**PUBLIC NOTICE**

**Federal Communications Commission**

**445 12^th^ Street, SW**

**Washington, DC 20554**

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

####### DA 06-3 {#da-06-3 .unnumbered}

**January 10, 2006**

###### AUCTION OF 800 MHz AIR-GROUND RADIOTELEPHONE SERVICE  {#auction-of-800-mhz-air-ground-radiotelephone-service .unnumbered}

###### LICENSES SCHEDULED FOR MAY 10, 2006 {#licenses-scheduled-for-may-10-2006 .unnumbered}

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

######  OTHER PROCEDURES FOR AUCTION NO. 65 {#other-procedures-for-auction-no.-65 .unnumbered}

**Comments Due: January 31, 2006 Reply Comments Due: February 7, 2006**

**Report No. AUC-06‑65-A (Auction No. 65)**

By this public notice, the Wireless Telecommunications Bureau ("Bureau")
announces the auction of new nationwide commercial Air-Ground
Radiotelephone Service licenses in the 800 MHz band[^1] (Auction No.
65).[^2] This auction is scheduled to commence on May 10, 2006.

# LICENSES TO BE OFFERED IN AUCTION NO. 65

***Alternative Band Configurations.*** The Commission will auction
licenses in three alternative band configurations: (1) Band Plan 1,
comprised of two overlapping, shared, cross-polarized 3 MHz licenses
(Licenses A and B, respectively),[^3] (2) Band Plan 2, comprised of an
exclusive 3 MHz license and an exclusive 1 MHz license (Licenses C and
D, respectively),[^4] and (3) Band Plan 3, comprised of an exclusive 1
MHz license and an exclusive 3 MHz license (Licenses E and F,
respectively), with the blocks at opposite ends of the band from Band
Plan 2.[^5] Licenses in only one of these mutually incompatible band
configurations will be awarded. The band plan that receives the highest
aggregate bids in the auction will be implemented,[^6] and licenses
composing that configuration will be awarded to winning bidders subject
to review of the long-form license applications. Because the three band
configurations are mutually incompatible, applications for licenses in
different band plans will be mutually exclusive.

***License Descriptions.*** The following table describes the licenses
that will be offered in Auction No. 65:

+-------+-------+-------------------+------------+-------+----------+
| *     | *     | **Frequency       | **Total    | *     | **Ge     |
| *Band | *Lice | Band**            | B          | *Pair | ographic |
| P     | nse** |                   | andwidth** | ing** | Area     |
| lan** |       | **(MHz)**         |            |       | Type**   |
+-------+-------+-------------------+------------+-------+----------+
| 1     | A     | 849.0-850.5 /     | 3 MHz      | P     | Na       |
|       |       | 894.0-895.5       |            | aired | tionwide |
|       |       |                   | (2 MHz     |       |          |
|       |       |                   | Shared)    |       |          |
+-------+-------+-------------------+------------+-------+----------+
|       | B     | Initial:          | 3 MHz      | P     | Na       |
|       |       |                   |            | aired | tionwide |
|       |       | 849.0-850.5 /     | (2 MHz     |       |          |
|       |       | 894.0-895.5       | Shared)    |       |          |
|       |       |                   |            |       |          |
|       |       | After Clearing:   |            |       |          |
|       |       |                   |            |       |          |
|       |       | 849.5-851.0 /     |            |       |          |
|       |       | 894.5-896.0       |            |       |          |
+-------+-------+-------------------+------------+-------+----------+
| 2     | C     | 849.0-850.5 /     | 3 MHz      | P     | Na       |
|       |       | 894.0-895.5       |            | aired | tionwide |
+-------+-------+-------------------+------------+-------+----------+
|       | D     | 850.5-851.0 /     | 1 MHz      | P     | Na       |
|       |       | 895.5-896.0       |            | aired | tionwide |
+-------+-------+-------------------+------------+-------+----------+
| 3     | E     | 849.0-849.5 /     | 1 MHz      | P     | Na       |
|       |       | 894.0-894.5       |            | aired | tionwide |
+-------+-------+-------------------+------------+-------+----------+
|       | F     | 849.5-851.0 /     | 3 MHz      | P     | Na       |
|       |       | 894.5-896.0       |            | aired | tionwide |
+-------+-------+-------------------+------------+-------+----------+

[]{.mark}

The licenses available in Auction No. 65 are also listed in Attachment A
of this public notice.

