[Federal Register: March 8, 2006 (Volume 71, Number 45)]
[Notices]
[Page 11645-11658]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08mr06-89]
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FEDERAL COMMUNICATIONS COMMISSION
[Report No. AUC-06-65-B (Auction No. 65); DA 06-299]
Auction of 800 MHz Air-Ground Radiotelephone Service Licenses
Scheduled for May 10, 2006; Notice of Filing Requirements, Minimum
Opening Bids, Upfront Payments and Other Procedures for Auction No. 65
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: This document announces the procedures and minimum opening
bids for the upcoming auction of new nationwide commercial Air-Ground
Radiotelephone Service licenses in the 800 MHz band. This document is
intended to familiarize prospective bidders with the procedures and
minimum opening bids for this auction.
DATES: Auction No. 65 is scheduled to begin on May 10, 2006.
FOR FURTHER INFORMATION CONTACT: For legal questions: Brian Carter at
(202) 418-0660.
For general auction questions: Jeff Crooks at (202) 418-0660.
For service rules questions: Erin McGrath or Richard Arsenault
(legal); or Jay Jackson or Moslem Sawez (technical) at (202) 418-0620.
SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 65
Procedures Public Notice released on February 21, 2006. The complete
text of the Auction No. 65 Procedures Public Notice, including
attachments and related Commission documents is available for public
inspection and copying from 8 a.m. to 4:30 p.m. Monday through Thursday
or from 8 a.m. to 11:30 a.m. on Friday at the FCC Reference Information
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC
20554. The Auction No. 65 Procedures Public Notice and related
Commission documents may also be purchased from the Commission's
duplicating contractor, Best Copy and Printing, Inc. (BCPI), Portals
II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554,
telephone 202-488-5300, facsimile 202-488-5563, or you may contact BCPI
at its Web site: http://www.BCPIWEB.com. When ordering documents from
BCPI please provide the appropriate FCC document number, for example,
DA 06-299. The Auction No. 65 Procedures Public Notice and related
documents are also available on the Internet at the Commission's Web
site:[hairsp]http://wireless.fcc.gov/auctions/65/.
I. General Information
A. Introduction
1. The Wireless Telecommunications Bureau announces the procedures
and minimum opening bid amounts for the upcoming auction of new
nationwide commercial Air-Ground Radiotelephone Service licenses in the
800 MHz band scheduled for May 10, 2006 (Auction No. 65). On January
10, 2006, in accordance with section 309(j)(3) of the Communications
Act of 1934, as amended, the Bureau released a public notice seeking
comment on a reserve price and minimum opening bid amounts and the
procedures to be used in Auction No. 65. The Bureau received one
comment in response to the Auction No. 65 Comment Public Notice, 71 FR
3513, January 23, 2006.
i. Background of Proceeding
2. On February 22, 2005, the Commission released the Air-Ground
Order, 70 FR 19377, April 13, 2005, in which it adopted a flexible
regulatory approach to determine the future band configuration of the
four megahertz of dedicated spectrum in the 800 MHz commercial Air-
Ground Radiotelephone Service. Based on the band configuration
proposals submitted by interested parties in the proceeding, the
Commission decided to assign nationwide air-ground licenses under one
of three alternative band configurations, implementing the band plan
receiving the highest gross aggregate bid in an auction. The Commission
also requested comment on competitive bidding rules for the 800 MHz
commercial Air-Ground Radiotelephone Service.
3. On December 9, 2005, the Commission released the Air-Ground
Reconsideration Order and R&O, 70 FR 76414, December 27, 2005, in which
it resolved petitions for reconsideration of the Air-Ground Order and
adopted competitive bidding rules for the 800 MHz commercial Air-Ground
Radiotelephone Service.
4. Licensees in the 800 MHz Air-Ground Radiotelephone Service will
be permitted to provide any type of air-ground service (i.e., voice
telephony, broadband Internet, data, etc.) to aircraft
[[Page 11646]]
of any type, and serve any or all aviation markets (commercial,
government, and general). A licensee must provide service to aircraft
and may not provide ancillary land mobile or fixed services in the 800
MHz air-ground spectrum.
ii. Licenses To Be Auctioned
5. Auction No. 65 will offer nationwide commercial licenses in the
800 MHz band in three alternative band configurations: (1) Band Plan 1,
comprised of two overlapping, shared, cross-polarized 3 MHz licenses
(Licenses A and B, respectively), (2) Band Plan 2, comprised of an
exclusive 3 MHz license and an exclusive 1 MHz license (Licenses C and
D, respectively), and (3) Band Plan 3, comprised of an exclusive 1 MHz
license and an exclusive 3 MHz license (Licenses E and F,
respectively), with the blocks at opposite ends of the band from Band
Plan 2. Licenses in only one of these mutually incompatible band
configurations will be awarded. The band plan that receives the highest
aggregate gross bid in the auction will be implemented, and licenses
composing that configuration will be awarded to winning bidders subject
to review of their long-form license applications. Because the three
band configurations are mutually incompatible, applications for
licenses in different band plans will be mutually exclusive.
6. No party may obtain a controlling interest, either at auction or
by a post-auction transaction, in new licenses for more than three
megahertz of spectrum (either shared or exclusive) in the band. No
single party, therefore, may win or hold more than one license in any
of the available band configurations.
7. A complete list of the licenses available in Auction No. 65 and
their descriptions is also included in Attachment A of the Auction No.
65 Procedures Public Notice.
B. Rules and Disclaimers
i. Relevant Authority
8. Prospective applicants must familiarize themselves thoroughly
with the Commission's general competitive bidding rules set forth in
Title 47, part 1, of the Code of Federal Regulations, including recent
amendments and clarifications; rules relating to the 800 MHz Air-Ground
Radiotelephone Service contained in Title 47, part 22, of the Code of
Federal Regulations; and rules relating to applications, practice and
procedure contained in Title 47, part 1, of the Code of Federal
Regulations. Prospective applicants must also be thoroughly familiar
with the procedures, terms and conditions (collectively, terms)
contained in this public notice and the Commission's decisions in
proceedings regarding competitive bidding procedures, application
requirements, and obligations of Commission licensees.
9. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in our public notices at any time,
and will issue public notices to convey any new or supplemental
information to applicants. It is the responsibility of all applicants
to remain current with all Commission rules and with all public notices
pertaining to this auction. Copies of most auctions-related Commission
documents, including public notices, can be retrieved from the FCC
Auctions Internet site at http://wireless.fcc.gov/auctions.
ii. Prohibition of Collusion
10. To ensure the competitiveness of the auction process, 47 CFR
1.2105(c) of the Commission's rules prohibits applicants for licenses
in any of the same geographic license areas from communicating with
each other about bids, bidding strategies, or settlements unless such
applicants have identified each other on their short-form applications
(FCC Forms 175) as parties with whom they have entered into agreements
under 47 CFR 1.2105(a)(2)(viii). Because all of the licenses available
in Auction No. 65 have the same service area, i.e., they are
nationwide, this prohibition will apply to all applicants. Thus, all
applicants (unless they have identified each other on their FCC Form
175 applications as parties with whom they have entered into agreements
under 47 CFR 1.2105(a)(2)(viii)) must affirmatively avoid all
communications with or disclosures to each other that affect or have
the potential to affect bids or bidding strategy, which may include
communications regarding the post-auction market structure. This
prohibition begins at the short-form application filing deadline and
ends at the down payment deadline after the auction. This prohibition
applies to all applicants regardless of whether such applicants become
qualified bidders or actually bid.
11. For purposes of this prohibition, 47 CFR 1.2105(c)(7)(i)
defines applicant as including all officers and directors of the entity
submitting a short-form application to participate in the auction, all
controlling interests of that entity, as well as all holders of
partnership and other ownership interests and any stock interest
amounting to 10 percent or more of the entity, or outstanding stock, or
outstanding voting stock of the entity submitting a short-form
application.
12. Applicants for licenses for any of the same geographic license
areas must not communicate directly or indirectly about bids or bidding
strategy. Because all of the licenses available in Auction No. 65 have
the same service area, all applicants are encouraged not to use the
same individual as an authorized bidder. A violation of the anti-
collusion rule could occur if an individual acts as the authorized
bidder for two or more applicants, and conveys information concerning
the substance of bids or bidding strategies between such applicants.
Also, if the authorized bidders are different individuals employed by
the same organization (e.g., law firm, engineering firm, or consulting
firm), a violation similarly could occur. In such a case, at a minimum,
applicants should certify on their applications that precautionary
steps have been taken to prevent communication between authorized
bidders and that applicants and their bidding agents will comply with
the anti-collusion rule. A violation of the anti-collusion rule could
occur in other contexts, such as an individual serving as an officer of
two or more applicants.
13. The Commission's rules do not prohibit applicants from entering
into otherwise lawful bidding agreements before filing their short-form
applications, as long as they disclose the existence of the
agreement(s) in their short-form applications. If parties agree in
principle on all material terms prior to the short-form filing
deadline, each party to the agreement must identify the other party or
parties to the agreement on its short-form application under 47 CFR
1.2105(c), even if the agreement has not been reduced to writing. If
the parties have not agreed in principle by the short-form filing
deadline, they should not include the names of parties to discussions
on their applications, and they may not continue negotiations,
discussions or communications with any other applicants after the
short-form filing deadline.
14. By electronically submitting its short-form application, each
applicant certifies its compliance with 47 CFR 1.2105(c). However, the
Bureau cautions that merely filing a certifying statement as part of an
application will not outweigh specific evidence that collusive behavior
has occurred, nor will it preclude the initiation of an investigation
when warranted.
15. Section 1.65 of the Commission's rules requires an applicant to
maintain the accuracy and completeness of
[[Page 11647]]
information furnished in its pending application and to notify the
Commission within 30 days of any substantial change that may be of
decisional significance to that application. Thus, 47 CFR 1.65 requires
an auction applicant to notify the Commission of any substantial change
to the information or certifications included in its pending short-form
application. Applicants are therefore required by 47 CFR 1.65 to report
to the Commission any communications they have made to or received from
another applicant after the short-form filing deadline that affect or
have the potential to affect bids or bidding strategy unless such
communications are made to or received from parties to agreements
identified under 47 CFR 1.2105(a)(2)(viii). In addition, 47 CFR
1.2105(c)(6) provides that any applicant that makes or receives a
communication prohibited by 47 CFR 1.2105(c) must report such
communication to the Commission in writing immediately, and in no case
later than five business days after the communication occurs.
16. Applicants that are winning bidders will be required to
disclose in their long-form applications the specific terms,
conditions, and parties involved in all bidding consortia, joint
ventures, partnerships, and other arrangements entered into relating to
the competitive bidding process.
17. Any applicant found to have violated the anti-collusion rule
may be subject to sanctions. Applicants are also reminded that,
regardless of compliance with the Commission's rules, they are subject
to the antitrust laws, which are designed to prevent anticompetitive
behavior in the marketplace. Compliance with the disclosure
requirements of the Commission's anti-collusion rule will not
necessarily insulate a party from enforcement of the antitrust laws. If
an applicant is found to have violated the antitrust laws or the
Commission's rules in connection with its participation in the
competitive bidding process, it may be subject to forfeiture of its
upfront payment, down payment, or full bid amount and may be prohibited
from participating in future auctions.
18. A summary listing of documents issued by the Commission and the
Bureau addressing the application of the anti-collusion rule may be
found in Attachment E of the Auction No. 65 Procedures Public Notice.
These documents are available on the Commission's auction anti-
collusion Web page.
iii. Incumbent Licensee
19. In the Air-Ground Order, the Commission granted Verizon Airfone
Inc., (Verizon Airfone or Airfone) the only incumbent service provider
in the 800 MHz air-ground band, a nonrenewable license to operate in
the band for five years. This license will expire on May 13, 2010.
Verizon Airfone must remove its incumbent narrowband operations from
three megahertz of spectrum in the band within two years of the initial
grant date of a new license in the band, but may continue to operate in
the remaining one megahertz of the band until the expiration of its
nonrenewable license. The Commission has directed the Bureau to adopt
reporting requirements so that Airfone's transition of its base
stations and its subscribers' aircraft to operations in one megahertz
of the 800 MHz air-ground band may be monitored. Accordingly, the
Bureau issued a public notice enumerating such requirements on February
6, 2006. Airfone must file its initial transition status report with
the Commission six months from the date of the grant of any new license
in the band and at each of the three six-month intervals thereafter.
20. In addition, if Airfone, or an affiliate of Airfone, wins an
exclusive 3 MHz license at auction, the Bureau will issue a public
notice within 60 days of the grant of such a license that will require
the company (1) to include in each status report information regarding
the transition of its existing subscribers from its narrowband system
to a broadband system and (2) to file additional status reports at six-
month intervals from the conclusion of the two-year transition period
until the expiration of its five-year nonrenewable license.
iv. Interference Protection
21. Ground stations in the Air-Ground Radiotelephone Service that
operate in the 849-851 MHz range will be subject to the same
interference abatement obligation rules adopted for cellular services
in the 800 MHz Order.
a. International Coordination
22. To promote interoperable communications and to manage
interference, some of the ground station locations in North America and
channel block assignments of the 800 MHz air-ground band have been
predetermined consistent with bilateral agreements with Mexico and with
Canada. These agreements, which provide for coordinated use of the 800
MHz air-ground frequencies over North American airspace, are based on a
narrow bandwidth channel scheme, and therefore may need to be
renegotiated to provide for more flexible use of this spectrum based on
the band plan configuration that is implemented as a result of the
auction.
b. Quiet Zone
23. Stations in the 800 MHz Air-Ground Radiotelephone Service must
protect the radio quiet zones set forth in the Commission's rules.
Licensees are cautioned that they must receive the appropriate
approvals directly from the relevant quiet zone entity prior to
operating within the areas described in the Commission's rules.
v. Spectrum Sharing Plan
24. If Band Plan 1, which is comprised of two overlapping 3 MHz
licenses, is implemented, the new licensees will be required to jointly
file a spectrum sharing and site selection plan with the Bureau within
six months of the initial grant of their spectrum licenses, and they
will be required to notify the Bureau of any changes to the plan. The
Bureau will issue a public notice prior to the commencement of Auction
No. 65 in which it will specify the filing requirements for such a
plan. This approach will provide parties with overlapping spectrum
licenses flexibility to configure their systems without having to
adhere to minimum spacing requirements or site locations predetermined
by the Commission.
vi. Due Diligence
25. Potential bidders are reminded that they are solely responsible
for investigating and evaluating all technical and marketplace factors
that may have a bearing on the value of the 800 MHz Air-Ground
Radiotelephone Service licenses in this auction. The FCC makes no
representations or warranties about the use of this spectrum for
particular services. Applicants should be aware that an FCC auction
represents an opportunity to become an FCC licensee in the 800 MHz Air-
Ground Radiotelephone Service, subject to certain conditions and
regulations. An FCC auction does not constitute an endorsement by the
FCC of any particular service, technology, or product, nor does an FCC
license constitute a guarantee of business success. Applicants should
perform their individual due diligence before proceeding as they would
with any new business venture.
26. Potential bidders are strongly encouraged to conduct their own
research prior to the beginning of bidding in Auction No. 65 in order
to determine the existence of any pending
[[Page 11648]]
administrative or judicial proceedings that might affect their decision
regarding participation in the auction. Participants in Auction No. 65
are strongly encouraged to continue such research throughout the
auction. In addition, potential bidders should perform technical
analyses sufficient to assure themselves that, should they prevail in
competitive bidding for a specific license, they will be able to build
and operate facilities that will fully comply with the Commission's
technical and legal requirements.
27. Applicants should also be aware that certain pending and future
applications (including those for modification), petitions for
rulemaking, requests for special temporary authority, waiver requests,
petitions to deny, petitions for reconsideration, informal oppositions,
and applications for review before the Commission may relate to
particular applicants or incumbent licensees or the licenses available
in Auction No. 65. In addition, pending and future judicial proceedings
may relate to particular applicants or incumbent licensees or the
licenses available in Auction No. 65. Prospective bidders are
responsible for assessing the likelihood of the various possible
outcomes, and considering their potential impact on spectrum licenses
available in this auction.
28. Applicants should perform due diligence to identify and
consider all proceedings that may affect the spectrum licenses being
auctioned and that could have an impact on the availability of spectrum
for Auction No. 65. In addition, although the Commission may continue
to act on various pending applications, informal objections, petitions,
and other requests for Commission relief, some of these matters may not
be resolved by the time of the auction.
29. Applicants are solely responsible for identifying associated
risks and for investigating and evaluating the degree to which such
matters may affect their ability to bid on, otherwise acquire, or make
use of licenses available in Auction No. 65.
30. The Commission makes no representations or guarantees regarding
the accuracy or completeness of information in its databases or any
third party databases.
31. Potential applicants are strongly encouraged to physically
inspect any prospective ground station sites and also to familiarize
themselves with the environmental assessment obligations.
vii. Bidder Alerts
32. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use Auction No. 65 to
deceive and defraud unsuspecting investors.
33. Information about deceptive telemarketing investment schemes is
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment
schemes should be directed to the FTC, the SEC, or the National Fraud
Information Center.
viii. National Environmental Policy Act Requirements
34. Licensees must comply with the Commission's rules regarding
implementation of the National Environmental Policy Act (NEPA). The
construction of a wireless antenna facility is a federal action and the
licensee must comply with the Commission's NEPA rules for each such
facility. The Commission's NEPA rules require, among other things, that
the licensee consult with expert agencies having NEPA responsibilities,
including the U.S. Fish and Wildlife Service, the State Historic
Preservation Office, the Army Corps of Engineers and the Federal
Emergency Management Agency.
