**Federal Communications
Commission**![](media/image1.png){width="1.1993055555555556in"
height="1.1881944444444446in"}

## Washington, D.C. 20554

DA 03-3885

December 4, 2003

Ms. Elizabeth R. Sachs

Attorney at Law

Lukas, Nace, Gutierrez & Sachs

Suite 1200

1111 Nineteenth Street N.W.

Washington, DC 20036

In re: American Mobile Telecommunications Association

900 MHz SMR Auction No. 55

Dear Ms. Sachs:

This letter responds to your request by letter, dated November 26, 2003,
on behalf of your client, American Mobile Telecommunications Association
("AMTA").[^1] AMTA requests that the Commission increase the small
business bidding credit levels that will apply to the upcoming 900 MHz
Specialized Mobile Radio (SMR) auction (Auction No. 55), which is
scheduled to begin in February of 2004. Specifically, AMTA urges the
Commission to raise the bidding credit levels for small businesses from
10 percent to 25 percent and for very small businesses from 15 percent
to 35 percent. For the reasons set forth below, we deny AMTA's request.

In September of 1995, in a rulemaking adopting competitive bidding rules
specifically for the 900 MHz SMR service ("*900 MHz SMR Rulemaking*"),
the Commission established a two-tiered bidding credit scheme for the
900 MHz SMR auction consisting of 10 and 15 percent credit amounts.[^2]
In adopting those credit levels, the Commission took into consideration
the comments filed regarding the appropriate discounts to be awarded to
small business entities as well as the encumbered nature of the 900 MHz
SMR service.[^3] Significantly, in that service-specific rulemaking, the
Commission expressly rejected the adoption of 25 percent and 40 percent
credit levels in favor of 10 and 15 percent credits for small and very
small businesses, respectively.[^4] On April 15, 1996, the Commission
completed its auction of 900 MHz SMR licenses.[^5] On September 17,
2003, the Commission released a public notice announcing the scheduling
of another 900 MHz SMR auction, Auction No. 55.[^6] The spectrum to be
included in this auction is spectrum that was previously associated with
licenses that have been cancelled or terminated. On October 17, 2003,
the Commission released a public notice announcing minimum opening bids
and procedures for Auction No. 55, including bidding credit amounts of
10 and 15 percent.[^7]

AMTA argues that the Commission\'s explicit determination in the *900
MHz SMR Rulemaking* was superceded by language in a 1997 Part 1
competitive bidding rulemaking, which clarified and amended the
Commission's general competitive bidding rules.[^8] In addition, AMTA
points to the availability of 25 and 35 percent bidding credit levels in
auctions of other services to support its contention that such credit
levels should similarly be adopted for the upcoming 900 MHz SMR
auction.[^9]

Prior to 1997, the Commission adopted separate competitive bidding rules
for each auctionable service.[^10] In 1997, the Commission launched a
rulemaking proceeding to expand the general competitive bidding rules
contained in Part 1, Subpart Q of its rules.[^11] The purpose of the
Part 1 proceeding was to establish a streamlined set of general
competitive bidding rules for all auctionable services and to reduce the
burden on both the Commission and the public of conducting
service-specific rulemakings.[^12] In the 1997 Part 1 rulemaking, the
Commission decided to continue to adopt small business size standards on
a service-specific basis.[^13] The Commission also adopted a schedule of
bidding credits for small businesses consisting of three credit
levels---15 percent, 25 percent and 35 percent, based on the gross
revenues of the businesses.[^14] In adopting this schedule, the
Commission acknowledged that these credit levels were higher than those
previously adopted for specific services, namely the 900 MHz SMR
service.[^15] In 2000, the Commission further clarified and amended the
Part 1 competitive bidding rules.[^16] In that item, the Commission
stated that it was in the public interest to conform service-specific
auction rules to the general competitive bidding rules and instructed
the Wireless Telecommunications Bureau ("Bureau\") to make conforming
edits to the Code of Federal Regulations.[^17] In 2002, the Bureau
adopted the *Conforming Edits Order.*[^18] In the *Conforming Edits
Order*, the Bureau stated that

> Pursuant to our delegated authority, this Order identifies and removes
> service-specific competitive bidding rules that have been superseded
> or made redundant by the Part 1 general competitive bidding rules.
> **In those instances in which service-specific departures from the
> Part 1 general competitive bidding rules were tailored for a
> particular service, we retain such rules. . . .**[^19]

AMTA argues that the bidding credit schedule adopted in the 1997 Part 1
general competitive bidding rulemaking supercedes the Commission's
previous decision in the service-specific *900 MHz SMR Rulemaking* to
offer lower bidding credit amounts. We firmly disagree.

