**PUBLIC NOTICE**

**FEDERAL COMMUNICATIONS COMMISSION**

**445 12th STREET SW**

**WASHINGTON DC 20554**

#######  {#section .unnumbered}

####### DA 01-593 {#da-01-593 .unnumbered}

**March 7, 2001**

###### AUCTION OF LICENSES FOR THE  {#auction-of-licenses-for-the .unnumbered}

**LOWER AND UPPER PAGING BANDS**

##### SCHEDULED FOR JUNE 26, 2001 {#scheduled-for-june-26-2001 .unnumbered}

**COMMENT SOUGHT**

**ON RESERVE PRICES OR MINIMUM OPENING BIDS AND**

###### OTHER AUCTION PROCEDURAL ISSUES {#other-auction-procedural-issues .unnumbered}

**Report No. AUC‑01-40-A (Auction No. 40)**

By this Public Notice, the Wireless Telecommunications Bureau ("Bureau")
announces the auction of 14,000 licenses in the lower paging bands
(35-36 MHz, 43-44 MHz, 152-159 MHz, and 454-460 MHz) ("Auction No. 40")
to commence on June 26, 2001.[^1] In addition, Auction No. 40 will
include 1,514 licenses in the upper paging bands (929-931 MHz), that
remained unsold in the first paging auction ("Auction No. 26"), which
closed on March 2, 2000.

In the *Paging Reconsideration Order*, the Commission concluded that the
lower bands licenses should be awarded in each of the 175 geographic
areas known as Economic Areas (EAs), and the upper band licenses awarded
in each of the 51 geographic areas known as Major Economic Areas (MEAs).
[^2] These EAs and MEAs both encompass the United States, Guam and
Northern Mariana Islands, Puerto Rico and the United States Virgin
Islands, and American Samoa.

The following tables contain the Block/Frequency Cross-Reference List
for the paging bands:

35 MHz Lower Bands Unpaired Paging Channels

  ----------- --------------- ----------- --------------- ----------- --------------- ----------- ---------------
  **Block     **Frequency**   **Block     **Frequency**   **Block     **Frequency**   **Block     **Frequency**
  (License                    (License                    (License                    (License    
  Suffix)**                   Suffix)**                   Suffix)**                   Suffix)**   

  CA          35.19 - 35.21   CE          35.29 - 35.31   CI          35.45 - 35.47   CM          35.57 - 35.59

  CB          35.21 - 35.23   CF          35.33 - 35.35   CJ          35.49 - 35.51   CN          35.59 - 35.61

  CC          35.23 - 35.25   CG          35.37 - 35.39   CK          35.53 - 35.55   CO          35.61- 35.63

  CD          35.25 - 35.27   CH          35.41- 35.43    CL          35.55 - 35.57   CP          35.65 - 35.67
  ----------- --------------- ----------- --------------- ----------- --------------- ----------- ---------------

43 MHz Lower Bands Unpaired Paging Channels

  ----------- --------------- ----------- --------------- ----------- --------------- ----------- ---------------
  **Block     **Frequency**   **Block     **Frequency**   **Block     **Frequency**   **Block     **Frequency**
  (License                    (License                    (License                    (License    
  Suffix)**                   Suffix)**                   Suffix)**                   Suffix)**   

  DA          43.19 - 43.21   DE          43.29 - 43.31   DI          43.45 - 43.47   DM          43.57 - 43.59

  DB          43.21 - 43.23   DF          43.33 - 43.35   DJ          43.49 - 43.51   DN          43.59 - 43.61

  DC          43.23 - 43.25   DG          43.37 - 43.39   DK          43.53 - 43.55   DO          43.61 - 43.63

  DD          43.25 - 43.27   DH          43.41 - 43.43   DL          43.55 - 43.57   DP          43.65 - 43.67
  ----------- --------------- ----------- --------------- ----------- --------------- ----------- ---------------

152 MHz Lower Bands Unpaired Paging Channels

  ----------- --------------------------- ----------- ----------------------------
  **Block     **Frequency**               **Block     **Frequency**
  (License                                (License    
  Suffix)**                               Suffix)**   

  EA          152.230 - 152.250           EC          158.090 - 158.110

  EB          152.830 - 152.850           ED          158.690 - 158.710
  ----------- --------------------------- ----------- ----------------------------

152 MHz Lower Bands Paired Paging Channels

  ----------- --------------------------- ----------- ----------------------------
  **Block     **Frequency**               **Block     **Frequency**
  (License                                (License    
  Suffix)**                               Suffix)**   

  FA          152.015-152.045 /           FJ          152.555-152.585 /
              158.475-158.505                         157.815-157.845

  FB          152.045-152.075 /           FK          152.585-152.615 /
              158.505-158.535                         157.845-157.875

