[Federal Register: June 26, 2002 (Volume 67, Number 123)]
[Notices]               
[Page 43118-43123]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn02-72]                         

=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-02-46-A (Auction No. 46); DA 02-1257]

 
1392-1395 and 1432-1435 MHz, 1390-1392 MHz, 1670-1675 MHz, and 
2385-2390 MHz Bands Auction Scheduled for September 18, 2002; Comment 
Sought on Reserve Prices or Minimum Opening Bids and Other Auction 
Procedural Issues

AGENCY: Federal Communications Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This document announces the auction of licenses in the paired 
1392-1395 and 1432-1435 MHz bands and in the unpaired 1390-1392 MHz, 
1670-1675 MHz, and the 2385-2390 MHz bands (``Auction No. 46'') 
scheduled to commence on September 18, 2002. Auction No. 46 will 
include 66 licenses. This document also seeks comment on reserve prices 
or minimum opening bids and other auction procedural issues.

DATES: Comments are due on or before June 6, 2002, and reply comments 
are due on or before June 13, 2002.

ADDRESSES: Comments and reply comments must be sent by electronic mail 
to the following address: auction46@fcc.gov. The electronic mail 
containing the comments or reply comments must include a subject or 
caption referring to Auction No. 46 Comments. The Bureau requests that 
parties format any attachments to electronic mail as Adobe 
Acrobat (pdf) or Microsoft Word documents. 
Copies of comments and reply comments will be available for public 
inspection during regular business hours in the FCC Public Reference 
Room, Room CY-A257, 445 12th Street, SW, Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: For legal questions: David Hu (202) 
418-0660. For general auction questions: Lyle Ishida (202) 418-0660 or 
Lisa Stover (717) 338-2888. For service rule questions: Brian Marenco 
(202) 418-0838.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 46 
Comment Public Notice released May 24, 2002. The complete text of the 
Auction No. 46 Comment Public Notice, including attachments, is 
available for public inspection and copying during regular business 
hours at the FCC Reference Information Center, Portals II, 445 12th 
Street, SW., Room CY-A257, Washington, DC, 20554. The Auction No. 46 
Comment Public Notice may also be purchased from the Commission's 
duplicating contractor, Qualex International, Portals II, 445 12th 
Street, SW., Room CY-B402, Washington, DC, 20554, telephone 202-863-
2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.
    1. The Auction No. 46 Comment Public Notice announces the auction 
of licenses in the paired 1392-1395 and 1432-1435 MHz bands and in the 
unpaired 1390-1392 MHz, 1670-1675 MHz, and the 2385-2390 MHz bands 
(``Auction No. 46'') scheduled to commence on September 18, 2002. 
Auction No. 46 will include 66 licenses. In Auction No. 46, one 2-
megahertz block of unpaired spectrum in the 1390-1392 MHz band will be 
offered in each of 52 geographic areas known as Major Economic Areas 
(MEAs). Additionally,

[[Page 43119]]

two 3-megahertz blocks, each consisting of a pair of 1.5 megahertz 
segments in the 1392-1395 MHz and 1432-1435 MHz bands, will be offered 
in each of six regions known as Economic Area Groupings (EAGs). 
Finally, two 5-megahertz blocks of contiguous unpaired spectrum, one in 
the 1670-1675 MHz band, and one in the 2385-2390 MHz band, will be 
offered on a nationwide basis. A complete list of licenses available 
for Auction No. 46 is included as Attachment A of the Auction No. 46 
Comment Public Notice.
    2. The following table describes the licenses that will be 
auctioned:

----------------------------------------------------------------------------------------------------------------
                                                                                  Geographic area     Number of
    Block           Frequencies           Bandwidt              Pairing                type            licenses
----------------------------------------------------------------------------------------------------------------
A............  1392-1393.5 and 1432- 3 MHz.............  2 x 1.5 MHz.........  EAG.................            6
                1433.5 MHz.
B............  1393.5-1395 and       3 MHz.............  2 x 1.5 MHz.........  EAG.................            6
                1433.5-1435 MHz.
               1390-1392 MHz.......  2 MHz.............  unpaired............  MEA.................           52
               1670-1675 MHz.......  5 MHz.............  unpaired............  Nationwide..........            1
               2385-2390 MHz.......  5 MHz.............  unpaired............  Nationwide..........            1
----------------------------------------------------------------------------------------------------------------

