**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Amendment of Part 1 of the ) WT Docket No. 97-82

Commission's Rules \-- )

Competitive Bidding Procedures )

**THIRD FURTHER NOTICE OF PROPOSED RULEMAKING**

**Adopted:** December 7, 1999 **Released:** December 13, 1999

**Comments Due:** No later than 60 days after publication in the Federal
Register

**Reply Comments Due:** No later than 120 days after publication in the
Federal Register

By the Commission:

**I. INTRODUCTION**

1\. In this Further Notice of Proposed Rulemaking, we seek comment on
our proposal to require auction applicants that make or receive a
communication of bids or bidding strategies prohibited by Section
1.2105(c)(1) of the Commission's rules[^1] to report promptly such a
communication to the Commission. As explained below, the proposed
reporting requirement is intended to deter anticompetitive conduct
during spectrum auctions. In this Notice, we also propose to amend
Section 1.2105(c)(1) to reflect our clarification of the rule that it
prohibits an auction applicant from discussing another applicant's bids
or bidding strategies even if the first applicant does not discuss its
own bids or bidding strategies.[^2] Lastly, we seek comment regarding
whether other changes to Section 1.2105(c)(1) may be warranted at this
time.

**II. BACKGROUND**

II. 

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2.  In 1993, Congress added new Section 309(j) to the Communications Act
    of 1934, as amended (the "Act").[^3] Section 309(j) authorizes the
    Commission to employ competitive bidding procedures (*i.e.,*
    auctions) to choose among mutually exclusive applications for
    initial licenses to use radio spectrum. On March 8, 1994, the
    Commission adopted rules to govern the competitive bidding
    process,[^4] including Sections 1.2105(a) and (c).[^5] Section
    1.2105(a)(2)(ix) provides that in order to be eligible to
    participate in a spectrum auction, an applicant must file a short
    form application (FCC Form 175) in which it certifies:

> that it has not entered into and will not enter into any explicit or
> implicit agreements, arrangements or understandings of any kind with
> any parties \[not identified in the application\] regarding the amount
> of their bids, bidding strategies or the particular licenses on which
> they will or will not bid.[^6]

Section 1.2105(c)(1) provides that:

> after the filing of short-form applications, all applicants[^7] are
> prohibited from cooperating, collaborating, discussing or disclosing
> in any manner the substance of their bids or bidding strategies,[^8]
> or discussing or negotiating settlement agreements, with other
> applicants until after the high bidder makes the required down
> payment, unless such applicants are members of a bidding
> consortium[^9] or other joint bidding arrangement identified on the
> bidder\'s short-form application pursuant to §
> 1.2105(a)(2)(viii).[^10]

3.  The Commission adopted Section 1.2105(c)(1) to deter anticompetitive
    conduct during spectrum auctions and to ensure the competitiveness
    of post-auction markets,[^11] thereby implementing Congress'
    directive that the Commission's auction rules "promot\[e\] economic
    opportunity and competition . . . ."[^12] Section 1.2105(c)(1) is
    intended to "help ensure that the government receives a fair market
    price for the use of the spectrum,"[^13] and to foster a level
    competitive playing field during auctions. In promulgating the rule,
    the Commission was particularly concerned that the largest firms
    might engage in behavior that would unfairly disadvantage other
    bidders.[^14]

4.  Conduct that violates Section 1.2105(c)(1) has the potential to
    undermine the competitiveness of our auction process and public
    confidence in the integrity of that process. Violation of Section
    1.2105(c)(1) is a serious matter that is subject to a range of
    sanctions. Violation of the rule could subject applicants to
    forfeiture penalties.[^15] It could also result in "forfeiture of
    their down payment or their full bid amount and revocation of their
    license(s), and they may be prohibited from participating in future
    auctions."[^16] Compliance with Section 1.2105(c)(1), moreover, does
    not obviate compliance with federal antitrust laws.[^17] The
    Commission may refer allegations of anticompetitive auction conduct
    to the Department of Justice for investigation. [^18]

