[Federal Register Volume 61, Number 182 (Wednesday, September 18, 1996)]
[Rules and Regulations]
[Pages 49066-49076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23939]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 1 and 95
[PP Docket No. 93-253; FCC 96-330]
Interactive Video and Data Service
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Sixth Memorandum Opinion and Order affirms the competitive
bidding procedures adopted in the Fourth Report and Order, with several
exceptions. Specifically, the Sixth Memorandum Opinion and Order
proposes to: clarify the Commission's anti-collusion rules; permits use
of simultaneous multiple round bidding for interactive video and data
service (IVDS) auctions; and eliminates the tax certificate program
available to investors in women- and minority-owned businesses in
accordance with Congressional action. The Sixth Memorandum Opinion and
Order also grants a petitioner's request that bidding credits be made
available for both licenses in each IVDS service area. The intended
effect of this action is to resolve petitions for reconsideration and
[[Page 49067]]
to clarify or modify the competitive bidding rules governing the
methodology and procedure for auctions for IVDS licenses.
EFFECTIVE DATE: November 18, 1996.
FOR FURTHER INFORMATION CONTACT: Eric Malinen, Wireless
Telecommunications Bureau, (202) 418-0680 or Christina Eads Clearwater,
Wireless Telecommunications Bureau, (202) 418-0660.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Sixth
Memorandum Opinion and Order and Further Notice of Proposed Rule Making
in PP Docket No. 93-253; FCC 96-330, adopted August 6, 1996 and
released September 10, 1996. The complete text of the Sixth Memorandum
Opinion and Order and Further Notice of Proposed Rule Making is
available for inspection and copying during normal business hours in
the FCC Reference Center (Room 239), 1919 M Street, N.W., Washington,
D.C. and also may be purchased from the Commission's copy contractor,
International Transcription Service, (202) 857-3800, 2100 M Street,
N.W., Suite 140, Washington, D.C. 20037.
Title: In the Matter of Implementation of Section 309(j) of the
Communications Act--Competitive Bidding.
I. Sixth Memorandum Opinion and Order
1. In the Fourth Report and Order, Implementation of Section 309(j)
of the Communications Act--Competitive Bidding, PP Docket No. 93-253,
59 FR 24947 (May 13, 1994), 9 FCC Rcd 2330 (1994), the Commission
adopted competitive bidding rules for selecting between mutually
exclusive applicants for IVDS spectrum. By Public Notices issued on May
23, June 17, and July 5, 1994, the Commission provided additional
information concerning the IVDS auctions.
2. Petitioner Phase One argues that, because the Commission may
only conduct an auction if there are mutually exclusive applications,
it should not have established IVDS auction dates until mutual
exclusivity had been determined. Petitioner also maintains that
interested parties did not have adequate time to plan their competitive
bidding strategy for the IVDS auction.
3. The Commission disagrees with petitioner's assertion that the
Commission may not establish auction dates or publicize auctions until
it has determined that mutual exclusivity exists. While the Commission
recognizes that it cannot conduct an auction for licenses for which
there are not mutually exclusive applications, it notes that scheduling
and announcing auction dates are no more than preparatory measures. The
Fourth Report and Order, states, that in the event the Commission
receives only one application that is acceptable for filing for a
particular frequency segment, then the pre-scheduled auction would be
cancelled. Moreover, the Commission conducted the July 1994 auction for
IVDS licenses only after mutual exclusivity had been established in all
markets. Thus, it concludes that the pre-auction application procedures
ensure that spectrum auctions will be conducted only in those
circumstances authorized by the Communications Act.
4. The Commission also disagrees with allegations that its auction
schedule did not provide applicants adequate time to prepare for the
IVDS auction. The Commission received more than 500 applications by the
June 27, 1994 filing deadline for short-form applications (FCC Form
175). The large number of timely applications it received, along with
its outreach efforts to disseminate information to the public about the
IVDS auctions, through the initial May 23, 1994 Public Notice and
subsequent public notices issued during the five week period prior to
the filing deadline, evidence that a substantial number of parties
found themselves aptly prepared to participate in the IVDS auction. As
a result, the Commission finds petitioner's contention to be
unpersuasive.
5. In the Second Report and Order, Implementation of Section 309(j)
of the Communications Act--Competitive Bidding, PP Docket No. 93-253,
59 FR 22980 (May 4, 1994), 9 FCC Rcd 2348 (1994)(Second Report and
Order), the Commission adopted rules prohibiting collusive conduct in
the context of competitive bidding. See 47 CFR Sec. 1.2105(c); see also
Second Memorandum Opinion and Order, 59 FR 44272 (August 26, 1994), 9
FCC Rcd 7245, erratum, Mimeo No. 50278 (October 19, 1994)(Second
Memorandum Opinion and Order). Specifically, the Commission determined
that bidders would be prohibited from discussing the substance of their
bids or bidding strategies with other bidders, unless such bidders are
members of a bidding consortium or other joint bidding arrangement
identified on their short-form application. It also required bidders to
identify on their short-form applications all parties with whom they
have entered into any consortium arrangements, joint ventures,
partnerships or other agreements relating to the competitive bidding
process. Second Report and Order. It also determined that auction
applicants would not be permitted to make any ownership changes or
changes in the identification of parties to bidding consortia once a
short-form application is filed. Id.
6. The Commission rejected Petitioner ITV's contention that the
Commission lacks the authority under the Communications Act to preclude
settlements between mutually exclusive applicants for licenses in
auctionable services. While the Commission has an established policy of
favoring settlements in some contexts, it is within its statutory
authority to restrict settlements if the Commission finds such
agreements would not be in the public interest. See, e.g., Report and
Order, MM Docket No. 90-263, 6 FCC Rcd 85 (1990), modified in part,
Memorandum Opinion and Order, MM Docket 90-253, 6 FCC Rcd 2901 (1991)
(limiting settlements between mutually exclusive applicants for
broadcast construction permits). At this time, the Commission finds
that prohibiting settlements after the short form filing deadline
between mutually exclusive applicants for the same license in the IVDS
competitive bidding process is necessary to deter collusive conduct and
ensure a competitive auction, and is thereby in the public interest.
The anti-collusion rules also prevent entities from filing applications
solely for the purpose of demanding payment from other bidders in
exchange for settlement or withdrawal.
7. Nevertheless, the Commission takes this opportunity to clarify
certain aspects of the anti-collusion rules. 47 CFR Sec. 1.2105(c). It
clarifies that the anti-collusion rules apply where one applicant has a
common ownership interest with another applicant. Second Memorandum
Opinion and Order. Specifically, unless the second applicant is
expressly identified as an entity with whom the first applicant has an
agreement concerning bidding, these parties may not communicate with
each other concerning their bids or bidding strategies. This
prohibition holds even where the other bidder is identified on the
applicant's short-form application as having a common ownership
interest with the applicant. Id. See also Public Notice, Wireless
Telecommunications Bureau Clarifies Spectrum Auction Anti-Collusion
Rules, DA 95-2244 (October 26, 1995); and further clarification in
Order, Amendment of Parts 21 and 74 of the Commission's Rules with
Regard to Filing Procedures in the Multipoint Distribution Service and
in the Instructional Television Fixed Service and Implementation of
Section 309(j) of the Communications
[[Page 49068]]
Act--Competitive Bidding, DA 95-2292 (released November 3, 1995).
