PUBLIC NOTICE Federal Communications Commission 1919 M St., N.W. Washington, D.C. 20554 DA 97-81 January 15, 1997 D, E, and F Block Auction Closes WINNING BIDDERS IN THE AUCTION OF 1,479 LICENSES TO PROVIDE BROADBAND PCS IN BASIC TRADING AREAS Down Payments Due Thursday, January 23, 1997 FCC Form 600s Due Thursday, January 30, 1997 Report No. AUC-97-11-I (Auction No. 11) On January 14, 1997 the Federal Communications Commission completed its auction of 1,479 licenses to provide broadband Personal Communications Services (PCS) on the D, E, and F blocks in the 2 GHz band, raising a net total of $2,517,439,565 for the U.S. Treasury. Each license authorizes service on 10 MHz of spectrum in one of 493 Basic Trading Areas (BTA) and BTA-like areas, with three licenses awarded in each area. The DEF auction has provided significant opportunities for small businesses, women, minorities, and rural telephone companies. There were 125 winning bidders. Over 40 percent of the licenses were won by 93 small businesses; 3.4 percent were won by 8 women-owned entities; 4.8 percent were won by 16 minority-owned entities; and 11.3 percent were won by 32 rural telecommunication entities. While eligibility for F block licenses is limited to entrepreneurs, entrepreneurs also won 15 percent of the non-entrepreneur D and E block licenses. This public notice provides detailed information concerning winning bidders, down payments, bid withdrawal and default payments, FCC Form 600 filing requirements, requests for waiver, installment payments and licensing matters. Key information appears in the following attachments: Attachment A: Lists the winning bidders, the licenses won by each winning bidder and the net high winning bid amount. Attachment B: Lists the down payments owed by winning bidders, and withdrawn bid payments owed by all bidders. Attachment C: Provides detailed information about how winning bidders should complete their required FCC Form 600 license applications. Attachment D: Provides instructions for downloading free software to file FCC Form 600 electronically. Bidders should note that this auction involves rules and procedures different in some respects from those used in previous broadband PCS auctions. Bidders should read this entire public notice carefully and familiarize themselves with these rules, orders and other pertinent FCC requirements. See Amendment of Parts 20 and 24 of the Commission's Rules Broadband PCS Competitive Bidding and Commercial Mobile Radio Service Spectrum Caps, WT Docket No. 96-59 and GN Docket No. 90-314, Report and Order, 11 FCC Rcd 7824, 61 Fed. Reg. 33,859 (1996) (Report and Order). Down Payments and Withdrawn Bid Payments The Commission's rules require that within five business days of the date of this public notice (i.e., by January 23, 1997), bidders must have on deposit with Mellon Bank in Pittsburgh, Pennsylvania, enough funds to cover all required (1) down payments on winning bids and (2) payments for withdrawn bids. If a bidder's upfront payment is not sufficient to meet both of these requirements, the bidder must deposit additional funds. The amount now due from each bidder, if any, is set out in the last column of Attachment B. Note that if a bidder's upfront payment covers the required total of down payments and withdrawn bid payments (as reflected in Attachment B), no payment or FCC Form 159 is necessary at this time. The following paragraphs describe the calculations of down payments and withdrawn bid payments, the required method of payment, and related issues. Down payments. Each winning bidder's down payment is a percentage of its winning bids, computed and payable as follows (see 47 C.F.R.  24.955):  For an F block license, the down payment is 20 percent of the net winning bid, of which the first half (10 percent) is due by January 23, 1997, and the second half (10 percent) is due within five days after release of a public notice announcing that the Commission is ready to award the license.  For D and E block licenses, the down payment is 20 percent of the winning bid(s), with the entire down payment due by January 23, 1997. Withdrawn bid payments. To prevent insincere bidding, the Commission adopted bid withdrawal payments for bidders who withdraw bids during the course of an auction. As a general rule the bid withdrawal payment is either (1) the difference between the net withdrawn bid and the subsequent net winning bid, or (2) the difference between the gross withdrawn bid and the subsequent gross winning bid for that license, whichever is less. In those cases where the amount of the withdrawal payment cannot yet be determined because there was no winning bid, the withdrawing bidder is required to make a deposit of up to 20 percent of the amount bid on the license(s); when it becomes possible to calculate and assess the payment, we will refund any excess payment. See Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 93-253, Fifth Report and Order, 9 FCC Rcd 5532, 5563 at n.51 (1994); see also C.H. PCS, Inc., DA 96-1825 (rel. Nov. 