[Federal Register Volume 78, Number 32 (Friday, February 15, 2013)]
[Notices]
[Pages 11179-11185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03493]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 13-12; DA 13-60]


Auction of Lower and Upper Paging Bands Licenses Scheduled for 
July 16, 2013; Comment Sought on Competitive Bidding Procedures for 
Auction 95

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of certain Paging Bands 
licenses scheduled to commence on July 16, 2013. This document also 
seeks comment on competitive bidding procedures for Auction 95.

DATES: Comments are due on or before February 22, 2013, and reply 
comments are due on or before March 14, 2013.

ADDRESSES: All filings in response to this public notice must refer to 
AU Docket No. 13-12. The Wireless Telecommunications Bureau strongly 
encourages 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 Street 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

[[Page 11180]]

and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol 
Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    [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: 
Debbie Smith or Linda Sanderson at (717) 338-2868. Mobility Division: 
For Paging service rule questions: Kathy Harris (legal) or Keith Harper 
(technical) at (202) 418-0620.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 95 Comment 
Public Notice released on February 1, 2013. The complete text of the 
Auction 95 Comment Public Notice, including an attachment and related 
Commission documents, is available for public inspection and copying 
from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) Monday through Thursday 
or from 8:00 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 95 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 13-60. The Auction 95 
Comment Public Notice and related documents also are available on the 
Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/95/, or by using the search function for AU Docket No. 13-12 
on the Commission's Electronic Comment Filing System (ECFS) web page at 
http://www.fcc.gov/cgb/ecfs/.

I. Introduction

    1. The Wireless Telecommunications Bureau (Bureau) announces an 
auction of 5,905 paging licenses to commence on July 16, 2013, and is 
designated as Auction 95.) The Bureau seeks comment on the procedures 
to be used for this auction. The licenses available in Auction 95 
consist of 4,902 licenses in the lower paging bands (35-36 MHz, 43-44 
MHz, 152-159 MHz, 454-460 MHz) and 1,003 licenses in the upper paging 
bands (929-931 MHz).

II. Licenses To Be Offered in Auction 95

    2. Auction 95 will offer licenses that remained unsold from 
previous auctions, licenses on which a winning bidder in a previous 
auction defaulted, and licenses for spectrum previously associated with 
licenses that cancelled or terminated. In a few cases, the available 
license does not cover the entire geographic area due to an excluded 
area or previous partitioning.
    3. Attachment A to the Auction 95 Comment Public Notice provides a 
summary of the licenses available in Auction 95. Due to the large 
number of licenses in Auction 95, the complete list of licenses 
available for this auction will be provided in electronic format only, 
available as separate Attachment A files at http://wireless.fcc.gov/auctions/95/.

A. License Descriptions

    4. The Commission has concluded that the lower band licenses should 
be awarded in each of the 175 geographic areas known as Economic Areas 
(EAs), and the upper bands licenses should be awarded in each of the 51 
geographic areas known as Major Economic Areas (MEAs). These EAs and 
MEAs encompass the United States, Guam, the Northern Mariana Islands, 
Puerto Rico, the U.S. Virgin Islands, and American Samoa.
    5. Tables containing the block/frequency cross-reference list for 
the paging bands are included in Attachment B to the Auction 95 Comment 
Public Notice. These licenses are limited to bandwidths of 20 kilohertz 
(kHz) or 20 kHz pairs (40 kHz total). Licensees may use the spectrum to 
provide (1) one-way messaging, (2) two-way messaging, and (3) fixed 
wireless services. Provision of these services is subject to the 
technical limitations set forth for the service in Part 22 of the 
Commission's rules.

B. Incumbency Issues

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

III. Due Diligence

    7. 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 licenses that it is seeking in this 
auction. Each bidder is responsible for assuring that, if it wins a 
license, 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 licensee in the paging service, subject to certain 
conditions and regulations. An FCC auction does not constitute an 
endorsement by the FCC of any particular service, technology, or 
product, nor does an FCC license constitute a guarantee of business 
success.
    8. An applicant should perform its due diligence research and 
analysis before proceeding, as it would with any new business venture. 
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 95 license, it will be able to build and operate 
facilities that will fully comply with all applicable technical and 
legal requirements. The Bureau strongly encourages each applicant to 
inspect any prospective transmitter sites located in, or near, the 
geographic 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.
    9. The Bureau strongly encourages each applicant to conduct its own 
research prior to Auction 95 in order to determine the existence of 
pending administrative, rulemaking, or judicial proceedings that might 
affect its decisions regarding participation in the auction.
    10. The Bureau strongly encourages participants in Auction 95 to 
continue such research throughout the auction. The due diligence 
considerations mentioned in the Auction 95 Comment Public Notice does 
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

[[Page 11181]]

the specific facts and circumstances related to its interests.

