**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of Application of  | * | FCC File No. 0000137330      |
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| PVT NETWORKS, INC.               | ) |                              |
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| Request for Waiver of Sections   | * |                              |
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| 1.2110(b) and 101.1209(e)        | * |                              |
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**ORDER**

**Adopted:** September 25, 20000 **Released:** September 27, 2000

By the Chief, Public Safety and Private Wireless Division, Wireless
Telecommunications Bureau:

# INtroduction

1.  We have before us two requests by PVT Networks, Inc. (PVT),[^1]
    seeking a waiver of Sections 1.2110(b) and 101.1209(e) of the
    Commission's Rules.[^2] Specifically, PVT requests a waiver of
    Sections 1.2110(b) and 101.1209(e) to permit it to exclude the gross
    income of its affiliate Mayberry Farm, Inc. (Mayberry Farm) and thus
    qualify as a very small business entity for the purposes of the 39
    GHz band Auction (Auction No. 30). For the reasons discussed below,
    we deny PVT's request.

# Background

2.  On November 23, 1999, the Commission issued a public notice
    announcing the start of Auction No. 30 on April 11, 2000.[^3]
    Short-form applications, FCC Form 175, for Auction No. 30 had to be
    filed by March 13, 2000,[^4] at which time, the applicants were
    required to indicate their designated entity status. In its
    short-form application, PVT indicated that it was filing as a very
    small business.[^5] PVT determined that its combined average gross
    revenues, including that of its affiliates and its attributable
    interests was \$14,824,714[^6] if it excluded the revenues
    (\$719,106) of the Mayberry Farm, personal farm of PVT's Secretary
    Treasurer, Robert Mayberry (Mayberry).[^7] Mayberry is a board
    member and officer of both the applicant,[^8] PVT, and the
    applicant's real party in interest, Peñasco Valley Telephone
    Cooperative, Inc. (PVTC). Mayberry also concedes an ownership
    interest in PVTC as a subscriber to the company's telephone
    services.[^9] Simultaneously with the submission of its short-form
    application, PVT submitted a request for a waiver of Sections
    1.2110(b) and 101.1209(e) of the Commission's Rules seeking to
    exclude the income Mayberry derived from Mayberry Farm.[^10]

3.  Auction No. 30 closed on May 8, 2000, with twenty-nine winning
    bidders for 2,173 licenses. PVT was the winning bidder for ten
    licenses in Auction No. 30 - - BEA136C, BEA136D, BEA136F, BEA136H,
    BEA136I, BEA136K, BEA136L, BEA136M, BEA157H and BEA157M.[^11] On May
    23, 2000, PVT filed its long-form application**,** FCC Form
    601.[^12] PVT filed a request for a waiver of Sections 1.2110(b) and
    101.1209(e) of the Commission's Rules with its long-form
    application.[^13] PVT's applications were accepted for filing on
    June 28, 2000.[^14]

# Discussion

4.  PVT requests that we exclude from PVT's gross revenue the income
    generated by Mayberry Farm.[^15] PVT states that the average gross
    revenues for the three preceding years for Mayberry Farm is
    \$719,106.[^16] Further, PVT states that if we determine that
    Mayberry Farm is an affiliate of PVT, then the combined gross
    revenues of PVT and its affiliates would exceed \$15 million, and
    PVT would not be eligible as a very small business.[^17] In that
    event, PVT requests a waiver of Sections 1.2110(b) and 101.1209(e).

5.  PVT argues that the revenues generated from Mayberry Farm provide
    personal income to Mayberry and that the farm has no business
    relationship with PVT, and is therefore not an affiliate of
    PVT.[^18] PVT further argues that if Mayberry Farm were organized as
    a sole proprietorship, its revenues would be treated as personal
    income to Mr. Mayberry and thus would not be attributable income for
    eligibility purposes.[^19] We disagree.

