*Pages 1--9 from Microsoft Word - 56743.doc* PUBLIC NOTICE Federal Communications Commission 445 12 th St., S. W. Washington, D. C. 20554 News Media Information 202 / 418- 0500 Internet: http:// www. fcc. gov TTY: 1- 888- 835- 5322 DA 06- 907 April 28, 2006 AUCTION OF 800 MHz AIR- GROUND RADIOTELEPHONE SERVICE LICENSES 9 Bidders Qualified to Participate in Auction No. 65 Report No. AUC- 06- 65- F (Auction No. 65) In this Public Notice, the Wireless Telecommunications Bureau (“ WTB”) identifies 9 applicants found to be qualified to bid in the upcoming auction for new nationwide commercial Air- Ground Radiotelephone Service licenses (“ Auction No. 65”). 1 Bidding in Auction No. 65 is scheduled to begin on Wednesday, May 10, 2006. In addition, this Public Notice contains bidding instructions and other important information regarding Auction No. 65. Attachment A lists each of the 9 qualified bidders, their upfront payments, and their maximum eligibility in bidding units. Attachment B lists the licenses selected on each qualified bidder’s short- form application (FCC Form 175). Attachment C lists each applicant that submitted a short- form application, but did not qualify to bid in this auction. These applicants are reminded that they remain subject to the Federal Communication Commission’s rules prohibiting collusion in Commission auctions. 2 In order to participate effectively in the auction, qualified bidders again should familiarize themselves with the auction rules, procedures, and other information described in the Auction No. 65 Procedures Public Notice and subsequent public notices. 3 These public notices and other documents related to Auction No. 65 are available on the Commission’s auctions website at http:// wireless. fcc. gov/ auctions/. The following information provides additional guidance. 1 See “Auction of 800 MHz Air- Ground Radiotelephone Service Licenses Scheduled for May 10, 2006, Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for Auction No. 65,” Public Notice, DA 06- 299 (rel. Feb. 21, 2006) (“ Auction No. 65 Procedures Public Notice"); see also “Auction of 800 MHz Air- Ground Radiotelephone Service Licenses Scheduled For May 10, 2006, Additional Default Payment of 20 Percent Will Apply to Auction No. 65,” Public Notice, DA 06- 588 (rel. March 20, 2006). 2 See 47 C. F. R. § 1.2105( c); infra, pp. 6- 8. 3 See Auction No. 65 Procedures Public Notice, supra, at n. 1; see also Auction of 800 MHz Air- Ground Radiotelephone Service Licenses, Status of FCC Form 175 Applications to Participate in Auction No. 65, Public Notice, DA 06- 701 (rel. Mar. 31, 2006). 1 3 correct any problems within Commission- controlled facilities, bidders are solely responsible for anticipating and overcoming problems such as bidder computer or other technical failures, loss of or problems with data connections, telephone service interruptions, adverse local weather conditions, unavailability of authorized bidders, or the loss or breach of confidential security codes. In their registration materials, all qualified bidders will be supplied with a telephone number for the Auction Bidder Line. Bidders choosing to bid telephonically are required to use this telephone number to place bids. Electronic bidders may use this telephone number as an alternate method of bidding in the event they are unable to submit their bids electronically. Telephonic bidders are reminded to allow sufficient time to bid by placing their calls well in advance of the close of a round. 4 Minimum Opening Bid Amounts. There will be a minimum opening bid amount for each license in Auction No. 65, calculated in accordance with factors previously announced. 5 The minimum opening bid amount is subject to reduction at the discretion of the Bureau. The Bureau will not entertain requests to lower minimum opening bid amounts. The Bureau will exercise this discretion, if at all, independent of any communications from bidders. Announcements. The Commission will post pertinent auction information as announcements in the FCC Auction System. Bidders should routinely check for announcements each time they enter the FCC Auction System and should read this information carefully. Bidding Schedule. On Wednesday, May 10, 2006, and continuing until further notice, there will be four rounds of bidding as follows: Bidding Round 10: 00 a. m. - 11: 00 a. m. ET Bidding Round 12: 00 p. m. - 1: 00 p. m. ET Bidding Round 2: 00 p. m. - 3: 00 p. m. ET Bidding Round 4: 00 p. m. - 5: 00 p. m. ET Round results will be available approximately 10 minutes after the close of each round. The Bureau will set the pace of the auction