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Closed Auction of Licenses for Cellular Unserved Service Areas Scheduled for June 17, 2008; Comment Sought on Competitive Bidding Procedures for Auction 77

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Federal Communications Commission.




This document announces the auction of licenses for Cellular Unserved Service Areas, with bidding scheduled to commence on June 17, 2008 (Auction 77). This document also seeks comments on competitive bidding procedures for Auction 77.


Comments are due on or before April 4, 2008, and reply comments are due on or before April 11, 2008.


Comments and reply comments must be identified by AU Docket No. 08-32; DA 08-543. Comments may be filed electronically using the Internet by accessing the Federal Communications Commission's (Commission) Electronic Comment Filing System (ECFS) at​cgb/​ecfs. Filers should follow the instructions provided on the Web site for submitting comments. The Wireless Telecommunications Bureau (Bureau) requests that a copy of all comments and reply comments be submitted electronically to the following address: In addition, comments and reply comments may be submitted by any of the following methods:

  • Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although the Bureau continues to experience delays in receiving U.S. Postal Service mail). All filings must be addressed to the Commission's Secretary, Attn: WTB/ASAD, Office of the Secretary, Federal Communications Commission.
  • The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. Eastern Time (ET). All hand deliveries must be held together with rubber bands or fasteners. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
  • U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
  • People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: or telephone: 202-418-0530 or TTY: 202-418-0432.
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Wireless Telecommunications Bureau, Auctions and Spectrum Access Division: For auction legal questions: Sayuri Rajapakse at (202) 418-0660. For general auction questions: Roy Knowles or Barbara Sibert at (717) 338-2868. Mobility Division: For service rule questions: Erin McGrath (legal) or Gabriel Ubieta (technical) at (202) 418-0620.

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This is a summary of the Auction 77 Comment Public Notice released on March 21, 2008. The complete text of the Auction 77 Comment Public Notice, including Attachment A, and related Commission documents, are available for public inspection and copying from 8 a.m. to 4:30 p.m. ET Monday through Thursday or from 8 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference Information Center, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The Auction 77 Comment Public Notice and related Commission documents also may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc. (BCPI), 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: When ordering documents from BCPI, please provide the appropriate FCC document number, for example, DA 08-543. The Auction 77 Comment Public Notice and related documents also are available on the Internet at the Commission's Web site:​auctions/​77/​, or by using the search function on the ECFS Web page at​cgb/​ecfs/​.

I. Licenses To Be Offered in Auction 77

1. By the Auction 77 Comment Public Notice, the Bureau announces an auction of licenses to provide cellular service in two different unserved areas (Auction 77), with bidding scheduled to commence on June 17, 2008. The spectrum to be auctioned is the subject of two groups of pending mutually exclusive long-form applications (FCC Forms 601) for unserved area licenses in the Cellular Radiotelephone Service. Participation in Auction 77 will be limited to those applicants identified in Attachment A of the Auction 77 Comment Public Notice. Licenses will be auctioned for each mutually exclusive applicant group (MX Group) identified in Attachment A of the Auction 77 Comment Public Notice. The winning bidder in each group will be licensed to serve only the unserved area proposed in its long-form application(s) for that MX Group.

2. In MX Group FGN001, one of the applicants, E.N.M.R. Telephone Cooperative (ENMR), has filed two applications that propose different Cellular Geographic Service Areas (CGSAs). ENMR was required by the Commission's rules to file two separate applications for these CGSAs. Because ENMR's applications are not mutually exclusive with each other, but each of these applications is mutually exclusive with the competing applicant in the MX Group, if ENMR qualifies to bid in the auction, it will submit one bid for the opportunity to have both of its applications processed in the event that it is the winning bidder in MX Group FGN001.

II. Bureau Seeks Comment on Auction Procedures

3. Consistent with the provisions of 47 U.S.C. 309(j)(3), the Bureau seeks comment on the following issues relating to Auction 77.

A. Auction Design

i. Single-Round Sealed-Bid Auction Design

4. The Bureau proposes to award the licenses included in Auction 77 using a single-round sealed-bid auction. The Bureau proposes to use the single-round format because the informational advantages of a simultaneous multiple-round auction are not necessary here. Because a bidder can only bid on a single cellular unserved area, bidders do not need the information afforded by a simultaneous multiple-round auction to consider valuations, alternative business Start Printed Page 18277plans, or backup strategies. The Bureau seeks comment on this proposal.

B. Auction Structure

i. Round Structure

5. The Commission will conduct Auction 77 over the Internet, and telephonic bidding will be available as well. The toll-free telephone number for the Auction Bidder Line will be provided to qualified bidders. The start and finish time of the bidding round will be announced in a public notice to be released at least one week before the start of the auction.

6. The single-round sealed-bid format will consist of one bidding round followed by the release of auction results. In the event of tied bids in an MX Group, the Commission will post an announcement in the FCC Auction System to announce an additional round of bidding for that MX Group. The Bureau seeks comment on this proposal.

ii. Information Relating to Auction Delay, Suspension, or Cancellation

7. For Auction 77, the Bureau proposes that, 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, administrative or weather necessity, evidence of an auction security breach or unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive bidding. In such cases, the Bureau, in its sole discretion, may elect to resume the auction or cancel the auction in its entirety. Network interruption may cause the Bureau to delay or suspend the auction. The Bureau emphasizes that exercise of this authority is solely within the discretion of the Bureau. The Bureau seeks comment on this proposal.

