[Federal Register Volume 80, Number 57 (Wednesday, March 25, 2015)]
[Proposed Rules]
[Pages 15715-15722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06864]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[AU Docket No. 15-3; DA 15-25]


Auction of FM Broadcast Construction Permits Scheduled for July 
23, 2015; Comment Sought on Competitive Bidding Procedures for Auction 
98

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures; comment sought.

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SUMMARY: The Wireless Telecommunications and Media Bureaus (the 
Bureaus) announce the auction of certain FM broadcast construction 
permits. This document also seeks comment on competitive bidding 
procedures for Auction 98.

DATES: Comments are due on or before April 1, 2015, and reply comments 
are due on or before April 8, 2015. Bidding for construction permits in 
Auction 98 is scheduled to begin on July 23, 2015.

ADDRESSES: Interested parties may submit comments to the Auction 98 
Request for Comment by any of the following methods:
    <bullet> FCC's Web site: Federal Communication Commission's 
Electronic Comment Filing System (ECFS): http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.
    <bullet> Mail: FCC Headquarters, 445 12th Street SW., Room TW-A325, 
Washington, DC 20554.
    <bullet> People With Disabilities: To request materials in 
accessible formats for

[[Page 15716]]

people with disabilities (braille, large print, electronic files, or 
audio format), send an email to <a href="/cdn-cgi/l/email-protection#50161313656064103633337e373f26"><span class="__cf_email__" data-cfemail="65232626505551250306064b020a13">[email protected]</span></a> or call the Consumer & 
Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 
(TTY).
    For detailed instructions for submitting comments, see the 
SUPPLEMENTARY INFORMATION section of this document.
    Initial Paperwork Reduction Act of 1995 Analysis:
    This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. In addition, therefore, it does not contain any proposed 
information collection burden for small business concerns with fewer 
than 25 employees, pursuant to the Small Business Paperwork Relief Act 
of 2002, Public Law 107-198. See 44 U.S.C. 3506(c)(4).

FOR FURTHER INFORMATION CONTACT:
    Wireless Telecommunications Bureau, Auctions and Spectrum Access 
Division: For auction legal questions: Lynne Milne or Howard Davenport 
at (202) 418-0660; for general auction questions: Jeff Crooks at (202) 
418-0660 or Sue Sterner at (717) 338-2868.
    Media Bureau, Audio Division: For FM service rules questions: Lisa 
Scanlan or Tom Nessinger at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 98 Request 
for Comment in AU Docket No. 15-3, DA 15-25, released on March 16, 
2015. The complete text of this document, including any attachment, is 
available for public inspection and copying from 8:00 a.m. to 4:30 p.m. 
Eastern Time (ET) Monday through Thursday or from 8:00 a.m. to 11:30 
a.m. ET on Fridays in the FCC Reference Information Center, 445 12th 
Street SW., Room CY-A257, Washington, DC 20554. The Auction 98 Request 
for Comment and related documents also are available on the Internet at 
the Commission's Web site: http://wireless.fcc.gov/auctions/98/, or by 
using the search function for AU Docket No. 15-3 on the Commission's 
ECFS Web page at http://www.fcc.gov/cgb/ecfs/.
    All filings in response to the Auction 98 Request for Comment must 
refer to AU Docket No. 15-3. The Bureaus strongly encourage interested 
parties to file comments electronically, and request that an additional 
copy of all comments and reply comments be submitted electronically to 
the following address: <a href="/cdn-cgi/l/email-protection#f091859384999f9ec9c8b0969393de979f86"><span class="__cf_email__" data-cfemail="4d2c382e3924222374750d2b2e2e632a223b">[email protected]</span></a>.
    <bullet> Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the Federal Communication Commission's 
Electronic Comments Filing System (ECFS): http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.
    <bullet> Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing. Filings can be sent by 
hand or messenger delivery, by commercial overnight courier or by 
first-class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary Attn: WTB/ASAD, Office of the 
Secretary, Federal Communications Commission (FCC). All hand-delivered 
or messenger-delivered paper filings for the Commission's Secretary 
must be delivered to the FCC Headquarters at 445 12th Street SW., Room 
TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 
p.m. Eastern Time (ET). All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building. Commercial overnight mail (other than 
U.S. Postal Service Express Mail and Priority Mail) must be sent to 
9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service 
first-class, Express, and Priority mail must be addressed to 445 12th 
Street SW., Washington, DC 20554.

I. Construction Permits in Auction 98

    1. Auction 98 will offer 131 construction permits in the FM 
broadcast service. The construction permits to be auctioned are for 113 
new FM allotments, including 18 construction permits that were offered 
but not sold or were defaulted upon in prior auctions. Attachment A of 
the Auction 98 Request for Comment lists the specific vacant FM 
allotments, along with the reference coordinates for each vacant FM 
allotment. These comprise FM channels added to the Table of FM 
Allotments, 47 CFR 73.202(b), and designated for use in the indicated 
communities.
    2. Under established Commission policies, an applicant may apply 
for any vacant FM allotment listed in Attachment A of the Auction 98 
Request for Comment. If two or more short-form applications (FCC Form 
175) specify a construction permit for the same FM allotment in Auction 
98, mutual exclusivity exists for auction purposes, and even if only 
one applicant is qualified to bid for a particular construction permit 
in Auction 98, that applicant is required to submit a bid in order to 
obtain that construction permit. Any applicant that submits a short-
form application for Auction 98, but fails to become a qualified bidder 
for any reason, including a failure to timely submit an upfront 
payment, will retain its status as an applicant in Auction 98 and will 
remain subject to the rules prohibiting certain communications.

