Installment Payment Financing for Personal Communications Services (PCS) Licensees

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 24

[WT Docket No. 97-82; FCC 97-342]

Installment Payment Financing for Personal Communications

Services (PCS) Licensees

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this Further Notice of Proposed Rule Making the Commission

proposes auction rules and procedures for the reauction of licenses

surrendered to the Commission pursuant to the Commission's decision in

the Second Report and Order in Docket 97-82, FCC 97-342 (released

October 16, 1997). These proposed rules are necessary to ensure that

any licenses surrendered to the Commission can be awarded to parties

who are capable of providing service to the public as rapidly as

possible. The intended effect of this action is to seek comment on

proposed rules and procedures for the reauction of all surrendered C

block licenses.

DATES: Comments are due on or before November 13, 1997. Reply comments

are due on or before November 24, 1997.

ADDRESSES: Federal Communications Commission, 1919 M Street, N.W.,

Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Mark Bollinger, Auctions and Industry

Analysis Division, Wireless Telecommunications Bureau, at (202) 418-

0660.

SUPPLEMENTARY INFORMATION: This Further Notice of Proposed Rule Making

in WT Docket No. 97-82, adopted on September 25, 1997, and released on

October 16, 1997, is available for inspection and copying during normal

business hours in the FCC Reference Center, Room 239, 1919 M Street,

N.W., Washington, D.C. 20554. The complete text may be purchased from

the Commission's copy contractor, International Transcription Service,

Inc., 1231 20th Street, N.W., Washington, D.C. 20036, (202) 857-3800.

The complete Further Notice of Proposed Rule Making also is available

on the Commission's Internet home page (http://www.fcc.gov).

SUMMARY OF ACTION:

I. Background

1. On September 25, 1997, the Federal Communications Commission

(Commission) adopted a Further Notice of Proposed Rule Making seeking

comment on proposed changes to its C block rules to govern the

reauction of any licenses or spectrum surrendered pursuant to the

provisions adopted in the Second Report and Order. See Amendment of the

Commission's Rules Regarding Installment Payment Financing for Personal

Communications Services (PCS) Licensees, Second Report and Order, WT

Docket No. 97-82, FCC 97-342 (released October 16, 1997) (``Second

Report and Order'').

II. Further Notice of Proposed Rule Making

2. In the Further Notice of Proposed Rule Making, the Commission

proposes to reauction all licenses and spectrum surrendered to the

Commission under the Second Report and Order. The Commission believes

that a reauction of licenses surrendered to the Commission will assure

rapid provision of service to the public. A reauction also will ensure

that these licenses are available to all applicants in a rapid and fair

fashion. A simultaneous reauction of all the licenses turned in to the

Commission will benefit all bidders because they will be able to bid

for a number of licenses in a single reauction, instead of a series of

piecemeal auctions after defaults and revocations, in which

opportunities for aggregation might be less favorable.

A. Licenses to be Reauctioned

3. The Commission proposes that the reauction include the following

licenses: (1) All licenses representing the disaggregated spectrum

surrendered to the Commission under the disaggregation option; (2) all

licenses surrendered to the Commission on or before January 15, 1998,

by incumbent licensees who choose to take advantage of the Commission's

prepayment or amnesty options; and (3) all PCS C block licenses

currently held by the Commission as a result of previous defaults. By

including all available licenses in the reauction, the Commission can

efficiently and fairly speed service to the public. In addition,

offering all available licenses will allow for the most efficient

aggregation of licenses. The Commission seeks comment on this proposal.

B. Eligibility for Participation

4. As the Commission stated in the Second Report and Order, all

entrepreneurs, all entities that applied for the original C block

auction, and all current C block licensees with exceptions, are

eligible to bid in the reauction. The Commission seeks comment on

whether it should restrict participation in the reauction to entities

that have not defaulted on any FCC payments. See 47 U.S.C. 309(j)(5).

Should the Commission presume that an entity's prior default on

payments for an FCC license or authorization makes that entity not

financially or otherwise fit to acquire a reauctioned C block license?

Alternatively, the Commission could review financial qualifications

through several other means. For instance, the Commission could allow

such entity to participate in an auction, but if the applicant is a

winning bidder, set for expedited hearing the financial qualifications

of the bidder, and allow the applicant to rebut a presumption that it

is not financially qualified. See 47 CFR 24.832(e), 1.2108(d)(3).

