02-31634. Closed Auction of Licenses for Cellular Unserved Service Areas Scheduled for February 12, 2003; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Auction Procedures

AGENCY:

Federal Communications Commission.

ACTION:

Notice.

SUMMARY:

This document announces the procedures and minimum opening bids for the upcoming auction of seven licenses to provide cellular service in unserved areas scheduled for February 12, 2003. This document is intended to familiarize prospective bidders with the procedures and minimum opening bids for this auction.

DATES:

Auction No. 47 is scheduled to begin on February 12, 2003.

FOR FURTHER INFORMATION CONTACT:

Auctions and Industry Analysis Division: Ken Burnley, Legal Branch, or Jeff Crooks, Auctions Operations Branch, at [phone]; Lisa Stover, Auctions Operations Branch, at [phone]. Media Contact: Lauren Kravetz at [phone]. Commercial Wireless Division: Mike Kleeb, Licensing and Technical Analysis Branch, at [phone]; Amal Abdallah, Policy and Rules Branch, at [phone] or Evan Baranoff, Policy and Rules Branch, at [phone].

SUPPLEMENTARY INFORMATION:

This is a summary of the Auction No. 47 Procedures Public Notice released on November 15, 2002. The complete text of the Auction No. 47 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-B402, Washington, DC 20554. The Auction No. 47 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 [phone], facsimile [phone], or via e-mail to [e-mail].

I. General Information

A. Introduction

1. By the Auction No. 47 Procedures Public Notice, the Wireless Telecommunications Bureau (“Bureau”) announces the procedures and minimum opening bids for the upcoming auction of seven licenses to provide cellular service in unserved areas (“Auction No. 47”) scheduled for February 12, 2003.

2. In accordance with the Balanced Budget Act of 1997, the Bureau released a public notice on September 16, 2002, seeking comment on reserve prices or minimum opening bids and the procedures to be used in Auction No. 47. The Bureau received one comment and no reply comments in response to the Auction No. 47 Comment Public Notice. The Bureau subsequently released a second public notice on October 25, 2002, revising the inventory, auction start date, and seeking comment on procedural issues. The Bureau did not receive any comments in response to the Auction No. 47 Revised Comment Public Notice, 67 FR 69221 (November 15, 2002).

i. Licenses to Be Auctioned

3. Participation in Auction No. 47 is limited to those applicants who have filed the long-form applications listed in Attachment A of the Auction No. 47 Procedures Public Notice. All applications within a mutually exclusive applicant group (“MX Group”) are directly mutually exclusive with one another and therefore a single license will be auctioned for each MX Group identified in Attachment A of the Auction No. 47 Procedures Public Notice. The winning bidder for a particular MX Group will be authorized to construct only the facilities proposed in its long-form application(s) for that MX Group as identified in Attachment A of the Auction No. 47 Procedures Public Notice.

4. As stated in the Competitive Bidding Ninth Report and Order, 61 FR 58333 (November 14, 1996), all pending mutually exclusive applications for unserved area licenses in the Cellular Radiotelephone Service must be resolved through a system of competitive bidding. When the short-form applications of two or more applicants within an MX Group are accepted for filing, mutual exclusivity exits for auction purposes. Once mutual exclusivity exists for auction purposes, even if only one applicant within an MX Group submits an upfront payment, that applicant is required to submit a bid in order to obtain the license.

B. Rules and Disclaimers

i. Relevant Authority

5. Prospective bidders must familiarize themselves thoroughly with the Commission's rules relating to the Cellular Radiotelephone Service contained in title 47, part 22 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. 47 Procedures Public Notice; the Auction No. 47 Comment Public Notice and the Auction No. 47 Revised Comment Public Notice; and 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).

6. Auction participants bidding on licenses for cellular unserved service areas should also be familiar with the Competitive Bidding Ninth Report and Order.

7. The terms contained in the Commission's rules, relevant orders, and public notices are not negotiable. The Commission may amend or supplement the information contained in our public notices at any time, and will issue public notices to convey any new or supplemental information to 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 [phone], facsimile 202-863-2898, or via e-mail [e-mail]. When ordering documents from Qualex, please provide the appropriate FCC number (for example, FCC 96-361 for the Competitive Bidding Ninth Report and Order).

ii. Prohibition of Collusion

8. To ensure the competitiveness of the auction process, the Commission's rules prohibit competing applicants from communicating with each other during the auction about bids, bidding strategies, or settlements. This prohibition begins at the short-form application filing deadline and ends at the down payment deadline after the auction.

