SOW_-_Attachment_A_-_Public_Notice_(Attachments_A-_G).pdf

Attachment A

PUBLIC NOTICE

Federal Communications Commission 445 12th St., S.W.

Washington, D.C. 20554

News Media Information 202 / 418-0500 Internet: http://www.fcc.gov

TTY: 1-888-835-5322

DA 09-1376

June 26, 2009

AUCTION OF BROADBAND RADIO SERVICE (BRS) LICENSES

SCHEDULED FOR OCTOBER 27, 2009

Notice and Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 86

AU Docket No. 09-56

TABLE OF CONTENTS

Heading Paragraph #

I. GENERAL INFORMATION

A. Introduction

1. Background of Proceeding

2. Licenses to be Offered in Auction 86

B. License Descriptions C. Rules and Disclaimers

1. Relevant Authority

2. Prohibition of Collusion; Compliance with Antitrust Laws

3. Incumbency Issues

4. Due Diligence

5. Use of Integrated Spectrum Auction System

6. Fraud Alert

7. Environmental Review Requirements

D. Auction Specifics

1. Auction Start Date

2. Auction Title

3. Bidding Methodology

4. Pre-Auction Dates and Deadlines

5. Requirements for Participation

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

A. General Information Regarding Short-Form Applications B. License Selection C. Disclosure of Bidding Arrangements

Federal Communications Commission DA 09-1376

D. Ownership Disclosure Requirements E. Designated Entity Provisions

1. Bidding Credits for Small and Very Small Businesses

2. Attributable Interests

3. Installment Payments

F. Tribal Lands Bidding Credit G. Provisions Regarding Former and Current Defaulters H. Optional Applicant Status Identification I. Minor Modifications to Short-Form Applications J. Maintaining Current Information in Short-Form Applications

III. PRE-AUCTION PROCEDURES

A. Auction Seminar – August 5, 2009 B. Short-Form Applications – Due Prior to 6:00 p.m. ET on August 18, 2009 C. Application Processing and Minor Corrections D. Upfront Payments – Due September 24, 2009

1. Making Upfront Payments by Wire Transfer

2. FCC Form 159

3. Upfront Payments and Bidding Eligibility

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

E. Auction Registration F. Remote Electronic Bidding G. Mock Auction – October 23, 2009

IV. AUCTION EVENT

A. Auction Structure

1. Simultaneous Multiple Round Auction

2. Information Available to Bidders Before and During the Auction

3. Eligibility and Activity Rules

4. Auction Stages

5. Stage Transitions

6. Activity Rule Waivers

7. Auction Stopping Rules

8. Auction Delay, Suspension, or Cancellation

B. Bidding Procedures

1. Round Structure

2. Reserve Price and Minimum Opening Bids

3. Bid Amounts

4. Provisionally Winning Bids

5. Bidding

6. Bid Removal and Bid Withdrawal

7. Round Results

8. Auction Announcements

V. POST-AUCTION PROCEDURES

A. Down Payments B. Final Payments C. Long-Form Application (FCC Form 601) D. Ownership Disclosure Information Report (FCC Form 602) E. Tribal Lands Bidding Credit F. Default and Disqualification G. Refund of Remaining Upfront Payment Balance

VI. CONTACT INFORMATION

ATTACHMENT A: Licenses to Be Auctioned ATTACHMENT B: Broadband and Radio Service Channels per License on 6 le

ATTACHMENT C: Short-Form Application Filing Instructions ATTACHMENT D: Auction-Specific Instructions for FCC Remittance Advice (FCC Form 159) ATTACHMENT E: Minimum Acceptable Bid Formula ATTACHMENT F: Summary Listing of Judicial, Commission and Bureau Documents Addressing Application of the Anti-Collusion Rule ATTACHMENT G: Auction 86 Seminar Registration Form

I. GENERAL INFORMATION

A. Introduction

1. By this Public Notice, we announce the procedures and minimum opening bid amounts for the upcoming auction of licenses for unassigned Broadband Radio Service (“BRS”) spectrum. This auction, which is designated as Auction 86, is scheduled to commence on October 27, 2009. Auction 86 will offer 78 licenses.

1. Background of Proceeding

2. The spectrum associated with licenses to be auctioned in Auction 86 was previously allocated and made available under the Multipoint Distribution Services (“MDS”) and Multichannel Multipoint Distribution Service (“MMDS”), the predecessor services to BRS. In Auction 6, which was completed in 1996, the Commission conducted competitive bidding for 493 Basic Trading Area (“BTA”)1 licenses to provide access to all BRS spectrum nationwide that was not covered by pre-existing MDS or MMDS site-based licenses.2 Overlay licenses for 75 of the BTAs originally offered in Aucti are available now as a result of default, cancellation, or termination. In one case, BTA 396, the availab license does not cover the entire BTA due to a previous partitioning. Underlying, pre-existing incumbent BRS licenses within these geographic areas remain intact. This auction will also include three additional licenses for BRS service areas in the Gulf of Mexico.

3. On April 24, 2009, in accordance with Section 309(j)(3) of the Communications Act of 1934, as amended,3 the Wireless Telecommunications Bureau (“Bureau”) released a public notice seeking comment on competitive bidding procedures to be used in Auction 86.4 Interested parties submitted 7 comments and 4 reply comments in response to the Auction 86 Comment Public Notice.5

1 BTAs are material copyright © 1992 Rand McNally & Company. Rights granted pursuant to a license from Rand McNally & Company (“Rand McNally”) through an agreement with the Federal Communications Commission.

Rand McNally’s BTA specification contains 487 geographic areas covering the 50 states and the District of Columbia. See Rand McNally, 1992 Commercial Atlas and Marketing Guide, 123rd Edition, at 38-39 (1992). See also 47 C.F.R. § 27.1208.

