[Federal Register Volume 84, Number 214 (Tuesday, November 5, 2019)]
[Proposed Rules]
[Pages 59605-59611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24227]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[AU Docket No. 19-290; DA 19-1027]


Auction of FM Broadcast Construction Permits Scheduled for April 
28, 2020; Comment Sought on Competitive Bidding Procedures for Auction 
106

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: The Office of Economics and Analytics (OEA), in conjunction 
with the Media Bureau (MB), announce an auction of certain FM broadcast 
construction permits. This public notice also seeks comment on 
competitive bidding procedures and proposed minimum opening bid amounts 
for Auction 106.

DATES: Comments are due on or before November 6, 2019, and reply 
comments are due on or before November 20, 2019. Bidding in Auction 106 
is scheduled to begin on April 28, 2020.

ADDRESSES: Interested parties may submit comments in response to the 
Auction 106 Comment Public Notice, identified by AU Docket No. 19-290, 
by any of the following methods:
     FCC's Website: Federal Communications Commission's 
Electronic Comment Filing System (ECFS): http://www.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: Contact the Consumer & 
Governmental Affairs Bureau to request reasonable accommodations 
(accessible format documents (braille, large print, electronic files, 
audio format), sign language interpreters, CART, etc.) by email to 
[email protected] or call 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 OEA Auctions Division at (202) 418-0660. For general 
auction questions, the Auctions Hotline at (717) 338-2868. For FM 
service questions, Lisa Scanlan, Tom Nessinger or James Bradshaw in the 
MB Audio Division at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 106 Comment 
Public Notice, released October 10, 2019. The complete text of this 
document, including attachment, is available for public inspection and 
copying from 8 a.m. to 4:30 p.m. Eastern Time (ET) Monday through 
Thursday or from 8 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 106 Comment Public Notice and related 
documents also are available on the internet at the Commission's 
website: www.fcc.gov/auction/106, or by using the search function for 
AU Docket No. 19-290 on the Commission's ECFS web page at www.fcc.gov/ecfs.
    All filings in response to the Auction 106 Comment Public Notice 
must refer to AU Docket No. 19-290. Interested parties are strongly 
encouraged to file comments electronically, and to submit 
electronically an additional copy of all comments and reply comments to 
the following address: [email protected].
    Electronic Filers: Comments may be filed electronically using the 
internet by accessing ECFS: www.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 a.m. to 7 p.m. 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. Construction Permits in Auction 106

    1. Auction 106 will offer 130 construction permits in the FM 
broadcast service for 130 FM allotments, including 34 construction 
permits that were offered but not sold or were defaulted upon in prior 
auctions. Attachment A of the Auction 106 Comment Public Notice lists 
these specific vacant FM allotments added to the Table of FM 
Allotments, 47 CFR 73.202(b), and assigned at the indicated 
communities. Attachment A also lists the reference coordinates for each 
vacant FM allotment. Each Auction 106 applicant may submit in its 
short-form application (FCC Form 175) a set of preferred site 
coordinates for any of its selected construction permits as an 
alternative to the reference coordinates for that vacant FM allotment.
    2. Under established Commission policies, an applicant may apply 
for any vacant FM allotment listed in Attachment A. If two or more FCC 
Forms 175 specify the same FM allotment, they will be considered 
mutually exclusive, and the construction permit for that FM allotment 
will be awarded by competitive bidding procedures. Once mutual 
exclusivity exists for auction purposes, even if only one applicant is 
qualified to bid for a particular construction permit in Auction 106, 
that applicant is required to submit a bid in order to obtain the 
construction permit.