***Permissible Services.*** A new licensee may provide any type of
air-ground service (*i.e.*, voice telephony, broadband Internet, data,
etc.) to aircraft of any type, and serve any or all aviation markets
(commercial, government, and general). A licensee must provide service
to aircraft.[^7] A new licensee may not provide ancillary land mobile or
fixed services in the 800 MHz air-ground spectrum.[^8]

***Eligibility Restriction.*** In order to promote competition in the
800 MHz air-ground band, the Commission has prohibited any party from
obtaining a controlling interest, either at auction or by a post-auction
transaction, in new licenses for more than three megahertz of spectrum
(either shared or exclusive) in the band. No single party, therefore,
may hold more than one license in any of the available band
configurations.[^9]

***International Coordination.*** To promote interoperable
communications and to manage interference, some of the ground station
locations in North America and channel block assignments of the 800 MHz
air-ground band have been predetermined consistent with bilateral
agreements with Mexico and with Canada.[^10] These agreements, which
provide for coordinated use of the 800 MHz air-ground frequencies over
North American airspace, are based on a narrow bandwidth channel scheme,
and therefore may need to be renegotiated to provide for more flexible
use of this spectrum based on the band plan configuration that is
implemented as a result of the auction.

***Spectrum Sharing Plan**.* If Band Plan 1, which is comprised of two
overlapping 3 MHz licenses, is implemented, the new licensees will be
required to jointly file a spectrum sharing and site selection plan with
the Bureau within six months of the initial grant of their spectrum
licenses, and they will be required to notify the Bureau of any changes
to the plan.[^11] The Bureau will issue a public notice prior to the
commencement of Auction No. 65 in which it will specify the filing
requirements for such a plan. This approach will provide parties with
overlapping spectrum licenses flexibility to configure their systems
without having to adhere to minimum spacing requirements or site
locations predetermined by the Commission.

***Incumbent Licensee.*** In the *Air-Ground Order*, the Commission
granted Verizon Airfone --- the only incumbent service provider in the
800 MHz air-ground band --- a nonrenewable license to operate in the
band for five years. This license will expire in May 2010.[^12] Verizon
Airfone must transition its incumbent narrowband operations from four to
one megahertz of spectrum in the band within two years of the initial
grant date of a new license in the band.[^13] The Commission has
directed the Bureau to adopt reporting requirements so that Airfone's
transition of its base stations and its subscribers' aircraft to
operations in one megahertz of the 800 MHz air-ground band may be
monitored.[^14] The Bureau will issue a public notice enumerating such
requirements by February 6, 2006.[^15] Airfone must file its initial
transition status report with the Commission six months from the date of
the grant of any new license in the band and at each of the three
six-month intervals thereafter.[^16]

In addition, if Airfone, or an affiliate of Airfone, wins an exclusive 3
MHz license at auction, the Bureau will issue a public notice within 60
days of the grant of such a license, which requires the company to
include in each status report information regarding the transition of
its existing subscribers from its narrowband system to a broadband
system and to file additional status reports at six-month intervals from
the conclusion of the two-year transition period until the expiration of
its five-year nonrenewable license.[^17]

# AUCTION PROCEDURES

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...."[^18] 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.[^19] We therefore seek comment on the following issues
relating to Auction No. 65.

## Auction Structure

### Simultaneous Multiple-Round Auction Design

We propose to conduct Auction No. 65 as a simultaneous multiple-round
auction. As indicated above, licenses will be offered in three mutually
incompatible band configurations, and the band plan that receives the
highest aggregate bids in the auction will be implemented. We believe
the simultaneous multiple-round auction design is an appropriate auction
design given these circumstances. 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. Bidding remains open on all licenses until bidding
stops on every license. We seek comment on this proposal.

### Round Structure

The Commission will conduct Auction No. 65 over the Internet.
Alternatively, telephonic bidding will also be available. The toll-free
telephone number for telephonic bidding will be provided to qualified
bidders.

The simultaneous multiple-round format will consist of sequential
bidding rounds, each followed by the release of round results. The
initial bidding schedule will be announced in a public notice to be
released at least one week before the start of the auction. Details on
viewing round results, including the location and format of downloadable
round results files, will be included in the same public notice.

The Bureau retains 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. 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.

### Stopping Rule

The Bureau has discretion "to establish stopping rules before or during
multiple round auctions in order to terminate the auction within a
reasonable time."[^20] For Auction No. 65, 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.

Bidding will close simultaneously on all licenses after the first round
in which no bidder submits any new bids or applies a proactive
waiver.[^21] Thus, unless circumstances dictate otherwise, bidding will
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. 65:

1\. 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 or submits 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.

2\. Keep the auction open even if no bidder submits any new bids or
applies a waiver. 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 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) after which the auction will close.

