Auction of 24 GHz Service Licenses Scheduled for July 28, 2004; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Auction Procedures

FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-04-56-B; DA 04-633]

Auction of 24 GHz Service Licenses Scheduled for July 28, 2004;

Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments

and Other Auction Procedures

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This document announces the procedures, minimum opening bids,

and revised inventory for the upcoming auction of licenses in the 24

GHz Service in the 24.25-24.45 GHz and 25.05-25.25 GHz bands. This

document is intended to familiarize prospective bidders with the

procedures and minimum opening bids for this auction.

DATES: Auction No. 56 is scheduled to begin on July 28, 2004.

FOR FURTHER INFORMATION CONTACT: Auctions and Spectrum Access Division:

[[Page 21100]]

For legal questions: Howard Davenport at (202) 418-0660, for general

auction questions: Roy Knowles or Barbara Sibert at (717) 338-2888.

Media Contact: For press inquiries: Lauren Patrich at (202) 418-7944.

Broadband Division: For legal questions: Nancy Zaczek at (202) 418-

2487, for technical questions: Michael Pollak at (202) 418-2487 or

Steve Buenzow at (717) 338-2687.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction No. 56

Procedures Public Notice released on March 12, 2004. The complete text

of the Auction No. 56 Procedures Public Notice, including attachments,

is available for public inspection and copying during regular business

hours at the FCC Reference Information Center, Portals II, 445 12th

Street, SW., Room CY-A257, Washington, DC 20554. The Auction No. 56

Procedures Public Notice may also be purchased from the Commission's

duplicating contractor, Qualex International, Portals II, 445 12th

Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-

2893, facsimile 202-863-2898, or via e-mail [email protected]. This

document is also available on the Internet at the Commission's Web

site: http://wireless.fcc.gov/auctions/56/.

I. General Information

A. Introduction

1. The Auction No. 56 Procedures Public Notice announces the

procedures and minimum opening bids for the upcoming auction of

licenses in the 24 GHz Service in the 24.25-24.45 GHz and 25.05-25.25

GHz bands scheduled for July 28, 2004 (Auction No. 56). On January 30,

2004, in accordance with the Balanced Budget Act of 1997, the Bureau

released a public notice seeking comment on reserve prices or minimum

opening bids and the procedures to be used in Auction No. 56. The

Bureau received no comments in response to the Auction No. 56 Comment

Public Notice, 69 FR 7219, February 13, 2004.

i. Background of Proceeding

2. On August 1, 2000, the Commission released the 24 GHz Report and

Order, 65 FR 59350, October 5, 2000, in which it determined that the 24

GHz band would be made available for licensing throughout the United

States by Economic Areas (``EA''). Stations in the 24 GHz Service may

render any kind of digital fixed communications service consistent with

the Commission's rules and the regulatory status of the station to

provide services on a common carrier or non-common carrier basis. The

Commission adopted rules to license the 24 GHz band by EA because EAs

not only offer economies of scale, but also serve the needs of a wider

range of entities, including both large and small service providers.

ii. Licenses To Be Auctioned

3. Auction No. 56 will offer 880 licenses in the 24 GHz Service in

the 24.25-24.45 GHz and 25.05-25.25 GHz bands. Five licenses will be

offered in each of 172 EAs and four EA-like areas: Guam and Northern

Mariana Islands; Puerto Rico and the U.S. Virgin Islands; American

Samoa; and the Gulf of Mexico. A complete list of the licenses

available in Auction No. 56 is included in Attachment A of the Auction

No. 56 Procedures Public Notice.

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Bandwidth

Channel number Channel description Frequency bands (MHz)

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EA Licenses

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35............................ Two paired 40 MHz frequency blocks 24,250-24,290/25,050-25,090 MHz 80 MHz.

36............................ Two paired 40 MHz frequency blocks 24,290-24,330/25,090-25,130 MHz 80 MHz.

37............................ Two paired 40 MHz frequency blocks 24,330-24,370/25,130-25,170 MHz 80 MHz.

38............................ Two paired 40 MHz frequency blocks 24,370-24,410/25,170-25,210 MHz 80 MHz.

39............................ Two paired 40 MHz frequency blocks 24,410-24,450/25,210-25,250 MHz 80 MHz.

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Grand Total............... .................................. ............................... 400 MHz.

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B. Rules and Disclaimers

i. Relevant Authority

4. Prospective applicants must familiarize themselves thoroughly

with the Commission's rules relating to the 24 GHz service contained in

title 47, part 101, 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 applicants must

also be thoroughly familiar with the procedures, terms and conditions

(collectively, ``terms'') contained in the Auction No. 56 Procedures

Public Notice; the Auction No. 56 Comment Public Notice; 24 GHz Report

& Order and the 24 GHz Reconsideration Order (as well as prior and

subsequent Commission proceedings regarding competitive bidding

procedures).

5. 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 applicants. It is the responsibility of all applicants

to remain current with all Commission rules and with all public notices

pertaining to this auction.

ii. Prohibition of Collusion

6. To ensure the competitiveness of the auction process, Sec.

1.2105(c) of the Commission's rules prohibits applicants for any of the

same geographic license areas from communicating with each other during

the auction about bids, bidding strategies, or settlements unless such

applicants have identified each other on their FCC Form 175

applications as parties with whom they have entered into agreements

under Sec. 1.2105(a)(2)(viii). Thus, applicants for any of the same

geographic license areas must affirmatively avoid all discussions with

each other that affect, or in their reasonable assessment have the

potential to affect, bidding or bidding strategy. This prohibition

begins at the short-form application filing deadline and ends at the

down payment deadline after the auction. For purposes of this

prohibition, Sec. 1.2105(c)(7)(i) defines applicant as including all

controlling interests in the entity submitting a short-form application

to participate in the auction, as well as all holders of partnership

and other ownership interests and any stock interest amounting to 10

percent or more of the entity, or outstanding stock, or outstanding

voting stock of the entity submitting a short-form application, and all

officers and directors of that entity.

