40520 Federal Register / Vol. 82, No. 164 / Friday, August 25, 2017 / Proposed Rules 

(913) 551–7039, or by email at 

hamilton.heather@epa.gov. 

SUPPLEMENTARY INFORMATION: This 

document proposes to take action on a 

SIP revision submitted by the State of 

Iowa for the purpose of incorporating an 

amendment to the Administrative 

Consent Order (ACO) with Grain 

Processing Corporation (GPC), 

Muscatine, Iowa. 

The state held a 30-day comment 

period, during which no comments 

were received. 

Additional information with respect 

to this proposed rule is included in the 

Technical Support Document that is 

part of this docket. 

We have published a direct final rule 

approving the State’s SIP revision (s) in 

the ‘‘Rules and Regulations’’ section of 

this Federal Register, because we view 

this as a noncontroversial action and 

anticipate no relevant adverse comment. 

We have explained our reasons for this 

action in the preamble to the direct final 

rule. If we receive no adverse comment, 

we will not take further action on this 

proposed rule. If we receive adverse 

comment, we will withdraw the direct 

final rule and it will not take effect. We 

would address all public comments in 

any subsequent final rule based on this 

proposed rule. We do not intend to 

institute a second comment period on 

this action. Any parties interested in 

commenting must do so at this time. For 

further information, please see the 

information provided in the ADDRESSES

section of this document. 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Particulate matter, Reporting 

and recordkeeping requirements. 

Dated: August 9, 2017. 

Edward H. Chu, 

Acting Regional Administrator, Region 7. 

[FR Doc. 2017–17418 Filed 8–24–17; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 54 

[AU Docket No. 17–182; WC Docket No. 10– 

90; FCC 17–101] 

Comment Sought on Competitive 

Bidding Procedures and Certain 

Program Requirements for the 

Connect America Fund Phase II 

Auction (Auction 903) 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission) initiates the pre-auction 

process for the Connect America Fund 

Phase II auction (Phase II auction, 

auction, or Auction 903). The 

Commission proposes and seeks 

comment on the procedures to be used 

in the Phase II auction. The Phase II 

auction will award up to $1.98 billion 

over 10 years to service providers that 

commit to offer voice and broadband 

services to fixed locations in unserved 

high-cost areas. The auction is 

scheduled to begin in 2018. A guide that 

provides further technical and 

mathematical detail regarding the 

bidding, assignment, and support 

amount determination procedures 

proposed in this document, as well as 

examples for potential bidders, is 

available at: http://transition.fcc.gov/ 

Daily_Releases/Daily_Business/2017/ 

db0804/DA-17-733A1.pdf. 

DATES: Comments are due on or before 

September 18, 2017 and reply 

comments are due on or before October 

18, 2017. If you anticipate that you will 

be submitting comments, but find it 

difficult to do so within the period of 

time allowed by this document, you 

should advise the contact listed below 

as soon as possible. 

ADDRESSES: Comments may be filed 

using the Commission’s Electronic 

Comment Filing System (ECFS). See 

Electronic Filing of Documents in 

Rulemaking Proceedings, 63 FR 24121 

(1998). 

D Electronic Filers: Comments may be 

filed electronically using the Internet by 

accessing the ECFS: http://apps.fcc.gov/ 

ecfs/. 

D Paper Filers: Parties who choose to 

file by paper must file an original and 

one copy of each filing. If more than one 

docket or rulemaking number appears in 

the caption of this proceeding, filers 

must submit two additional copies for 

each additional docket or rulemaking 

number. Filings can be sent by hand or 

messenger delivery, by commercial 

overnight courier, or by first-class or 

overnight U.S. Postal Service mail. All 

filings must be addressed to the 

Commission’s Secretary, Office of the 

Secretary, Federal Communications 

Commission. 

D All hand-delivered or messengerdelivered paper filings for the 

Commission’s Secretary must be 

delivered to FCC Headquarters at 445 

12th St. SW., Room TW–A325, 

Washington, DC 20554. The filing hours 

are 8:00 a.m. to 7:00 p.m. All hand 

deliveries must be held together with 

rubber bands or fasteners. Any 

envelopes and boxes must be disposed 

of before entering the building. 

D Commercial overnight mail (other 

than U.S. Postal Service Express Mail 

and Priority Mail) must be sent to 9300 

East Hampton Drive, Capitol Heights, 

MD 20743. 

D U.S. Postal Service first-class, 

Express, and Priority mail must be 

addressed to 445 12th Street SW., 

Washington, DC 20554. 

FOR FURTHER INFORMATION CONTACT: 

Heidi Lankau or Katie King, 

Telecommunications Commission, 

Wireline Competition Bureau, (202) 

418–7400 or TTY: (202) 418–0484; Mark 

Montano or Angela Kung, Auctions and 

Spectrum Access Division, Wireless 

Telecommunications Bureau, (202) 418– 

0660. 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s document 

in AU Docket No. 17–182; WC Docket 

No. 10–90; FCC 17–101, released on 

August 4, 2017. The full text of this 

document is available for public 

inspection during regular business 

hours in the FCC Reference Center, 

Room CY–A257, 445 12th St. SW., 

Washington, DC 20554 or at the 

following Internet address: http://

transition.fcc.gov/Daily_Releases/Daily_

Business/2017/db0807/FCC-17- 

101A1.pdf. 

Pursuant to sections 1.415 and 1.419 

of the Commission’s rules, 47 CFR 

1.415, 1.419, interested parties may file 

comments and reply comments on or 

before the dates indicated above in AU 

Docket No. 17–182 and WC Docket No. 

10–90. 

I. Introduction 

1. By this document, the Commission 

initiates the pre-auction process for the 

Connect America Fund Phase II auction 

(Phase II auction, auction, or Auction 

903). The Phase II auction will award up 

to $198 million annually for 10 years to 

service providers that commit to offer 

voice and broadband services to fixed 

locations in unserved high-cost areas. 

The auction is scheduled to begin in 

2018. 

2. Auction 903 will be the first 

auction to award ongoing high-cost 

universal service support through 

competitive bidding in a multipleround, reverse auction. Through this 

auction, the Commission intends to 

maximize the value the American 

people receive for the universal service 

dollars it spends, balancing higherquality services with cost efficiencies. 

Therefore, the auction is designed to 

select bids from providers that would 

deploy high-speed broadband and voice 

services in unserved communities for 

lower relative levels of support. 


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3. While many of the pre-auction and 

bidding procedures and processes 

proposed for this auction are similar to 

those used in the Commission’s 

Mobility Fund Phase I auction and in its 

spectrum auctions, the Commission 

proposes some new pre-auction and 

bidding procedures and processes for 

this auction. As is typical prior to a 

Commission auction, it proposes and 

seeks comment in this Public Notice on 

the procedures to be used in this 

auction, including (i) how an applicant 

can become qualified to participate in 

the auction, (ii) how bidders will submit 

bids, and (iii) how bids will be 

processed to determine winners and 

assign support amounts. The 

Commission also proposes procedures 

for, among other things, aggregating 

eligible areas into larger geographic 

units for bidding, setting reserve prices, 

and making auction information 

available to bidders and the public. The 

Commission asks that commenters 

advocating a particular procedure 

provide specific details regarding the 

costs and benefits of that procedure. 

4. The Commission will announce 

final procedures and other important 

information concerning Auction 903 

after considering comments provided in 

response to this document, pursuant to 

governing statutes and the 

Commission’s rules. Because the 

Commission expects that the Phase II 

auction will attract parties that have 

never participated in a Commission 

auction, the Commission anticipates 

providing detailed educational materials 

and hands-on practice opportunities in 

advance of the auction to help such 

potential bidders understand the 

procedures ultimately adopted to govern 

the auction after consideration of 

comments in response to this Public 

Notice. 

II. Minimum Geographic Area for 

Bidding 

5. As an initial matter, and in the 

interest of providing bidders with as 

much flexibility as feasible, the 

Commission proposes to use census 

block groups containing one or more 

eligible census blocks as the minimum 

geographic area for bidding in the 

auction. Although the Commission 

previously decided that support will be 

available for specified eligible census 

blocks, it proposes to aggregate eligible 

census blocks by census block groups 

for purposes of bidding. The 

Commission seeks comment on this 

approach. In August 2016, as directed 

by the Commission, the Wireline 

Competition Bureau (WCB) released a 

preliminary list of eligible census blocks 

based on June 30, 2015, FCC Form 477 

data. This list included approximately 

300,000 eligible census blocks, which 

are located in 36,000 census block 

groups and 20,000 census tracts. 

6. In the Phase II Auction Order, 81 

FR 44414, July 7, 2016, the Commission 

indicated that it expected to use census 

block groups that contain one or more 

eligible census blocks as the minimum 

geographic unit for bidding, rather than 

a larger geographic area, such as census 

tracts or counties. While the 

Commission reserved the right to 

require that bids be submitted for 

census tracts so as to limit the number 

of discrete biddable units, the 

Commission thinks that it is 

unnecessary to do so here. The number 

of eligible census block groups would 

not materially increase the complexity 

of the Phase II auction. At the same 

time, using census block groups will 

provide bidders with more flexibility to 

develop a bidding strategy that aligns 

with their intended network expansion 

or construction. Bidding at the census 

tract level could be particularly 

problematic for small providers that 

may seek to construct smaller networks 

or expand existing networks because a 

larger minimal geographic area, like a 

census tract or county, may extend 

beyond a bidder’s service territory, 

franchise area, or license area. The 

Commission invites comment on using 

census block groups as the minimum 

geographic unit for bids. 

7. In addition, the Commission 

directed WCB to determine the census 

blocks that will be eligible for the Phase 

II auction and to publish the final list of 

eligible census blocks no later than 

three months prior to the deadline for 

submission of short-form applications. 

The Preliminary Phase II Auction Areas 

document provides a summary of the 

Commission’s decisions regarding the 

categories of blocks that will be 

included in the auction. As directed, 

WCB will update the list of eligible 

census blocks, based on the most recent 

publicly available Form 477 data at that 

time by identifying blocks that are not 

served by terrestrial, fixed voice and 

broadband services at speeds of 10/1 

Mbps or higher, whether offered by the 

incumbent price cap carrier or an 

unsubsidized competitor. Separately, 

WCB has released additional 

information and is seeking comment on 

certain census blocks that may be 

incorporated into the final list of eligible 

census blocks, consistent with the 

Commission’s previous decisions. 

III. Proposed Application Requirements 

8. In this section, the Commission 

describes and seeks comment on certain 

information it proposes to require each 

applicant to provide in its short-form 

application. This information should 

help promote an effective, efficient, and 

fair auction and facilitate Commission 

staff’s evaluation of whether a potential 

bidder is qualified to participate in 

Auction 903. The Phase II Auction 

Order adopted a two-stage application 

filing process for the Phase II 

competitive bidding process. The two 

stages consist of a pre-auction shortform application and a post-auction 

long-form application. In its short-form 

application, a potential bidder will seek 

to establish its eligibility to participate 

in the Phase II auction. After the 

auction, upon receipt of a winning 

bidder’s long-form application, 

Commission staff will conduct a more 

extensive review of the winning 

bidder’s qualifications to receive 

support. 

9. The Commission’s rules require 

each applicant seeking to participate in 

the Phase II auction to provide in its 

short-form application, among other 

things, basic ownership information, 

certifications regarding its qualifications 

to receive support, and information 

regarding its operational and financial 

capabilities. The Commission’s Phase II 

short-form application rules also 

provide for the collection of such 

additional information as the 

Commission may require to evaluate an 

applicant’s qualifications to participate 

in the Phase II auction. The information 

provided in a short-form application 

helps confirm that an applicant meets 

certain basic qualifications for 

participation in the bidding and enables 

Commission staff to ensure compliance 

with certain rules and bidding 

restrictions that help protect the 

integrity of the auction. 

10. After the deadline for filing shortform applications, Commission staff 

will review all timely submitted 

applications to determine whether each 

applicant has complied with the 

application requirements and provided 

all information concerning its 

qualifications for bidding. After this 

review, WCB and the Wireless 

Telecommunications Bureau (WTB) 

(collectively, the Bureaus) will issue a 

public notice identifying the 

applications that are complete and those 

that are incomplete because of minor 

defects that may be corrected. For those 

applications found to be incomplete, the 

public notice will set a deadline for the 

resubmission of corrected applications. 

After reviewing the resubmitted 

applications, and well in advance of the 

start of bidding in Auction 903, the 

Bureaus will issue a public notice 

announcing all qualified bidders for the 

auction. Qualified bidders are those 


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applicants that submitted short-form 

applications deemed timely-filed and 

complete. To be clear, however, the 

finding from Commission staff that a 

short-form application is complete and 

that an applicant is qualified to bid only 

qualifies the applicant to participate in 

the bidding; it does not authorize a 

winning bidder to receive Phase II 

support. 

11. After Auction 903 concludes, each 

winning bidder must submit a long-form 

application that Commission staff will 

review to determine whether the 

winning bidder meets the eligibility 

requirements for receiving Phase II 

support and has the financial and 

technical qualifications to meet the 

obligations associated with such 

support. In its long-form application, 

each winning bidder must submit 

information about its qualifications, 

funding, and the network it intends to 

use to meet its obligations. In addition, 

prior to being authorized to receive 

Phase II support, each winning bidder 

must demonstrate that it has been 

designated as an ETC in the area(s) 

where it was awarded support and must 

obtain a letter of credit from a bank 

meeting the Commission’s eligibility 

requirements. The Commission 

addresses below the types of further 

information that may be required in the 

long-form application. If a winning 

bidder is not authorized to receive 

Phase II support (e.g., the bidder fails to 

file or prosecute its long-form 

application or its long-form application 

is dismissed or denied), the winning 

bidder is in default. 

