[Federal Register Volume 62, Number 206 (Friday, October 24, 1997)]
[Proposed Rules]
[Pages 55375-55380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28222]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 24

[WT Docket No. 97-82; FCC 97-342]


Installment Payment Financing for Personal Communications 
Services (PCS) Licensees

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this Further Notice of Proposed Rule Making the Commission 
proposes auction rules and procedures for the reauction of licenses 
surrendered to the Commission pursuant to the Commission's decision in 
the Second Report and Order in Docket 97-82, FCC 97-342 (released 
October 16, 1997). These proposed rules are necessary to ensure that 
any licenses surrendered to the Commission can be awarded to parties 
who are capable of providing service to the public as rapidly as 
possible. The intended effect of this action is to seek comment on 
proposed rules and procedures for the reauction of all surrendered C 
block licenses.

DATES: Comments are due on or before November 13, 1997. Reply comments 
are due on or before November 24, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W., 
Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Mark Bollinger, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, at (202) 418-
0660.

SUPPLEMENTARY INFORMATION: This Further Notice of Proposed Rule Making 
in WT Docket No. 97-82, adopted on September 25, 1997, and released on 
October 16, 1997, is available for inspection and copying during normal 
business hours in the FCC Reference Center, Room 239, 1919 M Street, 
N.W., Washington, D.C. 20554. The complete text may be purchased from 
the Commission's copy contractor, International Transcription Service, 
Inc., 1231 20th Street, N.W., Washington, D.C. 20036, (202) 857-3800. 
The complete Further Notice of Proposed Rule Making also is available 
on the Commission's Internet home page (http://www.fcc.gov).

SUMMARY OF ACTION:

I. Background

    1. On September 25, 1997, the Federal Communications Commission 
(Commission) adopted a Further Notice of Proposed Rule Making seeking 
comment on proposed changes to its C block rules to govern the 
reauction of any licenses or spectrum surrendered pursuant to the 
provisions adopted in the Second Report and Order. See Amendment of the 
Commission's Rules Regarding Installment Payment Financing for Personal 
Communications Services (PCS) Licensees, Second Report and Order, WT 
Docket No. 97-82, FCC 97-342 (released October 16, 1997) (``Second 
Report and Order'').

II. Further Notice of Proposed Rule Making

    2. In the Further Notice of Proposed Rule Making, the Commission 
proposes to reauction all licenses and spectrum surrendered to the 
Commission under the Second Report and Order. The Commission believes 
that a reauction of licenses surrendered to the Commission will assure 
rapid provision of service to the public. A reauction also will ensure 
that these licenses are available to all applicants in a rapid and fair 
fashion. A simultaneous reauction of all the licenses turned in to the 
Commission will benefit all bidders because they will be able to bid 
for a number of licenses in a single reauction, instead of a series of 
piecemeal auctions after defaults and revocations, in which 
opportunities for aggregation might be less favorable.
A. Licenses to be Reauctioned
    3. The Commission proposes that the reauction include the following 
licenses: (1) All licenses representing the disaggregated spectrum 
surrendered to the Commission under the disaggregation option; (2) all 
licenses surrendered to the Commission on or before January 15, 1998, 
by incumbent licensees who choose to take advantage of the Commission's 
prepayment or amnesty options; and (3) all PCS C block licenses 
currently held by the Commission as a result of previous defaults. By 
including all available licenses in the reauction, the Commission can 
efficiently and fairly speed service to the public. In addition, 
offering all available licenses will allow for the most efficient 
aggregation of licenses. The Commission seeks comment on this proposal.
B. Eligibility for Participation
    4. As the Commission stated in the Second Report and Order, all 
entrepreneurs, all entities that applied for the original C block 
auction, and all current C block licensees with exceptions, are 
eligible to bid in the reauction. The Commission seeks comment on 
whether it should restrict participation in the reauction to entities 
that have not defaulted on any FCC payments. See 47 U.S.C. 309(j)(5). 
Should the Commission presume that an entity's prior default on 
payments for an FCC license or authorization makes that entity not 
financially or otherwise fit to acquire a reauctioned C block license? 
Alternatively, the Commission could review financial qualifications 
through several other means. For instance, the Commission could allow 
such entity to participate in an auction, but if the applicant is a 
winning bidder, set for expedited hearing the financial qualifications 
of the bidder, and allow the applicant to rebut a presumption that it 
is not financially qualified. See 47 CFR 24.832(e), 1.2108(d)(3). 
Another alternative would be to request that the entity submit more 
detailed financial information at the application stage, or require 
that the entity submit a higher upfront payment amount (e.g., a 50% 
upfront payment requirement) to participate in the reauction. With 
regard to C block licensees who elect the disaggregation, amnesty, or 
prepayment options adopted in the Second Report and Order, the 
Commission observes that by making such election and related payments 
they are not in default on their C block licenses and, thus, would not 
be restricted from participation in the reauction (except as otherwise 
set forth in the Second Report and Order).
C. Reauction Procedures
    5. The Commission proposes below auction design and application 
procedures for the reauction of C block licenses.
1. Competitive Bidding Design
    6. The Commission proposes that all licenses and spectrum 
surrendered be awarded by means of a simultaneous multiple-round 
electronic auction. The Commission bases this proposal on its desire to 
quickly auction available licenses and thereby to promote the most 
efficient assignment of the spectrum. Consistent with the Commission's 
normal practice, the specific procedural requirements of the auction 
would be set out by public notice prior to the auction. In general,

