[Federal Register Volume 63, Number 124 (Monday, June 29, 1998)]
[Notices]
[Pages 35213-35224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17147]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

[DA 98-1010; Report No. AUC-98-18-B (Auction No. 18)]


Auction of the Phase II 220 MHz Service Licenses; Scheduled for 
September 15, 1998--Minimum Opening Bids and Other Procedural Issues

AGENCY: Federal Communications Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This Public Notice announces the procedures and minimum 
opening bids for the upcoming Phase II 220 MHz Service (``220 MHz 
Service'') auction. On January 13, 1998, the Commission released a 
Public Notice, (``220 MHz Public Notice''), seeking comment on the 
establishment of reserve prices or minimum opening bids for the 220 MHz 
Service auction. In addition, the Commission also sought comment on a 
number of procedures to be used in the 220 MHz Service auction.

EFFECTIVE DATES: June 29, 1998.

FOR FURTHER INFORMATION CONTACT: Lisa Hartigan, Bob Reagle, or Frank 
Stilwell, Auctions and Industry Analysis Division, Wireless 
Telecommunications Bureau at (202) 418-0660, Scott A. Mackoul, 
Commercial Wireless Division at (202 418-7240, or Marty Liebman, Policy 
Division, Wireless Telecommunications Bureau at (202 418-1310.

SUPPLEMENTARY INFORMATION: This is the summary of a Public Notice 
released May 29, 1998. The text of the public notice in its entirety, 
including attachments, 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 Services, 
Inc. (ITS), 1231 20th Street, NW, Washington, DC 20036, (202) 857-3800. 
In addition, the text of the public notice in its entirety, including 
attachments, is available on the World Wide Web at <a href="http://www.fcc.gov/
wtb/auctions/220/220.html">http://www.fcc.gov/
wtb/auctions/220/220.html</a><SUP><greek-i></SUP>PN.

1. Introduction

    1. The Federal Communications Commission (``FCC'' or 
``Commission'') will hold an auction for 908 licenses to operate in the 
220-222 MHz band. These licenses encompass the United States, the 
Northern Mariana Islands, Guam, American Samoa, the United States 
Virgin Islands and Puerto Rico. Specifically, the licenses include: (1) 
five licenses in each of 172 geographic areas known as Economic Areas 
(EAs) and three EA-like areas; (2) five licenses in six Economic Area 
Groupings (EAGs); and (3) three Nationwide licenses which encompass the 
same territory as all of the EAGs combined (see Attachment A for a 
complete listing of licenses). The licenses include the following 
channels:

------------------------------------------------------------------------
                                                                Channels
------------------------------------------------------------------------
(1) EA Block:                                                           
  A: Channel Groups 2, 13....................................         10
  B: Channel Groups 3, 16....................................         10
  C: Channel Groups 5, 18....................................         10
  D: Channel Groups 8, 19....................................         10
  E: Channel 171-180.........................................         10
(2) EAG Block:                                                          
  F: Channel Groups 1, 6, 11.................................         15
  G: Channel Groups 4, 9, 14.................................         15
  H: Channel Groups 7, 12, 17................................         15
  I: Channel Groups 10, 15, 20...............................         15
  J: Channel 186-200.........................................         15
(3) Nationwide Block:                                                   
  K: Channels 51-60..........................................         10
  L: Channels 81-90..........................................         10
  M: Channels 141-150........................................         10
------------------------------------------------------------------------

    Auction Date: The auction will commence on September 15, 1998. The 
initial schedule for bidding will be announced by public notice at 
least one week before the start of the auction. Unless otherwise 
announced, bidding will be conducted on each business day until bidding 
has stopped on all licenses.
    Auction Title: The Phase II 220 MHz Service--Auction No. 18.
    Bidding Methodology: Simultaneous multiple round bidding. Bidding 
will be permitted only from remote locations, either electronically (by 
computer) or telephonically.


                          Pre-Auction Deadline                          
                                                                        
<bullet> Auction Seminar.....................  August 6, 1998.          
<bullet> Short Form Application (FCC Form      August 17, 1998; 5:30    
 175).                                          p.m. ET.                

[[Page 35214]]

                                                                        
<bullet> Upfront Payments (via wire transfer)  August 31, 1998; 6:00    
                                                p.m. ET.                
<bullet> Orders for Remote Bidding Software..  September 1, 1998; 5:30  
                                                p.m. ET.                
<bullet> Mock Auction........................  September 11, 1998 (time 
                                                TBA).                   
                                                                        
                           Telephone Contacts                           
                                                                        
<bullet> FCC National Call Center............  (888) CALL-FCC ((888) 225-
                                                5322) (For Bidder       
                                                Information Packages,   
                                                General Auction,        
                                                Information, and Seminar
                                                Registration, press     
                                                option #2 at the        
                                                prompt). Hours of       
                                                service: 8 a.m.-5:30    
                                                p.m. ET.                
<bullet> FCC Technical Support Hotline.......  (202) 414-1250 (V), (202)
                                                414-1255 (TTY). Hours of
                                                service: 8 a.m.-6 p.m.  
                                                ET, Monday-Friday; 9    
                                                a.m.-5 p.m. ET, weekend 
                                                of August 15-16, 1998.  
                                                                        

List of Attachments

<bullet> Attachment A
    Summary of Phase II 220 Mhz Licenses to be Auctioned
<bullet> Attachment B
    List of Cases Pending before the Commission Involving Non-
Nationwide Phase I 220 MHz Licensees
<bullet> Attachment C
    Guidelines for Completion of FCC Forms 175 and 159, and Exhibits
<bullet> Attachment D
    Electronic Filing and Review of FCC Form 175
<bullet> Attachment E
    Summary Listing of Documents from the Commission and the Wireless 
Telecommunications Bureau Addressing Application of the Anti-Collusion 
Rules
<bullet> Attachment F
    List of Commenters

I. Background

    2. In March 1997, the Commission restructured the licensing 
framework that governs the 220 MHz Service. Site-specific licensing, 
used in the Phase I 220 MHz Service, is to be replaced with a 
geographic-based system in the Phase II 220 MHz Service which is the 
subject of the upcoming auction. This geographic-based licensing 
methodology is similar to that used in other commercial mobile radio 
services (``CMRS''). The geographic areas for the licenses were created 
based upon Economic Areas (EAs), developed by the Bureau of Economic 
Analysis of the U.S. Department of Commerce. The Economic Area 
Groupings (EAGs), developed by the Commission, include groupings of EAs 
and encompass the sum total of all EAs. Three Nationwide licenses, 
including all of the EAGs, are also to be offered in the Phase II 220 
MHz Service auction. Service and operational requirements for the Phase 
II 220 MHz Service are contained in Part 90 of the Commission's Rules, 
47 CFR Part 90.
    3. On May 21, 1998, the Commission released a Memorandum Opinion 
and Order on Reconsideration in PR Docket No. 89-552, 63 FR 32579; June 
12, 1998. Among other things the Commission removed the spectrum 
efficiency standard that applied to equipment operating in the 220-222 
MHz band, eliminated installment payments for small business and very 
small businesses, and increased bidding credits for such entities.

II. Due Diligence

    4. Potential bidders are reminded that there are a number of 
incumbent Phase I 220 MHz licensees already licensed and operating on 
frequencies that will be subject to the upcoming auction. Such 
incumbents must be protected from harmful interference by Phase II 220 
MHz licensees in accordance with the Commission's Rules. See 47 CFR 
90.763. These limitations may restrict the ability of such geographic 
area licensees to use certain portions of the electromagnetic spectrum 
or provide service to certain areas in their geographic license areas.
    5. In addition, potential bidders seeking licenses for geographic 
areas that are near the Canadian border should be aware that the use of 
some or all of the channels they acquire in the auction could be 
restricted as a result of a future agreement with Canada on the use of 
220-222 MHz spectrum in the border area.
    6. Potential bidders should also be aware that certain applications 
(including those for modification), waiver requests, petitions for 
reconsideration and applications for review are pending before the 
Commission that relate to particular incumbent non-nationwide 220 MHz 
licensees. The Commission notes that resolution of these matters could 
have an impact on the availability of spectrum for EA and EAG 
licensees. In addition, while the Commission will continue to act on 
pending applications, requests and petitions, some of these matters may 
not be resolved by the time of the auction.

