DA 08-767

April 4, 2008

**AUCTION OF AWS-1 AND BROADBAND PCS LICENSES**

**SCHEDULED FOR JULY 29, 2008**

**COMMENT SOUGHT ON COMPETITIVE BIDDING PROCEDURES**

**FOR AUCTION 78**

AU Docket No. 08-46

Comments Due: April 18, 2008 Reply Comments Due: April 25, 2008

Report No. AUC-08-78-A (Auction 78)

Table of Contents

Heading Paragraph \#

I. Introduction 1

II\. LICENSES TO BE OFFERED IN AUCTION 78 2

A. License Descriptions 3

1\. AWS-1 Licenses 4

2\. Broadband PCS Licenses 5

B. Incumbency Issues 10

1\. AWS-1 10

2\. Broadband PCS 14

III\. BUREAU SEEKS COMMENT ON AUCTION PROCEDURES 15

A. Auction Design 16

1\. Anonymous Bidding 16

2\. Auction Format 22

B. Auction Structure 24

1\. Round Structure 24

2\. Stopping Rule 27

3\. Information Relating to Auction Delay, Suspension, or Cancellation
30

C. Auction Procedures 31

1\. Upfront Payments and Bidding Eligibility 31

a\. AWS-1 35

b\. Broadband PCS 37

2\. Activity Rule 40

3\. Activity Rule Waivers and Reducing Eligibility 44

4\. Reserve Prices and Minimum Opening Bids 49

a\. Reserve Prices 51

b\. Minimum Opening Bids 53

i\. AWS-1 55

ii\. Broadband PCS 57

5\. Bid Amounts 62

a\. Minimum Acceptable Bids 63

b\. Additional Bid Amounts 65

6\. Provisionally Winning Bids 69

7\. Bid Removal 71

8\. Bid Withdrawal 72

D. Post-Auction Procedures 75

1\. Interim Withdrawal Payment Percentage 75

2\. Additional Default Payment Percentage 79

IV\. DEADLINES AND FILING PROCEDURES 83

V. Contacts 89

ATTACHMENT A: Licenses to Be Auctioned

ATTACHMENT B: Map of CW-BTA460-E

ATTACHMENT C: Smoothing Formula Equations

# Introduction

1.  By this Public Notice, the Wireless Telecommunications Bureau
    ("Bureau") announces an auction of licenses in multiple radio
    services to commence on July 29, 2008. This auction, which is
    designated Auction 78, will include 55 licenses: 35 licenses in the
    Advanced Wireless Services ("AWS") 1710-1755 MHz and 2110-2155 MHz
    bands ("AWS-1")[^1] and 20 licenses in the broadband Personal
    Communications Service ("PCS").[^2]

# LICENSES TO BE OFFERED IN AUCTION 78

2.  The spectrum to be auctioned has been offered previously in other
    auctions but was unsold or returned to the Commission as a result of
    license cancellation or termination. A complete list of licenses
    available for Auction 78 is included as Attachment A of this Public
    Notice.

## License Descriptions

3.  The following tables display information regarding blocks,
    frequencies of licenses in these blocks, total bandwidth per block,
    geographic area type, and the number of each license type available.

### AWS-1 Licenses

4.  Auction 78 will offer 35 AWS-1 licenses for which there were no
    winning bids in Auction 66. These licenses consist of six Regional
    Economic Area Grouping (REAG) licenses, seven Economic Area (EA)
    licenses, and 22 Cellular Market Area (CMA) licenses, as shown in
    Table 1.

    **[Table 1: AWS-1 Band Licenses Available in Auction
    78]{.underline}**

### Broadband PCS Licenses

5.  Auction 78 includes 20 Basic Trading Area ("BTA") broadband PCS
    licenses.[^3] In broadband PCS, certain C and F block licenses have
    been subject to an eligibility restriction making them available
    only to "entrepreneurs" in "closed" bidding.[^4] In order to qualify
    as an entrepreneur, a bidder, along with its attributable investors
    and affiliates, must have had gross revenues of less than \$125
    million in each of the last two years and must have less than \$500
    million in total assets.[^5] In addition, C and F block licenses are
    divided into two tiers according to the population size, with Tier 1
    comprising markets with population at or above 2.5 million, based on
    2000 decennial census figures, and Tier 2 comprising the remaining
    markets.[^6] Only Tier 2 licenses will be offered in Auction 78.

6.  Table 2 cross-references the general rules regarding
    block/eligibility status/frequencies of broadband PCS licenses in
    the C, D, E, and F blocks. Gray boxes indicate that no license of
    the particular tier/frequency block combination will be available in
    Auction 78.

    Table 2: General Broadband PCS License Eligibility Rules

  ------------- --------------- ---------- --------------- --------------------------------
  **Frequency   **Eligibility              **Bandwidth**   **Frequency**
  Block**       Status**                                   

                **Tier 1**      **Tier 2**                 

  C1            Open            Closed\*   15 MHz          1902.5-1910, 1982.5-1990 MHz

  C2            Open            Closed\*   15 MHz          1895-1902.5, 1975-1982.5 MHz

  C3            Closed          Closed\*   10 MHz          1895-1900, 1975-1980 MHz

  C4            Open            Closed\*   10 MHz          1900-1905, 1980-1985 MHz

  C5            Open            Open       10 MHz          1905-1910, 1985-1990 MHz

  D             n/a             n/a        10 MHz          1865-1870, 1945-1950 MHz

  E             n/a             n/a        10 MHz          1885-1890, 1965-1970 MHz

  F[^7]         Open            Open       10 MHz          1890-1895, 1970-1975 MHz
  ------------- --------------- ---------- --------------- --------------------------------

7.  As indicated in the table, C1, C2, C3, and C4 block licenses in Tier
    2 (marked with "\*") are generally available only to entrepreneurs
    at auction in closed bidding.[^8] The Commission decided, however,
    no longer to apply this eligibility restriction to any of these
    licenses that have been previously made available on a closed basis,
    but not won, in any auction beginning on or after March 23,
    1999.[^9] Such licenses are instead to be offered in open bidding.
    C5 block licenses and all D, E, and F block licenses are also
    available in open bidding. Bidding credits for applicants that
    qualify as small or very small businesses will be available for C
    and F block licenses subject to open bidding.[^10] These size-based
    bidding credits are not, however, available for C block licenses
    subject to closed bidding or for broadband PCS licenses in the D or
    E blocks.[^11]

8.  The specific broadband PCS licenses to be offered in Auction 78 are
    described below in Table 3.

    **[Table 3: Broadband PCS Licenses Available in Auction
    78]{.underline}**

+------+--------+------------------------+--------+---------+-------+
| *    | *      | **Frequency Bands**    | **T    | **Geo   | **No. |
| *Blo | *Eligi |                        | otal** | graphic | of    |
| ck** | bility | **(MHz)**              |        | Area    | Licen |
|      | St     |                        | *      | Type**  | ses** |
|      | atus** |                        | *Bandw |         |       |
|      |        |                        | idth** |         |       |
+------+--------+------------------------+--------+---------+-------+
| C1   | Ope    | 1902.5-1910 /          | 15 MHz | BTA     | 1     |
|      | n[^12] | 1982.5-1990            |        |         |       |
+------+--------+------------------------+--------+---------+-------+
| C1   | Close  | 1902.5-1910 /          | 15 MHz | BTA     | 4     |
|      | d[^13] | 1982.5-1990            |        |         |       |
+------+--------+------------------------+--------+---------+-------+
| C3   | Close  | 1895-1900 / 1975-1980  | 10 MHz | BTA     | 2     |
|      | d[^14] |                        |        |         |       |
+------+--------+------------------------+--------+---------+-------+
| C4   | Close  | 1900-1905 / 1980-1985  | 10 MHz | BTA     | 3     |
|      | d[^15] |                        |        |         |       |
+------+--------+------------------------+--------+---------+-------+
| C5   | Open   | 1905-1910 / 1985-1990  | 10 MHz | BTA     | 2     |
+------+--------+------------------------+--------+---------+-------+
| D    | n/a    | 1865-1870 / 1945-1950  | 10 MHz | BTA     | 1     |
+------+--------+------------------------+--------+---------+-------+
| E    | n/a    | 1885-1890 / 1965-1970  | 10 MHz | BTA     | 4     |
|      |        |                        | (or    |         |       |
|      |        |                        | less   |         |       |
|      |        |                        | )[^16] |         |       |
+------+--------+------------------------+--------+---------+-------+
| F    | Open   | 1890-1895 / 1970-1975  | 10 MHz | BTA     | 3     |
+------+--------+------------------------+--------+---------+-------+

9.  Because of the history of licenses for broadband PCS spectrum,
    certain of the licenses available in Auction 78 cover less bandwidth
    and fewer frequencies than noted in the "Broadband PCS Licenses"
    table above. In addition, in some cases, licenses are available for
    only part of a market. Attachment A to this Public Notice provides
    more details about the licenses that will be offered.