[[Page 55376]]

the Commission has indicated that the auction procedures chosen for 
each service should be those that will best promote the policy 
objectives identified by Congress. The Commission further concluded in 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding, Second Report and Order, 59 FR 22980 (May 4, 1994) 
(``Competitive Bidding Second Report and Order'') that in most cases 
the goals set forth in Section 309(j) will be best achieved by 
designing auctions that award authorizations to the parties that value 
them most highly. As the Commission explained, such parties are most 
likely to deploy new technologies and services rapidly, and to promote 
the development of competition for the provision of those and other 
services.
    7. Also, multiple-round bidding during the auction will provide 
more information to bidders about the value of licenses than single 
round bidding. With better information, bidders have less incentive to 
shade their bids downward in order to avoid the ``winner's curse,'' 
that is, the tendency for the winner to be the bidder who most 
overestimates the value of the item being auctioned. Finally, multiple-
round bidding is likely to be fairer than single-round bidding. Every 
bidder has the opportunity to win if it is willing to pay the most for 
it. Thus, the Commission tentatively concludes that multiple-round 
bidding would be the best method of auctioning all available licenses 
and the Commission seeks comment on this tentative conclusion.
    8. The Commission also tentatively concludes that all surrendered C 
block licenses should be awarded in a single simultaneous multiple-
round auction. A single simultaneous auction will facilitate any 
aggregation strategies that bidders may have, and it would provide the 
most information to bidders about license values at a time that they 
can best put that information to use. The Commission seeks comment on 
this tentative conclusion.
    9. Finally, if the Commission adopts simultaneous multiple-round 
bidding as its method of auctioning all available licenses, the 
Commission tentatively concludes that bidding should be allowed only by 
electronic means, rather than by telephone. Given the Commission's 
desire to conduct the reauction quickly, as well as recent improvements 
in the Commission's electronic bidding software, the Commission 
tentatively concludes that telephonic bidding should be permitted only 
in exceptional circumstances, to be determined by the Wireless 
Telecommunications Bureau (``Bureau'') in each instance.
2. Bidding Procedures
    10. Subject to the exceptions discussed below, which are designed 
to speed the reauction process, the Commission tentatively concludes 
that the reauction should be conducted in conformity with the general 
competitive bidding rules set forth in part 1, subpart Q of the 
Commission's rules, 47 CFR part 1, subpart Q, as revised (the 
Commission initiated a proceeding last February to revise its part 1 
rules; See Amendment of Part 1 of the Commission's Rules--Competitive 
Bidding Proceeding, Order, Memorandum Opinion and Order and Notice of 
Proposed Rule Making, WT Docket No. 97-82, 62 FR 13540 (March 21, 1997) 
(``Part 1 Proceeding''), and substantially consistent with the auctions 
that have been employed in other wireless services. The Commission also 
proposes to use its part 24 rules, 47 CFR part 24, applicable to the C 
block to the extent that such rules do not conflict with the 
Commission's part 1 rules or rules specifically adopted in the Second 
Report and Order for the reauction of C block licenses. Specifically, 
except as set forth herein, the Commission proposes to apply the part 1 
rules regarding competitive bidding mechanisms (47 CFR Sec. 1.2104); 
