[Federal Register Volume 64, Number 33 (Friday, February 19, 1999)]
[Notices]
[Pages 8361-8371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4053]
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FEDERAL COMMUNICATIONS COMMISSION
[DA 99-266; Report No. AUC-99-23-B (Auction No. 23)]
Auction of Local Multipoint Distribution Service Spectrum;
Auction Notice and Filing Requirements for 168 Local Multipoint
Distribution Service Licenses Scheduled for April 27, 1999; Minimum
Opening Bids and Other Procedural Issues
AGENCY: Federal Communications Commission.
ACTION: Notice.
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SUMMARY: On January 29, 1999, the Wireless Telecommunications Bureau
(``Bureau'') released a Public Notice announcing the minimum opening
bids and other auction procedures for the auction of Local Multipoint
Distribution Service (``LMDS'') spectrum, consisting of 168 licenses.
DATES: The LMDS auction will begin on April 27, 1998.
ADDRESSES: See text of the Public Notice and related attachments for
information regarding important addresses.
FOR FURTHER INFORMATION CONTACT: Auctions and Industry Analysis
Division: Kathryn Garland, Operations at (717) 338-2801; Tim Salmon,
Auctions Analysis; and Arthur Lechtman, Legal Branch at (202) 418-0660.
Public Safety and Private Wireless Division: Ronald Quirk or Cathy Fox
at (202) 418-0680. Media Contact: Meribeth McCarrick at (202) 418-0654.
SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice that
was released on January 29, 1999. The complete text of this Public
Notice is available in its entirety, including all Attachments, for
inspection and copying during normal business hours in the Wireless
Telecommunications Bureau Reference Center, Room 5608, 2025 M Street
N.W., Washington, D.C., and also may be purchased from the Commission's
copy contractor, International Transcription Services, (202) 857-3800,
fax (202) 857-3805, 1231 20th Street, N.W., Washington, D.C. 20036. It
is also available on the Commission's website at http://www.fcc.gov.
Synopsis of the Public Notice:
A. Introduction
1. This Public Notice announces the procedures and minimum opening
bids for the upcoming Local Multipoint Distribution Service (``LMDS'')
auction. On November 6, 1998, the Wireless Telecommunications Bureau
(``Bureau'') released a Public Notice (See ``Local Multipoint
Distribution Service Spectrum Re-Auction of 168 Licenses Scheduled for
April 27, 1999; Application Deadline Set for March 29, 1999; Comment
Sought on Reserve Prices or Minimum Opening Bids and Other Auction
Procedures,'' Public Notice, DA 98-2266 (rel. November 6, 1998) (``LMDS
Public Notice''), 63 FR 64502-01 (November 20, 1998), seeking comment
on the establishment of reserve prices or minimum opening bids for the
LMDS auction, in accordance with the Balanced Budget Act of 1997. In
addition, the Bureau sought comment on a number of procedures to be
used in the LMDS auction. The Bureau received two comments and no
replies in response to the LMDS Public Notice. Comments were filed on
November 30, 1998, by the Wireless Communications Association
International, Inc. (``WCA'') and by ABS LMDS Venture, Catfish
Communications, L.L.C., ENMR Telephone Cooperative, Inc., and SKSW LMDS
Venture, filing jointly (collectively ``ABS et al'').
2. The licenses available in this auction are licenses for which
there was no winning bidder in the original LMDS auction that closed on
March 25, 1998, or are licenses on which the winning bidder defaulted.
The three licensees in default include Baker Creek Communications,
L.P., New Wave Networks, L.L.C., and Pinpoint Communications, Inc.
Licenses B038-B, B144-B, B254-B, B371-B, B372-B, and B392-B are the
subject of a pending waiver request filed by New Wave Networks, L.L.C.
(See New Wave Networks, L.L.C, Request for Waiver of Rule Sections
101.1105(b) and 1.2109(a)-(c), filed August 13, 1998; Supplement filed
September 2, 1998; Second Supplement filed September 9, 1998; Third
Supplement filed December 9, 1998.) Licenses B185-B, B270-A, and B270-B
are the subject of a pending Petition for Reconsideration filed by
Pinpoint Communications, Inc. (See Pinpoint Communications, Application
for Local Multipoint Distribution Service Licenses to Serve BTA 185,
Hastings, Nebraska and BTA 270, McCook, Nebraska, Petition for
Reconsideration, filed October 23, 1998.) Two blocks of spectrum are
allocated for LMDS systems:
(1) Block A (1,150 MHz): 27,500-28,350 MHz and 29,100-29,250 MHz and
31,075 -31,225 MHz
(2) Block B (150 MHz): 31,000-31,075 MHz and 31,225-31,300 MHz
One license will be awarded for each of these spectrum blocks in each
of 122 Block A Basic Trading Areas (BTAs) and 46 Block B BTAs
designated for LMDS. Rand McNally is the copyright owner of the Major
Trading Area (MTA) and Basic Trading Area (BTA) Listings, which list
the BTAs contained in each MTA and the counties within each BTA, as
embodied in Rand McNally's Trading Area System MTA/BTA Diskette, and
geographically represented in the map contained in Rand McNally's
Commercial Atlas & Marketing Guide. The conditional use of Rand McNally
copyrighted material by interested persons is authorized under a
blanket license agreement dated February 10, 1994, and covers use by
LMDS applicants. This agreement requires authorized users of the
material to include a legend on reproductions (as specified in the
license agreement) indicating Rand McNally ownership. These licenses
are listed in Attachment A to this Public Notice. The BTA licenses
designated for the LMDS auction comprise various portions of the
following areas: (1) continental United States and (2) Puerto Rico.
Thus, there are a total of 168 LMDS licenses to be auctioned.
3. Auction Date: The auction will begin on April 27, 1999. The
initial schedule for bidding will be announced by public notice at
least one week before the start of the auction. Unless otherwise
announced, bidding will be conducted on each business day until bidding
has stopped on all licenses.
4. Auction Title: The Local Multipoint Distribution Service--
Auction No. 23.
5. Bidding Methodology: Simultaneous multiple round bidding.
Bidding will be permitted only from remote locations, either
electronically (by computer) or telephonically.
6. Pre-Auction Deadlines:
Auction Seminar--March 10, 1999.
Short Form Application (FCC Form 175)--March 29, 1999;
5:30 p.m.ET.
Upfront Payments (via wire transfer)--April 12, 1999; 6:00
p.m. ET.
Orders for Remote Bidding Software-- April 13, 1999; 5:30
p.m. ET.
Mock Auction April 22, 1999.
7. Telephone Contacts:
Auctions Hotline--(888) CALL-FCC ((888) 225-5322), press
Option #2 or (717) 338-2888 (direct dial).
(For Bidder Information Packages, General Auction Information, and
Seminar Registration. Hours of service: 8 a.m.-5:30 p.m. ET.)
[[Page 8362]]
FCC Technical Support Hotline--(202) 414-1250 (voice),
(202) 414-1255 (TTY).
(For technical assistance with installing or using FCC software. Hours
of service: 8 a.m.-6 p.m. ET, Monday-Friday; 9 a.m.-5 p.m. ET, weekend
of March 27-28.)
8. List of Attachments:
Attachment A--Summary of LMDS Licenses to be Auctioned,
Upfront Payments, Minimum Opening Bids.
Attachment B--Guidelines for Completion of FCC Forms 175
and 159, and Exhibits.
Attachment C--Electronic Filing and Review of FCC Form
175.
