[Federal Register Volume 83, Number 218 (Friday, November 9, 2018)]
[Proposed Rules]
[Pages 56031-56038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-24596]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[AU Docket No. 17-329; DA 18-1038]


Auction of Cross-Service FM Translator Construction Permits; 
Comment Sought on Competitive Bidding Procedures for Auction 100

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: The Wireless Telecommunications and Media Bureaus (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 100.

DATES: Comments are due on or before November 15, 2018, and reply 
comments are due on or before November 28, 2018.

ADDRESSES: Interested parties may submit comments in response to the 
Auction 100 Comment Public Notice by any of the following methods:
     FCC's Website: Federal Communications Commission's 
Electronic Comment Filing System (ECFS): http://apps.fcc.gov/ecfs. 
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 100 Comment 
Public Notice in AU Docket No.17-329, DA 18-1038, released on October 
19, 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 100 
Comment Public Notice and related documents also are available on the 
internet at the Commission's website: https://www.fcc.gov/auction/100/, 
or by using the search function for AU Docket No. 17-329 on the 
Commission's ECFS web page at https://www.fcc.gov/ecfs/.
    All filings in response to the Auction 100 Comment Public Notice 
must refer to AU Docket No. 17-329. 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 December 4, 2017, the Bureaus announced a second auction 
filing window for AM broadcasters seeking new cross-service FM 
translator station construction permits. By this Public Notice, the 
Bureaus seek comment on the procedures to be used for Auction 100. 
Auction 100 will be a closed auction: Only those entities listed in 
Attachment A of the Auction 100 Comment Public Notice will be eligible 
to participate further in Auction 100.
    2. The Bureaus anticipate that the bidding for Auction 100 will 
commence in fiscal year 2019. The Bureaus will announce a schedule for 
bidding in Auction 100 by public notice, to provide applicants with 
sufficient time to submit upfront payments and prepare for bidding in 
the auction.

II. Construction Permits in Auction 100

    3. Auction 100 will resolve by competitive bidding mutually 
exclusive (MX) engineering proposals for construction permits for up to 
13 new cross-service FM translator stations. The locations and channels 
of these proposed stations are identified in Attachment A of the 
Auction 100 Comment Public Notice. Attachment A also specifies a 
proposed minimum opening bid and a proposed upfront payment amount for 
each construction permit listed.
    4. An applicant listed in Attachment A may become qualified to bid 
only if it complies with the additional filing, qualification, and 
payment requirements, and otherwise complies with applicable rules, 
policies, and procedures. Each qualified bidder will be eligible to bid 
on only those construction permits specified for that qualified bidder 
in Attachment A of the

[[Page 56032]]

Auction 100 Comment Public Notice. All of the engineering proposals in 
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, once mutually exclusive applications are 
accepted for a construction permit and thus mutual exclusivity exists 
for auction purposes, an applicant cannot obtain a construction permit 
without placing a bid, even if no other applicant for that particular 
construction permit becomes qualified to bid or in fact places a bid.
    5. The Commission adopted eligibility criteria for filing window 
opportunities in its 2015 AM Radio Revitalization rulemaking order. 
Chesapeake-Portsmouth Broadcasting Corporation requested a waiver of 
the eligibility restriction for the Auction 100 filing window 
opportunity. MHR License LLC filed an objection to this waiver request. 
The Bureaus intend to address the Chesapeake-Portsmouth waiver request 
by the release of the public notice establishing procedures for Auction 
100.

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

A. Initial Review of FCC Form 175

    6. Applicants listed in Attachment A to the Auction 100 Comment 
Public Notice previously filed short-form applications (FCC Form 175). 
The Bureaus will process the Forms 175 filed by the 25 applicants 
listed in Attachment A 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

    7. As required by 47 CFR 1.65, an applicant must maintain the 
accuracy and completeness of information furnished in its pending 
application and must 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).
    8. If information needs to be submitted pursuant to sections 1.65 
or 1.2105 outside of the upcoming resubmission window in Auction 100, 
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 100 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 Auction 100 applicant's Form 175.

