Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 65587

Martinsville in compliance with the

Commission’s minimum distance

separation requirements without the

imposition of a site restriction. The

coordinates for Channel 258A at New

Martinsville are North Latitude 39–38–

36 and West Longitude 80–51–36. See

Supplementary Information, infra.

DATES: Effective January 29, 1996. The

window period for filing applications

will open on January 29, 1996 and close

on February 29, 1996.

FOR FURTHER INFORMATION CONTACT:

Sharon P. McDonald, Mass Media

Bureau, (202) 418–2180.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Report

and Order, MM Docket No. 95–113,

adopted November 27, 1995, and

released December 15, 1995. The full

text of this Commission decision is

available for inspection and copying

during normal business hours in the

FCC 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 Service, Inc., (202) 857–

3800, 2100 M Street, NW., Suite 140,

Washington, DC 20037.

Since Salem and New Martinsville are

located within 320 kilometers (200

miles) of the U.S.-Canadian border,

concurrence of the Canadian

government has been obtained. With

this action, this proceeding is

terminated.

List of Subjects in 47 CFR Part 73

Radio broadcasting.

Part 73 of title 47 of the Code of

Federal Regulations is amended as

follows:

PART 73—[AMENDED]

1. The authority citation for part 73

continues to read as follows:

Authority: Sections 303, 48 Stat., as

amended, 1082; 47 U.S.C. 154, as amended.

§ 73.202 [Amended]

2. Section 73.202(b), the Table of FM

Allotments under West Virginia, is

amended by adding Channel 277A at

Salem, and by adding Channel 258A at

New Martinsville.

Federal Communications Commission.

John A. Karousos,

Chief, Allocations Branch, Policy and Rules

Division, Mass Media Bureau.

[FR Doc. 95–30897 Filed 12–19–95; 8:45 am]

BILLING CODE 6712–01–F

47 CFR Part 100

[IB Docket No. 95–168; PP Docket No. 93–

253; FCC 95–507]

Direct Broadcast Satellite Service

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: On December 14, 1995, the

Federal Communications Commission

adopted a Report and Order in which it

adopted a number of new rules and

policies for the Direct Broadcast

Satellite (‘‘DBS’’) service, including the

use of competitive bidding to resolve

mutually exclusive applications for DBS

resources. As part of its decision in

Advanced Communications

Corporation, FCC 95–428 (released

October 18, 1995), the Commission

reclaimed for the public 51 channels of

DBS spectrum at two orbital locations

(27 channels at 110° W.L. and 24

channels at 148° W.L.) that had

previously been assigned to Advanced

Communications Corporation (‘‘ACC’’).

The Commission adopts rules and

policies in the DBS service in order to

update the current ‘‘interim’’ rules and

to reassign, through a competitive

bidding process, channels at orbital

locations previously assigned to ACC.

EFFECTIVE DATE: January 19, 1996.

FOR FURTHER INFORMATION CONTACT:

Suzanne Hutchings or Bill Wiltshire,

International Bureau, (202) 418–0420; or

Diane Conley, Wireless

Telecommunications Bureau, (202) 418–

0660.

SUPPLEMENTARY INFORMATION: This

summarizes the Commission’s Report

and Order in IB Docket No. 95–168; PP

Docket No. 93–253; FCC 95–507,

adopted on December 14, 1995, and

released on December 15, 1995. The

complete text of this Report and Order

(‘‘Order’’) is available for inspection and

copying during normal business hours

in the FCC Reference Center (Room

239), 1919 M Street NW., Washington,

D.C., and also may be purchased from

the Commission’s copy contractor,

International Transcription Service,

(202) 857–3800, 2100 M Street NW.,

Suite 140, Washington, D.C. 20037. This

Order contains new or modified

information collections subject to the

Paperwork Reduction Act of 1995

(‘‘PRA’’), Pub. L. 104–13, which were

proposed in the NPRM and submitted to

the Office of Management and Budget

(‘‘OMB’’) for approval. The Commission

received no comments on the proposed

information collections, and therefore

adopts them as originally proposed. The

effective date of the new and modified

rules being adopted falls after the

deadline for OMB action under the PRA.

Synopsis of the Report and Order

I. Introduction

1. Over six years ago, in Continental

Satellite Corporation, 4 FCC Rcd 6292

(1989), the Commission stated that

existing DBS permittees would have

first right to additional channel

assignments upon surrender or

cancellation of a DBS construction

permit. The Notice of Proposed

Rulemaking (‘‘NPRM’’) in this

proceeding, 60 FR 55822 (Nov. 3, 1995),

tentatively concluded that this

reassignment policy no longer serves the

public interest, and accordingly

proposed to use competitive bidding

when the Commission has received

mutually exclusive applications for

reassignment of such DBS resources.

Specifically, the NPRM proposed to

auction two large blocks of channels

that are currently available at two

orbital locations. In addition, the NPRM

proposed new service rules that would:

(1) impose performance criteria

intended to ensure that DBS resources

are utilized in a timely manner; (2)

guard against potential anticompetitive

conduct by DBS providers; and (3)

ensure timely DBS service to Alaska and

Hawaii. The NPRM also requested

comment on our existing policy

governing the extent to which DBS

resources may be put to alternative uses.

2. The Commission concludes that the

public interest is no longer served by

the pro rata methodology established in

Continental for reassigning reclaimed

DBS channels. Accordingly, the

Commission adopts new rules for

reassigning DBS resources. In the Order,

the Commission finds that it has the

statutory authority to auction DBS

construction permits if the Commission

receives mutually exclusive

applications, and that the objectives of

Section 309(j) of the Communications

Act, 47 U.S.C. 309(j), would be served

by doing so. Specifically, under the

Order the Commission will auction two

DBS construction permits: one for all 28

channels now available at the 110° W.L.

orbital location (27 channels from ACC

plus 1 channel that was never assigned),

and another for all 24 channels now

available at the 148° W.L. orbital

location. The NPRM proposed to

employ an oral outcry auction to award

construction permits for these channel

blocks. The Commission has instead

determined that these two permits

should be awarded through a sequential

multiple round electronic auction.

Other auction designs may be used for

future DBS auctions.
65588 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

3. The Commission also adopts three

new service rules and revises an

existing policy. First, a person receiving

a new or additional DBS construction

permit will be required to complete

construction of its first satellite within

four years of receiving its permit, and to

complete all satellites in its DBS system

within six years. Second, new

permittees will be required to provide

DBS service to Alaska and Hawaii from

any orbital location where such service

is technically feasible, and existing

permittees will be required to provide

such service from either or both of their

assigned orbital locations in order to

retain their channel assignments at

western orbital locations. Third, the

term for non-broadcast DBS licenses

will be lengthened from five years to ten

years, to encourage investment and

innovation in the service and to better

match the useful life of DBS satellites.

In addition, the existing policy

restricting non-DBS use of DBS

resources will be restated in terms of

capacity rather than time in order to

allow DBS licensees to configure their

systems more efficiently. The

Commission believes that these rules are

well designed to spur swift

development of DBS spectrum resources

to the benefit of the American public.

II. Proposed Service Rules

A. Performance Objectives

4. The Commission finds that

combining existing due diligence

requirements with additional milestones

for construction and operation of DBS

systems by new permittees will prevent

unnecessary delays in the

commencement of service. Accordingly,

the Commission adopts, as proposed in

the NPRM, two additional performance

criteria for those receiving DBS

construction permits after the effective

date of the proposed rule: (1)

completion of construction of the first

satellite in a DBS system within four

years of authorization; and (2) launch

and operation of all satellites in a DBS

system within six years of authorization.

B. Use of DBS Capacity

5. At present, Commission policy

requires each DBS licensee to begin DBS

operations before the end of its first fiveyear license term, but allows otherwise

unrestricted use during that term. After

expiration of the first term, a DBS

operator may continue to provide nonDBS service only on those transponders

on which it also provides DBS service,

and only up to half of the use of each

transponder each day. The Commission

finds that capacity-based restrictions

would allow DBS permittees and

licensees more flexibility in how they

configure their satellites as a matter of

technical efficiency in complying with

the limitations we have imposed.

