[Federal Register Volume 83, Number 30 (Tuesday, February 13, 2018)]
[Proposed Rules]
[Pages 6141-6148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-03025]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[AU Docket No. 17-143; DA 18-91]


Auction of Cross-Service FM Translator Construction Permits 
Scheduled for May 15, 2018; Comment Sought on Competitive Bidding 
Procedures for Auction 99

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: The Wireless Telecommunications and Media Bureaus (the 
Bureaus) announce an auction of certain cross-service FM translator 
construction permits. This document also seeks comment on competitive 
bidding procedures and proposed minimum opening bids for Auction 99.

DATES: Comments are due on or before February 13, 2018, and reply 
comments are due on or before February 21, 2018. Bidding for FM 
translator construction permits in Auction 99 is scheduled to begin on 
May 15, 2018.

ADDRESSES: Interested parties may submit comments in response to the 
Auction 99 Comment Public Notice by any of the following methods:
     FCC's website: Federal Communication Commission's 
Electronic Comment Filing System (ECFS): http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.
     Mail: FCC Headquarters, 445 12th Street SW, Room TW-A325, 
Washington, DC 20554.
     People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large print, 
electronic files, or audio format), send an email to [email protected] or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (TTY).
    For detailed instructions for submitting comments, see the 
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For auction legal questions, Lynne 
Milne in the Wireless Telecommunications Bureau's Auctions and Spectrum 
Access Division at (202) 418-0660. For general auction questions, the 
Auctions Hotline at (717) 338-2868. For FM translator service 
questions, James Bradshaw, Lisa Scanlan or Tom Nessinger in the Media 
Bureau's Audio Division at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 99 Comment 
Public Notice in AU Docket No. 17-143, DA 18-91, released on January 
31, 2018. The complete text of this document, including its attachment, 
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 99 
Comment Public Notice and related documents also are available on the 
internet at the Commission's website: http://wireless.fcc.gov/auctions/99/, or by using the search function for AU Docket No. 17-143 on the 
Commission's ECFS web page at http://www.fcc.gov/cgb/ecfs/.
    All filings in response to the Auction 99 Comment Public Notice 
must refer to AU Docket No.17-143. The Bureaus strongly encourage 
interested parties to file comments electronically, and request that an 
additional copy of all comments and reply comments be submitted 
electronically to the following address: [email protected].
    Electronic Filers: Comments may be filed electronically using the 
internet by accessing ECFS: http://apps.fcc.gov/ecfs. Follow the 
instructions for submitting comments.
    Paper Filers: Parties who choose to file by paper must file an 
original and one copy 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, Office of the Secretary, Federal 
Communications Commission (FCC). All hand-delivered or messenger-
delivered paper filings for the Commission's Secretary must be 
delivered to the FCC Headquarters at 445 12th Street SW, Room TW-A325, 
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. 
Eastern Time (ET). All hand deliveries must be held together with 
rubber bands or fasteners. Any envelope or box 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 
9050 Junction Drive, Annapolis Junction, MD 20701. U.S. Postal Service 
first-class, Express, and Priority mail must be addressed to 445 12th 
Street SW, Washington, DC 20554.

I. Introduction

    1. On June 1, 2017, the Bureaus announced an auction filing window 
for AM broadcasters seeking new cross-service FM translator station

[[Page 6142]]

construction permits. By this Public Notice, the Bureaus announce an 
auction of certain cross-service FM translator construction permits and 
seek comment on the procedures to be used for this auction, designated 
as Auction 99. Bidding in this auction is scheduled to commence on May 
15, 2018. Auction 99 will be a closed auction: Only those entities 
listed in Attachment A of the Auction 99 Comment Public Notice will be 
eligible to participate further in Auction 99.

II. Construction Permits in Auction 99

    2. Auction 99 will resolve mutually exclusive (MX) applications for 
construction permits for commercial cross-service FM translator 
stations. Competitive bidding will be used to select winning bidders 
for up to 12 new cross-service FM translator permits. A list of the 
locations and channels of these proposed stations is included in 
Attachment A of the Auction 99 Comment Public Notice. Attachment A also 
listed a proposed minimum opening bid and a proposed upfront payment 
amount for each construction permit.
    3. An applicant listed in Attachment A may become qualified to bid 
only if it meets the additional filing, qualification, payment and 
other applicable rules, policies and procedures. Each qualified bidder 
may become eligible to bid on only those construction permits specified 
for that applicant in Attachment A to the Auction 99 Comment Public 
Notice. Each of the engineering proposals within each MX group are 
directly mutually exclusive with one another; therefore, no more than 
one construction permit will be awarded for each MX group identified in 
Attachment A. Under the Commission's established precedent, because 
mutual exclusivity exists for auction purposes, once mutually exclusive 
applications are accepted, even if only one applicant for a particular 
construction permit becomes qualified to bid, that applicant must 
submit a bid in order to be eligible to obtain that construction 
permit.

III. Processing of Short-Form Applications (FCC FORM 175) and Minor 
Corrections

A. Initial Review of FCC Form 175

    4. The Bureaus will process all timely submitted Forms 175 to 
determine which are complete, and subsequently will issue a public 
notice identifying those that are complete and those that are 
incomplete or deficient because of minor defects that may be corrected. 
That public notice will provide instructions for applicants to make 
only minor corrections to their Forms 175. The public notice will 
include a deadline for resubmitting corrected Forms 175.

