January 14, 2002

DA 02-41

J. Curtis Henderson

Senior Vice President & General Counsel

Nucentrix Broadband Networks, Inc.

200 Chisholm Place, Suite 200

Plano, Texas 75075

Peter D. Shields, Esq.

Wiley, Rein & Fielding

1776 K Street, N.W.

Washington, D.C. 20006

> **Re: Petition of Nucentrix Spectrum Resources, Inc., for Deferral of
> Installment Payments**

Dear Messrs. Henderson and Shields:

This letter responds to the Petition filed by Nucentrix Spectrum
Resources, Inc. ("Nucentrix") seeking deferral of its installment
payment obligations for a Multipoint Distribution Service ("MDS")
license in Basic Trading Area 261 ("BTA 261").[^1] For the reasons set
forth below, we deny Nucentrix's Petition.

On March 28, 1996, the Commission completed its auction of MDS licenses
in 493 Basic Trading Areas and BTA-like areas (Auction No. 6).[^2]
Nucentrix was the high bidder on several licenses, including the license
for BTA 261, an area covering Longview, Washington.[^3] As a small
business, Nucentrix was eligible to participate in the Commission's
installment payment program.[^4] After grant of the license for BTA 261,
the Commission's rules required that Nucentrix make quarterly
installment payments.[^5] Nucentrix asserts that with the exception of
the license for BTA 261, it made timely installment payments.[^6]
Nucentrix also concedes that its request for deferral of payments was
not timely.[^7]

Pursuant to the installment payment grace period rules then in
effect,[^8] a licensee had an automatic 90-day period after the
installment payment due date during which payment might be submitted
("non-delinquency period"), with a five percent late fee. If remittance
of the missed installment payment and the five percent late fee was not
made before the expiration of the non-delinquency period, the rule
provided for a second automatic 90-day period in which to remit payment
("grace period") and required an additional late fee equal to ten
percent of the missed payment.[^9] Failure to make a payment, including
the total 15 percent late fee by the end of the second 90 day period
results in automatic cancellation of the license. Nucentrix concedes
that it failed to make its request for deferral of payments prior to
automatic cancellation of its license.[^10]

In its Petition, Nucentrix seeks deferral of its installment payments,
which we treat as a request for waiver of the Commission's Rules
regarding late installment payments for MDS licenses. In support of its
Petition, Nucentrix claims that the Longview BTA is the only license,
out of the 91 licenses it holds, for which timely payments have not been
submitted.[^11] Further, Nucentrix alleges that its failure to submit a
timely payment was due to the administrative complexity of managing the
payments on a large number of licenses. Nucentrix further alleges that
the oversight occurred while it was in negotiations to assign its
license for the Longview BTA to a third party.[^12]

In order to grant Nucentrix the relief that it requests, the Commission
must consider whether the underlying purpose of the installment payment
rule would not be served or would be frustrated by application to the
instant case, and whether a grant of the requested waiver would be in
the public interest; or whether unique or unusual factual circumstances
make application of the rule inequitable, unduly burdensome or contrary
to the public interest; or whether Nucentrix has no reasonable
alternative.[^13] Applying these factors, as we explain below, Nucentrix
has failed to provide a basis for waiver of the installment payment
rule.

Neither the number of licenses upon which Nucentrix had to submit
installment payments nor the negotiations concerning a possible
assignment of the license present unique or unusual factual
circumstances. Many licensees are obligated to keep track of the
installment payment status of multiple licenses. Similarly, many
licensees enter into negotiations to assign a license.[^14] The
Commission has recently held that the failure of a licensee to properly
organize and manage its business dealings is not a unique circumstance
that warrants the granting of a waiver.[^15] Thus, Nucentrix's failure
to adequately track its payment obligations does not present unique or
unusual circumstances warranting a waiver of the Commission's rules.

Although Nucentrix failed to address the issue, as we explain below, the
underlying purpose of the Commission's rules would not be served by
waiver in this instance. The licenses were conditioned upon the full and
timely performance of the payment obligations,[^16] which the licensee
failed to fulfill. The Commission has repeatedly emphasized the
importance of full and timely payment.[^17] Strict enforcement of
payment rules enhances the integrity of the auction and licensing
process by ensuring that applicants have the necessary financial
capacity and that spectrum is awarded to those qualified bidders who
value the spectrum most. Moreover, requiring licensees to comply with
the full and timely payment rule is essential to a fair and efficient
licensing process.[^18] It is fair to all participants in our auctions,
including those who won licenses in the auction and those who did not,
and it fosters the promotion of economic opportunity and competition in
the marketplace.[^19]

For the reasons detailed above, Nucentrix's Petition requesting deferral
of its installment payment obligations and waiver of the Commission's
installment payment rules **IS DENIED**. This action is taken pursuant
to sections 4(i), 303(r), and 309(j) of the Communications Act of 1934,
as amended, 47 U.S.C.§ 154(i), 303(r), and 309(j), and the authority
delegated pursuant to section 0.331 of the Commission's Rules, 47 C.F.R.
§ 0.331.

Sincerely,

Margaret W. Wiener, Chief

Auctions and Industry Analysis Division

Wireless Telecommunications Bureau

[^1]: Petition of Nucentrix Spectrum Resources, Inc. for Deferral of
    Installment Payments, filed October 12, 2000 ("Petition").

