> DA 02-1574
>
> July 8, 2002

Thomas Gutierrez, Esq.

Lukas, Nace, Gutierrez & Sachs

1111 Ninth Street, N.W.

Washington, D.C. 20036

**Re: Request for a Remedial Bidding Credit, Auction No. 3**

Dear Mr. Gutierrez:

This letter responds to the Request for a remedial bidding credit filed
on behalf of your client, Instapage Network Ltd. ("Instapage").[^1] The
Request seeks a forty percent remedial bidding credit for a license won
by Insta-Check Systems ("Insta-Check"), the original licensee for the
Southern Region, Market No. R002 (frequency block 5).[^2] For the
reasons set forth below, the Request is dismissed with prejudice.

### 1. Background

From October 26, 1994 through November 8, 1994, the Federal
Communications Commission ("Commission") conducted an auction of thirty
Regional Narrowband Personal Communication Service ("Regional Narrowband
PCS") licenses ("Auction No. 3") pursuant to rules adopted in the
*Competitive Bidding Third MO&O*.[^3] Those rules allowed women-owned
and minority-owned businesses to apply for a forty percent bidding
credit on ten specific Regional Narrowband PCS licenses,[^4] all of
which were subsequently won by women-owned and minority-owned businesses
in Auction No. 3.[^5] Bidding credits were not offered on the twenty
remaining licenses.[^6] Insta-Check, which qualified both as a small
business and a minority-owned business, was the winning bidder on a
license for which no bidding credit was offered, Southern Region, Market
No. R002 (frequency block 5).[^7]

On June 12, 1995, the Supreme Court held in *Adarand Constructors, Inc.
v. Pena* that any federal program in which the "government treats any
person unequally because of his or her race" must satisfy the "strict
scrutiny" constitutional standard of judicial review.[^8] More than four
years later, in alleged reliance upon the *Adarand* decision, Instapage
filed its Request for remedial bidding credits for the Regional
Narrowband PCS license originally won by Insta-Check in Auction No.
3.[^9] The Request did not contend, however, that Instapage or
Insta-Check had ever raised any concerns regarding the constitutionality
of bidding credits in Auction No. 3, in either the comment and
reply-comment process in the rule making proceeding[^10] or in a
petition for reconsideration of either the *Competitive Bidding Second
R&O*,[^11] the *Competitive Bidding Third R&O*,[^12] the *Competitive
Bidding Third MO&O*,[^13] or the public notice[^14] announcing the
winning bidders for Auction No. 3.[^15]

In its Request, Instapage alleges that the bidding credits offered to
women-owned and minority-owned businesses were unconstitutional and had
the effect of skewing the results of the auction as women-owned and
minority-owned businesses "bid up" the price for spectrum.[^16]
Instapage argues that the passage of time does not bar review of its
claim because the Commission granted a post-auction bidding credit to
eligible small businesses in the 218-219 MHz service.[^17] Lastly,
Instapage argues that because the Commission granted a post-auction
bidding credit to eligible small business in the 218-219 MHz service, it
should do the same here in order "to eliminate the effects of past
discrimination."[^18]

**2. Discussion**

Instapage filed its Request under Section 1.41 of the Commission's
rules, which provides that a request for Commission action may be
submitted informally "except where formal procedures are required."[^19]
Informal requests have no set filing deadline, unlike petitions for
reconsideration of Commission rulemakings, which have mandatory filing
deadlines. By statute, Congress limited the Commission's jurisdiction to
review petitions for reconsideration to those filed within a specific
time.[^20] Sections 1.106(f) and 1.429(d) of the Commission's rules
implement this statutory mandate and require that a petition for
reconsideration be filed within thirty days from the date of public
notice of the Commission's action.[^21]

Despite Instapage's styling of its Request as informal, the Request
essentially challenges the rulemaking that culminated in the adoption of
the competitive bidding rules for Auction No. 3. As a challenge to a
rulemaking, it is subject to the filing deadline set forth in Section
1.429(d) for petitions for reconsideration.[^22] Instapage failed to
observe this filing deadline, however, and filed its Request on November
12, 1999, more than five years after public notice of the adoption of
the Auction No. 3 competitive bidding rules, and well after the
mandatory thirty-day deadline.[^23] As such, Instapage's Request is
nothing more than an untimely petition for reconsideration of the
competitive bidding rules adopted for Auction No. 3.[^24]

