[Federal Register Volume 84, Number 205 (Wednesday, October 23, 2019)]
[Proposed Rules]
[Pages 56743-56754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22892]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 96

[AU Docket No. 19-244; FCC 19-96]


Auction of Priority Access Licenses for the 3550-3650 MHz Band; 
Comment Sought on Competitive Bidding Procedures for Auction 105; 
Bidding in Auction 105 Scheduled To Begin June 25, 2020

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: In this document, the Commission announces auctions of 
Priority Access Licenses for the 3550-3650 MHz Band, designated as 
Auction 105. This document proposes and seeks comment on competitive 
bidding procedures to be used for Auction 105.

DATES: Comments are due on or before October 28, 2019, and reply 
comments are due on or before November 12, 2019.

ADDRESSES: Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies. Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (May 1, 
1998). All filings in response to the Auction 105 Comment Public Notice 
must refer to AU Docket No. 19-244. The Commission strongly encourages 
interested parties to file comments electronically and requests that an 
additional copy of all comments and reply comments be submitted 
electronically to the following email address: [email protected].
    Electronic Filers: Comments may be filed electronically using the 
internet by accessing the ECFS: https://www.fcc.gov/ecfs/. Filers 
should follow the instructions provided on the website for submitting 
comments. In completing the transmittal screen, filers should include 
their full name, U.S. Postal Service mailing address, and the 
applicable docket number, AU Docket No. 19-244.
    Paper Filers: Parties who choose to file by paper must file an 
original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. 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.
    All hand-delivered or messenger-delivered paper filings for the 
Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes 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.

FOR FURTHER INFORMATION CONTACT: For auction legal questions, Mary 
Lovejoy or Kelly Quinn in the Auctions Division of the Office of 
Economics and Analytics at (202) 418-0660. For general auction 
questions, the Auctions Hotline at (717) 338-2868. For Priority Access 
License questions, Jessica Quinley in the Wireless Telecommunications 
Bureau's Mobility Division at (202) 418-1991.

SUPPLEMENTARY INFORMATION: This is a summary of the Public Notice 
(Auction 105 Comment Public Notice), AU Docket No. 19-244, FCC 19-96, 
adopted on September 26, 2019 and released on September 27, 2019. The 
Auction 105 Comment Public Notice includes the following attachment: 
Attachment A, Summary of Licenses to Be Auctioned. The complete text of 
the Auction 105 Comment Public Notice, 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 complete text is 
also available on the Commission's website at www.fcc.gov/auction/105/ 
or by using the search function for AU Docket No. 19-244 on the 
Commission's ECFS web page at www.fcc.gov/ecfs/. Alternative formats 
are available to persons with disabilities by sending an email to 
[email protected] or by calling the Consumer & Governmental Affairs Bureau 
at (202) 418-0530 (voice), (202) 418-0432 (TTY). Pursuant to Sections 
1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, 
interested parties may file comments and reply comments on or before 
the dates indicated in the Auction 105 Comment Public Notice in AU 
Docket No. 19-244.

I. Introduction

    1. By the Auction 105 Comment Public Notice, the Commission seeks 
comment on the procedures to be used for Auction 105, the auction of 
Priority Access Licenses (PALs) in the 3550-3650 MHz band. Bidding in 
the auction is scheduled to commence on June 25, 2020. By initiating 
the pre-bidding process for assigning licenses in Auction 105, the 
Commission takes an important step toward releasing flexible-use mid-
band spectrum to the market and furthering deployment of fifth-
generation wireless, the Internet of Things, and other advanced 
spectrum-based services in the United States.

II. Licenses To Be Offered in Auction 105

    2. Auction 105 will offer seven PALs in each county-based license 
area and counties shall be defined using the United States Census 
Bureau's data reflecting county legal boundaries and names valid 
through January 1, 2017. Each PAL consists of a 10-megahertz unpaired 
channel within the 3550-3650 MHz band. The auction will offer a total

[[Page 56744]]

of 22,631 PALs. PALs are 10-year renewable licenses. Priority Access 
Licensees may hold up to four 10-megahertz channel licenses (out of a 
total of seven) within the band in any license area at any given time.
    3. A frequency coordinator called a Spectrum Access System (SAS) 
will assign the specific channel for a particular licensee on a dynamic 
basis. Individual PALs will not be identified by specific spectrum 
blocks. Although Priority Access Licensees may request a particular 
channel or frequency range from an SAS following the auction, bidders 
should be mindful that licensees are not guaranteed a particular 
assignment. Potential bidders should also understand that an SAS may 
dynamically reassign a PAL to a different channel as needed to 
accommodate a higher priority Incumbent Access user. An SAS will 
``assign geographically contiguous PALs held by the same Priority 
Access Licensee to the same channels in each geographic area'' and 
``assign multiple channels held by the same Priority Access Licensee to 
contiguous frequencies within the same License Area,'' to the extent 
feasible. However, an SAS may temporarily reassign individual PALs to 
non-contiguous channels to the extent necessary to protect incumbent 
users from harmful interference or, if necessary, to perform its 
required functions.
    4. Each Priority Access Licensee must register its Citizens 
Broadband Radio Service Devices (CBSDs) with an SAS before operating 
those devices in the band. A CBSD registration includes its geographic 
location, antenna height, CBSD class, requested authorization status, 
FCC identification number, call sign, user contact information, air 
interface technology, unique manufacturer's serial number, sensing 
capabilities (if supported), and information on its deployment profile. 
An SAS relies on this information to coordinate access for Priority 
Access Licensees and General Authorized Access (GAA) users, and an SAS 
Administrator may charge Priority Access Licensees and GAA users a 
reasonable fee for its services.

A. Sharing in the 3.5 GHz Band

    5. The 3.5 GHz band (3550-3700 MHz) is governed by a three-tiered 
spectrum authorization framework. The three tiers of authorization are: 
Incumbent Access, Priority Access, and General Authorized Access (GAA). 
SASs will facilitate sharing among the three tiers of authorized users. 
Incumbent users receive protection from Priority Access Licensees and 
GAA users, while Priority Access Licensees receive protection from GAA 
users. The three-tiered structure is designed to accommodate a variety 
of commercial uses on a shared basis with incumbent federal and non-
federal uses of the band. The Citizens Broadband Radio Service includes 
Priority Access Licensees and GAA users in the 3550-3650 MHz band and 
GAA users in the 3550-3700 MHz band (collectively, the 3.5 GHz band).
    6. Incumbent users, which have the highest priority, include 
federal radiolocation users in the 3550-3650 MHz band and non-Federal 
grandfathered Fixed Satellite Service (FSS) earth stations in the 3600-
3650 MHz band.
    7. The 3550-3650 MHz band segment is allocated for use by 
Department of Defense (DoD) radar systems on a primary basis and by 
Federal non-military Radiolocation Service on a secondary basis. 
Federal aeronautical radionavigation (ground-based) stations may also 
be authorized on a primary basis in the 3500-3650 MHz band when 
accommodation in the 2700-2900 MHz band is not technically or 
economically feasible. Non-Federal licensees, including Priority Access 
Licensees, may not cause harmful interference to, or claim protection 
from federal stations in the aeronautical radionavigation (ground-
based) and radiolocation services in the 3550-3650 MHz band. The 
National Telecommunications and Information Administration (NTIA) may 
approve frequency assignments for new and modified Federal stations at 
current or new locations.
    8. In the 3550-3650 MHz band, non-Federal stations in the 
Radiolocation Service that were licensed or had pending applications 
prior to July 23, 2015 may operate on a secondary basis to the Citizens 
Broadband Radio Service until the end of the equipment's useful 
lifetime. FSS (space-to-Earth) earth station operations in the 3600-
3650 MHz band may operate on a primary basis if the Commission 
authorized operation prior to or granted an application filed prior to 
July 23, 2015 and if the FSS licensee constructed the subject earth 
station(s) within 12 months of the initial authorization. Any new FSS 
(space-to-Earth) earth stations in the 3600-3650 MHz band assigned 
after July 23, 2015, are authorized on a secondary basis. Regardless of 
primary or secondary status, all non-Federal FSS (space-to-Earth) 
operations in the 3600-3650 MHz band are limited to international 
inter-continental systems and subject to case-by-case electromagnetic 
compatibility analysis.
    9. GAA users may operate in the 3550-3700 MHz band, but are not 
guaranteed protection from interference. GAA users may operate on any 
frequencies not in use by Priority Access Licensees or Tier 1 licensees 
in the 3550-3650 MHz band. The GAA tier is licensed-by-rule to permit 
open, flexible access to the band for the widest possible group of 
potential users.
    10. Each potential bidder is solely responsible for investigating 
and evaluating all technical and marketplace factors that may have a 
bearing on the potential uses of a PAL that it may seek in Auction 105. 
In addition to the typical due diligence considerations that the 
Commission encourages of bidders in all auctions, the Commission calls 
particular attention in Auction 105 to the spectrum-sharing issues 
described above. Each applicant should closely follow releases from the 
Commission concerning these issues and consider carefully the technical 
and economic implications for commercial use of the 3550-3650 MHz band.

