NOTICE ************************************************************************* NOTICE ************************************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file pnmc5021. File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of DCR PCS, Inc. Application for Broadband PCS C Block License in BTA 320 -- New Orleans, Louisiana Application for Broadband PCS C Block License in BTA 195 -- Houma-Thibodaux, Louisiana In re Application of Meretel Communications, L.P. Application for Broadband PCS C Block License in BTA 032 -- Baton Rouge, Louisiana ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) File No. 00318CWL96 File No. 00344CWL96 File No. 00176CWL96 ORDER Adopted: November 1, 1996 Released: November 4, 1996 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION 1. In three Petitions to Deny, filed July 1, 1996, Radiofone, Inc. ("Radiofone") asks the Commission to dismiss or deny three applications for licenses in the Personal Communications Services (PCS) C block: (1) the application of DCR PCS Inc ("DCR") for the New Orleans Basic Trading Area (BTA); (2) DCR's application for the Houma-Thibodaux, Louisiana BTA; and (3) the application of Meretel Communications, L.P ("Meretel") for the Baton Rouge BTA. Radiofone contends that the applications should be denied based upon Radiofone's prior challenge and pending appeal of Commission actions affecting its eligibility to bid for C block markets where it is also a cellular licensee. Because Radiofone's contentions do not pertain to either the qualifications of Meretel and DCR or to the merits of their applications, we deny Radiofone's petitions. II. BACKGROUND 2. Radiofone, a cellular telephone licensee in portions of southeastern Louisiana, sought to participate in the C block auction in order to obtain an additional 30 MHz PCS block in those same areas. Because Radiofone already holds 25 MHz of cellular spectrum, however, its plan to obtain a C block license potentially violates both the cellular/PCS cross-ownership rule and the 45 MHz spectrum cap on broadband Commercial Mobile Radio Service ("CMRS"). Prior to the C block auction, Radiofone sought a waiver of these restrictions from the Wireless Telecommunications Bureau. Radiofone also participated in a judicial challenge of the PCS- cellular cross-ownership rule (but not the CMRS spectrum cap) before the Sixth Circuit. On November 9, 1995, the Sixth Circuit issued its decision in Cincinnati Bell Telephone v. FCC, which invalidated the PCS/cellular cross-ownership rule and remanded the cellular eligibility issue to the Commission. The Court did not address the 45 MHz spectrum cap, which had not been raised by the parties on appeal. Following the remand from the Sixth Circuit, the Bureau permitted Radiofone to participate conditionally in the C block auction subject to the ultimate resolution of Radiofone's eligibility to bid in the Louisiana BTAs under the spectrum cap and the PCS/cellular cross-ownership rule. 3. Radiofone proceeded to bid on the Louisiana BTAs when the C block auction commenced on December 18, 1995. In January, 1996, Radiofone withdrew from the C block bidding. Radiofone contends that it withdrew because it feared that the Commission would impose penalties if Radiofone was the highest bidder on a license for which the Commission ultimately determined it was ineligible. Despite the Commission's representation to the Sixth Circuit that this would not occur, Radiofone claimed that the risk was too great and that it was forced to withdraw from the auction. 4. Following the remand from the Sixth Circuit in Cincinnati Bell and during the C block auction, the Commission released a Notice of Proposed Rulemaking in WT Docket No. 96-59, in which it proposed to make certain changes concerning the auctioning of broadband PCS licenses for the D, E and F blocks, and the eligibility of cellular carriers to obtain PCS licenses. These included eliminating the Commission's PCS/cellular cross-ownership rule but retaining the 45 MHz cap on CMRS spectrum. On June 24, 1996, the Commission released its Report and Order in WT Docket No. 96-59. As proposed, the Broadband PCS Report and Order eliminated the PCS/cellular cross-ownership rule and retained the 45 MHz spectrum cap. The Commission further determined, however, that the elimination of the PCS/cellular cross- ownership restrictions would not be applicable to the already completed A, B, and C block auctions. III. CONTENTIONS OF THE PARTIES 5. In its petitions to deny, Radiofone does not attack the qualifications of DCR or Meretel, the auction winners in the Louisiana BTAs. Rather, petitioner attacks our conduct of the C block auction and alleges that we have failed to follow the directives of the Sixth Circuit following the Cincinnati Bell remand. All three petitions are substantially the same. Radiofone claims standing based on the assertion that it did not have a "fair chance" to bid at the C block PCS auction. Petitioner then lists three reasons why a grant of the three applications would not be in the public interest. First, it contends that the auctions involving the Louisiana BTAs were unlawful because they were held pursuant to rules declared invalid by the Sixth Circuit. Petitioners claim that the Commission should have completed its rulemaking on remand from