C. Auction Specifics
i. Auction Date
35. Bidding in Auction No. 65 will begin on Wednesday, May 10,
2006, as announced in the Auction No. 65 Comment Public Notice. The
initial schedule for bidding will be announced by public notice at
least one week before the start of the auction. Unless otherwise
announced, bidding on all licenses will be conducted on each business
day until bidding has stopped on all licenses.
ii. Auction Title
36. Auction No. 65--800 MHz Air-Ground Radiotelephone.
iii. Bidding Methodology
37. The bidding methodology for Auction No. 65 will be simultaneous
multiple round bidding. The Commission will conduct this auction over
the Internet using the FCC's Integrated Spectrum Auction System (ISAS
or FCC Auction System), and telephonic bidding will be available as
well. Qualified bidders are permitted to bid electronically via the
Internet or by telephone.
iv. Pre-Auction Dates and Deadlines
38. Dates and Deadlines.
Auction Seminar--March 14, 2006
Short-Form Application (FCC Form 175) Filing Window Opens--March 14,
2006; 12 p.m. ET
Short-Form Application (FCC Form 175) Filing Deadline--March 24, 2006;
6 p.m. ET
Upfront Payment (via wire transfer) Deadline--April 17, 2006; 6 p.m. ET
Mock Auction--May 8, 2006
Auction Begins--May 10, 2006
v. Requirements for Participation
39. Those wishing to participate in the auction must: submit a
short-form application (FCC Form 175) electronically prior to 6 p.m.
Eastern Time (ET), March 24, 2006, following the electronic filing
procedures set forth in Attachment C to the Auction No. 65 Procedures
Public Notice; submit a sufficient upfront payment and an FCC
Remittance Advice Form (FCC Form 159) before 6 p.m. ET, April 17, 2006;
comply with all provisions outlined in this Public Notice and
applicable Commission rules.
vi. General Contact Information
40. See Auction No. 65 Procedures Public Notice for the General
Contact Information Table.
II. Short-Form Application (FCC Form 175) Requirements
41. An application to participate in an FCC auction, referred to as
a short-form application or FCC Form 175, provides information used in
determining whether the applicant is legally, technically, and
financially qualified to participate in Commission auctions for
licenses or permits. The short-form application is the first part of
the Commission's two-phased auction application process. In the first
phase of this process, parties desiring to participate in the auction
file streamlined, short-form applications in which they certify under
penalty of perjury as to their qualifications. Eligibility to
participate in bidding is based on the applicant's short-form
application and certifications as well as its upfront payment. In the
second phase of the process, winning bidders file a more comprehensive
long-form application.
42. Entities seeking licenses available in Auction No. 65 must file
a short-form application electronically via the FCC Auction System
before 6 p.m. ET on March 24, 2006, following the procedures prescribed
in Attachment C of the Auction No. 65 Procedures Public Notice. If an
applicant claims eligibility for a bidding credit, the information
provided in its FCC Form 175 will be used in determining whether the
applicant is eligible for the claimed
[[Page 11649]]
bidding credit. Applicants bear full responsibility for submitting
accurate, complete and timely short-form applications. All applicants
must certify on their short-form applications under penalty of perjury
that they are legally, technically, financially and otherwise qualified
to hold a license. Applicants should read the instructions set forth in
Attachment C of the Auction No. 65 Procedures Public Notice carefully
and should consult the Commission's rules to ensure that, in addition
to the materials all the information that is required under the
Commission's rules is included with their short-form applications.
43. An entity may not submit more than one short-form application
for a single auction. In the event that a party submits multiple short-
form applications, only one application will be accepted for filing.
44. Applicants also should note that submission of a short-form
application constitutes a representation by the certifying official
that he or she is an authorized representative of the applicant, that
he or she has read the form's instructions and certifications, and that
the contents of the application, its certifications, and any
attachments are true and correct. Submission of a false certification
to the Commission may result in penalties, including monetary
forfeitures, license forfeitures, ineligibility to participate in
future auctions, and/or criminal prosecution.
A. Preferences for Small Businesses
i. Bidding Credits
45. A bidding credit represents the amount by which a bidder's
winning bid will be discounted. For Auction No. 65 bidding credits will
be available to small businesses and very small businesses, and
consortia thereof, as follows: a bidder with attributed average annual
gross revenues that exceed $15 million and do not exceed $40 million
for the preceding three years (small business) will receive a 15
percent discount on its winning bid; and a bidder with attributed
average annual gross revenues that do not exceed $15 million for the
preceding three years (very small business) will receive a 25 percent
discount on its winning bid.
46. Bidding credits are not cumulative; a qualifying applicant
receives either the 15 percent or 25 percent bidding credit on its
winning bid, but not both.
47. Every applicant that claims eligibility for a bidding credit as
either a small business or a very small business, or a consortium of
small businesses or very small businesses, will be required to provide
information regarding revenues attributable to the applicant, its
affiliates, its controlling interests, and the affiliates of its
controlling interests on its FCC Form 175 short-form application to
establish that it satisfies the applicable eligibility requirement.
Applicants considering claiming eligibility as a designated entity in
Auction No. 65 should review carefully the recently released CSEA/Part
1 Designated Entity FNPRM, 71 FR 6992, February 10, 2006. In the CSEA/
Part 1 Designated Entity FNPRM, the Commission tentatively concluded
that it should ``restrict the award of designated entity benefits to an
otherwise qualified designated entity where it has a material
relationship with a large in-region incumbent wireless service
provider,'' and sought comment on how to define the elements of such a
restriction. The Commission also sought comment on whether to restrict
the award of designated entity benefits where an otherwise qualified
designated entity has a material relationship with a large entity that
has a significant interest in communications services. The Commission
further proposed that in the event that any designated entity
applicants have filed an application to participate in an auction prior
to the effective date of any designated entity rule changes adopted
pursuant to the CSEA/Part 1 Designated Entity FNPRM, such applicants be
required to amend their applications on or after the effective date of
the rule changes with a statement declaring, under penalty of perjury,
that the applicant is qualified as a designated entity pursuant to 47
CFR 1.2110 of the Commission's rules effective as of the date of the
statement. Finally, the Commission noted that under this proposal the
Bureau will establish any detailed procedures necessary for making
required amendments and announce such procedures by public notice.
Accordingly, applicants considering claiming eligibility as a
designated entity in Auction No. 65 should monitor further proceedings
pursuant to the CSEA/Part 1 Designated Entity FNPRM to assure their
ability to comply with any changes to the designated entity rules that
the Commission may adopt that are applicable to applicants in Auction
No. 65.
ii. Tribal Land Bidding Credits
48. Tribal land bidding credits will not be available in Auction
No. 65. The Commission's tribal land bidding credits are intended to
provide incentives for wireless telecommunications carriers to serve
individuals living on tribal lands. More specifically, tribal land
bidding credits are intended for winning bidders that use licenses to
deploy facilities and provide service to federally recognized tribal
areas that are either unserved by any telecommunications carrier or
that have a wireline telephone subscription or penetration rate of 85
percent or less. Commercial Air-Ground Radiotelephone Service licenses,
however, must be used to provide service to aircraft and may not be
used to provide ancillary land mobile or fixed services. Because 800
MHz air-ground licenses may not be used to provide terrestrial
telephone service, tribal land bidding credits will not be available to
winning bidders in Auction No. 65 under 47 CFR 1.2110(f)(3).
iii. Installment Payments
49. Installment payment plans will not be available in Auction No.
65.
B. License Selection
50. In Auction No. 65, applicants must select the licenses on which
they want to bid from the Eligible Licenses list. The applicant may
select all the licenses in the list or select individual licenses from
the list. There will be no opportunity to change license selection
after the short-form filing deadline. It is critically important that
an applicant confirm its license selection before submitting its short-
form application because the FCC Auction System will not accept bids on
licenses that an applicant has not selected on its FCC Form 175.
C. Consortia and Joint Bidding Arrangements
51. Applicants will be required to identify in their short-form
applications all parties with whom they have entered into any
consortium arrangements, joint ventures, partnerships or other
agreements or understandings that relate in any way to the licenses
being auctioned, including any agreements relating to post-auction
market structure. Applicants also will be required to certify under
penalty of perjury in their short-form applications that they have not
entered and will not enter into any explicit or implicit agreements,
arrangements or understandings of any kind with any parties, other than
those identified in the application, regarding the amount of their
bids, bidding strategies, or the particular licenses on which they will
or will not bid. If an applicant has had discussions, but has not
reached a joint bidding agreement by the short-form application filing
deadline, it would not include the names of parties to the discussions
on its application and may
[[Page 11650]]
not continue such discussions with any applicants after the deadline.
52. After the filing of short-form applications, a party holding a
non-controlling, attributable interest in one applicant will be
permitted to acquire an ownership interest in, form a consortium with,
or enter into a joint bidding arrangement with other applicants
provided that (i) the attributable interest holder certifies that it
has not and will not communicate with any party concerning the bids or
bidding strategies of more than one of the applicants in which it holds
an attributable interest, or with which it has formed a consortium or
entered into a joint bidding arrangement; and (ii) the arrangements do
not result in a change in control of any of the applicants. While the
anti-collusion rules do not prohibit non-auction-related business
negotiations among auction applicants, applicants are reminded that
certain discussions or exchanges could touch upon impermissible subject
matters because they may convey pricing information and bidding
strategies.
D. Ownership Disclosure Requirements
53. All applicants must comply with the uniform Part 1 ownership
disclosure standards and provide information required by 47 CFR 1.2105
and 1.2112 of the Commission's rules. Specifically, in completing the
short-form application, applicants will be required to fully disclose
information on the real party or parties in interest and ownership
structure of the applicant.