IV. Bureau Seeks Comment on Auction Procedures

    11. The Commission directed the Bureau, under delegated authority, 
to seek comment on a variety of auction-specific procedures prior to 
the start of each auction. Therefore the Bureau seeks comment on the 
following issues relating to the conduct of Auction 95.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design
    12. The Bureau proposes to auction all licenses included in Auction 
95 using the Commission's standard simultaneous multiple-round auction 
format. This type of auction offers every license for bid at the same 
time and consists of successive bidding rounds in which eligible 
bidders may place bids on individual licenses. Typically, bidding 
remains open on all licenses until bidding stops on every license. The 
Bureau seeks comment on this proposal.
ii. Anonymous Bidding
    13. In several prior auctions the Commission has adopted procedures 
to limit the disclosure of certain bidder-specific information until 
after the auction. Consistent with that practice, the Bureau proposes 
to conduct Auction 95 using certain procedures for limited information 
disclosure or anonymous bidding. Specifically, the Bureau proposes to 
withhold, until after the close of bidding, public release of (1) 
bidders' license selections on their short-form applications (FCC Form 
175), (2) the amounts of bidders' upfront payments and bidding 
eligibility, and (3) information that may reveal the identities of 
bidders placing bids and taking other bidding-related actions.
    14. Under these proposed limited information procedures, the amount 
of every bid placed and whether a bid was withdrawn would be disclosed 
after the close of every round, but the identities of bidders placing 
specific bids or withdrawals and the net bid amounts would not be 
disclosed until after the close of the auction.
    15. Bidders would have access to additional information about their 
own bids. For example, bidders would be able to view their own level of 
eligibility, before and during the auction, through the Commission's 
Integrated Spectrum Auction System (ISAS or FCC Auction System).
    16. Moreover, for the purpose of complying with 47 CFR 1.2105(c) 
prohibiting certain communications between applicants (formerly 
referred to as the anti-collusion rule), applicants would be made aware 
of other applicants with which they will not be permitted to cooperate, 
collaborate, or communicate, including discussing bids, bidding 
strategies, or post-auction market structure. Specifically, the Bureau 
would notify separately each applicant in Auction 95 whether applicants 
with short-form applications to participate in pending auctions, 
including but not limited to Auction 95, have applied for licenses in 
any of the same or overlapping geographic areas as that applicant.
    17. After the close of bidding, bidders' license selections, 
upfront payment amounts, bidding eligibility, bids, and other bidding-
related actions would be made publicly available.
    18. The Bureau seeks comments on its proposal to implement 
anonymous bidding in Auction 95. The Bureau also seeks comment on 
alternatives to the use of anonymous bidding procedures for Auction 95. 
When the Commission first proposed limited information disclosure 
procedures, it did so in response to analysis suggesting that under 
certain circumstances the competitiveness and economic efficiency of a 
simultaneous multiple-round auction may be enhanced if such information 
is withheld until after the close of the auction. The Bureau encourages 
parties to provide information about the benefits and costs of 
complying with limited information procedures as compared with the 
benefits and costs of alternative procedures that would provide for the 
disclosure of more information on bidder identities and interests in 
the auction. If commenters believe that the Bureau should not adopt 
procedures to limit the disclosure of certain bidder-specific 
information until after the auction, they should explain their 
reasoning.
iii. Bidding Rounds
    19. Auction 95 will consist of sequential bidding rounds. The 
initial bidding schedule will be announced in a public notice to be 
released at least one week before the start of the auction.
    20. The Commission will conduct Auction 95 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.
    21. The Bureau proposes to retain the discretion to change the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. Under this proposal, the Bureau may change 
the amount of time for bidding rounds, the amount of time between 
rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. The Bureau seeks comment on this proposal. 
Commenters 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.
iv. Stopping Rule
    22. The Bureau has discretion to establish stopping rules before or 
during multiple round auctions in order to complete the auction within 
a reasonable time. For Auction 95, the Bureau proposes to employ a 
simultaneous stopping rule approach, which means all licenses remain 
available for bidding until bidding stops on every license. More 
specifically, bidding will close on all licenses after the first round 
in which no bidder submits any new bids, applies a proactive waiver, or 
withdraws any provisionally winning bids. Thus, unless the Bureau 
announces alternative procedures, the simultaneous stopping rule will 
be used in this auction, and bidding will remain open on all licenses 
until bidding stops on every license. Consequently, it is not possible 
to determine in advance how long the bidding in this auction will last.
    23. Further, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction 95: (a) Use a 
modified version of the simultaneous stopping rule that would close the 
auction for all licenses after the first round in which no bidder 
applies a waiver, withdraws a provisionally winning bid, or places any 
new bids on a license for which it is not the provisionally winning 
bidder. Thus, absent any other bidding activity, a bidder placing a new 
bid on a license for which it is the provisionally winning bidder would 
not keep the auction open under this modified stopping rule; (b) Use a 
modified version of the simultaneous stopping rule that would close the 
auction for all licenses after the first round in which no bidder 
applies a waiver, withdraws a provisionally winning bid, or places any 
new bids on a license that is not FCC

