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Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) APC PCS LLC ) ) Authorization for Broadband Personal ) Communications Services on Frequency ) File No. 1500-CW-L-94 Block A at Washington-Baltimore, ) MTA 10, Call Sign: KNLF200 ) ) Cox Communications, Inc. ) ) Authorization for Broadband Personal ) Communications Services on Frequency ) File No. 15001-CW-L-94 Block A at Los Angeles-San Diego, ) MTA 2, Call Sign: KNLF201 ) ) Omnipoint Communications, Inc. ) ) Authorization for Broadband Personal ) Communications Services on Frequency ) File No. 15002-CW-L-94 Block A at New York, MTA 1, ) Call Sign: KNLF202 ) ORDER ON RECONSIDERATION Adopted: November 30, 1999 Released: December 7, 1999 By the Commission: I. INTRODUCTION 1. On July 29, 1998, the Commission released an order acknowledging that it had overcharged APC PCS LLC (APC), Cox Communications, Inc. (Cox) and Omnipoint Communications, Inc. (Omnipoint) (collectively, the Licensees) for interest owed on their pioneer's preference broadband Personal Communications Services (PCS) A block licenses. APC and Cox filed a petition for reconsideration of the method used by the Commission in the Overpayment Order to calculate the amount of interest that they overpaid to the Commission. 2. In this Order on Reconsideration (Order), we grant petitioners' request that we modify the method used in the Overpayment Order to calculate the Licensees' interest overpayment so that it is consistent with the method for calculating quarterly interest payments for licensees under the Commission's installment payment program. After applying the modified method to recalculate the amount of the interest overpayments made by the Licensees, however, we find that the amount of interest payment credits ordered in the Overpayment Order were correct. Accordingly, we affirm that part of the Overpayment Order. II. BACKGROUND 3. In December 1993, the Licensees were granted pioneer's preferences for the development of new PCS technologies in the 2 GHz band. In 1994, the Uruguay Round Agreements Act of 1994 was enacted into law. Among other things, it amended Section 309(j) of the Communications Act of 1934 to establish a payment formula to recover a portion of the value of a pioneer's preference recipient's license. Later in 1994, the Commission granted broadband PCS A block licenses to the Licensees based on their pioneer's preference awards. On March 8, 1996, the Commission adopted an order which set forth the payment terms and amount that each Licensee owed the government for its pioneer's preference license. Under the terms of the Payment Order, the amount the Licensees owed for each license was payable in installments over five years. The first installment payment was due on April 8, 1996, 30 days after the licenses were granted. All other installment payments were due on a quarterly basis (January 31, April 30, July 31, October 31), with payments for the first two years consisting of interest only based on a 7.75 percent annual rate. 4. The Licensees made timely payments of the interest owed on the principal balance outstanding under their licenses for the quarter ending April 30, 1996. In 1998, the Licensees notified the Commission that they had been overcharged for interest during this first quarter, claiming that they had been charged for 90 days of interest when they actually had held their licenses for only 54 days during the quarter (from March 8, 1996 to April 30, 1996). In the Overpayment Order, the Commission acknowledged the error and computed a credit in the amount of the overpayment, which was applied against the Licensees' next quarterly interest payment due July 31, 1998. 5. On reconsideration, APC and Cox assert that in calculating the amount of interest they overpaid, the Commission should have based the calculation on a 365-day year, rather than a 360-day year as indicated in the Overpayment Order. According to APC and Cox, a calculation based on a 360-day year effectively increases the interest owed by the Licensees and fails to credit the Licensees for their entire overpayment of interest. Because the Commission's regulations do not specify use of a 360-day year and U.S. Treasury Department regulations pertaining to the method for computing interest for Treasury Notes are based on a 365-day year, APC and Cox urge the Commission to recalculate the amount of their interest overpayment under the Overpayment Order based on a 365- day year. In addition, they request that the Commission increase the amount of the overpayment credit issued to them in the Overpayment Order to reflect an interest calculation based on a 365-day year. III. DISCUSSION 6. Section 309(j)(13) of the Communications Act and the Commission's rules are silent regarding the method for computing interest on the amounts owed the Commission by recipients of a pioneer's preference license. As noted in the Payment Order, however, the House Committee Report accompanying the Uruguay Round Agreements Act of 1994 that amended Section 309(j) of the Communications Act expresses Congressional intent that principal and interest payments by pioneer's preference licensees should be made "in a manner consistent with the installment payment rules adopted by the Commission as part of its general competitive bidding regulations." Both installment payment program and pioneer's preference licensees are required to make principal and interest payments on a quarterly basis. 7. Under the Commission's installment payment program, a licensee's quarterly interest payments are computed by calculating the annual interest that would be owed based on the then outstanding principal balance and dividing this amount by four. As a matter of practice, when an installment payment licensee pays its outstanding principal balance in full before the end of a quarterly period, the Commission computes the quarterly interest owed pro rata based on the number of days that have elapsed in the quarter prior to the outstanding principal balance being paid in full. For example, if the quarterly interest payment owed by a licensee is $90 and the actual number of days in the quarter is 90, effectively the licensee is paying interest of $1 for each day in the quarter. If the licensee pays the outstanding principal balance in full on the 20th day of the quarter, then the licensee would owe only 20 days of interest or $20 for that quarter. Effectively, this method computes the interest owed based on the actual number of days that a licensee's principal balance is outstanding. 8. On reconsideration, we find that the method the Commission uses for computing interest when a licensee pays off its outstanding principal balance before the end of a quarter under the Commission's installment payment program is the method that should have been used for computing the Licensees' overpayments of interest in our Overpayment Order. Application of this method also would be in accord with Congress' intent, as expressed in the House Committee Report, that a pioneer's preference recipient's payment of interest be consistent with the Commission's installment payment rules. We, therefore, deny APC's and Cox's request that we recalculate the amount of their interest overpayments based on a 365-day year because this approach would be inconsistent with the method the Commission uses to compute interest for its installment payment licensees. 9. When applying the method used under the Commission's installment payment program to recompute the interest overpayments by the Licensees for the quarter ending April 30, 1996, the amount of the interest overpayment computed for each Licensee equals the amount of the interest overpayment found for each Licensee in the Overpayment Order. Consequently, we find on reconsideration that the Overpayment Order properly credited the Licensees for their interest overpayments. IV. CONCLUSION 10. This Order modifies the method used in the Overpayment Order to compute the amount of interest owed by the Licensees to be consistent with the method used to compute interest under the Commission's installment payment program. Using this modified method to recalculate the interest owed by the Licensees in the quarter ending April 30, 1996, however, yields the same conclusions reached in the Overpayment Order. Accordingly, this Order affirms the interest overpayment credits ordered in the Overpayment Order. V. ORDERING CLAUSE 11. Accordingly, IT IS ORDERED, pursuant to Section 4(i) of the Communications Act, 47 U.S.C. Section 154(i), and section 1.106 of the Commission's rules, 47 C.F.R.  1.106, that the petition for reconsideration filed by APC PCS LLC and Cox Communications, Inc. is GRANTED to the extent that it modifies the method the Commission uses to compute the interest owed the Commission in connection with the pioneer's preference broadband Personal Communications Services Frequency Block A licenses granted to APC PCS LLC, Cox Communications, Inc. and Omnipoint Communications, Inc. In all other respects, the petition for reconsideration filed by APC PCS LLC and Cox Communications, Inc. is DENIED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary