[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Notices]
[Pages 25737-25744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12523]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 09-21; DA 09-810]


Auction of FM Broadcast Construction Permits Scheduled for 
September 1, 2009; Notice and Filing Requirements, Minimum Opening 
Bids, Upfront Payments, and Other Procedures for Auction 79

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the procedures and minimum opening 
bids for the upcoming auction of FM broadcast construction permits 
(Auction 79). This document is intended to familiarize prospective 
bidders with the procedures and minimum opening bids for the auction.

DATES: Applications to participate in Auction 79 must be filed prior to 
6 p.m. Eastern Time (ET) on June 25, 2009. Bidding for permits in 
Auction 79 is scheduled to begin on September 1, 2009.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: For legal questions: Howard 
Davenport or Lynne Milne at (202) 418-0660. For general auction 
questions: Debbie Smith

[[Page 25738]]

or Linda Sanderson at (717) 338-2868. Media Bureau, Audio Division: For 
licensing information and service rule questions: Lisa Scanlan or Tom 
Nessinger at (202) 418-2700. To request materials in accessible formats 
(braille, large print, electronic files or audio format) for people 
with disabilities, send an e-mail to <a href="/cdn-cgi/l/email-protection#0e686d6d3b3e3a4e686d6d20696178"><span class="__cf_email__" data-cfemail="0f696c6c3a3f3b4f696c6c21686079">[email protected]</span></a> or call the 
Consumer and Governmental Affairs Bureau at (202) 418-0530 or (202) 
418-0432 (TTY).

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 79 
Procedures Public Notice, which was released on April 17, 2009. The 
complete text of the Auction 79 Procedures Public Notice, including 
attachments, as well as related Commission documents, are available for 
public inspection and copying from 8 a.m. to 4:30 p.m. ET Monday 
through Thursday and from 8 a.m. to 11:30 a.m. ET on Fridays in the FCC 
Reference Information Center, 445 12th Street, SW., Room CY-A257, 
Washington, DC 20554. The Auction 79 Procedures Public Notice and 
related Commission documents may also be purchased from the 
Commission's duplicating contractor, Best Copy and Printing, Inc. 
(BCPI), Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554, telephone 202-488-5300, facsimile 202-488-5563, or Web site: 
http://www.BCPIWEB.com, using document number DA 09-810 for the Auction 
79 Procedures Public Notice. The Auction 79 Procedures Public Notice 
and related documents are also available on the Internet at the 
Commission's Web site: http://wireless.fcc.gov/auctions/79/.

I. General Information

A. Introduction

    1. By this Public Notice, the Wireless Telecommunications Bureau 
and the Media Bureau (collectively, the Bureaus) announced the 
procedures and minimum opening bid amounts for the upcoming auction of 
certain FM broadcast construction permits. This auction, which is 
designated as Auction 79, is scheduled to commence on September 1, 
2009. On February 27, 2009, the Bureaus released a public notice 
seeking comment on competitive bidding procedures to be used in Auction 
79. Interested parties submitted three comments and four reply comments 
in response to the Auction 79 Comment Public Notice, 74 FR 10578, March 
11, 2009.
i. Construction Permits To Be Offered in Auction 79
    2. Auction 79 will offer 122 construction permits in the FM 
broadcast service as listed in Attachment A of the Auction 79 
Procedures Public Notice. The construction permits to be auctioned are 
for 122 new FM allotments, and include construction permits for three 
FM allotments that were defaulted on after a previous auction, and a 
construction permit for one FM allotment that was offered but not sold 
in Auctions 37 and 62. These construction permits are for vacant FM 
allotments, reflecting FM channels assigned to the FM Table of 
Allotments (Table), pursuant to the Commission's established rulemaking 
procedures, and are designated for use in the indicated communities.
    3. The Bureaus denied one commenter's request that the Bureaus add 
to the Auction 79 inventory construction permits for two specified 
vacant allotments, added to the Table October 10, 2008, as well as a 
second commenter's request to add all new FM allotments approved in a 
specified rulemaking proceeding. Further, the Bureaus explained that a 
request for a low power television station allotment or construction 
permit was beyond the scope of this proceeding, which is confined to 
developing competitive bidding procedures for an FM auction.
    4. Applicants may apply for any vacant FM allotment listed in 
Attachment A of the Auction 79 Procedures Public Notice. When two or 
more short-form applications (FCC Form 175) specifying the same FM 
allotment are accepted for filing, mutual exclusivity (MX) exists for 
auction purposes, and thus, that construction permit for the FM 
allotment will be awarded by competitive bidding procedures. Once 
mutual exclusivity exists for auction purposes, even if only one 
applicant for a particular construction permit submits an upfront 
payment, that applicant is required to submit a bid in order to obtain 
the construction permit. Any applicant that submits a short-form 
application that is accepted for filing, but fails to submit a timely 
upfront payment, will retain its status as an applicant in Auction 79 
and will remain subject to the Commission's anti-collusion rules, but, 
having purchased no bidding eligibility, will not be eligible to bid.

