[Federal Register Volume 86, Number 41 (Thursday, March 4, 2021)]
[Proposed Rules]
[Pages 12556-12563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04033]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[AU Docket No. 21-39; DA 21-131; FR ID 17492]


Auction of AM and FM Broadcast Construction Permits Scheduled for 
July 27, 2021; Comment Sought on Competitive Bidding Procedures for 
Auction 109

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), announces an auction of certain AM and FM 
broadcast construction permits. This document seeks comment on minimum 
opening bid amounts and the procedures to be used in Auction 109.

DATES: Comments are due on or before March 15, 2021, and reply comments 
are due on or before March 22, 2021. Bidding in this auction is 
scheduled to begin July 27, 2021.

ADDRESSES: Interested parties may file comments or reply comments in AU 
Docket No. 21-39. Comments may be filed using the Commission's 
Electronic Comment Filing System (ECFS) or by filing paper copies. All 
filings in response to the Auction 109 Comment Public Notice must refer 
to AU Docket No. 21-39. The Commission strongly encourages interested 
parties to file comments electronically.
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS at https://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 in response to the Auction 109 Comment Public 
Notice can be sent by commercial courier or by the U.S. Postal Service. 
All filings must be addressed to the Commission's Secretary, Office of 
the Secretary, Federal Communications Commission.
     Commercial deliveries (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Dr., 
Annapolis Junction, MD 20701.
     U.S. Postal Service first-class, Express, or Priority mail 
must be addressed to 45 L Street NE, Washington, DC 20554.
     Until further notice, the Commission no longer accepts any 
hand or messenger delivered filings. This is a temporary measure taken 
to help protect the health and safety of individuals and to mitigate 
the transmission of COVID-19.
     Email: OMB and MB also request that a copy of all comments 
and reply comments be submitted electronically to the following 
address: [email protected].

FOR FURTHER INFORMATION CONTACT: 
    Auction legal questions: Lynne Milne or Lyndsey Grunewald at 202-
418-0660.
    General auction questions: Auctions Hotline at 717-338-2868.
    AM/FM service questions: James Bradshaw or Lisa Scanlan or Tom 
Nessinger at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 109 Comment 
Public Notice, AU Docket No. 21-39, DA 21-131, released on February 8, 
2021. The complete text of the Auction 109 Comment Public Notice, 
including its attachment, is available on the Commission's website at 
www.fcc.gov/auction/109 or by using the search function for AU Docket 
No. 21-39 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).

I. Introduction

    1. By the Auction 109 Comment Public Notice, the Commission 
announces an auction of four AM construction permits and 136 FM 
construction permits, with bidding to start on July 27, 2021, and seeks 
comment on the procedures to be used to conduct Auction 109, as well as 
upon minimum opening bids for the permits.
    2. Auction 109 will offer all of the FM radio permits that were 
previously included in the inventory for Auction 106, as well as six 
additional FM permits. Auction 106 was postponed on March 25, 2020, 
with no appointed date for resumption, due to the Covid-19 pandemic. 
That auction is now canceled; applications submitted by entities 
seeking to participate in Auction 106 have been dismissed. All 
applicants wishing to participate in Auction 109, regardless of whether 
they may have previously filed a short-form application (FCC Form 175) 
for Auction 106, will be required to file a new short-form application 
to participate in Auction 109. A window for filing short-form 
applications to participate in Auction 109 will be announced in a 
subsequent public notice in this proceeding.

II. Construction Permits

    3. Auction 109 will offer four AM construction permits and 136 FM 
construction permits. Attachment A to the Auction 109 Comment Public 
Notice lists each permit to be offered. Under the policies established 
in the Broadcast Competitive Bidding Order, 63 FR 48615, September 11, 
1998, an applicant may apply for any AM construction permit or vacant 
FM allotment listed in Attachment A to the Auction 109 Comment Public 
Notice. If two or more short-form applications (FCC Form 175) specify 
the same AM permit or FM allotment, they will be considered mutually 
exclusive, mutual exclusivity exists for auction purposes, and the 
construction permit 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 109, that applicant is required to submit a bid in order to 
obtain the construction permit.
    4. AM Construction Permits. Auction 109 will offer four 
construction permits in the AM broadcast service. Attachment A to the 
Auction 109 Comment Public Notice lists the community of license, 
channel, class, and coordinates for each AM permit being offered.
    5. The construction permits to be auction are for four previously 
licensed AM stations, listed in Attachment A to the Auction 109 Comment 
Public Notice, the license renewals of which were dismissed with 
prejudice in a hearing before the Commission's Administrative Law Judge 
and the call signs deleted.
    6. To facilitate the auction of the four AM permits, the four AM 
facilities will be treated as existing allotments, using the 
coordinates, AM station frequency and class, and community of license 
of the respective AM facility as listed in Attachment A to the Auction 
109 Comment Public Notice. The Media Bureau has protected these four AM 
stations by freezing the filing of any minor modification applications 
that would be mutually exclusive with the