III. Proposed Pre-Bidding Procedures

A. Information Procedures During the Auction Process

    11. Consistent with most recent spectrum auctions, the Commission 
proposes to limit information available in Auction 105 in order to 
prevent the identification of bidders placing particular bids until 
after the bidding has closed. More specifically, the Commission 
proposes not to make public until after bidding has closed: (1) The 
licenses or license areas that an applicant selects for bidding in its 
auction application (FCC Form 175); (2) the amount of any upfront 
payment made by or on behalf of an applicant for Auction 105; (3) an 
applicant's bidding eligibility; and (4) any other bidding-related 
information that might reveal the identity of the bidder placing a bid.
    12. Under these proposed limited information procedures (sometimes 
also referred to as anonymous bidding), information to be made public 
after each round of bidding in Auction 105 includes, for each county: 
the aggregate demand for licenses, the prices at the end of the last 
completed round, and the prices for the next round. The identities of 
bidders placing specific bids and the net bid amounts (reflecting 
bidding credits) would not be disclosed until after the close of 
bidding.
    13. Bidders would have access to additional information related to 
their own bidding and bid eligibility. For example, bidders would be 
able to view their own level of eligibility, before and

[[Page 56745]]

during the auction, through the FCC auction bidding system.
    14. After the close of bidding, bidders' county selections and the 
number of licenses selected for each county, upfront payment amounts, 
bidding eligibility, bids, and other bidding-related actions would be 
made publicly available.
    15. The Commission seeks comment on the above details of the 
proposal for implementing limited information procedures, or anonymous 
bidding, in Auction 105. Commenters opposing the use of anonymous 
bidding in Auction 105 should explain their reasoning and propose 
alternative information rules.

B. Bidding Credit Caps

    16. The Commission administers its bidding credit programs to 
promote small business and rural service provider participation in 
auctions and in the provision of spectrum-based services. In 2018, the 
Commission determined that it would offer bidding credits in 
competitive bidding for PALS in the 3550-3650 MHz band auction to 
improve the ability of small businesses and rural service providers to 
attract the capital necessary to meaningfully acquire PALs. 
Specifically, the Commission adopted the gross revenue thresholds that 
define the eligibility tiers for the small business bidding credit, as 
revised by the 2015 Part 1 Report and Order, 80 FR 56764, September 18, 
2015, as well as a rural service provider bidding credit program. For 
the PALs in the 3550-3650 MHz band, the Commission determined that an 
entity with average annual gross revenues for the preceding three years 
not exceeding $55 million will be eligible to qualify as a ``small 
business'' for a bidding credit of 15%, while an entity with average 
annual gross revenues for the preceding three years not exceeding $20 
million will be eligible to qualify as a ``very small business'' for a 
bidding credit of 25%, consistent with the standardized schedule in 
Part 1 of the Commission's rules. Additionally, the Commission 
determined that entities providing commercial communication services to 
a customer base of fewer than 250,000 combined wireless, wireline, 
broadband, and cable subscribers in predominantly rural areas will be 
eligible for the 15% rural service provider bidding credit in 
competitive bidding for PALs in the 3550-3650 MHz band.
    17. Consistent with the Commission's decision in the 2015 Part 1 
Report and Order to set a reasonable cap on the total amount of bidding 
credits that an eligible small business or rural service provider may 
be awarded in any auction, the Commission now seeks comment on 
establishing the caps on the total amount of bidding credits that an 
eligible small business or rural service provider may be awarded for 
Auction 105. As the Commission explained in the 2015 Part 1 Report and 
Order, the total amount of the bidding credit cap for small businesses 
will not be less than $25 million, and the bidding credit cap for rural 
service providers will not be less than $10 million.
    18. For Auction 105, the Commission proposes a $25 million cap on 
the total amount of bidding credits that may be awarded to an eligible 
small business, and a $10 million cap on the total amount of bidding 
credits that may be awarded to an eligible rural service provider. 
These proposals are consistent with the Commission's recent decisions 
in Auctions 101, 102, and 103. As in those auctions, the Commission 
believes that the range of potential use cases suitable for spectrum in 
the 3550-3650 MHz band, combined with the relatively small geographic 
areas for PALs, may permit deployment of smaller scale networks with 
lower total costs. Moreover, past auction data suggests that the 
proposed caps will allow the substantial majority of eligible 
businesses in the auction to take advantage of the bidding credit 
program. In addition, to create parity in Auction 105 among eligible 
small businesses and rural service providers competing against each 
other in small markets, the Commission proposes a $10 million small 
markets cap on the overall amount of bidding credits that any winning 
small business bidder may apply to licenses won in counties located 
within any Partial Economic Area (PEA) with a population of 500,000 or 
less. These markets correspond to PEAs 118-416, excluding PEA 412 
(Puerto Rico).
    19. The Commission seeks comment on these proposed caps. 
Specifically, do the expected capital requirements associated with 
operating in the 3550-3650 MHz band, the potential number and value of 
PALs, past auction data, or any other considerations justify the 
proposed caps or a higher cap for either type of bidding credit? 
Commenters are encouraged to identify circumstances and characteristics 
of Auction 105 that should guide us in establishing bidding credit 
caps, and to provide specific, data-driven arguments in support of 
their proposals.
    20. The Commission reminds applicants applying for designated 
entity bidding credits that they should take account of the 
requirements of the Commission's rules and implementing orders 
regarding de jure and de facto control of such applicants. These rules 
include a prohibition, which applies to all applicants (whether or not 
seeking bidding credits), against changes in ownership of the applicant 
that would constitute an assignment or transfer of control. Applicants 
should not expect to receive any opportunities to revise their 
ownership structure after the filing of their short- and long-form 
applications, including making revisions to their agreements or other 
arrangements with interest holders, lenders, or others in order to 
address potential concerns relating to compliance with the designated 
entity bidding credit requirements. This policy will help ensure 
compliance with the Commission's rules applicable to the award of 
bidding credits prior to the conduct of Auction 105, which will involve 
competing bids from those with and without bidding credits, and thus 
preserve the integrity of the auctions process. The Commission also 
believes that this will meet the objectives that the Commission must 
consider in awarding licenses through the competitive bidding process, 
including ``the development and rapid deployment of new technologies, 
products, and services for the benefit of the public . . . without 
administrative or judicial delays'' and ``promoting economic 
opportunity and competition and ensuring that new and innovative 
technologies are readily accessible to the American people by avoiding 
excessive concentration of licenses and by disseminating licenses among 
a wide variety of applicants, including small businesses.''

