[Federal Register Volume 60, Number 143 (Wednesday, July 26, 1995)]
[Rules and Regulations]
[Pages 38276-38280]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18451]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 1
[WT Docket No. 95-69, FCC 95-308]
Fees for Products and Services in Connection With Competitive
Bidding Procedures
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Commission has adopted a Report and Order which
establishes a schedule of fees that participants in the competitive
bidding process will be assessed for certain on-line computer services,
bidding software, and bidder information packages. In establishing the
fees, the Report and Order implements the Independent Offices
Appropriations Act. The Commission's action in assessing the fees is to
recoup the Federal Government's costs for providing such services and
products.
EFFECTIVE DATE: July 26, 1995.
FOR FURTHER INFORMATION CONTACT:
Bert Weintraub, Wireless Telecommunications Bureau, Tel. No. (202) 418-
1316.
SUPPLEMENTARY INFORMATION: This is the complete text of the Report and
Order which was adopted on July 21, 1995, and released on July 21,
1995.
I. Introduction
1. In this Report and Order, we amend Part 1 of the Commission's
Rules to establish a schedule of fees that participants in the
competitive bidding process will be assessed for certain on-line
computer services, bidding software, and for bidder information
packages, We conclude that assessment of these charges is reasonable
and necessary to recoup the Commission's costs for providing such
services and products. Specifically, we will assess the following fees
to bidders and other interested parties:
$2.30 per minute for access via a 900 number telephone
service to the Commission's Wise Area Network (FCC WAN) system that
will enable users to bid electronically from remote locations and
access licensing databases.
$175.00 for remote bidding software package.
No charge for the first bidder information package
requested, and a $16.00 fee for each additional package that is
subsequently requested by the same party.
II. Background
2. The Omnibus Budget Reconciliation Act of 1993, Public Law No.
103-66, Title VI, section 6002(b), 107 Stat. 312, authorized the
Commission to award licenses by competitive bidding where mutually
exclusive applications for initial licensing are received for
subscriber-based services for compensation. Under this authority, the
Commission, to date, has conducted three auctions for Personal
Communications Service (PCS) licenses.\1\ In previous Commission
auctions, remote electronic bidding was provided by Business
Information network (BIN). Bidders electing to bid electronically from
remote locations (i.e., not at the FCC auctions site) paid
[[Page 38277]]
BIN a fee for the remote bidding software and an on-line computer
access charge. The fee covered BIN's costs to develop and provide
remote bidding access.
\1\ The three PCS auction conducted thus far are: (1) The
Nationwide Narrowband PCS auction, held from July 25 through July
29, 1994; (2) the Regional PCS Narrowband auction held October 26
through November 8, 1994; and (3) the broadband PCS A and B block
auction, held December 5, 1994, through March 13, 1995. All three of
these auctions were conducted as simultaneous multiple round
auctions. In a simultaneous multiple round auction, auction
participants submit bids on specific licenses in each round of the
auction. The auction closes when there are no new bids during a
bidding round on any of the offered licenses. See Second Report and
Order, PP Docket No. 93-253, 9 FCC Rcd 2348 (1994), 59 FR 22,980
(1994).
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3. Due to the experience gained from these three auctions, the
Commission has developed its own remote electronic access system that
utilizes Wide Area Network or WAN technology. This system (FCC Wan)
would allow bidders and other interested parties to file applications
electronically, bid electronically, access auction round results, and
query FCC licensing databases from their personal computers from remote
locations The Commission has also developed a number of proprietary
software applications to support the remote electronic access system.
Bidders and other interested parties would utilize a 900 number
telephone service to access the FCC Wan system. The Commission has
incurred significant costs in developing this remote electronic access
system. Such costs include: infrastructure design and implementation;
software development and testing; and other administrative/personnel
costs.
