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Before the
Federal Communications Commission
Washington, D.C. 20554
In re Application of )
)
Northeast Communications of Wisconsin, Inc. ) File No.
EB-02-IH-0768
) NAL/Acct. No. 00332080022
For C Block Facilities in the ) FCC Account ID
No. 0442010372
710-716 and 740-746 MHz Bands ) FRN No. 0002706190
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: August 26, 2003
Released: August 27, 2003
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. By this Notice of Apparent Liability for Forfeiture
(the ``NAL''), we find Northeast Communications of Wisconsin,
Inc. (``Northeast'') apparently liable for a monetary forfeiture
in the amount of $100,000.00. For the reasons stated below, we
conclude that Northeast, an applicant in the Commission's August
27-September 18, 2002, auction of 740 Lower 700 MHz Band C and D
block geographic area licenses (``Auction No. 44''), apparently
violated section 1.2105(c) of the Commission's rules1 during the
auction with Star Wireless, LLC (``Star''), another applicant and
a participating bidder in the same auction.
II. BACKGROUND
2. In September 2002, the Commission received information
that representatives of Star and Northeast had engaged in certain
communications during the course of Auction No. 44.2
Subsequently, the Enforcement Bureau (the ``Bureau'') conducted
an investigation of those contacts. During the course of that
investigation, on July 2, 2003, the Bureau sent letters of
inquiry to both applicants,3 to which Star4 and Northeast5
respectively responded.
3. The Commission's Rules. In order to enhance and ensure
the competitiveness of markets for communications services, the
Commission has adopted rules designed to prevent collusive
conduct during auctions, facilitate the detection of such
misconduct, and maintain public confidence in the integrity of
the auction process. 6 If collusive conduct were permitted
during the auction process, the result could be the elimination
of potential participants in auctions and competitors in the
marketplace.7 Thus, section 1.2105(c) of the Commission's rules,
the anti-collusion rule, prohibits applicants for any of the same
geographic license areas from communicating with each other
during an auction about their own or each other's or any other
competing applicant's bids or bidding strategies, or discussing
settlement agreements, unless such applicants are members of a
bidding consortium or other bidding arrangement that they have
identified in their FCC Form 175 (``short-form'') applications.8
The FCC Form 175 application must be submitted by all parties
interested in participating in an auction in order to qualify for
such participation.9
4. The prohibition against collusive communications set
forth in section 1.2105(c) takes effect on the pre-auction short-
form application deadline and remains in place until the down
payment deadline, after the close of the auction.10 This
prohibition expressly relates to all auction applicants, which
are defined by section 1.2105(c)(7)(i) to include ``all
controlling interests in the entity submitting a short-form
application to participate in an auction (FCC Form 175), as well
as all holders of'' certain ownership interests, ``and all
officers and directors of that entity.'' Moreover, the
Commission has repeatedly made clear that the prohibition against
collusion contained in section 1.2105(c) applies to all entities
that file a short-form application, regardless of whether they
are qualified to bid.11 The Commission has also stressed that
any applicant found in violation of the anti-collusion rule faces
the potential sanctions of license revocation or monetary
forfeiture and may be prohibited from participating in future
auctions.12
5. Section 1.2105(a)(2) of the Commission's rules requires
every auction applicant to disclose in its short-form application
certain information necessary to ensure compliance with the anti-
collusion rule.13 For instance, an auction applicant must
identify in its short-form application the licenses for which it
wishes to bid14 and must disclose all parties with whom it has
entered into any consortium agreements, joint ventures,
partnerships or other agreements, arrangements, or understandings
of any kind relating to the licenses being auctioned.15
Applicants must also certify that they have not and will not
enter into any explicit or implicit agreements, arrangements or
understandings of any kind with any parties other than those
identified in their short-form application regarding the amount
of their bids, bidding strategies, or the particular licenses on
which they will or will not bid.16
6. Auction No. 44 Public Notices. Consistent with its
standard practice, the Wireless Telecommunications Bureau issued
a series of public notices regarding auction procedures prior to
the commencement of Auction No. 44 in which it repeatedly warned
auction applicants of the need to comply with the anti-collusion
rule.17 For example, in its Public Notice issued on May 24,
2002, announcing the status of the short-form applications filed
for the auction, the Wireless Telecommunications Bureau included
a reminder that ``Section 1.2105(c) of the Commission's Rules
prohibits applicants for the same geographic license area from
communicating with each other during the auction about bids,
bidding strategies or settlements unless they have identified
each other as parties with whom they have entered into agreements
under section 1.2105(a)(2)(viii). For Auction No. 44, this
prohibition became effective at the filing deadline of short-form
applications on Wednesday, May 8, 2002, and will end on the post-
auction down payment deadline.''18 Other pre-auction public
notices included similar reminders.19
7. On June 26, 2002, after qualified bidders for the
auction had been identified, the Wireless Telecommunications
Bureau issued a Public Notice that reminded parties that section
1.2105(c) applies to communications involving disqualified
applicants, as well as those involving bidders in the auction:
``All parties that submitted short-form applications to
participate in Auction No. 44, including but not limited to
qualified bidders, are reminded that they remain subject to the
Commission's anti-collusion rule until the post-auction down
payment deadline.''20 On August 7, 2002, only three weeks before
the beginning of the auction, the Wireless Telecommunications
Bureau's Public Notice providing a revised list of qualified
bidders contained a similar admonition: ``All parties that
submitted short-form applications to participate in Auction No.
