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1. This Consent Decree is entered into by the Enforcement
Bureau, Federal Communications Commission ("Bureau") and
International Business Machines Corporation ("IBM").
2. There are four separate transfers that are the subject
of this Consent Decree. The first two transactions
involve microwave and land mobile stations1 originally
licensed to Advantis, a general partnership owned 70
percent by IBM and 30 percent by Sears Roebuck & Co.
(``Sears'').2 IBM's 70 percent interest was held by
Tarrytown Holdings, a wholly owned subsidiary of ISSC,
which was in turn a wholly owned subsidiary of IBM. On
June 11, 1997, Tarrytown Holdings became a subsidiary of
ISSC Holdings, Inc., a newly created subsidiary of ISSC.
On June 12, 1997, THP, Inc., another wholly owned
subsidiary of ISSC Holdings, Inc., acquired Sears'
interest in Advantis. At that time, IBM owned 100 percent
of Advantis. On July 1, 1997, Tarrytown Holdings merged
into THP, Inc., causing the dissolution of the Advantis
partnership. THP, Inc., the surviving entity, was
renamed Advantis Corporation. On October 1, 1997, IBM's
restructuring of its interest in Advantis was completed
when Advantis Corporation, ISSC, and ISSC Holdings, Inc.
were all merged into IBM.
3. IBM, Advantis, and the other corporations involved did
not file applications for Commission consent to the
transfers of control of the subject stations that took
place when these transactions were effectuated. IBM
admits that it was not until a ``review of the licenses
in connection with the filing of renewal applications for
the stations that the earlier failure to obtain FCC
consent came to light.'' IBM attributes Advantis's, and
subsequently its own, oversight, in part, to ``the fact
that licensees of private operational fixed microwave
radio stations are not required to provide detailed
ownership information at the time of filing of their
initial applications for new licenses.'' IBM admits that
it did not review the transfer of control implications of
the transaction ``because the transaction was, at the
time, viewed only as a corporate restructuring.''3
4. IBM states that shortly before October 26, 1998, it
determined that it had failed to obtain Commission
consent to the pro forma transfers of control. On
November 2, 1998, IBM filed a Request for Special
Temporary Authority, which was granted on November 12,
1998.4 Also on November 2, 1998, IBM filed an
application for the Commission's consent to assign the
licenses to IBM.5 That application was granted on
December 2, 1998.6
5. On July 20, 1999, the Enforcement Division of the
Wireless Telecommunications Bureau7 issued a Notice of
Apparent Liability for Forfeiture (``NAL''), finding IBM
apparently liable for a forfeiture in the total amount of
$20,000.8 Specifically, the NAL concluded that IBM had
``engaged in unauthorized pro forma transfers of control
of the stations, in apparent repeated violation of
Section 310(d) of the Communications Act of 1934, as
amended ("Act") and Section 101.53 of the Commission's
6. On August 19, 1999, IBM submitted a response to the NAL
in which it argued that as a matter of policy, the
Commission should not impose a forfeiture on IBM.9 IBM
also argued in the alternative that if the Commission did
impose a forfeiture, it should reduce the amount of the
forfeiture significantly.10 IBM subsequently withdrew
7. On September 24, 1999, IBM met with Commission staff.
At this meeting, IBM informed the Commission that it may
have prematurely transferred control of 20 of the 22
licenses that were the subject of the NAL to the Boeing
Company (``Boeing'') as part of a very large and complex
transaction involving the transfer of information
technology facilities and services between the two
corporations. Prior to the meeting, IBM and Boeing had
filed applications for the Commission's consent to assign
the licenses in question to Boeing. Those applications
were granted on October 6, 1999. At this meeting, IBM
also informed the Commission that it had discovered
another license that should have been included in the pro
forma transfer of licenses from Advantis to IBM.
