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Auction 97 (AWS-3) Procedures, Deadlines, Filing Requirements

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Released: July 23, 2014
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PUBLIC NOTICE

Federal Communications Commission

445 12th St., S.W.

Washington, D.C. 20554

News Media Information 202 / 418-0500

Internet: http://www.fcc.gov

TTY: 1-888-835-5322

DA 14-1018

July 23, 2014

AUCTION OF ADVANCED WIRELESS SERVICES (AWS-3) LICENSES

SCHEDULED FOR NOVEMBER 13, 2014

NOTICE AND FILING REQUIREMENTS, RESERVE PRICES, MINIMUM OPENING BIDS,

UPFRONT PAYMENTS, AND OTHER PROCEDURES FOR AUCTION 97

AU DOCKET NO. 14-78

TABLE OF CONTENTS

Heading

Paragraph #

I. GENERAL INFORMATION ................................................................................................................ 1

A. Introduction...................................................................................................................................... 1

B. Description of Licenses to be Offered in Auction 97 ...................................................................... 6

C. Rules and Disclaimers...................................................................................................................... 9

1. Relevant Authority .................................................................................................................... 9

2. Prohibited Communications and Compliance with Antitrust Laws ........................................ 11

a. Entities Subject to Section 1.2105 .................................................................................... 12

b. Prohibition Applies Until Down Payment Deadline......................................................... 18

c. Prohibited Communications ............................................................................................. 19

d. Disclosure of Bidding Agreements and Arrangements..................................................... 23

e. Section 1.2105(c) Certification......................................................................................... 26

f. Duty to Report Prohibited Communications..................................................................... 27

g. Procedure for Reporting Prohibited Communications...................................................... 30

h. Winning Bidders Must Disclose Terms of Agreements ................................................... 33

i. Additional Information Concerning Rule Prohibiting Certain Communications ............. 34

j. Antitrust Laws................................................................................................................... 35

3. Incumbency Issues .................................................................................................................. 37

4. Commercial Spectrum Enhancement Act/Spectrum Act Requirements ................................. 39

5. International Coordination ...................................................................................................... 42

6. Quiet Zones ............................................................................................................................. 43

7. Spectrum Screen for Competitive Review of Secondary Market Transactions ...................... 44

8. Due Diligence.......................................................................................................................... 46

9. Use of Integrated Spectrum Auction System .......................................................................... 52

10. Fraud Alert .............................................................................................................................. 53

11. Environmental Review Requirements..................................................................................... 55

D. Auction Specifics........................................................................................................................... 56

1. Auction Start Date................................................................................................................... 56

2. Auction Title............................................................................................................................ 58

3. Bidding Methodology.............................................................................................................. 59

4. Pre-Auction Dates and Deadlines............................................................................................ 60

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DA 14-1018

5. Requirements for Participation................................................................................................ 62

II. SHORT-FORM APPLICATION (FCC FORM 175) REQUIREMENTS........................................... 63

A. General Information Regarding Short-Form Applications ............................................................ 63

B. License Selection ........................................................................................................................... 68

C. Disclosure of Bidding Arrangements............................................................................................. 69

D. Ownership Disclosure Requirements............................................................................................. 72

E. Foreign Ownership Disclosure Requirements ............................................................................... 74

F. National Security Certification Requirement for Auction 97 Applicants...................................... 75

G. Acknowledgement Statement for Auction 97 Applicants.............................................................. 76

H. Designated Entity Provisions......................................................................................................... 79

1. Bidding Credits for Small Businesses..................................................................................... 80

a. Bidding Credit Eligibility Criteria .................................................................................... 81

b. Revenue Disclosure on Short-Form Application.............................................................. 84

2. Attributable Interests ............................................................................................................... 85

a. Controlling Interests ......................................................................................................... 85

b. Affiliates ........................................................................................................................... 87

c. Material Relationships ...................................................................................................... 88

d. Gross Revenue Exceptions ............................................................................................... 90

e. Bidding Consortia............................................................................................................. 92

3. Installment Payments .............................................................................................................. 93

I. Tribal Lands Bidding Credit .......................................................................................................... 94

J. Provisions Regarding Former and Current Defaulters................................................................... 95

K. Optional Applicant Status Identification...................................................................................... 102

L. Minor Modifications to Short-Form Applications....................................................................... 103

M. Maintaining Current Information in Short-Form Applications.................................................... 109

III. PRE-AUCTION PROCEDURES ...................................................................................................... 110

A. Online Auction Tutorial – Available August 28, 2014................................................................ 110

B. Short-Form Applications – Due Prior to 6:00 p.m. ET on September 12, 2014.......................... 114

C. Application Processing and Minor Corrections........................................................................... 117

D. Upfront Payments – Due October 15, 2014................................................................................. 120

1. Making Upfront Payments by Wire Transfer........................................................................ 121

2. FCC Form 159....................................................................................................................... 125

3. Upfront Payments and Bidding Eligibility............................................................................ 126

E. Applicant’s Wire Transfer Information for Purposes of Refunds of Upfront Payments ............. 133

F. Auction Registration.................................................................................................................... 134

G. Remote Electronic Bidding.......................................................................................................... 138

H. Mock Auction – November 10, 2014 .......................................................................................... 140

IV. AUCTION.......................................................................................................................................... 142

A. Auction Structure......................................................................................................................... 143

1. Simultaneous Multiple Round Auction................................................................................. 143

2.

Single Auction with a Single Set of Procedures and Requirements for the Unpaired

and Paired Bands................................................................................................................... 146

3.

Limited Information Disclosure Procedures: Information Available to Bidders Before

and During the Auction ......................................................................................................... 149

4. Eligibility and Activity Rules................................................................................................ 158

5. Auction Stages....................................................................................................................... 161

6. Stage Transitions................................................................................................................... 166

7. Activity Rule Waivers........................................................................................................... 168

8. Auction Stopping Rules......................................................................................................... 172

9. Auction Delay, Suspension, or Cancellation......................................................................... 179

B. Bidding Procedures...................................................................................................................... 181

1. Round Structure..................................................................................................................... 181

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DA 14-1018

2. Reserve Price and Minimum Opening Bids .......................................................................... 183

a. Reserve Price .................................................................................................................. 184

b. Minimum Opening Bids ................................................................................................. 193

3. Bid Amounts ......................................................................................................................... 198

a. Minimum Acceptable Bids ............................................................................................. 199

b. Additional Bid Amounts................................................................................................. 202

c. Bid Amount Changes...................................................................................................... 204

4. Provisionally Winning Bids .................................................................................................. 206

5. Bidding.................................................................................................................................. 208

6. Bid Removal and Bid Withdrawal ........................................................................................ 215

a. Bid Removal ................................................................................................................... 217

b. Bid Withdrawal............................................................................................................... 218

c. Calculation of Bid Withdrawal Payment ........................................................................ 220

7. Round Results........................................................................................................................ 223

8. Auction Announcements ....................................................................................................... 226

V. POST-AUCTION PROCEDURES.................................................................................................... 227

A. Down Payments ........................................................................................................................... 228

B. Final Payments............................................................................................................................. 229

C. Long-Form Application (FCC Form 601) ................................................................................... 230

D. Ownership Disclosure Information Report (FCC Form 602) ...................................................... 233

E. Tribal Lands Bidding Credit ........................................................................................................ 236

F. Default and Disqualification........................................................................................................ 239

G. Refund of Remaining Upfront Payment Balance ........................................................................ 242

VI. CONTACT INFORMATION ............................................................................................................ 244

Attachment A: Licenses to Be Auctioned

Attachment B: Minimum Acceptable Bid Formula

Attachment C: List of Parties

Attachment D: Short-Form Application Filing Instructions

Attachment E: Auction-Specific Instructions for FCC Remittance Advice (FCC Form 159)

Attachment F: Summary Listing of Judicial, Commission and Bureau Documents Addressing Application

of the Rule Prohibiting Certain Communications, 47 C.F.R. § 1.2105(c)

Attachment G: Acknowledgement Statement for Auction 97 Applicants

I.

GENERAL INFORMATION

A.

Introduction

1.

By this Public Notice, the Wireless Telecommunications Bureau (“Bureau”) establishes

the procedures, reserve prices, and minimum opening bid amounts for the upcoming auction of 1,614

Advanced Wireless Services licenses in the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz

bands (collectively, the “AWS-3” bands).1 This auction, which is designated as Auction 97, is scheduled

to start on November 13, 2014. This Public Notice provides an overview of the procedures, terms, and

conditions governing Auction 97 and the post-auction application and payment processes.

2.

The Federal Communications Commission (“Commission” or “FCC”) is offering the

licenses in Auction 97 pursuant to the Middle Class Tax Relief and Job Creation Act of 2012 (“Spectrum

1 Amendment of the Commission’s Rules with Regard to Commercial Operations in the 1695-1710 MHz, 1755-1780

MHz, and 2155-2180 MHz Bands, GN Docket No. 13-185, Report and Order, 29 FCC Rcd 4610 (2014) (recon.

pending) (“AWS-3 Report and Order”). A summary of the AWS-3 Report and Order was published at 79 Fed. Reg.

32366 (Jun. 4, 2014). All references to the Part 2 and 27 rules adopted by the Commission in the AWS-3 Report and

Order and cited herein will become effective on the dates announced in the Federal Register Notice summary of the

AWS-3 Report and Order.

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DA 14-1018

Act”).2 The Spectrum Act requires, among other things, that the Commission allocate for commercial use

and license spectrum in certain specified frequency bands using a system of competitive bidding no later

than February 2015.3 In February 2013, the National Telecommunications and Information

Administration (“NTIA”) identified the 1695-1710 MHz band for reallocation from Federal use to non-

Federal use in satisfaction of its Spectrum Act obligation.4 In the AWS-3 Report and Order, the

Commission identified the 1755-1780 MHz band in satisfaction of the Spectrum Act’s requirement that it

identify fifteen megahertz of contiguous spectrum in addition to the bands specifically identified in the

Spectrum Act.5

3.

On May 19, 2014, in accordance with section 309(j)(3) of the Communications Act of

1934, as amended,6 the Bureau released a public notice seeking comment on competitive bidding

procedures to be used in Auction 97.7 Ten comments, eight reply comments, ten ex parte filings, and four

brief comments were submitted in response to the Auction 97 Comment Public Notice.8

4.

Based on the record and after considering comments provided in response to the Auction

97 Comment Public Notice, this Public Notice, establishes procedures for, among other things:

Using the Commission’s standard simultaneous multiple-round (“SMR”) auction format in a

single auction event subject to uniform bidding procedures for the unpaired 1695-1710 MHz

band and the paired 1755-1780 MHz/2155-2180 MHz bands, except that bidding will close

on a band after five consecutive rounds in which no bidding activity occurs on licenses in that

band provided that the reserve for that band has been met;

Filing short-form applications to participate in Auction 97 during a ten-business day window

that closes on September 12, 2014;

Limited information disclosure, to enhance competition by safeguarding against potential

anti-competitive auction strategies;

2 See Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. No. 112-96, 126 Stat. 156 (2012) (“Spectrum

Act”), codified at 47 U.S.C. § 1401 et seq.

3 See 47 U.S.C. § 1451(b)(1), (2); see also 47 U.S.C. § 309(j). The specified frequency bands are: 1915-1920 MHz,

1995-2000 MHz, 2155-2180 MHz, the fifteen megahertz of spectrum between 1675 and 1710 MHz to be identified

by the National Telecommunications and Information Administration (“NTIA”) pursuant to 47 U.S.C. § 1451(a)(3),

and the fifteen megahertz of contiguous spectrum to be identified by the Commission pursuant to 47 U.S.C. §

1451(b)(2)(E). The Commission completed its auction of the spectrum in the 1915-1920 MHz and 1995-2000 MHz

bands on February 27, 2014. See Auction of H Block Licenses in the 1915-1920 MHz and 1995-2000 MHz Bands

Closes; Winning Bidder Announced for Auction 96, AU Docket No. 13-178, Public Notice, DA 14-279, 29 FCC

Rcd 2044 (2014).

4 See Identification of 15 Megahertz of Spectrum Between 1675 and 1710 MHz for Reallocation from Federal Use to

Non-Federal Use Pursuant to the Middle Class Tax Relief and Job Creation Act of 2012, Report to the President,

U.S. Department of Commerce (February 2013).

5 See AWS-3 Report and Order, 29 FCC Rcd at 4627, 4629 ¶¶ 33, 37.

6 47 U.S.C. § 309(j)(3)(E)(i) (requirement to seek comment on proposed auction procedures); see also 47 U.S.C.

§ 309(j)(4)(F) (authorization to prescribe reserve price or minimum bid); see 47 C.F.R. §§ 1.2104(c) and (d).

7 Auction of Advanced Wireless Services Licenses Scheduled For November 13, 2014; Comment Sought on

Competitive Bidding Procedures For Auction 97, AU Docket No. 14-78, Public Notice, DA 14-669, 29 FCC Rcd

5217 (2014) (“Auction 97 Comment Public Notice”). A summary of this public notice was published at 79 Fed.

Reg. 31327 (Jun. 2, 2014).

8 A listing of the parties that filed comments, reply comments, and ex parte notices can be found in Attachment C.

In addition, one erratum and one addendum were filed. Commenters are identified in this Public Notice by the

abbreviated names shown in Attachment C.

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DA 14-1018

Submission of a statement by each applicant for any license in the 1755-1780 MHz band

acknowledging that it has considered and accepts the risks of potential interference from

Federal systems to its planned operations in certain geographic zones;

An aggregate reserve price for the 1695-1710 MHz license of approximately $580 million

and a separate aggregate reserve price for the paired 1755-1780 MHz/2155-2180 MHz

licenses of approximately $10.07 billion;

Minimum opening bids for each license using a calculation based on $0.15 per MHz-pop for

paired licenses and $0.05 per MHz-pop for unpaired licenses with a revision to our method

for incorporating price information from past auctions;

Minimum acceptable bid amounts based on an activity-based formula under which bids in

subsequent rounds may be between 10-20% higher than the provisionally winning bid;

Filing long-form applications in accordance with the schedule specified in the Commission’s

rules, but establishing a deadline for down payments and final payments from winning

bidders that will occur no earlier than January 2015.

5.

In addition, this Public Notice concludes that any requests for temporary, limited relief

from the “former defaulter” rule are beyond the scope of this proceeding and notes that such requests are

being addressed separately.

B.

Description of Licenses to be Offered in Auction 97

6.

The 65 megahertz of AWS-3 spectrum available in Auction 97 will be licensed on a

geographic area basis. Of the 1,614 licenses offered in Auction 97, 880 will be Economic Area (“EA”)

licenses and 734 will be Cellular Market Area (“CMA”) licenses.9 The AWS-3 frequencies will be

licensed in five and ten megahertz blocks, with each license having a total bandwidth of five, ten, or

twenty megahertz.10

7.

The 1695-1710 MHz band will be licensed in an unpaired configuration for low-power

mobile transmit (i.e., uplink) operations.11 The 1755-1780 MHz band will be licensed paired with the

2155-2180 MHz band, with the 1755-1780 MHz band authorized for low-power mobile transmit (i.e.,

uplink) operations and the 2155-2180 MHz band authorized for base station and fixed (i.e., downlink)

operations.12

8.

Figure 1 shows the band plan for the 1695-1710 MHz band. Figure 2 shows the band

plans for the 1755-1780 MHz and 2155-2180 MHz bands. Table 1 contains summary information

9 In the AWS-3 Report and Order, the Commission concluded that all licenses in the 1695-1710 MHz band, and

most licenses in the 1755-1780 MHz and 2155-2180 MHz bands, should be awarded on an EA basis in all areas,

including the Gulf of Mexico, and that all licenses in the 1755-1760 MHz and 2155-2160 MHz bands should be

awarded on a CMA basis in all areas. See AWS-3 Report and Order, 29 FCC Rcd at 4612, 4621, 4632, 4633-34 ¶¶

2, 20, 48, 51. There are a total of 176 EAs and 734 CMAs. Spectrum Financial Partners recommends auctioning all

of the AWS-3 spectrum blocks available in Auction 97 on a CMA-basis. Spectrum Financial Partners Comments at

2. The requirement that all AWS-3 spectrum blocks except the G Block be licensed on an EA-basis was adopted by

the Commission as a rule in the AWS-3 Report and Order. A Commission rule cannot be amended in the context of

this proceeding establishing the procedures for Auction 97 because such action is outside of the scope of the

Bureau’s delegated authority. See 47 C.F.R. § 0.131.

10 See AWS-3 Report and Order, 29 FCC Rcd at 4633-34 ¶¶ 51-52.

11 See id. at 4612, 4620-21, 4625 ¶¶ 2, 19, 29.

12 See id. at 4612, 4630-32 ¶¶ 2, 41, 43-45. Higher-power fixed and base station operations are also prohibited in the

1755-1780 MHz band. See id. at 4630 ¶ 43.

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DA 14-1018

regarding the AWS-3 licenses available in Auction 97. A complete list of the licenses offered in Auction

97 is available in Attachment A to this Public Notice.

Figure 1: 1695-1710 MHz Band Plan

Figure 2: 1755-1780 and 2155-2180 MHz Band Plans

1755

1760

1765

1770

1780

AWS-3

AWS-3

H

EA

AWS-3

AWS-3

AWS-1

G

I

J

Federal

CMA

EA

EA

Mobile Transmit/Base Receive

2155

2160

2165

2170

2180

AWS-3

G

CMA

AWS-3

H

EA

AWS-3

I

EA

AWS-3

J

EA

AWS-1

AWS-4/MSS

Base Transmit/Mobile Receive

Table 1: AWS - 3 License Summary

Block

Frequencies (MHz)

Total

Pairing

Geographic

Number of

Bandwidth

Area Type

Licenses

A1

1695-1700 MHz

5 MHz

unpaired

EA

176

B1

1700-1710 MHz

10 MHz

unpaired

EA

176

G

1755-1760/2155-2160 MHz

10 MHz

2 x 5 MHz

CMA

734

H

1760-1765/2160-2165 MHz

10 MHz

2 x 5 MHz

EA

176

I

1765-1770/2165-2170 MHz

10 MHz

2 x 5 MHz

EA

176

J

1770-1780/2170-2180 MHz

20 MHz

2 x 10 MHz

EA

176

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C.

Rules and Disclaimers

1.

Relevant Authority

9.

Prospective applicants must familiarize themselves thoroughly with the Commission’s

general competitive bidding rules,13 including Commission decisions in proceedings regarding

competitive bidding procedures, application requirements, and obligations of Commission licensees.14

Prospective bidders should also familiarize themselves with the Commission’s rules relating to the AWS-

3 frequencies,15 including incumbency issues for AWS-3 licensees,16 Federal and non-Federal relocation

and sharing and cost sharing obligations,17 protection of Federal and non-Federal incumbent operations,18

and rules relating to applications, environment, practice and procedure.19 All bidders must also be

thoroughly familiar with the procedures, terms and conditions contained in this Public Notice and any

future public notices that may be issued in this proceeding.

10.

The terms contained in the Commission’s rules, relevant orders, and public notices are

not negotiable. The Commission may amend or supplement the information contained in its public

notices at any time, and will issue public notices to convey any new or supplemental information to

applicants. It is the responsibility of all applicants to remain current with all Commission rules and with

all public notices pertaining to this auction. Copies of most auctions-related Commission documents,

including public notices, can be retrieved from the FCC Auctions Internet site at

http://wireless.fcc.gov/auctions. Additionally, documents are available for public inspection and copying

between 8:00 a.m. and 4:30 p.m. Eastern Time (ET) Monday through Thursday or 8:00 a.m. to 11:30 a.m.

ET Fridays at the FCC Reference Information Center, 445 12th Street, SW, Room CY-A257,

Washington, DC 20554. Documents may also be purchased from BCPI, the Commission’s duplicating

contractor.20

2.

Prohibited Communications and Compliance with Antitrust Laws

11.

To ensure the competitiveness of the auction process, section 1.2105(c) of the

Commission’s rules prohibits auction applicants for licenses in any of the same or overlapping geographic

license areas from communicating with each other about bids, bidding strategies, or settlements unless

13 See 47 C.F.R. Part 1, Subpart Q.

14 See, e.g., Amendment of Part 1 of the Commission's Rules – Competitive Bidding Procedures, WT Docket No.

97-82, Order on Reconsideration of the Third Report and Order, Fifth Report and Order, and Fourth Further

Notice of Proposed Rule Making, FCC 00-274, 15 FCC Rcd 15293 (2000) (“Part 1 Fifth Report and Order”)

(modified by Erratum, DA 00-2475 (rel. Nov. 3, 2000)); Seventh Report and Order, FCC 01-270, 16 FCC Rcd

17546 (2001) (“Part 1 Seventh Report and Order”); Eighth Report and Order, FCC 02-34, 17 FCC Rcd 2962

(2002); Second Order on Reconsideration of the Third Report and Order and Order on Reconsideration of the Fifth

Report and Order, FCC 03-98, 18 FCC Rcd 10180 (2003); Second Order on Reconsideration of the Fifth Report

and Order, FCC 04-295, 20 FCC Rcd 1942 (2005).

15 See 47 C.F.R. Part 27.

16 See Section I.C.3. “Incumbency Issues,” below.

17 See Section I.C.3. “Incumbency Issues” and Section I.C.4 “Commercial Spectrum Enhancement Act/Spectrum

Act Requirements,” below; 47 C.F.R. §§ 27.1160-1190, 27.1250-1255, 101.69-82.

18 See 47 C.F.R. §§ 27.1131, 27.1132, 27.1134; The Federal Communications Commission and the National

Telecommunications and Information Administration: Coordination Procedures in the 1695-1710 MHz and 1755-

1780 MHz Bands, Public Notice, GN Docket No. 13-185, DA 14-1023 (rel. Jul. 18, 2014) (“FCC/NTIA

Coordination Procedures Public Notice”).

19 See 47 C.F.R. Part 1, Subpart I.

20 When ordering documents from BCPI, please provide the appropriate FCC document number (for example, FCC

14-31 for the AWS-3 Report and Order, or DA 14-669 for the Auction 97 Comment Public Notice).

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such applicants have identified each other on their short-form applications (FCC Form 175) as parties

with whom they have entered into agreements pursuant to section 1.2105(a)(2)(viii).21

a.

Entities Subject to Section 1.2105

12.

Section 1.2105(c)’s prohibition on certain communications will apply to any applicants

that submit short-form applications seeking to participate in a Commission auction for licenses in the

same or overlapping geographic license area. Thus, unless they have identified each other on their short-

form applications as parties with whom they have entered into agreements under section

1.2105(a)(2)(viii), applicants for any of the same or overlapping geographic license areas must

affirmatively avoid all communications with or disclosures to each other that affect or have the potential

to affect bids or bidding strategy.22 In some instances, this prohibition extends to communications

regarding the post-auction market structure. This prohibition applies to all applicants that submit

short-form applications regardless of whether such applicants ultimately become qualified bidders

or actually bid.23

13.

Applicants are also reminded that, for purposes of this prohibition on certain

communications, section 1.2105(c)(7)(i) defines “applicant” as including all officers and directors of the

entity submitting a short-form application to participate in the auction, all controlling interests of that

entity, as well as all holders of partnership and other ownership interests and any stock interest amounting

to 10 percent or more of the entity, or outstanding stock, or outstanding voting stock of the entity

submitting a short-form application.24 For example, where an individual served as an officer for two or

more applicants, the Bureau has found that the bids and bidding strategies of one applicant are conveyed

to the other applicant, and, absent a disclosed bidding agreement, an apparent violation of section

1.2105(c) occurs.25

14.

