FCC Record, Volume 27, No. 6, Pages 4697 to 5673, April 30 - May 22, 2012 Page: 4,776
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long-form application - by the applicable deadline and consistent with other requirements of the long-
form application process - and failure to do so constitutes an auction default.264 In addition, a
performance default occurs when a winning bidder that the Commission has authorized to receive support
fails to meet its minimum coverage requirement or adequately comply with quality of service or any other
requirements upon which support was granted.265
1. Auction Default Payment
184. Any winning bidder that fails to timely file a long-form application, is found ineligible or
unqualified to receive Mobility Fund support, has its long-form application dismissed, or otherwise
defaults on its bid or is disqualified for any reason after the close of the auction and prior to the
authorization of support for each winning bid will be subject to an auction default payment.266 Agreeing
to such payment in event of a default is a condition for participating in bidding.267 In the event of an
auction default, we will assess a default payment of five percent of the total defaulted bid.
185. In the USF/ICC Transformation Order, the Commission determined that a default
payment is appropriate to ensure the integrity of the auction process and safeguard against costs to the
Commission and the USF. The Commission left it to the Bureaus to consider methodologies for
determining such a payment, but specified that if the Bureaus established a default payment to be
calculated as a percentage of the defaulted bid, that percentage was not to exceed 20 percent of the total
amount of the defaulted bid.268 Accordingly, in the Auction 901 Comment Public Notice, the Bureaus
proposed an auction default payment of five percent of the total defaulted bid.269 The Bureaus also sought
comment on alternative methodologies, such as basing the auction default payment on the difference
between the defaulted bid and the next best bid to cover the same number of road miles as without the
default. The Bureaus further sought cormnent on whether, prior to bidding, all applicants for Auction 901
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.270
186. Commenters supported the Bureaus' proposal for a rate of five percent of the total
defaulted bid.27' AT&T urges the Bureaus to consider adopting a higher figure, such as ten percent,
saying that if the penalty percentage is too low it will not serve as a sufficient deterrent.272 Other
commenters suggest a less "punitive" approach or ask the Bureaus to refrain from enforcing default
payments except in cases of "egregious" failure, such as the failure to submit any long-form
264 USF/ICC Transformation Order, 26 FCC Rcd at 17808 para. 436; 47 C.F.R. 1.21004(a).
265 47 C.F.R. 54.1007(c).
266 47 C.F.R. 1.21004.
267 USF/ICC Transformation Order, 26 FCC Rcd at 17813-14 paras. 458-460.
268 Id. at 17814 para. 460.
269 Auction 901 Comment Public Notice, 27 FCC Red at 545-46 para. 61.
270 Id. at 546 para. 62.
271 ACS Comments at 6; RTG Comments at 7 (suggests that it should be added to bid amount and included in LOC).
272 AT&T Comments at 18-19. See also Verizon Comments at 4-5 (apparently conflating auction default and
performance default payments, but suggesting a penalty in the 25 percent range, because a five percent penalty is too
low and "unlikely to deter gamesmanship in the bidding process.")4776
Federal Communications Commission
DA 12-641
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United States. Federal Communications Commission. FCC Record, Volume 27, No. 6, Pages 4697 to 5673, April 30 - May 22, 2012, book, May 2012; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc111168/m1/96/: accessed March 28, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.