**PUBLIC NOTICE**

**FEDERAL COMMUNICATIONS COMMISSION**

**445 12th STREET, SW**

**WASHINGTON, DC 20554**

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

####### DA 02-1257 {#da-02-1257 .unnumbered}

**May 24, 2002**

###### 1392-1395 AND 1432-1435 MHZ, 1390-1392 MHZ, 1670-1675 MHZ,  {#and-1432-1435-mhz-1390-1392-mhz-1670-1675-mhz .unnumbered}

###### AND 2385-2390 MHZ BANDS AUCTION  {#and-2385-2390-mhz-bands-auction .unnumbered}

###### SCHEDULED FOR SEPTEMBER 18, 2002 {#scheduled-for-september-18-2002 .unnumbered}

**COMMENT SOUGHT**

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

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

**Report No. AUC-02‑46-A (Auction No. 46)**

By this Public Notice, the Wireless Telecommunications Bureau ("Bureau")
announces the auction of licenses in the paired 1392-1395 and 1432-1435
MHz bands and in the unpaired 1390-1392 MHz, 1670-1675 MHz, and the
2385-2390 MHz bands ("Auction No. 46") scheduled to commence on
September 18, 2002.[^1] Auction No. 46 will include 66 licenses. In
Auction No. 46, one 2-megahertz block of unpaired spectrum in the
1390-1392 MHz band will be offered in each of 52 geographic areas known
as Major Economic Areas (MEAs). Additionally, two 3-megahertz blocks,
each consisting of a pair of 1.5 megahertz segments in the 1392-1395 MHz
and 1432-1435 MHz bands, will be offered in each of six regions known as
Economic Area Groupings (EAGs). Finally, two 5-megahertz blocks of
contiguous unpaired spectrum, one in the 1670-1675 MHz band, and one in
the 2385-2390 MHz band, will be offered on a nationwide basis.[^2] A
complete list of licenses available for Auction No. 46 is included as
Attachment A.

The following table describes the licenses that will be auctioned:

  --------------------- --------------------------- ------------------------- ----------------------- ------------------- -----------------------
  [Block]{.underline}   [Frequencies]{.underline}   [Bandwidth]{.underline}   [Pairing]{.underline}   [Geographic Area    [No. of
                                                                                                      Type]{.underline}   Licenses]{.underline}

  A                     1392-1393.5 and 1432-1433.5 3 MHz                     2 x 1.5 MHz             EAG                 6
                        MHz                                                                                               

  B                     1393.5-1395 and 1433.5-1435 3 MHz                     2 x 1.5 MHz             EAG                 6
                        MHz                                                                                               

                        1390-1392 MHz               2 MHz                     unpaired                MEA                 52

                        1670-1675 MHz               5 MHz                     unpaired                Nationwide          1

                        2385-2390 MHz               5 MHz                     unpaired                Nationwide          1
  --------------------- --------------------------- ------------------------- ----------------------- ------------------- -----------------------

The Commission recently adopted service rules for the paired 1392-1395
and 1432-1435 MHz bands and the unpaired 1390-1392 MHz, 1670-1675 MHz,
and 2385-2390 MHz bands.[^3] Of the five frequency bands included in
Auction No. 46, only the 1432-1435 MHz and 2385-2390 MHz bands are
subject to the reimbursement provisions of the National
Telecommunications and Information Administration Organization Act (NTIA
Organization Act), as added by the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 (NDAA-99).[^4] Section 113(g) of
the NTIA Organization Act requires certain non-Government licensees to
reimburse incumbent Federal entities for the relocation costs such
Federal entities incur.[^5] It also requires the Federal entity to
notify the National Telecommunications and Information Administration
(NTIA) prior to auction of the "marginal costs anticipated to be
associated with such relocation or with modifications necessary to
accommodate prospective licensees," and requires NTIA to provide the
Commission with that information prior to auction.[^6] The NDAA-99 also
directs the NTIA and the Commission to develop reimbursement
procedures.[^7] The Commission's implementation of NDAA-99 is heavily
dependent on reimbursement procedures being promulgated by the NTIA,
which have not yet been released.[^8] Following the release of such
reimbursement procedures, in a separate proceeding the Commission will
adopt any additional rules or procedures necessary to supplement NTIA\'s
reimbursement procedures.