As described in Section IV.A.2., below, information concerning applicants’ license

selections will not be available to the public. Therefore, the Commission will inform each applicant by

letter of the identity of each of the other applicants that has applied for licenses covering any of the same

or overlapping geographic areas as the licenses that it has selected in its short-form application.26

21 See 47 C.F.R. §§ 1.2105(a)(2)(viii), 1.2105(c)(1); see also Part 1 Seventh Report and Order, 16 FCC Rcd at

17546.

22 See, e.g., Wireless Telecommunications Bureau Provides Guidance on the Anti-Collusion Rule for D, E and F

Block Bidders, Public Notice, DA 96-1460, 11 FCC Rcd 10134 (1996).

23 See, e.g., Star Wireless, LLC, Forfeiture Order, DA 04-3026, 19 FCC Rcd 18626, 18628 ¶ 4 & n.19 (EB 2004),

order granted in part sub nom, Star Wireless, LLC and Northeast Communications of Wisconsin, Inc., Order on

Review, FCC 07-80, 22 FCC Rcd 8943 (2007)(“Star and Northeast Review Order”), petition for review denied, Star

Wireless, LLC v. FCC, 522 F.3d 469 (D.C. Cir. 2008) (section 1.2105(c) applies to applicants regardless of whether

they are qualified to bid); Letter to Robert Pettit, from Margaret W. Wiener, Chief, Auctions and Industry Analysis

Division, DA 00-2905, 16 FCC Rcd 10080 (WTB 2000) (declining to exempt an applicant’s controlling interest

from coverage by the communication prohibitions of section 1.2105(c), even though the applicant never made an

upfront payment for the auction and was not listed as a qualified bidder).

24 47 C.F.R. § 1.2105(c)(7)(i).

25 See, e.g., Letter to Colby M. May, TCCSA, Inc., d/b/a Trinity Broadcasting Network, from Barbara A. Kreisman,

Chief, Video Division, Media Bureau, and Margaret W. Wiener, Chief, Auctions and Spectrum Access Division,

Wireless Telecommunications Bureau, DA 05-2445, 20 FCC Rcd 14648 (WTB/MB 2005) (“Trinity”) (finding

apparent violation of communication prohibitions of section 1.2105(c) where applicants with mutually exclusive

applications reported sharing same individual as an officer and director and reported having no bidding agreement).

26 Section IV.A.3. “Limited Information Disclosure Procedures: Information Available to Bidders Before and

During the Auction,” below.

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15.

Individuals and entities subject to section 1.2105(c) should take special care in

circumstances where their employees may receive information directly or indirectly relating to any

competing applicant’s bids or bidding strategies. The Bureau has not addressed a situation where non-

principals (i.e., those who are not officers or directors, and thus not considered to be the applicant) receive

information regarding a competing applicant’s bids or bidding strategies and whether that information

should be presumed to be communicated to the applicant.

16.

An exception to the prohibition on certain communications allows non-controlling

interest holders to obtain interests in more than one competing applicant without violating section

1.2105(c) provided specified conditions are met (including a certification that no prohibited

communications have occurred or will occur), but that exception does not extend to controlling interest

holders.27

17.

Moreover, Auction 97 applicants selecting licenses for any of the same or overlapping

geographic license areas are encouraged not to use the same individual as an authorized bidder. A

violation of section 1.2105(c) 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 such applicants. Similarly, if the authorized bidders are different individuals employed by the

same organization (e.g., law firm, engineering firm or consulting firm), a violation likewise could occur.28

In such a case, at a minimum, applicants should certify on their applications that precautionary steps have

been taken to prevent communication between authorized bidders, and that the applicant and its bidders

will comply with section 1.2105(c).29

b.

Prohibition Applies Until Down Payment Deadline

18.

Section 1.2105(c)’s prohibition on certain communications begins at the short-form

application filing deadline and ends at the down payment deadline after the auction closes, which will be

announced in a future public notice.30

c.

Prohibited Communications

19.

Applicants must not communicate directly or indirectly about bids or bidding strategy to

other applicants in this auction (as described above).31 Section 1.2105(c) prohibits not only

communication about an applicant’s own bids or bidding strategy, it also prohibits communication of

another applicant’s bids or bidding strategy.32 While section 1.2105(c) does not prohibit non-auction-

related business negotiations among auction applicants, each applicant must remain vigilant so as not to

27 47 C.F.R. § 1.2105(c)(4). Specifically, the Commission’s rules permit a party holding a non-controlling,

attributable interest in one applicant to acquire an ownership interest in or enter into a joint bidding arrangement

with other applicants after the short-form application filing deadline, provided that: (i) the attributable interest holder

certifies that it has not and will not communicate with any party concerning the bids or bidding strategies of more

than one of the applicants in which it holds an attributable interest, or with which it has entered into a joint bidding

arrangement; and (ii) the arrangements do not result in a change in control of any of the applicants. 47 C.F.R.

§§1.2105(c)(4)(i), (ii).

28 See Application of Nevada Wireless, Memorandum Opinion and Order, DA 98-1137, 13 FCC Rcd 11973, 11977-

78 ¶¶ 11-12 (1998) (“Nevada Wireless Order”).

29 Id.

30 47 C.F.R. § 1.2105(c)(1).

31 Part 1 Seventh Report and Order, 16 FCC Rcd at 17553-54 ¶ 12. For a discussion of the term “applicant” within

the meaning of section 1.2105(c), see Section I.C.2.a. above.

32 See Notice of Apparent [L]iability for Forfeiture of Western PCS BTA 1 Corp., Memorandum Opinion and

Order, FCC 99-385, 14 FCC Rcd 21571, 21574 ¶ 8 (1999).

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directly or indirectly communicate information that affects, or could affect, bids, bidding strategy, or the

negotiation of settlement agreements.33

20.

Applicants are cautioned that the Commission remains vigilant about prohibited

communications taking place in other situations. For example, the Commission has warned that

prohibited “communications concerning bids and bidding strategies may include communications

regarding capital calls or requests for additional funds in support of bids or bidding strategies to the extent

such communications convey information concerning the bids and bidding strategies directly or

indirectly.”34 Moreover, the Commission has found a violation of section 1.2105(c) where an applicant

used the Commission’s bidding system to disclose “its bidding strategy in a manner that explicitly invited

other auction participants to cooperate and collaborate in specific markets,”35 and has placed auction

participants on notice that the use of its bidding system “to disclose market information to competitors

will not be tolerated and will subject bidders to sanctions.”36 Applicants also should use caution in their

dealings with other parties, such as members of the press, financial analysts, or others who might become

conduits for the communication of prohibited bidding information. For example, where limited

information disclosure procedures are in place, as is the case for Auction 97, an applicant’s statement to

the press that it has lost bidding eligibility and intends to stop bidding in the auction could give rise to a

finding of a section 1.2105(c) violation.37 Similarly, an applicant’s public statement of intent not to

participate in Auction 97 bidding could also violate the rule.

21.

Applicants are also hereby placed on notice that public disclosure of information relating

to bidder interests and bidder identities that has not yet been made public by the Commission at the time

of disclosure may violate the provisions of section 1.2105(c) that prohibit certain communications.38 This

is so even though similar types of information were revealed prior to and during other Commission

auctions subject to different information procedures.

22.

In addition, when completing short-form applications, each applicant should avoid any

statements or disclosures that may violate section 1.2105(c), particularly in light of the limited

information procedures in effect for Auction 97.39 Specifically, an applicant should avoid including any

information in its short-form applications that might convey information regarding its license selection,

33 In discussing ways to improve the auction procedures, AT&T states that section 1.2105(c)’s prohibiting

“unnecessarily chill[s] secondary market activity and serves as a disincentive to auction participation without adding

to the deterrent effect against collusion that the antitrust laws’ remedies – criminal and treble damages – provide.”

AT&T Comments at 4. AT&T makes no specific request or proposal with respect to the rule, however, even if it

had, the Commission’s rules cannot be amended in the context of this proceeding establishing the procedures for

Auction 97 because such action is outside the scope of the Bureau’s delegated authority. See 47 C.F.R. § 0.131.

34 Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-253,

Memorandum Opinion and Order, FCC 94-295, 9 FCC Rcd 7684, 7689 ¶ 12 (1994) (“Competitive Bidding

Memorandum Opinion and Order”).

35 Mercury PCS II, LLC, Notice of Apparent Liability for Forfeiture, FCC 97-388, 12 FCC Rcd 17970, 17974 ¶ 12,

17976 ¶ 17 (1997).

36 Mercury PCS II, LLC, Memorandum Opinion and Order, FCC 98-203, 13 FCC Rcd 23755, 23760 ¶ 11 (1998).

37 Compare LMDS Auction Guidance Public Notice, 13 FCC Rcd at 347-48 (“Public statements can give rise to

collusion concerns. This has occurred in the antitrust context, where certain public statements can support other

evidence which tends to indicate the existence of a conspiracy.”)

38 Thus, communication by an applicant of its license selections to another applicant for one or more of the same

licenses, or communication of the fact that an applicant does or does not hold provisionally winning bids on

particular licenses, may well violate 47 C.F.R. § 1.2105(c).

39 See Section IV.A.3. “Limited Information Disclosure Procedures: Information Available to Bidders Before and

During the Auction,” below.

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such as using applicant names that refer to licenses being offered, referring to certain licenses or markets

in describing bidding agreements, or including any information in attachments that may otherwise

disclose the applicant’s license selections. Likewise, an Auction 97 applicant must not disclose to others

whether it has filed the acknowledgement concerning interference obligations that is required of each

applicant that seeks to bid on any license in the 1755-1780 MHz band, as that information would reveal

information regarding its license selection.40

d.

Disclosure of Bidding Agreements and Arrangements

23.

The Commission’s rules do not prohibit applicants from entering into otherwise lawful

bidding agreements before filing their short-form applications, as long as they disclose the existence of

the agreement(s) in their short-form applications.41

Applicants must identify in their short-form

applications all parties with whom they have entered into any agreements, arrangements, or

understandings of any kind relating to the licenses being auctioned, including any agreements relating to

post-auction market structure.42

24.

If parties agree in principle on all material terms prior to the short-form application filing

deadline, each party to the agreement must identify the other party or parties to the agreement on its short-

form application under section 1.2105(c), even if the agreement has not been reduced to writing. If the

parties have not agreed in principle by the short-form filing deadline, they should not include the names

of parties to discussions on their applications, and they may not continue negotiation, discussion or

communication with any other applicants after the short-form application filing deadline.43

25.

Section 1.2105(c) does not prohibit non-auction-related business negotiations among

auction applicants.44

However, certain discussions or exchanges could touch upon impermissible subject

matters because they may convey pricing information and bidding strategies. Such subject areas include,

but are not limited to, issues such as management, sales, local marketing agreements, and other

transactional agreements.45

e.

Section 1.2105(c) Certification

26.

By electronically submitting a short-form application, each applicant in Auction 97

certifies its compliance with section 1.2105(c). In particular, an applicant must certify under penalty of

perjury it has not entered and will not enter into any explicit or implicit agreements, arrangements or

understandings of any kind with any parties, other than those identified in the application, regarding the

amount of the applicant’s bids, bidding strategies, or the particular licenses on which it will or will not

bid.46 However, the Bureau cautions that merely filing a certifying statement as part of an application will

not outweigh specific evidence that a prohibited communication has occurred, nor will it preclude the

40 See Section II.G., “Acknowledgement Statement for Auction 97 Applicants,” below. The Bureau intends to

withhold from public disclosure all information concerning the existence of such applicant statements until after the

close of the auction.

41 47 C.F.R. § 1.2105(c)(1).

42 47 C.F.R. §§ 1.2105(a)(2)(viii), (c)(1).

43 See Wireless Telecommunications Bureau Clarifies Spectrum Auction Anti-Collusion Rules, Public Notice, DA

95-2244, 11 FCC Rcd 9645, 9646 (WTB 1995) (“Anti-Collusion Public Notice”).

44 See, e.g., Todd Stuart Noordyk, Memorandum Opinion and Order, FCC 01-275, 16 FCC Rcd 18113, 18116-17 ¶

12 (2001).

45 See Amendment of Part 1 of the Commission's Rules – Competitive Bidding Procedures, WT Docket No. 97-82,

Third Report and Order and Second Further Notice of Proposed Rule Making, FCC 97-413, 13 FCC Rcd 374, 467-

68 ¶ 163 (1997) (“Part 1 Third Report and Order”).

46 47 C.F.R. § 1.2105(a)(2)(ix).

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initiation of an investigation when warranted.47 The Commission has stated that it “intend[s] to scrutinize

carefully any instances in which bidding patterns suggest that collusion may be occurring.”48 Any

applicant found to have violated section 1.2105(c) may be subject to sanctions.49

f.

Duty to Report Prohibited Communications

27.

Section 1.2105(c)(6) provides that any applicant that makes or receives a communication

that appears to violate section 1.2105(c) must report such communication in writing to the Commission

immediately, and in no case later than five business days after the communication occurs.50 The

Commission has clarified that each applicant’s obligation to report any such communication continues

beyond the five-day period after the communication is made, even if the report is not made within the

five-day period.51

28.

In addition, section 1.65 of the Commission’s rules requires an applicant to maintain the

accuracy and completeness of information furnished in its pending application and to notify the

Commission of any substantial change that may be of decisional significance to that application.52 Thus,

section 1.65 requires an auction applicant to notify the Commission of any substantial change to the

information or certifications included in its pending short-form application. An applicant is therefore

required by section 1.65 to report to the Commission any communication the applicant has made to or

received from another applicant after the short-form application filing deadline that affects or has the

potential to affect bids or bidding strategy, unless such communication is made to or received from a

party to an agreement identified under section 1.2105(a)(2)(viii).53

29.

Sections 1.65(a) and 1.2105(c) require each applicant in competitive bidding proceedings

to furnish additional or corrected information within five days of a significant occurrence, or to amend its

short-form application no more than five days after the applicant becomes aware of the need for

amendment.54 These rules are intended to facilitate the auction process by making the information

available promptly to all participants and to enable the Bureau to act expeditiously on those changes when

such action is necessary.55

g.

Procedure for Reporting Prohibited Communications

30.

A party reporting any communication pursuant to sections 1.65, 1.2105(a)(2), or

1.2105(c)(6) must take care to ensure that any report of a prohibited communication does not itself give

rise to a violation of section 1.2105(c). For example, a party’s report of a prohibited communication

could violate the rule by communicating prohibited information to other applicants through the use of

Commission filing procedures that would allow such materials to be made available for public inspection.

31.

Section 1.2105(c) requires parties to file only a single report concerning a prohibited

communication and to file that report with Commission personnel expressly charged with administering

47 Nevada Wireless Order, 13 FCC Rcd at 11978 ¶ 13.

48 Competitive Bidding Memorandum Opinion and Order, 9 FCC Rcd at 7689 ¶ 12.

49 See 47 C.F.R. §§ 1.2105(c), 1.2107(d), and 1.2109(d).

50 47 C.F.R. § 1.2105(c)(6); see also Part 1 Seventh Report and Order, 16 FCC Rcd at 17553-55 ¶¶ 13-17.

51 See Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, WT Docket No. 06-150, Second Report

and Order, FCC 07-132, 22 FCC Rcd 15,289, 15,395 ¶¶ 285-86 (2007).

52 47 C.F.R. § 1.65; see also Part 1 Seventh Report and Order, 16 FCC Rcd at 17550-51 ¶ 9.

53 See Part 1 Seventh Report and Order, 16 FCC Rcd at 17550-51 ¶ 9.

54 Procedural Amendments to Commission Part 1 Competitive Bidding Rules, WT Docket No. 10-18, Order, FCC

10-4, 25 FCC Rcd 521, 523 ¶ 8 (2010) (“Part 1 Procedural Amendments Order”).

55 Id.

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the Commission’s auctions.56 This rule is designed to minimize the risk of inadvertent dissemination of

information in such reports. Any reports required by section 1.2105(c) must be filed consistent with the

instructions set forth in this Public Notice.57 For Auction 97, such reports must be filed with Margaret W.

Wiener, the Chief of the Auctions and Spectrum Access Division, Wireless Telecommunications Bureau,

by the most expeditious means available. Any such report should be submitted by e-mail to Ms. Wiener

at the following e-mail address: auction97@fcc.gov. If you choose instead to submit a report in hard

copy, any such report must be delivered only to Margaret W. Wiener, Chief, Auctions and Spectrum

Access Division, Wireless Telecommunications Bureau, Federal Communications Commission, 445 12th

Street, SW, Room 6423, Washington, DC 20554.

32.

A party seeking to report such a prohibited communication should consider submitting its

report with a request that the report or portions of the submission be withheld from public inspection by

following the procedures specified in section 0.459 of the Commission’s rules.58 Such parties also are

encouraged to coordinate with the Auctions and Spectrum Access Division staff about the procedures for

submitting such reports.59 This Public Notice provides additional guidance on procedures for submitting

application-related information below.60

h.

Winning Bidders Must Disclose Terms of Agreements

33.

Each applicant that is a winning bidder will be required to disclose in its long-form

applications the specific terms, conditions, and parties involved in any agreement it has entered into. This

applies to any bidding consortia, joint venture, partnership, or agreement, understanding, or other

arrangement entered into relating to the competitive bidding process, including any agreement relating to

the post-auction market structure.61

Failure to comply with the Commission’s rules can result in

enforcement action.

i.

Additional Information Concerning Rule Prohibiting Certain

Communications

34.

A summary listing of documents issued by the Commission and the Bureau addressing

the application of section 1.2105(c) may be found in Attachment F. These documents are available on the

Commission’s auction web page at http://wireless.fcc.gov/auctions/prohibited_communications.

j.

Antitrust Laws

35.

Regardless of compliance with the Commission’s rules, applicants remain subject to the

antitrust laws, which are designed to prevent anticompetitive behavior in the marketplace.62 Compliance

56 Part 1 Procedural Amendments Order, 25 FCC Rcd at 522 ¶ 4. This process differs from filing procedures used

in connection with other Commission rules and processes which may call for submission of filings to the

Commission’s Office of the Secretary or ECFS. Filing through the Office of Secretary or ECFS could allow the

report to become publicly available and might result in the communication of prohibited information to other

auction applicants.

57 Id.

58 See 47 C.F.R. § 0.459 (requests that materials or information submitted to the Commission be withheld from

public inspection). Filers requesting confidential treatment of documents must be sure that the cover page of the

filing prominently displays that the documents seek confidential treatment. For example, a filing might include a

cover page stamped with “Request for Confidential Treatment Attached” or “Not for Public Inspection.” Any such

request must cover all of the material to which the request applies. See 47 C.F.R. § 0.459 (a).

59 See Section VI. “Contact Information,” below.

60 See Section II.M. “Maintaining Current Information in Short-Form Applications,” below.

61 47 C.F.R. § 1.2107(d).

62 See Amendment of Part 1 of the Commission's Rules – Competitive Bidding Procedures, WT Docket No. 97-82,

Third Further Notice of Proposed Rulemaking, FCC 99-384, 14 FCC Rcd 21558, 21560-61 ¶ 4 & n.17 (1999)

(continued….)

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with the disclosure requirements of section 1.2105(c) will not insulate a party from enforcement of the

antitrust laws.63 For instance, a violation of the antitrust laws could arise out of actions taking place well

before any party submitted a short-form application.64 The Commission has cited a number of examples

of potentially anticompetitive actions that would be prohibited under antitrust laws: for example, actual or

potential competitors may not agree to divide territories in order to minimize competition, regardless of

whether they split a market in which they both do business, or whether they merely reserve one market

for one and another market for the other.65 Similarly, the Bureau previously reminded potential applicants

and others that “[e]ven where the applicant discloses parties with whom it has reached an agreement on

the short-form application, thereby permitting discussions with those parties, the applicant is nevertheless

subject to existing antitrust laws.”66

36.

To the extent the Commission becomes aware of specific allegations that suggest that

violations of the federal antitrust laws may have occurred, the Commission may refer such allegations to

the United States Department of Justice for investigation.67 If an applicant is found to have violated the

antitrust laws or the Commission’s rules in connection with its participation in the competitive bidding

process, it may be subject to forfeiture of its upfront payment, down payment, or full bid amount and may

be prohibited from participating in future auctions, among other sanctions.68

3.

Incumbency Issues

37.

The AWS-3 bands are currently being used for a variety of government and non-

government services. In the AWS-3 Report and Order, the Commission allocated the 1695-1710 MHz

and 1755-1780 MHz bands for commercial use.69 Licenses in 1695-1710 MHz band are being made

available on a shared basis with incumbent Federal meteorological-satellite (MetSat) data users.70

Licenses in the 1755-1780 MHz band are being made available on a shared basis with a limited number of

Federal incumbents indefinitely, while some of the Federal systems will over time relocate out of the

(Continued from previous page)

quoting Competitive Bidding Memorandum Opinion and Order, 9 FCC Rcd at 7689 ¶ 12 (“[W]e wish to emphasize

that all applicants and their owners continue to be subject to existing antitrust laws. Applicants should note that

conduct that is permissible under the Commission's Rules may be prohibited by the antitrust laws.”);

Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-253,

Fourth Memorandum Opinion and Order, FCC 94-264, 9 FCC Rcd 6858, 6869 n.134 (1994)(“[A]pplicants will also

be subject to existing antitrust laws.”) (“Fourth Memorandum Opinion and Order”).

63 See Competitive Bidding Memorandum Opinion and Order, 9 FCC Rcd at 7689 ¶ 12. See also Justice

Department Sues Three Firms Over FCC Auction Practices, Press Release 98-536 (DOJ Nov. 10, 1998).

64 See, e.g., Fourth Memorandum Opinion and Order, 9 FCC Rcd at 6869 n.134.

65 Id. See also Competitive Bidding Second Report and Order, 9 FCC Rcd at 2387 n.165.

66 Anti-Collusion Public Notice, 11 FCC Rcd at 9646.

67 See Competitive Bidding Second Report and Order, 9 FCC Rcd at 2388 ¶ 226.

68 See 47 C.F.R. § 1.2109(d); see also Competitive Bidding Second Report and Order, 9 FCC Rcd at 2388 ¶ 226.

69 See AWS-3 Report and Order, 29 FCC Rcd at 4612, 4620, 4627, 4629, 4684-85, 4688 ¶¶ 2, 16, 33, 37, 198-200,

207. The Commission allocated the 1695-1710 MHz band for non-Federal fixed and mobile (except aeronautical

mobile) use and the 1755-1780 MHz band for non-Federal fixed and mobile use. See id., App. A; 47 C.F.R. §

2.106.

70 See AWS-3 Report and Order, 29 FCC Rcd at 4612 ¶ 2. The Commission adopted twenty-seven Protection

Zones for the 1695-1710 MHz band in the AWS-3 Report and Order, and the forty-seven Federal earth stations

located in these Protection Zones will operate on a co-equal, primary basis with commercial AWS-3 licensees. See

47 C.F.R. § 2.106, US note 88. All other Federal earth stations operate on a secondary basis. See 47 C.F.R. § 2.106,

US note 88(b). In order to facilitate coordination, uplink/mobile transmit devices in the 1695-1710 MHz band must

be under the control of, or associated with, a base station as a means to facilitate shared use of the band and prevent

interference to Federal operations. See AWS-3 Report and Order, 29 FCC Rcd at 4620-21, 4648 ¶¶ 19, 100-102.

