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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 RETAINS THE MENU OF OPTIONS FOR C BLOCK PAYMENTS WHILE PROVIDING ADDITIONAL FLEXIBILITY FOR LICENSEES EXERCISING THESE OPTIONS
Today the Commission released an Order on Reconsideration of the Second Report and Order ("Reconsideration Order") addressing installment payment financing issues for broadband Personal Communications Services ("PCS") C block licensees. The Reconsideration Order largely affirms the framework of an earlier Order that provided limited debt relief as an alternative to continuing under the existing installment payment plan; however, the Reconsideration Order provides greater flexibility for licensees by permitting elections on a Major Trading Area ("MTA") basis rather than requiring licensees to make one all-inclusive election and increasing the amount of credit available for disaggregated spectrum.
The Reconsideration Order was adopted in response to 37 petitions seeking reconsideration of the Commission's Second Report and Order and Further Notice of Proposed Rule Making ("Second Report and Order"), FCC 97-342. By making these adjustments the Commission will better enable C block licensees to remain participants in the wireless market and will provide for an orderly and efficient reauction of returned spectrum, which will promote competition and the delivery of services to the public.
The principal modification eliminates the requirement that a licensee elect the same restructuring option for all its licenses, providing instead that it must elect the same option for all the licenses it holds within a given MTA. This modification will permit licensees to develop regional business plans and investment strategies while ensuring that entire MTA markets are returned to the Commission for the reauction of C block licenses.
C block licensees not resuming original installment payments may elect amnesty, prepayment, or disaggregation. However, as part of the modifications adopted in the Reconsideration Order, the Commission will also permit licensees to disaggregate and prepay the remaining outstanding balance due on the disaggregated license. The terms for resumption of payments or the prepayment option remain unchanged from the Second Report and Order:
Prepayment: A licensee may purchase any of its licenses, at the face value of the outstanding debt on those licenses. Subject to the affordability exception, a licensee must purchase all of the licenses it now owns within any single MTA. A licensee may use 70% of its down payment on licenses from other MTAs that it does not wish to retain as a credit towards prepaying those licenses that it wishes to keep. Licenses that are relinquished in accordance with this option must be surrendered to the Commission for reauction. A licensee electing this option (and its affiliates) may not bid 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.
However, the Commission has modified the amnesty and disaggregation options as follows:
Amnesty: The licensee may return to the Commission any of its licenses so long as all licenses within an MTA are returned. The entire outstanding debt on returned licenses will be forgiven. For licenses that are returned, the licensee will have two choices: (1) the licensee may opt to re-bid on those licenses in the reauction; or (2) the licensee may opt to forgo the opportunity to re-acquire its returned licenses in exchange for a credit of 70% of the down payment already made on the returned licenses. The same choice must be made for all licenses within an MTA. The 70% credit must be used to prepay either a 30 MHz or 15 MHz disaggregated licenses retained by the licensee.
Disaggregation: A licensee may disaggregate all of its 30 MHz licenses within an MTA and return 15 MHz to the Commission in exchange for forgiveness of 50% of the outstanding debt. For licensees who elect to disaggregate, there are two options, resume payments on the disaggregated license under the terms of the installment payment plan or prepay the outstanding loan balance on the disaggregated license. For a licensee who elects to continue installment payments for the disaggregated license, the licensee will receive a total credit equal to 70% of the original down payment made on the 30 MHz disaggregated license. 50% of the credit will be applied as a down payment on the outstanding debt and 40 percent of the downpayment associated with the disaggregated spectrum that is returned to the Commission may be used to prepay Suspension Interest or reduce principal at the licensee's option. For licensees who elect to prepay outstanding debt on the disaggregated license, the licensee will receive a credit equal to 85% of the original down payment made on the 30 MHz disaggregated license. Consistent with the prepayment option for 30 MHz licenses, this credit represents 70% of the down payment associated with the 15 MHz returned spectrum.
In addition, the Commission:
(1) extended to 90 days, the 60-day non-delinquency period for payments not made by the payment resumption date, and imposed a 5% late payment fee for payments made within this 90-day non-delinquency period;
(2) eliminated the build-out exception to the amnesty option because it is rendered moot by this modified approach;
(3) clarified that a licensee can "afford" as many licenses within an MTA that it can prepay using only the amount of credit available to the licensee for prepayment, for purposes of the rule that a licensee electing prepayment that does not have sufficient funds to prepay all its licenses within an MTA may prepay only the licenses within the MTA that it can afford; and
(4) modified the payment schedules of all C block licensees so that all payments by all licensees will be due on the same date.
As stated in the February 24, 1998, Commission Order (FCC 98-28), C block licensees have until 60 days after publication of today's Reconsideration Order in the Federal Register to select their payment options.
Action by the Commission, March 23, 1998, by Order on Reconsideration of the Second Report and Order (FCC 98-46). Chairman Kennard, Commissioners Furchtgott-Roth and Tristani, with Commissioner Ness concurring in part and dissenting in part and Commissioner Powell concurring in the result and dissenting in part and Commissioners Tristani, Ness and Powell issuing separate statements.
Wireless Telecommunications Bureau contacts: David Shiffrin and Rachel Kazan at 202-418-0660.