C. Bidding Procedures

i. Upfront Payments and Bidding Eligibility

8. The Bureau has delegated authority and discretion to determine an appropriate upfront payment for the cellular unserved area licenses being auctioned. A bidder's upfront payment is a refundable deposit to establish eligibility to bid in the auction on the cellular unserved area license(s) for which the applicant submitted an application. Upfront payments protect against frivolous or insincere bidding and provide the Commission with a source of funds from which to collect payments owed at the close of the auction.

9. For Auction 77, the Bureau proposes to set the upfront payment at $500 for each applicant. The unserved areas and the proposed upfront payment are listed in Attachment A of the Auction 77 Comment Public Notice. The Bureau seeks comment on this proposal.

ii. Reserve Price or Minimum Bid

10. In light of 47 U.S.C. 309(j), the Bureau proposes to establish a minimum bid amount at $500 for each of the two cellular unserved areas in Auction 77. For each unserved area, the proposed minimum bid amount is listed in Attachment A of the Auction 77 Comment Public Notice. The Bureau seeks comment on this proposal.

11. If commenters believe that the proposed minimum bid amount is not a reasonable amount, they should explain why this is so, and comment on the desirability of an alternative approach. Commenters are advised to support their claims with valuation analyses and suggested amounts or formulas. In establishing minimum bid amounts, the Bureau particularly seeks comment on such factors as the amount of spectrum being auctioned, the availability of technology to provide service, the size of the service areas, issues of interference with other spectrum bands and any other relevant factors that could reasonably have an impact on valuation of the license or licenses being auctioned. The Bureau also seeks comment on whether, consistent with 47 U.S.C. 309(j), the public interest would be served by having no minimum bid amount or a higher minimum bid amount.

iii. Minimum Acceptable Bids

12. Eligible bidders will be able to place a bid in any whole dollar amount equal to or greater than the minimum bid for each cellular unserved area. Bidders will not be permitted to withdraw a bid. The Bureau seeks comment on this proposal.

iv. Provisionally Winning Bids and Tied Bids

13. At the end of the bidding round, the winning bid for each cellular unserved area will be determined based on the highest bid amount received for the area. The result will be announced shortly after the close of the bidding round.

14. In the event of identical high bid amounts being submitted in a cellular unserved area (i.e., tied bids), the Bureau proposes to allow an additional bidding round or rounds, if necessary, for bidders to submit higher bids for the cellular unserved area with tied bids. The minimum bid for the next round will be calculated by rounding the tied bid amount up to the next highest $100. The license(s) will be assigned to the bidder submitting the highest bid in the additional round. If no bids are placed in the additional round, the license(s) will be assigned to the bidder placing the tied bid in the previous round with the highest random number, a random number having previously been assigned to each bid. If there is a tie for the winning bid in the additional round, the FCC may add another tie-breaking round or rounds, or stop the auction without assigning the license(s).

15. The Commission will announce the schedule for a subsequent round via an announcement in the FCC Auction System, concurrent with the release of round results. The Bureau seeks comment on this proposal.

D. Considerations Relating to Certain Post-Auction Payment Rules

i. Additional Default Payment Percentage

16. Any winning bidder that defaults or is disqualified after the close of an auction (i.e., fails to remit the required down payment within the prescribed period of time, fails to make full payment, or is otherwise disqualified) is liable for a default payment under 47 CFR 1.2104(g)(2). This payment consists of a deficiency payment, equal to the difference between the amount of the bidder's bid and the amount of the winning bid the next time a license covering substantially the same spectrum and geographic area is won in an auction, plus an additional payment equal to a percentage of the defaulter's bid or of the subsequent winning bid, whichever is less.

17. The percentage of the bid that a defaulting bidder must pay in addition to the deficiency will depend in part on the auction format ultimately chosen for a particular auction, if the license is subsequently reauctioned. In non-package auctions, the amount can range from three percent up to a maximum of 20 percent, established in advance of the auction and based on the nature of the service and the inventory of the licenses being offered.

18. For Auction 77, the Bureau proposes to establish an additional default payment of 20 percent. As previously noted by the Commission, defaults weaken the integrity of the auction process and impede the deployment of service to the public, and an additional default payment of more than three percent will be more effective in deterring defaults. The Bureau proposes the maximum 20 percent default payment for Auction 77. Since Start Printed Page 18278Auction 77 is being conducted strictly to resolve conflicts between entities in two cellular unserved areas that were unable to resolve their mutually exclusive applications, a default by the winning bidder would suggest that the bidder has not made a good-faith effort to abide by FCC license assignment procedures, thereby weakening the integrity of the auction process. The Bureau proposes to impose the maximum payment percentage to deter such behavior. The Bureau seeks comment on this proposal.

III. Commission's EX PARTE Rules

19. This proceeding has been designated as a permit-but-disclose proceeding in accordance with the Commission's ex parte rules, 47 CFR 1.1200-1.1216. Persons making oral ex parte presentations are reminded that memoranda summarizing the presentations must contain summaries of the substance of the presentations and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. Other rules pertaining to oral and written ex parte presentations in permit-but-disclose proceedings are set forth in 47 CFR 1.1206(b).

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Federal Communications Commission.

William W. Huber,

Associate Chief, Auctions and Spectrum Access Division, WTB.

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[FR Doc. E8-6956 Filed 4-2-08; 8:45 am]