Another alternative would be to request that the entity submit more

detailed financial information at the application stage, or require

that the entity submit a higher upfront payment amount (e.g., a 50%

upfront payment requirement) to participate in the reauction. With

regard to C block licensees who elect the disaggregation, amnesty, or

prepayment options adopted in the Second Report and Order, the

Commission observes that by making such election and related payments

they are not in default on their C block licenses and, thus, would not

be restricted from participation in the reauction (except as otherwise

set forth in the Second Report and Order).

C. Reauction Procedures

5. The Commission proposes below auction design and application

procedures for the reauction of C block licenses.

1. Competitive Bidding Design

6. The Commission proposes that all licenses and spectrum

surrendered be awarded by means of a simultaneous multiple-round

electronic auction. The Commission bases this proposal on its desire to

quickly auction available licenses and thereby to promote the most

efficient assignment of the spectrum. Consistent with the Commission's

normal practice, the specific procedural requirements of the auction

would be set out by public notice prior to the auction. In general,

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the Commission has indicated that the auction procedures chosen for

each service should be those that will best promote the policy

objectives identified by Congress. The Commission further concluded in

Implementation of Section 309(j) of the Communications Act--Competitive

Bidding, Second Report and Order, 59 FR 22980 (May 4, 1994)

(``Competitive Bidding Second Report and Order'') that in most cases

the goals set forth in Section 309(j) will be best achieved by

designing auctions that award authorizations to the parties that value

them most highly. As the Commission explained, such parties are most

likely to deploy new technologies and services rapidly, and to promote

the development of competition for the provision of those and other

services.

7. Also, multiple-round bidding during the auction will provide

more information to bidders about the value of licenses than single

round bidding. With better information, bidders have less incentive to

shade their bids downward in order to avoid the ``winner's curse,''

that is, the tendency for the winner to be the bidder who most

overestimates the value of the item being auctioned. Finally, multiple-

round bidding is likely to be fairer than single-round bidding. Every

bidder has the opportunity to win if it is willing to pay the most for

it. Thus, the Commission tentatively concludes that multiple-round

bidding would be the best method of auctioning all available licenses

and the Commission seeks comment on this tentative conclusion.

8. The Commission also tentatively concludes that all surrendered C

block licenses should be awarded in a single simultaneous multiple-

round auction. A single simultaneous auction will facilitate any

aggregation strategies that bidders may have, and it would provide the

most information to bidders about license values at a time that they

can best put that information to use. The Commission seeks comment on

this tentative conclusion.

9. Finally, if the Commission adopts simultaneous multiple-round

bidding as its method of auctioning all available licenses, the

Commission tentatively concludes that bidding should be allowed only by

electronic means, rather than by telephone. Given the Commission's

desire to conduct the reauction quickly, as well as recent improvements

in the Commission's electronic bidding software, the Commission

tentatively concludes that telephonic bidding should be permitted only

in exceptional circumstances, to be determined by the Wireless

Telecommunications Bureau (``Bureau'') in each instance.

2. Bidding Procedures

10. Subject to the exceptions discussed below, which are designed

to speed the reauction process, the Commission tentatively concludes

that the reauction should be conducted in conformity with the general

competitive bidding rules set forth in part 1, subpart Q of the

Commission's rules, 47 CFR part 1, subpart Q, as revised (the

Commission initiated a proceeding last February to revise its part 1

rules; See Amendment of Part 1 of the Commission's Rules--Competitive

Bidding Proceeding, Order, Memorandum Opinion and Order and Notice of

Proposed Rule Making, WT Docket No. 97-82, 62 FR 13540 (March 21, 1997)

(``Part 1 Proceeding''), and substantially consistent with the auctions

that have been employed in other wireless services. The Commission also

proposes to use its part 24 rules, 47 CFR part 24, applicable to the C

block to the extent that such rules do not conflict with the

Commission's part 1 rules or rules specifically adopted in the Second

Report and Order for the reauction of C block licenses. Specifically,

except as set forth herein, the Commission proposes to apply the part 1

rules regarding competitive bidding mechanisms (47 CFR Sec. 1.2104);

bidding application and certification procedures and prohibition of

collusion (47 CFR Sec. 1.2105); submission of upfront payment, down

payment and filing of long-form applications (47 CFR Secs. 1.2106,

1.2107); procedures for filing long form applications (47 CFR

Sec. 1.2108); and procedures regarding license grant, denial and

default (47 CFR Sec. 1.2109). The Commission seeks comment on this

proposal.

