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Notice

Auction of FM Broadcast Construction Permits Scheduled for September 1, 2009; Comment Sought on Competitive Bidding Procedures for Auction 79

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Information about this document as published in the Federal Register.

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Start Preamble

AGENCY:

Federal Communications Commission.

ACTION:

Notice.

SUMMARY:

This document announces the auction of 122 FM broadcast construction permits scheduled to commence on September 1, 2009 (Auction 79). This document also seeks comments on competitive bidding procedures for Auction 79.

DATES:

Comments are due on or before March 20, 2009, and reply comments are due on or before April 1, 2009.

ADDRESSES:

Comments and reply comments must be identified by AU Docket No. 09-21. Comments may be filed electronically using the Internet by accessing the Federal Communications Commission's (Commission) Electronic Comment Filing System (ECFS) at http://www.fcc.gov/​cgb/​ecfs. Filers should follow the instructions provided on the Web site for submitting comments. The Wireless Telecommunications and Media Bureaus request that a copy of all comments and reply comments be submitted electronically to the following address: auction79@fcc.gov. 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 Bureaus continue 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: FCC504@fcc.gov or telephone: 202-418-0530 or TTY: 202-418-0432.
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FOR FURTHER INFORMATION CONTACT:

Wireless Telecommunications Bureau, Auctions and Spectrum Access Division: For auction legal questions: Howard Davenport or Lynne Milne at (202) 418-0660. For general auction questions: Debbie Smith or Linda Sanderson at (717) 338-2868. Media Bureau, Audio Division: For service rule questions: Lisa Scanlan or Tom Nessinger at (202) 418-2700.

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SUPPLEMENTARY INFORMATION:

This is a summary of the Auction 79 Comment Public Notice released on February 27, 2009. The complete text of the Auction 79 Comment Public Notice, including Attachment A, and related Commission documents, are available for public inspection and copying from 8:00 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 79 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: http://www.BCPIWEB.com. When ordering documents from BCPI, please provide the appropriate FCC document number, for example, DA 09-422. The Auction 79 Comment Public Notice and related documents also are available on the Internet at the Commission's Web site: http://wireless.fcc.gov/​auctions/​79/​, or by using the search function for AU Docket No. 09-21 on the ECFS Web page at http://www.fcc.gov/​cgb/​ecfs/​.

I. Construction Permits in Auction 79

1. Auction 79 will offer 122 construction permits in the FM broadcast service as specified in Attachment A of the Auction 79 Comment Public Notice which lists vacant FM allotments, reflecting FM channels assigned to the Table of FM Allotments. Consistent with 47 U.S.C. 309(j), the Wireless Telecommunications and Media Bureaus (Bureaus) seek comment on the following issues relating to Auction 79.

A. Auction Structure

i. Simultaneous Multiple-Round Auction Design

2. The Bureaus propose to auction all construction permits included in Auction 79 using the Commission's standard simultaneous multiple-round auction. This type of auction offers every construction permit for bid at the Start Printed Page 10579same time and consists of successive bidding rounds in which eligible bidders may place bids on individual construction permits. Typically, bidding remains open on all construction permits until bidding stops on every construction permit. The Bureaus seek comment on this proposal.

ii. Round Structure

3. The Commission will conduct Auction 79 over the Internet, and telephonic bidding will be available as well. The initial bidding schedule will be announced in a public notice to be released at least one week before the start of the auction.

4. The auction will consist of sequential bidding rounds, each followed by the release of round results. The Bureaus propose to retain the 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. Under this proposal, the Bureaus may change the amount of time for the bidding rounds, amounts of time between rounds, or the number of rounds per day depending upon bidding activity and other factors. The Bureaus seek comment on this proposal.