    3. The Commission recently adopted service rules for the paired 
1392-1395 and 1432-1435 MHz bands and the unpaired 1390-1392 MHz, 1670-
1675 MHz, and 2385-2390 MHz bands. Of the five frequency bands included 
in Auction No. 46, only the 1432-1435 MHz and 2385-2390 MHz bands are 
subject to the reimbursement provisions of the National 
Telecommunications and Information Administration Organization Act 
(NTIA Organization Act), as added by the Strom Thurmond National 
Defense Authorization Act for Fiscal Year 1999 (NDAA-99). Section 
113(g) of the NTIA Organization Act requires certain non-Government 
licensees to reimburse incumbent Federal entities for the relocation 
costs such Federal entities incur. It also requires the Federal entity 
to notify the National Telecommunications and Information 
Administration (NTIA) prior to auction of the ``marginal costs 
anticipated to be associated with such relocation or with modifications 
necessary to accommodate prospective licensees,'' and requires NTIA to 
provide the Commission with that information prior to auction. The 
NDAA-99 also directs the NTIA and the Commission to develop 
reimbursement procedures. The Commission's implementation of NDAA-99 is 
heavily dependent on reimbursement procedures being promulgated by the 
NTIA, which have not yet been released. Following the release of such 
reimbursement procedures, in a separate proceeding the Commission will 
adopt any additional rules or procedures necessary to supplement NTIA's 
reimbursement procedures.
    4. Licensees will be required to file an application through ULS to 
request FAS coordination of any fixed station located within the 
protection radii of a co-primary Government incumbent or any mobile 
unit which would operate within the protection radii of the co-primary 
Government incumbent. FAS coordination will be required prior to 
activation of any fixed or mobile station within the co-primary 
Government incumbent's protection radii. Additionally, the licensee in 
the 2385-2390 MHz band will be required to coordinate fixed and mobile 
operations within the protection radii of non-Government aeronautical 
flight test sites with the Aerospace and Flight Test Radio Coordinating 
Council (AFTRCC) prior to filing an application for an individual 
station license with the Commission. An individual station license will 
be issued for each coordinated operation.
    5. The Balanced Budget Act of 1997 requires the Commission to 
``ensure that, in the scheduling of any competitive bidding under this 
subsection, an adequate period is allowed * * * before issuance of 
bidding rules, to permit notice and comment on proposed auction 
procedures * * *.'' Consistent with the provisions of the Balanced 
Budget Act and to ensure that potential bidders have adequate time to 
familiarize themselves with the specific rules that will govern the 
day-to-day conduct of an auction, the Commission directed the Bureau, 
under its existing delegated authority, to seek comment on a variety of 
auction-specific procedures prior to the start of each auction. The 
Commission therefore seeks comment on the following issues relating to 
Auction No. 46.

I. Auction Structure

A. Simultaneous Multiple Round (SMR) Auction Design

    6. The Commission proposes to award all licenses included in 
Auction No. 46 in a single, simultaneous multiple-round auction. As 
described further, this methodology offers every license for bid at the 
same time with successive bidding rounds in which bidders may place 
bids. The Commission seeks comment on this proposal.