B. Rules and Disclaimers

i. Relevant Authority
    5. Prospective applicants must familiarize themselves thoroughly 
with the Commission's general competitive bidding rules, including 
recent amendments and clarifications, as well as Commission decisions 
in proceedings regarding competitive bidding procedures, application 
requirements, and obligations of Commission licensees. Broadcasters 
should also familiarize themselves with the Commission's rules relating 
to the FM broadcast service contained in 47 CFR 73.201-73.333 and 
73.1001-73.5009. Prospective bidders must also be familiar with the 
rules relating to broadcast auctions and competitive bidding 
proceedings contained in 47 CFR 1.2001-1.2112 and 73.5000-73.5009. 
Prospective bidders must also be thoroughly familiar with the 
procedures, terms and conditions contained in the Auction 79 Procedures 
Public Notice and the Commission's decisions in proceedings regarding 
competitive bidding procedures, application requirements, and 
obligations of Commission licensees. The Commission may amend or 
supplement the information contained in its public notices at any time. 
It is the responsibility of all applicants to remain current with all 
Commission rules and with all public notices pertaining to this 
auction.
ii. Prohibition of Collusion and Compliance With Antitrust Laws
    6. Applicants for Auction 79 are reminded that they remain subject 
to the provisions of the Commission's anti-collusion rules, 47 CFR 
1.2105(c) and 73.5002(d), against any communication, directly or 
indirectly, about bids, bidding strategy, or the post-auction market 
structure, until the down payment deadline after the auction, which 
will be announced in a future public notice. This prohibition applies 
to all applicants regardless of whether such applicants become 
qualified bidders or actually bid. Applicants are also reminded that, 
for purposes of this prohibition on certain communications, 47 CFR 
1.2105(c)(7)(i) defines applicant as including all officers and 
directors of the entity submitting a short-form application to 
participate in the auction, all controlling interests of that entity, 
as well as all holders of partnership and other ownership interests and 
any stock interest amounting to 10 percent or more of the entity, or 
outstanding stock, or outstanding voting stock of the entity submitting 
a short-form application. The Auctions 79 Procedures Public Notice 
contains additional guidance concerning the application of the anti-
collusion rules. Potential applicants are strongly encouraged to review 
that guidance and seek additional information should they have any 
questions.
    7. If an applicant makes or receives a communication that appears 
to violate the anti-collusion rule, it must report

[[Page 25739]]

such communication in writing to the Commission immediately, and in no 
case later than five business days after the communication occurs. The 
applicant's obligation to report any such communication continues 
beyond the five-day period, even if the report is not made within the 
five-day period. Parties reporting communications pursuant to 47 CFR 
1.2105(a)(2) or 1.2105(c)(6) must take care to ensure that any reports 
of prohibited communications do not themselves give rise to a violation 
of the anti-collusion rule. Parties also are encouraged to coordinate 
with the Auctions and Spectrum Access Division staff if they have any 
questions about the procedures for submitting such reports.
    8. Applicants that are winning bidders will be required to disclose 
in their long-form applications the specific terms, conditions, and 
parties involved in any bidding consortia, joint venture, partnership, 
or agreement or other arrangement entered into relating to the 
competitive bidding process.
    9. Applicants must be aware that failure to comply with the 
Commission's rules can result in enforcement action. A summary listing 
of documents issued by the Commission and the Bureaus addressing the 
application of the anti-collusion rule may be found in Attachment D of 
the Auction 79 Procedures Public Notice. Most of these documents are 
available on the Commission's auction anti-collusion Web page.
    10. Applicants are also reminded that, regardless of compliance 
with the Commission's rules, they remain subject to the antitrust laws. 
Compliance with the disclosure requirements of the Commission's anti-
collusion rule will not insulate a party from enforcement of the 
antitrust laws.
iii. Due Diligence
    11. Potential applicants are reminded that they are solely 
responsible for investigating and evaluating all technical and 
marketplace factors that may have a bearing on the value of the 
broadcast facilities in this auction. Applicants should perform their 
individual due diligence before proceeding as they would with any new 
business venture. The Commission makes no representations or warranties 
about the use of this spectrum for particular purposes.
    12. Applicants are strongly encouraged to conduct their own 
research prior to the beginning of bidding in Auction 79 in order to 
determine the existence of any pending administrative or judicial 
proceedings that might affect their decision to participate in the 
auction. Participants in Auction 79 are strongly encouraged to continue 
such research throughout the auction.
    13. Applicants should also be aware that certain pending and future 
proceedings, including applications, applications for modification, 
petitions for rulemaking, requests for special temporary authority, 
waiver requests, petitions to deny, petitions for reconsideration, 
informal objections, and applications for review, before the Commission 
may relate to particular applicants or incumbent permittees, or 
incumbent licensees, or the construction permits available in Auction 
79. In addition, pending and future judicial proceedings may relate to 
particular applicants or incumbent permittees, or incumbent licensees, 
or the construction permits available in Auction 79. Prospective 
applicants are responsible for assessing the likelihood of the various 
possible outcomes, and considering their potential impact on 
construction permits available in this auction. Additionally, potential 
bidders should perform technical analyses sufficient to assure 
themselves that, should they prevail in competitive bidding for a 
specific FM construction permit, they will be able to build and operate 
facilities that will fully comply with the Commission's technical and 
legal requirements. Applicants are solely responsible for identifying 
associated risks and for investigating and evaluating the degree, to 
which such matters may affect their ability to bid on, otherwise 
acquire, or make use of the construction permits available in Auction 
79. Potential applicants are strongly encouraged to physically inspect 
any prospective sites located in, or near, the service area for which 
they plan to bid, and also to familiarize themselves with the 
environmental review obligations of Commission permittees and 
licensees.
iv. Use of Integrated Spectrum Auction System
    14. The Commission will make available a browser-based bidding 
system to allow bidders to participate in Auction 79 over the Internet 
using the Commission's Integrated Spectrum Auction System (ISAS or FCC 
Auction System). The Commission makes no warranty whatsoever with 
respect to the FCC Auction System. In no event shall the Commission, or 
any of its officers, employees or agents, be liable for any damages 
whatsoever (including, but not limited to, loss of business profits, 
business interruption, loss of business information, or any other loss) 
arising out of or relating to the existence, furnishing, functioning or 
use of the FCC Auction System that is accessible to qualified bidders 
in connection with this auction. Moreover, no obligation or liability 
will arise out of the Commission's technical, programming or other 
advice or service provided in connection with the FCC Auction System.
v. Environmental Review Requirements
    15. Permittees or licensees must comply with the Commission's rules 
regarding implementation of the National Environmental Policy Act and 
other Federal environmental statutes.

