83 FR 4455 - Auction of FM Translator Construction Permits Scheduled for June 21, 2018; Comment Sought on Competitive Bidding Procedures for Auction 83

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 83, Issue 21 (January 31, 2018)

In this document, the Wireless Telecommunications and Media Bureaus (the Bureaus) announce an auction of certain FM translator construction permits. This document also seeks comment on competitive bidding procedures and proposed minimum opening bids for Auction 83.

[Federal Register Volume 83, Number 21 (Wednesday, January 31, 2018)]
[Proposed Rules]
[Pages 4455-4462]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-01918]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 73

[AU Docket No. 17-351; DA 18-11]


Auction of FM Translator Construction Permits Scheduled for June 
21, 2018; Comment Sought on Competitive Bidding Procedures for Auction 
83

AGENCY: Federal Communications Commission.

ACTION: Proposed rule; proposed auction procedures.

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SUMMARY: In this document, the Wireless Telecommunications and Media 
Bureaus (the Bureaus) announce an auction of certain FM translator 
construction permits. This document also seeks comment on competitive 
bidding procedures and proposed minimum opening bids for Auction 83.

DATES: Comments are due on or before February 6, 2018, and reply 
comments are due on or before February 13, 2018. Bidding for FM 
translator construction permits in Auction 83 is scheduled to begin on 
June 21, 2018.

ADDRESSES: Interested parties may submit comments in response to the 
Auction 83 Comment Public Notice by any of the following methods:
     FCC's Website: Federal Communication Commission's 
Electronic Comment Filing System (ECFS): http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.
     People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large print, 
electronic files, or audio format), send an email to [email protected] or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (TTY).
    For detailed instructions for submitting comments, see the 
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For auction legal questions, Lynne 
Milne in the Wireless Telecommunications Bureau's Auctions and Spectrum 
Access Division at (202) 418-0660. For general auction questions, the 
Auctions Hotline at (717) 338-2868. For FM translator service rule 
questions, James Bradshaw, Lisa Scanlan or Tom Nessinger in the Media 
Bureau's Audio Division at (202) 418-2700.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
document (Auction 83 Comment Public Notice) in AU Docket No. 17-351, DA 
18-11, released on January 16, 2018. The complete text of this 
document, including any attachment, is available for public inspection 
and copying from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) Monday 
through Thursday or from 8:00 a.m. to 11:30 a.m. ET on Fridays in the 
FCC Reference Information Center, 445 12th Street SW, Room CY-A257, 
Washington, DC 20554. The Auction 83 Comment Public Notice and related 
documents also are available on the internet at the Commission's 
website: http://wireless.fcc.gov/auctions/83/, or by using the search 
function for AU Docket No. 17-351 on the Commission's ECFS web page at 
http://www.fcc.gov/cgb/ecfs/.
    All filings in response to the Auction 83 Comment Public Notice 
must refer to AU Docket No. 17-351. The Bureaus strongly encourage 
interested parties to file comments electronically, and request that an 
additional copy of all comments and reply comments be submitted 
electronically to the following address: [email protected].
    Electronic Filers: Comments may be filed electronically using the 
internet by accessing ECFS: http://apps.fcc.gov/ecfs. Follow the 
instructions for submitting comments.
    Paper Filers: Parties who choose to file by paper must file an 
original and one copy of each filing. Filings can be sent by hand or 
messenger delivery, by commercial overnight 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 (FCC). All hand-delivered or messenger-
delivered paper filings for the Commission's Secretary must be 
delivered to the FCC Headquarters at 445 12th Street SW, Room TW-A325, 
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. 
Eastern Time (ET). All hand deliveries must be held together with 
rubber bands or fasteners. Any envelope or box must be disposed of 
before entering the building. Commercial overnight mail (other than 
U.S. Postal Service Express Mail and Priority Mail) must be sent to 
9050 Junction Drive, Annapolis Junction, MD 20701. U.S. Postal Service 
first-class, Express, and Priority mail must be addressed to 445 12th 
Street SW, Washington, DC 20554.

I. Background

    1. On February 6, 2003, the Bureaus announced an auction filing 
window for non-reserved band (Channels 221 to 300) applications for new 
FM translator stations and major modifications to authorized FM 
translator facilities. By Public Notices released May 21, 2013 and 
April 30, 2014, the Bureaus provided a list of all applications 
received during the filing window that were mutually exclusive (MX) 
with other applications submitted in the filing window. Applicants were 
previously given the opportunity to eliminate their mutual exclusivity 
with other applicants' engineering proposals by settlement or technical 
modification to their proposals.

