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 Federal  Communications  Commission  DA  02-  1817 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  matter  of 
 Auction  No.  44  Revised  Schedule,  License  Inventory,  and  Procedures,  Public  Notice,  DA 
 02-  1491 
 Petition  for  Reconsideration  by  Spectrum  Holdings  I,  LP 


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 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  July  25,  2002  Released:  July  25,  2002 
 By  the  Deputy  Chief,  Wireless  Telecommunications  Bureau: 
 I.  INTRODUCTION 
 1.  Spectrum  Holdings  I,  LP  (  Spectrum  Holdings)  seeks  reconsideration  1  of  actions  taken  by  the  Wireless  Telecommunications  Bureau  (  Bureau)  to  implement  requirements  of  the 


 Auction  Reform  Act  of  2002.  2  Among  other  things,  the  Auction  Reform  Act  required  the  Commission  to  remove  from  the  Auction  No.  44  inventory  three  of  five  blocks  of  Lower  700 
 MHz  spectrum  for  which  licenses  had  been  available.  3  In  light  of  this  and  other  significant  changes  required  by  the  Auction  Reform  Act,  the  Bureau  released  a  public  notice  revising  the 
 auction  schedule,  license  inventory,  and  procedures  for  Auction  No.  44.  4  By  the  public  notice,  the  Bureau  provided  bidders  with  flexibility  essential  to  maintaining  a  competitive  auction 
 environment,  consistent  with  the  requirements  of  the  Auction  Reform  Act.  Spectrum  Holdings  now  challenges  the  Bureaus  grant  of  this  flexibility,  in  particular,  the  Bureaus  decision  to  allow 
 qualified  bidders  to  select  additional  licenses  and  supplement  upfront  payments.  5  In  addition,  Spectrum  Holdings  opposes  the  Bureaus  requirement  that  requests  for  returns  of  upfront 


 1  Petition  for  Reconsideration,  Auction  No.  44  Revised  Schedule,  License  Inventory,  and  Procedures,  filed  on  behalf 
 of  Spectrum  Holdings  I,  LP,  dated  July  1,  2002  (  Petition).  2 
 Auction  Reform  Act  of  2002,  Pub.  L.  No.  107-  195,  116  Stat.  715  (  Auction  Reform  Act).  3 
 Auction  Reform  Act,  sec.  3  (adding  para.  15(  B)  and  (C)(  i)  to  47  U.  S.  C.  309(  j))  (effectively  removing  the  Lower  700  MHz  A,  B,  and  E  block  licenses  from  Auction  No.  44,  which  comprised  30  of  the  48  megahertz  of  Lower  700 


 MHz  originally  available  in  Auction  No.  44).  4 
 Auction  No.  44  Revised  Schedule,  License  Inventory,  and  Procedures,  Public  Notice,  DA  02-  1491  (rel.  June  26,  2002)  (  Auction  No.  44  Revised  Schedule  Public  Notice). 


 5  See  Auction  No.  44  Revised  Schedule  Public  Notice  at  5-  8. 
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 payments  mandated  by  the  Auction  Reform  Act  be  made  by  6  p.  m.  ET  July  3,  2002.  6  For  the  reasons  set  forth  below,  we  deny  Spectrum  Holdings  Petition.  7 
 II.  BACKGROUND 
 2.  On  March  20,  2002,  in  the  Auction  No.  44  Procedures  Public  Notice,  the  Bureau  established  a  6  p.  m.  ET  May  8,  2002,  deadline  to  file  short-  form  applications  to  participate  in 


 Auction  No.  44.  8  Also  in  the  Auction  No.  44  Procedures  Public  Notice,  the  Bureau  established  a  6  p.  m.  ET  May  28,  2002  deadline  to  submit  upfront  payments  and  a  June  19,  2002  auction  start 
 date.  9  Numerous  parties  subsequently  requested  that  the  full  Commission  review  the  schedule  and  delay  Auction  No.  44.  10  On  May  24,  2002,  the  Commission  issued  the  Auction  No.  44  AFR 
 Order  and  the  Auction  No.  44  Commission  Public  Notice  which,  respectively,  denied  the  requests  for  delay  of  Auction  No.  44  and  reaffirmed  the  Bureaus  previously  announced  schedule.  11  On 
 that  same  day,  the  Bureau  released  the  Auction  No.  44  Status  Public  Notice,  which  extended  the  original  6  p.  m.  ET  May  28,  2002  upfront  payment  deadline  until  6  p.  m.  ET  May  30,  2002.  12 


