Auction of Flexible-Use Licenses in the 2.5 GHz Band for Next-Generation Wireless Services; Further Comment Sought on Competitive Bidding Procedures for Auction 108

CourtFederal Communications Commission
Citation87 FR 8764
Record Number2022-03182
Published date16 February 2022
Federal Register, Volume 87 Issue 32 (Wednesday, February 16, 2022)
[Federal Register Volume 87, Number 32 (Wednesday, February 16, 2022)]
                [Proposed Rules]
                [Pages 8764-8772]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2022-03182]
                =======================================================================
                -----------------------------------------------------------------------
                FEDERAL COMMUNICATIONS COMMISSION
                47 CFR Parts 1 and 27
                [AU Docket No. 20-429; DA 22-120; FR ID 71309]
                Auction of Flexible-Use Licenses in the 2.5 GHz Band for Next-
                Generation Wireless Services; Further Comment Sought on Competitive
                Bidding Procedures for Auction 108
                AGENCY: Federal Communications Commission.
                ACTION: Proposed rule; proposed auction procedures.
                -----------------------------------------------------------------------
                SUMMARY: The Office of Economics and Analytics and the Wireless
                Telecommunications Bureau seek further comment on the procedures to be
                used for Auction 108, an auction of approximately 8,300 geographic
                overlay licenses in the 2.5 GHz band. This document describes the
                procedures for an ascending clock auction format and seeks comment on
                whether this format would address concerns and suggestions raised by
                commenters with respect to both the single-round and simultaneous
                multiple-round auction formats on which the Federal Communication
                Commission (Commission or FCC) sought comment in the Auction 108
                Comment Public Notice.
                DATES: Comments are due on or before February 23, 2022.
                ADDRESSES: Interested parties may file comments in AU Docket No. 20-
                429. Comments may be filed using the Commission's Electronic Comment
                Filing System (ECFS) or by filing paper copies. Interested parties are
                strongly encouraged to file comments electronically.
                 Electronic Filers: Comments may be filed electronically
                using the internet by accessing the ECFS at https://www.fcc.gov/ecfs/.
                 Paper Filers: Parties who choose to file by paper must
                file an original and one copy of each filing.
                 Filings in response to the Public Notice can be sent by
                commercial courier or by first-class or overnight U.S. Postal Service
                mail. All filings must be addressed to the Commission's Secretary,
                Office of the Secretary, Federal Communications Commission.
                 Commercial deliveries (other than U.S. Postal Service
                Express Mail and Priority Mail) must be sent to 9050 Junction Dr.,
                Annapolis Junction, MD 20701.
                 U.S. Postal Service first-class, Express, or Priority mail
                must be addressed to 45 L Street NE, Washington, DC 20554.
                 Until further notice, the Commission no longer accepts any
                hand or messenger delivered filings. This is a temporary measure taken
                to help protect the health and safety of individuals, and to mitigate
                the transmission of COVID-19.
                 Email: Commenters are asked to also submit a copy of their
                comments and reply comments electronically to the following address:
                [email protected].
                FOR FURTHER INFORMATION CONTACT:
                 Auction Legal Questions: Daniel Habif, (202) 418-0660,
                [email protected]; Lyndsey Grunewald, (202) 418-0660,
                [email protected]; or Scott Mackoul, (202) 418-0660,
                [email protected].
                 General Auction Questions: (717) 338-2868.
                 2.5 GHz Band Licensing Questions: Madelaine Maior, (202) 418-1466,
                [email protected] [email protected] or Nadja Sodos-Wallace,
                (202) 418-0955, [email protected].
                SUPPLEMENTARY INFORMATION: This is a summary of the Auction 108 Further
                Comment Public Notice, AU Docket No. 20-429, DA 22-120, adopted on
                February 9, 2022 and released on February 9, 2022. The complete text of
                the Auction 108 Further Comment Public Notice is available on the
                Commission's website at https://www.fcc.gov/auction/108 or by using the
                search function for AU Docket No. 20-429, DA 22-120, on the
                Commission's Electronic Comment Filing System (ECFS) web page at
                www.fcc.gov/ecfs. Alternative formats are available to persons with
                disabilities by sending an email to [email protected] or by calling the
                Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202)
                418-0432 (TTY).
                I. Introduction
                 1. By the Auction 108 Further Comment Public Notice, the Office of
                Economics and Analytics (OEA), jointly with the Wireless
                Telecommunications Bureau (WTB), seeks further comment on the auction
                format to be used for Auction 108. Specifically, the Public Notice
                seeks comment on whether the use of an ascending clock auction format--
                a multiple-round auction with bidding for frequency-specific blocks--
                [[Page 8765]]
                would address certain concerns and suggestions raised by commenters
                with respect to both the single-round and simultaneous multiple-round
                (SMR) auction formats on which the Commission sought comment in the
                Auction 108 Comment Public Notice, 86 FR 12146, March 3, 2021.
                 2. On January 13, 2021, the Commission released the Auction 108
                Comment Public Notice seeking comment on competitive bidding procedures
                and various other procedures to be used in Auction 108, in accordance
                with 47 U.S.C. 309(j)(3). In that public notice, the Commission
                described and sought comment on a single-round auction format with
                user-defined package bidding, and on an SMR auction format.
                 3. Numerous commenters responded to the Auction 108 Comment Public
                Notice expressing specific concerns with one or the other format. In
                particular, several commenters express concern that the potentially
                long duration of an SMR auction could deter participation. Some
                commenters assert that the costs of monitoring an overly long auction,
                as well as complying with an extended quiet period, would be burdensome
                for bidders, especially smaller entities, and accordingly, they favor
                the single-round approach. On the other hand, several commenters cite
                the unfamiliarity of the single-round format as problematic, claiming
                that the additional resources needed to understand the auction format
                and develop an optimal bidding strategy could deter participation.