44, including but not limited to qualified bidders (regardless of
whether they elected to depart from the auction) are reminded
that they remain subject to the Commission's anti-collusion rule
until the post-auction down payment deadline.''21
8. FCC Forms 175 and Upfront Payments. In order to
participate in Auction No. 44, each applicant was required to
submit an FCC Form 175 by May 8, 2002.22 As noted in the
Wireless Telecommunications Bureau's Public Notice announcing the
status of applications, Star and Northeast each filed a timely
FCC Form 175 to participate in the auction.23 In its FCC Form
175 (the ``Star FCC Form 175''), Star indicated that it intended
to bid for all 740 available licenses and that David G. Behenna,
the President of PCSGP, Inc.,24 its operating manager, would
serve as its authorized bidder.25 The application states that
Star is a Delaware limited liability corporation located in
Rolling Hills Estates, California, formed to acquire and develop
Commission authorizations, but that it holds no such
authorizations. According to the application, the only affiliate
of Star that holds a Commission authorization is PCS Partners,
L.P., which holds the F-Block PCS license for the Plattsburgh,
New York BTA (BTA352) and was the high bidder in Auction No. 39
for 32 Location Monitoring Service authorizations, for which its
application remains pending.26 The David G. Behenna Trust, of
which Mr. Behenna is the Trustee, holds 97% of the membership
interests in Star.27 According to its FCC Form 175, neither Star
nor any of its controlling interest holders had entered into any
agreements, arrangements or understandings with any third party
regarding Star's Auction No. 44 bidding activity or post-auction
structure at the time of application.28
9. In its FCC Form 175 application (the ``Northeast FCC
Form 175''), Northeast expressed its intention to bid for 734 of
the licenses available in Auction No. 44. The application
identifies Patrick D. Riordan, Robert H. Riordan and Daniel Fabry
as Northeast's authorized bidders.29 According to the
application, Northeast is a closely held telecommunications
holding company located in Green Bay, Wisconsin, owned and
controlled by four siblings, Patrick D. Riordan, Robert H.
Riordan, Micki Harper and Ray J. Riordan, who are each officers
and directors and collectively hold over 52 percent of the stock
of Northeast. Northeast has interests in entities that hold PCS,
cellular and cable television authorizations in Wisconsin, Iowa
and Minnesota.30 In its application, Northeast certifies that it
had entered into two joint bidding arrangements for the auction,
one with Central Wisconsin Communications, Inc., West Wisconsin
Telcom Cooperative, Inc. and Chequamegon Telephone Cooperative,
Inc. and a second with Alpine Communications L.C. Northeast
further certifies that ``there are no joint bidding arrangements
with any other party other than that disclosed herein.''31
Northeast also represented that it ``will not discuss bid
strategies of any of the parties discussed below with any party
filing for a common market(s) unless those parties also have a
joint bidding arrangement and identified [sic] in an FCC Form 175
filing.''32
10. The date by which all applicants for Auction No. 44
were required to submit an upfront payment in order to become
qualified to bid in the auction was May 30, 2002.33 Star timely
made the required payment, qualifying it to bid in the auction.34
However, because Northeast failed to make such a payment due to
``limited availability of funds,''35 it was not qualified to bid
in the auction,36 which commenced on August 27, 2002.37
11. Conversations Prior to Short-Form Filing Deadline. It
appears that, before Auction No. 44, representatives of Star and
Northeast had engaged in business discussions. In 1999, Steve
Schneider, who at the time was Northeast's Vice President of
Wireless Operations,38 met Mr. Behenna at the Cellular
Telecommunications & Internet Association (``CTIA'') convention,
at which the two men discussed the high yield debt market.39
Because Northeast was interested in exploring such a financing
opportunity, on December 6, 1999, Mr. Behenna met with Patrick D.
Riordan, Robert H. Riordan, Mr. Schneider and Northeast Treasurer
Mark Naze at Northeast's Green Bay offices to discuss the high
yield debt market.40 As a follow-up to the meeting, Mr. Behenna
prepared a 58-page document, dated December 29, 1999, entitled,
``Introduction to High Yield Debt Market.41 Although Mr. Behenna
made several follow-up calls to Northeast to determine if it was
interested in pursuing such funding, nothing further came of the
discussions.42
12. Moreover, sometime between the 1999 CTIA convention and
Mr. Schneider's departure from Northeast in July 8, 2001, Mr.
Schneider contacted Mr. Behenna to see if Mr. Behenna had any
interest in acquiring Northeast's North Dakota PCS properties.43
Again, nothing came of those discussions.44
13. Communications During the Auction. As noted supra,
Auction No. 44 commenced on August 27, 2002. On August 28, 2002,
Mr. Behenna called Mr. Patrick Riordan and left a voice message
for him, requesting that Mr. Riordan return the call only if
Northeast was not participating in the auction.45 According to
phone records provided by Northeast, on August 29, 2002, Mr.
Riordan returned Mr. Behenna's call at 7:18 a.m. Mountain Time
(9:18 Eastern Time) and the two spoke for approximately six
minutes.46 Mr. Behenna asked Mr. Riordan whether Northeast was
interested in any of the markets in the auction. Mr. Riordan
identified four or five Wisconsin markets, including Green Bay,
Appleton, Wausau and Wisconsin RSA No. 10.47 Mr. Riordan did so
``because we consider those areas to be of most interest to us in
the provision of communications services on a going forward
basis.''48 As he explained further in his response to the
Bureau's letter of inquiry, ``[w]hile we still have PCS
authorizations in Iowa, and several PCS interests in South Dakota
and Michigan, our area of concentration is Wisconsin, especially
the area surrounding Green Bay.''49
14. Auction Conduct. According to the Commission's records
of the auction,50 prior to the August 29, 2002, call with
Northeast, Star did not place bids for any licenses in Wisconsin
or Iowa markets. The only bids that Star made before the call
were made on August 28, for licenses in San Jose and Oxnard,
California, in round 4, and for Tampa-St. Petersburg, Florida, in
round 6. Star placed no additional bids for these licenses.
Commencing on August 29, at 9:58:48 a.m., Eastern Time, Star
began to bid actively for licenses in the Wisconsin markets in
which Northeast's President Riordan had expressed an interest in
the call earlier that morning. Thus, Star placed round 7 bids
for Appleton, Green Bay and Wausau, Wisconsin, and a second bid,
in round 9, for Appleton.51 On August 30, it placed bids in
round 11 for Wausau, Wisconsin 4 (Marinette) and Wisconsin 10
(Door); on September 3, it placed bids for Wausau (rounds 13 and
15) and Appleton (round 14). On September 4, it made a round 17
bid for Wisconsin 10 (Door), for which it bid again on September
5 (round 19). It also bid on September 5 in round 19 for Green
Bay and for Cedar Rapids, Iowa.