[[Page 12557]]

facilities of the four AM stations. Because protections extend to the 
previously licensed facility parameters, applicants will be limited in 
their opportunities to modify these AM permits.
    7. FM Construction Permits. Auction 109 will also offer 136 
construction permits in the FM broadcast service. The construction 
permits to be auctioned include all of the 130 FM allotments that had 
previously been listed in the inventory for Auction 106 as well as six 
additional FM allotments. The FM allotments offered in Auction 109 
include 34 construction permits that were offered but not sold or were 
defaulted upon in prior auctions. Attachment A identifies those 
previously offered permits and the auctions in which they were offered.
    8. Attachment A to the Auction 109 Comment Public Notice lists the 
specific vacant FM allotments for which the Commission will offer 
construction permits in this auction, along with the reference 
coordinates for each vacant FM allotment. These comprise FM channels 
added to the Table of FM Allotments, 47 CFR 73.202(b), pursuant to the 
Commission's established rulemaking procedures and assigned at the 
indicated communities.
    9. Each applicant in the FM service has the opportunity to submit a 
set of preferred site coordinates as an alternative to the reference 
coordinates for the vacant FM allotment upon which the applicant 
intends to bid. A future public notice announcing the procedures for 
Auction 109 will provide guidelines for completing FCC Form 175 and 
exhibits, including detailed instructions for specifying preferred site 
coordinates.

III. Proposed Bidding Procedures

    10. Simultaneous Multiple-Round Auction Design. OEA and MB propose 
to use the Commission's simultaneous multiple-round auction format for 
Auction 109. As described further below, 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 invite comment on this proposal.
    11. Bidding Rounds. The Commission will conduct Auction 109 over 
the internet using the FCC auction bidding system. A bidder will also 
have the option of placing bids by telephone through a dedicated 
auction bidder line.
    12. Under this proposal, Auction 109 will consist of sequential 
bidding rounds, each of which would be 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.
    13. OEA and MB propose that the initial bidding schedule may be 
adjusted in order to foster an auction pace that reasonably balances 
speed with the bidders' need to study round results and adjust their 
bidding strategies. Under this proposal, such changes may include the 
amount of time for the bidding rounds, the amount of time between 
rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. OEA and MB request comment on this 
proposal. Commenters on this issue should address the role of the 
bidding schedule in managing the pace of the auction, specifically 
discussing the tradeoffs in managing auction pace by bidding schedule 
changes, by changing the activity requirement(s) or bid amount 
parameters, or by using other means.
    14. Stopping Rule. In accordance with 47 CFR 1.2104(e), stopping 
rules are established before or during multiple round auctions in order 
to complete the auction within a reasonable time. For Auction 109, OEA 
and MB propose to employ a simultaneous stopping rule approach, which 
means all construction permits remain available for bidding until 
bidding stops on every construction permit. Specifically, bidding will 
close on all construction permits after the first round in which no 
bidder submits any new bid, applies a proactive activity rule waiver, 
or withdraws any provisionally winning bid (if bid withdrawals are 
permitted in this auction). Thus, under the proposed simultaneous 
stopping rule, bidding would remain open on all construction permits 
until bidding stops on every construction permit. Consequently, under 
this approach, it is not possible to determine in advance how long the 
bidding in this auction will last.
    15. Further, OEA and MB propose to retain the discretion to 
exercise any of the following stopping options during Auction 109: (1) 
The auction would close for all construction permits after the first 
round in which no bidder applies a waiver, no bidder withdraws a 
provisionally winning bid (if withdrawals are permitted in this 
auction), or no bidder places any new bid on a construction permit for 
which it is not the provisionally winning bidder. 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, no bidder withdraws a provisionally winning 
bid (if withdrawals are permitted in this auction), or no bidder places 
any new bid on a construction permit that already has a provisionally 
winning bid. Absent any other bidding activity, a bidder placing a new 
bid on an FCC-held construction permit (a construction permit that does 
not already have a provisionally winning bid) would not keep the 
auction open under this modified stopping rule. (3) The auction would 
close using a modified version of the simultaneous stopping rule that 
combines (1) and (2) above. (4) The auction would close after a 
specified number of additional rounds (special stopping rule) to be 
announced in advance in the FCC auction bidding system. If this special 
stopping rule is invoked, bids will be accepted in the specified final 
round(s), after which the auction will close. (5) The auction would 
remain open even if no bidder places any new bid, applies a waiver, or 
withdraws any provisionally winning bid (if withdrawals are permitted 
in this auction). In this event, the effect will be the same as if a 
bidder had applied a waiver. The activity rule will apply as usual, and 
a bidder with insufficient activity will either lose bidding 
eligibility or use a waiver.
    16. OEA and MB propose to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly or quickly, there is minimal overall bidding activity, or it 
appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. Before exercising these 
options, OEA and MB will likely attempt to change the pace of the 
auction by changing the number of bidding rounds per day or the minimum 
acceptable bids, for example. 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 request comment on these 
proposals. Commenters should provide specific reasons for supporting or 
objecting to these proposals.
    17. Auction Delay, Suspension, or Cancellation. Pursuant to 47 CFR 
1.2104(i), OEA and MB may delay, suspend, or cancel bidding in the 
auction, at any time before or during the bidding process of Auction 
109, in the event of a natural disaster, technical obstacle, network 
interruption,