## Incumbency Issues

### AWS-1

10. The AWS-1 bands are now being used for a variety of government and
    non-government services. The 1710-1755 MHz band is currently a
    government band.[^17] The 2110-2150 MHz band is used by private
    services (including state and local governmental public safety
    services) and common carrier fixed microwave services.[^18] The
    2150-2155 MHz band contains incumbents in the Broadband Radio
    Service ("BRS").[^19] The Commission previously provided information
    on incumbency issues for the AWS-1 bands in the *Auction 66
    Procedures Public Notice*.[^20] While much of that information
    remains current, several updates follow.

11. *[Spectrum Relocation Fund]{.underline}*. The Commission established
    a reserve amount in Auction 66 in order to comply with a statutory
    requirement aimed at funding the relocation of federal government
    entities that currently operate in the 1710-1755 MHz band.[^21] In
    order for Auction 66 to close in compliance with the statute, the
    total winning bids in this auction, net of bidding credits
    applicable at the close of bidding, were required to equal or exceed
    a reserve amount of approximately \$2.059 billion.[^22] At the close
    of Auction 66, the net total winning bids far exceeded the reserve
    amount.[^23] For the reasons discussed below, the Bureau proposes to
    not establish reserve prices for the 35 AWS-1 licenses being offered
    in Auction 78.[^24]

12. *[Relocation of Government Incumbents]{.underline}*. The Commission
    also issued guidance, along with the National Telecommunications and
    Information Administration, to assist AWS-1 licensees to begin
    implementing service during the transition of federal operations
    from the band while providing interference protection to incumbent
    federal government operations until they have been relocated to
    other frequency bands or technologies.[^25]

13. *[Relocation of Non-Government Incumbents]{.underline}*. On the same
    day it released the *Auction 66 Procedures Public Notice*, the
    Commission, among other things, adopted relocation procedures that
    AWS-1 licensees will follow when relocating incumbent BRS licensees
    from the 2150-2160/62 MHz portion of the band.[^26]

### Broadband PCS

14. While most of the private and common carrier fixed microwave
    services ("FMS") formerly operating in the 1850-1990 MHz band (and
    other bands) have been relocated to available frequencies in higher
    bands or to other media, some FMS licensees may still be operating
    in the band. Any remaining FMS entities operating in the 1850-1990
    MHz band, however, are secondary to PCS operations. FMS licensees,
    absent an agreement with the applicable PCS entities or an extension
    pursuant to Section 101.79(b) of the Commission's rules, must turn
    in their authorizations six months following written notice from a
    PCS entity that such entity intends to turn on a system within the
    interference range of the incumbent FMS licensee.[^27] Further,
    broadband PCS licensees are no longer responsible for costs
    associated with relocating an incumbent FMS operation.[^28]

# BUREAU SEEKS COMMENT ON AUCTION PROCEDURES

15. Section 309(j)(3) of the Communications Act of 1934, as amended,
    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 . . . ."[^29] Consistent with
    the provisions of Section 309(j)(3) 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, to seek comment on a variety of
    auction-specific procedures prior to the start of each auction.[^30]
    We therefore seek comment on the following issues relating to
    Auction 78.

## Auction Design

### Anonymous Bidding

16. Consistent with recent auctions, the Bureau proposes to withhold,
    until after the close of bidding, public release of (1) bidders'
    license selections on their short-form applications (FCC Form
    175), (2) the amounts of bidders' upfront payments and bidding
    eligibility, and (3) information that may reveal the identities of
    bidders placing bids and taking other bidding-related actions. We
    propose to withhold this information irrespective of any pre-auction
    measurement of likely auction competition.[^31]

17. Under these proposed limited information procedures, the amount of
    every bid placed and whether a bid was withdrawn would be disclosed
    after the close of every round, but the identities of bidders
    placing specific bids or withdrawals and the net bid amounts would
    not be disclosed until after the close of the auction.

18. Bidders will have access to additional information about their own
    bids. For example, bidders will be able to view their own level of
    eligibility, before and during the auction, through the Commission's
    Integrated Spectrum Auction System ("ISAS" or "FCC Auction System").

19. Moreover, for the purpose of complying with the Commission's
    anti-collusion rule, bidders will be made aware of other bidders
    with which they will not be permitted to cooperate, collaborate, or
    communicate, including discussing bids or bidding strategies.[^32]
    Specifically, the Bureau will notify separately each applicant with
    short-form applications for participation in a pending auction,
    including but not limited to Auction 78, whether applicants in
    Auction 78 have applied for licenses in any of the same or
    overlapping geographic area as that applicant.

20. After the close of bidding, bidders' license selections, upfront
    payment amounts, bidding eligibility, bids, and other
    bidding-related actions will be made publicly available.

21. We seek comment on the details regarding our proposal for
    implementation of anonymous bidding in Auction 78, and on
    alternative proposals for the specific procedures to implement
    anonymous bidding.

### Auction Format

22. We propose to auction all licenses included in Auction 78 using the
    Commission's standard simultaneous multiple-round ("SMR") auction
    format. As described further below, this type of auction offers
    every license for bid at the same time and consists of successive
    bidding rounds in which eligible bidders may place bids on
    individual licenses. Typically, bidding remains open on all licenses
    until bidding stops on every license. We seek comment on this
    proposal.

23. Although package bidding was considered in Auction 66 and
    implemented for certain licenses made available in Auction 73,[^33]
    we believe that a package bidding format is unlikely to offer
    significant advantages to bidders in Auction 78. This auction's
    inventory is composed of licenses in different services and
    frequency bands, and the geographic markets are generally not
    contiguous. As a result, it would not be possible to establish a
    significant regional or national footprint by acquiring several of
    these licenses as a package. Therefore, we believe that the use of
    the SMR format for Auction 78 would be the most appropriate means of
    auctioning the licenses in this inventory. Accordingly, we propose
    to conduct the auction using our SMR auction format. However, if
    commenters believe that a package bidding design would offer
    significant benefits, we invite their comments and request that they
    describe what specific factors lead them to that conclusion. If
    commenters believe that certain pre-defined packages should be
    offered in package bidding, they should describe those packages.

## Auction Structure

### Round Structure

24. Auction 78 will consist of sequential bidding 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.

25. The Commission will conduct Auction 78 over the Internet, and
    telephonic bidding will be available as well. The toll-free
    telephone number for the Auction Bidder Line will be provided to
    qualified bidders.

26. The Bureau proposes to 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. Under this proposal, the Bureau may change the
    amount of time for bidding rounds, the amount of time between
    rounds, or the number of rounds per day, depending upon bidding
    activity and other factors. The Bureau seeks comment on this
    proposal. Commenters may wish to address the role of the bidding
    schedule in managing the pace of the auction and the tradeoffs in
    managing auction pace by bidding schedule changes, by changing the
    activity requirements or bid amount parameters, or by using other
    means.

### Stopping Rule

27. The Bureau has discretion "to establish stopping rules before or
    during multiple round auctions in order to terminate the auction
    within a reasonable time."[^34] For Auction 78, the Bureau proposes
    to employ a simultaneous stopping rule approach. A simultaneous
    stopping rule means that all licenses remain available for bidding
    until bidding closes simultaneously on all licenses. More
    specifically, bidding will close simultaneously on all licenses
    after the first round in which no bidder submits any new bids,
    applies a proactive waiver, or withdraws any provisionally winning
    bids.[^35] Thus, unless the Bureau announces alternative stopping
    procedures, bidding will remain open on all licenses until bidding
    stops on every license. Consequently, it is not possible to
    determine in advance how long the auction will last.

28. Further, the Bureau proposes to retain the discretion to exercise
    any of the following options during Auction 78:

> a\) Use 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 applies a waiver, withdraws a
> provisionally winning bid, or places any new bids on any license for
> which it is not the provisionally winning bidder. Thus, absent any
> other bidding activity, a bidder placing a new bid on a license for
> which it is the provisionally winning bidder would not keep the
> auction open under this modified stopping rule.
>
> b\) 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) after which the auction will close.
>
> c\) Keep the auction open even if no bidder submits any new bids,
> applies a waiver, or withdraws any provisionally winning bids. In this
> event, the effect will be the same as if a bidder had applied a
> waiver. The activity rule, therefore, will apply as usual and a bidder
> with insufficient activity will either lose bidding eligibility or use
> a waiver.

