Before the
               FEDERAL COMMUNICATIONS COMMISSION
                      Washington, D.C. 20554



In the Matter of                        )
                                   )
Mountain Solutions Ltd., Inc.           )
Emergency Petition for Waiver of             )
Section 24.711(a)(2) of the Commission's Rules    )
Regarding Various BTA Markets           )
in the Broadband Personal Communications     )
Services (PCS) C Block Auction               )




                   MEMORANDUM OPINION AND ORDER

     Adopted:  September 3, 1998        Released:  October 1, 1998

By the Commission:


                         I.  INTRODUCTION
     1.  The Commission has before it an Application for Review filed by Mountain Solutions
Ltd., Inc. ("Mountain Solutions") seeking review of a Wireless Telecommunications Bureau
("Bureau") Order.  The Order denied the Mountain Solutions Emergency Petition for Waiver of
the Commission's down payment rule.  Mountain Solutions was a winning bidder for ten licenses
in the broadband Personal Communications Services ("PCS") C block auction.  For the reasons
discussed below, we deny the Application for Review.

                         II.  BACKGROUND

     2.  On May 6, 1996, the Commission concluded the broadband PCS C block auction. 
Mountain Solutions was the winning bidder for Licenses B053 (Bozeman, MT), B168 (Grand
Junction, CO), B172 (Greeley, CO), B187 (Hays, KS), B188 (Helena, MT), B224 (Kalispell,
MT), B247 (Lawrence, KS), B275 (Manhattan-Junction City, KS), B366 (Pueblo, CO), and B381
(Rock Springs, WY).  Section 24.711(a)(2) of the Commission's rules required winning bidders
to submit a ten percent down payment on licenses won at auction.  Each winning bidder had to
bring its total amount on deposit with the Commission (including upfront payment) to five percent
of its net winning bid within five business days after the auction closed, with the remainder of the
down payment (five percent) paid within five business days after the application required by
Section 24.809(b) was conditionally granted.  Mountain Solutions made the first five percent
down payment on the required due date; the second five percent down payment was due on
September 24, 1996.  Instead of making this payment, Mountain Solutions filed a waiver petition
seeking additional time to secure financing to make its second five percent down payment.

     3.  On October 17, 1996, Mountain Solutions filed a supplemental petition, in which it (1)
stated that it had secured the necessary financing to make its second down payment; (2) reiterated
its request to make the second down payment late; and (3) proposed, in the alternative, to enter
into a consent decree with the Commission to submit its down payment late, along with a late
fee.  In a second supplement, dated February 12, 1997, Mountain Solutions cited, in support of
its waiver request, the Bureau's decisions in various Orders that granted waiver requests of
auction winners that failed to timely submit their second down payment, and offered to tender "an
irrevocable letter of credit" for the payments owed.  
     
     4.  Mountain Solutions raised four principal arguments to support its waiver request. 
First, Mountain Solutions contended that its timely submission of the first down payment is
"evidence of its intention and ability to fulfill its obligations," and that this fact differentiates the
circumstances of this case from those situations in which the Commission has denied waivers to
bidders that failed to make even their first down payment.  Second, Mountain Solutions
contended that its investors ceased financial discussions with Mountain Solutions out of concern
that they would violate the Commission's anti-collusion rule in the D, E, and F block auction
which went into effect August 1, 1996, the short-form application deadline for the D, E and F
block auction.  According to Mountain Solutions, a Public Notice clarifying application of the
anti-collusion rule in that auction led its investors to make this decision.  In essence, Mountain
Solutions argues that, because it filed a short-form application in the D, E, and F block auction,
prospective investors in its C block licenses were reluctant to talk with Mountain Solutions for
fear of contravening the D, E, and F block auction anti-collusion rule.  Mountain Solutions,
however, fails to offer evidence indicating with which D, E, and F block applicants its potential C
block investors had financial relationships.  Third, Mountain Solutions claimed that its failure to
make its second down payment on time also was a result of the Commission's decision not to
offer it certain defaulted C block licenses on which it was the second highest bidder.  Mountain
Solutions claims that it was required to expend its funds to participate in the reauction of those
licenses.  Fourth, Mountain Solutions argued that if not granted a waiver, it would face default
and that the Commission would have to reauction its licenses, thereby further delaying
deployment of service. 