9. Bidders in Auction No. 47 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 bidders 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. 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.

10. 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 § 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 competing applicants. By signing their FCC form 175 short-form applications, applicants are certifying their compliance with § 1.2105(c).

11. In addition, § 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, § 1.65 requires 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.

12. A summary listing of documents from the Commission and the Bureau addressing the application of the anti-collusion rules may be found in Attachment E of the Auction No. 47 Procedures Public Notice.

iii. Due Diligence

13. 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. The Bureau notes that resolution of these matters could have an impact on the availability of spectrum in Auction No. 47. In addition, although the Commission will continue to act on pending applications, requests and petitions, some of these matters may not be resolved by the time of the auction.

14. 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. 47.

15. 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 unserved areas for which they plan to bid.

iv. Bidder Alerts

16. 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.

17. 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 diligence before proceeding, as they would with any new business venture.

18. As is the case with many business investment opportunities, some unscrupulous entrepreneurs may attempt to use Auction No. 47 to deceive and defraud unsuspecting investors.

Common warning signals of fraud include the following:

• The first contact is a “cold call” from a telemarketer, or is made in response to an inquiry prompted by a radio or television infomercial.
• The offering materials used to invest in the venture appear to be targeted at IRA funds, for example, by including all documents and papers needed for the transfer of funds maintained in IRA accounts.
• The amount of investment is less than $25,000.
• The sales representative makes verbal representations that: (a) The Internal Revenue Service (“IRS”), Federal Trade Commission (“FTC”), Securities and Exchange Commission (“SEC”), FCC, or other government agency has approved the investment; (b) the investment is not subject to state or federal securities laws; or (c) the investment will yield unrealistically high short-term profits. In addition, the offering materials often include copies of actual FCC releases, or quotes from FCC personnel, giving the appearance of FCC knowledge or approval of the solicitation.

19. Information about deceptive telemarketing investment schemes is available from the FTC at [phone] and from the SEC at [phone]. Complaints about specific deceptive telemarketing investment schemes should be directed to the FTC, the SEC, or the National Fraud Information Center at [phone]. Consumers who have concerns about specific proposals regarding Auction No. 47 may also call the FCC Consumer Center at (888) CALL-FCC ([phone]).

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

20. 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. The Commission's NEPA rules require, among other things, that the licensee consult with expert agencies having NEPA responsibilities, including the U.S. Fish and Wildlife Service, the State Historic Preservation Office, the Army Corp of Engineers and the Federal Emergency Management Agency (through the local authority with jurisdiction over floodplains). The licensee must prepare environmental assessments for facilities that may have a significant impact in or on wilderness areas, wildlife preserves, threatened or endangered species or designated critical habitats, historical or archaeological sites, Indian religious sites, floodplains, and surface features. The licensee must also prepare environmental assessments for facilities that include high intensity white lights in residential neighborhoods or excessive radio frequency emission.

C. Auction Specifics

i. Auction Date

21. The auction will be held on Wednesday, February 12, 2003. Unless otherwise announced, all seven licenses will be offered at the same time with bidders placing one bid per license. The start and finish times for the bidding round will be announced by public notice at least one week before the start of the auction.

ii. Auction Title

22. Auction No. 47—Closed Cellular Unserved.

iii. Bidding Methodology

23. The bidding methodology for Auction No. 47 will be single-round sealed-bid. The Commission will conduct this auction over the Internet. Telephonic bidding will also be available. As a contingency, the FCC Wide Area Network will be available as well. Qualified bidders are permitted to bid telephonically or electronically.

iv. Pre-Auction Dates and Deadlines

24. Listed are important dates associated with Auction No. 47:

Short-Form Application (FCC FORM 175)	January 13, 2003; 6 p.m. e.t.
Upfront Payments (via wire transfer)	January 27, 2003; 6 p.m. e.t.
Mock Auction	February 7, 2003.
Auction	February 12, 2003.

v. Requirements for Participation

25. Those wishing to participate in the auction must:

• Submit a short-form application (FCC form 175) electronically by 6 p.m. e.t., January 13, 2003.
• Submit a sufficient upfront payment and an FCC Remittance Advice Form (FCC Form 159) by 6 p.m. e.t., January 27, 2003.
• Comply with all provisions outlined in the Auction No. 47 Procedures Public Notice.

vi. General Contact Information

26. The following is a list of general information relating to Auction No. 47:

General Auction Information: General Auction Questions—FCC Auctions Hotline, [phone], Press Option #2, or direct [phone]. Hours of service: 8 a.m.-5:30 p.m. e.t.