C. Auction Specifics

i. Auction Start Date
    16. Bidding in Auction 79 will begin on Tuesday, September 1, 2009. 
Although two commenters suggested that bidding be postponed, the 
Bureaus decided that bidding would begin on the date initially 
proposed. The initial schedule for bidding will be announced by public 
notice at least one week before the start of the auction. Moreover, 
unless otherwise announced, bidding on all construction permits will be 
conducted on each business day until bidding has stopped on all 
construction permits.
ii. Bidding Methodology
    17. The bidding methodology for Auction 79 will be simultaneous 
multiple round bidding. The Commission will conduct this auction over 
the Internet using the FCC Auction System, and telephonic bidding will 
be available as well. Qualified bidders are permitted to bid 
electronically via the Internet or by telephone. All telephone calls 
are recorded.
iii. Pre-Auction Dates and Deadlines
    18. The following dates and deadlines apply:

 
 
 
Auction Seminar................................  June 16, 2009.
Short-Form Application (FCC Form 175), Filing    June 16, 2009; 12 noon ET.
 Window Opens.
Short-Form Application (FCC Form 175), Filing    June 25, 2009; prior to 6 p.m. ET.
 Window Deadline.
Upfront Payments (via wire transfer)...........  July 31, 2009; 6 p.m. ET.
Mock Auction...................................  August 28, 2009.

[[Page 25740]]

 
Auction Begins.................................  September 1, 2009.
 

iv. Requirements for Participation
    19. Those wishing to participate in this auction must: (1) Submit a 
short-form application (FCC Form 175) electronically prior to 6 p.m. 
ET, June 25, 2009, following the electronic filing procedures set forth 
in Attachment B of the Auction 79 Procedures Public Notice; (2) submit 
a sufficient upfront payment and an FCC Remittance Advice Form (FCC 
Form 159) by 6 p.m. ET, July 31, 2009, following the procedures and 
instructions set forth in Attachment C of the Auction 79 Procedures 
Public Notice; and (3) comply with all provisions outlined in the 
Auction 79 Procedures Public Notice and applicable Commission rules.

II. Short-Form Application (FCC Form 175) Requirements

A. Short-Form Applications

    20. Entities and individuals seeking construction permits available 
in Auction 79 must file a short-form application electronically via the 
FCC Auction System prior to 6 p.m. ET on June 25, 2009, following the 
procedures prescribed in Attachment B of the Auction 79 Procedures 
Public Notice. Mailings for Auction 79 will be sent by the Bureaus only 
to the contact's address listed in the applicant's short-form 
application.
    21. Any application for a noncommercial educational station that is 
mutually exclusive with any application for a commercial station will 
be returned as unacceptable for filing. Applications specifying the 
same FM station construction permit are considered mutually exclusive. 
A short-form application that does not identify its proposed station(s) 
as a noncommercial educational station(s) will be considered to be an 
application for a commercial broadcast station(s).
    22. Applicants bear full responsibility for submitting accurate, 
complete and timely short-form applications. Each applicant should read 
carefully the instructions provided in the Auction 79 Procedures Public 
Notice, including its Attachment B, and should consult the Commission's 
rules to ensure that all of the information that is required by the 
Commission's rules and relevant public notices is included with its 
short-form application. If an applicant claims eligibility for a 
bidding credit, the information provided in its FCC Form 175 will be 
used in determining whether the applicant is eligible for the claimed 
bidding credit. Applicants filing a short-form application are subject 
to the Commission's anti-collusion rules beginning at the deadline for 
filing.
    23. Applicants also should note that submission of a short-form 
application, and any amendments, constitutes a representation by the 
certifying official that the certifier is an authorized representative 
of the applicant, that the certifier has read the form's instructions 
and certifications, and that the contents of the application, its 
certifications, and any attachments are true and correct.

