Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices 53629

would serve the public interest,

convenience, and necessity.

5. The Commission has further placed

Mr. Breen on notice that the presiding

administrative law judge may find that

Mr. Breen has misrepresented facts to

the Commission or lacked candor before

the Commission and therefore, may

impose upon him a forfeiture up to the

statutory maximum.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–27150 Filed 10–14–97; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS

COMMISSION

Auction of Local Multipoint

Distribution Service; Auction Notice

and Filing Requirements for 986 Basic

Trading Area (‘‘BTA’’) Licenses in the

28 GHz and 31 GHz Bands, Scheduled

for December 10, 1997

[DA 97–2081]

Released September 25, 1997

I. Introduction

Local Multipoint Distribution Service

(‘‘LMDS’’) Licenses to Be Auctioned:

The Federal Communications

Commission (‘‘FCC’’ or ‘‘Commission’’)

will hold an auction for 986 licenses to

provide LMDS in the 28 GHz and 31

GHz bands. Two licenses will be offered

in each of 493 BTAs and BTA-like areas

in the United States. One license, in

frequency block A, will authorize

service on 1,150 megahertz of spectrum

in both the 28 GHz and 31 GHz bands.

The second license, frequency block B,

will authorize service on 150 megahertz

of spectrum in the 31 GHz band. Each

frequency block encompasses the

following spectrum:

Block A (1,150 megahertz): 28 GHz

band: 27,500–28,350 MHz and

29,100–29,250 MHz and 31 GHz band:

31,075–31,225 MHz

Block B (150 megahertz): 31 GHz band:

31,000–31,075 MHz and 31,225–

31,300 MHz

Note: Operations to take place in the

29,100—29,250 MHz band are governed by

47 CFR 101.103(g) and (h), 101.113(c),

101.133(d), and 101.147(t), which are new

provisions designed to facilitate the sharing

of this spectrum by LMDS, GSO/FSS

gateways, and MSS feeder link licensees.

These provisions allow only hub-tosubscribers transmissions by LMDS licensees

in this band.

Auction Date: The auction will

commence on December 10, 1997. 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

will be conducted on each business day

until bidding has stopped on all

licenses.

Auction Title: LMDS—Auction No.

17.

Bidding Methodology: Simultaneous

multiple round bidding. Bidding will be

permitted only from remote locations,

either electronically (by computer) or

telephonically.

Pre-Auction Deadlines:

• Auction Seminar—October 30, 1997

• Short-Form Application (FCC Form

175) November 17, 1997, 5:30 p.m. ET

(Applications are not due on

November 10 as previously

announced on July 30, 1997)

• Upfront Payments (via wire

transfer)—December 1, 1997, 6:00

p.m. ET (Payments are not due on

November 24 as previously

announced on July 30, 1997)

• Orders for Remote Bidding Software—

December 1, 1997, 5:30 p.m. ET

• Mock Auction—December 8, 1997

Telephone Contacts:

• FCC National Call Center—888-CALLFCC (888–225–5322) (For Bidder

Information Packages, General

Auction Information, and Seminar

Registration, press option #2 at the

prompt)

FCC Technical Support Hotline—202–

414–1250

Participation: Those wishing to

participate in the auction must:

• Submit a short-form application (FCC

Form 175) by the above-listed

deadline.

• Submit an upfront payment and an

FCC Remittance Advice Form (FCC

Form 159) by the above-listed

deadline.

• Comply with all provisions outlined

in this Public Notice.

Prohibition of Collusion: To ensure

the competitiveness of the auction

process, the Commission’s rules

prohibit applicants for the same BTA

from communicating with each other

during the auction about bids, bidding

strategies, or settlements. This

prohibition begins with the filing of

short-form applications, and ends when

winning bidders submit their first down

payments. The only exception is where

applicants enter into a bidding

agreement before filing their short-form

applications, and disclose the existence

of the agreement in their short-form

applications. See 47 CFR 1.2105(c).

Bidder Information Package: More

complete details about this auction are

contained in a Bidder Information

Package. The Commission will provide

one copy to each company free of

charge. Additional copies may be

ordered at a cost of $16.00 each,

including postage, payable by Visa or

Master Card, or by check payable to

‘‘Federal Communications Commission’’

or ‘‘FCC.’’ To place an order, contact the

FCC National Call Center at 888–CALL–

FCC (888–225–5322, press option #2 at

the prompt). Prospective bidders who

have already contacted the FCC

expressing an interest in this auction

will receive a Bidder Information

Package in two to three weeks, and need

not call again unless they wish to order

additional copies.

Relevant Authority: Prospective

bidders must familiarize themselves

thoroughly with the Commission’s rules

relating to LMDS, contained in title 47,

part 101 of the Code of Federal

Regulations, and those relating to

application and auction procedures,

contained in title 47, part 1 of the Code

of Federal Regulations.

Prospective bidders must also be

thoroughly familiar with the

procedures, terms and conditions

(collectively, ‘‘Terms’’) contained in the

Second Report and Order in PP Docket

No. 93–253, 59 FR 22980 (May 4, 1994);

the Second Memorandum Opinion and

Order in PP Docket No. 93–253, 59 FR

44272 (August 26, 1994); the Erratum to

the Second Memorandum Opinion and

Order in PP Docket No. 93–253

(released October 19, 1994); the First

Report and Order, 61 FR 44177 (August

28, 1996), and Fourth Notice of

Proposed Rule Making in CC Docket No.

97–297, 61 FR 39425 (July 29, 1996); the

Second Report and Order, 62 FR 23148

(April 29, 1997), Order on

Reconsideration, 62 FR 28373 (May 23,

1997), and Fifth Notice of Proposed Rule

Making in CC Docket No. 96–297, 62 FR

16514 (April 7, 1997) (‘‘LMDS Second

R&O’’); and the Second Order on

Reconsideration in CC Docket No. 97–

297, 62 FR 48787 (September 17, 1997)

(collectively referred to as the ‘‘Relevant

Orders’’).

