Federal Register: March 5, 2007 (Volume 72, Number 42)
DOCID: fr05mr07-46 FR Doc E7-3786
FEDERAL COMMUNICATIONS COMMISSION
Federal Communications Commission
Docket ID: [AU Docket No. 06-206; Report No. AUC-07-71-B (Auction No. 71); DA 07- 30]
ACTION: Common carrier services:
DOCUMENT ACTION: Notice.
Auction of Broadband PCS Spectrum Scheduled for May 16, 2007; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 71
DATES: Applications to participate in Broadband PCS Auction No. 71 must be filed before 6 p.m. ET on March 16, 2007. Bidding for Auction No. 71 is scheduled to begin on May 16, 2007.
This document announces the procedures and minimum opening bids for the upcoming auction of certain Broadband PCS Spectrum (Auction No. 71). This document is intended to familiarize prospective bidders with the procedures and minimum opening bids for this auction.
Wireless telecommunications services—; Broadband PCS spectrum auction; notice of filing requirements, etc.,
This is a summary of the Auction No. 71
Procedures Public Notice released on January 16, 2007. The complete
text of the Auction No. 71 Procedures Public Notice, including
attachments, as well as related Commission documents are available for
public inspection and copying from 8 a.m. to 4:30 p.m. Eastern Time
(ET) Monday through Thursday or from 8 a.m. to 11:30 a.m. on Friday at
the FCC Reference Information Center, Portals II, 445 12th Street, SW.,
Room CYA257, Washington, DC 20554. The Auction No. 71 Procedures
Public Notice and related Commission documents may also be purchased
from the Commission's duplicating contractor, Best Copy and Printing,
Inc. (BCPI), Portals II, 445 12th Street, SW., Room CYB402,
Washington, DC, 20554, telephone 2024885300, facsimile 2024885563,
or Web site: http://www.BCPIWEB.com. When ordering documents from BCPI,
please provide the appropriate FCC document number, for example, DA 07
30 for the Auction No. 71 Procedures Public Notice. The Auction No. 71
Procedures Public Notice and related documents are also available on
the Internet at the Commission's Web site: http://wireless.fcc.gov/auctions/71/.
I. General Information
1. The Commission announces the procedures and minimum opening bid amounts for the upcoming auction of 38 broadband Personal
Communications Service (PCS) licenses scheduled to begin on May 16, 2007 (Auction No. 71). On November 17, 2006, in accordance with Section 309(j)(3) of the Communications Act of 1934, as amended, the Wireless Telecommunications Bureau (Bureau) released a public notice seeking comment on reserve prices or minimum opening bid amounts and the procedures to be used in Auction No. 71. The Commission received no comments in response to the Auction No. 71 Comment Public Notice 71 FR 69125, November 29, 2006.
2. In the Auction No. 71 Comment Public Notice, the Bureau proposed to include all 38 PCS licenses in a single auction using the Commission's standard simultaneous multipleround (SMR) auction format. The Bureau sought comment on the feasibility and desirability of allocating the PCS licenses using the Commission's package bidding format (SMRPB). Based on the record and the particular circumstances of the auction of these PCS licenses, the Bureau will include all 38 PCS licenses in a single auction using the Commission's standard SMR format, as proposed. Package bidding will not be used in Auction No. 71.
3. For Auction No. 71, the Commission will determine the information procedures based primarily on the eligibility ratio, a measure of likely competition in the auction. The eligibility ratio is defined as the total number of bidding units of eligibility purchased by bidders through their upfront payments, divided by the total number of bidding units for the licenses in the auction. Specifically, if the eligibility ratio equals or exceeds three, the Commission will use the information procedures since with sufficient likely competition, the anticompetitive behavior that limited information procedures aim to deter is unlikely to be successful. If the eligibility ratio is less than three, in general the Commission will withhold certain information on bidder interests and bidder identities. However, if the eligibility ratio is less than three, the Commission reserves the discretion not to limit information on bidder interests and identities if circumstances indicate that limited information procedures would not be an effective tool for deterring anticompetitive behavior. Such circumstances would occur, for example, if only two applicants became qualified to participate in the bidding, since limited information procedures would be ineffective in preventing bidders from knowing the identity of the competing bidder.
4. In the event that the conditions described above result in the use of procedures under which certain information is withheld, the Commission will release: (1) Each bidder's eligibility and upfront payment made prior to the start of the auction; and (2) the amounts of all gross bids (including the losing bids) for each license after each round, but not the identities of the bidders placing the bids. The Commission believes this provides bidders with information regarding license valuations without compromising the goal of reducing the potential for anticompetitive outcomes.
5. Pursuant to these procedures, information on the license selections of auction applicants will be withheld at least until the upfront payment deadline has passed and the Commission determines the information procedures that will be used for the auction. Therefore, to enable applicants to comply with the Commission's anticollusion rules, once the Bureau has conducted its initial review of applications to participate in Auction No. 71, each applicant will receive a letter that lists the other applicants in Auction No. 71 that have applied for licenses in any of the same geographic areas as the applicant. i. Licenses To Be Auctioned
6. Auction No. 71 will offer 38 licenses for A, C, D, E, and F blocks of broadband PCS spectrum. The spectrum to be auctioned has been offered previously in other auctions but was unsold and/or returned to the Commission as a result of license cancellation or termination. A complete list of licenses available for Auction No. 71 is included as Attachment A of the Auction No. 71 Procedures Public Notice.
7. Some of the C block licenses to be offered in Auction No. 71 are available to all bidders in open bidding, while others are available only to entrepreneurs in closed bidding. The A, B, E, and F block licenses, as well as certain C block licenses, are available in open bidding. Sizebased bidding credits will be available for C and F block licenses won in open bidding. In order to qualify as an entrepreneur for closed bidding, an applicant, including attributable investors and affiliates, must have had gross revenues of less than $125 million in each of the last two years and must have less than $500 million in total assets. Sizebased bidding credits are not available for C block licenses won in closed bidding or for licenses in the A, D, or E blocks.
8. Because of the history of licenses for broadband PCS spectrum,
certain of the licenses available in Auction No. 71 cover less
bandwidth and fewer frequencies and in some cases, licenses are
available for only part of a market. See Attachment A of the Auction
No. 71 Procedures Public Notice to determine the precise scope of the licenses that will be offered.