IV. Proposed Bidding Procedures

A. Clock Auction Design

    21. The Commission proposes to conduct Auction 105 using an 
ascending clock auction design, in which bidders indicate their demands 
for generic license blocks in specific geographic areas--in this case, 
counties. The Commission's proposed clock auction format would proceed 
in a series of rounds, with bidding being conducted simultaneously for 
all spectrum blocks in all counties available in the auction. During 
each bidding round, the Commission would announce a per-block price in 
each county, and qualified bidders would submit, for each county for 
which they wish to bid, the number of blocks they seek at the clock 
prices associated with the current round. Bidding rounds would be open 
for predetermined periods of time. Bidders would be subject to activity 
and eligibility rules

[[Page 56746]]

that govern the pace at which they participate in the auction.
    22. Under this proposal, in each county, the clock price for a 
generic license block would increase from round to round if bidders 
indicate total demand in that county that exceeds the number of blocks 
available. The bidding rounds would continue until, for all counties, 
the total number of blocks that bidders demand does not exceed the 
supply of available blocks. At that point, those bidders indicating 
demand for a block at the final price would be deemed winning bidders.
    23. The clock auction design the Commission proposes for Auction 
105 is similar in many respects to that used by the Commission for 
Auctions 1002 and 102, and that will be used for Auction 103, but it 
would differ in several important respects. First, no assignment phase 
will be held to assign frequency-specific licenses, as was done in 
previous auctions, because Priority Access Licensees will not be 
assigned frequency-specific licenses, but will be authorized to use 
frequencies associated with their PALs as dynamically assigned by SASs. 
Second, although the geographic licensing areas will be counties, the 
Commission seeks comment on a proposal to allow any bidder to elect to 
bid at a Cellular Market Area (CMA)-level for certain large CMAs rather 
than bidding separately for the counties within the CMA. The Commission 
seeks comment on bid incrementing and processing procedures to 
accommodate CMA-level bidding. These approaches could permit greater 
flexibility for bidders seeking to serve areas larger than a county. 
Third, the Commission proposes to modify the bidding activity rules 
that were used in prior clock auctions to provide a safeguard against a 
bidder losing bidding eligibility under certain circumstances.
    24. The Commission directs the Office of Economics and Analytics 
(OEA), in conjunction with the Wireless Telecommunications Bureau 
(Bureau), to prepare and release, concurrent with the Auction 105 
Comment Public Notice, a technical guide that provides mathematical 
details and algorithms of the proposed auction design.

B. Generic License Blocks

    25. According to the 2018 3.5 GHz Order, 83 FR 63076, December 7, 
2018, the 70 megahertz of spectrum designated for PALs in the 3550-3650 
MHz band will be licensed in seven generic 10-megahertz blocks by 
county. Accordingly, in the auction, seven generic block licenses will 
be available for bidding in each county.
    26. Limit on number of blocks per bidder. In the 2018 3.5 GHz 
Order, the Commission affirmed the its previous decision to impose a 
spectrum aggregation limit for PALs of 40 megahertz (i.e., four PALs) 
in any geographic area at any point in time. Consistent with this limit 
on the number of blocks that a single entity can hold in any single 
county, the bidding system will limit to four the quantity of blocks 
that a bidder can demand in any given area at any point in the auction. 
Therefore, in each bidding round, a bidder will have the opportunity to 
bid for up to four generic blocks of spectrum per county.
    27. County-level or CMA-level bidding. As indicated in the 2018 3.5 
GHz Order, the Commission seeks comment on proposed procedures that 
could give greater bidding flexibility to bidders interested in serving 
areas larger than a county. Under this proposal, a bidder could elect 
prior to the start of the bidding to bid at a CMA level for blocks in 
all of the counties comprising certain large CMAs. A bid at the CMA 
level would indicate demand for a single quantity of blocks for every 
county in the CMA. If a bidder is bidding at the CMA level and wins 
blocks in the CMA, the bidder would win the same number of blocks 
specified in the bid in each of the counties in the CMA. For example, 
if an entity bids successfully on four channels in CMA-60 that covers 
Orange, Osceola, and Seminole counties in Florida, then the Commission 
would issue twelve licenses. After the auction, the licensee would hold 
four 10-megahertz channel licenses within the 3550-3650 MHz band in 
each of the three counties. If a bidder elects CMA-level bidding for a 
CMA, the bidder would forego the opportunity to bid also at the county 
level for the individual counties in that CMA for the duration of 
Auction 105. PALs will be licensed on a county basis regardless of 
whether demands for the counties in a specific CMA are expressed 
through CMA-level or county-by-county bidding.
    28. Since the benefits to bidders of being able to bid for an 
aggregation of counties, rather than having to bid for the counties 
separately, would likely be greatest for large metropolitan areas, the 
Commission proposes that CMA-level bidding, subject to the conditions 
and procedures specified, be permitted only for the top CMAs that 
include more than one county. For purposes of Auction 105, we have used 
the 1992 CMA markets, adjusted for changes to county boundaries since 
that time. Where the benefits of bidding for an aggregation of counties 
are likely to be less significant, the Commission proposes to maintain 
procedures for county-level bidding only. Accordingly, the Commission 
proposes to allow a bidder to elect CMA-level bidding for the 172 CMAs 
that are classified as Metropolitan Statistical Areas (MSAs) and that 
incorporate multiple counties. Not including the Gulf of Mexico, 305 
CMAs are classified as MSAs (Metropolitan Statistical Areas). Of these, 
133 encompass a single county. Each of the remaining 172 MSAs comprises 
multiple counties. A bidder that does not elect CMA-level bidding for a 
given CMA would be able to bid for any or all of the counties in the 
CMA individually. A bidder would only be able to bid for all other 
counties--those in CMAs classified as Rural Service Areas (RSAs) and 
single-county MSAs--on a county-by-county basis.
    29. Under this proposal to permit CMA-level bidding, a bidder would 
be permitted to elect CMA-level bidding for a given CMA only if it has 
selected all the counties in that CMA on its Form 175. Further, its 
initial eligibility must be sufficient to bid for at least one block 
within the CMA (i.e., one block in each county in the CMA).
    30. We clarify that under this proposal, prices will would be 
determined on a county-by-county basis, consistent with the basic clock 
mechanism. Prices in a particular county would depend upon whether the 
aggregate demand for blocks in that county exceeds the supply, 
regardless of whether the demand comes from bidders bidding on a CMA 
level, on a county level, or both.
    31. We seek comment on this proposal for CMA-level bidding 
generally. In particular, we ask for comment on the proposal to make 
eligible for CMA-level bidding the multi-county CMAs that are 
classified as MSAs, to require a bidder to make an irrevocable election 
to bid at the CMA level or the county level, and on the specific 
implementation procedures we propose. We seek comment on how this 
proposal, including the proposed implementation procedures described 
below, would affect auction participation by bidders that seek licenses 
for individual counties. We also seek comment on whether there are 
modifications that should be made to our proposal for CMA-level bidding 
that would assist auction participation by smaller entities interested 
in county-sized licenses.

C. Bidding Rounds

    32. Under the proposed clock auction format, Auction 105 would 
consist of sequential bidding rounds, each

[[Page 56747]]

followed by the release of round results. The initial bidding schedule 
would be announced in a public notice to be released at least one week 
before the start of bidding.
    33. The Commission will conduct Auction 105 over the internet. 
Bidders will upload bids in a specified file format for processing by 
the FCC auction bidding system.
    34. Under this proposal, OEA would retain the discretion to adjust 
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. Such adjustments may include changes in the 
amount of time for bidding rounds, the amount of time between rounds, 
or the number of rounds per day, and would depend upon bidding activity 
and other factors. The Commission seeks comment on this proposal. 
Commenters should address the role of the bidding schedule in managing 
the pace of the auction and should specifically discuss the tradeoffs 
in managing auction pace by bidding schedule changes, by changing the 
activity requirement percentage or bid increment parameters, or by 
using other means.