The Terms contained in the

Commission’s rules, Relevant Orders,

Public Notices and Bidder Information

Package are not negotiable. Prospective

bidders should review these auction

documents thoroughly prior to the

auction to make certain that they

understand all of the provisions and are

willing to be bound by all of the Terms

before participating in the auction.

Potential bidders should also be

aware that petitions for reconsideration

of the Commission’s actions in the

LMDS Second R&O have been filed; that

several, but not all, matters raised in

petitions for reconsideration have been
53630 Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices

addressed in the Second Order on

Reconsideration; and that the Terms

adopted therein are therefore subject to

change upon reconsideration or appeal.

There are also petitions for

reconsideration filed against the

Commission’s actions in the First Report

and Order, these petitions are pending

an order on reconsideration.

The Commission may amend or

supplement the information contained

in our Public Notices or the Bidder

Information Package at any time, and

will issue public notices to convey any

new or supplemental information to

bidders. It is the responsibility of all

prospective bidders to remain current

with all Commission rules and with all

public notices pertaining to this auction.

Copies of most Commission documents,

including public notices, can be

retrieved from the FCC Internet node via

anonymous ftp@ftp.fcc.gov or the FCC

World Wide Web site at http://

www.fcc.gov. Additionally, documents

may be obtained for a fee by calling the

Commission’s copy contractor,

International Transcription Service,

Inc., at 202–857–3800.

Incumbent Licensees: Although LMDS

operations are permitted in the 31,000—

31,075 MHz and 31,225—31,300 MHz

bands, incumbent city licensees and

private business users operating in these

two segments are entitled to protection

against harmful interference from any

LMDS operation in these blocks. LMDS

service providers will be entitled to

interference protection from any other

presently-authorized primary users in

the 31,075—31,225 MHz bands.

Block A of the New York BTA is

encumbered by a pre-existing licensee

in the New York Primary Metropolitan

Statistical Area. The incumbent

licensee, CellularVision of New York, is

entitled to interference protection.

Reminder to potential Nongeostationary Mobile Satellite Service

applicants/licensees: Section 101.103(h)

of the Commission’s rules requires that

no more than 15 days after the release

of this Public Notice, NGSO-MSS feeder

link earth station complex applicants/

licensees planning to operate in the

29,100—29,250 MHz band pursuant to

§ 25.257 of the Commission’s rules, file

with the Commission a set of

geographical coordinates consistent

with section 101.103(h)(2) of the

Commission’s rules. This information

should be directed to the attention of:

Robert James, Federal Communications

Commission, Wireless

Telecommunications Bureau 1919 M

Street, NW, Room 8102, Washington,

D.C. 20554.

Other Proceedings: Currently pending

in the U.S. Court of Appeals for the D.C.

Circuit is a consolidated petition for

review of the LMDS Second R&O and

Order on Reconsideration. See James L.

Melcher v. Federal Communications

Commission and United States of

America, Case No. 93–110 (and

consolidated cases) dealing with two

issues: eligibility restrictions for

incumbent local exchange carriers

(‘‘ILECs’’) to own LMDS licenses ‘‘inregion,’’ and the denial of petitions for

reconsideration of the 971 waiver

applications for service in the 28 GHz

band which were previously dismissed.

Also pending before the Commission are

several petitions for reconsideration of

the LMDS Second R&O and Order on

Reconsideration dealing with the issues

of: the eligibility restriction on ILECs;

the allocation of the 31 GHz band to

LMDS; the reinstatement of dismissed

applications in the 31 GHz band; the

application of a new frequency

tolerance to the 31 GHz band; and

further reconsideration of the 971

waiver applications for service in the 28

GHz band which were previously

dismissed; as well as petitions for

clarification of certain technical and

service rules. A memorandum opinion

and order on reconsideration

responding to these petitions will be

released in the near future.

Bidder Alerts: All applicants must

certify on their FCC Form 175

applications under penalty of perjury

that they are legally, technically,

financially and otherwise qualified to

hold a license, and not in default on any

payment for Commission licenses

(including down payments) or

delinquent on any non-tax debt owed to

any Federal agency. Prospective bidders

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.

The FCC makes no representations or

warranties about the use of this

spectrum for particular services.

Applicants should be aware that an FCC

auction represents an opportunity to

become an FCC licensee in this service,

subject to certain conditions and

regulations. An FCC auction does not

constitute an endorsement by the FCC of

any particular services, technologies or

products, nor does an FCC license

constitute a guarantee of business

success. Applicants should perform

their individual due diligence before

proceeding as they would with any new

business venture.

As is the case with many business

investment opportunities, some

unscrupulous entrepreneurs may

attempt to use the LMDS auction to

deceive and defraud unsuspecting

investors. Common warning signals of

fraud include the following:

• The first contact is a ‘‘cold call’’

from a telemarketer, or is made in

response to an inquiry prompted by a

radio or television infomercial.

• The offering materials used to

invest in the venture appear to be

targeted at IRA funds, for example by

including all documents and papers

needed for the transfer of funds

maintained in IRA accounts.

• The amount of the minimum

investment is less than $25,000.

• The sales representative makes

verbal representations that: (a) the

Internal Revenue Service (‘‘IRS’’),

Federal Trade Commission (‘‘FTC’’),

Securities and Exchange Commission

(‘‘SEC’’), FCC, or other government

agency has approved the investment; (b)

the investment is not subject to state or

federal securities laws; or (c) the

investment will yield unrealistically

high short-term profits. In addition, the

offering materials often include copies

of actual FCC releases, or quotes from

FCC personnel, giving the appearance of

FCC knowledge or approval of the

solicitation.

Information about deceptive

telemarketing investment schemes is

available from the FTC at 202–326–2222

and from the SEC at 202–942–7040.

Complaints about specific deceptive

telemarketing investment schemes

should be directed to the FTC, the SEC,

or the National Fraud Information

Center at 800–876–7060. Consumers

who have concerns about specific LMDS

proposals may also call the FCC

National Call Center at 888–CALL–FCC

(888–225–5322).