B. Rules and Disclaimers
i. Relevant Authority
9. Prospective applicants must familiarize themselves thoroughly
with the Commission's general competitive bidding rules set forth in
Title 47CFR part 1, including recent amendments and clarifications;
rules relating to broadband PCS, contained in Title 47 CFR part 24; and rules relating to
applications, practice and procedure contained in Title 47 CFR part 1. Prospective applicants must also be thoroughly familiar with the procedures, terms and conditions (collectively, terms) contained in the Auction No. 71 Procedures Public Notice and the Commission's decisions in proceedings regarding competitive bidding procedures, application requirements, and obligations of Commission licensees.
10. The terms contained in the Commission's rules, relevant orders,
and public notices are not negotiable. The Commission may amend or
supplement the information contained in its public notices at any time,
and will issue public notices to convey any new or supplemental
information to applicants. It is the responsibility of all applicants
to remain current with all Commission rules and with all public notices pertaining to this auction.
ii. Prohibition of Collusion; Compliance With Antitrust Laws
11. To ensure the competitiveness of the auction process, Sec. 1.2105(c) of the Commission's rules prohibits applicants competing for licenses in any of the same geographic license areas from communicating with each other about bids, bidding strategies, or settlements unless such applicants have identified each other on their shortform applications (FCC Forms 175) as parties with whom they have entered into agreements pursuant to Sec. 1.2105(a)(2)(viii). In Auction No. 71, the rule would apply to any applicants for licenses in the same BTA or MTA. The rule would also apply to applicants for licenses in overlapping BTAs and MTAs. For example, assume that one applicant applies for an MTA license and a second applicant applies for a BTA license covering any area within that MTA. The two entities will have applied for licenses covering the same geographic area and would be precluded from communicating with each other under the rule. In addition, the rule would preclude applicants that apply to bid for all licenses from communicating with all other applicants. Thus, applicants that have applied for licenses covering the same markets (unless they have identified each other on their FCC Form 175 applications as parties with whom they have entered into agreements under Sec. 1.2105(a)(2)(viii)) must affirmatively avoid all communications with or disclosures to each other that affect or have the potential to affect bids or bidding strategy, which may include communications regarding the postauction market structure. This prohibition begins at the shortform application filing deadline and ends at the down payment deadline after the auction. This prohibition applies to all applicants regardless of whether such applicants become qualified bidders or actually bid. Information concerning applicants' license selections will not be made public at least until the upfront payment deadline has passed and the Commission determines the information procedures that will be used for the auction. Therefore, the Commission will inform each applicant by letter of the identity of each of the other applicants that has applied for licenses covering any of the same geographic areas as the licenses that it has selected in its shortform application.
12. For purposes of this prohibition, Sec. 1.2105(c)(7)(i) defines applicant as including all officers and directors of the entity submitting a shortform application to participate in the auction, all controlling interests of that entity, as well as all holders of partnership and other ownership interests and any stock interest amounting to 10 percent or more of the entity, or outstanding stock, or outstanding voting stock of the entity submitting a shortform application.
13. Applicants for licenses for any of the same geographic license areas must not communicate directly or indirectly about bids or bidding strategy. Accordingly, such applicants are encouraged not to use the same individual as an authorized bidder. A violation of the anti collusion rule could occur if an individual acts as the authorized bidder for two or more competing applicants, and conveys information concerning the substance of bids or bidding strategies between such applicants. Also, if the authorized bidders are different individuals employed by the same organization (e.g., law firm or engineering firm or consulting firm), a violation similarly could occur. In such a case, at a minimum, applicants should certify on their applications that precautionary steps have been taken to prevent communication between authorized bidders and that applicants and their bidding agents will comply with the anticollusion rule. A violation of the anticollusion rule could occur in other contexts, such as an individual serving as an officer for two or more applicants. Moreover, the Commission has found a violation of the anticollusion rule where a bidder used the Commission's bidding system to disclose its bidding strategy in a manner that explicitly invited other auction participants to cooperate and collaborate in specific markets, and has placed auction participants on notice that the use of its bidding system to disclose market information to competitors will not be tolerated and will subject bidders to sanctions. Bidders are cautioned that the Commission remains vigilant about prohibited communications taking place in other situations. For example, the Commission has warned that prohibited communications concerning bids and bidding strategies may include communications regarding capital calls or requests for additional funds in support of bids or bidding strategies to the extent such communications convey information concerning the bids and bidding strategies directly or indirectly. Applicants are hereby placed on notice that public disclosure of information relating to bidder interests and bidder identities thatalthough revealed prior to and during other Commission auctionsis confidential in this auction at the time of disclosure may violate the anticollusion rule. Bidders should use caution in their dealings with other parties, such as members of the press, financial analysts, or others who might become a conduit for the communication of prohibited bidding information.
14. The Commission's rules do not prohibit applicants from entering into otherwise lawful bidding agreements before filing their shortform applications, as long as they disclose the existence of the agreement(s) in their shortform application. If parties agree in principle on all material terms prior to the shortform filing deadline, each party to the agreement must identify the other party or parties to the agreement on its shortform application under Sec. 1.2105(c), even if the agreement has not been reduced to writing. If the parties have not agreed in principle by the shortform filing deadline, they should not include the names of parties to discussions on their applications, and they may not continue negotiations, discussions or communications with any other applicants after the shortform filing deadline.
15. By electronically submitting its shortform application
following the electronic filing procedures set forth in Attachment C of
the Auction No. 71 Procedures Public Notice, each applicant certifies
its compliance with Sec. 1.2105(c). However, the Commission cautions
that merely filing a certifying statement as part of an application
will not outweigh specific evidence that collusive behavior has
occurred, nor will it preclude the initiation of an investigation when
warranted. The Commission has stated that it intends to scrutinize
carefully any instances in which bidding patterns suggest that collusion may be occurring. Any
applicant found to have violated the anticollusion rule may be subject to sanctions.