bidding application and certification procedures and prohibition of 
collusion (47 CFR Sec. 1.2105); submission of upfront payment, down 
payment and filing of long-form applications (47 CFR Secs. 1.2106, 
1.2107); procedures for filing long form applications (47 CFR 
Sec. 1.2108); and procedures regarding license grant, denial and 
default (47 CFR Sec. 1.2109). The Commission seeks comment on this 
proposal.
    11. Activity Rules. The Commission tentatively concludes that, as 
it has done in other simultaneous multiple-round auctions, it will 
conduct the reauction in three stages. Three stages, with bidders 
required to be more active in each stage, serves to provide bidders 
with the flexibility to pursue backup strategies as the auction 
progresses. However, because the Commission believes that efficiently 
assigning these licenses for rapid service to the public and increased 
competition in the CMRS marketplace requires a swift reauction of the 
licenses, the Commission proposes to use high activity requirements in 
the reauction. In recent auctions, for example, the Commission has 
required bidders to be active on 80% of their eligible licenses in 
Stage I, 90% in Stage II, and 98% in Stage III. The Commission proposes 
to use similar activity levels in the C block reauction and, to further 
expedite the auction, to require the Bureau to use its delegated 
authority to aggressively schedule bidding rounds, quickly transition 
into the next stage of the auction when bidding activity falls, and use 
higher minimum bid increments for very active licenses. The Commission 
seeks comment on these proposals and tentative conclusions.
    12. Reserve Price, Minimum Opening Bid, and Minimum Bid Increments. 
Section 1.2104 of the Commission's rules provides that the Commission 
may establish reserve prices or suggested minimum opening bids. See 47 
CFR Sec. 1.2104. The Balanced Budget Act of 1997, Public Law 105-33, 
111 Stat. 251 (1997) (to be codified at 47 U.S.C. Sec. 309(j)(4)(F)) 
(``Balanced Budget Act'') directed the Commission to prescribe methods 
by which a reasonable reserve price will be required or a minimum 
opening bid will be established, unless the Commission determines that 
a reserve price or a minimum opening bid is not in the public interest. 
This legislative directive establishes a presumption in favor of 
reserve prices or minimum opening bids in the reauction. A minimum 
opening bid is the minimum bid price set at the beginning of the 
auction below which no bids are accepted. Customarily, an auctioneer 
has the discretion to lower a minimum opening bid in the course of the 
auction. A minimum opening bid in the C block reauction, more than a 
reserve price, will help make certain that the public is fairly 
compensated for spectrum surrendered to the Commission, expedite the 
auction and give the Commission the flexibility to make adjustments 
based on the competitiveness of the auction. The Commission seeks 
comment on this proposal. The Commission also seeks comment on the 
methodology to be used to establish minimum opening bids and what 
factors the Commission should consider in doing so. The Commission 
proposes minimum opening bids for each market equal to 10% of the 
corresponding high bid for the market in the original C block auction. 
Such an approach will scale the minimum opening bids in a way that 
reflects the relative value of the licenses. The Commission also asks 
that commenters address whether the amount of the minimum opening bid 
should be capped to ensure that bidding is not deterred on high 
valuation markets, in particular. Finally, if commenters believe that a 
minimum opening bid equal to 10% of the high bid in the original C 
block auction will result in substantial unsold licenses, or is not a

[[Page 55377]]

