******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Cenkan Towers, L.L.C. ) File Nos. D031500 ) D031499 Request for Waiver of ) D031498 Section 90.811 of the ) D031497 Commission's Rules Regarding ) D031496 Various MTA Markets ) ORDER Adopted: February 4, 1997 Released: February 4, 1997 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION AND BACKGROUND 1. By this Order, we partially grant a request for waiver of Section 90.811 of the Commission's rules filed by Cenkan Towers, L.L.C. (Cenkan), the winning bidder for five Major Trading Area (MTA) markets in the 900 MHz Specialized Mobile Radio (SMR) service. On June 28, 1996, the Wireless Telecommunications Bureau released a public notice notifying applicants that the Bureau was prepared to award applications for MTA licenses in the 900 MHz SMR service, including those filed by Cenkan. In that public notice, applicants who qualified as small businesses were required to submit additional funds to bring their total deposits with the government to ten percent of their net winning bids by July 8, 1996. 2. The down payment amount owed by Cenkan as of July 8, 1996 was $19,282.68. Cenkan failed to make payment on July 8, 1996, and the Commission staff notified Cenkan of its delinquency on July 23, 1996. On July 31, 1996, Cenkan submitted the amount due by wire transfer to Mellon Bank and filed a request for waiver of the second down payment deadline. 3. On October 18, 1996, the Wireless Telecommunications Bureau and the Mass Media Bureau released a joint public notice seeking comment on the above applicants' requests for waiver and several other down payment waiver requests filed by C Block, 900 MHz SMR, and MDS applicants. Most of the waiver applicants filed comments supporting grant of waivers under the circumstances described. II. DISCUSSION 4. The procedure for the submission of winning bid down payments is set forth in Section 90.811 of the Commission's rules: Each winning bidder that qualifies as a small business shall make a down payment equal to ten percent of its winning bid (less applicable bidding credits); a winning bidder shall bring its total amount on deposit with the Commission (including up-front payment) to five percent of its net winning bid within five business days after the auction closes, and the remainder of the down payment (five percent) shall be paid within five business days following Public Notice that the Commission is prepared to award the license. 5. Cenkan acknowledges that it missed the second down payment deadline, but notes that it had previously paid the Commission an up-front payment that more than covered the down payment amount ultimately owed. After the Commission announced the winning bidders, it refunded a portion of the up-front payment to Cenkan. Cenkan contends that its subsequent failure to pay the second down payment was inadvertent, because it assumed the Commission would retain sufficient funds to cover any remaining payments. Cenkan also states that it believed the Commission would notify it directly of any payment obligations. 6. To receive a waiver of the down payment rule, a waiver request must demonstrate either "that the underlying purpose of the rule will not be served, or would be frustrated, by its application in a particular case, and that grant of the waiver is otherwise in the public interest;" or "that the unique facts and circumstances of a particular case render application of the rule inequitable, unduly burdensome or otherwise contrary to the public interest." As the Commission has previously noted, the integrity and functioning of the auction process is dependent on winning bidders meeting their down payment obligations promptly. Timeliness of such payments is a necessary indication to the Commission that the winning bidder is financially able to meet its obligations on the license and intends to use the license for the provision of services to the public. In the Second Report and Order in the Competitive Bidding docket, the Commission noted that this requirement would also deter defaults by discouraging insincere or financially unqualified bidders from "shopping" a winning bid in order to obtain financing for a down payment. 7. We believe that Cenkan has presented sufficient facts to meet the standard for a partial waiver of the down payment rule. The record indicates that prior to the second down payment, Cenkan made all previously required auction payments on time and in full. There is no indication in the record that the payment shortfall was part of a deliberate effort by Cenkan to delay payment. To the contrary, prior to the refund of a portion of its up-front payment, Cenkan had sufficient funds on deposit with the Commission to cover its second down payment. In addition, we note that upon receiving notice from the Commission that its account was delinquent, Cenkan paid the balance owed. 8. Under the circumstances presented by Cenkan, we conclude that the public interest would not be served by rigid enforcement of the second down payment deadline, which would result in denying Cenkan licenses that it won at auction and imposition of a substantial default payment. In reaching this conclusion, we give considerable weight to the applicant's prior record of compliance, its good faith efforts to make payment on time, and its prompt action to remedy the delinquency. These facts indicate that Cenkan was not a financially unqualified applicant attempting to "shop" their licenses to investors. We also recognize that unlike the up-front and first down payments, the second down payment does not affect the timing of the auction or the Commission's review of these applicant's qualifications. Thus, while we have consistently denied requests to waive these earlier payment deadlines, we believe that once the first down payment is made and applicants have already proven an ability to meet their financial obligations, some flexibility may be appropriate in addressing a minor delinquency with respect to the final down payment. 9. We do not believe that Cenkan is entitled to a complete waiver of the default rules, however. Cenkan admits that the delinquency occurred because it was unaware of the Public Notice announcing the payment deadline. Such an error is the applicant's responsibility, and does not excuse its failure to make timely payment. Under the circumstances, we conclude that Cenkan should be subject to a late fee of five percent of the amount that was not timely paid. This amount is commercially reasonable and serves to underscore the importance of making timely payment of all auction payments. In addition, for future auctions, we intend to provide applicants with notice of the exact amount owed for each applicant's down payment. Therefore, we will not entertain future waiver requests for alleged lack of awareness of Commission public notices. 10. For the reasons stated above, the request for waiver filed by Cenkan Towers, L.L.C is hereby GRANTED IN PART, subject to a five (5) percent late fee, as specified above. Such late fee of $964.12 must be paid within five business days after the release of this order. Grant of each license is expressly conditioned on timely payment of the late fee and timely execution of a security agreement commemorating the Commission's security interest in the license in the event of default. This action is taken under delegated authority pursuant to Section 0.331 of the Commission's rules. Michele C. Farquhar Chief, Wireless Telecommunications Bureau