16. Applicants are also reminded that, regardless of compliance with the Commission's rules, they remain subject to the antitrust laws, which are designed to prevent anticompetitive behavior in the marketplace. Compliance with the disclosure requirements of the Commission's anticollusion rule will not insulate a party from enforcement of the antitrust laws. For instance, a violation of the antitrust laws could arise out of actions taking place well before any party submits a short form application. The Commission has cited a number of examples of potentially anticompetitive actions that would be prohibited under antitrust laws. The Bureau has long reminded potential applicants and others that even where the applicant discloses parties with whom it has reached an agreement on the shortform application, thereby permitting discussions with those parties, the applicant is nevertheless subject to existing antitrust laws. To the extent the Commission becomes aware of specific allegations that may give rise to violations of the federal antitrust laws, the Commission may refer such allegations to the United States Department of Justice for investigation. If an applicant is found to have violated the antitrust laws or the Commission's rules in connection with its participation in the competitive bidding process, it may be subject to forfeiture of its upfront payment, down payment, or full bid amount and may be prohibited from participating in future auctions, among other sanctions.
17. Section 1.65 of the Commission's rules requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission within 30 days of any substantial change that may be of decisional significance to that application. Thus Sec. 1.65 requires an auction applicant to notify the Commission of any substantial change to the information or certifications included in its pending shortform application. Applicants are therefore required by Sec. 1.65 to report to the Commission any communications they have made to or received from another applicant after the shortform filing deadline that affect or have the potential to affect bids or bidding strategy, unless such communications are made to or received from parties to agreements identified under Sec. 1.2105(a)(2)(viii). Section 1.2105(c)(6) provides that any applicant that makes or receives a communication prohibited by Sec. 1.2105(c) must report such communication to the Commission in writing immediately, and in no case later than five business days after the communication occurs.
18. Applicants that are winning bidders will be required to disclose in their longform applications the specific terms, conditions, and parties involved in any bidding consortia, joint ventures, partnerships, and other arrangements entered into relating to the competitive bidding process.
19. A summary listing of documents issued by the Commission and the Bureau addressing the application of the anticollusion rule may be found in Attachment F of the Auction No. 71 Procedures Public Notice. iii. Incumbency Issues
20. While much of the private and common carrier fixed microwave services (FMS) operating in the 18501990 MHz band (and other bands) have been relocated to available frequencies in higher bands or to other media, some FMS licenses may still be operating in the band. Applicants should become familiar with the status of FMS operation and relocation, and applicable Commission rules and orders.
iv. Due Diligence
21. Potential bidders are reminded that they are solely responsible for investigating and evaluating all technical and marketplace factors that may have a bearing on the value of the broadband PCS licenses in this auction. The FCC makes no representations or warranties about the use of this spectrum for particular services. Applicants should be aware that an FCC auction represents an opportunity to become an FCC licensee in this service, subject to certain conditions and regulations. An FCC auction does not constitute an endorsement by the FCC of any particular service, technology, or product, nor does an FCC license constitute a guarantee of business success. Applicants should perform their individual due diligence before proceeding as they would with any new business venture.
22. Potential bidders are strongly encouraged to conduct their own research prior to the beginning of bidding in Auction No. 71 in order to determine the existence of any pending administrative or judicial proceedings that might affect their decision regarding participation in the auction. Participants in Auction No. 71 are strongly encouraged to continue such research throughout the auction. In addition, potential bidders should perform technical analyses sufficient to assure themselves that, should they prevail in competitive bidding for a specific license, they will be able to build and operate facilities that will fully comply with the Commission's technical and legal requirements.
23. Applicants should also be aware that certain pending and future proceedings, including applications (including those for modification), petitions for rulemaking, requests for special temporary authority, waiver requests, petitions to deny, petitions for reconsideration, informal oppositions, and applications for review, before the Commission may relate to particular applicants or incumbent licensees or the licenses available in Auction No. 71. In addition, pending and future judicial proceedings may relate to particular applicants or incumbent licensees, or the licenses available in Auction No. 71. Prospective bidders are responsible for assessing the likelihood of the various possible outcomes, and considering their potential impact on spectrum licenses available in this auction.
24. Applicants should perform due diligence to identify and consider all proceedings that may affect the spectrum licenses being auctioned and that could have an impact on the availability of spectrum for Auction No. 71. In addition, although the Commission may continue to act on various pending applications, informal objections, petitions, and other requests for Commission relief, some of these matters may not be resolved by the beginning of bidding in the auction.
25. Applicants are solely responsible for identifying associated risks and for investigating and evaluating the degree to which such matters may affect their ability to bid on, otherwise acquire, or make use of licenses available in Auction No. 71.
26. Applicants may obtain information about licenses available in Auction No. 71 through the Bureau's licensing databases at http://wireless.fcc.gov/uls. Applicants may query the database online and
download a copy of their search results if desired.
27. The Commission makes no representations or guarantees regarding
the accuracy or completeness of information in its databases or any
third party databases, including, for example, court docketing systems.
To the extent the Commission's databases may not include all
information deemed necessary or desirable by an applicant, applicants
may obtain or verify such information from independent sources or
assume the risk of any incompleteness or inaccuracy in said databases. Furthermore, the Commission makes no representations
or guarantees regarding the accuracy or completeness of information that has been provided by incumbent licensees and incorporated into its databases.
28. Potential applicants are strongly encouraged to physically inspect any prospective sites located in, or near, the service area for which they plan to bid, and also to familiarize themselves with the environmental review obligations.
v. Use of Integrated Spectrum Auction System
29. The Commission will make available a browserbased bidding system to allow bidders to participate in Auction No. 71 over the Internet using the Commission's Integrated Spectrum Auction System (ISAS or FCC Auction System). The Commission makes no warranty whatsoever with respect to the FCC Auction System. In no event shall the Commission, or any of its officers, employees or agents, be liable for any damages whatsoever (including, but not limited to, loss of business profits, business interruption, loss of business information, or any other loss) arising out of or relating to the existence, furnishing, functioning or use of the FCC Auction System that is accessible to qualified bidders in connection with this auction. Moreover, no obligation or liability will arise out of the Commission's technical, programming or other advice or service provided in connection with the FCC Auction System.
vi. Bidder Alerts
30. As is the case with many business investment opportunities, some unscrupulous entrepreneurs may attempt to use Auction No. 71 to deceive and defraud unsuspecting investors. Information about deceptive telemarketing investment schemes is available from the Commission as well as the FTC and SEC. Complaints about specific deceptive telemarketing investment schemes should be directed to the FTC, the SEC, or the National Fraud Information Center.