reasonable amount, they should explain why this is so, and comment on 
the desirability of a higher or lower minimum opening bid.
3. Procedural and Payment Issues
    13. Pre-Auction Application Procedures. Auction applicants are 
required to file a short-form application, FCC Form 175, prior to the 
start of each auction. Although the Commission previously has allowed 
both electronic and manual filing of such applications, the Commission 
tentatively concludes that it should require electronic filing of all 
short-form applications for the reauction. The Commission believes that 
electronic filing of applications would serve the best interests of 
auction participants as well as the members of the public monitoring 
the reauction. The Commission also believes that an electronic filing 
requirement will help ensure that the reauction will be completed 
within the time frame contemplated by this Further Notice of Proposed 
Rule Making. The Commission have developed user-friendly electronic 
filing software and Internet World Wide Web forms to give applicants 
the ability to easily and inexpensively file and review applications. 
This software helps applicants ensure the accuracy of their 
applications as they are filling them out, and assists them in avoiding 
errors and omissions. In addition, by shortening the time required for 
the Commission to process applications before the auction, electronic 
filing will increase the lead time available to applicants to pursue 
business plans and arrange necessary financing before the short-form 
deadline. The Commission's experiences from recent auctions show that 
bidders are confident that the electronic filing system is reliable. 
For example, in the broadband PCS D, E, and F block auction, 94% of the 
qualified bidders filed their short-form applications electronically. 
In the recently completed Wireless Communications Services (``WCS'') 
auction, all winning bidders filed their long-form applications 
electronically. In addition, the Commission notes that in the Part 1 
Proceeding, the Commission tentatively concluded that Secs. 1.2105(a) 
and 1.2107(c) of its rules should be amended to require electronic 
filing of all short-form and long-form applications. See 47 CFR 
Secs. 1.2105(a) and 1.2107(c). The Commission seeks comment on this 
tentative conclusion.
    14. Upfront Payment. The Commission's part 1 rules, 47 CFR Part 1, 
require the submission of an upfront payment as a prerequisite to 
participation in spectrum auctions. The Commission proposes to set the 
amount of the upfront payment for the reauction at $.06 per MHz per 
pop. The Commission adopted the same upfront payment amount for its 
most recent broadband PCS auction, the D, E, and F block auction, in 
which all applicants for all blocks made a $.06 per MHz per pop upfront 
payment. In the Competitive Bidding Second Report and Order, the 
Commission indicated that the upfront payment should be set using a 
formula based upon the amount of spectrum and population (or ``pops'') 
covered by the license or licenses for which parties intend to bid. The 
Commission reasoned that this method of determining the required 
upfront payment would enable prospective bidders to tailor their 
upfront payment to their bidding strategies. At the same time, however, 
the Commission noted that determining an appropriate upfront payment 
involved balancing the goal of encouraging bidders to submit serious, 
qualified bids with the desire to simplify the bidding process and 
minimize implementation costs imposed on bidders. The Commission 
concluded that the best approach would be to maintain the flexibility 
to determine the amount of the upfront payment on an auction-by-auction 
basis because this balancing may yield different results depending upon 
the particular licenses being auctioned. In light of the its desire 
that only serious, qualified applicants participate in the reauction, 
the Commission's proposal of a $.06 per MHz per pop is appropriate. The 
Commission seeks comment on this proposal. The Commission also seeks 
comment on alternative methods of establishing an upfront payment, and 
in particular, on how the Commission may estimate the present market 
value of the spectrum to be auctioned.
    15. Down Payment and Full Payment. Consistent with the procedures 
used in prior auctions, the Commission tentatively concludes that every 
winning bidder in an auction should be required to tender a down 
payment sufficient to bring its total amount on deposit with the 
Commission up to 20% of its winning bid within 10 business days after 
the issuance of a public notice announcing the winning bidder for the 
license. See 47 CFR Sec. 1.2107(b). The Commission seeks comment on 
this tentative conclusion.
    16. If a winning bidder makes its down payment in a timely manner, 
the Commission proposes that it file an FCC Form 600 long-form 
application and follow the long-form application procedures in 
Sec. 1.2107 of the Commission's rules. See 47 CFR Sec. 1.2107. See 
also, 47 CFR Sec. 24.707. After reviewing the winning bidder's long-
form application, and after verifying receipt of the winning bidder's 
20% down payment, the Commission would announce the application's 
acceptance for filing, thus triggering the filing window for petitions 
to deny. The Commission notes that the Balanced Budget Act of 1997 
authorizes the Commission to establish a shortened period for the 
filing of petitions to deny. In light of this authority, as well as the 
Commission's desire to conclude the reauction process as quickly as 
possible, the Commission proposes that parties then have 15 days 
following public notice that an application was accepted for filing to 
file a petition to deny. If, pursuant to Section 309(d) of the 
Communications Act, as amended, 47 U.S.C. Sec. 309(j), the Commission 
dismisses or denies any and all petitions to deny, the Commission would 
announce by public notice that it is prepared to award the license, and 
the winning bidder would then have 10 business days to submit the 
balance of its winning bid. If the bidder does so, the license would be 
granted. If the bidder fails to submit the required down payment or the 
balance of the winning bid or the license is otherwise denied, the 
Commission would assess a default payment as discussed below. The 
Commission seeks comment on these proposals.
    17. Amendments and Modifications of Applications. To encourage 
maximum bidder participation, the Commission proposes to allow 
applicants to amend or modify their short-form applications as provided 
in Sec. 1.2105. See 47 CFR Sec. 1.2105. In the broadband PCS context, 
the Commission modified its rules to permit ownership changes that 
result when consortium investors drop out of bidding consortia, even if 
control of the consortium changes due to this restructuring. See 
Implementation of Section 309(j) of the Communications Act--Competitive 
Bidding, PP Docket No. 93-253, Fourth Memorandum Opinion and Order, 59 
FR 24947 (October 24, 1994). The Commission proposes to adopt the same 
exception to our rule prohibiting major amendments in the reauction. 
The Commission seeks comment on these proposals.
    18. Bid Withdrawal, Default and Disqualification. The Commission 
tentatively concludes that the withdrawal, default, and 
disqualification rules for the reauction should be based upon the 
procedures established in the Commission's general competitive bidding 
rules. With regard to bids that are submitted in error, the Commission 
proposes to apply the guidelines that the Commission has fashioned to 
provide for relief from the

