Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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**SEVENTH REPORT AND ORDER**

**Adopted: September 19, 2001 Released: September 27, 2001**

By the Commission:

# iNTRODUCTION

1.  In this Seventh Report and Order, we adopt modifications to Section
    1.2105(c) of the Commission's rules, the competitive bidding
    "anti-collusion rule."[^1] Specifically, we amend the rule so that
    its language clearly reflects the Commission's practice of
    prohibiting communications regarding bids or bidding strategies only
    between auction applicants that have applied to bid on licenses in
    any of the same geographic areas. In addition, we amend the rule
    to (1) clarify that it prohibits an auction applicant from
    discussing a competing applicant's bids or bidding strategies even
    if the first applicant does not discuss its own bids or bidding
    strategies, and (2) require auction applicants that make or receive
    a prohibited communication of bids or bidding strategies to report
    the communication immediately to the Commission in writing.[^2]

# BACKGROUND

2.  The Commission adopted Section 1.2105(c)(1) to deter anticompetitive
    conduct during auctions of spectrum licenses and to ensure the
    competitiveness of post-auction markets.[^3] The Commission's
    anti-collusion rule seeks to foster a level competitive playing
    field during auctions and to "ensure that the government receives a
    fair market price for the use of the spectrum."[^4] In promulgating
    the rule, the Commission was particularly concerned that some firms
    might engage in behavior that would unfairly disadvantage other
    bidders.[^5] Communications that violate Section 1.2105(c)(1) have
    the potential to undermine the competitiveness of our auction
    process and public confidence in the integrity of that process.[^6]

3.  In the *FNPRM*, we proposed to amend Section 1.2105(c)(1) to
    prohibit an auction applicant from discussing another applicant's
    bids or bidding strategies even if the first applicant does not
    discuss or disclose its own bids or bidding strategies.[^7] We also
    proposed to amend Section 1.2105(c) to require any auction applicant
    that makes or receives a communication of bids or bidding strategies
    prohibited under Section 1.2105(c)(1) to report such a communication
    to the Commission promptly.[^8] In addition, we sought comment on
    whether other changes to Section 1.2105(c)(1) may be warranted at
    this time in light of Congress's mandate that we ensure competitive
    auctions.[^9] We received one comment on the amendments proposed in
    the *FNPRM*.[^10]

# Discussion

## Amendments to Section 1.2105(c)(1)

4.  **Background.** Subject to certain exceptions, Section 1.2105(c)(1)
    prohibits auction applicants that have applied to bid on any common
    license area from communicating their bids or bidding strategies
    with each other from the short-form application filing deadline to
    the post-auction down payment deadline, unless such applicants are
    members of a bidding consortium or other joint bidding agreement
    reported on their short-form applications.[^11] In other words, if
    two auction applicants (that have not entered into an agreement and
    identified each other on the FCC Form 175) are each eligible to bid
    on numerous license areas but there is only one license area for
    which they are both eligible to bid, they may not discuss or
    disclose to each other their bids or bidding strategies relating to
    any license area that either of them is eligible to bid on.

5.  **Discussion.** *Applicants subject to Section 1.2105(c)(1).*
    Section 1.2105(c)(1) of the Commission's rules states that "all
    applicants" are prohibited from discussing or disclosing their bids
    or bidding strategy from the short-form application filing deadline
    until after the down payment deadline. Notwithstanding the term "all
    applicants," the Commission has applied the prohibitions of the rule
    only to auction applicants that have applied to bid for licenses in
    any of the same geographic license areas, and thus are competing
    applicants.[^12] Thus, as noted above, even if two auction
    applicants that have not identified each other as parties to an
    agreement on the FCC Form 175 are each eligible to bid on only one
    license area in common, they may not discuss or disclose to each
    other their bids or bidding strategies relating to any license area
    that either of them is eligible to bid on.[^13] On the other hand,
    auction applicants that have not applied to bid on licenses in any
    of the same geographic areas, and thus are not competing applicants,
    are not subject to the prohibitions of Section 1.2105(c)(1).[^14]

6.  We find that it would be helpful to auction applicants to amend
    Section 1.2105(c)(1) so that it accurately reflects the Commission's
    application of the rule. Thus, we amend Section 1.2105(c)(1) to make
    clear that only auction applicants that have applied for licenses in
    any of the same geographic license areas are prohibited from
    discussing with or disclosing to each other their bids or bidding
    strategy.[^15] We also caution auction applicants that apply to bid
    for licenses in any of the same geographic license areas (and that
    are not listed on each other's FCC Form 175) against indirectly
    communicating their bids or bidding strategies to each other through
    third-party discussions or disclosures to other auction applicants
    that have not applied to bid on licenses in any of the same
    geographic license areas.

7.  *Communications regarding other applicants' bids or bidding
    strategies.* In the *Western PCS Order*, we provided auction
    applicants with official notice that Section 1.2105(c)(1) prohibits
    an auction applicant from cooperating or collaborating with respect
    to, or discussing or disclosing, another applicant's bids or bidding
    strategies. Thus, an auction applicant may violate Section
    1.2105(c)(1) even if it does not discuss its own bids or bidding
    strategies.[^16] Nevertheless, we stated in the *FNPRM* that we
    believe that auction applicants would benefit if the text of the
    rule plainly stated 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.[^17]

8.  We amend Section 1.2105(c)(1) to clarify the prohibition against an
    auction applicant cooperating or collaborating with respect to,
    discussing with, or disclosing to a competing applicant the
    substance of the bids or bidding strategies of any competing
    applicant. We believe that the rule's prohibition against
    discussing, or disclosing, bids or bidding strategy would have
    minimal deterrent force if an applicant to whom a competing
    applicant's bidding information is disclosed could discuss such
    information with either that or another competing applicant without
    violating the rule.[^18] For instance, absent such a prohibition, it
    would be easy to circumvent the rule\'s prohibitions as Bidder A
    could pass on to competing Bidder C bidding strategy information of
    Bidder B with whom Bidder A has a bidding agreement. We believe that
    an applicant's discussion with a competing applicant of any other
    competing applicant's bids or bidding strategy could have a
    deleterious effect on the integrity and competitiveness of our
    auctions and that it is therefore essential to explicitly prohibit
    such discussions.