II. Bidder Eligibility and Small

Business Provisions

A. General Eligibility Criteria

As described above, this auction

offers two licenses: one license for 1,150

megahertz of spectrum in the 28 GHz

and 31 GHz bands; and one license for

150 megahertz of spectrum in the 31

GHz band; in each of 493 BTA and BTAlike areas, for a total of 986 licenses.

General eligibility to provide LMDS

service, subject to certain restrictions

outlined below, is afforded to entities

which are not precluded under 47 CFR

101.7, 101.1001, and 101.1003.

(1) Eligibility Restrictions

(a) 1,150 megahertz licenses.

ILECs and cable television companies

are subject to certain restrictions on

their eligibility to own an attributable

interest in the 1,150 megahertz LMDS
Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices 53631

license in their authorized or franchised

service areas (‘‘in-region’’). An

incumbent is defined as ‘‘in-region’’ if

its authorized service area represents 10

percent or more of the population of the

BTA. A 20 percent or greater ownership

level constitutes an attributable interest

in a license. ILECs and cable companies

are permitted to participate fully in the

auction of the 1,150 megahertz LMDS

licenses, but are required to divest any

overlapping interests within 90 days if

they win a license at the auction. The

eligibility restrictions terminate on the

third anniversary of the effective date of

the LMDS rules. These restrictions may

be extended beyond the three-year

period, if, upon a review at the end of

this period, the Commission determines

that sufficient competition has not

developed. The Commission may waive

the restriction in individual cases upon

a showing of good cause.

(b) 150 megahertz licenses.

All entities that meet the

Commission’s general eligibility criteria,

including ILECs and cable television

companies, are eligible to own

attributable interests in the 150

megahertz license in any BTA.

(2) Determination of Revenues

For purposes of determining which

entities qualify as very small businesses,

small businesses, and entrepreneurs, the

Commission will attribute to the

applicant the gross revenues of all of its

controlling principals and affiliates. For

purpose of this auction, the Commission

will not impose specific equity

requirements on controlling principals.

However, in order to qualify as a very

small business, small business, or

entrepreneur an applicant’s qualifying

principals must maintain control of the

applicant. The term ‘‘control’’ includes

both de facto and de jure control of the

applicant. Typically, de jure control is

evidenced by ownership of at least 50.1

percent of an entity’s voting stock. De

facto control is determined on a case-bycase basis. The following are some

common indicia of control:

• The entity constitutes or appoints

more than 50 percent of the board of

directors or management committee;

• The entity has authority to appoint,

promote, demote, and fire senior

executives that control the day-to-day

activities of the licensee; or

• The entity plays an integral role in

management decisions.

(3) Application Showing

Applicants should note that they will

be required to file supporting

documentation to establish that they

satisfy the eligibility requirements for

this auction. See 47 CFR 1.2105 and

101.1109.

B. Bidding Credits

Qualifying LMDS applicants are

eligible for bidding credits. The size of

an LMDS bidding credit depends on the

annual gross revenues of the bidder and

its controlling principles and affiliates,

as averaged over the preceding three

years:

• A bidder with gross annual

revenues of not more than $15 million

receives a 45 percent discount on its

winning bids for LMDS licenses;

• A bidder with gross annual

revenues of more than $15 million but

not more than $40 million receives a 35

percent discount on its winning bids for

LMDS licenses; and

• A bidder with gross annual

revenues of more than $40 million but

not more than $75 million receives a 25

percent discount on its winning bids for

LMDS licenses.

Bidding credits are not cumulative:

applicants that qualify receive either the

25 percent, the 35 percent, or the 45

percent bidding credit, but not all. The

definitions of very small business, small

business, and entrepreneur (including

calculation of gross annual revenue) are

set forth in 47 CFR 101.1112.

LMDS bidders should note that unjust

enrichment provisions apply to winning

bidders that use bidding credits and

subsequently assign or transfer control

of their BTA licenses to an entity not

qualifying for the same levels of bidding

credits. See 47 CFR 101.1107(e).

III. Pre-Auction Procedures

A. Short-Form Application (FCC Form

175)—Due November 17, 1997

In order to be eligible to bid in this

auction, applicants must first submit an

FCC Form 175 application. This

application must be received at the

Commission by 5:30 p.m. ET on

November 17, 1997. Late applications

will not be accepted.

There is no application fee required

when filing an FCC Form 175. However,

to be eligible to bid, an applicant must

submit an upfront payment. See Part

3.C, infra.

(1) Filing Options

Auction applicants are strongly

encouraged to file their applications

electronically in order to take full

advantage of the greater efficiencies and

convenience of electronic filing, bidding

and access to bidding data. For example,

electronic filing enables the applicant

to: (a) receive interactive feedback while

completing the application; and (b)

receive immediate acknowledgement

that the FCC Form 175 has been

submitted for filing. In addition, only

those applicants who file electronically

will have the option of bidding

electronically. However, manual filing

(via hard copy) is also permitted. Please

note that manual filers will not be

permitted to bid electronically and must

bid telephonically, unless the FCC Form

175 is amended electronically prior to

the resubmission date for incomplete or

deficient applications. Applicants who

file electronically may make

amendments to their applications until

the filing deadline. The following is a

brief description of each filing method.

(a) Electronic Filing.

Applicants wishing to file

electronically may generally do so on a

24-hour basis beginning October 27,

1997. All the information required to

file the FCC Form 175 electronically

(i.e., software and help files) will be

available over both the Internet and the

FCC’s Bulletin Board System (‘‘BBS’’).

(b) Manual Filing.

Auction applicants will be permitted

to file their FCC Form 175 applications

in hard copy. When any manually filed

FCC Form 175 and 175–S exceeds five

pages in length, the FCC additionally

requires that all attachments be

submitted on a 3.5-inch diskette, or the

entire application be filed in a

microfiche version. Manual filers must

use the September 1997 version of FCC

Form 175 and the October 1995 edition

of the 175–S (if applicable). Earlier

versions of the FCC Form 175 will not

be accepted for filing. Copies of FCC

Forms 175 and 175–S can be obtained

by calling 202–418–FORM.

