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Federal Communications Commission
Washington, D.C. 20554
In the Matter of
) File No.: EB-09-IH-0012
CASCADE ACCESS, L.L.C.
) NAL/Acct. No.: 200932080027
Applicant for 700 MHz band licenses
in Auction 73 ) FRN: 0004381547
Adopted: January 10, 2013 Released: January 11, 2013
By the Chief, Enforcement Bureau:
1. In this Forfeiture Order, issued pursuant to Section 503 of the
Communications Act of 1934, as amended (the Act), and Section 1.80 of
the Commission's rules, we find that Cascade Access, L.L.C. (Cascade
or Applicant), an applicant in Auction No. 73 for licenses in the 700
MHz band, engaged in collusive conduct and failed to notify the
Commission of such behavior, in willful violation of Sections
1.2105(c)(1) and (c)(6) of the Commission's rules. For the reasons
stated below, we issue a monetary forfeiture against Cascade in the
amount of $75,000.
2. This matter arises from misconduct by Cascade during the Commission's
Auction No. 73. On February 10, 2009, following a comprehensive
investigation of possible collusive activities between Cascade and
Cellco Partnership d/b/a/ Verizon Wireless (Verizon Wireless), the
Enforcement Bureau (Bureau), issued a Notice of Apparent Liability for
Forfeiture against Cascade. The facts that formed the basis for the
proposed forfeiture are set forth in the NAL and are incorporated
herein by reference. The NAL found that Cascade and Verizon Wireless
were both applicants for the same geographic license area, CMA547-B
(Nevada 5-White Pine), in Auction No. 73 and that, during the course
of that auction, a representative of Cascade apparently engaged in a
collusive communication with a representative of Verizon Wireless.
Specifically, the NAL found that Bob Milliken, an associate of
Cascade, sent an email to William Hickey, Executive Director -
Strategic Alliances for Verizon Wireless, stating, "[w]e have dropped
out of the 700 MHz auction" and are "ready to talk/meet" with Verizon
Wireless. The NAL concluded that Cascade had engaged in a prohibited
communication about its bidding strategy, in apparent willful
violation of Section 1.2105(c)(1) of the Commission's rules. The NAL
also concluded that Cascade had failed to inform the Commission about
its communication with Verizon Wireless, in apparent willful violation
of Section 1.2105(c)(6) of the Commission's rules. The NAL proposed a
forfeiture in the total amount of $75,000 against Cascade.
3. On March 12, 2009, Cascade filed its response to the NAL, requesting
cancellation or reduction of the proposed forfeiture. In support of
its position that the proposed forfeiture should be cancelled, Cascade
argued that it did not violate Section 1.2105(c) because: (1) Mr.
Milliken's statement did not communicate the "substance" of bids or
bidding strategies, as required by the Commission's anti-collusion
rule; (2) the conduct prohibited is not clearly stated in the
anti-collusion rule; (3) the FCC previously disseminated to the public
the type of information disclosed by Mr. Milliken; and (4) in a prior
decision, the Wireless Telecommunications Bureau's Auctions Division
permitted communications between auction applicants that were similar
to Mr. Milliken's email. Cascade also argued in its NAL Response that
the forfeiture should be reduced because: (1) Cascade did not intend
to violate the anti-collusion rule; (2) Cascade's action did not cause
Verizon Wireless to modify its bidding strategy or otherwise
compromise the integrity of the auction process; (3) Cascade's
offense, if any, is less egregious than that in the Star Wireless
case; and (4) Cascade and its affiliated entities have a history of
complying with the Commission's rules.
4. On June 9, 2009, Cascade's counsel, Tom Gutierrez, Esq., and its
President, Brenda Crosby, met with Enforcement Bureau and Wireless
Telecommunications Bureau (WTB) staff about its conduct in Auction 73.