III. Potential Bidders Are Solely Responsible for Investigating and 
Evaluating the Degree to Which Such Pending Matters May Affect 
Spectrum Availability in Areas Where They Seek EA or EAG Licenses

    7. To aid potential bidders, Attachment B to this Public Notice 
lists pending matters of which the Commission is aware that relate to 
licenses or applications for the 220 MHz service. The Commission makes 
no representations or guarantees that the listed matters are the only 
pending matters that could affect spectrum availability in the 220-222 
MHz band. Parties may submit additions or corrections to the list, 
provided such additions or corrections are filed with the Commission 
within ten (10) business days from release of this Public Notice. Such 
submissions should be limited to identifying pleadings or papers 
previously filed with the Commission. No new pleadings or arguments on 
the merits will be accepted as explicitly provided by Commission Rules.
    8. Corrections and additions must be filed with the Office of the 
Secretary, Federal Communications Commission, 1919 M Street, NW., 
Washington, DC 20554. One copy of each submission should also be sent 
to International Transcription Service, Inc., 1231 20th Street, NW., 
Washington, DC 20036, while an additional courtesy copy may be sent to 
Scott A. Mackoul, Policy and Rules Branch, Commercial Wireless 
Division, Wireless Telecommunications Bureau, Federal Communications 
Commission, 2100 M Street, NW., 7th Floor, Washington, DC 20554. 
Parties filing additions or corrections should include the internal 
reference number (DA 98-1010) on their submissions. Parties also are 
reminded that some of the proceedings are restricted proceedings 
governed by the Commission's ex parte rules. Accordingly, any 
submission filed pursuant to this Public Notice that is directed to the 
merits or outcome of any restricted proceeding must be served on

[[Page 35215]]

all parties to that restricted proceeding. See generally 47 CFR 1.1200-
1.1216.
    9. Additional information regarding matters identified in 
Attachment B is available to the public. Licensing information is 
contained in the Commission's licensing database, which is available 
for inspection in the Wireless Telecommunications Bureau's Pubic 
Reference Rooms, located at 2025 M Street, NW., Room 5608, Washington, 
DC 20554, and 1270 Fairfield Road, Gettysburg, PA 17325. In addition, 
copies of the pleadings are available for public inspection only in the 
Gettysburg Public Reference Room.
    10. In addition, potential bidders may search for information (but 
not the pleadings) regarding incumbent 220 MHz licensees on the World 
Wide Web at http://www.fcc.gov/wtb. In particular, information can be 
accessed by downloading databases by selecting ``WTB Database Files'' 
(http://www.fcc.gov/wbt/databases.html), or searching on-line by 
selecting ``Search WTB Databases'' (http://gullfoss.fcc.gov:8080/cgi-
bin/ws.exe/beta/genmen/index.hts). Any telephone inquiries regarding 
these matters should be directed to the Technical Support Hotline at 
(202) 414-1250 (V) or (202) 414-1255 (TTY).

IV. The Commission Makes no Representations or Guarantees Regarding 
the Accuracy or Completeness of Information That Has Been Provided 
by Incumbent Licensees and Incorporated Into the Database. 
Potential Bidders Are Strongly Encouraged to Physically Inspect any 
Sites Located in or Near the Geographic Area for Which They Plan to 
Bid

    11. Participation: Those wishing to participate in the auction 
must:
    <bullet> Submit a short form application (FCC Form 175) by the 
above-listed deadline.
    <bullet> Submit a sufficient upfront payment and an FCC Remittance 
Advice Form (FCC For 159) by the above-listed deadline.
    <bullet> Comply with all provisions outlined in this Public Notice.
    12. Prohibition of Collusion: To ensure the competitiveness of the 
auction process, the Commission's Rules prohibit applicants for the 
same geographic license area from communicating with each other during 
the auction about bids, bidding strategies, or settlements. This 
prohibition begins with the filing of short-form applications, and ends 
on the down payment due date. In the 220 MHz Service auction, for 
example, the rule would apply to an applicant bidding for an EAG and an 
applicant bidding for an EA within that EAG. Applicants that apply to 
bid for ``all markets'' or a nationwide license would be precluded from 
communicating with all other applicants. An exception is where 
applicants enter into a bidding agreement before filing their short-
form applications, and disclose the existence of the agreement in their 
short-form applications. See 47 CFR 1.2105(c). The Commission notes 
that Section 1.65 of the Commission's Rules requires an applicant to 
maintain the accuracy and completeness of information furnished in its 
pending application and to notify the Commission within 30 days of any 
substantial change that may be of decisional significance to that 
application. Thus, Section 1.65 requires an auction applicant to bring 
to the Commission's attention any communication not permissible under 
the applicant's certification of compliance with Sec. 1.2105(c). 
Finally, bidders are reminded that they have a duty to notify the 
Commission of any violation of the anti-collusion rules upon learning 
of such violation. Bidders are therefore required to make such 
notification to the Commission immediately upon discovery.
    13. Bidder Information Package: More complete details about this 
auction are contained in a Bidder Information Package. The Commission 
will provide one copy to each company free of charge. Additional copies 
may be ordered at a cost of $16.00 each, including postage, payable by 
Visa or Master Card, or by check payable to ``Federal Communications 
Commission'' or ``FCC.'' To place an order, contact the FCC National 
Call Center at (888) CALL-FCC (888) 225-5322, press option #2 at the 
prompt). Prospective bidders that have already contacted the FCC at 
this number expressing an interest in this auction will receive a 
Bidder Information Package in approximately three weeks, and need not 
call again unless they wish to order additional copies.
    14. Relevant Authority: Prospective bidders must familiarize 
themselves thoroughly with the Commission's Rules relating to the Phase 
II 220 MHz Service, contained in Title 47, Part 90 of the Code of 
Federal Regulations, and those relating to application and auction 
procedures, contained in Title 47, Part 1, of the Code of Federal 
Regulations.
    15. Prospective bidders must also be thoroughly familiar with the 
procedures, terms and conditions (collectively, ``Terms'') contained in 
Amendment of Part 90 of the Commission's Rules to Provide for the Use 
of the 220-222 MHz Band by the Private Land Mobile Radio Service, PR 
Docket No. 89-552, RM-8506, GN Docket No. 93-252, PP Docket No. 93-253, 
Third Report and Order and Fifth Notice of Proposed Rulemaking, 12 FCC 
Rcd 10943 (1997), 62 FR 15978 (April 3, 1997) (``220 MHz Third Report 
and Order''). The Commission resolved petitions for reconsideration of 
the 220 MHz Third Report and Order in Amendment of Part 90 of the 
Commission's Rules to Provide for the Use of the 220-222 MHz Band by 
the Private Land Mobile Radio Service, Implementation of Sections 3(n) 
and 332 of the Communications Act, Regulatory Treatment of Mobile 
Services, Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, PR Docket No. 89-552, GN Docket No. 93-252, PP 
Docket No. 93-253, FCC 98-93, Memorandum Opinion and Order on 
Reconsideration (rel. May 21, 1998), 63 FR 32580 (June 12, 1998) (``220 
MHz MO&O'').
    16. For general background on the Phase I 220 MHz Service, see, 
among other materials: Amendment of Part 90 of the Commission's Rules 
to Provide for the Use of the 220-222 MHz Band by the Private Land 
Mobile Radio Services, PR Docket No. 89-552, Report and Order, 6 FCC 
Rcd 2356 (1991), 56 FR 19598 (April 29, 1991); Amendment of Part 90 of 
the Commission's Rules to Provide for the Use of the 220-222 MHz Band 
by the Private Land Mobile Radio Services, PR Docket No. 80-552, 
Memorandum Opinion and Order, 7 FCC Rcd 4484 (1992), 57 FR 32448 (July 
22, 1992).
    17. For further information about the 220 MHz Service, see 
Amendment of Part 90 of the Commission's Rules to Provide for the Use 
of the 220-222 MHz Band by the Private Land Mobile Radio Service, PR 
Docket No. 89-552, GN Docket No. 93-252, Second Report and Order, 11 
FCC Rcd 3668 (1996), 61 FR 3841 (Feb. 2, 1996) (``220 MHz Second Report 
and Order''); Amendment of Part 90 of the Commission's Rules to Provide 
for the Use of the 220-222 MHz Band by the Private Land Mobile Radio 
Service, PR Docket No. 89-552, Fourth Report and Order, 12 FCC Rcd 
13453 (1997), 62 FR 46211 (Sept. 2, 1997).
    18. The Terms contained in the Commission's Rules, relevant orders, 
public notices and bidder information package are not negotiable. 
Potential bidders are reminded that the 220 MHz MO&O, released May 21, 
1998, which resolved petitions for reconsideration filed in response to 
the 220 MHz Second Report and Order and the 220 MHz Third Report and 
Order altered some of the decisions and rules adopted in those orders. 
In addition, the decisions reached in the 220 MHz proceeding are

[[Page 35216]]

the subject of a judicial appeal and may be the subject of additional 
reconsideration or appeal. See, e.g., PLMRS Narrowband Corp., et al. v. 
Federal Communications Commission, No. 92-1432, et al. (D.C. Cir., 
filed September 18, 1992).
    19. The Commission may amend or supplement the information 
contained in its public notices or the bidder information package at 
any time, and will issue public notices to convey any new or 
supplemental information to bidders. It is the responsibility of all 
prospective bidders to remain current with all Commission Rules and 
with all public notices pertaining to this auction. Copies of most 
Commission documents, including public notices, can be retrieved from 
the FCC Internet node via anonymous <a href="/cdn-cgi/l/email-protection#0d6b797d4d6b797d236b6e6e236a627b"><span class="__cf_email__" data-cfemail="a0c6d4d0e0c6d4d08ec6c3c38ec7cfd6">[email protected]</span></a> or the FCC World 
Wide Web site at http://www.fcc.gov/wtb/auctions. Additionally, 
documents may be obtained for a fee by calling the Commission's copy 
contractor, International Transcription Service, Inc., at (202) 857-
3800.
    20. Bidder Alerts: All applicants must certify on their FCC Form 
175 applications under penalty of perjury that they are legally, 
technically, financially and otherwise qualified to hold a license, and 
not in default on any payment for Commission licenses (including down 
payments) or delinquent on any non-tax debt owed to any Federal agency. 
Prospective bidders are reminded that submission of a false 
certification to the Commission is a serious matter that may result in 
severe penalties, including monetary forfeitures, license revocations, 
exclusion from participation in future auctions, and/or criminal 
prosecution.