The Balanced Budget Act of 1997 requires the Commission to "ensure that,
in the scheduling of any competitive bidding under this subsection, an
adequate period is allowed . . . before issuance of bidding rules, to
permit notice and comment on proposed auction procedures . . . ."[^9]
Consistent with the provisions of the Balanced Budget Act and to ensure
that potential bidders have adequate time to familiarize themselves with
the specific rules that will govern the day-to-day conduct of an
auction, the Commission directed the Bureau, under its existing
delegated authority,[^10] to seek comment on a variety of
auction-specific procedures prior to the start of each auction.[^11] We
therefore seek comment on the following issues relating to Auction No.
46.

# Auction Structure

## A. Simultaneous Multiple Round (SMR) Auction Design  {#a.-simultaneous-multiple-round-smr-auction-design .unnumbered}

## We propose to award all licenses included in Auction No. 46 in a single, simultaneous multiple-round auction. As described further below, this methodology offers every license for bid at the same time with successive bidding rounds in which bidders may place bids. We seek comment on this proposal.  {#we-propose-to-award-all-licenses-included-in-auction-no.-46-in-a-single-simultaneous-multiple-round-auction.-as-described-further-below-this-methodology-offers-every-license-for-bid-at-the-same-time-with-successive-bidding-rounds-in-which-bidders-may-place-bids.-we-seek-comment-on-this-proposal. .unnumbered}

## B. Upfront Payments and Initial Maximum Eligibility  {#b.-upfront-payments-and-initial-maximum-eligibility .unnumbered}

The Bureau has delegated authority and discretion to determine an
appropriate upfront payment for each license being auctioned, taking
into account such factors as the population in each geographic license
area, and the value of similar spectrum.[^12] As described further
below, the upfront payment is a refundable deposit made by each bidder
to establish eligibility to bid on licenses. Upfront payments related to
the specific spectrum subject to auction protect against frivolous or
insincere bidding and provide the Commission with a source of funds from
which to collect payments owed at the close of the auction.[^13]

With these guidelines in mind for Auction No. 46, we propose that
different formulae be utilized in setting upfront payments for the
Nationwide licenses than those used for the MEA and EAG licenses. We
anticipate that values between nationwide and regional licenses will
vary, and, accordingly propose the following license-by-license
formulae[^14] for calculating upfront payments:

[For MEA and EAG Licenses:]{.underline}

\$0.005 \* MHz \* License Area Population with a minimum of \$1,000 per
license.

[For Nationwide Licenses:]{.underline}

\$0.01 \* MHz \* License Area Population with a minimum of \$1,000 per
license.

Accordingly, we list all licenses, including the related license area
population and proposed upfront payment for each, in Attachment A. We
seek comment on this proposal.

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

## C. Activity Rules  {#c.-activity-rules .unnumbered}

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

We propose to divide the auction into three stages, each characterized
by an increased activity requirement. The auction will start in Stage
One. We propose that the auction generally will advance to the next
stage (i.e., from Stage One to Stage Two, and from Stage Two to Stage
Three) when the auction activity level, as measured by the percentage of
bidding units receiving new high bids, is approximately twenty percent
or below for three consecutive rounds of bidding. However, we further
propose that the Bureau retain the discretion to change stages
unilaterally by announcement during the auction. In exercising this
discretion, the Bureau will consider a variety of measures of bidder
activity, including, but not limited to, the auction activity level, the
percentage of licenses (as measured in bidding units) on which there are
new bids, the number of new bids, and the percentage increase in
revenue.[^15] We seek comment on these proposals.

For Auction No. 46, we propose the following activity requirements:

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

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

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

We seek comment on these proposals. If commenters believe that these
activity rules should be changed, they 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.

## D. Activity Rule Waivers and Reducing Eligibility  {#d.-activity-rule-waivers-and-reducing-eligibility .unnumbered}

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

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

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

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

We propose that each bidder be provided with five activity rule waivers
that may be used at the bidder's discretion during the course of the
auction as set forth above. We seek comment on this proposal.