B. Permit Selection

    24. An applicant must select on its short-form application the 
construction permits on which it wants to bid from the Eligible Permits 
list. Applicants will not be able to change their construction permit 
selections after the short-form application filing deadline.

C. New Entrant Bidding Credit

    25. Applicants may be able to qualify for either a 35 or 25 percent 
new entrant bidding credit, the amount by which a bidder's winning bid 
is discounted, depending on the number of other media of mass 
communications that are attributable to the applicant and its 
attributable interest holders. Media of mass communications are defined 
in 47 CFR 73.5008, and include both commercial and noncommercial 
educational full-power broadcast stations.
    26. Attributable interests are defined in 47 CFR 73.3555 and its 
Note 2. The media interests held by very substantial investors in, or 
creditors of, an applicant claiming new entrant status are attributed. 
Specifically, the attributable mass media interests held by an 
individual or entity with an equity and/or debt interest in an 
applicant shall be attributed to that bidder for purposes of 
determining its eligibility for the new entrant bidding credit, if the 
equity and debt interests, in the aggregate, exceed 33 percent of the 
total asset value of the applicant, even if such an interest is non-
voting. In 2008, the Commission relaxed the equity/debt plus 
attribution standard, to allow for higher investment opportunities in 
entities meeting the definition of eligible entities. An eligible 
entity is defined in Note 2(i) of 47 CFR 73.3555. The Commission will 
allow the holder of an equity or debt interest in the applicant to 
exceed the 33 percent threshold without triggering attribution provided 
the combined equity and debt in the eligible entity is less than 50 
percent, or the total debt in the eligible entity does not exceed 80 
percent of the asset value, and the interest holder does not hold any 
equity interest, option, or promise to acquire an equity interest in 
the eligible entity or any related entity.
    27. The applicant's attributable interests, and therefore, its 
maximum new entrant bidding credit eligibility, will be determined as 
of the short-form application filing deadline. Applicants intending to 
divest a media interest or make any other ownership changes, such as 
resignation of positional interests, in order to avoid attribution for 
purposes of qualifying for the new entrant bidding credit must have 
consummated such divestment transactions or have completed such 
ownership changes by no later than the short-form application filing 
deadline. Thus, an applicant could not qualify for a bidding credit, 
nor upgrade a previously claimed bidding credit, based upon ownership 
or positional changes occurring after the short-form filing deadline. 
Prospective bidders are reminded, however, that events occurring after 
the short-form application filing deadline, such as the acquisition of 
attributable interests in media of mass communications, may cause 
diminishment or loss of the bidding credit, and must be reported 
immediately.
    28. The unjust enrichment provisions of 47 CFR 73.5007(c) apply to 
a winning bidder who utilizes a bidding credit, and subsequently seeks 
to assign or transfer its construction permit or license to an entity 
not qualifying for the same level of bidding credit.
    29. The Bureaus were unable to adopt the suggestions of three 
commenters to revise the criteria for and the amount of the new entrant 
bidding credit. Commenters sought to re-define new entrant, to limit 
the number of facilities to which the new entrant bidding credit may be 
applied, and to impose a holding period for facilities obtained using 
the new entrant bidding credit. These changes would require amendment 
of the Commission's competitive bidding and broadcast service rules, 
which can only be accomplished through a rulemaking proceeding.
    30. For the same reasons, the Bureaus were not able to consider one 
commenter's proposal to adopt a new discount on the filing fees when an 
application is submitted for a new allocation by anyone who has not 
owned a Commission licensed station within five years prior to the date 
of filing or previously filed for a new allocation. This particular 
proposal is

[[Page 25741]]

beyond the scope of the Bureaus developing competitive bidding 
procedures for Auction 79.

D. Disclosure of Bidding Arrangements

    31. An applicant must identify in its short-form application each 
party with whom it has entered into any agreement, arrangement, or 
understanding of any kind relating to the construction permits being 
auctioned, including any agreement relating to a post-auction market 
structure. Applicants also will be required to certify under penalty of 
perjury in their short-form applications that they have not entered and 
will not enter into any explicit or implicit agreements, arrangements 
or understandings of any kind with any parties, other than those 
identified in the application, regarding the amount of their bids, 
bidding strategies, or the particular construction permits on which 
they will or will not bid. If an applicant has had discussions, but has 
not reached an agreement by the short-form application filing deadline, 
it should not include the names of parties to the discussions on its 
application and may not continue such discussions with any applicants 
after the deadline. The Auction 79 Procedures Public Notice contains 
further guidance on these disclosure requirements.