II. Construction Permits in Auction 83

    2. Auction 83 will resolve groups of pending mutually exclusive 
applications for commercial FM translator construction permits. 
Competitive bidding will be used to select winning bidders for up to 43 
new FM translator permits. A list of those pending groups of mutually 
exclusive applications is identified in Attachment A of the Auction 83 
Comment Public

[[Page 4456]]

Notice. Attachment A also lists proposed minimum opening bids and 
upfront payment amount for each construction permit.
    3. An applicant listed in Attachment A may become qualified to bid 
only if it meets the additional filing, qualification and payment 
requirements, and otherwise complies with applicable requirements. Each 
applicant may become a qualified bidder only for those constructions 
permits specified for that applicant in Attachment A to the Auction 83 
Comment Public Notice. Each of the engineering proposals within each MX 
group are directly mutually exclusive with one another; therefore, no 
more than one construction permit will be awarded for each MX group 
identified in Attachment A. Under the Commission's established 
precedent, because mutual exclusivity exists for auction purposes, once 
``mutually exclusive applications are accepted,'' even if only one 
applicant for a particular construction permit becomes qualified to 
bid, that applicant must submit a bid in order to be eligible to obtain 
that construction permit. The Bureaus seek comment on whether, in the 
event the Commission determines to apply to Auction 83 applicants the 
changes made since 2003 to Section 1.2105 of the auction rules 
described in paragraphs 9-11 of the Auction 83 Comment Public Notice, 
the Bureaus can or should apply a different approach in this unique 
context.

III. Remedial Filing Window for FCC Forms 175

    4. Applicants listed in Attachment A previously filed short-form 
applications (FCC Forms 175). The Bureaus, in a future public notice, 
will specify procedures and announce a filing window for updating 
Auction 83 applicants' Forms 175. During this remedial filing window, 
each applicant seeking to become qualified to participate in bidding 
must make any updates to information submitted in its application that 
may be needed, whether to reflect new or revised information pursuant 
47 CFR 1.65, to comply with requirements of the FCC auction application 
system or to address other requirements of the Commission's competitive 
bidding rules, including amendments to those rules that may have been 
adopted subsequent to Auction 83 applicants' initial submissions, such 
as those changes required to be reported pursuant to sections 1.65 and 
1.2105 of the Commission's rules. If an applicant fails to update its 
FCC Form 175 during the upcoming remedial filing window, it will be 
disqualified from further participation in Auction 83.

IV. Bureaus Seek Comment on Procedures for Pending Applications

    5. Auction 83 applicants initially filed their short-form auction 
applications and Form 349 tech box proposals in 2003. Since those 
applications were filed, the Bureaus have undertaken significant 
engineering analysis to determine mutual exclusivity among over 13,000 
tech boxes that were initially filed. In the intervening period, the 
Commission has also amended its Part 1 competitive bidding rules 
several times. In general, each Commission auction is subject to the 
current Commission's Part 1 competitive bidding rules, including any 
amendments that may be adopted after the initial filing of an 
application. In light of the many years during which the Auction 83 
applicants' short-form applications have been pending, the Bureaus seek 
comment on whether certain aspects of the current rules governing 
auctions should be waived to account for regulatory and business 
changes that have occurred since these applications were filed in 2003.
    6. Prohibition on Major Changes. The Bureaus seek comment on 
whether to waive section 1.2105(b)'s prohibition on major changes with 
respect to transfers of control or assignments that have occurred to 
date and/or that have been subject to Commission review and approval by 
a particular date. Section 1.2105(b)(2) provides that an auction 
applicant that undertakes a major change, including a change of 
ownership that would constitute an assignment or transfer of control, 
after the short-form application deadline will be disqualified from 
participating in bidding. This rule applies uniformly to auction 
applicants, including in broadcast auctions. As noted in the recent 
broadcast television spectrum incentive auction, this prohibition 
assures that ``relevant parties are identified to the Commission prior 
to the auction'' and that the representations and certifications in the 
application ``remain effective and enforceable'' while the application 
is pending. Further, preventing significant changes in the ownership of 
an applicant after the short-form application deadline assures that all 
applicants have consistent and transparent information about the 
identity of other applicants and, by leveling the informational playing 
field enhances competition in the auction. Accordingly, the bar on 
major modifications prevents an applicant entity from engaging in an 
assignment or transfer of control from the short-form deadline until 
after the auction closes. For Auction 83, this prohibition has already 
been in effect for more than 14 years, and will not be lifted before 
the passage of at least another six months.
    7. Two Auction 83 applicants whose ultimate parent corporation had 
consummated a transfer of control pursuant to authorization granted by 
the Commission in 2008 have sought waiver of section 1.2105(b)(2)'s bar 
on major modifications. Absent a waiver, the rule would require the 
dismissal of those applicants' short-form applications. The Bureaus 
seek comment on whether good cause exists to grant this request for 
waiver. Moreover, other Auction 83 applicants may have changed 
ownership or control since 2003 for operational or other business 
reasons entirely unrelated to the FM translator construction permits 
that they are seeking in Auction 83. Are there circumstances that would 
justify waiver of this rule for Auction 83 applicants? Should any such 
waiver be limited to certain transfers of control or assignments (e.g., 
that have occurred to date; that were subject to Commission review and 
approval by a particular date; and/or that were consummated pursuant to 
an assignment or transfer of control involving all, or substantially 
all, of the assets of the applicant or its parent and which involve 
multiple licenses)?
    8. Prohibitions on Joint Bidding Agreements, on Separate Auction 
Applications By Commonly Controlled Entities, and on Certain 
Communications. Under section 1.2105(a), as revised in 2015, each 
auction applicant must certify that it has disclosed any arrangements 
or understandings of any kind relating to the licenses being auctioned 
to which it (or any party that controls or is controlled by it) is a 
party, and must certify that it (or any party that controls or is 
controlled by it) has not entered and will not enter any arrangement or 
understanding of any kind relating directly or indirectly to bidding at 
auction with any other applicant for the auction, among others. 
Consistent with this prohibition, the Commission also revised section 
1.1205(a)(3) to prohibit the filing of more than one short-form auction 
application by any one entity or individual, or by multiple entities 
that have a controlling interest in common, and provided that if 
applications were filed by entities with overlapping controlling 
interests at most, only one of the applicants could become qualified to 
bid. For purposes of this prohibition, 47 CFR 1.2105(a)(4) defines 
controlling