Attachment D--Summary Listing of Documents from the
Commission and the Wireless Telecommunications Bureau Addressing
Application of the Anti-Collusion Rules.
Attachment E--Existing 28 GHz Licensee and 31 GHz
Licensee.
Attachment F--Location of NGSO-MSS Feeder Link Earth
Stations in the 29.1-29.25 GHz Band.
Attachment G--Auction Seminar Registration Form.
Attachment H--Exponential Smoothing Formula and Example.
9. Background: In 1997, the Commission established rules to create
and govern the licensing and operations for Local Multipoint
Distribution Service (LMDS), a fixed, broadband, point-to-multipoint
microwave service. The technology developed for use in the LMDS
frequency band provides very high subscriber capacity for two-way video
telecommunications. The Commission also established rules for the
distribution of LMDS licenses by means of competitive bidding. The
initial auction for LMDS licenses began on February 18, 1998 and closed
on March 25, 1998, with 104 bidders winning 864 of the 986 available
licenses.
10. Incumbent Licensees: Although LMDS operations are permitted in
the 31,000-31,075 MHz and 31,225-31,300 MHz bands, incumbent city
licensees and private business users operating in these two segments
are entitled to protection against harmful interference from any LMDS
operation in these blocks. LMDS service providers will be entitled to
interference protection from any other presently-authorized primary
users in the 31,075-31,225 MHz bands. More detailed information is
provided in Attachment E.
11. Block A of the New York BTA is encumbered by a pre-existing
licensee in the New York Primary Metropolitan Statistical Area. The
incumbent licensee, Winstar Wireless Fiber Corp., is entitled to
interference protection. See Attachment E.
12. Reminder to potential Non-geostationary Mobile Satellite
Service applicants/licensees: Section 101.103(h) of the Commission's
Rules requires that no more than 15 days after the release of this
Public Notice, NGSO-MSS feeder link earth station complex applicants/
licensees planning to operate in the 29,100-29,250 MHz band pursuant to
Section 25.257 of the rules, file with the Commission a set of
geographical coordinates consistent with Rule Section 101.103(h)(2).
This information should be directed to the attention of: Ronald Quirk,
Federal Communications Commission, Wireless Telecommunications Bureau,
1919 M Street, NW, Room 8102, Washington, D.C. 20554.
13. Other Proceedings: Currently pending before the Bureau are
several Petitions for Reconsideration in the matter of Requests for
Waiver of Section 101.1003(a) of the Commission's Rules Establishing
Eligibility Restrictions on Incumbent LECs and Cable Operators in the
Local Multipoint Distribution Service. (See Order, 13 FCC Rcd 18694
(1998)).
14. Due Diligence: Potential bidders are reminded that several
NGSO-MSS feeder link Earth stations are located in the 29.1-29.5 GHz
band. These are identified in Attachment F.
15. Potential bidders should be aware that certain licenses
designated for Auction No. 23 are subject to a waiver request and
petition for reconsideration that are pending before the Commission.
The Bureau notes that resolution of these matters could have an impact
on the availability of licenses for this auction. In addition, while
the Commission will continue to act on pending requests and petitions,
some of these matters may not be resolved before the auction. In the
event that changes in the license inventory for Auction Event No. 23
occur before the auction, the Commission will make an announcement by
Public Notice.
16. Licensing information is contained in the Commission's
licensing database, which is available for inspection in the Wireless
Telecommunications Bureau's Public Reference Rooms, located at 2025 M
Street, N.W., Room 5608, Washington, D.C. 20554, and 1270 Fairfield
Road, Gettysburg, PA 17325. In a future public notice, the Bureau will
provide the new location for inspecting the Commission's licensing
database in the Portals building.
17. In addition, potential bidders may search for information
regarding LMDS licensees on the World Wide Web at http://www.fcc.gov/
wtb. In particular, information can be accessed by downloading
databases by selecting ``WTB Database Files'' (which can be accessed at
http://www.fcc.gov/wtb/databases.html), or searching on-line by
selecting ``Search WTB Databases'' (http://gullfoss.fcc.gov:8080/cgi-
bin/ws.exe/beta/genmen/index.hts). Any telephone inquiries regarding
accessing this data should be directed to the Technical Support Hotline
at (202) 414-1250 (voice) or (202) 414-1255 (text telephone (TTY)).
18. 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 geographic area for which they plan to bid.
19. Participation: Those wishing to participate in the auction
must:
Submit a short form application (FCC Form 175) by March
29, 1999.
Submit a sufficient upfront payment and an FCC Remittance
Advice Form (FCC Form 159) by April 12, 1999.
Comply with all provisions outlined in this Public Notice.
20. Prohibition of Collusion: To ensure the competitiveness of the
auction process, the Commission's Rules prohibit applicants for the
same geographic license area from communicating with each other during
the auction about bids, bidding strategies, or settlements. This
prohibition begins with the filing of short-form applications, and ends
on the down payment due date. Bidders competing for the same license(s)
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/she is authorized to represent in the
auction. Also, if the authorized bidders are different individuals
employed by the same organization (e.g., law firm or consulting firm),
a violation could similarly occur. At a minimum, in such a case,
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. The Bureau, however, cautions that merely
filing a certifying statement as part of an
[[Page 8363]]
application will not outweigh specific evidence that collusive behavior
has occurred nor will it preclude the initiation of an investigation
when warranted. In the LMDS auction, for example, the rule would apply
to any applicants bidding for the same BTA. Therefore, applicants that
apply to bid for ``all markets'' would be precluded from communicating
with all other applicants after filing the FCC Form 175. However,
applicants may enter into bidding agreements before filing their FCC
Form 175 short-form applications, as long as they disclose the
existence of the agreement(s) in their Form 175 short-form
applications. By signing their FCC Form 175 short form applications,
applicants are certifying their compliance with Section 1.2105(c). In
addition, Section 1.65 of the Commission's Rules requires an applicant
to maintain the accuracy and completeness of information furnished in
its pending application and to notify the Commission within 30 days of
any substantial change that may be of decisional significance to that
application. Thus, Section 1.65 requires an auction applicant to notify
the Commission of any violation of the anti-collusion rules upon
learning of such violation. Bidders are therefore required to make such
notification to the Commission immediately upon discovery.
21. Bidder Information Package: No separate bidder information
package will be published for this auction. However, some Commission
Orders relevant to LMDS are contained in the Bidder Information Package
for Auction Event No. 17, the first LMDS auction. Prospective bidders
are advised not to rely upon information contained in the Bidder
Information Package, other than the rulemaking Orders contained in Tab
E, as it is outdated. In addition, the Commission and Bureau have
released Orders concerning LMDS since the publication of the Bidder
Information Package (see next section). The Commission has a limited
number of Auction Event No. 17 Bidder Information Packages available. A
copy may be requested by contacting the Auction Hotline at (888) CALL-
FCC ((888) 225-5322) and pressing Option 2 at the prompt. An electronic
version of the Auction Event No. 17 Bidder Information Package can be
accessed via the Commission website at www.fcc.gov/wtb/auctions.
22. Relevant Authority: Prospective bidders must familiarize
themselves thoroughly with the Commission's Rules relating to LMDS,
contained in Title 47, Part 101 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.
