Auction of Location and Monitoring Service Licenses; Auction Notice and Filing Requirements for 528 Multilateration Licenses Scheduled for December 15, 1998; Minimum Opening Bids and Other Auction Procedural Issues

FEDERAL COMMUNICATIONS COMMISSION

[Report No. AUC-98-21-B (Auction No. 21); DA 98-1879]

Auction of Location and Monitoring Service Licenses; Auction

Notice and Filing Requirements for 528 Multilateration Licenses

Scheduled for December 15, 1998; Minimum Opening Bids and Other Auction

Procedural Issues

AGENCY: Federal Communications Commission.

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ACTION: Notice.

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SUMMARY: On August 13, 1998, the Wireless Telecommunications Bureau

(``Bureau'') released a Public Notice, seeking comment on the

establishment of reserve prices or minimum opening bids for the

Location and Monitoring Service (``LMS'') auction, in accordance with

the Balanced Budget Act of 1997. In addition, the Bureau sought comment

on a number of procedures to be used in the LMS auction. The Bureau

received comments in response to its Public Notice. This Public Notice

announces the procedures and minimum opening bids for the upcoming LMS

auction. The Commission will hold an auction for 528 multilateration

LMS licenses to operate in the 902-928 MHz band.

DATES: The Location and Monitoring Service auction will begin on

December 15, 1998.

ADDRESSES: See the text of the Public Notice and related attachments

for information regarding important addresses.

FOR FURTHER INFORMATION CONTACT: Kathy Garland or Kenneth Burnley,

Auctions and Industry Analysis Division, Wireless Telecommunications

Bureau, at (202) 418-0660. More complete details about this auction are

contained in a Bidder Information Package. To place an order for a

Bidder Information Package, contact the FCC National Call Center at

(888) CALL-FCC ((888) 225-5322, press option #2 at the prompt).

SUPPLEMENTARY INFORMATION: This is a summary of a Public Notice

released on September 23, 1998, and corrected by a subsequent Public

Notice released on October 7, 1998. The complete text of this Public

Notice is available in its entirety, including attachments, for

inspection and copying during normal business hours in the FCC

Reference Center, 1919 M Street, N.W., Room 239, Washington, D.C., and

also may be purchased from the Commission's copy contractor,

International Transcription Services, (202) 857-3800, fax (202) 857-

3805, 1231 20th Street, N.W., Washington, D.C. 20036. In addition,

copies of the Public Notice may be retrieved from the FCC World Wide

Web Auctions site at http://www.fcc.gov/wtb/auctions.

Synopsis of the Public Notice

A. Introduction

On August 13, 1998, the Wireless Telecommunications Bureau

(``Bureau'') released ``Location and Monitoring Service Spectrum

Auction Scheduled for December 15, 1998; Comment Sought on Reserve

Prices or Minimum Opening Bids and Other Auction Procedural Issues,''

Public Notice, DA 98-1616 (rel. August 13, 1998), 63 FR 44456 (August

19, 1998) (``LMS Public Notice''), seeking comment on the establishment

of reserve prices or minimum opening bids for the Location and

Monitoring Service (``LMS'') auction, in accordance with the Balanced

Budget Act of 1997. The Bureau also sought comment on a number of

procedures to be used in the LMS auction. The Bureau received comments

in response to its Public Notice. By this Public Notice, the Bureau

announces the procedures and minimum opening bids for the upcoming LMS

auction. The Federal Communications Commission (``FCC'' or

``Commission'') will hold an auction for 528 multilateration LMS

licenses to operate in the 902-928 MHz band. Three blocks of spectrum

are allocated for multilateration LMS systems:

(1) Block A--904.000-909.750 MHz and 927.750-928.000 MHz

(2) Block B--919.750-921.750 MHz and 927.500-927.750 MHz

(3) Block C--921.750-927.250 MHz and 927.250-927.500 MHz

One license will be awarded for each of these three spectrum blocks in

each of 176 Economic Areas (EAs) designated for LMS. The 176 EAs

designated for the LMS auction comprise the following areas: (1) the

continental United States, Hawaii and Alaska (Alaska to be licensed in

a single area); (2) Guam and the Northern Mariana Islands (to be

licensed in a single area); (3) Puerto Rico and the U.S. Virgin Islands

(to be licensed in a single area); (4) American Samoa; and (5) the Gulf

of Mexico.

The auction will begin on December 15, 1998. 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 will be

conducted on each business day until bidding has stopped on all

licenses. The LMS auction will utilize simultaneous multiple round

bidding. Bidding will be permitted only from remote locations, either

electronically (by computer) or telephonically. The following are

pertinent pre-auction deadlines:

Auction Seminar--October 30, 1998

Short Form Application (FCC Form 175)--November 16, 1998; 5:30 p.m.ET

Upfront Payments (via wire transfer)--November 30, 1998; 6:00 p.m. ET

Orders for Remote Bidding Software--December 1, 1998; 5:30 p.m. ET

Mock Auction--December 10, 1998

The following are pertinent telephone contacts:

FCC National Call Center--(888) CALL-FCC ((888) 225-5322) or (717) 338-

2888 (direct dial)

For Bidder Information Packages, General Auction Information, and

Seminar Registration, press option #2 at the prompt. Hours of service:

8 a.m.--5:30 p.m. ET.

FCC Technical Support Hotline--(202) 414-1250 (voice), (202) 414-1255

(text telephone (TTY))

Hours of service: 8 a.m.--6 p.m. ET, Monday--Friday; 9 a.m.--5 p.m.

ET, weekend of November 14-15.

List of attachments contained in the Public Notice released on

September 23, 1998:

Attachment A--Summary of LMS Licenses to be Auctioned, Upfront

Payments, Minimum Opening Bids

Attachment B--Guidelines for Completion of FCC Forms 175 and 159, and

Exhibits

Attachment C--Electronic Filing and Review of FCC Form 175

Attachment D--Summary Listing of Documents from the Commission and the

Wireless Telecommunications Bureau Addressing Application of the Anti-

Collusion Rules

3. Due Diligence: Potential bidders are reminded that LMS operates

in the 902-928 MHz frequency band. This band is allocated for primary

use by Federal Government radiolocation systems. Next in order of

priority are Industrial, Scientific and Medical devices. Federal

Government fixed and mobile and LMS systems are secondary to both of

these uses. The remaining uses of the 902-928 MHz band include licensed

amateur radio operations and unlicensed Part 15 equipment, both of

which are secondary to all other uses of the band. Part 15 low power

devices include, but are not limited to, those used for automatic meter

reading, inventory control, package tracking and shipping control,

alarm services, local area networks, Internet access, and cordless

telephones. The amateur radio service is used by technically inclined

private citizens to engage in self-training, information exchange, and

radio experimentation. The Commission's band plan permits secondary

operations across the entire band by users of unlicensed Part 15

devices and amateur licensees. At the same time, the band plan

separates non-multilateration from multilateration LMS systems in all

but one subband so as to avert interference. The Commission has also

established limitations on LMS systems'

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interconnection with the public switched network and set forth a number

of technical requirements intended to ensure successful coexistence of

all the services authorized to operate in the band.

