[Federal Register Volume 77, Number 193 (Thursday, October 4, 2012)]
[Notices]
[Pages 60690-60695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-24544]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 12-239; DA 12-1411]


Auction of FM Broadcast Construction Permits Scheduled for March 
26, 2013; Comment Sought on Competitive Bidding Procedures for Auction 
94

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of certain FM broadcast 
construction permits scheduled to commence on March 26, 2013. This 
document also seeks comment on competitive bidding procedures for 
Auction 94.

DATES: Comments are due on or before October 10, 2012, and reply 
comments are due on or before October 24, 2012.

ADDRESSES: All filings in response to this public notice must refer to 
AU Docket No. 12-239. The Wireless Telecommunications and Media Bureaus 
strongly encourage interested parties to file comments electronically, 
and request that an additional copy of all comments and reply comments 
be submitted electronically to the following address: 
[email protected]. Comments may be submitted by any of the following 
methods:
    [ssquf] Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    [ssquf] Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and four copies of each filing. Filings can be sent by hand 
or messenger delivery, by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Attn: WTB/ASAD, Office of the 
Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. All hand deliveries 
must be held together with rubber bands or fasteners. Any envelopes 
must be disposed of before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 94 Comment 
Public Notice released on September 11, 2012. The complete text of the 
Auction 94 Comment Public Notice, including an attachment and related 
Commission documents, is available for public inspection and copying 
from 8 a.m. to 4:30 p.m. Eastern Time (ET) Monday through Thursday or 
from 8 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference 
Information Center, 445 12th Street SW., Room CY-A257, Washington, DC 
20554. The Auction 94 Comment Public Notice and related Commission 
documents also may be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc. (BCPI), 445 12th Street SW., 
Room CY-B402, Washington, DC 20554, telephone 202-488-5300, fax 202-
488-5563, or you may contact BCPI at its Web site: http://www.BCPIWEB.com. When ordering documents from BCPI, please provide the 
appropriate FCC document number, for example, DA 12-1411. The Auction 
94 Comment Public Notice and related documents also are available on 
the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/94/, or by using the search function for AU Docket No. 12-239 
on the Commission's Electronic Comment Filing System (ECFS) Web page at 
http://www.fcc.gov/cgb/ecfs/.

I. Introduction

    1. The Wireless Telecommunications and Media Bureaus (the Bureaus) 
announce an auction of certain FM broadcast construction permits and 
seek comment on the procedures to be used for this auction. This 
auction is scheduled to commence on March 26, 2013, and is designated 
as Auction 94.

II. Construction Permits in Auction 94

    2. Auction 94 will offer 117 construction permits in the FM 
broadcast service. The construction permits to be auctioned are for 117 
new FM allotments, including 26 construction permits that were offered 
but not sold or were defaulted upon in prior auctions. Attachment A of 
the Auction 94 Comment Public Notice lists the specific vacant FM 
allotments for which the Federal Communications Commission (FCC or 
Commission) will offer construction permits, along with the reference 
coordinates for each vacant FM allotment. These comprise FM channels 
added to the Table of FM Allotments, 47 CFR 73.202(b), pursuant to the 
Commission's established rulemaking procedures, and designated for use 
in the indicated communities. An applicant may apply for any vacant FM 
allotment listed in Attachment A of the Auction 94 Comment Public 
Notice. If two or more short-form applications (FCC Form 175) specify 
the same FM allotment, they will be considered mutually exclusive, and 
the construction permit for that FM allotment will be awarded by 
competitive bidding procedures. Once mutual exclusivity exists for 
auction purposes, then, even if only one applicant is qualified to bid 
for a particular construction permit in Auction 94, that applicant is 
required to submit a bid in order to obtain the construction permit. 
Any applicant that submits a short-form application, but fails to 
timely submit an upfront payment, will retain its status as an 
applicant in Auction 94 and will remain subject to the rules 
prohibiting certain communications but, having purchased no bidding 
eligibility, will not be eligible to bid.