## E. Information Relating to Auction Delay, Suspension, or Cancellation  {#e.-information-relating-to-auction-delay-suspension-or-cancellation .unnumbered}

For Auction No. 46, 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.[^16] 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

## A. Round Structure  {#a.-round-structure .unnumbered}

The Commission will conduct Auction No. 46 over the Internet. Telephonic
Bidding will also be available. As a contingency, the FCC Wide Area
Network, which requires access to a 900 number telephone service, will
be available as well. Full information regarding how to establish such a
connection, and related charges, will be provided in the public notice
announcing details of auction procedures.

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

The Bureau has discretion to change the bidding schedule in order to
foster an auction pace that reasonably balances speed with the bidders'
need to study round results and adjust their bidding strategies. The
Bureau may increase or decrease the amount of time for the bidding
rounds and review periods, or the number of rounds per day, depending
upon the bidding activity level and other factors. We seek comment on
this proposal.

## B. Reserve Price or Minimum Opening Bid  {#b.-reserve-price-or-minimum-opening-bid .unnumbered}

The Balanced Budget Act calls upon the Commission to prescribe methods
for establishing a reasonable reserve price or a minimum opening bid
when FCC licenses are subject to auction unless the Commission
determines that a reserve price or minimum opening bid is not in the
public interest.[^17] Consistent with this mandate, the Commission has
directed the Bureau to seek comment on the use of a minimum opening bid
and/or reserve price prior to the start of each auction.[^18]

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

In light of the Balanced Budget Act's requirements, the Bureau proposes
to establish minimum opening bids for Auction No. 46. The Bureau
believes a minimum opening bid, which has been utilized in other
auctions, is an effective bidding tool.[^19]

For Auction No. 46, the Commission proposes that different formulae be
utilized in setting minimum opening bids for Nationwide licenses that
those used for MEA and EAG licenses. Specifically, the following
license-by-license formulae[^20] for calculating minimum opening bids
are as follows:

[For MEA and EAG Licenses:]{.underline}

\$0.005 \* MHz \* License Area Population with a minimum of \$1,000 per
license.

[For Nationwide Licenses:]{.underline}

\$0.01 \* MHz \* License Area Population with a minimum of \$1,000 per
license.

The specific minimum opening bid for each license available in Auction
No. 46 is set forth in Attachment A herein. Comment is sought on this
proposal.

If commenters believe that these minimum opening bids will result in
substantial numbers of unsold licenses, or are not reasonable amounts,
or should instead operate as reserve prices, they should explain why
this is so, and comment on the desirability of an alternative approach.
Commenters are advised to support their claims with valuation analyses
and suggested reserve prices or minimum opening bid levels or formulas.
In establishing the minimum opening bids, we particularly seek comment
on such factors as the amount of spectrum being auctioned, levels of
incumbency, the availability of technology to provide service, the size
of the geographic service areas, issues of interference with other
spectrum bands and any other relevant factors that could reasonably have
an impact on valuation of the spectrum in the 1392-1395 and 1432-1435
MHz, 1390-1392 MHz, 1670-1675 MHz, and 2385-2390 MHz bands.
Alternatively, comment is sought on whether, consistent with the
Balanced Budget Act, the public interest would be served by having no
minimum opening bid or reserve price.

## C. Minimum Acceptable Bids and Bid Increments  {#c.-minimum-acceptable-bids-and-bid-increments .unnumbered}

In each round, eligible bidders will be able to place bids on a given
license in any of nine different amounts.[^21] The Automated Auction
System interface will list the nine acceptable bid amounts for each
license.

Once there is a standing high bid on a license, the Automated Auction
System will calculate a minimum acceptable bid for that license for the
following round, as described below. The difference between the minimum
acceptable bid and the standing high bid for each license will define
the **bid increment**. The nine acceptable bid amounts for each license
consist of the minimum acceptable bid (the standing high bid plus one
bid increment) and additional amounts calculated using multiple bid
increments (i.e., the second bid amount equals the standing high bid
plus two times the bid increment, the third bid amount equals the
standing high bid plus three times the bid increment, etc.).

Until a bid has been placed on a license, the minimum acceptable bid for
that license will be equal to its minimum opening bid. The additional
bid amounts for licenses that have not yet received a bid will be
calculated differently, as explained below.