vii. Environmental Review Requirements
31. Licensees must comply with the Commission's rules regarding
implementation of the National Environmental Policy Act and other
federal environmental statutes. The construction of a wireless antenna
facility is a federal action and the licensee must comply with the
Commission's environmental rules for each such facility. The
Commission's environmental rules require, among other things, that the
licensee consult with expert agencies having environmental
responsibilities, including the U.S. Fish and Wildlife Service, the
State Historic Preservation Office, the Army Corps of Engineers and the
Federal Emergency Management Agency (through the local authority with
jurisdiction over floodplains). In assessing the effect of facilities
construction on historic properties, the licensee must follow the
provisions of the Nationwide Programmatic Agreement Regarding the
Section 106 National Historic Preservation Act Review Process. The
licensee must prepare environmental assessments for facilities that may
have a significant impact in or on wilderness areas, wildlife
preserves, threatened or endangered species or designated critical
habitats, historical or archaeological sites, Indian religious sites,
floodplains, and surface features. The licensee also must prepare
environmental assessments for facilities that include high intensity
white lights in residential neighborhoods or excessive radio frequency emission.
C. Auction Specifics
i. Auction Date
32. Bidding in Auction No. 71 will begin on Wednesday, May 16, 2007, as announced in the Auction No. 71 Comment Public Notice. The initial schedule for bidding will be announced by public notice at least one week before the start of the auction.
33. Unless otherwise announced, bidding on all licenses will be
conducted on each business day until bidding has stopped on all licenses.
ii. Auction Title
34. Auction No. 71Broadband PCS.
iii. Bidding Methodology
35. The bidding methodology for Auction No. 71 will be simultaneous
multiple round bidding. The Commission will conduct this auction over
the Internet using the FCC Auction System, and telephonic bidding will
be available as well. Qualified bidders are permitted to bid
electronically via the Internet or by telephone. All telephone calls are recorded.
iv. PreAuction Dates and Deadlines
36. Dates and Deadlines
Auction Seminar............................ March 7, 2007. ShortForm Application (FCC Form 175) March 7, 2007; 12 noon ET. Filing Window Opens.
ShortForm Application (FCC Form 175) March 16, 2007; prior to 6 Filing Window Deadline. p.m. ET.
Upfront Payments (via wire transfer)....... April 20, 2007; 6 p.m. ET. Mock Auction............................... May 14, 2007.
Auction Begins............................. May 16, 2007.
v. Requirements for Participation
37. Those wishing to participate in the auction must: (1) Submit a shortform application (FCC Form 175) electronically prior to 6 p.m. Eastern Time (ET), March 16, 2007, following the electronic filing procedures set forth in Attachment C of the Auction No. 71 Procedures Public Notice; (2) submit a sufficient upfront payment and an FCC Remittance Advice Form (FCC Form 159) by 6 p.m. ET, April 20, 2007, following the procedures and instructions set forth in the Auction No. 71 Procedures Public Notice; and (3) comply with all provisions outlined in the Auction No. 71 Procedures Public Notice and applicable Commission rules.
II. ShortForm Application (FCC Form 175) Requirements
38. Entities seeking licenses available in Auction No. 71 must file
a shortform application electronically via the FCC Auction System
prior to 6 p.m. ET on March 16, 2007, following the procedures
prescribed in Attachment C to the Auction No. 71 Procedures Public
Notice. If an applicant claims eligibility for a bidding credit, the
information provided in its FCC Form 175 will be used in determining
whether the applicant is eligible for the claimed bidding credit.
Applicants bear full responsibility for submitting accurate, complete
and timely shortform applications. All applicants must certify on
their shortform applications under penalty of perjury that they are
legally, technically, financially and otherwise qualified to hold a
license. Applicants should read the instructions set forth in
Attachment C to the Auction No. 71 Procedures Public Notice carefully
and should consult the Commission's rules to ensure that, in addition to the
materials, all the information that is required under the Commission's rules is included with their shortform applications.
39. An entity may not submit more than one shortform application for a single auction. In the event that a party submits multiple short form applications, only one application will be accepted for filing.
40. Applicants also should note that submission of a shortform application constitutes a representation by the certifying official that he or she is an authorized representative of the applicant, that he or she has read the form's instructions and certifications, and that the contents of the application, its certifications, and any attachments are true and correct. Applicants are not permitted to make major modifications to their applications; such impermissible changes include a change of the certifying official to the application. Submission of a false certification to the Commission may result in penalties, including monetary forfeitures, license forfeitures, ineligibility to participate in future auctions, and/or criminal prosecution.
A. Eligibility for Closed Bidding
41. In order to be eligible to bid for one or more closed C block licenses, an applicant must demonstrate that it meets the eligibility requirements of Sec. 24.709(a) of the Commission's rules. Specifically, as of the FCC Form 175 filing deadline, the applicant, together with its affiliates and persons or entities that hold interests in the applicant and their affiliates, must have combined total assets of less than $500 million and must have had combined gross revenues of less than $125 million in each of the last two years. Every applicant that claims eligibility for closed bidding will be required to provide information regarding revenues attributable to the applicant, its affiliates, its controlling interests, and the affiliates of its controlling interests on its FCC Form 175 shortform application to establish that it satisfies the eligibility requirement. B. Preferences for Small Businesses and Others
i. Size Standards for Bidding Credits
42. A bidding credit represents the amount by which a bidder's winning bid will be discounted. For Auction No. 71, bidding credits will be available to small businesses and very small businesses, and consortia thereof, as follows: (1) A bidder with attributed average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years (small business) will receive a 15 percent discount on its winning bid for certain C and F block licenses; (2) a bidder with attributed average annual gross revenues that do not exceed $15 million for the preceding three years (very small business) will receive a 25 percent discount on its winning bid for certain C and F block licenses.
43. Bidding credits are not cumulative; a qualifying applicant receives either the 15 percent or 25 percent bidding credit on its winning bid, but not both. No small and very small business bidding credits are provided for licenses in the A, D, and E blocks or for C block licenses available only to entrepreneurs in closed bidding.
44. Every applicant that claims eligibility for a bidding credit as
either a small business or a very small business, or a consortium of
small businesses or very small businesses, will be required to provide
information regarding revenues attributable to the applicant, its
affiliates, its controlling interests, and the affiliates of its
controlling interests on its FCC Form 175 shortform application to
establish that it satisfies the applicable eligibility requirement.