12. Consistent with the Commission’s 

practice in the Mobility Fund I auction 

(Auction 901) and its spectrum 

auctions, the Commission proposes to 

require each applicant to identify in its 

short-form application the state(s) in 

which it intends to bid for support in 

the Phase II auction. An applicant will 

be able to place bids for eligible areas 

only in the states identified in its 

application. This restriction is designed 

to improve the administrative efficiency 

of the auction for both bidders and the 

Commission and to safeguard against 

coordinated bidding while preserving 

bidders’ flexibility to decide whether to 

bid for specific census block groups in 

a state until the start of the auction. 

13. To discourage coordinated 

bidding that may disadvantage other 

bidders, the Commission proposes to 

prohibit separate applicants that are 

commonly-controlled or parties to a 

joint bidding arrangement from bidding 

in any of the same states. Absent such 

a restriction, there is a risk that separate 

bidders could coordinate their bidding 

through a joint bidding arrangement 

identified on their respective 

applications and engage in 

communications during the competitive 

bidding process under the exception to 

the Commission’s rule prohibiting 

certain communications during the 

competitive bidding process. Knowing 

the specific state(s) for which each 

applicant intends to bid, in combination 

with the ownership and bidding 

agreement information collected on the 

short-form application, will enable the 

Commission to ensure applicants’ 

compliance. Accordingly, the 

Commission intends to resolve any state 

overlaps and determine the specific 

state(s) in which an applicant is eligible 

to bid prior to the commencement of the 

bidding. 

14. To implement the restriction 

described above, the Commission 

proposes to use definitions adopted for 

similar purposes in its spectrum 

auctions and rely to the extent 

appropriate on past precedent and 

guidance regarding the Commission’s 

rules on prohibited communications. 

Specifically, to identify commonlycontrolled entities, the Commission 

proposes to define a ‘‘controlling 

interest’’ for purposes of the Phase II 

auction as an individual or entity with 

positive or negative de jure or de facto 

control of the applicant. In addition, the 

Commission proposes to adapt the 

definition of ‘‘joint bidding 

arrangements’’ that it uses in its 

spectrum auctions to those that (i) relate 

to any eligible area in the Phase II 

auction, and (ii) address or 

communicate bids or bidding strategies, 

including arrangements regarding Phase 

II support levels (i.e., bidding 

percentages) and specific areas on 

which to bid, as well as any 

arrangements relating to the postauction market structure in an eligible 

area. As a result, if two or more 

applicants are parties to an agreement 

that falls within this definition, they 

would be prohibited from bidding in the 

same state in the Phase II auction. 

Furthermore, the prohibited 

communications rule applicable to the 

Phase II auction, section 1.21002(b), is 

analogous to rules that were applicable 

in past auctions. In past auctions, the 

Commission explained that the rule 

does not prohibit an applicant covered 

by the rule from communicating bids or 

bidding strategies to a third-party 

consultant or consulting firm, provided 

that such an applicant takes appropriate 

steps to ensure that any third party it 

employs for advice pertaining to its bids 

or bidding strategies does not become a 

conduit for prohibited communications 

to other covered entities, which in the 

Phase II auction would include another 

applicant, unless both applicants are 

parties to a joint bidding agreement 

disclosed on their respective 

applications. The Commission notes 

that WTB has expressed particular 

concerns about employing the same 

individual for bidding advice. The 

Commission seeks comment on whether 

there are alternative procedures that it 

could adopt that would be equally 

effective in preventing the competitive 

harm from coordinated bidding that the 

Commission seeks to avoid through 

section 1.21002(b) and the procedures 

proposed herein. 

15. Entities that are commonlycontrolled or parties to a joint bidding 

arrangement have several options for 

submitting short-form applications to 

avoid the Commission’s proposed 

restriction on state overlaps. It is 

important that entities carefully 

consider these options prior to the 

short-form application filing deadline. 

At the deadline, the prohibited 

communications rule takes effect, and 

only minor amendments or 

modifications to applications will be 

permitted. 

16. First, such entities may submit a 

single short-form application and 

qualify to bid as one applicant in a state. 

The Commission’s Phase II auction rules 

do not restrict service providers from 

determining which of their related 

entities will apply to participate in 

bidding. For example, a holding or 

parent company may choose to submit 

a single short-form application on behalf 

of all its affiliated operating companies 

in one or more states. So that 

Commission staff can readily identify 

such applications, it proposes requiring 

each applicant to indicate whether it is 

submitting the application on behalf of 

one or more existing operating 

companies and if so, to identify such 

companies. Similarly, parties to a joint 

bidding arrangement may form a 

consortium or a joint venture and 

submit a single short-form application 

that identifies each party to the 

consortium or joint venture. At least one 

related entity, affiliate, or member of the 

holding or parent company, consortium, 

or joint venture must demonstrate that 

it meets the operational and financial 

requirements of section 54.315(a)(7). 

17. Consistent with the Commission’s 

practice for consortium and joint 

venture applicants that are winning 

bidders in spectrum auctions, the 

Commission proposes that if a holding/ 

parent company or a consortium/joint 

venture is announced as a winning 

bidder in Auction 903, the entity may, 

during the long-form application review 

process, designate at least one operating 


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company for each state that will be 

authorized to receive Phase II support 

for the winning bids. While the 

Commission would permit more than 

one operating company to be designated 

in each state, in order to deter strategic 

conduct, it proposes that a winning 

bidder would not be allowed to 

apportion a winning bid for a package 

of eligible census block groups among 

multiple operating companies. Because 

the Commission recognizes that the 

holding company or the consortium 

may wish to form a new operating 

company to serve the area associated 

with its winning bid(s), the holding 

company or consortium would be 

permitted to file a long-form application 

in its own name and during the longform application review process, 

identify the operating company for 

which it seeks authorization to receive 

support for each winning bid. The 

operating company that should be 

identified as the entity authorized to 

receive support must be the entity that 

is designated as the ETC by the relevant 

state(s) in the areas covered by the 

winning bid(s) and is named in the 

letter of credit that each winning bidder 

must obtain. The entity authorized to 

receive support is the entity that will be 

required to meet the associated Phase II 

public interest obligations. 

18. Second, commonly-controlled 

entities or parties to a joint bidding 

arrangement may bid in the Phase II 

auction independently and submit 

separate short-form applications, 

provided that they do not submit bids 

in the same state. The Commission 

expects that such applicants would 

exercise due diligence to confirm that 

no other commonly-controlled entity or 

party to a joint bidding arrangement, or 

an entity that controls any party to such 

an arrangement, has indicated its intent 

to bid in any of the same states the 

applicant has selected. To provide 

further assurance, the Commission 

proposes requiring each applicant to 

certify that it acknowledges that it 

cannot place any bids in the same state 

as (i) another commonly-controlled 

entity; (ii) another party to a joint 

bidding arrangement related to Phase II 

auction support that it is a party to; or 

(iii) any entity that controls a party to 

such an arrangement. The Commission’s 

rules require each applicant to disclose 

in its short-form application information 

concerning its real parties in interest 

and its ownership, and identify all real 

parties in interest to any agreements 

relating to the participation of the 

applicant in the competitive bidding. 

The Commission proposes requiring an 

applicant to also provide in its shortform application a brief description of 

any such agreements, including any 

joint bidding arrangements. Commission 

staff would use such information to 

identify and resolve any impermissible 

state overlaps prior to the auction. 

19. The Commission further proposes 

to require every applicant to certify in 

its short-form application that it has not 

entered into any explicit or implicit 

agreements, arrangements, or 

understandings of any kind related to 

the support to be sought through the 

Phase II auction, other than those 

disclosed in the short-form application. 

The Commission further proposes 

requiring each winning bidder to submit 

in its long-form application any updated 

information regarding the agreements, 

arrangements, or understandings related 

to its Phase II auction support disclosed 

in its short-form application. A winning 

bidder may also be required to disclose 

in its long-form application the specific 

terms, conditions, and parties involved 

in any agreement into which it has 

entered and the agreement itself. 

20. If during short-form application 

review Commission staff identifies 

applicants that are commonlycontrolled and/or parties to a joint 

bidding arrangement where any 

controlling interests have selected the 

same states in their respective 

applications, the Commission proposes 

that all such applications would be 

deemed to be incomplete on initial 

review. The Bureaus would inform each 

affected applicant of the identity of each 

of the other applicants with which it has 

an impermissible state overlap and the 

specific state(s) associated with such 

overlap. To the extent that an affected 

applicant has disclosed a joint bidding 

arrangement with one or more of the 

other affected applicants, these 

applicants must decide amongst 

themselves which applicant will bid in 

each overlapping state and then revise 

their short-form applications during the 

application resubmission period, as 

appropriate, in order to become 

qualified to bid. However, any affected 

applicant that has not disclosed a joint 

bidding arrangement with the other 

affected applicants will be barred by the 

Commission’s prohibited 

communications rule from discussing 

the overlap with any of the other 

affected applicants. As a result, any 

affected applicant that cannot discuss 

and resolve the overlap(s) due to the 

failure to disclose a joint bidding 

arrangement will be prohibited from 

bidding in any states where there is an 

overlap. Due to the prohibition on 

certain communications that takes effect 

as of the short-form application filing 

deadline, all commonly-controlled 

entities must have entered into any joint 

bidding arrangements prior to the shortform filing deadline and disclosed them 

in their applications to be able to take 

advantage of the exception afforded by 

the Commission’s rules. By taking these 

steps, commonly-controlled entities 

could discuss and jointly resolve any 

state overlaps identified by Commission 

staff. After the application resubmission 

period has ended, the Bureaus would 

inform each applicant about how it can 

find out the states in which it is eligible 

to bid, and the bidding system would 

permit an applicant to place bids only 

in those states. 

21. The Commission seeks comment 

on this process and whether its 

proposals efficiently and effectively 

promote straightforward bidding and 

safeguard the integrity of the auction. 

22. The Commission proposes to have 

its staff determine, at the short-form 

application stage and in advance of the 

start of bidding in the auction, each 

applicant’s eligibility to bid for the 

performance tier and latency 

combinations it has selected in its 

application. The Commission also 

proposes a standard and a process 

Commission staff will use in making 

this determination. Moreover, the 

Commission proposes requiring each 

applicant to submit additional highlevel operational information in its 

short-form application to aid 

Commission staff in making this 

determination, and for each winning 

bidder to submit updated and 

supportive information in its long-form 

application. 

23. In the Phase II Auction Order, the 

Commission concluded that it would 

accept bids for four performance tiers 

with varying speed and usage 

allowances and with respect to each tier 

would provide for bids at either high or 

low latency. All bids will be considered 

simultaneously so that bidders that 

propose to meet one set of performance 

standards will compete directly against 

bidders that propose to meet other 

performance standards, taking into 

account the weights adopted by the 

Commission for each performance tier 

and latency level. Pursuant to the 

Commission’s rules, each applicant for 

the Phase II auction must indicate in its 

short-form application the performance 

tier and latency combinations for which 

it intends to bid and the technologies it 

intends to deploy to meet the relevant 

public interest obligations. 

Additionally, each Phase II auction 

applicant must indicate whether it has 

at least two years’ experience providing 

a voice, broadband, and/or electric 

distribution or transmission service and 

must submit certain financial 


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information. The Commission’s rules 

also require each applicant to submit 

any additional information that the 

Commission may require to establish its 

eligibility for the weights associated 

with the applicant’s selected 

performance tier and latency 

combinations. 

24. Requiring a potential bidder to 

submit evidence in its short-form 

application that it can meet the service 

requirements associated with the 

performance tier and latency 

combinations for which it intends to bid 

will help safeguard consumers from 

situations where bidders that are unable 

to meet the specified service 

requirements divert support from 

bidders that can meet the service 

requirements. Accordingly, the 

Commission seeks to collect sufficient 

operational information in the shortform application regarding an 

applicant’s experience providing voice, 

broadband, and/or electric distribution 

or transmission service and its plans for 

provisioning service if awarded support 

to assess a bidder’s technical 

qualifications to bid for specific 

performance tier and latency 

combinations. At the same time, the 

Commission wants to minimize the 

burden on applicants and Commission 

staff. 

25. The Commission intends to use 

the short-form application to assess the 

likelihood that an applicant will default 

if selected as a winning bidder. If the 

applicant becomes qualified to bid in 

the Phase II auction and subsequently 

becomes a winning bidder, Commission 

staff will evaluate the information 

submitted in the long-form application 

and will rely on the applicant’s letter of 

credit to determine whether an 

applicant is capable of meeting its Phase 

II auction obligations in the specific 

areas where it has been selected as a 

winning bidder. Accordingly, a 

determination at the short-form stage 

that an applicant is eligible to bid for a 

performance tier and latency 

combination would not preclude a 

determination at the long-form 

application stage that an applicant does 

not meet the technical qualifications for 

the performance tier and latency 

combination and thus will not be 

authorized to receive Phase II support. 

In addition, the Commission’s adoption 

of certain non-compliance measures in 

the event of default—both before a 

winning bidder is authorized for 

support and if a winning bidder does 

not fulfill its Phase II obligations after it 

has been authorized—should encourage 

each applicant to select performance tier 

and latency combinations with public 

interest obligations that it can 

reasonably expect to meet. With these 

considerations in mind, the Commission 

describes its proposals: (1) For what 

information and showing each applicant 

must submit to establish its 

qualifications for the performance tier 

and latency combinations it has selected 

on its application, (2) for the process 

Commission staff would use to 

determine whether an applicant is 

eligible to bid on those combination(s), 

and (3) not to adopt any additional noncompliance measures for this process 

beyond those adopted in the Phase II 

Auction Order. 

