**DA 06-1016**

**August 28, 2006**

**AUCTION OF 1.4 GHz BANDS LICENSES SCHEDULED FOR FEBRUARY 7, 2007**

**COMMENT SOUGHT ON COMPETITIVE BIDDING PROCEDURES FOR AUCTION No. 69**

[]{.mark}

**AU Docket No. 06-104**

[]{.mark}

[]{.mark}

**Comments Due: September 11, 2006 Reply Comments Due: September 18,
2006**

**Report No. AUC-06-69-A (Auction No. 69)**

By this Public Notice, the Wireless Telecommunications Bureau ("Bureau")
announces an auction of 64 licenses in the paired 1392-1395 MHz and
1432-1435 MHz bands, and in the unpaired 1390-1392 MHz band
(collectively the 1.4 GHz bands).[^1] This auction, which is designated
Auction No. 69, is scheduled to commence on February 7, 2007.[^2]

# Licenses to be offered IN aUCTION NO. 69

In Auction No. 69, 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). Additionally, 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).

***License Descriptions.*** The following table describes the licenses
that will be offered in Auction No. 69:

  ------- ---------------------- ----------- ---------- ------------ ------------
  Block   Frequencies            Bandwidth   Pairing    Geographic   No. of
                                                        Area Type    Licenses

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

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

          1390-1392 MHz          2 MHz       unpaired   MEA          52
  ------- ---------------------- ----------- ---------- ------------ ------------

The licenses available in Auction No. 69 are also listed in Attachment A
of this public notice.

***Permissible Services.*** When adopting its service rules for these
bands, the Commission established a flexible regulatory and licensing
framework in order to promote the provision of new and technologically
innovative services.[^3] Licensees may provide both fixed and mobile
services including wireless internet, high speed data as well as
advanced two-way mobile and paging services.[^4]

***International Coordination.*** Currently, the U.S. does not have
international agreements with Canada and Mexico governing operations in
the 1392-1395 MHz, 1432-1435 MHz or the 1390-1392 MHz bands. Licensees
in these bands operating near the borders must protect stations in
Canada and Mexico from harmful interference. We also note that operation
in these bands may be subject to future agreements with Canada and
Mexico and therefore may be subject to further modification.[^5]

***Incumbency Issues.*** Potential applicants are advised that there are
several government operations that will continue to operate in these
bands:

[1390-1392 MHz]{.underline}

-   Radio astronomy observations may be assigned in the 1350-1400 MHz
    band on an unprotected basis at the 16 radio astronomy observatories
    identified in the table of Footnote US311.[^6]

-   Government operations authorized as of March 22, 1995, at the 17
    sites identified in the table of Footnote US351 will continue to
    operate on a fully protected basis until January 1, 2009.[^7] All
    other government operations, except for medical telemetry (1395-1400
    MHz), will operate on a non-interference basis to authorized
    non-Government operations and shall not hinder implementation of any
    non-Government operations.[^8]

[1392-1395 MHz and 1432-1435 MHz]{.underline}

-   Radio astronomy observations may be assigned in the 1350-1400 MHz
    band on an unprotected basis at the 16 radio astronomy observatories
    identified in the table of Footnote US311.

-   Government operations authorized as of March 22, 1995, at the 17
    sites identified in the table of Footnote US351 will continue to
    operate on a fully protected basis until January 1, 2009.[^9] All
    other government operations, except for medical telemetry (1395-1400
    MHz), will operate on a non-interference basis to authorized
    non-Government operations and shall not hinder implementation of any
    non-Government operations.[^10]

-   Government stations in the fixed and mobile services may operate
    indefinitely on a primary basis at the 23 sites listed in the table
    of Footnote US361.[^11] All other Government stations in the fixed
    and mobile services shall operate on a primary basis until
    re-accommodated in accordance with the National Defense
    Authorization Act of 1999.[^12]

***Spectrum Relocation Fund*.** The upper half of paired frequencies for
1.4 GHz bands licenses, i.e., 1432-1435 MHz, is spectrum covered by a
Congressional mandate that requires that auction proceeds fund the
estimated relocation costs of incumbent federal entities.[^13]
Specifically, the Commercial Spectrum Enhancement Act ("CSEA")
established a Spectrum Relocation Fund ("SRF"), to which the cash
proceeds attributable to "eligible frequencies" in an auction of
licenses involving such frequencies would be deposited.[^14] In addition
to requiring that specified auction proceeds be deposited in the SRF,
CSEA prohibits the Commission from concluding any auction of eligible
frequencies if the total cash proceeds attributable to such spectrum are
less than 110 percent of the estimated relocation costs provided to the
Commission by the National Telecommunications and Information
Administration ("NTIA").[^15]

On December 27, 2005, pursuant to CSEA, NTIA notified the Commission
that there are no costs associated with relocating federal operations
from the 1432-1435 MHz band.[^16]

# BUREAU SEEKS COMMENT ON 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 . . . ."[^17] 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.[^18] We therefore seek comment on the following issues relating
to Auction No. 69.

## AUCTION STRUCTURE

### Simultaneous Multiple-Round Auction Design

We propose to auction all licenses included in Auction No. 69 using the
Commission's standard simultaneous multiple-round auction format. As
described further below, this type of auction offers every license for
bid at the same time and consists of successive bidding rounds in which
eligible bidders may place bids on individual licenses. Typically,
bidding remains open on all licenses until bidding stops on every
license. We seek comment on this proposal.

***Information Available to Bidders Before and During an Auction.*** The
Bureau also seeks comment on whether to implement procedures that would
limit the disclosure of information on bidder interests and identities
relative to the information procedures that have typically been used for
Commission auctions. Commenters should indicate what factors support the
position they take on this issue. In particular, commenters should
specifically address whether technological considerations or the likely
level of competition in this auction weighs in favor of or against
limiting the disclosure of information on bidder interests and
identities relative to most past Commission spectrum auctions, or
whether the Commission should condition the implementation of such
limits on a measure of the competitiveness of the auction, such as the
eligibility ratio or a modified version of the eligibility ratio.