2 Such licenses are commonly referred to as geographic “overlay” licenses. See Amendment of Parts 1, 21, 73, 74 and 101 of the Commission’s Rules to Facilitate the Provision of Fixed and Mobile Broadband Access, Educational and Other Advanced Services in the 2150-2162 and 2500-2690 MHz Bands, Fourth Memorandum Opinion and Order and Second Further Notice of Proposed Rulemaking, WT Docket No. 03-66, FCC 08-83, 23 FCC Rcd 5992, 6002 n. 38 (2008) (“BRS/EBS 4th MO&O & 2nd FNPRM”).

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

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

4 “Auction of Broadband Radio Service (BRS) Licenses Scheduled for October 27, 2009; Comment Sought on Competitive Bidding Procedures For Auction 86,” Public Notice, DA 09-843, 24 FCC Rcd 4605 (2009) (“Auction 86 Comment Public Notice”).

5 See Comments filed by Ad Hoc BRS Applicants Association, dated May 15, 2009 (“Ad Hoc Applicants Comments”); Inforum Communications, Inc., dated May 15, 2009 (“Inforum Comments”); The Public Interest Spectrum Coalition, dated May 15, 2009 (“PISC Comments”); SAL Spectrum, LLC, dated May 15, 2009 (“SAL Comments”); Satellite Signals of New England, Inc., dated May 15, 2009 (“SSNE Comments”); Utopian Wireless Corporation, dated May 15, 2009 (“Utopian Comments”); Wireless Communications Association International, Inc., of e.

2. Licenses to be Offered in Auction 86

4. The licenses to be offered in Auction 86 consist of the available spectrum in 78 BRS service areas. BRS service areas are BTAs or additional service areas similar to BTAs adopted by the Commission.6 In the BRS/EBS 4th MO&O, the Commission amended its rules to establish Gulf of Mexico service areas for BRS, and Auction 86 therefore includes licenses for three BRS service areas in the Gulf of Mexico.7 A complete list of licenses available for Auction 86 is included as Attachment A this Public Notic

5. Two commenters seek the removal of certain licenses from the Auction 86 inventory.

Inforum Communications, Inc. (“Inforum”) asks the Bureau to remove the license for the Sarasota- Bradenton, Florida, BTA 408 that was formerly held by Inforum.8 Similarly, Satellite Signals of New England, Inc. (“SSNE”) seeks the removal of the licenses for the Burlington, Vermont, BTA 063 and Rutland-Bennington,Vermont, BTA 388 that were formerly held by SSNE.9 Each license automatically cancelled when the former licensee failed to make timely payments of its installment debts.10 Inforum and SSNE argue that these licenses should not be included in the inventory because the Commission has not yet acted on their petitions for reconsideration of decisions denying earlier requests for waiver of the installment payment rules and reinstatement of the licenses.

6. We do not believe that the public interest would be served by the removal of the licenses from the auction. Pending administrative and judicial appeals may often be associated with licenses dated May 15, 2009 (“WCAI Comments”). See Reply Comments filed by Ad Hoc BRS Applicants Association, dated May 29, 2009 (“Ad Hoc Applicants Reply Comments”); Clearwire Corporation, dated May 29, 2009 (“Clearwire Reply Comments”); Utopian Wireless Corporation, dated May 29, 2009 (“Utopian Reply Comments”);

Wireless Communications Association International, Inc., dated May 29, 2009 (“WCAI Reply Comments”).

Cathleen A. Massey, Vice President, Regulatory Affairs and Public Policy of Clearwire Corporation, submitted an ex parte filing on June 11, 2009, on behalf of Clearwire, Xanadoo, and Digital Bridge Corporation (“WCAI members ex parte filing”).

6 The Commission established additional BRS service areas in places where Rand McNally has not defined BTAs:

American Samoa; Guam; Gulf of Mexico Zone A; Gulf of Mexico Zone B; Gulf of Mexico Zone C; Northern Mariana Islands; Mayaguez/Aguadilla-Ponce, Puerto Rico; San Juan, Puerto Rico; and the United States Virgin Islands. The Mayaguez/Aguadilla-Ponce, PR, service area consists of the following municipios: Adjuntas, Aguada, Aguadilla, Anasco, Arroyo, Cabo Rojo, Coamo, Guanica, Guayama, Guayanilla, Hormigueros, Isabela, Jayuya, Juana Diaz, Lajas, Las Marias, Maricao, Maunabo, Mayaguez, Moca, Patillas, Penuelas, Ponce, Quebradillas, Rincón, Sabana Grande, Salinas, San German, Santa Isabel, Villalba and Yauco. The San Juan service area consists of all other municipios in Puerto Rico. 47 C.F.R. § 27.1208.

7 The boundaries of Gulf of Mexico Zone A are from an area twelve nautical miles from the shoreline at mean high tide on the north and east, to the limit of the Outer Continental Shelf to the south, and to longitude 91º00’ to the west. The boundaries of Gulf of Mexico Zone B are from an area twelve nautical miles from the shoreline at mean high tide on the north, to the limit of the Outer Continental Shelf to the south, to longitude 91º00’ to the east, and to longitude 94º00’ to the west. The boundaries of Gulf of Mexico Zone C are from an area twelve nautical miles from the shoreline at mean high tide on the north and west, to longitude 94º00’ to the east, and to a line 281 kilometers from the reference point at Linares, N.L., Mexico on the southwest. See 47 C.F.R. § 27.1208. See also, BRS/EBS 4th MO&O & 2nd FNPRM, 23 FCC Rcd 5992, 6040 ¶ 127.