8. IBM committed to conducting a comprehensive due
diligence review of its operations and licenses. On
December 17, 1999, IBM reported the results of its due
diligence review. IBM reported two additional instances
where it had acquired control of Commission licenses
without seeking prior approval of the Commission. The
first such instance occurred on July 7, 1995, when IBM
acquired control of two currently active land mobile
licenses from Lotus Development Corporation (call signs
KNJJ238 and WNZT528). The second instance occurred on
September 24, 1999, when IBM acquired control of three
land mobile licenses held by Sequent Computer Systems,
Inc. (call signs WNXT503, WNSA207, and WNYM818).
9. For the purposes of this Consent Decree, the following
definitions shall apply:
(a) "Commission" means the Federal Communications
(b) "Bureau" means the Commission's Enforcement
(c) "IBM" means International Business Machines
Corporation and all of its subsidiaries and
(d) ``NAL'' means International Business
Machines, Notice of Apparent Liability for
Forfeiture, 14 FCC Rcd 11667 (WTB released
July 20, 1999)
(e) ``Advantis transactions'' means the series of
transactions that culminated on October 1,
1997, with the merging of Advantis
Corporation, ISSC, and ISSC Holdings, Inc.
(f) ``Boeing transactions'' means the series of
transactions that culminated in the January
1, 1999, transfer of stations formerly
licensed to Advantis from IBM to the Boeing
(g) ``Lotus transaction'' means the transaction
that culminated on July 7, 1995, with the
transfer of licenses formerly held by Lotus
Development Group to IBM.
(h) ``Sequent transaction'' means the transaction
that culminated on September 24, 1999, with
the transfer of licenses formerly held by
Sequent Computer Systems, Inc. to IBM.
(i) "Order" means an order of the Enforcement
Bureau adopting this Consent Decree.
(j) "Final Order" means an Order that is no
longer subject to administrative or judicial
reconsideration, review, appeal, or stay.
10. Without admitting to any violation of the Commission's
rules, IBM agrees not to contest findings in the NAL that
IBM apparently violated Section 310(d) of the
Communications Act of 1934, as amended, and Sections
90.113 and/or 101.53 of the Commission's rules with
respect to the Advantis transactions, provided that these
findings shall not be used by the Bureau against IBM or
its affiliates in any other current or future proceedings
before the Bureau, except as set forth in paragraph 17 of
this Consent Decree.
11. IBM and the Bureau agree that this Consent Decree does
not constitute an adjudication of the merits, or any
finding on the facts or law regarding any violations
committed by IBM arising out of the Advantis, Boeing,
Lotus, or Sequent transactions.
12. IBM shall make a voluntary contribution to the United
States Treasury in the amount of $70,000 within 10
calendar days after the Bureau releases an Order adopting
this Consent Decree.
13. IBM agrees to implement a comprehensive Compliance
Program to ensure compliance with the Communications Act
and the Commission's rules and policies. Documents
describing the Compliance Program are contained in a
letter from James C. Rendeiro III, Vice President,
Associate General Counsel, IBM Global Services, to John
J. Schauble, Special Counsel, Investigations and Hearings
Division, Enforcement Bureau dated April 6, 2000 and are
incorporated herein by reference.
14. In express reliance upon the covenants and
representations contained herein, the Bureau agrees to
terminate the investigation into the Advantis, Boeing,
Lotus, and Sequent transactions upon the Order adopting
this Consent Decree becoming a Final Order.
15. In consideration for the termination of these
proceedings in accordance with the terms of this Consent
Decree, IBM agrees to the terms, conditions and
procedures contained herein.
16. The Bureau agrees not to institute any new proceeding,
formal or informal, of any kind against IBM for
violations of Section 310(d) the Communications Act or
Sections 90.113 and 101.53 of the Commission's rules
regarding the Advantis, Boeing, Lotus, or Sequent
transactions that are the subject of this Consent Decree.
17. In the event that IBM is found by the Commission or its
delegated authority to have engaged in conduct the same
or similar to that described in paragraph 10 of this
Consent Decree, IBM and the Bureau agree that the
apparent misconduct described in paragraph 10 may be used
by the Bureau only to fashion an appropriate sanction,
provided that IBM shall not be precluded or estopped from
litigating de novo any and all of the issues arising from
the facts and allegations presented in the NAL as
necessary to defend, in any forum, its interest from
challenge by any person or entity not a party to this
18. IBM admits the jurisdiction of the Bureau to adopt this
19. IBM waives any and all rights it may have to seek
administrative or judicial reconsideration, review,
appeal or stay, or to otherwise challenge or contest the
validity of this Consent Decree and the Order adopting
this Consent Decree, provided the Order adopts the
Consent Decree without change, addition, or modification.
