# DA 01-1413

#  June 12, 2001

E. Ashton Johnston, Esquire

Piper, Marbury, Rudnick & Wolfe, LLP

1200 Nineteenth Street, NW

Washington, DC 20036-2412

## Re: [Eligibility Status of Vista Communications, Inc.]{.underline} 

Dear Mr. Johnston:

This letter responds to your correspondence on behalf of Vista
Communications, Inc. ("Vista")[^1] requesting a waiver of the grace
period provisions of Section 1.2110(e)(4)[^2] so that Vista might
participate in the restructuring plan adopted in the Commission's
*218-219 MHz Order*.[^3] Specifically, Vista seeks a waiver of the
Commission's grace period rules and asks that the Auctions and Industry
Analysis Division, Wireless Telecommunications Bureau, ("Division")
treat Vista's June 1, 1999 Waiver Request as a timely-filed grace period
request.[^4] In the alternative, Vista requests that the

Division allow Vista to remit a retroactive payment, sufficient to bring
its installment payments "current" through March 16, 1998.[^5] For the
reasons set forth below, we deny Vista's requests. [^6]

### 1. Background

The *218-219 MHz* *Order* modified the regulations governing the
licensing of the 218-219 MHz Service (formerly known as IVDS) to
maximize the efficient and effective use of the band.[^7] The *218-219
MHz Order*, among other things, modified service and technical rules for
the band and extended the license term from five to ten years.[^8] The
*218-219 MHz Order* also announced the Commission's decision to adopt a
financial restructuring plan for "Eligible Licensees." Eligible
Licensees are licensees that: (i) were current in installment payments
as of March 16, 1998; (ii) were less than ninety days delinquent on the
last payment due before March 16, 1998; or (iii) had properly filed
grace period requests under the former installment payment rules.[^9]
"Ineligible Entities" are former licensees that made second down
payments and: (i) made some installment payments, but were not current
in their installment payments as of March 16, 1998, and did not have a
grace period request on file in conformance with the former rules; or
(ii) entities that never made any installment payments and did not have
a timely filed grace period request on file.[^10] Ineligible Entities
are not entitled to participate in the 218-219 MHz Service restructuring
plan as they lost their licenses through default.[^11] However,
Ineligible Entities will be granted debt forgiveness for any outstanding
balances owed and will be refunded their previously paid installment
payments.[^12]

Prior to the issuance of the *218-219 MHz Order*, Vista sought waiver of
the Commission's grace period rules[^13] as applied to the 218-219 MHz
Service. After issuance of the *218-219 MHz Order*, Vista filed a
supplement requesting that the Division treat its June 1, 1999 waiver
request as a timely-filed grace period request.[^14] Alternatively,
Vista requested that the Division allow Vista to remit a retroactive
payment sufficient to bring its installment payments "current" through
March 16, 1998.[^15]

In January 2000, in accordance with the rules set forth in the *218-219
MHz Order*, current and former 218-219 MHz licensees were notified of
their eligibility status with regard to the restructuring plan. Vista
was notified that it was an Ineligible Entity.[^16]

### Vista's Request for Waiver of the Commission's Grace Period Rules 

Vista requests a waiver of the applicable default and automatic license
cancellation rules.[^17] In its waiver request, Vista acknowledges that
after making the interest-only installment payment of March 31, 1997, it
ceased making installment payments on its licenses, thus making it more
than ninety days delinquent as of March 16, 1998 and, therefore,
ineligible to participate in the 218-219 MHz restructuring plan.[^18] In
order for the Commission to grant a waiver of its rules, one of two
tests must be met. The entity requesting a waiver must demonstrate that
either (i) the underlying purpose of the rule(s) would not be served or
would be frustrated by application in the instant case, and that a grant
of the requested waiver would be in the public interest; or (ii) in view
of unique or unusual factual circumstances in the instant case,
application of the rule(s) would be inequitable, unduly burdensome or
contrary to the public interest, or the applicant has no reasonable
alternative.[^19] Vista claims that its waiver request satisfies both
tests.[^20] We disagree.