     5.  On October 18, 1996, the Bureau issued a Public Notice seeking comment on the
issues raised in the Waiver Petition, as well as on similar waiver requests of the second down
payment deadline filed by winners in various auctions.   Several commenters, some with a
financial interest in Mountain Solutions, supported the Mountain Solutions waiver request,
contending that a waiver would be consistent with Congress' goal of encouraging participation of
small entities in spectrum auctions.  One commenter, Liberty Cellular, Inc., opposed the Waiver
Petition, contending that the Bureau should strictly adhere to the Commission's rules in order to
promote and maintain the integrity of the auction process.
     
     6.  On April 28, 1997, the Bureau denied the Mountain Solutions waiver request, finding
that Mountain Solutions had failed to meet the standards required to justify such a waiver.  The
Bureau was unpersuaded by Mountain Solutions' attempt to differentiate the failure to make a
second down payment from the failure to make a first down payment.  The Bureau noted that it
has consistently denied waivers in both situations, particularly where it appeared that the party did
not have the funds on hand on the date of the payment deadline.  The Bureau likewise rejected
Mountain Solutions' argument that confusion among its investors regarding the anti-collusion rule
justified a waiver.  Mountain Solutions, the Bureau concluded, should have secured its financing
prior to the close of the auction, not four months after the auction closed, when a Public Notice
clarifying the applicability of the anti-collusion rule in the upcoming D, E and F block auction,
was released.  

     7.  Third, the Bureau rejected the contention that Mountain Solutions was compelled to
divert funds from its second down payment to finance its participation in the C block reauction. 
The Bureau likewise dismissed the argument that a waiver is justified in order to avoid a default
and reauction, which would result in a delay in the deployment of PCS services to the public.  

     8.  The Bureau next rejected the Mountain Solutions request for "similar treatment" to
that afforded certain other C block licensees that had received partial waivers for failure to make
second down payments.  These licensees, the Bureau concluded, had access to sufficient financing
at the time the second down payment was due, and their failure to make the down payments in full
was due solely to inadvertence, miscalculation or administrative complications.  The Bureau
likewise rejected proposals by Mountain Solutions to either now make the payment in full
together with a late fee or to retain this amount in a letter of credit pending Commission
consideration, because Mountain Solutions lacked financial qualification at the time the second
down payment was due.  On May 28, 1997, Mountain Solutions filed an Application for Review
of the Order, seeking relief from the Commission.
     
           III.  ARGUMENTS RAISED BY MOUNTAIN SOLUTIONS
     9.  Any person aggrieved by any action taken pursuant to delegated authority may file an
application requesting review of that action by the Commission.  The Commission may grant the
application for review in whole or in part, or it may deny the application with or without
specifying reasons therefor.  The filing of an application for review is a condition precedent to
judicial review of any action taken pursuant to delegated authority.  

     10.  Mountain Solutions argues generally that it is entitled to a waiver of Section
24.711(a)(2) of the Commission's rules because either (1) the underlying purpose of the rule is not
served or would be frustrated by its application in this case, and grant of the waiver is otherwise
in the public interest or (2) the unique facts and circumstances of this case render application of
the rule inequitable, unduly burdensome or otherwise contrary to the public interest.  A waiver
of the Commission's rules may be granted upon application or by the Commission on its own
motion.  Requests for waivers must contain a statement of reason sufficient to justify a waiver and
may be granted only upon an affirmative showing of entitlement pursuant to the rule.  

     11.  In its Application for Review, Mountain Solutions makes several arguments which it
originally raised in the Petition for Waiver, and new arguments as well.  Mountain Solutions
believes that the purpose of the Commission's down payment rule (i.e., to deter default and ensure
that winning bidders are sincere and financially sound) is not served by denying its waiver, and
that timely submission of the first, not the second, down payment fulfills this purpose.  Mountain
Solutions believes that its sincerity and commitment to service is demonstrated by its first down
payment of $1.2 million.  Mountain Solutions states that it experienced difficulty in accessing
capital, and contends that the Bureau's denial of the waiver request contravenes the intent of
Congress that the Commission be flexible with small business auction participants.  

