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During the period from July 15 through August 1, 1997, US WEST conducted interviews of Mr. Ford's supervisors and subordinates, as well as other senior company officials involved in the auction process, to determine who had been aware of the  X4Ford/Baumbaugh communications and to determine whether any other communications  Xv4occurred.[AvZ {O 'ԍUS WEST Response, supra, Question 5.[ US WEST states that the interviews of Mr. Ford's supervisors and other senior company officials involved in the auction process revealed no evidence that any of them was aware of the incident. The company further indicates that some of the subordinates recalled having heard during the auction period that Mr. Ford had spoken with an acquaintance at  X 4Western, but none was aware of the details or timing of the conversation.[B  {O'ԍUS WEST Response, supra, Question 5.[ 22. On July 22, 1997, US WEST representatives met with Commission staff to informally reveal the incidence of the Ford/Baumbaugh communications. Sometime during July 1997, Western learned that US WEST was "preparing to make a disclosure of the  X 4incident" pursuant to Section 1.65 of the Commission's Rules, 47 C.F.R.  1.65.[C ~ {O'ԍUS WEST Response, supra, Question 5.[ Western further states that around this time, Western's outside counsel again interviewed Mr. Baumbaugh, Mr. Stanton (WWC's Chairman/Chief Executive Officer) and Alan Bender (WWC's General Counsel), and it was around this time that Western's FCC counsel was  XK4"apprised of the incident."[DK {O 'ԍWestern Response, supra, Question 5.[ 23. On July 28, 1997, Western filed an Application for Review of the Bureau's June 26 MO&O, which denied Western's Petition to Condition [or Deny] Grant of US WEST's D and E block Licenses. Western's Application for Review did not raise the issue of the Ford/Baumbaugh communications. 24. On August 1, 1997, US WEST submitted a "Statement for the Information of the Commission in accordance with Section 1.65 of the Commission's Rules" ("US WEST Statement"), which formally disclosed Mr. Ford's voice mail message, the receipt of Mr. Baumbaugh's return voice mail message and a telephone conversation with Mr. Baumbaugh during the auction. In response to US WEST's Statement, Western submitted a letter on August 6 to clarify certain factual assertions ("Western Statement"). 25. On August 12, 1997, US WEST filed an opposition to Western's Application for Review, and on August 27, Western filed its reply. The Commission has not issued a final" D,))qq"  X4ruling on Western's Application for Review. On September 26, the Commission granted the  X4remaining five PCS licenses to Western.E {Ob'ԍ Public Notice, FCC Announces Grant of Broadband Personal Communications Services D and E Block Licenses to Western PCS BTA I Corporation, 12 FCC Rcd 15264 (WTB 1997). 26. On November 21, 1997, the Bureau's Enforcement and Consumer Information Division issued each company a letter of inquiry pursuant to Section 308 of the Communications Act of 1934, as amended, 47 U.S.C  308(b). Western submitted its response to the Division's letter of inquiry on December 15 ("Western Response"), and US WEST submitted its response to the letter on December 16 ("US WEST Response").  X14C III. DISCUSSION ă 27. Given the Commission's statutory obligation to use auctions as a primary licensing tool, the protection of the integrity of the auction process is of paramount importance. Consequently, we are concerned about actions that compromise the integrity of the auction process. This is particularly true with regard to behavior that violates the anticollusion rule, Section 1.2105(c) of the Commission's Rules. 28. Section 1.2105(c) states in pertinent part: ` ` all applicants are prohibited from cooperating, collaborating, discussing, or disclosing in any manner the substance of their bids or bidding strategies, or discussing or negotiating settlement agreements, with other applicants until after the high bidder makes the required down payment, unless such applicants are members of a bidding consortium or other joint bidding arrangement identified on the bidder's shortform application pursuant to 1.2105(a)(2)(viii).x`  X4 47 C.F.R. 1.2105(c)(1).  