8 Inforum Comments at 1-3.

9 SSNE Comments at 1-2.

10 See Request of Inforum Communications, Inc. for Petition for Reconsideration and Waiver Request for Late Acceptance of BTA Installment Payment, Order, DA 04-20, 19 FCC Rcd 83 (2004) (“Inforum Petition for Reconsideration”); Satellite Signals of New England, Inc., Request for Waiver of Installment Payment Rules for Auction No. 6 and Reinstatement of Licenses, Order, DA 07-482, 22 FCC Rcd 1937 (2007) (“SSNE Request for Waiver”).

offered at auction.11 We note that the Bureau has already denied the former licensees’ requests for waiver and reinstatement of the licenses.12 Offering the licenses in Auction 86 will have no effect on the power of the Commission to decide Inforum’s and SSNE’s petitions for reconsideration or to grant appropriate relief if the parties were to ultimately prevail on the merits of the petitions. As a matter of policy, if the Bureau were to refrain from offering at auction licenses associated with spectrum that remains subject to a petition for reconsideration or judicial appeal, the Bureau would risk delay of future auctions for review by the Commission and courts of the myriad issues parties could raise in attempts to circumvent auctions for their individual purposes.13 Such delaying action could frustrate the business plans of entities intending to acquire licenses at auction and provide service to the public. For these reasons, we decline to remove these three licenses from the Auction 86 inventory.

B. License Descriptions

7. Where unencumbered, the licenses to be auctioned consist of 76.5 megahertz of spectrum at 2496-2502, 2602-2615, and 2616-2673.5 MHz. We note that the licenses issued pursuant to this auction will be issued pursuant to the post-transition band plan contained in Section 27.5(i)(2) of the Commission’s rules.14 A table showing the channelization of this spectrum is included as Attachment B of this Public Notice.

C. Rules and Disclaimers

1. Relevant Authority

8. Prospective applicants must familiarize themselves thoroughly with the Commission’s general competitive bidding rules set forth in Title 47, Part 1, Subpart Q of the Code of Federal Regulations, including all amendments and clarifications; rules relating to the Broadband Radio Service and emerging technologies contained in Title 47, Part 27 of the Code of Federal Regulations; and rules relating to applications, environment, practice and procedure contained in Title 47, Part 1, Subpart I of the Code of Federal Regulations.15 Prospective applicants must also be thoroughly familiar with the procedures, terms and conditions (collectively, “terms”) contained in this Public Notice and the Commission’s decisions in proceedings regarding competitive bidding procedures, application requirements, and obligations of Commission licensees.16

9. SAL Spectrum, LLC (“SAL”) and the Ad Hoc BRS Applicants Association (“the Ad Hoc Applicants”) seek a revision of the performance requirement set forth in the BRS service rules.17 Section

11 Alpine PCS, Inc., Request for Stay of Auction 78 for the Broadband PCS C Block Licenses in the San Luis Obispo, CA and the Santa Barbara-Santa Maria, CA Basic Trading Areas, Order, DA 08-1602, 23 FCC Rcd 10485, 10491-2 ¶ 22 and n. 50 (2008) (“Alpine”).

12 Inforum Petition for Reconsideration, supra n.13; SSNE Request for Waiver, supra n.13.

13 Compare Alpine at ¶ 22.

14 See 47 C.F.R. § 27.5(i)(2).

15 47 C.F.R. Parts 1 and 27.

16 See, e.g., Amendment of Part 1 of the Commission’s Rules — Competitive Bidding Procedures, PP Docket No.

93-253, Second Report and Order, FCC 94-61, 9 FCC Rcd 2348 (1994) (“Competitive Bidding Second Report and Order”); Amendment of Part 1 of the Commission’s Rules — Competitive Bidding Procedures, WT Docket No. 97- 82, Order on Reconsideration of the Third Report and Order, Fifth Report and Order, and Fourth Further Notice of Proposed Rule Making, FCC 00-274, 15 FCC Rcd 15,293 (2000) (modified by Erratum, DA 00-2475, 15 FCC Rcd 24,501) (“Part 1 Fifth Report and Order”); Amendment of Part 1 of the Commission’s Rules — Competitive Bidding Procedures, WT Docket No. 97-82, Seventh Report and Order, FCC 01-270, 16 FCC Rcd 17,546 (2001) (“Part 1 Seventh Report and Order”) (amending the anti-collusion rule, which is codified at 47 C.F.R. § 1.2105(c)).

17 Specifically, SAL requests a change to the rule, or in the alternative, that the Commission adopt the procedures for the auction and thus amend the rule to allow Auction 86 licensees a full ten years from license grant to demonstrate

27.14(o) of the Commission’s rules provides that a BRS licensee must demonstrate “substantial service” in its service area no later than May 1, 2011.18 Clearwire and the Wireless Communications Association International, Inc. (“WCAI”) oppose SAL’s proposal, contending that it would not be in the public interest to give new licensees ten years to demonstrate substantial service because the spectrum could lie fallow during that period.19 The requests made in comments filed to the Auction 86 Comment Public Notice to change the BRS service rules are beyond the scope of this public notice regarding the procedures for Auction 86. Any such rule change would require action by the full Commission, which could address this issue in a rule making proceeding. Absent such action, new licensees will be subject to the requirements set forth in the current rules. We also note that the Bureau, under its delegated authority, has discretion to entertain requests for extension of the substantial service deadline pursuant to section

1.946 of the Commission’s rules.20

10. The terms contained in the Commission’s rules, relevant orders, and public notices are not negotiable. The Commission may amend or supplement the information contained in our public notices at any time, and will issue public notices to convey any new or supplemental information to applicants. It is the responsibility of all applicants to remain current with all Commission rules and with all public notices pertaining to this auction. Copies of most auctions-related Commission documents, including public notices, can be retrieved from the FCC Auctions Internet site at http://wireless.fcc.gov/auctions. Additionally, documents are available for public inspection and copying between 8:00 a.m. and 4:30 p.m. Eastern Time (ET) Monday through Thursday or 8:00 a.m. to 11:30 a.m.