based upon monitoring of the bidding and assessment of the auction’s progress. All subsequent schedule changes will be made by announcement via the FCC Auction System during the course of the auction. Bidder Questions during the Auction. FCC auction staff and technical support staff will be available during the auction to answer questions from authorized bidders. Bidders should identify themselves as a bidder with a time- sensitive auction question when calling. Help can be obtained through the following options: FCC Auction Bidder Line (telephonic bidding, auction conduct questions) Use Auction Bidder Line telephone number supplied in registration mailing FCC Technical Support (all technical, software and hardware questions) (877) 480- 3201, option nine; (202) 414- 1250; or (202) 414- 1255 (TTY) FCC Auctions and Spectrum Access Division (legal questions only) (202) 418- 0660 4 The length of a call to place a telephonic bid may vary; please allow a minimum of 10 minutes. 5 Auction No. 65 Procedures Public Notice at 31- 33. Attachment A of the Auction No. 65 Procedures Public Notice sets forth the minimum opening bid amounts for each license offered in Auction No. 65. 3 4 The FCC Auction System includes a function for bidders to submit suggestions to the FCC, but this is not an appropriate mechanism for asking time- sensitive questions that may need an immediate response, such as questions about auction procedures or other issues. Such questions should be directed to one of the telephone numbers listed above. Monitoring Round Results. The Integrated Spectrum Auction System (ISAS) Bidder’s Guide (included in the registration material) provides instructions for reviewing and downloading round results. Amendments to Short- Form Applications. Applicants are responsible for maintaining the accuracy and completeness of information furnished in their short- form applications, including their attachments. 6 Applicants should amend their short- form applications as promptly as possible, but no later than ten business days from the occurrence of a reportable change. Changes that cause a loss of or reduction in eligibility for a bidding credit must be reported immediately. Applicants must modify their short- form application electronically and submit a letter, briefly summarizing the changes, by electronic mail to the attention of Margaret Wiener, Chief, Auctions and Spectrum Access Division, at the following address: auction65@ fcc. gov. Questions about changes should be directed to Howard Davenport at (202) 418- 0660. As described in the Commission’s rules, applicants may make only minor corrections to their short- form applications (e. g., changing an authorized bidder or a facsimile number). 7 Major modifications (e. g., license changes, newly claimed or increased bidding credit, or changing control of the applicant) will not be accepted. 8 Bidders are reminded that any change affecting eligibility for a bidding credit, insofar as it results in the diminishment or loss of the bidding credit claimed on the short- form application, must be clearly stated in the bidder’s amendment and in the summary letter referenced above. In such cases, the Commission will make appropriate adjustments in the bidding credit prior to the computation of any down and final payment amounts due. Due Diligence. Potential bidders are reminded that they are solely responsible for investigating and evaluating all technical and marketplace factors that may have a bearing on the value of the 800 MHz Air-Ground Radiotelephone Service facilities being offered in this auction. The Commission makes no representations or warranties about the use of this spectrum for particular services. Potential bidders are strongly encouraged to conduct their own research prior to the beginning of competitive bidding in Auction No. 65 in order to determine the existence of pending administrative or judicial proceedings, pleadings, applications or authorizations that might affect their decisions regarding participation in the auction. Bidders are also responsible for reviewing all pending rulemaking petitions and open proceedings, as well as reconsideration petitions or waiver requests, that might affect the license on which they plan to bid. Additionally, potential bidders should perform technical analyses sufficient to assure themselves that, should they prevail in competitive bidding for a specific license, they will be able to build and operate facilities that will fully comply with the Commission’s technical and legal requirements. Participants in Auction No. 65 are strongly encouraged to continue such research throughout the auction. Each potential bidder is solely responsible for identifying associated risks and for investigating and evaluating the degree to which such matters may affect the bidder’s ability to bid on, otherwise acquire, 6 See 47 C. F. R § 1.65. 