XN429. The purpose of the anticollusion rule is to preserve the integrity and  X74competitiveness of the auction process.oF7" {O !'ЍSecond Report and Order, 9 FCC Rcd at 238687.o Just two days after the commencement of the Broadband PCS D, E, and F block auction, the Bureau warned "auction applicants who have applied for the same geographic areas ...[to] avoid all discussions with each other which affect, or in their reasonable assessment, have the potential to affect their bids or bidding  X4strategies."G yO@&' " Ѝ"Wireless Telecommunications Bureau Provides Guidance on the AntiCollusion Rule for D, E, and F Block  {O''Bidders," Public Notice, DA 961460 (released August 28, 1996). A few weeks later, the Bureau again emphasized to applicants that the anticollusion rule prohibits them from "cooperating, collaborating, discussing, or disclosing in any" G,))qq"  X4manner the substance of their bids or bidding strategies."H yOy' "y ЍLetter from Kathleen O'Brien Ham, Chief, Auctions Division, to David L. Nace, Esq., 11 FCC Rcd 11363 (September 17, 1996). Further, the Commission has stressed that any bidder found in violation of the anticollusion rule faces potential sanctions of license revocation or forfeiture and may even be prohibited from participating in future  X4auctions.TI  {O' "t ЍImplementation of Section 309(j) of the Communications Act Competitive Bidding, Fifth Report and Order,  x 9 FCC Rcd 5532, 557071 (1994) ("Fifth Report and Order"). The United States Department of Justice supported  {O ' x7 efforts by the Commission to minimize the risk of tacit collusion in the Commission's auctions. See Comments of  x the United States Department of Justice, dated October 8, 1997, in W.T. Docket No. 9782 ("DOJ Comments"), at 2.T 30. Here, US WEST concedes that the "[Ford/Baumbaugh] communications raise an  Xv4issue under Section 1.2105(c) of the [Commission's] Rules."Jv {O'ԍSee Letter dated August 1, 1997., from William T. Lake (counsel to US WEST) to William F. Caton, Acting Secretary, Federal Communications Commission. One of US WEST's vice presidents, who was also the head of the company's D, E, and F block auction team, disclosed information about the company's bidding strategy concerning a particular market to a  X14competing bidder during the auction. The message, i.e., US WEST's bid in round 24 was mistakenly placed, is precisely the type of disclosure prohibited under the anticollusion rule. The voice mail message revealed to Western that although US WEST was bidding in the market, US WEST was not interested in winning the Olympia, Washington BTA. US WEST concedes that the information was disclosed for the purpose of affecting Western's bidding  X 4strategy in the auction, i.e., to avoid retaliatory bidding by Western in markets important to  X 4US WEST.[K .  {O'ԍUS WEST Response, supra, Question 1.[ 31. Furthermore, it appears that the behavior of US WEST and Western was influenced by the disclosure and, in addition, that they may have cooperated in order to influence the outcome of the auction. The Commission's bidding record shows that after Mr. Ford's voice mail message was sent at or about the time of round 24, Western stopped bidding on the Olympia, Washington market. At the same time, US WEST, which by its own account was not interested in the Olympia, Washington market, nonetheless continued to bid actively for the license and engaged in a "bidding war" with a third bidder (Whidbey) over the market. However, after Western reentered the bidding and became the high bidder in round 56, US WEST stopped bidding for the license. Thereafter, a "bidding war" ensued  X4between Western and Whidbey, after which Western ultimately won the E block Olympia,  X4Washington BTA license.L  {O&' " ЍSee Public Notice, DA 9781 (released January 15, 1997) (identifying Western as the winning bidder for the Olympia, Washington BTA, E block). " L,))qq"Ԍ32. These facts refute US WEST's assertion that the subject disclosure and discussion  X4had no impact on the outcome of the auction.[M {Ob'ԍUS WEST Response, supra, Question 1.