**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * |                              |
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| C.H. PCS, Inc., BTA Nos.         | ) |                              |
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| B124, B144, B222, B322, B347,    | * |                              |
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| B362, B420, and B486             | * |                              |
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| Frequency Block C                | ) |                              |
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+----------------------------------+---+------------------------------+

**ORDER**

**Adopted:** May 31, 2001 **Released:** May 31, 2001

By the Deputy Chief, Wireless Telecommunications Bureau:

1.  This order sets forth the final default payment obligations of C.H.
    PCS, Inc ("CHPCS"), resulting from its failure to remit the required
    down payment on the licenses for which it was the successful high
    bidder in two Broadband Personal Communications Services ("PCS") C
    block auctions ("Auction No. 5 and Auction No. 10"). The specific
    default payment obligation with respect to each license is set forth
    in Attachment A to this order.

2.  [Background]{.underline}. CHPCS was the high bidder on seven
    broadband PCS C block markets[^1] in Auction No. 5, which closed on
    May 6, 1996.[^2] CHPCS paid an initial down payment of
    \$1,505,812.50[^3] for the licenses but made no further payments.
    Subsequently, CHPCS was the high bidder for one broadband PCS C
    block license[^4] (Phoenix BTA) in Auction No. 10, which closed on
    July 16, 1996.[^5] Instead of making its initial down payment for
    the Phoenix BTA, on July 24, 1996, CHPCS filed an emergency petition
    for waiver of the down payment deadline.[^6]

3.  On August 9, 1996, the Wireless Telecommunications Bureau ("WTB")
    denied CHPCS\'s waiver request and dismissed its long-form
    application for the one C block license CHPCS won in Auction No.
    10.[^7] On November 4, 1996, the Bureau assessed a \$6,414,232.50
    initial default payment with respect to CHPCS\'s default on that
    license.[^8] CHPCS\'s upfront payment of \$1,383,000.00 was applied
    to this initial default payment, leaving an amount of \$5,031,232.50
    still owed as part of the initial default payment.

4.  The Bureau subsequently notified CHPCS in a letter dated February 4,
    1997, that it had applied CHPCS\'s initial down payment of
    \$1,505,812.50 for the seven licenses won in Auction No. 5 to the
    \$5,031,232.50 still owed on the initial default payment for the
    Phoenix BTA license won in Auction No. 10.[^9] This left a remaining
    default payment obligation for the Phoenix BTA of \$3,525,420.00, in
    addition to an outstanding down payment obligation of \$1,505,812.50
    for the seven licenses from Auction No. 5.[^10] The Bureau informed
    CHPCS that it was required to pay the amount of \$5,031,232.50,
    which represented both outstanding obligations, within five business
    days.[^11]

5.  CHPCS failed to pay its outstanding down payment obligation for the
    seven licenses won in Auction No. 5. On November 6, 1998, the Bureau
    dismissed CHPCS's applications for the seven licenses by Public
    Notice.[^12] On January 21, 1999, the Bureau assessed an initial
    default payment of \$903,487.00 with respect to those licenses.[^13]
    On December 7, 1998, CHPCS filed a Petition For Reconsideration of
    the Bureau\'s *Dismissal Notice*. On June 16, 1999, the Bureau
    denied CHPCS's Petition For Reconsideration.[^14]

6.  On March 17, 2000, CHPCS submitted a letter to the Bureau seeking a
    refund of the initial down payment of \$1,505,812.50, plus interest
    for the seven broadband PCS licenses it won in Auction No. 5. [^15]
    CHPCS also requested a refund of \$1,383,000.00 plus interest it had
    on deposit for Auction No. 10 and a waiver of all default payments
    associated with the licenses it won in both auctions. On May 9,
    2000, the Bureau responded to CHPCS's letter and informed CHPCS that
    the Commission cannot review CHPCS's debt obligations because it had
    failed to file timely petitions for reconsideration or applications
    for review in response to any of the Commission's actions.[^16] The
    Bureau demanded immediate payment of the initial default payment for
    all eight licenses in the amount of \$5,934,720.00, plus interest,
    penalties, and administrative costs within 30 days of the date of
    the letter.[^17] Following this notification, CHPCS failed to remit
    the assessed payment.

