[Federal Register Volume 79, Number 105 (Monday, June 2, 2014)]
[Notices]
[Pages 31327-31335]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-12824]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 14-78; DA 14-669]


Auction of Advanced Wireless Services Licenses Scheduled for 
November 13, 2014; Comment Sought on Competitive Bidding Procedures for 
Auction 97

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the auction of Advanced Wireless 
Services licenses in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 
MHz (AWS-3) bands scheduled to commence November 13, 2014. This 
document also seeks comment on competitive bidding procedures for 
Auction 97.

DATES: Comments are due on or before June 9, 2014, and reply comments 
are due on or before June 23, 2014. Bidding for licenses in Auction 97 
is scheduled to begin on November 13, 2014.

ADDRESSES: All filings in response to this notice must refer to AU 
Docket No. 14-78. The Wireless Telecommunications Bureau strongly 
encourages interested parties to file comments electronically, and 
requests 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 five 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. 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. Commercial overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service 
first-class, Express, and Priority mail must be addressed to 445 12th 
Street SW., Washington, DC 20554.
    People with Disabilities: Contact the FCC to request reasonable 
accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by 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: 
Valerie Barrish at (202) 418-0660; for general auction questions: Jeff 
Crooks at (202) 418-0660 or Linda Sanderson at (717) 338-2868. 
Broadband Division, WTB: For AWS-3 service rules questions: Nancy 
Zaczek (legal) or Janet Young (technical) at (202) 418-2487.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 97 Comment 
Public Notice released on May 19, 2014. The complete text of the 
Auction 97 Comment Public Notice, including all attachments 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 97 Comment Public Notice and its attachments, as 
well as 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 14-669. The Auction 97 Comment Public Notice and related documents 
also are available on the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/97/, or by using the search function for AU 
Docket No. 14-78 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 1,614 licenses in the 1695-1710 MHz, 1755-1780 MHz, and 
2155-2180 MHz bands (the AWS-3 bands), and seeks comment on the 
procedures to be used for this auction. This auction, which is 
designated as Auction 97, is scheduled to commence on November 13, 
2014.
    2. The Commission is offering the licenses in Auction 97 pursuant 
to the Middle Class Tax Relief and Job Creation Act of 2012 (Spectrum 
Act). The Spectrum Act requires, among other things, that the 
Commission allocate for commercial use and license spectrum in certain 
specified frequency bands using a system of competitive bidding no 
later than February 2015. In February 2013, the National 
Telecommunications and Information Administration (NTIA) identified the 
1695-1710 MHz band for reallocation from Federal use to non-Federal use 
in satisfaction of its Spectrum Act obligation. In the AWS-3 Report and 
Order, FCC 14-31, the Commission identified the 1755-1780 MHz band in 
satisfaction of the Spectrum Act's requirement that it identify fifteen 
megahertz of contiguous spectrum in addition to the bands specifically 
identified in the Spectrum Act.

II. Licenses To Be Offered in Auction 97

A. Description of Licenses

    3. The 65 megahertz of AWS-3 spectrum available in Auction 97 will 
be licensed on a geographic area basis. Of the 1,614 licenses offered 
in Auction 97, 880 will be Economic Area (EA) licenses and 734 will be 
Cellular Market Area (CMA) licenses. The AWS-3 frequencies will be 
licensed in five and ten megahertz blocks, with each license having a 
total bandwidth of five, ten, or twenty megahertz.
    4. The 1695-1710 MHz band will be licensed in an unpaired 
configuration for low-power mobile transmit (i.e.,

[[Page 31328]]

uplink) operations. The 1755-1780 MHz band will be licensed paired with 
the 2155-2180 MHz band, with the 1755-1780 MHz band authorized for low-
power mobile transmit (i.e., uplink) operations and the 2155-2180 MHz 
band authorized for base station and fixed (i.e., downlink) operations. 
A complete list of the licenses offered in Auction 97 is available in 
Attachment A to the Auction 97 Comment Public Notice, available at 
http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=97.

