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Notice

Auction of Regional Narrowband PCS Licenses Scheduled for September 24, 2003; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, Package Bidding and Other Auction Procedures

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Start Preamble

AGENCY:

Federal Communications Commission.

ACTION:

Notice.

SUMMARY:

This document announces the procedures and minimum opening bids for the upcoming auction of six regional narrowband Personal Communications Services (“narrowband PCS”) licenses Start Printed Page 44786in the 900 MHz band scheduled for September 24, 2003 (Auction No. 51). This document is intended to familiarize prospective bidders with the procedures and minimum opening bids for this auction.

DATES:

Auction No. 51 is scheduled to begin on September 24, 2003.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Auctions and Industry Analysis Division, WTB: Legal questions: Christopher Shields at (202) 418-0660, or General auction questions: Lisa Stover at (717) 338-2888, Questions about package bidding: Martha Stancill at (202) 418-0660 or Craig Bomberger at (202) 418-0660. Media Contact: Press inquiries: Meribeth McCarrick at (202) 418-0654. Commercial Wireless Division, WTB: Service rule questions: Amal Abdallah at (202) 418-7307, Evan Baranoff at (202) 418-7142, JoAnn Epps at (202) 418-0620 or Dwain Livingston at (202) 418-0620.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

This is a summary of the Auction No. 51 Procedures Public Notice released on June 18, 2003. The complete text of the Auction No. 51 Procedures Public Notice, including attachments, is available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The Auction No. 51 Procedures Public Notice may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com. The Auction No. 51 Procedures Public Notice is also available on the Internet at the Commission's Web site: http://wireless.fcc.gov/​auctions/​51/​.

I. General Information

A. Introduction

1. The Auction No. 51 Procedures Public Notice announces the procedures and minimum opening bids for the upcoming auction of six regional narrowband Personal Communications Services (“narrowband PCS”) licenses in the 900 MHz band scheduled for September 24, 2003 (Auction No. 51). On April 3, 2003, in accordance with the Balanced Budget Act of 1997, the Bureau released a public notice seeking comment on reserve prices or minimum opening bids and the procedures to be used for the auction of six regional narrowband PCS licenses. The Bureau received no comments and no reply comments in response to the Auction No. 51 Comment Public Notice, 68 FR 18642 (April 16, 2003).

i. Licenses To Be Auctioned

2. Auction No. 51 will offer six regional narrowband PCS licenses. The spectrum to be auctioned was previously associated with licenses that were awarded based on Auction No. 3 but have since been cancelled or terminated. A complete list of licenses available in Auction No. 51 and their descriptions is included in Attachment A of the Auction No. 51 Procedures Public Notice.

3. The following table describes the licenses that will be auctioned:

RegionChannel No.Channel descriptionFrequency bands (MHz)Bandwidth (kHz)
Northeast1712.5 kHz/50 kHz paired901.8250-901.8375, 930.70-930.7562.5
South1612.5 kHz/50 kHz paired901.8125-901.8250, 930.65-930.7062.5
South1712.5 kHz/50 kHz paired901.8250-901.8375, 930.70-930.7562.5
Midwest1712.5 kHz/50 kHz paired901.8250-901.8375, 930.70-930.7562.5
Central1712.5 kHz/50 kHz paired901.8250-901.8375, 930.70-930.7562.5
West1712.5 kHz/50 kHz paired901.8250-901.8375, 930.70-930.7562.5

B. Rules and Disclaimers

i. Relevant Authority

4. Prospective bidders must familiarize themselves thoroughly with the Commission's rules relating to narrowband PCS, contained in title 47, part 24 and part 90 of the Code of Federal Regulations, and those relating to application and auction procedures, contained in title 47, part 1 of the Code of Federal Regulations. Prospective bidders must also be thoroughly familiar with the procedures, terms and conditions (collectively, “terms”) contained in the Auction No. 51 Procedures Public Notice; the Auction No. 51 Comment Public Notice; the Part 1 Fifth Report and Order, 65 FR 52401 (August 29, 2000), (as well as prior and subsequent Commission proceedings regarding competitive bidding procedures); the Narrowband PCS R&O/Further Notice, 62 FR 27507 (May 20, 1997), the Narrowband Second Report and Order and Second Further Notice of Proposed Rule, and the Third Narrowband Report and Order and Order on Reconsideration.

5. 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 its public notices at any time, and will issue public notices to convey any new or supplemental information to bidders. It is the responsibility of all prospective bidders to remain current with all Commission rules and with all public notices pertaining to this auction. Copies of most Commission documents, including public notices, can be retrieved from the FCC Auctions Internet site at http://wireless.fcc.gov/​auctions. Additionally, documents are available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554, or may be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com. When ordering documents from Qualex, please provide the appropriate FCC document number (for example, FCC 01-135 for the Third Narrowband Report and Order and Order on Reconsideration).

ii. Prohibition of Collusion

6. To ensure the competitiveness of the auction process, the Commission's rules prohibit applicants for any of the same or overlapping geographic license areas from communicating with each other during the auction about bids, bidding strategies, or settlements. The Bureau has previously stated that auction applicants who have applied for licenses in any of the same geographic areas, and who are also applicants for licenses in the same or competing services must affirmatively avoid all discussions with each other that affect, or in their reasonable assessment have the potential to affect their bidding or their bidding strategy. Accordingly, the prohibition in Section 1.2105(c) applies to communications between Auction No. 50 and Auction No. 51 applicants who have applied for licenses in any of Start Printed Page 44787the same or overlapping geographic license areas. This prohibition begins at the short-form application filing deadline and ends at the down payment deadline after the auction. Applicants for licenses in any of the same or overlapping geographic license areas 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 competing applicants and conveys information concerning the substance of bids or bidding strategies between the applicants he or she is authorized to represent in the auction. A violation could similarly occur if the authorized bidders are different individuals employed by the same organization (e.g., law firm or consulting firm). 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.

7. 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. The Commission's anti-collusion rules allow applicants to form certain agreements during the auction, provided the applicants have not applied for licenses covering the same geographic areas. Note that Auction No. 51 applicants and Auction No. 50 applicants for licenses in the same or overlapping geographic license areas will not be able to take advantage of these rule provisions, even though the licenses are not completely co-extensive. For example, assume that one applicant applies for several Major Trading Area (“MTA”) licenses in its Auction No. 50 FCC Form 175 and that a second applicant applies for a regional license in its Auction No. 51 FCC Form 175. If the first applicant selects licenses for MTAs that are within the region covered by the regional license selected by the second applicant, the two parties will have applied for licenses covering the same geographic areas. Consequently, unlike applicants who have applied for licenses that do not cover the same geographic areas, these two applicants will not be permitted to form a consortium or bid jointly for licenses after they file FCC Form 175. However, all applicants may enter into bidding agreements before filing their FCC Form 175, as long as they disclose the existence of the agreement(s) in their Form 175. If parties agree in principle on all material terms prior to the short-form filing deadline, those parties must be identified on the short-form application pursuant to section 1.2105(c), even if the agreement has not been reduced to writing. If the parties have not agreed in principle by the filing deadline, an applicant would not include the names of those parties on its application, and may not continue negotiations with other applicants for licenses covering any of the same geographic areas. By signing their FCC Form 175 short-form applications, applicants are certifying their compliance with section 1.2105(c).

8. In addition, section 1.65 of the Commission's rules requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission within 30 days of any substantial change that may be of decisional significance to that application. Thus, sections 1.65 and 1.2105 require an auction applicant to notify the Commission of any violation of the anti-collusion rules upon learning of such violation. Bidders therefore are required to make such notification to the Commission immediately upon discovery.