 6  See  id.  at  2-  4. 
 7  The  Bureau  received  comments  both  supporting  and  opposing  the  new  procedures  adopted  for  Auction  No.  44.  On 
 July  24,  2002,  the  Commission  received  a  letter  from  Congressman  W.  J.  Billy  Tauzin  and  Senator  John  Ensign  supporting  the  Bureaus  decision  to  permit  qualified  bidders  to  select  additional  licenses  and  supplement  their 


 upfront  payments.  On  July  18,  2002,  the  Commission  received  a  letter  from  Senators  Tim  Johnson,  Max  Baucus,  and  Mike  Enzi  objecting  to  the  Bureaus  decision  in  this  matter.  In  addition,  Council  Tree  Wireless,  L.  L.  C. 
 (  Council  Tree)  submitted  a  Response  to  the  Petition  filed  by  Spectrum  Holdings.  Response  of  Council  Tree  Wireless,  L.  L.  C.,  filed  by  Mark  F.  Dever  and  Kelly  N.  Stone,  counsel  for  Council  Tree  (July  11,  2002).  Council 
 Tree  argues  that  if  we  grant  Spectrum  Holdings  request  to  rescind  our  decision  to  allow  qualified  bidders  in  Auction  No.  44  to  supplement  their  upfront  payments,  we  should  nevertheless  allow  a  qualified  bidder  that 
 requested  the  partial  return  of  its  upfront  payment  to  supplement  its  upfront  payment  up  to  the  level  reported  for  that  qualified  bidder  in  the  Auction  No.  44  Qualified  Bidders  Public  Notice.  Auction  of  Licenses  for  698-  746  MHz 
 Band,  Public  Notice,  DA  02-  1346  (Wireless  Telecommunications  Bureau  rel.  June  7,  2002)  Because  we  deny  Spectrum  Holdings  Petition,  we  need  not  address  Council  Trees  Response. 
 8  Auction  of  Licenses  in  the  698-  746  MHZ  Band  Scheduled  for  June  19,  2002;  Notice  and  Filing  Requirements, 
 Minimum  Opening  Bids,  Upfront  Payments,  and  Other  Auction  Procedures,  Public  Notice,  17  FCC  Rcd  4935,  4951  (2002)  ("  Auction  No.  44  Procedures  Public  Notice").  Pursuant  to  Commission  rules,  applicants  must  select  the 


 license(  s)  on  which  they  wish  to  bid  in  their  short-  form  applications.  47  C.  F.  R.  1.  2105(  a)(  2)(  i).  9 
 Auction  No.  44  Procedures  Public  Notice,  17  FCC  Rcd.  at  4951.  10 
 See  Auction  of  Licenses  in  the  747-  762  and  777-  792  MHz  Bands  (Auction  No.  31);  Auction  of  Licenses  in  the  698-  746  MHz  Band  (Auction  No.  44);  Cellular  Telecommunications  &  Internet  Association;  Paxson  Communications 


 Corporation  and  the  Spectrum  Clearing  Alliance;  Applications  for  Review  of  Wireless  Telecommunications  Bureau  Letter,  Order,  17  FCC  Rcd  10,098  (2002)  (  Auction  No.  44  AFR  Order). 


 11  Auction  No.  44  AFR  Order;  Auction  of  Licenses  in  the  747-  762  and  777-  792  MHz  Bands  (Auction  No.  31) 
 Postponed  Until  January  14,  2003;  Auction  of  Licenses  in  the  698-  746  MHz  Band  (Auction  No.  44)  Will  Proceed  As  Scheduled,  Public  Notice,  17  FCC  Rcd  10,  108  (2002)  (  Auction  No.  44  Commission  Public  Notice). 


 12  Auction  of  Licenses  for  698-  746  MHz  Band;  Status  of  FCC  Form  175  Applications  to  Participate  in  the  Auction; 
 Extension  of  Upfront  Payment  Deadline,  DA  02-  1213,  Public  Notice,  17  FCC  Rcd  9415,  9415  (2002)  (  Auction  No.  44  Status  Public  Notice). 
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 3.  On  June  19,  2002,  one  day  after  the  Senate  and  the  House  of  Representatives  adopted  it  by  unanimous  consent,  the  President  signed  the  Auction  Reform  Act  of  2002.  13 
 Among  other  things,  the  Auction  Reform  Act  required  that  the  Commission  take  certain  actions  with  respect  to  scheduling  the  auction  of  Lower  700  MHz  band  licenses.  More  specifically,  the 
 Auction  Reform  Act  prohibited  the  Commission  from  commencing  Auction  No.  44  on  June  19,  2002,  as  provided  in  the  Auction  No.  44  Procedures  Public  Notice.  14  It  expressly  directed  the 
 Commission  to  commence  an  auction  of  the  Lower  700  MHz  band  C  and  D  block  licenses  no  earlier  than  August  19,  2002,  and  no  later  than  September  19,  2002,  and  defined  the  entities 
 eligible  to  bid  in  that  auction.  15  Finally,  the  Auction  Reform  Act  required  the  Commission,  within  one  month  of  the  its  enactment,  to  return  to  bidders  for  licenses  in  the  A,  B  and  E  blocks 
 in  Auction  No.  44  the  full  amount  of  all  upfront  payments  made  by  such  bidders  for  such  licenses.  16 


