NEWSReport No. DC- 2655 ACTION IN DOCKET CASE            September 22, 1994

        INSTALLMENT PAYMENTS ADOPTED FOR WOMEN AND MINORITY-OWNED
         BUSINESSES FOR OCTOBER 26 REGIONAL NARROWBAND AUCTIONS;
                          DEFINITION CLARIFIED
                            (PP DOCKET 93-253)

     On its own motion, the Commission has amended the rules governing the October 26,
1994, regional narrowband PCS auction to permit installment payments for women and minority-
owned businesses who are successful bidders.   The Commission also clarified its definition of
businesses owned by women and minorities.

     The Commission said that it has been aware of the funding problems faced by minority
and woman-owned businesses and that these problems, combined with the potentially high cost
of purchasing a regional narrowband PCS license at auction, erected a significant hurdle for
these entrepreneurs.  Because of this, the Commission has already adopted a 40 percent bidding
credit for two regional narrowband PCS licenses in each of the five regions.  The Commission
said that allowing these applicants to pay for their licenses over time would go a long way
toward overcoming barriers to entry and would provide more meaningful opportunities for
designated entities bidding in the upcoming regional auctions.

     Therefore the Commission adopted an installment payment plan for women and/or
minority-owned businesses that obtain a regional narrowband PCS license on Channels 13 and
17.  Similar to the installment payments for larger entities in the entrepreneurs' blocks for
broadband PCS auctions, the plan provides for:

     -- Interest charges to be fixed at the time of licensing at the rate for 10-year U.S.
Treasury obligations, plus 2.5 percent;

     --  Interest- only payments  for the first two years, with principal and interest payments
amortized over the remaining years of the license; 

     --  Payment of only half of the down payment (or 10 percent of the bid price) five
business days after close of the auction with the remaining 10 percent deferred until five days
after grant of the license. 



                                  (over)


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     In the Third Memorandum and Order in this proceeding the Commission adopted a new
definition for minority/women-owned businesses but neglected, however, to explain this change
in course.  Therefore, it has now clarified its rule.  The new definition requires an applicant
owned by women and/or minorities to establish a "control group" consisting entirely of women
or minorities that has both de jure and de facto control of the applicant.  It then gives the
applicant two options for taking on passive investors.  Under the first option a single investor
may hold as much as 49.9 percent of the applicant's passive equity if the control group holds
at least 50.1 percent of the total equity.  The second option allows the control group to reduce
its equity stake to 25 percent provided that no single other investor holds more than 25 percent
of the applicant's passive equity.  Under either option, the control group must control the
applicant and, in the  case of a corporation, hold at least 50.1 percent of the voting stock.  For
partnerships, all general partnership interest will be considered to be part of the control group. 

     This revised definition reduces the opportunity for fronts and helps ensure that only bona
fide designated entities will be able to take advantage of the 40 percent bidding credit and the
installment payments offered in the regional narrowband auctions.

     The Commission also clarified that it was departing from the provision in the Second
Report and Order that bars publicly traded companies from qualifying as minority and women-
owned businesses.  It said that prohibition was based on the assumption that companies traded
on the public market would not require government-sponsored measures to succeed in spectrum
auctions.  The high prices paid for the nationwide narrowband PCS licenses in the July 1994
auctions,  however, led the FCC to conclude that even publicly traded companies owned by 
women and minorities will require bidding credits and installment payments to participate
successfully in the regional auction.  

     Action by the Commission September 22, 1994, by Order on Reconsideration (FCC 94-
240).  Chairman Hundt, Commissioners Quello, Ness and Chong, with Commissioner Barrett
not participating. 

                                                                                         - FCC -

     News Media contact: Rosemary Kimball at (202) 418-0500.
     Office of General Counsel contact: Peter Tenhula at (202) 418-1720.