9. A summary listing of documents issued by the Commission and the Bureau addressing the application of the anti-collusion rules may be found in Attachment G of the Auction No. 51 Procedures Public Notice.

iii. Due Diligence

10. Potential bidders seeking licenses for regions that are in the border area of Canada or Mexico will be subject to the terms of the coordination arrangements/protocols currently in effect with those respective countries.

11. Potential bidders also should be aware that certain applications (including those for modification), petitions for rulemaking, requests for special temporary authority (“STA”) waiver requests, petitions to deny, petitions for reconsideration, and applications for review may be pending before the Commission and relate to particular applicants or incumbent licensees. In addition, certain judicial proceedings that may relate to particular applicants or incumbent licensees or the licenses available in Auction No. 51 may be commenced, may be pending, or may be subject to further review. We note that resolution of these matters could have an impact on the availability of spectrum in Auction No. 51. Some of these matters (whether before the Commission or the courts) may not be resolved by the time of the auction.

12. Potential bidders 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. 51.

13. Potential bidders may obtain information about licenses available in Auction No. 51 through the Bureau's licensing databases on the World Wide Web at http://wireless.fcc.gov/​uls. Potential bidders should direct questions regarding the search capabilities to the FCC Technical Support hotline at (202) 414-1250 (voice) or (202) 414-1255 (TTY), or via e-mail at auctech@fcc.gov. The hotline is available to assist with questions Monday through Friday, from 8 a.m. to 6 p.m. ET. In order to provide better service to the public, all calls to the hotline are recorded. The Commission makes no representations or guarantees regarding the accuracy or completeness of information in its databases or any third party databases, including, for example, court docketing systems. Furthermore, the Commission makes no representations or guarantees regarding the accuracy or completeness of information that has been provided by incumbent licensees and incorporated into the database. Potential bidders are strongly encouraged to physically inspect any sites located in, or near, the region for which they plan to bid.

iv. Bidder Alerts

14. All applicants must certify on their FCC Form 175 applications under penalty of perjury that they are legally, technically, financially and otherwise qualified to hold a license, and not in default on any payment for Commission licenses (including down payments) or delinquent on any non-tax debt owed to any Federal agency. Prospective bidders are reminded that submission of a false certification to the Commission is a serious matter that may result in severe penalties, including monetary forfeitures, license revocations, exclusion from participation in future auctions, and/or criminal prosecution.

15. The FCC makes no representations or warranties about the use of this spectrum for particular services. Applicants should be aware that an FCC auction represents an opportunity to become an FCC licensee in this service, subject to certain conditions and regulations. An FCC auction does not constitute an endorsement by the FCC of any particular services, technologies or products, nor does an FCC license constitute a guarantee of business success. Applicants and interested parties should perform their own due Start Printed Page 44788diligence before proceeding, as they would with any new business venture.

16. As is the case with many business investment opportunities, some unscrupulous entrepreneurs may attempt to use Auction No. 51 to deceive and defraud unsuspecting investors. Information about deceptive telemarketing investment schemes is available from the FTC at (202) 326-2222 and from the SEC at (202) 942-7040. Complaints about specific deceptive telemarketing investment schemes should be directed to the FTC, the SEC, or the National Fraud Information Center at (800) 876-7060. Consumers who have concerns about specific proposals regarding Auction No. 51 may also call the FCC Consumer Center at (888) CALL-FCC ((888) 225-5322).

v. National Environmental Policy Act (“NEPA”) Requirements

17. Licensees must comply with the Commission's rules regarding 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.

C. Auction Specifics

i. Auction Date

18. The auction will begin on Wednesday, September 24, 2003. 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 and packages will be conducted on each business day until bidding has stopped on all licenses and packages.

ii. Auction Title

19. Auction No. 51 “ Regional Narrowband PCS.

iii. Bidding Methodology

20. The bidding methodology for Auction No. 51 will be simultaneous multiple round with package bidding (or “package bidding”). The Commission will conduct this auction over the Internet, and telephonic bidding will be available as well. As a contingency plan, bidders may also dial in to the FCC Wide Area Network. Qualified bidders are permitted to bid telephonically or electronically.

iv. Pre-Auction Dates and Deadlines

21. The following is a list of important dates related to Auction No. 51:

Auction SeminarJuly 31, 2003.
Short-Form (FCC Form 175) Filing Window OpensJuly 31, 2003; 12 p.m. ET.
Short-Form (FCC Form 175) Application DeadlineAugust 8, 2003; 6 p.m. ET.
Upfront Payments (via wire transfer)August 26, 2003; 6 p.m. ET.
Mock AuctionSeptember 17 and 18, 2003.
Auction BeginsSeptember 24, 2003.

v. Requirements for Participation

22. Those wishing to participate in the auction must:

  • Submit a short-form application (FCC Form 175) electronically by 6 p.m. ET, August 8, 2003.
  • Submit a sufficient upfront payment and an FCC Remittance Advice Form (FCC Form 159) by 6 p.m. ET, August 26, 2003.
  • Comply with all provisions outlined in this public notice.

vi. General Contact Information

23. The following is a list of general contact information related to Auction No. 51:

General Auction Information

General Auction Questions; Seminar Registration: FCC Auctions Hotline, (888) 225-5322, Press Option #2, or direct (717) 338-2888, Hours of service: 8 a.m.-5:30 p.m. ET Monday through Friday

Technical Support

Electronic Filing; FCC Automated Auction System: FCC Auctions Technical Support Hotline (202) 414-1250 (Voice), (202) 414-1255 (TTY) Hours of service: 8 a.m.-6 p.m. ET, Monday through Friday

FCC Forms

(800) 418-3676 (outside Washington, DC), (202) 418-3676 (in the Washington Area), http://www.fcc.gov/​formpage.html

FCC Internet Sites

http://www.fcc.gov, http://wireless.fcc.gov/​auctions, http://wireless.fcc.gov/​uls

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

24. Guidelines for completion of the short-form (FCC Form 175) are set forth in Attachment C of the Auction No. 51 Procedures Public Notice.

A. Ownership Disclosure Requirements (FCC Form 175 Exhibit A)

25. The Commission indicated in the Broadcast First Report and Order, 63 FR 48615 (September 11, 1998), that, for purposed of determining eligibility to participate in a broadcast auction, the uniform part 1 ownership disclosure standards would apply. Specifically, in completing FCC Form 175, all applicants will be required to provide information required by sections 1.2105 and 1.2112 of the Commission's rules.

B. Consortia and Joint Bidding Arrangements (FCC Form 175 Exhibit B)

26. Applicants will be required to identify on their short-form applications any parties with whom they have entered into any consortium arrangements, joint ventures, partnerships or other agreements or understandings which relate in any way to the licenses being auctioned, including any agreements relating to post-auction market structure. Applicants will also be required to certify on their short-form applications that they have not entered into any explicit or implicit agreements, arrangements or understandings of any kind with any parties, other than those identified, regarding the amount of their bids, bidding strategies, or the particular licenses on which they will or will not bid.

27. While the anti-collusion rules do not prohibit non-auction related business negotiations among auction applicants, bidders are reminded that certain discussions or exchanges could touch upon impermissible subject matters because they may convey pricing information and bidding strategies.

C. Eligibility

i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)

28. A bidding credit represents the amount by which a bidder's winning bids are discounted. The size of the bidding credit depends on the average of the aggregated annual gross revenues for each of the preceding three years of the bidder, its affiliates, its controlling interests, and the affiliates of its controlling interests.

29. In the Narrowband Second Report and Order, the Commission adopted two tiers of bidding credits to promote and facilitate the participation of small businesses in the competitive bidding for licenses in the narrowband PCS service. Therefore, bidding credits are available to small and very small businesses, or consortia thereof, as follows for Auction No. 51:

  • A bidder with attributed average annual gross revenues of not more than $40 million for the preceding three years (“small business”) will receive a 15 percent discount on its winning bids;
  • A bidder with attributed average annual gross revenues of not more than $15 million for the preceding three years (“very small business”) will receive a 25 percent discount on its winning bids.

