******************************************************** 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 ) ) File No. 00551-CW-L-96 Southern Communications Systems, Inc.) Request for Waiver of ) Section 24.711(a)(2) of the ) Commission's Rules Regarding ) Market No. B085 ) ORDER Adopted: February 4, 1997 Released: February 4, 1997 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION AND BACKGROUND 1. By this Order, we resolve a request for waiver of Section 24.711(a)(2) of the Commission's rules filed by Southern Communications Systems, Inc., (SCS), the winning bidder in market number B085 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 SCS. In that Public Notice, applicants were notified that grant of each license is 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 SCS as of September 24 was $25,313.00. However, SCS was unaware of the release of the Public Notice and thus did not make a timely payment. Upon notification of its delinquency by Commission staff, SCS filed a request for waiver of the second down payment deadline and submitted the balance due on September 25, 1996, one day after payment was due. 3. On October 18, 1996, the Wireless Telecommunications Bureau and the Mass Media Bureau released a joint Public Notice seeking comment on several other down payment waiver requests by C Block, 900 MHz Specialized Mobile Radio (SMR), and Multipoint Distribution Service (MDS) applicants. Most of the waiver applicants filed comments supporting the 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. SCS argues that it did not receive the public notice and was therefore unable to make the payment in a timely manner. SCS asserts that when it became aware that the payment had not been made, it acted to rectify the situation and payment was tendered on September 25, 1996. 6. To receive a waiver of the down payment rule, a waiver request must be made which demonstrates 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 having payment obligations on winning bids promptly met. 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 SCS 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, SCS made all previously required auction payments on time and in full. In addition, SCS paid the second down payment as soon as it realized its error. There is no indication in the record that the payment delinquency was part of a deliberate effort by SCS to delay payment. We note that upon receiving notice from the Commission that its account was delinquent, SCS immediately paid the balance due. Thus, SCS's actions demonstrate that, but for an administrative error, it would have been able to meet its payment obligations on time. 8. Under the circumstances presented by SCS, 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 SCS's 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 SCS 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 SCS is entitled to a complete waiver of the default rules, however. SCS admits that the delinquency occurred because it was unaware of the Public Notice setting the payment deadline. Such an error is the applicant's responsibility, and failure to monitor the Commission's Public Notice releases does not excuse SCS's failure to make a timely payment. Under the circumstances, we conclude that SCS should be subject to a late fee of five percent of the $25,313.00 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 notify applicants directly of the exact amount owed for each applicant's down payment. Therefore, we will not entertain future waiver requests based on alleged lack of notice of the payment deadline. 10. For the reasons stated above, the request for waiver filed by Southern Communication Systems, Inc. IS HEREBY GRANTED IN PART, subject to a five percent late fee, as specified above. Such late fee of $1,265.65 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