*Pages 1--65 from Microsoft Word - 12764.doc* PUBLIC NOTICE Federal Communications Commission 445 12th St., S. W. Washington, D. C. 20554 News Media Information 202 / 418- 0500 Fax- On- Demand 202 / 418- 2830 TTY 202 / 418- 2555 Internet: http:// www. fcc. gov ftp. fcc. gov DA 00- 292 February 18, 2000 AUCTION OF LICENSES IN THE 747– 762 AND 777– 792 MHz BANDS Auction Notice and Filing Requirements for 12 Licenses in the 700 MHz Bands Auction Scheduled for May 10, 2000 Minimum Opening Bids and Other Procedural Issues Report No. AUC- 00- 31- C (Auction No. 31 ) I. General Information ......................................................................................................... 4 A. Introduction ......................................................................................................... 4 1. Background of Proceeding ........................................................................ 4 2. Licenses to Be Auctioned ......................................................................... 5 B. Rules and Disclaimers ........................................................................................... 5 1. Relevant Authority .................................................................................... 5 2. Prohibition of Collusion ............................................................................ 5 3. Protection of Television Services .............................................................. 7 4. Due Diligence ........................................................................................... 9 5. Bidder Alerts .......................................................................................... 10 6. National Environmental Policy Act (NEPA) Requirements…………… 11 C. Auction Specifics ............................................................................................... 11 1. Auction Date .......................................................................................... 11 2. Auction Title .......................................................................................... 12 3. Bidding Methodology ............................................................................. 12 4. Pre- Auction Dates and Deadlines ............................................................ 12 1 2 5. Requirements for Participation ................................................................ 12 6. General Contact Information ................................................................... 13 II. SHORT- FORM (FCC FORM 175) APPLICATION REQUIREMENTS ....................... 13 A. Ownership Disclosure Requirements (Form 175 Exhibit A) ................................ 14 B. Consortia And Joint Bidding Arrangements (Form 175 Exhibit B) ...................... 14 C. Small Business Bidding Credits (Form 175 Exhibit C) ........................................ 14 1. Eligibility ................................................................................................ 15 2. Application Showing ............................................................................... 15 3. Bidding Credits ....................................................................................... 16 D. Other Information (Form 175 Exhibits D and E) ................................................. 17 E. Minor Modifications to Short- Form Applications (FCC Form 175) ..................... 17 F. Maintaining Current Information in Short- Form Applications (FCC Form 175) ... 17 III. PRE- AUCTION PROCEDURES .................................................................................. 17 A. Auction Seminar ................................................................................................. 17 B. Short- Form Application (FCC Form 175) -- Due April 10, 2000 ........................ 17 1. Electronic Filing ..................................................................................... 18 2. Completion of the FCC Form 175 ........................................................... 18 3. Electronic Review of FCC Form 175 ...................................................... 18 C. Application Processing and Minor Corrections ................................................... 18 D. Upfront Payments -- Due April 24, 2000 ............................................................ 19 1. Auction Payments by Wire Transfer ........................................................ 19 2. FCC Form 159 ........................................................................................ 20 3. Amount of Upfront Payment ................................................................... 20 4. Applicant's Wire Transfer Information for Purposes of Refunds .............. 21 E. Auction Registration ..................................................................................................... 21 F. Remote Electronic Bidding Software .................................................................. 22 G. Mock Auction .................................................................................................... 22 IV. AUCTION EVENT ....................................................................................................... 22 A. Auction Structure ............................................................................................... 22 2 3 1. Simultaneous Multiple Round Auction .................................................... 22 2. Maximum Eligibility and Activity Rules .................................................. 23 3. Activity Rule Waivers and Reducing Eligibility ....................................... 23 4. Auction Stages ....................................................................................... 24 5. Stage Transitions .................................................................................... 25 6. Auction Stopping Rules .......................................................................... 26 7. Auction Delay, Suspension, or Cancellation ............................................ 27 B. Bidding Procedures ............................................................................................ 27 1. Round Structure ..................................................................................... 27 2. Reserve Price or Minimum Opening Bid ................................................. 28 3. Bid Increments and Minimum Accepted Bids .......................................... 29 4. High Bids ............................................................................................... 30 5. Bidding ................................................................................................... 30 6. Bid Removal and Bid Withdrawal ........................................................... 31 7. Special 30 MHz Nationwide Bid Withdrawal Procedure ......................... 32 8. Round Results ........................................................................................ 37 9. Auction Announcements ......................................................................... 37 10. Maintaining the Accuracy of FCC Form 175 Information ........................ 37 V. POST- AUCTION PROCEDURES ................................................................................ 37 A. Down Payments and Withdrawn Bid Payments ................................................... 37 B. Long- Form Application ...................................................................................... 38 C. Default and Disqualification ................................................................................ 38 D. Refund of Remaining Upfront Payment Balance ................................................. 38 VI. Attachment A ................................................................................................................ 40 VII. Attachment B ................................................................................................................ 41 VIII. Attachment C ................................................................................................................ 42 IX. Attachment D ................................................................................................................ 45 X. Attachment E ................................................................................................................. 51 XI. Attachment F ................................................................................................................. 53 XII. Attachment G ................................................................................................................ 54 XIII. Attachment H ................................................................................................................ 56 XIV. Attachment I ................................................................................................................. 62 XV. Attachment J .................................................................................................................. 66 3 4 I. GENERAL INFORMATION A. Introduction This public notice announces the procedures and minimum opening bids for the upcoming auction of licenses for Fixed, Mobile, and Broadcasting services in the 747- 762 and 777- 792 MHz bands (“ Auction No. 31”). On January 10, 2000, the Wireless Telecommunications Bureau (“ Bureau”) released a public notice, 1 seeking comment on the establishment of reserve prices or minimum opening bids for Auction No. 31, in accordance with the Balanced Budget Act of 1997. 2 In addition, the Bureau sought comment on a number of procedures to be used in Auction No. 31. 3 The Bureau received three comments and five reply comments in response to the Auction No. 31 Comment Public Notice. 4 1. Background of Proceeding The 746- 806 MHz band has historically been used exclusively by television stations (Channels 60- 69). Incumbent analog television broadcasters are permitted by statute to continue operations in this band until their markets are converted to digital television (“ DTV”). 5 The Budget Act directed the Commission to reallocate this spectrum for public safety and commercial use by December 31, 1997, 6 and to commence competitive bidding for the commercial licenses on the reallocated spectrum after January 1, 2001. 7 In November 1999, Congress enacted a consolidated appropriations statute that revised the latter instruction. 8 This legislation accelerated the schedule for auction of the commercial spectrum bands, and requires that the proceeds from the auction of these bands be deposited in the U. S. Treasury by September 30, 2000. 1 See "Auction of Licenses in the 747- 762 and 777- 792 MHz (“ 700 MHz”) Bands Scheduled for May 10, 2000; Comment Sought on Reserve Prices or Minimum Opening Bids and Other Auction Procedural Issues," Public Notice, DA 00- 43 (rel. January 10, 2000) (" Auction No. 31 Comment Public Notice"), 65 Fed. Reg. 2956 (January 19, 2000). 2 Section 3002( a), Balanced Budget Act of 1997, Pub. L. 105- 33, 111 Stat. 251 (1997) (" Budget Act"); 47 U. S. C. §309( j)( 4)( F). The Commission's authority to establish a reserve price or minimum opening bid is set forth in 47 C. F. R. § 1.2104 (c) and (d). 3 See Auction No. 31 Comment Public Notice at 5- 6. 4 Comments were filed by NextLink Communications, Inc. (“ NextLink”); PSINet, Inc.; and U S West Wireless, LLC. (“ U S West”); Reply Comments were filed by AT& T Corporation (“ AT& T”); Bell Atlantic Mobile, Inc. (“ BAM”); Cisco Systems, Inc. (“ Cisco”); Omnipoint Corp. (“ Omnipoint”); and PSINet, Inc (“ PSINet”). 5 See 47 U. S. C. § 337( e). See Advanced Television Systems and Their Impact Upon Existing Television Broadcast Service, MM Docket No. 87- 268, Reconsideration of Fifth Report and Order, 13 FCC Rcd 6860, 6887 (1998). 6 See Section 337( a) of the Communications Act, 47 U. S. C. § 337( a). 7 See Section 337( b)( 2) of the Communications Act, 47 U. S. C. § 337( b)( 2)( a). 8 See Consolidated Appropriations, Appendix E, § 213. See also 145 Cong. Rec. H12493- 94 (Nov. 17, 1999). 4 5 2. Licenses to Be Auctioned The licenses available in this auction consist of one 20 megahertz license (consisting of paired 10 megahertz blocks) and one 10 megahertz license (consisting of paired 5 megahertz blocks) in each of six regions to be known as the 700 MHz band economic area groupings (“ 700 MHz Band EAGs”). These licenses are listed in this public notice on Attachment A. The following table contains the Block/ Frequency Band Limits Cross- Reference List for each region in Auction No. 31: 747- 762 and 777- 792 MHz Allocations License Suffix Frequencies C 747 – 752, 777 – 782 D 752 – 762, 782 – 792 B. Rules and Disclaimers 1. Relevant Authority Prospective bidders must familiarize themselves thoroughly with the Commission's rules relating to the 700 MHz band, contained in Title 47, Part 27 of the Code of Federal Regulations, and those relating to application and auction procedures, contained in Title 47, Part 1 of the Code of Federal Regulations. Prospective bidders must also be thoroughly familiar with the procedures, terms and conditions (collectively, “Terms”) contained in this public notice; the Auction No. 31 Comment Public Notice; Service Rules for the 746- 764 and 776- 794 MHz Bands, and Revisions to Part 27 of the Commission’s Rules, First Report and Order, WT Docket No. 99- 168, FCC 00- 5 (rel. January 7, 2000) (“ 700 MHz First Report & Order”), 65 Fed. Reg. 3139 (January 20, 2000); Reallocation of Television Channels 60- 69, the 746- 806 MHz Band, ET Docket No. 97- 157, Report and Order, 12 FCC Rcd 22953 (1998), recon., 13 FCC Rcd 21578 (1998) (“ Reallocation Reconsideration”). The terms contained in the Commission's rules, relevant orders and public notices are not negotiable. The Commission may amend or supplement the information contained in our public notices at any time, and will issue public notices to convey any new or supplemental information to bidders. It is the responsibility of all prospective bidders to remain current with all Commission rules and with all public notices pertaining to this auction. Copies of most Commission documents, including public notices, can be retrieved from the FCC Internet node via anonymous ftp @ftp. fcc. gov or the FCC Auctions World Wide Web site at http:// www. fcc. gov/ wtb/ auctions. Additionally, documents may be obtained for a fee by calling the Commission's copy contractor, International Transcription Service, Inc. (ITS), at (202) 314- 3070. When ordering documents from ITS, please provide the appropriate FCC number (for example, FCC 00- 5 for the 700 MHz First Report & Order). 2. Prohibition of Collusion To ensure the competitiveness of the auction process, the Commission's rules prohibit 5 6 applicants for the same geographic license area from communicating with each other during the auction about bids, bidding strategies, or settlements. 9 This prohibition begins with the filing of short-form applications, and ends on the down payment due date after the auction. Bidders competing for licenses in the same geographic license areas are encouraged not to use the same individual as an authorized bidder. A violation of the anti- collusion rule could occur if an individual acts as the authorized bidder for two or more competing applicants, and conveys information concerning the substance of bids or bidding strategies between the bidders he/ she is authorized to represent in the auction. Also, if the authorized bidders are different individuals employed by the same organization (e. g., law firm or consulting firm), a violation could similarly occur. At a minimum, in such a case, applicants should certify on their applications that precautionary steps have been taken to prevent communication between authorized bidders and that applicants and their bidding agents will comply with the anti- collusion rule. 10 The Bureau, however, 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. 11 In Auction No. 31, for example, the rule would apply to any applicants bidding for the same 700 MHz Band EAG. Therefore, applicants that apply to bid for “all markets” would be precluded from communicating with all other applicants after filing the FCC Form 175. However, applicants may enter into bidding agreements before filing their FCC Form 175 short- form applications, as long as they disclose the existence of the agreement( s) in their Form 175 short- form applications. 12 If parties agree in principle on all material terms prior to the short- form filing deadline, those parties must be identified on the short- form application under Section 1.2105( c), even if the agreement has not been reduced to writing. If the parties have not agreed in principle by the filing deadline, an applicant would not include the names of those parties on its application, and may not continue negotiations with other applicants for the same geographic license areas( s). 13 By signing their FCC Form 175 short- form applications, applicants are certifying their compliance with Section 1.2105( c). In addition, Section 1.65 of the Commission's Rules requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission within 30 days of any substantial change that may be of decisional significance to that application. 14 Thus, Section 1.65 requires an auction applicant to notify the Commission of any violation of the anti- collusion rules upon learning of such violation. Bidders are therefore required to make such notification to the Commission immediately upon discovery. 9 See 700 MHz First Report & Order, above at ¶¶ 128- 129; See also Amendment of the Commission’s Rules Regarding the 37.0- 38.6 GHz and 38.6- 40.0 GHz Bands, ET Docket No. 95- 183, Report & Order and Second Notice of Proposed Rule Making, 12 FCC Rcd 18600 at ¶ 144 (1997) 62 Fed. Reg. 14015 (March 25, 1997) (“ Report & Order and Second NPRM”); See also 47 C. F. R. § 1.2105( c). 10 See In re Application of Nevada Wireless for a License to Provide 800 MHz Specialized Mobile Radio Service in the Farmington, NM- CO Economic Area (EA- 155) Frequency Band A, Memorandum Opinion and Order, 13 FCC Rcd 11973, 11977, at ¶ 11 (1998) (" Nevada Wireless"). 11 See Nevada Wireless, 13 FCC Rcd at 11978. 12 See 47 C. F. R. § 1.2105( c) Note that bidders with nationwide status are prohibited from entering into such agreements. See Section IV. B. 7, below. 13 See “Wireless Telecommunications Bureau Clarifies Spectrum Auction Anti- Collusion Rules,” Public Notice, DA 95- 2244 (rel. October 26, 1995), 11 FCC Rcd 9645 (1995). 14 See 47 C. F. R. § 1.65. 6 7 3. Protection of Television Services Licensees operating on the spectrum associated with Channels 60, 61, 62, 65, 66, and 67 must comply with the co- channel and adjacent channel provisions of Section 27.60 of our Rules. For example, a licensee operating on any portion of the 10 megahertz block (i. e., between 752 MHz and 762 MHz) that coincides with Channel 61 will have to provide co- channel protection to television stations operating on Channel 61 and adjacent channel protection to television stations operating on Channels 60 and 62; and any licensee operating on any portion of the 10 megahertz block that coincides with Channel 62 will have to provide co- channel protection to television stations operating on Channel 62 and adjacent channel protection to television stations operating on Channels 61 and 63. Licensees operating on spectrum between 747 MHz and 752 MHz (Channel 60), in addition to providing co- channel protection to Channel 60 television stations, will have to provide adjacent channel protection to television stations operating on both Channel 61 and 59. 15 15 In addition, licensees operating fixed stations in the 747- 762 MHz band must comply with the relevant provisions for “base stations” in Section 90.309 of our Rules; and licensees operating fixed stations in the 777- 792 MHz band must comply with the relevant provisions for “control stations” in Section 90.309 of our Rules. See 47 C. F. R. § 90.309. 7 8 a. Negotiations with Incumbent Broadcast Licensees As the Commission noted in the 700 MHz First Report & Order: “The Congressional plan set forth in Sections 336 and 337 of the [Communications] Act and in the 1997 Budget Act is to transition this spectrum from its current use for broadcast services to commercial use and public safety services.” 