29. The Bureau proposes to exercise these options only in certain
    circumstances, for example, where the auction is proceeding
    unusually slowly or quickly, there is minimal overall bidding
    activity, or it appears likely that the auction will not close
    within a reasonable period of time or will close prematurely. Before
    exercising certain of these options, the Bureau is likely to attempt
    to change the pace of the auction by, for example, changing the
    number of bidding rounds per day and/or changing minimum acceptable
    bids. The Bureau proposes to retain the discretion to exercise any
    of these options with or without prior announcement during the
    auction. We seek comment on these proposals.

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

30. For Auction 78, the Bureau proposes 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, 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.[^36] 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.
    The Bureau emphasizes 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. The Bureau seeks comment on this
    proposal.

## Auction Procedures

### Upfront Payments and Bidding Eligibility

31. The Bureau has delegated authority and discretion to determine an
    appropriate upfront payment for each license being auctioned.[^37] A
    bidder's upfront payment is a refundable deposit to establish
    eligibility to bid on licenses. Upfront payments related to the
    licenses for 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.[^38]

32. The Bureau proposes that the amount of the upfront payment submitted
    by a bidder will determine the bidder's initial bidding eligibility
    in bidding units. We propose that each license be assigned a
    specific number of bidding units equal to the upfront payment, on a
    bidding unit per dollar basis. The number of bidding units for a
    given license is fixed and does not change during the auction as
    prices rise. A bidder's upfront payment is not attributed to
    specific licenses. Rather, a bidder may place bids on any
    combination of licenses it selected on its short-form application
    (FCC Form 175) as long as the total number of bidding units
    associated with those licenses does not exceed its current
    eligibility.

33. Eligibility cannot be increased during the auction; it can only
    remain the same or decrease. Thus, in calculating its upfront
    payment amount and hence its initial bidding eligibility, an
    applicant must determine the maximum number of bidding units it may
    wish to bid on (or hold provisionally winning bids on) in any single
    round, and submit an upfront payment amount covering that total
    number of bidding units. Provisionally winning bids are bids that
    would become final winning bids if the auction were to close in that
    given round.[^39]

34. As in the most recent auctions, the Bureau proposes to calculate
    upfront payments in Auction 78 on a license-by-license basis,
    calculated by bandwidth and license area population, with a minimum
    of \$500 per license.[^40] The Bureau proposes to use upfront
    payment formulas similar to those used in the most recent auctions
    for AWS-1 licenses (Auction 66)[^41] and broadband PCS licenses
    (Auction 71).[^42]

#### AWS-1

35. For AWS-1 licenses offered in Auction 78, the Bureau proposes
    upfront payments as follows:

-   For licenses covering CMAs or EAs in the 50 states, upfront payment
    amounts will be calculated as \$0.03 per MHz per population
    (MHz-pop);

-   For the one available license that covers the Gulf of Mexico, the
    upfront payment amount will be \$20,000; and

-   For all remaining licenses, upfront payment amounts will be
    calculated as \$0.01/MHz-pop.

36. The proposed upfront payment amount and associated bidding units for
    each AWS-1 license available in Auction 78, calculated pursuant to
    the procedures described above, are set forth in Attachment A.

#### Broadband PCS

37. For broadband PCS licenses offered in Auction 78, the Bureau
    proposes upfront payments as follows:

-   For licenses covering BTAs in the 50 states, upfront payment amounts
    will be calculated as \$0.03/MHz-pop; and

-   For all remaining licenses, upfront payment amounts will be
    calculated as \$0.01/MHz-pop.

38. The proposed upfront payment amount and associated bidding units for
    each broadband PCS license available in Auction 78 are listed in
    Attachment A.

39. We seek comment on the above proposals concerning upfront payment
    amounts and bidding units.

### Activity Rule

40. In order to ensure that the auction closes within a reasonable
    period of time, an activity rule requires bidders to bid actively
    throughout the auction, rather than wait until late in the auction
    before participating. A bidder's activity in a round will be the sum
    of the bidding units associated with any licenses upon which it
    places bids during the current round and the bidding units
    associated with any licenses for which it holds provisionally
    winning bids. Bidders are required to be active on a specific
    percentage of their current bidding eligibility during each round of
    the auction. Failure to maintain the requisite activity level will
    result in the use of an activity rule waiver, if any remain, or a
    reduction in the bidder's eligibility, possibly curtailing or
    eliminating the bidder's ability to place additional bids in the
    auction.[^43]

41. The Bureau proposes to divide the auction into at least two stages,
    each characterized by a different activity requirement.[^44] The
    auction will start in Stage One. The Bureau proposes to advance the
    auction to the next stage by announcement during the auction. In
    exercising this discretion, the Bureau will consider a variety of
    measures of auction activity, including but not limited to the
    percentage of licenses (as measured in bidding units) on which there
    are new bids,[^45] the number of new bids, and the increase in
    revenue. The Bureau seeks comment on these proposals.

42. The Bureau proposes the following activity requirements, while
    noting again that the Bureau retains the discretion to change stages
    unilaterally by announcement during the auction:

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

> **Stage Two:** In each round of the second stage, a bidder desiring to
> maintain its current bidding eligibility is required to be active on
> 95 percent of its current bidding eligibility. Failure to maintain the
> required activity level will result in the use of an activity rule
> waiver or a reduction in the bidder's bidding eligibility for the next
> round of bidding. During Stage Two, a bidder's reduced eligibility for
> the next round will be calculated by multiplying the bidder's current
> round activity by twenty-nineteenths (20/19).

43. Under this proposal, the Bureau will retain the discretion to change
    the activity requirements during the auction. For example, the
    Bureau could decide to add an additional stage with a higher
    activity requirement, not to transition to Stage Two if it believes
    the auction is progressing satisfactorily under the Stage One
    activity requirement, or to transition to Stage Two with an activity
    requirement that is higher or lower than the 95 percent proposed
    herein.[^46] If the Bureau exercises this discretion, it will alert
    bidders by announcement in the FCC Auction System.

### Activity Rule Waivers and Reducing Eligibility

44. Use of an activity rule waiver preserves the bidder's 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, not to particular licenses. Activity rule waivers
    can be either proactive or automatic and are principally a mechanism
    for bidders to avoid the loss of bidding eligibility in the event
    that exigent circumstances prevent them from bidding in a particular
    round.

45. The FCC Auction System assumes that a bidder not meeting the
    activity requirement would prefer to apply an activity rule waiver
    (if available) rather than lose bidding eligibility. Therefore, the
    system will automatically apply a waiver at the end of any bidding
    round in which a bidder's activity level is below the minimum
    required unless (1) the bidder has no activity rule waivers
    remaining; or (2) the bidder overrides the automatic application of
    a waiver by reducing eligibility, thereby meeting the activity
    requirement. If a bidder has no waivers remaining and does not
    satisfy the required activity level, its eligibility will be
    permanently reduced, possibly curtailing or eliminating the bidder's
    ability to place additional bids in the auction.

46. A bidder with insufficient activity may wish to reduce its bidding
    eligibility rather than use an activity rule waiver. If so, the
    bidder must affirmatively override the automatic waiver mechanism
    during the bidding round by using the "reduce eligibility" function
    in the FCC Auction System. In this case, the bidder's eligibility is
    permanently reduced to bring the bidder into compliance with the
    activity rule as described above. Reducing eligibility is an
    irreversible action. Once eligibility has been reduced, a bidder
    will not be permitted to regain its lost bidding eligibility, even
    if the round has not yet closed.

47. Under the proposed simultaneous stopping rule, a bidder may apply an
    activity rule waiver proactively as a means to keep the auction open
    without placing a bid. If a bidder proactively applies an activity
    rule waiver (using the "apply waiver" function in the FCC Auction
    System) during a bidding round in which no bids are placed or
    withdrawn, the auction will remain open and the bidder's eligibility
    will be preserved. An automatic waiver applied by the FCC Auction
    System in a round in which there are no new bids, withdrawals, or
    proactive waivers will not keep the auction open. A bidder cannot
    apply a proactive waiver after bidding in a round, and applying a
    proactive waiver will preclude a bidder from placing any bids in
    that round.[^47] Applying a waiver is irreversible; once a proactive
    waiver is submitted, that waiver cannot be unsubmitted, even if the
    round has not yet closed.

48. Consistent with recent auctions of wireless spectrum, the Bureau
    proposes that each bidder in Auction 78 be provided with three
    activity rule waivers that may be used as set forth above at the
    bidder's discretion during the course of the auction. The Bureau
    seeks comment on this proposal.

### Reserve Prices and Minimum Opening Bids

49. Section 309(j) calls upon the Commission to prescribe methods for
    establishing a reasonable reserve price or a minimum opening bid
    amount when FCC licenses are subject to auction, unless the
    Commission determines that a reserve price or minimum opening bid
    amount is not in the public interest.[^48] Consistent with this
    mandate, the Commission has directed the Bureau to seek comment on
    the use of a minimum opening bid amount and/or reserve price prior
    to the start of each auction.[^49]

50. Normally, a reserve price is an absolute minimum price below which
    an item will not be sold in a given amount. 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.

