PUBLIC NOTICE

FEDERAL COMMUNICATIONS COMMISSION
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                                                     DA 97-1933
                                              September 5, 1997

                                                               

      COMMENT SOUGHT ON BALANCED BUDGET PROVISIONS CALLING
          FOR RESERVE PRICES OR MINIMUM OPENING BIDS 
                        IN FCC AUCTIONS

                 800 MHz Auction Formula Proposed
Report No. AUC-16-E (Auction No. 16)

     When FCC licenses are subject to auction (i.e, because they are mutually exclusive) the
recently enacted Balanced Budget Act of 1997 calls upon the Commission to prescribe methods
by which a reasonable reserve price is required or minimum opening bid established, unless it
determines that such an assessment is not in the public interest.  The Wireless
Telecommunications Bureau recently announced the auction of 525 licenses in the upper 10
MHz of the 800 MHz Specialized Mobile Service (SMR), which is to begin October 28, 1997. 
In anticipation of that auction, and in light of the recently adopted legislation, it is proposed that
a reserve price or minimum opening bid be established.  

     Specifically, it is proposed that in no event should any of the licenses in the 800 MHz
auction be sold for less than the value of the upfront payment amounts specified for the licenses
in the Public Notice released August 6, 1997 for that auction.  The upfront payments for the 800
MHz SMR auction are based on a $0.02 per MHz-POP formula, as was used in the 900 MHz
SMR auction.  The $0.02 MHz-POP has been discounted for each Economic Area by 75
percent, with a floor of $2,500, to account for the degree of incumbency for this service.  Under
this formulation, the minimum amount is $2,500 and the maximum amount is $717,571. 
Comment is sought on this proposal.  

     Parties should also comment on whether the upfront payment should be considered a
reserve price or a minimum opening bid for this auction.   Normally, a reserve price is an
absolute minimum price below which an item will not be sold in a given auction.  Reserve prices
can be either published or unpublished.  A minimum opening bid, on the other hand,  is the
minimum bid price set at the beginning of the auction below which no bids are accepted.  In a
minimum opening bid scenario, the auctioneer often has the discretion to lower it later in the
auction. 

     Furthermore, commenters should also address whether the amount of the reserve price or
minimum opening bid should be capped to ensure that bidding is not deterred on high valuation
markets, in particular.  For example, a cap of $250,000 could be applied.  

     Finally, if commenters believe that a reserve price or minimum opening bid equal to the
upfront payment will result in substantial unsold licenses, or is not a reasonable amount, they
should explain why this is so, and comment on the desirability of a reserve price or minimum
opening bid greater or less than the upfront payment.  

     Comments are due on or before September 12, 1997.  To file formally, parties must file
and original and four copies.  Parties may send comments to the Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal Communications
Commission, Room 5202, 2025 M Street, N.W., Washington, D.C. 20554.  Comments will be
available for public inspection during regular business hours in the FCC Reference Center of the
Federal Communications Commission, Room 239, 1919 M Street, N.W., Washington, D.C.
20554.

     For further information concerning this proceeding, contact Alice Elder at the Auctions
and Industry Analysis Division, Wireless Telecommunications Bureau at (202) 418-0660.


                              - FCC -