Vista alleges that certain factors created confusion regarding its
payment obligations and that this confusion constitutes unique or
unusual circumstances that warrant a waiver.[^21] Vista alleges that the
following three factors support its position: (i) changes to the IVDS
payment schedule;[^22] (ii) a March 1996 letter from the Billings and
Collections Branch in which a review date of September 20, 1999 was
noted to audit accounts;[^23] and (iii) Vista's own lack of knowledge as
to filing of grace period requests.[^24] Vista contends that the above
factors led to a belief that it would be given the opportunity "to make
current its accounts and/or otherwise participate in a revised IVDS
license program."[^25] For the reasons below, we find that the above
circumstances do not excuse Vista's individual non-compliance with the
Commission's installment payment rules.

With respect to Vista's first allegation that changes to the IVDS
payment schedule created confusion, the Commission provided ample notice
to 218-219 MHz licensees regarding the Commission's payment rules.[^26]
The *1995 IVDS Omnibus Order,* and the *IVDS Grace Period PN*, cautioned
licensees that, in accordance with section 1.2110[^27] of our Rules, if
they individually required financial assistance, they should request a
three- or six-month grace period during the first ninety days following
any missed installment payments.[^28] The Bureau further cautioned
licensees that if a licensee failed to make timely payments, absent the
filing of a grace period request, the license would be in default.[^29]
As the Commission noted in the *218-219 MHz Second Order on
Reconsideration*, although the date for the initial installment payment
was postponed for a period of time, "even the most favorable reading of
the Commission's Orders and letters to licensees would not reasonably
lead a licensee to believe that it was excused from its obligation to
make payments, or that it did not need to file a grace period request if
it determined that it could not make timely payments."[^30] Indeed, a
March 29, 1996 letter from the Commission's Billings and Collections
Branch to Vista, included as an attachment to Vista's petition,
explicitly stated that the dates for payments due after March 31, 1996
remained unchanged.[^31] Apparently, Vista ignored this information.

The second factor that Vista alleges created confusion was a March 10,
1996 letter from the Billings and Collections Branch entitled "Notice to
IVDS Licensees."[^32] Vista notes in its waiver request that the "Notice
to IVDS Licensees" stated that a review of accounts would be conducted
on September 20, 1999.[^33] Vista alleges that this statement confused
Vista to the point that it withheld all installment payments assuming it
could make up for a shortfall during the proposed review.[^34] Such an
assumption is unreasonable since the Commission specifically informed
Vista, and other licensees, that notice of the proposed review of
accounts was not meant to indicate that installment payments were
stayed.[^35]

The third factor that Vista relies upon is its own lack of
knowledge.[^36] Vista argues that its lack of knowledge regarding the
grace period rules, in combination with the alleged confusion created by
the first two factors should excuse its failure to file a grace period
request.[^37] Vista, just as every Commission licensee, was charged with
knowledge of the applicable rules.[^38] Further, Vista admits it
received the *March 29 1996 Letter*[^39] that reminded licensees of the
Commission's rules concerning grace period requests.[^40] The *March 29,
1996 Letter* also reiterated that previous stays of the due dates for
particular installment payments did not alter the due dates for future
payment.[^41] Finally, in the various Orders and Public Notices issued
in this service, the Commission repeatedly indicated to licensees the
consequence of failing to make timely payments.[^42] Thus, Vista has
failed to demonstrate unique or unusual circumstances that would warrant
a waiver of the rules.

Vista also argues that enforcement of the grace period rule would be
inequitable and contrary to the underlying purpose of the rules. In
support of its position, Vista lists the payments it has made on its
licenses[^43] and what it describes as its efforts to comply with the
Commission's installment payment rules.[^44] Vista argues that it is
inequitable to allow licensees that made no installment payments, but
filed timely grace period requests, to retain their license(s), while
refusing to permit licensees that made "substantial payments" to retain
their license(s).[^45] In essence, Vista seeks to change the definition
of "Eligible Licensees" to include those who have made "substantial
payments." The Commission, in the *218-219 MHz Second Order on
Reconsideration*, specifically rejected Vista's proposal to adopt a new
definition of "Eligible Licensee," which would have weighed partial
payments for adequacy.[^46] As we explain below, Vista's argument,
although raised in a different context, continues to be unavailing.