  FC          152.075-152.105 /           FL          152.615-152.645 /
              158.535-158.565                         157.875-157.905

  FD          152.105-152.135 /           FM          152.645-152.685 /
              158.565-158.595                         157.905-157.935

  FE          152.135-152.165 /           FN          152.685-152.705 /
              158.595-158.625                         157.935-157.965

  FF          152.165-152.195 /           FO          152.705-152.735 /
              158.625-158.655                         157.965-157.995

  FG          152.195-152.225 /           FP          152.735-152.765 /
              158.655-158.685                         157.995-158.025

  FH          152.495-152.525 /           FQ          152.765-152.795 /
              157.755-157.785                         158.025-158.055

  FI          152.525-152.555 /           FR          152.795-152.825 /
              157.785-157.815                         158.055-158.085
  ----------- --------------------------- ----------- ----------------------------

454 MHz Lower Bands Paired Paging Channels

  ----------- ---------------------------- ----------- ----------------------------
  **Block     **Frequency**                **Block     **Frequency**
  (License                                 (License    
  Suffix)**                                Suffix)**   

  GA          454.0125-454.0375 /          GN          454.3375-454.3625 /
              459.0125-459.0375                        459.3375-459.3625

  GB          454.0375-454.0625 /          GO          454.3625-454.3875 /
              459.0375-459.0625                        459.3625-459.3875

  GC          454.0625-454.0875 /          GP          454.3875-454.4125 /
              459.0625-459.0875                        459.3875-459.4125

  GD          454.0875-454.1125 /          GQ          454.4125-454.4375 /
              459.0875-459.1125                        459.4125-459.4375

  GE          454.1125-454.1375 /          GR          454.4375-454.4625 /
              459.1125-459.1375                        459.4375-459.4625

  GF          454.1375-454.1625 /          GS          454.4625-454.4875 /
              459.1375-459.1625                        459.4625-459.4875

  GG          454.1625-454.1875 /          GT          454.4875-454.5125 /
              459.1625-459.1875                        459.4875-459-5125

  GH          454.1875-454.2125 /          GU          454.5125-454.5375 /
              459.1875-459.2125                        459.5125-459.5375

  GI          454.2125-454.2375 /          GV          454.5375-454.5625 /
              459.2125-459.2375                        459.5375-459.5625

  GJ          454.2375-454.2625 /          GW          454.5625-454.5875 /
              459.2375-459.2625                        459.5625-459.5875

  GK          454.2625-454.2875 /          GX          454.5875-454.6125 /
              459.2625-459.2875                        459.5875-459.6125

  GL          454.2875-454.3125 /          GY          454.6125-454.6375 /
              459.2875-459.3125                        459.6125-459.6375

  GM          454.3125-454.3375 /          GZ          454.6375-454.6625 /
              459.3125-454.3375                        459.6375-459.6625
  ----------- ---------------------------- ----------- ----------------------------

929-931 MHz Upper Bands Paging Channels

  ----------- --------------- ------------- --------------- ----------- --------------- ----------- ---------------
  **Block     **Frequency**   **Block       **Frequency**   **Block     **Frequency**   **Block     **Frequency**
  (License                    (License                      (License                    (License    
  Suffix)**                   Suffix)**                     Suffix)**                   Suffix)**   

  A           929.0125        AA            931.0125        AN          931.3375        BA          931.6625

  B           929.1125        AB            931.0375        AO          931.3625        BB          931.6875

  C           929.2375        AC            931.0625        AP          931.3875        BC          931.7125

  D           929.3125        AD            931.0875        AQ          931.4125        BD          931.7375

  E           929.3875        AE            931.1125        AR          931.4375        BE          931.7625

  F           929.4375        AF            931.1375        AS          931.4625        BF          931.7875

  G           929.4625        AG            931.1625        AT          931.4875        BG          931.8125

  H           929.6375        AH            931.1875        AU          931.5125        BH          931.8375

  I           929.6875        AI            931.2125        AV          931.5375        BI          931.8625

  J           929.7875        AJ            931.2375        AW          931.5625        BJ          931.9625

  K           929.9125        AK            931.2625        AX          931.5875        BK          931.9875

  L           929.9625        AL            931.2875        AY          931.6125                    

                              AM            931.3125        AZ          931.6375                    
  ----------- --------------- ------------- --------------- ----------- --------------- ----------- ---------------

(*Note: For Auction No. 40, licenses are not available in every block
listed in the above 929-931 MHz Upper Bands Paging Channels table in
every market as the Commission sold 985 upper bands licenses in Auction
No. 26. See Attachment A to determine what licenses will be offered for
sale in Auction No. 40*.)