7 See 47 C. F. R. § 1.2105( b). 8 Id. 4 5 or make use of licenses available in Auction No. 65. For further details regarding due diligence, qualified bidders should refer to the Auction No. 65 Procedures Public Notice under Section I. B. 6. 9 Potential bidders are reminded that in the Air- Ground Order, the Commission granted Verizon Airfone Inc. (“ Verizon Airfone” or “Airfone”), the only incumbent service provider in the 800 MHz air- ground band, a nonrenewable license to operate in the band for five years. This license will expire on May 13, 2010. 10 Verizon Airfone must remove its incumbent narrowband operations from three megahertz of spectrum in the band within two years of the initial grant date of a new license in the band, but may continue to operate in the remaining one megahertz of the band until the expiration of its nonrenewable license. 11 The Commission has directed the Bureau to adopt reporting requirements so that Airfone’s transition of its base stations and its subscribers’ aircraft to operations in one megahertz of the 800 MHz air- ground band may be monitored. 12 Accordingly, the Bureau issued a public notice enumerating such requirements on February 6, 2006. 13 Airfone must file its initial transition status report with the Commission six months from the date of the grant of any new license in the band and at each of the three six- month intervals thereafter. 14 In addition, if Airfone, or an affiliate of Airfone, wins an exclusive 3 MHz license at auction, the Bureau will issue a public notice within 60 days of the grant of such a license that will require the company (1) to include in each status report information regarding the transition of its existing subscribers from its narrowband system to a broadband system and (2) to file additional status reports at six- month intervals 9 Auction No. 65 Procedures Public Notice at 10- 12. 10 Amendment of Part 22 of the Commission’s Rules to Benefit the Consumers of Air- Ground Telecommunications Services, Biennial Regulatory Review — Amendment of Parts 1, 22, and 90 of the Commission’s Rules, Amendment of Parts 1 and 22 of the Commission’s Rules to Adopt Competitive Bidding Rules for Commercial and General Aviation Air- Ground Radiotelephone Service, WT Docket Nos. 03- 103 and 05- 42, Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 4403 at 4440- 41 ¶¶ 80- 81 (2005), (“ Air- Ground Order”). 11 See id. at 4438- 39 ¶ 75. If Band Plan 1 or 2 is the winning configuration at auction, Verizon Airfone’s incumbent system must cease operations in the lower 1.5 MHz portion of each 2 MHz air- ground band within two years of the initial date of grant of a new license or licenses. Verizon Airfone may relocate its incumbent operations to the upper 0. 5 MHz portion of each 2 MHz band (0. 5 MHz at 850. 5- 851. 0 MHz paired with 0.5 MHz at 895.5- 896. 0 MHz) and may continue to operate under the renewal authorization until the end of the five- year license term. If Band Plan 3 is the winning configuration at auction, Verizon Airfone’s incumbent system must cease operations in the upper 1.5 MHz portion of each 2 MHz air- ground band within two years of the initial date of grant of a new license; Airfone may relocate to the lower 0. 5 MHz portion of each 2 MHz band (0. 5 MHz at 849. 0- 849. 5 MHz paired with 0.5 MHz at 894. 0- 894.5 MHz) and may continue to operate under the renewal authorization until the end of the five- year license term. 12 Amendment of Part 22 of the Commission’s Rules to Benefit the Consumers of Air- Ground Telecommunications Services, Biennial Regulatory Review — Amendment of Parts 1, 22, and 90 of the Commission’s Rules, Amendment of Parts 1 and 22 of the Commission’s Rules to Adopt Competitive Bidding Rules for Commercial and General Aviation Air- Ground Radiotelephone Service, WT Docket Nos. 03- 103 and 05- 42, Order on Reconsideration and Report and Order, FCC 05- 202 at ¶ 21 (rel. December 9, 2005) (“ Air- Ground Reconsideration Order and R& O”). 13 “Wireless Telecommunications Bureau Adopts Reporting Requirements Regarding Verizon Airfone Inc., Call Sign KNKG804,” Public Notice, DA 06- 294 (rel. February 6, 2006). 14 Airfone is not required to submit any classified information regarding government aircraft in its reports, and may seek confidential treatment of information contained in the transition reports in accordance with the Commission’s rules and policies. Air- Ground Reconsideration Order and R& O at ¶ 21. See also 47 C. F. R. § 0.459. 