**PUBLIC NOTICE**![](media/image1.png){width="0.7388888888888889in"
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FEDERAL COMMUNICATIONS COMMISSION News Media Information: (202) 418-0500

445 12th STREET, S.W. Fax-On-Demand: (202) 418-2830

# WASHINGTON, D.C. 20554 Internet: [**http://www.fcc.gov**](http://www.fcc.gov/)

# ftp.fcc.gov

DA 00-899

April 20, 2000

FREQUENTLY ASKED QUESTIONS REGARDING THE RESTRUCTURING RULES FOR THE
218-219 MHZ SERVICE

## 

In this Public Notice, the staff of the Wireless Telecommunication
Bureau provides guidance on issues that have been brought to our
attention concerning the restructuring of installment payment financing
and remedial bidding credits for the 218-219 MHz service. The advice and
rule interpretations provided in this Public Notice constitute informal
staff opinion and are not binding on the Commission as official
decisions or rulings.

I.  BACKGROUND

What changes did the Commission make to the 218-219 MHz Service in a
recent *Order*?

The *218-219 MHz Order*[^1] that the Federal Communications Commission
("Commission") adopted on September 10, 1999, essentially does three
things. First, it offers financial restructuring to current licensees
("Eligible Licensees") and debt forgiveness to previous licensees who
made their first and second down payments, but were not current in their
payments as of March 16, 1998, and/or did not have a timely filed grace
period request on file ("Ineligible Entities"). Second, it provides a
remedial bidding credit to all small businesses, eliminating the women-
and minority-owned business bidding credits. Third, it changes the
service rules, increasing the flexibility of licenses in the 218-219 MHz
service and changing the license term from five (5) to ten (10) years.

The following Frequently Asked Questions (FAQ) address the financial
restructuring offered and the application of remedial bidding credits.

II. SCOPE OF THE ORDER

Who is subject to the Order?

The *218-219 MHz Order* applies generally to all current and prior
218-219 MHz licensees that were not in default on their first or second
down payments. This also includes all licensees who acquired previously
auctioned licenses as a result of a valid assignment or transfer.
However, the election options portion of the *218-219 MHz Order* **[does
not]{.underline}** apply to licensees who obtained their licenses
through the lottery process, licensees that have paid for their licenses
in full, or to entities that are deemed to be "ineligible." In addition,
only those licensees that met the small business qualifications at the
time of the July 1994 auction are subject to the remedial bidding credit
provision.

Current and previous licensees who participated in the installment
payment program are divided into two categories: Eligible Licensees and
Ineligible Entities. "Eligible Licensees" are existing 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.[^2] "Ineligible Entities" are those
entities 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; and/or (ii) entities that never made any
installment payments and did not have a timely filed grace period
request on file.[^3] The licenses of Ineligible Entities automatically
cancelled so the entities are no longer "licensees."[^4]

In addition, any 218-219 MHz licensee that paid its first and second
down payment, met the small business qualifications at the time of
auction, and did not already receive a bidding credit as a women- or
minority- owned business, will have a refund processed based on the 25%
remedial bidding credit.[^5]

What does being an Ineligible Entity mean?

The licenses of Ineligible Entities have already automatically
cancelled.[^6] Nevertheless, under the *218-219 MHz Order* Ineligible
Entities are entitled to debt forgiveness of the original principal
balance and all interest payments due thereon.[^7] In addition,
Ineligible Entities are entitled to a refund of any previously paid
installment payments.[^8] The Commission will release a separate Public
Notice detailing the procedures by which entities may obtain a refund.

What does being an Eligible Licensee Mean?

Being an Eligible Licensee means that you may participate in the
restructuring options offered in the *218-219 MHz Order*.

Can I be both an Eligible Licensee and an Ineligible Entity?

Yes, you may meet the criteria to be an Eligible Licensee for one
license, but not for another. For example, if you had two licenses and
made all of your payments on one license, but failed to make any
payments (or file a timely grace period request) on the other license,
you would be an Eligible Licensee with respect to the first license and
an Ineligible Entity with respect to the second license.

What are the restructuring options offered to Eligible Licensees?

Eligible Licensees may choose between three options: (i) Reamortization
and Resumption of Payments; (ii) Amnesty; or (iii) Prepayment
(Prepayment-Return and Prepayment-Retain).[^9]

If I did not receive a letter announcing my eligibility, do I still have
to file an Election Notice?

Yes. It is the sole responsibility and obligation of all previous and
current licensees to keep the Commission apprised of any change of
address.[^10] If you are subject to the *218-219 MHz Order* and have not
received a letter of eligibility, you should contact the Commission
immediately. However, in an effort to keep all entities informed, the
Commission has made a significant effort to notify all previous and
current licensees to advise them of their eligibility status for
participation in this restructuring. If an Eligible Licensee fails to
make an election because the Licensee did not receive a letter regarding
its status, the sole responsibility for this falls on the Licensee and
its licenses will be automatically placed in the Amnesty category.

III\. ELECTION OPTIONS

What does "Reamortization and Resumption of Payments" mean to me?

"Reamortization and Resumption of payments" means that the Eligible
Licensee has chosen to retain one or more of its licenses and remain in
the installment payment plan. The loan will be "reamortized" over the
remaining term of the license. The interest rate will be the same
interest rate as on the original installment payment plan. All unpaid
and accrued interest from grant date through the Election Date, the last
business day of the first full month after the Order on Reconsideration
is released by the Commission, will be capitalized (*i.e.* added to) the
outstanding principal balance to create a new principal amount. The new
principal amount will be fully amortized over the remaining term of the
license.[^11] For examples of how the reamortized payments are
calculated, see Appendix A. In order to participate in
Reamortization/Resumption, the licensee will be required to: (1) sign
the Installment Payment Acknowledgement (2) begin making principal and
interest payments at the end of the third month after the Election Date;
and (3) continue to make principal and interest payments on the last day
of every third month thereafter, through and including the maturity date
of the loan. In addition, the licensee may be required to execute a
Uniform Commercial Code financing statement (UCC-1).

