******************************************************** 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. 00036-CW-L-96 Wireless Telecommunications Company) Request for Waiver of ) Section 24.711(a)(2) of the ) Commission's Rules Regarding ) Market No. B411 ) 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 Wireless Telecommunications Company (WTC), the winning bidder in Market B411 in Scottsbluff, Nebraska 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 WTC. 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 owed by WTC as of September 24 was $42,993.75. Due to an administrative error and a death in the family of the company's president, WTC failed to make a timely payment. On September 25, 1996, the FCC informed WTC's President, Michael J. Tracy, of WTC's delinquency. The same day, he submitted the remaining balance of $42,993.75 via Federal Express to Mellon Bank, which received the payment on September 26, 1996. On September 26, 1996 WTC also 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 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. WTC contends that its payment was delinquent because of an administrative error and a family death. Specifically, Michael J. Tracy, the president and General Partner of WTC, contends that he received a call from the Commercial Wireless Division stating that the Commission was prepared to grant WTC's C-Block license for Market B411 and that a public notice would be issued on or about "September 16 or 17, 1996." According to Mr. Tracy, WTC was advised that payment would be due within five business days after the release of the public notice. Mr. Tracy also states that during that telephone call, he expressed his view that the timing of the public notice was unfortunate due to the PCS '96 conference in San Francisco and that in his absence he had no one to monitor Public Notices. Mr. Tracy contends that he was told to write a letter explaining his circumstances to the Wireless Telecommunications Bureau. On September 10, 1996 he did send a letter by facsimile asking if the required payment could be sent in before the public notice release. Mr. Tracy states that he never received a response to his inquiry. Furthermore, Mr. Tracy contends that on September 12, 1996, his brother died and he was preoccupied with family matters until September 18, when he left to attend the PCS' 96 conference. Mr. Tracy states that he did not become aware of the public notice until September 25, 1996. Upon his realization that WTC's payment was delinquent, he sent the second down payment by Federal Express which was received by Mellon Bank on September 26, 1996, two days after the due date. 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 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 stated. 7. We believe that WTC 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, WTC made all previously required auction payments on time and in full. In addition, there is no indication in the record that the delinquent payment was part of a deliberate effort by WTC to delay payment. To the contrary, we note that upon receiving notice from the Commission, on September 25, that its account was delinquent, WTC immediately paid the $42,993.75 balance owed. Thus, WTC's actions demonstrate that, but for these circumstances, it would have been able to meet its payment obligations on time. 8. Under the circumstances presented by WTC, 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 WTC'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 WTC 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 WTC is entitled to a complete waiver of the default rules, however. The delinquency that occurred here was the result of WTC's failure to monitor the Commission's public notices. Such an error is the applicant's responsibility, and the circumstances described do not excuse its failure to make a timely payment. Under the circumstances, we conclude that WTC should be subject to a late fee of five percent of the $42,993.75 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 lack of notice of the payment deadline. 10. For the reasons stated above, the request for waiver filed by WIRELESS TELECOMMUNICATION S COMPANY IS HEREBY GRANTED IN PART, subject to a five percent late fee, as specified above. Such late fee of $2,149.70 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