PUBLIC
NOTICE

       Federal Communications Commission
       1919 M St., N.W.
       Washington, D.C. 20554


                                                  DA 96-145
                                                           
                                    Released February 7, 1996
  Comment Sought on Requests to Waive Bid Withdrawal Payments 
             and General Enforcement Guidelines 
  Waivers Requested by MAP Wireless, PCS 2000 in Broadband PCS C Block Auction
  Waiver Requested by Atlanta Trunking in 900 MHz SMR Auction
                                
     The Wireless Telecommunications Bureau seeks comment on the following
  requests for waiver:
  
  MAP Wireless, L.L.C. (filed January 24, 1996).  MAP Wireless alleges that it
  erroneously submitted a bid of $22,680,020 for license B380 (Rockford, IL) in Round
  10 of the broadband personal communications service (PCS) C block auction.  The
  minimum acceptable bid for that round and license was $2,267,000.  MAP Wireless
  maintains that it made a typographical error in submitting its bid, noting that it had
  intended to place a bid of $2,268,002.  MAP alleges that the error was due, in part,
  because of the design of the Commission's bidding software.  The Auctions Division
  was notified immediately and the bid was withdrawn during the same round. 
  
  PCS 2000, L.P. (filed January 26, 1996).  PCS 2000 alleges that it erroneously
  submitted a bid of $180,060,000 for license B324 (Norfolk, VA) in Round 11 of the
  Broadband PCS C block auction.  The minimum acceptable bid for that round and
  license was $18,006,000.  PCS 2000 indicates that it has conducted a preliminary
  investigation of the error, but has been unable to determine the precise cause of the
  erroneous bid.  It maintains that the error was likely caused by some combination of a
  departure from previously established internal procedures, human error, and the
  inability to complete a cross-check of its bids prior to bid submission.  PCS 2000
  contacted the Auctions Division after Round 11 had closed and withdrew its bid in
  Round 12.
  
  Atlanta Trunking Associates, Inc. (filed December 18, 1995).  Atlanta Trunking
  alleges that it erroneously submitted a bid of $125,025,000 for license 11P (Atlanta,
  GA) in Round 9 of the 900 MHz specialized mobile radio (SMR) auction.  The
  minimum acceptable bid for that round and license was $121,000.  Atlanta Trunking
  indicates that it had intended to bid $125,025 for the license, but inadvertently added
  an extra three "0"s to its bid.  Atlanta Trunking states that it cannot explain how the
  typographical error occurred.  It suggests, however, the error may be due to a glitch 
  
  
  
  
  in the Commission's bidding software, a computer delay between when a number was
  typed and when it appeared on screen, or additional "0"s created by attempting to add
  ".00" to the end of a bid.  Atlanta Trunking reported the error after Round 9 had
  closed and withdrew its bid in Round 10.
  
     The Commission established a bid withdrawal payment requirement in order to
  discourage insincere bidding.  Insincere bidding, whether purely frivolous or strategic,
  distorts the price information generated by the auction process and reduces efficiency. 
  See Second Report and Order, PP Docket No. 93-253, 9 FCC Rcd 2348 at  195
  (1994).  The amount of the bid withdrawal payment is equal to the difference between
  the withdrawn bid amount and the amount of the winning bid, if the subsequent
  winning bid is lower.  No withdrawal payment will be assessed if the subsequent
  winning bid exceeds the withdrawn bid.  See 47 C.F.R.   1.2104(g), 24.709,
  90.805(a).
  
      Each petitioner alleges that the underlying purpose of the bid withdrawal 
  payment requirements would not be served if it was imposed in each particular
  instance.  Petitioners observe that the payment requirement was designed to discourage
  bidders from engaging in insincere or frivolous bidding, and not to punish a bidder
  who inadvertently makes a typographical error in submitting its bid.  Moreover,
  petitioners observe that the Commission's efforts to facilitate small business
  participation could be thwarted if an excessive bid withdrawal payment was imposed. 
  Petitioners, all small businesses, argue that the significant amount they may be required
  to pay could limit their ability to participate at auction or force them to withdraw
  entirely.  They further allege that the magnitude of the payment is inappropriate in
  view of the nature of the error that was made.  PCS 2000 requests that, as an
  alternative, the bid withdrawal amount be substantially reduced.
  
