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X-  Before the #2FEDERAL COMMUNICATIONS COMMISSION gWashington, D.C. 20554 XH-P  X -In the Matter of hh@)  X -x` `  hh@)h  X -Reauction of Defaultedhh@)  X -PCS C Block Licenseshh@) x` `  hh@)  Xy-Emergency Application for Reviewhh@)  Xb-of Mountain Solutions, Ltd., Inc.hh@)  X4- 8XMEMORANDUM OPINION AND ORDER X-P  X-Adopted: August 28, 1997hh@hppReleased: October 29, 1997  By the Commission: x  X|-x1. Introduction and Executive Summary. On June 11, 1996, Mountain Solutions, Ltd., Inc. ("Mountain Solutions") filed an Emergency Application for Review ("Application for Review") of the decision of the Wireless Telecommunications Bureau  XN-("Bureau") to reauction eighteen (18) defaulted broadband PCS C Block licenses for which the winning bidders failed to submit"Nxxx^"  X-timely initial down payments.  yOy-#X\  P6G;qP#э See Public Notice, "18 Defaulted PCS Licenses to be Reauctioned," DA 96872 (rel. May 30, 1996). See also Emergency Petition for Waiver of Deadline  yOA-for Submission of Down Payment for the Broadband PCS C Block Auction filed by BDPCS, Inc., Order, DA 96811 (rel. May 20, 1996); Emergency Petition for  yO -Waiver of Deadline for Submission of Down Payment for the Broadband PCS C Block Auction filed by BDPCS, Inc., Order on Reconsideration, DA 96874 (rel.  yO-May 30, 1996) (recon. pending). Mountain Solutions requests that the Commission award two of these licenses to it as the second highest bidder for them in the initial broadband PCS C Block auction. Alternatively, Mountain Solutions had requested that the Commission allow only nondefaulting entities that participated in the original C Block auction to participate in the reauction. For the reasons discussed below, we are denying Mountain Solutions' Emergency Application for Review. We agree with the Bureau's decision to reauction the 18 licenses upon which BDPCS, Inc. ("BDPCS") and National Telecom PCS, Inc. ("NatTel") had defaulted in the C Block auction.  X_-x2. Background. The broadband PCS C Block auction closed on May 6, 1996.b_ yO -#X\  P6G;qP#э See Public Notice, "Entrepreneurs' C Block Auction Closes," DA 96716 (rel. May 8, 1996). See also News Release, "Broadband Personal  yO -Communications Services 'C Block' Auction Closes" (rel. May 6, 1996).#x6X@`7/X@#b In accordance with the Commission's  XH-Rules, winning bidders were required to submit down payments by May 15, 1996.H yO-#X\  P6G;qP#э See Public Notice, "Entrepreneurs' C Block Auction Closes," DA 96716 (rel. May 8, 1996).#x6X@`7/X@# Two of the winning bidders, BDPCS and NatTel, failed to submit the required down payments by the May 15, 1996 deadline. On May 30, 1996, the Bureau announced  X -that the Commission would reauction 17 broadband PCS C Block licenses upon which winning bidder BDPCS had defaulted and  X -one broadband PCS C Block license upon which winning bidder NatTel had defaulted.  yOL-#X\  P6G;qP#э See Public Notice, "18 Defaulted PCS Licenses to be Reauctioned," DA 96872 (rel. May 30, 1996). On June 11, 1996, Mountain Solutions, in addition to the filing before us, filed an emergency motion to stay the reauction of these licenses. The Bureau denied this  X -motion on June 28, 1996. (  yO-#X\  P6G;qP#э See Emergency Motion for Stay of Mountain Solutions, Ltd., Inc., Order, DA 961061 (rel. June 28, 1996).#Xj\  P6G; DXP# Mountain Solutions filed an Emergency Motion for Stay with the U.S. Court of Appeals for the"  x   "  X-District of Columbia Circuit on July 1, 1996. The Court denied the Emergency Motion for Stay on July 2, 1996.X yOy-#X\  P6G;qP#э Mountain Solutions, Ltd., Inc. v. FCC, D.C. Cir. No. 961227 (July 2, 1996). In addition, Mountain Solutions filed a Petition for Review of the Bureau's  yOA-decision to reauction the licenses. On March 31, 1997, the D.C. Court of Appeals granted the Commission's Motion to Dismiss the petition. See Mountain  yO -Solutions, Ltd., Inc. V. FCC, 1997 WL 195535 (D.C. Cir.). #x6X@`7/X@# As a result, the Bureau proceeded with the reauction on July 3, 1996, as scheduled. Of the 18 licenses offered in the reauction, Mountain Solutions submitted the winning bids for the Colorado Springs, Colorado and Fort  X-Collins, Colorado BTAs. The reauction concluded on July 16, 1996.