******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word 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 ) ) CARL N. DAVIS ) ) Waiver Request and Reinstatement of ) 218-219 MHz Service Licenses for Stations ) KIVD0041, KIVD0339, KIVD0080, ) KIVD0096, and KIVD0176 ) ORDER Adopted: December 15, 1999 Released: December 17, 1999 By the Chief, Public Safety and Private Wireless Division, Wireless Telecommunications Bureau: I. INTRODUCTION 1. The Public Safety and Private Wireless Division (Division) has before it an Emergency Request for Contingent Waiver and Reinstatement of Licenses filed on January 15, 1997, by Carl N. Davis (Davis). Davis seeks a waiver of the Commission's down payment rules and reinstatement of five 218-219 MHz Service licenses, conditioned upon payment of past due principal, accrued interest, and any applicable penalties. For the reasons discussed below, we deny the Waiver Request. II. BACKGROUND 2. Davis was the high bidder for five 218-219 MHz licenses (Metropolitan Statistical Areas Nos. 31A, 40A, 107A, 142A, and 180A) in the FCC auction held on July 28 and 29, 1994. As an eligible small business, Davis elected to pay his net bid amount through installment payments. Under the Commission's competitive bidding rules in effect at the time, winning bidders paying by installments were required to bring their total deposits to ten percent of their winning bids within five business days after the Commission issued a Public Notice announcing winning bidders (first down payment deadline). Such winning bidders were required to pay another ten percent of their winning bids within five business days of grant of their applications (second down payment deadline). The first down payment deadline was August 8, 1994. Davis brought his deposit up to ten percent of his winning bid by this deadline by paying the required amount of $268,250. On January 18, 1995, we conditionally granted three licenses to Davis (MSA Nos. 31A, 107A and 142A). On February 28, 1995, we conditionally granted an additional two licenses to Davis (MSA Nos. 40A and 180A). The grant of these five licenses was conditioned upon the full and timely performance of the licensee's payment obligations. The second down payment for the licenses granted on January 18, 1995 was due on January 25, 1995, while the second down payment for the licenses granted on February 28, 1995 was due on March 7, 1995. Davis failed to pay the second down payment amount on any of the licenses. 3. As a result of Davis's failure to make the second down payments, the Division sent a letter to Davis advising him that the licenses had been cancelled and that they would be auctioned at the next 218-219 MHz Service auction (Auction No. 13). The Letter also advised Davis that he would be responsible for a default payment on each license, which would be calculated according to the competitive bidding rules. On January 15, 1997, Davis filed a request seeking waiver of the Commission's down payment rules and reinstatement of the five 218-219 MHz licenses conditioned upon payment of all past due amounts (i.e., past due principal, accrued interest, and any applicable penalties) within five business days of his receipt of notice of conditional reinstatement. Davis stated that "intervening events" prevented him from making the second down payment in a timely manner. 4. In the Waiver Request, Davis represented that he had reached an agreement with WINCOM Corporation (WINCOM) whereby WINCOM would advance all amounts past due to allow Davis to cure the payment default upon receipt of notice that the subject licenses have been reinstated. Davis stated that upon payment of all amounts past due and reinstatement of the licenses, Davis and WINCOM would file an application with the Commission seeking authorization to assign Davis's licenses to WINCOM. On November 22, 1999, Davis filed an amendment to the Waiver Request stating that his financial arrangement with WINCOM has ended, but that he is ready to pay the remaining down payment, interest and penalties associated with the five 218-219 MHz Service licenses within five business days of the Commission's reinstatement of the licenses. Alternatively, Davis states that he is willing to give up his licenses if the Commission were to waive its rules and return to him the $268,250 down payment he made on those licenses. 5. Davis argues that grant of the Waiver Request will expedite delivery of new service to the public. Davis also distinguishes his Waiver Request from the waiver requests filed by several other winning bidders in the 218-219 MHz auction, which were denied in an October 7, 1994, Waiver Order issued by the Common Carrier Bureau. Specifically, Davis argues that contrary to the other winning bidders whose waiver requests were denied in the Waiver Order, Davis met the first down payment deadline. Second, Davis contends that he is not seeking a waiver of indefinite duration, but a waiver conditioned upon payment of all past due amounts within five business days of his receipt of notice of conditional reinstatement. Third, Davis argues that unlike his Waiver Request, the waiver requests that were denied in the Waiver Order were submitted without a promise that payment would ever occur. Finally, Davis argues that grant of the Waiver Request will not affect in an adverse manner financial and equipment markets because such markets "will be pleased to see