16 Congress also has directed the Commission to auction the 36 MHz of spectrum allocated for commercial use at least six years before the relocation deadline for incumbent broadcasters in this spectrum, while adopting interference limits and other technical restrictions necessary to protect full- service analog television service during the transition to DTV. 17 In these circumstances, the Commission will consider specific regulatory requests needed to implement voluntary agreements reached between incumbent licensees and new licensees in these bands. In considering whether the public interest would be served by approving specific requests, the Commission would, for example, consider the benefits to consumers of the provision of new wireless services, such as next generation mobile services or Internet fixed access services. 18 The Commission would also consider whether such agreements would help clear spectrum for public safety use in these bands and could result in the provision of new wireless service in rural and other relatively underserved communities. On the other hand, the Commission would also consider loss of service to the broadcast community of the licensee. For example, the Commission would consider the availability of the licensee’s former analog programming within the service area, through simulcast of that programming on the licensee’s DTV channel or distribution of the programming on cable or DBS, or the availability of similar broadcast services within the service area (e. g., whether the lost service is the only network service, the only source for local service, or the only source for otherwise unique broadcast service). b. Canadian and Mexican Border Regions There are currently separate agreements with Canada and Mexico covering TV broadcast use of the UHF 470- 806 MHz band. Such agreements do not reflect the additional use or services adopted in the 700 MHz First Report & Order for 746- 764 and 776- 794 MHz bands. 19 While the Commission staff has been involved in discussions with both countries regarding coordination of interference criteria for the use of these bands in the border areas for the additional services, agreements have yet to be reached. 20 Therefore, until such agreements have been finalized, the Commission found it necessary to adopt certain interim requirements for licenses in these bands along the Canada and Mexico borders. 21 Accordingly, licenses issued for these bands within 120 km of the borders were made subject to whatever future agreements the United States developed with those 16 See 700 MHz First Report & Order, above at ¶ 145; See also 47 U. S. C. §§ 336- 337. 17 See Pub. Law 106- 113, 113 Stat. 1501, Appendix E, Section 213; Consolidated Appropriations, Appendix E, Sec. 213. See also 145 Cong. Rec. at H12493- 94, (Nov. 17, 1999). 18 See 700 MHz First Report & Order, above at ¶ 145. 19 Id. at ¶ 146 20 Id.. Furthermore, both Canada and Mexico have been notified that the Commission has changed the allocation of these bands, and the Commission has discussed with them the possibility of mutually compatible spectrum use in all three countries. 21 See 700 MHz First Report & Order, above at footnote 17. There, the Commission stated that: “many agreements have used the geographic distance of 120 km from the border as the coordination or effected area. We will apply this criterion until agreements are reached.” 8 9 two countries. In that the existing agreements for the protection of TV stations in those countries are still in effect and must be recognized until they are replaced or modified to reflect the new uses, the Commission decided that licenses in the border areas will be granted on the condition that harmful interference may not be caused to, but must accept interference from, UHF TV transmitters in Canada and Mexico. Furthermore, the Commission pointed out that modifications may be necessary to comply with whatever provisions are ultimately specified in future agreements with Canada and Mexico regarding the use of these bands. 22 4. Due Diligence The FCC makes no representations or warranties about the use of this spectrum for particular services. Applicants should be aware that an FCC auction represents an opportunity to become an FCC licensee in this service, subject to certain conditions and regulations. An FCC auction does not constitute an endorsement by the FCC of any particular services, technologies or products, nor does an FCC license constitute a guarantee of business success. Applicants should perform their individual due diligence before proceeding as they would with any new business venture. Potential bidders are reminded that there are a number of incumbent broadcast television licensees already licensed and operating in the 746- 764 and 776- 794 MHz bands (television Channels 60- 62 and 65- 67) that will be subject to the upcoming auction. As discussed above in greater detail, the Commission made clear that geographic area licensees operating on the spectrum associated with Channels 60, 61, 62, 65, 66, and 67 must comply with the co- channel and adjacent channel provision of Section 90.545 of the Commission’s rules. 23 In addition, geographic area licensees operating fixed stations in the 746- 764 MHz band must comply with the relevant provisions for “base stations” in Sections 90.309 and 90.545 of the Commissions Rules; and licensees operating fixed stations in the 776- 794 MHz band must comply with the relevant provisions for “control stations” in those sections of the rules. 24 These limitations may restrict the ability of such geographic licensees to use certain portions of the electromagnetic spectrum or provide service to certain regions in their geographic license areas. Listed in Attachment K are the facilities of incumbent television permittees and licensees on television Channels 60- 62 and 65- 67 as well as on television Channels 59 and 68. However, prospective bidders should not rely solely on this list, but should carefully review the Commission’s databases and records before formulating bidding strategies. Records relating to these stations are available for public inspection during regular business hours in the Reference Information Center at the Federal Communications Commission, 445 Twelfth Street, S. W., CY- A257, Washington, D C 20554. The Commission makes no representation or guarantees regarding the accuracy or completeness of the information in Attachment K. In addition, the Commission makes no representations or guarantees regarding the accuracy or completeness of information that has been provided by incumbent licensees and incorporated into the databases. Potential bidders are strongly encouraged to physically inspect any sites located in or near the geographic area for which they plan to bid. 22 Id. at ¶ 146. 23 See 700 MHz First Report & Order at ¶ 141. See also 47 C. F. R. § 90.545; See also Section I. B. 3. 24 See 47 C. F. R. §§ 90.309 and 90.545. 9 10 Potential bidders should also be aware of the following: QUALCOMM Incorporated, Petition for Declaratory Ruling Giving Effect to the Mandate of the District of Columbia Circuit Court of Appeals, Service Rules for the 746- 764 and 776- 794 MHz Bands and Revisions to Part 27 of the Commission’s Rules, Petition for Declaratory Ruling (filed January 28, 2000). “Wireless Telecommunications Bureau Seeks Comment On QUALCOMM Incorporated’s Petition for Declaratory Ruling Seeking 700 MHz Band License Pursuant to Ruling of U. S. Circuit Court of Appeals,” Public Notice, DA 00- 219 (rel. February 4, 2000); Extension of Filing Deadline for Comments to QUALCOMM Incorporated’s Petition for Declaratory Ruling, Public Notice, DA 00- 273 (rel. February 11, 2000). Potential bidders should also be aware that certain applications (including those for modification), petitions for rulemaking, waiver requests, requests for special temporary authority (“ STA”), petitions to deny, petitions for reconsideration, and applications for review may be pending before the Commission that relate to the facilities in Attachment K. We note that resolution of these pending matters could have an impact on the availability of spectrum for licensees in the 746- 764 and 776- 794 MHz bands. While the Commission will continue to act on pending matters, some of these matters may not be resolved by the time of auction. Potential bidders are strongly encouraged to conduct their own research prior to Auction No. 31 in order to determine the existence of pending proceedings that might affect their decisions regarding participation in the auction. Participants in Auction No. 31 are strongly encouraged to continue such research during the auction. 5. Bidder Alerts All applicants must certify on their FCC Form 175 applications under penalty of perjury that they are legally, technically, financially and otherwise qualified to hold a license, and not in default on any payment for Commission licenses (including down payments) or delinquent on any non- tax debt owed to any Federal agency. Prospective bidders are reminded that submission of a false certification to the Commission is a serious matter that may result in severe penalties, including monetary forfeitures, license revocations, exclusion from participation in future auctions, and/ or criminal prosecution. As is the case with many business investment opportunities, some unscrupulous entrepreneurs may attempt to use Auction No. 31 to deceive and defraud unsuspecting investors. Common warning signals of fraud include the following: x The first contact is a “cold call” from a telemarketer, or is made in response to an inquiry prompted by a radio or television infomercial. x The offering materials used to invest in the venture appear to be targeted at IRA funds, for example by including all documents and papers needed for the transfer of funds maintained in IRA 10 11 accounts. x The amount of the minimum investment is less than $25,000. x The sales representative makes verbal representations that: (a) the Internal Revenue Service (“ IRS”), Federal Trade Commission (“ FTC”), Securities and Exchange Commission (“ SEC”), FCC, or other government agency has approved the investment; (b) the investment is not subject to state or federal securities laws; or (c) the investment will yield unrealistically high short- term profits. In addition, the offering materials often include copies of actual FCC releases, or quotes from FCC personnel, giving the appearance of FCC knowledge or approval of the solicitation. Information about deceptive telemarketing investment schemes is available from the FTC at (202) 326- 2222 and from the SEC at (202) 942- 7040. Complaints about specific deceptive telemarketing investment schemes should be directed to the FTC, the SEC, or the National Fraud Information Center at (800) 876- 7060. Consumers who have concerns about specific 700 MHz proposals may also call the FCC National Call Center at (888) CALL- FCC (( 888) 225- 5322). 5. National Environmental Policy Act (NEPA) Requirements The permitee must comply with the Commission's rules regarding the National Environmental Policy Act (NEPA). The construction of a 700 MHz facility is a federal action and the permitee must comply with the Commission's NEPA rules for each such facility. See 47 C. F. R. §§ 1.1305- 1.1319. The Commission's NEPA rules require that, among other things, the permitee consult with expert agencies having NEPA responsibilities, including the U. S. Fish and Wildlife Service, the State Historic Preservation Office, the Army Corp of Engineers and the Federal Emergency Management Agency (through the local authority with jurisdiction over floodplains). The permitee 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 permitee must also prepare environmental assessments for facilities that include high intensity white lights in residential neighborhoods or excessive radio frequency emission. C. Auction Specifics 1. Auction Date The Auction No. 31 Comment Public Notice announced that the auction would begin on May 10, 2000. In its comments, NextLink asks that the Commission complete any proceeding associated with the terms and conditions for the next C and F block PCS auction before the scheduled commencement of Auction No. 31. 25 In reply comments, AT& T takes a similar position in urging that the Commission complete all proceedings needed to establish the terms and conditions of the upcoming C and F block auction, including a decision on which entities are eligible to bid, prior to the short- form application deadline for Auction No. 31. 26 Although we have begun consideration of these issues by seeking comment on two petitions regarding C and F block rules, we cannot make the 25 See Comments of NextLink at 1- 2. 26 See Comments of AT& T at 1. 11 12 auction start date dependent upon the conclusion of other proceedings. 27 As NextLink and AT& T are aware, the Commission is under Congressional mandate to deposit the receipts from Auction No. 31 into the United States Treasury by September 30, 2000. 28 Therefore, all potential bidders, including NextLink and AT& T, must make business decisions based on the environment in which they currently operate. The business decisions that these two companies must make are no different than the judgments that any other similarly situated potential bidder must make. Accordingly, the auction will begin on Wednesday, May 10, 2000. The initial schedule for bidding will be announced by public notice at least one week before the start of the auction. Unless otherwise announced, bidding on all licenses will be conducted on each business day until bidding has stopped on all licenses. 2. Auction Title Auction No. 31 — 700 MHz Band 3. Bidding Methodology The bidding methodology for Auction No. 31 will be simultaneous multiple round bidding. Bidding will be permitted only from remote locations, either electronically (by computer) or telephonically. 4. Pre- Auction Dates and Deadlines Auction Seminar ..................................................... March 30, 2000 Short- Form Application (FCC FORM 175) .............. April 10, 2000; 5: 30 p. m. ET Upfront Payments (via wire transfer) ....................... April 24, 2000; 6: 00 p. m. ET Orders for Remote Bidding Software ...................... April 25, 2000; 5: 30 p. m. ET Mock Auction ......................................................... May 8, 2000 Auction Begins ........................................................ May 10, 2000 5. Requirements for Participation Those wishing to participate in the auction must: x Submit a short form application (FCC Form 175) electronically by 5: 30 pm ET, April 10, 2000. x Submit a sufficient upfront payment and an FCC Remittance Advice Form (FCC Form 159) by 6: 00 pm ET, April 24, 2000. x Comply with all provisions outlined in this public notice. 27 See “Wireless Telecommunications Bureau Seeks Comment on SBC Communications Inc. ’s Request for Waiver of the Eligibility Requirements for Participation in the Upcoming PCS C and F Block Auction,” Public Notice, DA 00- 145 (rel. January 31, 2000); “Wireless Telecommunications Bureau Seeks Comment on Nextel Communications, Inc. ’s Petition Regarding PCS C and F Block Spectrum,” Public Notice, DA 00- 191 (rel. February 3, 2000); “Extension of Filing Deadline for Comments to the Petitions Filed by SBC Communications Inc. and Nextel Communications, Inc. Regarding PCS C and F Block Rules,” Public Notice, DA 00- 271 (rel. February 11, 2000). 28 See Public Law 106- 113, 113 Stat. 1501, Appendix E, Section 213. See also Consolidated Appropriations, Appendix E, Sec. 213. See also 145 Cong. Rec. at H12493- 94, (Nov. 17, 1999). 12 13 6. General Contact Information GENERAL AUCTION INFORMATION FCC Auctions Hotline General Auction Questions (888) 225- 5322, Press Option #2 Seminar Registration or direct (717) 338- 2888 Orders for Remote Bidding Software Hours of service: 8 a. m. – 5: 30 p. m. ET AUCTION LEGAL INFORMATION Auctions and Industry Analysis Division Auction Rules, Policies, Regulations Legal Branch (202) 418- 0660 LICENSING INFORMATION Commercial Wireless Division Rules, Policies, Regulations (202) 418- 0620 Licensing Issues Incumbency/ Protection Issues TECHNICAL SUPPORT FCC Auctions Technical Support Hotline Electronic Filing Assistance (202) 414- 1250 (Voice), Software Downloading (202) 414- 1255 (TTY) Hours of service: 8 a. m. – 6: 00 p. m. ET PAYMENT INFORMATION FCC Auctions Accounting Branch Wire Transfers (202) 418- 1995 Refunds (202) 418- 2843 (Fax) TELEPHONIC BIDDING Will be furnished only to qualified bidders FCC COPY CONTRACTOR International Transcription Services, Inc. Additional Copies of 445 12 th Street, SW Room CY- B400 Commission Documents Washington, DC 20554 (202) 314- 3070 PRESS INFORMATION Meribeth McCarrick (202) 418- 0654 FCC FORMS (800) 418- 3676 (outside Washington, DC) (202) 418- 3676 (in the Washington Area) http:// www. fcc. gov/ formpage FCC INTERNET SITES http:// www. fcc. gov/ wtb/ auctions http:// www. fcc. gov ftp:// ftp. fcc. gov II. SHORT- FORM (FCC FORM 175) APPLICATION REQUIREMENTS Guidelines for completion of the short- form (FCC Form 175) are set forth on Attachment D to this public notice. The short- form application seeks the applicant’s name and address, legal classification, status, bidding credit eligibility, identification of the authorization( s) sought, the 13 14 authorized bidders and contact persons. A. Ownership Disclosure Requirements (Form 175 Exhibit A) All applicants must comply with the uniform Part 1 ownership disclosure standards and provide information required by Sections 1.2105 and 1.2112 of the Commission’s rules. Specifically, in completing Form 175, applicants will be required to file an Exhibit A providing a full and complete statement of the ownership of the bidding entity. 29 The ownership disclosure standards for the short-form are set forth in Section 1.2112 of the Commission’s rules. B. Consortia And Joint Bidding Arrangements (Form 175 Exhibit B) Applicants will be required to identify on their short- form applications any parties with whom they have entered into any consortium arrangements, joint ventures, partnerships or other agreements or understandings which relate in any way to the licenses being auctioned, including any agreements relating to post- auction market structure. 30 See 47 C. F. R. §§ 1.2105( a)( 2)( viii); 1. 2105( c)( 1). Applicants will also be required to certify on their short- form applications that they have not entered into any explicit or implicit agreements, arrangements or understandings of any kind with any parties, other than those identified, regarding the amount of their bids, bidding strategies, or the particular construction permits on which they will or will not bid. See 47 C. F. R. § 1.2105( a)( 2)( ix). As discussed above, if an applicant has had discussions, but has not reached a joint bidding agreement by the short- form deadline, it would not include the names of parties to the discussions on its application and may not continue discussions with applicants for the same geographic license area( s) after the deadline. 31 In cases where applicants have entered into consortia or joint bidding arrangements, applicants must submit an Exhibit B to the FCC Form 175. A party holding a non- controlling, attributable interest in one applicant will be permitted to acquire an ownership interest in, form a consortium with, or enter into a joint bidding arrangement with other applicants for construction permits in the same geographic license area provided that (i) the attributable interest holder( s) certify that it has not and will not communicate with any party concerning the bids or bidding strategies of more than one of the applicants in which it holds an attributable interest, or with which it has formed a consortium or entered into a joint bidding arrangement; and (ii) the arrangements do not result in a change in control of any of the applicants. 32 While the anti- collusion rules do not prohibit non- auction related business negotiations among auction applicants, bidders are reminded that certain discussions or exchanges could broach on impermissible subject matters because they may convey pricing information and bidding strategies. C. Small Business Bidding Credits (Form 175 Exhibit C) In the 700 MHz First Report & Order, the Commission adopted small business provisions to 29 Section 1.2105, in turn, requires the disclosure on the short- form of applicant ownership information as set forth in Section 1.2112. 30 Note that bidders with nationwide status are prohibited from entering into such agreements. See Section IV. B. 7, below. 31 See Section I. B. 2, above. 32 See 47 C. F. R. § 1.2105( c)( 4)( i) & (ii). 