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A. 1. a.(1)(a) i) a)#)a [ PcQ)P# ## b, oT9 !#)^ `> XidQ)X#Advanced Legal WordPerfect Learning Guide   u I. A. 1. a.(1)(a) i) a)#)a [ PeQ)P# ## b, oT9 !#)^ `> XifQ)X#   Copyright  Portola Systems, Inc. 1987, 1988`e%APage   I. A. 1. a.(1)(a) i) a)#)a [ PgQ)P# ## b, oT9 !#)^ `> XihQ)X#   Page ``e%)Copyright  Portola Systems, Inc. 1987, 1988 Style 87=@6FInitial Codes for BeginningF*'Ç.7=.EV IJ#)a [ PiQ)P# dn  ## b, oT9  [  I. A. 1. a.(1)(a) i) a)#)a [ PjQ)P# ## b, oT9 Style 97=@6FInitial Codes for Intermediate*'Ç.7=.ET KL#)a [ PrQ)P# dn  ## b, oT9 Њ [  I. A. 1. a.(1)(a) i) a)#)a [ PsQ)P# ## b, oT9 #)^ `> XitQ)X#`e%'Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PuQ)P# ## b, oT9 #)^ `> XivQ)X#Intermediate Legal WordPerfect Learning Guide   z I. A. 1. a.(1)(a) i) a)#)a [ PwQ)P# ## b, oT9 #)^ `> XixQ)X#   Copyright  Portola Systems, Inc.`e%APage   I. 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All payments after that date will continue in accordance with the terms of the amortization schedule attached to the Note executed by the licensee. All installment payments previously made by licensees who elect one of the three options will be applied in accordance with the provisions set forth under the discussion of each  X-option, see Section IV., infra.6A Xt-ԍ#X\  P6G;ɒP# For example, for a licensee electing to continue making payments under its existing Note, if a licensee had accrued $100,000 in Suspension Interest during this period and had previously made installment payments totaling $20,000, then the amount of Suspension Interest would be $80,000 (no additional interest will be assessed against this amount) and would be payable in eight equal payments of $10,000.  X-  Xx-d28. We delegate to the Bureau authority to set forth all procedures for implementing the resumption of payments.  X3-d29. Broadband PCS C block licensees choosing to surrender their licenses pursuant to  X -the amnesty option described in Section IV.C., infra and those surrendering licenses that  X -are not prepaid pursuant to the prepayment option described in Section IV.D., infra, will be required to return to the Commission each original Note and Security Agreement for cancellation by the Commission.  X -d30. We will not entertain any requests for an extension of the March 31, 1998  X-deadline beyond the automatic 60day nondefault period set forth in paragraph 25, supra.  X-The Suspension Order already has afforded a significant period to licensees during which"(60*&&aa-" payments were not required. Therefore, we intend to deny any requests for a grace period beyond the automatic 60day nondefault period we adopt herein, including any requests  X-made pursuant to Section 1.2110 of the Commission's rules.q7 XK-ԍ #X\  P6G;ɒP#47 C.F.R.  1.2110(e)(4)(ii).q  X-d31. C block licensees may resume payments under their current Note or elect one of the three options described below. d  XH- B. Disaggregation of Spectrum for Reauction  X -d32. Background. Existing Commission rules permit broadband PCS licensees to  X -disaggregate their spectrum.8} y X--ԍ#X\  P6G;ɒP# Geographic Partitioning and Spectrum Disaggregation by Commercial Mobile Radio Services Licensees,  {O-Report and Order and Further Notice of Proposed Rule Making, 11 FCC Rcd 21831 (1996) (partitioning and  {O-disaggregation rules now codified at 47 C.F.R.  24.714) (hereinafter "Disaggregation Order"). Under these rules, a broadband PCS licensee in the A, B, D, or E block may file an application with the Commission requesting permission to disaggregate any portion of its spectrum to other eligible entities at any time following the  X -issuance of its license.9  X--ԍ#X\  P6G;ɒP# See 47 C.F.R.  24.714(a)(1) (parties "shall request an authorization for partial assignment of a license pursuant to Section 24.839"). The existing rules also permit a C or F entrepreneur block licensee to disaggregate spectrum to other C and F block eligible entities for the first five  X-years following the issuance of a license.m:7 Xx-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(a)(3).m After the first five years of holding a license, an entrepreneur block licensee also may disaggregate to any qualified nonentrepreneur, provided that the nonentrepreneur compensates the federal government through an unjust  XK-enrichment payment proportionate to the amount of spectrum disaggregated.m;K  X-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(c)(1).m If the entrepreneur block licensee has elected to pay using installment payments, the qualified entity receiving the disaggregated spectrum will also be permitted to make installment  X-payments equaling its pro rata portion of the remaining government obligation.m<  XP!-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(d)(1).m The rules require that new notes and security agreements be executed by both the former and  X-the new licensee.q=J  X$-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(d)(3)(ii).q "=0*&&aa"Ԍ X-d 33. A number of C block licensees, as well as several financial advisors and equipment manufacturers, have requested that the Commission permit licensees to disaggregate spectrum and surrender it to the Commission for reauction in exchange for a  X-pro rata reduction in debt.">E X4-ԍ#X\  P6G;ɒP# See, e.g., AmeriCall ex parte letter, August 5, 1997 at 1 ; GWI ex parte letter, August 15, 1997 at 1;  {O-Magnacom ex parte letter, August 13, 1997 at 1; BIA Capital ex parte letter, August 4, 1997 at 12; Nokia ex  {O-parte letter, September 16, 1997 at 1; Horizon Comments at 56 (all seeking a liberalization of the Commission's current rules for disaggregation to private parties)." Generally, these proposals differ in: (1) the amount of spectrum that could be surrendered to the Commission; (2) the amount and form of credit for the spectrum surrendered; and (3) the terms and eligibility requirements for reauction of the disaggregated spectrum.  XJ-d!34. AmeriCall proposes "amnesty by thirds," which would permit each licensee to disaggregate its C block license into three 10 MHz portions, any one of which the licensee  X -could surrender to the Commission for forgiveness of its related installment debt.?  X-ԍ#X\  P6G;ɒP# AmeriCall ex parte letter, August 5, 1997 at 2. Under this proposal, surrendered spectrum would be reauctioned and the Commission would  X -retain the down payments made by the initial licensee.[@  X%-ԍ #X\  P6G;ɒP# Id. [ AmeriCall suggests allowing a licensee to participate in reauctions of C block spectrum, but only reauctions for spectrum  X -other than that surrendered by the licensee.ZA 7 X-ԍ#X\  P6G;ɒP# Id.Z AmeriCall also suggests that a licensee be required to wait two years before being allowed to reacquire spectrum that it has  X-surrendered to the Commission.ZB  X+-ԍ#X\  P6G;ɒP# Id.Z AmeriCall proposes that C block licensees continue operating under the terms and conditions of the initial payment obligation, but that the Note be reduced in proportion to the amount of spectrum surrendered and the associated Security Agreements and Uniform Commercial Code ("UCC") filings modified  X6-accordingly.ZC6  X-ԍ#X\  P6G;ɒP# Id.Z  X-d"35. A number of other commenters propose that the Commission adopt variations of AmeriCall's disaggregation proposal. BIA Capital's disaggregation proposal generally tracks AmeriCall's proposal, but would allow licensees to surrender 10, 20 or 30 MHz of  X-spectrum.DJ  X%-ԍ#X\  P6G;ɒP# BIA Capital ex parte letter, August 4, 1997 at 12. Magnacom proposes that parties be allowed to disaggregate up to 15 MHz of"D0*&&aa"  X-spectrum and that all payments be applied to the portion of the license retained.DE Xy-ԍ#X\  P6G;ɒP# Magnacom, ex parte letter, August 13, 1997 at 1; see also Northern Michigan PCS Consortium, L.L.C.  {Ob-ex parte letter, August 14, 1997 (supporting the application of all payments to the debt owed to the FCC).D Urban  X-Comm advocates that parties be allowed to disaggregate up to 10 MHz of spectrum.FC X-ԍ#X\  P6G;ɒP# Urban Comm ex parte letter, September 17, 1997 at 45. In a recent joint filing, AmeriCall, Clearcomm, and Chase support a disaggregation option that would allow a licensee to disaggregate 15 MHz from one or more of the C block licenses it now holds, on a licensebylicense basis, and to have its indebtedness reduced  X-proportionately (i.e., by 50%). The disaggregated spectrum would be reauctioned expeditiously and the disaggregating licensee would be precluded from rebidding on  Xa-spectrum it has disaggregated.Ga X -ԍ#X\  P6G;ɒP# AmeriCall, ClearComm, and Chase ex parte letter, September 17, 1997.  X3-d#36. Parties advocating a disaggregation option cite a number of benefits. AmeriCall contends its "amnesty by thirds" proposal would help the Commission avoid both wide scale bankruptcies as well as the need for a "bailout" in the form of radical debt  X -restructuring.H  XD-ԍ#X\  P6G;ɒP# AmeriCall ex parte letter, August 5, 1997 at 34. It contends that by requiring licensees to forfeit all down payments for the  X -surrendered spectrum, disaggregation imposes a penalty on C and F block licensees who  X -choose this option.`I V X-ԍ#X\  P6G;ɒP# Id. at 3.` AmeriCall argues further that spectrum disaggregation benefits participating licensees by allowing them to reduce their debt, which would in turn increase  X-their access to capital markets.J  XL-ԍ#X\  P6G;ɒP# Id. at 4. See also GWI ex parte letter, August 15, 1997 at 1. AmeriCall contends that because it avoids the "more substantial financial fixes" advocated by other debtors, disaggregation is a fairer proposal,  Xf-and one less prone to subsequent litigation.Kf  X-ԍ#X\  P6G;ɒP# AmeriCall ex parte letter, August 5, 1997 at 4. Finally, AmeriCall contends that the "amnesty by thirds" proposal is procompetitive in that it will introduce numerous new  X8-competitors, including licensees from other spectrum blocks.`L8i  XR!-ԍ#X\  P6G;ɒP# Id. at 5.` GWI indicates that spectrum disaggregation "works well" for C block licensees in small markets where a full  X -30 MHz of spectrum is not required.M  X$-ԍ#X\  P6G;ɒP# GWI ex parte letter, August 15, 1997 at 1. Urban Comm cites several public interest benefits deriving from spectrum disaggregation. According to Urban Comm, disaggregation"M0*&&aaE" provides spectrum to qualified designated entities without delay, decreases time to market for existing licensees, and injects new competition into the marketplace.  X- d$37. In opposition to the disaggregation option, CONXUS, a narrowband PCS licensee, argues that the option does not confer on narrowband licensees benefits comparable to those accorded to broadband licensees since there is insufficient bandwidth in narrowband  Xv-to allow disaggregation to occur without interfering with nationwide programs.Nv X-ԍ#X\  P6G;ɒP# CONXUS ex parte letter, August 27, 1997 at 12. Omnipoint argues that any type of "amnesty solution," including spectrum disaggregation, would require the Commission to adopt rules protecting companies that have substantially  X1-builtout their networks.O1y X[ -ԍ#X\  P6G;ɒP# Omnipoint ex parte letter, September 5, 1997 at 2.  X -d%38. Discussion. In view of the substantial support and public interest benefits accruing from an alternative that would permit a voluntary surrender of spectrum to the Commission while maintaining the fairness and integrity of the auction, we adopt a disaggregation option. Under the disaggregation option we adopt today, any C block licensee may disaggregate a portion of its spectrum from each of its licenses and surrender  X-it to the Commission for reauction.P* Xk-ԍ#X\  P6G;ɒP# See Section V., infra (Further Notice of Proposed Rule Making requesting comment on rules and procedures for reauction). The licensee must disaggregate 15 MHz of spectrum  Xy-it holds across all BTAs in an MTA. These provisions prevent licensees from selectively surrendering spectrum for which they may believe they paid too much, or otherwise discarding spectrum in markets that may be more difficult to serve (commonly referred to  X4-as "cherrypicking" of licenses or spectrum)."Qy4 X-ԍ#X\  P6G;ɒP# For example, if a licensee holds four BTA licenses in MTA No. 4 (comprising Northern California and Northern Nevada), the licensee must choose to disaggregate 15 MHZ from each or none of the four BTA markets. " We limit the ability of licensees to selectively disaggregate spectrum within an MTA also to facilitate attempts by new bidders to aggregate spectrum and initiate service. Because we are allowing disaggregation on an MTAbyMTA basis, special exemptions for builtout systems such as the one we adopt under the amnesty option discussed below in paragraphs 5358 are unnecessary. In cases where a licensee has builtout a BTA, it can choose either to retain all 30 MHz in each of the BTAs it has licenses for in an MTA, or it can operate its builtout system with 15 MHz. We believe that this flexibility, compared to the "allornothing" approach, mitigates the need for a buildout exception for this option. "e Q0*&&aa"Ԍ X-d&39. Licensees electing this option will be required to return half of their spectrum at 1895 1902.5 MHz paired with 1975 1982.5 MHz, which is spectrum contiguous to the PCS F block. The surrender of spectrum adjacent to the F block will provide sufficient contiguous spectrum for both the incumbent and new licensees to offer competitive PCS services.  Xv-d'40. Under the disaggregation option, the Commission will reduce the amount of the  X_-debt owed by an amount equal to the pro rata portion of the spectrum returned to the  XJ-Commission, i.e.,by 50%, subject to coordination with the Department of Justice pursuant  X5-to applicable federal claims collection standards.rR5 X -ԍ#X\  P6G;ɒP# See 4 C.F.R. Parts 101105.r The Commission will retain the pro  X -rata portion of the down payments applicable to the spectrum. The following illustrates how this proposal would operate in practice:  X -  V -,dCompany X holds a 30 MHz license in a BTA market; paid the Commission $100,000 in its down payment; and owes the Commission $900,000 on a net bid of $1,000,000. Company X could disaggregate 15 MHz and surrender it to the Commission for reauction, and the Commission would retain $50,000 of the down payment. In return,  V-the Commission would reduce the licensee's obligation to the government to $450,000.! d  XS-The face amount of the licensee's Note will be adjusted to reflect the new principal, and  X<-the Note will then be amortized from the original date of execution to calculate the  X%-payments at the new face amount of the Note. All installment payments made as of  X-March 31, 1997,Sy X8-ԍ#X\  P6G;ɒP# This includes any payments due prior to and on March 31, 1997. will be applied to reduce the amount of the Suspension Interest calculated on the new principal balance to be made in eight equal payments beginning March 31, 1998. d  X-d(41. Where applicable, the existing disaggregation rules will govern this option.T* X-ԍ#X\  P6G;ɒP# See 47 C.F.R.  24.714 (broadband PCS partitioning and disaggregation rules). However, the broadband disaggregation rules were not designed for the surrender of  X-spectrum to the Commission.U X!-ԍ#X\  P6G;ɒP# See Disaggregation Order, 11 FCC Rcd 21831. Thus, existing rule provisions on designated entity transfer  Xm-restrictions,lVm X#-ԍ#X\  P6G;ɒP# 47 C.F.R  24.714(a)(3).l unjust enrichment,xWm=  X[%-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714 (c)(1), (2), (3).x installment payments, abbreviated license termslXm  X-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(e).l and"myX0*&&aa"  X-construction requirements,Yy X*-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(f). Thus, a licensee that disaggregates spectrum to the Commission must still fully fulfill its original construction requirements with regard to the 15 MHz that it retains. restrictions on the amount of spectrum that can be  X-disaggregated,Z X-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.714(b)(3) ("Spectrum may be disaggregated in any amount"). and similar rules will not apply to disaggregation to the Commission authorized by this option. In order to take advantage of the disaggregation option,  X-licensees will be required to make an election consistent with the procedures specified in  X-Section IV.E., infra.  Xx-d)42. In order to avoid unjust enrichment, licensees (defined as qualifying members of the licensee's control group, and their affiliates) will be prohibited from bidding in the subsequent reauction for spectrum the incumbent licensee has disaggregated. However, they will be permitted to acquire spectrum for any BTA for which the incumbent licensee has not disaggregated spectrum. We do not believe that it would be fair for these entities to benefit from a reauction after taking advantage of the disaggregation option. This prohibition against subsequent participation in the reauction for the spectrum disaggregated  X -by the same party is supported by a number of commenters.[  X+-ԍ#X\  P6G;ɒP# See Horizon Comments at 14; AmeriCall ex parte letter, July 11, 1997; AirGate Wireless, ex parte letter, Sept. 9, 1997. To ensure further against unjust enrichment, these entities will also be barred from reacquiring the spectrum they have surrendered to the Commission through a secondary market transaction for a period  X-of two years from the start of a reauction.\  X_-ԍ#X\  P6G;ɒP# See AmeriCall ex parte letter, August 5, 1997 at 2. d  Xd-d*43. We believe that the disaggregation option set forth above is consistent with our goals in this proceeding and serves the public interest. First, this option preserves the credibility and integrity of the Commission's rules. The relief we provide is another means of making more efficient use of the spectrum. It does not provide a windfall or unfair advantage to the C block licensees availing themselves of the disaggregation option.  X-The disaggregating licensee continues to pay for spectrum at its net high bid price,m]  Xo!-ԍ #X\  P6G;ɒP#See n.13, supra.m and the Commission receives full payment for the spectrum retained by the licensee. In addition, the Commission will retain 50% of the down payment consistent with the amount of spectrum being surrendered to the Commission. Moreover, disaggregation with"~ ]0*&&aap"  X-a pro rata adjustment in debt is consistent with the Commission's rules with regard to  X-private party disaggregation.g^ Xd-ԍ #X\  P6G;ɒP#47 C.F.R.  24.714.g  X-d+44. Second, the disaggregation option is fair and equitable to all interested parties. Losing bidders and other eligible parties will have an opportunity to bid on the disaggregated spectrum in the reauction. Also, by limiting disaggregation of spectrum to 15 MHz blocks on a BTA within an MTA basis, we increase the likelihood that the licenses available for reauction will be in quantities and geographic clusters that are commercially viable. In addition, by providing this limited opportunity to "pick and choose" which licenses to disaggregate, and not requiring the surrender of all 30 MHz of the spectrum it holds in an MTA, we make this option fair to those who have builtout  X -some of their markets._ y X/-ԍ#X\  P6G;ɒP# See, e.g., Omnipoint ex parte letters, August 18, 1997, September 3, 1997, and September 5, 1997 at 2. Although this option is not being made available to the narrowband or F block licensees, we do not believe that it is unfair to these parties or to other Commercial Mobile Radio Service ("CMRS") providers. This option does not materially alter the competitive landscape for CMRS services. Given the current state of the market and the Commission's existing rules, it is reasonable to expect that some C block spectrum will be transferred to competitors through reauction or private sale. Our actions here facilitate this process, by reducing the amount of spectrum that would otherwise be marketed in a piecemeal fashion. Moreover, as noted above, other parties will have an opportunity to bid on this spectrum in the reauction and, because of the spectrum's proximity to the F block, the spectrum may be particularly attractive to prospective licensees. d,45. Third, the disaggregation option is consistent with our Section 309(j) obligation to promote opportunities for designated entities, including small businesses. According to a number of commenters, including those in the financial community, a reduced government debt burden and the resulting lower cost per MHz pop will enhance prospects for existing  X-small business licensees to attract debt and equity capital.