[Federal Register Volume 78, Number 69 (Wednesday, April 10, 2013)]
[Notices]
[Pages 21355-21364]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08402]


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FEDERAL COMMUNICATIONS COMMISSION

[AU Docket No. 13-53; DA 13-323]


Tribal Mobility Fund Phase I Auction Scheduled for October 24, 
2013; Comment Sought on Competitive Bidding Procedures for Auction 902 
and Certain Program Requirements

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this document, the Commission's Wireless Telecommunications 
and Wireline Competition Bureaus announce a reverse auction to award up 
to $50 million in one-time Tribal Mobility Fund Phase I support 
scheduled to commence on October 24, 2013. This document also seeks 
comment on competitive bidding procedures for Auction 902 and certain 
program requirements.

DATES: Comments are due on or before May 10, 2013, and Reply comments 
are due on or before May 24, 2013.

ADDRESSES: All filings in response to this public notice must refer to 
AU Docket No. 13-53. The Wireless Telecommunications Bureau and 
Wireline Competition Bureau strongly encourage interested parties to 
file comments electronically, and request that an additional copy of 
all comments and reply comments be submitted electronically to the 
following address: auction902@fcc.gov. To the extent that commenters 
identify census blocks for removal and/or addition to the list of 
potentially eligible census blocks, the Bureaus request that such lists 
be filed in MS Excel format through the Auction 902 email box. Comments 
may be submitted by any of the following methods:
    [ssquf] Electronic Filers: Federal Communications Commission's Web 
site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for 
submitting comments.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing. Filings can be sent by hand or 
messenger delivery, by commercial overnight courier, or by first-class 
or overnight U.S. Postal Service mail. All filings must be addressed to 
the Commission's Secretary, Attn: WTB/ASAD, Office of the Secretary, 
Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th Street SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8 a.m. to 7 p.m. Eastern Time. All hand deliveries must be held 
together with rubber bands or fasteners. Any envelopes and boxes must 
be disposed of before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    [ssquf] People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: For Tribal Mobility Fund Phase I 
questions: Patricia Robbins at (202) 418-0660; for auction process 
questions: Lisa Stover at (717) 338-2868. Wireline Competition Bureau, 
Telecommunications Access Policy Division: For general universal 
service questions: Alex Minard at (202) 418-7400. Consumer and 
Governmental Affairs Bureau, Office of Native Affairs and Policy: For 
questions regarding Tribal lands and Tribal governments: Geoffrey 
Blackwell at (202) 418-3629 or Irene Flannery at (202) 418-1307.

SUPPLEMENTARY INFORMATION: This is a summary of the Auction 902 Comment 
Public Notice released on March 29, 2013. The complete text of the 
Auction 902 Comment Public Notice, including attachments and related 
Commission documents, is available for public inspection and copying 
from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) Monday through Thursday 
or from 8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC Reference 
Information Center, 445 12th Street SW., Room CY-A257, Washington, DC 
20554. The Auction 902 Comment Public Notice and related Commission 
documents also may be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc. (BCPI), 445 12th Street SW., 
Room CY-B402, Washington, DC 20554, telephone 202-488-5300, fax 202-
488-5563, or you may contact BCPI at its Web site: http://www.BCPIWEB.com. When ordering documents from BCPI, please provide the 
appropriate FCC document number, for example, DA 13-323 for the Auction 
902 Comment Public Notice. The Auction 902 Comment Public Notice and 
related documents also are available on the Internet at the 
Commission's Web site: http://wireless.fcc.gov/auctions/902/, or by 
using the search function for AU Docket No. 13-53 on the Commission's 
Electronic Comment Filing System (ECFS) Web page at http://www.fcc.gov/cgb/ecfs/.

I. Introduction and Summary

    1. The Wireless Telecommunications and Wireline Competition Bureaus 
(the Bureaus) announce a reverse auction to award up to $50 million in 
one-time Tribal Mobility Fund Phase I support and seek comment on 
auction procedures and certain related programmatic issues. This 
auction is scheduled to begin on October 24, 2013, and is designated as 
Auction 902.
    2. Tribal Mobility Fund Phase I will provide one-time support to 
deploy mobile voice and broadband services to unserved Tribal lands, 
which have significant telecommunications deployment and connectivity 
challenges. Auction 902 will award high-cost universal service support 
through reverse competitive bidding, as envisioned by the Commission in 
the USF/ICC Transformation Order, 76 FR 73830, November 29, 2011 and 76 
FR 81562, December 28, 2011. Auction 902 will award one-time support to 
carriers that commit to provide 3G or better mobile voice and broadband 
services on Tribal lands where such services are unavailable, based on 
the bids that will maximize the population covered by new mobile 
services without exceeding

[[Page 21356]]

the budget of $50 million. Because the objective of this auction is to 
maximize the expansion of advanced services with the available funds, 
winning bids will generally be those that would achieve the deployment 
of such services for relatively lower levels of support.
    3. Many of the pre-auction processes and bidding procedures for 
this auction will be similar to those used in the Commission's first 
auction of universal service support, Auction 901, which were modeled 
on those regularly used for the Commission's spectrum license auctions. 
In Auction 902, support for Tribal lands generally will be awarded on 
the same terms and subject to the same rules as general Mobility Fund 
Phase I support with a few exceptions tailored to address the unique 
needs of communities on Tribal lands. Specifically, unlike general 
Mobility Fund Phase I, for which the number of units in a given 
unserved census block were calculated according to the number of road 
miles in that block, for Tribal Mobility Fund Phase I, the number of 
units in a given census block will be the population of that block. The 
Commission concluded in the USF/ICC Transformation Order that a 
population-based metric is appropriate for the Tribal Mobility Fund 
Phase I auction. The population-based coverage unit is the basic unit 
that will be used to determine the winners in Auction 902 and to 
measure compliance with the applicable performance requirements.
    4. Throughout this document, the term per-pop means per population 
(or per person) within a given geographic area. The terms 3G, 3G or 
better, current generation, and advanced are used interchangeably in 
this document to refer to mobile wireless services that provide voice 
telephony service on networks that also provide services such as 
Internet access and email. Areas without 3G or better services and the 
population within them are referred to as unserved. This document 
refers to awarding or selecting awardees by auction for simplicity of 
expression. Each party that becomes a winning bidder in the auction 
must file an application for support. Only after review of the 
application to confirm compliance with all the applicable requirements 
will a winning bidder become authorized to receive support.
    5. In the Auction 902 Comment Public Notice, the Bureaus propose 
and seek comment on: (1) Identifying geographic areas eligible for 
support; (2) determining the basic auction design, whether and how to 
aggregate eligible areas for bidding, and how awardees will be 
selected; and (3) establishing certain other bidding procedures, 
including information disclosure procedures and methodologies for 
calculating auction and performance default payments. The Bureaus will 
announce final procedures and other important information such as 
application deadlines and other dates related to Auction 902 after 
considering comments provided in response to the Auction 902 Comment 
Public Notice, pursuant to governing statutes and Commission rules.

