FCC Record, Volume 28, No. 4, Pages 2764 to 3699, March 18 - March 29, 2013 Page: 2,780
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Federal Communications Commission
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. We note that this proposal is the same percentage instituted for
51. We seek comment on this proposal. We ask commenters to assess whether our 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 our analysis? We also seek comment on whether we 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.81 Commenters advocating such
an approach should explain with specificity how such an approach might work under the options we
present for auction design. In addition, we 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.82 We 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.
2. Performance Default Payment
52. 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.83 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." We 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.
53. We 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, our 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
80 See Auction 901 Procedures Public Notice, 27 FCC Red at 4777, para. 187.
81 USF/ICC Transformation Order, 26 FCC Red at 17814, para. 460.
82 ld.; see also 47 C.F.R. 1.21001(c).
83 USF/ICC Transformation Order, 26 FCC Red at 17811, 17814, paras. 447, 461.
84 See 47 C.F.R. 54.1006(f).
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United States. Federal Communications Commission. FCC Record, Volume 28, No. 4, Pages 2764 to 3699, March 18 - March 29, 2013, book, March 2013; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc177414/m1/33/: accessed October 22, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.