`* Xp-ԍ#X\  P6G;ɒP# BIA Capital, ex parte letter, August 4, 1997 at 1. This, in turn, should assist current C block licensees in moving forward with the deployment of their service offerings. Disaggregation will also provide opportunities for other small businesses to enter the PCS market in the future. Finally, by requiring C block licensees to disaggregate the 15 MHz of spectrum adjacent to the F block, we provide opportunities for existing F block licensees to aggregate spectrum in a manner that could benefit their planned or prospective service offerings. "`0*&&aa"Ԍ X- C. Surrender Licenses for Reauction (Amnesty)  X- d-46. Background. In response to our Installment Public Notice seeking comment on broadband PCS installment payment issues, a number of commenters express support for an option that would permit C block licensees to surrender their licenses to the Commission for reauction in exchange for forgiveness of the related debt and any interest  Xx-and penaltiesax X-ԍ#X\  P6G;ɒP# See 47 C.F.R.  24.708(b), 1.2109(c), 1.2104(g)(2). (generally referred to as "amnesty").b}xy X -ԍ #X\  P6G;ɒP#See, e.g., R&S ex parte letter, August 11, 1997 at 1; MCI ex parte letter, August 14, 1997 at 2; Urban  {O -Comm ex parte letter, August 21, 1997; GWI ex parte letter, August 4, 1997; NextWave ex parte letter, July 29,  {OU -1997; El Dorado ex parte letter, August 13, 1997 at 23. Commenters have submitted a variety of proposals for the terms of an amnesty option. Horizon states that an amnesty program should be designed to prevent a large scale surrender of licenses, and should encourage return of a license only in advance of a business failure. Horizon would permit a licensee to be selective in surrendering licenses, but would prohibit a licensee from rebidding on any license it surrendered and would prohibit a licensee's participation in the reauction entirely if it surrendered a total of more than five licenses. To facilitate this plan, Horizon asks that we waive our current cross default policies so that a licensee able to construct some, but not all, of its licenses will be able to return those licenses it cannot construct without placing all of its licenses in default. Horizon concludes that adopting such an amnesty plan would serve the public interest by getting licenses in the hands of  X{-companies willing and able to provide service to the public.lc{ X-ԍ #X\  P6G;ɒP# Horizon Comments at 1315. l d  XM-d.47. R&SdMo Xm-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# R&S Comments at 1315. and Cyber SiteseM  X-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# Cyber Sites Comments at 3. propose that the Commission permit C block licensees to surrender their licenses and obtain a full refund of all payments without penalty. GWI suggests that the Commission allow licensees to exchange all licenses in return for a "store credit" equal to 100% of the original down payment, which could be applied to licenses won in a "cash upfront" reauction. GWI contends that there should be no restriction on  X-the licensee's bidding in the reauction.f  X\"-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# GWI ex parte letter, August 4, 1997. NextWave, too, supports an "amnesty day" for the surrender of licenses and a subsequent reauction, but stresses that licensees should be  X-allowed to retain their most desirable licenses.g  X%-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# NextWave ex parte letter, July 29, 1997. NextWave submits that the total amount"3g0*&&aaR" of the original down payments should be credited toward reauction bids "with a reasonable  X-penalty."h Xb-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# NextWave ex parte letter, August 5, 1997.  X-d/48. Other commenters, including C block licensees AmeriCalliy X-ԍ#X\  P6G;ɒP# AmeriCall ex parte letter, July 11, 1997; AmeriCall, ClearComm, and Chase ex parte letter, September 17, 1997. and Chase,~j X^ -ԍ#X\  P6G;ɒP# Chase ex parte letter, August 11, 1997.~ endorse a "simple amnesty" program pursuant to which a licensee would be obliged to surrender all of its C block licenses in return for forgiveness of its debt and an opportunity to participate in any reauction of the returned licenses or other licenses. Equipment manufacturer Nokia also endorses an amnesty program that would permit a licensee to surrender all of its C block licenses in return for forgiveness of all associated debt and an  X1-opportunity to bid at the reauction.k1 X-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# Nokia ex parte letter, September 16, 1997.  X -d049. Fortunet states that a simple amnesty program does not provide sufficient relief, and asks that licensees receive a refund of their down payments and interest payments  X -  made on those licenses surrendered.l T X-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# Fortunet Reply Comments at 5. MCI also supports permitting licensees to surrender all of their C block licenses with no further financial obligation, but suggests that a  X -licensee be permitted to receive only "a fraction" of the down payment already made.m   X]-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# MCI ex parte letter, August 14, 1997. See also Chase ex parte letter, August 11, 1997.  Xy-d150. In addition to the many commenters who oppose any rule changes, including a  Xb-grant of amnesty,7nb  X-ԍ #X\  P6G;ɒP#See, e.g., ClearComm ex parte letter, August 7, 1997, opposing "any substantially penaltyfree amnesty"  {O-and advocating, inter alia, penalties such as denial of future designated entity status.7 a number of commenters have resisted implementation of an amnesty plan and have identified various problems specific to the amnesty option. Cook Inlet recommends that the Commission strictly enforce its rules as they currently exist, and take  X-aggressive measures to collect all debt,o1 X"-ԍ#X\  P6G;ɒP# Cook Inlet ex parte letter, August 5, 1997 at 1. noting that other alternatives, including an  X-amnesty plan, invite litigation and threaten the auction program's integrity.p X%-ԍ#X\  P6G;ɒP# Cook Inlet ex parte letter, August 15, 1997. However,"p0*&&aa(" Cook Inlet states that, if an amnesty program is adopted, certain limitations should be imposed, including prohibitions against participation in the reauction of their licenses by those who participate in amnesty (principals and control group members), against participation by any entity in bankruptcy, and against cherry picking among those licenses to be surrendered. In order to expedite reauction, Cook Inlet suggests that the Commission refund 25% of their down payments to licensees who surrender their licenses  Xv-ԩ as "walk away" money.qEv X-ԍ#X\  P6G;ɒP# Cook Inlet ex parte letter, August 5, 1997 at 23. Cook Inlet argues that the Commission would also have to provide compensatory compliance benefit and transition rules for control group parties who are meeting  {O -debt obligations and are not subject to bankruptcy (e.g., an additional 10 percent bidding credit in any reauction  {Oj -and relaxed control group and transfer rules). Id.  XH-d251. Omnipoint opposes amnesty because "operational" C block companies would be left with no recourse under any of the amnesty proposals, and would face a significant relative disadvantage in accessing capital markets. Omnipoint points out that this might  X -deprive the public of the service that such licensees are providing.r  X-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# Omnipoint ex parte letter, September 5, 1997. Omnipoint states that it and other operational C block licensees have "operating businesses [that] are  X -completely tied to specific C block licenses"`s  X -ԍ#X\  P6G;ɒP# Id. at 2.` and do not have the same flexibility to cancel licenses voluntarily. Omnipoint asserts that these licensees' access to public capital markets will be hampered by policies that would, in effect, reduce per pop prices paid for  X-similar properties i.e., the surrendered C block licenses, and will strand those licensees that have been significantly builtout with licenses that have "artificially higher prices" per  Xd-pop.`td7 XL-ԍ #X\  P6G;ɒP# Id. at 3.`  X6-d352. Like Omnipoint, Alpine argues that entities like itself, which bid in good faith and  X-intend to construct their markets, will not be helped by an amnesty program.u  X-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# Alpine Reply Comments at 911. However, Alpine supports an amnesty plan structured to encourage overextended licensees to take prompt remedial action and free up the C block for reauction and subsequent development. Alpine explains that the ability to roam is essential to the viability of its system and to that of other operational C block systems, but cannot be offered to potential customers if significant portions of the C block have not been developed. Therefore, Alpine endorses an amnesty option that would encourage speedy surrender and reauction by permitting" u0*&&aaQ" licensees to turn in one or more of their licenses and to receive credit for the down  X-payments, to be applied against other obligations.v Xb-#Xj\  P6G;ynXP#э#X\  P6G;ɒP# Alpine ex parte letter, September 17, 1997 at 2.  X-d453. Discussion. We conclude that it serves the public interest as articulated in our  X-goals, Section II, supra, to adopt an amnesty option that permits any C block licensee to surrender all of its licenses in exchange for relief from its outstanding debt and waive any applicable default payments, subject to coordination with the Department of Justice  Xa-pursuant to applicable federal claims collections standards.rway X -ԍ #X\  P6G;ɒP#See 4 C.F.R. Parts 101105.r We adopt the amnesty option for purposes of speeding use of the C block spectrum to provide services to the American public. The surrender of licenses under this option will provide qualified parties with an opportunity to obtain C block licenses at the market value of the licenses prevailing at the time of the reauction. The amnesty option we adopt today is equitable to all parties because, while amnesty relieves a licensee from further debt obligations and any applicable default payments, a coordinated surrender of licenses facilitates expeditious reauctioning of the spectrum and will provide new market opportunities for all eligible entities. In addition, we note that rapid reauction of those licenses surrendered will also comply with the Congressional directive that we promote competition and participation in the telecommunications industry by small businesses. d554. A C block licensee must make the amnesty election in accordance with the  X6-procedures set forth in Section E, infra. The Commission will reauction those licenses  X!-surrendered on an expedited basis under the reauction rules discussed in the Further  X -Notice of Proposed Rule Making adopted with this Second Report and Order. See Section  X-V., infra. Licensees electing the amnesty option will be eligible to bid for any and all licenses at the reauction. d655. Licensees electing the amnesty option will not have their down payment returned. This will discourage speculation and ensure that all bidders, new entrants as well as  X-existing licensees, participate in the reauction without undue advantage. Retention of the down payments 10% of the bid price for most licensees is consistent with our previous decisions and actions affecting C block bidders in that we have retained any payments made by those C block bidders who have failed to make their first or second  X*-down payments.xE** X#-ԍ#X\  P6G;ɒP# See, Mountain Solutions LTD, Inc., Request for Waiver of Section 24.711(a)(2) of the Commission's  {O#-Rules Regarding Market Nos. B053, B168, B172, B187, B188, B224, B247, B275, B366, and B381, Order, 12  {O$-FCC Rcd 5904 (1997) (application for review filed May 28, 1997 pending); Carolina PCS I Limited Partnership, Request for Waiver of Section 24.711(a)(2) of the Commission's Rules Regarding Market Nos. B016, B072,"%w0*&&%"  {O-B091, B147, B177, B178, B312, B335, and B436, Order, DA 97890 (rel. April 28, 1997) (application for  {OZ-review filed May 28, 1997 pending); C.H. PCS, Inc., Request for Waiver of Section 24.711(a)(2) of the  {O$-Commission's Rules, Order, 11 FCC Rcd 9343 (1996); BDPCS, Inc., Emergency Petition for Waiver of Section  {O-24.711(a)(2) of the Commission's Rules, Memorandum Opinion and Order, 12 FCC Rcd 3230 (1997), petition  {O-for reconsideration granted in part and denied in part, Memorandum Opinion and Order, FCC 97300 (rel. Sept. 29, 1997). We believe that by not finding these licensees in default and assessing"*Jx0*&&aa\" any applicable default payments, we are according them a substantial benefit. In forgiving  X-the outstanding debt we afford significant relief to the licensees by allowing them to avoid  X-anticipated defaults. In addition, these licensees will not be deemed in default or delinquent in meeting government debt obligations. Nor will they be subject to any applicable default payments or in violation of any FCC rules or license conditions. Thus,  X-their creditworthiness, financial qualifications, and other qualifications are preserved  Xv-should they wish to take part in other federal loan programsyHvJ yOq -#C\  P6QɒP#э Under the Debt Collection Improvement Act ("DCIA"), no person may obtain any federal financial assistance if the person has an outstanding debt with any federal agency which is in a delinquent status. Pub. L.  {O-No. 104-134,  3100(j)(1), 110 Stat. 1321 (1996), codified at 31 U.S.C.  3720B. In addition, in the Part 1  {O-Proceeding, the Commission adopted a certification procedure as part of changes to the application procedures whereby applicants must certify that the applicant is not in default on any payment for Commission licenses (including down payments) and that it is not delinquent on any nontax debt owed to any federal agency.  {O%-Bidders who cannot make this certification may be ineligible for installment payment plans. Part 1 Proceeding  {O-at  8.   or apply for any future  X_-spectrum auctions or licenses .z_Z  {Oj-#C\  P6QɒP#э See 47 U.S.C.  308(b), 309(j)(5). Č  X1-d756. Subject to one exception identified below, licensees choosing to take advantage of  X -the amnesty option will be required to surrender all of their licenses to the Commission. The requirement that all licenses be surrendered precludes licensees from "cherry picking." The simultaneous multipleround auction design enables bidders to place bids on many licenses at once and to aggregate desired licenses in a manner that facilitates workable business plans. If we were to permit licensees to "cherry pick" which licenses to surrender, the interdependency of the licenses would be harmed. Licenses surrendered pursuant to such a "cherry picking" scheme might lack the potential for beneficial aggregation within MTAs, and therefore would likely be less valuable to potential bidders and impair business plans of new investors.  X6-d857. As an exception to the "allornothing" requirement, licensees that have met or exceeded the five year buildout requirements by September 25, 1997, the date of adoption  X-of this Second Report and Order, will not be required to surrender licenses for builtout markets. In addition, these licensees will be permitted to retain those BTA licenses in which such buildout has occurred. However, licensees availing themselves of this exception may not pick and choose BTAs within an MTA but will be required, instead, to"z0*&&aa5" keep all of the other BTAs in the MTA in which the buildout requirement has been met and to pay for those licenses under the terms of their Notes. The buildout exception facilitates the achievement of the statutory goal set forth in Section 309(j) that we encourage the rapid provision of service to the public, and responds to the needs of licensees that have already commenced operations or have otherwise invested significantly in certain of their C block licenses. The Commission has an interest in minimizing the competitive impact of the changes that it makes to the auction rules, consistent with its  X_-broader policy objectives. The exception we adopt today is one method by which we can ensure that the menu of options available to the C block is fair to those licensees that have rapidly builtout their markets and initiated provision of competitive service. d958. Although the Bureau suspended installment payments on C block licenses on  X -March 31, 1997, some licensees made their installment payments (i.e., installments due on that date, and amounts due on December 31, 1996, but not paid until March 31, 1997, based on our automatic 90day nondefault rule) after the suspension. In addition, prior to the suspension of payments, many C block licensees made their regularly scheduled  X-installment payments. We believe that due to the actions we take in this Second Report  X}-and Order, it would be unjust and inequitable for C block licensees to be treated differently merely because some C block licensees made prior payments while others did not. Consequently, we direct the Wireless Telecommunications Bureau to refund any installment payments made (whether due on or before March 31, 1997) on any license that  X#-is surrendered pursuant to this Second Report and Order. In addition, we will forgive  X-payment of any due, but unpaid, installment payments for any surrendered license."{ X-ԍ #X\  P6G;ɒP#Forgiveness of this obligation will be subject to coordination with the Department of Justice pursuant to  {Op-applicable federal claims collections standards. See 4 C.F.R. Parts 101105." For licensees exercising the buildout exception and retaining certain licenses, all previously made installment payments will be applied first to reduce the Suspension Interest  X-applicable to those licenses, and any amounts remaining will be refunded .  X- d  X- D. Prepayment  XV-d:59. Background. In the Installment Public Notice, the Bureau sought comment on whether PCS licensees should be permitted to prepay their installment debt at a discount,  X*-and on proposals for calculating the net present value of the debt.|*C X"-ԍ #X\  P6G;ɒP#See Installment Public Notice at n.6. In his presentation at the FCC Public Forum held on this issue, John Bensche of Lehman Brothers recommended prepayment by bidders as a way to avoid further restructuring in the future"|0*&&aa"  X-and to remove the government from its role as creditor to the wireless industry. } Xy-ԍ#X\  P6G;ɒP# Presentation by John Bensche of Lehman Brothers at June 30, 1997, FCC Public Forum on Installment  {Ob-Payment Issues at 3. See also NextWave Comments at 9; GWI Reply Comments at 1314.  Bear Stearns also indicates that a prepayment option will improve the financial flexibility of C block licenses by eliminating the uncertainty surrounding the threat that a license will be revoked for financial reasons because lenders could collateralize their obligations with the  X-licenses, at least indirectly, using the shares of the licenseholding entity.v~C X-ԍ#X\  P6G;ɒP# See Bear Stearns Comments at 4.v  Xv-d;60. Other commenters also support some form of prepayment option for C block  X_-licensees.z_ X -ԍ#X\  P6G;ɒP# See, e.g., ClearComm Comments at 3.z In a letter dated September 16, 1997, Representatives Edward J. Markey and W.J. "Billy" Tauzin urged the Commission to consider a "full price buyout" proposal as part of a menu of options approach. Under this proposal, licensees could purchase at "full price" as many of their existing licenses as they desire with cash up front, for the net present value of the net bid prices for such licenses. They suggested that the licensees be allowed to use any monies on deposit with the Commission and any "new money" that the licensee may immediately muster. They agreed that this option had the benefit of allowing licensees to proceed with buildouts immediately, thereby bringing service to the public as quickly as possible, while also providing a meaningful opportunity for all  X-interested parties to participate in an auction for the bulk of the licenses. X-ԍ#X\  P6G;ɒP# See The Honorable W.J. "Billy" Tauzin and the Honorable Edward J. Markey, ex parte letter, September 16, 1997.  Xb-d<61. Many commenters argue that a prepayment option should include a discount to  XK-lower the net high bid price of the licenses below A and B block prices.}K  X-ԍ#X\  P6G;ɒP# See, e.g., ClearComm Comments at 3; Horizon Comments at 1012; RTFC Comments at 3; Holland  {O-Comments at 34; Duluth PCS Comments at 12; GWI Comments at 810; NextWave Comments at 910. See  {O-also Alpine ex parte letter, September 23, 1997. For example, NextWave believes that a discount to A and B block prices is necessary due to the headstart that A and B block licensees have experienced in time to market, coupled with the restraints of the C block control group rules and the deterioration of the financial  X-market conditions for wireless companies.c  X#-ԍ#X\  P6G;ɒP# NextWave Comments at 910 and Reply Comments at 22. Other commenters believe that a prepayment discount should reflect the average of D and E block winning bids, with a multiplier of"0*&&aa"  X-2.25 applied to secondary and tertiary markets and 3.0 for top 100 markets.r Xy-ԍ #X\  P6G;ɒP#Duluth PCS Reply Comments at 12.r In its ex  X-parte letter, Triumph Capital suggests that the Commission apply a discount ranging from  X-15 percent to 30 percent to determine the present value of C block debt to the FCC.*y X-ԍ#X\  P6G;ɒP# See Frederick W. McCarthy, Chairman, Triumph Capital to The Honorable Reed E. Hundt, Chairman,  {O-Federal Communications Commission ex parteĠletter, September 23, 1997 ("McCarthy Letter").* GWI proposes to scale the C block bid using the ratio of the A/B block average cash bid to C block average bid. This scale factor would then be multiplied by the actual C block  X-bid for that license to determine the scaled C block cash bid.g X6 -ԍ#X\  P6G;ɒP# GWI Comments at 1012.g This scaled C block bid would then be discounted at a 14 percent discount rate for the government debt to  Xc-determine the prepayment price.c X-ԍ#X\  P6G;ɒP# GWI Comments at 9. See also Bear Stearns Comments at 3. NextWave suggests that a twoyear period would be  XL-necessary for licensees to fund this prepayment as well as sustain operating expenses.iLV XS-ԍ#X\  P6G;ɒP# NextWave Comments at 10.i  X -d=62. Cook Inlet Region argues that any discounting of the net high bid price for purposes of prepayment would be unfair to the losing bidders in the C block auction and  X -investors and creditors of the bidders in the auction.   