30. Bidding credits are not cumulative; a qualifying applicant receives either the 15 percent or 25 Start Printed Page 44789percent bidding credit on its winning bid, but only one credit per license.

ii. Tribal Land Bidding Credit

31. To encourage the growth of wireless services in federally recognized tribal lands the Commission has implemented a tribal land bidding credit. See section V.E. of the Auction No. 51 Procedures Public Notice.

iii. Applicability of Part 1 Attribution Rules

32. Controlling interest standard. On August 14, 2000, the Commission released the Part 1 Fifth Report and Order, in which the Commission, inter alia, adopted a “controlling interest” standard for attributing to auction applicants the gross revenues of their investors and affiliates in determining small business eligibility for future auctions. The Commission observed that the rule modifications adopted in the various Part 1 orders would result in discrepancies and/or redundancies between certain of the new Part 1 rules and existing service-specific rules, and the Commission delegated to the Bureau the authority to make conforming edits to the Code of Federal Regulations (CFR) consistent with the rules adopted in the Part 1 proceeding. More recently, the Commission made further modifications to its rules governing the attribution of gross revenues for purposes of determining small business eligibility. These changes included 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 also clarified that in calculating an applicant's gross revenues under the controlling interest standard, the personal net worth, including personal income, of its officers and directors will not be attributed to the applicant.

33. Eligibility for small business preferences will be determined based on the attribution rules in effect at the short-form application deadline. Accordingly, the “controlling interest” standard as recently modified, and the part 1 rules that superseded inconsistent service-specific rules, will control in Auction No. 51.

34. Control. The term “control” includes both de facto and 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; or
  • The entity plays an integral role in management decisions.

35. Attribution for small and very small business eligibility. In determining which entities qualify as small or very small businesses, the Commission will consider the gross revenues of the applicant, its affiliates, its controlling interests, and the affiliates of its controlling interests. 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, the applicant and its affiliates, will be counted in determining small business eligibility.

36. A consortium of small or very small businesses is a “conglomerate organization formed as a joint venture between or among mutually independent business firms,” each of which individually must satisfy the definition of small or very small business in Sections 1.2110(f) and 24.321. Thus, each consortium member must disclose its gross revenues along with those of its affiliates, its controlling interests, and the affiliates of its controlling interests. We note that although the gross revenues of the consortium members will not be aggregated for purposes of determining eligibility for small or very small business credits, this information must be provided to ensure that each individual consortium member qualifies for any bidding credit awarded to the consortium.

iv. Supporting Documentation

37. Applicants should note that they will be required to file supporting documentation to their FCC Form 175 short-form applications to establish that they satisfy the eligibility requirements to qualify as small or very small businesses (or consortia of small or very small businesses) for this auction.

38. Applicants should further note that submission of an FCC Form 175 application constitutes a representation by the certifying official that he or she is an authorized representative of the applicant, has read the form's instructions and certifications, and that the contents of the application and its 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.

39. Small or very small business eligibility (Exhibit C). Entities applying to bid as small or very small businesses (or consortia of small or very small businesses) will be required to disclose on Exhibit C to their FCC Form 175 short-form applications, separately and in the aggregate, the gross revenues for the preceding three years of each of the following: (i) The applicant, (ii) its affiliates, (iii) its controlling interests, and (iv) the affiliates of its controlling interests. Certification that the average annual gross revenues for the preceding three years do not exceed the applicable limit is not sufficient. A statement of the total gross revenues for the preceding three years is also insufficient. The applicant must provide separately for itself, its affiliates, its controlling interests, and the affiliates of its controlling interests, a schedule of gross revenues for each of the preceding three years, as well as a statement of total average gross revenues for the three-year period. If the applicant is applying as a consortium of small or very small businesses, this information must be provided for each consortium member.

D. Provisions Regarding Defaulters and Former Defaulters (FCC Form 175 Exhibit D)

40. Each applicant must certify on its FCC Form 175 application that it is not in default on any Commission licenses and that it is not delinquent on any non-tax debt owed to any Federal agency. In addition, each applicant must attach to its FCC Form 175 application a statement made under penalty of perjury indicating whether or not the applicant, its affiliates, its controlling interests, or the affiliates of its controlling interest have ever been in default on any Commission licenses or have ever been delinquent on any non-tax debt owed to any Federal agency. The applicant must provide such information for itself, its affiliates, its controlling interests, and the affiliates of its controlling interests, as defined by Section 1.2110 of the Commission's rules. Applicants must include this statement as Exhibit D of the FCC Form 175.

41. “Former defaulters”—i.e., applicants, including their attributable interest holders, 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-Start Printed Page 44790tax delinquencies—are eligible to bid in Auction No. 51, provided that they are otherwise qualified. However, as discussed infra in section III.D.iii, former defaulters are required to pay upfront payments that are fifty percent more than the normal upfront payment amounts.

E. Installment Payments

42. Installment payment plans will not be available in Auction No. 51.

F. Other Information (FCC Form 175 Exhibits E and F)

43. Applicants owned by minorities or women, as defined in 47 CFR 1.2110(c)(2), may attach an exhibit (Exhibit E) 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. Applicants wishing to submit additional information may do so on Exhibit F.

G. Minor Modifications to Short-Form Applications (FCC Form 175)

44. After the short-form filing deadline (August 8, 2003), applicants may make only minor changes 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 the certifying official or change control of the applicant or change bidding credits). See 47 CFR 1.2105. Permissible minor changes include, for example, deletion and addition of authorized bidders (to a maximum of three) and revision of exhibits. Applicants should make these modifications to their FCC Form 175 electronically and submit a letter, briefly summarizing the changes, by electronic mail to the attention of Margaret Wiener, Chief, Auctions and Industry Analysis Division, at the following address: auction51@fcc.gov. The electronic mail summarizing the changes must include a subject or caption referring to Auction No. 51. The Bureau requests that parties format any attachments to electronic mail as Adobe® Acrobat® (pdf) or Microsoft® Word documents.

45. A separate copy of the letter should be faxed to the attention of Kathryn Garland at (717) 338-2850.

H. Maintaining Current Information in Short-Form Applications (FCC Form 175)

46. Applicants have an obligation under 47 CFR1.65, to maintain the completeness and accuracy of information in their short-form applications. Amendments reporting substantial changes of possible decisional significance in information contained in FCC Form 175 applications, as defined by 47 CFR 1.2105(b)(2), will not be accepted and may in some instances result in the dismissal of the FCC Form 175 application.

III. Pre-Auction Procedures

A. Auction Seminar

47. On Thursday, July 31, 2003, the FCC will sponsor a free seminar for Auction No. 51 at the Federal Communications Commission, located at 445 12th Street, SW, Washington, DC. The seminar will provide attendees with information about pre-auction procedures, conduct of the auction, the FCC Automated Auction System, and the narrowband PCS and auction rules.

B. Short-Form Application (FCC Form 175)—Due August 8, 2003

48. In order to be eligible to bid in this auction, applicants must first submit an FCC Form 175 application. This application must be submitted electronically and received at the Commission no later than 6 p.m. ET on August 8, 2003. Late applications will not be accepted.

49. There is no application fee required when filing an FCC Form 175.

i. Electronic Filing

50. Applicants must file their FCC Form 175 applications electronically. Applications may generally be filed at any time beginning at noon ET on July 31, 2003, until 6 p.m. ET on August 8, 2003. Applicants are strongly encouraged to file early and are responsible for allowing adequate time for filing their applications. Applicants may update or amend their electronic applications multiple times until the filing deadline on August 8, 2003.