54. An applicant's most current ownership information on file with
the Commission, if in an electronic format compatible with the short-
form application (FCC Form 175), will automatically be entered into the
applicant's short-form application. Applicants are responsible for
ensuring that the information submitted in their FCC Form 175 is
complete and accurate. Accordingly, applicants should carefully review
any information automatically entered to confirm that it is complete
and accurate as of the deadline for filing the short-form application.
Applicants can update any information that needs to be changed directly
in the short-form application.
E. Bidding Credit Revenue Disclosures
55. To determine which applicants qualify for bidding credits as
small businesses or very small businesses, the Commission considers the
gross revenues of the applicant, its affiliates, its controlling
interests, and the affiliates of its controlling interests. Therefore,
entities applying to bid as small businesses or very small businesses
(or consortia of small businesses or very small businesses) will be
required to disclose on their FCC Form 175 short-form applications the
gross revenues of each of the following for the preceding three years:
(1) The applicant, (2) its affiliates, (3) its controlling interests,
and (4) the affiliates of its controlling interests. Certification that
the average annual gross revenues of such entities and individuals for
the preceding three years do not exceed the applicable limit is not
sufficient. In order to comply with the Commission's disclosure
requirements for bidding credit eligibility, an applicant must provide
separately for itself, its affiliates, its controlling interests, and
the affiliates of its controlling interests, the gross revenues for
each of the preceding three years. If the applicant is applying as a
consortium of small businesses or very small businesses, this
information must be provided for each consortium member.
56. Controlling interests include individuals and entities with
either de facto or de jure control of the applicant. Typically,
ownership of at least 50.1 percent of an entity's voting stock
evidences de jure control. De facto control is determined on a case-by-
case basis. The following are some common indicia of de facto control:
The entity constitutes or appoints more than 50 percent of the board of
directors or management committee; the entity has authority to appoint,
promote, demote, and fire senior executives that control the day-to-day
activities of the licensee; the entity plays an integral role in
management decisions. Officers and directors of an applicant are also
considered to have a controlling interest in the applicant. The
Commission does not impose specific equity requirements on controlling
interest holders. Once the principals or entities with a controlling
interest are determined, only the revenues of those principals or
entities, the affiliates of those principals or entities, and the
applicant and its affiliates will be counted in determining small
business eligibility.
57. In recent years the Commission has made modifications to its
rules governing the attribution of gross revenues for purposes of
determining small business eligibility. These changes include exempting
the gross revenues of the affiliates of a rural telephone cooperative's
officers and directors from attribution to the applicant if certain
specified conditions are met. The Commission has also clarified that,
in calculating an applicant's gross revenues under the controlling
interest standard, it will not attribute the personal net worth,
including personal income, of its officers and directors to the
applicant.
58. Each member of a consortium of small or very small businesses
that applies to participate in Auction No. 65 must individually meet
the definition of small business or very small business adopted by the
Commission for the 800 MHz Air-Ground Radiotelephone Service. Each
consortium member must disclose its gross revenues along with those of
its affiliates, its controlling interests, and the affiliates of its
controlling interests. Although the gross revenues of the consortium
members will not be aggregated for purposes of determining the
consortium's eligibility as a small business or very small business,
this information must be provided to ensure that each individual
consortium member qualifies for any bidding credit awarded to the
consortium.
F. Provisions Regarding Former and Current Defaulters
59. Each applicant must state under penalty of perjury on its
short-form application whether or not the applicant, its affiliates,
its controlling interests, and the affiliates of its controlling
interests, as defined by 47 CFR 1.2110, have ever been in default on
any Commission licenses or have ever been delinquent on any non-tax
debt owed to any Federal agency. In addition, each applicant must
certify under penalty of perjury on its short-form application that, as
of the short-form filing deadline, the applicant, its affiliates, its
controlling interests, and the affiliates of its controlling interests,
as defined by 47 CFR 1.2110, are not in default on any payment for
Commission licenses (including down payments) and that they are not
delinquent on any non-tax debt owed to any Federal agency. Prospective
applicants are reminded that submission of a false certification to the
Commission is a serious matter that may result in severe penalties,
including monetary forfeitures, license revocations, exclusion from
participation in future auctions, and/or criminal prosecution.
60. Former defaulters, i.e., applicants, including any of their
affiliates, any of their controlling interests, or any of the
affiliates of their controlling interests, that in the past have
defaulted on any Commission licenses or been delinquent on any non-tax
debt owed to any Federal agency, but that have since remedied all such
defaults and cured all of their outstanding non-tax delinquencies--are
eligible to bid in Auction No. 65, provided that they are otherwise
qualified. However, former
[[Page 11651]]
defaulters are required to pay upfront payments that are 50 percent
more than the normal upfront payment amounts.
61. Current defaulters, i.e., applicants, including any of their
affiliates, any of their controlling interests, or any of the
affiliates of their controlling interests, that are in default on any
payment for any Commission licenses (including down payments) or are
delinquent on any non-tax debt owed to any Federal agency as of the
filing deadline for applications to participate in this auction--are
not eligible to bid in Auction No. 65.
62. Applicants are encouraged to review the Bureau's previous
guidance on default and delinquency disclosure requirements in the
context of the short-form application process. The Commission considers
outstanding debts owed to the United States Government, in any amount,
to be a serious matter. The Commission adopted rules, including a
provision referred to as the red light rule, that implement the
Commission's obligations under the Debt Collection Improvement Act of
1996, which governs the collection of claims owed to the United States.
Under the red light rule, the Commission will not process applications
and other requests for benefits filed by parties that have outstanding
debts owed to the Commission. In the same rulemaking order, the
Commission explicitly declared, however, that the Commission's
competitive bidding rules are not affected by the red light rule. As a
consequence, the Commission's adoption of the red light rule does not
alter the applicability of any of the Commission's competitive bidding
rules, including the provisions and certifications of 47 CFR 1.2105 and
1.2106, with regard to current and former defaults or delinquencies.
Applicants are reminded, however, that the Commission's Red Light
Display System, which provides information regarding debts owed to the
Commission, may not be determinative of an auction applicant's ability
to comply with the default and delinquency disclosure requirements of
47 CFR 1.2105. Thus, while the red light rule may ultimately prevent
the processing of long-form applications by auction winners, an auction
applicant's red light status is not necessarily determinative of its
eligibility to participate in this auction or to its upfront payment
obligation.
63. Prospective applicants for Auction No. 65 should note that all
long-form applications filed after the close of competitive bidding
will be reviewed for compliance with the Commission's red light rule,
and such review may result in the dismissal of a winning bidder's long-
form application.
G. Other Information
64. Applicants owned by members of minority groups and/or women, as
defined in 47 CFR 1.2110(c)(3), may identify themselves in filling out
their short-form applications regarding this status. This applicant
status information is collected for statistical purposes only and
assists the Commission in monitoring the participation of designated
entities in its auctions.
H. Minor Modifications to Short-Form Applications (FCC Form 175)
65. After the deadline for filing short-form applications (FCC
Forms 175) at 6 p.m. ET on March 24, 2006, applicants are permitted to
make only minor changes to their applications. Applicants are not
permitted to make major modifications to their applications.
66. Any application amendment and related statements of fact must
be certified by: (1) The applicant, if the applicant is an individual,
(2) one of the partners, if the applicant is a partnership, (3) an
officer, director, or duly authorized employee, if the applicant is a
corporation, (4) a member who is an officer, if the applicant is an
unincorporated association, (5) the trustee, if the applicant is an
amateur radio service club, or (6) a duly elected or appointed official
who is authorized to make such certifications under the laws of the
applicable jurisdiction, if the applicant is a governmental entity.
67. An applicant must make permissible minor changes to its short-
form application, as such changes are defined by 47 CFR 1.2105(b), on-
line. Applicants must click on the SUBMIT button in the FCC Auction
System for the changes to be submitted and considered by the
Commission.
68. In addition, applicants should submit a letter, briefly
summarizing the changes, by electronic mail to the attention of
Margaret Wiener, Chief, Auctions and Spectrum Access Division, at the
following address: auction65@fcc.gov.
I. Maintaining Current Information in Short-Form Applications (FCC Form
175)
69. Section 1.65 of the Commission's rules requires an applicant to
maintain the accuracy and completeness of information furnished in its
pending application and to notify the Commission within 30 days of any
substantial change that may be of decisional significance to that
application. Changes that cause a loss of or reduction in eligibility
for a bidding credit must be reported immediately. If an amendment
reporting substantial changes is a ``major amendment'' as defined by 47
CFR 1.2105, the major amendment will not be accepted and may result in
the dismissal of the short-form application.
III. Pre-Auction Procedures
A. Auction Seminar--March 14, 2006
70. On Tuesday, March 14, 2006, the FCC will conduct a seminar for
parties interested in participating in Auction No. 65 at the Federal
Communications Commission headquarters, located at 445 12th Street,
SW., Washington, DC. The seminar will provide attendees with
information about pre-auction procedures, completing FCC Form 175,
auction conduct, the FCC Auction System, auction rules, and the 800 MHz
Air-Ground Radiotelephone Service rules.
71. To register, complete the registration form, Attachment B of
the Auction No. 65 Procedures Public Notice and submit it by Monday,
March 13, 2006. Registrations are accepted on a first-come, first-
served basis.
