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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 ) ) File Nos. 00063-CWL-96 Roberts-Roberts & Associates, LLC) 00498-CWL-96 ) 00502-CWL-96 Request for Waiver of ) 00506-CWL-96 Section 24.711(a)(2) of the ) 00510-CWL-96 Commission's Rules Regarding ) 00552-CWL-96 Various BTA 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 24.711(a)(2) of the Commission's rules filed by Roberts-Roberts & Associates, LLC (Roberts), the winning bidder for six Basic Trading Area (BTA) markets in the Broadband C Block Personal Communications Services (PCS). On September 17, 1996, the Wireless Telecommunications Bureau released a Public Notice conditionally granting various applications for BTA licenses in the C Block, including those filed by Roberts. In that Public Notice, applicants were notified that grant of each license was conditioned on payment within five business days of the remaining portion of the ten percent down payment due on the license. Accordingly, the second down payment was due on September 24, 1996. 2. The down payment amount owed by Roberts as of September 24 was $383,475. Due to an accounting error, Roberts paid only $335,481.75, leaving a shortfall of $47,933.25. The Commission staff notified Roberts of this delinquency on September 26, 1996. Upon receiving this notification, Roberts submitted the remaining balance of $47,933.25 by wire transfer to Mellon Bank and filed a request for waiver of the second down payment deadline. On September 27, Roberts filed a supplement to its waiver request, which further explained the events surrounding its delinquency. 3. On October 18, 1996, the Wireless Telecommunications Bureau and the Mass Media Bureau released a joint Public Notice seeking comment on Robert's request and several other down payment waiver requests by C Block, 900 MHz Special Mobilized Radio (SMR), and Multipoint Distribution Services (MDS) applicants. Most of the waiver applicants filed comments supporting grant of waivers under the circumstances described. However, four out of 27 commenters urged the Commission to deny the requests on the grounds of fairness and on the basis that such defaults are evidence of bad faith. II. DISCUSSION 4. The procedure for the submission of winning bid down payments is set forth in Section 24.711(a)(2) of the Commission's rules: Each winning bidder 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 upfront 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 after the application required by  24.809(b) is granted. 5. Roberts argues that its payment was deficient because of an error its accountant made in computing the required down payment amount. Specifically, Roberts states that in calculating the second down payment, its accountant confused the upfront payment amounts previously paid to the Commission with the actual down payment due for each BTA. As a result, Roberts submitted an insufficient down payment to the Commission. Roberts asserts that its CEO and Chairman, Michael V. Roberts, assumed that the dollar amounts per BTA calculated by the accountant were the same amounts as those made previously at the close of the auction to satisfy Roberts' initial down payment obligation, and that Mr. Roberts did not review the figures prior to ordering payment. 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 Roberts 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, Roberts made all previously required auction payments on time and in full. In addition, Roberts paid a substantial portion of the second down payment amount by the September 24 payment deadline, and its failure to pay the balance was due to an error by its accountant. There is no indication in the record that the payment shortfall was part of a deliberate effort by Roberts to delay payment. To the contrary, we note that upon receiving notice from the Commission that its account was delinquent, Roberts immediately paid the $47,993.25 balance owed. Thus, Roberts' actions demonstrate that, but for an accounting error, it would have been able to meet its payment obligations on time. 8. Under the circumstances presented by Roberts, we conclude that the public interest would not be served by rigid enforcement of the second down payment deadline, which would result in cancellation of Roberts' conditional licenses and imposition of a substantial default penalty. 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 Roberts was not a financially unqualified applicant attempting to "shop" its licenses to investors. We also recognize that unlike the upfront and first down payments, the second down payment does not affect the timing of the auction or the Commission's review of the 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 a license conditionally granted, some flexibility may be appropriate in addressing a minor delinquency with respect to the final down payment. 9. We do not believe that Roberts is entitled to a complete waiver of the default rules, however. Roberts admits that the delinquency that occurred here was the result of its accountant's error. Such an error is the applicant's responsibility, and does not excuse its failure to make timely payment. Under the circumstances, we conclude that Roberts should be subject to a late fee of five percent of the $47,993.25 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 insufficient payment based on alleged "accounting errors" in calculating the amount of payment. 10. For the reasons stated above, the request for waiver filed by Roberts-Roberts & Associates, LLC is hereby GRANTED IN PART, subject to a five (5) percent late fee, as specified above. Such late fee of $2,399.66 must be paid within five business days after the release of this order. This action is taken under delegated authority pursuant to Section 0.331 of the Commission's rules. Michele C. Farquhar Chief, Wireless Telecommunications Bureau