Manual applications may be

submitted by hand delivery (including

private ‘‘overnight’’ courier), or by U.S.

mail (certified mail with return receipt

recommended), addressed to: FCC Form

175 Filing, Auction No. 17, Federal

Communications Commission, Auctions

& Industry Analysis Division, 1270

Fairfield Road, Gettysburg, PA 17325–

7245.

Note: Manual applications delivered to any

other locations will not be accepted.

(2) Completion of the FCC Form 175

Applicants should carefully review 47

CFR 1.2105 and 101.1104, and must

complete all items on the FCC Form 175

(and 175–S, if applicable).

Failure to sign a manually filed FCC

Form 175 or failure to submit the

required ownership information (for

both electronic and manual filers) will

result in dismissal of the application

and loss of the ability to participate in

the auction. Only original signatures
53632 Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices

will be accepted for manually filed

applications.

(3) Electronic Review of FCC Form 175

The FCC Form 175 review software

may be used to review and print

applicants’ FCC Form 175 applications.

In other words, applicants who file

electronically may review their own

completed FCC Forms 175. Applicants

also have access to view other

applicants’ completed FCC Forms 175,

after the filing deadline has passed and

the FCC has issued a public notice

explaining the status of the applications.

There is a fee of $2.30 per minute for

accessing this system.

B. Application Processing and Minor

Corrections

After the deadline for filing the FCC

Form 175 applications has passed, the

FCC will process all timely applications

to determine which are acceptable for

filing, and subsequently will issue a

public notice identifying: (1) Those

applications accepted for filing

(including FCC account numbers and

the licenses for which they applied); (2)

those applications rejected; and (3)

those applications that have minor

defects that may be corrected, and the

deadline for filing such corrected

applications.

As described more fully in the

Commission’s rules, after the November

17, 1997, short-form filing deadline,

applicants may make only minor

corrections to their FCC Form 175

applications. Applicants will not be

permitted to make major modifications

to their applications (e.g., change their

license selections, change the certifying

official or change control of the

applicant). See 47 CFR 1.2105.

C. Upfront Payments—Due December 1,

1997

In order to be eligible to bid in the

auction, applicants must submit an

upfront payment accompanied by an

FCC Remittance Advice (FCC Form

159). Manual filers must use the July

1997 version of FCC Form 159. Earlier

versions of this form will not be

accepted. All upfront payments must be

received at Mellon Bank in Pittsburgh,

Pennsylvania, by 6:00 p.m. ET on

December 1, 1997.

Please note that:

• All payments must be made in U.S.

dollars.

• All payments must be made by wire

transfer. No other form of payment will

be accepted.

• Upfront payments for Auction No.

17 go to a lockbox number different

from the ones used in previous FCC

auctions, and different from the lockbox

number to be used for post-auction

payments.

• Failure to deliver the upfront

payment by the December 1, 1997

deadline will result in dismissal of the

application and disqualification from

participation in the auction.

(1) Wire Transfers

For this auction, the FCC requires

applicants to make their upfront

payments by wire transfer, which

experience has shown provides the

greatest reliability and efficiency. Wire

transfer payments must be received by

6:00 p.m. ET on December 1, 1997. 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. Applicants will need the

following information:

ABA Routing Number: 043000261

Receiving Bank: Mellon Pittsburgh

BNF: FCC/AC—9100180

OBI Field: (Skip one space between

each information item)

‘‘AUCTIONPAY’’

TAXPAYER IDENTIFICATION NO.

(same as FCC Form 175, block 7)

PAYMENT TYPE CODE (enter

‘‘AWLU’’)

FCC CODE (same as FCC Form 159,

Block 23A: ‘‘17’’)

PAYER NAME (same as FCC Form 175,

Block 1)

LOCKBOX NO. 358420

Note: The BNF and Lockbox number are

specific to the upfront payments for this

auction; do not use BNF or Lockbox numbers

from previous auctions.

Applicants must fax a completed FCC

Form 159 to Mellon Bank at 412–236–

5702 at least one hour before placing the

order for the wire transfer (but on the

same business day). On the cover sheet

of the fax, write ‘‘Wire Transfer—

Auction Payment for Auction Event No.

17.’’

(2) FCC Form 159

Each upfront payment must be

accompanied by a completed FCC

Remittance Advice (FCC Form 159).

Proper completion of FCC Form 159 is

critical to ensuring correct credit of

upfront payments. Detailed instructions

for completion of FCC Form 159 will be

included in the Bidder Information

Package.

(3) Amount of Upfront Payment

The amount of the upfront payment

required to bid on a particular license(s)

in Auction No. 17 has been calculated

in three tiers, based on the population

(‘‘pop’’) figures for the BTA(s), and

adjusted to take into account the

spectrum bandwidth that is being

licensed in frequency block A and in

frequency block B.

The formula utilized to calculate

upfront payments is as follows:

FREQUENCY BLOCK A

BTA population × Per pop

multiple* × Frequencyblock B*

Over 1,000,000 ................................................................................................................. × $0.90 × 10%

100,000–1,000,000 ........................................................................................................... × $0.60 × 10%

Under 100,000 .................................................................................................................. × $0.30 × 10%

*All upfront payments are rounded up to the nearest dollar. A minimum upfront payment amount has been set at $2,500 per license.

Please note that upfront payments are

not attributed to specific licenses, but

instead will be translated to bidding

units to define the bidder’s maximum

bidding eligibility. Thus, an applicant

does not have to make an upfront

payment to cover all licenses for which

the applicant has applied. Rather, the

total upfront payment defines the

maximum amount of bidding units on

which the applicant will be permitted to

bid (including standing high bids) in

any single round of bidding. In order to

be able to place a bid on a license, in

addition to having specified that license

on FCC Form 175, a bidder must have

an eligibility level that meets or exceeds

the number of bidding units assigned to

that license. At a minimum, an

applicant’s total upfront payment must

be enough to establish eligibility to bid

on at least one of the licenses applied

for on FCC Form 175, or else the
Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices 53633

applicant will not be eligible to

participate in the auction.

