[Federal Register Volume 74, Number 145 (Thursday, July 30, 2009)]
[Notices]
[Pages 38018-38033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18198]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 09-56; DA 09-1376]


Auction of Broadband Radio Service (BRS) Licenses Scheduled for 
October 27, 2009; Notice and Filing Requirements, Minimum Opening Bids, 
Upfront Payments, and Other Procedures for Auction 86

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the procedures and minimum opening 
bids for the upcoming auction of Broadband Radio Service Licenses 
(Auction 86). This document is intended to familiarize prospective 
bidders with the procedures and minimum opening bids for the auction.

DATES: Applications to participate in Auction 86 must be filed prior to 
6:00 p.m. Eastern Time (ET) on August 18, 2009. Bidding for licenses in 
Auction 86 is scheduled to begin on October 27, 2009.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: For legal questions: Sayuri 
Rajapakse at (202) 418-0660. For general auction questions: Debbie 
Smith or Linda Sanderson at (717) 338-2868. Broadband Division: For 
licensing information and service rule questions: Nancy Zaczek (legal) 
or Stephen Zak (technical) at 202-418-2487. To request materials in 
accessible formats (Braille, large print, electronic files or audio 
format) for people with disabilities, send an e-mail to <a href="/cdn-cgi/l/email-protection#fa9c9999cfcaceba9c9999d49d958c"><span class="__cf_email__" data-cfemail="f3959090c6c3c7b3959090dd949c85">[email protected]</span></a> 
or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 
or (202) 418-0432 (TTY).

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 86 
Procedures Public Notice, which was released on June 26, 2009. The 
complete text of the Auction 86 Procedures Public Notice, including 
attachments, as well as related Commission documents, are available for 
public inspection and copying from 8 a.m. to 4:30 p.m. ET Monday 
through Thursday and from 8 a.m. to 11:30 a.m. ET on Fridays in the FCC 
Reference Information Center, 445 12th Street, SW., Room CY-A257, 
Washington, DC 20554. The Auction 86 Procedures Public Notice and 
related Commission documents may also be purchased from the 
Commission's duplicating contractor, Best Copy and Printing, Inc. 
(BCPI), Portals II, 445 12th Street, SW, Room CY-B402, Washington, DC, 
20554, telephone 202-488-5300, facsimile 202-488-5563, or Web site: 
http://www.BCPIWEB.com, using document number DA 09-1376 for the 
Auction 86 Procedures Public Notice. The Auction 86 Procedures Public 
Notice and related documents are also available on the Internet at the 
Commission's Web site: http://wireless.fcc.gov/auctions/86/.

I. General Information

A. Introduction

    1. The Wireless Telecommunications Bureau (Bureau) announces the 
procedures and minimum opening bid amounts for the upcoming auction of 
licenses for unassigned Broadband Radio Service (BR) spectrum. This 
auction, which is designated as Auction 86, is scheduled to commence on 
October 27, 2009. Auction 86 will offer 78 licenses. On April 24, 2009 
the Bureau released a public notice seeking comment on competitive 
bidding procedures to be used in Auction 86. Interested parties 
submitted 7 comments and 4 reply comments in response to the Auction 86 
Comment Public Notice 74 FR 22166, May 12, 2009.
i. Licenses To Be Offered in Auction 86
    2. The licenses to be offered in Auction 86 consist of the 
available spectrum in 78 BRS service areas. BRS service areas are BTAs 
or additional service areas similar to BTAs adopted by the Commission. 
In the BRS/EBS 4th MO&O, the Commission amended its rules to establish 
Gulf of Mexico service areas for BRS, and Auction 86 therefore includes 
licenses for three BRS service areas in the Gulf of Mexico. A complete 
list of licenses available for Auction 86 is included as Attachment A 
of the Auction 86 Procedures Public Notice.
    3. Two commenters sought the removal of certain licenses from the 
Auction 86 inventory: Sarasota-Bradenton, Florida, BTA 408; Burlington, 
Vermont, BTA 063; and Rutland-Bennington, Vermont, BTA 388. The Bureau 
does not believe that the public interest would be served by the 
removal of the licenses from the auction. Therefore the Bureau declines 
to remove these three licenses from the Auction 86 inventory.

B. License Descriptions

    4. Where unencumbered, the licenses to be auctioned consist of 76.5 
megahertz of spectrum at 2496-2502, 2602-2615, and 2616-2673.5 MHz. We 
note that the licenses issued pursuant to this auction will be issued 
pursuant to the post-transition band plan contained in Section 
27.5(i)(2) of the Commission's rules. A table showing the 
channelization of this spectrum is included as Attachment B of the 
Auction 86 Procedures Public Notice.

C. Rules and Disclaimers

i. Relevant Authority
    5. Prospective applicants must familiarize themselves thoroughly 
with the Commission's general competitive bidding as well as decisions 
in proceedings regarding competitive bidding procedures, application 
requirements, and obligations of Commission licensees.
    6. Commenters sought a revision of the performance requirement set 
forth in the BRS service rules. 47 CFR 27.14(o) provides that a BRS 
licensee must demonstrate substantial service in its service area no 
later than May 1, 2011. Other commenters oppose the proposal, 
contending that it would not be in the public interest. The requests to 
change the BRS service rules are beyond the scope of the public notice 
regarding the procedures for Auction 86. Any such rule change would 
require action by the full Commission. Absent such action, new 
licensees will be subject to the requirements set forth in the current 
rules.
ii. Prohibition of Collusion; Compliance With Antitrust Laws
    7. To ensure the competitiveness of the auction process, 47 CFR 
1.2105(c) of the Commission's rules prohibits auction applicants for 
licenses in any of the same geographic license areas from communicating 
with each other about bids, bidding strategies, or settlements unless 
such applicants have identified each other on their short-form 
applications (FCC Form 175) as parties with whom they have entered into 
agreements pursuant to 47 CFR 1.2105(a)(2)(viii).
a. Entities Subject to Section 1.2105
    8. The anti-collusion rule will apply to any applicants that submit 
short-form applications seeking to participate in a Commission auction 
and select licenses in the same markets. In Auction 86, the rule would 
prohibit any applicants that have selected any of the same licenses

[[Page 38019]]

in their short form applications from communicating absent an 
agreement.
    9. Under the terms of the rule, applicants that have applied for 
licenses covering the same markets--unless they have identified each 
other on their short form applications as parties with whom they have 
entered into agreements under 47 CFR 1.2105(a)(2)(viii)--must 
affirmatively avoid all communications with or disclosures to each 
other that affect or have the potential to affect bids or bidding 
strategy, which may include communications regarding the post-auction 
market structure. This prohibition applies to all applicants regardless 
of whether such applicants become qualified bidders or actually bid.
    10. For purposes of this prohibition, 47 CFR 1.2105(c)(7)(i) 
defines applicant as including all officers and directors of the entity 
submitting a short-form application to participate in the auction, all 
controlling interests of that entity, 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.
    11. Information concerning applicants' license selections will not 
be available to the public. Therefore, the Commission will inform each 
applicant by letter of the identity of each of the other applicants 
that has applied for licenses covering any of the same geographic areas 
as the licenses that it has selected in its short-form application.
b. Prohibition Applies Until Down Payment Deadline
    12. 47 CFR 1.2105(c)'s anti-collusion prohibition begins at the 
short-form application filing deadline and ends at the down payment 
deadline after the auction.
c. Prohibited Communications
    13. Applicants for the upcoming Auction 86 and other parties that 
may be engaged in discussion with such applicants are cautioned on the 
need to comply with the Commission's anti-collusion rule, 47 CFR 
1.2105(c). The anti-collusion rule prohibits not only a communication 
about an applicant's own bids or bidding strategy, but also a 
communication of another applicant's bids or bidding strategy. While 
the anti-collusion rule provisions do not prohibit business 
negotiations among auction applicants, applicants must remain vigilant 
so as not to communicate directly or indirectly information that 
affects, or could affect, bids or bidding strategy, or the negotiation 
of settlement agreements.
    14. The Commission remains vigilant about prohibited communications 
taking place in other situations. For example, the Commission has 
warned that prohibited communications concerning bids and bidding 
strategies may include communications regarding capital calls or 
requests for additional funds in support of bids or bidding strategies 
to the extent such communications convey information concerning the 
bids and bidding strategies directly or indirectly.
    15. Applicants are hereby placed on notice that public disclosure 
of information relating to bidder interests and bidder identities that 
is confidential at the time of disclosure may violate the anti-
collusion rule. This is so even though similar types of information 
were revealed prior to and during other Commission auctions subject to 
different information procedures. Bidders should use caution in their 
dealings with other parties, such as members of the press, financial 
analysts, or others who might become a conduit for the communication of 
prohibited bidding information. For example, where limited information 
disclosure procedures are in place, as for Auction 86, a qualified 
bidder's statement to the press that it has lost bidding eligibility 
and stopped bidding in the auction could give rise to a finding of an 
anti-collusion rule violation. Similarly, an applicant's public 
statement of intent not to participate in Auction 86 bidding could also 
violate the rule.
    16. Applicants selecting licenses for any of the same geographic 
license areas must not communicate directly or indirectly about bids or 
bidding strategy. Accordingly, such applicants are encouraged not to 
use the same individual as an authorized bidder. A violation of the 
anti-collusion rule could occur if an individual acts as the authorized 
bidder for two or more competing applicants, and conveys information 
concerning the substance of bids or bidding strategies between such 
applicants. Also, if the authorized bidders are different individuals 
employed by the same organization (e.g., law firm or engineering firm 
or consulting firm), a violation similarly could occur. In such a case, 
at a minimum, applicants should certify on their applications that 
precautionary steps have been taken to prevent communication between 
authorized bidders and that applicants and their bidding agents will 
comply with the anti-collusion rule.
    17. A violation of the anti-collusion rule could occur in other 
contexts, such as an individual serving as an officer for two or more 
applicants. Moreover, the Commission has found a violation of the anti-
collusion rule where a bidder used the Commission's bidding system to 
disclose its bidding strategy in a manner that explicitly invited other 
auction participants to cooperate and collaborate in specific markets, 
and has placed auction participants on notice that the use of its 
bidding system to disclose market information to competitors will not 
be tolerated and will subject bidders to sanctions.
    18. In addition, when completing short-form applications, 
applicants should avoid any statements or disclosures that may violate 
the Commission's anti-collusion rule, particularly in light of the 
limited information procedures in effect for Auction 86. Specifically, 
applicants should avoid including any information in their short-form 
applications that might convey information regarding their license 
selection, such as using applicant names that refer to licenses being 
offered, referring to certain licenses or markets in describing bidding 
agreements, or including any information in attachments that may 
otherwise disclose applicants' license selections.
d. Disclosure of Bidding Agreements and Arrangements
    19. The Commission's rules do not prohibit applicants from entering 
into otherwise lawful bidding agreements before filing their short-form 
applications, as long as they disclose the existence of the 
agreement(s) in their short-form application. If parties agree in 
principle on all material terms prior to the short-form filing 
deadline, each party to the agreement must identify the other party or 
parties to the agreement on its short-form application under 47 CFR 
1.2105(c), even if the agreement has not been reduced to writing. If 
the parties have not agreed in principle by the short-form filing 
deadline, they should not include the names of parties to discussions 
on their applications, and they may not continue negotiations, 
discussions or communications with any other applicants for licenses 
covering any of the same geographic areas after the short-form filing 
deadline.
e. Anti-Collusion Certification
    20. By electronically submitting a short-form application following 
the electronic filing procedures set forth in Attachment C to the 
Auction 86 Procedures Public Notice, each applicant certifies its 
compliance with 47 CFR 1.2105(c). However, the Bureau