Cincinnati Bell before it began or completed the C block auction. Second, Radiofone notes its intention to challenge the 45 MHz spectrum cap. It claims that the Commission's retention of the spectrum cap in the Broadband PCS Report and Order suffers from the same infirmities as the PCS/cellular cross-ownership rule. Radiofone also criticizes the Commission's decision not to apply the modified rules to the A, B and C block auctions and urges the Commission not to grant the applications while these issues are still pending. Finally, Radiofone submits that grant of the above applications does not promote efficient use of the spectrum pursuant to 47 U.S.C.  309(j)(3)(D), because it would deprive Radiofone of a "chance to use its technical PCS expertise" to benefit potential customers. Radiofone urges the Commission to deny the applications of the winning bidders and re-auction the frequencies. Radiofone seeks consideration by the full Commission because its "petition involves the complexities of prior litigation, rulemakings, a pending waiver request and Radiofone's upcoming challenge to the Broadband PCS Report and Order." 6. DCR, the winning bidder in New Orleans and Houma-Thibodaux, filed an opposition to Radiofone's petitions with respect to those markets. First, it argues that Radiofone lacks standing because it voluntarily withdrew from the bidding. DCR further alleges that if Radiofone were to prevail on the merits of its appeal with respect to the legality of the 45 MHz cap as it affects its C block eligibility, the court's decision would likely safeguard its rights. If Radiofone does not prevail on that question, DCR reasons that it will not have suffered any injury as a result of DCR's winning bid. DCR notes that Radiofone did not challenge DCR's qualifications as a licensee. As to Radiofone's claim that the auction was illegal, DCR notes that the Commission permitted Radiofone to participate in the C block auction conditioned on the outcome of the remand proceedings from Cincinnati Bell. DCR states that Radiofone voluntarily withdrew from the bidding despite assurances from the Commission that it would not be penalized. Had Radiofone stayed in the auction and submitted the high bid, DCR contends, it would now be in a position to pursue judicial review. DCR also suggests that Radiofone's real motivation for dropping out of the bidding may have been its unwillingness to compete with the escalating bids. Next, DCR alleges that regardless of Radiofone's challenge to the Commission's rules, there is no basis for denying or delaying a grant to a fully qualified applicant. Finally, DCR alleges that Radiofone's "technical expertise" argument could apply to any disappointed auction bidder. 7. Meretel, the winning bidder in the Baton Rouge market, filed an opposition to Radiofone's petition accusing Radiofone of attempting to eliminate a prospective wireless competitor in Baton Rouge. Meretel further argues that the petition is procedurally defective because it fails to even discuss Meretel's qualifications as a licensee. In response to petitioner's argument that the Commission had deprived it of an opportunity to serve the public, Meretel notes that Radiofone is eligible under the 45 MHz spectrum cap to bid for up to 20 MHz of spectrum in the D, E and F block auctions in the Baton Rouge BTA. Meretel further argues that Radiofone's actions undermine its claim that it was forced to withdraw due to the risk of bid withdrawal penalties. Meretel contends that Radiofone's real reason for withdrawing was that "the cost of PCS Block licenses was simply too high." 8. In response to the Oppositions of DCR and Meretel, Radiofone argues that it indeed had standing, but that it was forced to withdraw from the bidding due to the failure of the Commission to give it adequate guarantees against the imposition of withdrawal bid penalties. Petitioner further argues that it is not necessary to make specific allegations against DCR or Meretel. Rather, Radiofone contends, it is sufficient to say that a grant of their "applications would be inconsistent with the public interest because the auction was conducted pursuant to rules that the Sixth Circuit held to be unlawful." Radiofone further argues that subjecting DCR and Meretel to the risk of possibly having to participate in a new auction when the pending litigation is concluded would not serve the public interest. 9. Finally, Radiofone takes issue with the claim that it was simply trying to eliminate a potential wireless competitor from the market. Radiofone argues that it must have a fair opportunity to obtain a 30 MHz PCS license to remain competitive in the Louisana BTAs. IV. DISCUSSION 10. Radiofone requests that the full Commission consider its petitions because they involve "the complexities of prior litigation, rulemakings, a pending waiver request and Radiofone's upcoming challenge to the [Broadband PCS] Report and Order." It is not unusual, however, for particular applications to be addressed at the Bureau level at the same time the service as a whole is potentially affected by ongoing administrative or judicial proceedings. Accordingly, we conclude that Radiofone has failed to demonstrate why the Bureau should not rule on its petitions in the first instance. 