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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).
FCC ADOPTS MENU OF OPTIONS FOR MODIFYING C BLOCK PAYMENTS;
(WT DOCKET 97-82)
(WT DOCKET 97-82)
Today the FCC adopted a Second Report and Order and Further Notice of Proposed Rule Making regarding installment payment financing for C Block Personal Communications Service (PCS) licensees.
Section 309(j) of the Communications Act directs the Commission to promote opportunities for participation by small businesses and other designated entities in spectrum- based services. To accomplish this goal, the Commission designated the broadband PCS C and F Blocks for entrepreneurs. In addition, the Commission provided small business participants in the C and F block auctions with bidding credits and installment payments.
The PCS C block auctions concluded on May 6, 1996, and on July 16, 1996. The PCS D, E and F block auction concluded on January 14, 1997. Shortly after the conclusion of the D, E and F block auction, PCS entrepreneur licensees began to make filings at the Commission that requested modification of their installment payment debt. On March 31, 1997, in response to a joint request from several C block licensees seeking to modify their existing installment payment obligations, and because of other debt collection issues, the Wireless Telecommunications Bureau suspended the deadline for payment of all C block installment payments until further notice. The suspension was extended to F block licensees on April 28, 1997.
Since that time, the Wireless Telecommunications Bureau sought public comment on a variety of issues surrounding the future of C and F block payments. In addition, on June 30, 1997 the Commission held a Public Forum to discuss C and F block financing issues. The Commission also formed a Task Force of representatives from the Wireless Telecommunications Bureau, Office of Plans and Policy, Office of General Counsel and Office of Communications Business Opportunities to evaluate the various proposals for alternative financing submitted by the licensees, and to recommend to the Commission how best to expedite resolution of these issues.
Today, the Commission reinstated the deadline for C and F block licensees to make installment payments, with the first payment due March 31, 1998. In addition, C block licensees may elect, by January 15, 1998, one of four options, described below.
Option 1 Existing Note Obligations. Licensees may elect to continue making payments under their original installment payment plan notes in accordance with the terms of those notes and the Commission's rules. Licensees using this option will repay over eight equal payments (beginning with the payment due on March 31, 1998) all interest that has accrued and was unpaid during the period of payment suspension.
Option 2 Disaggregation. On or before January 15, 1998, any C Block licensee may elect to disaggregate one-half of its spectrum (15 MHz of its 30 MHz) in any or all of its licenses and return such spectrum to the Commission for reauction. A licensee must disaggregate spectrum for all of the Basic Trading Area (BTA) licenses it owns within any Major Trading Area (MTA). In return, the licensee will have the proportionate amount, i.e. 50%, of its debt forgiven. Fifty percent of the down payment will be applied towards the debt for the retained spectrum; the licensee must forfeit the other 50% of its deposit. The licensee and its affiliates will be prohibited from rebidding for this spectrum, or otherwise acquiring it in the secondary market, for two years from the date of reauction. Licensees using this option will repay over eight equal payments (beginning with the payment due on March 31, 1998) all interest that has accrued and was unpaid during the period of payment suspension.
Option 3 Amnesty. On or before January 15, 1998, any C Block licensee may return all of its licenses, and in return will have its outstanding C Block debt forgiven. The down payment and any payments made on or before March 31, 1997 will not be returned. The licensee may, however, bid on any of its returned licenses or any other licenses in the reauction. There is no restriction on after-market acquisitions. The single exception to the all or nothing requirement for a grant of amnesty applies to licensees that have met or exceeded the five year build-out requirements by September 25, 1997.
Option 4 Prepayment. On or before January 15, 1998, a C Block licensee may purchase any of its licenses, at face value as bid at the prior C block auction. A licensee must purchase all BTA licenses it now owns within any single MTA. A licensee may use 70% of its downpayment and any additional monies as it is able to immediately raise in order to buy out as many of its licenses as it desires. Licenses that are not prepaid in accordance with this option must be surrendered to the Commission for reauction, in exchange for the Commission's forgiveness of the corresponding debt. A licensee electing this option may not rebid at the reauction for any of the licenses that the licensee relinquishes, and may not otherwise acquire any such license in the secondary market for a period of two years.
In the Further Notice, the Commission sought comment on issues associated with the implementation of these options for modification of the C block payment structure. In addition, the Commission proposed rules for the reauction of all returned licenses, disaggregated spectrum, and C block licenses that are currently held by the Commission.
Action by the Commission, September 25, 1997, by Second Report and Order and Further Notice of Proposed Rule Making (FCC 97-xx)
News Media contact: Audrey Spivack at (202) 418-0654 Wireless Telecommunications Bureau contacts: A. Jerome Fowlkes, David Shiffrin, or Sandra Danner at (202) 418-0660