II. Proposed Bidding Procedures

    3. Simultaneous Multiple Round Auction Design. This public notice 
proposes to auction all construction permits included in Auction 106 
using the Commission's standard simultaneous multiple-round auction 
format. This type of auction offers every construction permit for bid 
at the same time and consists of successive bidding rounds in which 
qualified bidders may place bids on individual construction permits. 
Typically, bidding remains open on all construction permits until 
bidding stops on every construction permit. OEA and MB seek comment on 
this proposal.
    4. Bidding Rounds. The Commission will conduct Auction 106 over the 
internet using the FCC auction bidding system. Bidders will also have 
the option of placing bids by telephone through a dedicated auction 
bidder line.
    5. Auction 106 will consist of sequential bidding rounds, each

[[Page 59606]]

followed by the release of round results. The initial bidding schedule 
will be announced in a public notice to be released at least one week 
before the start of bidding.
    6. OEA and MB seek comment on the proposal to retain the discretion 
to adjust the initial bidding schedule in order to foster an auction 
pace that reasonably balances speed with the bidders' need to study 
round results and change their bidding strategies. Under this proposal, 
such adjustments may include the amount of time for bidding rounds, the 
amount of time between rounds, or the number of rounds per day, 
depending upon bidding activity and other factors. 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 
requirement or bid amount parameters, or by using other means.
    7. Stopping Rule. To complete bidding in the auction within a 
reasonable time, pursuant to 47 CFR 1.2104(e), it is proposed to employ 
a simultaneous stopping rule approach for Auction 106, 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 bid, applies a proactive waiver, or, if bid withdrawals are 
permitted in this auction, 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, under the proposed 
simultaneous stopping rule, 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.
    8. Further, the following stopping options are proposed as 
alternatives during Auction 106. (1) The auction would close for all 
construction permits after the first round in which no bidder applies a 
waiver, withdraws a provisionally winning bid (if withdrawals are 
permitted in this auction), or places any new bid on a construction 
permit for which it is not the provisionally winning bidder. Thus, 
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) 
The auction would close for all construction permits after the first 
round in which no bidder applies a waiver, withdraws a provisionally 
winning bid (if withdrawals are permitted in this auction), or places 
any new bid on a construction permit that is not FCC held, a 
construction permit that does not already have a provisionally winning 
bid. Thus, absent any other bidding activity, a bidder placing a new 
bid on an FCC-held construction permit 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) above. (4) 
The auction would close after a specified number of additional rounds 
to be announced in advance in the FCC auction bidding system. If this 
special stopping rule is invoked, bids are accepted in the specified 
final round(s), after which the auction would 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.
    9. These options would be exercised 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, it is 
likely that there will be an attempt to change the pace of the auction 
by changing the number of bidding rounds per day or the minimum 
acceptable bids. OEA and MB propose to retain the discretion to 
exercise any of these options with or without prior announcement during 
the auction. OEA and MB seek comment on these proposals. Commenters 
should provide specific reasons for supporting or objecting to these 
proposals.
    10. Information Relating to Auction Delay, Suspension or 
Cancellation. Pursuant to 47 CFR 1.2104(i), OEA and MB may delay, 
suspend, or cancel bidding in the auction 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. Auction 106 participants will 
be notified of any such delay, suspension or cancellation by public 
notice or through the FCC auction bidding system's messages function. 
If bidding is delayed or suspended, OEA and MB 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. OEA and MB 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. OEA and MB seek comment on these 
proposals.
    11. Upfront Payments and Bidding Eligibility. As specified in 47 
CFR 1.2106, it is proposed that applicants be required to submit 
upfront payments as a prerequisite to becoming qualified to bid. 
Upfront payments are refundable deposits that are related to the 
specific construction permits being auctioned and protect against 
frivolous or insincere bidding and provide the Commission with a source 
of funds from which to collect payments owed at the close of the 
bidding.
    12. OEA and MB seek comment on the upfront payment amounts proposed 
in Attachment A of the Auction 106 Comment Public Notice, which were 
developed by taking into account such factors as the efficiency of the 
auction process and the potential value of similar construction 
permits.
    13. OEA and MB request comment on the proposal that the amount of 
the upfront payment submitted by a bidder will determine its initial 
bidding eligibility in bidding units. Under this proposal, each 
construction permit will be assigned a specific number of bidding 
units, equal to one bidding unit per dollar of the upfront payment 
listed in Attachment A of the Auction 106 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 106, 
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.