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band.71 Licenses to operate in the 1695-1710 MHz and 1755-1780 MHz bands are subject to the

condition that the licensee must not cause harmful interference to an incumbent Federal entity relocating

from these bands under an approved Transition Plan.72 This condition remains in effect until NTIA

terminates the applicable authorization of the incumbent Federal entity.73 In addition, AWS-3 licensees in

the 1755-1780 MHz band must agree to accept interference from incumbent Federal users while they

remain authorized to operate in the band.74 The 2155-2180 MHz band is already allocated for exclusive

non-Federal, commercial use. Although there are no Federal users currently licensed or operating in this

band, there are non-Federal incumbent Fixed Microwave and Broadband Radio Service licensees in the

band. AWS-3 licensees will have to protect or relocate and/or share in the cost of relocating such

incumbent licensees.75

38.

AWS-3 licensees in the 1695-1710 MHz and 1755-1780 MHz bands are required to

successfully coordinate with Federal incumbent users in these bands prior to operating in designated

protection zones.76 The AWS-3 Report and Order established that 1695-1710 MHz licensees operating at

certain power levels would be required to coordinate with Federal incumbents in those protection zones,

and higher-powered operations would generally require nationwide coordination.77 Similarly, operations

in the 1755-1780 MHz band are subject to successful coordination with Federal incumbents in the

protection zones adopted for that band, with the default coordination zone being nationwide.78 Prior to

commencing operations in the 1755-1780 MHz band, an AWS-3 licensee must reach a coordination

arrangement on an operator-to-operator basis with each Federal agency that has an assignment with

United States and Possessions (“USP”) authority.79 The FCC/NTIA Coordination Procedures Public

Notice contains various refinements to the previously-defined protection zones for each of these bands.80

71 See AWS-3 Report and Order, 29 FCC Rcd at 4612 ¶ 2. The Federal systems located in the Protection Zones

adopted by the Commission for the 1755-1780 MHz band in the AWS-3 Report and Order will operate on a co-

equal, primary basis with commercial AWS licensees. See 47 C.F.R. § 2.106, US note 91. The Federal systems that

will relocate from the band pursuant to an approved transition plan will operate on a primary basis until they are

reaccommodated. Id. In order to facilitate coordination, uplink/mobile transmit devices in the 1755-1780 MHz

band must be under the control of, or associated with, a base station as a means to facilitate shared use of the band

and prevent interference to Federal operations. See AWS-3 Report and Order, 29 FCC Rcd at 4631, 4648 ¶¶ 43,

100-102.

72 See AWS-3 Report and Order, 29 FCC Rcd at 4691-92 ¶ 219 and App. A; 47 C.F.R. § 27.5(h) (Note). See also 47

U.S.C. § 309(j)(16)(C).

73 See id. Although this license condition does not apply to the permanent sharing scenario, the Commission’s rules

require successful coordination to avoid causing harmful interference to these Federal incumbents. See 47 C.F.R. §§

27.1134(c), (f).

74 See 47 C.F.R. § 27.1134(f). See also AWS-3 Report and Order, 29 FCC Rcd at 4693 ¶ 222.

75 See AWS-3 Report and Order, 29 FCC Rcd at 4682-83 ¶¶ 194-196 and App. A; 47 C.F.R. §§ 27.1111, 27.1131,

27.1132.

76 See AWS-3 Report and Order, 29 FCC Rcd at 4692-93 ¶¶ 220-22 and App. A; 47 C.F.R. § 2.106, US notes 88 and

91; 47 C.F.R. §§ 27.1134(c), (f).

77 See AWS-3 Report and Order, 29 FCC Rcd at 4620-21, 4645, 4692-93 ¶¶ 19, 90, 220-22 and App. A; 47 C.F.R. §

2.106, US note 88; 47 C.F.R. § 27.1134(c).

78 See AWS-3 Report and Order, 29 FCC Rcd at 4645, 4692-93 ¶¶ 91, 220-222 and App. A; 47 C.F.R. § 2.106, US

note 91; 47 C.F.R. § 27.1134(f).

79 47 C.F.R. § 27.1134(f)(1)(i).

80 See FCC/NTIA Coordination Procedures Public Notice at Section III., “Refined Protection Zones Establishing

Areas Where AWS-3 Licensees Must Successfully Coordinate with Federal Incumbents Operating Under Non-USP

Assignments,” Section V., “Refined Protection Zones for 25 Satellite Earth Stations and Streamlined Coordination

Option,” and Apps. A, B, C.

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That Public Notice also provides information and guidance on the overall coordination process for these

bands, as contemplated by the AWS-3 Report and Order, including informal pre-coordination discussion

and the formal process of submitting coordination requests to, and receiving responses to coordination

requests from, relevant Federal agencies.81 We encourage each potential applicant to carefully review

these coordination requirements and the policies and procedures adopted by the Commission to

implement them, and to consider the impact of those requirements and policies on its business plans.

4.

Commercial Spectrum Enhancement Act/Spectrum Act Requirements

39.

The spectrum in the 1695-1710 MHz and 1755-1780 MHz bands is covered by a

Congressional mandate that requires that auction proceeds fund the estimated relocation or sharing costs

of incumbent Federal entities.82 In 2004, the Commercial Spectrum Enhancement Act (“CSEA”)

established a Spectrum Relocation Fund (“SRF”) to reimburse eligible Federal agencies operating on

certain frequencies that have been reallocated from Federal to non-Federal use for the cost of relocating

their operations.83 The SRF is funded with cash proceeds attributable to “eligible frequencies” in an

auction of licenses involving such frequencies.84 The CSEA requires the NTIA to notify the Commission

at least six months in advance of a scheduled auction of eligible frequencies of eligible Federal entities’

estimated relocation or sharing costs and the timelines for such relocation or sharing.85

40.

On May 13, 2014, pursuant to the CSEA, the NTIA notified the Commission of the

estimated relocation or sharing costs and relocation timelines for eligible Federal entities assigned to

frequencies in the 1695-1710 MHz and 1755-1780 MHz bands.86 The NTIA reported that the total

estimated relocation or sharing costs for the 1695-1710 MHz band equal $527,069,000, and that the total

estimated relocation or sharing costs for the 1755-1780 MHz band equal $4,575,603,000.87

41.

In addition to requiring that specified auction proceeds be deposited in the SRF, the

CSEA, as amended by the Spectrum Act, requires that the total cash proceeds from any auction of eligible

frequencies must equal at least 110 percent of the estimated relocation or sharing costs provided to the

Commission by NTIA, and prohibits the Commission from concluding any auction of eligible frequencies

81 See FCC/NTIA Coordination Procedures Public Notice at Section IV., “Coordination Process Guidance.”.

82 See 47 U.S.C. §§ 309(j)(8)(D), 923(g).

83 See 47 U.S.C. § 928.

84 See 47 U.S.C. §§ 309(j)(8)(D), 928(b). “Eligible frequencies” are defined as those in the 216-220 MHz, 1432-

1435 MHz, 1710-1755 MHz and 2385-2390 MHz bands, as well as any other band of frequencies reallocated from

Federal use to non-Federal use after January 1, 2003 that is assigned by the Commission through competitive

bidding pursuant to Section 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. § 309(j). See 47

U.S.C. § 923(g)(2).

85 See 47 U.S.C. § 923(g)(4). The Spectrum Act amendments to the CSEA require Federal agencies authorized to

use eligible frequencies to submit a transition plan no later than 240 days before an auction for such frequencies is

scheduled to begin. See 47 U.S.C. § 923(h)(1). The Federal agency transition plans are reviewed by a Technical

Panel, which must submit a report on the sufficiency of each transition plan to the NTIA and the applying Federal

agency no later than 30 days after submission of the plan. See 47 U.S.C. § 923(h)(4)(A); see 47 C.F.R. § 301.120(a).

If the Technical Panel finds a Federal agency’s plan to be insufficient with respect to the execution, timing, or cost

of the agency’s planned transition, the agency must submit a revised plan within 90 days. See 47 U.S.C. §

923(h)(4)(B). The NTIA must make the transition plans available on its website (with the exception of any

classified information contained therein) no later than 120 days before the auction’s scheduled start date. See 47

U.S.C. § 923(h)(5).

86 See 47 U.S.C. § 923(g)(4)(A).

87 Letter from Lawrence E. Strickling, Assistant Secretary for Communications and Information, U.S. Department of

Commerce, to Tom Wheeler, Chairman, Federal Communications Commission at Attachments B1 and B2 (May 13,

2014) (“NTIA May 13 Notification Letter”), available at http://www.ntia.doc.gov/category/aws-3-transition.

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that falls short of this revenue requirement.88 In the CSEA/Part 1 Declaratory Ruling, the Commission

determined, among other things, that “total cash proceeds” for purposes of meeting the CSEA’s revenue

requirement means winning bids net of any applicable bidding credit discounts at the end of bidding.89

Thus, whether CSEA’s revenue requirements regarding eligible frequencies have been met at the end of

an auction involving such frequencies depends upon whether winning bids that are attributable to such

spectrum, net of any applicable bidding credit discounts, equal at least 110 percent of estimated relocation

costs. In the CSEA/Part 1 Report and Order, the Commission, among other things, modified its reserve

price rule pursuant to the CSEA to ensure that the CSEA’s revenue requirement would be met.90

5.

International Coordination

42.

Potential bidders seeking licenses for geographic areas adjacent to the Canadian and

Mexican border should be aware that the use of some or all of the AWS-3 frequencies they acquire in the

auction are subject to international agreements with Canada and Mexico.91 As the Commission noted in

the AWS-3 Report and Order, the Commission routinely works with the United States Department of

State and Canadian and Mexican government officials to ensure the efficient use of the spectrum as well

as interference-free operations in the border areas near Canada and Mexico.92 Until such time as any

adjusted agreements, as needed, between the United States, Mexico and/or Canada can be agreed to,

operations in the AWS-3 frequency bands must not cause harmful interference across the border,

consistent with the terms of the agreements currently in force.93

6.

Quiet Zones

43.

AWS-3 licensees must individually apply for and receive a separate license for each

transmitter if the proposed operation would affect the radio quiet zones set forth in the Commission’s

rules.94

7.

Spectrum Screen for Competitive Review of Secondary Market

Transactions

44.

In its recent Mobile Spectrum Holdings Report and Order, the Commission concluded

that, instead of administering its case-by-case review of auction winners’ mobile spectrum holdings at the

long-form application stage, it would determine prior to an auction whether an ex ante application of a

band-specific mobile spectrum holding limit is necessary for the initial licensing of a band through

competitive bidding.95 For the initial licensing of the AWS-3 band through competitive bidding, the

88 See 47 U.S.C. § 309(j)(16)(A), (B).

89 Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission's

Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Declaratory Ruling and Notice of Proposed

Rule Making, 20 FCC Rcd 11268, 11270-72 ¶¶ 5-12 (2005).

90 Implementation of the Commercial Spectrum Enhancement Act and Modernization of the Commission’s

Competitive Bidding Rules and Procedures, Report and Order, 21 FCC Rcd 891, 894 ¶¶ 6-7 (2006) (“CSEA/Part 1

Report and Order”); 47 C.F.R. § 1.2104(c).

91 See AWS-3 Report and Order, 29 FCC Rcd at 4650 106; 47 C.F.R. § 27.57(c).

92 AWS-3 Report and Order, 29 FCC Rcd at 4650 106.

93 Id.

94 47 C.F.R. § 1.924.

95 See In the Matter of Policies Regarding Mobile Spectrum Holdings; Expanding the Economic and Innovation

Opportunities of Spectrum Through Incentive Auctions, Report and Order, WT Docket No. 12-269; GN Docket No.

12-268, FCC 14-63, at ¶ 139 (rel. Jun. 2, 2014)(“Mobile Spectrum Holdings Report and Order”).

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Commission found that, on balance, it is not in the public interest to adopt a band-specific mobile

spectrum holdings limit.96

45.

The Commission observed that, notwithstanding whether a band-specific mobile

spectrum holding limit is applied to the initial licensing of a band through competitive bidding, the band

would be included in the Commission’s application of its spectrum screen for competitive review of

subsequent secondary market transactions if the band is deemed suitable and available for the provision of

mobile telephony/mobile broadband services.97 Further, in the Mobile Spectrum Holdings Report and

Order, the Commission updated its spectrum screen to reflect the current suitability and availability of

spectrum for the provision of mobile telephony/broadband services.98 In particular, in its consideration of

AWS-3 spectrum, the Commission added the 65 megahertz of AWS-3 spectrum being offered in Auction

97 to the spectrum screen on a market-by-market basis as it becomes available.99 We encourage each

potential Auction 97 applicant to carefully review the Mobile Spectrum Holdings Report and Order to

understand how these policies might apply to its particular situation.

8.

Due Diligence

46.

We remind each potential bidder that it is solely responsible for investigating and

evaluating all technical and marketplace factors that may have a bearing on the value of the licenses that it

is seeking in this auction. Each bidder is responsible for assuring that, if it wins a license, it will be able

to build and operate facilities in accordance with the Commission’s rules. The Commission makes no

representations or warranties about the use of this spectrum for particular services. Applicants should be

aware that a Commission auction represents an opportunity to become a Commission licensee, subject to

certain conditions and regulations, and that the Commission’s statutory authority, under the

Communications Act, to add, modify and eliminate rules governing spectrum use, as the public interest

warrants, applies equally to all licenses, whether acquired through the competitive bidding process or

otherwise.100 In addition, a Commission auction does not constitute an endorsement by the Commission

of any particular service, technology, or product, nor does a Commission license constitute a guarantee of

business success.

47.

An applicant should perform its due diligence research and analysis before proceeding, as

it would with any new business venture. In particular, the Bureau strongly encourages each potential

bidder to review all Commission orders and public notices establishing rules and policies for the AWS-3

bands,101 including incumbency issues for AWS-3 licensees,102 Federal and non-Federal relocation and

96 See Mobile Spectrum Holdings Report and Order at ¶¶ 222-224.

97 See Mobile Spectrum Holdings Report and Order at note 422.

The Commission’s spectrum screen is a tool used

to help achieve the Commission’s policy of facilitating access to spectrum in a manner that promotes competition.

In its competitive review of secondary market transactions, the Commission applies an initial screen to help identify

for case-by-case review local markets where changes in spectrum holdings resulting from the proposed transaction

may be of particular concern. See Mobile Spectrum Holdings Report and Order at ¶ 13.

98 See Mobile Spectrum Holdings Report and Order at ¶¶ 4, 70-134.

99 See Mobile Spectrum Holdings Report and Order at ¶¶ 4, 100-102, 218-24. Because the timing and extent of

access by commercial licensees to the 1695-1710 MHz and 1755-1780 MHz bands in particular markets will

depend, in part, on the timelines set in the Transition Plans for relocating Federal incumbent users, the spectrum in

these bands will be counted in the spectrum screen in a particular market once all relocating Federal incumbent

systems in that market are within three years of completing relocation according to the Transition Plans. Id. at

¶ 102. Spectrum in the 2155-2180 MHz band will be counted in the spectrum screen for a particular market at the

same time the Commission counts the paired 1755-1780 MHz band in that market in the screen. Id. at ¶ 101.

100 See 47 U.S.C. §§ 309(j)(6)(C)-(D); Celtronix Telemetry, Inc. v. FCC, 272 F.3d 585 (D.C. Cir. 2001).

101 See, e.g., authorities cited at note 1, above.

102 See Section I.C.3., “Incumbency Issues,” above.

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sharing and cost sharing obligations,103 and protection of Federal and non-Federal incumbent

operations.104 Additionally, each potential bidder should perform technical analyses or refresh their

previous analyses to assure itself that, should it become a winning bidder for any Auction 97 license, it

will be able to build and operate facilities that will fully comply with all applicable technical and

regulatory requirements. The Bureau strongly encourages each applicant to inspect any prospective

transmitter sites located in, or near, the service area for which it plans to bid, confirm the availability of

such sites, and to familiarize itself with the Commission’s rules regarding the National Environmental

Policy Act.105

48.

The Bureau strongly encourages each applicant to conduct its own research prior to

Auction 97 in order to determine the existence of pending administrative or judicial proceedings,

including pending allocation rulemaking proceedings, that might affect its decision to participate in the

auction. The Bureau strongly encourages each participant in Auction 97 to continue such research

throughout the auction. The due diligence considerations mentioned in this Public Notice do not

comprise an exhaustive list of steps that should be undertaken prior to participating in this auction. As

always, the burden is on the potential bidder to determine how much research to undertake, depending

upon specific facts and circumstances related to its interests.

49.

The Bureau also reminds each applicant that pending and future judicial proceedings, as

well as pending and future proceedings before the Commission — including applications, applications for

modification, rulemaking proceedings, requests for special temporary authority, waiver requests, petitions

to deny, petitions for reconsideration, informal objections, and applications for review — may relate to

particular applicants or the licenses available in Auction 97 (or the terms and conditions thereof, including

all applicable Commission rules and regulations). Each prospective applicant is responsible for assessing

the likelihood of the various possible outcomes and for considering the potential impact on licenses

available in this auction.

50.

We call special attention in this auction to the requirements presented by the temporary

and indefinite sharing of portions of the AWS-3 bands by incumbent Federal users and AWS-3 licensees,

which may vary by geography and frequency. As discussed above, the FCC/NTIA Coordination

Procedures Public Notice contains additional information regarding the extent of sharing in the AWS-3

bands, refinements to the protection zones adopted in the AWS-3 Report and Order, and information and

guidance on the overall coordination process between commercial and Federal users. Additionally, the

CSEA, as amended by the Spectrum Act, stipulates that Federal agencies will receive reimbursement for

their costs in relocating their operations from, or sharing, the “eligible frequencies” offered in this auction

based on their approved transition plans, which the NTIA will make available to the public.106 We expect

that the information in both the FCC/NTIA Coordination Procedures Public Notice and the federal

agency transition plans will be material to an applicant’s potential participation in Auction 97. Therefore,

we strongly encourage each applicant to closely review these materials, as well as future releases from the

Commission and the NTIA concerning these issues, and to carefully consider the technical and economic

implications for commercial use of the AWS-3 bands.

51.

Applicants are solely responsible for identifying associated risks and for investigating

and evaluating the degree to which such matters may affect their ability to bid on, otherwise acquire, or

make use of the licenses available in Auction 97. Each potential bidder is responsible for undertaking

research to ensure that any licenses won in this auction will be suitable for its business plans and needs.

103 See Section I.C.3. “Incumbency Issues” and Section I.C.4 “Commercial Spectrum Enhancement Act/Spectrum

Act Requirements,” below; 47 C.F.R. §§ 27.1160-1190, 27.1250-1255, 101.69-82.

104 See 47 C.F.R. §§ 27.1131, 27.1132, 27.1134; see generally FCC/NTIA Coordination Procedures Public Notice.

105 47 C.F.R. Chapter 1, Part 1, Subpart I.

106 See Section I.C.4., “Commercial Spectrum Enhancement Act/Spectrum Act Requirements,” above.

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Each potential bidder must undertake its own assessment of the relevance and importance of information

gathered as part of its due diligence efforts.

9.

Use of Integrated Spectrum Auction System

52.

Bidders will be able to participate in Auction 97 over the Internet using the

Commission’s web-based Integrated Spectrum Auction System (“ISAS” or “FCC Auction System”). The

Commission makes no warranty whatsoever with respect to the FCC Auction System. In no event shall

the Commission, or any of its officers, employees, or agents, be liable for any damages whatsoever

(including, but not limited to, loss of business profits, business interruption, loss of business information,

or any other loss) arising out of or relating to the existence, furnishing, functioning, or use of the FCC

Auction System that is accessible to qualified bidders in connection with this auction. Moreover, no

obligation or liability will arise out of the Commission’s technical, programming, or other advice or

service provided in connection with the FCC Auction System.

10.

Fraud Alert

53.

As is the case with many business investment opportunities, some unscrupulous

entrepreneurs may attempt to use Auction 97 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 investment is less than $25,000.

The sales representative makes verbal representations that (a) the Internal Revenue Service, 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.

54.

Information about deceptive telemarketing investment schemes is available from the FCC

as well as the FTC and SEC. Additional sources of information for potential bidders and investors may

be obtained from the following sources:

the FCC’s Consumer Call Center at (888) 225-5322 or by visiting

http://wireless.fcc.gov/csinfo#fraud

the FTC at (877) FTC-HELP ((877) 382-4357) or by visiting

http://ftc.gov/bcp/edu/pubs/consumer/invest/inv03.shtm

the SEC at (202) 942-7040 or by visiting

http://sec.gov/cgi-bin/txt-srch-sec?text=fraud§ion=Investor+Information.

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.

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11.

Environmental Review Requirements

55.

Licensees must comply with the Commission’s rules regarding implementation of the

National Environmental Policy Act and other federal environmental statutes.107 The construction of a

wireless antenna facility is a federal action, and the licensee must comply with the Commission’s

environmental rules for each such facility.108 These environmental rules require, among other things, that

the licensee consult with expert agencies having environmental responsibilities, including the U.S. Fish

and Wildlife Service, the State Historic Preservation Office, the U.S. Army Corps of Engineers, and the

Federal Emergency Management Agency (through the local authority with jurisdiction over floodplains).

In assessing the effect of facility construction on historic properties, the licensee must follow the

provisions of the FCC’s Nationwide Programmatic Agreement Regarding the Section 106 National

Historic Preservation Act Review Process.109 The licensee must prepare an environmental assessment for

any facility that may have a significant impact in or on wilderness areas, wildlife preserves, threatened or

endangered species, designated critical habitats, historical or archaeological sites, Native American

religious sites, floodplains, surface features, or migratory birds. In addition, the licensee must prepare an

environmental assessment for any facility that includes high intensity white lights in residential

neighborhoods or excessive radio frequency emission.

D.

Auction Specifics

1.

Auction Start Date

56.

Bidding in Auction 97 will begin on Thursday, November 13, 2014. Pre-auction dates

and deadlines are listed below.

57.

The initial schedule for bidding rounds will be announced by public notice at least one

week before the auction starts. Moreover, unless otherwise announced, bidding on all licenses will be

conducted on each business day until bidding has stopped on all licenses.

2.

Auction Title

58.

Auction 97 – AWS-3

3.

Bidding Methodology

59.

As discussed in more detail below, the bidding methodology for Auction 97 will be a

simultaneous multiple round format.110 The Commission will conduct this auction over the Internet using

the FCC Auction System. Qualified bidders are permitted to bid electronically via the Internet or by

telephone using the telephonic bidding option. All telephone calls are recorded.

4.

Pre-Auction Dates and Deadlines

60.

The following dates and deadlines apply:

Auction Tutorial Available (via Internet) .........................August 28, 2014

Short-Form Application (FCC Form 175)

Filing Window Opens.......................................................August 28, 2014; 12:00 noon ET

Short-Form Application (FCC Form 175)

Filing Window Deadline...................................................September 12, 2014; 6:00 p.m. ET

Upfront Payments (via wire transfer)................................October 15, 2014; 6:00 p.m. ET

107 47 C.F.R. Chapter 1, Part 1, Subpart I.

108 47 C.F.R. §§ 1.1301-1.1319.

109 47 C.F.R. Part 1, Appendix C.

110 See Section IV.A.1.a. “Simultaneous Multiple Round Auction,” below.

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Mock Auction ...................................................................November 10, 2014

Auction Begins..................................................................November 13, 2014

61.