4. Potential bidders should be aware that certain applications

(including those for modification), waiver requests, petitions for

reconsideration and applications for review are pending before the

Commission that relate to particular incumbent multilateration LMS

licensees. Resolution of these matters could have an impact on the

availability of spectrum for EA licensees. In addition, while 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. Licensing information is contained in the Commission's

licensing database, which is available for inspection in the Wireless

Telecommunications Bureau's Public Reference Rooms, located at 2025 M

Street, N.W., Room 5608, Washington, D.C. 20554, and 1270 Fairfield

Road, Gettysburg, PA 17325. Potential bidders may search for

information regarding LMS licensees on the World Wide Web at http://

www.fcc.gov/wtb. In particular, information can be accessed by

downloading databases by selecting ``WTB Database Files'' (which can be

accessed (http://www.fcc.gov/wtb/databases.html), or searching on-line

by selecting ``Search WTB Databases'' (http://gullfoss.fcc.gov:8080/

cgi-bin/ws.exe/beta/genmen/index.hts). Any telephone inquires regarding

accessing this data should be directed to the Technical Support Hotline

at (202) 414-1250 (voice) or (202) 414-1255 (text telephone (TTY)).

5. 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

bidders are strongly encouraged to physically inspect any sites located

in or near the geographic area for which they plan to bid. Those

wishing to participate in the auction must:

Submit a short form application (FCC Form 175) by November

16, 1998;

Submit a sufficient upfront payment and an FCC Remittance

Advice Form (FCC Form 159) by November 30, 1998; and

Comply with all provisions outlined in the Bidder

Information Package.

6. Prohibition of Collusion: To ensure the competitiveness of the

auction process, the Commission's Rules prohibit applicants for the

same geographic license area from communicating with each other during

the auction about bids, bidding strategies, or settlements. This

prohibition begins with the filing of short-form applications, and ends

on the down payment due date. To comply with this rule, bidders

competing for the same license(s) are encouraged not to use the same

individual authorized bidder. A violation of the anti-collusion rule

could occur if an individual acts as the authorized bidder for two or

more competing applicants, and conveys information concerning the

substance of bids or bidding strategies between the bidders he/she is

authorized to represent in the auction. Also, if the authorized bidders

are different individuals employed by the same organization (e.g., law

firm or consulting firm), a violation could similarly occur. In such

instances, the Bureau strongly encourages applicants to certify on

their applications that precautionary steps (e.g., establishing a

``Chinese wall'') have been taken to prevent communication between

authorized bidders and that applicants and their bidding agents will

comply with the anti-collusion rule. See, e.g., ``Wireless

Telecommunications Bureau Responds to Questions About the Local

Multipoint Distribution Service Auction,'' Public Notice, 13 FCC Rcd

341 (1998); In re Application of Nevada Wireless for a License to

Provide 800 MHz Specialized Mobile Radio Service in the Farmington, NM-

CO Economic Area (EA-155) Frequency Band A, Memorandum Opinion and

Order, 13 FCC Rcd 11973, 11977, para. 11 (1998) (``Nevada Wireless'').

The Bureau, however, cautions that merely filing a certifying statement

as part of an application will not outweigh specific evidence that

collusive behavior has occurred nor will it preclude the initiation of

an investigation when warranted. See Nevada Wireless, 13 FCC Rcd at

11978, para. 13 (1998). In the LMS auction, for example, the rule would

apply to any applicants bidding for the same EA. Therefore, applicants

that apply to bid for ``all markets'' would be precluded from

communicating with all other applicants after filing the FCC Form 175.

However, applicants may enter into bidding agreements before filing

their FCC Form 175 short-form applications, as long as they disclose

the existence of the agreement(s) in their Form 175 short-form

applications. See 47 CFR 1.65. By signing their FCC Form 175 short form

applications, applicants are certifying their compliance with 47 CFR

1.2105(c). In addition, Sec. 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 an auction

applicant to notify the Commission of any violation of the anti-

collusion rules upon learning of such violation. Bidders are therefore

required to make such notification to the Commission immediately upon

discovery.

7. Bidder Information Package: More complete details about this

auction are contained in a Bidder Information Package. The Commission

will provide one copy to each company free of charge. Additional copies

may be ordered at a cost of $16.00 each, including postage, payable by

Visa or Master Card, or by check payable to ``Federal Communications

Commission'' or ``FCC.'' To place an order, contact the FCC National

Call Center at (888) CALL-FCC ((888) 225-5322, press option #2 at the

prompt). Prospective bidders that have already contacted the FCC at

this number expressing an interest in this auction will receive a

Bidder Information Package in approximately four weeks, and need not

call again unless they wish to order additional copies.

8. Relevant Authority: Prospective bidders must familiarize

themselves thoroughly with the Commission's Rules relating to the

Location and Monitoring Service, contained in Title 47, Part 90 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. In addition, prospective bidders must be

thoroughly familiar with the procedures, terms and conditions contained

in Amendment of Part 90 of the Commission's Rules to Adopt Regulations

for Automatic Vehicle Monitoring Systems, Report and Order, PR Docket

No. 93-61, 60 FR 15248 (March 23, 1995) (``LMS Report and Order'');

Amendment of Part 90 of the Commission's Rules to Adopt Regulations for

Automatic Vehicle Monitoring Systems, Memorandum Opinion and Order and

Further Notice of Proposed Rule Making, PR Docket No. 93-61, 62 FR

52078 (October 6, 1997) (``Memorandum Opinion and Order and Further

Notice of Proposed Rule Making''); Amendment of the Commission's Rules

to Adopt Regulations for Automatic Vehicle Monitoring Systems, Second

Report and Order, 63 FR 40659 (July 30, 1998) (``LMS Second Report and

Order''); Part

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90, Subpart M of the Commission's Rules concerning Transportation

Infrastructure Radio Service; Subpart X of the Commission's Rules

concerning Competitive Bidding Procedures; and Part 1, Subpart Q of the

Commission's Rules concerning Competitive Bidding Proceedings.

9. The terms contained in the Commission's Rules, relevant orders,

public notices and bidder information package are not negotiable. The

Commission may amend or supplement the information contained in our

public notices or the bidder information package at any time, and will

issue public notices to convey any new or supplemental information to

bidders. It is the responsibility of all prospective bidders to remain

current with all Commission Rules and with all public notices

pertaining to this auction. Copies of most Commission documents,

including public notices, can be retrieved from the FCC Internet node

via anonymous ftp @ftp.fcc.gov or the FCC World Wide Web site at http:/

/www.fcc.gov/wtb/auctions. Additionally, documents may be obtained for

a fee by calling the Commission's copy contractor, International

Transcription Service, Inc. (ITS), at (202) 857-3800.

10. Bidder Alerts: All applicants must certify on their FCC Form

175 applications under penalty of perjury that they are legally,

technically, financially and otherwise qualified to hold a license, and

not in default on any payment for Commission licenses (including down

payments) or delinquent on any non-tax debt owed to any Federal agency.

Prospective bidders are reminded that submission of a false

certification to the Commission is a serious matter that may result in

severe penalties, including monetary forfeitures, license revocations,

exclusion from participation in future auctions, and/or criminal

prosecution.

11. The FCC makes no representations or warranties about the use of

this spectrum for particular services. Applicants should be aware that

an FCC auction represents an opportunity to become an FCC licensee in

this service, subject to certain conditions and regulations. An FCC

auction does not constitute an endorsement by the FCC of any particular

services, technologies or products, nor does an FCC license constitute

a guarantee of business success. Applicants should perform their

individual due diligence before proceeding as they would with any new

business venture.

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

some unscrupulous entrepreneurs may attempt to use the LMS auction to

deceive and defraud unsuspecting investors. Common warning signals of

fraud include the following:

The first contact is a ``cold call'' from a telemarketer,

or is made in response to an inquiry prompted by a radio or television

infomercial.

The offering materials used to invest in the venture

appear to be targeted at IRA funds, for example by including all

documents and papers needed for the transfer of funds maintained in IRA

accounts.