51. Applicants must press the “SUBMIT Application” button on the “Submission” page of the electronic form to successfully submit their FCC Form 175s. Any form that is not submitted will not be reviewed by the FCC. Information about accessing the FCC Form 175 is included in Attachment C of the Auction No. 51 Procedures Public Notice. Technical support is available at (202) 414-1250 (voice) or (202) 414-1255 (text telephone (TTY)); hours of service Monday through Friday, from 8 AM to 6 PM ET. In order to provide better service to the public, all calls to the hotline are recorded.

ii. Completion of the FCC Form 175

52. Applicants should carefully review 47 CFR 1.2105, and must complete all items on the FCC Form 175. Instructions for completing the FCC Form 175 are in Attachment D of the Auction No. 51 Procedures Public Notice.

iii. Electronic Review of FCC Form 175

53. The FCC Form 175 electronic review system may be used to locate and print applicants' FCC Form 175 information. There is no fee for accessing this system. See Attachment C of the Auction No. 51 Procedures Public Notice for details on accessing the review system.

54. Applicants may also view other applicants' completed FCC Form 175s after the filing deadline has passed and the FCC has issued a public notice explaining the status of the applications.

Note:

Applicants should not include sensitive information (i.e., TIN/EIN) on any exhibits to their FCC Form 175 applications.

C. Application Processing and Minor Corrections

55. After the deadline for filing the 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: (i) Those applications accepted for filing; (ii) those applications rejected; and (iii) those applications which have minor defects that may be corrected, and the deadline for filing such corrected applications.

D. Upfront Payments—Due August 26, 2003

56. 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 faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must be received at Mellon Bank by 6 p.m. ET on August 26, 2003. For specific details regarding upfront payments, see section III. D of the Auction No. 51 Procedures Public Notice.

i. Making Auction Payments by Wire Transfer

57. Wire transfer payments must be received by 6 p.m. ET on August 26, 2003. 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. Start Printed Page 44791

58. Applicants must fax a completed FCC Form 159 (Revised 2/00) to Mellon Bank at (412) 209-6045 at least one hour before placing the order for the wire transfer (but on the same business day). On the cover sheet of the fax, write “Wire Transfer—Auction Payment for Auction Event No. 51.” In order to meet the Commission's upfront payment deadline, an applicant's payment must be credited to the Commission's account by 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. Detailed instructions for completion of FCC Form 159 are included in Attachment E of the Auction No. 51 Procedures Public Notice.

ii. Amount of Upfront Payment

59. In the Part 1 Order 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, the Commission ordered that “former defaulters,” i.e., applicants that have ever been in default on any Commission license or have ever been delinquent on any non-tax debt owed to any Federal agency, be required to pay upfront payments fifty percent greater than non-“former defaulters.” In the Auction No. 51 Comment Public Notice, the Bureau proposed that the amount of the upfront payment would determine the initial maximum eligibility (as measured in bidding units) for each bidder. Each license is assigned a specific number of bidding units equal to the upfront payment, on a bidding unit per dollar basis. For a package, the Bureau proposed to calculate the bidding units by adding together the bidding units of the individual licenses that make up the package. In order to bid on a license or package, otherwise qualified bidders that applied for the license(s) on Form 175 must have an eligibility level that meets or exceeds the number of bidding units assigned to the license or package. At a minimum, therefore, an applicant's total upfront payment must be enough to establish eligibility to bid on at least one of the licenses applied for on Form 175, or else the applicant will not be eligible to participate in the auction. An applicant does not have to make an upfront payment to cover all licenses for which the applicant has applied on Form 175, but rather to cover the maximum number of bidding units that are associated with licenses on which the bidder wishes to bid (via bids on licenses and/or packages) at any given time.

60. In the Auction No. 51 Comment Public Notice, the Bureau proposed to calculate upfront payments on a license-by-license basis using the following formula:

$.00001 * kHz * License Area Population rounded.

The Bureau received no comments on this issue. Therefore, the Bureau adopts its proposed upfront payments. The specific upfront payments and bidding units for each license are set forth in Attachment A of the Auction No. 51 Procedures Public Notice.

61. In calculating its upfront payment amount, an applicant should determine the bidding units of all the licenses it may wish to win at one time and submit an upfront payment covering that number of bidding units. In order to make this calculation, an applicant should add together the upfront payments for all of these licenses. Applicants should check their calculations carefully, as there is no provision for increasing a bidder's maximum eligibility after the upfront payment deadline.

Example: Upfront Payments and Bidding Flexibility

Market No.Channel No.Market nameBidding unitsUpfront payment
RPC00117Northeast34,000$34,000
RPC00217South38,00038,000
If a bidder wishes to bid on both licenses in a round or on a package of both licenses, it must have selected both on its FCC Form 175 and purchased at least 72,000 bidding units (34,000 + 38,000). If a bidder only wishes to bid on one license, but not both, purchasing 38,000 bidding units would meet the requirement for either license. The bidder would be able to bid on either license, but not both at the same time. If the bidder purchased only 34,000 bidding units, it would have enough eligibility for the Northeast license but not for the South license.

62. Former defaulters should calculate their upfront payment for all licenses by multiplying the number of bidding units they wish to purchase by 1.5. In order to calculate the number of bidding units to assign to former defaulters, the Commission will divide the upfront payment received by 1.5 and round the result up to the nearest bidding unit.

Note:

An applicant may, on its FCC Form 175, apply for every applicable license being offered, but its actual bidding in any round will be limited by the bidding units reflected in its upfront payment.

iii. Applicant's Wire Transfer Information for Purposes of Refunds of Upfront Payments

63. The Commission will use wire transfers for all Auction No. 51 refunds. To ensure that refunds of upfront payments are processed in an expeditious manner, the Commission is requesting that all pertinent information as listed be supplied to the FCC. Applicants can provide the information electronically during the initial short-form filing window after the form has been submitted. Wire Transfer Instructions can also be manually faxed to the FCC, Financial Operations Center, Auctions Accounting Group, ATTN: Gail Glasser or Tim Dates, at (202) 418-2843 by August 26, 2003. 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 or Tim Dates at (202) 418-0496. Name of Bank, ABA Number, Contact and Phone Number, Account Number to Credit, Name of Account Holder, FCC Registration Number (FRN), Taxpayer Identification Number, Correspondent Bank (if applicable), ABA Number, Account Number.

E. Auction Registration

64. 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 have timely submitted upfront payments sufficient to make them eligible to bid on at least one of the licenses for which they applied.

65. All qualified bidders are automatically registered for the auction. Registration materials will be distributed prior to the auction by two separate overnight mailings, one containing the confidential bidder identification number (BIN) and the Start Printed Page 44792other containing the SecurID cards, both of which are required to place bids. These mailings will be sent only to the contact person at the contact address listed in the FCC Form 175.

66. Applicants that do not receive both registration mailings will not be able to submit bids. Therefore, any qualified applicant that has not received both mailings by noon on Monday, September 15, 2003, should contact the Auctions Hotline at (717) 338-2888. Receipt of both registration mailings is critical to participating in the auction, and each applicant is responsible for ensuring it has received all of the registration material.

67. Qualified bidders should note that lost bidder identification numbers or SecurID cards can be replaced only by appearing in person at the FCC headquarters, located at 445 12th St., SW, Washington, DC 20554. Only an authorized representative or certifying official, as designated on an applicant's FCC Form 175, may appear in person with two forms of identification (one of which must be a photo identification) in order to receive replacements. Qualified bidders requiring replacements must call technical support prior to arriving at the FCC.