X-ԍ#X\  P6G;ɒP# Cook Inlet Region ex parte letter, September 23, 1997 at 2. Omnipoint also believes that a prepayment option is discriminatory against all of the winning bidders except the very  X -large.  X+-ԍ #X\  P6G;ɒP#Omnipoint ex parte letter, September 23, 1997 at 2. AirGate Wireless believes that permitting licensees to pay the net present value of their license costs at a discount would have the effect of rewriting the outcome of the C block auction, denying licenses to bidders who expressed through their bids a willingness  X}-to pay more than a discounted bid, and thereby arbitrarily choosing winners and losers.}i  X-ԍ#X\  P6G;ɒP# See AirGate Wireless ex parte letter, July 18, 1997 at 3.  Xf-Additionally, the SBA does not support a discount in the net bid amounts.{{f X1!-ԍ#X\  P6G;ɒP# See Jere W. Glover, Chief Counsel, U.S. Small Business Administration and Jenell S. Trigg, Assistant Chief Counsel, Telecommunications, to The Honorable Reed E. Hundt, Chairman, Federal Communications  {O"-Commission, ex parte letter, September 8, 1997 ("Glover Letter").{ The SBA indicates that absent a detailed analysis of the bidders, the bidding process, round activity, financial environment and marketplace circumstances during each of the auctions, including a regression analysis to isolate individual factors, it cannot be determined that"!]0*&&aa" the adjusted marketplace value of C block should be based on either A and B block or D X-F block bid amounts.` Xb-ԍ #X\  P6G;ɒP#Id. at 5.` The SBA also indicates that "a reduction in principal would seriously undermine the integrity of the auction as well as set a dangerous precedent for  X-small business participation in future auctions."Zy X-ԍ #X\  P6G;ɒP#Id.Z  X-d>63. Other commenters argue that a prepayment option is not viable for small businesses, or that it is otherwise inappropriate. BIA Capital contends that a prepayment option is not feasible because it would require small businesses to trade in debt capital from the government, which costs 7%, for private equity, which has a capital cost ranging  X1-from 30% to 40%.m1* X -ԍ#X\  P6G;ɒP# BIA Capital Comments at 23.m  X -d?64. Discussion. Under the prepayment option we adopt, any C block licensee may  X -prepay selective licenses subject to the restrictions described in this Subsection IV.D. All licenses that are not prepaid in accordance with this option must be surrendered to the Commission in exchange for a forgiveness of the corresponding debt and any penalties. A licensee selecting this option may apply 70% of the total of all down payments it made on the licenses that it elects to surrender to the Commission ("Available Down Payments"), to  Xy-a prepayment of the Notes for as many of its licenses it wishes to keep.y X-ԍ #X\  P6G;ɒP#For example, if a licensee held two licenses with net high bids of $100 and $200, then the total down payments would equal $30 ($10 + $20). If the licensee elected to keep the $200 license, the licensee would have $7 ($10 x 70 percent) of its down payment from the $100 license to apply towards the prepayment of the $200 license's Note. If, on the other hand, the licensee elected to prepay the $100 license, then the licensee would have $14 ($20 x 70 percent) of its down payment from the $200 license to apply towards the prepayment of the $100 license's Note. The remaining down payments not applied to prepayment will be retained by the Commission. Additionally, an incumbent may use any "new money" to prepay as many of its own licenses as it desires. Any installment payments previously made by the licensee for all its licenses will be added to the Available Down Payments to increase the funds available to  X-prepay its Notes. Interest accrued from the date of the conditional license grant through the Election Date will be forgiven. For purposes of this option, the down payment associated with licenses that are transferred as of the Election Date to subsidiaries or  X-affiliates will be considered transferred with the licenses and the corresponding debt.yXt  X#-ԍ #X\  P6G;ɒP#For example, if ABC Company paid $100,000 each for two licenses and submitted $10,000 in down payments for each license, the total down payments submitted by ABC Company would be $20,000. However, if ABC had subsequently transferred one of its licenses to XYZ Company, a whollyowned subsidiary, ABC"%0*&&%" Company would not have any additional money available to purchase its license, and XYZ Company would not have any additional money available to purchase its license. This option, however, is not intended to prohibit additional license transfers consistent with existing Commission rules. " 0*&&aaq"Ԍ X-ԙd@65. We believe that this prepayment option fairly balances competing interests, while maintaining the fairness and integrity of our rules and auctions. We note that 30% of the down payments is equal to 3% of the net high bids and is consistent with the approach  X-adopted previously for down payments.3 XT-ԍ#X\  P6G;ɒP# #X\  P6G;ɒP#See BDPCS, Inc., BTA Nos. B008, B036, B055, B089, B110, B133, B149, B261, B298, B331, B347,  {O= -B358, B391, B395, B407, B413, and B447, Order, 11 FCC Rcd 14399 (1996) (assessing a $67,695,653.23 default payment for failure to submit the required down payment for licenses won in the C block auction),  {O -reconsideration denied, Order, 12 FCC Rcd 6606 (1997); and C. H. PCS, Inc., BTA No. B347 Frequency Block  {O -C, Order, 11 FCC Rcd 22430 (1996) (assessing a $5,031,232.50 default payment for failure to submit the  yOc -required down payment for one license won in the C block reauction). 3 Under our existing rules, an applicant is subject  X-to a 3% payment if it fails to make the required down payment.EE  X-ԍ #X\  P6G;ɒP#See 47 C.F.R.  1.2104(g)(2), 24.704(a)(2). The defaulted bidder in this instance is subject to a payment equal to the difference between the amount bid and the amount of the winning bid the next time the  {O-license is offered by the Commission, plus a payment equal to three percent of the defaulted bid price. See 47  {OW-C.F.R.  24.704(a)(1), (2). See also, Competitive Bidding Fifth Report and Order, 9 FCC Rcd 4495 at n.51. E Furthermore, previously we have indicated that these payments will discourage default and ensure that bidders have adequate financing and that they meet all eligibility and qualification  X_-requirements._  X-ԍ #X\  P6G;ɒP#Competitive Bidding Second Report and Order, 9 FCC Rcd.at 2383. In this manner, we believe it to be most fair to apply this provision to those licensees who seek the relief provided by this option. If licensees were able to use all of their down payment, they would recoup in full what they paid, and there would be no deterrent effect against bidding excessively in the auction or otherwise gaming the process. Thus, in the next auction to which our default payments apply, these rules could be ignored with impunity. Such a result would severely harm our market-based auction program. It would make it impossible to impose the charges we already have imposed in  X -past cases, including in C block cases.u E X-ԍ #X\  P6G;ɒP#See n.145, supra. u Further, we emphasize that permitting C block licensees access to the down payments they previously made for licenses they no longer wish to retain is a substantial benefit and fair to these licensees. To allow them to use 100% of those funds would be unfair to other C block licensees who choose to continue to pay under their existing obligations, and to bidders who were unsuccessful in the auction.  X4-dA66. While some have argued that C block licensee loan payoffs made under a prepayment plan should be determined using a net present value formula, we decline to discount the Notes. We believe it is fair to other bidders and to the credibility and integrity of our rules for the prepayment to be in the amount of the outstanding debt for"!0*&&aa"  X-the net high bid. In other words, licensees should pay what they bid. To offer deep discounts off the amount of the debt is outside normal commercial practices and otherwise appears to be a "bailout" of C block licensees who have encountered financial difficulties long after the auction was completed and the financial commitments were made. Debt paid off in advance of the maturity date allows the debtor to reap the benefit of not incurring additional interest due on the principal amount owed. To discount the amount of the principal, as has been suggested, would unfairly permit a windfall to the licensee electing this option. While we are cognizant of the financial difficulties for some C block licensees, we are also mindful of our duty to the other C block licensees who are successfully meeting their obligations and continuing buildout efforts for wireless  X -services. Therefore, we believe that we strike the proper balance by allowing a licensee the benefit of prepaying its debt obligations, thereby reducing the amount of interest that  X -would be payable over the full term of the Note, while avoiding fundamental changes to our rules that unfairly harm other licensees who followed our rules and who continue to meet their payment obligations. dB67. Under this prepayment option, an incumbent must prepay all of the BTA licenses in a particular MTA and cannot arbitrarily select individual BTA licenses in a given MTA to prepay while surrendering other licenses in that MTA, with one exception. We conclude that while a licensee must prepay the debt on all of the BTAs for which it holds licenses in an MTA, we recognize that a licensee may not have sufficient funds available to it to prepay all of its Notes for the BTA licenses in a given MTA. Therefore, any licensee that has enough funds on hand to prepay one or more BTAs within an MTA, but not enough for the entire MTA, must prepay all of those BTAs within that MTA that it can afford. We conclude that a requirement that all licenses in a given MTA be prepaid precludes licensees from "cherry picking." The simultaneous multipleround auction  X-design discussed in paragraphs 8689, infra,  enables bidders to place bids on many licenses at once. If we were to permit licensees to "cherry pick" which licenses in an MTA to prepay and which to surrender under this option, the interdependency of the licenses would be threatened. Licenses surrendered pursuant to such a "cherry picking" scheme would lack the potential for aggregation, and consequently would hold much less value to other bidders in the subsequent reauction. dC68. We decline to provide an exception for markets in which the fiveyear buildout requirement has been met as provided under the amnesty option. Under the prepayment option, licensees have the flexibility to select which markets they will retain subject to the  X -restrictions in paragraph 67, supra. For this reason, licensees have the option of selecting and prepaying for licenses where they have invested capital to meet the buildout requirements and not prepaying in an MTA where they have not. We believe that this flexibility, compared to the all or nothing approach of simple amnesty, mitigates the need for this exception. d"U%"0*&&aa $"ԌdD69. Finally, for a period of two years from the start date of the reauction, licensees (defined as qualifying members of the licensee's control group, and their affiliates) will be prohibited from reacquiring the licenses surrendered pursuant to this option either through a reauction or any other secondary market transaction. We do not believe that it would be fair to other licensees and bidders for these licensees to benefit from a reauction of those licenses after taking advantage of this option. Furthermore, we do not believe that this option should provide opportunities for licensees to "selectively" reduce their license obligations by surrendering a license in hopes of reobtaining it in a reauction at a lower price.  X -  X -E.,dElection Procedures ! dE70. We conclude that a licensee electing to continue under its existing installment  X -payment plan or electing one of the options set forth in this Second Report and Order, must file a written notice of such election with the Wireless Telecommunications Bureau on or before the Election Date ("Election Notice") as specified in this section. As used  X{-herein, "Election Date" means January 15, 1998.{ X-ԍ #X\  P6G;ɒP#See paragraph 110, infra. The Wireless Telecommunications Bureau will provide more information concerning filing procedures in a subsequent public notice. dF71. We require that those licensees electing (i) to continue making payments under their original C block Notes, (ii) the disaggregation option, or (iii) the amnesty option who elect to take advantage of the buildout exception and retain certain of their licenses make the appropriate payment by March 31, 1998 (or by the end of the 60day grace period  X-allowed, see paragraph 25, supra), and execute any necessary financing documents pursuant to appropriate requirements and time frames established by the Bureau in order to continue to be eligible under the option chosen.  X-dG72. Continuation Under Existing Note(s). Any licensee that wishes to continue making installment payments in accordance with the terms of its original C block Note, must elect to do so by submitting the Election Notice of such election.  X;-dH73. Disaggregation. For licensees electing the disaggregation option, the Election Notice must include (i) a list of all licenses being disaggregated, (ii) the original of all licenses being disaggregated, and (iii) all originals of the Notes and Security Agreements for those licenses being disaggregated for cancellation by the Commission. Upon acceptance of the Election Notice, the disaggregated spectrum will be deemed returned to the Commission. "!#A0*&&aa "Ԍ X-dI74. Amnesty. For licensees electing the amnesty option, the Election Notice must include (i) a list of all licenses being surrendered, (ii) if applicable, a statement indicating that it intends to avail itself of the buildout exception together with a list of those BTA  X-licenses it intends to retain{ X4-ԍ #X\  P6G;ɒP#Those licensees electing to proceed under the buildout exception will be required to adhere to the specific obligations set forth in their Notes and Security Agreements, as modified for those licenses not being  {O-surrendered to the Commission. See discussion in Section IV.E., supra. and pertinent information concerning buildout pursuant to  X-the Commission's rules,j  X` -ԍ#X\  P6G;ɒP# 47 C.F.R.  24.203(c).j (iii) the original of all licenses being surrendered, and (iv) all originals of the Notes and Security Agreements for those licenses being surrendered for cancellation by the Commission.  XH-dJ75. Prepayment. For licensees electing the prepayment option, the Election Notice must include (i) a list of all licenses being prepaid, (ii) a payment in the amount of any additional "new money" a licensee desires to apply to the prepayment of its licenses, (iii) the original of all licenses not being prepaid in accordance with this option, and (iv) all originals of the Notes and Security Agreements for those licenses not being prepaid for cancellation by the Commission. Notes which are prepaid will be marked "PaidInFull" and returned to the licensee.  X-dK76. We further conclude that any C block licensee that (i) fails to elect one of the  Xy-options set forth, Section IV.A.D., supra on or before the Election Date, or (ii) fails to elect on or before the Election Date to continue making payments under its original C block Note(s), or (iii) fails to fully and timely execute and deliver to the Commission (or its agent) any required financing documents within the period of time specified by the Bureau, will not be afforded the opportunity granted to licensees who do make a timely election to repay the Suspension Interest over a period of eight equal payments. In such event, the licensee will be required, on or before March 31, 1998, to make all payments  X-that would have been due under its Note(s) but for the effect of the Suspension Order. For example, a licensee whose regular installment due date was March 31, 1997, who did  X-not make payment on that date because of the Suspension Order, will owe on March 31,  X-1998, all payments that were due and payable earlier, but unpaid due to the Suspension  X-Order, in addition to the regularly scheduled March 31, 1998, payment.  XX-  XA-F. Cross Defaults  X-dL77. Background. In the Notice of Proposed Rule Making in this proceeding, we sought comment on whether the Commission should cross default its installment payment"$0*&&aa"  X-plan loans with other installment payment plan loans to the same licensee. Xy-ԍ #X\  P6G;ɒP#See Part 1 Proceeding at  7678. č We asked if  X-we should cross default licensees across services or blocks (e.g., from PCS licenses to SMR licenses, or from PCS C and F block licenses), whether we should pursue default  X-remedies against single licenses only (e.g., from C block to C block licenses only), and what factors should influence our decision to pursue cross defaults. In response, several commenters specifically requested that the Commission clarify its rules regarding cross default in the context of defaults on installment payments if licenses are held by licensees  Xc-with the same or overlapping control groups.cy X -ԍ #X\  P6G;ɒP#See, e.g., ClearComm Reply Comments at 4; BIA Capital Comments at 4.  X5-dM78. Further, several commenters request the Commission to affirmatively decide that  X -there will be no cross default. * X-ԍ #X\  P6G;ɒP#See e.g., AmeriCall ex parte letter, July 11, 1997; Magnacom ex parte letter, August 13, 1997. BIA Capital states that one perceived disincentive to  X -providing financing to C block licensees is cross default.k  X-ԍ#X\  P6G;ɒP# BIA Capital Comments at 4.k In this regard, BIA Capital suggests that the Commission quickly clarify its position on cross defaults, and recommends that a default on payments for some licenses not result in cross default on  X -other licenses which the company is using successfully.[  X-ԍ#X\  P6G;ɒP# Id. [ ClearComm agrees and urges the Commission to allow licensees to place their licenses in separate entities so that  X-potential financiers may invest in specific markets that meet their investment criteria.o?  X-ԍ#X\  P6G;ɒP# ClearComm Reply Comments at 4.o  AmeriCall and Hughes Network Systems state the effectiveness of the disaggregation  Xf-option can be assured if the Commission clarifies that it will not pursue cross defaults.f  X-ԍ #X\  P6G;ɒP#AmeriCall and Hughes Network Systems, Inc., ex parte letter, September 16, 1997 at 2. AmeriCall and Hughes Network Systems state most regional equity funds are unwilling to look at this sector until they are reassured that their investment in one state is sheltered  X!-from events in other states that would impact licenses in those different markets.[!  Xs!-ԍ #X\  P6G;ɒP#Id. [  X-dN79. Discussion. We will not pursue cross default remedies against C block licensees who default on installment payments with regard to other licenses in the C or F blocks. For example, if a licensee defaults on a C block license and that licensee holds other C"%R0*&&aa" block licenses on which it is making its payments, we will not declare it to be in default on its debt associated with the other C block licenses. Similarly, if a licensee defaults on a C block license, and also holds F block licenses on which it is making its payments, we will not declare it to be in default on its F block debt. dO80. This decision is warranted in light of our efforts to provide current C block licensees who are experiencing financing difficulties with options for meeting their  X_-financial obligations to the Commission.M _ X-ԍ #X\  P6G;ɒP#This decision does not affect our policy with regard to defaults on first or second down payments. See  yO -Letter to Kenneth Hobbs from Michele C. Farquhar, Chief, Wireless Telecommunications Bureau, Federal  {O -Communications Commission, DA 97260 (rel. February 4, 1997). See also BDPCS, Inc. Emergency Petition  {OS -for Waiver of Section 24.711(a)(2) of the Commission's Rules, Memorandum Opinion and Order, 12 FCC Rcd 3230 (1997). M We emphasize that our decision only addresses the context of a licensee's default on an installment payment for a C block license upon other licenses held by that licensee in the C or F blocks. We defer to completion of the Part 1 Rule Making our decision on whether to amend more comprehensively our policy of cross defaults. We also emphasize that existing installment payment default rules and license conditions will continue to apply for those particular licenses in default after March 31, 1998. Accordingly, upon default, a license will automatically cancel and the Commission will initiate debt collection procedures against the licensee and accountable  X -affiliates.  X-ԍ #X\  P6G;ɒP#47 C.F.R.  1.2110(e)(4)(iii). See also 31 U.S.C. Chapter 37; 4 C.F.R. Parts 101105; 47 C.F.R. Part 1, Subpart O.  Xy- dx  Xb-( V. FURTHER NOTICE OF PROPOSED RULE MAKING ĐJVP  X4- A. Proposals Regarding the Reauction of Surrendered Licenses  X- #XP\  P6QynXP#  X-dP81. Background. Several commenters suggest that a reauction of C block licenses is the best method by which the Commission can place C block licenses in the hands of  X-licensees capable of constructing systems and offering service to the public rapidly .  