13570 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

Dated: March 7, 1997.

Frank Ciavatieri,

Acting Director, Office of Site Remediation

and Restoration.

[FR Doc. 97–7066 Filed 3–20–97; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 1

[WT Docket No. 97–82; FCC 97–60]

Competitive Bidding Procedures

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: In this Notice of Proposed

Rule Making (‘‘NPRM’’), the

Commission proposes changes to its

general competitive bidding rules that

are intended to simplify regulations and

eliminate unnecessary rules wherever

possible, increase the efficiency of the

competitive bidding process, and

provide more specific guidance to

auction participants while also giving

them more flexibility.

DATES: Comments must be submitted on

or before March 27, 1997, and reply

comments must be submitted on or

before April 16, 1997. Written

comments by the public on the

proposed and/or modified information

collections are due March 27, 1997.

Written comments must be submitted by

the Office of Management and Budget

(OMB) on the proposed and/or modified

information collections on or before

May 20, 1997.

ADDRESSES: Office of the Secretary,

Federal Communications Commission,

Washington, DC 20554. In addition to

filing comments with the Secretary, a

copy of any comments on information

collections contained herein should be

submitted to Dorothy Conway, Federal

Communications Commission, Room

234, 1919 M Street, NW., Washington

DC 20554, or via the Internet to

dconway@fcc.gov.

FOR FURTHER INFORMATION CONTACT:

Mark Bollinger, Wireless

Telecommunications Bureau, (202) 416–

0660. For additional information

concerning the information collections

contained in this NPRM, contact

Dorothy Conway at (202) 418–0217, or

via the Internet at dconway@fcc.gov.

SUPPLEMENTARY INFORMATION: This

summarizes the Commission’s Notice of

Proposed Rule Making in FCC Number

97–60; WT Docket No. 97–82, adopted

on February 20, 1997, and released on

February 28, 1997. The complete text of

this NPRM is available for inspection

and copying during normal business

hours in the FCC Reference Center

(Room 239), 1919 M Street, NW.,

Washington, DC, and also may be

purchased from the Commission’s copy

contractor, International Transcription

Service, (202) 857–3800, 2100 M Street,

NW., Suite 140, Washington, DC 20037.

The complete NPRM is also available on

the Commission’s Internet home page

(http://www.fcc.gov/).

The NPRM contains proposed or

modified information collections subject

to the Paperwork Reduction Act of 1995

(PRA). It has been submitted to the

Office of Management and Budget

(OMB) for review under the PRA. The

Commission, as part of its continuing

effort to reduce paperwork burdens,

invites the general public, the Office of

Management and Budget (OMB), and

other Federal agencies to comment on

the information collections contained in

this NPRM, as required by the

Paperwork Reduction Act of 1995, Pub.

L. 104–13. Public and agency comments

are due at the same time as other

comments on this NPRM; OMB

notification of action is due 60 days

from date of publication of this NPRM

in the Federal Register. Comments are

requested concerning (a) whether the

proposed collection of information is

necessary for the proper performance of

the functions of the Commission,

including whether the information shall

have practical utility; (b) the accuracy of

the Commission’s burden estimate; (c)

ways to enhance the quality, utility, and

clarity of the information collected; and

(d) ways to minimize the burden of the

collection of information on the

respondents, including the use of

automated collection techniques or

other forms of information technology.

OMB Approval Number: N/A.

Title: In the Matter of Amendment of

Part 1 of the Commission’s Rules—

Competitive Bidding Proceeding, WT

Docket No. 97–82, FCC Docket No. 97–

60.

Type of Review: New collection.

Respondents: Businesses or other forprofit entities.

Number of Respondents: 45,000.

Estimated Time for Response: 13

hours.

Total Annual Burden: 585,000 hours.

Estimated Cost to Respondents: 2,848

dollars.

Needs and Uses: The Commission’s

general competitive bidding rules

require applicants for all auctionable

services to submit: (1) Ownership

information, (2) terms of joint bidding

agreements, (3) gross revenue

calculations, and (4) evidence of

environmental impact. Furthermore, in

case a licensee defaults or loses its

license, the Commission retains the

discretion to re-auction such licenses. If

licenses are re-auctioned, the new

license winners would be required at

the close of the re-auction to comply

with the same disclosure requirements

explained above.

The information collected will be

used by the Commission to determine

whether the applicant is legally,

technically, and financially qualified to

bid in the spectrum auctions and hold

a license for spectrum based services.

Without such information the

Commission could not determine

whether to issue the license to the

successful applicant and therefore fulfill

its statutory responsibilities in

accordance with the Communications

Act of 1934, as amended.

Synopsis of Notice of Proposed Rule

Making

1. The Commission seeks comment on

a variety of proposals and tentative

conclusions set forth below. In addition,

it seeks comment on whether

competitive bidding provisions that

have been adopted in specific services

but not included in the part 1 rules

should be included in part 1 and, if so,

whether any amendments to these

provisions are needed in light of the

proposal, discussed below, to apply

these general competitive bidding rules

to future auctions.

2. As the Commission has gained

experience in conducting auctions, it

has found that much of the auction

process can be standardized and that

conducting rule makings for each

individual service slows down the

delivery of service to the public because

it may result in regulatory delays before

the licensing process begins. Thus, the

Commission propose that, to the extent

possible, all future auctions be governed

by the general competitive bidding rules

adopted in this proceeding. It envisions

that only a limited number of

competitive bidding regulations would

need to be adopted on a service-specific

basis. The Commission seeks comment

on whether the rules adopted in this

proceeding should supersede all

existing, service-specific competitive

bidding rules for future auctions. It

proposes that this action would affect

all services that are subject to pending

proceedings and any services that have

existing competitive bidding rules that

might apply to licenses that have not yet

been auctioned or that must be

reauctioned. The Commission seeks

comment on whether, alternatively, it

should phase in the applicability of the

revised general competitive bidding

rules at a future date, such that, at a
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13571

minimum, initial auctions may be

completed under the existing servicespecific rules. In the event the

Commission decides not to apply the

revised part 1 rules to supersede

existing service-specific auction rules,

should it nonetheless subject licenses

that are reauctioned (due to defaults or

if no winning bidder is otherwise

declared) to these revised part 1 general

competitive bidding rules? To the extent

that commenters believe that servicespecific rules should be maintained,

they should explain which ones and

why.

3. Section 1.2110(b)(1) of the rules

states that the Commission ‘‘will

establish the definition of a small

business on a service-specific basis,

taking into consideration the

characteristics and capital requirements

of the particular service.’’ The

Commission proposes to continue the

practice of soliciting comment in

service-specific rule making

proceedings on the appropriate small

business size standard, or tiered

standards, for each auctionable service.

In such rule makings, the Commission

would, take into consideration the

characteristics and capital requirements

of each service. It would in all cases,

however, for purposes of future

auctions, express the definition of small

business purely in terms of gross

revenues. The Commission further

proposes that, once the small business

definition for any particular service is

adopted, the special provisions for

which such businesses qualify would be

determined by schedules set forth in the

general competitive bidding rules. The

Commission seeks comment on these

proposals.

4. The Commission notes that some of

its eligibility requirements are defined

in terms of gross revenues of ‘‘less than’’

a certain amount, rather than ‘‘not

exceeding’’ a certain amount. It

tentatively concludes that a uniform

method of measurement is preferable

because it is more equitable and

administratively simpler. The

Commission therefore proposes that

when it adopts size standards, those

standards should be expressed so as to

require businesses to have gross

revenues ‘‘not to exceed’’ particular

amounts, and that all standards already

adopted be modified to conform to this

method of defining size. The

Commission seeks comment on this

proposal. It also seeks comment on a

proposal to base all small business size

standards on the applicant’s average

gross revenues over the preceding three

years, consistent with the Small

Business Act, 15 U.S.C. 632(a).

5. Although the general competitive

bidding rules do not define ‘‘gross

revenues,’’ the Commission has adopted

definitions in various services which are

generally the same, but contain some

distinction regarding use of audited and

unaudited financial statements. In order

to promote uniformity of regulations,

the Commission proposes to use the

broadband PCS definition for all sizebased determinations for all auctionable

services, with the modification that

unaudited financial statements used as

a basis for gross revenue calculations

must be prepared in accordance with

Generally Accepted Accounting

Principles. This modification should

ensure that all gross revenues

calculations, audited and unaudited, are

prepared consistently. It should also

discourage bidders from manipulating

unaudited financial statements to gain a

competitive bidding or payment

advantage. The Commission seeks

comment on this proposal.

6. The Commission notes that in the

D, E, and F Block Report and Order, 61

FR 33859 (July 1, 1996), it amended the

broadband PCS rules to require that an

applicant’s determination of average

gross revenues be based on the three

most recently completed fiscal or

calendar years. Should it adopt a similar

rule for the general auction rules that

would extend the same option of using

either fiscal or calendar years to

applicants in all auctionable services?

The Commission also notes that prior to

the D, E, and F Block Report and Order,

broadband PCS applicants were

required to state their average gross

revenues as supported by audited

financial statements or seek a waiver to

use unaudited financial statements. This

requirement was simplified in the D, E,

and F Block Report and Order to permit

the use of unaudited financial

statements without seeking a waiver.

The Commission seeks comment on

whether the general definition of gross

revenue should similarly allow the use

of unaudited financial statements.

7. In determining whether an

applicant meets certain size-based

eligibility requirements, many of the

Commission’s service-specific

competitive bidding rules require it to

consider, inter alia, the gross revenues

of certain investors in the applicant and

the affiliates of attributable investors.