For Auction No. 46, we propose to calculate minimum acceptable bids by
using a smoothing methodology, as we have done in several other
auctions. The smoothing formula calculates minimum acceptable bids by
first calculating a **percentage increment**, not to be confused with
the **bid increment**. The percentage increment for each license is
based on bidding activity on that license in all prior rounds;
therefore, a license which has received many bids throughout the auction
will have a higher percentage increment than a license which has
received few bids.

The calculation of the percentage increment used to determine the
minimum acceptable bids for each license for the next round is made at
the end of each round. The computation is based on an activity index,
which is a weighted average of the number of bids in that round and the
activity index from the prior round. The activity index at the start of
the auction (round 0) will be set at 0. The current activity index is
equal to a weighting factor times the number of new bids received on the
license in that round plus one minus the weighting factor times the
activity index from the prior round. The percentage increment is then
calculated as the smaller of (a) a minimum percentage increment
multiplied by one plus the activity index and (b) a specified maximum
percentage increment. The Commission will initially set the weighting
factor at 0.5, the minimum percentage increment at 0.1 (10%), and the
maximum percentage increment at 0.2 (20%). Hence, at these initial
settings, the percentage increment will fluctuate between 10% and 20%
depending upon the level of activity for the license.

######## Equations {#equations .unnumbered}

A~i~ = (C \* B~i~) + ( (1-C) \* A~i-1~)

I~i+1~ = smaller of ( (1 + A~i~) \* N) and M

X ~i+1~ = I~i+1~ \* Y~i~

where,

A~i~ = activity index for the current round (round i)

C = activity weight factor

B~i~ = number of bids in the current round (round i)

A~i-1~ = activity index from previous round (round i-1), A~0~ is 0

I~i+1~ = percentage increment for the next round (round i+1)

N = minimum percentage increment or percentage increment floor

M = maximum percentage increment or percentage increment ceiling

X ~i+1~ = dollar amount associated with the percentage increment

Y~i~ = high bid from the current round

Under the smoothing methodology, once a bid has been received on a
license, the minimum acceptable bid for that license in the following
round will be the high bid from the current round plus the dollar amount
associated with the percentage increment, with the result rounded to the
nearest thousand if it is over ten thousand or to the nearest hundred if
it is under ten thousand.

########  {#section-1 .unnumbered}

######## Examples {#examples .unnumbered}

License 1

C=0.5, N = 0.1, M = 0.2

[Round 1 (2 new bids, high bid = \$1,000,000)]{.underline}

1\. Calculation of percentage increment for round 2 using the smoothing
formula:

A~1~ = (0.5 \* 2) + (0.5 \* 0) = 1

I~2~ = The smaller of ( (1 + 1) \* 0.1) = 0.2 or 0.2 (the maximum
percentage increment)

2\. Calculation of dollar amount associated with the percentage
increment for round 2 (using I~2~ from above):

X~2~ = 0.2 \* \$1,000,000 = \$200,000

3\. Minimum acceptable bid for round 2 = \$1,200,000

[Round 2 (3 new bids, high bid = \$2,000,000)]{.underline}

1\. Calculation of percentage increment for round 3 using the smoothing
formula:

A~2~ = (0.5 \* 3) + (0.5 \* 1) = 2

I~3~ = The smaller of ( (1 + 2) \* 0.1) = 0.3 or 0.2 (the maximum
percentage increment)

2\. Calculation of dollar amount associated with the percentage
increment for round 3 (using I~3~ from above):

X~3~ = 0.2 \* \$2,000,000 = \$400,000

3\. Minimum acceptable bid for round 3 = \$2,400,000

[Round 3 (1 new bid, high bid = \$2,400,000)]{.underline}

1\. Calculation of percentage increment for round 4 using the smoothing
formula:

A~3~ = (0.5 \* 1) + (0.5 \* 2) = 1.5

I~4~ = The smaller of ( (1 + 1.5) \* 0.1) = 0.25 or 0.2 (the maximum
percentage increment)

2\. Calculation of dollar amount associated with the percentage
increment for round 4 (using I~4~ from above):

X~4~ = 0.2 \* \$2,400,000 = \$480,000

3\. Minimum acceptable bid for round 4 = \$2,880,000

As stated above, until a bid has been placed on a license, the minimum
acceptable bid for that license will be equal to its minimum opening
bid. The additional bid amounts are calculated using the difference
between the minimum opening bid times one plus the minimum percentage
increment, rounded as described above, and the minimum opening bid. That
is, I = (minimum opening bid)(1 + N){rounded}- (minimum opening bid).
Therefore, when N equals 0.1, the first additional bid amount will be
approximately ten percent higher than the minimum opening bid; the
second, twenty percent; the third, thirty percent; etc.