#########  III. DISCUSSION 

5.  Section 1.2105(c)(1) of our rules provides that "all \[auction\]
    applicants are prohibited from cooperating, collaborating,
    discussing or disclosing in any manner the substance of their bids
    or bidding strategies . . . ."[^19] The Commission's experience
    enforcing Section 1.2105(c)(1) over the past five years, however,
    indicates that, on occasion, some auction applicants engage in
    communications prohibited by the rule. In this Further Notice of
    Proposed Rulemaking, we seek comment on amending Section 1.2105(c)
    to require anyone who makes or receives a communication of bids or
    bidding strategies prohibited under Section 1.2105(c)(1) to report
    promptly such a communication to the Commission. This amendment is
    intended to deter parties from engaging in prohibited conduct and
    thereby enhance the competitiveness and fairness of our spectrum
    auctions. We also propose to amend Section 1.2105(c)(1) to codify
    our clarification of the rule that it prohibits an auction applicant
    from discussing another applicant's bids or bidding strategies even
    if the first applicant does not discuss its own bids or bidding
    strategies.[^20]

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A.  **Disclosure of Communications Prohibited By Section 1.2105(c)(1)**

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6.  Subject to certain exceptions, Section 1.2105(c)(1) prohibits
    auction applicants, who are eligible to bid on any common license
    area, from communicating their bids or bidding strategies with each
    other during the auction process.[^21] If auction applicants
    nonetheless engage in communications prohibited by Section
    1.2105(c)(1) that result in a bidding agreement, arrangement or
    understanding, the applicants must promptly disclose any such
    agreement, arrangement or understanding to the Commission pursuant
    to Section 1.65(a) of the Commission's rules.[^22]

7.  We have found that even when a communication of prohibited bids or
    bidding strategies is limited to one applicant's bids or bidding
    strategies, it may "unfairly disadvantage\[\] the other bidders in
    the market by creating an impermissible asymmetry of
    information."[^23] This is so because bidders deprived of the
    prohibited information are unable "to access, analyze, and act upon
    this strategic information,"[^24] otherwise available only to the
    recipient. In this proceeding, we therefore invite comment on
    whether the integrity and competitiveness of our auction process
    would be enhanced if we require auction applicants that make or
    receive communications prohibited under Section 1.2105(c)(1) to
    report promptly such communications to the Commission even if the
    communications do not result in an agreement, arrangement or
    understanding that must be reported to the Commission under Section
    1.65(a). We seek comment on any potential burden that may be
    associated with this reporting requirement,[^25] and the appropriate
    deadline for making such a report. We also invite comment on whether
    would-be disseminators of prohibited bidding or bidding strategy
    information, knowing that recipients of such prohibited information
    would have an affirmative duty to disclose promptly such prohibited
    communications to the Commission, would be deterred from making such
    communications.

8.  The proposed rule, which is set forth at Appendix B to this Further
    Notice, would, if adopted, apply even if the communication
    prohibited by Section 1.2105(c)(1) did not result in a bidding
    arrangement, agreement or understanding that must be reported to the
    Commission under Section 1.65(a).[^26] Under the proposed rule,
    failure to report timely a prohibited communication would constitute
    a rule violation distinct from the violation of Section 1.2105(c)(1)
    for making the prohibited communication. If such communications
    resulted in a bidding arrangement, agreement or understanding, the
    applicants also must update their pending applications pursuant to
    Section 1.65(a).[^27]

9.  Pending the outcome of this proceeding, we recommend that if an
    auction applicant receives a communication prohibited under Section
    1.1205(c)(1) orally, its best course of action is to respond
    immediately and unequivocally that it is unwilling to participate in
    any violation of Section 1.2105(c)(1), and to report promptly the
    improper communication to the Commission. If such a prohibited
    communication is received other than orally, we recommend that an
    auction applicant immediately respond in writing that it is
    unwilling to participate in any violation of Section 1.2105(c)(1)
    and report promptly the improper communication to the Commission.

