[Federal Register Volume 86, Number 65 (Wednesday, April 7, 2021)]
[Proposed Rules]
[Pages 18000-18014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06545]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 27

[AU Docket No. 21-62; FCC 21-33; FR ID 17995]


Auction of Flexible-Use Service Licenses in the 3.45-3.55 GHz 
Band for Next-Generation Wireless Services; Comment Sought on 
Competitive Bidding Procedures for Auction 110

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: In this document, the Commission announces the auction of new 
flexible-use licenses in the 3.45-3.55 GHz band (the 3.45 GHz Service) 
designated as Auction 110. This document proposes and seeks comment on 
auction procedures to be used for Auction 110.

DATES: Comments are due on or before April 14, 2021, and reply comments 
are due on or before April 29, 2021.

ADDRESSES: Interested parties may file comments or reply comments in AU 
Docket No. 21-62. Comments may be filed using the Commission's 
Electronic Comment Filing System (ECFS) or by filing paper copies. 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/.
     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 110 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: We also request that a copy of all comments and 
reply comments be

[[Page 18001]]

submitted electronically to the following address: [email protected].

FOR FURTHER INFORMATION CONTACT: 
    Auction Legal Questions: Mary Lovejoy, (202) 418-0660, 
[email protected], or Andrew McArdell, (202) 418-0660, 
[email protected].
    General Auction Questions: (717) 338-2868.
    3.45-3.55 GHz Band Legal Questions: Joyce Jones, (202) 418-1327, 
[email protected].
    3.45-3.55 GHz Band Technical Questions: Ira Keltz, (202) 418-0616, 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Public Notice 
(Auction 110 Comment Public Notice), AU Docket No. 21-62, FCC 21-33, 
adopted on March 17, 2021, and released on March 18, 2021. The Auction 
110 Comment Public Notice includes the following attachments: 
Attachment A, Proposed Upfront Payment and Minimum Opening Bid Amounts. 
The complete text of the Auction 110 Comment Public Notice, including 
its attachments, is available on the Commission's website at 
www.fcc.gov/auction/110 or by using the search function for AU Docket 
No. 21-62 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 110 Comment Public Notice, the Commission seeks 
comment on the procedures to be used for Auction 110, the auction of 
new flexible-use licenses in the 3.45-3.55 GHz band (the 3.45 GHz 
Service). The Commission expects the bidding for licenses in Auction 
110 to commence in early October 2021. The Commission proposes to use 
an ascending clock auction format for the licenses offered in Auction 
110. By initiating the pre-auction processes for assigning licenses in 
Auction 110, the Commission takes another important step towards 
releasing critical mid-band spectrum to the market and furthering the 
deployment of fifth-generation (5G) and other advanced wireless 
services across the country. The Auction 110 Comment Public Notice 
seeks comment on proposed auction procedures for bidding to acquire 
licenses in Auction 110.

II. Licenses To Be Offered in Auction 110

    2. Auction 110 will offer 4,060 new flexible-use licenses for 
spectrum in the 3.45-3.55 GHz band throughout the contiguous United 
States, subject to cooperative sharing requirements. The Commission 
will offer up to 100 megahertz of spectrum licensed on an unpaired 
basis and divided into ten 10-megahertz blocks in partial economic area 
(PEA)-based geographic areas located in the contiguous 48 states and 
the District of Columbia (PEAs 1 through 41, 43 through 211, 213 
through 263, 265 through 297, 299 through 359, and 361 through 411). At 
this time, the Commission will not issue flexible-use licenses for the 
following PEAs: Honolulu, Anchorage, Kodiak, Fairbanks, Juneau, Puerto 
Rico, Guam-Northern Mariana Islands, U.S. Virgin Islands, American 
Samoa, and the Gulf of Mexico (PEA numbers 42, 212, 264, 298, 360, 412 
through 416). The Commission will designate these 10-megahertz blocks A 
through J.
    3. All 3.45 GHz Service licenses will be issued for 15-year, 
renewable license terms. Licensees may hold up to four 10-megahertz 
blocks (out of a total of ten) in the 3.45-3.55 GHz band within any PEA 
at any given time for the first four years after the close of the 
auction. A licensee in the 3.45-3.55 GHz band may provide any services 
permitted under terrestrial fixed or mobile, except aeronautical 
mobile, allocations, as set forth in the non-Federal Government column 
of the Table of Frequency Allocations in Sec.  2.106 of the 
Commission's rules, as modified by the 3.45 GHz Second Report and 
Order, FCC 21-32, adopted on March 17, 2021, and published elsewhere in 
this issue of the Federal Register.
    4. Notwithstanding Commission resources described in the Auction 
110 Comment Public Notice, each potential bidder is solely responsible 
for investigating and evaluating all technical and marketplace factors 
that may have a bearing on the potential uses of a license that it may 
seek in Auction 110. In addition to the typical due diligence 
considerations that the Commission encourages of bidders in all 
auctions, the Commission calls particular attention in Auction 110 to 
the spectrum-sharing and relocation issues described in the Auction 110 
Comment Public Notice and in the 3.45 GHz Second Report and Order. Each 
applicant should closely follow releases from the Commission concerning 
these issues and consider carefully the technical and economic 
implications for commercial use of the 3.45-3.55 GHz band. The 
Commission makes no representations or warranties about the use of this 
spectrum for particular services, or about the information in 
Commission databases that is furnished by outside parties. Each 
applicant should be aware that a Commission auction represents an 
opportunity to become a Commission licensee, subject to certain 
conditions and regulations. This includes the established authority of 
the Commission to alter the terms of existing licenses by rulemaking, 
which is equally applicable to licenses awarded by auction. A 
Commission auction does not constitute an endorsement by the Commission 
of any particular service, technology, or product, nor does a 
Commission license constitute a guarantee of business success.

A. Cooperative Sharing in the 3.45-3.55 GHz Band

    5. The 3.45-3.55 GHz band, which is currently used by the 
Department of Defense (DoD) for high- and low-powered radar systems on 
fixed, mobile, shipborne, and airborne platforms, will operate using a 
cooperative sharing framework under which existing federal users are 
prohibited from causing harmful interference to non-federal operations, 
except in limited circumstances and in locations where current 
incumbent federal systems will remain in the band. Specifically, non-
federal systems are not entitled to protection against harmful 
interference from federal operations (and limited restrictions may be 
placed on non-federal operations), under the following circumstances: 
(1) In ``Cooperative Planning Areas'' identified by the DoD in which it 
anticipates that federal operations will continue after the assignment 
of flexible use licenses in the band; and (2) in ``Periodic Use Areas'' 
that overlap with certain Cooperative Planning Areas, in which the DoD 
will need episodic access to all or a portion of the band in specific, 
limited geographic areas. Cooperative Planning Areas and Periodic Use 
Areas do not preclude commercial operations within their boundaries. 
Rather, incumbent federal operations and new flexible use operations 
must coordinate with each other to facilitate shared use of the band in 
these specified areas and during specified time periods as described in 
the 3.45 GHz Second Report and Order.

B. Relocation of Secondary Non-Federal Radiolocation Operations

    6. In addition to the federal users operating in the 3.45-3.55 GHz 
band, the 3.3-3.55 GHz band is currently used

[[Page 18002]]

by secondary non-federal radiolocation licensees that will be relocated 
to the 2.9-3.0 GHz band no later than 180 days after the flexible-use 
licenses won in Auction 110 are granted. In order to facilitate the 
speedy clearing of the 3.3-3.55 GHz band, the Commission has adopted in 
the 3.45 GHz Second Report and Order a requirement that licensees in 
the new 3.45 GHz Service reimburse the current 3.3-3.55 licensees for 
their costs related to the relocation of their operations to the 2.9-
3.0 GHz band. Auction 110 winning bidders will be required to pay these 
reimbursement costs in addition to their winning bid amounts. For 
additional information about cost-sharing and reimbursement procedures 
related to the licenses offered in Auction 110, potential bidders 
should carefully review the 3.45 GHz Second Report and Order.

C. Commercial Spectrum Enhancement Act/Spectrum Act Requirements

    7. The spectrum in the 3.45-3.55 GHz band is covered by a 
Congressional mandate that requires auction proceeds to be used to fund 
the estimated relocation or sharing costs of incumbent Federal 
entities. In 2004, the Commercial Spectrum Enhancement Act (CSEA) 
established a Spectrum Relocation Fund (SRF) to reimburse eligible 
Federal agencies operating on certain frequencies that have been 
reallocated from Federal to non-Federal use for the cost of relocating 
their operations.
    8. In addition to requiring that specified auction proceeds be 
deposited in the SRF, the CSEA, as amended by the Spectrum Act, 
requires that the total cash proceeds from any auction of eligible 
frequencies must equal at least 110% of the estimated relocation or 
sharing costs provided to the Commission by the National 
Telecommunications and Information Administration (NTIA), and prohibits 
the Commission from concluding any auction of eligible frequencies that 
falls short of this amount. The Commission seeks comment on a proposed 
aggregate reserve price that will meet this statutory requirement, 
determined as discussed in Section III.F.
    9. The NTIA provides the Commission its estimate of eligible 
Federal entities' relocation or sharing costs and the timelines for 
such relocation or sharing pursuant to the requirements of the CSEA. On 
January 14, 2021, NTIA provided to the Commission an estimate of 
$13,432,140,300 for the relocation or sharing costs of incumbent the 
incumbent Federal entities currently operating in the 3.45-3.55 GHz 
band.

III. Implementation of Part 1 Competitive Bidding Rules and 
Requirements

    10. In the 3.45 GHz Second Report and Order, the Commission decided 
to conduct any auction of new flexible-use licenses for the 3.45 GHz 
Service in conformity with the amended Part 1 competitive bidding 
rules. As part of the pre-bidding process for each auction, the 
Commission seeks comment on various procedures described in those 
rules, as mandated by section 309(j) of the Communications Act of 1934, 
as amended, 47 U.S.C. 309(j)(3)(E).
    11. The Commission's part 1 rules require each applicant seeking to 
bid to acquire licenses in a spectrum auction to provide certain 
information in a short-form application (FCC Form 175), including 
ownership details and numerous certifications. Part 1, subpart Q's 
competitive bidding rules also contain a framework for the 
implementation of a competitive bidding design, application and 
certification procedures, reporting requirements, and the prohibition 
of certain communications. For auctions subject to the CSEA, such as 
Auction 110, the part 1 rules also require a reserve price or prices 
pursuant to which the total cash proceeds from any auction of eligible 
frequencies shall equal at least 110% of the total estimated relocation 
costs provided to the Commission by the NTIA.