IV. Bureaus Seek Comment on Procedures for Auction Applications

    9. The Bureaus previously announced that section 1.2105(a)(3)'s 
prohibition on the filing of more than one auction application (Form 
175) in an auction by entities with any of the same controlling 
interests would be waived for Auction 100 applicants in recognition of 
the specific eligibility provisions and filing procedures established 
by the Commission for this cross-service FM translator filing window. 
Thus, entities controlled by the same individual or set of individuals 
were permitted to file separate short-form applications for Auction 
100.
    10. The rule provision that was waived in the Auction 100 Filing 
Instructions Public Notice, section 1.2105(a)(3), 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, among others, any other 
applicant for the auction. Also in 2015, section 1.2105(c) was extended 
to prohibit communication of bids or bidding strategies between any 
applicants for an auction, and thus is no longer limited to a 
communication between applicants that had applied for construction 
permits to serve the same area. In addition, the 2015 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). In applying the prohibited 
communications rule, the Bureaus have found that, where an individual 
served as an officer or 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. Finally, in a 
change related to the prohibition on joint bidding agreements and the 
changes to the prohibited communications rule, revised section 
1.2105(a)(2)(iii) now prohibits any individual from serving as an 
authorized bidder of more than one applicant.
    11. In recognition that some Auction 100 applicants under common 
control may have filed separate Forms 175 relying on the waiver of 
section 1.2105(a)(3), the Bureaus seek comment on whether it would be 
appropriate to waive or modify for Auction 100 the application of 
certain other provisions of section 1.2105 so that such applicants will 
not thereby violate such other provisions of the rule. For instance, in 
the absence of relief, such applicants could be at risk of violating 
section 1.2105(c) because the Commission presumes that 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.
    12. 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 100 applicants relying on the waiver of 
section 1.2105(a)(3) will not thereby violate such other provisions. 
Commenters may wish to consider the Bureaus' prior observations 
regarding circumstances under which competitive bidding rules might be 
waived or modified in particular situations and should review carefully 
that discussion in the Auction 100 Comment Public Notice and references 
in that section.

V. Bureaus Seek Comment on Bidding Procedures

    13. The Bureaus, under delegated authority, seek comment on 
multiple

[[Page 56033]]

issues relating to the conduct of Auction 100.

A. Auction Structure

    14. Simultaneous Multiple Round Auction Design. The Bureaus propose 
to use the Commission's standard simultaneous multiple-round auction 
format for Auction 100. This type of auction offers every construction 
permit for bidding 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.
    15. Bidding Rounds. Auction 100 will consist of sequential bidding 
rounds, each followed by the release of round results. The Commission 
will conduct Auction 100 over the internet using the FCC auction 
bidding system. Qualified bidders will also have the option of placing 
bids by telephone through a dedicated auction bidder line.
    16. The Bureaus propose to retain the discretion to change the 
bidding schedule 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.
    17. Stopping Rule. To complete bidding in the auction within a 
reasonable time, the Bureaus propose to employ a simultaneous stopping 
rule approach for Auction 100, 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, under the proposed simultaneous stopping 
approach 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.
    18. Further, the Bureaus propose to retain the discretion to 
exercise any of the following options during Auction 100. (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.
    19. 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.
    20. 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 100 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

    21. Upfront Payments and Bidding Eligibility. The Bureaus have 
determined 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 100 Comment Public Notice. The Bureaus

[[Page 56034]]

seek comment on the upfront payments specified in that Attachment A.
    22. 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 100 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 100, 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.
    23. Activity Rule. 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.
    24. Activity Rule Waivers and Reducing Eligibility. For the 
proposed simultaneous multiple round auction format, the Bureaus 
propose that 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, 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 if exigent 
circumstances prevent it from bidding in a particular round.
    25. 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.
    26. 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.
    27. 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. 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 would not keep the auction open. The Bureaus propose 
that each bidder in Auction 100 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.
    28. 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 100 
construction permits.
    29. 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 100 
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 100 Comment Public Notice lists a proposed minimum 
opening bid amount for each construction permit available in Auction 
100. Consistent with 47 U.S.C. 309(j)(4)(f), the Bureaus seek comment 
on the minimum opening bid amounts specified in Attachment A of the 
Auction 100 Comment Public Notice.
    30. 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.
    31. 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. In the 
event of duplicate bid amounts due to rounding, the FCC auction system 
will omit the duplicates and will list fewer than nine acceptable bid 
amounts for that construction permit. Under this proposal, the FCC 
auction bidding system interface will list the acceptable

[[Page 56035]]

bid amounts for each construction permit.
    32. 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.
    33. The eight additional bid amounts would be calculated 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.
    34. For Auction 100, 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.
    35. Consistent with past practice, 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 
propose to 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
    36. 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.
    37. The auction bidding system assigns a pseudo-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 pseudo-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.
    38. 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.
    39. 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. 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.
    40. The Bureaus seek comment on whether bid withdrawals should be 
permitted in Auction 100. When permitted in an auction, bid withdrawals 
provide a bidder with the option of withdrawing bids placed in prior 
rounds that have become

[[Page 56036]]

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.
    41. Based on the stand-alone nature of FM translator facilities and 
the Auction 100 limit of one FM translator station proposal per AM 
station, as well as 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 that 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, all of which suggest that potential 
applicants for this auction will not need to use the auction process to 
aggregate construction permits (as compared with bidders in many 
auctions of wireless licenses). Thus, the Bureaus believe that it is 
unlikely that bidders will have a need to withdraw bids in this 
auction. 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 cross-service 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 
100.