#### Reserve Prices

51. The Commission adopted a reserve price for the auction of AWS-1
    licenses in Auction 66, but not for the auction of broadband PCS
    licenses in Auction 71.[^50] The reserve price in Auction 66 was
    adopted pursuant to Section 1.2104(c) and the Commercial Spectrum
    Enhancement Act ("CSEA"), which required the Commission to prescribe
    methods by which the total cash proceeds from any auction of
    licenses authorizing the use of eligible frequencies, such as 1710
    to 1755 MHz, would equal at least 110 percent of the total estimated
    relocation costs of eligible federal entities.[^51] Given that
    one-half of the frequencies authorized for use by each license were
    CSEA eligible frequencies, one-half of each winning bid, net of any
    applicable bidding credit discounts at the end of bidding, was
    counted toward meeting the reserve price.[^52] At the conclusion of
    Auction 66, the net total winning bids exceeded the reserve amount
    established by the Commission.[^53]

52. Given that net winning bids exceeded the reserve price in Auction 66
    and that there was no separate reserve price in Auction 71, we
    believe the public interest does not warrant establishing reserve
    prices for the licenses being offered in Auction 78. Therefore, the
    Bureau does not propose a reserve price for any licenses to be
    offered in Auction 78. However, if commenters believe that a reserve
    price would be in the public interest, we invite their comments and
    request that they describe what specific factors lead them to that
    conclusion.

#### Minimum Opening Bids

53. In light of Section 309(j)'s requirements, the Bureau proposes to
    establish minimum opening bid amounts for Auction 78. The Bureau
    believes a minimum opening bid amount, which has been used in other
    auctions, is an effective bidding tool for accelerating the
    competitive bidding process.[^54]

54. As in the most recent auctions, the Bureau proposes to calculate
    minimum opening bids in Auction 78 on a license-by-license basis,
    calculated by bandwidth and license area population,[^55] with a
    minimum of \$500 per license.[^56] The Bureau proposes minimum
    opening bid formulas similar to those used in the most recent
    auctions for AWS-1 licenses (Auction 66)[^57] and broadband PCS
    licenses (Auction 71).[^58]

##### AWS-1

55. For AWS-1 licenses offered in Auction 78, the Bureau proposes
    minimum opening bids as follows:

-   For licenses covering CMAs or EAs in the 50 states, minimum opening
    bid amounts will be calculated as \$0.03/MHz-pop;

-   For the one available license that covers the Gulf of Mexico, the
    minimum opening bid amount will be \$20,000; and

-   For all remaining licenses, minimum opening bid amounts will be
    calculated as \$0.01/MHz-pop.

56. The proposed minimum opening bid amount for each AWS-1 license
    available in Auction 78, calculated pursuant to the procedures
    described above, is set forth in Attachment A.

##### Broadband PCS

57. For broadband PCS licenses offered in Auction 78, the Bureau
    proposes minimum opening bids as follows:

-   For licenses covering BTAs in the 50 states, minimum opening bid
    amounts will be calculated as \$0.03/MHz-pop; and

-   For all remaining licenses, minimum opening bid amounts will be
    calculated as \$0.01/MHz-pop.

58. The proposed minimum opening bid amount for each broadband PCS
    license available in Auction 78 is set forth in Attachment A.

59. The Bureau seeks comment on all of the above proposals concerning
    minimum opening bids. If commenters believe that these minimum
    opening bid amounts will result in unsold licenses, or are not
    reasonable amounts, or should instead operate as a reserve price,
    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 amount levels or formulas.

60. In establishing minimum opening bid amounts, 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 service areas, issues of interference with
    other spectrum bands and any other relevant factors that could
    reasonably have an impact on valuation of the licenses being
    auctioned. The Bureau also seeks comment on whether, consistent with
    Section 309(j), the public interest would be served by having no
    minimum opening bid amount.

61. Commenters may also wish to address the general role of minimum
    opening bids in managing the pace of the auction. For example,
    commenters could compare using minimum opening bids -- e.g., by
    setting higher minimum opening bids to reduce the number of rounds
    it takes licenses to reach their final prices -- to other means of
    controlling auction pace, such as changes to bidding schedules or
    activity requirements.

### Bid Amounts 

62. The Bureau proposes that, in each round, eligible bidders be able to
    place a bid on a given license using one or more pre-defined bid
    amounts.[^59] Under this proposal, the FCC Auction System interface
    will list the acceptable bid amounts for each license.

#### Minimum Acceptable Bids

63. The first of the acceptable bid amounts is called the minimum
    acceptable bid amount. The minimum acceptable bid amount for a
    license will be equal to its minimum opening bid amount until there
    is a provisionally winning bid on the license. After there is a
    provisionally winning bid for a license, the minimum acceptable bid
    amount for that license will be equal to the amount of the
    provisionally winning bid plus a percentage of that bid amount
    calculated using the formula described below. In general, the
    percentage will be higher for a license receiving many bids than for
    a license receiving few bids. In the case of a license for which the
    provisionally winning bid has been withdrawn, the minimum acceptable
    bid amount will equal the second highest bid received for the
    license. [^60]

64. The percentage of the provisionally winning bid used to establish
    the minimum acceptable bid amount ("the additional percentage") is
    calculated at the end of each round, based on an activity index. The
    activity index is a weighted average of (a) the number of distinct
    bidders placing a bid on the license, and (b) the activity index
    from the prior round. Specifically, the activity index is equal to a
    weighting factor times the number of bidders placing a bid on the
    license in the most recent bidding round plus one minus the
    weighting factor times the activity index from the prior round.[^61]
    The additional percentage is determined by adding one to the
    activity index, and multiplying that sum by a minimum percentage,
    with the result not to exceed a maximum percentage. The additional
    percentage is then multiplied by the provisionally winning bid
    amount to obtain the minimum acceptable bid for the next round. The
    Bureau proposes initially to set the weighting factor at 0.5, the
    minimum percentage at 0.1 (10%), and the maximum percentage at 0.2
    (20%). Hence, at these initial settings, the minimum acceptable bid
    for a license will be between ten percent and twenty percent higher
    than the provisionally winning bid, depending upon the bidding
    activity for the license. Equations and examples are shown in
    Attachment C.

#### Additional Bid Amounts

65. Any additional bid amounts are calculated using the minimum
    acceptable bid amount and a bid increment percentage -- more
    specifically, by multiplying the minimum acceptable bid by one plus
    successively higher multiples of the bid increment percentage. If,
    for example, the bid increment percentage is five percent, the
    calculation of the first additional acceptable bid amount is
    (minimum acceptable bid amount) \* (1 + 0.05), or (minimum
    acceptable bid amount) \* 1.05; the second additional acceptable bid
    amount equals the minimum acceptable bid amount times one plus two
    times the bid increment percentage, or (minimum acceptable bid
    amount) \* 1.1, etc. The Bureau will round the results of these
    calculations and the minimum acceptable bid calculations using the
    Bureau's standard rounding procedures. The Bureau proposes to set
    the bid increment percentage at 0.05.

66. For Auction 73, the Bureau determined that it would generally not
    provide, in that auction, for additional bid amounts for licenses
    not subject to package bidding, in light of the limited flexibility
    provided by additional bid amounts and the possibility that
    additional bid amounts could be used for signaling.[^62] The Bureau
    seeks comment on whether to start with no additional bid amounts or
    with eight additional bid amounts (for a total of nine bid amounts)
    for Auction 78. In particular, commenters should address the issue
    of additional bid amounts in light of particular circumstances of
    Auction 78, including the nature of the license inventory. The
    Bureau retains the discretion to change the minimum acceptable bid
    amounts, the additional bid amounts, the number of acceptable bid
    amounts, and the parameters of the formulas used to calculate
    minimum acceptable bid amounts and additional bid amounts if it
    determines that circumstances so dictate. [^63] Further, the Bureau
    retains the discretion to do so on a license-by-license basis.

67. The Bureau also retains the discretion to limit (a) the amount by
    which a minimum acceptable bid for a license may increase compared
    with the corresponding provisionally winning bid, and (b) the amount
    by which an additional bid amount may increase compared with the
    immediately preceding acceptable bid amount. For example, the Bureau
    could set a \$1 million limit on increases in minimum acceptable bid
    amounts over provisionally winning bids. Thus, if the activity-based
    formula calculates a minimum acceptable bid amount that is \$2
    million higher than the provisionally winning bid on a license, the
    minimum acceptable bid amount would instead be capped at \$1 million
    above the provisionally winning bid. We seek comment on the
    circumstances under which the Bureau should employ such a limit,
    factors we should consider when determining the dollar amount of the
    limit, and the tradeoffs in setting such a limit or changing
    parameters of the activity-based formula, such as changing the
    minimum percentage. If the Bureau exercises this discretion, it will
    alert bidders by announcement in the FCC Auction System.

