[Federal Register Volume 87, Number 32 (Wednesday, February 16, 2022)]
[Proposed Rules]
[Pages 8764-8772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-03182]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 27

[AU Docket No. 20-429; DA 22-120; FR ID 71309]


Auction of Flexible-Use Licenses in the 2.5 GHz Band for Next-
Generation Wireless Services; Further Comment Sought on Competitive 
Bidding Procedures for Auction 108

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: The Office of Economics and Analytics and the Wireless 
Telecommunications Bureau seek further comment on the procedures to be 
used for Auction 108, an auction of approximately 8,300 geographic 
overlay licenses in the 2.5 GHz band. This document describes the 
procedures for an ascending clock auction format and seeks comment on 
whether this format would address concerns and suggestions raised by 
commenters with respect to both the single-round and simultaneous 
multiple-round auction formats on which the Federal Communication 
Commission (Commission or FCC) sought comment in the Auction 108 
Comment Public Notice.

DATES: Comments are due on or before February 23, 2022.

ADDRESSES: Interested parties may file comments in AU Docket No. 20-
429. Comments may be filed using the Commission's Electronic Comment 
Filing System (ECFS) or by filing paper copies. Interested parties are 
strongly encouraged to file comments electronically.
    <bullet> Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS at https://www.fcc.gov/ecfs/.
    <bullet> Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing.
    <bullet> Filings in response to the Public Notice can be sent by 
commercial courier or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    <bullet> Commercial deliveries (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Dr., 
Annapolis Junction, MD 20701.
    <bullet> U.S. Postal Service first-class, Express, or Priority mail 
must be addressed to 45 L Street NE, Washington, DC 20554.
    <bullet> Until further notice, the Commission no longer accepts any 
hand or messenger delivered filings. This is a temporary measure taken 
to help protect the health and safety of individuals, and to mitigate 
the transmission of COVID-19.
    <bullet> Email: Commenters are asked to also submit a copy of their 
comments and reply comments electronically to the following address: 
<a href="/cdn-cgi/l/email-protection#45243026312c2a2b74757d052326266b222a33"><span class="__cf_email__" data-cfemail="9cfde9ffe8f5f3f2adaca4dcfaffffb2fbf3ea">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: 
    Auction Legal Questions: Daniel Habif, (202) 418-0660, 
<a href="/cdn-cgi/l/email-protection#470326292e222b690f26252e210721242469202831"><span class="__cf_email__" data-cfemail="d89cb9b6b1bdb4f690b9bab1be98bebbbbf6bfb7ae">[email protected]</span></a>; Lyndsey Grunewald, (202) 418-0660, 
<a href="/cdn-cgi/l/email-protection#f4b88d9a9087918ddab386819a9183959890b4929797da939b82"><span class="__cf_email__" data-cfemail="6f2316010b1c0a1641281d1a010a180e030b2f090c0c41080019">[email protected]</span></a>; or Scott Mackoul, (202) 418-0660, 
<a href="/cdn-cgi/l/email-protection#a8fbcbc7dcdc86e5c9cbc3c7ddc4e8cecbcb86cfc7de"><span class="__cf_email__" data-cfemail="86d5e5e9f2f2a8cbe7e5ede9f3eac6e0e5e5a8e1e9f0">[email protected]</span></a>.
    General Auction Questions: (717) 338-2868.
    2.5 GHz Band Licensing Questions: Madelaine Maior, (202) 418-1466, 
<a href="/cdn-cgi/l/email-protection#84c9e5e0e1e8e5edeae1aac9e5edebf6c4e2e7e7aae3ebf2"><span class="__cf_email__" data-cfemail="a4e9c5c0c1c8c5cdcac18ae9c5cdcbd6e4c2c7c78ac3cbd2">[email protected]</span></a> <a href="/cdn-cgi/l/email-protection#b2ffd3d6d7ded3dbdcd79cffd3dbddc0f2d4d1d19cd5ddc4"><span class="__cf_email__" data-cfemail="eea38f8a8b828f87808bc0a38f87819cae888d8dc0898198">[email protected]</span></a> or Nadja Sodos-Wallace, 
(202) 418-0955, <a href="/cdn-cgi/l/email-protection#9ed0fffaf4ffb0cdf1faf1ede9fff2f2fffdfbdef8fdfdb0f9f1e8"><span class="__cf_email__" data-cfemail="e2ac83868883ccb18d868d9195838e8e838187a2848181cc858d94">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 108 Further 
Comment Public Notice, AU Docket No. 20-429, DA 22-120, adopted on 
February 9, 2022 and released on February 9, 2022. The complete text of 
the Auction 108 Further Comment Public Notice is available on the 
Commission's website at https://www.fcc.gov/auction/108 or by using the 
search function for AU Docket No. 20-429, DA 22-120, on the 
Commission's Electronic Comment Filing System (ECFS) web page at 
www.fcc.gov/ecfs. Alternative formats are available to persons with 
disabilities by sending an email to <a href="/cdn-cgi/l/email-protection#14525757212420547277773a737b62"><span class="__cf_email__" data-cfemail="bbfdf8f88e8b8ffbddd8d895dcd4cd">[email protected]</span></a> or by calling the 
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 
418-0432 (TTY).

