**Before the**

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * |                              |
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| Radio Layne, LLC, Request for    | ) |                              |
| Waiver of                        | * |                              |
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| Section 1.2109 of the            |   |                              |
| Commission's Rules               | * |                              |
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MEMORANDUM OPINION AND Order

**Adopted: February 7, 2007 Released: February 7, 2007**

By the Chief, Auctions and Spectrum Access Division, Wireless
Telecommunications Bureau:

# INTRODUCTION 

1.  By this Order, we grant a partial waiver of Section 1.2109 of the
    Commission's rules to Radio Layne, LLC ("Radio Layne"), the winning
    bidder for FM broadcast construction permit FM003A (King Salmon, AK)
    (the "Permit") in Auction No. 37.[^1] The down payment required for
    the Permit was paid out of the upfront payment Radio Layne submitted
    to participate in the auction. Radio Layne then failed to pay the
    remaining balance of its winning bid by the deadline. This balance
    was received by the Commission one day after the deadline, during
    the late payment period provided for under Section 1.2109(a).[^2]
    However, Radio Layne did not submit the 5 percent late fee required
    by the rule until after the end of the late payment period. Radio
    Layne requests that the late fee requirement of Section 1.2109(a) be
    waived. In the alternative, Radio Layne seeks a waiver of Section
    1.2109(c), which provides that a winning bidder that fails to remit
    the balance of its winning bid in a timely manner will be deemed to
    have defaulted, its application will be dismissed, and it will be
    liable for a default payment.[^3] For the reasons set forth below,
    we grant Radio Layne a waiver of the late payment deadline
    established under Section 1.2109(a), but not of the requirement of
    paying a late fee. Because we waive Radio Layne's late payment
    deadline, its request for waiver of Section 1.2109(c) is moot.

**II. BACKGROUND**

2.  Section 1.2109(a) of the Commission's rules provides that auction
    winners are required to pay the balance of their winning bids in a
    lump sum by the payment deadline established by public notice. A
    winning bidder that fails to do so is allowed to make payment within
    ten business days after the payment deadline, provided that it also
    pays a late fee equal to 5 percent of the amount due.[^4] When a
    winning bidder fails to pay the balance of its winning bid and the
    late fee by the late payment deadline, it is considered to be in
    default on its license and is subject to the applicable default
    payments.[^5] Section 1.2109(c) of the Commission's rules provides
    that a winning bidder that fails to remit the balance of its winning
    bid in a timely manner will be deemed to have defaulted, its
    application will be dismissed, and it will be liable for the
    applicable payment in 47 C.F.R. § 1.2104(g).[^6]

3.  Bidding in Auction No. 37 began on November 3, 2004, and concluded
    on November 23, 2004. Radio Layne was the winning bidder for the
    Permit, with a gross bid of \$34,000. Radio Layne received a 25
    percent bidding credit, so that its net winning bid for the Permit
    was \$25,500.[^7] Radio Layne's upfront payment to participate in
    Auction No. 37 was sufficient to satisfy its down payment obligation
    for the Permit as well as a portion of the remaining balance. On May
    20, 2005, the Media Bureau released a Public Notice indicating that
    it would grant the Permit "following the full and timely payment of
    the remaining balance of the applicant's winning bid."[^8] After
    application of its upfront payment, Radio Layne owed a remaining
    balance of \$16,782.05. Consistent with Section 1.2109(a), the
    Prepared to Grant Public Notice established a payment deadline of
    June 6, 2005, and stated that a winning bidder that did not meet the
    June 6, 2005, deadline would be allowed to pay its remaining balance
    plus a 5 percent late fee by June 20, 2005.[^9] The Media Bureau
    cautioned that failure to meet this late payment deadline would
    cause a winning bidder to "be in default and subject to the default
    payment procedures specified in the Commission's rules."[^10]

4.  Radio Layne asserts that Mr. Scott Powell, one of its principals,
    directed the First National Bank of Baird ("First National") to wire
    its outstanding balance of \$16,782.05 to Mellon Bank, the financial
    institution that receives payments of winning bids on behalf of the
    Commission, on the morning of June 6, 2005.[^11] However, this money
    was not received in the account maintained by Mellon Bank for the
    Commission until June 7, 2005, a day after the payment deadline.
    Further, Radio Layne did not submit the necessary 5 percent late
    payment fee of \$839.11 until August 15, 2005, several weeks after
    the late payment deadline of June 20, 2005.[^12] Without a waiver of
    the late payment deadline, therefore, Radio Layne would have been in
    default as of June 21, 2005.

