**Before the**

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | File No. EB-09-IH-0012       |
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| **CASCADE ACCESS, L.L.C.**       | ) | NAL/Acct. No.200932080027    |
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| Applicant for 700 MHz band       | * | FRN No. 0004381547           |
| licenses in Auction 73           |   |                              |
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NOTICE OF APPARENT LIABILITY FOR FORFEITURE

**Adopted: February 10, 2009 Released: February 10, 2009**

By the Chief, Enforcement Bureau:

# Introduction

1.  By this Notice of Apparent Liability for Forfeiture ("NAL"), we find
    that Cascade Access, L.L.C. ("Cascade"), an applicant to participate
    in the Commission's Auction 73, apparently engaged in a prohibited
    communication and failed to notify the Commission, in apparent
    violation of Sections 1.2105(c)(1) and (c)(6) of the Commission's
    rules.[^1] For the reasons stated below, we conclude that Cascade
    apparently is liable for a monetary forfeiture in the amount of
    \$75,000.

# Background 

2.  Cascade and Cellco Partnership d/b/a Verizon Wireless ("Verizon
    Wireless") each timely submitted short-form applications to
    participate in Auction 73.[^2] Cascade selected one license on which
    to bid, CMA547-B (Nevada 5-White Pine), while Verizon Wireless
    selected all 1,099 of the licenses available in the auction. Cascade
    did not identify any other party with which it had an agreement.
    Verizon Wireless disclosed that it had entered several agreements
    with other entities relating to the licenses being auctioned, which
    did not include Cascade or any Cascade-affiliated entities. Because
    the two entities did not disclose the existence of a bidding
    agreement between themselves, the Commission's anti-collusion rule
    prohibited them from communicating with each other about bids or
    bidding strategies during the period that the rule was in
    effect.[^3]

3.  For Auction 73, the prohibitions of the anti-collusion rule applied
    from 6:00 p.m. ET on December 3, 2007, the short-form application
    filing deadline, until 6:00 p.m. ET on April 3, 2008, the down
    payment deadline. Bidding in Auction 73 began on January 24, 2008
    and concluded on March 18, 2008.

4.  While bidding remained underway, counsel for Verizon Wireless
    submitted a letter, dated February 15, 2008, to the Chief of the
    Auctions and Spectrum Access Division of the Wireless
    Telecommunications Bureau ("WTB"). Therein, Verizon Wireless
    reported the unsolicited receipt of a February 11, 2008 e-mail
    communication, in possible violation of Section 1.2105(c) of the
    Commission's rules, from Bob Milliken. Verizon Wireless's report
    states that it "believes Mr. Milliken is associated with Rio Virgin
    Telephone Company, Inc. ("Rio Virgin"), the parent company of
    Cascade Access, L.L.C., an applicant in FCC Auction 73."[^4]
    Thereafter, WTB referred the matter to the Commission's Enforcement
    Bureau for investigation.

5.  The Enforcement Bureau commenced its investigation of Cascade's
    compliance with Section 1.2105(c) of the Commission's rules by
    sending a letter of inquiry ("LOI") to Cascade requesting
    information about the referenced e-mail communication.[^5] In its
    response to the LOI,[^6] Cascade identifies Mr. Milliken as a board
    member of Cascade Utilities, Inc. Cascade clarifies that Cascade
    Utilities is the 100 percent owner of Rio Virgin and an affiliate of
    Cascade.[^7] Cascade confirms that on February 11, 2008, while
    bidding in Auction 73 was underway, Mr. Milliken, sent an e-mail to
    William Hickey, Executive Director -- Strategic Alliances for
    Verizon Wireless, stating, "\[w\]e have dropped out of the 700 mhz
    auction" and are "ready to talk/meet" with Verizon Wireless.[^8]
    Cascade states that the purpose of the e-mail was "to address when a
    representative of Cascade could communicate with Verizon Wireless
    regarding Verizon's interest in the acquisition of Rio Virgin
    Telephone's 33.333% ownership in the AZ 1 RSA Mohave Wireless
    Partnership."[^9]

6.  Cascade did not report this communication to the Commission because,
    according to Cascade, the e-mail did "not include any information
    requiring disclosure."[^10] In its February 15, 2008, letter to WTB
    reporting the communication, Verizon represented that Hickey
    promptly responded to Milliken that the parties could not have
    discussions because they were then subject to the Commission's
    anti-collusion rule. We have no evidence that Verizon Wireless
    violated any Commission rule.