ET Fridays at the FCC Reference Information Center, 445 12th Street, SW, Room CY-A257, Washington, DC 20554. Documents may also be purchased from the Commission’s duplicating contractor, Best Copy and Printing, Inc. (“BCPI”), 445 12th Street, SW, Room CY-B402, Washington, DC 20554, 800-378-3160 or at http://www.bcpiweb.com.21

2. Prohibition of Collusion; Compliance with Antitrust Laws

11. To ensure the competitiveness of the auction process, Section 1.2105(c) of the Commission’s rules prohibits auction applicants for licenses in any of the same geographic license areas from communicating with each other about bids, bidding strategies, or settlements unless such applicants have identified each other on their short-form applications (FCC Form 175) as parties with whom they have entered into agreements pursuant to Section 1.2105(a)(2)(viii).22 substantial service. SAL Comments at 2-3. The Ad Hoc Applicants assert that they had assumed that any new licenses issued pursuant to Auction 86 would be subject to extended ten-year substantial service deadlines. Ad Hoc Reply Comments at 2.

18 47 C.F.R. § 27.14(o).

19 WCAI Reply Comments at 4; Clearwire Reply Comments at 3. WCAI recommends that any additional time “be an appropriate balance between the goal of ensuring that the spectrum is put to good use and permitting winners a reasonable opportunity to construct.” WCAI Reply Comments at 4. Clearwire argues that the existing May 1, 2011 substantial service deadline should apply, while noting that licensees could request an extension of the deadline “if they make a particularized showing justifying an extension under the Commission’s rules.” Clearwire Reply Comments at 3 and n.5. Clearwire asks that any additional time to demonstrate substantial service be limited to two years from the date of license grant. Id.

20 47 C.F.R. § 1.946.

21 When ordering documents from BCPI, please provide the appropriate FCC document number (for example, DA 09-843 for the Auction 86 Comment Public Notice, or DA 09-1376 for this Public Notice).

22 47 C.F.R. §§ 1.2105(a)(2)(viii), 1.2105(c)(1). See also Part 1 Seventh Report and Order, 16 FCC Rcd 17,546;

Part 1 Fifth Report and Order, 15 FCC Rcd at 15,297-98 ¶¶ 7-8.

a. Entities Subject to Section 1.2105

12. The anti-collusion rule will apply to any applicants that submit short-form applications seeking to participate in a Commission auction and select licenses in the same markets. In Auction 86, the rule would prohibit any applicants that have selected any of the same licenses in their short form applications from communicating absent an agreement.23

13. Under the terms of the rule, applicants that have applied for licenses covering the same markets – unless they have identified each other on their short form applications as parties with whom they have entered into agreements under Section 1.2105(a)(2)(viii) – must affirmatively avoid all communications with or disclosures to each other that affect or have the potential to affect bids or bidding strategy, which may include communications regarding the post-auction market structure.24 This prohibition applies to all applicants regardless of whether such applicants become qualified bidders or actually bid.25

14. For purposes of this prohibition, Section 1.2105(c)(7)(i) defines “applicant” as including all officers and directors of the entity submitting a short-form application to participate in the auction, all controlling interests of that entity, as well as all holders of partnership and other ownership interests and any stock interest amounting to 10 percent or more of the entity, or outstanding stock, or outstanding voting stock of the entity submitting a short-form application.26

15. As described in Section IV.A.2., below, information concerning applicants’ license selections will not be available to the public. Therefore, the Commission will inform each applicant by letter of the identity of each of the other applicants that has applied for licenses covering any of the same geographic areas as the licenses that it has selected in its short-form application.27

16. Entities and parties subject to the anti-collusion rule should take special care in circumstances where their employees may receive information directly or indirectly from a competing applicant relating to any competing applicant’s bids or bidding strategies. In situations where the anti-collusion rule views the same person as the applicant with respect to two different entities filing competing applications, under Bureau precedent the bids and bidding strategies of one applicant are necessarily conveyed to the other and, absent a disclosed bidding agreement, an apparent violation of the anti-collusion rule occurs.28 The Bureau has not addressed situations where employees who do not

23 See “Wireless Telecommunications Bureau Clarifies Spectrum Auction Anti-Collusion Rules,” Public Notice, DA 95-2244, 11 FCC Rcd 9645 (1995).

24 See, e.g., “Wireless Telecommunications Bureau Provides Guidance on the Anti-Collusion Rule for D, E, and F Block Bidders,” Public Notice, DA 96-1460, 11 FCC Rcd 10,134.

25 See, e.g., Star Wireless, LLC, Forfeiture Order, DA 04-3026, 19 FCC Rcd 18,626, 18,628 ¶ 4, n.19 (2004) (“Star Wireless Order”) (collusion rule applies to applicants regardless of whether they are qualified to bid), upheld on review, Star Wireless, LLC and Northeast Communications of Wisconsin, Inc., Order on Review, FCC 07-80, 22 FCC Rcd 8943 (2007), affirmed Star Wireless, LLC v. FCC, D.C. Cir. No. 07-1190 (decided April 22, 2008); Letter to Robert Pettit, Esquire, from Margaret W. Wiener, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, DA 00-2905, 16 FCC Rcd 10,080 (2000) (declining to exempt an applicant’s controlling interest from coverage by the anti-collusion rule, even though the applicant never made an upfront payment for the auction and was not listed as a qualified bidder).

26 47 C.F.R. § 1.2105(c)(7)(i).