11. Activity Rules. The Commission tentatively concludes that, as

it has done in other simultaneous multiple-round auctions, it will

conduct the reauction in three stages. Three stages, with bidders

required to be more active in each stage, serves to provide bidders

with the flexibility to pursue backup strategies as the auction

progresses. However, because the Commission believes that efficiently

assigning these licenses for rapid service to the public and increased

competition in the CMRS marketplace requires a swift reauction of the

licenses, the Commission proposes to use high activity requirements in

the reauction. In recent auctions, for example, the Commission has

required bidders to be active on 80% of their eligible licenses in

Stage I, 90% in Stage II, and 98% in Stage III. The Commission proposes

to use similar activity levels in the C block reauction and, to further

expedite the auction, to require the Bureau to use its delegated

authority to aggressively schedule bidding rounds, quickly transition

into the next stage of the auction when bidding activity falls, and use

higher minimum bid increments for very active licenses. The Commission

seeks comment on these proposals and tentative conclusions.

12. Reserve Price, Minimum Opening Bid, and Minimum Bid Increments.

Section 1.2104 of the Commission's rules provides that the Commission

may establish reserve prices or suggested minimum opening bids. See 47

CFR Sec. 1.2104. The Balanced Budget Act of 1997, Public Law 105-33,

111 Stat. 251 (1997) (to be codified at 47 U.S.C. Sec. 309(j)(4)(F))

(``Balanced Budget Act'') directed the Commission to prescribe methods

by which a reasonable reserve price will be required or a minimum

opening bid will be established, unless the Commission determines that

a reserve price or a minimum opening bid is not in the public interest.

This legislative directive establishes a presumption in favor of

reserve prices or minimum opening bids in the reauction. A minimum

opening bid is the minimum bid price set at the beginning of the

auction below which no bids are accepted. Customarily, an auctioneer

has the discretion to lower a minimum opening bid in the course of the

auction. A minimum opening bid in the C block reauction, more than a

reserve price, will help make certain that the public is fairly

compensated for spectrum surrendered to the Commission, expedite the

auction and give the Commission the flexibility to make adjustments

based on the competitiveness of the auction. The Commission seeks

comment on this proposal. The Commission also seeks comment on the

methodology to be used to establish minimum opening bids and what

factors the Commission should consider in doing so. The Commission

proposes minimum opening bids for each market equal to 10% of the

corresponding high bid for the market in the original C block auction.

Such an approach will scale the minimum opening bids in a way that

reflects the relative value of the licenses. The Commission also asks

that commenters address whether the amount of the minimum opening bid

should be capped to ensure that bidding is not deterred on high

valuation markets, in particular. Finally, if commenters believe that a

minimum opening bid equal to 10% of the high bid in the original C

block auction will result in substantial unsold licenses, or is not a

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reasonable amount, they should explain why this is so, and comment on

the desirability of a higher or lower minimum opening bid.

3. Procedural and Payment Issues

13. Pre-Auction Application Procedures. Auction applicants are

required to file a short-form application, FCC Form 175, prior to the

start of each auction. Although the Commission previously has allowed

both electronic and manual filing of such applications, the Commission

tentatively concludes that it should require electronic filing of all

short-form applications for the reauction. The Commission believes that

electronic filing of applications would serve the best interests of

auction participants as well as the members of the public monitoring

the reauction. The Commission also believes that an electronic filing

requirement will help ensure that the reauction will be completed

within the time frame contemplated by this Further Notice of Proposed

Rule Making. The Commission have developed user-friendly electronic

filing software and Internet World Wide Web forms to give applicants

the ability to easily and inexpensively file and review applications.

This software helps applicants ensure the accuracy of their

applications as they are filling them out, and assists them in avoiding

errors and omissions. In addition, by shortening the time required for

the Commission to process applications before the auction, electronic

filing will increase the lead time available to applicants to pursue

business plans and arrange necessary financing before the short-form

deadline. The Commission's experiences from recent auctions show that

bidders are confident that the electronic filing system is reliable.