Applicants claiming eligibility as a designated entity in Auction No.
71 should review carefully the CSEA/Part 1 Designated Entity Second
FNPRM, 71 FR 6992, February 10, 2006 and the CSEA/Part 1 Second Report
and Order, 71 FR 26245, May 5, 2006. In that connection, the Commission
adopted rules governing eligibility for designated entity benefits in
the Designated Entity Second Report and Order. The Commission's new
rules regarding applicants seeking eligibility for designated entity
benefits require the disclosure of a list of all parties with which the
applicant has entered into arrangements for the lease or resale
(including wholesale agreements) of any of the capacity of any of the
applicant's spectrum; and a list, separately and in the aggregate, of
the gross revenues of entities with which the applicant has an attributable material relationship, as defined in Sec.
ii. Tribal Lands Bidding Credit
45. To encourage the growth of wireless services in federally recognized tribal lands, the Commission has implemented a tribal lands bidding credit.
iii. Installment Payments
46. Installment payment plans will not be available in Auction No. 71.
C. License Selection
47. In Auction No. 71, applicants must select the licenses on which they want to bid from the list of available licenses. In Auction No. 71, FCC Form 175 will include a filtering mechanism that allows an applicant to filter the available licenses. The applicant will make selections for one or more of the filter criteria and the system will produce a list of licenses satisfying the specified criteria. The applicant may select all the licenses in the customized list or select individual licenses from the list. Applicants also will be able to select licenses from one customized list and then create additional customized lists to select additional licenses. There will be no opportunity to change license selection after the shortform filing deadline. It is critically important that an applicant confirm its license selections before submitting its shortform application because the FCC Auction System will not accept bids on licenses that an applicant has not selected on its FCC Form 175.
D. Disclosure of Bidding Arrangements
48. Applicants will be required to identify in their shortform applications all parties with whom they have entered into any agreements, arrangements, or understandings of any kind relating to the licenses being auctioned, including any agreements relating to post auction market structure. Applicants also will be required to certify under penalty of perjury in their shortform applications that they have not entered and will not enter into any explicit or implicit agreements, arrangements or understandings of any kind with any parties, other than those identified in the application, regarding the amount of their bids, bidding strategies, or the particular licenses on which they will or will not bid. If an applicant has had discussions, but has not reached a joint bidding agreement by the shortform application filing deadline, it would not include the names of parties to the discussions on its application and may not continue such discussions with any applicants after the deadline.
49. After the filing of shortform applications, the Commission's
rules do not prohibit a party holding a noncontrolling, attributable
interest in one applicant from acquiring an ownership interest in or
entering into a joint bidding arrangement with other applicants
provided that (i) the attributable interest holder certifies that it
has not and will not communicate with any party concerning the bids or
bidding strategies of more than one of the applicants in which it holds an
attributable interest, or with which it has entered into a joint bidding arrangement; and (ii) the arrangements do not result in a change in control of any of the applicants. While the anticollusion rules do not prohibit nonauctionrelated business negotiations among auction applicants, applicants are reminded that certain discussions or exchanges could touch upon impermissible subject matters because they may convey pricing information and bidding strategies. Further compliance with the disclosure requirements of the Commission's anti collusion rule will not insulate a party from enforcement of the antitrust laws.
E. Ownership Disclosure Requirements
50. All applicants must comply with the uniform part 1 ownership disclosure standards and provide information required by Sec. Sec. 1.2105 and 1.2112 of the Commission's rules. Specifically, in completing the shortform application, applicants will be required to fully disclose information on the real party or partiesininterest and ownership structure of the applicant. The ownership disclosure standards for the short form are prescribed in Sec. Sec. 1.2105 and 1.2112 of the Commission's rules. Each applicant is responsible for information submitted in its shortform application being complete and accurate.
51. An applicant's most current ownership information on file with the Commission, if in an electronic format compatible with the short form application (FCC Form 175) (such as information submitted in an online FCC Form 602 or in an FCC Form 175 filed for a previous auction using ISAS) will automatically be entered into the applicant's short form application. Applicants are responsible for ensuring that the information submitted in their FCC Form 175 for Auction No. 71 is complete and accurate. Accordingly, applicants should carefully review any information automatically entered to confirm that it is complete and accurate as of the deadline for filing the shortform application. Applicants can update any information that was entered automatically and needs to be changed directly in the shortform application. F. Entrepreneur Revenue Disclosures
52. To determine which entities qualify as entrepreneurs for closed bidding, the Commission considers the total assets and gross revenues of the applicant, its controlling interest holders, the affiliates of the applicant, and their controlling interests holders. The Commission does not impose specific entity requirements on parties with controlling interests. Once principals or entities with a controlling interest are determined, only the assets and revenues of those principals or entities, the applicant, and their affiliates will be counted in determining entrepreneur eligibility. Therefore, entities applying to bid on closed licenses will be required to disclose on their FCC Form 175 shortform applications, separately and in the aggregate, the gross revenues for the preceding two years and the total assets of each of the following: (1) The applicant, (2) the applicant's affiliates, (3) the applicant's controlling interest holders, and (4) the affiliates of the applicant's controlling interest holders. Certification that the gross revenues for each of the preceding two years or the total assets do not exceed the applicable limit is not sufficient. In order to comply with the Commission's disclosure requirements for entrepreneur eligibility, an applicant must provide separately for itself, its affiliates, its controlling interests holders, and their affiliates, the gross revenues for each of the preceding two years. Applicants for closed bidding in Auction No. 71 should not include existing C and F block licenses in their calculations of total assets; however, all other Commission licenses must be included in such calculations.
G. Bidding Credit Revenue Disclosures
53. To determine which applicants qualify for bidding credits as small businesses or very small businesses, the Commission considers the gross revenues of the applicant, its affiliates, its controlling interests, and the affiliates of its controlling interests. Therefore, entities applying to bid as small businesses or very small businesses (or consortia of small businesses or very small businesses) will be required to disclose on their FCC Form 175 shortform applications the gross revenues of each of the following for the preceding three years: (1) The applicant, (2) its affiliates, (3) its controlling interests, and (4) the affiliates of its controlling interests. Certification that the average annual gross revenues of such entities and individuals for the preceding three years do not exceed the applicable limit is not sufficient. In order to comply with the Commission's disclosure requirements for bidding credit eligibility, an applicant must provide separately for itself, its affiliates, its controlling interests, and the affiliates of its controlling interests, the gross revenues for each of the preceding three years. If the applicant is applying as a consortium of small businesses or very small businesses, this information must be provided for each consortium member.
