[Federal Register Volume 87, Number 71 (Wednesday, April 13, 2022)]
[Rules and Regulations]
[Pages 21755-21783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07602]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1 and 27
[AU Docket No. 20-429; FCC 22-24; FR ID 81075]
Auction of Flexible-Use Licenses in the 2.5 GHz Band for Next-
Generation Wireless Services; Notice and Filing Requirements, Minimum
Opening Bids, Upfront Payments, and Other Procedures for Auction 108;
Bidding Scheduled To Begin July 29, 2022
AGENCY: Federal Communications Commission.
ACTION: Final action; requirements and procedures.
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SUMMARY: This document summarizes the procedures, deadlines, and
upfront payment and minimum opening bid amounts for the upcoming
auction of approximately 8,000 new flexible-use geographic overlay
licenses in the 2.5 GHz band (Auction 108). The Auction 108 Procedures
Public Notice summarized here provides details regarding the
procedures, terms, conditions, dates, and deadlines governing
participation in Auction 108 bidding, as well as overview of the post-
auction application and payment process. The Auction 108 Procedures
Public Notice released on March 21, 2022, was corrected by an erratum
released on April 1, 2022. The changes made by the erratum are included
in this document.
DATES: Applications to participate in Auction 108 must be submitted
before 6 p.m. Eastern Time (ET) on May 10, 2022. Upfront payments for
Auction 108 must be received by 6 p.m. ET on June 23, 2022. Bidding in
Auction 108 is scheduled to start on July 29, 2022.
FOR FURTHER INFORMATION CONTACT:
General Auction 108 Information: FCC Auctions Hotline at 888-225-
5322, option two; or 717-338-2868.
Auction 108 Legal Information: Lyndsey Grunewald, Daniel Habif or
Scott Mackoul at (202) 418-0660.
2.5 GHz Band Licensing Information: Madelaine Maior or Nadja Sodos-
Wallace at (202) 418-2487.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
[[Page 21756]]
document, Auction 108 Procedures Public Notice, in AU Docket No. 20-
429, FCC 22-24, released on March 21, 2022. The complete text of this
document, including attachments and any related document, is available
on the Commission's website at http://www.fcc.gov/auction/108 or by
using the search function for on the Commission's Electronic Comment
Filing System (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. General Information
A. Introduction
1. By the Auction 108 Procedures Public Notice, the Commission
establishes the procedures to be used for Auction 108, the auction of
approximately 8,000 new flexible-use geographic overlay licenses in the
2.5 GHz band. Auction 108 will offer the single largest contiguous
portion of available mid-band spectrum below 3 GHz, and the licenses
made available in this auction will help extend 5G service beyond the
most populated areas.
2. Bidding in Auction 108 is scheduled to commence on July 29,
2022. Auction 108 will be conducted using an ascending clock auction
with a supply of one in each category of frequency-specific channel
blocks, referred to as the clock-1 auction format. The Auction 108
Procedures Public Notice provides details regarding the procedures,
terms, conditions, dates, and deadlines governing participation in
Auction 108 bidding, as well as an overview of the post-auction
application and payment processes.
B. Background and Relevant Authority
3. In the 2.5 GHz Report and Order, 84 FR 57343, July 11, 2019, the
Commission made available 117.5 megahertz of spectrum in the 2.5 GHz
band for new licensed use. In that Order, the Commission established a
Rural Tribal Priority Window to enable federally-recognized Tribal
Nations an opportunity to obtain 2.5 GHz licenses to provide service
using unassigned spectrum in the former Educational Broadband Service
(EBS) band on rural Tribal lands before the remaining unassigned
spectrum is made generally available through competitive bidding. Among
other things, the Commission authorized both fixed and mobile
operations in the 2.5 GHz band using geographic area licensing,
replaced the regulatory regime of the EBS with new flexible-use
licensing and operating rules, and decided to use its competitive
bidding rules to assign remaining overlay licenses following the close
of the Rural Tribal Priority Window.
4. On January 13, 2021, in accordance with section 309(j)(3) of the
Communications Act of 1934, as amended (Communications Act), the
Commission released the Auction 108 Comment Public Notice, 86 FR 12146,
March 2, 2021, seeking comment on certain competitive bidding
procedures and various other procedures to be used in Auction 108.
Interested parties filed 16 comments and 26 reply comments in response
to the Auction 108 Comment Public Notice. On February 9, 2022, the
Commission's Office of Economics and Analytics (OEA) and Wireless
Telecommunications Bureau (WTB) released the Auction 108 Further
Comment Public Notice, 87 FR 8764, February 16, 2022, seeking further
comment on multiple-round auction procedures for Auction 108.
Specifically, OEA and WTB sought comment on whether a clock auction
would address commenters' concerns and suggestions regarding the
simultaneous multiple-round (SMR) and single-round, sealed bid auction
formats proposed in the Auction 108 Comment Public Notice. Interested
parties filed 13 comments in response to the Auction 108 Further
Comment Public Notice. On February 18, 2022, OEA and WTB released the
Auction 108 Inventory Comment Public Notice, 87 FR 11379, March 1,
2022, that announced an updated auction inventory and sought comment
whether any procedures need to be adjusted for all the licenses
available in Auction 108 in light of additions to the initial license
inventory. Interested parties filed eight comments in response to the
Auction 108 Inventory Comment Public Notice. In the Auction 108
Procedures Public Notice, the Commission resolves all open issues
raised in the Auction 108 Comment Public Notice, the Auction 108
Further Comment Public Notice, and the Auction 108 Inventory Comment
Public Notice and address the comments received.
5. Other Commission rules and decisions provide the underlying
authority for the procedures the Commission adopts for Auction 108.
Among other things, prospective applicants should familiarize
themselves with the Commission's general competitive bidding rules,
including amendments and clarifications thereto, as well as Commission
decisions regarding competitive bidding procedures, application
requirements, and obligations of Commission licensees. Prospective
applicants also should familiarize themselves with the Commission's
rules regarding the 2.5 GHz band, as well as the licensing and
operating rules that are applicable to all Part 27 services. In
addition, applicants must be thoroughly familiar with the procedures,
terms, and conditions contained in the Auction 108 Procedures Public
Notice and any future public notices that may be released in this
proceeding.
6. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in its public notices at any time
and will issue public notices to convey any new or supplemental
generally applicable information to applicants. Pursuant to the
Commission's rules, OEA and WTB also retain the authority to implement
further procedures during the course of Auction 108. It is the
responsibility of all applicants to remain current with all Commission
rules and with all public notices pertaining to Auction 108.
C. Description of Licenses To Be Offered in Auction 108
7. Consistent with the Commission's determination, any remaining
unassigned EBS spectrum will be made available in Auction 108. Auction
108 will offer geographic overlay licenses for unassigned spectrum in
the 2.5 GHz (2496-2690 MHz) band. The Commission will offer up to three
blocks of spectrum--49.5 megahertz, 50.5 megahertz, and 17.5 megahertz
blocks, respectively--licensed on a county basis. Specifically, the
first channel block will include channels A1-A3, B1-B3, C1-C3 (49.5
megahertz); the second channel block will include channels D1-D3, the J
channels, and channels A4, B4, C4, D4, and G4 (50.5 megahertz); and the
third channel block will include channels G1-G3 and the relevant K
channels (16.5 megahertz of contiguous spectrum and 1 megahertz of the
K channels associated with the G channel group, for a total of 17.5
megahertz). New overlay licenses in the EBS portion of the 2.5 GHz band
will be issued for 10-year, renewable license terms. A licensee in this
band may provide any services permitted under terrestrial fixed or
mobile allocations, as set forth in the non-Federal Government column
of the Table of Frequency Allocations in 47 CFR 2.106.
8. Concurrent with the release of the Auction 108 Comment Public
Notice, OEA and WTB made available a file listing all county and
channel block
[[Page 21757]]
combinations potentially available for Auction 108. Several commenters,
including some incumbent licensees, noted potential discrepancies
between the Commission's initial list of potentially available licenses
and commenters' own analyses of available white space in the band.
These commenters and others urged the Commission to audit the
preliminary list of licenses available in Auction 108 to ensure that
the final list of available licenses is complete and accurate. In light
of these comments, WTB staff performed additional geographic
information systems (GIS) analysis of existing 2.5 GHz licenses and
prepared a new list of potentially available licenses based on license
service area data extracted from the Universal Licensing System (ULS)
on February 2, 2022. The revised list also took into account licenses
issued pursuant to Rural Tribal Priority Window applications and
information provided by commenters. OEA and WTB released that updated
list of potentially available licenses, which added 189 licenses to the
list and removed 370, on February 18, 2022, and requested comment on
whether any of the procedures proposed in the Auction 108 Comment
Public Notice or the Auction 108 Further Comment Public Notice needed
to be adjusted in light of licenses added to the initial license
inventory.
9. Many of the issues raised by commenters in response to the
Auction 108 Comment Public Notice were addressed in the revised
inventory released with the Auction 108 Inventory Comment Public
Notice. The revised list of licenses also excluded county/channel block
combinations where the only areas with unassigned spectrum were over
large bodies of water such as the Atlantic Ocean or the Great Lakes.
Since a licensee may only place base stations within their geographic
service area (GSA) and limit the power flux density of their signal
within their GSA, there would be no prospect for a licensee to deploy
service to land-based populations in that scenario.
10. The revised license inventory released in conjunction with the
Auction 108 Procedures Public Notice incorporates WTB's comprehensive
review of the inventory in response to additional GIS analyses and
feedback from interested parties including incumbent licensees and
lessees. The Commission declines a request by certain parties to
implement a more formal process by which interested parties may submit
data to challenge the revised license inventory. Interested parties had
multiple opportunities to provide input on the development of the
license inventory, as WTB has continued to refine and revise the
inventory in response to feedback from interested parties. Most
recently, several parties submitted additional information in response
to the Auction 108 Inventory Comment Public Notice, and WTB has taken
that information into account in developing the most recent inventory
listing reflected in the updated Attachment A that is being released in
conjunction with the Auction 108 Procedures Public Notice. Second, a
new, formal process at this time would significantly delay the auction
of critical mid-band spectrum.
11. On March 15, 2022, WTB granted seven additional Rural Tribal
Priority Window applications in Alaska. As a result of those grants,
all 2.5 GHz spectrum in Bristol Bay and Lake and Peninsula Boroughs in
Alaska was assigned on all three channel blocks. Accordingly, the three
licenses for those boroughs have been removed from the list of
available licenses.
12. In light of comments, the Commission has also excluded from its
analysis of active licensees' geographic service areas the potential
effect of licenses that expired before January 10, 2005, and were not
reinstated prior to March 10, 2008. As a result, the Commission removed
80 licenses in 57 counties from the auction inventory.
13. Concurrent with the release of the Auction 108 Procedures
Public Notice, the Commission makes available an updated file listing
all county and channel block combinations potentially available for
Auction 108. This file is listed as an Attachment A file on the Auction
108 website at www.fcc.gov/auction/108. This inventory of overlay
licenses available in Auction 108 released concurrently with the
Auction 108 Procedures Public Notice removes 87 licenses from the
revised inventory released on February 18, 2022, based on OEA and WTB
review of comments and the results of the Rural Tribal Priority Window.
If additional licenses are removed from inventory because of future
Rural Tribal Priority Window grants, those actions will be announced by
subsequent public notice(s).
14. The Commission has also made available resources to assist
applicants in conducting due diligence research regarding potential
encumbrances in the band. These resources include a new mapping tool to
help identify and view existing licenses and Rural Tribal Priority
Window applications. The new mapping tool is being made available to
all potential bidders in Auction 108, and the public generally,
concurrently with the release of the Auction 108 Procedures Public
Notice. It can be found under the Education tab on the Auction 108
website at www.fcc.gov/auction/108. Potential applicants are reminded,
however, that this mapping tool is merely a graphical aid for potential
applicants and does not represent official licensing information; all
information should be confirmed in the Universal Licensing System (ULS)
for any specific license or area.
15. The Commission will not adopt an expansion of existing
requirements on incumbent licensees and lessors in this band that would
mandate disclosure of additional details of spectrum lease agreements
to potential bidders. The Commission finds that adoption of proponents'
expanded disclosure requirement is beyond the bounds of the existing
spectrum leasing rules and the Commission's prior determinations
supporting those disclosure requirements. The Commission's spectrum
leasing rules already provide that each licensee that enters into a
leasing agreement must disclose to the Commission a significant amount
of information pertaining to the agreement, including the identity of
the lessee, the term, and the spectrum and geographic area covered, and
that such information is publicly available through ULS. Given the
spectrum lease information already available, the Commission finds that
proponents of disclosure have not supported their assertion that
additional information is necessary in making decisions about whether
or how to participate in this auction. Finally, even if additional
information may be helpful or material to one or more bidders--and the
Commission makes no such finding--the Commission is not convinced that
the benefits to potential bidders of obtaining such information would
outweigh the potential competitive harm to the leaseholders from
disclosure.
16. 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
108, including the availability of unassigned white space in any
particular license area. In addition to the typical due diligence
considerations encouraged of bidders in all auctions, the Commission
calls particular attention in Auction 108 to potential encumbrances due
to existing licenses and pending applications. In particular there will
be a substantial number of licenses in the inventory where the amount
of unassigned area or unassigned spectrum is very small. For example,
there could be licenses in Channel Block 2 where as little as .333
megahertz of spectrum is unassigned.
[[Page 21758]]
There are also a substantial number of licenses where the area with
unassigned spectrum is smaller than one square mile. Each applicant
should carefully consider these issues and the technical and economic
implications for commercial use of the 2.5 GHz band.
D. Auctions Specifics
1. Auction Title and Start Date
17. The auction of licenses in the 2.5 GHz band will be referred to
as Auction 108. Bidding in Auction 108 will begin on Friday, July 29,
2022. Pre-bidding dates and deadlines are listed below. The initial
schedule for bidding rounds in Auction 108 will be announced by public
notice at least one week before bidding begins.
18. Unless otherwise announced, bidding on all licenses will be
conducted on each business day until bidding has stopped on all
licenses.
2. Auction Dates and Deadlines
19. The following dates and deadlines apply to Auction 108:
Auction Application Tutorial Available No later than April 5, 2022.
(via internet).
Short-Form Application (FCC Form 175) April 27, 2022, 12 p.m. Eastern
Filing Window Opens. Time (ET).
Short-Form Application (FCC Form 175) May 10, 2022, 6 p.m. ET.
Filing Window Deadline.
Upfront Payments (via wire transfer)... June 23, 2022, 6 p.m. ET.
Bidding Tutorial Available (via No later than July 13, 2022.
internet).
Mock Auction........................... July 26-27, 2022.
Bidding Begins in Auction 108.......... July 29, 2022.
3. Requirements for Participation
20. Those wishing to participate in Auction 108 must:
Submit a short-form application (FCC Form 175)
electronically prior to 6 p.m. ET on May 10, 2022, following the
electronic filing procedures and other instructions set forth in the
Auction 108 Procedures Public Notice and in the FCC Form 175
Instructions.
Submit a sufficient upfront payment and an FCC Remittance
Advice Form (FCC Form 159) by 6 p.m. ET on June 23, 2022, following the
procedures and instructions set forth in the Auction 108 Procedures
Public Notice.
Comply with all provisions outlined in the Auction 108
Procedures Public Notice and applicable Commission rules.
II. Applying To Participate in Auction 108
A. Certification of Notice of Auction 108 Requirements and Procedures
21. For the reasons set forth in the Auction 108 Comment Public
Notice, the Commission adopts the proposal to require any applicant
seeking to participate in Auction 108 to certify in its short-form
application, under penalty of perjury, that it has read the Auction 108
Procedures Public Notice adopting procedures for Auction 108 and that
it has familiarized itself with these procedures and with the
requirements for obtaining a license and operating facilities in the
2.5 GHz band. No commenter opposed the proposed certification, and one
commenter, T-Mobile, supports it.
22. This certification is designed to bolster applicants' efforts
to educate themselves about the procedures for auction participation
and to ensure that, prior to submitting their short-form applications,
applicants understand their obligation to stay abreast of relevant,
forthcoming information. Familiarity with the Commission's rules and
procedures governing Auction 108 may also help bidders avoid the
consequences to them associated with defaults, which also cause harm to
other applicants and the public by reducing the efficiency of the
auction process and reducing the likelihood that the license will be
assigned to the bidder that values it the most. This certification,
along with the other certifications required pursuant to 47 CFR
1.2105(a), will promote submission of applications that meet the
Commission's requirements, thereby leading to a more efficient
application process.
23. A substantively similar requirement was recently instituted for
Auction 110, a Commission auction of flexible-use licenses in the 3.45-
3.55 GHz band. That requirement furthered a long-standing policy under
which the Commission expressly places a burden upon each applicant to
be thoroughly familiar with the procedures, terms, and conditions
contained in the relevant Procedures Public Notice and any future
public notices that may be released in the auction proceeding. While
the certification the Commission adds refers to information regarding
auction procedures and licensing that is available at the time of
certification, potential auction applicants are on notice that their
educational efforts must continue even after their short-form
applications are filed. Commission staff routinely makes available
detailed educational materials, such as interactive, online tutorials
and technical guides, to enhance interested parties' comprehension of
the pre-bidding and bidding processes and to help minimize the need for
applicants to engage outside engineers, legal counsel, or other auction
experts.
24. For these reasons, the Commission will require each Auction 108
applicant to certify as follows in its short-form application: That the
applicant 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 2.5 GHz band.
25. An applicant must provide this certification under penalty of
perjury, consistent with 47 CFR 1.2105(a). This certification is in
addition to the certifications already required under 47 CFR 1.2105.
Consistent with the other certifications required in the short-form
application, an applicant's failure to make this certification in its
FCC Form 175 by the May 10, 2022 filing deadline will render its
application unacceptable for filing, and its application will be
dismissed with prejudice.
B. General Information Regarding Short-Form Applications
26. An application to participate in Auction 108, referred to as a
short-form application or FCC Form 175, provides information that the
Commission uses to determine whether the applicant has the legal,
technical, and/or financial qualifications to participate in a
Commission auction for spectrum licenses or permits. The short-form
application is the first part of the Commission's two-phased auction
application process. In the first phase, a party seeking to participate
in Auction 108 must file a short-form application in which it
certifies, under penalty of perjury, that it is qualified to
participate. Eligibility to participate in Auction 108 is determined
based on an applicant's short-form application and certifications and
on the applicant's upfront payment. After bidding closes, in the second
phase of the process, each winning bidder in Auction 108 must file a
more comprehensive post-auction long-form application (FCC Form 601)
for the licenses it wins in the auction,
[[Page 21759]]
and it must have a complete and accurate ownership disclosure
information report (FCC Form 602) on file with the Commission.