II. Background

    6. In the USF/ICC Transformation Order, the Commission 
comprehensively reformed and modernized the universal service system to 
help ensure the universal availability of fixed and mobile 
communication networks capable of providing voice and broadband 
services where people live, work, and travel. The Commission's 
universal service reforms include a commitment to fiscal 
responsibility, accountability, and the use of market-based mechanisms, 
such as competitive bidding, to provide more targeted and efficient 
support than in the past. For the first time, the Commission 
established a universal service support mechanism dedicated exclusively 
to mobile services--the Mobility Fund.
    7. Tribal Mobility Fund Phase I will provide up to $50 million in 
one-time support to address gaps in mobile services by supporting the 
build-out of current- and next-generation mobile networks on Tribal 
lands where these networks are unavailable. This support will be 
awarded by reverse auction with the objective of maximizing the 
population covered in eligible unserved areas on Tribal lands within 
the established budget. The support offered under Tribal Mobility Fund 
Phase I is in addition to any ongoing support provided under existing 
high-cost universal service program mechanisms.
    8. Applicant Eligibility. The USF/ICC Transformation Order 
established application, performance, and other requirements for 
Mobility Fund Phase I, including Tribal Mobility Fund Phase I. In order 
to participate in an auction for Tribal Mobility Fund Phase I support, 
an applicant must be designated as an eligible telecommunications 
carrier (ETC) for the areas on which it wishes to bid or, if it is a 
Tribally-owned or -controlled entity, have a pending application for 
ETC designation for the relevant areas within the boundaries of the 
Tribal land associated with the Tribe that owns or controls the entity. 
A Tribally-owned or -controlled entity must have its application for 
ETC designation pending at the relevant short-form application 
deadline. The ETC designation must cover a sufficient portion of the 
bidding area to allow the applicant to satisfy the applicable 
performance requirements. A Tribal entity that wins support in Auction 
902 while its ETC petition is pending must receive an ETC designation 
prior to support being authorized and disbursed. Allowing a Tribally-
owned or -controlled entity to participate at auction while its ETC 
petition is pending in no way prejudges the ultimate decision on its 
pending ETC petition. An applicant for Auction 902 must also 
demonstrate that it has access to the spectrum necessary to satisfy the 
applicable performance requirements. The requirement that parties have 
access to spectrum applies equally to all parties, including Tribally-
owned or -controlled entities.
    9. Because of the lead time necessary to receive designation as an 
ETC and to acquire access to spectrum, prospective applicants that need 
to do so are strongly encouraged to initiate both processes as soon as 
possible in order to increase the likelihood that they will be eligible 
to participate in Auction 902. Carriers subject to the jurisdiction of 
a state in which they seek designation should petition that state's 
commission for designation as an ETC to provide voice service. Carriers 
not subject to the jurisdiction of the relevant state commission should 
petition the Commission for designation as an ETC. The Commission has 
established a framework for determining whether a state commission or 
the Commission itself has jurisdiction to designate ETCs on Tribal 
lands. First, a carrier serving Tribal lands must petition the 
Commission for a determination on whether the state has jurisdiction 
over the carrier. The Commission then determines whether the carrier is 
subject to the jurisdiction of a state commission or whether it is 
subject to a Tribal authority given the Tribal interests involved. In 
the latter case, the Commission has jurisdiction to designate the 
carrier as an ETC and will proceed to consider the merits of the 
carrier's petition for designation. The Bureaus have provided guidance 
on existing requirements for filing an ETC application with the 
Commission in a separate public notice: Eligible Telecommunications 
Carrier Designation for Participation in Mobility Fund Phase I, 77 FR 
14012. Petitions for designation as an ETC should be filed in WC Docket 
No. 09-197 and WT Docket No. 10-208, and should not be filed in the 
docket for Auction 902, AU Docket No. 13-53. The Bureaus adopted a

[[Page 21357]]

protective order limiting access to proprietary and confidential 
information that may be filed in WC Docket No. 09-197 and WT Docket No. 
10-208 in connection with petitions filed for designation as an ETC for 
purposes of participation in any Mobility Fund auction.
    10. In addition, an Auction 902 applicant must certify that it is 
financially and technically capable of providing 3G or better service. 
An applicant seeking to use the 25 percent bidding credit preference 
for Tribally-owned or -controlled providers must certify that it is a 
Tribally-owned or -controlled entity and identify the applicable Tribe 
and Tribal land in its application. To ensure that Tribal Mobility Fund 
Phase I support meets the Commission's public interest objectives, 
recipients will be subject to a variety of obligations, including 
performance, coverage, collocation, voice and data roaming 
requirements, and Tribal engagement obligations. Among other things, 
winning bidders will be required either to deploy 3G service within two 
years, or 4G service within three years, after the date on which it is 
authorized to receive support. Those seeking to participate in the 
auction must file a short-form application by a deadline to be 
announced, providing information and certifications as to their 
qualifications to receive support. After the close of the auction, 
winning bidders must submit a detailed long-form application and 
procure an irrevocable stand-by Letter (or Letters) of Credit (LOC) to 
secure the Commission's financial commitment, along with an opinion 
letter from counsel.
    11. Auction Process Overview. In the USF/ICC Transformation Order, 
the Commission delegated authority to the Bureaus to implement Tribal 
Mobility Fund Phase I, including the authority to prepare for and 
conduct an auction and administer program details. The Auction 902 
Comment Public Notice focuses on establishing the procedures and 
processes needed to conduct Auction 902 and administer Tribal Mobility 
Fund Phase I. Parties responding to the Auction 902 Comment Public 
Notice should be familiar with the details of the USF/ICC 
Transformation Order and the process established for the Commission's 
first auction of Mobility Fund Phase I support (Auction 901), which 
serve as the foundation for the process the Bureaus propose here. After 
reviewing the comments requested by the Auction 902 Comment Public 
Notice, the Bureaus will release a public notice detailing final 
procedures for Auction 902. That public notice will be released so that 
potential applicants will have adequate time to familiarize themselves 
with the specific procedures that will govern the auction and with the 
obligations of support, including rates and coverage requirements that 
the Bureaus address in the Auction 902 Comment Public Notice. The 
Auction 902 Comment Public Notice summarizes the topics on which the 
Bureaus seek comment. The Bureaus ask that commenters advocating for 
particular procedures provide input on the costs and benefits of those 
procedures.
    12. Areas Eligible for Mobility Fund Support. To assure that 
support is being used in areas that are not covered by current or next 
generation mobile networks, the USF/ICC Transformation Order provides 
that the Bureaus will identify areas currently without such services on 
a census block basis, and publish a list of census blocks deemed 
eligible for Tribal Mobility Fund Phase I support. A list of 
potentially eligible census blocks, as well as the population 
associated with each, can be found at: http://wireless.fcc.gov/auctions/902/. The Bureaus seek comment on various issues regarding the 
census blocks identified as potentially eligible. The Bureaus will 
finalize which areas are eligible for support in a public notice 
establishing final procedures for Auction 902.
    13. Auction Design and Bidding Procedures. In the USF/ICC 
Transformation Order, the Commission concluded that distributing 
support through a reverse auction would be the best way to achieve its 
goal of maximizing consumer benefits with the funds available for Phase 
I of the Mobility Fund and adopted general competitive bidding rules 
for that purpose. As envisioned by the Commission, parties seeking 
support will compete in Auction 902 by indicating the amount of support 
they need to meet the requirements of Tribal Mobility Fund Phase I in 
the eligible areas on which they bid. The Commission indicated that a 
single-round sealed bid auction format would be most appropriate for 
Tribal Mobility Fund Phase I, but left the final determination to the 
Bureaus. Based on the Bureaus' analysis of the Mobility Fund Phase I 
auction results and the opportunity for the Bureaus to refine the 
auction format for the purposes of Auction 902, which will offer 
support for fewer eligible areas than Auction 901, the Bureaus now seek 
further comment on the auction format for Tribal Mobility Fund Phase I. 
As in the Mobility Fund Phase I auction, the Bureaus propose to award 
support to maximize advanced services to eligible census blocks that 
can gain 3G or better mobile services under the Tribal Mobility Fund 
Phase I budget. In this case, however, the Bureaus will measure 
coverage based on population rather than road miles. Under the auction 
design options discussed in the Auction 902 Comment Public Notice, 
bidders would compete not only against other carriers that may be 
bidding for support in the same areas, but also against carriers 
bidding for support in other areas nationwide.
    14. The list of potentially eligible areas the Bureaus released in 
connection with the Auction 902 Comment Public Notice contains 5,554 
census blocks, which have an average area of approximately 2.1 square 
miles and may be smaller than the minimum areas for which carriers 
seeking support are likely to want to extend service. Thus, carriers 
bidding for support are likely to bid on groups of census blocks. To 
address this need to aggregate census blocks for bidding while 
maintaining a manageable auction process, the Bureaus propose an 
aggregation approach and seek comment on any alternative approaches.
    15. The Bureaus seek comment on whether to establish any maximum 
acceptable bid amounts or reserve amounts. In addition, consistent with 
recent practice in spectrum license auctions and Auction 901, the 
Bureaus propose to withhold, until after the close of bidding, 
information from applicants' short-form applications regarding their 
interest in particular eligible census blocks. The Bureaus seek comment 
on this proposal.
    16. Post-Auction Procedures. At the conclusion of the auction, each 
winning bidder will be required to file an in-depth long-form 
application to demonstrate that it qualifies for Tribal Mobility Fund 
Phase I support. The long-form application must include information 
regarding the winning bidder's ownership, eligibility to receive 
support, eligibility for a Tribal entity bidding credit, if relevant, 
and network construction details. An applicant's claim of eligibility 
for the bidding credit available to Tribally-owned or -controlled 
providers is subject to review to verify the facts underlying the claim 
of ownership or control. Winning bidders must also certify that they 
will offer service in supported areas at rates comparable to those for 
similar services in urban areas. In the Auction 902 Comment Public 
Notice, the Bureaus describe and seek comment on a proposed standard 
for demonstrating compliance with this requirement. A winning bidder 
will be liable for an auction default payment if the bidder