[[Page 4457]]

interest to include individuals or entities with de jure or de facto 
control. In 2015, the Commission also revised the rule prohibiting 
certain communications, section 1.2105(c), to prohibit a communication 
of bids or bidding strategies between all applicants for an auction.
    9. At the time Auction 83 applications were initially filed, 
section 1.2105 did not prohibit joint bidding agreements or the filing 
of separate auction applications by entities with overlapping 
controlling interests. The rule required, as it does now, the 
disclosure of any such agreement and identification of all parties to 
it. In addition, the section 1.2105(c) prohibition on certain 
communications applied only to a communication of bids and bidding 
strategies between auction applicants for construction permits in any 
of the same geographic license, areas, with an exception for applicants 
that had identified each other on their Forms 175 as parties with whom 
they had entered into agreements pursuant to section 
1.2105(a)(2)(viii). For purposes of this prohibition, both former 
section 1.2105(c)(7)(i) and current section 1.2105(c)(5)(i) define 
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. Further, in applying the prohibited communications rule, 
the Bureaus have found that, where an individual served as an officer 
and director for two or more applicants subject to the rule, the bids 
and bidding strategies of one applicant are presumptively conveyed to 
the other applicant. Accordingly, the Bureaus determined under the 
former rule that, absent a disclosed bidding agreement between such 
applicants, an apparent violation of section 1.2105(c) would occur.
    10. The Bureaus anticipate that some Auction 83 applicants and 
their pending applications may not be in compliance with the current 
provisions of section 1.2105. In light of the passage of time since the 
Auction 83 application filing deadline in 2003, the rule revisions that 
have become effective, and the business changes that applicants any 
applicants have undergone, the Bureaus seek comment on whether waiver 
of certain provisions of section 1.2105 to allow applicants to bring 
their applications into compliance with the current competitive bidding 
rules would serve the underlying purposes of these current prohibitions 
better than strict enforcement under these circumstances. If so, how 
might applicants bring themselves into compliance with current 
requirements during the upcoming remedial filing window? For example, 
if any Auction 83 applicants are under common control, should the 
Bureaus require such applicants to participate through a single bidding 
entity by filing a single application covering all of the MX 
engineering proposals applied for by the separate commonly controlled 
applicants? If so, should the Bureaus adopt specific procedures for the 
remedial filing window that would allow such Auction 83 applicants to 
come into compliance with current competitive bidding rules and 
requirements? Under this approach, the Bureaus propose that any 
commonly controlled applicants that combine their applications for 
purposes of bidding would be able to apply separately post-auction for 
construction permits. As an alternative, if any Auction 83 applicants 
have overlapping controlling interests, should the Bureaus allow 
separate auction applications from Auction 83 applicants that are under 
common control? If so, how would the Bureaus address the issue of a 
prohibited communication of bidding-related information by shared 
officers or directors of Auction 83 applicants? To the extent any 
Auction 83 applicant may have previously entered into an arrangement 
that is now prohibited under section 1.2105's prohibition on joint 
bidding agreements, what steps could such parties take to bring 
themselves into compliance with current rules without implicating the 
concerns that led the Commission to adopt the new rule? How should the 
Bureaus address the potentially continuing effects of any previously 
negotiated arrangement relating to joint bidding that was disclosed 
consistently with our prior rules? Irrespective of any waiver, should 
the Bureaus presume, absent affirmative evidence to the contrary, that 
any communications that may have occurred due to a shared director and 
officer during the more than ten years the initial applications have 
been pending prior to the remedial filing window did not involve bids 
or bidding strategies for purposes of applying the prohibition? 
Commenters are encouraged to identify any particular circumstances of 
this auction that should guide us in developing application procedures 
under the competitive bidding rules now in effect, including the 
lengthy pendency of the auction applications, specific aspects of the 
auction application process and processing procedures, limitations on 
eligibility to bid on specific permits in this closed auction, the 
nature of the permits to be awarded, or any other relevant 
considerations. Pursuant to 47 CFR 1.3 and 1.925, commenters favoring 
waiver of any rule should focus in particular on whether the underlying 
purpose of the rule would be served by its application in this case.

V. Updates to Application Outside of Filing Windows

    11. 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. 
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. See also 
47 CFR 1.2105(b), (c).
    12. If information needs to be submitted pursuant to sections 1.65 
or 1.2105 outside of the initial, remedial, or resubmission windows in 
Auction 83, the applicant must submit a letter briefly summarizing the 
changes by email to [email protected]. Such email must include a 
subject or caption referring to Auction 83 and the name of the 
applicant.