27. A party seeking to participate in Auction 108 must file an FCC
Form 175 electronically via the Auction Application System prior to 6
p.m. ET on May 10, 2022, following the procedures prescribed in the FCC
Form 175 Instructions. If an applicant claims eligibility for a bidding
credit, then the information provided in its FCC Form 175 will be used
to determine whether the applicant appears to be eligible for the
claimed bidding credit, with the final determination of bidding credit
eligibility to occur based on a winning bidder's post-auction long-form
application. Below the Commission describes more fully the information
disclosures and certifications required in the short-form application.
Each Auction 108 applicant will be subject to the Commission's rule
prohibiting certain communications. An applicant is subject to the
prohibition beginning at the deadline for filing short-form
applications--6 p.m. ET on May 10, 2022.
28. An Auction 108 applicant bears full responsibility for
submitting an accurate, complete, and timely short-form application.
Pursuant to the Commission's competitive bidding rules, an applicant
must make a series of certifications under penalty of perjury on its
FCC Form 175 related to the information provided in its application and
its participation in the auction, and an applicant must confirm that it
is legally, technically, financially, and otherwise qualified to hold a
license. As noted above, each participant in Auction 108 must also
certify that it has read the Auction 108 Procedures Public Notice and
familiarized itself both with the auction procedures and with the
requirements for obtaining a license and operating facilities in the
2.5 GHz band. If an Auction 108 applicant fails to make the required
certifications in its FCC Form 175 by the filing deadline, then its
application will be deemed unacceptable for filing and cannot be
corrected after the filing deadline.
29. An applicant should note that submitting an FCC Form 175 (and
any amendments thereto) constitutes a representation by the certifying
official that he or she is an authorized representative of the
applicant with authority to bind the applicant, that he or she has read
the form's instructions and certifications, and that the contents of
the application, its certifications, and any attachments are true and
correct. Submitting a false certification to the Commission may result
in penalties, including monetary forfeitures, license forfeitures,
ineligibility to participate in future auctions, and/or criminal
prosecution.
30. Applicants are cautioned that, because the required information
submitted in FCC Form 175 bears on each applicant's qualifications,
requests for confidential treatment will not be routinely granted. The
Commission generally has held that it may publicly release confidential
business information where the party has put that information at issue
in a Commission proceeding or where the Commission has identified a
compelling public interest in disclosing the information. In this
regard, the Commission specifically has held that information submitted
in support of receiving bidding credits in auction proceedings should
be made available to the public.
31. An applicant must designate between one and three individuals
as authorized bidders in its FCC Form 175. The Commission's rules
prohibit an individual from serving as an authorized bidder for more
than one auction applicant.
32. In order to access the auction bidding system, each authorized
bidder will be required to have a unique email address associated with
an FCC Username Account that is linked to the applicant's FCC
Registration Number (FRN) in the Commission Registration System
(CORES). This added security measure is newly implemented for bidding
in Commission auctions. If an authorized bidder does not provide an FCC
Username Account linked to the applicant's FRN in the applicant's FCC
Form 175, that bidder will be unable to place or submit bids. For
further details, applicants should refer to the FCC Form 175
Instructions for Auction 108.
33. No individual or entity may file more than one short-form
application or have a controlling interest in more than one short-form
application. If a party submits multiple short-form applications for an
auction, then only one application may form the basis for that party to
become qualified to bid in that auction.
34. Similarly, and consistent with the Commission's general
prohibition on joint bidding agreements, a party generally is permitted
to participate in a Commission auction only through a single bidding
entity. Accordingly, the filing of applications in Auction 108 by
multiple entities controlled by the same individual or set of
individuals generally will not be permitted. As noted by the Commission
in adopting the prohibition on applications by commonly controlled
entities, this rule, in conjunction with the prohibition against joint
bidding agreements, protects the competitiveness of the Commission's
auctions.
35. After the initial short-form application filing deadline,
Commission staff will review all timely submitted applications for
Auction 108 to determine whether each application complies with the
application requirements and whether the applicant has provided all
required information concerning its qualifications for bidding. After
this review is completed, a public notice will be released announcing
the status of applications and identifying the applications that are
complete and those that are incomplete because of minor defects that
may be corrected. That public notice also will establish an application
resubmission filing window, during which an applicant may make
permissible minor modifications to its application to address
identified deficiencies. The public notice will include the deadline
for resubmitting modified applications. To become a qualified bidder,
an applicant must have a complete application (i.e., have timely filed
an application that is deemed complete after the deadline for
correcting any identified deficiencies), and must make a timely and
sufficient upfront payment. Qualified bidders will be identified by
public notice at least 10 days prior to the mock auction.
36. The Commission discusses below additional details regarding
certain information required to be submitted in the FCC Form 175. An
applicant should consult the Commission's rules to ensure that, in
addition to the materials described below, all required information is
included in its short-form application. To the extent the information
in the Auction 108 Procedures Public Notice does not address an
applicant's specific operating structure, or if the applicant needs
additional information or guidance concerning the described disclosure
requirements, the applicant should review the educational materials for
Auction 108 (see the Education section of the Auction 108 website at
www.fcc.gov/auction/108) and use the contact information provided in
the Auction 108 Procedures Public Notice to consult with Commission
staff to better understand the information that it must submit in its
short-form application.
C. License Area Selection
37. An applicant must select all of the license areas on which it
may want to bid from the list of available counties on its FCC Form
175. An applicant must carefully review and verify its license area
(i.e., county) selections before the
[[Page 21760]]
FCC Form 175 filing deadline because those selections cannot be changed
after the auction application filing deadline. An applicant is not
required to place bids on licenses in any or all of the license areas
selected, but the FCC Auction Bidding System (bidding system) will not
accept bids for licenses in license areas (i.e., counties) that the
applicant did not select in its FCC Form 175.
38. When two or more short-form applications (FCC Form 175) are
submitted selecting the same licenses in Auction 108, mutual
exclusivity exists for auction purposes as to those licenses, and the
licenses must be awarded by competitive bidding procedures. Once mutual
exclusivity exists for auction purposes, even if only one applicant is
qualified to bid for a particular license, that applicant is required
to submit a bid in order to obtain the license. An applicant may select
licenses on its Form 175 by using the select all licenses checkbox or
by selecting any particular county. Selection of a county will allow
the applicant to bid on any available license within that county,
provided that it otherwise becomes a qualified bidder and has
sufficient bidding eligibility.
D. Disclosure of Agreements and Bidding Arrangements
39. An applicant must provide in its FCC Form 175 a brief
description of, and identify each party to, any partnerships, joint
ventures, consortia or agreements, arrangements, or understandings of
any kind relating to the licenses being auctioned, including any
agreements that address or communicate directly or indirectly bids
(including specific prices), bidding strategies (including the specific
licenses on which to bid or not to bid), or the post-auction market
structure, to which the applicant, or any party that controls or is
controlled by the applicant, is a party. In connection with the
agreement disclosure requirement, the applicant must certify under
penalty of perjury in its FCC Form 175 that it has described, and
identified each party to any such agreements, arrangements, or
understandings to which it (or any party that controls it or that it
controls) is a party. Moreover, since each applicant must maintain the
accuracy and completeness of the information in its pending auction
application, if it enters into any agreement relating to the licenses
being auctioned after the FCC Form 175 filing deadline, then that
agreement is subject to these same disclosure requirements.
40. For purposes of making the required agreement disclosures on
the FCC Form 175, if parties agree in principle on all material terms
prior to the application filing deadline, then each party to the
agreement that is submitting an auction application must provide a
brief description of, and identify the other party or parties to, the
agreement on its respective FCC Form 175, even if the agreement has not
been reduced to writing. Parties that have not agreed in principle by
the FCC Form 175 filing deadline should not describe, or include the
names of parties to, the discussions on their applications.
41. The Commission's rules generally prohibit joint bidding and
other arrangements involving auction applicants (including any party
that controls or is controlled by such applicants). For purposes of the
prohibition, a joint bidding arrangement includes any arrangement
relating to the licenses being auctioned that addresses or
communicates, directly or indirectly, bidding in the auction, bidding
strategies, including arrangements regarding price or the specific
licenses on which to bid, and any such arrangement relating to the
post-auction market structure.
42. This prohibition applies to joint bidding arrangements
involving two or more nationwide providers, as well as joint bidding
arrangements involving a nationwide provider and one or more non-
nationwide providers, where at least one party to the arrangement is an
applicant for the auction. In the Updating Part 1 Report and Order, 80
FR 56763, Sep. 18, 2015, the Commission stated that entities that
qualify as nationwide providers generally would be identified in
procedures public notices released before each auction. To that end,
and consistent with the Commission's decisions in recent spectrum
auctions and in the 2020 Communications Marketplace Report, the
Commission considers AT&T, T-Mobile, and Verizon to be nationwide
providers for the purpose of implementing the competitive bidding rules
in Auction 108.
43. Under certain circumstances, a non-nationwide provider may
enter into an agreement to form a consortium or a joint venture (as
applicable) that results in a single party applying to participate in
an auction. Specifically, a designated entity can participate in one
consortium or joint venture in an auction, and non-nationwide providers
that are not designated entities may participate in an auction through
only one joint venture. A non-nationwide provider may enter into only
one agreement to form a consortium or joint venture (as applicable),
and such consortium or joint venture shall be the exclusive bidding
vehicle for its members in the auction. The general prohibition on
joint bidding arrangements excludes certain agreements, including those
that are solely operational in nature, as defined in 47 CFR
1.2105(a)(2)(ix)(A)-(C).
44. To implement the prohibition on joint bidding arrangements, the
Commission's rules require each applicant to certify in its short-form
application that it has disclosed any arrangements or understandings of
any kind relating to the licenses being auctioned to which it (or any
party that controls or is controlled by it) is a party. The applicant
must also certify that it (or any party that controls or is controlled
by it) has not entered and will not enter into any arrangement or
understanding of any kind relating directly or indirectly to bidding at
auction with, among others, any other applicant or a nationwide
provider.
45. Although the Commission's rules do not prohibit auction
applicants from communicating about matters that are within the scope
of an excepted agreement that has been disclosed in an FCC Form 175,
the Commission reminds applicants that certain discussions or exchanges
could nonetheless touch upon impermissible subject matters, and that
compliance with the Commission's rules will not insulate a party from
enforcement of the antitrust laws.
46. Applicants should bear in mind that a winning bidder will be
required to disclose, in its post-auction long-form application, the
specific terms, conditions, and parties involved in any agreement
relating to the licenses being auctioned into which it had entered
prior to the time bidding was completed. This applies to any bidding
consortium, joint venture, partnership, or other agreement,
arrangement, or understanding of any kind entered into relating to the
competitive bidding process, including any agreements relating to the
licenses being auctioned that address or communicate directly or
indirectly bids (including specific prices), bidding strategies
(including the specific licenses on which to bid or not to bid), or the
post-auction market structure, to which the applicant, or any party
that controls or is controlled by the applicant, is a party.
E. Ownership Disclosure Requirements
47. Each applicant must comply with the applicable part 1 ownership
disclosure requirements and provide information required by 47 CFR
1.2105 and 1.2112, and, where applicable, 47 CFR 1.2110. Specifically,
in completing FCC Form 175, an applicant must fully
[[Page 21761]]
disclose information regarding the real party- or parties-in-interest
in the applicant or application and the ownership structure of the
applicant, including both direct and indirect ownership interests of
10% or more, as prescribed in 47 CFR 1.2105 and 1.2112 and, where
applicable, 47 CFR 1.2110. Each applicant is responsible for ensuring
that information submitted in its short-form application is complete
and accurate.
48. In certain circumstances, an applicant may have previously
filed an FCC Form 602 ownership disclosure information report or filed
an auction application for a previous auction in which ownership
information was disclosed. If the applicant used the same FCC
Registration Number (FRN) the applicant is using to submit its FCC Form
175, the most current ownership information contained in any such
filing will automatically be pre-filled into certain ownership sections
on the applicant's FCC Form 175, if such information is in an
electronic format compatible with FCC Form 175. Each applicant must
carefully review any ownership information automatically entered into
its FCC Form 175, including any ownership attachments, to confirm that
all information supplied on FCC Form 175 is complete and accurate as of
the application filing deadline. Any information that needs to be
corrected or updated must be changed directly in FCC Form 175.
F. Foreign Ownership Disclosure Requirements
49. Section 310 of the Communications Act requires the Commission
to review foreign investment in radio station licenses and imposes
specific restrictions on who may hold certain types of radio licenses.
Section 310 applies to applications for initial radio licenses,
applications for assignments and transfers of control of radio
licenses, and spectrum leasing arrangements under the Commission's
secondary market rules. In completing FCC Form 175, an applicant is
required to disclose information concerning foreign ownership of the
applicant. If an applicant has foreign ownership interests in excess of
the applicable limit or benchmark set forth in 47 U.S.C. 310(b), then
it may seek to participate in Auction 108 as long as it has filed a
petition for declaratory ruling with the Commission prior to the FCC
Form 175 filing deadline. An applicant must certify in its FCC Form 175
that, as of the deadline for filing its application to participate in
the auction, the applicant either is in compliance with the foreign
ownership provisions of 47 U.S.C. 310 or has filed a petition for
declaratory ruling requesting Commission approval to exceed the
applicable foreign ownership limit or benchmark in 47 U.S.C. 310(b)
that is pending before, or has been granted by, the Commission.
G. Information Procedures During the Auction Process
50. Consistent with past practice in many prior spectrum license
auctions, the Commission adopts the proposal to limit information
available in Auction 108 in order to prevent the identification of
bidders placing particular bids until after the bidding has closed.
Specifically, the Commission will not make public until after bidding
has closed: (1) The license areas that an applicant selects for bidding
in its short-form application, (2) the amount of any upfront payment
made by or on behalf of an applicant for Auction 108, (3) any
applicant's bidding eligibility, and (4) any other bidding-related
information that might reveal the identity of the bidder placing a bid.
51. Once bidding begins in Auction 108, under the limited
information procedures (sometimes also referred to as anonymous
bidding), information to be made public after each round of bidding
will include, for each license, the aggregate demand, the posted price
of the completed round, and the clock price for the next round. The
identities of bidders placing specific bids will not be disclosed until
after the close of bidding.
52. Throughout the auction, bidders will have access to additional
information related to their own bidding and bidding eligibility
through the Commission's bidding system. Specifically, after the bids
of a round have been processed, the bidding system will inform each
bidder of its processed demand, whether the bidder has a proxy
instruction in place for each license, and its eligibility for the next
round.
53. After the close of bidding, bidders' license area selections,
upfront payment amounts, bidding eligibility, bids, and other bidding-
related actions will be made publicly available. Bids placed according
to a bidder's proxy instructions will be available, but a bidder's
proxy instructions will not be disclosed.
54. The Commission warns applicants that direct or indirect
communication to other applicants or the public disclosure of non-
public information (e.g., reductions in eligibility, identities of
bidders) could violate the Commission's rule prohibiting certain
communications. Therefore, to the extent an applicant believes that
such a disclosure is required by law or regulation, including
regulations issued by the U.S. Securities and Exchange Commission
(SEC), the Commission strongly urges that the applicant consult with
Commission staff in the Auctions Division before making such
disclosure.
H. Prohibited Communications and Compliance With Antitrust Laws
55. The rules prohibiting certain communications set forth in 47
CFR1.2105(c) apply to each applicant in Auction 108. Section
1.2105(c)(1) 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.
1. Entities Subject to Section 1.2105(c)
56. An applicant for purposes of this rule includes all controlling
interests in the entity submitting the FCC Form 175 auction
application, as well as all holders of interests amounting to 10% or
more of the entity (including institutional investors and asset
management companies), and all officers and directors of that entity.
Under 47 CFR 1.2105(c), a party that submits an application becomes an
applicant under the rule, which goes into effect at the application
deadline, and that status does not change based on later developments.
57. As proposed in the Auction 108 Comment Public Notice, the
Commission considers AT&T, T-Mobile, and Verizon to be nationwide
providers for the purposes of the prohibited communications rule for
Auction 108.
2. Prohibition Applies Until Down Payment Deadline
58. The prohibition in 47 CFR 1.2105(c) on certain communications
begins at an auction's short-form application filing deadline and ends
at the auction's down payment deadline after the auction closes, which
will be announced in a future public notice.
[[Page 21762]]
3. Scope of Prohibition on Certain Communications; Prohibition on Joint
Bidding Agreements
59. Section 1.2105(c) prohibits certain communications between
applicants for an auction, regardless of whether the applicants seek
permits or licenses in the same geographic area or market. The rule
also applies to communications by applicants with non-applicant
nationwide providers of communications services and by nationwide
applicants with non-applicant, non-nationwide providers. The rule
further prohibits joint bidding arrangements, including arrangements
relating to the permits or licenses being auctioned that address or
communicate, directly or indirectly, bidding at the auction, bidding
strategies, including arrangements regarding price or the specific
permits or licenses on which to bid, and any such arrangements relating
to the post-auction market structure. The rule allows for limited
exceptions for communications within the scope of any arrangement
consistent with the exclusion from the Commission's rule prohibiting
joint bidding, provided such arrangement is disclosed on the
applicant's auction application. Applicants may communicate pursuant to
any pre-existing agreements, arrangements, or understandings relating
to the licenses being auctioned that are solely operational or that
provide for the transfer or assignment of licenses, provided that such
agreements, arrangements, or understandings are disclosed on their
applications and do not both relate to the licenses at auction and
address or communicate bids (including amounts), bidding strategies, or
the particular permits or licenses on which to bid or the post-auction
market structure.
60. In addition to express statements of bids and bidding
strategies, the prohibition against communicating in any manner
includes public disclosures as well as private communications and
indirect or implicit communications. Consequently, an applicant must
take care to determine whether its auction-related communications may
reach another applicant.
61. Parties subject to 47 CFR 1.2105(c) should take special care in
circumstances where their officers, directors, and employees may
receive information directly or indirectly relating to any applicant's
bids or bidding strategies. Such information may be deemed to have been
received by the applicant under certain circumstances. For example,
Commission staff have found that, where an individual serves as an
officer and director for two or more applicants, the bids and bidding
strategies of one applicant are presumed to be conveyed to the other
applicant through the shared officer, which creates an apparent
violation of the rule.