iii. Stopping Rule

5. For Auction 79, the Bureaus propose to employ a simultaneous stopping rule approach. A simultaneous stopping rule means that bidding will close simultaneously on all construction permits after the first round in which no bidder submits any new bids, applies a proactive waiver, or withdraws a provisionally winning bid (if bid withdrawals are permitted). Thus, unless the Bureaus announce alternative procedures during the auction, bidding will remain open on all construction permits until bidding stops on every construction permit. However, the Bureaus propose to retain the discretion to exercise any of the following options during Auction 79: (a) Use a modified version of the simultaneous stopping rule. The modified stopping rule would close the auction for all construction permits after the first round in which no bidder applies a waiver, withdraws a provisionally winning bid (if bid withdrawals are permitted) or places any new bids on any construction permit for which it is not the provisionally winning bidder. Thus, absent any other bidding activity, a bidder placing a new bid on a construction permit for which it is the provisionally winning bidder would not keep the auction open under this modified stopping rule; (b) declare that the auction will end after a specified number of additional rounds (which is called a special stopping rule). If the Bureaus invoke this special stopping rule, they will accept bids in the specified final round(s) after which the auction will close, and (c) keep the auction open even if no bidder submits any new bids, applies a waiver or withdraws any provisionally winning bids (if permitted). In this event, the effect will be the same as if a bidder had applied a waiver. The activity rule will apply as usual, and a bidder with insufficient activity will either lose bidding eligibility or use a waiver. The Bureaus seek comment on these stopping rule proposals.

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

6. For Auction 79, the Bureaus propose that, by public notice or by announcement during the auction, the Bureaus may delay, suspend, or cancel the auction in the event of natural disaster, technical obstacle, administrative or weather necessity, evidence of an auction security breach or unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive bidding. In such cases, the Bureaus, in their sole discretion, may elect to resume the auction starting from the beginning of the current round, resume the auction starting from some previous round, or cancel the auction in its entirety. Network interruption may cause the Bureaus to delay or suspend the auction. The Bureaus emphasize that exercise of this authority is solely within the discretion of the Bureaus, and its use is not intended to be a substitute for situations in which bidders may wish to apply their activity rule waivers. The Bureaus seek comment on this proposal.

B. Auction Procedures

i. Upfront Payments and Bidding Eligibility

7. The Bureaus have delegated authority and discretion to determine an appropriate upfront payment for each FM construction permit being auctioned. A bidder's upfront payment is a refundable deposit made by each bidder to establish eligibility to bid on construction permits. 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. With these considerations in mind, the Bureaus propose the upfront payments set forth in Attachment A of the Auction 79 Comment Public Notice.

8. The Bureaus further propose that the amount of the upfront payment submitted by a bidder will determine the bidder's initial bidding eligibility in bidding units. The Bureaus propose that each construction permit be assigned a specific number of bidding units equal to the upfront payment listed in Attachment A of the Auction 79 Comment Public Notice. The Bureaus seek comment on these proposals.

ii. Activity Rule

9. In order to ensure that the auction closes within a reasonable period of time, an activity rule requires bidders to bid actively throughout the auction, rather than wait until late in the auction before participating. A bidder's activity in a round will be the sum of the bidding units associated with any construction permits upon which it places bids during the current round and the bidding units associated with any construction permits for which it holds provisionally winning bids. Bidders are required to be active on a specific percentage of their current bidding eligibility during each round of the auction. Failure to maintain the requisite activity level will result in the use of an activity rule waiver, if any remain, or a reduction in the bidder's eligibility, possibly curtailing or eliminating the bidder's ability to place additional bids in the auction.

10. The Bureaus propose to divide the auction into at least two stages, each characterized by a different activity requirement. The auction will start in Stage One with a required 75 percent activity level. The Bureaus propose to advance the auction to the next stage with a required 95 percent activity level by announcement during the auction. In exercising this discretion, the Bureaus will consider a variety of measures of auction activity, including but not limited to the percentage of construction permits (as measured in bidding units) on which there are new bids, the number of new bids, and the increase in revenue. The Bureaus seek comment on this proposal.

iii. Activity Rule Waivers and Reducing Eligibility

11. Use of an activity rule waiver preserves the bidder's eligibility despite the bidder's activity in the current round being below the required minimum level. An activity rule waiver applies to an entire round of bidding, not to a particular construction permit. Activity rule waivers can be either proactive or automatic and are principally a mechanism for auction Start Printed Page 10580participants to avoid the loss of bidding eligibility in the event that exigent circumstances prevent them from bidding in a particular round.