                 4. The Auction 108 Further Comment Public Notice seeks comment on
                whether the clock auction procedures set forth here would be an
                appropriate means of addressing these concerns and suggestions. The
                clock auction procedures described below, like the SMR, would be for a
                multiple-round auction, a characteristic which is favored by several
                commenters. A clock auction is a familiar auction format, which has
                been used in a number of recent FCC spectrum and Universal Service Fund
                auctions. In addition, comments filed in response to the Auction 108
                Comment Public Notice suggest the use of intra-round bidding to reduce
                the length of an SMR auction. Intra-round bidding, however, is not a
                feature of Commission SMR auctions, but has been regularly used in
                clock auctions. Commenters also suggest the use of proxy bidding as an
                option to reduce the costs to bidders of continually monitoring a
                lengthy multiple-round auction. Proxy bidding has been provided as an
                option to bidders in reverse clock auctions, but has not been a feature
                of past SMR auctions.
                 5. To date, the Commission has used an ascending clock auction
                format in situations in which multiple frequency blocks of similar
                spectrum were offered, where a clock auction could be conducted more
                efficiently than could an SMR auction with license-by-license bidding.
                Consistent with these experiences, in the Auction 108 Comment Public
                Notice the Commission discounted the appropriateness of the typical
                clock auction format it uses--with multiple generic blocks in a
                category-- for this auction of heterogenous licenses. However, given
                commenters' requests for a familiar auction format with a manageable
                duration, with the benefits of intra-round bidding and proxy bidding,
                the Auction 108 Further Comment Public Notice seeks comment on whether
                the clock auction format is more responsive to bidder needs than the
                auction formats outlined in the Auction 108 Comment Public Notice.
                 6. As an initial matter, the Auction 108 Further Comment Public
                Notice seeks comment on whether the proposals concerning upfront
                payments and bidding eligibility as described in the Auction 108
                Comment Public Notice remain reasonable and appropriate if Auction 108
                is conducted under the clock auction format discussed herein. The clock
                auction procedures discussed in the Auction 108 Further Comment Public
                Notice do not impact the proposals described in the Auction 108 Comment
                Public Notice with respect to implementation of the Commission's part 1
                competitive bidding rules. Thus, in calculating its upfront payment
                amount and hence its initial bidding eligibility for the clock auction
                format set forth below, an applicant would determine the maximum number
                of bidding units on which it may wish to bid in any single round, and
                submit an upfront payment amount covering that total number of bidding
                units.
                 7. The Auction 108 Further Comment Public Notice seeks focused
                input on whether the clock auction bidding format discussed herein
                would address issues raised by commenters with respect to both the SMR
                and single-round auction formats. It is not intended to invite further
                comment on other procedures proposed in the Auction 108 Comment Public
                Notice apart from auction design. In light of the limited scope of the
                Auction 108 Further Comment Public Notice and comments urging the
                Commission to move expeditiously to the start of bidding, OEA and WTB
                provide for a single round of comments by February 23, 2022, with no
                filing period for reply comments. A subsequent public notice will
                announce final procedures for Auction 108, including the procedures,
                terms, conditions, dates, and deadlines for applying to and
                participating in Auction 108, as well as provide an overview of the
                post-auction application and payment processes.
                II. Further Comment Sought on Bidding Procedures
                 8. The Auction 108 Further Comment Public Notice seeks comment on
                additional multiple-round auction procedures prompted by filings in
                this proceeding. In particular, OEA and WTB ask for feedback on the use
                of a clock auction format with bidding on specific licenses. This clock
                auction format, if adopted, would follow the basic structure of the
                ascending clock auction used in previous FCC spectrum clock auctions,
                in which bidding in the clock phase was conducted for multiple generic
                spectrum blocks in a category in a geographic area, with adjustments,
                as described below, to account for the fact that Auction 108 would have
                only a single frequency-specific license in a category in a county. If
                the clock auction format were adopted for Auction 108, there would be
                up to three categories of licenses in each county, with one license
                block in each category. Accordingly, OEA and WTB refer to this specific
                format as a clock auction with a supply of one in each category--or a
                clock-1 auction format. Unlike previous FCC spectrum clock auctions,
                Auction 108 would not include an assignment phase, as none is needed
                with a format that provides for bidding on specific licenses.
                 9. OEA and WTB released a technical guide concurrently with the
                Auction 108 Further Comment Public Notice supplementing the information
                in it and providing the mathematical details and algorithms of the
                procedures described therein. The Clock-1 Technical Guide details
                procedures and provide examples for bidding in Auction 108 if a clock
                auction is adopted.
                A. Clock-1 Auction Structure
                 10. Using the clock-1 format, if adopted, each bidder would be able
                to bid for licenses, where specific licenses will be identified by a
                category within a county. As in the SMR auction format, the auction
                would proceed in a series of rounds, with bidding conducted
                simultaneously for all licenses available in the auction. Consistent
                with prior FCC clock auctions, during each bidding round, the bidding
                system would announce a clock price for each license, and a bidder
                would indicate its demand
                [[Page 8766]]
                for licenses at the clock prices associated with the current round.
                After the first round, intra-round bids would also be allowed.
                 11. The clock price for a license would increase from round to
                round if more than one bidder indicates demand for that license. The
                bidding rounds would continue until, for all licenses--that is, all
                categories in all counties--the number of bidders demanding each
                license does not exceed one. Once bidding rounds stop, the bidder with
                demand for a license becomes the winning bidder.
                 12. The Auction 108 Further Comment Public Notice seeks comment on
                the specific procedures OEA and WTB describe for conducting an auction
                of 2.5 GHz licenses, as an alternative approach that addresses the
                concerns of commenters with respect to the single-round and SMR formats
                described in the Auction 108 Comment Public Notice.