II. Due Diligence

    3. Each potential bidder is solely responsible for investigating 
and evaluating all technical and marketplace factors that may have a 
bearing on the value of the construction permits for broadcast 
facilities that it is seeking in this auction. Each bidder is 
responsible for assuring that, if it wins a construction permit, it 
will be able to build and operate facilities in accordance with the 
Commission's rules. The FCC makes no representations or warranties 
about the use of this spectrum for particular services. Each applicant 
should be aware that an FCC auction of FM station construction permits 
represents an opportunity to become an FCC permittee in the broadcast 
service, subject to certain conditions and regulations. These 
conditions include, but are not limited to, the condition that FCC 
licenses and other authorizations (whether awarded through competitive 
bidding or otherwise) are subject to the authority of the FCC, under 
the Communications Act of 1934, as amended, to modification through 
rulemaking and adjudicative proceedings. An FCC auction does not 
constitute an endorsement by the FCC of any particular service, 
technology, or product, nor does an FCC construction permit or license 
constitute a guarantee of business success.
    4. An applicant should perform its due diligence research and 
analysis before proceeding, as it would with any new business venture. 
In particular, the Bureaus strongly encourage each potential bidder to 
review all underlying Commission orders, such as the specific Report 
and Order amending the FM Table of Allotments and allotting the FM 
channel(s) on which it plans to bid. A Report and Order adopted in an 
FM allotment rulemaking proceeding may include anomalies such as site 
restrictions or expense reimbursement requirements. Additionally, each 
potential bidder should perform technical analyses and/or refresh any 
previous analyses to assure itself that, should it become a winning 
bidder for any Auction 98 construction permit, it will be able to build 
and operate facilities that will fully comply with all applicable 
technical and legal requirements. The Bureaus strongly encourage each 
applicant to inspect any prospective transmitter sites located in, or 
near, the service area for which it plans to bid; confirm the 
availability of such sites;

[[Page 15717]]

and familiarize itself with 47 CFR 1.1301-1.1319.
    5. The Bureaus strongly encourage each applicant to conduct its own 
research prior to Auction 98 in order to determine the existence of 
pending administrative or judicial proceedings, including pending 
allocation rulemaking proceedings that might affect its decisions 
regarding participation in the auction. The Bureaus strongly encourage 
participants in Auction 98 to continue such research throughout the 
auction. These due diligence considerations are not an exhaustive list 
of steps that should be undertaken prior to participating in this 
auction. As always, the burden is on the potential bidder to determine 
how much research to undertake, depending upon the specific facts and 
circumstances related to its interests.

