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Federal Communications Commission
Washington, D.C. 20554
In the Matter of ) File No. EB-02-IH-0768
STAR WIRELESS, LLC ) NAL/Acct. No. 00332080021
and ) FCC Account ID No. 0441724048
NORTHEAST COMMUNICATIONS OF ) FRN No. 0007043409
WISCONSIN, INC. ) File No. EB-02-IH-0768
Applicants for C Block Facilities ) NAL/Acct. No. 200332080022
) FCC Account ID No. 0442010372
710-716 and 740-746 MHz Bands
) FRN No. 0002706190
ORDER ON REVIEW
Adopted: May 2, 2007 Released: May 4, 2007
By the Commission:
1. In this Order On Review, we grant in part and otherwise deny an
Application for Review filed by Star Wireless, LLC ("Star") and a
Petition for Reconsideration filed by Northeast Communications of
Wisconsin, Inc. ("Northeast"). The Application and Petition were filed
in response to forfeiture orders issued by the Enforcement Bureau
("Bureau") that imposed a monetary forfeiture in the amount of
$100,000 against each company for its willful violation of section
1.2105(c) of the Commission's rules, which prohibits auction
collusion. Although we uphold the Bureau's finding of liability for
both Star and Northeast, we reduce the forfeiture for each licensee to
$75,000 because of their history of compliance with Commission rules.
2. The facts that formed the basis for the forfeitures are set forth in
detail in the NALs and the Forfeiture Orders issued individually to
Northeast and Star. A brief discussion of the facts, however, is
appropriate. Northeast and Star each filed applications to bid for
wireless licenses in the same geographic license areas in the
Commission's August 27-September 18, 2002 auction of 740 Lower 700 MHz
Band C and D block geographic area licenses ("Auction No. 44"). In
anticipation of the auction, the Wireless Telecommunications Bureau
issued several Public Notices specifically warning auction applicants
against violating the anti-collusion rule by communicating about bids,
bidding strategies or settlements with another applicant seeking to
bid for licenses in the same geographic license areas, unless the
applicants identified each other in their applications as having
entered into agreements under section 1.2105(a)(2)(viii). The Public
Notices also stated that this prohibition applied to all applicants
between the deadline for filing a short-form application and the
deadline for post-auction down payments.
3. Star made its upfront payment and bid in the auction. Northeast did
not make an upfront payment and was not allowed to bid in the auction.
On August 28, 2002, David G. Behenna, Star's authorized bidder and the
President of PCSGP, Inc., Star's operating manager, left a
voicemail message for Patrick Riordan, a shareholder, officer,
director of and authorized bidder for Northeast, requesting that Mr.
Riordan return his call if Northeast was not participating in Auction
44. The next day Mr. Riordan returned the call and spoke to Mr.
Behenna. During their conversation, Mr. Riordan identified and
discussed with Mr. Behenna Northeast's interest in five Wisconsin
markets for which licenses were to be auctioned in Auction No. 44.
Prior to that conversation, Star had bid only on licenses in the
California and Florida markets. Subsequent to that conversation, Star
ceased bidding on those markets and began bidding on markets at or
near the geographical areas of interest to Northeast. Star won
licenses in three Wisconsin markets located near Green Bay, in which
Northeast had expressed its interest, and one Iowa market located
adjacent to two markets for which an affiliate of Northeast is a
4. In September 2002, the Bureau received letters from counsel for Star
and Northeast regarding the communications between these applicants
during the auction. As a consequence, the Bureau investigated the
communications and, on August 27, 2003, proposed forfeitures against
Star and Northeast, finding that they had willfully violated the
anti-collusion rule while they were applicants in Auction No. 44. Star
and Northeast responded to the NALs, citing various arguments in
support of their claim that they did not violate the anti-collusion
rule, but on September 22, 2004, the Bureau rejected that contention
and affirmed its earlier holdings. Star and Northeast then filed the
Application and Petition challenging the Bureau's findings.
5. Star and Northeast argue that: (1) Northeast was not an "applicant" at
the time of the communications at issue; (2) the anti-collusion rule
is too vague to be enforced and has been inconsistently applied; (3)
these enforcement proceedings are inconsistent with the plain language
and intent of the anti-collusion rule; (4) the anti-collusion rule is
unconstitutional; (5) the Enforcement Bureau lacks jurisdiction to
render a forfeiture order in this case; and, (6) the forfeiture amount
imposed in the Forfeiture Orders should be reduced. Each allegation is
addressed below. Additionally, we incorporate by reference our prior
analyses responding to these allegations.
A. The Anti-Collusion Rule Applied To Northeast at the Time of the
6. Northeast and Star continue to argue that they did not violate the
anti-collusion rule because Northeast was not an applicant at the time
of the communications at issue. The Bureau addressed at length both
parties' arguments regarding this issue in the Forfeiture Orders so we
will address them only briefly here. Star and Northeast claim that
Northeast's short-form application to participate in the auction was
incomplete because Northeast did not pay the upfront money required to
bid in the auction. They contend that, as a consequence, Northeast was
never an "applicant" in the auction. This argument is without merit.