[[Page 38020]]

cautions that merely filing a certifying statement as part of an 
application will not outweigh specific evidence that collusive behavior 
has occurred, nor will it preclude the initiation of an investigation 
when warranted. The Commission has stated that it intends to scrutinize 
carefully any instances in which bidding patterns suggest that 
collusion may be occurring. Any applicant found to have violated the 
anti-collusion rule may be subject to sanctions.
f. Antitrust Laws
    21. Applicants are also reminded that, regardless of compliance 
with the Commission's rules, they remain subject to the antitrust laws, 
which are designed to prevent anticompetitive behavior in the 
marketplace. Compliance with the disclosure requirements of the 
Commission's anti-collusion rule will not insulate a party from 
enforcement of the antitrust laws. To the extent the Commission becomes 
aware of specific allegations that suggest that violations of the 
federal antitrust laws may have occurred, the Commission may refer such 
allegations to the United States Department of Justice for 
investigation. If an applicant is found to have violated the antitrust 
laws or the Commission's rules in connection with its participation in 
the competitive bidding process, it may be subject to forfeiture of its 
upfront payment, down payment, or full bid amount and may be prohibited 
from participating in future auctions, among other sanctions.
g. Duty To Report Prohibited Communications; Reporting Procedure
    22. If an applicant makes or receives a communication that appears 
to violate the anti-collusion rule, it must report such communication 
in writing to the Commission immediately, and in no case later than 
five business days after the communication occurs. 47 CFR 1.2105(c)(6) 
provides that any applicant that makes or receives a communication 
prohibited by 47 CFR 1.2105(c) must report such communication to the 
Commission in writing immediately, and in no case later than five 
business days after the communication occurs. The Commission has 
clarified that each applicant's obligation to report any such 
communication continues beyond the five-day period after the 
communication is made, even if the report is not made within the five-
day period.
    23. In addition, 47 CFR 1.65 requires an applicant to maintain the 
accuracy and completeness of information furnished in its pending 
application and to notify the Commission within 30 days of any 
substantial change that may be of decisional significance to that 
application. Thus, 47 CFR 1.65 requires an auction applicant to notify 
the Commission of any substantial change to the information or 
certifications included in its pending short-form application. 
Applicants are therefore required by 47 CFR 1.65 to report to the 
Commission any communications of bids or bidding strategies that result 
in a bidding arrangement, agreement, or understanding after the short-
form filing application deadline.
    24. Parties reporting communications pursuant to 47 CFR 1.65 or 
1.2105(c)(6) must take care to ensure that any such reports of 
prohibited communications do not themselves give rise to a violation of 
the anti-collusion rule. For example, a party's report of a prohibited 
communication could violate the rule by communicating prohibited 
information to other applicants through the use of Commission filing 
procedures that would allow such materials to be made available for 
public inspection. A party seeking to report such prohibited 
communications should consider submitting its report with a request 
that the report or portions of the submission be withheld from public 
inspection. Such parties are also encouraged to consult with the 
Auctions and Spectrum Access Division staff if they have any questions 
about the procedures for submitting such reports.
    25. Applicants must be aware that failure to comply with the 
Commission's rules can result in enforcement action.
h. Winning Bidders Must Disclose Terms of Agreements
    26. Applicants that are winning bidders will be required to 
disclose in their long-form applications the specific terms, 
conditions, and parties involved in any bidding consortia, joint 
ventures, partnerships, and other arrangements entered into relating to 
the competitive bidding process.
i. Additional Information Concerning Anti-Collusion Rule
    27. A summary listing of documents issued by the Commission and the 
Bureau addressing the application of the anti-collusion rule may be 
found in Attachment F of the Auction 86 Procedures Public Notice. These 
documents are available on the Commission's auction anti-collusion Web 
page.
iii. Incumbency Issues
    28. There are pre-existing BRS site-based incumbent licenses. The 
service area for each of those incumbent licenses is a 35-mile circle 
centered at the station's reference coordinates, and is bounded by the 
chord(s) drawn between the intersection points of the licensee's 
previous protected service area and those of respective adjacent 
market, co-channel licensees. Any licenses granted pursuant to this 
auction will not include the geographic service areas of any co-channel 
incumbent site-based licenses. If a site-based incumbent license 
cancels or is forfeited, however, the right to operate within that area 
shall revert to the overlay licensee that holds the license for the BRS 
service area that encompasses that BTA. BRS incumbent licenses are 
entitled to interference protection in accordance with the applicable 
technical rules. BRS licenses have previously been awarded through 
auction (Auction 6) for BTAs other than those in this auction, and the 
previously-awarded licenses may have since been assigned or 
partitioned. Such BRS geographic area licenses authorize operation 
within a BTA and provide the licensee with rights similar to those 
being offered in Auction 86.
    29. In addition, on the E and F channel groups, grandfathered 
Educational Broadband Service (EBS) licenses originally issued on those 
channels prior to 1983 may continue to operate indefinitely. Such 
grandfathered EBS licenses must be protected in accordance with the 
applicable technical rules.
    30. Operations within the 2614-2618 MHz band are secondary to 
adjacent channel operations.
    31. Finally, in the 2496-2500 MHz band, BRS licensees must share 
the band on a co-primary basis with the Code Division Multiple Access, 
Mobile Satellite Service, grandfathered Broadcast Auxiliary Service 
stations, and grandfathered land mobile and microwave licenses licensed 
under Parts 90 and 101 of the Commission's rules, respectively. In 
addition, the 2400-2500 MHz band is allocated for use by Industrial, 
Scientific, and Medical equipment under Part 18 of the Commission's 
rules.
    32. A comment was filed noting that in certain markets, the 
transition to the new band plan is not yet complete, and in those 
markets, new licensees may not be able to operate on some or all of 
their spectrum until the transition process is completed. Under the 
Commission's rules, until a transition has been completed in a BTA, 
existing licensees operating under the pre-transition band plan are 
entitled to interference protection in accordance with the applicable 
technical rules. Potential bidders can check on the status of 
transition in a market by checking the Commission's Electronic Comment

[[Page 38021]]

Filing System and reviewing WT Docket No. 06-136. If a post-transition 
notification has been filed for a BTA, the transition has been 
completed in that BTA. In a BTA where no transition initiation plan had 
been filed by January 21, 2009, for a BTA, existing licensees in the 
BTA could file notifications with the Commission by April 21, 2009, of 
an intent to self-transition. Once a licensee completes a self-
transition, it is required to modify its license to reflect its 
operation pursuant to the new band plan. Potential bidders can review 
the Universal Licensing System to see if a license has been modified to 
operate pursuant to the new band plan.
    33. The commenter also asked that potential bidders be reminded of 
obligations to reimburse certain licensees of their costs in 
transitioning to the new BRS/EBS band plan. Under the Commission's 
rules, BRS licensees are responsible for reimbursing transition 
proponents or self-transitioning EBS licensees in accordance with the 
Commission's rules. Potential bidders should be aware that in BTAs 
where the transition to the new band plan has not yet been completed as 
of the date licenses are issued pursuant to this auction, they may be 
required to reimburse eligible licensees for a pro rata share of 
transition costs.
a. International Coordination
    34. BRS licensees must individually apply for and receive a 
separate license for each transmitter if the proposed operation 
requires coordination with either Mexico or Canada. Potential bidders 
seeking licenses in Auction 86 for geographic areas that are near the 
Canadian or Mexican borders are encouraged to consult all international 
agreements with Canada and Mexico. We also note that the current 
agreement with Mexico does not provide for two-way operation in the 
border area. If the agreements with Mexico or Canada are modified in 
the future, licensees must likewise comply with these modifications.
b. Quiet Zones
    35. BRS licensees must individually apply for and receive a 
separate license for each transmitter if the proposed operation would 
affect the radio quiet zones set forth in the Commission's rules.
iv. Due Diligence
    36. The Bureau cautions potential applicants formulating their 
bidding strategies to investigate and consider the extent to which 
these frequencies are occupied. For example, there are incumbent 
operations already licensed and operating in the band that must be 
protected. These limitations may restrict the ability of BRS licensees 
to use certain portions of the electromagnetic spectrum or provide 
service to certain areas in their geographic license areas. Bidders 
should become familiar with the status of these operations and 
applicable Commission rules, orders and any pending proceedings related 
to the service, in order to make reasoned, appropriate decisions about 
their participation in this auction and their bidding strategy.
    37. Potential bidders are reminded that they are solely responsible 
for investigating and evaluating all technical and marketplace factors 
that may have a bearing on the value of the licenses being offered in 
this auction. The Commission makes no representations or warranties 
about the use of this spectrum for particular services. Applicants 
should be aware that a Commission auction represents an opportunity to 
become a licensee subject to certain conditions and regulations. The 
auction does not constitute an endorsement by the Commission of any 
particular service, technology, or product, nor does a Commission 
license constitute a guarantee of business success. Applicants should 
perform their individual due diligence before proceeding as they would 
with any new business venture.
    38. Potential bidders are strongly encouraged to conduct their own 
research prior to the beginning of bidding in Auction 86 in order to 
determine the existence of any pending legislative, administrative or 
judicial proceedings that might affect their decision regarding 
participation in the auction. Participants in Auction 86 are strongly 
encouraged to continue such research throughout the auction. In 
addition, potential bidders should perform technical analyses 
sufficient to assure themselves that, should they prevail in 
competitive bidding for a specific license, they will be able to build 
and operate facilities that will fully comply with the Commission's 
technical and legal requirements as well as other applicable Federal, 
state, and local laws.
    39. Applicants should also be aware that certain pending and future 
proceedings, including rulemaking proceedings or petitions for 
rulemaking, applications (including those for modification), requests 
for special temporary authority, waiver requests, petitions to deny, 
petitions for reconsideration, informal oppositions, and applications 
for review, before the Commission may relate to particular applicants 
or incumbent licensees or the licenses available in Auction 86. Pending 
and future judicial proceedings may also relate to particular 
applicants or incumbent licensees, or the licenses available in Auction 
86. Prospective bidders are responsible for assessing the likelihood of 
the various possible outcomes, and considering their potential impact 
on spectrum licenses available in this auction.
    40. Applicants should perform due diligence to identify and 
consider all proceedings that may affect the spectrum licenses being 
auctioned and that could have an impact on the availability of spectrum 
for Auction 86. In addition, although the Commission may continue to 
act on various pending applications, informal objections, petitions, 
and other requests for Commission relief, some of these matters may not 
be resolved by the beginning of bidding in the auction.
    41. Applicants are solely responsible for identifying associated 
risks and for investigating and evaluating the degree to which such 
matters may affect their ability to bid on, otherwise acquire, or make 
use of licenses being offered.
    42. Applicants may obtain information about licenses available in 
Auction 86 through the Bureau's online licensing databases at http://wireless.fcc.gov/uls. Applicants may query the database online and 
download a copy of their search results if desired. Detailed 
instructions on using License Search (including frequency searches and 
the GeoSearch capability) and downloading query results are available 
online by selecting the ``?'' button at the upper right-hand corner of 
the License Search screen or by going to the Universal Licensing System 
(ULS) support site at http://esupport.fcc.gov/licensing.htm. Applicants 
should direct questions regarding the ULS search capabilities to the 
FCC ULS Technical Support hotline at (877) 480-3201, option two. The 
hotline is available to assist with questions Monday through Friday, 
from 8 a.m. to 6 p.m. ET. In order to provide better service to the 
public, all calls to the hotline are recorded.
    43. The Commission makes no representations or guarantees regarding 
the accuracy or completeness of information in its databases or any 
third party databases, including, for example, court docketing systems. 
To the extent the Commission's databases may not include all 
information deemed necessary or desirable by an applicant, applicants 
may obtain or verify such information from independent sources or 
assume the risk of any