B. Upfront Payments and Initial Maximum Eligibility

    7. The Bureau has delegated authority and discretion to determine 
an appropriate upfront payment for each license being auctioned, taking 
into account such factors as the population in each geographic license 
area, and the value of similar spectrum. As described further, the 
upfront payment is a refundable deposit made by each bidder to 
establish eligibility to bid on licenses. Upfront payments related to 
the specific spectrum subject to auction protect against frivolous or 
insincere bidding and provide the Commission with a source of funds 
from which to collect payments owed at the close of the auction.
    8. With these guidelines in mind for Auction No. 46, the Bureau 
proposes that different formulae be utilized in setting upfront 
payments for the Nationwide licenses than those used for the MEA and 
EAG licenses. The Bureau anticipates that values between nationwide and 
regional licenses will vary, and, accordingly propose the following 
license-by-license formulae for calculating upfront payments:
    For MEA and EAG Licenses:
    $0.005 * MHz * License Area Population with a minimum of $1,000 per 
license.
    For Nationwide Licenses:
    $0.01 * MHz * License Area Population with a minimum of $1,000 per 
license.
    9. Accordingly, the Bureau lists all licenses, including the 
related license area population and proposed upfront payment for each, 
in Attachment A of the Auction No. 46 Comment Public Notice. The 
Commission seeks comment on this proposal.
    10. The Bureau further proposes that the amount of the upfront 
payment submitted by a bidder will determine

[[Page 43120]]

the number of bidding units on which a bidder may place bids. This 
limit is a bidder's ``maximum initial eligibility.'' Each license is 
assigned a specific number of bidding units equal to the upfront 
payment listed in Attachment A of the Auction No. 46 Comment Public 
Notice, on a bidding unit per dollar basis. This number does not change 
as prices rise during the auction. A bidder's upfront payment is not 
attributed to specific licenses. Rather, a bidder may place bids on any 
combination of licenses as long as the total number of bidding units 
associated with those licenses does not exceed its maximum initial 
eligibility. Eligibility cannot be increased during the auction. Thus, 
in calculating its upfront payment amount, an applicant must determine 
the maximum number of bidding units it may wish to bid on (or hold high 
bids on) in any single round, and submit an upfront payment covering 
that number of bidding units. The Commission seeks comment on this 
proposal.

C. Activity Rules

    11. In order to ensure that the auction closes within a reasonable 
period of time, an activity rule requires bidders to bid actively on a 
percentage of their maximum bidding eligibility during each round of 
the auction rather than wait until the end to participate. A bidder 
that does not satisfy the activity rule will either lose bidding 
eligibility in the next round or must use an activity rule waiver (if 
any remain).
    12. The Bureau proposes to divide the auction into three stages, 
each characterized by an increased activity requirement. The auction 
will start in Stage One. The Bureau proposes that the auction generally 
will 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 
approximately twenty percent or below for three consecutive rounds of 
bidding. However, the Bureau further proposes that it retain the 
discretion to change stages unilaterally by announcement during the 
auction. In exercising this discretion, the Bureau will consider a 
variety of measures of bidder activity, including, but not limited to, 
the auction activity level, the percentage 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 seeks comment on these 
proposals.
    13. For Auction No. 46, the Bureau proposes the following activity 
requirements:
    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 representing 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/forty-ninths (\50/49\).
    14. The Bureau seeks comment on these proposals. If commenters 
believe that these activity rules should be changed, they should 
explain their reasoning and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with analyses and suggested alternative activity rules.

D. Activity Rule Waivers and Reducing Eligibility

    15. 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. Activity 
waivers are principally a mechanism for auction participants to avoid 
the loss of auction eligibility in the event that exigent circumstances 
prevent them from placing a bid in a particular round.
    16. The FCC Automated 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 bidding period 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.
    17. A bidder with insufficient activity may wish to reduce its 
bidding eligibility rather than use an activity rule waiver. If so, the 
bidder must affirmatively override the automatic waiver mechanism 
during the bidding period by using the reduce eligibility function in 
the bidding system. In this case, the bidder's eligibility is 
permanently reduced to bring the bidder into compliance with the 
activity rules as described. Once eligibility has been reduced, a 
bidder will not be permitted to regain its lost bidding eligibility.
    18. 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 
system) during a bidding period in which no bids or withdrawals 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.
    19. The Bureau proposes that each bidder be provided with five 
activity rule waivers that may be used at the bidder's discretion 
during the course of the auction as set forth. The Bureau seeks comment 
on this proposal.