III. Bureaus Seek Comment on Auction Procedures

A. Auction Structure

    6. Simultaneous Multiple Round Auction Design. The Bureaus propose 
to auction all construction permits included in Auction 98 using the 
Commission's standard simultaneous multiple-round auction format. This 
type of auction offers every construction permit for bid at the same 
time and consists of successive bidding rounds in which eligible 
bidders may place bids on individual construction permits. Typically, 
bidding remains open on all construction permits until bidding stops on 
every construction permit. The Bureaus seek comment on this proposal.
    7. Bidding Rounds. Auction 98 will consist of sequential bidding 
rounds, each followed by the release of round results. The initial 
bidding schedule will be announced in a public notice to be released at 
least one week before the start of the auction. Details on viewing 
round results, including the location and format of downloadable round 
results files, will be included in the same public notice.
    8. The Commission will conduct Auction 98 over the Internet using 
the Commission's Integrated Spectrum Auction System (FCC Auction 
System). Bidders will also have the option of placing bids by telephone 
through a dedicated Auction Bidder Line. The toll-free telephone number 
for the Auction Bidder Line will be provided to qualified bidders prior 
to the start of the auction.
    9. The Bureaus propose to retain the 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. Under this proposal, the Bureaus may change 
the amount of time for the bidding rounds, the amount of time between 
rounds, or the number of rounds per day, depending upon bidding 
activity and other factors. The Bureaus seek comment on this proposal. 
Commenters on this issue should address the role of the bidding 
schedule in managing the pace of the auction, specifically discussing 
the tradeoffs in managing auction pace by bidding schedule changes, by 
changing the activity requirements or bid amount parameters, or by 
using other means.
    10. Stopping Rule. To complete the auction within a reasonable 
time, the Bureaus propose to employ a simultaneous stopping rule 
approach for Auction 98, which means all construction permits remain 
available for bidding until bidding stops on every construction permit. 
Specifically, bidding will close on all construction permits after the 
first round in which no bidder submits any new bid, applies a proactive 
waiver, or, if bid withdrawals are permitted in this auction, withdraws 
any provisionally winning bid which is a bid that would become a final 
winning bid if the auction were to close in that given round. Thus, 
unless the Bureaus announce alternative procedures, the simultaneous 
stopping rule will be used in this auction, and bidding will remain 
open on all construction permits until bidding stops on every 
construction permit. Consequently, it is not possible to determine in 
advance how long the bidding in this auction will last.
    11. Further, the Bureaus propose to retain the discretion to 
exercise any of the following options during Auction 98. (1) Use a 
modified version of the simultaneous stopping rule that would close the 
auction for all construction permits after the first round in which no 
bidder applies a waiver, withdraws a provisionally winning bid (if 
withdrawals are permitted in this auction), or places any new bid on a 
construction permit for which it is not the provisionally winning 
bidder, which means that, absent any other bidding activity, a bidder 
placing a new bid on a construction permit for which it is the 
provisionally winning bidder would not keep the auction open under this 
modified stopping rule. (2) Use a modified version of the simultaneous 
stopping rule that would close the auction for all construction permits 
after the first round in which no bidder applies a waiver, withdraws a 
provisionally winning bid (if withdrawals are permitted in this 
auction), or places any new bid on a construction permit that is not 
FCC held, which means that, absent any other bidding activity, a bidder 
placing a new bid on a construction permit that does not already have a 
provisionally winning bid (an FCC-held construction permit) would not 
keep the auction open under this modified stopping rule. (3) Use a 
modified version of the simultaneous stopping rule that combines (1) 
and (2). (4) Declare the auction will end after a specified number of 
additional rounds (special stopping rule). If the Bureaus invoke this 
special stopping rule, they will accept bids in the specified final 
round(s), after which the auction will close. (5) Keep the auction open 
even if no bidder places any new bid, applies a waiver, or withdraws 
any provisionally winning bid (if withdrawals are permitted in this 
auction). In this event, the effect will be the same as if a bidder had 
applied a waiver. The activity rule will apply as usual, and a bidder 
with insufficient activity will either lose bidding eligibility or use 
a waiver.
    12. The Bureaus propose to exercise these options only in certain 
circumstances, for example, where the auction is proceeding unusually 
slowly or quickly, there is minimal overall bidding activity, or it 
appears likely that the auction will not close within a reasonable 
period of time or will close prematurely. Before exercising these 
options, the Bureaus are likely to attempt to change the pace of the 
auction. For example, the Bureaus may adjust the pace of bidding by 
changing the number of bidding rounds per day and/or the minimum 
acceptable bids. The Bureaus proposed to retain the discretion to 
exercise any of these options with or without prior announcement during 
the auction. The Bureaus seek comment on these proposals.
    13. Information Relating to Auction Delay, Suspension or 
Cancellation. Pursuant to 47 CFR 1.2104(i), the Bureaus propose that 
they may delay, suspend, or cancel Auction 98 in the event of a natural 
disaster, technical obstacle, administrative or weather necessity, 
evidence of an auction security breach or unlawful bidding activity, or 
for any other reason that affects the fair and efficient conduct of 
competitive bidding. The Bureaus will notify participants of any such 
delay, suspension or cancellation by public notice and/or through the 
FCC Auction System's announcement function. If the auction is delayed 
or suspended, the Bureaus may, in their sole discretion, elect to 
resume the auction starting from the beginning of the current round or 
from some previous round, or cancel the

[[Page 15718]]

auction in its entirety. Network interruption may cause the Bureaus to 
delay or suspend the auction. The Bureaus emphasize that they will 
exercise this authority solely at their discretion, and not as a 
substitute for situations in which bidders may wish to apply activity 
rule waivers. The Bureaus seek comment on this proposal.