In calculating the upfront payment

amount, an applicant should determine

the maximum number of bidding units

it may wish to bid on in any single

round, and submit an upfront payment

covering that number of bidding units.

Note: An applicant may, on its FCC Form

175, apply for every license being offered, but

its actual bidding in any round will be

limited by the bidding units reflected in its

upfront payment. As explained in Parts

4.A(2) and 4.A(4), infra, bidders will be

required to remain active in each round of

the auction on a specified percentage of the

bidding units reflected in their upfront

payments in order to retain their current

eligibility.

(4) Applicant’s Wire Transfer

Information for Purposes of Refunds

Because experience with prior

auctions has shown that in most cases

wire transfers provide quicker and more

efficient refunds than paper checks, the

Commission plans to use wire transfers

for all Auction No. 17 refunds. To avoid

delays in processing refunds, applicants

should include wire transfer

instructions with any refund request

they file; they may also provide this

information in advance by faxing it to

the FCC Billings and Collections

Branch, ATTN: Regina Dorsey or

Linwood Jenkins, at 202–418–2843.

(Applicants should also note that

implementation of the Debt Collection

Improvement Act of 1996 requires the

FCC to obtain a Taxpayer Identification

Number (TIN) before it can disburse

refunds.) Eligibility for refunds is

discussed in Part 5.D, infra.

D. Auction Registration

Approximately five business days

before the auction, the FCC will issue a

public notice announcing all qualified

bidders for the auction. Qualified

bidders are those applicants whose FCC

Form 175 applications have been

accepted for filing and who have timely

submitted upfront payments sufficient

to make them eligible to bid on at least

one of the licenses for which they

applied.

All qualified bidders are

automatically registered for the auction.

Registration materials will be

distributed prior to the auction by two

separate overnight mailings, each

containing part of the confidential

identification codes required to place

bids. These mailings will be sent only

to the contact person at the applicant

address listed in the FCC Form 175.

Applicants who do not receive both

registration mailings will not be able to

submit bids. Therefore, any qualified

applicant who has not received both

mailings by noon on Monday, December

8, 1997 should contact the FCC National

Call Center at 888–CALL–FCC (888–

225–5322, press option #2 at the

prompt). Receipt of both registration

mailings is critical to participating in

the auction and each applicant is

responsible for ensuring it has received

all of the registration material.

Qualified bidders should note that

lost login codes, passwords or bidder

identification numbers can be replaced

only by appearing in person at the FCC

Auction Headquarters located at 2

Massachusetts Avenue, N.E.,

Washington, D.C. 20002. Only an

authorized representative or certifying

official, as designated on an applicant’s

FCC Form 175, may appear in person

with two forms of identification (one of

which must be a photo identification) in

order to receive replacement codes.

E. Remote Electronic Bidding Software

Qualified bidders who file or amend

the FCC Form 175 electronically are

allowed to bid electronically, but must

purchase remote electronic bidding

software for $175.00, including shipping

and handling, by December 1, 1997.

(Auction software is tailored to a

specific auction, so software from prior

auctions will not work for Auction No.

17.) Bidders who order remote bidding

software by the ordering deadline will

receive it with the registration mailings.

A software order form will appear in a

subsequent public notice.

F. Auction Seminar

On October 30, 1997 the FCC will

sponsor a seminar for the LMDS

auction. This seminar will be held at the

Renaissance Hotel, 999 9th Street,

N.W., Washington, D.C. The seminar

will provide attendees with information

about pre-auction procedures, conduct

of the auction, FCC remote bidding

software, and the LMDS service and

auction rules. Additionally, there will

be an opportunity for interested parties

to display equipment at this event. If

interested, please contact the FCC at

888–CALL–FCC (888–225–5322, press

option #2 at the prompt).

Please note that a maximum of two

representatives from each company may

attend, first-come first-served, on a

reservation basis until room capacity is

filled. To register, complete the

registration form included in the Bidder

Information Package.

G. Mock Auction

All applicants whose FCC Forms 175

have been accepted for filing will be

eligible to participate in a mock auction

beginning December 8, 1997. The mock

auction will enable applicants to

become familiar with the electronic

software prior to the auction. Free

demonstration software will be available

for use in the mock auction. Due to

different bidding procedures in the

LMDS auction from previous

Commission auctions, participation by

all bidders is strongly recommended.

Details will be announced by public

notice.

IV. Auction Event

The first round of the auction will

begin on December 10, 1997.

A. Auction Structure

(1) Simultaneous Multiple Round

Auction

The 986 LMDS BTAs will be awarded

through a single, simultaneous multiple

round auction. Unless otherwise

announced, bids will be accepted on all

licenses in each round of the auction.

(2) Maximum Eligibility and Activity

Rules

As explained in Part 3.C(3), supra, the

amount of the upfront payment

submitted by a bidder determines the

initial maximum eligibility (in bidding

units) for each bidder. In order to ensure

that the auction closes within a

reasonable period of time, an activity

rule requires bidders to bid actively

throughout the auction, rather than wait

until the end before participating.

Bidders are required to be active on a

percentage of their maximum eligibility

during each round of the auction.

Details of the specific percentages for

each stage are set forth under Auction

Stages in Part 4.A(4), infra. A bidder

that does not satisfy the activity rule

will either lose bidding eligibility or use

an activity rule waiver, as explained by

Activity Rule Waivers and Reducing

Eligibility in Part 4.A(3), infra.

A bidder is considered active on a

license in the current round if it is

either the high bidder at the end of the

previous bidding period and does not

withdraw the high bid in the current

round, or if it submits an acceptable bid

in the current round (see Minimum

Acceptable Bids in Part 4.B(2), infra). A

bidder’s activity level in a round is the

sum of the bidding units associated with

licenses on which the bidder is active.