68. The Bureau seeks comment on the above proposals. If commenters
    disagree with the Bureau's proposal to begin the auction with one
    acceptable bid amount per license, they should suggest an
    alternative number of acceptable bid amounts to use at the beginning
    of the auction, an alternative number to use later in the auction,
    and whether the same number of bid amounts should be used for each
    of the blocks, licenses, and services. Commenters may wish to
    address the role of the minimum acceptable bids and the number of
    acceptable bid amounts in managing the pace of the auction and the
    tradeoffs in managing auction pace by bidding schedule changes, by
    changing the activity requirements or bid amount parameters, or by
    using other means.

### Provisionally Winning Bids

69. Provisionally winning bids are bids that would become final winning
    bids if the auction were to close in that given round. At the end of
    a bidding round, a provisionally winning bid for each license will
    be determined based on the highest bid amount received for the
    license. In the event of identical high bid amounts being submitted
    on a license in a given round (i.e., tied bids), we will use a
    random number generator to select a single provisionally winning bid
    from among the tied bids. (Each bid is assigned a random number, and
    the tied bid with the highest random number wins the tiebreaker.)
    The remaining bidders, as well as the provisionally winning bidder,
    can submit higher bids in subsequent rounds. However, if the auction
    were to end with no other bids being placed, the winning bidder
    would be the one that placed the provisionally winning bid. If any
    bids are received on the license in a subsequent round, the
    provisionally winning bid again will be determined by the highest
    bid amount received for the license.

70. A provisionally winning bid will remain the provisionally winning
    bid until there is a higher bid on the license at the close of a
    subsequent round, unless the provisionally winning bid is withdrawn.
    Bidders are reminded that provisionally winning bids count toward
    activity for purposes of the activity rule.[^64]

### Bid Removal

71. For Auction 78, the Bureau proposes and seeks comment on the
    following bid removal procedures. Before the close of a bidding
    round, a bidder has the option of removing any bid placed in that
    round. By removing selected bids in the FCC Auction System, a bidder
    may effectively "undo" any of its bids placed within that round. In
    contrast to the bid withdrawal provisions described below, a bidder
    removing a bid placed in the same round is not subject to a
    withdrawal payment. Once a round closes, a bidder may no longer
    remove a bid.

### Bid Withdrawal

72. A bidder may withdraw its provisionally winning bids using the
    "withdraw bids" function in the FCC Auction System. A bidder that
    withdraws its provisionally winning bid(s) is subject to the bid
    withdrawal payment provisions of the Commission rules.[^65]

73. In the *Part 1 Third Report and Order*, the Commission explained
    that allowing bid withdrawals facilitates efficient aggregation of
    licenses and the pursuit of backup strategies as information becomes
    available during the course of an auction.[^66] 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.[^67]

74. For Auction 78, we propose to allow each bidder to withdraw
    provisionally winning bids in only one round during the course of
    the auction. To permit a bidder to withdraw bids in more than one
    round may encourage insincere bidding or the use of withdrawals for
    anti-competitive purposes. The round in which withdrawals may be
    used will be at the bidder's discretion, and there is no limit on
    the number of provisionally winning bids that may be withdrawn
    during that round. Otherwise, withdrawals must be in accordance with
    the Commission's rules, including the bid withdrawal payment
    provisions specified in Section 1.2104(g).[^68] The Bureau seeks
    comment on these bid withdrawal procedures. If commenters believe
    that each bidder should be allowed to withdraw provisionally winning
    bids in more than one round during the course of the auction, they
    should state how many bid withdrawal rounds they seek and explain
    what specific factors lead them to that conclusion.

## Post-Auction Procedures 

### Interim Withdrawal Payment Percentage

75. We seek comment on the appropriate percentage of a withdrawn bid
    that should be assessed as an interim withdrawal payment, in the
    event that a final withdrawal payment cannot be determined at the
    close of the auction. Balancing the potential need for bidders to
    use withdrawals to avoid winning incomplete combinations of licenses
    with our interest in deterring abuses of our bidding procedures, we
    propose an interim bid withdrawal payment level of fifteen percent
    for Auction 78.

76. In general, the Commission's rules provide that a bidder that
    withdraws a bid during an auction is subject to a withdrawal payment
    equal to the difference between the amount of the withdrawn bid and
    the amount of the winning bid in the same or subsequent
    auction(s).[^69] If a bid is withdrawn and no subsequent higher
    bid is placed and/or the license is not won in the same auction, the
    final withdrawal payment cannot be calculated until after the close
    of a subsequent auction in which a higher bid for the license (or
    the equivalent to the license) is placed or the license is won.[^70]
    When that final payment cannot yet be calculated, the bidder
    responsible for the withdrawn bid is assessed an interim bid
    withdrawal payment, which will be applied toward any final bid
    withdrawal payment that is ultimately assessed.[^71] Section
    1.2104(g)(1) of the Commission rules requires that the percentage of
    the withdrawn bid to be assessed as an interim bid withdrawal
    payment be between three percent and twenty percent and that it be
    set in advance of the auction.[^72]

77. The Commission has determined that the level of the interim
    withdrawal payment in a particular auction will be based on the
    nature of the service and the inventory of the licenses being
    offered.[^73] The Commission has noted that it may impose a higher
    interim withdrawal payment percentage to deter the anti-competitive
    use of withdrawals when, for example, bidders likely will not need
    to aggregate the licenses being offered in the auction, such as when
    few licenses are offered that are on adjacent frequencies or in
    adjacent areas, or when there are few synergies to be captured by
    combining licenses.[^74] Under this rationale, we chose an interim
    bid withdrawal payment level of fifteen percent for Auction 71,
    while we adopted a level of ten percent in Auction 66.[^75]

78. For Auction 78, the opportunities for combining licenses on adjacent
    frequencies or in adjacent areas are more limited than was the case
    in Auction 66, and thus, there is likely to be little need to use
    withdrawals to protect against incomplete aggregations. Therefore,
    we propose to establish the percentage of the withdrawn bid to be
    assessed as an interim bid withdrawal payment at fifteen percent for
    this auction for licenses in both services. The Bureau seeks comment
    on this proposal.

### Additional Default Payment Percentage

79. Any winning bidder that, after the close of an auction, defaults --
    by, for example, failing to remit the required down payment within
    the prescribed period of time, to submit a timely long-form
    application, or to make full payment -- or is otherwise disqualified
    is liable for a default payment under Section 1.2104(g)(2) of the
    Commission's rules.[^76] This payment consists of a deficiency
    payment, equal to the difference between the amount of the bidder's
    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.

80. Under Section 1.2104(g)(2), the Commission will, in advance of each
    non-combinatorial auction, establish an additional default payment
    for that auction of three percent up to a maximum of twenty
    percent.[^77] The level of this payment in each case will be based
    on the nature of the service and the inventory of the licenses being
    offered.[^78]

81. In the recent auctions of AWS-1 and broadband PCS licenses (Auctions
    66 and 71), the additional default payment was ten percent.[^79]

82. Defaults weaken the integrity of the auctions process and impede the
    deployment of service to the public, and an additional default
    payment of more than the previous three percent will be more
    effective in deterring defaults. At the same time, we do not believe
    the detrimental effects of any defaults in Auction 78 are likely to
    be unusually great. Balancing these considerations, we propose an
    additional default payment of ten percent of the relevant bid for
    Auction 78. The Bureau seeks comment on this proposal.

# DEADLINES AND FILING PROCEDURES

83. Comments are due on or before April 18, 2008, and reply comments are
    due on or before April 25, 2008. All filings related to the auction
    of these licenses should refer to AU Docket No. 08-46. Comments may
    be submitted using the Commission's Electronic Comment Filing System
    ("ECFS") or by filing paper copies.[^80] The Bureau strongly
    encourages interested parties to file comments electronically, and
    requests submission of a copy via the Auction 78 e-mail box
    (<auction78@fcc.gov>).

84. **Electronic Filers.** Comments may be filed electronically using
    the Internet by accessing the ECFS at
    <http://www.fcc.gov/cgb/ecfs/>. Filers should follow the
    instructions provided on the website for submitting comments. In
    completing the transmittal screen, filers should include their full
    name, U.S. Postal Service mailing address, and AU Docket No. 08-46.
    Parties may also submit an electronic comment by Internet e-mail. To
    get filing instructions, filers should send an e-mail to
    [[ecfs@fcc.gov]{.underline}](mailto:ecfs@fcc.gov), and include the
    following words in the body of the message, "get form." A sample
    form and directions will be sent in response.