‘‘Affiliate’’ is defined by the general

auction rules as an individual or entity

that directly or indirectly controls or has

the power to control the applicant; is

directly or indirectly controlled by the

applicant; is directly or indirectly

controlled by a third person(s) that also

controls or has the power to control the

applicant; or has an ‘‘identity of

interest’’ with the applicant. Some

service-specific rules have adopted

alternative definitions of ‘‘affiliate.’’

8. An ‘‘attributable’’ investor for

purposes of size determinations has

been defined differently in the rules for

different services; it proposes to use a

controlling interest threshold to

determine whether an entity qualifies to

bid as a small business. Thus, in

calculating gross revenues, the

Commission would include the gross

revenues of the controlling principals of

the applicants and their affiliates, with

the term ‘‘control’’ including both de

jure and de facto control of the

applicant. The Commission tentatively

concludes that this standard, which it

recently adopted in the IVDS rules,

would simplify the size attribution rules

and still enable small businesses to

attract adequate financing. It seeks

comment on this proposal. The

Commission also seeks comment on

whether it should change its definition

of affiliate. Should the Commission, for

example, amend its definition of

affiliate to provide an exception for

Indian tribes, Alaska Regional or Village

Corporations, as it did for broadband

PCS? Also, the Commission notes that,

earlier this year, the Small Business

Administration amended and simplified

its regulations governing the small

business size standards in 13 CFR part

121, including amendment of its

definition of ‘‘affiliate’’. The

Commission seeks comment on whether

it should amend its rules to provide a

similar ‘‘affiliate’’ definition, which

would include, for example, the

following general principles of

affiliation: (1) Concerns are affiliates of

each other when one concern controls

or has the power to control the other, or

a third party or parties controls or has

power to control both; and (2) factors

such as ownership, management,

previous relationships with or ties to

another concern, and contractual

relationships, will be considered in

determining whether an affiliation

exists.

9. The current part 1 rules define

‘‘rural telephone company’’ (or ‘‘rural

telco’’) as any local exchange carrier,

including affiliates, with 100,000 access

lines or fewer. The Commission revised

the definition of rural telephone

company contained in the broadband

PCS rules upon which the part 1 rule is

based, to conform with that contained in

the Telecommunications Act of 1996

(‘‘1996 Act’’). The Commission

tentatively concludes that the definition

of rural telco set forth in the 1996 Act

should apply to all auctionable services

as the term is used in section 309(j) of

the Communications Act. Thus,
13572 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

§ 1.2110(b)(3) would be amended so as

to define the term ‘‘rural telephone

company’’ as a local exchange carrier

operating entity to the extent that such

entity—(A) provides common carrier

service to any local exchange carrier

study area that does not include either

(i) any incorporated place of 10,000

inhabitants or more, or any part thereof,

based on the most recently available

population statistics of the Bureau of the

Census, or (ii) any territory,

incorporated or unincorporated,

included in an urbanized area, as

defined by the Bureau of the Census as

of August 10, 1993; (B) provides

telephone exchange service, including

exchange access, to fewer than 50,000

access lines; (C) provides telephone

exchange service to any local exchange

carrier study area with fewer than

100,000 access lines; or (D) has less than

15 percent of its access lines in

communities of more than 50,000 on the

date of enactment of the

Telecommunications Act of 1996. The

Commission seeks comment on this

tentative conclusion.

10. Since the Commission began

conducting spectrum auctions,

installment payments have been utilized

as a means of assisting small entities

that are likely to have difficulty

obtaining adequate private financing.

Pursuant to the part 1 rules, unless

otherwise specified, such installment

payment plans (1) impose interest based

on the rate of U.S. Treasury obligations

at the time of licensing, plus a possible

premium (2) allow installment

payments for the full license term, (3)

begin with interest-only payments for

the first two years, and (4) amortize

principal and interest over the

remaining term of the license.

Additionally, winning bidders are

required to execute a promissory note

and security agreement as a condition to

participate in the installment payment

plan.

11. Changes in the basic framework of

the installment payment plans have

been made in specific services as the

Commission has gained experience from

implementing the rules. In certain

services the Commission has adopted

‘‘tiered’’ installment payment plans,

which vary in terms of interest rate and

payment terms, depending on the size of

the licensee. While the Commission

seeks to continue to offer these

opportunities to small businesses, and

possibly other entities, it seeks comment

on ways to refine the installment

payment plans to streamline without

reducing their benefit to small

businesses. For example, it seeks

comment on whether the Commission

or its designee should seek non-resource

intensive means to screen applicants

applying for installment payment plans

to determine their credit worthiness,

and if so, whether all bidders eligible for

installment payments should be

screened before the start of an auction,

or only auction winners. If the

Commission were to adopt such

screening, what information or

standards should serve as criteria for

judging a bidder’s credit worthiness?

Further, the Commission seeks

comment on whether it should offer

higher bidding credits in lieu of

installment payments for winning

bidders who qualify. The Commission

notes that substituting a system of larger

bidding credits might eliminate the

administrative and market concerns

associated with installment payments,

while nonetheless ensuring

opportunities for small businesses to

participate in auctions. On the other

hand, however, installment payment

plans have been a useful tool for small

businesses to access capital.

12. As an alternative to offering higher

bidding credits in lieu of installment

payments, the Commission seeks

comment on whether it should require

larger down payments, such as 30 or 40

percent, to reduce the amount of a

bidder’s high bid that is financed by the

federal government. Increasing the

amount of money a bidder has at stake

in the event of a default may reduce the

likelihood of default and will reduce the

government’s risk in the event of

default. The Commission also seeks

comment on whether it could achieve

the same goal of reducing the likelihood

of default by adopting a requirement

that bidders increase their upfront

payment during the course of the

auction once their cumulative high bids

exceed their upfront payment by some

multiple. For example, once a bidder’s

cumulative bids were more than twentyfive times its upfront payment, it would

be required to deposit additional funds

with the Commission. The Commission

seeks comment on this proposal and

how it could be implemented, including

the appropriate multiplier used to

trigger the supplemental upfront

payment obligation.

13. In addition, the Commission

proposes that the general competitive

bidding rules be amended to include a

schedule of installment payment plans

for designated entities seeking to

participate in the provision of spectrumbased services. Defining available

installment payment plans in the

general competitive bidding rules would

give potential bidders more certainty

about the special provisions available to

small businesses and other entities and

promote uniformity of regulation. As

discussed above, the Commission

believes that once a small business

definition is adopted for a particular

service, or other entities are identified

as qualifying for installment payments,

eligible businesses should be able to

turn to the part 1 rules to determine the

specific terms available to them. The

following schedule of installment

payment plans is a possible approach to

implementing this concept.

Average gross revenues Interest rate Payment terms

Not to exceed $3 million ...................................... T-note rate .......................... 2 yrs. interest-only payments; amortize principal and interest

over remaining license term.

Not to exceed $15 million .................................... T-note rate + 1.5% ............. 2 yrs. interest-only payments; amortize principal and interest

over remaining license term.

Not to exceed $40 million .................................... T-note rate + 2.5% ............. 2 yrs. interest-only payments; amortize principal and interest

over remaining license term.

Not to exceed $75 million 1 .................................. T-note rate + 2.5% ............. Amortize principal and interest over license term.

Not to exceed $125 million 1 ................................ T-note rate + 3.5% ............. Amortize principal and interest over license term.

1These entities have never been defined as small businesses by service-specific rules, but for broadband PCS they may have been eligible for

installment payments as entrepreneurs.

The schedule set forth above is based

in general on the plans adopted for the

most recent auctions and, relying on

past auction experience, the

Commission believes these plans are

appropriate. However, it recognizes that
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13573

plans with more generous terms were

previously adopted for specific services.

The Commission seeks comment on

whether it should incorporate a

schedule of installment payments into

the general auction rules while still

retaining the authority to modify

payment terms on a service-specific

basis. Further, it seeks comment on the

appropriate schedule of payment terms.

14. Section 1.2110(e)(3)(i) of the rules

indicates that the interest rate on

installment payments will be the

interest rate on Treasury obligations

with maturities closest to the duration

of the license term at the time of

licensing. More precisely, the interest

rate is established by using the coupon

interest rate for Treasury notes with

similar maturities, at the most recent

preceding Treasury auction. The

Commission notes that, in the

Competitive Bidding Second Report and

Order, 59 FR 22980 (May 4, 1994), it

indicated both that it agreed with those

commenters that suggested that interest

on installments should be charged at a

rate no higher than the government’s

cost of money and also that the interest

rate imposed for installment payments

should be equal to the rate for U.S.

Treasury obligations of maturity equal

to the license term. The Commission

recognizes that determining the interest

rate for installment payment plans

pursuant to § 1.2110(e)(3)(i) may not

always reflect the government’s cost of

money but it provides an objective

benchmark for the interest rate

determination. The Commission

believes that it would be beneficial to

licensees for it to more clearly identify

in the rules how the interest rate would

be determined for all installment

payment plans. Therefore, it proposes to

codify the existing policy by specifying

that the interest rate for installment

payments will be determined by taking

the coupon rate of interest offered in the

most recent Treasury auction preceding

the close of the Commission’s auction.

The Commission seeks comment on this

proposal. Further, it seeks comment on

whether it should adopt some other

basis for computing interest. For

example, should the Commission

establish more market-based interest

rates with a cost of funds component

and a premium for credit risk? If so, it

asks commenters to discuss how it

should determine the appropriate

interest premium.

