[Federal Register Volume 65, Number 206 (Tuesday, October 24, 2000)]
[Notices]
[Pages 63584-63587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27409]


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FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-00-38-A (Auction No. 38); DA 00-2291]


Auction of Licenses for the 700 MHz Guard Bands Scheduled for 
February 13, 2001; Comment Sought on Reserve Prices or Minimum Opening 
Bids and Other Auction Procedural Issues

AGENCY: Federal Communications Commission.

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ACTION: Notice.

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SUMMARY: This document announces the auction of eight Guard Band 
Manager licenses (``Auction No. 38'') in the 700 MHz Guard Bands to 
commence on February 13, 2001. This auction will include the licenses 
that remained unsold in Auction No. 33, which closed on September 21, 
2000.

DATES: Comments are due on or before October 20, 2000, and reply 
comments are due on or before October 27, 2000.

ADDRESSES: An original and four copies of all pleadings must be filed 
with the Commission's Secretary, Magalie Roman Salas, Office of the 
Secretary, Federal Communications Commission, 445 Twelfth Street, SW., 
TW-A325, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis 
Division, Wireless Telecommunications Bureau, Howard Davenport, 
Auctions Attorney, or Craig Bomberger, Auctions Analyst, at (202) 418-
0660; or Linda Sanderson, Project Manager, at (717) 338-2888.

SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice 
released October 13, 2000. The complete text of the public notice, 
including Attachment A, is available for inspection and copying during 
normal business hours in the FCC Reference Center (Room CY-A257), 445 
12th Street, SW, Washington, DC. It may also be purchased from the 
Commission's copy contractor, International Transcription Services, 
Inc. (ITS, Inc.) 1231 20th Street, NW., Washington, DC 20036, (202) 
857-3800. It is also available on the Commission's web site at http://www.fcc.gov.

I. General Information

    1. The Wireless Telecommunications Bureau (``Bureau'') has before 
it a ``Request for Waiver'' filed by Harbor Wireless, LLC (Harbor) on 
September 26, 2000 and a ``Supplement to Request for Waiver'' filed by 
Harbor on September 28, 2000. These filings seek to have the Commission 
offer Harbor three of the licenses herein on which Harbor formerly held 
the high bid in Auction No. 33. The Bureau will respond to Harbor's 
request in a separate Order.
    2. Auction No. 38 will include the following licenses:

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              Market No.                          Market name                Block             Bandwidth
----------------------------------------------------------------------------------------------------------------
MEA012...............................  Pittsburgh, PA...................          A   2 MHz
MEA014...............................  Columbus, OH.....................          B   4 MHz
MEA028...............................  Little Rock, AR..................          B   4 MHz
MEA034...............................  Omaha, NE........................          B   4 MHz
MEA037...............................  Oklahoma City, OK................          B   4 MHz
MEA048...............................  Hawaii...........................          B   4 MHz
MEA049...............................  Guam and the Northern Mariana              B   4 MHz
                                        Islands.
MEA051...............................  American Samoa...................          B   4 MHz
----------------------------------------------------------------------------------------------------------------

    3. The frequency allocation for the ``A'' Block license is 746-747/
776-777 MHz. The frequency allocation for the ``B'' Block licenses is 
762-764/792-794 MHz.
    4. The Balanced Budget Act of 1997 requires the Commission to 
``ensure that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures * * *.'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, to seek comment on a variety of 
auction-specific procedures prior to the start of each auction. We 
therefore seek comment on the following issues relating to Auction No. 
38.

II. Auction Structure

A. Simultaneous Multiple Round Auction Design

    5. We propose to award the licenses in a single stage, simultaneous 
multiple-round auction. As described further, this methodology offers 
every license for bid at the same time in successive bidding rounds. We 
seek comment on this proposal.

B. Upfront Payments and Initial Maximum Eligibility

    6. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned taking 
into account such factors as the population in each geographic license 
area, and the value of similar spectrum. As described further, the 
upfront payment is a refundable deposit made by each bidder to 
establish eligibility to bid on licenses. Upfront payments related to 
the specific spectrum subject to auction protect against frivolous or 
insincere bidding and provide the Commission with a source of funds 
from which to collect payments owed at the close of the auction. For 
Auction No. 38, we propose to use the same upfront payments used for 
Auction No. 33. Those calculations were based on information available 
in the form of a congressional estimate of the value of the spectrum. 
Accordingly, we list all licenses, including the related license area 
population and the proposed upfront payment for each, in Attachment A. 
We seek comment on this proposal.
    7. We further propose that the amount of the upfront payment 
submitted by a bidder will determine the initial maximum eligibility 
(as measured in bidding units) for each bidder. Upfront payments will 
not be attributed to specific licenses, but instead will be translated 
into bidding units to define a bidder's initial maximum eligibility, 
which cannot be increased during the auction. The maximum eligibility 
will determine the licenses on which a bidder may bid in each round of 
the auction. Thus, in calculating its upfront payment amount, an 
applicant must determine the maximum number of bidding units it may 
wish to bid on (or hold high bids on) in any single round, and submit 
an upfront payment covering that number of bidding units. We seek 
comment on this proposal.