For example, in the broadband PCS D, E, and F block auction, 94% of the

qualified bidders filed their short-form applications electronically.

In the recently completed Wireless Communications Services (``WCS'')

auction, all winning bidders filed their long-form applications

electronically. In addition, the Commission notes that in the Part 1

Proceeding, the Commission tentatively concluded that Secs. 1.2105(a)

and 1.2107(c) of its rules should be amended to require electronic

filing of all short-form and long-form applications. See 47 CFR

Secs. 1.2105(a) and 1.2107(c). The Commission seeks comment on this

tentative conclusion.

14. Upfront Payment. The Commission's part 1 rules, 47 CFR Part 1,

require the submission of an upfront payment as a prerequisite to

participation in spectrum auctions. The Commission proposes to set the

amount of the upfront payment for the reauction at $.06 per MHz per

pop. The Commission adopted the same upfront payment amount for its

most recent broadband PCS auction, the D, E, and F block auction, in

which all applicants for all blocks made a $.06 per MHz per pop upfront

payment. In the Competitive Bidding Second Report and Order, the

Commission indicated that the upfront payment should be set using a

formula based upon the amount of spectrum and population (or ``pops'')

covered by the license or licenses for which parties intend to bid. The

Commission reasoned that this method of determining the required

upfront payment would enable prospective bidders to tailor their

upfront payment to their bidding strategies. At the same time, however,

the Commission noted that determining an appropriate upfront payment

involved balancing the goal of encouraging bidders to submit serious,

qualified bids with the desire to simplify the bidding process and

minimize implementation costs imposed on bidders. The Commission

concluded that the best approach would be to maintain the flexibility

to determine the amount of the upfront payment on an auction-by-auction

basis because this balancing may yield different results depending upon

the particular licenses being auctioned. In light of the its desire

that only serious, qualified applicants participate in the reauction,

the Commission's proposal of a $.06 per MHz per pop is appropriate. The

Commission seeks comment on this proposal. The Commission also seeks

comment on alternative methods of establishing an upfront payment, and

in particular, on how the Commission may estimate the present market

value of the spectrum to be auctioned.

15. Down Payment and Full Payment. Consistent with the procedures

used in prior auctions, the Commission tentatively concludes that every

winning bidder in an auction should be required to tender a down

payment sufficient to bring its total amount on deposit with the

Commission up to 20% of its winning bid within 10 business days after

the issuance of a public notice announcing the winning bidder for the

license. See 47 CFR Sec. 1.2107(b). The Commission seeks comment on

this tentative conclusion.

16. If a winning bidder makes its down payment in a timely manner,

the Commission proposes that it file an FCC Form 600 long-form

application and follow the long-form application procedures in

Sec. 1.2107 of the Commission's rules. See 47 CFR Sec. 1.2107. See

also, 47 CFR Sec. 24.707. After reviewing the winning bidder's long-

form application, and after verifying receipt of the winning bidder's

20% down payment, the Commission would announce the application's

acceptance for filing, thus triggering the filing window for petitions

to deny. The Commission notes that the Balanced Budget Act of 1997

authorizes the Commission to establish a shortened period for the

filing of petitions to deny. In light of this authority, as well as the

Commission's desire to conclude the reauction process as quickly as

possible, the Commission proposes that parties then have 15 days

following public notice that an application was accepted for filing to

file a petition to deny. If, pursuant to Section 309(d) of the

Communications Act, as amended, 47 U.S.C. Sec. 309(j), the Commission

dismisses or denies any and all petitions to deny, the Commission would

announce by public notice that it is prepared to award the license, and

the winning bidder would then have 10 business days to submit the

balance of its winning bid. If the bidder does so, the license would be

granted. If the bidder fails to submit the required down payment or the

balance of the winning bid or the license is otherwise denied, the

Commission would assess a default payment as discussed below. The

Commission seeks comment on these proposals.