In order to provide sufficient time for Commission staff to complete review of short-form

applications and for Auction 97 applicants to work with staff to address any deficiencies with their

applications, we are unable to grant in full the joint request of CCA, CTIA, and NTCA to set a short-form

deadline of September 24, 2014. Those parties assert setting the deadline near the end of that month

would facilitate the association members’ ability to participate in business negotiations and panel

discussions, including panels on the AWS-3 auction, at industry conferences scheduled during September

2014 without risk of running afoul of section 1.2105(c)’s prohibited communications period.111 We

understand that two of three of those events will have concluded by September 12, 2014, which is the

alternative date they request.

5.

Requirements for Participation

62.

Those wishing to participate in this auction must:

Submit a short-form application (FCC Form 175) electronically prior to 6:00 p.m. ET, on

September 12, 2014, following the electronic filing procedures set forth in Attachment D to this

Public Notice;

Submit a sufficient upfront payment and an FCC Remittance Advice Form (FCC Form 159) by

6:00 p.m. ET, on October 15, 2014, following the procedures and instructions set forth in

Attachment E to this Public Notice; and

Comply with all provisions outlined in this Public Notice and applicable Commission rules.

II.

SHORT-FORM APPLICATION (FCC FORM 175) REQUIREMENTS

A.

General Information Regarding Short-Form Applications

63.

An application to participate in an FCC auction, referred to as a short-form application or

FCC Form 175, provides information used to determine whether the applicant is legally, technically, and

financially qualified to participate in Commission auctions for licenses or permits.112 The short-form

application is the first part of the Commission’s two-phased auction application process. In the first

phase, parties desiring to participate in the auction must file a streamlined, short-form application in

which they certify under penalty of perjury as to their qualifications.113 Eligibility to participate in

bidding is based on the applicant’s short-form application and certifications, and on its upfront payment,

as explained below.114 In the second phase of the process, each winning bidder must file a more

comprehensive long-form application (FCC Form 601) and have a complete and accurate ownership

disclosure information report (FCC Form 602) on file with the Commission.115

64.

Every entity and individual seeking a license available in Auction 97 must file a short-

form application electronically via the FCC Auction System prior to 6:00 p.m. ET on September 12,

111 See Letter from Rebecca Murphy Thompson, General Counsel, CCA et al., to Marlene Dortch, Secretary, Federal

Communications Commission, AU Docket No. 14-78, GN Docket No. 13-185, and RM-11395 (filed June 6, 2014)

at 2.

112 47 C.F.R. §§ 1.2105.

113 Id.; see also Competitive Bidding Second Report and Order, 9 FCC Rcd at 2376 ¶ 165.

114 Section III.D. “Upfront Payments – Due October 15, 2014,” below.

115 47 C.F.R. §§ 1.2107.

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2014, following the procedures prescribed in Attachment D to this Public Notice. If an applicant claims

eligibility for a bidding credit, the information provided in its FCC Form 175 will be used to determine

whether the applicant is eligible for the claimed bidding credit. Applicants filing a short-form application

are subject to the Commission’s anti-collusion rules beginning at the deadline for filing, as described

above.

65.

Applicants bear full responsibility for submitting accurate, complete and timely short-

form applications. All applicants must certify on their short-form applications under penalty of perjury

that they are legally, technically, financially and otherwise qualified to hold a license.116 Each applicant

should read carefully the instructions set forth in Attachment D to this Public Notice and should consult

the Commission’s rules to ensure that, in addition to the materials described below, all the information

required is included within its short-form application.

66.

An individual or entity may not submit more than one short-form application for a single

auction. If a party submits multiple short-form applications for any license(s) in the same or overlapping

geographic area(s), only one of its applications can be found to be complete when reviewed for

completeness and compliance with the Commission’s rules.

67.

Applicants should note that submission of a short-form application (and any amendments

thereto) constitutes a representation by the person certifying the application that he or she is an authorized

representative of the applicant with authority to bind the applicant, that he or she has read the form’s

instructions and certifications, and that the contents of the application, its certifications, and any

attachments are true and correct. Applicants are not permitted to make major modifications to their

applications; such impermissible changes include a change of the certifying official to the application.117

Submission of a false certification to the Commission may result in penalties, including monetary

forfeitures, license forfeitures, ineligibility to participate in future auctions, and/or criminal prosecution.

B.

License Selection

68.

An applicant must select the licenses on which it wants to bid from the “Eligible

Licenses” list on its short-form application. Applicants must review and verify their license selections

before the deadline for submitting short-form applications. License selections cannot be changed after the

short-form application filing deadline.118 The FCC Auction System will not accept bids on licenses that

were not selected on the applicant’s short-form application.

C.

Disclosure of Bidding Arrangements

69.

An applicant will be required to identify in its short-form application all real parties in

interest with whom it has entered into any agreements, arrangements, or understandings of any kind

relating to the licenses being auctioned, including any agreements relating to post-auction market

structure.119

70.

Each applicant will also be required to certify under penalty of perjury in its short-form

application that it has not entered and will not enter into any explicit or implicit agreements, arrangements

or understandings of any kind with any parties, other than those identified in the application, regarding the

amount of its bids, bidding strategies, or the particular licenses on which it will or will not bid.120 If an

applicant has had discussions, but has not reached an agreement by the short-form application filing

116 47 C.F.R. § 1.2105(a)(2)(v).

117 See 47 C.F.R. § 1.2105(b).

118 47 C.F.R. § 1.2105(b)(2).

119 47 C.F.R. §§ 1.2105(a)(2)(viii), (c)(1).

120 47 C.F.R. § 1.2105(a)(2)(ix).

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deadline, it should not include the names of parties to the discussions on its application and may not

continue such discussions with any applicants after the deadline.121

71.

After the filing of short-form applications, the Commission’s rules do not prohibit a party

holding a non-controlling, attributable interest in one applicant from acquiring an ownership interest in or

entering into a joint bidding arrangement with other applicants, provided that (i) the attributable interest

holder certifies that it has not and will not communicate with any party concerning the bids or bidding

strategies of more than one of the applicants in which it holds an attributable interest, or with which it has

entered into a joint bidding arrangement; and (ii) the arrangements do not result in a change in control of

any of the applicants.122 While section 1.2105(c) of the rules does not prohibit non-auction-related

business negotiations among auction applicants, we remind applicants that certain discussions or

exchanges could touch upon impermissible subject matters because they may convey pricing information

and bidding strategies.123 Further, as discussed above, compliance with the disclosure requirements of

section 1.2105(c) of the Commission’s rules will not insulate a party from enforcement of the antitrust

laws.124

D.

Ownership Disclosure Requirements

72.

Each applicant must comply with the uniform Part 1 ownership disclosure standards and

provide information required by sections 1.2105 and 1.2112 of the Commission’s rules.125 Specifically, in

completing the short-form application, an applicant will be required to fully disclose information on the

real party- or parties-in-interest and the ownership structure of the applicant, including both direct and

indirect ownership interests of 10 percent or more, as prescribed in sections 1.2105 and 1.2112 of the

Commission’s rules.126 Each applicant is responsible for ensuring that information submitted in its short-

form application is complete and accurate.

73.

In certain circumstances, an applicant’s most current ownership information on file with

the Commission, if in an electronic format compatible with the short-form application (FCC Form 175)

(such as information submitted in an FCC Form 602 or in an FCC Form 175 filed for a previous auction

using ISAS) will automatically be entered into the applicant’s short-form application. Each applicant

must carefully review any information automatically entered to confirm that it is complete and accurate as

of the deadline for filing the short-form application. Any information that needs to be corrected or

updated must be changed directly in the short-form application.

E.

Foreign Ownership Disclosure Requirements

74.

Section 310 of the Communications Act requires the Commission to review foreign

investment in radio station licenses and imposes specific restrictions on who may hold certain types of

radio licenses.127 The provisions of section 310 apply to applications for initial radio licenses,

applications for assignments and transfers of control of radio licenses, and spectrum leasing arrangements

121 Section I.C.2. “Prohibited Communications and Compliance with Antitrust Laws,” above.

122 47 C.F.R. §§ 1.2105(c)(4)(i), (ii).

123 Section I.C.2. “Prohibited Communications and Compliance with Antitrust Laws,” above; see Amendment of

Part 1 of the Commission's Rules – Competitive Bidding Procedures, WT Docket No. 97-82, Third Report and

Order and Second Further Notice of Proposed Rule Making, FCC 97-413, 13 FCC Rcd 374, 467-68 ¶ 163 (1997)

(“Part 1 Third Report and Order”).

124 Id.

125 47 C.F.R. § 1.2105 requires the disclosure on the short-form application of the applicant’s ownership information

as set forth in 47 C.F.R. §§ 1.2105 and 1.2112.

126 47 C.F.R. §§ 1.2105, 1.2112.

127 See 47 U.S.C. §§ 310(a), (b).

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under the Commission’s secondary market rules.128 In completing the short-form application (FCC Form

175), an applicant will be required to disclose information concerning any foreign ownership of the

applicant. An applicant must certify in its short-form application that, as of the deadline for filing a short-

form application to participate in Auction 97, the applicant either is in compliance with the foreign

ownership provisions of section 310 or has filed a petition for declaratory ruling requesting Commission

approval to exceed the applicable foreign ownership limit or benchmark in section 310(b) that is pending

before, or has been granted by, the Commission.129

F.

National Security Certification Requirement for Auction 97 Applicants

75.

Section 6004 of the Spectrum Act prohibits a person who has been, for reasons of

national security, barred by any agency of the Federal Government from bidding on a contract,

participating in an auction, or receiving a grant from participating in any auction that is required or

authorized to be conducted pursuant to the Spectrum Act.130 In 2013, the Commission amended its rules

to implement this mandate by adding a certification to the various other certifications that a party must

make in any short-form application.131 Pursuant to this rule, any applicant seeking to participate in

Auction 97 must certify in its short-form application, under penalty of perjury, that the applicant and all

of the related individuals and entities required to be disclosed on its application are not person(s) who

have been, for reasons of national security, barred by any agency of the Federal Government from bidding

on a contract, participating in an auction, or receiving a grant, and who are thus statutorily prohibited

from participating in such a Commission auction.132 As with other required certifications, an auction

applicant’s failure to include the required certification in its short-form application by the applicable filing

deadline would render its application unacceptable for filing, and its application would be dismissed with

prejudice.133

G.

Acknowledgement Statement for Auction 97 Applicants

76.

We adopt our proposal to require each applicant selecting any license in the 1755-1780

MHz band to submit with its short-form application a signed statement acknowledging that the

applicant’s operations the 1755-1780 MHz band may be subject to interference from Federal systems, that

the applicant must accept interference from incumbent Federal operations, and that the applicant has

considered these risks before submitting any bids for applicable licenses in Auction 97.134 The specific

text that must be included in the required acknowledgement statement is contained in Attachment G to

this Public Notice.135 The acknowledgement statement must be signed by the same individual that signs

the application on behalf of the applicant.

128 See Review of Foreign Ownership Policies for Common Carrier and Aeronautical Radio Licensees under Section

310(b)(4) of the Communications Act of 1934, as Amended, Second Report and Order, FCC 13-50, 28 FCC Rcd

5741, 5747-48 ¶ 7 (2013) (“Foreign Ownership Second Report and Order”).

129 See 47 C.F.R. § 1.2105(a)(2)(v), (vi). See Attachment D, “Short-Form Application Filing Instructions,” below

for additional information concerning foreign ownership disclosure requirements.

130 See 47 U.S.C § 1404.

131 See 47 C.F.R. § 1.2105(a)(2)(xii). See also Service Rules for the Advanced Wireless Services H Block—

Implementing Section 6401 of the Middle Class Tax Relief and Job Creation Act of 2012 Related to the 1915-1920

MHz and 1995-2000 MHz Bands, Report and Order, FCC 13-88, 28 FCC Rcd 9483, 9577-78 ¶¶ 253-54 (2013);

AWS-3 Report and Order, 29 FCC Rcd at 4677 ¶ 182.

132See 47 C.F.R. § 1.2105(a)(2)(xii).

133 47 C.F.R. § 1.2105(b)(1).

134 See Auction 97 Comment Public Notice, 29 FCC Rcd at 5225 ¶ 24.

135 Guidance on submitting the acknowledgement statement can be found in Sections I.C.7. and 8. of Attachment D

to this Public Notice.

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77.

As discussed above, incumbent Federal users are currently operating in the 1695-1710

MHz and 1755-1780 MHz bands.136 In the AWS-3 Report and Order, the Commission adopted rules to

address commercial operations in these bands in light of the temporary and indefinite sharing of the bands

by Federal incumbent users and commercial licensees, including a requirement that commercial licensees

operate on a co-equal, primary operations with Federal systems,137 and a requirement that licensees in the

1755-1780 MHz band accept interference from Federal systems as long as such systems remain in the

band.138

78.

We disagree with the recommendation of Spectrum Financial Partners that we should not

require an acknowledgement on the grounds that this would be an unnecessary paperwork burden and

applicant’s acceptance of such interference obligations is already adequately covered by the due diligence

instructions that apply to all auctions.139 As both T-Mobile and AT&T recognize, it may be useful for

each bidder for these frequencies to sign a statement acknowledging that it has given consideration to

potential interference issues for this band.140 AT&T and T-Mobile request that the required statement be

narrowly drafted, and seek assurances that the acknowledgement does not give rise to any new obligations

for the 1755-1780 MHz band beyond those set out in the Commission’s rules.141 They also encourage the

Commission to promote disclosure by federal agencies of as much information as possible about the

potential interference environment.142

We note that the text of the acknowledgement statement is

narrowly tailored and expressly states that it “does not supersede the licensee’s rights and obligations

specified by law, rule, or other Commission action.”143

H.

Designated Entity Provisions

79.

Eligible applicants in Auction 97 may claim small business bidding credits. In addition

to the information provided below, applicants should review carefully the Commission’s decisions

regarding the designated entity provisions.144

136 See Section I.C.3, “Incumbency Issues,” above.

137 See 47 C.F.R. § 2.106, US note 88 and US note 91.

138 See 47 C.F.R. §27.1134(f).

See also 47 C.F.R. § 2.106, US note 91.

139 See Spectrum Financial Partners Comments at 2.

140 See T-Mobile Comments at 6-7; AT&T Reply Comments at 13.

141 T-Mobile Comments at 7-9; AT&T Reply Comments at 13-15. Specifically, AT&T and T-Mobile seek

clarification that (1) the acknowledgement does not mean that federal users may remain on spectrum that they are

obligated to clear, (2) commercial licensees are no longer subject to potential interference after NTIA withdraws a

federal authorization for the AWS-3 bands, (3) signing the acknowledgement is not intended to dissuade federal

agencies from entering into agreements with auction winners for commercial use of the AWS-3 bands, (4) the

acknowledgement does not require auction participants to engage in coordination with federal users in order to

accept interference from them, and (5) the coordination procedures are different from the notification procedures

that may be voluntarily implemented consistent with the required acknowledgement and Section 27.1134(f) of the

Commission’s rules. T-Mobile Comments at 7-9; AT&T Reply Comments at 13-15.

142 T-Mobile Comments at 6; AT&T Reply Comments at 13.

143 See Appendix G to this Public Notice (text of acknowledgement to be signed by applicants for 1755-1780 MHz

licenses); Section I.C.3., “Incumbency Issues,” above.

144 See, e.g., Implementation of the Commercial Spectrum Enhancement Act and Modernization of the

Commission’s Competitive Bidding Rules and Procedures, WT Docket No. 05-211, Report and Order, FCC 06-4,

21 FCC Rcd 891 (2006) (“CSEA/Part 1 Report and Order”); Second Report and Order and Second Further Notice

of Proposed Rule Making, FCC 06-52, 21 FCC Rcd 4753 (2006) (“CSEA/Part 1 Second Report and Order”), recon.

pending; Order on Reconsideration of the Second Report and Order, FCC 06-78, 21 FCC Rcd 6703 (2006)

(“CSEA/Part 1 Second Report and Order’s First Reconsideration Order”).

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1.

Bidding Credits for Small Businesses

80.

A bidding credit represents an amount by which a bidder’s winning bid will be

discounted. For Auction 97, bidding credits will be available to small businesses and consortia thereof.

a.

Bidding Credit Eligibility Criteria

81.

In the AWS-3 Report and Order, the Commission adopted small business bidding credits

to promote and facilitate the participation of small businesses in competitive bidding for licenses in the

AWS-3 bands.145

82.

The level of bidding credit is determined as follows:

A bidder with attributed average annual gross revenues that do not exceed $40 million for the

preceding three years will receive a 15 percent discount on its winning bid.146

A bidder with attributed average annual gross revenues that do not exceed $15 million for the

preceding three years will receive a 25 percent discount on its winning bid.147

83.

Bidding credits are not cumulative; qualifying applicants receive either the 15 percent or

the 25 percent bidding credit on its winning bid, but not both. Applicants should note that unjust

enrichment provisions apply to a winning bidder that utilizes a bidding credit and subsequently seeks to

assign or transfer control of its license to an entity not qualifying for the same level of bidding credit.148

b.

Revenue Disclosure on Short-Form Application

84.

An entity applying as a small business must provide gross revenues for the preceding

three years of each of the following: (1) the applicant, (2) its affiliates, (3) its controlling interests, (4) the

affiliates of its controlling interests, and (5) the entities with which it has an attributable material

relationship.149 Certification that the average annual gross revenues of such entities and individuals for

the preceding three years do not exceed the applicable limit is not sufficient. Additionally, if an applicant

is applying as a consortium of small businesses, this information must be provided for each consortium

member.150

2.

Attributable Interests

a.

Controlling Interests

85.

Controlling interests of an applicant include individuals and entities with either de facto

or de jure control of the applicant. Typically, ownership of greater than 50 percent of an entity’s voting

stock evidences de jure control. De facto control is determined on a case-by-case basis.151 The following

are some common indicia of de facto control:

145 See AWS-3 Report and Order, 29 FCC Rcd at 4680-81 ¶ 189.

146 See 47 C.F.R. §§ 1.2110(f)(2)(iii), 27.1106(a)(1), (b).

147 See 47 C.F.R. §§ 1.2110(f)(2)(ii), 27.1106(a)(2), (b).

148 See 47 C.F.R. § 1.2111.

149 47 C.F.R. §§ 1.2110(b)(1)(i), 1.2110(b)(3)(iv)(B). See also Part 1 Fifth Report and Order, 15 FCC Rcd at

15323-27 ¶¶ 59-67.

150 47 C.F.R. §§ 1.2110(b)(3)(i), 1.2110(b)(6), 1.2110(k).

151 For further guidance on the issue of de facto control, see the Commission’s affiliation rule at 47 C.F.R.

§1.2110(b)(5); see also Intermountain Microwave, Public Notice, 12 FCC 2d 559, 560, Report No. 1142 (1963);

Application of Baker Creek Communications, L.P., Memorandum Opinion and Order, DA 98-1921, 13 FCC Rcd

18709 (1998).

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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;

the entity plays an integral role in management decisions.152

86.

Applicants should refer to section 1.2110(c)(2) of the Commission’s rules and

Attachment D of this Public Notice to understand how certain interests are calculated in determining

control. For example, pursuant to section 1.2110(c)(2)(ii)(F), officers and directors of an applicant are

considered to have controlling interest in the applicant.153

b.

Affiliates

87.

Affiliates of an applicant or controlling interest include an individual or entity that

(1) directly or indirectly controls or has the power to control the applicant, (2) is directly or indirectly

controlled by the applicant, (3) is directly or indirectly controlled by a third party that also controls or has

the power to control the applicant, or (4) has an “identity of interest” with the applicant.154 The

Commission’s definition of an affiliate of the applicant encompasses both controlling interests of the

applicant and affiliates of controlling interests of the applicant.155 For more information regarding

affiliates, applicants should refer to section 1.2110(c)(5) and Attachment D to this Public Notice.

c.

Material Relationships

88.

The Commission requires the consideration of certain leasing and resale (including

wholesale) relationships — referred to as “attributable material relationships” — in determining

designated entity eligibility for bidding credits.156 An applicant or licensee has an “attributable material

relationship” when it has one or more agreements with any individual entity for the lease or resale

(including under a wholesale agreement) of, on a cumulative basis, more than 25 percent of the spectrum

capacity of any individual license held by the applicant or licensee. The attributable material relationship

will cause the gross revenues of that entity and its attributable interest holders to be attributed to the

applicant or licensee for the purposes of determining the applicant’s or licensee’s (i) eligibility for

designated entity benefits and (ii) liability for “unjust enrichment”157 on a license-by-license basis.158

89.

The Commission grandfathered material relationships in existence before the release of

the Designated Entity Second Report and Order, meaning that those preexisting relationships alone would

not cause the Commission to examine a designated entity’s ongoing eligibility for existing benefits or its

liability for unjust enrichment. The Commission did not, however, grandfather preexisting material

relationships for determinations of an applicant’s or licensee’s designated entity eligibility for future

auctions or in the context of future assignments, transfers of control, spectrum leases, or other reportable

152 47 C.F.R. § 1.2110(c)(2)(i)(A)-(C).

153 47 C.F.R. § 1.2110(c)(2)(ii)(F).

154 47 C.F.R. § 1.2110(c)(5).

155 Id.

156 See Council Tree Communications, Inc. v. FCC, 619 F.3d 235 (3d Cir. 2010) (affirming attributable material

relationship rule and vacating impermissible material relationship rule).

157 The repayment obligations of designated entities are governed by a five-year unjust enrichment schedule. Id.,

619 F.3d at 258 (vacating ten-year unjust enrichment schedule).

158 CSEA/Part 1 Second Report and Order, 21 FCC Rcd at 4759-60 ¶ 15, 4763-65 ¶¶ 25-30, 4765-68 ¶¶ 31-41; see

also CSEA/Part 1 Second Report and Order’s First Reconsideration Order, 21 FCC Rcd at 6712-13 ¶¶ 24-26; and

47 C.F.R. §§ 1.2110(b)(3)(iv)(B), 1.2111(d).

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eligibility events. Rather, in such circumstances, the Commission reexamines the applicant’s or

licensee’s designated entity eligibility, taking into account all existing material relationships, including

those previously grandfathered.159

d.

Gross Revenue Exceptions

90.

The Commission has also made other modifications to its rules governing the attribution

of gross revenues for purposes of determining designated entity eligibility. For example, the Commission

has clarified that, in calculating an applicant’s gross revenues under the controlling interest standard, it

will not attribute to the applicant the personal net worth, including personal income, of its officers and

directors.160

91.

The Commission has also exempted from attribution to the applicant the gross revenues

of the affiliates of a rural telephone cooperative’s officers and directors, if certain conditions specified in

section 1.2110(b)(3)(iii) of the Commission’s rules are met.161 An applicant claiming this exemption must

provide, in an attachment, an affirmative statement that the applicant, affiliate and/or controlling interest

is an eligible rural telephone cooperative within the meaning of section 1.2110(b)(3)(iii), and the

applicant must supply any additional information as may be required to demonstrate eligibility for the

exemption from the attribution rule.162 Applicants seeking to claim this exemption must meet all of the

conditions.163 Additional guidance on claiming this exemption may be found in Attachment D to this

Public Notice.

e.

Bidding Consortia

92.

