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Federal Register / Vol. 86, No. 41 / Thursday, March 4, 2021 / Proposed Rules
administrative or weather necessity, evidence of an auction security breach or unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive bidding. Notification of any such delay, suspension, or cancellation will be provided by public notice or through the FCC auction bidding systems messages function. If bidding is delayed or suspended, the auction may resume starting from the beginning of the current round or from some previous round, or the auction may be cancelled in its entirety. This authority will be exercised solely at the discretion of OEA
and MB, and not as a substitute for situations in which bidders may wish to apply activity rule waivers. OEA and MB seek comment on this proposal.
18. Upfront Payments and Bidding Eligibility. In keeping with the usual practice in spectrum auctions, OEA and MB propose that applicants be required to submit upfront payments in accordance with 47 CFR 1.2106 as a prerequisite to becoming qualified to bid. As described below, the upfront payment is a refundable deposit made by an applicant to establish its eligibility to bid on construction permits. Upfront payments that are related to the specific construction permits being auctioned protect against frivolous or insincere bidding and provide the Commission with a source of funds from which to collect payments owed at the close of the bidding. As required by 47 CFR 1.2106a, a former defaulter must submit an upfront payment equal to 50 percent more than the amount that would otherwise be required.
19. OEA and MB seek comment on an appropriate upfront payment for each construction permit being auctioned, taking into account such factors as the efficiency of the auction process and the potential value of similar construction permits. With these considerations in mind, upfront payments are specified in Attachment A to the Auction 109
Comment Public Notice. OEA and MB
seek comment on those proposed upfront payment amounts.
20. It is proposed also that the amount of the upfront payment submitted by a bidder will determine its initial bidding eligibility in bidding units, which are a measure of bidder eligibility and bidding activity. OEA and MB propose to assign each construction permit a specific number of bidding units, equal to one bidding unit per dollar of the upfront payment amount listed in Attachment A to the Auction 109
Comment Public Notice. The number of bidding units for a given construction permit is fixed and does not change
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during the auction as prices change. If an applicant is found to be qualified to bid on more than one permit being offered in Auction 109, such bidder may place bids on multiple construction permits, provided that the total number of bidding units associated with those construction permits does not exceed that bidders current eligibility. A
bidder cannot increase its eligibility during the auction; it can only maintain its eligibility or decrease its eligibility.
In calculating its upfront payment amount and hence its initial bidding eligibility, an applicant must determine the maximum number of bidding units on which it may wish to bid or hold provisionally winning bids in any single round and submit an upfront payment amount covering that total number of bidding units. OEA and MB
request comment on these proposals.
21. Any applicant that submits a short-form application, but fails to timely submit an upfront payment, will retain its status as an applicant in Auction 109 and will remain subject to the rules prohibiting certain communications but, having purchased no bidding eligibility, will not be eligible to bid. An applicant that fails to become a qualified bidder for any other reason also will retain its status as an Auction 109 applicant and will remain subject to the rules prohibiting certain communications.
22. Activity Rule. To ensure that the auction closes within a reasonable period of time, an activity rule requires bidders to bid actively throughout the auction, rather than wait until late in the auction before participating. For purposes of the activity rule, the FCC
auction bidding system calculates a bidders activity in a round as the sum of the bidding units associated with any construction permits upon which it places bids during the current round and the bidding units associated with any construction permits for which it holds provisionally winning bids. See 47 CFR 1.2104f. Bidders are required to be active on a specific percentage of their current bidding eligibility during each round of the auction. OEA and MB
propose a single-stage auction with the following activity requirement: In each bidding round, a bidder desiring to maintain its current bidding eligibility is required to be active on 100% of its bidding eligibility. Thus, the activity requirement would be satisfied when a bidder has bidding activity on construction permits with bidding units that total 100% of its current eligibility in the round. If the activity rule is met, then the bidders eligibility does not change in the next round. Failure to maintain the requisite activity level will
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result in the use of an activity rule waiver, if any remain, or a reduction in the bidders eligibility for the next round of bidding, possibly curtailing or eliminating the bidders ability to place additional bids in the auction. OEA and MB seek comment on these activity requirements. Commenters that oppose a 100% activity requirement should explain their reasons with specificity.
23. Activity Rule Waivers and Reducing Eligibility. Pursuant to the proposed simultaneous multiple round auction format, when a bidders activity in the current round is below the required minimum level, it may preserve its current level of eligibility through an activity rule waiver, if available. An activity rule waiver applies to an entire round of bidding, not to a particular construction permit.
Activity rule waivers can be either proactive or automatic. Activity rule waivers are primarily a mechanism for a bidder to avoid the loss of bidding eligibility in the event that exigent circumstances prevent it from bidding in a particular round.
24. The FCC auction bidding system will 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 will 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 waiver 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 will be permanently reduced, possibly curtailing or eliminating the ability to place additional bids in the auction.
25. A bidder with insufficient activity may wish to reduce its bidding eligibility rather than use an activity rule waiver. If so, the bidder must affirmatively 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 cannot regain its lost bidding eligibility.
26. Under the proposed simultaneous stopping rule, a bidder would be permitted to apply an activity rule waiver proactively as a means to keep
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