[^2]: "Winning Bidders in the Auction of Authorizations to Provide
    Multipoint Distribution Service in 493 Basic Trading Areas: Down
    Payments Due April 5, 1996, FCC Form 304s/Statements of Intention
    Due May 10, 1996," *Public Notice* (rel. March 29, 1996) ("*Winning
    Bidders' Public Notice*").

[^3]: *Winning Bidders' Public Notice* at Attachment A, p. 22. At the
    time of the Auction, Nucentrix was known as Heartland Wireless
    Commercial Channels, Inc. To avoid confusion, all references will be
    to Nucentrix and not Heartland.

[^4]: *See* 47 CFR § § 1.2110, 21.960(b) (1996).

[^5]: *Id.*

[^6]: Petition at 2.

[^7]: *Id*. at 3.

[^8]: 47 CFR § 1.2110(f)(4) (1999). The Part 1 rules referenced in this
    *Order* have been amended to reflect the use of quarters for
    implementation of the Commission's payment deadlines and attendant
    grace period rules. Amendment of Part 1 of the Commission's
    Rules-Competitive Bidding Procedures, WT Docket 07-82, *Order on
    Reconsideration of the Third Report and Order, Fifth Report and
    Order, and the Fourth Further Notice of Proposed Rulemaking*, 15 FCC
    15293 (2000) ("*Part 1 Third Report and Order Recon*"). These
    changes have no effect on Nucentrix's position or the Commission's
    evaluation of its arguments. The amended Part 1 rules became
    effective on October 30, 2000, 60 days after the date of their
    publication in the Federal Register. 65 Fed. Reg. 52323, 52336 (Aug.
    29, 2000).

[^9]: 47 CFR § 1.2110(f)(4) (1999). When the Commission abandoned its
    burdensome policy of reviewing grace period requests on a
    case-by-case approach and adopted its current rules allowing for two
    automatic 90 day grace periods, it did not extend the date upon
    which the payment was due and payable to the Commission. In other
    words, the last day of the 180 day grace period did not become the
    due date of the payment.

[^10]: Petition at 3.

[^11]: *Id.* at 2-3.

[^12]: Petition at 2*.*

[^13]: 47 CFR § 1.925.

[^14]: Letter from Margaret Wiener, Chief, Auctions and Industry
    Analysis Division, to Russell H. Fox, Esq. and Russ Taylor, Esq., DA
    01-1319 (rel. June 1, 2001) ("\[t\]he existence of a potential
    assignee does not negate the licensee's failure to comply with the
    Commission's rules."); *see also* In the Matter of Southern
    Communications Systems, Inc., Request for Limited Rule Waiver to
    Comply with PCS Installment Payment for C Bock Licenses in the
    Cleveland, TN BTA, *Memorandum Opinion & Order*, FCC 00-433 at ¶ 15
    (rel. Dec. 21, 2000) ("*Southern MO&O*"), *further recon. den.
    Second Memorandum Opinion and Order,* FCC 01-298 (rel. Oct. 12,
    2001).

[^15]: *See* *Southern MO&O,* at ¶ 10.

[^16]: 47 C.F.R. § 21.960(b)(4) (1996) ("A BTA authorization issued to
    an eligible winning bidder that elects installment payments shall be
    conditioned upon the full and timely performance of the BTA
    authorization holder's payment obligations under the installment
    plan."); *see also* Nucentrix Security Agreement at ¶ 11 ("The
    debtor recognizes that its continued retention of the License, and
    rights to operate as a Commission licensee thereunder, are
    conditioned upon compliance with all Commission orders and
    regulations applicable to the License and the Communications Act of
    1934, as amended.").

[^17]: *See Southern MO& O* at ¶ 15; In the Matter of Licenses of 21^st^
    Century Telesis, Inc. For Facilities in the Broadband Personal
    Communications Service, *Memorandum Opinion & Order*, FCC 00-434 at
    ¶ 10 (rel. Dec. 21, 2000) ("*21^st^ Century MO&O*"); In the Matter
    of Public Notice DA 00-49 Auction of C and F Block Broadband PCS
    Licenses NextWave Personal Communications, Inc. and NextWave Power
    Partners, Inc., Petition for Reconsideration, In re Settlement
    Request Pursuant to DA 99-745 For Various Broadband PCS C Block
    Licenses, *Order on Reconsideration*, 15 FCC Rcd 17500, 17507-17508,
    ¶¶ 12-13 (2000) ("*NextWave Order on Reconsideration*") *rev'd. on
    other grounds and remanded*, *NextWave Personal Communications, Inc.
    and NextWave Power Partners, Inc. v. Federal Communications
    Commission*, 254 F.3d 130 (D.C. Cir. 2001), *Petition for*
    *Certiorari* filed, 70 USLW 3317 (Oct. 19, 2001) (No. 01-654);
    "Wireless Telecommunications Bureau Will Strictly Enforce Default
    Payment Rules; Bureau to Re-Auction Licenses Quickly," *Public
    Notice*, DA 96-481, 11 FCC Rcd 10853 (1996) (WTB).

[^18]: Amendment of the Commission's Rules Regarding Installment Payment
    Financing of Personal Communications (PCS) Licensees, WT Docket No.
    97-82, *Order on Reconsideration of the Second Report and Order*, 13
    FCC Rcd 8345, 8348 at ¶ 8 (1998).

[^19]: *See NextWave Order on Reconsideration*, 15 FCC Rcd at 17514, ¶
    25.