Northeast timely submitted a short form application to participate in
Auction No. 44. Thus, Northeast was an "applicant" in the auction, as
that term is defined by sections 1.2105 of the Commission's rules and
as used in the Public Notices associated with the auction. Neither the
Commission's rules nor the Public Notices regarding Auction No. 44
condition the term "applicant" upon the outcome of the Commission's
review of submitted applications or its receipt of an upfront payment.
7. Northeast also contends that its application was automatically and
immediately dismissed when it failed to make the auction's required
upfront payment and as a consequence, it no longer remained an
applicant in the auction. Although the Commission's rules state that
an applicant that does not submit the auction's minimum upfront
payment "will be ineligible to bid" and the applicant's application
"will be dismissed," that language does not circumscribe the
definition of applicant for purposes of the anti-collusion rule
contained in section 1.2105. Moreover, the language of section
1.2106(c) indicates future, not immediate or automatic, action.
Because the dismissal requires future action by the Commission, the
rule is not self-effectuating. Similarly, the dismissal provisions of
sections 24.203(b) and (c) of the Commission's rules, upon which Star
and Northeast rely, are not self-effectuating because the termination
provisions are not solely contained in the rule. Instead, sections
1.946(c) and 1.955(a)(2) of the Commission's rules specifically
provide for the automatic termination of a licensee's license for
violation of section 24.203.
8. Northeast claims that an auction applicant must be able to bid in the
auction and, since it did not make the required upfront payment and
therefore was not allowed to bid, it was not an auction applicant. But
sections 1.2105 and 1.2106 of the Commission's rules consistently
refer to a person or entity that submits a short form application to
participate in an auction as an auction "applicant." At no point does
either rule suggest that those who do not make the upfront payment are
no longer "applicants." Pursuant to these sections, applicants who
submit a completed short form application and the required upfront
payment are applicants qualified to bid in the auction. Those whose
applications are not accepted and/or who do not submit the upfront
payment are applicants that failed to qualify to bid in the auction.
In either instance, the parties remain auction "applicants."
9. Finally, Northeast argues that it could not violate the anti-collusion
rule by discussing "bids" or "bid strategies" because it was not a
"bidder" or "competing applicant" in the auction and thus had no bids
or bidding strategies to discuss. To the contrary, Northeast became a
"competing applicant" with Star when it submitted a short-form
application specifying its intent to bid on the same markets chosen by
Star. Additionally, the plain language of the anti-collusion rule
clearly states that applicants are prohibited from discussing not only
their own bids and bidding strategies but also those of any other
applicants that applied to bid in the same auction markets. The
Commission repeatedly has explained that the anti-collusion rule
applies to all applicants that file a short-form application,
regardless of whether they qualify to bid in the auction. Northeast
violated the anti-collusion rule by discussing with Star the markets
for which both had applied to bid and by collaborating with Star with
respect to Star's bidding strategy in the auction.
A. The Anti-Collusion Rule Is Not Vague or Unenforceable
10. Northeast argues that prior Commission decisions regarding its
anti-collusion rule have rendered the rule too vague to be
enforceable. Specifically, Northeast claims that its actions are no
worse than those permitted by the Commission in the Mercury and High
Plains cases. In those cases, Mercury and High Plains were competing
bidders in an auction in which Mercury used trailing bid numbers to
indicate the markets in which it was interested and to deter would-be
competitors such as High Plains from bidding on a particular license.
The Commission found such "reflexive bid signaling" violated the
anti-collusion rule but did not merit sanction in that case because
the auction participants had not received prior notice that such
bidding activities were unlawful. Northeast argues that the
Commission's grant of licenses in that instance sends a "garbled"
message to applicants such as Northeast, making the anti-collusion
rule too vague to be enforced.
11. Northeast's reliance on the Mercury and High Plains decisions is
misplaced. While both cases also concern application of the
Commission's anti-collusion rule, their facts distinguish them from
the instant case. Star and Northeast secretly discussed Northeast's
market preferences and Star's bids and bidding strategies. Such
activities are specifically prohibited by the plain language of the
anti-collusion rule. In contrast, the Commission determined that the
reflexive bid-signaling in Mercury and High Plains was not plainly
prohibited at the time of the violations. Moreover, the Mercury
decision specifically provided notice to applicants in future auctions
that bid signaling violates the anti-collusion rule and thereafter
would be subject to enforcement action. Thus, contrary to Northeast's
assertions, these cases send a consistent, not garbled, message to
12. Similarly without merit is Northeast's related allegation that the
Commission intends to facilitate collusion by identifying to auction
participants the bidders and their bids at the end of each bidding
round. It is the nature of an auction that bidders bid against each
other. Informing bidders of competing bids so that they have an
opportunity to assess their bidding strategy before the next bidding
round is consistent with the processes the Commission established for
an "open" auction. Doing so does not mean that the Commission intends
to facilitate collusion by the bidders. To the contrary, the
Commission vigorously attempts to thwart bidder collusion by defining
collusive conduct for auction applicants and repeatedly notifying them
in public notices related to the auction that collusion is prohibited;
by monitoring auction bidding for suspicious bidding activity; and by
diligently enforcing the rules and regulations enacted to prohibit
collusive behavior. It is at all times the goal of the Commission to
protect the integrity of its auction processes.
