Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of                 | * | File Nos. 00341CWL96, et.    |
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| Public Notice DA 00-49           | ) |                              |
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| Auction of C and F Block         | * |                              |
| Broadband                        |   |                              |
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| PCS Licenses                     | * |                              |
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| NextWave Personal                | * |                              |
| Communications, Inc. and         | * |                              |
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| NextWave Power Partners Inc.     | * |                              |
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| Petition for Reconsideration     | ) |                              |
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| In re Settlement Request         | * |                              |
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ORDER ON RECONSIDERATION

**Adopted:** August 31, 2000 **Released:** September 6, 2000

By the Commission: Commissioner Furchtgott-Roth issuing a statement.

**I. Introduction**

1.  We have before us a Petition for Reconsideration ("Petition") filed
    by NextWave Personal Communications Inc. and NextWave Power Partners
    Inc. (collectively, "NextWave").[^1] NextWave requests that the
    Commission review the Wireless Telecommunications Bureau's
    ("Wireless Bureau") public notice, which announced an auction of the
    C and F block Personal Communications Service ("PCS") spectrum
    licenses previously licensed to NextWave.[^2] For the reasons set
    forth below, we deny NextWave's Petition. In addition, we dismiss
    Antigone Communications, Limited Partnership and PCS Devco, Inc.'s
    ("Antigone/Devco") Application for Review and Settlement Request as
    moot.

    **II. Background**

2.  Section 309(j)(4)(D) requires the Commission, when promulgating
    auctions regulations, to ensure that small businesses and other
    designated entities are given the opportunity to participate in the
    provision of spectrum-based services.[^3] In accordance with its
    mandate, the Commission created provisions in the auctions program
    to promote participation by small businesses in broadband PCS, such
    as limiting eligibility for the C and F block auctions to those with
    total assets and revenues below a certain threshold, and offering
    bidding credits and installment payment plans.[^4]

3.  NextWave was the high bidder on 95 licenses in the broadband PCS C,
    D, E, and F block auctions that concluded in 1996 and 1997.[^5] A
    petition to deny was filed against NextWave's C block license
    application and, ultimately, the Wireless Bureau found NextWave in
    violation of the Commission's foreign ownership restrictions.
    NextWave's C block licenses were conditionally granted on January 3,
    1997, however, subject to certain restructuring obligations to bring
    the company into compliance with the Commission's foreign ownership
    rules.[^6] Each of NextWave's C and F block licenses was explicitly
    conditioned on full and timely payment of all installments under the
    Commission's installment payment plan, and each license stated that
    "\[f\]ailure to comply with this condition will result in the
    automatic cancellation of this authorization."[^7] Antigone/Devco
    filed an Application for Review of the Commission's decision to
    conditionally grant NextWave's licenses on March 17, 1997.
    Antigone/Devco subsequently filed a settlement request setting forth
    the terms of a proposed settlement under which the Application for
    Review would be withdrawn**.**[^8]

4.  After it received its C block licenses, NextWave and other PCS block
    licensees petitioned the Commission for relief in order to modify
    their installment payment obligations.[^9] In response, the
    Commission suspended C and F block installment payments
    temporarily[^10] and initiated a rulemaking proceeding in order to
    consider whether to provide relief, and if so, the scope of that
    relief to C and/or F block licensees.[^11] Ultimately, the
    Commission adopted several restructuring options to assist C block
    licensees in meeting their debt obligations, including resumption of
    payments, disaggregation, amnesty and prepayment.[^12] All of the
    elections entailed licensees paying the full bid price, on a *pro
    rata* basis, for any and all spectrum retained by the licensee.
    Licensees were required to elect from among these options by June 8,
    1998, the Election Date, and resume payments by July 31, 1998.[^13]
    In the event licensees could not make payment by July 31, 1998, the
    *Restructuring Orders* gave licensees a single 90-day grace period,
    *i.e.,* until October 29, 1998*,* after which the licensee would be
    in default and its licenses would automatically cancel.[^14]

