Sec.  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) Reservation Price. The Commission may establish a reservation price,
   either disclosed or undisclosed, below which a license subject to auction
   will not be awarded.

   (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  Sec. 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 high
   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   to the difference between the amount of the withdrawn bid and the amount of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   either the difference between the net withdrawn bid and the subsequent net
   winning bid, or the difference between the gross withdrawn bid and the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   be assessed for a withdrawn bid if either the subsequent winning bid or any
   of the intervening subsequent withdrawn bids equals or exceeds that
   withdrawn bid.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 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 equal to 3 percent of the amount of their bid
   withdrawals. The 3 percent interim payment will be applied toward any final
   bid withdrawal payment that will be assessed at the close of the subsequent
   auction of the 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.
   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 high
   bid at the close of an auction. If a high bidder defaults or is disqualified
   after the close of such an auction, the defaulting bidder will be subject to
   the payment in paragraph (g)(1) of this section plus an additional payment
   equal to 3 percent of the subsequent winning bid. If the subsequent winning
   bid exceeds the defaulting bidder's bid amount, the 3 percent payment will
   be calculated based on the defaulting bidder's bid amount. If either bid
   amount is subject to a bidding credit, the 3 percent credit will be
   calculated using the same bid amounts and basis (net or gross bids) as in
   the calculation of the payment in paragraph (g)(1) of this section. Thus,
   for example, if gross bids are used to calculate the payment in paragraph
   (g)(1) of this section, the 3 percent will be applied to the gross amount of
   the subsequent winning bid, or the gross amount of the defaulting bid,
   whichever is less.

   (3) Default or disqualification in combinatorial bidding auctions after
   close of auction. A bidder assumes a binding obligation to pay its full bid
   amount upon acceptance of the high bid at the close of an auction. When the
   Commission conducts a combinatorial bidding auction pursuant to  Sec. 1.2103
   (a)(4), if a high bidder defaults or is disqualified after close of a
   combinatorial bidding auction, the defaulting bidder will be subject to a
   default payment. The default payment consists of a deficiency portion and an
   additional payment. The deficiency portion of the default payment shall be
   calculated as set forth in  Sec. 1.2104(g)(3)(i). The additional payment shall be
   calculated as set forth in  Sec. 1.2104(g)(3)(ii).

   (i) Deficiency payment. The deficiency portion of the default payment shall
   be calculated as set forth. In the case that any of the relevant bids are
   subject to bidding credits, the default payment will be adjusted in an
   analogous manner to that used in  Sec. 1.2104(g)(1).

   (A) Where a defaulting bidder won licenses individually (i.e., not as part
   of a package), and in a subsequent auction the licenses are also won
   individually, the deficiency portion will be calculated on a
   license-by-license basis (i.e., the differences between the amounts
   originally bid and the amounts subsequently bid will not be aggregated to
   determine a net amount owed). If the subsequent winning bid(s) exceed the
   defaulted bid(s), no deficiency portion will be assessed. Even in the
   absence of a deficiency portion, however, an additional 25% payment will be
   due.

   (B) Where a defaulting bidder won licenses in a package(s), and in a
   subsequent auction the licenses are won either in the same package(s), or in
   smaller packages or as individual licenses that correlate to the defaulted
   package(s), the deficiency portion will be determined on a
   package-by-package basis, and the differences between the amount originally
   bid and the amount(s) subsequently bid will not be aggregated to determine a
   net amount owed. Thus, in this situation, the deficiency portion will be
   calculated in an analogous manner to that used in  Sec. 1.2104(g)(2). However,
   with regard to each individual package, where the licenses are subsequently
   sold individually or as part of smaller packages, the amounts received in
   the subsequent auction will be aggregated in order to determine any
   deficiency.

   (C) Where a defaulting bidder or bidders won licenses either individually or
   as part of packages, and in a subsequent auction the licenses are won as
   larger packages or different packages (not including the situation described
   in paragraph (b) of this section), the deficiency portion will be calculated
   by subtracting the aggregate amount originally bid for the licenses from the
   aggregate amount bid in the subsequent auction for the licenses.

   (D) When in the situation described in paragraph (c) of this section, there
   are multiple defaulting bidders, the default payment (both the deficiency
   portion and the additional amount portion) will be allocated to the
   defaulting bidders in proportion to the amount they originally bid.

   Example:   Bidder 1 defaults on Package ABC for $200, and Bidder 2 defaults
   on Package DE for $400, and in a subsequent auction the licenses are won in
   Package AB for $150 and Package CDE for $350, Bidder 1 would be liable for
   1/3 of the default payment and Bidder 2 would be responsible for 2/3. The
   total default payment would be equal to the difference between the total of
   the original bids ($600) and the total of the subsequent amounts bid ($500)
   plus an additional amount of 25 percent of the total of the subsequent
   amounts bid. The total default payment therefore would equal $100
   ($600-$500) plus 25 percent of $500 ($125), for a total default payment of
   $225.

   (ii) Additional payment. If a high bidder defaults or is disqualified after
   the close of such an auction, the defaulting bidder will be subject to the
   payment in paragraph (g)(3)(i) of this section plus an additional payment
   equal to 25 percent of the subsequent winning bid(s) or the defaulting
   bid(s), whichever is less. In the case that either the subsequent winning
   bid(s) or the defaulting bid(s) is subject to bidding credits, the
   additional payment will be calculated in an analogous manner to that used in
    Sec. 1.2104(g)(2). In calculating the additional payment to determine whether
   the defaulted bid(s) or the subsequent winning bid(s) is the lesser amount,
   the defaulted and subsequent bid(s) will be compared according to the rules
   set forth in paragraphs (g)(3)(i)(A) through (g)(3)(i)(D) of this section
   for calculation of the deficiency portion of the default 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.

   [ 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]