B. Short-Form Application (FCC Form 175)--Due Before 6 p.m. ET on March
24, 2006
72. In order to be eligible to bid in this auction, applicants must
first submit an FCC Form 175 application electronically via the FCC
Auction System. This application must be received at the Commission
prior to 6 p.m. ET on March 24, 2006. Late applications will not be
accepted. There is no application fee associated with filing an FCC
Form 175. However, to be eligible to bid, an applicant must submit an
upfront payment.
73. Applications may generally be filed at any time beginning at
noon ET on March 14, 2006, until 6 p.m. ET on March 24, 2006.
Applicants are strongly encouraged to file early and are responsible
for allowing adequate time for filing their applications. Applicants
may update or amend their applications multiple times until the filing
deadline on March 24, 2006.
C. Application Processing and Minor Corrections
74. After the deadline for filing FCC Form 175 applications has
passed, the FCC will process all timely submitted applications to
determine which are acceptable for filing, and subsequently will issue
a public notice identifying: (1) Those applications accepted for
filing; (2) those applications rejected; and (3)
[[Page 11652]]
those applications that have minor defects that may be corrected, and
the deadline for resubmitting such corrected applications.
75. As described more fully in the Commission's rules, after the
March 24, 2006, short-form filing deadline, applicants may make only
minor corrections to their FCC Form 175 applications. Applicants will
not be permitted to make major modifications to their applications
(e.g., change their license selections, change control of the
applicant, or claim eligibility for a higher bidding credit).
D. Upfront Payments--Due April 17, 2006
76. In order to be eligible to bid in the auction, applicants must
submit an upfront payment accompanied by an FCC Remittance Advice Form
(FCC Form 159). After completing the FCC Form 175, filers will have
access to an electronic version of the FCC Form 159 that can be printed
and sent by facsimile to Mellon Bank in Pittsburgh, PA. All upfront
payments must be received in the proper account at Mellon Bank before 6
p.m. ET on April 17, 2006.
i. Making Auction Payments by Wire Transfer
77. Wire transfer payments must be received before 6 p.m. ET on
April 17, 2006. To avoid untimely payments, applicants should discuss
arrangements (including bank closing schedules) with their banker
several days before they plan to make the wire transfer, and allow
sufficient time for the transfer to be initiated and completed before
the deadline.
78. At least one hour before placing the order for the wire
transfer (but on the same business day), applicants must send by
facsimile a completed FCC Form 159 (Revised 2/03) to Mellon Bank at
(412) 209-6045. On the cover sheet of the facsimile, write ``Wire
Transfer--Auction Payment for Auction No. 65.'' In order to meet the
Commission's upfront payment deadline, an applicant's payment must be
credited to the Commission's account before the deadline. Applicants
are responsible for obtaining confirmation from their financial
institution that Mellon Bank has timely received their upfront payment
and deposited it in the proper account.
79. Please note that: all payments must be made in U.S. dollars;
all payments must be made by wire transfer; upfront payments for
Auction No. 65 go to a lockbox number different from the lockboxes used
in previous FCC auctions, and different from the lockbox number to be
used for post-auction payments; failure to deliver the upfront payment
by the April 17, 2006, deadline will result in dismissal of the
application and disqualification from participation in the auction.
ii. FCC Form 159
80. A completed FCC Remittance Advice Form (FCC Form 159, Revised
2/03) must be faxed to Mellon Bank to accompany each upfront payment.
Proper completion of FCC Form 159 (Revised 2/03) is critical to
ensuring correct crediting of upfront payments. Detailed instructions
for completion of FCC Form 159 are included in Attachment D of the
Auction No. 65 Procedures Public Notice. An electronic pre-filled
version of the FCC Form 159 is available after submitting the FCC Form
175. Payors using a pre-filled FCC Form 159 are responsible for
ensuring that all of the information on the form, including payment
amounts, is accurate. The FCC Form 159 can be completed electronically,
but must be filed with Mellon Bank via facsimile.
iii. Upfront Payments and Bidding Eligibility
81. In the Part 1 Order, 62 FR 13540, March 21, 1997, the
Commission delegated to the Bureau the authority and discretion to
determine appropriate upfront payment(s) for each auction. In addition,
in the Part 1 Fifth Report and Order, 65 FR 522323, August 29, 2000,
the Commission ordered that former defaulters be required to pay
upfront payments 50 percent greater than non-former defaulters. For
purposes of this calculation, the applicant includes the applicant
itself, its affiliates, its controlling interests, and affiliates of
its controlling interests, as defined by 47 CFR 1.2110 of the
Commission's rules.
82. In the Auction No. 65 Comment Public Notice, the Bureau
proposed an upfront payment amount of $100,000 per license. The Bureau
further proposed that the amount of the upfront payment would determine
a bidder's bidding eligibility in bidding units. For Auction No. 65,
the Bureau proposed to assign 100,000 bidding units per license. The
number of bidding units for a given license is fixed and does not
change during the auction as prices change.
83. Because the mutually incompatible band configurations and the
three megahertz eligibility restriction limit a bidder to winning only
a single license, the Bureau proposed to permit a bidder with 100,000
bidding units of eligibility to bid or be active simultaneously on any
or all of the licenses it selected on its FCC Form 175, rather than
being limited to activity on a single license with 100,000 bidding
units as our usual activity and eligibility rules would require. Under
our proposal, an upfront payment of $100,000, or $150,000 if the
applicant is a former defaulter, would give a bidder 100,000 bidding
units of eligibility, which in turn would permit the bidder to be
active on any or all of the licenses it selected on its FCC Form 175.
Under this proposal, it would be unnecessary to acquire more than
100,000 bidding units of bidding eligibility. The Bureau received no
comments concerning our proposals regarding the amount of upfront
payments and the number of bidding units for each license available in
Auction No. 65.
84. The Bureau adopts the above proposals. In order to bid on a
license, qualified bidders that applied for any or all licenses on FCC
Form 175 must have eligibility of 100,000 bidding units. Therefore, an
applicant that is not a former defaulter must submit a total upfront
payment of at least $100,000 in order to have 100,000 bidding units, or
else the applicant will not be eligible to participate in the auction.
An applicant that is a former defaulter must submit an upfront payment
of at least $150,000 in order to have 100,000 bidding units. If a
former defaulter fails to submit an upfront payment of at least
$150,000, the applicant will not be eligible to participate in the
auction. If an applicant fails to submit the upfront payment required
to establish eligibility to bid in the auction by the upfront payment
deadline, it will not be permitted to establish such eligibility after
the upfront payment deadline.
85. With 100,000 bidding units a bidder may be active on any or all
licenses selected on its FCC Form 175, although it may win only one
license. Eligibility cannot be increased during the auction; it can
only remain the same or decrease. Thus, in calculating its upfront
payment amount, an applicant must purchase 100,000 bidding units. The
total upfront payment does not affect the total dollar amount a bidder
may bid on any given license.
86. The upfront payments and bidding units for each license are set
forth in Attachment A of the Auction No. 65 Procedures Public Notice.
iv. Applicants' Wire Transfer Information for Purposes of Refunds of
Upfront Payments
87. The Commission will use wire transfers for all Auction No. 65
refunds. To ensure that refunds of upfront payments are processed in an
expeditious manner, the Commission is requesting that all pertinent
information
[[Page 11653]]
be supplied to the FCC. Applicants can provide the information
electronically during the initial short-form filing window after the
form has been submitted. Applicants are reminded that information
submitted as part of their FCC Form 175 will be available to the
public. Accordingly, the pertinent information for wire transfers
should not be included in the FCC Form 175. Wire Transfer Instructions
can also be manually sent by facsimile to the FCC, Financial Operations
Center, Auctions Accounting Group, ATTN: Gail Glasser, at (202) 418-
2843. All refunds will be returned to the payer of record as identified
on the FCC Form 159 unless the payer submits written authorization
instructing otherwise. For additional information, please call Gail
Glasser at (202) 418-0578.
E. Auction Registration
88. Approximately ten days before the auction, the FCC will issue a
public notice announcing all qualified bidders for the auction.
Qualified bidders are those applicants whose FCC Form 175 applications
have been accepted for filing and who have timely submitted upfront
payments sufficient to make them eligible to bid.
89. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by overnight mail. The mailing will be sent only to the contact
person at the contact address listed in the FCC Form 175 and will
include the SecurID cards that will be required to place bids, the
Integrated Spectrum Auction System (ISAS) Bidder's Guide, and the
Auction Bidder Line phone number.
90. Qualified bidders that do not receive this registration mailing
will not be able to submit bids. Therefore, any qualified bidder that
has not received this mailing by noon on Thursday, May 4, 2006, should
call (717) 338-2888. Receipt of this registration mailing is critical
to participating in the auction, and each applicant is responsible for
ensuring it has received all of the registration material.
91. In the event that SecurID cards are lost or damaged, only a
person who has been designated as an authorized bidder, the contact
person, or the certifying official on the applicant's short-form
application may request replacement registration material. Qualified
bidders requiring the replacement of these items must call Technical
Support.
