Installment Payment Financing for Personal Communications Services (PCS) Licensees

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 24

[WT Docket No. 97-82; FCC 97-342]

Installment Payment Financing for Personal Communications

Services (PCS) Licensees

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Second Report and Order the Commission orders

resumption of installment payments for the broadband Personal

Communications Services (PCS) C and F blocks, with the payment deadline

reinstated as of March 31, 1998. The Commission adopts disaggregation,

amnesty, and prepayment options designed to assist C block licensees

experiencing financial difficulties. These options will allow C block

licensees to build systems or surrender spectrum to the Commission for

reauction. The Commission's objectives in this proceeding are to ensure

that the C block licensees have opportunities to provide service to the

public while maintaining the fairness and integrity of the Commission's

auctions program.

EFFECTIVE DATE: The effective date of the rule changes herein is

December 23, 1997. The information collection contained in these rules

becomes effective on OMB approval but no sooner than December 23, 1997.

The Commission will publish a document on a later date announcing the

effective date of the information collection.

FOR FURTHER INFORMATION CONTACT: Jerome Fowlkes or Sandra Danner,

Auctions and Industry Analysis Division, Wireless Telecommunications

Bureau, at (202) 418-0660.

SUPPLEMENTARY INFORMATION: This Second Report and Order in WT Docket

No. 97-82, adopted on September 25, 1997 and released on October 16,

1997, is available for inspection and copying during normal business

hours in the FCC Reference Center, Room 239, 1919 M Street, N.W.,

Washington, D.C. 20554. The complete text may be purchased from the

Commission's copy contractor, International Transcription Service,

Inc., 1231 20th Street, N.W., Washington, D.C. 20036 (202) 857-3800.

The complete Second Report and Order also is available on the

Commission's Internet home page (http://www.fcc.gov).

Summary of Action

I. Background

1. In the Competitive Bidding Fifth Report and Order, the

Commission established a variety of incentives to encourage small

businesses to participate in the auction of C block 30 MHz and F block

10 MHz broadband PCS licenses. See Implementation of Section 309(j) of

the Communications Act--Competitive Bidding, Fifth Report and Order, 59

FR 37566 (July 22, 1994) (Competitive Bidding Fifth Report and Order).

Provisions to promote participation by small businesses in broadband

PCS included limiting eligibility in the initial C and F block auctions

to entrepreneurs and small businesses, offering varying bidding

credits, and offering installment payment plans. The installment

payment plan for C block permitted licensees that qualified as small

businesses to pay 90% of the bid price over a period of ten years, with

interest only paid for the first six years and interest and principal

for the remaining four. See 47 CFR Sec. 24.711(b)(3). In addition,

there were other installment payment options available for bidders

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qualifying as entrepreneurs. See 47 CFR Secs. 24.711(b)(1)-(3). All

bidders in the C block auction, however, qualified as small businesses.

Installment payments for small business F block licensees were limited

to 80% of the bid price over ten years, and payments consist of

interest only for the first two years, then interest and principal for

the remaining eight years. See 47 CFR Sec. 24.716(b)(3). Entrepreneurs

were also eligible for less favorable installment payment terms. See 47

CFR Secs. 24.711(b)(1)-(2).

2. On May 6, 1996 and July 16, 1996, the Commission concluded its

broadband PCS C block auctions. Ninety bidders (including the C block

reauction winners) won 493 C block licenses. The broadband PCS D, E,

and F block auction concluded on January 14, 1997, and 88 bidders won

491 F block licenses. Net high bids received for C block 30 MHz

licenses, including C block reauction bids, totalled approximately

$10.2 billion; net high bids received for F block 10 MHz licenses

totalled $642.3 million.

3. While many C block licenses were purchased for prices below or

comparable to those for the A or B blocks, a handful of large bidders

bid extremely high prices per pop for major markets, even adjusted for

the value of the government financing we provide. The aggregate results

of the C block auction, when measured in average price per pop paid,

are markedly higher than the other PCS bands, even after adjusting for

financing, and even though many individual small licensees bid prices

comparable to those paid for the A and B block PCS licenses.

4. When formulating its original auction rules in 1994, the

Commission considered the possibility of debt restructuring and

observed that it would follow current procedures under the existing

debt collection rules and procedures. See Implementation of Section

309(j) of the Communications Act--Competitive Bidding, Second Report

and Order, 59 FR 22980 (May 4, 1994) (Competitive Bidding Second Report

and Order).

