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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Paradise Cable, Inc. )File No. BMDP960510KP Sarasota-Bradenton, Florida, B408) Multipoint Distribution Service ) Request for Waiver of Section 21.955(b) ) ORDER Adopted: July 8, 1997Released: July 8, 1997 By the Chief, Video Services Division: 1. By this Order, we partially grant a request for waiver of Section 21.955(b) of the Commission's rules, 47 C.F.R.  21.955(b), filed by Paradise Cable, Inc. (Paradise), the winning bidder in Sarasota-Bradenton, Florida, Basic Trading Area (BTA) B408, in the Multipoint Distribution Service (MDS) auction. Upon consideration of the circumstances that resulted in Paradise's failure to timely remit the required second down payment on this authorization, we conclude that Paradise is not entitled to an entire waiver of the down payment rules. For the reasons set forth below, Paradise is subject to a late fee of $5771.50, which is five percent of the amount that was not timely paid. 2. Background. On March 28, 1996, the Commission concluded the MDS auction. Paradise was the winning bidder on one BTA authorization. On March 29, 1996, the Commission announced by Public Notice that, pursuant to Section 21.955 of the Commission's rules, winning bidders that qualified as small businesses would be required to submit, within five business days, sufficient funds to bring their total deposits with the Commission to ten percent of the sum of their winning bids, less the applicable fifteen percent bidding credit. Consequently, pursuant to Section 21.960(b)(1), on April 4, 1996, Paradise submitted an initial down payment for B408 in the amount of $111,699, bringing its total amount on deposit with the Commission for this authorization, including its upfront payment of $3731, to $115,430, or ten percent of its net winning bid. 3. On June 28, 1996, the Mass Media Bureau released a public notice notifying certain MDS applicants that the Bureau was prepared to issue BTA authorizations, including the application filed by Paradise. In that public notice, applicants who qualified as small businesses were required to submit additional funds to bring their total deposits with the government to twenty percent of their net winning bids by July 8, 1996. The down payment owed by Paradise as of July 8, 1996, was $115,430. On July 5, 1996, Paradise filed a request for waiver of this second down payment deadline, asking for an additional three-day period to make the requisite payment. On July 9, 1996, Paradise submitted the amount due by wire transfer, one day past the due date, and filed a supplement to its waiver request. 4. On October 18, 1996, the Mass Media Bureau and the Wireless Telecommunications Bureau issued a joint public notice seeking comment on down payment waiver requests filed by Paradise and several Broadband C Block Personal Communication Services and 900 MHz Specialized Mobile Radio (SMR) applicants. The majority of the applicants seeking waiver filed comments supporting the grant of waiver requests under the circumstances described, as did the majority of commentators. One commentator specifically opposed Paradise's waiver request on the basis that the circumstances causing the late payment were foreseeable. Paradise filed a response on November 12, 1996. 5. Discussion. The procedures for the submission of down payments for small business MDS entities are set forth in Section 21.955(b) of the Commission's rules. Under this rule, an applicant must remit the required second down payment within five business days after the Commission declares by public notice that it is prepared to issue that applicant's BTA authorization. To receive a waiver of this rule requiring timely down payments, a waiver request must demonstrate either that: "(a) [t]he underlying purpose of the rule will not be served, or would be frustrated, by its application in the particular case, and that grant of the waiver is otherwise in the public interest; or (b) [t]he unique facts and circumstances of a particular case render application of the rule inequitable, unduly burdensome or otherwise contrary to the public interest." As the Commission has previously noted, the integrity and functioning of the auction process is dependent on winning bidders meeting their down payment obligations promptly. 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 services to the public. In the Second Report and Order in the Competitive Bidding docket, the Commission established general rules and procedures to be used for all auctionable services. In establishing the timing of down payments, the Commission noted that this requirement would deter defaults by discouraging financially unqualified bidders who might "shop" a winning bid in order to obtain financing for a down payment. 6. In its waiver request, Paradise asserts that although the public notice was released on Friday, June 28, 1996, its counsel's publications service, D.C. News and Data, Inc., was unable to provide a copy to counsel until Monday, July 1, 1996. According to Paradise, its counsel immediately sent the notice to its President and Chief Executive Officer, Kenneth Marshall. Paradise explains that Mr. Marshall was traveling and did not learn of the public notice until Tuesday, July 2, at which time he immediately notified its investors that the remainder of the twenty percent down payment was due by July 8, 1996. Paradise further stated that its investors "needed to liquidate certain securities" to raise the payment, that they promptly sold the securities on Wednesday, July 3, 1996. However, according to Paradise, the funds could not be wired to the Commission before Tuesday, July 9, 1996, "as it is standard securities industry practice to hold the proceeds of such transactions for three business days for clearing." Paradise asserts, moreover, that hitherto it has demonstrated "good faith and responsible compliance" with its obligations under the Commission rules. 