5.  NextWave sought and was denied a stay of the Election Date,[^15] and
    did not file an election with the Commission. Therefore, under the
    Commission's rules, NextWave was deemed to have elected to resume
    payments under its existing Notes and Security Agreements.[^16] On
    the same day as its election was due to the Commission, NextWave
    filed for protection under Chapter 11 of the Bankruptcy Code.[^17]
    NextWave simultaneously filed an "Adversary Proceeding"[^18] against
    the United States Government[^19] asking the bankruptcy court to
    restructure its debt to the United States based on the theory that
    its assumption of the full amount of the C block auction debt was a
    "fraudulent conveyance" under bankruptcy law.[^20] On August 7,
    1998, NextWave sent a letter to the Commission indicating its belief
    that bankruptcy afforded protections that "extend the date for
    making an Election" under the *Restructuring Orders*.[^21] On
    September 2, 1998, the Wireless Bureau replied by letter that it
    disagreed, and considered the election requirements to be binding on
    NextWave, notwithstanding its bankruptcy filing ("*September 2, 1998
    Letter"*).[^22] Pursuant to our *Restructuring Orders*, the C and F
    block licenses granted to NextWave canceled automatically on October
    30, 1998 because NextWave failed to make its payment by the
    resumption deadline of October 29, 1998.[^23]

6.  In the bankruptcy proceedings, the Government opposed NextWave's
    attempt to use the Bankruptcy Code to retain its licenses without
    complying with the full and timely payment condition, and moved to
    dismiss the Adversary Proceeding as an improper collateral attack on
    our *Restructuring Orders*. The bankruptcy court rejected the
    Government's motion to dismiss the Adversary Proceeding, and ruled
    that on the fraudulent conveyance count, the Commission should be
    treated as a creditor, and not as a regulator.[^24] On May 26, 1999,
    the bankruptcy court found that a constructive fraudulent transfer
    had occurred and, consequently, avoided approximately \$3.7 billion
    of NextWave\'s aggregate \$4.7 billion obligation to the
    Government.[^25] The U.S. District Court for the Southern District
    of New York affirmed the bankruptcy court's decision on July 27,
    1999,[^26] but the United States Court of Appeals for the Second
    Circuit ("Second Circuit") reversed on November 24, 1999, and
    followed with an opinion on December 22, 1999 ("*December 22^nd^
    Opinion*").[^27] In the *December 22^nd^ Opinion*, the Second
    Circuit determined that the requirement that licensees comply with
    the full and timely payment condition in order to retain their
    licenses is regulatory in nature, because the auction is the
    mechanism used by the Commission to assign licenses under its
    statutory mandate in Section 309(j) of the Communications Act.
    Therefore, the Second Circuit found the bankruptcy court had erred
    in treating the Commission as merely a creditor. The Second Circuit
    concluded that the bankruptcy court lacked the power to alter the
    Commission's licensing scheme by changing the payment terms that
    applied to auction winners. In addition, the Court reversed the
    ruling that NextWave's obligation could be avoided as a fraudulent
    conveyance.[^28] In its *December 22^nd^ Opinion*, the Second
    Circuit recognized that the bankruptcy court litigation had hindered
    the Commission's enforcement of its licensing payment rules against
    NextWave:

    Because of the ongoing litigation, the FCC has not yet sought to
    take any action vis‑a‑vis the Licenses. While it would probably be
    fair to assume that the FCC will seek to revoke the Licenses and
    collect on its debts, we cannot presume to know in advance the
    course that the agency will ultimately follow.[^29]

7.  Following the Second Circuit's decision, NextWave endeavored to
    amend its bankruptcy plan of reorganization by substituting full
    payment of its debt obligation for the reduced sum set by the
    bankruptcy court.[^30] On January 12, 2000, the Government objected
    to the new reorganization plan, arguing that pursuant to the
    conditions of the C and F block licenses granted to NextWave, the
    licenses had automatically canceled when NextWave failed to make its
    required payments under the Commission's *Restructuring Orders.*
    [^31] The Government's filing attached the *January 12^th^ Public
    Notice* in which the Commission announced the auction of various PCS
    licenses, including those previously conditionally granted to
    NextWave, on July 26, 2000 ("July 26^th^ Auction").