A. The Bureau's Rulings Are Consistent With the Language and Intent of
13. Star and Northeast also argue that the Commission's application of the
anti-collusion rule is inconsistent with the language and intent of
the rule. Northeast suggests that the standard used to make a finding
in this case is based on a "staff clarification" that is inconsistent
with the existing regulations, but it does not identify the "staff
clarifications" that were allegedly used. As noted previously, it is
the plain language of the anti-collusion rule that prohibits
Northeast's and Star's conduct in this case, not a "staff
14. To support the point that prior notice of an agency's rule's
requirements must be given before a party can be sanctioned for
violating the anti-collusion rule, Northeast cites High Plains, Radio
Athens, Trinity Broadcasting of Florida, and U.S. v Chrysler Corp.
Unlike the facts presented in those cases, but consistent with the
principles enunciated therein, Northeast received clear notice, from
both the plain language of the anti-collusion rule itself and the
explanations and citations contained in the Public Notices released in
conjunction with Auction 44, that it would remain an auction applicant
until the post-auction down payment deadline and that it was
prohibited from discussing or collaborating regarding bids or bidding
strategy with any competing applicant until that time. Citing various
cases, Northeast incorrectly classifies the Commission's prior
decisions regarding the anti-collusion rule as "substantive"
interpretations that require a notice and comment proceeding. However,
the cases cited do not support such a finding based upon the facts
presented here. Unlike the circumstances presented in Air Transport
and National Family, the Commission's interpretation of the
anti-collusion rule in this case is not a new one. Rather, it follows
a long line of interpretive decisions that consistently have been
based upon the plain language of the rule. The Orengo case is most
analogous to this one because both concern a governmental agency's
interpretation of its own rules. As in Orengo, the Commission is not
required to provide a notice and comment proceeding under the
15. Northeast became an "applicant" in the auction when it timely
submitted a short-form application. Northeast became a "competing
applicant" of Star when, as indicated on its short-form application,
it chose to bid for licenses "in any of the same geographic license
areas" chosen by Star on its application. Even though Northeast did
not submit its upfront payment and so did not qualify to bid in the
auction, it remained an applicant for purposes of the anti-collusion
rule, pursuant to section 1.2105(c), because it was an applicant after
the short-form filing deadline. Despite Northeast's allegations to the
contrary, such an interpretation is consistent with the plain language
of the anti-collusion rule and the principles set forth in the Trinity
case upon which it relies. Additionally, auction applicants were
repeatedly reminded in public notices related to the auction of the
consequences of violating the anti-collusion rule and that they
remained auction applicants for purposes of the anti-collusion rule
until the post-auction down payment deadline. Coupled with the clear
language of the anti-collusion rule, such notifications further
satisfy the notice requirements discussed in the Satellite
16. Similarly, Star claims that "the Bureau failed to apply the
anti-collusion rule in a manner consistent with the original intent
and public policy considerations underlying the rule." This argument
appears to hinge on the use of the word "bidders," rather than
"applicants," in the Commission's discussion of the rule in the Fifth
Report and Order. But soon after the release of that order the
Commission clarified its intent and the anti-collusion rule's language
by substituting the term "applicant" for the term "bidder." Thus,
communications regarding bids or bidding strategies are prohibited
between auction applicants that have applied to bid on licenses in any
of the same geographic areas. The Commission also stated that the
purpose of the anti-collusion rules is "to protect the integrity and
robustness of our competitive bidding process." We adopt the rationale
of the Star NAL and Star Forfeiture Order, and find that the Bureau's
interpretation of the anti-collusion rule in this case is consistent
with the language of the rule itself and with the rule's underlying
A. The Anti-Collusion Rule Is Constitutional
17. Northeast also claims that the anti-collusion rule's prohibition
against the collusive communications in this case violates the First
Amendment as a vague and overbroad restriction on freedom of speech.
It should be noted, however, that Northeast's new allegation is based
on a false premise - that its communications with Star occurred "after
it exited" the auction. As discussed herein and in the Northeast NAL
and Northeast Forfeiture Order, Northeast remained an auction
applicant at the time of the communications at issue.
18. Contrary to Northeast's assertions, the anti-collusion rule is not
vague or inconsistent and does not violate the United States
Constitution. Rather, it is a precisely drawn means of serving a
compelling governmental interest, to wit, the integrity of the
Commission's auctions. The anti-collusion rule is neither vague nor
overly broad. It does not prohibit all communications between
applicants or prohibit any communications regarding the markets up for
bid between applicants that have previously entered into, and reported
on their short-form applications, bidding agreements with each other.
Instead, it is narrowly drawn to prohibit competing applicants from
discussing or collaborating during the auction regarding bids, bidding
strategies and settlements related to licenses for which both parties
wish to bid. This prohibition exists only during the time period
between the short-form application filing deadline and the
post-auction down payment deadline. Further, auction applicants were
given ample notice of the anti-collusion rule and therefore knew of
this prohibition when they submitted their short-form applications to
participate in the auction.