Accordingly, the Order restates existing

restrictions on the use of DBS resources

as a function of capacity rather than

time, but otherwise retains the existing

use policy. Thus, the new policy will be

that a DBS licensee must begin DBS

operations within five years of receipt of

its license, but may otherwise make

unrestricted use of the spectrum during

that time. After that five-year period,

such a licensee may continue to provide

non-DBS service so long as at least half

of its total capacity at a given orbital

location is used for DBS service.

6. The NPRM noted the possibility

that, as a result of a separate proceeding,

operators using DBS channels and

orbital locations may be permitted to

provide both domestic and international

service. See Amendment to the

Commission’s Regulatory Policies

Governing Domestic Fixed Satellites and

Separate International Satellite

Systems, Notice of Proposed

Rulemaking, FCC 95–146, para. 38

(released April 25, 1995)(‘‘Transborder/

Separate Systems’’), 60 FR 24817 (May

10, 1995). The Commission notes that

the construction permits available at

auction currently authorize only DBS

service to the United States, and finds

that the potential for international DBS

service is no basis for delaying the

auction pending resolution of

international satellite service issues in

the Transborder/Separate Systems

proceeding.

C. Rules and Policies Designed to

Promote Competition

1. Spectrum Aggregation Limitations.

7. The NPRM proposed certain rules

intended to prevent strategic use of DBS

resources for anticompetitive purposes

and also requested comment on whether

additional steps were necessary to

achieve the desired goal of fostering

competition among multichannel video

programming distributors (‘‘MVPDs’’),

such as DBS and cable systems. Two of

the rules proposed were structural, in

that they placed limits on the number of

full-CONUS DBS channels a person

could hold or use. The NPRM also

proposed rules aimed at preventing

specific types of potentially

anticompetitive conduct, and requested

comment on the degree to which

existing rules might address those same

concerns.

8. The Commission rejects both of the

spectrum caps proposed in the NPRM,

and instead adopts a one-time spectrum

limitation applicable to the upcoming

auction. Under this one-time auction

rule, a party currently holding an

attributable interest in full-CONUS

channels at one location may bid at

auction for channels currently available

at the 110° location, but if successful

must divest its existing full-CONUS

channels at any other location within

twelve months. The Commission finds

that the rule is necessary given the

scarcity of full-CONUS DBS spectrum

and the impact that concentration of

this spectrum into the hands of any

single provider might have on the

overall MVPD market. The resulting

intra-DBS competition will best serve

the public interest by ensuring a level of

rivalry between and among DBS firms

and other MVPDs that should constrain

any potential there might be for strategic

anticompetitive conduct. The

Commission also finds that twelve

months should be sufficient to allow an

orderly divestiture, if necessary, and

strikes a proper balance between the

time necessary for negotiation and the

desire to ensure that spectrum not

remain idle.

9. For purposes of implementing the

spectrum aggregation limitation adopted

in the Order, the Commission will only

consider three orbital locations—101°,

110°, and 119°—to be capable of fullCONUS service. A fourth orbital

location, at 61.5o W.L, should not be

deemed to be capable of delivering fullCONUS service at this time since an

operator serving customers in the

western United States from that location

would face interference from tall objects

that an operator from the other three

locations would not face due to their

better look angles, and therefore would

be at a qualitative disadvantage in

attracting customers.

10. In applying the auction spectrum

rule adopted in the Order, interests will

be attributed to their holders and

deemed cognizable under criteria

similar to those used in the context of

the broadcast, newspaper and cable

television cross ownership rules. The

rules adopted in the Order attribute the

following interests: (1) any voting

interest of five percent or more; (2) any

general partnership interest and direct

ownership interest; (3) any limited

partnership interest, unless the limited

partnership agreement provides for

insulation of the limited partner’s

interest and the limited partner in fact

is insulated from and has no material

involvement, either directly or

indirectly, in the management or

operation of the DBS activities of the

partnership; and (4) officers and

directors. As with the broadcast rules,

the attribution threshold for

institutional investors is ten percent,

and a multiplier will be used to
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 65589

calculate interests held through

successive and multiple layers of

ownership.

2. Conduct Rules. 11. In addition to

the structural solutions designed to

promote competition by preventing the

potential for undue concentration of

DBS and MVPD resources, the NPRM

also proposed conduct limitations on

the use of DBS resources in order to

address a number of specific forms of

potential anticompetitive behavior. In

the Order, the Commission finds that

the one-time auction rule described

above will significantly promote rivalry

among DBS systems and encourage the

development of competition in markets

for the delivery of video programming.

The Order states that there is little direct

evidence of anticompetitive behavior

specific to the DBS context.

Accordingly, the Commission has

decided to rely upon the competitive

effect of its one-time spectrum rule to

prevent the range of anticompetitive

conduct discussed in the NPRM, and

thus refrains from adopting conduct

rules at this stage in the development of

the DBS industry.

12. In view of the market structure set

in motion by the Order’s one-time

spectrum rule, the Commission does not

find it necessary to adopt rules

prohibiting DBS services from being

offered as ‘‘ancillary’’ to cable services.

Thus, there is no reason to extend to all

non-DBS MVPDs the restrictions

imposed in the DBS construction permit

issued to Tempo Satellite, Inc., or to

maintain those restrictions with respect

to Tempo. Similarly, the Commission

finds no compelling need at this time

for adopting rules designed to ensure

that a cable-affiliated DBS operator will

compete against other DBS providers for

subscribers in cabled areas, or for

determining that all joint marketing

arrangements between DBS operators

and other MVPDs will a fortiori reduce

competition. Further, the Commission

declines to amend the existing program

access and carriage rules to address

specific conduct by DBS operators. The

Order states that there is no evidence in

this record that exclusive agreements

currently pose any anticompetitive

concern or will do so in the future.

13. The NPRM identified as another

area of concern program access issues

related to the development of systems

such as TCI’s proposed ‘‘Headend in the

Sky’’ (‘‘HITS’’) service for satellite

delivery of programming to terrestrial

MVPD systems. It appears that a HITSlike service that provides most of the

available programming, and provides it

in a digital format that could be passed

through to subscribers, could offer

substantial efficiencies for many

MVPDs. The benefits of this service

cannot materialize if competing DBS

operators are unable to provide such

service because, for example,

programmers refuse to authorize MVPDs

to receive programming services from

the competing operator’s DBS satellite.

However, the Commission has no

evidence before it of firms presently

supplying HITS-like service, and the

actual characteristics of such a service

remain unclear. Moreover, resolution of

the issues surrounding such a service is

not necessary to the proceeding at hand.

Accordingly, the Commission has

decided that it would be imprudent to

consider rules governing HITS service

absent a better understanding of the

nature of the service.

Other Concerns

14. The NPRM observed that in the

Advanced Communications Corporation

proceeding, commenters raised a

number of other concerns about

potential strategic conduct that could

arise from cable-affiliated ownership of

full-CONUS DBS spectrum. Those

commenters argued that cable-affiliated

ownership of full-CONUS DBS

spectrum should be prohibited, or in the

alternative, that several remedial

conditions should be imposed. The

NPRM sought comment on the extent to

which those and related concerns are

implicated by the proposed auction of

DBS construction permits, and if so,

whether additional DBS service rules

might be appropriate to address those

concerns. For the time being, the

Commission has decided to rely upon

the one-time auction spectrum

limitation, the rivalry that rule should

promote throughout the MVPD market,

and the Commission’s ongoing ability to

monitor developments in the DBS and

MVPD markets through its Title III

authority, as adequate restraints on

anticompetitive conduct. The

Commission remains committed to

fostering a vibrant DBS service and

recognizes that periodic reviews will be

necessary to ensure that the benefits of

rivalry are available to the public. It

intends to keep a watchful eye on

developments in the service to ensure

that DBS systems have an opportunity

to develop into truly competitive

MVPDs.

East/West Paired Assignments

15. The NPRM tentatively concluded

that progress in the DBS service has

rendered unnecessary the Continental

policy of assigning DBS channels only

in east/west pairs. The commenters

supported this conclusion, and

accordingly the Commission will no

longer require DBS permittees and

licensees to retain their assigned

channels in east/west pairs.