F. Remote Electronic Bidding

68. The Commission will conduct this auction over the Internet, and telephonic bidding will be available as well. As a contingency plan, bidders may also dial in to the FCC Wide Area Network. Qualified bidders are permitted to bid telephonically or electronically. 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. For security purposes, the SecurID cards and the FCC Automated Auction System user manual are only mailed to the contact person at the contact address listed on the FCC Form 175. 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. 51. The telephonic bidding phone number will be supplied in the first overnight mailing, which also includes the confidential bidder identification number.

69. 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

70. All qualified bidders will be eligible to participate in a mock auction on Wednesday, September 17, and Thursday, September 18, 2003. The mock auction will enable applicants to become familiar with the FCC Automated Auction System prior to the auction. Participation by all bidders is strongly recommended. Details will be announced by public notice.

IV. Auction Event

71. The first round of bidding for Auction No. 51 will begin on Wednesday, September 24, 2003. 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 With Package Bidding

72. In the Auction No. 51 Comment Public Notice, the Bureau proposed to award all licenses in Auction No. 51 in a simultaneous multiple round auction with package bidding. The Bureau received no comments on this issue. The Bureau concludes that it is operationally feasible and appropriate to auction the regional narrowband PCS licenses through a simultaneous multiple round auction with package bidding. Unless otherwise announced, bids will be accepted on all individual licenses and on packages of licenses in each round of the auction. The Bureau believes this approach allows bidders to express complementarities among licenses, and the Bureau believes this approach does not unreasonably disadvantage bidders who do not wish to win packages of licenses. The Bureau also believes this approach is administratively efficient.

ii. Maximum Eligibility

73. In the Auction No. 51 Comment Public Notice, the Bureau proposed that the amount of the upfront payment submitted by a bidder would determine the initial maximum eligibility (as measured in bidding units) for each bidder. The Bureau received no comments on this issue.

74. For Auction No. 51 the Bureau adopts this proposal. The amount of the upfront payment submitted by a bidder determines the maximum eligibility (in bidding units) for each bidder. The total upfront payment defines the initial maximum number of bidding units on which the applicant will be permitted to bid in a given round. As there is no provision for increasing a bidder's eligibility during the course of an auction, prospective bidders are cautioned to calculate their upfront payments carefully. The total upfront payment does not affect the total dollars a bidder may bid on any given license or package.

iii. Activity Rule

75. In order to ensure that the auction closes within a reasonable period of time, an activity rule provides incentives for bidders to participate throughout the auction. The activity rule requires each bidder to have active bids in each round that account for a specified fraction of the bidder's current eligibility, as measured in bidding units. A bidder that does not satisfy the activity rule will either use an activity rule waiver (if any remain) or lose bidding eligibility for the next round. Losing eligibility matters to bidders because a bidder's bidding activity cannot exceed its current eligibility.

76. In the Auction No. 51 Comment Public Notice, the Bureau proposed to measure a bidder's bidding activity in a round as the maximum number of bidding units the bidder can win considering new bids placed and provisionally winning bids renewed in that round. Thus, when a bidder submits bids in a round the FCC Automated Auction System will determine the set of bids, among the bidder's new bids and renewed provisionally winning bids, that contains the most bidding units and has no overlap among the licenses. The Bureau also proposed that a bidder be considered active if the bidder has provisionally winning bids from the previous round. A bidder's bids made in different rounds will be considered mutually exclusive, so the bidding units associated with provisionally winning bids must be viewed independently from the bidding units associated with current round bids. The Bureau proposed to define a bidder's eligibility activity in a round as the greater of (i) its bidding activity in the round and (ii) the bidding units associated with the bidder's provisionally winning bids from the prior round.

77. For Auction No. 51, we proposed that, in each round of the auction, a bidder desiring to maintain its current eligibility would be required to have eligibility activity equal to sixty percent (three-fifths) of its current eligibility. For a bidder that failed to meet the activity requirement in a given round, the Automated Auction System would reduce the bidder's eligibility for the next round to five-thirds times its eligibility activity in the current round. Thus, a bidder's eligibility in the current Start Printed Page 44793round is equal to either its eligibility in the previous round (bidder met the activity requirement) or five-thirds of its eligibility activity in the previous round (bidder did not meet the activity requirement), whichever is less:

Eligibility (t) = Min (Eligibility (t−1), 5/3 * Eligibility Activity (t−1))

78. Activity rule waivers provide an exception to this rule and are discussed in the next section, “Activity Rule Waivers and Reducing Eligibility.”

79. In addition, the Bureau proposed to retain the discretion to increase to eighty percent (four-fifths) the proportion of bidding units on which bidders must be active to retain their current eligibility. Any such change will be announced to bidders prior to the beginning of the round in which the change takes effect. For a bidder that failed to meet an eighty percent activity requirement in a given round, the Automated Auction System would reduce the bidder's eligibility for the next round to five-fourths times its eligibility activity in the current round.

Caution: If the Bureau exercises its discretion to increase the activity requirement to eighty percent, bidders must carefully check their current activity during the bidding period of the first round following the change. In past auctions, some bidders have inadvertently lost bidding eligibility or used an activity rule waiver because they did not re-verify their activity after an increase in the activity requirement. Bidders may check their activity against the required activity level by using the bidding system's bidding module.

80. The Bureau received no comments on these proposals. Because employing an activity rule has proven successful in maintaining proper pace in previous auctions, the Bureau adopts its proposal for Auction No. 51.

iv. Activity Rule Waivers and Reducing Eligibility

81. Each bidder will be provided five activity rule waivers that may be used in any round during the course of the auction. Use of an activity rule waiver preserves the bidder's current bidding eligibility despite the bidder's eligibility activity in the current round being below the required level. An activity rule waiver applies to an entire round of bidding and not to a particular license or package.

82. The FCC Automated Auction System assumes that bidders with insufficient eligibility activity would prefer to use an activity rule waiver (if available) rather than lose bidding eligibility. Therefore, the system will automatically apply a waiver (known as an “automatic waiver”) at the end of any round where a bidder's eligibility activity is below the activity requirement unless: (i) The bidder has no activity rule waivers remaining; or (ii) the bidder overrides the automatic application of a waiver by reducing eligibility, thereby meeting the minimum requirements. If a bidder has no waivers remaining and does not satisfy the activity requirement, its current eligibility will be permanently reduced, possibly eliminating the bidder from further bidding in the auction.

83. A bidder with insufficient activity that wants to reduce its bidding eligibility rather than use an activity rule waiver must affirmatively override the automatic waiver mechanism during the round by using the “reduce eligibility” function in the bidding system. In this case, the bidder's eligibility is permanently reduced to bring the bidder into compliance with the activity rules as described in “Activity Rule” (see section IV.A.iii discussion). Once eligibility has been reduced, a bidder will not be permitted to regain its lost bidding eligibility.

84. Finally, the Bureau adopts its proposal not to permit bidders to submit an activity rule waiver proactively as a means to keep the auction open absent bidding activity.

v. Auction Stopping Rules

85. For Auction No. 51, the Bureau proposed to employ a two-round simultaneous stopping rule; that is, the auction would close after two consecutive rounds with no new bids. The Bureau also proposed that, for purposes of the stopping rule, last and best bids would be considered new bids (i.e., would keep the auction open) but renewed bids would not.

86. In addition, the Bureau proposed that it reserve the right to declare that the auction will end after a designated number of additional rounds (“special stopping rule”). The Bureau proposed to exercise this option 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. Before exercising this option, the Bureau is likely to attempt to increase the pace of the auction by, for example, increasing the activity requirement (where bidders will be required to maintain a higher level of bidding activity), increasing the number of rounds per day, and/or adjusting the minimum acceptable bids and bid increments for the licenses.

87. The Bureau received no comment on this issue. The Bureau adopts the proposals. Auction No. 51 will begin under the two-round simultaneous stopping rule, and the Bureau will retain the discretion to invoke the special stopping rule.

vi. Auction Delay, Suspension, or Cancellation

88. 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 conduct of competitive bidding. Because this approach has proven effective in resolving exigent circumstances in previous auctions, we adopt our proposed auction cancellation rules. 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.