Attempting to avoid dismissal of its untimely filing, Instapage relies
upon *Graceba Total Communications*.[^25] Such reliance is
misplaced.[^26] Graceba Total Communications ("Graceba"), a participant
in the 218-219 MHz auction, raised the issue of constitutionality of the
bidding credit in a post-*Adarand* supplement to its timely-filed
petition for reconsideration of the public notice announcing the results
in the 218-219 MHz auction. Instapage's Request is neither a
timely-filed petition for reconsideration nor a supplement to a timely
filing. Rather, Instapage's Request for a retroactive bidding credit is
analogous to the facts of *Community Teleplay* and *Weblink*, in which
the Wireless Telecommunications Bureau rejected requests for retroactive
bidding credits because the filings were untimely.[^27] Like the
requestors in those cases, Instapage filed a belated request and relies
upon *Graceba* to argue that its filing is not untimely. In addition,
like those requestors, Instapage's request was not filed as a supplement
to a timely-filed petition for reconsideration. Accordingly, as we did
in *Community Teleplay* and *Weblink*, we dismiss Instapage's Request as
untimely under sections 1.106(f) and 1.429(d)[^28] of our rules.

Not only is Instapage's Request untimely under section 1.429(d)[^29] of
the Commission's rules, it is also barred by the doctrine of waiver,
*i.e*., a party with sufficient opportunity to raise a challenge in a
timely manner, but who fails to do so, is deemed to have waived the
challenge and is precluded from raising it subsequently.[^30]
Insta-Check was obligated under the Commission's rules to bring any
challenge to the bidding credit rules to the Commission's attention in a
timely manner. Insta-Check had the opportunity to file comments
objecting to the constitutionality of the proposed bidding credit rules
in the proceedings resulting in the *Competitive Bidding Second R&O*,
*Competitive Bidding Third R&O* and

the *Competitive Bidding Third MO&O*, but did not do so.[^31]
Insta-Check failed to raise the constitutional issue upon conclusion of
Auction No. 3 in 1994, and also did not file a timely objection to the
payment conditions attendant to the license grant.[^32] Further, to the
extent that Instapage argues that the issuance of the *Adarand* decision
excused its earlier failures, Instapage's did not file its Request until
four years after *Adarand* was issued.[^33] In light of this record of
inaction, it is clear that Instapage has waived its challenge to the
bidding credit provisions of the regional Narrowband PCS service rules.
Accordingly, in view of the fact that both the original licensee,
Insta-Check, and the current licensee, Instapage, failed to timely raise
a constitutional challenge despite repeated opportunities to do so, we
dismiss Instapage's Request as untimely.

Finally, Instapage contends that under *Melody Music* the Commission's
actions with respect to the 218-219 MHz service require it to grant a
retroactive bidding credit here because, Instapage alleges, it is
similarly situated to those small business that won licenses in the
218-219 MHz service auction and were granted remedial bidding
credits.[^34] This contention is misplaced. It is based upon the errant
assumption that the retroactive credit afforded to the winning bidders
in the 218-219 MHz Service auction was a direct remedy for race and
gender discrimination. It was not. Rather, as the Commission has
explained, the extent of any "remedy" provided in response to the
timely-filed challenge[^35] to the auction rules was the elimination of
the race-based and gender-based bidding credits.[^36] Thus, all
minority-owned and women-owned businesses lost the bidding credit they
had previously received in Auction No. 2.[^37] At the same time, to
fulfill the Commission's statutory mandate of encouraging participation
by small businesses, rural telephone companies, and businesses owned by
members of minority groups and women, the Commission granted a
retroactive twenty-five percent bidding credit to the accounts of "every
winning bidder in the 1994 auction of what is now the 218-219 MHz
Service that met the small business qualifications for that
auction."[^38] The Commission noted that this approach minimized the
disruption to entities that have previously received a bidding credit
and the public,[^39] and that similar bidding credits had been provided
to bidders in other Services.[^40] Instapage does not present analogous
circumstances.