***Package Bidding.*** The Bureau has considered the possibility of
using a simultaneous multiple-round with package bidding ("SMR-PB")
format for this auction, but is not inclined to believe that SMR-PB
would be appropriate for the auction of these licenses. Under the
Commission's package bidding rules, bidders can place bids on any groups
of licenses they wish to win together, with the result that they win
either all the licenses in a group or none of them. In the SMR-PB
auction format, each bidder can have at most a single winning bid.
Consequently, because bidders cannot win a group of licenses unless they
have explicitly placed a bid on that exact combination, package bidding
may be more complex for bidders if they wish to aggregate any or all of
a number of licenses.[^19] However, we seek comment on this issue. If
commenters believe that an SMR-PB design should be implemented for this
auction, they should indicate what specific factors lead them to that
conclusion.

### Round Structure

The Commission will conduct Auction No. 69 over the Internet.
Alternatively, telephonic bidding will also be available via the Auction
Bidder Line. The toll-free telephone number for telephonic bidding will
be provided to qualified bidders.

The auction will consist of sequential bidding rounds. The initial
bidding schedule will be announced in a public notice to be released at
least one week before the start of the auction.

The Bureau proposes to retain the discretion to change the bidding
schedule in order to foster an auction pace that reasonably balances
speed with the bidders' need to study round results and adjust their
bidding strategies. Under this proposal, the Bureau may increase or
decrease the amount of time for the bidding rounds and review periods,
or the number of rounds per day, depending upon bidding activity levels
and other factors. 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."[^20] For Auction No. 69, the Bureau proposes to employ
a simultaneous stopping rule approach. A simultaneous stopping rule
means that all licenses remain available for bidding until bidding
closes simultaneously on all licenses. More specifically, bidding will
close simultaneously on all licenses after the first round in which no
bidder submits any new bids, applies a proactive waiver, or submits a
withdrawal.[^21] Thus, unless circumstances dictate otherwise, bidding
will remain open on all licenses until bidding stops on every license.

Further, the Bureau proposes to retain the discretion to exercise any of
the following options during Auction No. 69:

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, places a
withdrawal, 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,
applies a waiver, or submits a withdrawal. 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 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. 69, 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.

## AUCTION 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] 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 licenses for specific spectrum subject to
auction protect against frivolous or insincere bidding and provide the
Commission with a source of funds from which to collect payments owed at
the close of the auction.[^24] With these factors in mind, we propose to
calculate upfront payments on a license-by-license basis using a formula
based on bandwidth and license area population:[^25]

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

We further propose that the amount of the upfront payment submitted by a
bidder will determine the bidder's initial bidding eligibility in
bidding units. We propose that each license be assigned a specific
number of bidding units equal to the upfront payment listed in
Attachment A, on a bidding unit per dollar basis. The number of bidding
units for a given license is fixed and does not change during the
auction as prices rise. A bidder's upfront payment is not attributed to
specific licenses. Rather, a bidder may place bids on any combination of
licenses it selected on its FCC Form 175 as long as the total number of
bidding units associated with those licenses does not exceed its current
eligibility. Eligibility cannot be increased during the auction; it can
only remain the same or decrease. Thus, in calculating its upfront
payment amount and hence its initial bidding eligibility, an applicant
must determine the **maximum** number of bidding units it may wish to
bid on (or hold provisionally winning bids on) in any single round, and
submit an upfront payment amount covering that total number of bidding
units. Provisionally winning bids are bids that would become final
winning bids if the auction were to close in that given round.[^26]

The proposed number of bidding units for each license and associated
upfront payment amounts are listed in Attachment A.[^27] We seek comment
on these proposals.

### Activity Rule

In order to ensure that the auction closes within a reasonable period of
time, an activity rule requires bidders to bid actively throughout the
auction, rather than wait until late in the auction before
participating. A bidder's activity in a round will be the sum of the
bidding units associated with any licenses upon which it places bids
during the current round and the bidding units associated with any
licenses for which it holds provisionally winning bids. Bidders are
required to be active on a specific percentage of their current bidding
eligibility during each round of the auction. Failure to maintain the
requisite activity level will result in the use of an activity rule
waiver, if any remain, or a reduction in the bidder's eligibility,
possibly curtailing or eliminating the bidder's ability to place bids in
the auction.[^28]

We propose to divide the auction into two stages, each characterized by
a different activity requirement. The auction will start in Stage One.
We propose that the auction generally will advance from Stage One to
Stage Two when the auction activity level, as measured by the percentage
of bidding units receiving new provisionally winning bids, is
approximately twenty percent or below for three consecutive rounds of
bidding. However, we further propose that the Bureau retains 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,[^29] the number of new bids,
and the percentage of increase in revenue. We seek comment on these
proposals.

For Auction No. 69, 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 bidding eligibility is
> required to be active on licenses representing at least 80 percent of
> its current bidding eligibility. Failure to maintain the required
> activity level will result in a reduction in the bidder's bidding
> eligibility in the next round of bidding (unless an activity rule
> waiver is used). During Stage One, a bidder's reduced eligibility for
> the next round will be calculated by multiplying the bidder's current
> round activity by five-fourths (5/4).
>
> **Stage Two:** In each round of the second stage, a bidder desiring to
> maintain its current bidding eligibility is required to be active on
> 95 percent of its current bidding eligibility. Failure to maintain the
> required activity level will result in a reduction in the bidder's
> bidding eligibility in the next round of bidding (unless an activity
> rule waiver is used). During Stage Two, a bidder's reduced eligibility
> for the next round will be calculated by multiplying the bidder's
> current round activity by twenty-nineteenths (20/19).

We seek comment on this proposal. 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.