[[Page 11182]]

held. Thus, absent any other bidding activity, a bidder placing a new 
bid on a license that does not already have a provisionally winning bid 
(an FCC-held license) 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); (d) Declare the auction will 
end after a specified number of additional rounds (special stopping 
rule). If the Bureau invokes this special stopping rule, it will accept 
bids in the specified final round(s), after which the auction will 
close; and (e) Keep the auction open even if no bidder places any new 
bids, applies a waiver, or withdraws any provisionally winning bids. In 
this event, the effect will be the same as if a bidder had applied a 
waiver. The activity rule will apply as usual, and a bidder with 
insufficient activity will either lose bidding eligibility or use a 
waiver.
    24. The Bureau proposes to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly or quickly, there is minimal overall bidding activity, or it 
appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. Before exercising these 
options, the Bureau is likely to attempt to change the pace of the 
auction. For example, the Bureau may adjust the pace of bidding by 
changing the number of bidding rounds per day and/or the minimum 
acceptable bids. The Bureau proposes to retain the discretion to 
exercise any of these options with or without prior announcement during 
the auction. The Bureau seeks comment on these proposals.
v. Information Relating to Auction Delay, Suspension, or Cancellation
    25. For Auction 95, the Bureau proposes that it 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 
Bureau 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 
Bureau may, in its 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 Bureau emphasize 
that it will exercise this authority solely at its discretion, and not 
as a substitute for situations in which bidders may wish to apply their 
activity rule waivers. The Bureau seeks comment on this proposal.

B. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    26. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned, taking 
into account such factors as the efficiency of the auction process and 
the potential value of similar licenses. The upfront payment is a 
refundable deposit made by each bidder to establish eligibility to bid 
on licenses. Upfront payments that are related to the specific licenses 
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. For Auction 95, the proposed 
upfront payments are equal to the proposed minimum opening bids. The 
Bureau seeks comment on this proposal.
    27. The Bureau further proposes that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units. The Bureau proposes to assign each 
license a specific number of bidding units, equal to one bidding unit 
per dollar of the upfront payment listed for the license. The specific 
bidding units for each license are set forth in the complete list of 
licenses available for Auction 95, available as separate Attachment A 
files at http://wireless.fcc.gov/auctions/95/. The number of bidding 
units for a given license is fixed and does not change during the 
auction as prices change. A bidder may place bids on multiple licenses, 
provided that the total number of bidding units associated with those 
licenses 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 Bureau requests comment on these proposals.
ii. Activity Rule
    28. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. A bidder's activity in a round will be the sum of 
the bidding units associated with any licenses upon which it places 
bids during the current round and the bidding units associated with any 
licenses for which it holds provisionally winning bids placed in 
previous rounds. Bidders are required to be active on a specific 
percentage of their current bidding eligibility during each round of 
the auction. Failure to maintain the requisite activity level will 
result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction.
    29. The Bureau proposes to divide the auction into at least two 
stages, each characterized by a different activity requirement. The 
auction will start in Stage One. The Bureau proposes to advance the 
auction to the next stage by announcement during the auction. In 
exercising this discretion, the Bureau will consider a variety of 
measures of auction activity, including but not limited to the 
percentage of licenses (as measured in bidding units) on which there 
are new bids, the number of new bids, and the increase in revenue. The 
Bureau seeks comment on these proposals.
    30. The Bureau proposes the following activity requirements, while 
noting again that the Bureau retains the discretion to change stages 
unilaterally by announcement during the auction: Stage One: In each 
round of the first stage of the auction, a bidder desiring to maintain 
its current bidding eligibility is required to be active on licenses 
representing at least 80 percent of its current bidding eligibility. 
Failure to maintain the required activity level will result in the use 
of an activity rule waiver or a reduction in the bidder's bidding 
eligibility for the next round of bidding. During Stage One, a bidder's 
reduced eligibility for the next round will be calculated by 
multiplying the bidder's current round activity by five-fourths (\5/
4\). Stage Two: In each round of the second stage, a bidder desiring to 
maintain its current bidding eligibility is required to be active on 95 
percent of its current bidding eligibility. Failure to maintain the 
required activity level will result in the use of an activity rule 
waiver or a reduction in the bidder's bidding eligibility for the next 
round of