Auction Legal Information: Auctions Rules, Policies, Regulations—Auction and Industry Analysis Division, Legal Branch, [phone].

Licensing Information: Rules, Policies, Regulations, Licensing Issues, Due Diligence, Incumbency Issues—Commercial Wireless Division, [phone].

Technical Support: Electronic Filing Automated Auction System—FCC Auctions Technical Support Hotline, [phone] (Voice), [phone] (TTY). Hours of service: Monday through Friday 8 a.m. to 6 p.m. e.t.

Payment Information: Wire Transfers, Refunds—FCC Auctions Accounting Branch, [phone], [phone] (Fax).

Telephonic Bidding: Will be furnished only to qualified bidders.

FCC Copy Contractor: Additional Copies of Commission Documents—Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. [phone], [phone] (Fax), [e-mail] (E-mail).

Press Information: Lauren Kravetz [phone].

FCC Forms: [phone] (outside Washington, DC). [phone] (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

27. Guidelines for completion of the short-form application (FCC form 175) are set forth in Attachment C to the Auction No. 47 Procedures Public Notice. The short-form application seeks the applicant's name and address, legal classification, status, identification of the license(s) sought, the authorized bidders and contact persons. 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 that they are not in default on any payment for Commission licenses (including down payments) or delinquent on any non-tax debt owed to any Federal agency.

28. The Commission determines whether mutual exclusivity exists for auction purposes by reviewing all of the short-form (FCC form 175) applications that have been accepted for filing. In the event that review of all the FCC form 175 applications accepted for filing determines that only one applicant in a given MX Group has applied for the license to be auctioned for that MX Group, that license will be removed from the auction. In such a case, the Commission will process the long-form application(s) of the party that applied for the given license on its FCC form 175 and dismiss the long-form application(s) of the other applicant. In the event that neither applicant in a given MX Group applies for the license to be auctioned for that MX Group, the long-form application(s) of both applicants will be dismissed.

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

29. Applicants must comply with the uniform part 1 ownership disclosure standards and provide information required by §§ 1.2105 and 1.2112 of the Commission's rules. Specifically, in completing FCC form 175, applicants will be required to file an “Exhibit A” providing a full and complete statement of the ownership of the bidding entity. The ownership disclosure standards for the short-form are set forth in § 1.2112 of the Commission's rules.

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

30. 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. As discussed above, if an applicant has had discussions, but has not reached a joint bidding agreement by the short-form deadline, it would not include the names of parties to the discussions on its applications and may not continue discussions with competing applicants after the deadline. Where applicants have entered into consortia or joint bidding arrangements, applicants must submit an “Exhibit B” to the FCC form 175.

31. A party holding a non-controlling, attributable interest in one applicant will be permitted to acquire an ownership interest in, form a consortium with, or enter into a joint bidding arrangement with other competing applicants provided that (i) the attributable interest holder certifies that it has not and will not communicate with any party concerning the bids or bidding strategies of more than one of the applicants in which it holds an attributable interest, or with which it has formed a consortium or entered into a joint bidding arrangement; and (ii) the arrangements do not result in a change in control of any of the applicants. While the anti-collusion rules do not prohibit non-auction related business negotiations among auction applicants, bidders are reminded that certain discussions or exchanges could touch upon impermissible subject matters because they may convey pricing information and bidding strategies.

C. Bidding Credit Eligibility

32. Bidding credits for designated entities will not be available in Auction No. 47. To encourage the growth of wireless services in federally recognized tribal lands the Commission has implemented a tribal land bidding credit. See section V.C, infra.

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

33. 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 § 1.2110 of the Commission's rules (as amended in the Part 1 Fifth Report and Order). Applicants must include this statement as Exhibit C of the FCC form 175. Prospective bidders are reminded that the statement must be made under penalty of perjury and, further, 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.

34. “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-tax delinquencies—are eligible to bid in Auction No. 47, provided that they are otherwise qualified. However, former defaulters are required to pay upfront payments that are fifty percent more than the normal upfront payment amounts.

E. Installment Payments

35. Installment payment plans will not be available in Auction No. 47.

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

36. Applicants owned by minorities or women, as defined in 47 CFR 1.2110(c)(2), may attach an exhibit (Exhibit D) 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 E (Miscellaneous Information) to the FCC form 175.