62. Subject to the limited exceptions for communications within the
scope of any arrangement consistent with the exclusion from the
Commission's rule prohibiting joint bidding, 47 CFR 1.2105(c)(1)
prohibits applicants from communicating with specified other parties
only with respect to their own, or each other's, or any other
applicant's bids or bidding strategies. The Prohibited Communications
Guidance Public Notice, 80 FR 63215, October 19, 2015, released in
advance of the broadcast incentive auction (Auction 1000) reviewed the
scope of the prohibition generally, as well as in that specific
auction's forward auction of spectrum licenses and reverse auction to
relinquish broadcast licenses. As the Commission explained therein, a
communication conveying bids or bidding strategies (including post-
auction market structure) must also relate to the licenses being
auctioned in order to be covered by the prohibition. Thus, the
prohibition is limited in scope and does not apply to all
communications between or among the specified parties. The Commission
consistently has made clear that application of the rule prohibiting
communications has never required total suspension of essential ongoing
business. Entities subject to the prohibition may negotiate agreements
during the prohibition period, provided that the communications
involved do not relate to both: (1) The licenses being auctioned and
(2) bids or bidding strategies or post-auction market structure.
63. Accordingly, business discussions and negotiations that do not
convey information about the bids or bidding strategies, including the
post-auction market structure, of an applicant are not prohibited by
the rule. Moreover, not all auction-related information is covered by
the prohibition. For example, communicating merely whether a party has
or has not applied to participate in Auction 108 will not violate the
rule. In contrast, communicating, among other things, how a party will
participate, including specific geographic areas selected, specific bid
amounts, and/or whether or not the party is placing bids, would convey
bids or bidding strategies and would be prohibited.
64. While 47 CFR 1.2105(c) does not prohibit business discussions
and negotiations among auction applicants that are unrelated to the
auction, each applicant must remain vigilant not to communicate,
directly or indirectly, information that affects, or could affect, bids
or bidding strategies. Certain discussions might touch upon subject
matters that could convey price or geographic information related to
bidding strategies. Such subject areas include, but are not limited to,
management, sales, local marketing agreements, and other transactional
agreements.
65. The Commission cautions applicants that bids or bidding
strategies may be communicated outside of situations that involve one
party subject to the prohibition communicating privately and directly
with another such party. For example, the Commission has warned that
prohibited communications concerning bids and bidding strategies may
include communications regarding capital calls or requests for
additional funds in support of bids or bidding strategies to the extent
such communications convey information concerning the bids and bidding
strategies directly or indirectly. Moreover, the Commission found a
violation of the rule against prohibited communications when an
applicant used the Commission's bidding system to disclose its bidding
strategy in a manner that explicitly invited other auction participants
to cooperate and collaborate in specific markets, and it has placed
auction participants on notice that the use of its bidding system to
disclose market information to competitors will not be tolerated and
will subject bidders to sanctions.
66. Likewise, when completing a short-form application, each
applicant should avoid any statements or disclosures that may violate
47 CFR 1.2105(c), particularly in light of the limited information
procedures in effect for Auction 108. Specifically, an applicant should
avoid including any information in its short-form application that
might convey information regarding its license area selections, such as
referring to counties or other geographic areas in describing
agreements, including any information in application attachments that
will be publicly available that may otherwise disclose the applicant's
license area selections, or using applicant names that refer to
licenses being offered.
67. Applicants also should be mindful that communicating non-public
application or bidding information publicly or privately to another
applicant may violate 47 CFR 1.2105(c) even though that information
subsequently may be made public during later periods of the application
or bidding processes.
[[Page 21763]]
4. Communicating With Third Parties
68. Section 1.2105(c) does not prohibit an applicant from
communicating bids or bidding strategies to a third party, such as a
consultant or consulting firm, counsel, or lender. An applicant should
take appropriate steps, however, to ensure that any third party it
employs for advice pertaining to its bids or bidding strategies does
not become a conduit for prohibited communications to other specified
parties, as that would violate the rule. For example, an applicant
might require a third party, such as a lender, to sign a non-disclosure
agreement before the applicant communicates any information regarding
bids or bidding strategy to the third party. Within third-party firms,
separate individual employees, such as attorneys or auction
consultants, may advise individual applicants on bids or bidding
strategies, as long as such firms implement firewalls and other
compliance procedures that prevent such individuals from communicating
the bids or bidding strategies of one applicant to other individuals
representing separate applicants. Although firewalls and/or other
procedures should be used, their existence is not an absolute defense
to liability if a violation of the rule has occurred.
69. As the Commission has noted in other spectrum auctions, in the
case of an individual, the objective precautionary measure of a
firewall is not available. As a result, an individual that is privy to
bids or bidding information of more than one applicant presents a
greater risk of becoming a conduit for a prohibited communication. The
Commission will take the same approach to interpreting the prohibited
communications rule in Auction 108. The Commission emphasizes that
whether a prohibited communication has taken place in a given case will
depend on all the facts pertaining to the case, including who possessed
what information, what information was conveyed to whom, and the course
of bidding in the auction.
70. The Commission reminds potential applicants that they may
discuss the short-form application or bids for specific licenses or
license areas with the counsel, consultant, or expert of their choice
before the short-form application deadline. Furthermore, the same
third-party individual could continue to give advice after the short-
form deadline regarding the application, provided that no information
pertaining to bids or bidding strategies, including license areas, or
counties, selected on the short-form application, is conveyed to that
individual.
71. Applicants also should use caution in their dealings with other
parties, such as members of the press, financial analysts, or others
who might become conduits for the communication of prohibited bidding
information. For example, even though communicating that it has applied
to participate in the auction will not violate the rule, an applicant's
statement to the press that it intends to stop bidding in an auction
could give rise to a finding of a 47 CFR 1.2105 violation. Similarly,
an applicant's public statement of intent not to place bids during
bidding in Auction 108 could also violate the rule.
5. Section 1.2105(c) Certifications
72. By electronically submitting its FCC Form 175, each applicant
for Auction 108 certifies its compliance with 47 CFR 1.2105(c). The
mere filing of a certifying statement as part of an application,
however, will not outweigh specific evidence that a prohibited
communication has occurred, nor will it preclude the initiation of an
investigation when warranted. Any applicant found to have violated
these communication prohibitions may be subject to sanctions.
6. Duty To Report Prohibited Communications
73. 47 CFR 1.2105(c)(4) requires that any applicant that makes or
receives a communication that appears to violate 47 CFR 1.2105(c) must
report such communication in writing to the Commission immediately, and
in no case later than five business days after the communication
occurs. Each applicant's obligation to report any such communication
continues beyond the five-day period after the communication is made,
even if the report is not made within the five-day period.
7. Procedures for Reporting Prohibited Communications
74. A party reporting any information or communication pursuant to
47 CFR 1.65(a), 1.2105(a)(2), or 1.2105(c)(4) must take care to ensure
that any report of a prohibited communication does not itself give rise
to a violation of 47 CFR 1.2105(c). For example, a party's report of a
prohibited communication could violate the rule by communicating
prohibited information to other parties specified under the rule
through the use of Commission filing procedures that allow such
materials to be made available for public inspection.
75. An applicant must file only a single report concerning a
prohibited communication and must file that report with the Commission
personnel expressly charged with administering the Commission's
auctions. This rule is designed to minimize the risk of inadvertent
dissemination of information in such reports. Any reports required by
47 CFR 1.2105(c) must be filed consistent with the instructions set
forth in the Auction 108 Procedures Public Notice. For Auction 108,
such reports must be filed with the Chief of the Auctions Division,
Office of Economics and Analytics, by the most expeditious means
available. Any such report should be submitted by email to the Auctions
Division Chief and sent to [email protected]. If you choose instead to
submit a report in hard copy, contact Auctions Division staff at
[email protected] or (202) 418-0660 for guidance.
76. Given the potential competitive sensitivity of public
disclosure of information in such a report, a party seeking to report
such a prohibited communication should consider submitting its report
with a request that the report or portions of the submission be
withheld from public inspection by following the procedures specified
in 47 CFR 0.459. The Commission encourages such parties to coordinate
with the Auctions Division staff about the procedures for submitting
such reports.
8. Winning Bidders Must Disclose Terms of Agreements
77. Each applicant that is a winning bidder will be required to
provide as part of its long-form application any agreement or
arrangement it has entered into and a summary of the specific terms,
conditions, and parties involved in any agreement it has entered into.
This applies to any bidding consortia, joint venture, partnership, or
agreement, understanding, or other arrangement entered into relating to
the competitive bidding process, including any agreement relating to
the post-auction market structure. Failure to comply with the
Commission's rules can result in enforcement action.
9. Additional Information Concerning Prohibition on Certain
Communications in Commission Auctions
78. A summary listing of documents issued by the Commission and
OEA/WTB addressing the application of 47 CFR 1.2105(c) is available on
the Commission's auction web page at www.fcc.gov/summary-listing-documents-addressing-application-rule-prohibiting-certain-communications.
10. Antitrust Laws
79. Regardless of compliance with the Commission's rules,
applicants remain
[[Page 21764]]
subject to the antitrust laws, which are designed to prevent
anticompetitive behavior in the marketplace. Compliance with the
disclosure requirements of 47 CFR 1.2105(c)(4) will not insulate a
party from enforcement of the antitrust laws. For instance, a violation
of the antitrust laws could arise out of actions taking place well
before any party submits a short-form application. The Commission has
cited a number of examples of potentially anticompetitive actions that
would be prohibited under antitrust laws: for example, actual or
potential competitors may not agree to divide territories in order to
minimize competition, regardless of whether they split a market in
which they both do business, or whether they merely reserve one market
for one and another market for the other.
80. To the extent the Commission becomes aware of specific
allegations that suggest that violations of the federal antitrust laws
may have occurred, they may refer such allegations to the United States
Department of Justice for investigation. If an applicant is found to
have violated the antitrust laws or the Commission's rules in
connection with its participation in the competitive bidding process,
then it may be subject to a forfeiture and may be prohibited from
participating further in Auction 108 and in future auctions, among
other sanctions.
I. Provisions for Small Businesses and Rural Service Providers
81. A bidding credit represents an amount by which a bidder's
overall payment across all of the licenses won will be discounted,
subject to the caps discussed below. As set forth in 47 CFR 1.2110, and
as described below, the designated entity rules include, but are not
limited to: (1) A two-pronged standard for evaluating eligibility for
small business benefits, (2) an attribution rule for certain
disclosable interest holders of applicants claiming designated entity
benefits, (3) updated gross revenue amounts defining eligibility for
small business benefits, (4) a bidding credit for eligible rural
service providers, and (5) caps on the total amount of designated
entity benefits any eligible winning bidder may receive.
82. In Auction 108, designated entity bidding credits will be
available to applicants demonstrating eligibility for a small business
or a rural service provider bidding credit and subsequently winning
license(s). These bidding credits will not be cumulative--an applicant
is permitted to claim either a small business bidding credit or a rural
service provider bidding credit, but not both. Each applicant must also
certify that it is eligible for the claimed bidding credit in its FCC
Form 175. In addition to the information provided below, each applicant
should review carefully the Commission's decisions regarding the
designated entity provisions as well as the part 1 rules.
83. In particular, 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 (whether they
seek bidding credits or not), against changes in ownership of the
applicant that would constitute an assignment or transfer of control
after the initial filing deadline for FCC Form 175. 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 conduct of the auction, which will involve competing bids from
those that do and do not seek bidding credits, and thus preserves the
integrity of the auction process. The Commission also believes that
this will meet the Commission's objectives in awarding licenses through
the competitive bidding process.
1. Small Business Bidding Credit
84. For Auction 108, bidding credits will be available to eligible
small businesses and consortia thereof, subject to the caps discussed
below. Under the service rules applicable to the 2.5 GHz band licenses
to be offered in Auction 108, the level of bidding credit available is
determined as follows:
A bidder that qualifies as a small business--i.e., one
with attributed average annual gross revenues that do not exceed $55
million for the preceding five years--is eligible to receive a 15%
discount on its overall payment.
A bidder that qualifies as a very small business--i.e.,
one with attributed average annual gross revenues that do not exceed
$20 million for the preceding five years--is eligible to receive a 25%
discount on its overall payment.
85. In adopting this two-tiered approach in the 2.5 GHz Report and
Order, the Commission observed that this approach would provide
consistency and predictability for small businesses.
86. Small business bidding credits are not cumulative; an eligible
applicant may receive either the 15% or the 25% bidding credit on its
overall payment, but not both. The Commission's unjust enrichment
provisions also apply to a winning bidder that uses a bidding credit
and subsequently seeks to assign or transfer control of its license
within a certain period to an entity not qualifying for at least the
same level of small business bidding credit.
87. Each applicant claiming a small business bidding credit must
disclose the gross revenues for the preceding five years for each of
the following: (1) The applicant, (2) its affiliates, (3) its
controlling interests, and (4) the affiliates of its controlling
interests. The applicant must also submit an attachment that lists all
parties with which the applicant has entered into any spectrum use
agreements or arrangements for any licenses that may be won by the
applicant in Auction 108. In addition, to the extent that an applicant
has an agreement with any disclosable interest holder for the use of
more than 25% of the spectrum capacity of any license that may be won
in Auction 108, the applicant must disclose the identity and the
attributable gross revenues of any such disclosable interest holder.
This attribution rule will be applied on a license-by-license basis. As
a result, an applicant may be eligible for a bidding credit on some,
but not all, of the licenses for which it is bidding in Auction 108. If
an applicant is applying as a consortium of small businesses, then the
disclosures described in this paragraph must be provided for each
consortium member.
2. Rural Service Provider Bidding Credit
88. An eligible applicant may request a 15% discount on its overall
payment using a rural service provider bidding credit, subject to the
cap discussed below. To be eligible for a rural service provider
bidding credit, an applicant must: (1) Be a service provider that is in
the business of providing commercial communications services and,
together with its controlling interests, affiliates, and the affiliates
of its controlling interests, has fewer than 250,000 combined wireless,
wireline, broadband, and cable subscribers; and (2) serve predominantly
rural areas. Rural areas are defined as counties with a population
density of 100 or fewer persons per square mile. An applicant seeking a
rural service provider bidding credit must provide the number of
subscribers served as of the short-form
[[Page 21765]]
application deadline. An applicant may count any subscriber as a single
subscriber even if that subscriber receives more than one service.
89. Each applicant seeking a rural service provider bidding credit
must disclose the number of its subscribers, along with the number of
subscribers of its affiliates, controlling interests, and the
affiliates of its controlling interests. The applicant must also submit
an attachment that lists all parties with which the applicant has
entered into any spectrum use agreements or arrangements for any
licenses that may be won by the applicant in Auction 108. In addition,
to the extent that an applicant has an agreement with any disclosable
interest holder for the use of more than 25% of the spectrum capacity
of any license that may be won in Auction 108, the identity and the
attributable subscribers of any such disclosable interest holder must
be disclosed. Like applicants seeking eligibility for small business
bidding credits, eligible rural service providers may also form a
consortium. If an applicant is applying as a consortium of rural
service providers, then the disclosures described in this paragraph,
including the certification, must be provided for each consortium
member.
3. Caps on Bidding Credits
90. Eligible applicants claiming either a small business or rural
service provider bidding credit will be subject to specified caps on
the total bidding credit discount that they may receive. The Commission
adopts the bidding credit caps for Auction 108 at the amounts proposed
for the reasons discussed by the Commission in the Auction 108 Comment
Public Notice. Specifically, the Commission adopts a $25 million cap on
the total bidding credit discount that may be awarded to an eligible
small business, and a $10 million cap on the total bidding credit
discount that may be awarded to an eligible rural service provider.
Additionally, to create parity among eligible small businesses and
rural service providers competing against each other in smaller
markets, no winning designated entity bidder may receive more than $10
million in bidding credit discounts in total for licenses won in
counties located within any partial economic area (PEA) with a
population of 500,000 or less.
4. Attributable Interests
a. Controlling Interests and Affiliates
91. Pursuant to 47 CFR 1.2110, an applicant's eligibility for
designated entity benefits is determined by attributing the gross
revenues (for those seeking small business benefits) or subscribers
(for those seeking rural service provider benefits) of the applicant,
its affiliates, its controlling interests, and the affiliates of its
controlling interests. Controlling interests of an applicant include
individuals and entities with either de facto or de jure control of the
applicant. Typically, ownership of greater than 50% of an entity's
voting stock evidences de jure control. De facto control is determined
on a case-by-case basis based on the totality of the circumstances. The
following are some common indicia of de facto control:
The entity constitutes or appoints more than 50% of the
board of directors or management committee;
the entity has authority to appoint, promote, demote, and
fire senior executives that control the day-to-day activities of the
licensee; and
the entity plays an integral role in management decisions.
92. Additionally, for attribution purposes, officers and directors
of an applicant seeking a bidding credit are considered to have a
controlling interest in the applicant. Applicants should refer to 47
CFR 1.2110(c)(2) and the FCC Form 175 Instructions to understand how
certain interests are calculated in determining control for purposes of
attributing gross revenues.
93. Affiliates of an applicant or controlling interest include an
individual or entity that: (1) Directly or indirectly controls or has
the power to control the applicant, (2) is directly or indirectly
controlled by the applicant, (3) is directly or indirectly controlled
by a third party that also controls or has the power to control the
applicant, or (4) has an identity of interest with the applicant. The
Commission's definition of an affiliate of the applicant encompasses
both controlling interests of the applicant and affiliates of
controlling interests of the applicant. For more information on the
application requirements regarding controlling interests and
affiliates, applicants should refer to 47 CFR 1.2110(c)(2) and (5)
respectively, as well as the FCC Form 175 Instructions.
94. An applicant seeking a small business bidding credit must
demonstrate its eligibility for the bidding credit by: (1) Meeting the
applicable small business size standard, based on the controlling
interest and affiliation rules discussed above; and (2) retaining
control, on a license-by-license basis, over the spectrum associated
with the licenses for which it seeks small business benefits. For
purposes of the first prong of the standard, applicants should note
that control and affiliation may arise through, among other things,
ownership interests, voting interests, management and other operating
agreements, or the terms of any other types of agreements--including
spectrum lease agreements--that independently or together create a
controlling, or potentially controlling, interest in the applicant's or
licensee's business as a whole. In addition, once an applicant
demonstrates eligibility as a small business under the first prong, it
must also be eligible for benefits on a license-by-license basis under
the second prong. As part of making the FCC Form 175 certification that
it is qualified as a designated entity under 47 CFR 1.2110, an
applicant is certifying that it does not have any spectrum use or other
agreements that would confer either de jure or de facto control of any
license it seeks to acquire with bidding credits.