V. The FCC Makes no Representations or Warranties About the Use of 
This Spectrum for Particular Services. Applicants Should be Aware 
That an FCC Auction Represents an Opportunity to Become an FCC 
Licensee in This Service, Subject to Certain Conditions and 
Regulations. An FCC Auction Does Not Constitute an Endorsement by 
the FCC of Any Particular Services, Technologies or Products, nor 
Does an FCC License Constitute a Guarantee of Business Success. 
Applicants Should Perform Their Individual Due Diligence Before 
Proceeding as They Would With Any New Business Venture

    21. As is the case with many business investment opportunities, 
some unscrupulous entrepreneurs may attempt to use the Phase II 220 MHz 
Service auction to deceive and defraud unsuspecting investors. Common 
warning signals of fraud include the following:
    <bullet> The first contact is a ``cold call'' from a telemarketer, 
or is made in response to an inquiry prompted by a radio or television 
infomercial.
    <bullet> The offering materials used to invest in the venture 
appear to be targeted at IRA funds, for example by including all 
documents and papers needed for the transfer of funds maintained in IRA 
accounts.
    <bullet> The amount of the minimum investment is less than $25,000.
    <bullet> The sales representative makes verbal representations 
that: (a) the Internal Revenue Service (``IRS''), Federal Trade 
Commission (``FTC''), Securities and Exchange Commission (``SEC''), 
FCC, or other government agency has approved the investment; (b) the 
investment is not subject to state or federal securities laws; or (c) 
the investment will yield unrealistically high short-term profits. In 
addition, the offering materials often include copies of actual FCC 
releases, or quotes from FCC personnel, giving the appearance of FCC 
knowledge or approval of the solicitation.
    22. Information about deceptive telemarketing investment schemes is 
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment 
schemes should be directed to the FTC, the SEC, or the National Fraud 
Information Center at (800) 876-7060. Consumers who have concerns about 
specific Phase II 220 MHz Service proposals may also call the FCC 
National Call Center at (888) CALL-FCC ((888) 225-5322).

2. Bidder Eligibility and Small Business Provisions

A. General Eligibility Criteria

    23. As described above, this auction offers: (1) Five licenses in 
each of 172 geographic areas known as Economic Areas (EAs) and three 
EA-like areas; (2) five licenses in six Economic Area Groupings (EAGs); 
and (3) three Nationwide licenses which encompass the same territory as 
all of the EAGs combined (see Attachment A for a complete listing of 
licenses).
(1) Determination of Revenues
    24. For purposes of determining which entities qualify as very 
small businesses or small businesses, the Commission will attribute to 
the applicant the gross revenues of all of its controlling principals 
and affiliates. For purposes of this auction, the Commission will not 
impose specific equity requirements on controlling principals. However, 
in order to qualify as a very small business or small business, an 
applicant's qualifying principals must maintain control of the 
applicant. The term ``control'' includes both de facto and de jure 
control of the applicant. Typically, de jure control is evidenced by 
ownership of at least 50.1 percent of an entity's voting stock. De 
facto control is determined on a case-by-case basis. The following are 
some common indicia of control:
    <bullet> The entity constitutes or appoints more than 50 percent of 
the board of directors or management committee;
    <bullet> The entity has authority to appoint, promote, demote, and 
fire senior executives that control the day-to-day activities of the 
licensee; or
    <bullet> The entity plays an integral role in management decisions.
(2) Application Showing
    25. Applicants should note that they will be required to file 
supporting documentation to establish that they satisfy the eligibility 
requirements to qualify as a very small business or small business for 
this auction. See 47 CFR 90.1009 and 1.2105.

B. Bidding Credits

    26. Qualifying Phase II 220 MHz applicants are eligible for bidding 
credits. The size of a Phase II 220 MHz bidding credit depends on the 
annual gross revenues of the bidder and its controlling principals and 
affiliates, as averaged over the preceding three years:
    <bullet> A bidder with gross annual revenues of not more than $15 
million receives a 25 percent discount on its winning bids for Phase II 
220 MHz Service licenses; and,
    <bullet> A bidder with gross annual revenues of not more than $3 
million receives a 35 percent discount on its winning bids for Phase II 
220 MHz Service licenses.
    27. Bidding credits are not cumulative: applicants that qualify 
receive either the 25 percent or the 35 percent bidding credit, but not 
both. The definitions of very small business and small business 
(including calculation of gross annual revenue) are set forth in 47 CFR 
90.1021(b).
    28. Phase II 220 MHz Service bidders should note that unjust 
enrichment provisions apply to winning bidders that use bidding credits 
and subsequently assign or transfer control of their licenses to an 
entity not qualifying for the same levels of bidding credits. See 47 
CFR 90.1017(b). Finally, Phase II 220 MHz Service bidders should also 
note that there are no

[[Page 35217]]

installment payment plans in the 220 MHz Service auction.

3. Pre-Auction Procedures

A Short-form Application (FCC Form 175)--Due August 17, 1998

    29. In order to be eligible to bid in this auction, applicants must 
first submit an FCC Form 175 application. This application must be 
received at the Commission by 5:30 p.m. ET on August 17, 1998. Late 
applications will not be accepted.
    30. There is no application fee required when filing an FCC Form 
175. However, to be eligible to bid, an applicant must submit an 
upfront payment. See 3.C. infra.
(1) Filing Options
    31. Auction applicants are strongly encouraged to file their 
applications electronically in order to take full advantage of the 
greater efficiencies and convenience of electronic filing, bidding and 
access to bidding data. For example, electronic filing enables the 
applicant to: (a) receive interactive feedback while completing the 
application; and (b) receive immediate acknowledgement that the FCC 
Form 175 has been submitted for filing. In addition, only those 
applicants that file electronically will have the option of bidding 
electronically. However, manual filing (via hard copy) is also 
permitted. Please note that manual filers will not be permitted to bid 
electronically and must bid telephonically, unless the FCC Form 175 is 
amended electronically prior to the resubmission date for incomplete or 
deficient applications. Applicants that file electronically may make 
amendments to their applications until the filing deadline. The 
following is a brief description of each filing method.
(a) Electronic Filing
    32. Applicants wishing to file electronically may generally do so 
on a 24-hour basis beginning July 20, 1998. The window for filing the 
FCC Form 175 electronically will remain open until 5:30 p.m. ET on 
August 17, 1998. Information about installing and running the FCC Form 
175 application software is included in Attachment D to this Public 
Notice. Technical support is available at (202) 414-1250 (V) or (202) 
414-1255 (TTY); the hours of service are 8 a.m.-6 p.m. ET, Monday-
Friday, and 9 a.m.-5 p.m. ET, the weekend of August 15-16.
(b) Manual Filing
    33. Auction applicants will be permitted to file their FCC Form 175 
applications in hard copy. When any manually filed FCC Form 175 and 
175-S exceeds five pages in length, the FCC additionally requires that 
all attachments be submitted on a 3.5-inch diskette, or the entire 
application be filed in a microfiche version. Manual filers must use 
the May 1998 version of FCC Form 175 and the October 1995 edition of 
the 175-S (if applicable). Earlier versions of the FCC Form 175 will 
not be accepted for filing. Copies of FCC Forms 175 and 175-S can be 
obtained by calling (202) 418-FORM.
    34. Manual applications may be submitted by hand delivery 
(including private ``overnight'' courier) or by U.S. mail (certified 
mail with return receipt recommended), addressed to: FCC Form 175 
Filing, Auction No. 18, Federal Communications Commission, Wireless 
Telecommunications Bureau, Auctions & Industry Analysis Division, 1270 
Fairfield Road, Gettysburg, PA 17325-7245.