8.  In response to a motion filed by NextWave, the bankruptcy court
    subsequently issued an order holding that under the Bankruptcy Code,
    the FCC had no power to cancel NextWave's licenses ("*January 31^st^
    Bankruptcy Court Order*").[^32] The bankruptcy court set forth its
    own interpretation of the FCC's rules and enjoined the FCC from
    going forward with the July 26^th^ Auction. On February 10, 2000,
    upon the Government's motion for leave to file a petition for *writ
    of mandamus*, the Second Circuit stayed the *January 31^st^
    Bankruptcy Court Order* insofar as it precluded the Commission from
    taking steps in preparation for the auction, pending review of the
    mandamus petition, and established a briefing schedule to review the
    bankruptcy court's order. On May 25, 2000, the Second Circuit issued
    an opinion granting the *writ of mandamus ("May 25^th^
    Opinion")*.[^33] In the *May 25^th^* *Opinion*, the Second Circuit
    confirmed that bankruptcy provisions could not be used to
    collaterally attack the Commission's regulatory licensing scheme.
    The Court further explained that the Commission's rules requiring
    full and timely payment of installment obligations as a condition to
    holding FCC licenses served a fundamental regulatory purpose, and
    therefore could not be altered in bankruptcy.

9.  On February 11, 2000, while the mandamus proceedings were pending in
    the Second Circuit, NextWave filed the instant Petition for
    Reconsideration with the Commission challenging license cancellation
    on the grounds that it is arbitrary and capricious, contrary to law,
    and barred by the doctrines of estoppel and waiver. NextWave
    simultaneously filed a petition for review and notice of appeal
    before the U.S. Court of Appeals for the D.C. Circuit ("D.C.
    Circuit"). On June 23, 2000, the D.C. Circuit granted the
    Commission's motion to dismiss NextWave's petition for review and
    notice of appeal on the grounds that they were premature in advance
    of this order ("*June 23^rd^ Order*").[^34] On July 5, 2000,
    NextWave filed a petition for rehearing of the *June 23^rd^ Order*,
    which was denied by the D.C. Circuit on August 3, 2000.[^35]

    **III. Discussion**

10. [Procedural Issues]{.underline}. In challenging the issue of
    cancellation in its Petition for Reconsideration, NextWave
    apparently takes the position that the *January 12^th^ Public
    Notice* is a final order constituting a decision to cancel its
    previously-held licenses, rather than simply a public notice
    announcing the date that an auction is scheduled to begin. While we
    believe that in some instances it may be proper for a party to
    challenge the Commission's public notices that establish or deny
    rights, the *January 12^th^ Public Notice* was not an order or
    action of the Commission (or the Wireless Bureau) canceling
    NextWave's licenses. Pursuant to our rules, the licenses canceled
    automatically on October 30, 1998. Our records contain no timely
    challenge to the automatic cancellation rule by NextWave at the time
    of the rule's promulgation, nor did NextWave challenge the rule
    during the course of the proceedings culminating in the
    *Restructuring Orders*. NextWave did not file a request for waiver
    of the payment resumption deadline, as did several other
    parties.[^36] Finally, NextWave could have filed a petition for
    reconsideration when the licenses canceled on October 30, 1998, but
    did not.[^37] Thus, we believe NextWave's Petition to be late and
    its challenge to the *January 12^th^ Public Notice* to be
    procedurally defective.[^38] Nevertheless, because of the importance
    of the issues raised in NextWave's Petition, we address NextWave's
    challenge to the automatic cancellation of its licenses.[^39]