B. Auction Procedures

    14. Upfront Payments and Bidding Eligibility. The Bureaus have 
delegated authority and discretion to determine an appropriate upfront 
payment for each construction permit being auctioned, taking into 
account such factors as the efficiency of the auction process and the 
potential value of similar construction permits. The upfront payment is 
a refundable deposit made by each bidder to establish eligibility to 
bid on construction permits. Upfront payments that are related to the 
specific construction permits being auctioned 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. With 
these considerations in mind, the Bureaus propose the upfront payments 
set forth in Attachment A of the Auction 98 Request for Comment. The 
Bureaus seek comment on the upfront payments specified in Attachment A 
of the Auction 98 Request for Comment.
    15. The Bureaus further propose that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units. The Bureaus propose to assign each 
construction permit a specific number of bidding units, equal to one 
bidding unit per dollar of the upfront payment listed in Attachment A 
of the Auction 98 Request for Comment. The number of bidding units for 
a given construction permit is fixed and does not change during the 
auction as prices change. A bidder may place bids on multiple 
construction permits, provided that the total number of bidding units 
associated with those construction permits does not exceed the bidder's 
current eligibility. A bidder cannot increase its eligibility during 
the auction; it can only maintain its eligibility or decrease its 
eligibility. Thus, in calculating its upfront payment amount and hence 
its initial bidding eligibility, an applicant must determine the 
maximum number of bidding units on which it may wish to bid (or hold 
provisionally winning bids) in any single round, and submit an upfront 
payment amount covering that total number of bidding units. The Bureaus 
request comment on these proposals.
    16. Activity Rule. 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 late in 
the auction before participating. A bidder's activity in a round will 
be the sum of the bidding units associated with any construction 
permits upon which it places bids during the current round and the 
bidding units associated with any construction permits for which it 
holds provisionally winning bids. Bidders are required to be active on 
a specific percentage of their current bidding eligibility during each 
round of the auction. Failure to maintain the requisite activity level 
would result in the use of an activity rule waiver, if any remain, or a 
reduction in the bidder's eligibility for the next round of bidding, 
possibly curtailing or eliminating the bidder's ability to place 
additional bids in the auction. The Bureaus seek comment on these 
proposals.
    17. The Bureaus propose to divide the auction into at least two 
stages, each with a different activity requirement. Under this 
proposal, a bidder desiring to maintain its current bidding eligibility 
would be required to be active on bidding units associated with 
construction permits representing at least 80 percent of its current 
bidding eligibility in each round of the first stage of the auction. 
During Stage One, a bidder's reduced eligibility for the next round 
would be calculated by multiplying the bidder's current round activity 
level by five-fourths (5/4). The Bureaus propose to advance the auction 
to the next stage by announcement during the auction. A bidder desiring 
to maintain its current bidding eligibility would be required to be 
active in each round of the second stage of Auction 98 on 95 percent of 
its current bidding eligibility. During Stage Two, a bidder's reduced 
eligibility for the next round would be calculated by multiplying the 
bidder's current round activity by twenty-nineteenths (20/19). If the 
Bureaus implement a stage with an activity requirement other than 80 
percent or 95 percent, the Bureaus propose to calculate a bidder's 
reduced eligibility for the next round by multiplying the bidder's 
current round activity by the reciprocal of the activity requirement. 
Failure to maintain the requisite activity level will result in the use 
of an activity rule waiver, if any remain, or a reduction in the 
bidder's eligibility for the next round of bidding, possibly curtailing 
or eliminating the bidder's ability to place additional bids in the 
auction. The Bureaus seek comment on these activity requirements.
    18. The Bureaus retain the discretion to change stages unilaterally 
by announcement during the auction and to change the activity 
requirements during the auction. For example, the Bureaus could decide 
to add an additional stage with a higher activity requirement, not to 
transition to Stage Two if the Bureaus believe the auction is 
progressing satisfactorily under the Stage One activity requirement, or 
to transition to Stage Two with an activity requirement that is higher 
or lower than the 95 percent proposed for Stage Two in the Auction 98 
Request for Comment.
    19. Activity Rule Waivers and Reducing Eligibility. When a bidder's 
activity in the current round is below the required minimum level, it 
may preserve its current level of eligibility through an activity rule 
waiver. An activity rule waiver applies to an entire round of bidding, 
not to a particular construction permit. Activity rule waivers can be 
either proactive or automatic. Activity rule waivers are principally a 
mechanism for a bidder to avoid the loss of bidding eligibility in the 
event that exigent circumstances prevent it from bidding in a 
particular round.
    20. The FCC Auction System assumes that a bidder that does not meet 
the activity requirement would prefer to use an activity rule waiver 
(if available) rather than lose bidding eligibility. Therefore, the 
system will automatically apply a waiver at the end of any bidding 
round in which a bidder's activity is below the minimum required unless 
(1) the bidder has no activity rule waiver remaining or (2) the bidder 
overrides the automatic application of a waiver by reducing 
eligibility, thereby meeting the activity requirement. If a bidder has 
no waiver remaining and does not satisfy the required activity level, 
the bidder's current eligibility will be permanently reduced, possibly 
curtailing or eliminating the ability to place additional bids in the 
auction.
    21. 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 round by using the reduced eligibility function in 
the FCC Auction System. In this case, the bidder's eligibility is 
permanently reduced to bring it into compliance with the activity 
requirement specified for that stage of the auction. Reducing 
eligibility is an irreversible action; once eligibility has been 
reduced, a bidder will not be permitted to regain its lost bidding

[[Page 15719]]