14 15 promote and facilitate the participation of small businesses in competitive bidding for licenses in the 700 MHz band. 33 1. Eligibility Bidding credits are available to small businesses and very small businesses as defined in 47 C. F. R Section 27.502( a). For purposes of determining which entities qualify as very small businesses or small businesses, the Commission will consider the gross revenues of the applicant, its controlling interests, and affiliates of the applicant and its controlling interests. The Commission does not impose specific equity requirements on controlling interests. Once principals or entities with a controlling interest are determined, only the revenues of those principals or entities, the applicant and its affiliates will be counted in determining small business eligibility. The term “control” includes both de facto and 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 case- by- case basis. 34 The following are some common indicia of control: x the entity constitutes or appoints more than 50 percent of the board of directors or management committee; x the entity has authority to appoint, promote, demote, and fire senior executives that control the day- to- day activities of the licensee; or x the entity plays an integral role in management decisions. A consortium of small businesses, or very small businesses is a conglomerate organization formed as a joint venture between or among mutually independent business firms, each of which individually satisfies the definition of small or very small business in Section 27.502. Thus, each consortium member must disclose its gross revenues along with those of its affiliates, controlling interests, and controlling interests' affiliates. We note that although the gross revenues of the consortium members will not be aggregated for purposes of determining eligibility for small or very small business credits, this information must be provided to ensure that each individual consortium member qualifies for any bidding credit awarded to the consortium. 2. Application Showing Applicants should note that they will be required to file supporting documentation as Exhibit C to their FCC Form 175 short form applications to establish that they satisfy the eligibility requirements to qualify as a small business or very small business (or consortia of small or very small 33 See 47 C. F. R §§ 27.502. 34 For further guidance on the issue of control, see the Commission's affiliation rule at 47 C. F. R. § 1.2110( b)( 4). See also Ellis Thompson Corp., 76 Rad. Reg. 2d (P & F) 1125, 1127- 28 (1994), in which the Commission identified the following factors used to determine control of a business: (1) use of facilities and equipment; (2) control of day- to- day operations; (3) control of policy decisions; (4) personnel responsibilities; (5) control of financial obligations; and (6) receipt of monies and profits; Intermountain Microwave, 24 Rad. Reg. (P & F) 983 (1963), and Application of Baker Creek Communications, LP, For Authority to Construct and Operate Local Multipoint Distribution Services in Multiple Basic Trading Areas, Memorandum Opinion and Order, 13 FCC Rcd 18,709 (rel. September 23, 1998). 15 16 businesses) for this auction. 35 Specifically, for Auction No. 31, applicants applying to bid as small or very small businesses (or consortia of small or very small businesses) will be required to disclose on Exhibit C to their FCC Form 175 short- form applications, separately and in the aggregate, the gross revenues for the preceding three years of each of the following: (1) the applicant; (2) the applicant's affiliates; (3) the applicant's controlling interests; and (4) the affiliates of the applicant's controlling interests. Certification that the average gross revenues for the preceding three years do not exceed the applicable limit is not sufficient. A statement of the total gross revenues for the preceding three years is also insufficient. The applicant must provide separately for itself, its affiliates, and its controlling interests, a schedule of gross revenues for each of the preceding three years, as well as a statement of total average gross revenues for the three- year period. If the applicant is applying as a consortium of very small or small businesses, this information must be provided for each consortium member. 3. Bidding Credits Applicants that qualify under the definitions of small business and very small business (or consortia of small or very small businesses) as are set forth in 47 C. F. R. § 27.502, are eligible for a bidding credit that represents the amount by which a bidder's winning bids are discounted. 36 The size of a 700 MHz band bidding credit depends on the average gross revenues for the preceding three years of the bidder and its controlling interests and affiliates: x A bidder with average gross revenues of not more than $40 million for the preceding three years receives a 15 percent discount on its winning bids for 700 MHz band licenses (“ small business”); 37 x A bidder with average gross revenues of not more than $15 million for the preceding three years receives a 25 percent discount on its winning bids for 700 MHz band licenses (“ very small business”). 38 Bidding credits are not cumulative: qualifying applicants receive either the 15 percent or the 25 percent bidding credit, but not both. Bidders in Auction No. 31 should note that unjust enrichment provisions apply to winning bidders that use bidding credits and subsequently assign or transfer control of their licenses to an entity not qualifying for the same level of bidding credit. 39 Finally, bidders should also note that there are no installment payment plans in Auction No. 31. 35 See 47 C. F. R. §§ 27.502 and 1.2105. 36 See 47 C. F. R § 27.502. 37 See 47 C. F. R. §27.502 and 1.2110( e)( iii). 38 See 47 C. F. R. § 27.502 and 1.2110( e)( ii). 39 See 47 C. F. R. § 27.502. 16 17 D. Other Information (Form 175 Exhibits D and E) Applicants owned by minorities or women, as defined in 47 C. F. R. § 1.2110( b)( 2), may attach an exhibit (Exhibit D) regarding this status. This applicant status information is collected for statistical purposes only and assists the Commission in monitoring the participation of “designated entities” in its auctions. Applicants wishing to submit additional information may do so in Exhibit E, Miscellaneous Information to the FCC Form 175. E. Minor Modifications to Short- Form Applications (FCC Form 175) After the short- form filing deadline (April 10, 2000), applicants may make only minor changes to their FCC Form 175 applications. Applicants will not be permitted to make major modifications to their applications (e. g., change their license selections, change the certifying official or change control of the applicant or change bidding credits). See 47 C. F. R. § 1.2105. Permissible minor changes include, for example, deletion and addition of authorized bidders (to a maximum of three) and revision of exhibits. Applicants should make these changes on- line, and submit a letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, Federal Communications Commission, 445 12th Street, SW, Suite 4- A760 Washington, DC 20554, briefly summarizing the changes. Questions about other changes should be directed to Howard Davenport of the Auctions and Industry Analysis Division at (202) 418- 0660. F. Maintaining Current Information in Short- Form Applications (FCC Form 175) Applicants have an obligation under 47 C. F. R. §1. 65, to maintain the completeness and accuracy of information in their short- form applications. Amendments reporting substantial changes of possible decisional significance in information contained in FCC Form 175 applications, as defined by 47 C. F. R. § 1.2105( b)( 2), will not be accepted and may in some instances result in the dismissal of the FCC Form 175 application. III. PRE- AUCTION PROCEDURES A. Auction Seminar On March 30, 2000, the FCC will sponsor a free seminar for Auction No. 31 at the Federal Communications Commission, located at 445 12 th Street, S. W., Washington, D. C. The seminar will provide attendees with information about pre- auction procedures, conduct of the auction, FCC remote bidding software, and the 700 MHz band service and auction rules. The seminar will also provide an opportunity for prospective bidders to ask questions of FCC staff. To register, complete the registration form included as Attachment B of this public notice and submit it by Tuesday, March 28, 2000. Registrations are accepted on a first- come, first- served basis. B. Short- Form Application (FCC Form 175) -- Due April 10, 2000 In order to be eligible to bid in this auction, applicants must first submit an FCC Form 175 application. This application must be submitted electronically and received at the Commission by 5: 30 p. m. ET on April 10, 2000. Late applications will not be accepted. There is no application fee required when filing an FCC Form 175. However, to be eligible to 17 18 bid, an applicant must submit an upfront payment. See Section. III. D, below. 1. Electronic Filing Applicants must file their FCC Form 175 applications electronically. 40 Applications may generally be filed at any time from March 30, 2000 until 5: 30 p. m. ET on April 10, 2000. Applicants are strongly encouraged to file early, and applicants are responsible for allowing adequate time for filing their applications. Applicants may update or amend their electronic applications multiple times until the filing deadline on April 10, 2000. Applicants must press the “Submit Form 175” button on the “Submit” page of the electronic form to successfully submit their FCC Forms 175. Any form that is not submitted will not be reviewed by the FCC. Information about accessing the FCC Form 175 is included in Attachment C. Technical support is available at (202) 414- 1250 (voice) or (202) 414- 1255 (text telephone (TTY)); the hours of service are 8 a. m. to 6 p. m. ET, Monday through Friday. 2. Completion of the FCC Form 175 Applicants should carefully review 47 C. F. R. § 1.2105, and must complete all items on the FCC Form 175. Instructions for completing the FCC Form 175 are in Attachment D of this public notice. Applicants are encouraged to begin preparing the required attachments for FCC Form 175 prior to submitting the form. Attachments C and D to this public notice provide information on the required attachments and appropriate formats. 3. Electronic Review of FCC Form 175 The FCC Form 175 electronic review system may be used to review and print applicants' FCC Form 175 information. Applicants may also view other applicants' completed FCC Form 175s after the filing deadline has passed and the FCC has issued a public notice explaining the status of the applications. For this reason, it is important that applicants do not include their Taxpayer Identification Numbers (TINs) on any Exhibits to their FCC Form 175 applications. There is no fee for accessing this system. See Attachment C for details on accessing the review system. C. Application Processing and Minor Corrections After the deadline for filing the FCC Form 175 applications has passed, the FCC will process all timely submitted applications to determine which are acceptable for filing, and subsequently will issue a public notice identifying: (1) those applications accepted for filing (including FCC account numbers and the licenses for which they applied); (2) those applications rejected; and (3) those applications that have minor defects that may be corrected, and the deadline for filing such corrected applications. As described more fully in the Commission's rules, after the April 10, 2000, short form filing deadline, applicants may make only minor corrections to their FCC Form 175 applications. Applicants will not be permitted to make major modifications to their applications (e. g., change their license selections, change the certifying official, change control of the applicant, or change bidding 40 All short- form applications must be filed electronically. See 47 C. F. R. § 1.2105( a). 18 19 credit eligibility). 41 D. Upfront Payments -- Due April 24, 2000 In order to be eligible to bid in the auction, applicants must submit an upfront payment accompanied by an FCC Remittance Advice Form (FCC Form 159). After completing the FCC Form 175, filers will have access to an electronic version of the FCC Form 159 that can be printed and faxed to Mellon Bank in Pittsburgh, PA. All upfront payments must be received at Mellon Bank by 6: 00 p. m. ET on April 24, 2000. Please note that: x All payments must be made in U. S. dollars. x All payments must be made by wire transfer. x Upfront payments for Auction No. 31 go to a lockbox number different from the ones used in previous FCC auctions, and different from the lockbox number to be used for post- auction payments. x Failure to deliver the upfront payment by the April 24, 2000 deadline will result in dismissal of the application and disqualification from participation in the auction. 1. Auction Payments by Wire Transfer Wire transfer payments must be received by 6: 00 p. m. ET on April 24, 2000. To avoid untimely payments, applicants should discuss arrangements (including bank closing schedules) with their banker several days before they plan to make the wire transfer, and allow sufficient time for the transfer to be initiated and completed before the deadline. Applicants will need the following information: ABA Routing Number: 043000261 Receiving Bank: Mellon Pittsburgh BNF: FCC/ AC 910- 0171 OBI Field: (Skip one space between each information item) “AUCTIONPAY” TAXPAYER IDENTIFICATION NO. (same as FCC Form 159, block 26) PAYMENT TYPE CODE (enter “A31U”) FCC CODE 1 (same as FCC Form 159, block 23A: “31”) PAYER NAME (same as FCC Form 159, block 2) LOCKBOX NO. # 358430 NOTE: The BNF and Lockbox number are specific to the upfront payments for this auction; do not use BNF or Lockbox numbers from previous auctions. 41 See 47 C. F. R. § 1.2105. See also Two Way Radio of Carolina, Inc., Memorandum, Opinion and Order, FCC 99- 189 (rel. July 22, 1999). 19 20 Applicants must fax a completed FCC Form 159 to Mellon Bank at (412) 209- 6045 or (412) 236- 5702 at least one hour before placing the order for the wire transfer (but on the same business day). On the cover sheet of the fax, write “Wire Transfer - Auction Payment for Auction Event No. 31.” Bidders should confirm receipt of their upfront payment at Mellon Bank by contacting their sending financial institution. 2. FCC Form 159 A completed FCC Remittance Advice Form (FCC Form 159) must accompany each upfront payment. Proper completion of FCC Form 159 is critical to ensuring correct credit of upfront payments. Detailed instructions for completion of FCC Form 159 are included in Attachment E to this public notice. An electronic version of the FCC form 159 is available after submitting the FCC Form 175. The FCC Form 159 can be completed electronically, but must be filed with Mellon Bank via facsimile. 3. Amount of Upfront Payment In the Part 1 Order, Memorandum Opinion and Order, and Notice of Proposed Rule Making, the Commission delegated to the Bureau the authority and discretion to determine an appropriate upfront payment for each license being auctioned. 42 In the Auction No. 31 Comment Public Notice, the Bureau proposed upfront payments for Auction No. 31. 43 Specifically, the Bureau proposed calculating the upfront payment based on information available in the form of a Congressional estimate of the value of the spectrum. There were no comments filed on the proposed upfront payments set forth in the Auction No. 31 Comment Public Notice. Please note that upfront payments are not attributed to specific licenses, but instead will be translated to bidding units to define a bidder's maximum bidding eligibility. For Auction No. 31, the amount of the upfront payment will be translated into bidding units on a one- to- one basis, e. g., a $28,000,000 upfront payment provides the bidder with 28,000,000 bidding units. The total upfront payment defines the maximum number of bidding units on which the applicant will be permitted to bid (including standing high bids) in any single round of bidding. Thus, an applicant does not have to make an upfront payment to cover all licenses that an applicant has selected on FCC Form 175, but rather to cover the maximum number of bidding units that are associated with licenses on which the bidder wishes to place bids and hold high bids at any given time. In order to be able to place a bid on a license, in addition to having specified that license on the FCC Form 175, a bidder must have an eligibility level that meets or exceeds the number of bidding units assigned to that license. At a minimum, an applicant's total upfront payment must be enough to establish eligibility to bid on at least one of the licenses applied for on the FCC Form 175, or else the applicant will not be eligible to participate in the auction. In calculating its upfront payment amount, an applicant should determine the maximum number of bidding units it may wish to bid on in any single round, and submit an upfront payment 42 Amendment of Part 1 of the Commission's Rules -- Competitive Bidding Proceeding, WT Docket No. 97- 82, Order, Memorandum Opinion and Order and Notice of Proposed Rule Making, 12 FCC Rcd. 5686, 5697- 5698, ¶ 16 (1997); See also 700 MHz First Report & Order, above at ¶ 149. 43 See Auction No. 31 Comment Public Notice at 2- 3. 20 21 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 bid in any given round. Bidders should check their calculations carefully as there is no provision for increasing a bidder's maximum eligibility after the upfront payment deadline. NOTE: An applicant may, on its FCC Form 175, apply for every license being offered, but its actual bidding in any round will be limited by the bidding units reflected in its upfront payment. 4. Applicant's Wire Transfer Information for Purposes of Refunds The Commission will use wire transfers for all Auction No. 31 refunds. To ensure that refunds of upfront payments are processed in an expeditious manner, the Commission is requesting that all pertinent information as listed below be supplied to the FCC. Applicants may either submit the information electronically after filing their short- form application or fax the Wire Transfer Instructions by April 24, 2000, to the FCC, Financial Operations Center, Auctions Accounting Group, ATTN: Michelle Bennett or Gail Glasser, at (202) 418- 2843. Should the payer fail to submit the requested information, the refund will be returned to the original payer. For additional information, please call (202) 418- 1995. Name of Bank ABA Number Contact and Phone Number Account Number to Credit Name of Account Holder Correspondent Bank (if applicable) ABA Number Account Number (Applicants should also note that implementation of the Debt Collection Improvement Act of 1996 requires the FCC to obtain a Taxpayer Identification Number (TIN) before it can disburse refunds.) Eligibility for refunds is discussed in Section V. D., below. E. Auction Registration Approximately ten days before the auction, the FCC will issue a public notice announcing all qualified bidders for the auction. Qualified bidders are those applicants whose FCC Form 175 applications have been accepted for filing and that have timely submitted upfront payments sufficient to make them eligible to bid on at least one of the licenses for which they applied. All qualified bidders are automatically registered for the auction. Registration materials will be distributed prior to the auction by two separate overnight mailings, each containing part of the confidential identification codes required to place bids. These mailings will be sent only to the contact person at the contact address listed in the FCC Form 175. Applicants that do not receive both registration mailings will not be able to submit bids. Therefore, any qualified applicant that has not received both mailings by noon on Friday, May 5, 21 22 2000, should contact the Auctions Hotline at 717- 338- 2888. Receipt of both registration mailings is critical to participating in the auction and each applicant is responsible for ensuring it has received all of the registration material. Qualified bidders should note that lost login codes, passwords or bidder identification numbers can be replaced only by appearing in person at the FCC Auction Headquarters located at 445 12 th St., S. W., Washington, D. C. 20554. Only an authorized representative or certifying official, as designated on an applicant's FCC Form 175, may appear in person with two forms of identification (one of which must be a photo identification) in order to receive replacement codes. Qualified bidders requiring replacement codes must call technical support prior to arriving at the FCC to arrange preparation of new codes. F. Remote Electronic Bidding Software Qualified bidders are allowed to bid electronically or by telephone. If choosing to bid electronically, each bidder must purchase their own copy of the remote electronic bidding software. Electronic bids will only be accepted from those applicants purchasing the software. However, the software may be copied by the applicant for use by its authorized bidders at different locations. The price of the FCC’s remote bidding software is $175.00 and must be ordered by Tuesday, April 25, 2000. For security purposes, the software is only mailed to the contact person at the contact address listed on the FCC Form 175. Please note that auction software is tailored to a specific auction, so software from prior auctions will not work for Auction No. 31. If bidding telephonically, the telephonic bidding phone number will be supplied in the second Federal Express mailing of confidential login codes. Qualified bidders that do not purchase the software may only bid telephonically. To indicate your bidding preference, an FCC Bidding Preference/ Remote Software Order Form can be accessed and electronically completed when submitting the FCC Form 175. A copy of this form is included as Attachment F in this public notice. G. Mock Auction All qualified bidders will be eligible to participate in a mock auction on May 8, 2000. The mock auction will enable applicants to become familiar with the electronic software prior to the auction. Free demonstration software will be available for use in the mock auction. Participation by all bidders is strongly recommended. Details will be announced by public notice. IV. AUCTION EVENT The first round of bidding for Auction No. 31 will begin on May 10, 2000. The initial bidding schedule will be announced in the public notice listing the qualified bidders which is released approximately 10 days before the start of the auction. A. Auction Structure 1. Simultaneous Multiple Round Auction In the Auction No. 31 Comment Public Notice, we proposed to award 12 licenses in the 700 MHz bands in a single, simultaneous multiple round auction. 