7.  [Discussion]{.underline}. Under the Commission\'s rules, a bidder
    who fails to remit the required down payment for the licenses for
    which it was the high bidder within five (5) business days after the
    Commission declares the auction closed shall be deemed to be in
    default on those licenses.[^18] The Commission\'s rules also provide
    that under such circumstances, the Commission will dismiss the
    bidder\'s long-form application.[^19] Pursuant to the Commission's
    rules, a winning bidder that defaults on a payment obligation is
    subject to a default payment.[^20] Specifically, such bidder is
    required to pay the difference between the amount bid and the amount
    of the winning bid the next time the license is offered by the
    Commission (so long as the subsequent winning bid is less than the
    amount bid), plus an additional payment equal to three percent of
    the defaulter\'s bid, or the subsequent winning bid, whichever is
    less.[^21] In the event that the subsequent winning bid is greater
    than or equal to the defaulted bid, the total default payment is
    equal to three percent of the defaulted bid.[^22] In the event that
    the default payment cannot be determined (*i.e.,* because a license
    has not yet been reauctioned), the Commission indicated that a
    deposit may be assessed of up to 20 percent of the defaulted bid
    price.[^23] Finally, the Commission\'s payment rules provide that if
    a defaulting bidder does not submit the default payment assessed by
    the Commission in the time required, any amounts overdue \"will be
    deducted from any upfront payments or down payments that the
    defaulting or disqualified bidder has deposited with the
    Commission.\"[^24]

8.  CHPCS failed to pay the initial default payment for the Phoenix BTA
    license[^25] won in Auction No. 10 and the initial default payment
    obligation for the seven licenses[^26] won in Auction No. 5. Because
    all eight licenses were auctioned in Auction No. 22, the Commission
    is able to assess the full amount of the default payment for each
    license. Under this formula, which is set forth in Attachment A to
    this order, the sum of CHPCS's default payments on all eight
    licenses is \$231,915,820.01. Each default payment contains two
    separate payment obligations:

-   For each license, the first portion of the default payment
    represents the total difference between CHPCS's winning bid and the
    amount of the winning bid in Auction No. 22. The cumulative sum of
    those differences is \$231,544,433.[^27]

> Phoenix, AZ B347 \$202,619,250.00
>
> El Centro, CA B124 \$5,161,500.00
>
> Flagstaff, AZ B144 \$3,374,765.00
>
> Kahului, HI B222 \$7,399,500.00
>
> Nogales, AZ B322 \$1,193,981.00
>
> Prescott, AZ B362 \$4,403,437.00
>
> Sierra Vista, AZ B420 \$2,158,406.00
>
> Yuma, AZ B486 \$5,233,594.00
>
> **Total \$231,544,433.00**

-   For each license, the second portion of the default payment is an
    additional three percent of the lower of CHPCS's winning bid and the
    subsequent winning bid for each of the eight defaulted licenses. The
    cumulatively sum of three percent (3%) is \$371,387.01.

> Phoenix, AZ B347 \$335,655.00
>
> El Centro, CA B124 \$6,030.00
>
> Flagstaff, AZ B144 \$3,944.55
>
> Kahului, HI B222 \$10,575.00
>
> Nogales, AZ B322 \$1,395.57
>
> Prescott, AZ B362 \$5,146.89
>
> Sierra Vista, AZ B420 \$2,522.82
>
> Yuma, AZ B486 \$6,117.18
>
> **Total \$371,387.01**

-   Thus, the sum of the eight separate default payment obligations is
    \$231,915,820.01.

> Sum of Differences \$231,544,433.00
>
> Sum of 3% \$371,387.01
>
> **Total \$231,915,820.01**

9.  CHPCS deposited with the Commission \$2,888,812.50 which represented
    the initial down payment in the amount of \$1,505,812.50 for CHPCS's
    seven PCS C block markets from Auction No. 5 and CHPCS's upfront
    payment in the amount of \$1,383,000.00 from Auction No. 10. The
    total amount of \$2,888,812.50, was previously applied towards
    CHPCS's initial default payment on the Phoenix BTA license,[^28] and
    has now been applied to the sum of the final default payment for
    each license.

> Total Default Payments \$231,915,820.01
>
> Less Down Payment Auction No. 5 -\$1,505,812.50
>
> Less Upfront Payment Auction No. 10 -\$1,383,000.00
>
> **Total Default Payment Balance \$229,027,007.51**

10. As a result, CHPCS is in debt to the United States in the amount of
    \$229,027,007.51, payable in full, immediately, and without further
    demand. As permitted under 31 U.S.C. § 3717, the debt is subject to
    interest, penalties, and administrative costs, and interest accrues
    from the date of this ORDER, which is also its mailing date. CHPCS,
    the debtor, may avoid payment of the interest if it tenders to the
    Commission full payment within 30 days of the date of the ORDER.
    Moreover, the debt is subject to an additional charge to cover the
    cost of processing and handling of delinquent debts, and a penalty
    charge in the amount permitted by law. The penalty charge for
    delinquent debt payments permitted by 31 U.S.C. § 3717 currently is
    6 percent a year for the failure to pay any part of the debt more
    than 90 days past due.