I. Introduction

    1. By the Auction 108 Further Comment Public Notice, the Office of 
Economics and Analytics (OEA), jointly with the Wireless 
Telecommunications Bureau (WTB), seeks further comment on the auction 
format to be used for Auction 108. Specifically, the Public Notice 
seeks comment on whether the use of an ascending clock auction format--
a multiple-round auction with bidding for frequency-specific blocks--

[[Page 8765]]

would address certain concerns and suggestions raised by commenters 
with respect to both the single-round and simultaneous multiple-round 
(SMR) auction formats on which the Commission sought comment in the 
Auction 108 Comment Public Notice, 86 FR 12146, March 3, 2021.
    2. On January 13, 2021, the Commission released the Auction 108 
Comment Public Notice seeking comment on competitive bidding procedures 
and various other procedures to be used in Auction 108, in accordance 
with 47 U.S.C. 309(j)(3). In that public notice, the Commission 
described and sought comment on a single-round auction format with 
user-defined package bidding, and on an SMR auction format.
    3. Numerous commenters responded to the Auction 108 Comment Public 
Notice expressing specific concerns with one or the other format. In 
particular, several commenters express concern that the potentially 
long duration of an SMR auction could deter participation. Some 
commenters assert that the costs of monitoring an overly long auction, 
as well as complying with an extended quiet period, would be burdensome 
for bidders, especially smaller entities, and accordingly, they favor 
the single-round approach. On the other hand, several commenters cite 
the unfamiliarity of the single-round format as problematic, claiming 
that the additional resources needed to understand the auction format 
and develop an optimal bidding strategy could deter participation.
    4. The Auction 108 Further Comment Public Notice seeks comment on 
whether the clock auction procedures set forth here would be an 
appropriate means of addressing these concerns and suggestions. The 
clock auction procedures described below, like the SMR, would be for a 
multiple-round auction, a characteristic which is favored by several 
commenters. A clock auction is a familiar auction format, which has 
been used in a number of recent FCC spectrum and Universal Service Fund 
auctions. In addition, comments filed in response to the Auction 108 
Comment Public Notice suggest the use of intra-round bidding to reduce 
the length of an SMR auction. Intra-round bidding, however, is not a 
feature of Commission SMR auctions, but has been regularly used in 
clock auctions. Commenters also suggest the use of proxy bidding as an 
option to reduce the costs to bidders of continually monitoring a 
lengthy multiple-round auction. Proxy bidding has been provided as an 
option to bidders in reverse clock auctions, but has not been a feature 
of past SMR auctions.
    5. To date, the Commission has used an ascending clock auction 
format in situations in which multiple frequency blocks of similar 
spectrum were offered, where a clock auction could be conducted more 
efficiently than could an SMR auction with license-by-license bidding. 
Consistent with these experiences, in the Auction 108 Comment Public 
Notice the Commission discounted the appropriateness of the typical 
clock auction format it uses--with multiple generic blocks in a 
category-- for this auction of heterogenous licenses. However, given 
commenters' requests for a familiar auction format with a manageable 
duration, with the benefits of intra-round bidding and proxy bidding, 
the Auction 108 Further Comment Public Notice seeks comment on whether 
the clock auction format is more responsive to bidder needs than the 
auction formats outlined in the Auction 108 Comment Public Notice.
    6. As an initial matter, the Auction 108 Further Comment Public 
Notice seeks comment on whether the proposals concerning upfront 
payments and bidding eligibility as described in the Auction 108 
Comment Public Notice remain reasonable and appropriate if Auction 108 
is conducted under the clock auction format discussed herein. The clock 
auction procedures discussed in the Auction 108 Further Comment Public 
Notice do not impact the proposals described in the Auction 108 Comment 
Public Notice with respect to implementation of the Commission's part 1 
competitive bidding rules. Thus, in calculating its upfront payment 
amount and hence its initial bidding eligibility for the clock auction 
format set forth below, an applicant would determine the maximum number 
of bidding units on which it may wish to bid in any single round, and 
submit an upfront payment amount covering that total number of bidding 
units.
    7. The Auction 108 Further Comment Public Notice seeks focused 
input on whether the clock auction bidding format discussed herein 
would address issues raised by commenters with respect to both the SMR 
and single-round auction formats. It is not intended to invite further 
comment on other procedures proposed in the Auction 108 Comment Public 
Notice apart from auction design. In light of the limited scope of the 
Auction 108 Further Comment Public Notice and comments urging the 
Commission to move expeditiously to the start of bidding, OEA and WTB 
provide for a single round of comments by February 23, 2022, with no 
filing period for reply comments. A subsequent public notice will 
announce final procedures for Auction 108, including the procedures, 
terms, conditions, dates, and deadlines for applying to and 
participating in Auction 108, as well as provide an overview of the 
post-auction application and payment processes.

II. Further Comment Sought on Bidding Procedures

    8. The Auction 108 Further Comment Public Notice seeks comment on 
additional multiple-round auction procedures prompted by filings in 
this proceeding. In particular, OEA and WTB ask for feedback on the use 
of a clock auction format with bidding on specific licenses. This clock 
auction format, if adopted, would follow the basic structure of the 
ascending clock auction used in previous FCC spectrum clock auctions, 
in which bidding in the clock phase was conducted for multiple generic 
spectrum blocks in a category in a geographic area, with adjustments, 
as described below, to account for the fact that Auction 108 would have 
only a single frequency-specific license in a category in a county. If 
the clock auction format were adopted for Auction 108, there would be 
up to three categories of licenses in each county, with one license 
block in each category. Accordingly, OEA and WTB refer to this specific 
format as a clock auction with a supply of one in each category--or a 
clock-1 auction format. Unlike previous FCC spectrum clock auctions, 
Auction 108 would not include an assignment phase, as none is needed 
with a format that provides for bidding on specific licenses.
    9. OEA and WTB released a technical guide concurrently with the 
Auction 108 Further Comment Public Notice supplementing the information 
in it and providing the mathematical details and algorithms of the 
procedures described therein. The Clock-1 Technical Guide details 
procedures and provide examples for bidding in Auction 108 if a clock 
auction is adopted.