 4.  Following  enactment  of  the  Auction  Reform  Act,  the  Bureau  issued  the  Auction  No.  44  Revised  Schedule  Public  Notice.  In  the  Auction  No.  44  Revised  Schedule  Public  Notice, 
 the  Bureau  announced  that,  pursuant  to  the  Auction  Reform  Act:  Auction  No.  44  will  start  on  August  27,  2002;  only  those  parties  that  had  been  identified  as  qualified  bidders  will  be  eligible 
 to  participate  in  the  rescheduled  Auction  No.  44;  the  rescheduled  Auction  No.  44  will  offer  only  licenses  for  the  C  and  D  block  of  the  Lower  700  MHz  bands;  and  that  qualified  bidders  that  had 
 been  eligible  to  bid  on  the  A,  B,  and  E  block  licenses  could  request  partial  or  full  refunds  of  their  upfront  payments  by  providing  necessary  information  no  later  than  6  p.  m.  ET  July  3,  2002.  17  In 
 addition,  because  qualified  bidders  could  not  have  anticipated  the  changes  in  Auction  No.  44  mandated  by  adoption  of  the  Auction  Reform  Act,  the  Bureau  permitted  qualified  bidders  to 
 elect,  no  later  than  6  p.  m.  ET  July  3,  2002,  to  terminate  participation  in,  i.  e.,  depart  from,  Auction  No.  44,  and  receive  a  full  refund  of  their  upfront  payments.  18  Finally,  the  Bureau 
 permitted  all  qualified  bidders  not  departing  from  Auction  No.  44  to  select  additional  licenses  and  supplement  their  upfront  payments  pursuant  to  specified  procedures  beginning  July  22,  but 
 no  later  than  6  p.  m.  ET  July  26,  2002.  19 
 III.  DISCUSSION 
 5.  In  its  Petition,  Spectrum  Holdings  argues  that  the  Bureaus  decision  to  permit  qualified  bidders  not  departing  from  Auction  No.  44  to  select  additional  licenses  and  to 


 supplement  upfront  payments  violates  Section  309(  j)  of  the  Communications  Act  of  1934,  as 
 13  See  Auction  Reform  Act. 
 14  Auction  Reform  Act,  sec.  3  (adding  para.  15(  B)  to  47  U.  S.  C.    309(  j));  see  also  Auction  of  Licenses  in  the  698- 
 746  MHz  Band  Scheduled  for  June  19,  2002;  Comment  Sought  on  Reserve  Prices  or  Minimum  Opening  Bids  and  Other  Auction  Procedural  Issues,  Public  Notice,  17  FCC  Rcd  1617  (2002)(  public  notice  scheduling  Auction  No.  44). 


 15  Auction  Reform  Act,  sec.  3  (adding  para.  15(  C)(  ii)(  Auction  No.  44  timetable)  and  (iii)(  Auction  No.  44  qualified 
 bidders)  to  47  U.  S.  C.    309(  j)).  16 
 Auction  Reform  Act,  sec.  3  (adding  para.  15(  D)  to  47  U.  S.  C.    309(  j)).  17 
 Auction  No.  44  Revised  Schedule  Public  Notice  at  2-  4.  18 
 Auction  No.  44  Revised  Schedule  Public  Notice  at  4-  5.  19 
 Auction  No.  44  Revised  Schedule  Public  Notice  at  5-  8. 
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 amended  (  Communications  Act).  20  Spectrum  Holdings  also  claims  that  the  Bureaus  actions  violated  fundamental  administrative  law  principles  and  are  not  consistent  with  Commission  rules 
 governing  waivers.  21  Finally,  Spectrum  Holdings  contends  that  it  should  be  permitted  until  6  p.  m.  ET  July  16,  2002,  rather  than  only  until  the  Bureaus  6  p.  m.  ET  July  3,  2002  deadline,  to 
 request  the  return  of  upfront  payments  in  connection  with  A,  B,  and  E  block  licenses.  22 
 6.  Contrary  to  Spectrum  Holdings  contention,  Section  309(  j)(  3)(  E)  does  not  prohibit  the  Bureaus  modification  of  the  deadlines  for  selecting  licenses  and  making  upfront 