[[Page 59607]]

    14. 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. 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. Bidders are required to be active on a 
specific percentage of their current bidding eligibility during each 
round of the auction. OEA and MB request comment on the proposal for a 
single stage auction with the following activity requirement: In each 
bidding round, a bidder desiring to maintain its current bidding 
eligibility is required to be active on 100% of its bidding 
eligibility. Thus, the activity requirement would be satisfied when a 
bidder has bidding activity on construction permits with bidding units 
that total 100% of its current eligibility in the round. If the 
activity rule is met, then the bidder's eligibility does not change in 
the next round. Failure to maintain the requisite activity level would 
result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction. Commenters that oppose a 100% activity requirement are 
encouraged to explain their reasons with specificity.
    15. Activity Rule Waivers and Reducing Eligibility. When a bidder's 
activity in the current round is below the required minimum level, it 
may preserve its current level of eligibility through an activity rule 
waiver, if available. An activity rule waiver applies to an entire 
round of bidding, not to a particular construction permit. Activity 
rule waivers can be either proactive or automatic. Activity rule 
waivers are principally a mechanism for a bidder to avoid the loss of 
bidding eligibility in the event that exigent circumstances prevent it 
from bidding in a particular round.
    16. 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 waiver 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 waiver 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.
    17. 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.
    18. Under the proposed simultaneous stopping rule, a bidder would 
be permitted to apply an activity rule waiver proactively as a means to 
keep the auction open without placing a bid. If a bidder proactively 
applies an activity rule waiver (using the proactive waiver function in 
the FCC auction bidding system) during a bidding round in which no bid 
is placed or withdrawn (if bid withdrawals are permitted in this 
auction), the auction will remain open and the bidder's eligibility 
will be preserved. An automatic waiver applied by the FCC auction 
bidding system in a round in which there is no new bid, no bid 
withdrawal (if bid withdrawals are permitted in this auction), and no 
proactive waiver will not keep the auction open. Comment is requested 
on the proposal that each bidder in Auction 106 be provided with three 
activity rule waivers that may be used at the bidder's discretion 
during the course of the auction.
    19. 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. See 47 CFR 1.2104(c). OEA 
and MB propose to establish no separate reserve prices for the Auction 
106 construction permits offered in Auction 106.
    20. A minimum opening bid is the minimum bid price set at the 
beginning of the auction below which no bids are accepted. See 47 CFR 
1.2104(d). Attachment A of the Auction 106 Comment Public Notice lists 
a proposed minimum opening bid amount for each construction permit 
offered in Auction 106. These minimum opening bid amounts for Auction 
106 were 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, to 
the extent such information is available. Consistent with 47 U.S.C. 
309(j)(4)(f), OEA and MB seek comment on the minimum opening bid 
amounts specified in Attachment A of the Auction 106 Comment Public 
Notice.
    21. If commenters believe that these minimum opening bid amounts 
will result in unsold construction permits, are not reasonable amounts 
at which to start bidding, or should instead operate as reserve prices, 
they should explain why this is so and comment on the desirability of 
an alternative approach. Commenters should support their claims with 
valuation analyses and suggested amounts or formulas for reserve prices 
or minimum opening bids. This public notice particularly seeks comment 
on factors that could reasonably have an impact on bidders' valuation 
of this broadcast spectrum, including the type of service offered, 
market size, population covered by the proposed broadcast facility, and 
any other relevant factors. Commenters also may 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 for construction permits to reach final prices--to 
other means of controlling auction pace, such as changes to bidding 
schedules, percentage increments, or activity requirements.
    22. Bid Amounts. If the bidder has sufficient eligibility to place 
a bid on a particular construction permit in a round, a qualified 
bidder will be able to place a bid on that construction permit in any 
of up to nine different amounts. Under this proposal, the FCC auction 
bidding system interface will list the acceptable bid amounts for each 
construction permit.
    23. 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 equal to the amount of the 
provisionally winning bid plus a specified percentage of that bid 
amount. The percentage used for this calculation, the minimum 
acceptable bid increment percentage, is multiplied by the provisionally 
winning