# Discussion

7.  Under Section 503(b)(1) of the Communications Act of 1934, as
    amended (the "Act"), any person who is determined by the Commission
    to have willfully or repeatedly failed to comply with any provision
    of the Act or any rule, regulation, or order issued by the
    Commission shall be liable to the United States for a forfeiture
    penalty.[^11] In order to impose such a forfeiture penalty, the
    Commission must issue a notice of apparent liability, the notice
    must be received, and the person against whom the notice has been
    issued must have an opportunity to show, in writing, why no such
    forfeiture penalty should be imposed.[^12] The Commission will then
    issue a forfeiture if it finds, by a preponderance of the evidence,
    that the person has willfully or repeatedly violated the Act or a
    Commission rule.[^13] As discussed below, we conclude under this
    standard that Cascade is apparently liable for a forfeiture for its
    apparent willful violation of Section 1.2105(c) of the Commission's
    rules.

## Cascade Apparently Violated The Anti-Collusion Rules

8.  Section 1.2105(c)(1) of the Commission's rules states, in pertinent
    part:

    \[A\]fter the \[FCC Form 175\] short-form application filing
    deadline, all applicants for licenses in any of the same geographic
    license areas are prohibited from cooperating or collaborating with
    respect to, discussing with each other, or disclosing to each other
    in any manner the substance of their own, or each other's, or any
    other competing applicants' bids or bidding strategies, or
    discussing or negotiating settlement agreements, until after the
    down payment deadline, unless such applicants are members of a
    bidding consortium or other joint bidding arrangement identified on
    the bidder's short-form application . . . .[^14]

    In addition, Section 1.2105(c)(6) of the Commission's rules requires
    "any applicant that makes or receives a communication of bids or
    bidding strategies prohibited under \[Section 1.2105(c)(1) of the
    Commission's rules to\] report such communication in writing to the
    Commission immediately, and in no case later than five business days
    after the communication occurs."[^15]

9.  The Commission adopted its anti-collusion rule to prevent collusive
    conduct during auctions, to facilitate the detection of such
    misconduct, and to maintain public confidence in the integrity of
    the auction process.[^16] In so doing, the Commission expressed
    concern "that collusive conduct by bidders prior to or during the
    auction process could undermine the competitiveness of the bidding
    process and prevent the formation of a competitive post-auction
    market structure."[^17] Thus, Section 1.2105(c) of the Commission's
    rules prohibits applicants for any of the same geographic license
    areas from communicating with each other during an auction about
    their own, or each other's, or any other competing applicant's bids
    or bidding strategies, or discussing settlement agreements, unless
    such applicants are members of a bidding consortium or other bidding
    arrangement that they have identified in their FCC Form 175
    ("short-form") applications. The Commission has also stressed that
    any applicant found in violation of the anti-collusion rule faces
    the potential sanctions of license revocation or monetary forfeiture
    and may be prohibited from participating in future auctions.[^18]

10. The prohibition against certain communications set forth in Section
    1.2105(c) takes effect on the pre-auction short-form application
    deadline and remains in place until the down payment deadline, after
    the close of the auction.[^19] This prohibition expressly relates to
    all auction applicants, which are defined by Section 1.2105(c)(7)(i)
    to include "all controlling interests in the entity submitting a
    short-form application to participate in an auction (FCC Form 175),
    as well as all holders of" certain ownership interests, "and all
    officers and directors of that entity." In the instant case, the
    prohibition on certain communications for applicants in Auction 73,
    including Cascade and Verizon Wireless, commenced on December 3,
    2007, and ended on April 3, 2008.

11. Cascade does not dispute that it was an applicant and qualified
    bidder in Auction 73, and that during such auction, Milliken sent
    the referenced e-mail to Verizon Wireless. Although Cascade asserts
    that Milliken acted on behalf of Rio Virgin, it also acknowledges
    that the communication apparently was intended to address when a
    representative of Cascade could talk to Verizon Wireless about
    matters relating to Verizon Wireless's interest in a transaction
    involving Rio Virgin. Mr. Milliken's email was sent from his account
    at cuaccess.net. In addition, in referring to Cascade, Mr.
    Milliken's email used the term "we."[^20] Thus, Mr. Milliken
    represented himself as speaking for Cascade and his e-mail plainly
    disclosed to Verizon Wireless information about Cascade's status in
    Auction 73. Indeed, by representing to Verizon Wireless that Cascade
    had dropped out the auction, Cascade affirmatively disclosed to
    another auction applicant information about its bidding strategy, in
    apparent violation of Section 1.2105(c)(1) of the Commission's
    rules. By informing Verizon Wireless that Cascade was no longer
    bidding, Cascade's disclosure could have undermined the
    competitiveness of the bidding process and jeopardized the formation
    of a competitive post-auction market structure. Furthermore, given
    the nature of the communication, Cascade was required, but failed,
    to disclose this communication to the Commission, in apparent
    violation of Section 1.2105(c)(6) of the Commission's rules.