The minimum required activity level is

expressed as a percentage of the bidder’s

maximum bidding eligibility, and

increases as the auction progresses, as

set forth under Auction Stages in Parts

4.A(4) and 4.A(5), infra.

(3) Activity Rule Waivers and Reducing

Eligibility

Each bidder will be provided five

activity rule waivers that may be used
53634 Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices

in any round during the course of the

auction. Use of an activity rule waiver

preserves the bidder’s current bidding

eligibility despite the bidder’s activity

in the current round being below the

required minimum level. An activity

rule waiver applies to an entire round

of bidding and not to a particular

license.

The FCC auction system assumes that

bidders with insufficient activity would

prefer to use an activity rule waiver (if

available) rather than lose bidding

eligibility. Therefore, the system will

automatically apply a waiver (known as

an ‘‘automatic waiver’’) at the end of

any bidding period where a bidder’s

activity level is below the minimum

required unless: (1) there are no activity

rule waivers available; or (2) the bidder

overrides the automatic application of a

waiver by reducing eligibility, thereby

meeting the minimum requirements.

A bidder with insufficient activity

who wants to reduce its bidding

eligibility rather than use an activity

rule waiver must affirmatively override

the automatic waiver mechanism during

the bidding period by using the reduce

eligibility function in the software. In

this case, the bidder’s eligibility is

permanently reduced to bring the bidder

into compliance with the activity rules

as described in Auction Stages, Part

4.A(4), infra. Once eligibility has been

reduced, a bidder will not be permitted

to regain its lost bidding eligibility.

Finally, a bidder may proactively use

an activity rule waiver as a means to

keep the auction open without placing

a bid. If a bidder submits a proactive

waiver (using the proactive waiver

function in the bidding software) during

a bidding period in which no bids are

submitted, the auction will remain open

and the bidder’s eligibility will be

preserved. An automatic waiver invoked

in a round in which there are no new

valid bids will not keep the auction

open.

(4) Auction Stages

The auction is composed of three

stages, which are each defined by an

increasing activity rule. Below are the

proposed activity levels for each stage of

the auction. The FCC reserves the

discretion to alter the activity

percentages before and during the

auction.

Stage One: In each round of the first

stage of the auction, a bidder desiring to

maintain its current eligibility is

required to be active on licenses

encompassing at least 60 percent of its

current bidding eligibility. Failure to

maintain the requisite activity level will

result in a reduction in the bidder’s

bidding eligibility in the next round of

bidding (unless an activity rule waiver

is used). During Stage One, reduced

eligibility for the next round will be

calculated by multiplying the current

round activity by five-thirds (5/3).

Stage Two: In each round of the

second stage, a bidder desiring to

maintain its current eligibility is

required to be active on 80 percent of its

current bidding eligibility. During Stage

Two, reduced eligibility for the next

round will be calculated by multiplying

the current round activity by fivefourths (5/4).

Stage Three: In each round of the

third stage, a bidder desiring to

maintain its current eligibility is

required to be active on 98 percent of its

current bidding eligibility. In this final

stage, reduced eligibility for the next

round will be calculated by multiplying

the current round activity by fiftyfortyninths (50/49).

Caution: Since activity requirements

increase in each auction stage, bidders

must carefully check their current

activity during the bidding period of the

first round following a stage transition.

This is especially critical for bidders

who have standing high bids and do not

plan to submit new bids. In past

auctions, some bidders inadvertently

lost bidding eligibility or used an

activity rule waiver because they did

not reverify their activity status at stage

transitions. Bidders may check their

activity against the required minimum

activity level by using the bidding

software’s bidding module.

(5) Stage Transitions

The auction will start in Stage One.

Under the FCC’s general guidelines it

will advance to the next stage (i.e., from

Stage One to Stage Two, and from Stage

Two to Stage Three) when in each of

three consecutive rounds of bidding, the

high bid has increased on 10 percent or

less of the licenses being auctioned (as

measured in bidding units). However,

the FCC retains the discretion to

accelerate the auction by

announcement. This determination will

be based on a variety of measures of

bidder activity including, but not

limited to, the auction activity level, the

percentages of licenses (measured in

terms of bidding units) on which there

are new bids, the number of new bids,

and the percentage increase in revenue.

(6) Auction Stopping Rules

Barring extraordinary circumstances,

bidding will remain open on all licenses

until bidding stops on every license.

Thus, the auction will close for all

licenses when one round passes during

which no bidder submits a new

acceptable bid on any license, applies a

proactive waiver, or withdraws a

previous high bid.

The FCC retains the discretion,

however, to keep an auction open even

if no new acceptable bids or proactive

waivers are submitted, and no previous

high bids are withdrawn. In this event,

the effect will be the same as if a bidder

had submitted a proactive waiver. Thus,

the activity rule will apply as usual, and

a bidder with insufficient activity will

either lose bidding eligibility or use an

activity rule waiver (if it has any left).

Further, in its discretion, the FCC

reserves the right to declare that the

auction will end after a specified

number of additional rounds (‘‘special

stopping rule’’). If the FCC invokes this

special stopping rule, it will accept bids

in the final round(s) only for licenses on

which the high bid increased in at least

one of the preceding specified number

of rounds. The FCC intends to exercise

this option only in extreme

circumstances, such as where the

auction is proceeding very slowly,

where there is minimal overall bidding

activity, or where it appears likely that

the auction will not close within a

reasonable period of time. Before

exercising this option, the FCC is likely

to attempt to increase the pace of the

auction by, for example, moving the

auction into the next stage (where

bidders would be required to maintain

a higher level of bidding activity),

increasing the number of bidding

rounds per day, and/or increasing the

amount of the minimum bid increments

for the limited number of licenses where

there is still a high level of bidding

activity.