A. Certification of Notice of Auction 110 Requirements and Procedures

    12. In addition to the certifications already required under Sec.  
1.2105, the Commission proposes to require any applicant seeking to 
participate in Auction 110 to certify in its short-form application, 
under penalty of perjury, that it has read the public notice adopting 
procedures for the auction and that it has familiarized itself both 
with the auction procedures and with the requirements for obtaining a 
license and operating facilities in the 3.45-3.55 GHz band. The 
Commission believes that this requirement would help ensure that the 
applicant has reviewed the procedures for participation in the auction 
process and has investigated and evaluated those technical and 
marketplace factors that may have a bearing on its potential use of any 
licenses won at auction. Consequently, this requirement will promote an 
applicant's successful participation and will minimize its risk of 
defaulting on its auction obligations. As with other required 
certifications, an auction applicant's failure to make the required 
certification in its short-form application by the applicable filing 
deadline would render its application unacceptable for filing, and its 
application would be dismissed with prejudice. The Commission seeks 
comment on this proposal. Are there alternative procedures that could 
be implemented that would better ensure that an applicant has 
thoroughly reviewed the auction's procedures and considered all 
relevant factors that may affect its participation in the auction and 
use of any licenses for which it is the winning bidder?

B. Bidding Credit Caps

    13. Consistent with the Commission's decisions in the Updating Part 
1 Report and Order, 80 FR 5674, September 18, 2015, released July 21, 
2015, the Commission seeks comment on establishing reasonable caps on 
the total amount of bidding credits that an eligible small business, 
very small business, or rural service provider may be awarded for 
Auction 110. The Commission administers its bidding credit programs to 
promote small business and rural service provider participation in 
auctions and in the provision of spectrum-based services.
    14. Eligibility for the small business bidding credit is determined 
according to a tiered schedule of small business size definitions that 
are based on an applicant's average annual gross revenues for the 
relevant preceding period, and which determine the size of the bidding 
credit discount. In the Updating Part 1 Report and Order, the 
Commission revised the gross revenue thresholds that define the 
eligibility tiers for the small business bidding credit, and it adopted 
a rural service provider bidding credit program. In the 3.45 GHz Second 
Report and Order, the Commission determined that eligibility for the 
small business bidding credit in the auction of licenses in the 3.45-
3.55 GHz band would be defined using two of the thresholds of the 
standardized schedule of small business sizes. Specifically, an entity 
with average annual gross revenues for the preceding five years not 
exceeding $55 million will be designated as a ``small business'' 
eligible for a 15% bidding credit, and an entity with average annual 
gross revenues for the preceding five years not exceeding $20 million 
will be designated as a ``very small business'' eligible for a 25% 
bidding credit. Additionally, entities providing commercial 
communications services to a customer base of fewer than 250,000 
combined wireless, wireline, broadband, and cable subscribers in 
primarily rural areas will be eligible for the 15% rural service 
provider bidding credit.

[[Page 18003]]

    15. To protect the integrity of the bidding credit program and to 
mitigate the incentives for abuse, the Commission, in the Updating Part 
1 Report and Order, established a process to implement a reasonable cap 
on the total bidding credit amount that an eligible small business or 
rural service provider may be awarded in any auction, based on an 
evaluation of the expected capital requirements presented by the 
particular service and inventory of licenses being auctioned. The 
Commission determined that bidding credit caps would be implemented on 
an auction-by-auction basis, but resolved that, for any particular 
auction, the total amount of the bidding credit cap for small 
businesses would not be less than $25 million, and the bidding credit 
cap for rural service providers would not be less than $10 million. In 
each of its most recent spectrum auctions, the Commission adopted a $25 
million cap on the total bidding credit amount that may be awarded to 
an eligible small business in each auction and a $10 million cap on 
rural service provider bidding credits in each auction.
    16. The Commission proposes to adopt the same small business 
bidding credit caps for Auction 110. As in its most recent spectrum 
auctions, the Commission believes that the range of potential use cases 
suitable for spectrum in the 3.45-3.55 GHz band, combined with the 
relatively small geographic areas for new flexible-use licenses in the 
3.45 GHz Service, may permit deployment of smaller scale networks with 
lower total costs. Moreover, recent auction data suggests that the 
proposed caps will allow the substantial majority of eligible small 
businesses in the auction to take advantage of the bidding credit 
program. The Commission therefore believes that the proposed caps will 
promote the statutory goals of providing meaningful opportunities for 
bona fide small businesses to compete in auctions and in the provision 
of spectrum-based services, without compromising the Commission's 
responsibility to prevent unjust enrichment and ensure efficient and 
intensive use of spectrum.
    17. Similarly, the Commission proposes to adopt a $10 million cap 
on the total bidding credit amount that may be awarded to an eligible 
rural service provider in Auction 110. Based on prior experience with 
other spectrum auctions, the Commission anticipates that a $10 million 
cap on rural service provider bidding credits will not constrain the 
ability of any rural service provider to participate fully and fairly 
in Auction 110. In addition, to create parity in Auction 110 among 
eligible small businesses and rural service providers competing against 
each other in smaller markets, the Commission proposes a $10 million 
cap on the overall bidding credit amount that any winning small 
business bidder may apply to winning licenses in PEAs with populations 
of 500,000 or less.
    18. The Commission seeks comment on these proposed caps. 
Specifically, do the expected capital requirements associated with 
operating in the 3.45-3.55 GHz band, the potential number and value of 
3.45 GHz Service licenses, past auction data, or any other 
considerations justify a higher cap for either type of bidding credit? 
Moreover, are there convincing reasons for not maintaining parity with 
the bidding credit caps in other recent spectrum auctions? Commenters 
are encouraged to identify unique circumstances and characteristics of 
this mid-band auction that should guide us in establishing alternative 
bidding credit caps, and to provide specific, data-driven arguments in 
support of their proposals.
    19. The Commission reminds applicants applying for designated 
entity bidding credits that they should take due account of the 
requirements of the Commission's rules and implementing orders 
regarding de jure and de facto control of such applicants. These rules 
include a prohibition, which applies to all applicants (regardless of 
whether they seek bidding credits), against changes in ownership of the 
applicant that would constitute an assignment or transfer of control. 
Applicants should not expect to receive any opportunities to revise 
their ownership structure after the filing of their short- and long-
form applications, including making revisions to their agreements or 
other arrangements with interest holders, lenders, or others in order 
to address potential concerns relating to compliance with the 
designated entity bidding credit requirements. This policy will help to 
ensure compliance with the Commission's rules applicable to the award 
of bidding credits prior to the start of bidding in this auction, which 
will involve competing bids from those who do and do not seek bidding 
credits, and thus preserves the integrity of the auction process. The 
Commission also believes that this will meet its objectives in awarding 
licenses through the competitive bidding process.

C. Prohibition of Certain Communications

    20. The Commission's part 1 rules require each applicant seeking to 
bid to acquire licenses in a spectrum auction to provide certain 
information in a short-form application (FCC Form 175). Section 
1.2105(c)(1) of the Commission's rules provides that, subject to 
specified exceptions, after the short-form application filing deadline, 
all applicants are prohibited from cooperating or collaborating with 
respect to, communicating with or disclosing, to each other or any 
nationwide provider of communications services that is not an 
applicant, or, if the applicant is a nationwide provider, any non-
nationwide provider that is not an applicant, in any manner the 
substance of their own, or each other's, or any other applicants' bids 
or bidding strategies (including post-auction market structure), or 
discussing or negotiating settlement agreements, until after the down 
payment deadline. This prohibition applies until after the deadline for 
winning bidders to submit down payment.
    21. The operation of the rule prohibiting certain communications 
requires that the Commission identify nationwide providers in 
connection with each auction. Because the applicable service rules for 
the 3.45-3.55 GHz band will allow a licensee to provide flexible 
terrestrial wireless services, including mobile services, the 
Commission's identification of three nationwide providers in the 
Communications Marketplace Report suggests that the Commission should 
identify those same entities as nationwide providers for purposes of 
3.45 GHz licenses and Auction 110. Accordingly, consistent with the 
procedures adopted for prior auctions of flexible-use licenses for 
advanced wireless services, the Commission proposes to identify AT&T, 
T-Mobile, and Verizon Wireless as ``nationwide providers'' for the 
purpose of implementing the competitive bidding rules in Auction 110, 
including Sec.  1.2105(c), the rule prohibiting certain communications. 
The Commission seeks comment on this proposal. Commenters that disagree 
with this designation of nationwide providers are encouraged to 
articulate alternative methodologies by which the Commission should 
identify nationwide providers for purposes of the prohibited 
communications rule.

D. Information Procedures During the Auction Process

    22. As an additional safeguard to further prevent the sharing of 
information about applicants' bids and bidding strategies and to 
discourage unproductive and anti-competitive strategic behavior, the 
Commission proposes to limit information available

[[Page 18004]]

in Auction 110 in order to prevent the identification of bidders 
placing particular bids until after the bidding has closed. While the 
Commission generally makes available to the public information provided 
in each applicant's FCC Form 175 following an initial review by 
Commission staff, the Commission proposes to not make public until 
after bidding has closed: (1) The PEAs that an applicant selects for 
bidding in its short-form application (FCC Form 175), (2) the amount of 
any upfront payment made by or on behalf of an applicant for Auction 
110, (3) any applicant's bidding eligibility, and (4) any other 
bidding-related information that might reveal the identity of the 
bidder placing a bid.
    23. As in past Commission auctions, the Commission would not make 
public during a bidding round any real-time information on bidding 
activity. Bidders would have access both during and after a round to 
additional information related to their own bidding and bid 
eligibility. For example, bidders would be able to view their own level 
of eligibility before and during the auction through the FCC auction 
bidding system.
    24. After the close of bidding, bidders' PEA selections, upfront 
payment amounts, bidding eligibility, bids, and other bidding-related 
information would be made publicly available.
    25. The Commission seeks comment on the details of the proposal for 
implementing limited information procedures, or anonymous bidding, in 
Auction 110. Commenters opposing the use of limited information 
procedures in Auction 110 should explain their reasoning and propose 
alternative information rules.