4. On May 16, 1995, we adopted a Notice of Proposed Rulemaking
(Notice) \2\ seeking comment on a proposed schedule of fees to be
assessed in future auctions for access to certain on-line computer
services, and for obtaining proprietary bidding software as well as
multiple bidder information packages. In order to recoup our costs, we
proposed to charge a fee to bidders and other interested parties for
access to the FCC WAN system and for obtaining the proprietary bidding
software needed to make use of the system's electronic bidding
functions. We also proposed recouping some of the printing and
production costs associated with providing bidder information packages
to prospective auction participants. Specifically, we indicated that
parties would continue to receive one complimentary bidder information
package, but suggested charging a fee for additional packages that are
requested.
\2\ WT Docket No. 95-69, 10 FCC Rcd 7066 (1995), 60 FR 26,860
(1995).
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5. We also observed that under government regulations any funds
received from the sale of materials, software, or services must go
directly to the U.S. Treasury. See 31 U.S.C. 3302(b); 69 Comp. 260,
262(1990). We noted that the Independent Offices Appropriation Act of
1952, as amended (IOAA), 31 U.S.C. 9701, permits the government to
impose fees and charges for services and things of value. The IOAA
authorizes agencies to prescribe regulations establishing charges for
products and services provided by an agency. The charges must be fair
and must be based on the costs to the government, the value of the
service or product to the recipient, the public policy or interest
served, and other relevant facts. See 31 U.S.C. 9701(b). In addition,
we indicated that the Office of Management and Budget (OMB) has issued
policy guidelines on use of fees in Circular A-25 (OMB Circular),\3\
which was recently revised. We noted that the revised OMB Circular,
encourages the assessment of fees for government-provided products and
services, and provides that agencies must establish fees based on
either a ``full-cost'' or ``market price'' analysis.
\3\ See FPC v. New England Power Co., 415 U.S. 345, 349-51
(1974) (citing the OMB Circular).
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6. More specifically, we proposed in the Notice to calculate our
fees on the basis of ``market price'' \4\ rather than utilizing a
``full cost'' pricing analysis.\5\ In particular, we proposed to
utilize prevailing price methodology to determine the fees for the FCC
WAN system use, the proprietary bidding software, and the additional
bidder information packages. We proposed the following fees: (1) $4.00
per minute for access via a 900 number to the FCC WAN system; (2)
$200.00 for each remote bidding software package; and (3) $16.00 for
each additional bidder information package (including postage)
requested beyond the one complimentary copy that is made available. We
sought comments on these charges, and on comparable market prices for
similar products and services that are offered to the public.
\4\ ``Market price'' means the price for a good, resource, or
service that is based on competition in open markets, and creates
neither a shortage nor a surplus of the good, resource, or service.
See OMB Circular at 58 Fed. Reg. 38,145.
\5\ ``Full cost'' includes all direct and indirect costs to any
part of the Federal Government of providing a good, resource, or
service. See OMB Circular at 58 FR 38,145.
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7. BellSouth Corporation (BellSouth), Rural Telecommunications
Coalition (RTC) and AirTouch Paging (AirTouch) filed formal comments
and National Paging & Personal Communications Association (NPPCA) and
Kennedy-Wilson International (KWI) filed informal comments by letter in
response to the Notice.
III. Discussion
8. BellSouth questions whether the Commission can assess fees for
its auction-related services under IOAA, when Section 309(j)(8)(B) of
the Communications Act already authorizes the Commission to recover the
cost of conducting auctions from auction revenues. We conclude that
assessing fees for use of the Commission's FCC WAN system as described
above is fully consistent with our competitive bidding obligations
under the Communications Act and with other laws and regulations that
govern fees. See 47 U.S.C. 309(j)(8)(B); 31 U.S.C. 9701(a). Assessing a
fee to bidders using certain on-line computer services and bidding
software is a reasonable and efficient means of recovering the costs
associated with developing, maintaining, enhancing, and upgrading this
important system and its companion software. Indeed, our proposal
supports a congressional goal set forth in the IOAA, which is that
``each service or thing of value provided by an agency * * * to a
person * * * be self-sustaining to the extent possible.'' See 31 U.S.C.