The Balanced Budget Act of 1997 requires the Commission to "ensure that,
in the scheduling of any competitive bidding under this subsection, an
adequate period is allowed . . . before issuance of bidding rules, to
permit notice and comment on proposed auction procedures . . . ."[^3]
Consistent with the provisions of the Balanced Budget Act and to ensure
that potential bidders have adequate time to familiarize themselves with
the specific rules that will govern the day-to-day conduct of an
auction, the Commission directed the Bureau, under its existing
delegated authority,[^4] to seek comment on a variety of
auction-specific procedures prior to the start of each auction.[^5] We
therefore seek comment on the following issues relating to Auction No.
40.

# Auction Structure

##  Simultaneous Multiple Round Auction Design

We propose to award the licenses in a single, simultaneous
multiple-round auction. As described further below, this methodology
offers every license for bid at the same time with successive bidding
rounds in which bidders may place bids. We seek comment on this
proposal.

##  Upfront Payments and Initial Maximum Eligibility 

The Bureau has been delegated authority and discretion to determine an
appropriate upfront payment for each license being auctioned, taking
into account such factors as the population in each geographic license
area, and the value of similar spectrum.[^6] As described further below,
the upfront payment is a refundable deposit made by each bidder to
establish eligibility to bid on licenses. Upfront payments related to
the specific spectrum subject to auction protect against frivolous or
insincere bidding and provide the Commission with a source of funds from
which to collect payments owed at the close of the auction.[^7] For
Auction No. 40, we propose to make the upfront payments equal to the
minimum opening bids, which are established based on similar facts as
described in section II.B, below. The specific upfront payments for each
license are set forth in Attachment A. We seek comment on this proposal.

We further propose that the amount of the upfront payment submitted by a
bidder will determine the number of bidding units on which a bidder may
place bids -- this limit is a bidder's "maximum initial eligibility."
Each license is assigned a specific number of bidding units equal to the
upfront payment listed in Attachment A, on a bidding unit per dollar
basis. This number does not change as prices rise during the auction. A
bidder's upfront payment is not attributed to specific licenses. Rather,
a bidder may place bids on any combination of licenses as long as the
total number of bidding units associated with those licenses does not
exceed its maximum initial eligibility. Eligibility cannot be increased
during the auction. Thus, in calculating its upfront payment amount, an
applicant must determine the *maximum* number of bidding units it may
wish to bid on (or hold high bids on) in any single round, and submit an
upfront payment covering that number of bidding units. We seek comment
on this proposal.

## Activity Rules

In order to ensure that the auction closes within a reasonable period of
time, an activity rule requires bidders to bid actively on a percentage
of their maximum bidding eligibility during each round of the auction
rather than waiting until the end to participate. A bidder that does not
satisfy the activity rule will either lose bidding eligibility in the
next round or must use an activity rule waiver (if any remain).

We propose to divide the auction into three stages, each characterized
by an increased activity requirement. The auction will start in Stage
One. We propose that the auction will generally advance to the next
stage (*i.e.*, from Stage One to Stage Two, and from Stage Two to Stage
Three) when the auction activity level, as measured by the percentage of
bidding units receiving new high bids, is approximately ten percent or
below for three consecutive rounds of bidding in Stages One and Two.
However, we further propose that the Bureau retain the discretion to
change stages unilaterally by announcement during the auction. In
exercising this discretion, the Bureau will consider a variety of
measures of bidder activity including, but not limited to, the auction
activity level, the percentages of licenses (as measured in bidding
units) on which there are new bids, the number of new bids, and the
percentage increase in revenue. We seek comment on these proposals.

We propose the following activity requirements:

**Stage One**: In each round of the first stage of the auction, a bidder
desiring to maintain its current eligibility is required to be active on
licenses representing at least 80 percent of its current bidding
eligibility. Failure to maintain the requisite activity level will
result in a reduction in the bidder's bidding eligibility in the next
round of bidding (unless an activity rule waiver is used). During Stage
One, reduced eligibility for the next round will be calculated by
multiplying the current round activity by five-fourths (5/4).

**Stage Two**: In each round of the second stage, a bidder desiring to
maintain its current eligibility is required to be active on 90 percent
of its current bidding eligibility. During Stage Two, reduced
eligibility for the next round will be calculated by multiplying the
current round activity by ten-ninths (10/9).

**Stage Three**: In each round of the third stage, a bidder desiring to
maintain its current eligibility is required to be active on 98 percent
of its current bidding eligibility. In this final stage, reduced
eligibility for the next round will be calculated by multiplying the
current round activity by fifty/forty-ninths (50/49).

We seek comment on these proposals.

## Activity Rule Waivers and Reducing Eligibility

Use of an activity rule waiver preserves the bidder's current bidding
eligibility despite the bidder's activity in the current round being
below the required minimum level. An activity rule waiver applies to an
entire round of bidding and not to a particular license. Activity
waivers are principally a mechanism for auction participants to avoid
the loss of auction eligibility in the event that exigent circumstances
prevent them from placing a bid in a particular round.