[[Page 55378]]

bid withdrawal payment requirements under certain circumstances. The 
Commission seeks comment on this approach.
4. Anti-Collusion Rules
    19. In the Competitive Bidding Second Report and Order, the 
Commission adopted rules to prevent collusion in connection with 
competitive bidding, explaining that these rules, which are codified at 
47 CFR Sec. 1.2105, would enhance the competitiveness of both the 
auction process and the post-auction market structure. The Commission 
proposes to apply these same rules to the reauction of licenses 
surrendered to the Commission. The Commission seeks comment on this 
proposal.
5. Designated Entity Provisions
    20. The Commission proposes to provide small business bidders in 
the C block reauction with a two tiered bidding credit, which will 
provide a greater discount to very small businesses. In the C block 
auction, a winning bidder that qualified as a small business or a 
consortium of small businesses was able to use a bidding credit equal 
to 25% of its winning bid. For the reauction, however, the Commission 
tentatively concludes that it should offer tiered bidding credits, as 
the Commission did for F block and, more recently, Local Multipoint 
Distribution Service (LMDS) small business bidders. The Commission 
proposes to define a second tier of small business, which the 
Commission will refer to as ``very small businesses,'' as entities 
that, together with their affiliates and persons or entities that hold 
interest in such entities and their affiliates, have average gross 
revenues of not more that $15 million for the preceding three years. 
Creation of this subcategory of small business enables the Commission 
to tailor a bidding credit to meet the needs of entities that may be 
interested in bidding on spectrum surrendered by C block licensees. 
Thus, the Commission proposes a 35% bidding credit for very small 
businesses and a 25% bidding credit for small businesses. The 
Commission seeks comment on these proposals and tentative conclusions.
    21. The Commission also tentatively conclude that an installment 
payment program will not be offered in the reauction. The Commission 
has conducted several auctions without installment payments. The 
Commission must balance competing objectives in 47 U.S.C. Sec. 309(j) 
that require, inter alia, that it promote the development and rapid 
deployment of new spectrum-based services and ensure that designated 
entities are given the opportunity to participate in the provision of 
such services. In assessing the public interest, the Commission must 
try to ensure that all the objectives of Section 309(j) are considered. 
The Commission has found, for example, that obligating licensees to pay 
for their licenses as a condition of receipt ensures greater financial 
accountability from applicants. Thus, the Commission tentatively 
concludes that it should not extend installment payments to winners in 
the reauction, given the incentives to entrepreneurs established 
through the various proposals discussed above. The Commission seeks 
comment on these tentative conclusions.

