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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 ) ) Pacific Wireless Cable, Inc. )File No. BMDP960510KN BTA No. B490, Guam ) Multipoint Distribution Service ) Request for Waiver of Section 21.955(b) ) ORDER Adopted: July 8, 1997 Released: 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 Pacific Wireless Cable, Inc. (Pacific), the winning bidder in Guam, Basic Trading Area (BTA) 490, in the Multipoint Distribution Service (MDS) auction. Upon consideration of the circumstances that resulted in Pacific's failure to timely remit the required second down payment on this authorization, we conclude that Pacific is not entitled to an entire waiver of the down payment rules. For the reasons set forth below, Pacific is subject to a late fee of $208.25, which is five percent of the amount that was not timely paid. 2. Background. On March 28, 1996, the Commission concluded the MDS auction. Pacific was the winning bidder on two BTA authorizations. 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 3 and April 5, 1996, Pacific submitted initial down payments for the two authorizations in the amount of $10,266, bringing its total amount on deposit with the Commission, including its upfront payment of $7839, to $18,105, or ten percent of its net winning bids. 3. On October 4, 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 Pacific for B490. 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 October 11, 1996. The down payment owed by Pacific for B490 as of October 11, 1996, was $4165. Pacific's payment was initiated by wire transfer at 6:14 p.m. on October 11, 1996. On October 15, 1996, Pacific filed a request for waiver of this second down payment deadline. 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 Multipoint Distribution Services (MDS), Broadband C Block Personal Communications Services, and 900 MHz Specialized Mobile Radio (SMR) applicants in connection with three auctions. Subsequently, on November 14, 1996, the Mass Media Bureau issued an additional public notice seeking comment on the waiver request filed by Pacific. No comments were submitted with respect to the Pacific waiver request, however. 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 also 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, Pacific asserts that its payment was late owing to inadvertent errors and difficulties with accessing and transferring the funds. Pacific explains that "the wire transfer was initiated late because of an inadvertent employee error resulting from a management restructuring of an affiliated company." According to Pacific, the recent restructuring added various financial controls, including new requirements for the authorization of wire transfers and checks by a member of the board of directors, in particular, that any transfer between the wireless cable operator O'ahu Wireless Cable, Inc. (OWC) and Pacific "must now take the form of a check and that the signature of a member of the board of directors was required on a wire transfer." Pacific submits that the new requirement was inadvertently neglected until the morning of October 11, 1996. At that time, efforts to remit the funds were further hampered by the six-hour time delay between the respective time zones of OWC and Pacific. In sum, by the time the instrument of transfer could be signed by a member of the board of directors and physically conveyed to the bank, it was 6:14 p.m. eastern time. 7. We believe that Pacific has presented sufficient facts to justify the grant of a partial waiver of the down payment rule. Clearly, upon receiving notice, Pacific initiated its normal procedure to access the funds, and acted promptly to deal with the mechanical and practical difficulties which arose. Therefore, Pacific's actions demonstrate that, but for the circumstances explained to the Commission, it would have been able to meet its payment obligations on time. Further, the record indicates that prior to the second down payment, Pacific made all previously required auction payments on time and in full. There is no indication that Pacific sought to deliberately delay payment of the amount due. We conclude that upon receiving notice, Pacific 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 Pacific in default, cancelling the license and imposing a default penalty. In this connection, it is notable that Pacific's payment was transmitted on October 11, 1996, albeit after the close of business. 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 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, owing 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 days late). 9. We do not believe that Pacific is entitled to a total waiver of the down payment rules, however. Although Pacific's late payment here was due to an administrative delay in accessing funds, the disbursement authorization was a requirement of Pacific's own business procedure and therefore 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 Pacific did not anticipate the delays occasioned by compliance with its own internal company procedures does not excuse its failure to make timely payment. Under the circumstances, we conclude that Pacific should be subject to a late fee of five percent of the $4165 that was not timely paid, or $208.25. 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 Pacific Wireless Cable, Inc. IS HEREBY GRANTED IN PART, subject to a five (5) percent late fee, as herein specified. Pacific Wireless Cable, Inc. must pay a late fee of $208.25, 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 issue the BTA authorization for B490 and the MDS conditional station license for File Number BMDP960510KN 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) -$208.25; 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.