 payments.  In  relevant  part,  Section  309(  j)(  3)(  E)  of  the  Communications  Act  requires  the  Commission  to  allow  an  adequate  period,  before  issuance  of  bidding  rules,  to  permit  notice  and 
 comment  on  proposed  auction  procedures.  23  Spectrum  Holdings  complains  that  the  Bureau  did  not  allow  any  opportunity  for  notice  and  comment  on  the  procedures  for  selecting  additional 
 licenses  and  supplementing  upfront  payments.  The  Bureau  previously  sought  comment  on  the  process  of  having  qualified  bidders  establish  their  initial  maximum  eligibility  by  selecting 
 licenses  and  making  upfront  payments.  This  procedure  was  not  changed  in  the  Auction  No.  44  Revised  Schedule  Public  Notice.  24  Rather,  the  Bureau  merely  modified  the  deadlines  by 
 allowing  qualified  bidders  to  select  additional  licenses  and  make  supplemental  upfront  payments  within  a  specific  time  period.  These  modifications  do  not  amount  to  the  issuance  of  new  bidding 
 rules  within  the  meaning  of  Section  309(  j)(  3)(  E). 
 7.  The  Commission  has  applied  the  requirements  of  Section  309(  j)(  3)(  E)  to  bidding  rules  regarding  specific  mechanisms  of  day-  to-  day  auction  conduct,  including,  for  example,  the 


 structure  of  bidding  rounds  and  stages,  minimum  opening  bids  or  reserve  prices,  minimum  acceptable  bids,  and  initial  maximum  eligibility  for  each  bidder.  25  Such  mechanisms  incorporate 
 the  Bureaus  power  to  exercise  discretion  and  make  changes  in  appropriate  circumstances.  For  example,  the  Bureau  does  not  create  an  immutable  bidding  schedule  following  notice  and 
 comment.  Instead,  the  Bureau  adopts  mechanisms  for  announcing  changes  in  bidding  rounds  during  the  course  of  the  auction.  26  Section  309(  j)(  3)(  E)  does  not  require  anything  more  stringent. 
 Similarly,  the  Bureaus  use  of  notice  and  comment  when  establishing  a  mechanism  for  calculating  initial  maximum  eligibility  does  not  require  further  notice  and  comment  before  the 


 20  Petition  at  5-  12. 
 21  Petition  at  12-  15. 
 22  Petition  at  15-  16. 
 23  47  U.  S.  C.  309(  j)(  3)(  E)(  i)  ((  3)  Design  of  Systems  of  Competitive  Bidding.  .  .  .  [T]  he  Commission  .  .  .  shall  seek 
 to  promote  .  .  .  the  following  objective[]:  .  .  .  (E)  ensure  that,  in  the  scheduling  of  any  competitive  bidding  under  this  subsection,  an  adequate  period  is  allowed    (i)  before  the  issuance  of  bidding  rules,  to  permit  notice  and 


 comment  on  proposed  auction  procedures[.])  24 
 Pursuant  to  the  originally  established  Auction  No.  44  procedures,  a  qualified  bidders  initial  maximum  eligibility  in  the  rescheduled  Auction  No.  44  will  be  determined  by  licenses  selected  prior  to  the  auction  and  by  the  amount  of 


 the  qualified  bidders  upfront  payment.  Auction  No.  44  Procedures  Public  Notice,  17  FCC  Rcd  at  4965.  25 
 Amendment  of  Part  1  of  the  Commissions  Rules    Competitive  Bidding  Procedures;  Allocation  of  Spectrum  Below  5  GHz  Transferred  from  Federal  Government  Use,  4660-  4685  MHz,  WT  Docket  No.  97-  82,  ET  Docket  No. 


 94-  32,  Third  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374,  448  (1997)  (  Part  1  Third  Report  and  Order). 
 26  See,  e.  g.,  Auction  No.  44  Procedures  Public  Notice,  17  FCC  Rcd  at  4969. 
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 Bureau  modifies  deadlines  for  selecting  licenses  or  submitting  upfront  payments,  when  other  relevant  concerns  make  such  modifications  appropriate.  Indeed,  in  the  case  of  Auction  No.  44, 
 the  Bureau  departed  from  the  originally  announced  deadline  for  accepting  upfront  payments  when  it  extended  the  original  deadline  for  two  days  without  providing  further  notice  or  comment 
 pursuant  to  Section  309(  j)(  3)(  E).  27  Moreover,  the  Bureau  has  granted  waivers  in  other  auctions,  when  appropriate,  with  respect  to  both  license  selections  and  upfront  payments,  after  the  relevant 
 deadline  has  passed.  28  Section  309(  j)(  3)(  E)  does  not  prohibit  the  Commission,  or  the  Bureau  acting  on  its  delegated  authority,  from  changing  without  notice  and  comment  the  specific  dates 
 by  which  auction  participants  must  select  licenses  and  submit  upfront  payments.  29 
 8.  Also  contrary  to  Spectrum  Holdings  argument,  the  Auction  Reform  Act  does  not  limit  the  pre-  existing  discretion  the  Commission  has,  consistent  with  Section  309(  j)(  3)(  E),  to 