7. Applicants for licenses in any of 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

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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 could similarly

occur if the authorized bidders are different individuals employed by

the same organization (e.g., law firm or consulting firm). In such a

case, at a minimum, applicants should certify on their applications

that precautionary steps have been taken to prevent communication

between authorized bidders and that applicants and their bidding agents

will comply with the anti-collusion rule. However, the Bureau 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.

8. The Commission's anti-collusion rules allow applicants to form

certain agreements during the auction, provided the applicants have not

applied for licenses covering the same geographic areas. In addition,

applicants that apply to bid for all markets will be precluded from

communicating with all other applicants until after the down payment

deadline. However, all applicants may enter into bidding agreements

before filing their FCC Form 175, as long as they disclose the

existence of the agreement(s) in their Form 175. 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 pursuant to Sec. 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. By

signing their FCC Form 175 short-form applications, applicants are

certifying their compliance with Sec. 1.2105(c).

9. Section 1.65 of the Commission's rules requires an applicant to

maintain the accuracy and completeness of information furnished in its

pending application and to notify the Commission within 30 days of any

substantial change that may be of decisional significance to that

application. Thus, Sec. 1.65 requires auction applicants that engage

in communications of bids or bidding strategies that result 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, Sec. 1.2105(c)(6) requires

all auction applicants to report prohibited discussions or disclosures

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 strategy that must

be reported under Sec. 1.65.

10. Any applicant found to have violated the anti-collusion rule

may be subject to sanctions, including forfeiture of its upfront

payment, down payment or full bid amount, and may be prohibited from

participating in future auctions.

11. A summary listing of documents issued by the Commission and the

Bureau addressing the application of the anti-collusion rules may be

found in Attachment G of the Auction No. 56 Procedures Public Notice.

iii. Interference Protection

12. Among other licensing and technical rules, 24 GHz licensees

must comply with the interference protection and coordination

requirements set forth in Sec. Sec. 101.509 of the Commission's rules.

Incumbent 24 GHz Service Licensees (formerly Digital Electronic Message

Service (DEMS) licensees when they were in the 18 GHz band) authorized

to operate in Standard Metropolitan Statistical Areas (``SMSAs'') shall

retain exclusive rights to their channel(s) within their SMSA and must

be protected. 24 GHz service licensees must also protect neighboring

licensees. New EA licensees are encouraged to develop sharing

agreements with these incumbents and other new EA licensees along the

boundaries of their areas. Potential bidders seeking licenses for EAs

that border Canada or Mexico are subject to coordination arrangements

with those respective countries.

iv. Due Diligence

13. Potential applicants are reminded that there are a number of

incumbent 24 GHz Service licensees operating on 24.25-24.45 GHz and

25.05-25.25 GHz bands that are subject to the upcoming auction.

Incumbent licenses were originally granted in 1997 in 102 SMSAs.

Incumbent systems are entitled to protection as specified under Sec.

101.509 of the Commission's rules from co-channel interference by any

new entrant who obtains a 24 GHz EA license at the auction. We

therefore caution potential bidders in formulating their bidding

strategies to investigate and consider the extent to which 24 GHz

channels are occupied by incumbents. We note that the power flux

density listed in subparagraph (e) under Sec. 101.509 should read ``-

114'' instead of ``-14.''

14. Potential applicants are solely responsible for identifying

associated risks and for investigating and evaluating the degree to

which such matters may affect their ability to bid on, otherwise

acquire, or make use of licenses available in Auction No. 56.

15. Potential applicants also should be aware that certain

applications (including those for modification), petitions for

rulemaking, requests for special temporary authority (``STA''), waiver

requests, petitions to deny, petitions for reconsideration, and

applications for review may be pending before the Commission and relate

to particular applicants, incumbent licensees, or the licenses

available in Auction No. 56. In addition, certain judicial proceedings

that may relate to particular applicants or incumbent licensees, or the

licenses available in Auction No. 56, may be commenced, or may be

pending, or may be subject to further review. We note that resolution

of these matters could have an impact on the availability of spectrum

in Auction No. 56. In addition, although the Commission will continue

to act on pending applications, requests and petitions, some of these

matters may not be resolved by the time of the auction.

16. In addition, potential applicants may research the licensing

database for the Wireless Telecommunications Bureau on the Internet in

order to determine which frequencies are already licensed to incumbent

licensees. The Commission makes no representations or guarantees

regarding the accuracy or completeness of information in its databases

or any third party databases, including, for example, court docketing

systems. Furthermore, the Commission makes no representations or

guarantees regarding the accuracy or completeness of information that

has been provided by incumbent licensees and incorporated into the

database. Potential applicants are strongly encouraged to physically

inspect any sites located in, or near, the service area for which they

plan to bid.

17. Potential bidders may obtain information about licenses

available in Auction No. 56 through the Wireless Telecommunications

Bureau's licensing database on the World Wide Web at http://

wireless.fcc.gov/uls. Potential applicants may query the database

online and download a copy of their search results if desired. Detailed

instructions on using License Search (including frequency searches and

the

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GeoSearch capability) and downloading query results are available

online by selecting the ``?'' button at the upper right-hand corner of

the License Search screen.

18. Potential applicants should direct questions regarding the

search capabilities to the FCC Technical Support hotline at (202) 414-

1250 (voice) or (202) 414-1255 (TTY), or via e-mail at [email protected].

v. Bidder Alerts

19. 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 and interested parties

should perform their own due diligence before proceeding, as they would

with any new business venture.

20. As is the case with many business investment opportunities,

some unscrupulous entrepreneurs may attempt to use Auction No. 56 to

deceive and defraud unsuspecting investors.