In the case of a license for which the standing high bid has been
withdrawn,[^22] the minimum acceptable bid will equal the second highest
bid received for the license. The additional bid amounts are calculated
using the difference between the second highest bid times one plus the
minimum percentage increment, rounded, and the second highest bid.

The Bureau retains the discretion to change the minimum acceptable bids
and bid increments if it determines that circumstances so dictate. The
Bureau will do so by announcement in the Automated Auction System. We
seek comment on these proposals.

## D. High Bids {#d.-high-bids .unnumbered}

At the end of a bidding round, the Automated Auctions System will
determine the high bid on each license. In the event of identical high
bids on a license in a given round (*i.e.*, tied bids), we propose to
use a random number generator to select a high bid from among the tied
bids. Remaining bidders will be able to submit higher bids in subsequent
rounds.

A high bid will remain the high bid until there is a higher bid on the
same license at the close of a subsequent round. A high bid from a
previous round is sometimes referred to as a "standing high bid."
Bidders are reminded that standing high bids confer activity
credit.[^23]

## E. Information Regarding Bid Withdrawal and Bid Removal  {#e.-information-regarding-bid-withdrawal-and-bid-removal .unnumbered}

For Auction No. 46, we propose the following bid removal and bid
withdrawal procedures. Before the close of a bidding period, a bidder
has the option of removing any bid placed in that round. By using the
remove selected bids function in the bidding 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.

A high bidder may withdraw its standing high bids from previous rounds
using the withdraw function in the bidding system. A high bidder that
withdraws its standing high bid from a previous round is subject to the
bid withdrawal payment provisions of the Commission rules.[^24] We seek
comment on these bid removal and bid withdrawal procedures.

In the *Part 1 Third Report and Order*, the Commission explained that
allowing bid withdrawals facilitates efficient aggregation of licenses
and the pursuit of efficient backup strategies as information becomes
available during the course of an auction. The Commission noted,
however, that, in some instances, bidders may seek to withdraw bids for
improper reasons. The Bureau, therefore, has discretion, in managing the
auction, to limit the number of withdrawals to prevent any bidding
abuses. The Commission stated that the Bureau should assertively
exercise its discretion, consider limiting the number of rounds in which
bidders may withdraw bids, and prevent bidders from bidding on a
particular market if the Bureau finds that a bidder is abusing the
Commission's bid withdrawal procedures.[^25]

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

## Stopping Rule 

The Bureau has discretion "to establish stopping rules before or during
multiple round auctions in order to terminate the auction within a
reasonable time."[^26] For Auction No. 46, the Bureau proposes to employ
a simultaneous stopping rule approach. A simultaneous stopping rule
means that all licenses remain open until bidding closes simultaneously
on all licenses.

Bidding will close simultaneously on all licenses after the first round
in which no new acceptable bids, proactive waivers, or withdrawals are
received. 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. 46:

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

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

3.  Declare that the auction will end after a specified number of
    additional rounds ("special stopping

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

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

# Conclusion 

Comments are due on or before June 6, 2002, and reply comments are due
on or before June 13, 2002. Because of the disruption of regular mail
and other deliveries in Washington, DC, the Bureau requires that all
comments and reply comments be filed electronically. Comments and reply
comments must be sent by electronic mail to the following address:
[auction46@fcc.gov]{.underline}.[^27] The electronic mail containing the
comments or reply comments must include a subject or caption referring
to Auction No. 46 Comments. 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 during regular business hours in the
FCC Public Reference Room, Room CY-A257, 445 12th Street, SW,
Washington, DC 20554.