17. Amendments and Modifications of Applications. To encourage

maximum bidder participation, the Commission proposes to allow

applicants to amend or modify their short-form applications as provided

in Sec. 1.2105. See 47 CFR Sec. 1.2105. In the broadband PCS context,

the Commission modified its rules to permit ownership changes that

result when consortium investors drop out of bidding consortia, even if

control of the consortium changes due to this restructuring. See

Implementation of Section 309(j) of the Communications Act--Competitive

Bidding, PP Docket No. 93-253, Fourth Memorandum Opinion and Order, 59

FR 24947 (October 24, 1994). The Commission proposes to adopt the same

exception to our rule prohibiting major amendments in the reauction.

The Commission seeks comment on these proposals.

18. Bid Withdrawal, Default and Disqualification. The Commission

tentatively concludes that the withdrawal, default, and

disqualification rules for the reauction should be based upon the

procedures established in the Commission's general competitive bidding

rules. With regard to bids that are submitted in error, the Commission

proposes to apply the guidelines that the Commission has fashioned to

provide for relief from the

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bid withdrawal payment requirements under certain circumstances. The

Commission seeks comment on this approach.

4. Anti-Collusion Rules

19. In the Competitive Bidding Second Report and Order, the

Commission adopted rules to prevent collusion in connection with

competitive bidding, explaining that these rules, which are codified at

47 CFR Sec. 1.2105, would enhance the competitiveness of both the

auction process and the post-auction market structure. The Commission

proposes to apply these same rules to the reauction of licenses

surrendered to the Commission. The Commission seeks comment on this

proposal.

5. Designated Entity Provisions

20. The Commission proposes to provide small business bidders in

the C block reauction with a two tiered bidding credit, which will

provide a greater discount to very small businesses. In the C block

auction, a winning bidder that qualified as a small business or a

consortium of small businesses was able to use a bidding credit equal

to 25% of its winning bid. For the reauction, however, the Commission

tentatively concludes that it should offer tiered bidding credits, as

the Commission did for F block and, more recently, Local Multipoint

Distribution Service (LMDS) small business bidders. The Commission

proposes to define a second tier of small business, which the

Commission will refer to as ``very small businesses,'' as entities

that, together with their affiliates and persons or entities that hold

interest in such entities and their affiliates, have average gross

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

Creation of this subcategory of small business enables the Commission

to tailor a bidding credit to meet the needs of entities that may be

interested in bidding on spectrum surrendered by C block licensees.

Thus, the Commission proposes a 35% bidding credit for very small

businesses and a 25% bidding credit for small businesses. The

Commission seeks comment on these proposals and tentative conclusions.

21. The Commission also tentatively conclude that an installment

payment program will not be offered in the reauction. The Commission

has conducted several auctions without installment payments. The

Commission must balance competing objectives in 47 U.S.C. Sec. 309(j)

that require, inter alia, that it promote the development and rapid

deployment of new spectrum-based services and ensure that designated

entities are given the opportunity to participate in the provision of

such services. In assessing the public interest, the Commission must

try to ensure that all the objectives of Section 309(j) are considered.

The Commission has found, for example, that obligating licensees to pay

for their licenses as a condition of receipt ensures greater financial

accountability from applicants. Thus, the Commission tentatively

concludes that it should not extend installment payments to winners in

the reauction, given the incentives to entrepreneurs established

through the various proposals discussed above. The Commission seeks

comment on these tentative conclusions.

III. Procedural Matters

A. Regulatory Flexibility Analysis

22. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.

Sec. 603, the Commission has prepared an Initial Regulatory Flexibility

Analysis (IRFA) of the expected impact on small entities of the rules

proposed in the Further Notice of Proposed Rule Making. Written public

comments are requested on the IRFA. Comments on the IRFA must have a

separate and distinct heading designating them as responses to the IRFA

and must be filed by the deadlines for comments on the Further Notice

of Proposed Rule Making. The Commission will send a copy of the Further

Notice of Proposed Rule Making, including this IRFA, to the Chief

Counsel for Advocacy of the Small Business Administration. In addition,

the Further Notice of Proposed Rule Making and IRFA (or summaries

thereof) will be published in the Federal Register.

1. Need for, and Objectives of, the Proposed Rules

23. This Further Notice of Proposed Rule Making is being initiated

to secure comment on proposed changes to auction rules to govern the

reauction of returned broadband PCS spectrum in the C block. Among

other goals, Section 309(j) of the Communications Act of 1934, as

amended, directs the Commission to disseminate licenses among a wide

variety of applicants, including small businesses and other designated

entities. 47 U.S.C. Sec. 309(j)(3)(B). Section 309(j) also requires

that the Commission ensure the development and rapid deployment of new

technologies, products, and services for the benefit of the public, and

recover for the public a portion of the value of the public spectrum

resource made available for commercial use. 47 U.S.C.

Secs. 309(j)(3)(A), (C). The Commission is seeking comment on proposed

changes to auction rules to govern the reauction of returned broadband

PCS spectrum in the C block.

2. Legal Basis

24. This action is taken pursuant to Sections 4(i), 5(b), 5(c)(1),

303(r), and 309 (j) of the Communications Act of 1934, as amended, 47

U.S.C. Sections 154(i), 155(b), 155(c)(1), 303(r), and 309(j).

3. Description and Estimate of the Number of Small Entities to Which

the Proposed Rules Will Apply

25. The Commission is required to provide a description of and,

where feasible, an estimate of the number of small entities that will

be affected by its rules. See 5 U.S.C. Secs. 603(b)(3), 604(a)(3). The

RFA directs agencies to provide a description of and, where feasible,

an estimate of the number of small entities that will be affected by

the Commission's rules. 5 U.S.C. Secs. 603(b)(3), 604(a)(3). The RFA

generally defines the term ``small entity'' as having the same meaning

as the terms ``small business,'' ``small organization,'' and ``small

governmental jurisdiction.'' 5 U.S.C. Sec. 601(6). In addition, the

term ``small business'' has the same meaning as the term ``small

business concern'' under Section 3 of the Small Business Act. See 5

U.S.C. Sec. 601(3) (incorporating by reference the definition of

``small business concern'' in 15 U.S.C. Sec. 632). Under the Small

Business Act, a ``small business concern'' is one which: (1) is

independently owned and operated; (2) is not dominant in its field of

operation; and (3) meets any additional criteria established by the

Small Business Administration (SBA). 15 U.S.C. Sec. 632.

26. The rule changes proposed in the Further Notice of Proposed

Rule Making will affect all small businesses which avail themselves of

these rule changes, including small businesses currently holding C

block and F block broadband PCS licenses who choose to participate and

other small businesses who may acquire licenses through reauction. The

Commission, with respect to broadband PCS, defines small entities to

mean those having gross revenues of not more than $40 million in each

of the preceding three calendar years. See 47 CFR Sec. 24.720(b)(1).

This definition has been approved by the SBA. On May 6, 1996, the

Commission concluded the broadband PCS C block auction. The broadband

PCS D, E, and F block auction closed on January 14, 1997. Ninety

bidders (including the C block reauction winners, prior to any defaults

by winning bidders) won 493 C block

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licenses and 88 bidders won 491 F block licenses. Small businesses

placing high bids in the C and F block auctions were eligible for

bidding credits and installment payment plans. For purposes of our

evaluations and conclusion in this IRFA, the Commission assumes that

all of the 90 C block broadband PCS licensees and 88 F block broadband

PCS licensees, a total of 178 licensees potentially affected by this

order, are small entities. In addition to the 178 current small

business licensees who may participate at the reauction of C block

licenses, a number of additional small business entities may seek to

acquire licenses through reauction, and thus be affected by these

rules.

27. In addition, the Commission proposes to provide small business

bidders in the C block reauction with bidding credits, and to that end

proposes a two tiered bidding credit which will provide a greater

discount to ``very small businesses.'' In the C block auction, a

winning bidder that qualified as a small business or a consortium of

small businesses was able to use a bidding credit equal to 25 percent

of its winning bid. For the reauction, the Commission proposes tiered

bidding credits, as were offered for F block and, more recently, Local

Multipoint Distribution Service (LMDS) small business bidders. The

Commission proposes to define the second tier of very small business as

entities that, together with their affiliates and persons or entities

that hold interest in such entities and their affiliates, have average

gross revenues of not more that $15 million for the preceding three

years. Creation of this subcategory of small business will enable the

Commission to tailor a bidding credit to meet the needs of entities

that may be interested in bidding on spectrum returned by C block

licensees. Thus, the Commission proposes a 35 percent bidding credit

for very small businesses and a 25 percent bidding credit for small

businesses.

