August 5, 1994

I V D S    B I D D E R   A L E R T


The Commission's auction for Interactive Video Data Service (IVDS) was successfully
completed on Friday, July 29, 1994.  The high bidders for these licenses have been
announced and are required to submit their down payments by 3:00 pm on Monday, August
8, 1994 according to the procedures set forth in the IVDS Bidder's Information Package.

A number of winning bidders have inquired about whether the Commission will change the
due date for down payments.  The Commission has not and does not intend to change its
deadline.  Bidders not submitting their full down payment by the required deadline will be
considered to be in default and the licenses will be reauctioned.  

As the Commission clearly stated in its Fourth Report and Order, entities in default will be
assessed a penalty equal to the difference between their winning bid and the amount the
license is ultimately sold for, if that amount is lower. See Fourth Report and Order, PP
Docket 93-253 at  29.  An additional penalty of the lesser of three percent of the winning
bid or three percent of the defaulting bidder's bid will also be assessed.  Thus, if the
Commission reauctioned a license and received $800,000 for a license on which a bidder had
submitted a winning bid net of bidding credits of $862,500 and did not make the down
payment, the default penalty would be a total of $86,500 which is equal the difference
between the two bids ($62,500) plus three percent of the ultimate sales price ($24,000).  

We remind bidders that all applicants certified under penalty of perjury on their FCC Form
175 that they were legally, technically and financially qualified.  "Submission of a false
certification to the Commission is a serious matter that may result in severe penalties
including monetary forfeitures, license revocations, being barred from future auctions, and/or
criminal prosecutions."  (Procedures and Terms of Auctions at 3).

In addition, the Second Report and Order states that "if a default or disqualification involves
gross misconduct, misrepresentation or bad faith by an applicant, the Commission also may
declare the applicant and its principals ineligible to bid in future auctions, and may take any
other action that it may deem necessary, including institution of proceedings to revoke any
existing licenses held by the applicant."  


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We understand that some winning bidders have been encouraging other winning bidders to
delay their down payments.  Any such delay will constitute default.  Encouraging other
winning bidders to default would be an abuse of the Commission's processes and may violate
the antitrust law or other federal laws.  We are consulting with the United States Department
of Justice and the Federal Trade Commission to alert them of these potential violations.  

Questions regarding payment procedures should be directed to Regina Dorsey of the FCC at
(202) 632-0241.

-FCC-