The amount of the minimum investment is less than $25,000.

The sales representative makes verbal representations

that: (a) the Internal Revenue Service (``IRS''), Federal Trade

Commission (``FTC''), Securities and Exchange Commission (``SEC''),

FCC, or other government agency has approved the investment; (b) the

investment is not subject to state or federal securities laws; or (c)

the investment will yield unrealistically high short-term profits. In

addition, the offering materials often include copies of actual FCC

releases, or quotes from FCC personnel, giving the appearance of FCC

knowledge or approval of the solicitation.

Information about deceptive telemarketing investment schemes is

available from the FTC at (202) 326-2222 and from the SEC at (202) 942-

7040. Complaints about specific deceptive telemarketing investment

schemes should be directed to the FTC, the SEC, or the National Fraud

Information Center at (800) 876-7060. Consumers who have concerns about

specific LMS proposals may also call the FCC National Call Center at

(888) CALL-FCC ((888) 225-5322).

13. 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 licensees must comply

with the Commission's NEPA rules for each wireless facility. See 47 CFR

1.1305-1.1319. The Commission's NEPA rules require that, among other

things, licensees consult with expert agencies having NEPA

responsibilities, including the U.S. Fish and Wildlife Service, the

State Historic Preservation Office, the Army Corp of Engineers and the

Federal Emergency Management Agency (through the local authority with

jurisdiction over floodplains). Licensees must prepare environmental

assessments for wireless facilities that may have a significant impact

in or on wilderness areas, wildlife preserves, threatened or endangered

species or designated critical habitats, historical or archaeologic

sites, Indian religious sites, floodplains, and surface features.

Licensees must also prepare environmental assessments for wireless

facilities that include high intensity white lights in residential

neighborhoods or excessive radiofrequency emission.

B. Eligibility for Small and Very Small Business Provisions

As described above, this auction offers one license for each of

three spectrum blocks in each of the 176 Economic Areas (EAs)

designated for LMS. Our goal in adopting special small business

provisions is to promote and facilitate the participation of small

businesses in the LMS auction and in the provision of this and other

commercial mobile radio services.

15. Determination of Revenues. For purposes of determining which

entities qualify as very small businesses or small businesses, the

Commission will consider the gross revenues of the applicant, its

controlling interests, and the affiliates of the applicant and its

controlling interests. Once principals or entities with a controlling

interest are determined, only the revenues of those principals or

entities will be counted in determining small business eligibility. The

term ``controlling interest'' includes both de facto and de jure

control of the applicant. Typically, de jure control is evidenced by

ownership of at least 50.1 percent of an entity's voting stock. De

facto control is determined on a case-by-case basis. The following are

some common indicia of control:

The entity constitutes or appoints more than 50 percent of

the board of directors or management committee;

The entity has authority to appoint, promote, demote, and

fire senior executives that control the day-to-day activities of the

licensee; or

The entity plays an integral role in management decisions.

16. Very Small or Small Business Consortiums. A consortium of small

businesses or very small businesses is a conglomerate organization

formed as a joint venture between or among mutually independent

business firms, each of which individually satisfies the definition of

very small or small business in 47 CFR 90.1103(b)(1) or (2). Thus, each

consortium member must disclose its gross revenues along with those of

its affiliates, controlling interests, and controlling interests'

affiliates. The Bureau notes that although the gross revenues of the

consortium members will not be aggregated for purposes of determining

eligibility for very small or small business credits, this information

must

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be provided to ensure that each individual consortium member qualifies

for any bidding credit awarded to the consortium.

17. Application Showing. Applicants should note that they will be

required to file supporting documentation as Exhibit C to their FCC

Form 175 short form applications to establish that they satisfy the

eligibility requirements to qualify as a very small business or small

business (or consortiums of very small or small businesses) for this

auction. Specifically, for the LMS auction, applicants applying to bid

as very small or small businesses (or consortiums of very small or

small businesses) will be required to file as Exhibit C to their FCC

Form 175 short form applications, all information required under 47 CFR

1.2105(a) and 1.2112(a). In addition, these applicants must disclose,

separately and in the aggregate, the gross revenues for the preceding

three years of each of the following: (1) The applicant; (2) the

applicant's affiliates; (3) the applicant's controlling interests; and

(4) the affiliates of the applicant's controlling interests.

Certification that the average gross revenues for the preceding three

years do not exceed the applicable limit is not sufficient. A statement

of the total gross revenues for the preceding three years is also

insufficient. The applicant must provide separately for itself, its

affiliates, and its controlling interests, a schedule of gross revenues

for each of the preceding three years, as well as a statement of total

average gross revenues for the three-year period. If the applicant is

applying as a consortium of very small or small businesses, this

information must be provided for each consortium member.

18. Bidding Credits. Qualifying LMS applicants are eligible for a

bidding credit that represents the amount by which a bidder's winning

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

average gross revenues for the preceding three years of the bidder and

its controlling interests and affiliates:

A bidder with average gross revenues not to exceed $15

million for the preceding three years receives a 25 percent discount on

its winning bids for LMS licenses; and,

A bidder with average gross revenues not to exceed $3

million for the preceding three years receives a 35 percent discount on

its winning bids for LMS licenses.

Bidding credits are not cumulative: qualifying applicants receive

either the 25 percent or the 35 percent bidding credit, but not both.

The definitions of very small business and small business (or

consortiums of very small or small businesses) (including calculation

of average gross revenues) are set forth in 47 CFR 90.1103(b).

19. LMS bidders should note that unjust enrichment provisions apply

to winning bidders that use bidding credits and subsequently assign or

transfer control of their licenses to an entity not qualifying for the

same levels of bidding credits. Finally, LMS bidders should also note

that there are no installment payment plans in the LMS auction.

C. Pre-Auction Procedures

20. Short-Form Application (FCC Form 175)--Due November 16, 1998.

In order to be eligible to bid in this auction, applicants must first

submit an FCC Form 175 application. This application must be received

at the Commission by 5:30 p.m. ET on November 16, 1998. Late

applications will not be accepted. There is no application fee required

when filing an FCC Form 175. However, to be eligible to bid, an

applicant must submit an upfront payment.

21. Filing Options. Auction applicants are strongly encouraged to

file their applications electronically in order to take full advantage

of the greater efficiencies and convenience of electronic filing,

bidding and access to bidding data. For example, electronic filing

enables the applicant to: (a) receive interactive feedback while

completing the application; and (b) receive immediate acknowledgment

that the FCC Form 175 has been submitted for filing. In addition, only

those applicants that file electronically will have the option of

bidding electronically. However, manual filing (via hard copy) is also

permitted. Please note that manual filers will not be permitted to bid

electronically and therefore must bid telephonically, unless the FCC

Form 175 is amended electronically prior to the resubmission date for

incomplete or deficient applications. The following is a brief

description of each filing method.

22. Electronic Filing. Applicants wishing to file electronically

may generally do so on a 24-hour basis beginning October 26, 1998. The

window for filing the FCC Form 175 electronically will remain open

until 5:30 p.m. ET on November 16, 1998. Applicants are strongly

encouraged to file early, and applicants are responsible for allowing

adequate time for filing their applications. Applicants may update or

amend their electronic applications multiple times until the filing

deadline of November 16, 1998. Applicants who file electronically must

press the ``Submit Form 175'' button on the ``Submit'' page of the

electronic form to successfully submit their FCC Form 175s. Information

about installing and running the FCC Form 175 application software is

included in Attachment C to this Public Notice. Technical support is

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

(TTY)); the hours of service are 8 a.m.-6 p.m. ET, Monday-Friday, and 9

a.m.-5 p.m. ET, the weekend of November 14-15.