4, 1996) (requiring a three-percent deposit). These cases are indicated in Attachment B with an asterisk in the "Total Withdrawal Pmt Amt" column. Method of payment. All payments must be made in U.S. dollars, must be in the form of a wire transfer or cashier's check, and must be made payable to the "Federal Communications Commission" or "FCC." No personal checks, credit card payments, or other forms of payment will be accepted. All payments must be accompanied by a completed FCC Remittance Advice Form (FCC Form 159). Wire transfer payments must be received by Mellon Bank by 6:00 p.m. Eastern Standard Time, Thursday, January 23, 1997. Bidders making payments by wire transfer should coordinate with their bankers ahead of time, then allow sufficient time for the wire transfer to be initiated and for the transmission to be completed prior to the deadline. To submit funds by wire transfer, bidders will need the following information: ABA Routing Number: 043000261 Receiving Bank: Mellon Pittsburgh BNF: FCC/AC-9116106 OBI Field: (Skip one space between each information item) "AUCTIONPAY" FCC ACCOUNT NO. (same as FCC Form 159, Block 1) PAYMENT TYPE CODE (same as FCC Form 159, Block 14A: "AWDD") FCC CODE 1 (same as FCC Form 159, Block 17A: "11") PAYOR NAME (same as FCC Form 159, Block 3) LOCKBOX NO. 358850 Bidders making payments by wire transfer must fax a completed FCC Form 159 to Mellon Bank at 412-236-5702 at least one hour before placing the order for the wire transfer (but on the same business day). Cashier's checks must be drawn on a financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Payments by cashier's check must be received by Mellon Bank by 11:59 p.m. Eastern Standard Time, Thursday, January 23, 1997. Cashier's checks and accompanying FCC Form 159s must be addressed to: Mellon Bank Attention: Auction No. 11 P.O. Box 358850 Pittsburgh, PA 15251-5850 If delivering an auction payment in person or by courier, the cashier's check and FCC Form 159 must be delivered to: Mellon Bank Attention: Wholesale Lockbox Shift Supervisor 27th Floor (153-2713) 3 Mellon Bank Center 525 William Penn Way Pittsburgh, PA 15259-0001 (Note: Please indicate on the inside envelope "Lockbox No. 358850") Proper completion of FCC Form 159 is critical to ensuring correct credit of bidder deposits. Bidders must use the same FCC account number used during the auction. (This number is shown on Attachments A and B.) Additional instructions for making auction payments are contained in pages 95-97 of the Bidder Information Package. However, please note the following recent simplifications:  Items 14-18 For bidders who win multiple licenses, the FCC will allocate deposited funds among the licenses and/or withdrawal payments. Therefore FOR DOWN PAYMENTS ONLY, bidders should use only the "Item #1 Information" section to list their lump sum payment, and not list each license separately.  Line 14A Payment Type Code Enter "A W D D."  Line 15A Quantity Enter the numeral "1."  Line 16A Amount Due Enter the same amount entered in Line 2.  Line 17A FCC Code 1 Enter the number "11" (indicating Auction No. 11).  Line 18A FCC Code 2 Leave blank.  For initial down payments only, do not use "Item #2 Information" or FCC Form 159-C Advice (Continuation Sheet). Questions concerning the calculation and submission of down payments should be directed to Andy Cox at 202-418-1995. Bidder default. If a winning bidder fails to submit the required down payment(s) by the January 23, 1997 deadline, the bidder will be deemed to have defaulted, its application will be dismissed, and it will be subject to the default payment specified in Sections 1.2104(g)(2) and 24.704(a)(2) of the Commission's rules. See 47 C.F.R.  1.2104(g)(2) and 24.704(a)(2), BDPCS, Inc., FCC 96-498 (rel. Jan. 6, 1997); see also Public Notice, "Wireless Telecommunications Bureau Will Strictly Enforce Default Payment Rules," DA 96-481 (rel. April 4, 1996). Specifically, the defaulting bidder will be required to reimburse the Commission the amount of the difference between its net winning bid and the amount of the winning bid the next time the license is offered, if the subsequent winning bid is lower. In addition, defaulting winning bidders will be subject to a default payment of three percent of the subsequent winning bid or three percent of the defaulting bid, whichever is less. Refund of excess upfront payments. Upfront monies on deposit which are in excess of the required down payment and withdrawal and default payment amounts will be refunded to the payor of record. Refunds will be processed promptly and automatically after the close of the auction. Bidders who prefer refunds to be sent by wire transfer must fax the necessary wire transfer instructions to Andy Cox at 202-418-2843. Any questions concerning refunds should be referred to Andy Cox at 202-418-1995. FCC Form 600 By 5:30 p.m. Eastern Standard Time on Thursday, January 30, 1997, winning bidders must submit a completed long-form license application or applications covering each license on which