    Note: Manual applications delivered to any other location will 
not be accepted.
(2) Completion of the FCC Form 175
    35. Applicants should carefully review 47 CFR 90.1009 and 1.2105, 
and must complete all items on the FCC Form 175 (and Form 175-S, if 
applicable). Instructions for completing the FCC Form 175 are in 
Attachment C of this Public Notice.
    36. Failure to sign a manually filed FCC Form 175 (for both 
electronic and manual filers) will result in dismissal of the 
application and loss of the ability to participate in the auction. Only 
original signatures will be accepted for manually filed applications.
(3) Electronic Review of FCC Form 175
    37. The FCC Form 175 review software may be used to review and 
print applicants' FCC Form 175 applications. In other words, applicants 
that file electronically may review their own completed FCC Form 175. 
Applicants also have access to view other applicants' completed FCC 
Form 175s, after the filing deadline has passed and the FCC has issued 
a public notice explaining the status of the applications. There is a 
fee of $2.30 per minute for accessing the system. See Attachment D for 
details.

B. Application Processing and Minor Corrections

    38. After the deadline for filing the FCC Form 175 applications has 
passed, the FCC will process all timely applications to determine which 
are acceptable for filing, and subsequently will issue a public notice 
identifying: (1) those applications accepted for filing (including FCC 
account numbers and the licenses for which they applied); (2) those 
applications rejected; and (3) those applications which have minor 
defects that may be corrected, and the deadline for filing such 
corrected applications.
    39. As described more fully in the Commission's Rules, after the 
August 17, 1998, short form filing deadline, applicants may make only 
minor corrections to the FCC Form 175 applications. Applicants will not 
be permitted to make major modifications to their applications (e.g., 
change their license selections, change the certifying official or 
change control of the applicant). See 47 CFR 90.1009 and 1.2105.

C. Upfront Payments--Due August 31, 1998

    40. In order to be eligible to bid in the auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice Form 
(FCC Form 159). Manual filers must use the July 1997 version of FCC 
Form 159. Earlier versions of this form will not be accepted. All 
upfront payments must be received at Mellon Bank in Pittsburgh, PA, by 
6:00 p.m. ET on August 31, 1998.
    Please note that:
    <bullet> All payments must be made in U.S. dollars.
    <bullet> All payments must be made by wire transfer.
    <bullet> Upfront payments for Auction No. 18 go to a lockbox number 
different from the ones used in previous FCC auctions, and different 
from the lockbox number to be used for post-auction payments.
    <bullet> Failure to deliver the upfront payment by the August 31, 
1998 deadline will result in dismissal of the application and 
disqualification from participation in the auction.
(1) Making Auction Payments by Wire Transfers
    41. Wire transfer payments must be received by 6:00 p.m. ET on 
August 31, 1998. To avoid untimely payments, applicants should discuss 
arrangements (including bank closing schedules) with their banker 
several days before they plan to make the wire transfer, and allow 
sufficient time for the transfer to be initiated and completed before 
the deadline. Applicants will need the following information:
    ABA Routing Number: 043000261.
    Receiving Bank: Mellon Pittsburgh.
    BNF: FCC/AC 910-0171.
    OBI Field: (Skip one space between each information item)
    ``Auctionpay''.
    Taxpayer Identification No.: (Same as FCC Form 159, block 26).
    Payment Type Code: (Enter ``A22U'').

[[Page 35218]]

    FCC Code: 1 (Same as FCC Form 159, block 23A: ``18'').
    Payer Name: (Same as FCC Form 159, block 2).
    Lockbox No.: 358430.

    Note: The BNF and Lockbox number are specific to the upfront 
payments for this auction; do not use BNF or Lockbox numbers from 
previous auctions.

    42. Applicants must fax a completed FCC Form 159 to Mellon Bank at 
(412) 236-5702 at least one hour before placing the order for the wire 
transfer (but on the same business day). On the cover sheet of the fax, 
write ``Wire Transfer--Auction Payment for Auction Event No. 18.'' 
Bidders may confirm receipt of their upfront payment at Mellon Bank by 
contacting their sending financial institution.
(2) FCC Form 159
    43. Each upfront payment must be accompanied by a completed FCC 
Remittance Advice Form (FCC Form 159). Proper completion of FCC Form 
159 is critical to ensuring correct credit of upfront payments. 
Detailed instructions for completion of FCC Form 159 are included in 
Attachment C to this Public Notice and will also be included in the 
Bidder Information Package.
(3) Amount of Upfront Payment
    44. In the 220 MHz Third Report and Order, the Commission delegated 
to the Bureau the authority and discretion to determine an appropriate 
upfront payment for each license being auctioned. 62 FR at 15981. In 
the 220 MHz Public Notice, (63 FR 2976, January 20, 1998) the 
Commission proposed for the Phase II 220 MHz Service auction an upfront 
payment of one cent per MHz/POP with no amount less than $2,500. 63 FR 
at 2978.
    45. For the Phase II 220 MHz Service auction the Commission will 
adopt its proposal of one cent per MHz/POP with no amount less than 
$2,500. This upfront payment amount, based upon the data in Attachment 
A, will be the amount required to bid on a particular license(s) in 
Auction No. 18. The Commission believes that this is the appropriate 
upfront payment formula, considering such factors as the population in 
each geographic license area, and the value of spectrum similar to that 
being offered in the 220 MHz Service. The Commission notes that this 
upfront payment amount is lower than that used in many previous 
auctions--e.g., the PCS spectrum auctions--but believes a reduction is 
appropriate, for the reasons expressed by a commenter, namely, the size 
of the likely participants in the 220 MHz Service auction.
    46. The upfront payments are not attributed to specific licenses, 
but instead will be translated to bidding units to define the bidder's 
maximum bidding eligibility. For Auction No. 18, the total number of 
bidding units assigned to each bidder is equal to the amount of the 
upfront payment, e.g., a $25,000 upfront payment provides the bidder 
with 25,000 bidding units. The total upfront payment defines the 
maximum amount of bidding units on which the applicant will be 
permitted to bid (including standing high bids) in any single round of 
bidding. Thus, an applicant does not have to make an upfront payment to 
cover all licenses for which the applicant has applied, but rather to 
cover the maximum number of bidding units associated with licenses the 
bidder wishes to place bids on and hold high bids on at any given time. 
In order to be able to place a bid on a license, in addition to having 
specified that license on FCC Form 175, a bidder must have an 
eligibility level that meets or exceeds the number of bidding units 
assigned to that license. At a minimum, an applicant's total upfront 
payment must be enough to establish eligibility to bid on at least one 
of the licenses applied for on FCC Form 175, or else the applicant will 
not be eligible to participate in the auction.
    47. In calculating the upfront payment amount, an applicant should 
determine the maximum number of bidding units it may wish to bid on in 
any single round, and submit an upfront payment covering that number of 
bidding units.

    Note: An applicant may, on its FCC Form 175, apply for every 
license being offered, but its actual bidding in any round will be 
limited by the bidding units reflected in its upfront payment.
(4) Applicant's Wire Transfer Information for Purposes of Refunds
    48. Because experience with prior auctions has shown that in most 
cases wire transfers provide quicker and more efficient refunds than 
paper checks, the Commission will use wire transfers for all Auction 
No. 18 refunds. To avoid delays in processing refunds, applicants 
should include wire transfer instructions with any refund request they 
file; they may also provide this information in advance by faxing it to 
the FCC Billings and Collections Branch, ATTN: Linwood Jenkins or 
Geoffrey Idika, at (202) 418-2843. Please include the following 
information:

Name of Bank
ABA Number
Account Number to Credit
Correspondent Bank (if applicable)
ABA Number
Account Number
Contact and Phone Number

(Applicants should also note that implementation of the Debt Collection 
Improvement Act of 1996 requires the FCC to obtain a Taxpayer 
Identification Number (TIN) before it can disburse refunds.) 
Eligibility for refunds is discussed in 5.D., infra.