15. Where the Commission uses

installment payment plans, it proposes

to set the interest rate for such payment

plans on the date that the Public Notice

is issued announcing the close of the

auction and the winning bidders, based

on rates established in the most recent

Treasury auction with obligation of the

appropriate term. Currently,

§ 1.2110(e)(3)(i) of the Commission’s

general competitive bidding rules

requires that the Commission impose

interest based on the rate of U.S.

Treasury obligations at the time of

licensing. The Commission tentatively

concludes, however, that establishing

the interest rate on the day that the

Public Notice is released announcing

the close of the auction is the most

appropriate time for both licensees and

the Commission. The close of the

auction represents the most clearly

identifiable time when an obligation to

the Commission and the United States

Treasury is established. Establishing the

interest rate in this way also provides a

uniform date on which the interest rate

for all prospective licensees within a

particular service is established,

regardless of petitions to deny or other

delays that may vary among bidders. In

addition, the Commission believes that

establishing the interest rate at a date

earlier than the date of licensing would

assist bidders in efforts to obtain

financing, as interest expense would be

calculable from a specific known date.

Furthermore, the Commission believes

that establishing the interest rate as it

proposes would reduce the interest rate

risk to the bidder and mitigate this risk

to the capital investor. Establishing the

interest rate earlier than the point of

licensing would also permit the licensee

to receive, review, and return the

necessary note and security agreement

earlier, which would also speed the

licensing process. This, in turn, should

hasten the development of service to the

marketplace. Alternatively, the

Commission could establish the interest

rate for the installment payment plan in

the Public Notice announcing the start

of the auction, with the rate based on

the most current Treasury rate on that

date. This would enable both bidders

and potential capital investors to better

assess a bidder’s prospective financial

obligations during the auction. The

Commission seeks comment on each of

its proposals, tentative conclusions, and

alternatives.

16. Under the current general

competitive bidding rules, the

Commission may award bidding credits

(i.e., payment discounts) to eligible

designated entities. These general rules

also provide that service-specific rules

will specify the designated entities

eligible for bidding credits, the licenses

for which bidding credits are available,

the amounts of bidding credits, and

other procedures. Accordingly, the

Commission has adopted separate rules

governing bidding credits for various

auctionable services.

17. As with installment payments, the

Commission believes that the general

competitive bidding rules should be

amended so that the levels of available

bidding credits are defined, and are

uniform for all auctionable services. The

Commission believes such an approach

will be beneficial because potential

bidders will have more information well

in advance of the auction than they

currently do about how such levels will

be set. It believes that, once a small

business definition is adopted for a

particular service, eligible businesses

should be able to refer to the part 1 rules

to determine the level of bidding credit

available to them. The following

schedule is a possible approach to

implementing this concept.

Average annual gross revenues

Bidding

credits

(percent)

Not to exceed $3 million ................. 25

Not to exceed $15 million ............... 15

Not to exceed $40 million ............... 10

The Commission recognizes that these

credits may differ from those previously

adopted for specific services. Based on

past auction experience, however, the

Commission believes that the approach

taken here would provide adequate

opportunities for small businesses of

varying sizes to participate in spectrum

auctions. In addition, the Commission

believes that providing slightly less

generous bidding credits for larger

businesses (e.g., those businesses with

gross revenues not exceeding $40

million) would more specifically tailor

the amount of the credit to the needs of

the particular applicant. The

Commission seeks comment on this

schedule, and it also asks interested

parties to suggest alternatives. For

example, does the demand for capital to

implement certain services justify

including businesses with average

annual gross revenues exceeding $40

million on this schedule? The

Commission recognizes that it has

suggested that it might be appropriate in

some cases to provide larger bidding

credits in lieu of installment payments.

The Commission is aware that in

developing their auction strategy,

bidders make calculations about the net

present value of their bids and factor in

their ability to obtain financing.

Therefore, the same net effect can be

achieved by giving either higher bidding

credits or more generous installment

payment terms. If the Commission

limited the use of installment payments,
13574 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

how should that action affect levels of

bidding credits?

18. Under the general competitive

bidding rules, a licensee seeking

Commission approval of a transfer of

control or an assignment of a license

acquired through the competitive

bidding process utilizing installment

payments is required to pay the

remaining principal balance as a

condition of the transfer. No payment is

required, however, when the proposed

transferee or assignee is qualified to

obtain the same installment financing

and assumes the applicant’s installment

payment obligations. Many of the

service-specific auction rules include

similar provisions. However, some

service-specific unjust enrichment

provisions for installment payments

contain certain variations from the

general rule set forth in Part 1. The

broadband PCS unjust enrichment rule,

for example, specifies that applicants

seeking to assign or transfer control of

a license to an entity not meeting the

eligibility standards for installment

payments must pay not only unpaid

principal as a condition of Commission

approval but also any unpaid interest

accrued through the date of assignment

or transfer. This rule also provides that

if a licensee utilizing installment

financing seeks to make any change in

its ownership structure that would

result in the loss of eligibility for

installment payments, it must pay the

unpaid principal and accrued interest as

a condition of Commission approval of

the change. Finally, in recognition of the

tiered installment payment plans

offered to broadband PCS licensees, the

rule provides that if a licensee seeks to

make any change in ownership that

would result in the licensee qualifying

for a less favorable installment plan, it

must seek Commission approval and

adjust its payment plan to reflect its

new eligibility status. A licensee, under

this rule, may not switch its payment

plan to a more favorable plan.

19. Under the Commission’s general

competitive bidding rules, a licensee

seeking Commission approval of a

transfer of control or an assignment of

a license acquired through the

competitive bidding process utilizing

bidding credits, or proposing to take any

other action relating to ownership or

control that will result in loss of

eligibility for such bidding credits, is

required to pay the sum of the amount

of the bidding credit plus interest as a

condition of FCC approval. Under the

broadband PCS rules, if, within the

original term, a licensee applies to

assign or transfer control of a license to

an entity that is eligible for a lower

bidding credit, the difference between

the bidding credit obtained by the

assigning party and the bidding credit

for which the acquiring party would

qualify must be paid to the United

States Treasury as a condition of

approval of the assignment or transfer.

20. The Commission proposes to

amend the general unjust enrichment

rules to conform them to the broadband

PCS rules. It believes that these rules are

preferable to the current general unjust

enrichment rules because they provide

greater specificity about funds due at

the time of transfer or assignment and

specifically address changes in

ownership that would result in loss of

eligibility for installment payments,

which the current general rules do not

address. The broadband PCS rules also

address assignments and transfers

between entities qualifying for different

tiers of installment payments or bidding

credits, thus supplying clearer guidance

for auctions in which tiered installment

payment plans or bidding credits are

provided. The Commission seeks

comment on this proposal. Further, it

seeks comment on whether it should

adopt an unjust enrichment provision

that provides a scale of decreasing

payment liability based on the number

of years a license is held as it has

recently done for other services. For

example, should the Commission adopt

a rule that provides that a business that

holds a license that it obtained with a

bidding credit must pay back 60 percent

of its bidding credit if it transfers the

license after five years; 50 percent after

eight years; 40 percent after nine years;

and 20 percent after ten years? The

Commission also solicits comment on

unjust enrichment rules as they apply to

partitioning and disaggregation. If it

decides to adopt partitioning and

disaggregation for various services, how

should the unjust enrichment rules

apply when the partitioner or

disaggregator is the recipient of a

bidding credit or is paying on an

installment payment plan? Should the

Commission adopt for all auctionable

services the same provisions that it

adopted for broadband PCS?

21. In recent auctions, the

Commission has allowed applicants to

file their applications either manually or

electronically. The Commission believes

that requiring all applications to be filed

electronically is in the best interest of

auction participants as well as members

of the public interested in monitoring

Commission auctions.

22. The Commission therefore

tentatively concludes to amend

§§ 1.2105(a) and 1.2107(c) of the rules to

require that all short-form and long-form

applications be filed electronically

beginning January 1, 1998. The

Commission recognizes that there is a

need for a period of time before a

comprehensive electronic filing

requirement becomes effective in order

for bidders to prepare and be completely

comfortable with this process. It

believes that the effective date proposed

here will provide potential bidders with

adequate time in which to adapt to

electronic filing requirements. The

Commission seeks comment on this

tentative conclusion.

23. Section 1.2105(b) of the

Commission’s rules addresses

modifications and amendments to FCC

Form 175. Specifically, § 1.2105(b)(2)

provides that bidders may make minor

changes or correct minor errors in the

FCC Form 175 application, but major

amendments may not be submitted after

the initial application deadline. This

section further provides that the

Commission will classify all

amendments as major or minor pursuant

to service-specific rules. The

Commission proposes to amend the

general auction rules to define major

amendments to FCC Form 175

uniformly for all auctionable services. It

proposes at a minimum to consider any

change in ownership that constitutes a

change in control to be a major

amendment. It also proposes to consider

application amendments that show a

change in an applicant’s size which

would affect its eligibility for small

business provisions to be a major

amendment. The Commission also seeks

comment on which other kinds of

changes should be deemed major, and

which should be deemed minor. For

example, how should it treat changes to

the licenses selected in simultaneous

multiple round auctions? In previous

auctions, applicants have claimed that

they made mistakes in their license

selection and have requested that the

Commission allow them to add or delete

license selections during the

resubmission period. While the

Commission has generally refused to

grant these requests in order to prevent

collusive conduct or gaming that would

reduce the competitiveness of the

auction, there may be some

circumstances in which the

competitiveness of the auction might be

enhanced by allowing applicants to add

licenses to their FCC Form 175

applications. The Commission therefore

ask commenters to consider whether an

amendment to add licenses should be

permissible as a minor amendment. If

so, it also asks whether such an

amendment should be permitted only

until the deadline for submitting

upfront payments, because after that

point the risks of gaming in the auction
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13575

increase due to the availability of

information concerning each bidder’s

eligibility. For example, should an

applicant be permitted to add a license

designation to its short-form application

only if that license already has been

designated by two or more applicants?