12. The Bureaus propose that each bidder in Auction 79 be provided with three activity rule waivers that may be used at the bidder's discretion during the course of the auction. The Bureaus seek comment on this proposal.

iv. Reserve Price or Minimum Opening Bids

13. In light of 47 U.S.C. 309(j), the Bureaus propose to establish minimum opening bid amounts for Auction 79 as an effective bidding tool for accelerating the competitive bidding process. The Bureaus do not propose to establish a separate reserve price for the construction permits to be offered in Auction 79.

14. For Auction 79, the Bureaus propose minimum opening bid amounts determined by taking into account the type of service and class of facility offered, market size, population covered by the proposed FM broadcast facility, and recent broadcast transaction data. This proposed minimum opening bid amount for each construction permit is set forth in Attachment A of the Auction 79 Comment Public Notice. The Bureaus seek comment on this proposal.

v. Bid Amounts

15. The Bureaus propose that, in each round, eligible bidders be able to place a bid on a given construction permit in any of up to nine different amounts. Under this proposal, the FCC Auction System interface will list the acceptable bid amounts for each construction permit.

16. The first of these nine acceptable bid amounts is called the minimum acceptable bid amount. The minimum acceptable bid amount for a construction permit will be equal to its minimum opening bid amount until there is a provisionally winning bid for the construction permit. After there is a provisionally winning bid for a construction permit, the minimum acceptable bid amount will be calculated by multiplying the provisionally winning bid amount times one plus the minimum acceptable bid percentage.

17. For Auction 79, the Bureaus propose to use a minimum acceptable bid percentage of 10 percent. This means that the minimum acceptable bid amount for a construction permit will be approximately 10 percent greater than the provisionally winning bid amount for the construction permit. To calculate the eight additional acceptable bid amounts, the Bureaus propose to use a bid increment percentage of 5 percent.

18. The Bureaus retain the discretion to change the minimum acceptable bid amounts, the minimum acceptable bid percentage, the bid increment percentage, and the number of acceptable bid amounts if the Bureaus determine that circumstances so dictate. Further, the Bureaus retain the discretion to do so on a construction permit-by-construction permit basis. The Bureaus also retain the discretion to limit (a) the amount by which a minimum acceptable bid for a construction permit may increase compared with the corresponding provisionally winning bid, and (b) the amount by which an additional bid amount may increase compared with the immediately preceding acceptable bid amount. The Bureaus seek comment on the circumstances under which the Bureaus should employ such a limit, factors it should consider when determining the dollar amount of the limit, and the tradeoffs in setting such a limit or changing other parameters, such as changing the minimum acceptable bid percentage, the bid increment percentage, or the number of acceptable bid amounts. If the Bureaus exercise this discretion, they will alert bidders by announcement in the FCC Auction System during the auction. The Bureaus seek comment on these proposals.

vi. Provisionally Winning Bids

19. Provisionally winning bids are bids that would become final winning bids if the auction were to close in a specific round. At the end of a bidding round, the winning bid for each construction permit will be determined based on the highest bid amount received for the construction permit. In the event of identical high bid amounts being submitted on a construction permit in a given round (i.e., tied bids), the Bureaus will use a random number generator to select a single provisionally winning bid from among the tied bids. The remaining bidders, as well as the provisionally winning bidder, can submit higher bids in subsequent rounds. However, if the auction were to end with no other bids being placed, the winning bidder would be the one that placed the provisionally winning bid. If any bids are received on the construction permit in a subsequent round, the provisionally winning bid again will be determined by the highest bid amount received for the construction permit.