**ORDERING CLAUSES**

11. It is ORDERED that pursuant to Section 24.704, 24.708, 1.2104,
    1.2109 of the Commission's rules, CHPCS is assessed a final default
    payment in the amount of \$202,954,905.00 for license B347,
    \$5,167,530.00 for license B124, \$3,378,709.55 for license B144,
    \$7,410,075.00 for license B222, \$1,195,376.57 for license B322,
    \$4,408,583.89 for license B362, \$2,160,928.82 for license B420,
    and \$5,239,711.18 for license B486 as computed in Attachment A.

12. It is FURTHER ORDERED that CHPCS's initial down payment for CHPCS's
    seven PCS C block markets from Auction No. 5 in the amount of
    \$1,505,812.50 and the upfront payment from Auction No. 10 in the
    amount of \$1,383,000.00 will be applied towards the sum of the
    final default payments for the eight licenses in the amount of
    \$231,915,820.01.

13. It is FURTHER ORDERED that CHPCS's debt of **\$229,027,007.51** be
    paid immediately, and that if it is unpaid 30 days after the date of
    this ORDER, interest will accrue from the date of this ORDER along
    with penalties and administrative costs permitted by 31 U.S.C.
    § 3717. CHPCS must make payment in accordance with the instructions
    set forth in Attachment B to this ORDER.

14. It is FURTHER ORDERED that this Order shall be sent to the applicant
    by certified mail, return receipt requested. This action is taken
    pursuant to authority delegated by Section 0.331 of the Commission's
    rules, 47 C.F.R. § 0.331.

    FEDERAL COMMUNICATIONS COMMISSION

    Kathleen O\'Brien Ham

    Deputy Chief

    Wireless Telecommunications Bureau

[^1]: PBB124C (El Centro, CA), PBB144C (Flagstaff, AZ), PBB222C
    (Kahului, HI), PBB322C (Nogales, AZ), PBB362 (Prescott, AZ), PBB420C
    (Sierra Vista, AZ), and PBB486C (Yuma, AZ).

[^2]: Entrepreneurs' C Block Auction Closes, *Public Notice*, DA No.
    96-716 (rel. May 8, 1996) (WTB).

[^3]: This amount includes an upfront payment in the amount of
    \$299,000.00 received on December 1, 1995, and the balance of the
    first down payment in the amount of \$1,206,812.50 received on May
    15, 1996.

[^4]: PBB347C (Phoenix, AZ).

[^5]: Entrepreneurs' C Block Reauction Closes, *Public Notice*, DA No.
    96-1153 (rel. July 17, 1996) (WTB).

[^6]: C.H. PCS, Inc., Emergency Petition for Waiver of Section
    24.711(a)(2) of the Commission\'s Rules, filed on July 24, 1996.

[^7]: C.H. PCS, Inc., Request for Waiver of Section 24.711(a)(2) of the
    Commission\'s Rules, *Order*, 11 FCC Rcd 9343 (1996) (WTB).

[^8]: C.H. PCS, Inc., BTA No. 347, Frequency Block C, Order, 11 FCC Rcd.
    22430 (1996) (WTB) (\"*1996 Payment Order*\").

[^9]: Letter from Michele C. Farquhar, Chief, Wireless
    Telecommunications Bureau, to Kenneth Hobbs, C.H. PCS, DA 97-260
    (rel. February 4, 1997) ("*February 4, 1997 Letter*")*.*

[^10]: *Id.*

[^11]: *Id.*

[^12]: Wireless Telecommunications Bureau Dismisses C.H. PCS, Inc.
    Applications for Auction No. 5, *Public Notice,* 13 FCC Rcd 22255
    (1998) (WTB) ("*Dismissal Notice")*.

[^13]: C.H. PCS, Inc. BTA Nos. B124, B144, B222, B322, B362, B420, and
    B486, Frequency Block C, *Order*, 14 FCC Rcd 4131 (1999) (WTB)
    (\"*1999 Payment Order*\").