     In response to MAP Wireless's waiver request, AirLink, another bidder in the
  Broadband PCS C block auction, requests that the Commission strictly adhere to its bid
  withdrawal payment requirements.  See Letter to Kathleen O'Brien Ham, Chief,
  Auctions Division, from Shelley Spencer, AirLink (Jan. 25, 1996).  AirLink observes
  that the Commission's bidding software provides bidders with multiple opportunities to
  verify their bids prior to submission.  AirLink also maintains that any waiver of our
  withdrawal payment requirements would distort the auction process and prejudice other
  bidders.  
  
     To assist the Bureau in making recommendations to the Commission, we seek
  comment on these waiver requests.  We anticipate that the Commission will examine
  each request for waiver on a case-by-case basis.  In addition, as a general matter, we
  seek comment on whether the Commission should enforce the bid withdrawal payment
  provisions in all instances or whether exceptions should be made in certain
  circumstances.  For example, should the bid withdrawal payment be reduced or waived
  where an erroneous bid is caused by an inadvertent, typographical mistake 
  
  
  
  
  (like adding an extra "0") and the error is immediately reported to the Auctions 
  Division?  Specifically, we seek comment on a potential option of reducing the required
  payment in such circumstances to be equal to the greater of the upfront payment
  amount for that market or five percent of the winning bid on the market for which the
  erroneous bid was placed.  
  
     Alternatively, where the mistaken bid is withdrawn in the same round, it may
  be appropriate to treat the mistaken bid as if it was made at the minimum accepted bid
  (if there are no other bids for that round), or at the second highest bid (if there are
  other bids above the minimum accepted bid).  The required payment would be the
  difference between this amount and the subsequent winning bid.  These approaches
  could discourage careless bidding and encourage bidders to be careful in submitting
  their bids, without unfairly penalizing bidders who make typographical mistakes and
  immediately report the error to the Commission.  Moreover, where a bid is withdrawn
  in the same bidding round, we believe that it is unlikely that the bidder who made the
  mistake could gain under this option or that any other bidders would be harmed.  Any
  relief from enforcement would not be available to bidders that have engaged in
  insincere or frivolous bidding or have otherwise acted in bad faith.  As the Commission
  has stated, it will consider all allegations of bidder misconduct very seriously and will
  pursue appropriate enforcement action.  See Second Report and Order, PP Docket No.
  93-253, 9 FCC Rcd 2348 at  98 (1994); Fifth Report and Order, PP Docket No. 93-253, 9 FCC Rcd 5532 at  77 (1994); Second Order on Reconsideration and Seventh
  Report and Order, PP Docket No. 93-253, FCC95-395, 60 Fed. Reg. 48913 at 
   123 (Sept. 21, 1995).  
  
     We seek additional comment on whether any circumstances should warrant a
  complete waiver of the bid withdrawal payment.  For example, we suggest that such a
  waiver could be available when the bidding error was clearly the result of a mistake by
  the Commission, its staff or contractors.
  
     Comment is solicited on all aspects of the specific waiver requests and the 
  proposed general approach to addressing bidding errors when enforcing the bid
  withdrawal payment requirements.  Comments should specifically reference DA 96-145
  and should be filed on or before February 22, 1996.  Reply comments may be filed on
  or before March 4, 1996.  Comments should be addressed to:  Auctions Division,
  Wireless Telecommunications Bureau, Room 5322, Federal Communications
  Commission, Washington, D.C.  20554.
  
     Copies of the waiver requests, AirLink's letter, comments and replies may be
  obtained from the Commission's duplicating contractor, International Transcription
  Service, Inc. (ITS), 2100 M Street, N.W., Suite 140, Washington, D.C.  20037, (202)
  857)-3800.  Copies are also available for public inspection during regular business
  hours in Room 5608, 2025 M Street, N.W., Washington, D.C.  20554.
  
  
  
  
  
     For further information contact Sue McNeil, Louis Sigalos, or Diane Law at
  (202) 418-0660 in the Auctions Division, Wireless Telecommunications Bureau.
  
  Action by the Acting Chief, Wireless Telecommunications Bureau