5.  Radio Layne claims that it did not submit the required 5 percent
    late fee on time because of its mistaken belief that its outstanding
    balance had been received by the payment deadline. Mr. Powell states
    in a sworn declaration that "\[w\]e did not do anything different
    with this wire than we had with all of the other wire payments" and
    indicates that he was "surprised, subsequently, to hear that the
    Commission did not receive the wire until \[June 7\]."[^13] Mr.
    Powell and Mr. Kerry Wicker, a Vice President of First National,
    both assert that First National was solely responsible for this
    delay.[^14] Citing these circumstances, Radio Layne first asks that
    the Commission waive the late payment fee requirement. In the event
    the Commission declines to waive the late fee requirement, the
    company alternatively requests that the Commission waive Section
    1.2109(c), which provides that the applications of winning bidders
    that default will be dismissed. Radio Layne asserts that it was "in
    no way responsible for any late payment," and that "\[i\]t should
    not suffer the penalty of dismissal of its application because of
    any problems caused by its bank."[^15]

6.  Radio Layne indicates in its Supplemental Petition that it continues
    to seek a waiver of the late fee requirement notwithstanding its
    payment of the fee on August 15, 2005. Radio Layne states that "if
    it is successful in its waiver request, it will request a refund of
    the recent payment made to the Commission."[^16]

# DISCUSSION

7.  To obtain a waiver of the Commission's rules, Radio Layne must show
    that special circumstances warrant deviation from the rules, or that
    such a deviation would serve the public interest.[^17] As explained
    below, we find that Radio Layne has presented facts sufficient to
    meet this standard.

8.  The Commission's competitive bidding rules promote a number of
    statutory purposes, including the development and rapid deployment
    of new technologies and services for the benefit of the public and
    the efficient and intensive use of spectrum.[^18] To achieve these
    objectives, the rules are designed to provide for an auction and
    licensing process that assigns licenses only to serious, financially
    qualified bidders that are able to use the spectrum effectively and
    efficiently.[^19] As the Commission has explained, its competitive
    bidding rules are intended to protect the integrity of this process
    by ensuring that the provision of reliable service to the public is
    not undermined by winning bidders financially incapable of paying
    the amounts they bid, constructing systems, and providing
    service.[^20] As the Commission has further stated, "We have
    determined that timely payments of auction obligations are the
    manner in which we can be assured of the financial qualifications,
    and thus the seriousness, of a winning bidder."[^21]

9.  In establishing the ten-day late payment period provided for in
    Section 1.2109(a), the Commission determined that ten days would
    "provide an adequate amount of time to permit winning bidders to
    adjust for any last-minute problems."[^22] In establishing the
    requirement of a 5 percent late fee, the Commission found, *inter
    alia,* that such a fee would deter bidders from making late
    payments.[^23] The default and application dismissal provisions of
    Section 1.2109 ensure that entities financially unable to pay their
    winning bids and provide service do not unfairly acquire licenses
    that might have been won by other auction participants. In so doing,
    these provisions also function to deter insincere bidding by
    entities that are not prepared to use the spectrum efficiently and
    effectively. As the Commission has stated, "the default provisions
    are critical for maintaining the integrity of the auction process by
    discouraging insincere bidding and ensuring that licenses end up in
    the hands of those parties that value them the most and have the
    financial qualifications necessary to construct operational systems
    and provide service.[^24] Finally, as the Commission has also
    explained, the default payment rules deter winning bidders from
    delaying payment in order to give themselves time to decide whether
    to accept the assignment of a license, which would also be
    detrimental to other bidders and the efficient and fair functioning
    of the auction process.[^25]

10. In light of the purposes of the Commission's auction payment rules,
    we find that the facts of the current case justify the grant of a
    partial waiver to Radio Layne. Specifically, we waive the late
    payment deadline, but not the late payment requirement of Section
    1.2109(a).