E. Provisions Regarding Former and Current Defaulters

    32. Current defaulters are not eligible to participate in Auction 
79, but former defaulters can participate so long as they are otherwise 
qualified and make upfront payments that are fifty percent more than 
the normal upfront payment amounts. For purposes of this rule, a 
defaulter (current or former) includes the applicant itself, its 
affiliates, its controlling interests, and affiliates of its 
controlling interests, as defined by 47 CFR 1.2110. A default includes 
any default on any payment for any Commission construction permit or 
license, as well as any delinquency on any non-tax debt owed to any 
Federal agency, as of the filing deadline for short-form applications. 
An applicant, its affiliate, its controlling interest, or an affiliate 
of its controlling interest is considered a ``former defaulter'' only 
if it has remedied all such defaults and cured all of the outstanding 
non-tax delinquencies before the filing deadline for short-form 
applications.

F. Minor Modifications to Short-Form Applications

    33. After the deadline for filing short-form applications (FCC Form 
175) at 6 p.m. ET on June 25, 2009, applicants are permitted to make 
only minor changes to their applications. Applicants are not permitted 
to make major modifications to their short-form applications. Such 
impermissible changes include, but are not limited to, a change of 
certifying official, a change of a construction permit selection, a 
change of control of the applicant, a claim of eligibility for a higher 
percentage of bidding credit, or a change of identification of the 
application's proposed facilities from noncommercial educational to 
commercial.

G. Maintaining Current Information in Short-Form Applications

    34. 47 CFR 1.65 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. Changes that cause a 
loss of or reduction in a bidding credit percentage must be reported 
immediately.

III. Pre-Auction Procedures

A. Auction Seminar--June 16, 2009

    35. On Tuesday, June 16, 2009, the Commission will conduct a 
seminar for parties interested in participating in Auction 79 at FCC 
headquarters, located at 445 12th Street, SW., Washington, DC. The 
seminar will provide attendees with information about pre-auction 
procedures, completing FCC Form 175, auction conduct, the FCC Auction 
System, auction rules, and FM broadcast service rules. The seminar will 
also provide an opportunity for prospective bidders to ask questions of 
FCC staff concerning the auction, auction procedures, filing 
requirements, and other matters related to this auction. For 
individuals who are unable to attend, a webcast of this seminar will be 
available from the Commission's Auction 79 Web page at http://wireless.fcc.gov/auctions/79/.

B. Short-Form Applications--Due Prior to 6 p.m. ET on June 25, 2009

    36. In order to be eligible to bid in this auction, applicants must 
first follow the procedures set forth in Attachment B of the Auction 79 
Procedures Public Notice to submit a short-form application (FCC Form 
175) electronically via the FCC Auction System. This application must 
be received at the Commission prior to 6 p.m. ET on June 25, 2009. Late 
applications will not be accepted.

C. Application Processing and Minor Corrections

    37. After the deadline for filing FCC Form 175 applications, the 
Commission subsequently will issue a public notice identifying: (1) 
Those applications that are complete; (2) those applications that are 
rejected; and (3) those applications that are incomplete because of 
minor defects that may be corrected and the deadline for resubmitting 
corrected applications.

D. Upfront Payments--Due July 31, 2009

    38. In order to be eligible to bid in this auction, applicants must 
submit an upfront payment accompanied by an FCC Remittance Advice Form 
(FCC Form 159). After completing its short-form application, an 
applicant will have access to an electronic version of the FCC Form 159 
that can be printed and sent by fax to U.S. Bank in St. Louis, 
Missouri. All upfront payments must be made as instructed in this 
Public Notice and must be received in the proper account at U.S. Bank 
before 6 p.m. ET on July 31, 2009.
i. Making Upfront Payments by Wire Transfer
    39. Wire transfer payments must be received before 6 p.m. ET on 
July 31, 2009, consistent with instruction set forth in the Auction 79 
Procedures Public Notice. The applicant is responsible for obtaining 
confirmation from its financial institution that U.S. Bank has timely 
received its upfront payment and deposited it into the proper FCC 
account. The Commission will not accept checks, credit cards, or 
automated clearing house (ACH) payments.
ii. FCC Form 159
    40. A completed FCC Remittance Advice Form (FCC Form 159, Revised 
2/03) must be faxed to U.S. Bank to accompany each upfront payment. 
Proper completion of FCC Form 159 is critical to ensuring correct 
crediting of upfront payments. Detailed instructions for completion of 
FCC Form 159 are included in Attachment C to the Auction 79 Procedures 
Public Notice. An electronic pre-filled version of the FCC Form 159 is 
available after submitting the FCC Form 175. Payors using the pre-
filled FCC Form 159 are responsible for ensuring that all of the 
information on the form, including payment amounts, is accurate. The 
FCC Form 159 can be completed electronically, but must be filed with 
U.S. Bank by fax.