B. Incumbency Issues

    5. In the AWS-3 Report and Order, the Commission allocated the 
1695-1710 MHz and 1755-1780 MHz bands for commercial use. Licenses in 
1695-1710 MHz band are being made available on a shared basis with 
incumbent Federal meteorological-satellite (MetSat) data users. 
Licenses in 1755-1780 MHz band are being made available on a shared 
basis with a limited number of Federal incumbents indefinitely, while 
many of the Federal systems will over time relocate out of the band. 
Operations in the 1695-1710 MHz and 1755-1780 MHz bands are subject to 
successful coordination with Federal incumbents in the applicable 
Protection Zones adopted by the Commission in the AWS-3 Report and 
Order. Federal systems in the 1695-1710 MHz and 1755-1780 MHz bands 
that are located in these established Protection Zones will operate on 
a co-equal, primary basis with commercial AWS licensees. Licenses to 
operate in the 1695-1710 MHz and 1755-1780 MHz bands are subject to the 
condition that the licensee must not cause harmful interference to an 
incumbent Federal entity relocating from these bands under an approved 
Transition Plan. This condition remains in effect until NTIA terminates 
the applicable authorization of the incumbent Federal entity. The 2155-
2180 MHz band is already allocated for exclusive non-Federal, 
commercial use. Although there are no Federal users currently licensed 
or operating in this band, there are non-Federal incumbent Fixed 
Microwave and Broadband Radio Service licensees in the band. AWS-3 
licensees will have to protect or relocate and/or share in the cost of 
relocating such incumbent licensees.

C. Commercial Spectrum Enhancement Act/Spectrum Act Requirements

    6. The spectrum in the 1695-1710 MHz and 1755-1780 MHz bands is 
covered by a Congressional mandate that requires that auction proceeds 
fund the estimated relocation or sharing costs of incumbent Federal 
entities. In 2004, the Commercial Spectrum Enhancement Act (CSEA) 
established a Spectrum Relocation Fund (SRF) to reimburse eligible 
Federal agencies operating on certain frequencies that have been 
reallocated from Federal to non-Federal use for the cost of relocating 
their operations. The SRF is funded with cash proceeds attributable to 
``eligible frequencies'' in an auction of licenses involving such 
frequencies. The CSEA requires the NTIA to notify the Commission at 
least six months in advance of a scheduled auction of eligible 
frequencies of eligible Federal entities' estimated relocation or 
sharing costs and the timelines for such relocation or sharing.
    7. On May 13, 2014, pursuant to the CSEA, the NTIA notified the 
Commission of the estimated relocation or sharing costs and relocation 
timelines for eligible Federal entities assigned to frequencies in the 
1695-1710 MHz and 1755-1780 MHz bands. The NTIA reported that the total 
estimated relocation or sharing costs for the 1695-1710 MHz band equal 
$527,069,000, and that the total estimated relocation or sharing costs 
for the 1755-1780 MHz band equal $4,575,603,000. This information can 
be found at http://www.ntia.doc.gov/category/aws-3-transition.
    8. In addition to requiring that specified auction proceeds be 
deposited in the SRF, the CSEA, as amended by the Spectrum Act, 
requires that the total cash proceeds from any auction of eligible 
frequencies must equal at least 110 percent of the estimated relocation 
or sharing costs provided to the Commission by NTIA, and prohibits the 
Commission from concluding any auction of eligible frequencies that 
falls short of this revenue requirement. The Commission previously 
determined that ``total cash proceeds,'' for purposes of meeting the 
CSEA's revenue requirement, means winning bids net of any applicable 
bidding credit discounts at the end of bidding. Thus, whether CSEA's 
revenue requirements regarding eligible frequencies have been met at 
the end of an auction involving such frequencies depends upon whether 
winning bids that are attributable to such spectrum, net of any 
applicable bidding credit discounts, equal at least 110 percent of 
estimated relocation costs. The Commission also previously modified its 
reserve price rule pursuant to the CSEA to ensure that the CSEA's 
revenue requirement would be met.