The Bureau proposes to exercise these options only in certain
circumstances, 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 changing the minimum acceptable bid
percentage. We seek comment on these proposals.

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

For Auction No. 65, 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
efficient conduct of competitive bidding.[^22] 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.

## Bidding Procedures

### Upfront Payments and Bidding Eligibility 

The Bureau has delegated authority and discretion to determine an
appropriate upfront payment for each license being auctioned.[^23] A
bidder's upfront payment is a refundable deposit to establish
eligibility to bid on licenses. Upfront payments related to licenses for
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.[^24] With
these factors in mind for Auction No. 65, we propose upfront payments of
\$100,000 per license.

[]{.mark}

Consistent with the Bureau's usual practice, we further propose that the
amount of the upfront payment submitted by a bidder will determine the
bidder's bidding eligibility in bidding units. For Auction No. 65, we
propose to assign 100,000 bidding units per license. The number of
bidding units for a given license is fixed and does not change during
the auction as prices change.

However, because the mutually incompatible band configurations and the
three megahertz eligibility restriction limit a bidder to winning only a
single license, we propose to permit a bidder with 100,000 bidding units
of eligibility to bid or be active simultaneously on any or all of the
licenses it selected on its FCC Form 175, rather than being limited to
activity on a single license with 100,000 bidding units as our usual
activity and eligibility rules would require. That is, under our
proposal, an upfront payment of \$100,000 would give a bidder 100,000
bidding units of eligibility, which in turn would permit the bidder to
be active on any or all of the licenses it selected on its FCC Form 175,
making it unnecessary to acquire more than 100,000 bidding units of
bidding eligibility in order to bid or be active simultaneously on more
than one license.[^25]

The proposed upfront payment and number of bidding units for each
license available in Auction No. 65 is also set forth in Attachment A.
We seek comment on this proposal.

### Activity Rule

In order to ensure that an 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. Bidders are required to be active during each round of
the auction. If a bidder fails to maintain the required activity level
in a round, it must use one of the limited number of activity rule
waivers allotted to it in order to maintain its current level of
eligibility. In a typical FCC auction, if the bidder has no activity
rule waivers remaining, its eligibility will be reduced.

For Auction No. 65, we propose the following activity requirement: in
each round of the auction, a bidder desiring to maintain its eligibility
to participate in the auction is required to be active (place a bid or
hold the provisionally winning bid) on at least one license.[^26] As
explained above, under our proposal for upfront payments and bidding
eligibility, a bidder must have 100,000 bidding units of eligibility to
participate in the auction --- *i.e.*, to bid on at least one license
--- and may hold a maximum of 100,000 bidding units of eligibility.[^27]
Therefore, under our proposal for this auction, any reduction in a
bidder's eligibility will effectively preclude the bidder from further
bidding in the auction. In other words, failure to maintain the required
activity level will have the effect of eliminating the bidder from
further bidding in the auction unless an activity rule waiver is used.

We seek comment on these proposals. Commenters that believe this
activity rule should be modified should explain their reasoning and
comment on the desirability of an alternative approach. Commenters are
advised to support their claims with analyses and suggested alternative
activity rules.

### Activity Rule Waivers

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 and not to a particular license. Activity rule waivers
can be either proactive or automatic and are principally a mechanism for
auction participants to avoid the loss of bidding eligibility in the
event that exigent circumstances prevent them from placing a bid in a
particular round.

The FCC Auction System assumes that a bidder that does not meet the
activity requirement would prefer to apply an activity rule waiver (if
available) rather than lose bidding eligibility, which in this auction
would have the effect of precluding the bidder from further bidding in
the auction. Therefore, the system will automatically apply a waiver at
the end of any bidding round in which a bidder fails to be active (place
a bid or hold the provisionally winning bid) on at least one license
unless the bidder has no activity rule waivers available. **If a bidder
has no waivers remaining and does not satisfy the required activity
requirement, it will no longer be permitted to place bids in the
auction.**

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
submitted, 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 will not keep the auction
open. A bidder cannot submit a proactive waiver after submitting a bid
in a round, and submitting a proactive waiver will preclude a bidder
from placing any bids in that round. **Applying a waiver is
irreversible; once a proactive waiver is submitted, that waiver cannot
be unsubmitted, even if the round has not yet closed.**

We propose that each bidder in Auction No. 65 be provided with three
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.

### Reserve Price or Minimum Opening Bid

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.[^28] 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.[^29]

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 amount, 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. The auctioneer, however, often has the
discretion to lower the minimum opening bid amount during the course of
the auction. It is also possible for the minimum opening bid amount and
the reserve price to be the same amount.

