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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Proposed Rules IV. Proposed Bidding Procedures 31. The Commission proposes to conduct Auction 108 using either a single bidding round, after which the auction system will process the bids to determine winning bidders, or a simultaneous multiple-round ascending SMR auction format. Under the singleround format, winning bidders would pay the amounts of their winning bids for the licenses they are awarded less any applicable bidding credit discount.
The SMR auction format would offer every license for bid at the same time and consist of successive bidding rounds in which bidders may place bids on individual licenses. Under this format, bidding would remain open on all licenses until bidding stops on every license.
32. The procedures the Commission proposes for the single-round format on which it seeks comment differ from FCC
spectrum auctions it has held in the past because the circumstances for Auction 108 differ in many respects from more typical spectrum auction scenarios.
However, the Commission also outlines and seeks comment on SMR procedures that may be more familiar to potential auction participants.
33. The Commission notes the delegated authority of OEA to develop auctions jointly with WTB and expects that OEA and WTB will release a technical guide supplementing the information in the Auction 108
Comment Public Notice and including the mathematical details and algorithms of the single-round auction design. The corresponding technical information for an SMR auction is contained in the Auction 108 Comment Public Notice.

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A. Single Bidding Round Auction Design 34. The Commission seeks comment on use of a single bidding round that would remain open long enough to give bidders ample time to submit, review and potentially resubmit, and confirm their bids. Bids submitted during the round would need to meet the activity rule. After the round closes, the submitted bids would be processed by the bidding system to determine the winning bids.
35. While this format departs from the multiple-round procedures that the Commission typically has used in auctioning spectrum licenses, the inventory of licenses available in Auction 108 will be very large approximately 8,300 licenses and, as a result, a multiple-round auction could require a number of months to complete. Although a clock auction of generic blocks with an assignment
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phase to assign frequency-specific licenses can shorten the duration of a multiple-round auction relative to the Commissions SMR auction format, a clock auction format would not be appropriate here because each overlay license being offered is unique. Within a county, each block has a different amount of bandwidththough not all frequency blocks are available in all countiesand even where a given frequency block is available in a county, white space may not be available throughout the county due to existing incumbent licensee operations. An SMR
auction could last for months, which would require participating bidders to monitor the auction consistently, a resource commitment that is demanding for all bidders, but particularly for smaller entities, many of which the Commission expects will compete in Auction 108. In addition, a longer auction entails a longer prohibited communications quiet period, in which all applicantsincluding but not limited to all officers and directors of the entity submitting an application and all controlling interests of that entity are subject to the rule prohibiting certain discussions of bids or bidding strategies. Moreover, smaller entities that are seeking only a limited number of relatively low value licenses may consider such a resource commitment to be too onerous and may choose not to participate in this auction. In contrast, the Commission anticipates that, based on estimated processing time, a single bidding round giving bidders ample time to submit their bids and bid processing could be completed within a week.
36. In addition, a single-round auction format may help overcome some of the inherent advantages of incumbent rights holders in the band and increase overall competition in the auction. Specifically, the Commission seeks comment on using a single-round auction format in the context of the existing licensing and leasing landscape of the 2.5 GHz band where a single entity holds a large share of the spectrum rights. A multipleround auction will always give a bidder an opportunity to outbid its competitors, and given that the majority license-holder in this band is a nationwide service provider and is likely to be better funded than many other entities that are potentially interested in Auction 108, these other, smaller entities may feel as though they have little chance of winning when competing against the larger licenseholder. Moreover, given that the larger entitys interests are geographically broad while the smaller entities tend to
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have more localized interests, the larger entity would be able to cost-average by paying more for some licenses than its stand-alone valuation would otherwise indicate because it would be able to leverage savings from other licenses that it wins at less than its valuation. Other bidders, recognizing these advantages, consequently are likely to be deterred from participating in an auction where they expect that they would have little opportunity to win. Absent the participation of the smaller entities, the advantages to the majority license-holding entity would be even stronger. As a result of the diminished competition in the auction, prices may likely be lower than they would have been had the smaller entities participated. Conversely, in a single-round, pay-as-bid auction, the weak bidder has a better opportunity to win, it is more likely to participate in the auction, and prices can therefore be expected to be closer to the winning bidders valuation. The Commission asks commenters to consider whether a single-round format would encourage greater participation in this auction than would an SMR auction. Would a smaller entity be more likely to participate if other, possibly larger entities did not always have an opportunity to place a higher bid, as is the case in a multipleround ascending auction format?
37. The Commission recognizes that a single-round auction precludes the price discovery across licenses that is possible in a multiple-round auction. Price discovery is intended to help inform a bidders decision to shift its resources across areas as relative prices change over the course of the auction, which is particularly helpful for a bidder with multiple alternative business plans but without sufficient resources to pursue all of them. The single-round auction on which the Commission seeks comment considers the potential losses in efficiency from the price discovery process and, on balance, finds that any losses are likely to be less consequential in this auction than is generally true for spectrum auctions. Based on input in the proceeding and the characteristics of the licenses offered in Auction 108
county-based, with non-uniform and occasionally significant encumbrances across areas, making them less suitable for larger-scale operationsit is the Commissions understanding that the majority of potential bidders in Auction 108 likely will be entities with specific local or regional interests, and therefore, they will not be hampered significantly by a lack of price discovery over multiple rounds for alternative areas. To determine their bid amounts, bidders
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