 modify  without  notice  and  comment  dates  for  selecting  licenses  and  submitting  upfront  payments.  Recognizing  that  the  Bureau  needs  flexibility  and  discretion  in  this  area  in  order  to 
 respond  to  changed  circumstances  and  conduct  an  orderly  auctions  process,  the  Commission  has  granted  the  Bureau  broad  authority  to  administer  competitive  bidding  procedures.  30  Spectrum 
 Holdings  asserts  that  new  Section  309(  j)(  15)(  A)  s  reference  to  the  remainder  of  Section  309(  j)  transforms  Section  309(  j)(  3)(  E)  into  a  prohibition  against  the  Bureaus  actions.  31  Section 
 309(  j)(  15)(  A)  provides  that,  like  the  Commissions  design  of  competitive  bidding  systems  generally,  the  Commissions  new  discretion  to  determine  the  timing  of  and  deadlines  for  the 
 conduct  of  competitive  bidding,  including  the  timing  and  deadlines  for  qualifying  for  bidding  is  subject  to  the  goals  of  Section  309(  j).  32  Thus,  for  example,  the  Commission  must  take  into 
 account  promoting  efficient  and  intensive  use  of  the  electromagnetic  spectrum,  pursuant  to  Section  309(  j)(  3),  when  exercising  its  discretion  to  establish  auction  schedules.  This  does  not, 
 however,  transform  Section  309(  j)(  3)(  E)  into  a  notice  and  comment  requirement  for  all  auction  deadlines.  In  any  event,  the  Bureau  had  previously  sought  comment  generally  and  always  retains 


 27  See  Auction  No.  44  Status  Public  Notice,  17  FCC  Rcd  at  9415. 
 28  E.  g.,  Letter  to  Melodie  A.  Virtue,  Counsel  for  Pass  Word,  Inc.,  from  Mark  Bollinger,  Acting  Chief,  Auctions  and 
 Industry  Analysis  Division,  Wireless  Telecommunications  Bureau,  D.  A.  00-  274  (rel.  February  14,  2000)  (granting  waiver  of  Section  1.2105(  b)  to  permit  selecting  additional  licenses);  Letter  to  Ms.  Lynn  R.  Charytan,  Counsel  to 


 MPCS  Wireless,  Inc.,  from  Margaret  Wiener,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications  Bureau,  15  FCC  Rcd  24540  (2000)  (granting  waiver  of  upfront  payment  deadline). 


 29  See  47  C.  F.  R.    0.131(  b)  and  (c),  0.331;  Part  1  Third  Report  and  Order,  13  FCC  Rcd  at  448-  449    125  (1997). 
 30  Part  1  Third  Report  and  Order,  13  FCC  Rcd  at  448-  449    125  (1997);  Amendment  of  Part  1  of  the  Commissions 
 Rules    Competitive  Bidding  Proceeding,  WT  Docket  No.  97-  82,  Order,  Memorandum  Opinion  and  Order  and  Notice  of  Proposed  Rule  Making,  12  FCC  Rcd  5686,  5697-  5698    16. 


 31  Auction  Reform  Act,  sec.  3(  a)  (adding  para.  15(  A)  to  47  U.  S.  C.    309(  j))  ((  15)  Commission  To  Determine 
 Timing  Of  Auctions.    (A)  Commission  Authority.    Subject  to  the  provisions  of  this  subsection  (including  paragraph  (11)),  but  notwithstanding  any  other  provision  of  law,  the  Commission  shall  determine  the  timing  of  and 


 deadlines  for  the  conduct  of  competitive  bidding  under  this  subsection,  including  the  timing  of  and  deadlines  for  qualifying  for  bidding;  conducting  auctions;  collecting,  depositing,  and  reporting  revenues;  and  completing  licensing 
 processes  and  assigning  licenses.)  32 
 See,  generally,  47  U.  S.  C.  309(  j). 
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 the  discretion  to  modify  its  procedures  consistent  with  the  goals  of  Section  309(  j).  33 
 9.  Spectrum  Holdings  also  misreads  Section  309(  j)(  15)(  C)(  ii),  added  by  the  Auction  Reform  Act.  Section  309(  j)(  15)(  C)(  ii)  provides  that  [  t]  he  entities  that  shall  be  eligible  to  bid  in 