11. [Arbitrary and Capricious Standards]{.underline}. NextWave argues
    that the automatic cancellation of its licenses and *January 12^th^
    Public Notice* were arbitrary and capricious and contrary to
    reasoned decision-making[^40] because the Commission has violated
    its own regulations and departed from consistent prior practice by
    "purporting" to cancel NextWave\'s licenses without any previous
    declaration that NextWave had defaulted on its installment
    payments.[^41] We disagree. Cancellation is fully consistent with
    our congressional mandate, the Commission's regulations, and
    precedent. As the D.C. Circuit has recognized in a related context,
    the Commission has given "fair notice of the importance it attached
    to meeting payment dates . . . ."[^42] The necessary corollary to
    this requirement is that licenses cancel if timely payment is not
    made. The requirement to pay in full and on time is paramount to
    preserve the reliability and integrity of our auction licensing
    program. Furthermore, the Commission has designed its competitive
    bidding system with the goal of awarding licenses expeditiously to
    bring competitive wireless services to the public without undue
    delay.[^43] Providing for the "automatic" cancellation of licenses
    for nonpayment is designed to permit the most expeditious auction of
    spectrum licenses in furtherance of this goal.

12. NextWave's argument that cancellation is arbitrary and capricious
    ignores the multitude of Commission pronouncements that licenses
    would cancel automatically if the applicable installment payments
    were not timely received by October 29, 1998. At the time that
    NextWave was conditionally granted its licenses, the payment rules
    provided that a license would cancel automatically following the
    expiration of any grace period without the successful resumption of
    payment or upon default with no grace period.[^44] As noted above,
    the full and timely payment condition was explicitly stated on the
    face of each license[^45] and referenced in the Notes and Security
    Agreements that memorialized the payment terms and obligations
    applicable to each license.[^46] The *First Reconsideration Order*
    amended the rules to provide that C and F block licensees must
    resume payment by July 31, 1998, and that "C and F block licensees
    shall be in default if their payment due on the resumption date . .
    . is more than ninety (90) days late" (*i.e*., after October 29,
    1998).[^47]

13. In addition to the rules and orders issued by the Commission, the
    Wireless Bureau issued a series of public notices that gave
    Commission licensees specific instructions regarding the dates that
    payments were due and the consequences of non-compliance. In a
    Public Notice released on April 17, 1998, the Wireless Bureau stated
    that licensees who failed to meet the July 31, 1998, payment
    resumption deadline could submit their payment on or before October
    29, 1998, without being considered delinquent, if they timely paid a
    five percent late fee.[^48] In a Public Notice dated September 18,
    1998, the Wireless Bureau emphasized that licensees that miss the
    late payment deadline would be in default and their licenses would
    automatically cancel.[^49]

14. Beyond these public notices, the Wireless Bureau's *September 2,
    1998 Letter* directly informed NextWave that the Commission took the
    position that NextWave's pending bankruptcy case did not relieve it
    of its regulatory obligations under the Commission's *Restructuring
    Orders*.[^50] After the *September 2, 1998 Letter* -- nearly two
    months before the final payment date -- it would have been
    unreasonable for NextWave to believe that the Commission expected it
    to make the election required by the *Restructuring Orders*, but not
    to make the concomitant payments required pursuant to that election
    and specified in the *Restructuring Orders*. Thus, NextWave could
    not reasonably have assumed that the Commission agreed with its
    position that its bankruptcy filing freed it from its regulatory
    obligations, such as the timely payment requirement.

15. Recognizing that the cancellation of NextWave's licenses occurred
    automatically under our rules on October 30, 1998 is, in fact, fully
    consistent with our treatment of similarly situated C block
    licensees. As noted above, in October 1998, immediately prior to the
    payment resumption deadline, a number of licensees claimed to be
    facing serious financial difficulties, notwithstanding the relief we
    had provided in our *Restructuring Orders.* Those licensees filed
    requests for waiver of the October 29, 1998 payment deadline.[^51]
    In our *Extension Request Order*, we declined to further extend the
    deadline, noting that we had already provided a lengthy suspension
    period and explaining that to extend the deadline still further
    would "only serve to undermine the enforcement of \[our\] payment
    deadlines."[^52] Subsequent to that order, two of the five licensees
    that had requested waivers made the requisite payment, whereas
    SouthEast Telephone, Inc., and Wireless Ventures, Inc. lost their
    licenses by operation of the automatic cancellation rule.[^53] The
    Wireless Bureau did not issue a "declaration" of default, but simply
    released a public notice announcing its intention to include the
    spectrum previously licensed to SouthEast and Wireless Ventures in
    our March 23, 1999 auction.[^54]