[[Page 59608]]

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%, then the provisionally winning bid amount 
is multiplied by 10%. 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, as described in 
this public notice. 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.
    24. The FCC will calculate the eight additional bid amounts using 
the minimum acceptable bid amount and an additional bid increment 
percentage. The minimum acceptable bid amount is multiplied by the 
additional bid increment percentage, and that result, rounded, is the 
additional increment amount. The first additional acceptable bid amount 
equals the minimum acceptable bid amount plus the additional increment 
amount. The second additional acceptable bid amount equals the minimum 
acceptable bid amount plus two times the additional increment amount; 
the third additional acceptable bid amount is the minimum acceptable 
bid amount plus three times the additional increment amount; etc. If, 
for example, the additional bid increment percentage is 5%, then the 
calculation of the additional increment amount would be (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 results then will be rounded using the Commission's standard 
rounding procedures for auctions.
    25. For Auction 106, the proposal is to use a minimum acceptable 
bid increment percentage of 10%. This means that the minimum acceptable 
bid amount for a construction permit will be approximately 10% greater 
than the provisionally winning bid amount for the construction permit. 
To calculate the additional acceptable bid amounts, an additional bid 
increment percentage of 5% is proposed. OEA and MB seek comment on 
these proposals.
    26. OEA and MB 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 circumstances so dictate. Further, OEA and MB 
propose to retain the discretion to do so on a construction-permit-by-
construction-permit basis. OEA and MB 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, a $1,000 limit could be set on 
increases in minimum acceptable bid amounts over provisionally winning 
bids. In this example, 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. 
OEA and MB seek comment on the circumstances under which such a limit 
should be employed, factors to be considered 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 OEA and MB exercise this discretion, they 
will alert bidders by announcement in the FCC auction bidding system 
during the auction.
    27. If commenters disagree with the proposal to begin the auction 
with nine acceptable bid amounts per construction permit, they should 
suggest an alternative number of acceptable bid amounts to use. 
Commenters may wish to address the role of the minimum acceptable bids 
and the number of acceptable bid amounts in managing the pace of the 
auction and the tradeoffs in managing auction pace by changing the 
bidding schedule, activity requirement, bid amounts, or by using other 
means.
    28. Provisionally Winning Bids. At the end of each bidding round, 
the bidding system will determine a provisionally winning bid for each 
construction permit based on the highest bid amount received for that 
permit. The FCC auction bidding system will advise bidders of the 
status of their bids when round results are released. 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, unless the provisionally winning bid is withdrawn (if bid 
withdrawals are permitted in this auction). Provisionally winning bids 
at the end of the auction become the winning bids.
    29. The FCC auction bidding system assigns a pseudo-random number 
generated by an algorithm 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.
    30. Bid Removal. 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 may 
no longer remove a bid.
    31. Bid Withdrawal. When permitted in an auction, bid withdrawals 
provide a bidder with the option of withdrawing a bid placed in a prior 
round that has become a provisionally winning bid. 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.
    32. The Commission has recognized that bid withdrawals may be a 
helpful tool for bidders seeking to efficiently aggregate licenses or 
implement backup strategies in certain auctions. The Commission has 
also acknowledged that allowing bid withdrawals may encourage insincere 
bidding or increased opportunities for anti-competitive bidding in 
certain circumstances. The Commission encouraged assertive exercise of

