******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. 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 AMK International, Inc. Mobilecall, Inc. Requests for Waiver of Section 90.811of the Commission's Rules Regarding Various MTA Markets ) ) ) ) ) ) ) ) ) ) File Nos. D031481 D031482 File No. D031483 ORDER Adopted: February 4, 1997 Released: February 4, 1997 By the Chief, Wireless Telecommunications Bureau: I. INTRODUCTION AND BACKGROUND 1. By this Order, we partially grant requests for waiver of Section 90.811 of the Commission's rules filed by AMK International, Inc. (AMK) and Mobilecall, Inc. (Mobilecall), the winning bidders for three Major Trading Area (MTA) markets in the 900 MHz Specialized Mobile Radio (SMR) service. On June 28, 1996, the Wireless Telecommunications Bureau released a public notice notifying applicants that the Bureau was prepared to award applications for MTA licenses in the 900 MHz SMR service, including those filed by AMK and Mobilecall. 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 ten percent of their net winning bids by July 8, 1996. 2. The down payment amount owed by AMK as of July 8, 1996 was $1,993.25, and the amount owed by Mobilecall as of July 8, 1996 was $8,032.00. Both companies failed to make payment, and the Commission staff notified AMK and Mobilecall of this delinquency on July 23, 1996. Upon receiving this notification, AMK and Mobilecall submitted their remaining balances by wire transfer to Mellon Bank on July 24, 1996, and filed requests for waiver of the second down payment deadline. 3. On October 18, 1996, the Wireless Telecommunications Bureau and the Mass Media Bureau released a joint public notice seeking comment on the above applicants' requests for waiver and several other down payment waiver requests filed by C Block, 900 MHz SMR, and MDS applicants. Most of the waiver applicants filed comments supporting grant of waivers under the circumstances described. However, four commenters urged the Commission to deny the waiver requests on grounds of fairness and on the basis that such defaults are evidence of bad faith. II. DISCUSSION 4. The procedure for the submission of winning bid down payments is set forth in Section 90.811 of the Commission's rules: Each winning bidder that qualifies as a small business shall make a down payment equal to ten percent of its winning bid (less applicable bidding credits); a winning bidder shall bring its total amount on deposit with the Commission (including up-front payment) to five percent of its net winning bid within five business days after the auction closes, and the remainder of the down payment (five percent) shall be paid within five business days following Public Notice that the Commission is prepared to award the license. 5. AMK and Mobilecall, owned and operated by the same persons, argue that they relied for payment notifications on the on-line Bulletin Board System (BBS) established by the Commission for 900 MHz SMR auction participants. AMK and Mobilecall note that a Public Notice was released by the Commission at the outset of the auction that instructed bidders to monitor the FCC Remote Bidding System on its Internet site and on the BBS. AMK and Mobilecall argue that because Public Notices regarding the auction were posted on the BBS, they began to rely on this form of communication with the FCC and therefore expected all critical information to be communicated to bidders by this process. AMK and Mobilecall argue that they reasonably assumed that information regarding down payment deadlines after the auction would also be posted on the BBS. AMK and Mobilecall state that because the June 28, 1996 Public Notice announcing the second down payment was not posted on the BBS, they were unaware of it and failed to submit the requisite payment on time. 6. To receive a waiver of the down payment rule, a waiver request must demonstrate either "that the underlying purpose of the rule will not be served, or would be frustrated, by its application in a particular case, and that grant of the waiver is otherwise in the public interest;" or "that the 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 noted that this requirement would also deter defaults by discouraging insincere or financially unqualified bidders from "shopping" a winning bid in order to obtain financing for a down payment. 7. We believe that AMK and Mobilecall have presented sufficient facts to meet the standard for a partial waiver of the down payment rule. The record indicates that prior to the second down payment, AMK and Mobilecall made all previously required auction payments on time and in full. There is no indication in the record that the payment shortfall was part of a deliberate effort by AMK or Mobilecall to delay payment. In addition, we note that upon receiving notice from the Commission that their accounts were delinquent, AMK and Mobilecall promptly paid the balance owed. Thus, AMKs' and Mobilecalls' actions demonstrate that, but for their unawareness of the Public Notice, they would have been able to meet their payment obligations on time. 8. Under the circumstances presented by AMK and Mobilecall, we conclude that the public interest would not be served by rigid enforcement of the second down payment deadline, which would result in denying AMKs' and Mobilecalls' licenses they won at auctions and imposition of a substantial default payment. In reaching this conclusion, we give considerable weight to the applicant's prior record of compliance, their good faith efforts to make payment on time, and their prompt action to remedy the delinquency. These facts indicate that AMK and Mobilecall were not financially unqualified applicants attempting to "shop" their licenses to investors. We also recognize that unlike the up-front and first down payments, the second down payment does not affect the timing of the auction or the Commission's review of these applicant's qualifications. Thus, while we have consistently denied requests to waive these earlier payment deadlines, we believe that once the first down payment is made and applicants have already proven an ability to meet their financial obligations, some flexibility may be appropriate in addressing a minor delinquency with respect to the final down payment. 9. We do not believe that AMK and Mobilecall are entitled to a complete waiver of the default rules, however. AMK and Mobilecall admit that they missed the payment deadline because they were unaware of the June 28 Public Notice announcing that payments were due. Such an error is the applicant's responsibility, and does not excuse its failure to make timely payment. We do not agree that AMK and Mobilecall were entitled to rely on receiving notice of the deadline through the BBS; all 900 MHz SMR applicants were notified from the outset of the auction that they were responsible for maintaining current information regarding Commission public notices. We also note that AMK and Mobilecall were not new to the Commission's licensing processes and therefore should have been familiar with the Commission's public notice procedures. Under the circumstances, we conclude that AMK and Mobilecall should be subject to late fees of five percent of the amount that was not timely paid. This amount is commercially reasonable and serves to underscore the importance of making timely payment of all auction payments. In addition, for future auctions, we intend to provide applicants with direct notice of all down payment deadlines. Therefore, we will not entertain future waiver requests for alleged lack of awareness of Commission public notices. 10. For the reasons stated above, the requests for waiver filed by AMK International, Inc. and Mobilecall, Inc. are hereby GRANTED IN PART, subject to a five (5) percent late fee, as specified above. Such late fee of $99.66 must be paid within five business days after the release of this order by AMK International. Such late fee of $401.63 must be paid within five business days after the release of this order by Mobilecall, Inc. Grant of each license is expressly conditioned on timely payment of the late fee and timely execution and return by the licensee of a note documenting the licensee's installment payment obligations and a security agreement commemorating the Commission's security interest in the license in the event of default. This action is taken under delegated authority pursuant to Section 0.331 of the Commission's rules. Michele C. Farquhar Chief, Wireless Telecommunications Bureau