VI. Bureaus Seek Comment on Bidding Procedures

    13. The Bureaus, under delegated authority, seek comment on a 
variety of auction-specific procedures prior to the start of bidding in 
Auction 83.

A. Auction Structure

    14. Simultaneous Multiple Round Auction Design. The Bureaus propose 
using the Commission's standard simultaneous multiple-round auction 
format for Auction 83. This type of auction offers every construction 
permit for bid at the same time and consists of successive bidding 
rounds in which eligible bidders may place bids on individual 
construction permits. Typically, bidding remains open on all 
construction permits until bidding stops on every construction permit. 
The Bureaus seek comment on this proposal.
    15. Bidding Rounds. Auction 83 will consist of sequential bidding 
rounds, each followed by the release of round results. The Commission 
will conduct Auction 83 over the internet using the FCC auction bidding 
system. Bidders will also have the option of placing bids

[[Page 4458]]

by telephone through a dedicated auction bidder line.
    16. The Bureaus propose to retain the discretion to change the 
bidding schedule in order to foster an auction pace that reasonably 
balances speed with the bidders' need to study round results and adjust 
their bidding strategies. Under this proposal, the Bureaus 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. The Bureaus seek comment on this proposal. 
Commenters on this issue should address the role of the bidding 
schedule in managing the pace of the auction, specifically discussing 
the tradeoffs in managing auction pace by bidding schedule changes, by 
changing the activity requirements or bid amount parameters, or by 
using other means.
    17. Stopping Rule. To complete the auction within a reasonable 
time, the Bureaus propose to employ a simultaneous stopping rule 
approach for Auction 83, which means all construction permits remain 
available for bidding until bidding stops on every construction permit. 
Specifically, bidding would close on all construction permits after the 
first round in which no bidder submits any new bids, applies a 
proactive waiver, or, if bid withdrawals are permitted in this auction, 
withdraws any provisionally winning bid which is a bid that would 
become a final winning bid if the auction were to close in that given 
round. Thus, unless the Bureaus announce alternative procedures, the 
simultaneous stopping rule will be used in this auction, and bidding 
will remain open on all construction permits until bidding stops on 
every construction permit. Consequently, it is not possible to 
determine in advance how long the bidding in this auction will last.
    18. Further, the Bureaus propose to retain the discretion to 
exercise any of the following options during Auction 83. (1) Use a 
modified version of the simultaneous stopping rule that would close the 
auction for all construction permits after the first round in which no 
bidder applies a waiver, withdraws a provisionally winning bid (if 
withdrawals are permitted in this auction), or places any new bid on a 
construction permit for which it is not the provisionally winning 
bidder, which means that, absent any other bidding activity, a bidder 
placing a new bid on a construction permit for which it is the 
provisionally winning bidder would not keep the auction open under this 
modified stopping rule. (2) Use a modified version of the simultaneous 
stopping rule that would close the auction for all construction permits 
after the first round in which no bidder applies a waiver, withdraws a 
provisionally winning bid (if withdrawals are permitted in this 
auction), or places any new bid on a construction permit that already 
has a provisionally winning bid, which means that, absent any other 
bidding activity, a bidder placing a new bid on an FCC-held 
construction permit (a construction permit that does not already have a 
provisionally winning bid) would not keep the auction open under this 
modified stopping rule. (3) Use a modified version of the simultaneous 
stopping rule that combines options (1) and (2). (4) The auction would 
close after a specified number of additional rounds (special stopping 
rule) to be announced by the Bureaus. If the Bureaus invoke this 
special stopping rule, they will accept bids in the specified final 
round(s), after which the auction will close. (5) The auction would 
remain open even if no bidder places any new bid, applies a waiver, or 
withdraws any provisionally winning bid (if withdrawals are permitted 
in this auction). In this event, the effect will be the same as if a 
bidder had applied a waiver. The activity rule will apply as usual, and 
a bidder with insufficient activity will either lose bidding 
eligibility or use a waiver.
    19. The Bureaus propose to exercise these options 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. Before exercising these 
options, the Bureaus are likely to attempt to change the pace of the 
auction. For example, the Bureaus may adjust the pace of bidding by 
changing the number of bidding rounds per day and/or the minimum 
acceptable bids. The Bureaus proposed to retain the discretion to 
exercise any of these options with or without prior announcement during 
the auction. The Bureaus seek comment on these proposals.
    20. Auction Delay, Suspension or Cancellation. Pursuant to 47 CFR 
1.2104(i), the Bureaus propose that they may delay, suspend, or cancel 
bidding in Auction 83 in the event of a 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. The 
Bureaus will notify participants of any such delay, suspension or 
cancellation by public notice and/or through the FCC auction bidding 
system's announcement function. If bidding is delayed or suspended, the 
Bureaus may, in their sole discretion, 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 Bureaus to delay or suspend the auction. The Bureaus 
emphasize that they will exercise this authority solely at their 
discretion, and not as a substitute for situations in which bidders may 
wish to apply activity rule waivers. The Bureaus seek comment on this 
proposal.