 the  auction  of  the  C-  block  and  D-  block  licenses  .  .  .  shall  be  those  entities  that  were  qualified  entities,  and  that  submitted  applications  to  participate  in  auction  44,  by  May  8,  2002,  as  part  of 
 the  original  auction  44  short  form  filing  deadline.  34  Pursuant  to  this  language,  the  Bureau  announced  that  previously  identified  qualified  bidders  among  the  entities  that  submitted 
 applications  to  participate  in  Auction  No.  44  by  May  8,  2002,  would  be  the  only  parties  eligible  to  participate  in  the  rescheduled  Auction  No.  44.  35  Contrary  to  Spectrum  Holdings  claim, 
 Section  309(  j)(  15)(  C)(  ii)  limits  who  is  eligible  to  participate  in  the  rescheduled  Auction  No.  44  and  not  what  those  parties  may  bid  on  or  how  their  maximum  initial  eligibility  is  to  be 
 determined.  Nowhere  in  this  section  is  there  language  addressing  the  extent  of  eligibility  that  any  qualified  entity  is  to  have  in  rescheduled  Auction  No.  44. 


 10.  Spectrum  Holdings  contention  that  the  Bureaus  modification  of  previously  announced  deadlines  for  Auction  No.  44  violates  the  general  administrative  law  principle  that  an 
 agency  must  adhere  to  its  own  rules  and  regulations  also  lacks  merit.  36  Spectrum  Holdings  confuses  application  deadlines  in  the  Bureaus  administrative  process  with  Commission  rules 
 restricting  parties  amendments  to  their  applications;  administrative  deadlines  for  filing  and  amending  applications  to  participate  in  auctions  are  not  fixed  by  Commission  rules.  37  Like  the 
 rules  governing  the  filing  of  applications,  rules  permitting  (or  suspending)  amendment  are  rules  of  agency  organization,  procedure,  or  practice  exempt  from  the  Administrative  Procedures  Acts 
 notice  and  comment  requirement.  38  No  general  administrative  law  principle  precludes  the  Bureau,  when  appropriate,  from  altering  prior  deadlines  and  allowing  qualified  bidders  to  select 
 additional  licenses  and  supplement  upfront  payments. 
 11.  Moreover,  contrary  to  Spectrum  Holdings  argument  that  the  Bureau  cannot  satisfy  the  Commissions  waiver  rule,  39  the  present  circumstances  plainly  support  the  Bureaus 


 waiver  of  Section  1.2105(  b)(  2),  40  which  prohibits  post-  deadline  amendments  to  license  selections,  and  the  upfront  payment  deadline.  41  As  noted  in  the  Auction  No.  44  Revised  Schedule 
 Public  Notice,  the  Bureau  established  the  challenged  procedures  because  qualified  bidders  could  not  have  anticipated  the  Auction  Reform  Acts  changes  to  Auction  No.  44  when  they  originally 


 33  Id. 
 34  Auction  Reform  Act,  sec.  3  (adding  para.  15(  C)(  ii)  to  47  U.  S.  C.  309(  j)). 
 35  Auction  No.  44  Revised  Schedule  Public  Notice  at  2. 
 36  Petition  at  12-  15  (citing,  inter  alia,  Accardi  v.  Shaughnessy,  347  U.  S.  260  (1954)). 
 37  See  47  C.  F.  R.  1.  2105(  b)(  2)  (rule  determines  effect  of  the  deadline  without  establishing  the  deadline). 
 38  Bachow  Communications,  Inc.  v.  Federal  Communications  Commission,  237  F.  3d  683,  690  (D.  C.  Cir.  2001) 
 (citations  omitted).  39 
 See  47  C.  F.  R.  1.  925.  40 
 47  C.  F.  R.  1.  2105(  b)(  2).  41 
 Auction  No.  44  Revised  Schedule  Public  Notice  at  5-  6  (granting  waivers). 
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 submitted  license  selections  or  upfront  payments.  42  At  that  time,  Auction  No.  44  qualified  bidders  had  no  way  of  knowing  that  the  Auction  Reform  Act  would  reduce  the  amount  of 
 spectrum  available  in  Auction  No.  44  by  more  than  fifty  percent.  43  The  removal  of  3  of  5  originally  available  license  blocks  significantly  changed  the  availability  of  Lower  700  MHz  band 
 spectrum  licenses  for  the  near  future.  Auction  No.  44  will  promote  the  Communication  Acts  purposes,  such  as  efficient  and  intensive  use  of  the  electromagnetic  spectrum,  by  awarding 
 licenses  to  parties  that  value  them  most  highly.  44  The  rules  governing  license  selection  and  upfront  payments,  together  with  the  procedures  for  determining  maximum  eligibility,  further  this 
 purpose  by  protecting  against  insincere  bidding  while  permitting  qualified  bidders  flexibility  to  bid  on  a  variety  of  licenses.  45  In  light  of  the  extraordinary  changes  in  Auction  No.  44  required 
 by  the  Auction  Reform  Act,  permitting  qualified  bidders  to  select  additional  licenses  and  supplement  upfront  payments  may  be  the  only  way  to  permit  a  party  that  currently  most  highly 
 values  a  particular  license  to  bid  on  and  win  it  in  the  auction,  thereby  promoting  statutory  objectives.  46  Under  these  circumstances,  the  Bureau  clearly  satisfies  either  of  the  Commissions 
 relevant  tests  for  waivers.  The  underlying  purpose  of  the  rules  would  not  be  served  by  refusing  to  modify  the  deadlines  and  modifying  the  deadlines  is  in  the  public  interest.  47  Alternatively, 
 given  these  unique  circumstances,  strict  enforcement  of  the  original  deadlines  would  be  contrary  to  the  public  interest  and,  absent  the  waivers,  qualified  bidders  would  have  no  means  of 
 increasing  their  maximum  eligibility  to  bid  on  licenses  in  which  they  now  have  an  interest.  48 