                1. Single Licenses in Three Bidding Categories
                 13. Auction 108 will offer geographic overlay licenses for
                unassigned spectrum in the 2.5 GHz (2496-2690 MHz) band, offered in up
                to three blocks of spectrum--49.5 megahertz, 50.5 megahertz, and 17.5
                megahertz blocks--licensed on a county basis. With overlay licenses,
                licensees obtain the rights to geographic area licenses overlaid on top
                of the existing incumbent licenses, 2.5 GHz Report and Order, 84 FR
                57343, October 25, 2019. As with an ordinary flexible-use license, the
                overlay licensee may operate anywhere within its geographic area,
                subject to protecting the licensed areas (i.e., circular Geographic
                Service Areas with a 35-mile radius) of incumbent licensees. If an
                incumbent licensee in a county cancels or terminates its license, then
                the overlay licensee obtains the rights to operate in the geographic
                area and on the channel of the canceled license. An overlay licensee
                may clear its geographic area by purchasing the incumbent licenses, but
                it does not have the exclusive right to negotiate with the incumbent
                licensee for its spectrum rights or to purchase an incumbent license in
                the geographic area in which it has the overlay rights. For bidding in
                this clock auction, in the counties where available, OEA and WTB would
                designate the 49.5 megahertz block as bidding category 1 (C1); the 50.5
                megahertz block as bidding category 2 (C2); and the 17.5 megahertz
                block as bidding category 3 (C3). Specifically, the C1 license block
                would include channels A1-A3, B1-B3, C1-C3 (49.5 megahertz); the C2
                license block would include channels D1-D3, the J channels, and
                channels A4-G4 (50.5 megahertz); and the C3 license block would include
                channels G1-G3 and the relevant K channels (16.5 megahertz of
                contiguous spectrum and 1 megahertz of the K channels associated with
                the G channel group). Therefore, the combination of a bidding category
                and a county would define a single specific license, and bidding for a
                category and a county under the clock-1 auction format would constitute
                license-by-license bidding, as in the SMR format.
                2. Bidding Rounds
                 14. Under the clock-1 auction format, Auction 108 would consist of
                multiple, sequential bidding rounds, each followed by the release of
                round results, as would an SMR auction. Bidding would be conducted
                simultaneously for all licenses--all categories in all counties
                available in the auction. In the first bidding round of Auction 108, a
                bidder would indicate, for each category and county, whether it demands
                the license at the minimum opening bid price. During each subsequent
                bidding round, the bidding system would announce a start-of-round price
                and a clock price for each license, and qualified bidders would
                indicate the licenses for which they wish to bid at the prices
                associated with the current round. Bidding rounds would be open for
                predetermined periods of time. Bidders would be subject to activity and
                eligibility rules that govern the pace at which they participate in the
                auction.
                 15. For each category and county--that is, each license--the clock
                price for a license would increase from round to round if more than one
                bidder indicates demand for that license. The bidding rounds would
                continue until, for every category and county, demand does not exceed
                one. At that point, the bidder still indicating demand for a license
                would be deemed the winning bidder.
                 16. As would be the case with the SMR format, the initial bidding
                schedule for a clock-1 auction would be announced in a public notice to
                be released at least one week before the start of bidding, and OEA
                would retain the discretion to adjust 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. Such
                adjustments may include changes in the amount of time for bidding
                rounds, the amount of time between rounds, and/or the number of rounds
                per day, and would depend upon bidding activity and other factors.
                 17. Regardless of the format ultimately adopted, OEA and WTB would
                conduct Auction 108 over the internet. Under the clock-1 format, as
                with an SMR auction, a bidder would submit its bids using the bidding
                system's upload function, which allows bid files in a comma-separated
                values (CSV) text format to be uploaded. The bidding system would allow
                a bidder to submit bids only for licenses in counties the bidder
                selected on its FCC Form 175 and for which the bidder has sufficient
                bidding eligibility.
                 18. During each round of the bidding, a bidder would be able to
                modify its bids placed in the current bidding round. It would do so by
                uploading a new file of all its bids, including the modifications,
                which would replace bids previously submitted in the round. The system
                would take the last bid file submission as that bidder's bids for the
                round.
                3. Stopping Rule
                 19. As in previous FCC clock and SMR auctions, with a clock-1
                format for Auction 108, OEA and WTB would use a simultaneous stopping
                rule, under which all licenses would remain available for bidding until
                the bidding stops on all licenses. The Commission has discretion to
                establish stopping rules before or during multiple round auctions in
                order to complete the auction within a reasonable time, 47 CFR
                1.2104(e). Specifically, bidding would close for all licenses after the
                first round in which demand does not exceed one for any license.
                Consequently, under this approach, it is not possible to determine in
                advance how long Auction 108 would last.
                4. Availability of Bidding Information
                 20. The bidding system would disclose, after each round of Auction
                108, clock auction round results analogous to those for an SMR auction:
                Namely, for each license, the aggregate demand, the posted price of the
                last completed round, and the clock price for the next round. The
                posted price of the previous round is, generally, the start-of-round
                price if supply exceeds demand; the clock price of the previous round
                if demand exceeds supply; or the price at which a reduction caused
                demand to equal supply. Note that, for Auction 108, supply equals one.
                The identities of bidders making specific bids would not be disclosed
                until after the close of bidding in the auction.
                 21. Each bidder would have access to additional information related
                to its own bidding and bid eligibility. Specifically, after the bids of
                a round have been processed, the bidding system would inform each
                bidder of the licenses it currently demands (its
                [[Page 8767]]
                processed demand) and its eligibility for the next round.
                B. Activity Rule
                 22. In order to ensure that the auction closes within a reasonable
                period of time, an activity rule requires bidders to bid actively
                throughout the auction, rather than wait until late in the auction
                before participating, an approach that is routinely used in multiple-
                round auctions such as the SMR and the clock auction. For a clock-1
                auction, a bidder's activity in a round for purposes of the activity
                rule would be the sum of the bidding units associated with the bidder's
                demands as applied by the auction system during bid processing (its
                processed demand). Bidders are required to be active on a specific
                percentage (the activity requirement percentage) of their current
                bidding eligibility during each round of the auction. Failure to
                maintain the requisite activity level would result in a reduction in
                the bidder's eligibility, possibly curtailing or eliminating the
                bidder's ability to place bids in subsequent rounds of the auction.
                 23. Under this auction format, a bidder would be required to
                maintain a fixed, high level of activity in each round of Auction 108
                in order to maintain its bidding eligibility. Specifically, a bidder
                would be required to be active on between 90% and 100% of its bidding
                eligibility in all rounds, with the specific percentage within this
                range to be set for each round. Thus, the activity rule would be
                satisfied when a bidder has bidding activity on licenses with bidding
                units that total 90% to 100% of its current eligibility in the round.
                OEA and WTB would set the activity requirement percentage initially at
                95%. If the activity rule is met, then the bidder's eligibility would
                not change for the next round. If the activity rule is not met in a
                round, the bidder's eligibility would be reduced accordingly. Bidding
                activity would be based on the bids that are applied by the FCC auction
                bidding system. That is, if a bidder bids to reduce its demand for a
                license, but the FCC auction bidding system cannot apply the request
                because demand for that license would fall below one, then the bidder's
                activity would reflect its unreduced demand.
                 24. OEA would retain the discretion to change the activity
                requirement percentage during the auction. The bidding system would
                announce any such changes in advance of the round in which they would
                take effect, giving bidders adequate notice to adjust their bidding
                strategies.
                 25. Contingent Bidding Limit. The Auction 108 Further Comment
                Public Notice seeks comment on procedures by which, after Round 1, a
                bidder may submit bids with bidding units totaling up to a contingent
                bidding limit greater than or equal to the bidder's current bidding
                eligibility for the round, as in the three most recent FCC clock
                auctions. A bidder's contingent bidding limit would be calculated as
                its current eligibility times a contingent bidding percentage equal to
                or greater than 100%.
                 26. Allowing a bidder to submit bids with associated bidding
                activity greater than its current bidding eligibility would potentially
                help a bidder avoid having its eligibility reduced as a result of
                submitted bids that could not be applied during bid processing.
                However, even under these additional procedures, the bidder's activity
                as applied by the auction system during bid processing would not exceed
                the bidder's current bidding eligibility. That is, if a bidder were
                allowed to submit bids with associated bidding units exceeding 100% of
                its current bidding eligibility, its processed activity would never
                exceed its eligibility.
                 27. The Auction 108 Further Comment Public Notice seeks comment on
                whether OEA and WTB should allow bidders to submit bids with associated
                bidding activity greater than their current bidding eligibility. If
                adopted, OEA and WTB would set the initial contingent bidding
                percentage at 120%, which would apply starting in Round 2, subject to
                change in subsequent rounds within a range of 100% to 140%. In any
                bidding round, the auction bidding system would advise the bidder of
                its current bidding eligibility, its required bidding activity, and its
                contingent bidding limit.
                C. Acceptable Bids
                1. Minimum Opening Bids
                 28. Minimum opening bids would serve as initial clock prices under
                a clock-1 auction format. In Round 1 of the auction, qualified bidders
                would indicate the licenses they demand at the minimum opening bids.
                OEA and WTB seek comment on whether use of a clock-1 auction format
                would warrant any change to the minimum opening bids proposed in the
                Auction 108 Comment Public Notice.
                2. Clock Price Increments
                 29. Under clock-1 procedures for Auction 108, after bidding in the
                first round and before each subsequent round, for each license, the FCC
                auction bidding system would announce the start-of-round price (also
                referred to as the posted price) and the clock price for the upcoming
                round--that is, the lowest price and the highest price at which bidders
                can indicate their demand for the license during the round. As long as
                aggregate demand for the license exceeds one, the start-of-round price
                would be equal to the clock price from the prior round. If demand
                equaled one at a price in a previous round, then the start-of-round
                price for the next round would be equal to the price at which demand
                equaled one. If demand was zero in the previous round, then the start-
                of-round price for the next round would not increase.
                 30. The clock price for a license for a round would be set by
                adding a percentage increment to the start-of-round price. OEA would
                set the increment percentage within a range of 5% to 30% inclusive,
                with the initial increment percentage at 10%, and potentially would
                adjust the increment as rounds continue. OEA would retain the
                discretion to cap the increment if the total dollar amount of the
                increment (the difference between the clock price and the start-of-
                round price) would exceed a certain amount. The 5% to 30% increment
                range and cap would allow OEA and WTB to set a percentage that manages
                the auction pace and takes into account bidders' needs to evaluate
                their bidding strategies while moving the auction along quickly.
                3. Intra-Round Bids
                 31. The use of intra-round bidding has been suggested as a method
                of reducing the number of bidding rounds needed for the auction to
                reach equilibrium prices. Intra-round bidding could be particularly
                useful in the instant context given the number of licenses being
                offered, such that there would be more benefit than usual in reducing
                the number of bidding rounds. While the Commission has never conducted
                an SMR auction with intra-round bidding, it is a familiar feature of
                the Commission's recent clock auctions. To address commenters' concerns
                about the length of a multiple-round auction while also being mindful
                of comments that the use of a familiar auction format would foster
                participation, the Auction 108 Further Comment Public Notice seeks
                comment on use of intra-round bidding under the clock-1 format. Could
                intra-round bidding be useful in reducing the number of bidding rounds
                needed for the auction to reach equilibrium prices?
                 32. In a clock-1 auction, in a round after the first round, a
                bidder would be permitted to make intra-round bids by indicating a
                point between the start-of-round price and the clock price at which its
                demand for a license changes.
                [[Page 8768]]
                In placing an intra-round bid for a license, a bidder would indicate a
                specific price and the changed quantity it demands (either zero or one)
                if the price for the license should increase beyond that price.
                 33. Intra-round bid amounts would be limited to multiples of $10
                for prices below $10,000; to multiples of $100 for prices between
                $10,000 and $100,000, inclusive; and to multiples of $1,000 for prices
                above $100,000.