[[Page 38022]]

incompleteness or inaccuracy in said databases. Furthermore, the 
Commission makes no representations or guarantees regarding the 
accuracy or completeness of information that has been provided by 
incumbent licensees and incorporated into its databases.
    44. Potential applicants are strongly encouraged to physically 
inspect any prospective sites located in, or near, the geographic area 
for which they plan to bid, and also to familiarize themselves with the 
environmental review obligations.
v. Use of Integrated Spectrum Auction System
    45. The Commission will make available a browser-based bidding 
system to allow bidders to participate in Auction 86 over the Internet 
using the Commission's Integrated Spectrum Auction System (ISAS or FCC 
Auction System). The Commission makes no warranty whatsoever with 
respect to the FCC Auction System. In no event shall the Commission, or 
any of its officers, employees or agents, be liable for any damages 
whatsoever (including, but not limited to, loss of business profits, 
business interruption, loss of business information, or any other loss) 
arising out of or relating to the existence, furnishing, functioning or 
use of the FCC Auction System that is accessible to qualified bidders 
in connection with this auction. Moreover, no obligation or liability 
will arise out of the Commission's technical, programming or other 
advice or service provided in connection with the FCC Auction System.
vi. Environmental Review Requirements
    46. Licensees must comply with the Commission's rules regarding 
implementation of the National Environmental Policy Act and other 
federal environmental statutes. The construction of a wireless antenna 
facility is a federal action and the licensee must comply with the 
Commission's environmental rules for each such facility.

D. Auction Specifics

i. Auction Start Date
    47. Bidding in Auction 86 will begin on Tuesday, October 27, 2009, 
as announced in the Auction 86 Comment Public Notice. The initial 
schedule for bidding will be announced by public notice at least one 
week before the start of the auction; unless otherwise announced 
bidding on all licenses will be conducted on each business day until 
bidding has stopped on all licenses.
ii. Bidding Methodology
    48. The bidding methodology for Auction 86 will be simultaneous 
multiple round (SMR) bidding. The Commission will conduct this auction 
over the Internet using the FCC Auction System, and telephonic bidding 
will be available as well. Qualified bidders are permitted to bid 
electronically via the Internet or by telephone. All telephone calls 
are recorded.
iii. Pre-Auction Dates and Deadlines
    49. The following dates and deadlines apply:

Auction Seminar............................  August 5, 2009.
Short-Form Application (FCC Form 175)        August 5, 2009; 12:00 noon ET.
 Filing Window Opens.
Short-Form Application (FCC Form 175)        August 18, 2009; prior to 6:00 p.m. ET.
 Filing Window Deadline.
Upfront Payments (via wire transfer).......  September 24, 2009; 6:00 p.m. ET.
Mock Auction...............................  October 23, 2009.
Auction Begins.............................  October 27, 2009.
 

iv. Requirements for Participation
    50. Those wishing to participate in this auction must: (1) submit a 
short-form application (FCC Form 175) electronically prior to 6:00 p.m. 
ET, August 18, 2009; (2) submit a sufficient upfront payment and an FCC 
Remittance Advice Form (FCC Form 159) by 6:00 p.m. ET, September 24, 
2009 and (3) comply with all provisions outlined in the Auction 86 
Procedures Public Notice and applicable Commission rules.

II. Short-Form Application (FCC Form 175) Requirements

A. General Information Regarding Short-Form Applications

    51. Entities seeking licenses available in Auction 86 must file a 
short-form application electronically via the FCC Auction System prior 
to 6 p.m. ET on August 18, 2009, following the procedures prescribed in 
Attachment C of the Auction 86 Procedures Public Notice. Applicants 
filing a short-form application are subject to the Commission's anti-
collusion rules beginning on the deadline for filing. The information 
provided in its short-form application will be used in determining, 
among other things, if the applicant is eligible for a bidding credit.
    52. Applicants bear full responsibility for submitting accurate, 
complete and timely short-form applications. All applicants must 
certify on their short-form applications under penalty of perjury that 
they are legally, technically, financially and otherwise qualified to 
hold a license. Applicants should read the instructions set forth in 
Attachment C carefully and should consult the Commission's rules to 
ensure that all the information that is required under the Commission's 
rules is included with their short-form applications.
    53. An entity may not submit more than one short-form application 
for a single auction. If a party submits multiple short-form 
applications, only one application may become qualified to bid.
    54. Applicants also should note that submission of a short-form 
application and any amendments thereto constitutes a representation by 
the certifying official that he or she is an authorized representative 
of the applicant, that he or she has read the form's instructions and 
certifications, and that the contents of the application, its 
certifications, and any attachments are true and correct. An applicant 
cannot change the certifying official to its application. Submission of 
a false certification to the Commission may result in penalties, 
including monetary forfeitures, license forfeitures, ineligibility to 
participate in future auctions, and/or criminal prosecution.

B. License Selection

    55. An applicant must select the licenses on which it wants to bid 
from the Eligible Licenses list on its short-form application. 
Applicants will not be able to change their license selections after 
the short-form application deadline. Applicants interested in 
participating in Auction 86 must have selected license(s) available in 
the respective auction by the short-form application deadline. 
Applicants must confirm their license selections before the deadline 
for submitting short-form applications. The FCC Auction System will not 
accept bids from an applicant on licenses that the applicant has not 
selected on its short-form application.

[[Page 38023]]

C. Disclosure of Bidding Arrangements

    56. An applicant must identify in its short-form application all 
parties with whom it has entered into any agreements, arrangements, or 
understandings of any kind relating to the licenses being auctioned, 
including any agreements relating to post-auction market structure.
    57. Applicants also will be required to certify under penalty of 
perjury in their short-form applications that they have not entered and 
will not enter into any explicit or implicit agreements, arrangements 
or understandings of any kind with any parties, other than those 
identified in the application, regarding the amount of their bids, 
bidding strategies, or the particular licenses on which they will or 
will not bid. If an applicant has had discussions, but has not reached 
an agreement by the short-form application filing deadline, it would 
not include the names of parties to the discussions on its application 
and may not continue such discussions with any applicants after the 
deadline.
    58. While the anti-collusion rules do not prohibit non-auction-
related business negotiations among auction applicants, applicants are 
reminded that certain discussions or exchanges could touch upon 
impermissible subject matters because they may convey pricing 
information and bidding strategies. Further, as discussed above, 
compliance with the disclosure requirements of the Commission's anti-
collusion rule will not insulate a party from enforcement of the 
antitrust laws.

D. Ownership Disclosure Requirements

    59. All applicants must comply with the uniform Part 1 ownership 
disclosure standards and provide information required by 47 CFR 1.2105 
and 1.2112 of the Commission's rules. Specifically, in completing the 
short-form application, applicants will be required to fully disclose 
information on the real party or parties-in-interest and ownership 
structure of the applicant. The ownership disclosure standards for the 
short-form application are prescribed in 47 CFR 1.2105 and 1.2112 of 
the Commission's rules. Each applicant is responsible for information 
submitted in its short-form application being complete and accurate.
    60. An applicant's most current ownership information on file with 
the Commission, if in an electronic format compatible with the short-
form application (FCC Form 175) (such as information submitted with an 
ownership disclosure information report (FCC Form 602) or in a short-
form application (FCC Form 175) filed for a previous auction using 
ISAS) will automatically be entered into the applicant's short-form 
application. An applicant is responsible for ensuring that the 
information submitted in its short-form application for Auction 86 is 
complete and accurate. Accordingly, applicants should carefully review 
any information automatically entered to confirm that it is complete 
and accurate as of the Auction 86 deadline for filing the short-form 
application. If any information that was entered automatically needs to 
be changed, applicants must do so directly in the short-form 
application.

E. Designated Entity Provisions

    61. Eligible applicants in Auction 86 may claim designated entity 
status, as an entrepreneur, a small business, or very small business 
eligible for bidding credits. Applicants should review carefully the 
Commission's recent decisions regarding the designated entity 
provisions.
i. Bidding Credits for Small and Very Small Businesses
    62. A bidding credit represents the amount by which a bidder's 
winning bid will be discounted. For Auction 86, bidding credits will be 
available to entrepreneurs, small businesses and very small businesses, 
and consortia thereof.
    63. The level of bidding credit is determined as follows: (1) a 
bidder with attributed average annual gross revenues that exceed $15 
million and do not exceed $40 million for the preceding three years 
(small business) will receive a 15 percent discount on its winning bid; 
(2) a bidder with attributed average annual gross revenues that exceed 
$3 million and do not exceed $15 million for the preceding three years 
(very small business) will receive a 25 percent discount on its winning 
bid; and (3) a bidder with attributed average annual gross revenues 
that do not exceed $3 million for the preceding three years 
(entrepreneur) will receive a 35 percent discount on its winning bid.
ii. Attributable Interests
a. Controlling Interests
    64. Controlling interests of an applicant include individuals and 
entities with either de facto or de jure control of the applicant. 
Typically, ownership of greater than 50 percent of an entity's voting 
stock evidences de jure control. De facto control is determined on a 
case-by-case basis.
b. Affiliates
    65. Affiliates of an applicant or controlling interest include an 
individual or entity that: (1) Directly or indirectly controls or has 
the power to control the applicant; (2) is directly or indirectly 
controlled by the applicant; (3) is directly or indirectly controlled 
by a third party that also controls or has the power to control the 
applicant; or (4) has an identity of interest with the applicant. The 
Commission's definition of an affiliate of the applicant encompasses 
both controlling interests of the applicant and affiliates of 
controlling interests of the applicant. For more information regarding 
affiliates, applicants should refer to 47 CFR 1.2110(c)(5) and 
Attachment C to the Auction 86 Procedures Public Notice.
c. Material Relationships
    66. The Commission requires the consideration of certain leasing 
and resale (including wholesale) relationships--referred to as material 
relationships--in determining designated entity eligibility, i.e., for 
bidding credits. Material relationships fall into two categories: 
Impermissible and attributable.
    67. An applicant or licensee has an impermissible material 
relationship when it has agreements with one or more other entities for 
the lease or resale (including under a wholesale agreement) of, on a 
cumulative basis, more than 50 percent of the spectrum capacity of any 
of its licenses. If an applicant or a licensee has an impermissible 
material relationship, it is, as a result, (i) ineligible for the award 
of designated entity benefits and (ii) subject to unjust enrichment on 
a license-by-license basis.
    68. An applicant or licensee has an attributable material 
relationship when it has one or more agreements with any individual 
entity for the lease or resale (including under a wholesale agreement) 
of, on a cumulative basis, more than 25 percent of the spectrum 
capacity of any individual license held by the applicant or licensee. 
The attributable material relationship will cause the gross revenues of 
that entity and its attributable interest holders to be attributed to 
the applicant or licensee for the purposes of determining the 
applicant's or licensee's (i) eligibility for designated entity 
benefits and (ii) liability for unjust enrichment on a license-by-
license basis.
    69. The Commission grandfathered material relationships in 
existence before the release of the Designated Entity Second Report and 
Order, 71 FR 26245, May 5, 2006, meaning that those preexisting 
relationships alone would not cause the Commission to examine a 
designated entity's ongoing eligibility

