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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Proposed Rules
provided with three activity rule waivers that could be used as set forth at the bidders discretion during the course of the auction. The FCC auction bidding system would assume that a bidder that does not meet the activity requirement would prefer to use an activity rule waiver if available rather than lose bidding eligibility. Therefore, the system would automatically apply a waiver at the end of any bidding round in which a bidders activity level is below the minimum required unless: 1
The bidder has no activity rule waivers remaining; or 2 the bidder overrides the automatic application of a waiver by reducing eligibility, thereby meeting the activity requirement. If a bidder has no waivers remaining and does not satisfy the required activity level, the bidders current eligibility would be permanently reduced, possibly curtailing or eliminating the ability to place additional bids in the auction.
76. A bidder with insufficient activity might wish to reduce its bidding eligibility rather than use an activity rule waiver. If so, then the bidder affirmatively would have to override the automatic waiver mechanism during the bidding round by using the reduce eligibility function in the FCC auction bidding system. In this case, the bidders eligibility would be permanently reduced to bring it into compliance with the activity rule described above. Reducing eligibility is an irreversible action; once eligibility has been reduced, a bidder could not regain its lost bidding eligibility.
77. Under the simultaneous stopping rule for this auction format, a bidder would be permitted to apply an activity rule waiver proactively as a means to keep the auction open without placing a bid. If a bidder proactively were to apply an activity rule waiver using the proactive waiver function in the FCC
auction bidding system during a bidding round in which no bids are placed or withdrawn if bid withdrawals are permitted in Auction 108, the auction would remain open and the bidders eligibility would be preserved.
An automatic waiver applied by the FCC auction bidding system in a round in which there is no new bid, no bid withdrawal if bid withdrawals are permitted in Auction 108, or no proactive waiver would not keep the auction open. The Commission seeks comment on this approach.
5. Reserve Price or Minimum Opening Bids 78. If the Commission adopts an SMR
auction format, then it would also establish minimum opening bid
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amounts. The bidding system would not accept bids lower than these amounts.
79. The Commission would calculate minimum opening bid amounts on a license-by-license basis using the same calculations outlined for the single bidding round auction design based on $0.006 per MHz-pop. The Commission seeks comment on these minimum opening bid amounts, which are specified in Attachment A to the Auction 108 Comment Public Notice. If commenters believe that these minimum opening bid amounts would result in unsold licenses or are not reasonable amounts under an SMR
format, they should explain why this is so. Commenters should support their claims with valuation analyses and suggested amounts or formulas for minimum opening bids for this auction design.
80. In establishing minimum opening bid amounts under the SMR format, the Commission particularly seeks comment on factors that reasonably could have an impact on bidders valuation of the spectrum, including the type of service offered, market size, population covered by the proposed facility, and any other relevant factors.
81. Commenters may also wish to address the general role of minimum opening bids in managing the pace of the auction. For example, commenters could compare using minimum opening bidse.g., by setting higher minimum opening bids to reduce the number of rounds it takes licenses to reach their final pricesto other means of controlling auction pace, such as changes to bidding schedules or activity requirements.
82. The Commission would not establish any aggregate reserve price for licenses offered through an SMR auction format. The Commission is not aware at this time of circumstances that require establishment of an aggregate reserve price in the public interest for this auction of overlay licenses in the 2.5
GHz band and seek comment only on the per license minimum opening bids that it discusses here. The Commission seeks comment on this issue. If commenters believe the Commission should establish an aggregate reserve price, they should explain why and support their claims with valuation analyses and suggested amounts or formulas for reserve prices.
6. Bid Amounts 83. Under an SMR auction format, an eligible bidder with sufficient eligibility, in each round, would be able to place a bid on a given license in any of up to nine different amountsthe minimum acceptable bid amounts and additional
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bid amounts discussed below. Under this approach, the FCC auction bidding system would list the acceptable bid amounts for each license.
84. Minimum Acceptable Bid Amounts. The first of the acceptable bid amounts is called the minimum acceptable bid amount. The minimum acceptable bid amount for a license would be equal to its minimum opening bid amount until there is a provisionally winning bid on the license. Once there is a provisionally winning bid for a license, the minimum acceptable bid amount for that license would be equal to the amount of the provisionally winning bid plus a percentage of that bid amount calculated using the activity-based formula described below.
In general, the percentage would be higher for a license receiving many bids than for a license receiving few bids. In the case of a license for which the provisionally winning bid has been withdrawn if withdrawals are allowed in Auction 108, the minimum acceptable bid amount would equal the second highest bid received for the license.
85. The percentage of the provisionally winning bid used to establish the minimum acceptable bid amount the additional percentage would be calculated based on an activity index at the end of each round.
The activity index is a weighted average of a the number of distinct bidders placing a bid on the license in that round, and b the activity index from the prior round. Specifically, the activity index is equal to a weighting factor times the number of bidders placing a bid covering the license in the most recent bidding round plus one minus the weighting factor times the activity index from the prior round. For Round 1 calculations, because there is no prior round i.e., no round 0, the activity index from the prior round would be set at 0. The additional percentage is determined as one plus the activity index times a minimum percentage amount, with the result not to exceed a given maximum. The additional percentage is then multiplied by the provisionally winning bid amount to obtain the minimum acceptable bid for the next round. The result will be rounded using the Commissions standard rounding procedures for auctions: Results above $10,000 are rounded to the nearest $1,000; results below $10,000 but above $1,000 are rounded to the nearest $100;
and results below $1,000 are rounded to the nearest $10. Under the SMR auction format, the weighting factor would be set initially at 0.5, the minimum percentage at 0.1 10%, and the
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