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Federal Register / Vol. 86, No. 39 / Tuesday, March 2, 2021 / Proposed Rules
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can be included in a single package bid.
Would a smaller aggregation, such as EAs, be more appropriate?
Alternatively, would larger areas, such as REAGs be preferable? The Commission also asks commenters to address the proposed definition of metropolitan. Would an alternative definition of more heavily populated counties be simple to implement and consistent with other definitions used in this and other recent Commission spectrum auctions?
5. Either/Or Indicator 56. Because a single-round auction does not give a bidder an opportunity to move its bids from one area to another as prices change, or from one block to another within an area, as does a multiple-round auction, the Commission proposes to allow a bidder to indicate that two or more of its bids are to be treated as mutually exclusive by the bidding system when assigning winning bids. In other words, a bidder can indicate that it wants to win only one of the bids in a group of bids it specifies. For example, if a bidder is interested in winning one of the three licenses available in a county, it could submit separate bids for each of the three licenses and indicate that it wishes to win only one of them. A
bidders upfront payment amount and its activity and eligibility calculations would be based on the largest set of bids that the bidder can win taking into account that some bids may be mutually exclusive.
57. The Commission proposes that a bidder may indicate that it wants the bidding system to consider the bids in a specified group as mutually exclusive as long as either all the bids in the group involve the same non-metropolitan county or all the bids in the group involve only metropolitan counties in the same MEA. The Commission further seeks comment on allowing each bid to be included in at most one mutually exclusive group of bids. The Commission proposes these limits on either/or bids to ensure that the combinatorial optimization winner determination problem is feasible, given the extremely large number of potential combinations of bids that must be considered. A group of mutually exclusive bids can include individual and/or package bids.
58. The Commission asks commenters to consider whether these procedures to allow a bidder to use an either/or indicator to instruct the bidding system to assign only one of a specified group of bids would be helpful in managing the bidders potential winnings if this single-round auction format is adopted.

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6. Bid Processing and Winning Bids 59. To determine winning bids in the single-round format, the Commission proposes that after the single bidding round, the bidding system would use optimization software to determine the value-maximizing combination of package and individual bids, taking into account each bidders mutually exclusive either/or bids. A bid of a bidder with a bidding credit would be considered in the optimization at its undiscounted bid price. In contrast, for payment purposes, the bidding credit discount for a bidder with a bidding credit will be subtracted from the bidders total winning bids, applying any bidding credit caps, to determine its net winning bids.
60. The Commission also seeks comment on assigning each individual or package bid a pseudo-random number upon submission, such that, if there are ties among the valuemaximizing combinations of bids, the bidding system would determine the winning bids by finding the set that maximizes the sum of pseudo-random numbers.
61. Because there is a very small but positive probability that the optimization software would be unable to provide an exact solution to the problem of determining the valuemaximizing combination of bids within a reasonable amount of time, the Commission seeks comment on use of an escape clause. Under the proposed escape clause, if the optimization software does not yield an exact solution within 48 hours, then the winning set of bids would be determined by the best solution identified to that point. Winning bidders would pay the amounts of their winning bids, consistent with the payas-bid pricing rule.
62. The Commission seeks comment on these proposed bid processing procedures for this novel single-round auction with package bidding, including the tie-breaking mechanism, the escape clause generally, and the proposed 48hour computational period.
B. Simultaneous Multiple-Round Auction Design 63. The Commission also seeks comment on using its SMR auction format for this auction. This type of auction offers every license for bid at the same time and consists of successive bidding rounds in which bidders may place bids on individual licenses. The SMR procedures on which the Commission seeks comment below are consistent with those adopted in prior Commission SMR auctions. Typically,
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bidding remains open on all licenses until bidding stops on every license.
This format would not provide for package bidding because of the significant complexity that this would present, for both bidders and the bidding system, given that the 2.5 GHz band plan has a potential inventory of approximately 8,300 licenses.
64. The Commission has predominantly used an SMR format for spectrum auctions, and therefore this format is familiar to potential bidders that have participated in past Commission spectrum auctions. An SMR format allows price discovery, so that a bidder may observe how prices differ across areas or frequency blocks, and to modify its bidding strategies accordingly. In addition, multiple rounds of bidding may give a bidder more confidence in its bid amounts in cases where there is a significant common value element to the licenses being auctioned beyond the particular value to the bidder in its business plan.
65. The Commission seeks comment on whether using an auction design that is familiar to bidders is important in helping potential participants feel more comfortable with participating in Auction 108. The Commission also asks whether allowing price discovery through a multiple round auction format is particularly important in this auction, and whether such benefits would warrant the additional time required to conduct an SMR auction relative to a single-round. Would such benefits outweigh the potential advantages of a single-round format to smaller entities discussed above?
1. Bidding Rounds 66. Under the SMR format, Auction 108 would consist of sequential bidding rounds, each of which would be followed by the release of round results.
The initial bidding schedule would be announced in a public notice to be released at least one week before the start of bidding. Details on viewing round results, including the location and format of downloadable results files for each round would be included in the same public notice.
67. Under this auction format, the Commission would conduct Auction 108 over the internet using the FCC
auction bidding system. Bidders would have the option of placing bids online or by telephone through a dedicated auction bidder line.
68. OEA would retain the discretion to change the bidding schedule in order to foster an auction pace that reasonably balances speed with the bidders need to study round results and adjust their bidding strategies. This would allow
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