## Required Disclosure of Communications Regarding Bids or Bidding Strategies

9.  **Background.** Whenever the information furnished in a pending
    application is no longer substantially accurate and complete in all
    significant respects, Section 1.65(a) of the Commission's rules
    requires the applicant to amend the application so as to furnish
    additional or corrected information "as promptly as possible and in
    any event within 30 days. . . ."[^19] Pursuant to Section 1.65(a),
    auction applicants are required to maintain the accuracy and
    completeness of their pending short-form applications. Because the
    short-form application contains a certification under penalty of
    perjury that the applicant has not entered and will not enter into
    any agreements other than those identified in its application,
    auction applicants that engage in communications of bids or bidding
    strategies that result in a bidding agreement, arrangement or
    understanding not already identified on their short-form
    applications are required to promptly disclose any such agreement,
    arrangement or understanding to the Commission by amending their
    pending applications.[^20] Thus, even though competing applicants
    are prohibited by Section 1.2105(c)(1) from communicating their bids
    or bidding strategies to each other after the short-form application
    filing deadline, applicants that engage in such prohibited
    discussions are nonetheless required by Section 1.65(a) to promptly
    disclose any resulting agreements or understandings by amending
    their pending applications. [^21]

10. In the *FNPRM*, we sought comment on whether the integrity and
    competitiveness of our auction process would be enhanced if we
    required 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 invited 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
    communications to the Commission, would be deterred from making such
    communications. We also solicited comment on any potential burden
    that may be associated with such a reporting requirement, and the
    appropriate deadline for making such a report.[^22]

11. **Discussion.** We amend Section 1.2105(c) to require auction
    applicants that make or receive a communication of bids or bidding
    strategies prohibited under Section 1.2105(c)(1) to report such a
    communication to the Commission immediately, even if the
    communication does not result in an agreement, arrangement or
    understanding that must be reported under Section 1.65(a). As we
    noted in the *FNPRM*, we have found that even when a prohibited
    communication of 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] Thus, when one bidder is privy to a
    competing bidder's strategic bidding information without reporting
    this fact, it may use such information to manipulate the auctions
    process and gain an unfair competitive advantage over other bidders
    in the market who are unable to access, analyze, and act upon this
    strategic information in making bidding decisions. Section
    1.2105(c)(1) of the Commission's rules attempts to address this
    concern by prohibiting all auction applicants that have applied to
    bid on any of the same geographic areas from cooperating or
    collaborating with respect to, discussing or disclosing to each
    other in any manner the substance of their bids or bidding
    strategies.[^24] The Commission has encountered instances of
    violations of Section 1.2105.[^25] In some instances, there has been
    concern expressed about a bidder's obligation to report information
    received from another bidder that potentially violates our rule, and
    we have previously counseled applicants that the safest course of
    action for a recipient of a prohibited communication during the
    period in which Section 1.2105(c) prohibitions are in effect would
    be to terminate the discussion and promptly report the communication
    to the Commission.[^26] Therefore, we further clarify the
    anti-collusion rule by including a reporting requirement, as a
    deterrent to would-be disseminators of prohibited information
    regarding bids or bidding strategies. This will, we believe, make
    clear the responsibility to report such behavior and will thereby
    enhance the competitiveness and fairness of our spectrum auctions.

12. Thus, an applicant's duty under Section 1.2105(c) is two-fold.
    Applicants may not engage in prohibited communications with
    competing applicants, and they are obligated to report to the
    Commission all communications prohibited under Section 1.2105(c)(1).
    Thus, an applicant's failure to report a prohibited communication
    pursuant to Section 1.2105(c) may constitute a rule violation
    distinct from any act of collusion that violates Section
    1.2105(c)(1). Moreover, the Section 1.2105(c) reporting requirement
    we adopt today applies even if the communication of bids or bidding
    strategies does not result in a bidding arrangement, agreement or
    understanding that must be reported to the Commission under Section
    1.65(a).[^27] As explained previously, applicants have always had,
    under section 1.65(a), an affirmative duty to report any
    communications of bids or bidding strategies that result in a
    bidding arrangement, agreement or understanding after the filing of
    a short-form application. By requiring applicants to update pending
    applications to reflect such prohibited collusive agreements and
    communications, the Commission has sought to ensure the integrity
    and transparency of its auction processes. By now amending our rules
    to include an affirmative reporting requirement that applies even if
    a communication does not rise to the level of that which must be
    reported under Section 1.65(a), we can ensure that all bidders
    remain on a level playing field throughout the course of an auction.
    Of course, the fact that a party complies with the reporting
    requirements of Section 1.65(a) and Section 1.2105(c) will not
    insulate it from any sanctions that may be appropriate in connection
    with a violation of the Section 1.2105(c)(1) prohibition against
    collusive communications.[^28]

13. We disagree with Blooston's suggestion that recipients of bidding
    information should be exempt from the requirement to report such
    communications to the Commission. Blooston asserts that while it may
    be fair to require the initiator of a collusive communication to
    report such matters to the Commission, it is unfair to apply the
    same reporting requirement to the recipient of such a
    communication.[^29] According to Blooston, the proposed amendment
    requires a recipient to make a "snap decision" as to whether or not
    a communication has triggered the anti-collusion notification
    rule.[^30] Blooston further contends that if the Commission later
    disagrees with this judgment call (i.e., finds the communication to
    be non-collusive), the reporting "innocent third party" could find
    itself entangled in expensive litigation with substantial liability
    exposure.[^31] Conversely, Blooston argues that if the recipient
    makes the judgment that it should not report the communication, and
    the Commission later finds the communication to have violated the
    anti-collusion rule, the recipient may face sanctions for failing to
    disclose the violator.[^32]