[ The factual record shows that the subject communications very likely benefitted US WEST and Western and disadvantaged other bidders. US WEST likely benefitted from the disclosure by reducing the possibility that Western would compete in markets of interest to US West. Indeed, the bidding record shows that in the 20 rounds following the disclosure, Western began bidding in 11 new markets and US WEST began bidding in 33 new markets. In no case did either company bid on a market  X_4in which the other was designated the high bidder. Additionally, it appears that after the subject disclosure, US WEST obtained a relatively safe haven (the Olympia market) in which  X14to "park eligibility."N1Z yO< 'ԍUnder the auction rules, bidders were required to actively bid on a certain percentage of their maximum  {O 'eligibility, as initially determined by their upfront payment, in each round of the auction. See, Public Notice, Auction of Broadband PCS (D, E, and F Blocks), Qualified Bidders and Bidder Instructions, 11 FCC Rcd 9958, 9960 (WTB 1996). Rather than bidding directly on markets of interest, some auction participants bid elsewhere to preserve eligibility while not driving prices higher in markets of interest to themselves. This strategy is informally known as "parking eligibility." Normally, an auction participant that parks eligibility runs the risk of having to either purchase the license or pay a substantial withdrawal payment if another  X 4bidder does not subsequently place a higher bid on the market.!O|  yO'ԍUnder the auction rules, a bidder is permitted to withdraw a bid it previously placed in a particular market, subject to certain withdrawal payments. Where no subsequent bid is placed, the penalty is assessed at a  {O'percentage of the total amount of the withdrawn bid until the full amount can be assessed, i.e., when the license is reauctioned. If another bidder subsequently places a bid for the market, the bidder that placed the withdrawn bid is subject to a payment equivalent to the difference between the amount of the withdrawn bid and the amount of the winning bid. No withdrawal payment is assessed if the subsequent winning bid exceeds the withdrawn  {O:'bid. See e.g., 47 C.F.R. 24.704.! US WEST reduced this risk by disclosing to Western that it was not a serious contender for the Olympia market. In so doing, US WEST had effectively guaranteed that Western would later outbid US WEST in that market, since Western would have no fear of triggering a "bidding war" against US WEST over the Olympia market. US WEST subsequently placed four bids for Olympia (in rounds 41, 45, 48, and 54) with minimal risk that such bids would result in winning the license or in a withdrawal payment for the company. 33. Western likely benefitted from the communications as well. Western learned of US WEST's lack of interest in Olympia and, thus, learned more about the true overall demand for that market. Western also got a window into US WEST's overall auction plan and strategy. Mr. Ford's disclosure gave Western unique and exclusive information to the effect that US WEST's bidding strategy was not what it appeared. Until the voice mail message, Western possessed evidence (i.e., through the March/April 1995 meeting with US West representatives; the June 1996 golf game; and discussions with a third party, BDPCS, Inc.) of US West's desire to win the Olympia, Washington BTA. It also appears that US WEST avoided directly competing with Western in Olympia, as evidenced by the fact that US WEST immediately removed itself from bidding on the market once Western returned as the"| O,))qq" high bidder in round 56. 