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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

In the Matter of                )
                                )  File No.  00159-CW-L-96
MFRI, Inc.                      )            
Request for Waiver of           )            
Section 24.711(a)(2) of the     )            
Commission's Rules Regarding    )            
Market No. B435                 )


                             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 MFRI, Inc. (MFRI), the winning bidder in Market B435 in
Stroudsburg, Pennsylvania 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 MFRI.  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 MFRI as of September 24 was $81,450.00. 
MFRI attempted to make payment but was unable to tender the payment on or before the due
date due to internal administrative errors.  MFRI realized its mistake and tendered payment on
September 25, one day late.  On September 26, 1996, MFRI submitted a request for waiver of
the second down payment deadline explaining the reasons for its delinquency.  

     3.  On October 18, 1996, the Wireless Telecommunications Bureau and the Mass Media
Bureau released a joint Public Notice seeking comment on MFRI's request and 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.  MFRI argues that it attempted to make a timely payment on Monday, September 23,
1996 by wiring the money to Mellon Bank.  However, the wire transfer was not successful
because MFRI neglected to transfer funds to cover the payment from its money market account
to its checking account.  MFRI contends that it had over $81,450.00 in its money market
account.  MFRI also explained that the checking account is the only account from which wire
transfers are authorized.  In addition, MFRI argues that many of its key employees were out of
town and its voice mail system malfunctioned so that no-one could be reached by Mellon Bank. 
MFRI states that upon realizing that its payment had not been made on September 25, 1996, it
promptly tendered full payment.

     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 MFRI 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,
MFRI made all previously required auction payments on time and in full.  In addition, MFRI
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 MFRI to delay payment.  
In fact, MFRI submitted a declaration from the Mellon Bank affirming the fact that MFRI had
the funds available to make the payment.  We note that upon receiving notice from the
Commission that its account was delinquent, MFRI immediately paid the balance due.  Thus,
MFRI'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 MFRI, 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 MFRI'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 MFRI 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 MFRI is entitled to a complete waiver of the default rules,
however.  MFRI admits that the delinquency occurred here was the result of its own
administrative 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 MFRI should be subject
to a late fee of five percent of the $81,450.00 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 "administrative errors." 

     10.  For the reasons stated above, the request for waiver filed by MFRI IS HEREBY
GRANTED IN PART, subject to a five percent late fee, as specified above.  Such late fee of
$4,072.50 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