During the meeting, Mr. Gutierrez and Ms. Crosby reiterated the
arguments made in Cascade's NAL Response for cancellation or reduction
of the proposed forfeiture. At that time, Cascade also stated that,
although it is a small business, it is able to pay the full forfeiture
5. In order to prevent collusive conduct and ensure the competitiveness
of both the auction process and the post-auction market structure,
the Commission adopted Section 1.2105(c), the anti-collusion rule.
Section 1.2105(c) 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).
This prohibition against collusive communications set forth in Section
1.2105(c) commences with the filing of the Form 175 application to
participate in an auction, extends through the duration of the actual
auction, and concludes after the successful auction participants have made
any required down payment on the licenses. The anti-collusion rule applies
to all applicants that file a Form 175 to participate in an auction,
regardless of whether the applicants actually participate in the auction
6. As noted in the NAL, both before and after commencement of the
auction, WTB issued multiple public notices warning auction applicants
of their obligations to comply with Section 1.2105(c). WTB also issued
public notices notifying auction applicants that new anonymous bidding
procedures would be used in Auction 73 to prevent the release of
bidding-related information to the public and competing applicants
during the auction.
7. Initially, we reject Cascade's contention that it did not violate
Section 1.2105(c) because its communication did not discuss the
"substance" of Cascade's bids or bidding strategies. By revealing to
Verizon Wireless, a competing bidder in Auction 73, that it was
withdrawing from the auction and would consequently no longer be
bidding, Cascade clearly disclosed its bidding strategy. Affirmatively
revealing to another auction participant that you intend to refrain
from bidding is no less significant than disclosing an intention to
make a bid of a particular dollar amount or a bid for a license in a
particular market. Such an interpretation of Section 1.2105(c) of the
Commission's rules is both reasonable and supported by case precedent.
While the anti-collusion rule does not prohibit all business
discussions between or among auction applicants, it unquestionably
prohibits communications about bidding strategies while an auction is
8. We also reject Cascade's claim that its communication with Verizon
Wireless involved permissible "business negotiations." Contrary to
Cascade's assertion, business negotiations are expressly prohibited
when, as here, they are between competing applicants who are not
members of a bidding consortium or other joint bidding arrangement
identified on a bidder's short-form application. Indeed, the kind of
communication in which Cascade engaged in this instance is precisely
the type of activity which the anti-collusion rule was intended to
prevent, given that the communication had the potential to compromise
the competitive nature of the auction's bidding process and the
post-auction market structure. The confidential nature of
bidding-related information was emphasized and reinforced by Auction
73's anonymous bidding procedures, which required "any information"
indicating "specific applicants' interests in the auction," to be
withheld until after completion of Auctions 73 and 76. Thus, during
Auction 73, applicants were not allowed to disclose to the public or
other applicants any "confidential" information regarding an
applicant's "bidding-related actions," such as the fact that the
applicant had withdrawn from further bidding in the auction.
9. We also reject Cascade's contention that the proposed forfeiture
should be reduced because the violation was unintentional. While
Cascade may not have set out with the specific intention of violating
the anti-collusion rule, there is no doubt that Cascade's
representative intended to and did contact Verizon Wireless to
initiate a conversation about Cascade's participation in Auction No.
73 during the period of time when such communications were strictly
proscribed. Stated otherwise, Cascade did not accidentally contact
Verizon Wireless to convey that it was withdrawing from further
bidding in the auction. Thus, Cascade's actions were indisputably
willful, as defined under the Act, and patently inconsistent with the
plain language of Section 1.2105(c).
10. We are not persuaded by Cascade's assertion that the proposed
forfeiture is "far too high" compared to Star Wireless, a case in
which the Commission imposed a $75,000 forfeiture. Cascade maintains
that its conduct is less egregious than that in Star Wireless because
its email to Verizon Wireless did not alter or otherwise affect the
bidding in Auction 73. To the contrary, Cascade's conduct, insofar as
Section 1.2105(c)(1) is concerned, is similar to that in Star
Wireless-Cascade transmitted a prohibited communication that revealed
its bidding strategy to a competing auction applicant. The fact that
Verizon Wireless refrained from acting on the information it received
from Cascade does not provide a basis for mitigating the proposed
11. 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)(E) of the Act, 47 U.S.C. S:
503(b)(2)(E), 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." We have, again, carefully
considered each of these factors, including Cascade's history of
compliance with the Commission's rules, and find no basis for
mitigating the proposed forfeiture. Cascade's misconduct was willful
and serious. Given the multiple admonitions about collusion issued by
WTB to auction applicants in Auction No. 73, Cascade knew or should
have known that the communication in which it engaged was proscribed.
