.2 percent of the population in these markets is covered by
between four to six operators--offering a range of different service
plans at prices generally constrained by the numerous providers.
Finally, the Bureaus further proposed that they would retain discretion
to consider whether and how variable rate structures should be taken
into account.
162. The Bureaus sought comment on all aspects of the proposal, and
specifically sought comment on whether a support recipient should be
required to make this comparison for all of its service plans, or just
its required stand-alone voice plan and one other plan offering
broadband, or a set of its plans adopted by a specified percentage of
its customers. With respect to the rates for services to which
supported services are to be compared, the Bureaus asked whether
additional information was required to validate the assumption that an
urban service rate reflects the effects of competition in the urban
area--for example, whether an urban service used for matching should be
required to have a certain number of subscribers or percentage of the
relevant market in order to demonstrate its market acceptance. The
Bureaus noted that detailed information about the number of subscribers
at a particular rate might be difficult to obtain. The Bureaus further
sought comment on whether parties should be required to make
comparisons only to a subset of the most populated CMAs that are
geographically closest to the supported area, such as the 30 or 50 of
the top 100 CMAs that are closest to the supported service area. This
might protect against regional economic variations distorting the range
of prices useable for comparison. For example, such a restriction might
cause providers to compare supported rates in Oklahoma to rates in
Houston or Chicago rather than in New York City.
163. There was support among some commenters for the framework of
the Bureaus' proposal. Most commenters that addressed this issue
generally favored employing as simple a standard as possible for
determining whether a supported provider offered rates reasonably
comparable to those in urban areas. Some parties advocated allowing
supported parties to satisfy the requirement based on their offering
the same rate, either nationwide, statewide, or in non-supported areas.
The Bureaus note that, to the extent a provider offers the same service
at the same rate in an urban area, as the Bureaus define it for these
purposes, these proposals are all consistent with the Bureaus'
proposal. The commenters' proposals diverge from the Bureaus' in so far
as a provider offers the same rate for the same service in an
unsupported area but that unsupported area does not qualify as urban
for purpose of this requirement. Two parties specifically object to the
use of out-of-Alaska areas as points of comparison for service within
Alaska. They both argue that, given the unique challenges of offering
service anywhere in Alaska, parties offering service in supported areas
in Alaska only should have to demonstrate that their rates are
reasonably comparable with more urban areas of Alaska, even though
those areas do not qualify as urban under the Bureaus' proposal.
164. The Bureaus decline generally to alter the proposal to permit
comparisons with rates for services in areas that are not within the
definition of urban that the Bureaus proposed for this purpose in the
Auction 901 Comment Public Notice. As the Bureaus explained in the
Auction 901 Comment Public Notice, the areas proposed both meet a
population-based definition of urban and have a degree of competition
among wireless service providers that should help to assure that the
rates offered are reasonable. None of the parties advocating intrastate
comparisons, or reliance on comparisons between the rates a supported
carrier offers in supported areas and other areas, provides a basis for
concluding that the other areas proposed have a comparable level of
competition. Nevertheless, in light of the distinct character of Alaska
and the related costs of providing service, the Bureaus will make an
exception for supported parties in Alaska and allow them to demonstrate
comparability by comparison with rates offered in the CMA for
Anchorage, Alaska. In this regard, the Bureaus note that the Anchorage
CMA has a population of over 250,000 and four wireless providers, which
indicates that, while reflecting the particular challenges of offering
service in Alaska, competition for customers there could act to keep
rates for offered services reasonable.
165. One commenter expressly supported the proposed requirement
that supported providers demonstrate that all of their service plans
are offered at comparable rates while another argued that providing one
such plan should be sufficient. On further review, the Bureaus conclude
that it will be sufficient for a supported provider to demonstrate that
its required stand-alone voice plan and one service plan that offers
data services, presuming it offers such plans, satisfies the reasonably
comparable rate requirement. The Bureaus conclude that customers should
have available to them other rate plans should they so choose, so long
as the provider satisfies the reasonably comparable rate requirement
with respect to a stand-alone voice plan and one of any plans that
offer data services. In addition, this will simplify the supported
parties' compliance with the rule.
x. Tribal Engagement Requirements: Certification and Summary of
Engagement Results
166. Beginning at the long-form application stage, and continuing
throughout the term of support, Mobility Fund Phase I winning bidders
are required to comply with the Tribal engagement obligations
applicable to all ETCs. As the Commission discussed in the USF/ICC
Transformation Order, these obligations are designed to ensure that
Tribal governments have been formally and effectively engaged in the
planning process and that the services to be provided will advance the
goals established by the Tribal government. At a minimum, such
discussions must include: (1) A needs assessment and deployment
planning with a focus on Tribal community anchor institutions; (2)
feasibility and sustainability planning; (3) marketing services in a
culturally sensitive manner; (4) rights of way processes, land use
permitting, facilities siting, environmental and cultural review
processes; and (5) compliance with Tribal business and licensing
requirements.
167. Specific procedures and further guidance regarding the Tribal
engagement process are being developed by ONAP, in coordination with
the Bureaus. Winning bidders are encouraged to initiate the engagement
process as soon as possible. The Bureaus contemplate that, at a
minimum, a long-form applicant would be required to include a
certification and detailed description of its efforts to contact the
relevant Tribal government(s) and initiate substantive discussions
regarding the topics noted above. Any information provided as an
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attachment to the long-form application must be designated as a Tribal
Information attachment. Such certification and description must also be
submitted to the appropriate Tribal government official concurrent with
the filing of the long-form application. Thereafter, support recipients
will be obligated to demonstrate their compliance with Tribal
engagement requirements on an annual basis, and prior to any
disbursement of support from the Universal Service Administrative
Company (USAC). The Bureaus remind carriers that failure to satisfy the
Tribal government engagement obligation could subject them to financial
consequences, including potential reduction in support should they fail
to fulfill their obligations.