34. It is apparent that US WEST and Western's conduct unfairly disadvantaged the other bidders in the market by creating an impermissible asymmetry of information. Western alone was privy to US WEST's strategic bidding information. Other bidders were at a competitive disadvantage visavis Western because of their inability to access, analyze, and act upon this strategic information. In particular, Whidbey expended its auction time, energy and resources responding to the insincere bids of US WEST in Olympia, an expenditure Western was able to avoid. In addition, the continued presence of US WEST, a bidder with vast resources, may have had considerable impact on other bidders' estimates of the overall demand for the Olympia market and thus on their willingness to enter or to remain in the BTA. 35. The fact that Messrs. Ford and Baumbaugh may have had a prior acquaintance does not make their conversation permissible. Indeed, their relationship should have placed US WEST and Western on notice that heightened precautions may have been needed to ensure that prohibited discussions did not occur. Furthermore, the fact that the PCS markets  Xy4had been the topic of preauction conversations (i.e., at the March/April 1995 meeting and the June 30, 1996 golf game) between Messrs. Ford and Baumbaugh does not mitigate the violation. Rather, the preauction conversations may have given further substance and context to Mr. Ford's voice mail message. 36. Although the record in this matter appears to show that the disclosed information was used to advantage US WEST and Western, such a finding is not necessary to issue a penalty under the anticollusion rule. Irrespective of whether the information was used, a violation results from the mere communication or conveyance of prohibited information. It would severely hamper the Commission's ability to maintain the integrity of its auctions if a penalty for violations of Section 1.2105(c) could result only after a showing that prohibited information was actually used in an anticompetitive manner. The basis for the rule is to prohibit such disclosures in the first instance. 37. Further, the circumstances presented constitute an apparent violation of Section 1.65 of the Commission's Rules. Section 1.65 requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission within 30 days of any substantial change that may be of decisional significance  X4to that application.P" {OV"'ԍ47 C.F.R.  1.65. See also Letter from Kathleen O'Brien Ham, Chief, Auctions Division, Wireless Telecommunications Bureau, to Jonathan D. Blake and Robert J. Rini, DA 952404 (rel. November 28, 1995) ("Blake Letter") (noting that Section 1.65 requires an auction applicant to bring to the Commission's attention any communication not permissible under the applicant's certification pursuant to Section 1.2105(c)). In its shortform application, US WEST certified that it had not or would not enter into any explicit or implicit agreements, arrangements or understandings of any kind with any undisclosed parties regarding the amount of their bids, bidding strategies or  X"4particular licenses on which they would or would not bid. Here, the subject conduct i.e.,""P,))qq " conveying bidding strategy to an undisclosed competing bidder and cooperating with that undisclosed competing bidder in obtaining a license invalidated US WEST's certification,  X4thereby comprising a "substantial change" in US WEST's application.mQ\ yOK'ԍUnder the auction rules, US WEST would not be permitted to amend its shortform application after  {O'expiration of the filing deadline to reflect the creation of a joint bidding arrangement with Western. See Blake  {O'Letter, DA 952404 (rel. November 28, 1995), supra. m As such, the incident was a reportable event under Section 1.65 and required US WEST to bring the matter to the  X4Commission within 30 days.RZ yOA 'ԍ47 C.F.R.  1.65. The United States Department of Justice stressed that the Commission's imposition of notification requirements for auction competitors engaging in discussions or negotiations during the auction  {O 'would facilitate detection of potential anticompetitive arrangements. See DOJ Comments, at 3. US WEST's reporting of the incident was untimely under the rule. By its own admission, US WEST, through Mr. Ford, had knowledge that a "substantial change" occurred on September 19 and 20, 1996, at the time of the subject communications. US WEST, however, did not formally report the "substantial change" to the Commission until August 1, 1997, approximately 11 months after it occurred. US WEST's failure to promptly  X14notify the Commission constitutes a violation of Section 1.65 of the Commission's Rules.KSZ1 {O'ԍSee Elwood Beach Broadcasting, Ltd., 8 FCC Rcd 453 (1993) (where company's principal/general partner had knowledge that company's proposed transmitter site had become unavailable, company's failure to promptly notify the Commission constituted a violation of Rule 1.65).K The fact that Mr. Ford did not disclose the incident to US WEST until after the expiration of the 30 day time period does not absolve US WEST from the requirements of Section 1.65.  