The FCC auction system assumes that bidders with insufficient activity
would prefer to use an activity rule waiver (if available) rather than
lose bidding eligibility. Therefore, the system will automatically apply
a waiver (known as an "automatic waiver") at the end of any bidding
period where a bidder's activity level is below the minimum required
unless: (1) there are no activity rule waivers available; or (2) the
bidder overrides the automatic application of a waiver by reducing
eligibility, thereby meeting the minimum requirements.

A bidder with insufficient activity may wish to reduce its bidding
eligibility rather than use an activity rule waiver. If so, the bidder
must affirmatively override the automatic waiver mechanism during the
bidding period by using the reduce eligibility function in the bidding
software. In this case, the bidder's eligibility is permanently reduced
to bring the bidder into compliance with the activity rules as described
above. Once eligibility has been reduced, a bidder will not be permitted
to regain its lost bidding eligibility.

A bidder may proactively use an activity rule waiver as a means to keep
the auction open without placing a bid. If a bidder submits a proactive
waiver (using the proactive waiver function in the bidding software)
during a bidding period in which no bids are submitted, the auction will
remain open and the bidder's eligibility will be preserved. An automatic
waiver invoked in a round in which there are no new valid bids will not
keep the auction open.

We propose that each bidder in Auction No. 40 be provided with five
activity rule waivers that may be used at the bidder's discretion during
the course of the auction as set forth above. We seek comment on this
proposal.

## Information Relating to Auction Delay, Suspension, or Cancellation

For Auction No. 40, we propose that, by public notice or by announcement
during the auction, the Bureau may delay, suspend, or cancel the auction
in the event of natural disaster, technical obstacle, evidence of an
auction security breach, unlawful bidding activity, administrative or
weather necessity, or for any other reason that affects the fair and
competitive conduct of competitive bidding.[^8] In such cases, the
Bureau, in its sole discretion, may elect to resume the auction starting
from the beginning of the current round, resume the auction starting
from some previous round, or cancel the auction in its entirety. Network
interruption may cause the Bureau to delay or suspend the auction. We
emphasize that exercise of this authority is solely within the
discretion of the Bureau, and its use is not intended to be a substitute
for situations in which bidders may wish to apply their activity rule
waivers. We seek comment on this proposal.

## F. Information Available to Bidders During the Course of the Auction {#f.-information-available-to-bidders-during-the-course-of-the-auction .unnumbered}

In the *Paging Second Report and Order*, the Commission concluded that,
due to the large number of licenses to be auctioned, limiting the
disclosure of information to bidders during the course of paging
auctions (*e.g.*, revealing only high bids and total number of bids on
each license and withholding bidder identities) might help to speed the
pace of the auctions.[^9] In the *Paging Reconsideration Order*, the
Commission directed the Bureau to seek further comment on this issue.
Based on its experience in Auction No. 26, in which the information was
disclosed, the Bureau tentatively concludes that it is unnecessary to
withhold bidder identities in Auction No. 40. We seek comment on this
tentative conclusion. In addition, as in Auction No. 26, we propose to
disclose all information relating to the bids during Auction No. 40
after each round of bidding closes, including all bids and withdrawals
placed in each round, the identity of the bidder placing each bid or
withdrawal, and the net and gross amounts of each bid or withdrawal. We
seek comment on this proposal.

# Bidding Procedures

##  Round Structure

The Commission will use its Automated Auction System to conduct the
electronic simultaneous multiple round auction format for Auction No.
40. In contrast to prior auctions, Auction No. 40 will be conducted over
the Internet. However, the Bureau's wide area network will be available
at the standard charge, as in prior auctions. Prospective bidders
concerned about their access to the Internet may want to establish a
connection to the Bureau's wide area network as a backup. Full
information regarding how to establish such a connection, and related
charges, will be provided in the public notice announcing details of
auction procedures. In past auctions, we have used the timing of bids to
select a high bidder when multiple bidders submit identical high bids on
a license in a given round. Given that bidders will access the Internet
at differing speeds, we will not use this procedure in Auction No. 40.
For Auction No. 40, we propose to use a random number generator to
select a high bidder from among such bidders.[^10] As with prior
auctions, remaining bidders will be able to submit higher bids in
subsequent rounds. The initial bidding schedule will be announced in a
public notice to be released at least one week before the start of the
auction, and will be included in the registration mailings. The
simultaneous multiple round format will consist of sequential bidding
rounds, each followed by the release of round results. Details regarding
the location and format of round results will be included in the same
public notice.

The Bureau has 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. The
Bureau may increase or decrease the amount of time for the bidding
rounds and review periods, or the number of rounds per day, depending
upon the bidding activity level and other factors. We seek comment on
this proposal.