23. Prospective bidders must also be thoroughly familiar with the
procedures, terms and conditions (collectively, ``Terms'') contained in
the Second Report and Order in PP Docket No. 93-253, 9 FCC Rcd 2348
(1994); the Second Memorandum Opinion and Order in PP Docket No. 93-
253, 9 FCC Rcd 7245 (1994); the Erratum to the Second Memorandum
Opinion and Order in PP Docket No. 93-253 (released Oct. 19, 1994); the
First Report and Order and Fourth Notice of Proposed Rule Making in CC
Docket No. 97-297, 11 FCC Rcd 19005 (1996); the Second Report and
Order, Order on Reconsideration, and Fifth Notice of Proposed Rule
Making in CC Docket No. 96-297, 12 FCC Rcd 12545 (1997) (``LMDS Second
R&O''); the Second Order on Reconsideration in CC Docket No. 97-297, 12
FCC Rcd 15082 (1997); the Third Order on Reconsideration in CC Docket
97-297, 13 FCC Rcd 4856; the Fourth Report and Order in CC Docket No.
92-297, 13 FCC Rcd 11655 (1998); Order, Requests for Waiver of Section
101.1003(a) of the Commission's Rules Establishing Eligibility
Restrictions on Incumbent LECs and Cable Operators in the Local
Multipoint Distribution Service, 13 FCC Rcd 18694 (1998) (collectively
referred to as the ``Relevant Orders''); and Part 1, Subpart Q of the
Commission's Rules concerning Competitive Bidding Proceedings.
24. The terms contained in the Commission's Rules, relevant orders,
public notices and bidder information package are not negotiable. The
Commission may amend or supplement the information contained in our
public notices or the bidder information package 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 Internet node
via anonymous ftp @ftp.fcc.gov or the FCC World Wide Web site at http:/
/www.fcc.gov/wtb/auctions. Additionally, documents may be obtained for
a fee by calling the Commission's copy contractor, International
Transcription Service, Inc. (ITS), at (202) 857-3800. When ordering
documents from ITS, please provide the appropriate FCC number (e.g.,
FCC 97-323 for the Second Order on Reconsideration).
25. Bidder Alerts: 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.
26. 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 should perform their
individual due diligence before proceeding as they would with any new
business venture.
27. As is the case with many business investment opportunities,
some unscrupulous entrepreneurs may attempt to use the LMDS auction 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 the minimum 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.
[[Page 8364]]
28. Information about deceptive telemarketing investment schemes is
available from the FTC at (202) 326-2222 and from the SEC at (202) 942-
7040. Complaints about specific deceptive telemarketing investment
schemes should be directed to the FTC, the SEC, or the National Fraud
Information Center at (800) 876-7060. Consumers who have concerns about
specific LMDS proposals may also call the FCC National Call Center at
(888) CALL-FCC ((888) 225-5322).
B. Bidder Eligibility and Small Business Provisions
29. General Eligibility Criteria. As described above, this auction
offers one license in each of 122 Block A Basic Trading Areas (BTAs)
and 46 Block B BTAs designated for LMDS. For LMDS, the Commission
adopted small business provisions to promote and facilitate the
participation of small businesses in the LMDS auction and in the
provision of this and other commercial mobile radio services. General
eligibility to provide LMDS service, subject to certain restrictions
outlined below, is afforded to entities that are not precluded under 47
CFR Secs. 101.7, 101.1001, and 101.1003.
30. Eligibility Restrictions: 1,150 megahertz licenses. ILECs and
cable television companies are subject to certain restrictions on their
eligibility to own an attributable interest in the 1,150 megahertz LMDS
license in their authorized or franchised service areas (``in-
region''). An incumbent is defined as ``in-region'' if its authorized
service area represents 10 percent or more of the population of the
BTA. A 20 percent or greater ownership level constitutes an
attributable interest in a license. ILECs and cable companies are
permitted to participate fully in the auction of the 1,150 megahertz
LMDS licenses, but are required to divest any overlapping interests
within 90 days if they win a license at the auction. The eligibility
restrictions terminate on the third anniversary of the effective date
of the LMDS rules. These restrictions may be extended beyond the three-
year period, if, upon a review at the end of this period, the
Commission determines that sufficient competition has not developed.
The Commission may waive the restriction in individual cases upon a
showing of good cause.
31. 150 megahertz licenses. All entities that meet the Commission's
general eligibility criteria, including ILECs and cable television
companies, are eligible to own attributable interests in the 150
megahertz license in any BTA.
32. Determination of Revenues. For purposes of determining which
entities qualify as very small businesses, small businesses, or
entrepreneurs, the Commission will consider the gross revenues of the
applicant, its controlling principals, and the affiliates of the
applicant. Therefore, the gross revenues of all of the above entities
must be disclosed separately and in the aggregate as Exhibit C to an
applicant's FCC Form 175. The Commission does not impose specific
equity requirements on controlling principals. Once principals or
entities with a controlling interest are determined, only the revenues
of those principals or entities will be counted in determining small
business eligibility. The term ``control'' includes both de facto and
de jure control of the applicant. Typically, de jure control is
evidenced by ownership of at least 50.1 percent of an entity's voting
stock. De facto control is determined on a case-by-case basis. The
following are some common indicia of control:
The entity constitutes or appoints more than 50 percent of
the board of directors or management committee;
The entity has authority to appoint, promote, demote, and
fire senior executives that control the day-to-day activities of the
licensee; or
The entity plays an integral role in management decisions.
33. Entrepreneur or Very Small or Small Business Consortia. A
consortium of entrepreneurs, small businesses, or very small businesses
is a conglomerate organization formed as a joint venture between or
among mutually independent business firms, each of which individually
satisfies the definition of entrepreneur or very small or small
business in Section 101.1112(b), (c), or (d). Thus, each consortium
member must disclose its gross revenues along with those of its
affiliates, controlling principals, and controlling principals'
affiliates. The Bureau notes that although the gross revenues of the
consortium members will not be aggregated for purposes of determining
eligibility for very small or small business credits, this information
must be provided to ensure that each individual consortium member
qualifies for any bidding credit awarded to the consortium.
34. Application Showing. Applicants should note that they will be
required to file supporting documentation as Exhibit C to their FCC
Form 175 short form applications to establish that they satisfy the
eligibility requirements to qualify as an entrepreneur or a very small
business or small business (or consortiums of entrepreneurs, very
small, or small businesses) for this auction. Specifically, for the
LMDS auction, applicants applying to bid as entrepreneurs, very small,
or small businesses (or consortiums of entrepreneurs, very small, or
small businesses) will be required to file as Exhibit C to their FCC
Form 175 short form applications, all information required under
Sections 1.2105(a) and Section 1.2112(a). In addition, these applicants
must disclose, separately and in the aggregate, the gross revenues for
the preceding three years of each of the following: (1) the applicant;
(2) the applicant's affiliates; (3) the applicant's controlling
principals; and (4) the affiliates of the applicant's controlling
principals. Certification that the average gross revenues for the
preceding three years do not exceed the applicable limit is not
sufficient. A statement of the total gross revenues for the preceding
three years is also insufficient. The applicant must provide separately
for itself, its affiliates, and its controlling principals, a schedule
of gross revenues for each of the preceding three years, as well as a
statement of total average gross revenues for the three-year period. If
the applicant is applying as a consortium of very small or small
businesses, this information must be provided for each consortium
member.
35. Bidding Credits. Applicants that qualify under the definitions
of entrepreneur, very small business, and small business (or consortia
of entrepreneurs, very small, or small businesses) (including
calculation of average gross revenues) as are set forth in 47 CFR
Sec. 101.1112, are eligible for a bidding credit that represents the
amount by which a bidder's winning bids are discounted. The size of an
LMDS bidding credit depends on the average gross revenues for the
preceding three years of the bidder and its controlling principals and
affiliates:
A bidder with average gross revenues of not more than $15
million for the preceding three years receives a 45 percent discount on
its winning bids for LMDS licenses;
A bidder with average gross revenues of more than $15
million but not more than $40 million for the preceding three years
receives a 35 percent discount on its winning bids for LMDS licenses.