D. Service to Alaska and Hawaii

16. The Commission adopts the rules

proposed in the NPRM to: (1) require

that all new permittees must provide

service to Alaska and Hawaii if such

service is technically feasible from their

orbital locations; and (2) condition the

retention of channels assigned to

current permittees at western orbital

locations on provision of such service,

from either or both of their assigned

orbital locations. These rules should

help achieve the important goal of

bringing service to underserved regions

of the United States. The Commission

declined the proposal of some

commenters that the first rule be

applied to existing as well as new

permittees. The Commission notes that

service to Alaska and Hawaii has

already been shown to be feasible from

all but the 101°W.L. and 61.5°W.L.

orbital locations, and that any party

acquiring channels at those two

locations that desires not to provide

service to Alaska or Hawaii will bear the

burden of showing that such service is

not feasible as a technical matter, or that

while technically feasible such service

would require so many compromises in

satellite design and operation as to make

it economically unreasonable.

E. License Term

17. The Commission adopts the

NPRM’s proposal to increase the term of

a non-broadcast DBS license from 5

years to 10 years, the maximum allowed

under the Communications Act, which

better reflects the useful life of a DBS

satellite, is consistent with the current

proposal for extending the term of

satellite licenses in other services, and

should encourage investment and

innovation in the DBS service.

III. Adoption of a New Methodology for

Reassigning DBS Resources

18. Over six years ago, in the

Continental decision, the Commission

stated that existing DBS permittees

would have first right to additional

channel assignments upon surrender or

cancellation of a DBS construction

permit. The NPRM tentatively

concluded that this reassignment policy,

adopted in an era before Congress

explicitly authorized the Commission’s

use of auctions and well before any DBS

system actually went into operation, no

longer serves the public interest, and

therefore should be abandoned.

19. After reviewing the comments

received in response to the NPRM, the

Commission remains convinced that the

pro rata distribution of reclaimed
65590 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

channels to existing permittees no

longer serves the public interest. The

historic policy of assigning a relatively

small number of channels to each

permittee was based upon a conception

of DBS service that has not been put

into practice. Instead, the service has

experienced a move toward channel

consolidation, an understandable trend

given that DBS systems must compete in

the MVPD market with cable systems

that are promising a 500-channel service

in the future. Under Continental, the

channels available for reassignment

would be divided pro rata to assign five

pairs of channels at two orbital locations

to each of six permittees. The result

would be a piecemeal assignment of

valuable spectrum, requiring the

permittees to negotiate either joint

operations or channel swaps. The

process necessary in either case is often

a time consuming one that is not always

successful, which is further complicated

by the time required for Commission

consideration and approval of the

resulting transactions. There is also no

guarantee that the permittees eligible for

this distribution value the channels

most highly and can put them to use

most efficiently.

20. By contrast, competitive bidding

procedures are specifically designed

and intended to assign scarce resources

to those who value them most highly

and can make the most efficient use of

them. By offering the available channels

in two large blocks, the Commission

obviates the need for reaggregation and

allows the auction winners to proceed

directly to acquisition or construction of

satellites and system operation of their

systems. Since the Commission intends

to hold an auction in January 1996, it

concludes that an auction method is

better suited to achieving expedited

service from the channels available than

is the existing policy under Continental.

In addition, the Commission concludes

that since it has determined that the

public interest supports a change in its

regulatory approach, it has full authority

to modify existing DBS permits through

notice and comment rulemaking, even if

doing so frustrates the expectations of

existing permittees.

21. All potential auction participants

should be aware that the decision

cancelling ACC’s construction permit is

currently on appeal, and that others may

seek judicial review of this Order as

well. In the unlikely event that a court

either overturns the Advanced order

and ACC’s permit with its associated

orbital/channel authorizations is

ultimately reinstated, or overturns this

rulemaking and the Continental

reassignment methodology is ultimately

maintained, the Commission would

rescind any permit awarded through the

auction process and move with all

deliberate speed to refund money paid

up to that point. Participants in the

auction are hereby put on notice of this

possibility, and should be willing to

facilitate that process if it becomes

necessary.

IV. Adoption of Rules for Auctioning

DBS Permits

A. Authority to Conduct Auctions

The Commission has authority under

Section 309(j) of the Communications

Act, 47 U.S.C. 309(j), to employ auctions

to choose among mutually exclusive

applications for initial licenses or

construction permits where the

principal use of the spectrum is likely

to involve the licensee receiving

compensation from subscribers. Having

reviewed the comments received in

response to the NPRM in this

proceeding, the Commission concludes

that it has the authority under Section

309(j) to award DBS construction

permits for the spectrum reclaimed from

ACC, as well as other available

spectrum, by means of competitive

bidding.

Given that both DBS licensees now

providing service to the public operate

on a subscription basis, and all other

permittees planning to initiate service in

the near future also plan to offer

subscription-based service, the

Commission believes that it is a

reasonable assumption that a majority of

the use of DBS spectrum is likely to

involve the licensee receiving

compensation from subscribers, and the

‘‘principal use’’ requirement of the

statute is therefore satisfied. In light of

current licensees’ subscription-based

operations, and all other permittees’

plans for such operations, the

Commission disagrees with the claim

made by one commenter that

competitive bidding will force DBS

operators to offer all-subscription

service.

The Commission also disagrees with

the argument made by another

commenter that construction permits

awarded for the channels reclaimed

from ACC are not initial. When

channels are reclaimed from existing

permittees, the construction permits for

them are cancelled and cannot be

modified. Thus, any construction

permits awarded for reclaimed channels

will be ‘‘initial’’ under Section 309(j)

because they will be new permits for the

channels in question.

With respect to the requirement of

mutual exclusivity, the Commission

does not accept the claim that it could

have avoided mutual exclusivity by

applying the spectrum reassignment

policy in Continental. The Commission

has determined that this policy would

delay the development of DBS service

and would squander valuable spectrum,

and thus would not be in the public

interest. The Commission also notes that

where it has scheduled an auction and

it turns out that only one application is

filed for a particular construction

permit, the auction will be cancelled

and the application will be processed.

In addition, the Commission will

consider mutual exclusivity to exist

only when the number of DBS channels

sought at a given orbital location

exceeds the number available there.

The Commission further concludes

that the use of competitive bidding to

assign DBS spectrum will promote the

statutory objectives of the rapid

deployment of service and the efficient

use of spectrum more effectively than

any other spectrum assignment method.

An auction is likely to promote the

rapid deployment of service because

those parties that are in the best position

to deploy technologies and services are

also likely to be the highest bidders. In

addition, abandonment of the

Commission’s Continental policy opens

the DBS industry to a wide range of

potential new entrants and thus is

consistent with the statutory objective of

disseminating licenses among a wide

variety of licensees. The possibility that

auction costs will be passed on to

consumers does not mean, as certain

commenters assert, that auctions will

not serve the statutory objective of

recovering a portion of the value of DBS

spectrum for the public. DBS operators

may also pass on other costs to

consumers. Moreover, auction winners

will be constrained from charging rates

higher than those of competitors who

have not paid for spectrum. Finally, the

auctioning of DBS channels will ensure

that the ultimate holder of the channels

has paid market value to the U.S.

Treasury and thus will serve the

statutory goal of avoiding unjust

enrichment. The Commission will

therefore award construction permits for

the channels available at 110° and 148°,

as well as DBS construction permits that

become available in the future, by

means of competitive bidding.

B. Competitive Bidding Design

The Commission will auction one

construction permit for the block of 28

channels at 110° and one construction

permit for the block of 24 channels at

148°. The Commission believes that

designating two permits for these

channels will best serve the public

interest and the objectives of Section

309(j)(4)(B), 47 U.S.C. 309(j)(4)(B),
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 65591

especially the promotion of investment

in and rapid deployment of the DBS

service. The construction permits

available for auction include authority

to transmit pursuant to allocations in

accordance with the ITU feeder link

plan allocating frequencies for

establishing uplinks and downlinks.

The Commission recognizes that there

may be legitimate reasons for auctioning

spectrum in smaller blocks; therefore, in

the future, the Commission may auction

DBS spectrum either channel by

channel or in small blocks.