20. IBM and the Bureau agree that the effectiveness of this
Consent Decree is expressly contingent upon issuance of
the Order, provided the Order adopts the Consent Decree
without change, addition, or modification.
21. IBM and the Bureau recognize that in the event that
this Consent Decree is rendered invalid by any court of
competent jurisdiction, it shall become null and void and
may not be used in any manner in any legal proceeding.
22. IBM and the Bureau agree that if IBM, the Commission,
or the United States on behalf of the Commission, brings
a judicial action to enforce the terms of the Order
adopting this Consent Decree, neither IBM nor the
Commission shall contest the validity of the Consent
Decree or Order, and IBM and the Commission shall waive
any statutory right to a trial de novo with respect to
any matter upon which the Order is based, and shall
consent to a judgment incorporating the terms of this
23. IBM agrees to waive any claims it may otherwise have
under the Equal Access to Justice Act, Title 5 U.S.C. §
504 and 47 C.F. R. § 1.1501 et seq.
24. IBM agrees that any violation of the Order adopting
this Consent Decree shall constitute a separate violation
of a Commission order, entitling the Commission to
exercise any rights and remedies attendant to the
enforcement of a Commission order.
25. This Consent Decree may be signed in counterparts.
FEDERAL COMMUNICATIONS COMMISSION, ENFORCEMENT BUREAU
By: /s/ David H. Solomon
David H. Solomon Date
INTERNATIONAL BUSINESS MACHINES
By: /s/ Philip Thompson
Philip S. Thompson Date
Vice President, Business Transformation
and Chief Information Officer
1 Stations WNTT360 (Huntington Beach, CA); WHJ651
(Huntington Beach, CA); WNEZ481 (Monrovia, CA); WNEZ480 (La
Habra, CA); WHJ653 (Cypress, CA); WHJ649 (Hazelwood, CA);
WHJ650 (Torrance, CA); WHJ816 (Saint Charles, MO); WNER966
(Dominguez Hills, CA); WNET350 (Gardena, CA); WNEU335 (Gray
Butte, CA); WNEU679 (Long Beach, CA); WNEW515 (Long Beach,
CA); WNEY550 (Long Beach, CA); WNEZ482 (Compton, CA);
WNTB361 (Long Beach, CA); WNTH667 (Edwards AFB, CA); WNTL350
(Anaheim, CA); WNTT359 (Long Beach, CA); WNTX919
(Wrightwood, CA); WNTX920 (Long Beach, CA); and WPJF891
(Long Beach, CA).
2 See Request for Special Temporary Authority, filed
November 2, 1998, by IBM, p. 1.
3 Id., pp. 1-2.
4 Id. (STA Request is stamped ``Granted'').
5 File Nos. 746030, 746032-746052.
6 See Public Notice No. 2018, released December 8, 1998
7 Prior to November 8, 1999, the Enforcement Division of
the Wireless Telecommunications Bureau handled this
proceeding. On November 8, 1999, pursuant to the
Commission's reorganization, the proceeding was transferred
to the Investigations and Hearings Division of the
Enforcement Bureau. Establishment of the Enforcement and
Consumer Information Bureau, FCC 99-172 (released October
8 See International Business Machines, Notice of Apparent
Liability for Forfeiture, 14 FCC Rcd 11667 (WTB released
July 20, 1999).
9 See Response of International Business Machines
Corporation to Notice of Apparent Liability for Forfeiture,
(filed Aug. 19, 1999) at 9-11.
10 Id. at 11-16.
11 See Letter, dated September 28, 1999 from J.C. Rendeiro
III, Vice President, Associate General Counsel, IBM Global
Services, to Thomas J. Sugrue, Chief, Wireless
Telecommunications Bureau, FCC.