X- Triumph Capital, MCI, and Cook Inlet Communications all support a reauction within four  X-to six months. Xq!-ԍ#X\  P6G;ɒP# Triumph Capital ex parte letter, August 7, 1997 at 1; MCI ex parte letter, August 14, 1997 at 23; Cook  {OZ"-Inlet Communications ex parte letter, August 5, 1997 at 3.  X|-dQ82. Discussion. Under the options adopted above, licensees have three options for the surrender of licenses or spectrum to the Commission. A reauction of licenses will assure rapid provision of service to the public. A reauction also will ensure that these licenses"N& 0*&&aa" are available to all applicants in a rapid and fair fashion. A simultaneous reauction of all the licenses turned in to the Commission will benefit all bidders because they will be able to bid for a number of licenses in a single reauction, instead of a series of piecemeal auctions after defaults and revocations, in which opportunities for aggregation might be less favorable.  Xv-d1. Licenses to be reauctioned X    dR83. We propose that the reauction include the following licenses: (1) all licenses representing the disaggregated spectrum surrendered to the Commission under the disaggregation option; (2) all licenses surrendered to the Commission on or before January 15, 1998, by incumbent licensees who choose to take advantage of the Commission's prepayment or amnesty options; and (3) all PCS C block licenses currently held by the Commission as a result of previous defaults. By including all available licenses in the reauction, the Commission can efficiently and fairly speed service to the public. In addition, offering all available licenses will allow for the most efficient aggregation of licenses. We seek comment on this proposal.  Xy-d  Xb-d2. Eligibility for Participation  X4-dS84. As we stated in the Second Report and Order, all entrepreneurs, all entities that applied for the original C block auction, and all current C block licensees with exceptions, are eligible to bid in the reauction. We seek comment on whether we should restrict  X-participation in the reauction to entities that have not defaulted on any FCC payments.t Xj-ԍ #X\  P6G;ɒP#See 47 U.S.C.  309(j)(5).t Should we presume that an entity's prior default on payments for an FCC license or authorization makes that entity not financially or otherwise fit to acquire a reauctioned C  X-block license? Alternatively, we could review financial qualifications through several other means. For instance, we could allow such entity to participate in an auction, but if the applicant is a winning bidder, set for expedited hearing the financial qualifications of the bidder, and allow the applicant to rebut a presumption that it is not financially  XP-qualified.Py Xz-ԍ #X\  P6G;ɒP#See 47 C.F.R.  24.832(e), 1.2108(d)(3). Another alternative would be to request that the entity submit more detailed financial information at the application stage, or require that the entity submit a higher  X"-upfront payment amount (e.g., a 50% upfront payment requirement) to participate in the  X -reauction. With regard to C block licensees who elect the disaggregation, amnesty, or  X-prepayment options adopted in the Second Report and Order, we observe that by making such election and related payments they are not in default on their C block licenses and, thus, would not be restricted from participation in the reauction (except as otherwise set  X!-forth in the Second Report and Order)."!'*0*&&aa "Ԍ X-ԙ#Xj\  P6G;ynXP#d3. Reauction Procedures  X-dT85. We propose below auction design and application procedures for the reauction of C block licenses.  X- dxa. Competitive Bidding Design  X_-dU86. We propose that all licenses and spectrum surrendered to the Commission be awarded by means of a simultaneous multipleround electronic auction. We base this proposal on our desire to quickly auction available licenses and thereby to promote the most efficient assignment of the spectrum. Consistent with our normal practice, the specific procedural requirements of the auction would be set out by Public Notice prior to the auction. In general, we have indicated that the auction procedures chosen for each service should be those that will best promote the policy objectives identified by  X -Congress.j u X7-ԍ#X\  P6G;ɒP# 47 U.S.C.  309(j)(3).j We further concluded in the Competitive Bidding Second Report and Order that in most cases the goals set forth in Section 309(j) will be best achieved by designing auctions that award authorizations to the parties that value them most highly. As we explained, such parties are most likely to deploy new technologies and services rapidly, and to promote the development of competition for the provision of those and other  XM-services.Myu Xw-ԍ#X\  P6G;ɒP# Competitive Bidding Second Report and Order, 9 FCC Rcd at 2360.  X-dV87. Also, multipleround bidding during the auction will provide more information to bidders about the value of licenses than single round bidding. With better information, bidders have less incentive to shade their bids downward in order to avoid the "winner's curse," that is, the tendency for the winner to be the bidder who most overestimates the  X-value of the item being auctioned.c*u X-ԍ#X\  P6G;ɒP# Id. at 2362.c Finally, multipleround bidding is likely to be fairer than singleround bidding. Every bidder has the opportunity to win if it is willing to pay the most for it. Thus, we tentatively conclude that multipleround bidding would be the best method of auctioning all available licenses and we seek comment on this tentative conclusion. dW88. We also tentatively conclude that all surrendered C block licenses should be awarded in a single simultaneous multipleround auction. A single simultaneous auction will facilitate any aggregation strategies that bidders may have, and it would provide the most information to bidders about license values at a time that they can best put that information to use. We seek comment on this tentative conclusion. " (,&)&)aa"ԌdX89. Finally, if we adopt simultaneous multipleround bidding as our method of auctioning all available licenses, we tentatively conclude that bidding should be allowed only by electronic means, rather than by telephone. Given our desire to conduct the reauction quickly, as well as recent improvements in our electronic bidding software, we tentatively conclude that telephonic bidding should be permitted only in exceptional circumstances, to be determined by the Wireless Telecommunications Bureau in each instance.  XH-dxb. Bidding Procedures dY90. Subject to the exceptions discussed below, which are designed to speed the reauction process, we tentatively conclude that the reauction should be conducted in conformity with the general competitive bidding rules set forth in Part 1, Subpart Q of the  X -Commission's rules,o u XN-ԍ#X\  P6G;ɒP# 47 C.F.R. Part 1, Subpart Q. o as revised, yu X-ԍ#X\  P6G;ɒP# We initiated a proceeding last February to revise our Part 1 rules. See Part 1 Proceeding. and substantially consistent with the auctions that have been employed in other wireless services. We also propose to use our Part 24 rules applicable to the C block to the extent that such rules do not conflict with our Part 1 rules  X-or rules specifically adopted or proposed in this Second Report and Order and Notice of  X{-Proposed Rule Making for the reauction of C block licenses. Specifically, except as set forth herein, we propose to apply the Part 1 rules regarding competitive bidding  XO-mechanisms,gO*u X*-ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2104.g bidding application and certification procedures and prohibition of  X8-collusion,g8u X-ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2105.g submission of upfront payment, down payment and filing of longform  X!-applications,s!u X^-ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2106, 1.2107.s procedures for filing long form applications,g!= u X-ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2108.g and procedures regarding  X -license grant, denial and default.g  u X -ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2109.g We seek comment on this proposal.  X-dZ91. Activity Rules. We tentatively conclude that, as we have done in other simultaneous multipleround auctions, we will conduct the reauction in three stages. Three stages, with bidders required to be more active in each stage, serves to provide bidders with the flexibility to pursue backup strategies as the auction progresses. However, because we believe that efficiently assigning these licenses for rapid service to the public and increased competition in the CMRS marketplace requires a swift reauction of the licenses, we propose to use high activity requirements in the reauction. In recent auctions,"R) ,&)&)aa" for example, we have required bidders to be active on 80% of their eligible licenses in Stage I, 90% in Stage II, and 98% in Stage III. We propose to use similar activity levels in the C block reauction and, to further expedite the auction, require the Bureau to use its delegated authority to aggressively schedule bidding rounds, quickly transition into the next stage of the auction when bidding activity falls, and use higher minimum bid increments for very active licenses. We seek comment on these proposals and tentative conclusions.  XH-d[92. Reserve Price, Minimum Opening Bid, and Minimum Bid Increments. Section 1.2104 of our rules provides that the Commission may establish reserve prices or  X -suggested minimum opening bids.j u X -ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2104(d).j The Balanced Budget Act directed the Commission to prescribe methods by which a reasonable reserve price will be required or a minimum opening bid will be established, unless the Commission determines that a reserve price or  X -a minimum opening bid is not in the public interest. yu X-ԍ#X\  P6G;ɒP# Balanced Budget Act of 1997, P.L. 10533, 111 Stat. 251 (1997) (to be codified at 47 U.S.C.  309(j)(4)(F)) ("Balanced Budget Act"). This legislative directive establishes a presumption in favor of reserve prices or minimum opening bids in the reauction. A minimum opening bid is the minimum bid price set at the beginning of the auction below which no bids are accepted. Customarily, an auctioneer has the discretion to lower a minimum opening bid in the course of the auction. A minimum opening bid in the C block reauction, more than a reserve price, will help make certain that the public is fairly compensated for spectrum surrendered to the Commission, expedite the auction and give us the flexibility to make adjustments based on the competitiveness of the auction. We seek comment on this proposal. We also seek comment on the methodology we should use to establish minimum opening bids and what factors we should consider in doing so. We propose minimum opening bids for each market equal to 10% of the corresponding high bid for the market in the original C block auction. Such an approach will scale the minimum opening bids in a way that reflects the relative value of the licenses. We also ask that commenters address whether the amount of the minimum opening bid should be capped to ensure that bidding is not deterred on high valuation markets, in particular. Finally, if commenters believe that a minimum opening bid equal to 10% of the high bid in the original C block auction will result in substantial unsold licenses, or is not a reasonable amount, they should explain why this is so, and comment on the desirability of a higher or lower minimum opening bid.  X -dxc. Procedural and Payment Issues  X-d\93. PreAuctionApplicationProcedures. Auction applicants are required to file a  X -shortform application, FCC Form 175, prior to the start of each auction.t u Xg'-ԍ#X\  P6G;ɒP# See 47 C.F.R.  1.2105(a).t Although we" *,&)&)aa" have previously allowed both electronic and manual filing of such applications, we tentatively conclude that we should require electronic filing of all shortform applications for the reauction. We believe that electronic filing of applications would serve the best interests of auction participants as well as the members of the public monitoring the reauction. We also believe that an electronic filing requirement will help ensure that the  X-reauction will be completed within the time frame contemplated by this Further Notice of  Xx-Proposed Rule Making. We have developed userfriendly electronic filing software and Internet World Wide Web forms to give applicants the ability to easily and inexpensively file and review applications. This software helps applicants ensure the accuracy of their applications as they are filling them out, and assists them in avoiding errors and omissions. In addition, by shortening the time required for the Commission to process applications before the auction, electronic filing will increase the lead time available to applicants to pursue business plans and arrange necessary financing before the shortform deadline. Our experiences from recent auctions show that bidders are confident that the electronic filing system is reliable. For example, in the broadband PCS D, E, and F block auction, 94% of the qualified bidders filed their shortform applications electronically. In the recently completed WCS auction, all winning bidders filed their longform applications  X}-electronically. In addition, we note that in the Part 1 Proceeding, we tentatively concluded that Sections 1.2105(a) and 1.2107(c) of our rules should be amended to require  XQ-electronic filing of all shortform and longform applications.tQu X-ԍ#X\  P6G;ɒP# Part 1 Proceeding at  46.t We seek comment on this tentative conclusion.  X -d]94. UpfrontPayment. The Part 1 rules require the submission of an upfront payment  X-as a prerequisite to participation in spectrum auctions.qyu X-ԍ#X\  P6G;ɒP# See 47 C.F.R.  1.2106.q We propose to set the amount of the upfront payment for the reauction at $.06 per MHz per pop. We adopted the same upfront payment amount for our most recent broadband PCS auction, the D, E, and F block auction, in which all applicants for all blocks made a $.06 per MHz per pop upfront  X-payment.m*u Xt-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.716(a)(1).m In the Competitive Bidding Second Report and Order, we indicated that the upfront payment should be set using a formula based upon the amount of spectrum and  Xm-population (or "pops") covered by the license or licenses for which parties intend to bid.mu X!-ԍ#X\  P6G;ɒP# Competitive Bidding Second Report and Order, 9 FCC Rcd at 237778. We reasoned that this method of determining the required upfront payment would enable  X?-prospective bidders to tailor their upfront payment to their bidding strategies.c?u X|%-ԍ#X\  P6G;ɒP# Id. at 2377.c At the same time, however, we noted that determining an appropriate upfront payment involved balancing the goal of encouraging bidders to submit serious, qualified bids with the desire"+= ,&)&)aa"  X-to simplify the bidding process and minimize implementation costs imposed on bidders.cu Xy-ԍ#X\  P6G;ɒP# Id. at 2378.c We concluded that the best approach would be to maintain the flexibility to determine the amount of the upfront payment on an auctionbyauction basis because this balancing may  X-yield different results depending upon the particular licenses being auctioned.\yu X-ԍ#X\  P6G;ɒP# Id. \ In light of the our desire that only serious, qualified applicants participate in the reauction, our proposal of a $.06 per MHz per pop is appropriate. We seek comment on this proposal. We also seek comment on alternative methods of establishing an upfront payment, and in particular, on how the Commission may estimate the present market value of the spectrum to be auctioned.  X -d^95. DownPaymentandFullPayment. Consistent with the procedures used in prior auctions, we tentatively conclude that every winning bidder in an auction should be required to tender a down payment sufficient to bring its total amount on deposit with the Commission up to 20% of its winning bid within 10 business days after the issuance of a  X -public notice announcing the winning bidder for the license.t *u X-ԍ#X\  P6G;ɒP# See 47 C.F.R.  1.2107(b).t We seek comment on this tentative conclusion.  Xy-d_96. If a winning bidder makes its down payment in a timely manner, we propose that it file an FCC Form 600 longform application and follow the longform application  XK-procedures in Section 1.2107 of the Commission's rules.Ku X-ԍ#X\  P6G;ɒP# See 47 C.F.R.  1.2107. See also, 47 C.F.R.  24.707. After reviewing the winning bidder's longform application, and after verifying receipt of the winning bidder's 20% down payment, the Commission would announce the application's acceptance for filing,  X-thus triggering the filing window for petitions to deny. We note that the Balanced Budget Act of 1997 authorizes the Commission to establish a shortened period for the filing of  X-petitions to deny.eu X-ԍ#X\  P6G;ɒP# Balanced Budget Act.e In light of this authority, as well as our desire to conclude the reauction process as quickly as possible, we propose that parties then have 15 days following public notice that an application was accepted for filing to file a petition to deny. If, pursuant to Section 309(d) of the Communications Act, the Commission dismisses or denies any and all petitions to deny, the Commission would announce by public notice that it is prepared to award the license, and the winning bidder would then have 10 business days to submit the balance of its winning bid. If the bidder does so, the license would be granted. If the bidder fails to submit the required down payment or the balance of the winning bid or the license is otherwise denied, we would assess a default  X -payment as discussed below. We seek comment on these proposals. ",= ,&)&)aax"Ԍ X-d`97. AmendmentsandModificationsofApplications. To encourage maximum bidder participation, we propose to allow applicants to amend or modify their shortform  X-applications as provided in Section 1.2105.gu XK-ԍ#X\  P6G;ɒP# 47 C.F.R.  1.2105.g In the broadband PCS context, we modified our rules to permit ownership changes that result when consortium investors drop out of  X-bidding consortia, even if control of the consortium changes due to this restructuring.$yu X-ԍ#X\  P6G;ɒP# See Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket  {O-No. 93253, Fourth Memorandum Opinion and Order, 9 FCC Rcd 6858, 6868 (1994).$ We propose to adopt the same exception to our rule prohibiting major amendments in the reauction. We seek comment on these proposals.  XH-da98. BidWithdrawal,DefaultandDisqualification. We tentatively conclude that the  X1-withdrawal, default, and disqualification rules for the reauction should be based upon the procedures established in our general competitive bidding rules. With regard to bids that are submitted in error, we propose to apply the guidelines that the Commission has fashioned to provide for relief from the bid withdrawal payment requirements under  X -certain circumstances.g u Xz-ԍ#X\  P6G;ɒP# See Atlanta Trunking Associates, Inc. and MAP Wireless L.L.C. Requests to Waive Bid Withdrawal  {Oc-Payment Provisions, Order, FCC 96203 (May 3, 1996), and Georgia Independent PCS Corporation Request to  {O--Waive Bid Withdrawal Payment Provision, Order, DA 96706 (May 6, 1996). See alsoAtlanta Trunking Associates, Inc. and MAP Wireless, L.L.C., Petition for Reconsideration of Bid Withdrawal Payment and Georgia Independent PCS Corp., Application for Review of Request to Waive Bid Withdrawal Payment  {O-Provision, Memorandum Opinion and Order, 12 FCC Rcd 6382 (1997) (waiving the full bid withdrawal payments assessed against these parties after a finding that the Commission's remote bidding system may have contributed to some confusion leading to the submission of the erroneous bids).  We seek comment on this approach.  X -dxd. AntiCollusion Rules d  Xy-db99. In the Competitive Bidding Second Report and Order, we adopted rules to prevent collusion in connection with competitive bidding, explaining that these rules, which are codified at 47 C.F.R.  1.2105, would enhance the competitiveness of both the auction  X6-process and the postauction market structure.E6# u X -ԍ#X\  P6G;ɒP# See 47 C.F.R.  1.2105(c). See also Competitive Bidding Second Report and Order, 9 FCC Rcd at  {O -238688; Implementation of Section 309(j) of the Communications Act Competitive Bidding, Second  {O!-Memorandum Opinion and Order, PP Docket No. 93253, 9 FCC Rcd 7245, 72537254 (1994); Erratum, Mimeo No. 50278, 1994 WL 575828 (October 19, 1994). We propose to apply these same rules to the reauction of licenses surrendered to the Commission. We seek comment on this proposal.  