## Proposed Forfeiture

12. The Commission's *Forfeiture Policy Statement*[^21] specifies that
    the Commission shall impose a forfeiture based upon consideration of
    the factors enumerated in Section 503(b)(2)(E) of the Act, 47 U.S.C.
    § 503(b)(2)(E), such as "the nature, circumstances, extent and
    gravity of the violation, and, with respect to the violator, the
    degree of culpability, any history of prior offenses, ability to
    pay, and such other matters as justice may require."[^22]

13. In considering the factors set forth in the *Forfeiture Policy
    Statement*¸ we believe a forfeiture is warranted in this instance
    against Cascade for its apparent willful violation of Sections
    1.2105(c)(1) and (c)(6) of the Commission's rules. It is of no
    matter that the underlying intent of the e-mail communication may
    have involved a possible transaction between Rio Virgin and Verizon
    Wireless involving their interests in a third communications entity,
    which the party alleges is not auction related. In this regard,
    Section 312(f)(1) of the Act defines willful as "the conscious and
    deliberate commission or omission of such act, *irrespective of any
    intent* to violate . . . any rule or regulation of the Commission .
    . . ."[^23] Thus, although Milliken may not have intended to violate
    Section 1.2105(c), it is clear that he presented himself as a
    representative of Cascade and initiated a communication with Verizon
    Wireless containing information on Cascade's bidding. Consequently,
    for the purposes of Section 503(b)(1) of the Act, Cascade's conduct
    was willful.

14. We have carefully considered the facts of this case, including
    Cascade's explanation for its conduct and its history of compliance,
    as well as the importance that the Commission's anti-collusion and
    collusion notification provisions play in protecting the integrity
    of its auctions. On balance, and in light of our legal precedent, we
    find that a forfeiture in the amount of \$75,000 against Cascade is
    appropriate in this instance.[^24]

# ordering clauses

15. **ACCORDINGLY, IT IS ORDERED**, pursuant to Section 503(b) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 503(b), and
    Section 1.80 of the Commission's rules, 47 C.F.R. § 1.80, that
    Cascade Access, L.L.C., is hereby **NOTIFIED** of its **APPARENT
    LIABILITY FOR FORFEITURE** in the amount of seventy five thousand
    dollars (\$75,000) for its willful violation of Sections
    1.2105(c)(1) and (c)(6) of the Commission's rules, 47 C.F.R.
    §§ 1.2105(c)(1) and (c)(6).

16. **IT IS FURTHER ORDERED**, pursuant to Section 1.80 of the
    Commission's rules, 47 C.F.R. § 1.80, that within thirty (30)
    calendar days of the release date of this Notice, Cascade Access,
    L.L.C., **SHALL** **PAY** the full amount of the proposed forfeiture
    or **SHALL** **FILE** a written statement seeking reduction or
    cancellation of the proposed forfeiture.

17. Payment of the forfeiture must be made by check or similar
    instrument, payable to the order of the Federal Communications
    Commission. The payment must include the NAL/Account Number and FRN
    Number referenced above. Payment by check or money order may be
    mailed to Federal Communications Commission, P.O. Box 979088, St.
    Louis, MO 63197-9000. Payment by overnight mail may be sent to U.S.
    Bank -- Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention
    Plaza, St. Louis, MO 63101. Payment by wire transfer may be made to
    ABA Number 021030004, receiving bank TREAS/NYC, and account
    number 27000001. For payment by credit card, an FCC Form 159
    (Remittance Advice) must be submitted.  When completing the FCC Form
    159, enter the NAL/Account number in block number 23A (call
    sign/other ID), and enter the letters "FORF" in block number 24A
    (payment type code). Requests for full payment under an installment
    plan should be sent to:  Chief Financial Officer -- Financial
    Operations, 445 12th Street, S.W., Room 1-A625, Washington, D.C. 
    20554.   Please contact the Financial Operations Group Help Desk at
    1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
    regarding payment procedures. Cascade shall also send electronic
    notification on the date said payment is made to
    Hillary.DeNigro@fcc.gov and to [Gary.Schonman@fcc.gov]{.underline}.