     12.  Mountain Solutions makes several public interest arguments as well.  Mountain
Solutions believes that because it is a small, women-owned business, the public interest would be
served by granting the waiver.  Mountain Solutions argues that the public interest is not served if
a rule is enforced when simultaneously pending before the Commission is a Notice of Proposed
Rule Making that would change that rule.  Mountain Solutions believes that the Commission has
frustrated the participation of small businesses in spectrum auctions by allowing the introduction
of unlawful foreign money into the auction, causing "inflated prices."  Mountain Solutions
describes how difficult the task of raising funds became after it filed its petition for waiver, due to
the fact that the investors were uncertain about the status of the licenses following the payment
deadline.

     13.  Mountain Solutions contends that it has been treated differently from similarly
situated parties, thereby making denial of the waiver request an arbitrary and capricious action. 
It notes that the Bureau has granted waiver requests to other parties when the rule in question
was facing revision in concurrent proceedings.  Mountain Solutions states that the grant of
waivers to various C block high bidders that submitted late second down payments also
constitutes unequal treatment.  Likewise, Mountain Solutions notes that one C Block licensee
received a waiver of the bid withdrawal rule for a mistaken bid despite allegations of
misrepresentation and lack of candor with the Commission by the bidder.  Finally, Mountain
Solutions notes that the Bureau has afforded preferential treatment to all C and F block licensees
by suspending payments of installment payments.  As a result, Mountain Solutions believes that
the Commission has violated its constitutional rights to due process and equal protection.

                          IV. DISCUSSION
     14.  A waiver of the Commission's rules is appropriate only when a party demonstrates
either "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
"that the unique facts and circumstances of a particular case render application of the rule
inequitable, unduly burdensome or otherwise contrary to the public interest."  On the record
presented in this proceeding, the Commission does not find unique circumstances that warrant a
waiver of our down payment rule.  Indeed, we conclude that application of the down payment
rule in this case serves exactly the purpose of Section 24.711, by avoiding the possibility of
insincere bidding and participation in the auction process by companies lacking the financial
qualifications to construct viable PCS systems.  Our second down payment deadline is critical to
our licensing process.  Without firm evidence that Mountain Solutions had the money at the time
it was due, we are unwilling to depart from our rules here.  We also have a strong public interest
in holding onto licenses for reauction in such cases, because there is no question of our claim to
the license.

     15.  We reject Mountain Solutions' argument that it is not receiving treatment similar to
that afforded other license applicants seeking waivers of payment deadlines.  Unlike situations in
which the Commission has afforded relief, e.g., the Carolina PCS I Limited Partnership (CPCSI)
case, Mountain Solutions has failed to demonstrate its financial viability at the time its second
down payment obligation was due.  Indeed, on the day its second down payment was due,
Mountain Solutions requested an additional 30 days to meet its obligation to the Commission. 
CPCSI demonstrated financial viability based upon the fact that it had access to adequate funds at
the time its second down payment obligation was due. 

     16.  Even considering Mountain Solutions' offer to obtain an irrevocable letter of credit to
pay the Commission the full amount of the second down payment plus a five percent late fee in
exchange for award of its licenses, we are not persuaded that Mountain Solutions is being treated
differently than other licensees that sought payment deadline waivers from the Commission.  In
other instances where we have partially granted a payment deadline waiver request, the petitioner
receiving relief had the money at the time it was due.  In some cases, such petitioners also
demonstrated their continuing financial viability by setting aside funds in an escrow account or
maintaining funds on deposit with the Commission that were sufficient to meet their financial
obligations.  Sufficient funds beyond the control of these licensees were available to satisfy their
payment obligations to the Commission.  Mountain Solutions, however, only has proposed
tendering an irrevocable letter of credit to satisfy its payment obligations.  Mountain Solutions'
offer to pay an obligation is not the same thing as actually relinquishing control of the funds to
make the payment by placing the funds in escrow with a financial institution or on deposit with the
payee.  We find this to be another distinction between Mountain Solutions' request for a payment
deadline waiver and the waiver requests of other licensees that were granted relief.

     17.   Section 309(j)(5) requires financial qualification for grants of licenses to applicants
selected through competitive bidding.  In the Second Report and Order in the competitive
bidding docket, we established general rules and procedures to be used for all auctionable
services.  The down payments are a means of evaluating the financial qualifications of a bidder
and it is important to determine this status early.  In establishing the timing of down payments,
we noted that this requirement would also deter defaults by discouraging financially unqualified
bidders that might "shop" a winning bid in order to obtain financing for a payment.  The integrity
and functioning of the auction process is dependent upon winning bidders meeting their down
payment obligations on time.  Timeliness of such payments is a necessary indication to the
Commission that the winning bidder is financially able to meet its obligations on the license and
intends to use the license for the provision of service to the public.  Indeed, failure to make a
timely down payment constitutes a significant early warning for the Commission in determining
whether to grant the license.