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

    20. For Auction No. 46, the Bureau proposes that, by public notice 
or by announcement during the auction, it 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 efficient 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. The Bureau seeks comment on this proposal.

[[Page 43121]]

I. Bidding Procedures

A. Round Structure

    21. The Commission will conduct Auction No. 46 over the Internet. 
Telephonic Bidding will also be available. As a contingency, the FCC 
Wide Area Network, which requires access to a 900 number telephone 
service, will be available as well. Full information regarding how to 
establish such a connection, and related charges, will be provided in 
the public notice announcing details of auction procedures.
    22. The initial bidding schedule will be announced in a public 
notice to be released at least one week before the start of the 
auction, and will be included in the registration mailings. The 
simultaneous multiple round format will consist of sequential bidding 
rounds, each followed by the release of round results. Details 
regarding the location and format of round results will be included in 
the same public notice.
    23. The Bureau 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 Bureau 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. The Bureau 
seeks comment on this proposal.

B. Reserve Price or Minimum Opening Bid

    24. The Balanced Budget Act calls upon the Commission to prescribe 
methods for establishing a reasonable reserve price or a minimum 
opening bid when FCC licenses are subject to auction unless the 
Commission determines that a reserve price or minimum opening bid is 
not in the public interest. Consistent with this mandate, the 
Commission has directed the Bureau to seek comment on the use of a 
minimum opening bid and/or reserve price prior to the start of each 
auction.
    25. Normally, a reserve price is an absolute minimum price below 
which an item will not be sold in a given auction. Reserve prices can 
be either published or unpublished. A minimum opening bid, on the other 
hand, is the minimum bid price set at the beginning of the auction 
below which no bids are accepted. It is generally used to accelerate 
the competitive bidding process. Also, the auctioneer often has the 
discretion to lower the minimum opening bid amount later in the 
auction. It is also possible for the minimum opening bid and the 
reserve price to be the same amount.
    26. In light of the Balanced Budget Act's requirements, the Bureau 
proposes to establish minimum opening bids for Auction No. 46. The 
Bureau believes a minimum opening bid, which has been utilized in other 
auctions, is an effective bidding tool.
    27. For Auction No. 46, the Commission proposes that different 
formulae be utilized in setting minimum opening bids for Nationwide 
licenses that those used for MEA and EAG licenses. Specifically, the 
following license-by-license formulae for calculating minimum opening 
bids are as follows:
    For MEA and EAG Licenses: $0.005 * MHz * License Area Population 
with a minimum of $1,000 per license.
    For Nationwide Licenses: $0.01 * MHz * License Area Population with 
a minimum of $1,000 per license.
    28. The specific minimum opening bid for each license available in 
Auction No. 46 is set forth in Attachment A of the Auction No. 46 
Comment Public Notice. Comment is sought on this proposal.
    29. If commenters believe that these minimum opening bids will 
result in substantial numbers of unsold licenses, or are not reasonable 
amounts, or should instead operate as reserve prices, they should 
explain why this is so, and comment on the desirability of an 
alternative approach. Commenters are advised to support their claims 
with valuation analyses and suggested reserve prices or minimum opening 
bid levels or formulas. In establishing the minimum opening bids, the 
Bureau particularly seeks comment on such factors as the amount of 
spectrum being auctioned, levels of incumbency, the availability of 
technology to provide service, the size of the geographic service 
areas, issues of interference with other spectrum bands and any other 
relevant factors that could reasonably have an impact on valuation of 
the spectrum in the 1392-1395 and 1432-1435 MHz, 1390-1392 MHz, 1670-
1675 MHz, and 2385-2390 MHz bands. Alternatively, comment is sought on 
whether, consistent with the Balanced Budget Act, the public interest 
would be served by having no minimum opening bid or reserve price.