5. The Notice of Proposed Rulemaking to revise the part 1 auction

rules sought comment on several topics related to auction installment

debt. See Amendment of Part 1 of the Commission's Rules--Competitive

Bidding Proceeding, Order, Memorandum Opinion and Order, and Notice of

Proposed Rule Making, 62 FR 13540 (March 21, 1997) (Part 1 Proceeding).

The Commission sought comment on imposing late payment fees on

installment payments; the default provisions of Sec. 1.2104(g) in the

event of installment payment defaults; and revised procedures for

granting grace period requests.

6. On March 31, 1997, in response to a joint request from several C

block licensees seeking to modify their installment payment

obligations, and because of other debt collection issues, the Wireless

Telecommunications Bureau (Bureau) suspended the deadline for payment

of installment payments for all C block licensees. On April 28, 1997,

the Bureau extended the suspension to F block licensees.

7. On June 30, 1997, the Bureau conducted a public forum in

Washington, D.C. (``FCC Public Forum'') to discuss broadband PCS C and

F block installment payment issues, including the alternative financing

arrangements proposed in connection with the Public Notices issued on

June 2, 1997. An FCC Task Force also was established which included

representatives from the Bureau, the Office of Plans and Policy, the

Office of General Counsel, and the Office of Communications Business

Opportunities. This Task Force was charged with evaluating proposals

for alternative financing arrangements submitted by PCS C and F block

licensees and recommending to the Commission how to respond to those

proposals. Both before and after the FCC Public Forum, numerous

comments, reply comments, and ex parte letters and presentations were

submitted to the Commission as part of this proceeding. The Commission

thus has before it a wide range of proposals from entrepreneur block

licensees, financial institutions and investors, equipment vendors, and

other interested parties.

II. Second Report and Order

8. The Commission requires C and F block licensees to resume their

Note payments on March 31, 1998. They will also be required to pay on

that date one-eighth of the Suspension Interest, and thereafter, pay

one-eighth of the Suspension Interest with each regular installment

payment made until the Suspension Interest is paid in full.

``Suspension Interest'' is the entire amount of the unpaid simple

interest that was accrued at the rate set forth in each licensee's

Note(s) during the period beginning with the date on which each license

was conditionally granted through and including March 31, 1998

(``Suspension Period''). After March 31, 1998, payment due dates will

conform to those indicated in the Notes executed by the licensees. C

block licensees will be entitled to elect to continue making payments

under their original C block Notes. In addition, the Commission adopts

three options relating to the rules governing installment payments for

the C block. These are designed to help to resolve the financing issues

facing C block licensees and restore certainty to the marketplace,

while at the same time helping the Commission meet its statutorily

mandated public interest considerations set forth under Section 309(j)

of the Communications Act.

9. These goals will also be furthered by generally applying the

same rules regarding eligibility that were used in the C block auction

to the reauction of C block licenses. See 47 CFR Sec. 24.709. All

applicants for the reauction meeting the current definition of

``entrepreneur'' will be eligible to bid in the reauction. The

Commission will also allow all entities that were eligible for and

participated in the original C block auction to bid in the reauction.

Further, with the exception of incumbent licensees who choose to

disaggregate portions of spectrum they currently hold, and those

licensees who surrender licenses under the prepayment option, all C

block licensees who return licenses to the Commission will be eligible

to bid on all markets in the reauction.

A. Resumption of Payments

10. Effective March 31, 1998, the Commission rescinds the Order and

Public Notice suspending payments for the C and F block licenses and

reinstates the installment payment plans for all C and F block

licensees. The Commission directs that all payments due and owing on

and after March 31, 1998 be made in accordance with the terms of each

licensee's Note, associated Security Agreement, and the Commission

Orders and regulations. All Suspension Interest will become due and

payable over a two-year period and all Commission rules regarding

installment payments and defaults for the broadband PCS C and F blocks

will remain in effect. Any C or F block licensee that fails to remit

the payment due on March 31, 1998, and remains delinquent for more than

60 days (i.e., fails to make the March 31, 1998, payment on or before

May 30, 1998), will be in default on its license. See 47 CFR

Sec. 1.2110(e)(4)(i). The 60-day period is an exception to the existing

rules that provide for an automatic 90-day non-default period. Given

the one year suspension, the Commission believes that providing a

shorter automatic grace period is justified.

11. Any licensee that continues under its original Note(s), will be

required to pay on March 31, 1998, one-eighth of the Suspension

Interest; thereafter, regular payments will become due and payable in

accordance with the provisions of the licensee's original Note. The

Commission concludes that it

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could place a significant burden on licensees to require payment of the

entire amount of the Suspension Interest on March 31, 1998. Therefore,

the Commission requires that broadband PCS C and F block licensees

submit one-eighth of the Suspension Interest on March 31, 1998, and

one-eighth of the Suspension Interest with each regular installment

payment made thereafter until the Suspension Interest is paid in full.