B. Auction Procedures

    21. Upfront Payments and Bidding Eligibility. The Bureaus have 
delegated authority and discretion to determine an appropriate upfront 
payment for each construction permit being auctioned, taking into 
account such factors as the efficiency of the auction process and the 
potential value of similar construction permits. The upfront payment is 
a refundable deposit made by an applicant to establish eligibility to 
bid on construction permits. Upfront payments that are related to the 
specific construction permits being auctioned protect against frivolous 
or insincere bidding and provide the Commission with a source of funds 
from which to collect payments owed at the close of bidding. With these 
considerations in mind, the Bureaus proposed the upfront payments set 
forth in Attachment A of the Auction 83 Comment Public Notice. The 
Bureaus seek comment on the upfront payments specified in Attachment A 
of the Auction 83 Comment Public Notice.
    22. The Bureaus further propose that the amount of the upfront 
payment submitted by a bidder will determine its initial bidding 
eligibility in bidding units. The Bureaus propose to assign each 
construction permit a specific number of bidding units, equal to one 
bidding unit per dollar of the upfront payment listed in Attachment A 
of the Auction 83 Comment Public Notice. The number of bidding units 
for a given construction permit is fixed and does not change during the 
auction as prices change. If an applicant is found to be qualified to 
bid on more than one permit in Auction 83, such a bidder may place bids 
on multiple construction permits, provided that the total number of 
bidding units associated with those construction permits does not 
exceed the bidder's current eligibility. A bidder cannot increase its 
eligibility during the auction; it can only maintain its

[[Page 4459]]

eligibility or decrease its eligibility. Thus, in calculating its 
upfront payment amount and hence its initial bidding eligibility, an 
applicant must determine the maximum number of bidding units on which 
it may wish to bid (or hold provisionally winning bids) in any single 
round, and submit an upfront payment amount covering that total number 
of bidding units. The Bureaus request comment on these proposals.
    23. Activity Rule. 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. The Bureaus propose a single stage 
auction with the following activity requirement: In each round of the 
auction, a bidder desiring to maintain its current bidding eligibility 
is required to be active on 100 percent of its bidding eligibility. A 
bidder's activity in a round will be the sum of the bidding units 
associated with any construction permits upon which it places bids 
during the current round and the bidding units associated with any 
construction permits for which it holds provisionally winning bids. 
Failure to maintain the requisite activity level would result in the 
use of an activity rule waiver, if any, or a reduction in the bidder's 
eligibility, possibly curtailing or eliminating the bidder's ability to 
place additional bids in the auction. The Bureaus seek comment on this 
proposal.
    24. Activity Rule Waivers and Reducing Eligibility. When a bidder's 
activity in the current round is below the required minimum level, it 
may preserve its current level of eligibility through an activity rule 
waiver, if available. An activity rule waiver applies to an entire 
round of bidding, not to a particular construction permit. Activity 
rule waivers can be either proactive or automatic. Activity rule 
waivers are principally a mechanism for a bidder to avoid the loss of 
bidding eligibility in the event that exigent circumstances prevent it 
from bidding in a particular round.
    25. The FCC auction bidding system will assume that a bidder that 
does not meet the activity requirement would prefer to use 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 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, thereby meeting the activity requirement. If a 
bidder has no waivers remaining and does not satisfy the required 
activity level, the bidder's current eligibility will be permanently 
reduced, possibly curtailing or eliminating the ability to place 
additional bids in the auction.
    26. 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 bidding system. In this case, the bidder's eligibility 
would be permanently reduced to bring it into compliance with the 
specified activity requirement. Reducing eligibility is an irreversible 
action; once eligibility has been reduced, a bidder cannot regain its 
lost bidding eligibility.
    27. Under the proposed simultaneous stopping rule, a bidder may 
apply an activity rule waiver proactively as a means to keep the 
auction open without placing a bid. If a bidder proactively were to 
apply an activity rule waiver (using the proactive waiver function in 
the FCC auction bidding system) during a bidding round in which no bids 
are placed or withdrawn (if bid withdrawals are permitted in this 
auction), the auction will remain open and the bidder's eligibility 
will be preserved. An automatic waiver applied by the FCC auction 
bidding system in a round in which there are no new bids, no bid 
withdrawal (if bid withdrawals are permitted in this auction), or no 
proactive waiver will not keep the auction open.
    28. The Bureaus propose that each bidder in Auction 83 be provided 
with three activity rule waivers that may be used at the bidder's 
discretion during the course of the auction. The Bureaus seek comment 
on this proposal.
    29. Reserve Price or Minimum Opening Bids. Normally, a reserve 
price is an absolute minimum price below which a construction permit 
will not be sold in a given auction. The Bureaus do not propose to 
establish separate reserve prices for the Auction 83 construction 
permits.
    30. A minimum opening bid is the minimum bid price set at the 
beginning of the auction below which no bids are accepted. Because it 
is an effective tool for accelerating the competitive bidding process, 
the Bureaus propose to establish minimum opening bid amounts for 
Auction 83 determined by taking into account the type of service and 
class of facility offered, market size, population covered by the 
proposed broadcast facility, and recent broadcast transaction data. 
Attachment A of the Auction 83 Comment Public Notice lists a proposed 
minimum opening bid amount for each construction permit available in 
Auction 83. The Bureaus seek comment on the minimum opening bid amounts 
specified in Attachment A of the Auction 83 Comment Public Notice.
    31. If commenters believe that these minimum opening bid amounts 
will result in unsold construction permits, are not reasonable amounts, 
or should instead operate as reserve prices, they should explain why 
this is so and comment on the desirability of an alternative approach. 
The Bureaus ask commenters to support their claims with valuation 
analyses and suggested amounts or formulas for reserve prices or 
minimum opening bids. In establishing the minimum opening bid amounts, 
the Bureaus particularly seek comment on factors that could reasonably 
have an impact on bidders' valuation of the broadcast spectrum, 
including the type of service offered, market size, population covered 
by the proposed broadcast facility, and any other relevant factors.
    32. Bid Amounts. The Bureaus propose that, if the bidder has 
sufficient eligibility to place a bid on a particular construction 
permit in a round, an eligible bidder will be able to place a bid on 
that construction permit in any of up to nine different amounts. Under 
this proposal, the FCC auction bidding system interface will list the 
acceptable bid amounts for each construction permit.
    33. The first of the acceptable bid amounts is called the minimum 
acceptable bid amount. The minimum acceptable bid amount for a 
construction permit will be equal to its minimum opening bid amount 
until there is a provisionally winning bid for the construction permit. 
After there is a provisionally winning bid for a construction permit, 
the minimum acceptable bid amount will be a certain percentage higher. 
The percentage used for this calculation, the minimum acceptable bid 
increment percentage, is multiplied by the provisionally winning bid 
amount, and the resulting amount is added to the provisionally winning 
bid amount. If, for example, the minimum acceptable bid increment 
percentage is 10 percent, then the provisionally winning bid amount is 
multiplied by 10 percent. The result of that calculation is added to 
the provisionally winning bid amount, and that sum is rounded using the 
Commission's standard rounding procedure for auctions. If bid 
withdrawals are permitted in this auction, in the case of a 
construction