C. Minimum Acceptable Bids and Bid Increments

    30. In each round, eligible bidders will be able to place bids on a 
given license in any of nine different amounts. The Automated Auction 
System interface will list the nine acceptable bid amounts for each 
license.
    31. Once there is a standing high bid on a license, the Automated 
Auction System will calculate a minimum acceptable bid for that license 
for the following round, as described. The difference between the 
minimum acceptable bid and the standing high bid for each license will 
define the bid increment. The nine acceptable bid amounts for each 
license consist of the minimum acceptable bid (the standing high bid 
plus one bid increment) and additional amounts calculated using 
multiple bid increments (i.e., the second bid amount equals the 
standing high bid plus two times the bid increment, the third bid 
amount equals the standing high bid plus three times the bid increment, 
etc.).
    32. Until a bid has been placed on a license, the minimum 
acceptable bid for that license will be equal to its minimum opening 
bid. The additional bid amounts for licenses that have not yet received 
a bid will be calculated differently, as explained.
    33. For Auction No. 46, the Bureau proposes to calculate minimum 
acceptable bids by using a smoothing methodology, as it has done in 
several other auctions. The smoothing formula calculates minimum 
acceptable bids by first calculating a percentage increment, not to be 
confused with the bid increment. The percentage increment for each 
license is based on bidding activity on that license in all prior 
rounds; therefore, a license which has received many bids throughout 
the auction will have a higher percentage increment than a license 
which has received few bids.
    34. The calculation of the percentage increment used to determine 
the minimum acceptable bids for each license for the next round is made 
at the end of each round. The computation is based on an activity 
index, which is a weighted average of the number of bids in that round 
and the activity index from the prior round. The activity index at the 
start of the auction (round 0) will be set at 0. The current activity 
index is equal to a weighting factor times the number of new bids 
received on the license in that round plus one minus the weighting 
factor times the activity index from the prior round. The percentage 
increment is then calculated as the smaller of (a) a minimum percentage 
increment multiplied by one plus the activity index and (b) a specified 
maximum percentage increment. The Commission will initially set the 
weighting factor at 0.5, the minimum percentage increment at 0.1 (10%), 
and the maximum percentage increment at 0.2 (20%). Hence, at these 
initial settings, the percentage increment will

[[Page 43122]]

fluctuate between 10% and 20% depending upon the level of activity for 
the license.
Equations
Ai = (C * Bi) + ( (1-C) * Ai-1)
Ii+1 = smaller of ( (1 + Ai) * N) and M
Xi+1 = Ii+1 * Yi

where,

Ai = activity index for the current round (round i)
C = activity weight factor
Bi = number of bids in the current round (round i)
Ai-1 = activity index from previous round (round i-1), 
A0 is 0
Ii+1 = percentage increment for the next round (round i+1)
N = minimum percentage increment or percentage increment floor
M = maximum percentage increment or percentage increment ceiling
Xi+1 = dollar amount associated with the percentage 
increment
Yi = high bid from the current round

    35. Under the smoothing methodology, once a bid has been received 
on a license, the minimum acceptable bid for that license in the 
following round will be the high bid from the current round plus the 
dollar amount associated with the percentage increment, with the result 
rounded to the nearest thousand if it is over ten thousand or to the 
nearest hundred if it is under ten thousand.

