Goto Section: 1.2103 | 1.2105 | Table of Contents
Revised as of September 1, 2021
Goto Year:2020 |
§ 1.2104 Competitive bidding mechanisms.
(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
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
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), (f)(2), and (f)(4)), 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)), or a size-based bidding credit unjust enrichment
payment obligation (see § 1.2111(b), (c)(2) and (c)(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; 80 FR 56809 , Sept. 18, 2015]
Goto Section: 1.2103 | 1.2105
Goto Year: 2020 |
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