15. On September 18, after 84 bidding rounds, the auction
closed. On September 20, 2002, the Commission released a Public
Notice announcing the winning bidders, which indicated that Star
was the high bidder for Lower 700 Band C Block licenses for four
geographic areas: for Green Bay, Wisconsin, Wisconsin 4
(Marinette), Wisconsin 10 (Door) and Cedar Rapids, Iowa.52
16. Post-Auction Conduct. In response to the Bureau's
letter of inquiry, Northeast stated that no representatives of
Northeast and Star have had any discussions regarding Northeast's
acquisition of any of the authorizations for which Star was the
successful bidder in Auction No. 44 or regarding Northeast's
participation in any business operation contemplating the use of
such facilities.53 However, earlier this year, Northeast
inquired by voice message to Mr. Behenna whether he was
interested in acquiring Northeast's PCS interests in South
Dakota. According to Northeast, Mr. Behenna did not respond to
that inquiry.54
III. DISCUSSION
17. Under section 503(b)(1) of the Communications Act of
1934, as amended (the ``Act''), any person who is determined by
the Commission to have willfully or repeatedly failed to comply
with any provision of the Act or any rule, regulation, or order
issued by the Commission shall be liable to the United States for
a forfeiture penalty.55 In order to impose such a forfeiture
penalty, the Commission must issue a notice of apparent
liability, the notice must be received, and the person against
whom the notice has been issued must have an opportunity to show,
in writing, why no such forfeiture penalty should be imposed.56
The Commission will then issue a forfeiture if it finds, by a
preponderance of the evidence, that the person has willfully or
repeatedly violated the Act or a Commission rule.57 As we set
forth in greater detail below, we conclude under this standard
that Northeast is apparently liable for a forfeiture for its
apparent willful and repeated violation of section 1.2105(c) of
the Commission's rules.58
A. Apparent Violation of the Anti-Collusion Rule
18. The language of section 1.2105(c) of the Commission's
rules, pertinent precedent, and the auction public notices issued
by the Wireless Telecommunications Bureau, including those
involving Auction No. 44 issued before the subject auction, make
clear that the anti-collusion rule applies to all auction
applicants, whether or not they were qualified to bid. Thus, the
rule applied to both Star and Northeast, despite the fact that
Northeast had been disqualified from bidding because its
``limited availability of funds'' had prevented it from making
the required upfront payment. Further, the evidence before us
indicates that Northeast apparently violated section 1.2105(c),
the anti-collusion rule, by discussing markets with Star for
which both entities applied in Auction No. 44 and by
collaborating with Star with respect to bidding strategy. On
August 28, 2002, Star, an applicant that had applied to bid on
all of the markets that Northeast had identified in its Form 175
application, telephoned Mr. Patrick Riordan, Northeast's
President, specifically to solicit information concerning any
markets available in Auction No. 44 in which Northeast might have
a business interest. Rather than only reporting the incident to
the Commission, Mr. Riordan returned Mr. Behenna's call and
identified for Mr. Behenna five Wisconsin markets in which the
auction-disqualified Northeast had an interest, for which Star
immediately and aggressively started to bid.
19. It is not necessary for us to find that a disclosure of
information actually altered Star's bidding strategy or was used
to its advantage in order to issue a penalty under the anti-
collusion rule. A violation of the rule results from the mere
communication of prohibited information. In the instant case,
however, Star completely revamped its bidding strategy after
Northeast's disclosure to it of the markets in which it was
interested. The Commission's bidding records reveal that, after
Mr. Behenna and Mr. Riordan spoke early on the morning of August
29, 2002, Star began to bid actively and aggressively for
Wisconsin and Iowa markets in which it had previously shown no
interest in the auction, and it placed no additional bids for the
markets for which it had bid before the discussion. As a result
of this revised bidding strategy, Star was the winning bidder for
C block licenses in three Wisconsin markets and the Cedar Rapids,
Iowa, market. Although Star has no operations or licenses in
those markets, Northeast has cellular and/or PCS licenses and
telecommunications operations in or adjacent to each area in
which Star was the successful bidder in Auction No. 44.59 The
three Wisconsin markets are situated near Green Bay, the location
of Northeast's corporate offices and its admitted ``area of
concentration.'' Similarly, the Cedar Rapids, Iowa, market for
which Star was the successful bidder is adjacent to two markets
for which a Northeast affiliate is the licensee. These facts,
combined with the drastic change in Star's bidding subsequent to
Mr. Behenna's August 29 conversation with Mr. Riordan, renders
completely implausible any suggestion that Star's inquiry to
Northeast and Northeast's responding disclosure to Star was
unrelated to its bidding strategy and not in violation of the
anti-collusion rule, 47 C.F.R. 1.2105(c). Star's bidding
strategy was significantly affected by the improper contact that
David G. Behenna, its controlling principal and designated
bidder, initiated with Northeast, in violation of that rule.
20. The factual record also underscores the importance of
enforcing the Commission's rules prohibiting the type of auction-
related communications that occurred between Mr. Behenna and Mr.
Riordan. Star learned of Northeast's interest in the markets
which Mr. Riordan identified for Mr. Behenna and, thus, knew
about potential post-auction demand for the licenses in those
markets. At the same time, Northeast took advantage of an
opportunity to influence Star's auction plan and strategy for its
own purposes. In effect, Northeast was able to participate in
the auction from which it had been disqualified to do so without
providing notice to other applicants that might wish to compete
against it. Indeed, Mr. Riordan's disclosure gave Star exclusive
access to information concerning Northeast's interest in
particular licenses that was unavailable to other auction
participants bidding on the Wisconsin and Iowa markets in
question.
B. Proposed Forfeiture
21. The Commission's Forfeiture Policy Statement60
specifies that the Commission shall impose a forfeiture based
upon consideration of the factors enumerated in section
503(b)(2)(D) of the Act, 47 U.S.C. § 503(b)(2)(D), such as ``the
nature, circumstances, extent and gravity of the violation, and,
with respect to the violator, the degree of culpability, any
history of prior offenses, ability to pay, and such other matters
as justice may require.''61 In this case, taking all of these
factors into consideration, we find that Northeast is apparently
liable for a forfeiture of $100,000.00.
22. Northeast willfully engaged in conduct in violation of
section 1.2105(c) of the Commission's rules by discussing bidding
strategy with a competing applicant during Auction No. 44. In
response to the voice message that Mr. Behenna left for Mr.
Patrick Riordan on August 28, 2002, which it may be inferred that
Mr. Behenna left in order to initiate a discussion concerning
bidding strategy, on August 29, 2002, Mr. Riordan telephoned Mr.
Behenna. As noted supra, the August 29 conversation concerned
bidding strategy. Violations of the anti-collusion rule during
an auction directly threaten the integrity and competitiveness of
the auctions process. Northeast and Star intended to violate the
anti-collusion rule by engaging in communications regarding
bidding strategy -- precisely the type of communications that the
rule was adopted to prohibit.
23. Pursuant to section 1.80 of the Commission's rules,
Northeast may avail itself of the opportunity to present
mitigating evidence showing why a forfeiture should not be
imposed or why the amount should be adjusted downward. Upon
receipt of such evidence, we will consider all relevant factors,
including Northeast's overall compliance history.
IV. ORDERING CLAUSES
24. Accordingly, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. § 503(b), and
section 1.80 of the Commission's rules, 47 C.F.R. § 1.80,
Northeast Communications of Wisconsin, Inc. is hereby NOTIFIED of
its APPARENT LIABILITY FOR FORFEITURE in the amount of One
Hundred Thousand Dollars ($100,000.00) for its willful and
repeated violation of section 1.2105(c) of the Commission's
rules, 47 C.F.R. § 1.2105(c).
25. Therefore, IT IS HEREBY ORDERED, pursuant to section
1.80 of the Commission's Rules, 47 C.F.R. § 1.80, that within
thirty (30) days of the release date of this Notice, Northeast
Communications of Wisconsin, Inc. SHALL PAY the full amount of
the proposed forfeiture or shall file a written statement seeking
reduction or cancellation of the proposed forfeiture.
26. Payment of the forfeiture may be made by mailing a
check or similar instrument, payable to the order of the Federal
Communications Commission, to Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, Post Office
Box 73482, Chicago, Illinois 60673-7482. The payment must
include the FCC Registration Number (FRN) referenced above and
must also note the NAL/Acct Number referenced above.
27. Payment of the forfeiture may be made by mailing a
check or similar instrument, payable to the order of the Federal
Communications Commission, to Forfeiture Collection Section,
Finance Branch, Federal Communications Commission, P.O. Box
73482, Chicago, Illinois 60673-7482. The payment must include
the FCC Registration Number (FRN) referenced above and also must
note the NAL/Acct. Number referenced above.
28. The response, if any, MUST BE MAILED to Maureen F. Del
Duca, Chief, Investigations and Hearings Division, Enforcement
Bureau, Federal Communications Commission, 445 12th Street, SW,
Room 3-B443, Washington, D.C. 20554 and MUST INCLUDE the
NAL/Acct. Number referenced above.
29. The Commission will not consider reducing or canceling
a forfeiture in response to a claim of inability to pay unless
the respondent submits: (1) federal tax returns for the most
recent three-year period; (2) financial statements prepared
according to generally accepted accounting practices (``GAAP'');
or (3) some other reliable and objective documentation that
accurately reflects the respondent's current financial status.
Any claim of inability to pay must specifically identify the
basis for the claim by reference to the financial documentation
submitted.
30. Requests for payment of the full amount of the
forfeiture proposed in this NAL under an installment plan should
be sent to: Chief, Revenue and Receivables Operations Group, 445
12th Street, SW, Washington, DC 20554.62
31. Under the Small Business Paperwork Relief Act of 2002,
Pub L. No. 107-198, 116 Stat. 729 (June 28, 2002), the FCC is
engaged in a two-year tracking process regarding the size of
entities involved in forfeitures. If Northeast qualifies as a
small entity and if it wishes to be treated as a small entity for
tracking purposes, please so certify to us within thirty (30)
days of this NAL, either in its response to the NAL or in a
separate filing to be sent to the Investigations and Hearings
Division. Its certification should indicate whether Northeast,
including its parent entity and its subsidiaries, meets one of
the definitions set forth in the list provided by the FCC's
Office of Communications Business Opportunities (``OCBO'') set
forth in Attachment E to this NAL. This information will be used
for tracking purposes only. Northeast's response or failure to
respond to this question will have no effect on its rights and
responsibilities pursuant to section 503(b) of the Communications
Act. If Northeast has questions regarding any of the information
contained in Attachment E, it should contact OCBO at (202) 418-
0990.
32. IT IS FURTHER ORDERED that a copy of this Notice of
Apparent Liability For Forfeiture shall be sent, by Certified
Mail Return Receipt Requested, to Northeast Communications of
Wisconsin, Inc. to the attention of Patrick D. Riordan, 450
Security Boulevard, Green Bay, Wisconsin 54313, and a copy to its
counsel, Timothy E. Welch, Esquire, Hill & Welch, 1330 New
Hampshire Avenue, N.W., Suite 113, Washington, D.C. 20036.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
ATTACHMENT A
NORTHEAST COMMUNICATIONS OF WISCONSIN, INC.
TELECOMMUNICATIONS INTERESTS
Northeast Communications of Wisconsin, Inc. holds the license for
PCS Station KNLF999, Green Bay, WI (BTA173). It also holds
interest in the following other Commission licensees:
1. Brown County MSA Cellular Limited Partnership
Cellular Service Provider
100% Interest
Station KNKA547, Green Bay, WI (CMA 186)
2. Wisconsin RSA No. 4 Limited Partnership
Cellular Service Provider
25% Interest
Station KNKN395, Wisconsin 4 (Marinette) (CMA 711)
3. Wisconsin RSA-10 Limited Partnership
Cellular Service Provider
55% Interest
Station KNKN294, Wisconsin 10 (Door) (CMA 717)
4. Metro Southwest PCS, LLC
PCS Service Provider
50% Interest (application pending for approval to increase
interest to 100%)
Station KNLF931, Appleton-Oshkosh, WI (BTA 018)
Station KNLG938, Fond duc Lac, WI (BTA 148)
Station KNLG939, Iron Mountain, MI (BTA 206)
Station KNLG940, Ironwood, MI (BTA 207)
Station KNLG941, Manitowoc, WI (BTA 276)
Station KNLG942, Sheboygan, WI (BTA 417)
Station KNLG943, Wausau-Rhinelander, WI (BTA 466)
5. Wausau Cellular Telephone Company Limited Partnership
Cellular Service Provider
72.48% Interest
Station KNKA619, Wausau, WI (CMA 263)
6. NTN PCS, LLC
PCS Service Provider
50% Interest
Stations KNLG962 and WPTL469, Aberdeen, SD (BTA 001)
7. Iowa RSA #3 LLC
Cellular Service Provider
54.84% Interest (assignment application pending-File No.
0001362247)
Station KNKN351, Iowa 3 (Monroe) (CMA 414)
8. Iowa RSA #12 LLC
Cellular Service Provider
90% Interest (assignment application pending- File No.
0001362317)
Station KNKN642, Iowa 12 (Winneshiek) (CMA423)
9. NSP, LC
Cellular Service Provider
20% Interest (transfer application pending-File No.
0001365077)
Station KNKN314, Iowa 11 (Hardin) (CMA 422)
10. Nsighttel Wireless, LLC
PCS Service Provider
100% Interest
Station KNLH428, Clinton, IA-Sterling, IL (BTA 086)
Station KNLH429, Ft. Dodge, IA (BTA 150)
Station KNLH432, Marshalltown, IA (BTA 283)
Station KNLH433, Mason City, IA (BTA 285)
Station KNLH435, Ottumwa, IA (BTA 337)
Station KNLH436, Waterloo-Cedar Falls, IA (BTA 462)
Station WPOJ777, Escanaba, MI (BTA 132)
Station WPOJ778, Houghton, WI (BTA 194)
Station WPOJ779, Marquette, MI (BTA 282)
Station WPOJ780, Petoskey, MI (BTA 345)
Station WPQR272, Rochester-Austin-Albert Lea, MI (BTA 378)
Station KNLH353, Stevens Point-Marshfield, WI (BTA 432)
Station WPOJ781, Traverse City, MI (BTA 446)
Northeast Communications of Wisconsin, Inc. also owns 100% of the
following other telecommunications businesses, which each operate
from its Green Bay address:
1. Northeast Telephone Long Distance Co.: Interchange Carrier
2. Northeast Telephone Company: Local Exchange Carrier
3. Brown County CLEC, LLC: CLEC
4. NET LEC, LLC: CLEC
5. NET Cable, Inc.: Cable Television Provider
ATTACHMENT B
BIDDING RECORD
AUCTION NO. 44
STAR WIRELESS, LLC
Table I - All bids placed by Star Wireless, LLC
Date Rou- Market Market Name Gross Bid
nd # Amount
8/28/- 4 027 San Jose, CA $620,000.00
02
8/28/- 4 073 Oxnard-Simi Valley- $249,000.00
02 Ventura, CA
8/28/- 6 022 Tampa-St. Petersburg, FL $651,000.00
02
8/29/- 7 125 Appleton-Oskosh-Neenah, WI $105,000.00
02
8/29/- 7 186 Green Bay, WI $58,000.00
02
8/29/- 7 263 Wausau, WI $39,000.00
02
8/29/- 8 019 Denver-Boulder, CO $611,000.00
02
8/29/- 9 125 Appleton-Oskosh-Neenah, WI $161,000.00
02
8/30/- 11 263 Wausau, WI $50,000.00
02
8/30/- 11 717 Wisconsin 10 - Door $37,000.00
02
8/30/- 11 711 Wisconsin 4 - Marinette $34,000.00
02
9/03/- 13 263 Wausau, WI $68,000.00
02
9/03/- 14 125 Appleton-Oskosh-Neenah, WI $207,000.00
02 *
9/03/- 15 263 Wausau, WI $97,000.00
02
9/04/- 17 717 Wisconsin 10 - Door $46,000.00
02
9/05/- 19 186 Green Bay, WI $67,000.00
02
9/05/- 19 717 Wisconsin 10 - Door $59,000.00
02
9/05/- 19 195 Cedar Rapids, IA $51,000.00
02
(Bold print denotes
geographic area in which
or adjacent to an area for
which a Northeast
affiliate, but not Star,
holds cellular and/or PCS
authorizations; italics
denotes winning high bid
for area)
* Star's $207,000 bid in Round 14 for Market #125 (Appleton-
Oskosh-Neenah, WI) was subsequently withdrawn in Round 19.
Table II - All Bids Received in CMA027 (San Jose, CA)
Round Bidder Gross Bid Amount
1 Cavalier Group, LLC $449,000.00
1 Aloha Partners, L.P. $449,000.00
2 Aloha Partners, L.P. $539,000.00
4 Star Wireless LLC $620,000.00
5 Aloha Partners, L.P. $729,000.00
38 David M. Gates $765,000.00
39 Aloha Partners, L.P. $822,000.00
40 David M. Gates $894,000.00
43 Aloha Partners, L.P. $948,000.00
44 David M. Gates $1,024,000.00
47 Aloha Partners, L.P. $1,086,000.00
48 David M. Gates $1,173,000.00
58 Aloha Partners, L.P. $1,232,000.00
59 David M. Gates $1,324,000.00
60 Aloha Partners, L.P. $1,440,000.00
61 David M. Gates $1,575,000.00
62 Aloha Partners, L.P. $1,728,000.00
63 David M. Gates $1,898,000.00
Table III - All Bids Received in Market 073 (Oxnard-Simi Valley-
Ventura, CA)
Round Bidder Gross Bid Amount
1 McBride Spectrum Partners $221,000.00
I, LLC
1 Cavalier Group, LLC $201,000.00
4 Star Wireless LLC $249,000.00
6 Harbor Wireless, LLC $282,000.00
6 McBride Spectrum Partners $282,000.00
I, LLC
6 Aloha Partners, L.P. $282,000.00
7 Aloha Partners, L.P. $338,000.00
26 David M. Gates $355,000.00
41 Aloha Partners, L.P. $373,000.00
42 David M. Gates $401,000.00
45 Aloha Partners, L.P. $425,000.00
Table IV - All Bids Received in Market 022 (Tampa-St. Petersburg,
FL)
Round Bidder Gross Bid Amount
1 Aloha Partners, L.P. $590,000.00
6 Star Wireless LLC $651,000.00
7 Aloha Partners, L.P. $750,000.00
Table V - All Bid Received in Market 125 (Appleton-Oskosh-Neenah,
WI)
Round Bidder Gross Bid Amount
3 3G COMM, LLC $95,000.00
7 Star Wireless LLC $105,000.00
8 3G COMM, LLC $137,000.00
9 Star Wireless LLC $161,000.00
13 3G COMM, LLC $179,000.00
14 Star Wireless LLC $207,000.00 *
20 3G COMM, LLC $179,000.00
* Star's $207,000 bid in Round 14 for Market #125 (Appleton-
Oskosh-Neenah, WI) was subsequently withdrawn in Round 19.
Table VI - All Bids Received in Market 186 (Green Bay, WI)
Round Bidder Gross Bid Amount
7 Star Wireless LLC $58,000.00
15 3G COMM, LLC $64,000.00
19 Star Wireless LLC $67,000.00
Table VII - All Bids Received in Market 263 (Wausau, WI)
Round Bidder Gross Bid Amount*
1 CENTRAL WISCONSIN $35,000.00
COMMUNICATIONS, INC.
7 Star Wireless LLC $39,000.00
8 CENTRAL WISCONSIN $45,000.00
COMMUNICATIONS, INC.
11 Star Wireless LLC $50,000.00
12 CENTRAL WISCONSIN $58,000.00
COMMUNICATIONS, INC.
13 Star Wireless LLC $68,000.00
14 CENTRAL WISCONSIN $81,000.00
COMMUNICATIONS, INC.
15 Star Wireless LLC $97,000.00
16 CENTRAL WISCONSIN $116,000.00
COMMUNICATIONS, INC.
Table VIII - All Bids Received in Market 019 (Denver-Boulder, CO)
Round Bidder Gross Bid Amount
1 Aloha Partners, L.P. $555,000.00
8 Star Wireless LLC $611,000.00
9 Aloha Partners, L.P. $703,000.00
Table IX - All Bids Received in Market 717 (Wisconsin 10 - Door)
Round Bidder Gross Bid Amount
11 Star Wireless LLC $37,000.00
15 3G COMM, LLC $41,000.00
17 Star Wireless LLC $46,000.00
18 3G COMM, LLC $54,000.00
19 Star Wireless LLC $59,000.00
Table X - All Bids Received in Market 711 (Wisconsin 4 -
Marinette)
Round Bidder Gross Bid Amount
11 Star Wireless LLC $34,000.00
Table XI - All Bids Received in Market 195 (Cedar Rapids, IA)
Round Bidder Gross Bid Amount
19 Star Wireless, LLC $51,000.00
_________________________
1 47 C.F.R. § 1.2105(c). Section 1.2105(c)(1) states, in
pertinent part: ``[A]fter the [FCC Form 175] short-form
application filing deadline, all applicants for licenses in any
of the same geographic license areas are prohibited from
cooperating or collaborating with respect to, discussing with
each other, or disclosing to each other in any manner the
substance of their own, or each other's, or any other competing
applicant's bids or bidding strategies, or discussing or
negotiating settlement agreements, until after the down payment
deadline, unless such applicants are members of a bidding
consortium or other joint bidding arrangement identified on the
bidder's short-form application pursuant to §
1.2105(a)(2)(viii).'' 47 C.F.R. § 1.2105(c)(1).
2 See Letter from E. Ashton Johnson, Esquire, and Paul W.
Jamison, Esquire, counsel for Star, to Marlene H. Dortch,
Secretary, Federal Communications Commission, dated September 6,
2002 (the ``Star Notification Letter''); Letter from Timothy E.
Welch, Esquire, counsel for Northeast, to Margaret Wiener, Chief,
Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, Federal Communications Commission,
dated September 6, 2002 (the ``Northeast Notification Letter'').
3 See Letter from Maureen F. Del Duca, Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications
Commission, to David G. Behenna, President of PCSGP Inc.,
operating manager of Star, dated July 2, 2003; Letter from
Maureen F. Del Duca, Chief, Investigations and Hearings Division,
Enforcement Bureau, Federal Communications Commission, to Patrick
D. Riordan, President of Northeast, dated July 2, 2003.
4 See Letter from David G. Behenna to Judy Lancaster, Esquire,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, dated July 16, 2003, supplemented by
Letter from Mark J.Tauber, Esquire, to Judy Lancaster, Esquire,
Investigations and Hearings Division, Enforcement Bureau, Federal
Communications Commission, dated July 22, 2003 (collectively,
the ``Star Response''). Pursuant to 47 C.F.R. § 0.459, Star has
requested confidential treatment of the Star Notification Letter
and the Star Response. By Letter to E. Ashton Johnson, Esquire,
and Paul W. Jamieson, Esquire, from Margaret W. Wiener, Chief,
Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, Federal Communications Commission, DA
03-2681 (rel. Aug. 15, 2003), the Wireless Telecommunications
Bureau denied the request relating to the Star Notification
Letter and that denial has become final in the absence of an
application for review filed within five business days. By
Letter from Maureen F. Del Duca, Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications
Commission, to Mark J. Tauber, Esquire, and Paul W. Jamieson,
Esquire, DA 03-2721 (rel. August 26, 2003), the Bureau denied the
request pertaining to the Star Response. In accordance with 47
C.F.R. § 0.459(g), the substance of the documents submitted by
Star that are the subject of the latter confidentiality request
will not be made public unless and until Star has exhausted its
rights of appeal of the ruling as to that request without a
reversal of the denial. Accordingly, the substance of those
documents is not discussed in this NAL.
5 See Letter from Patrick D. Riordan to Maureen F. Del Duca,
Chief, Investigations and Hearings Division, Enforcement Bureau,
Federal Communications Commission, dated July 18, 2003
(``Northeast Response''), and Letter from Timothy E. Welch,
Esquire, to Maureen F. Del Duca, Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications
Commission, dated July 25, 2003 (``Northeast Supplement'').
Northeast requested confidential treatment only of the Northeast
Notification Letter. By Letter to Timothy E. Welch, Esquire,
from Margaret W. Wiener, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, DA 03-2682 (rel.
Aug. 15, 2003), the Wireless Telecommunications Bureau denied
Northeast's request and that denial has become final in the
absence of an application for review filed within five business
days.