In the instant case, neither Insta-Check nor Instapage filed a timely
challenge to the Regional Narrowband PCS rules.[^41] As discussed,
*supra*, the absence of a timely challenge distinguishes Instapage's
challenge from that of Graceba, and the limited relief that was granted
in the 218-219 MHz Service. Therefore, the directive in *Melody Music*
to accord the same treatment to similarly situated parties is not
implicated by Instapage's Request. Accordingly, Instapage cannot rely
upon the issuance of the *218-219 MHz Order* to cure the untimely nature
of its filing and we dismiss Instapage's Request as untimely under
section 1.429(d)[^42] of our rules.

**3. Ordering Clause**

Accordingly, for the foregoing reasons, IT IS ORDERED that the Informal
Request for Remedial

Bidding Credit filed on November 12, 1999 is HEREBY DISMISSED WITH
PREJUDICE. This action is taken pursuant to authority delegated by
Section 0.331[^43] of the Commission's Rules.

Sincerely,

Kathleen O'Brien Ham

> Deputy Chief
>
> Wireless Telecommunications Bureau

[^1]: Informal Request for Remedial Bidding Credit filed by Thomas
    Gutierrez on November 12, 1999 ("Request"). Since the filing of the
    Request, Instapage's license automatically terminated due to its
    failure to meet the construction notification requirement and the
    minimum coverage benchmarks pursuant to sections 1.946(c) and
    1.955(a)(2) of the Commission's Rules. Instapage Network, Ltd.,
    *Order*, 16 FCC Rcd 14029 (2001) (reconsideration pending); *see
    also* Letter to Mr. Thomas Gutierrez, Esq., Attorney for Instapage,
    from Margaret W. Wiener, Chief, Auctions and Industry Analysis
    Division, Wireless Telecommunications Bureau, 16 FCC Rcd 14728
    (2001) (Instapage's request for a grace period dismissed as moot
    after its licenses automatically canceled) (reconsideration
    pending).

[^2]: Announcing the High Bidders in the Auction of 30 Regional
    Narrowband (PCS) Licenses; Winning Bids Total \$490,901,787, *Public
    Notice* (rel. Nov. 9, 1994) ("*Regional Narrowband PCS Closing
    Public Notice*"). Insta-Check Systems was the winning bidder for the
    license in Market R002-05 with a bid of \$8,000,013. On February 14,
    1997, the Wireless Telecommunications Bureau ("Bureau") approved the
    transfer and assignment of the Channel 16 southern regional license
    from Insta-Check to Instapage. Wireless Telecommunications Bureau
    Commercial Wireless Service Information, Report No. LB-97-19,
    *Public Notice* (rel. Feb. 14, 1997).

[^3]: Implementation of Section 309(j) of the Communications
    Act---Competitive Bidding Narrowband PCS and Amendment of the
    Commission's Rules to Establish New Narrowband Personal
    Communications Services, *Third Memorandum Opinion and Order and
    Further Notice of Proposed Rulemaking*, 10 FCC Rcd 175 (1994)
    ("*Competitive Bidding Third MO&O*"). The Auction No. 3 rules were
    similar to rules adopted in the Interactive Video and Data Service
    ("IVDS") Auction ("Auction No. 2"), upon which Instapage premises
    its relief request, in that both auctions made bidding credits
    available for qualifying women-owned and minority-owned businesses.
    However, the Auction No. 3 rules restricted bidding credits to ten
    specific licenses of the thirty that were auctioned, while bidding
    credits were offered on all licenses in Auction No. 2. *Compare* 47
    C.F.R. § 24.309(b) (1994) *with* 47 C.F.R. § 95.816(d) (1994).

[^4]: 47 C.F.R. § 24.309(b)(2) (1994); Implementation of Section 309(j)
    of the Communications Act---Competitive Bidding, *Third Report And
    Order*, 9 FCC Rcd 2941, at 2945 ¶ 10 ("*Competitive Bidding Third
    R&O*"); *Competitive Bidding Third MO&O*, 10 FCC Rcd at 232-34.

