******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word 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. ***************************************************************** Federal Communications Commission Washington, D.C. 20554 February 14, 2001 DA 01-385 Fred D. Middleton, Jr. President P.A.W., Inc. 526 Superior Avenue, East #620 The Leader Building Cleveland, Ohio 44144-1900 Re: Eligibility Status of P.A.W., Inc. for the 218-219 MHz Service Restructuring Plan Dear Mr. Middleton: This letter responds to your correspondence on behalf of P.A.W., Inc. ("P.A.W.") requesting reconsideration of the Auctions Finance and Market Analysis Branch ("Branch") determination that P.A.W. is ineligible to participate in the restructuring plan adopted in the Commission's 218-219 MHz Order. P.A.W. contends that it complied with Commission regulations for payments and grace period requests, and therefore is entitled to participate in the Commission restructuring plan. As such, P.A.W. asserts that its failure to make any installment payments should not have resulted in its default and the automatic cancellation of its licenses pursuant to Section 1.2110 of the Federal Communication Commission's ("Commission") rules. Thus, P.A.W. contends that it should be eligible to participate in the 218-219 MHz Service restructuring plan. For the reasons set forth below, we deny P.A.W.'s request. 1. Background On September 10, 1999, the Commission issued the 218-219 MHz Order, which modified the regulations governing the licensing of the 218-219 MHz Service (formerly known as IVDS) to maximize the efficient and effective use of the band. The 218-219 MHz Order, among other measures, modified service and technical rules for the band and extended the license term from five to ten years. The 218-219 MHz Order also announced the Commission's decision to adopt a financial restructuring plan for "Eligible Licensees." Eligible Licensees are licensees that: (i) were current in installment payments as of March 16, 1998; (ii) were less than ninety days delinquent on the last payment due before March 16, 1998; or (iii) had properly filed grace period requests under the former installment payment rules. "Ineligible Entities" are former licensees that made second down payments and: (i) made some installment payments, but were not current in their installment payments as of March 16, 1998, and did not have a grace period request on file in conformance with the former rules; or (ii) entities that never made any installment payments and did not have a timely filed grace period request on file. Ineligible Entities are not entitled to participate in the 218-219 MHz Service restructuring plan as their licenses cancelled automatically. However, Ineligible Entities will be granted debt forgiveness for any outstanding balances owed and will be refunded their previously paid installment payments. In January 2000, in accordance with the rules set forth in the 218-219 MHz Order, current and former 218-219 MHz licensees were notified of their eligibility status with regard to the restructuring plan. P.A.W. was informed that it was an Ineligible Entity. P.A.W. did not meet the eligibility criteria for participation in the 218-219 MHz Service restructuring plan because it never made an installment payment on any of its licenses, and it did not file a timely grace period request. Upon notification of its ineligibility, P.A.W. sought reconsideration of the Branch's decision. In its petition, P.A.W. contends that it had until January 1997, approximately 2 years after grant of its licenses, to file a grace period request. In support of its contention, P.A.W. relies on a document regarding the 218-219 MHz service that appears to be a newsletter produced by a third party, Don Lounibos, who was not a government employee. In addition, P.A.W. relies upon alleged conversations with Commission staff. 2. Discussion P.A.W.'s petition fails to demonstrate that it is eligible to participate in the 218-219 MHz Service restructuring plan. P.A.W. failed to make a single installment payment on its licenses. P.A.W.'s first installment payment was due on January 5, 1996. The Commission's rules in effect at that time provided that any licensee whose installment payment was more than ninety days past due was in default, unless the licensee properly filed a grace period request. Accordingly, in order to avoid automatic cancellation of its licenses, P.A.W. should have filed a grace period request no later than April 4, 1996. P.A.W. does not even assert that it met this deadline. Consequently, P.A.W. went into default and its licenses cancelled automatically. In its petition, P.A.W. fails to present any facts that establish it met the criteria to be an Eligible Licensee. Further, its argument that it had until January 1997 to file a grace period request is legally and factually flawed. P.A.W.'s contention that it had until January 1997 to file a grace period request is unsupported. The Commission, in the 1995 IVDS Omnibus Order, and the Bureau in the IVDS Grace Period PN, cautioned licensees that, in accordance with Section 1.2110(e)(4)(ii) of our Rules, if winning bidders individually required financial assistance, they should request a three- or six-month grace period during the first ninety days following any missed installment payments. The Bureau further cautioned licensees that if a licensee failed to make timely payments the license would be in default if a grace period request had not been filed. The Commission's rules in effect at that time provided for a 90-day non-delinquency period. Any licensee whose installment payment was more than ninety days past due was in default, unless the licensee properly filed a grace period request. Licensees with properly filed grace period requests would not be held in default during the pendency of their requests and the interest accruing would be amortized by adding it to the other interest payments over the remaining term of the license. Upon expiration of any grace period without successful resumption of payment, or upon default with no such request submitted, the license would cancel automatically. In light of the ample notice given to licensees regarding the grace period rules, P.A.W. has failed to support its contention that it had until January of 1997 to file a grace period request. Neither the newsletter attached to the petition, nor the purported conversations P.A.W. personnel had with Commission staff change the obligations of a licensee or the effect of the Commission's rules. The statements of a third party in the newsletter attached to P.A.W.'s petition do not bind the Commission. Accordingly, the newsletter does not support P.A.W.'s contention that it had until January 1997 to file a grace period request. Further, it appears that this newsletter was providing advice to entities relating to a March 1997 installment payment and not the January 5, 1996 installment payment missed by P.A.W. Finally, because the newsletter is dated "February/March 1997," P.A.W. cannot contend that, prior to January 1997, it relied upon the newsletter to determine the date by which it must file a grace period request. P.A.W. also alleges in its affidavit that it held telephone conversations with Commission staff that purportedly led P.A.W. to conclude that the grace period filing deadline was in January 1997. P.A.W. does not offer any details regarding the purported conversation. Even assuming such phone conversations occurred, it would not change the result here because the Commission would not be bound by erroneous advice given by a staff member. This is especially true here as the Commission repeatedly indicated to licensees the consequence of failing to make timely payments. Finally, in its Petition, P.A.W. notes that it filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court, Northern District of Ohio, on February 28, 1996. The bankruptcy court dismissed P.A.W.'s petition on December 3, 1996. Although P.A.W. did not argue that the bankruptcy should be taken into consideration here, we note that filing for bankruptcy did not relieve P.A.W. from its obligation to make installment payments, or to file a request for a grace period, if it was experiencing financial difficulty. 3. Conclusion For the reasons detailed above, we find that P.A.W. has not timely filed a grace period request with the Commission. Nor does P.A.W. otherwise meet the requirements for "Eligible Licensee" status for participation in the 218-219 MHz Service restructuring plan. Accordingly, P.A.W.'s petition for reconsideration of the Branch's decision regarding P.A.W.'s eligibility to participate in the 218-219 MHz Service restructuring plan is DENIED. This action is taken pursuant to sections 1, 4(i), 4(j), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.  151, 154(i), 154(j), 303(r), and the authority delegated pursuant to section 0.331 of the Commission's Rules, 47 C.F.R.  0.331. Sincerely, Margaret Wiener Chief Auctions and Industry Analysis Division Wireless Telecommunications Bureau