[[Page 4460]]

permit for which the provisionally winning bid has been withdrawn, the 
minimum acceptable bid amount will equal the second highest bid 
received for the construction permit.
    34. The FCC will calculate the eight additional bid amounts using 
the minimum acceptable bid amount and an additional bid increment 
percentage. The minimum acceptable bid amount is multiplied by the 
additional bid increment percentage, and that result rounded is the 
additional increment amount. The first additional acceptable bid amount 
equals the minimum acceptable bid amount plus the additional increment 
amount. The second additional acceptable bid amount equals the minimum 
acceptable bid amount plus two times the additional increment amount; 
the third additional acceptable bid amount is the minimum acceptable 
bid amount plus three times the additional increment amount; etc. If, 
for example, the additional bid increment percentage is 5 percent, then 
the calculation of the additional increment amount is (minimum 
acceptable bid amount) * (0.05), rounded. The first additional 
acceptable bid amount equals (minimum acceptable bid amount) + 
(additional increment amount); the second additional acceptable bid 
amount equals (minimum acceptable bid amount) + (2 *(additional 
increment amount)); the third additional acceptable bid amount equals 
(minimum acceptable bid amount) + (3 *(additional increment amount)); 
etc. The Bureaus will round the results using the Commission's standard 
rounding procedures for auctions.
    35. For Auction 83, the Bureaus propose to use a minimum acceptable 
bid increment percentage of 10 percent. This means that the minimum 
acceptable bid amount for a construction permit will be approximately 
10 percent greater than the provisionally winning bid amount for the 
construction permit. To calculate the additional acceptable bid 
amounts, the Bureaus proposed to use an additional bid increment 
percentage of 5 percent. The Bureaus seek comment on these proposals.
    36. The Bureaus propose to retain the discretion to change the 
minimum acceptable bid amounts, the minimum acceptable bid increment 
percentage, the additional bid increment percentage, and the number of 
acceptable bid amounts if the Bureaus determine that circumstances so 
dictate. Further, the Bureaus retain the discretion to do so on a 
construction-permit-by-construction-permit basis. The Bureaus also 
propose to retain the discretion to limit (a) the amount by which a 
minimum acceptable bid for a construction permit may increase compared 
with the corresponding provisionally winning bid, and (b) the amount by 
which an additional bid amount may increase compared with the 
immediately preceding acceptable bid amount. For example, the Bureaus 
could set a $1,000 limit on increases in minimum acceptable bid amounts 
over provisionally winning bids. Thus, if calculating a minimum 
acceptable bid using the minimum acceptable bid increment percentage 
results in a minimum acceptable bid amount that is $1,200 higher than 
the provisionally winning bid on a construction permit, the minimum 
acceptable bid amount would instead be capped at $1,000 above the 
provisionally winning bid. The Bureaus seek comment on the 
circumstances under which the Bureaus should employ such a limit, 
factors the Bureaus should consider when determining the dollar amount 
of the limit, and the tradeoffs in setting such a limit or changing 
other parameters, such as changing the minimum acceptable bid 
percentage, the bid increment percentage, or the number of acceptable 
bid amounts. If the Bureaus exercise this discretion, they will alert 
bidders by announcement in the FCC auction bidding system during the 
auction. The Bureaus seek comment on these proposals
    37. Provisionally Winning Bids. Provisionally winning bids are bids 
that would become winning bids if the auction were to close in that 
given round. At the end of a bidding round, the FCC auction bidding 
system will determine a provisionally winning bid for each construction 
permit based on the highest bid amount received. A provisionally 
winning bid will remain the provisionally winning bid until there is a 
higher bid on the same construction permit at the close of a subsequent 
round.
    38. The auction bidding system assigns a pseudo-random number to 
each bid when the bid is entered. If identical high bid amounts are 
submitted on a construction permit in any given round (i.e., tied 
bids), the FCC auction bidding system will use a pseudo-random number 
generator to select a single provisionally winning bid from among the 
tied bids. The tied bid with the highest pseudo-random number wins the 
tiebreaker and becomes the provisionally winning bid. The remaining 
bidders, as well as the provisionally winning bidder, can submit higher 
bids in subsequent rounds. However, if the auction were to close with 
no other bids being placed, the winning bidder would be the one that 
placed the provisionally winning bid. If the construction permit 
receives any bids in a subsequent round, the provisionally winning bid 
again will be determined by the highest bid amount received for the 