The Commission proposed in the

NPRM to award the construction

permits for the channels available at

110° and 148° by means of an oral

outcry auction. However, the

Commission is persuaded by the

comments submitted that the auction for

these channels should have more

structure. The Commission concludes

that a sequential multiple round

electronic auction would be the best

way of providing such structure. The

primary benefit of additional structure

is the reduced risk of bidders making

errors in submitting bids, and bid

submission errors are far less likely with

electronic bidding than in a traditional

oral auction. Multiple round electronic

bidding also provides bidders more time

to analyze previous bids, confer with

decision makers, and refine their

bidding strategy than a continuous oral

auction. Multiple round electronic

bidding with the activity rule adopted

by the Commission also provides

bidders with more information about

other bidders’ valuations. Finally, given

the Commission’s experience with

electronic auctions, such an auction is

likely to be easier for the Commission to

implement.

In anticipation of a rapid auction

pace, the Commission will provide for

electronic bidding at an FCC auction

site. The Commission does not

anticipate allowing telephone bids and

remote electronic bidding, but the

Wireless Telecommunications Bureau

will announce by Public Notice whether

such bidding will be permitted. In the

event that telephone bids and remote

electronic bidding are not allowed, all

bidders will be required to have an

authorized bidding representative at the

auction site. The channels at 110° and

148° will be auctioned separately since

no commenter has made the case that

there is significant interdependence

between the channels available at these

two orbital locations. The Commission

may auction one channel block

immediately after the other, but also

reserves the discretion to hold two

separate auctions for the two blocks.

Although the Commission will not

use simultaneous multiple round

bidding, oral outcry bidding, sealed

bidding, or a combined sealed bid-oral

outcry auction to award construction

permits for the spectrum available at

110° and 148°, such auction designs

could be suitable for DBS under certain

circumstances. The Commission

therefore adopts rules providing for

these auction designs, and reserves the

discretion to employ such auction

designs for DBS in the future. The

Commission also delegates to the

Wireless Telecommunications Bureau

the authority to implement and modify

auction procedures—including the

general design and timing of an auction,

the number of authorizations to be

offered in any one auction, the manner

of submitting bids, and procedures such

as minimum opening bids and bid

increments, activity and stopping rules,

and application and payment

requirements—and to announce such

procedures by Public Notice.

C. Bidding Procedures

Sequencing. The 28 channels

available at 110° will be auctioned first.

The sequence of future DBS auctions

will be determined in keeping with the

Commission’s general finding that the

highest value licenses should be

auctioned first because the greater the

value of the licenses, the greater the cost

to the public of delaying licensing. See

Second Report and Order, PP Docket

No. 93–253, 59 FR 22980 (May 4, 1994).

In the event that the Commission needs

to assign separate blocks of channels

that it believes to be interdependent, it

may choose to utilize a simultaneous

multiple round auction.

Bid Increments and Tie Bids. The

Commission reserves the discretion to

establish, raise and lower minimum bid

increments in the course of DBS

auctions. The Commission anticipates

using larger percentage minimum bid

increments early in the auction and

reducing the minimum increment

percentage as bidding activity falls. The

Commission also reserves the discretion

to establish and change maximum bid

increments in the course of DBS

auctions. Where a tie bid occurs, the

high bidder will be determined by the

order in which the bids were received

by the Commission.

Minimum Opening Bid. The

Commission believes that it would be

useful to have a minimum opening bid

for the channels at 110° to help move

the auction along and to increase the

likelihood that the public receives fair

market value for the spectrum. A

minimum opening bid therefore will be

established for the channels available at

110°, the amount of which will be

announced by Public Notice. The

amount of this minimum opening bid

will be determined using all available

information and taking into

consideration the uncertainty as to the

value of the spectrum. No commenter

has suggested a minimum opening bid

for the channels available at 148°, and

it appears that the value of these

channels is substantially lower than the

value of the channels at 110°. The

Commission therefore will not set a

minimum opening bid for the channels

at 148°. The Commission also reserves

discretion to decide whether to set

minimum opening bids for individual

auctions in the future as circumstances

warrant.

Activity Rules. A bidder must be

active in each round of the auction or

use an activity rule waiver. To be active

in the current round, a bidder must

submit an acceptable bid in the current

round or have the high bid from the

previous round. Bidders will be

provided with five activity rule waivers

that may be used in any round during

the course of the auction. A bidder who

is not active in a round and has no

remaining activity rule waivers will no

longer be eligible to bid on the

construction permit being auctioned.

If a bidder is not active in a round, a

waiver will be applied automatically.

An automatic waiver applied in a round

in which there are no new valid bids

will not keep the auction open. A

proactive activity rule waiver is a

waiver invoked by a bidder during the

bid submission period. If a bidder

submits a proactive waiver in a round

in which no other bidding activity

occurs, the auction will remain open.

The Commission retains the discretion

to issue additional waivers during the

course of an auction for circumstances

beyond a bidder’s control or in the event

of a bid withdrawal, as discussed below.

The Commission also retains the

flexibility to adjust by Public Notice

prior to an auction the number of

waivers permitted.

Stopping Rules. A stopping rule

specifies when an auction is over. The

auction will close after one round

passes in which no new valid bids or

proactive activity rule waivers are

submitted. The Commission retains the

discretion, however, to keep the auction

open even if no new valid bids and no

proactive waivers are submitted. In the

event that the Commission exercises

this discretion, the effect will be the

same as if a bidder had submitted a

proactive waiver.
65592 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

D. Procedural and Payment Issues

Application Procedures, Permittee

Qualifications, and Payment for

Construction Permits Awarded by

Competitive Bidding. The Commission’s

general procedural and payment rules

for auctions will be applied to the DBS

service, along with certain

modifications. Applicants for DBS

auctions will be required to file a shortform application, FCC Form 175, prior

to the auction in which they wish to

participate. Filing deadlines will be

announced by Public Notice. If

administratively feasible, electronic

filing of FCC Form 175 for the auction

of spectrum available at 110° and 148°

will be allowed; filing procedures will

be announced by Public Notice. For

subsequent DBS auctions, the

Commission will also announce by

Public Notice how such forms should be

filed.

As discussed below, every DBS

auction participant will be required to

submit to the Commission an upfront

payment prior to commencement of the

auction. In addition, every auction

winner will be required to submit an

amount sufficient to bring its total

deposit up to 20 percent of its winning

bid within 10 business days of the

announcement of winning bidders.

Winning bidders will be required to file

information in conformance with Part

100 of the Commission’s Rules within

30 days of the announcement of

winning bidders. Winning bidders must

submit, as part of this post-auction

application process, a signed statement

describing their efforts to date and

future plans to come into compliance

with any applicable spectrum

limitations, if they are not already in

compliance.

After reviewing a winning bidder’s

information supplied in conformance

with Part 100 and determining that the

bidder is qualified to be a permittee, and

after verifying receipt of the bidder’s 20

percent down payment, the Commission

will announce the application’s

acceptance for filing, thus triggering the

filing window for petitions to deny. If

the Commission dismisses or denies any

and all petitions to deny, the

Commission will issue an

announcement to this effect, and the

winning bidder will then have five (5)

business days to submit the balance of

its winning bid. If the bidder does so,

the permit will be granted subject to a

condition, if necessary, that the

permittee come into compliance with

any applicable spectrum limitations

within twelve (12) months of the final

grant. The permittee may come into

compliance with applicable spectrum

caps by either surrendering to the

Commission its excess channels or filing

an application that would result in

divestiture of the excess channels. If the

bidder fails to submit the balance of the

winning bid or the permit is otherwise

denied, the Commission will assess a

default payment as set forth below and

re-auction the permit.

Upfront Payment. The Commission’s

approach to upfront payments varies

from auction to auction depending on a

balancing of the goal of encouraging

bidders to submit serious bids with the

desire to simplify the bidding process

and minimize implementation costs

imposed on bidders. In the Second

Report and Order in the Competitive

Bidding proceeding, the Commission

outlined a rationale for setting upfront

payments at roughly five percent of the

estimated value of a winning bid.