C. Default Payment Requirements
168. In the USF/ICC Transformation Order, the Commission determined
that it would impose two types of default payment obligations on
winning bidders: A default payment owed by Mobility Fund winning
bidders that default on their winning bids prior to approval for
receiving support and a default payment owed by Mobility Fund winning
bidders that apply for and are approved to receive support but
subsequently fail to meet their public interest obligations or other
terms and conditions of Mobility Fund support. Under the competitive
bidding rules adopted in the USF/ICC Transformation Order, bidders
selected by the auction process to receive USF support have a binding
obligation to file a post-auction long-form application--by the
applicable deadline and consistent with other requirements of the long-
form application process--and failure to do so constitutes an auction
default. In addition, a performance default occurs when a winning
bidder that the Commission has authorized to receive support fails to
meet its minimum coverage requirement or adequately comply with quality
of service or any other requirements upon which support was granted.
i. Auction Default Payment
169. Any winning bidder that fails to timely file a long-form
application, is found ineligible or unqualified to receive Mobility
Fund support, has its long-form application dismissed, or otherwise
defaults on its bid or is disqualified for any reason after the close
of the auction and prior to the authorization of support for each
winning bid will be subject to an auction default payment. Agreeing to
such payment in event of a default is a condition for participating in
bidding. In the event of an auction default, the Bureaus will assess a
default payment of five percent of the total defaulted bid.
170. In the USF/ICC Transformation Order, the Commission determined
that a default payment is appropriate to ensure the integrity of the
auction process and safeguard against costs to the Commission and the
USF. The Commission left it to the Bureaus to consider methodologies
for determining such a payment, but specified that if the Bureaus
established a default payment to be calculated as a percentage of the
defaulted bid, that percentage was not to exceed 20 percent of the
total amount of the defaulted bid. Accordingly, in the Auction 901
Comment Public Notice, the Bureaus proposed an auction default payment
of five percent of the total defaulted bid. The Bureaus also sought
comment on alternative methodologies, such as basing the auction
default payment on the difference between the defaulted bid and the
next best bid to cover the same number of road miles as without the
default. The Bureaus further sought comment on whether, prior to
bidding, all applicants for Auction 901 should be required to furnish a
bond or place funds on deposit with the Commission in the amount of the
maximum anticipated auction default payment.
171. Commenters supported the Bureaus' proposal for a rate of five
percent of the total defaulted bid. A commenter urges the Bureaus to
consider adopting a higher figure, such as ten percent, saying that if
the penalty percentage is too low it will not serve as a sufficient
deterrent. Other commenters suggest a less punitive approach or ask the
Bureaus to refrain from enforcing default payments except in cases of
egregious failure, such as the failure to submit any long-form
application. The Bureaus received no comments on any alternative
methodologies for determining an appropriate auction default penalty.
172. The Bureaus are not persuaded that they should modify the
proposal to establish an auction default payment at the rate of five
percent of the total defaulted bid. Such a requirement should serve to
deter failures to fulfill auction obligations that might undermine the
stability and predictability of the auction process and impose costs on
the Commission as well as higher support costs for USF, and is yet not
unduly punitive. Liability for the auction default payment will be
imposed without regard to the intentions or fault of any specific
defaulting bidder. The Bureaus therefore adopt its proposal.
173. The Bureaus received a single comment addressing whether
auction applicants should be required to furnish a bond or place funds
on deposit prior to bidding. The Bureaus think their adoption of an
auction default payment will provide adequate protection against costs
to the Commission and the USF, and therefore the Bureaus find that
establishing a bond or deposit requirement is unnecessary.
ii. Performance Default Payment
174. A winning bidder that has received notice from the Commission
that it is authorized to receive Mobility Fund support will be subject
to a performance default payment if it fails or is unable to meet its
minimum coverage requirement, other service requirements, or fails to
fulfill any other term or condition of Mobility Fund Phase I support.
The Bureaus will assess a performance default penalty of ten percent on
the total level of support for which a winning bidder is eligible.
175. The Commission recognized in the USF/ICC Transformation Order
that a Mobility Fund recipient's failure to fulfill its obligations may
impose significant costs on the Commission and higher support costs for
the USF and concluded that it was necessary to adopt a default payment
obligation for performance defaults. In addition to being liable for a
performance default payment, the recipient will be required to repay
the Mobility Fund all of the support it has received, and depending on
circumstances, could be disqualified from receiving any additional
Mobility Fund or other USF support. In the Auction 901 Comment Public
Notice, the Bureaus proposed to establish the performance default
payment percentage at ten percent of the total level of support for
which a winning bidder is eligible. Under this proposal, the
irrevocable stand-by LOC that winning bidders will be required to
provide would include an additional ten percent based on the total
level of support for which a winning bidder is eligible. The Bureaus
received support for this proposal. While both auction defaults and
performance defaults may threaten the integrity of the auction process
and impose costs on the Commission and the USF, an auction default
occurs earlier in the process and may facilitate an earlier use of the
funds that were assigned to the defaulted bid consistent with the
purposes of the universal service program. The Bureaus therefore
proposed that the performance default payment be set at a higher
percentage than the auction default payment percentage. The Bureaus did
not receive specific comments on their
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proposal to establish the performance default payment percentage at ten
percent. The Bureaus anticipate that a performance default payment of
ten percent of the defaulted support level will be effective in
encouraging those seeking support to make every effort to assure that
they are capable of meeting their obligations and protecting against
costs to the Commission and the USF without unduly discouraging auction
participation. The Bureaus therefore adopt this proposal.
Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2012-13223 Filed 5-30-12; 8:45 am]
BILLING CODE 6712-01-P