How are the Reamortized payments calculated?

For examples of how reamortized payments are calculated, see Appendix A.

If I choose Reamortization/Resumption, when will my first payment be
due?

Your first payment, which will include both principal and interest, must
be paid on or before the end of the third month after the Election
Date.[^12] Furthermore, under Part 1 late payment rules for installment
payments, licensees will have the option of utilizing two ninety-day
non-payment periods, subject to late payment fees, if licensees require
additional time to avoid default.[^13]

What does Amnesty mean for me?

Electing Amnesty means the licensee is returning the license to the
Commission in exchange for debt forgiveness of the outstanding principal
balance and all interest payments due thereon. The Commission retains
the down payment.[^14]

What happens to my installment payments if I elect Amnesty?

A licensee that elects Amnesty for all of its licenses and made any
installment payment(s), will have its installment payment(s) refunded.
For licensees that made any installment payment(s) and elect Amnesty for
some licenses and Reamortization/Resumption for others, their
installment payment(s) will be credited towards the retained licenses;
first toward the accrued interest and then toward any principal
owed.[^15]

The Commission issued an Order on Reconsideration that changed the terms
of the Amnesty option, what did they change?

On November 30, 1999, the Commission issued the *218-219 MHz* *Order on
Reconsideration* altering the terms of the Amnesty election option.[^16]
Essentially, the Commission eliminated the licensee's option to obtain a
credit for seventy (70%) percent of its down payment and the two year
bar against reacquiring the surrendered licenses through either auction
or a secondary market transaction.[^17]

What does Prepayment mean to me?

Eligible Licensees electing Prepayment may return or retain as many
licenses as they wish.[^18] This option applies to all of the licenses
held by a licensee and cannot be combined with Amnesty or
Reamortization/Resumption.[^19] Eligible Licensees electing Prepayment
must pay off the original principal balances of all the licenses they
retain; all interest due on the licenses from grant date until the
Election Date is forgiven.[^20]

Eligible Licensees are given a prepayment credit toward their retained
licenses equal to 85% of the down payment(s) made on the license(s) they
returned to the Commission and 100% of the installment payment(s).[^21]
If the original principal balance(s) of the license(s) the Eligible
Licensee wishes to retain is greater than the prepayment credit, the
additional amount due is called "new money" and is due at the end of the
third month after the Election Date.[^22] If the prepayment credit is
greater than the original principal balance(s), then the excess
prepayment credits will be refunded to the licensee to the extent that
the funds were generated from installment payments. No excess prepayment
credits generated from down payments will be refunded.

Is there a difference between Amnesty and Prepayment-Return?

Yes. A Licensee electing Amnesty **does not** get credit for its down
payment. A Licensee electing Prepayment-Return gets an 85% credit for
its down payment, towards the amount owed on the licenses for which
Prepayment-Retain is elected.

However, under both election options Eligible Licensees return licenses
to the Commission and receive a 100% credit/refund for any installment
payments.

If I elect Prepayment, when will my payment be due?

The licensee is required to pay the balance of any money owed on the
retained license(s), the "new money" balance, by the end of the third
month after the Election Date.[^23]

How do I calculate the amount of "New Money" I owe?

For an example of how to calculate the amount of "new money" owed on
licenses for which Prepayment-Retain has been elected, see Appendix A.

If I elect Prepayment, am I eligible for a grace period?

No. "New money" for the prepayment of licenses is due at the end of the
third month after the Election Date, and there are no grace periods
permitted for this payment. However, the licensee may pay the "new
money" balance within ten (10) days of the due date, subject to a 5%
late fee.[^24] Failure to pay the "new money" balance(s) within ten (10)
days of the end of the third month after the Election Date, with
applicable late fees, will result in the automatic and immediate
cancellation of the 218-219 MHz licenses held by the licensee.

What does "automatic cancellation" mean?

Automatic cancellation means that the license cancels without any action
on the part of the Commission. The license cancels by operation of the
Commission's rules, which require full and timely payment. The
Commission **does not** send out, or publish, a notice when a license
cancels automatically.[^25]

If I elect Prepayment, how do I submit my "new money" payment to the
Commission?

Appendix A of the *Implementation Procedures Public Notice* contains
precise payment instructions.[^26]

IV\. ASSIGNMENT OF LICENSES

What is an "assignment" of a license or a "transfer of control"?

Both assignments and transfers of control relate to those instances
where ownership and/or control of a license passes from one entity to
another. Both require **prior** FCC approval, and are subject to
limitations (for example, because of federal laws relating to foreign
ownership of communication licenses, transfers or assignments to foreign
corporations are restricted). Generally, an assignment occurs when the
license moves from one entity to another (*e.g.*, corporation A sells
its license to corporation B); a transfer of control involves a change
of ownership of the licensee (*e.g.*, corporation A is acquired by
corporation B). [You must file an application for assignment or transfer
of control of a 218-219 MHz Service license and receive FCC approval
before assigning or transferring your license]{.underline}*.*

If I have been assigned a license from another party, am I eligible to
file an election?

Yes. If the assignment was properly filed, consented to by the
Commission (granted), consummated by the parties [and]{.underline} the
license is determined to be "eligible" according to the criteria set
forth in the *218-219 MHz* *Order*, then you are eligible to file an
election.

If I have acquired licenses through assignment or transfer, do I receive
credit for the down payments and installment payments made by the prior
license holder(s)?