16. The only material differences of which we are aware between NextWave
    and these companies are that NextWave was in bankruptcy some months
    prior to the resumption deadline, and NextWave did not seek a waiver
    of the payment deadline. Had NextWave filed for a waiver at that
    time, we are not aware of any basis on which relief would have been
    afforded to it and not the other licensees that did request
    equitable relief.[^55] To now decline to enforce the automatic
    cancellation of NextWave's licenses would provide NextWave,
    retroactively, with just the relief that we declined to provide to
    those that had properly requested it. Such a result would be
    unjustified.[^56]

17. NextWave argues that before there can be an automatic cancellation
    of a license, the Commission must "declare" that the licensee was in
    default under its payment obligations and that such a declaration
    was not made in this instance. The Commission did not contemplate a
    separate individual "declaration" to achieve "automatic" license
    cancellation, especially for C and F block licensees. C and F block
    payments had been suspended for over a year. The Commission
    therefore had a strong interest in ensuring that the spectrum would
    be returned quickly if licensees did not have the financial ability
    to meet the payment obligations established by their winning bids at
    the auction. At the time NextWave defaulted on its payment
    obligations, the licenses, notes, security agreements, and operative
    Commission rules all called for "automatic cancellation" upon a
    payment default.[^57] Section 1.2110(f)(4)(iv) of the Commission's
    rules provided that if the payment obligations are missed the
    licensee "will be declared in default, its licenses will
    automatically cancel, and will be subject to debt collection
    procedures."[^58] This rule does not require a distinct, affirmative
    act, involving a separate "declaration" of default for each licensee
    that has missed a payment as a precursor to automatic license
    cancellation. Indeed, to require that the Commission take
    affirmative steps to declare a licensee in default before the
    operation of the cancellation of the license would render the
    automatic nature of the process futile and meaningless. Nor, as
    explained above, have we followed the practice of issuing a separate
    declaration of default in prior cases.[^59] For all these reasons,
    we reject NextWave's interpretation of our default and cancellation
    rules and reaffirm that the failure to make full payment in a timely
    manner following exhaustion of all applicable grace periods
    constitutes a default, and results in the automatic cancellation of
    the license without further Commission action.

18. In a August 11^th^ Supplemental filing, NextWave calls our attention
    to *Trinity Broadcasting of Florida v. FCC*,[^60] where the D.C.
    Circuit held that we had failed to provide adequate notice of the
    interpretation of our minority ownership rules that we sought to
    apply to Trinity. NextWave argues that our rules did not clarify
    that cancellation could occur without a prior declaration of
    default. The interpretation urged by NextWave is not a reasonable
    one and could not reasonably be relied upon.[^61] Even if it were
    reasonable to read the rule this way, NextWave could not have relied
    upon the alternative interpretation it urges. Whether cancellation
    was "automatic," or would require a prior "declaration," it was
    certainly clear that the consequence of NextWave's failure to pay on
    time would be nothing less than the loss of its licenses. NextWave
    could not have been waiting for a declaration of default, because,
    even under its interpretation, such a declaration would itself
    trigger automatic cancellation without recourse to NextWave. Thus,
    the only way that NextWave could have avoided the loss of its
    licenses, even under the rule interpretation it urges, was to avoid
    a default by making full and timely payment on or before the payment
    due date, which it unquestionably failed to do.[^62]

19. We also reject NextWave's argument that automatic cancellation and
    the *January 12^th^ Public Notice* are inconsistent with the
    Wireless Bureau's decisions in a series of non C block cases ---
    specifically, the *Lancaster Communications*,[^63] *Cordell
    Engineering*,[^64] *TE-MCG,*[^65] and *Ivan Brisbin*[^66] cases. In
    *Lancaster Communications*, *Cordell Engineering* and *TE-MCG*, the
    Commission, as a result of an administrative oversight, accepted
    payments from the licensees after the payment deadlines had passed,
    thereby constructively waiving the installment payment deadlines so
    that the licenses at issue did not cancel. The Commission is not
    required to repeat previous errors in order to maintain consistency
    with precedent. [^67] Moreover, in this case, the Commission has not
    acted in such a way that reasonably could be construed as
    constructively waiving the October 29, 1998, late payment deadline.