The Commission seeks comment on

each of these proposals.

24. Currently, the general competitive

bidding rules do not set forth any

ownership disclosure requirements for

auction applicants on their short-form

applications. Service-specific rules,

however, require varying degrees of

specific ownership information from

applicants. For example, both the

narrowband PCS and broadband PCS

rules require detailed ownership

disclosure from all auction applicants.

These rules also state additional

requirements for applicants claiming

designated entity status. On both the

short-and long-form applications for

narrowband PCS, applicants must

submit a list of (1) any business five

percent or more whose stock, warrants,

options, or debt securities are owned by

the applicant, (2) any business which

holds a five percent or more interest in

the applicant or any business in which

a five percent or more interest is held by

another company which holds a five

percent interest in the applicant, (3)

entities holding a five percent or more

interest in the applicant, and (4)

partners in a partnership. Short-form

applicants claiming designated entity

status also are required to list all control

group members and provide a

calculation of gross revenues and

personal net worth. Although the

broadband PCS requirements are very

similar to those for narrowband PCS, the

Commission has recently amended the

broadband PCS application

requirements to make them less

burdensome on applicants. Thus,

broadband PCS applicants are required

to disclose on both short-form and longform applications a list of (1) any

business, holding or applying for CMRS

or PMRS licenses, five percent or more

of whose stock, warrants, options or

debt securities are owned by the

applicant, (2) any party which holds a

five percent or more interest in the

applicant, or any entity holding or

applying for CMRS or PMRS licenses in

which a five percent or more interest is

held by another party which holds a five

percent or more interest in the

applicant, (3) any person holding five

percent or more of each class of stock,

warrants, options, or debt securities,

and (4) in the case of partnerships, the

name and address of each partner.

Broadband PCS applicants that claim

designated entity status must also

identify control group members and

provide net asset and gross revenues

figures. This information was necessary

at the short-form stage for the C and F

blocks because participation in these

blocks was limited to entities below a

net asset and gross revenue threshold.

25. The Commission continues to

believe that detailed ownership

information is necessary to ensure that

applicants claiming designated entity

status in fact qualify for such status, and

to ensure compliance with spectrum

caps and other ownership limits.

Disclosure of ownership information

also aids bidders by providing them

with information about their auction

competitors and alerting them to entities

subject to the anti-collusion rules. A

standard disclosure requirement,

however, would avoid the variation and

possible inconsistency found in the

current service-specific ownership

disclosure requirement. Thus, the

Commission seeks comment on whether

it should adopt standard ownership

disclosure requirements for all

auctionable services that are similar to

the current rules for broadband PCS. It

also seeks comment on what ownership

information should be required. Finally,

the Commission asks commenters to

address whether ownership disclosure

should vary depending on whether an

applicant is applying for special

provisions, such as bidding credits or

installment payments.

26. In addition, the Commission also

proposes to adopt a uniform reporting

requirement for all applicants claiming

designated entity status. Specifically, it

proposes to adopt a reporting

requirement similar to that in the 900

MHz SMR rules. That rule, unlike the

broadband PCS rule, focuses on

affiliates and their gross revenues rather

than more complex control group equity

structures. In keeping with its proposal

to adopt the simpler controlling

principals and affiliates test, the

Commission proposes an analogous

reporting requirement. Therefore, it

proposes that applicants claiming small

business status be required to disclose

on their short-form application the

names of each controlling principal and

affiliate and gross revenues calculations

for each. On their long-form

applications, they would be required to

disclose any additional gross revenues

calculations, any agreements that

support small business status, and any

investor protection agreements. The

Commission seeks comment on this

proposal.

27. Currently, the Commission’s

ownership disclosure rules require

applicants to file specific ownership

information, in conjunction with their

FCC Form 175, prior to each auction.

Similarly, at the close of each auction,

winning bidders are required to file

ownership information on each longform application.

28. The Commission believes that by

requiring these ownership disclosure

filings, it ensures that it receives all the

information necessary to evaluate an

applicant’s qualifications. The

Commission notes, however, that these

requirements could result in duplicative

filings. In order to streamline the

application procedure at both the shortform and long-form stage, the

Commission requests comment on

whether it should create a central

database of licensee and bidder data,

which would allow bidders to avoid

repeating ownership information in

each application in each auction. The

Commission tentatively concludes that

applicants should be able to file

ownership information to apply for the

first auction in which they participate

and that this information should then be

stored in a central database which

subsequently would be updated each

time applicants participate in another

auction. After applying for its first

auction, an applicant filing for a

subsequent auction would either update

the ownership information in the

database, or rely on the information in

the database and certify that there have

been no changes. The Commission

believes this approach would benefit

auction applicants by reducing the time

spent preparing auction applications,

and it would benefit the Commission by

eliminating the need to review and

analyze duplicative filings. The

Commission seeks comment on this

approach to ownership disclosure.

29. Under the broadband PCS rules,

the Commission has reserved the right

to conduct random audits of applicants

and licensees in order to verify

information provided regarding their

eligibility for certain special provisions.

Such entities certify their consent to

audits on their short-form applications.

The Commission proposes to explicitly

reserve this right for all auctionable

services and seeks comment on this

proposal.

30. Section 309(j)(8)(C) of the

Communications Act as amended by the

Telecommunications Act of 1996,

requires that any deposits the

Commission may require for the

qualification of any person to bid in an

auction shall be deposited into an

interest bearing account. The

Communications Act further requires

that within 45 days of the auction’s

conclusion, the deposits of successful

bidders shall be paid to the Treasury,
13576 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

the deposits of unsuccessful bidders

shall be returned, and all accrued

interest shall be transferred to the

Telecommunications Development

Fund. Prior to the enactment of this

provision, auction deposits were

submitted to a non-interest bearing

account with the Department of

Treasury. Bidders who completely

withdrew prior to the close of the

auction could, upon written request,

receive a refund of their upfront

payments prior to the close of the

auction.

31. It is unclear whether Congress

intended, by enacting this new law, to

require the Commission to change its

practice of refunding upfront payments

to bidders who withdraw during the

course of an auction. The Commission

believes that its current practice of

returning the upfront payments of

bidders who have completely

withdrawn prior to the conclusion of

competitive bidding is in the public

interest as it prevents unnecessary

encumbrances on the funds of auction

bidders, many of whom may be small

businesses, after they have withdrawn

from the auction. The Commission seeks

comment on this practice and whether

it is consistent with the

Communications Act.

32. The Commission determined in

the Competitive Bidding Second Report

and Order that, upon the conclusion of

the auction, a bidder must tender a

significant and non-refundable down

payment to the Commission over and

above its upfront payment in order to

provide further assurance that the

winning bidder will be able to pay the

full amount of its winning bid. The

Commission thus required that, within

five business days after being notified

that it is a high bidder on a particular

license, a high bidder must submit to

the Commission additional funds as are

necessary to bring its total deposits up

to 20 percent of its high bid(s).

33. In the Order accompanying this

NPRM, the Commission modified the

due date for down payments to ten

business days after the issuance of a

Public Notice announcing winning

bidders. In this NPRM, the Commission

proposes to retain discretion to

determine the down payment amount

required for each service and delegate

authority to the Bureau to announce this

amount in a Public Notice to be issued

prior to the start of the auction. In

exercising this authority, as discussed

above, the Bureau will seek input from

the public. The Commission continues

to believe that a substantial down

payment is needed to ensure that

licensees have the financial capability to

attract the capital necessary to deploy

and operate their systems, and to protect

against default. The Commission

believes that giving the Bureau the

discretion to determine the level of

down payments for each auction would

be the best way to ensure that such

levels remain appropriate for

developing and evolving industries. The

Commission seeks comment on this

proposal. It also seeks comment on

whether the level of down payments

which it has used in the past should be

raised for some services.

34. Section 1.2109(a) of the

Commission’s rules provides that

auction winners not eligible for

installment payments are generally

required to make final payment on their

license(s) within a certain time

following award of the license(s).

Section 1.2110(e) of the Commission’s

rules provides that all winning bidders

eligible for installment payments are

required to submit a second down

payment within a certain time of the

license grant. These payment deadlines

are announced by public notice when

the Commission has granted or is

prepared to grant the license(s). Where

a winning bidder fails to make its final

auction payment for the balance of its

winning bid or fails to make the second

down payment in a timely manner, it is

considered in default on its license(s)

and subject to the applicable default

payments.

35. The Commission continues to

believe that the strict enforcement of

payment deadlines preserves the

integrity of the auction and licensing

process by ensuring that applicants have

the necessary financial qualifications. In

this connection, the Commission

believes that the bona fide ability to pay

demonstrated by a timely first down

payment is essential to a fair and

efficient auction process and, thus, it

does not propose to modify the

approach of requiring timely submission

of first down payments. The

Commission nonetheless recognizes that

applicants may encounter certain

difficulties when trying to arrange

financing and make substantial

payments under strict deadlines. In

circumstances which may warrant

favorable consideration of a waiver

request or an extension of the payment

date, it must also evaluate the fairness

to other licensees who made their

payment in a timely fashion.