> yOT-#X\  P6G;qP#э See Public Notice, "Entrepreneurs' C Block Reauction Closes," DA 961153 (rel. July 17, 1996); Public Notice, "Erratum in Public Notice DA 961153 Announcing Close of the Entrepreneurs' C Block Reauction" (rel. July 18, 1996).> x3. In its Application for Review, Mountain Solutions contends that we should reverse the Bureau's decision to reauction the 18 licenses and instead award them to the second highest bidder on the grounds that: 1) granting the licenses to the second highest bidder would best serve the public interest; 2) reauctioning the licenses would delay the award of the C Block licenses and harm the public interest in violation of the Communications Act of 1934, as amended ("Communications Act"); 3) the Commission has acted in an arbitrary and capricious manner in its failure to provide a rationale for reauctioning; and 4) the Commission's refusal to grant the licenses to Mountain Solutions as the second highest bidder is an unconstitutional taking of property without just compensation. There were no responsive pleadings filed thereto.  X -x4. Discussion. We deny Mountain Solutions' Application for Review and affirm the Bureau's decision to reauction the 18 licenses. Under Section 1.2109(b) of our rules in effect at the time of the "C" Block auction, if a winning bidder failed to remit the required down payment five days after the Commission declared competitive bidding closed, the Commission could offer the  X-license to the second highest bidder or to reauction the license to existing or new applicants.X@ yO-#X\  P6G;qP#э 47 C.F.R.  1.2109(b). The number of days prescribed by Section 1.2109(b) was changed to ten business days in February 1997. See Amendment of  yOI-Part 1 of the Commission's Rules Competitive Bidding Proceeding, WT Docket No. 9782, Memorandum Opinion and Order and Notice of Proposed Rule  yO-Making, FCC 9760, 62 Fed.Reg. 13540, at 13542 (rel. February 28, 1997).#x6X@`7/X@# The Commission's discretion in this"` x  L"  X-matter is clear from Section 1.2109(b), as well as Commission decisions.6 X yOy-#X\  P6G;qP#э See Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 92253, Fifth Report and Order, 9 FCC Rcd.  yOA-5222, 5565 (1994) ("Fifth Report and Order"); Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket No. 92253,  yO -Second Report and Order, 9 FCC Rcd. 2348 (1994) ("Second Report and Order").#x6X@`7/X@#6 In the Fifth Report and Order, we restated this position:  X-XxX` ` As we stated in the Second Report and Order, we believe that, as a general rule, when an auction winner defaults or is otherwise disqualified after having made the required down payment, the best course of action is to reauction  X-the license. See Second Report and Order at  204. . . . However, if the default occurs within five (5) business days after the bidding has closed, the Commission retains the discretion to offer the license to the second highest bidder at its final bid level, or if that bidder declines the offer, to offer the license to other bidders (in descending  XN-order of their bid amounts) at the final bid levels. N yO -#X\  P6G;qP#э See also Fifth Report and Order, 9 FCC Rcd. 5222, 5565 (emphasis added)..` xThe licenses at issue became available due to BDPCS's default within five business days after bidding closed. While it was not automatic that reauction would occur, it was within our discretion to reauction the licenses rather than offer them to  X -Mountain Solutions, the second highest bidder.j x yO-#X\  P6G;qP#э See Id. at n. 55. j In the Fifth Report and Order, we did suggest that while we retain discretion to determine what steps to take if a default occurs within five business days, we might be particularly inclined to offer the license to the highest losing bidders where "only a small number of relatively lowvalue licenses are to be reauctioned and only a short time has passed since the initial auction," since "the cost of running another auction may exceed the benefits." However, this is not the scenario at hand; the licenses at issue are neither a small number nor of low value. The Bureau's action is wholly consistent with the Commission's Rules regarding the circumstances in which reauction is appropriate, and thus, contrary to Mountain Solutions' argument, was not arbitrary or capricious.  