In light of the distinctive features of the Air-Ground Radiotelephone
Service and Section 309(j)'s requirements for competitive bidding, the
Bureau proposes to set minimum opening bids for each license and to
establish a published aggregate reserve price for the entire band. The
Bureau believes a minimum opening bid amount, which has been used in
other auctions, is an effective tool for accelerating the competitive
bidding process.[^30] At the same time, given uncertainty regarding the
relative values of the 800 MHz Air-Ground Radiotelephone Service
licenses, the Bureau believes that it can best comply with the
Commission's statutory mandate to recover for the public a portion of
the value of the public spectrum resource by establishing a published
reserve price for the entire band.[^31] **Under this proposal, if the
sum of the provisionally winning bids at the close of bidding does not
meet or exceed the aggregate reserve price, the Commission will cancel
the auction and no licenses will be awarded on the basis of the
bidding.**[^32]

[]{.mark}

More specifically, for Auction No. 65, we propose to set minimum opening
bids on a license-by-license basis as follows:

  --------------- --------------------------- ----------------------------
  **Licenses**    **Bandwidth**               **Minimum Opening Bid**

  A and B         3 MHz (2 MHz shared)        \$1,500,000

  C and F         3 MHz                       \$2,800,000

  D and E         1 MHz                       \$200,000
  --------------- --------------------------- ----------------------------

We also propose to establish a published reserve price of \$5,000,000
for the entire band. Attachment A to this public notice also sets forth
the proposed minimum opening bids and reserve price. We seek comment on
this proposal.

If commenters believe that these minimum opening bid amounts will result
in 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 amount levels or formulas. In
establishing the minimum opening bid amounts and the reserve price, we
particularly seek comment on such factors as the amount of spectrum
being auctioned, levels of incumbency, the availability of technology to
provide service, issues of interference with other spectrum bands and
any other relevant factors that could reasonably have an impact on
valuation of the 800 MHz Air-Ground Radiotelephone Service licenses.
Commenters proposing to reduce or eliminate the reserve price should
address the extent to which minimum opening bids should be changed as a
result. We also seek comment on whether, consistent with Section 309(j),
the public interest would be served by having no minimum opening bid
amounts or reserve price.

### Bid Amounts

In each round, eligible bidders will be able to place bids on a given
license in any of nine different amounts. The FCC Auction System
interface will list the nine acceptable bid amounts for each license.

The minimum acceptable bid amount for a license will be equal to its
minimum opening bid amount until the bids placed enable the FCC Auction
System to calculate a higher "price" for the license. If such a "price"
can be calculated, the minimum acceptable bid amount for the license
will be determined in a two-step process:

1.  The FCC Auction System designates a "price" for each license. For
    licenses with provisionally winning bids, this price will be equal
    to the amount of the provisionally winning bid. For all other
    licenses, the price will be equal to the amount of the highest bid
    placed on the license by any non-provisionally winning bidder.

2.  The price is increased by the minimum acceptable bid percentage.

[]{.mark}

The minimum acceptable bid amount will be calculated by multiplying the
license price times the sum of one plus the minimum acceptable bid
percentage --- *e.g.*, if the minimum acceptable bid percentage is five
percent, the minimum acceptable bid amount will equal (license price) \*
(1.05), rounded. We will round the result using our standard rounding
procedures.[^33]

[]{.mark}

The nine acceptable bid amounts for each license consist of the minimum
acceptable bid amount and additional amounts calculated using the
minimum acceptable bid amount and the bid increment percentage. We will
round the results using our standard rounding procedures.[^34] The first
additional acceptable bid amount equals the minimum acceptable bid
amount times the sum of one plus the bid increment percentage, rounded
--- *e.g.*, if the bid increment percentage is five percent, the
calculation is (minimum acceptable bid amount) \* (1 + 0.05), rounded,
or (minimum acceptable bid amount) \* 1.05, rounded; the second
additional acceptable bid amount equals the minimum acceptable bid
amount times the sum of one plus two times the bid increment percentage,
rounded, or (minimum acceptable bid amount) \* 1.10, rounded; the third
additional acceptable bid amount equals the minimum acceptable bid
amount times the sum of one plus three times the bid increment
percentage, rounded, or (minimum acceptable bid amount) \* 1.15,
rounded; etc. Note that the bid increment percentage need not be the
same as the minimum acceptable bid percentage.

For Auction No. 65, the Bureau proposes to use a minimum acceptable bid
percentage of five percent. This means that the minimum acceptable bid
amount for a license will be approximately five percent greater than the
provisionally winning bid amount for the license. The Bureau proposes to
use a bid increment percentage of five percent.