## Reserve Price or Minimum Opening Bid

The Balanced Budget Act calls upon the Commission to prescribe methods
for establishing a reasonable reserve price or a minimum opening bid
when FCC licenses are subject to auction, unless the Commission
determines that a reserve price or minimum bid is not in the public
interest.[^11] Consistent with this mandate, the Commission has directed
the Bureau to seek comment on the use of a minimum opening bid and/or
reserve price prior to the start of each auction.[^12]

Normally, a reserve price is an absolute minimum price below which an
item will not be sold in a given auction. Reserve prices can be either
published or unpublished. A minimum opening bid, on the other hand, is
the minimum bid price set at the beginning of the auction below which no
bids are accepted. It is generally used to accelerate the competitive
bidding process. Also, the auctioneer often has the discretion to lower
the minimum opening bid amount later in the auction. It is also possible
for the minimum opening bid and the reserve price to be the same amount.

In light of the Balanced Budget Act's requirements, the Bureau proposes
to establish minimum opening bids for Auction No. 40. The Bureau
believes a minimum opening bid, which has been utilized in other
auctions, is an effective auction tool.[^13]

Because multiple licenses in the same geographic area are being
auctioned at the same time, under the same general conditions, the
Commission believes that it is appropriate to use a common baseline to
establish the minimum opening bid formula for all the licenses in the
auction. The gross high bids from the prior 929-931 MHz Paging Auction
(No. 26) provide the most comprehensive paging baseline. Therefore, we
propose to base the minimum opening bid for each license available in
Auction No. 40 on the average of the corresponding gross high bids
received in Auction No. 26, as follows:

-   For a license being auctioned by MEA, the minimum opening bid will
    be 20% of the average gross high bid received in Auction No. 26 in
    the same MEA.

```{=html}
<!-- -->
```
-   For a license being auctioned by EA, the minimum opening bid will be
    the EA population multiplied by 20% of the gross average dollars per
    population received in Auction No. 26 for the corresponding MEA.

The Commission will set a "floor" for minimum opening bids at \$1000 for
licenses in the upper paging bands (929-931 MHz) and \$500 for the
licenses in the lower paging bands (35-36 MHz, 43-44 MHz, 152-159 MHz,
and 454-460 MHz).

This formula is intended to apply to all geographic paging licenses in
Auction No. 40, and takes into account considerations discussed above.
The specific proposed minimum opening bid for each license is set forth
in Attachment A. We seek comment on this proposal.

If commenters believe that these minimum opening bids will result in
substantial numbers of unsold licenses, or are not reasonable amounts,
or should instead operate as reserve prices, they should explain why
this is so, and comment on the desirability of an alternative approach.
Commenters are advised to support their claims with valuation analyses
and suggested reserve prices or minimum opening bid levels or formulas.
In establishing the minimum opening bids, we particularly seek comment
on such factors as the amount of spectrum being auctioned, levels of
incumbency, the availability of technology to provide service, the size
of the geographic service areas, issues of interference with other
spectrum bands and any other relevant factors that could reasonably have
an impact on valuation of the paging bands. Alternatively, comment is
sought on whether, consistent with the Balanced Budget Act, the public
interest would be served by having no minimum opening bid or reserve
price.

## Minimum Acceptable Bids and Bid Increments 

In each round, eligible bidders will be able to place acceptable bids on
a given license in any of ten different amounts.[^14] The Automated
Auction System interface will list as acceptable bids for each license a
minimum acceptable bid and nine higher bids equal to the minimum
acceptable bid plus one to nine times a defined increment. Until a bid
has been placed on a license, the minimum acceptable bid for that
license will be equal to its minimum opening bid. In the rounds after an
acceptable bid is placed on a license, the minimum acceptable bid for
that license will be equal to the standing high bid plus the defined
increment.

[]{.mark}

For Auction No. 40, we propose to set the defined increment for each
license based on a percentage of the standing high bid on the license
or, if no bid has been placed on the license, a percentage of the
minimum opening bid for the license. The defined increment will be
calculated as follows. Presuming, for example, that the percentage being
used is 20 percent, we will multiply the standing high bid (or, if no
standing high bid exists for the particular license, the minimum opening
bid) by 1.2. (If the percentage being used is 30 percent, we would
multiply by 1.3, etc.) We will round the result to the nearest \$100 for
results below \$10,000 and to the nearest \$1,000 for amounts above
\$10,000. The defined increment then will be determined by subtracting
the standing high bid (or, if applicable, the minimum opening bid) from
the rounded result. At the start of the auction, we propose to use 20
percent to calculate the defined increment. We also propose to retain
discretion to change the percentage used to calculate the defined
increment if we determine that circumstances so dictate. Further, we
propose to retain discretion to set a floor for the increment used to
calculate the minimum acceptable bid at an absolute dollar amount.[^15]

In addition, we propose that in Stage Three the Bureau have discretion
to use a smaller defined increment to calculate acceptable bids higher
than the minimum acceptable bid. The smaller defined increment would be
calculated using a smaller percentage than the percentage used to
calculate the defined increment that sets the minimum acceptable bid.
For example, 20 percent might be used to calculate the defined increment
for the minimum acceptable bid and 10 percent might be used to calculate
the smaller defined increment used to calculate higher acceptable bids.
In all other respects, the smaller defined increment would be calculated
in exactly the manner described above for the initial defined increment,
including rounding.