After March 31, 1998, payment due dates will conform to those indicated

in the Note(s) executed by the licensees. While the first regular

installment payment next made after March 31, 1998, will be pro-rated

to account for the resumption of payments on March 31, 1998, all

regular installment payments thereafter will be in the amounts shown on

the amortization schedule attached to and made a part of each Note, as

amended, plus the applicable payments of Suspension Interest. For

example, for those licensees granted in September, 1996 whose regular

installments occur on March 31, June 30, September 30, and December 31

of each year, the next regular payment due after March 31, 1998, will

be due on June 30, 1998, and will include the amount of interest

accrued from April 1, 1998, through and including June 30, 1998, plus

one-eighth of the Suspension Interest. The next regular payment will be

due on September 30, 1998, and will be due in the amount shown on the

amortization schedule attached to the Note (i.e., interest from July 1,

1998, through and including September 30, 1998), plus one-eighth of the

Suspension Interest. Regular payments will continue on each and every

December 31, March 31, June 30, and September 30 thereafter until the

Note is paid in full. For these licensees, the payment due on December

31, 1999, will be the last payment due that includes any amortized

Suspension Interest. 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

option below.

12. The Commission delegates to the Bureau authority to set forth

all procedures for implementing the resumption of payments.

13. Broadband PCS C block licensees choosing to surrender their

licenses pursuant to the amnesty option described below and those

surrendering licenses that are not prepaid pursuant to the prepayment

option described below will be required to return to the Commission

each original Note and Security Agreement for cancellation by the

Commission. The Commission will not entertain any requests for an

extension of the March 31, 1998 deadline beyond the automatic 60-day

non-default period discussed above. The licensees have already been

afforded a significant period to licensees during which payments were

not required. Therefore, the Commission intends to deny any requests

for a grace period beyond the automatic 60-day non-default period

adopted herein, including any requests made pursuant to Sec. 1.2110 of

the Commission's rules. See 47 CFR Sec. 1.2110(e)(4)(ii).

14. C block licensees may resume payments under their current Note

or elect one of the three options described below.

B. Disaggregation of Spectrum for Reauction

15. Under the disaggregation option adopted today by the

Commission, any C block licensee may disaggregate a portion of its

spectrum from each of its licenses and surrender it to the Commission

for reauction. The licensee must disaggregate 15 MHz of spectrum it

holds across all Basic Trading Areas (BTAs) in an Major Trading Area

(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 as ``cherry-picking'' of licenses or spectrum).

The Commission limits 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 the

Commission is allowing disaggregation on an MTA-by-MTA basis, special

exemptions for built-out systems, such as the one adopted under the

amnesty option discussed below, are unnecessary. In cases where a

licensee has built-out 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 built-out system with 15 MHz. The Commission believes that this

flexibility mitigates the need for a build-out exception for this

option.

16. 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.

17. Under the disaggregation option, the Commission will reduce the

amount of the debt owed by an amount equal to the pro rata portion of

the spectrum returned to the Commission, i.e., by 50%, subject to

coordination with the Department of Justice pursuant to applicable

federal claims collection standards. The Commission will retain the pro

rata portion of the down payments applicable to the spectrum. The

following illustrates how this proposal would operate in practice:

Company 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, the

Commission would reduce the licensee's obligation to the government

to $450,000.

The face amount of the licensee's Note will be adjusted to reflect

the new principal, and the Note will then be amortized from the

original date of execution to calculate the payments at the new face

amount of the Note. All installment payments made as of March 31, 1997

(including 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.

18. Where applicable, the existing disaggregation rules will govern

this option. See 47 CFR Sec. 24.714. However, the broadband

disaggregation rules were not designed for the surrender of spectrum to

the Commission. Thus, existing rule provisions on designated entity

transfer restrictions, unjust enrichment, installment payments,

abbreviated license terms and construction requirements, restrictions

on the amount of spectrum that can be disaggregated, and similar rules

will not apply to disaggregation to the Commission authorized by this

option. In order to take advantage of the disaggregation option,

licensees will be required to make an election consistent with the

procedures specified in this Second Report and Order.

19. 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

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the incumbent licensee has not disaggregated spectrum. The Commission

does not believe that it would be fair for these entities to benefit

from a reauction after taking advantage of the disaggregation option.

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 of two

years from the start of a reauction.