(7) Auction Delay, Suspension, or

Cancellation

By public notice or by announcement

during the auction, the FCC may delay,

suspend or cancel the auction in the

event of natural disaster, technical

obstacle, evidence of an auction security

breach, unlawful bidding activity,

administrative or weather necessity, or

for any other reason that affects the fair

and competitive conduct of competitive

bidding. In such cases, the FCC, in its

sole discretion, may elect to: resume the

auction starting from the beginning of

the current round; resume the auction

starting from some previous round; or

cancel the auction in its entirety.

Network interruption may cause the

FCC to delay or suspend the auction.

B. Bidding Procedures

(1) Round Structure

The initial bidding schedule will be

announced by public notice at least one

week before the start of the auction, and
Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices 53635

will be included in the registration

mailings. The round structure for each

bidding round contains a single bidding

period followed by the release of the

round results.

The FCC 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 FCC may increase or

decrease the amount of time for the

performance and review periods, or the

number of rounds per day, depending

upon the bidding activity level and

other factors.

(2) Minimum Opening Bid/Reserve

Prices

When FCC licenses are subject to

auction (i.e., because they are mutually

exclusive) the recently enacted

Balanced Budget Act of 1997 calls upon

the Commission to prescribe methods

by which a reasonable reserve price is

required or minimum opening bid

established, unless it determines that

such an assessment is not in the public

interest. Balanced Budget Act of 1997,

Public Law 105–33, 111 Stat. 251

(1997); 47 U.S.C. § 309(j)(4)(F). In light

of the Balanced Budget Act, the

Commission will release a subsequent

Public Notice which will seek comment

on a proposal that a reserve price and/

or minimum opening bid be established

for the LMDS auction.

(3) Minimum Acceptable Bids

Once there is a standing high bid on

a license, a bid increment will be

applied to that license to establish a

minimum acceptable bid for the

following round. The Commission will

use its exponential smoothing

methodology to calculate minimum bid

increments. The exponential smoothing

formula calculates the bid increment

based on a weighted average of the

activity received on each license in the

current and all previous rounds. This

methodology will tailor the bid

increment for each license based on

activity, rather than setting a global

increment for all licenses. A detailed

description of the exponential

smoothing bid increment will be

included in the forthcoming Bidder

Information Package.

(4) High Bids

Each bid will be date-and timestamped when it is entered into the

computer system. In the event of tie

bids, the Commission will identify the

high bidder on the basis of the order in

which bids are received by the

Commission, starting with the earliest

bid. The bidding software allows

bidders to make multiple submissions

in a round. Each bid is date-and timestamped according to when it was

submitted. Thus, bids submitted by a

bidder earlier in a round will have an

earlier date-and time-stamp than bids

submitted later in a round.

(5) Bidding

During a bidding period, a bidder may

submit bids for as many licenses as it is

eligible, as well as withdraw high bids

from previous bidding periods, remove

bids placed in the same bidding period,

or permanently reduce eligibility.

Bidders also have the option of making

multiple submissions and withdrawals

in each bidding period, and will not

have a separate period to withdraw bids.

If a bidder enters multiple bids for a

single license in the same round, the

system takes the last bid entered as that

bidder’s bid for the round, and the date

and time stamp of that bid reflect the

latest time the bid was entered.

A bidder’s maximum eligibility in the

first round of the auction is determined

by: (a) the licenses applied for on FCC

Form 175; and (b) the upfront payment

amount deposited. The bid submission

screens will be tailored for each bidder

to include only those licenses for which

the bidder applied on its FCC Form 175.

A bidder also has the option to further

tailor its bid submission screens to call

up specified groups of licenses.

The bidding software requires each

bidder to login to the FCC Auction

System during the bidding period using

the FCC Account Number, Bidder

Identification Number, and confidential

security codes provided in the

registration materials. Bidders are

encouraged to download and print bid

confirmations after they submit their

bids.

In Auction No. 17, the screen will

display a ‘‘Click on Check Box to Bid’’

column that provides a check box for

each Minimum Bid Accepted amount in

place of the bid entry field. To place a

bid at the minimum acceptable bid

amount for a license, a bidder must

click the appropriate box to put a check

mark in it and then press submit to

enter the bid into the auction system.

Bidders may not type in a bid for any

license.

Once the click box is checked, the Bid

Submission screen updates the Group

Total (total dollars bid), Bid-Units, and

Activity amounts, as if a bid amount

had been typed. However, by using the

check boxes, there is no risk of

mistyping bids. Other auction screens

are unchanged, as are the reports.

(6) Bid Withdrawal and Bid Removal

(a) Procedures.

Before the close of a bidding period,

a bidder has the option of removing any

bids placed in that round. By using the

remove bid function in the software, 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. Note that removing a bid will

affect a bidder’s activity for the round in

which it is removed.

Once a round closes, a bidder may no

longer remove a bid. However, in the

next round, a bidder may withdraw

standing high bids from previous

rounds using the withdraw bid function.

A high bidder that withdraws its

standing high bid from a previous round

is subject to the bid withdrawal

payments specified in 47 CFR

101.1103(f), 1.2104(g), and 1.2109. The

procedure for withdrawing a bid and

receiving a withdrawal confirmation is

essentially the same as the bidding

procedure described in Bidding, Part

4.B(4), supra.

The FCC will limit the number of

rounds in which bidders may place

withdrawals to two rounds. These

rounds will be at the bidder’s discretion

and there will be no limit on the

number of bids that may be withdrawn

in either of these rounds. Withdrawals

will still be subject to the bid

withdrawal payments specified in 47

CFR 101.1103(f), 1.2104(g), and 1.2109.

Bidders should note that abuse of the

Commission’s bid withdrawal

procedures could result in the denial of

the ability to bid on a market.

If a high bid is withdrawn, the license

will be offered in the next round at the

second highest bid price, which may be

less than, or equal to, in the case of tie

bids, the amount of the withdrawn bid,

without any bid increment. The FCC

will serve as a ‘‘place holder’’ on the

license until a new acceptable bid is

submitted on that license.

(b) Calculation.