A. Clock-1 Auction Structure

    10. Using the clock-1 format, if adopted, each bidder would be able 
to bid for licenses, where specific licenses will be identified by a 
category within a county. As in the SMR auction format, the auction 
would proceed in a series of rounds, with bidding conducted 
simultaneously for all licenses available in the auction. Consistent 
with prior FCC clock auctions, during each bidding round, the bidding 
system would announce a clock price for each license, and a bidder 
would indicate its demand

[[Page 8766]]

for licenses at the clock prices associated with the current round. 
After the first round, intra-round bids would also be allowed.
    11. The clock price for a license would increase from round to 
round if more than one bidder indicates demand for that license. The 
bidding rounds would continue until, for all licenses--that is, all 
categories in all counties--the number of bidders demanding each 
license does not exceed one. Once bidding rounds stop, the bidder with 
demand for a license becomes the winning bidder.
    12. The Auction 108 Further Comment Public Notice seeks comment on 
the specific procedures OEA and WTB describe for conducting an auction 
of 2.5 GHz licenses, as an alternative approach that addresses the 
concerns of commenters with respect to the single-round and SMR formats 
described in the Auction 108 Comment Public Notice.
1. Single Licenses in Three Bidding Categories
    13. Auction 108 will offer geographic overlay licenses for 
unassigned spectrum in the 2.5 GHz (2496-2690 MHz) band, offered in up 
to three blocks of spectrum--49.5 megahertz, 50.5 megahertz, and 17.5 
megahertz blocks--licensed on a county basis. With overlay licenses, 
licensees obtain the rights to geographic area licenses overlaid on top 
of the existing incumbent licenses, 2.5 GHz Report and Order, 84 FR 
57343, October 25, 2019. As with an ordinary flexible-use license, the 
overlay licensee may operate anywhere within its geographic area, 
subject to protecting the licensed areas (i.e., circular Geographic 
Service Areas with a 35-mile radius) of incumbent licensees. If an 
incumbent licensee in a county cancels or terminates its license, then 
the overlay licensee obtains the rights to operate in the geographic 
area and on the channel of the canceled license. An overlay licensee 
may clear its geographic area by purchasing the incumbent licenses, but 
it does not have the exclusive right to negotiate with the incumbent 
licensee for its spectrum rights or to purchase an incumbent license in 
the geographic area in which it has the overlay rights. For bidding in 
this clock auction, in the counties where available, OEA and WTB would 
designate the 49.5 megahertz block as bidding category 1 (C1); the 50.5 
megahertz block as bidding category 2 (C2); and the 17.5 megahertz 
block as bidding category 3 (C3). Specifically, the C1 license block 
would include channels A1-A3, B1-B3, C1-C3 (49.5 megahertz); the C2 
license block would include channels D1-D3, the J channels, and 
channels A4-G4 (50.5 megahertz); and the C3 license block would include 
channels G1-G3 and the relevant K channels (16.5 megahertz of 
contiguous spectrum and 1 megahertz of the K channels associated with 
the G channel group). Therefore, the combination of a bidding category 
and a county would define a single specific license, and bidding for a 
category and a county under the clock-1 auction format would constitute 
license-by-license bidding, as in the SMR format.
2. Bidding Rounds
    14. Under the clock-1 auction format, Auction 108 would consist of 
multiple, sequential bidding rounds, each followed by the release of 
round results, as would an SMR auction. Bidding would be conducted 
simultaneously for all licenses--all categories in all counties 
available in the auction. In the first bidding round of Auction 108, a 
bidder would indicate, for each category and county, whether it demands 
the license at the minimum opening bid price. During each subsequent 
bidding round, the bidding system would announce a start-of-round price 
and a clock price for each license, and qualified bidders would 
indicate the licenses for which they wish to bid at the prices 
associated with the current round. Bidding rounds would be open for 
predetermined periods of time. Bidders would be subject to activity and 
eligibility rules that govern the pace at which they participate in the 
auction.
    15. For each category and county--that is, each license--the clock 
price for a license would increase from round to round if more than one 
bidder indicates demand for that license. The bidding rounds would 
continue until, for every category and county, demand does not exceed 
one. At that point, the bidder still indicating demand for a license 
would be deemed the winning bidder.
    16. As would be the case with the SMR format, the initial bidding 
schedule for a clock-1 auction would be announced in a public notice to 
be released at least one week before the start of bidding, and OEA 
would retain the discretion to adjust the bidding schedule in order to 
foster an auction pace that reasonably balances speed with the bidders' 
needs to study round results and adjust their bidding strategies. Such 
adjustments may include changes in the amount of time for bidding 
rounds, the amount of time between rounds, and/or the number of rounds 
per day, and would depend upon bidding activity and other factors.
    17. Regardless of the format ultimately adopted, OEA and WTB would 
conduct Auction 108 over the internet. Under the clock-1 format, as 
with an SMR auction, a bidder would submit its bids using the bidding 
system's upload function, which allows bid files in a comma-separated 
values (CSV) text format to be uploaded. The bidding system would allow 
a bidder to submit bids only for licenses in counties the bidder 
selected on its FCC Form 175 and for which the bidder has sufficient 
bidding eligibility.
    18. During each round of the bidding, a bidder would be able to 
modify its bids placed in the current bidding round. It would do so by 
uploading a new file of all its bids, including the modifications, 
which would replace bids previously submitted in the round. The system 
would take the last bid file submission as that bidder's bids for the 
round.
3. Stopping Rule
    19. As in previous FCC clock and SMR auctions, with a clock-1 
format for Auction 108, OEA and WTB would use a simultaneous stopping 
rule, under which all licenses would remain available for bidding until 
the bidding stops on all licenses. The Commission has discretion to 
establish stopping rules before or during multiple round auctions in 
order to complete the auction within a reasonable time, 47 CFR 
1.2104(e). Specifically, bidding would close for all licenses after the 
first round in which demand does not exceed one for any license. 
Consequently, under this approach, it is not possible to determine in 
advance how long Auction 108 would last.
4. Availability of Bidding Information
    20. The bidding system would disclose, after each round of Auction 
108, clock auction round results analogous to those for an SMR auction: 
Namely, for each license, the aggregate demand, the posted price of the 
last completed round, and the clock price for the next round. The 
posted price of the previous round is, generally, the start-of-round 
price if supply exceeds demand; the clock price of the previous round 
if demand exceeds supply; or the price at which a reduction caused 
demand to equal supply. Note that, for Auction 108, supply equals one. 
The identities of bidders making specific bids would not be disclosed 
until after the close of bidding in the auction.
    21. Each bidder would have access to additional information related 
to its own bidding and bid eligibility. Specifically, after the bids of 
a round have been processed, the bidding system would inform each 
bidder of the licenses it currently demands (its

[[Page 8767]]

processed demand) and its eligibility for the next round.