                 34. Intra-round bids would be optional; a bidder may choose to
                express its demands only at the start-of-round price or the clock
                price. Using intra-round bidding would allow the auction system to use
                relatively large percentage increments, thereby speeding up the
                auction, without running the risk that a jump in the clock price will
                overshoot the market clearing price--the point at which only one bidder
                demands the license--because bidders could specify an amount lower than
                the clock price.
                4. Proxy Bids
                 35. To address commenters' concerns that monitoring every round of
                a multiple-round auction may be burdensome, especially for smaller
                bidders, the Auction 108 Further Comment Public Notice seeks comment on
                providing each bidder with the option to use proxy bidding under the
                clock-1 format. OEA and WTB would permit a bidder to submit a proxy
                instruction to the bidding system to reduce its demand for a license to
                zero at a price higher than the current round's clock price. A bidder
                would submit its proxy instructions along with its bids, using the
                bidding system's upload function described in Section II.A.2 (Bidding
                Rounds), above. Proxy instructions to increase a bidder's demand for a
                license at a given price would not be permitted.
                 36. Under these procedures, if a proxy instruction has been
                submitted, the bidding system would automatically submit a proxy bid to
                maintain the bidder's demand for the license in every subsequent round
                as long as the clock price for the round is less than the proxy
                instruction price. In the first round in which the clock price is
                greater than or equal to the proxy instruction price, the bidding
                system would submit a proxy bid on behalf of the bidder to reduce the
                bidder's demand for that license to zero at the proxy instruction
                price.
                 37. In the case that a bid to reduce demand, placed according to
                proxy instructions or submitted by the bidder in the round, is not
                applied during bid processing, the bidding system would automatically
                generate a proxy instruction at the bid price and, in the following
                rounds, submit proxy bids on behalf of the bidder according to that
                proxy instruction.
                 38. In any round, a bidder can remove or modify any existing proxy
                instructions or proxy bids for the round by uploading a new bid file,
                including the modifications, which would replace any bids and proxy
                instructions previously submitted. The system would take the last bid
                file submission as that bidder's bids and proxy instructions.
                 39. As is the case for intra-round bid amounts, proxy instruction
                prices would be limited to multiples of $10 for prices below $10,000;
                to multiples of $100 for prices between $10,000 and $100,000,
                inclusive; and to multiples of $1,000 for prices above $100,000. Proxy
                instructions would not be publicly released either during or after the
                auction.
                5. Bid Types
                 40. Under a clock-1 auction format for Auction 108, as in other FCC
                spectrum clock auctions, a bidder would indicate in each round the
                licenses it demands at the prices associated with the round. Bidders
                would be permitted to make two types of bids: Simple bids and switch
                bids.
                 41. A simple bid indicates a desired quantity (in this auction, one
                or zero) at a price. A bidder that is willing to maintain its demand
                for a license at the new clock price would bid for the license at the
                clock price, indicating that it is willing to pay up to that price, if
                need be, for the license. A bidder that wishes to change the quantity
                it demands for a license (relative to its processed demand from the
                previous round) would express the price (either the clock price or an
                intra-round price) at which it wishes to change its demand.
                 42. A switch bid allows the bidder to request to move its demand
                for a license from C1 to C2, or vice versa, within the same county at a
                price for the from category (either the clock price or an intra-round
                price). Switch bids are allowed only in counties with both an available
                Category 1 and a Category 2 license.
                 43. Bids to maintain demand would always be applied by the auction
                bidding system during bid processing. Simple bids to change demand and
                switch bids would not necessarily be applied during bid processing. See
                Section II.D (Bid Processing) below for details on bid processing.
                6. Missing Bids
                 44. Under the clock-1 auction format, a bidder would be required to
                indicate its demands in every round or have a proxy instruction in
                place (as in other FCC spectrum clock auctions), even if its demands at
                the new round's prices are unchanged from the previous round. If a
                bidder does not submit a new bid for a license for which it had
                processed demand from the previous round and does not have a proxy
                instruction in place, the system will consider that a missing bid.
                 45. Missing bids are treated by the auction bidding system as
                requests to reduce to a quantity of zero for the license. If these
                requests are applied, then a bidder's bidding activity, and its bidding
                eligibility for the next round, may be reduced. Unlike in previous FCC
                clock auctions, under the clock-1 format for Auction 108, a bidder
                would be permitted to enter proxy instructions. Thus, a bidder that is
                unable to indicate its demands in every round can avoid having missing
                bids by entering appropriate proxy instructions.
                D. Bid Processing
                 46. After each bidding round, bid processing procedures would
                process bids to change demand to determine the processed demand of each
                bidder for each license and a posted price for each license that would
                serve as the start-of-round price for the next round. The bid
                processing procedures described below are similar in many respects to
                other FCC spectrum clock auctions.
                1. No Excess Supply Rule for Bids To Reduce Demand
                 47. Under the clock-1 auction format, the FCC auction bidding
                system would not allow a bidder to reduce its demand for a license if
                the reduction would cause demand to fall below one. Therefore, if a
                bidder has been bidding for a specific license but submits a simple bid
                to reduce its demand to zero for the license if the price should
                increase above the price in its bid, the FCC auction bidding system
                would treat the bid as a request to reduce demand that would be applied
                only if the no excess supply rule would be satisfied. Similarly, if a
                bidder submits a switch bid to move its demand from the C1 license to
                the C2 license in the same county, the FCC auction bidding system would
                treat the bid as a request that would be applied only if the no excess
                supply rule would be satisfied for C1 in the county, and vice versa.
                Note, however, if a bid to reduce demand is not applied, the bidder
                will not be asked
                [[Page 8769]]
                to pay more for the license than the highest price it agreed to pay.
                2. Eligibility Rule for Bids To Increase Demand
                 48. The bidding system would not allow a bidder to increase its
                demands for licenses if the total number of bidding units associated
                with the bidder's demands exceeds the bidder's bidding eligibility for
                the round. Therefore, if a bidder submits a simple bid to add a license
                for which it did not have processed demand in the previous round, the
                FCC auction bidding system would treat the bid as a request to increase
                demand that would be applied only if that would not cause the bidder's
                activity to exceed its eligibility. Note, the eligibility rule for bids
                to increase demand is always satisfied for switch bids because the
                bidder's processed activity does not change when a switch bid is
                applied (since, in a given county, the C1 and C2 licenses have the same
                number of bidding units).