20. The Commission believes that the disaggregation option set

forth above is consistent with the goals in this proceeding and serves

the public interest. First, this option preserves the credibility and

integrity of the Commission's rules. The relief provided 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. The disaggregating licensee

continues to pay for spectrum at its net high bid price, 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 a pro rata adjustment in debt

is consistent with the Commission's rules with regard to private party

disaggregation.

21. 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, the Commission increases 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, this option is fair to those who have

built-out some of their markets. This option does not materially alter

the competitive landscape for commercial mobile radio 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. The Commission's

action 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.

22. Third, the disaggregation option is consistent with the Section

309(j) obligation for the Commission to promote opportunities for

designated entities, including small businesses. This option 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, the Commission provides

opportunities for existing F block licensees to aggregate spectrum in a

manner that could benefit their planned or prospective service

offerings.

C. Surrender Licenses for Reauction (Amnesty)

23. The Commission concludes that it serves the public interest 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 pursuant to applicable federal claims

collections standards. The Commission adopts 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 adopted 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, 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.

24. A C block licensee must make the amnesty election in accordance

with the procedures set forth below in this Second Report and Order.

The Commission will reauction those licenses surrendered on an

expedited basis under the reauction rules discussed in the Further

Notice of Proposed Rulemaking adopted with this Second Report and

Order. Licensees electing the amnesty option will be eligible to bid

for any and all licenses at the reauction.

25. 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 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 the

Commission's previous decisions and actions affecting C block bidders.

The Commission has retained any payments made by those C block bidders

who have failed to make their first or second down payments. In

forgiving the outstanding debt the Commission affords significant

relief to the licensees by allowing them to avoid 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

Commission rules or license conditions.

26. Subject to one exception identified below, licensees choosing

to take advantage of 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 multiple-round 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 licensees could

``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.

27. As an exception to the all-or-nothing requirement, licensees

that have met or exceeded the five year build-out requirements by

September 25, 1997, the date of adoption of this Second Report and

Order, will not be required to surrender licenses for built-out

markets. In addition, these licensees will be permitted to retain those

BTA licenses in which such build-out has occurred. However, licensees

availing themselves of this exception may not pick and choose BTAs

within an MTA but will be required, instead, to keep all of the other

BTAs in the MTA in which the build-out requirement has been met

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and to pay for those licenses under the terms of their Notes. The

build-out exception facilitates the achievement of the statutory goal

set forth in Section 309(j) that it encourages 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 broader policy objectives. The

exception adopted today is one method by which the Commission can

ensure that the menu of options available to the C block is fair to

those licensees that have rapidly built-out their markets and initiated

provision of competitive service.

28. 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 the automatic 90-day non-

default rule) after the suspension. In addition, prior to the

suspension of payments, many C block licensees made their regularly

scheduled installment payments. Due to the actions taken in this Second

Report 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, the

Wireless Telecommunications Bureau is directed to refund any

installment payments made (whether due on or before March 31, 1997) on

any license that is surrendered pursuant to this Second Report and

Order. In addition, the Commission will forgive payment of any due, but

unpaid, installment payments for any surrendered license. For licensees

exercising the build-out exception and retaining certain licenses, all

previously made installment payments will be applied first to reduce

the Suspension Interest applicable to those licenses, and any amounts

remaining will be refunded.

D. Prepayment

29. Under the prepayment option the Commission adopts, any C block

licensee may prepay selective licenses subject to the restrictions

described in this Second Report and Order. 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 a

prepayment of the Notes for as many of its licenses it wishes to keep.

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.

30. 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 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 affiliates will be

considered transferred with the licenses and the corresponding debt.

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 wholly-

owned subsidiary, ABC 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.

31. The Commission believes that this prepayment option fairly

balances competing interests, while maintaining the fairness and

integrity of our rules and auctions. The Commission notes that 30% of

the down payments is equal to 3% of the net high bids and is consistent

with the approach adopted previously for down payments. Under the

Commission's existing rules, an applicant is subject to a 3% payment if

it fails to make the required down payment. See 47 CFR

Secs. 1.2104(g)(2), 24.704(a)(2). The Commission believes 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

default payments apply, these rules could be ignored with impunity.

Such a result would severely harm the Commission's market-based auction

program. It would make it impossible to impose the charges already

imposed in past cases, including in C block cases. Further, 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.

32. The Commission declines to discount the Notes. The Commission

believes it is fair to other bidders and to the credibility and

integrity of the rules for the prepayment to be in the amount of the

outstanding debt for 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

``bail-out'' 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 would unfairly permit a windfall to the licensee electing

this option. The Commission is cognizant of the financial difficulties

for some C block licensees, but is also mindful of a duty to the other

C block licensees who are successfully meeting their obligations and

continuing build-out efforts for wireless services. Therefore, the

Commission believes that it strikes the proper balance by allowing a

licensee the benefit of prepaying its debt obligations, thereby

reducing the amount of interest that would be payable over the full

term of the Note, while avoiding fundamental changes to our rules that

unfairly harm other licensees who followed the rules and who continue

to meet their payment obligations.