20. A provisionally winning bid will remain the provisionally winning bid until there is a higher bid on the construction permit at the close of a subsequent round, unless the provisionally winning bid is withdrawn (if bid withdrawals are permitted). Bidders are reminded that provisionally winning bids count toward activity for purposes of the activity rule.

vii. Bid Removal and Bid Withdrawal

21. For Auction 79, the Bureaus propose the following bid removal procedures. Before the close of a bidding round, a bidder has the option of removing any bid placed in that round. By removing selected bids in the FCC Auction System, a bidder may effectively unsubmit any bid placed within that round. In contrast to the bid withdrawal provisions, a bidder removing a bid placed in the same round is not subject to a withdrawal payment. Once a round closes, a bidder may no longer remove a bid. The Bureaus seek comment on this bid removal proposal.

22. Where permitted in an auction, bid withdrawals provide a bidder with the option of withdrawing bids placed in prior rounds that have become provisionally winning bids. If permitted, a bidder that withdraws its provisionally winning bid(s) is subject to the bid withdrawal payment provisions of the Commission's rules. Based on rulemaking order guidance and the experience of the Bureaus in prior FM auctions, the Bureaus propose to prohibit bidders in this auction from withdrawing any bids after the round in which bids were placed has closed. The Bureaus seek comment on whether bid withdrawals should be permitted in Auction 79.

C. Post-Auction Payments

i. Interim Withdrawal Payment Percentage

23. If withdrawals are allowed in this auction, the Bureaus seek comment on the appropriate percentage of a withdrawn bid that should be assessed as an interim withdrawal payment, in the event that a final withdrawal payment cannot be determined at the close of the auction. In general, the Commission's rules provide that a bidder that withdraws a bid during an auction is subject to a withdrawal payment equal to the difference between the amount of the withdrawn bid and the amount of the winning bid in the same or a subsequent auction. However, if a construction permit for which a bid has been withdrawn does not receive a subsequent higher bid or winning bid in the same auction, the final withdrawal payment cannot be calculated until a corresponding construction permit Start Printed Page 10581receives a higher bid or winning bid in a subsequent auction. When that final payment cannot yet be calculated, the bidder responsible for the withdrawn bid is assessed an interim bid withdrawal payment, which will be applied toward any final bid withdrawal payment that is ultimately assessed. The Commission's rules provide that in advance of each auction, the Commission shall establish a percentage between three percent and twenty percent of the withdrawn bid to be assessed as an interim bid withdrawal payment.

24. The Commission has indicated that the level of the interim withdrawal payment in a particular auction will be based on the nature of the service and the inventory of the construction permits being offered. The Commission noted that it may impose a higher interim withdrawal payment percentage to deter the anti-competitive use of withdrawals when, for example, bidders likely will not need to aggregate construction permits offered, such as when few construction permits are offered, the construction permits offered are not on adjacent frequencies or in adjacent areas, or there are few synergies to be captured by combining construction permits.

25. Applying the reasoning that a higher interim withdrawal payment percentage is appropriate when aggregation of construction permits is not expected, as with the construction permits subject to competitive bidding in Auction 79, if the Bureaus allow bid withdrawals in this auction, the Bureaus propose an interim bid withdrawal payment of twenty percent of the withdrawn bid for this auction. The Bureaus seek comment on this proposal.

ii. Additional Default Payment Percentage

26. 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 submit a timely long-form application, 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 construction permit covering the same spectrum is won in an auction, plus an additional payment equal to a percentage of the defaulter's bid or of the subsequent winning bid, whichever is less.

27. As previously noted by the Commission, defaults weaken the integrity of the auction process and may impede the deployment of service to the public. In light of these considerations for Auction 79, the Bureaus propose to establish an additional default payment of twenty percent of the relevant bid as more effective in deterring defaults than a smaller percentage. The Bureaus seek comment on this proposal.

II. Commission ex parte Rules

28. This proceeding has been designated as a permit-but-disclose proceeding in accordance with the Commission's ex parte rules. 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).

Start Signature

Federal Communications Commission.

Gary D. Michaels,

Deputy Division Chief, Auctions and Spectrum Access Division, WTB.

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[FR Doc. E9-5244 Filed 3-10-09; 8:45 am]

BILLING CODE 6712-01-P