A bidder with average gross revenues of more than $40
million but not more than $75 million for the preceding three years
receives a 25 percent discount on its winning bids for LMDS licenses.
36. Bidding credits are not cumulative: qualifying applicants
receive either the 25 percent, the 35
[[Page 8365]]
percent bidding credit, or the 45 percent bidding credit but not all
three or any combination thereof.
37. LMDS bidders should note that unjust enrichment provisions
apply to winning bidders that use bidding credits and subsequently
assign or transfer control of their licenses to an entity not
qualifying for the same level of bidding credit. Finally, LMDS bidders
should also note that there are no installment payment plans in the
LMDS auction.
C. Pre-Auction Procedures
38. Short-Form Application (FCC Form 175)--Due March 29, 1999. In
order to be eligible to bid in this auction, applicants must first
submit an FCC Form 175 application. This application must be received
at the Commission by 5:30 p.m. ET on March 29, 1999. Late applications
will not be accepted.
39. 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 Paragraph 45 below.
40. Electronic Filing. Applicants must file their FCC Form 175
applications electronically. (See 47 CFR Section 1.2105(a).)
Applications may generally be filed at any time from March 5, 1999
until 5:30 p.m. ET on March 29, 1999. Applicants are strongly
encouraged to file early, and applicants are responsible for allowing
adequate time for filing their applications. Applicants may update or
amend their electronic applications multiple times until the filing
deadline on March 29, 1999. Applicants must press the ``Submit Form
175'' button on the ``Submit'' page of the electronic form to
successfully submit their FCC Forms 175. Information about installing
and running the FCC Form 175 application software is included in
Attachment C. Technical support is available at (202) 414-1250 (voice)
or (202) 414-1255 (text telephone (TTY)); the hours of service are 8
a.m.-6 p.m. ET, Monday-Friday, and 9 a.m.-5 p.m. ET, the weekend of
March 27-28, 1999.
41. Completion of the FCC Form 175. Applicants should carefully
review 47 CFR Sec. 1.2105, and must complete all items on the FCC Form
175 (and Form 175-S, if applicable). Instructions for completing the
FCC Form 175 are in Attachment B of this Public Notice.
42. Electronic Review of FCC Form 175. The FCC Form 175 review
software may be used to review 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 a fee of $2.30 per minute for accessing this
system. See Attachment C for details.
43. Application Processing and Minor Corrections. 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: (1) those applications accepted for filing (including FCC
account numbers and the licenses for which they applied); (2) those
applications rejected; and (3) those applications which have minor
defects that may be corrected, and the deadline for filing such
corrected applications.
44. As described more fully in the Commission's Rules, after the
March 29, 1999, 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). See 47 CFR Section 1.2105.
45. Upfront Payments--Due April 12, 1999. 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. If filing the Form 159 manually, the July
1997 version must be used. Earlier versions of this form will not be
accepted. All upfront payments must be received at Mellon Bank in
Pittsburgh, PA, by 6:00 p.m. ET on April 12, 1999.
46. 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. 23 go to a lockbox number
different from the ones used in previous FCC auctions, and different
from the lockbox number to be used for post-auction payments.
Failure to deliver the upfront payment by the April 12,
1999 deadline will result in dismissal of the application and
disqualification from participation in the auction.
47. Making Auction Payments by Wire Transfer. Wire transfer
payments must be received by 6:00 p.m. ET on April 12, 1999. 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
BNF: FCC/AC 910-0180
OBI Field: (Skip one space between each information item)
``AUCTIONPAY''
TAXPAYER IDENTIFICATION NO. (same as FCC Form 159, block 26)
PAYMENT TYPE CODE (enter ``A23U'')
FCC CODE 1 (same as FCC Form 159, block 23A: ``23'')
PAYER NAME (same as FCC Form 159, block 2)
LOCKBOX NO. # 358420
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.
48. Applicants must fax a completed FCC Form 159 to Mellon Bank at
(412) 236-5702 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. 23.''
Bidders may confirm receipt of their upfront payment at Mellon Bank by
contacting their sending financial institution.
49. FCC Form 159. Each upfront payment must be accompanied by a
completed FCC Remittance Advice Form (FCC Form 159). Proper completion
of FCC Form 159 is critical to ensuring correct credit of upfront
payments. Detailed instructions for completion of FCC Form 159 are
included in Attachment B to this Public Notice.
50. Amount of Upfront Payment. The Bureau adopts the proposed
upfront payments for the LMDS auction. Specifically, the the upfront
payments adopted for Auction Event No. 23 are:
(1) Block A: $0.06 * Pops (rounded up to the next dollar)
(2) Block B: $0.03 * Pops (rounded up to the next dollar)
The Bureau does not share WCA's concern that these upfront payments are
too low, and thus invite defaults. The Bureau believes that the default
payment rule is sufficient to deter high bidders from not meeting their
payment obligations. The adopted upfront payment amounts have been
calculated for each license and are listed in Attachment A. These
amounts represent the deposits required to qualify to bid on the LMDS
licenses in Auction No. 23. The Bureau finds that amounts
[[Page 8366]]
higher than these might serve as a barrier to participation in the
auction, and that upfront payments lower than these might encourage
frivolous auction participation and insincere bidding.
51. Please note that upfront payments are not attributed to
specific licenses, but instead will be translated to bidding units to
define a bidder's maximum bidding eligibility. For Auction No. 23, the
amount of the upfront payment will be translated into bidding units on
a one-to-one basis, e.g., a $25,000 upfront payment provides the bidder
with 25,000 bidding units. The total upfront payment defines the
maximum amount of bidding units on which the applicant will be
permitted to bid (including standing high bids) in any single round of
bidding. Thus, an applicant does not have to make an upfront payment to
cover all licenses for which the applicant has selected on FCC Form
175, but rather to cover the maximum number of bidding units that are
associated with licenses on which the bidder wishes to place bids and
hold high bids at any given time.
52. In order to be able to place a bid on a license, in addition to
having specified that license on the FCC Form 175, a bidder must have
an eligibility level that meets or exceeds the number of bidding units
assigned to that license. At a minimum, an applicant's total upfront
payment must be enough to establish eligibility to bid on at least one
of the licenses applied for on the FCC Form 175, or else the applicant
will not be eligible to participate in the auction.
53. In calculating the upfront payment amount, an applicant should
determine the maximum number of bidding units it may wish to bid on in
any single round, and submit an upfront payment covering that number of
bidding units. Bidders should check their calculations carefully as
there is no provision for increasing a bidder's maximum eligibility
after the upfront payment deadline.
54. Note: An applicant may, on its FCC Form 175, apply for every
license being offered, but its actual bidding in any round will be
limited by the bidding units reflected in its upfront payment.
55. Applicant's Wire Transfer Information for Purposes of Refunds.
Because experience with prior auctions has shown that in most cases
wire transfers provide quicker and more efficient refunds than paper
checks, the Commission will use wire transfers for all Auction No. 23
refunds. To avoid delays in processing refunds, applicants should
include wire transfer instructions with any refund request they file;
they may also provide this information in advance by faxing it to the
FCC Billings and Collections Branch, ATTN: Linwood Jenkins or Geoffrey
Idika, at (202) 418-2843. Please include the following information:
Name of Bank
ABA Number
Account Number to Credit
Correspondent Bank (if applicable)
ABA Number
Account Number
Contact and Phone 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 Paragraph 114, infra.