It also knew or should have known to report such prohibited
communications to the Commission in a timely manner. Therefore, taking
all of these factors into consideration, we find that Cascade is
liable for a forfeiture in the amount of $75,000.
IV. ORDERING CLAUSES
12. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Communications Act of 1934, as amended, Section 1.80 of the
Commission's rules, and authority delegated by Sections 0.111, 0.204,
and 0.311 of the Commission's rules, Cascade IS LIABLE FOR A MONETARY
FORFEITURE in the amount of Seventy-five Thousand Dollars ($75,000)
for willfully violating Sections 1.2105(c)(1) and 1.2105(c)(6) of the
13. Payment of the forfeiture shall be made in the manner provided for in
Section 1.80 of the Rules within ten (10) calendar days after the
release of this Forfeiture Order. If the forfeiture is not paid within
the period specified, the case may be referred to the Department of
Justice for enforcement of the forfeiture pursuant to Section 504(a)
of the Act. Cascade Access, L.L.C. shall send electronic notification
of payment to Gary Schonman at Gary.Schonman@fcc.gov and Judy
Lancaster at Judy.Lancaster@fcc.gov on the date said payment is made.
14. The payment must be made by check or similar instrument, wire
transfer, or credit card, and must include the NAL/Account number and
FRN referenced above. Regardless of the form of payment, a completed
FCC Form 159 (Remittance Advice) must be submitted. When completing
the FCC Form 159, enter the Account Number in block number 23A (call
sign/other ID) and enter the letters "FORF" in block number 24A
(payment type code). Below are additional instructions you should
follow based on the form of payment you select:
* Payment by check or money order must be made payable to the order
of the Federal Communications Commission. Such payments (along with
the completed Form 159) must be mailed to Federal Communications
Commission, P.O. Box 979088, St. Louis, MO 63197-9000, or sent via
overnight mail to U.S. Bank - Government Lockbox #979088, SL-MO-C2-
GL, 1005 Convention Plaza, St. Louis, MO 63101.
* Payment by wire transfer must be made to ABA Number 021030004,
TREAS/NYC, and Account Number 27000001. To complete the wire transfer and
ensure appropriate crediting of the wired funds, a completed Form 159 must
be faxed to U.S. Bank at (314) 418-4232 on the same business day the wire
transfer is initiated.
* Payment by credit card must be made by providing the required
credit card information on FCC Form 159 and signing and dating the
Form 159 to authorize the credit card payment. The completed Form
159 must then be mailed to Federal Communications Commission, P.O.
Box 979088, St. Louis, MO 63197-9000, or sent via overnight mail to
U.S. Bank - Government Lockbox #979088, SL-MO-C2-GL, 1005
Convention Plaza, St. Louis, MO 63101.
15. Any request for full payment under an installment plan should be sent
to Chief Financial Officer - Financial Operations, Federal
Communications Commission, 445 12th Street, SW, Room 1-A625,
Washington, DC 20554. If you have questions regarding payment
procedures, please contact the Financial Operations Group Help Desk by
telephone, 1-877-480-3201, or by e-mail, ARINQUIRIES@fcc.gov.
16. IT IS FURTHER ORDERED that a copy of this Forfeiture Order shall be
sent by Certified Mail Return - Receipt Requested, to: Brenda C.