B. Updates to Auction Applications Outside of Filing Windows

    5. Section 1.65 of the Commission's rules requires an applicant to 
maintain the accuracy and completeness of information furnished in its 
pending application and to notify the Commission of any substantial 
change that may be of decisional significance to that application. 
Thus, section 1.65 requires an auction applicant to notify the 
Commission of any substantial change to the information or 
certifications included in its pending short-form application. See also 
47 CFR 1.2105(b)(4), (c).
    6. If information needs to be submitted pursuant to sections 1.65 
or 1.2105 outside of the upcoming resubmission window in Auction 99, 
the applicant must submit a letter briefly summarizing the changes by 
email to [email protected]. Such email must include a subject or 
caption referring to Auction 99 and the name of the applicant. If any 
information needs to be submitted during the upcoming resubmission 
window pursuant to sections 1.65 or 1.2105, that information must be 
submitted within an applicant's Form 175.

IV. Bureau Seeks Comment on Procedures for Auction Applications

    7. The Bureaus seek comment on whether our application of certain 
aspects of the current rules governing auctions should be modified to 
implement our prior decision to allow eligible AM licensees having any 
of the same controlling interests in common to file separate Forms 175, 
rather than a single Form 175, as is currently required. In recognition 
of the specific eligibility provisions and filing procedures for this 
auction window, the Bureaus waived, for Auction 99, section 
1.2105(a)(3)'s prohibition on the filing of more than one Form 175 in 
an auction by entities with any of the same controlling interests. 
Thus, the Bureaus permitted entities controlled by the same individual 
or set of individuals to file separate Forms 175 for Auction 99.
    8. The prohibition on the filing of more than one Form 175 in an 
auction by entities with any of the same controlling interests was 
adopted in 2015 in conjunction with other rule changes. Under section 
1.2105(a), as revised in 2015, each auction applicant must certify that 
it has disclosed any arrangements or understandings of any kind 
relating to the licenses being auctioned to which it (or any party that 
controls or is controlled by it) is a party, and must certify that it 
(or any party that controls or is controlled by it) has not entered and 
will not enter any arrangement or understanding of any kind relating 
directly or indirectly to bidding at auction with any other applicant 
for the auction, among others. In 2015, the Commission also revised the 
rule prohibiting certain communications, section 1.2105(c), to prohibit 
a communication of bids or bidding strategies between any applicants in 
an auction, and thus the prohibition is no longer limited to a 
communication between applicants that had applied for construction 
permits to serve the same area. In addition, the revisions to that rule 
removed a prior exception to section 1.2105(c) under which applicants 
that had entered into bidding-related agreements could engage in 
certain communications so long as each entity had disclosed the other 
as a party to such an agreement on its auction application pursuant to 
section 1.2105(a)(2)(viii). For purposes of section 1.2105(c), an 
applicant is defined as including all officers and directors of the 
entity submitting a Form 175, all controlling interests of that entity, 
as well as all holders of partnership and other ownership interests and 
any stock interest amounting to 10 percent or more of the entity, or 
outstanding stock, or outstanding voting stock of the entity submitting 
a Form 175. In applying the prohibited communication rule, the Bureaus 
have found that, where an individual served as an officer and director 
for two or more applicants subject to the rule, the bids and bidding 
strategies of one applicant are presumptively conveyed to the other 
applicant. Consequently, the Bureaus determined that, absent a 
disclosed bidding agreement between such applicants creating an 
applicable exception under the prior rule, an apparent violation of 
section 1.2105(c) would occur.
    9. Finally, in a change related to the prohibition on joint bidding 
agreements and the changes to the prohibited communication rule, 
revised section 1.2105(a)(2)(iii) now prohibits any individual from 
serving as an authorized bidder of more than one applicant.
    10. In the event that Auction 99 applicants under common control 
may have filed separate Forms 175 pursuant to the Bureaus' waiver of 
section 1.2105(a)(3), such applicants could be at risk of violating 
section 1.2105(c) because the Commission presumes that

[[Page 6143]]

bidding strategies are communicated between entities that share a 
common officer or director. Moreover, current rules bar most kinds of 
joint bidding agreements that may have, under the prior rule, permitted 
certain communications between commonly controlled entities or other 
auction applicants under the former rules.
    11. Accordingly, the Bureaus seek comment on whether it would be 
appropriate to waive or modify the application of section 1.2105 
provisions so that Auction 99 applicants relying on the waiver of 
section 1.2105(a)(3) will not thereby violate such other provisions. 
With respect to a communication between commonly owned applicants, this 
auction appears analogous to the circumstances of Auction 1001, the 
reverse auction portion of the broadcast incentive auction. In that 
case, as here, applicants to participate in the auction were limited to 
specified current licensees of the Commission. Consequently, it was 
clear that multiple applicants would be commonly controlled.
    12. With respect to implementing the commonly controlled applicant 
exception in the broadcast incentive auction, the Commission provided 
that the prohibition did not apply to a communication between different 
applicants if they share a common controlling interest, director, 
officer, or governing board member as of the deadline for submitting 
applications to participate in the reverse auction. The Commission 
expressly noted that an applicant's communication would not qualify for 
this exception based on a new director, officer or governing board 
member added after the application deadline. According to the 
Commission, if a covered licensee were to appoint a new officer after 
the broadcast incentive auction application deadline, that new officer 
would be subject to the rule and not included within the exception.
    13. In this auction, when applying the Commission's general 
competitive bidding rules, do the limitations on eligibility to bid on 
specific permits in this closed auction similarly provide good cause to 
waive section 1.2105(c) for communications between commonly controlled 
applicants consistent with the exception provided for in the broadcast 
incentive auction? Do other factors demonstrate good cause for such 
relief, or some other form of relief? Commenters are encouraged to 
identify circumstances of this auction that should guide us in 
developing application procedures under the current competitive bidding 
rules, including specific aspects of the auction application process 
and processing procedures, the nature of the permits to be awarded, or 
other relevant considerations.