Accordingly, the Commission proposes

to allow winning bidders to make their

final payments or second down

payments within a short period after the

applicable deadline, provided that they

also pay a late fee. The Commission

believes that, by committing substantial

capital to their license acquisition in the

form of an initial down payment,

winning bidders have demonstrated a

bona fide interest in becoming a

licensee, but have also incurred a

substantial debt to the federal

government. The Commission,

therefore, seeks comment on the

appropriate time period to allow late

second down payments and final

payments. It believes that the late

payment period should be short (e.g., no

longer than 10 business days). The

Commission tentatively concludes that,

if a winning bidder misses the final

payment or second down payment

deadline and also fails to remit the

required payment (plus the applicable

late fee) by the end of the late payment

period, it would be declared in default

and subject to the applicable default

payments. The Commission seeks

comment on this tentative conclusion.

36. Additionally, the Commission

seeks comment on the appropriate fee to

impose for late payment. Because it

believes that the late payment fee

should be large enough to deter winning

bidders from making late payments and

yet small enough so as not to be

punitive, it tentatively concludes that a

late payment of five percent of the

amount due is consistent with general

commercial practice and provides some

recompense to the federal government

for the delay and administrative or other

costs incurred. The Commission seeks

comment on this proposal and asks that

commenters proposing alternative late

payment fee(s) provide a rationale for

the alternative fee amount(s).

37. This proposal to allow late

payments is limited to payments owed

by winning bidders that have had their

licenses conditionally granted or where

the license grant is imminent. As

indicated above, the Commission does

not propose to adopt a late payment

period for initial down payments that

are due soon after the close of the

auction. It believes it is reasonable to

expect that winning bidders timely

remit their initial down payments, given

that is their first opportunity to

demonstrate to the Commission their

ability to make payments towards the

licenses of interest to them. Further, if

a winning bidder defaults on its initial

down payment on a license, the

Commission can take action under

§ 1.2109(b) relatively soon after the

auction has closed, by, for example, reauctioning the license or offering it to

the other highest bidders (in descending

order) at their final bids. Similarly, the

Commission does not propose to allow

any late submission of upfront

payments. Allowing late submission of

upfront payments would slow down the
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13577

licensing process by delaying the start of

an auction.

38. Under the current rules, winning

bidders that are designated entities are

not required to pay their second down

payment until petitions to deny filed

against them are dismissed or denied. In

the interim, designated entity winning

bidders for the same auction with no

petitions filed against them are required

to submit their second down payments

earlier because their licenses are ready

for grant.

39. The Commission seeks comment

on whether it should require all

designated entities that win licenses to

make their second down payments at

the same time. If so, one way to

implement this would be for winning

bidders who have petitions to deny

pending against them to submit their

second down payments to the

Commission to be deposited into an

escrow account. If the petitions to deny

are granted, the bidder would be

refunded the amount of the second

down payment subject to any default

payments owed the Commission. If the

petitions to deny are dismissed or

denied, the funds would be transferred

from the escrow account and applied to

the balance owed by the licensee. This

procedure would have the effect of

ensuring that all designated entities pay

their down payments in a uniform

fashion, thus, reducing any potential

inequities that could result from

differing payment dates. It would also

avoid requiring a bidder with petitioned

and non-petitioned licenses to make

several payments to the Commission.

The Commission seeks comment,

however, on whether this procedure

would affect the ability of bidders that

are subject to petitions to deny to access

capital to make their down payments.

The Commission also seeks comment on

whether all non-designated entities

should be required to make payment in

full at the same time for the same

reasons discussed in connection with

designated entities.

40. Section 1.2104(g) of the rules

provides that when a bidder withdraws,

defaults, or is otherwise disqualified

from a simultaneous multiple round

auction, upfront and/or down payment

amounts that the bidder has on deposit

with the Commission will be applied

first to the bid withdrawal and default

payments owed the Commission. This

rule has been interpreted to encompass

upfront and/or down payment funds a

bidder has on deposit for licenses won

at the same auction. The Commission

proposes to delete the language

‘‘simultaneous multiple round’’ from

§ 1.2104(g) because it believes that it

should apply to other auction designs

with equal force as it does to a

simultaneous multiple round auction.

The Commission believes strict rules

regarding default payments will

discourage insincere bidding, maintain

the integrity of the auction and ensure

that licenses end up in the hands of

those parties that value them the most

and have the financial capacity to

provide service. It seeks comment on

this proposal.

41. In the Competitive Bidding Fifth

Report and Order, 59 FR 43062 (August

22, 1994), the Commission provided

that, where the default payment cannot

be determined at the time of default by

a broadband PCS licensee (e.g. because

the license has not yet been

reauctioned), the Commission can

obtain a deposit on the default payment

to be held on deposit until such time as

the final default obligation can be

determined. This deposit is held by the

Commission until the final default

payment can be established and is paid.

The purpose of this provision is to

maintain the integrity of the auction by

discouraging defaults on the part of

bidders, encouraging bidders to make

secondary or back-up financial

arrangements, and ensuring that default

payments are made in a timely manner.

The Commission seeks comment on a

proposal to modify the rules to provide

for a similar default deposit for all

auctionable services of at least three

percent (3%) of the defaulted bid

amount.

42. For the broadband PCS F block

auction, the Commission amended the

terms of the installment payment plans

to provide for late payment fees. Thus,

when licensees are late in their

scheduled installment payments, the

Commission will charge a late payment

fee equal to five percent (5%) of the

amount of the past due payment. The

Commission instituted this fee because

it concluded that, without it, licensees

may not have adequate financial

incentives to make installment

payments on time and may attempt to

maximize their cash flow at the

government’s expense by paying late.

43. The Commission seeks comment

on whether it should adopt, for all

auctionable services, a late payment fee

on any installment payment that is

overdue. The late fee could be set, for

example, at a rate that is equal to five

percent (5%) of the overdue payment.

Such payment would accrue on the next

business day following the payment due

date and would be payable with the

next quarterly installment payment

obligation. This fee would be assessed

for each quarterly payment submitted

late. Payments would be applied in the

following order: late charges, interest

charges, principal payments. Thus, a

licensee who makes payment after the

due date but does not make payment

sufficient to pay the late fee, interest,

and principal, will be deemed to have

failed to make full payment and will be

subject to license cancellation pursuant

to the Commission’s rules. The

Commission tentatively concludes that

such a late payment provision is

necessary to ensure that licensees have

an adequate financial incentive to make

installment payments on time. It seeks

comment on this tentative conclusion

and notes that licensees would continue

to have 90 days before a payment is

deemed delinquent but a late payment

fee would be assessed during this

period.

44. Section 1.2110(e)(4)(ii) of the

Commission’s rules provides that

interest that accrues during a grace

period will be amortized over the

remaining term of the license.

Amortizing interest in this way has the

effect of changing the amount of all

future payments and requiring the

Commission, or its designee, to generate

a new payment schedule for the license.

Changing the amount of the installment

payment has, in turn, created

uncertainty about the interest schedule,

and increased the administrative burden

by requiring formulation of a new

amortization schedule.

45. Section 1.2110(e)(4)(ii) also states

that in considering whether to grant a

request for a grace period, the

Commission may consider, among other

things, the licensee’s payment history,

including whether the licensee has

defaulted before, how far into the

license term the default occurs, the

reasons for default, whether the licensee

has met construction build-out

requirements, the licensee’s financial

condition, and whether the licensee is

seeking a buyer under an authorized

distress sale policy. Under this rule,

licensees are required to come before

the Commission with a filing as well as

financial information such as an income

statement or balance sheet, in the case

of financial distress, to provide the

necessary information for the

Commission to make its ruling.

Licensees are then required to wait for

a ruling by the Commission before

knowing whether a grace period has

been granted or denied. This could

place licensees in a position of

uncertainty if they are seeking to

restructure other debt contingent upon

the results of the Commission’s grace

period ruling.

46. In order to avoid the potential

problems associated with changing the

amount of installment payments, the

Commission proposes to amend
13578 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

§ 1.2110(e)(4)(ii) to require all current

licensees who avail themselves of the

grace period to pay all fees, all interest

accrued during the grace period, and the

appropriate scheduled payment with

the first payment made following the

conclusion of the grace period. It seeks

comment on this proposal.

47. Further, to simplify the grace

period procedures, the Commission

proposes to revise the method by which

grace periods are provided. The

Commission or its designee may not

have the necessary resources to evaluate

a licensee’s financial condition,

business plans, and capital structure

proposals. Therefore, instead of

considering grace period requests, the

Commission could institute the

following system: If a licensee did not

make payment on an installment

obligation within 90 days of its due

date, then the licensee would

automatically receive an additional 90

days to make that payment contingent

upon receipt of the 5 percent late

payment fee proposed above plus an

additional late payment fee of 10

percent. The late payment fee that the

Commission proposes here is greater

than the 5 percent late payment fee that

it proposes for non-grace-period late

installment payments because it

envisions the grace period as an

extraordinary remedy and wish to

encourage licensee to seek private

market solutions to their capital

problems before the payment due date

or, at a minimum, within 90 days of the

due date. Under this proposal licensees

would not be required to submit a filing

to receive a grace period; however,

licensees would be expected to resume

payments after the 90 day grace period

is over. This approach would also be

consistent with the standard

commercial practice of establishing late

payment fees and developing financial

incentives for licensees to resolve

capital issues before payment due dates.