                3. Processed Demand
                 49. After a round ends, the bidding system would first consider and
                apply all bids to maintain demand, and then it would process bids to
                change demand in order of price point, where the price point represents
                the percentage of the bidding interval for the round. The bidding
                system would process bids to change demand in ascending order of price
                point, first considering intra-round bids in order of price point and
                then bids at the clock price. The system would consider bids at the
                lowest price point across all licenses, then look at bids at the next
                price point across all licenses, and so on. If there are multiple bids
                at a single price point, the system would process bids in order of a
                bid-specific pseudo-random number. As it considers each submitted bid
                during bid processing, the FCC auction bidding system would determine
                whether there is excess demand for a license at that point in the
                processing in order to determine whether a bidder's request to reduce
                demand for that license can be applied. Likewise, the auction bidding
                system would evaluate the activity associated with the bidder's most
                recently determined demands at that point in the processing to
                determine whether a request to increase demand can be applied.
                 50. Because in any given round some bidders may request to increase
                demands for licenses while others may request reductions, the price
                point at which a bid is considered by the auction bidding system can
                affect whether it is applied. In addition, bids that were not applied
                because demand would fall below one or because the bidder's activity
                (as applied by the auction system) would exceed its eligibility would
                be held in a queue and considered, again in price point order, if there
                should be excess demand or if the bidder's activity (as applied by the
                auction system) is reduced sufficiently later in the processing after
                other bids are processed.
                 51. Therefore, once a round closes, the auction system would
                process bids to change demand by first considering the bid submitted at
                the lowest price point and determining whether that bid can be applied
                given bidders' demands as determined at that point in the bid
                processing. If the bid can be applied, the licenses that the bidder
                holds at that point in the processing would be adjusted, and aggregate
                demand for the license would be recalculated accordingly. If the bid
                cannot be applied, the unfulfilled bid would be held in a queue to be
                considered later during bid processing for that round. The FCC auction
                bidding system would then consider the bid submitted at the next lowest
                price point, applying it or not given the most recently determined
                demands of bidders. Any unfulfilled requests would again be held in the
                queue, and aggregate demand would again be recalculated. Every time a
                bid is applied, the unfulfilled bids held in the queue would be
                reconsidered, in the order of the original price points of the bids
                (and by pseudo-random number, in the case of tied price points). The
                auction bidding system would not carry over unfulfilled bid requests to
                the next round. The bidding system, however, would generate a proxy bid
                in the case of bids to reduce to zero that are not applied. The bidding
                system would advise bidders of the status of their bids when round
                results are released.
                4. Price Determination
                 52. The FCC auction bidding system further would determine, based
                on aggregate demand, the posted price for each license for the round
                that would serve as the start-of-round price for the next round. The
                price for a license would increase from round to round as long as there
                is excess demand for the license but would not increase if only a
                single bidder demands the license.
                 53. If, at the end of a round, the aggregate demand for a license
                exceeds the supply of one, the posted price would equal the clock price
                for the round. If a reduction in demand was applied during the round
                and caused demand to fall to one, the posted price would be the price
                at which the reduction was applied. If aggregate demand is zero, or one
                and no bid to reduce demand was applied for the license, then the
                posted price would equal the start-of-round price for the round. The
                range of acceptable bid amounts for the next round would be set by
                adding the percentage increment to the posted price.
                 54. Under these procedures for a clock-1 auction, if a bid to
                reduce demand is not applied, it is because there is not excess demand
                for the license and, therefore, the posted price would not increase.
                Hence, a bidder that makes a bid to reduce demand that cannot be
                applied would not face a price for the license that is higher than its
                bid price.
                 55. After the bids of the round have been processed, if the
                stopping rule has not been met, the FCC auction bidding system would
                announce clock prices to indicate a range of acceptable bids for the
                next round. Each bidder would be informed of the licenses for which it
                has processed demand and the extent of excess demand for the licenses.
                E. Winning Bids
                 56. Under a clock-1 auction format for Auction 108, a bidder with
                processed demand for a license at the time the stopping rule is met
                would become the winning bidder for the license. The final price for a
                license would be the posted price for the final round.
                F. Digital Equity and Inclusion
                 57. Finally, as part of the Commission's continuing effort to
                advance digital equity for all, including people of color and others
                who have been historically underserved, marginalized, and adversely
                affected by persistent poverty and inequality, OEA and WTB invite
                comment on any equity-related considerations and benefits (if any) that
                may be associated with the issues discussed herein. Specifically, OEA
                and WTB seek comment on how any bidding procedures for Auction 108 may
                promote or inhibit advances in diversity, equity, inclusion, and
                accessibility.
                III. Procedural Matters
                A. Second Supplemental Initial Regulatory Flexibility Analysis
                 58. OEA and WTB have prepared a Second Supplemental Initial
                Regulatory Flexibility Analysis (Second Supplemental IRFA) of the
                possible significant economic impact on small entities of the policies
                and rules addressed in the Auction 108 Further Comment Public Notice to
                supplement the Regulatory Flexibility Analyses completed in the 2.5 GHz
                Report and
                [[Page 8770]]
                Order, Auction 108 Comment Public Notice, and other Commission orders
                pursuant to which Auction 108 will be conducted. Written public
                comments are requested on the Second Supplemental IRFA. Comments must
                be identified as responses to the Second Supplemental IRFA and must be
                filed by the same deadline for comments specified in the DATES section
                of this document. OEA and WTB will send a copy of the Auction 108
                Further Comment Public Notice, including the Second Supplemental IRFA,
                to the Chief Counsel for Advocacy of the Small Business Administration
                (SBA). In addition, the Auction 108 Further Comment Public Notice and
                the Second Supplemental IRFA (or summaries thereof) will be published
                in the Federal Register.