Crosby, President, Cascade Access, L.L.C., 303 SW Zobrist, Estacada,
Oregon 97023; and to Cascade's counsel: Thomas Gutierrez, Esq. and
Elizabeth R. Sachs, Esq., Lukas, Nace, Gutierrez & Sachs, L.L.P., 1650
Tysons Blvd., Suite 1500, McLean, VA 22102.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80.
47 C.F.R. S: 1.2105(c)(1), (c)(6).
See Cascade Access, L.L.C., Notice of Apparent Liability for Forfeiture,
24 FCC Rcd 1350 (Enf. Bur. 2009) (NAL).
NAL, 24 FCC Rcd at 1351. See also Request for Cancellation or Reduction of
Proposed Forfeiture, filed March 12, 2009, by Cascade Access, L.L.C. at 1
(NAL Response); Letter from Thomas Gutierrez, Esq., Counsel for Cascade
Access, L.L.C., to Marlene H. Dortch, Secretary, Federal Communications
Commission, dated January 26, 2009 (LOI Response), at Exhibit 1.
47 C.F.R. S: 1.2105(c)(1). Section 1.2105(c) is commonly referred to as
the Commission's "anti-collusion" rule.
47 C.F.R. S: 1.2105(c)(6).
See NAL Response.
See NAL Response at 3.
See NAL Response at 3-4.
See NAL Response at 5.
See NAL Response at 6.
See id. See also Star Wireless, LLC and Northeast Communications of
Wisconsin, Inc., Order on Review, 22 FCC Rcd 8943 (2007), appeal denied,
Star Wireless, LLC v. FCC & USA, 522 F.3d 469 (D.C. Cir. 2008) (Star
See NAL Response at 6.
See June 11, 2009, letter from Brenda Crosby, President, Cascade Access,
L.L.C., to Judy Lancaster, Investigations and Hearings Division, FCC
Enforcement Bureau (wherein Cascade informally states that it is a small
See Implementation of Section 309(j) of the Communications Act -
Competitive Bidding, Second Report and Order, 9 FCC Rcd 2348, 2386-88
(1994) (Competitive Bidding Second Report and Order). See also id. at
2387, para. 225 ("[W]e believe that the competitiveness of the auction
process and of post-auction market structure will be enhanced by certain
additional safeguards designed to reinforce existing laws and facilitate
detection of collusive conduct."); Implementation of Section 309(j) of the
Communications Act - Competitive Bidding, Memorandum Opinion and Order, 9
FCC Rcd 7684, 7685-7688, para. 10 (1994) ("Our anti-collusion rules are
intended to protect the integrity and robustness of our competitive
47 C.F.R. S: 1.2105(c)(1). Section 1.2105(a) requires that each auction
applicant submit a short-form application (FCC Form 175) in order to
participate in an auction. See 47 C.F.R. S:1.2105(a).
47 C.F.R. S: 1.2105(c)(1). See also Amendment of Part 1 of the
Commission's Rules - Competitive Bidding Procedures, Order on
Reconsideration of the Third Report and Order, Fifth Report and Order, and
Fourth Further Notice of Proposed Rulemaking, 15 FCC Rcd 15923 (2000) at
15297-98, paras. 7-8.
See, e.g., Auction of 700 MHz Band Licenses, Auction of 700 MHz Band
Licenses Scheduled for January 24, 2008, Public Notice, 22 FCC Rcd 18141,
18148-54 (2007) (Procedures PN); Auction of MHz Band Licenses, Status of
Short-Form Applications to Participate in Auction 73, Public Notice, 23
FCC Rcd 18 (2008) (Status PN); Auction of 700 MHz Band License, 214
Bidders Qualified to Participate in Auction 73, Public Notice, 23 FCC Rcd
276, 283-286 (2008) (Qualified Bidders PN); Wireless Telecommunications
Bureau Reminds 700 MHz Auction Applicants of Confidential Nature of
Upfront Payment and Other Bidding-Related Information, 23 FCC Rcd 18,
(2008) (Confidential Information Reminder PN); Auction of 700 MHz Band
Licenses Closes, Winning Bidders Announced for Auction 73, Public Notice,
23 FCC Rcd 4572, 4581 (2008) (Winning Bidders PN).
See NAL Response at 2-3.