B. Activity Rule

    22. 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, an approach that is routinely used in multiple-
round auctions such as the SMR and the clock auction. For a clock-1 
auction, a bidder's activity in a round for purposes of the activity 
rule would be the sum of the bidding units associated with the bidder's 
demands as applied by the auction system during bid processing (its 
processed demand). Bidders are required to be active on a specific 
percentage (the activity requirement percentage) of their current 
bidding eligibility during each round of the auction. Failure to 
maintain the requisite activity level would result in a reduction in 
the bidder's eligibility, possibly curtailing or eliminating the 
bidder's ability to place bids in subsequent rounds of the auction.
    23. Under this auction format, a bidder would be required to 
maintain a fixed, high level of activity in each round of Auction 108 
in order to maintain its bidding eligibility. Specifically, a bidder 
would be required to be active on between 90% and 100% of its bidding 
eligibility in all rounds, with the specific percentage within this 
range to be set for each round. Thus, the activity rule would be 
satisfied when a bidder has bidding activity on licenses with bidding 
units that total 90% to 100% of its current eligibility in the round. 
OEA and WTB would set the activity requirement percentage initially at 
95%. If the activity rule is met, then the bidder's eligibility would 
not change for the next round. If the activity rule is not met in a 
round, the bidder's eligibility would be reduced accordingly. Bidding 
activity would be based on the bids that are applied by the FCC auction 
bidding system. That is, if a bidder bids to reduce its demand for a 
license, but the FCC auction bidding system cannot apply the request 
because demand for that license would fall below one, then the bidder's 
activity would reflect its unreduced demand.
    24. OEA would retain the discretion to change the activity 
requirement percentage during the auction. The bidding system would 
announce any such changes in advance of the round in which they would 
take effect, giving bidders adequate notice to adjust their bidding 
strategies.
    25. Contingent Bidding Limit. The Auction 108 Further Comment 
Public Notice seeks comment on procedures by which, after Round 1, a 
bidder may submit bids with bidding units totaling up to a contingent 
bidding limit greater than or equal to the bidder's current bidding 
eligibility for the round, as in the three most recent FCC clock 
auctions. A bidder's contingent bidding limit would be calculated as 
its current eligibility times a contingent bidding percentage equal to 
or greater than 100%.
    26. Allowing a bidder to submit bids with associated bidding 
activity greater than its current bidding eligibility would potentially 
help a bidder avoid having its eligibility reduced as a result of 
submitted bids that could not be applied during bid processing. 
However, even under these additional procedures, the bidder's activity 
as applied by the auction system during bid processing would not exceed 
the bidder's current bidding eligibility. That is, if a bidder were 
allowed to submit bids with associated bidding units exceeding 100% of 
its current bidding eligibility, its processed activity would never 
exceed its eligibility.
    27. The Auction 108 Further Comment Public Notice seeks comment on 
whether OEA and WTB should allow bidders to submit bids with associated 
bidding activity greater than their current bidding eligibility. If 
adopted, OEA and WTB would set the initial contingent bidding 
percentage at 120%, which would apply starting in Round 2, subject to 
change in subsequent rounds within a range of 100% to 140%. In any 
bidding round, the auction bidding system would advise the bidder of 
its current bidding eligibility, its required bidding activity, and its 
contingent bidding limit.

C. Acceptable Bids

1. Minimum Opening Bids
    28. Minimum opening bids would serve as initial clock prices under 
a clock-1 auction format. In Round 1 of the auction, qualified bidders 
would indicate the licenses they demand at the minimum opening bids. 
OEA and WTB seek comment on whether use of a clock-1 auction format 
would warrant any change to the minimum opening bids proposed in the 
Auction 108 Comment Public Notice.
2. Clock Price Increments
    29. Under clock-1 procedures for Auction 108, after bidding in the 
first round and before each subsequent round, for each license, the FCC 
auction bidding system would announce the start-of-round price (also 
referred to as the posted price) and the clock price for the upcoming 
round--that is, the lowest price and the highest price at which bidders 
can indicate their demand for the license during the round. As long as 
aggregate demand for the license exceeds one, the start-of-round price 
would be equal to the clock price from the prior round. If demand 
equaled one at a price in a previous round, then the start-of-round 
price for the next round would be equal to the price at which demand 
equaled one. If demand was zero in the previous round, then the start-
of-round price for the next round would not increase.
    30. The clock price for a license for a round would be set by 
adding a percentage increment to the start-of-round price. OEA would 
set the increment percentage within a range of 5% to 30% inclusive, 
with the initial increment percentage at 10%, and potentially would 
adjust the increment as rounds continue. OEA would retain the 
discretion to cap the increment if the total dollar amount of the 
increment (the difference between the clock price and the start-of-
round price) would exceed a certain amount. The 5% to 30% increment 
range and cap would allow OEA and WTB to set a percentage that manages 
the auction pace and takes into account bidders' needs to evaluate 
their bidding strategies while moving the auction along quickly.
3. Intra-Round Bids
    31. The use of intra-round bidding has been suggested as a method 
of reducing the number of bidding rounds needed for the auction to 
reach equilibrium prices. Intra-round bidding could be particularly 
useful in the instant context given the number of licenses being 
offered, such that there would be more benefit than usual in reducing 
the number of bidding rounds. While the Commission has never conducted 
an SMR auction with intra-round bidding, it is a familiar feature of 
the Commission's recent clock auctions. To address commenters' concerns 
about the length of a multiple-round auction while also being mindful 
of comments that the use of a familiar auction format would foster 
participation, the Auction 108 Further Comment Public Notice seeks 
comment on use of intra-round bidding under the clock-1 format. Could 
intra-round bidding be useful in reducing the number of bidding rounds 
needed for the auction to reach equilibrium prices?
    32. In a clock-1 auction, in a round after the first round, a 
bidder would be permitted to make intra-round bids by indicating a 
point between the start-of-round price and the clock price at which its 
demand for a license changes.