[^14]: C.H. PCS, Inc. Dismissal of Seven Broadband PCS C-Block Long-Form
    Applications for Auction Event No. 5, *Memorandum Opinion and
    Order*, DA 99-1166 (June 16, 1999) (WTB) ("*CHPCS MO&O*"). In its
    Petition for Reconsideration, CHPCS argued that the Bureau
    erroneously stated that (1) the long-form applications of CHPCS had
    not been accepted for filing, and (2) CHPCS failed to submit timely
    down payments for the seven C block licenses it won in Auction No.
    5. In denying the Petition, the Bureau stated that its error in
    characterizing the status of applications did not invalidate its
    dismissal. *CHPCS MO&O* at ¶ 5. CHPCS' applications were dismissed
    because CHPCS failed to replenish the down payment funds that had
    been applied toward CHPCS' default payment obligation for the
    license it won in Auction No. 10. *Id.*

[^15]: Letter to Thomas J. Sugrue, Chief, Wireless Telecommunications
    Bureau, from Mr. Charles R. Jones, Counsel for C.H. PCS, Inc., filed
    on March 17, 2000.

[^16]: Letter to Mr. Charles R. Jones, Esq., Jenkins & Jones, C.H. PCS
    Inc., from Gerald P. Vaughan, Deputy Chief, Wireless
    Telecommunications Bureau (rel. May 9, 2000) (WTB) ("*May 9, 2000
    Letter*").

[^17]: *Id*. In the *May 9, 2000 Letter,* the WTB should have requested
    a payment in the amount of \$4,428,907.00 which represents the
    initial default payment due for Auction No. 10 (\$3,525,420.00) and
    Auction No. 5 (\$903,487.00). Instead, the WTB incorrectly requested
    \$5,934,720.00 which includes the initial default payment due for
    Auction No. 5 and Auction No. 10 plus the initial down payment for
    Auction No. 5 (\$1,505,812.50). Nevertheless, CHPCS failed to remit
    the initial default payment and the Commission is now assessing the
    final default payment.

[^18]: Section 24.708(b) states that a bidder who defaults on a required
    payment will be subject to the consequences set forth in Section
    1.2109. 47 C.F.R. § 24.708(b) (1996). Section 1.2109(b) provided
    that \"\[i\]f a license winner withdraws its bid after the
    Commission has declared competitive bidding closed or fails to remit
    the required down payment within five (5) business days after the
    Commission has declared competitive bidding closed, the bidder will
    be deemed to have defaulted, its application will be dismissed, and
    it will be liable for the default payment specified in §
    1.2104(g)(2)." 47 C.F.R. § 1.2109(b) (1996); *see also* 47 C.F.R. §
    1.2104(g)(2) (1996). In February 1997, the Commission changed the
    number of days prescribed by Section 1.2109(b) from five (5) to ten
    (10) business days. Amendment of Part 1 of the Commission\'s Rules
    \-- Competitive Bidding Proceeding*, Order, Memorandum Opinion and
    Order and Notice of Proposed Rule Making*, 12 FCC Rcd 5686 (1997).

[^19]: 47 C.F.R. § 1.2109(b) (1996).

[^20]: 47 C.F.R. § 1.2109(b), § 24.704, and § 1.2104(g)(2) (1996).

[^21]: 47 C.F.R. § 24.704 (1996).

[^22]: *Id.*

[^23]: *Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, Fifth Report and Order,* 9 FCC Rcd 5532, 5563,
    n. 51 (1994) (*\"Fifth Report and Order\")*; *see also
    Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, Second Report and Order*, 9 FCC Rcd 2348,
    2382-2383, ¶¶ 195-197 (1994); *Amendment of Part 1 of the
    Commission\'s Rules \-- Competitive Bidding Procedures, WT Docket
    No. 97-82, Allocation of Spectrum Below 5 GHz Transferred from
    Federal Government Use, ET Docket No. 94-32, Third Report and Order
    and Second Further Notice of Proposed Rule Making*, 13 FCC Rcd 374,
    434, ¶ 102 (1997). "Wireless Telecommunications Bureau Will Strictly
    Enforce Default Payment Rules,\" *Public Notice*, 11 FCC Rcd 10853
    (1996). In July 2000, the Commission modified Section 1.2104 (g) of
    the rules regarding assessments of interim payments. 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 (2000). These amendments in no way alter
    our decision here.

[^24]: 47 C.F.R. §§ 24.704(a)(2), 1.2104(g)(2) (1996).

[^25]: *1996 Payment Order.*

[^26]: *1999 Payment Order.*

[^27]: The high bids received for all eight licenses in Auction No. 22
    were less than the high bids placed by CHPCS on those licenses in C
    block Auctions No. 5 and No. 10.

[^28]: *1996 Payment Order* and *February 4, 1997 Letter.*