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B.  **Amendment of Section 1.2105(c)(1)**

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10. In the *Western PCS Order*, we clarify that Section 1.2105(c)(1)
    prohibits an auction applicant from cooperating or collaborating
    with respect to, or discussing, another applicant's bids or bidding
    strategies, even if it does not discuss its own bids or bidding
    strategies.[^28] In clarifying Section 1.2105(c)(1), we note that
    the rule's prohibition of "discussing" bids or bidding strategy
    would have minimal deterrent force if an applicant to whom bidding
    information is disclosed could discuss such information (but not
    discuss its own bidding information) without violating the
    rule.[^29] The *Western PCS Order* thus provides auction applicants
    official notice that Section 1.2105(c)(1) prohibits an auction
    applicant from discussing another applicant's bids or bidding
    strategies, even if it does not discuss its own bids or bidding
    strategies. Nevertheless, we believe that auction applicants would
    benefit if the text of the rule plainly states that it prohibits an
    auction applicant from discussing another applicant's bids or
    bidding strategies, even if it does not discuss or disclose its own
    bids or biding strategies. Accordingly, we seek comment on our
    proposal to add the italicized text below to Section 1.2105(c)(1):

> all applicants are prohibited from cooperating, collaborating,
> discussing or disclosing in any manner the substance of their *own or
> other applicants'* bids or bidding strategies, or discussing or
> negotiating settlement agreements, with other applicants . . . unless
> such applicants are members of a bidding consortium or other joint
> bidding arrangement identified on the bidder\'s short-form application
> pursuant to § 1.2105(a)(2)(viii).[^30]

11. We also seek comment regarding whether other changes to Section
    1.2105(c)(1) may be warranted at this time in light of Congress'
    mandate that we ensure competitive auctions.[^31] For example, could
    the text of the rule be refined to further enhance its clarity? In
    addition, we seek comment regarding whether there are types of
    conduct currently prohibited by Section 1.2105(c)(1) that do not
    impact the integrity of the Commission's auction process. We seek
    comment regarding any changes in our rules that would eliminate this
    possible overinclusiveness.

**IV. PROCEDURAL MATTERS**

***Ex Parte* Rules - Permit-But-Disclose Proceeding**

12. This proceeding will be treated as a \"permit-but- disclose\"
    proceeding subject to the \"permit-but-disclose\" requirements under
    47 C.F.R. § 1.1206(b), as revised. Ex parte presentations are
    permissible if disclosed in accordance with Commission rules, except
    during the Sunshine Agenda period when presentations, ex parte or
    otherwise, are generally prohibited. Persons making oral ex parte
    presentations are reminded that a memorandum summarizing a
    presentation must contain a summary of the substance of the
    presentation 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.[^32] Additional rules
    pertaining to oral and written presentations are set forth in 47
    C.F.R. § 1.1206(b).

**Regulatory Flexibility Act**

13. With respect to this Notice, an Initial Regulatory Flexibility
    Analysis (\"IRFA\") is contained in Appendix A. As required by the
    Regulatory Flexibility Act,[^33] the Commission has prepared an IRFA
    of the possible significant economic impact on small entities by the
    policies and rules proposed in this Notice*.* Written public
    comments are requested on the IRFA. We ask questions in the IRFA
    regarding the prevalence of small businesses in the industries
    covered by this Notice*.* Comments on the IRFA must be filed in
    accordance with the same filing deadlines as comments on the Notice
    and must have a distinct heading designating them as responses to
    the IRFA.

**Comment Submission**

14. **Filing of Comments and Reply Comments**. Pursuant to Sections
    1.415 and 1.419 of the Commission\'s rules, 47 C.F.R. §§ 1.415 &
    1.419, interested parties may file comments no later than sixty (60)
    days after the date of publication of this Notice in the Federal
    Register and reply comments no later than one hundred twenty (120)
    days of the date of publication of this Notice in the Federal
    Register. Comments and reply comments may be filed using the
    Commission\'s Electronic Comment Filing System ("ECFS") or by filing
    paper copies. [See]{.underline} [Electronic Filing of Documents in
    Rulemaking Proceedings]{.underline}, 63 Fed. Reg. 24,121 (1998).
    Comments filed through the ECFS can be sent as an electronic file
    via the Internet to \<http://www.fcc.gov/e-file/ecfs.html\>. In
    completing the transmittal screen, commenters should include their
    full name, postal service mailing address, and the applicable docket
    or rulemaking number. Parties may also submit an electronic comment
    by Internet e-mail. To obtain filing instructions for e-mail
    comments, commenters should send an e-mail to ecfs@fcc.gov, and
    should include the following words in the body of the message, \"get
    form \<your e-mail address\>.\" A sample form and directions will be
    sent in reply. Parties who choose to file by paper must file an
    original and four copies of each filing. If you want each
    Commissioner to receive a copy of your comments, you must file an
    original plus eleven copies. All filings must be sent to the
    Commission\'s Secretary, Magalie Roman Salas, Office of the
    Secretary, TW-A306, Federal Communications Commission, 445 12th
    Street, S.W., Washington, D.C. 20554.