[[Page 12558]]

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. 
Notification of any such delay, suspension, or cancellation will be 
provided by public notice or through the FCC auction bidding system's 
messages function. If bidding is delayed or suspended, the auction may 
resume starting from the beginning of the current round or from some 
previous round, or the auction may be cancelled in its entirety. This 
authority will be exercised solely at the discretion of OEA and MB, and 
not as a substitute for situations in which bidders may wish to apply 
activity rule waivers. OEA and MB seek comment on this proposal.
    18. Upfront Payments and Bidding Eligibility. In keeping with the 
usual practice in spectrum auctions, OEA and MB propose that applicants 
be required to submit upfront payments in accordance with 47 CFR 1.2106 
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 construction permits. Upfront 
payments that are related to the specific construction permits being 
auctioned protect against frivolous or insincere bidding and provide 
the Commission with a source of funds from which to collect payments 
owed at the close of the bidding. As required by 47 CFR 1.2106(a), a 
former defaulter must submit an upfront payment equal to 50 percent 
more than the amount that would otherwise be required.
    19. OEA and MB seek comment on an appropriate upfront payment for 
each construction permit being auctioned, taking into account such 
factors as the efficiency of the auction process and the potential 
value of similar construction permits. With these considerations in 
mind, upfront payments are specified in Attachment A to the Auction 109 
Comment Public Notice. OEA and MB seek comment on those proposed 
upfront payment amounts.
    20. It is proposed also that the amount of the upfront payment 
submitted by a bidder will determine its initial bidding eligibility in 
bidding units, which are a measure of bidder eligibility and bidding 
activity. OEA and MB propose to assign each construction permit a 
specific number of bidding units, equal to one bidding unit per dollar 
of the upfront payment amount listed in Attachment A to the Auction 109 
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 being offered in Auction 109, such bidder may place 
bids on multiple construction permits, provided that the total number 
of bidding units associated with those construction permits does not 
exceed that bidder's current eligibility. A bidder cannot increase its 
eligibility during the auction; it can only maintain its eligibility or 
decrease its eligibility. 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. OEA and MB 
request comment on these proposals.
    21. Any applicant that submits a short-form application, but fails 
to timely submit an upfront payment, will retain its status as an 
applicant in Auction 109 and will remain subject to the rules 
prohibiting certain communications but, having purchased no bidding 
eligibility, will not be eligible to bid. An applicant that fails to 
become a qualified bidder for any other reason also will retain its 
status as an Auction 109 applicant and will remain subject to the rules 
prohibiting certain communications.
    22. 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. For purposes of the activity rule, the 
FCC auction bidding system calculates a bidder's activity in a round as 
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. See 47 CFR 1.2104(f). Bidders are required 
to be active on a specific percentage of their current bidding 
eligibility during each round of the auction. OEA and MB propose 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 will 
result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility for the next round of bidding, 
possibly curtailing or eliminating the bidder's ability to place 
additional bids in the auction. OEA and MB seek comment on these 
activity requirements. Commenters that oppose a 100% activity 
requirement should explain their reasons with specificity.
    23. Activity Rule Waivers and Reducing Eligibility. Pursuant to the 
proposed simultaneous multiple round auction format, 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 primarily 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.
    24. 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 level 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 waivers remaining and does not satisfy 
the required activity level, the bidder's current eligibility will be 
permanently reduced, possibly curtailing or eliminating the ability to 
place additional bids in the auction.
    25. 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 
activity rule described above. Reducing eligibility is an irreversible 
action; once eligibility has been reduced, a bidder cannot regain its 
lost bidding eligibility.
    26. Under the proposed simultaneous stopping rule, a bidder would 
be permitted to apply an activity rule waiver proactively as a means to 
keep

