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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 ) ) McElroy Electronics Corporation ) FCC File No. 02613-CL-MP-89 For Authority to Serve Unserved Areas in) Metropolitan Statistical Area Market No. 15) Minneapolis-St. Paul, Minnesota ) MEMORANDUM OPINION AND ORDER Adopted: March 13, 1997 Released: March 13, 1997 By the Chief, Wireless Telecommunications Bureau I. INTRODUCTION 1. By this Order, we grant the amended application of McElroy Electronics Corporation ("McElroy") to serve unserved areas of the Minneapolis-St. Paul Metropolitan Statistical Area ("Minneapolis MSA"). In 1996, this matter, along with related unserved area applications in the Los Angeles MSA, was remanded to the Commission by the U.S. Court of Appeals for the D.C. Circuit. Pursuant to the court's instructions on remand, we determine the rights of McElroy as the sole remaining applicant for the Minneapolis MSA. We also resolve an outstanding Petition to Deny that was filed against McElroy's original application by CGSA Cellular Partnership-Minneapolis ("CGSA-Minneapolis"), as well as Comments filed by McCaw Cellular Communications, Inc. ("McCaw") with respect to McElroy's financial qualifications. For the reasons set forth below, McElroy's application is granted, CGSA-Minneapolis's Petition is denied, and McCaw's Comments are dismissed. II. BACKGROUND 2. On January 11, 1989, McElroy filed an application for unserved areas in Market 15 (Block A) in the Minneapolis MSA. The application was accepted for filing on February 6, 1989. On March 9, 1989, a Petition and Comments were filed, respectively, by CGSA-Minneapolis and McCaw, both of whom had filed competing applications for the Minneapolis license. Both the Petition and the Comments challenged McElroy's financial qualifications, noting that questions had been raised by the Commission concerning the ability of McElroy's equipment vendor and financial backer, NovAtel Communications, Ltd. ("NovAtel"), to meet NovAtel's financial commitments to several Rural Statistical Area ("RSA") applicants. 3. On March 24, 1989, McElroy filed a Consolidated Reply to the Comments and Petition ("Reply"), stating that NovAtel's commitment to McElroy was separate and distinct from commitments made in the RSA markets. McElroy further noted that NovAtel's commitment for the Minneapolis MSA was specifically authorized and financially supported by one of NovAtel's parents, Alberta Government Telephones, which had committed up to $2 million for this particular application. Finally, McElroy argued that neither the Petition nor the Comments raised specific allegations relating to McElroy's financial showing in the Minneapolis MSA, but rather only raised questions by reference to an inquiry instituted by the Commission relating to separate RSAs. These questions, according to McElroy, were insufficient to bring McElroy's financial qualifications into question. 4. On April 10, 1989, the Chief of the Common Carrier Bureau dismissed the applications of McElroy, CGSA-Minneapolis, and McCaw as premature. The full Commission subsequently affirmed the dismissal. McElroy challenged this dismissal in the U.S. Court of Appeals for the D.C. Circuit. After considering McElroy's challenge, the Court remanded the case to the Commission with instructions to reinstate McElroy's application nunc pro tunc. 5. In December 1992, during the pendency McElroy's court appeal, the Commission issued a public notice announcing application procedures for cellular unserved areas. By this public notice, the Commission established a March 10, 1993 one-day filing window within which applicants could file their unserved area applications for the Minneapolis MSA, as well as for the Los Angeles and Phoenix MSAs. In March 1993, pursuant to the Court's remand, the Commission reinstated McElroy's application nunc pro tunc as of the date the application was originally filed. However, the Commission included the reinstated McElroy application with 494 other applications that had been filed for the Minneapolis MSA during the March 10, 1993 one-day filing window. McElroy appealed the Commission's decision to include its application with the March 10 applications to the U.S. Court of Appeals for the D.C. Circuit. In 1996, the Court remanded the case to the Commission with instructions to: (i) dismiss the March 10 applications as untimely; and (ii) determine the rights of McElroy, the sole remaining applicant in the Minneapolis MSA. 6. On November 5, 1996, the Wireless Telecommunications Bureau released a public notice establishing procedures for carrying out the Court's mandate for licensing cellular service in unserved areas of the Minneapolis MSA. On December 4, 1996, McElroy filed an amended unserved area application for the Minneapolis MSA under 47 C.F.R.  1.65. In its amended application, McElroy updated its financial qualification showing by replacing the original financial commitment of NovAtel with a $2 million commitment from NovAtel's successor, the Harris Access Division of Harris, Inc. III. DISCUSSION 7. At the outset, we note that McElroy is the sole remaining applicant in the Minneapolis MSA. CGSA-Minneapolis and McCaw have long since abandoned their original applications. Nevertheless, because CGSA-Minneapolis's Petition and and McCaw's Comments remain pending, we address the issues raised therein with respect to McElroy's financial qualifications. 8. First, in reviewing McElroy's 1989 application, under Sections 22.913(a)(7) and 22.917 of the Commission's Rules, we are satisfied that McElroy was financially qualified when it originally filed. The Commission generally requires applicants to provide either a "reasonable assurance" of the availability of funds or a firm financial commitment. In this case, McElroy supplied a firm financial commitment letter for $2 million from NovAtel. The $2 million commitment made to McElroy was fully independent of other commitments NovAtel had in other RSAs. In addition, NovAtel's parent had assets ($2.3 billion) that more than covered the proposed cost of constructing McElroy's proposed cellular system. Neither CGSA-Minneapolis nor McCaw has raised any specific allegation of fact that would cause us to conclude that this original financial commitment was defective. 9. Aside from McElroy's original financial showing, in its amended application, McElroy has provided an updated commitment letter from the Harris Wireless Access Division ("Harris"), the successor to NovAtel. Neither CGSA-Minneapolis nor McCaw has challenged the ability of Harris to finance the cellular system proposed by McElroy. We further find that McElroy should be permitted to amend its application to update its financial commitment letter and to name Harris as its financial backer. Given the unique circumstances surrounding this case, the length of the application's pendency and the successive Court appeals, we believe that substitution is proper and does not render McElroy's application defective. We believe that McElroy will have adequate financing to build its proposed system, and that the grant of the license to McElroy is in the public interest. In addition, we find that CGSA-Minneapolis's Petition and McCaw's Comments are now moot. 10. Therefore, IT IS ORDERED that, pursuant to Sections 4(i) and 309(a) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), 309(a), and by delegated authority under Section 0.331 of the Commission's Rules, 47 C.F.R.  0.331, the application of McElroy Electronics Corporation is GRANTED, the Petition to Deny filed by CGSA Cellular Partnership- Minneapolis on March 9, 1989 is DENIED, and the Comments of McCaw Cellular Communications, Inc. filed on March 9, 1989 are DISMISSED. FEDERAL COMMUNICATIONS COMMISSION Michele C. Farquhar Chief, Wireless Telecommunications Bureau