X-dx 44  X- "-0,&)&)aa"  X-dxe. Designated Entity Provisions  X-dc100. We propose to provide small business bidders in the C block reauction with a two tiered bidding credit, which will provide a greater discount to very small businesses. In the C block auction, a winning bidder that qualified as a small business or a consortium  X-of small businesses was able to use a bidding credit equal to 25% of its winning bid.ju X-ԍ#X\  P6G;ɒP# 47 C.F.R.  24.712(a).j For the reauction, however, we tentatively conclude that we should offer tiered bidding credits, as we did for F block and, more recently, Local Multipoint Distribution Service  XH-(LMDS) small business bidders.Hyu Xr -ԍ#X\  P6G;ɒP# See 47 C.F.R.  24.717, 101.1107. We propose to define a second tier of small business, which we will refer to as "very small businesses," as entities that, together with their affiliates and persons or entities that hold interest in such entities and their affiliates, have average gross revenues of not more that $15 million for the preceding three years. Creation of this subcategory of small business enables us to tailor a bidding credit to meet the needs of entities that may be interested in bidding on spectrum surrendered by C block licensees. Thus, we propose a 35% bidding credit for very small businesses and a 25% bidding credit for small businesses. We seek comment on our proposals and tentative conclusions.  Xb-dd101. We also tentatively conclude that an installment payment program will not be  XK-offered in the reauction.4 K*u X&-ԍ#X\  P6G;ɒP# Section 309(j)(4) of the Communications Act states that the Commission shall, in prescribing  {O-regulations pursuant to these objectives and others, "consider alternative payment schedules and methods of calculation, including lump sums or guaranteed installment payments, with or without royalty payments, or other  {O-schedules or methods that promote the objectives described in paragraph (3)(B) . . . ." See 47 U.S.C.   {Ok-309(j)(4)(A) (emphasis added). See also Omnibus Budget Reconciliation Act of 1993, Report of the Committee on the Budget, House of Representatives, to Accompany H.R. 2264, A Bill to Provide for Reconciliation Pursuant to Section 7 of the Concurrent Resolution of the Budget for Fiscal Year 1994, May 25, 1993, at p. 255: ,dWhile it is clear that, in many instances, the objectives of section 309(j) will be best served by a traditional, "cashonthebarrelhead" auction, it is important that the Commission employ different methodologies as appropriate. Under this subsection, the Commission has the flexibility to utilize any combination of techniques that would serve the public interest.(# H.R. Rep. No. 103111 at 255 (1993).4 We have conducted several auctions without installment payments. The Commission must balance competing objectives in Section 309(j) that  X-require, inter alia, that it promote the development and rapid deployment of new spectrumbased services and ensure that designated entities are given the opportunity to  X-participate in the provision of such services. u X&-ԍ#X\  P6G;ɒP# See 47 U.S.C.  309(j)(3) and (4). In assessing the public interest, we must try to ensure that all the objectives of Section 309(j) are considered. We have found, for".,&)&)aa" example, that obligating licensees to pay for their licenses as a condition of receipt ensures  X-greater financial accountability from applicants.}u Xb-ԍ#X\  P6G;ɒP# See Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of SMR  {OK-Systems in the 800 MHz Frequency Band, PR Docket No. 93144, Memorandum Opinion and Order on  {O-Reconsideration, FCC 97224, 62 Fed. Reg. 41225 (rel. July 10, 1997) ("800 MHz MO&O") at  130. Thus, we tentatively conclude that we should not extend installment payments to winners in the reauction, given the incentives to entrepreneurs established through the various proposals discussed above. We seek comment on these tentative conclusions. d  X_- V VI. CONCLUSION ă  X1-de102. In this Second Report and Order, we order resumption of installment payments for the broadband PCS C and F blocks, with the payment deadline reinstated as of March 31, 1998. We also adopt options designed to assist C block licensees that are experiencing financial difficulties to build systems that will promote competition, or to surrender spectrum to the Commission for reauction. These options include disaggregation, amnesty, and prepayment. These provisions will create opportunities for C block licensees to provide service to the public while maintaining the fairness and integrity of our auctions  X-program. We also adopt a Further Notice of Proposed Rule Making seeking comment on proposed changes to our C block rules to govern the reauction of surrendered spectrum in the C block. d  X!-k VII. PROCEDURAL MATTERS AND ORDERING CLAUSES ĐJVP  X- A. Regulatory Flexibility Analysis  X-df103. The Final Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, 5 U.S.C.  604, is contained in Appendix C. The Initial Regulatory Flexibility Analysis is contained in Appendix D.  Xi- B.  Paperwork Reduction Act Analysis  X;-dg104. This Second Report and Order contains a modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the  X-information collections contained in this Second Report and Order, as required by the Paperwork Reduction Act of 1995, Pub. L. No. 10413. Public and agency comments are due December 1, 1997. OMB comments are due December 1, 1997. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to"#/ ,&)&)aae"" enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.  X-dh105. This Further Notice of Proposed Rule Making contains either a proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collections contained in this  XJ-Further Notice of Proposed Rule Making, as required by the Paperwork Reduction Act of  X5-1995, Pub. L. No. 10413. Public and agency comments are due at the same time as other  X -comments on this Further Notice of Proposed Rule Making; OMB comments are due 60  X -days from date of publication of this Further Notice of Proposed Rule Making in the  X -Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. d  X<- C . Paperwork Reduction Act Comment Filing Procedures   X-di106. Written comments by the public on the modified information collections in this  X-Second Report and Order are due on or before December 1, 1997. Written comments must be submitted by OMB on the modified information collections on or before December 1, 1997. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to jboley@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington, DC 20503 or via the Internet to fain_t@al.eop.gov. dj107. Written comments by the public on the modified information collections in this  X-Further Notice of Proposed Rule Making are due November 13, 1997 . Written comments must be submitted by OMB on the modified information collections on or before 60 days  X-after date of publication in the Federal Register. In addition to filing comments with the Secretary, a copy of any comments on the information collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to jboley@fcc.gov and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., Washington, DC 20503 or via the Internet to fain_t@al.eop.gov.  X]%- d "F&0,&)&)aa$"  X-D. Ordering Clauses   X-dk108. Accordingly, IT IS ORDERED THAT, pursuant to Sections 4(i), 5(b), 5(c)(1), 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. Sections  X-154(i), 155(b), 156(c)(1), 303(r), and 309(j), this Second Report and Order and Further  X-Notice of Proposed Rule Making is hereby ADOPTED, and Sections 1.2110 and 24.709 of the Commission's rules are amended as set forth in Appendix B, effective 60 days after  Xc-publication in the Federal Register. The information collection contained in these rules becomes effective 60 days after publication in the Federal Register, following OMB approval, unless a notice is published in the Federal Register stating otherwise.  X -dl109. IT IS FURTHER ORDERED THAT the Wireless Telecommunications Bureau's  X -Suspension Order dated March 31, 1997, suspending the installment payment obligations for Personal Communications Services (PCS) C block licensees, and the subsequent Public  X -Notice dated April 28, 1997, suspending those obligations for PCS F block licensees are rescinded, effective March 31, 1998, and installment payments for C and F block PCS licensees are reinstated as of that date.  Xj-dm110. IT IS FURTHER ORDERED THAT on or before January 15, 1998, the Election Date, all C block broadband PCS licensees must elect either (1) to continue making payments under their original C block Notes, or (2) one of the options set forth in Section  X%-IV of this Second Report and Order. The Election Notice must be filed on or before January 15, 1998 with the Office of the Secretary, Federal Communications Commission, Washington, DC 20554 (Attn: Wireless Telecommunications Bureau, Auctions and Industry Analysis Division Election Notice).  X-dn111. IT IS FURTHER ORDERED THAT the Secretary shall send a copy of this  X-Second Report and Order and Further Notice of Proposed Rule Making, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with Section 605(b) of the Regulatory Flexibility  XZ-Act, 5 U.S.C.  601 et seq. do112. IT IS FURTHER ORDERED THAT, pursuant to 47 U.S.C.  155(c) and 47 C.F.R.  0.331, the Chief of the Wireless Telecommunications Bureau IS GRANTED DELEGATED AUTHORITY to prescribe and set forth procedures for the implementation  X-of the provisions adopted herein.  X!- E. ExPartePresentations  X#-dp113. The Further Notice of Proposed Rule Making is a permit but disclose notice and  Xx$-comment rule making proceeding. Exparte presentations are permitted, provided they are  Xc%-disclosed as provided in Commission rules. See generally 47 C.F.R. Sections 1.1202, 1.1203, and 1.1206(a).  X (- " (1,&)&)aa&"  X-F. Comments  X-dq114. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the  X-Commission's Rules, interested parties may file comments on or before November 13,  X-1997 , and reply comments on or before November 24, 1997 . In addition, a courtesy copy should be delivered to Mark Bollinger, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, Federal Communications Commission, 2025 M Street, Room 5202, Washington, DC 20554. All relevant and timely comments will be considered by the Commission before final action is taken in this proceeding. To file formally in this proceeding, participants must file an original and five copies of all comments, reply comments, and supporting comments. If participants want each Commissioner to receive a personal copy of their comments, an original plus ten copies must be filed. Comments and reply comments should be sent to Office of the Secretary, Federal Communications Commission, Washington, DC 20554. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center (Room 239) of the Federal Communications Commission, 1919 M Street, N.W., Washington, DC 20554.  Xb- G. AdditionalInformation  X4-dr115. For further information concerning the Second Report and Order, contact Jerome Fowlkes or Sandra Danner, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, Federal Communications Commission, Washington, DC  X-20554, (202) 4180660. For further information concerning the Further Notice of  X-Proposed Rule Making, contact Mark Bollinger, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, Federal Communications Commission, Washington, DC 20554, (202) 4180660. dx44` `  FEDERAL COMMUNICATIONS COMMISSION dx44` `  William F. Caton dx44` `  Acting Secretary "!2,&)&)aa "  X- 3 d VAPPENDIX A  X-V List of Commenters ă  X-Initial Comments 1. Airadigm Communications, Inc. (Airadigm) 2. ALLTEL Communications, Inc. (ALLTEL) 3. Alpine PCS, Inc. (Alpine) 4. AmeriCall International, L.L.C. (AmeriCall) 5. Bay Springs Telephone Company, Inc. (Bay Springs) 6. Bear Stearns 7. BellSouth Corporation 8. BIA Capital Corporation (BIA Capital) 9. Brookings Municipal Utilities (BMU) 10. Central Wireless Partnership (CWP) 11. Chase Telecommunications, Inc. (Chase) 12. ClearComm, L.P. 13. Comcast Corporation 14. Community Service Communications, Inc. (CSCI) 15. ComScape Telecommunications of Charleston License, Inc. (ComScape) 16. Conestoga Wireless Company (Conestoga) 17. CONXUS Communications, Inc. (CONXUS) 18. Cook Inlet Region, Inc., Cook Inlet Western Wireless, PV/SS PCS, L.P., Western Wireless Corporation, AirGate Wireless, L.L.C., Aerial Communications, Inc., TeleCorp, Inc., and Airadigm Communications, Inc. (collectively, CIRI) 19. Creative Airtime Services, L.L.C. (Creative) 20. Cyber Sites, L.L.C. 21. Dewey Ballantine 22. DiGiPH PCS, Inc. (DiGiPH) 23. Duluth PCS, Inc., St. Joseph PCS, Inc., and West Virginia PCS, Inc. (collectively, Duluth PCS) 24. Eldorado Communications, L.L.C. (Eldorado) 25. Fortunet Communications, L.P. (Fortunet) 26. General Wireless Inc. (GWI) 27. Holland Wireless, L.L.C., Wireless 2000, Inc., and Northern Michigan PCS Consortium, (collectively, Holland) 28. Horizon Personal Communications, Inc. (Horizon) 29. Indus, Inc. 30. Integrated Communications Group (Integrated) 31. Kansas Personal Communications Services, Ltd. (KPCS) 32. Ken W. Bray 33. Magnacom Wireless, L.L.C., PCSouth, Inc., and Communications Venture PCS Limited Partnership (collectively, Magnacom) 34. MCI Communications Corporation (MCI) 35. Meretel Communications Limited Partnership (Meretel)" (3,&)&)aa&"Ԍ36. MFRI, Inc. 37. Morris Communications, Inc. (Morris) 38. National Wireless Resellers Association (NWRA) 39. National Association of BlackOwned Broadcasters, Inc. (NABOB) 40. National Association of Black Telecommunications Professionals, Inc. (NABTP) 41. National Telephone Cooperative Association (NTCA) 42. Nextel Communications, Inc. (Nextel) 43. NextWave Telecom, Inc. (NextWave) 44. Northcoast Communications, L.L.C. (Northcoast) 45. Official Committee of Unsecured Creditors of Pocket Communications, Inc. (Pocket Creditors) 46. Omnipoint Corporation 47. OneStop Wireless 48. OnQue Communications, Inc. (OnQue) 49. PCS Plus L.L.C. and McKenzie Telecommunications Group, Inc. (collectively, PCS Plus) 50. Pioneer Telephone Association, Inc. (Pioneer) 51. Pocket Communications, Inc. (Pocket) 52. Point Enterprises, Inc. (Point) 53. R&S PCS, Inc. (R&S) 54. RFW, Inc. 55. Rural Telephone Finance Corporation (RTFC) 56. Small Business Coalition (SBC) 57. SouthEast Telephone Limited Partnership, Ltd. (SouthEast Telephone) 58. Southwestern Bell Mobile Systems (SBMS) 59. SpectrumWatch 60. Sprint Spectrum L.P. 61. Sprint Corporation 62. Tennessee L.P. 121 (Tennessee) 63. Toronto Dominion Bank and Toronto Dominion Securities (collectively, Toronto Dominion) 64. Urban Communicators PCS Limited Partnership (Urban Comm)  X-Reply Comments 1. Airtel Communications, Inc. (Airtel) 2. ALLTEL 3. Alpine 4. American Mobile Telecommunications Association, Inc. (AMTA) 5. Antigone Communications Limited Partnership and PCS Devco, Inc. (collectively, Antigone/Devco) 6. BellSouth Corporation 7. Carlson Technologies, Inc. (Carlson) 8. Cellexis International, Inc. (Cellexis)" (4,&)&)aa&"Ԍ9. ClearComm, L.P. 10. Comcast Corporation 11. Conestoga 12. CONXUS 13. CIRI 14. Duluth PCS 15. Fortunet 16. GWI 17. GTE Service Corporation (GTE) 18. Ken W. Bray 19. MCI 20. Millison Investment Management, Inc. (MIM) 21. Mountain Solutions LTD, Inc. (Mountain Solutions) 22. Nextel 23. NextWave 24. Northcoast 25. Omnipoint Corporation 26. OnQue 27. PCS Wisconsin, LLC 28. PrimeCo Personal Communications, L.P. (PrimeCo) 29. Radiofone PCS, L.L.C. (Radiofone) 30. R&S 31. RTFC 32. Sprint Spectrum L.P. 33. Stan P. Doyle 34. Telecommunications Resellers Association (TRA) 35. UniDial Communications (UniDial) 36. Urban Comm 37. U.S. Airwaves, Inc. 38. Wireless Nation, Inc.  X -Ex Parte Comments 1. AirGate Wireless, July 18, 1997 2. AirGate Wireless, July 22, 1997 3. AirGate Wireless, September 9, 1997 4. Alpine, September 17, 1997 5. Alpine, September 23, 1997 6. AmeriCall, July 11, 1997 7. AmeriCall, August 5, 1997 8. AmeriCall and Hughes Network Systems, Inc., September 16, 1997 9. AmeriCall, ClearComm, and Chase, September 17, 1997 10. BIA Capital, August 4, 1997 11. Chase, August 11, 1997" (5,&)&)aa&"Ԍ12. ClearComm, August 7, 1997 13. Congressman Rick Boucher, July 25, 1997 14. Congressman Richard Burr, August 11, 1997 15. Congressman Thomas Davis, July 30, 1997 16. Congressman John D. Dingell, September 16, 1997 17. Congressman Steny H. Hoyer, August 7, 1997 18. Congresswoman Sue W. Kelly, August 11, 1997 19. Congressman W.J. "Billy" Tauzin, August 13, 1997 20. Congressmen W.J. "Billy" Tauzin and Edward J. Markey, September 16, 1997 21. CONXUS, August 27, 1997 22. Cook Inlet Communications, August 5, 1997 23. Cook Inlet Communications, August 15, 1997 24. Cook Inlet Region, Inc., September 23, 1997  X -25. El Dorado, August 13, 1997 26. GWI, August 4, 1997 27. GWI, August 15, 1997 28. GWI, August 18, 1997 29. Magnacom Wireless, LLC, August 13, 1997 30. MCI, August 14, 1997 31. NextWave, June 23, 1997 32. NextWave, July 29, 1997 33. NextWave, August 5, 1997 34. Nokia, September 15, 1997 35. Nokia, September 16, 1997 36. Northern Michigan PCS Consortium, L.L.C., August 14, 1997 37. Omnipoint Corporation, August 18, 1997 38. Omnipoint Corporation, September 3, 1997 39. Omnipoint Corporation, September 5, 1997 40. Omnipoint Corporation, September 23, 1997 41. R&S, August 11, 1997 42. Senator Christoper S. Bond, July 14, 1997 43. Senator Paul D. Coverdell, September 24, 1997 44. Senator Pete V. Domenici, September 10, 1997 45. Senators James M. Inhofe, Don Nickles, and Conrad Burns, August 7, 1997 46. Senator John McCain, August 19, 1997 47. Senator John McCain, September 18, 1997 48. Senator Daniel Patrick Moynihan, August 4, 1997 49. Triumph Capital, August 7, 1997 50. Triumph Capital, September 23, 1997 ("McCarthy Letter") 51. Urban Comm, August 21, 1997 52. Urban Comm, September 17, 1997 53. U.S. Small Business Administration, September 8, 1997 ("Glover Letter")  X:&-IJ":&6,&)&)aa$"  X-   VAPPENDIX B ă  X-V FINAL RULES ă  Part 1 of Chapter I of Title 47 of the Code of Federal Regulations is amended as follows:  Xv- PART 1 PRACTICE AND PROCEDURE d1. Section 1.2110 is amended by amending paragraph (e)(4)(i) to read as follows.  X -  1.2110 Designated Entities  X - (a) * * * * (b) * * * * (c) * * * * (d) * * * * (e) * * * (4) * * * ,d(i) If an eligible entity making installment payments is more than ninety (90) days delinquent in any payment, it shall be in default, except that broadband PCS frequency block C licensees making the March 31, 1998, interest payment pursuant to their elections under the Amendment of the Commission's Rules Regarding Installment  X-Payment Financing for Personal Communications Services Licensees, Second Report  X-and Order, WT Docket No. 9782 (rel. Oct. 16, 1997), shall be in default if they are more than sixty (60) days delinquent on such payment.! X4` hp x (#%'0*,.8135@8:,&)&)aa"ԌxThe Commission is required to provide a description of and, where feasible, an  X-estimate of the number of small entities that will be affected by our rules.x Xb-ԍ #X\  P6G;ɒP#5 U.S.C.  603(b)(3), 604(a)(3).x The RFA directs agencies to provide a description of and, where feasible, an estimate of the number  X-of small entities that will be affected by our rules.xy X-ԍ #X\  P6G;ɒP#5 U.S.C.  603(b)(3), 604(a)(3).x The RFA generally defines the term "small entity" as having the same meaning as the terms "small business," "small  X-organization," and "small governmental jurisdiction."f* Xh -ԍ #X\  P6G;ɒP#5 U.S.C.  601(6).f In addition, the term "small business" has the same meaning as the term "small business concern" under Section 3 of  X_-the Small Business Act._ X -ԍ #X\  P6G;ɒP#5 U.S.C.  601(3) (incorporating by reference the definition of "small business concern" in 15 U.S.C.  632). Under the Small Business Act, a "small business concern" is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the Small Business  X -Administration (SBA).d T X-ԍ #X\  P6G;ɒP#15 U.S.C.  632.d xThe rule changes proposed in the Notice will affect all small businesses which avail themselves of these rule changes, including small businesses currently holding C block and F block broadband PCS licenses who choose to participate and other small  X -businesses who may acquire licenses through reauction. The Commission, with respect to broadband PCS, defines small entities to mean those having gross revenues of not more  Xy-than $40 million in each of the preceding three calendar years.wy  X/-ԍ #X\  P6G;ɒP#See 47 C.F.R.  24.720(b)(1).w This definition has been  Xb-approved by the SBA.Eb  X-ԍ #X\  P6G;ɒP#See Implementation of Section 309(j) of the Communications Act Competitive Bidding, Third  {O-Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, 10 FCC Rcd 175, 196 (1995);  {O|-Implementation of Section 309(j) of the Communications Act Competitive Bidding, Fifth Report and Order, 9 FCC Rcd 55815584 (1994); 47 C.F.R.  24.320(b) and 24.720(b).  