Yes. The licensee of record as of the Election Date will receive credit
and/or refund in the amounts discussed above for the down payments and
installment payments made on the licenses it owns on the Election Date.
However, please note that only the original payer of the down payment
will receive any refund of the down payment amount resulting from the
remedial bidding credit. For purposes of making an election, it does not
matter who was the payer of the down payment(s) and/or installment
payment(s).[^27]

Can I assign my license(s) prior to the Election Date?

Yes. The Commission will accept assignment applications prior to the
Election Date. However, there are no assurances that the assignment
process will be completed prior to the Election Date. Again, licensees
should note only the [valid license-holder of record]{.underline} is
eligible to make an election.

How do I go about assigning my license during the election process?

Assignment applications must be filed on FCC Forms 600 and 1046. For a
transfer of control application, use FCC Form 703. Note: Applicants may
also use new Form 603 for these purposes. Applications will be evaluated
under the rules adopted in the September 10, 1999, *218-219 MHz Order*.

If an assignment is pending before the Commission, who must file the
Election Notice?

The licensee of record, on the day that the Election Notice is filed,
must file the Election Notice. Therefore, if you filed an application
with the Commission to assign your license to another party, and the
application is still pending on the Election Date, then you as the
current licensee must file the Election Notice.[^28]

If the assignment of licenses is not consented to or consummated by the
Election Date, may I change my election after the Election Date?

No. Elections may not be changed after the Election Date. If the
assignment of license is not granted or consummated, the licensee of
record is responsible for the election made. For example, if the
licensee of record elects to prepay licenses because it believes that it
would assign its licenses to another party who would make the new money
payment and the assignment was not consummated, the licensee of record
is still responsible to pay any new money due the Commission. Failure to
pay the new money due will trigger default and result in the automatic
cancellation of the license(s).

V. ELECTION PROCEDURES

Detailed instructions regarding the election procedures may be obtained
from the *Implementation Procedures Public Notice*.

[^29]

When do I have to choose an option?

The deadline for submitting an election to the Commission is 7:00 p.m.
on the Election Date, the last business day of the first full month
after the Order on Reconsideration is released by the Commission.[^30]

How do I submit my Election Notice to the Commission?

Election Notices may be filed with the Commission from 8:00 a.m. to 7:00
p.m. starting on the date of this Public Notice and ending at 7:00 p.m.
on the Election Date, the last business day of the first full month
after the Order on Reconsideration is released by the Commission. **NO
ELECTIONS OR CHANGES TO ELECTIONS WILL BE ACCEPTED AFTER 7:00 P.M. ON
THE ELECTION DATE, THE LAST BUSINESS DAY OF THE FIRST FULL MONTH AFTER
THE ORDER ON RECONSIDERATION IS RELEASED BY THE COMMISSION.** Notices
should be sent to the Office of the Secretary, Room TW-B204, Federal
Communications Commission, 445 12th Street, S.W., Washington, D.C.
20554. In addition, a copy of each Election Notice should be sent to Ms.
Rachel Kazan, Room 4-A460, Auctions and Industry Analysis Division,
Wireless Telecommunications Bureau, Federal Communications Commission,
445 12th Street, S.W., Washington, D.C. 20554.

[Eligible Licensees are solely responsible for ensuring the accurate and
timely delivery of their Election Notices. Submissions of Election
Notices by FAX or electronic mail will NOT be accepted.]{.underline}

What kind of information/format is suggested for my Election Notice
submission?

See Appendix A in the *Implementation Procedures Public Notice* for a
sample format, and information that should be contained in the Election
Notice.[^31]

Can I change my election choice after I have submitted the Election
Notice? How?

Yes. A licensee may change its election until 7:00 p.m. on the Election
Date, the last business day of the first full month after the Order on
Reconsideration is released by the Commission. [No changes will be
accepted after 7:00 p.m. on the Election Date, last business day of the
first full month after the Order on Reconsideration is released by the
Commission.]{.underline} See the *Implementation Procedures Public
Notice* for specific instructions.

Can I choose more than one of the election options for my licenses?

Yes. However, there is only one election option combination available.
If you have more than one eligible license, you may elect either
Amnesty, Reamortization/Resumption, or both.[^32] There are no other
election combinations available to licensees. The Prepayment option
[cannot]{.underline} be combined with Amnesty and/or
Reamortization/Resumption.[^33] In addition, only one election option
per license may be selected.

What happens if I don't file an Election Notice?

An Eligible Licensee failing to make a specific, valid election for each
of its licenses by the Election Date (the last business day of the first
full month after the Order on Reconsideration is released by the
Commission) will automatically be placed in the Amnesty category.[^34]

VI\. FINANCIAL TRANSACTIONS

If I am an Eligible Licensee, how do I calculate my refund?

Refunds and/or credits for installment payments depend upon the
election(s) made by the licensee:

##### Amnesty

For an Eligible Licensee that elects Amnesty for all of its licenses,
the Commission will retain the down payment (less any remedial bidding
credit refund) and forgive the original principal balance and all
interest payments due thereon.[^35] In addition, for Eligible Licensees
in this category that have previously made installment payments, the
Commission will refund installment payments in their entirety.[^36]

### [Amnesty and Reamortization/Resumption]{.underline}

For an Eligible Licensee that holds more than one license and elects
Amnesty for one or more of its licenses, and Reamortization/Resumption
for its other license(s), all installment payments made on the Amnesty
license(s) will be credited towards the outstanding balance due on the
license(s) for which Reamortization/Resumption was elected. The
installment payment credits will be applied against the accrued and
unpaid interest on the retained license(s), with any excess funds being
applied to the principal balance on each retained license.[^37] The
installment payment credits will be prorated based on the net high bids
of the retained licenses.