Second Report and Order, PP Docket

No. 93–253, 59 FR 22980 (May 4, 1994).

A year ago, Tempo would have paid

ACC $45 million for its channels at 110°

and 148°. In view of the fact that MCI

has stated it would bid $175 million for

the channels at 110°, and in the absence

of any specific expression of interest in

bidding on the channels at 148°, it

seems clear that the channels at 110° are

more valuable than those at 148°.

Moreover, the Commission strongly

believes that the value of the channels

has increased over the past year. These

considerations lead the Commission to

set an upfront payment of $10 million

for the channels at 110° and $2 million

for the channels at 148°. The figure of

$10 million is well above five percent of

$45 million (it is actually 22.2 percent).

This reflects a balancing of the assumed

increase in value of the spectrum with

the fact that the channels at 110° and

148° were included in the Tempo-ACC

arrangement.

The magnitude of the upfront

payment also reflects the Commission’s

concern that, if the upfront payment is

too low, there is a risk of encouraging

insincere bidding. Moreover, a $10

million payment should not be an

excessive burden for bidders because it

will not be held for a significant amount

of time. In addition, $10 million is the

lowest of the specific upfront payment

suggestions in the comments. With

respect to procedures for collecting

upfront payments, the Commission will

accept only wire transfers for the

auction of the channels available at 110°

and 148°.

Bid Withdrawal, Default and

Disqualification. Any bidder who

withdraws a high bid during an auction

before the Commission declares bidding

closed will be required to reimburse the

Commission in the amount of the

difference between its high bid and the

amount of the winning bid the next time

the construction permit is offered by the

Commission, if this subsequent winning

bid is lower than the withdrawn bid. No

withdrawal payment will be assessed if

the subsequent winning bid exceeds the

withdrawn bid. To prevent multiple

withdrawals by the same party, the

Commission will bar a bidder who

withdraws a bid from continued

participation in the auction of the

withdrawn construction permit.

In the event of a bid withdrawal, the

Commission will reoffer the

construction permit in the next round.

The offer price will be the highest price

at or above which bids were made in

previous rounds by three or more

bidders. The Commission may at its

discretion reduce this price in

subsequent rounds if it receives no bids

at this price. Prior to restarting the

auction, the Commission will also

restore the eligibility of all bidders who

have not withdrawn. After a withdrawal

the Commission will also issue each

eligible bidder one activity rule waiver

in addition to any remaining waivers to

provide additional time for bid

preparation and to avoid accidental

disqualification.

A default payment will be assessed if

a winning bidder fails to pay the full

amount of its 20 percent down payment

or the balance of its winning bid in a

timely manner, or is disqualified after

the close of an auction. The amount of

this default payment will be equal to the

difference between the defaulting

auction winner’s ‘‘winning’’ bid and the

amount of the winning bid the next time

the construction permit is offered for

auction by the Commission, if the latter

bid is lower. In addition, the defaulting

auction winner will be required to

submit a payment of three (3) percent of

the subsequent winning bid or three (3)

percent of its own ‘‘winning’’ bid,

whichever is less. If withdrawal, default

or disqualification involves gross

misconduct, misrepresentation or bad

faith by an applicant, the Commission

retains the option to declare the

applicant and its principals ineligible to

bid in future auctions, or take any other

action the Commission deems

necessary, including institution of

proceedings to revoke any existing

licenses held by the applicant.

E. Regulatory Safeguards

Transfer Disclosure Provisions. In

order to accumulate data to evaluate

whether DBS authorizations are being

issued for bids that fall short of market

value, the Commission will require any

entity that acquires a DBS license

through competitive bidding and seeks
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 65593

to transfer that license within six years

of the initial license grant, to file,

together with its application for FCC

consent to the transfer, the associated

contracts for sale, option agreements,

management agreements, or other

documents disclosing the total

consideration received in return for the

transfer of its license. Thus, the

information submitted should include

not only a monetary purchase price, but

also any future, contingent, in-kind, or

other consideration. Any competitive

concerns raised by the possible

disclosure of sensitive information can

be addressed by the provisions in

Sections 0.457 and 0.459 of the

Commission’s rules, 47 CFR §§ 0.457,

0.459, providing for the nondisclosure

of information.

Performance Requirements. In

implementing auction procedures, the

Commission is required under Section

309(j) to include performance

requirements ‘‘to ensure prompt

delivery of service to rural areas, to

prevent stockpiling or warehousing of

spectrum by licensees or permittees,

and to promote investment in and rapid

deployment of new technologies and

services.’’ 47 U.S.C. § 309(j)(4)(B). The

Commission concludes that the

performance requirements adopted as

part of the DBS service rules are

sufficient to achieve these goals, and it

is unnecessary to adopt any further

performance rules in connection with

auction procedures.

Rules Prohibiting Collusion. The

Commission adopts the anti-collusion

rules proposed in the NPRM with one

modification, as explained below.

Under these rules, bidders must 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 in any way to the competitive

bidding process. Bidders are also

required to certify on their short-form

applications that they have not entered

into any explicit or implicit agreements,

arrangements or understandings of any

kind with any parties, other than those

identified, regarding the amount of their

bid, bidding strategies or the particular

properties on which they will or will

not bid. In the NPRM, the Commission

proposed that after short-form

applications are filed, and prior to the

time the winning bidder has submitted

the balance of its bid, all applicants

should be prohibited from cooperating,

collaborating, discussing or disclosing

in any manner the substance of their

bids or bidding strategies with other

applicants for construction permits

serving the same or overlapping

geographic areas, unless such bidders

are members of a bidding consortium or

other joint bidding arrangement

identified on the bidder’s short-form

application. The Commission adopts

this prohibition, but extends it only

until the winning bidder has submitted

its 20 percent down payment, and not

until the winning bidder has submitted

the balance of its bid. Even when an

applicant has withdrawn its application

after the short-form filing deadline, the

applicant may not enter into a bidding

agreement with another applicant

bidding on the same or overlapping

geographic areas from which the first

applicant withdrew. In addition, once

the short-form application has been

filed, a party with an attributable

interest in one bidder may not acquire

a controlling interest in another bidder

bidding for construction permits in any

of the same or overlapping geographic

areas.

DBS applicants may (1) modify their

short-form applications to reflect

formation of consortia or changes in

ownership at any time before or during

an auction, provided that such changes

do not result in a change in control of

the applicant, and provided that the

parties forming consortia or entering

into ownership agreements have not

applied for construction permits for

channels that may be used to cover the

same or overlapping geographic areas;

and (2) make agreements to bid jointly

for construction permits after the filing

of short-form applications, provided

that the parties to the agreement have

not applied for construction permits

that may be used to serve the same or

overlapping geographic areas. In

addition, the holder of a non-controlling

attributable interest in an entity

submitting a short-form application may

acquire an ownership interest in, form

a consortium with, or enter into a joint

bidding arrangement with other

applicants for construction permits that

may be used to serve the same or

overlapping geographic areas after the

filing of short-form applications,

provided that (1) the attributable

interest holder certifies to the

Commission that it has not

communicated and will not

communicate with any party concerning

the bids or bidding strategies of more

than one of the applicants in which it

holds an attributable interest, or with

which it has a consortium or joint

bidding arrangement, and which have

applied for construction permits that

may be used to serve the same or

overlapping geographic areas, and (2)

the arrangements do not result in any

change in control of an applicant.

Winning bidders are required to

submit a detailed explanation of the

terms and conditions and parties

involved in any bidding consortia, joint

venture, partnership or other agreement

or arrangement they have entered into

relating to the competitive bidding

process prior to the close of bidding.

Such arrangements must have been

entered into prior to the filing of shortform applications as provided in the

Order.

In adopting these rules, the

Commission reminds potential bidders

for DBS construction permits that

allegations of collusion in a petition to

deny may be investigated by the

Commission or referred to the U.S.

Department of Justice for investigation.

Bidders who are found to have violated

the antitrust laws or the Commission’s

rules while participating in an auction

may be subject to forfeiture of their

down payment or their full bid amount,

as well as revocation of their license,

and may be prohibited from

participating in future auctions.

