Implementation of the Commercial Spectrum Enhancement Act

AGENCY:

Federal Communications Commission.

ACTION:

Declaratory ruling.

SUMMARY:

In order to implement the auction revenue requirement in Commercial Spectrum Enhancement Act (CSEA) for any auction of frequencies subject to CSEA, the Commission interprets the meaning of the term “total cash proceeds” as used in CSEA to mean winning bids net of any applicable bidding credit discounts.

DATES:

Effective August 26, 2005.

ADDRESSES:

Federal Communications Commission, 445 Twelfth Street, SW., Washington, DC 20554. People with Disabilities: Contact the FCC to request materials in accessible formats (Braille, large print, electronics files, audio format, etc.) by e-mail at FCC504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0531 (voice), 202-418-7365 (TTY).

FOR FURTHER INFORMATION CONTACT:

Audrey Bashkin or Gary Michaels, Auctions and Spectrum Access Division, Wireless Telecommunications Bureau, (202) 418-0660.

SUPPLEMENTARY INFORMATION:

This is a synopsis of the Commission's Declaratory Ruling in WT Docket No. 05-211 adopted June 9, 2005, and released June 14, 2005. The full text of this Commission decision is available for inspection and copying during regular business hours at the FCC's Reference Information Center, Portals II, 445 Twelfth Street, SW., Room CY-A257, Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20054, telephone 1-800-378-3160 or http://www.BCPIWEB.com . The Declaratory Ruling is also available on the FCC's Web site at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-123A1.doc or http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-05-123A1.pdf . The Commission will send a copy of this Declaratory Ruling in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

1. CSEA establishes a mechanism to use spectrum auction proceeds to reimburse Federal agencies operating on “eligible frequencies” (the 216-220 MHz, 1432-1435 MHz, 1710-1755 MHz, and 2385-2390 MHz bands, and certain other frequency bands) that may be reallocated from Federal to non-Federal use, for the cost of relocating operations. CSEA requires that the “total cash proceeds” from any auction of eligible frequencies equal at least 110 percent of estimated relocation costs of eligible Federal entities. CSEA prohibits the Commission from concluding any auction of eligible frequencies that falls short of this revenue requirement. CSEA requires the Commission, if it is unable to conclude an auction for this reason, to cancel the auction, return any deposits from participating bidders held in escrow, and absolve such bidders from any obligation to bid in any subsequent reauction of the spectrum.

2. In order to implement CSEA's revenue requirement, the Commission must determine the meaning of the term “total cash proceeds” as used in the statute. For the following reasons, the Commission interprets “total cash proceeds” for purposes of CSEA to mean winning bids net of any applicable bidding credit discounts. Under the Commission's competitive bidding rules, winning bids in an auction do not necessarily translate into amounts actually owed by bidders. The discrepancy between gross and net winning bid amounts arises from the award of bidding credits—i.e., discounts on gross winning bids—to eligible designated entities, new entrants into the broadcast marketplace, and winning bidders that undertake to serve previously underserved tribal lands. In this context, the plain language of the statute appears to refer to an auction's net winning bids rather than gross winning bids. The word “cash” is defined as “money or its equivalent;” or “ready money” and “proceeds” is defined as “the money obtained from a commercial or fund-raising venture: yield.”

3. In addition to the language of the statute, the purpose underlying the revenue requirement of CSEA supports a determination that “total cash proceeds” is based on winning bids net of bidding credits. Given that Congress's purpose was to provide a mechanism for making sufficient funds available to relocating Federal agencies, it is reasonable to assume that Congress did not intend the Commission, in determining whether the “total cash proceeds” requirement has been met, to count those portions of winning bids for which the bidder would receive credit and not have to pay. Accordingly, the Commission does not read CSEA to equate the amount of the gross winning bids with the total cash proceeds of the auction.