54. Controlling interests of an applicant include individuals and entities with either de facto or de jure control of the applicant. Typically, ownership of at least 50.1 percent of an entity's voting stock evidences de jure control. De facto control is determined on a casebycase basis. The following are some common indicia of de facto control: (1) The entity constitutes or appoints more than 50 percent of the board of directors or management committee; (2) the entity has authority to appoint, promote, demote, and fire senior executives that control the daytoday activities of the licensee; and (3) the entity plays an integral role in management decisions.
55. Officers and directors of an applicant are also considered to have a controlling interest in the applicant. The Commission does not impose specific equity requirements on controlling interest holders. Once the principals or entities with a controlling interest are determined, only the revenues of those principals or entities, the affiliates of those principals or entities, and the applicant and its affiliates will be counted in determining small business eligibility.
56. In recent years the Commission has made modifications to its rules governing the attribution of gross revenues for purposes of determining small business eligibility. These changes include exempting the gross revenues of the affiliates of a rural telephone cooperative's officers and directors from attribution to the applicant if certain specified conditions are met. The Commission has also clarified that, in calculating an applicant's gross revenues under the controlling interest standard, it will not attribute the personal net worth, including personal income, of its officers and directors to the applicant.
57. A consortium of small businesses or very small businesses is a
conglomerate organization composed of two or more entities, each of
which individually satisfies the definition of a small business or very
small business as those terms are defined in the servicespecific
rules. Thus, each member of a consortium of small or very small
businesses that applies to participate in Auction No. 71 must
individually meet the definition of a small business or a very small
business adopted by the Commission for broadband PCS. Each consortium
member must disclose its gross revenues along with those of its
affiliates, its controlling interests, and the affiliates of its controlling interests.
Although the gross revenues of the consortium members will not be aggregated for purposes of determining the consortium's eligibility as a small business or very small business, this information must be provided to ensure that each individual consortium member qualifies for any bidding credit awarded to the consortium.
H. Provisions Regarding Former and Current Defaulters
58. Each applicant must state under penalty of perjury on its shortform application whether or not the applicant, its affiliates, its controlling interests, and the affiliates of its controlling interests, as defined by Sec. 1.2110, have ever been in default on any Commission licenses or have ever been delinquent on any nontax debt owed to any Federal agency. In addition, each applicant must certify under penalty of perjury on its shortform application that as of the shortform filing deadline, the applicant, its affiliates, its controlling interests, and the affiliates of its controlling interests, as defined by Sec. 1.2110, are not in default on any payment for Commission licenses (including down payments) and that they are not delinquent on any nontax debt owed to any Federal agency. Prospective applicants are reminded that submission of a false certification to the Commission is a serious matter that may result in severe penalties, including monetary forfeitures, license revocations, exclusion from participation in future auctions, and/or criminal prosecution.
59. Former defaultersi.e., applicants, including any of their affiliates, any of their controlling interests, or any of the affiliates of their controlling interests, that in the past have defaulted on any Commission licenses or been delinquent on any nontax debt owed to any Federal agency, but that have since remedied all such defaults and cured all of their outstanding nontax delinquenciesare eligible to bid in Auction No. 71, provided that they are otherwise qualified. However former defaulters are required to pay upfront payments that are fifty percent more than the normal upfront payment amounts.
60. Current defaultersi.e., applicants, including any of their affiliates, any of their controlling interests, or any of the affiliates of their controlling interests, that are in default on any payment for any Commission licenses (including down payments) or are delinquent on any nontax debt owed to any Federal agency as of the filing deadline for applications to participate in this auctionare not eligible to bid in Auction No. 71.
61. Applicants are encouraged to review the Bureau's previous guidance on default and delinquency disclosure requirements in the context of the shortform application process. For example, it has been determined that to the extent that Commission rules permit late payment of regulatory or application fees accompanied by late fees, such debts will become delinquent for purposes of Sec. Sec. 1.2105(a) and 1.2106(a) only after the expiration of a final payment deadline. Therefore, with respect to regulatory or application fees, the provisions of Sec. Sec. 1.2105(a) and 1.2106(a) regarding default and delinquency in connection with competitive bidding are limited to circumstances in which the relevant party has not complied with a final Commission payment deadline.
62. The Commission considers outstanding debts owed to the United States Government, in any amount, to be a serious matter. The Commission adopted rules, including a provision referred to as the red light rule, that implement the Commission's obligations under the Debt Collection Improvement Act of 1996, which governs the collection of claims owed to the United States. Under the red light rule, the Commission will not process applications and other requests for benefits filed by parties that have outstanding debts owed to the Commission. In the same rulemaking order, the Commission explicitly declared, however, that the Commission's competitive bidding rules are not affected by the red light rule. As a consequence, the Commission's adoption of the red light rule does not alter the applicability of any of the Commission's competitive bidding rules, including the provisions and certifications of Sec. Sec. 1.2105 and 1.2106, with regard to current and former defaults or delinquencies. Applicants are reminded, however, that the Commission's Red Light Display System, which provides information regarding debts owed to the Commission, may not be determinative of an auction applicant's ability to comply with the default and delinquency disclosure requirements of Sec. 1.2105. Thus, while the red light rule ultimately may prevent the processing of long form applications by auction winners, an auction applicant's red light status is not necessarily determinative of its eligibility to participate in this auction or of its upfront payment obligation.
63. Prospective applicants in Auction No. 71 should note that any longform applications filed after the close of competitive bidding will be reviewed for compliance with the Commission's red light rule, and such review may result in the dismissal of a winning bidder's long form application.
I. Other Information
64. Applicants owned by member of minority groups and/or women, as
defined in Sec. 1.2110(c)(3), may identify themselves in filling out
their shortform applications regarding this status. This applicant
status information is collected for statistical purposes only and
assists the Commission in monitoring the participation of designated entities in its auctions.
