Before the
                FEDERAL COMMUNICATIONS COMMISSION
                      Washington D.C.  20554



In the Matter of                   )
                              )
BDPCS, Inc.                        )    
                              )                                                                               )
BTA Nos. B008, B036, B055, B089    )
B110, B133, B149, B261, B298, B331 )    
B347, B358, B391, B395, B407, B413,     )
and B447, Frequency Block C        )    





                              ORDER


     Adopted:  May 21, 1997                  Released:  May 21, 1997   


By the Acting Chief, Wireless Telecommunications Bureau: 


                        I.  INTRODUCTION


     1.  The Bureau has before it a Petition for Reconsideration filed by BDPCS, Inc.
("BDPCS"), seeking reconsideration of an Order by the Acting Chief of the Wireless
Telecommunications Bureau ("Bureau") that assessed BDPCS a default payment on the above-
captioned licenses in the amount of $67,695,653.23, pursuant to Section 24.704(a)(2) of the
Commission's rules.  For the reasons discussed below, we deny BDPCS's petition.

                    II. BACKGROUND

     2.  On May 6, 1996, the Commission concluded the Broadband PCS C Block auction. 
BDPCS was the successful high bidder on 17 licenses, with a cumulative total bid price of
$873,783,912.75.  On May 8, 1996, the Commission announced by Public Notice that, pursuant
to 47 C.F.R.  24.711(a)(2), winning bidders would be required to submit their full 10 percent
down payment, or if claiming small business status, an initial one-half of their total down payment
amount (five percent of their winning bids), by May 15, 1996.  Accordingly, BDPCS, a winning
bidder claiming small business status, was required to bring its total funds on deposit with the
Commission to five percent of its total bid amount, or approximately $43,689,195.00. 
Accounting for BDPCS's upfront payment, BDPCS was required to remit a down payment in the
amount of $36,689,196.00.

     3.  On May 15, 1996, BDPCS filed an Emergency Petition seeking a limited waiver of the
down payment deadline, claiming that a waiver was necessary because of the sudden withdrawal
of all of its intended sources of financing.  In its petition, BDPCS detailed a series of events that
it claims resulted in its loss of financing.  BDPCS claimed that its parent company, QuestCom,
Inc., had made arrangements with US West Communications ("USWC") to receive a bridge loan
for the required down payment.  BDPCS also claimed that QuestCom intended to repay the
bridge loan after completing an initial public offering that was to take place while BDPCS's C
Block license applications were pending.  BDPCS contended that QuestCom continued to search
for additional and alternative short-term and permanent financing from several parties.  In
particular, QuestCom focused on obtaining a loan from a large "Financial Institution" and through
an initial public offering with Merrill Lynch as the lead underwriter.  BDPCS states that financing
of its payment obligations seemed secure until May 2, four days before the PCS C Block auction
closed, when it lost its USWC bridge loan.  In addition, BDPCS notes that four days later, on
May 6, Merrill Lynch withdrew as the lead underwriter for QuestCom's initial public offering. 
Finally, BDPCS claims that because of the short time available, it was unable to complete its
financing transactions with the "Financial Institution."  BDPCS states that, after the down
payment deadline, QuestCom selected Bear Stearns to serve as lead investment banker, thereby
giving BDPCS the financial capability to attract capital for the deployment and operation of its
PCS systems.

     4.  On May 20, 1996, the Bureau denied BDPCS's waiver request because BDPCS had
failed to show that special circumstances warranted a deviation from the general down payment
rule, or that such a deviation would serve the public interest.  On May 22, 1996, BDPCS filed a
Petition for Reconsideration of the Order, contending that the Bureau failed to give BDPCS's
waiver request the "hard look" required by the Commission's rules and applicable case law. 
Specifically, BDPCS contended that the Bureau ignored the unique facts and circumstances of its
case.  According to BDPCS, these circumstances included the fact that BDPCS acted with
reasonable diligence to meet the down payment deadline, and that BDPCS could not have
predicted that it would lose its expected sources of funding shortly before payment was due. 
BDPCS also claimed that the Bureau inappropriately relied upon the Commission's IVDS auction
waiver decisions that are factually distinguishable from its case because BDPCS, unlike the IVDS
bidders, attempted to secure back-up financing and made attempts to raise funds from several
sources.  In addition, BDPCS stated that the Bureau did not address or recognize the fact that
until the week prior to the close of the auction, BDPCS reasonably believed that it would be
capable of meeting its financial obligations.  On May 30, 1996, the Bureau denied the Petition
for Reconsideration, reaffirming its decision that the facts presented by BDPCS failed to warrant a
deviation from the general rule, and did not show that the grant of a waiver would be in the public
interest. 

     5.  On May 30, 1996, the Bureau released a Public Notice announcing that the 17 licenses
on which BDPCS had defaulted would be reauctioned commencing July 3, 1996.  On July 17,
1996, the Bureau announced the winning bidders in that reauction.  All 17 licenses on which
BDPCS defaulted were won by other bidders in the reauction.

     6.  On October 28, 1996, the Bureau released the Payment Order, assessing BDPCS a
default payment in the amount of $67,695,653.23.  This amount represents the total difference
between BDPCS's winning bids and the amount of the winning bids in the C Block reauction for
those licenses which attracted lower winning bids in the reauction (cumulatively
$42,765,088.50), plus an additional three percent of the lower of the two amounts for each of
the 17 defaulted licenses (cumulatively $24,930,564.73).  On November 27, 1996, BDPCS filed
a Petition for Reconsideration of the Payment Order, seeking to reduce the amount of the default
payment and to obtain a three year deferral of the payment deadline.