On May 6, 1996, the Commission concluded the broadband PCS C block auction. The broadband PCS D, E, and F block auction closed on Jan. 14, 1997. Ninety bidders (including the C block reauction winners, prior to any defaults by winning bidders) won 493 C block licenses and 88 bidders won 491 F block licenses. Small businesses placing high bids in the C and F block auctions were eligible for bidding credits and installment payment plans. For purposes of our evaluations and conclusion in this IRFA, we assume that all of the 90 C block broadband PCS licensees and 88 F block broadband PCS licensees, a total of 178 licensees potentially affected by this order, are small entities. In addition to the 178 current small business licensees who may participate"?,&)&)aa" at the reauction of C block licenses, a number of additional small business entities may seek to acquire licenses through reauction, and thus be affected by these rules. xIn addition, the Commission proposes to provide small business bidders in the C block reauction with bidding credits, and to that end proposes a two tiered bidding credit  X-which will provide a greater discount to "very small businesses."A X-ԍ #X\  P6G;ɒP#In the C block auction, a winning bidder that qualified as a small business or a consortium of small businesses was able to use a bidding credit equal to 25 percent of its winning bid. For the reauction, the Commission proposes tiered bidding credits, as were offered for F block and, more recently, Local Multipoint Distribution Service (LMDS) small business bidders. The Commission proposes to define the second tier of very small business as entities that, together with their affiliates and persons or entities that hold interest in such entities and their affiliates, have average gross revenues of not more that $15 million for the preceding three years. Creation of this subcategory of small business will enable the Commission to tailor a bidding credit to meet the needs of entities that may be interested in bidding on spectrum returned by C block licensees. Thus, the Commission proposes a 35 percent bidding credit for very small businesses and a 25 percent bidding credit for small businesses. xTo assist the Commission analyzing the total number of affected small entities, commenters are requested to provide information regarding how many total broadband PCS small business entities would be affected by the rules proposed in this Notice. In particular, the Commission seeks estimates of how many broadband PCS entities, existing and potential, will be considered small businesses or very small businesses.  X4-D.XxDescription of reporting, recordkeeping, and other compliance requirements! xThere are no additional reporting, recordkeeping, or other compliance requirements as a result of the Notice.  X-E.XxSteps taken to minimize significant economic impact on small entities, and significant alternatives considered! xThe Commission proposes to apply the same rules that were used in the C block auction to the reauction of C block licenses, with some modifications designed to encourage participation by small businesses while at the same time helping to ensure the best use of the spectrum through the competitive bidding process. xThe Commission proposes to conduct the C block reauction in three stages. Having three stages, with bidders required to be more active in each stage, serves to provide bidders with the flexibility to pursue backup strategies as the auction progresses. The Commission proposes to use high activity requirements in the reauction. In addition, the Commission proposes to use similar activity levels in the C block reauction and, to further expedite the auction, require the Wireless Telecommunications Bureau to use its""@,&)&)aa!" delegated authority to aggressively schedule bidding rounds, quickly transition into the next stage of the auction when bidding activity falls, and use higher minimum bid increments for very active licenses. xThe Commission proposes to establish a minimum opening bid for the reauction. A minimum opening bid is the minimum bid price set at the beginning of the auction below which no bids are accepted. A minimum opening bid in the C block reauction will help ensure that the public is fairly compensated for licenses returned to the Commission, expedite the auction and give the Commission the flexibility to make adjustments based on the competitiveness of the auction. The Commission proposes minimum opening bids for each market equal to ten percent of the corresponding high bid for the market in the original C block auction. Such an approach will scale the minimum opening bids in a way that reflects the relative value of the licenses. xThe Commission proposes to require electronic filing of all shortform applications for the reauction. Electronic filing of applications would serve the best interests of auction participants as well as the members of the public monitoring the reauction. The Commission believes that an electronic filing requirement will help ensure that the  Xb-reauction will be completed within the time frame contemplated by this Notice. xThe Commission proposes to set the amount of the upfront payment for the reauction at $.06 per megahertz per population ("MHz per pop"). xThe Commission proposes that parties have fifteen (15) days to file a petition to deny following public notice that an application was accepted for filing. If, pursuant to Section 309(d) of the Communications Act, the petitions to deny are dismissed or denied, the Commission would announce by public notice that it is prepared to award the license, and the winning bidder would then have ten (10) business days to submit the balance of its winning bid. If the bidder does so, the license would be granted. If the bidder fails to submit the required down payment or the balance of the winning bid or the license is otherwise denied, a default payment would be assessed. xSection 309(j) of the Communications Act of 1934, as amended, directs the Commission to disseminate licenses among a wide variety of applicants, including small  X-businesses and other designated entities.m Xk!-ԍ #X\  P6G;ɒP#47 U.S.C.  309(j)(3)(B).m Section 309(j) also requires that the Commission ensure the development and rapid deployment of new technologies, products, and services for the benefit of the public, and recover for the public a portion of the value  X!-of the public spectrum resource made available for commercial use.v!y X%-ԍ #X\  P6G;ɒP#47 U.S.C.  309(j)(3)(A), (C).v The Commission believes these provisions in the Notice help meet those goals and promote efficient""A*,&)&)aa!" competition while maintaining fairness and efficiencies of process in the Commission's rules.  X-F.XxFederal rules which overlap, duplicate, or conflict with these rules! xNone."B,&)&)aae"  X-  JV JV JV  X-  Affirming and Dissenting Separate Statement Bof Chairman Reed E. Hundt  Xv-JV P  X_-T Re: C Block Financing Issues ĐJVP JVP xThe C block is the longdesired fifth wireless license: the third socalled PCS license to be added to the two outstanding cellular licenses. A halfdozen holders of the C block licenses for about twothirds of the country by population are in financial distress and apparently unable to pay monies promised to the government by these licensees in a fair auction of the C block licenses. The question presented today is what should the FCC do as a creditor and a policymaker in this situation. For ten months I have been stating that the key policy goal in wireless is competition, not debt collection. However, it is also true that this Commission, as a creditor, ought to behave in a commercially reasonable manner. In America debtors who cannot pay are not thrown into prison, nor ought they be consigned to a Serbonian bog of Commission deliberation in which armies of lawyers and lobbyists and Commission staff are sunk. Yet for almost a year my colleagues on this Commission have been unwilling to make a commercially reasonable restructuring proposal of any kind to any of the financially troubled C block licensees. Nor have they been willing to promote competition by expediting some solution to the need to restructure and finance the C block. xHaving this fifth license used in the marketplace is a longstanding goal of policy in this country; allowing it to be unfinanceable due to moralistic arguments against commercially reasonable structuring of debtridden licensees faced with unsolvable financial problems is inconsistent with all the wireless competition policies of this Commission and the repeated public statements by all commissioners for many years. Today the Commission, after ten months of inaction in response to my repeated urgings, finally decides to take some significant steps consistent with the reasonable commercial practices of any debt holder and consistent with our oftstated commitment to competition. xThe Commission has a history dating back to 1993 of seeking to promote small business entrepreneurial activity in wireless with these C block licenses. This history included the current Commissioners' decision in 1994 to reallocate the PCS spectrum so as to make sure the C block licenses were of equal viability to the two other 30 MHz PCS licenses auctioned in 1994. Subsequently, the Commission designated the C block as an entrepreneur's block expressly to promote participation by small businesses and businesses  XQ%-owned by minorities and women. After the Supreme Court's Adarand decision, that plan had to be revised to eliminate provisions for minorities and women but the Commission retained its primary objective of providing entrepreneurial opportunities for small businesses. All current Commissioners supported this objective. "(C,**'"ԌxAfter the FCC successfully persuaded the Supreme Court to lift an appellate court stay, the C block auction began in 1995. To the dismay of many, some of the winners bid at levels far beyond apparently prudent ranges. Most did not; dozens of financially prudent bidders won at reasonable prices. But a handful of bidders submitted bids that cannot be explained other than by assuming they made their decisions according to erroneous market predictions, bad financial advice or a triumph of hope over thought. Regrettably, these bidders irrationally exuberant in hindsight and, according to many, even at the time of bidding won nearly three quarters of the United States market measured by population. xSome of these bidders have subsequently criticized the FCC's auction process and other FCC actions. None of this criticism has the slightest basis in fact. All amount to unworthy attempts to shift blame from the bidders to the auction conductor. Nothing about this history discredits auctions as a means of distributing licenses. Moreover, the installment payment and bidding credit plan that facilitated entrepreneurial entry into the C block in fact worked very well with respect to the majority of the licensees. More small business participation in wireless resulted from prudent bids in the C block than in virtually all other FCC license distributions in this decade. xHowever, the current situation, and indeed the situation for almost a year, has been that a handful of large C block licensees have been unable to attract sufficient financing to create viable businesses. These are at least Nextwave, Pocket, GWI, ChaseTel and ClearComm. xUnfortunately, all other C block bidders have their business futures occluded by the financial troubles of these large, financially troubled bidders. That is because Wall Street financiers are interested in seeing the build out of the entire block with the attendant possibilities for roaming that would be realized by complete buildout. In other words, the financial difficulties of the largest troubled bidders are in fact visited on otherwise financeable C block bidders. xFurthermore, the country's wise policy of encouraging wireless competition is hampered by the financial troubles of the C block. The sooner this block of licenses can be financed, the quicker we will see long overdue robust price and quality competition in wireless. xIn addition, our decision not to adopt a single standard, and to permit competition among CDMA, TDMA and GSM, is also undercut by a failure to put the C block on reasonable financial footing. It is simply necessary to have at least three PCS firms operating in major markets to permit each of these technologies a fair chance to gain adherents. xI was aware last December that the market was unlikely to finance many of the largest bidders. That is why, in my year end statement entitled,"The Hard Road Ahead, "I stated that "commercial lenders often reassess the terms of loans to address changes in the marketplace" and that C block licenses "perhaps ... should be able to request renegotiation of their financing where it is necessary and appropriate to do so." ")D,**n("ԌxI made this suggestion because it is necessary for creditors, such as the United States in this situation, to act in a commercially reasonable manner. And it is necessary for the Commission to focus persistently on major policy goals and not to make the blunder of thinking that Congress has tasked us to attempt to maximize revenue from the C block auction. Here the goals are, as a matter of statute, not to maximize revenue from the C block, nor to punish debtors for their unwise bids, but rather we are commanded by Congress to promote competition, deployment of service and small business entry. xFor the greater part of the last ten months my colleagues and I have disagreed over these objectives. They have focussed instead on questioning whether the largest licensees were really financially troubled, or they have evinced disinterest in the significance to consumers of these licensees' business prospects, or they have dwelled on the disappointment of other C block bidders who dropped out of the bidding in markets where price levels reached the heights now universally seen as imprudent and unsustainable. Finally, they have expressed indifference to the risk of bankruptcy filings by the subject licensees, rather than negotiating restructuring of their debt according to marketbased principles. xWith perfect hindsight, had Congress written the law to state with inexorable clarity that the auctioning of wireless licenses does not suddenly make them property subject to bankruptcy jurisdiction, this latter point would be moot. Indeed, if tying up licenses in bankruptcy litigation were foreclosed as an option for a troubled C block licensee, then the Commission could simply retrieve licenses from defaulters, and reauction them to other small businesses. This is why I asked Congress this summer to amend the law to make clear that such action could be taken. No other commissioners joined me at that time. Powerful lobbying forces defeated my efforts. I am glad that, at least in recent days, all commissioners have joined this effort. However, responsible leaders in Congress have assured us that no such legislation is likely this year. xPocket Communications, one of the largest C block licensees, is already in Chapter 11. An objective of the Commission therefore ought to be to compromise the Pocket litigation, as we have been advised by Sidley & Austin, Gordian Group,and many other experts. I had hoped that today's decision would offer a marketbased compromise Pocket would accept. I have doubts that the decision today will accomplish that result. xAnother objective ought to be to reach marketbased compromises with the other troubled C block licensees that would at least roughly approximate results that could be obtained in bankruptcy settlements because that strategy would save the time and money expended trying to retrieve unused licenses in bankruptcy. x I might be the only FCC commissioner in history who has actually litigated as an attorney for creditors in bankruptcy court. Normally this would be of small relevance to my job. However, from personal experience, as well as from the advice of our experts, I am quite confident that bankruptcy litigation can cause substantial delay even when the creditor's legal position is impregnable. That is the case here. Some debtor's attorneys have suggested that such issues as perfection of UCC1's are a legal problem for the Commission. This is a frivolous assertion, that underscores the desperate ingenuity of a")E,**n(" bankrupt firm's counsel but plays no role in our thinking or actions. Highly skilled outside counsel, Department of Justice lawyers, our own General Counsel's office, and my own personal experience all convince me beyond any doubt that we will prevail in bankruptcy court. But the process of bankruptcy litigation takes time and money. Meanwhile, the assets in question are, based on all advice, declining in value while lawyers talk and commissioners deliberate and lobbyists advocate. The reason is the lead time granted to the other licensees. If we truly want small business entrepreneurs to make use of the C block spectrum, we simply have to permit them to restructure their government debt or obtain the debtor's voluntary agreement to return the licenses quickly for prompt reauction. This is why it is so important for the Commission to make proposals that might obtain such agreement at least from some of the C block licensees. This action is overdue, and although the Commission may not have made a perfect decision today, some decision was better than none.  X -x The test of any workout plan for the financiallytroubled C block licensees appears to be this: Does the plan avoid protracted bankruptcy, with the attendant costs of debtor and creditor litigation, while also generally treating fairly the competing interests of the taxpayers, consumers, nongovernment creditors, equity holders and other interested parties?  X4-x Today we adopt at least one plan that is highly likely to obtain a voluntary and fair restructuring settlement agreement from several of the troubled bidders. I refer to the disaggregation plan, which allows licensees to return 15 Mhz of spectrum in return for a proportionate reduction in the amount of their outstanding debt. This will help small or rural area licensees who may not need the full 30 Mhz of spectrum to serve their markets. If long delayed, at least we are at last adopting this change in our rules. xThe so called "amnesty" option we adopt today is also a good idea and I would have been happy to extend it to any licensee at any time. The problem of course is that it does not provide any incentives to the licensees' nongovernment creditors to consent to a return of licenses and therefore is not a workable solution. Congressman Dingell has told us that in his view "Giving licensees a choice between walking away from investments already made and facilities already constructed, or taking a chance in bankruptcy court, is tantamount to giving them no choice whatsoever." Nonetheless, I don't object to our decision to offer this as an option. xAnother plan we considered including in our Order today had real promise for practical use the socalled "full price buy out plan." This plan, proposed originally by the bipartisan leadership coalition of Congressmen Markey and Tauzin, would have permitted a licensee to retain as many of its licenses as it could pay for in cash today (at net present value) using the full amount of funds on deposit plus any additional sums it could immediately raise. Licenses that could not be paid for in this manner would be returned and reauctioned in exchange for discharge of the debt obligations associated with these licenses. xUnfortunately, the prepayment plan included in today's Order fails by a number of key measures to be consistent with the Markey/Tauzin suggestion and with good policy.")F,**n("ԌI register my strong dissent as to this part of the Order. xFirst, it is questionable why a majority of Commissioners departs from the bipartisan consensus in Congress on this issue. Just two weeks ago, Senator Domenici wrote the Commission urging that we adopt a "comprehensive solution ... [that would] put into productive use the spectrum." He also advised against pursuing "options that forestall the commercial application of Block C spectrum because of timeconsuming and costly litigation resulting ... from extended bankruptcy proceedings." This sentiment is also reflected in letters from Senator McCain received over the past six weeks. Likewise, Senators Inhofe, Nickles and Burns expressed their view in early August that "debt restructuring of the PCS licensees may be necessary to address the concerns that have been raised by the interested parties." Congressmen Markey, Tauzin and Dingell have each supported the full price buy out plan described above. xThis correspondence makes plain Congress' direction that we adopt a workable,  X -comprehensive plan for the C block. That is consistent with the statute. The Congressional mandate has not been adequately met by the Order we adopt today.  