7. We believe that Paradise has presented sufficient facts to justify the grant of a partial waiver of the down payment rule. Clearly, once Paradise received notice, it acted as promptly as practicable to notify its investors who paid the second down payment in full, albeit one day late. Therefore, Paradise's actions demonstrate that, but for the circumstances explained in its waiver request, Paradise would have been able to meet its payment obligations on time. Further, the record indicates that prior to the second down payment, Paradise made all previously required auction payments on time and in full. There is no indication that Paradise sought to deliberately delay payment of the amount due. We conclude that upon receiving notice, Paradise generated a concerted effort to access and remit the down payment amount, thus demonstrating a good faith endeavor to comply with the auction payment rules. 8. Based on the foregoing, we conclude that a strict application of the down payment deadline specified in Section 21.955(b) would not serve the public interest in this instance. Such a course would result in the Commission declaring Paradise in default, cancelling the license and imposing a default penalty. In this connection, it is notable that Paradise informed the Commission of its dilemma and requested a waiver prior to the due date, and then submitted the balance due only one day after the payment was due. Further, unlike the initial payment, an untimely remittance of the second down payment does not alter either the timing of the auction or our own review of the applicant's qualifications. Rather, the principal effect of the late payment of the second down payment, from a procedural viewpoint, is to delay the issuance of the applicant's authorization. An applicant's failure to timely submit the second down payment, while still a delinquency, is therefore comparatively less disruptive to the auction process. Accordingly, we believe that some flexibility is appropriate in addressing a minor delinquency with respect to the second down payment. See, e.g., Southern Communications Systems, Inc., 12 FCC Rcd 1532 (1997 Wireless Tel. Bur.) (granting partial waiver where applicant was unaware of the release of the public notice and submitted payment one day late); MFRI, Inc., 12 FCC Rcd 1540 (1997 Wireless Tel. Bur.) (granting partial waiver where, due to applicant's internal administrative errors, the payment was one day late); Longstreet Communications International, Inc., 12 FCC Rcd 1549 (1997 Wireless Tel. Bur.) (granting partial waiver where applicant was unaware of the release of the public notice and submitted payment seven business days late). 9. We do not believe that Paradise is entitled to a total waiver of the down payment rules, however. Although Paradise's late payment was due to a delay in the availability of funds, time constraints such as clearance and transfer periods for monetary transactions are incident to standard banking industry practices and are thus foreseeable. It is the applicant's responsibility to anticipate such requirements and ascertain fund availability in order to comply with specified payment deadlines throughout the auction process. The fact that Paradise did not foresee the delay does not excuse its failure to make timely payment. Under the circumstances, we conclude that Paradise should be subject to a late fee of five percent of the $115,430 that was not timely paid, or $5771.50. This amount is commercially reasonable and serves to underscore the importance of making timely auction payments. 10. Accordingly, IT IS ORDERED, that the request for waiver filed by Paradise Cable, Inc. IS HEREBY GRANTED IN PART, subject to a five percent late fee, as herein specified. Paradise Cable, Inc. must pay a late fee of $5771.50, in accordance with the instructions set forth in Attachment A, within five business days from the release date of this Order. The Mass Media Bureau will grant the BTA authorization for B408 and the MDS conditional station license for File Number BMDP960510KP following notification of receipt of the required payment. This action is taken under delegated authority pursuant to Section 0.283 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Barbara A. Kreisman Chief, Video Services Division Mass Media Bureau ATTACHMENT A The payment 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." Payments must be accompanied by a completed FCC Remittance Advice Form (FCC Form 159). PAYMENT BY WIRE TRANSFER To make a payment by wire transfer, please send via facsimile a completed Form 159 to Mellon Bank at (412) 236-5702 at least one hour before placing the order for the wire transfer. On the cover sheet of the fax indicate "Wire Transfer - Auction Payment for Auction 6." Please indicate on the upper left hand corner of the Form 159 the lockbox number "358850." The purpose of the FCC Form 159 is to identify the payor, the amount of the payment, and what the payment is for. Proper completion of this form is critical to ensuring correct credit for the payment. Before completing an FCC Form 159, read the instructions below. 1) Complete all of the blocks in the Payor Information Section, Blocks 1 through 10. 2) Complete the following auction-specific information in Blocks 14(A), 15(A), 16(A) and 17(A). 14(A) - Payment Type Code, enter the letters "APEN"; Block 15(A) - Quantity, enter "1"; Block 16(A) - $5,771.50; and Block 17(A) - FCC Code 1, enter "6". When wiring funds, please give your bank 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 14: "APEN") FCC CODE: (same as FCC Form 159, Block 17: "6") PAYOR NAME: (same as FCC Form 159, Block 3) LOCKBOX NO. 358850 PAYMENT BY CASHIER'S CHECK Payment by cashier's check and accompanying FCC Form 159 must be in an individual envelope and specifically addressed to: Mellon Bank Attention: Auction 6 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.") For further information or assistance, please call Regina Dorsey, Office of Managing Director, Billings and Collections Branch at (202) 418-1995.