additional licenses being paid for, which demonstrates confidence in the technology and the marketplace." III. DISCUSSION 6. After review of the record in this proceeding, we deny Davis's Waiver Request. In the Competitive Bidding Second Report and Order, the Commission established the requirement of a full and timely down payment to ensure that winning bidders would be able to pay the full amount of their bids and be capable of constructing and operating their systems. Specifically, the Commission indicated that the down payment is intended to ensure that all licensees have the financial capability to attract capital to rapidly deploy their systems and operate them in an efficient manner. The Commission has expressed concern that substantial delay between the auction and down payment would provide financially unqualified bidders with an opportunity to shop their licenses post-auction in an effort to obtain financing for a down payment and that permitting such action "would undermine the integrity of the auction itself." Given the importance of the down payment deadline, the Commission has held that a waiver is appropriate only if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest. 7. Davis fails to reveal the nature of the "intervening events" that prevented him from making the second down payment. Instead, Davis relies on his statement that he is ready to pay all past due amounts within five days of reinstatement of the licenses, as a basis for waiver of the Commission's down payment rules. We reject this argument. The Commission has clearly stated that it is essential to strictly enforce the down payment deadlines because the effect of waiving such rules would be "a disruption to the auction process and a delay in service to the public generally." In this instance, we are not persuaded that Davis's post- default representation that he will assume responsibility for making the second down payment sufficiently demonstrates that a deviation from the general rule is warranted. 8. Further, we disagree with Davis's contention that he is in a "completely different position" from the other winning bidders whose waiver requests were denied in the Waiver Order. Although Davis met the first down payment deadline, he nonetheless failed to fulfill the second down payment obligation. The licenses issued to Davis were conditioned upon the full and timely performance of his payment obligations, which Davis failed to do. Although the bidders in the Waiver Order were not license holders, they similarly lost the opportunity to become licensees because of their failure to meet the down payment requirements. We do not believe that the fact that Davis is seeking a waiver conditioned upon payment of all past due amounts within five business days of his receipt of notice of conditional reinstatement, as opposed to a waiver for an indefinite period of time, constitutes a sufficient basis for granting the requested relief. In addition, we reject Davis' alternative request for a return of the first down payment in exchange for the licenses at issue. The licenses issued to Davis were cancelled because of his failure to fulfill the payment obligations for each of the five licenses in a timely manner. Thus, Davis is responsible for a default amount on each license to be calculated according to the Commission's competitive bidding rules. 9. We also reject Davis's argument that grant of the Waiver Request will expedite delivery of new service to the public. The Bureau has considered this argument and held that while an extension of the down payment deadline may result in faster provision of service than the subsequent auction of a particular license, "the overall effect of permitting late payments will be a delay in service to the public-at-large." We conclude that Davis has not demonstrated any special circumstances warranting deviation from the down payment rule, and that granting the Waiver Request would serve the public interest. 10. Finally, we distinguish Davis' situation from Carolina PCS, in which the Commission waived a late second down payment. In Carolina PCS, the Commission found that the licensee offered affidavits to support its assertion that it had access to adequate funds to meet its second down payment obligation on or about the due date. In addition, the Commission found that by placing sufficient funds in escrow to meet its financial obligations, Carolina PCS showed a continuing financial viability and adequate financial qualifications to provide telecommunications service to the public. In this instance, Davis has failed to provide any evidence indicative of financial viability. Furthermore, there is no indication that Davis' failure to make it's second down payment resulted from miscalculation, inadvertence, or administrative complications. IV. ORDERING CLAUSE 11. Accordingly, IT IS ORDERED that pursuant to Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i) and Section 1.3 of the Commission's Rules, 47 C.F.R.  1.3, the Emergency Request for Contingent Waiver and Reinstatement of Licenses filed by Carl N. Davis on January 15, 1997, and amended on November 22, 1999, IS DENIED. 12. This action is taken under delegated authority pursuant to Sections 0.131 and 0.331 of the Commission's Rules, 47 C.F.R.  0.131 and 0.331. FEDERAL COMMUNICATIONS COMMISSION D'wana R. Terry Chief, Public Safety and Private Wireless Division Wireless Telecommunications Bureau