44 We received no comment on this 44 Auction No. 31 Comment Public Notice at 2. 22 23 issue. We conclude that it is operationally feasible and appropriate to auction the 700 MHz band licenses through a single, simultaneous multiple round auction. Unless otherwise announced, bids will be accepted on all licenses in each round of the auction. This approach, we believe, allows bidders to take advantage of any synergies that exist among licenses and is most administratively efficient. 2. Maximum Eligibility and Activity Rules In the Auction No. 31 Comment Public Notice, we proposed that the amount of the upfront payment submitted by a bidder would determine the initial maximum eligibility (as measured in bidding units) for each bidder. 45 We received no comments on this issue. For Auction No. 31 we will adopt this proposal. The amount of the upfront payment submitted by a bidder determines the initial maximum eligibility (in bidding units) for each bidder. Note again that upfront payments are not attributed to specific licenses, but instead will be translated into bidding units to define a bidder's initial maximum eligibility. The total upfront payment defines the maximum number of bidding units on which the applicant will initially be permitted to bid. As there is no provision for increasing a bidder's maximum eligibility during the course of an auction (as described under “Auction Stages” as set forth in Section IV. A. 4, prospective bidders are cautioned to calculate their upfront payments carefully. The total upfront payment does not define the total dollars a bidder may bid on any given license. In order to ensure that the auction closes within a reasonable period of time, an activity rule requires bidders to bid actively throughout the auction, rather than wait until the end before participating. Bidders are required to be active on a specific percentage of their maximum eligibility during each round of the auction. A bidder's activity level in a round is the sum of the bidding units associated with licenses on which the bidder is active. A bidder is considered active on a license in the current round if it is either the high bidder at the end of the previous bidding round and does not withdraw the high bid in the current round, or if it submits an acceptable bid in the current round (see “Minimum Accepted Bids” in Section IV. B. 3, below). The minimum required activity level is expressed as a percentage of the bidder's maximum bidding eligibility, and increases by stage as the auction progresses. Because these procedures have proven successful in maintaining the pace of previous auctions as set forth under “Auction Stages” in Section IV. A. 4 and “Stage Transitions” in Section IV. A. 5, below, we adopt them for Auction No. 31. 3. Activity Rule Waivers and Reducing Eligibility In the Auction No. 31 Comment Public Notice, we proposed that each bidder in the auction would be provided five activity rule waivers that may be used in any round during the course of the auction. 46 We received no comment on this issue. 47 45 Id. at 2- 3. 46 Id. at 4. 47 In its reply comments, Omnipoint raises questions concerning eligibility restoration and activity rule waivers in the context of how the rules apply to applicants proceeding under nationwide bidder's status in Auction No. 31. See Reply Comments of Omnipoint at 2- 3. The Bureau addresses Omnipoint’s concerns in Section IV. B. 7, below. 23 24 Based upon our experience in previous auctions, we adopt our proposal that each bidder be provided five activity rule waivers that may be used in any round during the course of the auction. Use of an activity rule waiver preserves the bidder's current bidding eligibility despite the bidder's activity in the current round being below the required minimum level. An activity rule waiver applies to an entire round of bidding and not to a particular license. We are satisfied that our practice of providing five waivers over the course of the auction provides a sufficient number of waivers and maximum flexibility to the bidders, while safeguarding the integrity of the auction. 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 round where a bidder's activity level is below the minimum required unless: (1) there are no activity rule waivers available; or (2) the bidder overrides the automatic application of a waiver by reducing eligibility, thereby meeting the minimum requirements. A bidder with insufficient activity that wants to reduce its bidding eligibility rather than use an activity rule waiver must affirmatively override the automatic waiver mechanism during the round by using the reduce eligibility function in the software. In this case, the bidder's eligibility is permanently reduced to bring the bidder into compliance with the activity rules as described in “Auction Stages” (see Section IV. A. 4 discussion below). Once eligibility has been reduced, a bidder will not be permitted to regain its lost bidding eligibility. Finally, a bidder may proactively use an activity rule waiver as a means to keep the auction open without placing a bid. If a bidder submits a proactive waiver (using the proactive waiver function in the bidding software) during a round in which no bids are submitted, the auction will remain open and the bidder's eligibility will be preserved. An automatic waiver invoked in a round in which there are no new valid bids or withdrawals will not keep the auction open. 4. Auction Stages In the Auction No. 31 Comment Public Notice, we proposed to conduct the auction in three stages and employ an activity rule. We further proposed that, in each round of Stage One, a bidder desiring to maintain its current eligibility would be required to be active on licenses encompassing at least 50 percent of its current bidding eligibility. 48 In each round of Stage Two, a bidder desiring to maintain its current eligibility would be required to be active on at least 80 percent of its current bidding eligibility. Finally, we proposed that a bidder in Stage Three, in order to maintain eligibility, would be required to be active on 100 percent of its current bidding eligibility. 49 We received no comment on these proposals. 50 We conclude that the auction will be composed of three stages, which are each defined by an 48 Auction No. 31 Comment Public Notice, supra, at 3- 4. 49 Note that bidders with nationwide status have a 100 percent activity requirement in each stage. See Section IV. B. 7, below. 50 In its reply comments, Omnipoint raises questions concerning the eligibility restoration mechanism and how it affects the Stage I, II, and III activity rules. See Reply Comments of Omnipoint at 3. The Bureau addresses Omnipoint’s concerns in Section IV. B. 7, below. 24 25 increasing activity rule. We will adopt our proposals for the activity rules. Below are the activity levels for each stage of the auction. The FCC reserves the discretion to further alter the activity percentages before and/ or during the auction. Stage One: During the first stage of the auction, a bidder desiring to maintain its current eligibility will be required to be active on licenses that represent at least 50 percent of its current bidding eligibility in each bidding round. Failure to maintain the required 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 sum of bidding units of the bidder’s standing high bids and valid bids during the current round by two. Stage Two: During the second stage of the auction, a bidder desiring to maintain its current eligibility is required to be active on 80 percent of its current bidding eligibility. Failure to maintain the required 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 Two, reduced eligibility for the next round will be calculated by multiplying the sum of bidding units of the bidder’s standing high bids and valid bids during the current round by five- fourths (5/ 4). Stage Three: During the third stage of the auction, a bidder desiring to maintain its current eligibility is required to be active on 100 percent of its current bidding eligibility. Failure to maintain the required 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). In this final stage, reduced eligibility for the next round will be set at current round activity. CAUTION: Since activity requirements increase in each auction stage, bidders must carefully check their current activity during the bidding period of the first round following a stage transition. This is especially critical for bidders that have standing high bids and do not plan to submit new bids. In past auctions, some bidders have inadvertently lost bidding eligibility or used an activity rule waiver because they did not re- verify their activity status at stage transitions. Bidders may check their activity against the required minimum activity level by using the bidding software's bidding module. Because the foregoing procedures have proven successful in maintaining proper pace in previous auctions, we adopt them for Auction No. 31. 5. Stage Transitions In the Auction No. 31 Comment Public Notice, we proposed that the auction would generally advance to the next stage (i. e., from Stage One to Stage Two, and from Stage Two to Stage Three) when the auction activity level, as measured by the percentage of bidding units receiving new high bids, is below 10 percent for three consecutive rounds of bidding in each stage. However, we further proposed that the Bureau would retain the discretion to change stages unilaterally by announcement during the auction. This determination, we proposed, would be based on a variety of measures of bidder activity, including, but not limited to, the auction activity level, the percentages of licenses (as measured in bidding units) on which there are new bids, the number of new bids, and the percentage increase in revenue. 51 We received no comments on this subject. 51 Auction No. 31 Comment Public Notice, supra at 3- 4. 25 26 We adopt our proposal. Thus, the auction will start in Stage One. Under the FCC's general guidelines the auction will start in Stage One and will advance to the next stage (i. e., from Stage One to Stage Two, and from Stage Two to Stage Three) when, in each of three consecutive rounds of bidding, the high bid has increased on 10 percent or less of the licenses being auctioned (as measured in bidding units). However, the Bureau will retain the discretion to regulate the pace of the auction by announcement. This determination will be based on a variety of measures of bidder activity, including, but not limited to, the auction activity level, the percentages of licenses (as measured in bidding units) on which there are new bids, the number of new bids, and the percentage increase in revenue. We believe that these stage transition rules, having proven successful in prior auctions, are appropriate for use in Auction No. 31. 6. Auction Stopping Rules For Auction No. 31, the Bureau proposed to employ a simultaneous stopping rule. 52 The Bureau also sought comment on a modified version of the simultaneous stopping rule. The modified version of the stopping rule would close the auction for all licenses after the first round in which no bidder submits a proactive waiver, a withdrawal, or a new bid on any license on which it is not the standing high bidder. Thus, absent any other bidding activity, a bidder placing a new bid on a license for which it is the standing high bidder would not keep the auction open under this modified stopping rule. The Bureau further sought comment on whether this modified stopping rule should be used unilaterally or only in stage three of the auction. The Bureau further proposed retaining the discretion to keep an auction open even if no new acceptable bids or proactive waivers are submitted and no previous high bids are withdrawn. In addition, we proposed that the Bureau reserve the right to 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 final round( s) only for licenses on which the high bid increased in at least one of the preceding specified number of rounds. We proposed to exercise this option only in circumstances such as where the auction is proceeding very slowly, where there is minimal overall bidding activity or where it appears likely that the auction will not close within a reasonable period of time. 53 We received no comment on these issues. We adopt our proposals concerning the stopping rule. Adoption of these rules, we believe, is most appropriate for Auction No. 31 because our experience in prior auctions demonstrates that the simultaneous stopping rule balances the interests of administrative efficiency and maximum bidder participation. The substitutability between and among licenses in different geographic areas and the importance of preserving the ability of bidders to pursue backup strategies support the use of a simultaneous stopping rule. Under the simultaneous stopping rule, bidding will remain open on all licenses until bidding stops on every license. The auction will close for all licenses when one round passes during which no bidder submits a new acceptable bid on any license, applies a proactive waiver, or withdraws a previous high bid. After the first such round, bidding closes simultaneously on all licenses. In addition, the Bureau retains the discretion to close the auction for all licenses after the first round in 52 Id. at 10. 53 Id. at 11. 26 27 which no bidder submits a proactive waiver, a withdrawal, or a new bid on any license on which it is not the standing high bidder. Under this modified stopping rule, absent any other bidding activity, a bidder placing a new bid on a license for which it is the standing high bidder would not keep the auction open under this stopping rule procedure. We will notify bidders in advance of implementing any change to our simultaneous stopping rule. The Bureau also retains the discretion to keep the auction open even if no new acceptable bids or proactive waivers are submitted, and no previous high bids are withdrawn in a round. In this event, the effect will be the same as if a bidder had submitted a proactive waiver. Thus, the activity rule will apply as usual, and a bidder with insufficient activity will either lose bidding eligibility or use an activity rule waiver (if it has any left). Further, in its discretion, the Bureau reserves the right to invoke the “special stopping rule,” whereby it will accept bids in the final round( s) only for licenses on which the high bid increased in at least one of the preceding specified number of rounds. Before exercising this option, the Bureau is likely to attempt to increase the pace of the auction by, for example, moving the auction into the next stage (where bidders would be required to maintain a higher level of bidding activity), increasing the number of bidding rounds per day. 7. Auction Delay, Suspension, or Cancellation In the Auction No. 31 Comment Public Notice, we proposed that, by public notice or by announcement during the auction, the Bureau may delay, suspend, or cancel the auction in the event of natural disaster, technical obstacle, evidence of an auction security breach, unlawful bidding activity, administrative or weather necessity, or for any other reason that affects the fair and competitive conduct of competitive bidding. 54 Because this approach has proven effective in resolving exigent circumstances in previous auctions, we will adopt our proposed auction cancellation rules. By public notice or by announcement during the auction, the Bureau may delay, suspend or cancel the auction in the event of natural disaster, technical obstacle, evidence of an auction security breach, unlawful bidding activity, administrative or weather necessity, or for any other reason that affects the fair and competitive conduct of competitive bidding. In such cases, the Bureau, in its sole discretion, may elect to: resume the auction starting from the beginning of the current round; resume the auction starting from some previous round; or cancel the auction in its entirety. Network interruption may cause the Bureau to delay or suspend the auction. We emphasize 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. B. Bidding Procedures 1. Round Structure The initial bidding schedule will be announced in the public notice listing the qualified bidders which is released approximately 10 days before the start of the auction. This public notice will be included with the registration mailings. The round structure for each bidding round contains a single bidding round followed by the release of the round results. Multiple bidding rounds may be 54 Id. at 4. 27 28 conducted in a given day. Details regarding round results formats and locations will be included in the Qualified Bidder Public Notice. The FCC has discretion to change the bidding schedule in order to foster an auction pace that reasonably balances speed with the bidders' need to study round results and adjust their bidding strategies. The FCC may increase or decrease the amount of time for the bidding rounds and review periods, or the number of rounds per day, depending upon the bidding activity level and other factors. 2. Reserve Price or Minimum Opening Bid Background. The Balanced Budget Act of 1997 calls upon the Commission to prescribe methods by which a reasonable reserve price will be required or a minimum opening bid established when FCC licenses are subject to auction (i. e., because they are mutually exclusive), unless the Commission determines that a reserve price or minimum opening bid is not in the public interest. 55 Consistent with this mandate, the Commission directed the Bureau to seek comment on the use of a minimum opening bid and/ or reserve price prior to the start of each auction. 56 Among other factors, the Bureau must consider the amount of spectrum being auctioned, levels of incumbency, the availability of technology to provide service, the size of the geographic service areas, the extent of interference with other spectrum bands, and any other relevant factors that could have an impact on valuation of the spectrum being auctioned. 