26. The Commission proposes to 

collect high-level operational 

information from each applicant to 

complete its operational showing and 

enable Commission staff to determine 

whether the applicant is expected to be 

reasonably capable of meeting the 

public interest obligations (e.g., speed, 

usage, latency, and build-out 

milestones) for each performance tier 

and latency combination that it selected 

in its application. As noted above, each 

applicant seeking to participate in the 

Phase II auction is required to make 

certain certifications in its short-form 

application, including a certification 

that it is technically qualified to meet 

the public interest obligations in each 

tier and in each area for which it seeks 

support, and a certification regarding its 

experience in providing voice, 

broadband, and/or electric distribution 

or transmission service. The 

Commission’s rules also require an 

applicant to submit certain information 

in its short-form application in 

connection with those certifications. 

27. The Commission proposes making 

such determinations on a state-by-state 

basis. Accordingly, for each selected 

performance tier and latency 

combination, an applicant will be 

required to demonstrate how it intends 

to provision service if awarded support 

and that it is reasonably capable of 

meeting the relevant public interest 

obligations for each state it selects. 

Some parties have suggested in the 

Phase II proceeding that the 

Commission should only require 

additional information from, and 

conduct an eligibility review for, 

applicants that select certain 

performance tier and latency 

combinations. Instead, to reduce the risk 

of defaults, the Commission proposes to 

evaluate all combinations selected by 

each applicant to determine its 

eligibility to bid for any such 

combination. 

28. Specifically, the Commission 

proposes to require each applicant to 

answer the questions listed in the 

following Proposed Auction 903 ShortForm Application Operational 

Questions for each state it selects in its 

application. The questions are intended 

to elicit short, narrative responses from 

each applicant regarding its experience 

in providing voice, broadband, and/or 

electric distribution or transmission 

service, and the network(s) it intends to 

use to meet its Phase II public interest 

obligations. The questions are designed 

to confirm that each applicant has 

developed a preliminary design or 

business case for meeting the public 

interest obligations for its selected 

performance tier and latency 

combinations. They ask the applicant to 

identify the information it could make 

available to support the assertions in its 

application. Because the Commission 

expects that applicants will have 

already started planning to be ready to 

deploy the required voice and 

broadband services upon authorization 

of Phase II support, the Commission 

does not anticipate that it will be 

unduly burdensome to respond to these 

questions. The Commission seeks 

comment on the specific questions it 

proposes and ask whether there are 

other questions the Commission should 

include. 

29. The Commission also seeks 

comment on the assumptions an 

applicant will need to make about 

network usage and subscription rates 

when determining whether it can meet 

the public interest obligations for its 

selected performance tier and latency 

combination(s). For example, the 

Commission’s rules require that each 

winning bidder provide in its long-form 

application a certification by a 

professional engineer that the 

applicant’s proposed network can 

deliver the required service to at least 95 

percent of the required number of 

locations. The Commission seeks 

comment on the suggestion by some 

parties that an applicant be required to 

demonstrate that its network could be 

engineered to deliver the required 

service to every location in the relevant 

census blocks. The Commission also 

seeks comment on whether it should 

require each service provider to assume 

a subscription rate of at least 70 percent 

for voice services, broadband services, 

or both when determining whether it 

can meet the public interest obligations 

for its selected performance tiers and 

latency combinations. This subscription 

rate is consistent with the assumptions 

made in the Connect America Cost 

Model (CAM) when calculating the 

amount of support made available. 

Some parties in the Phase II proceeding 

have suggested that the Commission 

should not expect that all end users 


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passed by a Phase II support recipient 

will subscribe to a service package at 

speeds required by the relevant 

performance tier, or that they will 

subscribe to the provider’s service at all. 

Does the presumed subscription rate 

need to change over time to reflect the 

number of locations that a bidder is able 

to serve in a given year? For example, 

if a provider will only have facilities in 

place in year two to serve 10 percent of 

the eligible locations in its bid area, 

should it be required to make its 

assumptions based on this subscription 

rate in that year? The Commission also 

seeks comment on whether it should 

specify the assumptions an applicant 

should make concerning per-subscriber 

data usage to ensure that its network is 

sufficient to support peak usage busy 

hour offered load, accounting for the 

monthly data usage allowance 

associated with the performance tier(s) 

the applicant selects in its short-form 

application. The Commission seeks 

comment on these issues and on 

whether it should set any other 

parameters for assumptions about the 

network that will be used to meet Phase 

II obligations. 

30. The Commission proposes 

requiring each applicant that intends to 

use radiofrequency spectrum to submit 

certain types of information regarding 

the sufficiency of the spectrum to which 

it has access to aid Commission staff in 

determining whether the applicant is 

expected to be reasonably capable of 

meeting the public interest obligations 

for each performance tier and latency 

combination that it selected in its 

application. 

31. The Commission’s Phase II 

auction rules require a short-form 

applicant that plans to use 

radiofrequency spectrum to demonstrate 

that it has (i) the proper spectrum use 

authorizations, if applicable; (ii) access 

to operate on the spectrum it intends to 

use; and (iii) sufficient spectrum 

resources to cover peak network usage 

and meet the minimum performance 

requirements to serve the fixed locations 

in eligible areas. Consistent with the 

Commission’s approach in the Mobility 

Fund Phase I auction, for the described 

spectrum access to be sufficient as of the 

date of the short-form application, the 

applicant must have obtained any 

necessary approvals from the 

Commission for the spectrum, if 

applicable, subject to the earth station 

license exception for satellite providers 

described below. The Phase II auction 

short-form rules also require an 

applicant to certify that it will retain 

such authorizations for 10 years. 

32. A number of parties sought 

clarification on how an applicant can 

demonstrate that it has access to 

sufficient spectrum resources. The 

Commission proposes that an applicant 

(i) identify the spectrum band(s) it will 

use for last mile, backhaul, and any 

other parts of the network; (ii) describe 

the total amount of uplink and 

downlink bandwidth (in megahertz) that 

it has access to in such spectrum 

band(s) for last mile; (iii) describe the 

authorizations it has obtained to operate 

in the spectrum, if applicable; and (iv) 

list the call signs and/or application file 

numbers associated with its spectrum 

authorizations. This spectrum 

information, combined with the 

operational and financial information 

submitted in the short-form application, 

will allow Commission staff to 

determine whether an applicant has 

sufficient spectrum resources and is 

expected to be reasonably capable of 

meeting the public interest obligations 

required by its selected performance tier 

and latency combination(s). 

33. In the following Proposed Auction 

903 Spectrum Chart, the Commission 

identifies the spectrum bands that it 

anticipates could be used for the last 

mile to meet Phase II obligations and 

indicates whether the spectrum bands 

are licensed or unlicensed. The 

Commission seeks comment on whether 

the individual bands—or, in some cases, 

the blocks within them, individually or 

in combination with each other— 

provide sufficient uplink or downlink 

bandwidth to support the wireless 

technologies that a provider may use to 

meet the Phase II obligations. In 

addition to the amount of bandwidth, 

should Commission staff consider the 

differences between licensed and 

unlicensed spectrum, or the differences 

between upper band and lower band 

frequencies when evaluating whether an 

applicant has sufficient spectrum 

resources? Are there other spectrum 

bands that can offer sufficient uplink or 

downlink bandwidth—individually or 

in combination—to meet the various 

performance tier and latency 

combination qualifications? If so, what 

last mile technologies and 

corresponding last mile network 

architecture can be used in those 

spectrum bands? 

34. The Commission also proposes 

requiring any applicant that intends to 

provide service using satellite 

technology to identify in its short-form 

application any space station licenses it 

intends to use in the areas where it 

intends to bid. The Commission expects 

that this information, coupled with the 

additional operational information it 

will collect in the short-form 

application, will be sufficient to enable 

the Commission to assess whether 

satellite providers have the required 

authorizations and adequate access to 

spectrum. Some parties have suggested 

in the Phase II proceeding that each 

satellite provider should also be 

required to demonstrate that it has 

obtained earth station licenses for the 

terminals it will use to communicate 

with satellites. But satellite providers 

must bring their earth stations into 

operation within one year of obtaining 

a license, and may not be ready to do 

so within a year of the short-form 

application deadline. Because the first 

Phase II auction interim milestone is not 

until the end of the third year of support 

and the final milestone is not until the 

end of the sixth year of support, a 

satellite provider could obtain an earth 

station license during the support term 

and still meet its obligations. 

Nevertheless, the Commission would 

expect that each satellite provider 

would describe in its short-form 

application its expected timing for 

applying for earth station licenses. 

35. In addition to information 

provided in a short-form application, 

the Commission proposes to allow its 

staff to consider any information that a 

provider has submitted to the 

Commission in other contexts when 

determining whether a service provider 

is reasonably capable of meeting the 

public interest obligations for its 

selected performance tier and latency 

combinations. This other information 

would include information submitted to 

the Commission in other contexts— 

including data reported in FCC Form 

477 Local Telephone Competition and 

Broadband Report (FCC Form 477), FCC 

Form 481 Carrier Annual Reporting Data 

Collection Form (FCC Form 481), FCC 

Form 499–A Annual 

Telecommunications Reporting 

Worksheet (FCC Form 499–A)—and any 

public information. For example, 

Commission staff may consider whether 

an applicant already offers service that 

meets the public interest obligations 

associated with its selected performance 

tier and latency combinations and the 

number of subscribers to that service. 

36. To facilitate Commission staff’s 

collection and review of data provided 

to the Commission by applicants 

outside the Phase II auction short-form 

application process, the Commission 

proposes to collect information in the 

short-form application about the unique 

identifiers a provider uses to submit 

other data to the Commission. 

37. Specifically, the Commission 

proposes to collect in the short-form 

application any FCC Registration 

Numbers (FRNs) that an applicant or its 

parent company—and in the case of a 

holding company applicant, its 


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operating companies—have used to 

submit their FCC Form 477 data for the 

past two years. By collecting the FRNs 

that an applicant has used to submit 

FCC Form 477, Commission staff will be 

able to cross-reference FCC Form 477 

data that an applicant has filed for the 

past two years. 

38. Data on where a service provider 

offers voice and broadband service, the 

number of subscribers to its voice and 

broadband services, and the broadband 

speeds it offers would provide insight 

into an applicant’s experience in 

providing voice or broadband service. 

This information could help 

Commission staff determine whether an 

applicant can reasonably be expected to 

meet the public interest obligations 

associated with the performance tier 

and latency combinations it has selected 

in its application. The Commission 

expects that it would generally be 

sufficient to review FCC Form 477 data 

from only the past two years because 

those data would reflect the services 

that the applicant is currently offering 

or recently offered, and would illustrate 

the extent to which an applicant was 

able to scale its network in the recent 

past. 

39. The Commission proposes to 

collect in the short-form application any 

study area codes (SAC) associated with 

an applicant (or its parent company) 

that indicates it is an existing ETC. In 

the case of a holding company 

applicant, the Commission proposes 

collecting the SACs of its operating 

companies. An applicant is required by 

the Commission’s Phase II short-form 

application rules to disclose its status as 

an ETC if applicable. By identifying its 

SACs, an applicant will be disclosing its 

status as an existing ETC. As noted 

above, an applicant need not have 

obtained an ETC designation in the 

areas where it seeks Phase II support 

until after it is named as the winning 

bidder in those areas. The Commission 

proposes to collect these SACs even if 

the relevant entity is not an ETC in the 

areas where the applicant intends to 

bid. ETCs also file their annual reports 

on their FCC Form 481 for each of their 

SACs. Collecting the SACs associated 

with every applicant (if applicable) will 

allow Commission staff to easily crossreference the Form 481 data filed by the 

applicant or its parent company, or in 

the case of a holding company 

applicant, the Form 481 data filed by its 

operating companies. An ETC is 

required to file FCC Form 481 data and 

certifications regarding its compliance 

with existing ETC obligations. Being 

able to review an ETC’s past compliance 

with its ETC obligations will be useful 

for determining whether an applicant is 

reasonably capable of meeting the 

relevant Phase II obligations. 

40. Finally, the Commission proposes 

to collect in the short-form application 

any FCC Form 499 filer identification 

numbers that the applicant or its parent 

company, and in the case of a holding 

company, its operating companies, have 

used to file an FCC Form 499–A in the 

past year, if applicable. Subject to some 

exceptions, the Commission requires 

telecommunications carriers and certain 

other providers of telecommunications 

(including VoIP providers) to report on 

an annual basis in FCC Form 499–A 

certain revenues from the prior year for 

a number of purposes, including for 

purposes of calculating contributions to 

the Universal Service Fund and the 

Telecommunications Relay Services 

Fund, the administration of the North 

American Numbering Plan, for shared 

costs of the local number portability 

administration, and for calculating and 

assessing Interstate 

Telecommunications Service Provider 

regulatory fees. By collecting the 

relevant FCC Form 499 filer 

identification numbers, Commission 

staff would be able to easily crossreference the most recent FCC Form 

499–A filed by the applicant and obtain 

the revenue data therein, which could 

be useful in assessing the financial 

qualifications of the applicant. 

41. Because the Commission expects 

each applicant already keeps track of its 

identifiers to meet various regulatory 

obligations, the Commission does not 

anticipate that requiring these 

identifiers to be provided in the shortform application would be unduly 

burdensome for Phase II auction 

applicants. The Commission seeks 

comment on its proposed collection and 

use of these various identifiers, and on 

whether there are other ways 

Commission staff can leverage data that 

are already reported to the Commission 

to assess the qualifications of Phase II 

applicants. 

42. To streamline the review of shortform applications, the Commission 

proposes to preclude an applicant that 

intends to use certain technologies from 

selecting certain performance tier and 

latency combinations that are 

inconsistent with those technologies. 

For example, the Commission proposes 

to prohibit satellite providers from 

selecting low latency in combination 

with any of the performance tiers. As 

satellite providers have acknowledged, 

they cannot meet the low latency 

requirement that 95 percent or more of 

all peak period measurements of 

network round trip latency are at or 

below 100 milliseconds due to the 

limitations of geostationary spacecraft. 