D. Auction Registration

    49. Approximately ten days before the auction, the FCC will issue a 
public notice announcing all qualified bidders for the auction. 
Qualified bidders are those applicants whose FCC Form 175 applications 
have been accepted for filing and that have timely submitted upfront 
payments sufficient to make them eligible to bid on at least one of the 
licenses for which they applied.
    50. All qualified bidders are automatically registered for the 
auction. Registration materials will be distributed prior to the 
auction by two separate mailings, each containing part of the 
confidential identification codes required to place bids. These 
mailings will be sent only to the contact person at the applicant 
address listed in the FCC Form 175.
    51. Applicants that do not receive both registration mailings will 
not be able to submit bids. Therefore, any qualified applicant that has 
not received both mailings by noon on Thursday, September 10, 1998 
should contact the FCC National Call Center at (888) CALL-FCC ((888) 
225-5322, press option #2 at the prompt). Receipt of both registration 
mailings is critical to participating in the auction and each applicant 
is responsible for ensuring it has received all of the registration 
material.
    Qualified bidders should note that lost login codes, passwords or 
bidder identification numbers can be replaced only by appearing in 
person at the FCC Auction Headquarters located at 2 Massachusetts 
Avenue, NE., Washington, DC 20002. Only an authorized representative or 
certifying official, as designated on an applicant's FCC Form 175, may 
appear in person with two forms of identification (one of which must be 
a photo identification) in order to receive replacement codes.

E. Remote Electronic Bidding Software

    52. Qualified bidders that file or amend the FCC Form 175 
electronically are allowed to bid electronically, but must purchase 
remote electronic bidding software for $175.00 by September 1, 1998. 
(Auction software is tailored to a specific auction, so software from 
prior auctions will not

[[Page 35219]]

work for Auction No. 18.) A software order form is included in the 
Bidder Information Package.

F. Auction Seminar

    53. On August 6, 1998, the FCC will sponsor a seminar for the Phase 
II 220 MHz Service auction in Washington, DC. The seminar will provide 
attendees with information about pre-auction procedures, conduct of the 
auction, FCC remote bidding software, and the 220 MHz Service and 
auction rules.
    54. To register, complete the registration form to be included in 
the upcoming Phase II 220 MHz Service auction Bidder Information 
Package. The registration form will include details about the time and 
location of the seminar. Registrations are accepted on a first-come, 
first-served basis.

G. Mock Auction

    55. All applicants whose FCC Form 175 and 175-S have been accepted 
for filing will be eligible to participate in a mock auction beginning 
September 11, 1998. The mock auction will enable applicants to become 
familiar with the electronic software prior to the auction. Free 
demonstration software will be available for use in the mock auction. 
Due to different bidding procedures in the Phase II 220 MHz Service 
auction from previous Commission auctions, participation by all bidders 
is strongly recommended. Details will be announced by public notice.

4. Auction Event

    56. The first round of the auction will begin on September 15, 
1998. The initial round schedule will be announced in a Public Notice 
listing the qualified bidders, to be released approximately 10 days 
before the start of the auction.

A. Auction Structure

(1) Simultaneous Multiple Round Auction
    57. The Commission adopts its proposal, in the 220 MHz Public 
Notice, to award the 908 licenses in the Phase II 220 MHz Service in a 
single, simultaneous multiple round auction. 63 FR at 2977. Unless 
otherwise announced, bids will be accepted on all licenses in each 
round of the auction. This approach, the Commission believes, is most 
administratively efficient. In addition, the Commission believes that 
the Phase II 220 MHz licenses are interdependent and bidders may prefer 
to substitute different types of licenses during the same auction.
(2) Maximum Eligibility and Activity Rules
    58. In the 220 MHz Public Notice, the Commission proposed that the 
amount of the upfront payment submitted by a bidder would determine the 
initial maximum eligibility (as measured in bidding units) for each 
bidder. For the Phase II 220 MHz Service auction the Commission will 
adopt this proposal. The amount of the upfront payment submitted by a 
bidder determines the initial maximum eligibility (in bidding units) 
for each bidder. Upfront payments are not attributed to specific 
licenses, but instead will be translated into bidding units to define a 
bidder's initial maximum eligibility. The total upfront payment defines 
the maximum number of bidding units on which the applicant will 
initially be permitted to bid. The Commission notes that there is no 
provision for increasing a bidder's maximum eligibility during the 
course of an auction.
    59. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until the end before 
participating. Bidders are required to be active on a specific 
percentage of their maximum eligibility during each round of the 
auction.
    60. A bidder is considered active on a license in the current round 
if it is either the high bidder at the end of the previous bidding 
round and does not withdraw the high bid in the current round, or if it 
submits an acceptable bid in the current round (see ``Minimum Accepted 
Bids'' in Part 4.B.(3), infra). A bidder's activity level in a round is 
the sum of the bidding units associated with licenses on which the 
bidder is active. The minimum required activity level is expressed as a 
percentage of the bidder's maximum bidding eligibility, and increases 
as the auction progresses. Because these procedures have proven 
successful in maintaining the pace of previous auctions as set forth 
under ``Auction Stages'' in Part 4.A.(4) and ``Stage Transitions'' in 
Part 4.A.(5), infra, the Commission adopts them for the 220 MHz Service 
auction.
(3) Activity Rule Waivers and Reducing Eligibility
    61. In the 220 MHz Public Notice, the Commission proposed that each 
bidder in the auction would be provided five activity rule waivers that 
may be used in any round during the course of the auction.
    62. Based upon the Commission's experience in previous auctions, 
the Commission concludes that each bidder will be provided five 
activity rule waivers that may be used in any round during the course 
of the auction. Use of an activity rule waiver preserves the bidder's 
current bidding eligibility despite the bidder's activity in the 
current round being below the required minimum level. An activity rule 
waiver applies to an entire round of bidding and not to a particular 
license.
    63. The FCC auction system assumes that bidders with insufficient 
activity would prefer to use an activity rule waiver (if available) 
rather than lose bidding eligibility. Therefore, the system will 
automatically apply a waiver (known as an ``automatic waiver'') at the 
end of any round where a bidder's activity level is below the minimum 
required unless: (1) there are no activity rule waivers available; or 
(2) the bidder overrides the automatic application of a waiver by 
reducing eligibility, thereby meeting the minimum requirements.
    64. A bidder with insufficient activity that wants to reduce its 
bidding eligibility rather than use an activity rule waiver must 
affirmatively override the automatic waiver mechanism during the round 
by using the reduce eligibility function in the software. In this case, 
the bidder's eligibility is permanently reduced to bring the bidder 
into compliance with the activity rules as described in ``Auction 
States,'' Part 4.A.(4). Once eligibility has been reduced, a bidder 
will not be permitted to regain its lost bidding eligibility.
    65. Finally, a bidder may proactively use an activity rule waiver 
as a means to keep the auction open without placing a bid. If a bidder 
submits a proactive waiver (using the proactive waiver function in the 
bidding software) during a round in which no bids are submitted, the 
auction will remain open and the bidder's eligibility will be 
preserved. An automatic waiver invoked in a round in which there are no 
new valid bids or withdrawals will not keep the auction open.
(4) Auction Stages
    66. In the 220 MHz Public Notice, the Commission proposed to 
conduct the auction in stages and employ an activity rule. The 
Commission concludes that the auction will be composed of three stages, 
which are each defined by an increasing activity rule. Below are the 
proposed activity levels for each stage of the auction. The FCC 
reserves the discretion to alter the activity percentages before and/or 
during the auction.
    67. Stage One: In each round of the first stage of the auction, a 
bidder desiring to maintain its current

[[Page 35220]]