[[Page 12559]]

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), or no proactive waiver 
would not keep the auction open.
    27. Consistent with prior Commission auctions of broadcast 
construction permits, OEA and MB propose that each bidder in Auction 
109 be provided with three activity rule waivers that may be used as 
set forth above at the bidder's discretion during the course of the 
auction. Comment is sought on this proposal of three activity rule 
waivers.
    28. Reserve Price or Minimum Opening Bids. Pursuant to 47 U.S.C. 
309(j)(4)(F) and 47 CFR 1.2104(c), (d), OEA and MB seek comment on the 
use of a minimum opening bid amount and a reserve price prior to the 
start of bidding in this auction. Normally, a reserve price is an 
absolute minimum price below which a construction permit or license 
will not be sold in a given auction. A minimum opening bid, on the 
other hand, is the minimum bid price set at the beginning of the 
auction below which no bids are accepted. It is generally used to 
accelerate the competitive bidding process.
    29. OEA and MB propose not to establish separate reserve prices for 
the construction permits offered in this auction. OEA and MB propose to 
establish minimum opening bid amounts for Auction 109. Based on 
experience in past broadcast auctions, setting a minimum opening bid 
amount judiciously is an effective bidding tool for accelerating the 
competitive bidding process.
    30. For Auction 109, proposed minimum opening bid amounts 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. Attachment A to the Auction 109 
Comment Public Notice lists a proposed minimum opening bid amount for 
each construction permit available in Auction 109. OEA and MB seek 
comment on the minimum opening bid amounts specified in Attachment A to 
the Auction 109 Comment Public Notice.
    31. 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. In establishing the minimum opening bid 
amounts, OEA and MB seek comment particularly on factors that could 
reasonably have an impact on bidders' valuation of the broadcast 
spectrum, including the type of service and class of facility offered, 
market size, population covered by the proposed AM or FM 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 their 
final prices--to other means of controlling auction pace, such as 
changes to bidding schedules, percentage increments, or activity 
requirements.
    32. Bid Amounts. OEA and MB propose that if a qualified bidder has 
sufficient eligibility to place a bid on a particular construction 
permit, in each round, the bidder will be able to place a bid on the 
given construction permit in any of up to nine different amounts: The 
minimum acceptable bid amount or one of the additional bid amounts.
    33. Minimum Acceptable Bid Amounts. 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. Once there is a provisionally winning bid 
for a construction permit, the minimum acceptable bid amount for that 
construction permit 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 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 
the 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.
    34. Additional Bid Amounts. Under this proposal, the FCC auction 
bidding system 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. The result then will be rounded 
using the Commission's standard rounding procedures for auctions as 
described in the public notice. That result 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.
    35. For Auction 109, a minimum acceptable bid increment percentage 
of 10% is proposed. 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, a bid increment 
percentage of 5% is proposed. OEA and MB request comment on these 
proposals.
    36. Bid Amount Changes. Consistent with past practice, OEA and MB 
propose to retain the discretion to change the minimum acceptable bid 
amounts, the minimum acceptable bid

