§ 1.2104   Competitive bidding mechanisms.

   Link to an amendment published at  80 FR 56809 , September 18, 2015.

   (a) Sequencing. The Commission will establish the sequence in which multiple
   licenses will be auctioned.

   (b)  Grouping.  In the event the Commission uses either a simultaneous
   multiple round competitive bidding design or combinatorial bidding, the
   Commission will determine which licenses will be auctioned simultaneously or
   in combination.

   (c) Reserve Price. The Commission may establish a reserve price or prices,
   either disclosed or undisclosed, below which a license or licenses subject
   to auction will not be awarded. For any auction of eligible frequencies
   described  in section 113(g)(2) of the National Telecommunications and
   Information Administration Organization Act (47 U.S.C. 923(g)(2)) requiring
   the recovery of estimated relocation costs, the Commission will establish a
   reserve price or prices pursuant to which the total cash proceeds from any
   auction of eligible frequencies shall equal at least 110 percent of the
   total estimated relocation costs provided to the Commission by the National
   Telecommunications  and Information Administration pursuant to section
   113(g)(4) of such Act (47 U.S.C. 923(g)(4)).

   (d) Minimum Bid Increments, Minimum Opening Bids and Maximum Bid Increments.
   The Commission may, by announcement before or during an auction, require
   minimum bid increments in dollar or percentage terms. The Commission also
   may  establish  minimum  opening  bids and maximum bid increments on a
   service-specific basis.

   (e) Stopping procedures. Before or during an auction, procedures may be
   established regarding when bidding will stop for a round, a stage, or an
   entire auction, in order to terminate the auction within a reasonable time
   and  in  accordance with public interest considerations and the goals,
   statutory requirements, rules, and procedures for the auction, including any
   reserve price or prices.

   (f)  Activity Rules. The Commission may establish activity rules which
   require a minimum amount of bidding activity.

   (g) Withdrawal, Default and Disqualification Payment. As specified below,
   when the Commission conducts an auction pursuant to § 1.2103, the Commission
   will impose payments on bidders who withdraw high bids during the course of
   an auction, or who default on payments due after an auction closes or who
   are disqualified.

   (1) Bid withdrawal prior to close of auction. A bidder that withdraws a bid
   during the course of an auction is subject to a withdrawal payment equal to
   the difference between the amount of the withdrawn bid and the amount of the
   winning  bid in the same or subsequent auction(s). In the event that a
   bidding credit applies to any of the bids, the bid withdrawal payment is
   either the difference between the net withdrawn bid and the subsequent net
   winning bid, or the difference between the gross withdrawn bid and the
   subsequent gross winning bid, whichever is less. No withdrawal payment will
   be assessed for a withdrawn bid if either the subsequent winning bid or any
   of  the  intervening  subsequent withdrawn bids equals or exceeds that
   withdrawn bid. The withdrawal payment amount is deducted from any upfront
   payments or down payments that the withdrawing bidder has deposited with the
   Commission. In the case of multiple bid withdrawals on a single license, the
   payment for each bid withdrawal will be calculated based on the sequence of
   bid  withdrawals  and  the amounts withdrawn in the same or subsequent
   auction(s). In the event that a license for which there have been withdrawn
   bids subject to withdrawal payments is not won in the same auction, those
   bidders for which a final withdrawal payment cannot be calculated will be
   assessed an interim bid withdrawal payment of between 3 and 20 percent of
   their withdrawn bids, according to a percentage (or percentages) established
   by the Commission in advance of the auction. The interim bid withdrawal
   payment will be applied toward any final bid withdrawal payment that will be
   assessed at the close of a subsequent auction of the corresponding license.
   Example  1  to  paragraph  (g)(1).  Bidder  A withdraws a bid of $100.
   Subsequently, Bidder B places a bid of $90 and withdraws. In that same
   auction, Bidder C wins the license at a bid of $95. Withdrawal payments are
   assessed as follows: Bidder A owes $5 ($100-$95). Bidder B owes nothing.
   Example  2  to  paragraph  (g)(1).  Bidder  A withdraws a bid of $100.
   Subsequently, Bidder B places a bid of $95 and withdraws. In that same
   auction, Bidder C wins the license at a bid of $90. Withdrawal payments are
   assessed  as  follows:  Bidder  A owes $5 ($100-$95). Bidder B owes $5
   ($95-$90).
   Example  3  to  paragraph  (g)(1).  Bidder  A withdraws a bid of $100.
   Subsequently,  in  that same auction, Bidder B places a bid of $90 and
   withdraws.  In  a subsequent auction, Bidder C places a bid of $95 and
   withdraws.  Bidder D wins the license in that auction at a bid of $80.
   Assuming that the Commission established an interim bid withdrawal payment
   of  3 percent in advance of the first auction, withdrawal payments are
   assessed as follows: At the end of the first auction, Bidder A and Bidder B
   are each assessed an interim withdrawal payment equal to 3 percent of their
   withdrawn bids pending Commission assessment of a final withdrawal payment
   (Bidder A would owe 3% of $100, or $3, and Bidder B would owe 3% of $90, or
   $2.70). At the end of the second auction, Bidder A would owe $5 ($100-$95)
   less the $3 interim withdrawal payment for a total of $2. Because Bidder C
   placed a subsequent bid that was higher than Bidder B's $90 bid, Bidder B
   would owe nothing. Bidder C would owe $15 ($95-$80).