E. Upfront Payments and Bidding Eligibility

    26. In keeping with the Commission's usual practice in spectrum 
license auctions, the Commission proposes that applicants be required 
to submit upfront payments as a prerequisite to becoming qualified to 
bid. The upfront payment is a refundable deposit made by an applicant 
to establish its eligibility to bid on licenses. Upfront payments 
protect against frivolous or insincere bidding and provide the 
Commission with a source of funds from which to collect payments owed 
at the close of bidding. With these considerations in mind, the 
Commission proposes to calculate upfront payments based on bandwidth 
and license area population using a tiered approach under which the 
calculation will vary by market population. The Commission proposes 
upfront payments for a block in a PEA based on $0.03 per MHz-pop for 
PEAs 1-50 and $0.01 per MHz-pop for all other PEAs, subject to a 
minimum of $500. The proposed upfront payments equal approximately half 
the proposed minimum opening bids, which are established as described 
in Section IV.A.7. The Commission seeks comment on these upfront 
payment amounts, which are specified in the Attachment A file on the 
Auction 110 website at https://www.fcc.gov/auction/110. If commenters 
believe that these upfront payment amounts are not reasonable amounts, 
they should explain their reasoning and suggest an alternative 
approach. For example, if a commenter believes that opening bids should 
be lower in PEAs that are largely covered by a Cooperative Planning 
Area or Periodic Use Area, it should explain how those upfront payments 
should be adjusted.
    27. The Commission proposes to assign each generic spectrum block 
in a given PEA a specific number of bidding units, equal to one bidding 
unit per $100 of the upfront payment listed in Attachment A to the 
Auction 110 Comment Public Notice. The number of bidding units for one 
block in a given PEA is fixed, since it is based on the MHz-pops in the 
block, and it does not change during the auction as prices change. 
Bidding units are used to measure bidder eligibility and bidding 
activity. The Commission further proposes that the amount of the 
upfront payment submitted by a bidder would determine its initial 
bidding eligibility in bidding units. Accordingly, a bidder that makes 
an upfront payment of $1,000 would have initial eligibility of 10 
bidding units. To the extent that bidders wish to bid on multiple 
generic blocks simultaneously, whether within the same PEA or in 
different PEAs, they would need to ensure that their upfront payment 
provides enough eligibility to cover multiple blocks.
    28. Under the proposed approach, a bidder's upfront payment would 
not be attributed to blocks in a specific PEA or PEAs, or to a 
particular category of blocks. A bidder may place bids on multiple 
blocks in PEAs consistent with its selections in its FCC Form 175, 
provided that the total number of bidding units associated with those 
blocks does not exceed its bidding 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 in any single round and submit an upfront payment 
amount covering that total number of bidding units. The Commission 
seeks comment on these proposals. Commenters are encouraged to identify 
unique circumstances and characteristics of this mid-band auction that 
should guide us in establishing procedures for determining bidding 
eligibility, and to provide specific, data-driven arguments in support 
of their proposals.

F. Aggregate Reserve Pursuant to CSEA

    29. Auction 110 is subject to the CSEA's requirement that the total 
cash proceeds from the auction equal at least 110% of the estimated 
relocation or sharing costs provided to the Commission by the NTIA. The 
Commission's rules require that this statutory requirement be met by 
establishing a reserve price. NTIA has estimated that the relocation or 
sharing costs for eligible Federal entities assigned to frequencies in 
the 3.45-3.55 GHz band will be $13,432,140,300. The Commission proposes 
to establish a single aggregate reserve price for the auction to ensure 
that total cash proceeds from the auction equal at least 
$14,775,354,330.
    30. The Commission proposes procedures that have been used in past 
Commission auctions to determine whether the reserve price is met in 
Auction 110. Total cash proceeds from Auction 110 will not be self-
evident from the bidding prior to the conclusion of the auction. As in 
many services, the Commission established bidding credits for small 
business and rural service providers. Winning bidders claiming such 
credits may pay less than the amount of their winning bids for any 
licenses won. In the CSEA/Part 1 Report and Order, 71 FR 6214, February 
7, 2006, released January 24, 2006, the Commission determined that 
``total cash proceeds'' for purposes of meeting the CSEA's requirement 
means winning bids net of any applicable bidding credit discounts at 
the end of bidding. Thus, whether the CSEA's total cash proceeds 
requirement has been met depends on whether winning bids, net of any 
applicable bidding credit discounts, equal, in aggregate, at least 110% 
of estimated relocation costs.
    31. As a preliminary matter, as in prior Commission auctions, the 
Commission proposes to assess whether the reserve price is met--whether 
the auction will generate sufficient total cash proceeds--based on bids 
in the clock phase of the auction and not the assignment phase. Total 
cash proceeds from assignment phase payments are expected to be small 
relative to those from the clock phase and therefore less

[[Page 18005]]

likely to contribute significantly to meeting the reserve price. Given 
the proposal that assignment phase payments will be determined using a 
second-price rule, an individual bidder will have little ability to 
boost net winning bids in the assignment phase in order to meet the 
reserve price. The Commission does not wish to require bidders or 
Commission staff to invest the additional time in the assignment phase 
if ultimately no licenses will be assigned.
    32. Whether winning bidders in the clock phase claim any bidding 
credits that may reduce total cash proceeds to less than gross winning 
bids only can be determined with certainty at the close of the clock 
phase of bidding. However, the Commission will estimate whether the 
reserve is met during the clock phase by assuming conservatively that 
for a category in a PEA with excess demand, blocks will be won by the 
bidders with the highest bidding credit percentages, to the extent that 
such bidders still demand blocks in that category in that PEA. In order 
to make bidders aware of whether the reserve is likely to be met while 
they are still bidding in the clock phase, the Commission proposes to 
indicate on the Public Reporting System (PRS) whether estimated total 
cash proceeds based on the bids in the most recently completed round 
would satisfy the reserve. The Commission proposes further to make 
available only to bidders information on the shortfall between the 
reserve and the estimated total cash proceeds, rounded to the nearest 
$1,000.
    33. This proposal should avoid a potential situation where the 
reserve price is assumed to be met, but, when bidding credits are 
considered, final net winning bids later prove insufficient. For a 
category in a PEA without excess demand, the requirement will be 
evaluated based on a true calculation of net revenue after bid 
processing, rather than on the estimate, since information on how to 
apply bidding credits precisely will be available in that case.
    34. The Commission seeks comment on the proposed aggregate reserve 
price and proposed procedures for determining whether it is met. The 
Commission believes that the procedures proposed in the Public Notice 
are the best way to reduce the risk that the reserve price will not be 
met, but seeks comment on whether there are other mechanisms that could 
be used, either in place of or as a supplement to the proposed 
procedures, that may further reduce that risk. Commenters proposing any 
alternatives should explain how their proposal complies with the 
requirements under the CSEA and the Commission's part 1 rules.

G. Auction Delay, Suspension, or Cancellation

    35. For Auction 110, the Commission proposes that, at any time 
before or during the bidding process, the Office of Economics and 
Analytics (OEA), in conjunction with the Wireless Telecommunications 
Bureau (WTB), may delay, suspend, or cancel bidding in Auction 110 in 
the event of a natural disaster, technical obstacle, network 
interruption, administrative or weather necessity, evidence of an 
auction security breach or unlawful bidding activity, or for any other 
reason that affects the fair and efficient conduct of competitive 
bidding. In such a case, OEA would notify participants of any such 
delay, suspension, or cancellation by public notice and/or through the 
FCC auction bidding system's announcement function. If the bidding is 
delayed or suspended, OEA, in its sole discretion, may elect to resume 
the auction starting from the beginning of the current round or from 
some previous round, or it may cancel the auction in its entirety. The 
Commission emphasizes that OEA and WTB would exercise the delegated 
authority to delay, suspend, or cancel bidding in Auction 110 solely at 
their discretion. The Commission seeks comment on this proposal.

H. Deficiency Payments and Additional Default Payment Percentage

    36. Any winning bidder that defaults or is disqualified after the 
close of an auction (i.e., fails to remit the required down payment by 
the specified deadline, fails to submit a timely long-form application, 
fails to make full and timely final payment, or is otherwise 
disqualified) is liable for a default payment under Sec.  1.2104(g)(2) 
of the rules. This payment consists of a deficiency payment, equal to 
the difference between the amount of the bidder's winning bid and the 
amount of the winning bid the next time a license covering the same 
spectrum is won in an auction, plus an additional payment equal to a 
percentage of the defaulter's bid or of the subsequent winning bid, 
whichever is less.
    37. The Commission's rules provide that, in advance of each 
auction, it will establish a percentage between 3% and 20% of the 
applicable winning bid 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 
licenses being offered.
    38. For Auction 110, the Commission proposes to establish an 
additional default payment of 15%, which is consistent with that 
adopted for recent spectrum auctions, including Auctions 101, 102, 103, 
and 107. As noted in the CSEA/Part 1 Report and Order, defaults weaken 
the integrity of the auction process and may impede the deployment of 
service to the public, and an additional default payment of up to 20% 
will be more effective in deterring defaults than the 3% used in some 
earlier auctions. Based on experience from recent spectrum auctions 
that have also made available PEA-based licenses, the Commission does 
not believe the detrimental effects of any defaults in Auction 110 are 
likely to be unusually great. In light of these considerations, the 
Commission proposes for Auction 110 an additional default payment of 
15% of the relevant bid. The Commission seeks comment on this proposal. 
Commenters are encouraged to identify unique circumstances and 
characteristics of the licenses made available for bidding in this 
auction that should guide us in establishing an alternative default 
payment, and to provide specific, data-driven arguments in support of 
their proposals.
    39. In case they are needed for post-auction administrative 
purposes, such as default or unjust enrichment payments on specific 
licenses, the bidding system will calculate individual per-license 
prices that are separate from the final auction payments that are 
calculated on an aggregate basis. The bidding system will apportion to 
individual licenses any assignment phase payments and any capped 
bidding credit discounts, since in both cases, a single amount may 
apply to multiple licenses.

