DA 04-3491

Released: October 29, 2004

WIRELESS TELECOMMUNICATIONS BUREAU REMINDS

PROSPECTIVE BROADBAND PCS SPECTRUM AUCTION APPLICANTS OF

DEFAULT AND DELINQUENCY DISCLOSURE REQUIREMENTS

Report No. AUC-04-58-E (Auction No. 58)

We remind prospective competitive bidding applicants that each applicant
must be able to certify, under penalty of perjury, on its short-form
application (FCC Form 175) that the applicant, its affiliates, its
controlling interests, and the affiliates of its controlling
interests[^1] are not in default on any Commission license and are not
delinquent on any non-tax debt owed to any Federal agency.[^2] An
applicant is not eligible to participate in competitive bidding if the
applicant, any of its affiliates, any of its controlling interests, or
any of the affiliates of its controlling interests is in default on any
Commission license, as of the filing deadline for applications to
participate in a specific auction.[^3] An applicant also is not eligible
for competitive bidding if the applicant, any of its affiliates, any of
its controlling interests, or any of the affiliates of its controlling
interests is delinquent on any non-tax debt owed to any Federal agency,
as of the filing deadline for applications to participate in a specific
auction.[^4]

In addition, each applicant must attach to its short-form application a
statement, made under penalty of perjury, indicating whether or not the
applicant, its affiliates, its controlling interests, or the affiliates
of its controlling interests, have ever been in default on any
Commission license or have ever been delinquent on any non-tax debt owed
to any Federal agency.[^5] We note that the pendency of a regulatory
request to waive, forgive, alter or settle obligations may not affect an
applicant\'s status as being in default or delinquent for the purposes
of the Commission's competitive bidding rules, as it might in other
contexts.[^6]

An applicant, including the applicant\'s attributable interest
holders,[^7] that has cured each default on a Commission license and has
cured each outstanding non-tax delinquency owed to a Federal agency,
including but not limited to the Commission, prior to the deadline for
filing a short-form application to participate in a specific auction may
be eligible to bid in that auction as a \"former defaulter,\" provided
that the applicant is otherwise qualified. To participate in an auction
as a former defaulter, applicants are required to pay upfront payments
that are fifty percent more than the normal upfront payment amount
established for each particular license.[^8] It is each applicant's
responsibility to certify to its qualifications to participate in an
auction under Section 1.2105 of the Commission's rules and to determine
its upfront payment obligation under Section 1.2106.

The Commission considers outstanding debts owed to the United States
Government, in any amount, to be a serious matter. Earlier this year,
the Commission adopted rules, including a provision referred to as the
\"red light rule,\" that implement the Commission\'s obligations under
the Debt Collection Improvement Act of 1996, which governs the
collection of claims owed to the United States.[^9] Under the red light
rule, the Commission will not process applications and other requests
for benefits filed by parties that have outstanding debts owed to the
Commission. In the same rulemaking order, the Commission explicitly
declared, however, that the Commission\'s competitive bidding rules
\"are not affected\" by the red light rule.[^10] As a consequence, the
Commission\'s adoption of the red light rule does not alter the
applicability of any of the Commission\'s competitive bidding rules,
including the provisions and certifications of Sections 1.2105 and
1.2106, with regard to current and former defaults or delinquencies.
Thus, while the red light rule may ultimately prevent the processing of
long-form applications by auction winners, an auction applicant's "red
light" status is not necessarily determinative of its eligibility to
participate in Auction No. 58 or to its upfront payment obligation.

The Commission\'s Red Light Display System database, which is available
to assist in implementing the red light rule, does not reflect
delinquencies on any non-tax debt owed to any other federal agency of
the United States.[^11] Moreover, the database does not include
historical information regarding former defaults or delinquencies that
have since been resolved. Accordingly, at this time, a "green light"
does not conclusively demonstrate that a potential applicant for Auction
No. 58 can make the certification required under Section 1.2105(a)(2)(x)
regarding whether the applicant currently is in default on a Commission
license or delinquent on a non-tax debt owed to any federal agency.
Similarly, a "green light" does not conclusively demonstrate that a
potential applicant for Auction No. 58 can make the statement required
under Section 1.2105(a)(2)(xi) regarding whether the applicant has ever
been in default on a Commission license or has ever been delinquent on a
non-tax debt owed to any federal agency. In addition, the Commission's
Red Light Display System database may include information on Commission
debts that may not constitute a default and/or delinquency for purposes
of Sections 1.2105 and 1.2106 of the Commission's competitive bidding
rules. For example, a party may have a "red light" because it submitted
a payment with an incorrect FCC registration number and, consequently,
the payment was not applied to the correct account. Accordingly, at this
time, a "red light" does not conclusively demonstrate that a potential
applicant for Auction No. 58 is in default or delinquent on non-tax debt
to the Commission for purposes of applying to participate in an auction.
Similarly, a "red light" at some time in the past does not conclusively
demonstrate that a potential applicant for Auction No. 58 cannot make
the statement required under Section 1.2105(a)(2)(xi) regarding whether
the applicant has ever been in default on a Commission license or has
ever been delinquent on a non-tax debt owed to any federal agency.

We recognize that the implementation of the Commission's Red Light
Display System in advance of Auction No. 58 will raise issues of
delinquency and default for purposes of certification under Section
1.2105. Consistent with the Commission's waiver standard of Section
1.925,[^12] we will therefore entertain requests for clarification
and/or waiver of defaulter or former defaulter status under Sections
1.2105(a)(2)(x) & (xi) and Section 1.2106(a).