Further, consistent with the Wireless Telecommunications Bureau's
(Bureau) approach in the Broadband PCS C Block auction, amendments to
the short-form application must be filed with the Commission within ten
business days of any such change. See Public Notice, Qualified Bidders
and Bidding Instructions For December 18, 1995 Broadband PCS C Block
Auction, Report No. AUC-95-05, Auction No. 5 at 3 (December 8, 1995).
8. In the Second Report and Order, the Commission established the
criteria to be used in selecting the competitive bidding methodology
for each auctionable service. Generally, it concluded that awarding
licenses to those parties that value them most highly will promote the
rapid development and deployment of new services, and the efficient and
intensive use of the spectrum. In the Fourth Report and Order, the
Commission adopted an oral outcry competitive bidding methodology for
auctioning 594 MSA licenses in IVDS. For the remaining RSA licenses,
the Commission concluded that a sealed bid competitive bidding
mechanism was appropriate. The Commission observed that both methods
appear suited to IVDS because they are relatively inexpensive for the
Commission to administer and the costs of bidder participation are
fairly low. The Commission reserved discretion, however, to reconsider
this competitive bidding design if, in view of its actual auctions
experience, a change appears warranted.
9. The Commission anticipates that it will auction the remaining
IVDS licenses using the oral outcry method. It used this method
successfully to auction 594 MSA licenses on July 28 and 29, 1994 and
finds that auctioning IVDS licenses in this manner continues to serve
the public interest. The Commission amends its IVDS rules, however, to
permit use of simultaneous multiple round bidding as well. This method,
with its remote bidding capabilities, has been successful in PCS,
Multipoint and/or Multichannel Distribution Service (MDS), and 900 MHz
Specialized Mobile Radio (900 MHz SMR) auctions. As the Commission
continues to gain experience in conducting simultaneous multiple round
auctions, the costs associated with this methodology decline. As a
result, the Commission reserves the option of using a simultaneous
multiple round auction methodology for future IVDS auctions. It
delegates authority to the Bureau to announce the type of auction and
the procedures by public notice.
10. In the event that the Commission uses the simultaneous multiple
round auction methodology, it will specify minimum bid increments. See
Second Report and Order. The bid increment is the amount or percentage
by which the bid must be raised above the previous round's high bid in
order to be accepted as valid in the current bidding round. The
application of a minimum bid increment speeds the auction progress and,
along with activity and stopping rules, helps to ensure that the
auction closes within a reasonable period of time. Establishing an
appropriate minimum bid increment is important in a simultaneous
auction with a simultaneous closing rule, because all markets remain
open until there is no bidding on any license and a delay in closing
one market will delay the closing of all markets.
11. If the Commission elects to use simultaneous multiple round
auctions, it will conduct the auction in three stages and start the
auction with large bid increments, reducing the increments as bidding
activity falls. The minimum bid increment in Stage I of the auction
will be 5 percent of the high bid in the previous round or $.02 per
bidding unit, whichever is greater. The Commission will reduce the
minimum bid increment as the auction moves through its stages, with a
minimum bid increment of the greater of two percent or $.01 per bidding
unit in Stage II, and the greater of one percent or $.005 per bidding
unit in Stage III. The Commission, however, retains the discretion in
IVDS auctions to vary the minimum bid increments for individual
licenses, or groups of licenses, at any time before or during the
course of an auction. The Commission delegates to the Bureau the
authority to exercise such discretion. See 47 CFR Sec. 0.331; see also
Order, Amendment of Part 0 of the Commission's Rules to Reflect a
Reorganization Establishing the Wireless Telecommunications Bureau and
to Make Changes in the Delegated Authority of Other Bureaus, 60 FR
35503 (July 10, 1995), 10 FCC Rcd 12751 (1995).
12. If the Commission decides to use simultaneous multiple round
bidding for the IVDS auction, it intends to use a simultaneous stopping
rule. Because of the large number of licenses likely to be auctioned at
once, however, it will retain the discretion either to use a hybrid
stopping rule or to allow bidding to close individually for these
licenses. The specific stopping rule to conclude bidding on IVDS
licenses will be announced by Public Notice prior to auction. The
Commission also retains the discretion to declare at any point after 40
rounds that the auction will end after some specified number of
additional rounds. The Commission believes this number of rounds will
ensure that the auction will not close prematurely, while providing
bidders with fair assurance that the auction will be conducted as
intended. See Fifth Report and Order, 59 FR 37566 (July 22, 1994), 9
FCC Rcd 5532 (1994). Bids will be accepted only on licenses where the
high bid has increased in the last three rounds. This will deter
bidders from continuing to bid on a few low value licenses solely to
delay the closing of the auction. It will also enable the Commission to
end the auction when it determines that the benefits of terminating the
auction and issuing licenses exceed the likely benefits of continuing
to allow bidding. The Commission will announce by Public Notice the
number of remaining rounds and other final bidding procedures. The
Commission delegates to the Bureau the authority to exercise such
discretion.
13. Duration of Bidding Rounds. In simultaneous multiple round
auctions, bidders may need a certain amount of time to evaluate back-up
strategies and develop their bidding plans. In the event the Commission
uses the simultaneous multiple round auction methodology, it delegates
to the Bureau the discretion to vary the duration of the bidding rounds
or the interval at which bids are accepted (e.g., run more than one
round per day) in order to move the auction toward closure more
quickly. The Bureau will announce any changes to the duration of, and
intervals between, bidding rounds, either by Public Notice prior to the
auction or by announcement during the auction.
14. As discussed above, in order to ensure that simultaneous
auctions with simultaneous stopping rules close within a reasonable
period of time and to increase the information conveyed by bid prices
during the auction, it is necessary to impose an activity rule to
prevent bidders from waiting until the end of the auction before
participating. In the Second Report and Order, the Commission adopted
the Milgrom-Wilson activity rule as its preferred activity rule where a
simultaneous stopping rule is used. The Milgrom-Wilson approach
encourages bidders to participate in early rounds by limiting their
maximum participation to some multiple of their minimum participation
level. Bidders are required to declare their maximum eligibility in
terms of bidding units, and to make an upfront payment proportional to
that eligibility level. In each round, bidders are limited
[[Page 49069]]
to bidding on licenses encompassing no more than the number of bidding
units covered by their upfront payment. Licenses on which a bidder is
the high bidder at the end of the withdrawal period in the previous
round, as well as licenses on which a new valid bid is placed, count
toward this limit. Under this approach, bidders have the flexibility to
shift their bids among any license for which they have applied so long
as, within each round, the total bidding units encompassed by those
licenses does not exceed the total number of bidding units on which
they are eligible to bid.