18. The response, if any, must be mailed to Hillary S. DeNigro, Chief,
    Investigations and Hearings Division, Enforcement Bureau, Federal
    Communications Commission, 445 12th Street, SW, Room 4-C330,
    Washington, D.C. 20554, and must include the NAL/Account Number
    referenced above. In addition, to the extent practicable, a copy of
    the response, if any, should also be transmitted via e-mail to
    [Hillary.DeNigro@fcc.gov]{.underline},
    [Gary.Schonman@fcc.gov]{.underline}, and
    [Judy.Lancaster@fcc.gov]{.underline}.

19. The Commission will not consider reducing or canceling a forfeiture
    in response to a claim of inability to pay unless the respondent
    submits: (1) federal tax returns for the most recent three-year
    period; (2) financial statements prepared according to generally
    accepted accounting practices ("GAAP"); or (3) some other reliable
    and objective documentation that accurately reflects the
    respondent's current financial status. Any claim of inability to pay
    must specifically identify the basis for the claim by reference to
    the financial documentation submitted.

20. **IT IS FURTHER ORDERED** that a copy of this Notice of Apparent
    Liability For Forfeiture shall be sent, by Certified Mail Return
    Receipt Requested, to Brenda C. Crosby, President, Cascade Access,
    L.L.C., 303 SW Zobrist, Estacada, Oregon 97023, and to Thomas
    Gutierrez, Esq., Lukas, Nace, Gutierrez & Sachs, LLP, 1650 Tysons
    Boulevard, Suite 1500, McLean, Virginia 22102.

FEDERAL COMMUNICATIONS COMMISSION

Kris Anne Monteith

Chief, Enforcement Bureau

[^1]: *See* 47 C.F.R. §§ 1.2105(c)(1) and (c)(6).

[^2]: *See* FCC Form 175 of Cascade Access, L.L.C., Application to
    Participate in an FCC Auction, submitted on December 1, 2007, 9:49
    a.m. ET, resubmitted with modifications on January 4, 2008, 2:47
    p.m. ET; FCC Form 175 of Cellco Partnership d/b/a Verizon Wireless,
    Application to Participate in an FCC Auction, submitted on December
    3, 2007, 2:00 p.m. ET, resubmitted with modifications on December
    31, 2007, 2:06 p.m. ET. Cascade and Verizon Wireless were classified
    as eligible to participate in the auction. *See* "Auction of 700 MHz
    Band Licenses: 214 Bidders Qualified to Participate in Auction 73,"
    *Public Notice*, 23 FCC Rcd 276 (2008).

[^3]: *See* 47 C.F.R. § 1.2105(c)(1).

[^4]: Letter from David H. Solomon and Lawrence J. Movshin, Counsel to
    Cellco Partnership d/b/a Verizon Wireless, to Margaret Wiener, Chief
    of the Auctions and Spectrum Access Division, Wireless
    Telecommunications Bureau, dated February 15, 2008, at 1. Verizon
    Wireless properly requested confidential treatment of the letter on
    the basis of anonymous bidding procedures then in effect. *See*
    *Public Notice*, Auction of 700 MHz Band Licenses, AU Docket No.
    07-157, DA 08-83 (WTB, rel. Jan. 14, 2008). Those procedures, as
    they applied to Auction 73, and, consequently, the basis for
    confidential treatment of the Verizon Wireless letter, have since
    lapsed.

[^5]: *See* Letter from Gary Schonman, Special Counsel, Investigations &
    Hearings Division, Enforcement Bureau, Federal Communications
    Commission, to Brenda C. Crosby, President, Cascade, L.L.C., dated
    January 14, 2009.

[^6]: *See* Letter from Thomas Gutierrez, Esq., to Marlene H. Dortch,
    Secretary Federal Communications Commission, dated January 26, 2009
    ("Response") at 1. []{.mark}

[^7]: Response at 1, 2 and Declaration of Robert G. Milliken.

[^8]: Response at 2 and Exhibit I (copy of 2/11/2008 email from Bob
    Milliken's cuaccess.net account to William Hickey).

[^9]: Response at 2.

[^10]: Response at 3.

[^11]: *See* 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1); *see
    also* 47 U.S.C. § 503(b)(1)(D)(forfeitures for violation of 18
    U.S.C. § 1464). Section 312(f)(1) of the Act defines willful as "the
    conscious and deliberate commission or omission of \[any\] act,
    irrespective of any intent to violate" the law. 47 U.S.C. §
    312(f)(1). The legislative history to Section 312(f)(1) of the Act
    clarifies that this definition of willful applies to both Sections
    312 and 503(b) of the Act, H.R. Rep. No. 97-765, 97^th^ Cong. 2d
    Sess. 51 (1982), and the Commission has so interpreted the term in
    the Section 503(b) context. *See, e.g., Southern California
    Broadcasting Co.*, Memorandum Opinion and Order, 6 FCC Rcd 4387,
    4388 (1991) ("*Southern California Broadcasting Co.*").