28. To assist the Commission analyzing the total number of affected

small entities, commenters are requested to provide information

regarding how many total broadband PCS small business entities would be

affected by the rules proposed in this Further Notice of Proposed Rule

Making. In particular, the Commission seeks estimates of how many

broadband PCS entities, existing and potential, will be considered

small businesses or very small businesses.

4. Description of Reporting, Recordkeeping, and Other Compliance

Requirements

29. There are no additional reporting, recordkeeping, or other

compliance requirements as a result of the Further Notice of Proposed

Rule Making.

5. Steps Taken to Minimize Significant Economic Impact on Small

Entities, and Significant Alternatives Considered

30. The Commission proposes to apply the same rules that were used

in the C block auction to the reauction of C block licenses, with some

modifications designed to encourage participation by small businesses

while at the same time helping to ensure the best use of the spectrum

through the competitive bidding process. The Commission proposes to

conduct the C block reauction in three stages. Having three stages,

with bidders required to be more active in each stage, serves to

provide bidders with the flexibility to pursue backup strategies as the

auction progresses. The Commission proposes to use high activity

requirements in the reauction. In addition, the Commission proposes to

use similar activity levels in the C block reauction and, to further

expedite the auction, require the Wireless Telecommunications Bureau to

use its delegated authority to aggressively schedule bidding rounds,

quickly transition into the next stage of the auction when bidding

activity falls, and use higher minimum bid increments for very active

licenses.

31. The Commission proposes to establish a minimum opening bid for

the reauction. A minimum opening bid is the minimum bid price set at

the beginning of the auction below which no bids are accepted. A

minimum opening bid in the C block reauction will help ensure that the

public is fairly compensated for licenses returned to the Commission,

expedite the auction and give the Commission the flexibility to make

adjustments based on the competitiveness of the auction. The Commission

proposes minimum opening bids for each market equal to ten percent of

the corresponding high bid for the market in the original C block

auction. Such an approach will scale the minimum opening bids in a way

that reflects the relative value of the licenses.

32. The Commission proposes to require electronic filing of all

short-form applications for the reauction. Electronic filing of

applications would serve the best interests of auction participants as

well as the members of the public monitoring the reauction. The

Commission believes that an electronic filing requirement will help

ensure that the reauction will be completed within the time frame

contemplated by this Further Notice of Proposed Rule Making.

33. The Commission proposes to set the amount of the upfront

payment for the reauction at $.06 per megahertz per population (``MHz

per pop'').

34. The Commission proposes that parties have fifteen (15) days to

file a petition to deny following public notice that an application was

accepted for filing. If, pursuant to Section 309(d) of the

Communications Act, the petitions to deny are dismissed or denied, the

Commission would announce by public notice that it is prepared to award

the license, and the winning bidder would then have ten (10) business

days to submit the balance of its winning bid. If the bidder does so,

the license would be granted. If the bidder fails to submit the

required down payment or the balance of the winning bid or the license

is otherwise denied, a default payment would be assessed.

35. Section 309(j) of the Communications Act of 1934, as amended,

directs the Commission to disseminate licenses among a wide variety of

applicants, including small businesses and other designated entities.

See 47 U.S.C. Sec. 309(j)(3)(B). Section 309(j) also requires that the

Commission ensure the development and rapid deployment of new

technologies, products, and services for the benefit of the public, and

recover for the public a portion of the value of the public spectrum

resource made available for commercial use. 47 U.S.C.

Secs. 309(j)(3)(A), (C). The Commission believes these provisions in

the Further Notice of Proposed Rule Making help meet those goals and

promote efficient competition while maintaining fairness and

efficiencies of process in the Commission's rules.

6. Federal Rules Which Overlap, Duplicate, or Conflict With These Rules

None.