For example, the Bureau could calculate Stage Three bids using 20
percent to calculate the defined increment for the minimum acceptable
bid and 10 percent to calculate the smaller defined increment. Assuming
that the standing high bid on a given license is \$50,000, in the next
round of Stage Three,

Defined Increment = Rounded(Standing High Bid \* 1.2) -- Standing High
Bid

= Rounded(\$50,000 \* 1.2) -- \$50,000

= Rounded(\$60,000) -- \$50,000

= \$60,000 -- \$50,000

= \$10,000

Minimum Acceptable Bid = Standing High Bid + Defined Increment

= \$50,000 + \$10,000

= \$60,000

Smaller Defined Increment = Rounded(Standing High Bid \* 1.1) --
Standing High Bid

= Rounded(\$50,000 \* 1.1) -- \$50,000

= Rounded(\$55,000) -- \$50,000

= \$55,000 -- \$50,000

= \$5,000

One Increment Higher Than Minimum Acceptable Bid

= Minimum Acceptable Bid + (Smaller Defined Increment \* 1)

= \$60,000 + (\$5,000 \* 1)

= \$60,000 + \$5,000

= \$65,000

Two Increments Higher Than Minimum Acceptable Bid

= Minimum Acceptable Bid + (Smaller Defined Increment \* 2)

= \$60,000 + (\$5,000 \* 2)

= \$60,000 + \$10,000

= \$70,000

This procedure would enable bidders unwilling to raise the standing high
bid by twice the defined increment to place bids higher than the minimum
acceptable bid. Thus, in the above example, a bidder wanting to bid
above the minimum acceptable bid but unwilling to raise the standing
high bid of \$50,000 by twice the defined increment of \$10,000
(\$20,000 or 40 percent) would have the flexibility to bid \$65,000,
raising the standing high bid by \$15,000. Bidders may want the
flexibility to place such bids as licenses approach their final price.
However, such precision earlier in the auction only would create
unnecessary delay, and we therefore propose to limit this procedure to
Stage Three of the auction.

In summary, we propose the Bureau have discretion at any time during the
auction to change the initial 20 percent used to calculate the defined
increment and/or to set an absolute dollar amount floor for the
increment used to calculate the minimum acceptable bid. We also propose
that the Bureau have additional discretion in Stage Three to calculate
the minimum acceptable bid using one percentage and to calculate higher
acceptable bids using another percentage, as described above. Advanced
notice of the Bureau's decision to exercise its discretion with regard
to acceptable bids in any manner would be announced via the Automated
Auction System. We seek comment on these proposals.

##  Information Regarding Bid Withdrawal and Bid Removal

For Auction No. 40, we propose the following bid removal and bid
withdrawal procedures. Before the close of a bidding period, a bidder
has the option of removing any bid placed in that round. By using the
remove bid function in the bidding software, a bidder may effectively
"unsubmit" any bid placed within that round. A bidder removing a bid
placed in the same round is not subject to a withdrawal payment.

Once a round closes, a bidder may no longer remove a bid. However, in
any subsequent round, a high bidder may withdraw its standing high bids
from previous rounds using the withdraw bid function in the bidding
software. A high bidder that withdraws its standing high bid from a
previous round is subject to the bid withdrawal payment provisions of
the Commission rules.[^16] We seek comment on these bid removal and bid
withdrawal procedures.

In the *Part 1 Third Report and Order*, the Commission explained that
allowing bid withdrawals facilitates efficient aggregation of licenses
and the pursuit of efficient backup strategies as information becomes
available during the course of an auction. The Commission noted,
however, that, in some instances, bidders may seek to withdraw bids for
improper reasons. The Bureau, therefore, has discretion, in managing the
auction, to limit the number of withdrawals to prevent any bidding
abuses. The Commission stated that the Bureau should assertively
exercise its discretion, consider limiting the number of rounds in which
bidders may withdraw bids, and prevent bidders from bidding on a
particular market if the Bureau finds that a bidder is abusing the
Commission's bid withdrawal procedures.[^17]

Applying this reasoning, we propose to limit each bidder in Auction No.
40 to withdrawing standing high bids in no more than two rounds during
the course of the auction. To permit a bidder to withdraw bids in more
than two rounds would likely encourage insincere bidding or the use of
withdrawals for anti-competitive purposes. The two rounds in which
withdrawals are utilized will be at the bidder's discretion; withdrawals
otherwise must be in accordance with the Commission's rules. There is no
limit on the number of standing high bids that may be withdrawn in
either of the rounds in which withdrawals are utilized. Withdrawals will
remain subject to the bid withdrawal payment provisions specified in the
Commission's rules. We seek comment on this proposal.