[[Page 38024]]

for benefits or its liability for unjust enrichment. The Commission did 
not, however, grandfather preexisting material relationships for 
determinations of an applicant's or licensee's designated entity 
eligibility for future auctions or in the context of future 
assignments, transfers of control, spectrum leases, or other reportable 
eligibility events. Rather, the occurrence of any of those eligibility 
events after the release date of the Designated Entity Second Report 
and Order triggers a reexamination of the applicant's or licensee's 
designated entity eligibility, taking into account all existing 
material relationships, including those previously grandfathered.
d. Gross Revenue Exceptions
    70. In recent years the Commission has also made other 
modifications to its rules governing the attribution of gross revenues 
for purposes of determining designated entity eligibility. For example, 
the Commission has clarified that, in calculating an applicant's gross 
revenues under the controlling interest standard, it will not attribute 
the personal net worth, including personal income, of its officers and 
directors to the applicant.
    71. The Commission has also exempted from attribution to the 
applicant the gross revenues of the affiliates of a rural telephone 
cooperative's officers and directors, if certain conditions specified 
in 47 CFR 1.2110(b)(3)(iii) of the Commission's rules are met. An 
applicant claiming this exemption must provide in an attachment an 
affirmative statement that the applicant, affiliate and/or controlling 
interest is an eligible rural telephone cooperative within the meaning 
of 47 CFR 1.2110(b)(3)(iii), and must supply any additional information 
as may be required to demonstrate eligibility for the exemption from 
the attribution rule. Applicants seeking to claim this exemption must 
meet all of the conditions.
e. Bidding Consortia
    72. A consortium of small businesses, very small businesses, or 
entrepreneurs is a conglomerate organization composed of two or more 
entities, each of which individually satisfies the definition of a 
small business, very small business, or entrepreneur. Thus, each member 
of a consortium of small businesses, very small businesses, or 
entrepreneurs that applies to participate in Auction 86 must 
individually meet the criteria for small businesses, very small 
businesses, or entrepreneurs. Each consortium member must disclose its 
gross revenues along with those of its affiliates, its controlling 
interests, the affiliates of its controlling interests, and any 
entities having an attributable material relationship with the member. 
Although the gross revenues of the consortium members will not be 
aggregated for purposes of determining the consortium's eligibility as 
a small business, very small business, or entrepreneur this information 
must be provided to ensure that each individual consortium member 
qualifies for any bidding credit awarded to the consortium.

F. Tribal Lands Bidding Credit

    73. To encourage the growth of wireless services in federally 
recognized tribal lands, the Commission has implemented a tribal lands 
bidding credit. Applicants do not provide information regarding tribal 
lands bidding credits on their short-form applications. Instead, 
winning bidders may apply for the tribal lands bidding credit after the 
auction when they file their more detailed, long-form applications.

G. Provisions Regarding Former and Current Defaulters

    74. Current defaulters are not eligible to participate in Auction 
86, but former defaulters can participate so long as they are otherwise 
qualified and must make upfront payments that are fifty percent more 
than the normal upfront payment amounts.
    75. On the short-form application, an applicant must certify under 
penalty of perjury that it, its affiliates, its controlling interests, 
and the affiliates of its controlling interests, as defined by 47 CFR 
1.2110, are not in default on any payments for Commission licenses 
(including down payments) and that it is not delinquent on any non-tax 
debt owed to any Federal agency. Each applicant must also state under 
penalty of perjury whether or not it, its affiliates, its controlling 
interests, and the affiliates of its controlling interests, have ever 
been in default on any Commission licenses or have ever been delinquent 
on any non-tax debt owed to any Federal agency. Prospective applicants 
are reminded that submission of a false certification to the Commission 
is a serious matter that may result in severe penalties, including 
monetary forfeitures, license revocations, exclusion from participation 
in future auctions, and/or criminal prosecution. These statements and 
certifications are prerequisites to submitting an application to 
participate in an FCC auction.
    76. Applicants are encouraged to review the Bureau's previous 
guidance on default and delinquency disclosure requirements in the 
context of the short-form application process. For example, it has been 
determined that to the extent that Commission rules permit late payment 
of regulatory or application fees accompanied by late fees, such debts 
will become delinquent for purposes of 47 CFR 1.2105(a) and 1.2106(a) 
only after the expiration of a final payment deadline. Therefore, with 
respect to regulatory or application fees, the provisions of 47 CFR 
1.2105(a) and 1.2106(a) regarding default and delinquency in connection 
with competitive bidding are limited to circumstances in which the 
relevant party has not complied with a final Commission payment 
deadline. Parties are also encouraged to coordinate with the 
Commission's Office of Managing Director or the Bureau's Auctions and 
Spectrum Access Division staff if they have any questions about default 
and delinquency disclosure requirements.
    77. The Commission considers outstanding debts owed to the United 
States Government, in any amount, to be a serious matter. The 
Commission adopted rules, including a provision referred to as the red 
light rule, that implement the Commission's obligations under the Debt 
Collection Improvement Act of 1996, which governs the collection of 
claims owed to the United States. Under the red light rule, the 
Commission will not process applications and other requests for 
benefits filed by parties that have outstanding debts owed to the 
Commission. In the same rulemaking order, the Commission explicitly 
declared, however, that the Commission's competitive bidding rules are 
not affected by the red light rule. As a consequence, the Commission's 
adoption of the red light rule does not alter the applicability of any 
of the Commission's competitive bidding rules, including the provisions 
and certifications of 47 CFR 1.2105 and 1.2106, with regard to current 
and former defaults or delinquencies.
    78. Applicants are reminded, however, that the Commission's Red 
Light Display System, which provides information regarding debts owed 
to the Commission, may not be determinative of an auction applicant's 
ability to comply with the default and delinquency disclosure 
requirements of 47 CFR 1.2105. Thus, while the red light rule 
ultimately may prevent the processing of long-form applications by 
auction winners, an auction applicant's red light status is not 
necessarily determinative of its eligibility to participate in an 
auction or of its upfront payment obligation.

[[Page 38025]]

H. Minor Modifications to Short-Form Applications

    79. Applicants are not permitted to make major modifications to 
their short-form applications (e.g., change their license selections, 
change control of the applicant, change the certifying official, or 
change their size to claim eligibility for a higher bidding credit) 
after the short-form application deadline. Thus, any change in control 
of an applicant, resulting from a merger for example, will be 
considered a major modification to the applicant's short-form 
application, which will consequently be dismissed.
    80. Applicants are, however, permitted to make minor changes to 
their short-form applications after the filing deadline. Permissible 
minor changes include, for example, deletion and addition of authorized 
bidders (to a maximum of three) and revision of addresses and telephone 
numbers of the applicants and their contact persons.

I. Maintaining Current Information in Short-Form Applications

    81. 47 CFR 1.65 requires an applicant to maintain the accuracy and 
completeness of information furnished in its pending application and to 
notify the Commission within 30 days of any substantial change that may 
be of decisional significance to that application. Changes that cause a 
loss of or reduction in eligibility for a bidding credit must be 
reported immediately. If an amendment reporting substantial changes is 
a major amendment, as defined by 47 CFR 1.2105, the major amendment 
will not be accepted and may result in the dismissal of the short-form 
application.
    82. After the short-form filing deadline, applicants may make only 
minor changes to their short-form applications. Applicants must click 
on the SUBMIT button in the FCC Auction System for the changes to be 
submitted and considered by the Commission. In addition, applicants 
must submit a letter, briefly summarizing the changes, by e-mail at the 
following address: <a href="/cdn-cgi/l/email-protection#79180c1a0d101617414f391f1a1a571e160f"><span class="__cf_email__" data-cfemail="1170647265787e7f2927517772723f767e67">[email protected]</span></a>. The e-mail summarizing the 
changes must include a subject or caption referring to Auction 86 and 
the name of the applicant. The Bureau requests that parties format any 
attachments to e-mail as Adobe[supreg] Acrobat[supreg] (pdf) or 
Microsoft[supreg] Word documents. Applicants must not submit 
application-specific material through ECFS. A party seeking to submit 
information that might reflect non-public information, such as an 
applicant's license selections, upfront payment amount or bidding 
eligibility, should consider submitting any such information along with 
a request that the filing or portions of the filing be withheld from 
public inspection until the end of the anti-collusion period.

III. Pre-Auction Procedures

A. Auction Seminar--August 5, 2009

    83. On Wednesday, August 5, 2009, the Commission will conduct a 
seminar for parties interested in participating in Auction 86 at FCC 
headquarters, located at 445 12th Street, SW., Washington, DC. The 
seminar will provide attendees with information about pre-auction 
procedures, completing short-form applications, auction conduct, the 
FCC Auction System, auction rules, and Broadband Radio Service rules. 
The seminar will also provide an opportunity for prospective bidders to 
ask questions of FCC staff concerning the auction, auction procedures, 
filing requirements, and other matters related to this auction. To 
register, see Attachment G of the Auction 86 Procedures Public Notice.

B. Short-Form Applications--Due Prior to 6 p.m. ET on August 18, 2009

    84. In order to be eligible to bid in this auction, applicants must 
first follow the procedures set forth in Attachment C of the Auction 86 
Procedures Public Notice to submit a short-form application (FCC Form 
175) electronically via the FCC Auction System. This application must 
be received at the Commission prior to 6:00 p.m. ET on August 18, 2009. 
Late applications will not be accepted.

C. Application Processing and Minor Corrections

    85. After the deadline for filing short-form applications, the 
Commission will process all timely submitted applications to determine 
which are complete, and subsequently will issue a public notice 
identifying (1) Those applications that are complete, (2) those 
applications that are rejected, and (3) those applications that are 
incomplete because of minor defects that may be corrected. The public 
notice will include the deadline for resubmitting corrected 
applications.
    86. After the August 18, 2009, short-form filing deadline, 
applicants may make only minor corrections to their applications. 
Applicants will not be permitted to make major modifications to their 
applications (e.g., change their license selections, change control of 
the applicant, change certifying official, or change their size to 
claim eligibility for a higher bidding credit).
    87. Applicants should be aware the Commission staff will 
communicate only with an applicant's contact person or certifying 
official, as designated on the applicant's short-form application, 
unless the applicant's certifying official or contact person notifies 
the Commission in writing that applicant's counsel or other 
representative is authorized to speak on its behalf. Authorizations may 
be submitted by e-mail at the following address: <a href="/cdn-cgi/l/email-protection#96f7e3f5e2fff9f8aea0d6f0f5f5b8f1f9e0"><span class="__cf_email__" data-cfemail="dabbafb9aeb3b5b4e2ec9abcb9b9f4bdb5ac">[email protected]</span></a>.