III. Procedural Matters

A. Regulatory Flexibility Analysis
    22. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 
Sec. 603, the Commission has prepared an Initial Regulatory Flexibility 
Analysis (IRFA) of the expected impact on small entities of the rules 
proposed in the Further Notice of Proposed Rule Making. Written public 
comments are requested on the IRFA. Comments on the IRFA must have a 
separate and distinct heading designating them as responses to the IRFA 
and must be filed by the deadlines for comments on the Further Notice 
of Proposed Rule Making. The Commission will send a copy of the Further 
Notice of Proposed Rule Making, including this IRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration. In addition, 
the Further Notice of Proposed Rule Making and IRFA (or summaries 
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
    23. This Further Notice of Proposed Rule Making is being initiated 
to secure comment on proposed changes to auction rules to govern the 
reauction of returned broadband PCS spectrum in the C block. Among 
other goals, Section 309(j) of the Communications Act of 1934, as 
amended, directs the Commission to disseminate licenses among a wide 
variety of applicants, including small businesses and other designated 
entities. 47 U.S.C. Sec. 309(j)(3)(B). Section 309(j) also requires 
that the Commission ensure the development and rapid deployment of new 
technologies, products, and services for the benefit of the public, and 
recover for the public a portion of the value of the public spectrum 
resource made available for commercial use. 47 U.S.C. 
Secs. 309(j)(3)(A), (C). The Commission is seeking comment on proposed 
changes to auction rules to govern the reauction of returned broadband 
PCS spectrum in the C block.
2. Legal Basis
    24. This action is taken pursuant to Sections 4(i), 5(b), 5(c)(1), 
303(r), and 309 (j) of the Communications Act of 1934, as amended, 47 
U.S.C. Sections 154(i), 155(b), 155(c)(1), 303(r), and 309(j).
3. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply
    25. The Commission is required to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by its rules. See 5 U.S.C. Secs. 603(b)(3), 604(a)(3). The 
RFA directs agencies to provide a description of and, where feasible, 
an estimate of the number of small entities that will be affected by 
the Commission's rules. 5 U.S.C. Secs. 603(b)(3), 604(a)(3). The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' 5 U.S.C. Sec. 601(6). In addition, the 
term ``small business'' has the same meaning as the term ``small 
business concern'' under Section 3 of the Small Business Act. See 5 
U.S.C. Sec. 601(3) (incorporating by reference the definition of 
``small business concern'' in 15 U.S.C. Sec. 632). Under the Small 
Business Act, a ``small business concern'' is one which: (1) is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) meets any additional criteria established by the 
Small Business Administration (SBA). 15 U.S.C. Sec. 632.
    26. The rule changes proposed in the Further Notice of Proposed 
Rule Making will affect all small businesses which avail themselves of 
these rule changes, including small businesses currently holding C 
block and F block broadband PCS licenses who choose to participate and 
other small businesses who may acquire licenses through reauction. The 
Commission, with respect to broadband PCS, defines small entities to 
mean those having gross revenues of not more than $40 million in each 
of the preceding three calendar years. See 47 CFR Sec. 24.720(b)(1). 
This definition has been approved by the SBA. On May 6, 1996, the 
Commission concluded the broadband PCS C block auction. The broadband 
PCS D, E, and F block auction closed on January 14, 1997. Ninety 
bidders (including the C block reauction winners, prior to any defaults 
by winning bidders) won 493 C block

[[Page 55379]]