15. Parties who choose to file by paper should also submit their
    comments on diskette. Diskettes should be submitted to: Richard
    Arsenault, Federal Communications Commission, 445 12th Street, S.W.,
    Room 4-A234, Washington, D.C. 20554. Such a submission should be on
    a 3.5-inch diskette formatted in an IBM compatible format using
    Microsoft Word for Windows or compatible software. The diskette
    should be accompanied by a cover letter and should be submitted in
    \"read only\" mode. The diskette should be clearly labeled with the
    commenter\'s name, proceeding (including the docket number in this
    case -- WT Docket No. 97- 82), type of pleading (comment or reply
    comment), date of submission, and the name of the electronic file on
    the diskette. The label should also include the following phrase
    \"Disk Copy - Not an Original.\" Each diskette should contain only
    one party\'s pleadings, preferably in a single electronic file. In
    addition, commenters must send diskette copies to the Commission\'s
    copy contractor, International Transcription Service, Inc., 1231
    20th Street, N.W., Washington, D.C. 20036.

16. Comments and reply comments will be available for public inspection
    during regular business hours in the FCC Reference Center, Room
    CY-A257, 445 12^th^ Street, S.W., Washington, D.C. 20554.

17. Written comments by the public and the Office of Management and
    Budget (OMB) on the proposed and/or modified information collections
    are due on or before 60 days after date of publication in the
    Federal Register. In addition to filing comments with the Secretary
    of the Commission, a copy of any comments on the information
    collections contained herein should be submitted to Jody Boley,
    Federal Communications Commission, Room 1-C804, 445 12^th^ Street,
    SW, Washington, DC 20554, or via the Internet to <jboley@fcc.gov>
    and to Virginia Huth, OMB Desk Officer, 10236 NEOB, 725 -- 17^th^
    Street, N.W., Washington, DC 20503 or via the Internet to
    <vhuth@omb.eop.gov>.

**Initial Paperwork Reduction Act of 1995 Analysis**

18. This Notice proposes a new rule that may contain information
    collection requirements. As part of our continuing effort to reduce
    paperwork burdens, we invite the general public and the OMB to take
    this opportunity to comment on the information collections contained
    in this Notice, as required by the Paperwork Reduction Act of 1995,
    Pub. L. No. 104-13. Public, OMB and agency comments are due at the
    same time as other comments on this Notice (not later than 60 days
    after the date of publication of this Notice in the Federal
    Register). Comments should address: (a) whether the proposed
    collection of data is necessary for the proper performance of the
    functions of the Commission, including whether the information shall
    have practical utility; (b) the accuracy of the Commission\'s burden
    estimates; (c) ways to enhance the quality, utility and clarity of
    the information collected; and (d) ways to minimize the burden of
    the collection of information on the respondents, including the use
    of automated collection techniques or other forms of information
    technology.

**Further Information**

19. For further information, contact Richard Arsenault, Commercial
    Wireless Division, Wireless Telecommunications Bureau, (202)
    418-0920 or rarsenau@fcc.gov.

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V.  **CONCLUSION**

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20. In the foregoing Further Notice of Proposed Rulemaking, we seek
    comment on requiring any auction applicant that makes or receives a
    communication of bids or bidding strategies prohibited under Section
    1.2105(c)(1) of our rules to disclose such a communication to the
    Commission in writing. We also seek comment on amending the text of
    Section 1.2105(c)(1) to reflect our recent clarification of the rule
    that it prohibits an auction applicant from discussing another
    applicant's bids or bidding strategies, even if it does not discuss
    or disclose its own bids or bidding strategies.

**VI. ORDERING CLAUSES**

21. IT IS ORDERED that, pursuant to Sections 4(i), 4(j), 303(r), 309(j)
    and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154(i), 154(j), 303(r), 309(j) and 403, notice is hereby given of
    proposed amendments to Part 1 Commission\'s Rules, 47 C.F.R. Part 1,
    in accordance with the proposals, discussions, and statement of
    issues in this Third Further Notice of Proposed Rulemaking.