20. Moreover, it is significant that in *Lancaster Communications,
    Cordell Engineering*, and *TE-MCG*, the parties were not C or F
    block licensees and were not affected by the extraordinary measures
    the Commission took to facilitate payment by such licensees.[^68] In
    attempting to accommodate the needs of the C Block licensees in the
    *Restructuring Orders*, the Commission reiterated its belief that
    the ability to make installment payments is evidence of licensees'
    ability to access the capital necessary to both pay for the licenses
    and provide service to the public.[^69] Having allowed C and F block
    licensees to defer any installment payments for more than a year,
    the Commission took the position that it would strictly enforce the
    resumption deadline, and not permit any further extensions. [^70] In
    these circumstances, it is hardly arbitrary or capricious for the
    Commission to recognize the applicability of its automatic
    cancellation rules to a licensee that failed to make a payment by
    the resumption deadline. As a party in the C block restructuring
    proceedings, NextWave certainly knew that we intended to strictly
    enforce the October 29, 1998 payment deadline, particularly in light
    of the year of suspension of payments already afforded to C block
    licensees.[^71]

21. *Ivan Brisbin* is also inapposite. There, the Commercial Wireless
    Division granted a late request for waiver of the Commission's rules
    establishing license renewal terms for Specialized Mobile Radio
    (SMR) licensees[^72] and reinstated its license on the grounds that
    the licensee had completed construction and had been operating over
    the course of the license term. The full and timely payment rules,
    applicable to NextWave, were not at issue in *Ivan Brisbin*, which
    was not a payment default case. Moreover, because NextWave is not in
    commercial operation, its case does not present the same public
    interest concerns, *i.e*., the uninterrupted provision of service,
    that informed the Wireless Bureau's decision in *Ivan Brisbin*.

22. NextWave also contends that in asserting cancellation, the
    Commission departed without explanation from the consistent course
    of conduct it followed in the NextWave bankruptcy proceedings,
    particularly in regard to an agreement reached in principle between
    the Government and Nextel Communications, Inc. ("Nextel") to settle
    the NextWave bankruptcy. The circumstances surrounding this
    agreement demonstrate that NextWave's contention is erroneous. The
    Government consistently maintained throughout the litigation that
    NextWave's Adversary Proceeding represented a collateral attack on
    the *Restructuring Orders*. The bankruptcy court, however, rejected
    this position and ruled that NextWave could retain its licenses for
    significantly less than its winning bid at auction. The Government
    appealed. Thereafter, the bankruptcy court allowed NextWave's
    reorganization efforts to proceed. Until resolution of that appeal,
    the Government appropriately entertained settlement proposals.[^73]
    Settlement discussions do not constitute an admission that the
    positions that a party has maintained and continues to press in the
    litigation are incorrect.

23. NextWave also argues that in enforcing the automatic cancellation
    rules*,* the Commission failed to consider the significant
    congressional policy judgments that are embodied in the Bankruptcy
    Code, including equality of distribution among creditors, a fresh
    start for debtors and the efficient and economical administration of
    cases, or to attempt to weigh those judgments against the
    Commission\'s own policy objectives. We have, in fact, made the
    assessment that NextWave seeks. Our consistent position throughout
    the bankruptcy litigation reflects just the sort of consideration
    that NextWave complains to be lacking. As we explain below, even
    when these bankruptcy policies are considered, the public interest
    is best served by enforcing our automatic cancellation rules against
    NextWave. Indeed, the D.C. Circuit has stated that "the Commission
    should assure that licensees do not use bankruptcy as a means of
    circumventing their obligation to operate in the public
    interest.\"[^74]