Moreover, based on the record and 

publicly available Form 477 data, the 

Commission is not convinced that a 

satellite provider would be able to 

persuade the Commission staff that the 

provider is reasonably capable of 

offering broadband at speeds of 1 Gbps 

downstream/500 Mbps upstream and 2 

TB of monthly data to consumers by the 

first interim build-out milestone. No 

satellite provider reports offering 

broadband speeds in excess of 25 Mbps 

downstream in FCC Form 477 data (as 

of June 30, 2016), and ViaSat reports 

that it is the first satellite provider to 

offer a 150 GB monthly data allowance. 

While ViaSat claims that it is deploying 

networks that will be capable of offering 

speeds of at least 100 Mbps in the near 

term, the record lacks specificity on 

whether or when satellite providers 

would be able to offer 1 Gbps/500 Mbps 

speeds and a minimum monthly 2 TB 

data usage allowance to U.S. consumers. 

43. While a certain technology may 

eventually be able to meet the public 

interest obligations required by certain 

performance tier and latency 

combinations, it may not serve the 

public interest to award Phase II support 

for such a technology at this time based 

on possible future technological 

advances. Should applicants be limited 

to bidding on performance tier and 

latency combinations that they or 

similar providers are currently offering? 

Specifically, what combination of 

technologies, performance tiers, and 

latency levels should the Commission 

prohibit? 

44. The Commission seeks comment 

on the above proposals for determining 

an applicant’s eligibility to bid on the 

performance tier and latency 

combination(s) selected in its short-form 

application. A party submitting 

alternative proposals should explain 

how its proposal appropriately balances 

the Commission’s objective of assessing 

an applicant’s capability to meet the 

Phase II obligations with its intent not 

to impose undue costs on applicants or 

the Commission. 

45. The Commission proposes that its 

staff review the information submitted 

by an applicant in its short-form 

application and any other relevant 

information available to staff to 

determine whether the applicant has 

planned how it would provide service if 

awarded support and is therefore 

expected to be reasonably capable of 

meeting the public interest obligations 

for its selected performance tier and 

latency combinations in its selected 

states. The Commission proposes that if 

staff finds that an applicant is 

reasonably expected to be capable of 

meeting the relevant public interest 


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obligations in a state, the applicant 

would be eligible to bid for its selected 

performance tier and latency 

combinations in that state. 

46. If Commission staff, in its initial 

review, is unable to find that an 

applicant can reasonably be expected to 

meet the relevant public interest 

obligations based on the information 

submitted in its short-form application, 

the Bureaus would deem the application 

incomplete, and the applicant would 

have another opportunity during the 

application resubmission period to 

submit additional information to 

demonstrate that it meets this standard. 

The Bureaus would notify the applicant 

that additional information is required 

to assess the applicant’s eligibility to bid 

for any or all of the specific states and 

performance tier and latency 

combinations selected in its short-form 

application. During the application 

resubmission period, an applicant 

would be able to submit additional 

information to establish its eligibility to 

bid for the relevant performance tier and 

latency combinations. An applicant 

would also have the option of selecting 

a lesser performance tier and latency 

combination for which it might be more 

likely to be technically qualified. The 

Commission would consider these to be 

permissible minor modifications of the 

short-form application. Once the 

application resubmission period has 

ended, the Bureaus would make their 

final determination of an applicant’s 

eligibility to bid for any or all of the 

specific states and performance tier and 

latency combinations selected in its 

application, and then notify each 

applicant in which states and for which 

performance tier and latency 

combinations it is eligible to bid. The 

bidding system will be configured to 

permit a bidder to bid only in the 

state(s) and for the performance tier and 

latency combinations on which it is 

eligible to bid. The Commission seeks 

comment on this proposed process. 

47. The Commission proposes not to 

adopt any specific measures or remedies 

related to an applicant’s representations 

in its short-form or long-form 

applications of its capabilities with 

respect to the performance tier and 

latency combination(s) for which it 

seeks to be eligible to bid. First, the 

Commission expects that its Phase II 

auction default rules and the measures 

adopted by the Commission relating to 

an authorized recipient that does not 

meet its obligations will impress upon 

each applicant the importance of both 

ensuring that it can meet the technical 

qualifications associated with each 

performance tier and latency 

combination for which it is eligible to 

bid and submitting documentation that 

accurately reflects its capabilities. 

Second, to the extent documentation 

may be falsified, the Commission has 

broad discretion to impose additional 

non-compliance measures on a 

defaulting winning bidder, including 

disqualifying that entity from future 

universal service competitive bidding. 

Finally, each applicant is required to 

declare, under the penalty of perjury, 

that the information in its short-form 

and long-form applications is true and 

correct. The Commission believes these 

collective measures provide adequate 

incentives for an applicant to submit 

truthful and accurate evidence of its 

technical qualifications. The 

Commission seeks comment on this 

analysis. To the extent commenters 

believe that additional measures may be 

needed to ensure that Commission staff 

receive accurate information, they 

should explain why the current noncompliance scheme is inadequate and 

describe with specificity the additional 

non-compliance measures that they 

propose. 

48. In addition to the audited 

financial statements that certain 

applicants are already required to 

provide at the short-form stage to 

establish their financial qualifications to 

provide broadband service, the 

Commission proposes to require all 

applicants to submit financial 

statements. The Commission also 

proposes to require applicants to 

identify and report certain specific 

information from their financial 

statements on the short-form 

application. 

49. In the Phase II Auction Order, the 

Commission required each applicant for 

the Phase II auction to certify its 

financial capabilities to provide the 

required services within the specified 

timeframe in the geographic areas for 

which it seeks support. In addition, an 

applicant certifying that it has provided 

voice, broadband, and/or electric 

transmission or distribution services for 

at least two years must submit audited 

financial statements from the prior fiscal 

year, including balance sheets, and 

statements of net income and cash flow, 

unless it has not obtained an audit of 

financial statements in the ordinary 

course of business. If the applicant 

cannot make that certification, it must 

submit (1) audited financial statements 

for the three most recent consecutive 

fiscal years, including balance sheets, 

and statements of net income, and cash 

flow, and (2) a letter of interest from a 

qualified bank with terms acceptable to 

the Commission that the bank would 

provide a letter of credit to the bidder 

if the bidder were selected for support 

of a certain dollar magnitude. The 

Commission seeks comment on whether 

it should also require applicants 

submitting audited financial statements 

to identify and report certain specific 

information from their most recent 

financial statements on the short-form 

application to facilitate the 

Commission’s review of their financial 

capabilities. 

50. In the Phase II Auction Order, the 

Commission permitted an applicant 

certifying that it has provided voice, 

broadband, and/or electric transmission 

or distribution services for at least two 

years, but that is not audited in the 

ordinary course of business to wait until 

after it is announced as a winning 

bidder to submit audited financial 

statements. Such an applicant must 

certify that it will submit the prior fiscal 

year’s audited financial statements by 

the deadline during the long-form 

application process. The Commission 

seeks comment on whether it should 

require these applicants to submit 

unaudited financial statements with the 

short-form application and to identify 

and report the same information in the 

short-form application as an applicant 

that submits audited financial 

statements. 

51. Based on the Commission’s 

experience with the rural broadband 

experiments, it proposes that 

Commission staff use criteria similar to 

those used there in evaluating the 

financial statements of those 

applications, including a five-point 

scale described below. Specifically, the 

Commission proposes to require an 

applicant to respond to one financial 

question and submit four financial 

metrics. An applicant could receive one 

point for each of the five areas, and 

those points would be summed as 

shown in the table below. The five-point 

scale should help Commission staff 

evaluate, quickly and efficiently, an 

applicant’s financial qualifications, and 

it would expect an applicant with a 

score of at least three points to be 

financially qualified to bid in the 

auction. An applicant with a score of 

less than three points or a score of zero 

for the ratio of current assets to current 

liabilities and total equity divided by 

total capital would warrant a more indepth review of the full set of financial 

statements submitted with the shortform application, as well as other 

information, to determine whether the 

applicant is qualified to bid in the Phase 

II auction. 

52. Specifically, the short-form 

application would ask an applicant 

whether, to the extent that its prior yearend financial statements were audited, 

it had received an unmodified, nonVerDate Sep<11>2014 14:55 Aug 24, 2017 Jkt 241001 PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 E:\FR\FM\25AUP1.SGM 25AUP1

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qualified opinion from the auditor; an 

applicant would receive one point for a 

‘‘yes’’ answer. Each applicant would 

also enter the following metrics from its 

prior year-end financial statements: (1) 

Latest operating margins (i.e., operating 

revenue less operating expenses), where 

an operating margin greater than zero 

receives one point; (2) time interest 

earned ratio (TIER), where TIER ((net 

income plus interest expense)/interest 

expense) greater than or equal to 1.25 

would receive one point; (3) current 

ratio (i.e., current assets divided by 

current liabilities), where a ratio greater 

than or equal to 2 would receive one 

point; and (4) total equity divided by 

total capital, where a result greater or 

equal to 0.5 would receive one point. 

This scoring methodology is 

summarized in the chart below: 

If the applicant has audited financial statements, did it receive an unmodified (nonqualified) opinion? Yes ............................................................ +1 

Operating margin .......................................................................................................... >0 .............................................................. +1 

Times Interest Earned Ratio (TIER) ............................................................................ >=1.25 ....................................................... +1 

Ratio current assets/current liabilities .......................................................................... >=2 ............................................................ +1 

Total equity/total capital (total equity plus total liabilities) ............................................ >=0.5 ......................................................... +1 

53. The Commission proposes 

common and simple financial metrics to 

evaluate the financial position of the 

types of applicants that it anticipates 

will seek to participate in the auction. 

The question regarding an applicant’s 

audit opinion measures both the 

applicant’s financial condition and 

operations. The metric for operating 

margin measures core profitability, and 

the metrics for current ratio and ratio of 

equity to capital measure the applicant’s 

short- and long-term financial 

condition, respectively. TIER measures 

the ability to pay the interest on 

outstanding debt. The Commission 

seeks comment on these five evaluative 

criteria. Are there additional metrics 

that the Commission should consider 

that are both common and simple and 

can be used to analyze the financial 

qualifications of auction applicants? 

54. The Commission staff’s 

determination at the short-form stage 

that an applicant is financially qualified 

to bid would not preclude a 

determination at the long-form 

application review stage that an 

applicant is not authorized to receive 

Phase II support. The Commission’s 

rules require that during the long-form 

application stage a winning bidder: (1) 

Certify that it will have available funds 

for all project costs that exceed the 

amount of Phase II support for the first 

two years, (2) submit a description of 

how the required construction will be 

funded, and (3) obtain a letter of credit. 

55. The Commission proposes 

requiring an applicant to certify that it 

has performed due diligence concerning 

its potential participation in the Phase 

II auction. Specifically, the Commission 

proposes that each applicant make the 

following certification in its application 

under penalty of perjury: 

The applicant acknowledges that it 

has sole responsibility for investigating 

and evaluating all technical and 

marketplace factors that may have a 

bearing on the level of Connect America 

Fund Phase II support it submits as a 

bid, and that, if the applicant wins 

support, it will be able to build and 

operate facilities in accordance with the 

Connect America Fund obligations and 

the Commission’s rules generally. 

56. This proposed certification will 

help ensure that each applicant 

acknowledges and accepts 

responsibility for its bids and any 

forfeitures imposed in the event of 

default, and that the applicant will not 

attempt to place responsibility for the 

consequences of its bidding activity on 

either the Commission or third parties. 

The Commission seeks comment on this 

proposal. 

57. The Commission proposes to 

require each winning bidder to submit 

certain information in its long-form 

application to aid the Commission staff 

in evaluating whether the winning 

bidder is technically and financially 

qualified to meet the relevant Phase II 

public interest obligations in the areas 

where it was awarded support. As 

required by the Commission’s rules, a 

winning bidder must also provide in its 

long-form application more in-depth 

information regarding the networks it 

intends to use to meet its Phase II 

obligations and how it intends to fund 

such networks. Among other things, the 

Commission proposes to require each 

applicant to provide in its long-form 

application any updates to its spectrum 

authorizations or spectrum access and 

to certify in its long-form application 

that it will retain access to the spectrum 

for at least 10 years from the date of the 

funding authorization. Requiring this 

information in the long-form application 

will provide the Commission with 

additional assurance that a winning 

bidder intends to retain appropriate 

access to spectrum, particularly if any 

changes identified in the long-form 

application were not certified to in the 

short-form application. The Commission 

expects to provide guidance in a future 

public notice regarding the specific 

types of information that each winning 

bidder will be required to submit in its 

long-form application to support its 

operational assertions in the short-form 

application. 

IV. Auction Reserve Prices 

58. The Commission proposes that the 

reserve price for each census block 

group will be the sum of the support 

amounts calculated for each eligible 

census block in that census block group, 

subject to the cap on extremely highcost locations. For all census blocks 

with average costs above the funding 

threshold but below the extremely highcost threshold (i.e., high-cost census 

blocks), the Commission proposes to set 

a reserve price based on the support perlocation calculated by the CAM for that 

census block. This would ensure that no 

high-cost census block will receive more 

Connect America Fund Phase II support 

than the CAM calculates is necessary for 

deploying and operating a voice and 

broadband-capable network in that 

census block. 

59. Under the Commission’s rules on 

competitive bidding for high-cost 

universal service support, the 

Commission has the discretion to 

establish maximum acceptable per-unit 

bid amounts and reserve amounts, 

separate and apart from any maximum 

opening bids. In the Phase II Auction 

Order, the Commission decided that 

bids in excess of a reserve price set 

using the CAM will not be accepted, 

and that winning bidders generally 

would be those that accept the lowest 

percentages of the reserve price for the 

areas for which they bid. Assigned 

support amounts would take into 

account the performance tiers and 

latencies specified in the winning bids. 