 42  Id. 
 43  The  Auction  Reform  Acts  provisions  effectively  removing  the  A,  B,  and  E  blocks,  or  30  megahertz  of  the  48 
 megahertz  of  Lower  700  MHz  licenses  covering  the  country  that  were  available  in  Auction  No.  44,  were  not  introduced  until  June  18,  2002,  more  than  two  weeks  after  the  upfront  payment  deadline  and  one  day  prior  to 


 Auction  No.  44s  scheduled  start  date.  See  148  Cong.  Rec.  S5714-  02,  S5715  (daily  ed.  June  18,  2002)  (text  of  amendments). 
 44  See  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  PP  Docket  No.  93-  253, 
 Second  Report  and  Order,  9  FCC  Rcd  2348,  2360-  61  (1994).  45 
 See  Competitive  Bidding  Second  Report  and  Order,  9  FCC  Rcd  at  (  173-  175)  (  bidders  will  be  limited  in  an  auction  to  bidding  on  licenses  .  .  .  that  their  upfront  payment  covers  [while  having]  the  flexibility  to  change  its 


 strategy  during  the  auction[.]).  46 
 See  also  Amendment  of  Part  1  of  the  Commissions  Rules    Competitive  Bidding  Procedures;  Allocation  of  Spectrum  Below  5  GHz  Transferred  from  Federal  Government  Use;  4660-  4685  MHz,  WT  Docket  No.  97-  82,  ET 


 Docket  No.  94-  32,  Third  Report  and  Order  and  Second  Further  Notice  of  Proposed  Rule  Making,  13  FCC  Rcd  374,  414-  15  (  we  recognize  that  there  may  be  some  circumstances  in  which  the  competitiveness  of  the  auction  might  be 
 enhanced  by  allowing  applicants  to  add  markets  to  their  short-  form  applications,  while  concluding  that  generally  such  additional  selections  should  be  prohibited). 
 47  See  47  C.  F.  R.  1.  925(  b)(  3)(  i). 
 48  See  47  C.  F.  R.  1.  925(  b)(  3)(  ii).  The  radical  change  in  available  spectrum  may  or  may  not  change  individual 
 qualified  bidders  valuations  of  particular  licenses  or  the  total  number  of  licenses  they  seek  to  purchase.  Spectrum  Holdings  forecasts  that  the  interests  of  qualified  bidders  will  not  be  substantially  changed.  Petition  at  15.  Rather 


 than  rely  on  forecasts  by  Spectrum  Holdings  or  any  other  party,  however,  the  Bureau  chose  to  permit  qualified  bidders  to  increase  their  initial  maximum  eligibility  so  the  bidders  will  be  able  to  bid  based  on  their  current 
 valuations. 
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 12.  In  light  of  the  significant  timing  and  inventory  changes  to  the  auction  mandated  by  the  Auction  Reform  Act,  the  Bureau  acted  reasonably  and  fairly  to  ensure  that  all  qualified 
 bidders  were  offered  the  maximum  amount  of  flexibility  consistent  with  the  requirements  of  the  legislation.  Importantly,  the  Bureaus  actions  in  response  to  the  legislation  promote  the 
 objectives  of  Section  309(  j)(  3)  of  the  Communications  Act,  including  the  fostering  of  economic  opportunity  and  competition,  the  recovery  for  the  public  of  a  portion  of  the  value  of  the 
 spectrum,  and  the  efficient  and  intensive  use  of  the  spectrum.  49  Within  the  limited  pool  of  qualified  bidders,  the  Bureau  acted  to  maximize  competition  consistent  with  the  statute. 
 Granting  the  relief  sought  by  Spectrum  Holdings  would  undermine  competition  and  intensive  use  of  the  spectrum  in  these  circumstances.  The  overarching  goal  of  the  Commissions  auctions 
 process  is  to  ensure  that  spectrum  is  awarded  to  those  that  value  it  most  highly,  thereby  promoting  efficient  and  effective  spectrum  use.  50  Nothing  in  the  Auction  Reform  Act  bars  the 
 Bureau  from  continuing  to  pursue  these  goals,  especially  here  where  there  is  already  a  potential  diminishment  of  competition  (i.  e.,  by  the  withdrawal  of  potential  bidders  and  by  limiting  the 
 pool  of  qualified  bidders). 
 13.  Finally,  Spectrum  Holdings  opposition  to  the  Bureaus  deadline  for  requesting  the  return  of  upfront  payments  is  unsupported  by  the  Auction  Reform  Act.  Spectrum  Holdings 