14. Section 1.2105(c) does not distinguish between initiators and
    recipients in terms of their duty to avoid a collusive
    communication.[^33] Rather, the anti-collusion rule focuses on the
    content of the communication (i.e., the discussion or disclosure
    must involve direct or indirect information that affects, or could
    affect, bids or bidding strategy, or the negotiation of settlement
    agreements) that occurs between auction applicants for any of the
    same geographic license areas after the short-form filing
    deadline.[^34] Thus, all auction applicants that have applied for a
    license in the same geographic area, and have not reported in their
    short-form applications that they have an agreement with each other,
    must affirmatively avoid all communications with each other that
    disclose their or a competing applicant's bids or bidding
    strategy.[^35] In light of the fact that our current rules do not
    focus on whether a party is initiating or receiving a communication,
    we do not believe that we should limit the reporting requirement we
    adopt today to initiators of prohibited communications. Moreover,
    because initiators of collusive communications are less likely to
    report such communications, we consider recipients of prohibited
    oral or written communications regarding bids or bidding strategies
    to be an important deterrent against collusive behavior. We also
    believe that recipients should be held to the same reporting
    standard as initiators because, even if a recipient does not reach
    an agreement or understanding with the initiator, a recipient
    nevertheless derives substantial benefit from obtaining details of a
    competitor's bids or bidding strategy prior to or during an
    auction.[^36] If we were to allow recipients to possess strategic
    bidding information that other applicants are not privy to, we would
    unfairly disadvantage other bidders in the market by sanctioning an
    asymmetry of information that could be used to manipulate the
    auction process.[^37] Therefore, the mere occurrence of a
    communication by or among auction applicants for the same geographic
    license area about their own or a competing applicant's bids or
    bidding strategy triggers the reporting requirement.

15. We do not believe that there is any merit to Blooston's assertion
    that compliance with this reporting requirement will expose
    recipients of communications to substantial legal liability.[^38]
    Blooston asserts that the anti-collusion rule must be applied to
    many factual circumstances and, as a result, what does or does not
    constitute a violation of the anti-collusion rule is not easily
    definable.[^39] Blooston further notes that in the past the
    Commission has indicated that auction applicants, rather than the
    Commission, are in the best position to determine in the first
    instance when communications may constitute potential violations of
    the rule.[^40] We continue to believe that this is the case and
    that, rather than requiring the Commission to take on the impossible
    task of screening all applicant communications, we should place the
    responsibility for identifying potentially unauthorized
    communications on auction applicants. Applicants, during the course
    of their day-to-day operations, are better equipped to identify and
    report such communications. Nonetheless, we emphasize that
    applicants are not responsible for deciding whether a violation of
    the anti-collusion rule has occurred. Thus, the purpose of the
    reporting requirement we adopt today is to obligate parties to
    notify the Commission of communications that appear to violate the
    anti-collusion rule and to allow the Commission to determine whether
    a violation has occurred. The determination of whether a violation
    of the rule has occurred rests with the Commission, not with
    bidders.[^41] Thus, while the reporting requirement places an
    affirmative duty on all auction applicants to report what they
    perceive to be prohibited communications, auction applicants are
    required only to act in good faith and to report truthfully the
    facts and circumstances of what they perceive to be a communication
    covered by Section 1.2105(c). The Commission will then investigate
    these reports and reach a judgment as to whether a violation has
    occurred. By simply reporting the facts, auction applicants can
    insulate themselves from liability.

16. We also find that any burden associated with the reporting
    requirement we establish today will be slight, particularly in
    comparison with the potential benefits to the auction process and
    bidders. Applicants will be required only to submit a letter to the
    Commission describing the facts of a communication that appears to
    be prohibited.[^42]

17. In sum, we amend Section 1.2105(c) to require all auction applicants
    to report prohibited discussions or disclosures regarding bids or
    bidding strategy to the Commission in writing immediately, but in no
    case later than five business days after the communication occurs.
    Thus, an auction applicant must report a prohibited communication
    within five business days even if the communication does not result
    in an agreement or understanding regarding bids or bidding
    strategy.[^43] Although we believe that applicants generally should
    need less than five business days to make such reports to the
    Commission, we will not impose a shorter deadline because we find
    that there may be circumstances in which applicants, particularly
    small businesses, may need five business days to file a report. An
    auction applicant that receives a communication prohibited under
    Section 1.2105(c)(1) orally should respond immediately and
    unequivocally that it is unwilling to participate in any violation
    of Section 1.2105(c)(1). If a prohibited communication is received
    other than orally, an auction applicant should respond immediately
    in writing that it is unwilling to participate in any violation of
    Section 1.2105(c)(1). In either case, the auction applicant must
    report the improper communication to the Commission in writing
    within five business days after the communication occurs.

# CONCLUSION

18. In this Seventh Report and Order, we amend Section 1.2105(c)(1) of
    the Commission's rules to clarify that the rule prohibits only
    auction applicants that have applied to bid for licenses in any of
    the same geographic license areas from cooperating or collaborating
    with respect to, or discussing or disclosing to each other bids or
    bidding strategies. We also amend the rule to clarify that it
    prohibits such auction applicants from cooperating or collaborating
    with respect to, or discussing or disclosing to each other any
    competing applicant's bids or bidding strategies. Thus, the rule may
    be violated even if an applicant does not discuss or disclose its
    own bids or bidding strategies. Finally, we amend Section 1.2105(c)
    to require 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 report such communication to the
    Commission in writing immediately, but in no case later than five
    business days after the communication occurs.