eligibility is required to be active on licenses encompassing at least 
80 percent of its current bidding eligibility. Failure to maintain the 
requisite activity level will result in a reduction in the bidder's 
bidding eligibility in the next round of bidding (unless an activity 
rule waiver is used). During Stage One, reduced eligibility for the 
next round will be calculated by multiplying the current round activity 
by five-fourths (\5/4\).
    68. Stage Two: In each round of the second stage, a bidder desiring 
to maintain its current eligibility is required to be active on 90 
percent of its current bidding eligibility. During Stage Two, reduced 
eligibility for the next round will be calculated by multiplying the 
current round activity by ten-ninths (\10/9\).
    69. Stage Three: In each round of the third stage, a bidder 
desiring to maintain its current eligibility is required to be active 
on 98 percent of its current bidding eligibility. In this final stage, 
reduced eligibility for the next round will be calculated by 
multiplying the current round activity by fifty-fortyninths (\50/49\).
    Caution: Since activity requirements increase in each auction 
stage, bidders must carefully check their current activity during the 
bidding round of the first round following a stage transition. This is 
especially critical for bidders that have standing high bids and do not 
plan to submit new bids. In past auctions, some bidders have 
inadvertently lost bidding eligibility or used an activity rule waiver 
because they did not reverify their activity status at stage 
transitions. Bidders may check their activity against the required 
minimum activity level by using the bidding software's bidding module.
    70. Because the foregoing procedures have proven successful in 
maintaining proper tempo in previous auctions, the Commission will 
adopt them for the Phase II 220 MHz Service auction.
(5) Stage Transitions
    71. In the 220 MHz Public Notice, the Commission proposed that the 
auction would advance to the next stage (i.e., from Stage One to Stage 
Two, and from Stage Two to Stage Three) when, in each of three 
consecutive rounds of bidding, the high bid has increased on 10 percent 
or less of the licenses being auctioned (as measured in bidding units).
    72. The Commission concludes that the auction will start in Stage 
One. Under the FCC's general guidelines it will advance to the next 
stage (i.e., from Stage One to Stage Two, and from Stage Two to Stage 
Three) when, in each of three consecutive rounds of bidding, the high 
bid has increased on 10 percent or less of the licenses being auctioned 
(as measured in bidding units). However, the Bureau will retain the 
discretion to regulate the pace of the auction by announcement. This 
determination will be based on a variety of measures of bidder 
activity, including, but not limited to, the auction activity level, 
the percentages of licenses (as measured in bidding units) on which 
there are new bids, the number of new bids, and the percentage increase 
in revenue. The Commission believes that these stage transition rules, 
having proven successful in prior auctions, are appropriate for use in 
the Phase II 220 MHz Service auction.
(6) Auction Stopping Rules
    73. In the 220 MHz Public Notice, the Commission proposed to retain 
the discretion to keep the auction open, even if no new acceptable bids 
or proactive waivers are submitted and no previous high bids are 
withdrawn. In addition, the Commission proposed that the Bureau reserve 
the right to declare that the auction will end after a specified number 
of additional rounds (``special stopping rule'').
    74. Barring extraordinary circumstances, bidding will remain open 
on all licenses until bidding stops on every license. Thus, the auction 
will close for all licenses when one round passes during which no 
bidder submits a new acceptable bid on any license, applies a proactive 
waiver, or withdrawns a previous high bid.
    75. The Bureau retains the discretion, however, to keep an auction 
open even if no new acceptable bids or proactive waivers are submitted, 
and no previous high bids are withdrawn. In this event, the effect will 
be the same as if a bidder has submitted a proactive waiver. Thus, the 
activity rule will apply as usual, and a bidder with insufficient 
activity will either lose bidding eligibility or use an activity rule 
waiver (if it has any left).
    76. Further, in its discretion, the Bureau reserves the right to 
declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the FCC invokes this 
special stopping, rule it will accept bids in the final round(s) only 
for licenses on which the high bid increased in at least one of the 
preceding specified number of rounds. The FCC intends to exercise this 
option only in extreme circumstances, such as where the auction is 
proceeding very slowly, where there is minimal overall bidding 
activity, or where it appears likely that the auction will not close 
within a reasonable period of time. Before exercising this option, the 
FCC is likely to attempt to increase the pace of the auction by, for 
example, moving the auction into the next stage (where bidders would be 
required to maintain a higher level of bidding activity), increasing 
the number of bidding rounds per day, and/or increasing the amount of 
the minimum bid increments for the limited number of licenses where 
there is still a high level of bidding activity.
    77. Adoption of these rules, the Commission believes, is most 
appropriate for the Phase II 220 MHz auction because our experience in 
prior auctions demonstrates that the simultaneous stopping rule 
balanced the interests of administrative efficiency and maximum bidder 
participation. The substitutability between and among licenses in 
different geographic areas and the importance of preserving the ability 
of bidders to pursue backup strategies support of use of a simultaneous 
stopping rule.
(7) Auction Delay, Suspension, or Cancellation
    78. In the 220 MHz Public Notice, the Commission proposed that, by 
police notice or by announcement during the auction, the Bureau may 
delay, suspend, or cancel the auction in the event of natural disaster, 
technical obstacle, evidence of an auction security breach, unlawful 
bidding activity, administrative or weather necessity, or for any other 
reason that affects the fair and competitive conduct of competitive 
bidding.
    79. Because this approach has proven effective in resolving exigent 
circumstances in previous auctions, the Commission will adopt our 
proposed auction cancellation rules. By public notice or by 
announcement during the action, the Burean may delay, suspend or cancel 
the auction in the event of natural disaster, technical, obstacle, 
evidence of an auction security breach, unlawful bidding activity, 
administrative or weather necessity, or for any other reason that 
affects the fair and competitive conduct of competitive bidding. In 
such cases, the Bureau, in its sole discretion, may elect to: resume 
the auction starting from the beginning of the current round; resume 
the auction starting from some previous round; or cancel the auction in 
its entirety. Network interruption may cause the Bureau to delay or 
suspend the auction. The Commission emphasizes that exercise of this 
authority is solely within the discretion of the Bureau, and its use is 
not intended to be a substitute for situations in which bidders may 
wish to apply their activity rule waivers.

[[Page 35221]]

B. Bidding Procedures

 (1) Round Structure
    80. The initial bidding schedule will be announced by public notice 
at least one week before the start of the auction, and will be included 
in the registration mailings. The round structure for each bidding 
round contains a single bidding round followed by the release of the 
round results.
    81. The FCC has discretion to change the bidding schedule in order 
to foster an auction pace that reasonably balances speed with the 
bidders' need to study round results and adjust their bidding 
strategies. The FCC may increase or decrease the amount of time for the 
bidding rounds and review periods, or the number of rounds per day, 
depending upon the bidding activity level and other factors.
(2) Reserve Price or Minimum Opening Bid
    82. The Balanced Budget Act of 1997 calls upon the Commission to 
prescribe methods by which a reasonable reserve price will be required 
or a minimum opening bid established with FCC licenses are subject to 
auction (i.e., because they are mutually exclusive), unless the 
Commission determines that a reserve price or minimum opening bid is 
not in the public interest. Consistent with this mandate, the 
Commission has directed the Wireless Telecommunications Bureau 
(``Bureau'') to seek comment on the use of a minimum opening bid and/or 
reserve price prior to the start of each auction. The Bureau was 
directed to seek comment on the methodology to be employed in 
establishing each of these mechanisms. Among other factors, the Bureau 
should consider the amount of spectrum being auctioned, levels of 
incumbency, the availability of technology to provide service, the size 
of the geographic service areas, the extent of inference with other 
spectrum bands, and any other relevant factors that could have an 
impact on valuation of the spectrum being auctioned. The Commission 
concluded that the Bureau should have the discretion to employ either 
or both of these mechanisms for future auctions.
    83. In the 220 MHz Public Notice, the Bureau proposed to establish 
minimum opening bids for the 220 MHz Service auction and to retain 
discretion to lower the minimum opening bids. Specifically, the Bureau 
proposed the following formula for calculating minimum opening bids for 
Auction 18:

1. EA Licenses
    $0.0175 MHz * POP
2. EAG Licenses
    $0.015 MHz * POP
3. Nationwide Licenses
    $0.02 MHz * POP

with a minimum of no less than $2,500 per license. In the alternative, 
the Bureau sought comment on whether, consistent with the Balanced 
Budget Act, the public interest would be served by having no minimum 
opening bid or reserve price.
    84. The Commission adopts minimum opening bids for each of the 
licenses in the Phase II 220 MHz Service auction that are reducible at 
the discretion of the Bureau. The levels will be set as follows:

1. EA Licenses
    $0.015 MHz * POP
2. EAG License
    $0.0125 MHz * POP
3. Nationwide Licenses
    $0.0175 MHz * POP

 with a minimum of no less than $2,500 per license.
    85. As was the case in prescribing minimum opening bids in the 
auction of the upper channels in the 800 MHz SMR service and the LMDS 
auctions, Congress has enacted a presumption that unless the Commission 
determines otherwise, minimum opening bids or reserve prices are in the 
public interest. The Bureau is unpersuaded by commenters' assertions 
that minimum opening bids for the Phase II 220 MHz Service auction are 
not in the public interest. Setting the level of the minimum opening 
bids is a difficult task, especially in the case of the Phase II 220 
MHz Service where the channels are narrow, encumbered and the potential 
uses of the band remain to be explored. To address this concern, the 
minimum opening bids adopted here are reducible. This will allow the 
Bureau flexibility to adjust the minimum opening bids if circumstances 
warrant. The Commission emphasizes, however, that such discretion will 
be exercised sparingly and early in the auction, ie., before bidders 
lose all waivers and begin the lose eligibility. During the course of 
the auction, the Bureau will not entertain any bidder requests to 
reduce the minimum opening bids on specific licenses.
    86. The Commission concludes that the revised formula presented 
here best meets the objectives of our auction authority in establishing 
a reasonable minimum opening bid. The Commission has noted in the past 
that the reserve price and minimum opening bid provision is not a 
requirement to maximize auction revenue but rather a protection against 
assigning licenses at unacceptably low prices and that the Commission 
must balance the revenue raising objective against its other public 
interest objectives in setting the minimum bid level. In doing so, the 
Commission agree with commenters that the 220 MHz channels are narrow 
and the likely auction participants will be small business 
entrepreneurs. In addition, the Commission recognizes that the EAG 
licenses are more substantially encumbered than are the other license 
types. The Commission has adjusted its minimum opening bids 
accordingly. In sum, the Commission's experience in using minimum 
opening bids in the 800 MHz SMR auction and the LMDS auction supports 
the fact that minimum opening bids promote efficient allocation of 
licenses and speed the course of the auction while ensuring that 
valuable assets are not sold for nominal prices.
(3) Minimum Accepted Bids
    87. In the 220 MHz Public Notice, the Commission proposed to use an 
exponential smoothing methodology to calculate minimum bid increments. 
The Commission further proposed to retain the discretion to change the 
minimum bid increment if circumstances so dictate.
    88. Because these techniques have proven effective in prior 
auctions, the Commission adopts its proposal for the 220 MHz Service 
auction. Once there is a standing high bid on a license, a bid 
increment will be applied to that license to establish a minimum 
acceptable bid for the following round. For the Phase II 220 MHz 
Service auction, the Commission will utilize, as described immediately 
below, an exponential smoothing methodology to calculate minimum bid 
increments. The Bureau retains the discretion to change the minimum bid 
increment if it determines that circumstances so dictate. The 
exponential smoothing methodology has been used in previous auctions, 
including the WCS auction and the 800 MHz SMR auction.
Exponential Smoothing
    89. The exponential smoothing formula calculates the bid increment 
for each license based on a weighted average of the activity received 
on each license in the current and all previous rounds. This 
methodology will tailor the bid increment for each license based based 
on activity, rather than setting a global increment for all licenses. 
For every license that receives a bid, the bid increment for the next 
round for that license will be established using the exponential 
smoothing formula.
    90. Using exponential smooting, the calculation of the percentage 
bid increment for each license will be based