A consortium of small businesses is a conglomerate organization composed of two or

more entities, each of which individually satisfies the definition of a small business.164 Thus, each

member of a consortium of small businesses that applies to participate in Auction 97 must individually

meet the criteria for small businesses, as set forth above.165 Each consortium member must disclose its

159 47 C.F.R. § 1.2110(b)(3)(iv)(C); CSEA/Part 1 Second Report and Order, 21 FCC Rcd at 4764 ¶¶ 28-29; see

CSEA/Part 1 Second Report and Order’s First Reconsideration Order, 21 FCC Rcd at 6713-14 ¶¶ 27-29; but see the

additional grandfathering provision in section 1.2110(b)(3)(iv)(C)(2) for the material relationships of those entities

that are an applicant’s affiliates based solely on 47 C.F.R. § 1.2110(c)(5)(i)(C). See also 47 C.F.R. §

1.2110(b)(3)(iv)(C)(2); CSEA/Part 1 Second Report and Order, 21 FCC Rcd at 4764-65 ¶ 30. The Bureau has

before it a request to waive the attributable material relationship rule, which would otherwise trigger the automatic

attribution to Grain Management, LLC, of its lessee’s gross revenues.

See Grain Management, LLC’s Request for

Clarification or Waiver of Section 1.2110(b)(3)(iv)(A) of the Commission’s Rules (filed March 4, 2014).

160 See 47 C.F.R. § 1.2110(c)(2)(ii)(F). See also Part 1 Fifth Report and Order’s First Reconsideration Order, 18

FCC Rcd at 10185-86 ¶¶ 8-9. However, to the extent that the officers and directors of the applicant are controlling

interest holders of other entities, the gross revenues of those entities will be attributed to the applicant. Moreover, if

an officer or director operates a separate business, the gross revenues derived from that separate business would be

attributed to the applicant, although any personal income from such separate business would not be attributed. Id.,

18 FCC Rcd at 10186 ¶ 9.

161 Part 1 Fifth Report and Order’s First Reconsideration Order, 18 FCC Rcd at 10186-94 ¶¶ 10-18; Amendment of

Part 1 of the Commission’s Rules – Competitive Bidding Procedures, WT Docket No. 97-82, Second Order on

Reconsideration of the Fifth Report and Order, FCC 04-295, 20 FCC Rcd 1942, 1945-46 ¶ 9 (2005) (“Fifth Report

and Order’s Second Reconsideration Order”).

162 47 C.F.R. § 1.2110(b)(3)(iii). See also Fifth Report and Order’s Second Reconsideration Order, 20 FCC Rcd at

1949-50 ¶ 18.

163 See Part 1 Fifth Report and Order’s First Reconsideration Order, 18 FCC Rcd at 10186-95 ¶¶ 10-20; see also

Fifth Report and Order’s Second Reconsideration Order, 20 FCC Rcd at 1945-46 ¶ 9.

164 47 C.F.R. § 1.2110(c)(6).

165 Id.

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gross revenues along with those of its affiliates, its controlling interests, the affiliates of its controlling

interests, and any entities having an attributable material relationship with the member. Although the

gross revenues of the consortium members will not be aggregated for purposes of determining the

consortium’s eligibility as a small business,166 this information must be provided to ensure that each

individual consortium member qualifies for any bidding credit awarded to the consortium.167

3.

Installment Payments

93.

Installment payments will not be available in Auction 97.

I.

Tribal Lands Bidding Credit

94.

To encourage the growth of wireless services in federally recognized tribal lands, the

Commission has implemented a tribal lands bidding credit. Applicants do not provide information

regarding tribal lands bidding credits on their short-form applications. Instead, winning bidders may

apply for the tribal lands bidding credit after the auction when they file their more detailed, long-form

applications. This process is described in Section V.E. “Tribal Lands Bidding Credit,” below.

J.

Provisions Regarding Former and Current Defaulters

95.

Current defaulters or delinquents are not eligible to participate in Auction 97, but former

defaulters or delinquents can participate so long as they are otherwise qualified and, as discussed in

Section III.D.3. below, make upfront payments that are fifty percent more than would otherwise be

necessary.168 An applicant is considered a “current defaulter” or a “current delinquent” when it, any of its

affiliates, any of its controlling interests, or any of the affiliates of its controlling interests, is in default on

any payment for any Commission construction permit or license (including a down payment) or is

delinquent on any non-tax debt owed to any Federal agency as of the filing deadline for short-form

applications. An applicant is considered a “former defaulter” or a “former delinquent” when it, any of its

affiliates, any of its controlling interests, or any of the affiliates of its controlling interests, have defaulted

on any Commission construction permit or license or been delinquent on any non-tax debt owed to any

Federal agency, but have since remedied all such defaults and cured all of the outstanding non-tax

delinquencies.

96.

Four trade associations have jointly requested that the Commission grant a limited,

temporary waiver of the Commission’s “former defaulter” rule, 47 C.F.R. § 1.2106(a), as to two

categories of debt for Auction 97 applicants.169 We conclude that any requests for temporary, limited

166 47 C.F.R. § 1.2110(b)(3)(i).

167 The CSEA/Part 1 Report and Order modified the procedure by which a consortium that is a winning bidder will

apply for a license. See CSEA/Part 1 Report and Order, 21 FCC Rcd at 911-12 ¶¶ 51-52. Applicants applying as

consortia should review the CSEA/Part 1 Report and Order and 47 C.F.R. §§ 1.2107(g) and 1.2110(b)(3) to

understand how the members of the consortia will apply for a license in the event they are winning bidders.

168 47 C.F.R. §§ 1.2105(a)(2)(x), (xi), 1.2105(b)(1), and 1.2106(a); see Part 1 Fifth Report and Order, 15 FCC Rcd

at 15317 ¶ 42 & n.142 (“If any one of an applicant’s controlling interests or their affiliates…is in default on any

Commission licenses or is delinquent on any non-tax debt owed to any Federal agency at the time the applicant files

it[s] FCC Form 175, the applicant will not be able to make the certification required by section 1.2105(a)(2)(x)…and

will not be eligible to participate in Commission auctions.”)

169 See Letter from Rebecca Murphy Thompson, General Counsel, CCA et al., to Marlene Dortch, Secretary, Federal

Communications Commission, RM-11395, GN Docket Nos. 13-185 and 12-268, and AU Docket No. 14-78 (filed

May 30, 2014); see also CCA/CTIA/NTCA June 6, 2014 Joint Ex Parte at 2-3. Several parties support the relief

requested by these trade associations and their proposed modifications to the rule. See DISH Comments at 19-20;

Spectrum Financial Partners Comments at 3; Verizon Wireless Comments at 3-4; AT&T Reply Comments at 17-18;

Letter from Stacey G. Black, Assistant Vice President, Federal Regulatory, External and Legislative Affairs, AT&T

Services, Inc., to Marlene H. Dortch, Secretary, Federal Communications Commission, AU Docket No. 14-78 (filed

July 15, 2014); Letter from Tamara Preiss, Vice President, Federal Regulatory Affairs, Verizon Wireless, to Marlene

(continued….)

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relief from the “former defaulter” rule are beyond the scope of this Public Notice, which is limited to

establishing procedures for the upcoming auction of AWS-3 licenses. We note, however, that such

requests are being addressed separately.

97.

On the short-form application, an applicant must certify under penalty of perjury that it,

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

1.2110 of the Commission’s rules,170 are not in default on any payment for a Commission construction

permit or license (including down payments) and that it is not delinquent on any non-tax debt owed to any

Federal agency.171 Each applicant must also state under penalty of perjury whether it, its affiliates, its

controlling interests, and the affiliates of its controlling interests, have ever been in default on any

Commission construction permit or license or have ever been delinquent on any non-tax debt owed to any

Federal agency.172 Prospective applicants 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.

98.

Applicants are encouraged to review the Bureau’s previous guidance on default and

delinquency disclosure requirements in the context of the short-form application process.173 For example,

it has been determined that, to the extent that Commission rules permit late payment of regulatory or

application fees accompanied by late fees, such debts will become delinquent for purposes of sections

1.2105(a) and 1.2106(a) only after the expiration of a final payment deadline.174 Therefore, with respect

to regulatory or application fees, the provisions of sections 1.2105(a) and 1.2106(a) regarding default and

delinquency in connection with competitive bidding are limited to circumstances in which the relevant

party has not complied with a final Commission payment deadline.175 Parties are also encouraged to

consult with the Wireless Telecommunications Bureau’s Auctions and Spectrum Access Division staff if

they have any questions about default and delinquency disclosure requirements.

99.

The Commission considers outstanding debts owed to the United States Government, in

any amount, to be a serious matter. The Commission adopted rules, including a provision referred to as

the “red light rule,” that implement its obligations under the Debt Collection Improvement Act of 1996,

which governs the collection of debts owed to the United States.176 Under the red light rule, applications

(Continued from previous page)

H. Dortch, Secretary, Federal Communications Commission, AU Docket No. 14-78 (filed July 16, 2014) at 1. We

encourage potential Auction 97 applicants to monitor any releases in the referenced proceedings. See Section I.C.8.

“Due Diligence,” above.

170 47 C.F.R. § 1.2110.

171 47 C.F.R. § 1.2105(a)(2)(x); see also Part 1 Fifth Report and Order, 15 FCC Rcd at 15317 ¶ 42 & n.142.

172 47 C.F.R. § 1.2105(a)(2)(xi); see also Part 1 Fifth Report and Order, 15 FCC Rcd at 15317 ¶ 42.

173 Wireless Telecommunications Bureau Reminds Prospective Broadband PCS Spectrum Auction Applicants of

Default and Delinquency Disclosure Requirements, Public Notice, DA 04-3491, 19 FCC Rcd 21920 (2004)

(“Auction Default Disclosure Public Notice”). This public notice may be found at

http://wireless.fcc.gov/auctions/58/.

174 Letter to Cheryl A. Tritt, Esq., from Margaret Wiener, Chief, Auctions and Spectrum Access Division, Wireless

Telecommunications Bureau, DA 04-3685, 19 FCC Rcd 22907 (2004) (clarifying the term “debt” or “non-tax debt”

as referenced in 47 C.F.R. §§ 1.2105(a) and 1.2106(a)). This letter may be found at

http://wireless.fcc.gov/auctions/58/.

175 Even where Commission rules expressly permit late payment, subject to payment of an additional late fee, and do

not impose a final payment deadline, the Commission may in some cases issue a demand for payment by a date

certain. See 47 C.F.R. § 1.1164(a). Failure to comply with the terms of a demand letter in the time period specified

may render the subject debt delinquent, notwithstanding rules generally permitting late payment.

176 Amendment of Parts 0 and 1 of the Commission's Rules; Implementation of the Debt Collection Improvement

Act of 1996 and Adoption of Rules Governing Applications or Requests for Benefits by Delinquent Debtors, MD

(continued….)

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and other requests for benefits filed by parties that have outstanding debts owed to the Commission will

not be processed. In the same rulemaking order, the Commission explicitly declared, however, that its

competitive bidding rules “are not affected” by the red light rule.177 As a consequence, the Commission’s

adoption of the red light rule does not alter the applicability of any of its competitive bidding rules,

including the provisions and certifications of sections 1.2105 and 1.2106, with regard to current and

former defaults or delinquencies.

100.

Applicants are reminded, however, that the Commission’s Red Light Display System,

which provides information regarding debts currently owed to the Commission, may not be determinative

of an auction applicant’s ability to comply with the default and delinquency disclosure requirements of

section 1.2105.178 Thus, while the red light rule ultimately may prevent the processing of long-form

applications by auction winners, an auction applicant’s lack of current “red light” status is not necessarily

determinative of its eligibility to participate in an auction or of its upfront payment obligation.

101.

Moreover, prospective applicants in Auction 97 should note that any long-form

applications filed after the close of bidding will be reviewed for compliance with the Commission’s red

light rule,179 and such review may result in the dismissal of a winning bidder’s long-form application.180

K.

Optional Applicant Status Identification

102.

Applicants owned by members of minority groups and/or women, as defined in section

1.2110(c)(3),181 and rural telephone companies, as defined in section 1.2110(c)(4), 182 may identify

themselves regarding this status in filling out their short-form applications. This applicant status

information is collected for statistical purposes only and assists the Commission in monitoring the

participation of “designated entities” in its auctions.183

L.

Minor Modifications to Short-Form Applications

103.

After the deadline for filing initial applications, an Auction 97 applicant is permitted to

make only minor changes to its application. Permissible minor changes include, among other things,

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

telephone numbers of the applicants and their contact persons. An applicant is not permitted to make a

major modification to its application (e.g., change of license selection, change control of the applicant,

change the certifying official, or claim eligibility for a higher percentage of bidding credit) after the initial

(Continued from previous page)

Docket No. 02-339, Report and Order, FCC 04-72, 19 FCC Rcd 6540 (2004) (implementing Pub. L. No. 104-134,

110 Stat. 1321, 1358 (1996)) (“Debt Collection Report and Order”).

177 Debt Collection Report and Order, 19 FCC Rcd at 6541 n.11 (specifically mentions 47 C.F.R. §§ 1.2105(a)(2)(x)

and (xi) and states that “[t]hese rules are not affected by the red light rule.”)

178 Auction Default Disclosure Public Notice, DA 04-3491, 19 FCC Rcd at 21920 (addressing relationship between

Commission’s Red Light Display System and short-form application default and delinquency disclosure

requirements for auction applicants).

179 Debt Collection Report and Order, 19 FCC Rcd at 6540. See 47 C.F.R. § 1.1114.

180 Applicants that have their long-form application dismissed will be deemed to have defaulted and will be subject

to default payments under 47 C.F.R. §§ 1.2104(g) and 1.2109(c).

181 47 C.F.R. § 1.2110(c)(3).

182 47 C.F.R. § 1.2110(c)(4).

183 Designated entities are defined as small businesses, businesses owned by members of minority groups and/or

women, and rural telephone companies. See 47 C.F.R. § 1.2110(a).

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application filing deadline.184 Thus, any change in control of an applicant — resulting from a merger, for

example — will be considered a major modification, and the application will consequently be

dismissed.185

104.

If an applicant wishes to make permissible minor changes to its short-form application,

such changes should be made electronically to its short-form application using the FCC Auction System

whenever possible. For the change to be submitted and considered by the Commission, be sure to click

on the SUBMIT button. After the revised application has been submitted, a confirmation page will be

displayed stating the submission time, submission date, and a unique file number.186

105.

An applicant cannot use the FCC Auction System outside of the initial and resubmission

filing windows to make changes to its short-form application for other than administrative changes (e.g.,

changing certain contact information or the name of an authorized bidder). If these or other permissible

minor changes need to be made outside of these windows, the applicant must submit a letter briefly

summarizing the changes and subsequently update its short-form application in the FCC Auction System

once it is available. Moreover, after the filing window has closed, the system will not permit applicants to

make certain changes, such as the applicant’s legal classification and license selections.

106.

Any letter describing changes to an applicant’s short-form application must be submitted

by e-mail to auction97@fcc.gov. The e-mail summarizing the changes must include a subject or caption

referring to Auction 97 and the name of the applicant, for example, “Re: Changes to Auction 97 Short-

Form Application of ABC Corp.” The Bureau requests that parties format any attachments to e-mail as

Adobe® Acrobat® (PDF) or Microsoft® Word documents. Questions about short-form application

amendments should be directed to the Auctions and Spectrum Access Division at (202) 418-0660.

107.

As with the short-form application, any application amendment and related statements of

fact must be certified by an authorized representative of the applicant with authority to bind the applicant.

Applicants should note that submission of any such amendment or related statement of fact constitutes a

representation by the person certifying that he or she is an authorized representative with such authority,

and that the contents of the amendment or statement of fact are true and correct.

108.

Applicants must not submit application-specific material through the Commission’s

Electronic Comment Filing System, which was used for submitting comments regarding Auction 97.

Further, as discussed above, parties submitting information related to their applications should use caution

to ensure that their submissions do not contain confidential information or communicate information that

would violate section 1.2105(c) or the limited information procedures adopted for Auction 97.187 A party

seeking to submit information that might reflect non-public information, such as an applicant’s license

selections, upfront payment amount, or bidding eligibility, should consider submitting any such

information along with a request that the filing or portions of the filing be withheld from public inspection

until the end of the prohibition of certain communications pursuant to section 1.2105(c).

M.

Maintaining Current Information in Short-Form Applications

109.

Sections 1.65 and 1.2105(b) of the Commission’s rules require an applicant to maintain

the accuracy and completeness of information furnished in its pending application and in competitive

184 47 C.F.R. § 1.2105(b); see also Two Way Radio of Carolina, Inc., Memorandum Opinion and Order, FCC 99-

189, 14 FCC Rcd 12035 (1999) (“Two Way Radio”)(auction applicant not allowed to change its designated entity

status after application filing deadline).

185 We reiterate that, even if an applicant’s short-form application is dismissed, the applicant would remain subject

to the communication prohibitions of 47 C.F.R. § 1.2105(c) until the down-payment deadline, which will be

established after the auction closes.

186 The Bureau advises applicants to retain a copy of this confirmation page.

187 See Section I.C.2.f. “Duty to Report Prohibited Communications,” above.

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bidding proceedings to furnish additional or corrected information to the Commission within five days of

a significant occurrence,188 or to amend a short form application no more than five days after the applicant

becomes aware of the need for the amendment.189 Changes that cause a loss of or reduction in the

percentage of bidding credit specified on the originally-submitted application must be reported

immediately, and no later than five business days after the change occurs. If an amendment reporting

changes is a “major amendment,” as defined by section 1.2105, the major amendment will not be

accepted and may result in the dismissal of the application.190 As noted above, after the short-form filing

deadline, applicants may make only minor changes to their applications. For changes to be submitted and

considered by the Commission, be sure to click on the SUBMIT button in the FCC Auction System. In

addition, an applicant cannot update its short-form application using the FCC Auction System after the

initial and resubmission filing windows close. If information needs to be submitted pursuant to section

1.65 after these windows close, a letter briefly summarizing the changes must be submitted by e-mail to

auction97@fcc.gov. This e-mail must include a subject or caption referring to Auction 97 and the name

of the applicant. The Bureau requests that parties format any attachments to e-mail as Adobe® Acrobat®

(PDF) or Microsoft® Word documents. A party seeking to submit information that might reflect non-

public information, such as an applicant’s license selections, upfront payment amount, or bidding

eligibility, should consider submitting any such information along with a request that the filing or

portions of the filing be withheld from public inspection until the end of the prohibition of certain

communications pursuant to section 1.2105(c).

III.

PRE-AUCTION PROCEDURES

A.

Online Auction Tutorial – Available August 28, 2014

110.

No later than Thursday, August 28, 2014, an auction tutorial will be available on the

Auction 97 web page for prospective bidders to familiarize themselves with the auction process.

This online tutorial will provide information about pre-auction procedures, completing short-form

applications, auction conduct, the FCC Auction Bidding System, auction rules, and AWS-3 service rules.

The tutorial will also provide an avenue to ask Commission staff questions about the auction, auction

procedures, filing requirements, and other matters related to this auction.

111.

The Bureau believes parties interested in participating in this auction will find the

interactive, online tutorial an efficient and effective way to further their understanding of the auction

process. The tutorial will allow viewers to navigate the presentation outline, review written notes, listen

to audio recordings of the notes, and search for topics using a text search function. Additional features of

this web-based tool include links to auction-specific Commission releases, e-mail links for contacting

Commission licensing and auctions staff, a timeline with deadlines for auction preparation, and screen

shots of the online application and bidding system. The tutorial will be accessible through a web browser

with Adobe Flash Player.191

112.

The auction tutorial will be accessible from the Commission’s Auction 97 web page at

http://wireless.fcc.gov/auctions/97/ through an “Auction Tutorial” link. Once posted, this tutorial will

remain available and accessible anytime for reference in connection with the procedures outlined in this

Public Notice.

188 We remind each applicant of its duty to continuously maintain the accuracy of information submitted in its

auction application. See, e.g., Vermont Telephone Company, Notice of Apparent Liability for Forfeiture, 26 FCC

Rcd 14130 (Enf. 2011).

189 47 C.F.R. §§ 1.65, 1.2105(b). See also Part 1 Procedural Amendments Order, 25 FCC Rcd at 523 ¶ 8.

190 47 C.F.R. § 1.2105(b)(2).

191 Most users will already have the Flash Player browser plug-in, which can be downloaded from

http://get.adobe.com/flashplayer/.

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113.

Spectrum Financial Partners asks that we clarify the online interactive auction tutorial to

include a clear description of the various fields in the downloadable reports, which might not be familiar

to those taking part in a Commission auction for the first time.192 Spectrum Financial Partners also urges

us to do more to make the auction tutorial more broadly available, perhaps even by posting a video

version of the interactive tutorial on YouTube.193 We find the description of the various fields in the

downloadable reports contained in our auction materials to be sufficiently clear, even for first-time

bidders. Our “Integrated Spectrum Auction System (ISAS) Bidder’s Guide” — which is sent by

overnight delivery to all qualified bidders in advance of the mock auction and which is also available to

the public in the FCC Auction System — provides additional information. We therefore decline to make

the changes to the tutorial materials requested by Spectrum Financial Partners. In addition, because our

auction tutorial is publicly-available on the Auction 97 website and is accessible 24 hours a day, 7 days a

week, it is already widely accessible, and we are not persuaded that there is any need to create other

formats of the tutorial.194

B.

Short-Form Applications – Due Prior to 6:00 p.m. ET on September 12, 2014

114.

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

set forth in Attachments D and E to this Public Notice to submit a short-form application (FCC Form 175)

electronically via the FCC Auction System.195 This short-form application must be submitted prior to

6:00 p.m. ET on September 12, 2014. Late applications will not be accepted. No application fee is

required, but an applicant must submit a timely upfront payment to be eligible to bid.196

115.

Applications may generally be filed at any time beginning at noon ET on August 28,

2014, until the filing window closes at 6:00 p.m. ET on September 12, 2014. Applicants are strongly

encouraged to file early and are responsible for allowing adequate time for filing their applications. There

are no limits or restrictions on the number of times an application can be updated or amended until the

filing deadline on September 12, 2014.

116.

An applicant must always click on the SUBMIT button on the “Certify & Submit” screen

to successfully submit its FCC Form 175 and any modifications; otherwise the application or changes to

the application will not be received or reviewed by Commission staff. Additional information about

accessing, completing, and viewing the FCC Form 175 is included in Attachment D. FCC Auctions

Technical Support is available at (877) 480-3201, option nine; (202) 414-1250; or (202) 414-1255 (text

telephone (TTY)); hours of service are Monday through Friday, from 8:00 a.m. to 6:00 p.m. ET. In order

to provide better service to the public, all calls to Technical Support are recorded.

C.

Application Processing and Minor Corrections

117.

After the deadline for filing short-form applications, the Commission will process all

timely submitted applications to determine which are complete, and subsequently will issue a public

notice identifying (1) those that are complete, (2) those that are rejected, and (3) those that are incomplete

or deficient because of minor defects that may be corrected. The public notice will include the deadline

for resubmitting corrected applications.

192 See Spectrum Financial Partners Comments at 3.

193 Id.

194 Because certain portions of our auction tutorial are interactive, posting the auction tutorial to sites such as

YouTube would make such interactive features inaccessible. In addition, our tutorial is designed to be compliant

with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d, as amended by

the Workforce Investment Act of 1998, P.L. 105-220).

Posting the tutorial to sites such as YouTube could disable

certain Section 508-compliant features.

195 47 C.F.R. § 1.2105(a).