See 47 C.F.R. S: 1.2105(c); Star Wireless, LLC and Northeast
Communications of Wisconsin, Inc., Order on Review, 22 FCC Rcd 8943
(2007), appeal denied, Star Wireless, LLC v FCC and USA, 522 F.3d 469
(D.C. Cir. 2008) (Star Wireless).
See id. See also Lotus Communications Corporation, 23 FCC Rcd 9107 (WTB
2008). There is no merit to Cascade's argument that Section 1.2105(c) has
never been applied to facts such as those presented here. See Response at
3, 7-9. It is axiomatic that the facts and circumstances of two cases will
never be identical and, although Cascade attempts to distinguish its
behavior from that in Star by pointing out inconsequential factual
differences between them, the facts are sufficiently similar to find the
legal principles applied in that case to be applicable here.
See 47 C.F.R. S: 1.2105(c). See also Mr. Robert Pettit, Letter, 16 FCC Rcd
10080 (WTB Auctions Div. 2000)("[T]he anti-collusion rule does not
prohibit all business discussions among applicants for licenses in the
same geographic license areas . . . [but] such discussions . . . must be
conducted with great care not to convey the substance of bids or bidding
strategies of any such applicant"); David L. Nace, 11 FCC Rcd 11363, 4 CR
1080 (1996) (David L. Nace), cited by Cascade ("As a general matter, the
anti-collusion rule does not prohibit business negotiations between D, E
and F block applicants who have applied for the same markets [but]
[a]uction applicants are reminded . . . that such negotiations should not
amount to `cooperating, collaborating, discussing or disclosing in any
manner the substance of ...bids or bidding strategies.'").
47 CFR S: 1.2105(c)(1). See also supra, note 19.
NAL Response at 5.
See 47 C.F.R. S: 1.2105(c).
See NAL, 24 FCC Rcd at 1354.
Qualified Bidders PN, 23 FCC Rcd at 285. Auction 76 was the contingent,
subsequent auction to Auction 73. The identities of qualified applicants
and auction results were released in January 2008. See Qualified Bidders
PN, 23 FCC Rcd at 288-299; Auction of 700 MHz Band Licenses, Additional
Information Regarding the FCC Auction System and Results Files for
Auctions 73 and 76, Public Notice, 23 FCC Rcd 303 (2008) (Auction Results
Confidential Information Reminder PN, 12 FCC Rcd at 18 ("[T]he Bureau
recently warned applicants that the direct or indirect communication to
other applicants or the public disclosure of such non-public information
could violate the Commission's anonymous bidding procedures and the
anti-collusion rule"). Thus, contrary to Cascade's argument, it is
irrelevant whether the Auctions Division may have allowed similar
information to be disseminated in a much earlier, prior auction.
Section 312(f)(1) of the Act, 47 U.S.C. S: 312(f)(1), defines willful as
"the conscious and deliberate commission or omission of [any] act,
irrespective of any intent to violate" the law. The legislative history to
Section 312(f)(1) of the Act clarifies that this definition of willful
applies to both Sections 312 and 503(b) of the Act, and the Commission has
so interpreted the term in the Section 503(b) context. See, e.g.,
Application for Review of Southern California Broadcasting Co., Memorandum
Opinion and Order, 6 FCC Rcd 4387, 4388 (1991).
NAL Response at 5-6.
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, para. 27.
See supra, note 19.
47 U.S.C. S: 503(b).
47 C.F.R. S: 1.80.
47 C.F.R. S:S: 0.111, 0.204, and 0.311.
47 C.F.R. S: 1.80.
47 U.S.C. S: 504(a).
An FCC Form 159 and detailed instructions for completing the form may be
obtained at http://www.fcc.gov/Forms/Form159/159.pdf.
Federal Communications Commission DA 13-32
Federal Communications Commission DA 13-32