95. Applicants should note that, under this standard for evaluating
eligibility for small business bidding credits, if an applicant
executes a spectrum use agreement that does not comply with the
Commission's relevant standard of de facto control, then it will be
subject to unjust enrichment obligations for the benefits associated
with that particular license, as well as the penalties associated with
any violation of 47 U.S.C. 310(d) and related regulations, which
require Commission approval of transfers of control. If that spectrum
use agreement (either alone or in combination with the designated
entity controlling interest and attribution rules described above) goes
so far as to confer control of the applicant's overall business, then
the gross revenues of the additional interest holders will be
attributed to the applicant, which could render the applicant
ineligible for all current and future small business benefits on all
licenses.
b. Limitation on Spectrum Use
96. Under 47 CFR 1.2110(c)(2)(ii)(J), the gross revenues (or the
subscribers, in the case of a rural service provider) of an applicant's
disclosable interest holder are attributable to the applicant, on a
license-by-license basis, if the disclosable interest holder has an
agreement with the applicant to use, in any manner, more than 25% of
the spectrum capacity of any license won by the applicant and acquired
with a bidding credit during the five-year unjust enrichment period for
the applicable license. For purposes of this requirement, a disclosable
interest holder of an applicant seeking designated entity benefits is
defined as
[[Page 21766]]
any individual or entity holding a 10% or greater interest of any kind
in the applicant, including but not limited to, a 10% or greater
interest in any class of stock, warrants, options, or debt securities
in the applicant or licensee. Any applicant seeking a bidding credit
for licenses won in Auction 108 will be subject to this attribution
rule and must make the requisite disclosures.
97. Certain disclosable interest holders may be excluded from this
attribution rule. Specifically, an applicant claiming the rural service
provider bidding credit may have spectrum license use agreements with a
disclosable interest holder, without having to attribute the
disclosable interest holder's subscribers, so long as the disclosable
interest holder is independently eligible for a rural service provider
credit and the disclosable interest holder's spectrum use and any
spectrum use agreements are otherwise permissible under the
Commission's existing rules. If applicable, the applicant must attach
to its FCC Form 175 any additional information as may be required to
indicate any license (or license area) that may be subject to this
attribution rule or to demonstrate its eligibility for the exception
from this attribution rule. Consistent with the Commission's limited
information procedures, the Commission intends to withhold from public
disclosure all information contained in any such attachments until
after the close of Auction 108.
c. Exceptions From Attribution Rules for Small Businesses and Rural
Service Providers
98. Applicants claiming designated entity benefits may be eligible
for certain exceptions from the Commission's attribution rules. For
example, in calculating an applicant's gross revenues under the
controlling interest standard, the Commission will not attribute to the
applicant the personal net worth, including personal income, of its
officers and directors. However, to the extent that the officers and
directors of the applicant are controlling interest holders of other
entities, the gross revenues of those entities will be attributed to
the applicant. Moreover, if an officer or director operates a separate
business, then the gross revenues derived from that business would be
attributed to the applicant.
99. The Commission has also exempted from attribution to the
applicant the gross revenues of the affiliates of a rural telephone
cooperative's officers and directors, if certain conditions specified
in 47 CFR 1.2110(b)(4)(iii) are met. An applicant claiming this
exemption must provide, in an attachment, an affirmative statement that
the applicant, affiliate and/or controlling interest is an eligible
rural telephone cooperative within the meaning of 47 CFR
1.2110(b)(4)(iii), and the applicant must supply any additional
information as may be required to demonstrate eligibility for the
exemption from the attribution rule.
100. An applicant claiming a rural service provider bidding credit
may be eligible for an exception from the Commission's attribution
rules as an existing rural partnership. To qualify for this exception,
an applicant must be a rural partnership providing service as of July
16, 2015, and each member of the rural partnership must individually
have fewer than 250,000 combined wireless, wireline, broadband, and
cable subscribers. Because each member of the rural partnership must
individually qualify for the bidding credit, by definition, a
partnership that includes a nationwide provider as a member will not be
eligible for the benefit.
101. Finally, a consortium of small businesses or rural service
providers may seek an exception from the Commission's attribution
rules. Under the Commission's rules, a consortium of small businesses
or rural service providers is a conglomerate organization composed of
two or more entities, each of which individually satisfies the
definition of small business or rural service provider. A consortium
must provide additional information for each member demonstrating each
member's eligibility for the claimed bidding credit in order to show
that the applicant satisfies the eligibility criteria for the bidding
credit. The gross revenue or subscriber information of each consortium
member will not be aggregated for purposes of determining the
consortium's eligibility for the claimed bidding credit. This
information must be provided, however, to ensure that each consortium
member qualifies for the bidding credit sought by the consortium.
J. Tribal Lands Bidding Credit
102. A winning bidder that intends to use its license(s) to deploy
facilities and provide services to qualifying Tribal lands that have a
wireline penetration rate equal to or below 85% is eligible to receive
a Tribal lands bidding credit. A tribal lands bidding credit is in
addition to, and separate from, any other bidding credit for which a
winning bidder may qualify. Unlike other bidding credits that are
requested prior to an auction, a winning bidder applies for a Tribal
lands bidding credit after the auction when it files its FCC Form 601
post-auction application.
K. Provisions Regarding Former and Current Defaulters
103. Pursuant to the rules governing competitive bidding, each
applicant must make certifications regarding whether it is a current or
former defaulter or delinquent. A current defaulter or delinquent is
not eligible to participate in Auction 108, but a former defaulter or
delinquent may participate so long as it is otherwise qualified and
makes an upfront payment that is 50% more than would otherwise be
necessary. Accordingly, each applicant must certify under penalty of
perjury on its FCC Form 175 that it, its affiliates, its controlling
interests, and the affiliates of its controlling interests are not in
default on any payment for a Commission construction permit or license
(including down payments) and that they are not delinquent on any non-
tax debt owed to any Federal agency. Additionally, an applicant must
certify under penalty of perjury whether it (along with its controlling
interests) has ever been in default on any payment for a Commission
construction permit or license (including down payments) or has ever
been delinquent on any non-tax debt owed to any Federal agency, subject
to the exclusions described below. For purposes of making these
certifications, the term controlling interest is defined in 47 CFR
1.2105(a)(4)(i).
104. Under the Commission's rule regarding applications by former
defaulters, an applicant is considered a former defaulter or a former
delinquent when, as of the FCC Form 175 filing deadline, the applicant
or any of its controlling interests has defaulted on any Commission
construction permit or license or has been delinquent on any non-tax
debt owed to any Federal agency, but has since remedied all such
defaults and cured all of the outstanding non-tax delinquencies. For
purposes of the certification under 47 CFR 1.2105(a)(2)(xii), the
applicant may exclude from consideration any cured default on a
Commission construction permit or license or cured delinquency on a
non-tax debt owed to a Federal agency for which any of the following
criteria are met: (1) The notice of the final payment deadline or
delinquency was received more than seven years before the FCC Form 175
filing deadline, (2) the default or delinquency amounted to less than
$100,000, (3) the default or delinquency was paid within two quarters
(i.e., six months) after receiving the notice of the final payment
deadline or delinquency, or (4) the
[[Page 21767]]
default or delinquency was the subject of a legal or arbitration
proceeding and was cured upon resolution of the proceeding. With
respect to the first exclusion, notice to a debtor may include notice
of a final payment deadline or notice of delinquency and may be express
or implied depending on the origin of any Federal non-tax debt giving
rise to a default or delinquency. Additionally, for the third
exclusion, the date of receipt of the notice of a final default
deadline or delinquency by the intended party or debtor will be used
for purposes of verifying receipt of notice.
105. In addition to the Auction 108 Procedures Public Notice,
applicants are encouraged to review previous guidance on default and
delinquency disclosure requirements in the context of the auction
short-form application process. Parties are also encouraged to consult
with Auctions Division staff if they have any questions about default
and delinquency disclosure requirements.
106. The Commission considers outstanding debts owed to the United
States Government, in any amount, to be a serious matter. The
Commission has previously adopted rules, including a provision referred
to as the red light rule, that implement its obligations under the Debt
Collection Improvement Act of 1996, which governs the collection of
debts owed to the United States. Under the red light rule, applications
and other requests for benefits filed by parties that have outstanding
debts owed to the Commission will not be processed. When adopting that
rule, the Commission explicitly declared, however, that its competitive
bidding rules are not affected by the red light rule. As a consequence,
the Commission's adoption of the red light rule does not alter the
applicability of any of its competitive bidding rules, including the
provisions and certifications of 47 CFR 1.2105 and 1.2106, with regard
to current and former defaults or delinquencies.
107. The Commission reminds each applicant, however, that any
indication in the Commission's Red Light Display System, which provides
information regarding debts currently owed to the Commission, may not
be determinative of an auction applicant's ability to comply with the
default and delinquency disclosure requirements of 47 CFR 1.2105. Thus,
while the red light rule ultimately may prevent the processing of long-
form applications by auction winners, an auction applicant's lack of
current red light status is not necessarily determinative of its
eligibility to participate in an auction (or whether it may be subject
to an increased upfront payment obligation). Moreover, a prospective
applicant in Auction 108 should note that any long-form applications
filed after the close of bidding will be reviewed for compliance with
the Commission's red light rule, and such review may result in the
dismissal of a winning bidder's long-form application. The Commission
encourages each applicant to carefully review all records and other
available Federal agency databases and information sources to determine
whether the applicant, or any of its affiliates, or any of its
controlling interests, or any of the affiliates of its controlling
interests, owes or was ever delinquent in the payment of non-tax debt
owed to any Federal agency.
L. Optional Applicant Status Identification
108. Applicants owned by members of minority groups and/or women,
as defined in 47 CFR 1.2110(c)(3), and rural telephone companies, as
defined in 47 CFR 1.2110(c)(4), may identify themselves regarding this
status in filling out their FCC Form 175 applications. This applicant
status information is collected for statistical purposes only and
assists the Commission in monitoring the participation of various
groups in its auctions.
M. Modifications to FCC Form 175
1. Only Minor Modifications Allowed
109. After the initial FCC Form 175 filing deadline, an Auction 108
applicant will be permitted to make only minor amendments to its
application consistent with the Commission's rules. Examples of minor
changes include the deletion or addition of authorized bidders (to a
maximum of three) and the revision of addresses and telephone numbers
of the applicant, its responsible party, and its contact person. Major
amendments to an FCC Form 175 (e.g., change of license area selection,
certain changes in ownership that would constitute an assignment or
transfer of control of the applicant, change in the required
certifications, change in applicant's legal classification that results
in a change in control, or change in claimed eligibility for a higher
percentage of bidding credit) will not be permitted after the initial
FCC Form 175 filing deadline. If an amendment reporting changes is a
major amendment, as described in 47 CFR 1.2105(b)(2), the major
amendment will not be accepted and may result in the dismissal of the
application.
2. Duty To Maintain Accuracy and Completeness of FCC Form 175
110. Pursuant to 47 CFR 1.65, each applicant has a continuing
obligation to maintain the accuracy and completeness of information
furnished in a pending application, including a pending application to
participate in Auction 108. Consistent with the requirements for prior
spectrum auctions, an applicant for Auction 108 must furnish additional
or corrected information to the Commission within five business days
after a significant occurrence, or amend its FCC Form 175 no more than
five business days after the applicant becomes aware of the need for
the amendment. An applicant is obligated to amend its pending
application even if a reported change may result in the dismissal of
the application because it is subsequently determined to be a major
modification.
3. Modifying and FCC Form 175
111. As noted above, a party seeking to participate in Auction 108
must file an FCC Form 175 electronically via the FCC's Auction
Application System. During the initial filing window, an applicant will
be able to make any necessary modifications to its FCC Form 175 in the
Auction Application System. An applicant that has certified and
submitted its FCC Form 175 before the close of the initial filing
window may continue to make modifications as often as necessary until
the close of that window; however, the applicant must re-certify and
re-submit its FCC Form 175 before the close of the initial filing
window to confirm and effect its latest application changes. After each
submission, a confirmation page will be displayed stating the
submission time and submission date.
112. An applicant will also be allowed to modify its FCC Form 175
in the Auction Application System, except for certain fields, during
the resubmission filing window and after the release of the public
notice announcing the qualified bidders for an auction. During these
times, if an applicant needs to make permissible minor changes to its
FCC Form 175 or must make changes in order to maintain the accuracy and
completeness of its application pursuant to 47 CFR 1.65 and
1.2105(b)(4), then it must make the change(s) in the Auction
Application System and re-certify and re-submit its application to
confirm and effect the change(s).
113. An applicant's ability to modify its FCC Form 175 in the
Auction Application System will be limited between the closing of the
initial filing
[[Page 21768]]
window and the opening of the application resubmission filing window,
and between the closing of the resubmission filing window and the
release of the public notice announcing the qualified bidders for an
auction. During these periods, an applicant will be able to view its
submitted application, but will be permitted to modify only the
applicant's address, responsible party address, and contact information
(e.g., name, address, telephone number) in the Auction Application
System. An applicant will not be able to modify any other pages of the
FCC Form 175 in the Auction Application System during these periods.
If, during these periods, an applicant needs to make other permissible
minor changes to its FCC Form 175, or changes to maintain the accuracy
and completeness of its application pursuant to 47 CFR 1.65 and
1.2105(b)(4), then the applicant must submit a letter briefly
summarizing the changes to its FCC Form 175 via email to
[email protected]. The email summarizing the changes must include a
subject line referring to Auction 108 and the name of the applicant,
for example, Re: Changes to Auction 108 Auction Application of XYZ
Corp. Any attachments to the email must be formatted as Adobe[supreg]
Acrobat[supreg] (PDF) or Microsoft[supreg] Word documents. An applicant
that submits its changes in this manner must subsequently modify,
certify, and submit its FCC Form 175 application(s) electronically in
the Auction Application System once it is again open and available to
applicants.
114. Applicants should also note that even at times when the
Auction Application System is open and available to applicants, the
system will not allow an applicant to make certain other permissible
changes itself (e.g., correcting a misstatement of the applicant's
legal classification). If an applicant needs to make a permissible
minor change of this nature, then it must submit a written request by
email to the Auctions Division Chief, via [email protected] requesting
that the Commission manually make the change on the applicant's behalf.
Once Commission staff has informed the applicant that the change has
been made in the Auction Application System, the applicant must then
re-certify and re-submit its FCC Form 175 in the Auction Application
System to confirm and effect the change(s).
115. As with filing the FCC Form 175, any amendment(s) to the
application and related statements of fact must be certified by an
authorized representative of the applicant with authority to bind the
applicant. Applicants should note that submission of any such amendment
or related statement of fact constitutes a representation by the person
certifying that he or she is an authorized representative with such
authority and that the contents of the amendment or statement of fact
are true and correct.
116. Applicants must not submit application-specific material
through the Commission's Electronic Comment Filing System. Further, as
discussed above, parties submitting information related to their
applications should use caution to ensure that their submissions do not
contain confidential information or communicate information that would
violate 47 CFR 1.2105(c) or the limited information procedures adopted
for Auction 108. An applicant seeking to submit, outside of the Auction
Application System, information that might reflect non-public
information, such as an applicant's county selection(s), upfront
payment amount, or bidding eligibility, should consider including in
its email a request that the filing or portions of the filing be
withheld from public inspection until the end of the prohibition on
certain communications pursuant to 47 CFR 1.2105(c).
117. Questions about FCC Form 175 amendments should be directed to
the Auctions Division at (202) 418-0660.
III. Preparing for Bidding in Auction 108
A. Due Diligence
118. The Commission reminds each potential bidder that it is solely
responsible for investigating and evaluating all technical and
marketplace factors that may have a bearing on the value of the
licenses that it is seeking in Auction 108 and that it is required to
certify, under penalty of perjury, that it has read the Auction 108
Procedures Public Notice and has familiarized itself with the auction
procedures and the service rules for the 2.5 GHz band. The Commission
makes no representations or warranties about the use of this spectrum
or these licenses for particular services. 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.
119. An applicant should perform its due diligence research and
analysis before proceeding, as it would with any new business venture.
In particular, the Commission encourages each potential bidder to
perform technical analyses and/or refresh its previous analyses to
assure itself that, should it become a winning bidder for any Auction
108 license, it will be able to build and operate facilities that will
fully comply with all applicable technical and legal requirements. The
Commission urges each applicant to inspect any prospective sites for
communications facilities located in, or near, the geographic area for
which it plans to bid, confirm the availability of such sites, and to
familiarize itself with the Commission's rules regarding the National
Environmental Policy Act (NEPA), the National Historic Preservation Act
(NHPA), and any other environmental statutes that may apply.
120. As noted above, applicants must carefully consider potential
encumbrances on existing licenses. The Commission notes in particular
that there will be a substantial number of licenses in inventory where
the amount of unassigned area or unassigned spectrum is very small. For
example, there could be licenses in Channel Block 2 where as little as
.333 megahertz of spectrum is unassigned. There are also a substantial
number of licenses where the area with unassigned spectrum is smaller
than one square mile. Each applicant should carefully research the
existence of incumbent licenses and the technical and economic
implications for commercial use of the 2.5 GHz band.
121. The Commission also encourages each applicant in Auction 108
to continue to conduct its own research throughout the auction in order
to determine the existence of pending or future administrative or
judicial proceedings that might affect its decision on continued
participation in the auction. Each applicant is responsible for
assessing the likelihood of the various possible outcomes and for
considering the potential impact on licenses available in an auction.
The due diligence considerations mentioned in the Auction 108
Procedures Public Notice do not constitute an exhaustive list of steps
that should be undertaken prior to participating in Auction 108. As
always, the burden is on the potential bidder to determine how much
research to undertake, depending upon the specific facts and
circumstances related to its interests. For example, applicants should
pay particular attention to the
[[Page 21769]]
results applications filed in the Rural Tribal Priority Window, which
will determine the final inventory of licenses available for bidding in
Auction 108. The Commission emphasizes again that licenses granted
through applications received during the Rural Tribal Priority Window
have incumbent status vis-[agrave]-vis licenses awarded in Auction 108.
In other words, any winning bidder awarded a license in Auction 108
will not be allowed to operate within the license area of a successful
Rural Tribal Priority Window applicant, even if that application
remains pending today or at the time of issuance of the overlay
license. In addition, the Commission reminds applicants that the tools
made available to assess the available licenses in Auction 108,
including the mapping tool described above, may not represent official
licensing information and all information should be confirmed in ULS
for any specific license or area.
122. Applicants are solely responsible for identifying associated
risks and for investigating and evaluating the degree to which such
matters may affect their ability to bid on, otherwise acquire, or make
use of the licenses available in Auction 108. Each potential bidder is
responsible for undertaking research to ensure that any licenses won in
the auction will be suitable for its business plans and needs. Each
potential bidder must undertake its own assessment of the relevance and
importance of information gathered as part of its due diligence
efforts.
123. The Commission makes no representations or guarantees
regarding the accuracy or completeness of information in its databases
or any third-party databases, including, for example, court docketing
systems. To the extent the Commission's databases may not include all
information deemed necessary or desirable by an applicant, it must
obtain or verify such information from independent sources or assume
the risk of any incompleteness or inaccuracy in said databases.
Furthermore, the Commission makes no representations or guarantees
regarding the accuracy or completeness of information that has been
provided by incumbent licensees and incorporated into its databases.
B. Licensing Considerations
1. Incumbency Issues
124. Potential applicants in Auction 108 should carefully review
the new rules applicable to the 2.5 GHz band as well as the results of
applications filed in the Rural Tribal Priority Window, which will
determine the final license inventory for Auction 108, when developing
business plans, assessing market conditions, and evaluating the
availability of equipment for 2.5 GHz operations. 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 2.5 GHz band.
2. International Coordination
125. Potential bidders seeking licenses for geographic areas
adjacent to the Canadian and Mexican borders should be aware that the
use of the 2.5 GHz frequencies they acquire in Auction 108 are subject
to current and future agreements with the governments of Canada and
Mexico.
126. The Commission routinely works with the United States
Department of State and Canadian and Mexican government officials to
ensure the efficient use of the spectrum as well as interference-free
operations in the border areas near Canada and Mexico. Until such time
as any adjusted agreements, as needed, between the United States,
Mexico, and/or Canada can be agreed to, operations in the 2.5 GHz band
must not cause harmful interference across the border, consistent with
the terms of the agreements currently in force.
3. Environmental Review Requirements
127. Licensees must comply with the Commission's rules for
environmental review under the NEPA, the NHPA, and any other
environmental statutes that may apply. Licensees and other applicants
that propose to build certain types of communications facilities for
licensed service must follow Commission procedures implementing
obligations under NEPA and NHPA prior to constructing the facilities.
Under NEPA, a licensee or applicant must assess if certain
environmentally sensitive conditions specified in the Commission's
rules are relevant to the proposed facilities, and prepare an
environmental assessment when applicable. If an environmental
assessment is required, then facilities may not be constructed until
environmental processing is completed. Under NHPA, a licensee or
applicant must follow the procedures in 47 CFR 1.1320, the Nationwide
Programmatic Agreement for Collocation of Wireless Antennas and the
Nationwide Programmatic Agreement Regarding the Section 106 National
Historic Preservation Act Review Process. Compliance with section 106
of the NHPA requires Tribal consultation, and if construction of the
communications facilities would have adverse effects on historic or
Tribally significant properties, an environmental assessment must be
prepared.
4. Mobile Spectrum Holdings Policies
128. The Commission reminds bidders of the Commission's mobile
spectrum holdings policies applicable to the 2.5 GHz band.
Specifically, the Commission did not impose a pre-auction bright-line
limit on acquisitions of the 2.5 GHz band. The Commission determined
that ``EBS white space spectrum should be considered available for
purposes of the spectrum screen.'' In addition, the Commission
eliminated the EBS white space discounts and ended the 5% exclusion of
spectrum from the screen. The Commission also concluded that it would
perform case-by-case review of secondary market transactions to assess
the effect of educational use restrictions in existing spectrum leases
in particular local markets.
C. Bidder Education
129. Before the opening of the short-form filing window for Auction
108, detailed educational information will be provided in various
formats to would-be participants on the Auction 108 web page.
Specifically, the Commission directs OEA to provide various materials
on the pre-bidding processes in advance of the opening of the short-
form application window, beginning with the release of step-by-step
instructions for completing the FCC Form 175, which OEA will make
available in the Education section of the Auction 108 website at
www.fcc.gov/auction/108. In addition, OEA will provide an online
application procedures tutorial for the auction, covering information
on pre-bidding preparation, completing short-form applications, and the
application review process.
130. In advance of the start of the mock auction, OEA will provide
educational materials on the bidding procedures for Auction 108,
including a user guide for the bidding system, bidding system file
formats, and an online bidding procedures tutorial. These materials
will provide detailed information on bidding features specific to the
ascending clock auction format, including intra-round bidding and proxy
bids. The Commission recognizes the importance of these materials to
applicants' and bidders' comprehension of the bidding procedures
adopted in the Auction 108 Procedures Public Notice. Accordingly, the
educational materials shall be released as soon as reasonably possible
to provide potential applicants and bidders with time to
[[Page 21770]]
understand them and ask questions before bidding begins.
131. The Commission believes that parties interested in
participating in Auction 108 will find the interactive, online
tutorials an efficient and effective way to further their understanding
of the application and bidding processes. The online tutorials will
allow viewers to navigate the presentation outline, review written
notes, and listen to audio of the notes. Additional features of this
web-based tool include links to auction-specific Commission releases,
email links for contacting Commission staff, and screen shots of the
online application and bidding systems. The online tutorials will be
accessible in the Education section of the Auction 108 website at
www.fcc.gov/auction/108. Once posted, the tutorials will remain
continuously accessible.
D. Short-Form Applications: Due Before 6 p.m. ET on May 10, 2022
132. In order to be eligible to bid in Auction 108, an applicant
must first follow the procedures to submit a short-form application
(FCC Form 175) electronically via the Auction Application System,
following the instructions set forth in the FCC Form 175 Instructions.
The short-form application will become available with the opening of
the initial filing window and must be submitted prior to 6 p.m. ET on
May 10, 2022. Late applications will not be accepted. No application
fee is required for short-form applications.
133. Applications may be filed at any time beginning at noon ET on
April 27, 2022, until the filing window closes at 6 p.m. ET on May 10,
2022. Applicants are strongly encouraged to file early and are
responsible for allowing adequate time for filing their applications.
There are no limits or restrictions on the number of times an
application can be updated or amended until the initial filing deadline
on May 10, 2022.
134. An applicant must always click on the CERTIFY & SUBMIT button
on the Certify & Submit screen to successfully submit its FCC Form 175
and any modifications; otherwise the application or changes to the
application will not be received or reviewed by Commission staff.
Additional information about accessing, completing, and viewing the FCC
Form 175 is provided in the FCC Form 175 Instructions. Applicants
requiring technical assistance should contact FCC Auctions Technical
Support using the contact information provided in Section VI.D.
(Contact Information), below. In order to provide better service to the
public, all calls to Technical Support are recorded.
E. Application Processing and Minor Modifications
1. Public Notice of Applicants' Initial Application Status and
Opportunity for Minor Modifications
135. After the deadline for filing auction applications, the
Commission will process all timely submitted applications to determine
whether each applicant has complied with the application requirements
and provided all information concerning its qualifications for bidding.
OEA will issue a public notice with applicants' initial application
status, identifying: (1) Those that are complete; and (2) those that
are incomplete or deficient because of defects that may be corrected.
The public notice will include the deadline for resubmitting corrected
applications and an electronic copy will be sent by email to the
contact address listed in the FCC Form 175 for each applicant. In
addition, each applicant with an incomplete application will be sent
information on the nature of the deficiencies in its application, along
with the name and contact information of a Commission staff member who
can answer questions specific to the application.
136. After the initial application filing deadline on May 10 2022,
applicants can make only minor modifications to their applications.
Major modifications (e.g., change of license area selection, change in
ownership that would constitute an assignment or transfer of control of
the applicant, change in the required certifications, change in
applicant's legal classification that results in a change in control,
or change in claimed eligibility for a higher percentage of bidding
credit) will not be permitted. After the deadline for resubmitting
corrected applications, an applicant will have no further opportunity
to cure any deficiencies in its application or provide any additional
information that may affect Commission staff's ultimate determination
of whether and to what extent the applicant is qualified to participate
in Auction 108.
137. Commission staff will communicate only with an applicant's
contact person or certifying official, as designated on the applicant's
FCC Form 175, unless the applicant's certifying official or contact
person notifies Commission staff in writing that another representative
is authorized to speak on the applicant's behalf. Authorizations may be
sent by email to [email protected].
2. Public Notice of Applicants' Final Application Status After Upfront
Payment Deadline
138. After Commission staff reviews resubmitted applications and
upfront payments, OEA will release a public notice identifying
applicants that have become qualified bidders for the auction. A
Qualified Bidders Public Notice will be issued before bidding in the
auction begins. Qualified bidders are those applicants with submitted
FCC Form 175 applications that are deemed timely filed and complete and
that have made a sufficient upfront payment.
F. Upfront Payments
139. In order to be eligible to bid in Auction 108, a sufficient
upfront payment and a complete and accurate FCC Remittance Advice Form
(FCC Form 159, Revised 2/03) must be submitted before 6 p.m. ET on June
23, 2022. After completing its short-form application, an applicant
will have access to an electronic pre-filled version of the FCC Form
159. An accurate and complete FCC Form 159 must accompany each payment.
Proper completion of this form is critical to ensuring correct
crediting of upfront payments. Payers using the pre-filled FCC Form 159
are responsible for ensuring that all the information on the form,
including payment amounts, is accurate. Instructions for completing FCC
Form 159 for Auction 108 are provided below.
1. Making Upfront Payments by Wire Transfer for Auction 108
140. Upfront payments for Auction 108 must be wired to, and will be
deposited in, the U.S. Treasury.
141. Wire transfer payments for Auction 108 must be received before
6 p.m. ET on June 23, 2022. No other payment method is acceptable. To
avoid untimely payments, applicants should discuss arrangements
(including bank closing schedules and other specific bank wire transfer
requirements, such as an in-person written request before a specified
time of day) with their bankers several days before they plan to make
the wire transfer, and must allow sufficient time for the transfer to
be initiated and completed before the deadline. The following
information will be needed:
ABA Routing Number: 021030004.
Receiving Bank: TREAS NYC, 33 Liberty Street, New York, NY 10045.
Beneficiary: FCC, 45 L Street NE, 3rd Floor, Washington, DC 20554.
Account Number: 827000001002.
Originating Bank Information (OBI Field): (Skip one space between
each information item).
[[Page 21771]]
``AUCTIONPAY''
Applicant FCC Registration Number (FRN): (use the same FRN as used
on the applicant's FCC Form 159, block 21).
Payment Type Code: (same as FCC Form 159, block 24A: ``U108'').
Note: The beneficiary account number (BNF Account Number) is
specific to the upfront payments for Auction 108. Do not use a BNF
Account Number from a previous auction.
142. At least one hour before placing the order for the wire
transfer (but on the same business day), applicants must print and fax
a completed FCC Form 159 (Revised 2/03) to the FCC at (202) 418-2843.
Alternatively, the completed form can be scanned and sent as an
attachment to an email to [email protected]. On the fax cover sheet
or in the email subject header, write ``Wire Transfer--Auction Payment
for Auction 108''. To meet the upfront payment deadline, an applicant's
payment must be credited to the Commission's account for Auction 108
before the deadline.
143. Each applicant is responsible for ensuring timely submission
of its upfront payment and for timely filing of an accurate and
complete FCC Form 159. An applicant should coordinate with its
financial institution well ahead of the due date regarding its wire
transfer and allow sufficient time for the transfer to be initiated and
completed prior to the deadline. The Commission repeatedly has
cautioned auction participants about the importance of planning ahead
to prepare for unforeseen last-minute difficulties in making payments
by wire transfer. Each applicant also is responsible for obtaining
confirmation from its financial institution that its wire transfer to
the U.S. Treasury was successful and from Commission staff that its
upfront payment was timely received and that it was deposited into the
proper account. As a regulatory requirement, the U.S. Treasury screens
all payments from all financial institutions before deposits are made
available to specified accounts. If wires are suspended, the U.S.
Treasury may direct questions regarding any transfer to the financial
institution initiating the wire. Each applicant must take care to
assure that any questions directed to its financial institution(s) are
addressed promptly. To receive confirmation from Commission staff,
contact Scott Radcliffe of the Office of Managing Director's Revenue &
Receivables Operations Group/Auctions at (202) 418-7518 or Theresa
Meeks at (202) 418-2945.
144. Please note the following information regarding upfront
payments:
All payments must be made in U.S. dollars.
All payments must be made by wire transfer.
Upfront payments for Auction 108 go to an account number
different from the accounts used in previous FCC auctions.
145. Failure to deliver a sufficient upfront payment as instructed
in the Auction 108 Procedures Public Notice by the upfront payment
deadline will result in dismissal of the short-form application and
disqualification from participation in the auction.
2. Completing and Submitting FCC Form 159
146. The following information supplements the standard
instructions for FCC Form 159 (Revised 2/03) and is provided to help
ensure correct completion of FCC Form 159 for upfront payments for
Auction 108. Applicants need to complete FCC Form 159 carefully,
because:
Mistakes may affect bidding eligibility; and
Lack of consistency between information provided in FCC
Form 159 (Revised 2/03), FCC Form 175, long-form application (FCC Form
601), and correspondence about an application may cause processing
delays.
147. Therefore, appropriate cross-references between the FCC Form
159 Remittance Advice and the short-form application (FCC Form 175) are
described below.
------------------------------------------------------------------------
Block No. Required information
------------------------------------------------------------------------
1........................ LOCKBOX #--Leave Blank.
2........................ Payer Name--Enter the name of the person or
company making the payment. If the applicant
itself is the payer, this entry would be the
same name as in FCC Form 175.
3........................ Total Amount Paid--Enter the amount of the
upfront payment associated with the FCC Form
159 (Revised 2/03).
4-8...................... Street Address, City, State, ZIP Code--Enter
the street mailing address (not post office
box number) where mail should be sent to the
payer. If the applicant is the payer, these
entries would be the same as FCC Form 175
from the Applicant Information section.
9........................ Daytime Telephone Number--Enter the telephone
number of a person knowledgeable about this
upfront payment.
10....................... Country Code--For addresses outside the
United States, enter the appropriate postal
country code (available from the Mailing
Requirements Department of the U.S. Postal
Service).
11....................... Payer FRN--Enter the payer's 10-digit FCC
Registration Number (FRN) registered in the
Commission Registration System (CORES).
21....................... Applicant FRN (Complete only if applicant is
different than payer)--Enter the applicant's
10-digit FRN registered in CORES.
24A...................... Payment Type Code--Enter ``U108''.
25A...................... Quantity--Enter the number ``1''.
26A...................... Fee Due--Amount of Upfront Payment
27A...................... Total Fee--Will be the same amount as 26A.
28A...................... FCC Code 1--Enter the number ``108''
(indicating Auction 108).
------------------------------------------------------------------------
Notes:
Do not use Remittance Advice (Continuation Sheet), FCC Form 159-
C, for upfront payments.
If applicant is different from the payer, complete blocks 13
through 21 for the applicant, using the same information shown on FCC
Form 175. Otherwise leave them blank.
No signature is required on FCC Form 159 for auction payments
Since credit card payments will not be accepted for upfront
payments for an auction, leave Section E blank.
3. Upfront Payments and Bidding Eligibility
148. The Commission has authority to determine appropriate upfront
payments for each license being auctioned, taking into account such
factors as the efficiency of the auction process and the potential
value of similar licenses. An upfront payment is a refundable deposit
made by each applicant seeking to participate in bidding to establish
its eligibility to bid on licenses. Upfront payments that are related
to the inventory of licenses being auctioned protect against frivolous
or
[[Page 21772]]
insincere bidding and provide the Commission with a source of funds
from which to collect payments owed at the close of bidding.
149. Applicants that are former defaulters must pay upfront
payments 50% greater than non-former defaulters. For purposes of
classification as a former defaulter or a former delinquent, defaults
and delinquencies of the applicant itself and its controlling interests
are included.
150. An applicant must make an upfront payment sufficient to obtain
bidding eligibility on the licenses on which it will bid. The
Commission adopts the proposals to set upfront payments based on the
total potential MHz-pops of each license offered in the auction and to
determine an applicant's initial bidding eligibility, the maximum
number of bidding units on which a bidder may place bids in any single
round, based on the amount of the upfront payment. In order to bid for
a license, qualified bidders must have a current eligibility level that
meets or exceeds the number of bidding units assigned to that license.
At a minimum, therefore, an applicant's total upfront payment must be
enough to establish eligibility to bid on at least one license in one
of the license areas selected on its FCC Form 175 for Auction 108, or
else the applicant will not become qualified to participate in the
auction. The total upfront payment does not affect the total dollar
amount the bidder may bid.
151. In the Auction 108 Comment Public Notice, the Commission
proposed to require applicants to submit upfront payments based on
$0.003 per MHz-pop with a minimum of $500 per license. Because 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, the Commission adopts the proposal. For the
49.5-megahertz and 50.5-megahertz channel blocks, the calculation will
be based on 50 megahertz, which is beneficial for the purpose of
allowing switch bids because it will result in the same number of
bidding units, as described below, for each of those channel blocks
within a county. For the 17.5-megahertz channel block, the calculation
will be based on the 16.5 megahertz of contiguous spectrum not
including the 1-megahertz guard band. The Commission uses the 16.5
megahertz of contiguous spectrum and excludes the 1-megahertz guard
band for comparability with the larger blocks that consist of
contiguous spectrum only. The upfront payment amount per license
potentially available in Auction 108 is set forth in the Attachment A
file on the Auction 108 website at www.fcc.gov/auction/108.
152. For the reasons set forth in the Auction 108 Comment Public
Notice, the Commission also adopts the proposal to assign each license
a specific number of bidding units, equal to one bidding unit per $100
of the upfront payment, which is necessary for implementing the
activity requirement described in Section IV.F. (Activity Rule) below,
and facilitates the efficient conduct of the auction. The number of
bidding units for a given license is fixed and does not change during
the auction as prices change. Thus, in calculating its upfront payment
amount, an applicant should 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 number of bidding units. In order
to make this calculation, an applicant should add together the bidding
units for the licenses on which it seeks to be active in any given
round. Applicants should check their calculations carefully, as there
is no provision for increasing a bidder's eligibility after the upfront
payment deadline.