[[Page 21358]]

fails to timely file the long-form application, is found ineligible, is 
disqualified, or otherwise defaults for any reason. In addition, a 
winning bidder that fails to meet certain obligations will be liable 
for a performance default payment. Accordingly, winning bidders will be 
required to provide an irrevocable stand-by LOC in an amount equal to 
the amount of support, plus an additional amount which would serve as a 
performance default payment if necessary. The Bureaus seek comment on 
how to establish auction and performance default payments.
    17. Tribal Engagement. Any bidder winning support for areas within 
Tribal lands (any bidder winning support in Auction 902) must notify 
the appropriate Tribal governments of its winning bid no later than 
five business days after being identified by public notice as a winning 
bidder. Thereafter, at the long-form application stage and in annual 
reports, a bidder winning support in Auction 902 will be required to 
certify that it has substantively engaged appropriate Tribal officials 
regarding certain minimum discussion topics and provide a summary of 
the results of such engagement. Appropriate Tribal government officials 
are elected or duly authorized government officials of federally 
recognized American Indian Tribes and Alaska Native Villages. In the 
instance of the Hawaiian Home Lands, this engagement must occur with 
the State of Hawaii Department of Hawaiian Home Lands and Office of 
Hawaiian Affairs. A copy of the certification and summary must be sent 
to the appropriate Tribal officials when it is sent to the Commission. 
A winning bidder's engagement with the applicable Tribal governments 
must consist, at a minimum, of discussion regarding: (1) a needs 
assessment and deployment planning with a focus on Tribal community 
anchor institutions; (2) feasibility and sustainability planning; (3) 
marketing services in a culturally sensitive manner; (4) rights of way 
processes, land use permitting, facilities siting, environmental and 
cultural preservation review processes; and (5) compliance with Tribal 
business and licensing requirements.

III. Areas Eligible For Tribal Mobility Fund Support

A. Identifying Eligible Unserved Census Blocks

    18. In the USF/ICC Transformation Order, the Commission decided to 
target Mobility Fund Phase I support, including Tribal Mobility Fund 
Phase I support, to census blocks without 3G or better service, and 
determined that Mosaik Solutions (Mosaik) (formerly known as American 
Roamer) data is the best available data source for determining the 
availability of such service. Accordingly, the Bureaus have identified 
potentially eligible blocks on Tribal lands using census blocks from 
the 2010 Census and the most recently available Mosaik data, from 
January 2013.
    19. The Bureaus identified census blocks within Tribal lands using 
2010 Census data. Tribal lands include any federally recognized Indian 
tribe's reservation, pueblo or colony, including former reservations in 
Oklahoma, Alaska Native regions established pursuant to the Alaska 
Native Claims Settlement Act, and Indian Allotments, as well as 
Hawaiian Home Lands--areas held in trust for native Hawaiians by the 
state of Hawaii, pursuant to the Hawaiian Homes Commission Act, as 
amended. Tribal lands in Alaska, i.e., the Annette Island Reserve and 
areas where federally recognized Alaska Native villages are located 
within the Alaska Native regions, were identified using 2010 Census 
data identifying the Annette Island Reserve and Alaska Native village 
statistical areas.
    20. The Bureaus then used geographic information system (GIS) 
software to determine whether the Mosaik data shows 3G or better 
wireless coverage at the centroid of each census block. The Bureaus use 
the term centroid to refer to the internal point (latitude/longitude) 
of a census block polygon. The Bureaus used ArcGIS software from Esri 
to determine whether the Mosaik data showed 3G or better coverage at 
each block's centroid. The following technologies were considered 3G or 
better: EV-DO, EV-DO Rev A, UMTS/HSPA, HSPA+, WiMAX, and LTE. If the 
Mosaik data did not show such coverage, the block was determined to be 
potentially eligible for Tribal Mobility Phase I support. Because 
support will be awarded based on the bids that will maximize the 
population covered by new mobile services, any of these census blocks 
without population were excluded. The Bureaus then excluded any blocks 
that, during the Auction 901 challenge process, were determined to be 
served or to be ineligible for Mobility Fund Phase I support because a 
provider had made a regulatory commitment to provide 3G or better 
wireless service or had received a funding commitment from a federal 
executive department or agency in response to the provider's commitment 
to provide 3G or better wireless service in that area. In addition, the 
Bureaus identified those census blocks that were the subject of winning 
bids in Auction 901. Any census block that was the subject of a winning 
bid in Auction 901 and for which support is authorized at the 
conclusion of the Auction 901 long-form application review will not be 
eligible for Tribal Mobility Fund Phase I support. If prior to the 
release of the list of eligible census blocks the Bureaus determine 
that any of the identified winning bids from Auction 901 cannot be 
authorized, but would otherwise be eligible for Auction 902, then such 
eligible blocks will be made available.
    21. Pursuant to the USF/ICC Transformation Order, the Bureaus will 
also make ineligible for support any additional census blocks for 
which, notwithstanding the absence of 3G service, any provider has made 
a regulatory commitment to provide 3G or better wireless service, or 
has received a funding commitment from a federal executive department 
or agency in response to the carrier's commitment to provide 3G or 
better wireless service. Such federal funding commitments may have been 
made under, but are not limited to, the Broadband Technology 
Opportunities Program and the Broadband Initiatives Program. 
Furthermore, the Commission established certain bidder-specific 
restrictions. Specifically, each applicant for Tribal Mobility Fund 
Phase I support is required to certify that it will not seek support 
for any areas in which it had made a public commitment to deploy 3G or 
better wireless service by December 31, 2012. In determining whether an 
applicant had made such a public commitment, the Bureaus anticipate 
that they would consider any public statement made with some 
specificity as to both geographic area and time period. This 
restriction will not prevent a bidder from seeking and receiving 
support for an unserved area for which another provider had made such a 
public commitment.
    22. Attachment A-1 released with the Auctions 902 Comment Public 
Notice provides a summary of the list of potentially eligible census 
blocks. For each state and territory, Attachment A-1 provides the total 
number of potentially eligible census blocks and the total number of 
tracts, counties, Tribal lands, and proposed aggregated bidding areas. 
For each state and territory, Attachment A-1 also provides the total 
population, area, and road miles of the potentially eligible blocks. 
Attachment A-2 released with the Auction 902 Comment Public Notice 
provides a list of the proposed aggregated bidding areas. For each 
area, Attachment A-2 provides the state, county, and Tribal land; the 
number of