# PROCEDURAL MATTERS

## Regulatory Flexibility Act 

19. The Commission has prepared a Final Regulatory Flexibility Analysis
    (\"FRFA\") of the possible significant economic impact on small
    entities of the rule amendments adopted herein*.* The FRFA is set
    forth in Appendix A. The Commission's Reference Information Center,
    Consumer Information Bureau, will send a copy of this Seventh Report
    and Order, including the FRFA, to the Chief Counsel for Advocacy of
    the Small Business Administration.

## Final Paperwork Reduction Act of 1995 Analysis

20. This Report and Order contains a new information collection, which
    was proposed in the *FNPRM*. As required by the Paperwork Reduction
    Act of 1995, the Commission sought comment from the public and from
    the Office of Management and Budget (OMB) on this proposed change to
    the Commission\'s information collection requirements. This new
    information collection will be submitted to OMB for approval, as
    prescribed by the Paperwork Reduction Act.

## Ordering Clauses

21. Authority for issuance of this Seventh Report and Order 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.

22. Accordingly, IT IS ORDERED that Part 1 of the Commission's Rules IS
    AMENDED as specified in Appendix B, effective 30 days after
    publication in the Federal Register, except new Section
    1.2105(c)(6), which will be effective upon OMB approval.

23. IT IS FURTHER ORDERED that the Commission\'s Reference Information
    Center, Consumer Information Bureau, SHALL SEND a copy of this
    Seventh Report and Order*,* including the Final Regulatory
    Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
    Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

**APPENDIX A**

**Final Regulatory Flexibility Analysis**

As required by the Regulatory Flexibility Act (\"RFA\"),[^44] an Initial
Regulatory Flexibility Analysis ("IRFA") was incorporated in the *Third
Further Notice of Proposed Rule Making ("FNPRM")* in this
proceeding*.*[^45] The Commission sought written public comment on the
proposals in the *FNPRM*, including comment on the IRFA. This present
Final Regulatory Flexibility Analysis (\"FRFA\") conforms to the
RFA.[^46]

An RFA certification, rather than an analysis, is appropriate where
\"the rule will not, if promulgated, have a significant economic impact
on a substantial number of small entities.\"[^47] We believe that the
rule amendments we have adopted will not have a significant economic
impact on a substantial number of small entities. We nonetheless
voluntarily perform this FRFA in order to thoroughly explain this
conclusion and to address concerns raised in comments submitted by the
Small Business Administration ("SBA").[^48] We discuss our conclusion
further in Section B, *infra*.

**A. Need for and Objectives of the Report and Order:**

The amendments to 47 C.F.R. § 1.2105(c) adopted in this Seventh Report
and Order are intended to enhance the competitiveness and integrity of
the Commission's auctions. First, we amend Section 1.2105(c)(1) so that
its language clearly reflects the Commission's application of the rule
to prohibit communications regarding bids or bidding strategies only
between applicants that have applied to bid on licenses in any of the
same geographic areas. Second, we clarify Section 1.2105(c)(1) to
explicitly prohibit auction applicants that have applied to bid on
licenses in any of the same geographic areas from discussing with or
disclosing to each other any competing applicant's bids or bidding
strategies. Although we have previously interpreted the rule to prohibit
an applicant's discussion of a competing applicant's bids or bidding
strategies, we believe that all auction applicants would benefit from
this amendment, which ensures that the text of the rule is unambiguous.
Third, we amend Section 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 report such communication to
the Commission. We believe that this reporting requirement will act as a
deterrent to would-be disseminators of prohibited information and will
thereby enhance the competitiveness and fairness of our auctions.

**B. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA:**

The SBA filed comments in response to the IRFA. The SBA asserts that the
Commission failed to describe the impact its proposed rules would have
on small businesses as required by the RFA.[^49] Further, the SBA states
that the Commission's proposals would expand the obligations that
applicants must meet when they participate in an auction.[^50] The SBA
states that the amended anti-collusion rule would impose reporting
requirements on applicants, cover a broader range of communications, and
increase the risk of punitive action, including monetary
forfeitures.[^51] The SBA asserts that small businesses have far fewer
financial resources than their larger counterparts and they are
therefore less able to absorb the costs of forfeitures.[^52] According
to the SBA, the Commission did not discuss the potential burden posed by
the risk of punishment as it should have. The SBA also states that the
Commission failed to propose any alternatives designed to minimize the
impact of its proposed rules on small business, as the RFA
requires.[^53]

We acknowledge that the amendment to Section 1.2105(c) that we proposed
in the *FNPRM*, and that we adopt today, imposes a reporting requirement
on all auction participants, including small businesses. However, we
have previously urged parties to report communications prohibited under
Section 1.2105(c)(1) to the Commission,[^54] and parties have done so in
the past.[^55] Thus, we view the adoption of this requirement as
consistent with conduct that the Commission has urged on applicants in
the past. Further, the amendment to Section 1.2105(c)(1) that we adopt
today to prohibit auction applicants from discussing the bids or bidding
strategies of competing applicants merely clarifies the text of the rule
to make it consistent with the interpretation we announced in the
*Western PCS Order*.[^56] Nonetheless, we recognize that these
amendments to our anti-collusion rule impose increased duties and
present the possibility of sanctions against auction applicants,
including small entities, that do not comply with the revised rules.

Based on past experience, however, we do not believe the impact of these
amendments on small businesses will be significant. In all of our
auctions held to date except for the auctions for broadcast licenses,
1,513 out of a total of 1,881 qualified bidders have been small
businesses as that term has been defined under rules adopted by the
Commission for specific services,[^57] but only two forfeitures have
been assessed in all, *i.e.*, against businesses of all sizes. Thus,
despite the large number of small businesses that have participated in
the auctions program since its inception, an extremely small percentage
of auction participants have made or received communications that have
violated the anti-collusion rule. We believe that the vast majority of
applicants comply with the Commission's rules and do not engage in
prohibited behavior, and that this will continue to be the case.
Therefore, we expect these amendments to have little impact on small
businesses generally. The amended rules will deter the few that would
try to gain an advantage unfairly by creating an asymmetry of
information that is detrimental to other participants.