The Commission also decided to cap the 

amount of support per location 

provided to extremely high-cost census 

blocks. 

60. For census blocks with average 

costs that exceed the extremely highcost threshold, the Commission 

proposes imposing a $146.10 perlocation-per-month funding cap so that 

the reserve price will be equal to 

$146.10 multiplied by the number of 


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locations in that census block as 

determined by the CAM. This cap 

would be calculated by starting with the 

extremely high-cost benchmark of 

$198.60 and subtracting the funding 

threshold of $52.50 that WCB 

determined could reasonably be 

recovered through end-user charges. 

This approach would help ensure that 

Phase II auction support is not 

unreasonably skewed toward areas that 

the Commission has deemed the most 

expensive to serve and the most remote. 

These areas also tend to be sparsely 

populated. If the Commission were to 

allocate all the available Connect 

America Fund support to areas where 

few consumers live, it would leave 

many consumers unserved. In 

circumstances where bidders can make 

a business case to serve these extremely 

high-cost areas with support at or below 

the capped amount, they would be able 

to bid for support in these areas. To the 

extent bidders cannot, the census blocks 

would not receive bids, and thus would 

remain eligible for the Remote Areas 

Fund auction if they continue to be 

unserved. 

61. Finally, for administrative 

simplicity, the Commission proposes to 

round the reserve prices for each census 

block group to the nearest dollar. 

Because auction participants will place 

bids for annual support amounts, the 

Commission proposes to multiply the 

monthly reserve price for a census block 

group by 12 and then perform the 

rounding. As a simplified example, if an 

annual reserve price for a census block 

group is $15,000.49, the reserve price 

would be rounded down to $15,000; and 

if a reserve price is $15,000.50, the 

reserve price would be rounded up to 

$15,001. Thus, any census block group 

that has a reserve price of less than 

$0.50 would be ineligible for the Phase 

II auction. 

62. When it released the preliminarily 

eligible census block list in August 2016 

based on the June 30, 2015 FCC Form 

477 data, WCB included the annual 

CAM-calculated support amounts for 

the high-cost census blocks and capped 

the CAM-calculated support amount at 

$146.10 per location-per-month for 

extremely high-cost census blocks. That 

list is available at https://apps.fcc.gov/ 

edocs_public/attachmatch/DA-16- 

908A1_Rcd.pdf. Commenters can refer 

to this list and round the annual support 

amounts to the nearest dollar for each 

census block group to see approximate 

reserve prices for these areas based on 

the Commission’s proposed 

methodology. To be clear, the list is 

intended to be illustrative for purposes 

of showing potential reserve prices and 

preliminary eligible areas, and parties 

should not assume that support 

ultimately will be made available in all 

the areas listed. For example, the census 

blocks located in New York will be 

removed from the final list because they 

are no longer eligible for the Phase II 

auction due to the Commission’s 

decision to allocate up to $170.4 million 

dollars in partnership with New York’s 

New NY Broadband program in eligible 

census blocks. In addition, WCB will 

update the eligible census block list to 

reflect publicly available Form 477 data 

and may further modify the list in light 

of the public notice that WCB recently 

released seeking comment on certain 

census blocks. A final list of eligible 

census blocks will be released at least 

three months prior to the short-form 

application filing deadline. 

63. The Commission seeks comment 

on these proposals and on any other 

proposed methodology for calculating 

reserve prices using the Connect 

America Cost Model. 

V. Proposed Bidding Procedures 

64. The Commission proposes to use 

a descending clock auction to identify 

the providers that will be eligible to 

receive Phase II support and to establish 

the amount of support that each bidder 

will be eligible to receive using a 

‘‘second-price’’ rule, subject to postauction application review. In the Phase 

II Auction FNPRM Order, 82 FR 14466, 

March 21, 2017, the Commission 

decided that bids for different areas at 

specified performance tier and latency 

levels will be compared to each other 

based on the percentage each bid 

represents of their respective areas’ 

reserve prices. In the sections below, the 

Commission discusses and seeks 

comment on the details of the proposed 

auction format and procedures. As 

directed by the Commission, the 

Bureaus also compiled and released a 

guide that provides further technical 

and mathematical detail regarding the 

bidding, assignment, and support 

amount determination procedures 

proposed here, as well as examples for 

potential bidders. In addition, the 

Commission seeks comment on what 

types of additional information (e.g., 

fact sheets and user guides) it could 

make available to help educate parties 

that have never participated in a 

Commission auction. The Commission 

also seeks comment on whether the 

Bureaus should use the Commission’s 

Office of Communications Business 

Opportunities to engage with small 

providers interested in the auction 

process. 

65. The Bureaus will conduct the 

Phase II auction over the Internet, and 

bidders will upload bids in a specified 

file format for processing by the bidding 

system. The Commission proposes that 

the bidding system announce a base 

clock percentage before each round. The 

base clock percentage is used to delimit 

the acceptable prices in each round of 

the auction and as a common unit to 

compare bids for different performance 

tiers and latencies. The round’s base 

clock percentage implies an annual 

support amount for a given area at the 

performance tier and latency 

combination specified in a bid using the 

formula determined in the Phase II 

Auction FNPRM Order. 

66. The base clock percentage begins 

at a high level, implying a support 

amount that is equal to or close to the 

full reserve price, and which descends 

from one round to the next. In a round, 

a bidder can submit a bid for a given 

area at a performance tier and latency 

combination at any percentage that is 

greater than or equal to the round’s base 

clock percentage and less than the 

previous round’s base clock percentage. 

A bid indicates that the bidder is willing 

to provide service to the area that meets 

the specified performance tier and 

latency requirements in exchange for 

support that is no less than the support 

amount implied by the bid percentage. 

67. The base clock percentage will 

continue to descend in a series of 

bidding rounds, implying diminishing 

support amounts, until the aggregate 

amount of support represented by the 

bids placed in a round at the base clock 

percentage is no greater than the budget. 

At that point, when the budget ‘‘clears,’’ 

the bidding system will assign support 

to current bidders in areas where there 

are not competing bids from two or 

more bidders to provide service. 

Bidding will continue, however, for 

areas where there are competing bids, 

and the clock will continue to descend 

in subsequent rounds. When there is no 

longer competition for any area, the 

auction will end. A winning bidder may 

receive support in amounts at least as 

high, because of the second-price rule, 

as the support amounts corresponding 

to their bid percentages. 

68. The Commission proposes that the 

Phase II descending clock auction will 

consist of sequential bidding rounds 

according to an announced schedule 

providing the start time and closing 

time of each bidding round. As is 

typical for Commission auctions, the 

Commission proposes to retain the 

discretion to change the bidding 

schedule—with advance notice to 

bidders—in order to foster an auction 

pace that reasonably balances speed 

with giving bidders sufficient time to 

study round results and adjust their 

bidding strategies. Under this proposal, 


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the Bureaus may modify the amount of 

time for bidding rounds, the amount of 

time between rounds, or the number of 

rounds per day, depending on bidding 

activity and other factors. The 

Commission seeks comment on this 

proposal. Commenters suggesting 

alternatives to this proposal should 

address any other means the 

Commission should use to manage the 

auction pace. 

69. The Commission proposes that 

under its descending clock auction 

format, the base clock will be 

denominated in terms of a percentage, 

which will be decremented for each 

round. To determine the annual support 

amount implied at each percentage, the 

percentage will be adjusted for the 

weights for each performance tier and 

latency combination for which bids will 

be accepted, and an area-specific reserve 

price, as in the formula set forth below. 

This proposed approach is consistent 

with previous Commission decisions 

regarding the Phase II auction. 

70. In the Phase II Auction Order, the 

Commission concluded that it would 

accept bids for four performance tiers 

with varying speed and usage 

allowances and, for each performance 

tier, would provide for bids at either 

high or low latency. The Commission 

further decided to consider all bids 

simultaneously so that bidders 

proposing varying performance 

standards would be competing directly 

against each other for the limited Phase 

II budget. In addition, the Commission 

decided that bidders would bid for 

support expressed as a fraction of an 

area’s reserve price and declined to 

adopt an approach that would conduct 

bidding on a dollar per location basis. 

71. In the Phase II Auction FNPRM 

Order, the Commission adopted weights 

to compare bids for the performance 

tiers and latency combinations adopted 

in the Phase II Auction Order. The 

Commission determined that Minimum 

performance tier bids will have a 65 

weight; Baseline performance tier bids 

will have a 45 weight; Above Baseline 

performance tier bids will have a 15 

weight; and Gigabit performance tier 

bids will have zero weight. Moreover, 

high latency bids will have a 25 weight 

and low latency bids will have zero 

weight added to their respective 

performance tier weight. The lowest 

possible weight for a performance tier 

and latency combination is 0, and the 

highest possible weight is 90. Each 

weight uniquely defines a performance 

tier and latency combination, as shown 

in the table below. 

WEIGHTS FOR PERFORMANCE TIERS AND LATENCIES

Minimum Baseline Above baseline Gigabit 

High latency Low latency High latency Low latency High latency Low latency High latency Low latency 

90 65 70 45 40 15 25 0 

The Commission’s proposal for a 

clock auction format with a base clock 

percentage and weights for performance 

tier and latency combinations 

implements these Commission 

decisions and provides a simple way to 

compare bids of multiple types. The 

Commission seeks comment on this 

proposal. 

72. The Commission proposes that the 

base clock percentage in each round 

will imply a total amount of annual 

support in dollars for each area 

available for bidding, based on the 

performance tier and latency (‘‘T+L’’) 

combination specified in the bid. The 

annual support amount implied at the 

base clock percentage will be the 

smaller of the reserve price and the 

annual support amount obtained by 

using a formula that incorporates the 

performance tier and latency weights. 

Specifically: 

Implied Annual Support Amount (at 

the base clock percentage) = 

Where: 

R denotes the area’s reserve price 

T denotes the tier weight 

L denotes the latency weight 

BC denotes the base clock percentage 

73. Because the highest implied 

support amount can never exceed an 

area’s reserve price, when the base clock 

percentage is greater than 100, the total 

implied annual support for lower 

weighted performance tier and latency 

combinations may remain at an area’s 

reserve price for one or more rounds, 

while the total implied annual support 

of one or more higher weighted 

performance tier and latency 

combinations may be lower than an 

area’s reserve price. When the base 

clock percentage is decremented below 

100, the total implied annual support 

for all area, performance tier and latency 

combinations will be below the areas’ 

respective reserve prices. 

74. The formula above (the ‘‘implied 

support formula’’) can be used to 

determine the implied support at any 

price point percentage by substituting a 

given percentage for the base clock 

percentage. 

75. The Commission proposes that, in 

each round, a bidder may place a bid at 

any price point percentage equal to or 

greater than the base clock percentage 

and strictly less than the previous 

round’s base clock percentage, specified 

up to two decimal places. This proposal 

will reduce the likelihood of ties and 

allow bids to correspond to smaller 

increments in annual support amounts. 

The Commission seeks comment on this 

proposal. 

76. The Commission proposes that 

bids must imply a support amount that 

is one percent or more of an area’s 

reserve price to be acceptable. For a 

given performance tier and latency 

combination, when the price point 

percentage equals T+L, the formula 

implies that the annual support amount 

is zero. When the price point percentage 

equals T+L+1, the formula implies an 

annual support amount that is one 

percent of the area’s reserve price. 

Hence, a bid must be at least T+L+1 to 

be accepted by the bidding system. The 

Commission seeks comment on this 

proposal. 

77. The Commission anticipates that 

the ability to submit bids at price points 

other than the base clock percentage, as 

proposed, will be especially useful to a 

bidder when the lowest support amount 

it will accept for an area corresponds to 

a percentage between the base clock 

percentages for two consecutive rounds. 

In such a case, the proposed option will 

allow the bidder to more precisely 

indicate the point at which it wishes to 

drop out of bidding for the area. In 

contrast, a bidder still willing to accept 

a support amount equal to or less than 

that implied by the base clock 

percentage will simply bid at the base 

clock percentage. In rounds before the 

budget clears, a bidder may bid at an 

intermediate price point in one round 

and then bid again for the same area in 

a subsequent round, but its ability to do 

so is limited. In rounds after the budget 

clears, no area switching is permitted. 

78. The Commission proposes that the 

minimum geographic area for bidding 

will be a census block group. A bid for 


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a census block group is a bid for support 

for the eligible census blocks within that 

census block group. 

79. To simplify the bidding process, 

ensure manageable bid processing, and 

promote straightforward bidding, the 

Commission proposes for Auction 903 

to allow a bidder to place only one bid 

on a given geographic area in a round, 

whether that area is bid on singly or 

included in a package bid. The 

Commission proposes to extend this 

restriction on a bidder placing 

overlapping area bids in a round to also 

apply to multiple bidders that are able 

to coordinate their bidding, which 

includes commonly-controlled bidders 

and bidders subject to joint bidding 

arrangements. The Commission 

anticipates that the restriction on 

overlapping bids by a single bidder will 

simplify bid strategies for bidders and 

eliminates the need for the auction 

system to use mathematical 

optimization to consider multiple ways 

to assign winning bids to a bidder, thus 

simplifying bid processing. The 

restriction on overlapping bids by 

multiple bidders able to coordinate their 

bidding should promote straightforward 

bidding by eliminating the possibility 

that separate bidders may coordinate 

their bids in ways that may 

disadvantage other bidders in the 

auction. 

80. To implement the restriction on 

bids by a single bidder, the Commission 

proposes that the bidding system not 

accept multiple bids by a bidder in a 

round that include the same area. To 

implement the restriction on multiple 

bidders that are able to coordinate their 

bidding, the Commission proposes to 

restrict the ability of such applicants to 

select the same state during the preauction application process, as 

discussed above. Specifically, the 

Commission’s proposed application 

procedures require that commonlycontrolled applicants or applicants 

subject to joint bidding arrangements 

not select on their applications any of 

the same states but instead resolve any 

overlapping state bidding interests prior 

to becoming qualified to participate in 

the auction. The Commission seeks 

comment on this proposal. 