V. Bureaus Seek Comment on Bidding Procedures

    14. The Bureaus, under delegated authority, seek comment on a 
variety of auction-specific procedures prior to the start of bidding in 
Auction 99.

A. Auction Structure

    15. Simultaneous Multiple Round Auction Design. The Bureaus propose 
using the Commission's standard simultaneous multiple-round auction 
format for Auction 99. This type of auction offers every construction 
permit for bid at the same time and consists of successive bidding 
rounds in which eligible bidders may place bids on individual 
construction permits. Typically, bidding remains open on all 
construction permits until bidding stops on every construction permit. 
The Bureaus seek comment on this proposal.
    16. Bidding Rounds. Auction 99 will consist of sequential bidding 
rounds, each followed by the release of round results. The Commission 
will conduct Auction 99 over the internet using the FCC auction bidding 
system. Bidders will also have the option of placing bids by telephone 
through a dedicated auction bidder line.
    17. The Bureaus propose to retain the discretion to change the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. Under this proposal, the Bureaus may change 
the amount of time for the bidding rounds, the amount of time between 
rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. The Bureaus seek comment on this proposal. 
Commenters on this issue should address the role of the bidding 
schedule in managing the pace of the auction, specifically discussing 
the tradeoffs in managing auction pace by bidding schedule changes, by 
changing the activity requirements or bid amount parameters, or by 
using other means.
    18. Stopping Rule. To complete the auction within a reasonable 
time, the Bureaus propose to employ a simultaneous stopping rule 
approach for Auction 99, which means all construction permits remain 
available for bidding until bidding stops on every construction permit. 
Specifically, bidding would close on all construction permits after the 
first round in which no bidder submits any new bids, no bidder applies 
a proactive waiver, or, if bid withdrawals are permitted in this 
auction, no bidder withdraws any provisionally winning bid which is a 
bid that would become a final winning bid if the auction were to close 
in that given round. Thus, unless the Bureaus announce alternative 
procedures, bidding would remain open on all construction permits until 
bidding stops on every construction permit. Consequently, it is not 
possible to determine in advance how long the bidding in this auction 
will last.
    19. Further, the Bureaus propose to retain the discretion to 
exercise any of the following options during Auction 99. (1) Use a 
modified version of the simultaneous stopping rule that would close the 
auction for all construction permits after the first round in which no 
bidder applies a waiver, no bidder withdraws a provisionally winning 
bid (if withdrawals are permitted in this auction), or no bidder places 
any new bid on a construction permit for which it is not the 
provisionally winning bidder, which means that, absent any other 
bidding activity, a bidder placing a new bid on a construction permit 
for which it is the provisionally winning bidder would not keep the 
auction open under this modified stopping rule. (2) Use a modified 
version of the simultaneous stopping rule that would close the auction 
for all construction permits after the first round in which no bidder 
applies a waiver, no bidder withdraws a provisionally winning bid (if 
withdrawals are permitted in this auction), or no bidder places any new 
bid on a construction permit that already has a provisionally winning 
bid, which means that, absent any other bidding activity, a bidder 
placing a new bid on an FCC-held construction permit (a construction 
permit that does not already have a provisionally winning bid) would 
not keep the auction open under this modified stopping rule. (3) Use a 
modified version of the simultaneous stopping rule that combines 
options (1) and (2). (4) The auction would close after a specified 
number of additional rounds (special stopping rule) to be announced by 
the Bureaus. If the Bureaus invoke this special stopping rule, they 
will accept bids in the specified final round(s), after which the 
auction will close. (5) The auction would remain open even if no bidder 
places any new bid, applies a waiver, or withdraws any provisionally 
winning bid (if withdrawals are permitted in this auction). In this 
event, the effect will be the same as if a bidder had applied a waiver. 
The activity rule will apply as usual, and a bidder with insufficient 
activity will either lose bidding eligibility or use a waiver.