Moreover, while we acknowledge that the reporting requirement we adopt
today constitutes a potential burden, we expect the actual burden to be
slight. In addition to the fact that we expect there to be few instances
of prohibited communications to be reported, we note that the new filing
requirement will place a *de minimis* reporting burden upon auction
participants because it merely requires those who make or receive a
communication of bids or bidding strategies prohibited by Section
1.2105(c)(1) to send a letter to the Secretary. Furthermore, Section 223
of the SBREFA allows agencies to reduce or eliminate fines or other
enforcement actions taken against small entities. Indeed, Section 223
requires agencies to provide for the reduction, and under appropriate
circumstances for the waiver, of civil penalties for violations of a
statutory or regulatory requirement by a small entity. Under appropriate
circumstances, an agency may consider ability to pay in determining
penalty assessments on small entities.[^58] In amending Section 1.80 of
its rules in 1997 to incorporate guidelines for assessing forfeitures,
the Commission also made clear that its forfeiture policies are
consistent with this approach.[^59] We cannot in good conscience alter
the uniform standards of behavior required of all auction participants,
even if to do so might assist small businesses. Public confidence in the
fairness of our auction process could be undermined if all entities were
not subject to the same standards of behavior. However, in light of the
provisions of the SBREFA and for the other reasons discussed above, we
conclude that the amendments we adopt today are not likely to have a
significant economic impact on a substantial number of small entities.

We also believe generally that any burden associated with these rule
amendments is outweighed by the advantages presented by a fair auction
process that does not allow some bidders to gain an advantage over
others through collusive behavior. Thus, we find that the rule
amendments that we adopt today will benefit all bidders, including small
businesses. First, we believe that the amendments will enhance the
competitiveness and fairness of our auction process to the benefit of
small auction applicants. Second, under the amendments, general
confidence in the integrity of our auctions should increase. In short,
we conclude that the public policy benefits of the amendments
substantially outweigh the minimal impact the reporting requirement
imposes on small entities.

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

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.[^60] The RFA generally
defines the term "small entity" as having the same meaning as the terms
"small organization," "small business," and "small governmental
jurisdiction."[^61] The term \"small business\" has the same meaning as
the term \"small business concern\" under the Small Business Act.[^62] 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 SBA. A small
organization is generally \"any not-for-profit enterprise which is
independently owned and operated and is not dominant in its
field.\"[^63] Nationwide, as of 1992, there were approximately 275,801
small organizations.[^64] \"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.\"[^65] As of 1992, there were approximately 85,006 such
jurisdictions in the United States. [^66] 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.[^67]

The amendments to Section 1.2105(c) adopted in this Seventh Report and
Order will apply to all entities that apply to participate in Commission
auctions, including small entities. The number of entities that may
apply to participate in future Commission auctions is unknown. The
number of small businesses that have participated in prior auctions has
varied. As stated previously, small businesses, as defined under the
Commission's rules, have accounted for 1,513 out of a total of 1,881
qualified bidders in all prior auctions, not including broadcast
auctions.[^68] Given these statistics, we expect a large percentage of
participants in our auctions program generally to be small businesses in
the future, although this may not be the case in each individual
auction.

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

As a result of the actions taken in this Seventh Report and Order,
disseminators and recipients of communications prohibited by Section
1.2105(c)(1) will be required to report such communications to the
Commission, in writing, within five business days after the
communication occurs.[^69]

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

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, among others: (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.[^70] In
this Seventh Report and Order, we amend Section 1.2105(c) 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[^71] to report such a communication in writing to the
Commission immediately, but in no case later than five business days
after the communication occurs. We considered, but decided against,
imposing a shorter deadline for such reports. We believe that five
business days will lessen the burden of the reporting requirement,
particularly for small businesses.[^72] We also considered not applying
the requirement to recipients of prohibited communications. However, we
believe that recipients of prohibited communications are more likely to
report such communications and thus serve as an important deterrent
against collusive behavior. Moreover, we believe that recipients of
prohibited communications must be held to the same enforcement standard
as initiators, because a recipient may derive substantial unfair benefit
from obtaining details of a competitor's bids or bidding strategy.

**[Report to Congress]{.underline}:** The Commission will send a copy of
the Seventh Report and Order, including this FRFA, in a report to be
sent to Congress pursuant to the Congressional Review Act, *see* 5
U.S.C. § 801(a)(1)(A). In addition, the Commission will send a copy of
the Seventh Report and Order, including FRFA, to the Chief Counsel for
Advocacy of the Small Business Administration. A copy of the Seventh
Report and Order and FRFA (or summaries thereof) will also be published
in the Federal Register. *See* 5 U.S.C. § 604(b).

######### APPENDIX B {#appendix-b .unnumbered}

**Final Rules**

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

**PART 1 -- PRACTICE AND PROCEDURE**

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

1.  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 amended by revising paragraph (c)(1) to read as
follows:

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

   \* \* \* \* \*

(c) *Prohibition of collusion.*

```{=html}
<!-- -->
```
(1) Except as provided in paragraphs (c)(2), (c)(3) and (c)(4) of this
    section, after the short-form application filing deadline, all
    applicants for licenses in any of the same geographic license areas
    are prohibited from cooperating or collaborating with respect to,
    discussing with each other, or disclosing to each other in any
    manner the substance of their own, or each other's, or any other
    competing applicants' bids or bidding strategies, or discussing or
    negotiating settlement agreements, until after the down payment
    deadline, 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 amended by redesignating current paragraph (c)(6)
as new paragraph (c)(7), and by adding new paragraph (c)(6) to read as
follows:

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

paragraph (c)(1) shall report such communication in writing to the
Commission immediately, and in no case later than five business days
after the communication occurs. Such reports shall be filed with the
Office of the Secretary, and a copy shall be sent to the Chief of the
Auctions and Industry Analysis Division, Wireless Telecommunications
Bureau.

