§ 1.2104   Competitive bidding mechanisms.

   Link to an amendment published at  79 FR 48529 , August 15, 2014.

   (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 Rules. The Commission may establish stopping rules before
   or during multiple round auctions in order to terminate the auctions
   within a reasonable time.

   (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   equal to the difference between the amount of the withdrawn bid and the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. 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.

   [ 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]

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