###  {#section .unnumbered}

### Activity Rule Waivers and Reducing Eligibility

Use of an activity rule waiver preserves the bidder's eligibility
despite the bidder's activity in the current round being below the
required minimum level. An activity rule waiver applies to an entire
round of bidding, not to particular licenses. Activity rule waivers can
be either proactive or automatic and are principally a mechanism for
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. Therefore, the system
will automatically apply a waiver at the end of any bidding round in
which a bidder's activity level is below the minimum required unless:
(1) the bidder has no activity rule waivers remaining; or (2) the bidder
overrides the automatic application of a waiver by reducing eligibility,
thereby meeting the minimum requirement. If a bidder has no waivers
remaining and does not satisfy the required activity level, its
eligibility will be permanently reduced, possibly curtailing or
eliminating the bidder's ability to place additional bids in the
auction.

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

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 or
withdrawals 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, withdrawals,
or proactive waivers 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. 69 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 Bids

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.[^30] 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.[^31]

#### Reserve Price

In CSEA, Congress requires the Commission to prescribe methods by which
the total cash proceeds from any auction of licenses authorizing use of
eligible frequencies, such as 1432-1435 MHz, shall equal at least 110
percent of the total estimated relocation costs provided to the
Commission pursuant to CSEA.[^32] CSEA also requires that the total cash
proceeds "attributable to" eligible spectrum must be at least 110
percent of the total estimated relocation costs before the Commission
may conclude the auction.[^33] If this condition is not met, CSEA
requires that the Commission shall cancel the auction.[^34] On December
27, 2005, pursuant to CSEA, NTIA notified the Commission that there are
no costs associated with relocating federal operations from the
1432-1435 MHz band.[^35] Accordingly, the Bureau does not propose a
reserve price to cover relocation costs under CSEA.

#### Minimum Opening Bids

In contrast to a reserve price, a minimum opening bid amount 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 Section 309(j)'s requirements, the Bureau proposes to
establish minimum opening bid amounts for Auction No. 69. The Bureau
believes a minimum opening bid amount, which has been used in other
auctions, is an effective bidding tool for accelerating the competitive
bidding process.[^36] The Bureau does not propose a separate reserve
price for the licenses to be offered in Auction No. 69.

Specifically, for Auction No. 69, the Bureau proposes to calculate
minimum opening bid amounts on a license-by-license basis using a
formula based on bandwidth and license area population:[^37]

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

This proposed minimum opening bid amount for each license available in
Auction No. 69 is set forth in Attachment A of this public notice.[^38]
We seek comment on this proposal.

If commenters believe that this minimum opening bid amount will result
in unsold licenses, or is not a reasonable amount, or should instead
operate as a reserve price, they should explain why this is so, and
comment on the desirability of an alternative approach. Commenters are
advised to support their claims with valuation analyses and suggested
reserve prices or minimum opening bid amount levels or formulas. In
establishing minimum opening bid amounts, we particularly seek comment
on such factors as the amount of spectrum being auctioned, levels of
incumbency, the availability of technology to provide service, the size
of the service areas, issues of interference with other spectrum bands
and any other relevant factors that could reasonably have an impact on
valuation of the licenses being auctioned. We also seek comment on
whether, consistent with Section 309(j), the public interest would be
served by having no minimum opening bid amount or reserve price.

### Bid Amounts 

We propose that, in each round, eligible bidders be able to place a bid
on a given license in any of nine different amounts.[^39] Under this
proposal, the FCC Auction System interface will list the nine acceptable
bid amounts for each license.[^40]

The first of the nine acceptable bid amounts is called the minimum
acceptable bid amount. The minimum acceptable bid amount for a license
will be equal to its minimum opening bid amount until there is a
provisionally winning bid for the license. After there is a
provisionally winning bid for a license, the minimum acceptable bid
amount for that license will be equal to the amount of the provisionally
winning bid plus a percentage of that bid amount calculated using the
formula described below. In general, the percentage will be higher for a
license receiving many bids than for a license receiving few bids. In
the case of a license for which the provisionally winning bid has been
withdrawn, the minimum acceptable bid amount will equal the second
highest bid received for the license.[^41]

The percentage of the provisionally winning bid used to establish the
minimum acceptable bid amount (the "additional percentage") is
calculated at the end of each round, based on an activity index which is
a weighted average of the number of bids in that round and the activity
index from the prior round. Specifically, the activity index is equal to
a weighting factor times the number of bids on the license in the most
recent bidding round plus one minus the weighting factor times the
activity index from the prior round.[^42] The additional percentage is
determined as one plus the activity index times a minimum percentage
amount, with the result not to exceed a given maximum. The additional
percentage is then multiplied by the provisionally winning bid amount to
obtain the minimum acceptable bid for the next round. The Commission
will initially set the weighting factor at 0.5, the minimum percentage
at 0.1 (10%), and the maximum percentage at 0.2 (20%). Hence, at these
initial settings, the minimum acceptable bid for a license will be
between 10% and 20% higher than the provisionally winning bid, depending
upon the bidding activity for the license. Equations and examples are
shown in Attachment B.

The eight additional bid amounts are calculated using the minimum
acceptable bid amount and a bid increment percentage. The first
additional acceptable bid amount equals the minimum acceptable bid
amount times one plus the bid increment percentage, rounded. If, for
example, the bid increment percentage is 5 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 one
plus two times the bid increment percentage, rounded, or (minimum
acceptable bid amount) \* 1.1, rounded; the third additional acceptable
bid amount equals the minimum acceptable bid amount times one plus three
times the bid increment percentage, rounded, or (minimum acceptable bid
amount) \* 1.15, rounded; etc. We will round the results of these
calculations, as well as the calculations to determine the minimum
acceptable bid amounts, using our standard rounding procedures.[^43] For
Auction No. 69, the Bureau proposes to use a bid increment percentage of
5 percent to calculate the eight additional acceptable bid amounts.

The Bureau retains the discretion to change the minimum acceptable bid
amounts, the parameters of the formula to determine the percentage of
the provisionally winning bid used to determine the minimum acceptable
bid, and the bid increment percentage 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

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

A provisionally winning bid will remain the provisionally winning bid
until there is a higher bid on the license at the close of a subsequent
round, unless the provisionally winning bid is withdrawn. Bidders are
reminded that provisionally winning bids count toward activity for
purposes of the activity rule.[^44]

### Bid Removal and Bid Withdrawal 

For Auction No. 69, we propose the following bid removal procedures.
Before the close of a bidding round, a bidder has the option of removing
any bid placed in that round. By removing selected bids in the FCC
Auction System, a bidder may effectively "unsubmit" any bid placed
within that round. In contrast to the bid withdrawal provisions
described below, a bidder removing a bid placed in the same round is not
subject to a withdrawal payment. Once a round closes, a bidder may no
longer remove a bid.