## Stopping Rule

For Auction No. 40, the Bureau proposes to employ a simultaneous
stopping rule approach. The Bureau has discretion "to establish stopping
rules before or during multiple round auctions in order to terminate the
auction within a reasonable time."[^18] A simultaneous stopping rule
means that all licenses remain open until the first round in which no
new acceptable bids or proactive waivers are received. After the first
such round, bidding closes simultaneously on all licenses. Thus, unless
circumstances dictate otherwise, bidding would remain open on all
licenses until bidding stops on every license.

However, the Bureau proposes to retain the discretion to exercise any of
the following options during Auction No. 40:

1\. Utilize a modified version of the simultaneous stopping rule. The
modified stopping rule would close the auction for all licenses after
the first round in which no bidder submits a proactive waiver or a new
bid on any license on which it is not the standing high bidder. Thus,
absent any other bidding activity, a bidder placing a new bid on a
license for which it is the standing high bidder would not keep the
auction open under this modified stopping rule. The Bureau further seeks
comment on whether this modified stopping rule should be used at any
time or only in stage three of the auction.

2\. Keep the auction open even if no new acceptable bids or proactive
waivers are submitted. In this event, the effect will be the same as if
a bidder had submitted a proactive waiver. The activity rule, therefore,
will apply as usual, and a bidder with insufficient activity will either
lose bidding eligibility or use a remaining activity rule waiver.

3\. Declare that the auction will end after a specified number of
additional rounds ("special stopping rule"). If the Bureau invokes this
special stopping rule, it will accept bids in the specified final
round(s) only for licenses on which the high bid increased in at least
one of the preceding specified number of rounds.

[]{.mark}

The Bureau proposes to exercise these options only in certain
circumstances, such as, for example, where the auction is proceeding
very slowly, there is minimal overall bidding activity, or it appears
likely that the auction will not close within a reasonable period of
time. Before exercising these options, the Bureau is likely to attempt
to increase the pace of the auction by, for example, increasing the
number of bidding rounds per day, and/or increasing the amount of the
minimum bid increments for the limited number of licenses where there is
still a high level of bidding activity. We seek comment on these
proposals.

# Conclusion

Comments are due on or before March 19, 2001, and reply comments are due
on or before March 26, 2001. An original and four copies of all
pleadings must be filed with the Commission's Secretary, Magalie Roman
Salas, Office of the Secretary, Federal Communications Commission, Room
TW-A325, 445 Twelfth Street SW, Washington DC 20554, in accordance with
Section 1.51(c) of the Commission's rules.[^19] In addition, one copy of
each pleading must be delivered to each of the following locations: (1)
the Commission's duplicating contractor, International Transcription
Service, Inc. (ITS), 1231 20th Street NW, Washington DC 20036; (2)
Office of Media Relations, Public Reference Center, Room CY-A257, 445
Twelfth Street SW, Washington DC 20554; (3) Rana Shuler, Auctions and
Industry Analysis Division, Wireless Telecommunications Bureau, Room
4-A628, 445 Twelfth Street SW, Washington DC 20554. Comments and reply
comments will be available for public inspection during regular business
hours in the FCC Public Reference Room, Room CY-A257, 445 12th Street
SW, Washington DC 20554.

This proceeding has been designated as a "permit‑but‑disclose"
proceeding in accordance with the Commission's *ex parte* rules.[^20]
Persons making oral *ex parte* presentations are reminded that memoranda
summarizing the presentations must contain summaries of the substance of
the presentations and not merely a listing of the subjects discussed.
More than a one or two sentence description of the views and arguments
presented is generally required.[^21] Other rules pertaining to oral and
written *ex parte* presentations in permit-but-disclose proceedings are
set forth in Section 1.1206(b) of the Commission's rules.[^22]

For further information concerning this proceeding, contact the Auctions
and Industry Analysis Division, Wireless Telecommunications Bureau, Erik
Salovaara, Auctions Attorney, or Jeff Crooks, Auctions Analyst, at (202)
418-0660; or Lisa Stover, Project Manager, at (717) 338-2888.

-- FCC --

[^1]: *See* Revision of Part 22 and Part 90 of the Commission's Rules to
    Facilitate Future Development of Paging Systems, Implementation of
    Section 309(j) of the Communications Act -- Competitive Bidding, WT
    Docket No. 96-18, PR Docket No. 93-253, *Memorandum Opinion and
    Order on Reconsideration and Third Report and Order,* 14 FCC Rcd
    10030 (1999) ("*Paging Reconsideration Order*").