III. Due Diligence

    3. Each potential bidder is solely responsible for investigating 
and evaluating all technical and marketplace factors that may have a 
bearing on the value of the construction permits for broadcast 
facilities that it is seeking in this auction. Each bidder is 
responsible for assuring that, if it wins a construction permit, it 
will be able to build and operate facilities in accordance with the 
Commission's rules. The FCC makes no representations or warranties 
about the use of this spectrum for particular services. Each applicant 
should be aware that an FCC auction represents an opportunity to become 
an FCC permittee in the broadcast service,

[[Page 60691]]

subject to certain conditions and regulations. An FCC auction does not 
constitute an endorsement by the FCC of any particular service, 
technology, or product, nor does an FCC construction permit or license 
constitute a guarantee of business success.
    4. 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 potential bidder to 
review all underlying Commission orders, such as the specific Report 
and Order amending the FM Table of Allotments and allotting the FM 
channel(s) on which it plans to bid. A Report and Order adopted in an 
FM allotment rulemaking proceeding may include anomalies such as site 
restrictions or expense reimbursement requirements. Additionally, each 
potential bidder should perform technical analyses and/or refresh any 
previous analyses to assure itself that, should it become a winning 
bidder for any Auction 94 construction permit, 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 bid; confirm the 
availability of such sites; and familiarize itself with the 
Commission's rules regarding the National Environmental Policy Act.
    5. The Bureaus strongly encourage each applicant to conduct its own 
research prior to Auction 94 in order to determine the existence of 
pending administrative or judicial proceedings, including pending 
allocations rulemaking proceedings, that might affect its decisions 
regarding participation in the auction.
    6. The Bureaus strongly encourage participants in Auction 94 to 
continue such research throughout the auction. The due diligence 
considerations mentioned in the Auction 94 Comment 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 the specific facts and circumstances related to its interests.

IV. Bureaus Seek Comment on Auction Procedures

    7. The Commission directed the Bureaus, under delegated authority, 
to seek comment on a variety of auction-specific procedures prior to 
the start of each auction. Therefore the Bureaus seek comment on the 
following issues relating to the conduct of Auction 94.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design
    8. The Bureaus propose to auction all construction permits included 
in Auction 94 using the Commission's standard simultaneous multiple-
round auction format. This type of auction offers every construction 
permit for bid at the same time and consists of successive bidding 
rounds in which eligible bidders may place bids on individual 
construction permits. Typically, bidding remains open on all 
construction permits until bidding stops on every construction permit. 
The Bureaus seek comment on this proposal.
ii. Bidding Rounds
    9. Auction 94 will consist of sequential bidding rounds, each 
followed by the release of round results. The initial bidding schedule 
will be announced in a public notice to be released at least one week 
before the start of the auction. Details on viewing round results, 
including the location and format of downloadable round results files, 
will be included in the same public notice.
    10. The Commission will conduct Auction 94 over the Internet using 
the Commission's Integrated Spectrum Auction System (FCC Auction 
System). Bidders will also have the option of placing bids by telephone 
through a dedicated Auction Bidder Line. The toll-free telephone number 
for the Auction Bidder Line will be provided to qualified bidders prior 
to the start of the auction.
    11. The Bureaus propose to retain the discretion to change the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. The Bureaus may change the amount of time for 
the bidding rounds, the amount of time between rounds, or the number of 
rounds per day, depending upon bidding activity and other factors. The 
Bureaus seek comment on this proposal. Commenters on this issue should 
address the role of the bidding schedule in managing the pace of the 
auction, specifically discussing the tradeoffs in managing auction pace 
by bidding schedule changes, by changing the activity requirements or 
bid amount parameters, or by using other means.
iii. Stopping Rule
    12. The Bureaus have discretion to establish stopping rules before 
or during multiple round auctions in order to complete the auction 
within a reasonable time. For Auction 94, the Bureaus propose to employ 
a simultaneous stopping rule approach, which means all construction 
permits remain available for bidding until bidding stops on every 
construction permit. More specifically, bidding will close on all 
construction permits after the first round in which no bidder submits 
any new bids, applies a proactive waiver, or withdraws any 
provisionally winning bids (if bid withdrawals are permitted in this 
auction). Thus, unless the Bureaus announce alternative procedures, the 
simultaneous stopping rule will be used in this auction, and bidding 
will remain open on all construction permits until bidding stops on 
every construction permit. Consequently, it is not possible to 
determine in advance how long the bidding in this auction will last.
    13. Further, the Bureaus propose to retain the discretion to 
exercise any of the following options during Auction 94: (a) Use a 
modified version of the simultaneous stopping rule that would close the 
auction for all construction permits after the first round in which no 
bidder applies a waiver, withdraws a provisionally winning bid (if 
withdrawals are permitted in this auction), or places any new bids on a 
construction permit for which it is not the provisionally winning 
bidder. Thus, absent any other bidding activity, a bidder placing a new 
bid on a construction permit for which it is the provisionally winning 
bidder would not keep the auction open under this modified stopping 
rule; (b) Use a modified version of the simultaneous stopping rule that 
would close the auction for all construction permits after the first 
round in which no bidder applies a waiver, withdraws a provisionally 
winning bid (if withdrawals are permitted in this auction), or places 
any new bids on a construction permit that is not FCC held. Thus, 
absent any other bidding activity, a bidder placing a new bid on a 
construction permit that does not already have a provisionally winning 
bid (an FCC-held construction permit) would not keep the auction open 
under this modified stopping rule; (c) Use a modified version of the 
simultaneous stopping rule that combines (a) and (b) above; (d) Declare 
the auction will end after a specified number of additional rounds 
(special stopping rule). If the Bureaus invoke this special stopping 
rule, they will accept bids in the specified final round(s), after 
which the auction will close; and (e) Keep the