85. **Paper Filers.** Parties who choose to file by paper must file an
    original and four copies of each filing. Filings can be sent by hand
    or messenger delivery, by commercial overnight courier, or by
    first-class or overnight U.S. Postal Service mail (although we
    continue to experience delays in receiving U.S. Postal Service
    mail). All filings must be addressed to the Commission's Secretary
    Attn: WTB/ASAD, Office of the Secretary, Federal Communications
    Commission, and should reference AU Docket No. 08-46.

> • The Commission's contractor will receive hand-delivered or
> messenger-delivered paper filings for the Commission's Secretary at
> 236 Massachusetts Avenue, NE, Suite 110, Washington, DC 20002. The
> filing hours at this location are 8:00 a.m. to 7:00 p.m. Eastern Time
> (ET). All hand deliveries must be held together with rubber bands or
> fasteners. Any envelopes must be disposed of before entering the
> building.
>
> • Commercial overnight mail (other than U.S. Postal Service Express
> Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
> Capitol Heights, MD 20743.
>
> • U.S. Postal Service first-class, Express, and Priority mail should
> be addressed to 445 12th Street, SW, Washington DC 20554.

86. **Auction 78 E-mail Box.** The Bureau also requests that a copy of
    all comments and reply comments be submitted electronically to the
    following address: <auction78@fcc.gov>.

87. Copies of comments and reply comments will be available for public
    inspection between 8:00 a.m. and 4:30 p.m. ET Monday through
    Thursday or 8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC
    Reference Information Center, Room CY-A257, 445 12th Street, SW,
    Washington, DC 20554, and will also be accessible through the search
    function on the ECFS web page at <http://www.fcc.gov/cgb/ecfs/>.

88. This proceeding has been designated as a "permit-but-disclose"
    proceeding in accordance with the Commission's *ex parte*
    rules.[^81] 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. 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.[^82]

# Contacts

89. For further information concerning this proceeding, contact the
    Wireless Telecommunications Bureau, as listed below:

**Mobility Division, Wireless Telecommunications Bureau**

For broadband PCS service rule questions: Erin McGrath or Michael
Connelly (legal) or Keith Harper (technical), at (202) 418-0620

**Broadband Division, Wireless Telecommunications Bureau**

For AWS-1 service rule questions: John Spencer at (202) 418-2487

**Auctions and Spectrum Access Division, Wireless Telecommunications
Bureau**

For general auction questions: Lisa Stover at (717) 338-2868

For auctions legal questions: Scott Mackoul or Stephen Johnson

> at (202) 418-0660

90. To request materials in accessible formats (Braille, large print,
    electronic files, audio format) for people with disabilities, send
    an e-mail to <fcc504@fcc.gov> or call the Consumer and Governmental
    Affairs Bureau at (202) 418-0530 or (202) 418-0432 (TTY).

**- FCC -**

[^1]: Additional information concerning AWS-1 licenses may be found in
    Part 27 of the Commission's rules. 47 C.F.R. Part 27. *See also*
    "Auction of Advanced Wireless Services Licenses Scheduled for June
    29, 2006; Notice and Filing Requirements, Minimum Opening Bids,
    Upfront Payments and Other Procedures for Auction No. 66," AU Docket
    No. 06-30, *Public Notice*, FCC 06-47, 21 FCC Rcd 4562 (2006)
    ("*Auction 66 Procedures Public Notice*"); "Auction of Advanced
    Wireless Services Licenses Rescheduled for August 9, 2006; Revised
    Schedule, Filing Requirements and Supplemental Procedures for
    Auction No. 66," AU Docket No. 06-30, *Public Notice*, FCC 06-71, 21
    FCC Rcd 5598 (2006).

[^2]: Additional information concerning broadband PCS licenses may be
    found in Part 24 of the Commission's rules. 47 C.F.R. Part 24. For
    additional background on previous broadband PCS auctions, including
    Auctions 4, 5, 10, 11, 22, 35, 58, and 71, see
    <http://wireless.fcc.gov/auctions>. *See also* "Auction of Broadband
    PCS Spectrum Scheduled for May 16, 2007; Notice and Filing
    Requirements, Minimum Opening Bids, Upfront Payments and Other
    Procedures for Auction No. 71," AU Docket No. 06-206, *Public
    Notice*, DA 07-30, 22 FCC Rcd 433 (2007) ("*Auction 71 Procedures
    Public Notice*").

[^3]: BTAs are material copyright ^©^ 1992 Rand McNally & Company.
    Rights granted pursuant to a license from Rand McNally & Company
    ("Rand McNally") through an agreement with the Federal
    Communications Commission. Rand McNally's BTA specification contains
    487 geographic areas covering the 50 states and the District of
    Columbia. For its spectrum auctions, the Commission added additional
    BTA-like areas for: American Samoa; Guam; Northern Mariana Islands;
    San Juan, Puerto Rico; Mayagüez/Aguadilla-Ponce, Puerto Rico; and
    the U.S. Virgin Islands. *See* Rand McNally, *1992 Commercial Atlas
    and Marketing Guide*, 123^rd^ Edition, at 38-39 (1992). *See also*
    47 C.F.R. § 24.202.

[^4]: *See* 47 C.F.R. § 24.709.

[^5]: *See* 47 C.F.R. § 24.709(a)(1).

[^6]: *See* 47 C.F.R. § 24.709(a)(3).

[^7]: Although F block licenses were originally offered only to
    entrepreneurs, the Commission later adopted open bidding for all F
    block licenses. Amendment of the Commission's Rules Regarding
    Installment Payment Financing for Personal Communications Services
    (PCS) Licenses, WT Docket No. 97-82, *Sixth Report and Order and
    Order on Reconsideration*, FCC 00-313, 15 FCC Rcd 16,266, 16,279-80
    ¶ 24 (2000) ("*C/F Block Sixth Report and Order*").

[^8]: *See* 47 C.F.R. § 24.709(a)(4)(i)(B).

[^9]: *See* 47 C.F.R. § 24.709(a)(4)(ii). *See also C/F Block Sixth
    Report and Order*, 15 FCC Rcd at 16,281-82 ¶¶ 27-29.

[^10]: *See* 47 C.F.R. §§ 24.712, 24.717*.*

[^11]: *See* 47 C.F.R. §§ 24.712, 24.717.

[^12]: The C1 Block license for market BTA127 is offered in open bidding
    because it was offered in Auctions 58 and 71, both of which occurred
    after March 23, 1999, but remained unsold.

[^13]: Four C1 Block licenses to be offered in Auction 78 (for markets
    BTA208, BTA333, BTA388, and BTA453) were available only to
    entrepreneurs and won in Auction 35, but automatically terminated
    for failure to meet the build-out requirements. Therefore, pursuant
    to the Commission's determination in the *C/F Block Sixth Report and
    Order* and Section 24.709(a)(4)(ii), they remain subject to the
    entrepreneur eligibility restriction when they are offered in
    Auction 78. 47 C.F.R. § 24.709(a)(4)(ii); *C/F Block Sixth Report
    and Order*, 15 FCC Rcd at 16,281-82 ¶¶ 27-29.

[^14]: When the Commission reconfigured 30 megahertz C Block licenses
    available for auction into three 10 megahertz licenses -- designated
    the C3, C4, and C5 Blocks -- it specified that, for Tier 2 markets,
    two license blocks (C3 and C4) would be subject to closed bidding,
    while the third license block (C5) would be made available in open
    bidding. *See* *C/F Block Sixth Report and Order*, 15 FCC Rcd at
    16,273-77 ¶¶ 12-20. *See also* 47 C.F.R. § 24.709(a)(4)(i)(B). The
    two C3 block licenses in Auction 78 -- in markets BTA205 and BTA406
    -- are available only to entrepreneurs because they are C3 block
    licenses that have not been previously made available on a closed
    basis in any auction beginning on or after March 23, 1999. *See*
    paragraph 7 and note 10, above.

[^15]: Two of the C4 Block licenses -- in markets BTA405 and BTA406 --
    are also available only to entrepreneurs because they are C4 block
    licenses that have not been previously made available on a closed
    basis in any auction beginning on or after March 23, 1999. Auction
    78 also includes a C4 Block license in market BTA062, which had been
    disaggregated from a 30 MHz C Block license won in Auction 5, but
    which was subsequently cancelled pursuant to an order from federal
    bankruptcy court. The C4 license in market BTA062 in its entirety is
    also available only to entrepreneurs because it has not been
    previously made available on a closed basis in any auction beginning
    on or after March 23, 1999. *See* note 14, above.