33. Under this prepayment option, an incumbent must prepay all of

the BTA licenses in a particular MTA and cannot

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arbitrarily select individual BTA licenses in a given MTA to prepay

while surrendering other licenses in that MTA, with one exception. The

Commission concludes that while a licensee must prepay the debt on all

of the BTAs for which it holds licenses in an MTA, 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. The Commission concludes that a requirement

that all licenses in a given MTA be prepaid precludes licensees from

``cherry picking.'' The simultaneous multiple-round auction design

discussed in the Further Notice of Proposed Rulemaking enables bidders

to place bids on many licenses at once. If licensees were permitted 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.

34. The Commission declines to provide an exception for markets in

which the five-year build-out 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

restrictions in this Second Report and Order. For this reason,

licensees have the option of selecting and prepaying for licenses where

they have invested capital to meet the build-out requirements and not

prepaying in an MTA where they have not. The Commission believes that

this flexibility, compared to the all or nothing approach of simple

amnesty, mitigates the need for this exception.

35. 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. The

Commission does 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, the

Commission does not believe that this option should provide

opportunities for licensees to ``selectively'' reduce their license

obligations by surrendering a license in hopes of re-obtaining it in a

reauction at a lower price.

E. Election Procedures

36. The Commission concludes that a licensee electing to continue

under its existing installment 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''). The ``Election

Date'' is January 15, 1998. The Election Notice must be filed on or

before January 15, 1998 with the Office of the Secretary, Federal

Communications Commission, Washington, D.C. 20554 (attn: Wireless

Telecommunications Bureau, Auctions and Industry Analysis Division--

Election Notice). The Wireless Telecommunications Bureau will provide

more information concerning filing procedures in a subsequent public

notice.

37. The Commission requires 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 build-out exception and retain certain of their

licenses make the appropriate payment by March 31, 1998 (or by the end

of the 60-day grace period allowed), 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.

38. 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.

39. 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.

40. 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 build-out exception together with a list of

those BTA licenses it intends to retain and pertinent information

concerning build-out pursuant to the Commission's rules, (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. Those licensees electing to proceed

under the build-out 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 surrendered to the Commission.

41. 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 ``Paid-In-Full'' and returned to the

licensee.

42. The Commission further concludes that any C block licensee that

(i) fails to elect one of the options set forth in this Second Report

and Order 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 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 not make

payment on that date because of the Suspension Order, will owe on March

31, 1998, all payments that were due and payable earlier, but unpaid

due to the Suspension Order, in addition to the regularly scheduled

March 31, 1998, payment.

F. Cross Defaults

43. The Commission 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

[[Page 55354]]

licensee defaults on a C block license and that licensee holds other C

block licenses on which it is making its payments, the Commission 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, the

Commission will not declare it to be in default on its F block debt.

44. This decision is warranted in light of the efforts to provide

current C block licensees who are experiencing financing difficulties

with options for meeting their financial obligations to the Commission.

This decision does not affect the Commission's policy with regard to

defaults on first or second down payments. The Commission emphasizes

that this 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. The Commission defers to

completion of the Part 1 Rulemaking a decision on whether to amend more

comprehensively the policy of cross defaults. The Commission also

emphasizes 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 affiliates. See 47 CFR

Sec. 1.2110(e)(4)(iii).

III. Conclusion

45. In this Second Report and Order the Commission orders

resumption of installment payments for the broadband PCS C and F

blocks, with the payment deadline reinstated as of March 31, 1998. The

Commission 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 program.

IV. Procedural Matters and Ordering Clauses

A. Regulatory Flexibility Analysis

46. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.

Sec. 604, an Initial Regulatory Flexibility Analysis (IRFA) was

incorporated in Amendment of Part 1 of the Commission's Rules--

Competitive Bidding Proceeding, Order, Memorandum Opinion and Order,

and Notice of Proposed Rule Making, 62 FR 13540 (March 21, 1997) (Part

1 Proceeding) in WT Docket No. 97-82. The Commission sought written

public comment on the proposals in the Part 1 Proceeding, including

comment on the IRFA. This Final Regulatory Flexibility Analysis (FRFA)

conforms to the IRFA.