5 6 from the conclusion of the two- year transition period until the expiration of its five- year nonrenewable license. 15 Mock Auction. On Monday, May 8, 2006, the Bureau will conduct a mock auction which will allow qualified bidders to familiarize themselves with the FCC Auction System. Only qualified bidders will be permitted to participate in the mock auction. The Bureau will conduct this auction over the Internet, but telephonic bidding also will be available. Qualified bidders that wish to place bids telephonically should use the telephone number supplied in the Auction No. 65 registration materials. The mock auction can be accessed at: http:// auctions. fcc. gov. Alternatively, you may also use http:// auctions2. fcc. gov. The mock auction will include only the 4 licenses in Band Plans 2 and 3 (licenses C, D, E, and F) for Auction No. 65 and will follow the rules governing the actual auction. The mock auction will be identified as Mock Auction No. 74. The FCC Auction System will assume that each bidder applied for all 4 of the licenses included in the mock auction. The mock auction will simulate the start of the auction, and each bidder will be required to be active (place a bid or hold the provisionally winning bid) on at least one license in each round to maintain its bidding eligibility. If a bidder does not meet this requirement, it will have a waiver automatically applied (if the bidder has any waivers available), or its eligibility will be permanently reduced (if the bidder has no waivers remaining) and it will no longer be permitted to place bids in the mock auction. Electronic bidders participating in the mock auction are advised to review the Integrated Spectrum Auction System (ISAS) Bidder’s Guide provided in the registration material. The mock auction bidding schedule for Monday, May 8, 2006, will be: Round 1 10: 00 a. m. - 10: 30 a. m. ET Round 2 11: 30 a. m. - 11: 45 a. m. ET Round 3 12: 30 p. m. - 12: 45 p. m. ET Prohibition of Collusion. Applicants are reminded that Section 1.2105( c) of the Commission’s rules prohibits applicants for any of the same geographic license areas from communicating with each other about bids or bidding strategies unless they have identified each other as parties with which they have entered into agreements under Section 1.2105( a)( 2)( viii). 16 Because all of the licenses available in Auction No. 65 have the same service area, i. e., they are nationwide, this prohibition will apply to all applicants. Thus, all applicants (unless they have identified each other on their FCC Form 175 applications as parties with whom they have entered into agreements under Section 1.2105( a)( 2)( viii)) must affirmatively avoid all communications with or disclosures to each other that affect or have the potential to affect bids or bidding strategy, which may include communications regarding the post- auction 15 Air- Ground Reconsideration Order and R& O at ¶ 22. The Commission has stated that, at a minimum, Airfone must specify the number and percentage of each type of aircraft (commercial, general aviation, and government) and base stations that have been configured to operate in the three megahertz portion of the band. The report must also delineate which aircraft have been transitioned from Airfone’s 4 MHz narrowband system directly to a 3 MHz broadband system, and which aircraft have been transitioned from the 4 MHz narrowband system to a 1 MHz narrowband system and then to a 3 MHz broadband system. Id. 16 47 C. F. R. §§ 1. 2105( a)( 2)( viii), 1. 2105( c)( 1). See also Auction No. 65 Procedures Public Notice at 6- 9, for a discussion of the anti- collusion rules in Auction No. 65. See Amendment of Part 1 of the Commission’s Rules – Competitive Bidding Procedures, WT Docket No. 97- 82, Seventh Report and Order, 16 FCC Rcd 17546 (2001) (“ Part 1 Seventh Report and Order”); see also id., Order on Reconsideration of the Third Report and Order, Fifth Report and Order, and Fourth Further Notice of Proposed Rule Making, 15 FCC Rcd 15293, 15297- 98 ¶¶ 7- 8 (2000). 6 7 market structure. 17 For Auction No. 65, this prohibition became effective at the short- form application filing deadline on Friday, March 24, 2006, and will end at the post- auction down payment deadline, which will be announced in a future public notice. 