6 See Implementation of Section 309(j) of the Communications Act
-- Competitive Bidding, Second Report and Order, 9 FCC Rcd 2348,
2386-88, ¶¶221-226 (1994) (``Competitive Bidding Second Report
and Order'')(``[W]e believe that the competitiveness of the
auction process and of post-auction market structure will be
enhanced by certain additional safeguards designed to reinforce
existing laws and facilitate detection of collusive conduct.'').
7 Competitive Bidding Second Report and Order, 9 FCC Rcd 2348,
2387, ¶223; Implementation of Section 309(j) of the
Communications Act -- Competitive Bidding, Memorandum Opinion and
Order, 9 FCC Rcd 7684, 7687-7688, ¶10 (1994) (``Our anti-
collusion rules are intended to protect the integrity and
robustness of our competitive bidding process.'')
8See note 1, supra.
9 47 C.F.R. § 1.2105(a).
10 47 C.F.R. § 1.2105(c)(1). See also Amendment of Part 1 of the
Commission's Rules- Competitive Bidding Procedures, Order on
Reconsideration of the Third Report and Order, Fifth Report and
Order, and Fourth Further Notice of Proposed Rulemaking, 15 FCC
Rcd 15923 (2000) at 15297-98, ¶¶ 7-8.
11 The Public Notice announcing how parties could apply to
participate in Auction No. 44 explicitly advised potential
participants about the Commission's anti-collusion rule, that the
rule was applicable to all applicants, and that the rule would
apply to all applicants from the deadline for filing short-form
applications until the post-auction down payment deadline. See
Auction of Licenses in the 698-746 MHz Band Scheduled for June
19, 2002, Public Notice, DA 02-563 (WTB rel. March 20, 2002) at 7
(``March 20 Procedures Public Notice'') (``[T]he Commission's
rules prohibit applicants for the same geographic license area
from communicating with each other during the auction about bids,
bidding strategies, or settlements. This prohibition begins at
the short-form application filing deadline and ends at the down
payment deadline after the auction.''). Furthermore, the March
20 Procedures Public Notice directed applicants to a list of
precedents applying the anti-collusion rule, several of which
explicitly applied the rule to applicants that subsequently did
not bid in the auction. Id. at Attachment G (citing, inter alia,
Letter to Robert Pettit, Esquire, from Margaret W. Wiener, Chief,
Auctions and Industry Analysis Division, Wireless
Telecommunications Bureau, Federal Communications Commission, 16
FCC Rcd 10080 (WTB 2000) (declining to except an applicant's
controlling interest from coverage by the anti-collusion rule,
even though the applicant never made an upfront payment for the
auction and was not listed as a qualified bidder); Letter to Mark
Grady, President, Communications Venture PCS Limited Partnership,
from Kathleen O'Brien Ham, Chief, Auctions Division, Wireless
Telecommunications Bureau, Federal Communications Commission, 11
FCC Rcd 10895 (WTB 1996) (``Even when an applicant has withdrawn
its application during the course of the auction, the applicant
may not enter into a bidding agreement with another applicant
bidding on the geographic license areas from which the first
applicant withdrew.'')). See also Implementation of Section
309(j) of the Communications Act - Competitive Bidding, Fourth
Memorandum Opinion and Order, 9 FCC Rcd 6858, 6867 ¶ 50-51
(1994) (rejecting the argument that communications prohibited by
the anti-collusion rule should be permitted during auctions
between active and non-active bidders); Letter to John Reardon,
Secretary to the Board of Directors and General Counsel, Mobex
Communications, Inc., from Amy J. Zoslov, Chief, Auctions and
Industry Analysis Division, Wireless Telecommunications Bureau,
Federal Communications Commission, 13 FCC Rcd 17877 (WTB 1998)
(``When the short-form filing deadline passes, the anti-collusion
rule applies to all applicants with submitted short-form
applications. . . We . . . remind applicants that submitted
applications, once the short-form deadline passes, trigger
application of the anti-collusion rule even if they are later
withdrawn.'').
12 See, e.g., Implementation of Section 309(j) of the
Communications Act-Competitive Bidding, Fifth Report and Order, 9
FCC Rcd 5532, 5570-71 (1994); March 20 Procedures Public Notice
at 8; Auction of Licenses for 698-746 MHz Band: Status of FCC
Form 175 Applications to Participate in the Auction, Public
Notice, DA 02-1213 (WTB rel. May 24, 2002) at 4-5 (``May 24
Status Public Notice''); Auction of Licenses for 698-746 MHz
Band: 128 Qualified Bidders, Public Notice, DA 02-1346 (WTB rel.
June 7, 2002) at 7 (``June 7 Qualified Bidders Public Notice'');
and Auction No. 44- Revised Qualified Bidder Notification, Public
Notice, DA 02-1933 (WTB rel. August 7, 2002) at 8 (``August 7
Revised Qualified Bidders Public Notice'').
13 47 C.F.R. § 1.2105(a)(2).
14 47 C.F.R. § 1.2105(a)(2)(i).
15 47 C.F.R. § 1.2105(a)(2)(viii).
16 47 C.F.R. § 1.2105(a)(2)(ix).
17 March 20 Procedures Public Notice at 8; May 24 Status Public
Notice at 4-5; June 24 Qualified Bidders Public Notice at 7;
August 7 Revised Qualified Bidders Public Notice at 8.
18 May 24 Status Public Notice at 4.
19See e.g, March 20 Procedures Public Notice at 7-8; June 7
Qualified Bidders Public Notice at 6-7.
20 Auction No. 44, Revised Schedule, License Inventory, and
Procedures, Public Notice, DA 02-1491 (WTB rel. June 26, 2002) at
2 (emphasis added).
21 August 7 Revised Qualified Bidder Notification at 7 (emphasis
added).
22 See March 20 Procedures Public Notice at 14.
23 See May 24 Status Public Notice, Attachment A at 6, Attachment
B at 10.
24 Mr. Behenna owns 100% of PCSGP's fully diluted shares of
common stock. He is PCSGP's President, Secretary, Treasurer and
sole director. See Star FCC Form 175, Exhibit A.