D. Stopping Rule

    35. The Commission proposes a simultaneous stopping rule for 
Auction 105, under which all blocks in all counties would remain 
available for bidding until the bidding stops in every county. 
Specifically, the Commission proposes that bidding close for all blocks 
after the first round in which there is no excess demand in any county. 
Excess demand is calculated as the difference between the number of 
blocks of aggregate demand (from both county-level and CMA-level bids) 
and supply (equal to 7 blocks in all counties). Consequently, under 
this approach, it is not possible to determine in advance how long 
Auction 105 would last. The Commission seeks comment on the proposed 
simultaneous stopping rule.

E. Information Relating to Auction Delay, Suspension, or Cancellation

    36. For Auction 105, the Commission proposes that, at any time 
before or during the bidding process, OEA, in conjunction with the 
Bureau, may delay, suspend, or cancel bidding in Auction 105 in the 
event of a natural disaster, technical obstacle, network interruption, 
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. In such 
a case, OEA 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 the bidding is delayed or suspended, 
OEA, in its sole discretion, may elect to resume the auction starting 
from the beginning of the current round or from some previous round, or 
it may cancel the auction in its entirety. The Commission emphasizes 
that OEA and the Bureau would exercise this authority solely at their 
discretion. The Commission seeks comment on this proposal.

F. Upfront Payments and Bidding Eligibility

    37. In keeping with the Commission's usual practice in spectrum 
license auctions, the Commission proposes that applicants be required 
to submit upfront payments as a prerequisite to becoming qualified to 
bid. As described below, the upfront payment is a refundable deposit 
made by an applicant to establish its eligibility to bid on licenses. 
Upfront payments 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 Commission proposes upfront payments based on $0.01 per MHz-
pop, with a minimum of $500 per county. The results of these 
calculations will be rounded using the Commission's standard rounding 
procedures for auctions: Results above $10,000 are rounded to the 
nearest $1,000; results below $10,000 but above $1,000 are rounded to 
the nearest $100; and results below $1,000 are rounded to the nearest 
$10. The proposed upfront payments equal approximately half the 
proposed minimum opening bids, which are established as described in 
section IV.H.1 of the Auction 105 Comment Public Notice. The Commission 
seeks comment on these upfront payment amounts, which are specified in 
the Attachment A files of the Auction 105 Comment Public Notice.
    38. The Commission further proposes that the amount of the upfront 
payment submitted by a bidder would determine its initial bidding 
eligibility in bidding units, which are a measure of bidder eligibility 
and bidding activity. The Commission proposes to assign each block in a 
given county a specific number of bidding units, equal to one bidding 
unit per $10 of the upfront payment listed in Attachment A. The number 
of bidding units for one block in a given county is fixed, since it is 
based on the MHz-pops in the block, and does not change during the 
auction as prices change. To the extent that bidders wish to bid on 
multiple generic blocks simultaneously, whether within the same county 
or in different counties, they would need to ensure that their upfront 
payment provides enough eligibility to cover multiple blocks.
    39. Under the proposed approach, a bidder's upfront payment would 
not be attributed to blocks in a specific county or counties. A bidder 
may place bids on multiple blocks in counties that it selected for 
bidding in its FCC Form 175, provided that the total number of bidding 
units associated with those blocks does not exceed its eligibility-
based limit for the round. 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 in any 
single round and submit an upfront payment amount covering that total 
number of bidding units. The Commission seeks comment on these 
proposals.

G. Activity Rule, Activity Upper Limit, and Reducing Eligibility

    40. 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. For this clock auction, a bidder's activity in a 
round for purposes of the activity rule would be the sum of the bidding 
units associated with the bidder's demands as applied by the auction 
system during bid processing. Bidders are required to be active on a 
specific percentage (the activity requirement percentage) of their 
current bidding eligibility during each round of the auction. Failure 
to maintain the requisite activity level would result in a reduction in 
the bidder's eligibility, possibly curtailing or eliminating the 
bidder's ability to place additional bids in the auction.
    41. The Commission proposes to require that bidders maintain a 
fixed, high level of activity in each round of Auction 105 in order to 
maintain bidding eligibility. Specifically, the Commission proposes to 
require that bidders be active on between 90% and 100% of their bidding 
eligibility in all clock rounds. Thus, the activity rule would be 
satisfied when a bidder has bidding activity on blocks with bidding 
units that total 90% to 100% of its current eligibility in the round. 
If the activity rule is met, then the bidder's

[[Page 56748]]

eligibility does not change for the next round. If the activity rule is 
not met in a round, the bidder's eligibility would be reduced. The 
Commission proposes to calculate bidding activity based on the bids 
that are accepted by the FCC auction bidding system. That is, if a 
bidder requests a reduction in the quantity of blocks it demands in a 
county, but the FCC auction bidding system does not accept the request 
because demand would fall below the available supply, then the bidder's 
activity would reflect its unreduced demand. Under the ascending clock 
auction format, the FCC auction bidding system will not allow a bidder 
to reduce the quantity of blocks it demands in an individual county if 
the reduction would result in aggregate demand falling below (or 
further below) the available supply of blocks in the county.
    42. Because a bidder's eligibility for the next round is calculated 
based on the bidder's demands as applied by the auction system during 
bid processing, a bidder's eligibility may be reduced even if the 
bidder submitted bids with activity that exceeds the required activity 
for the round. This may occur, for example, if the bidder bids to 
reduce its demand in county A by two blocks (with 10 bidding units 
each) and bids to increase its demand by one block (with 20 bidding 
units) in county B. If the bidder's demand can only be reduced by one 
block in county A (because there is only one block of excess demand), 
the increase in county B cannot be applied, and absent other bidding 
activity the bidder's eligibility would be reduced. To help a bidder 
avoid having its eligibility reduced as a result of submitted bids that 
could not be accepted during bid processing, the Commission proposes to 
allow a bidder to submit bids with associated bidding activity greater 
than its current bidding eligibility. For example, under this proposal, 
and depending upon the bidder's overall bidding eligibility and the 
activity limit percentage, a bidder could submit an ``additional'' bid 
or bids that would be considered (in price point order with its other 
bids) and applied as available eligibility permits during the bid 
processing. However, under the proposed procedures, the bidder's 
activity as applied by the auction system during bid processing would 
not exceed the bidder's current bidding eligibility. That is, a bidder 
may submit bids with associated bidding units exceeding 100% of its 
current bidding eligibility, but its processed activity may never 
exceed its eligibility.
    43. Specifically, the Commission proposes that after Round 1 a 
bidder may submit bids with bidding units totaling up to an activity 
upper limit equal to the bidder's current bidding eligibility for the 
round times a percentage (the activity limit percentage) equal to or 
greater than 100%. For Round 1, the activity upper limit would be 100% 
of the bidder's initial bidding eligibility. The Commission proposes an 
initial activity limit percentage of 120% and a range of potential 
percentages between 100% and 140% to apply to Round 2 and subsequent 
rounds. In any bidding round, the auction bidding system will advise 
the bidder of its current bidding eligibility, its required bidding 
activity, and its activity upper limit.
    44. Under the proposed procedures, OEA would retain the discretion 
to change the activity requirement percentage and the activity limit 
percentage during the auction. The bidding system would announce any 
such changes in advance of the round in which they would take effect, 
giving bidders adequate notice to adjust their bidding strategies.
    45. The Commission invites comment on this proposal and, in 
particular, on using an activity upper limit to address the potential 
for loss of bidding eligibility under some circumstances. We also 
encourage commenters to address specifically whether to set the 
activity requirement percentage between 90% and 100% and whether to set 
the activity limit percentage between 100% and 140%. Further, the 
Commission seeks comment on where to set these percentages initially. 
The Commission also seeks comment on the relationship between the 
proposed activity rules and the ability of bidders to switch their 
demands across counties. The Commission encourages any commenters that 
oppose the proposed ranges for the activity requirement percentage and 
the activity limit percentage to explain their reasons with 
specificity.
    46. The Commission points out that under the proposed clock auction 
format, bidders are required to indicate their demands in every round, 
even if their demands at the new round's prices are unchanged from the 
previous round. Missing bids--bids that are not reconfirmed--are 
treated by the auction bidding system as requests to reduce to a 
quantity of zero blocks for the county or CMA (if the bidder is bidding 
at the CMA level). If these requests are applied, or applied partially, 
a bidder's bidding activity, and hence its bidding eligibility for the 
next round, may be reduced. A CMA-level bid may be applied partially 
with respect to the number of blocks specified in the bid, not for 
fewer than the full number of counties in the CMA.
    47. For Auction 105, the Commission does not propose to provide for 
activity rule waivers to preserve a bidder's eligibility. The 
Commission notes that its proposal to permit a bidder to submit bids 
with bidding activity greater than its eligibility, within the precise 
limits set forth above, would address some of the circumstances under 
which a bidder risks losing bidding eligibility and otherwise could 
wish to use a bidding activity waiver, while minimizing any potential 
adverse impacts on bidder incentives to bid sincerely and on the price 
setting mechanism of the clock auction. This approach not to allow 
waivers is consistent with the ascending clock auction procedures used 
in Auction 1002 and 102 and with the procedures adopted for Auction 
103. The clock auction relies on precisely identifying the point at 
which demand decreases to equal supply to determine winning bidders and 
final prices. Allowing waivers would create uncertainty with respect to 
the exact level of bidder demand and interfere with the basic clock 
price-setting and winner determination mechanism. Moreover, uncertainty 
about the level of demand would affect the way bidders' requests to 
reduce demand are processed by the bidding system, as addressed below. 
The Commission seeks comment on this approach.