III. Due Diligence

    9. 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 Commission makes no representations or 
warranties about the use of this spectrum for particular services. Each 
applicant should be aware that a Commission auction represents an 
opportunity to become a Commission licensee, subject to certain 
conditions and regulations. A Commission auction does not constitute an 
endorsement by the Commission of any particular service, technology, or 
product, nor does a Commission license constitute a guarantee of 
business success.
    10. 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 97 license, it will be able to build and operate 
facilities that will fully comply with all applicable technical and 
regulatory 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.
    11. The Bureau strongly encourages each applicant to conduct its 
own research prior to Auction 97 in order to determine the existence of 
pending administrative, rulemaking, or judicial proceedings that might 
affect its decisions regarding participation in the auction.
    12. The Bureau strongly encourages participants in Auction 97 to 
continue such research throughout the auction. The due diligence 
considerations mentioned in the Auction 97 Comment Public Notice do not 
constitute 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.
    13. In addition to the foregoing due diligence considerations, 
which the Bureau encourages in all auctions, the

[[Page 31329]]

Bureau calls particular attention in this auction to the unique 
requirements presented by the occupancy of some of the available 
frequencies by incumbent Federal users. AWS-3 licensees can expect to 
share portions of the AWS-3 bands with various incumbent Federal users 
for a period of time as such users transition out of the bands, which 
may vary by geography and frequency. Moreover, some Federal users will 
remain in the AWS-3 bands, with shared use continuing indefinitely. The 
Commission and the NTIA intend to release additional information 
regarding the extent of sharing in the AWS-3 bands and the methods of 
coordination between commercial and Federal users. Additionally, the 
CSEA, as amended by the Spectrum Act, stipulates that Federal agencies 
that will receive reimbursement for their costs in relocating their 
operations from, or sharing, the ``eligible frequencies'' offered in 
this auction based on their approved transition plans, which the NTIA 
will make available to the public. The Bureau expects that all of this 
information will be material to an applicant's potential participation 
in Auction 97. Therefore, the Bureau strongly encourages each applicant 
to closely follow releases from the Commission and the NTIA concerning 
these issues and to carefully consider the technical and economic 
implications for commercial use of the AWS-3 bands.

IV. Bureau Seeks Comment on Auction Procedures

    14. The Commission directed the Bureau, under its existing 
delegated authority, to seek comment on a variety of auction-specific 
procedures prior to the start of each auction. We therefore seek 
comment on the following issues relating to the conduct of Auction 97.

A. Auction Design

i. Simultaneous Multiple Round Auction
    15. The Bureau proposes to conduct Auction 97 using a simultaneous 
multiple-round (SMR) auction format. An SMR auction offers every 
license for bid at the same time and consists of successive bidding 
rounds in which eligible bidders may place bids. Typically, bidding 
remains open on all licenses until bidding stops on every license. The 
Bureau seeks comment on this proposal.
ii. Anonymous Bidding
    16. Consistent with past practice, the Bureau proposes to adopt 
procedures for limited information disclosure or ``anonymous bidding'' 
for Auction 97. 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.
    17. Under these proposed limited information procedures, the amount 
of every bid placed and whether a bid was withdrawn (if withdrawals are 
permitted) would be disclosed after the close of every round, but the 
identities of bidders placing specific bids or withdrawals (if 
permitted) and the net bid amounts (reflecting bidding credits) would 
not be disclosed until after the close of the auction.
    18. 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 FCC Auction 
System.
    19. Moreover, for the purpose of complying with 47 CFR 1.2105(c), 
which prohibits 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 with a short-form 
application on file for participation in Auction 97 whether applicants 
with short-form applications to participate in a pending auction, 
including but not limited to Auction 97, have applied for licenses in 
any of the same or overlapping geographic areas as that applicant.
    20. After the close of bidding, bidders' license selections, 
upfront payment amounts, bidding eligibility, bids, and other bidding-
related actions would be made publicly available.
    21. The Bureau seeks comment on the details of its proposal for 
implementing anonymous bidding in Auction 97. The Bureau also seeks 
comment on alternatives to the use of anonymous bidding procedures for 
Auction 97. When the Commission originally 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 in this auction 
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 in Auction 97 until after the auction, they 
should explain their reasoning.
iii. Acknowledgement for Auction 97 Applicants
    22. There are Federal incumbent users in the 1695-1710 MHz and 
1755-1780 MHz bands, and the Commission adopted rules in the AWS-3 
Report and Order to address commercial operations in these bands in 
light of the temporary and indefinite sharing of the bands by Federal 
incumbent users and commercial licensees, including a requirement that 
commercial licensees operate on a co-equal, primary operations with 
Federal systems within specified geographic zones, and a requirement 
that licensees in the 1755-1780 MHz band accept interference from 
Federal systems as long as such systems remain in the band. To 
implement these rules, the Bureau proposes to require an Auction 97 
applicant to submit with its short-form application a signed statement 
acknowledging that the applicant's operations in the 1755-1780 MHz band 
may be subject to interference from Federal systems in certain 
geographic zones, that the applicant must accept interference from such 
Federal systems in those zones, and that the applicant has considered 
these risks before submitting any bids for applicable licenses in 
Auction 97. The Bureau seeks comment on this proposal.