[[Page 60692]]

auction open even if no bidder places any new bids, applies a waiver, 
or withdraws any provisionally winning bids (if withdrawals are 
permitted in this auction). In this event, the effect will be the same 
as if a bidder had applied a waiver. The activity rule will apply as 
usual, and a bidder with insufficient activity will either lose bidding 
eligibility or use a waiver.
    14. The Bureaus propose to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly or quickly, there is minimal overall bidding activity, or it 
appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. Before exercising these 
options, the Bureaus are likely to attempt to change the pace of the 
auction. For example, the Bureaus may adjust the pace of bidding by 
changing the number of bidding rounds per day and/or the minimum 
acceptable bids. The Bureaus propose to retain the discretion to 
exercise any of these options with or without prior announcement during 
the auction. The Bureaus seek comment on these proposals.
iv. Information Relating to Auction Delay, Suspension, or Cancellation
    15. For Auction 94, the Bureaus propose that they may delay, 
suspend, or cancel the auction in the event of a 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 will notify participants of any such delay, 
suspension or cancellation by public notice and/or through the FCC 
Auction System's announcement function. If the auction is delayed or 
suspended, the Bureaus may, in their sole discretion, elect to resume 
the auction starting from the beginning of the current round or from 
some previous round, or cancel the auction in its entirety. Network 
interruption may cause the Bureaus to delay or suspend the auction. The 
Bureaus emphasize that they will exercise this authority solely at 
their discretion, and not as a substitute for situations in which 
bidders may wish to apply their activity rule waivers. The Bureaus seek 
comment on this proposal.

B. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    16. The Bureaus have delegated authority and discretion to 
determine an appropriate upfront payment for each construction permit 
being auctioned, taking into account such factors as the efficiency of 
the auction process and the potential value of similar construction 
permits. The upfront payment is a refundable deposit made by each 
bidder to establish eligibility to bid on construction permits. Upfront 
payments that are related to the specific construction permits being 
auctioned protect against frivolous or insincere bidding and provide 
the Commission with a source of funds from which to collect payments 
owed at the close of the auction. With these considerations in mind, 
the Bureaus propose the upfront payments set forth in Attachment A of 
the Auction 94 Comment Public Notice. The Bureaus seek comment on the 
upfront payments specified in Attachment A of the Auction 94 Comment 
Public Notice.
    17. The Bureaus further propose that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units. The Bureaus propose to assign each 
construction permit a specific number of bidding units, equal to one 
bidding unit per dollar of the upfront payment listed in Attachment A 
of the Auction 94 Comment Public Notice. The number of bidding units 
for a given construction permit is fixed and does not change during the 
auction as prices change. A bidder may place bids on multiple 
construction permits, provided that the total number of bidding units 
associated with those construction permits does not exceed its current 
eligibility. A bidder cannot increase its eligibility during the 
auction; it can only maintain its eligibility or decrease its 
eligibility. Thus, in calculating its upfront payment amount and hence 
its initial bidding eligibility, an applicant must determine the 
maximum number of bidding units on which it may wish to bid (or hold 
provisionally winning bids) in any single round, and submit an upfront 
payment amount covering that total number of bidding units. The Bureaus 
request comment on these proposals.
ii. Activity Rule
    18. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. The Bureaus propose a single stage auction with 
the following activity requirement: In each round of the auction, a 
bidder desiring to maintain its current bidding eligibility is required 
to be active on one hundred percent (100%) of its bidding eligibility. 
A bidder's activity in a round will be the sum of the bidding units 
associated with any construction permits upon which it places bids 
during the current round and the bidding units associated with any 
construction permits for which it holds provisionally winning bids. 
Failure to maintain the requisite activity level will result in the use 
of an activity rule waiver, if any remain, or a reduction in the 
bidder's eligibility, possibly curtailing or eliminating the bidder's 
ability to place additional bids in the auction. The Bureaus seek 
comment on this proposal. If commenters believe the auction should be 
conducted with multiple stages, they should explain the reason for 
doing so.
iii. Activity Rule Waivers and Reducing Eligibility
    19. When a bidder's eligibility in the current round is below the 
required minimum level, it may preserve its current level of 
eligibility through an activity rule waiver. An activity rule waiver 
applies to an entire round of bidding, not to a particular construction 
permit. Activity rule waivers can be either proactive or automatic. 
Activity rule waivers are principally a mechanism for a bidder to avoid 
the loss of bidding eligibility in the event that exigent circumstances 
prevent it from bidding in a particular round.
    20. The FCC Auction System assumes that a bidder that does not meet 
the activity requirement would prefer to use an activity rule waiver 
(if available) rather than lose bidding eligibility. Therefore, the 
system will automatically apply a waiver at the end of any bidding 
round in which a bidder's activity level is below the minimum required 
unless (1) the bidder has no activity rule waivers remaining; or (2) 
the bidder overrides the automatic application of a waiver by reducing 
eligibility, thereby meeting the activity requirement. If a bidder has 
no waivers remaining and does not satisfy the required activity level, 
the bidder's current eligibility will be permanently reduced, possibly 
curtailing or eliminating the ability to place additional bids in the 
auction.
    21. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding round by using the reduce eligibility function in 
the FCC Auction System. In this case, the bidder's eligibility is 
permanently reduced to bring it into compliance with the activity rule. 
Reducing eligibility is an irreversible action; once eligibility has 
been

[[Page 60693]]