B. Paperwork Reduction Act Analysis

36. This Further Notice of Proposed Rule Making contains either a

proposed or modified information collection. As part of its continuing

effort to reduce paperwork burdens, the Commission invites the general

public and the Office of Management and Budget (``OMB'') to take this

opportunity to comment on the information collections contained in this

Further Notice of Proposed Rule Making, as required by the Paperwork

Reduction Act of 1995, Public Law No. 104-13. Public and agency

comments are due at the same time as other

[[Page 55380]]

comments on this Further Notice of Proposed Rule Making; OMB comments

are due 60 days from date of publication of this Further Notice of

Proposed Rule Making in the Federal Register. Comments should address:

(a) Whether the proposed collection of information is necessary for the

proper performance of the functions of the Commission, including

whether the information shall have practical utility; (b) the accuracy

of the Commission's burden estimates; (c) ways to enhance the quality,

utility, and clarity of the information collected; and (d) ways to

minimize the burden of the collection of information on the

respondents, including the use of automated collection techniques or

other forms of information technology.

Dates

Written comments by the public on the proposed or modified

information collections in this Further Notice of Proposed Rule Making

are due on or before December 1, 1997. Written comments must be

submitted by OMB on the modified information collections on or before

December 1, 1997.

Address

In addition to filing comments with the Secretary, a copy of any

comments on the information collections contained herein should be

submitted to Judy Boley, Federal Communications Commission, Room 234,

1919 M Street, N.W., Washington, DC 20554, or via the Internet to

[email protected] and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--

17th Street, N.W., Washington, DC 20503 or via the Internet to

[email protected].

Further Information

For additional information concerning the information collections

contained in this Further Notice of Proposed Rule Making contact Judy

Boley, Federal Communications Commission, Room 234, 1919 M Street,

N.W., Washington, DC 20554, or via the Internet to [email protected].

Supplementary Information

Title: Amendment of the Commission's Rules Regarding Installment

Payment Financing for Personal Communications Services (PCS) Licensees.

Type of Review: Proposed or Modified Collection.

Respondents: The Commission estimates that no more than 255

respondents (i.e., previous C block bidders) will participate in this

information collection. The Commission estimates that this information

collection, that eligibility is based on previous participation in a C

block auction and the bidder identification number from the previous

auction, will take 0.5 hours to complete. In addition, the Commission

proposes that C block reauction applicants submit more detailed

financial information, if necessary. The Commission estimates that this

information collection will take 1.0 hours to complete. The Commission

estimates that the total burden will be 1.5 hours per respondent or

377.5 total hours.

Estimate of total cost burden to respondents: The Commission

estimates that there will be no additional cost burden to respondents.

The cost to the Federal Government is estimated to be:

GS 7 Legal Instrument Examiners at $14.06 per hour to review the

documentation for approximately 0.5 hours per submission, times 255

submissions = $1,581.75

GS 12 Attorneys to review the financial documentation at $24.95 per

hour, for approximately 2.0 hours per submission, times 255 submissions

= $11,227.50

Total = $12,809.25

C. Ex Parte Presentations

The Further Notice of Proposed Rule Making is a permit but disclose

notice and comment rule making proceeding. Ex parte presentations are

permitted, provided they are disclosed as provided in Commission rules.

See generally 47 CFR Secs. 1.1202, 1.1203, and 1.1206(a).

D. Comments

38. Pursuant to applicable procedures set forth in Secs. 1.415 and

1.419 of the Commission's rules, interested parties may file comments

on or before November 13, 1997, and reply comments on or before

November 24, 1997. In addition, a courtesy copy should be delivered to

Mark Bollinger, Auctions and Industry Analysis Division, Wireless

Telecommunications Bureau, Federal Communications Commission, 2025 M

Street, Room 5202, Washington, DC 20554. All relevant and timely

comments will be considered by the Commission before final action is

taken in this proceeding. To file formally in this proceeding,

participants must file an original and five copies of all comments,

reply comments, and supporting comments. If participants want each

Commissioner to receive a personal copy of their comments, an original

plus ten copies must be filed. Comments and reply comments should be

sent to Office of the Secretary, Federal Communications Commission,

Washington, DC 20554. Comments and reply comments will be available for

public inspection during regular business hours in the FCC Reference

Center (Room 239) of the Federal Communications Commission, 1919 M

Street, N.W., Washington, DC 20554.

List of Subjects

47 CFR Part 1

Communications common carriers, Reporting and recordkeeping

requirements.

47 CFR Part 24

Communications common carriers, Reporting and recordkeeping

requirements.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97-28222 Filed 10-23-97; 8:45 am]

BILLING CODE 6712-01-P