9701(a). Moreover, contrary to BellSouth's suggestion, nothing in
Section 309(j)(8)(B) prohibits the Commission from imposing fees on
auction participants under the IOAA.
A. On-Line Computer Access Charges
9. Comments. BellSouth, RTC, and AirTouch oppose the Commission's
proposal to establish on-line access charges by comparing the FCC WAN
system with the costs associated with access to Westlaw and Lexis-Nexis
services, claiming the comparison is invalid. RTC contends that the fee
for 900 service should be based upon ``full cost'' and not ``market
price.'' In addition, BellSouth and NPPCA assert that there is no
alternative to remote electronic bidding procedures. Additionally,
NPPCA claims there is already a fee to file applications
electronically.
10. Decision. After considering the record, we will charge $2.30
per minute for access to the FCC WAN system for purposes of bidding
electronically, reviewing other applications (e.g., FCC Form 175 or FCC
Form 600 applications), and obtaining available licensing database
information. We emphasize, however, that we will not charge a user a
fee for accessing this system for the purpose of filing a short- or
long-form application electronically. There will be a clear delineation
between services for which on-line access fees will be charged and
services for which no on-line access fees will be charged. Users who
download from the FCC's electronic bulletin board or from the Internet
software specific to a service for which we intend to charge on-line
access fees will receive clear notification that execution of this
software will result in on-line access fees. In addition, when a caller
executes software specific to a service for which
[[Page 38278]]
we intend to charge on-line access fees, there will be a grace period,
free of charge to the caller. During the grace period, the caller will
be advised of the associated pricing, basic program content, sponsor
information, and provided the option to disconnect without being
charged. Charges to the caller will not begin until the grace period
has ended. Instructions on downloading and executing software specific
to a particular service will be made available by Public Notice prior
to the availability of that service.
11. In arriving at this $2.30 fee, we considered that the FCC WAN
system will provide services that are similar to both the electronic
bidding capabilities previously offered by BIN and to database services
provided by Westlaw or Lexis-Nexis. For previous auctions, the cost for
on-line electronic bidding through BIN was $23.00 per hour, which
equals $.38 per minute (rounded). The average cost associated with
access to on-line database services such as Westlaw or Lexis-Nexis is
$4.23 per minute.
12. While our new remote electronic bidding system is similar to
BIN, which charged $23.00 per hour, FCC WAN system access to the
Commission's licensing databases is more like the services provided by
Westlaw or Lexis-Nexis. Both Westlaw and Lexis-Nexis provide on-line
database access for research purposes to legal and other research
professionals. We have therefore averaged the costs of these two types
of services to arrive at a fee of $2.30 per minute for on-line access
to the FCC WAN system. BellSouth and AirTouch argue that the Commission
should use other information service providers such as CompuServe,
Prodigy, Internet and America On-line as comparisons in determining a
price per minute for access to the FCC WAN system. According to the
commenters, these particular services range in price from $10.00 to
$30.00 per month for limited access and $3.00 to $10.00 per hour for
special services. These providers market their products and services to
the general public, however, and their fees obviously reflect the high
volume of users that are serviced by them. By comparison, the
Commission's auction and licensing databases are of interest to a
relatively small number of potential users. Westlaw or Lexis-Nexis,
however, do service a small number of users with information that is
akin to the licensing database information we plan to offer.
Consequently, their pricing provides a more relevant comparison for
establishing our fees here.
13. We note that OMB guidelines provide that the price of the
government-provided service must be adjusted to reflect the ``level of
service and quality of the good or service'' when compared to a similar
commercial service. OMB Circular at 58 FR 38145. In this regard, we
believe it is reasonable to charge a higher per-minute fee for our
remote bidding system than was charged by BIN because of the enhanced
bidding functionality of the FCC WAN system. Specifically, electronic
bidding via the FCC WAN system is expected to be faster and more
efficient \6\ than BIN. Bidders will have the option of uploading bids
from a file that they have created off-line, which will reduce the time
required to submit and verify bid submissions. Also, bidders will be
able to develop round results files based on their individual needs. In
addition to remote bidding and round results, the system also will
provide for access to the Commission's licensing databases (i.e., to
locate and review other applications). Moreover, the FCC WAN system
permits applications to be filed electronically (e.g., the FCC Form 175
and the FCC Form 600).