they were the winning high bidder. Applications may be filed either electronically or manually, though we encourage electronic filing. Attachment C sets out instructions for completing FCC Form 600. Electronic filing. Detailed instructions for downloading the software necessary to file the Form 600 electronically are set out in Attachment D. Electronic filers applying for multiple licenses are not required to submit applications for each market if all filing requirements associated with the application (the ownership worksheet, all ownership and eligibility attachments, waiver requests and divestiture plans) are identical except for the market designator, channel block and market name. Under these circumstances, applicants may submit one FCC Form 600 Main Form and Schedule A. On Schedule A, applicants must select the numerically lowest market designator (Item A2 on the Schedule A), the corresponding channel block (Item A3) and market name (Item A5), and file an additional exhibit under the "Attachment" tab labelled "Exhibit I: Market Designator" (see Attachment C) for the additional licenses. This exhibit should contain all the additional market designators and channel blocks (other than the market designator and channel block already indicated in Items A2 and A3) that the application covers. Example: A winning bidder for three licenses (B016, Block D, Anderson, SC; B232, Block D, Knoxville, TN; B243, Block D, La Salle, IL; B232, Block E, Knoxville, TN; and B295,. Block F, Middlesboro-Harlan, KY) with identical required filings would insert one lowest market designator in Item A2 (B016), one channel block in Item A3 (D), and one market name in Item A5 (Anderson, SC). In Exhibit I the winning bidder would provide the market number designators with the channel block for the additional licenses using the following format: B232D,B243D,B232E,B295F Electronic filers whose ownership, eligibility, waiver and divestiture filings are identical for some licenses but different for others may utilize this streamlined filing procedure only for those licenses that have identical filing information. For those licenses with unique filings, electronic filers must submit a separate application. Example: If an electronic filer wins eight licenses but must file a divestiture plan for only one of them, the electronic filer must submit two separate applications. One application would cover the seven identical licenses, following the guidelines above. A second application would cover the license requiring a divestiture plan. Schedule A would list the market designator, channel block and market name for this unique license, and the application would include all of the required filings and the additional divestiture plan. Electronic filers should file each exhibit to the FCC Form 600 Main Form separately. That is, electronic filers should label each ownership and eligibility exhibit (as described below) and upload it into the "Attachments" tab as a separate ASCII text (.TXT) file. Manual filing. Manual filers must submit a separate FCC Form 600 Main Form, Schedule A and required exhibit information for each license on which they are the high bidder. Manual filers must complete the FCC Form 600 Main Form and Schedule A and attach any exhibits. Manual filers are requested to submit a "clean" (i.e., without lines, markings, footnotes, tables, charts, etc.) original application which does not contain any information in spreadsheet format. Manual filers must mail or deliver the original application to: FCC Auction Processing Section 1270 Fairfield Road Gettysburg, PA 17325 Note: Applications should not be filed with the Office of the Secretary in Washington, D.C. Copies of the FCC Form 600 can be obtained by calling the Commission's Forms Distribution Center at 1-800-418-3676 (outside Washington, D.C.) or 202-418-3676 (in the Washington area). Copies of the FCC Form 600 can also be obtained via the Internet and by Fax-On-Demand. If applicants have any questions concerning availability of the FCC Form 600, they should call the FCC Records Management Branch at 202-418-0210. Microfiche copies of manually filed FCC Form 600 are required for all submissions in excess of five pages in accordance with 47 C.F.R.  24.806(e). However, for this auction the FCC will allow the submission of a 3.5-inch diskette in lieu of the microfiche. These diskettes should contain all attachments and any other supporting documentation in separate ASCII text (.TXT) file formats. When converting word processing files to ASCII text format, formatting is often lost. For example, the conversion frequently results in the deletion of text in footnotes. Manual filers should therefore review each exhibit file to ensure that the information contained in the exhibit is complete. Failure to sign a manually-filed FCC Form 600 will result in dismissal of the application. Only original signatures will be accepted for manually-filed applications. Application processing and grant. After the FCC reviews an applicant's FCC Form 600 and any petitions