Need for, and Objectives of, this Action

47. This Second Report and Order is designed to assist C block

broadband personal communications services (PCS) licensees to meet

their financial obligations to the Commission while at the same time

helping the Commission meet its goals of ensuring the rapid provision

of PCS service to the public.

Summary of Significant Issues Raised by Public Comments in Response to

the Initial Regulatory Flexibility Analysis (IRFA)

48. There were no comments filed in response to the IRFA; however,

in this proceeding we have considered the economic impact on small

businesses of the rules adopted herein.

Description and Estimate of the Number of Small Entities to Which Rules

Will Apply

49. The RFA directs agencies to provide a description of and, where

feasible, an estimate of the number of small entities that will be

affected by our rules. See 5 U.S.C. Secs. 603(b)(3), 604(a)(3). The RFA

generally defines the term ``small entity'' as having the same meaning

as the terms ``small business,'' ``small organization,'' and ``small

governmental jurisdiction.'' See 5 U.S.C. Sec. 601(6). In addition, the

term ``small business'' has the same meaning as the term ``small

business concern'' under Section 3 of the Small Business Act. See 5

U.S.C. Sec. 601(3). 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 Administration (SBA). See 15

U.S.C. Sec. 632.

50. This Second Report and Order applies to broadband PCS C and F

block licensees. The Commission, with respect to broadband PCS, defines

small entities to mean those having gross revenues of not more than $40

million in each of the preceding three calendar years. See 47 CFR

Sec. 24.720(b)(1). This definition has been approved by the SBA. 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

FRFA, 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.

Description of the Projected Reporting, Recordkeeping, and other

Compliance Requirements

51. A licensee electing one of the options set forth in the Order

must file a written notice of such election (the ``Election Notice'')

with the Wireless Telecommunications Bureau, Auctions and Industry

Analysis Division no later than the Election Date. The ``Election

Date'' is January 15, 1998. Those licensees electing either (1) to

continue making payments under their original C block Notes; (2) the

disaggregation option; or (3) the amnesty option but elect to take

advantage of the build-out exception and retain certain of their

licenses, will be required to execute and submit a modification of

their Notes, Security Agreements, Uniform Commercial Code (``UCC'')

Financing Statements and any other related documents securing their

Notes within the time frame established by the Bureau.

52. 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.

53. Disaggregation. For licensees electing the disaggregation

option, the Election Notice must include the following: (1) A list of

all licenses being disaggregated; (2) the original of all licenses

being disaggregated; and (3) all originals of the Notes and Security

Agreements for those licenses being disaggregated for cancellation by

the Commission.

54. Amnesty. For licensees electing the amnesty option, the

Election Notice must include the following: (1) A list of all licenses

being surrendered; (2) if applicable, a statement indicating that the

licensee intends to avail itself of the build-out exception together

with a list of those BTA licenses it intends to retain and pertinent

information

[[Page 55355]]

concerning build-out; (3) the original of all licenses being

surrendered; and (4) originals of the Notes and Security Agreements for

those licenses being surrendered for cancellation by the Commission.

55. Prepayment. For licensees electing the prepayment option, the

Election Notice must include the following: (1) A list of all licenses

being prepaid; (2) a payment in the amount of any additional ``new

money'' as a licensee desires to apply to the prepayment of its

licenses; (3) the original of all licenses not being prepaid in

accordance with this option; and (4) all originals of the Notes and

Security Agreements for those licenses not being prepaid for

cancellation by the Commission.

Steps Taken to Minimize Significant Economic Impact on Small Entities,

and Significant Alternatives Considered

56. The Commission believes that it is in the public interest to

adopt these provisions to facilitate use of C block licenses without

further regulatory or marketplace delay. The menu approach adopted in

this Second Report and Order is intended to provide options to

facilitate the rapid introduction of service to the public, while

recognizing that ultimately the decisions concerning competition and

services appropriately are marketplace decisions and should not be

determined by government intervention. This decision is intended to be

fair to current C block licensees (including small entities), to

bidders who were not successful in their attempts to obtain licenses in

this spectrum, and to the public desiring new and innovative

competitive services. These options minimize the potential significant

economic impact on small entities because they meet the unique

circumstances facing the C block licensees and permit these small

entities to choose one of three alternative solutions to reduce their

debt to the Commission. All of the entities affected by this Second

Report and Order are small entities, and the intent of this Second

Report and Order is to alleviate, to some extent, the financial

difficulties faced by these small entities. These options are

relatively straightforward, achieve a degree of fairness to all

parties, including losing bidders in the C block auction, continue to

promote competition and participation by smaller businesses in

providing broadband PCS service, and avoid solutions that merely

prolong uncertainty.