\6\ Our FCC WAN system is demonstrably faster than the BIN
system used in previous auctions, according to our test results. For
example, using BIN, the average amount of on-line time for the
Regional Narrowband auction was 16 minutes, 37 seconds per bidding
round whereas the average amount of time using the new system in a
mock Regional Narrowband auction was 12 minutes, 26 seconds per
bidding round (i.e., using a comparison of 30 licenses).
14. In addition, we reject RTC's argument that charging for 900
number service should be based on ``full cost'' instead of ``market
price.'' First, OMB has given us the discretion to choose either
methodology. Second, based on our examination of the two methodologies,
we conclude that application of a ``market price'' approach is more
practical and efficient for our purposes here. In this regard, we note
that the Commission will incur costs of approximately $700,000 for one
year of service for the expanded telephone cabling required to
implement the Commission's on-line bidding system.\7\ This figure
alone, however, does not reflect all of the cost components to be
included within OMB's definition of ``full cost.'' Attempting to
apportion ``full cost'' to individual auctions, which will each vary in
duration, number of bidders and number of licenses, is administratively
unworkable. Thus, we conclude that the ``full cost'' methodology is
inappropriate in this context. This analysis answers BellSouth's
concerns that we have not provided any estimate of Commission costs. We
reiterate that market price remains the only viable methodology in
establishing a fee for 900 service. Likewise, AirTouch's assertion that
a $.15 to $.20 per minute charge for 900 service. Likewise, AirTouch's
assertion that a $.15 to $.20 per minute charge for 900 service would
recoup the Commission's costs is an attempt at the ``full cost''
recovery methodology, which we have declined to use.
\7\ The Notice pointed out that the General Services
Administration (``GSA'') was in the process of making arrangements
to add 900 service to the Federal Telecommunications System
(``FTS'') 2000 contract, which is the government-wide telephone
system. The Notice should have additionally mentioned that point-to-
point telephone cabling upgrades were also added to the FTS
contract. Since release of the Notice, installation of the expanded
telephone cabling has been ordered but addition of the 900 service
is pending and will not be added until this Report and Order has
been adopted and released.
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15. Finally, we are not persuaded by BellSouth's or NPPCA's
argument that there is no alternative to remote electronic bidding
procedures and therefore no fee should be charged for this service. We
note that bidders may continue to place bids through a 800 telephone
number service free of charge.\8\ In addition, contrary to NPPCA's
belief, we have not established a fee for electronic filing of the FCC
Form 175. In order to encourage auction participants to file their
short-form applications electronically, as noted above, we do not plan
to charge for this particular use.
\8\ As in previous auctions, bidders still will have the option
of placing their bids from remote locations via an 800 telephone
number service at no charge. Round results information also will be
available to bidders over the Internet and on a FCC electronic
bulletin board at no charge.
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B. Auction Bidding Software
16. Comments. BellSouth, RTC, and AirTouch generally argue that
there are a number of comparable software packages on the market that
are substantially cheaper than the $200.00 fee proposed by the
Commission for fee proposed by the Commission for its bidding software
package. They provided names of various computer companies, computer
programs and protocols, as well as various dollar amounts in support of
their arguments.