eligibility, even if the round has not yet closed.
    22. Under the proposed simultaneous stopping rule, a bidder may 
apply an activity rule waiver proactively as a means to keep the 
auction open without placing a bid. If a bidder proactively applies an 
activity rule waiver (using the apply waiver function in the FCC 
Auction System) during a bidding round in which no bids are placed or 
withdrawn (if bid withdrawals are permitted in this auction), the 
auction will remain open and the bidder's eligibility will be 
preserved. An automatic waiver applied by the FCC Auction System in a 
round in which there are no new bids, withdrawals (if bid withdrawals 
are permitted in this auction), or proactive waivers will not keep the 
auction open. A bidder cannot apply a proactive waiver after bidding in 
a round, and applying a proactive waiver will preclude it from taking 
any other bidding-related action in that round, including placing bids 
or withdrawing bids (if bid withdrawals are permitted in this auction). 
Applying a waiver is irreversible; once a proactive waiver is 
submitted, it cannot be unsubmitted, even if the round has not yet 
closed.
    23. The Bureaus propose that each bidder in Auction 98 be provided 
with three activity rule waivers that may be used at the bidder's 
discretion during the course of the auction. The Bureaus seek comment 
on this proposal.
    24. Reserve Price or Minimum Opening Bids. Normally, a reserve 
price is an absolute minimum price below which an item will not be sold 
in a given auction. The Bureaus do not propose to establish separate 
reserve prices for the construction permits to be offered in Auction 
98.
    25. A minimum opening bid is the minimum bid price set at the 
beginning of the auction below which no bids are accepted. Because it 
is an effective bidding tool for accelerating the competitive bidding 
process, the Bureaus propose to establish minimum opening bid amounts 
for Auction 98 determined by taking into account the type of service 
and class of facility offered, market size, population covered by the 
proposed broadcast facility, and recent broadcast transaction data. 
Attachment A of the Auction 98 Request for Comment lists a proposed 
minimum opening bid amount for each construction permit available in 
Auction 98. The Bureaus seek comment on the minimum opening bid amounts 
specified in Attachment A of the Auction 98 Request for Comment.
    26. If commenters believe that these minimum opening bid amounts 
will result in unsold construction permits, 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. 
The Bureaus ask commenters to support their claims with valuation 
analyses and suggested amounts or formulas for reserve prices or 
minimum opening bids. In establishing the minimum opening bid amounts, 
the Bureaus particularly seek comment on factors that could reasonably 
have an impact on valuation of the broadcast spectrum, including the 
type of service and class of facility offered, market size, population 
covered by the proposed FM broadcast facility, and any other relevant 
factors.
    27. Bid Amounts. The Bureaus propose that, if the bidder has 
sufficient eligibility to place a bid on a particular construction 
permit in a round, an eligible bidder will be able to place a bid on 
that construction permit in any of up to nine different amounts. Under 
this proposal, the FCC Auction System interface will list the 
acceptable bid amounts for each construction permit. If there are 
duplicate bid amounts due to rounding, the FCC Auction System will omit 
the duplicates and will list fewer than nine acceptable bid amounts for 
the construction permit.
    28. The first of the acceptable bid amounts is called the minimum 
acceptable bid amount. The minimum acceptable bid amount for a 
construction permit will be equal to its minimum opening bid amount 
until there is a provisionally winning bid for the construction permit. 
After there is a provisionally winning bid for a construction permit, 
the minimum acceptable bid amount will be a certain percentage higher. 
That is, the FCC will calculate the minimum acceptable bid amount by 
multiplying the provisionally winning bid amount times one plus the 
minimum acceptable bid percentage. If, for example, the minimum 
acceptable bid percentage is 10 percent, the minimum acceptable bid 
amount will equal (provisionally winning bid amount) * (1.10), rounded 
using the Commission's standard rounding procedures for auctions as 
described in the Auction 98 Request for Comment. If bid withdrawals are 
permitted in this auction, in the case of a construction permit for 
which the provisionally winning bid has been withdrawn, the minimum 
acceptable bid amount will equal the second highest bid received for 
the construction permit.
    29. The FCC will calculate the eight additional bid amounts using 
the minimum acceptable bid amount and a bid increment percentage. The 
first additional acceptable bid amount equals the minimum acceptable 
bid amount times one plus the bid increment percentage, rounded. If, 
for example, the bid increment percentage is 5 percent, the calculation 
is (minimum acceptable bid amount) * (1 + 0.05), rounded, or (minimum 
acceptable bid amount) * 1.05, rounded; the second additional 
acceptable bid amount equals the minimum acceptable bid amount times 
one plus two times the bid increment percentage, rounded, or (minimum 
acceptable bid amount) * 1.10, rounded; etc. The Bureaus will round the 
results using the Commission's standard rounding procedures for 
auctions.
    30. For Auction 98, the Bureaus propose to use a minimum acceptable 
bid percentage of 10 percent. This means that the minimum acceptable 
bid amount for a construction permit will be approximately 10 percent 
greater than the provisionally winning bid amount for the construction 
permit. To calculate the additional acceptable bid amounts, the Bureaus 
proposed to use a bid increment percentage of 5 percent. The Bureaus 
seek comment on these proposals.
    31. The Bureaus retain the discretion to change the minimum 
acceptable bid amounts, the minimum acceptable bid percentage, the bid 
increment percentage, and the number of acceptable bid amounts if the 
Bureaus determine that circumstances so dictate. Further, the Bureaus 
retain the discretion to do so on a construction-permit-by-
construction-permit basis. The Bureaus also retain the discretion to 
limit (a) the amount by which a minimum acceptable bid for a 
construction permit may increase compared with the corresponding 
provisionally winning bid, and (b) the amount by which an additional 
bid amount may increase compared with the immediately preceding 
acceptable bid amount. For example, the Bureaus could set a $10,000 
limit on increases in minimum acceptable bid amounts over provisionally 
winning bids. Thus, if calculating a minimum acceptable bid using the 
minimum acceptable bid percentage results in a minimum acceptable bid 
amount that is $12,000 higher than the provisionally winning bid on a 
construction permit, the minimum acceptable bid amount would instead be 
capped at $10,000 above the provisionally winning bid. The Bureaus seek 
comment on the circumstances under which the Bureaus should employ such 
a limit, factors the Bureaus should consider when determining the 
dollar amount of the limit, and the tradeoffs in setting such a limit 
or

[[Page 15720]]