27 Section IV.A.2. “Information Available to Bidders Before and During the Auction,” below, especially ¶ 163.

28 Letter to John Cooper, Aurora Communications, Inc., from Margaret W. Wiener, Chief, Auctions and Spectrum Access Division, Wireless Telecommunications Bureau, DA 06-157, 21 FCC Rcd 523 (2006); Letter to Howard A.

Kalmenson, Lotus Communications Corp., from Margaret W. Wiener, Chief, Auctions and Spectrum Access Division, Wireless Telecommunications Bureau, DA 06-156, 21 FCC Rcd 520 (2006); Letter to Colby M. May from Barbara A. Kreisman, Chief, Video Division, Media Bureau, and Margaret W. Wiener, Chief, Auctions and qualify as the applicant (e.g., are not officers or directors) receive information regarding a competing applicant’s bids or bidding strategies and whether that information might be deemed to be necessarily conveyed to the applicant. We note that the exception to the anti-collusion rule providing that non-controlling interest holders may have interests in more than one competing bidder without violating the anti-collusion rule, provided specified conditions are met (including a certification that no prohibited communications have occurred or will occur), does not extend to controlling interest holders.29

b. Prohibition Applies Until Down Payment Deadline

17. Section 1.2105(c)’s anti-collusion prohibition begins at the short-form application filing deadline and ends at the down payment deadline after the auction.30

c. Prohibited Communications

18. Applicants for the upcoming Auction 86 and other parties that may be engaged in discussion with such applicants are cautioned on the need to comply with the Commission’s anti-collusion rule, Section 1.2105(c).31 The anti-collusion rule prohibits not only a communication about an applicant’s own bids or bidding strategy, but also a communication of another applicant’s bids or bidding strategy.32 While the anti-collusion rule provisions do not prohibit business negotiations among auction applicants, applicants must remain vigilant so as not to communicate directly or indirectly information that affects, or could affect, bids or bidding strategy, or the negotiation of settlement agreements.

19. The Commission remains vigilant about prohibited communications taking place in other situations. For example, the Commission has warned that prohibited “communications concerning bids and bidding strategies may include communications regarding capital calls or requests for additional funds in support of bids or bidding strategies to the extent such communications convey information concerning the bids and bidding strategies directly or indirectly.”33

20. Applicants are hereby placed on notice that public disclosure of information relating to bidder interests and bidder identities that is confidential at the time of disclosure may violate the anti-collusion rule.34 This is so even though similar types of information were revealed prior to and during other Commission auctions subject to different information procedures. Bidders should use caution in their dealings with other parties, such as members of the press, financial analysts, or others who might become a conduit for the communication of prohibited bidding information. For example, where limited information disclosure procedures are in place, as for Auction 86, a qualified bidder’s statement to the press that it has lost bidding eligibility and stopped bidding in the auction could give rise to a finding of

Spectrum Access Division, Wireless Telecommunications Bureau, DA 05-2445, 20 FCC Rcd 14,648 (2005) (“May Letter”).

29 47 C.F.R. § 1.2105(c)(4).

30 47 C.F.R. § 1.2105(c)(1).

31 47 C.F.R. § 1.2105(c).

32 See Western PCS BTA 1 Corp., Memorandum Opinion and Order, FCC 99-383, 14 FCC Rcd 21,571 (1999).

33 Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-253, Memorandum Opinion and Order, FCC 94-295, 9 FCC Rcd 7684, 7689 ¶ 12 (1994) (“Memorandum Opinion and Order”).

34 Thus, communication by an applicant of its license selections to another applicant for one or more of the same licenses, or communication of the fact that an applicant does or does not hold provisionally winning bids on particular licenses, may well violate the anti-collusion rule.

an anti-collusion rule violation.35 Similarly, an applicant’s public statement of intent not to participate in Auction 86 bidding could also violate the rule.

21. Applicants selecting licenses for any of the same geographic license areas must not communicate directly or indirectly about bids or bidding strategy.36 Accordingly, such applicants are encouraged not to use the same individual as an authorized bidder. A violation of the anti-collusion rule could occur if an individual acts as the authorized bidder for two or more competing applicants, and conveys information concerning the substance of bids or bidding strategies between such applicants.

Also, if the authorized bidders are different individuals employed by the same organization (e.g., law firm or engineering firm or consulting firm), a violation similarly could occur.37 In such a case, at a minimum, applicants should certify on their applications that precautionary steps have been taken to prevent communication between authorized bidders and that applicants and their bidding agents will comply with the anti-collusion rule.38

22. A violation of the anti-collusion rule could occur in other contexts, such as an individual serving as an officer for two or more applicants.39 Moreover, the Commission has found a violation of the anti-collusion rule where a bidder used the Commission’s bidding system to disclose “its bidding strategy in a manner that explicitly invited other auction participants to cooperate and collaborate in specific markets,”40 and has placed auction participants on notice that the use of its bidding system “to disclose market information to competitors will not be tolerated and will subject bidders to sanctions.”41

23. In addition, when completing short-form applications, applicants should avoid any statements or disclosures that may violate the Commission’s anti-collusion rule, particularly in light of the limited information procedures in effect for Auction 86.42 Specifically, applicants should avoid including any information in their short-form applications that might convey information regarding their license selection, such as using applicant names that refer to licenses being offered, referring to certain licenses or markets in describing bidding agreements, or including any information in attachments that may otherwise disclose applicants’ license selections.

d. Disclosure of Bidding Agreements and Arrangements

24. The Commission’s rules do not prohibit applicants from entering into otherwise lawful bidding agreements before filing their short-form applications, as long as they disclose the existence of the agreement(s) in their short-form application.43 If parties agree in principle on all material terms prior

35 Compare “Wireless Telecommunications Bureau Responds to Questions about the Local Multipoint Distribution Service Auction,” Public Notice, DA 98-37, 13 FCC Rcd 341, 347-48 (1998) (“Public statements can give rise to collusion concerns. This has occurred in the antitrust context, where certain public statements can support other evidence which tends to indicate the existence of a conspiracy.”).