[[Page 35222]]

on an activity index, which is calculated as the weighted average of 
the current activity and the activity index from the previous round. 
The activity index at the start of the auction (round 0) will be set at 
0. The current activity index is equal to a weighing factor times the 
number of new bids received on the license in the current bidding round 
plus one minus the weighting factor times the activity index from the 
previous round. The activity index is then used to calculate a 
percentage increment by multiplying a minimum percentage increment by 
one plus the activity index with that result being subject to a maximum 
percentage increment. The Commission will initially set the weighting 
factor at 0.5, the minimum percentage increment at 0.05, and the 
maximum percentage increment at 0.15.
Equations
A<INF>i</INF>=(C*B<INF>i</INF>)+((1-
C)*A<INF>i</INF><INF>-</INF><INF>1</INF>)
I<INF>i</INF>=smaller of (1+A<INF>i</INF>)*N) and M

Where:
A<INF>i</INF>=activity index for the current round (round i)
C=activity weight factor
B<INF>i</INF>=number of bids in the current round (round i)
A<INF>i</INF><INF>-1</INF>=activity index from previous round (round 
i-1), A<INF>0</INF> is 0
I<INF>i</INF>=percentage bid increment for the current round (round i)
N=minimum percentage increment
M=maximum percentage increment

    Under the exponential smoothing methodology, once a bid has been 
received on a license, the minimum acceptable bid for that license in 
the following round will be the new high bid plus the dollar amount 
associated with the percentage increment (variable I<INF>i</INF> from 
above times the high bid). This result will be rounded to the nearest 
thousand if it is over ten thousand or to the nearest hundred it it is 
under ten thousand.
Examples
License 1
C=0.5, N=0.05, M=0.15
Round 1 (2 new bids, high bid = $1,000,000)

    1. Calculation of percentage increment using exponential smoothing:

A<INF>1</INF>=(0.5*2) + (0.5*0) = 1
I<INF>1</INF> = (1+1) *0.05=0.1

    2. Minimum bid increment using the percentage increment 
(I<INF>1</INF> from above)

0.1*$1,000,000=$100,000

    3. Minimum acceptable bid for round 2=1,100,000

Round 2 (3 new bids, high bid=2,000,000)

    1. Calculation of percentage increment using exponential smooting:

A<INF>2</INF>=(0.5 * 3) + (0.5 * 1) = 2
I<INF>2</INF>=(1 +2) * 0.05 = 0.15

    2. Minimum bid increment using the percentage increment 
(I<INF>2</INF> from above)

0.15 * $2,000,000 = $300,000

    3. Minimum acceptable bid for round 3 = 2,300,000

Round 3 (1 new bid, high bid = 2,300,000)

    1. Calculation of percentage increment using exponential smoothing:

A<INF>3</INF> = (0.5 * 1) + (0.5 * 2) = 1.5
I<INF>3</INF> = (1 + 1.5) * 0.05 + 0.125

    2. Minimum bid increment using the percentage increment 
(I<INF>3</INF> from above)

0.125 * $2,300,000 = $287,500

    3. Minimum acceptable bid for round 4 = 2,588,000
(4) High Bids
    91. Each bid will be date- and time-stamped when it is entered into 
the computer system. In the event of tie bids, the Commission will 
identify the high bidder on the basis of the order in which bids are 
received by the Commission, starting with the earliest bid. The bidding 
software allows bidders to make multiple submissions in a round. As 
each bid is individually date and time-stamped according to when it was 
submitted, bids submitted by a bidder earlier in a round will have an 
earlier date- and time-stamped than bids submitted later in a round.
(5) Bidding
    92. During a bidding round, a bidder may submit bids for as many 
licenses for which it is eligible, as well as withdraw high bids from 
previous bidding rounds, remove bids placed in the same bidding round, 
or permanently reduce eligibility. Bidders also have the option of 
making multiple submissions and withdrawals in each bidding round, and 
will not have a separate period to withdraw bids. If a bidder submits 
multiple bids for a single license in the same round, the system takes 
the last bid entered as that bidder's bid for the round, and the date- 
and time-stamped of that bid reflect the latest time the bid was 
submitted.
    93. Please note that all bidding will take place either through the 
automated bidding software or by telephonic bidding (Telephonic bid 
assistants are required to use a script when handling bids placed by 
telephone. Telephonic bidders are therefore reminded to allow 
sufficient time to bid, by placing their calls well in advance of the 
close of a round, because four to five minutes are necessary to 
complete a bid submission.) There will be no on-site bidding during 
Auction No. 18.
    94. A bidder's maximum eligibility in the first round of the 
auction is determined by two factors: (1) the licenses applied for on 
FCC Form 175; and (2) the upfront payment amount deposited. The bid 
submission screens will be tailored for each bidder to include only 
those licenses for which the bidder applied on its FCC Form 175. A 
bidder also has the option to further tailor its bid submission screens 
to call up specified groups of licenses.
    95. The bidding software requires each bidder to log in to the FCC 
auction system during the bidding round using the FCC account number, 
bidder identification number, and the confidential security codes 
provided in the registration materials. Bidders are strongly encouraged 
to download and print bid confirmations after they submit their bids.
    96. The bid entry screen of the Automated Auction System software 
for the Phase II 220 MHz Service auction allows bidders to place 
multiple increment bids which will let bidders increase high bids from 
one to nine bid increments. A single bid increment is defined as the 
difference between the standing high bid and the minimum acceptable bid 
for a license.
    97. To place a bid on a license, the bidder must enter a whole 
number between 1 and 9 in the bid increment multiplier (Bid Mult) 
field. This value will determine the amount of the bid (Amount Bid) by 
multiplying the bid increment multiplier by the bid increment and 
adding the result to the high bid amount according to the following 
formula:

Amount Bid = High Bid + (Bid Mult * Bid Increment)

Thus, bidders may place a bid that exceeds the standing high bid by 
between one and nine times the bid increment. For example, to bid the 
minimum acceptable bid, which is equal to one bid increment, a bidder 
will enter ``16'' in the bid increment multiplier column and press 
submit.
    98. For any license on which the FCC is designated as the high 
bidder (i.e., a license that has not yet received a bid in the auction 
or where the high bid was withdrawn and a new bid has not yet been 
placed), bidders will be limited to bidding only the minimum acceptable 
bid. In both of these cases no increment exists for the licenses, and 
bidders should enter ``1'' in the Bid Mult field. Note that any whole 
number between 1 and 9 entered in the multiplier column will result in 
a bid value at the minimum acceptable bid amount.

