PUBLIC NOTICE FEDERAL COMMUNICATIONS COMMISSION 1919 M STREET N.W. WASHINGTON, D.C. 20554 News media information 202/418-0500 Recorded listing of releases and texts 202/418-2222. DA 96-586 April 15, 1996 FCC ANNOUNCES WINNING BIDDERS IN THE AUCTION OF 1,020 LICENSES TO PROVIDE 900 MHz SMR IN MAJOR TRADING AREAS: Down Payments Due April 22, 1996, FCC Form 600s Due April 29, 1996 On April 15, 1996, the Federal Communications Commission completed its auction of 1,020 Major Trading Area (MTA) licenses to provide Specialized Mobile Radio Service in the 896-901 MHz and 935-940 MHz bands (900 MHz SMR), raising a net total of $204,267,144. The winning bidders and the licenses associated with each winning bidder are listed in Attachment A. This Public Notice provides details for winning bidders concerning down payments, FCC Form 600 filing requirements, withdrawal payments, waivers, final payments and licensing matters. Down Payments Each winning bidder must submit to Mellon Bank sufficient funds to bring its total deposits with the government to TWENTY (20) PERCENT of the sum of its winning bids by April 22, 1996. Winning bidders who qualify as small businesses under either the $3 million or $15 million gross revenue definitions are eligible for a reduced down payment. Small business winning bidders must submit additional funds to bring their total deposits with the government to FIVE (5) PERCENT of the sum of their winning bids less any bidding credits by April 22, 1996. All payments must be made in U.S. dollars, must be in the form of a wire transfer or cashier's check, and must be made payable to the "Federal Communications Commission" or "FCC." Cashier's checks must be drawn on a financial institution whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Payments by cashier's check must be received by 11:59 p.m. Eastern Time, April 22, 1996. Cashier's checks must be addressed to: Mellon Bank Attention: Auction No. 7 P.O. Box 358850 Pittsburgh, PA 15251-5850 If delivering an auction payment in person or by courier, the cashier's check and FCC Remittance Advice Form (FCC Form 159) must be delivered to: Mellon Bank Attention: Wholesale Lockbox Shift Supervisor 27th Floor (153-2713) 3 Mellon Bank Center 525 William Penn Way Pittsburgh, PA 15259-0001 (Note: Please indicate on the inside envelope "Lockbox No. 358850.") Payments made by wire transfer must be received by 3 p.m. Eastern Time, April 22, 1996. Bidders making payments by wire transfer should allow sufficient time for the wire transfer to be initiated and for the transmission to be completed prior to the deadline. No personal checks or other forms of payment will be accepted. Down payments must be accompanied by a completed FCC Remittance Advice Form (FCC Form 159). ON THE FCC FORM 159, BIDDERS MUST USE THE SAME FCC ACCOUNT NUMBER ASSOCIATED WITH THEIR FCC FORM 175. Bidders making payments by wire transfer must fax a completed FCC Form 159 to Mellon Bank at (412) 236-5702 at least one hour prior to placing the order for the wire transfer (but on the same business day). To submit funds by wire transfer, bidders will need the following information for the FCC Form 159: ABA Routing Number: 043000261 Receiving Bank: Mellon Pittsburgh BNF: FCC/AC-9116106 OBI Field: (Skip one space between each information item) "AUCTIONPAY" FCC ACCOUNT NO. (SAME AS FCC FORM 159, BLOCK 1) PAYMENT TYPE CODE AWSD FCC CODE (SAME AS FCC FORM 159, BLOCK 17) PAYOR NAME (SAME AS FCC FORM 159, BLOCK 3) LOCKBOX NO. 358850 Winning bidders must specify each license for which it was a high bidder as a separate item on FCC Form 159 (use continuation sheet (FCC 159-C) if necessary). Bidders must place a "7" as the auction event number in Block 17 of the FCC Form 159. BIDDERS MUST INCLUDE THE "License No." DESIGNATION(S) FOR EACH LICENSE (WHICH IS INCLUDED IN THE ATTACHMENT A HERETO) IN BLOCK 18 OF FCC FORM 159. For the "License No." designation in Block 18 of FCC Form 159, winning bidders should list the "License No." as it appears in Attachment C of the Bidder Information Package, e.g. YSMO51A. Winning bidders for multiple licenses must calculate the down payment applicable to each license separately by applying a portion of its upfront payment to each of the licenses prorated on the basis of the amount of each winning bid relative to the sum of its winning bids. Any upfront payment money in excess of the required down payment, after taking into account withdrawal payments (see discussion below), will be refunded. Additional instructions and addresses for making auction payments are contained in the FCC Forms and Instructions section of the Bidder Information Package for this auction. Questions concerning the calculation and submission of down payments should be directed to Regina Dorsey or William Koch of the Billings and Collections Branch, at (202) 418-1995. The following are a few simple examples of how the down payment is calculated: Example 1 Upfront Payment Amount $10,000 Withdrawal Payment Amount $0 Amount of Upfront to be Counted Towards Down Payment $10,000 