B. Bidding Procedures

i. Round Structure

89. The initial bidding schedule 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.

90. 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.

ii. Packages

91. The Bureau proposed that, in addition to bidding on individual licenses, bidders be permitted to create and bid on up to twelve different packages of their own choosing during the course of the auction. A bid on an individual license does not count as a bid on a package; packages consist of two or more licenses. Bidders will not be required to identify or create their packages before the start of the auction, but may create their packages as the auction progresses. A bidder may modify or delete a package it has created up until the point where it has bid on the package and the round has closed. If the bidder submits a bid on a package and subsequently removes the bid during the same round, the bidder has Start Printed Page 44794the option of also deleting or modifying the package. However, once a bidder bids on a package and the round closes, the package may not be modified or deleted and counts as one of the bidder's twelve allowable packages.

92. The Bureau received no comments on this issue. The Bureau adopts the proposals regarding packages.

iii. Reserve Price or Minimum Opening Bid

93. For Auction No. 51, the Bureau proposed the following license-by-license formula for calculating minimum opening bids: $.00001 * kHz * License Area Population, rounded.

94. For a package, the Bureau proposed to calculate the minimum opening bid by adding together the minimum opening bids of the individual licenses that make up the package.

95. The Bureau received no comments on this issue. Consequently, the Bureau adopts its proposed minimum opening bids for Auction No. 51. The minimum opening bids the Bureau adopts for Auction No. 51 are reducible at the discretion of the Bureau. The Bureau emphasizes, however, that such discretion will be exercised, if at all, sparingly and early in the auction, i.e., before bidders lose all waivers and begin to lose substantial eligibility. During the course of the auction, the Bureau will not entertain any requests to reduce the minimum opening bid on specific licenses.

96. The specific minimum opening bids for each license available in Auction No. 51 are set forth in Attachment A of the Auction No. 51 Procedures Public Notice.

iv. Minimum Acceptable Bids and Bid Increments

97. In the Auction No. 51 Comment Public Notice, the Bureau proposed that in each round, eligible bidders will be able to place bids on a given license or package in any of nine different amounts. The Automated Auction System interface will list the nine acceptable bid amounts for each license and package. In the first round of the auction, the minimum acceptable bid for a license or package will be equal to its minimum opening bid. The Bureau proposed that in all subsequent rounds, the minimum acceptable bid for a license or package will be the greatest of: (i) The minimum opening bid; (ii) the bidder's own previous high bid on a license or package plus x%, where the Bureau will specify the value of x in each round; and (iii) the current price estimate of the license plus z%, or for a package, the sum of the current price estimates for the licenses in the package plus z%, where the Bureau will specify the value of z in each round.

98. Current price estimates are estimates of the individual prices of the licenses being auctioned. The estimates take into account the minimum opening bids for the licenses as well as all the bids placed in the auction and, therefore, reflect all available information that has been revealed in the auction about the relative demands for the licenses. For a provisionally winning package, the current price estimates for the licenses that make up the package are set such that the sum of those current price estimates equals the provisionally winning bid on the package. These estimates are generated during round results following every round of the auction as part of the mathematical optimization process used by the Bureau to determine the provisionally winning bids. The precise methodology used to calculate current price estimates is described in Attachment F of the Auction No. 51 Procedures Public Notice. Until a bid is placed on a license or on a package containing that license, by any bidder in any round, the current price estimate is the FCC bid amount.

99. The Bureau proposed to retain an exception to part (iii) for calculating the minimum acceptable bid for a “global” package—a package consisting of all six of the licenses available in the auction. After the first round of the auction, part (iii) of the minimum acceptable bid rule for a global package will always be the revenue generated by the provisionally winning bid set in the previous round plus w%, where the Bureau will specify the value of w in each round.

100. The result of the minimum acceptable bid calculation will be rounded using our standard rounding procedure. The Bureau proposed to initially set x at ten, z at five and w at five, and to retain the discretion to adjust these variables during the course of the auction.

101. For bids higher than the minimum acceptable bid—i.e., multi-increment bids—the Bureau proposed to define the amount of the additional bid increments as v% of the minimum acceptable bid, where the minimum acceptable bid is determined. The Bureau proposed to initially set v at ten and to retain the discretion to adjust the amount during the course of the auction. Thus, when v equals ten, a bidder will be able to place multi-increment bids of the minimum acceptable bid plus approximately 10%, 20%, etc. with the maximum bid being approximately equal to the minimum acceptable bid plus 80%.

102. The Bureau received no comments on these issues. The Bureau adopts the proposals. The Bureau retains the discretion to change minimum acceptable bids, and to do so on a license-by-license and package-by-package basis, if circumstances so dictate. If the Bureau exercises this discretion, it will announce any change in the Automated Auction System.

v. Winning and Provisionally Winning Bids

103. In the Auction No. 51 Comment Public Notice, the Bureau proposed the procedures set forth.

104. Winning bids in a package bidding auction are the set of “consistent” bids (non-overlapping, and for each winning bidder, only bids made or renewed in the same round) on individual licenses and packages that maximizes total revenue when the auction closes. Provisionally winning bids are the set of consistent bids that maximizes total revenue in a particular round (they would win if the auction were to close in that round), assigning each license to either a bidder or the FCC. When determining winning and provisionally winning bids, all bids made in every round throughout the course of the auction (except for bids that are placed and subsequently removed during the same round) will be considered. In addition, each license is treated as having a bid placed by the FCC at $1000 less than the minimum opening bid. This procedure will ensure that a bid on a license or package at the minimum opening bid always beats the FCC bid.

105. Since there can be more than one set of consistent bids that produces the maximum revenue, we proposed to use a procedure that randomly selects among these tied sets when determining the provisionally winning bids. This tie breaking procedure involves two steps: (i) The assignment of a selection number to each bid, and (ii) the determination of, among all tied bid sets, the set that produces the maximum sum of selection numbers.

106. A bid's selection number is the sum of n pseudo-random numbers where n is the number of licenses comprising the bid's package. A bid's selection number will be included in the publicly-available round results released after each round.

107. Selection numbers will be generated for each license in each bid in each round. In the event that more than one set of consistent bids produces the maximum revenue, the second step of the tie breaking procedure will determine the provisionally winning bid set. Computer software will be used to Start Printed Page 44795determine the consistent set that produces the maximum revenue and the maximum sum of selection numbers. Each license in each bid will be assigned a new selection number in every round. Consequently, if there are ties, the set of provisionally winning bids may change even after a round in which there are no new bids. The solver will not be run after the last round of the auction, so that the winning set is the same as the set of provisional winners generated after the next-to-the-last round (i.e., there won't be any surprise winners).

108. Please note that it is possible that a provisionally winning bid might not be the highest bid on the particular license or package. This possibility is primarily due to each bidder's bids being considered mutually exclusive across rounds. For example, if one bidder has placed the highest bid on each of two different licenses in two different rounds (and did not renew the earlier of the two bids), then those two bids are considered as mutually exclusive and only one of them can be a provisionally-winning bid.

109. The Bureau received no comments on these proposals. The Bureau adopts the procedures regarding winning and provisionally winning bids.

vi. Last and Best Bids

110. In the Auction No. 51 Comment Public Notice, the Bureau proposed to allow bidders that wish to drop out of the auction or that believe they are about to lose their bidding eligibility to have an opportunity before they drop out to place up to two mutually exclusive sets of “last and best” bids on any licenses or packages for which they remain eligible. This is a limited exception to minimum acceptable bids and to click-box bidding. Such bids may be of any amount (in thousand dollar increments) between the bidder's previous high bid on the license or package and the amount of the highest acceptable bid for the license or package in the current round (the eighth increment above the minimum acceptable bid). If a bidder chooses this option, it will not be permitted to make any further bids during the auction.