   (2) Default or disqualification after close of auction. A bidder assumes a
   binding obligation to pay its full bid amount upon acceptance of the winning
   bid at the close of an auction. If a bidder defaults or is disqualified
   after the close of such an auction, the defaulting bidder will be subject to
   a  default  payment  consisting  of a deficiency payment, described in
   § 1.2104(g)(2)(i), and an additional payment, described in § 1.2104(g)(2)(ii)
   and (g)(2)(iii). The default payment will be deducted from any upfront
   payments or down payments that the defaulting bidder has deposited with the
   Commission.

   (i) Deficiency payment. The deficiency payment will equal the difference
   between the amount of the defaulted bid and the amount of the winning bid in
   a subsequent auction, so long as there have been no intervening withdrawn
   bids that equal or exceed the defaulted bid or the subsequent winning bid.
   If the subsequent winning bid or any intervening subsequent withdrawn bid
   equals or exceeds the defaulted bid, no deficiency payment will be assessed.
   If there have been intervening subsequent withdrawn bids that are lower than
   the  defaulted  bid and higher than the subsequent winning bid, but no
   intervening withdrawn bids that equal or exceed the defaulted bid, the
   deficiency payment will equal the difference between the amount of the
   defaulted bid and the amount of the highest intervening subsequent withdrawn
   bid. In the event that a bidding credit applies to any of the applicable
   bids, the deficiency payment will be based solely on net bids or solely on
   gross bids, whichever results in a lower payment.

   (ii)  Additional  payment—applicable  percentage.  When the default or
   disqualification follows an auction without combinatorial bidding, the
   additional payment will equal between 3 and 20 percent of the applicable
   bid,  according  to  a  percentage (or percentages) established by the
   Commission in advance of the auction. When the default or disqualification
   follows an auction with combinatorial bidding, the additional payment will
   equal 25 percent of the applicable bid.

   (iii) Additional payment—applicable bid. When no deficiency payment is
   assessed, the applicable bid will be the net amount of the defaulted bid.
   When  a deficiency payment is assessed, the applicable bid will be the
   subsequent winning bid, using the same basis—i.e., net or gross—as was used
   in calculating the deficiency payment.

   (h)  The  Commission will generally release information concerning the
   identities  of  bidders  before  each  auction  but  may choose, on an
   auction-by-auction basis, to withhold the identity of the bidders associated
   with bidder identification numbers.

   (i) The Commission may delay, suspend, or cancel an auction in the event of
   a  natural  disaster, technical obstacle, evidence of security breach,
   unlawful bidding activity, administrative necessity, or for any other reason
   that affects the fair and efficient conduct of the competitive bidding. The
   Commission also has the authority, at its sole discretion, to resume the
   competitive bidding starting from the beginning of the current or some
   previous round or cancel the competitive bidding in its entirety.

   (j)  Bid apportionment—(1) Apportioned license bid. The Commission may
   specify a method for apportioning a bid among portions of the license (i.e.,
   portions of the license's service area or bandwidth, or both) when necessary
   to compare a bid on the original license or portions thereof with a bid on a
   corresponding reconfigured license for purposes of the Commission's rules or
   procedures,  such  as to calculate a bid withdrawal or default payment
   obligation in connection with the bid.

   (2) Apportioned package bid. The apportioned package bid on a license is an
   estimate of the price of an individual license included in a package of
   licenses in an auction with combinatorial (package) bidding. Apportioned
   package  bids  shall  be  determined  by the Commission according to a
   methodology it establishes in advance of each auction with combinatorial
   bidding. The apportioned package bid on a license included in a package
   shall be used in place of the amount of an individual bid on that license
   when the bid amount is needed to determine the size of a designated entity
   bidding credit (see § 1.2110(f)(1) and (f)(2)), a new entrant bidding credit
   (see  § 73.5007  of  this chapter), a bid withdrawal or default payment
   obligation  (see  § 1.2104(g)), a tribal land bidding credit limit (see
   § 1.2110(f)(3)(iv)), or a size-based bidding credit unjust enrichment payment
   obligation  (see  § 1.2111(d),  (e)(2),  and  (e)(3)), or for any other
   determination required by the Commission's rules or procedures.

   [ 59 FR 44293 , Aug. 26, 1994, as amended at  63 FR 2341 , Jan. 15, 1998;  65 FR 52344 , Aug. 29, 2000;  68 FR 42995 , July 21, 2003;  71 FR 6226 , Feb. 7, 2006;
    79 FR 48529 , Aug. 15, 2014]

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