A bidder may withdraw its provisionally winning bids using the "withdraw
bids" function in the FCC Auction System. A bidder that withdraws its
provisionally winning bid(s) is subject to the bid withdrawal payment
provisions of the Commission rules.[^45] 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 backup strategies as information becomes available
during the course of an auction.[^46] 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.[^47]

Applying this reasoning, we propose to limit each bidder to withdrawing
provisionally winning 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 may encourage insincere bidding or the use of withdrawals for
anti-competitive purposes. The two rounds in which withdrawals may be
used will be at the bidder's discretion; withdrawals otherwise must be
in accordance with the Commission's rules.[^48] There is no limit on the
number of provisionally winning bids that may be withdrawn in either of
the rounds in which withdrawals are used. Withdrawals will remain
subject to the bid withdrawal payment provisions specified in the
Commission's rules.

## POST-AUCTION PROCEDURES

### Establishing the Interim Withdrawal Payment Percentage

We seek comment on the appropriate percentage of a withdrawn bid that
should be assessed as an interim withdrawal payment, in the event that a
final withdrawal payment cannot be determined at the close of the
auction. In general, the Commission's rules provide that a bidder that
withdraws a bid during an auction is subject to a withdrawal payment
equal to the difference between the amount of the withdrawn bid and the
amount of the winning bid in the same or subsequent auction(s).[^49]
However, if a license for which there has been a withdrawn bid is
neither subject to a subsequent higher bid nor won in the same auction,
the final withdrawal payment cannot be calculated until a corresponding
license is subject to a higher bid or won in a subsequent auction. When
that final payment cannot yet be calculated, the bidder responsible for
the withdrawn bid is assessed an interim bid withdrawal payment, which
will be applied toward any final bid withdrawal payment that is
ultimately assessed.[^50] The Commission recently amended its rules to
provide that in advance of the auction, the Commission shall establish
the percentage of the withdrawn bid to be assessed as an interim bid
withdrawal payment between three percent (3%) and twenty percent
(20%).[^51]

When it adopted the new rule, the Commission indicated that the level of
the interim withdrawal payment in a particular auction will be based on
the nature of the service and the inventory of the licenses being
offered.[^52] The Commission noted that it may impose a higher interim
withdrawal payment percentage to deter the anti-competitive use of
withdrawals when, for example, bidders likely will not need to aggregate
licenses offered, such as when few licenses are offered that are not on
adjacent frequencies or in adjacent areas, or there are few synergies to
be captured by combining licenses.[^53]

With respect to the licenses being offered in Auction No. 69, the
service rules permit a variety of fixed and mobile services, some of
which may best be offered by combining licenses on adjacent frequencies
or in adjacent areas. Balancing the potential need for bidders to use
withdrawals to avoid incomplete combinations of licenses with our
interest in deterring strategic withdrawals, we propose a percentage
below the maximum 20 percent (20%) permitted under the current rules but
above the 3 percent (3%) previously provided by the Commission's rules.
Specifically, we propose to establish the percentage of the withdrawn
bid to be assessed as an interim bid withdrawal payment at ten percent
(10%) for this auction. We seek comment on this proposal.

### Establishing the Additional Default Payment Percentage

Any winning bidder that defaults or is disqualified after the close of
an auction (i.e., fails to remit the required down payment within the
prescribed period of time, fails to submit a timely long-form
application, fails to make full payment, or is otherwise disqualified)
is liable for a default payment under 47 C.F.R. § 1.2104(g)(2). This
payment consists of a deficiency payment, equal to the difference
between the amount of the bidder's bid and the amount of the winning bid
the next time a license covering the same spectrum is won in an auction,
plus an additional payment equal to a percentage of the defaulter's bid
or of the subsequent winning bid, whichever is less. Until recently this
additional payment for non-combinatorial auctions has been set at 3
percent of the defaulter's bid or of the subsequent winning bid,
whichever is less.

The *CSEA/Part 1 Report and Order* modified Section 1.2104(g)(2) by,
*inter alia,* increasing the 3 percent limit on the additional default
payment for non-combinatorial auctions to 20 percent.[^54] Under the
modified rule, the Commission will, in advance of each non-combinatorial
auction, establish an additional default payment for that auction of 3
percent up to a maximum of 20 percent.[^55] As the Commission has
indicated, the level of this payment in each case will be based on the
nature of the service and the inventory of the licenses being
offered.[^56]

[]{.mark}

For Auction No. 69, the Bureau proposes to establish an additional
default payment of 10 percent. As noted in the *CSEA/Part 1 Report and
Order,* defaults weaken the integrity of the auctions process and impede
the deployment of service to the public, and an additional default
payment of more than the previous 3 percent will be more effective in
deterring defaults. At the same time, we do not believe the detrimental
effects of any defaults in Auction No. 69 are likely to be unusually
great. Balancing these considerations, we propose an additional default
payment of 10 percent of the relevant bid. We seek comment on this
proposal.

# CONCLUSION

Comments are due on or before September 11, 2006, and reply comments are
due on or before September 18, 2006. All filings related to the auction
of 1.4 GHz Bands licenses should refer to AU Docket No. 06-104. Comments
may be submitted using the Commission's Electronic Comment Filing System
("ECFS") or by filing paper copies.[^57] The Bureau strongly encourages
interested parties to file comments electronically, and requests
submission of a copy via the Auction No. 69 e-mail box
(<auction69@fcc.gov>).

Electronic Filers: Comments may be filed electronically using the
Internet by accessing the ECFS at <http://www.fcc.gov/cgb/ecfs/>. Filers
should follow the instructions provided on the website for submitting
comments. In completing the transmittal screen, filers should include
their full name, U.S. Postal Service mailing address, and the applicable
docket or rulemaking number. Parties may also submit an electronic
comment by Internet e-mail. To get filing instructions, filers should
send an e-mail to <ecfs@fcc.gov>, and include the following words in the
body of the message, "get form." A sample form and directions will be
sent in response.

