Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Rapid Wireless, Ltd. ) Request for Waiver of ) Section 90.805 of the Commission's Rules ) ORDER Adopted: May 23, 1997 Released: May 23, 1997 By the Acting Chief, Wireless Telecommunications Bureau: 1. The Wireless Telecommunications Bureau has before it a Request for Waiver of Sections 90.805(a) and 90.805(b) of the Commission's Rules filed by Rapid Wireless, Ltd. ("Rapid"). By this Order, we grant Rapid's petition and thus waive Sections 90.805(a), 90.805(b), and 1.2104(g)(1) of the Commission's Rules. Background 2. On April 22, 1996, Rapid filed a request for waiver of the bid withdrawal payment provisions applicable to the 900 MHz Specialized Mobile Radio ("SMR") service auction. Specifically, Rapid seeks waiver of the payment with respect to its bid of $2,629,890, which was ten times higher than its intended bid of $262,989, for the L Block license, Market 015 (Miami, Florida). Under the Commission's Rules, the amount of the bid withdrawal payment is equal to the difference between the withdrawn bid amount and the amount of the subsequent winning bid, if the subsequent winning bid is lower. No withdrawal payment is assessed if the subsequent winning bid exceeds the withdrawn bid. At the time Rapid's waiver request was filed, there was no provision in the rules addressing erroneous bids that result from typographical or clerical errors. 3. The Commission has recently established procedures and guidelines for parties seeking waiver of the bid withdrawal payment provisions for erroneous or mistaken bids. To be eligible, a party must submit a request for a waiver, demonstrating that the bid in question was submitted in error. In addition, the waiver request must be accompanied by a sworn declaration attesting to the factual circumstances surrounding the erroneous bid. Relief is unavailable, however, if there is evidence that the bidder has engaged in insincere or frivolous bidding, such as strategically making mistaken bids, or has otherwise acted in bad faith. If the Commission finds that a bid is mistaken or erroneous, it then applies guidelines for granting partial waivers depending upon the round and stage of the auction in which the bid is made and withdrawn. 4. Certain unique circumstances, however, may warrant a complete waiver of the bid withdrawal payment. The Commission recently granted the waiver requests of several bidders based upon a finding that its remote bidding system might have contributed to bidder confusion that caused their clerical errors. This unique situation, the Commission concluded, warranted a complete waiver of the bid withdrawal payment rule. Rapid Waiver Request 5. In its request, Rapid alleges that, in Round 61 of the 900 MHz SMR auction, Elaine Presnell, one of its authorized bidders, typed in a bid of $262,989 for License M015-L (Miami, Florida). However, for reasons which she did not understand, the bid software confirmation showed the bid to be $2,629,890 -- ten times higher than her intended bid. Rapid withdrew its $2,629,890 bid during the bid withdrawal period for Round 61 and reported the incident to Commission staff. The final high bid on this market at the close of the auction was $805,000. Consequently, if the bid withdrawal payment requirement were fully enforced, Rapid would be subject to a bid withdrawal payment of $1,824,890. 6. In support of its waiver request, Rapid asserts that its erroneous bid in Round 61 was due to an apparent software or communications problem and that the Commission's computer had indicated the incorrect bid amount. Rapid also argues that its bidding pattern in the 900 MHz SMR auction objectively confirms that it intended to bid $262,989 in Round 61. Its predominant bidding pattern, Rapid contends, was to increase its previous bid by five to ten percent, and its $2,629,890 bid was erroneous and not strategic. Its erroneous bid and immediate withdrawal thereof, did not prejudice any other bidder, Rapid asserts, nor did it adversely affect the auction results. Rapid alleges finally that strict application of the rule would not serve the public interest and thus a waiver is appropriate. Discussion 7. A waiver of the bid withdrawal payment provisions applicable to the 900 MHz SMR auction is appropriate when the petitioner "set[s] forth reasons in support thereof including a showing that unique circumstances are involved and that there is no reasonable alternative solution within existing rules." Applying this standard to the facts before us, we conclude that a complete waiver of the bid withdrawal payment provisions is justified. 8. The circumstances surrounding Rapid's bid of $2,629,890 -- ten times higher than its intended bid -- persuade us that this bid was erroneous and was not placed for strategic reasons. As the Commission stated in the ATA/MAP Order, full imposition of the bid withdrawal payment rules in cases where the erroneous bid exceeds the intended bid by factors of 10 or more could impose an extreme and unnecessary financial hardship. Our bid withdrawal rules are intended to discourage insincere bidding, and we do not believe it would serve the underlying purpose of the rules to enforce the rules in this case. We conclude that Rapid has demonstrated special circumstances warranting a complete waiver of the bid withdrawal payment rule. Specifically, it has shown that the Commission's remote bidding system may have contributed to confusion resulting in an irregularity previously acknowledged by the Commission as justifying a waiver of the bid withdrawal payment provision. Indeed, the situation here is the same as that presented to the Commission by bidders in the 900 MHz SMR and C Block auctions who were granted complete waivers in the ATA/MAP Recon Order after demonstrating that the Commission's remote bidding system, which placed a zero in the bid submission field, may have contributed to some confusion causing the clerical error at issue. 9. We note that the Commission has completed system enhancements to reduce the possibility of these types of mistaken bids. The bidding software has been revised so that the bid submission field is blank when a bidder begins entering its bid. In addition, further protections have been included in our spectrum auctions software to guard against the possibility of a mistaken bid by alerting bidders when a bid has been entered that is greater, by a certain factor of the minimum bid increment, than the minimum accepted bid for the round. 10. In view of these system enhancements -- which, if present, would have mitigated the situation presented by Rapid -- we conclude that it is in the public interest to grant Rapid's waiver request. Given the system enhancements, we do not anticipate that any bidder will commit this type of mistake in the future. We nonetheless strongly urge bidders to exercise great care when submitting their bids. We caution bidders that they will be faced with a heavy burden to show a mistaken bid and that it is unlikely the Commission will make similar exceptions for such mistaken bids in the future. 11. Accordingly, IT IS ORDERED that the Request for Waiver of Rapid Wireless, Ltd. IS GRANTED, and 47 C.F.R.  90.805(a), 90.805(b) and 1.2104(g) of the Commission's Rules HEREBY WAIVED. 12. IT IS FURTHER ORDERED that the license YSM 037I (Jacksonville, Florida) IS GRANTED, effective upon the date of the release of this order. Grant of this license is expressly conditioned on timely execution and return by the licensee of a note documenting the licensee's installment payment obligations and a security agreement commemorating the Commission's security interest in the license in the event of default. This action is taken under delegated authority pursuant to Section 0.331 of the Commission's Rules. FEDERAL COMMUNICATIONS COMMISSION Daniel B. Phythyon Acting Chief, Wireless Telecommunications Bureau