[^16]: The two partial E Block licenses in BTA385 and BTA460, which are
    available in Auction 78, had been cancelled/terminated after being
    partitioned and/or disaggregated.

[^17]: *See, e.g.,* US Notes 311 and 378 of the Table of Allocations, 47
    C.F.R. § 2.106. In the Omnibus Budget Reconciliation Act of 1993
    ("OBRA‑93"), Congress directed the Secretary of Commerce to identify
    at least 200 megahertz of spectrum below 5 GHz for transfer to
    non‑Federal services. 47 U.S.C. § 923. NTIA identified the band
    1710‑1755 MHz for transfer, with certain Federal operations to
    remain protected indefinitely. *See* Spectrum Reallocation Final
    Report, Response to Title VI Omnibus Budget Reconciliation Act of
    1993, NTIA Special Publication 95-32, at App. E and page F-4 (Feb.
    1995). Subsequently, NTIA concluded that most of the protected
    Federal operations could relocate or modify their operations to
    allow reallocation of the band for AWS. *See* NTIA Report, "An
    Assessment of the Viability of Accommodating Advanced Mobile
    Wireless (3G) Systems in the 1710-1770 MHz and 2110-2170 MHz Bands,"
    at 1-2 (July 22, 2002) ("*NTIA AWS Assessment*") (available at
    <http://www.ntia.doc.gov/reportsarchive2000_2003.html>). The
    Commission sought comment on the *NTIA AWS Assessment*. "FCC Seeks
    Comment on the National Telecommunications and Information
    Administration's Report, An Assessment of the Viability of
    Accommodating Advanced Mobile Wireless (3G) Systems in the 1710-1770
    MHz and 2110-2170 MHz Bands," ET Docket No. 00-258, *Public Notice*,
    DA 02-1780, 17 FCC Rcd 14,390 (2002). The *NTIA AWS Assessment* was
    incorporated into Amendment of Part 2 of the Commission's Rules to
    Allocate Spectrum Below 3 GHz for Mobile and Fixed Services to
    Support the Introduction of New Advanced Wireless Services,
    Including Third Generation Wireless Systems, ET Docket No. 00-258,
    *Fourth Notice of Proposed Rulemaking*, FCC 03-134, 18 FCC Rcd
    13,235 (2003).

[^18]: *See* Amendment of Part 2 of the Commission's Rules to Allocate
    Spectrum Below 3 GHz for Mobile and Fixed Services to Support the
    Introduction of New Advanced Wireless Services, Including Third
    Generation Wireless Systems, ET Docket No. 00-258, *Notice of
    Proposed Rule Making*, FCC 00-455, 16 FCC Rcd 596, 617-18 (2001).

[^19]: *See* Amendment of Part 2 of the Commission's Rules to Allocate
    Spectrum Below 3 GHz for Mobile and Fixed Services to Support the
    Introduction of New Advanced Wireless Services, including Third
    Generation Wireless Systems, ET Docket No. 00-258, *Second Report
    and Order*, FCC 02-304, 17 FCC Rcd 23,193, 23,208-13 ¶¶ 34-41
    (2002). The Commission has decided to clear BRS from the 2150-2155
    MHz band as part of a fundamental restructuring of the service.
    *See* Amendment of Parts 1, 21, 73, 74 and 101 of the Commission's
    Rules to Facilitate the Provision of Fixed and Mobile Broadband
    Access, Educational and Other Advanced Services in the 2150-2162 and
    2500-2690 MHz Bands, WT Docket No. 03-66, *Report and Order and
    Further Notice of Proposed Rule Making*, FCC 04-135, 19 FCC Rcd
    14,165, 14,177-78 ¶¶ 23-24 (2004).

[^20]: *Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4573-77 ¶¶
    24-34. *See also* "Auction of Advanced Wireless Services Licenses,
    168 Bidders Qualified to Participate in Auction No. 66; Information
    Disclosure Procedures Announced," *Public Notice,* DA 06-1525, 21
    FCC Rcd 8585 (2006).

[^21]: *See Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4612-15
    ¶¶ 188-200 (Commission adoption of reserve amount for Auction 66
    pursuant to the Commercial Spectrum Enhancement Act, Pub. L. No.
    108-494, 118 Stat. 3986, Title II (2004) (codified in various
    sections of Title 47 of the United States Code), § 202 (codified at
    47 U.S.C. § 923(g)(2))).

[^22]: *Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4615 ¶ 198.

[^23]: "Auction of Advanced Wireless Services Licenses Closes; Winning
    Bidders Announced for Auction No. 66," *Public Notice*, DA 06-1882,
    21 FCC Rcd 10,521 (2006) ("*Auction 66 Closing Public Notice*").

[^24]: *See* Section III.C.4.a. "Reserve Prices," below.

[^25]: *See* "The Federal Communications Commission and the National
    Telecommunications and Information Administration -- Coordination
    Procedures in the 1710 -- 1755 MHz Band, *Public Notice*, WT Docket
    No. 02-353, FCC 06-50, 21 FCC Rcd 4730 (2006).

[^26]: *See* Amendment of Part 2 of the Commission's Rules to Allocate
    Spectrum Below 3 GHz for Mobile and Fixed Services to Support the
    Introduction of New Advanced Wireless Services, Including Third
    Generation Wireless Systems, ET Docket No. 00-258, Service Rules for
    Advanced Wireless Services in the 1.7 GHz and 2.1 GHz Bands, WT
    Docket No. 02-353, *Ninth Report and Order and Order*, FCC 06-45, 21
    FCC Rcd 4473 (2006).

[^27]: *See* 47 C.F.R. § 101.79(a). *See also* 47 C.F.R. §§ 15.307,
    24.5; Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    *Memorandum Opinion and Order on Reconsideration*, FCC 00-123, 15
    FCC Rcd 13,999 (2000); Amendment to the Commission's Rules Regarding
    a Plan for Sharing the Costs of Microwave Relocation, WT Docket No.
    95-157, *Second Report and Order*, FCC 97-48, 12 FCC Rcd 2705
    (1997); Amendment to the Commission's Rules Regarding a Plan for
    Sharing the Costs of Microwave Relocation, WT Docket No. 95-157,
    *First Report and Order and Further Notice of Proposed Rule Making*,
    FCC 96-196, 11 FCC Rcd 8825 (1996).

[^28]: Broadband PCS entities were previously required to pay costs of
    relocating FMS licensees to other bands or alternative facilities,
    or in certain circumstances, to share the costs of relocating FMS
    licensees. The relocation reimbursement requirement sunset on April
    4, 2005. *See* 47 C.F.R. §§ 24.239-24.253, 101.69-101.81; "Broadband
    PCS Entities and Fixed Microwave Services Licensees Reminded of
    April 4, 2005 Sunset of Relocation Cost Compensation and Microwave
    Cost Sharing Rules," *Public Notice*, DA 05-612, 20 FCC Rcd 5141
    (2005).

[^29]: 47 U.S.C. § 309(j)(3)(E)(i).

[^30]: *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*, FCC 97-413, 13 FCC Rcd 374,
    448 ¶¶ 124-25 (1997) ("*Part 1 Third Report and Order*") (directing
    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 acceptable 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). *See also* 47 C.F.R. § 0.131; 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*, FCC 97-60, 12 FCC Rcd
    5686, 5697-98 ¶ 16 (1997) ("*Part 1 Order*").

[^31]: In Auction 66, the decision to implement limited information
    procedures depended upon an estimate of competition through a
    modified eligibility ratio. *See Auction 66 Procedures Public
    Notice*, 21 FCC Rcd at 4600-06 ¶¶ 140-159. The Commission's
    decision, however, was limited to AWS-1 licenses offered in Auction
    66. *See id.* at 4602 ¶ 144.

[^32]: *See* 47 C.F.R. § 1.2105(c).

[^33]: *See* "Auction of 700 MHz Band Licenses Scheduled for January 24,
    2008; Notice and Filing Requirements, Minimum Opening Bids, Upfront
    Payments and Other Procedures for Auction 73 and 76," AU Docket No.
    07-157, *Public Notice*, DA 07-4171, 22 FCC Rcd 18,141, 18,179-81 ¶¶
    138-144 (2007) ("*Auction 73 Procedures Public Notice*").

[^34]: 47 C.F.R. § 1.2104(e).

[^35]: Proactive waivers are described in Section III.C.3. "Activity
    Rule Waivers and Reducing Eligibility," provisionally winning bids
    are defined in Section III.C.6. "Provisionally Winning Bids," and
    bid withdrawals are described in Section III.C.8. "Bid Withdrawal,"
    below.

[^36]: 47 C.F.R. § 1.2104(i).