IV. Proposed Bidding Procedures

    40. The Commission proposes to conduct Auction 110 using an 
ascending clock auction design. Under the proposed auction format, 
bidding would take place in two phases. The first phase of the 
auction--the clock phase--would consist of successive clock bidding 
rounds in which bidders indicate their demands for categories of 
generic license blocks in specific PEAs, followed by a second phase--
the assignment phase--with bidding for frequency-specific license 
assignments. The Commission seeks comment on bidding procedures for the 
two phases of Auction 110.
    41. A technical guide, is available on the Auction 110 website, 
supplementing the information in the Auction 110 Comment Public Notice 
and including

[[Page 18006]]

the mathematical details and algorithms of the proposed auction design.

A. Clock Phase

1. Clock Auction Design
    42. During the clock phase of Auction 110, bidders will indicate 
their demands for generic license blocks in a bidding category in 
specific geographic areas--in this case, PEAs. There may be one or two 
bidding categories in a given PEA. The proposed clock auction format 
would proceed in a series of rounds, with bidding being conducted 
simultaneously for all spectrum blocks in all PEAs available in the 
auction. During each bidding round, the bidding system would announce a 
per-block clock price for each category in each PEA, and qualified 
bidders would submit, for each category and PEA for which they wish to 
bid, the number of blocks they seek at the clock prices associated with 
the current round. Bidding rounds would be open for predetermined 
periods of time. Bidders would be subject to activity and eligibility 
rules that govern the pace at which they participate in the auction.
    43. Under the proposal, for each product--a category in a PEA--the 
clock price for a generic license block would increase from round to 
round if bidders indicate total demand for blocks in that product that 
exceeds the number of blocks available. The bidding rounds would 
continue until, for all products, the total number of blocks that 
bidders demand does not exceed the supply of available blocks.
    44. If the aggregate reserve price to satisfy the CSEA has been met 
at the time that the clock phase bidding stops, those bidders 
indicating demand for a product at the final clock phase price would be 
deemed winning bidders, and the auction will proceed to the assignment 
phase. If the reserve price has not been satisfied at the time bidding 
stops in the clock phase, the auction will end, and no licenses will be 
assigned.
    45. Following the clock phase, if the reserve price has been met, 
the assignment phase will offer clock phase winners the opportunity to 
bid an additional amount for licenses with specific frequencies. All 
winning bidders, regardless of whether they bid in the assignment 
phase, will be assigned licenses for contiguous blocks within a 
category in a PEA.
    46. The Commission seeks comment on specific procedures to 
implement this ascending clock auction and on alternative procedures 
for conducting, in a timely manner, an auction of 3.45-3.55 GHz 
licenses.
2. Generic License Blocks in Two Bidding Categories
    47. Pursuant to the 3.45 GHz Second Report and Order, the 3.45-3.55 
GHz band will be reconfigured and licensed in uniform 10-megahertz sub-
blocks in each of the 406 PEAs in the contiguous United States. In most 
PEAs, new licensees generally will have unrestricted use of all ten 
frequency blocks. In other areas, specifically in PEAs that wholly or 
in part cover Cooperative Planning Areas or Periodic Use Areas, 
licensees must coordinate with incumbent federal operations in the 
band, as established in the 3.45 GHz Second Report and Order. In some 
of the PEAs where coordination is required, all ten blocks will be 
subject to the same restrictions. In others, the restrictions may vary 
depending upon the frequency block--specifically, in some PEAs, the A 
through D blocks may be subject to different restrictions than the E 
through J blocks.
    48. Categories. The Commission proposes to establish categories for 
bidding such that all the blocks within a category in a PEA are similar 
in terms of any requirements or restrictions. Therefore, the Commission 
proposes bidding categories as follows: In the PEAs where all ten 
blocks are the same--i.e., all ten generally are unrestricted or all 
five are subject to the same restrictions--the ten generic blocks will 
be considered Category 1, or ``Cat1,'' blocks. In the PEAs where the 
restrictions differ according to the frequency, the A through D blocks 
will be considered Category 1, or ``Cat1,'' while the E through J 
blocks will be considered Category 2, or ``Cat2,'' blocks for bidding. 
Accordingly, in 334 PEAs, there will be ten generic blocks of a single 
Cat1 product and in 72 PEAs, there will be two products, with four 
generic blocks of Cat1 and six generic blocks of Cat2. In PEAs with two 
categories, the Commission designates the A through D blocks as Cat1 
and the E through J blocks as Cat2, simply to denote that for these 
licenses the coordination requirements in a PEA differ between the A 
through D blocks compared to the E through J blocks. For all licenses, 
the Commission cautions potential bidders to investigate carefully the 
restrictions that may apply to a given PEA. In particular, the 
Commission notes that prior to the start of bidding, the DoD will 
disseminate one or more workbooks that specifically describe the 
coordination requirements for each Cooperative Planning Area and 
Periodic Use Area. The Commission will issue a Public Notice when such 
workbook(s) or any updates are available.
    49. The proposed approach to determine bidding categories differs 
somewhat from the approach the Commission has taken in prior clock 
auctions, in that the coordination requirements on blocks in a given 
category in a given PEA may differ from the requirements on the same 
category of blocks in a different PEA. For example, the Cat1 blocks in 
one PEA may be unrestricted while the Cat1 blocks in another PEA may 
require some degree of coordination. Similarly, the restrictions on 
Cat2 blocks in one PEA will likely vary from PEA to PEA. In previous 
auctions, blocks in a given bidding category generally have been 
subject to the same use requirements in all PEAs, but because the 
restrictions in this auction differ so widely from PEA to PEA, that 
approach is not feasible. Importantly, however, under this proposal for 
Auction 110, within any given PEA, the blocks within a category can be 
considered generic, and bidding in the clock phase would determine a 
single price that would apply to each generic block in a category in a 
PEA. The Commission seeks comment on this proposal for determining 
categories of generic blocks for bidding.
    50. The proposal for bidding on generic blocks in two categories is 
based on the close similarity of the blocks within each bidding 
category within a PEA. To the extent a bidder has a preference for 
licenses for specific frequencies, the Commission proposes to allow the 
bidder to bid for its preferred blocks in the assignment phase. 
However, a bidder for a generic block would not be assured that it will 
be assigned, or not be assigned, any particular frequency block. The 
Commission seeks comment on this approach, which it believes will 
promote the efficient management of the auction.
    51. Limit on number of blocks per bidder. In the 3.45 GHz Second 
Report and Order, the Commission adopted a spectrum aggregation limit 
for flexible-use licenses in the 3.45 GHz band of a maximum of 40 
megahertz (i.e., four blocks out of ten) in any PEA at any point in 
time for four years post-auction. Consistent with this limit on the 
number of blocks that a single entity can hold in any single PEA, the 
bidding system will limit to four the number of blocks that a bidder 
can demand in any given PEA at any point in the auction. Therefore, in 
each bidding round, a bidder would have the opportunity to bid for a 
total of up to four blocks of spectrum per PEA. This spectrum 
aggregation limit would apply across

[[Page 18007]]