construction permit.
    39. A provisionally winning bid will be retained until there is a 
higher bid on the construction permit at the close of a subsequent 
round, unless the provisionally winning bid is withdrawn (if bid 
withdrawals are permitted in this auction). The Bureaus remind bidders 
that provisionally winning bids count toward a bidder's activity level 
for purposes of the activity rule.
    40. Bid Removal and Bid Withdrawal. For Auction 83, the Bureaus 
propose the following bid removal procedures. The FCC auction bidding 
system allows each bidder to remove any of the bids it placed in a 
round before the close of that round. By removing a bid placed within a 
round, a bidder effectively unsubmits the bid. In contrast to the bid 
withdrawal provisions, a bidder removing a bid placed in the same round 
is not subject to a withdrawal payment. Once a round closes, a bidder 
is no longer permitted to remove a bid. The Bureaus seek comment on 
this bid removal proposal.
    41. The Bureaus also seek comment on whether bid withdrawals should 
be permitted in Auction 83. When permitted in an auction, bid 
withdrawals provide a bidder with the option of withdrawing bids placed 
in prior rounds that have become provisionally winning bids. A bidder 
would be able to withdraw its provisionally winning bids using the 
withdraw function in the FCC auction bidding system. A bidder that 
withdraws its provisionally winning bid(s), if permitted in this 
auction, is subject to the bid withdrawal payment provisions of 47 CFR 
1.2104(g) and 1.2109.
    42. Based on the nature of the permits available in Auction 83 and 
on the experience of the Bureaus with past auctions of broadcast 
construction permits, the Bureaus propose to prohibit bidders from 
withdrawing any bid after the close of the round in which the bid was 
placed. The Bureaus make this proposal in light of the site- and 
applicant-specific nature and wide geographic dispersion of the permits 
available in this closed auction, which suggests that potential 
applicants for this auction will have limited opportunity to aggregate 
construction permits through the auction process because of the closed 
MX groups previously established. Thus, the Bureaus believe that it is 
unlikely that

[[Page 4461]]

bidders will have a need to withdraw bids in this auction. Also, 
allowing bid withdrawals may encourage insincere bidding or increase 
opportunities for anti-competitive bidding in certain circumstances. 
The Bureaus also remain mindful that bid withdrawals, particularly 
those made late in this auction, could result in delays in licensing 
new FM translator stations and attendant delays in the offering of new 
broadcast service to the public. The Bureaus seek comment on their 
proposal to prohibit bid withdrawals in Auction 83.

C. Post-Auction Payments

    43. Interim Withdrawal Payment Percentage. A bidder that withdraws 
a bid during an auction is subject to a withdrawal payment equal to the 
difference between the amount of the withdrawn bid and the amount of 
the winning bid in the same or a subsequent auction. However, if a 
construction permit for which a bid has been withdrawn does not receive 
a subsequent higher bid or winning bid in the same auction, the FCC 
cannot calculate the final withdrawal payment until that construction 
permit receives a higher bid or winning bid in a subsequent auction. In 
such cases, when that final withdrawal payment cannot yet be 
calculated, the FCC imposes on the bidder responsible for the withdrawn 
bid an interim bid withdrawal payment, which will be applied toward any 
final bid withdrawal payment that is ultimately assessed.
    44. The amount of the interim bid withdrawal payment may range from 
three to 20 percent of the withdrawn bid amount. If bid withdrawals are 
allowed in Auction 83, the Bureaus propose that the interim bid 
withdrawal payment be 20 percent of the withdrawn bid. The Bureaus 
request comment on using 20 percent for calculating an interim bid 
withdrawal payment amount in Auction 83. Commenters advocating the use 
of bid withdrawals should also address the percentage of the interim 
bid withdrawal payment.
    45. Additional Default Payment Percentage. Any winning bidder that 
defaults or is disqualified after the close of an auction (i.e., fails 
to remit the required down payment by the specified deadline, fails to 
submit a timely long-form application, fails to make full and timely 
final payment, or is otherwise disqualified) is liable for a default 
payment under 47 CFR 1.2104(g)(2). This default payment consists of a 
deficiency payment equal to the difference between the amount of the 
Auction 83 bidder's winning bid and the amount of the winning bid the 
next time a construction permit covering the same spectrum is won in an 
auction, plus an additional payment equal to a percentage of the 
defaulter's bid or of the subsequent winning bid, whichever is less.
    46. Based on the nature of the service and the construction permits 
being offered, the Bureaus propose for Auction 83 an additional default 
payment of 20 percent of the relevant bid. The Bureaus seek comment on 
this proposal.