Status Non-Small Business High Bid Down Payment Pro Rata % Amount from Balance Due Amount Amount of Down Upfront Payment Payment Lic. A $20,000 $4,000 25% $2,500 $1,500 Lic. B $60,000 $12,000 75% $7,500 $4,500 Totals $80,000 $16,000 100% $10,000 $6,000 Example 2 Upfront Payment Amount $5,000 Withdrawal Payment Amount $0 Amount of Upfront to be Counted Towards Down Payment $5,000 Small Business Status Small business under the $15 million definition High Bid Net High Down Pro Rata % Amt from Balance Amount Bid Amt Payment of Down Upfront Due Amount Payment Payment Lic. A $80,000 $72,000 $3,600 44% $2,200 $1,400 Lic. B $100,000 $90,000 $4,500 56% $2,800 $1,700 Totals $180,000 $162,000 $8,100 100% $5,000 $3,100 Example 3 Upfront Payment Amount $50,000 Withdrawal Payment Amount $5,000 Amount of Upfront to be Counted Towards Down Payment $45,000 Status Non-Small Business High Bid Down Pro Rata % Amount from Balance Due Amount Payment of Down Upfront Amount Payment Payment Lic. A $113,000 $22,600 36% $16,200 $6,400 Lic. B $95,000 $19,000 31% $13,950 $5,050 Lic. C $103,000 $20,600 33% $14,850 $5,750 Totals $311,000 $62,200 100% $45,000 $17,200 Winning bidders who do not submit the required down payment by the specified deadline will be considered in default, and the Commission will determine whether the license in question will be offered to the second highest bidder or re-auctioned. In addition, defaulting winning bidders are subject to additional penalties for default. Specifically, an entity in default will be assessed a penalty equal to the difference between its winning bid and the winning bid the next time the license is offered by the Commission. An additional penalty equal to three percent of the lesser of the subsequent winning bid or the defaulting bidder's winning bid will also be assessed. See Section 90.805 of the Commission's Rules, 47 C.F.R.  90.805. Bidders Owing Withdrawal Payments To prevent insincere bidding, the Commission adopted bid withdrawal payments for bidders who withdrew bids during the course of an auction. See Competitive Bidding Second Report and Order, 9 FCC Rcd 2348 (1994); see also 47 C.F.R.  90.805. We will calculate the bid withdrawal payment as: either (1) the difference between the net withdrawn bid and the subsequent net winning bid, or (2) the difference between the gross withdrawn bid and the subsequent gross winning bid for that license, whichever is less. A list of winning bidders who owe withdrawal payments and the amounts due appear in Attachment B. Any withdrawal payments due will be subtracted from the winning bidders' upfront payments on deposit. If a winning bidder's upfront payment amount is insufficient to cover the withdrawal payment due, the winning bidder will be expected to deposit the difference due, in addition to the down payment discussed above, with Mellon Bank by the down payment deadline. If the upfront payment is larger than the withdrawal payment, any excess upfront payment funds will be credited toward the down payment. If the amount of the payment cannot yet be determined, the bidder will be required to make a deposit of 20 percent of the amount bid on such licenses. When it becomes possible to calculate and assess the penalty, any excess deposit will be refunded. If a winning bidder has a pending waiver request asking for relief from a bid withdrawal payment such that its withdrawal payment would exceed the amount of its upfront payment, no withdrawal payment will be required at the down payment deadline. However, the Commission will hold those winning bidders' upfront payments until their waiver requests are resolved and will not apply any upfront payments toward the required down payment. We will take action on all bid withdrawal waiver requests prior to licensing. Waivers In the event a winning bidder requests waivers, the requestor must submit a written waiver request along with the FCC Form 159, and a fee of $125.00 per license, per rule waiver request. The request must specify each rule for which a waiver is requested. If the applicant seeks waiver of more than one rule, a separate $125 fee must be paid for each rule that is subject to a waiver request. If the applicant seeks waiver for more than one license, a separate $125 fee must be paid for each license. For example, if a winning bidder filed a waiver of a service rule for one hundred licenses, that bidder would have to submit a fee of $12,500 ($125 x 100 licenses). If a winning bidder requested a waiver of 5 service rules for 5 licenses, that bidder would have to submit a fee of $3,125 ($125 x 25 (5 x 5)). This fee may be paid either by check (drawn on a U.S. financial institution), money order, or credit card. The payment type code to be used is "PDWM," and should be filed in the following lockbox with Mellon Bank: Federal Communications Commission Waiver Requests P.O. Box 358300 Pittsburgh, PA 15251-5300 Winning bidders filing their FCC Form 600 electronically must submit waiver requests in the "Waivers" section of the Electronic Filing Software. Winning bidders