F. Designated Entities

Because of the extremely high

implementation costs associated with

satellite-based services, the Commission

tentatively concluded in the NPRM that

no special provisions should be made

for designated entities—i.e., small

businesses, rural telephone companies,

and businesses owned by members of

minority groups and women—for the

channels currently available at 110° and

148°. The Commission noted, however,

that the expeditious implementation of

DBS service at the two orbital locations

in question might indirectly benefit

designated entities by providing new

opportunities for them to supply

programming and equipment. Having

reviewed the comments submitted in

this proceeding, the Commission

concludes that competition in the

delivery of DBS service requires auction

rules that will allow expedient

assignment of the channels at 110° and

148°. Given the fact that these channels

offer enough capacity to provide full

DBS service in competition with current

video providers, auction rules that put

these two construction permits in the

hands of entities that can quickly

provide competition are in the public

interest. No commenters assert that

small businesses could attract the

capital necessary to provide service on

all the channels available at either 110°

or 148°.

Accordingly, the Commission will not

adopt special provisions for designated

entities in the DBS auction for the

channels at 110° and 148°, and will not

set aside spectrum in this auction for
65594 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

‘‘independents,’’ as suggested by one

commenter. Another commenter’s

statement that small and minority

businesses are developing services for

the DBS industry confirms the

Commission’s belief that a wide variety

of businesses will be involved in the

DBS industry; however, the Commission

does not have a record before it

sufficient to support adoption of this

commenter’s suggestion that the

Commission provide incentives to

encourage companies to team up with

small and minority-owned businesses.

However, designated entity provisions

for future DBS auctions may be

appropriate, particularly if spectrum is

auctioned in small blocks.

Paperwork Reduction Act

22. The Order contains new or

modified information collections subject

to the Paperwork Reduction Act of 1995

(‘‘PRA’’), Pub. L. No. 104–13, which

were proposed in the NPRM and were

submitted to the Office of Management

and Budget (‘‘OMB’’) for approval. The

Commission, as part of its continuing

effort to reduce paperwork burdens, also

invited the general public to comment

on the information collections

proposed. The Commission received no

comments on the proposed collections,

and adopts them as originally proposed.

The effective date of the new and

modified rules that have been adopted

falls after the deadline for OMB action

under the PRA.

47 CFR Part 100

OMB Approval Number: None.

Title: Direct Broadcast Satellite

Service.

Form No.: None.

Type of Review: Approval of existing

collection.

Respondents: Businesses or other for

profit.

Number of Respondents: 8.

Estimated Time Per Response: 400

hours.

Total Annual Burden: 3200 hours.

Needs and Uses: In accordance with

the Communications Act, the

information collected will be used by

the Commission in granting DBS

authorizations, and in determining the

technical and legal qualifications of a

satellite applicant, permittee or licensee.

Existing information collection

requirements are set forth in Part 100 of

the Commission’s Rules and in

Commission orders. See e.g., Inquiry

Into the Development of Regulatory

Policy in Regard to Direct Broadcast

Satellites for the Period Following the

1983 Regional Administrative Radio

Conference, 90 FCC 2d 676 (1982),

recon. denied, 53 RR 2d 1637 (1983);

CBS, Inc., 98 FCC 2d 1056 (1983);

Tempo Enterprises, Inc., 1 FCC Rcd 20,

21 (1986); and United States Satellite

Broadcasting Co., 3 FCC Rcd 6858,

6861–62 (1988). Under the existing

information collection requirements in

the Commission’s Rules, an entity

awarded a DBS authorization would be

required to submit the information

required pursuant to 47 CFR 100.13,

100.19, 100.21, 100.51. The Commission

proposed to require that DBS auction

winners submit: (1) Ownership

information to determine compliance

with Parts 1 and 100 of the

Commission’s Rules; (2) a statement

describing their efforts to comply with

the proposed spectrum aggregation

limitations; (3) an explanation of the

terms and conditions and parties

involved in any bidding consortia, joint

venture, partnership, or other agreement

or arrangement they enter into relating

to the competitive bidding process prior

to the close of bidding; and (4) any

agreements or contracts pertaining to

the transfer of the DBS authorization

acquired through auction during the six

years following grant of the

authorization.

Final Regulatory Flexibility Analysis

Pursuant to Section 603 of the

Regulatory Flexibility Act, 5 U.S.C.

§ 603, an initial Regulatory Flexibility

Analysis was incorporated in the Notice

of Proposed Rulemaking in IB Docket

No. 95–168/PP Docket No. 93–253.

Written comments on the proposals in

the Notice, including the Regulatory

Flexibility Analysis, were requested.

A. Need and Purpose of Rules

This rulemaking proceeding modifies

the licensing and service rules for the

DBS service. It also adopts rules for

competitive bidding in the DBS service

based on Section 309(j) of the

Communications Act, 47 U.S.C. § 309(j),

which authorizes the Commission to use

auctions to select among mutually

exclusive applications for

authorizations under certain

circumstances. Our objectives have been

to promote efficiency and innovation in

the licensing and use of the

electromagnetic spectrum, to develop

competitive and innovative

communications systems, and to

promote effective and adaptive

regulations.

B. Issues Raised by the Public in

Response to the Initial Analysis

No comments were received

specifically in response to the Initial

Regulatory Flexibility Analysis. We

have, however, taken into account all

issues raised by the public in response

to the proposed rules. In certain

instances, we have eliminated or

modified rules in response to those

comments.

C. Significant Alternatives Considered

We have attempted to balance all the

commenters’ concerns with our public

interest mandate under the

Communications Act in order to update

the existing ‘‘interim’’ rules in the DBS

service. We will continue to examine

these rules in an effort to eliminate

unnecessary regulations and to

minimize significant economic impact

on small businesses.

Ordering Clauses

Accordingly, IT IS ORDERED that Part

100 of the Commission’s Rules is

amended as specified below.

24. It is Further Ordered that the onetime auction spectrum limitation

discussed above Will be Implemented in

connection with the auction of the

construction permits for the use of 28

DBS channels at the 110° orbital

location and 24 channels at the 148°

orbital location.

25. It is Further Ordered that the

amendments to Part 100 adopted herein

and the one-time auction spectrum

limitation discussed above Will Become

Effective January 19, 1996. This action

is taken pursuant to Sections 1, 4(i), 4(j),

7, and 309(j) of the Communications Act

of 1934, as amended, 47 U.S.C. §§ 151,

154(i), 154(j), 157, and 309(j).

26. It is Further Ordered that,

pursuant to 47 U.S.C. § 155(c), the Chief,

Wireless Telecommunications Bureau,

is granted Delegated Authority to

implement and modify auction

procedures in the DBS service,

including the general design and timing

of an auction, the number of

authorizations to be offered in an

auction, the manner of submitting bids,

minimum opening bids and bid

increments, activity and stopping rules,

and application and payment

requirements, and to announce such

procedures by Public Notice.

27. It is Further Ordered that

condition (a) placed on the construction

permit of Tempo Satellite, Inc. in

Tempo Satellite, Inc., 7 FCC Rcd 2728,

2732 (1992), which imposed certain

marketing restrictions, is Rescinded.

28. It is Further Ordered that the

proceeding in IB Docket No. 95–168 is

hereby terminated.

List of Subjects in 47 CFR Part 100

Radio, Satellites.
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 65595

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 100 of Chapter I of Title 47 of the

Code of Federal Regulations is amended

as follows:

PART 100—DIRECT BROADCAST

SATELLITE SERVICE

1. The authority citation for Part 100

is revised to read as follows:

Authority: 47 U.S.C. 154, 303, 309, and

554, unless otherwise noted.

2. Section 100.17 is revised to read as

follows:

§ 100.17 License term.

(a) Licenses for non-broadcast

facilities governed by this part will be

issued for a period of ten (10) years.

Licenses for broadcast facilities

governed by this part will be issued for

a period of five (5) years.

3. Section 100.19 is revised to read as

follows:

§ 100.19 Due diligence requirements.

(a) All persons granted DBS

authorizations shall proceed with

diligence in constructing DBS systems.

Permittees shall be required to complete

contracting for construction of the

satellite station(s) within one year of the

grant of the construction permit. The

satellite stations shall also be required

to be in operation within six years of the

construction permit grant.