F. Remote Electronic Bidding
92. The Commission will conduct this auction over the Internet, and
telephonic bidding will be available as well. Qualified bidders are
permitted to bid electronically and telephonically. Each applicant
should indicate its bidding preference--electronic or telephonic--on
the FCC Form 175. In either case, each authorized bidder must have its
own SecurID card, which the FCC will provide at no charge. Each
applicant with one authorized bidder will be issued two SecurID cards,
while applicants with two or three authorized bidders will be issued
three cards. For security purposes, the SecurID cards, the telephonic
bidding phone number, and the Integrated Spectrum Auction System (ISAS)
Bidder's Guide are only mailed to the contact person at the contact
address listed on the FCC Form 175. Please note that each SecurID card
is tailored to a specific auction; therefore, SecurID cards issued for
other auctions or obtained from a source other than the FCC will not
work for Auction No. 65.
93. Please note that the SecurID cards can be recycled and the
Bureau encourages bidders to return the cards to the FCC. The Bureau
will provide pre-addressed envelopes that bidders may use to return the
cards once the auction is over.
G. Mock Auction--May 8, 2006
94. All qualified bidders will be eligible to participate in a mock
auction on Monday, May 8, 2006. The mock auction will enable applicants
to become familiar with the FCC Auction System prior to the auction.
Participation by all bidders is strongly recommended. Details will be
announced by public notice.
IV. Auction Event
95. The first round of bidding for Auction No. 65 will begin on
Wednesday, May 10, 2006. The initial bidding schedule will be announced
in a public notice listing the qualified bidders, which is released
approximately 10 days before the start of the auction.
A. Auction Structure
i. Simultaneous Multiple Round Auction
96. In the Auction No. 65 Comment Public Notice, the Bureau
proposed to award all licenses in Auction No. 65 in a simultaneous
multiple round auction. The Bureau received no comments on this
proposal. Licenses will be offered in three mutually incompatible band
configurations, and the band plan that receives the highest gross bids
in the auction will be implemented. The Bureau believes the
simultaneous multiple-round auction is an appropriate auction design
given these circumstances, and the Bureau adopts its proposal. In a
simultaneous multiple round auction, all licenses are available during
the entire auction, and bids are accepted on any license until the
auction concludes. Unless otherwise announced, bids will be accepted on
all licenses in each round of the auction until bidding stops on every
license.
ii. Activity Rule
97. The procedures the Bureau establish in the Auction No. 65
Procedures Public Notice for upfront payments and bidding eligibility,
the amount of the upfront payment submitted by a bidder determines the
bidder's bidding eligibility in terms of bidding units. A bidder must
have 100,000 bidding units of eligibility to participate in Auction No.
65--i.e., to bid on at least one license--and may hold a maximum of
100,000 bidding units of eligibility. Any reduction in a bidder's
eligibility will effectively preclude the bidder from further bidding
in the auction.
98. In order to ensure that an auction closes within a reasonable
period of time, an activity rule requires bidders to bid actively
throughout the auction, rather than wait until late in the auction
before participating. For Auction No. 65, the Bureau proposed the
following activity requirement: In each round of the auction, a bidder
desiring to maintain its eligibility to participate in the auction is
required to be active (place a bid or hold the provisionally winning
bid) on at least one license. Under this proposal, failure to maintain
the required activity level has the effect of eliminating the bidder
from further bidding in the auction unless an activity rule waiver is
used. The Bureau received no comments on this proposal.
99. The Bureau adopts this proposal for Auction No. 65 because the
Bureau believes it is an appropriate procedure for ensuring that the
auction will proceed at a reasonable pace. Thus, in Auction No. 65, in
each round of the auction, a bidder desiring to maintain its
eligibility to participate in the auction is required to be active on
at least one license. A bidder is considered active on a license in the
current round if it is either the provisionally winning bidder at the
end of the previous bidding round or if it submits a bid in the current
round. If a bidder fails to be active on at least one license in a
round, it must use one of the limited number of activity rule waivers
allotted to it in order to maintain its eligibility to continue bidding
in the auction. If the bidder has no activity rule waivers
[[Page 11654]]
remaining, its eligibility will be reduced and it will no longer be
permitted to place bids in the auction.
iii. Activity Rule Waivers
100. In the Auction No. 65 Comment Public Notice, the Bureau
proposed that each bidder in the auction be provided with three
activity rule waivers. The Bureau received no comments on this issue.
The Bureau adopts its proposal that each bidder be provided with three
activity rule waivers. The Bureau are satisfied that providing three
waivers over the course of the auction will give bidders a sufficient
number of waivers and flexibility, while also safeguarding the
integrity of the auction.
101. Bidders may use an activity rule waiver in any round during
the course of the auction. Use of an activity rule waiver preserves the
bidder's current bidding eligibility despite the bidder's failure to be
active on at least one license in the current round. An activity rule
waiver applies to an entire round of bidding and not to a particular
license. Activity rule waivers can be either applied proactively by the
bidder (a proactive waiver) or applied automatically by the FCC Auction
System (an automatic waiver) and are principally a mechanism for
auction participants to avoid the loss of bidding eligibility in the
event that exigent circumstances prevent them from placing a bid in a
particular round.
102. The FCC Auction System assumes that bidders with insufficient
activity would prefer to apply an activity rule waiver (if available)
rather than lose bidding eligibility, which in this auction would have
the effect of precluding the bidder from further bidding in the
auction. Therefore, the system will automatically apply a waiver at the
end of any bidding round in which a bidder fails to be active (place a
bid or hold the provisionally winning bid) on at least one license
unless the bidder has no activity rule waivers available. If a bidder
has no waivers remaining and does not satisfy the required activity
requirement, it will no longer be permitted to place bids in the
auction.
103. Finally, a bidder may apply an activity rule waiver
proactively as a means to keep the auction open without placing a bid.
If a bidder proactively applies an activity waiver (using the apply
waiver function in the FCC Auction System) during a bidding round in
which no bids are submitted, the auction will remain open and the
bidder's eligibility will be preserved. However, an automatic waiver
applied by the FCC Auction System in a round in which there are no new
bids will not keep the auction open. A bidder cannot submit a proactive
waiver after submitting a bid in a round, and submitting a proactive
waiver will preclude a bidder from placing any bids in that round.
Note: Applying a waiver is irreversible; once a proactive waiver
is submitted that waiver cannot be unsubmitted, even if the round
has not yet closed.
iv. Auction Stopping Rules
104. For Auction No. 65, the Bureau proposed to employ a
simultaneous stopping rule approach. The Bureau also sought comment on
a modified version of the simultaneous stopping rule. The modified
version of the stopping rule would close the auction for all licenses
after the first round in which no bidder applies a waiver or submits
any new bids on any license on which it is not the provisionally
winning bidder. Thus, absent any other bidding activity, a bidder
placing a new bid on a license for which it is the provisionally
winning bidder would not keep the auction open under this modified
stopping rule.
105. The Bureau further proposed retaining the discretion to keep
the auction open even if no new bids or proactive waivers are
submitted. In this event, the effect will be the same as if a bidder
had applied a waiver. Thus, the activity rule will apply as usual, and
a bidder with insufficient activity will either use an activity rule
waiver (if it has any left) or lose bidding eligibility.
106. In addition, the Bureau proposed that the Bureau reserve the
right to declare that the auction will end after a specified number of
additional rounds (special stopping rule). If the Bureau invokes this
special stopping rule, it will accept bids in the specified final
round(s) and the auction will close.
107. The Bureau proposed to exercise these options only in
circumstances such as where the auction is proceeding very slowly,
where there is minimal overall bidding activity, or where it appears
likely that the auction will not close within a reasonable period of
time. The Bureau noted that before exercising these options, the Bureau
is likely to attempt to increase the pace of the auction by, for
example, increasing the number of bidding rounds per day, and/or
increasing the amount of the minimum bid increments for the limited
number of licenses where there is still a high level of bidding
activity.
108. The Bureau received no comments concerning the auction
stopping rules. The Bureau believes that the proposed stopping rules
are appropriate for Auction No. 65, because of its experience in prior
auctions demonstrates that these stopping rules balance the interests
of administrative efficiency and maximum bidder participation.
Therefore, the Bureau adopts the above proposals. Auction No. 65 will
begin under the simultaneous stopping rule approach, and the Bureau
will retain the discretion to employ the other versions of the stopping
rule.
v. Auction Delay, Suspension, or Cancellation
109. Because the Bureau approach to notification of delay during an
auction has proven effective in resolving exigent circumstances in
previous auctions, the Bureau adopts its proposed auction cancellation
rules. By public notice or by announcement during the auction, the
Bureau may delay, suspend, or cancel the auction in the event of
natural disaster, technical obstacle, evidence of an auction security
breach, unlawful bidding activity, administrative or weather necessity,
or for any other reason that affects the fair and competitive conduct
of competitive bidding. In such cases, the Bureau, in its sole
discretion, may elect to resume the auction starting from the beginning
of the current round, resume the auction starting from some previous
round, or cancel the auction in its entirety. Network interruption may
cause the Bureau to delay or suspend the auction. The Bureau emphasize
that exercise of this authority is solely within the discretion of the
Bureau, and its use is not intended to be a substitute for situations
in which bidders may wish to apply their activity rule waivers.
