*Pages 1--2 from Microsoft Word - 54706.doc* C- 1 Auction No. 66 – Advanced Wireless Services (AWS- 1) Attachment C Smoothing Formula Equations Ai = (C * Bi) + (( 1- C) * Ai- 1) Ii+ 1 = smaller of (( 1 + Ai) * N) and M X i+ 1 = Ii+ 1 * Yi where, Ai = activity index for the current round (round i) C = activity weight factor Bi = number of bidders submitting bids on the licenses in the current round (round i) Ai- 1 = activity index from previous round (round i- 1), A0 is 0 Ii+ 1 = percentage increment for the next round (round i+ 1) N = minimum percentage increment or percentage increment floor M = maximum percentage increment or percentage increment ceiling X i+ 1 = dollar amount associated with the percentage increment Yi = provisionally winning bid amount from the current round Examples License 1 C= 0.5, N = 0.1, M = 0.2 Round 1 (2 bidders submitting bids, provisionally winning bid = $1, 000,000) 1. Calculation of percentage increment for round 2 using the smoothing formula: A1 = (0.5 * 2) + (0.5 * 0) = 1 I2 = The smaller of (( 1 + 1) * 0.1) = 0.2 or 0.2 (the maximum percentage increment) 2. Calculation of dollar amount associated with the percentage increment for round 2 (using I2 from above): X2 = 0.2 * $1, 000,000 = $200,000 3. Minimum acceptable bid amount for round 2 = $1,200,000 Round 2 (3 bidders submitting bids, provisionally winning bid = $2, 000,000) 1. Calculation of percentage increment for round 3 using the smoothing formula: A2 = (0.5 * 3) + (0.5 * 1) = 2 I3 = The smaller of (( 1 + 2) * 0.1) = 0.3 or 0.2 (the maximum percentage increment) 2. Calculation of dollar amount associated with the percentage increment for round 3 (using I3 from above): X3 = 0.2 * $2, 000,000 = $400,000 1 C- 2 3. Minimum acceptable bid amount for round 3 = $2,400,000 Round 3 (1 bidder submitting bids, provisionally winning bid = $2,400,000) 1. Calculation of percentage increment for round 4 using the smoothing formula: A3 = (0.5 * 1) + (0.5 * 2) = 1.5 I4 = The smaller of (( 1 + 1.5) * 0.1) = 0.25 or 0.2 (the maximum percentage increment) 2. Calculation of dollar amount associated with the percentage increment for round 4 (using I4 from above): X4 = 0.2 * $2,400,000 = $480,000 3. Minimum acceptable bid amount for round 4 = $2,880,000 2