AMTA's argument seems to be based on its belief that the bidding credit
levels set forth in the 1997 rulemaking apply automatically to all
auctions that take place thereafter, even those auctions for which
specific service rules were previously adopted after having provided
notice and received comment. The idea that the Commission intended a
blanket application of the 1997 bidding credit schedule to all services
is without merit.

In connection with its service-specific consideration of small business
size standards, the Commission adopts bidding credit amounts for each
service. In the course of its 1995 900 MHz SMR service proceeding, the
Commission was asked to adopt a 25 percent bidding credit amount. It
specifically rejected that proposal.[^20] Based on the record developed
in that proceeding, the Commission decided to adopt a two-tier, 10 and
15 percent formula, concluding that it \"strikes a reasonable compromise
between the new applicants who favor a higher bidding credit on all
blocks, and the incumbent commenters who favor a lower bidding credit
only on unencumbered blocks.\"[^21] Thus, in the case of the 900 MHz SMR
service, the Commission adopted bidding credit levels specifically
tailored to that service. As noted in the highlighted language above,
the *Conforming Edits Order* provides that in this circumstance, the
Commission retains such rules, rather than conforming the
service-specific rules to the Part 1 rules.[^22]

Even with regard to the three services AMTA provides as examples of the
Commission\'s use of 25 and 35 percent bidding credits, Broadband
Personal Communications Services (PCS), Local Multipoint Distribution
Service, and PCS, we note that in each instance, the Commission
solicited comment and made an individual determination on the bidding
credit amounts to be used in the auctions for those services.[^23] While
the Commission established a bidding credit schedule in the Part 1
rules, consistent with Sections 1.2110(c)(1) and 1.2110(f)(1), the
Commission has continued to seek comment on bidding credit amounts in
service rules proceedings in which the Commission adopts competitive
bidding rules.[^24] Thus, contrary to AMTA\'s implication, the amount of
the bidding credit for each service was not settled in a rulemaking
order of general applicability, but continues to be resolved in
rulemaking proceedings applicable to each individual service.

AMTA acknowledges that it failed to submit its request within thirty
(30) days of the release of the *Auction No. 55 Procedures Public
Notice*.[^25] In light of the Commission\'s specific rejection of a 25
percent bidding credit amount for the 900 MHz SMR auction, we reject
AMTA\'s request, submitted shortly before the due date for auction
applications, to supersede the Commission\'s 1995 determination to use
10 and 15 percent bidding credits.

This action is taken under delegated authority pursuant to Section 0.331
of the Commission\'s rules.[^26]

Sincerely,

Margaret W. Wiener

Chief, Auctions and Spectrum Access Division

Wireless Telecommunications Bureau

[^1]: Letter to Margaret Wiener, FCC, from Elizabeth R. Sachs, Nov. 26,
    2003.

[^2]: Amendment of Parts 2 and 90 of the Commission\'s Rules to Provide
    for the Use of 200 Channels Outside the Designated Filing Areas in
    the 896-901 MHz and the 935-940 MHz Bands Allotted to the
    Specialized Mobile Radio Pool, PR Docket No. 89-553, *Second Order
    on Reconsideration and Seventh Report and Order*, 11 FCC Rcd 2639,
    2645-46 (1995) (*900 MHz SMR Rulemaking*).

[^3]: *Id.*

[^4]: *Id.*

[^5]: FCC Announces Winning Bidders in the Auction of 1,020 Licenses to
    Provide 900 MHz SMR in Major Trading Areas, *Public Notice*, 11 FCC
    Rcd 18599 (1996).

[^6]: Auction of 900 MHz Specialized Mobile Radio Service Licenses
    Scheduled for February 11, 2004, *Public Notice*, 2003 WL 22170843
    (F.C.C.), DA 03-2897 (Sept. 17, 2003).

[^7]: Auction of 900 MHz Specialized Mobile Radio Service Licenses
    Scheduled for February 11, 2004, *Public Notice*, 2003 WL 22383006
    (F.C.C.), DA 03-3235 (Oct. 17, 2003) (*Auction No. 55 Procedures
    Public Notice*).