[[Page 59609]]

discretion, including limiting the number of rounds in which bidders 
may withdraw bids, and preventing bidders from bidding on a particular 
market if a bidder is found to be abusing the Commission's bid 
withdrawal procedures. In managing the auction, therefore, OEA and MB 
may limit the number of withdrawals to prevent bidding abuses.
    33. Based on this guidance and on experiences with past auctions of 
FM broadcast construction permits, the public notice proposes to 
prohibit bidders from withdrawing any bid after the close of the round 
in which that bid was placed. This proposal is made in light of the 
site-specific nature and wide geographic dispersion of the permits 
available in this auction, which suggests that potential applicants for 
this auction may have fewer incentives to aggregate permits through the 
auction process (as compared with bidders in many auctions of wireless 
licenses). Thus, it is unlikely that bidders will have a need to 
withdraw bids in this auction. Also, bid withdrawals, particularly if 
they were made late in this auction, could result in delays in 
licensing new FM stations and attendant delays in the offering of new 
broadcast service to the public. OEA and MB seek comment on this 
proposal to prohibit bid withdrawals in Auction 106. Commenters 
advocating alternative approaches should support their arguments by 
taking into account the construction permits offered, the impact on 
auction dynamics and the pricing mechanism, and the effects on the 
bidding strategies of other bidders.
    34. Interim Withdrawal Payment Percentage. If bid withdrawals are 
permitted in Auction 106, OEA and MB propose the interim bid withdrawal 
payment be 20% of the withdrawn bid. In accordance with 47 CFR 
1.2104(g)(1), 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. When that final withdrawal 
payment cannot yet be calculated, the FCC imposes on the bidder 
responsible for the withdrawn bid an interim bid withdrawal payment, 
which will be applied toward any final bid withdrawal payment that is 
ultimately assessed.
    35. The amount of the interim bid withdrawal payment is established 
in advance of bidding in each auction and may range from 3% to 20% of 
the withdrawn bid amount. The Commission has determined that the level 
of interim withdrawal payment in a particular auction will be based on 
the nature of the service and the inventory of the licenses being 
offered. The Commission noted specifically that a higher interim 
withdrawal payment percentage is warranted to deter the anti-
competitive use of withdrawals when, for example, bidders will not need 
to aggregate the licenses being offered in the auction or when there 
are few synergies to be captured by combining licenses. In light of 
these considerations with respect to the construction permits being 
offered in this auction, this public notice proposes to use the maximum 
interim bid withdrawal payment percentage permitted by section 
1.2104(g)(1) in the event bid withdrawals are allowed in this auction. 
OEA and MB request comment on using 20% of the withdrawn bid for 
calculating an interim bid withdrawal payment amount in Auction 106. 
Commenters advocating the use of bid withdrawals should also address 
the interim bid withdrawal payment percentage.
    36. 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 
make a full and timely final payment, whose long-form application is 
not granted for any reason 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 106 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.
    37. Based on the nature of the FM service and the construction 
permits being offered, an additional default payment of 20% of the 
relevant bid is proposed for Auction 106, which is consistent with the 
percentage in recent auctions of FM construction permits. Defaults 
weaken the integrity of the auction process and may impede the 
deployment of service to the public, and an additional 20% default 
payment will be more effective in deterring defaults than the 3% used 
in some earlier auctions. In light of these considerations, OEA and MB 
seek comment on the proposal to use for Auction 106 an additional 
default payment of 20% of the relevant bid.

III. Procedural Matters

    38. Paperwork Reduction Act. The Office of Management and Budget 
(OMB) has approved the information collections in the application to 
participate in an FCC auction, FCC Form 175. OMB Control No. 3060-0600. 
This public notice proposes no new or modified information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. Therefore, it also does not contain any new or 
modified 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).
    39. Ex Parte Rules. This proceeding has been designated as a permit 
but disclose proceeding in accordance with the Commission's ex parte 
rules. Participants in this proceeding should familiarize themselves 
with the Commission's ex parte rules, especially 47 CFR 1.1200(a) and 
1.1206.