Generally, a bidder who withdraws a

standing high bid during the course of

an auction will be subject to a payment

equal to the lower of: (1) the difference

between the net withdrawn bid and the

subsequent net winning bid; or (2) the

difference between the gross withdrawn

bid and the subsequent gross winning

bid for that license. See 47 CFR

101.1103(f), 1.2104(g), and 1.2109. No

withdrawal payment will be assessed if

the subsequent winning bid exceeds the

withdrawn bid.

(7) Round Results.

The bids placed during a bidding

period are not published until the

conclusion of that bidding period. After

a bidding period closes, the FCC will
53636 Federal Register / Vol. 62, No. 199 / Wednesday, October 15, 1997 / Notices

compile reports of all bids placed, bids

withdrawn, current high bids, new

minimum accepted bids, and bidder

eligibility status (bidding eligibility and

activity rule waivers), and post the

reports for public access.

Reports reflecting bidders’ identities

and bidder identification numbers for

Auction No. 17 will be available before

and during the auction. Thus, bidders

will know in advance of this auction the

identities of the bidders against which

they are bidding.

(8) Auction Announcements

The FCC will use auction

announcements to announce items such

as schedule changes and stage

transitions. All FCC auction

announcements will be available on the

FCC remote electronic bidding system,

as well as the Internet and the FCC

Bulletin Board System.

(9) Other Matters

As noted in Part 3.B, supra, after the

short-form filing deadline, applicants

may make only minor changes to their

FCC Form 175 applications. For

example, permissible minor changes

include deletion and addition of

authorized bidders (to a maximum of

three) and revision of exhibits. Filers

should make these changes on-line, and

submit a letter to Kathleen O’Brien

Ham, Chief, Auctions and Industry

Analysis Division, Wireless

Telecommunications Bureau, Federal

Communications Commission, 2025 M

Street, N.W., Room 5202, Washington,

D.C. 20554 (and mail a separate copy to

Matthew Moses, Auctions and Industry

Analysis Division), briefly summarizing

the changes. Questions about other

changes should be directed to the FCC

Auctions and Industry Analysis

Division at 202–418–0660.

V. Post-Auction Procedures

A. Down Payments and Withdrawn Bid

Payments

After bidding has ended, the

Commission will issue a public notice

declaring the auction closed, identifying

the winning bids and bidders for each

license, and listing withdrawn bid

payments due.

Within five business days after release

of this 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 Government

to 20 percent of its net winning bids

(actual bids less any applicable bidding

credits). See 47 CFR 101.1102(b). In

addition, by the same deadline all

bidders must pay any withdrawn bid

amounts due under 47 CFR 1.2104(g), as

discussed in Part 4.B(5), supra. (Upfront

payments are applied first to satisfy any

withdrawn bid liability, before being

applied toward down payments.)

B. Long-Form Application

Within ten business days after release

of the auction closing notice, winning

bidders must submit a properly

completed long-form application and

required exhibits for each LMDS license

won through the auction. Winning very

small businesses, small businesses, and

entrepreneurs must include an exhibit

demonstrating their eligibility for

bidding credits. See 47 CFR 101.1109(b).

Further filing instructions will be

provided to auction winners at the close

of the auction.

C. Default and Disqualification

Any high 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). In

such event the Commission may reauction the license to existing or new

applicants or offer it to the next highest

bidders (in descending order) at their

final bids. See 47 CFR 1.2109(b) and (c).

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

that it deems necessary, including

institution of proceedings to revoke any

existing licenses held by the applicant.

See 47 CFR 1.2109(d).

D. Refund of Remaining Upfront

Payment Balance

All applicants who submitted upfront

payments but were not winning bidders

for any LMDS license may be entitled to

a refund of their remaining upfront

payment balance after the conclusion of

the auction. No refund will be made

unless there are excess funds on deposit

from that applicant after any applicable

bid withdrawal payments have been

paid.

Bidders who drop out of the auction

completely may be eligible for a refund

of their upfront payments before the

close of the auction. However, bidders

who reduce their eligibility and remain

in the auction are not eligible for partial

refunds of upfront payments until the

close of the auction. Qualified bidders

who have exhausted all their activity

rule waivers, have no remaining bidding

eligibility, and have not withdrawn a

high bid during the auction must submit

a written refund request which includes

wire transfer instructions, a Taxpayer

Identification Number (‘‘TIN’’), and a

copy of their bidding eligibility screen

print, to: Federal Communications

Commission, Billings and Collections

Branch, Attn: Regina Dorsey or Linwood

Jenkins, 1919 M Street, N.W., Room 452,

Washington, D.C. 20554.

Bidders can also fax their request to

the Billings and Collections Branch at

(202) 418–2843. Once the request has

been approved, a refund will be sent to

the address provided on the FCC Form

159.

Note: Refund processing generally takes up

to two weeks to complete. Bidders with

questions about refunds should contact

Regina Dorsey or Linwood Jenkins at 202–

418–1995.

Media Contact: Audrey Spivack at

(202) 418–0654.

Public Safety and Private Wireless

Division: Susan Magnotti or Bob James

at (202) 418–0680; Auctions and

Industry Analysis Division: Mark

Bollinger, Matthew Moses, or Louis

Sigalos at (202) 418–0660.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–27232 Filed 10–14–97; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS

COMMISSION

Deletion of Agenda Items From

October 9th Open Meeting

The following items have been

deleted from the list of agenda items

scheduled for consideration at the

October 9, 1997, Open Meeting and

previously listed in the Commission’s

Notice of October 2, 1997.

Item No., Bureau, Subject

1—Wireless Telecommunications—

Title: Service Rules for the 746–806

MHz Band, and Revisions to Part 27

of the Commission’s Rules and The

Development of Operational,

Technical and Spectrum

Requirements for Meeting Federal,

State and Local Public Safety Agency

Communication Requirements

Through the Year 2010 --

Establishment of Rules and

Requirements for Priority Access

Service (WT Docket No. 96–86).

Summary: The Commission will

consider action concerning service

rules for the 746-806 MHz band and