Payments from the licensee would be

applied to late fees, interest, and

principal, in that order. Any licensee

that did not make full payment of all

amounts, including a total late payment

fee of 15 percent, within 180 days of the

payment due date would have its

license automatically canceled as

provided in § 1.2110(e)(4)(ii). The

Commission seeks comment on this

method of providing for an automatic

grace period.

48. The Commission also seeks

comment on whether licensees that

default on installment payment

obligations should be subject to the

default payment provisions outlined in

§ 1.2104(g), i.e., the difference between

the defaulting winner’s bid and the

subsequent winning bid plus 3 percent

of the lesser of these amounts. Sections

1.2110(e)(1) and 1.2110(e)(2) provide

that applicants eligible for installment

payments will be liable for such a

payment if they fail to remit either their

initial or final down payment. Section

1.2110(e)(4)(iii) provides that following

the expiration of any grace period

without successful resumption of

payment, or upon denial of a grace

period request, or upon default with no

such request submitted, the license of

an entity paying on an installment basis

will be canceled automatically. This

section does not state, however, that

under these circumstances the licensee

will be liable for the default payment set

forth in § 1.2104(g). Furthermore, the

Commission has been asked to address

the issue of cross default in the context

of installment payments. A cross-default

provision would specify that if a

licensee defaults on one installment

payment loan, it would also default on

any other installment payment loans it

holds. These provisions are standard in

credit-related agreements.

49. The Commission tentatively

concludes that a licensee that makes the

necessary down payments but defaults

on installment payments should not be

exempt from the default payment

provisions of § 1.2104(g). Licensees that

default at any point in the auction

process, either before licenses are issued

or during the installment payment

period, reduce the efficiency of the

licensing process. A default, regardless

of when it occurs, makes it necessary for

the Commission to incur the costs of

reauctioning the license, and the default

delays the deployment or continuation

of service in the affected market. The

Commission believes that imposing the

default payment of § 1.2104(g) on all

defaulting licensees would serve to

discourage defaults and encourage

licensees to find private market

solutions for default situations in

addition to covering the cost the

government must incur to reauction the

license. The Commission seeks

comment on this tentative conclusion

and on the appropriate method for

calculating default payments when

defaults occur during the license term.

50. The Commission seeks comment

on whether it should cross default its

installment payment plan loans with

other installment payment plan loans to

the same licensee. If adopted, should a

cross default provision apply across

services? For example, if a licensee,

with both SMR and broadband PCS

licenses, defaults on one of its PCS

licenses, should the Commission

consider pursuing default remedies

against all PCS and SMR licenses?

Instead, should the Commission pursue

default remedies against the single

license only? What factors should

influence its decision to pursue crossdefaults? Should cross-defaults be

applied automatically or on a case-bycase basis? The Commission also seeks

comment, in general, on what remedies

are appropriate when licensees default.

51. Congress has directed the

Commission to ‘‘design and test

multiple alternative methodologies for

auction designs.’’ The Commission is

interested in reducing the length of the

auctions without sacrificing the

economic efficiency of the assignment

process. It seeks comment, in general,

on how it can speed the auctions (and

in particular the simultaneous multiple

round auctions). For example, how

could the current procedural rules for

simultaneous multiple round auctions

be modified to meet this objective, or

what new designs might be used to

efficiently allocate numerous licenses?

52. The Commission believes that one

way complex auctions of multiple

licenses could proceed more quickly

would be to modify the current

simultaneous multiple round auction to

allow bidding on a continuous basis

within a combined bid submission/bid

withdrawal period. This would give

bidders immediate feedback on new

high bids, withdrawn high bids and

minimum accepted bids, and provide

them with the opportunity to move the

auction along more quickly. Under the

current simultaneous multiple round

auction rules, each round of bidding

contains a discrete bid submission

period and a bid withdrawal period.

The rules permit bidders to place bids

once within the submission period of

the round on licenses that they are

eligible to bid on, and they may

withdraw high bids only during the bid

withdrawal period. This requires

bidders to wait until the end of the

round to determine their status. An

open, continuous bidding round—in

which bidders would know when their

bid has been exceeded and would be

free to bid again—could reduce the

delay inherent in the current design.

Therefore, the Commission proposes to

amend the general rules to provide for

such ‘‘real time’’ bidding as another

design feature for electronic multiple

round auctions.

53. The Commission recognizes,

however, that it may be difficult for

bidders to react quickly enough to

ensure that in each bidding round they

make new high bids on the necessary

percentage of their bidding eligibility to

meet their activity requirement.

Therefore, it proposes that after each

fixed period of real time bidding (when
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13579

only standing high bids from the

previous round and new high bids from

the current round count in determining

the bidder’s activity level) the

Commission would open a discrete

closed bidding period, when bidders

would be able to submit valid bids (bids

that meet or exceed the minimum

accepted bid) at the end of the ‘‘real

time’’ bidding to ensure that they have

the opportunity to meet their activity

requirements for the round. Following

the discrete closed bidding period, the

Commission would post the final round

results for the period and make all bids

available to the public. By allowing a

discrete period of time for bidders to

make valid bids at the end of the round,

the Commission would reduce the risks

associated with real time electronic

bidding.

54. Because ‘‘real time’’ auctions are

a variation of the simultaneous multiple

round auction design established in the

rules, the Commission tentatively

concludes that many of the same

procedures should apply. These

include: Upfront payments to determine

eligibility, activity requirements that

apply to each round, minimum bid

increments, and a stopping rule.

However, the Commission believes that

separate rules would be required on

certain issues. The Commission seeks

comment on issues that arise when the

bid submission and bid withdrawal

periods are combined, such as how

withdrawn bids should be treated when

calculating current activity. For

example, whether a bid that is placed

and withdrawn in one round should

count as activity, and whether a

withdrawn bid will negate the status of

that bid as activity in the current round

as well as the status as standing high

bid.

55. In addition, the Commission seeks

comment on the appropriate length for

the real time bidding rounds. It seeks

comment on what measures it can take

to assure bidders that they will have

enough time to determine their bidding

strategies with ‘‘real time’’ bidding. In

particular, the Commission seeks

comment on the impact of ‘‘real time’’

bidding on small businesses, generally,

and particularly on their ability to

process bid information during the

course of a single round.

56. Currently, § 1.2104(d) of the rules

states that the Commission may

establish suggested minimum opening

bids. In the Competitive Bidding Second

Report and Order, the Commission

noted that if only two or three

applicants applied to bid for a valuable

license, it might set a reservation price.

A reservation price is a price below

which a license subject to auction will

not be awarded. The Commission

provided the option of setting a

reservation price in order to prevent a

license from being awarded under

circumstances where there would be

little competition among bidders and

significant incentives to collude.

57. The Commission proposes to

amend § 1.2104 to specify that it may

establish minimum opening bids, rather

than suggested minimum opening bids.

Such a rule has been adopted in servicespecific rules. The Commission

proposes to amend the general

competitive bidding rules to allow it to

establish a minimum opening bid

because it believes that a minimum

opening bid can serve some of the same

purposes as a reservation price. A

minimum opening bid increases the

likelihood that the public receives fair

market value for the spectrum being

auctioned and can also help an auction

move more swiftly. The Commission

seeks comment on this proposal.

58. A bid increment is the amount or

percentage by which a bid must be

raised above the previous round’s high

bid in order to be accepted as a valid bid

in the current round. The Commission

determined in the Competitive Bidding

Second Report and Order that it would

reserve the right to specify minimum

bid increments in dollar terms as well

as in percentage terms. The Commission

reasoned that imposing a minimum bid

increment speeds the progress of the

auction and, along with activity and

stopping rules, helps to ensure that the

auction comes to closure within a

reasonable period of time. It did not

reserve the discretion to specify

maximum bid increments.

59. Whereas the minimum bid

increment speeds the auction process, a

maximum bid increment could prevent

bidders from placing bids that are

significantly higher than the minimum

acceptable bid. This type of bidding is

known as ‘‘jump bidding.’’ Some

theoretical literature suggests that

bidders could use jump bidding to

manipulate the auction process and

potentially reduce efficiency of the

auction. Jump bidding complicates

bidding strategy and denies bidders

information about the number of

bidders who would be willing to pay

prices between the minimum acceptable

bid and the jump bid. In the absence of

information about the bidders who

would be willing to participate at

intermediate bids, other bidders might

feel compelled to shade their bids more

than they otherwise would. This

behavior is an attempt to avoid the

‘‘winner’s curse,’’—the phenomenon of

a bidder winning only because he or she

has overestimated the value of the

license. A general principle of auction

theory has it that the auction

mechanisms which perform the best are

those which are able to induce bidders

to reveal the most information. To the

extent that jump bids enable bidders to

conceal information, the phenomenon

moves the process away from the

informational advantages of an

ascending bid (multiple round) auction

in the direction of a first-price sealed

bid (single round) auction. The

Commission seeks comment on whether

it should retain the discretion to employ

a maximum bid increment if it finds

that jump bidding is impairing the

auction process.

60. Under the current rules, if a high

bid is withdrawn prior to the close of a

simultaneous multiple round auction,

the Commission will impose a payment

equal to the difference between the

withdrawn bid and the amount of the

winning bid the next time the license is

offered by the Commission. No

withdrawal payment is assessed if the

subsequent winning bid exceeds the

withdrawn bid. If a winning bidder

defaults after the close of an auction, the

defaulting bidder will be required to pay

the foregoing payment plus an

additional payment of 3 percent of the

subsequent winning bid or its own

withdrawn bid, whichever is lower.