     18.  We are unpersuaded that the failure to submit a second down payment -- having
submitted the first down payment -- is somehow different from the cases in which the Bureau
refused to grant a waiver for failure to submit the first down payment.  The purpose of the second
down payment rule is to ensure the financial viability of a license winner and to provide an
indication as to the capability of the winning bidder to actually build out its system.  This is the
last payment that is required before the Commission grants the license and proceeds with
installment payments under a note and a security agreement.  It is important that financial viability
be clearly demonstrated before we grant the license because the Commission runs the risk of
bankruptcy tying up the license.  Thus, we think it important to uphold application of the rule in
this instance.  As the Bureau pointed out, if we grant a waiver under these circumstances, a
winning bidder will be less likely to make sincere bids in the auction, relying instead on the
possibility of "shopping" its licenses once the auction closes.  In amending our rules to permit
licensees ten additional days within which to meet their second down payment deadline, the
Commission recognized that applicants need additional flexibility to overcome unexpected or
unforeseeable difficulties when trying to arrange financing and make substantial payments under
strict deadlines.  In past instances where the second down payment deadline was waived, the
Bureau recognized the licensee's good faith and ability to pay as evidenced by its timely
remittance of all earlier payments and prompt action to cure the delinquency.  In this case,
however, not only did Mountain Solutions request an additional 30 days to secure its financing --
and thus evidence its lack of access to financial resources at the time its second down payment
was due  -- but it also failed to take steps to remit the funds to the Commission once they were
presumably obtained.  In addition, we note that Mountain Solutions participated in the C block
reauction, which closed July 16, 1996, winning two licenses.  As a result, Mountain Solutions
expended funds that could have been used to meet its second down payment obligation for
licenses won in the C block auction.  

     19.  Mountain Solutions asserts that because it is a small, women-owned business, the
public interest would be enhanced by granting the waiver.  Mountain Solutions contends because
the Commission proposed to change its rules in order to accommodate other C block bidders, it is
entitled to relief, as was afforded C block bidders that failed to timely make their second down
payments in full.  Specifically, Mountain Solutions argues that the Bureau applied proposed rule
changes for the benefit of certain C block bidders and a more flexible second down payment rule
for various C block licensees.  Mountain Solutions further argues that a number of C block
licensees that have faced difficulties in meeting their installment payment obligations have received
special treatment from the Commission in their efforts to meet such financial obligations. 
Mountain Solutions concludes it is entitled to similar treatment as a matter of fairness, due
process and equal protection.  

     20.  We disagree that Mountain Solutions' small business status entitles it to a waiver.  In
the C block auction, all of the participants were designated entities, receiving special preferences. 
Therefore, we see no reason why Mountain Solutions' status as a small business, per se, entitles it
to any form of relief.  The Commission has fulfilled its statutory mandate to afford small
businesses an opportunity to participate in spectrum auctions by making bidding credits and
installment payment plans available to such entities in the C block auction.  Neither its mandate
to provide opportunities for small businesses nor its finding that small businesses have difficulty
obtaining capital requires the Commission to waive payment deadlines for small businesses in this
instance. 

     21.  Although the Bureau granted partial waivers to a number of C block bidders that
were either late in making their second down payments, or failed to make such down payments in
full, such entities had not met their second down payment obligations because of inadvertence,
miscalculation or other administrative complication, rather than because they lacked sufficient
funds to make the payment.  In this case, however, Mountain Solutions lacked access to funds,
and thus evidenced financial inability at the time payment was due.  Mountain Solutions was not
"similarly situated" to the other C block licensees for which the Bureau has granted partial
waivers.  

     22.  We also reject Mountain Solutions' contention that its investors' confusion about the
anti-collusion rule, in connection with the soon-to-begin D, E and F block auction, which,
according to Mountain Solutions, caused a discontinuation of negotiations with its investors,
justifies a waiver.  We agree with the Bureau that Mountain Solutions should have arranged its
financing prior to the close of the auction and that failure to do so indicates that Mountain
Solutions may have planned to "shop" its licenses at the close of the auction.  Any confusion by
Mountain Solutions' investors that may have inhibited the negotiation of additional financing is
irrelevant for purposes of our analysis in this case.  Further, Mountain Solutions does not identify
in which D, E, and F block applicants its investors had financial interests, nor does Mountain
Solutions identify on which markets such entities planned to bid.