57 The Commission concluded that the Bureau should have the discretion to employ either or both of these mechanisms for future auctions. 58 In the Auction No. 31 Comment Public Notice, the Bureau proposed to establish minimum opening bids for Auction No. 31 and to retain discretion to lower the minimum opening bids. 59 Specifically, for Auction No. 31, the Commission proposed calculating the minimum opening bid based on information available in the form of a Congressional estimate of the value of the spectrum. In its comments, U S West argues that the proposed minimum opening bid amounts have failed to account for the “overly stringent” limitations adopted in the 700 MHz First Report & Order on out- of- band emissions (“ OOBE”) and permissible transmit power. 60 We are not persuaded that the proposed minimum opening bids are too high. We note that in establishing OOBE, the Commission took into account the impact of limitations on interference from new commercial licensees on public safety service licensees. 61 The Commission stated: “[ W] e recognize the need to adopt technical rules that provide adequate protection to public safety entities operating in this band. We are mindful, however that Congress also intended that we establish rules that will enable viable commercial 55 Budget Act, see above note 2. 56 See Amendment of Part 1 of the Commission's Rules -- Competitive Bidding Procedures, WT Docket No. 97- 82, Third Report and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd. at 141, 455- 456 (1998) (" Part 1 Third Report and Order"). 57 Id. 58 Id. 59 Auction No. 31 Comment Public Notice at 5- 6. 60 See Comments of U S West at 1- 3. 61 See 700 MHz First Report & Order, above at ¶¶ 103- 107. 28 29 operations here.” 62 Thus, the Commission set OOBE limits that, while achieving the primary goal of protecting public safety, also struck a reasonable balance between protecting public safety and maintaining the commercial viability of this band. Further, we note that no other parties commented on either the OOBE and transmit power limits or on the proposed minimum opening bids. Significantly, U S West did not submit an alternative proposal or substantiate its position with an alternate valuation or quantitative analysis. Moreover, U S West did not even comment on this issue in the service rule proceeding. Taking all of these factors into account, we will adopt the minimum opening bids, as proposed, for the licenses in Auction No. 31, which are reducible at the discretion of the Bureau. Congress has enacted a presumption that unless the Commission determines otherwise, minimum opening bids or reserve prices are in the public interest. 63 Based on our experience in using minimum opening bids in other auctions, we believe that minimum opening bids speed the course of the auction and ensure that valuable assets are not sold for nominal prices, without unduly interfering with the efficient assignment of licenses. 64 3. Bid Increments and Minimum Accepted Bids In the Auction No. 31 Comment Public Notice, we proposed to use a smoothing methodology to calculate minimum bid increments. 65 We further proposed to retain the discretion to change the minimum bid increment if circumstances so dictate. 66 We received no comment on this issue. We will adopt our proposal for a smoothing formula. The smoothing methodology is designed to vary the increment for a given license between a maximum and minimum value based on the bidding activity on that license. This methodology allows the increments to be tailored to the activity level of a license, decreasing the time it takes for active licenses to reach their final value. The formula used to calculate this increment is included as Attachment G. We adopt our proposal of initial values for the maximum of 0. 2, or 20 percent of the license value, and a minimum of 0.1, or 10 percent of the license value. The Bureau retains the discretion to change the minimum bid increment if it determines that circumstances so dictate. The Bureau will do so by announcement in the Automated Auction System. Under its discretion, the Bureau may also implement an absolute dollar floor for the bid increment to further facilitate a timely close of the auction. The Bureau may also use its discretion to adjust the minimum bid increment without prior notice if circumstances warrant. As an alternative approach, the Bureau may, in its discretion, adjust the minimum bid increment gradually over a number of rounds as opposed to single large changes in the minimum bid increment (e. g., by raising the increment floor by one percent every round over the 58 Id. 63 Section 3002( F) of the Budget Act directs the Commission to "prescribe methods by which a reasonable reserve price will be required, or a minimum bid established, to obtain any license or permit being assigned pursuant to the competitive bidding, unless the Commission determines that such a reserve price or minimum bid is not in the public interest." 64 See 47 U. S. C. 309( j)( 3)( C). 65 Auction No. 31 Comment Public Notice at 6. 66 Id. 29 30 course of ten rounds). The Bureau also retains the discretion to use alternate methodologies, such as a flat percentage increment for all licenses, for Auction No. 31 if circumstances warrant. 4. High Bids Each bid will be date- and time- stamped when it is entered into the FCC computer system. In the event of tie bids, the Commission will identify the high bidder on the basis of the order in which the Commission receives bids. The bidding software allows bidders to make multiple submissions in a round. As each bid is individually date- and time- stamped according to when it was submitted, bids submitted by a bidder earlier in a round will have an earlier date and time stamp than bids submitted later in a round. 5. Bidding During a bidding round, a bidder may submit bids for as many licenses as it wishes, subject to its eligibility, as well as withdraw high bids from previous bidding rounds, remove bids placed in the same bidding round, or permanently reduce eligibility. Bidders also have the option of making multiple submissions and withdrawals in each bidding round. If a bidder submits multiple bids for a single license in the same round, the system takes the last bid entered as that bidder's bid for the round, and the date- and time- stamp of that bid reflects the latest time the bid was submitted. Please note that all bidding will take place remotely either through the automated bidding software or by telephonic bidding. (Telephonic bid assistants are required to use a script when entering bids placed by telephone. Telephonic bidders are therefore reminded to allow sufficient time to bid by placing their calls well in advance of the close of a round. Normally, four to five minutes are necessary to complete a bid submission.) There will be no on- site bidding during Auction No. 31. A bidder's ability to bid on specific licenses in the first round of the auction is determined by two factors: (1) the licenses applied for on FCC Form 175; and (2) the upfront payment amount deposited. The bid submission screens will be tailored for each bidder to include only those licenses for which the bidder applied on its FCC Form 175. A bidder also has the option to further tailor its bid submission screens to call up specified groups of licenses. The bidding software requires each bidder to login to the FCC auction system during the bidding round using the FCC account number, bidder identification number, and the confidential security codes provided in the registration materials. Bidders are strongly encouraged to download and print bid confirmations after they submit their bids. The bid entry screen of the automated auction system software for Auction No. 31 allows bidders to place multiple increment bids, which will let bidders increase high bids from one to nine bid increments. A single bid increment is defined as the difference between the standing high bid and the minimum acceptable bid for a license. The bidding software will display the bid increment for each license. To place a bid on a license, the bidder must increase the standing high bid by one to nine times the bid increment. This is done by entering a whole number between 1 and 9 in the bid increment multiplier (Bid Mult) field in the software. This value will determine the amount of the bid (Amount Bid) by multiplying the bid increment multiplier by the bid increment and adding the result to the high bid amount according to the following formula: 30 31 Amount Bid = High Bid + (Bid Mult * Bid Increment) Thus, bidders may place a bid that exceeds the standing high bid by between one and nine times the bid increment. For example, to bid the minimum acceptable bid, which is equal to one bid increment, a bidder will enter “1” in the bid increment multiplier column and press submit. For any license on which the FCC is designated as the high bidder (i. e., a license that has not yet received a bid in the auction or where the high bid was withdrawn and a new bid has not yet been placed), bidders will be limited to bidding only the minimum acceptable bid. In both of these cases no increment exists for the licenses, and bidders should enter “1” in the Bid Mult field. Note that in this case, any whole number between 1 and 9 entered in the multiplier column will result in a bid value at the minimum acceptable bid amount. Finally, bidders are cautioned in entering numbers in the Bid Mult field because, as explained in the following section, a high bidder that withdraws its standing high bid from a previous round, even if mistakenly or erroneously made, is subject to bid withdrawal payments. 6. Bid Removal and Bid Withdrawal In the Auction No. 31 Comment Public Notice, we proposed bid removal and bid withdrawal rules. 67 With respect to bid withdrawals, we proposed limiting each bidder to withdrawals in no more than two rounds during the course of the auction. The two rounds in which withdrawals are utilized, we proposed, would be at the bidder's discretion. We received no comment on this issue. In previous auctions, we have detected bidder conduct that, arguably, may have constituted strategic bidding through the use of bid withdrawals. While we continue to recognize the important role that bid withdrawals play in an auction, i. e., reducing risk associated with efforts to secure various geographic area licenses in combination, we conclude that, for Auction No. 31, adoption of a limit on their use to two rounds is the most appropriate outcome. By doing so we believe we strike a reasonable compromise that will allow bidders to use withdrawals. Our decision on this issue is based upon our experience in prior auctions, particularly the PCS D, E and F block auctions, and 800 MHz SMR auction, and is in no way a reflection of our view regarding the likelihood of any speculation or “gaming” in this auction. The Bureau will therefore limit the number of rounds in which bidders may place withdrawals to two rounds. These rounds will be at the bidder's discretion and there will be no limit on the number of bids that may be withdrawn in either of these rounds. Withdrawals during the auction will still be subject to the bid withdrawal payments specified in 47 C. F. R. § 1. 2104( g). Bidders should note that abuse of the Commission's bid withdrawal procedures could result in the denial of the ability to bid on a market. If a high bid is withdrawn, the license will be offered in the next round at the second highest bid price, which may be less than, or equal to, in the case of tie bids, the amount of the withdrawn bid, without any bid increment. The Commission will serve as a “place holder” on the license until a new acceptable bid is submitted on that license. Procedures. Before the close of a bidding round, a bidder has the option of removing any bids placed in that round. By using the “remove bid” function in the software, a bidder may 67 Auction No. 31 Comment Public Notice at 8. 31 32 effectively “unsubmit” any bid placed within that round. A bidder removing a bid placed in the same round is not subject to withdrawal payments. Removing a bid will affect a bidder's activity for the round in which it is removed, i. e. a bid that is subsequently removed does not count toward the bidder’s activity requirement. This procedure, about which we received no comments, will enhance bidder flexibility during the auction. Therefore, we will adopt these procedures for Auction No. 31. Once a round closes, a bidder may no longer remove a bid. However, in the next round, a bidder may withdraw standing high bids from previous rounds using the “withdraw bid” function (assuming that the bidder has not exhausted its withdrawal allowance). A high bidder that withdraws its standing high bid from a previous round during the auction is subject to the bid withdrawal payments specified in 47 C. F. R. § 1.2104( g). The procedure for withdrawing a bid and receiving a withdrawal confirmation is essentially the same as the bidding procedure described in “High Bids,” Section IV. B. 4. Calculation. Generally, the Commission imposes payments on bidders that withdraw high bids during the course of an auction. 68 Specifically, a bidder (“ Bidder X”) that withdraws a high bid during the course of an auction is subject to a bid withdrawal payment equal to the difference between the amount withdrawn and the amount of the subsequent winning bid. If a high bid is withdrawn on a license that remains unsold at the close of the auction, Bidder X will be required to make an interim payment equal to three (3) percent of the net amount of the withdrawn bid. 69 This payment amount is deducted from any upfront payments or down payments that Bidder X has deposited with the Commission. If, in a subsequent auction, that license receives a valid bid in an amount equal to or greater than the withdrawn bid amount, then no final bid withdrawal payment will be assessed, and Bidder X may request a refund of the interim three (3) percent payment. If, in a subsequent auction, the selling price for that license is less than Bidder X’s withdrawn bid amount, then Bidder X will be required to make a final bid withdrawal payment, less the three percent interim payment, equal to either the difference between Bidder X’s net withdrawn bid and the subsequent net winning bid, or the difference between Bidder X’s gross withdrawn bid and the subsequent gross winning bid, whichever is less. 7. Special 30 MHz Nationwide Bid Withdrawal Procedure a. Background For the licenses being offered in Auction No. 31, we noted that there may be entities whose business plans are such that they may not wish to acquire any licenses if they are unable to aggregate them all. 70 Our current rules are designed to facilitate the aggregation of licenses, and we believe they are adequate to facilitate the aggregation of all the 10 MHz or all 20 MHz licenses or any subset thereof. The bid withdrawal provisions of our Part 1 rules could, however, potentially discourage bidders from attempting a 30 MHz nationwide aggregation in an auction where there are divergent business plans. This is because, were such a large aggregation attempt ultimately to fail, a bidder 68 See 47 C. F. R. §§ 1.2104( g) and 1.2109. 69 See, e. g., “Phase II 220 MHz Service Auction Closes, Winning Bidders in the Auction of 908 Phase II 220 MHz,” Public Notice, 14 FCC Rcd 605 (1998). 70 See Auction No. 31 Comment Public Notice at 9. 70 See Reply Comments of PSINet at 2- 7. 32 33 might be left with a potentially large subset of licenses that it does not wish to win given its all- or-nothing strategy. The bidder would then be forced to withdraw all of the high bids it holds and pay a bid withdrawal payment. We therefore proposed and have determined to adopt a nationwide bid withdrawal procedure for the 747- 762 MHz and 777- 792 MHz bands to limit the exposure of bidders seeking a 30 MHz nationwide aggregation. b. Discussion In its comments, PSINet asks that we allow applicants that choose to bid for a 30 MHz nationwide aggregation to maintain the ability to also bid on regional 30 MHz aggregations and that the “Commission adopt a similar scheme for entities that desire to participate in regional 30 MHz aggregations to that proposed by the Commission for the nationwide 30 MHz aggregation.” 71 Cisco submitted reply comments in which it strongly urged the Commission to limit withdrawal penalties for regional 30 MHz bidders by adopting the bidding rule proposed by PSINet. 72 On reply, PSINet emphasizes that the Commission should apply limited withdrawal penalties to applicants seeking to aggregate 30 MHz by obtaining both the 10 MHz and 20 MHz licenses in a region 73 and contends that it is “extremely unlikely that an entity will win a nationwide 30 MHz aggregation.” 74 BAM takes the opposite position in its reply comments. According to BAM, we should not change long- standing auction procedures for either nationwide or regional bidders. 75 AT& T’s reply comments strongly suggest that the Commission should reject PSINet’s request to impose reduced bid withdrawal penalties on bidders for regional, rather than nationwide, 30 MHz licenses. 76 In the 700 MHz First Report & Order, the Commission directed the Bureau to create a modified withdrawal procedure for those bidders seeking a 30 megahertz nationwide aggregation, i. e., those who have the greatest exposure under the standard bid withdrawal payment rule. 77 Neither PSINet nor Cisco presents compelling reasons why the Bureau can or should apply the special rule to those bidders that face less exposure. In fact, bidders in the past auctions have successfully aggregated licenses under the existing withdrawal rules. However, the Bureau notes that the existence of all- or- nothing nationwide business plans presents a unique situation for bidders. Likewise, BAM has not persuaded the Bureau to exercise its limited discretion not to make this procedure available to 30 MHz nationwide bidders. 78 Accordingly, the Bureau will adopt the bid withdrawal provisions as stated in this section. Bidders not choosing to avail themselves of the nationwide bid withdrawal provision may still 71 See Comments of PSINet at 4- 8. 72 See Reply Comments of Cisco at 2- 4. 73 See Reply Comments of PSINet at 2- 7. 74 See Id. at 3 75 See Reply Comments of BAM at 1. 76 See Reply Comments of AT& T at 4- 6. 77 See 700 MHz First Report & Order, above at ¶¶ 126- 127. 78 See Id. at ¶ 126. 33 34 aggregate licenses subject to our standard bid withdrawal provisions. 79 The nationwide bid withdrawal procedure is made available to limit the exposure associated with bid withdrawal payments for those bidders whose business plans require an all- or- nothing aggregation of all licenses in the auction, while still discouraging insincere bidding. Under the nationwide bid withdrawal procedure, an applicant will be required to declare on its short- form application whether it is seeking a 30 MHz nationwide aggregation and wishes to be subject to the nationwide bid withdrawal provisions. Instructions for doing so will be part of the electronic filing system for the short- form application. An applicant that chooses to be a nationwide bidder will be required to be active in each round of bidding on all licenses (a 100 percent activity requirement). A nationwide bidder must win either the entire 30 MHz nationwide aggregation (all 12 licenses) or no licenses at all. (Note that a nationwide bidder does not necessarily have to be the standing high bidder on every license at the end of each round in order to fulfill the 100 percent activity requirement. Activity on a license in a given round is defined as a bidder either holding the high bid from the previous round or placing a valid bid in the current round.) Nationwide bidders that decide to no longer pursue the nationwide aggregation and hold any high bids may withdraw those high bids subject to the modified withdrawal payment described below. Once a nationwide bidder withdraws a high bid from any market, it must withdraw any remaining high bids it holds from all other markets. (The automated auction system will allow a nationwide bidder only to withdraw all of its standing high bids and not any subset thereof.) The nationwide bidder will then have its eligibility reduced to zero, thus making the bidder ineligible to continue bidding for any licenses. If a 30 MHz nationwide bidder withdraws, eligibility, activity rule waivers, and withdrawal round allowances will be restored to beginning auction levels for all other bidders except for any nationwide bidders that have withdrawn from the auction by either withdrawing their high bids or failing to meet the activity requirement (and thus having their high bids withdrawn for them). Without this restoration, few bidders would likely be eligible to bid on licenses withdrawn late in the auction. 