C. Post-Auction Payments

    42. 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, in accordance with 47 CFR 1.2104(g)(1) 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.
    43. 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 the Bureaus allow bid withdrawals in Auction 100, the 
Bureaus propose that the interim bid withdrawal payment be 20 percent 
of the withdrawn bid amount. The Bureaus request comment on using 20 
percent for calculating an interim bid withdrawal payment amount in 
Auction 100. Commenters advocating the use of bid withdrawals in 
Auction 100 should also address the percentage of the interim bid 
withdrawal payment.
    44. 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 100 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 100 an additional default 
payment amount of 20 percent of the applicable winning bid. The Bureaus 
seek comment on this proposal.

VI. Procedural Matters

A. Initial Paperwork Reduction Act of 1995 Analysis

    45. This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. In addition, therefore, it does not contain any proposed 
information collection burden for small business concerns with fewer 
than 25 employees, pursuant to the Small Business Paperwork Relief Act 
of 2002, Public Law 107-198. See 44 U.S.C. 3506(c)(4).

B. Supplemental Initial Regulatory Flexibility Analysis

    46. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), 5 U.S.C. 603, the Commission prepared Initial Regulatory 
Flexibility Analyses (IRFAs) as part of the 1997 Broadcast Competitive 
Bidding Notice of Proposed Rulemaking (NPRM) and other Commission 
notices (collectively, Broadcast Competitive Bidding NPRMs) pursuant to 
which Auction 100 will be conducted. Final Regulatory Flexibility 
Analyses (FRFAs) likewise were prepared in the 1998 Broadcast First 
Report and Order and other Commission rulemaking orders (collectively, 
Broadcast Competitive Bidding Orders). The Bureaus have prepared this 
Supplemental Initial Regulatory Flexibility Analysis (Supplemental 
IRFA) of the possible significant economic impact on a substantial 
number of small entities of the policies and rules addressed in the 
Auction 100 Comment Public Notice, to supplement the Commission's 
Initial and Final Regulatory Flexibility Analyses completed in the 
Broadcast First Report and Order and other Commission orders pursuant 
to which Auction 100 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 
deadline for comments specified on the first page of the Auction 100 
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), 5 U.S.C. 603(a).
    47. Need for, and Objectives of, the Proposed Rules. In addition to 
providing notice of proposed procedures in the Auction 100 Comment 
Public Notice, consistent with 47 U.S.C. 309(j)(3)(E)(i), the Bureaus 
intend to provide adequate time for participants to comment on proposed 
procedures to govern Auction 100, an auction of up to 13 cross-service 
FM translator construction permits. To promote the efficient and fair 
administration of the competitive bidding process for all Auction 100 
participants, including small businesses, the Bureaus seek comment on 
the following proposed procedures: (1) Whether certain aspects of the 
rules governing auction applications should be waived or modified in 
conjunction with the Bureaus' prior decision to allow eligible AM 
licensees having any of the same controlling interest in common to file 
separate auction applications (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

[[Page 56037]]