C. Activity Rules

    8. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to either place a 
valid bid and/or be the standing high bidder during each round of the 
auction rather than waiting until the end to participate. A bidder that 
does not satisfy the activity rule will either use an activity rule 
waiver, if any remain, or lose bidding eligibility in the auction.
    9. We propose a single stage auction with the following activity 
requirement. In each round of the auction, a bidder desiring to 
maintain its eligibility to

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participate in the auction is required to be active on one hundred 
(100) percent of its bidding eligibility. Failure to maintain the 
requisite activity level will result in the use of an activity rule 
waiver, if any remain, or a reduction in the bidder's bidding 
eligibility, thus eliminating the bidder from the auction. We seek 
comment on this proposal.

D. Activity Rule Waivers and Reducing Eligibility

    10. 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. Activity 
waivers are principally a mechanism for auction participants to avoid 
the loss of auction eligibility in the event that exigent circumstances 
prevent them from placing a bid in a particular round.
    11. 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: (i) there are no activity rule waivers 
available; or (ii) the bidder overrides the automatic application of a 
waiver by reducing eligibility, thereby meeting the minimum 
requirements.
    12. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder 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. 
Once eligibility has been reduced, a bidder will not be permitted to 
regain its lost bidding eligibility.
    13. 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.
    14. We propose that each bidder in Auction No. 38 be provided with 
two activity rule waivers that may be used at the bidder's discretion 
during the course of the auction. We seek comment on this proposal.

E. Information Relating to Auction Delay, Suspension or Cancellation

    15. For Auction No. 38, we propose that, by public notice or by 
announcement during the auction, the Bureau 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 Bureau, 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 Bureau to delay or 
suspend the auction. We emphasize that exercise of this authority is 
solely within the discretion of the Bureau, and its use is not intended 
to be a substitute for situations in which bidders may wish to apply 
their activity rule waivers. We seek comment on this proposal.

III. Bidding Procedures

A. Round Structure

    16. The Commission will use its Automated Auction System to conduct 
the electronic simultaneous multiple round auction format for Auction 
No. 38. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction, and will be included in the registration mailings. The 
simultaneous multiple round format will consist of sequential bidding 
rounds, each followed by the release of round results. Details 
regarding the location and format of round results will be included in 
the same public notice.
    17. The Bureau has discretion to change the bidding schedule in 
order to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The Bureau may increase or decrease the amount of time for 
the bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors. We seek 
comment on this proposal.

B. Reserve Price or Minimum Opening Bid

    18. The Balanced Budget Act calls upon the Commission to prescribe 
methods by which a reasonable reserve price will be required or a 
minimum opening bid established when FCC licenses are subject to 
auction (i.e., because the Commission has accepted mutually exclusive 
applications for those licenses), unless the Commission determines that 
a reserve price or minimum bid is not in the public interest. 
Consistent with this mandate, the Commission has directed the Bureau to 
seek comment on the use of a minimum opening bid and/or reserve price 
prior to the start of each auction.
    19. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It is generally used to accelerate 
the competitive bidding process. Also, in a minimum opening bid 
scenario, the auctioneer generally has the discretion to lower the 
amount later in the auction. It is also possible for the minimum 
opening bid and the reserve price to be the same amount.
    20. In light of the Balanced Budget Act, the Bureau proposes to 
establish minimum opening bids for Auction No. 38. The Bureau believes 
a minimum opening bid, which has been utilized in other auctions, is an 
effective bidding tool. A minimum opening bid, rather than a reserve 
price, will help to regulate the pace of the auction and provides 
flexibility. For Auction No. 38, we propose to use the same upfront 
payments used for Auction No. 33. Those calculations were based on 
information available in the form of a Congressional estimate of the 
value of the spectrum. Accordingly, we list all licenses, including the 
related license area population and the proposed minimum opening bid 
for each, in Attachment A. We seek comment on this proposal.
    21. If commenters believe that these minimum opening bids will 
result in substantial numbers of unsold licenses, or are not reasonable 
amounts, or should instead operate as reserve prices, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, we 
particularly seek comment on such factors as, among other things, the 
amount of spectrum being auctioned, levels of incumbency, the 
availability of technology to provide service, the size of the 
geographic service areas, issues of interference with

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other spectrum bands and any other relevant factors that could 
reasonably have an impact on valuation of the 700 MHz Guard Bands. 
Alternatively, comment is sought on whether, consistent with the 
Balanced Budget Act, the public interest would be served by having no 
minimum opening bid or reserve price.