24. In making public interest assessments under the Communications Act
    we take into account the policies embodied in other federal
    statutes, including the Bankruptcy Code.[^75] We have fully
    considered the policies embodied in the Bankruptcy Code as presented
    by NextWave and find that the public interest in maintaining the
    integrity of the licensing process through auctions, the need to
    ensure that licenses are allocated to those licensees that are best
    qualified to hold them, and our desire to in this way further
    competition in the marketplace outweigh NextWave's individual
    business interests and those of its creditors.[^76] Furthermore, the
    preservation and protection of the public interest in facilitating
    the goals of the Communications Act of 1934 as set forth in Section
    309(j) are decisive here.[^77] Section 309(j) embodies a presumption
    that licenses should be allocated as a result of an auction to those
    who place the highest value on the use of the spectrum. Such
    entities are presumed to be those best able to put the licenses to
    their most efficient use. If licensees were allowed to adjust their
    winning bid obligations after the fact in bankruptcy, the result of
    the auction would be negated, and the integrity of the auction
    process would be completely undermined. The winning bidder would be
    allowed to retain licenses despite having lost the above
    presumption. Nor would this be fair to those who: 1) participated in
    the auction but were outbid by NextWave; 2) would like an
    opportunity to bid on the licenses now, and; 3) perhaps most
    importantly, complied with our *Restructuring Orders*. Some of the
    licensees that complied with our orders actually forfeited their
    licenses because they could not ultimately meet their bid
    obligations; the balance either returned spectrum pursuant to our
    *Restructuring Orders* or made their installment payments as
    required. It would be unfair to permit a licensee that could not
    satisfy its bid to file for bankruptcy, tying up the spectrum in the
    process, and then emerge from bankruptcy at some later time and
    retain the licenses, while others that complied with our rules lost
    their licenses.

25. Congress gave the Commission the authority to auction radio spectrum
    licenses in order to facilitate the fulfillment of its mandate,
    which is, *inter alia*, to promote the rapid deployment of new
    technologies, products, and services to the American public while
    recovering for the public the value of that spectrum.[^78] In order
    to implement the auction program, Congress delegated to the
    Commission the authority to make the rules by which the program
    operates, including the payment rules. Strict enforcement of payment
    rules enhances the integrity of the auction and licensing process by
    ensuring that applicants have the necessary financial qualifications
    and that spectrum is awarded to those qualified bidders who value
    the spectrum most. Insisting that licensees demonstrate their
    ability to pay as a condition to holding licenses is essential to a
    fair and efficient licensing process, is fair to all participants in
    our auctions, including those who won licenses in the auctions and
    those who did not, and fosters the promotion of economic opportunity
    and competition in the marketplace. NextWave is providing no
    service. The spectrum licensed to NextWave has gone unused since
    early 1997 and represents licenses in 90 markets across the United
    States. Since the cancellation and the *January 12^th^ Public
    Notice*, there has been an overwhelming interest in this
    spectrum.[^79] NextWave's failure to utilize the spectrum and its
    attempts to shield the spectrum in bankruptcy have hindered the
    growth of innovative and competitive telecommunications services in
    many areas of the United States, to the detriment of the American
    public. Under the circumstances presented, and on balance, we cannot
    accommodate the policies embodied in the Bankruptcy Code without
    causing undue harm to the integrity of our auction and licensing
    process and further harming the public's interest in the efficient
    deployment of telecommunications services.