     23.  We likewise reject Mountain Solutions' argument that it is entitled to relief because
the Commission has subsequently addressed requests by C and F block licensees for assistance in
meeting their installment payment obligations.  Unlike these licensees, Mountain Solutions failed
to make its second down payment, due September 24, 1996.  Down payment deadlines are
essential to protect the integrity of our auctions process by preventing insincere bidding and to
determine the financial qualification of a new licensee to provide communications services.  In
contrast to Mountain Solutions, entities facing installment payment difficulties had met their
second down payment obligations, became licensees, and signed note and security agreements
with the Commission.  Because Mountain Solutions failed to meet the fundamental and
preliminary step of a ten percent down payment, we reject its argument on this issue.  

     24.  The Commission's rules provide that when a winning bidder defaults on a license, the
bidder becomes subject to a default payment equal to the difference between the amount bid and
the winning bid the next time the license is offered by the Commission, plus a payment equal to
three percent of the subsequent winning bid or the amount bid, whichever is lower.  
Specifically, the payment is either the difference between the licensee's net winning bid and the
subsequent net winning bid or the difference between the licensee's gross winning bid and the
subsequent gross winning bid, whichever is less.  If either bid amount is subject to a bidding
credit, the three percent penalty will be calculated using the same bid amounts and basis (net or
gross bids) as in the calculation of the payment.  Thus, if gross bids are used to calculate the
payment, the three percent will be applied to the gross amount of the subsequent winning bid or
the gross amount of the defaulting bid, whichever is less.  In the Fifth Report and Order, the
Commission stated that when the default payment cannot be determined, the Commission may
assess an initial default payment "of up to 20 percent" of the defaulting bidder's winning bid.  As
we noted in the Part 1, Third Report and Order, we will assess an initial default deposit of
between three percent and twenty percent of the defaulted bid amount where a winning bidder or
licensee defaults and the defaulted license has yet to be reauctioned.  Once the license has been
reauctioned by the Commission, and the total default payment can be determined, the Commission
will either assess the balance of the appropriate default payment or refund any amounts due as
necessary.   Finally, the Commission's payment rules provide that, if a defaulting bidder does not
submit the default payment assessed by the Commission in the time required, any amounts
overdue "will be deducted from any upfront payments or down payments that the defaulting or
disqualified bidder has deposited with the Commission."    

     25.  Because the licenses at issue in this proceeding have not been reauctioned, and thus
we cannot determine the full amount of the default payment, we will assess a deposit toward the
default payment ultimately owed by Mountain Solutions.  Although the Commission provided that
this deposit amount may be as high as twenty percent of the bid price on which Mountain
Solutions defaulted, if the licenses are reauctioned for an amount greater than Mountain Solutions'
bids for the licenses, the default payment due will be only three percent of Mountain Solutions'
defaulted bid.  Consequently, a three percent payment is the minimum amount which Mountain
Solutions could owe, even under the most favorable circumstances.  We therefore require an
initial deposit of three percent of Mountain Solutions' defaulted bids for the licenses, or
$736,257.78 (three percent of Mountain Solutions' net winning bid for the ten C block licenses). 
Pursuant to Sections 24.704(a)(2) and 1.2104(g) of the Commission's rules, Mountain Solutions'
first down payment of $1,227,096.30 for the licenses has been applied to this initial default
payment.  If additional payment is required, following the reauction of licenses, a second order
will assess such payment.  If Mountain Solutions fails to remit this amount in its entirety within
the time required, any amounts overdue will be deducted from any upfront payments or down
payments which Mountain Solutions currently has on deposit with the Commission.  

                       V.  ORDERING CLAUSES
     26. Accordingly, IT IS ORDERED that, under the authority of Section 1.115(g) of the
Commission's rules, 47 C.F.R.  1.115(g), the Application for Review filed by Mountain
Solutions Ltd., Inc. on May 28, 1997, IS DENIED.  

                         FEDERAL COMMUNICATIONS COMMISSION



                         Magalie Roman Salas
                         Secretary