[^37]: *See Part 1 Order*, 12 FCC Rcd at 5697-98 ¶ 16. *See also Part 1
    Third Report and Order*, 13 FCC Rcd at 425 ¶ 86; Implementation of
    Section 309(j) of the Communications Act -- Competitive Bidding, PP
    Docket No. 93-253, *Second Report and Order*, FCC 94-61, 9 FCC Rcd
    2348, 2378-79 ¶¶ 171-75 (1994) ("*Competitive Bidding Second Report
    and Order*").

[^38]: *See Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2378-79 ¶¶ 171-76.

[^39]: *See* Section III.C. 6. "Provisionally Winning Bids," below.

[^40]: The Bureau proposes to round results using our standard rounding
    procedure. This procedure provides that results above \$10,000 are
    rounded to the nearest \$1,000; results below \$10,000 but above
    \$1,000 are rounded to the nearest \$100; and results below \$1,000
    are rounded to the nearest \$10. The exception to the bandwidth and
    population formulas is the AWS-1 license covering the Gulf of
    Mexico. *See* paragraph 35, below. All population figures are from
    the 2000 U.S. Census, U.S. Department of Commerce, Bureau of the
    Census. *See* Census 2000 Summary File 1 (SF1) and July 3, 2001,
    News Releases covering the U.S. Virgin Islands, Guam, the Northern
    Mariana Islands, and American Samoa.

[^41]: *See Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4594-97
    ¶¶ 109-121.

[^42]: *See Auction 71 Procedures Public Notice*, 22 FCC Rcd at 460 ¶
    93.

[^43]: *See* Section III C.3. "Activity Rule Waivers and Reducing
    Eligibility," below.

[^44]: *See* 47 C.F.R § 1.2104(g).

[^45]: For example, when monitoring activity for determining when to
    change stages, the Bureau may consider the percentage of bidding
    units of the licenses receiving new provisionally winning bids,
    excluding any FCC-held licenses. In past auctions, the Bureau has
    generally changed stages when this measure was approximately twenty
    percent or below for three consecutive rounds of bidding.

[^46]: If the Bureau implements stages with activity requirements other
    than the ones listed above, a bidder's reduced eligibility for the
    next round will be calculated by multiplying the bidder's current
    round activity by the reciprocal of the activity requirement. For
    example, with a 98 percent activity requirement, the bidder's
    current round activity would be multiplied by 50/49; with a 100
    percent activity requirement, the bidder's current round activity
    would become its bidding eligibility (current round activity would
    be multiplied by 1/1).

[^47]: In general, once a bidder places a proactive waiver during a
    round, the FCC Auction System does not allow the bidder to take any
    other bidding-related action, including placing or withdrawing bids
    later in that round.

[^48]: 47 U.S.C. § 309(j)(4)(F). *See also* 47 C.F.R. § 1.2104(c) and
    (d).

[^49]: *Part 1 Third Report and Order*, 13 FCC Rcd at 454-56 ¶ 141.
    *See* *also* 47 C.F.R. § 1.2104(c).

[^50]: *See* *Auction 66 Procedures Public Notice*, 21 FCC Rcd at
    4613-15 ¶¶ 190-200; *Auction 71 Procedures Public Notice*, 22 FCC
    Rcd at 469-71 ¶¶ 141-147. However, the Commission did note that the
    minimum opening bids established for the Auction 71 licenses
    effectively operated as reserve prices. *Id.* at 471 ¶ 146.

[^51]: 47 C.F.R. § 1.2104(c); Commercial Spectrum Enhancement Act, Pub.
    L. No. 108-494, 118 Stat. 3986, Title II (2004) (codified in various
    sections of Title 47 of the United States Code) ("CSEA"), § 202
    (codified at 47 U.S.C. § 923(g)(2)). *See also* *Auction 66
    Procedures Public Notice*, 21 FCC Rcd at 4613-15 ¶¶ 190-200.

[^52]: *See* *Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4615 ¶
    198.

[^53]: *See* *Auction 66 Closing Public Notice*, 21 FCC Rcd at 10,521.

[^54]: *See*, *e.g.*, Auction of 800 MHz SMR Upper 10 MHz Band, Minimum
    Opening Bids or Reserve Prices, *Order*, DA 97-2147, 12 FCC Rcd
    16,354 (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," *Public Notice*, DA 98-1010, 13 FCC Rcd
    16,445 (1998).

[^55]: All population figures are from the 2000 U.S. Census, U.S.
    Department of Commerce, Bureau of the Census. *See* Census 2000
    Summary File 1 (SF1) and July 3, 2001, News Releases covering the
    U.S. Virgin Islands, Guam, the Northern Mariana Islands, and
    American Samoa.

[^56]: We believe that the proposed minimum opening bid of \$500 will
    not impede any party willing and able to offer wireless service to
    the public. Under the Commission's current rules, the filing fee for
    a new cellular license or to make major modifications to an existing
    cellular license is \$365. This fee is waived for applicants that
    obtain licenses through the auction process. Thus, even absent an
    auction, service providers would have to meet costs comparable to
    the proposed absolute minimum opening bids in order to obtain a
    license. For both license service types, the Bureau proposes to
    round results using our standard rounding procedure. This procedure
    provides that results above \$10,000 are rounded to the nearest
    \$1,000; results below \$10,000 but above \$1,000 are rounded to the
    nearest \$100; and results below \$1,000 are rounded to the nearest
    \$10.

[^57]: *See* *Auction 66 Procedures Public Notice*, 21 FCC Rcd at
    4615-17 ¶¶ 201-209.

[^58]: *See* *Auction 71 Procedures Public Notice*, 22 FCC Rcd at 469-71
    ¶¶ 141-147.

[^59]: Bidders must have sufficient eligibility to place a bid on the
    particular license. *See* Section III.C.1. "Upfront Payments and
    Bidding Eligibility," above.

[^60]: *See* Section III.C.8. "Bid Withdrawal," below.

[^61]: For Round 1 calculations, because there is no prior round (i.e.,
    no round 0), the activity index from the prior round is set at 0.

[^62]: *See Auction 73 Procedures Public Notice*, 22 FCC Rcd at
    18,203-04 ¶¶ 228-233. The Bureau, however, retained discretion to
    change the number of acceptable amounts during the auction.

[^63]: Given that rounding may affect the relationship between the
    minimum acceptable bid and the provisionally winning bid, the Bureau
    also retains the discretion to alter its standard rounding procedure
    to avoid the possibility that the minimum acceptable bid duplicates
    the provisionally winning bid. In the event of duplicate bid amounts
    due to rounding, the FCC Auction System will omit the duplicates and
    will list fewer acceptable bid amounts for the license.

[^64]: *See* Section III.C.2. "Activity Rule," above.

[^65]: 47 C.F.R. §§ 1.2104(g) and 1.2109.

[^66]: *Part 1 Third Report and Order*, 13 FCC Rcd at 459-60 ¶ 150.

[^67]: *Id*.

[^68]: *See* 47 C.F.R. § 1.2104(g).

[^69]: 47 C.F.R. § 1.2104(g)(1). The withdrawal payment amount is
    deducted from any upfront payments or down payments that the
    withdrawing bidder has deposited with the Commission. No withdrawal
    payment is assessed for a withdrawn bid if either the subsequent
    winning bid or any of the intervening subsequent withdrawn bids
    equals or exceeds that withdrawn bid. *Id.*

[^70]: *Id*.

[^71]: *Id.*

[^72]: *See id.*, as amended by Implementation of the Commercial
    Spectrum Enhancement Act and Modernization of the Commission's
    Competitive Bidding Rules and Procedures, WT Docket No. 05-211,
    *Report and Order*, FCC 06-4, 21 FCC Rcd 891, 903 ¶ 30 (2006)
    ("*CSEA/Part 1 Report and Order*").

[^73]: *See CSEA/Part 1 Report and Order*, 21 FCC Rcd at 903-04 ¶ 31.

[^74]: *See id.* at 904 n.57*.*

[^75]: *See Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4623 ¶
    239; *Auction 71 Procedures Public Notice*, 22 FCC Rcd at 475 ¶ 169.

[^76]: 47 C.F.R. § 1.2104(g)(2).

[^77]: *Id*.

[^78]: *See* *CSEA/Part 1 Report and Order*, 21 FCC Rcd at 903-04 ¶¶
    30-31.

[^79]: *See Auction 66 Procedures Public Notice*, 21 FCC Rcd at 4628 ¶
    258; *Auction 71 Procedures Public Notice*, 22 FCC Rcd at 477 ¶ 183.

[^80]: *See* Electronic Filing of Documents in Rulemaking Proceedings,
    GC Docket No. 97-113, *Report and Order*, FCC 98-56, 13 FCC Rcd
    11,322 (1998).

[^81]: *See* 47 C.F.R. §§ 1.1200(a), 1.1206.

[^82]: 47 C.F.R. § 1.1206(b).