[Prepayment (Prepayment-Retain/Prepayment-Return)]{.underline}

Eligible Licensees electing Prepayment may retain or return as many
licenses as they wish. The Commission will forgive all of the interest
due on the retained licenses from grant date until the Election Date,
however Eligible Licensees must pay off the original principal balance
of the license(s) they retain. Eligible Licensees will be given a
prepayment credit equal to 85% of the down payment and 100% of the
installment payment(s) made on the license(s) they return to the
Commission. If the original principal balance of the license(s) the
Eligible Licensee wishes to retain is greater than the prepayment
credit, the additional amount due is called "new money," and must be
remitted to the Commission on or before the end of the third month after
the Election Date.[^38] If the prepayment credit is greater than the
original principal balances, the excess prepayment credits will be
refunded to the licensee to the extent that the funds were generated
from installment payments. No excess prepayment credits generated from
down payments will be refunded.

Who may receive a refund based on the application of the remedial
bidding credit for small businesses?

Where an Eligible Licensee or Ineligible Entity paid its first and
second down payment and met the small business qualifications at the
time of the July 1994 auction, but did not receive a woman- or
minority-owned small business bidding credit at the time of auction, the
Commission will process a refund based on the 25% remedial bidding
credit. Because entities that registered as a woman- or minority-owned
small business received a biding credit at the time of auction, no
refund is generated by the small business bidding credit. Where
licensees paid for their licenses in full and met the qualifications for
a small business at the time of auction, and did not receive the credit
as a women- or minority- owned business, the Commission will process a
refund based on the remedial bidding credit. The Commission will issue a
separate Public Notice detailing the procedures by which entities may
obtain a refund. Additional information on remedial bidding credits for
small businesses may be found in the *Implementation Procedures Public
Notice*.[^39]

If I am due a refund based on the application of the remedial bidding
credit for small businesses, how do I go about getting it?

Entities that are due a refund as a result of the remedial bidding
credit for small businesses will have them processed via Automated
Clearing House (ACH) Credits (*i.e.* electronic fund transfer). In order
for the Commission to issue payment, all entities due a refund must
submit the information necessary for an automatic deposit. The
Commission will issue a separate Public Notice detailing the necessary
information and procedure for submission. A refund of excess down
payment to Ineligible Entities, as a result of the remedial bidding
credit for small businesses, does not change their "ineligible" status.

If I am due a refund, when will I receive it?

The Commission will endeavor to issue appropriate refund payments
(assuming the necessary information has been provided) within
approximately 60 days of the Election Date. The Commission will issue a
separate Public Notice with instructions detailing the procedures by
which entities may obtain a refund.

What are the tax implications of debt forgiveness?

The Federal Communications Commission is required by federal law and
regulation to report certain discharges of indebtedness to the Internal
Revenue Service. The Commission does not make a determination, or offer
comment on the tax consequences, of the information reported. Each
license holder should fully consider the financial consequences of the
election options. Questions involving matters in this area should be
addressed to the license holder\'s individual advisors with appropriate
expertise in these fields. The Commission neither endorses nor
recommends a particular election, and it does not comment on, or advise
in, matters involving the fiscal consequences of any particular election
or course of action.

When will I receive my loan documents?

Eligible Licensees electing Reamortization/Resumption are required to
execute loan documents in the form of an Installment Payment
Acknowledgement.[^40] The Installment Payment Acknowledgement must be
executed and returned to the Commission (or its agent) within ten
business days of receipt.

The Commission will notify and deliver the Installment Payment
Acknowledgement to these licensees at some time following the Election
Date. However, Eligible Licensees electing Reamortization/Resumption are
required to resume payments at the end of the third month after the
Election Date, subject to applicable late payment rules,[^41] in
accordance with the *218-219 MHz Order* [without regard to whether the
Installment Payment Acknowledgement has been issued, executed, or
returned]{.underline}.[^42] Licensees may also be required to execute a
Uniform Commercial Code financing statement (UCC-1).

What happens if I don't execute the loan document(s)?

The Installment Payment Acknowledgement and, if required, a Uniform
Commercial Code financing statement (UCC-1) must be executed and
returned to the Commission (or its agent) within ten business days of
receipt. Failure to fully and timely execute and deliver any required
loan document(s) will result in the automatic and immediate cancellation
of your license(s).[^43]

VII\. FUTURE ELIGIBILITY

Does being an "Ineligible Entity" affect my ability to participate in
future auctions?

No. For purposes of future auctions that do not involve the extension of
credit by the government, entities determined to be ineligible (former
licensees) will be deemed "former defaulters"[^44] and eligible to
participate in future elections provided they can make the certification
required under Section 1.2105(a)(2)(x) of the Commission's general
competitive bidding rules.[^45]

Do any of the election options available to "Eligible Licensees" affect
my ability to participate in future auctions?

No, they do not.

VIII\. MISCELLANEOUS

Is there a difference between "accrued and unpaid" and "unpaid" interest
under the Reamortization option?

No. "Accrued and unpaid" interest and "unpaid" interest are the same.
Both terms refer to the unpaid interest on the license from grant date
through the Election Date, the last business day of the first full month
after the Order on Reconsideration is released by the Commission. This
amount also includes the two uncollected installment (interest only)
payments for September 30, 1995 and December 31, 1995.[^46]

Will I receive a revised radio station authorization (license)? When?

Yes. The Commission will update its records and automatically issue
revised radio station authorizations (licenses) to reflect the modified
terms and conditions. Because Eligible Licensees may choose to
relinquish their licenses under the Amnesty option, the Commission does
not anticipate issuing updated licenses until after the Election Date.
Eligible Licensees who elect Reamortization will receive license
documents conditioned on their meeting the terms of their loans, and may
not receive licenses until after the due date for the first installment
payment. Licensees who choose Prepayment, or do not have payment
obligations associated with their licenses, will receive license
documents free of these conditions.

Can I find out which option(s) each Eligible Licensee selected?

Yes. The Commission will release a Public Notice listing Eligible
Licensees and the restructuring option(s) they elected for their
license(s).