Example: Upfront Payments and Bidding Eligibility
----------------------------------------------------------------------------------------------------------------
Bandwidth Upfront
County State Channel block (MHz) Bidding units payment
----------------------------------------------------------------------------------------------------------------
Lake........................... IN 2 50.5 700 $70,000
Porter......................... IN 2 50.5 200 20,000
----------------------------------------------------------------------------------------------------------------
Under the clock-1 format, if a bidder wishes to bid on the 50.5-megahertz license in both of the above counties
in a round, it must have selected both counties on its FCC Form 175 and purchased at least 900 bidding units
(700 + 200) of bidding eligibility. If a bidder only wishes to bid on one, but not both, purchasing 700
bidding units would meet the eligibility requirement for the 50.5-megahertz license in either county. The
bidder would be able to bid on the license in either county, but not both at the same time. If the bidder
purchased only 200 bidding units, the bidder would have enough eligibility to bid for the license in Porter
County but not for the one in Lake County.
153. If an applicant is a former defaulter, it must calculate its
upfront payment for the maximum number of licenses on which it plans to
bid by multiplying the number of bidding units on which it wishes to be
active by 1.5. In order to calculate the number of bidding units to
assign to former defaulters, the Commission will calculate the number
of bidding units a non-former defaulter would get for the upfront
payment received, divide that number by 1.5, and round the result up to
the nearest bidding unit.
G. Auction Registration
154. All qualified bidders for Auction 108 are automatically
registered for the auction. Registration materials will be distributed
prior to the auction by overnight delivery. The mailing will be sent
only to the contact person at the contact address listed in the FCC
Form 175 and will include the SecurID[supreg] tokens that will be
required to place bids.
155. Qualified bidders that do not receive this registration
mailing will not be able to submit bids. Therefore, any qualified
bidder for Auction 108 that has not received this mailing by noon on
July 20, 2022, should call the Auctions Hotline at (717) 338-2868.
Receipt of this registration mailing is critical to participating in
the auction, and each applicant is responsible for ensuring it has
received all the registration materials.
156. In the event that a SecurID[supreg] token is lost or damaged,
only a person who has been designated as an authorized bidder, the
contact person, or the certifying official on the applicant's short-
form application may request a replacement. To request a replacement,
call the Auction Bidder Line at the telephone number provided in the
registration materials or the Auction Hotline at (717) 338-2868.
H. Remote Electronic Bidding via the FCC Auction Bidding System
157. Bidders will be able to participate in Auction 108 over the
internet using the FCC Auction Bidding System (bidding system). Only
qualified bidders are permitted to bid.
158. Each authorized bidder must have his or her own
SecurID[supreg] token, which the Commission will provide at no charge.
Each applicant will be issued three SecurID[supreg] tokens. A bidder
cannot bid without his or her SecurID[supreg] token.
[[Page 21773]]
In order to access the bidding function of the bidding system, bidders
must be logged in during the bidding round using the passcode generated
by the SecurID[supreg] token and a personal identification number (PIN)
created by the bidder. For security purposes, the SecurID[supreg]
tokens and a telephone number for bidding questions are only mailed to
the contact person at the contact address listed on the FCC Form 175.
Each SecurID[supreg] token is tailored to a specific auction.
SecurID[supreg] tokens issued for other auctions or obtained from a
source other than the FCC will not work for Auction 108. Please note
that the SecurID[supreg] tokens can be recycled, and the Commission
requests that bidders return the tokens to the FCC. Pre-addressed
envelopes will be provided to return the tokens once the auction has
ended.
159. The Commission makes no warranties whatsoever, and shall not
be deemed to have made any warranties, with respect to the bidding
system, including any implied warranties of merchantability or fitness
for a particular purpose. In no event shall the Commission, or any of
its officers, employees, or agents, be liable for any damages
whatsoever (including, but not limited to, loss of business profits,
business interruption, loss of use, revenue, or business information,
or any other direct, indirect, or consequential damages) arising out of
or relating to the existence, furnishing, functioning, or use of the
bidding system. Moreover, no obligation or liability will arise out of
the Commission's technical, programming, or other advice or service
provided in connection with the bidding system.
160. To the extent an issue arises with the bidding system itself,
the Commission will take all appropriate measures to resolve such
issues quickly and equitably. Should an issue arise that is outside the
bidding system or attributable to a bidder, including, but not limited
to, a bidder's hardware, software, or internet access problem that
prevents the bidder from submitting a bid prior to the end of a round,
the Commission shall have no obligation to resolve or remediate such an
issue on behalf of the bidder. Similarly, if an issue arises due to
bidder error using the bidding system, the Commission shall have no
obligation to resolve or remediate such an issue on behalf of the
bidder. Accordingly, after the close of a bidding round, the results of
bid processing will not be altered absent evidence of any failure in
the bidding system.
I. Mock Auction
161. All qualified bidders will be eligible to participate in a
mock auction. The mock auction, which will begin on July 26, 2022, will
enable qualified bidders to become familiar with the bidding system and
to practice submitting bids prior to the auction. The Commission
recommends that all qualified bidders, including all their authorized
bidders, participate to assure that they can log in to the bidding
system and gain experience with the bidding procedures. Participating
in the mock auction may reduce the likelihood of a bidder making a
mistake during the auction. Details regarding the mock auction will be
announced in the Qualified Bidders Public Notice for Auction 108.
J. Auction Delay, Suspension, or Cancellation
162. At any time before or during the bidding process, OEA, in
conjunction with WTB, may delay, suspend, or cancel bidding in Auction
108 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. This approach has proven effective in resolving exigent
circumstances in previous auctions, and the Commission finds no reason
to depart from it for Auction 108. OEA will notify participants of any
such delay, suspension, or cancellation by public notice and/or through
the bidding system's announcement function. If the bidding is delayed
or suspended, then OEA may, in its sole discretion, elect to resume the
auction starting from the beginning of the current round or from some
previous round, or cancel the auction in its entirety. The Commission
emphasizes that OEA will exercise this authority at its discretion.
K. Fraud Alert
163. As is the case with many business investment opportunities,
some unscrupulous parties may attempt to use Auction 108 to deceive and
defraud unsuspecting investors. Common warning signals of fraud include
the following:
The first contact is a cold call from a telemarketer or is
made in response to an inquiry prompted by a radio or television
infomercial.
The offering materials used to invest in the venture
appear to be targeted at IRA funds, for example, by including all
documents and papers needed for the transfer of funds maintained in IRA
accounts.
The amount of investment is less than $25,000.
The sales representative makes verbal representations
that: (a) The Internal Revenue Service, Federal Trade Commission (FTC),
Securities and Exchange Commission (SEC), FCC, or other government
agency has approved the investment; (b) the investment is not subject
to state or federal securities laws; or (c) the investment will yield
unrealistically high short-term profits. In addition, the offering
materials often include copies of actual FCC releases, or quotes from
FCC personnel, giving the appearance of FCC knowledge or approval of
the solicitation.
164. Information about deceptive telemarketing investment schemes
is available from the FCC, as well as the FTC and SEC. Additional
sources of information for potential bidders and investors may be
obtained from the following sources:
The FCC's Consumer Call Center at (888) 225-5322 or by
visiting www.fcc.gov/general/frauds-scams-and-alerts-guides.
The FTC at (877) FTC-HELP ((877) 382-4357) or by visiting
consumer.ftc.gov.
The SEC at (202) 942-7040 or by visiting www.sec.gov/investor.
165. Complaints about specific deceptive telemarketing investment
schemes should be directed to the FTC, the SEC, or the National
Consumer League's Fraud Center at fraud.org or (202) 835-3323, Ext.
815.
IV. Bidding Procedures
166. The Auction 108 Comment Public Notice and the Auction 108
Further Comment Public Notice sought comment on three different auction
formats for Auction 108: A single-round auction format with user-
defined package bidding, a simultaneous multiple-round (SMR) auction
format, and an ascending clock auction format. The Auction 108
Inventory Comment Public Notice also sought comment on the previously-
detailed auction procedures in light of additions to the initial
license inventory. As discussed below, there are arguments for and
against each auction format. After consideration of the record, the
Commission finds on balance the record supports using an ascending
clock auction format for Auction 108 by which bidding will be conducted
simultaneously for all licenses available in the auction and bidders
will be able to bid for specific licenses. Accordingly, the Commission
selects the clock-1 auction format for Auction 108. This
[[Page 21774]]
format will be similar to the clock phase of past Commission ascending
clock auctions, but rather than offering multiple generic spectrum
blocks in a category in a geographic area, it will offer only a single
frequency-specific license in a category in a county. Thus, by using a
supply of 1 in each category, a clock-1 auction format allows bidders
to bid on frequency-specific licenses and negates the need for an
assignment phase, which have been typical of past Commission ascending
clock auctions.
167. In response to the Auction 108 Comment Public Notice,
interested parties filed numerous comments that were split fairly
evenly between parties that favored the single-round auction format and
those that favored an SMR auction. OEA and WTB subsequently released
the Auction 108 Further Comment Public Notice, suggesting an
alternative clock auction format that would address two frequently-
cited commenter concerns. Specifically, the clock-1 format would be
familiar to bidders that have participated in FCC auctions previously
(addressing concerns about the unfamiliarity of the single-round
format) and would incorporate elements to help mitigate a drawback of
an SMR auction--its likely long duration--by both potentially
shortening the length of the auction and making it easier for bidders
to participate in a longer auction. In response to the Auction 108
Further Comment Public Notice, interested parties filed comments in
favor of the single-round auction format and others in favor of the
multiple-round clock-1 auction. Many commenters that originally
supported an SMR auction format in response to the Auction 108 Comment
Public Notice support use of the clock-1 format as proposed in the
Auction 108 Further Comment Public Notice. Recognizing that there are
advantages and disadvantages to each auction format for each individual
bidder, on the whole, the Commission finds that for Auction 108 the
clock-1 format balances these competing interests.
168. The Commission directs OEA, in conjunction with WTB, to
prepare and release, concurrently with this Public Notice, an updated
technical guide (Auction 108 Technical Guide) that provides the
mathematical details of the adopted auction design and algorithms for
the clock phase of Auction 108. The information in the Auction 108
Technical Guide, which is available in the Education section of the
Auction 108 website (www.fcc.gov/auction/108), supplements the
decisions in the Auction 108 Procedures Public Notice.
A. Clock-1 Auction Design
169. Under the clock-1 format that the Commission adopts, each
bidder will be able to bid for licenses in the license areas selected
on its short-form application, where a specific license will be
identified by a category and a county. The auction will proceed in a
series of rounds, with bidding conducted simultaneously for all
licenses available in the auction. Consistent with prior FCC clock
auctions, for each bidding round, the bidding system will announce a
clock price for each license, and a bidder will indicate its demand for
licenses at the prices associated with the current round. The prices
associated with the round are prices between the start-of-round price
and the clock price, inclusive.
170. The clock price for a license will increase from round to
round if more than one bidder indicates demand for that license. The
bidding rounds will continue until, for all licenses--that is, all
categories in all counties--the number of bidders demanding each
license does not exceed one. Once bidding rounds stop, the bidder with
demand for a license becomes the winning bidder.
B. Single Licenses in Three Bidding Categories
171. Auction 108 will offer geographic overlay licenses for
unassigned spectrum in the 2.5 GHz (2496-2690 MHz) band offered in up
to three channel blocks of spectrum--49.5 megahertz, 50.5 megahertz,
and 17.5 megahertz blocks--licensed on a county basis. For bidding in
this clock auction, in the counties where available, the Commission
adopts bidding categories as follows: The 49.5 megahertz channel block
is bidding category 1 (C1); the 50.5 megahertz channel block is bidding
category 2 (C2); and the 17.5 megahertz channel block is bidding
category 3 (C3). Therefore, the combination of a bidding category and a
county would define a single specific license, and bidding for a
category and a county under the clock-1 auction format would constitute
license-by-license bidding.
C. Bidding Rounds
172. Auction 108 will consist of sequential bidding rounds, each
followed by the release of round results. The Commission will conduct
bidding simultaneously for all licenses--all categories in all counties
available in the auction. In the first bidding round of Auction 108, a
bidder will indicate, for each category and county, whether it demands
the license at the minimum opening bid price. Before each subsequent
bidding round, the bidding system will announce a start-of-round price
and a clock price for each license, and during the round, qualified
bidders will indicate the licenses for which they wish to bid at the
prices associated with the current round. Bidding rounds will be open
for predetermined periods of time. Bidders will be subject to activity
and eligibility rules that govern the pace at which they participate in
the auction.
173. For each category and county--that is, each license--the clock
price will increase from round to round if more than one bidder
indicates demand for that license. The bidding rounds will continue
until, for every license, demand does not exceed one. At that point,
the bidder still indicating demand for a license will be the winning
bidder.
174. The initial bidding schedule will be announced in a public
notice to be released at least one week before the start of bidding.
Details on viewing round results, including the location and format of
downloadable results files for each round, will be released concurrent
with or prior to that public notice.
175. The Commission will conduct Auction 108 over the internet. A
bidder will 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.
176. The bidding system will allow a bidder to submit bids only for
licenses in license areas (i.e., counties) the bidder selected on its
FCC Form 175 and for which the bidder has sufficient bidding
eligibility.
177. During each round of the bidding, a bidder will be able to
modify its bids placed in the current bidding round. It can do so by
uploading a new file of all its bids, including the modifications,
which would replace bids previously submitted in the round. The system
will take the last bid file submission as that bidder's bids for the
round. The Commission urges bidders to verify their bids in each round.
Information on how to do so will be made available in educational
materials that OEA will provide, including a bidding system user guide
and an online bidding procedures tutorial.
178. The Commission adopts the proposal that OEA retain the
discretion to change 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. This will allow OEA
to change the amount of time for bidding rounds, the amount of time
[[Page 21775]]
between rounds, or the number of rounds per day, depending upon bidding
activity and other factors.
D. Stopping Rule
179. For Auction 108, the Commission will employ a simultaneous
stopping rule approach, which means all licenses remain available for
bidding until bidding stops on every license. Specifically, bidding
will close for all licenses after the first round in which demand does
not exceed one for any license. Consequently, under this approach, it
is not possible to determine in advance how long Auction 108 will last.
E. Availability of Bidding Information
180. The Commission adopts the proposal to make public after each
clock phase bidding round, for each license, the aggregate demand, the
posted price of the last completed round, and the clock price for the
next round. The identities of bidders making specific bids will not be
disclosed until after the close of bidding in the auction.
181. Each bidder will 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 will inform each bidder
of the licenses it currently demands (its processed demand), whether it
has proxy instructions for those licenses, and its eligibility for the
next round.
F. Activity Rule
182. Activity Requirement. For the reasons set forth in the Auction
108 Comment Public Notice, the Commission adopts the proposal to employ
an activity rule that 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 will 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 will 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.
183. The Commission adopts the proposal to require that bidders
maintain a fixed, high level of activity in each round of Auction 108
in order to maintain bidding eligibility. The clock auction requires a
high level of certainty about bidder demand in order to set accurate
prices and provide reliable information to bidders. Consistent with
past practice, bidders must 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 by OEA. Thus, the activity
rule will 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. OEA The Commission will set the activity requirement
percentage initially at 95%. If the activity rule is met, then the
bidder's eligibility will not change for the next round. If the
activity rule is not met in a round, then the bidder's eligibility will
be reduced to an amount that brings the bidder into compliance with the
rule. Bidding activity will be based on the bids that are applied by
the FCC auction bidding system. That is, if a bidder bids to reduce its
demand for a license, but the FCC auction bidding system cannot apply
the request because demand for that license would fall below one, then
the bidder's activity would reflect its unreduced demand.
184. OEA retains the discretion to change the activity requirement
percentage during the auction. The bidding system will announce any
such changes in advance of the round in which they would take effect,
giving bidders adequate notice to adjust their bidding strategies.
185. Contingent Bidding Limit. 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. To help a bidder avoid potentially
having its eligibility reduced as a result of submitted bids that could
not be applied during bid processing, the Commission adopts procedures
to allow a bidder to submit bids with associated bidding activity
greater than its current bidding eligibility. However, the Commission
emphasizes that even under these additional procedures, the bidder's
activity as applied by the auction system during bid processing will
not exceed the bidder's current bidding eligibility. That is, even if a
bidder submits bids with associated bidding units exceeding 100% of its
current bidding eligibility, its processed activity cannot exceed its
eligibility.
186. Under these procedures, after Round 1, a bidder may submit
bids with bidding units totaling up to a contingent bidding limit
greater than or equal to the bidder's current bidding eligibility for
the round times a contingent bidding percentage equal to or greater
than 100%. The Commission adopts an initial contingent bidding
percentage of 120%, which will apply starting in Round 2. The
Commission finds that 120% provides a useful amount of flexibility to a
bidder trying to guard against loss of eligibility when requesting a
reduction in its demand. This limit will be subject to change in
subsequent rounds within a range of 100% to 140%. If it appears that
the contingent bidding limit is being misused, OEA may use its
discretion to change the contingent bidding limit percentage. In any
bidding round, the auction bidding system will advise the bidder of its
current bidding eligibility, its required bidding activity, and its
contingent bidding limit. The Auction 108 Technical Guide provides
examples of use of the contingent bidding limit, and bidders are
encouraged to review them.
187. As with the activity requirement percentage, OEA will retain
the discretion to change the contingent bidding percentage during the
auction and will announce any such changes in advance of the round in
which they would take effect.
188. For Auction 108, the Commission will not provide for activity
rule waivers to preserve a bidder's eligibility. The Commission notes
that the contingent bidding limit, which permits a bidder to submit
bids with bidding activity greater than its eligibility, within the
precise limits set forth above, and allowing bidders to submit proxy
instructions will 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, as addressed below.
[[Page 21776]]
G. Acceptable Bids
1. Minimum Opening Bids
189. As is typical for each auction, the Commission sought comment
on the use of a minimum opening bid amount and/or reserve price, as
mandated by 47 U.S.C. 309(j). The Commission will establish minimum
opening bid amounts for Auction 108. The bidding system will not accept
bids lower than the minimum opening bids for each license. 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.