56. Auction Registration. Approximately ten days before the
auction, the FCC will issue a public notice announcing all qualified
bidders for the auction. Qualified bidders are those applicants whose
FCC Form 175 applications have been accepted for filing and that have
timely submitted upfront payments sufficient to make them eligible to
bid on at least one of the licenses for which they applied.
57. All qualified bidders are automatically registered for the
auction. Registration materials will be distributed prior to the
auction by two separate overnight mailings, each containing part of the
confidential identification codes required to place bids. These
mailings will be sent only to the contact person at the applicant
address listed in the FCC Form 175.
58. 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, April 21, 1999 should
contact the Auctions Hotline at (717) 338-2888. Receipt of both
registration mailings is critical to participating in the auction and
each applicant is responsible for ensuring it has received all of the
registration material.
59. Qualified bidders should note that lost login codes, passwords
or bidder identification numbers can be replaced only by appearing in
person at the FCC Auction Headquarters located at 2 Massachusetts
Avenue, N.E., Washington, D.C. 20002. 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 replacement codes.
60. Remote Electronic Bidding Software. Qualified bidders are
allowed to bid electronically or telephonically. Those choosing to bid
electronically must purchase remote electronic bidding software for
$175.00 by April 13, 1999. (Auction software is tailored to a specific
auction, so software from prior auctions will not work for Auction No.
23.) A software order form is included in this public notice. If
bidding telephonically, the appropriate phone number will be supplied
in the second Federal Express mailing of confidential login codes.
61. Auction Seminar. On March 10, 1999, the FCC will sponsor a
seminar for the LMDS auction at the Park Hyatt Washington Hotel,
located at 1201 24th Street, N.W., Washington, D.C. The seminar will
provide attendees with information about pre-auction procedures,
conduct of the auction, FCC remote bidding software, and the LMDS
service and auction rules. The seminar will also provide a unique
opportunity for prospective bidders to ask questions of FCC staff.
62. To register, complete the registration form included with this
Public Notice and submit it by March 8, 1999. Registrations are
accepted on a first-come, first-served basis.
63. Mock Auction. All applicants whose FCC Form 175 and 175-S have
been accepted for filing will be eligible to participate in a mock
auction on April 22, 1999. The mock auction will enable applicants to
become familiar with the electronic software prior to the auction. Free
demonstration software will be available for use in the mock auction.
Participation by all bidders is strongly recommended. Details will be
announced by public notice.
D. Auction Event
64. The first round of the auction will begin on April 27, 1999.
The initial round schedule will be announced in a Public Notice listing
the qualified bidders, to be released approximately 10 days before the
start of the auction.
65. Auction Structure--Simultaneous Multiple Round Auction. In the
LMDS Public Notice, the Bureau proposed to award the 168 licenses in
LMDS in a single, simultaneous multiple round auction. Neither
commenter specifically addressed this issue, although WCA generally
supported all proposals in the LMDS Public Notice. The Bureau concludes
that the 168 LMDS licenses will be awarded through a single,
simultaneous multiple round auction. Unless otherwise announced, bids
will be accepted on all licenses in each round of the auction. This
approach, the Bureau believes, allows bidders to take advantage of any
synergies that exist among licenses and is most administratively
efficient.
[[Page 8367]]
66. Maximum Eligibility and Activity Rules. In the LMDS Public
Notice, the Bureau proposed that the amount of the upfront payment
submitted by a bidder would determine the initial maximum eligibility
(as measured in bidding units) for each bidder. The Commission received
no comments on this issue.
67. For the LMDS auction the Bureau will adopt this proposal. The
amount of the upfront payment submitted by a bidder determines the
initial maximum eligibility (in bidding units) for each bidder. Note
again that upfront payments are not attributed to specific licenses,
but instead will be translated into bidding units to define a bidder's
initial maximum eligibility. The total upfront payment defines the
maximum number of bidding units on which the applicant will initially
be permitted to bid. As there is no provision for increasing a bidder's
maximum eligibility during the course of an auction (as described under
``Auction Stages'' as set forth in Paragraph 74), prospective bidders
are cautioned to calculate their upfront payments carefully.
68. 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 the end before
participating. Bidders are required to be active on a specific
percentage of their maximum eligibility during each round of the
auction.
69. A bidder is considered active on a license in the current round
if it is either the high bidder at the end of the previous bidding
round and does not withdraw the high bid in the current round, or if it
submits an acceptable bid in the current round (see ``Minimum Accepted
Bids'' in Paragraph 89, infra). A bidder's activity level in a round is
the sum of the bidding units associated with licenses on which the
bidder is active. The minimum required activity level is expressed as a
percentage of the bidder's maximum bidding eligibility, and increases
as the auction progresses. Because these procedures have proven
successful in maintaining the pace of previous auctions as set forth
under ``Auction Stages'' in Paragraph 74 and ``Stage Transitions'' in
Paragraph 76, infra, the Bureau adopts them for the LMDS auction.
70. Activity Rule Waivers and Reducing Eligibility. Based upon our
experience in previous auctions, the Bureau adopts its proposal and
each bidder will be provided five activity rule waivers that may be
used in any round during the course of the auction. Use of an activity
rule waiver preserves the bidder's current bidding eligibility despite
the bidder's activity in the current round being below the required
minimum level. An activity rule waiver applies to an entire round of
bidding and not to a particular license.
71. The FCC auction system assumes that bidders with insufficient
activity would prefer to use an activity rule waiver (if available)
rather than lose bidding eligibility. Therefore, the system will
automatically apply a waiver (known as an ``automatic waiver'') at the
end of any round where a bidder's activity level is below the minimum
required unless: (1) There are no activity rule waivers available; or
(2) the bidder overrides the automatic application of a waiver by
reducing eligibility, thereby meeting the minimum requirements.
72. A bidder with insufficient activity that wants to reduce its
bidding eligibility rather than use an activity rule waiver must
affirmatively override the automatic waiver mechanism during the round
by using the reduce eligibility function in the software. In this case,
the bidder's eligibility is permanently reduced to bring the bidder
into compliance with the activity rules as described in ``Auction
Stages'' (see Paragraph 74 discussion below). Once eligibility has been
reduced, a bidder will not be permitted to regain its lost bidding
eligibility.
73. Finally, a bidder may proactively use an activity rule waiver
as a means to keep the auction open without placing a bid. If a bidder
submits a proactive waiver (using the proactive waiver function in the
bidding software) during a round in which no bids are submitted, the
auction will remain open and the bidder's eligibility will be
preserved. An automatic waiver invoked in a round in which there are no
new valid bids or withdrawals will not keep the auction open.
74. Auction Stages. The Bureau concludes that the auction will be
composed of three stages, which are each defined by an increasing
activity rule. The Bureau will adopt its proposals for the activity
rules. These are the same rules the Bureau will employ for the upcoming
LMS auction. Below are the activity levels for each stage of the
auction. The FCC reserves the discretion to further alter the activity
percentages before and/or during the auction.
Stage One: In each round of the first stage of the auction, a
bidder desiring to maintain its current eligibility is required to be
active on licenses encompassing at least 80 percent of its current
bidding eligibility. Failure to maintain the requisite activity level
will result in a reduction in the bidder's bidding eligibility in the
next round of bidding (unless an activity rule waiver is used). During
Stage One, reduced eligibility for the next round will be calculated by
multiplying the current round activity by five-fourths (\5/4\).