IX\. ADDDITIONAL INFORMATION

Where can I get additional information on this implementation and
underlying rule making?

To obtain additional information on implementation procedures and the
underlying rule making you may go to the Federal Communications
Commission web site located at [http://www.fcc.gov/wtb/auctions/218
rest/218 rest.html.](http://www.fcc.gov/wtb/auctions/218) Additionally,
related documents may be obtained from the FCC Reference Center[^47] or
purchased from the Commission's copy contractor, ITS, Inc.[^48]

Who do I call if I have a specific question?

If you have a specific question or believe that an error has occurred
with regard to your eligibility or payment history, please contact Ben
Freeman or Nicole Oden of the Auctions and Industry Analysis Division at
(202) 418-0660, or Jamison Prime of the Public Safety and Private
Wireless Division at (202) 418-0680.

**[APPENDIX A]{.underline}**

SAMPLE ELECTION CALCULATIONS

The following examples illustrate various election options an Eligible
Licensee might select.

The examples, which use a fictitious company called "Byron Enterprises,"
include the following elections:

I.  Reamortization/Resumption - All Licenses

II. Amnesty -- All Licenses

III. Resume Payments On Three Licenses

> And Amnesty Two Licenses

IV. Prepayment (Retain 2 Licenses)

V.  Prepayment (Retain 1 License)

VI. Invalid Election Filing

Byron Enterprises was the high bidder for five IVDS licenses. It was
granted the licenses on January 18, 1995. Byron Enterprises was a small
business and was eligible to participate in the installment payment plan
for IVDS licensees. Its loan terms are as follows:

Five-year loan term: Two years interest-only; three years principal and
interest

Payments: Quarterly payments

Interest Rate: 6.25%

Grant Date: January 18, 1995

Down Payment: 20% of the Net High Bid

Original Principal: 80% of the Net High Bid

+-------------+-----------+-------------+------------+---------------+
| **License** | **Net     | **Down      | **Original | **Quarterly** |
|             | High      | Payment**   | P          |               |
|             | Bid**     |             | rincipal** | **Installment |
|             |           |             |            | Pmt**         |
|             |           |             |            |               |
|             |           |             |            | **(Int        |
|             |           |             |            | erest-Only)** |
+-------------+-----------+-------------+------------+---------------+
| License 1   | \$30,000  | \$6,000     | \$24,000   | \$375         |
+-------------+-----------+-------------+------------+---------------+
| License 2   | \$100,000 | \$20,000    | \$80,000   | \$1,250       |
+-------------+-----------+-------------+------------+---------------+
| License 3   | \$100,000 | \$20,000    | \$80,000   | \$1,250       |
+-------------+-----------+-------------+------------+---------------+
| License 4   | \$250,000 | \$50,000    | \$200,000  | \$3,125       |
+-------------+-----------+-------------+------------+---------------+
| License 5   | \$250,000 | \$50,000    | \$200,000  | \$3,125       |
+-------------+-----------+-------------+------------+---------------+
| Total       | \$730,000 | \$146,000   | \$584,000  | \$9,125       |
+-------------+-----------+-------------+------------+---------------+

Byron Enterprises made four installment payments and then filed a grace
period request within 90 days of the next installment payment due date,
which effectively stayed Byron Enterprises' future installment payments.
Therefore, Byron Enterprises is an "Eligible Licensee" under the terms
of the 218-219 Order.

# 

Prior to assessing Byron's election options, we need to calculate the
accrued and unpaid interest for all five licenses by taking the total
interest due from grant date through election date (the "accrued and
unpaid interest") and subtracting the installment payments actually
made. This calculation automatically includes the suspended "uncollected
payments" i.e. the payments for September 30, 1995 and December 31,
1995, which the Commission suspended and did not require to be repaid
until the issuance of the *219-219 Order*.

  -------------- ------------- -------------- --------------- ----------------
  **License**    **Original    **Total        **Installment   **Accrued and
                 Principal**   Interest Due   Payments Made   Unpaid
                               (grant date    (4 pmts)**      Interest**
                               through                        
                               2/29/00)**                     

  License 1      \$24,000      \$6,202        \$1,500         \$4,702

  License 2      \$80,000      \$20,672       \$5,000         \$15,672

  License 3      \$80,000      \$20,672       \$5,000         \$15,672

  License 4      \$200,000     \$51,680       \$12,500        \$39,180

  License 5      \$200,000     \$51,680       \$12,500        \$39,180

  Total          \$584,000     \$150,906      \$36,500        \$114,406
  -------------- ------------- -------------- --------------- ----------------

### I. Reamortization/Resumption of All Licenses

Byron Enterprises elected to retain all of its licenses and continue in
the installment payment plan. Its first payment due is the end of the
third month after Election Date. The Election Date is on the last
business day of the first full month after the Order on Reconsideration
is released by the Commission.

The modified loan will be reamortized over the remaining term of the
license, which expires on January 17, 2005. To reamortize the loan, all
accrued and unpaid interest from grant date through the Election Date
(the last business day of the first full month after the Order on
Reconsideration is released by the Commission.) must be added to Byron
Enterprises' outstanding principal balance to create a "new" principal
balance as of Election Day. (The outstanding principal balance is the
same as the original principal balance because Byron Enterprises did not
make any principal and interest payment prior to Election Day.)

The new principal balance will be fully amortized over the remaining
term of the loan. The interest rate is the same as the interest rate on
the original installment payment plan. Assuming that the installment
payments resume on May 31, 2000, and that the last payment is on January
17, 2005, there will be 20 quarterly installment payments, including the
last payment due on January 18, 2005, which will be a partial payment.

The actual calculation of an amortized installment payment is not a
simple calculation that can be shown. To calculate the payment, you must
use either an amortization table, a financial calculator or the
financial function on a computer spreadsheet (such as the PMT function
in Excel.)