licenses and 88 bidders won 491 F block licenses. Small businesses 
placing high bids in the C and F block auctions were eligible for 
bidding credits and installment payment plans. For purposes of our 
evaluations and conclusion in this IRFA, the Commission assumes that 
all of the 90 C block broadband PCS licensees and 88 F block broadband 
PCS licensees, a total of 178 licensees potentially affected by this 
order, are small entities. In addition to the 178 current small 
business licensees who may participate at the reauction of C block 
licenses, a number of additional small business entities may seek to 
acquire licenses through reauction, and thus be affected by these 
rules.
    27. In addition, the Commission proposes to provide small business 
bidders in the C block reauction with bidding credits, and to that end 
proposes a two tiered bidding credit which will provide a greater 
discount to ``very small businesses.'' In the C block auction, a 
winning bidder that qualified as a small business or a consortium of 
small businesses was able to use a bidding credit equal to 25 percent 
of its winning bid. For the reauction, the Commission proposes tiered 
bidding credits, as were offered for F block and, more recently, Local 
Multipoint Distribution Service (LMDS) small business bidders. The 
Commission proposes to define the second tier of very small business as 
entities that, together with their affiliates and persons or entities 
that hold interest in such entities and their affiliates, have average 
gross revenues of not more that $15 million for the preceding three 
years. Creation of this subcategory of small business will enable the 
Commission to tailor a bidding credit to meet the needs of entities 
that may be interested in bidding on spectrum returned by C block 
licensees. Thus, the Commission proposes a 35 percent bidding credit 
for very small businesses and a 25 percent bidding credit for small 
businesses.
    28. To assist the Commission analyzing the total number of affected 
small entities, commenters are requested to provide information 
regarding how many total broadband PCS small business entities would be 
affected by the rules proposed in this Further Notice of Proposed Rule 
Making. In particular, the Commission seeks estimates of how many 
broadband PCS entities, existing and potential, will be considered 
small businesses or very small businesses.
4. Description of Reporting, Recordkeeping, and Other Compliance 
Requirements
    29. There are no additional reporting, recordkeeping, or other 
compliance requirements as a result of the Further Notice of Proposed 
Rule Making.
5. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    30. The Commission proposes to apply the same rules that were used 
in the C block auction to the reauction of C block licenses, with some 
modifications designed to encourage participation by small businesses 
while at the same time helping to ensure the best use of the spectrum 
through the competitive bidding process. The Commission proposes to 
conduct the C block reauction in three stages. Having three stages, 
with bidders required to be more active in each stage, serves to 
provide bidders with the flexibility to pursue backup strategies as the 
auction progresses. The Commission proposes to use high activity 
requirements in the reauction. In addition, the Commission proposes to 
use similar activity levels in the C block reauction and, to further 
expedite the auction, require the Wireless Telecommunications Bureau to 
use its delegated authority to aggressively schedule bidding rounds, 
quickly transition into the next stage of the auction when bidding 
activity falls, and use higher minimum bid increments for very active 
licenses.
    31. The Commission proposes to establish a minimum opening bid for 
the reauction. A minimum opening bid is the minimum bid price set at 
the beginning of the auction below which no bids are accepted. A 
minimum opening bid in the C block reauction will help ensure that the 
public is fairly compensated for licenses returned to the Commission, 
expedite the auction and give the Commission the flexibility to make 
adjustments based on the competitiveness of the auction. The Commission 
proposes minimum opening bids for each market equal to ten percent of 
the corresponding high bid for the market in the original C block 
auction. Such an approach will scale the minimum opening bids in a way 
that reflects the relative value of the licenses.
    32. The Commission proposes to require electronic filing of all 
short-form applications for the reauction. Electronic filing of 
applications would serve the best interests of auction participants as 
well as the members of the public monitoring the reauction. The 
Commission believes that an electronic filing requirement will help 
ensure that the reauction will be completed within the time frame 
contemplated by this Further Notice of Proposed Rule Making.
    33. The Commission proposes to set the amount of the upfront 
payment for the reauction at $.06 per megahertz per population (``MHz 
per pop'').
    34. The Commission proposes that parties have fifteen (15) days to 
file a petition to deny following public notice that an application was 
accepted for filing. If, pursuant to Section 309(d) of the 
Communications Act, the petitions to deny are dismissed or denied, the 
Commission would announce by public notice that it is prepared to award 
the license, and the winning bidder would then have ten (10) business 
days to submit the balance of its winning bid. If the bidder does so, 
the license would be granted. If the bidder fails to submit the 
required down payment or the balance of the winning bid or the license 
is otherwise denied, a default payment would be assessed.
    35. Section 309(j) of the Communications Act of 1934, as amended, 
directs the Commission to disseminate licenses among a wide variety of 
applicants, including small businesses and other designated entities. 
See 47 U.S.C. Sec. 309(j)(3)(B). Section 309(j) also requires that the 
Commission ensure the development and rapid deployment of new 
technologies, products, and services for the benefit of the public, and 
recover for the public a portion of the value of the public spectrum 
resource made available for commercial use. 47 U.S.C. 
Secs. 309(j)(3)(A), (C). The Commission believes these provisions in 
the Further Notice of Proposed Rule Making help meet those goals and 
promote efficient competition while maintaining fairness and 
efficiencies of process in the Commission's rules.
6. Federal Rules Which Overlap, Duplicate, or Conflict With These Rules
    None.

B. Paperwork Reduction Act Analysis

    36. This Further Notice of Proposed Rule Making contains either a 
proposed or modified information collection. As part of its continuing 
effort to reduce paperwork burdens, the Commission invites the general 
public and the Office of Management and Budget (``OMB'') to take this 
opportunity to comment on the information collections contained in this 
Further Notice of Proposed Rule Making, as required by the Paperwork 
Reduction Act of 1995, Public Law No. 104-13. Public and agency 
comments are due at the same time as other