80 Upon the withdrawal of a nationwide bidder, the auction will pause for 24 hours to allow for the restoration of eligibility, activity rules waivers, and withdrawal allowances, and for the notification of all auction participants that such a withdrawal has occurred. The Bureau will contact the contact person listed on the FCC Form 175 for each qualified bidder that is eligible for the restoration of eligibility. Note that non- nationwide bidders that have already dropped out of the auction will also have their eligibility, activity rules waivers, and withdrawal allowances restored, and any nationwide bidders still in the auction will have their activity rule waivers restored. The automated auction system will not allow bidders that identify themselves as nationwide bidders to submit a group of bids that does not result in the bidder being active on all licenses in the auction. Nationwide bidders, like all other bidders in the auction, will be provided 5 activity rule waivers to preserve their maximum eligibility level in the instance that they do not meet the 100% activity requirement. In each round of bidding that a nationwide bidder fails to meet the activity rule requirement, an automatic waiver will be applied to preserve the bidder’s maximum eligibility. If a nationwide bidder fails to meet the activity rule requirement and has no activity rule waivers 79 See 47 C. F. R. § 1.2104( g). 80 We adopted a similar rule for the General Wireless Communications Service. See Allocation of Spectrum Below 5 GHz Transferred from Federal Government Use, ET Docket No. 94- 32, Second Report and Order, 11 FCC Rcd 624, 652- 53, ¶¶ 71- 73 (1995). 34 35 remaining, the bidder’s maximum eligibility will be reduced to zero and any high bids will automatically be withdrawn. In such a case, the system will treat the bidder as if the bidder had placed a withdrawal itself — making the bidder subject to the special withdrawal payments — and the auction will pause to allow for the restoration of eligibility, activity rules waivers, and withdrawal allowances, as described above. The bid withdrawal payment for a 30 MHz nationwide bidder that withdraws from the auction will be calculated as the difference between the sum of the standing high bids that the nationwide bidder withdraws and the sum of the subsequent winning bids on those withdrawn licenses. In addition, nationwide bid withdrawal payments will be limited to 5 percent of the aggregate withdrawn bids. The withdrawn licenses will be offered in the next round at the second highest bid price, which may be less than or equal to the amount of the withdrawn bid, without any bid increment. The FCC will serve as the "place holder" on the license until a new acceptable bid is submitted. In the 700 MHz First Report & Order, the Commission stated that nationwide bidders cannot win anything less than a nationwide 30 MHz aggregation. 81 Thus, in the event that there is no other bidding activity in a given round so that the auction would otherwise close under the simultaneous stopping rule, but a nationwide bidder holds the high bid on licenses that comprise less than a 30 MHz nationwide aggregation, the auction will not close. Rather, the auction will proceed another round and the nationwide bidder (and all other bidders failing to meet the activity requirement) will use an activity rule waiver, if any remain. Once all the nationwide bidder’s activity rule waivers are used, its standing high bids will be withdrawn, and eligibility will be restored to other bidders, as described above. In its comments, BAM asks that if the Bureau decides to adopt a special withdrawal penalty rule for nationwide bidders, any such bidder should not be allowed to have any affiliation or bidding arrangement with any other bidder that is pursuing a regional or individual market bidding strategy. We agree with BAM on this point. In the Public Notice, we stated that any applicant who chooses nationwide bidder status will not be allowed to bid on anything other than all licenses comprising the 30 MHz nationwide aggregation. 82 We will not allow a bidder to do indirectly that which we have directly prohibited. Thus, any bidder who seeks nationwide bidding status shall not have any controlling interest in, or affiliate relationship with, any other applicant or any agreement of any kind relating to the licenses being auctioned. AT& T raises a similar point in seeking clarification that upon withdrawal of a nationwide bidder from the auction, the eligibility of all other bidders, except “bidding partners” of the withdrawing nationwide bidder, will be restored to beginning auction levels. 83 Since nationwide bidders are not permitted to enter into agreements regarding the licenses, AT& T’s point is moot. In reply comments, Omnipoint states that the bid withdrawal process for a nationwide bidder is not yet sufficiently clear. 84 In support of its position, Omnipoint states that it is unclear whether the FCC requires nationwide bidders to exercise bid withdrawal. Contrary to Omnipoint’s contention, 81 See 700 MHz First Report & Order, above at ¶ 127. 82 See Auction No. 31 Comment Public Notice at 10. 83 See Comments of AT& T at 6- 7. 84 See Reply Comments of Omnipoint . 35 36 the Commission clearly stated: “An applicant that chooses to be such a nationwide bidder would not be allowed to bid on anything other than all licenses comprising the 30 megahertz nationwide aggregation, and must win either this nationwide aggregation or no licenses at all. Thus, once such a nationwide bidder withdraws from a market, it must withdraw from all markets and will be ineligible to continue bidding for any licenses.” 85 If a nationwide bidder has standing high bids on some licenses but decides not to continue bidding on other licenses, then the bidder withdraws its standing high bids. This may be accomplished one of two ways: (1) A nationwide bidder may withdraw standing high bids using the bidding software. The bidding software will only allow a nationwide bidder to remove all or none of its standing high bids. Once a nationwide bidder exercises this option, it is out of the auction. (2) A nationwide bidder may decide not to bid on licenses on which it is not already the standing high bidder. Once such a bidder’s activity rule waivers expire, the FCC will withdraw the standing high bids for the bidder — which has the same effect as if the bidder had withdrawn its own bids. The Bureau provides the following additional information in response to Omnipoint’s Reply Comments. When a 30 megahertz nationwide bidder withdraws a standing high bid, initial maximum eligibility, activity rule waivers, and withdrawal allowances for all other bidders are restored to beginning auction levels, except for those nationwide bidders that have withdrawn from the auction. Once a nationwide bidder is out of the auction, it cannot have its eligibility restored. Eligibility restoration does not affect the activity requirements of the different stages. For example, if a bidder has eligibility restored due to the withdrawal from the auction of a nationwide bidder, the bidder with restored eligibility would be subject to the activity rule of whatever stage the auction is in when the eligibility is restored. Finally, we reiterate that the activity rules for Stages I, II, and III do not apply to nationwide bidders. A nationwide bidder will not be allowed to be active on anything less than all licenses comprising the 30 megahertz nationwide aggregation. The bidder must be active on every license in every round, or employ an activity rule waiver. Also, PSINet seeks clarification on two items. First, PSINet asks that the Bureau confirm that the withdrawal payment would be calculated as the difference between the sum of the withdrawn bids and the sum of the “subsequent winning bids” on the withdrawn licenses. 86 PSI Net is correct. The withdrawal payment would be calculated based on the amount of the winning bids and not based upon the subsequent high bids in the next round of bidding. 87 PSI Net also seeks clarification that the withdrawal penalty for a nationwide aggregation will be calculated using the sum of all twelve withdrawn bids and the sum of subsequent bids. 88 In that regard, PSINet is incorrect. The withdrawal penalty will be calculated using the sum of only the withdrawn standing high bids and the sum of the subsequent winning bids for those licenses. 89 8. Round Results 85 See 700 MHz First Report & Order, above at ¶ 127. 86 See PSINet Comments at 8. 87 See Auction 31 Comment Public Notice at 10. 88 See PSINet Comment at 9. 89 See Auction 31 Comment Public Notice at 10. 36 37 Bids placed during a round will not be published until the conclusion of that bidding period. After a round closes, the Commission will compile reports of all bids placed, bids withdrawn, current high bids, new minimum accepted bids, and bidder eligibility status (bidding eligibility and activity rule waivers), and post the reports for public access. 90 Reports reflecting bidders' identities and bidder identification numbers for Auction No. 31 will be available before and during the auction. Thus, bidders will know in advance of this auction the identities of the bidders against which they are bidding. 9. Auction Announcements The FCC will use auction announcements to announce items such as schedule changes and stage transitions. All FCC auction announcements will be available on the FCC remote electronic bidding system, as well as on the Internet. 10. Maintaining the Accuracy of FCC Form 175 Information As noted in Section II. E., after the short- form filing deadline, applicants may make only minor changes to their FCC Form 175 applications. For example, permissible minor changes include deletion and addition of authorized bidders (to a maximum of three) and certain revisions to exhibits. Filers must make these changes on- line, and submit a letter to: Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, Federal Communications Commission, 445 12 th Street, S. W., Washington, D. C. 20554 A separate copy of the letter should be mailed to Howard Davenport, Auctions and Industry Analysis Division), briefly summarizing the changes. Questions about other changes should be directed to Howard Davenport, Auctions and Industry Analysis Division at (202) 418- 0660. V. POST- AUCTION PROCEDURES A. Down Payments and Withdrawn Bid Payments After bidding has ended, the Commission will issue a public notice declaring the auction closed, identifying the winning bids and bidders for each license, and listing bid withdrawal payments due. Within ten business days after release of the auction closing public notice, each winning bidder must submit sufficient funds (in addition to its upfront payment) to bring its total amount of money on deposit with the Government to 20 percent of its net winning bids (actual bids less any applicable bidding credits). See 47 C. F. R. § 1.2107( b). In addition, by the same deadline all bidders must pay any withdrawn bid amounts due under 47 C. F. R. § 1.2104( g), as discussed in “Bid Removal and Bid Withdrawal,” Section IV. B. 6. (Upfront payments are applied first to satisfy any withdrawn bid liability, before being applied toward down payments.) 90 See Attachment I. 37 38 B. Long- Form Application Within ten business days after release of the auction closing public notice, winning bidders must electronically submit a properly completed long- form application and required exhibits for each 700 MHz band license won through the auction. Winning bidders that are small businesses or very small businesses must include an exhibit demonstrating their eligibility for bidding credits. See 47 C. F. R. § 1.2112( b). Further filing instructions will be provided to auction winners at the close of the auction. C. Default and Disqualification Any high bidder that defaults or is disqualified after the close of the auction (i. e., fails to remit the required down payment within the prescribed period of time, fails to submit a timely long- form application, fails to make full payment, or is otherwise disqualified) will be subject to the payments described in 47 C. F. R. § 1.2104( g)( 2). In such event the Commission may re- auction the license or offer it to the next highest bidder (in descending order) at their final bid. See 47 C. F. R. § 1.2109( b) and (c). In addition, if a default or disqualification involves gross misconduct, misrepresentation, or bad faith by an applicant, the Commission may declare the applicant and its principals ineligible to bid in future auctions, and may take any other action that it deems necessary, including institution of proceedings to revoke any existing licenses held by the applicant. See 47 C. F. R. § 1.2109( d). D. Refund of Remaining Upfront Payment Balance All applicants that submitted upfront payments but were not winning bidders for a 700 MHz license may be entitled to a refund of their remaining upfront payment balance after the conclusion of the auction. No refund will be made unless there are excess funds on deposit from that applicant after any applicable bid withdrawal payments have been paid. Bidders that drop out of the auction completely may be eligible for a refund of their upfront payments before the close of the auction. However, bidders that reduce their eligibility and remain in the auction are not eligible for partial refunds of upfront payments until the close of the auction. Qualified bidders that have exhausted all of their activity rule waivers, have no remaining bidding eligibility, and have not withdrawn a high bid during the auction must submit a written refund request which includes wire transfer instructions, a Taxpayer Identification Number (“ TIN”), and a copy of their bidding eligibility screen print, to: Federal Communications Commission Financial Operations Center Auctions Accounting Group Shirley Hanberry 445 12th Street, S. W., Room 1- A824 Washington, D. C. 20554 Bidders are encouraged to file their refund information electronically using the Refund Information portion of the FCC Form 175, but bidders can also fax their request to the Auctions Accounting Group at (202) 418- 2843. Once the request has been approved, a refund will be sent to the party identified in the refund information. 38 39 NOTE: Refund processing generally takes up to two weeks to complete. Bidders with questions about refunds should contact Michelle Bennett or Gail Glasser at (202) 418- 1995. Media Contact: Meribeth McCarrick at (202) 418- 0654. Auctions and Industry Analysis Division: Howard Davenport, Attorney, Auctions Legal Branch at (202) 418- 0660; Kathy Garland, Project Manager, Auctions Operations Branch at (717) 338- 2888, or Craig Bomberger, Analyst, Auctions Operations Branch at (202) 418- 0660. Commercial Wireless Division: Roger Noel at (202) 418- 0620. - FCC - 39 40 VI. ATTACHMENT A Auction No. 31 Licenses to be Auctioned Economic Area Grouping License Numbers License Bandwidth (MHz) Description Population (1990) Bidding Units Upfront Payment Minimum Opening Bid EAG701 WXEAG701- C 10 Northeast 41,567,654 14,000,000 $14,000,000 $40,000,000 EAG702 WXEAG702- C 10 Mid- Atlantic 42,547,218 14,000,000 $14,000,000 $40,000,000 EAG703 WXEAG703- C 10 Southeast 44,516,919 14,000,000 $14,000,000 $40,000,000 EAG704 WXEAG704- C 10 Great Lakes 41,560,906 14,000,000 $14,000,000 $40,000,000 EAG705 WXEAG705- C 10 Central / Mountain 40,926,284 14,000,000 $14,000,000 $40,000,000 EAG706 WXEAG706- C 10 Pacific 41,427,686 14,000,000 $14,000,000 $40,000,000 Subtotal 84,000,000 $84,000,000 $240,000,000 EAG701 WXEAG701- D 20 Northeast 41,567,654 28,000,000 $28,000,000 $80,000,000 EAG702 WXEAG702- D 20 Mid- Atlantic 42,547,218 28,000,000 $28,000,000 $80,000,000 EAG703 WXEAG703- D 20 Southeast 44,516,919 28,000,000 $28,000,000 $80,000,000 EAG704 WXEAG704- D 20 Great Lakes 41,560,906 28,000,000 $28,000,000 $80,000,000 EAG705 WXEAG705- D 20 Central / Mountain 40,926,284 28,000,000 $28,000,000 $80,000,000 EAG706 WXEAG706- D 20 Pacific 41,427,686 28,000,000 $28,000,000 $80,000,000 Subtotal 168,000,000 $168,000,000 $480,000,000 Total 252,000,000 $252,000,000 $720,000,000 40 41 VII. ATTACHMENT B FCC AUCTION SEMINAR REGISTRATION FORM Auction No. 31 The FCC will sponsor a one- day seminar for the 700 MHz (Auction No. 31) applicants. The seminar is free of charge and will provide information about pre- auction procedures, service and auction rules, conduct of the auction, and the FCC remote bidding software. A maximum of two representatives from each company may attend on a reservation basis. Additional representatives may attend on a first- come, first- served basis until room capacity is filled. Additional seating may be available on a stand- by basis the day of the seminar. The seminar will be held: Thursday, March 30, 2000 Federal Communications Commission 445 12 th Street S. W. Washington, DC 20554 Registration 8: 30 a. m. - 9: 30 a. m. Seminar 9: 30 a. m. - 4 p. m. If hotel accommodations are needed Please contact 1- 888- 225- 5322 (option #2) for a list of hotels in the area ********************************** To register, complete the form below and return by mail or fax to be received no later than Tuesday, March 28, 2000, to: FCC Auction 31 Auctions Operations Branch 1270 Fairfield Road Gettysburg, PA 17325- 7245 FAX: 717- 338- 2850 Phone: 717- 338- 2888 I/ We will attend the Auction No. 31 Seminar, scheduled for Thursday, March 30, 2000. Name of attendee: _____________________________________________________ Name of attendee: _____________________________________________________ Company name: ______________________________________________________ Phone: __________________________ Fax: ______________________________ 41 42 VIII. ATTACHMENT C ELECTRONIC FILING AND REVIEW OF THE FCC FORM 175 Applicants must submit their FCC Form 175 applications electronically using the Commission's remote access system. This system will generally be available 24 hours per day. FCC Form 175 applications must be submitted and confirmed by 5: 30 p. m. ET on Monday, April 10, 2000. Late applications or unconfirmed submissions of electronic data will not be accepted. Applicants must press the 175 Submit button on the Submit page to successfully submit their FCC Form 175. The electronic filing process consists of an initial filing period and a resubmission period to make minor corrections. During each filing period, submitted applications may be updated and amended multiple times until the filing deadline. Applicants will need to meet the following minimum hardware and software requirements: Minimum Hardware Requirements x CPU: Intel Pentium x RAM: 16 MB (more recommended if you have multiple applications open) x Modem: v. 32bis 14.4kbps Hayes compatible modem or faster (recommend 56.6 Kbps) x Monitor: VGA or above x Mouse or other pointing device Minimum Software Requirements x Operating System: Microsoft Windows 95 or 98 x PPP (Point- to- Point Protocol) Dialer: Use the Dial- Up Networking feature included with Windows 95/ 98 x Web Browser: Netscape Communicator 4.7 is recommended. However, you can also use Netscape Communicator 4.5, 4.51, or 4.61 (Internet web browser software). Note: To download Netscape Communicator 4.7 free of charge, access the Netscape download site at http:// home. netscape. com/ download/ x PDF Viewer: Adobe Acrobat Reader 3.0 or higher (available at http:// www. adobe. com) x If you wish to use the download feature in the Form 175 Review, you will need a .tar file extraction utility, e. g., Winzip (available at http:// www. winzip. com) or Pkzip for Windows (available at http:// www. pkware. com/ download. html). 