81. A bid is an offer to serve the 

locations in eligible census blocks 

within the indicated census block group 

at the indicated performance tier and 

latency combination for a total annual 

amount of support that is not less than 

the implied annual support at the price 

point percentage specified by the bidder 

and not more than the reserve price. In 

each round, a bid for a single available 

census block group with reserve price R 

consists of three pieces: A performance 

tier weight, T, latency weight, L, and a 

price point that is a percentage not less 

than the current round’s base clock 

percentage and less than the previous 

round’s base clock percentage. For a 

given round, a census block group can 

be included in at most one bid— 

whether a bid on a single census block 

group or a package bid on multiple 

census block groups—made by a bidder, 

and a bidder can only bid on census 

block groups that are in states that the 

bidder selected on its application. If a 

bidder wants to know the annual 

support amount implied by its bid 

percentage, the bidder can calculate the 

implied annual support, by taking the 

smaller of the reserve price R and the 

annual support calculated according to 

the implied support formula. 

82. Before the budget has cleared, a 

bidder may change the performance tier 

and latency combination in any of its 

bids from the previous round, provided 

the bidder qualified for the performance 

tier and latency combination for the 

state at the application stage. 

83. The Commission proposes 

package bidding procedures that will 

give bidders the option to place bids to 

serve a bidder-specified list of census 

block groups, with corresponding bid 

processing procedures that may assign 

fewer than the full list of areas to the 

bidder as long as the funding associated 

with the assigned areas is at least equal 

to a bidder-specified percentage of the 

funding requested for the complete list 

of areas. The Commission proposes to 

allow a bidder to specify a package bid 

by providing a list of census block 

groups, a performance tier and latency 

combination for each census block 

group in the list, a single price point for 

the list, and a minimum scale 

percentage for the package. The 

minimum scale percentage must be no 

higher than a maximum value defined 

by the Commission, which will be less 

than 100 percent. Thus, a package bid 

is an offer by the bidder to serve any 

subset of areas in the list at the support 

amount implied at the bid percentage, 

provided that the ratio of the total 

implied support of the subset to the 

total implied support of the list meets or 

exceeds the bidder-defined minimum 

scale percentage. 

84. The Commission proposes further 

procedures defining acceptable package 

bids. The Commission proposes that 

each census block group in the list may 

have a different performance tier and 

latency combination. Every census 

block group in a package bid must be in 

the same state. As discussed above, for 

a given round, a census block group can 

appear in at most one bid—either a 

single bid or a package bid—made by a 

given bidder. A bidder may change the 

minimum scale percentage in any 

package bid from round to round. The 

Commission seeks comment, as well, on 

whether it should set a limit on the total 

amount of implied support that may be 

included in a single package. Limiting 

packages to the census block groups 

within a state will impose a de facto 

limit on the total support that may be 

assigned in a package bid, but the 

Commission asks whether a limit, lower 

than the maximum possible state-level 

amount of support, should also be 

implemented. 

85. The Commission also seeks 

comment on the appropriate upper limit 

of the bidder-specified minimum scale 

percentage. The Commission proposes 

80 percent as the Commission-defined 

maximum of the minimum scale 

percentage. The Commission proposes 

to use an upper limit less than 100 

percent so that small overlaps in the 

areas included in package bids do not 

prevent support from being assigned to 

a potentially much larger number of 

areas included in the package bids, 

which could occur if packages were 

assigned on an all-or-nothing basis. 

While an upper limit that is too high 

will not be effective for this purpose, an 

upper limit that is too low will hinder 

bidders’ ability to achieve a minimum 

amount of funding. 

86. The proposed package bidding 

format permits a bidder to choose 

between a minimum amount of support 

or no support, guaranteeing that the 

bidder will not be assigned an amount 

that does not meet the bidder’s specified 

minimum scale requirement. The 

Commission seeks comment on the 

proposed package bidding format. Will 

this package bidding format facilitate 

packages that include areas with diverse 

costs, population densities, and other 

characteristics? Would the option to 

submit package bids be useful to both 

bidders that have small networks and 

bidders that have large networks? 

87. The Commission seeks comment 

on the possibility of using proxy 

bidding, which could reduce bidders’ 

need to submit bids manually every 

bidding round and provide bidders with 

a safeguard against accidentally failing 

to submit a bid. With proxy bidding, a 

bidder could submit instructions for the 

system to continue to bid automatically 

for an area with a specified performance 

tier and latency combination in every 

round until either the base clock 

percentage falls below a bidderspecified proxy amount, the bidder 

intervenes to change its bid, or the area 

is assigned, whichever happens first. In 

the auction format the Commission 

proposes, proxy bidding instructions for 


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a single area or a package of areas would 

contain all the information required for 

these bids, and the specified price point 

percentage would potentially be valid 

for multiple rounds, as described below. 

The Commission proposes that proxy 

bidding instructions will not be 

permitted to include instructions for 

changes to the performance tier and 

latency combination, to the minimum 

scale percentage of a package bid, nor to 

the specified area or areas. 

88. Under the Commission’s proposal 

for proxy bidding, during a round, the 

bidding system will generate a bid at the 

base clock percentage on behalf of the 

bidder as long as the percentage 

specified in the proxy instruction is 

equal to or below the current base clock 

percentage. If the proxy percentage 

exceeds the current base clock 

percentage but is lower than the prior 

round’s base clock percentage, then the 

bidding system will generate a bid at the 

price point percentage of the proxy. 

These bids would be treated by the 

auction system in the same way as any 

other bids placed in the auction. Thus, 

proxy instructions will remain effective 

through the round in which the base 

clock percentage is equal to or less than 

the proxy percentage. During a bidding 

round, a bidder may cancel or enter new 

proxy bidding instructions. Since proxy 

instructions may expire as the base 

clock descends, even with proxy 

bidding, bidders must monitor the 

progress of the auction to assure that 

they do not need to cancel or adjust 

their proxy instructions. 

89. The Commission seeks comment 

on whether to provide for proxy bidding 

in this way. The Commission also seeks 

comment on whether the bidding 

system should alert bidders regarding 

the status of their proxy instructions 

(i.e., whether the proxy instructions 

remain in effect). 

90. Under the Commission’s proposal, 

proxy bidding instructions will be 

treated as confidential information and 

would not be disclosed to the public at 

any time after the auction concludes, 

because they may reveal private cost 

information that would not otherwise be 

made public (e.g., if proxy bidding 

instructions are not fully implemented 

because the base clock percentage does 

not fall as low as the specified proxy 

percentage). However, the amount of 

support awarded for any assigned bid, 

regardless of whether it was placed by 

the bidder or by the bidding system 

according to proxy bidding instructions, 

will be publicly disclosed. The 

Commission seeks comment on these 

proposals. 

91. The Commission proposes to 

measure a bidder’s bidding activity in a 

round in terms of implied support 

dollars and to adopt activity rules that 

prevent a bidder’s activity in a round 

from exceeding its activity in the 

previous round. Activity rules for 

bidding are used in multiple round 

auctions to encourage bidders to express 

their bidding interests early and 

sincerely, thus generating reliable 

information about the level of bidding 

across the various geographic areas in 

the auction. Activity rules promote the 

orderly collection of bids across rounds 

and limit undesirable strategic bidding 

behavior such as insincerely switching 

bids across areas, waiting to bid until 

everyone else has bid, or suddenly 

increasing the number of areas for 

which bids were submitted. Activity 

rules balance these concerns with 

allowing bidders some freedom to react 

to competition and price changes. 

92. For this descending clock auction, 

the Commission proposes that a bidder’s 

activity in a round: (1) Be calculated as 

the sum of the implied support amounts 

(calculated at the bid percentage) for all 

the areas bid for in the round, and (2) 

not exceed its activity from the previous 

round. The Commission further 

proposes that a bidder be limited in its 

ability to switch to bidding for support 

in different areas from round to round. 

Specifically, a bidder’s activity in a 

round from areas that the bidder did not 

bid on at the previous round’s base 

clock percentage cannot exceed an 

amount determined by a percentage (the 

‘‘switching percentage’’) of the bidder’s 

total implied support from bids at the 

previous round’s base clock percentage. 

The Commission proposes to set this 

switching percentage at 10 percent 

initially and to give the Bureaus the 

discretion to change the switching 

percentage, with adequate notice, before 

a round begins. 

93. The Commission seeks comment 

on these proposed activity rules. In 

addition, the Commission asks for 

comment on the appropriate size of the 

switching percentage, and, if it is to be 

changed across rounds, when and how 

it should be changed. Will the proposed 

10 percent switching percentage allow a 

bidder sufficient flexibility to react to 

other bidders’ bids from the prior 

round? 

94. Since bidding in rounds after the 

budget has cleared is limited to bidding 

to resolve competition among areas for 

which more than one bidder was willing 

to accept the base clock percentage in 

the round when the budget cleared, a 

bidder’s permissible bids after clearing 

will necessarily satisfy the activity 

rules, which therefore are no longer 

constraining. After the budget clears, the 

Commission proposes that a bidder not 

be allowed to switch to bidding for 

different areas or to change the 

performance tier and latency 

combination of a bid. 

95. The Commission proposes that 

once a bidding round closes, the 

bidding system will consider the 

submitted bids to determine whether an 

additional round of bidding at a lower 

base clock percentage is needed to bring 

the amount of requested support down 

to a level within the available budget. If 

the total requested support at the base 

clock percentage exceeds the budget, 

another bidding round occurs. In a 

round in which the amount of overall 

requested support falls to a level within 

the budget, bid processing will take the 

additional steps of assigning support for 

a given area to the bid at the lowest 

percentage (as measured by the price 

point percentage of the bid) and 

determining support amounts to be paid 

according to a second-price rule. If there 

are multiple bids for a given area at the 

base clock percentage, the bidding 

system will commence another round of 

bidding to resolve the competition, and 

rounds will continue with bidding for 

these areas at lower base clock 

percentages until, for each of the 

contested areas, there is a single low 

bid. The winning bidder will then be 

assigned support at the price point 

percentage of the second lowest bid. 

Additional details and examples of bid 

processing are provided in the technical 

guide released by the Bureaus. 

96. As a result of these proposed 

procedures, the bids that can be 

assigned under the budget in the round 

when the budget clears and in any later 

rounds will determine the areas that 

will be provided support under Phase II. 

At most, one bid per area will be 

assigned support, and as set forth above, 

the winning bid for an area will 

generally be the bid made at the lowest 

percentage. The specifications of that 

bid, in turn, determine the performance 

tier and latency combination at which 

service will be provided to the eligible 

locations in the area. 

97. ViaSat has suggested an 

alternative approach to assigning 

winning bids. Instead of ranking bids 

based strictly on the percentage of the 

reserve price, ViaSat proposes that the 

auction system take the number of 

locations to be covered, as well as 

performance tier and latency, into 

account when assigning winning bids. 

As another party has observed, however, 

this suggestion conflicts with the 

Commission’s decision not to assign 

support based on the number of 

locations covered and therefore is 

beyond the scope of this Public Notice. 


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98. The Commission seeks comment 

generally on its proposed approach to 

assigning bids and determining support 

amounts. The Commission asks any 

commenters supporting an alternative 

approach to consider the goals of the 

Commission in the Connect America 

Fund Phase II proceeding, the decisions 

made to date on auction design, and 

how any suggested alternatives would 

integrate with other aspects of the 

auction design. 

99. The Commission’s specific 

proposals for bid processing procedures 

fall into three categories: Before, during, 

and after the round in which the budget 

clears. The Commission addresses them 

in order below, after first addressing 

proposals for the base clock percentage. 

100. In each of a series of discrete 

bidding rounds, a bidder will be offered 

an amount of support for an area at a 

specified performance tier and latency 

combination that is determined by the 

base clock percentage for the round. By 

bidding at that base clock percentage, 

the bidder indicates that it is willing to 

provide the required service within the 

bid area in exchange for a payment at 

least as large as that implied by the base 

clock percentage. The opening base 

clock percentage will determine the 

highest support amount that the bidder 

will be offered in the auction for a given 

area and performance tier and latency 

combination. 

101. The Commission proposes to 

start the base clock percentage at 100 

percent of an area’s reserve price plus 

an additional percentage equal to the 

largest performance tier and latency 

combination discount that may be 

submitted by any qualified bidder in the 

auction. Therefore, if any applicant is 

qualified to bid to provide service at the 

Minimum performance tier and high 

latency—a performance tier and latency 

combination assigned a weight of 90— 

the Commission proposes that the base 

clock percentage will start at 190 

percent. Starting the clock at this level 

will allow bidders at the lower 

performance tier and latency 

combinations multiple bidding rounds 

in which to compete for support 

simultaneously with bidders offering 

higher performance tier and latency 

combinations. 

102. The Commission seeks comment 

on this approach to setting the initial 

base clock percentage, and request that 

commenters, in considering the 

proposal, bear in mind the 

Commission’s previous decisions to: (1) 

Provide an opportunity for bidders 

offering different performance standards 

to compete against each other, and (2) 

balance this approach with the use of 

performance scoring weights previously 

determined by the Commission. 

103. The Commission proposes to 

decrement the base clock percentage by 

10 percentage points in each round. 

However, the Commission also proposes 

to provide the Bureaus with the 

discretion to change that amount during 

the auction if it appears that a lower or 

higher decrement would better manage 

the pace of the auction. For example, if 

bidding is proceeding particularly 

slowly, the Commission may increase 

the bid decrement to speed up the 

auction, recognizing that bidders have 

the option of bidding at an intra-round 

price point percentage if the base clock 

percentage falls to a percentage 

corresponding to an amount of support 

that is no longer sufficient. Under this 

proposal, the Commission would begin 

the auction with a decrement of 10 

percent and limit any further changes to 

the decrement to between 5 percent and 

20 percent. 