D. Upfront Payments--Due September 24, 2009

    88. In order to be eligible to bid in this auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice Form 
(FCC Form 159). After completing its short-form application, an 
applicant will have access to an electronic version of FCC Form 159 
that can be printed and sent by fax to U.S. Bank in St. Louis, 
Missouri. All upfront payments must be made as instructed in the 
Auction 86 Procedures Public Notice and must be received in the proper 
account at U.S. Bank before 6 p.m. ET on September 24, 2009.
i. Making Upfront Payments by Wire Transfer
    89. Wire transfer payments must be received by 6 p.m. ET on 
September 24, 2009. No other payment method is acceptable. To avoid 
untimely payments, applicants should discuss arrangements (including 
bank closing schedules) with their banker several days before they plan 
to make the wire transfer, and allow sufficient time for the transfer 
to be initiated and completed before the deadline.
    90. At least one hour before placing the order for the wire 
transfer (but on the same business day), applicants must fax a 
completed FCC Form 159 (Revised 2/03) to U.S. Bank at (314) 418-4232. 
On the fax cover sheet, applicants should write Wire Transfer--Auction 
Payment for Auction 86. In order to meet the Commission's upfront 
payment deadline, an applicant's payment must be credited to the 
Commission's account before the deadline. The applicant is responsible 
for obtaining confirmation from its financial institution that U.S. 
Bank has timely received its upfront payment and deposited it in the 
proper account.
    91. Please note that: (1) All payments must be made in U.S. 
dollars; (2) all payments must be made by wire transfer; (3) upfront 
payments for Auction 86 go to a lockbox number different from the 
lockboxes used in previous FCC auctions, and different from the lockbox 
number to be used for post-auction payments; and (4) failure to

[[Page 38026]]

deliver a sufficient upfront payment as instructed by the September 24, 
2009, deadline will result in dismissal of the application and 
disqualification from participation in the auction
ii. FCC Form 159
    92. A completed FCC Remittance Advice Form (FCC Form 159, Revised 
2/03) must be faxed to U.S. Bank to accompany each upfront payment. 
Proper completion of FCC Form 159 is critical to ensuring correct 
crediting of upfront payments. Detailed instructions for completion of 
FCC Form 159 are included in Attachment D of the Auction 86 Procedures 
Public Notice. An electronic pre-filled version of the FCC Form 159 is 
available after submitting the short-form application. Payors using the 
pre-filled FCC Form 159 are responsible for ensuring that all of the 
information on the form, including payment amounts, is accurate. The 
FCC Form 159 can be completed electronically, but must be filed with 
U.S. Bank by fax.
iii. Upfront Payments and Bidding Eligibility
    93. The Commission has delegated to the Bureau the authority and 
discretion to determine appropriate upfront payments for each auction. 
Upfront payments help deter frivolous or insincere bidding, and provide 
the Commission with a source of funds in the event that the bidder 
incurs liability during the auction.
    94. Applicants that are former defaulters must pay upfront payments 
50 percent greater than non-former defaulters. For purposes of this 
calculation, the applicant includes the applicant itself, its 
affiliates, its controlling interests, and affiliates of its 
controlling interests, as defined by 47 CFR 1.2110.
    95. Applicants must make upfront payments sufficient to obtain 
bidding eligibility on the licenses on which they will bid. The Bureau 
proposed, in the Auction 86 Comment Public Notice, that the amount of 
the upfront payment would determine a bidder's initial bidding 
eligibility, the maximum number of bidding units on which a bidder may 
place bids. Under the Bureau's proposal, in order to bid on a 
particular license, a qualified bidder must have selected the license 
on its short-form application and must have a current eligibility level 
that meets or exceeds the number of bidding units assigned to that 
license. At a minimum, therefore, an applicant's total upfront payment 
must be enough to establish eligibility to bid on at least one of the 
licenses selected on its short-form application, or else the applicant 
will not be eligible to participate in the auction. An applicant does 
not have to make an upfront payment to cover all licenses the applicant 
selected on its short-form application, but only enough to cover the 
maximum number of bidding units that are associated with licenses on 
which the bidder wishes to place bids and hold provisionally winning 
bids at any given time.
    96. The Bureau proposed to calculate upfront payments for Auction 
86 on a license-by-license basis using the following formula based on 
bandwidth and license area population.
    97. Several commenters addressed the proposed upfront payment 
amounts as well as minimum opening bids for this auction. These 
commenters sought a downward adjustment of the formulas used to 
calculate upfront payments and minimum opening bids. Commenters offered 
two alternatives to the upfront payment amounts and minimum opening 
bids proposed in the Auction 86 Comment Public Notice. The Commission 
received reply comments and an ex parte submission regarding the 
proposal.
    98. Upon careful consideration of the comments, reply comments, and 
ex parte submission, as well as the history of this particular service, 
the Bureau has decided to exercise its discretion to adjust upfront 
payments. In making this change, the Bureau recognizes the concerns 
expressed regarding relative incumbency of the licenses. The revised 
upfront payments are calculated on a license-by-license basis using 
formulas based on bandwidth, license area population, and the 
encumbrance data, as follows:

------------------------------------------------------------------------
                        Encumbrance                           $/MHz-pop
------------------------------------------------------------------------
0%-20%.....................................................      $0.0125
21%-50%....................................................       0.0100
51%-80%....................................................       0.0050
above 80%..................................................       0.0025
------------------------------------------------------------------------

    99. The results of the formulas are subject to the Bureaus standard 
rounding procedures and to a minimum of $5,000 per license, except for 
the licenses for BRS service areas in the Gulf of Mexico, for which the 
upfront payments will be $20,000 as originally proposed. The upfront 
payment and bidding units for each license are set forth in Attachment 
A.
    100. In calculating its upfront payment amount, an applicant should 
determine the maximum number of bidding units on which it may wish to 
be active (bid on or hold provisionally winning bids on) in any single 
round, and submit an upfront payment amount covering that number of 
bidding units. In order to make this calculation, an applicant should 
add together the upfront payments for all licenses on which it seeks to 
be active in any given round. Applicants that are former defaulters 
must calculate their upfront payment for all licenses by multiplying 
the number of bidding units on which they wish to be active by 1.5. In 
order to calculate the number of bidding units to assign to former 
defaulters, the Commission will divide the upfront payment received by 
1.5 and round the result up to the nearest bidding unit.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of 
Upfront Payments
    101. To ensure that refunds of upfront payments are processed in an 
expeditious manner, the Commission is requesting that all pertinent 
information be supplied. Applicants can provide the information 
electronically during the initial short-form application filing window 
after the form has been submitted. Applicants are reminded that 
information submitted as part of an FCC Form 175 will be available to 
the public; for that reason, wire transfer information should not be 
included in an FCC Form 175. For wire transfer instructions see Auction 
86 Procedures Public Notice at paragraph 129.

E. Auction Registration

    102. Approximately ten days before the auction, the Bureau will 
issue a public notice announcing all qualified bidders for the auction. 
Qualified bidders are those applicants with submitted short-form 
applications that are deemed complete and upfront payments that are 
sufficient to make them eligible to bid.
    103. All qualified bidders are automatically registered for the 
auction. Registration materials will be distributed prior to the 
auction by overnight mail. The mailing will be sent only to the contact 
person at the contact address listed in the short-form application and 
will include the SecurID[supreg] tokens that will be required to place 
bids, the Integrated Spectrum Auction System (ISAS) Bidder's Guide, and 
the Auction Bidder Line phone number.
    104. Qualified bidders that do not receive this registration 
mailing will not be able to submit bids. Therefore, any qualified 
bidder that has not received this mailing by noon on Wednesday, October 
21, 2009, should call (717) 338-2868. Receipt of this registration 
mailing is critical to participating in the auction, and each applicant 
is responsible for

[[Page 38027]]

ensuring it has received all of the registration material.
    105. Only a person who has been designated as an authorized bidder, 
the contact person, or the certifying official on the applicant's 
short-form application may request replacement SecurID tokens.

F. Remote Electronic Bidding

    106. The Commission will conduct this auction over the Internet, 
and telephonic bidding will be available as well. Only qualified 
bidders are permitted to bid. Each applicant should indicate its 
bidding preference--electronic or telephonic--on its short-form 
application. In either case, each authorized bidder must have its own 
SecurID[supreg] token, which the Commission will provide at no charge. 
Each applicant with one authorized bidder will be issued two 
SecurID[supreg] tokens, while applicants with two or three authorized 
bidders will be issued three tokens. For security purposes, the 
SecurID[supreg] tokens, the telephonic bidding telephone number, and 
the Integrated Spectrum Auction System (ISAS) Bidder's Guide are only 
mailed to the contact person at the contact address listed on the 
short-form application. Each SecurID[supreg] token is tailored to a 
specific auction. SecurID[supreg] tokens issued for other auctions or 
obtained from a source other than the FCC will not work for Auction 86.

G. Mock Auction--October 23, 2009

    107. All qualified bidders will be eligible to participate in a 
mock auction on Friday, October 23, 2009. The mock auction will enable 
applicants to become familiar with the FCC Auction System prior to the 
auction. Participation by all bidders is strongly recommended. Details 
will be announced by public notice.