B. Auction Structure

i. Bidding Rounds
    23. Auction 97 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.
    24. The Commission will conduct Auction 97 over the Internet using 
the FCC Auction System. Bidders will also have the option of placing 
bids by telephone through a dedicated, toll-free Auction Bidder Line. 
The toll-free telephone number for the Auction Bidder Line will be 
provided to

[[Page 31330]]

qualified bidders prior to the start of the auction.
    25. 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 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.
ii. Stopping Rule
    26. The Bureau has discretion to establish stopping rules before or 
during multiple round auctions in order to complete the auction within 
a reasonable time. The Bureau proposes to employ a simultaneous 
stopping rule approach in Auction 97, which means all licenses will 
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 (if withdrawals are 
permitted). Thus, unless the Bureau announces alternative stopping 
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, regardless of whether bids are placed on 
individual licenses of licenses. Consequently, it is not possible to 
determine in advance how long Auction 97 will last.
    27. The Bureau proposes to retain the discretion to exercise any of 
the following options during Auction 97: (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-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 that the auction will end after a specified number 
of additional rounds (special stopping rule). If the Bureau invokes 
this special stopping rule, it will accept bids in the specified final 
round(s), after which the auction will close; and (e) Keep the auction 
open even if no bidder places any new bids, applies a waiver, or 
withdraws (if withdrawals are permitted) 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.
    28. 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 by, for example, 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.
iii. Information Relating to Auction Delay, Suspension, or Cancellation
    29. The Bureau proposes that it may delay, suspend, or cancel 
Auction 97 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. 
Additionally, the CSEA requires the Commission to cancel an auction of 
``eligible frequencies'' if the total cash proceeds attributable to 
those frequencies do not meet CSEA's revenue requirement. 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 Bureau 
to delay or suspend the auction. The Bureau emphasizes that it will 
exercise this authority solely at its discretion, and note that the 
exercise of its authority in this regard is not intended to be a 
substitute for situations in which bidders may wish to apply their 
activity rule waivers. The Bureau seeks comment on this proposal.

C. Auction Procedures

i. Upfront Payments and Bidding Eligibility
    30. 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. An upfront payment is a 
refundable deposit made by each bidder to establish its 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 97, the Bureau 
proposes to make the upfront payments equal to approximately half the 
proposed minimum opening bids. The proposed upfront payments are 
similar to those used in the recent auction of H Block licenses in the 
1915-1920 MHz and 1995-2000 MHz bands. The upfront payments for each 
license are set forth in Attachment A to the Auction 97 Comment Public 
Notice. The Bureau seeks comment on this proposal.
    31. 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 proposed for the license. The 
specific bidding units for each license are set forth in Attachment A 
to the Auction 97 Comment Public Notice. The number of bidding units 
for a given license is fixed and does not change during the auction as 
prices change. A bidder's upfront payment is not attributed to specific 
licenses of licenses. Rather, a bidder may place bids on any 
combination of the licenses it selected on its short-form