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

37. After the short-form filing deadline (January 13, 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 or proposed service areas, change the certifying official or change control of the applicant). 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 must make these modifications to their FCC form 175 electronically and should 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: [e-mail]. The electronic mail summarizing the changes should include a subject or caption referring to Auction No. 47. The Bureau requests that parties format any attachments to electronic mail as Adobe® Acrobat® (pdf) or Microsoft® Word documents.

38. A separate copy of the letter should be faxed to the attention of Kathryn Garland at [phone]. Questions about other changes should be directed to Kenneth Burnley of the Auctions and Industry Analysis Division at [phone].

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

39. Applicants have an obligation under 47 CFR 1.65, 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

40. An auction seminar will not be held for Auction No. 47. Applicants having questions about pre-auction procedures, conduct of the auction, the FCC Automated Auction System , or the Cellular Radiotelephone Service and auction rules are encouraged to contact the appropriate staff listed in the Auction No. 47 Procedures Public Notice.

B. Short-Form Application (FCC Form 175)—Due January 13, 2003

41. In order to be eligible to bid in this auction, each applicant must first submit an FCC form 175 application with the license(s) selected. This application must be submitted electronically and received at the Commission no later than 6 p.m. e.t. on January 13, 2003. Late applications will not be accepted.

42. There is no application fee required when filing an FCC Form 175. However, to be eligible to bid, an applicant must submit an upfront payment. See part III.D.

i. Electronic Filing

43. Applicants must file their FCC form 175 applications electronically. Applications may generally be filed at any time beginning at 9 a.m. e.t. on January 7, 2003, until 6 p.m. e.t. on January 13, 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 of 6 p.m. e.t. on January 13, 2003.

44. 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 B. Technical support is available at [phone] (voice) or [phone] (text telephone (TTY)); hours of service Monday through Friday, from 8 a.m. to 6 p.m. e.t. In order to provide better service to the public, all calls to the hotline are recorded.

45. Applicants can also contact Technical Support via e-mail. To obtain the address, click the Support tab on the form 175 Homepage.

ii. Completion of the FCC Form 175

46. 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 C of the Auction No. 47 Procedures Public Notice. Applicants are encouraged to begin preparing the required attachments for FCC form 175 prior to submitting the form. Attachments B and C to the Auction No. 47 Procedures Public Notice provide information on the required attachments and appropriate formats.

iii. Electronic Review of FCC Form 175

47. The FCC form 175 electronic review system may be used to locate and print applicants' FCC form 175 information. 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. For this reason, it is important that applicants do not include their Taxpayer Identification Numbers (TINs) on any exhibits to their FCC form 175 applications. There is no fee for accessing this system. See Attachment B of the Auction No. 47 Procedures Public Notice for details on accessing the review system.

C. Application Processing and Minor Corrections

48. 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.

49. As described more fully in the Commission's rules, after the January 13, 2003, short-form filing deadline, applicants may make only minor corrections to their FCC form 175 applications. Applicants will not be permitted to make major modifications to their applications (e.g., change their license selections, change the certifying official, or change control of the applicant).

D. Upfront Payments—Due January 27, 2003

50. 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. e.t. on January 27, 2003.

Please note that:

• All payments must be made in U.S. dollars.
• All payments must be made by wire transfer.
• Upfront payments for Auction No. 47 go to a lockbox number different from the lockboxes used in previous FCC auctions, and different from the lockbox number to be used for post-auction payments.
• Failure to deliver the upfront payment by the January 27, 2003, deadline will result in dismissal of the application and disqualification from participation in the auction.

i. Making Auction Payments by Wire Transfer

51. Wire transfer payments must be received by 6 p.m. e.t. on January 27, 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. Applicants will need the following information:

ABA Routing Number: 043000261.

Receiving Bank: Mellon Pittsburgh.

Beneficiary: FCC/Account # 910-0198.

OBI Field: (Skip one space between each information item).

“Auctionpay”

FCC Registration Number (FRN): (same as FCC form 159, block 11 and/or 21).

Payment Type Code (same as FCC form 159, block 24A: A47U).

FCC Code 1 (same as FCC form 159, block 28A: “47”).

Payer Name (same as FCC form 159, block 2).

Lockbox No. #358410.

Note:

The BNF and Lockbox number are specific to the upfront payments for this auction; do not use BNF or Lockbox numbers from previous auctions.