                 59. Need for, and Objectives of, the Proposed Rules. The Auction
                108 Further Comment Public Notice seeks further comment on procedural
                rules to govern Auction 108, which will auction geographic overlay
                licenses of unlicensed spectrum in the 2.5 GHz band (2496-2690 MHz).
                The process is intended to provide notice of and adequate time for
                potential applicants to comment on these additional auction procedures.
                To promote the efficient and fair administration of the competitive
                bidding process for all Auction 108 participants, the Auction 108
                Further Comment Public Notice seeks further comment on the use of a
                clock auction format, including the following modified bidding
                procedures that would address concerns and suggestions raised by
                commenters, including small entities, in response to the Auction 108
                Comment Public Notice:
                 Use of a clock auction format with a supply of one for
                Auction 108, under which each qualified bidder would indicate in
                successive clock bidding rounds its demand for the single license in
                each category in each specific geographic area;
                 establishment of categories based on the framework set
                forth in the 2.5 GHz Report and Order, in which up to three blocks of
                spectrum--49.5 megahertz, 50.5 megahertz, and 17.5 megahertz blocks--
                would be offered in each available county;
                 retention by OEA of discretion to adjust the bidding
                schedule in order to manage the pace of Auction 108;
                 use of a simultaneous stopping rule for Auction 108, under
                which all licenses would remain available for bidding until the bidding
                stops on all licenses;
                 use of information procedures which would make public
                after each round of Auction 108, for each category in each county, the
                aggregate demand, the posted price of the last completed round, and the
                clock price for the next round;
                 use of an activity rule that would require bidders to be
                active on between 90% and 100% of their bidding eligibility in all
                regular clock rounds, with the initial activity requirement percentage
                set at 95% and with OEA retaining discretion to change the activity
                requirement percentage during the auction;
                 use of a contingent bidding limit that would allow a
                bidder to submit bids with associated bidding activity greater than its
                current bidding eligibility;
                 establishment of an initial contingent bidding percentage
                at 120%, which would be subject to change in subsequent rounds within a
                range of 100% to 140%;
                 a specific minimum opening bid amount for licenses
                available in Auction 108;
                 establishment of acceptable bid amounts, including clock
                price increments and intra-round bids, along with a methodology for
                calculating such amounts;
                 to permit a bidder to submit a proxy instruction to reduce
                its demand for a license to zero at a price higher than the current
                round's clock price;
                 to permit bidders to make two types of bids, simple bids
                and switch bids, in which a simple bid indicates a desired quantity of
                blocks (one or zero) for a license at a price (either the clock price
                or an intra-round price), and a switch bid allows the bidder to request
                to move its demand from C1 to C2, or vice versa, within the same county
                at a price for the from category (either the clock price or an intra-
                round price);
                 a requirement that bidders indicate their demands in every
                round or submit appropriate proxy instructions, even if their demands
                at the new round's prices are unchanged from the previous round, and
                the treatment of bids that are not reconfirmed as requests to reduce
                demand to a quantity of zero for the license; and
                 a methodology for processing bids and requests to reduce
                and increase demand.
                 60. The procedures for the conduct of Auction 108 on which the
                Auction 108 Further Comment Public Notice seeks further comment
                constitute the more specific implementation of the competitive bidding
                rules contemplated by 47 CFR parts 1 and 27, the 2.5 GHz Report and
                Order, and relevant competitive bidding orders, and are fully
                consistent therewith.
                 61. Legal Basis. The Commission's statutory obligations to small
                businesses under the Communications Act of 1934, as amended, are found
                in 47 U.S.C. 309(j)(3)(B) and 309(j)(4)(D). The statutory basis for the
                Commission's competitive bidding rules is found in various provisions
                of the Communications Act of 1934, as amended, including 47 U.S.C.
                154(i), 301, 302, 303(e), 303(f), 303(r), 304, 307, and 309(j). The
                Commission has established a framework of competitive bidding rules,
                updated most recently in 2015, pursuant to which it has conducted
                auctions since the inception of the auctions program in 1994 and would
                conduct Auction 108.
                 62. Description and Estimate of the Number of Small Entities to
                Which the Proposed Rules Will Apply. The RFA directs agencies to
                provide a description of, and, where feasible, an estimate of the
                number of small entities that may be affected by the proposed rules and
                policies, if adopted. The RFA generally defines the term small entity
                as having the same meaning as the terms small business, small
                organization, and small governmental jurisdiction. In addition, the
                term small business has the same meaning as the term small business
                concern under the Small Business Act. A small business concern is one
                which: (1) Is independently owned and operated; (2) is not dominant in
                its field of operation; and (3) satisfies any additional criteria
                established by the SBA.
                 63. As noted above, Regulatory Flexibility Analyses were
                incorporated into the 2.5 GHz Report and Order and the Auction 108
                Comment Public Notice. In those analyses, the Commission described in
                detail the small entities that might be significantly affected. In the
                Auction 108 Further Comment Public Notice, OEA and WTB incorporate by
                reference the descriptions and estimates of the number of small
                entities from the previous Regulatory Flexibility Analyses in the 2.5
                GHz Report and Order and the Auction 108 Comment Public Notice.
                 64. Description of Projected Reporting, Recordkeeping, and Other
                Compliance Requirements for Small Entities. OEA and WTB do not expect
                the processes and procedures described in the Auction 108 Further
                Comment Public Notice will require small entities to hire attorneys,
                engineers, consultants, or other professionals to participate in
                Auction 108 and comply with the procedures ultimately established
                because of the information, resources, and guidance the Commission
                makes available to potential and actual
                [[Page 8771]]
                participants. For example, OEA intends to make information on the
                bidding system available and offer demonstrations and other educational
                opportunities for applicants in Auction 108 to familiarize themselves
                with the FCC auction application system and the auction bidding system,
                consistent with the additional bidding procedures described in the
                Auction 108 Further Comment Public Notice. By providing these resources
                as well as the resources discussed below, OEA and WTB expect small
                entities that use the available resources to experience lower
                participation and compliance costs. Nevertheless, while OEA and WTB
                cannot quantify the cost of compliance with the procedures on which
                they seek further comment, they do not believe that the costs of
                compliance will unduly burden small entities that choose to participate
                in the auction because the additional procedures for Auction 108 on
                which the Auction 108 Further Comment Public Notice seeks further
                comment are similar in many respects to the procedures in recent
                spectrum auctions conducted by the Commission.