[[Page 31331]]

application (FCC Form 175), 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 
seeks comment on these proposals.
ii. Activity Rule
    32. 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.
    33. 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 bidding units associated with licenses on which there are 
new bids, the number of new bids, and the increase in revenue. The 
Bureau seeks comment on these proposals.
    34. 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 bidding 
units associated with 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 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).
    35. The Bureau seeks 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
    36. 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 bid. 
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.
    37. 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.
    38. 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 
described above. 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.
    39. 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 (if 
permitted), 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.
    40. Consistent with recent Commission auctions, the Bureau proposes 
that each bidder in Auction 97 be provided with a total of three 
activity rule waivers that may be used as at the bidder's discretion 
during the course of the auction. The Bureau seeks comment on this 
proposal.
iv. Reserve Price and Minimum Opening Bids
    41. 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. Normally, a reserve price is an absolute minimum 
price below which an item or items will not be sold in a given auction. 
If a reserve price is utilized, the specific amount of the reserve 
price may be disclosed or undisclosed. A minimum opening bid, on the 
other hand, is the minimum bid

[[Page 31332]]

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.
    42. Among other factors the Bureau must consider in deciding 
whether to employ either or both of these mechanisms is the amount of 
spectrum being auctioned, levels of incumbency, the availability of 
technology to provide service, the size of the geographic service 
areas, the extent of interference with other spectrum bands, and any 
other relevant factors that could have an impact on the spectrum being 
auctioned.
a. Reserve Price
    43. The Commission is statutorily obliged to consider and balance a 
variety of public interests and objectives when establishing service 
rules and licensing procedures with respect to the public spectrum 
resource. These objectives include promoting recovery for the public a 
portion of the value of that resource. Certain of the frequencies in 
the AWS-3 bands are ``eligible frequencies'' under the CSEA, and the 
CSEA requires that auction proceeds fund the estimated relocation or 
sharing costs of incumbent federal entities operating on these 
frequencies. In view of this, the Bureau will establish reserve prices 
for the AWS-3 licenses offered in Auction 97.
    44. The CSEA requires that the total cash proceeds attributable to 
``eligible frequencies'' be at least 110 percent of the total estimated 
relocation or sharing costs provided to the Commission pursuant to the 
CSEA before the Commission may conclude an auction involving such 
frequencies. If this condition is not met, the CSEA requires the 
Commission to cancel the auction. For purposes of determining whether 
the CSEA's revenue requirement has been met, the Commission has 
determined that ``total cash proceeds'' means winning bids net of any 
applicable bidding credit discounts at the end of bidding (e.g., 
exclusive of any Tribal lands bidding credit).
    45. The NTIA has notified the Commission that the total estimated 
relocation or sharing costs for the 1695-1710 MHz band equal 
$527,069,000, and that the total estimated relocation or sharing costs 
for the 1755-1780 MHz band equal $4,575,603,000. Accordingly, the 
Bureau proposes one aggregate reserve price for the 1695-1710 MHz band 
and a separate aggregate reserve price for the paired 1755-1780/2155-
2180 MHz band.
    46. The Bureau proposes to establish an aggregate reserve price of 
$579,775,900 for the licenses in the 1695-1710 MHz band. This aggregate 
reserve price is 110 percent of total estimated relocation or sharing 
costs of $527,069,000 provided by the NTIA for this band and, 
therefore, the minimum reserve price required by the CSEA. Given that 
the 1695-1710 MHz band consists entirely of ``eligible frequencies,'' 
