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Proposed Rule2022-03182

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

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Published

February 16, 2022

Issuing agencies

Federal Communications Commission

Abstract

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.

Full Text

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<title>Federal Register, Volume 87 Issue 32 (Wednesday, February 16, 2022)</title>
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[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 [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-03182]

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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.

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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.
<bullet> Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS at <a href="https://www.fcc.gov/ecfs/">https://www.fcc.gov/ecfs/</a>.
<bullet> Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
<bullet> 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.
<bullet> Commercial deliveries (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Dr.,
Annapolis Junction, MD 20701.
<bullet> U.S. Postal Service first-class, Express, or Priority mail
must be addressed to 45 L Street NE, Washington, DC 20554.
<bullet> 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.
<bullet> Email: Commenters are asked to also submit a copy of their
comments and reply comments electronically to the following address:
<a href="/cdn-cgi/l/email-protection#45243026312c2a2b74757d052326266b222a33">[email&#160;protected]</a>.

FOR FURTHER INFORMATION CONTACT:
Auction Legal Questions: Daniel Habif, (202) 418-0660,
<a href="/cdn-cgi/l/email-protection#470326292e222b690f26252e210721242469202831">[email&#160;protected]</a>; Lyndsey Grunewald, (202) 418-0660,
<a href="/cdn-cgi/l/email-protection#f4b88d9a9087918ddab386819a9183959890b4929797da939b82">[email&#160;protected]</a>; or Scott Mackoul, (202) 418-0660,
<a href="/cdn-cgi/l/email-protection#a8fbcbc7dcdc86e5c9cbc3c7ddc4e8cecbcb86cfc7de">[email&#160;protected]</a>.
General Auction Questions: (717) 338-2868.
2.5 GHz Band Licensing Questions: Madelaine Maior, (202) 418-1466,
<a href="/cdn-cgi/l/email-protection#84c9e5e0e1e8e5edeae1aac9e5edebf6c4e2e7e7aae3ebf2">[email&#160;protected]</a> <a href="/cdn-cgi/l/email-protection#b2ffd3d6d7ded3dbdcd79cffd3dbddc0f2d4d1d19cd5ddc4">[email&#160;protected]</a> or Nadja Sodos-Wallace,
(202) 418-0955, <a href="/cdn-cgi/l/email-protection#9ed0fffaf4ffb0cdf1faf1ede9fff2f2fffdfbdef8fdfdb0f9f1e8">[email&#160;protected]</a>.

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 <a href="https://www.fcc.gov/auction/108">https://www.fcc.gov/auction/108</a> 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
<a href="http://www.fcc.gov/ecfs">www.fcc.gov/ecfs</a>. Alternative formats are available to persons with
disabilities by sending an email to <a href="/cdn-cgi/l/email-protection#14525757212420547277773a737b62">[email&#160;protected]</a> 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:
<bullet> 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;
<bullet> 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;
<bullet> retention by OEA of discretion to adjust the bidding
schedule in order to manage the pace of Auction 108;
<bullet> 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;
<bullet> 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;
<bullet> 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;
<bullet> use of a contingent bidding limit that would allow a
bidder to submit bids with associated bidding activity greater than its
current bidding eligibility;
<bullet> 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%;
<bullet> a specific minimum opening bid amount for licenses
available in Auction 108;
<bullet> establishment of acceptable bid amounts, including clock
price increments and intra-round bids, along with a methodology for
calculating such amounts;
<bullet> 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;
<bullet> 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);
<bullet> 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
<bullet> 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

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