VII. Tutorial and Additional Information for Auction 83 Applicants

    47. The Bureaus intend to provide educational opportunities for 
applicants to familiarize themselves with the FCC auction application 
system and the auction bidding system.

VIII. Supplemental Regulatory Flexibility Analysis

    48. The Regulatory Flexibility Act of 1980 (RFA) requires that an 
initial regulatory flexibility analysis be prepared for notice and 
comment rulemaking proceedings unless the agency certifies that the 
rule, if promulgated, will not have a significant economic impact on a 
substantial number of small entities, 5 U.S.C. 605(b). 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, 5 
U.S.C. 601(3). According to the Small Business Act, 15 U.S.C. 632, 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 Small Business 
Administration.
    49. The Auction 83 Comment Public Notice seeks comment on proposed 
procedures to govern Auction 83, an auction of up to 43 commercial FM 
translator construction permits, and on proposed procedures for 
processing pending Auction 83 applications. This process is intended to 
provide notice of and adequate time for potential applicants to comment 
on proposed application processing and auction procedures. To promote 
the efficient and fair administration of the competitive bidding 
process for all Auction 83 participants, including small businesses, 
the Bureaus seek comment on the following: (1) Whether certain aspects 
of the rules governing auction applications, including the prohibitions 
on major changes and on certain communications as well as the rules 
governing bidding-related agreements including the current prohibition 
on joint bidding arrangements, should be waived to account for 
regulatory and business changes that have occurred since Auction 83 
applications were filed in 2003; (2) Use of a simultaneous multiple-
round auction format, consisting of sequential bidding rounds with a 
simultaneous stopping rule (with Bureau discretion to exercise 
alternative stopping rules under certain circumstances); (3) A specific 
minimum opening bid amount for each construction permit available in 
Auction 83; (4) A specific upfront payment amount for each construction 
permit; (5) Establishment of a bidder's initial bidding eligibility in 
bidding units based on that bidder's upfront payment through assignment 
of a specific number of bidding units for each construction permit; (6) 
Use of an activity rule that would require bidders to bid actively 
during the auction rather than waiting until late in the auction before 
participating; (7) A single stage auction in which a bidder is required 
to be active on 100 percent of its bidding eligibility in each round of 
the auction; (8) Provision of three activity rule waivers for each 
bidder to allow it to preserve bidding eligibility during the course of 
the auction; (9) Use of minimum acceptable bid amounts and additional 
acceptable amounts, along with a proposed methodology for calculating 
such amounts, with the Bureaus retaining discretion to change their 
methodology if circumstances dictate; (10) A procedure for breaking 
ties if identical high bid amounts are submitted on a permit in a given 
round; (11) Bid removal procedures; (12) Whether to permit bid 
withdrawals; (13) Establishment of an interim bid withdrawal percentage 
of 20 percent of the withdrawn bid in the event the Bureaus allow bid 
withdrawals in Auction 83; and (14) Establishment of an additional 
default payment of 20 percent under 47 CFR 1.2104(g)(2) in the event 
that a winning bidder defaults or is disqualified after the auction.
    50. The specific procedures and minimum opening bids on which 
comment is sought in this Public Notice will affect all applicants 
participating in Auction 83. Any revisions to application procedures 
for pending Auction 83 applications would affect only those entities 
that are commonly controlled, or that underwent a major change of 
ownership or control after the short-form application deadline. Auction 
83 is a closed auction, and only the 57 separate entities listed in

[[Page 4462]]

Attachment A to the Auction 83 Comment Public Notice may become 
qualified to bid. U.S. Census data for 2012 show that 2,849 radio 
station firms operated during that year. Because the proposed 
procedures would affect a maximum of 57 radio station firms, or 
approximately two percent of the total, some of which are not small 
entities, the Bureaus found that no substantial number of small 
entities would be affected by the proposed procedures or minimum 
opening bid amounts. Therefore, the Bureaus certify that the proposed 
procedures and minimum opening bid amounts for Auction 83 will not have 
a significant economic impact on a substantial number of small 
entities.

IX. Ex Parte Rules

    51. This proceeding has been designated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. While 
additional information is provided in the Auction 83 Comment Public 
Notice on these reporting requirements, participants in Auction 83 
should familiarize themselves with the Commission's ex parte rules.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, Wireless 
Telecommunications Bureau.
[FR Doc. 2018-01918 Filed 1-30-18; 8:45 am]
 BILLING CODE 6712-01-P