How is an auction conducted?

Depending on the auction design, number of bidders, and the number of licenses being offered, an auction might run anywhere from one day to several weeks. Auctions are typically conducted Monday through Friday during normal business hours (Eastern Time). The first day of an auction generally opens with long bidding periods — for example, two bidding rounds lasting two hours each. As the auction continues, the Commission generally increases the number of rounds per day and decreases the duration of the rounds. Bidders in spectrum auctions drop out of the auction when prices for licenses in which they are interested exceed the amount they are willing to pay. In USF auctions, bidders stop bidding when the support amount falls below an amount they are willing to accept for providing service. The auction continues until all bidding activity stops.

In a traditional real-time or continuous auction, bidders often wait until the last minute to place their bids. However, the FCC has developed activity rules to ensure that participants bid actively throughout the auction. Before a spectrum auction, each bidder must submit an upfront payment that determines its bidding eligibility in the auction. An applicant does not need to submit an upfront payment for each license specified in its Form 175, but instead, must only submit an upfront payment that will purchase the maximum number of bidding units on which it will wish to bid in any single round. During each round of the auction, each bidder is required to bid on a specified portion of its eligibility. For USF auctions, there are also rules that govern bidding activity. If a bidder does not meet the relevant activity requirement, it may lose some or all of its ability to bid in subsequent rounds.

Round results are released shortly after each round closes. In order to promote transparency, results typically are made available to both the public and to bidders. The public results generally provide high-level information on the aggregate results of each round, such as the net and gross bids. Bidders can see all the bids that were placed during the round, but to deter collusion and enhance the competitiveness and economic efficiency of the auctions, bidders do not see the identities of the bidders placing bids. The identities of bidders placing bids are not made public until after an auction concludes, when all bidding information is available to all interested parties.

At the conclusion of a spectrum auction, the Commission issues a public notice declaring the auction closed, identifying winning bidders, and specifying the amounts of down payments due. At that time, winning bidders are given ten business days to supplement their upfront payments to satisfy the license down payment requirement. By the same deadline, winning bidders must electronically submit a properly completed long-form application and required exhibits.

Once an auction for USF support ends, the Commission similarly issues a public notice identifying winning bidders, areas that will receive support, and support amounts. Winning bidders must submit a long-form application by a set deadline that includes additional information about funding, qualifications, and the network they intend to use. They must also submit a letter from a bank committing to issue a letter of credit once the application is approved. Winning bidders must certify that they are eligible telecommunications carriers in the areas in which they receive support, within several months of approval.