IV. Supplemental Initial Regulatory Flexibility Analysis

    40. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), 5 U.S.C. 601-612, the Commission prepared Initial 
Regulatory Flexibility Analyses (IRFAs) in connection with the 
Broadcast Competitive Bidding Notice of Proposed Rulemaking (NPRM), and 
other Commission NPRMs (collectively, Competitive Bidding NPRMs) 
pursuant to which Auction 106 will be conducted. Final Regulatory 
Flexibility Analyses (FRFAs) likewise were prepared in the Broadcast 
Competitive Bidding Order and other Commission rulemaking orders 
(collectively, Competitive Bidding Orders) pursuant to which Auction 
106 will be conducted. The Office of Economics and Analytics (OEA), in 
conjunction with the Media Bureau (MB), has 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 proposed in this public notice, to 
supplement the Commission's Initial and Final Regulatory Flexibility 
Analyses completed in the Broadcast Competitive Bidding Order and other 
Commission orders pursuant to which Auction 106 will be conducted. 
Written public comments are requested on this

[[Page 59610]]

Supplemental IRFA. Comments must be identified as responses to the 
Supplemental IRFA and must be filed by the same filing deadlines for 
comments specified on the first page of the Auction 106 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).
    41. Need for, and Objectives of, the Public Notice. The proposed 
procedures for the conduct of Auction 106 as described in the Auction 
106 Comment Public Notice would constitute the more specific 
implementation of the competitive bidding rules contemplated by 47 CFR 
parts 1 and 73, adopted by the Commission in multiple notice-and-
comment rulemaking proceedings, including the Commission's establishing 
in the underlying rulemaking orders additional procedures to be used on 
delegated authority. More specifically, the Auction 106 Comment Public 
Notice seeks comment on proposed procedures, terms and conditions 
governing Auction 106 and the post-auction application and payment 
processes, as well as seeking comment on the minimum opening bid 
amounts for 130 specified construction permits, and is fully consistent 
with the underlying rulemaking orders, including the Broadcast 
Competitive Bidding Order and other relevant competitive bidding 
orders.
    42. Consistent with 47 U.S.C. 309(j)(3)(E)(i), the Auction 106 
Comment Public Notice is intended to provide notice of proposed auction 
procedures and adequate time for Auction 106 applicants to comment on 
those proposed procedures. To promote the efficient and fair 
administration of the competitive bidding process for all Auction 106 
participants, including small businesses, this public notice seeks 
comment on the following proposed procedures: (1) Use of a simultaneous 
multiple-round auction format, consisting of sequential bidding rounds 
with a simultaneous stopping rule (with discretion to exercise 
alternative stopping rules under certain circumstances); (2) a specific 
minimum opening bid amount for each construction permit offered in 
Auction 106; (3) a specific number of bidding units for each 
construction permit; (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 a single-stage auction in which a 
qualified bidder is required to be active on 100% of its bidding 
eligibility in each bidding round as an activity requirement; (7) 
provision of three activity rule waivers for each qualified bidder to 
allow it to preserve eligibility during the course of the auction; (8) 
use of minimum acceptable bid amounts and additional bid increments, 
along with a proposed methodology for calculating such amounts, while 
retaining discretion to change the methodology if circumstances 
dictate; (9) a procedure for breaking ties if identical high bid 
amounts are submitted on a construction permit in a given round; (10) 
whether to permit use of bid withdrawals; (11) establishment of an 
interim bid withdrawal percentage of 20% of the withdrawn bid in the 
event bid withdrawals are permitted in Auction 106; and (12) 
establishment of an additional default payment of 20% under 47 CFR 
1.2104(g)(2) in the event that a winning bidder defaults or is 
disqualified after the auction.
    43. Legal Basis. The Commission's statutory obligations to small 
businesses participating in a spectrum auction 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 47 U.S.C. 154(i), 301, 303(e), 
303(f), 303(r), 304, 307, and 309(j). 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 106. The Commission has directed that OEA, in 
conjunction with MB, under delegated authority, seek comment on a 
variety of auction-specific procedures prior to the start of bidding in 
each auction.
    44. Description and Estimate of the Number of Small Entities to 
Which the Proposed Procedures 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 procedures, 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 governmental 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. 5 U.S.C. 601(3). 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. 15 U.S.C. 
632.
    45. The specific procedures and minimum opening bid amounts on 
which comment is sought in the Auction 106 Comment Public Notice will 
affect directly all applicants participating in Auction 106. The number 
of entities that may apply to participate in Auction 106 is unknown. 
Based on the number of applicants in prior FM auctions, we estimate 
that the number of applicants for Auction 106 may range from 
approximately 175 to 260. This estimate is based on the number of 
applicants who filed short-form applications to participate in previous 
open auctions of FM construction permits held to date, an average of 
1.98 short-form applications were filed per construction permit 
offered, with a median of 1.365 applications per permit. The actual 
number of applicants for Auction 106 could vary significantly as any 
individual's or entity's decision to participate may be affected by a 
number of factors beyond the Commission's control.
    46. Radio Stations. This U.S. Economic Census category comprises 
establishments primarily engaged in broadcasting aural programs by 
radio to the public. Programming may originate in its own studio, from 
an affiliated network, or from external sources. According to the 
rulemaking order to assess 2019 annual regulatory fees, Commission 
staff identified from MB's Consolidated Database System (CDBS) 10,011 
licensed radio facilities subject to annual regulatory fees as of 
October 1, 2018, excluding from this count radio stations exempt from 
required annual regulatory fees.
    47. The SBA has established a small business size standard for this 
category as firms having $41.5 million or less in annual receipts. 13 
CFR 121.201; NAICS code 51512. Economic Census data from 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.
    48. According to Commission staff review of the BIA/Kelsey, LLC's 
Media Access Pro Radio Database as of September 17, 2019, about 11,033 
(or about 99.95%) of 11,039 commercial radio stations had revenues of 
$41.5 million or less and thus qualify as small entities under the SBA 
definition. The SBA size standard data, however, does