23. Manual Filing. Auction applicants will be permitted to file

their FCC Form 175 applications in hard copy. When any manually filed

FCC Form 175 and 175-S exceeds five pages in length, the FCC requires

that all attachments be submitted on a 3.5-inch diskette, or the entire

application be filed in a microfiche version. Manual filers must use

the August 1998 version of FCC Form 175 and FCC Form 175-S (if

necessary). Earlier versions of the FCC Form 175 will not be accepted

for filing. Copies of the FCC Form 175 can be obtained by calling the

Commission's Forms Distribution Center at (800) 418-FORM ((800) 418-

3676) (outside Washington, D.C.) or (202) 418-FORM ((202) 418-3676) (in

the Washington area). Copies of the FCC Form 175 can also be obtained

via Fax-On-Demand at (202) 418-0177 (the document retrieval number for

the FCC Form 175 is 000175, and 001751 for the FCC Form 175-S), or

downloaded from the Commission's World Wide Web site at http://

www.fcc.gov/formpage.html. If applicants have any questions concerning

availability of the FCC Form 175, they should call the FCC Records

Management Branch at (202) 418-0210.

24. Manual applications must be submitted by hand delivery

(including private ``overnight'' courier) or by U.S. mail (certified

mail with return receipt recommended), addressed to: FCC Form 175

Filing, Auction No. 21, Federal Communications Commission, Wireless

Telecommunications Bureau, Auctions & Industry Analysis Division, 1270

Fairfield Road, Gettysburg, PA 17325-7245.

Note: Manual applications delivered to any other location or

applications sent via facsimile will not be accepted.

25. Completion of the FCC Form 175. Applicants should carefully

review 47 CFR 1.2105, and must complete all items on the FCC Form 175

(and Form 175-S, if applicable). Instructions for completing the FCC

Form 175 are in Attachment B of this Public Notice. Note again that

applicants who file electronically must press the ``Submit Form 175''

button on the ``Submit'' page to successfully submit their FCC Form

175. Failure to sign a manually filed

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FCC Form 175 will result in dismissal of the application and loss of

the ability to participate in the auction. Only original signatures

will be accepted for manually filed applications.

26. Electronic Review of FCC Form 175. The FCC Form 175 review

software may be used to review and print applicants' FCC Form 175

applications. In other words, applicants that file electronically may

review their own completed FCC Form 175. Applicants may also view other

applicants' completed FCC Form 175s after the filing deadline has

passed and the FCC has issued a public notice explaining the status of

the applications. For this reason, it is important that applicants do

not include their Taxpayer Identification Numbers (TINs) on any

Exhibits to their FCC Form 175 applications. There is a fee of $2.30

per minute for accessing this system.

27. Application Processing and Minor Corrections. After the

deadline for filing the FCC Form 175 applications has passed, the FCC

will process all timely submitted applications to determine which are

acceptable for filing, and subsequently will issue a public notice

identifying: (1) those applications accepted for filing (including FCC

account numbers and the licenses for which they applied); (2) those

applications rejected; and (3) those applications which have minor

defects that may be corrected, and the deadline for filing such

corrected applications.

28. As described more fully in the Commission's Rules, after the

November 16, 1998, short form filing deadline, applicants may make only

minor corrections to their FCC Form 175 applications. Applicants will

not be permitted to make major modifications to their applications

(e.g., change their license selections, change the certifying official

or change control of the applicant). See 47 CFR 1.2105.

29. Upfront Payments--Due November 30, 1998. 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).

Manual filers must use the July 1997 version of FCC Form 159.

Electronic filers of the FCC Form 175 will have access to an electronic

version of Form 159 after completing the FCC Form 175. Earlier versions

of this form will not be accepted. All upfront payments must be

received at Mellon Bank in Pittsburgh, PA, by 6:00 p.m. ET on November

30, 1998.

Please note that:

All payments must be made in U.S. dollars.

All payments must be made by wire transfer.

Upfront payments for Auction No. 21 go to a lockbox number

different from the ones used in previous FCC auctions, and different

from the lockbox number to be used for post-auction payments.

Failure to deliver the upfront payment by the November 30,

1998 deadline will result in dismissal of the application and

disqualification from participation in the auction.

30. Making Auction Payments by Wire Transfer. Wire transfer

payments must be received by 6:00 p.m. ET on November 30, 1998. To

avoid untimely payments, applicants should discuss arrangements

(including bank closing schedules) with their banker several days

before they plan to make the wire transfer, and allow sufficient time

for the transfer to be initiated and completed before the deadline.

Applicants will need the following information:

ABA Routing Number: 043000261

Receiving Bank: Mellon Pittsburgh

BNF: FCC/AC 910-0198

OBI Field: (Skip one space between each information item)

``AUCTIONPAY''

Taxpayer Identification No. (same as FCC Form 159, block 26)

Payment Type Code (enter ``ALMU'')

FCC Code 1 (same as FCC Form 159, block 23A: ``21'')

Payer Name (same as FCC Form 159, block 2)

Lockbox No. # 358410

Note: The BNF and Lockbox number are specific to the upfront

payments for this auction; do not use BNF or Lockbox numbers from

previous auctions.

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

(412) 236-5702 at least one hour before placing the order for the wire

transfer (but on the same business day). On the cover sheet of the fax,

write ``Wire Transfer--Auction Payment for Auction Event No. 21.''

Bidders may confirm receipt of their upfront payment at Mellon Bank by

contacting their sending financial institution.

32. FCC Form 159. Each upfront payment must be accompanied by a

completed FCC Remittance Advice Form (FCC Form 159). Proper completion

of FCC Form 159 is critical to ensuring correct credit of upfront

payments. Detailed instructions for completion of FCC Form 159 will be

included in the Bidder Information Package.

33. Amount of Upfront Payments. The Bureau will reduce the proposed

upfront payments per MHz-pop for the LMS auction but retain the

previously proposed floors for the upfront payments. After considering

comments and subsequent discussions, the Bureau agrees with commenters

that LMS is a unique and restricted niche service that will be provided

to smaller segments of the population. Based on this assessment, and

the Bureau's decision to reduce minimum opening bids (see paragraphs

65-66, infra), the Bureau believes that a reduction of the proposed

upfront payments is reasonable. Further, based on information provided

in these discussions, the Bureau will adopt values that are slightly

lower than one commenter's (Comtrak) proposed upfront payments.

Specifically, the Bureau will adopt the following levels of upfront

payments for each LMS license:

(1) Block A--$0.00075*MHz*Pop (rounded up to the next dollar and no

less than $2,850 per license)

(2) Block B--$0.00075*MHz*Pop (rounded up to the next dollar and no

less than $2,500 per license)

(3) Block C--$0.00075*MHz*Pop (rounded up to the next dollar and no

less than $2,800 per license)

These upfront payments represent the deposits required to qualify to

bid on LMS licenses in Auction No. 21. The Bureau finds that amounts

higher than these might serve as a barrier to participation in the

auction, and that upfront payments lower than these might encourage

frivolous auction participation and insincere bidding.

34. Please note that upfront payments are not attributed to

specific licenses, but instead will be translated to bidding units to

define a bidder's maximum bidding eligibility. For Auction No. 21, the

amount of the upfront payment will be translated into bidding units on

a one-to-one basis, e.g., a $25,000 upfront payment provides the bidder

with 25,000 bidding units. The total upfront payment defines the

maximum amount of bidding units on which the applicant will be

permitted to bid (including standing high bids) in any single round of

bidding. Thus, an applicant does not have to make an upfront payment to

cover all licenses for which the applicant has selected on FCC Form

175, but rather to cover the maximum number of bidding units that are

associated with licenses the bidder wishes to place bids on and hold

high bids on at any given time.