21. 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 proposals regarding Auction No. 56 may also call the FCC

Consumer Center at (888) CALL-FCC ((888) 225-5322).

vi. National Environmental Policy Act Requirements

22. Licensees must comply with the Commission's rules regarding the

National Environmental Policy Act (``NEPA''). The construction of a

wireless antenna facility is a federal action and the licensee must

comply with the Commission's NEPA rules for each such facility.

C. Auction Specifics

i. Auction Date

23. The auction will begin on Wednesday, July 28, 2004. 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.

ii. Auction Title

24. Auction No. 56--24 GHz Service.

iii. Bidding Methodology

25. The bidding methodology for Auction No. 56 will be simultaneous

multiple round bidding. The Commission will conduct this auction over

the Internet, and telephonic bidding will be available as well. As a

contingency plan, bidders may also dial in to the FCC Wide Area

Network. Qualified bidders are permitted to bid telephonically or

electronically.

iv. Pre-Auction Dates and Deadlines

26. The following is a list of important dates related to Auction

No. 56:

Auction Seminar--May 25, 2004.

Short-Form Application (FCC Form 175) Filing Window Opens--May 25,

2004; 12 p.m. e.t.

Short-Form Application (FCC Form 175) Filing Window Deadline--June 4,

2004; 6 p.m. e.t.

Upfront Payments (via wire transfer)--June 29, 2004; 6 p.m. e.t.

Mock Auction--July 23, 2004.

Auction Begins--July 28, 2004.

v. Requirements for Participation

27. Those wishing to participate in the auction must:

Submit a short-form application (FCC Form 175)

electronically by 6 p.m. e.t., June 4, 2004.

Submit a sufficient upfront payment and an FCC

Remittance Advice Form (FCC Form 159) by 6 p.m. e.t., June 29, 2004.

Comply with all provisions outlined in the

Auction No. 56 Procedures Public Notice.

vi. General Contact Information

28. The following is a list of general contact information related

to Auction No. 56:

General Auction Information

General Auction Questions

Seminar Registration

FCC Auctions Hotline, (888) 225-5322, Press Option 2, or

direct (717) 338-2888, Hours of service: 8 a.m.-5:30 p.m. e.t., Monday

through Friday

Auction Legal Information

Auction Rules, Policies, Regulations

Auctions and Spectrum Access Division, Legal Branch (202) 418-0660

Licensing Information

Rules, Policies, Regulations

Licensing Issues

Due Diligence

Incumbency Issues

Broadband Division, (202) 418-2487

Technical Support

Electronic Filing

FCC Automated Auction System

FCC Auctions Technical Support Hotline, (202) 414-1250, (202) 414-

1255 (TTY), Hours of service: 8 a.m.-6 p.m. e.t., Monday through Friday

Payment Information

Wire Transfers

Refunds

FCC Auctions Accounting Branch, (202) 418-0578, (202) 418-2843

(Fax)

Telephonic Bidding

Will be furnished only to qualified bidders

Press Information

Lauren Patrich (202) 418-7944

FCC Forms

(800) 418-3676 (outside Washington, DC), (202) 418-3676 (in the

Washington Area), http://www.fcc.gov/formpage.html

FCC Internet Sites

http://www.fcc.gov, http://wireless.fcc.gov/auctions, http://

wireless.fcc.gov/uls

II. Short-Form (FCC Form 175) Application Requirements

29. Guidelines for completion of the short-form (FCC Form 175) are

set forth in Attachment D of the Auction No. 56 Procedures Public

Notice.

A. Ownership Disclosure Requirements (FCC Form 175 Exhibit A)

30. All applicants must comply with the uniform Part 1 ownership

disclosure standards and provide information required by Sec. Sec.

1.2105 and 1.2112 of the Commission's rules. Specifically, in

completing FCC Form 175, applicants will be required to file an

``Exhibit A'' providing a full and complete statement of the ownership

of the bidding entity. The ownership disclosure standards for the

short-form are set forth in Sec. 1.2112 of the Commission's rules.

B. Consortia and Joint Bidding Arrangements (FCC Form 175 Exhibit B)

31. Applicants will be required to identify on their short-form

applications any parties with whom they have entered into any

consortium

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arrangements, joint ventures, partnerships or other agreements or

understandings that relate in any way to the licenses being auctioned,

including any agreements relating to post-auction market structure.

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 licenses on which they will

or will not bid.

32. 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 licenses in the same geographic license area provided

that (i) the attributable interest holder certifies that it has not and

will not communicate with any party concerning the bids or bidding

strategies of more than one of the applicants in which it holds an

attributable interest, or with which it has 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. While the

anti-collusion rules do not prohibit non-auction related business

negotiations among auction applicants, applicants are reminded that

certain discussions or exchanges could touch upon impermissible subject

matters because they may convey pricing information and bidding

strategies.

C. Eligibility

i. Bidding Credit Eligibility (FCC Form 175 Exhibit C)

33. A bidding credit represents the amount by which a bidder's

winning bids are discounted. The size of the bidding credit depends on

the average of the aggregated annual gross revenues for each of the

preceding three years of the bidder, its affiliates, its controlling

interests, and the affiliates of its controlling interests.

34. In the 24 GHz Report and Order, the Commission adopted bidding

credits to promote and facilitate the participation of small businesses

in the competitive bidding for licenses in the 24 GHz service. For

Auction No. 56, bidding credits will be available to small businesses

or consortia thereof, as follows:

A bidder with attributed average annual gross

revenues of not more than $40 million for the preceding three years

(``entrepreneur'') will receive a 15 percent discount on its winning

bids;

A bidder with attributed average annual gross

revenues of not more than $15 million for the preceding three years

(``small business'') will receive a 25 percent discount on its winning

bids;

A bidder with attributed average annual gross

revenues of not more than $3 million for the preceding three years

(``very small business'') will receive a 35 percent discount on its

winning bids.