42 43 Submitting FCC Form 175 Applications To submit FCC Form 175 applications electronically, you must first connect to the FCC Network via a toll- free phone number (877- 844- 2788) using Dial- Up Networking. Dial- Up Networking establishes a point- to- point connection from your PC to the FCC Network. This point- to- point connection is not routed through the Internet. Note: For instructions on how to connect to the FCC Network using Dial- Up Networking, see the Accessing the FCC Network Using Windows 95/ 98 attachment. After you have connected to the FCC Network, start your Netscape Web browser. In your browser’s Location field, enter http:// wtbwww34.fcc. gov and then click 175 Submit. When uploading attachments in FCC Form 175 Submission, applicants may use a variety of file formats - including Word, WordPerfect, Adobe PDF, Excel, Lotus, and ASCII text - and should verify that the files contain all exhibit information. Graphics file uploads (e. g., .bmp, .tiff, .jpg) are not supported, and graphics images should not be imported into any word processing files that are uploaded. After you upload an attachment, check to see if it converted properly by selecting the PDF filename in the rightmost column. The conversion process generally completes within thirty minutes. If you are unable to read this file after it has been converted, please do the following: 1. Re- upload the attachment. 2. If the file still has not converted properly, then simplify the formatting of the file. For example, if you are using a Table structure in a WordPerfect document, remove the Table structure and leave the contents of the table, then re- upload the attachment. After you have successfully re- uploaded an attachment, please delete the old, unreadable attachment files. Applicants must press the Submit Form 175 button on the Submit page to successfully submit their FCC Form 175. During each filing period, submitted applications may be updated and amended multiple times until the filing deadline. When you have finished, exit your Web browser; then disconnect from the FCC Network. Reviewing FCC Form 175 Applications Once the FCC has completed the 175 Review process, you can review FCC Form 175 applications electronically via the Internet. Start your Netscape Web browser. In your browser’s Location field, enter http:// wtbwww15.fcc. gov and then click 175 Review. 43 44 Help For technical assistance with installing or using FCC software, contact the FCC Technical Support Hotline at (202) 414- 1250 (V) or (202) 414- 1255 (TTY). The FCC Technical Support Hotline is generally available Monday through Friday, from 8 a. m. to 6 p. m. ET. All calls to the FCC Technical Support Hotline are recorded. 44 45 IX. ATTACHMENT D GUIDELINES FOR COMPLETION OF FCC FORM 175 AND EXHIBITS A. FCC Form 175 Because of the significance of the FCC Form 175 application to the auction, bidders should especially note the following: Applicant Name: Name given is used as your bidder name in the auction. Address: Give a street address (not a Post Office box number) for the applicant, suitable for mail or private parcel delivery. Applicant Classification: Applicants must indicate their legal classification. The FCC Form 175 requires the applicant to classify itself as an individual, joint venture, partnership, trust, corporation, consortium, association, limited liability company (LLC) or government entity. Applicant Status: Applicants are also requested to indicate their status as a rural telephone company, minority- owned business and/ or women- owned business, so that the FCC can monitor its performance in promoting economic opportunities for these designated entities. Bidding Credit Eligibility: Be advised that this is the sole opportunity applicants have to elect small business or very small business status and bidding credit level (if applicable), and there is no opportunity to change the election once the short- form filing deadline passes. x Small business or very small business applicants should enter the applicable bidding credit from the drop down menu. Applicants should be aware that this is the sole opportunity that they will have to elect the appropriate bidding credit. License Selection: Applicants should identify all licenses on which they want to be eligible to bid in the auction. Be advised that there is no opportunity to change this list once the short- form filing deadline passes. The FCC auction system will not accept bids on licenses for which an applicant has not applied on its FCC Form 175. Authorized Bidders: Applicants must list the name( s) of the person( s) (no more than three) authorized to represent them at the auction. Only those individuals listed on the FCC Form 175 will be authorized to place or withdraw bids for the applicant during the auction. Note: Applicants may only share a common authorized bidder( s) if each applicant has selected separate markets. See 47 CFR § 1.2105( c). Certifications: Applicants should carefully read the list of certifications on the FCC Form 175. These certifications help to ensure a fair and competitive auction and require, among other things, disclosure to the Commission of certain information on applicant ownership and agreements or 45 46 arrangements concerning the auction. Submission of an FCC Form 175 application constitutes a representation by the certifying official that he or she is an authorized representative of the applicant, has read the form's instructions and certifications, and that the contents of the application and its attachments are true and correct. 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. Contact person/ address: If the Commission wishes to communicate with the applicant by telephone or fax, those communications will be directed to the contact person identified on the FCC Form 175. Space is provided for an address, telephone number, fax number, and e- mail address. All written communication and registration information will be directed to the applicant's contact person at the address specified on the FCC Form 175. Applicants must provide a street address; no P. O. Box addresses may be used. Completeness: Applicants must submit all information required by the FCC Form 175 and by applicable rules. Failure to submit required information by the resubmission date will result in dismissal of the application and inability to participate in the auction. See 47 C. F. R. § 1.2105( b). NOTE: Applicants must press the “Submit Form 175” button on the “Submit” page to successfully submit their FCC Form 175. Continuing Accuracy: Each applicant is responsible for the continuing accuracy and completeness of information furnished in the FCC Form 175 and its exhibits. See 47 C. F. R. § 1.65. It is the FCC's position that during the conduct of an auction, thirty business days from a reportable change is a reasonable period of time. Applicants are reminded that they consent to be audited in the certification section of the FCC Form 175 (see certification item number 6). B. Exhibits and Attachments In addition to the FCC Form 175 itself, applicants must submit additional information required by the FCC's rules. Although the FCC does not require a particular format for this information, it has developed the following guidelines that will facilitate the processing of short- form applications. The FCC encourages applicants to submit this information in several attachments using the following format. If you find that an attachment has not converted properly to Adobe PDF format, take the following steps: 1) Delete the failed attachment. 2) Simplify the formatting of the file. For example, if using a Table structure in a WordPerfect document, remove the Table structure leaving the contents of the table, re- save the document. 3) Re- upload the attachment. NOTE: Applicants should not list their TIN numbers on any Exhibits to their FCC Form 175s. Exhibit A - Applicant Identity and Ownership Information: 47 C. F. R. § 1.2105( a)( 2)( ii) requires each applicant to fully disclose the real party or parties- in- interest in an exhibit to its FCC Form 175 46 47 application. Each member of an applicant applying to bid as a small or very small business consortium must provide this information. The following information is required: 1. General Information Applicant Status Required Information General Partnership Name, citizenship, and address of all partners, and the share or interest participation of each partner Limited Part nership Name, cit izenship, and address of each limited part ner whose int erest in the applicant is equal to or greater than 10 percent (as calculated according to the percentage of equity paid in and the percentage of distribution of profits and losses). Corporation Corporate name and address; and name, title, and citizenship of a responsible officer or director. Limited Liabilit y Corporat e name and address; and name, address and cit izenship of all Corporation members. Trust Name, citizenship, and address of trustee. None of the above Name, citizenship, title or other relation to the applicant, and address of a principal or other responsible person 2. Ownership Information Applicant Status Required Information All applicant s Name, cit izenship, and address of all cont rolling int erest s of the applicant as defined in Section II. C. 1 of this public notice. All applicant s Name, cit izenship, and address of all part ies holding 10 percent or more of any class of stock, warrants, options or debt securities and the amount and percentage held. All applicant s Name of all part ies holding a 10 percent or great er interest in the applicant and the specific amount held. All applicants List of any FCC- licensed entity or applicant for an FCC license, in which a. the applicant; b. any party with a 10 percent or greater interest in the applicant; or c. a cont rolling int erest (as discussed in Sect ion II. C. 1 of this public notice) of the applicant owns a 10 percent or greater interest or 10 percent or more of any class 47 48 of stock, warrants, options or debt securities. (See also 47 C. F. R. §§ 27.502 and 1.2110) This list must include a description of each such entities' principal business and a description of each such entities' relationship to the applicant. Example of a. The applicant owns 10 percent of Company A (an FCC- licensed entity or an applicant for an FCC license). The applicant must list Company A on its Form 175 Exhibit A and provide the required information. Example of b. Company A owns 10 percent of the applicant and 10 percent of Company B (an FCC- licensed entity or an applicant for an FCC license). The applicant must list both Company A and Company B on its Form 175 Exhibit A and provide the required information. Example of c. A owns 55% of the applicant and owns 10 percent of Company B (an FCC- licensed entity or an Applicant for an FCC license). The applicant must list both A and Company B on its Form 175 Exhibit A and provide the required information. All applicant s List of all part ies holding indirect ownership int erest s in the applicant as determined by successive multiplication of the ownership percentages in each link of the vertical ownership chain, that equals 10 percent or more of the applicant, except that if the ownership percentage for any link in the chain exceeds 50 percent or represents actual control, it shall be reported as if it were a 100 percent interest. Example. A owns 10% of Company B, which owns 60% of Company C, which owns 25% of the applicant. Company B's int erest in t he applicant would be 25% (t he same as Company C's interest since Company B's interest in Company C exceeds 50%), and A's interest in the applicant would be 2.5% (0. 1 * 0.25). Under t he 10% at t ribut ion benchmark, Company B's int erest in the applicant must be reported on the applicant's FCC Form 175 Exhibit A, while A's interest in the applicant need not be reported. However, if A owned 40% of Company B in the above example, then A's interest in the applicant would be 10% (0. 4 * 0.25), and the applicant would need to report it on the applicant's FCC Form 175 Exhibit A. Exhibit B - Agreements with Other Parties/ Joint Bidding Arrangements: Applicants must attach an exhibit identifying all parties with which they have entered into any agreements, arrangements or underst andings which relat e in any way t o the licenses being auct ioned, including any relat ing to the post -auction market structure. See 47 C. F. R. §1.2105( a)( 2)( viii). Not e that applicant s that are nat ionwide bidders may not be parties to such agreements. See Section IV. B. 7, above. 48 49 Be aware that pursuant to Certification (4) on the FCC Form 175, the applicant certifies that it will not ent er int o any explicit or implicit agreement s or underst andings of any kind wit h part ies not ident ified in t he applicat ion regarding bid amount s, bidding st rat egies, or the part icular licenses the applicant will or will not bid. See 47 C. F. R..§ 1.2105( a)( 2)( ix). To prevent collusion, the Commission's Rules generally prohibit communication among applicants for the same license areas between the initial short- form applications filing deadline and the down payment deadline for licenses won, when such communications concern bids, bidding strategies, or settlements. 47 C. F. R. § 1.2105( c). Exhibit C - Status as a Small Business or Very Small Business: Applicant s claiming st at us as a very small business or small business must attach an exhibit providing the following information regarding this status. Entity Required Information Applicant Average gross revenues for the preceding three years set forth both separately (e. g., for each of the three preceding three years individually) and in the aggregate (for all of the preceding three years combined). Certification that the average gross revenues for the preceding three years do not exceed the required limit, or providing average gross revenues for the 3- year period without providing the gross revenues for each of the preceding three years, is insufficient. Applicant's Affiliates see 47 CFR § 27.502 same information required as discussed above Applicant's Cont rolling Int erest s See Section II. C. 1, above. See also 47 CFR § 1.2110. same information required as discussed above Example. The applicant had gross revenues of $500,000 in 1997, $1,000,000 in 1998, and $3,000,000 in 1999, with average gross revenues for that time period of $1,500,000. The applicant owns 60% of Company A, making Company A an affiliat e of the applicant under Section 1.2110( b)( 4)( i)( B), and Company B owns 52% of the applicant (making Company B a cont rolling int erest of t he applicant , as defined in Section II. C. 1 of this public notice. The applicant's Exhibit C would look like this: Applicant Name 1997 gross revenues $ 500,000 1998 gross revenues $ 1,000,000 1999 gross revenues $ 3,000,000 Average gross revenues for the preceding 3 years $ 1,500,000 Company A (an affiliat e of the applicant ) 49 50 1997 gross revenues $ enter amount 1998 gross revenues $ enter amount 1999 gross revenues $ enter amount Average gross revenues for the preceding 3 years $ enter amount Company B (a cont rolling int erest in the applicant ) 1997 gross revenues $ enter amount 1998 gross revenues $ enter amount 1999 gross revenues $ enter amount Average gross revenues for the preceding 3 years $ enter amount TOTAL: combined average gross revenues for the preceding three years of the applicant, the applicant's affiliates and their controlling interests NOTE: Each member of an applicant that is applying to bid as a consortium of small or very small businesses must provide this information and qualify for the claimed status. Exhibit D - Information Requested of Designated Entities: Applicant s owned by minorit ies or women, as defined in 47 C. F. R. § 1.2110( b), or that are rural telephone companies, may attach an exhibit regarding this status. This information, in conjunction with the information requested in Block 10 of the FCC Form 175, will assist the Commission in monit oring the part icipat ion of these “designat ed ent it ies” in its auct ions. Exhibit E - Miscellaneous Information: Applicants wishing to submit additional information should include it in Exhibit E. Applicants are reminded that all information required in connection with applications to participate in spectrum auctions is necessary to determine the applicants' qualifications, and as such will be available for public inspection. Required proprietary information may be redacted, or confidentiality may be requested, following the procedures set forth in 47 C. F. R. § 0.459. Such requests must be submitted in writing to Amy Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, Federal Communications Commission, 445 12 th Street, S. W., Room 4- A760, Washington, D. C. 20554 (with a separate copy mailed to Howard Davenport, Legal Branch, Auctions and Industry Analysis Division), in which case the applicant must indicate in Exhibit E that it has filed a confidentiality request. Because the required information bears on applicants' qualifications, the FCC envisions that confidentiality request s will not be rout inely grant ed. Waivers: Applicants requesting waiver of any rules must submit a statement of reasons sufficient to justify the waiver sought. See 47 C. F. R. § 1.3. 50 51 X. ATTACHMENT E AUCTION- SPECIFIC INSTRUCTIONS FOR FCC REMITTANCE ADVICE (FCC FORM 159) Upfront Payments The following information supplements the standard instructions for FCC Form 159, and is provided to help ensure correct completion of FCC Form 159 for upfront payments for Auction No. 31. Applicants need to complete FCC Form 159 carefully, since: x Mistakes may affect their bidding eligibility; and x Lack of consistency between information set forth in FCC Form 159, FCC Form 175, long- form application, and correspondence about an application may cause processing delays. Therefore appropriate cross- references between the FCC Form 159 Remittance Advice and the FCC Form 175 Short Form Application are described below: Block Number Required Information 1 LOCKBOX # - Enter "358430" 2 Payer Name - Enter the name of the person or company making the payment. If the applicant itself is the payer, this entry would be the same as FCC Form 175. 3 Total Amount Paid - Enter the amount of the upfront payment associated with the FCC Form 159. 4- 8 Street Address, City, State, ZIP Code - Enter the street mailing address (not Post Office box number) where mail should be sent to the payer. If the applicant is the payer, these entries would be the same as FCC Form 175, blocks 2 through 5. 9 Daytime Telephone Number - Enter the telephone number of a person knowledgeable about this upfront payment. 10 Country Code - For addresses outside the United States, enter the appropriate postal country code (available from the Mailing Requirements Department of the U. S. Postal Service). 20A Payment Type Code - Enter "A31U" 21A Quantity - Enter the number "1" 22A Amount Due - Enter the total upfront payment due. 51 52 23A FCC Code 1 - Enter the number "31" (indicating Auction No. 31). 26 Applicant TIN - Same as FCC Form 175, block 7. NOTES: x Do not use Remittance Advice (Continuation Sheet), FCC Form 159- C, for upfront payments. x If applicant is different from the payer, complete blocks 11 through 18 for the applicant, using the same information shown on FCC Form 175. Otherwise leave them blank. x Since credit card payments will not be accepted for this auction, leave this area blank. Winning Bidder Requirements, Down Payments and Final Payments Specific information regarding down payments and final payments will be included in a post- auction public notice announcing the winning bidders. 