filing their FCC Form 600 manually must attach a copy of the waiver request to their FCC Form 600. Anti-Collusion Rules To insure the integrity of its auctions, the Commission's anti-collusion rules generally prohibit bidders for the same 900 MHz SMR MTA licenses from discussing bids or bidding strategies during the course of the auction, unless such bidders disclosed a bidding agreement on the FCC Form 175. See 47 C.F.R.  1.2105(c). The prohibition began when short-form applications to participate in the auction were filed, and end when the winning bidders submit their down payments. For small business winning bidders eligible for reduced down payments, the prohibition ends when they satisfy the initial five percent reduced down payment. FCC Form 600 Applicants who submitted winning bids for 900 MHz SMR MTA licenses are required to file a long-form application (FCC Form 600) by 5:30 P.M. (Eastern Time) on April 29, 1996 for each license upon which it was a high bidder. The winning bidders and the licenses associated with each winning bidder are listed in Attachment A. This Public Notice constitutes official notification to winning bidders under Sections 1.2107 and 90.808 of the Commission's Rules, 47 C.F.R.  1.2107 and 90.808, for purposes of triggering the 10 business day filing period for the FCC Form 600. Winning bidders may file the FCC Form 600 either manually or by electronic transmission. Detailed instructions for electronic and manual filers are included in Attachments C and D. Winning bidders must complete the FCC Form 600 Main Form, Schedule D and any exhibits required by Commission Rules. An applicant who fails to submit the required long-form application by April 29, 1996, and fails to establish good cause for any late-filed submissions, shall be deemed to have defaulted and will be subject to the penalties set forth in Section 1.2104 and 90.805 of the Commission's Rules. See 47 C.F.R.  1.2107(c). Required proprietary information may be redacted, or confidentiality may be sought pursuant to Section 0.459 of the Commission's Rules, 47 C.F.R.  0.459. Any such requests must be submitted manually, even if the winning bidder chooses to file electronically. If filing electronically, the winning bidder must indicate in an electronic exhibit that it has a confidentiality request on file. Requests to keep required application information confidential will be subject to strict review under our rules and will not be routinely granted. FCC 600 MAIN FORM AND SCHEDULE D INSTRUCTIONS Winning bidders completing the FCC Form 600 Main Form and Schedule D are urged to review carefully all instructions contained on the form. The following are several items of special note: 1. The two letter radio service code (Item 26 on the main form and at the top of schedule D) for 900 MHz SMR applicants is "YS". 2. Item 27 on the FCC Form 600 Main Form, "Type of operation code," is not applicable to Part 90 radio services like SMR and should be left blank. 3. Only the following items on Schedule D need to be completed: - Licensee Name (manual filing only) - Radio Service (manual filing only) - Item D1 (Purpose - Check "N") - Item D10 (Market Area - See Note 4 below) 4. Please make note that proper entry of the "Market Area/ Number " (Item D10 on Schedule D) is critical to the processing of the application. Winning bidders should present the market area/number as a four position field, the first three positions being numeric and reflecting the market area and the fourth being a letter A through T identifying the frequency block. The leading "M" in the market/area code should be eliminated in item D10. Examples: If you won license number YSM003F for Chicago, enter the market area as 003F If you won license number YSM016D for Cleveland, enter the market area as 016D Failure to properly enter this code is a major defect in the application. ORGANIZATION OF EXHIBITS FOR FCC FORM 600 Main Form Exhibits Any exhibits to be attached to an application as a result of an answer to a question on the FCC Form 600 Main Form should be identified as specified in the instructions to the FCC Form 600. Applicants filing the FCC Form 600 electronically should identify exhibits by labeling them as specified below in the Description Field on the Attachments screen. Rule-related Exhibits Any exhibits to be attached to an application as a result of our rule requirements should follow any FCC Form 600 Main Form or Schedule D-related exhibits mentioned above. Please order and identify any exhibits to be attached to an application as a result of our rule requirements as indicated below. I. Applicant Identity and Ownership Information. Background Under Section 90.123 of the Commission's Rules, each application shall contain full and complete disclosures with regard to the real party or parties in interest and as to all matters required to be disclosed by the application forms. In addition, Section 90.815 requires small business applicants to submit additional ownership and gross revenues information. Ownership Exhibit A First, attach