35. Small business bidding credits are not cumulative; a qualifying

applicant receives the 15 percent, the 25 percent or 35 percent bidding

credit on its winning bid, but only one credit per license.

36. To encourage the growth of wireless services in federally

recognized tribal lands the Commission has implemented a tribal land

bidding credit. See section V.F. of the Auction No. 56 Procedures

Public Notice.

37. Attribution for entrepreneur, small business, and very small

business eligibility. In determining which entities qualify as

entrepreneurs, small businesses, or very small businesses, the

Commission will consider the gross revenues of the applicant, its

affiliates, its controlling interests, and the affiliates of its

controlling interests. The Commission does not impose specific equity

requirements on controlling interest holders. Once the principals or

entities with a controlling interest are determined, only the revenues

of those principals or entities, the affiliates of those principals or

entities, and the applicant and its affiliates, will be counted in

determining small business eligibility.

38. Each member of a consortium of entrepreneurs, small businesses

or very small businesses must disclose its gross revenues along with

those of its affiliates, its controlling interests, and the affiliates

of its controlling interests.

ii. Supporting Documentation

39. Applicants should note that they will be required to file

supporting documentation to their FCC Form 175 short-form applications

to establish that they satisfy the eligibility requirements to qualify

as entrepreneur, small business, or very small business (or consortia

of entrepreneurs, small businesses, or very small businesses) for this

auction.

40. Applicants should further note that 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.

41. Entrepreneur, small business, or very small business

eligibility (Exhibit C). Entities applying to bid as entrepreneurs,

small businesses, or very small businesses (or consortia of

entrepreneurs, small businesses, 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: (i) The applicant,

(ii) its affiliates, (iii) its controlling interests, and (iv) the

affiliates of its controlling interests. Certification that the average

annual 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, its

controlling interests, and the affiliates of 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 entrepreneurs,

small businesses, or very small businesses, this information must be

provided for each consortium member.

C. Provisions Regarding Defaulters and Former Defaulters (FCC Form 175

Exhibit D)

42. Each applicant must certify on its FCC Form 175 application

under penalty of perjury that the applicant, its controlling interests,

its affiliates, and the affiliates of its controlling interests, as

defined by Sec. 1.2110, are not in default on any payment for

Commission licenses (including down payments) and not delinquent on any

non-tax debt owed to any Federal agency. In addition, each applicant

must attach to its FCC Form 175 application a statement made under

penalty of perjury indicating whether or not the applicant, its

affiliates, its controlling interests, or the affiliates of its

controlling interests, as defined by Sec. 1.2110, have ever been in

default on any Commission licenses or have ever been delinquent on any

non-tax debt owed to any Federal agency. Applicants must include this

statement as Exhibit D of the FCC Form 175.

43. ``Former defaulters''--i.e., applicants, including their

attributable interest holders, that in the past have

[[Page 21104]]

defaulted on any Commission licenses or been delinquent on any non-tax

debt owed to any Federal agency, but that have since remedied all such

defaults and cured all of their outstanding non-tax delinquencies--are

eligible to bid in Auction No. 56, provided that they are otherwise

qualified. However, as discussed infra in section III.D.3, former

defaulters are required to pay upfront payments that are fifty percent

more than the normal upfront payment amounts.

D. Installment Payments

44. Installment payment plans will not be available in Auction No.

56.

E. Other Information (FCC Form 175 Exhibits E and F)

45. Applicants owned by minorities or women, as defined in 47 CFR

1.2110(c)(2), may attach an exhibit (Exhibit E) 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 on Exhibit F.

F. Minor Modifications to Short-Form Applications (FCC Form 175)

46. After the short-form filing deadline (6 p.m. e.t. June 4,

2004), 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, change control of the

applicant, or change bidding credits). See 47 CFR 1.2105. Permissible

minor changes include, for example, deletion and addition of authorized

bidders (to a maximum of three) and revision of exhibits. Applicants

must make these modifications to their FCC Form 175 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: [email protected]. The electronic

mail summarizing the changes must include a subject or caption

referring to Auction No. 56. The Bureau requests that parties format

any attachments to electronic mail as Adobe[reg] Acrobat[reg] (pdf) or

Microsoft[reg] Word documents.

47. A separate copy of the letter should be faxed to the attention

of Kathryn Garland at (717) 338-2850.

G. Maintaining Current Information in Short-Form Applications (FCC Form

175)

48. 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. Amendments reporting substantial changes of possible

decisional significance in information contained in FCC Form 175

applications, as defined by 47 CFR 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

49. On Tuesday, May 25, 2004, the FCC will sponsor a free seminar

for Auction No. 56 at the Federal Communications Commission, located at

445 12th Street, SW., Washington, DC. The seminar will provide

attendees with information about pre-auction procedures, auction

conduct, the FCC Automated Auction System, auction rules, and the 24

GHz service rules.

B. Short-Form Application (FCC Form 175)--Due June 4, 2004

50. 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 no later than 6

p.m. e.t. on June 4, 2004. Late applications will not be accepted.

i. Electronic Filing

51. Applicants must file their FCC Form 175 applications

electronically. Applications may generally be filed at any time

beginning at noon e.t. on May 25, 2004, until 6 p.m. e.t. on June 4,

2004. Applicants are strongly encouraged to file early and 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 June 4, 2004.