IV. Auction Event

A. Auction Structure

i. Simultaneous Multiple Round Auction
    108. The Bureau will auction all licenses in Auction 86 using the 
Commission's standard simultaneous multi-round auction format. This 
type of auction offers every license for bid at the same time and 
consists of successive bidding rounds in which eligible bidders may 
place bids on individual licenses. A bidder may bid on, and potentially 
win, any number of licenses. Typically, bidding remains open on all 
licenses until bidding stops on every license.
ii. Information Available to Bidders Before and During the Auction
    109. In the Auction 86 Comment Public Notice, the Bureau proposed 
to withhold, until after the close of bidding, public release of (1) 
Bidders' license selections on their short-form applications (FCC Form 
175), (2) the amounts of bidders' upfront payments and bidding 
eligibility, and (3) information that may reveal the identities of 
bidders placing bids and taking other bidding-related actions.
    110. The Bureau adopts the limited information procedures proposed 
in the Auction 86 Comment Public Notice. Thus, after the conclusion of 
each round, the Bureau will disclose all relevant information about the 
bids placed and/or withdrawn except the identities of the bidders 
performing the actions and the net amounts of the bids placed or 
withdrawn. As in past auctions conducted with limited information 
procedures, the Bureau will indicate, for each license, the minimum 
acceptable bid amount for the next round and whether the license has a 
provisionally winning bid. After each round, the Bureau will also 
release, for each license, the number of bidders that placed a bid on 
the license. Furthermore, the Bureau will indicate whether any 
proactive waivers were submitted in each round, and the Bureau will 
release the stage transition percentage--the percentages of licenses 
(as measured in bidding units) on which there were new bids--for the 
round. In addition, bidders can log in to the FCC Auction System to 
see, after each round, whether their own bids are provisionally 
winning. The Bureau will provide descriptions and/or samples of 
publicly-available and bidder-specific (non-public) results files prior 
to the start of the auction.
    111. Other Issues. Information disclosure procedures established 
for this auction will not interfere with the administration of or 
compliance with the Commission's anti-collusion rule. 47 CFR Section 
1.2105(c)(1) of the Commission's rules provides that after the short-
form application filing deadline, all applicants for licenses in any of 
the same geographic license areas are prohibited from disclosing to 
each other in any manner the substance of bids or bidding strategies 
until after the down payment deadline, subject to specified exceptions.
    112. In Auction 86, the Commission will not disclose information 
regarding license selection or the amounts of bidders' upfront payments 
and bidding eligibility. As in the past, the Commission will disclose 
the other portions of applicants' short-form applications through its 
online database, and certain application-based information through 
public notices.
    113. To assist applicants in identifying other parties subject to 
the anti-collusion rule, the Bureau will notify separately each 
applicant that has filed a short-form application to participate in a 
pending auction whether applicants in Auction 86 have applied for 
licenses in any of the same geographic areas as the applicant. 
Specifically, after the Bureau conducts its initial review of 
applications to participate in Auction 86, it will send to each 
applicant in Auction 86 a letter that lists the other applicants that 
have pending short-form applications for licenses in any of the same 
geographic areas. The list will identify the other applicants by name 
but will not list their license selections. As in past auctions, 
additional information regarding other applicants that is needed to 
comply with 47 CFR 1.2105(c)--such as the identities of other 
applicants' controlling interests and entities with a greater than ten 
percent ownership interest--will be available through the publicly 
accessible online short-form application database.
    114. When completing short-form applications, applicants should 
avoid any statements or disclosures that may violate the Commission's 
anti-collusion rule, particularly in light of the Commission's 
procedures regarding the availability of certain information in Auction 
86. While applicants' license selection will not be disclosed until 
after Auction 86 closes, the Commission will disclose other portions of 
short-form applications through its online database and public notices. 
Accordingly, applicants should avoid including any information in their 
short-form applications that might convey information regarding license 
selections. For example, applicants should avoid using applicant names 
that refer to licenses being offered, referring to certain licenses or 
markets in describing bidding agreements, or including any information 
in attachments that may otherwise disclose applicants' license 
selections.
    115. If an applicant is found to have violated the Commission's 
rules or antitrust laws in connection with its participation in the 
competitive bidding process, the applicant may be subject to various 
sanctions, including forfeiture of its upfront payment, down payment, 
or full bid amount and prohibition from participating in future 
auctions.
    116. The Bureau hereby warns applicants that the direct or indirect

[[Page 38028]]

communication to other applicants or the public disclosure of non-
public information, (e.g., bid withdrawals, proactive waivers 
submitted, reductions in eligibility) could violate the Commission's 
anonymous bidding procedures and the anti-collusion rule. To the extent 
an applicant believes that such a disclosure is required by law or 
regulation, including regulations issued by the Securities and Exchange 
Commission, the Bureau strongly urges that the applicant consult with 
the Commission before making such disclosure.
iii. Eligibility and Activity Rules
    117. The Bureau will use upfront payments to determine initial 
eligibility for Auction 86. The amount of the upfront payment submitted 
by a bidder determines initial bidding eligibility, the maximum number 
of bidding units on which a bidder may be active. Each license is 
assigned a specific number of bidding units listed in Attachment A of 
the Auction 86 Procedures Public Notice. Bidding units for a given 
license do not change as prices rise during the auction. A bidder's 
upfront payment is not attributed to specific licenses. Rather, a 
bidder may place bids on any of the licenses selected on its short-form 
application as long as the total number of bidding units associated 
with those licenses does not exceed its current eligibility. 
Eligibility cannot be increased during the auction; it can only remain 
the same or decrease. Thus, in calculating its upfront payment amount, 
an applicant must determine the maximum number of bidding units it may 
wish to bid on or hold provisionally winning bids on in any single 
round, and submit an upfront payment amount covering that total number 
of bidding units. At a minimum, an applicant's upfront payment must 
cover the bidding units for at least one of the licenses it selected on 
its short-form application. The total upfront payment does not affect 
the total dollar amount a bidder may bid on any given license.
    118. In order to ensure that an auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. Bidders are required to be active on a specific 
minimum percentage of their current bidding eligibility during each 
round of the auction.
    119. A bidder's activity level in a round is the sum of the bidding 
units associated with any licenses covered by new and provisionally 
winning bids. A bidder is considered active on a license in the current 
round if it is either the provisionally winning bidder at the end of 
the previous bidding round and does not withdraw the provisionally 
winning bid in the current round, or if it submits a bid in the current 
round.
    120. The minimum required activity is expressed as a percentage of 
the bidder's current eligibility, and increases by stage as the auction 
progresses. Because these procedures have proven successful in 
maintaining the pace of previous auctions, the Commission adopts them 
for Auction 86. Failure to maintain the requisite activity level will 
result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility, possibly curtailing or 
eliminating the bidder's ability to place additional bids in the 
auction.
iv. Auction Stages
    121. In the Auction 86 Comment Public Notice, the Bureau proposed 
to conduct the auction in two stages and employ an activity rule. Under 
the Bureau's proposal a bidder desiring to maintain its current bidding 
eligibility would be required to be active on licenses representing at 
least 90 percent of its current bidding eligibility, during each round 
of Stage One, and at least 98 percent of its current bidding 
eligibility in Stage Two. The Commission received no comments on this 
proposal.
    122. The Bureau has the discretion to further alter the activity 
requirements before and/or during the auction as circumstances warrant, 
and also has other mechanisms by which it may influence the speed of an 
auction. The Bureau finds that two stages for an activity requirement 
adequately balances the desire to conclude the auction quickly with 
giving sufficient time for bidders to consider the status of the 
bidding and to place bids. Therefore, the Bureau adopts the two stages.
    123. Stage One: During the first stage of the auction, a bidder 
desiring to maintain its current bidding eligibility will be required 
to be active on licenses representing at least 90 percent of its 
current bidding eligibility in each bidding round. Failure to maintain 
the required activity level will result in the use of an activity rule 
waiver or, if the bidder has no activity rule waivers remaining, a 
reduction in the bidder's bidding eligibility in the next round. During 
Stage One, reduced eligibility for the next round will be calculated by 
multiplying the bidder's current round activity (the sum of bidding 
units of the bidder's provisionally winning bids and bids during the 
current round) by ten-ninths (10/9).
    124. Stage Two: During the second stage of the auction, a bidder 
desiring to maintain its current bidding eligibility is required to be 
active on 98 percent of its current bidding eligibility. Failure to 
maintain the required activity level will result in the use of an 
activity rule waiver or, if the bidder has no activity rule waivers 
remaining, a reduction in the bidder's bidding eligibility in the next 
round. During Stage Two, reduced eligibility for the next round will be 
calculated by multiplying the bidder's current round activity (the sum 
of bidding units of the bidder's provisionally winning bids and bids 
during the current round) by fifty-fortyninths (50/49).

    Caution: Since activity requirements increase in Stage Two, 
bidders must carefully check their activity during the first round 
following a stage transition to ensure that they are meeting the 
increased activity requirement. This is especially critical for 
bidders that have provisionally winning bids and do not plan to 
submit new bids. In past auctions, some bidders have inadvertently 
lost bidding eligibility or used an activity rule waiver because 
they did not re-verify their activity status at stage transitions. 
Bidders may check their activity against the required activity level 
by logging into the FCC Auction System.

    125. Because the foregoing procedures have proven successful in 
maintaining the proper pace in previous auctions, the Bureau adopts 
them for Auction 86.
v. Stage Transitions
    126. In the Auction 86 Comment Public Notice, the Bureau proposed 
that it would advance the auction to the next stage (i.e., from Stage 
One to Stage Two) after considering a variety of measures of auction 
activity, including, but not limited to, the percentages of licenses 
(as measured in bidding units) on which there are new bids, the number 
of new bids, and the increase in revenue. The Bureau further proposed 
that it would retain the discretion to change the activity requirements 
during the auction. For example, the Bureau could decide not to 
transition to Stage Two if it believes the auction is progressing 
satisfactorily under the Stage One activity requirement, or to 
transition to Stage Two with an activity requirement that is higher or 
lower than the 98 percent. The Bureau proposed to alert bidders of 
stage advancements by announcement during the auction. The Bureau 
received no comments on this issue.
    127. The Bureau adopts its proposal for stage transitions. Thus, 
the auction will start in Stage One. The Bureau will regulate the pace 
of the auction by announcement. The Bureau retains the

[[Page 38029]]

discretion to transition the auction to Stage Two, to add an additional 
stage with a higher activity requirement, not to transition to Stage 
Two, and to transition to Stage Two with an activity requirement that 
is higher or lower than 98 percent. This determination will be based on 
a variety of measures of auction activity, including, but not limited 
to, the number of new bids and the percentages of licenses (as measured 
in bidding units) on which there are new bids.
vi. Activity Rule Waivers
    128. In the Auction 86 Comment Public Notice, the Bureau proposed 
that each bidder in the auction be provided with three activity rule 
waivers. The Bureau received no comments on this issue.
    129. Therefore, the Bureau adopts its proposal to provide bidders 
with three activity rule waivers.
vii. Auction Stopping Rules
    130. For Auction 86, the Bureau proposed to employ a simultaneous 
stopping rule approach. A simultaneous stopping rule means that all 
licenses remain available for bidding until bidding closes 
simultaneously on all licenses. More specifically, bidding will close 
simultaneously on all licenses after the first round in which no bidder 
submits any new bids, applies a proactive waiver, or withdraws any 
provisionally winning bids.
    131. The Bureau also sought comment on alternative versions of the 
simultaneous stopping rule for Auction 86:
    Option 1. The auction would close for all licenses after the first 
round in which no bidder applies a waiver, withdraws a provisionally 
winning bid, or places any new bids on any license on which it is not 
the provisionally winning bidder. Thus, absent any other bidding 
activity, a bidder placing a new bid on a license for which it is the 
provisionally winning bidder would not keep the auction open under this 
modified stopping rule.
    Option 2. The auction would end after a specified number of 
additional rounds. If the Bureau invokes this special stopping rule, it 
will accept bids in the specified final round(s) and the auction will 
close.
    Option 3. The auction would remain open even if no bidder places 
any new bids, applies a waiver, or withdraws any provisionally winning 
bids. In this event, the activity rule will apply as usual, and a 
bidder with insufficient activity will either lose bidding eligibility 
or use a waiver.
    132. The Bureau proposed to exercise these options only in 
circumstances such as where the auction is proceeding unusually slowly 
or quickly, where there is minimal overall bidding activity, or where 
it appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. The Bureau noted that before 
exercising these options, it is likely to attempt to change the pace of 
the auction by, for example, changing the number of bidding rounds per 
day and/or changing minimum acceptable bids. The Bureau proposed to 
retain the discretion to exercise any of these options with or without 
prior announcement during the auction. The Bureau received no comment 
on these proposals, and the Bureau adopts them for Auction 86.
viii. Auction Delay, Suspension, or Cancellation
    133. In the Auction 86 Comment Public Notice, the Bureau proposed 
that, by public notice or by announcement during the auction, it may 
delay, suspend, or cancel the auction in the event of natural disaster, 
technical obstacle, administrative or weather necessity, evidence of an 
auction security breach or unlawful bidding activity, or for any other 
reason that affects the fair and efficient conduct of competitive 
bidding. The Bureau received no comment on this issue. The Bureau 
adopts its proposed rules regarding auction delay, suspension or 
cancellation.