**In addition, the Bureau requests that commenters fax a courtesy copy
of their comments and reply comments to the attention of Kathryn Garland
at (717) 338-2850.**

This proceeding has been designated as a "permit‑but‑disclose"
proceeding in accordance with the Commission's [ex parte]{.underline}
rules.[^28] Persons making oral [ex parte]{.underline} 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.[^29] Other
rules pertaining to oral and written [ex parte]{.underline}
presentations in permit-but-disclose proceedings are set forth in
Section 1.1206(b) of the Commission's rules.[^30]

For further information concerning this proceeding, contact the Auctions
and Industry Analysis Division, Wireless Telecommunications Bureau, as
listed below:

For legal questions: David Hu (202) 418-0660

For general auction questions: Lyle Ishida (202) 418-0660

Lisa Stover (717) 338-2888

For service rule questions: Brian Marenco (202) 418-0838

**- FCC -**

[^1]: *See* Amendments to Parts 1, 2, 27 and 90 of the Commission's
    Rules to License Services in the 216-220 MHz, 1390-1395 MHz,
    1427-1429 MHz, 1429-1432 MHz, 1432-1435 MHz, 1670-1675 MHz, and
    2385-2390 MHz Government Transfer Bands, GN Docket 02-8, *Report and
    Order*, FCC 02-152 (rel. May 24, 2002) ("*Service Rules Report and
    Order*").

[^2]: Licensees will be required to file an application through ULS to
    request FAS coordination of any fixed station located within the
    protection radii of a co-primary Government incumbent or any mobile
    unit which would operate within the protection radii of the
    co-primary Government incumbent. *Service Rules Report and Order*,
    FCC 02-152 at ¶ 163. FAS coordination will be required prior to
    activation of any fixed or mobile station within the co-primary
    Government incumbent's protection radii. *Id.*

    The licensee in the 2385-2390 MHz band will be required to
    coordinate fixed and mobile operations within the protection radii
    of non-Government aeronautical flight test sites with the Aerospace
    and Flight Test Radio Coordinating Council (AFTRCC) prior to filing
    an application for an individual station license with the
    Commission. *Service Rules Report and Order*, FCC 02-152 at ¶¶
    174-175. An individual station license will be issued for each
    coordinated operation. *Id.*

[^3]: *See supra* *note* 1.

[^4]: Pub. L. 105-261, 112 Stat. 1920 (1999). *See Service Rules Report
    and Order*, FCC 02-152 at ¶ 2; Reallocation of the 216-220 MHz,
    1390-1392 MHz, 1427-1429 MHz, 1429-1432 MHz, 1432-1435 MHz,
    1670-1675 MHz, and 2385-2390 MHz Government Transfer Bands, ET
    Docket No. 00-221, *Report and Order and Memorandum Opinion and
    Order,* 17 FCC Rcd 368, 372, ¶ 7 (2002).

[^5]: 47 U.S.C. § 923*(*g)(1).

[^6]: *Id*. In a recent letter from NTIA to the Commission, NTIA reports
    that there are "no longer any marginal costs subject to mandatory
    federal reimbursement" for the 1432-1435 MHz band. NTIA noted,
    however, that the projected costs for the 2385-2390 MHz band "have
    been more difficult to finalize." *See* Letter to Bruce Franca,
    Acting Chief, Office of Engineering and Technology, Federal
    Communications Commission, from William T. Hatch, Associate
    Administrator, Office of Spectrum Management, National
    Telecommunications and Information Administration, dated December
    19, 2001.

[^7]: 47 U.S.C. § 923(g)(1)(E).

[^8]: *See* Mandatory Reimbursement Rules for Frequency Band or
    Geographic Relocation of Federal Spectrum-Dependent Systems,
    National Telecommunications and Information, Docket No.
    001206341-0341-01, *Notice of Proposed Rule Making*, 66 Fed. Reg.
    4771 (Jan. 18, 2001). We previously sought comment on proposed
    general rules and guidelines to implement NDAA-99. Reallocation of
    the 216-220 MHz, 1390-1395 MHz, 1427-1429 MHz 1429-1432 MHz,
    1432-1435 MHz, 1670-1675 MHz, and 2385-2390 MHz Government Transfer
    Bands, *Notice of Proposed Rulemaking,* ET Docket No. 00-221, 15 FCC
    Rcd 22657, 22677-22682, ¶¶ 54-66 (2000) (*Reallocation Notice*).