and label as Ownership Exhibit A, a document or series of documents that lists the name, address and citizenship of all corporate officers or directors of the corporation (e.g,. CEO/President, Secretary and Treasurer) or all of the partners in a partnership. Ownership Exhibit B If applicants applied as small businesses, they must submit detailed ownership and gross revenues information. Attach and label as Ownership Exhibit B, a document or series of documents that identifies persons or entities that directly or indirectly hold a twenty percent or more interest in the applicant. In calculating the percentage of indirect ownership be sure to use a multiplier. See 47 C.F.R.  90.814(g)(1). For each twenty percent interest holder listed, applicants should provide the following information: Item (1) Name and address: Identify the name and address of the interest holder in the applicant. If the interest holder is an individual, provide the name and address of that person, and indicate whether the interest holder is a partner, officer, director, or key manager (e.g., CEO, General Manager) of the applicant. If the interest holder is a corporation, provide the name and address of the corporate office and the name and title of an officer, director or authorized contact. If the interest holder is a partnership, provide the name and address of all partners, or the name, title and address of an authorized contact for the partnership. Item (2) Relationship to Other Interest Holder: Indicate whether the interest holder is related to any other twenty percent interest holder by blood or marriage, and provide the name of the related interest holder. Item (3) Citizenship: Indicate whether the interest holder is a U.S. citizen or U.S. corporation. If the interest holder is a partnership, indicate whether each partner is a U.S. citizen. Applicants should list all foreign partners regardless of whether they are general or limited partners, except that applicants need not list a limited partner: (1) whose level of ownership in the licensee does not exceed the level allowed by Section 310(b); and (2) who is "insulated" from the management and control of the partnership. See Wilner and Scheiner, 103 FCC 2d 511 (1985), recon. granted in part, 1 FCC Rcd 12 (1986); First Report and Order in GN Docket No. 93-252, 9 FCC Rcd 1056, 59 Fed. Reg. 1,285 (Jan. 10, 1994) at  9 and n. 13. See also Memorandum Opinion and Order, GN Docket No. 90-314, FCC 95-92, 10 FCC Rcd 7893 (1995), 60 Fed. Reg. 13,915 (March 15, 1995) at  11. Also, if an interest holder is an alien, check your response to Items 29-33 on the FCC Form 600 Main Form. The level of alien ownership in an applicant can trigger the need to attach a separate exhibit explaining the nature and extent of alien or foreign ownership. See 47 U.S.C.  310(b)(3)-(4). If such an exhibit is needed, attach as part of the FCC Form 600 Main Form exhibits, and as indicated in the instructions to the FCC Form 600. Item (4) Type of Interest Held: Indicate whether the interest held is in the form of stocks, bonds, warrants, partnership, etc. If interests are held in stock, specify the class of stock and any voting rights associated with the stock. If the interests are held in a partnership, indicate whether the interests are limited or general partnership interests. Item (5) Amount Held: Specify the amount held (e.g., number of shares of stock) for each type of interest specified. Item (6) Percentage Held: Specify the percentage interest held in the applicant based on any combined holdings. Item (7) Held on Behalf of: If an interest is held in trust, or on behalf of another person or entity, identify the party for whom the interest is held. In addition, for indirect interest holders create an Item (9) category -- Intervening Interests -- as further explained below. Item (8) Intervening Interests: Indirect interests also can be held through intervening corporations and other entities. For each indirect interest holder, specify the intervening corporations or other entities from which the indirect twenty percent interest in the applicant is derived. Ownership Exhibit C If applicants applied as small businesses, attach and label as Ownership Exhibit C, a document or series of documents that identifies all affiliates of the applicant. An individual or entity is an affiliate of an applicant or of a person holding an attributable interest in an applicant if such individual or entity: (1) directly or indirectly controls or has the power to control the applicant, (2) is directly or indirectly controlled by the applicant, or (3) is directly or indirectly controlled by a third party or parties that also controls or has the power to control the applicant, or (4) has an "identity of interest" with the applicant, e.g. spouse, kinship, stock ownership. See 47 C.F.R.  90.814(h). For each person or entity listed, provide the same information listed in Items (1)-(8) above as is requested for direct and indirect interests. Ownership Exhibit D If applicants applied as small businesses, attach and