\* \* \* \* \*

[^1]: 47 C.F.R. § 1.2105(c).

[^2]: ^?^ *See* 47 C.F.R. § 1.2105(c)(1).

[^3]: Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding, *Second Report and Order*, PP Docket No.
    93-253, 9 FCC Rcd 2348, 2387 ¶ 223 (1994) ("*Competitive Bidding
    Second Report and Order*") ("\[T\]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.").

    > Section 1.2105(c)(1) provides that:
    >
    > after the short-form application filing deadline, all applicants
    > are prohibited from cooperating, collaborating, discussing or
    > disclosing in any manner the substance of their bids or bidding
    > strategies, or discussing or negotiating settlement agreements,
    > with other applicants until after the down payment deadline,
    > 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).
    >
    > 47 C.F.R. § 1.2105(c)(1).

    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).

    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).

    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 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. 47 C.F.R. § 1.2105(a)(2)(ix).

[^4]: ^?^ *Competitive Bidding Second Report and Order*, 9 FCC Rcd at
    2386, ¶ 221.

[^5]: ^?^ *Id*.

[^6]: Compliance with Section 1.2105(c)(1) does not obviate compliance
    with federal antitrust laws. *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 also*
    Implementation of Section 309(j) of the Communications
    Act---Competitive Bidding, PP Docket No. 93-253, *Fourth Memorandum
    Opinion & Order*, 9 FCC Rcd 6858, 6868 n.134 (1994) ("*Fourth
    MO&O"*). As discussed in the *Fourth MO&O*, the antitrust laws
    prohibit discussions with respect to bid prices between applicants
    that 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.* The Commission may refer allegations of
    anticompetitive auction conduct to the Department of Justice for
    investigation. *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).

[^7]: Amendment of Part 1 of the Commission's Rules \-- Competitive
    Bidding Procedures, *Third Further Notice of Proposed Rule Making*,
    WT Docket 97-82, 14 FCC Rcd 21558, 21563, ¶¶ 10-11 (1999)
    ("*FNPRM*").

[^8]: *Id.* at 21561-62, ¶¶ 5-9.

[^9]: *Id.* at 21563, ¶ 11 (*citing* 47 U.S.C. § 309(j)(3)).

[^10]: *See* Comments of Blooston, Mordofsky, Jackson & Dickens
    (Blooston Comments). We also received comments on the Initial
    Regulatory Flexibility Analysis from the Office of Advocacy, U.S.
    Small Business Administration (SBA Comments).

[^11]: 47 C.F.R. § 1.2105(c)(1). *See also* "Wireless Telecommunications
    Bureau Responds to Questions About the Local Multipoint Distribution
    Service Auction," *Public Notice*, 13 FCC Rcd 341 (1998); "Wireless
    Telecommunications Bureau Clarifies Spectrum Auction Anti-Collusion
    Rules," *Public Notice*, 11 FCC Rcd 9645 (1995); and Letter to R.
    Michael Senkowski from Rosalind K. Allen, Acting Chief, Commercial
    Radio Division, Wireless Telecommunication Bureau (rel. December 1,
    1994). We recently amended Section 1.2105(c)(1) to make clear that
    competing bidders may not engage in communications prohibited by the
    rule from the date that short-form applications are due to the
    Commission until after the down payment deadline has passed. *See*
    Amendment of Part 1 of the Commission's Rules -- Competitive Bidding
    Procedures, *Order on Reconsideration of the Third Report and Order,
    Fifth Report and Order, and Fourth Further Notice of Proposed
    Rulemaking*, WT Docket 97-82, FCC 00-274, 2000 WL 1140602 (rel. Aug.
    14, 2000) ("*Part 1 Order on Reconsideration of Third R&O*"). This
    amendment codified our practice of using the short-form application
    and down payment deadlines to define the period during which
    collusive communications are prohibited, which was previously
    explained in bidding information packages and public notices.

[^12]: *See* *Fourth MO&O*, 9 FCC Rcd at 6868, ¶ 55; *see also*
    "Wireless Telecommunications Bureau Clarifies Spectrum Auction
    Anti-Collusion Rules," *Public Notice*, 11 FCC Rcd 9645 (1995);
    Amendment of Parts 21 and 74 of the Commission's Rules With Regard
    to Filing Procedures in the Multipoint Distribution Service and in
    the Instructional Television Fixed Service and Implementation of
    Section 309(j) of the Communications Act -- Competitive Bidding,
    *Order*, 11 FCC Rcd 9655, 9657-58, ¶¶ 6-8 (1995); "Wireless
    Telecommunications Bureau Provides Guidance on the Anti-Collusion
    Rule for D, E, and F Block Bidders," *Public Notice*, 11 FCC Rcd
    10134 (1996); Letter to David L. Nace from Kathleen O'Brien Ham,
    Chief, Auctions Division, Wireless Telecommunications Bureau, 11 FCC
    Rcd 11363 (1996); "Wireless Telecommunications Bureau Responds to
    Questions About the Local Multipoint Distribution Service Auction,"
    *Public Notice*, 13 FCC Rcd 341 (1998).

    The geographic license area is the market designation of the
    particular service, e.g., MTA, BTA, and EA. *See* "Wireless
    Telecommunications Bureau Clarifies Spectrum Auction Anti-Collusion
    Rules," *Public Notice*, 11 FCC Rcd 9645 (1995).

[^13]: For example, two applicants not listed on each other's short-form
    applications for an auction of broadband PCS licenses may not
    discuss bids or bidding strategies with each other if they are
    bidding for licenses in any of the same MTAs or BTAs, even if they
    are not bidding for the same frequency blocks. *See* *Fourth MO&O*,
    9 FCC Rcd at 6868, ¶ 55; *see also* "Wireless Telecommunications
    Bureau Clarifies Spectrum Auction Anti-Collusion Rules," *Public
    Notice*, 11 FCC Rcd 9645 (1995).

[^14]: This construction of Section 1.2105(c)(1) is consistent with
    Sections 1.2105(c)(2) and 1.2105(c)(3), which the Commission adopted
    in 1994 in the *Competitive Bidding Second Memorandum Opinion and
    Order.* Those rule sections allow bidders who have not filed
    short-form applications for any of the same geographic license areas
    to engage in discussions and enter into consortia or joint bidding
    arrangements during the course of an auction. In adopting these
    amendments to its original anti-collusion rule*,* the Commission
    found that its \"prohibition on communication among bidders and
    formation of agreements among bidders after applications have been
    filed may have been excessively broad in that it includes
    communications and agreements with bidders who are not bidding
    against each other, and so may prevent useful agreements that have
    no effect on the competitiveness of bidding.\" Implementation of
    Section 309(j) of the Communications Act---Competitive Bidding, PP
    Docket No. 93-253, *Second Memorandum Opinion and Order*, 9 FCC Rcd
    7245, 7254 ¶ 51 (1994) *("Competitive Bidding Second Memorandum
    Opinion and Order")*. *See also* 47 C.F.R. §§ 1.2105(c)(2) and
    1.2105(c)(3).

[^15]: *See* Appendix B for the text of the Final Rules.

[^16]: *See* Western PCS BTA 1 Corporation, *Memorandum Opinion and
    Orde*r, 14 FCC Rcd 21571, 21574, ¶¶ 7-9 (1999) ("*Western* PCS
    *Order*").

[^17]: *FNPRM*, 14 FCC Rcd at 21563, ¶ 10.

[^18]: *See* *id.* (*citing Western PCS Order*, 14 FCC Rcd at 21574, ¶
    8).

[^19]: 47 C.F.R. § 1.65(a).

[^20]: *See* 47 C.F.R. § 1.2105(a)(2)(ix).

[^21]: 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, 10 FCC Rcd 13783, 13785 (1995). It
    should be noted, however, that in order to find a Section 1.65(a)
    violation, we would need to first establish that the auction
    applicant violated the anti-collusion rule. If the evidence is
    insufficient to establish a Section 1.2105(c) violation, we may not
    find a Section 1.65(a) violation. *See Western PCS Order*, 14 FCC
    Rcd at 21577-78, ¶ 20.

[^22]: *FNPRM*, 14 FCC Rcd at 21562, ¶ 7.

[^23]: *See id*. (*citing* US West Communications, Inc., *Notice of
    Apparent Liability for Forfeiture*, 13 FCC Rcd 8286, 8299 at ¶ 34
    (1998)).

[^24]: 47 C.F.R. § 1.2105(c)(1). As explained above, we today are
    amending Section 1.2105(c)(1) to also explicitly prohibit competing
    auction applicants from cooperating or collaborating with respect
    to, discussing, or disclosing to each other the substance of any
    competing applicant\'s bids or bidding strategies. *See* *supra* at
    ¶ 9.

[^25]: *See, e.g*., In re Commercial Realty St. Pete, Inc., *Memorandum
    Opinion and Order*, 11 FCC Rcd 15374 (1996); US West Communications,
    Inc., *Notice of Apparent Liability for Forfeiture*, 13 FCC Rcd 8286
    (1998).

[^26]: In the *Western PCS Order*, the Commission stated that:

    > Western's safest course of action, therefore, would have been to:
    > (a) limit its reply solely to an unequivocal statement that they
    > could not talk about bidding, and (b) promptly report the
    > communications to the Commission. Indeed, if an auction
    > participant is contacted by another auction participant during the
    > period within which Section 1.2105(c) prohibitions are in effect,
    > it would be prudent for the parties to relate the substance of
    > that contact to the Commission out of an abundance of caution. In
    > the instant case, had Western taken the above steps it would have
    > eliminated any doubt whether its conduct violated the
    > anti-collusion rule and avoided any appearance of impropriety.

    *Western PCS Order*, 14 FCC Rcd. at 21577, ¶ 18.

[^27]: 47 C.F.R. § 1.65(a).

[^28]: The reporting requirement we adopt today does not relieve any
    applicant from its duty pursuant to Section 1.65(a) to update its
    pending application any time a communication of bids or bidding
    strategies results in an arrangement, agreement or understanding.
    *See* US West Communications, Inc., *Notice of Apparent Liability
    for Forfeiture*, 13 FCC Rcd at 8299, ¶ 34 (1998).

[^29]: Blooston Comments at 4-5.

[^30]: *Id*.

[^31]: *Id.*

[^32]: *Id*.

[^33]: *See* 47 C.F.R. § 1.2105(c)(1).

[^34]: *Id*. *See also* Letter to R. Michael Senkowski from Rosalind K.
    Allen, Acting Chief, Commercial Radio Division (rel. December 1,
    1994); "Wireless Telecommunications Bureau Clarifies Spectrum
    Auction Anti-Collusion Rules," *Public Notice*, 11 FCC Rcd 9645
    (1995); and "Wireless Telecommunications Bureau Provides Guidance on
    the Anti-Collusion Rule for D, E, and F Block Bidders," *Public
    Notice*, 11 FCC Rcd 10134 (1996).

[^35]: "Wireless Telecommunications Bureau Responds to Questions About
    the Local Multipoint Distribution Service Auction," *Public Notice*,
    13 FCC Rcd 341 (1998), *citing* "Wireless Telecommunications Bureau
    Provides Guidance on the Anti-Collusion Rule for D, E and F Block
    Bidders," *Public Notice*, 11 FCC Rcd 10134 (1996) (providing
    hypothetical examples of collusive conduct), and Letter to David L.
    Nace from Kathleen O'Brien Ham, Chief, Auctions Division, Wireless
    Telecommunications Bureau, 11 FCC Rcd 11363 (1996). We note that
    when communications between auction applicants have the potential to
    undermine the integrity of the auction process and our rules, a
    violation of the anti-collusion rule can be found even if there is
    no demonstrable impact on bidding behavior. *See Western PCS
    Order*,14 FCC Rcd at 21577, ¶ 18 ("Our anti-collusion rules are
    intended to have a prophylactic effect, and a violation can be found
    even if there is no demonstrable impact on bidding behavior. For
    example, a discussion of bidding strategies by applicants
    constitutes a violation of the rule whether or not it ultimately
    results in changes in bidding behavior").

[^36]: A recipient may adjust its bids or bidding strategy on the basis
    of information proffered by the initiator regarding its own or a
    competitor's auction plan. Similarly, an initiator may also reap
    substantial benefits from its disclosure or communication. For
    example, an initiator who discloses which markets it will bid on, or
    not bid on, would benefit if the recipient modified its bidding
    strategy in a manner beneficial to both applicants.

[^37]: *See* US West Communications, Inc*.*, *Notice of Apparent
    Liability for Forfeiture*, 13 FCC Rcd at 8284, ¶ 34 (1998).

[^38]: Blooston Comments at 4-5.

[^39]: *Id*. at 3.

[^40]: *Id*. at 3-4.

[^41]: *See Western PCS Order*, 14 FCC Rcd. at 21577, ¶ 18.

[^42]: As we noted in the *FNPRM*, in past auctions 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, Auctions and Industry Analysis Division, Wireless
    Telecommunications Bureau, FCC (dated April 14, 1998).

[^43]: As explained above, under Section 1.65(a) an auction applicant's
    duty to report (by amending its short-form application) arises only
    when an agreement, arrangement, or understanding is reached.

[^44]: *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\").

[^45]: Amendment of Part 1 of the Commission's Rules \-- Competitive
    Bidding Procedures, *Third Further Notice of Proposed Rule Making*,
    14 FCC Rcd 21558 (1999) ("*FNPRM*").

[^46]: *See* 5 U.S.C. § 604.

[^47]: 5 U.S.C. § 605(b).

[^48]: The IRFA was inadvertently omitted from the February 8, 2000 (65
    Fed. Reg. 6113) Federal Register publication of the *FNPRM*. In
    comments submitted on March 28, 2000, the SBA pointed out the
    failure of the Commission to publish an IRFA. The IRFA was
    subsequently published in the Federal Register on August 9, 2000 (65
    Fed. Reg. 48658). In response to the IRFA, the SBA submitted
    comments on August 29, 2000 ("SBA Comments").

[^49]: SBA Comments at 1.

[^50]: *Id.* at 1-2.

[^51]: *Id.* at 2.

[^52]: *Id.*

[^53]: *Id.*

[^54]: *See* Western PCS BTA 1 Corporation, *Memorandum Opinion and
    Orde*r, 14 FCC Rcd 21571, 21577, ¶ 18 (1999) ("*Western PCS
    Order*").

[^55]: *See, e.g.*, Letter from Carl W. Northrop, counsel for WNP
    Communications, Inc. to Kathleen O'Brien Ham, Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau, FCC
    (dated April 14, 1998).

[^56]: *See Western PCS Order*, 14 FCC Rcd at 21574, ¶¶ 7-9.

[^57]: As provided in Section 1.2110(c)(1) of the Commission's rules,
    and in conformity with the Small Business Act and the regulations of
    the Small Business Administration, the Commission establishes small
    business definitions for purposes of its auctions on a
    service-specific basis. *See* 47 C.F.R. § 1.2110(c)(1); 15 U.S.C. §
    632(c)(2)(C); 13 C.F.R. § 121.902(b). *See also* note 19, *infra*.
    Statistics for broadcast license auctions are not available.

[^58]: *See* 5 U.S.C. § 601 Note.

[^59]: The Commission's Forfeiture Policy Statement and Amendment of
    Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines,
    *Report and Order*, 12 FCC Rcd 17087 (1997). The Commission stated
    specifically:

    > The Commission intends to continue its policy of being sensitive
    > to concerns of small entities who may not have the ability to pay
    > a particular forfeiture amount or the ability to submit the same
    > kind of documentation to corroborate the inability to pay. This is
    > consistent with section 503(b)(2)(D) of the Communications Act and
    > section 1.80(b)(4) of our rules, which provides that the
    > Commission will take into account ability to pay in assessing
    > forfeitures, and with our longstanding case law.

    *Id.* at 17107, ¶ 44. The Commission further explained:

    > Our existing policies, as reflected in our precedent, and as
    > retained here, comply with Section 223 of SBREFA. Warnings, rather
    > than forfeitures, may continue to be appropriate in particular
    > cases involving small businesses or others. . . . Under Section
    > 503(b)(2)(D) of the Communications Act and section 1.80(b)(4) of
    > our rules, we will continue to consider inability to pay a
    > relevant factor in assessing forfeitures.

    *Id.* at 17109, ¶ 52.

[^60]: 5 U.S.C. § 603(b)(3).

[^61]: 5 U.S.C. § 601(6).

[^62]: 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).

[^63]: 5 U.S.C. 601(4).

[^64]: 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).

[^65]: ^?^ 5 U.S.C. § 601(5).

[^66]: 1992 Census of Governments, U.S. Bureau of the Census, U.S.
    Department of Commerce.

[^67]: *See* note 21, *supra*.

[^68]: *See* note 14, *supra*.

[^69]: *See* para. 18, *supra*.

[^70]: 5 U.S.C. §§ 603(c)(1)-(4)

[^71]: 47 C.F.R. § 1.2105(c)(1).

[^72]: *See* para. 18, *supra*.