B. Bidding Procedures
i. Round Structure
110. The initial schedule of bidding rounds will be announced in
the public notice listing the qualified bidders, which is released
approximately 10 days before the start of the auction. Each bidding
round is followed by the release of round results. Multiple bidding
rounds may be conducted in a given day. Details regarding round results
formats and locations will also be included in the qualified bidders
public notice.
111. The FCC has discretion to change the bidding schedule in order
to foster an auction pace that reasonably balances speed with the
bidders' need to study round results and adjust their bidding
strategies. The Bureau may increase or decrease the amount of time for
the bidding rounds and review periods, or the number of rounds per day,
depending upon the bidding activity level and other factors.
[[Page 11655]]
ii. Reserve Price or Minimum Opening Bid
112. Section 309(j) of the Communications Act of 1934, as amended,
calls upon the Commission to prescribe methods by which a reasonable
reserve price will be required or a minimum opening bid established
when applications for FCC licenses are subject to auction (i.e.,
because they are mutually exclusive), unless the Commission determines
that a reserve price or minimum opening bid is not in the public
interest. Consistent with this mandate, the Commission directed the
Bureau to seek comment on the use of a minimum opening bid and/or
reserve price prior to the start of each auction. Among other factors,
the Bureau must consider the amount of spectrum being auctioned, levels
of incumbency, the availability of technology to provide service, the
extent of interference with other spectrum bands, and any other
relevant factors that could have an impact on the spectrum licenses
being auctioned. The Commission concluded that the Bureau should have
the discretion to employ either or both of these mechanisms for future
auctions.
113. In the Auction No. 65 Comment Public Notice, the Bureau
proposed to establish minimum opening bids and an aggregate reserve
price for Auction No. 65, and to retain the discretion to lower the
minimum opening bids. Specifically, for Auction No. 65, the Bureau
proposed to set minimum opening bids for each license and to establish
a published aggregate reserve price for the entire band. Under the
proposal for an aggregate reserve price, if the sum of the
provisionally winning gross bids at the close of bidding did not meet
or exceed the aggregate reserve price, the Commission would cancel the
auction and no licenses would be awarded.
114. More specifically, for Auction No. 65, the Bureau proposed to
set minimum opening bids on a license-by-license basis as follows:
------------------------------------------------------------------------
Minimum
Licenses Bandwidth opening bid
------------------------------------------------------------------------
A and B..................... 3 MHz (2 MHz shared)........ $1,500,000
C and F..................... 3 MHz....................... 2,800,000
D and E..................... 1 MHz....................... 200,000
------------------------------------------------------------------------
115. The Bureau also proposed to establish a published reserve
price of $5,000,000 for the entire band.
116. In the alternative, the Bureau sought comment on whether,
consistent with section 309(j), the public interest would be served by
having no minimum opening bid or reserve price.
117. Verizon Airfone filed comments supporting the Bureau's
proposed minimum opening bids but opposing the use of a reserve price
in Auction No. 65. According to Verizon Airfone, the Bureau has no
historical data on which to base its proposed reserve price, and it
should let the marketplace decide the value of the licenses being
auctioned. Verizon Airfone further argues that if the Bureau deems a
reserve price to be necessary, it should set reserve prices for each
individual license rather than an aggregate reserve price for the band
because one license is likely to be valued more highly than the other
and a bidder for the more highly valued license could be responsible
for a disproportionate amount of any aggregate reserve price.
118. The Bureau adopts its proposed minimum opening bids. The
minimum opening bid amounts the Bureau adopts for Auction No. 65 are
reducible at the discretion of the Bureau. The Bureau emphasize,
however, that such discretion will be exercised, if at all, sparingly
and early in the auction, i.e., before bidders have used all of their
activity waivers. During the course of the auction, the Bureau will not
entertain requests to reduce the minimum opening bid amount on specific
licenses.
119. The Bureau does not adopt its proposal for an aggregate
reserve price. The Bureau recognizes that, although a reserve price
might be useful in meeting our obligation under section 309(j)(3)(C) of
the Communications Act to attempt to recover for the public a portion
of the value of the spectrum, there are insufficient data to use to
determine an appropriate reserve price for licenses to provide air-
ground services. The Bureau therefore concludes that it should not
establish a reserve price for this auction.
120. The minimum opening bid amounts for each license available in
Auction No. 65 are set forth in Attachment A of the Auction No. 65
Procedures Public Notice.
iii. Minimum Acceptable Bid Amounts and Bid Increment Amounts
121. The minimum acceptable bid amount for a license will be equal
to its minimum opening bid amount until the bids placed enable the FCC
Auction System to calculate a higher price for the license. If such a
price can be calculated, the minimum acceptable bid amount for the
license will be determined in a two-step process: (a) The FCC Auction
System designates a price for each license. For licenses with
provisionally winning bids, this price will be equal to the amount of
the provisionally winning bid. For non-provisionally winning licenses,
the price will be equal to the amount of the highest bid placed on the
license by any non-provisionally winning bidder. (b) The price is
increased using the minimum acceptable bid percentage to determine the
minimum acceptable bid.
122. Specifically, the minimum acceptable bid amount will be
calculated by multiplying the license price times one plus the minimum
acceptable bid percentage.
123. In the Auction No. 65 Comment Public Notice, the Bureau
proposed to use a minimum acceptable bid percentage of 5 percent. The
Bureau received no comment on this issue. The Bureau believes that a
minimum acceptable bid percentage of 5 percent will permit bidders to
express their values while allowing the auction to proceed at an
appropriate pace. The Bureau therefore adopt our proposal, and the
Bureau will begin the auction with a minimum acceptable bid percentage
of 5 percent. The Bureau will round the result using our standard
rounding procedures.
124. In each round, each eligible bidder will be able to place a
bid on a particular license for which it applied in any of nine
different amounts. The FCC Auction System will list the nine acceptable
bid amounts for each license. These nine acceptable bid amounts consist
of the minimum acceptable bid amount for the license and additional
amounts calculated using the minimum acceptable bid amount and the bid
increment percentage. The first additional acceptable bid amount equals
the minimum acceptable bid amount times one plus the bid increment
percentage, rounded.
125. In the Auction No. 65 Comment Public Notice, the Bureau
proposed to use a bid increment percentage of 5 percent. The Bureau
received no comment on this issue. The Bureau believes that a bid
increment percentage of 5 percent will give bidders the flexibility to
speed up the pace of the auction, if appropriate. The Bureau therefore
adopts its proposal, and the Bureau will begin the auction using a bid
increment percentage of 5 percent. The Bureau will round the results
using our standard rounding procedures.
126. In the Auction No. 65 Comment Public Notice, the Bureau
proposed to retain the discretion to change the minimum acceptable bid
amounts, the minimum acceptable bid percentage, the bid increment
percentage, and the number of acceptable bid amounts if the Bureau
determine that circumstances so dictate. No comments were received on
this issue. The Bureau adopts this proposal. Therefore, the Bureau
retains
[[Page 11656]]
the discretion to change the minimum acceptable bid amounts, the
minimum acceptable bid percentage, the bid increment percentage, and
the number of acceptable bid amounts if it determines that
circumstances so dictate. The Bureau will do so by announcement in the
FCC Auction System during the auction. The Bureau may also use its
discretion to adjust the minimum bid increment amount without prior
notice if circumstances warrant.
iv. Provisionally Winning Bids
127. At the end of each bidding round, the FCC Auction System will
determine the provisionally winning bids by considering all of the bids
that have been placed in the auction. Subject to the restriction that a
single bidder cannot have more than one provisionally winning bid, the
system will determine which combinations of licenses, and hence, which
band plan option, has the highest aggregate gross bid amount. The only
licenses that can have provisionally winning bids are those of the band
plan option with the highest gross bid; the licenses of the other band
plan options will not have provisionally winning bids.
128. In the Auction No. 65 Comment Public Notice, the Bureau
proposed to use a random number generator to select a single bid from
among the tied gross bids, if a provisionally winning bid must be
selected from among identical bids amounts submitted on a license in a
given round (i.e., tied bids). No comments were received on this
proposal. Therefore, the Bureau adopts its proposal. A pseudo-random
number generator based on the L'Ecuyer algorithms will be used to
assign a random number to each bid. The tied gross bid with the highest
random number wins the tiebreaker. The remaining bidders, as well as
the provisionally winning bidder, can submit higher bids in subsequent
rounds. However, if the auction were to end with no other bids being
placed, the winning bidder would be the one that placed the selected
provisionally winning bid.
129. Similarly, in the event of identical aggregate high gross bid
amounts on more than one band plan (i.e., tied band plans), the tie
between band plans will be broken based on the random numbers of the
corresponding bids. The tied band plan with the highest sum of random
numbers will become the band plan for which there are provisionally
winning bids.
130. A consequence of the mutually incompatible band configurations
and the three megahertz eligibility restriction is that a bid that does
not become a provisionally winning bid at the conclusion of the round
in which it was placed may become a provisionally winning bid at the
conclusion of a subsequent round.
131. Bidders are reminded that provisionally winning bids count
toward activity for purposes of the activity rule.
v. Bidding
132. During a round, a bidder may submit bids for as many licenses
as it wishes (providing that it is eligible to bid) or remove bids
placed in the current bidding round. Bidders also have the option of
submitting and removing multiple bids during a round. If a bidder
submits multiple bids for a single license in the same round, the
system takes the last bid entered as that bidder's bid for the round.