111. The Bureau received no comments on this issue. Therefore, we adopt our proposal.

vii. Renewed Bids

112. Without regard to the minimum acceptable bid requirement, the Bureau proposed to allow a bidder to “renew” in the current round the highest previous bid it made on any license or package; that is, it may resubmit the bid without increasing the amount bid. No eligibility activity or bidding activity is conferred for renewing a non-provisionally winning bid. Renewed provisionally winning bids confer bidding activity (non-renewed provisionally winning bids count toward eligibility activity). Renewed bids will be treated as being made in the current round.

113. Renewals provide bidders a means to ensure that bids from previous rounds are considered in addition to the bids placed in the current round. Otherwise, bids made in different rounds are treated as mutually exclusive, so that the bidder may win some or all of the bids from the current round, or a previous round, but not both.

114. The Bureau received no comments on this issue. Therefore, the Bureau adopts its proposal.

viii. Bidding

115. During a round, a bidder may submit new bids or renewed bids for as many licenses and packages as it wishes (subject to eligibility requirements, its FCC Form 175 license selection, and the twelve package limitation); remove bids placed in the same bidding round; or permanently reduce eligibility. Bidders also have the option of making multiple submissions in each round. If a bidder submits multiple bids for a single license or package in the same round, the system takes the last bid entered as that bidder's bid for the round. Bidders should note that the bidding units associated with licenses for which the bidder has removed its bid do not count towards the bidder's activity at the close of the round.

116. Bidding is constrained by the eligibility and activity rules, which determine both minimum and maximum permissible levels of bidding, as measured in bidding units. As previously discussed, minimum bidding, as measured in bidding units, is constrained by the activity rules. In each round, a bidder desiring to maintain its current eligibility and not use an activity rule waiver must be active, based on eligibility activity, on licenses associated with enough bidding units to meet the activity requirement for the current round. For more details, please refer to section IV.A.iii. “Activity Rule.”

117. Maximum bidding, as measured in bidding units, is constrained by the eligibility rules. Bidding activity for a round, defined as the maximum number of bidding units a bidder can win considering new bids and renewed provisionally winning bids placed in that round, cannot exceed current eligibility. That is, when a bidder submits a set of bids in a round, the system will not accept the set of bids if it determines that the bidding activity generated by those bids exceeds the bidder's current eligibility. Bidding in a round is further limited by the requirement that a bidder's bidding exposure in a round must be less than or equal to its initial eligibility. Bidding exposure is the maximum number of bidding units a bidder can win considering all the bids (new, renewed provisionally winning or non-provisionally winning) placed in the round. Similarly, when a bidder submits a set of bids in a round, the system will not accept the set of bids if it determines that the bidding exposure generated by those bids exceeds the bidder's initial eligibility. In either case, if a set of bids is rejected, the system will notify the bidder that its bids have not been accepted and report which rule is in violation.

118. Bidders are permitted only to bid on the specific licenses they selected on their FCC Form 175. Any packages they create must be comprised entirely of licenses selected on their Form 175. The bid submission screens are customized using the bidder's Form 175 information, and will not permit bidding on non-selected licenses (or packages of those licenses).

119. Please note that all bidding will take place remotely either through the FCC Automated Auction System or by telephonic bidding. Telephonic bidders are therefore reminded to allow sufficient time to bid by placing their calls well in advance of the close of a round.

120. In order to access the bidding functions of the FCC Automated Auction System, bidders must be logged in during the bidding round using the bidder identification number provided in the registration materials, and the passcode generated by the SecurID card. Bidders are strongly encouraged to print bid confirmations for each round after they have completed all of their activity for that round.

121. In each round, eligible bidders will be able to place bids on a given license or package in any of nine different amounts. Bidders may use the drop-down box to select from among the nine bid amounts; to renew any bids (if applicable); or to remove any bids made within the current round.

122. Finally, bidders are cautioned in selecting their bid amounts because, as explained in the following section, bidders are not permitted to withdraw bids from a previous round, even if mistakenly or erroneously made. As explained previously, when Start Printed Page 44796determining winning and provisionally winning bids, the Bureau considers all bids made throughout the course of the auction.

ix. Bid Removal and Bid Withdrawal

123. In the Auction No. 51 Comment Public Notice, the Bureau proposed not to allow any bid withdrawals in Auction No. 51. The Bureau received no comments on this issue. Therefore, the Bureau adopts its proposal.

124. Bid Removal Procedures. Before the close of a bidding round, a bidder has the option of removing any bids placed in that round. By using the “remove bid” function in the bidding system, a bidder may effectively “unsubmit” any bid placed within that round. Removing a bid will affect a bidder's activity for the round in which it is removed, i.e., a bid that is removed does not count towards bidding activity. This procedure will enhance bidder flexibility during the auction, and therefore, the Bureau adopts these procedures for Auction No. 51.

x. Round Results

125. Bids placed during a round will not be made public until the conclusion of that bidding period. After a round closes, the Bureau will compile reports of all bids made in that round, the set of bids considered when determining the current provisionally winning bids, current price estimates, new minimum acceptable bids for all bidders, current provisionally winning bids, and bidder eligibility status (bidding eligibility and activity rule waivers), and post the reports for public access. Reports reflecting bidders' identities for Auction No. 51 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. Details regarding round results formats and locations will be included in a subsequent public notice.

xi. Auction Announcements

126. The FCC will use auction announcements to announce items such as schedule changes. All FCC auction announcements will be available by clicking a link on the FCC Automated Auction System.

xii. Default

127. The Commission recently adopted a special rule for calculating default payments in connection with package bidding. In the event a winning bidder defaults on payments due after an auction closes or is disqualified after the auction, a default payment will be assessed. The default payment will consist of a deficiency portion and an additional 25% payment. The special default rule is modeled on the default rule used in other auctions. However, there are substantial differences, perhaps most significantly in the amount of the additional payment. The default rule used in other auctions sets the additional payment at three percent (3%) of the lesser of the subsequent winning bid and the defaulted bid. In contrast, the default rule for use with package bidding sets the additional payment at twenty-five percent (25%) of the lesser of the subsequent winning bid and the defaulted bid.

128. The deficiency portion will make up any loss to the Commission that results when defaulted bid(s) are replaced by subsequent winning bid(s). If the subsequent winning bid(s) exceed the defaulted bid(s), no deficiency portion will be assessed. Even in the absence of a deficiency portion, however, an additional 25% payment will be due. Where a defaulting bidder held winning bids on individual licenses (i.e., not as part of a package), and in a subsequent auction the licenses are also won individually, the deficiency portion will be calculated by subtracting the subsequent winning bid from the defaulted bid. The deficiency portion for such bids will be calculated on a license-by-license basis (i.e., in the event of defaults on multiple bids, the differences between the amounts originally bid and the amounts subsequently bid will not be aggregated to determine a net amount owed).

129. Where a defaulting bidder won licenses in package(s), and in a subsequent auction the licenses are won either (a) In the same package(s), or (b) in smaller packages or as individual licenses that correlate to the defaulted package(s), the deficiency portion will be determined on a package-by-package basis. In the event a defaulting bidder defaults on more than one such bid, the differences between the amount originally bid and the amount(s) subsequently bid will not be aggregated to determine a net amount owed. Thus, in this situation, the deficiency portion will be calculated in a manner analogous to where the licenses are sold individually. However, with regard to each individual package, where the licenses are subsequently sold individually or as part of smaller packages, the amounts received in the subsequent auction will be aggregated in order to determine any deficiency.