J. Minor Modifications to ShortForm Applications (FCC Form 175)
65. As of the deadline for filing shortform applications (FCC Forms 175) prior to 6 p.m. ET on March 16, 2007, applicants are permitted to make only minor changes to their applications. Applicants are not permitted to make major modifications to their applications (e.g., change their license selections, change control of the applicant, change the certifying official, or change their size to claim eligibility for a higher bidding credit). Permissible minor changes include, for example, deletion and addition of authorized bidders (to a maximum of three) and revision of addresses and telephone numbers of the applicants and their contact persons.
66. Any application amendment and related statements of fact must be certified by:
(1) The applicant, if the applicant is an individual, (2) one of the partners if the applicant is a partnership, (3) an officer, director, or duly authorized employee, if the applicant is a corporation, (4) by a member who is an officer, if the applicant is an unincorporated association, (5) the trustee if the applicant is an amateur radio service club, or (6) a duly elected or appointed official who is authorized to make such certifications under the laws of the applicable jurisdiction, if the applicant is a governmental entity.
67. An applicant must make permissible minor changes to its short
form application, as such changes are defined by Sec. 1.2105(b),
electronically using the FCC Auction System. Applicants must click on
the SUBMIT button in the FCC Auction System for the changes to be
submitted and considered by the Commission. After the revised
application has been submitted, a confirmation page will be displayed that states the submission
time and date, along with a unique file number.
68. In addition, an applicant should submit a letter briefly
summarizing the changes and subsequently update their shortform
applications in ISAS as soon as possible. Note: After the filing window
has closed, the auction system will not permit applicants to make
certain changes, such as legal classification and bidding credit. Any
letter describing changes to an applicant's shortform application
should be submitted by electronic mail to the following address:
69. Applicants must not submit applicationspecific material through the Commission's Electronic Comment Filing System (ECFS). K. Maintaining Current Information in ShortForm Applications (FCC Form 175)
70. Section 1.65 of the Commission's rules requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission within 30 days of any substantial change that may be of decisional significance to that application. Changes that cause a loss of or reduction in eligibility for a bidding credit must be reported immediately. If an amendment reporting substantial changes is a major amendment as defined by Sec. 1.2105, the major amendment will not be accepted and may result in the dismissal of the shortform application.
71. After the shortform filing deadline, applicants may make only minor changes to their FCC Form 175 applications, for example, deletion and addition of authorized bidders (to a maximum of three). Applicants must click on the SUBMIT button in the FCC Auction System for the changes to be submitted and considered by the Commission. In addition, applicants must submit a letter, briefly summarizing the changes, by electronic mail at the following address: firstname.lastname@example.org. The electronic mail summarizing the changes must include a subject or caption referring to Auction No. 71 and the name of the applicant.
72. Applicants must not submit applicationspecific material
through ECFS into the record of the proceeding concerning Auction No. 71 procedures.
III. PreAuction Procedures
A. Auction SeminarMarch 7, 2007
73. On Wednesday, March 7, 2007, the FCC will sponsor a seminar for parties interested in participating in Auction No. 71 at the FCC headquarters, located at 445 12th Street, SW., Washington, DC. The seminar will provide attendees with information about preauction procedures, completing FCC Form 175, auction conduct, the FCC Auction System, auction rules, and the broadband PCS rules. The seminar will also provide an opportunity for prospective bidders to ask questions of FCC staff concerning the auction, auction procedures, filing requirements and other matters related to this auction.
74. To register, please provide the information listed on
Attachment B of the Auction No. 71 Procedures Public Notice by Monday,
March 5, 2007. Registrations are accepted on a firstcome, firstserved
basis. The seminar is free of charge. For individuals who are unable to
attend, an Audio/Video webcast of this seminar will be available from
the FCC's Auction No. 71 Web page at http://wireless.fcc.gov/auctions/71/ .
B. ShortForm Application (FCC Form 175)Due Prior to 6 p.m. ET on March 16, 2007
75. In order to be eligible to bid in this auction, applicants must first follow the procedures set forth in Attachment C to the Auction No. 71 Procedures Public Notice to submit an FCC Form 175 application electronically via the FCC Auction System. This application must be received at the Commission prior to 6 p.m. ET on March 16, 2007. Late applications will not be accepted. There is no application fee required when filing an FCC Form 175. However, to be eligible to bid, an applicant must submit an upfront payment.
76. Applications may generally be filed at any time beginning at noon ET on March 7, 2007, and the filing window will close at 6 p.m. ET on March 16, 2007. Applicants are strongly encouraged to file early and are responsible for allowing adequate time for filing their applications. Applicants may update or amend their applications multiple times until the filing deadline on March 16, 2007.
77. Applicants must always click on the SUBMIT button on the Certify & Submit screen of the electronic form to successfully submit or modify their FCC Form 175. Any form that is not submitted will not be reviewed by the FCC. Additional information about accessing, completing, and viewing the FCC Form 175 is included in Attachment C of the Auction No. 71 Procedures Public Notice. FCC Auctions Technical Support is available at (877) 4803201, option nine; (202) 4141250; or (202) 4141255 (text telephone (TTY)); hours of service are Monday through Friday, from 8 a.m. to 6 p.m. E.T. In order to provide better service to the public, all calls to Technical Support are recorded. C. Application Processing and Minor Corrections
78. After the deadline for filing the FCC Form 175 applications has passed, the FCC will process all timely submitted applications to determine which are acceptable for filing, and subsequently will issue a public notice identifying: (1) Those applications accepted for filing; (2) those applications rejected; and (3) those applications which have minor defects that may be corrected, and the deadline for resubmitting corrected applications.
79. As described more fully in the Commission's rules, after the March 16, 2007, shortform filing deadline, applicants may make only minor corrections to their FCC Form 175 applications. Applicants will not be permitted to make major modifications to their applications (e.g., change their license selections, change control of the applicant, change certifying official, or change their size to claim eligibility for a higher bidding credit).
D. Upfront PaymentsDue April 20, 2007
80. In order to be eligible to bid in the auction, applicants must submit an upfront payment accompanied by an FCC Remittance Advice Form (FCC Form 159). After completing the FCC Form 175, filers will have access to an electronic version of the FCC Form 159 that can be printed and sent by facsimile to Mellon Bank in Pittsburgh, PA. All upfront payments must be sent by wire transfer and received in the proper account at Mellon Bank by 6 p.m. ET on April 20, 2007.
i. Making Auction Payments by Wire Transfer
81. Wire transfer payments must be received by 6 p.m. ET on April 20, 2007. To avoid untimely payments, applicants should discuss arrangements (including bank closing schedules) with their banker several days before they plan to make the wire transfer, and allow sufficient time for the transfer to be initiated and completed before the deadline.