[[Page 8768]]

In placing an intra-round bid for a license, a bidder would indicate a 
specific price and the changed quantity it demands (either zero or one) 
if the price for the license should increase beyond that price.
    33. Intra-round bid amounts would be limited to multiples of $10 
for prices below $10,000; to multiples of $100 for prices between 
$10,000 and $100,000, inclusive; and to multiples of $1,000 for prices 
above $100,000.
    34. Intra-round bids would be optional; a bidder may choose to 
express its demands only at the start-of-round price or the clock 
price. Using intra-round bidding would allow the auction system to use 
relatively large percentage increments, thereby speeding up the 
auction, without running the risk that a jump in the clock price will 
overshoot the market clearing price--the point at which only one bidder 
demands the license--because bidders could specify an amount lower than 
the clock price.
4. Proxy Bids
    35. To address commenters' concerns that monitoring every round of 
a multiple-round auction may be burdensome, especially for smaller 
bidders, the Auction 108 Further Comment Public Notice seeks comment on 
providing each bidder with the option to use proxy bidding under the 
clock-1 format. OEA and WTB would permit a bidder to submit a proxy 
instruction to the bidding system to reduce its demand for a license to 
zero at a price higher than the current round's clock price. A bidder 
would submit its proxy instructions along with its bids, using the 
bidding system's upload function described in Section II.A.2 (Bidding 
Rounds), above. Proxy instructions to increase a bidder's demand for a 
license at a given price would not be permitted.
    36. Under these procedures, if a proxy instruction has been 
submitted, the bidding system would automatically submit a proxy bid to 
maintain the bidder's demand for the license in every subsequent round 
as long as the clock price for the round is less than the proxy 
instruction price. In the first round in which the clock price is 
greater than or equal to the proxy instruction price, the bidding 
system would submit a proxy bid on behalf of the bidder to reduce the 
bidder's demand for that license to zero at the proxy instruction 
price.
    37. In the case that a bid to reduce demand, placed according to 
proxy instructions or submitted by the bidder in the round, is not 
applied during bid processing, the bidding system would automatically 
generate a proxy instruction at the bid price and, in the following 
rounds, submit proxy bids on behalf of the bidder according to that 
proxy instruction.
    38. In any round, a bidder can remove or modify any existing proxy 
instructions or proxy bids for the round by uploading a new bid file, 
including the modifications, which would replace any bids and proxy 
instructions previously submitted. The system would take the last bid 
file submission as that bidder's bids and proxy instructions.
    39. As is the case for intra-round bid amounts, proxy instruction 
prices would be limited to multiples of $10 for prices below $10,000; 
to multiples of $100 for prices between $10,000 and $100,000, 
inclusive; and to multiples of $1,000 for prices above $100,000. Proxy 
instructions would not be publicly released either during or after the 
auction.
5. Bid Types
    40. Under a clock-1 auction format for Auction 108, as in other FCC 
spectrum clock auctions, a bidder would indicate in each round the 
licenses it demands at the prices associated with the round. Bidders 
would be permitted to make two types of bids: Simple bids and switch 
bids.
    41. A simple bid indicates a desired quantity (in this auction, one 
or zero) at a price. A bidder that is willing to maintain its demand 
for a license at the new clock price would bid for the license at the 
clock price, indicating that it is willing to pay up to that price, if 
need be, for the license. A bidder that wishes to change the quantity 
it demands for a license (relative to its processed demand from the 
previous round) would express the price (either the clock price or an 
intra-round price) at which it wishes to change its demand.
    42. A switch bid allows the bidder to request to move its demand 
for a license from C1 to C2, or vice versa, within the same county at a 
price for the from category (either the clock price or an intra-round 
price). Switch bids are allowed only in counties with both an available 
Category 1 and a Category 2 license.
    43. Bids to maintain demand would always be applied by the auction 
bidding system during bid processing. Simple bids to change demand and 
switch bids would not necessarily be applied during bid processing. See 
Section II.D (Bid Processing) below for details on bid processing.
6. Missing Bids
    44. Under the clock-1 auction format, a bidder would be required to 
indicate its demands in every round or have a proxy instruction in 
place (as in other FCC spectrum clock auctions), even if its demands at 
the new round's prices are unchanged from the previous round. If a 
bidder does not submit a new bid for a license for which it had 
processed demand from the previous round and does not have a proxy 
instruction in place, the system will consider that a missing bid.
    45. Missing bids are treated by the auction bidding system as 
requests to reduce to a quantity of zero for the license. If these 
requests are applied, then a bidder's bidding activity, and its bidding 
eligibility for the next round, may be reduced. Unlike in previous FCC 
clock auctions, under the clock-1 format for Auction 108, a bidder 
would be permitted to enter proxy instructions. Thus, a bidder that is 
unable to indicate its demands in every round can avoid having missing 
bids by entering appropriate proxy instructions.