the Bureau proposes that the winning bid for each license in this band, 
net of any applicable bidding credit discounts at the end of bidding 
(e.g., exclusive of any Tribal lands bidding credit), will be counted 
toward meeting the reserve price for the band. Thus, the aggregate 
reserve price will be met if the total winning bids for the licenses in 
the 1695-1710 MHz band, net of any applicable bidding credit discounts 
at the end of bidding (e.g., exclusive of any Tribal lands bidding 
credit), is at least $579,775,900.
    47. The 1755-1780 MHz band will be licensed paired with the 2155-
2180 MHz band. The lower half of the frequencies in each paired 
license, i.e., those in the 1755-1780 MHz band, are ``eligible 
frequencies'' and are thus subject to CSEA requirements. To meet CSEA's 
requirements, the Bureau proposes to establish an aggregate reserve 
price of $5,033,163,300 for the 1755-1780 MHz frequencies. This 
aggregate reserve price is 110 percent of total estimated relocation or 
sharing costs of $4,575,603,000 for the 1755-1780 MHz band provided by 
the NTIA and, therefore, the minimum reserve price required by CSEA. 
Because these frequencies are one half of the frequencies authorized 
for use by each of the 1755-1780/2155-2180 MHz paired licenses, the 
Bureau proposes that one-half of each winning bid for each of the 
paired 1755-1780/2155-2180 MHz licenses, net of any applicable bidding 
credit discounts at the end of bidding, will be counted toward meeting 
the reserve price. The aggregate reserve price will be met if one half 
of the total winning bids for the paired 1755-1780/2155-2180 MHz 
licenses in, net of any applicable bidding credit discounts at the end 
of bidding (e.g., exclusive of any Tribal lands bidding credit), is at 
least $5,033,163,300. Therefore, the winning ``net'' bids for the 
paired 1755-1780/2155-2180 MHz licenses must be at least twice that 
amount, or $10,066,326,600, in order for the Commission to conclude the 
auction.
    48. The Bureau seeks comment on its proposed reserve prices for 
Auction 97 and its proposals for implementing them. The Bureau 
encourages commenters to address any additional specific issues related 
to the use of reserve prices. The Bureau asks that commenters describe 
in detail the specific factors that lead them to their conclusions.
    49. In light of the proposal to adopt procedures for limited 
information disclosure for Auction 97, if information regarding net bid 
amounts is not provided during the auction, the Bureau proposes to 
issue an announcement in the FCC Auction System, viewable by bidders 
and the general public, stating that a reserve price has been met 
immediately following the first round in which that occurs. However, 
due to factors such as bid withdrawals and the effect of bidding 
credits, an announcement that the reserve price has been met following 
a round of the auction does not guarantee that the reserve price will 
continue to be met. Accordingly, the Bureau will make a further 
announcement in the FCC Auction System after any round in which the 
reserve price status changes. The Bureau seeks comment this proposal.
b. Minimum Opening Bids
    50. The Bureau proposes to establish minimum opening bid amounts 
for Auction 97. The Bureau believes a minimum opening bid amount, which 
has been used in other auctions, is an effective bidding tool for 
accelerating the competitive bidding process. The Bureau proposes 
minimum opening bids that should accelerate the progress of the auction 
toward meeting (1) the reserve prices established to meet CSEA 
requirements and (2) the Spectrum Act deadline for licensing identified 
frequencies. The proposed minimum opening bids are higher than the 
proposed upfront payments so that the competitive bidding process can 
be accelerated without increasing the cost of eligibility.
    51. The Bureau proposes to calculate minimum opening bid amounts 
for Auction 97 on a license-by-license basis using a formula based on 
bandwidth and license area population, similar to its approach in many 
previous spectrum auctions. The Bureau proposes to use a calculation 
based on $0.15 per megahertz of bandwidth per population (per ``MHz-
pop'') for paired licenses and $0.05 per MHz-pop for unpaired licenses, 
adjusted for past geographic variations. Specifically, the Bureau 
proposes to incorporate pricing information from previous auctions to 
adjust the minimum opening bid calculations based on an index of 
relative winning bid amounts for licenses in each CMA and EA in

[[Page 31333]]

