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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Proposed Rules
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can incorporate information from significant secondary market activity in the 2.5 GHz band, including through auction or auction-like processes that have been used by incumbents to find interested parties and set prices, as well as data in ULS, and spectrum values from recent mid-band spectrum auctions, such as the recentlyconcluded Commission auction of Priority Access Licenses in the 3550
3650 MHz Band. Moreover, it has been suggested that smaller operators may have better knowledge of the local landscape and may be able to price their bids more accurately than larger entities without ties to such local rural areas.
38. The bidding procedures the Commission proposes for the singleround format include several mechanisms for ensuring that many important benefits of a multiple-round auction can be accommodated under the single-round format. Importantly, the Commission seeks comment on procedures to ensure that certain potentially critical aggregations of licenses can be bid on with an either/
or indicator so that a bidder can indicate that it wishes to be assigned only one of a group of substitutable licenses. This procedure offers a useful advantage that is not feasible in a multiple-round auction where a large number of items precludes flexible package bidding.
With these mechanisms, the Commission is confident that bidders can simply and effectively represent their bidding interests in a single-round format.
39. The Commission seeks comment on any specific aspects of this singleround auction with which commenters agree or disagree. In particular, do potential bidders see the time savings of a single-round auction as valuable relative to the SMR auction that could last for several months? Do commenters believe that the single-round format would disproportionately favor one group of bidders or another? Is there any reason to conclude that its understanding of the type of entities likely to participate in Auction 108 is inaccurate or unsupported by the record in the Transforming the 2.5 GHz Band proceeding, WT Docket No. 18120?
40. Prior to the start of Auction 108, the Commission would make available to bidders various educational materials.
1. Pay-As-Bid Pricing Rule 41. Under the single-round auction format, each winning bidder would pay the sum of its winning bid amounts for the licenses it is awarded, less any applicable bidding credit discount.
Accordingly, a bidder with bidding
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credits should bid an undiscounted full-price amount for the licenses it wishes to win.
42. The Commission would use a payas-bid payment rule to give bidders more certainty about the cost of their winning bids than would a second price payment rule, in which the winning bidder would pay a price corresponding to the next best bid or set of bids. In the simple case of an individual item and no package bids, the second price would be the second-highest bid. In the context of a combinatorial winner determination process such as the Commission proposes here, the bidding system would compare the revenue of the winning combination of bids with the highest revenue possible absent the winning bidders bid, and subtract the difference from the winning bidders bid to determine the second, or Vickrey, price. A pay-as-bid rule may also be useful in discouraging undesirable strategic behavior. In a second-price auction where the highest bidder would win but pay only the amount of the second-highest bid, a dominant entity may overbid on a large group of licenses if it anticipates that competing bids for most of those licenses would be considerably lower, so that expected gains would outweigh any losses. In contrast, with a pay-as-bid rule, each bidder would have to pay the amount of its high bid for each license it wins, discouraging such aggressive strategies by entities with interests in a large number of areas. Moreover, given the very large inventory of licenses offered in Auction 108, the computation of second prices or Vickrey prices would be exceedingly complex and potentially intractable within a reasonable amount of processing time.
The determination of a single Vickrey price involves solving an additional combinatorial optimization problem, which could take a significant amount of time to solve. The Commission has computed Vickrey prices during the assignment phase of several recent spectrum clock auctions where, in each assignment phase market, the number of licenses being assigned was less by orders of magnitude and only a relatively small number of bidders were being assigned licenses.
43. Might a resource-constrained smaller bidder be more inclined to compete at auction because it has more certainty over the amount it might pay?
Or might a small entity be more likely to participate because a dominant entity will have less incentive to strategically overbid than in a second-price auction?
The Commission seeks comment on the use of a pay-as-bid payment rule.

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2. Bidding Activity and Eligibility 44. Consistent with its proposal to determine bidding eligibility in bidding units based on the amount of a bidders upfront payment, the Commission proposes to determine bidding activity in terms of bidding units, as well. Each license will be assigned a certain number of bidding units. For a single round of bidding, the Commission would limit a bidders total bidding activity such that the maximum number of bidding units associated with the licenses that the bidder can win does not exceed its total eligibility in bidding units.
45. To implement this procedure, when a bidder uploads a set of bids via the internet to the FCC auction bidding system, the system would calculate the maximum bid amount and the maximum number of bidding units associated with the bids. If the bids do not exceed the bidders eligibility and otherwise are valid bids, the bidding system would accept the bid submission. If the submitted bids exceed the bidders eligibility, the bids would be rejected and new bids could be submitted before the close of the round. In addition, during the bidding round, the bidding system would inform the bidder of a running total of its activity in terms of bidding units and the total value of all of its submitted bids. The Commission asks for comment on these procedures.
3. Minimum Bids and Reserve Prices 46. As part of the pre-bidding process for each auction, section 309j of the Communications Act of 1934, as amended, mandates that the Commission prescribes methods for establishing reasonable minimum bid amounts for licenses subject to auction unless such bid amounts are not in the public interest. Accordingly, the Commission proposes to establish minimum bid amounts for Auction 108.
47. Given the potential lack of accurate information on available white space in the 2.5 GHz band, the Commission proposes to establish the minimum bid amounts in Auction 108
using the total potential MHz-pops of each license offered in the auction, rather than on available white space in each block. The Commission proposes to base these calculations on $0.006 per MHz-pop, with a minimum of $500 per license. For the 49.5-megahertz and 50.5-megahertz blocks, the Commission proposes to base the calculation on 50
megahertz. Additionally, when calculating minimum bid amounts, the Commission proposes to round the results of calculations as follows:

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