82. At least one hour before placing the order for the wire
transfer (but on the same business day), applicants must send by
facsimile a completed FCC Form 159 (Revised 2/03) to Mellon Bank. On
the cover sheet of the facsimile, write Wire TransferAuction Payment for Auction No. 71. In order to
meet the Commission's upfront payment deadline, an applicant's payment must be credited to the Commission's account before the deadline. Applicants are responsible for obtaining confirmation from their financial institution that Mellon Bank has timely received their upfront payment and deposited it in the proper account.
83. Please note that: (1) All payments must be made in U.S. dollars; (2) all payments must be made by wire transfer; (3) upfront payments for Auction No. 71 go to a lockbox number different from the lockboxes used in previous FCC auctions, and different from the lockbox number to be used for postauction payments and (4) failure to deliver the upfront payment as instructed by the April 20, 2007, deadline, will result in dismissal of the application and disqualification from participation in the auction.
ii. FCC Form 159
84. A completed FCC Remittance Advice Form (FCC Form 159, Revised 2/03) must be sent by facsimile to Mellon Bank to accompany each upfront payment. Proper completion of FCC Form 159 (Revised 2/03) is critical to ensuring correct crediting of upfront payments. Detailed instructions for completion of FCC Form 159 are included in Attachment D to the Auction No. 71 Procedures Public Notice. An electronic pre filled version of the FCC Form 159 is available after submitting the FCC Form 175. Payors using a prefilled FCC Form 159 are responsible for ensuring that all of the information on the form, including payment amounts, is accurate. The FCC Form 159 can be completed electronically, but must be filed with Mellon Bank via facsimile.
iii. Upfront Payments and Bidding Eligibility
85. In the Auction No. 71 Comment Public Notice, the Bureau proposed that the amount of the upfront payment would determine a bidder's initial bidding eligibility, the maximum number of bidding units on which a bidder may place bids. In order to bid on a license, otherwise qualified bidders that selected that license on Form 175 must have a current eligibility level that meets or exceeds the number of bidding units assigned to that license. At a minimum, therefore, an applicant's total upfront payment must be enough to establish eligibility to bid on at least one of the licenses selected on its Form 175, or else the applicant will not be eligible to participate in the auction. An applicant does not have to make an upfront payment to cover all licenses the applicant selected on its Form 175, but rather to cover the maximum number of bidding units that are associated with licenses on which the bidder wishes to place bids and hold provisionally winning bids at any given time. A qualified bidder's maximum eligibility will not exceed the sum of the bidding units associated with the total number of licenses selected on its FCC Form 175 application. In some cases a qualified bidder's maximum eligibility may be less than the amount of its upfront payment because the qualified bidder has either previously been in default on a Commission license or delinquent on a nontax debt owed to a Federal Agency, or has submitted an upfront payment that exceeds the total amount of bidding units associated with the licenses selected on its FCC Form 175 application.
86. In the Auction No. 71 Comment Public Notice, the Bureau proposed to calculate upfront payments for Auction No. 71 on a license bylicense basis using the following formula based on bandwidth and license area population: $0.05 * MHz * License Area Population with a minimum of $500 per license. The Bureau set forth the specific upfront payments and bidding units for each license in Attachment A of the Auction No. 71 Comment Public Notice and sought comment on this proposal. The Bureau received no comments in response to the proposed upfront payments. The specific upfront payments and bidding units for each license are set forth in Attachment A of the Auction No. 71 Procedures Public Notice.
87. Applicants must make upfront payments sufficient to obtain bidding eligibility on the licenses on which they will bid.
88. In calculating its upfront payment amount, an applicant should determine the maximum number of bidding units on which it may wish to be active (bid on or hold provisionally winning bids on) in any single round, and submit an upfront payment amount covering that number of bidding units. In order to make this calculation, an applicant should add together the upfront payments for all licenses on which it seeks to be active in any given round. Applicants should check their calculations carefully, as there is no provision for increasing a bidder's eligibility after the upfront payment deadline.
89. Former defaulters should calculate their upfront payment for
all licenses by multiplying the number of bidding units on which they
wish to be active by 1.5. In order to calculate the number of bidding
units to assign to former defaulters, the Commission will divide the
upfront payment received by 1.5 and round the result up to the nearest bidding unit.
iv. Applicant's Wire Transfer Information for Purposes of Refunds of Upfront Payments
90. To ensure that refunds of upfront payments are processed in an expeditious manner, the Commission is requesting that all pertinent information listed in the Auction No. 71 Procedures Public Notice supplied to the FCC. All refunds will be returned to the payer of record as identified on the FCC Form 159 unless the payer submits written authorization instructing otherwise.
E. Auction Registration
91. Approximately ten days before the auction, the FCC will issue a public notice announcing all qualified bidders for the auction. Qualified bidders are those applicants whose FCC Form 175 applications have been accepted for filing and have timely submitted upfront payments sufficient to make them eligible to bid.
92. All qualified bidders are automatically registered for the auction. Registration materials will be distributed prior to the auction by overnight mail. The mailing will be sent only to the contact person at the contact address listed in the FCC Form 175 and will include the SecurID[supreg] tokens that will be required to place bids, the Integrated Spectrum Auction System (ISAS) Bidder's Guide, and the Auction Bidder Line phone number.
93. Qualified bidders that do not receive this registration mailin
FOR FURTHER INFORMATION CONTACT
Wireless Telecommunications Bureau,
Auctions Spectrum and Access Division: For legal questions: Stephen
Johnson at (202) 4180660. For general auction questions: Roy Knowles
or Lisa Stover at (717) 3382868. Mobility Division: For service rule questions: Michael Connelly (legal and licensing)
or Keith Harper (technical) at (202) 4180620. To request materials in accessible formats (Braille, large print, electronic files, audio format) for people with disabilities, send an email to email@example.com or call the Consumer and Governmental Affairs Bureau at (202) 4180530 or (202) 4180432 (TTY).