[[Page 21359]]

potentially eligible blocks; and the total population, area, and road 
miles of those blocks. Due to the large number of potentially eligible 
blocks, the complete list of the individual blocks will be provided in 
electronic format only, available as a separate Attachment A file at 
http://wireless.fcc.gov/auctions/902/. For each potentially eligible 
block, individually identified by its Federal Information Processing 
Series (FIPS) code, the Attachment A file provides the population, 
area, and road miles of the block; and the associated state, county, 
tract, Tribe, Tribal land, and proposed aggregated bidding area.
    23. If commenters think certain blocks included in the list should 
not be eligible for support, they should indicate which blocks and 
provide supporting evidence. Similarly, if commenters think certain 
blocks not included in the list should be eligible for support, they 
should indicate which blocks and provide supporting evidence. In 
particular, the Bureaus note that, in the USF/ICC Transformation Order, 
the Commission required all wireless competitive ETCs in the high-cost 
program to review the list of eligible census blocks for the purpose of 
identifying any areas for which they have made a regulatory commitment 
to provide 3G or better service or received a federal executive 
department or agency funding commitment in exchange for their 
commitment to provide 3G or better service. The Bureaus will entertain 
challenges to the list of potentially eligible census blocks only in 
the form of comments to the Auctions 902 Comment Public Notice. The 
Commission concluded in the USF/ICC Transformation Order that more 
extended pre-auction review could cause undue delay in making one-time 
Phase I support available. Further, the Commission decided that 
providing for post-auction challenges would inject uncertainty and 
delay into the process. Commenters identifying census blocks for 
removal and/or addition to the Bureaus' list of potentially eligible 
census blocks are encouraged to provide detailed information in support 
of their views. In making such determinations for Auction 901, the 
Bureaus found demonstrations of coverage to be more credible and 
convincing where they were supported by maps, discussions of drive 
tests, explanation of methodologies for determining coverage, and 
certifications by one or more individuals as to the veracity of the 
material provided. In light of the population-based metric used to 
determine the number of unserved units for Tribal Mobility Fund Phase 
I, drive tests used to demonstrate coverage may be conducted by means 
other than automobiles on roads. Providers may demonstrate coverage of 
an area with a statistically significant number of tests in the 
vicinity of residences being covered. For Auction 901, the Bureaus did 
not make changes to potentially eligible areas based on submissions 
making assertions of coverage without any supporting evidence.
    24. Based on a review of the comments and any related information, 
the Bureaus will provide a list of the specific census blocks eligible 
for support in Auction 902 when it releases the public notice 
announcing procedures for Auction 902. In addition to providing files 
containing this final list of census blocks and related data, the 
Bureaus anticipate providing an interactive mapping interface for this 
information on the Commission Web site. This interface could aid 
bidders in matching up their own information on the geographic areas in 
which they are interested with the blocks available in the auction. The 
files and/or the interactive mapping interface will also provide data 
such as associated population and area. The Bureaus anticipate that the 
file formats and the interactive mapping interface will be very similar 
to those provided for Auction 901. If potential bidders believe that 
the Bureaus should not provide the same types of files and interactive 
mapping interface as those provided for Auction 901, or that the 
Bureaus should provide additional information or other tools, they 
should submit detailed comments describing the types of files, 
information, or tools requested and explaining the reasons for the 
request.

B. Establishing Unserved Population-Based Units

    25. In Auction 902, the Bureaus will use population as the basis 
for calculating the number of units in each eligible census block for 
purposes of comparing bids and measuring the performance of Tribal 
Mobility Fund Phase I support recipients. To establish the population 
associated with each census block eligible for Tribal Mobility Fund 
Phase I support, the Bureaus will use the 2010 Census data made 
available by the Census Bureau. The Attachment A file at http://wireless.fcc.gov/auctions/902/ includes the population for each 
potentially eligible census block.
    26. The Bureaus propose to include as eligible only those unserved 
census blocks where there is a population greater than zero. The 
Bureaus seek comment on this proposal.

IV. Establishing Auction Procedures

A. Auction Design

    27. The Bureaus discuss and seek comment on which auction design is 
most appropriate. The Bureaus also discuss related auction design 
options, including aggregation approaches, the coverage requirement, 
and awardee determination. The Bureaus ask for input on these 
approaches and options, and request that commenters explain how their 
suggestions will promote the Commission's objective in Tribal Mobility 
Fund Phase I of maximizing, within the $50 million budget, the 
population with newly available 3G or better service.
i. Reverse Auction Design
    28. The Bureaus seek comment on which reverse auction design would 
be the most appropriate for the Tribal Mobility Fund Phase I auction. 
In the Notice of Proposed Rulemaking for Mobility Fund Phase I, the 
Commission proposed a single-round auction format to disburse funds. A 
variety of commenters supported a format with more than one round of 
bidding, arguing that multiple rounds would maximize the benefits of 
the program through more informed bidding and more competitive bidding. 
In the USF/ICC Transformation Order, the Commission indicated that a 
single-round sealed bid auction format would be most appropriate for 
Mobility Fund Phase I, but left the final determination to the Bureaus. 
For the general Mobility Fund Phase I auction, the Bureaus decided to 
implement a single-round auction format because they believed that the 
circumstances favoring a multiple-round auction, i.e., when there are 
strong interactions among items and when bidders are unsure as to the 
market value of the item, were not significant enough in Auction 901 to 
outweigh the Bureaus' concerns about the complexity it would add to the 
auction. For the purposes of Auction 902, the Bureaus seek comment on 
whether they should adopt a single-round or a multiple-round reverse 
auction design.
    29. Single-Round Auction. Under a single-round approach, during the 
single bidding round, each bid submitted by a bidder would indicate a 
per-pop support price at which the bidder is willing to meet the 
Bureaus' requirements to cover the population in eligible blocks 
covered by the bid. One advantage of the single-round format is that it 
would be simple and quick. The Bureaus seek comment on whether a 
single-round approach would allow bidders to make informed bid 
decisions