both categories in PEAs that contain Cat1 and Cat2 blocks. As a result, 
no single entity would be permitted to bid on, for example, two Cat1 
block and three Cat2 blocks within a single PEA. An aggregation limit 
of four blocks would further the Commission's interest in promoting 
greater diversity in participation in the 3.45 GHz band by ensuring 
that, if licenses for all blocks in a PEA are awarded, there will be at 
least three winning bidders in the PEA.
3. Bidding Rounds
    52. Under the proposed clock auction format, Auction 110 would 
consist of sequential bidding rounds, each followed by the release of 
round results. The Commission proposes to conduct bidding 
simultaneously for all spectrum blocks in both bidding categories for 
all PEAs available in the auction. In the first bidding round of 
Auction 110, a bidder would indicate, for each product, how many 
generic license blocks it demands at the minimum opening bid price. 
During each subsequent bidding round, the bidding system would announce 
a per-block clock price for each product, and qualified bidders would 
submit, for each product for which they wish to bid, the number of 
blocks they seek at the clock prices associated with the current round. 
Bidding rounds would be open for predetermined periods of time. Bidders 
would be subject to activity and eligibility rules that govern the pace 
at which they participate in the auction.
    53. For each product, the clock price for a generic license block 
would increase from round to round if bidders indicate total demand for 
that product that exceeds the number of blocks available. The bidding 
rounds would continue until, for every product, the total number of 
blocks that bidders demand does not exceed the supply of available 
blocks. At that point, those bidders indicating demand for a block at 
the final price would be deemed winning bidders.
    54. The initial bidding schedule would be announced in a public 
notice to be released at least one week before the start of bidding. 
Under this proposal, OEA would retain the discretion to adjust the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. Such adjustments may include changes in the 
amount of time for bidding rounds, the amount of time between rounds, 
or the number of rounds per day, and would depend upon bidding activity 
and other factors. The Commission seeks comment on this proposal. 
Commenters should address the role of the bidding schedule in managing 
the pace of the auction and should specifically discuss the tradeoffs 
in managing auction pace by bidding schedule changes, by changing the 
activity requirement percentage or the bid increment percentage, or by 
using other means.
    55. The Commission proposes to conduct Auction 110 over the 
internet. A bidder would be able to submit its bids using the bidding 
system's upload function, which allows bid files in a comma-separated 
values (CSV) text format to be uploaded. The bidding system would not 
allow bids to be submitted unless the bidder selected the PEAs on its 
FCC Form 175 and the bidder has sufficient bidding eligibility.
    56. During each round of the bidding, a bidder would also be able 
to remove bids placed in the current bidding round. If a bidder 
modifies its bids for blocks in a PEA in a round, the system would take 
the last bid submission as that bidder's bid for the round.
4. Stopping Rule
    57. The Commission proposes a simultaneous stopping rule for 
Auction 110, under which all blocks in all PEAs would remain available 
for bidding until the bidding stops in every PEA. Specifically, the 
Commission proposes that bidding close for all blocks after the first 
round in which there is no excess demand in any product. Excess demand 
is calculated as the difference between the number of blocks of 
aggregate demand and supply. Consequently, under this approach, it is 
not possible to determine in advance how long Auction 110 would last. 
The Commission seeks comment on the proposed simultaneous stopping 
rule.
5. Availability of Bidding Information
    58. The Commission proposes to make public after each round of 
Auction 110, for each category in each PEA: The supply, the aggregate 
demand, the posted price of the last completed round, and the clock 
price for the next round. The posted price of the previous round is, 
generally, the start-of-round price if supply exceeds demand; the clock 
price of the previous round if demand exceeds supply; or the price at 
which a reduction caused demand to equal supply. The identities of 
bidders demanding blocks in a specific category or PEA would not be 
disclosed until after Auction 110 concludes (i.e., after the close of 
bidding).
    59. Under this proposal, each bidder would have access to 
additional information related to its own bidding and bid eligibility. 
Specifically, after the bids of a round have been processed, the 
bidding system would inform each bidder of the number of blocks it 
holds after the round (its processed demand) for every product and its 
eligibility for the next round.
    60. Limiting the availability of bidding information during the 
auction balances the Commission's interest in providing bidders with 
sufficient information about the status of their own bids and the 
general level of bidding in all areas and license categories to allow 
them to bid confidently and effectively, while restricting the 
availability of information that may facilitate identification of 
bidders placing particular bids, which could potentially lead to 
undesirable strategic bidding.
6. Activity Rule, Contingent Bidding Limit, and Reducing Eligibility
    61. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. For this clock auction, a bidder's activity in a 
round for purposes of the activity rule would be the sum of the bidding 
units associated with the bidder's demands as applied by the auction 
system during bid processing. Bidders are required to be active on a 
specific percentage (the activity requirement percentage) of their 
current bidding eligibility during each round of the auction. Failure 
to maintain the requisite activity level would result in a reduction in 
the bidder's eligibility, possibly curtailing or eliminating the 
bidder's ability to place bids in subsequent rounds of the auction.
    62. The Commission proposes to require that bidders maintain a 
fixed, high level of activity in each round of Auction 110 in order to 
maintain bidding eligibility. Specifically, the Commission proposes to 
require that bidders be active on between 90% and 100% of their bidding 
eligibility in all clock rounds, with the specific percentage within 
this range to be set for each round. Thus, the activity rule would be 
satisfied when a bidder has bidding activity on blocks with bidding 
units that total 90% to 100% of its current eligibility in the round. 
The Commission proposes to set the activity requirement percentage 
initially at 95%. If the activity rule is met, then the bidder's 
eligibility would not change for the next round. If the activity rule 
is not met in a round, the bidder's eligibility would be reduced. The 
Commission proposes to calculate bidding activity based on the bids 
that are applied by the

[[Page 18008]]

FCC auction bidding system. That is, if a bidder requests a reduction 
in the quantity of blocks it demands in a product, but the FCC auction 
bidding system cannot apply the request because demand would fall below 
the available supply, then the bidder's activity would reflect its 
unreduced demand. Under the ascending clock auction format, the FCC 
auction bidding system will not allow a bidder to reduce the quantity 
of blocks it demands in an individual product if the reduction would 
result in aggregate demand falling below (or further below) the 
available supply of blocks in the product.
    63. Because a bidder's eligibility for the next round is calculated 
based on the bidder's demands as applied by the auction system during 
bid processing, a bidder's eligibility may be reduced even if the 
bidder submitted bids with activity that exceeds the required activity 
for the round. This may occur, for example, if the bidder bids to 
reduce its demand in PEA X by two blocks (with 10 bidding units each) 
and bids to increase its demand by one block (with 20 bidding units) in 
PEA Y. If the bidder's demand can only be reduced by one block in PEA X 
(because there is only one block of excess demand), the increase in PEA 
Y cannot be applied, and absent other bidding activity the bidder's 
eligibility would be reduced. To potentially help a bidder avoid having 
its eligibility reduced as a result of submitted bids that could not be 
accepted during bid processing, the Commission seeks comment on 
additional procedures that would allow a bidder to submit bids with 
associated bidding activity greater than its current bidding 
eligibility. For example, depending upon the bidder's overall bidding 
eligibility and the contingent bidding percentage, a bidder could 
submit an ``additional'' bid or bids that would be considered (in price 
point order with its other bids) and applied as available eligibility 
permits during the bid processing. However, even under these additional 
procedures, the bidder's activity as applied by the auction system 
during bid processing would not exceed the bidder's current bidding 
eligibility. That is, if a bidder were allowed to submit bids with 
associated bidding units exceeding 100% of its current bidding 
eligibility, its processed activity would never exceed its eligibility.
    64. Specifically, the Commission seeks comment on procedures by 
which, after Round 1, a bidder may submit bids with bidding units 
totaling up to a contingent bidding limit equal to the bidder's current 
bidding eligibility for the round times a percentage (the contingent 
bidding percentage) equal to or greater than 100%. The Commission seeks 
comment on setting an initial contingent bidding percentage of 120%, 
which would apply beginning in Round 2. This limit would be subject to 
change in subsequent rounds within a range of 100% to 140%. In any 
bidding round, the auction bidding system would advise the bidder of 
its current bidding eligibility, its required bidding activity, and its 
contingent bidding limit.
    65. Under the proposed procedures, OEA would retain the discretion 
to change the activity requirement percentage during the auction, and 
the Commission seeks comment in connection with potential additional 
procedures on whether OEA should similarly retain the discretion to 
change the contingent bidding percentage during the auction. The 
bidding system would announce any such changes in advance of the round 
in which they would take effect, giving bidders adequate notice to 
adjust their bidding strategies.
    66. The Commission invites comment on this activity rule proposal 
and further seeks comment on using a contingent bidding limit to 
address the potential for loss of bidding eligibility under some 
circumstances. The Commission also encourages commenters to address 
whether it should set the activity requirement percentage between 90% 
and 100% for each round and, should the Commission adopt a contingent 
bidding limit, whether to set the contingent bidding percentage between 
100% and 140%. Further, the Commission seeks comment on where to set 
these percentages initially. The Commission also seeks comment on the 
relationship between the proposed activity rules and the ability of 
bidders to switch their demands across PEAs. The Commission encourages 
any commenters that oppose the proposed range for the activity 
requirement percentage and the described contingent bidding percentage 
range to explain their reasons with specificity.
    67. Missing bids. The Commission points out that under the proposed 
clock auction format, bidders are required to indicate their demands in 
every round, even if their demands at the new round's prices are 
unchanged from the previous round. Missing bids--bids that are not 
reconfirmed--are treated by the auction bidding system as requests to 
reduce to a quantity of zero blocks for the product. If these requests 
are applied, or applied partially, then a bidder's bidding activity, 
and its bidding eligibility for the next round, may be reduced.
    68. For Auction 110, the Commission does not propose to provide for 
activity rule waivers to preserve a bidder's eligibility. The 
Commission notes that the proposal to permit a bidder to submit bids 
with bidding activity greater than its eligibility, within the precise 
limits set forth above, would address some of the circumstances under 
which a bidder risks losing bidding eligibility and otherwise could 
wish to use a bidding activity waiver, while minimizing any potential 
adverse impacts on bidder incentives to bid sincerely and on the price 
setting mechanism of the clock auction. This approach not to allow 
waivers is consistent with the ascending clock auction procedures used 
in other FCC clock auctions. The clock auction relies on precisely 
identifying the point at which demand decreases to equal supply to 
determine winning bidders and final prices. Allowing waivers would 
create uncertainty with respect to the exact level of bidder demand and 
would interfere with the basic clock price-setting and winner 
determination mechanism. Moreover, uncertainty about the level of 
demand would affect the way bidders' requests to reduce demand are 
processed by the bidding system. The Commission seeks comment on this 
approach.
7. Acceptable Bids
a. Minimum Opening Bids
    69. The Commission proposes to establish minimum opening bid 
amounts for Auction 110. The bidding system will not accept bids lower 
than these amounts. Based on the Commission's experience in past 
auctions, setting minimum opening bid amounts judiciously is an 
effective tool for accelerating the competitive bidding process. For 
Auction 110, the Commission proposes to establish initial clock prices, 
or minimum opening bids, by PEA.
    70. For Auction 110, the Commission proposes to calculate minimum 
opening bid amounts based on bandwidth and license area population, 
which is similar to its approach in previous spectrum auctions, using a 
tiered approach under which the calculation will vary by market 
population. The Commission proposes minimum opening bid amounts for a 
block in a PEA based on $0.06 per MHz-pop for PEAs 1-50 and $0.02 per 
MHz-pop for all other PEAs, subject to a minimum of $1,000. The 
Commission seeks comment on these minimum opening bid amounts, which 
are specified in Attachment A to the Auction 110 Comment Public Notice. 
If commenters