C. Minimum Accepted Bids and Bid Increments

    22. 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. For Auction No. 38, we propose to set a 
minimum 10 percent increment. This means that a new bid placed by a 
bidder must be at least 10 percent greater than the previous bid 
received on the license. The Bureau retains the discretion to change 
the methodology for determining the minimum bid increment if they 
determine the circumstances so dictate. Advanced notice of the Bureau's 
decision to do so will be announced via the Automated Auction System.
    23. Bidders will enter their bid as multiples of the bid increment 
(i.e., with a 10 percent bid increment, a bid of 1 increment will place 
a bid 10 percent above the previous high bid, a bid of 2 increments 
will place a bid 20 percent above the previous high bid). We seek 
comment on this proposal.

D. Information Regarding Bid Withdrawal and Bid Removal

    24. For Auction No. 38, we proposed the following bid removal and 
bid withdrawal procedures. Before the close of a bidding period, a 
bidder has the option of removing any bid 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 a withdrawal payment. Once a 
round closes, a bidder may no longer remove a bid. We seek comment on 
this bid removal procedure.
    25. In the Part 1 Third Report and Order, 63 FR 2315 (January 15, 
1998) the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and the pursuit of 
efficient backup strategies as information becomes available during the 
course of an auction. In Auction No. 38, however, aggregation of 
licenses will not be possible because only eight licenses will be 
auctioned. Accordingly, for this auction, we propose that bidders not 
be permitted to withdraw bids in any round. We seek comment on this 
proposal.

E. Stopping Rule

    26. For Auction No. 38, the Bureau proposes to employ a 
simultaneous stopping rule approach. The Bureau has discretion ``to 
establish stopping rules before or during multiple round auctions in 
order to terminate the auction within a reasonable time.'' A 
simultaneous stopping rule means that all licenses remain open until 
the first round in which no new acceptable bids or proactive waivers 
are received. After the first such round, bidding closes simultaneously 
on all licenses. Thus, unless circumstances dictate otherwise, bidding 
would remain open on all licenses until bidding stops on every license.
    27. The Bureau seeks comment on a modified version of the 
simultaneous stopping rule. The modified stopping rule would close the 
auction for all licenses after the first round in which no bidder 
submits a proactive waiver or a new bid on any license on which it is 
not the standing high bidder. Thus, absent any other bidding activity, 
a bidder placing a new bid on a license for which it is the standing 
high bidder would not keep the auction open under this modified 
stopping rule. The Bureau further seeks comment on whether this 
modified stopping rule should be used unilaterally or only in stage 
three of the auction.
    28. The Bureau proposes to retain the discretion to keep an auction 
open even if no new acceptable bids or proactive waivers are submitted. 
In this event, the effect will be the same as if a bidder had submitted 
a proactive waiver. The activity rule, therefore, will apply as usual, 
and a bidder with insufficient activity will either lose bidding 
eligibility or use a remaining activity rule waiver.
    29. Finally, we propose that the Bureau reserve the right to 
declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the Bureau 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 Bureau proposes to 
exercise this option only in certain circumstances, such as, for 
example, where the auction is proceeding very slowly, there is minimal 
overall bidding activity, or it appears likely that the auction will 
not close within a reasonable period of time. Before exercising this 
option, the Bureau 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. We seek comment on these proposals.

IV. Comments

    30. An original and four copies of all pleadings must be filed with 
the Commission's Secretary, Magalie Roman Salas, Office of the 
Secretary, Federal Communications Commission, 445 Twelfth Street, SW., 
TW-A325, Washington, DC 20554. In addition, one copy of each pleading 
must be delivered to each of the following locations: (i) The 
Commission's duplicating contractor, International Transcription 
Service, Inc. (ITS), 1231 20th Street, NW., Washington, DC 20036; (ii) 
Office of Media Relations, Public Reference Center, 445 Twelfth Street, 
SW., Suite CY-A257, Washington, DC 20554; (iii) Rana Shuler, Auctions 
and Industry Analysis Division, Wireless Telecommunications Bureau, 445 
Twelfth Street, SW., Suite 4-A628, Washington, DC 20554. Comments and 
reply comments will be available for public inspection during regular 
business hours in the FCC Public Reference Room, Room CY-A257, 445 12th 
Street, SW., Washington, DC 20554.

Federal Communications Commission.
Margaret Wiener,
Deputy Chief, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau.
[FR Doc. 00-27409 Filed 10-23-00; 8:45 am]
BILLING CODE 6712-01-U