15. In general, the auction will start in Stage I and move to Stage
II if the auction activity level is below 10 percent for three
consecutive rounds in Stage I, and move from Stage II to Stage III if
the auction activity level is below five percent for three consecutive
rounds in Stage II. In no case can the auction revert to an earlier
stage. However, the Commission retains the discretion to announce
during the course of an auction when, and if, the auction will move
from one auction stage to the next. These determinations will be based
on a variety of measures of bidder activity including, but not limited
to, the auction activity level defined above, the percentage of
licenses (measured in terms of bidding units) on which there are new
bids, the number of new bids, and the percentage increase in revenue.
The Commission delegates to the Bureau the authority to exercise such
discretion.
16. To avoid the consequences of clerical errors and to compensate
for unusual circumstances that might delay a bidder's bid preparation
or submission on a particular day, the Commission will provide bidders
with five activity rule waivers that may be used in any round during
the course of the auction. If a bidder's activity level is below the
required activity level a waiver automatically will be applied. That
is, if a bidder fails to submit a bid in a round, and its activity
level from any standing high bids (high bids at the end of the bid
withdrawal period in the previous round) falls below its required
activity level, a waiver will be applied automatically. A waiver will
preserve current eligibility in the next round, but cannot be used to
correct an error in the amount bid. An activity rule waiver applies to
an entire round of bidding and not to a particular MSA or RSA service
area.
17. Bidders will be afforded an opportunity to override the
automatic waiver mechanism when they place a bid, if they intentionally
wish to reduce their bidding eligibility and do not want to use a
waiver to retain their eligibility at its current level. If a bidder
overrides the automatic waiver mechanism, its eligibility will be
reduced permanently (according to the formulas specified above), and it
will not be permitted to regain its bidding eligibility from a previous
round. An automatic waiver invoked in a round in which there are no
valid bids will not keep the auction open. Bidders will have the option
to enter an activity rule waiver proactively during the bid submission
period. Thus, a ``proactive'' waiver, as distinguished from an
automatic waiver, is one requested by the bidder. If a bidder submits a
proactive waiver in a round in which no other bidding activity occurs,
the auction will remain open.
18. If a simultaneous multiple round auction is employed, the
Commission retains the discretion to issue additional waivers during
the course of an auction for circumstances beyond a bidder's control
and delegates to the Bureau the authority to exercise such discretion.
The Bureau also retains the flexibility to adjust, by Public Notice
prior to an auction, the number of waivers permitted, or to institute a
rule that allows one waiver during a specified number of bidding rounds
or during specified stages of the auction.
19. A waiver may be submitted either in the round in which bidding
falls below the minimum required level to maintain (for the next round)
the same eligibility as in that round, or prior to submitting a bid in
the next round. If an activity rule waiver is entered in a round in
which no other bidding activity occurs, the auction will remain open.
However, an activity rule waiver entered after a round in which no
other bidding activity occurs will not reopen the auction. In addition,
to help ensure that the auctions are not closed prematurely, the
Commission will retain the discretion to keep an auction open even if
no new acceptable bids and no proactive waivers are submitted in a
single round. In such an instance, the Commission would, in effect, be
submitting its own proactive waiver, thus keeping the auction open. At
such time, the Commission could also advance to larger bid increments,
speeding the pace of the auction.
20. If the Commission chooses to use a simultaneous multiple round
auction methodology, it intends to apply bid withdrawal provisions. In
the Second Report and Order, the Commission determined that bid
withdrawal provisions were needed to discourage insincere bidding. The
Commission observed that insincere bidding, whether frivolous or
strategic, distorts the price information generated by the auction
process and reduces its efficiency. Accordingly, the Commission adopts
the bid withdrawal provisions established in the Second Report and
Order. 47 CFR Sec. 1.2104(g)(1). Pursuant to these rules, any bidder
who withdraws a high bid during an auction will be required to
reimburse the Commission the amount of the difference between its high
bid and the amount of the winning bid the next time the license is
offered by the Commission, if this subsequent winning bid is lower than
the withdrawn bid. No withdrawal payment will be assessed if the
subsequent winning bid exceeds the withdrawn bid. If a license is
reoffered by auction, the ``winning bid'' refers to the high bid in the
auction in which the license is reoffered. If a license is reoffered in
the same auction, the winning bid refers to the high bid amount, made
subsequent to the withdrawal, in that auction. If the subsequent high
bidder also withdraws its bid, that bidder will be required to pay an
amount equal to the difference between its withdrawn bid and the amount
of the subsequent winning bid the next time the license is offered by
the Commission. If a license which is the subject of withdrawal is not
re-auctioned but is instead offered to the highest losing bidders in
the initial auction, the ``winning bid'' refers to the bid of the
highest bidder who accepts the offer. Losing bidders would not be
required to accept the offer, i.e., they may decline without penalty.
The payment amount will be deducted from any upfront payments or down
payments that the withdrawing bidder has deposited with the Commission.
[But see Order, Atlanta Trunking Associates, Inc. v. MAP Wireless
L.L.C. Requests to Waive Bid Withdrawal Payment Provisions, FCC 96-203,
(released May 3, 1996) (summarized in 61 FR 25807 (May 23, 1996)),
recon. pending; the Atlanta Trunking guidelines were formally
incorporated into and adopted by Report and Order, 61 FR 33859 (July 1,
1996), FCC 96-278 (released June 24, 1996) which amended Sec. 24.704 of
the competitive bidding rules.]
21. In establishing its auction methodology for IVDS, the
Commission set forth several provisions to ensure that winning bidders
have the resources needed to obtain their licenses and construct their
systems and to discourage insincere bidding. In the Fourth Report and
Order, the Commission required applicants to show a cashier's check in
the amount of $2,500 for each five licenses sought in order to obtain a
bidding number and
[[Page 49070]]
participate in the auction. Immediately following the auction, winning
bidders were required to submit a $2,500 upfront payment for every five
licenses won. The Commission anticipated that this amount would ensure
that only serious, qualified applicants would be eligible to bid at
auction. In addition, it required winning bidders to make a substantial
down payment within five business days after the close of bidding.
Generally, the Commission required that the down payment be sufficient
to bring the winning bidder's total deposit with the Commission up to
20 percent of the amount bid. Small business applicants were permitted
to pay 10 percent at that time and the remaining 10 percent within five
days of the grant of the license.