52. Applicants must fax a completed FCC form 159 (revised 2/00) to Mellon Bank at [phone] 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. 47.” Bidders should confirm receipt of their upfront payment at Mellon Bank by contacting their sending financial institution.

ii. FCC Form 159

53. A completed FCC Remittance Advice Form (FCC form 159, revised 2/00) must be faxed to Mellon Bank in order to accompany each upfront payment. Proper completion of FCC form 159 (Revised 2/00) is critical to ensuring correct credit of upfront payments. Detailed instructions for completion of FCC form 159 are included in Attachment D to the Auction No. 47 Procedures Public Notice. An electronic version of the FCC form 159 is available after filing the FCC form 175. The FCC form 159 can be completed electronically, but must be filed with Mellon Bank via facsimile.

iii. Amount of Upfront Payment

54. In the Part 1 Order, Memorandum Opinion and Order, and Notice of Proposed Rule Making, 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.”

55. In both the Auction No. 47 Comment Public Notice and Auction No. 47 Revised Comment Public Notice, the Bureau proposed that the amount of the upfront payment would determine the number of bidding units on which a bidder may place bids. In order to bid on a license, otherwise qualified bidders that applied for that license on form 175 must have an eligibility level that meets or exceeds the number of bidding units assigned to that license. 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 place a bid.

56. In both the Auction No. 47 Comment Public Notice and Auction No. 47 Revised Comment Public Notice, the Bureau proposed to set the upfront payment for each license at $500 per license. Having received no comments regarding the amount of the proposed upfront payments, the Bureau therefore adopts its proposed upfront payment amounts for Auction No. 47. The specific upfront payments and bidding units for each license are set forth in Attachment A of the Auction No. 47 Procedures Public Notice.

57. In calculating its upfront payment amount, an applicant should determine the maximum number of bidding units on which it may wish to bid on, 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 licenses on which it plans to bid. Bidders should check their calculations carefully, as there is no provision for increasing a bidder's maximum eligibility after the upfront payment deadline.

58. 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 will be limited by the bidding units reflected in its upfront payment.

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

59. The Commission will use wire transfers for all Auction No. 47 refunds. To ensure that refunds of upfront payments are processed in an expeditious manner, the Commission is requesting that all pertinent information as listed below 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: Tim Dates or Gail Glasser, at [phone] by January 27, 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 [phone] 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 (see below)

Correspondent Bank (if applicable)

ABA Number

Account Number

(Applicants should also note that implementation of the Debt Collection Improvement Act of 1996 requires the FCC to obtain a Taxpayer Identification Number (TIN) before it can disburse refunds.) Eligibility for refunds is discussed in part V.E., infra.

E. Auction Registration

60. Approximately 10 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.

61. 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) required to place bids and the other containing the SecurID cards. These mailings will be sent only to the contact person at the contact address listed on the FCC form 175.

62. 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 Wednesday, February 5, 2003, should contact the Auctions Hotline at [phone]. 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.

63. Qualified bidders should note that lost bidder identification numbers or SecurID cards can be replaced only by appearing in person at the FCC Auction 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. Electronic Bidding

64. The Commission will conduct this auction over the Internet. Telephonic bidding will also be available. As a contingency, the FCC Wide Area Network will be available as well. Qualified bidders are permitted to bid electronically or telephonically , i.e., over the Internet or the FCC's Wide Area Network. In either case, each authorized bidder must have its own Remote Security Access SecurID card, which the FCC will provide at no charge. Each applicant with less than three authorized bidders will be issued two SecurID cards, while applicants with three authorized bidders will be issued three cards. 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. Please note that each SecurID card is tailored to a specific auction, therefore, SecurID cards issued for other auctions or obtained from a source other than the FCC will not work for Auction No. 47. The telephonic bidding phone number will be supplied in the first overnight mailing, which also includes the confidential bidder identification number. Each applicant should indicate its bidding preference-electronic or telephonic—on the FCC form 175.

65. Please note that the SecurID cards can be recycled, and the Bureau encourages bidders to return the cards to the FCC. The Bureau will provide pre-addressed envelopes that bidders may use to return the cards once the auction is over.

G. Mock Auction

66. All qualified bidders will be eligible to participate in a mock auction on Friday, February 7, 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

67. Auction No. 47 will be held on Wednesday, February 12, 2003. The start and finish time of the bidding round will be announced in a later public notice, which will be released approximately 10 days before the start of the auction.