D. Bid Processing

    46. After each bidding round, bid processing procedures would 
process bids to change demand to determine the processed demand of each 
bidder for each license and a posted price for each license that would 
serve as the start-of-round price for the next round. The bid 
processing procedures described below are similar in many respects to 
other FCC spectrum clock auctions.
1. No Excess Supply Rule for Bids To Reduce Demand
    47. Under the clock-1 auction format, the FCC auction bidding 
system would not allow a bidder to reduce its demand for a license if 
the reduction would cause demand to fall below one. Therefore, if a 
bidder has been bidding for a specific license but submits a simple bid 
to reduce its demand to zero for the license if the price should 
increase above the price in its bid, the FCC auction bidding system 
would treat the bid as a request to reduce demand that would be applied 
only if the no excess supply rule would be satisfied. Similarly, if a 
bidder submits a switch bid to move its demand from the C1 license to 
the C2 license in the same county, the FCC auction bidding system would 
treat the bid as a request that would be applied only if the no excess 
supply rule would be satisfied for C1 in the county, and vice versa. 
Note, however, if a bid to reduce demand is not applied, the bidder 
will not be asked

[[Page 8769]]

to pay more for the license than the highest price it agreed to pay.
2. Eligibility Rule for Bids To Increase Demand
    48. The bidding system would not allow a bidder to increase its 
demands for licenses if the total number of bidding units associated 
with the bidder's demands exceeds the bidder's bidding eligibility for 
the round. Therefore, if a bidder submits a simple bid to add a license 
for which it did not have processed demand in the previous round, the 
FCC auction bidding system would treat the bid as a request to increase 
demand that would be applied only if that would not cause the bidder's 
activity to exceed its eligibility. Note, the eligibility rule for bids 
to increase demand is always satisfied for switch bids because the 
bidder's processed activity does not change when a switch bid is 
applied (since, in a given county, the C1 and C2 licenses have the same 
number of bidding units).
3. Processed Demand
    49. After a round ends, the bidding system would first consider and 
apply all bids to maintain demand, and then it would process bids to 
change demand in order of price point, where the price point represents 
the percentage of the bidding interval for the round. The bidding 
system would process bids to change demand in ascending order of price 
point, first considering intra-round bids in order of price point and 
then bids at the clock price. The system would consider bids at the 
lowest price point across all licenses, then look at bids at the next 
price point across all licenses, and so on. If there are multiple bids 
at a single price point, the system would process bids in order of a 
bid-specific pseudo-random number. As it considers each submitted bid 
during bid processing, the FCC auction bidding system would determine 
whether there is excess demand for a license at that point in the 
processing in order to determine whether a bidder's request to reduce 
demand for that license can be applied. Likewise, the auction bidding 
system would evaluate the activity associated with the bidder's most 
recently determined demands at that point in the processing to 
determine whether a request to increase demand can be applied.
    50. Because in any given round some bidders may request to increase 
demands for licenses while others may request reductions, the price 
point at which a bid is considered by the auction bidding system can 
affect whether it is applied. In addition, bids that were not applied 
because demand would fall below one or because the bidder's activity 
(as applied by the auction system) would exceed its eligibility would 
be held in a queue and considered, again in price point order, if there 
should be excess demand or if the bidder's activity (as applied by the 
auction system) is reduced sufficiently later in the processing after 
other bids are processed.
    51. Therefore, once a round closes, the auction system would 
process bids to change demand by first considering the bid submitted at 
the lowest price point and determining whether that bid can be applied 
given bidders' demands as determined at that point in the bid 
processing. If the bid can be applied, the licenses that the bidder 
holds at that point in the processing would be adjusted, and aggregate 
demand for the license would be recalculated accordingly. If the bid 
cannot be applied, the unfulfilled bid would be held in a queue to be 
considered later during bid processing for that round. The FCC auction 
bidding system would then consider the bid submitted at the next lowest 
price point, applying it or not given the most recently determined 
demands of bidders. Any unfulfilled requests would again be held in the 
queue, and aggregate demand would again be recalculated. Every time a 
bid is applied, the unfulfilled bids held in the queue would be 
reconsidered, in the order of the original price points of the bids 
(and by pseudo-random number, in the case of tied price points). The 
auction bidding system would not carry over unfulfilled bid requests to 
the next round. The bidding system, however, would generate a proxy bid 
in the case of bids to reduce to zero that are not applied. The bidding 
system would advise bidders of the status of their bids when round 
results are released.
4. Price Determination
    52. The FCC auction bidding system further would determine, based 
on aggregate demand, the posted price for each license for the round 
that would serve as the start-of-round price for the next round. The 
price for a license would increase from round to round as long as there 
is excess demand for the license but would not increase if only a 
single bidder demands the license.
    53. If, at the end of a round, the aggregate demand for a license 
exceeds the supply of one, the posted price would equal the clock price 
for the round. If a reduction in demand was applied during the round 
and caused demand to fall to one, the posted price would be the price 
at which the reduction was applied. If aggregate demand is zero, or one 
and no bid to reduce demand was applied for the license, then the 
posted price would equal the start-of-round price for the round. The 
range of acceptable bid amounts for the next round would be set by 
adding the percentage increment to the posted price.
    54. Under these procedures for a clock-1 auction, if a bid to 
reduce demand is not applied, it is because there is not excess demand 
for the license and, therefore, the posted price would not increase. 
Hence, a bidder that makes a bid to reduce demand that cannot be 
applied would not face a price for the license that is higher than its 
bid price.
    55. After the bids of the round have been processed, if the 
stopping rule has not been met, the FCC auction bidding system would 
announce clock prices to indicate a range of acceptable bids for the 
next round. Each bidder would be informed of the licenses for which it 
has processed demand and the extent of excess demand for the licenses.