[[Page 59611]]

not enable a meaningful estimate of the number of small entities who 
may participate in Auction 106.
    49. In assessing whether a business entity qualifies as small under 
the SBA definition, business control affiliations must be included. 
Business concerns are affiliates of each other when one concern 
controls or has the power to control the other, or a third party or 
parties controls or has the power to control both. 13 CFR 
121.103(a)(1). The estimate of the number of small entities that might 
be affected by Auction 106 likely overstates the estimate because the 
revenue figure on which small business concerns are 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 
106 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. Further, it is not possible 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, 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.
    50. It also is not possible to accurately develop an estimate of 
how many of the entities in this auction would be 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).
    51. In 2013, the Commission estimated that 97% 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 $41.5 million, which suggests that an even 
greater percentage of radio broadcasters would fall within the SBA's 
definition. Based on Commission staff review of BIA/Kelsey, LLC's Media 
Access Pro Radio Database, 6,739 (99.91%) of 6,745 FM radio stations 
have revenue of $41.5 million or less. Accordingly, based on this data, 
it is estimated that the majority of Auction 106 applicants would 
likely meet the SBA's definition of a small business concern.
    52. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. The Auction 106 Comment 
Public Notice proposes 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. To participate in this auction, 
parties will 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 auction 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.
    53. Steps Taken to Minimize 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 
small entities. 5 U.S.C. 603(c)(1)-(4).
    54. The proposals of the Auction 106 Comment Public Notice to 
facilitate participation in Auction 106 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 
for Auction 106 in this 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 qualified bidders the 
opportunity to familiarize themselves with both the bidding processes 
and systems that will be used in Auction 106. 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 a telephone 
hotline for assistance with auction processes and procedures as well as 
a telephone technical support hotline 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 106 by all qualified bidders and may result in significant cost 
savings for small business entities that utilize these mechanisms. 
These steps, coupled with the advance description of the bidding 
procedures in Auction 106, should ensure that the auction will be 
administered efficiently and fairly, thus providing certainty for small 
entities as well as other auction participants.
    55. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules. None.

Federal Communications Commission.

William Huber,
Associate Chief, Auctions Division, Office of Economics and Analytics.
[FR Doc. 2019-24227 Filed 11-4-19; 8:45 am]
BILLING CODE 6712-01-P