104. The Commission asks 

commenters to address proposals to 

begin the auction with a base clock 

percentage decrement of 10 percent, 

with subsequent decrements between 5 

and 20 percent. The Commission also 

seeks comment on circumstances under 

which it should consider changing the 

decrement during the auction. 

105. Under the Commission’s 

proposed approach to bid processing, 

after each clock round until the budget 

has cleared, the bidding system will 

calculate an ‘‘aggregate cost,’’ an 

estimate of what it would cost to assign 

support at the base clock percentage to 

the bids submitted in the round, in 

order to determine whether the budget 

will clear in that round. More precisely, 

the aggregate cost is the sum of the 

implied support amounts for all the 

areas receiving bids at the base clock 

percentage for the round, evaluated at 

the base clock percentage. The 

calculation counts each area only once, 

even if the area receives bids, 

potentially including package bids, from 

multiple bidders. If there are multiple 

bids for an area at different performance 

tier and latency combinations, the 

calculation uses the bid with the highest 

implied support amount. If the aggregate 

cost for the round exceeds the budget, 

the bidding system will implement 

another regular clock round with a 

lower base clock percentage. 

106. The first round in which the 

aggregate cost, as calculated above, is 

less than or equal to the overall support 

budget is considered the ‘‘clearing 

round.’’ In the clearing round, the 

bidding system will further process bids 

submitted in the round, to determine 

those areas that can be assigned and the 

support amounts winning bidders will 

receive. Once the clearing round has 

been identified, the system no longer 

calculates the aggregate cost, even if 

there are subsequent bidding rounds. 

107. In the clearing round, the 

bidding system will consider bids in 

more detail to determine which can be 

identified as winning, or ‘‘assigned,’’ 

bids in that round; the ‘‘second prices’’ 

to be paid for winning bids; and which 

bids will carry over for bidding in an 

additional bidding round or rounds. The 

Commission addresses its proposed 

procedures for these determinations 

below. 

108. Until the clearing round, the 

auction is generally driven by cross-area 

competition for the budget, and until 

the clearing round, implied support 

amounts for all areas are reduced 

proportionately. In estimating cost, the 

system does not determine which of 

multiple bids competing for support in 

the same area will be assigned, although 

it does take into account that only one 

bid per area may be assigned. Processing 

during the clearing round considers 

intra-area competition as well, assigning 

support to bids that require the lowest 

level of support for a given area, as long 

as any assigned package bids meet the 

bidder’s minimum scale percentage. Bid 

processing in the clearing round also 

determines support amounts for 

assigned bids according to a secondprice rule, so that bids are supported at 

a price percentage at least as high as the 

bid percentage. 

109. Once bid processing has 

determined that the current round is the 

clearing round, the bidding system will 

begin to assign winning bids, awarding 

support to at most one bid for a given 

area. The system will first assign bids 

made at the base clock percentage for 

areas not bid on by another bidder at the 

base clock percentage. Any package bids 

that are assigned must meet the bidder’s 

minimum scale percentage. 

110. Under the proposed bid 

processing procedures, the system then 

considers all other bids submitted in the 

round in ascending order of price point 

percentage to see if additional bids can 

be assigned and, considering the bids 

assigned so far, to determine the highest 

price point percentage at which the total 

support cost of the assigned bids does 

not exceed the budget (the ‘‘clearing 

price point’’). Bids at price point 

percentages above the clearing price 

point are not assigned. 

111. As it considers bids in ascending 

price point percentage order, the system 

assigns a bid if no other bid for the same 

area has already been assigned, as long 

as the area did not receive multiple bids 

at the base clock percentage and the 


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areas to be assigned in a package bid 

meet the bid’s minimum scale 

percentage. The bidding system also 

checks to ensure that sufficient budget 

is available to assign the bid. 

112. To determine whether there is 

sufficient budget to support a bid, the 

bidding system keeps a running sum of 

support costs. This cost calculation at 

price point percentages between the 

current and previous base clock 

percentages extends the concept of the 

aggregate cost calculation (which 

identifies the clearing round) to take 

into account, at sequential intermediate 

price points, the cost of bids that have 

been assigned so far and the estimated 

cost of bids that have not been assigned. 

113. The Commission proposes that at 

each ascending price point increment, 

starting at the base clock percentage, the 

running cost calculation is the sum of 

support for three types of bids: (1) For 

assigned bids for which there were no 

other bids for support for their 

respective areas at price points lower 

than the currently-considered price 

point percentage, the system calculates 

the cost of providing support as the 

amount of support implied by the 

currently-considered price point, (2) for 

assigned bids for areas that did receive 

other bids at price points lower than the 

currently-considered price point, 

support is generally calculated as the 

amount implied by the next-higher price 

point at which the area received a bid 

(where next-higher is relative to the 

price point of the assigned bid, not the 

currently-considered price point), and 

(3) competing bids at the base clock 

percentage are not assigned and are 

evaluated as they were in the preclearing aggregate cost calculation: Only 

one bid per area is included in the 

calculation, and if there are bids for an 

area at different performance tier and 

latency combinations, the calculation 

uses the bid with the highest implied 

support amount, all evaluated at the 

base clock percentage. 

114. The auction system continues to 

assign bids meeting the assignment 

criteria in ascending price point order as 

long as the cost calculation does not 

exceed the budget. The highest price 

point at which the running total cost 

will not exceed the budget is identified 

as the clearing price point. This process 

is addressed in more detail in the 

technical guide that has been released 

by the Bureaus. 

115. Bids that were assigned for areas 

that received no other bids at less than 

the clearing price point are supported at 

an amount implied by the clearing price 

point percentage. 

116. Bids assigned in the clearing 

round, when there was also a bid at a 

price point higher than the base clock 

percentage, are generally supported at 

an amount determined by the price 

point percentage of the higher 

unassigned bid. For example, if there 

are two bids for an area, the lower bid 

is supported at the bid price point of the 

higher bid. 

117. The Commission seeks comment 

on these assignment and pricing 

proposals for the clearing round. 

118. Once the budget clears, further 

bidding resolves competition for areas 

where more than one bidder is still 

bidding for support at the lowest base 

clock percentage announced so far, 

which is the base clock percentage in 

the previous round. Therefore, bidding 

rounds continue after the clearing round 

at lower base clock percentages, but bids 

are restricted to areas for which the 

bidder had bid at the clearing round’s 

base clock percentage but which could 

not be assigned in the clearing round. 

Such bids may be for a given unassigned 

area that received multiple single bids, 

package bids that were not assigned 

because the bidder’s minimum scale 

percentage for the package was not met, 

or remainders of package bids— 

unassigned areas that formed part of 

package bids that were partially 

assigned. 

119. The Commission proposes that 

these bids at the base clock percentage 

for unassigned areas will carry over 

automatically to the next bidding round 

at the previous round’s clock 

percentage, since the bidder had 

previously accepted that percentage. In 

the round into which the bids carry 

forward, the bidder may also bid for 

support for these areas at the current 

round’s base clock percentage or at 

intermediate price points. In rounds 

after the clearing round, a bidder cannot 

switch to bidding for an area for which 

it did not bid in the previous round, nor 

can a bidder bid at a different 

performance tier and latency 

combination for an area for which it bid 

previously. 

120. While bids for unassigned 

packages will carry over at the previous 

clock percentage, the bidder for such a 

package may group the bids for the areas 

in the package into smaller packages 

and bid on those smaller packages at 

current round percentages. However, 

the unassigned remainders of assigned 

package bids will carry over as 

individual area bids. Any bids the 

bidder places for the remainder areas at 

the new round percentages must be bids 

for individual areas—that is, the bidder 

cannot create a new package of any of 

the unassigned remainders. 

121. The Commission proposes that 

proxy instructions, if at a price point 

percentage below the base clock 

percentage of the previous round, 

continue to apply in rounds after the 

clearing round under the same 

conditions that apply to other bids. For 

package bids made by proxy that are 

only partially assigned because there are 

multiple bids at the base clock 

percentage, the proxy instructions 

continue to apply to the unassigned 

areas in the package bid. That is, the 

price point percentage specified in the 

proxy instructions would apply to bids 

for the individual remainder areas. 

122. As in the clearing round, in 

subsequent rounds the system considers 

bids for assignment and support amount 

determination in ascending price point 

percentage order. The system first 

considers bids at the new round’s base 

clock percentage, and any bids for areas 

that received no other bids at the base 

clock percentage are assigned, as long as 

any package bid meets the minimum 

scale percentage of the bid. The system 

then processes bids in ascending price 

point order, assigning those bids for as 

yet unassigned areas, as long as any 

package bids meet the minimum scale 

condition. 

123. If there is only one bid for an 

area in a round, the assigned bid is paid 

at the base clock percentage for the 

previous round, consistent with the 

second-price rule. If an assigned bid is 

for an area that received more than one 

bid in the round, the assigned bid is 

supported at the next higher price point 

percentage at which there is a bid for 

the area. 

124. If there is more than one bid for 

an area at the current base clock 

percentage, including a package bid, 

there will be another bidding round at 

a lower base clock percentage, with the 

same restrictions on bids and following 

the same assignment and pricing 

procedures. The Commission seeks 

comment on these proposed procedures 

for assigning bids and determining 

support amounts in rounds after the 

clearing round. 

125. Under the proposed auction 

design, the auction will end once the 

overall budget has cleared and there are 

no longer competing bids for any areas. 

126. As in past Commission auctions, 

the Commission proposes that the 

public will have access to certain 

auction information, while auction 

participants will have secure access to 

additional, non-public information. 

127. The Commission proposes to 

limit the disclosure of information 

regarding bidding in the auction. During 

the auction, the Commission proposes 

to make available to bidders sufficient 

information about the status of their 

own bids and the eligible areas in the 


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states in which they are qualified to bid 

to allow them to bid confidently and 

effectively. At the same time, the 

Commission proposes to restrict the 

availability of information that may 

facilitate identification of other bidders 

and their bids, which could potentially 

lead to undesirable strategic bidding. 

With that distinction in mind, after each 

round ends, and before the next round 

begins, the Commission proposes to 

make the following information 

available to individual bidders: 

• The base clock percentage for the 

upcoming round. 

• The aggregate cost, as calculated 

above, at the previous round’s base 

clock percentage up until the budget 

clears. 

Æ The aggregate cost at the base clock 

percentage is not disclosed for the 

clearing round or any later round. 

• The bidder’s activity, based on all 

bids in the previous round, and activity 

based on bids at the base clock 

percentage, whether submitted directly 

or by proxy. These will determine, 

respectively, the maximum activity the 

bidder is allowed in the next round and 

the maximum activity the bidder is 

allowed in the next round on areas for 

which the bidder did not bid at the prior 

round’s base clock percentage. 

Æ In rounds after the clearing round, 

the bidder’s assigned support and the 

implied support of its carried-forward 

bids will be available. 

• Summary statistics of the bidder’s 

bidding in the previous round, 

including: 

Æ The number of areas for which it 

bid, at the clock percentage and at other 

price points. 

Æ Breakdowns of activity and number 

of areas by proxy bids, including proxy 

instructions for future rounds. 

Æ After the clearing round, areas and 

support amounts it has been assigned 

and those for which it is still bidding. 

D Status of carried-forward bids. 

• For all eligible areas in all states, 

including those in which the bidder was 

not qualified to bid or is not bidding, 

whether the number of bids placed at 

the previous round’s base clock 

percentage was 0, 1, or 2 or more. 

Æ The performance tier and latency 

combination of the bids is not disclosed. 

128. Prior to each round, the 

Commission also proposes to make 

available to bidders the support 

amounts, corresponding to the areas and 

performance tier and latency 

combinations for which they are eligible 

to bid, that are implied by the round’s 

base clock percentage. 

129. Consistent with the 

Commission’s practice in the Mobility 

Fund Phase I auction (Auction 901) and 

recent spectrum auctions, the 

Commission proposes to adopt 

procedures for limited information 

disclosure for Auction 903. Specifically, 

the Commission proposes to withhold 

from the public, as well as other 

applicants, the following information 

related to the short-form application 

process: 

• The state(s) identified by an 

applicant in which it is interested in 

bidding. 

• The state(s) for which the applicant 

has been determined to be eligible to 

bid. 

• The performance tier and latency 

combination(s) identified by an 

applicant. 

• The performance tier and latency 

combination(s) for which the applicant 

has been determined to be eligible to 

bid. 

• Operational information that is 

intended to demonstrate an applicant’s 

ability to meet the public interest 

obligations for each performance tier 

and latency combination that the 

applicant has identified in its 

application. 

130. The Commission also proposes to 

withhold financial information 

submitted by an applicant that also files 

financial information on FCC Form 481 

pursuant to a protective order. The 

Commission proposes to identify such 

applicants via a question on the shortform application. All other applicants 

may request confidential treatment of 

their financial data by submitting a 

request under Section 0.459 at the same 

time such information is submitted. The 

Commission cautions that requests that 

it withhold financial data that 

applicants elsewhere disclose to the 

public will not be granted. 

131. In addition, until the 

Commission’s announcement of auction 

results, it does not intend to publicly 

release information pertaining to the 

progression of the Phase II auction. This 

includes information such as the round, 

base clock percentage, aggregate cost (as 

it relates to the budget), or any 

information that may reveal or suggest 

the identities of bidders placing bids 

and taking other bidding-related actions. 

While auction participants will have 

access to some of this information to 

inform their bidding, such information 

is of little value to the general public, 

particularly when the Commission 

projects the auction to close within a 

month. At the same time, the public 

release of preliminary auction data 

would impose non-trivial costs on the 

Commission to devise and set up a 

mechanism for that release and to 

prepare aggregated preliminary data at 

the end of each round or other 

appropriate interval. Furthermore, due 

to the preliminary and complex nature 

of the data, its release may engender 

confusion among the general public. 