  -------------- --------------- -------------- -------------- -------------
  **License**    **Outstanding   **Accrued and  **New          **Principal
                 (Original)      Unpaid         Principal**    and Interest
                 Principal**     Interest**                    Installment
                                                               Payment**

  License 1      \$24,000        \$4,702        \$28,702       \$1,682

  License 2      \$80,000        \$15,672       \$95,672       \$5,607

  License 3      \$80,000        \$15,672       \$95,672       \$5,607

  License 4      \$200,000       \$39,180       \$239,180      \$14,017

  License 5      \$200,000       \$39,180       \$239,180      \$14,017

  Total          \$584,000       \$114,406      \$698,406      \$40,930
  -------------- --------------- -------------- -------------- -------------

### II. Amnesty All Licenses

Byron Enterprises elected amnesty for all of its licenses. Therefore,
all of Byron's licenses will automatically cancel on Election Day. Byron
Enterprises will be refunded all of its installment payments and the
Commission will retain all of Byron Enterprises' down payments.

As previously described, Byron Enterprises made four installment
payments on each of its five licenses. The total amount of the
installment payments will be refunded to Byron Enterprises.

+-----------------------+----------------------+-----------------------+
| **License**           | **Quarterly**        | **Installment         |
|                       |                      | Payments Made**       |
|                       | **Installment Pmt**  |                       |
|                       |                      | **(4 pmts)**          |
|                       | **(Interest-Only)**  |                       |
+-----------------------+----------------------+-----------------------+
| License 1             | \$375                | \$1,500               |
+-----------------------+----------------------+-----------------------+
| License 2             | \$1,250              | \$5,000               |
+-----------------------+----------------------+-----------------------+
| License 3             | \$1,250              | \$5,000               |
+-----------------------+----------------------+-----------------------+
| License 4             | \$3,125              | \$12,500              |
+-----------------------+----------------------+-----------------------+
| License 5             | \$3,125              | \$12,500              |
+-----------------------+----------------------+-----------------------+
| Total to be Refunded  | \$9,125              | \$36,500              |
+-----------------------+----------------------+-----------------------+

### III. Resume Payments on Three Licenses And Amnesty Two Licenses

Byron Enterprises elected reamortization/resumption for three licenses
and amnesty for two licenses. This is a valid election because the
combination of reamortization/resumption and amnesty is permitted in the
*218-219 MHz Order*.

The difference between electing reamortization/resumption for all of its
license and reamortization/resumption for only three of its licenses, is
that the installment payments on the licenses for which Byron
Enterprises elected amnesty are applied to the accrued and unpaid
interest on the licenses which Byron Enterprises is keeping.

The installment payments on the licenses for which Byron Enterprises
elected amnesty are added together and the amount is "pro rated" across
the licenses which Byron Enterprises is retaining. "Pro rated" means
that the installment payments will be applied proportionally across the
licenses which Byron Enterprises is retaining, based on the net high bid
amounts.

#### License Election

License 1 Resume

License 2 Resume

License 3 Resume

License 4 Amnesty

License 5 Amnesty

Installment Payments to be applied to Reamortized/Resumed Licenses

+---------------------------------+------------------------------------+
| **License**                     | **Installment Payments Made**      |
|                                 |                                    |
|                                 | **(4 pmts)**                       |
+---------------------------------+------------------------------------+
| License 4                       | \$5,000                            |
+---------------------------------+------------------------------------+
| License 5                       | \$12,500                           |
+---------------------------------+------------------------------------+
| Total                           | \$17,500                           |
+---------------------------------+------------------------------------+

Pro Ration Calculation

  -------------- -------------- -------------- -------------- --------------
  **License**    **Net High     **Pro Rated    **Total        **Pro Rated
                 Bid**          Amount**       Installment    Installment
                                               Payments to be Payment**
                                               Pro Rated**    

  License 1      \$30,000       8%             \$17,500       \$1,381

  License 2      \$100,000      26%            \$17,500       \$4,605

  License 3      \$250,000      66%            \$17,500       \$11,513

  Total          \$380,000      100%                          \$17,500
  -------------- -------------- -------------- -------------- --------------

Calculation of New Principal Amounts

As previously described, in order to calculate its new principal amount
Byron Enterprises must add the accrued and unpaid interest to its
outstanding principal. However, in this instance Byron Enterprises also
subtracts the pro rated amount of the installment payments from the
licenses for which it elected amnesty.

  -------------- --------------- -------------- -------------- --------------
  **License**    **Outstanding   **Accrued and  **Pro Rated    **New
                 (Original)      Unpaid         Installment    Principal**
                 Principal**     Interest**     Payment**      

  License 1      \$30,000        \$4,702        \$1,381        \$27,302

  License 2      \$100,000       \$15,675       \$4,605        \$91,067

  License 3      \$250,000       \$15,675       \$11,513       \$227,667

  Total          \$380,000                      \$17,500       
  -------------- --------------- -------------- -------------- --------------

### IV. Prepayment (Retain 2 Licenses)

Byron Enterprises elected prepayment. Under this election, Byron
Enterprises decided to prepay the original principal balances for two of
its licenses and return three licenses to the FCC in exchange for
"Prepayment Credits". In this example the original principal balances
for the two licenses Byron Enterprises is greater than the prepayment
credits. Therefore, Byron Enterprises will owe additional money to pay
off the principal balances. The additional money is called "new money"
and is due on the payment resumption day, the end of the third month
after the Election Date.

The following shows the calculations to determine the total original
principal balances, prepayment credits, and new money.