57. The Commission received numerous comments and ex parte comments

that addressed these issues at great length. The majority of commenters

favor some type of relief, including debt restructuring, spectrum

disaggregation, or a penalty-free license surrender (i.e., amnesty)

followed by a reauction. Other commenters express disapproval of any

relief, and urge the Commission to strictly enforce its rules. The

Commission believes that there may be a need for some measure of relief

for these small entities in addition to the suspension of payments

previously granted. The Commission believes that the options adopted in

this Second Report and Order are relatively straightforward and achieve

a degree of fairness to all parties, including small entities. Finally,

the Commission rejects any proposal of a deferral of payments on the

grounds that such proposal would be unfair to unsuccessful bidders who

may have withdrawn from the C block when prices became too high.

58. Among other goals, Section 309(j) directs the Commission to

disseminate licenses among a wide variety of applicants, including

small businesses and other designated entities. See 47 U.S.C.

Sec. 309(j)(3)(B). At the same time, Section 309(j) 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 of the public spectrum

resource made available for commercial use. See 47 U.S.C.

Secs. 309(j)(3)(A), (C). In assessing the public interest, the

Commission must try to ensure that all the objectives of Section 309(j)

are considered. The Commission believes that those goals are best met

by promoting efficient competition while maintaining fairness and

efficiencies of process in the Commission's rules.

Report to Congress

59. The Commission shall send a copy of the Second Report and

Order, including the Final Regulatory Flexibility Analysis, in a report

to Congress pursuant to the Small Business Regulatory Enforcement

Fairness Act of 1996. See 5 U.S.C. Sec. 801(a)(1)(A). A copy of the

Second Report and Order and this Final Regulatory Flexibility Analysis

will also be sent to the Chief Counsel for Advocacy of the Small

Business Administration.

B. Paperwork Reduction Act

60. This Second Report and Order contains a modified information

collection. The Commission, as part of its continuing effort to reduce

paperwork burdens, invites the general public and the Office of

Management and Budget (OMB) to take this opportunity to comment on the

information collections contained in this Second Report and Order, as

required by the Paperwork Reduction Act of 1995, Public Law 104-13.

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 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.

Dates: Written comments by the public on the modified information

collections in this 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.

Address: 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

[email protected] and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--

17th Street, N.W., Washington, DC 20503 or via the Internet to

[email protected].

Further Information: For additional information concerning the

information collections contained in this Second Report and Order

contact Judy Boley, Federal Communications Commission, Room 234, 1919 M

Street, N.W., Washington, DC 20554, or via the Internet to

[email protected].

Supplementary Information

Title: Amendment of the Commission's Rules Regarding Installment

Payment Financing for Personal Communications Services (PCS) Licensees

Type of Review: New Collection.

Respondents

Number of Respondents: The Commission estimates that up to 90

respondents will take the opportunity to elect one of the options in

the Second Report and Order.

Estimated Time Per Response: The Commission estimates the total

burden under the disaggregation and amnesty options would be 4.0 hours

per

[[Page 55356]]

respondent, a total hour burden of 360 hours, which is the highest

estimate and assumes that all 90 potential respondents elect either the

disaggregation or amnesty options. The Commission believes that the

actual total hour burden will be less than 360 hours. The Commission is

of the opinion that the respondents will prepare the submission with

in-house staff, such as in-house counsel or the equivalent, in lieu of

outside contractors. At the equivalent of the GS 15 hourly rate,

$41.24, the total burden would be $41.24 times 360 hours = $14,846.40.

Estimate of total cost burden to respondents: The Commission

estimates that there will be no additional cost burden to respondents.

Cost to the Federal Government

GS 7 Legal Instrument Examiners at $14.06 per hour to review the

documentation for approximately 0.5 hours per submission, times 90

submissions = $632.70

GS 7 Clerical at $14.06 per hour to process refunds for approximately

1.0 hour per submission, times 90 submissions = $1,265.40

GS 12 Engineers to review the documentation at $24.95 per hour, for

approximately 0.5 hours per submission, times 90 submissions =

$1,122.75

GS 12 Engineers to review technical analysis at $24.95 per hour, for

approximately 0.5 hours per submission, times 90 submissions =

$1,122.75

GS 12 Attorneys to review the financial documentation at $24.95 per

hour, for approximately 2.0 hours per submission, times 90 submissions

= $4,491.00

GS 15 Financial Analysts or Accountants to review the documentation,

accounting analysis, and revised payment schedules and to oversee the

repayment process at $41.24 per hour, for approximately 2.0 hours per

submission, times 90 submissions = $7,423.20

Total = $16,057.80.