[[Page 35223]]

Finally, bidders are cautioned in entering numbers in the Bid Mult 
field because, as explained in the following section, a high bidder 
that withdraws its standing high bid from a previous round, even if 
mistakenly or erroneously made, is subject to bid withdrawal payments.
(6) Bid Removal and Bid Withdrawal
    99. In the 20 MHz Public Notice, the Commission proposed bid 
removal and bid withdrawal rules. With respect to bid withdrawals, the 
Commission proposed limiting each bidder to withdrawals in no more than 
two rounds during the course of the auction.
a. Procedures
    100. Before the close of a bidding round, a bidder has the option 
of removing any bids placed in that round. By using the remove bid 
function in the software, a bidder may effectively ``unsubmit'' any bid 
placed within that round. A bidder removing a bid placed in the same 
round is not subject to withdrawal payments. Removing a bid will affect 
a bidder's activity for the round in which it is removed. This 
procedure will enhance bidder flexibility and, may serve to expedite 
the course of the action. Therefore, the Commission will adopt these 
procedures for the 220 MHz Service auction.
    101. Once a round closes, a bidder may no longer remove a bid. 
However, in the next round, a bidder may withdraw standing high bids 
from previous rounds using the withdraw bid function (assuming that the 
bidder has not exhausted its withdrawal allowance). A high bidder that 
withdraw its standing high bid from a previous round is subject to the 
bid withdrawal payments specified in 47 CFR 90.1007, 1.2104(g), and 
1.2109. The procedure for withdrawing a bid and receiving a withdrawal 
confirmation is essentially the same as the bidding procedure described 
in ``High Bids,'' Part 4.B.2.c.(4).
    102. In previous auctions, the Commission has detected bidder 
conduct that, arguably, may have constituted strategic bidding through 
the use of bid withdrawals. While the Commission continues to recognize 
the important role that bid withdrawals play in an auction, i.e. 
reducing risk associated with efforts to secure various geographic area 
licenses in combination, the Commission concludes that, for the 220 MHz 
Service auction, adoption of a limit on their use to two rounds is the 
most appropriate outcome. By doing so the Commission believes it 
strikes a reasonable compromise that will allow bidders to use 
withdrawals. The Commission's decision on this issue is based upon its 
experience in prior auctions, particularly the PCS D, E and F block 
auction, 800 MHz SMR auction, and LMDS auction, and is in no way a 
reflection of its view regarding the likelihood of any speculation or 
``gaming'' in the 220 MHz Service auction.
    103. The Bureau will therefore limit the number of rounds in which 
bidders may place withdrawals to two rounds. These rounds will be at 
the bidder's discretion and there will be no limit on the number of 
bids that may be withdrawn in either of these rounds. Withdrawals will 
still be subject to the bid withdrawal payments specified in 47 CFR 
90.1007, 1.2104(g), and 1.2109. Bidders should note that abuse of the 
Commission's bid withdrawal procedures could result in the denial of 
the ability to bid on a market.
    104. If a high bid is withdrawn, the license will be offered in the 
next round at the second highest bid price, which may be less than, or 
equal to, in the case of tie bids, the amount of the withdrawn bid, 
without any bid increment. The FCC will serve as a ``place holder'' on 
the license until a new acceptable bid is submitted on that license.
b. Calculation
    105. Generally, a bidder that withdraws a standing high bid during 
the course of an auction will be subject to a payment equal to the 
lower of: (1) the difference between the net withdrawn bid and the 
subsequent net winning bid; or (2) the difference between the gross 
withdrawn bid and the subsequent gross winning bid for that license. 
See 47 CFR 90.1007, 1.2104(g), and 1.2109. No withdrawal payment will 
be assessed if the subsequent winning bid exceeds the withdrawn bid.
(7) Round Results
    106. The bids placed during a round are not published until the 
conclusion of that bidding period. After a round closes, the FCC will 
compile reports of all bids placed, bids withdrawn, current high bids, 
a new minimum accepted bids, and bidder eligibility status (bidding 
eligibility and activity rule waivers), and post the reports for public 
access.
    107. Reports reflecting bidders' identities and bidder 
identification numbers for Auction No. 18 will be available before and 
during the auction. Thus, bidders will know in advance of this auction 
the identities of the bidders against which they are bidding.
(8) Auction Announcement
    108. The FCC will use auction announcements to announce items such 
as schedule changes and stage transitions. All FCC auction 
announcements will be available on the FCC remote electronic bidding 
system, as well as the Internet and the FCC Bulletin Board System.
(9) Other Matters
    109. As noted in 3.B., after the short-form filing deadline, 
applicants may make only minor changes to their FCC Form 175 
applications. For example, permissible minor changes include deletion 
and addition of authorized bidders (to a maximum of three) and revision 
of exhibits. Filers should make these changes on-line, and submit a 
letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division, 
Wireless Telecommunications Bureau, Federal Communications Commission, 
2025 M Street, N.W., Room 5202, Washington, D.C. 20554 (and mail a 
separate copy to Frank Stilwell, Auctions and Industry Analysis 
Division), briefly summarizing the changes. Questions about other 
changes should be directed to Frank Stilwell of the FCC Auctions and 
Industry Analysis Division at (202) 418-0660.

5. Post-Auction Procedures

A. Down Payments and Withdrawn Bid Payments

    110. After bidding has ended, the Commission will issue a public 
notice declaring the auction closed, identifying the winning bids and 
bidders for each license, and listing withdrawn bid payments due.
    111. Within ten business days after release of the auction closing 
notice, each winning bidder must submit sufficient funds (in addition 
to its upfront payment) to bring its total amount of money on deposit 
with the Government to 20 percent of its net winning bids (actual bids 
less any applicable bidding credits). See 47 CFR 90.1011(b). In 
addition, by the same deadline all bidders must pay any withdrawn bid 
amounts due under 47 CFR 1.2104(g), as discussed in ``Bid Removal and 
Bid Withdrawal,'' Part 4.B.2.c(6). (Upfront payments are applied first 
to satisfy any withdrawn bid liability, before being applied toward 
down payments.)

B. Long-Form Application

    112. Within ten business days after release of the auction closing, 
notice winning bidders must submit a properly completed long-form 
application and required exhibits for each Phase II 220

[[Page 35224]]

MHz Service license won through the auction. Winning bidders that are 
small businesses or very small businesses must include an exhibit 
demonstrating their eligibility for bidding credits. See 47 CFR 
90.1013. Further filing instructions will be provided to auction 
winners at the close of the auction.

C. Default and Disqualification

    113. Any high bidder that defaults or is disqualified after the 
close of the auction (i.e., fails to remit the required down payment 
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise 
disqualified) will be subject to the payments described in 47 CFR 
1.2104(g)(2). In such event the Commission may re-auction the license 
or offer it to the next highest bidders (in descending order) at their 
final bids. See 47 CFR 1.2109(b) and (c). In addition, if a default or 
disqualification involves gross misconduct, misrepresentation, or bad 
faith by an applicant, the Commission may declare the applicant and its 
principals ineligible to bid in future auctions, and may take any other 
action that it deems necessary, including institution of proceedings to 
revoke any existing licenses held by the applicant. See 47 CFR 
1.2109(d).

D. Refund of Remaining Upfront Payment Balance

    114. All applicants that submitted upfront payments but were not 
winning bidders for any Phase II 220 MHz Service license may be 
entitled to a refund of their remaining upfront payment balance after 
the conclusion of the auction. No refund will be made unless there are 
excess funds on deposit from that applicant after any applicable bid 
withdrawal payments have been paid.
    115. Bidders that drop out of the auction completely may be 
eligible for a refund of their upfront payments before the close of the 
auction. However, bidders that reduce their eligibility and remain in 
the auction are not eligible for partial refunds of upfront payments 
until the close of the auction. Qualified bidders that have exhausted 
all of their activity rule waivers, have no remaining bidding 
eligibility, and have not withdrawn a high bid during the auction must 
submit a written refund request which includes wire transfer 
instructions, a Taxpayer Identification Number (``TIN''), and a copy of 
their bidding eligibility screen print, to: Federal Communications 
Commission, Billings and Collections Branch, Attn: Regina Dorsey or 
Linwood Jenkins, 1919 M Street, NW. Room 452, Washington, DC 20554.
    116. Bidders can also fax their request to the Billings and 
Collections Branch at (202) 418-2843. Once the request has been 
approved, a refund will be sent to the address provided on the FCC Form 
159.

    Note: Refund processing generally takes up to two weeks to 
complete. Bidders with questions about refunds should contact 
Linwood Jenkins or Geoffrey Idika at (202) 418-1995.

 Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Attachment A--Summary of Phase II 220 MHZ Licenses to be Auctioned

Attachment B--List of Cases Pending Before the Commission Involving 
Non-Nationwide Phase I 220 MHZ Licensees

Attachment C--Guidelines for completion of FCC Forms 175 and 159, and 
Exhibits

Attachment D--Electronic Filing and Review of FCC Form 175

Attachment E--Summary Listing of Documents From the Commission and the 
Wireless Telecommunications Bureau Addressing Application of The Anti-
Collusion Rules

Attachment F--List of Commenters

    Note: Attachments A through F are not printed in the Federal 
Register. See the beginning of the Supplementary Information section 
for availability.

[FR Doc. 98-17147 Filed 6-26-98; 8:45 am]
BILLING CODE 6712-01-M


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>