22. Petitioner ITV requests that the Commission refund upfront
payment amounts to the extent that they not only cover, but exceed, the
required down payment. Petitioner maintains that this policy would
ensure that winning bidders are not penalized by prevailing with a low
bid. Petitioner alleges that this modification is especially important
to applicants that qualify as a small business, who need to conserve
their financial resources for other auctions, and when the Commission
cannot pay interest on collected funds.
23. The Commission grants the petition on this issue. The
Commission agrees with petitioner that winning bidders should not be
penalized because their winning bid was lower than the amount the
upfront payment would suggest. The Commission will issue a refund to
any qualified applicants after determining that no bid withdrawal or
default payments are owed. Due to administrative constraints, however,
the Commission will not honor requests that any excess amount be
retained and applied toward later payments or obligations. Additional
instructions for obtaining a refund will be provided in a Bidder
Information Package prior to auction.
24. In the Fourth Report and Order, the Commission adopted default
payments to discourage insincere bidding and to compensate the
government for the cost of reauctioning a license. Specifically, the
Commission determined that the defaulting auction winner would be
assessed an additional payment of three percent of the subsequent
winning bid or three percent of its own bid, whichever is less.
25. Petitioner ITV requests that, where the new bid on a license
(upon reauction) exceeds the defaulting applicant's bid by 3 percent or
more, no default payment be applied. In the event that the subsequent
bid exceeds the defaulting bid by less than 3 percent, petitioner
requests that the defaulting applicant should only be responsible for
payment of the difference between the subsequent winning bid and 103
percent of the defaulting applicant's bid. Petitioner maintains that
this proposal will prevent any windfall to the U.S. Treasury.
26. The Commission believes that its existing default provisions
serve an important purpose by helping to deter insincere or speculative
bidding, and providing an incentive for bidders wishing to withdraw
their bids to do so before bidding ceases. In the Second Report and
Order, the Commission observed that it is appropriate to create such an
incentive because a withdrawal that occurs after an auction closes
(default) is likely to be more harmful than one that occurs before
closing. The Commission noted, for example, that default reduces the
likelihood that licenses will be assigned to those who value them the
most and imposes additional costs on the government. Therefore, it
determined that an additional 3 percent payment would discourage
bidders from defaulting on licenses won at auction. The Commission
continues to believe that this amount is appropriate and will
reasonably compensate the government for costs associated with
reauctioning the license. Thus, petitioner's proposal is rejected.
27. In the Fourth Report and Order, the Commission established
several special provisions to ensure that designated entities, i.e.,
small businesses, rural telephone companies, and businesses owned by
members of minority groups and women, are given the opportunity to
participate both in the competitive bidding process for, and in the
provision of, IVDS. The Commission's rules provide that on one of the
two licenses in each market, a 25 percent bidding credit would be
awarded to a winning bidder that is a business owned by women or
minorities. 47 CFR Secs. 95.816(d)(1). It declined to provide bidding
credits to rural telephone companies, however, because the Commission
concluded that the relatively modest build-out costs for systems in
this service would make such special provisions unnecessary to ensure
that they had the opportunity to participate in the provision of IVDS
offerings to rural areas. The Commission also made tax certificates
available to initial investors in minority and women-owned businesses,
and to licensees that transfer their authorizations to minority and
women-owned enterprises. Id. Finally, because installment payments are
an effective way to promote the participation of designated entities
and to distribute licenses and services among geographic areas, and
because use of IVDS spectrum is very likely to match the business
objectives of bona fide small businesses, the Commission allowed small
businesses to pay for their licenses using installment payments. Id.
28. Also, to ensure that its special provisions for designated
entities would benefit only the parties to whom they were directed, the
Commission adopted ``unjust enrichment'' provisions designed to
discourage trafficking in licenses obtained using these special
provisions. 47 CFR Secs. 1.2111, 95.816(e). For example, the unjust
enrichment provisions require reimbursement of the bidding credit plus
interest when the licensee assigns or transfers the license to a
business not owned by minorities and/or women. In addition, the
Commission requires small business licensees to pay back the full
amount of the remaining principal balance upon transfer or assignment
of a license to a non-qualifying entity. 47 CFR Sec. 1.2110(c).
29. Petitioner ITV requests that a bidding credit be made available
for both licenses in each IVDS service area. Petitioner asserts that
the Commission did not adequately explain why it restricted the use of
bidding credits to one license per service area, and that any interest
in ``maximizing'' auction revenue would be contrary to statutory
authority.
30. The Commission grants the petition on this issue. In the Fourth
Report and Order, the Commission stated that providing bidding credits
in the IVDS auctions was ``necessary to provide [the pertinent]
designated entities with a significant enough advantage to ensure their
ability to compete successfully for some IVDS licenses.'' Fourth Report
and Order. The Commission notes, however, that it is not required to
provide all potential special provisions to all designated entities in
all auction contexts. The Commission also notes, contrary to
petitioner's assertions, that it did not limit the application of
bidding credits to only half of the available licenses solely to
maximize auction revenues, but rather considered many other factors.
The Commission chose to make bidding credits available to only half of
the available licenses, rather than all of them, because the Commission
believed that this substantial level of assistance, coupled with the
special provision of tax certificates, fulfilled its statutory mandate
to ensure that businesses owned by minorities and/or women would have a
meaningful opportunity to
[[Page 49071]]
participate in the competitive bidding process for, and in the
provision of, IVDS offerings. The Commission notes that these
provisions achieved a high degree of designated entity participation in
the initial IVDS auction. Of the 594 licenses, 195 (32.8%) were won by
bidders claiming minority-owned status, 282 (47.5%) by bidders claiming
woman-owned status, and 557 (93.8%) by bidders claiming small business
status. Since that time, however, the tax certificate program has been
discontinued by Congress, and, as discussed infra, the Commission is
reconsidering the eligibility criteria for bidding credits in the IVDS
context in light of the Supreme Court's recent decision in Adarand.
Accordingly, to the extent bidding credits are retained for IVDS, the
Commission will provide bidding credits for both licenses in each
service area. In view of the discontinuation of the tax certificate
program, the Commission believes that extending the bidding credit to
both licenses is appropriate to increase the participation
opportunities available for designated entities.
31. The Commission eliminates the tax certificate program available
to investors in women-and minority-owned firms. The Commission adopted
the tax certificate program in the Fourth Report and Order pursuant to
authority granted in 26 U.S.C. Sec. 1071. Congress has since repealed
Section 1071. As a result, the Commission is compelled to eliminate the
tax certificate provision in the IVDS rules.
32. Petitioner ITV asserts that the unjust enrichment provision for
the transfer of a license obtained using bidding credits should not
apply when the license is assigned or transferred at a loss. Petitioner
also asserts that, when the license is profitably assigned or
transferred, the forfeiture should be based on profits directly
attributable to the license, rather than on the government's cost in
providing the bidding credit.