H. Acceptable Bids

1. Reserve Price or Minimum Opening Bids
    48. As part of the pre-bidding process for each auction, the 
Commission seeks comment on the use of a minimum opening bid amount 
and/or reserve price, as mandated by Section 309(j) of the 
Communications Act of 1934, as amended.
    49. The Commission proposes to establish minimum opening bid 
amounts for Auction 105. The bidding system will not accept bids lower 
than these amounts. Based on the Commission's experience in past 
auctions, setting minimum opening bid amounts judiciously is an 
effective tool for accelerating the competitive bidding process. In the 
first bidding round of Auction 105, a bidder would indicate how many 
generic license blocks in a county (or CMA, if applicable) it demands 
at the minimum opening bid price. For Auction 105, the Commission 
proposes to establish initial clock prices, or minimum opening bids, by 
county, as set forth in the following paragraph. For CMA-level bids, 
the Commission proposes minimum

[[Page 56749]]

opening bids that are the sum of the minimum opening bids for all of 
the counties in the CMA. There are no circumstances associated with 
Auction 105 that suggest the Commission should propose a separate 
aggregate reserve price in Auction 105. Accordingly, the Commission 
does not propose to establish an aggregate reserve price or block 
reserve prices that are different from minimum opening bid amounts for 
the licenses to be offered in Auction 105.
    50. For Auction 105, the Commission proposes to calculate minimum 
opening bid amounts using a formula based on bandwidth and license area 
population, which is similar to the Commission's approach in many 
previous spectrum auctions. The Commission proposes to use a 
calculation based on $0.02 per MHz-pop, with a minimum of $1,000. The 
Commission seeks comment on these minimum opening bid amounts, which 
are specified in the Attachment A files. If commenters believe that 
these minimum opening bid amounts would result in unsold licenses, are 
not reasonable amounts, or should instead operate as reserve prices, 
they should explain their reasoning and propose an alternative 
approach. Commenters should support their claims with valuation 
analyses and suggested amounts or formulas for reserve prices or 
minimum opening bids.
    51. In establishing minimum opening bid amounts, the Commission 
particularly seeks comment on factors that could reasonably affect 
bidders' valuation of the spectrum, including the type of service 
offered, market size, population covered by the proposed facility, and 
any other relevant factors.
    52. Commenters may also wish to address the general role of minimum 
opening bids in managing the pace of the auction. For example, 
commenters could compare using minimum opening bids--e.g., by setting 
higher minimum opening bids to reduce the number of rounds it takes 
licenses to reach their final prices--to other means of controlling 
auction pace, such as changing the bidding schedule, the activity 
requirement percentage, or the bid increment parameters.
2. Clock Price Increments
    53. Under the proposed clock auction format for Auction 105, after 
bidding in the first round and before each subsequent round, the FCC 
auction bidding system would announce the start-of-round price and the 
clock price for the upcoming round--that is, the lowest price and the 
highest price at which bidders can specify the number of blocks they 
demand during the round. As long as aggregate demand for blocks in the 
county exceeds the supply of blocks, the start-of-round price would be 
equal to the clock price from the prior round. If demand equaled supply 
at a price in a previous round, then the start-of-round price for the 
next round would be equal to the price at which demand equaled supply. 
If demand was less than supply in the previous round, then the start-
of-round price for the next round would not increase.
    54. The Commission proposes to set the clock price for blocks in a 
specific county for a round by adding a percentage increment, which may 
be county-specific, to the start-of-round price. For example, if the 
start-of-round price for a block in a given county is $10,000, and the 
percentage increment is 20%, then the clock price for the round will be 
$12,000. The Commission further proposes that the total dollar amount 
of the increment (the difference between the clock price and the start-
of-round price) would not exceed a certain amount. The Commission 
proposes that this cap on the increment initially be set at $10 
million, and proposes to retain the discretion to adjust this cap as 
rounds continue.
    55. Under the proposed procedures, the percentage increment for a 
county would depend upon whether the county is in a CMA for which CMA-
level bids are allowed.
    56. For counties not subject to CMA-level bidding. The Commission 
proposes to set the clock price for blocks in a county not subject to 
CMA-level bidding (counties in CMAs 307-734 and counties in single-
county MSAs) by adding a fixed increment--the basic increment 
percentage--to the start-of-round price. The Commission proposes to set 
the basic increment percentage within a range of 5% to 20% inclusive, 
to set the initial basic increment percentage at 10%, and potentially 
to adjust the increment as rounds continue. The proposed 5% to 20% 
increment range will allow us to set a percentage that manages the 
auction pace and takes into account bidders' needs to evaluate their 
bidding strategies while moving the auction along quickly.
    57. For counties subject to CMA-level bidding. The Commission 
proposes to set the clock price for counties that are subject to CMA-
level bidding using a formula that attempts to equalize aggregate 
demand across the counties in the CMA, thereby discouraging excess 
supply that can occur with CMA-level bids. Because of the exception to 
the no excess supply rule, one unit of CMA-level bid to reduce demand 
may be applied even of that causes aggregate demand to drop below 
supply in some counties. Thus, the aggregate demand in a county can 
drop in later rounds even if the aggregate demand in that county 
initially exceeded supply. Under this proposal, when there is 
significant variation in the extent of aggregate demand across the 
counties in a CMA, the increment percentage will be larger for counties 
with greater aggregate demand, increasing prices more quickly. As a 
result, aggregate demand for those counties will tend to fall relative 
to aggregate demand for counties in which prices are increasing less 
quickly. As aggregate demand across the counties in the CMA tends to 
equalize, it becomes less likely that there will be excess demand in 
one county but not in others, a situation which under the proposed 
procedures may allow a CMA-level bidder to reduce demand such that 
demand falls below supply in one or more counties.
    58. Under this proposal, the bidding system would set the clock 
price for counties subject to CMA-level bidding using an algorithm. The 
algorithm would first consider the extent of variation in excess demand 
across the counties in the CMA. If the variation does not exceed a 
given basic threshold, the increment percentage for all counties in the 
CMA would be set equal to the basic increment percentage. Then the 
clock price would be determined by adding the basic increment 
percentage to the start-of-round price for each county in the CMA, as 
it would be for counties not subject to CMA-level bidding.
    59. If instead the algorithm shows that the extent of variation in 
aggregate demand across the counties in a CMA exceeds the basic 
threshold, indicating that there is significantly more demand for 
blocks in some counties than others, the algorithm would calculate an 
increment percentage for each county based on how aggregate demand in 
that county compares to aggregate demand in the other counties. The 
increment percentage for counties with relatively high demand would be 
greater than the increment percentage for counties with relatively low 
demand. The county-specific percentage increment calculated by the 
algorithm would then be added to the start-of-round price to determine 
the clock price for the county. The increment percentages would be no 
greater than a maximum, which the Commission proposes to set within a 
range of 5% to 20% and no less than a minimum, which the Commission 
proposes to set within a range of 2% to 20%. The Commission proposes to 
set the initial maximum increment percentage at 15%, and the