[[Page 11183]]

bidding. During Stage Two, a bidder's reduced eligibility for the next 
round will be calculated by multiplying the bidder's current round 
activity by twenty-nineteenths (\20/19\).
    31. The Bureau requests comment on these activity requirements. 
Under this proposal, the Bureau will retain the discretion to change 
the activity requirements during the auction. For example, the Bureau 
could decide to add an additional stage with a higher activity 
requirement, not to transition to Stage Two if it believes the auction 
is progressing satisfactorily under the Stage One activity requirement, 
or to transition to Stage Two with an activity requirement that is 
higher or lower than the 95 percent proposed herein. If the Bureau 
exercises this discretion, it will alert bidders by announcement in the 
FCC Auction System.
iii. Activity Rule Waivers and Reducing Eligibility
    32. 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 license. 
Activity rule waivers, which can be either proactive or automatic, 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.
    33. 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.
    34. 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 reduced, a bidder will not be permitted to regain its lost bidding 
eligibility, even if the round has not yet closed.
    35. 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, 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, 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.
    36. Consistent with recent FCC auctions, the Bureau proposes that 
each bidder in Auction 95 be provided with three activity rule waivers 
that may be used at the bidder's discretion during the course of the 
auction. The Bureau seeks comment on this proposal.
iv. Reserve Price or Minimum Opening Bids
    37. The Commission has directed the Bureau to seek comment on the 
use of a minimum opening bid amount and/or reserve price prior to the 
start of each auction.
    38. 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.
    39. The Bureau proposes to establish minimum opening bid amounts 
for Auction 95. The Bureau believes that a minimum opening bid amount, 
which has been used in other auctions, is an effective bidding tool for 
accelerating the competitive bidding process. The Bureau does not 
propose to establish separate reserve prices for the licenses to be 
offered in Auction 95.
    40. As the Bureau did for the last auction of paging licenses, 
Auction 87, the Bureau proposes to set the minimum opening bid for each 
license available in Auction 95 at $500. The Bureau seeks comment on 
this proposal.
    41. If commenters believe that these minimum opening bid amounts 
will result in unsold licenses, 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. If 
requesting a lower minimum opening bid amount for a specific license 
offered in this auction, a commenter should justify the requested 
amount in detail. The Bureaus asks commenters to support their claims 
with valuation analyses and suggested amounts or formulas for reserve 
prices or minimum opening bids. In establishing minimum opening bid 
amounts, the Bureau particularly seeks comment on factors that could 
reasonably have an impact on valuation of the spectrum being auctioned, 
including levels of incumbency within these spectrum bands, the 
availability of technology to provide service, the size of the 
geographic service areas, issues of interference with other spectrum 
bands, and any other relevant factors. The Bureau has not attempted to 
adjust minimum opening bid amounts for licenses based on precise levels 
of incumbency within particular geographic areas, and has instead 
proposed low minimum opening bid amounts that are intended to reflect 
overall incumbency levels. The Bureau seeks comment on this approach, 
on whether the public interest would be served by having no minimum 
opening bid amount or reserve price.
v. Bid Amounts
    42. The Bureau proposes that, in each round, an eligible bidder 
will be able to place a bid on a given license using one or more pre-
defined bid amounts. Under this proposal, the FCC Auction System 
interface will list the acceptable bid amounts for each license. The 
Bureau proposes to calculate bid amounts.
a. Minimum Acceptable Bids
    43. The first of the acceptable bid amounts is called the minimum 
acceptable bid amount. The minimum acceptable bid amount for a license 
will be equal to its minimum opening bid amount until there is a 
provisionally winning bid for the license. After there is a 
provisionally winning bid for a license, the minimum acceptable bid 
amount will be a certain percentage higher. That is, the FCC will 
calculate the minimum acceptable bid amount by multiplying the 
provisionally winning bid amount times one plus the