33. The petition is denied on this issue. The Commission does not
believe that the unjust enrichment provisions should take into account
the profits or losses of particular businesses. The recapture
provisions are designed not only to repay the government for the cost
of the benefit conferred, but also to ensure that the special
provisions adopted for designated entities benefit the parties to whom
they were directed. Special treatment of designated entities is
intended to further the statutory policy of ensuring that these
entities have the opportunity to participate in spectrum-based
services. The repayment provisions the Commission adopted help to
promote the long-term holding of licenses by those parties benefitting
from bidding credits and installment payment provisions.
34. Petitioners RCA and USIN request that rural telephone companies
be provided all the special provisions extended to small businesses and
businesses owned by women or minorities. They assert that the
Communications Act requires that special provisions be provided to
rural telephone companies, and that, without bidding credits and other
special provisions, it is unlikely that IVDS offerings will be
available in rural areas. They further assert that it will take more
than build-out capability for rural telephone companies to provide IVDS
offerings. They maintain the financial ability is required to obtain
the license at auction in the first place.
35. The petitions are denied on this issue. As noted supra, the
Commission has discretion to tailor the use of special provisions as
necessary for each particular service. For IVDS, the Commission expects
that the cost of winning licenses and subsequently building-out systems
will be relatively modest, compared to the costs associated with other
services subject to auctions. Petitioner notes that the Fourth Report
and Order lacks discussion of the expected actual build-out costs of
IVDS systems and the economic characteristics of rural telephone
companies. While the Commission cannot yet determine with precision any
average cost figures for building and operating an IVDS system, it is
familiar with the technical and operational parameters of the service,
and believes its assumption is reasonable that build-out costs will be
modest relative to such costs for other auctionable services. In
addition, the Commission has previously assessed the economic
characteristics of rural telephone companies in this proceeding. As a
result, the Commission expects that rural telephone companies, even
without special provisions, will be able to compete effectively both
during the auction and in providing service.
36. With respect to bidding credits, as discussed infra, the
Commission is proposing to eliminate bidding credits for minority and
women-owned businesses and extend a 25 percent bidding credit to small
businesses only. A rural telephone company would be eligible for the
bidding credit to the extent that it also qualifies as a small
business. The Commission also affirms its decision not to provide
installment payments for those rural telephone companies that are not
also small businesses. The Commission continues to believe that
qualification for installment payments should be limited to businesses
that qualify as small.
37. Further, the Commission anticipates that rural areas will be
served despite the lack of special provisions for rural telephone
companies, because other companies can also serve these areas at
relatively low cost. While rural telephone companies possess
infrastructure that might place them initially at an advantage over
other applicants intending to serve rural areas, they do not, in the
IVDS context, require an additional advantage in the form of a separate
special provision before it is economically advantageous for them to
serve rural customers. Whether or not the Commission establishes
special provisions in this context is not why rural telephone companies
will elect to provide or not provide service to these rural areas.
Therefore, consistent with the Fourth Report and Order, the Commission
denies petitioners' request that it adopt special provisions
specifically for rural telephone companies.
38. Audits. Since the initial IVDS auction, the Commission has
revised the short-form application to place applicants on notice of the
Commission's authority to audit licensees and license applicants. See
Public Information Collection Requirement Submitted to Office of
Management and Budget for Review. The Commission believes the use of
audits and other enforcement tools is necessary to maintain the
integrity of the self-certification process it has used to the
designated entity provisions. The Commission has specified this
authority in its revised IVDS rules.
39. Long-Form Application. While IVDS applicants have previously
provided their financial information by filing Form 574 as their long-
form application, the Commission now requires that they use Form 600.
See Notice of Public Information Collections Submitted to OMB for
Review and Approval, 61 FR 3699 (February 1, 1996). While Form 600
contains certain instructions that IVDS applicants would be instructed
to ignore, it is a more complete form than the current Form 574.
40. Divestiture Provisions. In establishing rules for IVDS, the
Commission concluded that the best way to promote competition in the
IVDS marketplace is to make at least two licenses available in each
market. Notice of Proposed Rule Making, GEN Docket No. 91-2, 56 FR
10222 (March 11, 1991), 6 FCC Rcd 1368, 1371 (1991). The Commission's
rules therefore
[[Page 49072]]
prohibit an IVDS licensee from acquiring an interest in another IVDS
license in the same service area where it is licensed. 47 CFR
Sec. 95.813(b)(2). The Interactive Television Association (ITA)
requests that the Commission initiate a rule making proceeding to
eliminate this ownership restriction and permit one licensee to own
both licenses in a market. Petitioner ITA maintains that, in view of
several telephone and cable companies' interest in interactive
television, these rules are no longer needed to promote competition.
The Commission declines to grant this petition for rule making at this
time. The Commission observes that the interactive television
marketplace is in a relatively early state of competition. Moreover,
allowing a single entity to acquire both licenses in a service area
would limit the opportunity for other potential competitors to emerge.
Such a result is inconsistent with Congress' mandate to facilitate the
dissemination of licenses among a wide variety of applicants. 47 U.S.C.
309(j)(3)(B).
41. On its own motion, the Commission also clarifies that, where
unintended common attributable ownership interests exist between two
license winners in an IVDS service area, an applicant will be permitted
to divest itself of the prohibited common ownership within 90 days
after license grant. Assuming that the applicant is otherwise
qualified, the Commission will conditionally grant the license if the
winning applicant has submitted a signed statement with its long-form
applications stating its intent to divest. The licensee must then
certify its compliance when timely achieved. In addition, in the event
that a licensee seeks to bid on another license in its market at a
future auction, it may request a waiver of the common ownership
prohibition to bid on the other license. If the licensee then wins the
second license, the licensee must divest itself of its existing license
within 90 days of the grant of the second and is responsible for all
penalty or other amounts that result from these transactions. Any
licensee desiring such a waiver should submit its statement and request
as an attachment to its short-form application.
II. Procedural Matters
42. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.
Sec. 604, the Commission's final analysis for the Sixth Memorandum
Opinion and Order is as follows:
43. Need for and purpose of this action. As a result of new
statutory authority, the Commission may utilize competitive bidding
mechanisms in the granting of certain initial licenses. The Commission
published an Initial Regulatory Flexibility Analysis, see generally 5
U.S.C. Sec. 603, within the Notice of Proposed Rule Making in this
proceeding (at 8 FCC Rcd 7635, Appendix at 7666 (1993)), and published
Final Regulatory Flexibility Analyses within the Second Report and
Order and the Fourth Report and Order. As noted in these previous final
analyses, this proceeding will establish a system of competitive
bidding for choosing among certain applications for initial licenses,
and will carry out statutory mandates that certain designated entities,
including small entities, be afforded an opportunity to participate in
the competitive bidding process and in the provision of spectrum-based
services.
44. Summary of the issues raised by the public comments in response
to the Initial Regulatory Flexibility Analysis. As this is an Order on
Reconsideration, there is no initial regulatory flexibility analysis to
which petitioners are responding. There were no petitions which
discussed the final regulatory flexibility analysis in the underlying
order.