11. First, we find that there is no evidence of Radio Layne being
    financially unqualified to be a Commission permittee.[^26] With its
    wire transfers of June 7, 2005, and August 15, 2005, Radio Layne
    remitted in full its final payment for the Permit and the required 5
    percent late fee. Moreover, the Commission received the entire
    amount of the final payment of \$16,782.05 for the Permit on June 7,
    2005, well before the late payment deadline of June 20, 2005.
    Although Radio Layne did not pay the late fee of \$839.11 until
    August 15, 2005, its submission of the entire final payment absent
    the late fee before the expiration of the late payment period
    eliminates any concern that the company was financially unable to
    pay its winning bid.

12. Second, there is no suggestion of any deliberate effort to delay
    payment, or of any unwillingness to pay, on the part of Radio
    Layne.[^27] Instead, the record indicates that Radio Layne directed
    its bank to pay the full outstanding balance on the June 6, 2005,
    deadline, and believed that the latter had done so. As described
    above, Mr. Powell declared under oath that he was "surprised" to
    learn of the late payment. He noted that this problem had not arisen
    with Radio Layne's prior wire transfers to the Commission, which had
    been made in the same manner.[^28] In addition, First National has
    admitted that its error caused the payment to be received after the
    deadline. Mr. Wicker of First National stated that the delayed
    payment was "due to circumstances having nothing to do with Mr.
    Powell."[^29] This evidence indicates that there are no grounds to
    suspect that Radio Layne either intentionally sought to cause the
    delay in the wire transfer or was otherwise unwilling to make its
    final payment on the Permit.

13. In sum, we find that the facts presented by Radio Layne demonstrate
    that it is financially qualified to be a Commission permittee and
    that there was no deliberate effort on its part to delay payment. We
    find that the circumstances of its late payment meet the standard of
    special circumstances that warrant a waiver of the late payment
    deadline. We therefore grant Radio Layne a waiver of the late
    payment deadline established under Section 1.2109(a).

14. We find, however, that Radio Layne is not entitled to a waiver of
    the June 6, 2005, deadline for paying the balance of its winning bid
    or of its obligation under Section 1.2109(a) to pay the 5 percent
    late fee. Radio Layne was aware, or should have been aware, of its
    responsibility to ensure the timely submission of its final payment
    amount.[^30] As the Commission has previously stated, auction
    winners bear the responsibility for ensuring that the Commission\'s
    financial deadlines are met, and the Commission\'s default rules
    exist in part to provide licensees with the incentive to maintain
    adequate systems for transferring payments to the Commission.[^31]
    We therefore find that a waiver of the late payment fee would be
    inappropriate.

**III. CONCLUSIONS AND ORDERING CLAUSES**

15. For the reasons stated above, IT IS ORDERED pursuant to Sections
    4(i) and 309 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 154(i), 309, that the Petition, dated August 2, 2005, by
    Radio Layne, LLC, is HEREBY GRANTED IN PART, that the Supplemental
    Petition, dated August 22, 2005, by Radio Layne, LLC, is HEREBY
    DENIED, and that Radio Layne, LLC, is not in default under Section
    1.2109 of the Commission's rules, subject, however, to the retention
    by the Commission of the 5 percent late payment fee already paid by
    Radio Layne, LLC, as described above. This action is taken under
    delegated authority pursuant to section 0.331 of the Commission's
    rules, 47 C.F.R. § 0.331.

FEDERAL COMMUNICATIONS COMMISSION

Margaret W. Wiener

Chief, Auctions and Spectrum Access Division

[^1]: *See* Letter from Lee J. Peltzman, Esq., Attorney for Radio Layne,
    LLC, to Marlene H. Dortch, Esq., Secretary, Federal Communications
    Commission (August 2, 2005) ("Petition"); Letter from Lee J.
    Peltzman, Esq., Attorney for Radio Layne, LLC, to Marlene H. Dortch,
    Esq., Secretary, Federal Communications Commission (August 22, 2005)
    ("Supplemental Petition"); 47 C.F.R. § 1.2109.

[^2]: 47 C.F.R. § 1.2109(a).

[^3]: Petition at 2 (citing 47 C.F.R. § 1.2109(c)).

[^4]: 47 C.F.R. §§ 1.2109(a) & 73.5003.

