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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 No. 00199-CW-L-96 RFW, Inc. ) Request for Waiver of ) Section 24.711(a)(2) of the ) Commission's Rules Regarding ) Market No. B230 ) 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 R.F.W., Inc. (RFW), the winning bidder in Kirksville, MO, Market B230 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 RFW. 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 RFW as of September 24, 1996 was $14,363.00. Due to an error in calculating the down payment amount, RFW only submitted $12,927.00, leaving a shortfall of $1,436.00. Upon receiving notification of its delinquency by the Commission on September 26, RFW tendered the remaining balance on September 30, 1996 and filed a request for waiver of the second down payment deadline on October 2, 1996. 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 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. RFW argues that it attempted to make a timely payment but mistakenly submitted the wrong amount, calculating the down payment amount as $12,927.00 instead of $14,363.00. RFW contends that when it became aware that the full payment had not been made, it acted to rectify the situation and the remaining balance of $1,436.00 was tendered by wire transfer on September 30, 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 RFW 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, RFW made all previously required auction payments on time and in full. In addition, RFW 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 in calculation. There is no indication in the record that the payment shortfall was part of a deliberate effort by RFW to delay payment. To the contrary, we note that upon receiving notice from the Commission that its account was delinquent, RFW immediately paid the balance owed. Thus, RFW's actions demonstrate that, but for a calculation error, it would have been able to meet its payment obligations on time. 8. Under the circumstance presented by RFW, 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 RFW's conditional license 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 RFW 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 RFW is entitled to complete waiver of the default rule, however. RFW admits that the delinquency that occurred here was the result of a calculation error. Such an error is the applicant's responsibility, and does not excuse its failure to make a timely payment. Under the circumstances, we conclude that RFW should be subject to a late fee of five percent of the $1,436.00 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 provide applicants with notice of the exact amount owed for each applicant's down payment. Therefore, we will not entertain future waiver requests for lack of payment based on alleged "calculation errors." 10. For the reasons stated above, the request for waiver filed by RFW, INC., IS HEREBY GRANTED IN PART, subject to a five percent late fee, as specified above. Such late fee of $71.80 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