Consistent with the Commission's obligations under Section 309(j) of the
Communications Act of 1934, as amended,[^47] the Commission's auction
rules serve the underlying purpose of assuring and maintaining the
efficient and effective assignment of spectrum licenses. The underlying
purpose of the default and automatic license cancellation rules, which
Vista asks us to waive, is to maintain the integrity of the auction
process by encouraging licensees to timely and fully comply with their
payment obligations, and effectively utilize the spectrum. [^48] Strict
enforcement of the Commission's payment rules ensures that applicants
have the necessary financial qualifications and that spectrum is awarded
to those qualified bidders who value the spectrum most. Insisting that
licensees demonstrate their ability to pay as a condition to holding
licenses 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.[^49] Thus,
Vista has failed to demonstrate that application of the installment
payment and grace period rules to the facts in this instance would be
contrary to the underlying purpose of the rule.

**3. [Request to Remit Retroactive Payment]{.underline}**

In its alternative argument, Vista requests that it be allowed to make a
retroactive payment sufficient to be deemed "current as of March 16,
1998."[^50] In essence, this request seeks a change to the Commission's
eligibility rules. In the *218-219 MHz Second Order on Reconsideration,*
the Commission specifically rejected Vista's proposal that the
Commission reconsider the *218-219 MHz Order* to allow retroactive
payments by former licensees such as Vista.[^51] The Commission
determined that granting Vista's request would undermine the
Commission's rules requiring timely and full payment as a condition of
retaining the license.[^52] The Commission concluded that in light of
the ample notice provided licensees regarding the payment rules,[^53]
and the generous provisions for Ineligible Entities provided in the
*218-219 MHz Order*, Vista's suggestion that it be allowed to make
retroactive payments was unsupportable.[^54] Thus, in keeping with the
Commission's earlier rejection of this suggestion, we reject Vista's
proposal to allow it to make retroactive payments in order to become
eligible for participation in the 218-219 MHz Service restructuring
plan.

### 4. Conclusion

For the reasons detailed above, we deny Vista's request to be accorded
the status of "Eligible Licensee" for participation in the 218-219 MHz
restructuring plan.

For the reasons stated above, Vista's request for waiver of the
Commission's grace period rules as applied to the 218-219 MHz Service is
DENIED.

For the reasons stated above, Vista's request to remit funds sufficient
to cover installment payments due on its licenses to make it "current"
through March 16, 1998, is DENIED.

This action is taken pursuant to sections 1, 4(i), and 4(j) of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), and
154(j), and the authority delegated pursuant to section 0.331 of the
Commission's Rules, 47 C.F.R. § 0.331.

> Sincerely,

Margaret Wiener

> Chief, Auctions and Industry Analysis Division

Wireless Telecommunications Bureau

[^1]: ^?^ Letter to Thomas Sugrue, Chief, WTB, FCC, from E. Ashton
    Johnston, Esq., dated June 1, 1999 ("Vista Waiver Request"); and,
    Letter to Thomas Sugrue, Chief, WTB, FCC, from E. Ashton Johnston,
    Esq., dated Dec. 8, 1999 ("Vista Waiver Supplement").

[^2]: Vista cites to the grace period provisions at 47 C.F.R. §
    1.2110(f)(4)(1999), however, at the time of the automatic
    cancellation of its licenses in 1997, the grace period provisions
    were codified at 47 C.F.R. § 1.2110(e)(4). We also note that after
    the filing of Vista\'s request, the Commission modified the Part 1
    rules, including Section 1.2110. 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 Rule Making*, 15 FCC
    Rcd. 15293, 15 FCC Rcd. 21520 (2000).

[^3]: Amendment of Part 95 of the Commission's Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, WT Docket No.
    98-169, *Report and Order and Memorandum Opinion and Order*, 15 FCC
    Rcd. 1497 (1999) ("*218-219 MHz Order*"); *218-219 MHz Second Order
    on Reconsideration of the Report and Order and Memorandum Opinion
    and Order*, FCC 00-411 (rel. December 13, 2000) ("*218-219 MHz
    Second Order on Reconsideration*").

[^4]: Vista Waiver Request at 7; Vista Waiver Supplement at 2.

[^5]: Vista Waiver Supplement at 2.

[^6]: We also note that Vista filed a petition for reconsideration of
    the Commission's *218-219 MHz Order* raising many of the same
    arguments that it raises here in the context of a waiver request.
    The Commission denied Vista's petition. *218-219 MHz Second Order on
    Reconsideration*, ¶¶ 27-29 (denying Vista's request for a
    modification of the definition of "Eligible Licensees"; and denying
    Vista\'s request that licensees be able to make retroactive payments
    sufficient to be deemed "current as of March 16, 1998.")