                 65. Steps Taken to Minimize the Significant Economic Impact on
                Small Entities, and Significant Alternatives Considered. The RFA
                requires an agency to describe any significant, specifically small
                business, alternatives that it has considered in reaching its proposed
                approach, which may include the following four alternatives (among
                others): (1) The establishment of differing compliance or reporting
                requirements or timetables that take into account the resources
                available to small entities; (2) the clarification, consolidation, or
                simplification of compliance and reporting requirements under the rule
                for such small entities; (3) the use of performance rather than design
                standards; and (4) an exemption from coverage of the rule, or any part
                thereof, for such small entities.
                 66. OEA and WTB have taken steps to minimize any economic impact of
                the additional procedures on small entities through, among other
                things, the Commission's potential use of a clock auction format. Among
                the comments received in response to the Auction 108 Comment Public
                Notice were several that support the SMR format at least in part
                because it is familiar to bidders, suggesting that small entities may
                be deterred from participating under the single-round format with
                package bidding described in the Auction 108 Comment Public Notice. The
                potential length of an SMR auction, however, is seen by some commenters
                as a disadvantage. With those comments in mind, the clock auction
                format on which the Auction 108 Further Comment Public Notice seeks
                comment would be a familiar format to small entities that have
                previously participated in Commission auctions, and would consist of
                multiple rounds of bidding and incorporate intra-round bidding to
                potentially help manage the duration of the auction, thereby lessening
                the burden of a multiple-round auction on small entities. In addition,
                bidders would have an option to choose to use proxy bid instructions to
                reduce the time they spend monitoring the auction, further benefitting
                small entities.
                 67. OEA and WTB have also taken steps to minimize any economic
                impact of the Commission's auction procedures on small entities
                through, among other things, the many resources that the Commission
                provides to potential auction participants. These resources, which are
                described in detail in the Supplemental IRFA incorporated into the
                Auction 108 Comment Public Notice are provided at no cost and include,
                for example, access to an FCC Auctions Hotline for information about
                the auction process and procedures; an FCC Auctions Technical Support
                Hotline for technical assistance on issues such as access to or
                navigation within the electronic FCC Form 175 and use of the FCC's
                auction bidding system; a web-based, interactive online tutorial
                produced by Commission staff to familiarize applicants with auction
                procedures, filing requirements, bidding procedures, and other matters
                related to an auction; the opportunity to participate in a mock
                auction; and the opportunity to participate in Auction 108
                electronically via the internet. Additionally, eligible small
                businesses and rural service providers will be able to participate in
                the bidding credit program for Auction 108, which may lower their
                relative costs of participation. In the Auction 108 Further Comment
                Public Notice, OEA and WTB incorporate by reference the description of
                the additional steps taken to minimize the significant economic impact
                on small entities, and significant alternatives considered, from the
                Regulatory Flexibility Analysis in the Auction 108 Comment Public
                Notice.
                 68. The procedures for the conduct of Auction 108 on which the
                Auction 108 Further Comment Public Notice seeks further comment
                constitute the more specific implementation of the competitive bidding
                rules contemplated by 47 CFR parts 1 and 27, the 2.5 GHz Report and
                Order, and relevant competitive bidding orders, and are fully
                consistent therewith.
                 69. Federal Rules that May Duplicate, Overlap, or Conflict with the
                Proposed Rules. None.
                B. Deadlines and Filing Procedures
                 70. Pursuant to 47 CFR 1.415(d) and 1.419, interested parties may
                file comments on or before the date indicated in the DATES section of
                this document. Comments may be filed using the Commission's Electronic
                Comment Filing System (ECFS) or by filing paper copies.
                 71. Ex Parte Requirements. This proceeding has been designated as a
                permit-but-disclose proceeding in accordance with the Commission's ex
                parte rules. Persons making oral ex parte presentations must file a
                copy of any written presentations or memoranda summarizing any oral
                presentation within two business days after the presentation (unless a
                different deadline applicable to the Sunshine Period applies). Persons
                making oral ex parte presentations are reminded that memoranda
                summarizing the presentations must (1) list all persons attending or
                otherwise participating in the meeting at which the ex parte
                presentation was made, and (2) summarize all data presented and
                arguments made during the presentation. If the presentation consisted
                in whole or in part of the presentation of data or arguments already
                reflected in the presenter's written comments, memoranda, or other
                filings in the proceeding, the presenter may provide citations to such
                data or arguments in his or her prior comments, memoranda, or other
                filings (specifying the relevant page and/or paragraph numbers where
                such data or arguments can be found) in lieu of summarizing them in the
                memorandum. Documents shown or given to the Commission staff during ex
                parte meetings are deemed to be written ex parte presentations and must
                be filed consistent with 47 CFR 1.1206(b). In proceedings governed by
                47 CFR 1.49(f) or for which the Commission has made available a method
                of electronic filing, written ex parte presentations and memoranda
                summarizing oral ex parte presentations, and all attachments thereto,
                must be filed through the electronic comment filing system available
                for that proceeding, and must be filed in their native format (e.g.,
                .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
                should familiarize themselves with the Commission's ex parte rules.
                [[Page 8772]]
                Federal Communications Commission.
                William Huber,
                Associate Chief, Auctions Division, Office of Economics and Analytics.
                [FR Doc. 2022-03182 Filed 2-15-22; 8:45 am]
                BILLING CODE 6712-01-P
                

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT