# Presentation: 025247

## Spectrum Auction Process and Integrated Spectrum Auction SystemAuction No. 65800 MHz Air-Ground Radiotelephone Service

- Jeff Crooks,  Auctions Analyst
- jeff.crooks@fcc.gov
- March 14, 2006

## Disclaimer

- Nothing herein is intended to supersede any provision of the Commission's rules or public notices.  These slides should not be used as a substitute for a prospective applicant's review of the Commission's relevant orders, rules, and public notices.  Prospective applicants must familiarize themselves thoroughly and remain current with the Commission's rules relating to 800 MHz Air-Ground Radiotelephone Service, rules relating to application and auction procedures, and the procedures, terms and conditions contained in the Auction No. 65 public notices.

## Questions?

- 	If you are viewing this presentation live over the web, please feel free to e-mail your questions to...

- Auction65@fcc.gov

## This symbol indicates a common question slide

## Agenda

- Overview of Auction Design and Terminology
- Discussion of Auction No. 65 Rules and Procedures
- Presentation and Hands-on Demonstration of the FCC’s Integrated Spectrum Auction System

## Auction Design(See DA 06-299, Section IV)

- A variation of the Simultaneous Multiple Round (SMR) auction format
**Simultaneous** — All licenses are offered at the same time.
**Multiple Round** — There are multiple discrete bidding rounds during which bidding is confidential.

## How many rounds are conducted and when does bidding stop?

- Bidding continues until there is one round in which nothing happens.
- No new bids or proactive waivers.
- The number of rounds varies in each auction.  There is no predetermined number.

## Auction Design(continued)

- Special features for Auction No. 65
- Licenses will be awarded in only one of the three band plans
- Two licenses in each band plan
- A bidder can win only one license
- In each round, a bidder can be the provisional winner on only one license

## Auction Design(continued)

- Web-Based Bidding System
- Option to bid via Auction Bidder Line
- Click-Box Bidding
- When placing a bid, a bidder selects from nine bid amounts in the bidding system.

## Auction Design(continued)

- When a round ends, results are processed and made public.
- Provisionally winning bids (PWBs) announced
- Other bids, waivers made public

## 
An upfront payment establishes eligibility to bid 
In Auction 65, bidders must make an upfront payment of $100,000 to participate
This payment gives a bidder eligibility to bid on any or all of the licenses it selected on its Form 175

- An upfront payment establishes eligibility to bid
- In Auction 65, bidders must make an upfront payment of $100,000 to participate
- This payment gives a bidder eligibility to bid on any or all of the licenses it selected on its Form 175

- Eligibility (See DA 06-299, Section III.D.3 )

## 
Bidders generally must bid throughout the auction 
In each round, bidders must hold a PWB or place at least one new bid

- Bidders generally must bid throughout the auction
- In each round, bidders must hold a PWB *or* place at least one new bid

- Activity Requirements (See DA 06-299, Sections IV.A.2-3)

## What if you do not meet the activity requirement? 
One of two things will happen:
You will use an activity rule waiver
			or
You will lose the eligibility to place new bids in the auction

- One of two things will happen:
- You will use an activity rule waiver
- 			or
- You will lose the eligibility to place new bids in the auction

- Activity and Eligibility

## Activity Rule Waivers

- In Auction No. 65, bidders will be provided with three activity rule waivers
- Use of an activity rule waiver preserves the bidder’s eligibility to bid despite not meeting the activity requirement in the current round

## Activity Rule Waivers

- Waivers can be either applied proactively by the bidder or applied automatically by the FCC Auction System
- Cannot “undo” a waiver once it is applied
- If a bidder does not meet the activity requirement and has already used its three waivers, it will lose its eligibility to place new bids
- A bidder that has lost eligibility may still win a license bid on previously (more later)

## What if you change your mind?

- You can _remove_ a bid you placed during the current round.  If you place a bid during a round and then remove that bid _before the end of the round_, it’s as if it never happened. (Sect.IV.B.6)
- You **cannot withdraw** a bid once the round in which it was placed has closed. (Sect.IV.B.6)

## Auction Stopping Rule (See DA 06-299, Section IV.A.4)

- Bidding continues until there is one round in which nothing happens.
- No new bids or proactive waivers.
- The Bureau retains the discretion to employ other versions of the stopping rule.

## 
Minimum opening bids are established prior to the auction
How much can you bid?
Any one of nine pre-determined amounts

- Minimum opening bids are established prior to the auction
- How much can you bid?
- Any one of nine pre-determined amounts

- Bid Amounts(See DA 06-299, Sections IV.B.2-5)

## Bid Amounts (cont.)

- Acceptable bid amounts for the next round are calculated using license “prices”
- For a license with a PWB, the “price” is the PW bid amount
- For a license without a PWB, the “price” is the highest bid by a non-winning bidder

## Bid Amounts (cont.)

- The minimum acceptable bid (first of nine amounts) for the next round is the “price” plus a 5% increment
- If there are no bids on a license, or no bids by a non-winning bidder, the minimum acceptable bid is the minimum opening bid
- The next eight bid amounts each increment the minimum acceptable bid by an additional 5%

## Bid Amounts (cont.)

- Why use the highest bid by a non-winning bidder as the “price” ?
- It makes it harder for bidders to “bid up” licenses they are not interested in winning
- Note:  Minimum acceptable bids may be lower than some bids from prior rounds

## Provisionally Winning Bids

- At the end of each round, bids in only one of the three band plans will be PWBs
- PWBs are those bids that
- Yield the highest aggregate gross bid amount
- Do not assign both licenses to the same bidder

## Provisionally Winning Bids (cont.)

- To determine new PWBs, the system considers new bids and old bids
- Bids from previous rounds, including non-provisionally winning bids, are considered
- Bids placed by bidders no longer eligible to bid can become PWBs
- All considered bids are assigned a new random number (for tie breaking) after each round with any new bids

## Placeholder

- simple example of how PWBs are calculated

## Example : Determining Provisionally Winning Bids

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**Step 1: Find the largest bids for each license in the pair, but each bidder can have only one bid in the pair**

## Example : Determining Provisionally Winning Bids

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**Step 1: Find the largest bids for each license in the pair, but each bidder can have only one bid in the pair**

**Where can I find this information?**

- The *considered bids* download file on the results tab contains all of the bids considered by the software when determining provisional winners.

## Example : Determining Provisionally Winning Bids

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**Step 1: Find the largest bids for each license in the pair, *****but each bidder can have only one bid in the pair***

## Example : Determining Provisionally Winning Bids

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

- A      + 	  B

- $4,500 +   $3,500   = $8,000

- C      + 	  D

- $4,000 +    $300   = $4,300

- E      + 	  F

- $199 +    $4,000   = $4,199

**Step 2: Add the bids for each pair and choose the pair with the largest sum.  **

## Example : Determining Provisionally Winning Bids

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**A      + ****	****  B **

**$4,500 +   $3,500   = $8,000**

- C      + 	  D

- $4,000 +    $300   = $4,300

- E      + 	  F

- $199 +    $4,000   = $4,199

**Step 2: Add the bids for each pair and choose the pair with the largest sum.  **

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Determining “Prices”

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**The *****"price" *****for each item is the provisionally winning bid, if there is not one it is the highest bid placed by a bidder who is not currently a provisional winner**

**Provisionally Winning Bid**
**“****price”=$4,500**

- A

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Determining “Prices”

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**The *****"price" *****for each item is the provisionally winning bid, if there is not one it is the highest bid placed by a bidder who is not currently a provisional winner**

**Provisionally Winning Bid**
**“****price”=$3,500**

- B

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Determining “Prices”

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**The *****"price" *****for each item is the provisionally winning bid, if there is not one it is the highest bid placed by a bidder who is not currently a provisional winner**

- C

**Not a Provisionally Winning Bid, but the highest bid ($4,000) is by a Provisionally Winning Bidder and the remaining bid is an FCC bid, so no "price" can be calculated and the Minimum Acceptable Bid will be set to the Minimum Opening Bid.**

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Determining “Prices”

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**The *****"price" *****for each item is the provisionally winning bid, if there is not one it is the highest bid placed by a bidder who is not currently a provisional winner**

- D

**Not a Provisionally Winning Bid and Company 1 is not a Provisionally Winning Bidder, so the "price" = $300.**

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Determining “Prices”

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**The *****"price" *****for each item is the provisionally winning bid, if there is not one it is the highest bid placed by a bidder who is not currently a provisional winner**

- E

**The only bid is an FCC bid, so no "price" can be calculated and the Minimum Acceptable Bid will be set to the Minimum Opening Bid.**

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Determining “Prices”

| License | Bidder | Bid |
| --- | --- | --- |
| A | Company 2 | $4,500 (PWB) |
| A | Company 1 | $3,500 |
| A | FCC | $1,499 |
| B | Company 3 | $3,500 (PWB) |
| B | Company 2 | $3,000 |
| B | FCC | $1,499 |
| C | Company 3 | $4,000 |
| C | FCC | $2,799 |
| D | Company 1 | $300 |
| D | FCC | $199 |
| E | FCC | $199 |
| F | Company 3 | $4,000 |
| F | FCC | $2,799 |

**The *****"price" *****for each item is the provisionally winning bid, if there is not one it is the highest bid placed by a bidder who is not currently a provisional winner**

- F

**Not a Provisionally Winning Bid, but the highest bid ($4,000) is by a Provisionally Winning Bidder and the remaining bid is an FCC bid, so no "price" can be calculated and the Minimum Acceptable Bid will be set to the Minimum Opening Bid.**

- (Determining “Prices” for Calculating the Minimum Acceptable Bid)

## Example : Setting Minimum Acceptable Bid Amounts

- Minimum Acceptable Bid Amount
- “Price" + 5%
- Result is rounded using FCC rounding rules
- If the "price" cannot be calculated because of an FCC bid, the Minimum Acceptable Bid Amount will be set to the Minimum Opening Bid Amount.

## The SecurID Card

- Multiple cards sent to all bidders
- Random number refreshes every 60 seconds
- Countdown indicator
- Please return to the FCC for recycling

## To Ensure a Positive Auction Experience

- Do your homework.
- Read all public notices related to this auction.
- Participate in the mock auction.
- Test backup strategies and activate _all_ SecurID cards.
- Use Auction Bidder Line to ask “what if” questions.
- Check for and read all announcements to stay informed.
- Bidding schedule
- Auction parameter changes
- Bid Early!
- Print round summaries.