52. Applicants must press the ``SUBMIT Application'' button on the

``Submission'' page of the electronic form to successfully submit their

FCC Form 175s. 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 of the Auction No. 56 Procedures Public Notice. Technical

support is available at (202) 414-1250 (voice) or (202) 414-1255 (text

telephone (TTY)); hours of service are Monday through Friday, from 8

a.m. to 6 p.m. e.t. In order to provide better service to the public,

all calls to the hotline are recorded.

ii. Completion of FCC Form 175

53. Applicants should carefully review 47 CFR 1.2105, and must

complete all items on the FCC Form 175. Instructions for completing the

FCC Form 175 are in Attachment D of the Auction No. 56 Procedures

Public Notice.

iii. Electronic Review of FCC Form 175

54. The FCC Form 175 electronic review system may be used to locate

and print applicants' FCC Form 175 information. There is no fee for

accessing this system. See Attachment C of the Auction No. 56

Procedures Public Notice for details on accessing the review system.

55. 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.

Note: Applicants should not include sensitive information (i.e.,

TIN/EIN) on any exhibits to their FCC Form 175 applications.

C. Application Processing and Minor Corrections

56. 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: (i) Those applications accepted for

filing; (ii) those applications rejected; and (iii) those applications

which have minor defects that may be corrected, and the deadline for

filing such corrected applications.

D. Upfront Payments--Due June 29, 2004

57. 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) (Revised 2/03). All upfront payments must be received by

Mellon Bank in Pittsburgh, PA by 6 p.m. e.t. on June 29, 2004. Failure

to deliver the upfront payment by the June 29, 2004, deadline will

result in dismissal of the application and disqualification from

participation in the auction. For specific details regarding upfront

payments, see III.D. of the Auction No. 56 Procedures Public Notice.

[[Page 21105]]

i. Making Auction Payments by Wire Transfer

58. Wire transfer payments must be received by 6 p.m. e.t. on June

29, 2004. 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.

59. Applicants must fax a completed FCC Form 159 to Mellon Bank at

(412) 209-6045 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. 56.'' In

order to meet the Commission's upfront payment deadline, an applicant's

payment must be credited to the Commission's account by the deadline.

Applicants are responsible for obtaining confirmation from their

financial institution that Mellon Bank has timely received their

upfront payment and deposited it in the proper account.

ii. Amount of Upfront Payment

60. In the Part 1 Order, 62 FR 13540, March 21, 1997, the

Commission delegated to the Bureau the authority and discretion to

determine appropriate upfront payment(s) for each auction. In addition,

in the Part 1 Fifth Report and Order, 65 FR 52323, August 29, 2000, the

Commission ordered that ``former defaulters,'' i.e., applicants that

have ever been in default on any Commission license or have ever been

delinquent on any non-tax debt owed to any Federal agency, be required

to pay upfront payments 50 percent greater than non-''former

defaulters.'' For purposes of this calculation, the ``applicant''

includes the applicant itself, its affiliates, its controlling

interests, and affiliates of its controlling interests, as defined by

Sec. 1.2110 of the Commission's rules.

61. The amount of the upfront payment will determine the number of

bidding units on which a bidder may place bids. In order to bid on a

license, otherwise qualified bidders that applied for that license on

Form 175 must have an eligibility level that meets or exceeds the

number of bidding units assigned to that license. At a minimum,

therefore, an applicant's total upfront payment must be enough to

establish eligibility to bid on at least one of the licenses applied

for on Form 175, or else the applicant will not be eligible to

participate in the auction. An applicant does not have to make an

upfront payment to cover all licenses for which the applicant has

applied on 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.

62. For Auction No. 56 the Commission adopts upfront payments on a

license-by-license basis using the following formula: $0.00015 * MHz *

License Area Population with a minimum of $2,500 per license.

63. The specific upfront payments and bidding units for each

license are set forth in Attachment A of the Auction No. 56 Procedures

Public Notice. Attachment A of the Auction No. 56 Procedures Public

Notice also includes the number of bidding units for each license.

64. In calculating its upfront payment amount, an applicant should

determine the maximum number of bidding units on which it may wish to

be active (bidding units associated with licenses on which the bidder

has the standing high bid from the previous round and licenses on which

the bidder places a bid in the current round) in any single round, and

submit an upfront payment 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. Applicants should check their calculations carefully, as there

is no provision for increasing a bidder's maximum eligibility after the

upfront payment deadline.

65. Former defaulters should calculate their upfront payment for

all licenses by multiplying the number of bidding units they wish to

purchase by 1.5. In order to calculate the number of bidding units to

assign to former defaulters, the Commission will divide the upfront

payment received by 1.5 and round the result up to the nearest bidding

unit.

iii. Applicant's Wire Transfer Information for Purposes of Refunds of

Upfront Payments

66. The Commission will use wire transfers for all Auction No. 56

refunds. To ensure that refunds of upfront payments are processed in an

expeditious manner, the Commission is requesting that the following

pertinent information be supplied to the FCC: Name of Bank; ABA Number;

Contact and Phone Number; Account Number to Credit; Name of Account

Holder; FCC Registration Number (FRN); Taxpayer Identification Number;

Correspondent Bank (if applicable); Account Number. All refunds will be

returned to the payer of record as identified on the FCC Form 159

unless the payer submits written authorization instructing otherwise.

E. Auction Registration

67. Approximately ten days before the auction, the FCC will issue a

public notice announcing all qualified bidders for the auction.

Qualified bidders are those applicants whose FCC Form 175 applications

have been accepted for filing and have timely submitted upfront

payments sufficient to make them eligible to bid on at least one of the

licenses for which they applied.

68. All qualified bidders are automatically registered for the

auction. Registration materials will be distributed prior to the

auction by two separate overnight mailings, one containing the

confidential bidder identification number (BIN) and the other

containing the SecurID cards, both of which are required to place bids.

These mailings will be sent only to the contact person at the contact

address listed in the FCC Form 175.

69. 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 Wednesday, July 21, 2004, 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.

70. Qualified bidders should note that lost bidder identification

numbers or SecurID cards can be replaced only by appearing in person at

the FCC headquarters, located at 445 12th St., SW., Washington, DC

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 replacements. Qualified bidders

requiring replacements must call technical support prior to arriving at

the FCC.