[^9]: *See* 47 U.S.C. § 309(j) (as amended by Section 3002(a)(E)(i),
    Balanced Budget Act of 1997, Pub. L. 105-33, 111 Stat. 251 (1997)
    ("Balanced Budget Act")).

[^10]: *See* Amendment of Part 1 of the Commission's Rules ---
    Competitive Bidding Proceeding, WT Docket No. 97-82, *Order,
    Memorandum Opinion and Order, and Notice of Proposed Rule Making*,
    12 FCC Rcd 5686, 5697, ¶ 16 (1997) ("*Part 1 Order*") ("We also
    clarify that pursuant to Section 0.131 of our rules, the Chief,
    Wireless Telecommunications Bureau, has delegated authority to
    implement all of the Commission's rules pertaining to auctions
    procedures.").

[^11]: *See* Amendment of Part 1 of the Commission's Rules ---
    Competitive Bidding Procedures, Allocation of Spectrum Below 5 GHz
    Transferred from Federal Government Use, 4660-4685 MHz, WT Docket
    No. 97-82, ET Docket No. 94-32, *Third Report and Order and Second
    Further Notice of Proposed Rule Making*, 13 FCC Rcd 374, 448, ¶ 124
    (1998) ("*Part 1 Third Report and Order*"). The Commission directed
    the Bureau to seek comment on specific mechanisms related to
    day-to-day auction conduct including, for example, the structure of
    bidding rounds and stages, establishment of minimum opening bids or
    reserve prices, minimum accepted bids, initial maximum eligibility
    for each bidder, activity requirements for each stage of the
    auction, activity rule waivers, criteria for determining reductions
    in eligibility, information regarding bid withdrawal and bid
    removal, stopping rules, and information relating to auction delay,
    suspension or cancellation. *Id.* at ¶ 125.

[^12]: *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.

[^13]: *See* Implementation of Section 309(j) of the Communications
    Act - Competitive Bidding, PP Docket No. 93-253, *Second Report and
    Order*, 9 FCC Rcd 2348, 2378-79, ¶¶ 171-176 (1994).

[^14]: All population figures are from the 4/1/90 U.S. Census, U.S.
    Department of Commerce, Bureau of the Census. Results below \$10,000
    are rounded to the nearest hundred; results above \$10,000 are
    rounded to the nearest thousand.

[^15]: In the event that total upfront payments for the auction do not
    purchase at least as many bidding units of eligibility as there are
    bidding units available in the auction, we may consider the
    percentage of bidding units of the total eligibility receiving new
    high bids, not the percentage of bidding units available in the
    auction receiving new high bids, when monitoring activity for
    determining when to change stages.

[^16]: *See* 47 C.F.R. § 1.2104(i).

[^17]: *See* 47 U.S.C. § 309(j) (as amended by Balanced Budget Act,
    Section 3002(a)). The Commission's authority to establish a reserve
    price or minimum opening bid is set forth in 47 C.F.R. § 1.2104(c)
    and (d).

[^18]: *See* *Part 1 Third Report and Order,* 13 FCC Rcd at 454-455, ¶
    141.

[^19]: *S*e*e*, *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).

[^20]: All population figures are from the 4/1/90 U.S. Census, U.S.
    Department of Commerce, Bureau of the Census. Results below \$10,000
    are rounded to the nearest hundred; results above \$10,000 are
    rounded to the nearest thousand.

[^21]: Bidders must have sufficient eligibility to place a bid on the
    particular license. *See* Section I(B) ("Upfront Payments and
    Initial Maximum Eligibility"), *supra*.

[^22]: *See* Section II(E) "Information Regarding Bid Withdrawal and Bid
    Removal," *infra*.

[^23]: *See* Section I.C. "Activity Rules," *supra*.

[^24]: *See* 47 C.F.R. §§ 1.2104(g), 1.2109.

[^25]: *Part 1 Third Report and Order*, 13 FCC Rcd at 460, ¶ 150.

[^26]: *See* 47 C.F.R. § 1.2104(e).

[^27]: 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.

[^28]: *See* 47 C.F.R. §§ 1.1200(a), 1.1206.

[^29]: *See* 47 C.F.R. § 1.1206(b).

[^30]: *Id.*