52 53 XI. ATTACHMENT F FCC BIDDING PREFERENCE/ REMOTE SOFTWARE ORDER FORM Auction No. 31 All qualified applicants who plan to participate in this auction must complete the form below. Each qualified applicant choosing to bid electronically must purchase their own FCC Remote Bidding Software. Electronic bids will only be accepted from those applicants purchasing the software. However, the software may be copied by the applicant for use by its authorized bidders at different locations. The price of the FCC Remote Bidding Software is $175.00, which includes a user manual and shipping costs. (Since bidding software is tailored to a specific auction, previous versions will not work for Auction #31.) For security purposes, the software is only mailed to the contact person at the contract address listed on the FCC Form 175. Completed forms should be printed and either faxed or mailed to the address below, ensuring receipt by no later than 5: 30 p. m. ET on Tuesday, April 25, 2000. FCC BIDDING PREFERENCE (Auction No. 31) Auction Operations Branch 1270 Fairfield Rd. Gettysburg, PA 17325- 7245 FAX: 717- 338- 2850 Auction Applicant: _______________________________________________________ FCC Assigned Account No. ______________________ Contact Phone: _____________ Contact Name:___________________________________________________________ Contact Address: _________________________________________________________ Contact City: ___________________________ Contact State: ____________________ Contact Zip: ____________________________ Contact Fax: ____________________ Bidding Preference: ____ Electronic ____ Telephonic If planning to bid electronically, please complete the following: Type: ____ 3.5 Diskette ____ CD- Rom Payment of $175.00 US by: ____ Check (payable to FCC) ____ Mastercard ____ Visa Credit card number ______________________________ Expiration date ____________ Name on card ____________________________________________________________ Authorized signature ______________________________________ Date ___________ 53 54 XII. ATTACHMENT G Bid Increments and Exponential Smoothing Background. The Auctions Automation System (“ AAS”) calculates the minimum bid increment for each license with a standing high bid in each round of the auction based on all bidding activity for the license. For t his auct ion, t he Commission will use a st andard exponent ial smoot hing met hodology to calculat e minimum bid increment s. The AAS’ exponential smoothing formula calculates the bid increment based on a weighted average of activity received for each license in all previous rounds. This methodology allows the Commission to tailor each license’s bid increment based on its specific level of activity throughout the auction and provides a fairer means to determine license value. Calculation. The calculation of the percentage bid increment increase for each license for the current round is made at the end of the previous round. The computation is based on an activity index, which is calculated as the weighted average of the activity in that round and the activity index from the prior round. The act ivit y index at t he st art of the auct ion (round 0) will be set at 0. The current act ivit y index is equal to a weighting factor times the number of new bids received on the license in the most recent bidding round plus one minus the weighting factor times the activity index from the prior round. The act ivit y index is then used to calculat e a percent age increment by mult iplying a minimum percentage increment by one plus the activity index with that result being subject to a maximum percent age increment . The Commission will init ially set the weight ing fact or at 0. 5, t he minimum percentage increment at 0.1, and the maximum percentage increment at 0.2. (See example below.) Equations Ai = (C * Bi) + ( (1- C) * Ai- 1) Ii+ 1 = smaller of ( (1 + Ai) * N) and M 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 bid increment for the next round (round i+ 1) N = minimum percentage increment or bid increment floor M = maximum percent age increment or bid increment ceiling Under the exponential 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 new high bid plus the dollar amount associated with the percentage increment (the high bid multiplied by variable variable Ii+ 1 from above). This result will be rounded to t he nearest t housand if t he minimum acceptable bid is over ten thousand dollars or to the nearest hundred if it is under ten thousand dollars. 54 55 Examples License 1 C= 0.5, N = 0.1, M = 0.2 Round 1 (2 new bids, high bid = $1,000,000) 1. Calculation of percentage increment for round 2 using exponential smoothing: A1 = (0. 5 * 2) + (0. 5 * 0) = 1 The smaller of I2 = (1 + 1) * 0.1 = 0.2 or 0.2 (the maximum percentage increment) 2. Minimum bid increment for round 2 using the percentage increment 0.2 * $1,000,000 = $200,000 3. Minimum acceptable bid for round 2 = $1,200,000 Round 2 (3 new bids, high bid = $2,000,000) 1. Calculation of percentage increment for round 3 using exponential smoothing: A2 = (0. 5 * 3) + (0. 5 * 1) = 2 The smaller of I3 = (1 + 2) * 0.1 = 0.3 or 0.2 (the maximum percentage increment) 2. Minimum bid increment for round 3 using the percentage increment 0.2 * $2,000,000 = $400,000 3. Minimum acceptable bid for round 3 = $2,400,000 Round 3 (1 new bid, high bid = $2,400,000) 1. Calculation of percentage increment for round 4 using exponential smoothing: A3 = (0. 5 * 1) + (0. 5 * 2) = 1.5 The smaller of I4 = (1 + 1.5) * 0.1 = 0.25 or 0.2 (the maximum percentage increment) 2. Minimum bid increment for round 4 using the percentage increment 0.2 * $2,400,000 = $480,000 3. Minimum acceptable bid for round 4 = $2,880,000 55 56 XIII. ATTACHMENT H ACCESSING THE FCC NETWORK USING WINDOWS 95/ 98 This attachment describes how to access the FCC Network from a system that is running the Microsoft Windows 95 or Microsoft Windows 98 operating system. This involves configuring dial- up network access and then performing the dial- up procedure. Dial- up access to the FCC Network is required to submit FCC Form 175 applications electronically or use the FCC Remote Access System. Note: Dial- up access to the FCC Network is not required to review FCC Form 175 applications. You can perform that function from the Internet, by entering location http:// wtbwww15.fcc. gov/ on your Netscape Web browser and clicking the 175 Review button. Conventions The instructions in this section use the following typographical conventions: bold Represents objects on the screen that you click with the mouse pointer, including buttons, Internet links, icons, tabs, menu items (e. g., Cancel button, Auctions link, Save option in the File menu). italic Represents field names or areas of a screen (e. g., Applicant field, Selected Licenses area of a screen). bold italic Represents characters that you must type exactly as they appear in the instructions. For example, if you are instructed to type http:// wtbwww03.fcc. gov, you should type all of the characters shown in bold italic exactly as they are printed. SMALL CAPS Represents keys on the keyboard (e. g., ENTER, CTRL, ESC). Note: Throughout these instructions, “enter” means to type the appropriate information and then press the ENTER key. Configuring Dial- Up Networking 1. To start dial- up networking: a. Click the Windows 95/ 98 Start button. b. Click the Programs option to display the Programs menu. c. Click the Accessories option to display the Accessories menu. 56 57 d. In Windows 95, click Dial- Up Networking. In Windows 98, click Communications, then Dial- Up Networking . If Dial- Up Networking is not an option on your Accessories menu, you should install it from your Windows 95/ 98 CD or diskettes. 2. When the Dial- Up Networking window appears, double- click the Make New Connection icon. The Make New Connection window appears. 3. If you are connecting to submit FCC Form 175 applications, type FCC Auctions 877# in the field titled Type a name for the computer you are dialing. If you are connecting to use the FCC Remote Access System, type FCC Auctions 900# in the field titled Type a name for the computer you are dialing. Note: If you connect to the FCC’s 900# telephone service, there is a charge of $2.30 per minute. The first minute of connection time to the 900 number service is at no charge. 4. In Windows 95, click the down arrow at the right of the Select a modem field and select your modem from the menu of available modems. In Windows 98, click the down arrow at the right of the Select a device field and select your modem from the menu of available devices. If your modem does not appear on this list, you must install your modem driver according to the modem manufacturer installation procedures, which are usually described in your modem’s user manual. 5. Click the Next button. 6. If you are connecting to submit FCC Form 175 applications, type 877 and 844- 2788 in the Area Code and Telephone Number fields, respectively. If you are connecting to use the FCC Remote Access System, type 900 and 555- 5554 in the Area Code and Telephone Number fields, respectively. 7. Verify that the correct country is selected in the Country code field. If necessary, click the down arrow at the right of the Country code field and select the appropriate country from the menu of available countries. 8. Click the Next button. 9. Click the Finish button. 57 58 An icon labeled either FCC Auctions 877# or FCC Auctions 900# appears in the Dial- Up Networking window. 10. Verify that properties are configured correctly before attempting a dial- up session. Put the mouse pointer on the FCC Auctions icon that you wish to configure and click the right mouse button to display a menu. Click Properties from the menu. 11. Click the Configure button. Click the Options tab at the top of the Properties window. 12. In the Connection control area of the Options tab, verify that neither option is selected. If either option is selected, click the check box at the left of the option to deselect it. Then click OK. 13. In Windows 95, click the Server Type... button. In Windows 98, click the Server Types tab at the top of the Properties window. 14. In the Advanced Options area, verify that only Enable software compression is selected. If it is not selected, click the check box at the left of the option to select it. If either of the other options is selected, click the check box to deselect it. 15. In the Allowed Network Protocols area, verify that only TCP/ IP is selected. If it is not selected, click the check box at the left of the option to select it. If either of the other options is selected, click the check box to deselect it. 16. Click the TCP/ IP Settings button. On the TCP/ IP Settings window, select Server assigned IP addresses at the top and select Specify name server addresses midway down the window. 17. Type 165.135.79.95 as the Primary DNS. Ensure that these two options are checked: x Use IP header compression x Use default gateway or remote network 18. Click OK on the TCP/ IP Settings window and the Server Type window. 19. a. Click the Windows 95/ 98 Start button, then click the Settings option to display the Settings menu. b. Click Control Panel and then double- click the Network icon. c. Highlight the TCP/ IP Protocol and click Properties. If there are multiple TCP/ IP protocols, highlight TCP/ IP --> Dial- Up Adapter and click Properties. 58 59 In a Windows 98 environment, a confirmation dialog appears. Read the information on the dialog, then click the OK button. d. Click the DNS Configuration tab. e. Select Enable DNS. Type bidder in the Host box, type fcc. gov in the Domain box, then type 165.135.79.95 in the DNS Server Search Order box and click the Add button. f. Click OK on the TCP/ IP Properties windows, then click OK on the Network windows. f. If you are prompted to restart your computer, click Yes to restart, then begin the Dial-Up Procedure. Dial- Up Procedure If the Dial- Up Networking window is not currently open, do the following: a. Click the Windows 95/ 98 Start button. b. Click the Programs option to display the Programs menu. c. Click the Accessories option to display the Accessories menu. d. In Windows 95, click Dial- Up Networking In Windows 98, click Communications, then Dial- Up Networking. The Dial- Up Networking window appears. 2. In the Dial- Up Networking window, double- click the FCC Auctions 877# or FCC Auctions 900# icon. Note: If you connect to the FCC’s 900 number telephone service, there is a charge of $2.30 per minute. The first minute of connection time to the 900 number service is at no charge. 3. Click the Connect button on the window. Do not enter User name and Password. The Connection window appears, indicating the status of your connection as your modem dials into the system. This window must remain running during your dial- up session. You may minimize the window, if you wish. If your modem fails to establish a connection, please see the Troubleshooting section below. 4. Once the connection is established, open your Web browser. 59 60 5. In your browser’s Location field, enter the appropriate Universal Resource Locator (URL) as follows: x For FCC Form 175 Submit, enter http:// wtbwww34.fcc. gov (primary location) or http:// wtbwww04.fcc. gov (secondary location) x For the FCC Remote Access System, enter http:// wtbwww26.fcc. gov (primary location) or http:// wtbwww03.fcc. gov (secondary location) If nothing appears in your Web browser, please see the Troubleshooting section below. 6. When you have finished, exit the Web browser, then click the Disconnect button on the Connection window to end your dial- up session. Troubleshooting Following are problems you may encounter and possible solutions for resolving or isolating them. Modem does not respond 1. Confirm that all physical connections for the modem are present. 2. Confirm that the phone line is active by connecting it to a telephone and checking for a dial- tone. 3. If you are dialing the 900 number service, check for a 900 number telephone block. If the volume settings are low, the modem may be dialing but not connecting. Check for this by trying to connect to the 800 number, or by dialing the 900 number on that line using a telephone. 4. Confirm that the correct modem driver is installed for your modem. Modem dials but does not connect 1. If you are dialing the 900 number service, check for a 900 number telephone block. Check for this by dialing the 800 number to see if you connect, or by dialing the 900 number on that line using a telephone. 2. Confirm that the number the modem is dialing is correct. 3. Confirm that the modem prefix, if any, is correct. 60 61 Modem dials and connects, but nothing appears when you enter the Location in the Web browser 1. Verify the Dial- Up Networking settings specified in the Configuring Dial- Up Networking section of this attachment. 2. Confirm that your Web browser is not using proxies: a) On your browser, click the Preferences option in the Edit menu. b) In the Category area at the left, double- click Advanced. c) Click the Advanced structure’s Proxies option. d) Click the radio button labeled Direct connection to the Internet. e) Click the OK button at the bottom of the window. Receive an Internal Server error in the Web browser 1. Confirm that the Location is correct. 2. Confirm that Java and JavaScript are enabled in your Web browser, and confirm that Cookies is set to accept all. Help For technical assistance with installing or using FCC software, contact the FCC Technical Support Hotline at (202) 414- 1250 (V) or (202) 414- 1255 (TTY). The FCC Technical Support Hotline is generally available Monday through Friday, from 8 a. m. to 6 p. m. ET. All calls to the FCC Technical Support Hotline are recorded. 61 62 XIV. ATTACHMENT I SUMMARY LISTING OF DOCUMENTS FROM THE COMMISSION AND THE WIRELESS TELECOMMUNICATIONS BUREAU ADDRESSING APPLICATION OF THE ANTI- COLLUSION RULES All of the following documents can be found at FCC web site: http:// www. fcc. gov/ wtb/ auctions/ collusio/ collusio. html Commission Decisions: Second Report and Order in PP Docket No. 93- 253, FCC 94- 61, 9 FCC Rcd. 2348, 2386- 2388 (1994), paragraphs 221- 226. Fifth Report and Order in PP Docket No. 93- 253, FCC 94- 178, 9 FCC Rcd. 5532, 5570- 5571 (1994), paragraphs 91- 92. Fourth Memorandum Opinion and Order in PP Docket No. 93- 253, FCC 94- 264, 9 FCC Rcd. 6858, 6866- 6869 (1994), paragraphs 47- 60. Second Memorandum Opinion and Order in PP Docket No. 93- 253, FCC 94- 215, 9 FCC Rcd. 7245, 7253- 7255 (1994), paragraphs 48- 55. Memorandum Opinion and Order in PP Docket No. 93- 253, FCC 94- 295, 9 FCC Rcd. 7684, 7687- 7689 (1994), paragraphs 8- 12. In re Commercial Realty St. Pete, Notice of Apparent Liability for Forfeiture, 10 FCC Rcd. 4277 (1995), In re Commercial Realty St. Pete, Memorandum Opinion and Order, 11 FCC Rcd. 15374 (1996). In re Applications of Mercury PCS II, LLC, Notice of Apparent Liability for Forfeiture, 12 FCC Rcd. 17970 (1997) (petition for partial reconsideration pending). Amendment of Part 1of the Commission's Rules -- Competitive Bidding Procedures, Allocation of Spectrum Below 5 GHz Transferred from Federal Government Use, 4660- 4685 MHz, WT Docket No. 97- 82, ET Docket No. 94- 32, FCC 97- 413, Third Report and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd. 374, 463- 469 (1997), paragraphs 155- 166. In re Application of US West Communications, Inc., Notice of Apparent Liability for Forfeiture, FCC 98- 41 (March 16, 1998). In re Application of Western PCS BTA I Corporation, Notice of Apparent Liability for Forfeiture, FCC 98- 42 (March 16, 1998). 62 63 Wreless Telecommunications Bureau Decisions: Amendment of Parts 21 and 74 of the Commission's Rules with Regard to Filing Procedures in the Multipoint Distribution Service and in the Instructional Television Fixed Service, Order, 11 FCC Rcd. 9655 (Wireless Tel. Bur. 1995). In re Applications of GWI PCS, Inc. For Authority to Construct and Operate Broadband PCS Systems Operating on Frequency Block C, Memorandum Opinion and Order, 12 FCC Rcd. 6441 (Wireless Tel. Bur. 1997). In re Applications of Mercury PCS II, LLC, For Facilities in the Broadband Personal Communications Services in the D, E, and F Blocks, Memorandum Opinion and Order on Reconsideration, 12 FCC Rcd. 18093 (Wireless Tel. Bur. 1997). In the Matter of Applications of High Plains Wireless, L. P., For Authority to Construct and Operate Broadband PCS Systems on Frequency Blocks D, E, and F, Memorandum Opinion and Order, 12 FCC Rcd. 19627 (Wireless Tel. Bur. 1997). In the Matter of Applications of Mercury PCS II, LLC, For Authority to Construct and Operate Broadband PCS Systems on Frequency Blocks D, E, and F, Memorandum Opinion and Order, 13 FCC Rcd. 5756 (Wireless Tel. Bur. 1997). Public Notices: "Wireless Telecommunications Bureau Clarifies Spectrum Auction Anti- Collusion Rules," Public Notice, 11 FCC Rcd. 9645 (1995). "FCC Staff Clarifies Application of Anti- Collusion Rule to Broadband PCS 'C' Block Reauction," Public Notice, 11 FCC Rcd. 7031 (1996). "Wireless Telecommunications Bureau Provides Guidance on the Anti- Collusion Rule for D, E and F Block Bidders," Public Notice, 11 FCC Rcd. 10134 (1996). Letters from the Office of General Counsel and the Wireless Telecommunications Bureau: Letter to Gary M. Epstein and James H. Barker from William E. Kennard, General Counsel, Federal Communications Commission (released October 25, 1994). Letter to Alan F. Ciamporcero from William E Kennard, General Counsel, Federal Communications Commission (released October 25, 1996). Letter to R. Michael Senkowski from Rosalind K. Allen, Acting Chief, Commercial Radio Division, Wireless Telecommunications Bureau (released December 1, 1994). Letter to Leonard J. Kennedy from Rosalind K. Allen, Acting Chief, Commercial Radio Division, Wireless Telecommunications Bureau (released December 14, 1994). Letter to Jonathan D. Blake and Robert J. Rini from Kathleen O'Brien Ham, Chief, Auctions Division, Wireless Telecommunications Bureau, DA 95- 2404 (released November 28, 1995). 63 64 Letter to Mark Grady from Kathleen O'Brien Ham, Chief, Auctions Division, Wireless Telecommunications Bureau, 11 FCC Rcd. 10895 (1996). Letter to David L. Nace from Kathleen O'Brien Ham, Chief, Auctions Division, Wireless Telecommunications Bureau, 11 FCC Rcd. 11363 (1996). Letter to Elliott J. Greenwald from Christopher J. Wright, General Counsel, Federal Communications Commission (released April 6, 1998). Civil Actions Initiated by U. S. Department of Justice: U. S. v. Omnipoint Corp., Proposed Final Judgements and Competitive Impact Statements, Department of Justice, 63 FR 65228 (November 25, 1998). "Justice Department Sues Three Firms Over FCC Auction Practices," Press Release, U. S. Department of Justice (November 10, 1998). Complaint, U. S. v. Omnipoint Corp., No. 1: 98CV02750 (D. D. C. November 10, 1998). Complaint, U. S. v. Mercury PCS II, L. L C., No. 1: 98CV02751 (D. D. C. November 10, 1998). Complaint, U. S. v. 21st Century Bidding Corp., No. 1: 98CV02752 (D. D. C. November 10, 1998). Miscellaneous: Many of these documents can be retrieved from the following Commission web site: http:// www. fcc. gov/ wtb/ auctions/ collusio/ collusio. html These documents may be located by using our search engine (select the link "search"). All of these documents can be ordered in hard copy for a fee from the Commission’s contractor, International Transcription Service, Inc. at (202) 314- 3070. Documents retrieved from the FCC web site are available in various formats. In order to review a document in its entirety, including footnotes, it is necessary to access the document in WordPerfect, MS Word, or Acrobat Reader. 64 65 XV. ATTACHMENT J Place holder for Attachment J, see Excel file. 65