19. This case presents a good example of a reason the Commission clearly
prohibits certain communications under the anti-collusion rule: an
applicant that is not qualified to bid in an auction nevertheless
secretly influences a bidding applicant to obtain the licenses it
desires. It is reasonable to presume that the bidding applicant
obtained those licenses with an expectation that it would be rewarded
by the non-bidder for obtaining the licenses. Such conduct is unfair
to other applicants and clearly undermines the integrity and success
of the Commission's auctions. Prohibiting such communications between
applicants during the proscribed auction period protects a valid
governmental interest without infringing unduly on the First Amendment
rights of auction participants.
A. The Enforcement Bureau Has Jurisdiction To Enforce The Anti-Collusion
20. Northeast argues that section 0.111 of the Commission's rules denies
the Enforcement Bureau jurisdiction to render a forfeiture order
against it because this matter is related "to a pending application
for a license." Section 0.111(a) of the Commission's rules conveys to
the Enforcement Bureau the primary responsibility for enforcement
functions related to certain Commission rules and regulations.
Contrary to Northeast's implication, by enforcing the anti-collusion
rule in this case, the Bureau is not ruling on a pending license.
Neither the NALs nor the Forfeiture Orders addressed the merits of
Northeast's or Star's applications for a license, and we do not do so
now. Rather, the Bureau's primary focus and jurisdiction in this
matter relates to enforcement of the auction's anti-collusion rule.
Northeast has failed to present any authority undermining the Bureau's
jurisdiction over such enforcement matters.
A. The Forfeiture Amount Should Be Reduced
21. Finally, both Northeast and Star argue that the forfeiture amounts
imposed against them should be reduced. They argue that the Bureau did
not properly assess the nature, extent and gravity of the offenses
presented and that the Forfeiture Orders did not properly explain the
reasons for imposition of the maximum forfeiture in this case.
22. The Commission's Forfeiture Policy Statement specifies that the
Commission shall impose a forfeiture based upon consideration of the
factors enumerated in section 503(b)(2)(D) of the Act, 47 U.S.C. S
503(b)(2)(D), such as "the nature, circumstances, extent and gravity
of the violation, and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such
other matters as justice may require." The NALs and Forfeiture Orders
issued in this case complied with the requirements of the Forfeiture
Policy Statement and section 503(b)(2)(D) of the Act. Each of these
orders reviewed the nature, circumstances, extent and gravity of the
anti-collusion rule violations and Northeast's and Star's culpability
for them. While finding that Northeast and Star willfully and
intentionally violated the anti-collusion rule and that such serious
violations directly threaten the integrity and competitiveness of the
auction process, the NALs invited Northeast and Star to present
mitigating evidence showing why forfeiture should not be imposed or
why the amount should be adjusted downward. In each subsequent
response and petition , Northeast and Star have refused to accept
responsibility for violating the anti-collusion rule and have failed
to present any new evidence to mitigate imposition of the proposed
forfeitures. We note that neither Northeast nor Star has claimed
financial hardship as a reason to reduce the forfeiture.
23. Although the Forfeiture Orders found no basis for reducing the
proposed forfeiture, after additional consideration of the forfeitures
imposed, we conclude that a downward adjustment of the forfeitures is
warranted. While both Northeast's and Star's actions were clearly
willful and inconsistent with the plain language of the anti-collusion
rule, their past history of compliance with the Commission's rules
merits a reduction from the maximum forfeiture amount. Based on our
records, neither Star nor Northeast, nor any of their affiliated
companies, have any previous violations of Commission rules, whether
in the auction context or otherwise. Therefore, we reduce the
forfeiture amount attributable to each for violation of section
1.2105(c) of the Commission's rules from $100,000 to $75,000.
IV. ordering clauses
24. Accordingly, IT IS ORDERED THAT, pursuant to section 405(a) of the
Act, 47 U.S.C. S 405(a), and sections 1.106(j), 1.115(g) of the
Commission's rules, 47 C.F.R. SS 1.106(j), 1.115(g), that the Petition
for Reconsideration filed by Northeast Communications of Wisconsin,
Inc. and the Application for Review filed by Star Wireless, LLC are
DENIED, except as otherwise noted herein.
25. IT IS FURTHER ORDERED that a copy of this Order On Review shall be
sent by Certified Mail Return - Receipt Requested, to: Northeast
Communications of Wisconsin, Inc., 450 Security Boulevard, P.O. Box
19079, Green Bay, Wisconsin 54307-9079; and to its counsel: Thomas
Gutierrez, Esq., Lukas, Nace, Gutierrez & Sachs, Chtd., 1111
Nineteenth Street, N.W., Suite 1200, Washington, D.C. 20036. A copy
shall also be sent by Certified Mail Return - Receipt Requested, to:
Star Wireless, LLC, 4000 Palos Verdes Dr. North, Suite 201, Rollings
Hills Est., California 90274; and to its counsel: Mark J. Tauber,
Esq., Piper Rudnick, 1200 Nineteenth Street, N.W., Washington, D.C.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
See Application For Review, filed by Mark J. Tauber, Esquire and D. Peter
Valiotis, Esquire, counsel for Star Wireless, LLC, on October 22, 2004
("Application"). See also Letter from Paul W. Jamieson, counsel for Star,
to Maureen F. Del Duca, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, dated September 26,
2003 ("Star Response").