[[Page 6144]]

    20. The Bureaus propose to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly or quickly, there is minimal overall bidding activity, or it 
appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. Before exercising these 
options, the Bureaus are likely to attempt to change the pace of the 
auction. For example, the Bureaus may adjust the pace of bidding by 
changing the number of bidding rounds per day and/or the minimum 
acceptable bids. The Bureaus proposed to retain the discretion to 
exercise any of these options with or without prior announcement during 
the auction. The Bureaus seek comment on these proposals.
    21. Auction Delay, Suspension or Cancellation. Pursuant to 47 CFR 
1.2104(i), the Bureaus propose that they may delay, suspend, or cancel 
bidding in Auction 99 in the event of a natural disaster, technical 
obstacle, administrative or weather necessity, evidence of an auction 
security breach or unlawful bidding activity, or for any other reason 
that affects the fair and efficient conduct of competitive bidding. The 
Bureaus would notify participants of any such delay, suspension or 
cancellation by public notice and/or through the FCC auction bidding 
system's announcement function. If bidding is delayed or suspended, the 
Bureaus may, in their sole discretion, elect to resume the auction 
starting from the beginning of the current round or from some previous 
round, or cancel the auction in its entirety. Network interruption may 
cause the Bureaus to delay or suspend the auction. The Bureaus 
emphasized that they will exercise this authority solely at their 
discretion, and not as a substitute for situations in which bidders may 
wish to apply activity rule waivers. The Bureaus seek comment on this 
proposal.

B. Auction Procedures

    22. Upfront Payments and Bidding Eligibility. The Bureaus have 
delegated authority and discretion to determine an appropriate upfront 
payment for each construction permit being auctioned, taking into 
account such factors as the efficiency of the auction process and the 
potential value of similar construction permits. The upfront payment is 
a refundable deposit made by an applicant to establish eligibility to 
bid on construction permits. Upfront payments that are related to the 
specific construction permits being auctioned protect against frivolous 
or insincere bidding and provide the Commission with a source of funds 
from which to collect payments owed at the close of bidding. With these 
considerations in mind, the Bureaus proposed the upfront payments set 
forth in Attachment A of the Auction 99 Comment Public Notice. The 
Bureaus seek comment on the upfront payments specified in this 
Attachment A.
    23. The Bureaus further propose that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units. The Bureaus propose to assign each 
construction permit a specific number of bidding units, equal to one 
bidding unit per dollar of the upfront payment listed in Attachment A 
of the Auction 99 Comment Public Notice. The number of bidding units 
for a given construction permit is fixed and does not change during the 
auction as prices change. If an applicant is found to be qualified to 
bid on more than one permit in Auction 99, such a bidder may place bids 
on multiple construction permits, provided that the total number of 
bidding units associated with those construction permits does not 
exceed the bidder's current eligibility. A bidder cannot increase its 
eligibility during the auction; it can only maintain its eligibility or 
decrease its eligibility. Thus, in calculating its upfront payment 
amount and hence its initial bidding eligibility, an applicant must 
determine the maximum number of bidding units on which it may wish to 
bid (or hold provisionally winning bids) in any single round, and 
submit an upfront payment amount covering that total number of bidding 
units. The Bureaus request comment on these proposals.
    24. Activity Rule. In order to ensure that the auction closes 
within a reasonable period of time, an activity rule requires bidders 
to bid actively throughout the auction, rather than wait until late in 
the auction before participating. The Bureaus propose a single stage 
auction with the following activity requirement: In each round of the 
auction, a bidder desiring to maintain its current bidding eligibility 
is required to be active on 100 percent of its bidding eligibility. A 
bidder's activity in a round will be the sum of the bidding units 
associated with any construction permits upon which it places bids 
during the current round and the bidding units associated with any 
construction permits for which it holds provisionally winning bids. 
Failure to maintain the requisite activity level would result in the 
use of an activity rule waiver, if any, or a reduction in the bidder's 
eligibility, possibly curtailing or eliminating the bidder's ability to 
place additional bids in the auction. The Bureaus seek comment on this 
proposal.
    25. Activity Rule Waivers and Reducing Eligibility. When a bidder's 
activity in the current round is below the required minimum level, it 
may preserve its current level of eligibility through an activity rule 
waiver, if available. An activity rule waiver applies to an entire 
round of bidding, not to a particular construction permit. Activity 
rule waivers can be either proactive or automatic. Activity rule 
waivers are principally a mechanism for a bidder to avoid the loss of 
bidding eligibility in the event that exigent circumstances prevent it 
from bidding in a particular round.
    26. The FCC auction bidding system will assume 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 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.
    27. 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 bidding system. In this case, the bidder's eligibility 
would be permanently reduced to bring it into compliance with the 
specified activity requirement. Reducing eligibility is an irreversible 
action; once eligibility has been reduced, a bidder cannot regain its 
lost bidding eligibility.
    28. 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 were to 
apply an activity rule waiver (using the proactive waiver function in 
the FCC auction bidding system) during a bidding round in which no bids 
are placed or withdrawn (if bid withdrawals are permitted in this 
auction), the auction would remain open and the bidder's eligibility 
would be preserved.

[[Page 6145]]