22. IT IS FURTHER ORDERED that comments on the Third Further Notice of
    Proposed Rulemaking shall be filed no later than 60 days after
    publication of a summary of the Third Further Notice of Proposed
    Rulemaking in the Federal Register and reply comments shall be filed
    no later than 120 days after such publication in the Federal
    Register.

23. IT IS FURTHER ORDERED that the Commission\'s Reference Information
    Center, Consumer Information Bureau, SHALL SEND a copy of the Third
    Further Notice of Proposed Rulemaking*,* including the Initial
    Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy
    of the Small Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**APPENDIX A**

**Initial Regulatory Flexibility Analysis**

As required by the Regulatory Flexibility Act (\"RFA\"),[^34] the
Commission has prepared this present Initial Regulatory Flexibility
Analysis (\"IRFA\") of the possible significant economic impact on small
entities by the policies and rules proposed in this Third Further Notice
of Proposed Rule Making (\"Notice\"). Written and electronically filed
public comments are requested on this IRFA. Comments must be identified
as responses to the IRFA and must be filed by the deadlines for comments
on this *Notice* provided above in paragraph 14. The Commission will
send a copy of the Notice, including this IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration. *See* 5 U.S.C. § 603(a).
In addition, the *Notice* and IRFA (or summaries thereof) will be
published in the Federal Register. *See* *id.*

A. Need for and Objectives of the Proposed Rules:

1\. This rulemaking proceeding is initiated to obtain comments
concerning a proposal to amend 47 C.F.R. § 1.2105(c) to require any
auction applicant that makes or receives a communication of bids or
bidding strategies prohibited by 47 C.F.R. § 1.2105(c)(1) to disclose
such communication to the Commission. The proposed amendment is intended
to deter anticompetitive behavior during Commission spectrum auctions
and foster competitive post-auction markets. We also seek comment on
amending Section 1.2105(c)(1) to reflect our clarification that the rule
prohibits an auction applicant from discussing another applicant's bids
or bidding strategies, even if it does not discuss or disclose its own
bids or bidding strategies. The proposed amendment is intended to
facilitate compliance with the rule by ensuring that its text is
unambiguous.

B. Legal Basis:

2\. Authority for issuance of this Notice of Proposed Rule Making is
contained in Sections 4(i), 4(j), 303(r), 309(j) and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j),
303(r), 309(j) and 403.

**C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply:**

3\. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted.[^35] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small organization," "small business," and "small governmental
jurisdiction."[^36] The term \"small business\" has the same meaning as
the term \"small business concern\" under the Small Business Act.[^37] A
small business concern is one which: (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (\"SBA\"). A small organization is generally \"any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field.\"[^38] Nationwide, as of 1992, there were
approximately 275,801 small organizations.[^39] \"Small governmental
jurisdiction\" generally means \"governments of cities, counties, towns,
townships, villages, school districts, or special districts, with a
population of less than 50,000.\"[^40] As of 1992, there were
approximately 85,006 such jurisdictions in the United States. [^41] This
number includes 38,978 counties, cities, and towns; of these, 37,566, or
96 percent, have populations of fewer than 50,000. The Census Bureau
estimates that this ratio is approximately accurate for all governmental
entities. Thus, of the 85,006 governmental entities, we estimate that
81,600 (91 percent) are small entities. According to SBA reporting data,
there were 4.44 million small business firms nationwide in 1992.[^42]

4\. The amendment to Section 1.2105(c)(1) proposed above will only apply
to applicants in Commission spectrum auctions. The number of entities
that may apply to participate in future Commission spectrum auctions is
unknown. In the past, the number of small businesses that have
participated in prior auctions has varied.

**D. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements:**

5\. As a result of the actions proposed in this rulemaking proceeding,
disseminators and recipients of communications prohibited by Section
1.2105(c) would be required to report such communications to the
Commission. No other new reporting, recordkeeping, or other compliance
requirements would be imposed on applicants or licensees as a result of
the actions proposed in this rule making proceeding.