Paper Filers: Parties who choose to file by paper must file an original
and four copies of each filing. Filings can be sent by hand or messenger
delivery, by commercial overnight courier, or by first-class or
overnight U.S. Postal Service mail (although we continue to experience
delays in receiving U.S. Postal Service mail). All filings must be
addressed to the Commission's Secretary Attn: WTB/ASAD, Office of the
Secretary, Federal Communications Commission.

-   The Commission's contractor will receive hand-delivered or
    messenger-delivered paper filings for the Commission's Secretary at
    236 Massachusetts Avenue, NE, Suite 110, Washington, DC 20002. The
    filing hours at this location are 8:00 a.m. to 7:00 p.m. Eastern
    Time (ET). All hand deliveries must be held together with rubber
    bands or fasteners. Any envelopes must be disposed of before
    entering the building.

```{=html}
<!-- -->
```
-   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.

```{=html}
<!-- -->
```
-   U.S. Postal Service first-class, Express, and Priority mail should
    be addressed to 445 12th Street, SW, Washington DC 20554.

Auction No. 69 E-mail Box: The Bureau also requests that a copy of all
comments and reply comments be submitted electronically to the following
address: <auction69@fcc.gov>.

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

This proceeding has been designated as a "permit-but-disclose"
proceeding in accordance with the Commission's *ex parte* rules.[^58]
Persons making oral *ex parte* presentations are reminded that memoranda
summarizing the presentations must contain summaries of the substance of
the presentations and not merely a listing of the subjects discussed.
More than a one or two sentence description of the views and arguments
presented is generally required. Other rules pertaining to oral and
written *ex parte* presentations in permit-but-disclose proceedings are
set forth in Section 1.1206(b) of the Commission's rules.

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

**Mobility Division, Wireless Telecommunications Bureau**

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

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

For general auction questions: Roy Knowles or Barbara Sibert at (717)
338-2868

For auctions legal questions: Howard Davenport at (202) 418-0660

**-** **FCC -**

**Auction No. 69 -- 1.4 GHz Bands**

**DA 06-1016**

**Attachment A**

  -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  **Market\    **Description**                **License\   **Frequencies   **Channel\   **Population**   **Bandwidth\   **Bidding\      **Upfront\        **Minimum\
  Number**                                    Number**     (MHz)**         Block**                       (MHz)**        Units**         Payment**         Opening Bid**
  ------------ ------------------------------ ------------ --------------- ------------ ---------------- -------------- --------------- ----------------- -----------------
  **MEA                                                                                                                                                    
  Licenses                                                                                                                                                
  (1390-1392                                                                                                                                              
  MHz)**                                                                                                                                                  

  MEA001       Boston                         BA-MEA001    1390-1392                    9,229,477        2              92,000          \$92,000          \$92,000

  MEA002       New York City                  BA-MEA002    1390-1392                    30,885,797       2              309,000         \$309,000         \$309,000

  MEA003       Buffalo                        BA-MEA003    1390-1392                    1,507,759        2              15,000          \$15,000          \$15,000

  MEA004       Philadelphia                   BA-MEA004    1390-1392                    8,435,057        2              84,000          \$84,000          \$84,000

  MEA005       Washington                     BA-MEA005    1390-1392                    8,767,100        2              88,000          \$88,000          \$88,000

  MEA006       Richmond                       BA-MEA006    1390-1392                    4,329,258        2              43,000          \$43,000          \$43,000

  MEA007       Charlotte-Greensboro-Raleigh   BA-MEA007    1390-1392                    11,679,928       2              117,000         \$117,000         \$117,000

  MEA008       Atlanta                        BA-MEA008    1390-1392                    9,198,217        2              92,000          \$92,000          \$92,000

  MEA009       Jacksonville                   BA-MEA009    1390-1392                    2,605,624        2              26,000          \$26,000          \$26,000

  MEA010       Tampa-St. Petersburg-Orlando   BA-MEA010    1390-1392                    6,802,332        2              68,000          \$68,000          \$68,000

  MEA011       Miami                          BA-MEA011    1390-1392                    6,294,487        2              63,000          \$63,000          \$63,000

  MEA012       Pittsburgh                     BA-MEA012    1390-1392                    4,109,453        2              41,000          \$41,000          \$41,000

  MEA013       Cincinnati-Dayton              BA-MEA013    1390-1392                    4,517,237        2              45,000          \$45,000          \$45,000

  MEA014       Columbus                       BA-MEA014    1390-1392                    2,349,060        2              23,000          \$23,000          \$23,000

  MEA015       Cleveland                      BA-MEA015    1390-1392                    5,211,808        2              52,000          \$52,000          \$52,000

  MEA016       Detroit                        BA-MEA016    1390-1392                    10,696,754       2              107,000         \$107,000         \$107,000

  MEA017       Milwaukee                      BA-MEA017    1390-1392                    5,023,107        2              50,000          \$50,000          \$50,000

  MEA018       Chicago                        BA-MEA018    1390-1392                    13,667,977       2              137,000         \$137,000         \$137,000

  MEA019       Indianapolis                   BA-MEA019    1390-1392                    3,066,469        2              31,000          \$31,000          \$31,000

  MEA020       Minneapolis-St. Paul           BA-MEA020    1390-1392                    6,657,036        2              67,000          \$67,000          \$67,000

  MEA021       Des Moines-Quad Cities         BA-MEA021    1390-1392                    2,879,403        2              29,000          \$29,000          \$29,000

  MEA022       Knoxville                      BA-MEA022    1390-1392                    1,559,410        2              16,000          \$16,000          \$16,000

  MEA023       Louisville-Lexington           BA-MEA023    1390-1392                    4,349,581        2              43,000          \$43,000          \$43,000

  MEA024       Birmingham                     BA-MEA024    1390-1392                    3,390,273        2              34,000          \$34,000          \$34,000