label as Ownership Exhibit D, a list and summary of all agreements or other instruments that support an applicant's eligibility as a small business, including the establishment of de facto and de jure control; such agreements and instruments include articles of incorporation and bylaws, partnership agreements, shareholder agreements, voting or other trust agreements, franchise agreements, and any other relevant agreements. Also list and summarize any investor protection agreements, including rights of first refusal, supermajority clauses, options, veto rights, and rights to hire and fire employees and to appoint members to boards of directors, or management committees. See 47 C.F.R.  90.815(b). II. Gross Revenue Information Gross Revenue Exhibit E All applicants claiming status as a small business must provide gross revenue information. First indicate on Gross Revenue Exhibit E whether the applicant falls under the $3 million or $15 million definition. Then list the name(s) of all individuals and entities listed in Ownership Exhibits B-C, those entities' gross revenues for the preceding three years, and an average of those numbers. Therefore, for each applicant, affiliate, and investor with attributable interests, there should be a total of four figures - gross revenues for years 1-3 and an average of those three figures. The aggregate of the applicant's, affiliates' and investors' average gross revenues must not be more than $3 million or $15 million. III. Joint Venture Agreements/Bidding Consortia. Agreements Exhibit F Attach and label as Agreements Exhibit F, a detailed explanation of the terms and conditions and parties involved in any bidding consortia, joint venture, partnerships or other agreement or arrangement into which the applicant has entered relating to the competitive bidding process prior to the time the bidding was completed. Such agreements must have been entered into prior to the filing of the short form applications pursuant to Section 1.2105, 47 C.F.R.  1.2105. See also 47 C.F.R.  1.2107(d). To comply with this requirement, applicants can either submit the agreements themselves, or can submit a detailed description of those agreements with proprietary information excluded. IV. Divestiture Plans. Divestiture Exhibit G If an applicant is unable to certify to compliance with the CMRS spectrum aggregation limit (47 C.F.R.  20.6), attach and label as Divestiture Exhibit G, a signed statement that describes the applicant's efforts to date and future plans to come into compliance with the rules through divestiture of prohibited properties. See 47 C.F.R.  20.6(e)-(f). The statement must indicate that sufficient properties will be divested within 90 days of license grant to meet our requirements. If divestiture is required, the Commission will condition grant of the application on the licensee coming into compliance with our requirements. Petitions to Deny Once FCC Form 600s are filed, the Commission will review the applications and issue a Public Notice announcing that those applications have been accepted for filing. This Public Notice will trigger the 30-day filing window for petitions to deny. All petitions to deny must comply with 47 C.F.R.  1.52. Final Payment and Licensing Matters After resolving any petitions to deny, and if the Commission is otherwise satisfied that the applicant is qualified, the Commission will issue a Public Notice announcing its readiness to issue the MTA licenses, assuming that the applicant (except for small businesses making quarterly installment payments) makes full payment of its winning bid amount. See 47 C.F.R.  90.807, 90.808 and 90.812(a). Applicants must submit the balance due on the license(s) within five business days after release of the Public Notice, unless the applicant is entitled to reduced down payments and installment payments pursuant to Section 90.811 and 90.812 of the Commission's Rules. Small business applicants eligible for reduced down payments must bring the total amount on deposit with the Commission (including upfront payments and initial down payment) up to ten percent of their net winning bid(s) within five (5) business days of the Public Notice. Small business applicants then pay the remainder of the amount due on their licenses in quarterly installment payments. See 47 C.F.R.  90.812. Small business applicants will receive an installment payment plan schedule listing payment amounts and the dates due shortly after receiving their licenses. The Commission generally will grant licenses within 10 business days after the receipt of the remaining balance due (or the required down payment for licensees paying in installments) on the license. Licensees will receive their MTA licenses through the mail. -FCC- For further information, contact: News Media: Kara Palamaras at (202) 418-0654 Office of Managing Director: Regina Dorsey at (202) 418-1995 Wireless Telecommunications Bureau, Auctions: Diane Law or Wendy Chow at (202) 418-0660 Wireless Telecommunications Bureau, Commercial Wireless: Michael Hamra at (202) 418-0620