[[Page 12560]]

percentage, the additional bid increment percentage, and the number of 
acceptable bid amounts if circumstances so dictate. See 47 CFR 
1.2104(d). OEA and MB propose to retain the discretion to do so on a 
construction permit-by-construction permit basis. OEA and MB propose 
also 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 also seek comment on the 
circumstances under which such a limit should be employed, factors to 
consider when determining the dollar amount of the limit, and the 
tradeoffs in setting such a limit or changing other parameters, such as 
changing the minimum acceptable bid percentage, the bid increment 
percentage, or the number of acceptable bid amounts. Bidders would be 
notified by announcement in the FCC auction bidding system during the 
auction if this discretion is exercised.
    37. OEA and MB seek comment on these proposals. 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.
    38. Provisionally Winning Bids. The FCC auction bidding system will 
determine provisionally winning bids consistent with practice in past 
auctions. At the end of a 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. As a reminder, provisionally 
winning bids count toward activity for purposes of the activity rule.
    39. 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 end 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.
    40. 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. In contrast to the bid withdrawal provisions 
described below, 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. Consistent with the design of the bidding 
system, bidders in Auction 109 would be permitted to remove bids placed 
in a round before the close of that round.
    41. Bid Withdrawal. OEA and MB propose not to permit bidders in 
Auction 109 to withdraw bids. When permitted in an auction, bid 
withdrawals provide a bidder with the option of withdrawing bids placed 
in prior rounds that have become provisionally winning bids. A bidder 
would be able to withdraw its provisionally winning bids using the 
withdraw function in the FCC auction bidding system. A bidder that 
withdraws its provisionally winning bid(s), if permitted, is subject to 
the bid withdrawal payment provisions of 47 CFR 1.2104(g), 1.2109.
    42. 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 undesirable strategic bidding in 
certain circumstances. The Commission stated that this discretion 
should be exercised assertively, with consideration of limiting the 
number of rounds in which bidders may withdraw bids and preventing 
bidders from bidding on a particular market if a bidder is abusing the 
Commission's bid withdrawal procedures. In managing the auction, 
therefore, OEA and MB have discretion to limit the number of 
withdrawals to prevent bidding abuses.
    43. Based on this guidance and on experience with past auctions of 
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. 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), it is 
unlikely that bidders will have a need to withdraw bids in this 
auction. Further, bid withdrawals, particularly if they were made late 
in this auction, could result in delays in licensing new broadcast 
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 109. Commenters advocating alternative 
approaches should support their arguments by taking into account the 
construction permits offered, the impact of auction dynamics and the 
pricing mechanism, and the effects on the bidding strategies of other 
bidders.
    44. Post Auction Payment: Interim Withdrawal Payment Percentage. In 
the event bid withdrawals are permitted in Auction 109, OEA and MB 
propose that the interim bid withdrawal payment be 20% of the withdrawn 
bid. As required by 47 CFR 1.2104(g)(1), a bidder that withdraws a 
provisionally winning 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

[[Page 12561]]

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 Commission cannot calculate the final withdrawal 
payment until that construction permit receives a higher bid or winning 
bid in a subsequent auction. In such cases, when that final withdrawal 
payment cannot yet be calculated, the Commission 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.
    45. The percentage 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, OEA and MB propose to use the maximum interim 
bid withdrawal payment percentage permitted by 47 CFR 1.2104(g)(1) in 
the event bid withdrawals are allowed in this auction. OEA and MB 
request comment on using 20% for calculating an interim bid withdrawal 
payment amount in Auction 109. Commenters advocating the use of bid 
withdrawals should also address the percentage of the interim bid 
withdrawal payment.
    46. Post Auction Payment: 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 full and timely final payment, fails 
to submit a timely long-form application, or 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). As required by 47 CFR 1.2109, this payment consists of a 
deficiency payment, equal to the difference between the amount of the 
Auction 109 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.
    47. In advance of each auction, a percentage between 3% and 20% of 
the applicable winning bid is set pursuant to 47 CFR 1.2104(g)(2) to be 
assessed as an additional default payment. As the Commission has 
indicated, the level of this additional payment in each auction will be 
based on the nature of the service and the construction permits being 
offered.
    48. Consistent with the percentage in prior auctions of broadcast 
construction permits, OEA and MB propose for Auction 109 to establish 
an additional default payment of 20%. As the Commission has noted, 
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, for Auction 
109 an additional default payment of 20% of the relevant bid is 
proposed. OEA and MB seek comment on this proposal.