  MEA025       Nashville                      BA-MEA025    1390-1392                    2,444,643        2              24,000          \$24,000          \$24,000

  MEA026       Memphis-Jackson                BA-MEA026    1390-1392                    4,192,132        2              42,000          \$42,000          \$42,000

  MEA027       New Orleans-Baton Rouge        BA-MEA027    1390-1392                    4,762,929        2              48,000          \$48,000          \$48,000

  MEA028       Little Rock                    BA-MEA028    1390-1392                    2,652,998        2              27,000          \$27,000          \$27,000

  MEA029       Kansas City                    BA-MEA029    1390-1392                    3,187,783        2              32,000          \$32,000          \$32,000

  MEA030       St. Louis                      BA-MEA030    1390-1392                    4,787,224        2              48,000          \$48,000          \$48,000

  MEA031       Houston                        BA-MEA031    1390-1392                    6,626,248        2              66,000          \$66,000          \$66,000

  MEA032       Dallas-Fort Worth              BA-MEA032    1390-1392                    11,571,024       2              116,000         \$116,000         \$116,000

  MEA033       Denver                         BA-MEA033    1390-1392                    4,978,469        2              50,000          \$50,000          \$50,000

  MEA034       Omaha                          BA-MEA034    1390-1392                    1,773,282        2              18,000          \$18,000          \$18,000

  MEA035       Wichita                        BA-MEA035    1390-1392                    1,175,577        2              12,000          \$12,000          \$12,000

  MEA036       Tulsa                          BA-MEA036    1390-1392                    1,384,426        2              14,000          \$14,000          \$14,000

  MEA037       Oklahoma City                  BA-MEA037    1390-1392                    1,837,958        2              18,000          \$18,000          \$18,000

  MEA038       San Antonio                    BA-MEA038    1390-1392                    3,668,441        2              37,000          \$37,000          \$37,000

  MEA039       El Paso-Albuquerque            BA-MEA039    1390-1392                    2,519,690        2              25,000          \$25,000          \$25,000

  MEA040       Phoenix                        BA-MEA040    1390-1392                    4,808,845        2              48,000          \$48,000          \$48,000

  MEA041       Spokane-Billings               BA-MEA041    1390-1392                    2,001,065        2              20,000          \$20,000          \$20,000

  MEA042       Salt Lake City                 BA-MEA042    1390-1392                    3,132,367        2              31,000          \$31,000          \$31,000

  MEA043       San Francisco-Oakland-San Jose BA-MEA043    1390-1392                    13,850,204       2              139,000         \$139,000         \$139,000

  MEA044       Los Angeles-San Diego          BA-MEA044    1390-1392                    22,527,050       2              225,000         \$225,000         \$225,000

  MEA045       Portland                       BA-MEA045    1390-1392                    3,675,513        2              37,000          \$37,000          \$37,000

  MEA046       Seattle                        BA-MEA046    1390-1392                    4,812,965        2              48,000          \$48,000          \$48,000

  MEA047       Alaska                         BA-MEA047    1390-1392                    626,932          2              6,300           \$6,300           \$6,300

  MEA048       Hawaii                         BA-MEA048    1390-1392                    1,211,537        2              12,000          \$12,000          \$12,000

  MEA049       Guam-Northern Mariana Islands  BA-MEA049    1390-1392                    224,026          2              2,200           \$2,200           \$2,200

  MEA050       Puerto Rico-US Virgin Islands  BA-MEA050    1390-1392                    3,917,222        2              39,000          \$39,000          \$39,000

  MEA051       American Samoa                 BA-MEA051    1390-1392                    57,291           2              1,000           \$1,000           \$1,000

  MEA052       Gulf of Mexico                 BA-MEA052    1390-1392                    0                2              1,000           \$1,000           \$1,000

                                                                                                                                                          

               **Total MEA Licenses**         **52**                                                                    **2,858,500**   **\$2,858,500**   **\$2,858,500**
  -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

  ------------ ------------------ ------------- --------------- ------------ ---------------- -------------- ---------------- ------------------ ------------------
  **Market\    **Description**    **License\    **Frequencies   **Channel\   **Population**   **Bandwidth\   **Bidding\       **Upfront\         **Minimum\
  Number**                        Number**      (MHz)**         Block**                       (MHz)**        Units**          Payment**          Opening Bid**

  **EAG                                                                                                                                           
  Licenses                                                                                                                                       
  (1392-1395                                                                                                                                     
  MHz and                                                                                                                                        
  1432-1435                                                                                                                                      
  MHz,                                                                                                                                           
  Paired)**                                                                                                                                      

  EAG001       Northeast          BB-EAG001-A   1392.0-1393.5 / A            44,077,625       3              661,000          \$661,000          \$661,000
                                                1432.0-1433.5                                                                                    

  EAG001       Northeast          BB-EAG001-B   1393.5-1395.0 / B            44,077,625       3              661,000          \$661,000          \$661,000
                                                1433.5-1435.0                                                                                    

  EAG002       Mid-Atlantic       BB-EAG002-A   1392.0-1393.5 / A            47,079,540       3              706,000          \$706,000          \$706,000
                                                1432.0-1433.5                                                                                    

  EAG002       Mid-Atlantic       BB-EAG002-B   1393.5-1395.0 / B            47,079,540       3              706,000          \$706,000          \$706,000
                                                1433.5-1435.0                                                                                    

  EAG003       Southeast          BB-EAG003-A   1392.0-1393.5 / A            51,610,405       3              774,000          \$774,000          \$774,000
                                                1432.0-1433.5                                                                                    

  EAG003       Southeast          BB-EAG003-B   1393.5-1395.0 / B            51,610,405       3              774,000          \$774,000          \$774,000
                                                1433.5-1435.0                                                                                    

  EAG004       Great Lakes        BB-EAG004-A   1392.0-1393.5 / A            44,940,233       3              674,000          \$674,000          \$674,000
                                                1432.0-1433.5                                                                                    