E. Winning Bids

    56. Under a clock-1 auction format for Auction 108, a bidder with 
processed demand for a license at the time the stopping rule is met 
would become the winning bidder for the license. The final price for a 
license would be the posted price for the final round.

F. Digital Equity and Inclusion

    57. Finally, as part of the Commission's continuing effort to 
advance digital equity for all, including people of color and others 
who have been historically underserved, marginalized, and adversely 
affected by persistent poverty and inequality, OEA and WTB invite 
comment on any equity-related considerations and benefits (if any) that 
may be associated with the issues discussed herein. Specifically, OEA 
and WTB seek comment on how any bidding procedures for Auction 108 may 
promote or inhibit advances in diversity, equity, inclusion, and 
accessibility.

III. Procedural Matters

A. Second Supplemental Initial Regulatory Flexibility Analysis

    58. OEA and WTB have prepared a Second Supplemental Initial 
Regulatory Flexibility Analysis (Second Supplemental IRFA) of the 
possible significant economic impact on small entities of the policies 
and rules addressed in the Auction 108 Further Comment Public Notice to 
supplement the Regulatory Flexibility Analyses completed in the 2.5 GHz 
Report and

[[Page 8770]]

Order, Auction 108 Comment Public Notice, and other Commission orders 
pursuant to which Auction 108 will be conducted. Written public 
comments are requested on the Second Supplemental IRFA. Comments must 
be identified as responses to the Second Supplemental IRFA and must be 
filed by the same deadline for comments specified in the DATES section 
of this document. OEA and WTB will send a copy of the Auction 108 
Further Comment Public Notice, including the Second Supplemental IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration 
(SBA). In addition, the Auction 108 Further Comment Public Notice and 
the Second Supplemental IRFA (or summaries thereof) will be published 
in the Federal Register.
    59. Need for, and Objectives of, the Proposed Rules. The Auction 
108 Further Comment Public Notice seeks further comment on procedural 
rules to govern Auction 108, which will auction geographic overlay 
licenses of unlicensed spectrum in the 2.5 GHz band (2496-2690 MHz). 
The process is intended to provide notice of and adequate time for 
potential applicants to comment on these additional auction procedures. 
To promote the efficient and fair administration of the competitive 
bidding process for all Auction 108 participants, the Auction 108 
Further Comment Public Notice seeks further comment on the use of a 
clock auction format, including the following modified bidding 
procedures that would address concerns and suggestions raised by 
commenters, including small entities, in response to the Auction 108 
Comment Public Notice:
    <bullet> Use of a clock auction format with a supply of one for 
Auction 108, under which each qualified bidder would indicate in 
successive clock bidding rounds its demand for the single license in 
each category in each specific geographic area;
    <bullet> establishment of categories based on the framework set 
forth in the 2.5 GHz Report and Order, in which up to three blocks of 
spectrum--49.5 megahertz, 50.5 megahertz, and 17.5 megahertz blocks--
would be offered in each available county;
    <bullet> retention by OEA of discretion to adjust the bidding 
schedule in order to manage the pace of Auction 108;
    <bullet> use of a simultaneous stopping rule for Auction 108, under 
which all licenses would remain available for bidding until the bidding 
stops on all licenses;
    <bullet> use of information procedures which would make public 
after each round of Auction 108, for each category in each county, the 
aggregate demand, the posted price of the last completed round, and the 
clock price for the next round;
    <bullet> use of an activity rule that would require bidders to be 
active on between 90% and 100% of their bidding eligibility in all 
regular clock rounds, with the initial activity requirement percentage 
set at 95% and with OEA retaining discretion to change the activity 
requirement percentage during the auction;
    <bullet> use of a contingent bidding limit that would allow a 
bidder to submit bids with associated bidding activity greater than its 
current bidding eligibility;
    <bullet> establishment of an initial contingent bidding percentage 
at 120%, which would be subject to change in subsequent rounds within a 
range of 100% to 140%;
    <bullet> a specific minimum opening bid amount for licenses 
available in Auction 108;
    <bullet> establishment of acceptable bid amounts, including clock 
price increments and intra-round bids, along with a methodology for 
calculating such amounts;
    <bullet> to permit a bidder to submit a proxy instruction to reduce 
its demand for a license to zero at a price higher than the current 
round's clock price;
    <bullet> to permit bidders to make two types of bids, simple bids 
and switch bids, in which a simple bid indicates a desired quantity of 
blocks (one or zero) for a license at a price (either the clock price 
or an intra-round price), and a switch bid allows the bidder to request 
to move its demand from C1 to C2, or vice versa, within the same county 
at a price for the from category (either the clock price or an intra-
round price);
    <bullet> a requirement that bidders indicate their demands in every 
round or submit appropriate proxy instructions, even if their demands 
at the new round's prices are unchanged from the previous round, and 
the treatment of bids that are not reconfirmed as requests to reduce 
demand to a quantity of zero for the license; and
    <bullet> a methodology for processing bids and requests to reduce 
and increase demand.
    60. The procedures for the conduct of Auction 108 on which the 
Auction 108 Further Comment Public Notice seeks further comment 
constitute the more specific implementation of the competitive bidding 
rules contemplated by 47 CFR parts 1 and 27, the 2.5 GHz Report and 
Order, and relevant competitive bidding orders, and are fully 
consistent therewith.
    61. Legal Basis. The Commission's statutory obligations to small 
businesses under the Communications Act of 1934, as amended, are found 
in 47 U.S.C. 309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the 
Commission's competitive bidding rules is found in various provisions 
of the Communications Act of 1934, as amended, including 47 U.S.C. 
154(i), 301, 302, 303(e), 303(f), 303(r), 304, 307, and 309(j). The 
Commission has established a framework of competitive bidding rules, 
updated most recently in 2015, pursuant to which it has conducted 
auctions since the inception of the auctions program in 1994 and would 
conduct Auction 108.
    62. Description and Estimate of the Number of Small Entities to 
Which the Proposed Rules 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 the proposed rules and 
policies, 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.
    63. As noted above, Regulatory Flexibility Analyses were 
incorporated into the 2.5 GHz Report and Order and the Auction 108 
Comment Public Notice. In those analyses, the Commission described in 
detail the small entities that might be significantly affected. In the 
Auction 108 Further Comment Public Notice, OEA and WTB incorporate by 
reference the descriptions and estimates of the number of small 
entities from the previous Regulatory Flexibility Analyses in the 2.5 
GHz Report and Order and the Auction 108 Comment Public Notice.
    64. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities. OEA and WTB do not expect 
the processes and procedures described in the Auction 108 Further 
Comment Public Notice will require small entities to hire attorneys, 
engineers, consultants, or other professionals to participate in 
Auction 108 and comply with the procedures ultimately established 
because of the information, resources, and guidance the Commission 
makes available to potential and actual