reduced, a bidder will not be permitted to regain its lost bidding 
eligibility, even if the round has not yet closed.
    22. Under the proposed simultaneous stopping rule, a bidder may 
apply an activity rule waiver proactively as a means to keep the 
auction open without placing a bid. If a bidder proactively applies an 
activity rule waiver (using the apply waiver function in the FCC 
Auction System) during a bidding round in which no bids are placed or 
withdrawn (if bid withdrawals are permitted in this auction), the 
auction will remain open and the bidder's eligibility will be 
preserved. An automatic waiver applied by the FCC Auction System in a 
round in which there are no new bids, withdrawals (if bid withdrawals 
are permitted in this auction), or proactive waivers will not keep the 
auction open. A bidder cannot apply a proactive waiver after bidding in 
a round, and applying a proactive waiver will preclude it from placing 
any bids in that round. Applying a waiver is irreversible; once a 
proactive waiver is submitted, it cannot be unsubmitted, even if the 
round has not yet closed.
    23. Consistent with recent FCC auctions, the Bureaus propose that 
each bidder in Auction 94 be provided with three activity rule waivers 
that may be used at the bidder's discretion during the course of the 
auction. The Bureaus seek comment on this proposal.
iv. Reserve Price or Minimum Opening Bids
    24. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. A minimum opening 
bid, on the other hand, is the minimum bid price set at the beginning 
of the auction below which no bids are accepted. It is generally used 
to accelerate the competitive bidding process. It is possible for the 
minimum opening bid and the reserve price to be the same amount.
    25. The Bureaus propose to establish minimum opening bid amounts 
for Auction 94. The Bureaus believe that a minimum opening bid amount, 
which has been used in other broadcast auctions, is an effective 
bidding tool for accelerating the competitive bidding process. The 
Bureaus do not propose to establish separate reserve prices for the 
construction permits to be offered in Auction 94.
    26. For Auction 94, the Bureaus propose minimum opening bid amounts 
determined by taking into account the type of service and class of 
facility offered, market size, population covered by the proposed 
broadcast facility, and recent broadcast transaction data. Attachment A 
of the Auction 94 Comment Public Notice lists a proposed minimum 
opening bid amount for each construction permit available in Auction 
94. The Bureaus seek comment on the minimum opening bid amounts 
specified in Attachment A.
    27. If commenters believe that these minimum opening bid amounts 
will result in unsold construction permits, are not reasonable amounts, 
or should instead operate as reserve prices, they should explain why 
this is so and comment on the desirability of an alternative approach. 
The Bureaus ask commenters to support their claims with valuation 
analyses and suggested amounts or formulas for reserve prices or 
minimum opening bids. In establishing the minimum opening bid amounts, 
the Bureaus particularly seek comment on factors that could reasonably 
have an impact on valuation of the broadcast spectrum, including the 
type of service and class of facility offered, market size, population 
covered by the proposed FM broadcast facility, and any other relevant 
factors.
v. Bid Amounts
    28. The Bureaus propose that, in each round, an eligible bidder 
will be able to place a bid on a given construction permit in any of up 
to nine different amounts. Under this proposal, the FCC Auction System 
interface will list the acceptable bid amounts for each construction 
permit.
    29. The first of the acceptable bid amounts is called the minimum 
acceptable bid amount. The minimum acceptable bid amount for a 
construction permit will be equal to its minimum opening bid amount 
until there is a provisionally winning bid for the construction permit. 
After there is a provisionally winning bid for a construction permit, 
the minimum acceptable bid amount will be a certain percentage higher. 
That is, the FCC will calculate the minimum acceptable bid amount by 
multiplying the provisionally winning bid amount times one plus the 
minimum acceptable bid percentage. If, for example, the minimum 
acceptable bid percentage is 10 percent, the minimum acceptable bid 
amount will equal (provisionally winning bid amount) * (1.10), rounded. 
If bid withdrawals are permitted in this auction, in the case of a 
construction permit for which the provisionally winning bid has been 
withdrawn, the minimum acceptable bid amount will equal the second 
highest bid received for the construction permit.
    30. The FCC will calculate the eight additional bid amounts using 
the minimum acceptable bid amount and a bid increment percentage, which 
need not be the same as the percentage used to calculate the minimum 
acceptable bid amount. The first additional acceptable bid amount 
equals the minimum acceptable bid amount times one plus the bid 
increment percentage, rounded. If, for example, the bid increment 
percentage is 5 percent, the calculation is (minimum acceptable bid 
amount) * (1 + 0.05), rounded, or (minimum acceptable bid amount) * 
1.05, rounded; the second additional acceptable bid amount equals the 
minimum acceptable bid amount times one plus two times the bid 
increment percentage, rounded, or (minimum acceptable bid amount) * 
1.10, rounded; etc. The Bureaus will round the results using the 
Commission's standard rounding procedures for auctions.
    31. For Auction 94, the Bureaus propose to use a minimum acceptable 
bid percentage of 10 percent. This means that the minimum acceptable 
bid amount for a construction permit will be approximately 10 percent 
greater than the provisionally winning bid amount for the construction 
permit. To calculate the additional acceptable bid amounts, the Bureaus 
propose to use a bid increment percentage of 5 percent. The Bureaus 
seek comment on these proposals.
    32. The Bureaus retain the discretion to change the minimum 
acceptable bid amounts, the minimum acceptable bid percentage, the bid 
increment percentage, and the number of acceptable bid amounts if the 
Bureaus determine that circumstances so dictate. Further, the Bureaus 
retain the discretion to do so on a construction permit-by-construction 
permit basis. The Bureaus also retain the discretion to limit (a) the 
amount by which a minimum acceptable bid for a construction permit may 
increase compared with the corresponding provisionally winning bid, and 
(b) the amount by which an additional bid amount may increase compared 
with the immediately preceding acceptable bid amount. For example, the 
Bureaus could set a $10,000 limit on increases in minimum acceptable 
bid amounts over provisionally winning bids. Thus, if calculating a 
minimum acceptable bid using the minimum acceptable bid percentage 
results in a minimum acceptable bid amount that is $12,000 higher than 
the provisionally winning bid on a construction permit, the minimum 
acceptable bid amount would instead be capped at $10,000 above the 
provisionally winning bid. The Bureaus seek comment on the 
circumstances under which the Bureaus should employ such a limit, 
factors the Bureaus