6.  Under the Commission's Rules, a very small business is an entity
    that, together with its affiliates and person or entities that hold
    any interest in the applicant and its affiliates, has average gross
    revenues that are not more than \$15 million for the preceding three
    years.[^20] Furthermore, 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, *inter alia*, "\[i\]s
    directly or indirectly controlled by a third party . . . that also
    controls or has the power to control the applicant . . . ."[^21]

7.  We believe that the facts clearly establish that, as a board member
    and officer of both the applicant, PVT, and the applicant's real
    party in interest, PVTC, Mayberry is an affiliate of the
    applicant.[^22] Further, we believe that Mayberry's ownership of the
    farm is sufficient to establish the indicia of control necessary to
    demonstrate Mayberry's attributable interest in Mayberry Farm and
    consequently, Mayberry Farm's affiliation with the applicant,
    PVT.[^23] Accordingly, we believe that the income of Mayberry Farm
    should be included in PVT's gross revenues under Section 101.1209(e)
    of the Commission's Rules.

8.  PVT also contends that the revenues of Mayberry Farm should be
    treated as personal income and thus excluded from total gross
    revenues.[^24] As previously explained by the Commission, personal
    income of an individual is a part of personal net worth and not
    attributable.[^25] However, we note that our affiliation rules treat
    all affiliates of a controlling interest as affiliates of the
    applicant[^26]. Thus, although we do not attribute the personal
    income of an individual with a controlling interest in an applicant,
    if this individual has a controlling interest in another entity our
    affiliation rules would make attributable to the applicant the gross
    revenues of that entity.[^27] Thus, the income from Mayberry Farm is
    attributable to PVT.

9.  We now address PVT's waiver request. Pursuant to the Commission's
    Rules, we may grant a request for waiver when (i) the underlying
    purpose of the rule(s) would not be served or would be frustrated by
    application to the instant case, and a grant of the requested waiver
    would be in the public interest; or (ii) in view of unique or
    unusual factual circumstances, application of the rule(s) would be
    inequitable, unduly burdensome or contrary to the public interest,
    or the applicant has no reasonable alternative.[^28] Our review of
    the facts before us indicates that grant of a waiver is not
    warranted in this instance because PVT failed to satisfy the waiver
    standard.

10. Specifically, PVT fails to state why the underlying purpose of
    sections 1.2110(b) and 101.1209(b) of the Commission's Rules would
    not be served or would be frustrated by application to the instant
    matter and that a grant of the waiver would be in the public
    interest. Sections 1.2110(b) and 101.1209(b) of the Commission's
    Rules are intended to promote small business participation in
    spectrum auctions.[^29] Although our decision to deny PVT's request
    means that it will not be able to use a thirty-five percent bidding
    credit to lower the cost of its winning bid, it does not foreclose
    PVT's opportunity to use a twenty-five percent bidding credit as a
    small business.[^30] It is for this same reason, in addition to its
    failure to state any unique or unusual factual circumstances, that
    we conclude that PVT has not demonstrated the lack of a reasonable
    alternative to justify its waiver. Thus, we deny PVT's requests for
    waiver.

# Ordering Clauses

11. ACCORDINGLY, IT IS ORDERED that pursuant to Section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i) and
    Sections 1.925, 1.2110 and 101.1209 of the Commission's Rules, 47
    C.F.R. §§ 1.925, 1.2110 and 101.1209, PVT Networks, Inc.'s requests
    for waiver filed on March 13, 2000, and May 23, 2000, respectively,
    ARE DENIED.

12. IT IS FURTHER ORDERED that application FCC File No. 0000137330 filed
    by PVT Networks, Inc. on March 13 2000, SHALL BE PROCESSED by the
    Public Safety and Private Wireless Division, Licensing and Technical
    Analysis Branch in accordance with this decision and the applicable
    Commission Rules.

13. This action is taken under delegated authority pursuant to Sections
    0.131 and 0.331 of the Commission\'s Rules, 47 C.F.R. §§ 0.131,
    0.331.

FEDERAL COMMUNICATIONS COMMISSION

D\'wana R. Terry

Chief, Public Safety and Private Wireless Division

Wireless Telecommunications Bureau

[^1]: PVT Networks, Inc., Waiver Request (filed May 23, 2000) (Waiver
    Request); *see also* PVT Networks, Inc., FCC Form 175, Exhibit C
    (filed Mar. 13, 2000). On March 13, 2000, in its FCC Form 175
    submission PVT also requested a waiver of Section 101.1209(e) of the
    Commission's Rules. Because these requests seek the same relief, we
    will address them simultaneously.