11. Meretel and DCR claim that Radiofone lacks standing to petition their applications because it voluntarily dropped out of the C block bidding despite assurances from the Commission that it would not impose monetary penalties in the event Radiofone was the high bidder in the C block and was ultimately denied a license. Radiofone contends that it was "forced" to withdraw from the auction and should not be denied standing on this basis. We see no need to address the issue of whether Radiofone's withdrawal from the auction was voluntary. Based on its initial participation in bidding on the Louisiana BTAs in the C block auction, we conclude that for the purposes of this Order, we will grant Radiofone standing. 12. Turning to the merits, we conclude that Petitioner has failed to demonstrate that a grant of the above license applications would be inconsistent with the public interest. Under Section 309(d)(1) of the Communications Act, parties filing petitions to deny must make specific allegations that a grant of the application would be prima facie inconsistent with the public interest, convenience and necessity. Except where official notice may be taken, such allegations must be supported by affidavits of persons with personal knowledge of the facts alleged. Section 309(d)(2) states that if the pleadings and affidavits fail to raise substantial and material questions of fact and the Commission concludes that grant of the application would be in the public interest, the Commission shall deny the petition. 13. Based upon the pleadings before us, we find that petitioner has failed to raise substantial and material questions of fact under this standard. In fact, Radiofone's petitions contain no allegations at all, much less supporting affidavits, regarding the qualifications of either DCR or Meretel. Instead, Radiofone asks us to deny the applications based solely on the fact that it has challenged the Commission's rulemaking addressing the Cincinnati Bell remand issues and the Commission's decision to proceed with the C block auction. Radiofone argues that granting license applications where, as here, the underlying licensing procedures are subject to a pending judicial challenge does not serve the public interest. We disagree. Neither the Commission nor the court has stayed the licensing process based on Radiofone's challenge. While Meretel and DCR may be affected by the outcome of ongoing rulemakings or judicial proceedings, these proceedings have nothing to do with their qualifications as applicants and provide no basis for denying these applications. If we were to defer processing of Meretel and DCR's applications on this basis, they would be severely harmed and service to the public would be significantly delayed. Conversely, grant of the licenses to Meretel and DCR does not prejudice any right Radiofone may otherwise have to appeal the Commission's actions with respect to the Cincinnati Bell remand or the C block auction rules. V. CONCLUSION 14. Having reviewed the applications and the pleadings filed in this matter, we conclude that grant of the subject applications will serve the public interest, convenience, and necessity, and that Radiofone has not alleged facts establishing that a grant of the applications would be inconsistent with the public interest, convenience and necessity. Therefore, we deny Radiofone's petitions and grant the above applications. 15. The grant of DCR's and Meretel's applications is expressly conditioned on payment within five (5) business days of release of this Order of the remaining portion of the 10 percent down payments due on each of the licenses. Payment of the remainder of the amount due on each license will be made in quarterly installments in accordance with Parts 1 and 24 of the Commission's rules. For each license granted, DCR PCS, Inc., and Meretel Communications, L.P. will receive from the United States Department of the Treasury an original note documenting its installment payment obligations and a security agreement commemorating the Commission's security interest in the license in the event of default. The notes and security agreements will include instructions on the completing, signing, and return of the documents to the Treasury Department. The grant of DCR's and Meretel's applications is expressly conditioned on timely execution and return of the notes and security agreements in accordance with these instructions. VI. ORDERING CLAUSES 16. Accordingly, pursuant to Section 309(d) of the Communications Act of 1934, as amended, 47 U.S.C.  309(d), IT IS ORDERED that the Petitions to Deny filed by Radiofone, Inc. ARE DENIED. 17. IT IS FURTHER ORDERED that, pursuant to Section 309(a) of the Communications Act of 1934, as amended, 47 U.S.C.  309(a), the applications of DCR PCS, Inc. for Broadband PCS C block licenses in New Orleans and Houma-Thibodaux, Louisiana and the application of Meretel Communications, L.P., for a Broadband PCS C block license in Baton Rouge, Louisiana, are GRANTED, subject to the conditions set forth above. 18. IT IS FURTHER ORDERED, pursuant to Section 0.331 of the Commission's Rules, 47 C.F.R.  0.331, that the request of Radiofone, Inc. for initial consideration of the above petitions by the full Commission IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Michele C. Farquhar Chief, Wireless Telecommunications Bureau