A. Auction Structure

i. Single Round Sealed Bid Auction

68. In both the Auction No. 47 Comment Public Notice and Auction No. 47 Revised Comment Public Notice, the Bureau proposed to award all licenses in Auction No. 47 using a single-round sealed-bid auction design. In its comments, Western Wireless objects to this design proposal and urges the Bureau instead to utilize a simultaneous multiple-round auction or, if that is not possible, a “sealed-second-bid” single round design. Western Wireless contends that there exists informational advantages to using these alternative auction formats. The Bureau believes that due to the unusual circumstances of Auction No. 47, in which there are only two bidders, both of whom are very familiar with the areas to be licensed, these informational advantages are not necessary. Therefore, the Bureau concludes that it is operationally feasible and appropriate to auction the cellular unserved service area licenses through a single-round sealed-bid auction.

ii. Maximum Eligibility

69. In both the Auction No. 47 Comment Public Notice and Auction No. 47 Revised Comment Public Notice, the Bureau proposed that the amount of the upfront payment submitted by a bidder would determine the maximum eligibility (as measured in bidding units) for each bidder. The Bureau received no comments on this issue.

70. For Auction No. 47, the Bureau adopts its proposal. The amount of the upfront payment submitted by a bidder determines the number of bidding units on which a bidder may place bids. Note again that each license is assigned a specific number of bidding units equal to the upfront payment listed in Attachment A on a bidding unit per dollar basis. The total upfront payment defines the maximum number of bidding units on which the applicant will be permitted to bid. As there is no provision for increasing a bidder's maximum eligibility after the upfront payment deadline, prospective bidders are cautioned to calculate their upfront payments carefully. The total upfront payment does not affect the dollar amount a bidder may bid on any license.

iii. Auction Delay or Cancellation

71. In the Auction No. 47 Comment Public Notice, the Bureau proposed that, by public notice or by announcement during the auction, the Bureau may delay 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.

72. Because this approach has proven effective in resolving exigent circumstances in previous auctions, the Bureau adopts its proposed auction cancellation rules. By public notice or by announcement during the auction, the Bureau may delay or cancel the auction in the event of natural disaster, technical obstacle, evidence of an auction security breach, unlawful bidding activity, administrative or weather necessity, or for any other reason that affects the fair and competitive conduct of competitive bidding. In such cases, the Bureau, in its sole discretion, may elect to resume the auction or cancel the auction in its entirety. Network interruption may cause the Bureau to delay the auction. The Bureau emphasizes that exercise of this authority is solely within the discretion of the Bureau.

B. Bidding Procedures

i. Round Structure

73. The single-round sealed-bid format will consist of one bidding round followed by the release of the auction results. The start and finish time of the bidding round will be announced in the public notice listing the qualified bidders, which is released approximately 10 days before the start of the auction.

ii. Reserve Price or Minimum Opening Bid

74. Background. The Balanced Budget Act calls upon the Commission to prescribe methods by which a reasonable reserve price will be required or a minimum opening bid established when FCC licenses are subject to auction (i.e., because they are mutually exclusive), unless the Commission determines that a reserve price or minimum opening bid is not in the public interest. Consistent with this mandate, the Commission directed the Bureau to seek comment on the use of a minimum opening bid and/or reserve price prior to the start of each auction. The Commission concluded that the Bureau should have the discretion to employ either or both of these mechanisms for future auctions.

75. In both the Auction No. 47 Comment Public Notice and Auction No. 47 Revised Comment Public Notice, the Bureau proposed to establish minimum opening bids for Auction No. 47 in the amount of $500 per license. The Bureau received no comments concerning this proposal. Therefore, the minimum opening bid for each license is set at $500 and is set forth in Attachment A of the Auction No. 47 Procedures Public Notice.

iii. Bidding

76. During the bidding round, a bidder may place bids in any whole dollar amount equal to or greater than the minimum opening bid for as many licenses as it wishes (subject to its eligibility). Bidders also have the option of making multiple submissions during the bidding round. If a bidder submits multiple bids for a single license in the same round, the system takes the last bid submitted as that bidder's bid.

77. Please note that all bidding will take place remotely either through the Automated Auction System or by telephonic bidding. (Telephonic bid assistants are required to use a script when entering bids placed by telephone. Telephonic bidders are therefore reminded to allow sufficient time to bid by placing their call well in advance of the close of the round. Normally, four to five minutes are necessary to complete a bid submission.) There will be no on-site bidding during Auction No. 47.