132. After the close of bidding and 

announcement of auction results, the 

Commission proposes to make publicly 

available all short-form application 

information and bidding data, except for 

an applicant’s operational information, 

confidential financial information, and 

proxy bidding instructions. This 

approach is consistent with the 

Commission’s practice in the Mobility 

Fund Phase I auction and its typical 

spectrum auctions. The Commission 

recognizes that the Phase II auction 

bidding data it proposes to release 

would presumably encompass bids for 

eligible areas that do not receive Phase 

II support and therefore may be eligible 

for Remote Areas Fund (RAF) support in 

a subsequent auction, and that these 

non-winning Phase II bids may be used 

to inform bids in the RAF auction. 

However, that information is of value to 

all potential RAF auction participants— 

not just those that participated in the 

Phase II auction and thus potentially 

would have had access to information 

about bids in those areas. Accordingly, 

the public release of Phase II bidding 

data would prevent asymmetric 

information from being disseminated 

among potential RAF auction bidders, 

which could ultimately distort 

competition in the RAF auction. 

133. The Commission seeks comment 

on its proposals to limit the availability 

of bidding information during the 

auction and to adopt limited 

information procedures for the Phase II 

auction concerning the application and 

bidding data that will be publicly 

available before, during, and after the 

auction. 

Proposed Auction 903 Short-Form 

Application Operational Questions 

Has the applicant previously 

deployed consumer broadband 

networks (Yes/No)? If so, identify the 

date range for when broadband service 

was offered and in which state(s) service 

was offered. What specific last mile and 

interconnection (backhaul) technologies 

were used? How many subscribers were 

served? What services (e.g., voice, video, 

broadband Internet access) were 

provided? 

Answer for each state the applicant 

selected in its application: 

1. Which network architectures and 

technologies will be used in the 

applicant’s proposed deployment? How 

will voice services be provided? How 

will broadband Internet access service 

be provided? 


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2. What are the relevant industry 

standards for the last-mile technologies 

in the applicant’s proposed 

deployment? What features of this 

technology and proposed network will 

enable performance tier, latency and 

voice service requirements to be met? 

3. Can the applicant demonstrate that 

the technology and the engineering 

design will fully support the proposed 

performance tier, latency and voice 

service requirements for the requisite 

number of locations during peak periods 

(Yes/No)? What assumptions about 

subscription rate and peak period data 

usage is the applicant making in this 

assertion? List the information that can 

be made available to support this 

assertion. 

4. Can the applicant demonstrate that 

all the network buildout requirements to 

achieve all service milestones can be 

met (Yes/No)? Describe the information 

that the applicant can make available in 

a project plan to support this assertion. 

5. For the proposed performance tier, 

latency and voice service, can the 

applicant demonstrate that potential 

vendors, integrators and other partners 

are able to provide commercially 

available and fully compatible network 

equipment, interconnection, last mile 

technology and customer premise 

equipment (CPE) at cost consistent with 

applicant’s buildout budget and in time 

to meet service milestones (Yes/No)? 

Describe the information and sources of 

such information that the applicant 

could make available to support this 

response. 

6. Can the applicant describe how the 

network will be maintained and services 

provisioned (Yes/No)? Can the applicant 

demonstrate that it can provide 

internally-developed operations systems 

for provisioning and maintaining the 

proposed network including equipment 

and segments, interconnections, CPE 

and customer services at cost consistent 

with applicant’s buildout budget and in 

time to meet service milestones (Yes/ 

No)? If not, can the applicant 

demonstrate that potential vendors, 

integrators, and other partners are able 

to provide commercially available and 

fully compatible operations systems and 

tools for provisioning and maintaining 

the proposed network at cost consistent 

with applicant’s buildout budget and in 

time to meet service milestones (Yes/ 

No)? Describe the information and 

sources of such information that the 

applicant could make available to 

support these responses. 

7. If the applicant is using satellite 

technologies, describe the total satellite 

capacity available and possible methods 

the applicant will utilize to assign 

bandwidth and capacity for each spot 

beam. 

PROPOSED AUCTION 903 SPECTRUM CHART

Spectrum band/service 

Paired licensed Unpaired licensed Unlicensed 

Uplink freq. 

(MHz) 

Downlink freq. 

(MHz) Uplink & downlink freq. (MHz) Unlicensed (MHz) 

600 MHz .......................................................... 663–698 617–652 ......................................................................... ........................

Lower 700 MHz ............................................... 698–716 728–746 716–728 (Downlink only) ............................... ........................

Upper 700 MHz ............................................... 776–787 746–757 ......................................................................... ........................

800 MHz SMR ................................................ 813.5/817–824 858.5/862–869 ......................................................................... ........................

Cellular ............................................................ 824–849 869–894 ......................................................................... ........................

Broadband PCS .............................................. 1850–1915 1930–1995 ......................................................................... ........................

AWS–1 ............................................................ 1710–1755 2110–2155 ......................................................................... ........................

AWS (H Block) ................................................ 1915–1920 1995–2000 ......................................................................... ........................

AWS–3 ............................................................ 1755–1780 2155–2180 1695–1710 (Uplink only) ................................ ........................

AWS–4 ............................................................ ........................ ........................ 2000–2020 ..................................................... ........................

2180–2200 (Downlink only) ........................... ........................

BRS/EBS ......................................................... ........................ ........................ 2496–2690 ..................................................... ........................

WCS ................................................................ 2305–2315 2350–2360 2315–2320 ..................................................... ........................

2345–2350 ..................................................... ........................

CBRS (3.5 GHz) ............................................. ........................ ........................ 3550–3700 ..................................................... ........................

2.4 GHz ........................................................... ........................ ........................ ......................................................................... 2400–2483.5 

5 GHz .............................................................. ........................ ........................ ......................................................................... 5150–5250 

5725–5850 

24 GHz ............................................................ ........................ ........................ ......................................................................... 24,000–24,250 

Ku Band (satellite) .......................................... 14,000–14,500 11,700–12,200 ......................................................................... ........................

Ka Band (satellite) .......................................... 27,500–30,000 17,700–20,000 ......................................................................... ........................

UMFUS (terrestrial) ......................................... ........................ ........................ 27,500–28,350 ............................................... ........................

38,600–40,000 ............................................... ........................

Abbreviations 

AWS Advanced Wireless Services 

BRS/EBS Broadband Radio Service/ 

Education Broadband Service 

CBRS Citizens Broadband Radio Service 

PCS Personal Communications Service 

SMR Specialized Mobile Radio 

UMFUS Upper Microwave Flexible Use 

Service 

WCS Wireless Communications Service 

VI. Procedural Matters 

134. This document seeks to 

implement the information collections 

adopted in the Phase II Auction Order 

and does not contain any additional 

proposed information collection(s) 

subject to the Paperwork Reduction Act 

of 1995 (PRA), Public Law 104–13. The 

Commission is currently seeking PRA 

approval for information collections 

related to the short-form application 

process and will in the future seek PRA 

approval for information collections 

related to the long-form application 

process. In addition, therefore, this 

document does not contain any new or 

modified information collection burden 

for small business concerns with fewer 

than 25 employees, pursuant to the 

Small Business Paperwork Relief Act of 

2002, Public Law 107–198, see 44 U.S.C. 

3506(c)(4). 

135. As required by the Regulatory 

Flexibility Act of 1980 (RFA), the 

Commission prepared Initial Regulatory 

Flexibility Analyses (IRFAs) in 

connection with the USF/ICC 

Transformation Order FNPRM, 76 FR 

78384, December 16, 2011, the April 

2014 Connect America FNPRM, 79 FR 

39196, July 9, 2014, and the Phase II 


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Auction FNPRM, 81 FR 40235, June 21, 

2016 (collectively, Phase II FNPRMs), 

and Final Regulatory Flexibility 

Analyses (FRFAs) in connection with 

the April 2014 Connect America Order, 

79 FR 39164, July 9, 2014, the Phase II 

Auction Order, and the Phase II Auction 

FNPRM Order (collectively, Phase II 

Orders). The Commission sought 

written public comment on the 

proposals in the Phase II FNPRMs, 

including comments on the IRFAs. The 

Commission did not receive any 

comments in response to those 

Regulatory Flexibility Analyses. 

136. The IRFAs for the Phase II 

NPRMs and the FRFAs for the Phase II 

Orders set forth the need for and 

objectives of the Commission’s rules for 

the Phase II auction; the legal basis for 

those rules; a description and estimate 

of the number of small entities to which 

the rules apply; a description of 

projected reporting, recordkeeping, and 

other compliance requirements for small 

entities; steps taken to minimize the 

significant economic impact on small 

entities and significant alternatives 

considered; and a statement that there 

are no federal rules that may duplicate, 

overlap, or conflict with the rules. The 

proposals in this Public Notice do not 

change any of those descriptions. 

However, because this Public Notice 

proposes specific procedures for 

implementing the rules proposed in the 

Phase II FNPRMs and adopted in the 

Phase II Orders, the Commission has 

prepared a supplemental IRFA seeking 

comment on how the proposals in this 

Public Notice could affect those 

Regulatory Flexibility Analyses. 

137. The proposals in this Public 

Notice include procedures for awarding 

Phase II support through a multi-round, 

reverse auction, the minimum 

geographic area for bidding in the 

auction, aggregating eligible areas into 

larger geographic units for bidding, 

setting reserve prices, capping the 

amount of support per location 

provided to extremely high-cost census 

blocks, and the availability of 

application and auction information to 

bidders and to the public during and 

after the auction. This Public Notice 

also includes detailed proposed bidding 

procedures for a descending clock 

auction, including bid collection, clock 

prices, proposed bid format, package 

bidding format, proxy bidding, bidder 

activity rules, bid processing, and how 

support amounts are determined. The 

bidding procedures proposed in this 

Public Notice are designed to facilitate 

the participation of qualified service 

providers of all kinds, including small 

entities, in the Phase II program, and to 

give all bidders, including small 

entities, the flexibility to place bids that 

align with their intended network 

construction or expansion, regardless of 

the size of their current network 

footprints. In addition, the Public Notice 

specifically seeks comment on 

information the Commission could 

make available to help educate parties 

that have not previously participated in 

a Commission auction, and on whether 

the Bureaus should work with the 

Commission’s Office of 

Communications Business 

Opportunities to engage with small 

providers. 

138. To implement the rules adopted 

by the Commission in the Phase II 

Orders for the pre-auction process, this 

Public Notice proposes specific 

procedures and requirements for 

applying to participate and becoming 

qualified to bid in the Phase II auction, 

including designating the state(s) in 

which an applicant intends to bid, and 

providing operational and financial 

information designed to allow the 

Commission to assess the applicant’s 

qualifications to meet the Phase II 

public interest obligations for each area 

for which it seeks support. The Public 

Notice also makes proposals that 

address the types of further information 

that may be required in the post-auction 

long-form application that a winning 

bidder must file to become authorized to 

receive support. The application 

procedures proposed in this Public 

Notice are intended to require 

applicants to submit enough 

information to permit the Commission 

to determine their qualifications to 

participate in the Phase II auction, 

without requiring so much information 

that it is cost-prohibitive for any entity, 

including small entities, to participate. 

139. As noted above, the Commission 

seeks comment on how the proposals in 

this Public Notice could affect the 

IRFAs for the Phase II FNPRMs or the 

FRFAs in the Phase II Orders. Such 

comments must be filed in accordance 

with the same filing deadlines for 

responses to this Public Notice and have 

a separate and distinct heading 

designating them as responses to the 

IRFAs and FRFAs. 

140. People with Disabilities: To 

request materials in accessible formats 

(braille, large print, electronic files, 

audio format) for people with 

disabilities, send an email to fcc504@

fcc.gov or call the Consumer & 

Governmental Affairs Bureau at 202– 

418–0530 (voice), 202–418–0432 (TTY). 

141. This proceeding has been 

designated as a ‘‘permit-but-disclose’’ 

proceeding in accordance with the 

Commission’s ex parte rules. Persons 

making ex parte presentations must file 

a copy of any written presentation or a 

memorandum summarizing any oral 

presentation within two business days 

after the presentation (unless a different 

deadline applicable to the Sunshine 

period applies). Persons making oral ex 

parte presentations are reminded that 

memoranda summarizing the 

presentation must (1) list all persons 

attending or otherwise participating in 

the meeting at which the ex parte 

presentation was made, and (2) 

summarize all data presented and 

arguments made during the 

presentation. If the presentation 

consisted in whole or in part of the 

presentation of data or arguments 

already reflected in the presenter’s 

written comments, memoranda or other 

filings in the proceeding, the presenter 

may provide citations to such data or 

arguments in his or her prior comments, 

memoranda, or other filings (specifying 

the relevant page and/or paragraph 

numbers where such data or arguments 

can be found) in lieu of summarizing 

them in the memorandum. Documents 

shown or given to Commission staff 

during ex parte meetings are deemed to 

be written ex parte presentations and 

must be filed consistent with rule 

1.1206(b). In proceedings governed by 

rule 1.49(f) or for which the 

Commission has made available a 

method of electronic filing, written ex 

parte presentations and memoranda 

summarizing oral ex parte 

presentations, and all attachments 

thereto, must be filed through the 

electronic comment filing system 

available for that proceeding, and must 

be filed in their native format (e.g., .doc, 

.xml, .ppt, searchable .pdf). Participants 

in this proceeding should familiarize 

themselves with the Commission’s ex 

parte rules. 

Federal Communications Commission. 

Katura Jackson, 

Federal Register Liaison Officer, Office of the 

Secretary. 

[FR Doc. 2017–18041 Filed 8–24–17; 8:45 am] 

BILLING CODE 6712–01–P 


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