F. Remote Electronic Bidding

71. The Commission will conduct this auction over the Internet, and

telephonic bidding will be available as well. As a contingency plan,

bidders may also dial in to the FCC Wide Area Network. Qualified

bidders are permitted to bid telephonically or electronically. Each

applicant should indicate its bidding preference--electronic or

telephonic--on the FCC Form 175. In either case, each authorized bidder

must have its own SecurID card, which the FCC will provide at no

charge. For security

[[Page 21106]]

purposes, the SecurID cards and the FCC Automated Auction System user

manual are only mailed to the contact person at the contact address

listed on the FCC Form 175. Each SecurID card is tailored to a specific

auction; therefore, SecurID cards issued for other auctions or obtained

from a source other than the FCC will not work for Auction No. 56. The

telephonic bidding phone number will be supplied in the first overnight

mailing, which also includes the confidential bidder identification

number.

G. Mock Auction

72. All qualified bidders will be eligible to participate in a mock

auction on Friday, July 23, 2004. The mock auction will enable

applicants to become familiar with the FCC Automated Auction System

prior to the auction. Participation by all bidders is strongly

recommended.

III. Auction Event

73. The first round of bidding for Auction No. 56 will begin on

Wednesday, July 28, 2004. The initial bidding schedule will be

announced in a public notice listing the qualified bidders, which is

released approximately 10 days before the start of the auction.

H. Auction Structure

i. Simultaneous Multiple Round Auction

74. The Commission will award all licenses in Auction No. 56 in a

simultaneous multiple round auction. Unless otherwise announced, bids

will be accepted on all licenses in each round of the auction. This

approach allows bidders to take advantage of synergies that exist among

licenses and is administratively efficient.

ii. Maximum Eligibility and Activity Rules

75. The amount of the upfront payment submitted by a bidder will

determine the initial (maximum) eligibility (as measured in bidding

units) for each bidder.

76. Note that each license is assigned a specific number of bidding

units equal to the upfront payment listed in Attachment A of the

Auction No. 56 Procedures Public Notice on a bidding unit per dollar

basis. The total upfront payment defines the maximum number of bidding

units on which the applicant will be permitted to bid and hold high

bids in a round. As there is no provision for increasing a bidder's

eligibility after the upfront payment deadline, applicants are

cautioned to calculate their upfront payments carefully. The total

upfront payment does not affect the total dollar amount a bidder may

bid on any given license.

77. 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.

78. 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 a bid in

the current round (see ``Minimum Acceptable Bids and Bid Increments''

in section IV.B.iii). The minimum required activity is expressed as a

percentage of the bidder's current 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.iii and ``Stage

Transitions'' in section IV.A.iv), we adopt them for Auction No. 56.

iii. Auction Stages

79. The Commission will conduct the auction in two stages and

employ an activity rule. Listed 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 encompassing at least 80 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 bidder's current activity

(the sum of bidding units of the bidder's standing high bids and bids

during the current round) by five-fourths (5/4).

Stage Two: During the second stage of the auction, a bidder

desiring to maintain its current eligibility is required to be active

on 95 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 bidder's current

activity (the sum of bidding units of the bidder's standing high bids

and bids during the current round) by twenty-nineteenths (20/19).

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

activity level by using the bidding system's bidding module.

80. Because the foregoing procedures have proven successful in

maintaining proper pace in previous auctions, we adopt them for Auction

No. 56.

iv. Stage Transitions

81. The auction will generally advance to the next stage (i.e.,

from Stage One to Stage Two) when the auction activity level, as

measured by the percentage of bidding units receiving new high bids, is

below 20 percent for three consecutive rounds of bidding in each Stage.

The Bureau will retain the discretion to change stages unilaterally by

announcement during the auction.

82. Thus, 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 are appropriate for use in Auction No. 56.

v. Activity Rule Waivers and Reducing Eligibility

83. Each bidder will be provided three 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 level. An activity rule waiver applies to an entire round of

bidding and not to a particular license.

84. 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

[[Page 21107]]

a bidder's activity level is below the minimum required unless: (i)

There are no activity rule waivers available; or (ii) the bidder

overrides the automatic application of a waiver by reducing

eligibility, thereby meeting the minimum requirements. If a bidder has

no waivers remaining and does not satisfy the required activity level,

the current eligibility will be permanently reduced, possibly

eliminating the bidder from the auction.

85. 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 bidding system. 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.iii discussion). Once eligibility

has been reduced, a bidder will not be permitted to regain its lost

bidding eligibility.

86. 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

FCC Automated Auction System) during a round in which no bids are

submitted, the auction will remain open and the bidder's eligibility

will be preserved. However, an automatic waiver triggered during a

round in which there are no new bids or withdrawals will not keep the

auction open.

Note: Once a proactive waiver is submitted during a round, that

waiver cannot be unsubmitted.

vi. Auction Stopping Rules

87. For Auction No. 56, the Commission will employ a simultaneous

stopping rule, and retain discretion to invoke a modified version of

the 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.

88. In addition, the Bureau may reserve the right to declare that

the auction will end after a designated 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. The Bureau may exercise these

options only in certain 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.

vii. Auction Delay, Suspension, or Cancellation

89. 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 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. 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.

I. Bidding Procedures

i. Round Structure

90. 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. Each bidding round is followed

by the release of round results. Multiple bidding rounds may be

conducted in a given day. Details regarding round results formats and

locations will also be included in the qualified bidders public notice.

91. 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 Bureau may increase or decrease the amount of time for

the bidding rounds and review periods, or the number of rounds per day,

depending upon the bidding activity level and other factors.

ii. Reserve Price or Minimum Opening Bid

92. For Auction No. 56, the Bureau adopts the following license-by

license formula for calculating minimum opening bids: $0.0003 * MHz *

License Area Population with a minimum of $2,500 per license.