18 This prohibition applies to all applicants regardless of whether such applicants become qualified bidders or actually bid. 19 The prohibition continues until the down payment deadline regardless of whether a winning bidder needs to make an additional payment by the down payment deadline. For purposes of this prohibition, Section 1.2105( c)( 7)( i) defines “applicant” to include all officers and directors of the entity submitting a short- form application to participate in the auction, as well as all controlling interests of that entity and all holders of partnership and other ownership interests and any stock interest amounting to 10 percent or more of the entity, or outstanding stock, or outstanding voting stock of the entity submitting a short- form application. 20 We note that a violation of the anti- collusion rule could occur when an individual serves as an officer and/ or director for two or more competing applicants. 21 If parties had agreed in principle on all material terms of a bidding agreement( s), those parties must have been identified on the short- form application as required by Section 1.2105( c), even if the agreement had not been reduced to writing. If parties had not agreed in principle by the short- form application filing deadline, an applicant should not have included the names of those parties on its application and must not have continued negotiations or communications prohibited by the anti- collusion rule. 22 Applicants competing for licenses for any of the same geographic license areas must not communicate directly or indirectly about bids or bidding strategy. 23 Accordingly, the Bureau encourages such applicants not to use the same individual as an authorized bidder. 24 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 applicants he or she is authorized to represent in the auction. A violation similarly could occur if the authorized bidders are different individuals employed by the same organization (e. g., law firm or consulting firm). In such a 17 See, e. g., “Wireless Telecommunications Bureau Provides Guidance on the Anti- Collusion Rule for D, E and F Block Bidders,” Public Notice, DA 96- 1460 (rel. August 28, 1996). 18 47 C. F. R. § 1.2105( c)( 1). 19 See, e. g., Star Wireless, LLC, Forfeiture Order, 19 FCC Rcd 18626 (EB 2004) (imposing forfeiture in the amount of $100, 000 for violation of the anti- collusion rule, even though an applicant never made an upfront payment for the auction and was not listed as a qualified bidder); Northeast Communications of Wisconsin, LLC, Forfeiture Order, 19 FCC Rcd 18635 (EB 2004) (imposing forfeiture in the amount of $100, 000 for violation of the anti- collusion rule, even though the applicant never made an upfront payment for the auction and was not listed as a qualified bidder); Letter to Robert Pettit, Esq., from Margaret W. Wiener, 16 FCC Rcd 10080 (WTB Auc. Div. 2000) (declining to exempt an applicant’s controlling interest from coverage by the anti- collusion rule, even though the applicant never made an upfront payment for the auction and was not listed as a qualified bidder). 20 47 C. F. R. § 1.2105( c)( 7)( i). 21 See Letter to Colby M. May from Barbara A. Kreisman and Margaret W. Wiener, 20 FCC Rcd 14648 (Video and Auc. Divs. 2005)( finding apparent violation of anti- collusion rule where applicants with mutually exclusive applications shared same individual as an officer and director and reported no bidding agreement). 22 See “Wireless Telecommunications Bureau Clarifies Spectrum Auction Anti- Collusion Rules,” Public Notice, 11 FCC Rcd 9645 (WTB 1995). 23 Part 1 Seventh Report and Order, 16 FCC Rcd at 17549- 50 ¶ 6. 24 See Auction No. 65 Procedures Public Notice at 7. 7 8 case, at a minimum, applicants should take precautionary steps to prevent communication between authorized bidders. 25 However, the Bureau cautions that merely filing a certifying statement as part of the short- form application will not outweigh specific evidence that collusive behavior has occurred, nor will it preclude the initiation of an investigation when warranted. 26 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. 27 Thus, Section 1.65 requires auction applicants that engage in a communication of bids or bidding strategies that results in a bidding agreement, arrangement, or understanding not already identified on their short- form applications to promptly disclose any such agreement, arrangement or understanding to the Commission by amending their pending applications. In addition, Section 1.2105( c)( 6) requires all auction applicants to report any prohibited discussion or disclosure regarding bids or bidding strategy to the Commission in writing immediately but in no case later than five business days after the communication occurs, even if the communication does not result in an agreement or understanding regarding bids or bidding strategies that must be reported under Section 1.65. 