25 See Star FCC Form 175.
26 FCC File No. 0000506827.
27 See Star FCC Form 175, Ex. A.
28 See Star FCC Form 175, Ex. B.
29 See Northeast FCC Form 175.
30 See Northeast FCC Form 175, Ex. A; FCC Form 602 of Northeast
Communications of Wisconsin, Inc., dated November 25, 2002. A
listing of the communications-related entities in which Northeast
holds an interest, based upon the entities named in the FCC Form
602 and the Commission's licensing records, is provided as
Attachment A.
31 See Northeast FCC Form 175, Ex. B.
32 Id.
33 See May 24 Status Public Notice at 2; see also 47 C.F.R. §
1.2106.
34 See June 7 Qualified Bidders Public Notice, Attachment A at 6.
35 Northeast Response at A6.
36 See June 7 Qualified Bidders Public Notice, Attachment A.
37 See Auction No, 44-Revised Schedule, License Inventory, and
Procedures, Public Notice, DA 02-1491 at 1(WTB rel. June 26,
2002).
38 See Northeast Response at A4. Mr. Schneider left the employ
of Northeast on July 8, 2001, but continues to provide consulting
services to the organization. Id.
39 Id.
40 Id.
41 Id; Northeast Response, Exhibit A.4.
42 See Northeast Response at A4.
43 According to Exhibit A of its FCC Form 175, Northeast held a
10% or greater interest in Redwood Wireless Wisconsin, L.L.C.,
cellular licensee for the Grand Forks (KNLH430) and Williston,
North Dakota (WPOJ815) BTAs. Northeast has since divested its
interest in the licensee. See Northeast Response at A1.
44 See Northeast Response at A4.
45 See Northeast Response at A7.
46 See Northeast Response, Ex. A.7.a.; Northeast Supplemental
Response, Mobile Telephone Bill, p. 16.
47 See Northeast Response at A7, A16.
48 See Northeast Response at A16.
49 Id. As noted supra, according to Northeast's Form 175, its
business office is in Green Bay, from which many of its
businesses operate. See Attachment A.
50 See Attachment B.
51 Star also placed a bid on August 29, during round 8 of the
auction, for Denver-Boulder, Colorado. See Attachment B.
52 See Public Notice, Lower 700 MHz Band Auction Closes, DA 02-
2323, Attachment A at 26 (WTB rel. September 20, 2002).
53 See Northeast Response at A4, A22.
54 See Northeast Response at A4, A10, A22.
55 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1); see also 47
U.S.C. § 503(b)(1)(D)(forfeitures for violation of 18 U.S.C. §
1464). Section 312(f)(1) of the Act defines willful as ``the
conscious and deliberate commission or omission of [any] act,
irrespective of any intent to violate'' the law. 47 U.S.C. §
312(f)(1). The legislative history to section 312(f)(1) of the
Act clarifies that this definition of willful applies to both
sections 312 and 503(b) of the Act, H.R. Rep. No. 97-765, 97th
Cong. 2d Sess. 51 (1982), and the Commission has so interpreted
the term in the section 503(b) context. See, e.g., Application
for Review of Southern California Broadcasting Co., Memorandum
Opinion and Order, 6 FCC Rcd 4387, 4388 (1991) (``Southern
California Broadcasting Co.'').
56 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).
57 See, e.g., SBC Communications, Inc., Apparent Liability for
Forfeiture, Forfeiture Order, 17 FCC Rcd 7589, 7591, ¶ 4 (2002)
(forfeiture paid).
58 By separate Notice of Apparent Liability for Forfeiture
released concurrently herewith, we likewise find that Star is
apparently liable for a forfeiture in the same amount for its
apparent willful violation of section 1.2105(c) of the
Commission's rules.
59 Northeast is the licensee of PCS Station KNLF999, Green Bay,
Wisconsin (BTA173). It also holds a 100 % interest in Brown
County MSA Cellular Limited Partnership, licensee of Green Bay
cellular Station KNKA547 (CMA186); a 55% interest in Wisconsin
RSA#10 Limited Partnership, licensee of cellular Station KNKN294,
Wisconsin 10 (Door) (CMA717); and a 25% interest in Wisconsin RSA
No. 4 Limited Partnership, licensee of cellular Station KNKN395,
Wisconsin 4 (Marinette) (CMA711). Star won the Lower 700 MHz
authorizations for these CMAs in Auction No. 44. Moreover, after
the August 29, 2003, telephone conversation between Mr. Behenna
and Mr. Riordan, Star also bid, unsuccessfully, for the auctioned
authorizations in Appleton-Oshkosh-Neehan, Wisconsin (CMA125) and
Wausau, Wisconsin (CMA263), which are contiguous to Wisconsin 10
(Door) (CMA717), for which, as noted above, a Northeast affiliate
is the cellular licensee. Northeast also holds interests in
Iowa cellular licensees Iowa RSA #3 LLC (54.84%) (Station
KNKN351, Iowa 3 (Monroe), CMA414), Iowa RSA #12 LLC (90%)
(Station KNKQ388, Iowa 12 (Winneshiek), CMA423) and NSP, LC (20%)
(Station KNKN314, Iowa 11 (Hardin), CMA422). CMAs 423 and 422
are contiguous to and CMA414 is situated near the Cedar Rapids
geographic area (CMA195), for which Star was also high bidder in
the auction. Although, in late June and early July 2003, those
three Northeast-related cellular licensees filed applications
with the Commission for approval of the sale of their
aforementioned Iowa authorizations, Northeast held its interest
in those entities at the time of the August 29, 2002,
conversation between Messrs. Behenna and Riordan and throughout
the course of the bidding in Auction No. 44. Northeast also
wholly owns Nsighttel Wireless, LLC, which holds PCS
authorizations in six other Iowa markets. See Attachments A, C
and D.
60 The Commission's Forfeiture Policy Statement and Amendment of
Section 1.80 of the Rules to Incorporate the Forfeiture
Guidelines, 12 FCC Rcd 17087, 17113 (1997), recon. denied 15 FCC
Rcd 303 (1999) (``Forfeiture Policy Statement''); 47 C.F.R. §
1.80(b).
61 Forfeiture Policy Statement, 12 FCC Rcd at 17100-01, ¶ 27.
62 47 C.F.R. § 1.1914.