Examples

    License 1
    C = 0.5, N = 0.1, M = 0.2
    Round 1 (2 new bids, high bid = $1,000,000)
    i. Calculation of percentage increment for round 2 using the 
smoothing formula:
    A1 = (0.5 * 2) + (0.5 * 0) = 1
    I2 = The smaller of ((1 + 1) * 0.1) = 0.2 or 0.2 (the 
maximum percentage increment)
    ii. Calculation of dollar amount associated with the percentage 
increment for round 2 (using I2):
    X2 = 0.2 * $1,000,000 = $200,000
    iii. Minimum acceptable bid for round 2 = $1,200,000
    Round 2 (3 new bids, high bid = $2,000,000)
    i. Calculation of percentage increment for round 3 using the 
smoothing formula:
    A2 = (0.5 * 3) + (0.5 * 1) = 2
    I3 = The smaller of ((1 + 2) * 0.1) = 0.3 or 0.2 (the 
maximum percentage increment)
    ii. Calculation of dollar amount associated with the percentage 
increment for round 3 (using I3):
    X3 = 0.2 * $2,000,000 = $400,000
    iii. Minimum acceptable bid for round 3 = $2,400,000
    Round 3 (1 new bid, high bid = $2,400,000)
    i. Calculation of percentage increment for round 4 using the 
smoothing formula:
    A3 = (0.5 * 1) + (0.5 * 2) = 1.5
    I4 = The smaller of ((1 + 1.5) * 0.1) = 0.25 or 0.2 
(the maximum percentage increment)
    ii. Calculation of dollar amount associated with the percentage 
increment for round 4 (using I4):
    X4 = 0.2 * $2,400,000 = $480,000
    iii. Minimum acceptable bid for round 4 = $2,880,000

    36. As stated, until a bid has been placed on a license, the 
minimum acceptable bid for that license will be equal to its minimum 
opening bid. The additional bid amounts are calculated using the 
difference between the minimum opening bid times one plus the minimum 
percentage increment, rounded as described, and the minimum opening 
bid. That is, I = (minimum opening bid)(1 + N){rounded}-(minimum 
opening bid). Therefore, when N equals 0.1, the first additional bid 
amount will be approximately ten percent higher than the minimum 
opening bid; the second, twenty percent; the third, thirty percent; 
etc.
    37. In the case of a license for which the standing high bid has 
been withdrawn, the minimum acceptable bid will equal the second 
highest bid received for the license. The additional bid amounts are 
calculated using the difference between the second highest bid times 
one plus the minimum percentage increment, rounded, and the second 
highest bid.
    38. The Bureau retains the discretion to change the minimum 
acceptable bids and bid increments if it determines that circumstances 
so dictate. The Bureau will do so by announcement in the Automated 
Auction System. The Bureau seeks comment on these proposals.

D. High Bids

    39. At the end of a bidding round, the Automated Auctions System 
will determine the high bid on each license. In the event of identical 
high bids on a license in a given round (i.e., tied bids), the Bureau 
proposes to use a random number generator to select a high bid from 
among the tied bids. Remaining bidders will be able to submit higher 
bids in subsequent rounds.
    40. A high bid will remain the high bid until there is a higher bid 
on the same license at the close of a subsequent round. A high bid from 
a previous round is sometimes referred to as a ``standing high bid.'' 
Bidders are reminded that standing high bids confer activity credit.

E. Information Regarding Bid Withdrawal and Bid Removal

    41. For Auction No. 46, the Bureau proposes the following bid 
removal and bid withdrawal procedures. Before the close of a bidding 
period, a bidder has the option of removing any bid placed in that 
round. By using the remove selected bids function in the bidding 
system, 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 a withdrawal payment. Once a round closes, a bidder may no 
longer remove a bid.
    42. A high bidder may withdraw its standing high bids from previous 
rounds using the withdraw function in the bidding system. A high bidder 
that withdraws its standing high bid from a previous round is subject 
to the bid withdrawal payment provisions of the Commission's rules. The 
Bureau seeks comment on these bid removal and bid withdrawal 
procedures.
    43. In the Part 1 Third Report and Order, 63 FR 770 (January 7, 
1998), the Commission explained that allowing bid withdrawals 
facilitates efficient aggregation of licenses and the pursuit of 
efficient backup strategies as information becomes available during the 
course of an auction. The Commission noted, however, that, in some 
instances, bidders may seek to withdraw bids for improper reasons. The 
Bureau, therefore, has discretion, in managing the auction, to limit 
the number of withdrawals to prevent any bidding abuses. The Commission 
stated that the Bureau should assertively exercise its discretion, 
consider limiting the number of rounds in which bidders may withdraw 
bids, and prevent bidders from bidding on a particular market if the 
Bureau finds that a bidder is abusing the Commission's bid withdrawal 
procedures.
    44. Applying this reasoning, the Bureau proposes to limit each 
bidder in Auction No. 46 to withdrawing standing high bids in no more 
than two rounds during the course of the auction. To permit a bidder to 
withdraw bids in more than two rounds would likely encourage insincere 
bidding or the use of withdrawals for anti-competitive purposes. The 
two rounds in which withdrawals are utilized will be at the bidder's 
discretion; withdrawals otherwise must be in accordance with the 
Commission's rules. There is no limit on the number of standing high 
bids that may be withdrawn in either of the rounds in which withdrawals 
are utilized. Withdrawals will remain subject to the bid withdrawal 
payment provisions specified in the Commission's rules. The Bureau 
seeks comment on this proposal.