Finally, we remind prospective applicants that submission of a false
certification to the Commission is a serious matter that may result in
severe penalties, including monetary forfeitures, license revocations,
exclusion from participation in future auctions, and/or criminal
prosecution.[^13]

Action by the Wireless Telecommunications Bureau.

-FCC-

[^1]: Controlling interests and affiliates are defined at 47 C.F.R. §
    1.2110.

[^2]: 47 C.F.R. § 1.2105(a)(2)(x); *see* Amendment of Part 1 of the
    Commission\'s Rules -- Competitive Bidding Procedures, WT Docket No.
    97-82, *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, 15317 ¶ 42 (2000) (modified by Erratum,
    DA 00-2475 (Auctions Div. Nov. 3, 2000)) (*Part 1 Fifth Report and
    Order*).

[^3]: 47 C.F.R. § 1.2105(b)(1).

[^4]: *Id*.

[^5]: 47 C.F.R. § 1.2105(a)(2)(xi); *see Part 1 Fifth Report and Order*,
    15 FCC Rcd at 15317 n.142 (\"If any one of an applicant\'s
    controlling interests or their affiliates . . . is in default on any
    Commission licenses or is delinquent on any non-tax debt owed to any
    Federal agency at the time the applicant files it\[s\] Form 175, the
    applicant will not be able to make the certification required by
    Section 1.2105(a)(2)(x) . . . and will not be eligible to
    participate in Commission auctions.\"); *see also* Broadcast PCS
    Spectrum Auction Scheduled for January 12, 2005, *Public Notice*,
    Report No. AUC-04-58-C (Auction No. 58), DA 04-3005, at 16 (Sept.
    16, 2004).

[^6]: *See* Amendment of Part 0 and 1 of the Commission\'s Rules;
    Implementation of the Debt Collection Improvement Act of 1996 and
    Adoption of Rules Governing Applications or Requests for Benefits by
    Delinquent Debtors, MD Docket No. 02-339, *Report and Order*, 19 FCC
    Rcd 6540, ¶10 (2004) (footnote omitted) (\"We proposed that the
    30-day resolution period would not apply to applications or requests
    for benefits where more restrictive rules govern treatment of
    delinquent debtors. For example, under existing rules auction
    applicants must already certify that they are not delinquent in
    non-tax debt or their short form application will be dismissed and
    they will be ineligible to participate in an auction. . . . We adopt
    this proposal without modification.\"); Letter to Audrey P.
    Rasmussen, Counsel to Tracy Broadcasting Corp., from Gary D.
    Michaels, Deputy Chief, Auctions and Spectrum Access Div., Wireless
    Telecommunications Bur., DA 04-3065 (Sept. 24, 2004) (\"In brief,
    uncertainty regarding pending requests for relief does not alter a
    debtor\'s current status, which the Commission may take into account
    when considering an application to participate in an auction.\").

[^7]: *See* 47 C.F.R. § 1.2110.

[^8]: 47 C.F.R. § 1.2106(a). This rule provision has a practical effect.
    For example, if the normal upfront payment amount established for a
    specific group of licenses in a particular auction is \$100,000,
    then a former defaulter must submit an upfront payment of \$150,000
    to be eligible to bid on that specific group of licenses (\$100,000
    x 1.5 = \$150,000). In these circumstances, if a former defaulter
    submits an upfront payment amount of \$100,000, instead of
    \$150,000, the former defaulter\'s bidding eligibility is reduced to
    66,667 bidding units (\$100,000 divided by 1.5 = 66,667). Such a
    reduction in bidding eligibility may constrain an applicant\'s
    ability to bid on certain licenses. Further, if eligibility is
    reduced below the number of bidding units of any one of the licenses
    an applicant has selected on its short-form application, such
    applicant will be unable to place bids in the auction.

[^9]: Amendment of Part 0 and 1 of the Commission\'s Rules;
    Implementation of the Debt Collection Improvement Act of 1996 and
    Adoption of Rules Governing Applications or Requests for Benefits by
    Delinquent Debtors, MD Docket No. 02-339, *Report and Order*, 19 FCC
    Rcd 6540 (2004) (implementing Pub. L. No. 104-134, 110 Stat. 1321,
    1358 (1996)).

[^10]: *Id*., 19 FCC Rcd at 6541 n.11. Footnote 11 specifically mentions
    47 C.F.R. §§ 1.2105(a)(2)(x) and (xi).

[^11]: The Red Light Display System can be accessed at
    [http://]{.underline}[www.fcc.gov/redlight](http://www.fcc.gov/redlight)/.

[^12]: 47 C.F.R. § 1.925.

[^13]: *See e.g.*, Auction of Licenses for VHF Public Coast and Location
    and Monitoring Service Spectrum, *Order*, 17 FCC Rcd 19746, 19752
    n.45 (Wireless Telecom. Bur. 2002); *see also* Implementation of
    Section 309(j) of the Communications Act \-- Competitive Bidding for
    Commercial Broadcast and Instructional Television Fixed Service
    Licenses, *First Report and Order*, 13 FCC Rcd 15920, 15956 ¶ 99
    (1998)(emphasizing that candor is a concern to the Commission in the
    context of auction application certifications).