[[Page 11184]]

minimum acceptable bid percentage. If, for example, the minimum 
acceptable bid percentage is 10 percent, the minimum acceptable bid 
amount will equal (provisionally winning bid amount) * (1.10), rounded. 
In the case of a license for which the provisionally winning bid has 
been withdrawn, the minimum acceptable bid amount will equal the second 
highest bid received for the license. The Bureau proposes to use a 
minimum acceptable bid percentage of 10 percent. This means that the 
minimum acceptable bid amount for a license will be approximately 10 
percent greater than the provisionally winning bid amount for the 
license.
b. Additional Bid Amounts
    44. The FCC will calculate any 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 Bureau will round the results using the 
Commission's standard rounding procedures for auctions. The Bureau 
proposes to use a bid increment percentage of 5 percent.
    45. For Auction 95 the Bureau proposes to start with eight 
additional bid amounts (for a total of nine bid amounts). The Bureau 
seeks comment on this proposal. If commenters believe the Bureau should 
start with fewer or no additional bid amounts, they should address the 
issue of additional bid amounts in light of particular circumstances of 
Auction 95, including the nature of the license inventory.
c. Bid Amount Changes
    46. The Bureau retains the discretion to change the minimum 
acceptable bid amounts, the minimum acceptable bid percentage, the bid 
increment percentage, and the number of acceptable bid amounts if the 
Bureau determines that circumstances so dictate. Further, the Bureau 
retains the discretion to do so on a license-by-license basis. The 
Bureau also retains the discretion to limit (a) the amount by which a 
minimum acceptable bid for a license 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 Bureau 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 license, the minimum acceptable bid amount would 
instead be capped at $10,000 above the provisionally winning bid. The 
Bureau seeks comment on the circumstances under which the Bureau should 
employ such a limit, factors it should consider when determining the 
dollar amount of the limit, and the tradeoffs in setting such a limit 
or changing other parameters, such as changing the minimum acceptable 
bid percentage, the bid increment percentage, or the number of 
acceptable bid amounts. If the Bureau exercises this discretion, it 
will alert bidders by announcement in the FCC Auction System during the 
auction.
    47. The Bureau seeks comment on these proposals. Commenters may 
wish to address the role of the minimum acceptable bids and the number 
of acceptable bid amounts in managing the pace of the auction and the 
tradeoffs in managing auction pace by changing the bidding schedule, 
activity requirements, or bid amounts, or by using other means.
vi. Provisionally Winning Bids
    48. 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 license based on the highest bid 
amount received. If identical high bid amounts are submitted on a 
license 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 license receives any bids in a 
subsequent round, the provisionally winning bid again will be 
determined by the highest bid amount received for the license.
    49. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the license at the close of 
a subsequent round, unless the provisionally winning bid is withdrawn. 
The Bureau reminds bidders that provisionally winning bids count toward 
activity for purposes of the activity rule.
vii. Bid Removal
    50. For Auction 95, the Bureau proposes 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 undo 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 Bureau seeks comment on this bid removal proposal.
viii. Bid Withdrawal
    51. The Bureau seeks comment on the following bid withdrawal 
procedures for Auction 95. 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.
    52. The Bureau has discretion in managing the auction to limit the 
number of withdrawals to prevent any bidding abuses. The Commission has 
stated that the Bureau should exercise its discretion, consider 
limiting the number of rounds in which bidders may withdraw bids, and 
prevent bidders from bidding on a particular market if the Bureau finds 
that a bidder is abusing the Commission's bid withdrawal procedures.
    53. For Auction 95, the Bureau proposes to limit each bidder to 
withdrawing provisionally winning bids in only one round during the 
course of the auction. To permit a bidder to withdraw bids in more than 
one round may encourage insincere bidding or the