[^8]: Amendment of Part 1 of the Commission\'s Rules -- Competitive
    Bidding Procedures, WT Docket No. 97-82, *Third* *Report and Order
    and Second Further Notice of Proposed Rulemaking*, 13 FCC Rcd 374,
    403-04 (1997) (*1997 Part 1 Rulemaking*).

[^9]: We note that AMTA supports its claim by citing three rulemaking
    orders for three specific services, Broadband Personal
    Communications Services (PCS), Local Multipoint Distribution
    Service, and PCS.

[^10]: Amendment of Part 1 of the Commission\'s Rules -- Competitive
    Bidding Procedures, WT Docket No. 97-82, *Order on Reconsideration
    of the Third Report and Order, Fifth Report and Order, and Fourth
    Further Notice of Proposed Rulemaking*, 15 FCC Rcd 15293, 15294
    (2000).

[^11]: Amendment of Part 1 of the Commission\'s Rules -- Competitive
    Bidding Procedures, WT Docket No. 97-82, *Order, Memorandum Opinion
    and Order and Notice of Proposed Rulemaking*, 12 FCC Rcd 5686
    (1997).

[^12]: *Id.*

[^13]: *1997 Part 1 Rulemaking*, 13 FCC Rcd at 388.

[^14]: *Id.*, 13 FCC Rcd at 403-04.

[^15]: *Id.,* 13 FCC Rcd at 404 n. 124.

[^16]: Amendment of Part 1 of the Commission\'s Rules -- Competitive
    Bidding Procedures, WT Docket No. 97-82, *Order on Reconsideration
    of the Third Report and Order, Fifth Report and Order, and Fourth
    Further Notice of Proposed Rulemaking*, 15 FCC Rcd 15293, 15294
    (2000).

[^17]: *Id*., 15 FCC Rcd at 15330.

[^18]: Amendment of Parts 1, 21, 22, 24, 25, 27, 73, 74, 80, 90, 95,
    100, and 101 of the Commission\'s Rules -- Competitive Bidding,
    *Order*, 17 FCC Rcd 6534, 6536 (Wireless Telecommunications Bureau,
    2002) (emphasis added)(footnotes omitted) (*Conforming Edits
    Order*).

[^19]: *Id.*

[^20]: In fact, Pro Tec proposed a 40 percent bidding credit because it
    \"would encourage greater participation in the auction process by
    small businesses, women and minorities.\" *900 MHz SMR Rulemaking*,
    11 FCC Rcd at 2705. This is the same argument made by AMTA in this
    instance.

[^21]: *900 MHz SMR Rulemaking*, 11 FCC Rcd at 2706.

[^22]: *Conforming Edits Order*, 17 FCC Rcd at 6536.

[^23]: Amendment of Parts 20 and 24 of the Commission\'s Rules --
    Broadband PCS Competitive Bidding and the Commercial Mobile Radio
    Service Spectrum Cap, WT Docket No. 96-59, *Report and Order*, 11
    FCC Rcd 7824, 7846-49 (1996); Rulemaking To Amend Parts 1, 2, 21 and
    25 Of the Commission\'s Rules to Redesignate The 27.5-29.5 GHz
    Frequency Band, To Reallocate the 29.5-30.0 GHz Frequency Band, To
    Establish Rules and Policies for Local Multipoint Distribution
    Service And for Fixed Satellite Services, CC Docket No. 92-297,
    *Second Report and Order, Order on Reconsideration, and Fifth Notice
    of Proposed Rulemaking*, 12 FCC Rcd 12545, 12693-95 (1997);
    Amendment of the Commission\'s Rules Regarding Installment Payment
    Financing for Personal Communications Service (PCS) Licensees, WT
    Docket No. 97-82, *Fourth Report and Order*, 13 FCC Rcd 15743,
    15767-69 (1998).

[^24]: 47 C.F.R. § 1.2110(c)(1); 47 C.F.R. § 1.2110(f)(1).

[^25]: Letter to Margaret Wiener, FCC, from Elizabeth R. Sachs, Nov. 26,
    2003. *See* Auction of 900 MHz Specialized Mobile Radio Service
    Licenses Scheduled for February 11, 2004, *Public Notice*, 2003 WL
    22383006 (F.C.C.), DA 03-3235 (Oct. 17, 2003).

[^26]: 47 C.F.R. § 0.331.