190. The Commission establishes the minimum bid amounts in Auction
108 using the total potential MHz-pops of each license offered in the
auction, rather than on available white space in each block. The
Commission bases these calculations on $0.006 per MHz-pop, with a
minimum of $500 per license. Consistent with the calculations for
upfront payments and bidding units adopted in the Auction 108
Procedures Public Notice, for the 49.5-megahertz and 50.5-megahertz
blocks, the Commission bases the calculation on 50 megahertz. For the
17.5-megahertz channel block, the calculation will be based on the 16.5
megahertz of contiguous spectrum not including the 1-megahertz guard
band. Additionally, when calculating minimum bid amounts, the
Commission rounds the results of calculations as follows: Results below
$1,000 will be rounded down to the nearest $100; results between $1,000
and $10,000 will be rounded down to the nearest $1,000; results between
$10,000 and $100,000 will be rounded down to the nearest $10,000; and
results above $100,000 will be rounded down to the nearest $100,000.
The rounding procedures will lessen the differences between minimum bid
amounts for licenses in counties with similar population instead of
reflecting relatively small differences in total potential MHz-pops
that are not necessarily representative of the available white space.
191. The minimum opening bid amounts for each license offered in
Auction 108 are set forth in the Attachment A file on the Auction 108
website at www.fcc.gov/auction/108.
2. Clock Price Increments
192. The Commission adopts the procedures regarding clock price
increments described in the Auction 108 Further Comment Public Notice.
Therefore, after bidding in the first round and before each subsequent
round, for each license, the FCC auction bidding system will 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
indicate their demand for the license during the round. As long as
aggregate demand for the license exceeds one, the start-of-round price
will be equal to the clock price from the prior round. If aggregate
demand equaled one at a price in a previous round, then the start-of-
round price for the next round will be equal to the price at which
aggregate demand equaled one. If aggregate demand was zero in the
previous round, then the start-of-round price for the next round will
not increase.
193. The Commission will set the clock price for a license for a
round by adding a percentage increment to the start-of-round price. The
Commission will set the initial increment percentage at 10% and OEA may
adjust within a range of 5% to 30% inclusive as rounds continue. The
Commission recognizes that an increment larger than the initial 10% may
be useful in managing the length of the auction, and OEA may increase
the percentage increment during the auction, but OEA will take bidding
activity into account before deciding to do so and will announce any
change in advance. To ensure that an increase in the percentage
increment does not result in an unduly large increase for a license,
the total dollar amount of the increment (the difference between the
clock price and the start-of-round price) will be capped at a certain
amount. The Commission will set this cap on the increment initially at
$10 million and OEA may adjust the cap as rounds continue. The 5% to
30% 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.
3. Intra-Round Bids
194. As described in the Auction 108 Further Comment Public Notice,
in any round after the first round, the Commission will 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 a license
changes. In placing an intra-round bid for a license, a bidder will
indicate a specific price and the changed quantity it demands (either
zero or one) if the price for the license should increase beyond that
price. For example, if a bidder has processed demand for a license at
the start-of-round price of $200, but no longer wants the license if
the price increases by more than $10, the bidder would indicate a bid
quantity of zero at a price of $210. Similarly, if the bidder wishes to
reduce its demand to zero if the price increases at all above $200, the
bidder would indicate a bid quantity of zero at the start-of-round
price of $200.
195. Intra-round bids are optional; a bidder may choose to express
its demands only at the start-of-round price or the clock price. Using
intra-round bidding will allow the auction system to use relatively
large percentage increments, thereby speeding up the auction, without
running the risk that a jump in the clock price will overshoot the
market clearing price--the point at which only one bidder demands the
license--because bidders can specify a price lower than the clock
price.
196. Intra-round bid amounts will be limited to multiples of $10
for prices below $10,000; to multiples of $100 for prices between
$10,000 and $100,000, inclusive; and to multiples of $1,000 for prices
above $100,000.
4. Proxy Bids
197. The Commission adopts the proposal to provide each bidder with
the option to use proxy bidding under the clock-1 format. Accordingly,
a bidder will be allowed to submit a proxy instruction to the bidding
system to reduce its demand for a license to zero at a price higher
than the current round's clock price. Proxy instructions to increase a
bidder's demand for a license at a given price will not be permitted.
198. Under these procedures, if a proxy instruction has been
submitted, the bidding system will automatically submit a proxy bid to
maintain the bidder's demand for the license in every subsequent round
as long as the clock price for the round is less than the proxy
instruction price. In the first round in which the clock price is
greater than or equal to the proxy instruction price, the bidding
system will submit a proxy bid on behalf of the bidder to reduce the
bidder's demand for that license to zero at the proxy instruction
price. For example, if a bidder has processed demand for a license with
a clock price of $1,000, but the bidder is willing to purchase the
license for a price up to $1,800, the bidder could submit a proxy
instruction to reduce its demand for the license to 0 at $1,800. In
that case, the bidding system will submit proxy bids to maintain the
bidder's demand for the license in each subsequent round as long as the
clock price is less than $1,800.
199. In the case that a bid to reduce demand, placed according to
proxy
[[Page 21777]]
instructions or submitted by the bidder in the round, is not applied
during bid processing, the bidding system will automatically generate a
proxy instruction at the bid price and, in the following rounds, submit
proxy bids on behalf of the bidder according to that proxy instruction.
For example, suppose that the start-of-round price for a license is
$10,000, the clock price is $12,000, and a bidder with processed demand
for the license submits a bid to reduce its demand to 0 at price
$11,500. If the bid is not applied during bid processing (e.g., because
there were no other bids for the license in the round), in the
following round the bidding system will submit a proxy bid on behalf of
the bidder to reduce demand for the license to 0 at price $11,500. The
proxy instruction preserves in the bidding system the bidder's interest
in retaining demand for the license at a price no higher than $11,500,
which may help avoid having the license sold later in the auction to
another bidder at a price less than what the initial bidder is willing
to pay.
200. In any round, a bidder can remove or modify any existing proxy
instructions or proxy bids for the round by uploading a new bid file,
including the modifications, which would replace any bids and proxy
instructions previously submitted. The system will take the last bid
file submission as that bidder's bids and proxy instructions.
201. As is the case for intra-round bid amounts, proxy instruction
prices will be limited to multiples of $10 for prices below $10,000; to
multiples of $100 for prices between $10,000 and $100,000, inclusive;
and to multiples of $1,000 for prices above $100,000. Proxy
instructions will not be publicly released either during or after the
auction.
5. Bid Types
202. Under the clock-1 auction format adopted for Auction 108, as
in other FCC spectrum clock auctions, a bidder will indicate in each
round the licenses it demands at the prices associated with the round.
Bidders will be permitted to make two types of bids: Simple bids and
switch bids.
203. A simple bid indicates a desired quantity (in this auction,
one or zero) at a price. A bidder that is willing to maintain its
demand for a license at the new clock price would bid for the license
at the clock price, indicating that it is willing to pay up to that
price, if need be, for the license. A bidder that wishes to change the
quantity it demands for a license (relative to its processed demand
from the previous round) would express the price (either the clock
price or an intra-round price) at which it wishes to change its demand.
204. A switch bid allows the bidder to request to move its demand
for a license from C1 to C2, or vice versa, within the same county at a
price for the from category (either the clock price or an intra-round
price). Switch bids are allowed only in counties with both an available
category 1 license and an available category 2 license.
205. Bids to maintain demand will always be applied by the auction
bidding system during bid processing. Simple bids to change demand and
switch bids will not necessarily be applied during bid processing.
6. Missing Bids
206. Under the clock-1 auction format, a bidder is required to
indicate its demands in every round or have a proxy instruction in
place, even if its demands at the new round's prices are unchanged from
the previous round. If a bidder does not submit a new bid for a license
for which it had processed demand from the previous round and does not
have a proxy instruction in place, the system will consider that a
missing bid.
207. Missing bids are treated by the auction bidding system as
requests to reduce demand to a quantity of zero for the license. If
these requests are applied, then a bidder's bidding activity, and its
bidding eligibility for the next round, may be reduced. Unlike in
previous FCC clock auctions for spectrum licenses, under the clock1
format for Auction 108, a bidder is permitted to enter proxy
instructions. Thus, a bidder that is unable to indicate its demands in
every round can avoid having missing bids by entering appropriate proxy
instructions.
H. Bid Processing
208. The Commission adopts bid processing procedures that the
auction bidding system will use, after each bidding round, to process
bids to change demand to determine the processed demand of each bidder
for each license and a posted price for each license that will serve as
the start-of-round price for the next round.
1. No Excess Supply Rule for Bids To Reduce Demand
209. Under the clock-1 auction format, the FCC auction bidding
system will not allow a bidder to reduce its demand for a license if
the reduction would cause aggregate demand to fall below one.
Therefore, if a bidder has been bidding for a specific license but
submits a simple bid to reduce its demand to zero for the license if
the price should increase above the price in its bid, 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 from the
C1 license to the C2 license in the same county, 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 C1 in the
county, and vice versa.
2. Eligibility Rule for Bids To Increase Demand
210. The bidding system will not allow a bidder to increase its
demands for licenses if the total number of bidding units associated
with the bidder's demands exceeds the bidder's bidding eligibility for
the round. Therefore, if a bidder submits a simple bid to add a license
for which it did not have processed demand in 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
processed activity to exceed its eligibility.
3. Processed Demand
211. The Commission adopts the procedures described in the Auction
108 Further Comment Public Notice to determine the order in which the
bidding system will process bids after a round ends. After a round
ends, the bidding system will first consider and apply all bids to
maintain demand, and then it will process bids to change demand in
order of price point, where the price point represents the percentage
of the bidding interval for the round. The bidding system will 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 will consider bids at the lowest price
point across all licenses, then look at bids at the next price point
across all licenses, and so on. As it considers each submitted bid
during bid processing, the FCC auction bidding system will determine
whether there is excess demand for a license at that point in the
processing in order to determine whether a bidder's request to reduce
demand for that license can be applied. Likewise, the auction bidding
system will 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.
212. Because in any given round some bidders may request to
increase demand
[[Page 21778]]
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, bids that were not applied because
demand would fall below one or because the bidder's activity (as
applied by the auction system) would exceed its eligibility will be
held in a queue and considered, again in price point order, if there
should be excess demand or if the bidder's activity (as applied by the
auction system) is reduced sufficiently later in the processing after
other bids are processed.
213. Therefore, once a round closes, the auction system will
process bids to change demand by first considering the bid submitted at
the lowest price point and determining whether that bid can be applied
given bidders' demands as determined at that point in the bid
processing. If the bid can be applied, the licenses that the bidder
holds at that point in the processing will be adjusted, and aggregate
demand for the license will be recalculated accordingly. If the bid
cannot be applied, the unfulfilled bid will be held in a queue to be
considered later during bid processing for that round. The FCC auction
bidding system will then consider the bid submitted at the next lowest
price point, applying it or not given the most recently determined
demands of bidders. Any unfulfilled requests will again be held in the
queue, and aggregate demand will again be recalculated. Every time a
bid is applied, the unfulfilled bids held in the queue will 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 will not carry over unfulfilled bid requests to
the next round, however. The bidding system will advise bidders of the
status of their bids when round results are released.
4. Price Determination
214. As described in the Auction 108 Further Comment Public Notice,
the FCC auction bidding system further will determine, based on
aggregate demand, the posted price for each license for the round that
will serve as the start-of-round price for the next round. The price
for a license will increase from round to round as long as there is
excess demand for the license but will not increase if only a single
bidder demands the license.
215. If, at the end of a round, the aggregate demand for a license
exceeds the supply of one, the posted price will equal the clock price
for the round. If a reduction in demand was applied during the round
and caused demand to fall to one, the posted price will be the price at
which the reduction was applied. If aggregate demand is zero, or
aggregate demand is one and no bid to reduce demand was applied for the
license, then the posted price will equal the start-of-round price for
the round. The range of acceptable bid amounts for the next round will
be set by adding the percentage increment to the posted price.
216. Under the clock-1 auction format, if a bid to reduce demand is
not applied, it is because there is not excess demand for the license
and, therefore, the posted price will not increase. Hence, a bidder
that makes a bid to reduce demand that cannot be applied will not face
a price for the license that is higher than its bid price.
217. After the bids of the round have been processed, if the
stopping rule has not been met, the FCC auction bidding system will
announce clock prices to indicate a range of acceptable bids for the
next round. Each bidder will be informed of the licenses for which it
has processed demand and of the aggregate demand for each license.
I. Winning Bids
218. Under the clock-1 auction format, a bidder with processed
demand for a license at the time the stopping rule is met will become
the winning bidder for the license. The final price for a license will
be the posted price for the final round.
V. Post-Auction Procedures
219. The public notice announcing the close of the bidding and
auction results will be released within several days after bidding has
ended in Auction 108. The Auction 108 Procedures Public Notice will
also establish the deadlines for submitting down payments, final
payments, and the long-form applications (FCC Form 601) for the
auction.
A. Down Payments
220. The Commission's rules provide that, unless otherwise
specified by public notice, within 10 business days after the release
of the auction closing public notice for Auction 108, each winning
bidder must submit sufficient funds (in addition to its upfront
payment) to bring its total amount of money on deposit with the
Commission to 20% of the net amount of its winning bids (less any
bidding credits, if applicable).
B. Final Payments
221. Each winning bidder will be required to submit the balance of
the net amount for each of its winning bids within 10 business days
after the deadline for submitting down payments.
C. Long-Form Application (FCC Form 601)
222. The Commission's rules provide that, within 10 business days
after release of the auction closing public notice, winning bidders
must electronically submit a properly completed post-auction
application (FCC Form 601), including the applicable filing fee, for
the license(s) they won through the auction.
223. A winning bidder claiming eligibility for a small business
bidding credit or a rural service provider bidding credit must
demonstrate its eligibility for the bidding credit sought in its FCC
Form 601 post-auction application. Further instructions on these and
other filing requirements will be provided to winning bidders in the
auction closing public notice for Auction 108
224. Winning bidders organized as bidding consortia must comply
with the FCC Form 601 post-auction application procedures set forth in
47 CFR 1.2107(g). Specifically, license(s) won by a consortium must be
applied for as follows: (a) An individual member of the consortium or a
new legal entity comprising two or more individual consortium members
must file for licenses covered by the winning bids; (b) each member or
group of members of a winning consortium seeking separate licenses will
be required to file a separate FCC Form 601 for its/their respective
license(s) in their legal business name; (c) in the case of a license
to be partitioned or disaggregated, the member or group filing the
applicable FCC Form 601 shall include the parties' partitioning or
disaggregation agreement with the FCC Form 601; and (d) if a designated
entity credit is sought (either small business or rural service
provider), the applicant must meet the applicable eligibility
requirements in the Commission's rules for the credit.
D. Ownership Disclosure Information Report (FCC Form 602)
225. Within 10 business days after release of the auction closing
public notice for Auction 108, each winning bidder must also comply
with the ownership reporting requirements in 47 CFR 1.913, 1.919, and
1.2112 by submitting an ownership disclosure information report for
wireless telecommunications services (FCC Form 602) with its FCC Form
601 post-auction application.
[[Page 21779]]
226. If a winning bidder already has a complete and accurate FCC
Form 602 on file in the FCC's Universal Licensing System (ULS), then it
is not necessary to file a new report, but the winning bidder must
certify in its FCC Form 601 application that the information on file
with the Commission is complete and accurate. If the winning bidder
does not have an FCC Form 602 on file, or if the form on file is not
complete and accurate, then the winning bidder must submit a new one.
227. When a winning bidder submits an FCC Form 175, ULS
automatically creates an ownership record. This record is not an FCC
Form 602, but it may be used to pre-fill the FCC Form 602 with the
ownership information submitted on the winning bidder's FCC Form 175
application. A winning bidder must review the pre-filled information
and confirm that it is complete and accurate as of the filing date of
the FCC Form 601 post-auction application before certifying and
submitting the FCC Form 602. Further instructions will be provided to
winning bidders in the auction closing public notice.
E. Tribal Lands Bidding Credit
228. As noted above, a winning bidder that intends to use its
license(s) to deploy facilities and provide services to qualifying
Tribal lands that have a wireline penetration rate equal to or below 85
percent is eligible to receive a Tribal lands bidding credit as set
forth in 47 CFR 1.2107 and 1.2110(f). A Tribal lands bidding credit is
in addition to, and separate from, any other bidding credit for which a
winning bidder may qualify.
229. Unlike other bidding credits that are requested prior to an
auction, a winning bidder applies for a Tribal lands bidding credit
after the auction when it files its FCC Form 601 post-auction
application. When initially filing the post-auction application, the
winning bidder will be required to advise the Commission whether it
intends to seek a Tribal lands bidding credit, for each license won in
a particular auction, by checking the designated box(es). After stating
its intent to seek a Tribal lands bidding credit, the winning bidder
will have 180 days from the close of the applicable post-auction
application filing window to amend its application to select the
specific qualifying Tribal lands to be served and provide the required
Tribal government certifications. Licensees receiving a Tribal lands
bidding credit are subject to performance criteria as set forth in 47
CFR 1.2110(f)(3)(vii). For additional information on the Tribal lands
bidding credit, including how the amount of the credit is calculated,
applicants should review the Commission's rulemaking proceeding
regarding Tribal lands bidding credits and related public notices.
F. Default and Disqualification
230. 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 a full and timely final payment, or is otherwise
disqualified) is liable for default payments as described in 47 CFR
1.2104(g)(2). A default 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.
231. The percentage of the applicable bid to be assessed as an
additional payment for defaults in a particular auction is established
in advance of the auction. For the reasons set forth in the Auction 108
Comment Public Notice, the Commission adopts the proposal to set the
additional default payment for Auction 108 at 15% of the applicable bid
for winning bids.
232. Finally, in the event of a default, the Commission has the
discretion to re-auction the license or offer it to the next highest
bidder (in descending order) at its final bid amount. In addition, if a
default or disqualification involves gross misconduct,
misrepresentation, or bad faith by an applicant, then the Commission
may declare the applicant and its principals ineligible to bid in
future auctions and may take any other action that it deems necessary,
including institution of proceedings to revoke any existing
authorizations held by the applicant.
G. Refund of Remaining Upfront Payment Balance
233. If a refund is due, the Bidder must request a refund in
writing with the information listed below and to the email listed
below. All refunds of upfront payment balances will be returned to the
payer of record as identified on the FCC Form 159, or on the wire
transfer, unless the payer submits written authorization instructing
otherwise. Bidders are encouraged to use the Refund Information icon
found on the Auction Application Manager page or the Refund Form link
available on the Auction Application Submit Confirmation page in the
FCC Auction Application System to access the form. After the required
information is completed on the blank form, the form should be printed,
signed, and submitted to the Commission by mail, fax, or email as
instructed below.