Stage Two: In each round of the second stage, a bidder desiring to
maintain its current eligibility is required to be active on 90 percent
of its current bidding eligibility. During Stage Two, reduced
eligibility for the next round will be calculated by multiplying the
current round activity by ten-ninths (\10/9\).
Stage Three: In each round of the third stage, a bidder desiring to
maintain its current eligibility is required to be active on 98 percent
of its current bidding eligibility. In this final stage, reduced
eligibility for the next round will be calculated by multiplying the
current round activity by fifty-fortyninths (\50/49\).
Caution: Since activity requirements increase in each auction
stage, bidders must carefully check their current activity during the
bidding period of the first round following a stage transition. This is
especially critical for bidders that have standing high bids and do not
plan to submit new bids. In past auctions, some bidders have
inadvertently lost bidding eligibility or used an activity rule waiver
because they did not reverify their activity status at stage
transitions. Bidders may check their activity against the required
minimum activity level by using the bidding software's bidding module.
75. Because the foregoing procedures have proven successful in
maintaining proper pace in previous auctions, the Bureau adopts them
for the LMDS auction.
76. Stage Transitions. In the LMDS Public Notice, the Bureau
proposed that the auction would advance to the next stage (i.e., from
Stage One to Stage Two, and from Stage Two to Stage Three) when the
auction activity level, as measured by the percentage of bidding units
receiving new high bids, is below 10 percent for three consecutive
rounds of bidding in each Stage. However, the Bureau further proposed
that the Bureau would retain the discretion to change stages
unilaterally by announcement during the auction. This determination,
the Bureau proposed, would be based on a variety of measures of bidder
activity, including, but not limited to, the auction activity level,
the percentages of licenses (as measured in bidding units) on which
there are new bids, the number of new bids, and the percentage increase
in revenue. The Commission received no comments on this subject.
[[Page 8368]]
77. The Commission adopts its proposal. Thus, the auction will
start in Stage One. Under the FCC's general guidelines it will advance
to the next stage (i.e., from Stage One to Stage Two, and from Stage
Two to Stage Three) when, in each of three consecutive rounds of
bidding, the high bid has increased on 10 percent or less of the
licenses being auctioned (as measured in bidding units). However, the
Bureau will retain the discretion to regulate the pace of the auction
by announcement. This determination will be based on a variety of
measures of bidder activity, including, but not limited to, the auction
activity level, the percentages of licenses (as measured in bidding
units) on which there are new bids, the number of new bids, and the
percentage increase in revenue. The Bureau believes that these stage
transition rules, having proven successful in prior auctions, are
appropriate for use in the LMDS auction.
78. Auction Stopping Rules. The Bureau adopts its proposals
concerning the stopping rule. Thus, bidding will remain open on all
licenses until bidding stops on every license (a simultaneous stopping
rule). The auction will close for all licenses when one round passes
during which no bidder submits a new acceptable bid on any license,
applies a proactive waiver, or withdraws a previous high bid. In
addition, however, the Bureau retains the discretion to close the
auction for all licenses after the first round in which no bidder
submits a proactive waiver, a withdrawal, or a new bid on any license
on which it is not the standing high bidder. Thus, absent any other
bidding activity, a bidder placing a new bid on a license for which it
is the standing high bidder would not keep the auction open under this
stopping rule procedure. The Bureau will notify bidders in advance of
implementing any change to our simultaneous stopping rule.
79. The Bureau retains the discretion, however, to keep an auction
open even if no new acceptable bids or proactive waivers are submitted,
and no previous high bids are withdrawn. In this event, the effect will
be the same as if a bidder had submitted a proactive waiver. Thus, the
activity rule will apply as usual, and a bidder with insufficient
activity will either lose bidding eligibility or use an activity rule
waiver (if it has any left).
80. Further, in its discretion, the Bureau reserves the right to
declare that the auction will end after a specified number of
additional rounds (``special stopping rule''). If the FCC invokes this
special stopping rule, it will accept bids in the final round(s) only
for licenses on which the high bid increased in at least one of the
preceding specified number of rounds. The FCC intends to exercise this
option only in extreme circumstances, such as where the auction is
proceeding very slowly, where there is minimal overall bidding
activity, or where it appears likely that the auction will not close
within a reasonable period of time. Before exercising this option, the
FCC is likely to attempt to increase the pace of the auction by, for
example, moving the auction into the next stage (where bidders would be
required to maintain a higher level of bidding activity), increasing
the number of bidding rounds per day, and/or increasing the amount of
the minimum bid increments for the limited number of licenses where
there is still a high level of bidding activity.
81. Adoption of these rules, the Bureau believes, is most
appropriate for the LMDS auction because our experience in prior
auctions demonstrates that the simultaneous stopping rule balanced the
interests of administrative efficiency and maximum bidder
participation. The substitutability between and among licenses in
different geographic areas and the importance of preserving the ability
of bidders to pursue backup strategies support the use of a
simultaneous stopping rule.
82. Auction Delay, Suspension, or Cancellation. In the LMDS Public
Notice, the Bureau proposed 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, 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. The
Commission received no comments on this proposal.
83. Because this approach has proven effective in resolving exigent
circumstances in previous auctions, the Bureau will adopt its proposed
auction cancellation rules. By public notice or by announcement during
the auction, the Bureau may delay, suspend or cancel the auction in the
event of natural disaster, technical obstacle, evidence of an auction
security breach, unlawful bidding activity, administrative or weather
necessity, or for any other reason that affects the fair and
competitive conduct of competitive bidding. In such cases, the Bureau,
in its sole discretion, may elect to: resume the auction starting from
the beginning of the current round; resume the auction starting from
some previous round; or cancel the auction in its entirety. Network
interruption may cause the Bureau to delay or suspend the auction. The
Bureau emphasizes that exercise of this authority is solely within the
discretion of the Bureau, and its use is not intended to be a
substitute for situations in which bidders may wish to apply their
activity rule waivers.
84. Bidding Procedures--Round Structure. The initial bidding
schedule will be announced by public notice at least one week before
the start of the auction, and will be included in the registration
mailings. The round structure for each bidding round contains a single
bidding round followed by the release of the round results.
85. The FCC has discretion to change the bidding schedule in order
to foster an auction pace that reasonably balances speed with the
bidders' need to study round results and adjust their bidding
strategies. The FCC may increase or decrease the amount of time for the
bidding rounds and review periods, or the number of rounds per day,
depending upon the bidding activity level and other factors.
86. Reserve Price or Minimum Opening Bid. The Bureau will adopt the
minimum opening bids proposed for each of the licenses in the LMDS
auction, which are reducible at the discretion of the Bureau. Congress
has enacted a presumption that unless the Commission determines
otherwise, minimum opening bids or reserve prices are in the public
interest. Based on our experience in using minimum opening bids in the
800 MHz SMR, VHF Public Coast, and first LMDS auctions, the Bureau
believes that minimum opening bids speed the course of the auction and
ensure that valuable assets are not sold for nominal prices, without
unduly interfering with the efficient assignment of licenses.