[^7]: *218-219 MHz Order*, 15 FCC Rcd at 1506 ¶ 15.

[^8]: *Id*. at 1517 ¶ 31.

[^9]: *Id*. at 1520 ¶ 37.

[^10]: *Id*. at 1520 ¶ 38.

[^11]: *Id.* at 1518 ¶ 33 (citing 47 C.F.R. § 1.2110 (1994)); *see also*
    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, Settlement Request
    Pursuant to DA 99-745 For Various Broadband PCS C Block Licenses,
    *Order on Reconsideration*, 15 FCC Rcd 17500 (2000) ("*NextWave
    Order on Reconsideration*"); *In re NextWave Personal
    Communications, Inc.,* 200 F.3d 43 (2^nd^ Cir. 1999), *mandate
    enforced by* 217 F.3d 125 (2^nd^ Cir. 2000), *cert. denied*, 2000 WL
    795201 (Oct. 10, 2000) (No. 99-1980); *Mountain Solutions v. FCC*,
    197 F.3d 512 (D.C. Cir. 1999) (upholding the Commission's decision,
    in a PCS licensing matter, to deny a waiver of its rule requiring a
    winning bidder to timely submit both its first and second down
    payment before the Commission will grant a license).

[^12]: *218-219 MHz Order*, 15 FCC Rcd at 1520 ¶ 38; Implementation
    Procedures For The Report And Order And Memorandum Opinion And Order
    Addressing the 218-219 MHz Services (Formerly Known As Interactive
    Video And Data Services (IVDS)), *Public Notice*, DA 00-900, 15 FCC
    Rcd 7329 (WTB 2000) (noting that the Department of Justice
    authorized the reduction of debt owed to the United States in
    accordance with the debt relief provisions of the *218-219* *MHz
    Order*); *see also* *IVIDCO* Letter dated January 23, 2001 DA-170.

[^13]: *See* Vista Waiver Request at 1.

[^14]: Vista Waiver Supplement.

[^15]: *Id*. at 2.

[^16]: Letter to Elizabeth Michaels, from Rachel Kazan, Chief, Auctions
    Finance and Market Analysis Branch, WTB, FCC, dated January 6, 2000
    ("*January 6, 2000 Vista Ineligibility Letter*").

[^17]: *See* Vista Waiver Request.

[^18]: Vista Waiver Request at 5.

[^19]: 47 C.F.R. § 1.925.

[^20]: *See* Vista Waiver Request at 7.

[^21]: Vista Waiver Request at 2-7.

[^22]: Vista Waiver Request at 3-5.

[^23]: ^?^ *See* Vista Waiver Request, Attachment 7 (March 10, 1996
    Billings "Notice to IVDS Licensees," from Regina W. Dorsey, Chief,
    Billings and Collections Branch).

[^24]: ^?^ Vista Waiver Request at 5.

[^25]: *Id.*

[^26]: ^?^ 47 C.F.R. § 1.2110 (1994); Wireless Telecommunications Bureau
    Staff Clarifies "Grace Period" Rule for IVDS "Auction" Licensees
    Paying By Installment Payments, *Public Notice*, DA 95-1617, 10 FCC
    Rcd. 10724 (1995) (WTB) ("*IVDS Grace Period PN*"); *see also*
    Interactive Video and Data Service (IVDS) Licensees, Various
    Requests by Auction Winners, *Order*, 11 FCC Rcd. 1282 at 1285 ¶ 19
    (1995) ("*1995 IVDS Omnibus Order*").

[^27]: 47 C.F.R. § 1.2110 (e)(4)(ii) (1994).

[^28]: *1995 IVDS Omnibus Order,* 11 FCC Rcd. at 1285 ¶ 19; *IVDS Grace
    Period PN*, 10 FCC Rcd. 10724; *see also* Wireless
    Telecommunications Bureau Staff Responds to Questions About the
    Broadband PCS C Block Auction, *Public Notice*, Mimeo 54270 (1995)
    (clarified grace period rule in the context of Personal
    Communications Services auction) ("*PCS Grace Period PN*").