35. In order to be able to place a bid on a license, in addition to

having specified that license on the FCC Form 175, a bidder must have

an eligibility level that meets or exceeds the number

[[Page 54699]]

of bidding units assigned to that license. At a minimum, an applicant's

total upfront payment must be enough to establish eligibility to bid on

at least one of the licenses applied for on the FCC Form 175, or else

the applicant will not be eligible to participate in the auction.

36. In calculating the upfront payment amount, an applicant should

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

any single round, and submit an upfront payment covering that number of

bidding units. Bidders should check their calculations carefully as

there is no provision for increasing a bidder's maximum eligibility

after the upfront payment deadline.

Note: An applicant may, on its FCC Form 175, apply for every

license being offered, but its actual bidding in any round will be

limited by the bidding units reflected in its upfront payment.

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

Because experience with prior auctions has shown that in most cases

wire transfers provide quicker and more efficient refunds than paper

checks, the Commission will use wire transfers for all Auction No. 21

refunds. To avoid delays in processing refunds, applicants should

include wire transfer instructions with any refund request they file;

they may also provide this information in advance by faxing it to the

FCC Billings and Collections Branch, ATTN: Linwood Jenkins or Geoffrey

Idika, at (202) 418-2843. Please include the following information:

Name of Bank

ABA Number

Account Number to Credit

Correspondent Bank (if applicable)

ABA Number

Account Number

Contact and Phone Number

(Applicants should also note that implementation of the Debt Collection

Improvement Act of 1996 requires the FCC to obtain a Taxpayer

Identification Number (TIN) before it can disburse refunds.)

Eligibility for refunds is discussed in paragraph 94, infra.

38. Auction Registration. Approximately ten days before the

auction, the Commission will issue a public notice announcing all

qualified bidders for the auction. Qualified bidders are those

applicants whose FCC Form 175 applications have been accepted for

filing and that have timely submitted upfront payments sufficient to

make them eligible to bid on at least one of the licenses for which

they applied.

39. All qualified bidders are automatically registered for the

auction. Registration materials will be distributed prior to the

auction by two separate overnight mailings, each containing part of the

confidential identification codes required to place bids. These

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

address listed in the FCC Form 175.

40. 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, December 9, 1998

should contact the FCC National Call Center at (888) CALL-FCC ((888)

225-5322, press option #2 at the prompt). 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.

41. Qualified bidders should note that lost login codes, passwords

or bidder identification numbers can be replaced only by appearing in

person at the FCC Auction Headquarters located at 2 Massachusetts

Avenue, N.E., Washington, D.C. 20002. Only an authorized representative

or certifying official, as designated on an applicant's FCC Form 175,

may appear in person with two forms of identification (one of which

must be a photo identification) in order to receive replacement codes.

42. Remote Electronic Bidding Software. Qualified bidders that file

or amend the FCC Form 175 electronically are allowed to bid

electronically, but must purchase remote electronic bidding software

for $175.00 by December 1, 1998. (Auction software is tailored to a

specific auction, so software from prior auctions will not work for

Auction No. 21.) A software order form is included in the Bidder

Information Package.

43. Auction Seminar. On October 30, 1998, the FCC will sponsor a

seminar for the LMS auction at the Ana Hotel, located at 2401 M Street,

N.W., Washington, D.C. The seminar will provide attendees with

information about pre-auction procedures, conduct of the auction, FCC

remote bidding software, and the LMS service and auction rules.

44. To register, complete the registration form to be included in

the upcoming Bidder Information Package. The registration form will

include details about the time and location of the seminar.

Registrations are accepted on a first-come, first-served basis.

45. Mock Auction. All applicants whose FCC Form 175 and 175-S have

been accepted for filing will be eligible to participate in a mock

auction beginning December 10, 1998. The mock auction will enable

applicants to become familiar with the electronic software prior to the

auction. Free demonstration software will be available for use in the

mock auction. Participation by all bidders is strongly recommended.

Details will be announced by public notice.

D. Auction Event

46. The first round of the auction will begin on December 15, 1998.

The initial round schedule will be announced in a Public Notice listing

the qualified bidders, to be released approximately 10 days before the

start of the auction.

47. Auction Structure--Simultaneous Multiple Round Auction. The 528

multilateration LMS licenses will be awarded through a single,

simultaneous multiple round auction. Unless otherwise announced, bids

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

approach, the Bureau believes, allows bidders to take advantage of any

synergies that exist among licenses and is most administratively

efficient.

48. Maximum Eligibility and Activity Rules. The amount of the

upfront payment submitted by a bidder would determine the initial

maximum eligibility (as measured in bidding units) for each bidder. The

amount of the upfront payment submitted by a bidder determines the

initial maximum eligibility (in bidding units) for each bidder. Note

again that upfront payments are not attributed to specific licenses,

but instead will be translated into bidding units to define a bidder's

initial maximum eligibility. The total upfront payment defines the

maximum number of bidding units on which the applicant will initially

be permitted to bid. There is no provision for increasing a bidder's

maximum eligibility during the course of an auction, as described under

``Auction Stages,'' set forth in paragraph 55, infra.

49. In order to ensure that the auction closes within a reasonable

period of time, an activity rule requires bidders to bid actively

throughout the auction, rather than wait until the end before

participating. Bidders are required to be active on a specific

percentage of their maximum eligibility during each round of the

auction.

50. A bidder is considered active on a license in the current round

if it is either the high bidder at the end of the previous bidding

round and does not withdraw the high bid in the current round, or if it

submits an acceptable bid in the current round (see ``Minimum Accepted

Bids,'' paragraph 67 , infra). A bidder's activity level in a round is

the sum of the bidding units associated with

[[Page 54700]]

licenses on which the bidder is active. The minimum required activity

level is expressed as a percentage of the bidder's maximum bidding

eligibility, and increases as the auction progresses.

51. Activity Rule Waivers and Reducing Eligibility. Each bidder

will be provided five activity rule waivers that may be used in any

round during the course of the auction. Use of an activity rule waiver

preserves the bidder's current bidding eligibility despite the bidder's

activity in the current round being below the required minimum level.

An activity rule waiver applies to an entire round of bidding and not

to a particular license.

52. The FCC auction system assumes that bidders with insufficient

activity would prefer to use an activity rule waiver (if available)

rather than lose bidding eligibility. Therefore, the system will

automatically apply a waiver (known as an ``automatic waiver'') at the

end of any round where a bidder's activity level is below the minimum

required unless: (1) there are no activity rule waivers available; or

(2) the bidder overrides the automatic application of a waiver by

reducing eligibility, thereby meeting the minimum requirements.

53.A bidder with insufficient activity that wants to reduce its

bidding eligibility rather than use an activity rule waiver must

affirmatively override the automatic waiver mechanism during the round

by using the reduce eligibility function in the software. In this case,

the bidder's eligibility is permanently reduced to bring the bidder

into compliance with the activity rules as described in ``Auction

Stages'' (see paragraph 55, infra). Once eligibility has been reduced,

a bidder will not be permitted to regain its lost bidding eligibility.

54. Finally, a bidder may proactively use an activity rule waiver

as a means to keep the auction open without placing a bid. If a bidder

submits a proactive waiver (using the proactive waiver function in the

bidding software) during a round in which no bids are submitted, the

auction will remain open and the bidder's eligibility will be

preserved. An automatic waiver invoked in a round in which there are no

new valid bids or withdrawals will not keep the auction open.

55. Auction Stages. The Bureau will conduct the auction in stages

and employ an activity rule. Further, in each round of Stage One, 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 round of Stage Two, a bidder desiring to

maintain its current eligibility will be required to be active on at

least 90 percent of its current bidding eligibility. Finally, a bidder

in Stage Three, in order to maintain eligibility, will be required to

be active on 98 percent of its current bidding eligibility.

56. The FCC reserves the discretion to further alter the activity

percentages before and/or during the auction. The following are the

proposed activity levels for each stage of the auction:

Stage One: In each round of the first stage of the auction, a

bidder desiring to maintain its current eligibility is required to be

active on licenses encompassing at least 80 percent of its current

bidding eligibility. Failure to maintain the requisite 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 current round activity by five-fourths (\5/4\).

Stage Two: In each round of the second stage, a bidder desiring to

maintain its current eligibility is required to be active on 90 percent

of its current bidding eligibility. During Stage Two, reduced

eligibility for the next round will be calculated by multiplying the

current round activity by ten-ninths (\10/9\).

Stage Three: In each round of the third stage, a bidder desiring to

maintain its current eligibility is required to be active on 98 percent

of its current bidding eligibility. In this final stage, reduced

eligibility for the next round will be calculated by multiplying the

current round activity by fifty-fortyninths (\50/49\).

Caution: Since activity requirements increase in each auction

stage, bidders must carefully check their current activity during

the bidding round 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 reverify their activity status at stage

transitions. Bidders may check their activity against the required

minimum activity level by using the bidding software's bidding

module.

57. Stage Transitions. The auction will start in Stage One. Under

the FCC's general guidelines it will advance to the next stage (i.e.,

from Stage One to Stage Two, and from Stage Two to Stage Three) when,

in each of three consecutive rounds of bidding, the high bid has

increased on 10 percent or less of the licenses being auctioned (as

measured in bidding units). However, the Bureau will retain the

discretion to regulate the pace of the auction by announcement. This

determination will be based on a variety of measures of bidder

activity, including, but not limited to, the auction activity level,

the percentages of licenses (as measured in bidding units) on which

there are new bids, the number of new bids, and the percentage increase

in revenue. The Bureau believes that these stage transition rules,

having proven successful in prior auctions, are appropriate for use in

the LMS auction.

58. Auction Stopping Rules. Barring extraordinary circumstances,

bidding will remain open on all licenses until bidding stops on every

license. Thus, the auction will close for all licenses when one round

passes during which no bidder submits a new acceptable bid on any

license, applies a proactive waiver, or withdraws a previous high bid.

59. The Bureau retains the discretion, however, to keep an auction

open even if no new acceptable bids or proactive waivers are submitted,

and no previous high bids are withdrawn. In this event, the effect will

be the same as if a bidder had submitted a proactive waiver. Thus, the

activity rule will apply as usual, and a bidder with insufficient

activity will either lose bidding eligibility or use an activity rule

waiver (if it has any left).

60. Further, in its discretion, the Bureau reserves the right to

declare that the auction will end after a specified number of

additional rounds (``special stopping rule''). If the FCC 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 FCC intends to exercise this

option only in extreme 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. Before exercising this option, the

FCC is likely to attempt to increase the pace of the auction by, for

example, moving the auction into the next stage (where bidders would be

required to maintain a higher level of bidding activity), increasing

the number of bidding rounds per day, and/or increasing the amount of

the minimum bid increments for the limited number of licenses where

there is still a high level of bidding activity.

61. Adoption of these rules, the Bureau believes, is most

appropriate for the LMS auction because our experience in prior

auctions demonstrates that the simultaneous stopping rule balanced the

[[Page 54701]]

interests of administrative efficiency and maximum bidder

participation. The substitutability between and among licenses in

different geographic areas and the importance of preserving the ability

of bidders to pursue backup strategies support the use of a

simultaneous stopping rule.

62. Auction Delay, Suspension, or Cancellation. By public notice or

by announcement during the auction, the Bureau may delay, suspend or

cancel the auction in the event of natural disaster, technical

obstacle, evidence of an auction security breach, unlawful bidding

activity, administrative or weather necessity, or for any other reason

that affects the fair and competitive conduct of competitive bidding.

In such cases, the Bureau, in its sole discretion, may elect to: resume

the auction starting from the beginning of the current round; resume

the auction starting from some previous round; or cancel the auction in

its entirety. Network interruption may cause the Bureau to delay or

suspend the auction. The Bureau emphasizes that exercise of this

authority is solely within the discretion of the Bureau, and its use is

not intended to be a substitute for situations in which bidders may

wish to apply their activity rule waivers.

63. Round Structure. The initial bidding schedule will be announced

by public notice at least one week before the start of the auction, and

will be included in the registration mailings. The round structure for

each bidding round contains a single bidding round followed by the

release of the round results.

64. The FCC has discretion to change the bidding schedule in order

to foster an auction pace that reasonably balances speed with the

bidders' need to study round results and adjust their bidding

strategies. The FCC may increase or decrease the amount of time for the

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

depending upon the bidding activity level and other factors.

65. Reserve Price or Minimum Opening Bid. The Bureau will adopt

minimum opening bids for each of the licenses in the LMS auction that

are reducible at the discretion of the Bureau. Commenters, however,

have persuaded the Bureau that its proposed levels are significantly

too high. Therefore, the Bureau will reduce the price per MHz-pop

proposed in the LMS Public Notice, but retain the proposed floors for

the minimum opening bids. Congress has enacted a presumption that

unless the Commission determines otherwise, minimum opening bids or

reserve prices are in the public interest. Based on the Bureau's

experience in using minimum opening bids in the 800 MHz Specialized

Mobile Radio and LMDS auctions, the Bureau believes that minimum

opening bids speed the course of the auction and ensure that valuable

assets are not sold for nominal prices, without unduly interfering with

the efficient assignment of licenses. Accordingly, the Bureau adopts

the following revised formulae for calculating minimum opening bids:

(1) Block A--$0.0008*MHz*Pop (rounded up to the next dollar and no less

than $2,850 per license)

(2) Block B--$0.0008*MHz*Pop (rounded up to the next dollar and no less

than $2,500 per license)

(3) Block C--$0.0008*MHz*Pop (rounded up to the next dollar and no less

than $2,800 per license)

The revised formulae presented here best meet the objectives of our

auction authority in establishing reasonable minimum opening bids. The

Bureau has noted in the past that the reserve price and minimum opening

bid provision is not a requirement to maximize auction revenue but

rather a protection against assigning licenses at unacceptably low

prices. In addition, the Bureau must balance the revenue raising

objective against the Bureau's other public interest objectives in

setting the minimum bid level. LMS is a restricted service with unique

dynamics and recognizes that LMS winning bidders are prohibited from

using non-vehicular location service except where the primary purpose

is to locate vehicles. In addition, LMS auction winners must share and

accept interference from other services. LMS operates in the 902-928

MHz frequency band. The band is allocated for primary use by Federal

Government radiolocation systems. Next in order of priority are

Industrial, Scientific and Medical devices. Federal Government fixed

and mobile and LMS systems are secondary to both of these uses. The

remaining uses of the 902-928 MHz band include licensed amateur radio

operations and unlicensed Part 15 equipment, both of which are

secondary to all other uses of the band. The Commission's band plan

permits secondary operations across the entire band by users of

unlicensed Part 15 devices and amateur licensees. All of these facts,

together with projections of the likely revenues and costs of providing

multilateration LMS service, convince the Bureau that the proposed

minimum opening bids should be substantially reduced. In sum, the

Bureau finds that these minimum opening bids will speed the course of

the auction and ensure that valuable assets are not sold for nominal

prices without unduly interfering with the efficient assignment of

licenses.

66. Minimum opening bids are reducible at the discretion of the

Bureau. This will allow the Bureau flexibility to adjust the minimum

opening bids if circumstances warrant. The Bureau emphasizes, 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 any bidder requests to reduce the minimum opening

bid on specific licenses.

67. Minimum Accepted Bids. The Bureau will use an exponential

smoothing methodology to calculate minimum bid increments and retains

the discretion to change the minimum bid increment if circumstances so

dictate. For every license that receives a bid, the bid increment for

the next round for that license will be established as a percentage

increment that is determined using the exponential smoothing formula.

68. Exponential Smoothing. The exponential smoothing formula

calculates the bid increment based on a weighted average of the

activity received on each license in the current and all previous

rounds. This methodology will tailor the bid increment for each license

based on activity, rather than setting a global increment for all

licenses. For every license that receives a bid, the bid increment for

the next round for that license will be established as a percentage

increment that is determined using the exponential smoothing formula.

69. Using exponential smoothing, the calculation of the percentage

bid increment for each license will be based on an activity index,

which is calculated as the weighted average of the current activity and

the activity index from the previous round. The activity index at the

start of the auction (round 0) will be set at 0. The current activity

index is equal to a weighting factor times the number of new bids

received on the license in the current bidding period plus one minus

the weighting factor times the activity index from the previous round.

The activity index is then used to calculate a percentage increment by

multiplying a minimum percentage increment by one plus the activity

index with that result being subject to a maximum percentage increment.

70. In the 220 MHz Service auction the increment ranged from a

minimum of 0.10 percent to a maximum of 0.20

[[Page 54702]]

percent. The proposal for the LMS auction follows this precedent. In

addition, that increment will ensure the auction is conducted at a

reasonable pace and will result in reasonable prices for LMS spectrum.

Accordingly, the Bureau will initially set the weighting factor at 0.5,

the minimum percentage increment at 0.1, and the maximum percentage

increment at 0.2.

Equations

Ai = (C * Bi) + ((1-C) * Ai-1)

Ii = smaller of ((1 + Ai) * N) and M

Where:

Ai = activity index for the current round (round i)

C = activity weight factor

Bi = number of bids in the current round (round i)

Ai-1 = activity index from previous round (round i-1),

A0 is 0

Ii = percentage bid increment for the current round (round

i)

N = minimum percentage increment

M = maximum percentage increment

Under the exponential smoothing methodology, once a bid has been

received on a license, the minimum acceptable bid for that license in

the following round will be the new high bid plus the dollar amount

associated with the percentage increment (variable Ii from

above times the high bid). This result will be rounded to the nearest

thousand if it is over 10,000 or to the nearest hundred if it is under

10,000.

Examples

License 1

C=0.5, N = 0.1, M = 0.2

Round 1 (2 new bids, high bid = $1,000,000)

1. Calculation of percentage increment using exponential smoothing:

A1 = (0.5 * 2) + (0.5 * 0) = 1

The smaller of I1 = (1 + 1) * 0.1 = 0.2 or 0.2 (the

maximum percentage increment)

2. Minimum bid increment using the percentage increment (I1

from above)

0.2 * $1,000,000 = $200,000

3. Minimum acceptable bid for round 2 = 1,200,000

Round 2 (3 new bids, high bid = $2,000,000)

1. Calculation of percentage increment using exponential smoothing:

A2 = (0.5 * 3) + (0.5 * 1) = 2

The smaller of I2 = (1 + 2) * 0.1 = 0.3 or 0.2 (the

maximum percentage increment)

2. Minimum bid increment using the percentage increment is

(I2 from above)

0.2 * $2,000,000 = $400,000

3. Minimum acceptable bid for round 3 = $2,400,000

Round 3 (1 new bid, high bid = $2,400,000)

1. Calculation of percentage increment using exponential smoothing:

A3 = (0.5 * 1) + (0.5 * 2) = 1.5

The smaller of I3 = (1 + 1.5) * 0.1 = 0.25 or 0.2 (the

maximum percentage increment)

2. Minimum bid increment using the percentage increment (I3

from above)

0.2 * $2,400,000 = $480,000

3. Minimum acceptable bid for round 4 = $2,880,000

71. Bidding. Each bid will be date- and time-stamped when it is

entered into the FCC computer system. All bidding will take place

either through the automated bidding software or by telephonic bidding.

There will be no on-site bidding during Auction No. 21. The bidding

software requires each bidder to login to the FCC auction system during

the bidding round using the FCC account number, bidder identification

number, and the confidential security codes provided in the

registration materials.

72. High Bids. Each bid will be date- and time-stamped when it is

entered into the FCC computer system. In the event of tie bids, the

Commission will identify the high bidder on the basis of the order in

which bids are received by the Commission, starting with the earliest

bid. The bidding software allows bidders to make multiple submissions

in a round. As each bid is individually date- and time-stamped

according to when it was submitted, bids submitted by a bidder earlier

in a round will have an earlier date- and time-stamp than bids

submitted later in a round.

73. Bidding. During a bidding round, a bidder may submit bids for

as many licenses for which it is eligible, as well as withdraw high

bids from previous bidding rounds, remove bids placed in the same

bidding round, or permanently reduce eligibility. Bidders also have the

option of making multiple submissions and withdrawals in each bidding

round. If a bidder submits multiple bids for a single license in the

same round, the system takes the last bid entered as that bidder's bid

for the round, and the date- and time-stamp of that bid reflect the

latest time the bid was submitted.

74. Please note that all bidding will take place either through the

automated bidding software or by telephonic bidding. (Telephonic bid

assistants are required to use a script when handling 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, because four to five minutes are necessary to

complete a bid submission.)

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

round of the auction is determined by two factors: (1) the licenses

applied for on FCC Form 175; and (2) the upfront payment amount

deposited. The bid submission screens will be tailored for each bidder

to include only those licenses for which the bidder applied on its FCC

Form 175. A bidder also has the option to further tailor its bid

submission screens to call up specified groups of licenses.

76. The bidding software requires each bidder to login to the FCC

auction system during the bidding round using the FCC account number,

bidder identification number, and the confidential security codes

provided in the registration materials. Bidders are strongly encouraged

to download and print bid confirmations after they submit their bids.

77. The bid entry screen of the Automated Auction System software

for the LMS auction allows bidders to place multiple increment bids

which will let bidders increase high bids from one to nine bid

increments. A single bid increment is defined as the difference between

the standing high bid and the minimum acceptable bid for a license.

78. To place a bid on a license, the bidder must enter a whole

number between 1 and 9 in the bid increment multiplier (Bid Mult)

field. This value will determine the amount of the bid (Amount Bid) by

multiplying the bid increment multiplier by the bid increment and

adding the result to the high bid amount according to the following

formula:

Amount Bid = High Bid + (Bid Mult * Bid Increment)

Thus, bidders may place a bid that exceeds the standing high bid by

between one and nine times the bid increment. For example, to bid the

minimum acceptable bid, which is equal to one bid increment, a bidder

will enter ``1'' in the bid increment multiplier column and press

submit.