**E. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered:**

6\. The RFA requires an agency to describe any significant alternatives
that it has considered in reaching its proposed approach, which may
include the following four alternatives: (1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use of
performance rather than design standards; and (4) an exemption from
coverage of the rule, or any part thereof, for small entities.[^43] In
the *Notice*, we seek comment on our proposal to require auction
applicants that make or receive a communication of bids or bidding
strategies prohibited by Section 1.2105(c)(1) of the Commission's
rules[^44] to report promptly such a communication to the Commission. We
also propose to amend Section 1.2105(c)(1) to reflect our recent
clarification of the rule that it prohibits an auction applicant from
discussing another applicant's bids or bidding strategies even if the
first applicant does not discuss its own bids or bidding
strategies.[^45] We anticipate no significant impact on affected
entities, including small businesses. The proposed amendment to Section
1.2105(c) discussed above will have several public interest benefits
with little or no impact on small businesses and local government
entities. First, we believe that the proposed amendment will enhance the
competitiveness of our auction process to the benefit of small auction
applicants. Second, under the proposed amendment, general confidence in
the integrity of our auctions should increase. Public confidence could
be undermined if all entities were not subject to the proposed
disclosure requirements. Therefore, the public policy benefits of the
proposed amendments are great and we anticipate no significant impact on
small businesses. We seek comment on these tentative conclusions.

**F**. **Federal Rules that may Duplicate, Overlap, or Conflict with the
Proposed Rules:**

7\. None.

######### APPENDIX B

**Proposed Rules**

Subpart Q of Part 1 of Title 47 of the Code of Federal Regulations is
proposed to be amended as follows:

**PART 1 -- PRACTICE AND PROCEDURE**

1\. The authority citation for Part 1 continues to read as follows:

Authority citation: Sections 4, 303, and 332, 48 Stat. 1066, 1082, as
amended: 47 U.S.C. 154, 303, and 332, unless otherwise noted.

2\. Section 1.2105 is proposed to be amended (the proposed new text is
double underlined) by revising paragraph (c)(1) to read as follows:

**§ 1.2105 Bidding application and certification procedures; prohibition
of collusion.**

   \* \* \* \* \*

(c) *Prohibition of collusion.*

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(1) Except as provided in paragraphs (c)(2), (c)(3) and (c)(4) of this
    section, after the filing of short-form applications, all applicants
    are prohibited from cooperating, collaborating, discussing, or
    disclosing in any manner the substance of their own or other
    applicants' bids or bidding strategies, or discussing or negotiating
    settlement agreements, with other applicants until after the high
    bidder makes the required down payment, unless such applicants are
    members of a bidding consortium or other joint bidding arrangement
    identified on the bidder\'s short-form application pursuant to
    §1.2105(a)(2)(viii).

3\. Section 1.2105 is proposed to be amended by renumbering current
paragraph (c)(6) to become new paragraph (c)(7), and by adding new
paragraph (c)(6) as follows:

\(6\) Any applicant that makes or receives a communication of bids or
bidding strategies prohibited under

paragraph (c)(1) shall disclose such communication in writing to the
Commission within \_\_\_\_\_calendar

days of the receipt of such communication.

\* \* \* \* \*

[^1]: Section 1.2105(c)(1), also known as the anti-collusion rule,
    provides that, subject to certain exceptions, "all applicants \[in a
    Commission spectrum auction\] are prohibited from cooperating,
    collaborating, discussing or disclosing in any manner the substance
    of their bids or bidding strategies" unless they are members of a
    bidding consortium that has been properly disclosed to the
    Commission. 47 C.F.R. § 1.2105(c)(1).

[^2]: *See Western PCS BTA 1 Corporation*, Memorandum Opinion and Order
    at ¶¶ 7-9, FCC 99-385 (rel. Dec. 13, 1999) ("*Western PCS Order*").

[^3]: 47 U.S.C. § 309(j). On August 10, 1993, the Omnibus Budget
    Reconciliation Act of 1993 (Pub. L. No. 103-66) added Section 309(j)
    to the Act. Section 309(j) was substantially amended by Section 3002
    of the Balanced Budget Act of 1997 (Pub. L. No. 105-33).

[^4]: *See* 47 C.F.R. Part 1, Subpart Q (competitive bidding
    procedures).