The Bureau retains the discretion to change the minimum acceptable bid
amounts, the minimum acceptable bid percentage, the bid increment
percentage, and the number of acceptable bid amounts if it determines
that circumstances so dictate. The Bureau will do so by announcement in
the FCC Auction System during the auction. We seek comment on these
proposals.

### Provisionally Winning Bids

At the end of each bidding round, the FCC Auction System will determine
the provisionally winning bids by considering all of the bids that have
been placed in the auction and determining which band plan option has
the highest aggregate bid while not allowing a bidder to have more than
one provisionally winning bid. The only licenses that can have
provisionally winning bids are those of the band plan option with the
highest aggregate bid; the licenses of the other band plan options will
not have provisionally winning bids.

If a provisionally winning bid must be selected from among identical bid
amounts submitted on a license (*i.e*., tied bids), we will use a random
number generator to select a single 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 selected
provisionally winning bid.

Similarly, in the event of identical aggregate high bid amounts on more
than one band plan (*i.e.*, tied band plans), the tie between band plans
will be broken based on the random numbers of the corresponding bids.
The tied band plan with the highest sum of the random numbers will
become the band plan for which there are provisionally winning bids.

[]{.mark}

A consequence of the mutually incompatible band configurations and the
three megahertz eligibility restriction is that a bid that does not
become a provisionally winning bid at the conclusion of the round in
which it was placed may become a provisionally winning bid at the
conclusion of a subsequent round. For example, assume that Bidder 1
places a bid on License A in round 1, and that the provisionally winning
bids at the conclusion of round 1 are for Licenses C and D. If another
bidder places a bid on License B in a later round that, together with
Bidder 1's round 1 bid on License A, produces the highest aggregate bid
amount on a band plan, then Bidder 1's round 1 bid on License A and the
other bidder's later bid on License B would become the provisionally
winning bids. This could happen after many intervening rounds even if
Bidder 1 is no longer eligible to bid.[^35] Moreover, this could happen
even if there are bids on License A that are higher than Bidder 1's
because no bidder may win more than one license.

Bidders are reminded that provisionally winning bids count toward
activity for purposes of the activity rule.[^36]

### Bid Removal and Bid Withdrawal

For Auction No. 65, we propose the following bid removal and bid
withdrawal 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
"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.

The Bureau proposes for Auction No. 65 that bidders not be permitted, in
any round, to withdraw bids made in previous rounds. The Commission has
recognized that bid withdrawals may be an important tool to help bidders
avoid incomplete aggregations of licenses and pursue efficient backup
strategies as information becomes available during the course of an
auction.[^37] In Auction No. 65, however, bidders may win only one
license and therefore will not face risks of being unable to secure
desired aggregations of licenses. In addition, we believe that given the
small number of licenses in the auction and the nature of the licenses
being offered, bidders will not need to use bid withdrawals to pursue
backup strategies in the same way bidders may need to do so in some
auctions. Moreover, in previous auctions, we have observed instances in
which bid withdrawals arguably may have been used for strategic,
anticompetitive purposes. While we continue to recognize that bid
withdrawals may play an important role in an auction, we note that bid
withdrawals have not been available in several previous auctions.[^38]
We seek comment on these proposed bid removal and bid withdrawal
procedures.

# CONCLUSION

Comments are due on or before January 31, 2006, and reply comments are
due on or before February 7, 2006. All filings must be addressed to the
Commission's Secretary Attn: WTB/ASAD, Office of the Secretary, Federal
Communications Commission. Parties who file comments by paper must file
an original and four copies of each filing. U.S. Postal Service
first-class, Express, and Priority mail should be addressed to 445
12^th^ Street, SW, Washington, DC 20554. Filings can be sent by hand or
messenger delivery, by commercial overnight courier, or by first-class
or overnight U.S. Postal Service mail.[^39] The Bureau also requires
that all comments and reply comments be filed electronically to the
following address: <auction65@fcc.gov>.[^40] The electronic mail
containing the comments or reply comments must include a subject or
caption referring to "Auction No. 65 Comments" and the name of the
commenting party. The Bureau requests that parties format any
attachments to electronic mail as Adobe^®^ Acrobat^®^ (pdf) or
Microsoft^®^ Word documents. Copies of comments and reply comments will
be available for public inspection between 8:00 a.m. and 4:30 p.m.
Eastern Time (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 posted on the
web page for Auction No. 65 at
[http://wireless.fcc.gov/auctions/65/](http://wireless.fcc.gov/auctions/default.htm?job=auction_summary&id=65).