79. For any license on which the FCC is designated as the high

bidder (i.e., a license that has not yet received a bid in the auction

or where the high bid was withdrawn and a new bid has not yet been

placed), bidders will be limited to bidding only the minimum acceptable

bid. In both of these cases no increment exists for the licenses, and

bidders should enter ``1'' in the Bid Mult field. Note that, in these

cases, any whole number between 1 and 9 entered in the

[[Page 54703]]

multiplier column will result in a bid value at the minimum acceptable

bid amount. Finally, bidders are cautioned in entering numbers in the

Bid Mult field because, as explained in the following section, a high

bidder that withdraws its standing high bid from a previous round, even

if mistakenly or erroneously made, is subject to bid withdrawal

payments.

80. Bid Removal and Bid Withdrawal Procedures. Before the close of

a bidding round, a bidder has the option of removing any bids placed in

that round. By using the ``remove bid'' function in the software, a

bidder may 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. This procedure will enhance bidder

flexibility and may serve to expedite the course of the auction.

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

However, in the next round, a bidder may withdraw standing high bids

from previous rounds using the ``withdraw bid'' function (assuming that

the bidder has not exhausted its withdrawal allowance). A high bidder

that withdraws its standing high bid from a previous round is subject

to the bid withdrawal payments specified in 47 CFR 1.2104(g) and

1.2109. The procedure for withdrawing a bid and receiving a withdrawal

confirmation is essentially the same as the bidding procedure described

in ``High Bids'' (see paragraph 72, supra).

82. In previous auctions, the Bureau has detected bidder conduct

that, arguably, may have constituted strategic bidding through the use

of bid withdrawals. While the Bureau continues to recognize the

important role that bid withdrawals play in an auction, i.e., reducing

risk associated with efforts to secure various geographic area licenses

in combination, the Bureau concludes that, for the LMS auction,

adoption of a limit on their use to two rounds is the most appropriate

outcome. By doing so the Bureau believes it strikes a reasonable

compromise that will allow bidders to use withdrawals. The Bureau's

decision on this issue is based upon its experience in prior auctions,

particularly the PCS D, E and F block auction, 800 MHz SMR auction, and

LMDS auction, and is in no way a reflection of the Bureau's view

regarding the likelihood of any speculation or ``gaming'' in the LMS

auction.

83. The Bureau will therefore limit the number of rounds in which

bidders may place withdrawals to two rounds. These rounds will be at

the bidder's discretion and there will be no limit on the number of

bids that may be withdrawn in either of these rounds. Withdrawals will

still be subject to the bid withdrawal payments specified in 47 CFR

1.2104(g) and 1.2109. 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.

84. If a high bid is withdrawn, the license will be offered in the

next round at the second highest bid price, which may be less than, or

equal to, in the case of tie bids, the amount of the withdrawn bid,

without any bid increment. The FCC will serve as a ``place holder'' on

the license until a new acceptable bid is submitted on that license.

85. Bid Removal and Bid Withdrawal Calculation. Generally, a bidder

that withdraws a standing high bid during the course of an auction will

be subject to a payment equal to the lower of: (1) the difference

between the net withdrawn bid and the subsequent net winning bid; or

(2) the difference between the gross withdrawn bid and the subsequent

gross winning bid for that license. See 47 CFR 1.2104(g) and 1.2109. No

withdrawal payment will be assessed if the subsequent winning bid

exceeds the withdrawn bid.

86. Round Results. The bids placed during a round are not published

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

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

high bids, new minimum accepted bids, and bidder eligibility status

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

for public access.

87. Reports reflecting bidders' identities and bidder

identification numbers for Auction No. 21 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.

88. Round Results and Auction Announcements. The FCC will use

auction announcements to announce items such as schedule changes and

stage transitions. All FCC auction announcements will be available on

the FCC remote electronic bidding system, as well as the Internet and

the FCC Bulletin Board System.

89. Other Matters. As noted above, after the short-form filing

deadline, applicants may make only minor changes to their FCC Form 175

applications. For example, permissible minor changes include deletion

and addition of authorized bidders (to a maximum of three) and revision

of exhibits. Filers should make these changes on-line, and submit a

letter to Amy Zoslov, Chief, Auctions and Industry Analysis Division,

Wireless Telecommunications Bureau, Federal Communications Commission,

2025 M Street, N.W., Room 5202, Washington, D.C. 20554 (and mail a

separate copy to Kenneth Burnley, Auctions and Industry Analysis

Division), briefly summarizing the changes. Questions about other

changes should be directed to Kenneth Burnley of the FCC Auctions and

Industry Analysis Division at (202) 418-0660.

E. Post-Auction Procedures

90. Down Payments and Withdrawn Bid Payments. After bidding has

ended, the Commission will issue a public notice declaring the auction

closed, identifying the winning bids and bidders for each license, and

listing withdrawn bid payments due.

91. 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 Government to 20 percent of its net winning bids (actual bids

less any applicable bidding credits). See 47 CFR 1.2107(b). In

addition, by the same deadline all bidders must pay any withdrawn bid

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

Bid Withdrawal'' (see paragraphs 80-85, supra). (Upfront payments are

applied first to satisfy any withdrawn bid liability, before being

applied toward down payments.)

92. Long-Form Application. Within ten business days after release

of the auction closing notice, winning bidders must submit a properly

completed long-form application and required exhibits for each LMS

license won through the auction. Winning bidders that are small

businesses or very small businesses must include an exhibit

demonstrating their eligibility for bidding credits. See 47 CFR

1.2112(b). Further filing instructions will be provided to auction

winners at the close of the auction.

93. Default and Disqualification. Any high bidder that defaults or

is disqualified after the close of the auction (i.e., fails to remit

the required down payment within the prescribed period of time, fails

to submit a timely long-form application, fails to make full payment,

or is otherwise disqualified) will be subject to the payments described

in 47 CFR 1.2104(g)(2). 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

[[Page 54704]]

ineligible to bid in future auctions, and may take any other action

that it deems necessary, including institution of proceedings to revoke

any existing licenses held by the applicant. See 47 CFR 1.2109(d).

94. Refund of Remaining Upfront Payment Balance. All applicants

that submitted upfront payments but were not winning bidders for a LMS

license may be entitled to a refund of their remaining upfront payment

balance after the conclusion of the auction. No refund will be made

unless there are excess funds on deposit from that applicant after any

applicable bid withdrawal payments have been paid. Bidders that drop

out of the auction completely may be eligible for a refund of their

upfront payments before the close of the auction. However, bidders that

reduce their eligibility and remain in the auction are not eligible for

partial refunds of upfront payments until the close of the auction.

Qualified bidders that have exhausted all of their activity rule

waivers, have no remaining bidding eligibility, and have not withdrawn

a high bid during the auction must submit a written refund request

which includes wire transfer instructions, a Taxpayer Identification

Number (``TIN''), and a copy of their bidding eligibility screen print,

to: Federal Communications Commission, Billings and Collections Branch,

Attn: Regina Dorsey or Linwood Jenkins, 1919 M Street, N.W., Room 452,

Washington, D.C. 20554.

95. Bidders can also fax their request to the Billings and

Collections Branch (202) 418-2843. Once the request has been approved,

a refund will be sent to the address provided on the FCC Form 159.

Note: Refund processing generally takes up to two weeks to

complete. Bidders with questions about refunds should contact

Linwood Jenkins or Geoffrey Idika at (202) 418-1995.

Federal Communications Commission.

Amy Zoslov,

Chief, Auctions and Industry Analysis Division, Wireless

Telecommunications Bureau.

[FR Doc. 98-27384 Filed 10-9-98; 8:45 am]

BILLING CODE 6712-01-P