[^5]: ^?^ *Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding*, Second Report and Order, PP Docket No. 93-253,
    9 FCC Rcd 2348, 2386-88 ¶¶ 221-226 (1994) ("*Competitive Bidding
    Second Report* *and Order*"), *on recon.,* Second Memorandum Opinion
    and Order*,* 9 FCC Rcd 7245 (1994).

[^6]: 47 C.F.R. § 1.2105(a)(2)(ix).

[^7]: An applicant "include\[s\] all controlling interests in the entity
    submitting a short-form application to participate in an auction
    (FCC Form 175), as well as all holders of partnership and other
    ownership interests and any stock interest amounting to 10 percent
    or more of the entity, or outstanding stock, or outstanding voting
    stock of the entity submitting a short-form application, and all
    officers and directors of that entity." 47 C.F.R. § 1.2105(c)(6)(i).

[^8]: Section 1.2105(c)(6)(ii) provides that "\[t\]he term bids or
    bidding strategies shall include capital calls or requests for
    additional funds in support of bids or bidding strategies." 47
    C.F.R. § 1.2105(c)(6)(ii).

[^9]: *See, e.g.,* 47 C.F.R. § 101.1112(f) (definition of consortium
    under LMDS competitive bidding procedures).

[^10]: 47 C.F.R. § 1.2105(c)(1) (internal footnotes added).

[^11]: ^?^ *Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2387 ¶ 222 ("\[T\]he Commission is concerned that collusive conduct
    by bidders prior to or during the auction process could undermine
    the competitiveness of the bidding process and prevent the formation
    of a competitive post-auction market structure.").

[^12]: 47 U.S.C. § 309(j)(3)(B).

[^13]: ^?^ *Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2386 ¶ 221. We believe that achievement of this goal has furthered
    Congress' directive that the Commission promote "recovery for the
    public of a portion of the value of the public spectrum resource
    made available for commercial use . . . ." 47 U.S.C. § 309(j)(3)(C).

[^14]: ^?^ *Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2386 ¶ 221. *See also* FCC Auction Bidder Information Package, C, D,
    E & F Broadband PCS Auction at 109 (March 23, 1999) ("To ensure the
    competitiveness and integrity of the auction process, the
    Commission's Rules prohibit applicants for the same geographic
    license area from communicating with each other during the auction
    about bids, bidding strategies, or settlements.").

[^15]: *See* 47 U.S.C. § 503(b)(2).

[^16]: *Implementation of Section 309(j) of the Communications
    Act---Competitive Bidding*, PP Docket No. 93-253, Fifth Report and
    Order, 9 FCC Rcd 5532, 5571 ¶ 92 (1994).

[^17]: *See Implementation of Section 309(j) of the Communications
    Act---Competitive Bidding*, PP Docket No. 93-253, Memorandum Opinion
    and Order, 9 FCC Rcd 7684, 7689 ¶ 12 (1994) ("\[W\]e wish to
    emphasize that all applicants and their owners continue to be
    subject to existing antitrust laws. Applicants should note that
    conduct that is permissible under the Commission's Rules may be
    prohibited by the antitrust laws."). *See Implementation of Section
    309(j) of the Communications Act---Competitive Bidding*, PP Docket
    No. 93-253, Fourth Memorandum Opinion & Order, 9 FCC Rcd 6858, 6869
    n.134 (1994) ("*Fourth MO&O"*). As discussed in the Fourth MO&O,
    under the antitrust laws, the parties to an agreement may not
    discuss bid prices if they have applied for licenses in the same
    geographic market. *Id*. In addition, agreements between actual or
    potential competitors to submit collusive, noncompetitive or rigged
    bids are *per se* violations of Section One of the Sherman Antitrust
    Act. *Id.* Further, actual or potential competitors may not agree to
    divide territories horizontally in order to minimize competition,
    regardless of whether they split a market in which they both do
    business, or whether they merely reserve one market for one and
    another for the other. *Id.*

[^18]: *See Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2388 ¶ 226. *See also* "Justice Department Sues Three Firms Over FCC
    Auction Practices," Press Release 98-536 (Nov. 10, 1998).

[^19]: 47 C.F.R. § 1.2105(c).