This proceeding has been designated as a "permit‑but‑disclose"
proceeding in accordance with the Commission's *ex parte* rules.[^41]
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.[^42] 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.[^43]

For further information concerning this proceeding, contact:

**Mobility Division, Wireless Telecommunications Bureau**

For service rules questions: Erin McGrath or Richard Arsenault (legal);
or Jay Jackson or Moslem Sawez (technical) at (202) 418-0620

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

For legal questions: Brian Carter at (202) 418-0660

For general auction questions: Jeff Crooks at (202) 418-0660 or Barbara
Sibert at (717) 338-2888

**- FCC -**

**Auction No. 65**

**DA 06-3**

**Attachment A**

  ---- ---- ------------ -------- ------------- -------------- ------------ --------- ----------- --------------
                                                                                                  

  1    A    Nationwide   NWA255   CJ-NWA255-A   849.0-850.5 /  3 MHz\       100,000   \$100,000    \$1,500,000
                                                894.0-895.5    (2 MHz                             
                                                               Shared)^1^                         

       B    Nationwide   NWA255   CJ-NWA255-B   Initial\       3 MHz\       100,000   \$100,000    \$1,500,000
                                                849.0-850.5 /  (2 MHz                             
                                                894.0-895.5\   Shared) ^1^                        
                                                After                                             
                                                Clearing\                                         
                                                849.5-851.0 /                                     
                                                894.5-896.0                                       

  2    C    Nationwide   NWA255   CJ-NWA255-C   849.0-850.5 /  3 MHz        100,000   \$100,000    \$2,800,000
                                                894.0-895.5                                       

       D    Nationwide   NWA255   CJ-NWA255-D   850.5-851.0 /  1 MHz        100,000   \$100,000    \$200,000
                                                895.5-896.0                                       

  3    E    Nationwide   NWA255   CJ-NWA255-E   849.0-849.5 /  1 MHz        100,000   \$100,000    \$200,000
                                                894.0-894.5                                       

       F    Nationwide   NWA255   CJ-NWA255-F   849.5-851.0 /  3 MHz        100,000   \$100,000    \$2,800,000
                                                894.5-896.0                                       
  ---- ---- ------------ -------- ------------- -------------- ------------ --------- ----------- --------------

> Aggregate Reserve Price \$5,000,000
>
> ^1^ Licenses A and B would authorize transmission of radio waves that
> are vertically and horizontally polarized, respectively, and would
> initially share 3.0 MHz: 1.5 MHz at 849.0-850.5 MHz paired with 1.5
> MHz at 894.0-895.5 MHz. Once Verizon Airfone Inc.'s incumbent system
> ceases operations in the upper 0.5 MHz of each band, the License B
> licensee would shift its operations to 1.5 MHz at 849.5-851.0 MHz
> paired with 1.5 MHz at 894.5-896.0 MHz, and the licensees for Licenses
> A and B would share 2.0 MHz.
>
> ^2^ As described in Section II.B.1. "Upfront Payments and Bidding
> Eligibility," under the proposed bidding procedures, bidders would not
> need more than 100,000 bidding units of eligibility.

[^1]: The spectrum consists of an uplink band at 849-851 MHz and a
    downlink band at 894-896 MHz. 47 C.F.R. § 22.857.

[^2]: Amendment of Part 22 of the Commission's Rules to Benefit the
    Consumers of Air-Ground Telecommunications Services, Biennial
    Regulatory Review --- Amendment of Parts 1, 22, and 90 of the
    Commission's Rules, Amendment of Parts 1 and 22 of the Commission's
    Rules to Adopt Competitive Bidding Rules for Commercial and General
    Aviation Air-Ground Radiotelephone Service, WT Docket Nos. 03-103
    and 05-42, *Order on Reconsideration and Report and Order,* FCC
    05-202 (rel. December 9, 2005) ("*Air-Ground Reconsideration
    Order*"); Amendment of Part 22 of the Commission's Rules to Benefit
    the Consumers of Air-Ground Telecommunications Services, Biennial
    Regulatory Review --- Amendment of Parts 1, 22, and 90 of the
    Commission's Rules, Amendment of Parts 1 and 22 of the Commission's
    Rules to Adopt Competitive Bidding Rules for Commercial and General
    Aviation Air-Ground Radiotelephone Service, WT Docket Nos. 03-103
    and 05-42, *Report and Order and Notice of Proposed Rulemaking*, 20
    FCC Rcd 4403 (2005) ("*Air-Ground Order*").