C. Authority

61. The above action is authorized under the Communications Act of

1934, Secs. 4(i), 5(b), 5(c)(1), 303(r), and 309(j) as amended.

D. Ordering Clauses

62. 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 154(i), 155(b), 156(c)(1), 303(r), and

309(j), this Second Report and Order is hereby adopted, and

Secs. 1.2110 and 24.709 of the Commission's rules are amended as set

forth below, effective December 23, 1997. The information collection

contained in these rules becomes effective on OMB approval but no

sooner than December 23, 1997. The Commission will publish a document

on a later date announcing the effective date of the information

collection.

63. It is further ordered that the Wireless Telecommunications

Bureau's Suspension Order dated March 31, 1997, suspending the

installment payment obligations for Personal Communications Services

(PCS) C block licensees, and the subsequent Public 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.

64. 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 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, D.C. 20554 (attn: Wireless Telecommunications

Bureau, Auctions and Industry Analysis Division--Election Notice).

65. It is further ordered that the Secretary shall send a copy of

this Second Report and Order, 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 Act, 5 U.S.C. Secs. 601 et seq.

66. It is further ordered that, pursuant to 47 U.S.C. Sec. 155(c)

and 47 CFR Sec. 0.331, the Chief of the Wireless Telecommunications

Bureau Is granted delegated authority to prescribe and set forth

procedures for the implementation of the provisions adopted herein.

List of Subjects

47 CFR Part 1

Communications common carriers, Reporting and recordkeeping

requirements.

47 CFR Part 24

Communications common carriers, Reporting and recordkeeping

requirements.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Parts 1 and 24 of Chapter I of title 47 of the Code of Federal

Regulations are amended as follows:

PART 1--PRACTICE AND PROCEDURE

1. The authority citation for Part 24 continues to read as follows:

Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066,

1082, as amended; 47 U.S.C. Secs. 154, 301, 302, 303, 309 and 332,

unless otherwise noted.

2. Section 1.2110 is amended by revising paragraph (e)(4)(i) to

read as follows.

Sec. 1.2110 Designated entities.

* * * * *

(e) * * *

(4) * * *

(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 Payment

Financing for Personal Communications Services Licensees, Second Report

and Order, WT Docket No. 97-82 (released October 16, 1997), shall be in

default if they are more than sixty (60) days delinquent on such

payment. (The Second Report and Order is available in the FCC Reference

Center, Room 239, 1919 M Street, NW., Washington, DC 20554.)

* * * * *

PART 24--PERSONAL COMMUNICATIONS SERVICES

3. The authority citation for Part 24 continues to read as follows:

Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066,

1082, as amended; 47 U.S.C. Secs. 154, 301, 302, 303, 309 and 332,

unless otherwise noted.

4. Section 24.709 is amended by adding paragraph (b)(9) to read as

follows.

Sec. 24.709 Eligibility for licenses for frequency Blocks C and F.

* * * * *

(b) * * *

(9) Special rule for licensees disaggregating or returning certain

spectrum in frequency block C.

(i) In addition to entities qualifying under this section, any

entity that was

[[Page 55357]]

eligible for and participated in the first auction for frequency block

C, which began on December 18, 1995, will be eligible to bid in a

reauction of licenses for frequency block C conducted after March 31,

1998.

(ii) The following restrictions will apply for any reauction of

frequency block C licenses conducted after March 31, 1998:

(A) Applicants that elected to disaggregate 15 MHz of spectrum from

any or all of their frequency block C licenses, as provided in

subsection IV.B., Amendment of the Commission's Rules Regarding

Installment Payment Financing for Personal Communications Services

Licensees, Second Report and Order, WT Docket No. 97-82 (released

October 16, 1997), will not be eligible to apply for such disaggregated

licenses until 2 years from the start of the reauction of those

licenses. The Second Report and Order is available in the FCC Reference

Center, Room 239, 1919 M Street, NW., Washington, DC 20554.

(B) Applicants that surrendered any of their frequency block C

licenses as provided in subsection IV.D. (the ``prepayment option'')

Amendment of the Commission's Rules Regarding Installment Payment

Financing for Personal Communications Services Licensees, Second Report

and Order, WT Docket No. 97-82 (released October 16, 1997), will not be

eligible to apply for the licenses that they surrendered to the

Commission until 2 years from the start of the reauction of those

licenses.

(C) For purposes of this paragraph, applicant shall mean the

applicant and its affiliates and any present or former qualifying

member of a control group and their affiliates.

* * * * *

[FR Doc. 97-28221 Filed 10-23-97; 8:45 am]

BILLING CODE 6712-01-P