[[Page 18009]]

believe that these minimum opening bid amounts would result in unsold 
licenses or are not reasonable amounts, they should explain their 
reasoning and propose an alternative approach. For example, if a 
commenter believes that opening bids should be lower in PEAs that are 
largely covered by a Cooperative Planning Area or Periodic Use Area, it 
should explain how those bids should be adjusted. Commenters should 
support their claims with valuation analyses and suggested amounts or 
formulas for minimum opening bids.
    71. In establishing minimum opening bid amounts, the Commission 
particularly seeks comment on factors that could reasonably affect 
bidders' valuation of the spectrum, including the type of service 
offered, market size, population covered by the proposed facility, 
whether there is significant overlap with a Cooperative Planning Area 
or Periodic Use Area, and any other relevant factors.
    72. Commenters may also wish to address the general role of minimum 
opening bids in managing the pace of the auction. For example, 
commenters could compare using minimum opening bids--e.g., by setting 
higher minimum opening bids to reduce the number of rounds it takes 
licenses to reach their final prices--to other means of controlling 
auction pace, such as changing the bidding schedule, the activity 
requirement percentage, or the bid increment percentage.
b. Clock Price Increments
    73. Under the proposed clock phase procedures for Auction 110, 
after bidding in the first round and before each subsequent round, the 
FCC auction bidding system would announce the start-of-round price and 
the clock price for the upcoming round--that is, the lowest price and 
the highest price at which bidders can specify the number of blocks 
they demand during the round. As long as aggregate demand for blocks in 
the product exceeds the supply of blocks, the start-of-round price 
would be equal to the clock price from the prior round. If demand 
equaled supply at a price in a previous round, then the start-of-round 
price for the next round would be equal to the price at which demand 
equaled supply. If demand was less than supply in the previous round, 
then the start-of-round price for the next round would not increase.
    74. The Commission proposes to set the clock price for blocks in a 
specific product for a round by adding a percentage increment to the 
start-of-round price. For example, if the start-of-round price for a 
block in a given product is $10,000, and the percentage increment is 
20%, then the clock price for the round will be $12,000. The result of 
the clock price calculation will be rounded up to the nearest $1,000 
for results above $10,000 and rounded up to the nearest $100 for 
results below $10,000.
    75. The Commission proposes to set the increment percentage within 
a range of 5% to 20% inclusive, to set the initial increment percentage 
at 10%, and potentially to adjust the increment as rounds continue. The 
Commission further proposes that the total dollar amount of the 
increment (the difference between the clock price and the start-of-
round price) would not exceed a certain amount. The Commission proposes 
to set this cap on the increment initially at $50 million and 
potentially to adjust the cap as rounds continue. The proposed 5% to 
20% increment range and cap will allow us to set a percentage that 
manages the auction pace and takes into account bidders' needs to 
evaluate their bidding strategies while moving the auction along 
quickly.
    76. The Commission seeks comment on these proposed procedures.
c. Intra-Round Bids
    77. The Commission proposes generally to permit a bidder to make 
intra-round bids by indicating a point between the start-of-round price 
and the clock price at which its demand for blocks changes. In placing 
an intra-round bid, a bidder would indicate a specific price and a 
quantity of blocks it demands if the price for blocks should increase 
beyond that price. For example, if a bidder has processed demand of two 
blocks at the start of the round price of $200, but wishes to hold only 
one block if the price increases by more than $10 (assuming the bid 
increment is more than $10), the bidder will indicate a bid quantity of 
two at a price of $210 ($200 + $10). Similarly, if the bidder wishes to 
reduce its demand to zero if the price increases at all above $200, the 
bidder will indicate a bid quantity of zero at the start-of-round price 
of $200.
    78. Intra-round bids would be optional; a bidder may choose to 
express its demands only at the clock prices. This proposal to permit 
intra-round bidding would allow the auction system to use relatively 
large increments, thereby speeding the auction, without running the 
risk that a jump in the clock price will overshoot the market clearing 
price--the point at which demand for blocks equals the available 
supply. The Commission seeks comment on the proposal to allow intra-
round bids.
8. Bids To Change Demand, Bid Types, and Bid Processing
    79. Under the ascending clock auction format the Commission 
proposes for Auction 110, a bidder would indicate in each round the 
number of blocks in each product that it demands at a given price, 
subject to the discussed in-band limit of four blocks. A bidder that 
wishes to change the quantity it demands (relative to its demands from 
the previous round as processed by the bidding system) would express 
its demands at the clock price or at an intra-round price. A bidder 
that is willing to maintain the same demand in a product at the new 
clock price would bid for that quantity at the clock price, indicating 
that it is willing to pay up to that price, if need be, for the 
specified quantity. Bids to maintain demand would always be applied by 
the auction bidding system.
    80. In order to facilitate bidding for multiple blocks in a PEA, 
the Commission proposes that bidders will be permitted to make two 
types of bids: Simple bids and switch bids. A ``simple'' bid indicates 
a desired quantity of blocks in a product at a price (either the clock 
price or an intra-round price). A ``switch'' bid allows the bidder to 
request to move its demand for a quantity of blocks from Cat1 to Cat2, 
or vice versa, within the same PEA at a price for the ``from'' category 
(either the clock price or an intra-round price). ``Switch'' bids are 
allowed only in PEAs with two categories.
    81. The Commission does not propose to incorporate any form of 
package bidding procedures into the clock phase of Auction 110. Package 
bidding would add complexity to the bidding process, and the Commission 
does not see significant benefit from such procedures, given the clock 
auction and assignment phase format proposed in the Auction 110 Comment 
Public Notice. A bidder may bid on multiple blocks in a PEA and in 
multiple PEAs. The Commission proposes that the assignment phase will 
assign contiguous blocks to winners of multiple blocks in a category in 
a PEA and give bidders an opportunity to express their preferences for 
specific frequency blocks, thereby facilitating aggregations of 
licenses.
    82. The Commission proposes bid processing procedures that the 
auction bidding system would use, after each bidding round, to process 
bids to change demand to determine the processed demand of each bidder 
for each product and a posted price for each product that would serve 
as the start-of-round price for the next round.

[[Page 18010]]

a. No Excess Supply Rule for Bids To Reduce Demand
    83. Under the ascending clock auction format, the FCC auction 
bidding system will not allow a bidder to reduce the quantity of blocks 
it demands in a product if the reduction would result in aggregate 
demand falling below (or further below) the available supply of blocks 
in the product. Therefore, if a bidder submits a simple bid to reduce 
the number of blocks for which it has processed demand as of the 
previous round, the FCC auction bidding system will treat the bid as a 
request to reduce demand that will be applied only if the ``no excess 
supply'' rule would be satisfied. Similarly, if a bidder submits a 
switch bid to move its demand for a quantity of blocks from Cat1 to 
Cat2 within the same PEA, the FCC auction bidding system will treat the 
bid as a request that will be applied only if the ``no excess supply'' 
rule would be satisfied for Cat1 in the PEA.
b. Eligibility Rule for Bids To Increase Demand
    84. The bidding system will not allow a bidder to increase the 
quantity of blocks it demands in a product if the total number of 
bidding units associated with the bidder's demand exceeds the bidder's 
bidding eligibility for the round. Therefore, if a bidder submits a 
simple bid to increase the number of blocks for which it has processed 
demand as of the previous round, the FCC auction bidding system will 
treat the bid as a request to increase demand that will be applied only 
if that would not cause the bidder's activity to exceed its 
eligibility. The eligibility rule for bids to increase demand does not 
apply to switch bids because the bidder's processed activity does not 
change when a switch bid is applied.
c. Partial Application of Bids
    85. Under the proposed bid processing procedures and as in all 
previous FCC spectrum auctions using the clock auction format, a bid 
(simple bid or switch bid) that involves a reduction from the bidder's 
previous demands could be applied partially--that is, reduced by fewer 
blocks than requested in the bid--if excess demand is insufficient to 
support the entire reduction. Accordingly, the bidding system will 
apply a bidder's request to reduce demand as much as possible 
consistent with the no excess supply rule. A switch bid may be applied 
partially, but the increase in demand in the ``to'' category will 
always match in quantity the reduction in the ``from'' category. A 
simple bid to increase a bidder's demand could be applied partially if 
the total number of bidding units associated with the bidder's demand 
exceeds the bidder's bidding eligibility for the round. Therefore, the 
bidding system will accommodate a bidder's request to increase demand 
as much as possible as long as the bidder's activity does not exceed 
its eligibility.
d. Processed Demand
    86. The Commission proposes to process bids to change demand in 
order of price point after a round ends, where the price point 
represents the percentage of the bidding interval for the round. For 
example, if the start-of-round price is $5,000 and the clock price is 
$6,000, a price of $5,100 will correspond to the 10% price point, since 
it is 10% of the bidding interval between $5,000 and $6,000. Under this 
proposal, the FCC auction bidding system would process bids to change 
demand in ascending order of price point, first considering intra-round 
bids in order of price point and then bids at the clock price. The 
system would consider bids at the lowest price point across all PEAs, 
then look at bids at the next price point in all areas, and so on. The 
Commission proposes that, if there are multiple bids at a single price 
point, the system will process bids in order of a bid-specific pseudo-
random number. As it considers each submitted bid during bid 
processing, the FCC auction bidding system would determine the extent 
to which there is excess demand in each PEA at that point in the 
processing in order to determine whether a bidder's request to reduce 
demand can be applied. Likewise, the auction bidding system would 
evaluate the activity associated with the bidder's most recently 
determined demands at that point in the processing to determine whether 
a request to increase demand can be applied.
    87. Because in any given round some bidders may request to increase 
demands for licenses while others may request reductions, the price 
point at which a bid is considered by the auction bidding system can 
affect whether it is applied. In addition to proposing that bids be 
considered by the system in increasing order of price point, the 
Commission further proposes that bids not applied because of 
insufficient aggregate demand or insufficient eligibility be held in a 
queue and considered, again in order, if there should be excess demand 
or sufficient eligibility later in the processing after other bids are 
processed.
    88. Therefore, under the proposed procedures, once a round closes, 
the auction system would process bids to change demand by first 
considering the bid submitted at the lowest price point and determining 
the maximum extent to which that bid can be applied given bidders' 
demands as determined at that point in the bid processing. If the bid 
can be applied (either in full or partially), the number of licenses 
the bidder holds at that point in the processing would be adjusted, and 
aggregate demand would be recalculated accordingly. If the bid cannot 
be applied in full, the unfulfilled bid, or portion thereof, would be 
held in a queue to be considered later during bid processing for that 
round. The FCC auction bidding system would then consider the bid 
submitted at the next highest price point, applying it in full, in 
part, or not at all, given the most recently determined demands of 
bidders. Any unfulfilled requests would again be held in the queue, and 
aggregate demand would again be recalculated. Every time a bid or part 
of a bid is applied, the unfulfilled bids held in the queue would be 
reconsidered, in the order of the original price points of the bids 
(and by pseudo-random number, in the case of tied price points). The 
auction bidding system would not carry over unfulfilled bid requests to 
the next round, however. The bidding system would advise bidders of the 
status of their bids when round results are released.
e. Price Determination
    89. The Commission further proposes bid processing procedures that 
would determine, based on aggregate demand, the posted price for each 
product for the round that will serve as the start-of-round price for 
the next round. Under this proposal, the uniform price for all of the 
blocks in a product would increase from round to round as long as there 
is excess demand for blocks in the product but would not increase if 
aggregate demand does not exceed the available supply of blocks.
    90. The Commission proposes that if, at the end of a round, the 
aggregate demand for blocks in the product exceeds the supply of 
blocks, the posted price would equal the clock price for the round. If 
a reduction in demand was applied during the round and caused demand in 
the product to equal supply, the posted price would be the price at 
which the reduction was applied. If aggregate demand is less than or 
equal to supply and no bid to reduce demand was applied for the 
product, then the posted price would equal the start-of-round price for 
the round. The range of acceptable bid amounts for the next round would 
be set by adding the