61. To help bidders avoid mistaken

bids that could expose them to liability

for bid withdrawal payments, the

Commission has enhanced its electronic

bidding software. The software now

displays a warning screen to bidders

when they try to place a bid that is far

in excess of the minimum accepted bid.

Bidders must affirmatively override this

mistaken bid warning if they wish to

place the bid. For example, if the

minimum accepted bid for a license is

$10,000, an excessive bid warning will

appear if a bidder attempts to place a

bid of $100,000 or more.

62. The Commission has also recently

addressed the issue of how the bid

withdrawal payment rules apply to bids

that are mistakenly placed and

subsequently withdrawn. In Atlanta

Trunking, the Commission stated that,

while it believes that in some cases full

application of the bid withdrawal

payment provisions could impose an

extreme and unnecessary hardship on

bidders, it may be extremely difficult for

the Commission to distinguish between

‘‘honest’’ erroneous bids and ‘‘strategic’’

erroneous bids. The Commission held

that in cases of erroneous bids, some

relief from the bid withdrawal payment

requirement appears necessary. Thus, it

waived the bid withdrawal rules as they

apply to 900 MHz SMR and broadband

PCS and applied the following
13580 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

guidelines: If at any point during an

auction a mistaken bid is withdrawn in

the same round in which it was

submitted, the bid withdrawal payment

should be the greater of (a) the

minimum bid increment for that license

and round, or (b) the standard bid

withdrawal payment calculated as if the

bidder had made a bid at the minimum

accepted bid. If a mistaken bid is

withdrawn in the round immediately

following the round in which it was

submitted, and the auction is in Stage I

or Stage II, the withdrawal payment

should be the greater of (a) two times

the minimum bid increment during the

round in which the mistaken bid was

submitted or (b) the standard

withdrawal payment calculated as if the

bidder had made a bid at one bid

increment above the minimum accepted

bid. If the mistaken bid is withdrawn

two or more rounds following the round

in which it was submitted, the bidder

should not be eligible for any reduction

in the bid withdrawal payment.

Similarly, during Stage III of an auction,

if a mistaken bid is not withdrawn

during the round in which it was

submitted, the bidder should not be

eligible for any reduction in the bid

withdrawal payment.

63. In response to a commenter’s

request, the Commission recently

modified the broadband PCS rules for

the D, E, and F blocks to establish

provisions governing the withdrawal of

erroneous bids. It thus incorporated the

guidelines fashioned in Atlanta

Trunking into these rules. The

Commission now proposes to change

§§ 1.2104 and 1.2109 of the rules such

that similar provisions adopted for the

broadband PCS D, E, and F block

auction will apply to all auctions. The

Commission seeks comment on this

proposal.

64. The current auction rules allow a

high bidder on a license to withdraw its

bid at any point during the auction,

subject to a bid withdrawal payment.

The Commission has recognized that

allowing bid withdrawals facilitates

efficient aggregation of licenses and

pursuit of efficient backup strategies as

information becomes available during

the course of an auction. It also is

cognizant that allowing withdrawals

also risks encouraging insincere bidding

and allowing the use of withdrawals for

anti-competitive strategic purposes,

such as signaling other bidders. To

guard against such abuses, the

Commission put in place a withdrawal

payment equal to the difference between

the withdrawn bid and the amount of

the winning bid the next time the

license is offered by the Commission.

The Commission seeks comment on

whether it should exercise its authority

to limit withdrawals, and if so, under

what circumstances. Should the

Commission consider limiting the

number of withdrawals that a bidder is

permitted to make in an auction, the

number of rounds in which withdrawals

can be made, or the number of

withdrawals permitted with respect to a

particular license? Are there other ways

to address concern about strategic

withdrawals without unduly affecting

bidders’ ability to efficiently aggregate

licenses? For example, should the

Commission consider increasing the

withdrawal payment or changing its

structure?

65. Under § 1.2109(b) of the rules, if

a winning bidder withdraws its bid after

the auction has closed or fails to remit

the required down payment within the

requisite period after the Commission

has announced high bidders, the bidder

will be deemed to have defaulted. This

rule also provides that, in such event,

the Commission may either re-auction

the license to existing or new applicants

or offer it to the other highest bidders

(in descending order) at their final bids.

In the Order accompanying this NPRM,

the Commission modified the down

payment due date to ten business days

after the Commission has issued a

Public Notice announcing winning

bidders, and accordingly adjusted the

period within which the Commission

has discretion to offer the defaulted

license to bidders in the original auction

to the same ten-day period.

66. When the Commission first

adopted rules governing the licensing of

defaulted licenses, it stated that ‘‘[i]n

the event that a winning bidder in a

simultaneous multiple round auction

defaults on its down payment

obligations, the Commission will

generally re-auction the license either to

existing or new applicants.’’ Noting that

in some circumstances the costs of

conducting a re-auction may not always

be justified, the Commission reserved

the discretion in cases in which the

winning bidder defaults on its down

payment obligation to offer a defaulted

license to the highest losing bidders (in

descending order of their bids) at their

final bids if ‘‘only a small number of

relatively low value licenses are to be

re-auctioned * * *.’’

67. Having now developed a

computerized auction system and

conducted numerous auctions, the

Commission believes that the costs of a

re-auction, even for a small number of

relatively low value licenses, would be

minimal. Use of regularly scheduled

quarterly auctions will also ensure rapid

reauction. Further, re-offering a

defaulted license to the next highest

bidder (in descending order) at their

final bids may not ensure that the

license will be awarded to the bidder

that values it the most highly. When

more than one license is being

auctioned, aggregation strategies may

shift during the course of the auction,

affecting interest of individual bidders.

68. The Commission asks commenters

to address whether the Commission

should (1) retain § 1.2109(b) in its

current form, (2) modify the rule so that

the Commission retains the discretion

regardless of when a default occurs to

offer the license only to the second

highest bidder at its bid price (3) modify

the rule so that the Commission retains

discretion to offer a license on which

the winning bidder has defaulted on its

down payment obligation only to the

second highest bidder, (4) modify the

rule so that the Commission retains

discretion to offer a defaulted license to

the highest losing bidders (in

descending order of their bids), but only

at the final bid level of the second

highest bidder, (5) modify the rule to

require re-auction of defaulted licenses

regardless of when a default occurs.

Moreover, it seeks comment on whether

it should modify the rule to codify the

statement in the Competitive Bidding

Fifth Report and Order that where there

are a relatively small number of low

value licenses, and only a short time has

passed since the initial auction, the

Commission may choose to offer the

license to the highest losing bidder

because the cost of conducting another

auction may exceed the benefits.

Commenters favoring this should

indicate the parameters that the

Commission should employ in

determining which licenses might be reoffered to bidders in the original

auction.

69. The Commission adopted rules to

prohibit collusion in the Competitive

Bidding Second Report and Order

because it was concerned that collusive

conduct by bidders prior to or during an

auction could undermine the

competitiveness of the bidding process

and prevent the formation of a

competitive post-auction market

structure. In general, bidders are

required to identify on their short-form

applications any parties with whom

they have entered into any consortium

arrangements, joint ventures,

partnerships or other agreements or

understandings which relate to the

competitive bidding process. With

certain exceptions, all such

arrangements must have been entered

into prior to the filing of short-form

applications. After such applications are

filed and prior to the time that the

winning bidder has made its required
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules 13581

down payment, all bidders are

prohibited from cooperating,

collaborating, discussing or disclosing

in any manner the substance of their

bids or bidding strategies with other

bidders, unless such bidders are

members of a bidding consortium or

other joint bidding arrangement

identified on the bidder’s short-form

application.

70. As the Commission’s auction

process has evolved, it has clarified the

rules prohibiting collusion. Early on in

the auction process, for example, the

Commission established exceptions to

the anti-collusion rules in an attempt to

allow applicants greater flexibility to

form agreements with other applicants

and thereby acquire the capital

necessary to bid successfully for

licenses. Specifically, it amended the

anti-collusion rules to permit a holder of

a non-controlling attributable interest in

an applicant to obtain an ownership

interest in or enter into a consortium

arrangement with another applicant for

a license in the same geographic area,

provided that the attributable interest

holder certifies to the Commission that

it has not communicated and will not

communicate with the applicant or any

one else information concerning the

bids or bidding strategies (including

which licenses an applicant will or will

not bid on) of more than one applicant

for licenses in the same geographic area

in which it holds an ownership interest

or with which it has a consortium

arrangement. Additionally, Commission

staff has issued public notices and

letters that seek to interpret and clarify

these rules.

71. The exception outlined above was

adopted in order to facilitate the flow of

capital to applicants by enabling parties

to make investments in multiple

applicants for licenses in the same

geographic license areas. Having gained

experience with implementing its anticollusion rules, the Commission now

believes that this exception is difficult

to apply in a business setting. Entities

are reluctant to invest in multiple

applicants if they cannot obtain

information about business plans and

strategies, which often necessarily

reflect bidding strategies or bids.

72. The Commission therefore

proposes to modify this provision of the

anti-collusion rule to permit entities to

invest in multiple applicants if the

original applicant withdraws from the

auction. Under this proposal, a holder of

a non-controlling attributable interest in

an applicant would be permitted to

obtain an ownership interest in or enter

into a consortium arrangement with

another applicant for a license in the

same geographic area, provided that the

original applicant has dropped out of

the auction and is no longer placing

bids, and the attributable interest holder

certifies to the Commission that it did

not communicate with the new

applicant prior to the date that the

original applicant withdrew from the

auction. The Commission believes that

this proposal will encourage entities to

invest in bidders if their original

applicant fails to complete the auction

and will give such entities the flexibility

needed to do so. Furthermore, it

believes that prohibiting any

communication with other applicants

prior to when the original applicant

withdraws from the auction will prevent

investors from exerting pressure on

smaller bidders to withdraw in

exchange for teaming up with other

larger bidders. The Commission seeks

comment on this proposal.