An automatic waiver applied by the FCC auction bidding system in a 
round in which there are no new bid, no bid withdrawal (if bid 
withdrawals are permitted in this auction), or no proactive waiver will 
not keep the auction open. The Bureaus propose that each bidder in 
Auction 99 be provided with three activity rule waivers that may be 
used at the bidder's discretion during the course of the auction. The 
Bureaus seek comment on this proposal.
    29. Reserve Price or Minimum Opening Bids. Normally, a reserve 
price is an absolute minimum price below which a construction permit or 
license will not be sold in a given auction. The Bureaus did not 
propose to establish separate reserve prices for the Auction 99 
construction permits.
    30. A minimum opening bid is the minimum bid price set at the 
beginning of the auction below which no bids are accepted. Because it 
is an effective tool for accelerating the competitive bidding process, 
the Bureaus propose minimum opening bid amounts for Auction 99 
determined by taking into account the type of service and class of 
facility offered, market size, population covered by the proposed 
broadcast facility, and recent broadcast transaction data. Attachment A 
of the Auction 99 Comment Public Notice lists a proposed minimum 
opening bid amount for each construction permit available in Auction 
99. The Bureaus seek comment on the minimum opening bid amounts 
specified in Attachment A of the Auction 99 Comment Public Notice.
    31. If commenters believe that these minimum opening bid amounts 
will result in unsold construction permits, are not reasonable amounts, 
or should instead operate as reserve prices, they should explain why 
this is so and comment on the desirability of an alternative approach. 
The Bureaus ask commenters to support their claims with valuation 
analyses and suggested amounts or formulas for reserve prices or 
minimum opening bids. In establishing the minimum opening bid amounts, 
the Bureaus particularly seek comment on factors that could reasonably 
have an impact on bidders' valuation of the broadcast spectrum, 
including the type of service offered, market size, population covered 
by the proposed broadcast facility, and any other relevant factors.
    32. Bid Amounts. The Bureaus propose that, if the bidder has 
sufficient eligibility to place a bid on a particular construction 
permit in a round, an eligible bidder will be able to place a bid on 
that construction permit in any of up to nine different amounts. Under 
this proposal, the FCC auction bidding system interface will list the 
acceptable bid amounts for each construction permit.
    33. The first of the acceptable bid amounts is called the minimum 
acceptable bid amount. The minimum acceptable bid amount for a 
construction permit will be equal to its minimum opening bid amount 
until there is a provisionally winning bid for the construction permit. 
After there is a provisionally winning bid for a construction permit, 
the minimum acceptable bid amount will be a certain percentage higher. 
The percentage used for this calculation, the minimum acceptable bid 
increment percentage, is multiplied by the provisionally winning bid 
amount, and the resulting amount is added to the provisionally winning 
bid amount. If, for example, the minimum acceptable bid increment 
percentage is 10 percent, then the provisionally winning bid amount is 
multiplied by 10 percent. The result of that calculation is added to 
the provisionally winning bid amount, and that sum is rounded using the 
Commission's standard rounding procedure for auctions. If bid 
withdrawals are permitted in this auction, in the case of a 
construction permit for which the provisionally winning bid has been 
withdrawn, the minimum acceptable bid amount will equal the second 
highest bid received for the construction permit.
    34. The FCC will calculate the eight additional bid amounts using 
the minimum acceptable bid amount and an additional bid increment 
percentage. The minimum acceptable bid amount is multiplied by the 
additional bid increment percentage, and that result, rounded, is the 
additional increment amount. The first additional acceptable bid amount 
equals the minimum acceptable bid amount plus the additional increment 
amount. The second additional acceptable bid amount equals the minimum 
acceptable bid amount plus two times the additional increment amount; 
the third additional acceptable bid amount is the minimum acceptable 
bid amount plus three times the additional increment amount; etc. If, 
for example, the additional bid increment percentage is 5 percent, then 
the calculation of the additional increment amount is (minimum 
acceptable bid amount) * (0.05), rounded. The first additional 
acceptable bid amount equals (minimum acceptable bid amount) + 
(additional increment amount); the second additional acceptable bid 
amount equals (minimum acceptable bid amount) + (2 * (additional 
increment amount)); the third additional acceptable bid amount equals 
(minimum acceptable bid amount) + (3 * (additional increment amount)); 
etc. The Bureaus will round the results using the Commission's standard 
rounding procedures for auctions.
    35. For Auction 99, the Bureaus propose to use a minimum acceptable 
bid increment percentage of 10 percent. This means that the minimum 
acceptable bid amount for a construction permit will be approximately 
10 percent greater than the provisionally winning bid amount for the 
construction permit. To calculate the additional acceptable bid 
amounts, the Bureaus propose to use an additional bid increment 
percentage of 5 percent. The Bureaus seek comment on these proposals.
    36. The Bureaus propose to retain the discretion to change the 
minimum acceptable bid amounts, the minimum acceptable bid increment 
percentage, the additional bid increment percentage, and the number of 
acceptable bid amounts if the Bureaus determine that circumstances so 
dictate. Further, the Bureaus retain the discretion to do so on a 
construction-permit-by-construction-permit basis. The Bureaus also 
propose to retain the discretion to limit (a) the amount by which a 
minimum acceptable bid for a construction permit may increase compared 
with the corresponding provisionally winning bid, and (b) the amount by 
which an additional bid amount may increase compared with the 
immediately preceding acceptable bid amount. For example, the Bureaus 
could set a $1,000 limit on increases in minimum acceptable bid amounts 
over provisionally winning bids. Thus, if calculating a minimum 
acceptable bid using the minimum acceptable bid increment percentage 
results in a minimum acceptable bid amount that is $1,200 higher than 
the provisionally winning bid on a construction permit, the minimum 
acceptable bid amount would instead be capped at $1,000 above the 
provisionally winning bid. The Bureaus seek comment on the 
circumstances under which the Bureaus should employ such a limit, 
factors the Bureaus should consider when determining the dollar amount 
of the limit, and the tradeoffs in setting such a limit or changing 
other parameters, such as changing the minimum acceptable bid 
percentage, the bid increment percentage, or the number of acceptable 
bid amounts. If the Bureaus exercise this discretion, they will alert 
bidders by announcement in the FCC auction bidding system during the 
auction. The Bureaus seek comment on these proposals.