changing other parameters, such as changing the minimum acceptable bid 
percentage, the bid increment percentage, or the number of acceptable 
bid amounts. If the Bureaus exercise this discretion, they will alert 
bidders by announcement in the FCC Auction System during the auction.
    32. Provisionally Winning Bids. Provisionally winning bids are bids 
that would become final winning bids if the auction were to close in 
that given round. At the end of a bidding round, the FCC Auction System 
determines a provisionally winning bid for each construction permit 
based on the highest bid amount received. If identical high bid amounts 
are submitted on a construction permit in any given round (i.e., tied 
bids), the FCC Auction System will use a random number generator to 
select a single provisionally winning bid from among the tied bids. 
(The FCC Auction System assigns a random number to each bid when the 
bid is entered. The tied bid with the highest random number wins the 
tiebreaker.) The remaining bidders, as well as the provisionally 
winning bidder, can submit higher bids in subsequent rounds. However, 
if the auction were to end with no other bids being placed, the winning 
bidder would be the one that placed the provisionally winning bid. If 
the construction permit receives any bids in a subsequent round, the 
provisionally winning bid again will be determined by the highest bid 
amount received for the construction permit.
    33. A provisionally winning bid will be retained until there is a 
higher bid on the construction permit at the close of a subsequent 
round, unless the provisionally winning bid is withdrawn (if bid 
withdrawals are permitted in this auction). The Bureaus remind bidders 
that provisionally winning bids count toward a bidder's activity level 
for purposes of the activity rule.
    34. Bid Removal and Bid Withdrawal. For Auction 98, the Bureaus 
propose the following bid removal procedures. Before the close of a 
bidding round, a bidder has the option of removing any bid that bidder 
placed in that round. By removing a selected bid in the FCC Auction 
System, a bidder may effectively unsubmit any bid placed within that 
round. In contrast to the bid withdrawal provisions, 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. The Bureaus 
seek comment on this bid removal proposal.
    35. The Bureaus also seek comment on whether bid withdrawals should 
be permitted in Auction 98. When permitted in an auction, bid 
withdrawals provide a bidder with the option of withdrawing bids placed 
in prior rounds that have become provisionally winning bids. A bidder 
may withdraw its provisionally winning bids using the withdraw bids 
function in the FCC Auction System. A bidder that withdraws its 
provisionally winning bid(s), if permitted in this auction, is subject 
to the bid withdrawal payment provisions of 47 CFR 1.2104(g) and 
1.2109.
    36. Based on guidance provided by the Commission in several 
competitive bidding rulemaking proceedings and on the experience of the 
Bureaus with past auctions of FM broadcast construction permits, the 
Bureaus propose to prohibit bidders from withdrawing any bid after the 
close of the round in which the bid was placed. The Bureaus make this 
proposal in light of the site-specific nature and wide geographic 
dispersion of the permits available in this auction, which suggests 
that potential applicants for this auction may have fewer incentives to 
aggregate permits through the auction process (as compared with bidders 
in many auctions of wireless licenses). Thus, the Bureaus believe that 
it is unlikely that bidders will have a need to withdraw bids in this 
auction. Bid withdrawals also could encourage insincere bidding and the 
use of withdrawals for anti-competitive strategic purposes. The Bureaus 
also remain mindful that bid withdrawals, particularly those made late 
in this auction, could result in delays in licensing new FM stations 
and attendant delays in the offering of new broadcast service to the 
public. The Bureaus seek comment on their proposal to prohibit bid 
withdrawals in Auction 98.

C. Post-Auction Payments

    37. Interim Withdrawal Payment Percentage. A bidder that withdraws 
a bid during an auction is subject to a withdrawal payment equal to the 
difference between the amount of the withdrawn bid and the amount of 
the winning bid in the same or a subsequent auction. However, if a 
construction permit for which a bid has been withdrawn does not receive 
a subsequent higher bid or winning bid in the same auction, the FCC 
cannot calculate the final withdrawal payment until that construction 
permit receives a higher bid or winning bid in a subsequent auction. In 
such cases, when that final withdrawal payment cannot yet be 
calculated, the FCC imposes on the bidder responsible for the withdrawn 
bid an interim bid withdrawal payment, which will be applied toward any 
final bid withdrawal payment that is ultimately assessed.
    38. The amount of the interim bid withdrawal payment may range from 
three percent to twenty percent of the withdrawn bid amount. If bid 
withdrawals are allowed in Auction 98, the Bureaus propose that the 
interim bid withdrawal payment be 20 percent of the withdrawn bid, the 
maximum interim bid withdrawal payment percentage allowed by 47 CFR 
1.2104(g)(1). The Bureaus request comment on using twenty percent for 
calculating an interim bid withdrawal payment amount in Auction 98. 
Commenters advocating the use of bid withdrawals should also address 
the percentage of the interim bid withdrawal payment.
    39. Additional Default Payment Percentage. Any winning bidder that 
defaults or is disqualified after the close of an 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 and timely final payment, or is otherwise disqualified) is liable 
for a default payment under 47 CFR 1.2104(g)(2). This default payment 
consists of a deficiency payment equal to the difference between the 
amount of the Auction 98 bidder's winning bid and the amount of the 
winning bid the next time a construction permit covering the same 
spectrum is won in an auction, plus an additional payment equal to a 
percentage of the defaulter's bid or of the subsequent winning bid, 
whichever is less.
    40. Defaults weaken the integrity of the auction process and may 
impede the deployment of service to the public, and an additional 
twenty percent default payment will be more effective in deterring 
defaults than the three percent used in some earlier auctions. 
Moreover, a twenty percent additional default payment amount is 
consistent with the percentage used in recent auctions of FM permits. 
Based on the nature of the service and the construction permits being 
offered, the Bureaus propose for Auction 98 an additional default 
payment of twenty percent of the relevant bid. The Bureaus seek comment 
on this proposal.

IV. Ex Parte Rules

    41. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of

[[Page 15721]]

the subjects discussed. More than a one- or two-sentence description of 
the views and arguments presented is generally required. Other 
provisions pertaining to oral and written ex parte presentations in 
permit-but-disclose proceedings are set forth in 47 CFR 1.1206(b).