17. Decision. After reviewing the comments and alternative prices
suggested, we have decided to assess a fee of $175.00 for the remote
bidding software package made available to each user on the FCC WAN
system. We will not, however, charge for software that is necessary for
users to file applications electronically on the FCC WAN system. Also,
we will not charge for software
[[Page 38279]]
that is needed for users to access the Commission's licensing databases
(although as discussed supra, FCC WAN users will be charged $2.30 per
minute for actually accessing the Commission's licensing database). We
base our $175.00 price on the BIN bidding software which was made
available to bidders in previous Commission auctions for a $200.00
charge. We will reduce this fee by $25.00, however, because our system
does not include a communications component that was provided as part
of the BIN software package. Specifically, the $25.00 reduction
represents the cost of certain technical protocols that are necessary
for remote electronic bidders and other interested parties to access
the Commission's remote electronic system.\9\
\9\ Such technical protocols are available ``off the shelf'' and
can be purchased for approximately $25.00. Examples of these
protocols are Trumpet, NetManage Chameleon and Wollongong Pathway
Access.
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18. AirTouch argues that computer software programs such as
Procomm, Telix, Crosstalk and SLIP PPP are appropriate comparisons to
the FCC remote bidding software and should be used in determining the
market price of our bidding software. For two reasons, we do not
believe these software packages are ``price comparable'' to the bidding
software we plan to offer. First, the programs cited by AirTouch are
produced for large numbers of users whereas our software is targeted to
a small group of users. Second, these programs are more limited in
scope and function than the FCC's software. Specifically, the cited
programs are communications and technical protocols only whereas the
FCC's software package is a more sophisticated logic-based program that
will enable users to submit and withdraw bids electronically.
C. Bidder's Information Package
19. Comments. None of the commenting parties challenge the
methodology used to calculate the $16.00 cost for each additional
bidder information package. AirTouch nevertheless opposes a charge for
additional bidder information packages, and claims it will be difficult
to enforce the policy. KWI, on the other hand, states the Commission
should charge $50.00 to $100.00 for bidder information packages to
ensure they are distributed to persons with a serious interest in the
auction process.
20. Decision. We conclude that it is both fair and reasonable to
provide one complimentary bidder information package to each person or
entity, and to charge $16.00 for each additional package (including
postage) requested by the same person or entity. The $16.00 charge is
based on the average direct costs incurred by the Commission to
duplicate, bind and mail such packages.
21. We observe that nothing prevents a recipient of a complimentary
bidder information package from making additional copies at his or her
own expense. We are unpersuaded that charging for additional bidder
information packages violates the public interest or will be unduly
burdensome to enforce, as AirTouch suggests. We also reject KWI's
suggestion that we charge $50.00 to $100.00 for bidder information
packages since we think such charges would not be consistent with OMB
guidelines.
D. Payment of Fees Methodology
22. Comments. None of the commenting parties object to the proposed
inclusion of the FCC WAN on-line access charges on the user's long
distance telephone bill. Moreover, none of the commenters express any
opposition to having the fees for the bidding software and the bidder
information packages collected by credit card or cashier checks. KWI
suggests expanding the payment method to include personal and corporate
checks.
23. Decision. Charges for on-line access to the FCC WAN system will
be included in the form of 900 number service charges on each user's
long distance telephone bill. Each user will pay its long distance
telephone company directly for these charges. As for bidding software
and additional bidder information packages, we will permit payment by
credit card and cashier's check. Further, we agree that personal or
corporate checks should be permitted and will permit payment in this
manner as long as such checks sufficiently identify the payor. All
checks should be made payable to the ``Federal Communications
Commission'' or ``FCC.'' The Commission contracts with an auctioneer
for each auction, and it is the auction contractor that will be
responsible for administering payments of the bidding software and
additional bidder information packages. Bidders may obtain the FCC's
bidding software and bidder information packages from the FCC's auction
contractor. Specific instructions for purchasing the software and
bidder information packages will be made available by Public Notice
prior to the start of each auction.
IV. Procedural Matters
24. Pursuant to the Regulatory Flexibility Act (Pub. L. 96-354,
Stat. 1165, 5 U.S.C. 601, et seq. (1981), the Commission attached an
Initial Regulatory Flexibility Analysis (IRFA) as Appendix A to the
Notice in WT Docket No. 95-69. Written comments on the IRFA were
requested. The Commission's Final Regulatory Flexibility Analysis is as
follows:
A. Need and Purpose of the Action. This rulemaking proceeding is
taken to implement the Commission's establishment and collection of
fees for the Commission's proprietary remote software packages, on-line
communications service charges, and bidder's information packages in
connection with auctionable services. The rules specifically set forth
the amounts that are to be paid in connection with bidding for
auctionable services. The objective of this proceeding is to collect
the necessary amounts through the fees being adopted, with the funds
going to the U.S. Treasury.