F. Stopping Rule

    45. The Bureau has discretion ``to establish stopping rules before 
or during multiple round auctions in order to

[[Page 43123]]

terminate the auction within a reasonable time.'' For Auction No. 46, 
the Bureau proposes to employ a simultaneous stopping rule approach. A 
simultaneous stopping rule means that all licenses remain open until 
bidding closes simultaneously on all licenses.
    46. Bidding will close simultaneously on all licenses after the 
first round in which no new acceptable bids, proactive waivers, or 
withdrawals are received. Thus, unless circumstances dictate otherwise, 
bidding will remain open on all licenses until bidding stops on every 
license.
    47. However, the Bureau proposes to retain the discretion to 
exercise any of the following options during Auction No. 46:
    i. Utilize a modified version of the simultaneous stopping rule. 
The modified stopping rule would close the auction for all licenses 
after the first round in which no bidder submits a proactive waiver, 
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 modified stopping rule. The Bureau 
further seeks comment on whether this modified stopping rule should be 
used at any time or only in stage three of the auction.
    ii. Keep the 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. The activity rule, therefore, will 
apply as usual, and a bidder with insufficient activity will either 
lose bidding eligibility or use a remaining activity rule waiver.
    iii. Declare that the auction will end after a specified number of 
additional rounds (``special stopping rule''). If the Bureau invokes 
this special stopping rule, it will accept bids in the specified final 
round(s) only for licenses on which the high bid increased in at least 
one of a specified preceding number of rounds.
    48. The Bureau proposes to exercise these options only in certain 
circumstances, such as, for example, where the auction is proceeding 
very slowly, there is minimal overall bidding activity, or it appears 
likely that the auction will not close within a reasonable period of 
time. Before exercising these options, the Bureau is likely to attempt 
to increase the pace of the auction by, for example, 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. The Bureau seeks comment on 
these proposals.

II. Conclusion

    49. Comments are due on or before June 6, 2002, and reply comments 
are due on or before June 13, 2002. Because of the disruption of 
regular mail and other deliveries in Washington, DC, the Bureau 
requires that all comments and reply comments be filed electronically. 
Comments and reply comments must be sent by electronic mail to the 
following address: auction46@fcc.gov. The electronic mail containing 
the comments or reply comments must include a subject or caption 
referring to Auction No. 46 Comments. The Bureau requests that parties 
format any attachments to electronic mail as Adobe 
Acrobat (pdf) or Microsoft Word documents. 
Copies of comments and reply comments will be available for public 
inspection during regular business hours in the FCC Public Reference 
Room, Room CY-A257, 445 12th Street, SW, Washington, DC 20554. In 
addition, the Bureau requests that commenters fax a courtesy copy of 
their comments and reply comments to the attention of Kathryn Garland 
at (717) 338-2850.
    50. This proceeding has been designated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentations must contain summaries of the 
substance of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other rules pertaining to 
oral and written ex parte presentations in permit-but-disclose 
proceedings are set forth in Sec. 1.1206(b) of the Commission's rules.

Federal Communications Commission.
Margaret Wiener,
Chief, Auctions and Industry Analysis Division, WTB.
[FR Doc. 02-16095 Filed 6-25-02; 8:45 am]
BILLING CODE 6712-01-U