On February 9, 2022, the FCC released a Public Notice (“Second Procedures Notice”) seeking further comment on the competitive bidding procedures for Auction 108, which will auction approximately 8,300 geographic overlay licenses in the 2.5 GHz band (“the Auction”). The FCC released a Public Notice (“Initial Procedures Notice”) last January seeking comment on the format and procedures to be used for the Auction, a summary of which is included in the email below. A number of commenters responded to the Initial Procedures Notice with concerns for the proposed formats and associated rules, prompting the FCC to release the Second Procedures Notice and seek further comment on the Auction format and procedures. The Second Procedures Notice seeks further comment on the use of an ascending clock auction format, a simultaneous multiple-round (“SMR”) auction with bidding for frequency-specific blocks in a geographic area, which the FCC has labeled a “Clock-1” Auction Structure. The new proposed format builds upon the SMR format utilized for many of the FCC’s recent auctions, while attempting to address the timing concerns commentators raised regarding past auctions. In particular, the Second Procedures Notice seeks further comment on:
- Using a “Clock-1” Auction Structure, under which each bidder would be able to bid for licenses, where specific licenses will be identified by a category within a county. Bidding would proceed in a series of rounds, with bidding conducted simultaneously for all licenses available in the auction. After the first round, intra round bidding would be allowed. Licenses would be offered in three categories: 49.5 megahertz block as bidding category 1 (C1); the 50.5 megahertz block as bidding category 2 (C2); and the 17.5 megahertz block as bidding category 3 (C3). They would also be licensed on a county basis. Thus, a combination of bidding category and county would define a single specific license. The FCC would deploy a simultaneous stopping rule and would disclose after each round the aggregate demand, the posted price of the last completed round, and the clock price for the next round for each license.
- Requiring bidders in the Clock-1 style auction to be active on between 90-100% of its bidding eligibility in all rounds, with the specific percentage within this range to be set for each round. The activity rule would be satisfied when a bidder has bidding activity on licenses with bidding units that total 90% to 100% of its current eligibility in the round. The initial percentage would be set at 95%. If it is met, the percentage does not change for the next round. If it is not met, it is reduced accordingly. The FCC also seeks comment on a contingent bidding percentage, calculated as a bidder’s current eligibility times a contingent bidding percentage equal to or greater than 100%, after Round 1, which would potentially help bidders avoid having their eligibly reduced as a result of submitted bids that could not be applied during bid processing.
- Acceptable bids, including what the minimum opening bid should be, how to calculate the clock price increments, intra-round bids, proxy bids, bid types, and missing bids.
- For the clock price increments, the FCC proposes an initial increment percentage of 10%, and would adjust the increments within a range of 5-30% as rounds continue.
- For intra-round bids, the FCC proposes that after the first round, a bidder would optionally be permitted to make intra-round bids by indicating a point between the start-of-round price and the clock price at which its demand for a license changes. Intra-round bids would be limited to multiples of $10 for prices below $10,000; multiples of $100 for prices between $10,000 and $100,000; and multiples of $1,000 for prices above $100,000.
- For proxy bidding, the FCC would permit a bidder to submit a proxy instruction to the bidding system to reduce its demand for a license to zero at a price higher than the current round’s clock price. These would be automatically submitted every round so long as the clock price is less than the proxy instruction price. Proxy instructions to increase a bidder’s demand for a license at a given price would not be permitted.
- For bid types, the FCC would allow bidders to make two types of bids, simple and switch. A “simple” bid indicates a desired quantity (in this auction, one or zero) at a price. A bidder that is willing to maintain its demand at the new clock price would bid at that price, indicating it is willing to pay up to that price, if need be, for the license. A bidder that wishes to change the quantity it demands for a license, relative to its processed demand from the previous round, would express the price at which it wishes to change its demand. A “switch” bid allows the bidder to request to move its demand for a license from C1 to C2, or vice versa, within the same county at a price for the “from” category (either the clock price or an intra-round price). Switch bids would be allowed only in counties with both an available Category 1 and a Category 2 license.
- For missing bids, the FCC proposes to treat missing bids as a zero activity and reduce biding eligibility accordingly for the next round.
- Bid Processing procedures, including implementing a no excess supply rule for bids to reduce demand (which would prohibit a bidder from reducing its demand if the reduction would cause demand to fall below one), an eligibility rule for bids to increase demand (which would prohibit a bidder to increase its demand for licenses if the total number of bidding units associated with the demands exceeds the bidder’s eligibility), processing demand procedures, and price determination procedures. These procedures are similar to the FCC spectrum clock auction procedures adopted in prior circumstances.
- Determining the winning bidder. The FCC proposes that a bidder with processed demand for a license at the time the stopping rule is met would become the winning bidder for the license.
Comments are due on or before February 23, 2022.
For additional information please see previous blog post FCC Seeks Comment on 2.5GHz Band Auction.
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