[[Page 6146]]

    37. Provisionally Winning Bids. Provisionally winning bids are bids 
that would become winning bids if the auction were to close in that 
given round. At the end of each bidding round, the FCC auction bidding 
system will determine a provisionally winning bid for each construction 
permit based on the highest bid amount received for that permit. A 
provisionally winning bid will remain the provisionally winning bid 
until there is a higher bid on the same construction permit at the 
close of a subsequent round. Provisionally winning bids become the 
winning bid at the end of the auction.
    38. The auction bidding system assigns a random number to each bid 
when the bid is entered. If identical high bid amounts are submitted on 
a construction permit in any given round (i.e., tied bids), the FCC 
auction bidding system will use a pseudo-random number generator to 
select a single provisionally winning bid from among the tied bids. The 
tied bid with the highest random number wins the tiebreaker and becomes 
the provisionally winning bid. The remaining bidders, as well as the 
provisionally winning bidder, can submit higher bids in subsequent 
rounds. However, if the auction were to close with no other bids being 
placed, the winning bidder would be the one that placed the 
provisionally winning bid. If the construction permit receives any bids 
in a subsequent round, the provisionally winning bid again will be 
determined by the highest bid amount received for the construction 
permit.
    39. A provisionally winning bid will be retained until there is a 
higher bid on the construction permit at the close of a subsequent 
round, unless the provisionally winning bid is withdrawn (if bid 
withdrawals are permitted in this auction). As a reminder, 
provisionally winning bids count toward a bidder's activity level for 
purposes of the activity rule.
    40. Bid Removal and Bid Withdrawal. The FCC auction bidding system 
allows each bidder to remove any of the bids it placed in a round 
before the close of that round. By removing a bid placed within a 
round, a bidder effectively unsubmits the bid. 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 
is no longer permitted to remove a bid.
    41. The Bureaus seek comment on whether bid withdrawals should be 
permitted in Auction 99. 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 would be 
able to withdraw its provisionally winning bids using the withdraw 
function in the FCC auction bidding system. A bidder that withdraws its 
provisionally winning bid(s), if permitted in this auction, is subject 
to the bid withdrawal payment provisions of 47 CFR 1.2104(g) and 
1.2109.
    42. Based on the nature of the permits available in Auction 99 and 
on the experience of the Bureaus with past auctions of broadcast 
construction permits, the Bureaus propose to prohibit bidders from 
withdrawing any bid after the close of the round in which the bid was 
placed. The Bureaus made this proposal in light of the site- and 
applicant-specific nature and wide geographic dispersion of the permits 
available in this closed auction, which suggests that potential 
applicants for this auction will have limited opportunity to aggregate 
construction permits through the auction process because of the closed 
MX groups previously established. Thus, the Bureaus believe that it is 
unlikely that bidders will have a need to withdraw bids in this 
auction. Also, allowing bid withdrawals may encourage insincere bidding 
or increase opportunities for anti-competitive bidding in certain 
circumstances. The Bureaus also remain mindful that bid withdrawals, 
particularly those made late in this auction, could result in delays in 
licensing new FM translator stations and attendant delays in the 
offering of new broadcast service to the public. The Bureaus seek 
comment on their proposal to prohibit bid withdrawals in Auction 99.

C. Post-Auction Payments

    43. Interim Withdrawal Payment Percentage. A bidder that withdraws 
a bid during an auction is subject to a withdrawal payment equal to the 
difference between the amount of the withdrawn bid and the amount of 
the winning bid in the same or a subsequent auction. However, if a 
construction permit for which a bid has been withdrawn does not receive 
a subsequent higher bid or winning bid in the same auction, the FCC 
cannot calculate the final withdrawal payment until that construction 
permit receives a higher bid or winning bid in a subsequent auction. In 
such cases, when that final withdrawal payment cannot yet be 
calculated, the FCC imposes on the bidder responsible for the withdrawn 
bid an interim bid withdrawal payment, which will be applied toward any 
final bid withdrawal payment that is ultimately assessed.
    44. Pursuant to 47 CFR 1.2104(g)(1), the amount of the interim bid 
withdrawal payment may range from 3 to 20 percent of the withdrawn bid 
amount. If bid withdrawals are allowed in Auction 99, the Bureaus 
propose that the interim bid withdrawal payment be 20 percent of the 
withdrawn bid. The Bureaus request comment on using 20 percent for 
calculating an interim bid withdrawal payment amount in Auction 99. 
Commenters advocating the use of bid withdrawals in Auction 99 should 
also address the percentage of the interim bid withdrawal payment.
    45. Additional Default Payment Percentage. Any winning bidder that 
defaults or is disqualified after the close of an auction (i.e., fails 
to remit the required down payment by the specified deadline, 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 default payment consists of a 
deficiency payment equal to the difference between the amount of the 
Auction 99 bidder's winning bid and the amount of the winning bid the 
next time a construction permit covering the same spectrum is won in an 
auction, plus an additional payment equal to a percentage of the 
defaulter's bid or of the subsequent winning bid, whichever is less. 
Based on the nature of the service and the construction permits being 
offered, the Bureaus propose for Auction 99 an additional default 
payment of 20 percent of the relevant bid. The Bureaus seek comment on 
this proposal.