[^2]: 47 C.F.R. §§ 1.2110(b)(4), 101.1209(e) provides that "\[a\]n
    individual or entity is an affiliate of an applicant or of a person
    holding an attributable interest in an application . . . if such
    individual or entity: (i) Directly or indirectly control or has the
    power to control the applicant, or (ii) Is directly or indirectly
    controlled by the applicant, or (iii)) Is directly or indirectly
    controlled by third parties that also controls or has the power to
    control the applicant, or (iv) Has an "identity of interest" with
    the applicant."

[^3]: Auction of Licenses for Fixed Point-to-Point Microwave Services in
    the 38.6-40.0 GHz (39 GHz) Band Scheduled for April 11, 2000,
    *Public Notice*, DA 99-2624 , Report No. AUC-99-30-A (rel. Nov. 23,
    1999).

[^4]: Auction of Licenses for Fixed Point-to-Point Microwave Services in
    the 38.6-40.0 GHz (39 GHz) Band, *Public Notice*, DA 00-112, Report
    No. AUC-99-30-B at 11 (rel. Jan. 21, 2000).

[^5]: PVT Networks, Inc. FCC Form 175 (filed Mar. 13, 2000) (FCC From
    175). 47 C.F.R. § 101.1209(b)(1)(2) provides that "\[a\] very small
    business is an entity that together with its affiliates and persons
    or entities that hold attributable interests in such entity and
    their affiliates, has average gross revenues that are not more than
    \$15 million for the preceding three years."

[^6]: FCC Form 175, Exhibit C.

[^7]: *Id.*

[^8]: Waiver Request at 2.

[^9]: *Id.*

[^10]: *Id.*

[^11]: 39 GHz Band Auction Closes, *Public Notice*, Report No. AUC-30-E
    (rel. May 10, 2000).

[^12]: PVT Networks, Inc., Long-form application (filed May 23, 2000).

[^13]: Waiver Request.

[^14]: Wireless Telecommunications Bureau Market-Based Applications
    Accepted for Filing, *Public Notice,* Report No. 570 (rel. June 28,
    2000).

[^15]: Waiver Request at 1.

[^16]: *Id.*

[^17]: *Id.*

[^18]: *Id.*

[^19]: *Id.*

[^20]: 47 C.F.R. §§ 1.2110(b)(1), 101.1209(b)(1)(ii).

[^21]: 47 C.F.R. § 1.2110(b)(4)(i)(C).

[^22]: *See* 47 C.F.R. §§ 1.2110(b)(4)(ii)(B)-(C), 1.2110(b)(4)(iv),
    101.1209(e)(2). Under the Commission's Rules, the indicia of control
    may be inferred by virtue of one's stock ownership or position as a
    manager, officer, or key employee. Mayberry also holds a
    "subscriber" ownership interest in PVTC, which may also be
    sufficient basis to establish affiliation.

[^23]: *See* 47 C.F.R. §§ 1.2110(b)(4)(i)(C), 101.1209(e).

[^24]: Waiver Request at 1.

[^25]: Amendments of Parts 1, 2, 87 and 101 of the Commission's Rules to
    License Fixed Services at 24 GHz, *Report and Order*, WT Docket No.
    99-238, FCC 00-272, at ¶ 88 (rel. Aug 1, 2000).

[^26]: *Id*.

[^27]: *See id*. citing 47 C.F.R. § 1.2110(b)(4). *See also*
    Implementation of Section 309(j) of the Communications Act - -
    Competitive Bidding, PP Docket No. 93-253, *Fifth Memorandum Opinion
    and Order*, 10 FCC Rcd 403, 421 ¶ 30 (1994) (explaining that the
    affiliation rules make the personal net worth rules largely
    unnecessary since most wealthy individuals are likely to have their
    wealth closely tied to ownership of another business.)

[^28]: *See* 47 C.F.R. § 1.925(b)(3)(i)-(ii).

[^29]: *See* 47 C.F.R. §§ 1.2110(b)(1), 1.2110(b)(3), Amendment of Part
    1 of the Commission's Rules --Competitive Bidding Procedures, WT
    Docket No. 97-82, *Third Report and Order and Second Further Notice
    of Proposed Rule Making*, 13 FCC Rcd 374 (1997).

[^30]: *See* 47 C.F.R. §§ 1.2110(b)(1), 101.1208(a).