[[Page 60694]]

should consider when determining the dollar amount of the limit, and 
the tradeoffs in setting such a limit or changing other parameters, 
such as changing the minimum acceptable bid percentage, the bid 
increment percentage, or the number of acceptable bid amounts. If the 
Bureaus exercise this discretion, they will alert bidders by 
announcement in the FCC Auction System during the auction.
vi. Provisionally Winning Bids
    33. Provisionally winning bids are bids that would become final 
winning bids if the auction were to close in that given round. At the 
end of a bidding round, the FCC Auction System determines a 
provisionally winning bid for each construction permit based on the 
highest bid amount received. If identical high bid amounts are 
submitted on a construction permit in any given round (i.e., tied 
bids), the FCC Auction System will use a random number generator to 
select a single provisionally winning bid from among the tied bids. 
(The Auction System assigns a random number to each bid when the bid is 
entered. The tied bid with the highest random number wins the 
tiebreaker.) The remaining bidders, as well as the provisionally 
winning bidder, can submit higher bids in subsequent rounds. However, 
if the auction were to end with no other bids being placed, the winning 
bidder would be the one that placed the provisionally winning bid. If 
the construction permit receives any bids in a subsequent round, the 
provisionally winning bid again will be determined by the highest bid 
amount received for the construction permit.
    34. A provisionally winning bid will be retained until there is a 
higher bid on the construction permit at the close of a subsequent 
round, unless the provisionally winning bid is withdrawn (if bid 
withdrawals are permitted in this auction). The Bureaus reminds bidders 
that provisionally winning bids count toward activity for purposes of 
the activity rule.
vii. Bid Removal and Bid Withdrawal
    35. For Auction 94, the Bureaus propose the following bid removal 
procedures. Before the close of a bidding round, a bidder has the 
option of removing any bid placed in that round. By removing a selected 
bid in the FCC Auction System, a bidder may effectively ``unsubmit'' 
any bid placed within that round. In contrast to the bid withdrawal 
provisions, a bidder removing a bid placed in the same round is not 
subject to a withdrawal payment. Once a round closes, a bidder may no 
longer remove a bid. The Bureaus seek comment on this bid removal 
proposal.
    36. The Bureaus also seek comment on whether bid withdrawals should 
be permitted in Auction 94. When permitted in an auction, bid 
withdrawals provide a bidder with the option of withdrawing bids placed 
in prior rounds that have become provisionally winning bids. A bidder 
may withdraw its provisionally winning bids using the ``withdraw bids'' 
function in the FCC Auction System. A bidder that withdraws its 
provisionally winning bid(s), if permitted, is subject to the bid 
withdrawal payment provisions of the Commission rules.
    37. Based on this guidance and on the Bureaus' experience with past 
auctions of FM broadcast construction permits, the Bureaus propose to 
prohibit bidders from withdrawing any bids after the close of the round 
in which bids were placed. The Bureaus make this proposal in light of 
the site-specific nature and wide geographic dispersion of the permits 
available in this auction, which suggests that potential applicants for 
this auction may have fewer incentives to aggregate permits through the 
auction process (as compared with bidders in many auctions of wireless 
licenses). Thus, the Bureaus believe that it is unlikely that bidders 
will have a need to withdraw bids in this auction. The Bureaus also 
remain mindful that bid withdrawals, particularly those made late in 
this auction, could result in delays in licensing new FM stations and 
attendant delays in the offering of new broadcast service to the 
public. The Bureaus seek comment on our proposal to prohibit bid 
withdrawals.