[^5]: 47 C.F.R. § 1.2109(a). *See also* Amendment of Part 1 of the
    Commission's Rules -- Competitive Bidding Procedures, *Third Report
    and Order and Second Further Notice of Proposed Rulemaking*, 13 FCC
    Rcd 374, 428-31 (1997) ("*Part 1 Third Report and Order*").

[^6]: 47 C.F.R. § 1.2109(c). Section 1.2104(g) provides that a bidder
    assumes a binding obligation to pay its full bid amount upon
    acceptance of the high bid at the close of an auction. A high bidder
    that defaults after an auction closes is liable for a payment equal
    to the difference between the amount of its high bid and the amount
    of the winning bid in a subsequent auction, calculated pursuant to
    Section 1.2104(g)(1), plus an additional payment equal to 3 percent
    of the subsequent winning bid.

[^7]: *"*FM Broadcast Construction Permits Auction Closes," *Public
    Notice*, 20 FCC Rcd 1021 (2004) ("*Closing Public Notice*").

[^8]: "Media Bureau Is Prepared to Grant Certain Auction No. 37
    Broadcast Construction Permit Applications," *Public Notice*, 20 FCC
    Rcd 9027, 9027 (2005) ("*Prepared to Grant Public Notice*").

[^9]: *Id.* at 9027-28 (citing 47 C.F.R. § 1.2109(a)).

[^10]: *Prepared to Grant Public Notice*, 20 FCC Rcd at 9028 (citing 47
    C.F.R. §§ 73.5003, 1.2104(g)(2), 1.2109, & 1.2107(b); In re
    Application of Delta Radio, Inc*.*, *Memorandum Opinion and Order*,
    18 FCC Rcd 16889 (2003) ("*Delta Radio*"); Abundant Life, Inc.,
    *Memorandum Opinion and Order*, 16 FCC Rcd 4972 (2001); "Wireless
    Telecommunications Bureau Will Strictly Enforce Default Payment
    Rules," *Public Notice*, 11 FCC Rcd 10853 (1996)).

[^11]: Petition at 1, 2.

[^12]: Supplemental Petition at 1.

[^13]: Petition, Declaration of Scott Powell ("Powell Declaration").

[^14]: Petition at 1, 2, Powell Declaration, Letter from Kerry Wicker,
    Vice President, First National Bank of Baird, to Lee Peltzman,
    Counsel for Radio Layne, LLC, dated July 28, 2005 ("Wicker Letter").

[^15]: Petition at 2.

[^16]: Supplemental Petition at 2.

[^17]: *Delta Radio*, 18 FCC Rcd at 16891 ¶ 7; *see also Northeast
    Cellular Telephone Co. v. FCC*, 897 F.2d 1164, 1166 (D.C. Cir. 1990)
    (citing *WAIT Radio v. FCC*, 418 F.2d 1153, 1157-59 (D.C. Cir.
    1969)).

[^18]: *See* 47 U.S.C. § 309(j)(3). *See also* H.R. Rep. No. 103-111, at
    253 (1993), reprinted in 1993 U.S.C.C.A.N. 378, 580 (finding that "a
    carefully designed system to obtain competitive bids from competing
    qualified applicants can speed delivery of services, promote
    efficient and intensive use of the electromagnetic spectrum, prevent
    unjust enrichment, and produce revenues to compensate the public for
    the use of the public airwaves.").

[^19]: Abundant Life, Inc., *Memorandum Opinion and Order*, 17 FCC Rcd
    4006, 4009 ¶ 8 (2002) ("*Abundant Life III*"). *See also*
    Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding*, Second Report and Order*, 9 FCC Rcd 2348, 2375
    ¶ 160 (1994) ("*Second Report and Order*"); Mountain Solutions LTD,
    Inc*.*, *Memorandum Opinion and Order*, 13 FCC Rcd 21983, 21990 ¶ 14
    (1998), *review denied in part and dismissed in part, Mountain
    Solutions LTD, Inc. v. FCC*, 197 F.3d 512 (D.C. Cir. 1999)
    ("*Mountain Solutions*").