78. A bidder's ability to bid on specific licenses in the auction is determined by two factors: (i) the licenses applied for on FCC form 175 and (ii) the upfront payment amount deposited. The bid submission screens will allow bidders to submit bids on only those licenses for which the bidder applied on its FCC form 175.

79. The Automated Auction System requires each bidder to be logged in during the bidding round using the bidder identification number provided in the registration materials, and the generated SecurID code. Bidders are strongly encouraged to print a bid confirmation after they submit their bids.

80. Finally, bidders are cautioned that they should type their bid amounts carefully because, even if mistakenly or erroneously made, bidders still assume a binding obligation to pay their full bid amount.

iv. Bid Removal and Bid Withdrawal

81. In the Auction No. 47 Comment Public Notice, the Bureau proposed bid removal and bid withdrawal procedures. With respect to bid withdrawals, the Bureau proposed not to allow any bid withdrawals in Auction No. 47. The Bureau received no comments on this issue. Therefore, the Bureau adopts its proposal.

82. Bid Removal Procedures. Before the close of the bidding round, a bidder has the option of removing any bids placed in the round. By using the “remove bid” function in the bidding system, a bidder may effectively “unsubmit” any bid placed within the round.

v. Winning Bids and Tie Bids

83. At the end of the bidding round, the winning bids will be determined based on the highest gross bid amount received for each license. In the event of identical bids on a license (i.e., tied bids), the Bureau proposed to allow an additional bidding round for bidders to submit higher bids for only the license(s) with tied bids. The Commission would announce the schedule for the subsequent round, via an announcement in the Auctions Bidding System, concurrent with the release of round results. In the event of tied bids, the Bureau proposed to use a random number generator to select a high bid from among the tied bids. A random number will be assigned to each bid. The tie bid having the highest random number will become the high bid. The remaining bidder, as well as the high bidder, will be able to submit higher bid in the next round. If neither bidder submits a higher bid, the high bid from the previous round will win the license. If any bids are received in the next round, the winning bid will be determined on the highest gross bid amount received for each license. The Bureau received no comments on its proposal. Therefore, the Bureau adopts its proposal.

vi. Auction Announcements

84. The FCC will use auction announcements to announce items such as the schedule for a subsequent round in the event of tied bids on a license. All FCC auction announcements will be available by clicking on a link in the Automated Auction System.

vii. Maintaining the Accuracy of FCC Form 175 Information

85. As noted in part II.G., after the short-form filing deadline, applicants may make only minor changes to their FCC form 175 applications. For example, permissible minor changes include deletion and addition of authorized bidders (to a maximum of three) and certain revision of exhibits. Applicants must make these modifications to their FCC form 175 electronically and should 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: [e-mail]. The electronic mail summarizing the changes should include a subject or caption referring to Auction No. 47. The Bureau requests that parties format any attachments to electronic mail as Adobe® Acrobat® (pdf) or Microsoft® Word documents.

86. A separate copy of the letter should be faxed to the attention of Kathryn Garland at [phone]. Questions about other changes should be directed to Kenneth Burnley of the Auctions and Industry Analysis Division at [phone].

V. Post-Auction Procedures

A. Down Payments

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

88. Within 10 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 Government to 20 percent of its winning bids. See 47 CFR 1.2107(b).

B. Long-Form Applications

89. Within an MX Group, the previously filed long-form applications(s) of the unsuccessful bidder will be dismissed following the grant of the winning bidder's license.

C. Tribal Land Bidding Credit

90. 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).

91. A winning bidder applies for the tribal land bidding credit after winning the auction. Instructions for applying for this credit will be provided in a public notice after the close of the auction. Licensees receiving a tribal land bidding credit are subject to performance criteria as set forth in 47 CFR 1.2110(f).

92. 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 auctions Web site at http://wireless.fcc.gov/​auctions by clicking on the Tribal Land Credits link.

D. Default and Disqualification

93. Any winning 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 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 its 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.

E. Refund of Remaining Upfront Payment Balance

94. Applicants that submitted upfront payments but were not a winning bidder for a license in Auction No. 47 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.

95. Qualified bidders 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.

96. 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 [phone]. 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 Tim Dates at [phone] or Gail Glasser at [phone].

Federal Communications Commission.

Margaret Wiener,

Chief, Auctions & Industry Analysis Division, WTB.