[[Page 56750]]

initial minimum increment percentage at 5%.
    60. The specific algorithm proposed for calculating the increment 
percentage in counties subject to CMA-level bidding is set forth in the 
Auction 105 Technical Guide. The Commission seeks comment on these 
proposed procedures for setting the clock increment under various 
circumstances, including the variable pricing algorithm and the use of 
the algorithm with CMA-level bids. As an alternative to our proposal to 
use a variable price increment for counties subject to CMA-level 
bidding to help avoid creating excess supply, should we apply the basic 
increment to all counties? In particular, the Commission asks for 
feedback on the proposed 5% to 20% range for the basic increment 
percentage, with an initial basic increment percentage of 10%. The 
Commission also asks for specific feedback on the proposed 2% to 20% 
range for the minimum increment percentage, with an initial minimum 
increment percentage of 5%, and on the proposed 5% to 20% range for the 
maximum increment percentage, with an initial maximum increment 
percentage of 15%.
3. Intra-Round Bids
    61. The Commission proposes generally to permit a bidder to make 
intra-round bids by indicating a point between the start-of-round price 
and the clock price at which its demand for blocks changes. In placing 
an intra-round bid, a bidder would indicate a specific price and a 
quantity of blocks it demands if the price for blocks should increase 
beyond that price.
    62. The Commission also proposes an exception to this general rule. 
In the case of a CMA-level bid to reduce demand, the bid could only be 
made at the start-of-round price. This proposed exception would help to 
ensure that the price does not increase above the start-of-round price 
when there is excess supply (that is, unsold blocks), which may result 
from a CMA-level bid to reduce demand.
    63. Intra-round bids would be optional; a bidder may choose to 
express its demands only at the clock prices. This proposal to permit 
intra-round bidding would allow the auction system to use relatively 
large increments, thereby speeding the auction, without running the 
risk that a jump in the clock price will overshoot the market clearing 
price--the point at which demand for blocks equals the available 
supply. The Commission seeks comment on the proposal to allow intra-
round bids.

I. Bids To Change Demand and Bid Processing

    64. Under the ascending clock format the Commission proposes for 
Auction 105, a bidder would indicate in each round the number of blocks 
in each county and/or CMA (if bidding at a CMA level) that it demands 
at a given price. A bidder that wishes to change the quantity it 
demands (relative to its demands from the previous round as processed 
by the bidding system) would express its demands at the clock price or 
at an intra-round price. However, CMA-level bids to reduce demand must 
be made at the start-of-round price. A bidder that is willing to 
maintain the same demand in a county at the new clock price would bid 
for that quantity at the clock price, indicating that it is willing to 
pay up to that price, if need be, for the specified quantity. Bids to 
maintain demand would always be applied by the auction bidding system.
    65. The Commission proposes bid processing procedures that the 
auction bidding system would use, after each bidding round, to process 
bids to change demand to determine the processed demand of each bidder 
and a posted price for each county that would serve as the start-of-
round price for the next round.
1. No Excess Supply Rule
    66. Under the ascending clock auction format, the FCC auction 
bidding system will not allow a bidder to reduce the quantity of blocks 
it demands in an individual county if the reduction would result in 
aggregate demand falling below (or further below) the available supply 
of blocks in the county. Therefore, if a bidder bids to reduce the 
number of blocks that it holds as of the previous round, the FCC 
auction bidding system will treat the bid as a request to reduce demand 
that will be applied only if the ``no excess supply'' rule would be 
satisfied.
    67. The Commission proposes a limited exception to the ``no excess 
supply'' rule for CMA-level bids only. Under this proposed 
modification, for CMA-level bids, if there is excess demand in at least 
one county of the CMA at the time a CMA-level bid to reduce demand is 
processed, then a reduction of one block would be applied even if that 
creates excess supply in other counties of the CMA. Once the first unit 
of a CMA-level bid to reduce demand has been applied, the ``no excess 
supply'' rule then would be in effect for any further reduction 
requested in that bidder's CMA-level bid that has not yet been applied. 
CMA-level bids to reduce demand would only be allowed at the lowest 
price associated with the round (the start-of-round price). The 
Commission notes that the price incrementing rules for CMAs for which 
CMA-level bidding is permitted make it more likely that aggregate 
demands would be equalized across the counties in the CMA, thus making 
it less likely that the ``no excess supply'' exception would be 
triggered.
2. Partial Application of Bids
    68. Under the proposed bid processing procedures, a bid that 
involves a reduction from the bidder's previous demands could be 
applied partially--that is, reduced by fewer blocks than requested in 
the bid--if excess demand is insufficient to support the entire 
reduction. A bid to increase a bidder's demands could be applied 
partially if the total number of bidding units associated with the 
bidder's demand exceeds the bidder's bidding eligibility for the round.
3. Processed Demands
    69. The Commission proposes to process bids to change demand in 
order of price point after a round ends, where the price point 
represents the percentage of the bidding interval for the round. For 
example, if the start-of-round price is $5,000 and the clock price is 
$6,000, a price of $5,100 will correspond to the 10% price point, since 
it is 10% of the bidding interval between $5,000 and $6,000. Under this 
proposal, the FCC auction bidding system would process bids to change 
demand in ascending order of price point, first considering intra-round 
bids in order of price point and then bids at the clock price. The 
system would consider bids at the lowest price point across all 
counties and all CMAs subject to CMA-level bidding, then look at bids 
at the next price point in all areas, and so on. The Commission 
proposes that, if there are multiple bids at a single price point, the 
system will process bids in order of a bid-specific pseudo-random 
number. As it considers each submitted bid during bid processing, the 
FCC auction bidding system would determine the extent to which there is 
excess demand in each county at that point in the processing in order 
to determine whether a bidder's request to reduce demand can be 
applied. Likewise, the auction bidding system would evaluate the 
activity associated with the bidder's most recently determined demands 
at that point in the processing to determine whether a request to 
increase demand can be applied.
    70. Because in any given round some bidders may request to increase