[[Page 21360]]

and to submit competitive bids. The purpose of the Tribal Mobility Fund 
Phase I auction mechanism is to identify whether and, if so, at what 
price providers are willing to extend advanced mobile coverage over 
unserved areas in exchange for a one-time support payment. Absent 
strategic behavior, these bid decisions largely depend upon internal 
cost structures, private assessments of risk, and other factors related 
to the providers' specific circumstances. Thus, the Bureaus seek 
comment on whether the bid amounts of other auction participants are 
likely to contain information that will significantly affect an 
individual bidder's own cost assessments, and whether bidders would 
prefer to have the opportunity to react to the bids of others.
    30. Multiple-Round Auction. In the particular context of the Tribal 
Mobility Fund Phase I, the Bureaus seek further comment on whether an 
alternative auction design might be appropriate for Auction 902. In 
particular, the Bureaus seek comment on whether they should use a 
multiple-round auction given the knowledge gained from the Mobility 
Fund Phase I auction and the smaller number of eligible areas, the 
likely fewer participants, and the smaller budget. Observing the 
variation in Auction 901 winning bids, potential bidders in Auction 902 
are likely to realize the potential gain from strategically shading up 
their bids to be just low enough to be accepted, but no lower. 
Calculating the optimal bid in this situation can be difficult, 
imposing a burden on bidders, and may result in relatively low-cost 
providers losing because they miscalculated. This difficulty can be 
mitigated in a multiple-round auction, such as a descending clock 
auction, because it does not provide the same opportunity for strategic 
behavior. The Bureaus seek comment on whether it would be easier for 
bidders to formulate a successful bid strategy in a multiple-round 
auction such as a descending clock auction. If commenters support a 
multiple-round design, the Bureaus seek comment on which design would 
be most appropriate for Auction 902. Possibilities could include a 
descending clock auction (in which winning bidders could all be paid 
the same amount per-pop) and a descending simultaneous multiple round 
format. Because the Tribal Mobility Fund Phase I auction is smaller in 
scale, with fewer eligible areas, than the Mobility Fund Phase I 
auction, the relative benefits of a single-round auction design in 
terms of simplicity of implementation and time to completion are likely 
reduced relative to a multiple-round format.
ii. Census Blocks and Aggregations
    31. The Commission determined that the census block should be the 
minimum geographic building block for which support is provided, but 
left to the Bureaus the task of deciding how to facilitate bidding on 
aggregations of eligible census blocks. Some aggregation of census 
blocks may be necessary because census blocks are numerous and can be 
quite small. The 5,554 census blocks potentially eligible for support 
under Tribal Mobility Fund Phase I have an average area of 
approximately 2.1 square miles. The Bureaus believe that on average 
these blocks are much smaller than the average area covered by a single 
cell site, which is likely to be the minimum incremental geographic 
area of expanded coverage with Tribal Mobility Fund Phase I support. 
The Bureaus propose bidding procedures that will define biddable items 
consisting of certain aggregations of eligible census blocks and for 
this purpose suggest using census tracts and Tribal land boundaries.
    32. Aggregation of census blocks by tracts and Tribal lands. The 
Bureaus seek comment on an approach that would require bidding on 
biddable items consisting of predefined aggregations of eligible census 
blocks. For purposes of bidding, all eligible census blocks would be 
grouped by the tracts in which they are located. In the case of tracts 
with more than one Tribal land, the blocks in that tract would be 
grouped by Tribal land. Bidders would bid by these aggregated areas, 
not on individual blocks.
    33. Under this approach, for each aggregated area that a bidder 
bids on, the bidder would indicate a per-unit price to cover the 
population in the eligible census blocks within that area. The auction 
would assign support to awardees equal to the per-pop rate of their bid 
multiplied by the population associated with the eligible census blocks 
within the aggregated area as shown in the information that will be 
provided by the Bureaus prior to the auction. Under this approach, 
bidders would be able to bid on multiple aggregated areas and win 
support for any or all of them.
    34. The Bureaus release with the Auction 902 Comment Public Notice 
a list of 5,554 census blocks that would be considered potentially 
eligible under their criteria. These blocks are located within 258 
Census tracts and 292 Tribal lands. If the Bureaus bundled these 
unserved blocks into tracts and parts of tracts within different Tribal 
lands for bidding, there would be 417 aggregated areas. One goal in 
suggesting aggregated areas for this purpose is to create biddable 
geographic areas closer in scale to minimum buildout areas than census 
blocks would be. This approach would make it less important that 
bidders have the ability to place all-or-nothing package bids than 
would be the case if the basic bidding units were individual census 
blocks. Further, this approach would lend itself to a simpler method of 
determining winning bids.
    35. In the USF/ICC Transformation Order, the Commission noted that 
because census blocks in Alaska are so much larger on average than 
census blocks elsewhere, the Bureaus should consider permitting bidding 
on individual census blocks in Alaska, a suggestion the Bureaus adopted 
for Mobility Fund Phase I. Under the tract and Tribal land aggregation 
method proposed, however, the size of the biddable items in Alaska 
would be similar to those in other states. Therefore, the Bureaus 
propose and seek comment on using the same aggregation of blocks into 
biddable items in Alaska as they do elsewhere.
    36. The Bureaus ask whether commenters believe that further 
packaging of the predefined aggregations would be helpful. If so, they 
should explain the specific need for package bidding and their proposed 
approach. For example, could such a need be met by allowing bidding on 
a package of all of the tracts and parts of tracts within a Tribal 
land? The Bureaus also seek comment on whether a multiple round format, 
such as a descending clock auction, could facilitate aggregation by 
allowing bidders to shift bids if outbid on a piece of a group of areas 
they were seeking to serve.
    37. Coverage requirement. Under this approach, awardees would be 
required to provide voice and broadband service meeting the established 
minimum standards over at least 75 percent of the population associated 
with the eligible blocks in each aggregated area for which they receive 
support. The required minimum standards for service will depend on 
whether a winning bidder elects to deploy 3G or 4G service. This 
coverage requirement would apply to the total population in the 
eligible census blocks in each predefined aggregated area on which bids 
are based. Pursuant to the USF/ICC Transformation Order, awardees 
meeting the minimum coverage requirement could receive their winning 
bid amount for that population and for any additional population 
covered in