[[Page 25742]]

iii. Upfront Payments and Bidding Eligibility
    41. Applicants must make upfront payments to obtain bidding 
eligibility. The amount of the upfront payment determines a bidder's 
initial bidding eligibility, the maximum number of bidding units on 
which a bidder may place bids. The Bureaus declined to adopt for 
Auction 79 a commenter's suggestion to impose additional upfront 
payment requirements on applicants selecting more than ten percent of 
the FM construction permits in Auction 79.
    42. In order to bid on a particular construction permit, a 
qualified bidder must have selected the construction permit on its FCC 
Form 175 and must have a current eligibility level that meets or 
exceeds the number of bidding units assigned to that construction 
permit. At a minimum, therefore, an applicant's total upfront payment 
must be enough to establish eligibility to bid on at least one of the 
construction permits selected on its FCC Form 175, or else the 
applicant will not be eligible to participate in the auction. An 
applicant does not have to make an upfront payment to cover all 
construction permits the applicant selected on its FCC Form 175, but 
only enough to cover the maximum number of bidding units that are 
associated with construction permits on which the bidder wishes to 
place bids and hold provisionally winning bids at any given time. 
Provisionally winning bids are bids that would become final winning 
bids if the auction were to close after the given round.
    43. In calculating its upfront payment amount, an applicant should 
determine the maximum number of bidding units on which it may wish to 
be active (bid on or hold provisionally winning bids on) in any single 
round, and submit an upfront payment amount covering that number of 
bidding units. In order to make this calculation, an applicant should 
add together the upfront payments for all construction permits on which 
it seeks to be active in any given round. Applicants should check their 
calculations carefully, as there is no provision for increasing a 
bidder's eligibility after the upfront payment deadline.
    44. Applicants that are former defaulters must pay upfront payments 
50 percent greater than non-former defaulters. For purposes of this 
calculation, the applicant includes the applicant itself, its 
affiliates, its controlling interests, and affiliates of its 
controlling interests, as defined by 47 CFR 1.2110. If an applicant is 
a former defaulter, it must calculate its upfront payment for all of 
its selected construction permits by multiplying the number of bidding 
units on which it wishes to be active by 1.5. In order to calculate the 
number of bidding units to assign to former defaulters, the Commission 
will divide the upfront payment received by 1.5 and round the result up 
to the nearest bidding unit. If a former defaulter fails to submit a 
sufficient upfront payment to establish eligibility to bid on at least 
one of the construction permits selected on its short-form application, 
the applicant will not be eligible to participate in the auction.

E. Remote Electronic Bidding

    45. The Commission will conduct this auction over the Internet, and 
telephonic bidding will be available as well. Only qualified bidders 
are permitted to bid. Each applicant should indicate its bidding 
preference--electronic or telephonic--on its FCC Form 175.

F. Mock Auction--August 28, 2009

    46. All qualified bidders will be eligible to participate in a mock 
auction on Friday, August 28, 2009. The mock auction will enable 
applicants to become familiar with the FCC Auction System prior to the 
auction. Participation by all bidders is strongly recommended. Details 
will be announced by public notice.

IV. Auction Event

    47. The first round of bidding for Auction 79 will begin on 
Tuesday, September 1, 2009. The initial bidding schedule will be 
announced in a public notice listing the qualified bidders, which is to 
be released approximately 10 days before the start of the auction.

A. Auction Structure

i. Simultaneous Multiple Round Auction
    48. The Bureaus will auction all construction permits in Auction 79 
in a single auction using the Commission's standard simultaneous 
multiple-round auction format. This type of auction offers every 
construction permit for bid at the same time and consists of successive 
bidding rounds in which eligible bidders may place bids on individual 
construction permits. A bidder may bid on, and potentially win, any 
number of construction permits. Typically, bidding remains open on all 
construction permits until bidding stops on every construction permit.
ii. Eligibility and Activity Rules
    49. The Bureaus will use upfront payments to determine initial 
(maximum) eligibility (as measured in bidding units) for Auction 79. 
The amount of the upfront payment submitted by a bidder determines 
initial bidding eligibility, the maximum number of bidding units on 
which a bidder may be active. Each construction permit is assigned a 
specific number of bidding units as listed in Attachment A of the 
Auction 79 Procedures Public Notice. Bidding units for a given 
construction permit do not change as prices rise during the auction. A 
bidder's upfront payment is not attributed to specific construction 
permits. Rather, a bidder may place bids on any of the construction 
permits selected on its short-form application as long as the total 
number of bidding units associated with those construction permits does 
not exceed its current eligibility. Eligibility cannot be increased 
during the auction; it can only remain the same or decrease. Thus, in 
calculating its upfront payment amount, an applicant must determine the 
maximum number of bidding units it may wish to bid on or hold 
provisionally winning bids on in any single round, and submit an 
upfront payment amount covering that total number of bidding units. At 
a minimum, an applicant's upfront payment must cover the bidding units 
for at least one of the construction permits it selected on its short-
form application. The total upfront payment does not affect the total 
dollar amount a bidder may bid on any given construction permit.
    50. In order to ensure that an auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively 
throughout the auction, rather than wait until late in the auction 
before participating. Bidders are required to be active on a specific 
minimum percentage of their current bidding eligibility during each 
round of the auction.
    51. A bidder's activity level in a round is the sum of the bidding 
units associated with any construction permits covered by new and 
provisionally winning bids. A bidder is considered active on a 
construction permit in the current round if it is either the 
provisionally winning bidder at the end of the previous bidding round 
or if it submits a bid in the current round.
    52. Failure to maintain the requisite activity level will result in 
the use of an activity rule waiver, if any remain, or a reduction in 
the bidder's eligibility, possibly curtailing or eliminating the 
bidder's ability to place additional bids in the auction.