[[Page 18011]]

percentage increment to the posted price.
    91. When a bid to reduce demand can be applied only partially, the 
uniform price for the product would stop increasing at that point, 
since the partial application of the bid would result in demand falling 
to equal supply. Hence, a bidder that makes a bid to reduce demand that 
cannot be fully applied would not face a price for the remaining demand 
that is higher than its bid price.
    92. After the bids of the round have been processed, if the 
stopping rule has not been met, the FCC auction bidding system would 
announce clock prices to indicate a range of acceptable bids for the 
next round. Each bidder would be informed of its processed demand and 
the extent of excess demand for blocks in each product.
    93. The Commission seeks comment on the proposals regarding bid 
processing for Auction 110.
9. Winning Bids in the Clock Phase
    94. Under the proposed clock auction format for Auction 110, if the 
reserve price to meet the CSEA requirement is met in the clock phase, 
bidders with processed demand for a product at the time the stopping 
rule is met will become the winning bidders of licenses corresponding 
to that number of blocks and will be assigned specific frequencies in 
the assignment phase. The final clock phase price for a generic block 
in a product would be the posted price for the final round.

B. Assignment Phase

    95. Following the conclusion of the clock phase, if the reserve 
price to meet the CSEA requirement has been met, the Commission 
proposes to conduct an assignment phase using a series of single 
bidding rounds, where each clock phase winning bidder will have the 
opportunity to indicate its preferences for specific frequency licenses 
corresponding to the generic blocks it won in the clock phase. A bidder 
will be assigned contiguous frequencies for blocks it wins within each 
category and PEA regardless of whether it chooses to bid in the 
assignment phase.
1. Sequencing and Grouping of PEAs
    96. The Commission proposes to sequence assignment rounds to make 
it easier for bidders to incorporate frequency assignments from 
previously assigned areas into their bid preferences for other areas, 
recognizing that bidders winning multiple blocks of licenses generally 
will prefer contiguous blocks across adjacent PEAs. To that end, the 
Commission proposes to conduct rounds for the largest markets first to 
enable bidders to establish a ``footprint'' from which to work.
    97. Specifically, the Commission proposes to conduct a separate 
assignment round for each of the top 20 PEAs and to conduct these 
assignment rounds sequentially, beginning with the largest PEA. Once 
the top 20 PEAs have been assigned, the Commission proposes to conduct, 
for each Regional Economic Area Grouping (REAG), a series of assignment 
rounds for the remaining PEAs within that region. The six REAGs are: 
Northeast, Southeast, Great Lakes, Mississippi Valley, Central, and 
West.
    98. The Commission further proposes, where feasible, to group into 
a single market for assignment any non-top 20 PEAs within a region in 
which the same winning bidders will be assigned the same number of 
blocks in each category, and all are subject to the small markets 
bidding cap or all are not subject to the cap, which will also help 
maximize contiguity across PEAs. The Commission proposes to sequence 
the assignment rounds within a REAG in descending order of population 
for a PEA group or individual PEA. The Commission further proposes to 
conduct the bidding for the different REAGs in parallel in order to 
reduce the total amount of time required to complete the assignment 
phase.
    99. The Commission seeks comment on these proposals for sequencing 
assignment rounds, including conducting separate rounds for the top 20 
PEAs, and on the proposal to group PEAs for bidding under some 
circumstances within REAGs. Are there concerns that, because blocks in 
the same category but in different PEAs within a REAG may have 
different restrictions on their use, that the bidding system should not 
group PEAs for bidding? Or would the potential reduction in the number 
of bidding rounds outweigh such concerns?
2. Acceptable Bids and Bid Processing
    100. Under the Commission's proposal, in each assignment round, a 
bidder will be asked to assign a price to one or more possible 
frequency assignments for which it wishes to express a preference, 
consistent with its winnings for generic blocks in the clock phase. The 
price will represent a maximum payment that the bidder is willing to 
pay, in addition to the price established in the clock phase for the 
generic blocks, for the frequency-specific license or licenses in its 
bid. In PEAs where there are two categories and a bidder won generic 
blocks in both categories, the Commission proposes that bidder submit 
its preferences for blocks won in Cat1 and Cat2 separately, rather than 
submitting bids for preferences that include blocks in both categories. 
That is, if a bidder won one block in Cat1 and two blocks in Cat2, it 
would not be able to submit a single bid amount for an assignment that 
included both categories. Instead, it would submit its bid or bids for 
assignments in Cat1 separately from its bid or bids for assignments in 
Cat2.
    101. The Commission proposes to use an optimization approach to 
determine the winning frequency assignment for each category in each 
PEA or PEA group. The Commission proposes that the auction system will 
select the assignment that maximizes the sum of bid amounts among all 
assignments that satisfy the contiguity requirements. Furthermore, if 
multiple blocks in a category in a PEA remain unsold, the unsold 
licenses will be contiguous. The Commission proposes that the 
additional price a bidder will pay for a specific frequency assignment 
(above the clock phase price) will be calculated consistent with a 
generalized ``second price'' approach--that is, the winner will pay a 
price that would be just sufficient to result in the bidder receiving 
that same winning frequency assignment while ensuring that no group of 
bidders is willing to pay more for an alternative assignment that 
satisfies the contiguity restrictions. This price will be less than or 
equal to the price the bidder indicated it was willing to pay for the 
assignment. The Commission proposes to determine prices in this way 
because it facilitates bidding strategy for the bidders, encouraging 
them to bid their full value for the assignment, knowing that if the 
assignment is selected, they will pay no more than would be necessary 
to ensure that the outcome is competitive. The Commission proposes to 
determine prices using the Vickrey-nearest approach, which is described 
in the Assignment Phase Technical Guide available on the Auction 110 
website.
    102. The Commission seeks comment on these proposed procedures.

V. Tutorials and Additional Information for Applicants

    103. The Commission intends to provide additional information on 
the bidding system and to offer demonstrations and other educational 
opportunities for applicants in Auction 110 to familiarize themselves 
with the FCC auction application system and the auction bidding system. 
For example, the Commission intends to release online tutorials that 
will help applicants understand the procedures to be followed in the 
filing of their auction

[[Page 18012]]

short-form applications (FCC Form 175) and on the bidding procedures 
for Auction 110.

VI. Procedural Matters

A. Supplemental Initial Regulatory Flexibility Analysis

    104. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), 5 U.S.C. 603, the Commission 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 110 Comment Public 
Notice to supplement the Commission's Initial and Final Regulatory 
Flexibility Analyses completed in the 3.45 GHz Further Notice of 
Proposed Rulemaking (FNPRM), 85 FR 66888, October 21, 2020, released 
October 2, 2020, the 3.45 GHz Second Report and Order, and other 
Commission orders pursuant to which Auction 110 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 deadline for comments specified in the DATES 
section of this document and on the first page of the Auction 110 
Comment Public Notice. The Commission will send a copy of the Auction 
110 Comment Public Notice, including this Supplemental IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration (SBA). 
In addition, the Auction 110 Comment Public Notice and Supplemental 
IRFA (or summaries thereof) will be published in the Federal Register.
    105. Need for, and Objectives of, the Proposed Rules. The Auction 
110 Comment Public Notice sets forth the proposed auction procedures 
for those entities that seek to bid to acquire licenses in Auction 110. 
The Auction 110 Comment Public Notice seeks comment on proposed 
procedural rules to govern Auction 110, which will auction flexible-use 
licenses for the 3.45 GHz Service. This process is intended to provide 
notice of and adequate time for potential applicants to comment on 
proposed auction procedures. To promote the efficient and fair 
administration of the competitive bidding process for all Auction 110 
participants, the Commission seeks comment on the following proposed 
procedures:
     A requirement that any applicant seeking to participate in 
Auction 110 certify in its short-form application, under penalty of 
perjury, that it has read the public notice adopting procedures for 
Auction 110 that will be released in advance of the short-form 
deadline, and that it has familiarized itself with those procedures and 
the requirements for obtaining a license and operating facilities in 
the 3.45-3.55 GHz band;
     establishment of bidding credit caps for eligible small 
businesses, very small businesses, and rural service providers in 
Auction 110;
     designation of AT&T, T-Mobile, and Verizon Wireless as 
nationwide providers for purposes of the prohibition of certain 
communications;
     use of anonymous bidding/limited information procedures 
which will not make public until after bidding has closed: (1) The PEAs 
that an applicant selects for bidding in its short-form application 
(FCC Form 175), (2) the amount of any upfront payment made by or on 
behalf of an applicant for Auction 110, (3) an applicant's bidding 
eligibility, and (4) any other bidding-related information that might 
reveal the identity of the bidder placing a bid;
     establishment of an additional default payment of 15% 
under Sec.  1.2104(g)(2) of the rules in the event that a winning 
bidder defaults or is disqualified after the auction;
     a specific upfront payment amount for products available 
in Auction 110;
     establishment of a bidder's initial bidding eligibility in 
bidding units based on that bidder's upfront payment through assignment 
of a specific number of bidding units for each generic block;
     establishment of a single aggregate reserve price for the 
auction to ensure that total cash proceeds from the auction equal at 
least $14,775,354,330;
     provision of delegated authority to OEA, in conjunction 
with WTB, to exercise its discretion to delay, suspend, or cancel 
bidding in Auction 110 for any reason that affects the ability of the 
competitive bidding process to be conducted fairly and efficiently;
     retention by OEA of discretion to adjust the bidding 
schedule in order to manage the pace of Auction 110;
     use of a simultaneous stopping rule for Auction 110, under 
which all blocks in both categories in all PEAs would remain available 
for bidding until the bidding stops in every PEA;
     use of a clock auction format for Auction 110 under which 
each qualified bidder will indicate in successive clock bidding rounds 
its demands for categories of generic blocks in specific geographic 
areas. Proposed categories are determined based on the framework set 
forth in the 3.45 GHz Second Report and Order, in which the lower 40 
megahertz of the band--between 3450-3490 MHz corresponding to the A 
through D blocks--are affected differently than the upper 60 megahertz 
in certain PEAs in the band;
     to permit bidders to make two types of bids: Simple bids 
and switch bids. A ``simple'' bid indicates a desired quantity of 
blocks in a product at a price (either the clock price or an intra-
round price). A ``switch'' bid allows the bidder to request to move its 
demand for a quantity of blocks from Cat1 to Cat2, or vice versa, 
within the same PEA at a price for the ``from'' category (either the 
clock price or an intra-round price);
     use of an activity rule that would require bidders to be 
active on between 90% and 100% of their bidding eligibility in all 
regular clock rounds;
     use of an activity rule that does not include a waiver of 
the rule to preserve a bidder's eligibility;
     a specific minimum opening bid amount for products 
available in Auction 110;
     establishment of acceptable bid amounts, including clock 
price increments and intra-round bids, along with a proposed 
methodology for calculating such amounts;
     a proposed methodology for processing bids and requests to 
reduce and increase demand; and
     establishment of an assignment phase that will determine 
which frequency-specific licenses will be won by the winning bidders of 
generic blocks during the clock phase.
    106. The proposed procedures for the conduct of Auction 110 
constitute the more specific implementation of the competitive bidding 
rules contemplated by Parts 1 and 27 of the Commission's rules, the 
3.45 GHz Second Report and Order, and relevant competitive bidding 
orders, and are fully consistent therewith.
    107. Legal Basis. The Commission's statutory obligations to small 
businesses under the Communications Act of 1934, as amended, are found 
in sections 309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the 
Commission's competitive bidding rules is found in various provisions 
of the Communications Act of 1934, as amended, including 47 U.S.C. 
154(i), 301, 302, 303(r), 304, 307, and 309(j). The Commission has 
established a framework of competitive bidding rules, updated most 
recently in 2015, pursuant to which it has conducted auctions since the 
inception of the auctions program in 1994 and would conduct Auction 
110.
    108. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules Will Apply. The RFA directs agencies to 
provide a description of, and, where feasible, an estimate of the 
number of small entities that may be