[^5]: ^?^ *Regional Narrowband PCS Closing Public Notice*; "FCC
    Announces the Receipt of Down Payments from the High Bidders in the
    Auction of 30 Regional Narrowband PCS Licenses," *News Release*
    (rel. Nov. 29, 1994).

[^6]: 47 C.F.R. § 24.309(b)(2); *Competitive Bidding Third R&O,* 9 FCC
    Rcd at 2945, ¶ 10*; Competitive Bidding Third MO&O*, 10 FCC Rcd at
    232-34.

[^7]: *Regional Narrowband PCS Closing Public Notice;* 47 C.F.R. §
    24.309(b)(2) (1994).

[^8]: *Adarand Constructors Inc. v. Pena*, 515 U.S. 200, 229-30 (1995).

[^9]: ^?^ Request. As noted above, the Commission consented to the
    assignment of the license from Insta-Check to Instapage on February
    14, 1997. Note 2 *supra*.

[^10]: ^?^ Implementation of Section 309(j)of the Communications
    Act---Competitive Bidding, *Notice of Proposed Rulemaking*, PP
    Docket No. 93-253, 8 FCC Rcd. 7635 (1993).

[^11]: ^?^ Implementation of Section 309(j) of the Communications Act --
    Competitive Bidding, *Second Report and Order*, 9 FCC Rcd. 2348
    (1994) ("*Competitive Bidding Second R&O*").

[^12]: ^?^ *Competitive Bidding Third R&O*, 9 FCC Rcd 2941.

[^13]: ^?^ *Competitive Bidding Third MO&O,* 10 FCC Rcd 175.

[^14]: ^?^ *Regional Narrowband PCS Closing Public Notice*.

[^15]: ^?^ The constitutionality of bidding credits for designated
    entities was explicitly considered by the Commission in the
    rulemakings that affected the regional Narrowband PCS auction:
    *Competitive Bidding Second Report &Order*, 9 FCC Rcd 2348, 2357-58
    ¶¶ 54-58, 2398-00, ¶¶ 289-97; *Competitive Bidding Third R&O*, 9 FCC
    Rcd 2941, 2973 n.47.

[^16]: Request at 3.

[^17]: Request at 3-4 (*citing Graceba Total Communications, Inc. v.
    FCC*, 155 F.3d 1038 (D.C. Cir. 1997); 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 Ord*er, 15
    FCC Rcd 1497 (1999) ("*218-219 MHz Order*")).

[^18]: ^?^ Request at 4.

[^19]: 47 C.F.R. § 1.41.

[^20]: 47 U.S.C. § 405 (limiting the Commission's power to consider
    petitions for reconsideration to those filed within 30 days from
    public notice of the order, decision, report or action complained
    of); *see also Reuters Limited v. FCC*, 781 F.2d 946, 951-52 (1986)
    (narrowly construing judicially created "extraordinary
    circumstances" exception to statutory time limit for filing
    petitions for reconsideration).

[^21]: ^?^ 47 C.F.R. §§ 1.106(f), 1.429(d).

[^22]: ^?^ 47 C.F.R. § 1.429.

[^23]: ^?^ *Competitive Bidding Third MO&O,* 10 FCC Rcd 175 (rel. Aug.
    17, 1994), 59 Fed. Reg. 44070 (Aug. 26, 1994); Implementation of
    Section 309(j) of the Communications Act -- Competitive Bidding,
    *Erratum to Third Memorandum Opinion and Order*, 10 FCC Rcd 173
    (rel. Sept. 21, 1994), 59 Fed. Reg. 50511 (Oct. 4 1994).

[^24]: See Request at 3 (wherein Instapage claims that it was injured by
    the availability of bidding credits for certain designated entities,
    which bidding credits were adopted as part of a rulemaking
    proceeding, as set forth *supra*).

[^25]: ^?^ Request at 4 (citing *Graceba Total Communications, Inc. v.
    FCC,* 115 F.3d 1038, 1041 (D.C. Cir. 1997).