[^3]: Licenses A and B would authorize transmission of radio waves that
    are vertically and horizontally polarized, respectively, and would
    initially share 3.0 MHz: 1.5 MHz at 849.0-850.5 MHz paired with 1.5
    MHz at 894.0-895.5 MHz. Once Verizon Airfone Inc.'s ("Verizon
    Airfone" or "Airfone") incumbent system ceases operations in the
    upper 0.5 MHz of each band, the License B licensee would shift its
    operations to 1.5 MHz at 849.5-851.0 MHz paired with 1.5 MHz at
    894.5-896.0 MHz, and the licensees for Licenses A and B would share
    2.0 MHz. *See* "Incumbent Licensee," below. However, licensees in
    Band Plan 1 would have the option of agreeing to a different
    implementation scheme, subject to the service rules. *See* "Spectrum
    Sharing Plan," below.

[^4]: License C would be located in the lower 1.5 MHz portion of each 2
    MHz band (1.5 MHz at 849.0-850.5 MHz paired with 1.5 MHz at
    894.0-895.5 MHz). License D would be located in the upper 0.5 MHz
    portion of each 2 MHz band (0.5 MHz at 850.5-851.0 MHz paired with
    0.5 MHz at 895.5-896.0 MHz).

[^5]: License E would be located in the lower 0.5 MHz portion of each 2
    MHz band (0.5 MHz at 849.0-849.5 MHz paired with 0.5 MHz at
    894.0-894.5 MHz). License F would be located in the upper 1.5 MHz
    portion of each 2 MHz band (1.5 MHz at 849.5-851.0 MHz paired with
    1.5 MHz at 894.5-896.0 MHz).

[^6]: Gross bids for the licenses, rather than net bids adjusted for
    bidding credits, will be used to determine the band plan with the
    highest aggregate bids.

[^7]: *See Air-Ground Order,* 20 FCC Rcd at 4431 ¶ 52.

[^8]: *See id.* at 4431 ¶ 53; *Air-Ground Reconsideration Order* at ¶¶
    5-7.

[^9]: *See Air-Ground Order,* 20 FCC Rcd at 4426-4427 ¶¶ 43-44.

[^10]: *See* "Arrangement Between the Department of Communications of
    Canada and the Federal Communications Commission of the United
    States of America Concerning the Use of the Bands 849-851 and
    894-896 MHz," signed August 18, 1992 (U.S.A.) and August 28, 1992
    (Canada), Section 4. *See also* "Protocol Concerning the Use of the
    849-851 and 894-896 MHz Bands for Public Air-To-Ground Radio
    Service," signed June 16, 1994 by the Government of the United
    States and the Government of Mexico, Article IV.

[^11]: *See Air-Ground Order,* 20 FCC Rcd at 4422-4423 ¶ 34.

[^12]: *See id.* at 4440-4441 ¶¶ 80-81.

[^13]: *See id.* at 4438-4439 ¶ 75. If Band Plan 1 or 2 is the winning
    configuration at auction, Verizon Airfone's incumbent system must
    cease operations in the lower 1.5 MHz portion of each 2 MHz
    air-ground band within two years of the initial date of grant of a
    new license or licenses. Verizon Airfone may relocate its incumbent
    operations to the upper 0.5 MHz portion of each 2 MHz band (0.5 MHz
    at 850.5-851.0 MHz paired with 0.5 MHz at 895.5-896.0 MHz) and may
    continue to operate under the renewal authorization until the end of
    the five-year license term. If Band Plan 3 is the winning
    configuration at auction, Verizon Airfone's incumbent system must
    cease operations in the upper 1.5 MHz portion of each 2 MHz
    air-ground band within two years of the initial date of grant of a
    new license; Airfone may relocate to the lower 0.5 MHz portion of
    each 2 MHz band (0.5 MHz at 849.0-849.5 MHz paired with 0.5 MHz at
    894.0-894.5 MHz) and may continue to operate under the renewal
    authorization until the end of the five-year license term.

[^14]: *Air-Ground Reconsideration Order* at ¶ 21.

[^15]: The Commission stated that, at a minimum, each report should
    provide the number and percentage of each type of aircraft
    (commercial, general aviation, and government) and base stations
    that have been transitioned to operate in the one megahertz portion
    of the band. *Id.*

[^16]: Airfone is not required to submit any classified information
    regarding government aircraft in its reports, and may seek
    confidential treatment of information contained in the transition
    reports in accordance with the Commission's rules and policies. 47
    C.F.R. § 0.459.