Accordingly, the Bureau will use the following formulae for calculating
minimum opening bids:
(1) Block A: $0.06 * Pops (rounded up to the next dollar)
(2) Block B: $0.03 * Pops (rounded up to the next dollar)
87. The Bureau concludes that the adopted formulae presented here
best meet the objectives of our auction authority in establishing
reasonable minimum opening bids. The Commission has noted in the past
that the reserve price and minimum opening bid provision is not a
requirement to maximize auction revenue but rather a protection against
assigning licenses at unacceptably low prices and that we must balance
the revenue raising objective against our other public
[[Page 8369]]
interest objectives in setting the minimum bid level. The Bureau
further believes that when conducting second auctions for particular
licenses, the public interest is best served by setting minimum opening
bids that will maximize the likelihood that all licenses are
distributed. The Bureau does not grant ABS et al's request to use the
minimum opening bids from Auction Event No. 17 for their 13 licenses.
The Bureau does not believe that their arguments are persuasive.
Minimum opening bids cannot reflect the amount of the bid withdrawal
payment for which a winning bidder may ultimately be liable. The
Commission has never indicated that it would use the same minimum
opening bids for subsequent auctions of any given licenses. Each
auction event is unique and the Commission establishes minimum opening
bids and other auction procedures that are most appropriate for the
given circumstances. Using the original minimum opening bids for
licenses that were subject to bid withdrawal is impractical. For the
sake of auction integrity and fairness, minimum opening bids must be
set in a manner that is consistent across licenses. The commenters'
proposal, if implemented, could result in similar licenses having very
different valuations at the start of the auction. ABS et al err in
claiming that the value of the licenses they withdrew from is
demonstrated by the second highest bid. If that were true, another
bidder would have claimed the license. Furthermore, ABS et al recognize
that minimum opening bids might have to be reduced during the course of
the auction. This illustrates that they are aware of the potential for
wide variations in withdrawal payments, and that is a risk all bidders
assume when they withdraw bids.
88. Minimum opening bids are reducible at the discretion of the
Bureau. This will allow the Bureau flexibility to adjust the minimum
opening bids if circumstances warrant. The Bureau emphasizes, however,
that such discretion will be exercised, if at all, sparingly and early
in the auction, i.e., before bidders lose all waivers and begin to lose
substantial eligibility. During the course of the auction, the Bureau
will not entertain any bidder requests to reduce the minimum opening
bid on specific licenses.
89. Minimum Accepted Bids. In the LMDS Public Notice, the Bureau
proposed to use a smoothing methodology to calculate minimum bid
increments. The Bureau further proposed to retain the discretion to
change the minimum bid increment if circumstances so dictate. The
Commission received no comments on this particular issue.
90. Because these techniques have proven effective in prior
auctions, the Bureau adopts its proposal for the LMDS auction. Once
there is a standing high bid on a license, a bid increment will be
applied to that license to establish a minimum acceptable bid for the
following round. The formula used to calculate this increment is
included as Attachment H. This methodology is designed to vary the
increment for a given license between a maximum and minimum value based
on the bidding activity on that license. A similar methodology was used
in previous auctions, including the original LMDS auction and the 220
MHz auction.
91. The Bureau adopts its proposal of initial values for the
maximum of 0.2 or 20% of the license value, and a minimum of 0.1 or 10%
of the license value. The Bureau retains the discretion to change the
minimum bid increment if it determines that circumstances so dictate,
such as raising the minimum increment toward the end of the auction to
enable bids to reach their final values more quickly. The Bureau will
do so by announcement in the Automated Auction System. Under its
discretion the Bureau may also implement an absolute dollar floor for
the bid increment to further facilitate a timely close of the auction.
The Bureau may also use its discretion to adjust the minimum bid
increment without prior notice if circumstances warrant. As an
alternative approach, the Bureau may, in its discretion, adjust the
minimum bid increment gradually over a number of rounds as opposed to
single large changes in the minimum bid increment (e.g., by raising the
increment floor by one percent every round over the course of ten
rounds). The Bureau also retains the discretion to use alternate
methodologies for the LMDS auction if circumstances warrant.
92. High Bids. Each bid will be date-and time-stamped when it is
entered into the FCC computer system. In the event of tie bids, the
Commission will identify the high bidder on the basis of the order in
which bids are received by the Commission, starting with the earliest
bid. The bidding software allows bidders to make multiple submissions
in a round. As each bid is individually date and time-stamped according
to when it was submitted, bids submitted by a bidder earlier in a round
will have an earlier date-and time-stamp than bids submitted later in a
round.
93. Bidding. During a bidding round, a bidder may submit bids for
as many licenses as it wishes, subject to its eligibility, as well as
withdraw high bids from previous bidding rounds, remove bids placed in
the same bidding round, or permanently reduce eligibility. Bidders also
have the option of making multiple submissions and withdrawals in each
bidding round. If a bidder submits multiple bids for a single license
in the same round, the system takes the last bid entered as that
bidder's bid for the round, and the date-and time-stamp of that bid
reflects the latest time the bid was submitted.
94. Please note that all bidding will take place either through the
automated bidding software or by telephonic bidding. (Telephonic bid
assistants are required to use a script when handling bids placed by
telephone. Telephonic bidders are therefore reminded to allow
sufficient time to bid, by placing their calls well in advance of the
close of a round, because four to five minutes are necessary to
complete a bid submission.) There will be no on-site bidding during
Auction No. 23.
95. A bidder's ability to bid on specific licenses in the first
round of the auction is determined by two factors: (1) the licenses
applied for on FCC Form 175; and (2) the upfront payment amount
deposited. The bid submission screens will be tailored for each bidder
to include only those licenses for which the bidder applied on its FCC
Form 175. A bidder also has the option to further tailor its bid
submission screens to call up specified groups of licenses.
96. The bidding software requires each bidder to login to the FCC
auction system during the bidding round using the FCC account number,
bidder identification number, and the confidential security codes
provided in the registration materials. Bidders are strongly encouraged
to download and print bid confirmations after they submit their bids.
97. The bid entry screen of the Automated Auction System software
for the LMDS auction allows bidders to place multiple increment bids
which will let bidders increase high bids from one to nine bid
increments. A single bid increment is defined as the difference between
the standing high bid and the minimum acceptable bid for a license.
98. To place a bid on a license, the bidder must enter a whole
number between 1 and 9 in the bid increment multiplier (Bid Mult)
field. This value will determine the amount of the bid (Amount Bid) by
multiplying the bid increment multiplier by the bid increment and
adding the result to the high bid amount according to the following
formula:
Amount Bid = High Bid + (Bid Mult * Bid Increment)
[[Page 8370]]
Thus, bidders may place a bid that exceeds the standing high bid by
between one and nine times the bid increment. For example, to bid the
minimum acceptable bid, which is equal to one bid increment, a bidder
will enter ``1'' in the bid increment multiplier column and press
submit.
99. For any license on which the FCC is designated as the high
bidder (i.e., a license that has not yet received a bid in the auction
or where the high bid was withdrawn and a new bid has not yet been
placed), bidders will be limited to bidding only the minimum acceptable
bid. In both of these cases no increment exists for the licenses, and
bidders should enter ``1'' in the Bid Mult field. Note that in this
case, any whole number between 1 and 9 entered in the multiplier column
will result in a bid value at the minimum acceptable bid amount.
Finally, bidders are cautioned in entering numbers in the Bid Mult
field because, as explained in the following section, a high bidder
that withdraws its standing high bid from a previous round, even if
mistakenly or erroneously made, is subject to bid withdrawal payments.