IV. Procedural Matters

    49. 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. 
The Auction 109 Comment Public Notice does not propose new or modified 
information collection requirements subject to the Paperwork Reduction 
Act of 1995 (PRA), Public Law 104-13. Therefore, it 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).
    50. Ex Parte Rules. This proceeding has been designated as a permit 
but disclose proceeding in accordance with the 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

    51. 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), 62 
FR 65392, December 12, 1997, and other Commission NPRMs (collectively, 
Competitive Bidding NPRMs) pursuant to which Auction 109 will be 
conducted. Final Regulatory Flexibility Analyses (FRFAs) likewise were 
prepared in the Broadcast Competitive Bidding Order, 63 FR 48615, 
September 11, 1998, and other Commission rulemaking orders 
(collectively, Competitive Bidding Orders) pursuant to which Auction 
109 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 small entities of the policies 
and rules addressed in the Auction 109 Comment Public Notice, to 
supplement the Commission's Initial and Final Regulatory Flexibility 
Analyses completed in the Competitive Bidding NPRMs and the Competitive 
Bidding Orders pursuant to which Auction 109 will be conducted. Written 
public comments are requested on this Supplemental IRFA. Comments must 
be identified as responses to the Supplemental IRFA and must be filed 
by the same filing deadlines for comments specified on the first page 
of the Auction 109 Comment Public Notice. Pursuant to 5 U.S.C. 603(a), 
the Commission will send a copy of the Auction 109 Comment Public 
Notice, including this Supplemental IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).
    52. Need for, and Objectives of, the Public Notice. The proposed 
procedures for the conduct of Auction 109 as described in the Auction 
109 Comment Public Notice would constitute the more specific 
implementation of the competitive bidding rules contemplated by Parts 1 
and 73 of the Commission's rules, 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 109 
Comment Public Notice seeks comment on proposed procedures, terms and 
conditions governing Auction 109, and the post-auction application and 
payment processes, as well as seeking comment on the minimum opening 
bid amounts for the specified construction permits, and is fully 
consistent with the underlying rulemaking orders, including the 
Broadcast Competitive Bidding Order

[[Page 12562]]

and other relevant competitive bidding orders.
    53. The Auction 109 Comment Public Notice provides notice of 
proposed auction procedures and adequate time for Auction 109 
applicants to comment on those proposed procedures. See 47 U.S.C. 
309(j)(3)(E)(i). To promote the efficient and fair administration of 
the competitive bidding process for all Auction 109 participants, 
including small businesses, the Auction 109 Comment Public Notice seeks 
comment on the following proposed procedures: 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); a specific 
minimum opening bid amount for each construction permit to be offered 
in this auction; a specific number of bidding units for each 
construction permit; a specific upfront payment amount for each 
construction permit; 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; use of an activity requirement so that bidders 
must bid actively during the auction rather than waiting until late in 
the auction before participating; a single-stage auction in which a 
bidder is required to be active on 100% of its bidding eligibility in 
each bidding round; provision of three activity waivers for each bidder 
to allow it to preserve eligibility during the course of the auction; 
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; a procedure for breaking ties if identical high bid amounts 
are submitted on a construction permit in a given round; whether to 
permit use of bid withdrawals; establishment of an interim bid 
withdrawal percentage of 20% of the withdrawn bid in the event bid 
withdrawals are allowed in Auction 109; and 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 closes.
    54. 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 109, including 47 CFR part 1, subpart Q. See 
47 CFR 73.5000, 73.5002-73.5003, 73.5005-73.5009. In promulgating those 
rules, the Commission conducted numerous Initial Regulatory Flexibility 
Act Analyses (IRFAs) to consider the possible impact of those rules on 
small businesses that might seek to participate in Commission auctions. 
In addition, multiple Final Regulatory Flexibility Analyses (FRFAs) 
were included in the rulemaking orders which adopted or amended rule 
provisions relevant to Auction 109 Comment Public Notice. 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. See 47 CFR 
1.2104(c), (d), (e), (f), (g), (i).
    55. 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 government jurisdiction. 5 U.S.C. 601(6). In 
addition, the term small business has the same meaning as the term 
small business concern under the Small Business Act. See 5 U.S.C. 
601(3) (adopting by reference the definition of small business concern 
in the Small Business Act, 15 U.S.C. 632). A small business concern is 
one which: (1) Is independently owned and operated, (2) is not dominant 
in its field of operation, and (3) satisfies any additional criteria 
established by the SBA. See 15 U.S.C. 632.
    56. The specific procedures and minimum opening bid amounts on 
which comment is sought in the Auction 109 Comment Public Notice will 
directly affect all applicants participating in Auction 109. The number 
of entities that may apply to participate in Auction 109 is unknown. 
Based on the number of applicants in prior FM auctions, OEA and MB 
estimate that the number of applicants for Auction 109 may range from 
approximately 130 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 
1.8 short-form applications were filed per construction permit offered, 
with a median of 1.2 applications per permit. The actual number of 
applicants for Auction 109 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.
    57. 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 their own studio, 
from an affiliated network, or from external sources. According to the 
most recent Report and Order, 85 FR 37364, June 22, 2020, to assess 
annual regulatory fees, Commission staff identified from the Media 
Bureau's licensing databases 9,636 licensed radio facilities subject to 
annual regulatory fees as of October 1, 2019, excluding from this count 
radio stations exempt from required annual regulatory fees.
    58. In 13 CFR 121.201, the SBA established a small business size 
standard for this category, NAICS code 515112, as firms having $41.5 
million or less in annual receipts. 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.
    59. According to Commission staff review of the BIA/Kelsey, LLC's 
Media Access Pro Radio Database (BIA) as of January 26, 2021, nearly 
all AM and FM full-service radio stations (approximately 15,478 of 
15,483 total stations, or 99.97%) 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 not enable a meaningful estimate of 
the number of small entities who may participate in Auction 109.
    60. Also, in assessing whether a business entity qualifies as small 
under the SBA definition, 13 CFR 121.103(a)(1), 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. 
The estimate therefore likely overstates the number of small entities 
that might be affected by