[^2]: *See Paging Reconsideration Order*, 14 FCC Rcd at 10043-46, ¶¶
    14-21.

[^3]: *See* 47 USC § 309(j) (as amended by Section 3002(a)(E)(i),
    Balanced Budget Act of 1997, Pub. L. 105-33, 111 Stat. 251 (1997)
    ("Balanced Budget Act")).

[^4]: *See* Amendment of Part 1 of the Commission's Rules ---
    Competitive Bidding Proceeding, WT Docket No. 97-82, *Order,
    Memorandum Opinion and Order, and Notice of Proposed Rule Making*,
    12 FCC Rcd 5686, 5697-98, ¶ 16 (1997) ("*Part 1 Order*") ("We also
    clarify that pursuant to Section 0.131 of our rules, the Chief,
    Wireless Telecommunications Bureau, has delegated authority to
    implement all of the Commission's rules pertaining to auctions
    procedures.").

[^5]: *See* Amendment of Part 1 of the Commission's Rules ---
    Competitive Bidding Procedures, Allocation of Spectrum Below 5 GHz
    Transferred from Federal Government Use, 4660-4685 MHz, WT Docket
    No. 97-82, ET Docket No. 94-32, *Third Report and Order and Second
    Further Notice of Proposed Rule Making*, 13 FCC Rcd 374, 448, ¶ 124
    (1998) ("*Part 1 Third Report and Order*"). The Commission directed
    the Bureau to seek comment on specific mechanisms related to
    day-to-day auction conduct including, for example, the structure of
    bidding rounds and stages, establishment of minimum opening bids or
    reserve prices, minimum accepted bids, initial maximum eligibility
    for each bidder, activity requirements for each stage of the
    auction, activity rule waivers, criteria for determining reductions
    in eligibility, information regarding bid withdrawal and bid
    removal, stopping rules, and information relating to auction delay,
    suspension or cancellation. *Id.* at ¶ 125.

[^6]: *See Part 1 Order,* 12 FCC Rcd at 5697-98, ¶ 16.

[^7]: *See* Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, PP Docket No. 93-253, *Second Report and
    Order*, 9 FCC Rcd 2348, 2378-79, ¶¶ 171-176 (1994) ("*Competitive
    Bidding Second Report and Order*").

[^8]: *See* 47 C.F.R. § 1.2104(i).

[^9]: Revision of Part 22 and Part 90 of the Commission's Rules to
    Facilitate Future Development of Paging Systems, *Second Report and
    Order and Further Notice of Proposed Rulemaking*, 12 FCC Rcd 2732,
    2786, ¶ 106 (1997) ("*Paging Second Report and Order*").

[^10]: To ensure randomness, we will use a National Institute of
    Standards and Technology ("NIST") tested pseudorandom generator.

[^11]: *See* 47 U.S.C. § 309(j) (as amended by Balanced Budget Act,
    Section 3002(a)). The Commission's authority to establish a reserve
    price or minimum opening bid is set forth in 47 C.F.R. § 1.2104(c)
    and (d).

[^12]: *See* *Part 1 Third Report and Order,* 13 FCC Rcd at 454-455, ¶
    141.

[^13]: *S*e*e*, *e.g.*, Auction of 800 MHz SMR Upper 10 MHz Band,
    Minimum Opening Bids or Reserve Prices, DA 97-2147, *Order*, 12 FCC
    Rcd 16354 (1997); Auction of the Phase II 220 MHz Service Licenses,
    Auction Notice and Filing Requirements for 908 Licenses Consisting
    of Economic Area (EA), Economic Area Grouping (EAG), and Nationwide
    Licenses, Scheduled for September 15, 1998, Minimum Opening Bids and
    Other Procedural Issues, DA 98-1010, *Public Notice*, 13 FCC Rcd
    16445 (1998).

[^14]: Bidders must have sufficient eligibility to place a bid on the
    particular license. *See* Section I(B) ("Upfront Payments and
    Initial Maximum Eligibility"), *supra*.

[^15]: Bids higher than the minimum acceptable bid would be calculated
    using the current percentage, even if the resulting increment is
    less than the absolute dollar amount imposed on the initial
    increment.

[^16]: *See* 47 C.F.R. §§ 1.2104(g), 1.2109.

[^17]: *Part 1 Third Report and Order*, 13 FCC Rcd at 460, ¶ 150.

[^18]: *See* 47 C.F.R. § 1.2104(e).

[^19]: 47 C.F.R. § 1.51(c).

[^20]: 47 C.F.R. §§ 1.1200(a), 1.1206.

[^21]: *See* 47 C.F.R. § 1.1206(b).

[^22]: 47 C.F.R. § 1.1206(b).