 maintains  that  the  Auction  Reform  Acts  requirement  that  the  Commission  return  certain  upfront  payments  for  certain  qualified  bidders  by  July  19,  2002,  gives  those  bidders  a  right  to  request 
 returns  until  6  p.  m.  ET  July  16,  2002,  only  two  full  days  before  the  statutes  deadline  for  the  returns  and  almost  two  weeks  after  the  6  p.  m.  ET  July  3,  2002  deadline  the  Bureau  established  in 
 the  Auction  No.  44  Revised  Schedule  Public  Notice.  51  The  Auction  Reform  Act  requires  that  [  w]  ithin  one  month  after  the  date  of  enactment  of  this  [provision],  the  Commission  shall  return 
 to  the  bidders  for  licenses  in  the  A-  block,  B-  block,  and  E-  block  of  auction  44  the  full  amount  of  all  upfront  payments  made  by  such  bidders  for  such  licenses.  52  The  Commission,  however, 
 cannot  determine  the  precise  amounts  to  return  because  qualified  bidders  aggregate  upfront  payments  are  not  license  specific.  53  Accordingly,  the  Bureau  established  a  procedure  for 
 qualified  bidders  eligible  to  bid  on  A,  B,  or  E  block  licenses  to  request  a  full  or  partial  return  of  their  upfront  payments.  54  The  Bureau  allowed  qualified  bidders  one  week,  or  five  business  days, 
 after  the  release  of  the  Auction  No.  44  Revised  Schedule  Public  Notice  to  provide  the  necessary  information  to  process  any  requests,  i.  e.,  not  later  than  6  p.  m.  ET  July  3,  2002.  By  establishing 
 this  deadline,  the  Bureau  provided  the  Commission  with  eleven  business  days  to  process  the  requests,  and  resolve  any  potential  disputes,  while  complying  with  the  Auction  Reform  Acts 
 statutory  deadline.  Thus,  the  Bureaus  procedure  both  complies  with  the  Auction  Reform  Act  and  accommodates  qualified  bidders  by  giving  them  five  business  days  to  determine  the  amount 


 49  47  C.  F.  R.    309(  j)(  3). 
 50  See  FCC  Report  to  Congress  on  Spectrum  Auctions,  WT  Docket  No.  97-  150,  FCC  97-  353  (1997). 
 51  Petition  at  15-  16. 
 52  Auction  Reform  Act,  sec.  3  (adding  para.  15(  D)  to  47  U.  S.  C.  309(  j)). 
 53  See  Auction  No.  44  Procedures  Public  Notice,  17  FCC  Rcd  at  4965. 
 54  See  Auction  No.  44  Revised  Schedule  Public  Notice  at  3-  4. 
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 of  their  upfront  payment  to  be  returned.  55 
 IV.  CONCLUSION  AND  ORDERING  CLAUSE 
 14.  For  the  foregoing  reasons,  Spectrum  Holdings  Petition  is  denied.  This  action  is  taken  on  delegated  authority  pursuant  to  47  U.  S.  C.    155(  c)  and  47  C.  F.  R.    0.131(  c)  0.331(  d) 


 of  the  Commissions  rules. 
 15.  ACCORDINGLY,  IT  IS  ORDERED,  pursuant  to  pursuant  to  Section  1.106(  j)  of  the  Commissions  rules,  47  C.  F.  R.  1.106(  j),  and  sections  4(  i),  309,  and  405(  a)  of  the 


 Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    154(  i),  309,  and  405(  a),  that  the  Petition  for  Reconsideration  filed  on  behalf  of  Spectrum  Holdings  I,  LP,  dated  July  1,  2002  IS 
 DENIED. 


 FEDERAL  COMMUNICATIONS  COMMISSION 
 Kathleen  OBrien  Ham  Deputy  Chief 
 Wireless  Telecommunications  Bureau 


 55  In  addition,  the  Bureaus  decision  to  allow  qualified  bidders  remaining  in  Auction  No.  44  to  supplement  their 
 upfront  payments  gives  these  qualified  bidders  an  opportunity  effectively  to  revise  any  requests  they  later  deem  excessive.  See  Auction  No.  44  Revised  Schedule  Public  Notice  at  6-  8. 
9