73. In the proceeding involving

service-specific auction rules for paging

services, several commenters requested

that the Commission establish rules that

do not have a chilling effect on ongoing

business acquisitions and transactions.

Under the current rules, they

contended, discussions between bidders

for the same license area regarding a

business merger or acquisition may be

construed as discussions of bidding or

bidding strategy—thus violating the

anti-collusion rules. They proposed that

the Commission grant a ‘‘safe harbor’’

for certain situations, such as in services

where there are incumbent operators,

permitting ongoing discussions among

bidders concerning mergers,

acquisitions or intercarrier arrangements

to proceed during the period in which

the anti-collusion rules are applicable.

Some suggested a system in which

respective bidder personnel certify that

persons involved in such discussions

are not discussing bidding strategy or

otherwise divulging bidder information

to each other in violation of the anticollusion rules. Absent a showing that

a certification is false, necessary

discussions in the ordinary course of

business would be permitted during the

course of the auction. The Commission

seeks comment on this proposal

concerning a safe harbor for discussions

of certain non-auction business matters

and it seeks comment on any other

changes to the rules prohibiting

collusion they believe are warranted.

Finally, it seeks comment on the public

notices and letters issued by

Commission staff seeking to interpret

and clarify these rules.

74. In 1989, the Commission adopted

rules permitting certain license

applicants, under prescribed conditions,

to construct their facilities prior to

license grant. It subsequently

determined that part 22 and part 90

commercial mobile radio service

applicants should be subject to the same

rules governing the construction of

facilities prior to the grant of pending

applications. The Commission later

clarified that such rules would extend to

successful broadband PCS bidders that

had filed a long-form application. Thus,

35 days after the date of the Public

Notice announcing the broadband PCS

A and B Block Form 600 applications

accepted for filing, the parties has filed

those applications were permitted, at

their own risk, to commence

construction of facilities, provided that

(1) no petitions to deny the application

had been filed; (2) the application did

not contain a request for a rule waiver;

(3) the applicant complied fully with

the antenna structure provisions of

§§ 24.416 and 24.816 of the

Commission’s rules, including FAA

notification, and Commission filing

requirements; (4) the application

indicated that the facilities would not

have a significant environmental effect

(see 47 CFR 24.413(f) and 24.813(f));

and (5) international coordination of the

facilities was not required.

75. The Commission proposes to

extend the pre-grant construction rules

set forth in 47 CFR 22.143 to all auction

winners, regardless of whether petitions

to deny have been filed against their

long-form applications. It further

proposes to permit each auction winner

to begin construction of its system, at its

own risk, upon release of a Public

Notice announcing the acceptance for

filing of post-auction long-form

applications. The Commission

tentatively concludes that to do so

would further the public interest by

expediting, in most cases, the initiation

of service to the public. It believes that

allowing pre-grant construction furthers

the statutory objective expressed in the

Communications Act in section

309(j)(3)(A) of the rapid deployment of

new technologies, products, and

services for the benefit of the public.

Pre-grant construction would be subject

to any service-related restrictions,

including but not limited to antenna

restrictions, environmental

requirements, and international

restrictions. Finally, the Commission

emphasizes that any applicant engaging

in pre-grant construction activity would

do so entirely at its own risk, and the

Commission would not take such

activity into account in ruling on any

petition to deny although it

acknowledges that this could result in

significant economic loss to applicants.

The Commission seeks comment on this

proposal.
13582 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Proposed Rules

Procedural Matters and Ordering

Clauses

76. The Initial Regulatory Flexibility

Analysis (IRFA), as required by section

604 of the Regulatory Flexibility Act, is

set forth in Appendix C of the NPRM.

Pub. L. 96–354, 94 Stat. 1164, 5 U.S.C.

601 et seq. (1981). Written public

comments are request on the IRFA.

These comments must be filed in

accordance with the same filing

deadlines as comments on the rest of the

NPRM, but they must have a separate

and distinct heading designating them

as responses to the IRFA. The Secretary

shall send a copy of this NPRM,

including the IRFA, to the Chief counsel

for Advocacy of the Small Business

Administration in accordance with the

paragraph 603(a) of the Regulatory

Flexibility Act.

77. Ex Parte Presentations. This is a

non-restricted notice and comment rule

making proceeding. Ex parte

presentations are permitted, provided

they are disclosed as provided in

Commission rules. See generally 47 CFR

1.1202, 1.1203, and 1.1206(a).

78. Authority. This action is taken

pursuant to sections 4(i), 5(b), 5(c)(1),

303(r), and 309 (j) of the

Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 155(b),

156(c)(1), 303(r), and 309(j).

79. Comment. This NPRM contains

either new or modified information

collections. The Federal

Communications Commission, as part of

its continuing effort to reduce

paperwork burden, invites the general

public and other Federal agencies to

take this opportunity to comment on the

following revised information

collection, as required by the Paperwork

Reduction Act of 1995, Pub. L. 104–13.

In addition to filing comments on the

new or modified collection with the

Secretary, a copy of any comments on

the information collections contained

herein should be submitted to Dorothy

Conway, Federal Communications

Commission, Room 234, 1919 M St.,

NW., Washington, DC 20554 or via the

Internet to dconway@fcc.gov.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–7233 Filed 3–20–97; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 73

[MM Docket No. 97–93, RM–9013]

Radio Broadcasting Services;

Hardinsburg, IN

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: This document requests

comments on a petition for rule making

filed by Keith L. Reising seeking the

allotment of FM Channel 245A to

Hardinsburg, Indiana, as that

community’s first local aural

transmission service. Coordinates used

for Channel 245A at Hardinsburg are

38–30–42 and 86–22–22.

DATES: Comments must be filed on or

before May 5, 1997, and reply comments

on or before May 20, 1997.

ADDRESSES: Secretary, Federal

Communications Commission,

Washington, DC 20554. In addition to

filing comments with the FCC,

interested parties must serve the

petitioner, as follows: Keith L. Reising,

1680 Hwy 62 NE, Corydon, IN 47112.

FOR FURTHER INFORMATION CONTACT:

Nancy Joyner, Mass Media Bureau, (202)

418–2180.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Notice of

Proposed Rule Making, MM Docket No.

97–93, adopted March 5, 1997, and

released March 14, 1997. The full text

of this Commission decision is available

for inspection and copying during

normal business hours in the FCC’s

Reference Center (Room 239), 1919 M

Street, NW., Washington, DC. The

complete text of this decision may also

be purchased from the Commission’s

copy contractors, International

Transcription Services, Inc., 2100 M

Street, NW., Suite 140, Washington, DC

20037, (202) 857–3800.

Provisions of the Regulatory

Flexibility Act of l980 do not apply to

this proceeding.

Members of the public should note

that from the time a Notice of Proposed

Rule Making is issued until the matter

is no longer subject to Commission

consideration or court review, all ex

parte contacts are prohibited in

Commission proceedings, such as this

one, which involve channel allotments.

See 47 CFR 1.1204(b) for rules

governing permissible ex parte contacts.

For information regarding proper

filing procedures for comments, see 47

CFR 1.415 and 1.420.

List of Subjects in 47 CFR Part 73

Radio broadcasting.

Federal Communications Commission.

John A. Karousos,

Chief, Allocations Branch, Policy and Rules

Division, Mass Media Bureau.

[FR Doc. 97–7253 Filed 3–20–97; 8:45 am]

BILLING CODE 6712–01–F

47 CFR Part 73

[MM Docket No. 97–92, RM–9032]

Radio Broadcasting Services;

Mukwonago, WI

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: This document requests

comments on a petition filed by Faith

Congregation proposing the allotment of

Channel 287A to Mukwonago,

Wisconsin, as that community’s first

local broadcast service. There is a site

restriction 11.8 kilometers (7.3 miles)

west of the community at coordinates

42–54–15 and 88–27–55.

DATES: Comments must be filed on or

before May 5, 1997, and reply comments

on or before May 20, 1997.

ADDRESSES: Federal Communications

Commission, Washington, DC. 20554. In

addition to filing comments with the

FCC, interested parties should serve the

petitioner’s counsel, as follows: Henry

E. Crawford, 1150 Connecticut Avenue,

NW., Suite 900, Washington, DC. 20036.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scheuerle, Mass Media

Bureau, (202) 418–2180.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Notice of

Proposed Rule Making, MM Docket No.

97–92, adopted March 5, 1997, and

released March 14, 1997. The full text

of this Commission decision is available

for inspection and copying during

normal business hours in the

Commission’s Reference Center (Room

239), 1919 M Street, NW., Washington,

DC. The complete text of this decision

may also be purchased from the

Commission’s copy contractors,

International Transcription Services,

Inc., 2100 M Street, NW., Suite 140,

Washington, DC. 20037, (202) 857–3800.

Provisions of the Regulatory

Flexibility Act of l980 do not apply to

this proceeding.

Members of the public should note

that from the time a Notice of Proposed

Rule Making is issued until the matter

is no longer subject to Commission

consideration or court review, all ex

parte contacts are prohibited in

Commission proceedings, such as this

one, which involve channel allotments.