45. Significant alternatives considered. Although no comments were
received pertaining to IVDS, the Second Report and Order and Fourth
Report and Order addressed at length the general policy considerations
raised as a result of the Commission's new auction authority.
46. With respect to the Memorandum Opinion and Order reconsidering
the rules, a Final Regulatory Flexibility Analysis (FRFA), in
compliance with 5 U.S.C. Section 801, is provided as follows.
47. This action reconsiders rules previously adopted by the
Commission and is authorized under Section 405 of the Communications
Act, 47 U.S.C. Sec. 405. Because the action is not generated by a
Notice of Proposed Rule Making, there is no applicable Initial
Regulatory Flexibility Act analysis to which it responds. However, the
Commission's Final Regulatory Flexibility Analysis (FRFA) in this Order
conforms to the RFA, as amended by the Contract with America
Advancement Act of 1996 (CWAAA), Public Law No. 104-131, 110 Stat. 847
(1996).
A. Need for and Objective of the Rules
48. This Order adopts rule changes regarding the Commission's
auction of Interactive Video and Data Service (IVDS) licenses. The rule
changes are appropriate because laws have changed since the rules were
originally adopted which invalidate some of the provisions, because the
Supreme Court decision in Adarand Constructors, Inc. v. Pena, 115 S.Ct.
2097 (1995), has affected the Commission's decisions regarding the
level of legal scrutiny that must be met by some of its designated
entity provisions, and because petitions for reconsideration of earlier
orders have caused us to review the rules in a new light. The objective
of the Order is to bring the benefit of the Commission's experience
since the first IVDS auction to subsequent IVDS auctions and to make
opportunities available to small businesses to operate in the service.
The most significant changes being made are: to allow IVDS licenses to
be auctioned using a simultaneous multiple round auction methodology;
to eliminate the tax certificate program for licensees; and to extend
bidding credits to both licenses in each IVDS market.
B. Summary of Issues Raised by Public Comment on the Initial Regulatory
Flexibility Analysis
49. As this is an Order on Reconsideration, there is no initial
regulatory flexibility analysis to which petitioners are responding.
There were no petitions which discussed the final regulatory
flexibility analysis in the underlying order.
C. Projected Reporting, Recordkeeping and Other Compliance Requirements
of the Rules
Authorizing Use of Simultaneous Multiple Round Auctions
50. The Commission, on its own motion, is adopting a rule which
will permit IVDS licenses to be auctioned using a simultaneous multiple
round auction in addition to oral outcry auctions. The Commission is
recommending the use of an oral outcry auction for the RSA and re-
auctioned licenses, but it is trying to add flexibility in the event
that a simultaneous multiple round auction would be more appropriate at
some later point. A simultaneous multiple round auction will allow
remote access to bidding software, auction information, bid submission
and results. This will make it easier for small business operators to
participate in an auction without leaving their places of business.
Also, it will make information concerning the status of the auction
easier to access, which will reduce the administrative burden on
participants in the auction. There are no other reporting,
recordkeeping or compliance changes which would result from this rule
change.
[[Page 49073]]
Elimination of the Tax Certificate Program
51. The Commission had authority under Title 26 of the United
States Code, 26 U.S.C. Sec. 1071, to issue tax certificates to benefit
women and/or minority owned businesses. In 1995, the Congress repealed
section 1071. This rule is being eliminated to comply with the tax
code.
Bidding Credits Extended to Both Licenses in Each MSA
52. The Commission originally wrote its rules to permit a bidding
credit to be awarded to only one auction winner in each MSA.
Originally, a minority- or woman-owned business designated entity
auction winner who did not receive a bidding credit was free to
transfer its license and gain the benefits of a tax certificate. The
auction winner who received a bidding credit was subject to unjust
enrichment penalties if it transferred the license. The tax certificate
acted as the equivalent of a bidding credit, helping an auction winner
attract capital. If the auction winner's license was transferred to a
designated entity, or the winner is a designated entity, the tax
certificate would provide a financial incentive for transacting
business with the designated entity. In the absence of a tax
certificate program, small businesses with gross revenues under the
requisite levels will be eligible for a bidding credit on both licenses
in the MSA. The companies eligible for these bidding credits will have
to provide information to the Commission which establishes that they
meet the qualifications to receive the bidding credit. This reporting
requirement is necessary to avoid fraud on the public.
Long Form Application Changed to Form 600
53. Applicants were required to submit financial information
regarding their qualification to hold a license on an FCC Form 574. The
Commission has secured approval by the Office of Management and Budget
for the use of the FCC Form 600. This form collects more accurate and
complete financial information regarding applicants. As a result, it
helps the Commission ensure that the applicants for licenses are fully
qualified to hold licenses, reducing the amount of time that radio
spectrum would sit unused, if it were subject to legal dispute.
Winning Bidders May Receive Upfront Payment Refund
54. One petitioner, ITV, requested that when upfront money on
deposit exceeded the amount necessary for a winning bidder to make its
down payment the excess funds be refunded to the bidder. The Commission
granted the request to change its rules to alleviate one source of
financial constraints on small businesses. This will not result in any
changed reporting or recordkeeping. It could reduce the need to secure
additional interim financing.
55. All of these changes were made to encourage the participation
of designated entities in the auctions of IVDS licenses, as Section
309(j) of the Communications Act requires.
D. Description and Estimate of Small Entities Subject to the Rules
56. The proposed changes in the regulations would affect a number
of entities both large and small. The Commission was directed by the
Communications Act, 47 U.S.C. 309(j) to make provisions to ensure that
smaller businesses, and other designated entities, have an opportunity
to participate in the auction process. To fulfill this statutory
mandate, these proposed rules are designed to attract participation by
the small entities. The small businesses who will be subject to the
rules would be those which choose to operate interactive video and data
services, a class of wireless communications services with a wide
variety of uses. The services will generally be offered to consumers
who wish to subscribe to those services.
57. IVDS is a communications based service subject to regulation as
a wireless provider of pay television services under Standard
Industrial Classification 4841 (SIC 4841), which covers subscription
television services. The Small Business Administration (SBA) defines
small businesses in SIC 4841 as businesses with annual gross revenues
of $11 million or less. 13 CFR Sec. 121.201. In this, the Commission
proposes to extend special provisions to small businesses with annual
gross revenues of $15 million or less and additional benefits to very
small businesses with annual gross revenues of $3 million or less. The
Commission observes that this proposal is consistent with its approach
in other wireless services, see e.g., the 900 MHz specialized mobile
radio service, and is narrowly tailored to address the capital
requirements for IVDS. The Commission is soliciting SBA approval for
the small business definitions for this and other auctionable services.
58. The Commission estimate of the number of small business
entities subject to the rules begins with the Bureau of Census report
on businesses listed under SIC 4841, subscription television services.