[[Page 55380]]

comments on this Further Notice of Proposed Rule Making; OMB comments 
are due 60 days from date of publication of this Further Notice of 
Proposed Rule Making in the Federal Register. Comments should address: 
(a) Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information shall have practical utility; (b) the accuracy 
of the Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.
Dates
    Written comments by the public on the proposed or modified 
information collections in this Further Notice of Proposed Rule Making 
are due on or before December 1, 1997. Written comments must be 
submitted by OMB on the modified information collections on or before 
December 1, 1997.
Address
    In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein should be 
submitted to Judy Boley, Federal Communications Commission, Room 234, 
1919 M Street, N.W., Washington, DC 20554, or via the Internet to 
<a href="/cdn-cgi/l/email-protection#2f454d40434a566f494c4c01484059"><span class="__cf_email__" data-cfemail="d4beb6bbb8b1ad94b2b7b7fab3bba2">[email protected]</span></a> and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--
17th Street, N.W., Washington, DC 20503 or via the Internet to 
<a href="/cdn-cgi/l/email-protection#abcdcac2c5f4f4dfebcac785cec4db85ccc4dd"><span class="__cf_email__" data-cfemail="7a1c1b131425250e3a1b16541f150a541d150c">[email protected]</span></a>.
Further Information
    For additional information concerning the information collections 
contained in this Further Notice of Proposed Rule Making contact Judy 
Boley, Federal Communications Commission, Room 234, 1919 M Street, 
N.W., Washington, DC 20554, or via the Internet to <a href="/cdn-cgi/l/email-protection#a6ccc4c9cac3dfe6c0c5c588c1c9d0"><span class="__cf_email__" data-cfemail="86ece4e9eae3ffc6e0e5e5a8e1e9f0">[email protected]</span></a>.
Supplementary Information
    Title: Amendment of the Commission's Rules Regarding Installment 
Payment Financing for Personal Communications Services (PCS) Licensees.
    Type of Review: Proposed or Modified Collection.
    Respondents: The Commission estimates that no more than 255 
respondents (i.e., previous C block bidders) will participate in this 
information collection. The Commission estimates that this information 
collection, that eligibility is based on previous participation in a C 
block auction and the bidder identification number from the previous 
auction, will take 0.5 hours to complete. In addition, the Commission 
proposes that C block reauction applicants submit more detailed 
financial information, if necessary. The Commission estimates that this 
information collection will take 1.0 hours to complete. The Commission 
estimates that the total burden will be 1.5 hours per respondent or 
377.5 total hours.
    Estimate of total cost burden to respondents: The Commission 
estimates that there will be no additional cost burden to respondents.
    The cost to the Federal Government is estimated to be:

GS 7 Legal Instrument Examiners at $14.06 per hour to review the 
documentation for approximately 0.5 hours per submission, times 255 
submissions = $1,581.75
GS 12 Attorneys to review the financial documentation at $24.95 per 
hour, for approximately 2.0 hours per submission, times 255 submissions 
= $11,227.50
Total = $12,809.25

C. Ex Parte Presentations

    The Further Notice of Proposed Rule Making is a permit but disclose 
notice and comment rule making proceeding. Ex parte presentations are 
permitted, provided they are disclosed as provided in Commission rules. 
See generally 47 CFR Secs. 1.1202, 1.1203, and 1.1206(a).

D. Comments

    38. Pursuant to applicable procedures set forth in Secs. 1.415 and 
1.419 of the Commission's rules, interested parties may file comments 
on or before November 13, 1997, and reply comments on or before 
November 24, 1997. In addition, a courtesy copy should be delivered to 
Mark Bollinger, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau, Federal Communications Commission, 2025 M 
Street, Room 5202, Washington, DC 20554. All relevant and timely 
comments will be considered by the Commission before final action is 
taken in this proceeding. To file formally in this proceeding, 
participants must file an original and five copies of all comments, 
reply comments, and supporting comments. If participants want each 
Commissioner to receive a personal copy of their comments, an original 
plus ten copies must be filed. Comments and reply comments should be 
sent to Office of the Secretary, Federal Communications Commission, 
Washington, DC 20554. Comments and reply comments will be available for 
public inspection during regular business hours in the FCC Reference 
Center (Room 239) of the Federal Communications Commission, 1919 M 
Street, N.W., Washington, DC 20554.

List of Subjects

47 CFR Part 1

    Communications common carriers, Reporting and recordkeeping 
requirements.

47 CFR Part 24

    Communications common carriers, Reporting and recordkeeping 
requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-28222 Filed 10-23-97; 8:45 am]
BILLING CODE 6712-01-P


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