B. Issues Raised in Response to the Initial Regulatory Flexibility
Analysis. There were no comments submitted in response to the Initial
Regulatory Flexibility Analysis.
C. Significant Alternatives Considered and Rejected. All
significant alternatives have been addressed in this Report and Order.
D. Description, Potential Impact, and Number of Small Entities
Involved. Because the Commission will provide proprietary remote
software packages, on-line communications services, and bidder's
information packages directly, the fees assessed and collected will
recover the Government's costs. While the number of small entities
impacted by these fees is unknown, any such impact is likely to be
insubstantial. Moreover, the Commission has provided alternative remote
access options free of charge.
25. For further information on the assessment and collection of the
charges established by the rules adopted herein, contact Bert
Weintraub, Wireless Telecommunications Bureau, Auctions Division, at
(202) 418-1316.
V. Ordering Clause
26. Accordingly, it is ordered That pursuant to the authority of
Sections 4(i) and (j), 303(r), and 309(j) of the Communications Act of
1934, as amended, 47 U.S.C. 154 (i) and (j), 303(r), and 309(j), as
well as the Independent Offices Appropriation Act of 1952, as amended,
31 U.S.C. 9701, Part 1 of the Commission's Rules, 47 C.F.R. Part 1, is
amended to assess and collect fees in connection with auctionable
services as set forth below, effective upon publication in the Federal
Register. Pursuant to 5 U.S.C.
[[Page 38280]]
553(d)(3), we conclude that ``good cause'' exists to have the rule
amendments set forth in this Report and Order take effect immediately
upon publication in the Federal Register. The Commission's next auction
is presently scheduled to commence on August 29, 1995, and short-form
applications for that auction are due on July 28, 1995.\10\ In order to
provide for a smooth transition to the new computer system and software
discussed in this Report and Order, it is necessary to institute our
fee schedule prior to the start of this upcoming auction.
\10\ See Public Notice, DA 95-1420, released June 23, 1995.
List of Subjects in 47 CFR Part 1
Administrative practice and procedure.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 1 of Title 47 of the Code of Federal Regulations is amended as
follows:
PART 1--PRACTICE AND PROCEDURE
1. The authority citation continues to read as follows:
Authority: 47 U.S.C. 151, 154, 303, and 309(j) unless otherwise
noted.
2. Sections 1.1181 and 1.1182 are added to Subpart G to read as
follows:
Sec. 1.1181 Authority to prescribe and collect fees for competitive
bidding-related services and products.
Authority to prescribe, impose, and collect fees for expenses
incurred by the government is governed by the Independent Offices
Appropriation Act of 1952, as amended , 31 U.S.C. 9701, which
authorizes agencies to prescribe regulations that establish charges for
the provision of government services and products. Under this
authority, the Federal Communications Commission may prescribe and
collect fees for competitive bidding-related services and products as
specified in Sec. 1.1182.
Sec. 1.1182 Schedule of fees for products and services provided by the
Commission in connection with competitive bidding procedures.
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Product or service Fee amount Payment procedure
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On-line remote access 2.30 per minute........ Charges included on
900 Number Telephone customer's long
Service). distance telephone
bill.
Remote Bidding Software $175.00 per package.... Payment to auction
contractor by credit
card or check.
(Public Notice will
specify exact payment
procedures.)
Bidder Information First package free; Payment to auction
Package. $16.00 per additional contractor by credit
package (including card or check.
postage) to same (Public Notice will
person or entity. specify exact payment
procedures.)
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[FR Doc. 95-18451 Filed 7-25-95; 8:45 am]
BILLING CODE 6712-01-M