36 Part 1 Seventh Report and Order, 16 FCC Rcd at 17,549-50 ¶ 6.

37 Application of Nevada Wireless for a License to Provide 800 MHz Specialized Mobile Radio Service in the Farmington, NM-CO Economic Area (EA-155) Frequency Band A, Memorandum Opinion and Order, DA 98-1137, 13 FCC Rcd 11,973, 11,977 ¶ 11 (1998) (“Nevada Wireless Order”).

38 Id.

39 See, e.g., May Letter (finding apparent violation of anti-collusion rule where applicants with mutually exclusive applications reported sharing same individual as an officer and director and reported having no bidding agreement).

40 Mercury PCS II, LLC, Notice of Apparent Liability for Forfeiture, FCC 97-388, 12 FCC Rcd 17,970, 17,976 ¶ 12 (1997).

41 Mercury PCS II, LLC, Memorandum Opinion and Order, FCC 98-203, 13 FCC Rcd 23,755, 23,760 ¶ 11 (1998).

42 See Section IV.A.2. “Information Available to Bidders Before and During the Auction,” below.

43 47 C.F.R. § 1.2105(c)(7)(i).

to the short-form filing deadline, each party to the agreement must identify the other party or parties to the agreement on its short-form application under Section 1.2105(c), even if the agreement has not been reduced to writing. If the parties have not agreed in principle by the short-form filing deadline, they should not include the names of parties to discussions on their applications, and they may not continue negotiations, discussions or communications with any other applicants for licenses covering any of the same geographic areas after the short-form filing deadline.44

e. Anti-Collusion Certification

25. By electronically submitting a short-form application following the electronic filing procedures set forth in Attachment C to this Public Notice, each applicant certifies its compliance with Section 1.2105(c). However, the Bureau cautions that merely filing a certifying statement as part of an application will not outweigh specific evidence that collusive behavior has occurred, nor will it preclude the initiation of an investigation when warranted.45 The Commission has stated that it “intend[s] to scrutinize carefully any instances in which bidding patterns suggest that collusion may be occurring.”46 Any applicant found to have violated the anti-collusion rule may be subject to sanctions.47

f. Antitrust Laws

26. Applicants are also reminded that, regardless of compliance with the Commission’s rules, they remain subject to the antitrust laws, which are designed to prevent anticompetitive behavior in the marketplace.48 Compliance with the disclosure requirements of the Commission’s anti-collusion rule will not insulate a party from enforcement of the antitrust laws.49 For instance, a violation of the antitrust laws could arise out of actions taking place well before any party submits a short-form application.50 The Commission has cited a number of examples of potentially anticompetitive actions that would be prohibited under antitrust laws: for example, actual or potential competitors may not agree to divide territories in order to minimize competition, regardless of whether they split a market in which they both do business, or whether they merely reserve one market for one and another for the other.51 Similarly, the Bureau has long reminded potential applicants and others that “[e]ven where the applicant discloses parties with whom it has reached an agreement on the short-form application, thereby permitting

44 “Wireless Telecommunications Bureau Clarifies Spectrum Auction Anti-Collusion Rules,” Public Notice, DA 95- 2244, 11 FCC Rcd 9645 (1995) (“Anti-Collusion Public Notice”).

45 Nevada Wireless Order, 13 FCC Rcd at 11,978 ¶ 13.

46 Memorandum Opinion and Order, 9 FCC Rcd at 7689 ¶ 12.

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

48 Amendment of Part 1 of the Commission's Rules – Competitive Bidding Procedures, WT Docket No. 97-82, Third Further Notice of Proposed Rule Making, FCC 99-384, 14 FCC Rcd 21,558, 21,560 ¶ 4 and n.4 (1999) citing Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-253, Memorandum Opinion and Order, 9 FCC Rcd at 7689 ¶ 12 (1994) (“[W]e wish to emphasize that all applicants and their owners continue to be subject to existing antitrust laws. Applicants should note that conduct that is permissible under the Commission's Rules may be prohibited by the antitrust laws.”); Implementation of Section 309(j) of the Communications Act-Competitive Bidding, PP Docket No. 93-253, Fourth Memorandum Opinion & Order, FCC 94-624, 9 FCC Rcd 6858, 6869 n.134 (1994)(“[A]pplicants will also be subject to existing antitrust laws.”).

(“Fourth Memorandum Opinion and Order”).

49 Competitive Bidding Second Report and Order, 9 FCC Rcd at 2388 ¶ 226. See also “Justice Department Sues Three Firms Over FCC Auction Practices,” Press Release 98-536 (DOJ Nov. 10, 1998).

50 The Commission has cited a number of examples of such anticompetitive behavior. See, e.g., Fourth Memorandum Opinion & Order, 9 FCC Rcd at 6869 n.134.

51 Id.; see also Anti-Collusion Public Notice.

iod.

discussions with those parties, the applicant is nevertheless subject to existing antitrust laws.”52 To the extent the Commission becomes aware of specific allegations that suggest that violations of the federal antitrust laws may have occurred, the Commission may refer such allegations to the United States Department of Justice for investigation.53 If an applicant is found to have violated the antitrust laws or the Commission’s rules in connection with its participation in the competitive bidding process, it may be subject to forfeiture of its upfront payment, down payment, or full bid amount and may be prohibited from participating in future auctions, among other sanctions.54

g. Duty to Report Prohibited Communications; Reporting Procedure

27. If an applicant makes or receives a communication that appears to violate the anti-collusion rule, it must report such communication in writing to the Commission immediately, and in no case later than five business days after the communication occurs.55 Section 1.2105(c)(6) provides that any applicant that makes or receives a communication prohibited by Section 1.2105(c) must report such communication to the Commission in writing immediately, and in no case later than five business days after the communication occurs.56 The Commission has clarified that each applicant’s obligation to report any such communication continues beyond the five-day period after the communication is made, even if the report is not made within the five day per 57

28. In addition, Section 1.65 of the Commission’s rules requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission within 30 days of any substantial change that may be of decisional significance to that application.58 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.