[^20]: *See Western PCS Order* at ¶¶ 7-9.

[^21]: For example, if two auction applicants are each eligible to bid
    on numerous license areas but have only one license area for which
    they are both eligible, they may not discuss their bids or bidding
    strategies relating to any license area that either of them is
    eligible to bid on.

[^22]: 47 C.F.R. § 1.65(a). Section 1.65(a) provides that if a
    prohibited communication does result in an agreement, arrangement,
    or understanding regarding bids or bidding strategies, then all
    applicants involved are required to notify the Commission, by
    amendment of their pending applications, "as promptly as possible
    and in any event within 30 days . . . ." *Id*. Failure to make the
    notification required by Section 1.65(a) would constitute a separate
    violation of our rules in addition to the underlying violation of
    Section 1.2105(c)(1). *See* Letter to Jonathan D. Blake and Robert
    J. Rini from Kathleen O\'Brien-Ham, Chief, Auctions Division, WTB,
    DA 95-2404, 10 FCC Rcd 13783, 13785 (rel. Nov. 28, 1995) (noting
    that Section 1.65 requires an auction applicant to bring to the
    Commission\'s attention any communication not permissible under the
    applicant\'s Form 175 certifications).

[^23]: *US West Communications, Inc*., Notice of Apparent Liability for
    Forfeiture, 13 FCC Rcd 8286, 8284 at ¶ 34 (1998).

[^24]: *Id.*

[^25]: In past auctions, auction applicants have voluntarily reported
    the receipt of potentially improper communications to the
    Commission. *See, e.g.,* Letter from Carl W. Northrop, counsel for
    WNP Communications, Inc., to Kathleen O'Brien Ham, Chief, Auction
    and Industry Analysis Division, Wireless Telecommunications Bureau,
    FCC (dated April 14, 1998).

[^26]: ^?^ 47 C.F.R. § 1.65(a). Such a Section 1.65(a) notification,
    even if timely, would not exempt such prohibited conduct from
    Section 1.2105(c)(1) and administrative sanctions.

[^27]: *See* n.23, *supra*.

[^28]: *Western PCS Order* at ¶¶ 7-9.

[^29]: *Id.* at ¶ 8.

[^30]: 47 C.F.R. § 1.2105(c)(1) (internal footnotes added).

[^31]: 47 U.S.C. § 309(j)(3).

[^32]: *See* 47 C.F.R. § 1.1206(b)(2).

[^33]: ^?^ *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et
    seq*., has been amended by the Contract with America Advancement Act
    of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (\"CWAAA\").
    Title II of the CWAAA is the Small Business Regulatory Enforcement
    Fairness Act of 1996 (\"SBREFA\").

[^34]: ^?^ *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et
    seq*., has been amended by the Contract with America Advancement Act
    of 1996, Pub. L. No. 104-121, 110 Stat. 847 (1996) (\"CWAAA\").
    Title II of the CWAAA is the Small Business Regulatory Enforcement
    Fairness Act of 1996 (\"SBREFA\").

[^35]: 5 U.S.C. § 603(b)(3).

[^36]: 5 U.S.C. § 601(6).

[^37]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern in 15 U.S.C. § 632). Pursuant to the RFA,
    the statutory definition of a small business applies \"unless an
    agency, after consultation with the Office of Advocacy of the Small
    Business Administration and after opportunity for public comment,
    establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition(s) in the Federal Register.\" 5 U.S.C. § 601(3).

[^38]: 5 U.S.C. 601(4).

[^39]: 1992 Economic Census, U.S. Bureau of the Census, Table 6 (special
    tabulation of data under contract to Office of Advocacy of the U.S.
    Small Business Administration).

[^40]: ^?^ 5 U.S.C. § 601(5).

[^41]: ^?^ 1992 Census of Governments, U.S. Bureau of the Census, U.S.
    Department of Commerce.

[^42]: ^?^ *See* n.39, *supra*.

[^43]: 5 U.S.C. §§ 603(c)(1)-(4)

[^44]: 47 C.F.R. § 1.2105(c)(1).

[^45]: *See Western PCS BTA 1 Corporation*, Memorandum Opinion and Order
    at ¶¶ 7-9, FCC 99-385 (rel. Dec. 13, 1999).