[[Page 21361]]

excess of the 75 percent minimum, up to 100 percent of the population 
associated with the unserved blocks, subject to the rules on 
disbursement of support. Because Census data does not specify how 
population is distributed within a census block, the Bureaus seek 
comment on how to determine whether the coverage requirement is met. If 
a provider demonstrates new coverage over the entirety of an eligible 
census block, the Bureaus can assume coverage of the entire population 
of that census block. However, the Bureaus seek input on how to 
evaluate the population served by new coverage where a provider 
demonstrates new coverage over part of an eligible census block. Should 
the Bureaus use the area covered and assume that the population is 
evenly distributed? For example, if an awardee covered 75% of the area, 
the Bureaus would conclude that the awardee was covering 75% of the 
population. The Bureaus seek comment on this and other methods.
iii. Determining Awardees
    38. Single-Round Auction. To determine awardees in a single-round 
auction under the Bureaus' proposed aggregation approach, the auction 
system would rank all bids from lowest to highest based on the per-pop 
bid amount, and assign support first to the lowest per-pop bid. The 
auction system would continue to assign support to the next lowest per-
pop bids in turn, as long as support had not already been assigned for 
that geographic area, and would continue until the sum of support funds 
of the winning bids was such that no further winning bids could be 
supported given the funds available. When calculating how much of the 
budget remains, for each winning bid the auction system will multiply 
the per-pop rate bid by the total population in the uncovered blocks. 
This is because an awardee may receive support for up to 100 percent of 
the population in the blocks for which it receives support. Ties among 
identical bids in the same amount for covering the same aggregated area 
would be resolved by assigning a random number to each bid and then 
assigning support to the tied bid with the highest random number. A 
bidder would be eligible to receive support for each of its winning 
bids equal to the per-pop rate of a winning bid multiplied by the 
population in the eligible census blocks covered by the bid, subject to 
meeting the obligations associated with receiving support. For bidders 
claiming eligibility for the bidding credit available to Tribally-owned 
or -controlled providers, the auction system would reduce the Tribal 
entity's bid amount by 25 percent for the purpose of comparing it to 
other bids, thus increasing the likelihood that Tribally-owned and -
controlled entities would receive funding.
    39. Because using the ranking method would likely result in monies 
remaining available from the budget after identifying the last lowest 
per-pop bid that does not exceed the funds available, the Bureaus seek 
comment on what to do in these circumstances. If the Bureaus use an 
approach similar to that used for Auction 901, they would continue to 
consider bids in order of per-pop bid amount while skipping bids that 
would require more support than is available. The Bureaus would award 
such bids as long as funds are available. The Bureaus seek comment on 
this approach and others. Alternatives could include, for example, not 
awarding any further support; awarding support as long as the per-pop 
bid amount does not exceed the last bid by more than twenty percent; 
or, if there is a set of tied bids all of which cannot be supported, 
awarding support to that combination of bids that will most nearly 
exhaust the remaining funds.
    40. Multiple-Round Auction. If commenters support a multiple-round 
design, the Bureaus seek comment on appropriate methods for determining 
awardees under proposed auction design alternatives. In a descending 
clock auction format, for example, the auction system would announce a 
per-pop price, and bidders would submit bids for the eligible areas 
they would cover. If the cost of accepting those bids (population in 
the areas bid on times the per-pop price) exceeds the budget, the price 
would be lowered. In each round bidders would be required to satisfy an 
activity requirement, providing an incentive for consistent bidding 
throughout the auction. Rounds would continue until the cost of 
accepting all current bids was below the budget.
    41. One issue that must be addressed is the case of more than one 
bid for the same area, since the Bureaus propose to award only one 
subsidy per area. A possible solution would be to continue running the 
clock in those areas where there are multiple bids until only one bid 
remains. If the clock were initially stopped when the budget 
requirement was just met, continuing to run the clock in the areas with 
multiple bids would result in not spending all the funds. The Bureaus 
seek comment on how to address this overshooting. Possible solutions 
may include permitting intra-round bids that allow bidders to indicate 
their change in supply at specified prices between the opening and 
closing prices in each round.

B. Auction Information Procedures

    42. Under the Commission's rules on competitive bidding for high-
cost universal service support adopted in the USF/ICC Transformation 
Order, the Bureaus have discretion to limit public disclosure of 
certain bidder-specific application and bidding information until after 
the auction, as they do in the case of spectrum license auctions. 
Consistent with practice in recent spectrum license auctions and in 
Auction 901, the Bureaus propose to conduct Auction 902 using 
procedures for limited information disclosure. The Bureaus propose to 
withhold, until after the close of bidding and announcement of auction 
results, the public release of information from bidders' short-form 
applications regarding their interest in particular eligible census 
blocks. If a single-round auction is used, the Bureaus also propose not 
to reveal any information that may reveal the identities of bidders 
placing bids and taking other bidding-related actions. If the Bureaus 
decide to implement a descending simultaneous multiple round or 
descending clock auction, they may wish to release additional 
information about bidding-related actions during the auction, and the 
Bureaus seek comment on what information should be released under 
alternative auction design proposals. After the close of bidding, 
bidders' area selections, bids, and any other bidding-related actions 
and information would be made publicly available. The Bureaus seek 
comment on their proposal to implement limited information procedures 
in Auction 902.

C. Auction Structure

i. Bidding Period
    43. The Bureaus will conduct Auction 902 over the Internet. For the 
single round of bidding in Auction 901, the Bureaus did not provide a 
telephonic bidding option. In Commission spectrum license auctions, 
telephonic bidding has served as a backup to on-line bidding. The 
Bureaus seek comment on whether telephonic bidding should be available 
in Auction 902, particularly if they use a multiple-round format.
    44. The start time for bidding will be announced in a public notice 
to be released at least one week before the start of the auction. The 
Bureaus seek comment on this proposal.

[[Page 21362]]

ii. Information Relating to Auction Delay, Suspension, or Cancellation
    45. For Auction 902, the Bureaus propose that, by public notice or 
by announcement during the auction, the Bureaus may delay, suspend, or 
cancel the auction in the event of natural disaster, technical 
failures, administrative or weather necessity, evidence of an auction 
security breach or unlawful bidding activity, or for any other reason 
that affects the fair and efficient conduct of competitive bidding. In 
such cases, the Bureaus, in their sole discretion, may elect to resume 
the auction or cancel the auction in its entirety. Network interruption 
may cause the Bureaus to delay or suspend the auction. The Bureaus 
emphasize that exercise of this authority would be solely within the 
discretion of the Bureaus. The Bureaus seek comment on this proposal.

D. Bidding Procedures

i. Maximum Bids and Reserve Prices
    46. Under the Commission's rules on competitive bidding for high-
cost universal service support adopted in the USF/ICC Transformation 
Order, the Bureaus have discretion to establish maximum acceptable per-
unit bid amounts and reserve amounts, separate and apart from any 
maximum opening bids.
    47. The Bureaus concluded that for Auction 901, a reserve price was 
not needed to guard against unreasonably high winning bids because 
cross-area competition for support from a budget that was not likely to 
cover support for all of the areas receiving bids would constrain the 
bid amounts. The Bureaus seek comment on whether any maximum acceptable 
per-unit bid amounts, reserve amounts, or maximum opening bid amounts 
would be appropriate for Auction 902. Although the $50 million budget 
available for Auction 902 is less than the $300 million budget 
available for Auction 901, the number of eligible census blocks is also 
significantly lower in this auction. Will cross-area competition for 
support adequately constrain bid amounts? The Bureaus further seek 
comment on what methods should be used to calculate reserve prices and/
or maximum or minimum bids if they are adopted. Commenters are advised 
to support their claims with valuation analyses and suggested amounts 
or formulas. The Bureaus also seek comment on the appropriate policy 
if, at the reserve price, less than the full budget is exhausted.
ii. Bid Removal
    48. For Auction 902, the Bureaus propose and seek comment on bid 
removal procedures. In the case of a single-round auction, the Bureaus 
propose that before the end of the single round of bidding, a bidder 
would have the option of removing any bid it has placed. By removing 
selected bids, a bidder may effectively undo any of its bids placed 
within the single round of bidding. Once the single round of bidding 
ends, a bidder may no longer remove any of its bids. For multiple-round 
auction designs, the Bureaus seek comment on potential bid removal 
mechanisms and whether bidders should be permitted to withdraw bids 
from previous rounds and, if so, subject to what limitations.