See Petition For Reconsideration, filed by Thomas Gutierrez, Esquire,
counsel for Northeast, on October 22, 2004 ("Petition"). See also
Response To Notice of Apparrent [sic] Liability, filed by Thomas
Gutierrez, Esquire, counsel for Northeast, on September 26, 2003
("Northeast Response")(together with Star Response, the "Responses").
47 C.F.R. S1.106(a)(1) allows a Bureau to refer to the Commission
petitions requesting reconsideration of final actions taken by the Bureau
pursuant to delegated authority. Because Star's Application requires
Commission-level review, the Bureau has referred Northeast's Petition to
the Commission and we shall also treat it as an Application for Review.
See Northeast Communications of Wisconsin, Inc., Forfeiture Order, 19 FCC
Rcd 18635 (Enf. Bur. 2004) ("Northeast Forfeiture Order"); see also Star
Wireless, LLC, Forfeiture Order, 19 FCC Rcd 18626 (Enf. Bur. 2004) ("Star
Forfeiture Order") (together, the "Forfeiture Orders"). See also Northeast
Communications of Wisconsin, Inc., Notice of Apparent Liability for
Forfeiture, 18 FCC Rcd 17672 (Enf. Bur. 2003 ) ("Northeast NAL"); Star
Wireless, LLC, Notice of Apparent Liability for Forfeiture, 18 FCC Rcd
17648 (Enf. Bur. 2003 ) ("Star NAL") (each an "NAL", together the "NALs").
Because both cases involve the same underlying facts, we have consolidated
our decision regarding each licensee in this Order.
47 C.F.R. S 1.2105(c) (the "anti-collusion rule"). Section 1.2105(c)(1)
states, in pertinent part: "[A]fter the [FCC Form 175] short-form
application filing deadline, all applicants for licenses in any of the
same geographic license areas are prohibited from cooperating or
collaborating with respect to, discussing with each other, or disclosing
to each other in any manner the substance of their own, or each other's,
or any other competing applicant's bids or bidding strategies, or
discussing or negotiating settlement agreements, until after the down
payment deadline, unless such applicants are members of a bidding
consortium or other joint bidding arrangement identified on the bidder's
short-form application pursuant to S 1.2105(a)(2)(viii)." 47 C.F.R. S
See Northeast Forfeiture Order, 19 FCC Rcd at 18635-36, PP 2-3. See also
Northeast NAL, 18 FCC Rcd at 17672-79, PP 2-17; Star Forfeiture Order, 19
FCC Rcd at 18626-27, PP 2-3; Star NAL, 18 FCC Rcd at 17648-55, PP 2-16.
These documents are incorporated herein by reference.
See Northeast NAL, 18 FCC Rcd at 17676, PP 8-9. See also Star NAL, 18 FCC
Rcd 17652-53, PP 8-9.
See Auction of Licenses in the 698-746 MHz Band Scheduled for June 19,
2002, Public Notice, DA 02-563 at 8 (WTB rel. March 20, 2002) ("March 20
Procedures Public Notice"); Auction of Licenses for 698-746 MHz Band:
Status of FCC Form 175 Applications to Participate in the Auction, Public
Notice, DA 02-1213 at 4-5 (WTB rel. May 24, 2002) ("May 24 Status Public
Notice"); Auction of Licenses for 698-746 MHz Band: 128 Qualified Bidders,
Public Notice, DA 02-1346 at 7 (WTB rel. June 7, 2002) ("June 7 Qualified
Bidders Public Notice"); and Auction No. 44- Revised Qualified Bidder
Notification, Public Notice, DA 02-1933 at 8 (WTB rel. August 7, 2002)
("August 7 Revised Qualified Bidders Public Notice"); 47 C.F.R S
See, e.g., March 20 Procedures Public Notice at 7 ("[T]he Commission's
rules prohibit applicants for the same geographic license area from
communicating with each other during the auction about bids, bidding
strategies, or settlements. This prohibition begins at the short-form
application filing deadline and ends at the down payment deadline after
the auction."). Further, the March 20 Procedures Public Notice directed
applicants to a list of precedents applying the anti-collusion rule,
several of which explicitly applied the rule to applicants that
subsequently did not bid in the auction (See, e.g., Letter to Robert
Pettit, Esquire, from Margaret W. Wiener, Chief, Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, Federal
Communications Commission, 16 FCC Rcd 10080 (WTB 2000) (declining to
except an applicant's controlling interest from coverage by the
anti-collusion rule, even though the applicant never made an upfront
payment for the auction and was not listed as a qualified bidder);
Implementation of Section 309(j) of the Communications Act - Competitive
Bidding, Fourth Memorandum Opinion and Order, 9 FCC Rcd 6858, 6867 P 50-51
(1994) (rejecting the argument that communications prohibited by the
anti-collusion rule should be permitted during auctions between active and
non-active bidders)); May 24 Status Public Notice at 4 ("The Bureau has
previously stated that auction applicants who have applied for licenses in
any of the same geographic areas, and who are also applicants for licenses
in the same or competing services must affirmatively avoid all discussions
with each other that affect, or in their reasonable assessment have the
potential to affect their bidding or bidding strategy. For Auction No. 44,
this prohibition became effective at the short-form application filing
deadline on Wednesday, May 8, 2002, and will end on the post-auction down
payment deadline, which will be announced in a future public notice.").