under certain circumstances); (3) A specific minimum opening bid amount 
for each construction permit available in Auction 100; (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 bid 
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 100; 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 participating in a spectrum auction under the Communications 
Act of 1934, as amended (the Act), 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 Act, 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 100. In promulgating 
those rules, the Commission conducted numerous Regulatory Flexibility 
Act analyses to consider the possible impact of competitive bidding 
rules on small businesses that might seek to participate in Commission 
auctions. 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, 5 U.S.C. 603(b)(3). The RFA generally defines the term small 
entity as having the same meaning as the terms small business, small 
organization, and small government jurisdiction, 5 U.S.C. 601(6). 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 SBA, 5 U.S.C. 632.
    50. The specific procedures and minimum opening bid amounts on 
which comment is sought in the Auction 100 Comment Public Notice will 
affect directly all applicants participating in Auction 100. There are 
a maximum of 25 individuals or entities that may become qualified 
bidders in Auction 100, in which applicant eligibility is closed. 
Therefore, the specific competitive bidding procedures and minimum 
opening bid amounts described in the Auction 100 Comment Public Notice 
will affect only the 25 individuals or entities listed in Attachment A 
to that Public Notice and who are the only parties eligible to complete 
the remaining steps to become qualified to bid in Auction 100. These 
specific 25 Auction 100 individuals or entities include firms of all 
sizes.
    51. 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 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.
    52. According to Commission staff review of the BIA/Kelsey, LLC's 
Media Access Pro Radio Database as of September 6, 2018, about 11,024 
(or about 99.92 percent) of 11,033 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 100.
    53. In assessing whether a business entity qualifies as small under 
the SBA definition, business control affiliations must be included. The 
Bureaus' estimate therefore likely overstates the number of small 
entities that might be affected by its action because the revenue 
figure on which it is based does not include or aggregate revenues from 
affiliated companies. Moreover, the definition of small business also 
requires that an entity not be dominant in its field of operation and 
that the entity be independently owned and operated. The estimate of 
small businesses to which Auction 100 competitive bidding rules may 
apply does not exclude any radio station from the definition of a small 
business on these bases and is therefore over-inclusive to that extent. 
Furthermore, the Bureaus are unable at this time to define or quantify 
the criteria that would establish whether a specific radio station is 
dominant in its field of operation. In addition, the Bureaus note that 
it is difficult to assess these criteria in the context of media 
entities and therefore estimates of small businesses to which they 
apply may be over-inclusive to this extent.
    54. The Bureaus also note that they are unable to accurately 
develop an estimate of how many of these 25 individuals or entities in 
Auction 100 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). Due to specific 
eligibility criteria adopted in a 2015 Commission rulemaking order, 
potential eligible bidders in Auction 100 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 
at 13

[[Page 56038]]

CFR 121.201. Based on Commission staff review of BIA/Kelsey, LLC's 
Media Access Pro Radio Database, 4,626 (99.94%) of 4,629 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 100 
eligible bidders would likely meet the SBA's definition of a small 
business concern.
    55. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. In the Auction 100 Comment 
Public Notice, the Bureaus propose no new reporting, recordkeeping, or 
other compliance requirements for small entities or other auction 
applicants. 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 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, there are 
additional compliance requirements for winning bidders. Thus, a small 
business that 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.
    56. 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, 5 U.S.C. 603(c)(1)-(4).
    57. The Bureaus intend that the proposals of the Auction 100 
Comment Public Notice to facilitate participation in Auction 100 will 
result in both operational and administrative cost savings for small 
entities and other auction participants. In light of the numerous 
resources that will be available from the Commission at no cost, the 
processes and procedures proposed in the Auction 100 Comment Public 
Notice should result in minimal economic impact on small entities. For 
example, prior to the auction, the Commission will hold a mock auction 
to allow eligible bidders the opportunity to familiarize themselves 
with both the bidding processes and systems that will be used in 
Auction 100. During the auction, participants will be able to access 
and participate in bidding via the internet using a web-based system, 
or telephonically, providing two cost-effective methods of 
participation and avoiding the cost of travel for in-person 
participation. Further, small entities as well as other auction 
participants will be able to avail themselves of telephone hotlines for 
assistance with auction processes and procedures as well as technical 
support hotlines to assist with issues such as access to or navigation 
within the electronic FCC Form 175 and use of the FCC's auction system. 
In addition, all auction participants, including small business 
entities, will have access to various other sources of information and 
databases through the Commission that will aid in both their 
understanding of and participation in the process. These mechanisms are 
made available to facilitate participation in Auction 100 by all 
eligible bidders and may result in significant cost savings for small 
business entities who utilize these mechanisms. These steps, coupled 
with the advance description of the bidding procedures in Auction 100, 
should ensure that the auction will be administered efficiently and 
fairly, thus providing certainty for small entities as well as other 
auction participants.
    58. These proposed procedures for the conduct of Auction 100 
constitute the more specific implementation of the competitive bidding 
rules contemplated by 47 CFR parts 1 and 73 and the underlying 
rulemaking orders, including the Broadcast First Report and Order and 
relevant competitive bidding orders, and are fully consistent 
therewith.
    59. Federal Rules That May Duplicate, Overlap or Conflict With the 
Proposed Rules. None.

C. Ex Parte Rules

    60. 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 100 Comment Public 
Notice on the relevant reporting requirements, participants in Auction 
100 should familiarize themselves with the Commission's ex parte rules.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, Wireless 
Telecommunications Bureau.
[FR Doc. 2018-24596 Filed 11-8-18; 8:45 am]
 BILLING CODE 6712-01-P