[[Page 25743]]

iii. Auction Stages
    53. A bidder desiring to maintain its current bidding eligibility 
will be required to be active on construction permits representing at 
least 75 percent of its current bidding eligibility, during each round 
of Stage One, and at least 95 percent of its current bidding 
eligibility in Stage Two. The Bureaus have the discretion to further 
alter the activity requirements before and/or during the auction as 
circumstances warrant, and also have other mechanisms by which they may 
influence the speed of an auction.
iv. Activity Rule Waivers
    54. Each bidder in the auction will be provided with three activity 
rule waivers. An activity rule waiver applies to an entire round of 
bidding and not to a particular construction permit.
v. Auction Stopping Rules
    55. To reduce the need for a provisionally winning bidder to 
monitor subsequent bidding rounds for higher bids, two commenters 
proposed alternative stopping procedures for this auction, which differ 
from the stopping procedures proposed by the Bureaus by halting bidding 
on a particular construction permit before bidding closes 
simultaneously on all construction permits. Because these alternative 
stopping procedures would reduce the flexibility of bidders to 
implement backup strategies in response to price information revealed 
as bidding continues in multiple bidding rounds, the Bureaus will 
employ a simultaneous stopping rule approach for Auction 79. A 
simultaneous stopping rule means that all construction permits remain 
available for bidding until bidding closes simultaneously on all 
construction permits. More specifically, bidding will close 
simultaneously on all construction permits after the first round in 
which no bidder submits any new bids or applies a proactive waiver.
    56. Auction 79 will begin under the simultaneous stopping rule 
approach, and the Bureaus retained the discretion to employ later a 
modified stopping rule, a special stopping rule, or to keep the auction 
open even if no bidder places any new bids or applies a waiver in a 
round. Moreover, the Bureaus may use the modified stopping rule with or 
without prior announcement during the auction.
vi. Auction Delay, Suspension, or Cancellation
    57. The Bureaus may delay, suspend, or cancel the auction in the 
event of natural disaster, technical obstacle, administrative or 
weather necessity, evidence of an auction security breach or unlawful 
bidding activity, or for any other reason that affects the fair and 
efficient conduct of competitive bidding.