Elections

#### License Election

License 1 Prepay-Return

License 2 Prepay-Return

License 3 Prepay

License 4 Prepay-Return

License 5 Prepay

Licenses to be Prepaid/Retained

  --------------------------------- -------------------------------------
  **License**                       **Original Principal Balance**

  License 3                         \$80,000

  License 5                         \$200,000

  Total                             \$280,000
  --------------------------------- -------------------------------------

Prepayment Credits

Prepayment credits are generated from two places: installment payments
and down payments. More specifically, they include 100% of the
installment payments made on all of the licenses and 85% of the down
payments made on the licenses that are being returned to the FCC.

  -------------- --------------- -------------- -------------- --------------
  **License**    **Installment   **Down         **85% of Down  **Total
                 Payments Made   Payment**      Payment**      Prepayment
                 (4 pmts)**                                    Credit**

  License 1      \$1,500         \$6,000        \$5,100        \$11,100

  License 2      \$5,000         \$20,000       \$17,000       \$37,000

  License 3      \$5,000         \$20,000       N/A            \$5,000

  License 4      \$12,500        \$50,000       \$42,500       \$92,500

  License 5      \$12,500        \$50,000       N/A            \$12,500

  Total          \$36,500        \$146,000      \$64,600       \$101,100
  -------------- --------------- -------------- -------------- --------------

Original Principal Balance to be Prepaid \$280,000

Total Prepayment Credit \$101,100

Amount Due (New Money) \$178,900

### Prepayment (Retain 1 License)

In this example, Byron Enterprises elected prepayment again, but decided
to prepay the principal balance for only one license and to return its
other four licenses to the FCC. Under this scenario, Byron Enterprises
generated more prepayment credit than the principal balance it was
required to prepay. Therefore, Byron Enterprises was entitled to a
refund. Eligible Licensees are entitled to the refund of excess
prepayment credit to the extent that the excess prepayment credit is
generated from installment payments rather than down payments. This
example illustrates a refund of prepayment credit generated from
installment payments.

The following shows the calculations to determine the total original
principal balances, prepayment credits, and new money.

Elections

#### License Election

License 1 Prepay

License 2 Prepay-Return

License 3 Prepay-Return

License 4 Prepay-Return

License 5 Prepay-Return

Licenses to be Prepaid/Retained

  --------------------------------- -------------------------------------
  **License**                       **Original Principal Balance**

  License 1                         \$24,000
  --------------------------------- -------------------------------------

Prepayment Credits

As discussed, prepayment credits are generated from two places:
installment payments and down payments. They include 100% of the
installment payments made on all of the licenses and 85% of the down
payments made on the licenses that are being returned to the FCC.

  ------------- --------------- ------------- -------------- ---------------
  **License**   **Installment   **Down        **85% of Down  **Total
                Payments Made   Payment**     Payment**      Prepayment
                (4 pmts)**                                   Credit**

  License 1     \$1,500         \$6,000       N/A            \$1,500.00

  License 2     \$5,000         \$20,000      \$17,000       \$22,000.00

  License 3     \$5,000         \$20,000      \$17,000       \$22,000.00

  License 4     \$12,500        \$50,000      \$42,500       \$55,000.00

  License 5     \$12,500        \$50,000      \$42,500       \$55,000.00

  Total         \$36,500        \$146,000     \$119,000.00   \$155,500.00
  ------------- --------------- ------------- -------------- ---------------

Original Principal Balance to be Prepaid \$ 24,000

Total Prepayment Credit \$155,500

Excess Prepayment Credit \$131,500

Amount of Excess Prepayment Credit

To be refunded to Byron Enterprises \$ 36,500

(The refund of prepayment credits can not exceed the total amount of
installment payments made by Byron Enterprises.)

### Invalid Election Filing

In this example Byron Enterprises thought it could elect to reamortize
and resume making payments on one license and return four licenses to
the FCC and use the prepayment credits to pay down the principal on the
license it is retaining. As discussed in the 218-219 MHz Order, a
licensee electing prepayment must prepay the entire principal balance of
the licenses it is retaining. Therefore, this is an INVALID election.
Therefore, Byron Enterprises' election will be changed to amnesty for
all of its licenses.

Byron Invalid

Enterprises Election

#### License Election (Amnesty)

License 1 Prepay Amnesty

License 2 Prepay-Return Amnesty

License 3 Prepay-Return Amnesty

License 4 Prepay-Return Amnesty

License 5 Prepay-Return Amnesty

As described above in the Example 2, where Byron Enterprises elected
amnesty for all of its licenses, the FCC will refund the installment
payments Byron Enterprises previously made.

[^1]: *See* In the Matter of Amendment of Part 95 of the Commission's
    Rules to Provide Regulatory Flexibility in the 218-219 MHz Service,
    *Report and Order and Memorandum Opinion and Order*, FCC 99-239, WT
    Docket No. 98-169, RM-8951, (rel. Sept. 10, 1999) at 3, ¶2.
    (*218-219 MHz Order*).

[^2]: *See* *id*. at ¶ 37.

[^3]: *See* *id*. at ¶ 38. 47 C.F.R. § 95.816(d)(3) (1994)
    (incorporating by reference 47 C.F.R. § 1.2110 (1994)). *See also*
    *Mountain Solutions v. FCC*, No. 98-1503 (D.C. Cir. Dec. 3, 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 in order to retain its
    license.

[^4]: *See* 47 C.F.R. §§ 1.2110(f)(4)(i-iv).

[^5]: See 218-219 MHz Order at ¶¶ 60-62.

[^6]: Automatic cancellation means that the license cancels without any
    action on the part of the Commission. *See* "Wireless
    Telecommunications Bureau Provides Guidance on Grace Period and
    Installment Payment Rules," *Public Notice*, DA 98-1897 (rel.
    September 18, 1998).