196 See Section III.D. “Upfront Payments – Due October 15, 2014,” below.

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118.

As described above, after the application filing deadline on September 12, 2014,

applicants can make only minor corrections to their applications.197 They will not be permitted to make

major modifications (e.g., change license selection, change control of the applicant, change the certifying

official, or claim eligibility for a higher percentage of bidding credit).198

119.

Commission staff will communicate only with an applicant’s contact person or certifying

official, as designated on the short-form application, unless the applicant’s certifying official or contact

person notifies the Commission in writing that applicant’s counsel or other representative is authorized to

speak on its behalf.199 Authorizations may be sent by e-mail to auction97@fcc.gov.

D.

Upfront Payments – Due October 15, 2014

120.

In order to be eligible to bid in this auction, an upfront payment must be submitted and

accompanied by an FCC Remittance Advice Form (FCC Form 159). After completing its short-form

application, an applicant will have access to an electronic version of the FCC Form 159 that can be

printed and sent by fax to U.S. Bank in St. Louis, Missouri. All upfront payments must be made as

instructed in this Public Notice and must be received in the proper account at U.S. Bank before

6:00 p.m. ET on October 15, 2014.

1.

Making Upfront Payments by Wire Transfer

121.

Wire transfer payments must be received before 6:00 p.m. ET on October 15, 2014.200

No other payment method is acceptable.201 To avoid untimely payments, applicants should discuss

arrangements (including bank closing schedules) with their bankers 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. The following information will be needed:

ABA Routing Number: 081000210

Receiving Bank:

U.S. Bank

1005 Convention Plaza

St. Louis, MO 63101

BENEFICIARY: FCC/Account # 152307774819

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

“AUCTIONPAY”

APPLICANT FCC REGISTRATION NUMBER (FRN): (same as FCC Form 159, block 21)

PAYMENT TYPE CODE: (same as FCC Form 159, block 24A: “U097”)

FCC CODE 1: (same as FCC Form 159, block 28A: “97”)

PAYER NAME: (same as FCC Form 159, block 2)

LOCKBOX NO: # 979085

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.

197 See Section II.L. “Minor Modifications to Short-Form Applications,” above.

198 47 C.F.R. § 1.2105(b); see also Two Way Radio, 14 FCC Rcd at 12035.

199 In no event, however, will the FCC send auction registration materials to anyone other than the contact person

listed on the applicant’s FCC Form 175 or respond to a request for replacement registration materials from anyone

other than the authorized bidder, contact person, or certifying official listed on the applicant’s FCC Form 175. See

Section III.F. “Auction Registration,” below.

200 An applicant must initiate the wire transfer through its bank, authorizing the bank to wire funds from the

applicant’s account to the Commission’s auction payment lockbox bank, the U.S. Bank in St. Louis, Missouri.

201 The Commission will not accept checks, credit cards, or automated clearing house (ACH) payments.

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122.

At least one hour before placing the order for the wire transfer (but on the same business

day), applicants must fax a completed FCC Form 159 (Revised 2/03) to U.S. Bank at (314) 418-4232. On

the fax cover sheet, write “Wire Transfer – Auction Payment for Auction 97.” In order to meet the

upfront payment deadline, an applicant’s payment must be credited to the Commission's account for

Auction 97 before the deadline.202

123.

Each applicant is responsible for ensuring timely submission of its upfront payment and

for timely filing of an accurate and complete FCC Remittance Advice Form (FCC Form 159). An

applicant should coordinate with its financial institution well ahead of the due date regarding its wire

transfer and allow sufficient time for the transfer to be initiated and completed prior to the deadline. The

Commission repeatedly has cautioned auction participants about the importance of planning ahead to

prepare for unforeseen last-minute difficulties in making payments by wire transfer.203 Each applicant

also is responsible for obtaining confirmation from its financial institution that its wire transfer to

U.S. Bank was successful and from Commission staff that its upfront payment was timely received

and that it was deposited into the proper account. To receive confirmation from Commission staff,

contact Gail Glasser of the Office of Managing Director’s Auctions Accounting Group at (202) 418-0578,

or alternatively, Theresa Meeks at (202) 418-2945.

124.

Please note the following information regarding upfront payments:

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

All payments must be made by wire transfer.

Upfront payments for Auction 97 go to a lockbox number different from the lockboxes used in

previous Commission auctions.

Failure to deliver a sufficient upfront payment as instructed by the October 15, 2014, deadline

will result in dismissal of the short-form application and disqualification from participation in

the auction.

2.

FCC Form 159

125.

An accurate and complete FCC Remittance Advice Form (FCC Form 159, Revised 2/03)

must be faxed to U.S. Bank to accompany each upfront payment. Proper completion of this form is

critical to ensuring correct crediting of upfront payments. Detailed instructions for completion of FCC

Form 159 are included in Attachment E. An electronic pre-filled version of the FCC Form 159 is

available after submitting the FCC Form 175. Payers using the pre-filled FCC Form 159 are responsible

for ensuring that all of the information on the form, including payment amounts, is accurate. The FCC

Form 159 can be completed electronically, but it must be filed with U.S. Bank by fax.

3.

Upfront Payments and Bidding Eligibility

126.

The Commission has delegated to the Bureau the authority and discretion to determine

appropriate upfront payments for each auction.204 An upfront payment is a refundable deposit made by

each bidder to establish its eligibility to bid on licenses. Upfront payments help deter frivolous or

202 Letter to Lee G. Petro, from Margaret W. Wiener, Chief, Auctions and Spectrum Access Division, Wireless

Telecommunications Bureau, DA 10-1270, 25 FCC Rcd 9046 (Auc. Div. 2010).

203 See, e.g., Letter to David G. O’Neil, Esq. from Margaret W. Wiener, Chief, Auctions and Spectrum Access

Division, Wireless Telecommunications Bureau, DA 08-622, 23 FCC Rcd 4765 (2008); Letter to Patrick Shannon,

Esq., Counsel for Lynch 3G Communications Corp., from Margaret W. Wiener, Chief, Auctions and Industry

Analysis Division, Wireless Telecommunications Bureau, DA 03-1944, 18 FCC Rcd 11552 (2003).

204 Amendment of Part 1 of the Commission’s Rules – Competitive Bidding Proceeding, WT Docket No. 97-82,

Order, Memorandum Opinion and Order and Notice of Proposed Rule Making, FCC 97-60, 12 FCC Rcd 5686,

5697-98 ¶ 16 (1997); see also Broadcast First Report and Order, 13 FCC Rcd at 15971 ¶ 134.

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insincere bidding, and provide the Commission with a source of funds in the event that the bidder incurs

liability during the auction.

127.

Applicants that are former defaulters, as described above, must make upfront payments

that are fifty percent greater than non-former defaulters.205 For purposes of this calculation, the

“applicant” includes the applicant itself, its affiliates, its controlling interests, and affiliates of its

controlling interests, as defined by section 1.2110 of the Commission’s rules.206

128.

An applicant must make an upfront payment sufficient to obtain bidding eligibility for the

licenses on which it will bid. The Bureau proposed in the Auction 97 Comment Public Notice that the

amount of the upfront payment would determine a bidder’s initial bidding eligibility, i.e., the maximum

number of bidding units on which a bidder may place bids.207

Under the Bureau’s proposal, in order to

bid on a particular license, a qualified bidder must have selected the license on its FCC Form 175 and

must have a current eligibility level that meets or exceeds the number of bidding units assigned to that

license. At a minimum, therefore, an applicant’s total upfront payment must be enough to establish

eligibility to bid on at least one of the licenses selected on its FCC Form 175 for Auction 97, or else

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

upfront payment to cover all licenses the applicant selected on its FCC Form 175, but only enough to

cover the maximum number of bidding units that are associated with licenses on which it wishes to place

bids and hold provisionally winning bids in any given round.208 The total upfront payment does not affect

the total dollar amount the bidder may bid on any given license.

129.

In the Auction 97 Comment Public Notice, the Bureau proposed to make the upfront

payments equal to approximately one-half of the minimum opening bids.209 The Bureau further proposed

that each license be assigned a specific number of bidding units, equal to one bidding unit per dollar of

the upfront payment listed for the license.210 The number of bidding units for each license will remain

constant throughout the auction. The Bureau did not receive any comments on its proposals for

calculating upfront payments or assigning bidding units to each license, and thus adopts upfront payments

that are approximately one-half of the minimum opening bids. We note that, because the minimum

opening bids we adopt in this Public Notice differ from those proposed, the number of bidding units and

the upfront payment amount associated with each license are different than those that were proposed in

the Auction 97 Comment Public Notice. The complete list of licenses for Auction 97 and the specific

number of bidding units and associated upfront payment for each license are set forth in Attachment A to

this Public Notice.

130.

In calculating its upfront payment amount, an applicant should determine the maximum

number of bidding units on which it may wish to be active (bid on or hold provisionally winning bids on)

205 Part 1 Fifth Report and Order, 15 FCC Rcd at 15316-17 ¶¶ 40-42; see also 47 C.F.R. § 1.2106(a); Section II.J.

“Provisions Regarding Former and Current Defaulters,” above.

206 47 C.F.R. § 1.2110(c).

207 Auction 97 Comment Public Notice, 29 FCC Rcd at 5227-28 ¶ 33.

208 Provisionally winning bids are bids that would become final winning bids if the auction were to close after the

given round. See Section IV.B.4. “Provisionally Winning Bids,” below.

209 Auction 97 Comment Public Notice, 29 FCC Rcd at 5227 ¶ 32.

210 Id. at 5227-28 ¶ 33. “Former Defaulters” – i.e., applicants, including any of their affiliates, any of their

controlling interests, or any of the affiliates of their controlling interests, that in the past have defaulted on any

Commission license or been delinquent on any non-tax debt owed to any Federal agency, but that have since

remedied all such defaults and cured all of their outstanding non-tax delinquencies – are required to pay upfront

payments that are fifty percent more than the normal upfront payment amounts. 47 C.F.R. § 1.2106(a).

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in any single round, and submit an upfront payment amount covering that number of bidding units.211 In

order to make this calculation, an applicant should add together the bidding units for all licenses on which

it seeks to be active in any given round. Each applicant should check its calculations carefully, as

there is no provision for increasing a bidder’s eligibility after the upfront payment deadline.

Table 2: Upfront Payments, Bidding Eligibility, and Bidding Flexibility Example

License

Market

Description

Bidding Units

Upfront Payment

AW-CMA166-G

CMA166

Hickory, NC

30,000

$30,000

AW-CMA183-G

CMA183

Asheville, NC

28,000

$28,000

131.

If a bidder wishes to bid on both licenses in a round, it must have selected both on its

FCC Form 175 and purchased at least 58,000 bidding units (30,000 + 28,000) of bidding eligibility. If a

bidder only wishes to bid on one of these licenses, purchasing 30,000 bidding units would allow the

bidder to bid on either license, but not both at the same time. If the bidder purchased only 28,000 bidding

units, it would have enough eligibility for the Asheville license but not the Hickory license.212

132.

If an applicant is a former defaulter, it must calculate its upfront payment for all of its

identified licenses by multiplying the number of bidding units on which it wishes to be active by 1.5.213

In order to calculate the number of bidding units to assign to former defaulters, the Commission will

divide the upfront payment received by 1.5 and round the result up to the nearest bidding unit.214

E.

Applicant’s Wire Transfer Information for Purposes of Refunds of Upfront

Payments

133.

To ensure that refunds of upfront payments are processed in an expeditious manner, the

Commission is requesting that all pertinent information listed below be supplied. Applicants can provide

the information electronically during the initial short-form application filing window after the form has

been submitted. (Applicants are reminded that information submitted as part of an FCC Form 175 will be

available to the public.

For that reason, wire transfer information should not be included in an FCC Form

175.) Wire Transfer Instructions can also be faxed to the FCC, Financial Operations, Auctions

Accounting Group, Attn: Gail Glasser, at (202) 418-2980. Eligibility for refunds is discussed in

211 A qualified bidder’s maximum eligibility will not exceed the sum of the bidding units associated with the total

number of licenses identified on its FCC Form 175. In some cases a qualified bidder's maximum eligibility may be

less than the amount of its upfront payment because the qualified bidder has either previously been in default on a

Commission construction permit or license or delinquent on non-tax debt owed to a Federal agency (see 47 C.F.R. §

1.2106(a)), or has submitted an upfront payment that exceeds the total amount of bidding units associated with the

licenses it selected on its FCC Form 175.

212 Spectrum Financial Partners supports the proposal to permit bidders to allocate upfront payments to multiple

licenses of equal or lessor values, but notes that the examples provided in the Auction 97 Comment Public Notice are

both CMA licenses. See Spectrum Financial Partners Comments at 2.

It recommends allowing bidders to allocate

their upfront payments to bids for either CMA or EA licenses, and asks for clarification that such flexibility will be

permitted between CMA and EA licenses. Id. Spectrum Financial Partners’ need not be concerned about our use of

only CMA-based licenses in the above example. While our example uses only CMA-based licenses, an upfront

payment will be applicable to individual licenses based solely on the bidding units it represents without regard to the

geographic area type covered by the license.

213 47 C.F.R. § 1.2106(a).

214 If a former defaulter fails to submit a sufficient upfront payment to establish eligibility to bid on at least one of

the licenses selected on its FCC Form 175, the applicant will not be eligible to participate in the auction. This

applicant will retain its status as an applicant in Auction 97 and will remain subject to 47 C.F.R. §§ 1.2105(c). See

Star Wireless and Northeast Communications of Wisconsin, Inc., Order on Review, 22 FCC Rcd 8943, 8947 ¶ 8.

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Section V. G., below. All refunds will be returned to the payer of record as identified on the FCC Form

159 unless the payer submits written authorization instructing otherwise. For additional information,

please call Gail Glasser at (202) 418-0578.

Name of Bank

ABA Number

Address of Bank

Contact and Phone Number

Account Number to Credit

Name of Account Holder

FCC Registration Number (FRN)

Correspondent Bank (if applicable)

ABA Number

Account Number

F.

Auction Registration

134.

Approximately ten days before the auction, the Bureau will issue a public notice

announcing all qualified bidders for the auction. Qualified bidders are those applicants with submitted

short-form applications that are deemed timely-filed, accurate, and complete, provided that such

applicants have timely submitted an upfront payment that is sufficient to qualify them to bid.

135.

All qualified bidders are automatically registered for the auction. Registration materials

will be distributed prior to the auction by overnight mail. The mailing will be sent only to the contact

person at the contact address listed in the FCC Form 175 and will include the SecurID® tokens that will

be required to place bids, the “Integrated Spectrum Auction System (ISAS) Bidder’s Guide,” and the

Auction Bidder Line phone number.

136.

Qualified bidders that do not receive this registration mailing will not be able to submit

bids. Therefore, if this mailing is not received by noon on Thursday, November 6, 2014, call the

Auctions Hotline at (717) 338-2868. Receipt of this registration mailing is critical to participating in the

auction, and each applicant is responsible for ensuring it has received all of the registration material.

137.

In the event that SecurID® tokens are lost or damaged, only a person who has been

designated as an authorized bidder, the contact person, or the certifying official on the applicant’s short-

form application may request replacements. To request replacement of these items, call Technical

Support at (877) 480-3201, option nine; (202) 414-1250; or (202) 414-1255 (TTY).

G.

Remote Electronic Bidding

138.

The Commission will conduct this auction over the Internet, and telephonic bidding will

be available as well. Only qualified bidders are permitted to bid. Each applicant should indicate its

bidding preference — electronic or telephonic — on its FCC Form 175. In either case, each authorized

bidder must have its own SecurID® token, which the Commission will provide at no charge. Each

applicant with one authorized bidder will be issued two SecurID® tokens, while applicants with two or

three authorized bidders will be issued three tokens. For security purposes, the SecurID® tokens, the

telephonic bidding telephone number, and the “Integrated Spectrum Auction System (ISAS)

Bidder’s Guide” are only mailed to the contact person at the contact address listed on the FCC

Form 175. Each SecurID® token is tailored to a specific auction. SecurID® tokens issued for other

auctions or obtained from a source other than the FCC will not work for Auction 97.

139.

Please note that the SecurID® tokens can be recycled, and the Bureau encourages bidders

to return the tokens to the FCC. Pre-addressed envelopes will be provided to return the tokens once

bidding has closed.

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H.

Mock Auction – November 10, 2014

140.

All qualified bidders will be eligible to participate in a mock auction on Monday,

November 10, 2014. The mock auction will enable bidders to become familiar with the FCC Auction

System prior to the auction. The Bureau strongly recommends that all bidders participate in the mock

auction. Details will be announced by public notice.

141.

DISH requests that we conduct at least one, but preferably two, mock auctions at least

one week before the auction begins, and that the mock auction(s) offer the same number of licenses as the

auction itself to match the actual auction’s scenarios as closely as possible.215 In keeping with our

practice in most auctions, we will hold a mock auction shortly before the start of Auction 97 that will

offer a sampling of licenses available in the auction. Based on our experience, this approach provides

adequate practice and avoids the need to lengthen the time period between the short-form application

deadline and the start of bidding.

IV.

AUCTION

142.

The first round of bidding for Auction 97 will begin on Thursday, November 13, 2014.

The initial bidding schedule will be announced in a public notice listing the qualified bidders, which is

released approximately 10 days before the start of the auction.

A.

Auction Structure

1.

Simultaneous Multiple Round Auction

143.

In the Auction 97 Comment Public Notice, the Bureau proposed to auction all licenses in

Auction 97 in a single auction using a standard simultaneous multiple-round (“SMR”) auction format.216

This format offers every license for bid at the same time and consists of successive bidding rounds in

which eligible bidders may place bids on individual licenses. A bidder may bid on, and potentially win,

any number of licenses.

144.

With one exception, all commenters that discussed this issue support using a standard

SMR auction format without any form of package bidding.217 AT&T notes that this format has been used

successfully for two decades and that the wireless industry is extremely familiar with it.218 AT&T

maintains that using this design for Auction 97 will promote a competitive and fair auction where both

large and small bidders are familiar with the format and can make informed choices in an efficient

manner.219 Verizon Wireless supports the use of package bidding in Auction 97, and proposes allowing

applicants to bid on a nationwide package of licenses in the H, I, and J Blocks.220 Verizon Wireless

maintains that package bidding will increase participation and bidding competition because it allows

bidders to bid on both the value of the individual EA licenses and the value of obtaining spectrum

nationwide over a consistent set of frequencies. Verizon Wireless also claims that the risk of failing to

acquire all licenses in a business plan (the “exposure problem”) may inhibit participation because, for

some bidders, the potential for acquisition of all desired licenses is needed to support individual license

215 DISH Comments at 17.

216 Auction 97 Comment Public Notice, 29 FCC Rcd at 5224 ¶ 17.

217 AT&T Comments at 1-2; C Spire Comments at 2-3; CCA Comments at 9; US Cellular Comments at 5, 7; AT&T

Reply Comments at 2; CCA Reply Comments at 5-8; C Spire Reply Comments at 2-4; New America

Foundation/Public Knowledge Reply Comments at 2-3, 7-9; NTCA Reply Comments at 5-6; US Cellular Reply

Comments at 2-7.

218 See AT&T Comments at 1-2.

219 Id.

220 Verizon Comments at 8-10.

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bid amounts.221 However, US Cellular asserts that Verizon Wireless has previously made clear that the

availability of larger license areas, such as the EA-based licenses being offered in Auction 97, would

significantly mitigate the “exposure risks” it would face if it could not bid on packages of smaller license

areas.222

145.

We conclude, based on the record and in light of our experience with previous spectrum

auctions, including auctions of Advanced Wireless Services (“AWS”) licenses, that a standard SMR

format will provide bidders with a simple and efficient means of bidding on single or multiple licenses

and will offer adequate opportunity for bidders in Auction 97 to aggregate licenses in order to obtain the

level of coverage they desire consistent with their business plans.223 We therefore adopt a standard SMR

auction format for Auction 97. Accordingly, bids will be accepted on all licenses in each round of the

auction until bidding stops on every license unless otherwise announced.224

2.

Single Auction with a Single Set of Procedures and Requirements for the

Unpaired and Paired Bands

146.

A number of commenters ask (to varying degrees) that we recognize the differences

between the unpaired and paired bands when adopting procedures and requirements for Auction 97 by

establishing separate bidding eligibility, activity waivers, and stopping rules for the bands.225 They

submit that it is not likely that licenses in the bands could be used as close substitutes because they have

different technical characteristics and likely uses, and that combined procedures could enable bidders to

use bidding strategies designed to hurt smaller competitors and new entrants, which could deter

competition.226 These commenters advocate establishing separate upfront payment requirements and

bidding eligibility for the unpaired and paired bands to prevent a bidder from gaming eligibility and

activity requirements by “parking” bidding eligibility on licenses in one band to lock competitors out of

that spectrum or distract from its real interests.227 They argue that such strategic parking enables larger

competitors to drive up the cost of spectrum they have no real interest in winning, and could cause

smaller competitors or new entrants to drop out of the auction early, thereby potentially depressing

auction revenues.228 They maintain that separate eligibility and activity requirements will avoid such

results.229

221 Id.

222 US Cellular Comments at 8-9.

223 Our decision not to employ package bidding for AWS-3 licenses in Auction 97 does not reflect on or preclude

future use of package bidding in Commission auctions.

224 See Section IV.A.8, “Auction Stopping Rules,” below.

225 CCA Comments at 6-7; DISH Comments at 2-17; T-Mobile Comments at 2-4; CCA Reply Comments at 3-4; C

Spire Reply Comments at 2; New America Foundation/Public Knowledge Reply Comments at 3-6. DISH notes that

the Spectrum Act does not require the bands to be auctioned simultaneously, or that combined bidding and

eligibility procedures be used. DISH Comments at 13. T-Mobile makes a recommendation concerning our proposed

auction stopping rules, which we address separately in Section IV.A.8 “Auction Stopping Rules,” below.

226 CCA Comments at 6-7; DISH Comments at 2-3, 8; New America Foundation/Public Knowledge Reply

Comments at 3-6; CCA Reply Comments at 3-4.

227 See CCA Comments at 6-7; DISH Comments at 10-11, 16-17.

228 See CCA Comments at 6-7; DISH Comments at 3, 8-11; New America Foundation/Public Knowledge Reply

Comments at 3-6; CCA Reply Comments at 3-4.

229 See CCA Comments at 7; DISH Comments at 10-11, 16-17; New America Foundation/Public Knowledge Reply

Comments at 3-6; CCA Reply Comments at 3-4.

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147.

AT&T and Verizon Wireless support a single auction with a single set of procedures.230

Verizon Wireless submits that separate auctions would significantly increase auction complexity, limit

applicants’ bidding flexibility, inhibit competition for the 1695-1710 MHz band, and decrease auction

revenues.231 AT&T argues that commenters’ arguments in support of adopting separate procedures and

requirements are premised on the false assumptions that the different technical characteristics of the bands

warrant separate auction treatment, and that employing common auction procedures for both bands will

encourage parking.232 Both AT&T and Verizon Wireless maintain that other bidders may view the bands

as substitutable or complementary and, if so, public interest objectives are best promoted by allowing the

market to reflect substitutability through a single set of auction procedures.233 They also contend that

commenters’ concerns about parking are misplaced, because an applicant bidding solely on the 1695-

1710 MHz band to preserve eligibility will quickly move its bids as soon as the reserve is met, and thus

eligibility “parkers” will not drive up the price any higher than otherwise required to meet the reserve.234

148.

Auction 97 will offer paired and unpaired licenses in a single auction subject to one set of

procedures and requirements. Particularly where, as here, interested parties are divided on whether

licenses being offered may be characterized as substitutes, such information may best be discovered

through a competitive bidding process. Offering both the paired and unpaired bands in the same auction

will allow market forces to determine the degree to which market participants view the AWS-3 spectrum

blocks as substitutable. Our approach is grounded in our experience with past auctions where the degree

to which licenses may be characterized as substitutable or complementary differs depending upon the

perspective of each auction participant.235 Providing for two different sets of bidding eligibility, activity

waivers, and stopping rules would disadvantage bidders interested in both paired and unpaired blocks by

forcing them to manage two separate pools of eligibility, which would reduce their ability to pursue

backup strategies as prices rise. Whether in one auction or two simultaneous auctions, requiring bidders

interested in both blocks to deal with separate sets of bidding actions would invite confusion and could

lead to mistakes in bidding. Elsewhere in this Public Notice, we describe procedures that are intended to

ameliorate the parking concerns raised by commenters. Accordingly, we will conduct Auction 97 under a

single set of procedures and requirements covering both the unpaired and paired bands.

3.

Limited Information Disclosure Procedures: Information Available to

Bidders Before and During the Auction

149.

Consistent with its practice in several prior wireless spectrum auctions, the Bureau

proposed in the Auction 97 Comment Public Notice to withhold, until after the close of bidding, public

release of (1) bidders’ license selections on their short-form applications (FCC Form 175), (2) the

230 AT&T Reply Comments at 2-7; Verizon Wireless Reply Comments at 5-6; AT&T July 15, 2014 Ex Parte.

231 Verizon Wireless Reply Comments at 5; Verizon Wireless July 16, 2014 Ex Parte at 2.

232 AT&T Reply Comments at 2-3.

233 AT&T Reply Comments at 3-5; Verizon Wireless Reply Comments at 5. See also Letter from Stacey G. Black,

Assistant Vice President, Federal Regulatory, External and Legislative Affairs, AT&T Services, Inc., to Marlene H.

Dortch, Secretary, Federal Communications Commission, AU Docket No. 14-78 (filed July 11, 2014) at 2 (the

Commission should allow the both the paired and unpaired bands to be included in Auction 97 and allow bidders to

determine the extent to which these bands are substitutable or complementary); Verizon Wireless July 16, 2014 Ex

Parte at 2 (questioning the assumption by DISH that the bands are not substitutes for one another).

234 AT&T Reply Comments at 6; Verizon Wireless Reply Comments at 5-6.

235 For example, in Auction 73, the Commission offered licenses covering five blocks of 700 MHz band spectrum,

including both paired and unpaired licenses having differing geographic area sizes, service rules, and technical

requirements. See Auction of 700 MHz Band Licenses Scheduled for January 24, 2008; Notice and Filing

Requirements, Minimum Opening Bids, Reserve Prices, Upfront Payments and Other Procedures for Auction 73,

Public Notice, 22 FCC Rcd 18141 (2007) (“Auction 73 Procedures Public Notice”).

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amounts of bidders’ upfront payments and bidding eligibility, and (3) information that may reveal the

identities of bidders placing bids and taking other bidding-related actions.236 The Bureau sought comment

on the proposal to implement limited information disclosure procedures and on any alternatives for

Auction 97.237

150.

We received several comments on our proposal to employ limited information disclosure

procedures for Auction 97, both in support238 and in opposition.239 The limited information disclosure

procedures used in past auctions have helped safeguard against potential anticompetitive behavior such as

retaliatory bidding and collusion,240 and after carefully considering the record on this issue, we find

nothing that persuades us that we should depart from our now-established practice of implementing these

procedures in wireless spectrum auctions.241 We disagree with the assertions of commenters that argue

that limited information disclosure procedures are unnecessary or harmful to smaller bidders,242 and

conclude that the competitive benefits associated with limiting information disclosure support adoption of

such procedures and outweigh the potential benefits of full disclosure.243

Accordingly, we adopt the

limited information disclosure procedures proposed in the Auction 97 Comment Public Notice.244

Thus,

after the conclusion of each round, the Bureau will disclose all relevant information about the bids placed

and/or withdrawn except the identities of the bidders performing the actions and the net amounts of the

bids placed or withdrawn. As in past auctions conducted with limited information procedures, the Bureau

will indicate, for each license, the minimum acceptable bid amount for the next round and whether the

license has a provisionally winning bid. After each round, the Bureau will also release, for each license,

the number of bidders that placed a bid on the license and the amounts of those bids. Furthermore, the

Bureau will indicate whether any proactive waivers were submitted in each round, and the Bureau will

release the stage transition percentage — the percentages of licenses (as measured in bidding units) on

which there were new bids — for the round. In addition, bidders can log in to the FCC Auction System to

236 Auction 97 Comment Public Notice, 29 FCC Rcd at 5224 ¶¶ 18-22.

237 Id. at 5225 ¶ 23.

238 See AT&T Comments at 1-2; C Spire Comments at 2-3; DISH Comments at 14-16; New America

Foundation/Public Knowledge Reply Comments at 2, 6-7; AT&T Reply Comments at 2; C Spire Reply Comments

at 4-5; Verizon Wireless Reply Comments at 3-5; Verizon Wireless July 16, 2014 Ex Parte at 1.

239 See CCA Comments at 7-9; US Cellular Comments at 9-16; CCA Reply Comments at 4-5; US Cellular Reply

Comments at 7-8.

240 See Auction of AWS-1 and Broadband PCS Licenses Rescheduled for August 13, 2008; Notice and Filing

Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 78, Public Notice,

DA 08-1090, 23 FCC Rcd 7496, 7536 ¶ 157 (WTB 2008) (recognizing that limited information procedures may

have overall competitive benefits from reduced opportunities for bid signaling, retaliatory bidding, or other anti-

competitive strategic bidding); Auction of 700 MHz Band Licenses Scheduled for July 19, 2011; Notice and Filing

Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 92, Public Notice,

DA 11-420, 26 FCC Rcd 3342, 3372 ¶ 128 (WTB 2011) (finding that the competitive benefits associated with

limited information disclosure procedures support adoption of such procedures).

241 We also decline to adopt US Cellular’s suggestion that we use a pre-defined eligibility ratio to determine the

level of competition for Auction 97 and make our decision about whether to limit the information available to

bidders contingent upon competitiveness of the auction (see US Cellular Comments at 15).

242 See CCA Comments at 7-9; US Cellular Comments at 9-13.

243 See “Auction of AWS-1 and Broadband PCS Licenses Rescheduled for August 13, 2008; Notice and Filing

Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 78,” Public Notice,

DA 08-1090, 23 FCC Rcd 7496, 7536 ¶ 157 (WTB 2008), in which the Bureau recognized that limited information

procedures may have overall competitive benefits from reduced opportunities for bid signaling, retaliatory bidding,

or other anti-competitive strategic bidding.

244 Auction 97 Comment Public Notice, 29 FCC Rcd at 5224 ¶¶ 18-22.

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see, after each round, whether their own bids are provisionally winning. The Bureau will provide

descriptions and/or samples of publicly-available and bidder-specific (non-public) results files prior to the

start of the auction.

151.

The Bureau, however, retains the discretion not to use limited information procedures if

the Bureau, after examining the level of potential competition based on the short-form applications filed

for Auction 97, determines that the circumstances indicate that limited information procedures would not

be an effective tool for deterring anti-competitive behavior. For example, if only two applicants become

qualified to participate in the bidding, limited information procedures would be ineffective in preventing

bidders from knowing the identity of the competing bidder and, therefore, limited information procedures

would not serve to deter attempts at signaling and retaliatory bidding behavior.

152.

Other Issues. Information disclosure procedures established for this auction will not

interfere with the administration of, or compliance with, the Commission’s prohibition of certain

communications. As described in more detail above, section 1.2105(c)(1) of the Commission’s rules

provides that, after the short-form application filing deadline, all applicants for licenses in any of the same

or overlapping geographic license areas are prohibited from disclosing to each other in any manner the

substance of bids or bidding strategies until after the down payment deadline, subject to specified

exceptions.245

153.

In Auction 97, the Commission will not disclose information regarding license selection

or the amounts of bidders’ upfront payments and bidding eligibility. The Commission will disclose the

other portions of applicants’ short-form applications through its online database, and certain application-

based information through public notices.

154.

To assist applicants in identifying other parties subject to section 1.2105(c), the Bureau

will notify separately each applicant in Auction 97 whether applicants with short-form applications to

participate in pending auctions, including but not limited to Auction 97, have applied for licenses in any

of the same or overlapping geographic areas as that applicant. Specifically, after the Bureau conducts its

initial review of applications to participate in Auction 97, it will send to each applicant in Auction 97 a

letter that lists the other applicants that have pending short-form applications for licenses in any of the

same or overlapping geographic areas. The list will identify the other applicants by name but will not list

their license selections. As in past auctions, additional information regarding other applicants that is

needed to comply with section 1.2105(c) — such as the identities of other applicants’ controlling interests

and entities with a greater than ten percent ownership interest — will be available through the publicly-

accessible online short-form application database.246

155.

When completing short-form applications, applicants should avoid any statements or

disclosures that may violate the Commission’s prohibition of certain communications, pursuant to section

1.2105(c), particularly in light of the Commission’s procedures regarding the availability of certain

information in Auction 97. While applicants’ license selections will not be disclosed until after Auction

97 closes, the Commission will disclose other portions of short-form applications through its online

database and public notices. Accordingly, applicants should avoid including any information in their

short-form applications that might convey information regarding license selections. For example,

applicants should avoid using applicant names that refer to licenses being offered, referring to certain

licenses or markets in describing bidding agreements, or including any information in attachments that

may otherwise disclose applicants’ license selections.

156.

If an applicant is found to have violated the Commission’s rules or the antitrust laws in

245 47 C.F.R. § 1.2105(c)(1). See Section I.C.2. “Prohibited Communications and Compliance with Antitrust Laws,”

above.

246 For purposes of section 1.2105(c), the term “applicant” includes all controlling interests, all parties with

ownership interests greater than ten percent and all officers and directors of the applicant. 47 C.F.R. § 1.2105(c)(7).

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connection with its participation in the competitive bidding process, the applicant may be subject to

various sanctions, including forfeiture of its upfront payment, down payment, or full bid amount and

prohibition from participating in future auctions.247

157.

The Bureau hereby warns applicants that the direct or indirect communication to other

applicants or the public disclosure of non-public information (e.g., bid withdrawals, proactive waivers

submitted, reductions in eligibility) could violate the Commission’s limited information disclosure

procedures and section 1.2105(c).248 To the extent an applicant believes that such a disclosure is

required by law or regulation, including regulations issued by the SEC, the Bureau strongly urges

that the applicant consult with the Commission staff in the Auctions and Spectrum Access Division

before making such disclosure.

4.

Eligibility and Activity Rules

158.

As discussed above, the Bureau will use upfront payments to determine initial

(maximum) eligibility (as measured in bidding units) for Auction 97.249 The amount of the upfront

payment submitted by a bidder determines initial bidding eligibility, the maximum number of bidding

units on which a bidder may be active. As noted earlier, each license is assigned a specific number of

bidding units as listed in Attachment A to this Public Notice. Bidding units assigned to each license do

not change as prices change during the auction. Upfront payments are not attributed to specific licenses.

Rather, a bidder may place bids on any of the licenses selected on its FCC Form 175 as long as the total

number of bidding units associated with those licenses does not exceed its current eligibility. Eligibility

cannot be increased during the auction; it can only remain the same or decrease. Thus, in calculating its

upfront payment amount, an applicant must determine the maximum number of bidding units it may wish

to bid on or hold provisionally winning bids on in any single round, and submit an upfront payment

amount covering that total number of bidding units. At a minimum, an applicant’s upfront payment must

cover the bidding units for at least one of the licenses it selected on its FCC Form 175. The total upfront

payment does not affect the total dollar amount a bidder may bid on any given license.

159.

In order to ensure that an auction closes within a reasonable period of time, an activity

rule requires bidders to bid actively throughout the auction, rather than wait until late in the auction before

participating. Bidders are required to be active on a specific percentage of their current bidding eligibility

during each round of the auction. A bidder’s activity level in a round is the sum of the bidding units

associated with licenses covered by the bidder’s new bids in the round and its provisionally winning bids

from the previous round. If a bidder removes bids in the current round or withdraws provisionally

winning bids, those bids no longer count towards the bidder’s activity.250

160.

The minimum required activity is expressed as a percentage of the bidder’s current

eligibility, and increases by stage as the auction progresses. Because these procedures (as set forth under

“Auction Stages” in Section IV.A.5. and “Stage Transitions” in Section IV.A.6. below) have proven

successful in maintaining the pace of previous auctions, the Bureau adopts them for Auction 97. Failure

to maintain the requisite activity level will result in the use of an activity rule waiver, if any remain, or a

reduction in the bidder’s eligibility, possibly curtailing or eliminating the bidder’s ability to place

additional bids in the auction.251

247 47 C.F.R. § 1.2109(d).

248 The Bureau has previously warned Auction 73 applicants that such disclosures could violate the Commission’s

rules. See Wireless Telecommunications Bureau Reminds 700 MHz Auction Applicants of Confidential Nature of

Upfront Payment and Other Bidding-Related Information, Public Notice, DA 08-13, 23 FCC Rcd 18 (2008).

249 See Section III.D.3. “Upfront Payments and Bidding Eligibility,” above.

250 See Section IV.B.6. “Bid Removal and Bid Withdrawal,” below.

251 See Section IV.A.7. “Activity Rule Waivers,” below.

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5.

Auction Stages

161.

In the Auction 97 Comment Public Notice, the Bureau proposed to conduct the auction in

two stages and employ an activity rule.252 Under the Bureau’s proposal, a bidder desiring to maintain its

current bidding eligibility would be required to be active on licenses representing at least 80 percent of its

current bidding eligibility during each round of Stage One, and at least 95 percent of its current bidding

eligibility in Stage Two. US Cellular supports our proposal to divide the auction into two stages, and

opposes adopting a third stage with a 98 percent activity requirement.253 Aloha Partners asks the Bureau

to add a third stage with a 100 percent activity requirement and would require that minimum acceptable

bids be 20 percent higher than provisionally winning bids, and recommends that this third stage be

implemented when the number of new provisionally winning bids falls below ten bids.254

162.

We see no need to establish, at this time, a third stage with a 100 percent eligibility

requirement as requested by Aloha Partners. Based on our past experience, we believe that two stages

with 80 percent and 95 percent activity requirements should facilitate the auction progressing at a

reasonable pace. In some of our earlier auctions, we established three stages using 80 percent, 90 percent,

and 98 percent activity requirements. In many of these auctions, however, implementing Stage Two had

little effect in terms of increasing bidding activity, and Stage Three was implemented shortly thereafter.255

Based on this experience, the Bureau has generally moved away from three-stage auctions in favor of

two-stage auctions. Moreover, a 95 percent threshold allows bidders slightly more flexibility than a

higher requirement would in fulfilling their activity requirements during the final stage of the auction.

Accordingly, we decline to establish a third stage with a 100 percent activity threshold at this time.256 The

Bureau notes that it has the discretion to further alter the activity requirements (by, for example,

establishing a 98 or 100 percent threshold) before and/or during the auction as circumstances warrant.

We also have other mechanisms by which to influence the speed of the auction if we determine that such

steps are necessary. Therefore, we adopt the two stages as described in more detail immediately below.

163.

Stage One: During the first stage of the auction, a bidder desiring to maintain its current

bidding eligibility will be required to be active on licenses representing at least 80 percent of its current

bidding eligibility in each bidding round. Failure to maintain the required activity level will result in the

use of an activity rule waiver or, if the bidder has no activity rule waivers remaining, a reduction in the

bidder’s bidding eligibility in the next round. During Stage One, reduced eligibility for the next round

will be calculated by multiplying the bidder’s current round activity (the sum of bidding units of the

bidder’s provisionally winning bids and bids during the current round) by five-fourths (5/4).

164.

Stage Two: During the second stage of the auction, a bidder desiring to maintain its

current bidding eligibility is required to be active on 95 percent of its current bidding eligibility. Failure

to maintain the required activity level will result in the use of an activity rule waiver or, if the bidder has

no activity rule waivers remaining, a reduction in the bidder’s bidding eligibility in the next round.

252 Auction 97 Comment Public Notice, 29 FCC Rcd at 5228-29 ¶¶ 34-36.

253 See US Cellular Comments at 16-17; US Cellular Reply Comments 9-10.

254 See Aloha Partners Comments at 2.

255 For example, in Auction 35, Stage One (80 percent activity requirement) lasted 37 rounds, Stage Two (90 percent

activity requirement) lasted 5 rounds, and Stage Three (98 percent activity requirement) lasted 59 rounds.

256 We have previously declined similar requests to add a third stage and/or to adopt a greater activity requirement

for the final stage of the auction for similar reasons. See Broadband PCS Spectrum Auction Scheduled for January

12, 2005; Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures for

Auction No. 58, Public Notice, 19 FCC Rcd 18190, 18216-17 (WTB 2004). In Auction 73 we also declined to

establish a third stage prior to the auction. See Auction 73 Procedures Public Notice, 22 FCC Rcd 18141, 18187-88

¶ 168 . However, in Auction 73 we exercised our discretion to implement a third stage — in this case, with a 98

percent activity requirement — by announcement during the auction.

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During Stage Two, reduced eligibility for the next round will be calculated by multiplying the bidder’s

current round activity (the sum of bidding units of the bidder’s provisionally winning bids and bids during

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

CAUTION: Since activity requirements increase in Stage Two, bidders must carefully check

their activity during the first round following a stage transition to ensure that they are meeting the

increased activity requirement. This is especially critical for bidders that have provisionally

winning bids and do not plan to submit new bids. In past auctions, some bidders have

inadvertently lost bidding eligibility or used an activity rule waiver because they did not re-verify

their activity status at stage transitions. Bidders may check their activity against the required

activity level by logging into the FCC Auction System

165.

When the Bureau moves the auction from Stage One to Stage Two, we will first alert

bidders by announcement in the bidding system. The Bureau has the discretion to further alter the activity

requirements before and/or during the auction as circumstances warrant.

6.

Stage Transitions

166.

In the Auction 97 Comment Public Notice, the Bureau proposed that it would advance the

auction to the next stage (i.e., from Stage One to Stage Two) after considering a variety of measures of

auction activity, including, but not limited to, the percentages of licenses (as measured in bidding units)

on which there are new bids, the number of new bids, and the increase in revenue.257 The Bureau further

proposed that it would retain the discretion to change the activity requirements during the auction. For

example, the Bureau could decide not to transition to Stage Two if it believes the auction is progressing

satisfactorily under the Stage One activity requirement, or to transition to Stage Two with an activity

requirement that is higher or lower than 95 percent.258 The Bureau proposed to alert bidders of stage

advancements by announcement during the auction. The Bureau received no comments on this issue.

167.

We adopt our proposal for stage transitions. Thus, the auction will start in Stage One.259

The Bureau will regulate the pace of the auction by announcement. The Bureau retains the discretion to

transition the auction to Stage Two, to add an additional stage with a higher activity requirement, not to

transition to Stage Two, and to transition to Stage Two with an activity requirement that is higher or

lower than 95 percent. This determination will be based on a variety of measures of auction activity,

including, but not limited to, the number of new bids and the percentages of licenses (as measured in

bidding units) on which there are new bids.260

7.

Activity Rule Waivers

168.

The Bureau proposed in the Auction 97 Comment Public Notice that each bidder in the

auction be provided with three activity rule waivers.261 The Bureau received no comments on this issue.

257 Auction 97 Comment Public Notice, 29 FCC Rcd at 5228-29 ¶¶ 36-37.

258 If the Bureau implements stages with activity requirements other than the ones listed above, a bidder’s reduced

eligibility for the next round will be calculated by multiplying the bidder’s current round activity by the reciprocal of

the activity requirement. For example, with a 98 percent activity requirement, the bidder’s current round activity

would be multiplied by 50/49; with a 100 percent activity requirement, the bidder’s current round activity would

become its bidding eligibility (current round activity would be multiplied by 1/1).

259 The stage of the auction does not affect the auction stopping rules; the auction may conclude in Stage One. See

Section IV.A.8. “Auction Stopping Rules,” below.

260 For example, when monitoring activity to determine when to change stages, the Bureau may consider the

percentage of bidding units of the licenses receiving new provisionally winning bids, excluding any FCC-held

licenses. In past auctions, the Bureau has generally — but not always — changed stages when this measure was

approximately twenty percent or below for three consecutive rounds of bidding.

261 Auction 97 Comment Public Notice, 29 FCC Rcd at 5230 ¶ 42.

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Therefore, the Bureau adopts its proposal to provide bidders with three activity rule waivers. Bidders

may use an activity rule waiver in any round during the course of the auction. Use of an activity rule

waiver preserves the bidder’s eligibility despite its activity in the current round being below the required

minimum activity level. An activity rule waiver applies to an entire round of bidding and not to a

particular license. Waivers can be either proactive or automatic and are principally a mechanism for

auction participants to avoid the loss of bidding eligibility in the event that exigent circumstances prevent

them from placing a bid in a particular round.

169.

The FCC Auction System assumes that a bidder with insufficient activity would prefer to

apply an activity rule waiver (if available) rather than lose bidding eligibility. Therefore, the system will

automatically apply a waiver at the end of any bidding round in which a bidder’s activity level is below

the minimum required unless (1) the bidder has no activity rule waivers remaining or (2) the bidder

overrides the automatic application of a waiver by reducing eligibility. If no waivers remain and the

activity requirement is not satisfied, the FCC Auction System will permanently reduce the bidder’s

eligibility, possibly curtailing or eliminating the ability to place additional bids in the auction.

170.

A bidder with insufficient activity may wish to reduce its bidding eligibility rather than

use an activity rule waiver. If so, the bidder must affirmatively override the automatic waiver mechanism

during the bidding round by using the “reduce eligibility” function in the FCC Auction System. In this

case, the bidder’s eligibility is permanently reduced to bring it into compliance with the activity rule

described above. Reducing eligibility is an irreversible action; once eligibility has been reduced, a bidder

will not be permitted to regain its lost bidding eligibility, even if the round has not yet closed.

171.

Finally, a bidder may apply an activity rule waiver proactively as a means to keep the

auction open without placing a bid. If a proactive waiver is applied (using the “apply waiver” function in

the FCC Auction System) during a bidding round in which no bids are placed or withdrawn, the auction

will remain open and the bidder’s eligibility will be preserved. However, an automatic waiver applied by

the FCC Auction System in a round in which there are no new bids, withdrawals, or proactive waivers

will not keep the auction open. A bidder cannot submit a proactive waiver after bidding in a round, and

applying a proactive waiver will preclude it from placing any bids in that round. Applying a waiver is

irreversible: once a bidder submits a proactive waiver, the bidder cannot unsubmit the waiver even

if the round has not yet ended.

8.

Auction Stopping Rules

172.

In the Auction 97 Comment Public Notice, the Bureau proposed to employ a

simultaneous stopping rule under its SMR proposal.262

Under this rule, all licenses remain available for

bidding until bidding stops simultaneously on every license.263 More specifically, bidding will close on

all licenses after the first round in which no bidder submits any new bids, applies a proactive waiver, or

withdraws any provisionally winning bids. Thus, under our SMR proposal, unless we announce

alternative stopping procedures, the simultaneous stopping rule will be used in this auction, and bidding

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

173.

We also proposed that the Bureau retain discretion to exercise any of the following

alternative versions of the simultaneous stopping rule for Auction 97:264

Option 1. The auction would close for all licenses after the first round in which no bidder applies

a waiver, withdraws a provisionally winning bid, or places any new bids on a license for which it

is not the provisionally winning bidder. Thus, absent any other bidding activity, a bidder placing

a new bid on a license for which it is the provisionally winning bidder would not keep the auction

262 Id. at 5226-27 ¶¶ 28-30.

263 Id. at 5226 ¶ 28.

264 Id. at 5226 ¶ 29.

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open under this modified stopping rule.

Option 2. The auction would close for all licenses after the first round in which no bidder applies

a waiver, withdraws a provisionally winning bid, or places any new bids on a license that is not

FCC-held. Thus, absent any other bidding activity, a bidder placing a new bid on a license that

does not already have a provisionally winning bid (an “FCC-held” license) would not keep the

auction open under this modified stopping rule.

Option 3. The auction would close using a modified version of the simultaneous stopping rule

that combines (Option 1) and (Option 2) above.

Option 4. The auction would end after a specified number of additional rounds (“special stopping

rule”). If the Bureau invokes this special stopping rule, it will accept bids in the specified final

round(s), after which the auction will close.

Option 5. The auction would remain open even if no bidder places any new bids, applies a

waiver, or withdraws any provisionally winning bids. In this event, the effect will be the same as

if a bidder had applied a waiver. Thus, the activity rule will apply as usual, and a bidder with

insufficient activity will either lose bidding eligibility or use a waiver.

174.

We proposed to exercise these alternative versions of the simultaneous stopping rule only

in certain circumstances, for example, where the auction is proceeding unusually slowly or quickly, there

is minimal overall bidding activity, or it appears likely that the auction will not close within a reasonable

period of time or will close prematurely (e.g., before bidder have had an adequate opportunity to satisfy

any applicable reserve prices).265 We noted that before exercising these options, we are likely to attempt

to change the pace of the auction by, for example, changing the number of bidding rounds per day and/or

the minimum acceptable bids.266 We also proposed to retain the discretion to exercise any of these

options with or without prior announcement during the auction.267

175.

As part of their general request that we adopt separate procedures and requirements for

the paired and unpaired bands, several parties ask us to apply our stopping rules separately to the paired

and unpaired bands.268 T-Mobile suggests we apply the stopping rules based on activity within a

particular band rather than the activity across all licenses.269 Under T-Mobile’s proposal, if bidding stops

on one of the bands, the auction for that band would close.270 T-Mobile submits that this will add

certainty to the auction process and avoid delaying the close of the auction any longer than necessary, and

claims that leaving the entire auction open even when interest in one band diminishes may prompt

insincere bidding by allowing bidders interested in one band to park bids in another merely to preserve

eligibility, thereby artificially prolonging the auction.271 DISH and New America Foundation/Public

Knowledge advocate separate stopping rules for the unpaired and paired bands, arguing that combined

procedures for bands that they consider to be non-substitutable could enable bidders to employ bidding

strategies designed to hurt smaller competitors and new entrants, which could deter competition and

suppress revenues.272 Like T-Mobile, DISH and New America Foundation/Public Knowledge are

265 Id. at 5226-27 ¶ 30.

266 Id.

267 Id.

268 See CCA Comments at 6-7; DISH Comments at 2, 8, 14, 16-17; New America Foundation/Public Knowledge

Reply Comments at 3-5; T-Mobile Comments at 3-4. See also C Spire Reply Comments at 2.

269 See T-Mobile Comments at 3.

270 Id.

271 Id. at 3-4.

272 See DISH Comments at 2-3; New America Foundation/Public Knowledge Reply Comments at 3-5.

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concerned that applying the stopping rules based on activity across all licenses could facilitate strategic

parking and permit bidders to pursue the very “wait and see” approach the eligibility and activity rules are

designed to prevent.273 CCA echoes the sentiments of T-Mobile, DISH, and New America

Foundation/Public Knowledge regarding parking and argues that such behavior could be prevented by

adopting separate stopping rules for the bands.274

176.

We adopt procedures to address these commenters’ concerns that bidding activity could

stop on one band well before it stops on the other. We generally adopt our stopping rules as described

above, but we do so on a per-band basis described as follows. After no more than five consecutive rounds

in which no bids have been placed or withdrawn for licenses in one of the two bands (i.e., the unpaired

1695-1710 MHz band and the paired 1755-1780/2155-280 MHz band), no bidder has placed a proactive

waiver, and the associated reserve price has been met, we will close the bidding for that band.275

Accordingly, bidders will no longer be able to place new bids for licenses in the band, nor will they be

able to withdraw any provisional winning bids for licenses in the band.276 We reserve the right to close

bidding for a band after fewer than five consecutive rounds without bidding activity. We will notify

bidders with an announcement in the FCC Auction System before bidding closes for one of the bands.

177.

Aloha Partners agrees that there should be a mechanism to end the auction when the

number of bids decreases to low levels, but expresses concern that the proposed special stopping rule

could be misused by a bidder that has remaining eligibility in the last round by bidding on licenses that it

may not have shown an interest in previously.277 As an alternative, Aloha Partners recommends the

Bureau instead add a third stage, to be implemented when the number of new winning bids falls below ten

bids, that would require a bidder to have activity covering 100 percent of its eligibility and would require

minimum acceptable bids be 20 percent higher than provisionally winning bids.278 As discussed in

Section IV.A.5. above, we decline to adopt Aloha Partners’ request for a third stage with a 100 percent

eligibility requirement in lieu of our special stopping rule.

178.

Aside from the per-band departure from our past procedure discussed above, the Bureau

retains the discretion to employ the alternative versions of the stopping rule, with or without prior

announcement during the auction. We will not, however, employ the first alternative (Option 1) for a

band if the reserve price for that band has not been met. Bidders will continue to have the opportunity to

place bids in a given band at least until the reserve price for that band is met.

9.

Auction Delay, Suspension, or Cancellation

179.

In the Auction 97 Comment Public Notice, the Bureau proposed that, by public notice or

by announcement during the auction, it may delay, suspend, or cancel the auction in the event of natural

disaster, technical obstacle, administrative or weather necessity, evidence of an auction security breach or

unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive

273 See DISH Comments at 8-12; New America Foundation/Public Knowledge Reply Comments at 3-5.

274 See CCA Comments at 7.

275 Even if we declare bidding on one of the bands closed, section 1.2105(c)’s prohibition on certain

communications will continue to apply to every Auction 97 applicant until the down payment deadline that is to be

announced by public notice following the close of the auction. See Section I.C.2., “Prohibited Communications and

Compliance with Antitrust Laws,” above.

276 Our decision to end the auction for a given band in this manner for Auction 97 does not pre-judge how we may

approach stopping rules in any future auctions, including those in which the same or similar facts and circumstances

exist.

277 See Aloha Partners Comments at 1.

278 Id. at 2.

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bidding.279 We received no comment on this issue.

180.

Because this approach has proven effective in resolving exigent circumstances in

previous auctions, the Bureau adopts these proposals regarding auction delay, suspension, or cancellation.

By public notice or by announcement during the auction, we may delay, suspend, or cancel the auction in

the event of natural disaster, technical obstacle, administrative or weather necessity, evidence of an

auction security breach or unlawful bidding activity, or for any other reason that affects the fair and

efficient 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 or from some previous round, or

cancel the auction in its entirety. Network interruption may cause the Bureau to delay or suspend the

auction. We emphasize that we will exercise of this authority solely at our discretion, and not as a

substitute for situations in which bidders may wish to apply their activity rule waivers.

B.

Bidding Procedures

1.

Round Structure

181.

The initial schedule of bidding rounds will be announced in the public notice listing the

qualified bidders, which is released approximately ten days before the start of the auction. Each bidding

round is followed by the release of round results. Details regarding formats and locations of round results

will also be included in the qualified bidders public notice. Multiple bidding rounds may be conducted

each day.

182.

The Bureau has the discretion to change the bidding schedule in order to foster an auction

pace that reasonably balances speed with the bidders’ needs to study round results and adjust their bidding

strategies. We may change the amount of time for the bidding rounds, the amount of time between

rounds, or the number of rounds per day, depending upon bidding activity and other factors.

2.

Reserve Price and Minimum Opening Bids

183.

Section 309(j) of the Communications Act calls upon the Commission to prescribe

methods by which a reasonable reserve price will be required or a minimum opening bid established when

applications for Commission licenses are subject to auction (i.e., because they are mutually exclusive),

unless the Commission determines that a reserve price or minimum opening bid is not in the public

interest.280 Consistent with this mandate, the Commission directed the Bureau to seek comment on the

use of a minimum opening bid and/or reserve price prior to the start of each auction.281 Among other

factors, we must consider the amount of spectrum being auctioned, levels of incumbency, the availability

of technology to provide service, the size of the geographic service areas, the extent of interference with

other spectrum bands, and any other relevant factors that could have an impact on the spectrum being

auctioned.282

The Commission concluded that the Bureau should have the discretion to employ either or

both of these mechanisms for future auctions.283

a.

Reserve Price

184.

The Commission is statutorily obliged to consider and balance a variety of public

interests and objectives when establishing service rules and licensing procedures with respect to the

public spectrum resource. These objectives include promoting recovery for the public a portion of the

279 See Auction 97 Procedures Public Notice, 29 FCC Rcd at 5227 ¶ 31.

280 47 U.S.C. § 309(j)(4)(F).

281 Part 1 Third Report and Order, FCC 97-413, 13 FCC Rcd at 455-56 ¶ 141.

282 Id.

283 Id.

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value of that resource.284 As discussed above, certain of the frequencies in the AWS-3 bands are “eligible

frequencies” under the CSEA, and the CSEA requires that auction proceeds fund the estimated relocation

or sharing costs of incumbent federal entities operating on these frequencies.285 In view of this, we

establish reserve prices for the AWS-3 licenses offered in Auction 97.

185.

The CSEA requires that the total cash proceeds attributable to “eligible frequencies” be at

least 110 percent of the total estimated relocation or sharing costs provided to the Commission pursuant

to the CSEA before the Commission may conclude an auction involving such frequencies.286 If this

condition is not met, the CSEA requires the Commission to cancel the auction.287 For purposes of

determining whether the CSEA’s revenue requirement has been met, the Commission has determined that

“total cash proceeds” means winning bids net of any applicable bidding credit discounts at the end of

bidding (e.g., exclusive of any Tribal lands bidding credit).288

186.

Pursuant to the CSEA, on May 13, 2014, the NTIA notified the Commission that the total

estimated relocation or sharing costs for the 1695-1710 MHz band equal $527,069,000, and that the total

estimated relocation or sharing costs for the 1755-1780 MHz band equal $4,575,603,000.289 Accordingly,

in the Auction 97 Comment Public Notice, we proposed to establish one aggregate reserve price for the

1695-1710 MHz band and a separate aggregate reserve price for the paired 1755-1780/2155-2180 MHz

band.290

187.

We proposed to establish an aggregate reserve price of $579,775,900 for the licenses in

the 1695-1710 MHz band.291 This aggregate reserve price is 110 percent of total estimated relocation or

sharing costs of $527,069,000 provided by the NTIA for this band and, therefore, the minimum reserve

price required by the CSEA. Given that the 1695-1710 MHz band consists entirely of “eligible

frequencies,” we propose that the winning bid for each license in this band (i.e., the licenses in Blocks A1

and B1), net of any applicable bidding credit discounts at the end of bidding (e.g., exclusive of any Tribal

lands bidding credit), will be counted toward meeting the reserve price for the band. Thus, the aggregate

reserve price will be met if the total winning bids for the licenses in Blocks A1 and B1, net of any

applicable bidding credit discounts at the end of bidding (e.g., exclusive of any Tribal lands bidding

credit), is at least $579,775,900.292

284 47 U.S.C. § 309(j)(3)(C).

285 See 47 U.S.C. §§ 309(j)(8)(D), 923(g); see also Section I.C.4 (Commercial Spectrum Enhancement Act/Spectrum

Act Requirements) above.

286 See 47 U.S.C. § 309(j)(16)(B).

287 Id.

288 See CSEA/Part 1 Declaratory Ruling, 20 FCC Rcd at 11270-72, ¶¶ 5-12.

289 See NTIA May 13 Notification Letter at Attachments B1 and B2, available at

http://www.ntia.doc.gov/category/aws-3-transition. These figures are the current total estimated relocation or

sharing costs contained in the Federal agencies’ approved transition plans. We note that Federal agencies are

required to periodically update their transition plans as such plans are implemented to reflect any changed

circumstances, including changes in estimated relocation or sharing costs or the timeline for relocation or sharing.

See 47 U.S.C. § 923(h)(6).

290 Auction 97 Comment Public Notice, 29 FCC Rcd at 5231-32 ¶¶ 48, 50.

291 Id. at 5231 ¶ 49.

292 Our proposed aggregate reserve price for licenses in the 1695-1710 MHz band is calculated based on the current

total estimated relocation or sharing costs contained in the Federal agencies’ approved transition plans. To the

extent that total estimated relocation or sharing costs change as the result of any transition plan updates, the

aggregate reserve price for Auction 97 will be adjusted accordingly to ensure that it represents 110 percent of the

total estimated relocation or sharing costs consistent with the CSEA’s requirement. However, we will apply the

(continued….)

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188.

As discussed in Section I.B. above, the 1755-1780 MHz band will be licensed paired with

the 2155-2180 MHz band.293 The lower half of the frequencies in each paired license, i.e., those in the

1755-1780 MHz band, are “eligible frequencies” and are thus subject to CSEA requirements.294 To meet

CSEA’s requirements, we proposed to establish an aggregate reserve price of $5,033,163,300 for the

1755-1780 MHz frequencies.295 This aggregate reserve price is 110 percent of total estimated relocation

or sharing costs of $4,575,603,000 for the 1755-1780 MHz band provided by the NTIA and, therefore, the

minimum reserve price required by CSEA. Because these frequencies are one half of the frequencies

authorized for use by each of the 1755-1780/2155-2180 MHz paired licenses, we propose that one-half of

each winning bid for each of the paired 1755-1780/2155-2180 MHz licenses (i.e., the licenses in Blocks

G, H, I, and J), net of any applicable bidding credit discounts at the end of bidding, will be counted

toward meeting the reserve price. The aggregate reserve price will be met if one half of the total winning

bids for the licenses in Blocks G, H, I, and J, net of any applicable bidding credit discounts at the end of

bidding (e.g., exclusive of any Tribal lands bidding credit), is at least $5,033,163,300.296 Therefore, the

winning “net” bids for the paired 1755-1780/2155-2180 MHz licenses must be at least twice that amount,

or $10,066,326,600, in order for the Commission to conclude the auction.

189.

C Spire supports our proposal to use an aggregate reserve for the AWS-3 spectrum

bands.297 A few commenters ask us to treat the unpaired and paired bands differently with respect to

meeting the reserve prices.298 T-Mobile argues that there is no reason that the entire auction should be

declared invalid if the reserve price is not met for one band and that, consistent with CSEA, only the

auction for the particular band that failed to meet the reserve should be cancelled.299

190.

We adopt our proposed reserve prices for Auction 97 and our proposals for implementing

them.300 Consistent with our past treatment of spectrum bands that are subject to separate reserve prices,301

and based on our reading of CSEA, we will treat the unpaired and paired bands separately with respect to

meeting their respective reserve prices. Thus, if the reserve price is met or exceeded for a given band, the

(Continued from previous page)

same formula for determining whether the reserve has been met regardless of any adjustment to the aggregate

reserve price.

293 See Section I.B. (Description of Licenses to be Offered in Auction 97) above.

294 See Sections I.A. (Introduction) and Section I.C.4. (Commercial Spectrum Enhancement Act/Spectrum Act

Requirements) above.

295 Auction 97 Comment Public Notice, 29 FCC Rcd at 5231-32 ¶ 50.

296 Our proposed aggregate reserve price for the paired 1755-1780/2155-2180 MHz licenses is calculated based on

the current total estimated relocation or sharing costs contained in the Federal agencies’ approved transition plans

for the 1755-1780 MHz band. To the extent that total estimated relocation or sharing costs for this band change as

the result of any transition plan updates, the aggregate reserve price for Auction 97 will be adjusted accordingly to

ensure that it represents 110 percent of the total estimated relocation or sharing costs for the 1755-1780 MHz band

consistent with the CSEA’s requirement. However, we will apply the same formula for determining whether the

reserve has been met regardless of any adjustment to the aggregate reserve price.

297 C Spire Comments at 3-4.

298 T-Mobile Comments at 4; AT&T Reply Comments at 5; New America Foundation/Public Knowledge Reply

Comments at 5; Verizon Wireless Reply Comments at 6.

299 T-Mobile Comments at 4. T-Mobile maintains that CSEA’s directive to cancel the auction must be read to mean

the auction for the particular spectrum, not the entire auction that includes such spectrum. Id. at 5.

300 C Spire asks in its comments that if the Commission chooses to adopt individual license reserve prices – rather

than the proposed aggregate reserve – it set minimum opening bids equal to its pre-determined reserve price for each

license. C Spire Comments at 3-4. As discussed below, we adopt our proposal to use an aggregate reserve for the

AWS-3 spectrum bands.

301 See Auction 73 Procedures Public Notice, 22 FCC Rcd at 18145 ¶ 6.

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auction for that band will be deemed to be successful and licenses in that band will be assigned. If the

reserve price for the other band is not met, the auction for that band will, as required by CSEA, be

cancelled as to only that band.

191.

In light of our proposal to adopt procedures for limited information disclosure for

Auction 97,302 if information regarding net bid amounts is not provided during the auction, we proposed in

the Auction 97 Comment Public Notice to issue an announcement in the FCC Auction System, viewable

by bidders and the general public, stating that a reserve price has been met immediately following the first

round in which that occurs.303 We received no comment this proposal, and therefore adopt it for Auction

97. As we noted in the Auction 97 Comment Public Notice, due to factors such as bid withdrawals and

the effect of bidding credits, an announcement that the reserve price has been met following a round of

the auction does not guarantee that the reserve price will continue to be met.304

Accordingly, we will

make a further announcement in the FCC Auction System after any round in which the reserve price

status changes.

192.

As discussed above, when determining whether a reserve price has been met, the Bureau

will use net bid amounts that take into account bidding credits. We will not count any withdrawn bids

toward meeting a reserve price. Thus, we will count only the current provisionally winning bid on a

license when determining whether a reserve price has been met.

b.

Minimum Opening Bids

193.

In addition to proposing aggregate reserve prices, the Bureau proposed in the Auction 97

Comment Public Notice to establish minimum opening bid amounts for each license in Auction 97.305

The Bureau believes a minimum opening bid amount, which has been used in other auctions, is an

effective bidding tool for accelerating the competitive bidding process.306

194.

In the Auction 97 Comment Public Notice, the Bureau proposed to calculate minimum

opening bid amounts on a license-by-license basis using a formula based on bandwidth and license area

population,307 similar to our approach in many previous spectrum auctions.308 We proposed to use a

calculation based on $0.15 per megahertz of bandwidth per population (per “MHz-pop”) for paired

licenses and $0.05 per MHz-pop for unpaired licenses.309 Additionally, we proposed, as we did for

Auction 96,310 to adjust minimum opening bid amounts based on past auction results, in order to reflect

302 See Section IV.A.3., “Limited Information Disclosure Procedures: Information Available to Bidders Before and

During the Auction,” above.

303 Auction 97 Comment Public Notice, 29 FCC Rcd at 5232 ¶ 52.

304 Id.

305 Id. at 5232-33 ¶¶ 53-55.

306 See, e.g., Auction of 800 MHz SMR Upper 10 MHz Band, Minimum Opening Bids or Reserve Prices, Order,

DA 97-2147, 12 FCC Rcd 16354 (1997); Auction of the Phase II 220 MHz Service Licenses, Auction Notice and

Filing Requirements for 908 Licenses Consisting of Economic Area (EA), Economic Area Grouping (EAG), and

Nationwide Licenses, Scheduled for September 15, 1998, Minimum Opening Bids and Other Procedural Issues,

Public Notice, DA 98-1010, 13 FCC Rcd 16445 (1998).

307 All population figures are from the 2010 U.S. Census, U.S. Department of Commerce, Bureau of the Census. See

Census 2010 Summary File 1 (SF1) and Island Areas: 2010 Census Summary File (covering the U.S. Virgin Islands,

Guam, the Northern Mariana Islands, and American Samoa).

308 Auction 97 Comment Public Notice, 29 FCC Rcd at 5232 ¶ 54.

309 Id.

310 See Auction of H Block Licenses in the 1915-1920 MHz and 1995-2000 MHz Bands; Comment Sought on

Competitive Bidding Procedures For Auction 96, AU Docket No. 13-178, Public Notice, DA 13-1540, 28 FCC Rcd

10013, 10026-7 ¶¶ 54-59 (2013).

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historical price differences among different geographic areas.311 We further proposed a minimum of

$2,500 per license.312 For the license covering the Gulf of Mexico, we proposed to set the minimum

opening bid at $2,000 per megahertz.313

195.

Commenters presented a number of perspectives on our proposal. Verizon Wireless,

CCA, C Spire, and NTCA advocate using $0.05 per MHz-pop to set the minimum opening bids.314

Verizon Wireless also objects to our proposal to vary the calculation of minimum opening bid amounts

across license areas.315 Spectrum Financial Partners recommends a change to our proposed method for

reflecting historical price differences by excluding the results of Auction 96.316 AT&T acknowledges the

merits of our proposal to vary the calculation of minimum opening bid amounts across license areas, but

suggests an alternative method. AT&T recognizes the value of adjusting minimum opening bids to

account for regional price differences, but contends that making these adjustments on a license-by-license

basis perpetuates anomalous bidding patterns from past auctions (which may have involved eligibility

parking and inefficient pricing) into Auction 97.317 For these reasons, AT&T offers refinements that it

believes would help prevent both inefficient allocation of bidding units and eligibility parking during the

auction.318 AT&T proposes that we rank the licenses by population; group them into deciles; sum our

proposed minimum opening bid amounts for the licenses in the decile; and then, based on population,

redistribute that subtotal among the licenses in the decile.319 After careful consideration of the record, the

Bureau finds AT&T’s arguments compelling and adopts AT&T’s proposal in a modified form.

196.

We will calculate minimum opening bid amounts as follows. We continue to use

underlying prices of $0.15 per MHz-pop for paired licenses and $0.05 per MHz-pop for unpaired licenses,

and we continue to adjust amounts based on relative price information from previous auctions. We

change our method of incorporating past price information, however, in several ways. We no longer use

the relative price information from Auction 96 in our calculations for the EA licenses. We revise our

method of incorporating past price information by using a variation of the decile-based approach

suggested by AT&T. Rather than grouping by population decile, we group the licenses by historical

MHz-pop price deciles.320 For each decile we use the lowest index price value and apply it to all of the

markets in that decile. As proposed in the Auction 97 Comment Public Notice, we round the results using

311 We proposed to adjust the minimum opening bid amounts based on an index of relative winning bid amounts for

licenses in each CMA and EA subject to a minimum of $0.01 per MHz-pop. We proposed to calculate the index of

the relative price differences using the winning bid amounts for the CMA and EA licenses in Auction