E. Default Payments

    49. In the USF/ICC Transformation Order, the Commission determined 
that a winning bidder in a reverse auction for high-cost universal 
service support that defaults on its bid or on its performance 
obligations will be liable for a default payment. Bidders selected by 
the auction process to receive support have a binding obligation to 
file a post-auction long-form application, by the applicable deadline 
and consistent with other requirements of the long-form application 
process, and failure to do so will constitute an auction default. 
Likewise, an auction default occurs when a winning bidder is found 
ineligible to be a recipient of support or is disqualified or has its 
long-form application dismissed for any reason. In addition, the 
Mobility Fund Phase I rules provide that the failure, by any winning 
bidder authorized to receive support, to meet its minimum coverage 
requirement or adequately comply with quality of service or any other 
requirements will constitute a performance default. The Bureaus have 
delegated authority to determine in advance of Auction 902 the 
methodologies for determining the auction and performance default 
payments. The Bureaus seek comment on how to calculate the auction 
default payments that will be applicable for Auction 902. The Bureaus 
note that neither an auction default nor a performance default would 
result in a change to the set of awardees originally selected by the 
auction mechanism.
i. Auction Default Payment
    50. As noted in the USF/ICC Transformation Order, failure to 
fulfill auction obligations, including those undertaken prior to the 
award of any support funds, may undermine the stability and 
predictability of the auction process and impose costs on the 
Commission and the Universal Service Fund (USF). To safeguard the 
integrity of the Tribal Mobility Fund Phase I auction, the Bureaus seek 
comment on an appropriate payment for auction defaults, which occur if 
a bidder selected by the auction mechanism does not become authorized 
to receive support after the close of the bidding, e.g., fails to 
timely file a long-form application, is found ineligible to be a 
recipient of support or is disqualified, or has its long-form 
application dismissed for any reason. An auction default could occur at 
any time between the close of the bidding and the authorization of 
support for each of the winning bidders. For example, an auction 
default would occur if a winning bidder failed to file its long-form 
application by the announced deadline. Similarly, an auction default 
could occur later in the long-form application review process if a 
winning bidder that timely filed its long-form application is 
determined to be ineligible to be a recipient of support or is 
disqualified.
    51. In determining what size payment would be appropriate for a 
bidder that defaults in the auction, the Bureaus' goals are to ensure 
the stability and predictability of the auction process by deterring 
insincere or uninformed bidding without establishing such a high amount 
as to unduly deter participation in the auction. Such a decision must 
be made in light of the procedures established for the auction, 
including auction design. According to the Commission's rules, if the 
auction default payment is determined as a percentage of the defaulted 
bid amount, the default payment will not exceed 20 percent of the total 
defaulted bid. The Bureaus propose to use a rate of five percent of the 
total defaulted bid. The Bureaus would apply the percentage to the 
total amount of support based on the bid amount for the geographic area 
covered by the defaulted bid(s). The Bureaus believe that this amount, 
below the maximum percentage, will protect against the costs to the 
Commission and the USF of auction defaults and provide bidders 
sufficient incentive to fully inform themselves of the obligations 
associated with participation in the Tribal Mobility Fund Phase I 
program and to commit to fulfilling those obligations. Under this 
method of calculating the default payment, bidders would be aware ahead 
of time of the exact amount of their potential liability based on their 
bids. The Bureaus note that this proposal is the same percentage 
instituted for Auction 901.

[[Page 21363]]

    52. The Bureaus seek comment on this proposal. The Bureaus ask 
commenters to assess whether their proposal to use an auction default 
payment percentage of five percent will be adequate to deter insincere 
or uninformed bidding, and safeguard against costs to the Commission 
and the USF that may result from such auction defaults, without unduly 
discouraging auction participation, particularly given that liability 
for the auction default payment will be imposed without regard to the 
intentions or fault of any specific defaulting bidder. Are there any 
circumstances unique to bids to serve Tribal lands that should be 
considered in the analysis? The Bureaus also seek comment on whether 
they should use an alternative methodology, such as basing the auction 
default payment on the difference between the defaulted bid and the 
next best bid(s) to cover the same population as without the default. 
Commenters advocating such an approach should explain with specificity 
how such an approach might work under the options the Bureaus present 
for auction design. In addition, the Bureaus seek comment on whether, 
prior to bidding, all applicants for Auction 902 should be required to 
furnish a bond or place funds on deposit with the Commission in the 
amount of the maximum anticipated auction default payment. The Bureaus 
ask for specific input on whether a bond or deposit would be preferable 
for this purpose and on methodologies for anticipating the maximum 
auction default payment.
ii. Performance Default Payment
    53. Pursuant to the Mobility Fund Phase I rules adopted in the USF/
ICC Transformation Order, a winning bidder will be subject to a 
performance default payment if, after it is authorized to receive 
support, it fails to meet its minimum coverage requirement, other 
service requirements, or any other condition of Tribal Mobility Fund 
Phase I support. In addition to being liable for a performance default 
payment, the recipient will be required to repay the Mobility Fund all 
of the support it has received and, depending on the circumstances 
involved, could be disqualified from receiving any additional Tribal 
Mobility Fund, general Mobility Fund, or other USF support. The Bureaus 
may obtain its performance default payment and repayment of a 
recipient's Tribal Mobility Fund Phase I support by drawing upon the 
irrevocable stand-by LOC that winning bidders will be required to 
provide.
    54. The Bureaus propose to assess a 10 percent default payment 
where a winning bidder fails to satisfy its performance obligations or 
any of the requirements and conditions for the support. The percentage 
would be applied to the total amount of support based on the bid amount 
for the geographic area covered by the defaulted bid(s). Under this 
proposal, the LOC would include an additional 10 percent based on the 
total level of support for which a winning bidder is eligible. In 
determining what size payment would be appropriate for a performance 
default, the Bureaus' goals are to ensure the stability and 
predictability of the auction process by deterring insincere or 
uninformed bidding without establishing such a high amount as to unduly 
deter participation in the auction. While both auction defaults and 
performance defaults may threaten the integrity of the auction process 
and impose costs on the Commission and the USF, an auction default 
occurs earlier in the process and may permit an earlier alternative use 
of the funds that were assigned to the defaulted bid, consistent with 
the purposes of the universal service program. Thus, the Bureaus 
believe that the amount of a performance default payment should be 
higher than the amount of the auction default payment. The Bureaus 
proposed, and adopted, a 10 percent performance default penalty for 
Auction 901. The Bureaus seek comment on their proposal for calculating 
the performance default payment. Will a performance default payment of 
10 percent of the total amount of support for which the winning bidder 
defaults be effective in ensuring that those authorized to receive 
support will be capable of meeting their obligations and protect 
against costs to the Commission and the USF, without unduly 
discouraging auction participation? Are there any circumstances unique 
to provisioning service to Tribal lands that should be considered in 
the Bureaus' analysis?