[^7]: *218-219 MHz Order* at ¶38. This debt treatment is subject to the
    following provisions: 31 U.S.C. §3711 and 31 U.S.C. §3720B. Only the
    United States Department of Justice may compromise a claim in excess
    of \$100,000. *See* 4 C.F.R. §103.1. *See also* 31 U.S.C. §3711.
    Under the Debt Collection Improvement Act no person may obtain any
    federal financial assistance if the person had an outstanding debt
    with any federal agency that is in a delinquent status, as
    determined under standards prescribed by the Secretary of Treasury.
    Pub. L. No. 104-134, §3100(j)(1), 110 Stat. 1321 (1996), codified at
    31 U.S.C. §3720B.

[^8]: *Id.*

[^9]: 218-219 MHz Order at ¶ 34.

[^10]: 47 C.F.R. § 1.5.

[^11]: 218-219 MHz Order at ¶¶ 43-44.

[^12]: *Id.* at ¶ 44. Resumption of payments begins at the end of the
    third month after the Election Date.

[^13]: *See* *218-219 MHz Order* at ¶ 44; 47 C.F.R. §§
    1.2110(f)(4)(i-iii). *See also* Amendment of Part 1 of the
    Commission's Rules, Competitive Bidding Procedures, Allocation of
    Spectrum Below 5GHz Transferred From Federal Government Use,
    4660-4685 MHz, *Third Report and Order and Second Further Notice of
    Proposed Rulemaking*, 13 FCC Rcd. 374 ¶¶ 106-107 (1997).

[^14]: 218-219 MHz Order at ¶ 49-50.

[^15]: *Id.* at ¶ 50.

[^16]: Amendment of Part 95 of the Commission's Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, *O*r*der on
    Reconsideration*, WT Docket No. 98-169, FCC 99-372 (released Nov.
    30, 1999) ("*218-219 MHz* *Order on Reconsideration*").

[^17]: See generally Id.

[^18]: 218-219 MHz Order at ¶ 53.

[^19]: *Id.*

[^20]: *Id.*

[^21]: *Id.*

[^22]: *Id*. at ¶ 44.

[^23]: 218-219 MHz Order at ¶ 53.

[^24]: 47 C.F.R. § 1.2109 ("new money" payments are subject to the same
    late payment rules as balance payments for new licenses).

[^25]: *See* S*upra* note 6.

[^26]: 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)), DA 00-900,
    (rel. April 20, 2000) ("Implementation Procedures Public Notice").

[^27]: Note: unless an assignment has been both (1) granted by the
    Commission, and (2) consummated by the parties, the assignee is not
    the licensee of record; the assignor remains the licensee of record
    and the entity entitled to make an election.

[^28]: 47 C.F.R. § 1.948(a) (prior Commission application and approval
    of assignment or transfer of control is necessary).

[^29]: *See Supra* note 26.

[^30]: All references to time in this Public Notice are to Eastern
    Daylight Saving time.

[^31]: *See Supra* note 26.

[^32]: 218-219 MHz Order at ¶ 50.

[^33]: 218-219 MHz Order at ¶ 53.

[^34]: 218-219 MHz Order at ¶ 54.

[^35]: *See 218-219 MHz Order* at ¶¶ 49-50. This debt treatment is
    subject to the following provisions: 31 U.S.C. §3711 and 31 U.S.C.
    §3720B. Only the United States Department of Justice may compromise
    a claim in excess of \$100,000. *See* 4 C.F.R. §103.1. *See also* 31
    U.S.C. §3711. Under the Debt Collection Improvement Act no person
    may obtain any federal financial assistance if the person had an
    outstanding debt with any federal agency that is in a delinquent
    status, as determined under standards prescribed by the Secretary of
    Treasury. Pub. L. No. 104-134, §3100(j)(1), 110 Stat. 1321 (1996),
    codified at 31 U.S.C. §3720B.

[^36]: See 218-219 MHz Order at ¶ 50.

[^37]: *Id.*

[^38]: *See Supra* note 13.

[^39]: *See Supra* note 26.

[^40]: 218-219 MHz Order at ¶ 44.

[^41]: 47 C.F.R. §§ 1.2110(f)(4)(i-iii).

[^42]: 218-219 MHz Order at ¶ 44.

[^43]: *Id*.

[^44]: *See* 47 C.F.R. § 1.2105 (a)(2)(xi). *See also* Amendment of
    Commission's Rules Regarding Installment Payment Financing for
    Personal Communications Services (PCS) Licensees, *Fourth Report and
    Order*, 13 FCC Rcd 15743, 15753, ¶18 (1998).

[^45]: Whether these former licensees will be eligible for federal loan
    programs will be determined based upon U.S. Treasury regulations.
    Under the Debt Collection Improvement Act of 1996 ("DCIA"), no
    person may obtain any federal financial assistance if the person has
    an outstanding debt with any federal agency which is in a delinquent
    status, as determined under standards prescribed by the Secretary of
    Treasury. Pub. L. No. 104-134, §3100 (j)(1), 110 Stat. 1321 (1996),
    codified at 31 U.S.C. §3720B. *See also* 31 C.F.R. § 285.13 (setting
    forth Department of Treasury regulations regarding delinquent
    debtors). In addition, in the *Part I Proceeding*, the Commission
    adopted a certification procedure as part of changes to the
    application procedures whereby applicants must certify that the
    applicant is not in default on any payment for Commission licenses
    (including down payments) and that it is not delinquent on any
    non-tax debt owed to any federal agency. Bidders that cannot make
    this certification may be ineligible for installment payment plans.
    *Part I Third Report and Order*, 13 FCC Rcd at 436, ¶ 8.

[^46]: 218-219 MHz Order at ¶ 44.

[^47]: During normal business hours, 445 12^th^ Street, S.W., Room
    CY-A257, Washington, DC 20554, telephone (202) 418-0270.

[^48]: ITS, Inc. located at 1231 20^th^ Street, N.W., Washington, DC
    20036, telephone (202) 857-3800.