See Auction of Licenses in the 698-746 MHz Band Scheduled for June 19,
2002, Public Notice, DA 02-1933 at 6 (WTB rel. March 20, 2002) ("Revised
Qualified Bidder Notification").
See Northeast NAL, 18 FCC Rcd at 17677, P 10.
See id at 17676, P 8.
See id. at 17676, P 9.
See id. at 17678, PP 13-15, 19.
See Letter from E. Ashton Johnson, Esquire, and Paul W. Jamieson, Esquire,
counsel for Star, to Marlene H. Dortch, Secretary, Federal Communications
Commission, dated September 6, 2002 (the "Star Notification Letter");
Letter from Timothy E. Welch, Esquire, counsel for Northeast, to Margaret
Wiener, Chief, Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, Federal Communications Commission, dated
September 6, 2002 (the "Northeast Notification Letter").
See Response To Notice of Apparent Liability, filed by Thomas Gutierrez,
Esquire, counsel for Northeast, on September 26, 2003; Letter from Paul W.
Jamieson, counsel for Star, to Maureen F. Del Duca, Chief, Investigations
and Hearings Division, Enforcement Bureau, Federal Communications
Commission, dated September 26, 2003.
See Forfeiture Orders.
See Application at 7-10; Petition at 3-7.
See Petition at 3, 7-10.
See Application at 10-12; Petition at 11-13.
See Petition at 13-14.
See Petition at 7.
See Application at 13-15; Petition at 15-16.
Northeast also alleges that the Northeast Forfeiture Order did not address
its prior argument that section 1.2105(c) is invalid because it did not
display a valid control number pursuant to section 3512 of the Paperwork
Reduction Act. See id. at 14-15. Northeast is mistaken. That allegation
was addressed in the Northeast Forfeiture Order and need not be addressed
here. See Northeast Forfeiture Order, 19 FCC Rcd at 18642, P 14. See also
Geotek Communications, Inc., Memorandum Opinion and Order, 16 FCC Rcd
15010 (2001) (summarily denying Application for Review that did not
present any new information not previously considered and did not allege
an erroneous finding of material fact).
See Northeast Forfeiture Order, 19 FCC Rcd at 18638, P 5; Star Forfeiture
Order, 19 FCC Rcd 18626 PP 2-16.
See Northeast Forfeiture Order, 19 FCC Rcd at 18638-39; Star Forfeiture
Order, 19 FCC Rcd at 18629.
47 C.F.R. SS 1.2105, 1.2106 (Sections 1.2105 and 1.2106 of the
Commission's rules are provisions of "Subpart Q - Competitive Bidding
Proceedings," which implement section 309(j) of the Act. These rules serve
a mutual purpose and, accordingly, should be interpreted so as to be
consistent with each other. Both rules continue to refer to those
submitting a short-form application as "applicants" even though the
applicants may not have made an upfront payment. See Northeast NAL, 18 FCC
Rcd at 17675, P6. See also section 1.2105(c)(7)(1) of the Commission's
rules ("The term applicant shall include all controlling interests in the
entity submitting a short-form application to participate in an auction
(FCC Form 175) . . ."); section 1.2105(c) of the Commission's rules
("[A]fter the short-form application filing deadline, all applicants for
licenses in any of the same geographic license areas are prohibited from
cooperating or collaborating with respect to, discussing with each other,
or disclosing to each other in any manner the substance of their own, or
each other's, or any other competing applicants' bids or bidding
strategies, or discussing or negotiating settlement agreements, until
after the down payment deadline . . .").
47 C.F.R. S 1.2106(c).
The most reasonable interpretation of the anti-collusion rule in section
1.2105(c) is that any party or entity that has timely submitted a
short-form auction application for a Commission auction (including certain
interest holders in such entity as specifically provided in section
1.2105(c)(7))isdeemed an auction applicant for purposes of the rule.
Pursuant to the rule, that applicant status continues until the
post-auction down payment deadline.
The only reasonable interpretation of Section 1.2106(c) is that an
applicant's failure to submit an upfront payment in compliance with that
rule makes that applicant ineligible to bid and its application subject to
dismissal when no longer relevant for purposes of the auction, i.e., when
the application is rendered moot by the completion of the auction process
at the post-auction down payment deadline and/or by the winning bidders'
filing of long-form applications with respect to licenses they won.
47 C.F.R. SS 24.203(b) and (c) (failure of any licensee to meet the
build-out construction requirements for a station will result in
forfeiture of the license).
47 C.F.R. SS 1.946(c), 1.955(a)(2).
47 C.F.R. SS 1.2105, 1.2106.
See 47 C.F.R. S1.2106(c).