  EAG004       Great Lakes        BB-EAG004-B   1393.5-1395.0 / B            44,940,233       3              674,000          \$674,000          \$674,000
                                                1433.5-1435.0                                                                                    

  EAG005       Central/Mountain   BB-EAG005-A   1392.0-1393.5 / A            49,321,832       3              740,000          \$740,000          \$740,000
                                                1432.0-1433.5                                                                                    

  EAG005       Central/Mountain   BB-EAG005-B   1393.5-1395.0 / B            49,321,832       3              740,000          \$740,000          \$740,000
                                                1433.5-1435.0                                                                                    

  EAG006       Pacific            BB-EAG006-A   1392.0-1393.5 / A            48,590,810       3              729,000          \$729,000          \$729,000
                                                1432.0-1433.5                                                                                    

  EAG006       Pacific            BB-EAG006-B   1393.5-1395.0 / B            48,590,810       3              729,000          \$729,000          \$729,000
                                                1433.5-1435.0                                                                                    

                                                                                                                                                 

               **Total EAG        **12**                                                                     **8,568,000**    **\$8,568,000**    **\$8,568,000**
               Licenses**                                                                                                                        

                                                                                                                                                 

  **Total                         **64**                                                                     **11,426,500**   **\$11,426,500**   **\$11,426,500**
  Licenses in                                                                                                                                    
  Auction No.                                                                                                                                    
  69**                                                                                                                                           
  ------------ ------------------ ------------- --------------- ------------ ---------------- -------------- ---------------- ------------------ ------------------

**Auction No. 69 -- 1.4 GHz** **Bands**

**DA 06-1016**

**Attachment B**

######## Formulas to Determine Minimum Acceptable Bids {#formulas-to-determine-minimum-acceptable-bids .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 bidders submitting bids on the licenses in the current
round (round i)

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

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

N = minimum additional percentage or floor

M = maximum additional percentage or ceiling

X ~i+1~ = additional dollar amount

Y~i~ = provisionally winning bid amount from the current round

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

License 1

C=0.5, N = 0.1, M = 0.2

[Round 1 (2 bidders submitting bids, provisionally winning bid =
\$1,000,000)]{.underline}

1\. Calculation of additional percentage for round 2:

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
additional percentage)

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

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

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

[Round 2 (3 bidders submitting bids, provisionally winning bid =
\$2,000,000)]{.underline}

1\. Calculation of additional percentage for round 3:

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
additional percentage)

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

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

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

[Round 3 (1 bidder submitting bids, provisionally winning bid =
\$2,400,000)]{.underline}

1\. Calculation of additional percentage for round 4:

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
additional percentage)

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

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

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

[^1]: This spectrum has been reallocated for non-Government use to
    provide fixed and mobile services, with the exception of
    aeronautical mobile services. *See* 47 C.F.R. § 27.802.

[^2]: The Bureau initially announced that licenses in these bands would
    be included in the inventory of Auction No. 46. 1392-1395 and
    1432-1435 MHz, 1390-1392 MHz, 1670-1675 MHz, and 2385-2390 MHz Bands
    Auction Scheduled for September 18, 2002; Comment Sought on Reserve
    Prices or Minimum Opening Bids and Other Auction Procedural Issues,
    *Public Notice*, 17 FCC Rcd. 9600 (2002). The Bureau subsequently
    revised the Auction No. 46 inventory and offered only the 1670 -1675
    MHz band license in Auction No. 46. Auction No. 46 Revised License
    Inventory and Auction Start Date; Comment Sought on Revisions to
    Auction Procedures, *Public Notice*, 17 FCC Rcd. 13421 (2002)
    ("*Auction No. 46 Revised Comment Public Notice*").

[^3]: *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 Band, *Report and Order*, 17 FCC
    Rcd 9980 (2002)(*Report and Order*).

[^4]: *See id.*, 17 FCC Rcd at 9997-9 ¶¶ 37-39; 47 C.F.R. § 27.802.

[^5]: *See Report and Order*, 17 FCC Rcd at 10048 ¶¶ 178-79; 47 C.F.R. §
    27.803.

[^6]: 47 C.F.R. § 2.106 n. US311.

[^7]: 47 C.F.R. § 2.106 n. US351.

[^8]: *See* *id*.

[^9]: *See id*.

[^10]: *See* *id*.

[^11]: 47 C.F.R. § 2.106 n. US361.

[^12]: *See* *id*.

[^13]: *See* Commercial Spectrum Enhancement Act, Pub. L. No. 108-494,
    118 Stat. 3986, Title II (2004) (codified in various sections of
    Title 47 of the United States Code) ("CSEA"), § 202 (codified at 47
    U.S.C. § 923(g)(2)).

[^14]: *Id.,* §§ 201-209. Eligible frequencies comprise four bands
    specified in CSEA (the 216-220 MHz, 1432-1435 MHz, 1710-1755 MHz and
    2385-2390 MHz bands), as well as any other band of frequencies
    reallocated from federal use to non-federal use after January 1,
    2003, and assigned by the Commission through competitive bidding.
    *Id.,* § 202. Bands of frequencies previously identified by the
    National Telecommunications and Information Administration in the
    Spectrum Reallocation Final Report, NTIA Special Publication 95-32
    (1995), are excluded. *Id*.

[^15]: *Id.,* § 203(b). CSEA also requires that, at the same time, NTIA
    submit for approval its estimate of relocation costs and the
    timelines for relocation to the Senate Committees on Appropriations,
    and Commerce, Science, and Transportation, the House of
    Representatives Committees on Appropriations and Energy and
    Commerce, and the Comptroller General. Unless disapproved by the
    Committees within 30 days, the estimate "shall be approved."
    *Id*., § 202.

[^16]: *See* letter from Michael D. Gallagher, Assistant Secretary for
    Communications and Information, National Telecommunications and
    Information Administration, US Department of Commerce, to Kevin J.
    Martin, Chairman, Federal Communications Commission (Dec. 27, 2005).

[^17]: 47 U.S.C. § 309(j)(3)(E)(i).

[^18]: *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 ¶¶ 124-25 (1997) ("*Part 1 Third Report and
    Order*") (directing the Bureau to seek comment on specific
    mechanisms related to day-to-day auction conduct including, for
    example, the structure of bidding rounds and stages, establishment
    of minimum opening bids or reserve prices, minimum acceptable bids,
    initial maximum eligibility for each bidder, activity requirements
    for each stage of the auction, activity rule waivers, criteria for
    determining reductions in eligibility, information regarding bid
    withdrawal and bid removal, stopping rules, and information relating
    to auction delay, suspension or cancellation). *See also* 47 C.F.R.
    § 0.131; Amendment of Part 1 of the Commission's Rules ---
    Competitive Bidding Proceeding, *Order, Memorandum Opinion and
    Order, and Notice of Proposed Rule Making*, 12 FCC Rcd 5686, 5697-98
    ¶ 16 (1997) ("*Part 1 Order*").

[^19]: The number of possible combinations (C) increases exponentially
    with the number of licenses (N) at the rate C = 2^N ^- 1. This
    number can become very large quickly; for example, 20 licenses would
    result in over one million possible combinations. Depending upon the
    number of licenses included in an SMR-PB auction, the Bureau may
    decide, for computability, to limit the number of bids a bidder may
    place in a round, the number of different packages a bidder may
    define, and the number of different packages on which a bidder may
    place bids.

[^20]: 47 C.F.R. § 1.2104(e).

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

[^22]: 47 C.F.R. § 1.2104(i).

[^23]: *See Part 1 Order,* 12 FCC Rcd at 5697-98 ¶ 16. *See also Part 1
    Third Report and Order*, 13 FCC Rcd at 425 ¶ 86; Implementation of
    Section 309(j) of the Communications Act--Competitive Bidding,
    *Second Report and Order*, 9 FCC Rcd 2348, 2378-79 ¶¶ 171-75 (1994)
    ("*Competitive Bidding Second Report and Order*").

[^24]: *See Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2378-79 ¶¶ 171-76.

[^25]: All population figures are from the 2000 U.S. Census, U.S.
    Department of Commerce, Bureau of the Census. *See* Census 2000
    Summary File 1 (SF1) and July 3, 2001, News Releases covering the
    U.S. Virgin Islands, Guam, the Northern Mariana Islands, and
    American Samoa.

[^26]: *See* Section II.B. 6. "Provisionally Winning Bids," below.

[^27]: 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.

[^28]: *See* Section II B.3. "Activity Rule Waivers and Reducing
    Eligibility," below.

[^29]: For example, when monitoring activity for determining when to
    change stages, we may consider the percentage of bidding units of
    the licenses receiving new provisionally winning bids, excluding any
    FCC-held licenses.

[^30]: 47 U.S.C. § 309(j)(4)(F). The Commission's rules regarding
    reserve prices and minimum opening bids are set forth at 47 C.F.R. §
    1.2104(c) and (d).

[^31]: *Part 1 Third Report and Order*, 13 FCC Rcd at 454-55 ¶ 141.
    *See* 47 C.F.R. §1.2104(c).

[^32]: *See* CSEA, § 203(b); *see also* 47 C.F.R. §1.2104(c).

[^33]: *See* CSEA, § 203(b).

[^34]: *Id*.

[^35]: *See* letter from Michael D. Gallagher, Assistant Secretary for
    Communications and Information, National Telecommunications and
    Information Administration, US Department of Commerce, to Kevin J.
    Martin, Chairman, Federal Communications Commission (Dec. 27, 2005).

[^36]: *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).

[^37]: *See* note 25 (concerning Census figures), above.

[^38]: *See* note 27 (concerning rounding), above.

[^39]: Bidders must have sufficient eligibility to place a bid on the
    particular license. *See* Section II.B.1. "Upfront Payments and
    Bidding Eligibility," above.

[^40]: In the event of duplicate bid amounts due to rounding, the FCC
    Auction System will omit the duplicates and will list fewer than
    nine acceptable bid amounts for the license.

[^41]: *See* Section II.B.7. "Bid Removal and Bid Withdrawal," below.

[^42]: For Round 1 calculations, because there is no prior round
    (*i.e.*, no round 0), the activity index from the prior round is set
    at 0.

[^43]: 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.

[^44]: *See* Section II.B.2. "Activity Rule," above.

[^45]: 47 C.F.R. §§ 1.2104(g) and 1.2109.

[^46]: *Part 1 Third Report and Order*, 13 FCC Rcd at 459-60 ¶ 150.

[^47]: *Id*.

[^48]: *See* 47 C.F.R. § 1.2104(g).

[^49]: 47 C.F.R. § 1.2104(g)(1). The withdrawal payment amount is
    deducted from any upfront payments or down payments that the
    withdrawing bidder has deposited with the Commission. No withdrawal
    payment is assessed for a withdrawn bid if either the subsequent
    winning bid or any of the intervening subsequent withdrawn bids
    equals or exceeds that withdrawn bid. *Id.*

[^50]: *Id.*

[^51]: *See* 47 C.F.R. § 1.2104(g)(2), as amended by Implementation of
    the Commercial Spectrum Enhancement Act and Modernization of the
    Commission's Competitive Bidding Rules and Procedures, WT Docket No.
    05-211, *Report and Order,* 21 FCC Rcd 891, 903 ¶ 30 (2006)
    ("*CSEA/Part 1 Report and Order*").

[^52]: *See* 47 C.F.R. § 1.2104(g)(2).

[^53]: *See* 47 C.F.R. § 1.2104(g)(2).

[^54]: *See CSEA/Part 1 Report and Order*, 21 FCC Rcd at 903 ¶ 30.

[^55]: *See* 47 C.F.R. § 1.2104(g)(2).

[^56]: *See CSEA/Part 1 Report and Order*, 21 FCC Rcd at 903 ¶ 30.

[^57]: *See* Electronic Filing of Documents in Rulemaking Proceedings,
    GC Docket No. 97-113, *Report and Order*, 13 FCC Rcd 11322 (1998).

[^58]: 47 C.F.R. §§ 1.1200(a), 1.1206.