28 Applicants that are winning bidders will be required to disclose in their long- form applications the specific terms, conditions, and parties involved in all bidding consortia, joint ventures, partnerships, and other agreements or arrangements entered into relating to the competitive bidding process. 29 Any applicant found to have violated the anti- collusion rule may be subject to sanctions. 30 In addition, applicants are reminded that they are subject to the antitrust laws, which are designed to prevent anti-competitive behavior in the marketplace. If an applicant is found to have violated the antitrust laws in connection with its participation in the competitive bidding process, it may be subject to forfeiture of its upfront payment, down payment, or full bid amount and may be prohibited from participating in future auctions. 31 Submission of Auction- related Filings. As noted above, applicants seeking to amend their short- form applications during the auction must make modifications to their short- form applications electronically and submit a letter, briefly summarizing the changes, by electronic mail to the attention of Margaret Wiener, Chief, Auctions and Spectrum Access Division, at the following address: auction65@ fcc. gov. Parties wishing to submit requests, complaints, or other information concerning Auction No. 65 also should send a copy by electronic mail to the attention of Margaret Wiener, Chief, Auctions and Spectrum Access Division, at the following address: auction65@ fcc. gov, in addition to following other procedures prescribed by the Commission’s rules. The Commission occasionally receives complaints regarding certain bidders and requests to suspend bidding during an auction. While the Commission reserves the right to take appropriate action during an auction to preserve the integrity of the auction process, it is 25 See 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 ¶ 11 (1998). 26 Id., 13 FCC Rcd at 11978 ¶ 13. 27 47 C. F. R. § 1.65. 28 47 C. F. R. §§ 1.65, 1. 2105( c)( 6); see also Part 1 Seventh Report and Order, 16 FCC Rcd at 17555 ¶ 17. 29 See 47 C. F. R. § 1.2107( d). 30 See 47 C. F. R. §§ 1.2105( c), 1.2107( d), and 1.2109( d). 31 See 47 C. F. R. § 1.2109( d). 8 9 generally our practice to address any such allegations only after the winning bidders have submitted their long- form applications, when there is greater opportunity for investigation of such allegations, if warranted. Finally, parties wishing to make suggestions concerning Auction No. 65 or future auctions are encouraged to present such ideas using the suggestion feature of the FCC Auction System. (As mentioned above, this feature is not an appropriate mechanism for posing time- sensitive questions that need an immediate response.) Commission staff considers all suggestions, but may not always provide an individualized response. Long- Form Applications. Within ten days after release of the auction closing public notice, winning bidders must electronically submit a properly completed long- form application (FCC Form 601), for each license won through Auction No. 65. 32 Applicants that claim eligibility to receive a small business or very small business bidding credit should be aware that, following the auction, they will be subject to more extensive reporting requirements contained in the Commission’s Part 1 ownership disclosure rule. 33 In addition, applicants with foreign ownership interests will be required to comply with 47 U. S. C. § 310( b) at the long- form application stage. Further filing instructions will be provided to auction winners at the close of the auction. 34 For additional information regarding this public notice, please contact: Auctions and Spectrum Access Division, Wireless Telecommunications Bureau: For bidding and software questions: Jeff Crooks at (202) 418- 0660 For bidding, auction procedures, and general filing questions: Barbara Sibert at (717) 338- 2868 For legal questions: Howard Davenport at (202) 418- 0660 Mobility Division, Wireless Telecommunications Bureau: For legal and service rule questions: Erin McGrath or Richard Arsenault at (202) 418- 0620 (legal); or Jay Jackson or Moslem Sawez at (202) 418- 0620 (technical) For technical questions about software or hardware, please contact FCC Technical Support at (877) 480- 3201, option nine; (202) 414- 1250; or (202) 414- 1255 (TTY). - FCC - 32 See 47 C. F. R. §§ 1.2107. 33 See 47 C. F. R. § 1.2112( b)( 2). 34 See 47 C. F. R. §§ 1.2107, 1. 2109( a). 9