F. Reasonably Comparable Rates

    55. Reasonably Comparable Rates. Tribal Mobility Fund Phase I 
recipients must certify that they offer service in areas with support 
at consumer rates that are within a reasonable range of rates for 
similar service plans offered by mobile wireless providers in urban 
areas. Recipients will be subject to this requirement for five years 
after the date of award of support. Recipients must offer service plans 
in supported areas that meet the public interest obligations specified 
in the Commission's Mobility Fund rules and that include a stand-alone 
voice service plan. The Commission delegated authority to the Bureaus 
to specify how support recipients could demonstrate compliance with 
this rate certification. The Commission directed the Bureaus to develop 
surveys of voice and broadband rates generally that should be completed 
before the later phases of the Connect America Fund and the Mobility 
Fund. In order to offer Mobility Fund Phase I support at the earliest 
time feasible, however, the Commission recognized that the Bureaus 
might have to implement an approach to the reasonably comparable rates 
requirement without being able to rely upon the information that will 
be collected through the surveys. The Bureaus propose to do so in 
implementing Tribal Mobility Fund Phase I.
    56. The Bureaus propose that recipients of Tribal Mobility Fund 
Phase I support may demonstrate compliance with the reasonably 
comparable rates requirement in the same manner as recipients of 
general Mobility Fund Phase I support. The Bureaus propose that a 
supported provider must demonstrate that its required stand-alone voice 
plan, and one service plan that offers data services, if it offers such 
plans, are (1) substantially similar to a service plan offered by at 
least one mobile wireless service provider in an urban area, and (2) 
offered at or below the rate for the matching urban service plan. The 
Bureaus note that any provider that itself offers the same service plan 
for the same rate in a supported area and in an urban area would be 
able to meet this requirement. The Bureaus seek comment on this 
proposal and any alternatives. Commenters offering alternatives to the 
Bureaus' proposal should address the feasibility of implementing their 
alternatives in advance of the deadlines for parties to participate in 
competitive bidding for Tribal Mobility Fund Phase I support. In 
addition, the Bureaus request that commenters describe the costs and 
benefits associated with the position they advocate. Adopting this 
approach for purposes of Tribal Mobility Fund Phase I does not prejudge 
the approach to be taken with respect to Phase II of the Mobility Fund 
or the Connect America Fund generally. The Bureaus note that in line 
with the approach in Auction 901, they do not propose to adopt an urban 
rate floor for recipients of Tribal Mobility Fund Phase I support.
    57. For purposes of Tribal Mobility Fund Phase I, any rate equal to 
or less than the highest rate charged for a matching service in an 
urban area would be reasonably comparable to, i.e., within a reasonable 
range of, rates for

[[Page 21364]]

similar service in urban areas. Under this approach, the supported 
party must offer services at rates within the range but that do not 
exceed one particular rate that is presumed to be a part of that range. 
Previously, rates for supported services in high-cost, insular and 
rural areas served by non-rural carriers were presumed to be reasonably 
comparable to urban rates nationwide if they fell below the national 
rate benchmark, which was set at two standard deviations above the 
average urban rate as reported in an annual rate survey published by 
the Wireline Competition Bureau. Thus, while the approaches differ, 
both serve to assure that rates for supported services are reasonably 
comparable to rates in urban areas. Urban areas are generally served by 
multiple and diverse providers offering a range of rates and service 
offerings in competition with one another. Consequently, the Bureaus 
presume that even the highest rate would qualify as being within a 
reasonable range of rates for similar service in urban areas, because 
the rates for the matching urban services reflect the effects of 
competition in the urban area. Should the Bureaus require additional 
information to validate this assumption? For example, should an urban 
service used for matching be required to have a certain number of 
subscribers or percentage of the relevant market in order to 
demonstrate its market acceptance? A supported provider using its own 
urban rates would have little trouble making such a demonstration. 
However, would other supported providers find the range of urban plans 
with publicly available subscriber data by plan too limited? Are there 
alternative criteria that urban plans should meet before their rates 
may be used for comparison? Do the Bureaus need to be concerned that 
recipients may seek to game this standard by using an urban rate for 
comparison that does not reflect a true market rate? How can the 
Bureaus address any such concerns?
    58. The Bureaus would retain discretion to consider whether and how 
variable rate structures should be taken into account. For example, 
should a supported stand-alone voice plan that offers 1,000 minutes a 
month for $50 and additional minutes at $0.08 per minute be considered 
more expensive than a plan in an urban area that offers 2,000 minutes a 
month for $100 and additional minutes at $0.10 per minute? There may be 
circumstances under which data plans with equivalent prices-per-unit 
match each other even if there are other differences in the plans. The 
Bureaus propose to address such issues on a case-by-case basis and 
welcome comment on how to address such circumstances.
    59. To provide recipients with flexibility to tailor their 
offerings to consumer demand while complying with the rule, the Bureaus 
propose that they deem a Tribal Mobility Fund Phase I support recipient 
compliant with the terms of the required certification if it can 
demonstrate that its rates for services satisfy the requirements, and 
if it provides supporting documentation. The Bureaus seek comment on 
all aspects of this proposal, in particular whether it meets the goal 
of assuring that supported services are provided at rates reasonably 
comparable to those in urban areas, while allowing recipients to have 
appropriate flexibility in structuring their offerings. The Bureaus 
also seek comment on any potential alternatives. For example, is there 
a readily available set of benchmark urban rates for mobile voice and 
broadband service that the Bureaus could use with respect to Tribal 
Mobility Fund Phase I?
    60. Urban Areas. For purposes of this requirement, the Bureaus 
propose defining urban area as one of the 100 most populated CMAs in 
the United States. A list of the top 100 CMAs by population is included 
in Attachment B of the Auction 902 Comment Public Notice. Multiple 
providers currently serve these areas--99.2 percent of the population 
in these markets is covered by between four to six operators--offering 
a range of different service plans at prices generally constrained by 
the numerous providers. Are there other definitions of urban area that 
commenters believe the Bureaus should consider for purposes of this 
requirement?
    61. The Bureaus propose to make a specific exception for supported 
parties serving Alaska in light of the distinct character of Alaska and 
the related costs of providing service, and in line with the approach 
adopted for Auction 901. The Bureaus propose that supported parties in 
Alaska may demonstrate comparability by comparison with rates offered 
in the CMA for Anchorage, Alaska. In this regard, the Bureaus note that 
the Anchorage, Alaska CMA has a population of over 250,000 and four 
wireless providers, which indicates that, while reflecting the 
particular challenges of offering service in Alaska, competition for 
customers there could act to keep rates for offered services 
reasonable.

V. Ex Parte Rules

    62. This proceeding shall be treated as a permit-but-disclose 
proceeding in accordance with the Commission's ex parte rules. Persons 
making ex parte presentations must file a copy of any written 
presentation or a memorandum summarizing any oral presentation within 
two business days after the presentation (unless a different deadline 
applicable to the Sunshine period applies). Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda, or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with 47 CFR 1.1206(b). In proceedings governed by 
47 CFR 1.49(f) or for which the Commission has made available a method 
of electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format. 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2013-08402 Filed 4-9-13; 8:45 am]
BILLING CODE 6712-01-P