(b) In addition to the requirements

stated in paragraph (a) of this section,

all persons who receive new or

additional DBS construction permits

after January 19, 1996 shall complete

construction of the first satellite in their

respective DBS systems within four

years of the grant of the construction

permit. All satellite stations in such a

DBS system shall be in operation within

six years of the grant of the construction

permit.

(c) DBS permittees and licensees shall

be required to proceed consistent with

all applicable due diligence obligations,

unless otherwise determined by the

Commission upon proper showing in

any particular case. Transfer of control

of the construction permit shall not be

considered to justify extension of these

deadlines.

4. A new Section 100.53 is added to

Subpart D to read as follows:

§ 100.53 Geographic service requirements.

(a) Those holding DBS permits or

licenses as of January 19, 1996 must

either:

(1) Provide DBS service to Alaska and

Hawaii from one or more orbital

locations before the expiration of their

current authorizations; or

(2) Relinquish their western DBS

orbital/channel assignments at the

following orbital locations: 148° W.L.,

157°W.L., 166° W.L., and 175° W.L.

(b) Those acquiring DBS

authorizations after January 19, 1996

must provide DBS service to Alaska and

Hawaii where such service is

technically feasible from the acquired

orbital location.

A new subpart E consisting of

§§ 100.71 through 100.80 is added to

Part 100 to read as follows:

Subpart E—Competitive Bidding

Procedures for DBS

Sec.

100.71 DBS subject to competitive bidding.

100.72 Competitive bidding design for DBS

construction permits.

100.73 Competitive bidding mechanisms.

100.74 Withdrawal, default and

disqualification payments.

100.75 Bidding application (FCC Form 175

and 175–S Short-form).

100.76 Submission of upfront payments

and down payments.

100.77 Long-form applications.

100.78 Permit grant, denial, default, and

disqualification.

100.79 Prohibition of collusion.

100.80 Transfer disclosure.

§ 100.71 DBS subject to competitive

bidding.

Mutually exclusive initial

applications to provide DBS service are

subject to competitive bidding

procedures. The general competitive

bidding procedures found in Part 1,

Subpart Q of this chapter, will apply

unless otherwise provided in this part.

§ 100.72 Competitive bidding design for

DBS construction permits.

(a) The Commission will employ the

following competitive bidding designs

when choosing from among mutually

exclusive initial applications to provide

DBS service:

(1) Single round sealed bid auctions

(either sequential or simultaneous);

(2) Sequential oral auctions;

(3) Combined sealed bid-oral

auctions;

(4) Sequential multiple round

electronic auctions; or

(5) Simultaneous multiple round

auctions.

(b) The Wireless Telecommunications

Bureau may design and test alternative

procedures. The Wireless

Telecommunications Bureau will

announce by Public Notice before each

auction the competitive bidding design

to be employed in a particular auction.

(c) The Wireless Telecommunications

Bureau may use combinatorial bidding,

which would allow bidders to submit

all or nothing bids on combinations of

construction permits, in addition to bids

on individual construction permits. The

Commission may require that to be

declared the high bid, a combinatorial

bid must exceed the sum of the

individual bids by a specified amount.

Combinatorial bidding may be used

with any type of auction design.

(d) The Wireless Telecommunications

Bureau may use single combined

auctions, which combine bidding for

two or more substitutable construction

permits and award construction permits

to the highest bidders until the available

construction permits are exhausted.

This technique may be used in

conjunction with any type of auction.

§ 100.73 Competitive bidding mechanisms.

(a) Sequencing. In sequential

auctions, the Wireless

Telecommunications Bureau will

generally auction DBS construction

permits in order of their estimated

value, with the highest value

construction permit being auctioned

first. The Wireless Telecommunications

Bureau may vary the sequence in which

DBS construction permits will be

auctioned.

(b) Grouping. All DBS channels

available for a particular orbital location

will be auctioned as a block, unless the

Wireless Telecommunications Bureau

announces, by Public Notice prior to the

auction, an alternative auction scheme.

In the event the Wireless

Telecommunications Bureau uses either

a simultaneous multiple round

competitive bidding design or

combinatorial bidding, the Wireless

Telecommunications Bureau will

determine which construction permits

will be auctioned simultaneously or in

combination.

(c) Bid Increments and Tie Bids. The

Wireless Telecommunications Bureau

may, by announcement before or during

an auction, establish, raise or lower

minimum bid increments in dollar or

percentage terms. The Wireless

Telecommunications Bureau may

establish and change maximum bid

increments during an auction. The

Wireless Telecommunications Bureau

may also establish by Public Notice a

suggested opening bid or a minimum

opening bid on each construction

permit. Where a tie bid occurs, the high

bidder will be determined by the order

in which the bids were received by the

Commission.

(d) Stopping Rules. The Wireless

Telecommunications Bureau may

establish stopping rules before or during

multiple round auctions in order to

terminate an auction within a

reasonable time.
65596 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations

(e) Activity Rules. The Wireless

Telecommunications Bureau may

establish activity rules which require a

minimum amount of bidding activity. In

the event that the Wireless

Telecommunications Bureau establishes

an activity rule in connection with a

simultaneous multiple round auction or

sequential multiple round electronic

auction, each bidder will be

automatically granted a certain number

of waivers of such rule during the

auction.

§ 100.74 Withdrawal, default and

disqualification payments.

(a) When the Commission conducts a

sequential multiple round electronic

auction or simultaneous multiple round

auction pursuant to § 100.72, the

Wireless Telecommunications Bureau

will impose payments on a bidder who

withdraws a high bid during the course

of the auction, who defaults on

payments due, or who is disqualified.

(b) A bidder who withdraws a high

bid during the course of such an auction

will be assessed a payment equal to the

difference between the amount bid and

the amount of the winning bid the next

time the construction permit is offered

for auction by the Commission. No

withdrawal payment will be assessed if

the subsequent winning bid exceeds the

withdrawn bid. This payment amount

will be deducted from any upfront

payments or down payments that the

withdrawing bidder has deposited with

the Commission.

(c) If a high bidder defaults or is

disqualified after the close of such an

auction, the defaulting bidder will be

subject to the payment in paragraph (b)

of this section plus an additional

payment equal to three (3) percent of the

subsequent winning bid. If the

subsequent winning bid exceeds the

defaulting bidder’s bid amount, the 3

percent payment will be calculated

based on the defaulting bidder’s bid

amount. These amounts will be

deducted from any upfront payments or

down payments that the defaulting or

disqualified bidder has deposited with

the Commission.

(d) When the Commission conducts a

sequential multiple round electronic

auction, the Wireless

Telecommunications Bureau will bar a

bidder who withdraws a bid from

continued participation in the auction

of the withdrawn construction permit.

When the Commission conducts any

other type of auction, the Wireless

Telecommunications Bureau may bar a

bidder who withdraws a bid from

continued participation in the bidding

for the same construction permit or

other construction permits offered in the

same auction.

(e) When the Commission conducts

any type of auction other than those

provided for in paragraphs (a), (b), (c),

and (d) of this section, the Wireless

Telecommunications Bureau may

modify the payments to be paid in the

event of bid withdrawal, default or

disqualification; provided, however,

that such payments shall not exceed the

payments specified above.

§ 100.75 Bidding application (FCC Form

175 and 175–S Short-form).

All applicants to participate in

competitive bidding for DBS

construction permits must submit

applications on FCC Form 175 pursuant

to the provisions of § 1.2105 of this

chapter. The Wireless

Telecommunications Bureau will issue

a Public Notice announcing the

availability of DBS construction permits

and the date of the auction for those

construction permits. This Public Notice

also will specify the date on or before

which applicants intending to

participate in a DBS auction must file

their applications in order to be eligible

for that auction, and it will contain

information necessary for completion of

the application as well as other

important information such as any

upfront payment that must be

submitted, and the location where the

application must be filed.

§ 100.76 Submission of upfront payments

and down payments.

(a) Bidders in DBS auctions will be

required to submit an upfront payment

in accordance with § 1.2106 of this

chapter, the amount of which will be

announced by Public Notice prior to

each auction.