V. Supplemental Regulatory Flexibility Analysis

    42. Consistent with the Regulatory Flexibility Act of 1980, as 
amended (RFA), as well as the Bureaus' obligations to small businesses 
under 47 U.S.C. 309(j)(3)(B) and 309(j)(4)(D), the Bureaus have 
prepared this additional analysis to supplement the Commission's 
Initial and Final Regulatory Flexibility Analyses completed in the 
underlying notices of proposed rulemaking and orders, including the 
Broadcast First Report and Order and associated competitive bidding 
orders, which are hereby incorporated by reference. This analysis 
addresses any possible incremental significant economic impact on small 
entities by the competitive bidding procedures proposed in the Auction 
98 Request for Comment implementing such rulemaking orders. The Bureaus 
request written public comments on this supplemental analysis. Comments 
must be filed on or before April 1, 2015, and reply comments are due on 
or before April 8, 2015, and must be identified as responses to this 
supplemental analysis. The Bureaus will send a copy of the Auction 98 
Request for Comment, including this supplemental analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration (SBA).
    43. Need for, and Objectives of, the Proposed Competitive Bidding 
Procedures. The Auction 98 Request for Comment seeks comment on 
proposed procedures to govern Auction 98, an auction of 131 FM radio 
station construction permits. This process is intended to implement the 
Commission's duty under 47 U.S.C. 309(j)(3)(e)(i) to provide notice of 
and adequate time for potential applicants to comment on proposed 
auction procedures. The objective is to promote the efficient and fair 
administration of the competitive bidding process for all Auction 98 
participants, including small businesses.
    44. The Auction 98 Request for Comment seeks comment on proposed 
procedures for conducting Auction 98, including: (1) Use of a 
simultaneous multiple-round auction format, consisting of sequential 
bidding rounds with a simultaneous stopping rule (with discretion to 
exercise alternative stopping rules under certain circumstances); (2) A 
specific minimum opening bid amount for each construction permit 
proposed to be offered in Auction 98; (3) A specific upfront payment 
amount for each construction permit; (4) Establishment of a bidder's 
initial bidding eligibility in bidding units based on that bidder's 
upfront payment through assignment of a specific number of bidding 
units for each construction permit; (5) Use of an activity rule that 
would require bidders to bid actively during the auction rather than 
waiting until late in the auction before participating; (6) Use of 
different activity requirements in two stages of the auction, with the 
Bureaus retaining discretion to change the activity requirement during 
the auction; (7) Provision of three activity rule waivers for each 
bidder to allow it to preserve bidding eligibility during the course of 
the auction; (8) Use of minimum acceptable bid amounts and bid 
increments, along with a proposed methodology for calculating such 
amounts, with the Bureaus retaining discretion to change their 
methodology if circumstances dictate; (9) A procedure for breaking ties 
if identical high bid amounts are submitted on a permit in a given 
round; (10) Bid removal procedures; (11) Whether to permit bid 
withdrawals; (12) Establishment of an interim bid withdrawal percentage 
of 20 percent of the withdrawn bid in the event the Bureaus allow bid 
withdrawals in Auction 98; and (13) Establishment of an additional 
default payment of 20 percent under 47 CFR 1.2104(g)(2) in the event 
that a winning bidder defaults or is disqualified after the auction.
    45. Description and Estimate of the Number of Small Entities to 
which Specified Auction 98 Procedures Will Apply. The RFA directs 
agencies to provide a description of and, where feasible, an estimate 
of the number of small entities that may be affected by rules proposed 
in that rulemaking proceeding, if adopted. The RFA generally defines 
the term small entity as having the same meaning as the terms small 
business, small organization, and small governmental jurisdiction. In 
addition, the term small business has the same meaning as the term 
small business concern 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) satisfies any 
additional criteria established by the SBA. Moreover, the SBA has 
created a small business size standard of $38.5 million or less in 
annual receipts for establishments primarily engaged in broadcasting 
aural programs. The size data provided by the SBA, however, does not 
enable the Bureaus to make a meaningful estimate of the number of small 
entities who may participate in Auction 98.
    46. The specific procedures on which comment is sought in the 
Auction 98 Request for Comment will affect directly all applicants 
participating in Auction 98. The number of entities that may apply to 
participate in Auction 98 is unknown. Based on the numbers of 
applicants in prior FM auctions, the Bureaus estimate that the number 
of applicants for Auction 98 may range from approximately 175 to 260. 
This estimate is based on the number of applicants who filed short-form 
applications to participate in previous auctions of FM radio station 
construction permits (exclusive of closed auctions). In the eight open 
FM broadcast auctions held to date, an average of 1.98 short-form 
applications were filed per construction permit offered, with a median 
of 1.365 applications per permit. If those figures apply to Auction 98, 
the number of applicants may range between 179 and 259. The Bureaus 
recognize, however, that the actual number of applicants for Auction 98 
could vary significantly as any individual's or entity's decision to 
participate may be affected by a number of factors beyond the 
Commission's control.
    47. The Bureaus are unable to accurately develop an estimate based 
on the number of small entities that applied to participate in prior 
broadcast auctions because that information is not collected from 
applicants for broadcast auctions in which bidding credits are not 
based on an applicant's size (as is the case in auctions of licenses 
for wireless services). Potential applicants in Auction 98 may include 
existing holders of broadcast station construction permits or licenses, 
as well as non-licensees. The Bureaus note, however, that the 
Commission has recently estimated that 97 percent of radio broadcasters 
met the SBA's prior definition of small business concern, based on 
annual revenues of $7 million. Moreover, the SBA has since increased 
that revenue threshold to $38.5 million. Based on this assessment, the 
Bureaus conclude that nearly all of Auction 98 applicants will likely 
meet the SBA's definition of a small business concern.
    48. Legal Basis. The Commission has established a framework of 
competitive bidding rules pursuant to which it has conducted auctions 
since the inception of the auction program in 1994 and would conduct 
Auction 98. The basis for those rules is found in various statutory 
provisions, including 47