[^29]: *IVDS Grace Period PN*, 10 FCC Rcd. 10724 ("IVDS Licensees that
    elect to pay for their license in installments will have their
    license conditioned upon full and timely performance of all
    installment payment obligations. The Commission's rules provide that
    a licensee will be deemed in default on its installment payments if
    it is more than 90 days delinquent in making a payment to the
    government.").

[^30]: *218-219 MHz Second Order on Reconsideration*, ¶ 28; *see* 47
    C.F.R. § 1.2110(e)(4)(ii) (1994); *IVDS Grace Period PN*, 10 FCC
    Rcd. 10724; *1995 IVDS Omnibus Order*, 11 FCC Rcd. at 1285 ¶ 19.

[^31]: ^?^ Vista Waiver Request, Attachment 8 (Letter from Regina
    Dorsey, Chief, Billings and Collections Branch, to "Licensee," dated
    March 29, 1996, page 1) ("*March 29, 1996 Letter*").

[^32]: Vista Waiver Request, Attachment 7 (March 10, 1996 Billings
    "Notice to IVDS Licensees," from Regina W. Dorsey, Chief, Billings
    and Collections Branch).

[^33]: Vista Waiver Request, at 5.

[^34]: ^?^ *Id.*

[^35]: ^?^ *March 29, 1996 Letter*, at 2 (**"**To clarify, these
    statements were *not* meant to indicate that all installment
    payments were being stayed until 1999.") The *March 29, 1996 Letter*
    also notified licensees that the Commission's Rules permitted
    licensees within the first 90 days following a missed installment
    payment, to request a grace period. *Id*. at 1 (citing 47 C.F.R. §
    1.2110 (1996)).

[^36]: Vista Waiver Request at 5.

[^37]: ^?^ Vista Waiver Request at 5.

[^38]: 47 C.F.R. § 0.406 ("Persons having business with the Commission
    should familiarize themselves with those portions of its rules and
    regulations pertinent to such business.")

[^39]: *March 29, 1996 Letter* at 1.

[^40]: *Id.* at 1 ("Please note that the Commission's Rules permit
    licensees, within the first 90 days following a missed installment
    payment, to request a 'grace period'.")

[^41]: *Id.* at 1.

[^42]: *1995 IVDS Omnibus Order*, 11 FCC Rcd 1282 at 1285 ¶ 19; *IVDS
    Grace Period PN,* 10 FCC Rcd 10724; *218-219 MHz Second Order on
    Reconsideration*, at ¶ 28.

[^43]: Vista Supplement at 2.

[^44]: Vista Waiver Request at 7; Vista Waiver Supplement at 2

[^45]: ^?^ *Id*.

[^46]: *218-219 MHz Second Order on Reconsideration*, ¶ 27 ("The test
    proposed by Vista is inherently subjective and would be unfair to
    licensees in other services. Administering such a subjective test
    would be difficult and would invite challenge on the basis of being
    arbitrary. Further, allowing licensees that failed to abide by the
    Commission\'s rules, but had made 'substantial payments' to retain
    their licenses is inconsistent with the Commission\'s requirement
    that a licensee make full and timely payments. From such a rule
    current licensees, in this or other services, might conclude that no
    consequences would flow from failure to make full and timely
    payment.")

[^47]: ^?^ 47 U.S.C. § 309(j).

[^48]: The courts have recognized the importance of the Commission's
    default rules and affirmed the Commission's authority to enforce its
    rules. *See generally, Mountain Solutions*, 197 F.3d 512;
    *NextWave*, 200 F.3d 43*.*

[^49]: *See* *NextWave* *Order on Reconsideration*, 15 Fed Rcd 17500, ¶
    25

[^50]: Vista Waiver Request at 7.

[^51]: *218-219 MHz Second Order on Reconsideration*, ¶ 29.

[^52]: ^?^ *Id*., ¶ 29; *see also* *IVIDCO*, DA 01-170.

[^53]: ^?^ *Id*., ¶ 29; 47 C.F.R. § 1.2110(e)(4)(ii)(1994); *IVDS Grace
    Period PN*, 10 FCC Rcd. 10724; *see also* *1995 IVDS Omnibus Order,*
    11 FCC Rcd. at 1285 ¶ 19.

[^54]: *218-219 MHz Second Order on Reconsideration*, ¶ 29.