[^17]: *Air-Ground Reconsideration Order* at ¶ 22. The Commission stated
    that, at a minimum, Airfone must specify the number and percentage
    of each type of aircraft (commercial, general aviation, and
    government) and base stations that have been configured to operate
    in the three megahertz portion of the band. The report must also
    delineate which aircraft have been transitioned from Airfone's 4 MHz
    narrowband system directly to a 3 MHz broadband system, and which
    aircraft have been transitioned from the 4 MHz narrowband system to
    a 1 MHz narrowband system and then to a 3 MHz broadband system.
    *Id.*

[^18]: 47 U.S.C. § 309(j)(3)(E)(i).

[^19]: *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, *Third
    Report and Order and Second Further Notice of Proposed Rule Making*,
    13 FCC Rcd 374, 448 ¶ 124-125 (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, *Order, Memorandum Opinion and
    Order, and Notice of Proposed Rule Making*, 12 FCC Rcd 5686,
    5697-5698 ¶ 16 (1997) ("*Part 1 Order*").

[^20]: 47 C.F.R. § 1.2104(e).

[^21]: Proactive waivers are described in Section II.B.3. "Activity Rule
    Waivers," below.

[^22]: *See* 47 C.F.R. § 1.2104(i).

[^23]: *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,
    *Second Report and Order*, 9 FCC Rcd 2348, 2378-79 ¶¶ 171-175 (1994)
    ("*Competitive Bidding Second Report and Order*").

[^24]: *Competitive Bidding Second Report and Order,* 9 FCC Rcd 2348,
    2378-79 ¶¶ 171-176.

[^25]: Former defaulters --- applicants that in the past have defaulted
    on any Commission licenses or been delinquent on any non-tax debt
    owed to any Federal agency, but that have since remedied all such
    defaults and cured all of their outstanding non-tax delinquencies
    --- are required to pay upfront payments that are fifty percent more
    than the normal upfront payment amounts. *See* 47 C.F.R. §
    1.2106(a).

[^26]: The activity rules in most FCC auctions require that bidders be
    active on a certain percentage of their eligibility, and the
    required percentage increases one or more times during the auction
    in a series of stages. The requirement proposed here corresponds to
    a single stage auction with a 100 percent activity requirement.

[^27]: As also explained above, 100,000 bidding units of eligibility
    will permit bidders to be active on more than one license in a given
    round, although no bidder will be permitted to win more than a
    single license. *See* Section II.B.1, "Upfront Payments and Bidding
    Eligibility," above.

[^28]: 47 U.S.C. § 309(j)(4)(F). *See also* 47 C.F.R. § 1.2104(c) and
    (d).

[^29]: *Part 1 Third Report and Order,* 13 FCC Rcd at 454-55 ¶ 141.

[^30]: *See*, *e.g.*, Auction of 800 MHz SMR Upper 10 MHz Band, Minimum
    Opening Bids or Reserve Prices, *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, *Public Notice*, 13 FCC Rcd 16445 (1998); Auction
    of Licenses in the Multichannel Video Distribution and Data Service
    Rescheduled for January 14, 2004; Notice and Filing Requirements,
    Minimum Opening Bids, Upfront Payments and Other Auction Procedures,
    *Public Notice*, 18 FCC Rcd 17553 (2003).

[^31]: *See* 47 U.S.C. § 309(j)(3)(C).

[^32]: Gross bids for the licenses, rather than net bids adjusted for
    bidding credits, will be used to determine whether the reserve has
    been met.

[^33]: Results are rounded using our standard rounding procedure:
    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.

[^34]: *Id.*

[^35]: A bidder will not have its bidding eligibility restored if it has
    lost eligibility but in a later round has a bid (placed previously)
    become a provisionally winning bid. In other words, while holding a
    provisionally winning bid allows a bidder to maintain bidding
    eligibility, holding a provisionally winning bid does not restore
    bidding eligibility that has been lost. Nevertheless, a bidder that
    has lost eligibility may win a license based on a bid placed prior
    to losing eligibility.

[^36]: *See* Section II.B.2. "Activity Rule," above.

[^37]: *Third Report and Order*, 13 FCC Rcd at 459-60 ¶ 150.

[^38]: Bidders were not permitted to withdraw bids after the close of a
    bidding round in Auction No. 32 (Broadcast), Auction No. 38 (700 MHz
    Guard Band), Auction No. 46 (1670-1675 MHz Band), and Auction No. 54
    (Broadcast).

[^39]: 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. All hand
    deliveries must be held together with rubber bands or fasteners.
    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.

[^40]: Comments and reply comments in response to this public notice may
    not be filed using the Commission's Electronic Comment Filing
    System, which is used for the Commission's docketed rule making
    proceedings.

[^41]: 47 C.F.R. §§ 1.1200(a), 1.1206.

[^42]: 47 C.F.R. § 1.1206(b).

[^43]: *Id*.