[[Page 11185]]

use of withdrawals for anti-competitive purposes. The round in which 
withdrawals may be used will be at the bidder's discretion, and there 
is no limit on the number of provisionally winning bids that may be 
withdrawn during that round. Withdrawals must be in accordance with the 
Commission's rules, including the bid withdrawal payment provisions 
specified in 47 CFR 1.2104(g). The Bureau seeks comment on these bid 
withdrawal procedures. If commenters believe that each bidder should be 
allowed to withdraw provisionally winning bids in more than one round 
during the course of the auction, they should state how many bid 
withdrawal rounds they seek and explain what specific factors lead them 
to that conclusion. If commenters believe that bidders in this auction 
should not be permitted to withdraw any bids, they should discuss their 
reasoning for this suggestion.

C. Post-Auction Payments

i. Interim Withdrawal Payment Percentage
    54. The Bureau seeks comment on the appropriate percentage of a 
withdrawn bid that should be assessed as an interim withdrawal payment 
in the event that a final withdrawal payment cannot be determined at 
the close of the auction. In general, the Commission's rules provide 
that a bidder that withdraws a bid during an auction is subject to a 
withdrawal payment equal to the difference between the amount of the 
withdrawn bid and the amount of the winning bid in the same or 
subsequent auction(s). If a bid is withdrawn and no subsequent higher 
bid is placed and/or the license is not won in the same auction, the 
final withdrawal payment cannot be calculated until after the close of 
a subsequent auction in which a higher bid for the license (or the 
equivalent to the license) is placed or the license is won. When that 
final payment cannot yet be calculated, the bidder responsible for the 
withdrawn bid is assessed an interim bid withdrawal payment, which will 
be applied toward any final bid withdrawal payment that is ultimately 
assessed. 47 CFR 1.2104(g)(1) requires that the percentage of the 
withdrawn bid to be assessed as an interim bid withdrawal payment be 
between three percent and twenty percent and that it be set in advance 
of the auction.
    55. The Commission has determined that the level of the interim 
withdrawal payment in a particular auction will be based on the nature 
of the service and the inventory of the licenses being offered. The 
Commission has noted that it may impose a higher interim withdrawal 
payment percentage to deter the anti-competitive use of withdrawals 
when, for example, bidders likely will not need to aggregate the 
licenses being offered in the auction, such as when few licenses are 
offered that are on adjacent frequencies or in adjacent areas, or when 
there are few synergies to be captured by combining licenses. With 
respect to the licenses being offered in Auction 95, the service rules 
permit a variety of fixed, mobile, and paging services, though the 
opportunities for combining licenses on adjacent frequencies or in 
adjacent areas are more limited than has been the case in previous 
auctions of paging licenses. Balancing the potential need for bidders 
to use withdrawals to avoid winning incomplete combinations of licenses 
with the Bureau's interest in deterring undesirable strategic use of 
withdrawals, the Bureau proposes a percentage below the maximum twenty 
percent permitted under the current rules but above the three percent 
previously provided by the Commission's rules. Specifically, the Bureau 
proposes to establish an interim bid withdrawal payment of ten percent 
of the withdrawn bid for this auction. The Bureau seeks comment on this 
proposal.
ii. Additional Default Payment Percentage
    56. 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 95 bidder's winning 
bid and the amount of the winning bid the next time a license covering 
the same spectrum is won in an auction, plus an additional payment 
equal to a percentage of the defaulter's bid or of the subsequent 
winning bid, whichever is less.
    57. 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 licenses being offered.
    58. For Auction 95, the Bureau proposes to establish an additional 
default payment of ten percent. Defaults weaken the integrity of the 
auction process and may impede the deployment of service to the public, 
and an additional ten percent default payment will be more effective in 
deterring defaults than the three percent used in some earlier 
auctions. At the same time, the Bureau does not believe the detrimental 
effects of any defaults in Auction 95 are likely to be unusually great. 
The Bureau seeks comment on this proposal.

V. Ex Parte Rules

    59. 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 Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2013-03493 Filed 2-14-13; 8:45 am]
BILLING CODE 6712-01-P