XU- x x5. Furthermore, the particular circumstances in this case demonstrate that the public interest has been best served by reauctioning the 18 licenses upon which BDPCS and NatTel had defaulted. In its decision to reauction the 18 licenses, the"' x  "  X-Bureau noted that "a reauction will rapidly and efficiently assign the licenses."  yOy-#X\  P6G;qP#э See Public Notice, "18 Defaulted PCS Licenses to be Reauctioned," DA 96811 (rel. May 30, 1996).#X\  P6G;qP# The reauction began on July 3, 1996, less than  X-two months from the license default date, and closed after eight days and twentyfive rounds of bidding. X yO-#X\  P6G;qP#э See News Release, "Broadband PCS Entrepreneurs' ("C") Block Reauction Closes" (rel. July 16, 1996).#Xj\  P6G; DXP# Thus, reauctioning did not significantly delay the award of the licenses or cause competitive harm to the prospective licensees. x6. In addition, we disagree with Mountain Solutions' contention that the Bureau's decision constituted an unconstitutional taking of property without just compensation. Mountain Solutions' status as the second highest bidder does not entitle it to any property right in the licenses. In fact, Section 301 of the Communications Act provides that no license granted pursuant to the  X_-Act "shall be construed to create any right beyond the terms, conditions, and periods of the license."m_ yO -#X\  P6G;qP#э See 47 U.S.C.  301.m Furthermore, courts have  XH-long held that licensees have no property interest in their licenses.Hx yOq-#X\  P6G;qP#э See, e.g., FCC v. Sanders Brothers Radio Station, 309 U.S. 470, 475 (1940); Quincy Cable TV, Inc. v. FCC, 768 F.2d 1434, 1460 (D.C. Cir. 1985); National  yO9-Association of Broadcasters v. FCC, 740 F.2d 1190, 1198 (D.C. Cir. 1984)#X\  P6G;qP#. Consequently, Mountain Solutions, which at most was a prospective licensee, had no property interest in any of the 18 licenses that were the subject of the reauction. As such, the decision to reauction does not and indeed could not violate the Fifth Amendment's prohibition against the taking of private property for public use without just compensation. x7. Alternatively, Mountain Solutions requests that the Commission allow only nondefaulting entities that participated in the original C Block auction to participate in the reauction. We note, as a general matter, that Section 1.2109(b) of the  X -Commission's Rules indicates that new parties would be afforded an opportunity to participate in a reauction scenario.i  yO(-#X\  P6G;qP#э 47 C.F.R.  1.2109(b).i Mountain Solutions particularly requests that the Commission prohibit BDPCS, one of the defaulting parties in the C Block auction, from participating in the reauction on the grounds that its participation would cause irreparable harm to Mountain Solutions and undermine the integrity of the auction process. Since BDPCS did not participate in the reauction, this issue is moot. We further note that Mountain Solutions was able to participate in the reauction and submitted the winning bids for the Colorado Springs,"K` x  I"  X-Colorado and Fort Collins, Colorado BTAs. yOy-#X\  P6G;qP#э See Public Notice, "Entrepreneurs' C Block Reauction Closes," DA 961153 (rel. July 17, 1996); Public Notice, "Erratum in Public Notice DA 961153  yOA-Announcing Close of the Entrepreneurs' C Block Reauction" (rel. July 18, 1996). To date, these licenses have not been issued.#x6X@`7/X@#ѩ x8. ACCORDINGLY, IT IS ORDERED pursuant to Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C.  154(i), and Section 1.115(g) of the Commission's Rules, 47 C.F.R.  1.115(g), that the Emergency Application for Review filed by Mountain Solutions IS DENIED. x` `  hhFEDERAL COMMUNICATIONS COMMISSION x` `  hhWilliam F. Caton x` `  hhActing Secretary