[^26]: Instapage's argument also ignores other distinguishing factors
    between itself and Graceba. First, as previously noted, in this
    instance, no bidding credits were offered on the particular license
    won by Insta-Check. Thus, any bidder who participated in the auction
    would have recognized that under no circumstances would the winning
    bidder for that license have been able to obtain a bidding credit.
    Second, Insta-Check was a minority owned business. Accordingly, even
    if Insta-Check had filed a timely objection to the rules that
    governed Auction No. 3, it would be difficult for it to properly
    state a claim alleging a constitutional injury.

[^27]: Community Teleplay, Inc., et. al., *Order*, 13 FCC Rcd 12426,
    12428-29 (WTB 1998) ("*Community Teleplay*"); Weblink Wireless,
    Inc., *Order*, 16 FCC Rcd 9420, 9423 ¶ 6 (2001) (WTB) ("*Weblink*")
    (reconsideration pending).

[^28]: 47 C.F.R. §§ 1.106(d), 1.429(d).

[^29]: *Id*.

[^30]: ^?^ *Adelphia Communications Corp. v. FCC*, 88 F.3d 1250, 1256
    (D.C. Cir. 1996*); Northwest Indiana Telephone Company, Inc. v.
    FCC*, 872 F.2d 465, 470 (D.C. Cir. 1989); *Weblink*, 16 FCC Rcd at
    9423, ¶ 6; *Community Teleplay*, 13 FCC Rcd at 12428, ¶ 5.

[^31]: *See supra* notes 10-12.

[^32]: ^?^ Section 1.110 of the Commission's rules provides that if the
    Commission grants an application with conditions, the applicant must
    accept those conditions unless it rejects them within thirty days.
    47 C.F.R. § 1.110. Thus, Insta-Check similarly waived any challenge
    to the payment conditions on the licenses by the passage of time.

[^33]: ^?^ *See Weblink,* 16 FCC Rcd at 9424, ¶ 9; *Community Teleplay,*
    13 FCC Rcd at 12429, ¶ 6.

[^34]: ^?^ Request at 4 (*citing Melody Music v. FCC*, 345 F.2d 730
    (D.C. Cir. 1965)).

[^35]: ^?^ *See Graceba Total Communications, Inc. v. FCC*, 115 F3d 1038
    (D.C. Cir. 1997).

[^36]: ^?^ Amendment of Part 95 of the Commission's Rule to Provide
    Regulatory Flexibility in the 218-219 MHz Service, *Second Order on
    Reconsideration of the Report and Order and Memorandum Opinion and
    Order*, 15 FCC Rcd 25020, 25041-42 ¶ 44 (2000) ("*218-219 MHz*
    *Second Order on Reconsideration*"); Amendment of Part 95 of the
    Commission's Rule to Provide Regulatory Flexibility in the 218-219
    MHz Service, *Third Order on Reconsideration of the Report and Order
    and Memorandum Opinion and Order*, FCC 02-130, at ¶ 9, 16 (rel. May
    3, 2002) ("*218-219 MHz 3^rd^ Order on Recon*."); Weblink, 16 FCC
    Rcd at 9424, ¶ 9.

[^37]: *218-219 MHz Order*, 15 FCC Rcd at 1533-34, ¶¶ 60-61; *218-219
    MHz 3^rd^ Order on Recon*, FCC 02-130, at ¶ 9, 16 (rel. May 3,
    2002).

[^38]: ^?^ *218-219 MHz Order* at 1533, ¶ 61; *218-219 MHz 3^rd^ Order
    on Recon*., at ¶ 9.

[^39]: *218-219 MHz Order* at 1534, ¶ 63; *218-219 MHz 3^rd^ Order on
    Recon*., at ¶ 9.

[^40]: ^?^ *218-219 MHz Order* at 1533-34, ¶¶ 61- 62; *218-219 MHz 3^rd^
    Order on Recon*., at ¶ 9.

[^41]: ^?^ *See* *James Beam Distilling Company v. Georgia*, 501 U.S.
    529 (1991) (wherein the Supreme Court upheld a party's
    responsibility to comply with procedural requirements); *see also
    Weblink,* 16 FCC Rcd. at 9424, ¶ 8.

[^42]: ^?^ 47 C.F.R. § 1.429(d).

[^43]: ^?^ 47 C.F.R. § 0.331