[[Page 18013]]

affected by the proposed rules and policies, if adopted. The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small business concern'' under the 
Small Business Act. A ``small business concern'' is one which: (1) Is 
independently owned and operated, (2) is not dominant in its field of 
operation, and (3) satisfies any additional criteria established by the 
SBA.
    109. As noted, Regulatory Flexibility Analyses were incorporated 
into the 3.45 GHz FNPRM and the 3.45 GHz Second Report and Order. In 
those analyses, the Commission described in detail the small entities 
that might be significantly affected. In the Auction 110 Comment Public 
Notice, the Commission incorporates by reference the descriptions and 
estimates of the number of small entities from the previous Regulatory 
Flexibility Analyses in the 3.45 GHz FNPRM, and the 3.45 GHz Second 
Report and Order.
    110. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. The Commission designed the 
auction application process itself to minimize reporting and compliance 
requirements for applicants, including small business applicants. In 
the first part of the Commission's two-phased auction application 
process, parties desiring to participate in an auction file 
streamlined, short-form applications in which they certify under 
penalty of perjury as to their qualifications. Eligibility to 
participate in bidding is based on an applicant's short-form 
application and certifications, as well as its upfront payment. In the 
second phase of the process, winning bidders file a more comprehensive 
long-form application. Thus, an applicant 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.
    111. The Commission does not expect the processes and procedures 
proposed in the Auction 110 Comment Public Notice will require small 
entities to hire attorneys, engineers, consultants, or other 
professionals to participate in Auction 110 and comply with the 
procedures it ultimately adopts because of the information, resources, 
and guidance the Commission makes available to potential and actual 
participants. For example, the Commission intends to release an online 
tutorial that will help applicants understand the procedures for filing 
the auction short-form application (FCC Form 175). The Commission also 
intends to make information on the bidding system available and to 
offer demonstrations and other educational opportunities for applicants 
in Auction 110 to familiarize themselves with the FCC auction 
application system and the auction bidding system. By providing these 
resources as well as the resources discussed under ``Steps Taken to 
Minimize the Significant Economic Impact on Small Entities, and 
Significant Alternatives Considered,'' the Commission expects small 
business entities who use the available resources to experience lower 
participation and compliance costs. Nevertheless, while the Commission 
cannot quantify the cost of compliance with the proposed procedures, it 
does not believe that the costs of compliance will unduly burden small 
entities that choose to participate in the auction because the 
proposals for Auction 110 are similar in many respects to the 
procedures in recent auctions conducted by the Commission.
    112. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant, specifically small 
business, alternatives that it has considered in reaching its proposed 
approach, which may include the following four alternatives (among 
others): (1) The establishment of differing compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities; (2) the clarification, consolidation, or 
simplification of compliance and reporting requirements under the rule 
for such small entities; (3) the use of performance rather than design 
standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for such small entities.
    113. The Commission has taken steps to minimize any economic impact 
of its auction procedures on small businesses through, among other 
things, the many resources it provides potential auction participants. 
Small entities and other auction participants may seek clarification of 
or guidance on complying with competitive bidding rules and procedures, 
reporting requirements, and the FCC's auction bidding system. An FCC 
Auctions Hotline provides access to Commission staff for information 
about the auction process and procedures. The FCC Auctions Technical 
Support Hotline is another resource which provides technical assistance 
to applicants, including small entities, on issues such as access to or 
navigation within the electronic FCC Form 175 and use of the FCC's 
auction bidding system. Small entities may also use the web-based, 
interactive online tutorial produced by Commission staff to familiarize 
themselves with auction procedures, filing requirements, bidding 
procedures, and other matters related to an auction.
    114. The Commission also makes various databases and other sources 
of information, including the Auctions program websites and copies of 
Commission decisions, available to the public without charge, providing 
a low-cost mechanism for small entities to conduct research prior to 
and throughout the auction. Prior to and at the close of Auction 110, 
the Commission will post public notices on the Auctions website, which 
articulate the procedures and deadlines for the auction. The Commission 
makes this information easily accessible and without charge to benefit 
all Auction 110 applicants, including small entities, thereby lowering 
their administrative costs to comply with the Commission's competitive 
bidding rules.
    115. Prior to the start of bidding, eligible bidders will be given 
an opportunity to become familiar with auction procedures and the 
bidding system by participating in a mock auction. Further, the 
Commission intends to conduct Auction 110 electronically over the 
internet using its web-based auction system that eliminates the need 
for bidders to be physically present in a specific location. Qualified 
bidders also have the option to place bids by telephone. These 
mechanisms are made available to facilitate participation in Auction 
110 by all eligible bidders and may result in significant cost savings 
for small business entities that use these alternatives. Moreover, the 
adoption of bidding procedures in advance of the auction, consistent 
with statutory directive, is designed to ensure that the auction will 
be administered predictably and fairly for all participants, including 
small entities.
    116. For Auction 110, the Commission proposes a $25 million cap on 
the total bidding credit amount that may be awarded to an eligible 
small business and a $10 million cap on the total bidding credit amount 
that may be awarded to a rural service provider. In addition, the 
Commission proposes a $10 million cap on the overall amount of bidding 
credits that any winning small business bidder may apply to winning 
licenses in PEAs with a population of 500,000 or less. The Commission 
seeks comment on whether the expected capital requirements associated 
with operating in the 3.45-

[[Page 18014]]

3.55 GHz band, the potential number and value of 3.45 GHz Service 
licenses, past auction data, or any other considerations justify a 
higher cap for either type of bidding credit, and whether there are 
convincing reasons for not maintaining parity with the bidding credit 
caps in other recent spectrum auctions. Based on the technical 
characteristics of the 3.45-3.55 GHz band and its analysis of past 
auction data, the Commission anticipates that the proposed caps will 
allow the majority of small businesses to take full advantage of the 
bidding credit program, thereby lowering the relative costs of 
participation for small businesses.
    117. These proposed procedures for the conduct of Auction 110 
constitute the more specific implementation of the competitive bidding 
rules contemplated by parts 1 and 27 of the Commission's rules, the 
3.45 GHz Second Report and Order, and relevant competitive bidding 
orders, and are fully consistent therewith.
    118. Federal Rules that May Duplicate, Overlap, or Conflict with 
the Proposed Rules. None.

B. Paperwork Reduction Act Analysis

    119. This document contains proposed new information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, we seek specific comment on how we might 
further reduce the information collection burden for small business 
concerns with fewer than 25 employees.

C. Deadlines and Filing Procedures

    120. Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, interested parties may file comments or reply comments on or 
before the dates indicated in the DATES section of this document and on 
the first page of the document in AU Docket No. 21-62. Comments may be 
filed using the Commission's Electronic Comment Filing System (ECFS) or 
by filing paper copies. We strongly encourage interested parties to 
file comments electronically.
    121. This proceeding has been designated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making oral ex parte presentations must file a copy of 
any written presentations or memoranda summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine Period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to the Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule Sec.  1.1206(b). In proceedings governed 
by rule Sec.  1.49(f) or for which the Commission has made available a 
method of electronic filing, written ex parte presentations and 
memoranda summarizing oral ex parte presentations, and all attachments 
thereto, must be filed through the electronic comment filing system 
available for that proceeding, and must be filed in their native format 
(e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this 
proceeding should familiarize themselves with the Commission's ex parte 
rules.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2021-06545 Filed 4-6-21; 8:45 am]
BILLING CODE 6712-01-P