[[Page 15722]]

U.S.C. 154(i), 301, 302, 303(e), 303(f), 303(r), 304, 307 and 309(j). 
The Commission has directed the Bureaus, under delegated authority, to 
seek comment on a variety of auction-specific procedures prior to the 
start of each auction.
    49. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements. In the Auction 98 Request for Comment, the 
Bureaus do not propose to implement any new reporting requirements, 
recordkeeping requirements or any other compliance requirements. Any 
individual or entity seeking to participate in an auction must submit a 
short-form application (FCC Form 175). The information collected on FCC 
Form 175 is used by the Bureaus to determine if an applicant is 
legally, technically, and financially qualified to participate in a 
Commission auction. Additionally, if an applicant applies for status as 
a new entrant auction participant pursuant to Commission rules, the 
Commission uses information collected on FCC Form 175 to determine 
whether the applicant is eligible for the status requested. If an 
applicant is a winning bidder, it is required to submit a more detailed 
long-form application (such as an FCC Form 301 for an FM station), 
including any showings to demonstrate its eligibility for new entrant 
status it may have claimed. This two-phased process helps minimize 
reporting and compliance requirements for auction applicants.
    50. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered. The RFA requires an 
agency to describe any significant alternatives beneficial to small 
entities considered in reaching a proposed approach, which may include 
the following four alternatives (among others): (1) Establishment of 
differing compliance or reporting requirements or timetables that take 
into account the resources available to small entities; (2) 
clarification, consolidation, or simplification for small entities of 
compliance and reporting requirements; (3) use of performance, rather 
than design, standards; and (4) an exemption for small entities.
    51. The Bureaus propose a number of specific procedures to govern 
an auction of 131 FM radio station construction permits, which are 
summarized above in this supplemental analysis. Based on experience in 
conducting numerous auctions since the program's inception in 1994, the 
Commission has taken steps to minimize the impact of its auction 
procedures on small businesses. For example, following consideration of 
any comments submitted in response to the Auction 98 Request for 
Comment, the Bureaus will release a public notice to provide detailed 
guidance for potential applicants on how to complete a short-form 
application, participate in the auction, and comply with the various 
competitive bidding requirements applicable to all Auction 98 
applicants.
    52. The Commission designed the auction application process to 
minimize reporting and compliance requirements for applicants, 
including small business applicants. In the first part of the 
Commission's two-phased auction application process, parties desiring 
to participate in an auction file streamlined, short-form applications 
in which they certify under penalty of perjury as to their 
qualifications. Eligibility to participate in bidding is based on an 
applicant's short-form application and certifications, as well as its 
upfront payment. In the second phase of the process, winning bidders 
file a more comprehensive long-form application. Thus, a small business 
which fails to become a winning bidder does not need to file a long-
form application and provide the additional showings and more detailed 
demonstrations required of a winning bidder.
    53. The Commission provides a number of resources through which 
potential auction participants, including small entities, may seek 
clarification of or guidance on complying with competitive bidding 
rules and procedures, reporting requirements, and the FCC's auction 
system. An FCC Auctions Hotline provides access to Commission staff for 
information about the auction process and procedures. The FCC Auctions 
Technical Support Hotline is another resource which provides technical 
assistance to applicants, including small business entities, on issues 
such as access to or navigation within the electronic FCC Form 175 and 
use of the FCC's auction system. These hotlines are generally 
accessible during regular business hours. Commission staff also 
produces a web-based, interactive online tutorial for each auction 
which potential applicants, including small businesses, may access to 
familiarize themselves with auction procedures, filing requirements and 
other matters related to an auction. Once posted, the online tutorial 
remains available for reference and is accessible anytime.
    54. The Bureaus also make various databases and other sources of 
information, including the Media Bureau's Consolidated Database System, 
the Auctions program Web sites, and copies of Commission decisions, 
available to the public without charge, providing a low-cost mechanism 
for small businesses to conduct research prior to and throughout the 
auction. Prior to and at the close of Auction 98, the Bureaus will post 
public notices on the Auctions Web site, which articulate auction 
procedures and deadlines. The Bureaus make this information easily 
accessible and without charge to benefit all Auction 98 applicants, 
including small businesses, by lowering their administrative costs to 
comply with the Commission's competitive bidding rules.
    55. Prior to the start of bidding in each auction, all auction 
applicants are given an opportunity to become familiar with auction 
procedures and the bidding system by participating in a mock auction. 
Further, the Commission intends to conduct Auction 98 electronically 
over the Internet using its web-based auction system that eliminates 
the need for qualified bidders to be physically present in a specific 
location. Qualified bidders also have an option to place bids by 
telephone. These mechanisms are made available to facilitate 
participation in Auction 98 by all applicants, including small business 
entities. Moreover, the adoption of bidding procedures in advance of 
the auction, consistent with statutory directive, is designed to ensure 
that the auction will be administered predictably and fairly for all 
participants, including small businesses.
    56. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Procedures for which Comment is Solicited. None. These proposed 
procedures for the conduct of Auction 98 constitute the more specific 
implementation of the competitive bidding rules contemplated by Parts 1 
and 73 of the Commission's rules and the underlying rulemaking orders, 
including the Broadcast First Report and Order and associated 
competitive bidding orders, and are fully consistent therewith.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2015-06864 Filed 3-24-15; 8:45 am]
 BILLING CODE 6712-01-P


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