C. Post-Auction Payments

i. Interim Withdrawal Payment Percentage
    38. In the event the Bureaus allow bid withdrawals in Auction 94, 
the Bureaus propose the interim bid withdrawal payment be 20 percent of 
the withdrawn bid. A bidder that withdraws a bid during an auction is 
subject to a withdrawal payment equal to the difference between the 
amount of the withdrawn bid and the amount of the winning bid in the 
same or a subsequent auction. However, if a construction permit for 
which a bid has been withdrawn does not receive a subsequent higher bid 
or winning bid in the same auction, the FCC cannot calculate the final 
withdrawal payment until that construction permit receives a higher bid 
or winning bid in a subsequent auction. In such cases, when that final 
withdrawal payment cannot yet be calculated, the FCC imposes on the 
bidder responsible for the withdrawn bid an interim bid withdrawal 
payment, which will be applied toward any final bid withdrawal payment 
that is ultimately assessed.
    39. The amount of the interim bid withdrawal payment may range from 
three percent to twenty percent of the withdrawn bid amount, with the 
percentage generally being higher where there is greater risk of bid 
withdrawals being used for anti-competitive purposes, such as when 
there is little need for bidders to aggregate permits. The Bureaus 
propose to use the maximum interim bid withdrawal payment percentage 
allowed by 47 CFR 1.2104(g)(1) in the event bid withdrawals are 
allowed. The Bureaus request comment on using twenty percent for 
calculating an interim bid withdrawal payment amount in Auction 94. 
Commenters advocating the use of bid withdrawals should also address 
the percentage of the interim bid withdrawal payment.
ii. Additional Default Payment Percentage
    40. Any winning bidder that defaults or is disqualified after the 
close of an auction (i.e., fails to remit the required down payment 
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full and timely final payment, or is 
otherwise disqualified) is liable for a default payment under 47 CFR 
1.2104(g)(2). This payment consists of a deficiency payment, equal to 
the difference between the amount of the Auction 94 bidder's winning 
bid and the amount of the winning bid the next time a construction 
permit covering the same spectrum is won in an auction, plus an 
additional payment equal to a percentage of the defaulter's bid or of 
the subsequent winning bid, whichever is less.
    41. The Commission's rules provide that, in advance of each 
auction, it will establish a percentage between three percent and 
twenty percent of the applicable bid to be assessed as an additional 
default payment. As the Commission has indicated, the level of this 
additional payment in each auction will be based on the nature of the 
service and the construction permits being offered.
    42. For Auction 94, the Bureaus propose to establish an additional 
default payment of twenty percent. Defaults weaken the integrity of the 
auction process and may impede the deployment of service to the public, 
and an additional twenty percent default payment will be more effective 
in

[[Page 60695]]

deterring defaults than the three percent used in some earlier 
auctions. In light of these considerations, the Bureaus propose for 
Auction 94 an additional default payment of twenty percent of the 
relevant bid. Moreover, a twenty percent additional default payment 
amount is consistent with the percentage used in recent auctions of FM 
permits. The Bureaus seek comment on this proposal.

V. Ex Parte Rules

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

Federal Communications Commisison.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2012-24544 Filed 10-3-12; 8:45 am]
BILLING CODE 6712-01-P