                  III. ARGUMENTS RAISED BY BDPCS
     7.  BDPCS offers four arguments in support of its petition.  First, BDPCS reiterates that it
"could not have avoided the severe financial distress caused by the unexpected unavailability of a
bridge loan . . . and the withdrawal of Merrill Lynch as the lead underwriter of (BDPCS parent)
Questcom's initial public offering."  BDPCS reasons that under these unique circumstances,
assessing a small start-up company such a large default payment would be inequitable.  Second,
BDPCS argues that its defaulted licenses were reauctioned by the Bureau for a net gain of
$30,653,304.05, and in light of this, the $67,695,653.23 default payment (nearly twice the amount
of the net gain from reauction) assessed by the Bureau is unjustified.  Third, BDPCS believes that
a default payment of $24,930,564.73 is more appropriate because BDPCS will find raising the
necessary funds for the current obligation "impossible."  BDPCS contends that its existing assets
and revenues are not sufficient to cover the current default payment, and bankruptcy will result if
compelled to do so.  Finally, BDPCS urges the Bureau to grant it three years to make a reduced
payment, to afford time to raise the funds. 
     
                          IV. DISCUSSION
     8.  After careful review of the facts, there appears to be no valid basis for reconsidering
the Bureau's imposition of a $67,695,653.23 default payment on BDPCS.  The fact that BDPCS
lost all sources of funding does not diminish its financial responsibility under the Commission's
rules.  The default payment rules clearly articulate the obligations of a defaulting bidder.  A
defaulting bidder is required to pay the difference between the amount bid and the amount of the
winning bid the next time the license is offered by the Commission (so long as the subsequent
winning bid is less than the amount bid), plus an additional payment equal to three percent of the
defaulter's bid or the subsequent winning bid, whichever is less.  In the event that a license is
reauctioned for an amount greater than or equal to the defaulted bid, the total default payment is
equal to three percent of the defaulted bid.  

     9.  We continue to believe that BDPCS's efforts to seek back-up financing until the down
payment deadline do not constitute circumstances that would warrant special consideration. 
Indeed, the Commission has recently reaffirmed this policy.  The Commission has stated
previously that "it is critically important to the success of our system of competitive bidding that
potential bidders understand that there will be a substantial penalty assessed if they . . . default on
a balance due."  This approach is necessary "so as to avoid delays in the deployment of new
services to the public that would result from litigation, disqualification and re-auction." 
Furthermore, the Commission has made clear that it is not responsible for the private business
arrangements that an applicant has made to finance its successful bid, nor can it "police the
private business activities of each bidder."  

     10. The fact that some of the defaulted licenses attracted higher bids in the C Block
reauction does not reduce BDPCS's overall obligation.  Bidders cannot seek relief simply because
gains made on some licenses offset losses incurred on others. In adopting our default payment
rules, the Commission said that the payment must be "high enough to deter unwanted conduct." 
Accordingly, we set the default payment as the difference between the defaulter's high bid and the
bid received the next time that license is offered.  Additionally, the three percent payment (i.e.,
three percent of the subsequent winning bid, or three percent of the defaulter's bid if the
subsequent bid exceeds it) is designed to "encourage bidders, if they are to withdraw their bids, to
do so before bidding ceases."  

     11.  The default rules contemplate that this calculation will be made on a license-by-license
basis.  As the Commission has stated, bidders should have secure financing before placing bids in
an auction.  In addition, when BDPCS became aware, before the C Block auction closed, that it
had lost its financial backing, the proper course of action was "to refrain from bidding and
withdraw all high bids until its financing was secure."  The Commission designed the default
payment rule as a deterrent to the sort of behavior exhibited by BDPCS.  As such, a reduction in
the default payment is not warranted in order to reflect reauction gains.  Doing so would only
serve to minimize the impact of our rules.

     12.  BDPCS urges the Commission to reduce its default payment because the sheer size of
it renders payment impossible.  BDPCS suggests that reducing the payment would be consistent
with the Commission's policy of adjusting or even eliminating otherwise applicable forfeiture
amounts where the licensee is unable to pay the specified amount.  If the Commission were to
reduce default payments based on a bidder's inability to pay, that would serve only to encourage
bidders to bid without secure financial backing and contravene Commission policy.  The
Commission's rules are intended to prevent bidders from bidding when not securely financed. 
Secondarily, BDPCS argues that the Commission's forfeiture authority under Section 503(b) of
the Communications Act supports consideration of its ability to pay in setting its default payment
amount.   This argument is also misplaced.  The Commission's authority to impose default
payments arises from Section 309(j), in which the Commission is directed to "include performance
requirements, such as appropriate deadlines and penalties for performance failures. . . ."
BDPCS's argument is thus inapposite to an analysis of bid default payments.  
     
     13.  Finally, we reject BDPCS's request that the Commission grant a three year deferral of
the default payment deadline.  The impact of the default payment rule would be significantly
reduced if we were to defer the due date. 

                       V. ORDERING CLAUSES
     14.  For the reasons discussed above, we will deny BDPCS's petition for reconsideration
of the Commission's default payment order in connection with BDPCS's failure to submit the
required down payment for the seventeen licenses it won in the broadband PCS C Block auction.
     
     15.  Accordingly, it is ORDERED that the Petition for Reconsideration filed by BDPCS,
Inc. IS DENIED.

     16.  It is FURTHER ORDERED that BDPCS must submit a default payment in the
amount of $67,695,653.23 within 30 days from the release of this Order.  The instructions for
making this payment are contained in the October 28, 1996 Payment Order.  This action is taken
pursuant to delegated authority, 47 C.F.R.  0.331.


     
     

                         FEDERAL COMMUNICATIONS COMMISSION
                         



                         Daniel B. Phythyon
                         Acting Chief, Wireless Telecommunication Bureau