X 4The violation was committed by US WEST's thenVice President of Business Development and External Affairs, Wireless Group, who headed the company's auction team, and had also held a variety of inhouse counsel positions in the company over a period of 11 years. As such, the company is fully accountable for the actions of its officials, including those of Mr.  X4Ford.}TZ0  {Oq'ԍElwood Beach Broadcasting, Ltd., supra. See also, In re Applications of PCS 2000, LP, Memorandum Opinion and Order, 12 FCC Rcd 1681,  16 (1997) (holding company ultimately responsible for the  yO'misrepresentations made during the auction by its officer/registered bidding agent). } 38. We also find the timing of US WEST's voluntary disclosure to the Commission somewhat disconcerting. Specifically, while US WEST claims to have reported this incident to the Commission within three weeks of discovering the violation, the incident was not formally reported to the Commission until approximately four weeks after the Wireless Telecommunications Bureau granted 48 of US WEST's pending applications for D and E block licenses and after the expiration of the 30 day time period within which the Bureau, on  X4its own motion, could have set aside the grant.LUR  yO$'ԍ 47 C.F.R.  1.108.L 39. Under Section 503(b) of the Act, a forfeiture can be imposed against any applicant or licensee that willfully or repeatedly fails to comply with any rule of the"U,))qq"  X4Commission.@V yOy'ԍ 47 U.S.C.  503(b).@ For purposes of Section 503(b), the term "willful" means that the violator knew it was taking the action in question, regardless of whether there was an intent to violate  X4the rule.pWX {O'ԍ See Southern California Broadcasting Co., 6 FCC Rcd 4387 (1991).p Pursuant to that definition, we conclude that US WEST willfully engaged in two violations of Section 1.2105(c) of the Commission's rules by intentionally disclosing and discussing bidding strategy with a competing bidder during the auction the voice mail that Mr. Ford left for Mr. Baumbaugh and the telephone conversation between Messrs. Ford and Baumbaugh. US WEST also willfully 'p$\N#engaged in one violation of' p$\N# violated p$\N#  Section 1.65 of the Commission's rules by not timely informing the Commission of the prohibited communications. 40. Violations of the anticollusion rule during an auction directly threaten the  X 4integrity and competitiveness of the auctions process.6X$  {O'ԍ See Implementation of Section 309(j) of the Communications Act - Competitive Bidding, Second Report  {O'and Order, 9 FCC Rcd 2348, 2386-87 (1994)(anticollusion rule adopted to preserve integrity and competitiveness of auctions process). 6 We believe that the actions of US WEST and Western are particularly egregious because they evidence a specific intent to violate the anticollusion rule. While, as noted above, a party's intent to violate the rule is not necessary to a determination of whether that party acted willfully, we find that an intent to violate a Commission rule is probative in determining the penalty to be assessed. US WEST and Western intended to violate the anticollusion rule by engaging in communications regarding bidding strategy precisely the types of communications the rule was adopted to prohibit. In light of the above, we assess against US WEST a forfeiture in the amount of $100,000 for each of its two willful violations of Section 1.2105(c) of the Commission's rules, for a total of $200,000. 