B. Bidding Procedures

i. Round Structure
    134. The initial schedule of bidding rounds will be announced in 
the public notice listing the qualified bidders, which is released 
approximately 10 days before the start of the auction. Each bidding 
round is followed by the release of round results. Multiple bidding 
rounds may be conducted in a given day. Details regarding round results 
formats and locations will also be included in the qualified bidders 
public notice.
    135. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds, the amount of time between rounds, or the number of 
rounds per day, depending upon bidding activity and other factors.
ii. Reserve Price and Minimum Opening Bids
    136. Section 309(j) of the Communications Act of 1934, as amended, 
calls upon the Commission to prescribe methods by which a reasonable 
reserve price will be required or a minimum opening bid established 
when applications for FCC licenses are subject to auction (i.e., 
because they are mutually exclusive), unless the Commission determines 
that a reserve price or minimum opening bid is not in the public 
interest.
    137. In the Auction 86 Comment Public Notice, the Bureau did not 
propose to establish a separate reserve price for the licenses to be 
offered in Auction 86. The Bureau, however, did propose to establish 
minimum opening bids for each license, reasoning that a minimum opening 
bid, which has been used on other auctions, is an effective bidding 
tool for accelerating the competitive bidding process. Specifically, 
for Auction 86, the Bureau proposed to calculate minimum opening bid 
amounts on a license-by-license basis using a formula based on 
bandwidth and license area population as follows:

$0.01 * MHz * BTA population with a minimum of $20,000 per license

    138. The Bureau sought comment on this proposal and, in the 
alternative, on whether, consistent with Section 309(j), the public 
interest would be served by having no minimum opening bids.
    139. Several commenters sought a downward adjustment in the formula 
for calculating minimum opening bids (as well as the formula for 
upfront payments). Commenters offer two alternatives to the upfront 
payment amounts and minimum opening bids proposed in the Auction 86 
Comment Public Notice.
    140. In the Auction 86 Comment Public Notice, the Bureau noted the 
presence of pre-existing BRS site-based incumbent licenses within some 
of the geographic areas available in Auction 86. In its discussion of 
the proposed minimum opening bid amounts, the Bureau noted, it had not 
attempted to adjust minimum opening bid amounts for licenses based on 
precise levels of incumbency within particular geographic areas, and 
have instead proposed a formula intended to reflect overall incumbency 
levels within the BRS service areas being offered.
    141. Upon careful consideration of the comments, reply comments, 
and ex parte submission, as well as the history of this particular 
service, the Bureau has decided to exercise its discretion to adjust 
minimum opening bids. In

[[Page 38030]]

making this change, the Bureau recognizes the concerns expressed 
regarding relative incumbency of the licenses. The revised minimum 
opening bids are calculated on a license-by-license basis using 
formulas based on bandwidth, license area population, and the 
encumbrance data submitted in the ex parte filing as follows:

------------------------------------------------------------------------
                        Encumbrance                           $/MHz-pop
------------------------------------------------------------------------
0%-20%.....................................................       0.0125
21%-50%....................................................       0.0100
51%-80%....................................................       0.0050
above 80%..................................................       0.0025
------------------------------------------------------------------------

    142. The results of the formulas are subject to the Bureaus 
standard rounding procedures and to a minimum of $5,000 per license, 
except for the licenses for BRS service areas in the Gulf of Mexico, 
for which the minimum opening bids will be $20,000 as originally 
proposed. The specific minimum opening bid amounts for each license 
available in Auction 86 calculated pursuant to the procedure described 
above are set forth in Attachment A of the Auction 86 Procedures Public 
Notice.
iii. Bid Amounts
    143. In the Auction 86 Comment Public Notice, the Bureau proposed 
that in each round, eligible bidders be able to place a bid on a given 
license using one or more pre-defined bid amounts. Under the proposal, 
the FCC Auction System interface will list the acceptable bid amounts 
for each license. The Commission received no comment on this issue. 
Based on the Commission's experience in prior auctions, we adopt the 
proposals for Auction 86.
a. Minimum Acceptable Bids
    144. Under the Bureaus proposed procedures, the first of the 
acceptable bid amounts is called the minimum acceptable bid amount. The 
minimum acceptable bid amount for a license will be equal to its 
minimum opening bid amount until there is a provisionally winning bid 
on the license. After there is a provisionally winning bid for a 
license, the minimum acceptable bid amount for that license will be 
equal to the amount of the provisionally winning bid plus a percentage 
of that bid amount calculated using the formula. In general, the 
percentage will be higher for a license receiving many bids than for a 
license receiving few bids. In the case of a license for which the 
provisionally winning bid has been withdrawn, the minimum acceptable 
bid amount will equal the second highest bid received for the license.
    145. The percentage of the provisionally winning bid used to 
establish the minimum acceptable bid amount is calculated at the end of 
each round, based on an activity index. The activity index is a 
weighted average of (a) the number of bidders placing a bid on the 
license, and (b) the activity index from the prior round. Specifically, 
the activity index is equal to a weighting factor times the number of 
bidders placing a bid on the license in the most recent bidding round 
plus one minus the weighting factor times the activity index from the 
prior round. The additional percentage is determined as one plus the 
activity index times a minimum percentage amount, with the result not 
to exceed a maximum. The additional percentage is then multiplied by 
the provisionally winning bid amount to obtain the minimum acceptable 
bid for the next round.
    146. The Bureau proposed initially to set the weighting factor at 
0.5, the minimum percentage (floor) at 0.1 (10%), and the maximum 
percentage (ceiling) at 0.3 (30%). At these initial settings, the 
minimum acceptable bid for a license will generally be between ten 
percent and thirty percent higher than the provisionally winning bid, 
depending upon the bidding activity for the license.
b. Additional Bid Amounts
    147. Any additional bid amounts are calculated using the minimum 
acceptable bid amount and a bid increment percentage--more 
specifically, by multiplying the minimum acceptable bid by one plus 
successively higher multiples of the bid increment percentage. If, for 
example, the bid increment percentage is five percent, the calculation 
of the first additional acceptable bid amount is (minimum acceptable 
bid amount) * (1 + 0.05), or (minimum acceptable bid amount) * 1.05; 
the second additional acceptable bid amount equals the minimum 
acceptable bid amount times one plus two times the bid increment 
percentage, or (minimum acceptable bid amount) * 1.1, etc. The Bureau 
will round the results of these calculations and the minimum acceptable 
bid calculations using the Bureau's standard rounding procedures.
    148. For Auction 86, the Bureau proposed to set the bid increment 
percentage at 0.05, so that any additional bid amounts would increase 
by approximately 5 percent of the minimum acceptable bid. The Bureau 
received no comments on this proposal. Therefore, the Bureau adopts its 
proposal to begin the auction with a bid increment percentage of 0.05.
    149. The Bureau also sought comment on whether we should start 
Auction 86 with eight additional bid amounts (for a total of nine bid 
amounts) or with fewer or no additional bid amounts per license. The 
Bureau received no comments on this proposal. The Bureau adopts its 
proposal, and Auction 86 will begin with eight additional bid amounts 
per license.
    150. The Bureau also sought comment on circumstances under which 
the Bureau should cap (a) the amount by which a minimum acceptable bid 
for a license may increase compared with the corresponding 
provisionally winning bid, and (b) the amount by which an additional 
bid amount may increase compared with the immediately preceding 
acceptable bid amount. No commenters addressed this question.
    151. The Bureau will start the auction without a cap on the dollar 
amount by which minimum acceptable bids and additional bid amounts may 
increase. The Bureau retains the discretion to impose a cap on bid 
amounts.
    152. The Bureau retains the discretion to change the minimum 
acceptable bid amounts, the additional bid amounts, the cap on bid 
amounts, the number of acceptable bid amounts, and the parameters of 
the formulas used to calculate minimum acceptable bid amounts and 
additional bid amounts if it determines that circumstances so dictate. 
Further, the Bureau retains the discretion to do so on a license-by-
license basis.
iv. Provisionally Winning Bids
    153. At the end of each bidding round, a provisionally winning bid 
will be determined based on the highest bid amount received for each 
license. A provisionally winning bid will remain the provisionally 
winning bid until there is a higher bid on the same license at the 
close of a subsequent round. Provisionally winning bids at the end of 
the auction become the winning bids. Bidders are reminded that 
provisionally winning bids count toward activity for purposes of the 
activity rule.
    154. In the Auction 86 Comment Public Notice, the Bureau proposed 
to use a random number generator to select a single provisionally 
winning bid in the event of identical high bid amounts being submitted 
on a license in a given round (i.e., tied bids). No comments were 
received on this proposal. Hence, the Bureau adopts the proposal.
v. Bidding
    155. All bidding will take place remotely either through the FCC 
Auction System or by telephonic bidding. There will be no on-site