The total number of entities under this category is 1,788. There are
1,463 companies in the 1992 Census Bureau report which are categorized
as small businesses providing cable and pay TV services. The Commission
knows that many of these businesses are cable and television service
businesses, rather than IVDS licensees. Therefore, the number of small
entities currently in this business which will be subject to the rules
will be less than 1,463.
59. The first IVDS auction resulted in 170 entities winning
licenses for 594 MSA licenses. Of the 594 licenses, 557 were won by
entities qualifying as a small business. For that auction, the
Commission defined a small business as an entity, together with its
affiliates, that has no more than a $6 million net worth and, after
federal income taxes (excluding any carry over losses), has no more
than $2 million in annual profits each year for the previous two years.
In the upcoming IVDS reauction of approximately 100 licenses in
metropolitan service area (MSA) markets and auction of 856 licenses in
rural service area (RSA) markets (two licenses per market), bidding
credits and installment payments are available to encourage
participation by small and very small businesses. The Commission cannot
estimate, however, the number of licenses that will be won by entities
qualifying as small or very small businesses under the proposed rules.
Given the success of small businesses in past IVDS auctions, and that
small businesses make up over 80 percent of firms in the subscription
television services industry, the Commission assumes for purposes of
this FRFA that all of the licenses may be awarded to small businesses,
which would be affected by the rules amendments. The Commission
estimates that some companies will win more than one license, as
happened in the earlier IVDS auction.
60. Applicants seeking to participate in the auction also will be
subject to these rule amendments. It is impossible to accurately
predict how many small businesses will apply to participate in the
auction. In the last IVDS auction, there were 289 qualified applicants.
The Commission does not anticipate that there will be significantly
more participants in the subsequent IVDS auction.
E. Steps Taken to Minimize the Burdens on Small Entities
61. The changes made in Sixth Memorandum Opinion and Order are
designed to minimize burdens on small businesses. The extension of an
[[Page 49074]]
additional bidding credit to the second license in each market will
assist businesses owned by women and minorities. Most of the businesses
owned by women and minorities which have participated in the FCC's
auctions are small businesses which will benefit from this rule. This
rule change will benefit small businesses owned by women and minorities
by doubling the number of bidding credits available to them.
62. Refunds of excess upfront payments on deposit will benefit
small businesses. Smaller businesses often have more difficulty in
raising capital. The rules permitted the retention of any excess
upfront payments on deposit with the FCC to apply to down payments or
to bid withdrawal payments. 47 CFR Sec. 1.2106. While an upfront
payment is an important part of ensuring that only serious bidders
participate in the Commission's auction process, it is also important
that small businesses have an opportunity to put their more limited
funds to the best possible use. By assuring the return of excess funds
after the first down payment and any withdrawal penalties are paid,
small businesses will have those funds to use as they wish.
63. By adding an auction methodology, the Commission adds
flexibility to its auction process. One advantage of simultaneous
multiple round auctions is that they can make it possible for bidders
to participate from their own places of business. That is an advantage
under some auction circumstances. The Commission has chosen to use an
oral outcry auction for the RSA license auction, and for the first MSA
licenses which will be re-auctioned, because an oral outcry auction
will be most efficient.
F. Significant Alternatives Considered and Rejected
Authorizing Use of Simultaneous Multiple Round Auctions
64. The Commission does not currently have plans to use a
simultaneous multiple round auction for this service. The rule is being
added should it become necessary at a later time to re-auction licenses
which have developed a higher degree of interdependence. Because this
rule adds administrative expediency, which will speed the issuance of
licenses, the Commission have chosen to add the option of an additional
auction methodology for this service. The Commission is acting to
minimize delays in the close of an auction by adding flexibility to its
stopping and activity rules. It determined that the alternative of
leaving the rules unchanged could delay the auction process at some
time in the future.
Elimination of the Tax Certificate Program
65. All small businesses which were owned by members of minority
groups or women who choose to participate in the auction for IVDS
licenses will be subject to this rule change. Due to the repeal of the
tax code provision, the Commission has no choice but to eliminate this
provision which benefitted these small businesses.
Bidding Credits Extended on Both Licenses in Each MSA
66. This rule will apply to any small businesses owned by women or
minorities that eligible for bidding credits which participate in the
re-auction of MSA licenses. The Commission considered leaving the rules
unchanged, but in the absence of the tax certificate program, the rules
may have unfairly disadvantaged some minority or women owned small
businesses while offering greater advantages to some of their
competitors. Therefore, in eliminating the tax certificate program, the
Commission felt it necessary to extend the bidding credit to both
licenses in each market. The Commission considered the extension of
bidding credits to rural telephone companies. The Commission is not
required to make all benefits available to all designated entities.
Consequently, in weighing the competing public policy concerns with
respect to bidding credits, the Commission chose not to extend bidding
credits to rural telephone companies.
Long-Form Application Changed to Form 600
67. This rule will enable the Commission to more effectively
evaluate applications filed for IVDS licenses. The Commission did not
consider alternatives because in adapting its processes to auctions,
the Commission has concentrated on reducing the number of different
forms and steps that auction participants will have to master to
participate in the process. Because all other auctionable services have
shifted to the Form 600, IVDS auction participants will be able to use
information they may have filed for other auctionable services in any
future IVDS auctions as well.
Winning Bidders May Receive Upfront Payment Refund
68. The rules previously did not make clear that an auction winner
could receive a refund of any excess monies on deposit with the FCC,
after payment of the first down payment and any penalties due. This
rule change was made to ensure that businesses which win IVDS licenses
have as much capital available to build systems and serve the public as
possible. Because the rule change results in returning money to
businesses, the Commission did not consider alternatives in making this
change.
G. Commission's Outreach Efforts to Learn of and Respond to the Views
of Small Entities Pursuant to 5 U.S.C. Sec. 609
69. The Commission did not seek specific comments regarding small
entities' views of the rules being changed because the petitions and
comments were filed in this proceeding prior to the enactment of the
1996 Regulatory Flexibility Act Amendments. However, the Commission, in
making changes to the rules, has sought to alleviate burdens on small
businesses. When Congress authorized the FCC to use auctions, it
instructed the FCC to make provisions for designated entities,
including small businesses, when it designed competitive bidding
mechanisms.
H. Report to Congress
70. The Commission shall send a copy of this Final Regulatory
Flexibility Analysis, along with this Memorandum Opinion and Order, in
a report to Congress pursuant to the Small Business Regulatory
Enforcement Fairness Act of 1996, 4 U.S.C. Sec. 801(a)(1)(A). A copy of
this FRFA will also be published in the Federal Register.
71. Authority for issuance of this Sixth Memorandum Opinion and
Order is contained in Sections 4(i), 303(r), and 309(j) of the
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 303(r)
and 309(j).