234. If you have elected not to access the Refund Form through the
Auction Application Manager page, the Commission is requesting that all
information listed below be supplied in writing.
Name, address, contact and phone number of Bank
ABA Number (capable to accept ACH payments)
Account Number to Credit
Name of Account Holder
FCC Registration Number (FRN)
The refund request must be submitted by fax to the Revenue &
Receivables Operations Group/Auctions at (202) 418-2843, by email to
[email protected].
Note: Refund processing generally takes up to two weeks to
complete. Bidders with questions about refunds should contact Scott
Radcliffe at (202) 418-7518 or Theresa Meeks at (202) 418-2945.
VI. Procedural Matters
A. Paperwork Reduction Act Analysis
235. The Office of Management and Budget (OMB) has approved the
information collections in the Application to Participate in an FCC
Auction, FCC Form 175. The Auction 108 Procedures Public Notice does
not contain new or substantively modified information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13. Therefore, it does not contain any new or modified
information collection burden for small business concerns with fewer
than 25 employees pursuant to the Small Business Paperwork Relief Act
of 2002, Public Law 107-198. The Commission will be submitting a non-
substantive change request to OMB concerning OMB 3060-0600 related to
the certification requirement for Auction 108 applicants adopted in the
Auction 108 Procedures Public Notice, and the Commission will not
require Auction 108 applicants to make this certification on FCC Form
175 until OMB has approved the non-substantive change request.
B. Congressional Review Act
236. The Commission has determined, and Administrator of the Office
of Information and Regulatory Affairs, Office of Management and Budget,
concurs, that this rule is non-major
[[Page 21780]]
under the Congressional Review Act, 5 U.S.C. 804(2). The Commission
will send a copy of the Auction 108 Procedures Public Notice to
Congress and the Government Accountability Office pursuant to 5 U.S.C.
801(a)(1)(A).
C. Supplemental Final Regulatory Flexibility Analysis
237. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), a Supplemental Initial Regulatory Flexibility Analysis
(Supplemental IRFA) was incorporated in the Auction 108 Comment Public
Notice released in January 2021. In February 2022, a Second
Supplemental Initial Regulatory Flexibility Analysis (Second
Supplemental IRFA) was incorporated in the Auction 108 Further Comment
Public Notice, and a Third Supplemental Initial Regulatory Flexibility
Analysis (Third Supplemental IRFA) was incorporated in the Auction 108
Revised Inventory Public Notice. The Commission sought public comment
on the proposals in all three public notices, including comments on the
three supplemental IRFAs. No comments were filed addressing the
Supplemental IRFA, Second Supplemental IRFA, or Third Supplemental
IRFA. The Auction 108 Procedures Public Notice establishes the
procedures to be used for Auction 108. The Supplemental Final
Regulatory Flexibility Analysis (Supplemental FRFA) reflects actions
taken in the Auction 108 Procedures Public Notice, and supplements the
Final Regulatory Flexibility Analyses completed by the Commission in
the 2.5 GHz Report and Order and other Commission orders pursuant to
which Auction 108 will be conducted. The present FRFA conforms to the
RFA.
238. Need for, and Objectives of, the Rules. The Auction 108
Procedures Public Notice resolves all open issues, and addresses
comments filed in response to the Auction 108 Comment Public Notice,
the Auction 108 Further Comment Public Notice, and the Auction 108
Revised Inventory Public Notice. The Auction 108 Procedures Public
Notice implements auction procedures for those entities that seek to
bid in Auction 108 to acquire new flexible-use geographic overlay
licenses in the 2.5 GHz band. Auction 108 will offer the single largest
contiguous portion of available mid-band spectrum below 3 GHz, and the
licenses made available in Auction 108 will help extend 5G service
beyond the most populated areas. The Auction 108 Procedures Public
Notice adopts procedural rules and terms and conditions governing
Auction 108, and the post-auction application and payment processes, as
well as sets the minimum opening bid amounts for new flexible-use
overlay licenses in the 2.5 GHz band that will be offered in Auction
108.
239. To promote the efficient and fair administration of the
competitive bidding process for all Auction 108 participants, the
Commission adopts the following procedures for Auction 108:
A requirement that any applicant seeking to participate in
Auction 108 certify in its short-form application, under penalty of
perjury, that it has read the public notice adopting procedures for
Auction 108 and that it has familiarized itself with those procedures
and the requirements for a license and operating facilities in the 2.5
GHz band;
provision of discretionary authority to OEA, in
conjunction with WTB, to delay, suspend, or cancel bidding in Auction
108 for any reason that affects the ability of the competitive bidding
process to be conducted fairly and efficiently;
establishment of bidding credit caps for eligible small
businesses, very small businesses, and rural service providers in
Auction 108;
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
license areas 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 108, (3) any 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 47 CFR 1.2104(g)(2)in the event that a winning bidder defaults or
is disqualified after the auction;
a specific upfront payment amount for each license
available in Auction 108;
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 license;
establishment of minimum opening bid amounts based on
$0.006 per MHz-pop, with a minimum of $500 per license;
use of an ascending clock auction format for Auction 108
under which each qualified bidder will indicate in successive clock
bidding rounds its demand for the single frequency-specific license in
each category in each county. Categories are determined based on the
framework set forth in the 2.5 GHz Report and Order, in which the 49.5
megahertz block is bidding category 1 (C1); the 50.5 megahertz block is
bidding category 2 (C2); and the 17.5 megahertz block is bidding
category 3 (C3);
use of a simultaneous stopping rule for Auction 108, under
which all licenses remain available for bidding until bidding stops on
every license;
retention by OEA of discretion to adjust the bidding
schedule as necessary in order to manage the pace of Auction 108;
permission for bidders to make two types of bids: Simple
bids and switch bids. A simple bid indicates a desired quantity (one or
zero) 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
license from C1 to C2, or vice versa, within the same county at a price
for the from category (either the clock price or an intra-round price);
use of information procedures which would make public
after each round of Auction 108, for each category in each county, the
aggregate demand, the posted price of the last completed round, and the
clock price for the next round;
use of an activity rule that would require bidders to be
active on between 90% and 100% of their bidding eligibility in all
clock rounds with the activity requirement percentage initially set at
95%;
use of a contingent bidding limit that would allow a
bidder to submit bids with associated bidding activity greater than its
current bidding eligibility, and establishment of an initial contingent
bidding percentage at 120%, which would be subject to change in
subsequent rounds within a range of 100% to 140%;
a specific minimum opening bid amount for licenses
available in Auction 108;
an option to permit a bidder to submit a proxy instruction
to reduce its demand for a license to zero at a price higher than the
current round's clock price and a requirement that bidders indicate
their demands in every round or submit appropriate proxy instructions;
establishment of acceptable bid amounts, including clock
price increments and intra-round bids, along with a methodology for
calculating such amounts; and
establishment of a methodology for processing bids and
requests to reduce and increase demand subject to the no
[[Page 21781]]
excess supply rule for bids to reduce demand and the eligibility rule
for bids to increase demand.
240. The procedures for the conduct of Auction 108 constitute the
more specific implementation of the competitive bidding rules
contemplated by parts 1 and 27 of the Commission's rules and the
underlying rulemaking orders, including the 2.5 GHz Report and Order,
and relevant competitive bidding orders, and are fully consistent
therewith.
241. Summary of Significant Issues Raised by Public Comments in
Response to the IRFA. There were no comments filed that specifically
address the information in the Supplemental IRFA, Second Supplemental
IRFA, or Third Supplemental IRFA. One commenter, Mile One styled a
proposal for the Commission to facilitate ``pairing infrastructure
providers and small innovators in commercial market trial programs'' as
a comment to the Auction 108 Comment Public Notice Supplemental IRFA.
The substance of this proposal, however, does not specifically address
the information in the Supplemental IRFA or the procedures and policies
proposed in the Auction 108 Comment Public Notice and is outside of the
scope of the procedures established in the Auction 108 Further Comment
Public Notice and the Auction 108 Revised Inventory Public Notice.
242. Response to Comments by the Chief Counsel for Advocacy of the
Small Business Administration. Pursuant to the Small Business Jobs Act
of 2010, which amended the RFA, the Commission is required to respond
to any comments filed by the Chief Counsel for Advocacy of the SBA and
to provide a detailed statement of any changes made to the proposed
procedures as a result of those comments. The Chief Counsel did not
file any comments in response to the procedures that were proposed in
the Auction 108 Comment Public Notice, Auction 108 Further Comment
Public Notice, or Auction 108 Revised Inventory Public Notice.
243. Description and Estimate of the Number of Small Entities to
Which the Rules Will Apply. The RFA directs agencies to provide a
description of, and, where feasible, an estimate of the number of small
entities that may be affected by the rules and policies adopted in the
Auction 108 Procedures Public Notice. 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.
244. As noted above, a regulatory flexibility analysis was
incorporated into the 2.5 GHz Report and Order. That order provides the
underlying authority for the procedures proposed in the Auction 108
Comment Public Notice, Auction 108 Further Comment Public Notice, and
Auction 108 Revised Inventory Public Notice, and that are adopted in
the Auction 108 Procedures Public Notice for Auction 108. In the 2.5
GHz Report and Order Regulatory Flexibility Analysis, the Commission
described in detail the small entities that might be significantly
affected. In the Auction 108 Procedures Public Notice, in the
Supplemental FRFA, the Commission incorporates by reference the
descriptions and estimates of the number of small entities from the
regulatory flexibility analysis in the 2.5 GHz Report and Order.
245. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities. The Commission designed the
auction application process to minimize reporting and compliance
requirements for small businesses and other 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, and to having reviewed the Auction 108 Procedures
Public Notice. 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 or provide the additional showings and more detailed
demonstrations required of a winning bidder.
246. Applicants that wish to participate in Auction 108 are
required to certify that they have read the Auction 108 Procedures
Public Notice and the procedures adopted in the Auction 108 Procedures
Public Notice for Auction 108, and are familiar with the procedures and
requirements for obtaining a license and operating facilities in the
2.5 GHz band. The certification requirement allows applicants to
educate themselves about the procedures for participation in Auction
108, and their obligation to stay abreast of relevant information
before bidding in Auction 108 begins, and throughout the entire Auction
108 process. Adoption of this requirement may help small entities and
other applicants avoid, among other things, rule violations or
technical error that could prevent them from becoming a qualified
bidder or obtaining a license after placing a winning bid. Moreover,
the requirement will ensure that small entity applicants are aware of
the detailed educational materials, such as interactive, online
tutorials and technical guides, made available by the Commission to
enhance the understanding of the pre-bidding and bidding processes, and
should minimize the need for small entity applicants to hire outside
engineers, legal counsel, or other auction experts.
247. Some of the resources that the Commission makes available to
small entities and other applicants are discussed above. In light of
all of the information, resources, and guidance made available to
potential and actual participants at no cost, the Commission does not
expect that the processes and procedures adopted in the Auction 108
Procedures Public Notice will require small entities to hire attorneys,
engineers, consultants, or other professionals to participate in
Auction 108 and comply with the procedures they adopt. Although, the
Commission cannot quantify the cost of compliance with the procedures
adopted for Auction 108, they do not believe that the cost of
compliance will unduly burden small entities that choose to participate
in the auction. The Commission notes that the processes and procedures
are consistent with existing Commission policies and procedures used in
prior auctions. Thus, some small entities may already be familiar with
such procedures and have the processes and procedures in place to
facilitate compliance resulting in minimal incremental costs to comply.
For those small entities that may be new to the Commission's auction
process, the various resources that will be made available, including,
but not limited to, the mock auction, remote electronic bidding, and
access to hotlines for both technical and auction assistance, should
help facilitate participation without the need to hire professionals.
These resources are in addition to the resources discussed above that
small entities and other applicants will be able to access. By
providing these resources as well as the resources
[[Page 21782]]
discussed below, the Commission expects small entities that use the
available resources to experience lower participation and compliance
costs.
248. 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 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.
249. The Commission has taken steps to minimize any economic impact
of its auction procedures on small entities through, among other
things, the many free resources the Commission provides to potential
auction participants. As mentioned above, consistent with the past
practices in prior auctions, small entities that are potential
participants will have access to detailed educational information and
Commission personnel to help guide their participation in Auction 108,
which should alleviate any need to hire professionals. For example,
small entities and other would-be participants will also be provided
with various materials on the pre-bidding process in advance of the
short-form application filing window, which includes step-by-step
instructions on how to complete FCC Form 175. The Commission has taken
steps to ensure that the application system is simple to use, and that
FCC Form 175 is easy to complete. For example, the application will
pre-fill ownership information that an applicant has previously
provided in an FCC Form 175 for prior auctions or in an FCC Form 602
filing.
250. In addition, small entities will have access to the web-based,
interactive online tutorials produced by Commission staff to
familiarize themselves with auction procedures, filing requirements,
bidding procedures, and other matters related to an auction. The
Commission has also made available resources to assist applicants in
conducting due diligence research regarding potential encumbrances in
the 2.5 GHz band, including a mapping tool to help identify and view
existing licenses and Rural Tribal Priority Window applications in the
Commission's Universal Licensing System (ULS) database.
251. After the initial application stage, auction participants
whose applications have been deemed incomplete have the opportunity to
correct certain errors. An applicant whose application is deemed
incomplete will receive a letter from the Commission identifying the
specific errors in their application and providing contact information
for a specific FCC staff member who has been assigned to provide
assistance. Additionally, after the application process is complete and
the Commission has identified the applicants who will be qualified to
bid in Auction 108, all qualified bidders for Auction 108 will
automatically be registered for the auction, and registration materials
will be distributed prior to the auction by overnight delivery.
Applicants are not required to take any further steps until bidding
commences.
252. 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. Eligible bidders
will have access to a user guide for the bidding system, bidding file
formats, and an online bidding procedures tutorial in advance of the
mock auction. Further, the Commission will conduct Auction 108
electronically over the internet using a web-based auction system that
eliminates the need for small entities and other bidders to be
physically present in a specific location. These mechanisms are made
available to facilitate participation in Auction 108 by all eligible
bidders and may result in significant cost savings for small entities
that use them. 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 businesses.
253. Small entities and other auction participants may seek
clarification of, or guidance on, complying with competitive bidding
rules and procedures, reporting requirements, and using the bidding
system at any stage of the auction process. Additionally, an FCC
Auctions Hotline will provide small entities one-on-one access to
Commission staff for information about the auction process and
procedures. Further, the FCC Auctions Technical Support Hotline is
another resource that provides technical assistance to applicants,
including small entities, on issues such as access to or navigation
within the electronic FCC Form 175 and use of the bidding system.
254. 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 the start of bidding, and at the
close of Auction 108, OEA and WTB will post public notices on the
Auctions website that articulate the procedures and deadlines for the
auction. The Commission makes this information easily accessible and
without charge to benefit all Auction 108 applicants, including small
entities, thereby lowering their administrative costs to comply with
the Commission's competitive bidding rules.
255. Another step taken to minimize the economic impact for small
entities participating in Auction 108 is the Commission's adoption of
bidding credits for small businesses and rural service providers. In
accordance with the service rules applicable to the 2.5 GHz band
licenses to be offered in Auction 108, bidding credit discounts will be
available to eligible small businesses and small business consortia on
the following basis: (1) A bidder with attributed average annual gross
revenues that do not exceed $55 million for the preceding five years is
eligible to receive a 15% discount on its overall payment; or (2) a
bidder with attributed average annual gross revenues that do not exceed
$20 million for the preceding five years is eligible to receive a 25%
discount on its overall payment. Eligible applicants can receive only
one of the available small business bidding credits--not both.
256. An eligible rural service provider may request a 15% discount
on its overall payment using a rural service provider bidding credit.
To be eligible for a rural service provider bidding credit, an
applicant must: (1) Be a service provider that is in the business of
providing commercial communications services and, together with its
controlling interests, affiliates, and the affiliates of its
controlling interests, has fewer than 250,000 combined wireless,
wireline, broadband, and cable subscribers; and (2) serve predominantly
rural areas. Rural areas are defined as counties with a population
density of 100 or fewer persons per square mile. Eligible applicants
can request either a small business bidding credit or a rural service
provider bidding credit, but not both.
[[Page 21783]]
257. The total bidding credit discount that may be awarded to an
eligible small business is capped at $25 million and there is a $10
million cap on the total bidding credit discount that may be awarded to
an eligible rural service provider. In addition, to create parity among
eligible small businesses and rural service providers competing against
each other in smaller markets, the Commission adopts a $10 million cap
on the overall amount of bidding credits that any winning designated
entity may apply to winning licenses in markets with a population of
500,000 or less. Based on the technical characteristics of the 2.5 GHz
band and their analysis of past auction data, the Commission
anticipates that the 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. While
eligible entities will have the opportunity to compete at auction
without being unduly constrained, the caps are reasonable enough to
ensure that ineligible entities are not encouraged to undercut the
Commission's rules, thereby achieving the Commission's dual statutory
goals of benefitting designated entities and at the same time
preventing unjust enrichment.
258. A Tribal lands bidding credit will also be available to
winning bidders that intend to deploy facilities and provide services
to qualifying Tribal lands that have a wireline penetration rate equal
to or below 85 percent. The Tribal lands bidding credit is in addition
to, and separate from, any other bidding credit winning bidders may
qualify to claim. Therefore, small entities that are eligible for the
small or rural bidding credit can also claim the Tribal lands bidding
credit, provided they meet the requirements of 47 CFR 1.2107 and
1.2110(f).
259. These procedures for the conduct of Auction 108 constitute the
more specific implementation of the competitive bidding rules
contemplated by parts 1 and 27 of the Commission's rules and the
underlying rulemaking orders, including the 2.5 GHz Report and Order
and relevant competitive bidding orders, and are fully consistent
therewith.
260. Report to Congress. The Commission will send a copy of the
Auction 108 Procedures Public Notice, in a report to Congress pursuant
to the Congressional Review Act. In addition, the Commission will send
a copy of the Auction 108 Procedures Public Notice, including the
Supplemental FRFA to the Chief Counsel for Advocacy of the SBA.
Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2022-07602 Filed 4-12-22; 8:45 am]
BILLING CODE 6712-01-P