[^12]: *See* 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).

[^13]: *See, e.g., SBC Communications, Inc.,* Forfeiture Order, 17 FCC
    Rcd 7589, 7591, ¶ 4 (2002) (forfeiture paid).

[^14]: 47 C.F.R. § 1.2105(c)(1).

[^15]: 47 C.F.R. § 1.2105(c)(6).

[^16]: *See* *Implementation of Section 309(j) of the Communications Act
    -- Competitive Bidding*, Second Report and Order, 9 FCC Rcd 2348,
    2386-88, ¶¶ 221-226 (1994) ("*Competitive Bidding Second Report and
    Order*") ("\[W\]e believe that the competitiveness of the auction
    process and of post-auction market structure will be enhanced by
    certain additional safeguards designed to reinforce existing laws
    and facilitate detection of collusive conduct."); *Amendment of Part
    1 of the Commission's Rules -- Competitive Bidding Procedures*,
    Seventh Report and Order, 16 FCC Rcd 17546 (2001) (adopting rule
    imposing continuing obligation on auction applicants to disclose
    communications that appear to violate the anti-collusion rule).

[^17]: *Competitive Bidding Second Report and Order*, 9 FCC Rcd 2348,
    2387, ¶ 223; *see also Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding*, Memorandum Opinion and
    Order, 9 FCC Rcd 7684, 7687-7688, ¶ 10 (1994) ("Our anti-collusion
    rules are intended to protect the integrity and robustness of our
    competitive bidding process.").

[^18]: *See, e.g., Implementation of Section 309(j) of the
    Communications Act -- Competitive Bidding*, Fifth Report and Order,
    9 FCC Rcd 5532, 5570-71 (1994). In anticipation of Auction 73, WTB
    issued several Public Notices specifically warning auction
    applicants against violating the anti-collusion rule by
    communicating about bids, bidding strategies or settlements with
    another applicant seeking to bid for licenses in the same geographic
    license areas, unless the applicants identified each other in their
    applications as having entered into agreements under section
    1.2105(a)(2)(viii). *See also* "Auction of 700 MHz Band Licenses
    Scheduled for January 24, 2008; Notice and Filing Requirements,
    Minimum Opening Bids, Reserve Prices, Upfront Payments, and Other
    Procedures for Auctions 73 and 76," *Public Notice*, 22 FCC Rcd
    18,141, 18,149-54 ¶¶ 15-34 (2007).

[^19]: *See* 47 C.F.R. § 1.2105(c)(1). *See also* *Amendment of Part 1
    of the Commission's Rules -- Competitive Bidding Procedures,* Order
    on Reconsideration of the Third Report and Order, Fifth Report and
    Order, and Fourth Further Notice of Proposed Rulemaking, 15 FCC Rcd
    15,923, 15,297-298, ¶¶ 7-8 (2000).

[^20]: Cascade states that Milliken is a director of Cascade Utilities,
    an affiliate of Cascade. We note that the two entities appear to be
    commonly controlled.

[^21]: *The Commission's Forfeiture Policy Statement and Amendment of
    Section 1.80 of the Rules to Incorporate the Forfeiture Guidelines*,
    12 FCC Rcd 17,087, 17,113 (1997), *recons. denied* 15 FCC Rcd 303
    (1999) ("*Forfeiture Policy Statement"*); 47 C.F.R. § 1.80(b).

[^22]: *Id.* at 17,100-101, ¶ 27.

[^23]: 47 U.S.C. § 312(f)(1) (emphasis added). *See, e.g., Southern
    California Broadcasting Co.*

[^24]: *See, e.g., Star Wireless, LLC and Northeast Communications of
    Wisconsin, Inc.*, Order on Review, 22 FCC Rcd 8943 (2007), *appeal
    denied*, *Star Wireless, LLC v. FCC & USA*, No. 07-1190 (D.C. Cir.
    April 22. 2008). In the *Order on Review*, the Commission affirmed
    the Bureau's determination that Star Wireless and Northeast
    Communications were each liable for a monetary forfeiture for
    violating Section 1.2105(c) of the Commission's rules, but reduced
    the forfeiture from \$100,000 to \$75,000 in light of each company's
    past history of compliance with Commission rules*.*