130. Where a defaulting bidder or bidders won licenses either individually or as part of packages, and in a subsequent auction the licenses are won as larger packages or different packages (not including the situation described in the preceding paragraph), the deficiency portion will be calculated by subtracting the aggregate amount originally bid for the licenses from the aggregate amount bid in the subsequent auction for the licenses. Thus, in this situation, the deficiency portion will not be calculated on a bid-by-bid basis.

131. If, in a situation requiring that bids be aggregated in order to determine the deficiency portion of the default payments for the bids, there are multiple defaulting bidders, the default payment (both the deficiency portion and the additional 25% payment portion) will be allocated to the defaulting bidders in proportion to their share of the aggregated default bids.

132. In the event that a bidding credit applies to any applicable bid(s), the Bureau will assess the deficiency portion of the default payment using the lesser of the difference between gross bids and the difference between net bids. (In the event that a bidder does not have a bidding credit, the bidder's gross bid and net bid are the same.) In other words, the Bureau will compare (i) The sum of the gross defaulted Auction No. 51 bid(s) minus the gross subsequent winning bid(s) and (ii) the sum of the net defaulted Auction No. 51 bid(s) minus the net subsequent winning bid(s). The Bureau will impose the lesser of (i) and (ii) as the deficiency portion.

133. As noted at the outset, the default payment consists of the deficiency portion and an additional 25% payment. The additional payment will be 25% of the lesser of the subsequent winning bid(s) and the defaulted bid(s). The Bureau will use the same gross or net bid(s) that it used to calculate the deficiency portion when assessing the additional 25% payment. That is, the Bureau will compare the defaulted and subsequent bid(s) according to the methods described for calculation of the deficiency portion of the default payment when determining whether the defaulted bid(s) or the subsequent winning bid(s) is the lesser amount. Should there be no difference between the gross or net bid(s) for purposes of assessing the deficiency portion, the Bureau will assess the additional 25% payment using the lesser of the gross or net bid(s).

xiii. Maintaining the Accuracy of FCC Form 175 Information

134. As noted in section II.G, after the short-form filing deadline, applicants may make only minor changes to their FCC Form 175 applications. Applicants must make these modifications to their FCC Form 175 electronically and submit Start Printed Page 44797a letter, briefly summarizing the changes, by electronic mail to the attention of Margaret Wiener, Chief, Auctions and Industry Analysis Division at the following address: auction51@fcc.gov. The electronic mail summarizing the changes must include a subject or caption referring to Auction No. 51. The Bureau requests that parties format any attachments to electronic mail as Adobe® Acrobat® (pdf) or Microsoft® Word documents.

135. A separate copy of the letter should be faxed to the attention of Kathryn Garland at (717) 338-2850. Questions about other changes should be directed to Christopher Shields of the Auctions and Industry Analysis Division at (202) 418-0660.

V. Post-Auction Procedures

A. Down Payments

136. After bidding has ended, the Commission will issue a public notice declaring the auction closed, identifying winning bidders and down payments due.

137. 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. 51 to 20 percent of its net winning bids (actual bids less any applicable small or very small business bidding credits).

B. Auction Discount Voucher

138. On June 8, 2000, the Commission awarded Qualcomm, Inc. a transferable Auction Discount Voucher (“ADV”) in the amount of $125,273,878.00. Subject to the terms and conditions set forth in the Commission's Order, Qualcomm or its transferee could use this ADV, in whole or in part, to adjust a winning bid in any spectrum auction prior to June 8, 2003. On April 28, 2003, the Bureau granted Qualcomm an additional year, until June 8, 2004, to use the remaining amount of its ADV. Qualcomm transferred $10,848,000.00 of the ADV to a winning bidder in FCC Auction No. 35. The transferee used this amount to pay a portion of one of its winning bids in Auction No. 35. Qualcomm also transferred $50,536,998.75 of the ADV to an assignee of broadband PCS licenses that requests this amount be applied to pay the unpaid principal and interest accrued on the licenses. The remaining $63,888,879.25 of Qualcomm's ADV could be used to adjust winning bids in another FCC Auction, including Auction No. 51.

C. Long-Form Application (FCC Form 601)

139. Within ten business days after release of the auction closing notice, winning bidders must electronically submit a properly completed long-form application (FCC Form 601) and required exhibits for each license won through Auction No. 51. Winning bidders that are small or very small businesses must include an exhibit demonstrating their eligibility for small or very small business bidding credits. See 47 CFR 1.2112(b). Further filing instructions will be provided to auction winners at the close of the auction.

D. Ownership Disclosure Information Report (FCC Form 602)

140. 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. Applicants are reminded that the FCC Form 602 must now be filed electronically. Accordingly, forms filed manually will not be accepted. Winning bidders without a current Form 602 already on file with the Commission must submit a properly completed Form 602 at the time they submit their long-form applications. Further filing instructions will be provided to auction winners at the close of the auction.

E. Tribal Land Bidding Credit

141. A winning bidder that intends to use its license(s) to deploy facilities and provide services to federally-recognized tribal lands that are unserved by any telecommunications carrier or that have a telephone service penetration rate equal to or below 70 percent is eligible to receive a tribal land bidding credit as set forth in 47 CFR 1.2107 and 1.2110(f). A tribal land bidding credit is in addition to, and separate from, any other bidding credit for which a winning bidder may qualify.

142. Unlike other bidding credits that are requested prior to the auction, a winning bidder applies for the tribal land bidding credit after winning the auction when it files its long-form application (FCC Form 601). When filing the long-form application, the winning bidder will be required to advise the Commission whether it intends to seek a tribal land bidding credit, for each market won in the auction, by checking the designated box(es). After stating its intent to seek a tribal land bidding credit, the applicant will have 90 days from the close of the long-form filing window to amend its application to select the specific tribal lands to be served and provide the required tribal government certifications. Licensees receiving a tribal land bidding credit are subject to performance criteria as set forth in 47 CFR 1.2110(f).

143. For additional information on the tribal land bidding credit, including how the amount of the credit is calculated, applicants should review the Commission's rule making proceeding regarding tribal land bidding credits and related public notices. Relevant documents can be viewed on the Commission's Web site by going to http://wireless.fcc.gov/​auctions and clicking on the Tribal Land Credits link.

F. Default and Disqualification

144. Any high bidder that defaults or is disqualified after the close of the auction (i.e., fails to remit the required down payment within the prescribed period of time, fails to submit a timely long-form application, fails to make full payment, or is otherwise disqualified) will be subject to the payments described in 47 CFR 1.2104(g)(2). In such event the Commission may re-auction the license or offer it to the next highest bidder (in descending order) at their final bid. 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.

G. Refund of Remaining Upfront Payment Balance

145. All applicants that submitted upfront payments but were not winning bidders for a license in Auction No. 51 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.

146. At the end of the auction, those bidders who are eligible for a refund must submit a written refund request. If you have 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 request to: Federal Communications Commission, Financial Operations Center, Auctions Accounting Group, Gail Glasser or Tim Dates, 445 12th Street, SW., Room 1-C863, Washington, DC 20554. Start Printed Page 44798

147. Bidders are encouraged to file their refund information electronically using the refund information portion of the FCC Form 175, but bidders can also fax their information to the Auctions Accounting Group at (202) 418-2843. Once the information has been approved, a refund will be sent to the party identified in the refund information.

Note:

Refund processing generally takes up to two weeks to complete. Bidders with questions about refunds should contact Gail Glasser at (202) 418-0578 or Tim Dates at (202) 418-0496.

Start Signature

Federal Communications Commission.

Margaret Wiener,

Chief, Auctions and Industry Analysis Division.

End Signature End Supplemental Information

[FR Doc. 03-19485 Filed 7-29-03; 8:45 am]

BILLING CODE 6712-01-P