Xb-xThe Order requires licensees to forfeit 30% of their deposits if they elect the "buyout" option, even though this money has already been paid and would be used to purchase licenses at the price bid in the original C Block auction. That penalty is more than 50 times higher than any previous penalty in FCC history. The bipartisan view from Congress is that no such forfeiture should be imposed a difference which potentially represents hundreds of millions of dollars lost by incumbent licensees for reasons that bear no relation to the policy goals included in Section 309(j) of the Communications Act which granted the Commission's original auction authority. Today's Order also ignores the bipartisan conclusion of Congress that prepayment prices should be set based on "the net present value of the ... prices for such licenses". Instead, the prepayment alternative ignores the time value of money and extracts an additional penalty from licensees on the order of several hundred million more dollars. xSecond, the prepayment option we adopt today stands fundamentally at odds with basic principles of commercial reasonableness. By requiring licensees that elect the option to prepay their licenses at the "nominal" bid price, the plan ignores the time value of  X-money and inflates the effective price paid by the licensees that it purportedly seeks to assist. Put simply, the value of a bid paid out over ten years is significantly less around 40% less than that same bid paid in cash. The consequence of this oversight is a massive penalty for any licensee that might otherwise elect this alternative. The prepayment option layers on an additional penalty by requiring licensees to forfeit 30% of their deposit. Note that this forfeiture of deposited monies is ordered even though the  Xh$-licensees would use their deposits to prepay licenses at effective prices higher than the amount that they bid. At base, the plan ignores fundamental principles of finance and, as a result, cannot reasonably be expected to appeal to licensees or their creditors. xThird, the prepayment plan adopted today has too much risk of not being helpful to the financing of the licenses held by the very large bidders that constitute the vast majority of the C block licensed POPs in the United States. The acid test of any work out")G,**n(" plan is whether the deal is accepted by the debtor; if not, the plan is not a workout but rather only works us deeper into the toils of a drawn out bankruptcy litigation. In this case, the prepayment plan extracts the two extraordinary penalties described above and offers little in the way of incentives for licensees to accept it. According to the Congressional Budget Office Report, bankruptcies could cost consumers in excess of $5.5 in lost benefits. Taxpayers lose because the reauction of licenses is conducted in a piecemeal fashion at the end of lengthy bankruptcy litigations, ensuring smaller proceeds as the value of the licenses deteriorates from delay. Such are the costs of the Commission majority's sanctimonious rigidity. xThe majority's unwillingness to adopt a comprehensive plan for addressing the financial situation of the C block is inexcusable and inexplicable. The legacy of that decision is a substantial risk of bankruptcies that Congress and any commercially reasonable enterprise would have us eliminate. By focussing on punishment and ignoring the need to make the workout "workable", the majority sacrifices consumer and taxpayer interests. This approach is fundamentally misdirected and contrary to our statutory directives. In short, today's decision will delay more competition for most Americans. Competition delayed is competition denied. xFinally, it is not clear to me that the parameters of our Order today and the accompanying Notice treat fairly those C block companies such as Omnipoint, Cook Inlet and Airadigm that have accepted our challenge to bring service to market and who, as result, have invested heavily in build out. These licensees have operating businesses that are tied to specific C block licenses. Consequently, they do not have the same flexibility as other licensees to disaggregate or participate in a "full price buy out", which would require a dramatic reduction in the size of their existing service footprints. This concern with fairness is more than a metaphysics. These licensees must compete for capital in the public markets with other C block licensees, including winners of the subsequent reauction. To the extent that such a reauction of spectrum returned under any of the options in our Order today "resets" the market price for spectrum, it could impair access to capital for those licenses that are significantly built out but which carry artificially higher prices per pop.  X - xThe concerns I have identified do not subtract from the following facts:  X-1. XxAfter many months of discussion the Commission has finally recognized the need to restructure certain debt in the C block.!  X"-2.XxToday's decision will permit us to obtain some licenses for reauction and will permit some licensees to get financing, based on all available information.!  XQ%-3. XxAnd we have, at the very least, not simply extended the payment dates on the  X:&-existing notes by the many years sought by some licensees. This proposal was unfair to the taxpayer and an unnecessary windfall to most C block licensees. ! Therefore, I affirm in part and dissent with respect to the socalled "full price buyout"  X)-plan. ")H,**n("  X-  x` `  hh@hpp   #Xj\  P6G;ynXP# x` `  hh@hpp  X-  Separate Statement Dof  X-Commissioner Susan Ness Đ Xv-JVPX01Í ÍX01Í Í  V1-Re:XxAmendment of the Commission's Rules Regarding Installment Payment Financing  V -for Personal Communications Services (PCS) Licensees, WT Docket No. 9782! A little over a year ago, we conducted an auction for the "Cblock" PCS licenses. Like our other auctions, this auction was carefully conceived to operate on marketbased principles, allowing licenses to be obtained by those who valued them most at prices to be set by free market mechanisms. It was also crafted to fulfill a Congressional mandate to bring "designated entities" especially small businesses, often owned by women and minorities into the marketplace. And it did. I supported our commitment to marketdriven auctions and to designated entities. I  X-reaffirm that commitment today. Our auction was conducted properly, our rules were clear, and numerous licensees stand ready to meet their payment obligations fully and on time. And while it is truly  X-unfortunate that a handful of bidders overbid and/or overleveraged, it is clearly not our responsibility to prevent them from failing in the marketplace, or from going into  X-bankruptcy. It is our responsibility to manage the spectrum, including the auction process,  X-with fairness and integrity.  Although I sincerely regret that some licensees now find themselves unable to meet their commitments, I remain unpersuaded that the FCC should alter the outcome of the auction by providing bidders vastly more favorable terms than those to which they previously agreed. To grant overly generous accommodations to certain Cblock licensees, after the auction, would be to forsake the marketplace and return to the government picking winners and losers. I do not think that this should be our spectrum policy for the future. Such a result also would be unfair to those Cblock licensees that counted on us to enforce our rules; unfair to disappointed Cblock bidders who dropped out of the auction when the licenses they desired became too expensive; unfair to licensees in other spectrum blocks who are offering competing services; and unfair to the U.S. taxpayer.  X@&- I do support, however, modest options that would facilitate the return of spectrum and  X)'-reauction in a timely and fair manner. The menu of options we offer to all Cblock licensees today provides an appropriate balance.  X(- ")I,**n("Ԍ X-Clear Rules; A Fair Auction  X- Everyone participating in the Cblock auction was subject to the same rules. The auction was run fairly. Even now there are no serious complaints about our conduct of the auction or the clarity of our rules. Our rules were designed, as Congress intended, to create opportunities for small businesses. Eligibility to bid was limited, and favorable payment terms were available. While we offered licensees the opportunity to pay for the licenses in installments, we were not a lender in the traditional sense: the payment terms were available to all small businesses without regard to their creditworthiness or soundness of their business plans. First and foremost, we acted as a licensing agency and, as our rules clearly specified, the licenses were granted conditionally. Each license was conditioned upon timely payments according to a predetermined payment  X -schedule, with the caveat that the license would automatically cancel if the payments were not made. The conditional interest granted is clearly noted on the face of the license itself, and in the relevant Commission rules and orders. (Indeed, the conditional nature of the license and the attendant penalties and loss of downpayment are duly acknowledged in at least one large bidder's public filings with the Securities and Exchange Commission.)  X- The Problem  X- The Cblock auction resulted in licenses being won by a handful of large players each with license bids in excess of a billion dollars and a multitude of smaller players. Several of the largest winners paid well in excess of prices comparable to those paid by the A and B block licensees. Compounding the problem, some of these same large players have highly leveraged capital structures with debt/equity ratios as high as 10 1, tying their future to conducting a successful public offering. In contrast to the larger players, the majority of the Cblock winners have smaller holdings, paid considerably less per pop for their licenses and/or had more prudent capitalization. For the most part, the smaller licensees do not appear to be in financial trouble. Last spring, a handful of the largest winners requested relief from their obligations essentially to keep their licenses on more favorable terms than those they voluntarily agreed to just sixteen months ago. They were outnumbered by many smaller licensees who have not sought relief and who are ready to build out their markets.  X"-Nonetheless, as the campaign for significant modifications won some support at the Commission, other licensees echoed the call, reflecting a natural desire to pay less should the Commission be willing to rewrite the terms of the agreement. That chorus transcended the Cblock and has now spilled over into other radio services. Interest payments were temporarily suspended as of March 31, 1997, pending Commission consideration of what , if any, measures should be taken to assist financially troubled licensees. ")J,**n("ԌOther interested parties include many small companies some of which failed to win any  X-licenses and dissolved who feel the prices were unreasonably driven up by certain  X-bidders during the auction. Many of the investors in these companies and in those Cblock licensees currently meeting their obligations believe fairness dictates that defaulting parties forego their licenses, that the licenses be reauctioned, and that everyone have a fair chance to acquire the licenses in a subsequent auction.  X_- Marketplace Disruption  XH- We must, however, consider certain countervailing factors. The financial markets became unsettled subsequent to our suspension of Cblock installment payments. Licensees with sound business plans have been enveloped by the cloud of marketplace uncertainty, and the flow of capital needed for continued buildout has been impeded. Cblock licensees, to varying degrees, have plans on hold, as the financial community awaits the outcome of this proceeding. The Commission must take action now to get the Cblock of licensees back to business.  Xy-While there has been a wide range of proposals offered and considered, the one thing that almost all parties have agreed upon is that final resolution is needed immediately to enable rapid buildout and foster competition.  X- A Menu of Options  X- We adopt a menu of options that is likely to help many of the troubled licensees, without jeopardizing the principles of fairness and integrity that are essential to marketdriven  X-auctions. In developing these options, the majority of Commissioners have discarded proposals that would have fundamentally changed auction outcomes or created incentives for licensees to alter otherwise achievable business plans. In addition, we have avoided giving anyone a "thumb on the scales" in a subsequent auction. Specifically, we are continuing the deferral of installment payments until March 31, 1998, making the total suspension period a full year. This resumption date ensures that all Cblock licensees and prospective financial backers will have sufficient time to complete their deals. Some will also benefit from the access to foreign equity that is permitted, beginning January 1, 1998, under the recent WTO Agreement. (This is all the relief that was initially sought by one bidder that is now urging us to adopt a very substantial restructuring.) All Cblock licensees who do not choose one of the three following options will be expected to resume payments under their existing agreements. I hope and anticipate that the vast majority of successful bidders will proceed in this fashion. ":&K,**$" The three options are:  X-  X-First, under the amnesty option, licensees may forfeit all of their licenses and their  X-downpayments. In return, the Commission will (in coordination with the Department of Justice) approve forgiveness of their outstanding debt and cancellation of the additional penalties, including a deficiency payment (representing the difference between the net bid price and the price obtained in a subsequent auction), that otherwise would be due. The licenses will then be reauctioned.  X -Second, under the disaggregation option, licensees may return half of their spectrum in a  X -given market or markets in exchange for a corresponding reduction of debt. This is consistent with our existing disaggregation rules, facilitates new spectrumbased competition in the marketplace, and better enables the cash flows of the licensees to service the significantly reduced debt. We will reauction licenses for the 15megahertz spectrum blocks that are returned under the same designated entity terms as apply to all other Cblock licenses. Several of the largest licensees have endorsed this option.  Xf-Third, under the prepayment option, licensees may apply 70 percent of their  XQ-downpayments from licenses they now choose to abandon and 100 percent of their downpayments for licenses they now choose to keep to pay for as many licenses at the original auction price as they can afford. This is a buyout, not a bailout. Again, returned spectrum will be reauctioned under the same terms as apply to all other Cblock licenses.  X- Rejected Options  X- We carefully considered and discarded other options. For example, our dissenting  X-colleague would have offered vastly more generous buyout options. His actions suggest that the prospect of a large licensee filing for bankruptcy must be avoided at all costs. I cannot agree.  X&-Substantial Discounts: Under the approach advocated by the Chairman, the debt owed by  X-the licensees would be drastically discounted a 40% haircut to the American taxpayer well below the prices that other, subsequently disappointed, bidders were clearly willing to pay. This would be replacing a marketbased outcome with an FCCdirected outcome. I agree with the Chairman's prior statements that the market not the FCC should pick the winners and losers. In my view, the price bid is the price bid. Bidders were not offered a cash versus credit  Xp$-price. The notes do not provide for prepayment discounts. If the FCC wanted to induce licensees to prepay, we would have included a prepayment schedule in our notes and rules. To the contrary, the favorable financing terms offered at an interest rate reflecting the cost of capital to the U.S. government were designed, in part, to induce designated entities to hold their licenses for a full ten years. This was consistent with Congress's stated goals to bring small business, including women and minorities, into the market on a sustained basis. Therefore a licensee would be unjustly enriched if it received the")L,**n(" full ten year benefit of attractive financing without the burden of holding the license for the full term.  X-Use of All Downpayments: I also disagree with the Chairman that the Cblock licensees  X-should be permitted to "spend" 100 percent of their deposits from licenses they no longer  X-want, to pay for licenses they do want. These funds have been paid to the U.S. Treasury and are not the licensees' to redeploy as they wish. That policy was clearly stated in our rules and documentation. Indeed, the Chairman reiterated that view in an April 30, 1997, speech to the Federal Communications Bar Association:   Some say that the Cblock licensees will not pay the total of their commitments to installment payments. If that is true, they will not hold the licenses any longer. But still the taxpayers will have received all the installment payments to that date, and we will reauction the licenses. . .   x A buyer of an option to purchase a piece of property is not entitled to apply the price of that option to the purchase price of another property. If licensees were able to use 100 percent of their deposits to cherrypick which licenses they want to keep and which they want to return, they would recoup in full what they paid and there would be no deterrent in future auctions against bidding excessively. Such a result surely would poison a marketbased auction. Moreover, we have repeatedly refused to allow defaulting licensees to recoup their  X -downpayment not just in the Cblock auction, but in other auctions. Again, the purpose is to ensure the integrity of the auction. Nonetheless, to accommodate some of the troubled licensees, the majority has agreed to allow them to apply up to 70 percent of the downpayments on licenses returned and 100 percent of the downpayment on licenses kept toward payment for selected licenses. The remaining 30 percent of the downpayment on returned licenses equates to the 3% of bid price default penalty specified in our rules. The Wireless Telecommunications Bureau has routinely assessed such penalties, including loss  X$-of downpayment, on defaulting bidders. $ yO-#C\  P6QɒP#эFor example, in May, one Cblock bidder, BDPCS, Inc., was assessed a $67.7 million penalty, which  yOe -totals 7% of the face amount of its bids of approximately $873 million. See BDPCS, Inc., Order, 12 FCC Rcd 6606 (WTB, 1997). Another Cblock bidder, C.H. PCS, was assessed an initial penalty for over $6.4 million. C.H. PCS Inc., Order, 11 FCC Rcd 22430 (WTB, 1996).  It also has P#I  assessed similar penalties against defaulting auction winners in other spectrum bands. While the amount at stake for the largest Cblock licensees is not insignificant, surely it cannot be the policy of the FCC that we grant generous breaks to the largest bidders while we strictly apply our rules including the penalty provisions to the smaller bidders.  X#-Transferable Bidding Credit: Finally, the Chairman would have allowed licensees to return all licenses and then apply 100% of their downpayments as a transferable bidding credit in a"n$M,**F#" subsequent auction. This option, too, was carefully considered and discarded as being grossly unfair to losing Cblock bidders, and to those bidders who already have built out their systems and cannot risk returning their licenses. It would have put a "thumb on the scales" in the subsequent auction in favor of the defaulting bidders. Those who bid up the original auction would now be rewarded by receiving full use of their downpayments toward the same licenses, at presumably significantly lower prices with "use it or lose it" dollars, or to cash out through another bidder. No wonder this concept found few policy adherents.  XH- Other Misconceptions  X1-  X -Declining value of the licenses: Clearly, it would be better if Cblock licensees did not file  X -for bankruptcy. As a former communications lender, I am painfully aware of the problems and timeframes associated with bankruptcy proceedings. Nonetheless, I do not share the view that the Cblock spectrum is a declining value asset, or that if the licenses were tied up in protracted litigation, they would ultimately yield a small fraction of today's worth. Our PCS service rules are extremely flexible, allowing licensees to provide both fixed and mobile services. With changing technology constantly creating new services, there is every likelihood  X{-that demand for this spectrum will be there whenever the licenses are reauctioned.   XM-Forestalled Competition: Nor do I believe that Cblock licensees must build their systems  X8-now or consumers will suffer from lack of competition in mobile communications. Even if buildout of a substantial portion of the Cblock licenses were delayed, consumers still have the benefit of competition from the A and B blocks, wide area SMR, and the PCS D, E, and F blocks, in addition to the two cellular licenses in each market. Consumers in many markets  X-already enjoy a substantial reduction in rates as a result of PCS competition." yOU-#C\  P6QɒP#эThe Yankee Group identifies over 40 markets that now have three wireless competitors and 10 markets with four competitors. It observes that pricing in competitive markets with at least one new PCS operator  {O-averages 18% lower than in markets with no PCS competitors. Yankee Watch Mobile Flash Competition  {M-Begins to Have an Impact on Wireless Pricing (April 18, 1997). Moreover, licensees are obligated to have built their systems only by the fifth year. Thus even if bankruptcy were avoided, there is no guarantee that service would commence immediately. I reject the argument that if we do not provide extraordinary relief to the largest Cblock  Xi-licensees, other Cblock licensees will be stymied by lack of roaming opportunities for their customers. The marketplace recognizes the problem, and has been working on a solution. Equipment manufacturers are helping to forge agreements that will enable the PCS equipment to roam nationwide, and new handsets operate on both cellular and PCS frequencies. I am confident that wireless telephone competition will not come to a grinding halt if there were a delay in the buildout of some of these licenses.  X!- Conclusion  X"- The FCC's primary responsibilities are to write fair rules, run fair auctions, and issue licenses  Xl$-to successful bidders. We have an obligation of fairness and impartiality to those who bid but"l$N,**F#" chose not to overbid or overleverage. And we owe it to the Cblock licensees who seek no special treatment but just want to get about their business to avoid changing the rules in any fundamental way that is detrimental to their business plans.  