41. In addition, US WEST, through its vice president, knew that its bidding strategy had been disclosed to and discussed with a competing bidder. US WEST's violation of Section 1.65 by failing to timely report to the Commission the communications between Messrs. Ford and Baumbaugh was not only willful but was repeated. Thus, it was a "continuing violation" under Section 503(b) of the Communications Act. Each day of a continuing violation is considered a separate violation for purposes of computing a  X4forfeiture.uY {O"'ԍ See Eastern Carolina Broadcasting, Inc., 6 FCC Rcd 6154, 6155 (1991).u In this case, the violation began on October 19, 1996, 30 days after the date of the disclosure, and continued until US WEST reported the incident to the Commission (US WEST reported the incident to the Commission informally on July 22, 1997 and in writing on August 1, 1997). We find that the appropriate forfeiture amount for each day of this continuing violation was $5,000, for a total of $1,000,000. 42. In determining the amount of the forfeiture, we have considered the relevant" h Y,))qq" statutory factors enumerated in Section 503(b)(2) of the Communications Act of 1934, as amended, including the nature, circumstances, extent and gravity of the violations. Pursuant to Section 1.80 of the Commission's Rules, US WEST may avail itself of the opportunity to present mitigating evidence showing why a forfeiture should not be imposed or why the amount should be adjusted downward. Upon receipt of such evidence, we will consider all relevant factors, including the licensee's overall compliance history, whether the licensee voluntarily disclosed the violation to the Commission, and the circumstances under which the licensee came forward with information concerning the incident.  X14}? IV. CONCLUSION ă 43. Accordingly, pursuant to Section 503(b) of the Communications Act of 1934, as amended, 47 U.S.C. 503(b), and Section 1.80 of the Commission's Rules, 47 C.F.R. 1.80, US WEST Communications, Inc., is hereby NOTIFIED of its APPARENT LIABILITY FOR  X 4FORFEITURE in the amount of one million and two hundred thousand dollars ($1,200,000) for its willful and repeated violation of Section 1.2105(c) of the Commission's Rules, 47 C.F.R. 1.2105(c) and its willful and repeated  p$\N$ violation of Section 1.65 of the Commission's Rules, 47 C.F.R.  1.65. The amount specified was determined after consideration of the factors set forth in Section 503(b)(2)(D) of the Communications Act of 1934, as amended, 47 U.S.C. 503(b)(2)(D). 44. Therefore, IT IS HEREBY ORDERED, pursuant to Section 1.80(f)(3) of the Commission's Rules, 47 C.F.R. 1.80(f)(3), that within thirty (30) days of the release date of this Notice, US WEST Communications, Inc., SHALL PAY the full amount of the proposed forfeiture OR SHALL FILE a response showing why the proposed forfeiture should not be imposed or the amount should be reduced. 45. Payment of the forfeiture may be made by mailing a check or similar instrument, payable to the order of the Federal Communications Commission, to the Federal Communications Commission, Post Office Box 73482, Chicago, Illinois 606737482. The payment should note the File Number of the abovecaptioned proceeding. Payment of the forfeiture may be made by credit through the Commission's Billing and Collections Branch at (202) 4181995." Y,))qq" 46. IT IS FURTHER ORDERED that a copy of this Notice SHALL BE SENT to US WEST Communications, Inc., by Certified Mail, Return Receipt Requested. ` `  hhCqFEDERAL COMMUNICATIONS COMMISSION ` `  hhCqMagalie Roman Salas ` `  hhCqSecretary "1Y,))qq"  X4K ATTACHMENT ă  X4g< BIDDING RECORD > OLYMPIA, WASHINGTON BTA (MARKET 331)  X' BLOCK E, BROADBAND PCS AUCTION ă h ddx !ddxvZZZZZZZ h     &&   X' Round 7  X' Lt.Wave 7  X' N.Coast 7  X' Omnipt. 7  X' USWEST 7  X' Western 7  X' Whidbey   q v &_&  2_ $1,000_ $11_ _ _ _ q q 7 10 _  _  _  _ $27,000 _  _ q q  11 _  _  _  _  _ $79,088 _ q q   24 _  _  _  _ $105,000 _  _ q q   40l_ l_ l_ l_ l_ l_ $150,000q q   41_ _ _ _ $176,000_ _ q q l 44N_ N_ N_ N_ N_ N_ $205,000q q  45_ _ _ _ $231,000_ _ q q N 460_ 0_ 0_ 0_ 0_ 0_ $257,000q q  48_ _ _ _ $283,000_ _ q q 0 &__&  53_ _ _ _ _ $311,000_  S)'#&a\  P6G;&P#$311,000*#Xj\  P6G;y XP#q q  &__&  54_ _ _ _ $342,000_ _ q q  56_ _ _ _ _ $376,320_ q q  83e_ e_ e_ e_ e_ e_ $414,000q q  84_ _ _ _ _ $455,001_ q q e 93G_ G_ G_ G_ G_ G_ $501,000q q  94_ _ _ _ _ $551,001_ q q G 120)!_ )!_ )!_ )!_ )!_ )!_ $579,000q    &_&  121" " " $637,000" " $637,001"   )! * high bid for round 53