Applicants are therefore required by Section 1.65 to report to the Commission any communications of bids or bidding strategies that result in a bidding arrangement, agreement, or understanding after the short-form filing application deadline.59

29. Parties reporting communications pursuant to Sections 1.65 or 1.2105(c)(6) must take care to ensure that any such reports of prohibited communications do not themselves give rise to a violation of the anti-collusion rule. For example, a party’s report of a prohibited communication could

52 Anti-Collusion Public Notice.

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

54 47 C.F.R. § 1.2109(d); see also Competitive Bidding Second Report and Order, 9 FCC Rcd at 2388 ¶ 226.

55 47 C.F.R. § 1.2105(c)(6).

56 47 C.F.R. § 1.2105(c)(6); see also Part 1 Seventh Report and Order, 16 FCC Rcd at 17555 ¶ 17.

57 See Service Rules for the 698-746, 747-762 and 777-792 MHz Bands, WT Docket No. 06-150, Revision of the Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket No. 94- 102, Section 68.4(a) of the Commission’s Rules Governing Hearing Aid-Compatible Telephones, WT Docket No.

01-309, Biennial Regulatory Review – Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various Rules Affecting Wireless Radio Services, WT Docket 03-264, Former Nextel Communications, Inc. Upper 700 MHz Guard Band Licenses and Revisions to Part 27 of the Commission’s Rules, WT Docket No. 06-169, Implementing a Nationwide, Broadband, Interoperable Public Safety Network in the 700 MHz Band, PS Docket No.

06-229, Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State and Local Public Safety Communications Requirements Through the Year 2010, WT Docket No. 96-86, Declaratory Ruling on Reporting Requirement under Commission’s Part 1 Anti-Collusion Rule, WT Docket No. 07-166, Second Report and Order, FCC 07-132, 22 FCC Rcd 15,289, 15,403-04 ¶¶ 285-86 (2007) (“700 MHz Second Report and Order”) recon. pending.

58 47 C.F.R. § 1.65.

59 See Part 1 Seventh Report and Order, 16 FCC Rcd at 17552 ¶ 12.

violate the rule by communicating prohibited information to other applicants through the use of Commission filing procedures that would allow such materials to be made available for public inspection.

A party seeking to report such prohibited communications should consider submitting its report with a request that the report or portions of the submission be withheld from public inspection.60 Such parties are also encouraged to consult with the Auctions and Spectrum Access Division staff if they have any questions about the procedures for submitting such reports.61 This Public Notice provides additional guidance on procedures for submitting application-related information below.62

30. Applicants must be aware that failure to comply with the Commission’s rules can result in enforcement action.

h. Winning Bidders Must Disclose Terms of Agreements

31. Applicants that are winning bidders will be required to disclose in their long-form applications the specific terms, conditions, and parties involved in any bidding consortia, joint ventures, partnerships, and other arrangements entered into relating to the competitive bidding process.63

i. Additional Information Concerning Anti-Collusion Rule

32. A summary listing of documents issued by the Commission and the Bureau addressing the application of the anti-collusion rule may be found in Attachment F. These documents are available on the Commission’s auction anti-collusion web page.64

3. Incumbency Issues

33. There are pre-existing BRS site-based incumbent licenses. The service area for each of those incumbent licenses is a 35-mile circle centered at the station’s reference coordinates, and is bounded by the chord(s) drawn between the intersection points of the licensee’s previous protected service area and those of respective adjacent market, co-channel licensees.65 Any licenses granted pursuant to this auction will not include the geographic service areas of any co-channel incumbent site-based licenses.66 If a site-based incumbent license cancels or is forfeited, however, the right to operate within that area shall revert to the overlay licensee that holds the license for the BRS service area that encompasses that BTA.67 BRS incumbent licenses are entitled to interference protection in accordance with the applicable technical rules.68 BRS licenses have previously been awarded through auction (Auction 6) for BTAs other than those in this auction, and the previously-awarded licenses may have since been assigned or

60 See 47 C.F.R. § 0.459 (procedures for requesting that materials or information submitted to the Commission be withheld from public inspection). If an applicant requests confidential treatment of a document, the cover page of the filing must prominently display that the applicant is seeking confidential treatment for that document. For example, a filing might include a cover page stamped with “Request for Confidential Treatment Attached” or “Not for Public Inspection.” Any such request must cover all of the material to which the request applies. See 47 C.F.R.

§ 0.459(a).

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

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

63 47 C.F.R. § 1.2107(d).

64 See http://wireless.fcc.gov/auctions/anticollusion 65 See 47 C.F.R. § 27.1206(a)(1).

66 See 47 C.F.R. § 27.1206(a)(2).

67 See 47 C.F.R. § 27.1206(b).

68 See 47 C.F.R. §§ 27.50(h), 27.53(m), 27.55(a)(4), 27.1221.

partitioned. Such BRS geographic area licenses authorize operation within a BTA and provide the licensee with rights similar to those being offered in Auction 86.