Auctions 66, 73, and 96, subject to a minimum of $0.01 per MHz-pop. 
This modification results in amounts ranging from $0.01 per MHz-pop to 
$0.53 per MHz-pop. The Bureau further proposes a minimum of $2,500 per 
license. The Bureau proposes to set the minimum opening bid amounts for 
the licenses covering the Gulf of Mexico at $2,000 per megahertz.
    52. The proposed minimum opening bid amount for each AWS-3 license 
available in Auction 97, calculated pursuant to these procedures is set 
forth in Attachment A to the Auction 97 Comment Public Notice.
    53. The Bureau seeks comment on its proposals concerning minimum 
opening bids. If commenters believe that these minimum opening bid 
amounts will result in unsold licenses, or are not reasonable amounts, 
they should explain why this is so and comment on the desirability of 
an alternative approach. If a commenter requests an alternative 
approach for a specific frequency block or a lower minimum opening bid 
amount for a specific license, it should justify the requested change 
in detail. If commenters disagree with the Bureau's proposed use of 
$0.15 per MHz-pop and $0.05 per MHz-pop, its approach to tailoring 
minimum opening bid amounts to account for relative prices among the 
CMAs and EAs in past auctions, or its selection of which past results 
to consider, the Bureau asks commenters to support their claims with 
valuation analyses and suggested minimum opening bid amount levels or 
formulas.
    54. In establishing minimum opening bid amounts, the Bureau 
particularly seeks comment on factors that could reasonably have an 
impact on valuation of the licenses being auctioned, including the 
amount of spectrum being auctioned, levels of incumbency, the 
availability of technology to provide service, the size of the service 
areas, the size of the geographic service areas, issues of interference 
with other spectrum bands and any other relevant factors. The Bureau 
also seeks comment on whether the public interest would be served by 
having no minimum opening bid amount.
    55. Commenters may also wish to address the general role of minimum 
opening bids in managing the pace of the auction. For example, 
commenters could compare using minimum opening bids--e.g., by setting 
higher minimum opening bids to reduce the number of rounds it takes 
licenses to reach their final prices--to other means of controlling 
auction pace, such as changes to bidding schedules or activity 
requirements.
v. Bid Amounts
    56. 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 in the following manner.
a. Minimum Acceptable Bids
    57. The first of the acceptable bid amounts is called the minimum 
acceptable bid amount. The minimum acceptable bid amount for a license 
will be equal to its minimum opening bid amount until there is a 
provisionally winning bid on the license. The Bureau proposes to 
calculate minimum acceptable bids based on provisionally winning bids 
and an activity-based formula.
    58. After there is a provisionally winning bid for a license, the 
minimum acceptable bid amount for that license will be equal to the 
amount of the provisionally winning bid plus a percentage of that bid 
amount calculated using an activity-based formula. In general, the 
percentage will be higher for a license receiving many bids than for a 
license receiving few bids. 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.
    59. The percentage of the provisionally winning bid used to 
establish the minimum acceptable bid amount (``the additional 
percentage'') is calculated based on an activity index at the end of 
each round. The activity index is a weighted average of (a) the number 
of distinct bidders placing a bid on the license in that round, and (b) 
the activity index from the prior round. The additional percentage is 
determined as one plus the activity index times a minimum percentage 
amount, with the result not to exceed a given maximum. The additional 
percentage is then multiplied by the provisionally winning bid amount 
to obtain the minimum acceptable bid for the next round. The Bureau 
proposes initially to set the weighting factor at 0.5, the minimum 
percentage at 0.1 (10%), and the maximum percentage at 0.3 (30%). 
Hence, at these initial settings, the minimum acceptable bid for a 
license will be between ten percent and thirty percent higher than the 
provisionally winning bid, depending upon the bidding activity for the 
license. Equations and examples are shown in Attachment B to the 
Auction 97 Comment Public Notice. The Bureau seeks comment on whether 
to use this activity-based formula or a different approach.
b. Additional Bid Amounts
    60. The Bureau proposes to calculate any additional bid amounts 
using the minimum acceptable bid amount and a bid increment 
percentage--more specifically, by multiplying the minimum acceptable 
bid by one plus successively higher multiples of the bid increment 
percentage. If, for example, the bid increment percentage is 5 percent, 
the calculation of the first additional acceptable bid amount 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 initially to set the bid increment 
percentage at 5 percent.
    61. For Auction 97, the Bureau proposes to begin the auction with 
nine acceptable bid amounts per license (the minimum acceptable bid 
amount and eight additional bid amounts).
c. Bid Amount Changes
    62. The Bureau retains the discretion to change the minimum 
acceptable bid amounts, the additional bid amounts, the number of 
acceptable bid amounts, and the parameters of the formulas used to 
calculate minimum acceptable bid amounts and additional 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 million limit on increases in minimum acceptable bid amounts over 
provisionally winning bids. Thus, if the activity-based formula 
calculates a minimum acceptable bid amount that is $20 million higher 
than the provisionally winning bid on a license, the minimum acceptable 
bid amount would instead be capped at $10 million above the 
provisionally winning bid.