[[Page 56751]]

demands for licenses while others may request reductions, the price 
point at which a bid is considered by the auction bidding system can 
affect whether it is applied. In addition to proposing that bids be 
considered by the system in increasing order of price point, the 
Commission further proposes that bids not applied because of 
insufficient aggregate demand or insufficient eligibility be held in a 
queue and considered, again in order, if there should be excess supply 
or sufficient eligibility later in the processing after other bids are 
processed.
    71. Therefore, under the proposed procedures, once a round closes, 
the auction system would process bids to change demand by first 
considering the bid submitted at the lowest price point and determining 
the maximum extent to which that bid can be applied given bidders' 
demands as determined at that point in the bid processing. If the bid 
can be applied (either in full or partially), the number of licenses 
the bidder holds at that point in the processing would be adjusted, and 
aggregate demand would be recalculated accordingly. If the bid cannot 
be applied in full, the unfulfilled bid, or portion thereof, would be 
held in a queue to be considered later during bid processing for that 
round. The FCC auction bidding system would then consider the bid 
submitted at the next highest price point, applying it in full, in 
part, or not at all, given the most recently determined demands of 
bidders. Any unfulfilled requests would again be held in the queue, and 
aggregate demand would again be recalculated. Every time a bid or part 
of a bid is applied, the unfulfilled bids held in the queue would be 
reconsidered, in the order of their original price points (and by 
pseudo-random number, in the case of tied price points). The auction 
bidding system would not carry over unfulfilled bid requests to the 
next round, however. The bidding system would advise bidders of the 
status of their bids when round results are released.
4. Price Determination
    72. The Commission further proposes bid processing procedures that 
would determine, based on aggregate demand, the posted price for each 
county for the round that will serve as the start-of-round price for 
the next round. Under this proposal, the uniform price for all of the 
blocks in a county would increase from round to round as long as there 
is excess demand for blocks in the county but would not increase if 
aggregate demand does not exceed the available supply of blocks.
    73. The Commission proposes that if, at the end of a round, the 
aggregate demand for blocks in the county (considering both county-
level and CMA-level bids) exceeds the supply of blocks (7), the posted 
price would equal the clock price for the round. If a reduction in 
demand was applied during the round and caused demand in the county to 
equal (or fall below) supply, the posted price would be the price at 
which the reduction was applied. If aggregate demand is less than 
supply and no bid to reduce demand was applied for the county, then the 
posted price would equal the start-of-round price for the round. The 
range of acceptable bid amounts for the next round would be set by 
adding the percentage increment to the posted price.
    74. When a county-level bid to reduce demand can be applied only 
partially, the uniform price for the county would stop increasing at 
that point, since the partial application of the bid would result in 
demand falling to equal supply. Hence, a bidder that makes a county-
level bid to reduce demand that cannot be fully applied would not face 
a price for the remaining demand that is higher than its bid price. A 
bidder that makes a CMA-level bid to reduce demand that is partially 
applied may face a price for the remaining demand that is higher than 
its bid price for some of the counties. This is the case when some 
counties in the CMA still have excess demand, which will cause the 
prices in those counties to increase.
    75. After the bids of the round have been processed, if the 
stopping rule has not been met, the FCC auction bidding system would 
announce clock prices to indicate a range of acceptable bids for the 
next round. Each bidder would be informed of its processed demand and 
the extent of excess demand for blocks in each county.
    76. The Commission seeks comment on the proposals regarding bid 
processing for Auction 105.

J. Winning Bids

    77. Under the proposed clock auction format for Auction 105, 
bidders that are still expressing demand for a quantity of blocks in a 
county--either on an individual county basis or through a CMA-level 
bid--at the time the stopping rule is met would become the winning 
bidders of licenses corresponding to that number of blocks. The final 
price for a generic block in a county would be the posted price for the 
final round.

K. Bid Removal and Bid Withdrawal

    78. 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. Once a round closes, a bidder may no longer 
remove a bid.
    79. Unlike an auction conducted using the Commission's standard 
simultaneous multiple-round auction format for bidding on frequency-
specific licenses (as opposed to generic blocks), there are no 
provisionally winning bids in a clock auction. As a result, the concept 
of bid withdrawals does not apply to a clock auction. As proposed 
above, however, bidders in Auction 105 may request to reduce demand for 
generic blocks.

V. Post-Auction Process

A. Deficiency Payments and Additional Default Payment Percentage

    80. 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 Section 
1.2104(g)(2) of the rules. This payment consists of a deficiency 
payment, equal to the difference between the amount of the bidder's 
winning bid and the amount of the winning bid the next time a license 
covering the same spectrum is won in an auction, plus an additional 
payment equal to a percentage of the defaulter's bid or of the 
subsequent winning bid, whichever is less.
    81. Deficiency payment for CMA-level bidding. Under the CMA-level 
bidding procedures the Commission proposes, a CMA-level bid requests a 
quantity of blocks in each county at a price equal to the sum of the 
per-block prices in the individual constituent counties times the 
number of blocks demanded. Accordingly, in the event of default on a 
CMA-level bid, the deficiency payment for each individual county-based 
license will be calculated using the per-block price for the specific 
county, and the deficiency payment for the CMA will be the sum of the 
payment for each county.
    82. Additional Default Payment Percentage. The percentage of the 
bid that a defaulting bidder must pay in addition to the deficiency 
will depend on the auction format ultimately chosen for a particular 
auction. Without combinatorial bidding, the amount can range from 3% up 
to a maximum of 20%, established in advance of the auction and based on 
the nature of the service and the inventory of the licenses

[[Page 56752]]

being offered. In auctions with combinatorial bidding, the additional 
payment is set, pursuant to Section 1.2104(g)(2)(ii), at 25% of the 
applicable bid. This higher level reflects the fact that a defaulted 
winning bid in an auction with combinatorial bidding may affect the 
award of other licenses in the auction and may be used to effectuate 
anti-competitive strategies; hence a stronger deterrent against 
insincere bidding and strategic default is warranted. If adopted, under 
the proposed procedures, bidders would be permitted to bid for a group 
of counties that comprise a CMA. Thus, the Commission proposes an 
approach consistent with past auctions where the bidding procedures 
allowed for bidders to package their bids. Specifically, the 
Commissions propose to establish for Auction 105 an additional default 
payment of 25% for a default on any winning CMA-level bid.
    83. For winning county-level bids, the Commission proposes an 
additional default payment of 20% of the relevant bid. As noted in the 
CSEA/Part 1 Report and Order, 71 FR 6214, February 7, 2006, defaults 
weaken the integrity of the auction process and may impede the 
deployment of service to the public, and an additional default payment 
of up to 20% should be more effective in deterring defaults than the 3% 
used in some earlier auctions. Given the large number of PALs available 
for bidding in Auction 105, the Commission believes that a 20% default 
payment is necessary to ensure that entities only bid on those licenses 
that they reasonably expect to use. The Commission seeks comment on 
this proposal.
    84. In case they are needed for post-auction administrative 
purposes, the bidding system will calculate individual per-license 
prices that are separate from a bidder's final auction payment, which 
is calculated on an aggregate basis. In calculating the per-license 
prices, the bidding system will apportion to individual licenses any 
capped bidding credit discounts, since a single amount may apply to 
multiple licenses.

B. Tutorial and Additional Information

    85. The Commission intends to provide additional information on the 
bidding system and to offer demonstrations and other educational 
opportunities for applicants in Auction 105 to familiarize themselves 
with the FCC auction application system and the auction bidding system. 
For example, the Commission intends to release an online tutorial for 
Auction 105 that will help applicants understand the procedures to be 
followed in the filing of their auction short-form applications (FCC 
Form 175) for Auction 105 and in their use of the auction bidding 
system.