[^20]: BDPCS, Inc., *Memorandum Opinion and Order*, 15 FCC Rcd 17590,
    17598-99 ¶ 15 (2000) (citing *Second Report and Order*, 9 FCC Rcd at
    2381 ¶ 190) ("*BDPCS*").

[^21]: *Abundant Life III*, 17 FCC Rcd at 4009 ¶ 8 (citing [*BDPCS,
    Inc.*, 12 FCC Rcd 3230, 3235 ¶ 8
    (1997)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=4493&FindType=Y&ReferencePositionType=S&SerialNum=1997259853&ReferencePosition=3235),
    *recon. denied in part and granted in part*, [12 FCC Rcd 15341
    (1997)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=4493&FindType=Y&SerialNum=1997264231)).
    *See also Delta Radio*, 18 FCC Rcd at 16896-97 ¶ 19 ("Timely auction
    payments are the principal way we determine whether a winning bidder
    is financially qualified to build out the permit being auctioned.");
    Licenses of 21st Century Telesis, Inc. for Facilities in the
    Broadband Personal Communications Services, *Memorandum Opinion and
    Order*, 15 FCC Rcd 25113, 25123-24 ¶ 22 (2000) ("Insisting that
    licensees demonstrate their ability to pay . . . is essential to a
    fair and efficient licensing process, is fair to all participants in
    our auctions, including those who won licenses in the auctions and
    those who did not, and fosters the promotion of economic opportunity
    and competition in the marketplace."), *recon. denied,* Licenses of
    21st Century Telesis Joint Venture and 21st Century Bidding
    Corporation for Facilities in the Broadband Personal Communications
    Services, *Order on Reconsideration,* 16 FCC Rcd 17257 (2001),
    *petition dismissed in part and denied in part,* *21st Century
    Telesis Joint Venture v. FCC*, 318 F.3d 192 (D.C. Cir. 2003).

[^22]: *Third Report and Order*, 13 FCC Rcd at 429-30 ¶ 95. The
    Commission also concluded that a lengthier late payment period
    "could threaten the integrity, fairness, and efficiency of the
    auction process." *Id*.

[^23]: *Id.*

[^24]: Winstar Broadcasting Corp., *Memorandum Opinion and Order*, 17
    FCC Rcd 6126, 6132 ¶ 15 (2002) ("*Winstar*").

[^25]: *Id.*

[^26]: *Abundant Life III*, 17 FCC Rcd at 4011-12 ¶ 14 (citing *Mountain
    Solutions*, 13 FCC Rcd at 21990-91, 21993 ¶¶ 14-15, 18 and Carolina
    PCS I Limited Partnership, *Memorandum Opinion and Order*, 12 FCC
    Rcd 22938, 22943-44 ¶ 13 (1997)).

[^27]: *Abundant Life III*, 17 FCC Rcd at 4012 ¶ 13. *See also Winstar*,
    17 FCC Rcd at 6129 ¶ 10; WSS, LLC Request for Waiver of Section
    1.2109 of the Commission's Rules, *Memorandum Opinion and Order*, 21
    FCC Rcd 6635, 6639 ¶ 7 (2006); Letter to Messrs. David Irwin and
    Nathaniel Hardy, Counsel for MBO Wireless, Inc., from Margaret
    Wiener, Chief, Auctions and Industry Analysis Division, Wireless
    Telecommunications Bureau, 19 FCC Rcd 4011, 4016 (2004); Metricom,
    Inc, *Order*, 13 FCC Rcd 890, 891 ¶ 6 ("*Metricom Order*"); High
    Tech Communications Services, Inc., *Order*, 15 FCC Rcd 6757, 6759 ¶
    5 (1999).

[^28]: Powell Declaration.

[^29]: Petition at 2, Wicker Letter.

[^30]: *Closing Public Notice*, 20 FCC Rcd at 1022 (stating in bold
    print that "each winning bidder is responsible for . . . obtaining
    confirmation from their financial institution that Mellon Bank has
    timely received their final payment and deposited it in the proper
    account"); *see also Prepared to Grant Public Notice*, 20 FCC Rcd at
    9028 (stating that "\[a\]pplicants must allow sufficient time for
    the wire transfer to be initiated and for the transmission to be
    completed prior to the deadline").

[^31]: *Metricom* *Order*, 13 FCC Rcd at 891 ¶ 8.