X- I believe the approach we adopt today fairly balances the competing interests. Restoring  X-regulatory certainty to the marketplace promotes investment, competition, and service to the American public. Even though the approach we adopt today is the product of negotiation and compromise, and does not reflect the firstchoice preferences of any individual Commissioner, I am satisfied that under present circumstances adoption of this order is the course of action  X1-that best serves the public interest. " O,**"  X-   x` `  hh@hpp     X- SEPARATE STATEMENT OF  X-T  X-V COMMISSIONER RACHELLE B. CHONG T  V_-TPRe: XxAmendment of the Commission's Rules Regarding Installment Payment Financing for  XH-Personal Communications Service P#I s P#I  Licensees, WT Docket No. 9782, Second Report and Order and Further Notice of Proposed Rulemaking(#  \ -#z2pPG; 3#x# Xxjp P7 SXP#  \ -Introduction xThree years ago, we set up a series of new rules for the conduct of a historic auction, the first U.S. auction of spectrum for the purpose of providing Personal Communications Service (PCS). Our previous assignment methods of lotteries and comparative hearings were timeconsuming, resourceintensive, and encouraged losing applicants to tie up the licenses in years of litigation. We believed that auctions would speed the development and deployment of new services to the public; encourage the efficient use of spectrum; and generally award licenses to those parties who value them most highly and who are thus most likely to introduce service rapidly to the public.  \-Finally, auctions recovered for the public a portion of the value of the spectrum.(G X-Ѝ#djp P7CP# Implementation of Section 309(j) of the Communications Act Competitive Bidding, Second  uS-Report and Order, 9 FCC Rcd. 2348, 234950 (1994).#&njp P7+&P#( Thus, we firmly believed that the public interest would be served by having market forces, rather than regulators, decide who should be assigned licenses for the PCS spectrum. We also put our trust in market forces to determine which licensees would succeed and which would fail.  \-xConsistent with our statutory mandate under section 309(j),AG X-ԍ#djp P7CP# 47 U.S.C.  309(j).#Xxjp P7 SXP#ю however, we incorporated in our auction rules some special assistance to "designated entities," including small businesses, minorities, women, and rural telephone companies. After some  \P-unexpected delay caused by the release of the Supreme Court's Adarand decision,PG X!-ԍ#djp P7CP# Adarand v. Pena, 515 U.S. 200 (1995).#Xxjp P7 SXP#ѣ this assistance was narrowed to apply only to small businesses. Because the main problem small  \"-business faced was access to capital,"G Xv%-ԍ #djp P7CP#Implementation of Section 309(j) of the Communications Act Competitive Bidding, Fifth Report  uS_&-and Order, 9 FCC Rcd. 5532 (1994). we gave them a number of regulatory advantages to address this problem and to give them opportunities to succeed. These tools included a smaller down payment, installment payments and their own block (C Block) so they would not have to bid against larger, "deep pocket" companies. " P ,** "ԌxDespite these advantages, some C Block licensees have found themselves in financial  \-trouble. These licensees allege that the higher per popG Xb-ԍ#djp P7CP# "Pop" is defined as prices per MHz per population. values they paid for their C Block licenses as compared to their counterparts in the A and B Blocks, together with alleged  ]-recent downturns in the wireless financial markets, have made it difficult for them to obtain financing. A number of C Block licensees have petitioned this Commission asking for relief. They have made impassioned pleas for very dramatic restructuring of their installment payment plans. Some have gone so far as to claim that if we do not restructure their debt, they will go into bankruptcy, pointing to one large C Block licensee who has already gone into bankruptcy. xSince the beginning of this debate, my initial reaction to these requests for relief was to turn them down. No one disputes that our rules at the time of the auction were clear. Every applicant knew exactly what would happen if a licensee failed to pay in a timely manner. In our rules and in the notes signed by the C block licensees, the Commission could not have been clearer that we granted these licenses subject to conditions. If a licensee failed to meet a condition, including making a timely installment payment, it  \-would be in default; in such an event, the license would be returned to the Commission.ayG X-Ѝ#djp P7CP# I believe that our licensees reasonably should have expected the Commission to deny requests for relief. Even our dissenting colleague, who thinks that the relief we provide C Block licensees does not go far enough, has publicly stated that if defaults occurred, he would not hesitate to take back the licenses.  uS4- See speech by Chairman Reed Hundt, "To Loop or Not to Loop: Is that the Question?" before the Cellular Telecommunications Industry Association (March 26, 1996) ("But I have heard that some bidders believe that the FCC will forgive the down payment due when the auction is over and even may forgive the principal payments which begin six years later. In the event that anyone knows anyone who thinks such thoughts, I have some advice you can pass on to them: Forget about it.")  \c-Major Restructuring Requests xRegardless of these clear rules and executed financial agreements, some C Block licensees have asked us for dramatic restructuring, including up to a 7080% reduction of their debt or deferrals of all payments for a number of years. I believe it would be unwise for the Commission to agree to any such major restructuring. First, I believe that a major restructuring or any other dramatic afterthefact rule change designed to bail out every financiallytroubled C Block licensee harms beyond repair the integrity and credibility of our auction rules. Such a major restructuring would make a mockery of our entire auction  \-process.  G X#-Ѝ #djp P7CP#My dissenting colleague states that we have a "sanctimonious" attitude. Far from passing any moral judgments, my decisionmaking is based on the facts, the law, and notions of sound public policy.  In addition, I believe major restructuring would encourage speculation in any future auctions, because bidders may rely upon anticipated regulatory relief in making bids that are higher than prudence would warrant. Further, any major restructuring might also deter future investment because of the uncertainty caused by our regulatory actions. It is not just the integrity of our auctions rules that is at stake; if we were to permit major"8Q ,**" restructuring, we would head down a very slippery slope which could have dire  \-consequences for the agency and all of its rules. xSecond, I opposed any major restructuring because I felt that it would be inherently unfair to other bidders and licensees, including the following: (1) losing C Block bidders who made prudent bids in accordance with our rules but were outbid by those now in financial trouble; (2) ruleabiding C Block licensees who are promptly making their payments and building out their systems just the way Congress and the Commission wanted them to; and (3) other broadband and narrowband PCS licenses who are competing with the C Block licensees for financial support in the marketplace. These other bidders and licensees have expressed tremendous frustration and downright anger that the Commission would even consider breaching its duty to the American taxpayers and to our other licensees by changing our rules after the fact to give unwarranted relief to financially troubled C block licensees. These licensees are right every notion of fair play is violated by a bailout. If we go too far to help the financially troubled C Block licensees, we end up skewing the marketplace and rendering more serious harm to others who played by our rules.  \b-The Menu Approach xIt has been my consistent position that the wisest thing for us to have done was to decide quickly to enforce our rules. Having said that, some of my colleagues wished to go much farther. In the spirit of compromise and because I felt strongly that we needed to  \-resolve the C Block question as quickly as possible, G Xh-Ѝ M#djp P7CP#y dissenting colleague has characterized the majority of the Commissioners as being unwilling to act, or the cause of a ten month delay in reaching a resolution of the C Block issue. I wish to set the record straight. The first C Block request for relief was filed in March 1997, and the draft Public Notice putting out those requests for comment was not presented to the other Commissioners' offices until late May. Reply comments on the petition were due in July 1997, after which time the Staff drafted an item. Thus, given the pleading cycle, no action could have resulted before August. The notion that the Commissioners in the majority are somehow responsible for a ten month delay is ridiculous. Since August, the three Commissioners and our staffs have been deeply engaged in this issue, meeting with  uS-dozens of parties, talking with financial analysts and Congress members, reading dozens of ex parte filings, and consulting with bankruptcy counsel and the FCC Task Force. In truth, the only delay in this decision was caused by the Chairman, who, for about eight weeks, was wedded to an approach not favored by a single other Commissioner, and who refused to concede defeat. It was he who erected a number of procedural roadblocks in the way of a more timely item. Notably, when a majority of the Commissioners directed the staff in writing to prepare a draft item disfavored by the Chairman, he directed the staff to disregard our instructions, claiming that under Section 5(a) of the Communications Act, he is the "CEO" of the Commission and as such, is the sole person who may "coordinate and organize the work" of the Commission's staff. While Section 5(a) states that the Chairman may coordinate and organize the work of the Commission, he may do so only "in such a manner as to promote prompt and efficient disposition of all matters within the jurisdiction of the Commission." Clearly, the prompt and efficient disposition of the C block matter was not served by a Chairman who refused to allow the staff to draft a decision supported by a majority of the Commissioners. Having studied the legislative history of Section 5(a), I know that Congress did not intend for Section 5(a) to be a tool of the Chairman to defeat the basic structure of the Commission as a multi member body, with majority rule and equal votes granted to each Commissioner. I initiated the idea of a menu approach"Rq,**7"  \-and agreed to compromise on the ultimate menu that we adopt today in order provide some modest and limited relief for troubled C Block licensees.  \-The Prepayment Option x xAlthough I support the majority decision, I remain concerned that we may have gone too far, particularly with the prepayment option. I would have preferred not to include this option at all, or if so, to allow the parties to use only 50% of their deposits. Again, due to the need to get the proceeding concluded, and because I felt that the 70%  \1-figure was consistent with our rules, 1G X -Ѝ#djp P7CP# See 47 CFR Section 1.2104(g)(2). I ultimately agreed to the majority's proposal. This proposal was, however, as far as I thought we could prudently go, without endangering the integrity and credibility of our rules. xMy dissenting colleague makes clear that he would have preferred to allow theX01Í ÍX01Í Í  licensees to use 100% of the downpayment and to allow a discount on the net bid price to the net present value. I believe his proposal would have been bad public policy for a variety of reasons. First, I believe that it would have been unfair and commercially unreasonable for us to have discounted the face value of the notes to their net present value. It is clearly fair to other bidders and to the integrity and credibility of our rules for  \K-the prepayment to be in the amount of the note, i.e. to make the licensees pay what they bid. If we offered an arbitrary discount to net present value, then every C Block licensee even those who can pay what they bid would demand the same discount. Clearly, the loser would be the American taxpayer, and the culprit the agency that cannot abide by its own rules. Further, to offer deep discounts off the net amount of the debt is outside  \-normal commercial practices . By allowing C Block licensees to pay off their debt in advance of the maturity date, we are allowing them to reap the benefit of not incurring additional interest due on the principal amount owed. To discount the amount of principal owed by C Block licensees would unfairly permit a windfall. xSecond, I object to my dissenting colleague's characterization of our decision to allow licensees to use only 70% of their deposits (as opposed to 100%) as an unreasonable imposition of a "penalty." This is no penalty! The prepayment option is simply that an option. If a licensee wishes to continue to make installment payments under the terms of its agreement with the Commission, it may do so and all of the monies on deposit with the Commission will go to pay for the purchase of those licenses. Allowing parties to take deposits that were targeted for a specific market's license, aggregate those deposits and use them to buy other licenses for other markets is an enormous benefit that our rule abiding C Block licensees can't enjoy. Under our rules, no such aggregation is allowed; those monies on deposit would have been forfeited to the Commission if the installment payments were not made on each license. Thus, allowing a licensee to use any percentage of deposits for any license they return to the Commission is an enormous benefit; allowing licensees to use 70% of those deposits is downright generous. ":&Sy ,**%"ԌxNor do I believe that our failure to adopt the Chairman's prepayment plan makes our C Block approach unworkable. As an initial matter, I do not agree that, as my dissenting colleague asserts, the acid test of our decision is how many licensees avail  \-themselves of the options we set forth here today. # \4-Ѝ# djp P7CP# Indeed, if all parties took an option, it may be evidence that the proposal was too generous. At the time we put in place our C Block auction rules, I expected there to be winners and losers. There will be some who may not have prudently bid or who are overcome by subsequent market events; I do not believe it to be the Commission's job to bail out every licensee who finds itself in financial trouble. This notion is inherently inconsistent with an auction and market forces process. xFurther, I believe that the more modest relief we have adopted herein does provide some reasonable alternatives for financially troubled C Block licensees. I am optimistic that our menu of options will be attractive to a wide range of licensees. Several of the options  \ -we presented have been specifically advocated by and supported by commenters.  y# \-Ѝ# djp P7CP# Clearcomm, L.P., Americall International, L.L.C., and Chase Telecommunications, L.P. ex parte letter, September 17, 1997. We also  \ -have taken steps to make our option attractive to those who have built out their systems.+  # \x-Ѝ# djp P7CP# Under each of the options, those who have built out have an opportunity to keep the licenses in those markets where they have built out subject to certain restrictions designed to prevent "cherry picking."+ In addition, it appears from recent press reports, that our options may even be attractive to  \ -those licensees who are in bankruptcy.  k# \-Ѝ# djp P7CP# Although, in general, I am loathe to comment on a pending litigation matter, because this matter was reported in the press and my dissenting colleague raises it in his dissent, I feel I may briefly discuss it here. I am, however, deeply disappointed that my colleague, an experienced litigator, would see fit to include in his  uS<-separate statement the advice of our bankruptcy counsel as to our conduct of pendi#djp P7CP#ng litigation. Moreover,  uS-any implication that our counsel's advice supports only the Chairman's position is simply incorrect. #djp P7CP# A third party has petitioned the bankruptcy court  \-in the Pocket bankruptcy matter, seeking to purchase Pocket's assets and resume its  \y-installment payments.y< # \f-ԍ# djp P7CP# "National Telecom Makes Unsolicited $1.5 Billion Bid For Pocket," Communications Daily, October 3, 1997. This development generally confirms the wisdom of my initial position that the best thing to do was to simply enforce the rules, and let the market work. In any event, this development supports the majority's belief that the options we have adopted are sufficiently attractive to encourage parties to invest in even the most troubled of C Block licensees.  \-Bankruptcy Concerns xIt may well be, however, that our menu approach does not appeal to every licensee and that some C Block licensees will reject all the options and go into bankruptcy. This is neither a surprise to me nor a development that causes me any serious alarm. In fact, this is a risk I am willing to take. My dissenting colleague's statements to the contrary notwithstanding, it is not the Commission's job to bail out every C Block licensee. Some"eU,**" bidders simply made imprudent business decisions, and despite our desire to assist small businesses in starting wireless businesses, the Commission's C Block auction process only  \-offered opportunities, not guarantees of success. Our job here is to make sure that the public interest is served. The decision we make today strikes the right balance between our responsibility to preserve the integrity and credibility of our rules and our obligation to be fair to all licensees including those who are successful and those who find themselves in trouble. xAlthough I am not indifferent to the sad plight of the financially troubled licensees, or to the delays in service and costs to the Commission associated with a bankruptcy proceeding, I disagree with my dissenting colleague that we should make the threat of bankruptcy the key driver of our decision today. There are three main reasons for my view. First, bankruptcies are a normal activity of our commercial world and, in our role as lender, should be expected. In fact, since, as Commissioner Ness astutely noted, the Commission did not even check applicants' financial status as a traditional lender would have, it truly would have been extraordinary had there been no C Block bankruptcies. The Commission has litigated many a bankruptcy before, and I have full faith in our counsel to obtain the best result possible given our strong case. xSecond, despite assertions by my dissenting colleague to the contrary, I do not think the presence of a C Block licensee as the "fifth competitor" in the market is the key to competition in the wireless industry. Even without a C Block licensee in all of the  \-markets, competition in the wireless market will continue to flourish.# \-Ѝ# djp P7CP# It is worth noting that our rules do not require PCS licensees to build out their systems in less than 5 years in any case. 47 CFR  21.930. The combination of four PCS and cellular players, each with more than 25 MHz of spectrum, together with the D, E and F Block licensees, each with 10 MHz, and an enhanced SMR provider makes for a vibrant competitive mix. Nor do I believe that the whole C Block will fail if the largest competitors do not build out their systems immediately. When we declined to adopt a single technology standard for PCS, we left open the possibility that there would be situations where parties would have to roam on PCS blocks other than their own. Although a delay in the roll out of service by a third PCS competitor may make roaming agreements a bit more difficult to negotiate, with the recent advancements of dual mode phones, carriers will soon have four wireless systems on which to roam. xFinally, I disagree with my dissenting colleague's characterization of the C Block as "a wasting asset." If there is one thing that I have learned in my years in the dynamic wireless industry, it is foolish to try and predict the future. Spectrum and services once thought to have little value have often proven to be extremely valuable. For example, C Block spectrum which some knowledgeable parties thought would sell for significantly less than A and B block spectrum far outstripped those values. Although time to market is certainly one factor in determine the value of spectrum, I think the value of the C Block licenses in the future will depend on many factors, including developments in technology and the amount and type of other spectrum available for similar uses. ":&VA,**%"Ԍ \-Conclusion  \-xIn sum, I support the majority's decision today with full confidence that we have made a wise and fair decision. I hope that the regulatory certainty that will flow from our menu approach will finally allow the C Block licensees to get back to the business of  \-building out their systems.# \-ԍ # djp P7CP# It does seem fitting somehow that this Commission, who cut its first teeth on the PCS auction and service rules back in the summer of 1994, finish its term with yet another major PCS decision.  \_-T