[[Page 8771]]

participants. For example, OEA intends to make information on the 
bidding system available and offer demonstrations and other educational 
opportunities for applicants in Auction 108 to familiarize themselves 
with the FCC auction application system and the auction bidding system, 
consistent with the additional bidding procedures described in the 
Auction 108 Further Comment Public Notice. By providing these resources 
as well as the resources discussed below, OEA and WTB expect small 
entities that use the available resources to experience lower 
participation and compliance costs. Nevertheless, while OEA and WTB 
cannot quantify the cost of compliance with the procedures on which 
they seek further comment, they do not believe that the costs of 
compliance will unduly burden small entities that choose to participate 
in the auction because the additional procedures for Auction 108 on 
which the Auction 108 Further Comment Public Notice seeks further 
comment are similar in many respects to the procedures in recent 
spectrum auctions conducted by the Commission.
    65. Steps Taken to Minimize the Significant Economic Impact on 
Small Entities, and Significant Alternatives Considered. The RFA 
requires an agency to describe any significant, specifically small 
business, alternatives that it has considered in reaching its proposed 
approach, which may include the following four alternatives (among 
others): (1) The establishment of differing compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities; (2) the clarification, consolidation, or 
simplification of compliance and reporting requirements under the rule 
for such small entities; (3) the use of performance rather than design 
standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for such small entities.
    66. OEA and WTB have taken steps to minimize any economic impact of 
the additional procedures on small entities through, among other 
things, the Commission's potential use of a clock auction format. Among 
the comments received in response to the Auction 108 Comment Public 
Notice were several that support the SMR format at least in part 
because it is familiar to bidders, suggesting that small entities may 
be deterred from participating under the single-round format with 
package bidding described in the Auction 108 Comment Public Notice. The 
potential length of an SMR auction, however, is seen by some commenters 
as a disadvantage. With those comments in mind, the clock auction 
format on which the Auction 108 Further Comment Public Notice seeks 
comment would be a familiar format to small entities that have 
previously participated in Commission auctions, and would consist of 
multiple rounds of bidding and incorporate intra-round bidding to 
potentially help manage the duration of the auction, thereby lessening 
the burden of a multiple-round auction on small entities. In addition, 
bidders would have an option to choose to use proxy bid instructions to 
reduce the time they spend monitoring the auction, further benefitting 
small entities.
    67. OEA and WTB have also taken steps to minimize any economic 
impact of the Commission's auction procedures on small entities 
through, among other things, the many resources that the Commission 
provides to potential auction participants. These resources, which are 
described in detail in the Supplemental IRFA incorporated into the 
Auction 108 Comment Public Notice are provided at no cost and include, 
for example, access to an FCC Auctions Hotline for information about 
the auction process and procedures; an FCC Auctions Technical Support 
Hotline for technical assistance on issues such as access to or 
navigation within the electronic FCC Form 175 and use of the FCC's 
auction bidding system; a web-based, interactive online tutorial 
produced by Commission staff to familiarize applicants with auction 
procedures, filing requirements, bidding procedures, and other matters 
related to an auction; the opportunity to participate in a mock 
auction; and the opportunity to participate in Auction 108 
electronically via the internet. Additionally, eligible small 
businesses and rural service providers will be able to participate in 
the bidding credit program for Auction 108, which may lower their 
relative costs of participation. In the Auction 108 Further Comment 
Public Notice, OEA and WTB incorporate by reference the description of 
the additional steps taken to minimize the significant economic impact 
on small entities, and significant alternatives considered, from the 
Regulatory Flexibility Analysis in the Auction 108 Comment Public 
Notice.
    68. The procedures for the conduct of Auction 108 on which the 
Auction 108 Further Comment Public Notice seeks further comment 
constitute the more specific implementation of the competitive bidding 
rules contemplated by 47 CFR parts 1 and 27, the 2.5 GHz Report and 
Order, and relevant competitive bidding orders, and are fully 
consistent therewith.
    69. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules. None.

B. Deadlines and Filing Procedures

    70. Pursuant to 47 CFR 1.415(d) and 1.419, interested parties may 
file comments on or before the date indicated in the DATES section of 
this document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies.
    71. Ex Parte Requirements. 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 must file a 
copy of any written presentations or memoranda summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine Period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to the Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with 47 CFR 1.1206(b). In proceedings governed by 
47 CFR 1.49(f) or for which the Commission has made available a method 
of electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.


[[Page 8772]]


Federal Communications Commission.
William Huber,
Associate Chief, Auctions Division, Office of Economics and Analytics.
[FR Doc. 2022-03182 Filed 2-15-22; 8:45 am]
BILLING CODE 6712-01-P


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