[[Page 31334]]

The Bureau seeks comment on the circumstances under which it 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.
    63. The Bureau seeks comment on these proposals. If commenters 
disagree with the proposal to begin the auction with nine acceptable 
bid amounts per license, they should suggest an alternative number of 
acceptable bid amounts to use at the beginning of the auction and an 
alternative number to use later in the auction. 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
    64. 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 for the license. These bids become the provisionally 
winning bids for the round.
    65. 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.
    66. The set of provisionally winning bids is determined after every 
round in which new bids are submitted. The provisionally winning bids 
at the end of the auction become winning bids, provided that any 
applicable reserve prices have been met. The Bureau reminds bidders 
that provisionally winning bids count toward activity for purposes of 
the activity rule.
vii. Bid Removal
    67. For Auction 97, 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. Once a round closes, a bidder may no 
longer remove a bid. The Bureau seeks comment on this bid removal 
proposal.
viii. Bid Withdrawal
    68. 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. The Commission has explained that 
allowing bid withdrawals facilitates efficient aggregation of licenses 
and the pursuit of backup strategies as information becomes available 
during the course of an auction, but has recognized that in some 
instances, bidders may seek to withdraw bids for improper reasons. The 
Bureau therefore has discretion in managing the auction to limit the 
number of withdrawals to prevent any bidding abuses. Applying this 
reasoning to Auction 97, the Bureau proposes to allow each bidder to 
withdraw provisionally winning bids in no more than two rounds during 
the course of the auction. To permit a bidder to withdraw bids in more 
than two rounds may encourage insincere bidding or the use of 
withdrawals for anti-competitive purposes. The two rounds in which a 
bidder may withdraw provisionally winning bids will be at the bidder's 
discretion, and there is no limit on the number of provisionally 
winning bids that a bidder may withdraw in either of the rounds in 
which it withdraws bids. Withdrawals must be in accordance with the 
Commission's rules, including the bid withdrawal payment provisions 
specified in 47 CFR 1.2104(g).
    69. The Bureau seeks comment on this proposal. If commenters 
disagree with this proposal, the Bureau asks them to support their 
arguments by taking into account the licenses available, the impact on 
auction dynamics and the pricing mechanism, and the effects on the 
bidding strategies of other bidders.

D. Post-Auction Payments

i. Interim Withdrawal Payment Percentage
    70. 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.
    71. 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 AWS-3 licenses being offered in Auction 97, the service 
rules permit a wide variety of advanced services, some of which may 
best be offered by combining licenses on adjacent frequencies or in 
adjacent areas, and the licenses will be offered under different 
geographic licensing schemes and bandwidth sizes. 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

[[Page 31335]]

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
    72. 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 97 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.
    73. The Commission's rules provide that, in advance of each 
auction, it will establish a percentage between three 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 vary based on the nature of the service 
and the inventory of the licenses being offered.
    74. Defaults weaken the integrity of the auction process and may 
impede the deployment of service to the public, however, the Bureau 
does not believe the detrimental effects of any defaults in Auction 97 
are likely to be unusually great. Balancing these considerations, for 
Auction 97, the Bureau proposes to establish an additional default 
payment of fifteen percent of the applicable bid. The Bureau seeks 
comment on this proposal.

V. Ex Parte Rules

    75. 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. 2014-12824 Filed 5-30-14; 8:45 am]
BILLING CODE 6712-01-P