VI. Procedural Matters

A. Supplemental Initial Regulatory Flexibility Analysis

    46. As required by the Regulatory Flexibility Act of 1980 as 
amended (RFA), 5 U.S.C. 603, the Bureaus have prepared this 
Supplemental Initial Regulatory Flexibility Analysis (Supplemental 
IRFA) of the possible significant economic impact on small entities of 
the policies and rules addressed in the Public Notice to supplement the 
Commission's Initial and Final Regulatory Flexibility Analyses 
completed in the Broadcast First Report and Order and multiple other 
Commission rulemaking orders pursuant to which Auction 99 will be 
conducted. Written public comments are requested on this Supplemental 
IRFA. Comments must be identified as responses to the Supplemental IRFA 
and must be filed by the same filing

[[Page 6147]]

deadline for comments specified on the first page of the Auction 99 
Comment Public Notice. The Commission will send a copy of the Public 
Notice, including this Supplemental IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).
    47. Need for, and Objectives of, the Proposed Rules. The Auction 99 
Comment Public Notice seeks comment on proposed procedures to govern 
Auction 99, an auction of up to 12 cross-service FM translator 
construction permits. To promote the efficient and fair administration 
of the competitive bidding process for all Auction 99 participants, the 
Bureaus seek comment on the following: (1) Application of the current 
rules prohibiting certain communications between auction applicants and 
the related prohibition on joint bidding arrangements to implement the 
Bureaus' prior decision to allow eligible AM licensees having any of 
the same controlling interest in common to file separate Forms 175, 
rather than a single Form 175; (2) Use of a simultaneous multiple-round 
auction format, consisting of sequential bidding rounds with a 
simultaneous stopping rule (with discretion by the Bureaus to exercise 
alternative stopping rules under certain circumstances); (3) A specific 
minimum opening bid amount for each construction permit available in 
Auction 99; (4) A specific upfront payment amount for each construction 
permit; (5) Establishment of a bidder's initial bidding eligibility in 
bidding units based on that bidder's upfront payment through assignment 
of a specific number of bidding units for each construction permit; (6) 
Use of an activity rule that would require bidders to bid actively 
during the auction rather than waiting until late in the auction before 
participating; (7) A single stage auction in which a bidder is required 
to be active on 100 percent of its bidding eligibility in each round of 
the auction; (8) Provision of three activity rule waivers for each 
bidder to allow it to preserve bidding eligibility during the course of 
the auction; (9) Use of minimum acceptable bid amounts and additional 
acceptable increments, along with a proposed methodology for 
calculating such amounts, with the Bureaus retaining discretion to 
change their methodology if circumstances dictate; (10) A procedure for 
breaking ties if identical high bid amounts are submitted on a permit 
in a given round; (11) Bid removal procedures; (12) Whether to permit 
bid withdrawals; (13) Establishment of an interim bid withdrawal 
percentage of 20 percent of the withdrawn bid in the event the Bureaus 
allow bid withdrawals in Auction 99; and (14) Establishment of an 
additional default payment of 20 percent under 47 CFR 1.2104(g)(2) in 
the event that a winning bidder defaults or is disqualified after the 
auction.
    48. Legal Basis. The Commission's statutory obligations to small 
businesses under the Communications Act of 1934, as amended, are found 
in 47 U.S.C. 309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the 
Commission's competitive bidding rules is found in various provisions 
of the Communications Act of 1934, as amended, including 47 U.S.C. 
154(i), 301, 302, 303(e), 303(f), 303(r), 304, 307, and 309(i). The 
Commission has established a framework of competitive bidding rules 
pursuant to which it has conducted auctions since the inception of the 
auction program in 1994 and would conduct Auction 99. The Commission 
has directed the Bureaus, under delegated authority, to seek comment on 
a variety of auction-specific procedures prior to the start of bidding 
in each auction.
    49. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The RFA directs agencies to 
provide a description of and, where feasible, an estimate of the number 
of small entities that may be affected by the proposed rules, if 
adopted. The RFA generally defines the term small entity as having the 
same meaning as the terms small business, small organization, and small 
government jurisdiction. In addition, the term small business has the 
same meaning as the term small business concern under the Small 
Business Act, 15 U.S.C. 632. A small business concern is one which: (1) 
Is independently owned and operated, (2) is not dominant in its field 
of operation, and (3) satisfies any additional criteria established by 
the Small Business Administration (SBA).
    50. Radio Stations. This Economic Census category comprises 
establishments primarily engaged in broadcasting aural programs by 
radio to the public. Programming may originate in their own studio, 
from an affiliated network, or from external sources. The SBA has 
established a small business size standard for this category as firms 
having $38.5 million or less in annual receipts. Economic Census data 
for 2012 shows that 2,849 radio station firms operated during that 
year. Of that number, 2,806 firms operated with annual receipts of less 
than $25 million per year, 17 with annual receipts between $25 million 
and $49,999,999 million and 26 with annual receipts of $50 million or 
more. Therefore, based on the SBA's size standard the majority of such 
entities are small entities.
    51. According to Commission staff review of the BIA/Kelsey, LLC's 
Media Access Pro Radio Database as of January 30, 2018, about 11,261 
(or about 99.92 percent) of 11,270 commercial radio stations had 
revenues of $38.5 million or less and thus qualify as small entities 
under the SBA definition. The Bureaus note, however, that the SBA size 
standard data does not enable the Bureaus to make a meaningful estimate 
of the number of small entities who may participate in Auction 99. 
There are a maximum of 26 entities that may become qualified bidders in 
Auction 99, in which applicant eligibility is closed. The specific 
procedures and minimum opening bid amounts on which comment is sought 
in the Auction 99 Comment Public Notice will affect directly all 
applicants participating in Auction 99.
    52. In addition, the Bureaus note that they are unable to 
accurately develop an estimate of how many of these 26 entities are 
small businesses based on the number of small entities that applied to 
participate in prior broadcast auctions, because that information is 
not collected from applicants for broadcast auctions in which bidding 
credits are not based on an applicant's size (as is the case in 
auctions of licenses for wireless services). Potential eligible bidders 
in Auction 99 may include existing holders of broadcast station 
construction permits or licenses. In 2013, the Commission estimated 
that 97 percent of radio broadcasters met the SBA's prior definition of 
small business concern, based on annual revenues of $7 million. The SBA 
has since increased that revenue threshold to $38.5 million, which 
suggests that an even greater percentage of radio broadcasters would 
fall within the SBA's definition. Based on Commission data 4,635 
(99.94%) of 4,638 a.m. radio stations have revenue of $38.5 million or 
less. Accordingly, based on this data, the Bureaus conclude that the 
majority of Auction 99 eligible bidders will likely meet the SBA's 
definition of a small business concern.
    53. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. The Commission designed the 
auction application process itself to minimize reporting and compliance 
requirements for applicants, including small business applicants. In 
the first part of the Commission's two-phased auction application 
process, parties desiring to participate in an auction file 
streamlined, short-form applications in which they certify under 
penalty of

[[Page 6148]]

perjury as to their qualifications. Eligibility to participate in 
bidding is based on an applicant's short-form application and 
certifications, as well as its upfront payment. In the second phase of 
the process, winning bidders file a more comprehensive long-form 
application. Thus, a small business which fails to become a winning 
bidder does not need to file a long-form application and provide the 
additional showings and more detailed demonstrations required of a 
winning bidder.
    54. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant, specifically small 
business, alternatives that it has considered in reaching its proposed 
approach, which may include the following four alternatives (among 
others): (1) The establishment of differing compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities; (2) the clarification, consolidation, or 
simplification of compliance and reporting requirements under the rule 
for such small entities; (3) the use of performance rather than design 
standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for such small entities.
    55. The Commission has taken steps to minimize any economic impact 
of its auction procedures on small businesses through among other 
things, the many resources it provides potential auction participants. 
Small entities and other auction participants may seek clarification of 
or guidance on complying with competitive bidding rules and procedures, 
reporting requirements, and the FCC's auction system. An FCC Auctions 
Hotline provides access to Commission staff for information about the 
auction process and procedures. The FCC Auctions Technical Support 
Hotline is another resource which provides technical assistance to 
applicants, including small business entities, on issues such as access 
to or navigation within the electronic FCC Form 175 and use of the 
FCC's auction system. Small entities may also utilize the web-based, 
interactive online tutorial produced by Commission staff for each 
auction to familiarize themselves with auction procedures, filing 
requirements, bidding procedures and other matters related to an 
auction. The Bureaus also make various databases and other sources of 
information, including the Media Bureau's Consolidated Database System, 
the Auctions program websites, and copies of Commission decisions, 
available to the public without charge, providing a low-cost mechanism 
for small businesses to conduct research prior to and throughout the 
auction. Prior to and at the close of Auction 99, the Bureaus will post 
public notices on the Auctions website, which articulate the procedures 
and deadlines. The Bureaus make this information easily accessible and 
without charge to benefit all Auction 99 applicants, including small 
businesses, thereby lowering their administrative costs to comply with 
the Commission's competitive bidding rules.
    56. Prior to the start of bidding in each auction, eligible bidders 
are given an opportunity to become familiar with auction procedures and 
the bidding system by participating in a mock auction. Further, the 
Commission intends to conduct Auction 99 electronically over the 
internet using its web-based auction system that eliminates the need 
for bidders to be physically present in a specific location. Qualified 
bidders also have the option to place bids by telephone. These 
mechanisms are made available to facilitate participation in Auction 99 
by all eligible bidders, and may result in significant cost savings for 
small business entities who utilize these alternatives. Moreover, the 
adoption of bidding procedures in advance of the auction, consistent 
with statutory directive, is designed to ensure that the auction will 
be administered predictably and fairly for all participants, including 
small businesses.
    57. These proposed procedures for the conduct of Auction 99 
constitute the more specific implementation of the competitive bidding 
rules contemplated by Parts 1 and 73 of the Commission's rules and the 
underlying rulemaking orders, including the Broadcast First Report and 
Order and relevant competitive bidding orders, and are fully consistent 
therewith.
    58. Federal Rules that May Duplicate, Overlap or Conflict with the 
Proposed Rules. None.

B. Ex Parte Rules

    59. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. While 
additional information is provided in the Auction 99 Comment Public 
Notice on these reporting requirements, participants in Auction 99 
should familiarize themselves with the Commission's ex parte rules.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2018-03025 Filed 2-12-18; 8:45 am]
BILLING CODE 6712-01-P