72. Accordingly, IT IS ORDERED that, pursuant to the authority of
Sections 4(i), 303(r), and 309(j) of the Communications Act of 1934, as
amended, 47 U.S.C. Secs. 154(i), 303(r), and 309(j), this Sixth
Memorandum Opinion and Order is adopted, and Parts 1 and 95 of the
Commission's Rules are AMENDED as set forth below.
73. It is further ordered that the rule changes made herein will
become effective November 18, 1996. It is further ordered that, as
described above, the petition for reconsideration filed by ITV is
granted in part to the extent described above and is denied in all
other respects, the petitions for reconsideration filed by Phase One,
RCA, and USIN are denied, and the
[[Page 49075]]
petition for rule making filed by ITA is denied.
List of Subjects
47 CFR Part 1
Administrative practice and procedure, Reporting and recordkeeping
requirements, Telecommunications.
47 CFR Part 95
Communications equipment, Radio.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Parts 1 and 95 of title 47 of the Code of Federal Regulations are
amended as follows:
PART 1--PRACTICE AND PROCEDURE
1. The authority citation for part 1 continues to read as follows:
Authority: 47 U.S.C. 151, 154, 303, and 309(j) unless otherwise
noted.
2. Section 1.2107 is amended by revising paragraph (c) to read as
follows:
Sec. 1.2107 Submission of down payment and filing of long-form
applications.
* * * * *
(c) A high bidder that meets its down payment obligations in a
timely manner must, within ten (10) business days after being notified
that it is a high bidder, submit an additional application (the ``long-
form application'') pursuant to the rules governing the service in
which the applicant is the high bidder (unless it has already submitted
such an application, as contemplated by Sec. 1.2105(a)(1)(b). For
example, if the applicant is high bidder for a license in the
Interactive Video Data Service (see 47 CFR part 95, subpart F), the
long-form application will be submitted on FCC Form 600 in accordance
with Sec. 95.815 of this chapter. Notwithstanding any other provision
in title 47 of the Code of Federal Regulations to the contrary, high
bidders need not submit an additional application filing fee with their
long-form applications. Notwithstanding any other provision in title 47
of the Code of Federal Regulations to the contrary, the high bidder's
long-form application must be mailed or otherwise delivered to: Office
of the Secretary, Federal Communications Commission, Attention: Auction
Application Processing Section, 1919 M Street, NW., Room 222,
Washington, DC 20554. An applicant that fails to submit the required
long-form application as required under this subsection, and fails to
establish good cause for any late-filed submission, shall be deemed to
have defaulted and will be subject to the penalties set forth in
Sec. 1.2104.
* * * * *
PART 95--PERSONAL RADIO SERVICES
1. The Authority Citation for part 95 continues to read as follows.
Authority: Secs. 4, 303, 48 Stat. 1066, 1082, as amended; 47
U.S.C. 154, 303.
2. Section 95.815 is amended by revising paragraphs (b), (d)(2),
and (f)(3) to read as follows:
Sec. 95. 815 License application.
* * * * *
(b) Each application for an IVDS system license must be made on a
separate FCC Form 600, and must be submitted to the Federal
Communications Commission, Interactive Video and Data Service, P.O. Box
358365, Pittsburgh, PA 15251-5365. Each application for a CTS license
where the CTS antenna exceeds 6.1m (20 feet) (see Sec. 95.811(b)) must
be made on a separate FCC Form 574, and must be submitted to the
address set forth in Sec. 1.1102 of this chapter.
* * * * *
(d) * * *
(2) A completed application (FCC Form 600).
* * * * *
(f) * * *
(3) A separate application (FCC Form 600) for each CTS that is
being added or modified.
* * * * *
3. Section 95.816 is amended by revising paragraphs (c)(1), (c)(2),
(c)(4), (c)(6), and (d)(1); removing paragraph (d)(2); and
redesignating paragraph (d)(3) as (d)(2) and revising it; and adding
new paragraph (d)(3) to read as follows:
Sec. 95.816 Competitive bidding proceedings.
* * * * *
(c) * * *
(1) Competitive bidding design options and mechanisms. The Wireless
Telecommunications Bureau will select competitive bidding design(s) and
mechanisms in accordance with Secs. 1.2103 and 1.2104 of this chapter.
If simultaneous multiple round bidding is used, the Wireless
Telecommunications Bureau has the discretion to vary the duration of
the bidding rounds or the interval at which bids are accepted at any
time before or during the course of the auction.
(2) Forms.
(i) Applicants must submit short-form applications (FCC Form 175)
as specified in Commission Public Notices. Minor deficiencies may be
corrected prior to the auction. Major modifications such as changes in
ownership, failure to sign an application or failure to submit required
certifications will result in the dismissal of the application. See
1.2105(a) and (b) of this chapter.
(ii) Applicants must submit a long-form application (FCC Form 600)
within ten (10) business days after being notified that it is the
winning bidder for a license. See 1.2107(c) and (d) of this chapter.
* * * * *
(4) Down payments. See Sec. 1.2107(b) of this chapter.
* * * * *
(6) Withdrawal, default or disqualification. See Secs. 1.2104(g)
and 1.2109 of this chapter.
* * * * *
(d) * * *
(1) Bidding credits. A winning bidder that qualifies as a business
owned by women and/or minorities may use a bidding credit of twenty
five (25) percent to lower the cost of its winning bid.
(2) Installment payments. Each licensee that qualifies as a small
business may pay the remaining 80 percent of the net auction price in
quarterly installment payments pursuant to Sec. 1.2110(e) of this
chapter. Licensees who qualify for installment payments are entitled to
pay their winning bid amount in installments over the term of the
license, with interest charges to be fixed at the time of licensing at
a rate equal to the rate for five-year U.S. Treasury obligations.
Payments shall include interest only for the first two years and
payments of interest and principal amortized over the remaining three
years of the license term. A license issued to an eligible small
business that elects installment payments shall be conditioned on the
full and timely performance of the license holder's quarterly payments.
(3) Audits.
(i) Applicants and licensees claiming eligibility under this
section shall be subject to audits by the Commission, using in-house
and contract resources. Selection for audit may be random, on
information, or on the basis of other factors.
(ii) Consent to such audits is part of the certification included
in the short-form application (Form 175). Such consent shall include
consent to the audit of the applicant's or licensee's books, documents,
and other material (including accounting procedures and practices)
regardless of form or type,
[[Page 49076]]
sufficient to confirm that such applicant's or licensee's
representations are, and remain, accurate. Such consent shall include
inspection at all reasonable times of the facilities, or parts thereof,
engaged in providing and transacting business, or keeping records
regarding licensed IVDS and shall also include consent to the interview
of principals, employees, customers and suppliers of the applicant or
licensee.
* * * * *
[FR Doc. 96-23939 Filed 9-17-96; 8:45 am]
BILLING CODE 6712-01-P