to deny filed against it, it will determine whether there are any reasons why the license should not be granted. If there are none, it will grant the license, conditioned on timely payments for the license; otherwise, it will take appropriate action. Within five days after license grant:  Winning bidders for D and E block licenses must pay the 80-percent balance of their winning bids, and  Winning F block bidders must bring the total amount on deposit with the FCC up to 20 percent of their net winning bids. They will then execute a promissory note for the balance and pay it off in quarterly installments over ten years, as specified below. Installment payment plans. Upon issuance of their F block licenses, winning bidders for F block licenses may elect to pay the balance of their net winning bids (actual bids less the applicable bidding credits) in quarterly installments over ten years. See 47 C.F.R.  24.716; see also 47 C.F.R.  1.2110(e). The installment plans differ, depending on the licensee's gross revenues in each of the two preceding years, calculated in accordance with 47 C.F.R.  24.709(a)(2), 24.709(b) and 24.720(f).  For licensees with annual revenues of not more than $40 million Interest is based on the rate for ten-year U.S. Treasury obligations at the time the BTA license is issued; Interest-only payments may be made for the first two years after the license is issued; and Payments must amortize principal and interest over the next eight years. See 47 C.F.R.  24.716(b)(3).  For licensees with annual revenues more than $40 million but not more than $75 million Interest is based on the rate for ten-year U.S. Treasury obligations at the time the BTA license is issued, plus 2.50 percent; Interest-only payments may be made for the first year after the license is issued; and Payments must amortize principal and interest over the next nine years. See 47 C.F.R.  24.716(b)(2).  For licensees with annual revenues of more than $75 million Interest is based on the rate for ten-year U.S. Treasury obligations at the time the BTA license is issued, plus 3.50 percent; and Payments must amortize principal and interest over ten years. See 47 C.F.R.  24.716(b)(1). Additionally, any F block licensee that submits a scheduled installment payment more than 15 days late will be charged a late payment fee equal to five percent of the amount of the past due payment. See 47 C.F.R.  24.716(c). Once the Commission has confirmed that the second down payment has been made, the Treasury Department's Birmingham Financial Center, as the Commission's servicing agent, will prepare a note and security agreement for each license and express mail those loan documents to the contacts listed on FCC Form 600. Licensees will have 30 days from the date of the cover letter in this package to execute and return the note and security agreement as a condition of the license grant. After the Treasury Department has received the loan documents and confirmed their completeness, licensees will receive their license certificates along with instructions on how to make their installment payments. Other Matters Anti-collusion rules. To ensure the integrity of its auctions, the Commission's anti-collusion rules generally prohibit bidders for the same BTA from discussing bids or bidding strategies during the course of the auction. The prohibition begins when short-form applications to participate in the auction are filed; it ends when the winning D and E block bidders submit their down payments and the F block winning bidders satisfy the ten-percent initial down payment. (If the upfront payments of all winning bidders in a given BTA are sufficient to cover their required down payments and withdrawn bid payments, as reflected by a negative figure in the last column of Attachment B, we will consider the anti-collusion prohibition to be lifted for that BTA upon release of this public notice.) Records maintenance. Applicants for F block licenses are reminded that they must maintain at their principal place of business an updated file of the ownership, revenue and asset information used to establish their eligibility as entrepreneurs and as small businesses. Winning bidders must maintain such files for the term of the F block license. Applicants that did not win F block licenses must maintain these files until grant of the F block licenses they applied for, or one year from the filing of their FCC Form 175 application, whichever is earlier. See 47 C.F.R.  24.709(c)(3). For further information, contact: News Media: Kara Palamaras at 202-418-0654 Office of the Managing Director (down payment and refund questions): Regina Dorsey, Andy Cox or Gail Glasser at 202-418-1995 Wireless Telecommunications Bureau, Auctions: John Spencer or Mark Bollinger (legal questions), or Jerome Fowlkes (installment payment questions), at 202-418-0660 Wireless Telecommunications Bureau, Commercial Wireless (FCC Form 600 questions): Irene Longin or JoAnn Epps at 202-530-6008, or Shaun Maher, Michael Hamra or Rhonda Lien at 202-418-0620. - FCC -