(b) Winning bidders in a DBS auction

must submit a down payment to the

Commission in an amount sufficient to

bring their total deposits up to 20

percent of their winning bids within ten

(10) business days of the announcement

of winning bidders.

§ 100.77 Long-form applications.

Each winning bidder will be required

to submit the information described in

§§ 100.13, 100.21, and 100.51 within

thirty (30) days after being notified by

Public Notice that it is the winning

bidder. Each winner also will be

required to file, by the same deadline,

a signed statement describing its efforts

to date and future plans to come into

compliance with any applicable

spectrum limitations, if it is not already

in compliance. Such information shall

be submitted pursuant to the procedures

set forth in § 100.13 and any associated

Public Notices. Only auction winners

will be eligible to file applications for

DBS construction permits in the event

of mutual exclusivity between

applicants filing a short-form

application.

§ 100.78 Permit grant, denial, default, and

disqualification.

(a) Each winning bidder will be

required to pay the balance of its

winning bid in a lump sum payment

within five (5) business days following

Public Notice that the construction

permit is ready for grant.

(b) A bidder who withdraws its bid

during the course of an auction, defaults

on a payment due, or is disqualified,

will be subject to the payments

specified in § 100.74.

§ 100.79 Prohibition of collusion.

(a) 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 in any way to the competitive

bidding process. Bidders are also

required to certify on their short-form

applications that they have not entered

into any explicit or implicit agreements,

arrangements or understandings of any

kind with any parties, other than those

identified, regarding the amount of their

bid, bidding strategies or the particular

properties on which they will or will

not bid.

(b)(1) Except as provided in

paragraphs (b)(2), (b)(3) and (b)(4) of this

section, after the filing of short-form

applications, all applicants are

prohibited from cooperating,

collaborating, discussing or disclosing

in any manner the substance of their

bids or bidding strategies, or discussing

or negotiating settlement agreements,

with other applicants until after the

high bidder submits its downpayment,

unless such applicants are members of

a bidding consortium or other joint

bidding arrangement identified on the

bidder’s short-form application.

(2) Applicants may modify their

short-form applications to reflect

formation of consortia or changes in

ownership at any time before or during

an auction, provided that such changes

do not result in a change in control of

the applicant, and provided that the

parties forming consortia or entering

into ownership agreements have not

applied for construction permits that

may be used to serve the same or

overlapping geographic areas. Such

changes will not be considered major

modifications of the application.
Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Rules and Regulations 65597

(3) After the filing of short-form

applications, applicants may make

agreements to bid jointly for

construction permits, provided that the

parties to the agreement have not

applied for construction permits that

may be used to serve the same or

overlapping geographic areas.

(4) After the filing of short-form

applications, a holder of a noncontrolling attributable interest in an

entity submitting a short-form

application may acquire an ownership

interest in, form a consortium with, or

enter into a joint bidding arrangement

with, other applicants for construction

permits that may be used to serve the

same or overlapping geographic areas,

provided that:

(i) The attributable interest holder

certifies to the Commission that it has

not communicated and will not

communicate with any party concerning

the bids or bidding strategies of more

than one of the applicants in which it

holds an attributable interest, or with

which it has a consortium or joint

bidding arrangement, and which have

applied for construction permits that

may be used to serve the same or

overlapping geographic areas; and

(ii) The arrangements do not result in

any change in control of an applicant.

(5) Applicants must modify their

short-form applications to reflect any

changes in ownership or in the

membership of consortia or joint

bidding arrangements.

(c) Winning bidders are required to

submit a detailed explanation of the

terms and conditions and parties

involved in any bidding consortia, joint

venture, partnership or other agreement

or arrangement they have entered into

relating to the competitive bidding

process prior to the close of bidding.

Such arrangements must have been

entered into prior to the filing of shortform applications pursuant to

paragraphs (a) and (b) of this section.

§ 100.80 Transfer disclosure.

Any entity that acquires a DBS license

through competitive bidding, and seeks

to transfer that license within six years

of the initial license grant, must file,

together with its application for FCC

consent to the transfer, the associated

contracts for sale, option agreements,

management agreements, or other

documents disclosing the total

consideration received in return for the

transfer of its license. The information

submitted must include not only a

monetary purchase price, but also any

future, contingent, in-kind, or other

consideration.

[FR Doc. 95–30938 Filed 12–19–95; 8:45 am]

BILLING CODE 6712–01–P

DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 660

RIN 2132–AA54

Buy America Requirements; Removal

AGENCY: Federal Transit Administration,

DOT.

ACTION: Final rule.

SUMMARY: This rule removes the Buy

America requirements which are now

obsolete and have been superseded by

49 CFR part 661.

EFFECTIVE DATE: December 20, 1995.

FOR FURTHER INFORMATION CONTACT: Rita

Daguillard, Deputy Assistant Chief

Counsel, Office of Chief Counsel, room

9316, 400 Seventh Street, S.W.,

Washington, D.C. 20590, (202) 366–

1936.

SUPPLEMENTARY INFORMATION: Section

401 of the Surface Transportation

Assistance Act of 1978 (the 1978 STAA)

(Public Law No. 95–599) included a Buy

America provision applicable for the

first time to the Federal Transit

Administration ( FTA) program. This

provision established a preference for

products produced, mined or

manufactured in the United States. The

implementing regulation, 49 CFR part

660, applied these requirements to

contracts exceeding $500,000 financed

by funds obligated under the 1978

STAA.

Both the statutory and funding

authority of the 1978 STAA have now

lapsed. FTA’s current Buy America

requirements are set out at 49 U.S.C.

5323(j) and the implementing

regulation, 49 CFR part 661. Because 49

CFR part 660 is now obsolete, FTA finds

that it is unnecessary to seek public

comment on its removal from the Code

of Federal Regulations. Part 660 is being

removed as part of the President’s

‘‘Reinventing Government’’ initiative.

Accordingly, and effective December

20, 1995, FTA is removing 49 CFR Part

660.

Regulatory Analyses and Notices

This is not a significant rule under

Executive Order 12866 or under the

Department’s Regulatory Policies and

Procedures. It does not impose costs on

regulated parties. It merely removes an

obsolete regulation. There are not

sufficient Federalism implications to

warrant the preparation of a Federalism

Assessment. The Department certifies

that this rule will not have a significant

economic impact on a substantial

number of small entities.

List of Subjects in 49 CFR Part 660

Grant programs—transportation, Mass

transportation.

PART 660—[REMOVED]

Accordingly, for the reasons set forth

above, part 660 is hereby removed.

Gordon J. Linton,

Administrator.

[FR Doc. 95–30736 Filed 12–20–95; 8:45 am]

BILLING CODE 4910–57–U

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

50 CFR Part 285

[I.D. 121495A]

Atlantic Tuna Fisheries; Bluefin Tuna

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Closure of the General category

fishery.

SUMMARY: NMFS has determined that

the 10 metric tons (mt) of Atlantic

bluefin tuna (ABT) set aside for the lateseason General category fishery in the

New York Bight beginning October 1,

1995, will have been taken by December

15, 1995. Therefore, the General

category fishery will be closed effective

at 2330 hours (11:30 pm) on Friday,

December 15, 1995. This action is being

taken to prevent overharvest of the

quota established for this fishery.

EFFECTIVE DATE: 2330 hours on

December 15, 1995, through

December 31, 1995.

FOR FURTHER INFORMATION CONTACT: John

Kelly, 301–713–2347, or Kevin Foster,

508–281–9260.

SUPPLEMENTARY INFORMATION:

Regulations implemented under the

authority of the Atlantic Tunas

Convention Act (16 U.S.C. 971 et seq.)

governing the harvest of ABT by persons

and vessels subject to U.S. jurisdiction

are found at 50 CFR part 285. Section

285.22 subdivides the International

Commission for the Conservation of

Atlantic Tunas recommended U.S.

quota among the various domestic

fishing categories.

Implementing regulations for the

Atlantic Tuna Fisheries at 50

CFR 285.22(a) provide for an adjusted

annual quota of 550 mt of large medium

and giant ABT to be harvested from the

Regulatory Area by vessels permitted in

the General category. Based on landings