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File how2ftp (.txt & .wp) is in directory /pub/Bureaus/Miscellaneous/Public_Notices/ ***************************************************************** ******** Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 96-811 In the Matter of) ) Emergency Petition for Waiver ) of Deadline for Submission of ) Down Payment for the Broadband PCS ) C Block Auction filed by BDPCS, Inc. ) ORDER Adopted: May 17, 1996Released: May 20, 1996 By the Chief, Wireless Telecommunications Bureau 1. On May 15, 1996, BDPCS, Inc. (BDPCS) filed an Emergency Petition for Waiver (Petition), seeking a limited waiver of Section 24.711(a)(2) of the Commission's Rules governing the deadline for submission of down payments for the broadband PCS C block auction. For the reasons stated below, BDPCS's Petition is denied. 2. Background. On May 6, 1996, the Federal Communications Commission (FCC) completed its auction of 493 licenses to provide broadband Personal Communications Services (PCS) on the C block in the 2 GHz band. On May 8, 1996, the FCC announced, by Public Notice, that the initial down payment of five percent of net winning bids was due from all winning bidders on or before Wednesday, May 15, 1996. At the conclusion of the auction, BDPCS was the high bidder on 17 licenses with total net bids of $873,783,912.75. To comply with the Commission's down payment requirement, BDPCS was obligated to supplement its $7 million upfront payment with an additional deposit of $36,689,196. 3. BDPCS Petition. BDPCS claims that, although it had made arrangements to satisfy its down payment obligations, they unexpectedly fell through at the last minute and it could not secure alternate financing by the May 15 down payment deadline. Specifically, BDPCS maintains that its parent company, QuestCom, had entered into discussions with US West Communications (USWC) for a bridge loan to cover the required down payment. BDPCS states that QuestCom intended to repay the bridge loan after completing an initial public offering that Merrill Lynch had agreed to underwrite. BDPCS alleges that QuestCom also sought financing from an unnamed financial institution, which it claims is a branch of one of the world's largest financial institutions. 4. By way of background, BDPCS details that on April 30, 1996, USWC informed QuestCom that it would only be able to fund one-half of QuestCom's cash requirements. USWC subsequently informed QuestCom on May 2 that it would not be able to provide any loan to QuestCom. In addition, on May 6, Merrill Lynch withdrew as the lead underwriter for QuestCom's planned initial public offering. Despite QuestCom's subsequent efforts to obtain financing, including discussions with USWC and the unnamed institution, BDPCS states that it was unable to raise sufficient funds to make the down payment. BDPCS reports that QuestCom has since selected Bear Stearns to serve as their lead investment banker and has the financial capability to attract capital for the deployment and operation of its PCS systems. BDPCS requests a 30-day extension to make its $36,689,196 down payment. 5. Discussion. Section 24.819(a)(1) of the Commission's Rules provides that a waiver of Part 24 of the Commission's Rules is appropriate when a petitioner demonstrates (1) 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 (2) that the unique facts and circumstances of a particular case render the rule inequitable, unduly burdensome or otherwise contrary to the public interest, and there is no reasonable alternative). Because BDPCS fails to make the required showing, we are denying its request for waiver. Specifically, we find that BDPCS has not shown that special circumstances warrant a deviation from the general rule and that such a deviation would serve the public interest. 6. For more than one month, BDPCS had substantial notice that the C block auction was coming to a close and that the initial down payment obligation would soon become due. The C block auction entered its third and final stage on April 1. Thereafter, we gradually increased the number of bidding rounds per day, and bidding eventually slowed on nearly all of the 493 licenses. During the course of the auction, nearly all of the 89 winning bidders were able to secure financing in order to satisfy their down payment obligations when they became due on Wednesday, May 15, 1996. We therefore are not persuaded that BDPCS's last-minute difficulties in arranging its financing warrant deviation from our general rules. As we have previously stated, "[t]he Commission ... cannot be responsible for the private business arrangements that an applicant has made to finance its successful bid." 7. Our down payment provisions are intended to ensure that auction winners have the financial ability to complete payment for the license and to pay for the costs of constructing a broadband PCS system. See Implementation of Section 309(j) of the Communications Act -- Competitive Bidding, Fifth Report and Order, 9 FCC Rcd 5532. Failure to satisfy our initial down payment requirements may indicate that a winning bidder would not be able to meet its subsequent down payment, installment payment and build out obligations. Consistent with the Commission's efforts to ensure that an applicant is financially qualified to satisfy its obligations as a licensee, we have strictly adhered to our upfront and down-payment requirements. See, e.g., Letter to Jeffrey J. Pepin, United Wireless from Kathleen O'Brien Ham, Chief, Auctions Division (Dec. 12, 1995); In the Matter of Interactive Video and Data Service Licenses Requests to Extend Payment Deadline, Order, 10 FCC Rcd 4520 (1995). Because BDPCS failed to meet its initial down payment requirement, we have reason to doubt that BDPCS would be able to fulfill its additional down payment, installment payment and build-out obligations. 8. Accordingly, IT IS ORDERED that the Emergency Petition for Waiver filed by BDPCS on May 15, 1996, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Michele C. Farquhar Chief, Wireless Telecommunications Bureau