133. All bidding will take place remotely either through the FCC
Auction System or by telephonic bidding. There will be no on-site
bidding during Auction No. 65. Please note that telephonic bid
assistants are required to use a script when entering bids placed by
telephone. Telephonic bidders are therefore reminded to allow
sufficient time to bid by placing their calls well in advance of the
close of a round. Normally, five to ten minutes are necessary to
complete a telephonic bid submission.
134. A bidder's ability to bid on specific licenses is determined
by two factors: (1) The licenses applied for on the bidder's FCC Form
175 and (2) the bidder's eligibility. The bid submission screens will
allow bidders to submit bids on only those licenses for which the
bidder applied on its FCC Form 175.
135. In order to access the bidding function of the FCC Auction
System, bidders must be logged in during the bidding round using the
passcode generated by the SecurID card and a personal identification
number (PIN) created by the bidder. Bidders are strongly encouraged to
print a round summary for each round after they have completed all of
their activity for that round.
136. In each round, eligible bidders will be able to place bids on
a given license in any of nine different amounts. For each license, the
FCC Auction System will list the nine acceptable bid amounts in a drop-
down box. Bidders use the drop-down box to select from among the
acceptable bid amounts. The FCC Auction System also includes an upload
function that allows bidders to upload text files containing bid
information.
137. Until a bid has been placed on a license, the minimum
acceptable bid amount for that license will be equal to its minimum
opening bid amount. Once there are bids on a license, minimum
acceptable bids for a license will be determined.
138. Finally, bidders are cautioned to select their bid amounts
carefully because, as explained below, although bids can be removed
before the round ends, no withdrawals will be allowed in Auction No.
65, even if a bid was mistakenly or erroneously made.
vi. Bid Removal and Bid Withdrawal
139. In the Auction No. 65 Comment Public Notice, the Bureau
proposed bid removal and bid withdrawal procedures. With respect to bid
withdrawals, the Bureau proposed that bidders not be permitted, in any
round, to withdraw bids made in previous rounds. The Bureau received no
comments on this issue.
140. The Commission has recognized that bid withdrawals may be an
important tool to help bidders avoid incomplete aggregations of
licenses and pursue efficient backup strategies as information becomes
available during the course of an auction. In Auction No. 65, however,
bidders may win only one license and therefore will not face risks of
being unable to secure desired aggregations of licenses. In addition,
the Bureau believes that given the small number of licenses in the
auction and the nature of the licenses being offered, bidders will not
need to use bid withdrawals to pursue backup strategies in the same way
bidders may need to do in some auctions. Moreover, in previous
auctions, the Bureau has observed instances in which bid withdrawals
arguably may have been used for strategic, anticompetitive purposes.
While the Bureau continue to recognize that bid withdrawals may play an
important role in an auction, the Bureau note that bid withdrawals have
not been available in several auctions. Therefore, the Bureau adopts
its proposal.
141. With respect to bid removals during the course of a bidding
round, the Bureau proposed that bidders have the option of removing any
bid placed in a particular round before the close of that round. The
Bureau believes that providing this option will enhance bidder
flexibility during the auction, without creating the opportunities for
anticompetitive behavior that can be associated with withdrawals of
bids placed in previous rounds, and therefore the Bureau adopts the
proposed procedures for Auction No. 65. Thus, before the close of a
bidding round, a bidder has the option of
[[Page 11657]]
removing any bids placed in that round. By using the remove bids
function in the FCC Auction System, a bidder may effectively unsubmit
any bid placed within that round. A bidder removing a bid placed in the
same round is not subject to withdrawal payments. A bid that is removed
does not count toward meeting the bidding activity rule. After a round
closes, a bidder may no longer remove a bid.
vii. Round Results
142. Bids placed during a round will not be made public until the
conclusion of that round. After a round closes, the Bureau will compile
reports of all bids placed, current provisionally winning bids, new
minimum acceptable bid amounts, and bidder eligibility status (bidding
eligibility and activity rule waivers) and will post the reports for
public access. Reports reflecting bidders' identities for Auction No.
65 will be available before and during the auction. Thus, bidders will
know in advance of this auction the identities of the bidders against
which they are bidding.
viii. Auction Announcements
143. The FCC will use auction announcements to announce items such
as schedule changes. All FCC auction announcements will be available by
clicking a link in the FCC Auction System.
ix. Maintaining the Accuracy of FCC Form 175 Information
144. As noted in the Auction No. 65 Procedures Public Notice, after
the short-form filing deadline, applicants may make only minor changes
to their FCC Form 175 applications. Applicants must click on the SUBMIT
button in the FCC Auction System for the changes to be submitted and
considered by the Commission. In addition, applicants should submit a
letter, briefly summarizing the changes, by electronic mail to the
attention of Margaret Wiener, Chief, Auctions and Spectrum Access
Division, at the following address: auction65@fcc.gov.
V. Post-Auction Procedures
A. Down Payments
145. After bidding has ended, the Commission will issue a public
notice declaring the auction closed and identifying winning bidders as
well as down payments and final payments due.
146. Within ten business days after release of the auction closing
notice, each winning bidder must submit sufficient funds (in addition
to its upfront payment) to bring its total amount of money on deposit
with the Commission for Auction No. 65 to 20 percent of the net amount
of its winning bid (gross bid less any applicable small business or
very small business bidding credit).
B. Final Payments
147. Each winning bidder will be required to submit the balance of
the net amount of its winning bid within 10 business days after the
deadline for submitting down payments.
C. Long-Form Application (FCC Form 601)
148. Within ten business days after release of the auction closing
notice, each winning bidder must electronically submit a properly
completed long-form application (FCC Form 601) for the license it won
through Auction No. 65. Winning bidders that are small businesses or
very small businesses must demonstrate their eligibility for a small
business or very small business bidding credit. Further filing
instructions will be provided to auction winners at the close of the
auction.
D. Ownership Disclosure Information Report (FCC Form 602)
149. At the time it submits its long-form application (FCC Form
601), each winning bidder also must comply with the ownership reporting
requirements as set forth in 47 CFR 1.913, 1.919, and 1.2112. An
ownership disclosure record is automatically created in the Universal
Licensing System (ULS) for any applicant that submits an FCC Form 175.
However, winning bidders will be required to review and confirm that
this information is complete and accurate as of the date of filing FCC
Form 601. Further instructions will be provided to winning bidders at
the close of the auction.
E. Default and Disqualification
150. Any high bidder that defaults or is disqualified after the
close of the auction (i.e., fails to remit the required down payment
within the prescribed period of time, fails to submit a timely long-
form application, fails to make full payment, or is otherwise
disqualified) will be subject to the payments described in 47 CFR
1.2104(g)(2). In the CSEA/Part 1 Report and Order, adopted January 24,
2006, 71 FR 6214, February 7, 2006, the Commission modified its rules
to provide that it will, as part of its determination of competitive
bidding procedures in advance of each auction, establish the
appropriate level, from 3 percent up to a maximum of 20 percent, for
the additional payment component of default payments, which the
previous rule fixed at 3 percent. The Commission adopted this rule
modification after the release of the Auction No. 65 Comment Public
Notice. The Bureau released a separate public notice seeking comment on
the appropriate level of the additional payment component of default
payments for Auction No. 65.
151. In the event of a default, the Commission may re-auction the
license or offer it to the next highest bidder (in descending order) at
its final bid amount. In addition, if a default or disqualification
involves gross misconduct, misrepresentation, or bad faith by an
applicant, the Commission may declare the applicant and its principals
ineligible to bid in future auctions, and may take any other action
that it deems necessary, including institution of proceedings to revoke
any existing licenses held by the applicant.
F. Refund of Remaining Upfront Payment Balance
152. All applicants that submit upfront payments but that after the
close of the auction are not winning bidders for a license in Auction
No. 65 may be entitled to a refund of their remaining upfront payment
balance after the conclusion of the auction. All refunds will be
returned to the payer of record, as identified on the FCC Form 159,
unless the payer submits written authorization instructing otherwise.
153. Bidders that drop out of the auction completely may be
eligible for a refund of their upfront payments before the close of the
auction. A bid that does not become a provisionally winning bid at the
conclusion of the round in which it was placed may become a
provisionally winning bid at the conclusion of a subsequent round.
Consequently, any applicant that places a bid may become a
provisionally winning bidder before the close of the auction, even if
the bidder is no longer eligible to place new bids. Only bidders that
have placed no bids during the course of the auction and have lost all
eligibility may be considered to have dropped out of the auction
completely. Such bidders seeking a refund must submit a written refund
request. If the applicant has completed the refund instructions
electronically, then only a written request for the refund is
necessary. If not, the request must also include wire transfer
instructions, Taxpayer Identification Number (TIN) and FCC Registration
Number (FRN). Send refund requests to: Federal Communications
Commission, Financial Operations Center, Auctions Accounting Group,
Gail Glasser, 445 12th Street, SW., Room 1-C864, Washington, DC 20554.
[[Page 11658]]
Federal Communications Commission.
Gary Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. E6-3287 Filed 3-7-06; 8:45 am]
BILLING CODE 6712-01-P