93. The minimum opening bids we adopt for Auction No. 56 are

reducible at the discretion of the Bureau. We emphasize, however, that

such discretion will be exercised, if at all, sparingly and early in

the auction, i.e., before bidders lose all waivers and begin to lose

substantial eligibility. During the course of the auction, the Bureau

will not entertain requests to reduce the minimum opening bid on

specific licenses.

94. The specific minimum opening bids for each license available in

Auction No. 56 are set forth in Attachment A of the Auction No. 56

Procedures Public Notice.

iii. Minimum Acceptable Bids and Bid Increments

95. In the Auction No. 56 Comment Public Notice, we will use a

smoothing methodology to calculate minimum acceptable bids. The

smoothing methodology is designed to vary the increment for a given

license between a maximum and minimum percentage based on the bidding

activity on that license. This methodology allows the increments to be

tailored to the activity on a license, decreasing the time it takes for

licenses receiving many bids to reach their final prices. The formula

used to calculate this increment is included as Attachment F of the

Auction No. 56 Procedures Public Notice. We will initially set the

weighting factor at 0.5, the minimum percentage increment at 0.1 (10%),

and the maximum percentage increment at 0.2 (20%). Hence, at these

initial settings, the percentage increment will fluctuate between 10%

and 20% depending upon the number of bids for the license. The Bureau

will retain the discretion to change the minimum acceptable bids and

bid increments if circumstances so dictate.

96. In each round, each eligible bidder will be able to place a bid

on a particular license for which it applied in any of nine different

amounts. The FCC Automated Auction System will list the nine bid

amounts for each license.

97. Once there is a standing high bid on a license, the FCC

Automated Auction System will calculate a minimum acceptable bid for

that license for the following round, as described in Attachment F of

the Auction No. 56 Procedures Public Notice. The difference between the

minimum acceptable bid and the standing high bid for each license will

define the bid increment--i.e., bid increment = (minimum acceptable

bid)--(standing high bid). The nine acceptable bid amounts for each

license consist of the minimum acceptable bid (the standing high bid

plus one bid increment) and additional amounts calculated using

[[Page 21108]]

multiple bid increments (i.e., the second bid amount equals the

standing high bid plus two times the bid increment, the third bid

amount equals the standing high bid plus three times the bid increment,

etc.).

98. At the start of the auction and until a bid has been placed on

a license, the minimum acceptable bid for that license will be equal to

its minimum opening bid. Corresponding additional bid amounts will be

calculated using bid increments defined as the difference between the

minimum opening bid times one plus the percentage increment, rounded as

described in Attachment F of the Auction No. 56 Procedures Public

Notice, and the minimum opening bid--i.e., bid increment = (minimum

opening bid)(1 + percentage increment) {rounded{time} - (minimum

opening bid). At the start of the auction and until a bid has been

placed on a license, the nine acceptable bid amounts for each license

consist of the minimum opening bid and additional amounts calculated

using multiple bid increments (i.e., the second bid amount equals the

minimum opening bid plus the bid increment, the third bid amount equals

the minimum opening bid plus two times the bid increment, etc.).

99. In the case of a license for which the standing high bid has

been withdrawn, the minimum acceptable bid will equal the second

highest bid received for the license. The additional bid amounts are

calculated using the difference between the second highest bid times

one plus the minimum percentage increment, rounded, and the second

highest bid.

100. The Bureau retains the discretion to change the minimum

acceptable bids and bid increments and the methodology for determining

the minimum acceptable bids and bid increments if it determines that

circumstances so dictate. The Bureau will do so by announcement in the

FCC Automated Auction System. The Bureau may also use its discretion to

adjust the minimum bid increment without prior notice if circumstances

warrant.

iv. High Bids

101. At the end of each bidding round, the high bids will be

determined based on the highest gross bid amount received for each

license. A high bid from a previous round is sometimes referred to as a

``standing high bid.'' A ``standing high bid'' will remain the high bid

until there is a higher bid on the same license at the close of a

subsequent round. Bidders are reminded that standing high bids count

towards bidding activity.

102. In the event of identical high bids on a license in a given

round (i.e., tied bids), a Sybase[reg] SQL pseudo-random number

generator will be used to assign a random number to each bid. The

remaining bidders, as well as the high bidder, will be able to submit a

higher bid in a subsequent round. If no bidder submits a higher bid in

a subsequent round, the high bid from the previous round will win the

license. If any bids are received on the license in a subsequent round,

the high bid will once again be determined on the highest gross bid

amount received for the license.

v. Bidding

103. During a round, a bidder may submit bids for as many licenses

as it wishes (subject to its eligibility), 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 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.

Bidders should note that the bidding units associated with licenses for

which the bidder has removed or withdrawn its bid do not count towards

the bidder's activity at the close of the round.

104. Please note that all bidding will take place remotely either

through the FCC Automated Auction System 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, five to ten minutes are necessary to

complete a bid submission.)

105. A bidder's ability to bid on specific licenses in the first

round of the auction is determined by two factors: (i) The licenses

applied for on FCC Form 175 and (ii) the upfront payment amount

deposited. The bid submission screens will allow bidders to submit bids

on only those licenses for which the bidder applied on its FCC Form

175.

106. In order to access the bidding function of the FCC Automated

Auction System, bidders must be logged in during the bidding round

using the bidder identification number provided in the registration

materials, and the password generated by the SecurID card. Bidders are

strongly encouraged to print bid confirmations for each round after

they have completed all of their activity for that round.

107. In each round, eligible bidders will be able to place bids on

a given license in any of nine different amounts. For each license, the

FCC Automated Auction System interface will list the nine acceptable

bid amounts in a drop-down box. Bidders may use the drop-down box to

select from among the nine bid amounts. The FCC Automated Auction

System also includes an import function that allows bidders to upload

text files containing bid information.