[[Page 12563]]

this auction because the revenue figure on which it is based does not 
include or aggregate revenues from affiliated companies. Moreover, the 
definition of small business also requires that an entity not be 
dominant in its field of operation and that the entity be independently 
owned and operated. The estimate of small businesses to which the 
proposed competitive bidding rules may apply does not exclude any radio 
station from the definition of a small business on these bases and is 
therefore over-inclusive to that extent. Furthermore, 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.
    61. Further, it 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).
    62. 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 in 
NAICS code 515112 of 13 CFR 121.201 that revenue threshold to $41.5 
million, which suggests that an even greater percentage of radio 
broadcasters would fall within the SBA's definition. The Commission has 
estimated the number of licensed commercial AM radio stations to be 
4,347 and the number of commercial FM radio stations to be 6,699 for a 
total number of 11,046. As of January 2021, 4,347 AM stations and 6,694 
FM stations had revenues of $41.5 million or less, according to 
Commission staff review of the BIA Database. Accordingly, based on this 
data, OEA and MB estimate that the majority of Auction 109 applicants 
would likely meet the SBA's definition of a small business concern.
    63. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. In the Auction 109 Comment 
Public Notice, no new reporting, recordkeeping, or other compliance 
requirements for small entities or other auction applicants are 
proposed. 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.
    64. Steps Taken to Minimize the Significant Economic Impact of 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant, specifically small 
business, alternatives that it has considered in reaching its proposed 
approach, which may include the following four alternatives (among 
others): (1) The establishment of differing compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities; (2) the clarification, consolidation, or 
simplification of compliance and reporting requirements under the rule 
for such small entities; (3) the use of performance rather than design 
standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for such small entities. 5 U.S.C. 603(c)(1)-(4).
    65. OEA and MB intend that the proposals of the Auction 109 Comment 
Public Notice to facilitate participation in Auction 109 will result in 
both operational and administrative cost savings for small entities and 
other auction participants. In light of the numerous resources that 
will be available from the Commission at no cost, the processes and 
procedures proposed in the Auction 109 Comment Public Notice should 
result in minimal economic impact on small entities. For example, prior 
to the start of bidding, 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 
109. 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 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, should ensure that the auction will be administered 
efficiently and fairly, thus providing certainty for small entities, as 
well as other auction participants.
    66. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules. None.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2021-04033 Filed 3-1-21; 4:15 pm]
BILLING CODE 6712-01-P