B. Bidding Procedures

i. Round Structure
    58. The initial schedule of bidding rounds will be announced in the 
public notice listing the qualified bidders. Each bidding round is 
followed by the release of round results. Multiple bidding rounds may 
be conducted in a given day.
ii. Minimum Opening Bids
    59. The specific minimum opening bid amounts for the construction 
permits available in Auction 79 are set forth in Attachment A of the 
Auction 79 Procedures Public Notice.
iii. Bid Amounts
    60. In each round, eligible bidders will be able to place a bid on 
a given construction permit in any of up to nine different amounts. The 
FCC Auction System interface will list the nine acceptable bid amounts 
for each construction permit.
iv. Provisionally Winning Bids
    61. At the end of each bidding round, a provisionally winning bid 
will be determined based on the highest bid amount received for each 
construction permit. A provisionally winning bid will remain the 
provisionally winning bid until there is a higher bid on the same 
construction permit at the close of a subsequent round. Provisionally 
winning bids at the end of the auction become the winning bids. Bidders 
are reminded that provisionally winning bids count toward activity for 
purposes of the activity rule.
    62. The Bureaus will use a random number generator to select a 
single provisionally winning bid in the event of identical high bid 
amounts being submitted on a construction permit in a given round.
v. Bidding
    63. All bidding will take place remotely either through the FCC 
Auction System or by telephonic bidding. There will be no on-site 
bidding during Auction 79. Telephonic bid assistants are required to 
use a script when entering 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. The length of a call to 
place a telephonic bid may vary; please allow a minimum of ten minutes.
    64. A bidder's ability to bid on specific construction permits is 
determined by two factors: (1) The construction permits selected on the 
bidder's FCC Form 175 and (2) the bidder's eligibility. The bid 
submission screens will allow bidders to submit bids on only those 
construction permits the bidder selected on its FCC Form 175.
    65. If a bidder has sufficient eligibility to place a bid on the 
particular construction permit, an eligible bidder will be able to 
place bids in each round on that construction permit in any of nine 
different bid amounts. For each construction permit, the FCC Auction 
System will list the nine acceptable bid amounts in a drop-down box. 
Bidders use the drop-down box to select from among the acceptable bid 
amounts. The FCC Auction System also includes an upload function that 
allows bidders to upload text files containing bid information.
    66. Until a bid has been placed on a construction permit, the 
minimum acceptable bid amount for that construction permit will be 
equal to its minimum opening bid amount. Once there are bids on a 
construction permit, minimum acceptable bids for a construction permit 
for the following round will be determined.
    67. During a round, an eligible bidder may submit bids for as many 
construction permits as it wishes, (providing that it is eligible to 
bid), remove bids placed in the current bidding round, or permanently 
reduce eligibility. If a bidder submits multiple bids for the same 
construction permit in the same round--multiple bids on the exact same 
construction permit, the system takes the last bid entered as that 
bidder's bid for the round. Bidders should note that the bidding units 
associated with construction permits for which the bidder has removed 
bids do not count towards the bidder's current activity.
vi. Bid Removal and Bid Withdrawal
    68. Before the close of a bidding round, a bidder has the option of 
removing any bids placed in that round. By using the remove bids 
function in the FCC Auction System, 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, i.e., 
a bid that is removed does not count toward bidding activity. Once a 
round closes, a bidder may no longer remove a bid.

[[Page 25744]]

    69. Bidders in Auction 79 are prohibited from withdrawing any bid 
after the close of a round in which the bid was placed. Bidders are 
cautioned to select bid amounts carefully because no bid withdrawals 
will be allowed in Auction 79, even if a bid was mistakenly or 
erroneously made.
vii. Round Results
    70. Reports reflecting bidders' identities for Auction 79 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.
    71. Bids placed during a round will not be made public until the 
conclusion of that round. After a round closes, the Bureaus will 
compile reports of all bids placed, current provisionally winning bids, 
new minimum acceptable bid amounts for the following round, whether the 
construction permit is FCC held, and bidder eligibility status (bidding 
eligibility and activity rule waivers), and post the reports for public 
access.
viii. Auction Announcements
    72. The Commission will use auction announcements to announce items 
such as schedule changes and stage transitions. All auction 
announcements will be available by clicking a link in the FCC Auction 
System.

V. Post-Auction Procedures

    73. Shortly after bidding has ended, the Commission will issue a 
public notice declaring the auction closed, identifying the winning 
bidders, and establishing the deadlines for submitting down payments, 
final payments, and the long-form applications (FCC Form 301).

A. Down Payments

    74. 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 Commission for Auction 79 to 20 percent of the net amount of 
its winning bids (gross bids less any applicable new entrant bidding 
credits).

B. Final Payments

    75. Each winning bidder will be required to submit the balance of 
the net amount of its winning bids within ten business days after the 
applicable deadline for submitting down payments.

C. Long-Form Application (FCC Form 301)

    76. Within thirty days after release of the auction closing notice, 
winning bidders must electronically submit a properly completed long-
form application (FCC Form 301, Application for FM Construction Permit) 
and required exhibits, for each construction permit they won through 
Auction 79. Winning bidders claiming new entrant status must include an 
exhibit demonstrating their eligibility for the bidding credit. Further 
instructions on these and other filing requirements will be provided to 
winning bidders in the auction closing public notice.

D. Default and Disqualification

    77. Any winning 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). The payments include both a deficiency payment, equal to 
the difference between the amount of the bidder's bid and the amount of 
the winning bid the next time a construction permit covering the same 
spectrum is won in an auction, plus an additional payment equal to a 
percentage of the defaulter's bid or of the subsequent winning bid, 
whichever is less. The Bureaus have set the additional default payment 
for this auction at twenty percent of the applicable bid.
    78. Finally, in the event of a default, the Commission may re-
auction the construction permit or offer it to the next highest bidder 
(in descending order) at its final bid amount. 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 
authorizations held by the applicant.

E. Refund of Remaining Upfront Payment Balance

    79. Applicants that are not winning bidders or are winning bidders 
whose upfront payment exceeded the total net amount of their winning 
bids may be entitled to a refund of some or all of their upfront 
payment. All refunds will be returned to the payor of record, as 
identified on the FCC Form 159, unless the payor submits written 
authorization instructing otherwise. Bidders that drop out of the 
auction completely (have exhausted all of their activity rule waivers 
and have no remaining bidding eligibility) may request a refund of 
their upfront payments before the close of the auction.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E9-12523 Filed 5-28-09; 8:45 am]
BILLING CODE 6712-01-P


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