108. Finally, bidders are cautioned to select their bid amounts

carefully because, as explained in the following section, bidders that

withdraw a standing high bid from a previous round, even if the bid was

mistakenly or erroneously made, are subject to bid withdrawal payments.

vi. Bid Removal and Bid Withdrawal

109. For Auction No. 56 the Commission adopts bid removal and bid

withdrawal procedures. With respect to bid withdrawals, the Commission

will limit each bidder to withdrawals in no more than two rounds during

the course of the auction. The rounds in which withdrawals are used

will be at the bidder's discretion.

110. 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 bidding system, a bidder may effectively

``unsubmit'' any bid placed within that round. A bidder removing a bid

placed in the same round is not subject to 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 removed does not count toward

bidding activity. These procedures will enhance bidder flexibility

during the auction.

111. Once a round closes, a bidder may no longer remove a bid.

However, in later rounds, a bidder may withdraw standing high bids from

previous rounds using the withdraw bid function in the FCC Automated

Auction System (assuming that the bidder has not reached its withdrawal

limit). 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 CFR 1.2104(g).

Note: Once a withdrawal is submitted during a round, that

withdrawal cannot be unsubmitted.

112. The Bureau will 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

[[Page 21109]]

during the auction will be subject to the bid withdrawal payments

specified in 47 CFR 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.

113. Calculation. Generally, the Commission imposes payments on

bidders that withdraw high bids during the course of an auction. If a

bidder withdraws its bid and there is no higher bid in the same or

subsequent auction(s), the bidder that withdrew its bid is responsible

for the difference between its withdrawn bid and the high bid in the

same or subsequent auction(s). In the case of multiple bid withdrawals

on a single license, within the same or subsequent auctions(s), the

payment for each bid withdrawal will be calculated based on the

sequence of bid withdrawals and the amounts withdrawn. No withdrawal

payment will be assessed for a withdrawn bid if either the subsequent

winning bid or any of the intervening subsequent withdrawn bids, in

either the same or subsequent auctions(s), equals or exceeds that

withdrawn bid. Thus, a bidder that withdraws a bid will not be

responsible for any withdrawal payments if there is a subsequent higher

bid in the same or subsequent auction(s).

114. In instances in which bids have been withdrawn on a license

that is not won in the same auction, the Commission will assess an

interim withdrawal payment equal to 3 percent of the amount of the

withdrawn bids. The 3 percent interim payment will be applied toward

any final bid withdrawal payment that will be assessed after subsequent

auction of the license. The Part 1 Fifth Report and Order provides

specific examples showing application of the bid withdrawal payment

rule.

vii. Round Results

115. Bids placed during a round will not be made public until the

conclusion of that bidding period. After a round closes, the Bureau

will compile reports of all bids placed, bids withdrawn, current high

bids, new minimum acceptable bids, and bidder eligibility status

(bidding eligibility and activity rule waivers), and post the reports

for public access. Reports reflecting bidders' identities for Auction

No. 56 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.

viii. Auction Announcements

116. The FCC will use auction announcements to announce items such

as schedule changes and stage transitions. All FCC auction

announcements will be available by clicking a link on the FCC Automated

Auction System.

IV. Post-Auction Procedures

A. Down Payments and Withdrawn Bid Payments

117. After bidding has ended, the Commission will issue a public

notice declaring the auction closed and identifying winning bidders,

down payments, final payments, and any withdrawn bid payments due.

118. Within ten business days after release of the auction closing

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 Commission for Auction No. 56 to 20 percent of the net amount

of its winning bids (gross bids less any applicable entrepreneur, small

business, or very small business bidding credits). In addition, by the

same deadline, all bidders must pay any bid withdrawal payments due

under 47 CFR 1.2104(g), as discussed in ``Bid Removal and Bid

Withdrawal,'' section IV.B.vi. (Upfront payments are applied first to

satisfy any withdrawn bid liability, before being applied toward down

payments.)

B. Final Payments

119. Each winning bidder will be required to submit the balance of

the net amount of its winning bids within 10 business days after the

deadline for submitting down payments.

C. Long-Form Application (FCC Form 601)

120. Within ten business days after release of the auction closing

notice, winning bidders must electronically submit a properly completed

long-form application (FCC Form 601) and required exhibits for each

license won through Auction No. 56. Further filing instructions will be

provided to auction winners at the close of the auction.

D. Default and Disqualification

121. 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 CFR

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 its

final bid. 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.

E. Refund of Remaining Upfront Payment Balance

122. All applicants that submit upfront payments but are not

winning bidders for a license in Auction No. 56 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 the applicant after any applicable bid withdrawal payments

have been paid. All refunds will be returned to the payer of record, as

identified on the FCC Form 159, unless the payer submits written

authorization instructing otherwise.

123. Bidders that drop out of the auction completely may be

eligible for a refund of their upfront payments before 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. If a bidder has completed the refund instructions

electronically, then only a written request for the refund is

necessary. If not, the request must also include wire transfer

instructions, Taxpayer Identification Number (TIN) and FCC Registration

Number (FRN). Send refund request to: Federal Communications

Commission, Financial Operations Center, Auctions Accounting Group,

Gail Glasser, 445 12th Street, SW., Room 1-C864, Washington, DC 20554.

124. 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 information to the Auctions

Accounting Group at (202) 418-2843. Once the information has been

approved, a refund will be sent to the party identified in the refund

information.

Note: Refund processing generally takes up to two weeks to

complete. Bidders with questions about refunds should contact Gail

Glasser at (202) 418-0578.

[[Page 21110]]

Federal Communications Commission.

Gary Michaels,

Deputy Chief, Auction and Spectrum Access Division, WTB.

[FR Doc. 04-8844 Filed 4-19-04; 8:45 am]

BILLING CODE 6712-01-P