100. Bid Removal and Bid Withdrawal--Procedures. Before the close
of a bidding round, a bidder has the option of removing any bids placed
in that round. By using the ``remove bid'' function in the software, a
bidder may effectively ``unsubmit'' any bid placed within that round. A
bidder removing a bid placed in the same round is not subject to
withdrawal payments. Removing a bid will affect a bidder's activity for
the round in which it is removed. This procedure, about which the
Commission received no comments, will enhance bidder flexibility and,
the Bureau believes, may serve to expedite the course of the auction.
Therefore, the Bureau will adopt these procedures for the LMDS auction.
101. Once a round closes, a bidder may no longer remove a bid.
However, in the next round, a bidder may withdraw standing high bids
from previous rounds using the ``withdraw bid'' function (assuming that
the bidder has not exhausted its withdrawal allowance). A high bidder
that withdraws its standing high bid from a previous round is subject
to the bid withdrawal payments specified in 47 CFR 1.2104(g) and
1.2109. The procedure for withdrawing a bid and receiving a withdrawal
confirmation is essentially the same as the bidding procedure described
in ``High Bids,'' Part 4.B.(4).
102. In previous auctions, the Bureau has detected bidder conduct
that, arguably, may have constituted strategic bidding through the use
of bid withdrawals. While the Bureau continues to recognize the
important role that bid withdrawals play in an auction, i.e., reducing
risk associated with efforts to secure various geographic area licenses
in combination, the Bureau concludes that, for the LMDS auction,
adoption of a limit on their use to two rounds is the most appropriate
outcome. By doing so the Bureau believes it strikes a reasonable
compromise that will allow bidders to use withdrawals. Our decision on
this issue is based upon our experience in prior auctions, particularly
the PCS D, E and F block auction, 800 MHz SMR auction, and first LMDS
auction, and is in no way a reflection of our view regarding the
likelihood of any speculation or ``gaming'' in this LMDS auction.
103. The Bureau will therefore limit the number of rounds in which
bidders may place withdrawals to two rounds. These rounds will be at
the bidder's discretion and there will be no limit on the number of
bids that may be withdrawn in either of these rounds. Withdrawals will
still be subject to the bid withdrawal payments specified in 47 CFR
1.2104(g), and 1.2109. Bidders should note that abuse of the
Commission's bid withdrawal procedures could result in the denial of
the ability to bid on a market.
104. If a high bid is withdrawn, the license will be offered in the
next round at the second highest bid price, which may be less than, or
equal to, in the case of tie bids, the amount of the withdrawn bid,
without any bid increment. The FCC will serve as a ``place holder'' on
the license until a new acceptable bid is submitted on that license.
105. Calculation. Generally, a bidder that withdraws a standing
high bid during the course of an auction will be subject to a payment
equal to the lower of: (1) the difference between the net withdrawn bid
and the subsequent net winning bid; or (2) the difference between the
gross withdrawn bid and the subsequent gross winning bid for that
license. See 47 CFR Sections 1.2104(g), and 1.2109. No withdrawal
payment will be assessed if the subsequent winning bid exceeds the
withdrawn bid.
106. Round Results. The bids placed during a round are not
published until the conclusion of that bidding period. After a round
closes, the FCC will compile reports of all bids placed, bids
withdrawn, current high bids, new minimum accepted bids, and bidder
eligibility status (bidding eligibility and activity rule waivers), and
post the reports for public access.
107. Reports reflecting bidders' identities and bidder
identification numbers for Auction No. 23 will be available before and
during the auction. Thus, bidders will know in advance of this auction
the identities of the bidders against which they are bidding.
108. Auction Announcements. The FCC will use auction announcements
to announce items such as schedule changes and stage transitions. All
FCC auction announcements will be available on the FCC remote
electronic bidding system, as well as the Internet and the FCC Bulletin
Board System.
109. Other Matters. As noted above [FLAG], 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
revision of exhibits. Filers must make these changes on-line, and
submit a letter to Amy Zoslov, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, Federal Communications
Commission, 2025 M Street, N.W., Room 5202, Washington, D.C. 20554 (and
mail a separate copy to Arthur Lechtman, Auctions and Industry Analysis
Division), briefly summarizing the changes. Questions about other
changes should be directed to Arthur Lechtman of the FCC Auctions and
Industry Analysis Division at (202) 418-0660.
E. Post-Auction Procedures
110. Down Payments and Withdrawn Bid Payments. After bidding has
ended, the Commission will issue a public notice declaring the auction
closed, identifying the winning bids and bidders for each license, and
listing withdrawn bid payments due.
111. Within ten business days after release of the auction closing
notice, each winning bidder must submit sufficient funds (in addition
to its upfront payment) to bring its total amount of money on deposit
with the Government to 20 percent of its net winning bids (actual bids
less any applicable bidding credits). See 47 CFR Section 1.2107(b). In
addition, by the same deadline all bidders must pay any withdrawn bid
amounts due under 47 CFR Sec. 1.2104(g), as discussed in ``Bid Removal
and Bid Withdrawal,'' Paragraph 100. (Upfront payments are applied
first to satisfy any withdrawn bid liability, before being applied
toward down payments.)
112. Long-Form Application. Within ten business days after release
of the auction closing notice, winning bidders must electronically
submit a properly
[[Page 8371]]
completed long-form application and required exhibits for each LMDS
license won through the auction. Winning bidders that are small
businesses or very small businesses must include an exhibit
demonstrating their eligibility for bidding credits. See 47 CFR Section
1.2112(b). Further filing instructions will be provided to auction
winners at the close of the auction.
113. Default and Disqualification. Any high bidder that defaults or
is disqualified after the close of the auction (i.e., fails to remit
the required down payment within the prescribed period of time, fails
to submit a timely long-form application, fails to make full payment,
or is otherwise disqualified) will be subject to the payments described
in 47 CFR Sec. 1.2104(g)(2). In such event the Commission may re-
auction the license or offer it to the next highest bidders (in
descending order) at their final bids. See 47 CFR Section 1.2109(b) and
(c). 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. See 47 CFR 1.2109(d).
114. Refund of Remaining Upfront Payment Balance. All applicants
that submitted upfront payments but were not winning bidders for a LMDS
license may be entitled to a refund of their remaining upfront payment
balance after the conclusion of the auction. No refund will be made
unless there are excess funds on deposit from that applicant after any
applicable bid withdrawal payments have been paid.
115. Bidders that drop out of the auction completely may be
eligible for a refund of their upfront payments before the close of the
auction. However, bidders that reduce their eligibility and remain in
the auction are not eligible for partial refunds of upfront payments
until the close of the auction. Qualified bidders that have exhausted
all of their activity rule waivers, have no remaining bidding
eligibility, and have not withdrawn a high bid during the auction must
submit a written refund request which includes wire transfer
instructions, a Taxpayer Identification Number (``TIN''), and a copy of
their bidding eligibility screen print, to: Federal Communications
Commission, Billings and Collections Branch, Attn: Regina Dorsey or
Linwood Jenkins, 445 12th Street, S.W., Room 1-A824, Washington, D.C.
20554.
116. Bidders can also fax their request to the Billings and
Collections Branch at (202) 418-2843. Once the request has been
approved, a refund will be sent to the address provided on the FCC Form
159.
Note: Refund processing generally takes up to two weeks to
complete. Bidders with questions about refunds should contact
Linwood Jenkins or Geoffrey Idika at (202) 418-1995.
Federal Communications Commission.
Mark R. Bollinger,
Deputy Chief, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau.
[FR Doc. 99-4053 Filed 2-18-99; 8:45 am]
BILLING CODE 6712-01-U