34. In addition, on the E and F channel groups, grandfathered Educational Broadband Service (“EBS”) licenses originally issued on those channels prior to 1983 may continue to operate indefinitely.69 Such grandfathered EBS licenses must be protected in accordance with the applicable technical rules.70

35. Operations within the 2614-2618 MHz band are secondary to adjacent channel operations.71

36. Finally, in the 2496-2500 MHz band, BRS licensees must share the band on a co-primary basis with the Code Division Multiple Access (“CDMA”) Mobile Satellite Service (“MSS”),72 grandfathered Broadcast Auxiliary Service (“BAS”) stations,73 and grandfathered land mobile and microwave licenses licensed under Parts 90 and 101 of the Commission’s rules, respectively.74 In addition, the 2400-2500 MHz band is allocated for use by Industrial, Scientific, and Medical equipment under Part 18 of the Commission’s rules.75

37. The WCAI filed comments noting that in certain markets, the transition to the new band plan is not yet complete, and in those markets, new licensees may not be able to operate on some or all of their spectrum until the transition process is completed.76 Under our rules, until a transition has been completed in a BTA, existing licensees operating under the pre-transition band plan are entitled to interference protection in accordance with the applicable technical rules.77 Potential bidders can check on the status of transition in a market by checking the Commission’s Electronic Comment Filing System and reviewing WT Docket No. 06-136. If a post-transition notification has been filed for a BTA, the transition has been completed in that BTA.78 In a BTA where no transition initiation plan had been filed by January 21, 2009, for a BTA, existing licensees in the BTA could file notifications with the Commission by April 21, 2009, of an intent to self-transition.79 Once a licensee completes a self-

69 See Amendment of Parts 1, 21, 73, 74 and 101 of the Commission’s Rules to Facilitate the Provision of Fixed and Mobile Broadband Access, Educational and Other Advanced Services in the 2150-2162 and 2500-2690 MHz Bands;

Part 1 of the Commission's Rules - Further Competitive Bidding Procedures; Amendment of Parts 21 and 74 to Enable Multipoint Distribution Service and the Instructional Television Fixed Service Amendment of Parts 21 and 74 to Engage in Fixed Two-Way Transmissions; Amendment of Parts 21 and 74 of the Commission's Rules With Regard to Licensing in the Multipoint Distribution Service and in the Instructional Television Fixed Service for the Gulf of Mexico; WT Docket Nos. 03-66, 03-67, 02-68, MM Docket No. 97-217, Order on Reconsideration and Fifth Memorandum Opinion and Order and Third Memorandum Opinion and Order and Second Report and Order, FCC 06- 46, 21 FCC Rcd 5606, 5749-5751 ¶¶ 347-354 (2006) (BRS/EBS 3rd MO&O or Big LEO Spectrum Sharing Reconsideration Order, as appropriate); 47 C.F.R. § 27.1216.

70 See 47 C.F.R. §§ 27.50(h), 27.53(m), 27.55(a)(4), 27.1221.

71 See 47 C.F.R. § 27.1222.

72 See Big LEO Spectrum Sharing Reconsideration Order, 21 FCC Rcd at 5623-5627 ¶¶ 29-34. CDMA MSS licensees are not entitled to interference protection from fixed and mobile services operating in the 2495-2500 MHz band. Id. at 5623 ¶ 29.

73 See id. at 5628-5630 ¶¶ 38-42.

74 See id. at 5631-4632 ¶¶ 44-47.

75 See 47 C.F.R. § 18.301.

76 See WCAI Comments at 8-9.

77 See 47 C.F.R. §§ 27.50(h), 27.53(m), 27.55(a)(4), 27.1221.

78 See 47 C.F.R. § 27.1235.

79 See 47 C.F.R. § 27.1236.

transition, it is required to modify its license to reflect its operation pursuant to the new band plan.80 Potential bidders can review the Universal Licensing System to see if a license has been modified to operate pursuant to the new band plan.

38. WCAI also asks that potential bidders be reminded of obligations to reimburse certain licensees of their costs in transitioning to the new BRS/EBS band plan.81 Under the Commission’s rules, BRS licensees are responsible for reimbursing transition proponents or self-transitioning EBS licensees in accordance with the Commission’s rules.82 Potential bidders should be aware that in BTAs where the transition to the new band plan has not yet been completed as of the date licenses are issued pursuant to this auction, they may be required to reimburse eligible licensees for a pro rata share of transition costs.83

a. International Coordination

39. BRS licensees must individually apply for and receive a separate license for each transmitter if the proposed operation requires coordination with either Mexico or Canada.84 Potential bidders seeking licenses in Auction 86 for geographic areas that are near the Canadian or Mexican borders are encouraged to consult all international agreements with Canada and Mexico.85 We also note that the current agreement with Mexico does not provide for two-way operation in the border area. If the agreements with Mexico or Canada are modified in the future, licensees must likewise comply with these modifications.

b. Quiet Zones

40. BRS licensees must individually apply for and receive a separate license for each transmitter if the proposed operation would affect the radio quiet zones set forth in the Commission’s rules.86

4. Due Diligence

41. We caution potential applicants formulating their bidding strategies to investigate and consider the extent to which these frequencies are occupied. For example, as stated above, there are incumbent operations already licensed and operating in the band that must be protected. These limitations may restrict the ability of BRS licensees to use certain portions of the electromagnetic spectrum or provide service to certain areas in their geographic license areas. Bidders should become familiar with the status of these operations and applicable Commission rules, orders and any pending proceedings related to the service, in order to make reasoned, appropriate decisions about their participation in this auction and their bidding strategy.

42. Potential bidders are reminded that they are solely responsible for investigating and evaluating all technical and marketplace factors that may have a bearing on the value of the licenses being offered in this auction. The Commission makes no representations or warranties about the use of this spectrum for particular services. Applicants should be aware that a Commission auction represents an opportunity to become a licensee subject to certain conditions and regulations. The auction does not constitute an endorsement by the Commission of any particular service, technology, or product, nor does

80 See BRS/EBS 3rd MO&O, 21 FCC Rcd at 5674 ¶ 143.

81 WCAI Comments at 8.

82 See 47…