[[Page 38031]]

bidding during Auction 86. Please note that telephonic bid assistants 
are required to use a script when entering bids placed by telephone. 
Telephonic bidders are therefore reminded to allow sufficient time to 
bid by placing their calls well in advance of the close of a round. The 
length of a call to place a telephonic bid may vary; please allow a 
minimum of ten minutes.
    156. A bidder's ability to bid on specific licenses is determined 
by two factors: (1) the licenses selected on the bidder's FCC Form 175 
and (2) the bidder's eligibility. The bid submission screens will allow 
bidders to submit bids on only those licenses the bidder selected on 
its FCC Form 175.
    157. In order to access the bidding function of the FCC Auction 
System, bidders must be logged in during the bidding round using the 
passcode generated by the SecurID[supreg] token and a personal 
identification number created by the bidder. Bidders are strongly 
encouraged to print a round summary for each round after they have 
completed all of their activity for that round.
    158. In each round, eligible bidders will be able to place bids on 
a given license in one or more pre-defined bid amounts. For each 
license, the FCC Auction System will list the acceptable bid amounts in 
a drop-down box. Bidders use the drop-down box to select from among the 
acceptable bid amounts. The FCC Auction System also includes an upload 
function that allows bidders to upload text files containing bid 
information.
    159. Until a bid has been placed on a license, the minimum 
acceptable bid amount for that license will be equal to its minimum 
opening bid amount. Once there are bids on a license, minimum 
acceptable bids for a license will be determined.
    160. During a round, an eligible bidder may submit bids for as many 
licenses as it wishes (providing that it is eligible to bid), remove 
bids placed in the current bidding round, withdraw provisionally 
winning bids from previous rounds, or permanently reduce eligibility. 
If a bidder submits multiple bids for the same license in the same 
round--multiple bids on the exact same license, the system takes the 
last bid entered as that bidder's bid for the round. Bidders should 
note that the bidding units associated with licenses for which the 
bidder has removed or withdrawn its bid do not count towards the 
bidder's current activity.
    161. Finally, bidders are cautioned to select their bid amounts 
carefully because, as explained below, bidders that withdraw a 
provisionally winning bid from a previous round, even if the bid was 
mistakenly or erroneously made, are subject to bid withdrawal payments.
vi. Bid Removal and Bid Withdrawal
    162. In the Auction 86 Comment Public Notice, the Commission 
proposed bid removal and bid withdrawal procedures. The Bureau sought 
comment on permitting a bidder to remove a bid before the close of the 
round in which the bid was placed. With respect to bid withdrawals, the 
Commission proposed limiting each bidder to withdrawals of 
provisionally winning bids on licenses in no more than one round during 
the course of the auction. The round in which withdrawals are used 
would be at each bidder's discretion.
    163. The Bureau received no comments on this issue. Therefore, the 
Bureau adopts its proposal.
    164. Bid Removal. Before the close of a bidding round, a bidder has 
the option of removing any bids placed in that round. By using the 
remove bids function in the FCC Auction System, a bidder may 
effectively unsubmit any bid placed within that round. A bidder 
removing a bid placed in the same round is not subject to withdrawal 
payments. Removing a bid will affect a bidder's activity for the round 
in which it is removed, i.e., a bid that is removed does not count 
toward bidding activity.
    165. Bid Withdrawal. Once a round closes, a bidder may no longer 
remove a bid. However, in a later round, a bidder may withdraw 
provisionally winning bids from previous rounds for licenses using the 
withdraw bids function in the FCC Auction System. A provisionally 
winning bidder that withdraws its provisionally winning bid from a 
previous round during the auction is subject to the bid withdrawal 
payments specified in Section 1.2104(g). Once a withdrawal is submitted 
during a round, that withdrawal cannot be unsubmitted even if the round 
has not yet ended.
    166. If a provisionally winning bid is withdrawn, the minimum 
acceptable bid amount will equal the amount of the second highest bid 
received for the license, which may be less than, or in the case of 
tied bids, equal to, the amount of the withdrawn bid. The Commission 
will serve as a placeholder provisionally winning bidder on the license 
until a new bid is submitted on that license.
    167. These procedures will permit bidder flexibility during the 
auction, and therefore the Bureau adopts them for Auction 86.
    168. Calculation of Bid Withdrawal Payment. Generally, the 
Commission imposes payments on bidders that withdraw high bids during 
the course of an auction. If a bidder withdraws its bid and there is no 
higher bid in the same or subsequent auction(s), the bidder that 
withdrew its bid is responsible for the difference between its 
withdrawn bid and the winning bid in the same or subsequent auction(s). 
If there are multiple bid withdrawals on a single license and no 
subsequent higher bid is placed and/or the license is not won in the 
same auction, the payment for each bid withdrawal will be calculated 
based on the sequence of bid withdrawals and the amounts withdrawn. No 
withdrawal payment will be assessed for a withdrawn bid if either the 
subsequent winning bid or any subsequent intervening withdrawn bid, in 
either the same or subsequent auction(s), equals or exceeds that 
withdrawn bid. Thus, a bidder that withdraws a bid will not be 
responsible for any final withdrawal payment if there is a subsequent 
higher bid in the same or subsequent auction(s).
    169. 47 CFR 1.2104(g)(1) of the rules sets forth the payment 
obligations of a bidder that withdraws a provisionally winning bid on a 
license during the course of an auction, and provides for the 
assessment of interim bid withdrawal payments. In the Auction 86 
Comment Public Notice, the Bureau proposed to establish the percentage 
at 15% for Auction 86 and sought comment on the proposal.
    170. The Bureau received no comments on this issue and adopts its 
proposal. The Commission will assess an interim withdrawal payment 
equal to 15% of the amount of the withdrawn bids. The 15% interim 
payment will be applied toward any final bid withdrawal payment that 
will be assessed after subsequent auction of the license. Assessing an 
interim bid withdrawal payment ensures that the Commission receives a 
minimal withdrawal payment pending assessment of any final withdrawal 
payment. Section 1.2104(g) provides specific examples showing 
application of the bid withdrawal payment rule.
vii. Round Results
    171. Limited information about the results of a round will be made 
public after the conclusion of the round. Specifically, after a round 
closes, the Bureau will make available for each license, its current 
provisionally winning bid amount, the minimum acceptable bid amount for 
the following round, the amounts of all bids placed on the license 
during the round, and

[[Page 38032]]

whether the license is FCC held. The system will also provide an entire 
license history detailing all activity that has taken place on a 
license with the ability to sort by round number. The reports will be 
publicly accessible. Moreover, after the auction, the Bureau will make 
available complete reports of all bids placed during each round of the 
auction, including bidder identities.
viii. Auction Announcements
    172. The Commission will use auction announcements to announce 
items such as schedule changes and stage transitions. All auction 
announcements will be available by clicking a link in the FCC Auction 
System.

V. Post-Auction Procedures

    173. Shortly after bidding has ended, the Commission will issue a 
public notice declaring the auction closed, identifying the winning 
bidders, and establishing the deadlines for submitting down payments, 
long-form applications, final payments, and ownership disclosure 
information reports.

A. Down Payments

    174. Within ten business days after release of the auction closing 
notice, each winning bidder must submit sufficient funds (in addition 
to its upfront payment) to bring its total amount of money on deposit 
with the Commission for Auction 86 to 20 percent of the net amount of 
its winning bids (gross bids less any applicable entrepreneur, small 
business or very small business bidding credits).

B. Final Payments

    175. Each winning bidder will be required to submit the balance of 
the net amount of its winning bids within 10 business days after the 
applicable deadline for submitting down payments.

C. Long-Form Application (FCC Form 601)

    176. Within ten business days after release of the auction closing 
notice, winning bidders must electronically submit a properly completed 
long-form application (FCC Form 601) for the license(s) they won 
through Auction 86. Winning bidders claiming eligibility for a small 
business, very small business, or entrepreneur bidding credit must 
demonstrate their eligibility for the bidding credit. Further filing 
instructions will be provided to winning bidders in the auction closing 
notice.
    177. Winning bidders organized as bidding consortia must comply 
with the long-form application procedures established in the CSEA/Part 
1 Report and Order 71 FR 6992, February 10, 2006. Specifically, each 
member (or group of members) of a winning consortium seeking separate 
licenses will be required to file a separate long-form application for 
its respective license(s). If the license is to be partitioned or 
disaggregated, the member (or group) filing the long-form application 
must provide the relevant partitioning or disaggregation agreement in 
its long-form application. In addition, if two or more consortium 
members wish to be licensed together, they must first form a legal 
business entity, and any such entity must meet the applicable 
designated entity criteria.

D. Ownership Disclosure Information Report (FCC Form 602)

    178. Within ten business days after release of the auction closing 
notice, each winning bidder must also comply with the ownership 
reporting requirements in 47 CFR 1.913, 1.919, and 1.2112 of the 
Commission's rules by submitting an ownership disclosure information 
report (FCC Form 602) with its long-form application.
    179. If an applicant already has a complete and accurate FCC Form 
602 on file in ULS, it is not necessary to file a new report, but 
applicants must verify that the information on file with the Commission 
is complete and accurate. If the applicant does not have an FCC Form 
602 on file, or if it is not complete and accurate, the applicant must 
submit one.
    180. When an applicant submits a short-form application, ULS 
automatically creates an ownership record. This record is not an FCC 
Form 602, but may be used to pre-fill the FCC Form 602 with the 
ownership information submitted on the applicant's short-form 
application. Applicants must review the pre-filled information and 
confirm that it is complete and accurate as of the filing date of the 
long-form application before certifying and submitting the FCC Form 
602. Further instructions will be provided to winning bidders in the 
auction closing notice.

E. Tribal Lands Bidding Credit

    181. A winning bidder that intends to use its license(s) to deploy 
facilities and provide services to federally recognized tribal lands 
that are unserved by any telecommunications carrier or that have a 
wireline penetration rate equal to or below 85 percent is eligible to 
receive a tribal lands bidding credit as set forth in 47 CFR 1.2107 and 
1.2110(f). A tribal lands bidding credit is in addition to, and 
separate from, any other bidding credit for which a winning bidder may 
qualify.
    182. Unlike other bidding credits that are requested prior to the 
auction, a winning bidder applies for the tribal lands bidding credit 
after winning the auction when it files its long-form application (FCC 
Form 601). When initially filing the long-form application, the winning 
bidder will be required to advise the Commission whether it intends to 
seek a tribal lands bidding credit, for each license won in the 
auction, by checking the designated box(es). After stating its intent 
to seek a tribal lands bidding credit, the applicant will have 180 days 
from the close of the long-form filing window to amend its application 
to select the specific tribal lands to be served and provide the 
required tribal government certifications. Licensees receiving a tribal 
lands bidding credit are subject to performance criteria as set forth 
in 47 CFR 1.2110(f)(3)(vii).

F. Default and Disqualification

    183. Any winning bidder that defaults or is disqualified after the 
close of the auction (i.e., fails to remit the required down payment 
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise 
disqualified) will be subject to the payments described in 47 CFR 
1.2104(g)(2). The payments include both a deficiency payment, equal to 
the difference between the amount of the bidder's bid and the amount of 
the winning bid the next time a license covering the same spectrum is 
won in an auction, plus an additional payment equal to a percentage of 
the defaulter's bid or of the subsequent winning bid, whichever is 
less.
    184. The percentage of the applicable bid to be assessed as an 
additional payment for defaults in a particular auction is established 
in advance of the auction. Accordingly, in the Auction 86 Comment 
Public Notice, the Bureau proposed to set the additional default 
payment for this auction at fifteen percent of the applicable bid. The 
Bureau received no comments on this proposal and therefore adopts the 
proposal.
    185. Finally, in the event of a default, the Commission may re-
auction the license or offer it to the next highest bidder (in 
descending order) at its final bid amount. In addition, if a default or 
disqualification involves gross misconduct, misrepresentation, or bad 
faith by an applicant, the Commission may declare the applicant and its 
principals ineligible to bid in future auctions, and may take any other 
action

[[Page 38033]]

that it deems necessary, including institution of proceedings to revoke 
any existing licenses held by the applicant.

G. Refund of Remaining Upfront Payment Balance

    186. After the auction, applicants that are not winning bidders or 
are winning bidders whose upfront payment exceeded the total net amount 
of their winning bids may be entitled to a refund of some or all of 
their upfront payment. All refunds will be returned to the payer of 
record, as identified on the FCC Form 159, unless the payor submits 
written authorization instructing otherwise. Bidders should not request 
a refund of their upfront payments before the Commission releases a 
public notice declaring the auction closed, identifying the winning 
bidders, and establishing the deadlines for submitting down payments, 
long-form applications, and final payments.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E9-18198 Filed 7-29-09; 8:45 am]
BILLING CODE 6712-01-P


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