The rules of statutory construction dictate that, where possible,
statutory provisions should be interpreted so as to be consistent with
each other. See Sullivan v. Stroop, 496 U.S. 478,484 (1990) (applying "the
normal rule of statutory construction that identical words used in
different parts of the same act are intended to have the same meaning").
47 C.F.R. S1.2105(c) (prohibiting competing applicants from discussing
"their own, or each other's, or any other competing applicants' bids or
See e.g., August 7 Revised Qualified Bidders Public Notice at 5-6
("Prohibition of Collusion. All parties that submitted short-form
applications to participate in Auction No.44, including but not limited to
qualified bidders (regardless of whether they elected to depart from the
auction) . . . remain subject to the Commission's anti-collusion rule
until the post-auction down payment deadline." See also Northeast NAL, 18
FCC Rcd at 17674, note 11. An applicant retains its "applicant" status
even if it does not qualify to bid because it failed to make an upfront
payment or elected to depart the auction. See also note 9, supra.
Northeast cites Mercury PCS II, LLC, Notice of Apparent Liability, 12 FCC
Rcd 17970 (1997) ($650,000 proposed forfeiture). But see Mercury PCS II,
LLC, Memorandum Opinion and Order, 13 FCC Rcd 23755 (1998) ("Mercury")
(rescinding the proposed forfeiture); Mercury PCS II, LLC, Memorandum
Opinion and Order, 13 FCC Rcd 5756 (1997) (conditional grant of licenses
to Mercury), reconsideration denied in part by Mercury PCS II, LLC,
Memorandum Opinion and Order, 12 FCC Rcd 18093 (1997), review denied by
Mercury PCS II, LLC, Memorandum Opinion and Order, 15 FCC Rcd 9654 (2000),
affirmed by High Plains Wireless, LP v. FCC, 276 F.3d 599 (D.C. Cir.
High Plains Wireless, LP v. FCC, 276 F.3d 599, 606-607 (D.C. Cir. 2002)
("High Plains") (affirming the Commission's award of licenses to Mercury,
the court reasoned that "the [anti-collusion] rule probably did prohibit
Mercury's conduct," but "whether reflexive bidding violated the rule
against collusion appears to have been an unsettled - indeed, an unasked -
question before the DEF auction. In this circumstance it was not
unreasonable for the Commission to have deemed the rule ambiguous with
respect to whether reflexive bidding was prohibited."). See also Mercury
PCS II, LLC, Memorandum Opinion and Order, 13 FCC Rcd 5756 (1997),
reconsideration denied in part by Mercury PCS II, LLC, Memorandum Opinion
and Order, 12 FCC Rcd 18093 (1997), review denied by Mercury PCS II, LLC,
Memorandum Opinion and Order, 15 FCC Rcd 9654 (2000), affirmed by High
Mercury, 13 FCC Rcd at 607; High Plains, 276 F.3d at 606-07.
Petition at 11.
The Mercury decision gave bid signalers the clear notice required by
Satellite Broadcasting Company v. FCC, 824 F.2d 1 (D.C. Cir. 1987)
(because FCC failed to give clear notice of where application should be
filed, the court reversed FCC's dismissal of application that was filed at
Petition at 9-10.
See High Plains, 276 F.3d at 603.
Petition at 11-13.
See High Plains, 276 F.3d at note 39; Radio Athens, Inc. (WATH) v. FCC,
401 F.2d 398, 404 (D.C. Cir. 2000) ("When the sanction is as drastic as
dismissal [of an application] without any consideration whatsoever of the
merits, elementary fairness compels clarity in the notice of the material
required as a condition for consideration."); Trinity Broadcasting of
Florida, Inc. v. FCC, 211 F.3d 618, 631 (D.C. Cir. 2000) (finding the
FCC's rule provided insufficient notice of its requirements to justify
dismissal of petitioner's application); U.S. v. Chrysler Corp., 158 F.3d
1350 (D.C. Cir. 1998) (holding that an automobile manufacturer cannot be
found to be non-compliant with a safety standard if the National Highway
Traffic Safety Administration failed to give fair notice of what was
required by the standard).
See Response at 13 (citing Air Transport Ass'n of America, Inc. v. FAA,
291 F.3d 49 (D.C. Cir. 2002) (notice and comment rulemaking is required if
agency's interpretation of rule adopts a new position inconsistent with
existing regulations); National Family Planning and Reproductive Health
Association, Inc. v. Sullivan, 979 F.2d 227, 237 (D.C. Cir. 1992)
(distinguishing "substantive" and "interpretive" rules and stating "for
purpose of determining whether notice and comment rule making is required
under the Administrative Procedure Act, a "legislative" or "substantive
rule" is one that does more than simply clarify or explain a statutory
term or confirm a regulatory requirement or maintain consistent agency
policy"); and Orengo Caraball v. Reich, 11 F.3d 186, 196 (D.C. Cir. 1993)
("Orengo") (discussing the characteristics of "interpretive" rules, and
finding the Department of Labor's risk of loss test to be an
interpretation of its regulations, exempt from the notice and rule making
requirements of the Administrative Procedure Act ("APA")).