VI. Procedural Matters

    86. Supplemental Initial Regulatory Flexibility Analysis. As 
required by the Regulatory Flexibility Act of 1980, as amended (RFA), 
the Commission has prepared this Supplemental Initial Regulatory 
Flexibility Analysis (Supplemental IRFA) of the possible significant 
economic impact on small entities of the proposed policies and rules 
addressed in the Public Notice to supplement the Commission's Initial 
and Final Regulatory Flexibility Analyses completed in the 2017 Notice 
of Proposed Rulemaking, 82 FR 56193 (2017), and 2018 3.5 GHz Order, 
respectively. 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 deadline for comments 
specified on the first page of the 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). In addition, the Public Notice and Supplemental IRFA (or 
summaries thereof) will be published in the Federal Register.
    87. Need for, and Objectives of, the Proposed Rules. The Public 
Notice seeks comment on proposed auction procedures for those entities 
that seek to acquire Priority Access Licenses in Auction 105. This 
process is intended to provide notice of and adequate time for 
potential applicants to comment on proposed auction procedures. To 
promote the efficient and fair administration of the competitive 
bidding process for all Auction 105 participants, the Commission seeks 
comment on the following proposed procedures: (1) Use of anonymous 
bidding/limited information procedures which will not make public: (a) 
The licenses or license areas that an applicant selects for bidding in 
its auction application (FCC Form 175); (b) the amount of any upfront 
payment made by or on behalf of an applicant for Auction 105; (c) an 
applicant's bidding eligibility; and (d) any other bidding-related 
information that might reveal the identity of the bidder placing a bid, 
until after bidding has closed; (2) establishment of bidding credit 
caps for eligible small businesses and rural service providers in 
Auction 105; (3) retention by OEA of discretion to adjust the bidding 
schedule in order to manage the pace of Auction 105; (4) use of a 
simultaneous stopping rule where all blocks in all counties will remain 
open for bidding until bidding has stopped in every county; (5) 
provision of discretionary authority to OEA, in conjunction with the 
Bureau, to delay, suspend, or cancel bidding in Auction 105 for any 
reason that affects the ability of the competitive bidding process to 
be conducted fairly and efficiently; (6) use of a clock auction format 
for Auction 105 under which each qualified bidder will indicate in 
successive clock bidding rounds its demands for generic blocks in 
specific counties, and associated bidding and bid processing procedures 
to implement the clock auction format; (7) procedures to permit a 
bidder to elect to bid at a CMA level, rather than a county level, for 
certain large, multi-county CMAs, and procedures to implement CMA-level 
bidding; (8) use of an activity rule, which requires a bidder to bid 
actively during the auction on a high percentage of its bidding 
eligibility, including a modification that would allow a bidder to 
submit bids, but not to be assigned bids, that exceed its bidding 
eligibility; (9) use of an activity rule that does not include a waiver 
of the rule to preserve a bidder's eligibility; (10) a specific minimum 
opening bid amount for generic blocks in each county available in 
Auction 105; (11) a specific upfront payment amount for generic blocks 
in each county available in Auction 105; (12) 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 generic block; (13) establishment of acceptable 
bid amounts, including clock price increments and intra-round bids, 
along with a proposed methodology for calculating such amounts; (14) 
use of bid processing procedures that the auction bidding system will 
use, after each bidding round, to process bids to determine the 
processed demand of each bidder and a posted price for each county that 
would serve as the start-of-round price for the next round; and (15) 
establishment of additional default payments of 20% for county-level 
bids and 25% for CMA-level bids pursuant to Section 1.2104(g)(2) of the 
rules in the event that a winning bidder defaults or is disqualified 
after the auction.
    88. Legal Basis. The Commission's statutory obligations to small 
businesses under the Communications Act of 1934, as amended, are found 
in Sections 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),

[[Page 56753]]

301, 302, 303(e), 303(f), 303(r), 304, 307, and 309(j). The Commission 
has established a framework of competitive bidding rules, updated most 
recently in 2015, pursuant to which it has conducted auctions since the 
inception of the auction program in 1994 and would conduct Auction 105.
    89. 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 and 
policies, if adopted. The RFA generally defines the term ``small 
entity'' as having the same meaning as the terms ``small business,'' 
``small organization,'' and ``small governmental jurisdiction.'' In 
addition, the term ``small business'' has the same meaning as the term 
``small business concern'' under the Small Business Act. 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.
    90. As noted above, Regulatory Flexibility Analyses were 
incorporated into the 2017 Notice of Proposed Rulemaking and 2018 3.5 
GHz Order. In those analyses, the Commission described in detail the 
small entities that might be significantly affected. The Commission 
hereby adopts by reference the descriptions and estimates of the number 
of small entities from the Regulatory Flexibility Analyses completed in 
the 2017 Notice of Proposed Rulemaking and 2018 3.5 GHz Order.
    91. 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 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, an applicant which fails to become a 
winning bidder does not need to file a long-form application or provide 
the additional showings and more detailed demonstrations required of a 
winning bidder.
    92. We do not expect that the processes and procedures proposed in 
this Public Notice will require small entities to hire attorneys, 
engineers, consultants, or other professionals for compliance or to 
participate in Auction 105 because of the information, resources, and 
guidance we make available to potential and actual participants. For 
example, we intend to release an online tutorial that will help 
applicants understand the procedures for filing the auction short-form 
application (FCC Form 175). We also intend to make information on the 
bidding system available and to offer demonstrations and other 
educational opportunities for applicants in Auction 105 to familiarize 
themselves with the FCC auction application system and the auction 
bidding system. By providing these resources as well as the resources 
discussed below, we expect small business entities that use the 
available resources to experience lower participation and compliance 
costs. Nevertheless, while we cannot quantify the cost of compliance 
with the proposed procedures, we do not believe that the costs of 
compliance will unduly burden small entities that choose to participate 
in the auction because the proposals for Auction 105 are similar in 
many respects to the procedures in recent auctions conducted or to be 
conducted by the Commission.
    93. 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.''
    94. The Commission has taken steps to minimize any economic impact 
of its auction procedures on small entities 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 bidding 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 that provides technical assistance 
to applicants, including small entities, on issues such as access to or 
navigation within the electronic FCC Form 175 and use of the FCC's 
auction bidding system. Small entities may also use the web-based, 
interactive online tutorial produced by Commission staff to familiarize 
themselves with auction procedures, filing requirements, bidding 
procedures, and other matters related to an auction.
    95. The Commission also makes various databases and other sources 
of information, including 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 105, 
the Commission will post public notices on the Auction's website, which 
articulate the procedures and deadlines for the respective auction. The 
Commission makes this information easily accessible and without charge 
to benefit all Auction 105 applicants, including small entities, 
thereby lowering their administrative costs to comply with the 
Commission's competitive bidding rules.
    96. Prior to the start of bidding in Auction 105, 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 105 electronically over the 
internet using its web-based auction system, which eliminates the need 
for bidders to be physically present in a specific location. These 
mechanisms are made available to facilitate participation in Auction 
105 by all eligible bidders and may result in significant cost savings 
for small business entities who use 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 entities.
    97. For Auction 105, the Commission proposes a $25 million cap on 
the total amount of bidding credits that may be awarded to an eligible 
small business and a $10 million cap on the total amount of bidding 
credits that may be awarded to a rural service provider. The Commission 
also proposes a $10 million cap on the overall amount of bidding

[[Page 56754]]

credits that any winning small business bidder may apply to winning 
licenses in counties located within any PEA with a population of 
500,000 or less. Based on the technical characteristics of the 3550-
3650 MHz band and the Commission's analysis of past auction data, the 
Commission anticipates that the proposed caps will allow the majority 
of small businesses and rural service providers to take full advantage 
of the bidding credit program, thereby lowering the relative costs of 
participation for small businesses.
    98. These proposed procedures for the conduct of Auction 105 
constitute the more specific implementation of the competitive bidding 
rules contemplated by Parts 1 and 96 of the Commission's rules and the 
underlying rulemaking orders, including the 2018 3.5 GHz Order and 
relevant competitive bidding orders, and are fully consistent 
therewith.
    99. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules. None.
    100. Ex Parte Rules. This proceeding has been designated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. Persons making oral ex parte presentations must file a 
copy of any written presentations or memoranda summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine Period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to the Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2019-22892 Filed 10-22-19; 8:45 am]
 BILLING CODE 6712-01-P