See 47 C.F.R. S 1.2105(c).
Trinity, 211 F.3d at 625, 628 (although the court accords the Commission's
interpretation of its own regulations a "high level of deference,
accepting it unless it is plainly wrong," it states that the Commission
must give "clear notice" of a rule's meaning before it can sanction a
party for its "failure to comply with the rule's requirements").
See Petition at 12.
See Northeast Forfeiture Order, 19 FCC Rcd at 18638, P 6.
Satellite Broadcasting Co. v. FCC, 824 F.2d 1, 3-4 (D.C. Cir 1987) ("The
Agency's interpretation is entitled to deference but if it wishes to use
that interpretation to cut off a party's right, it must give full notice
of its interpretation.").
Application at 10.
Implementation of Section 309(j) of the Communications Act - Competitive
Bidding, Fifth Report and Order, 9 FCC Rcd 5532 (1994), at P 91.
Implementation of Section 309(j) of the Communications Act - Competitive
Bidding, Memorandum Opinion and Order, 9 FCC Rcd 7684, 7687 (1994)
Id. See also Amendment of Part 1 Of The Commission's Rules - Competitive
Bidding Procedures, Seventh Report and Order, 16 FCC Rcd 17546 (2001) ("so
that [the anti-collusion rule's] language clearly reflects the
Commission's practice of prohibiting communications regarding bids or
bidding strategies only between auction applicants that have applied to
bid on licenses in any of the same geographic areas") (emphasis added).
See Implementation MO&O, 9 FCC Rcd 7684 at P 10.
Star NAL, 18 FCC Rcd at 17657, P 20 ("Star learned of Northeast's interest
in the markets which Mr. Riordan identified for Mr. Behenna and, thus,
knew about potential post-auction demand for the licenses in those
markets. At the same time, Northeast took advantage of an opportunity to
influence Star's auction plan and strategy for its own purposes. In
effect, Northeast was able to participate in the auction from which it had
been disqualified to do so without providing notice to other applicants
that might wish to compete against it. Indeed, Mr. Riordan's disclosure
gave Star exclusive access to information concerning Northeast's interest
in particular licenses that were unavailable to other auction participants
bidding on the Wisconsin and Iowa markets in question."
Star Forfeiture Order, 18 FCC Rcd at 18632, P11 ("it is clear from the
parties' subsequent communication that Star's Mr. Behenna contacted
Northeast's Mr. Riordan on August 28, 2002, in order to initiate a
discussion concerning bidding strategy. Nothing that Star has presented
in its Response leads us to any other conclusion. Star concedes it placed
the call to, and left a message on the answering machine of, Northeast's
auction representative. The only logical conclusion that one can draw,
given the subsequent conversation between the two representatives, is that
the message involved a solicitation about a prohibited subject: Star's
auction bidding plans.").
See Petition at 13.
See Northeast NAL, 18 FCC Rcd at 17675, P 6.
We note that it is not necessary for us to find that there was an
agreement between Star and Northeast or that the communications between
them actually altered Star's bidding strategy in order for us to find a
violation of the anti-collusion rule. See Star NAL, 18 FCC Rcd at 17656, P
Northeast Response at 7, citing 47 C.F.R. S 0.111(a) (stating that the
Enforcement Bureau shall "(a) [s]erve as the primary Commission entity
responsible for enforcement of the Communications Act and other
communications statutes, the Commission's rules, Commission orders and
Commission authorizations, other than matters that are addressed in the
context of a pending application for a license or other authorization . .
The Commission's Forfeiture Policy Statement and Amendment of Section 1.80
of the Rules to Incorporate the Forfeiture Guidelines, 12 FCC Rcd 17087,
17113 (1997), recon. denied 15 FCC Rcd 303 (1999) ("Forfeiture Policy
Statement"); 47 C.F.R. S 1.80(b).
Forfeiture Policy Statement, 12 FCC Rcd at 17100-01, P 27.
See Star Forfeiture Order, 19 FCC Rcd at 18630-33; Star NAL, 18 FCC Rcd
at 17657-58; Northeast Forfeiture Order, 19 FCC Rcd at 18643; Northeast
NAL, 18 FCC Rcd at 17681.
Star's argument that Mr. Behenna's August 28th voice mail message to Mr.
Riordan did not violate the anti-collusion rule is unconvincing. Because
the August 28th voice mail message was intended as a solicitation to
collude regarding Star's bids and bidding strategies in Auction No. 44, it
too violates the anti-collusion rule.
Northeast does not claim an inability to pay the forfeiture amount imposed
against it. Although the Star Response may have suggested an inability to
pay the proposed forfeiture, its Application does not do so. See Star
Forfeiture Order, 19 FCC Rcd at 18633, P 14 ("Although Star Response
suggested an inability to pay the forfeiture proposed in the NAL, [Star
Response at 9] it has presented no documentation in support of such a
See Forfeiture Policy Statement, 12 FCC Rcd at 17116.
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Federal Communications Commission FCC 07-80
Federal Communications Commission FCC 07-80