26. [Application of Federal Bankruptcy Laws]{.underline}. NextWave
    argues that the release of the *January 12^th^ Public Notice*
    violates Sections 362(a), 525, 1123, and 1124 of the Bankruptcy
    Code. To the extent NextWave argues that the Bankruptcy Code
    operates to preclude license cancellation under our rules, that
    argument has been summarily rejected by the Second Circuit and is
    precluded under the doctrine of *res judicata*.[^80]

27. [Estoppel and Waiver]{.underline}. NextWave claims that the
    Commission is barred by the doctrines of equitable estoppel,
    judicial estoppel, and waiver from asserting that its licenses have
    canceled.[^81] NextWave asserts that the Commission did not seek
    payments from it and did not send quarterly notices of payment
    obligations, specifying the outstanding balance of the debt.
    NextWave also cites to statements made by Department of Justice
    attorneys in the bankruptcy case, which NextWave claims led it and
    its investors to believe that the Commission was taking the position
    that it could not cancel licenses during the pendency of the
    bankruptcy case. We note that these arguments were made to the
    Second Circuit, and were responded to by the Government.[^82]

28. The party seeking to raise the defense of equitable estoppel must
    first establish the following elements: (1) the party to be estopped
    must be aware of the facts; (2) the party to be estopped intended
    his act or omission to be acted upon; (3) the party asserting
    estoppel did not have knowledge of the facts; and (4) the party
    asserting estoppel reasonably relied on the conduct of the other to
    his substantial injury.[^83] In addition to these elements, a
    private litigant seeking to estop the government bears a heavy
    burden. Estoppel will not lie unless the party can show affirmative
    misconduct by the government[^84] that goes beyond mere negligence,
    delay, inaction or failure to follow internal agency
    guidelines[^85]; erroneous oral and written advice given by a lower
    level official is not sufficient.[^86] None of these prerequisites
    is satisfied here.

29. The Commission did not act in a manner that would have led NextWave
    reasonably to believe that its licenses would not cancel if it
    failed to make timely payment. In fact, NextWave had ample notice to
    the contrary. As discussed above, outside the bankruptcy context we
    have consistently stressed the importance of the full and timely
    payment condition as set forth in our rules and on the face of the
    licenses themselves. Under our *Restructuring Orders* it was clear
    that payments must resume by October 29, 1998, at the latest, to
    prevent cancellation, and requests by similarly situated parties to
    waive the payment resumption deadline were denied. In the bankruptcy
    case, the Government's consistent position was that NextWave could
    not use bankruptcy to collaterally attack our *Restructuring
    Orders*. The *September 2, 1998 Letter* reiterated to NextWave our
    position that the filing of bankruptcy did not relieve it of its
    regulatory obligations. It is true that NextWave argued repeatedly
    in court that the obligation to pay is not "regulatory," but the
    Government argued just as forcefully that the full and timely
    payment requirement is a critical regulatory condition. Given these
    circumstances, we do not think NextWave could reasonably have
    believed that we agreed with its position that the bankruptcy filing
    precluded enforcement of our licensing rules.

30. Turning to NextWave's specific assertions, the fact that NextWave
    did not receive payment notices after the bankruptcy case was filed
    does not establish waiver or estoppel. At the time that the payment
    was due, October 29, 1998, NextWave already knew from our
    *Restructuring Orders*, the Wireless Bureau's public notices, and
    the Commission's orders rejecting requests for extension of time to
    pay by other C-block licensees, that the Commission had established
    October 29, 1998 as the final due date for payments under the
    *Restructuring Orders.* NextWave also received the *September 2,
    1998 Letter* nearly two months before payment was due. Given these
    formal and informal statements, NextWave did not need a separate
    notice that its payments were due by October 29 in order to
    understand the Commission's position that it was obligated to comply
    with the Commission's rules regardless of the bankruptcy filing. The
    practice of sending out individual notice is not mandated by any
    Commission rule, and the fact that no special additional notice was
    sent to NextWave during the pendency of the bankruptcy case of the
    amount due does not meet the prerequisites of waiver or estoppel. As
    a Commission licensee, NextWave was responsible for making timely
    payment on the dates set by the Commission, without individual
    notice of payment due.[^87]

31. NextWave argues that the Commission is estopped from asserting
    cancellation because of selected quotes from statements made by DOJ
    attorneys in court regarding the operation of the Bankruptcy Code.
    We do not find that any of these statements, taken individually or
    collectively, constitute an estoppel. *First*, nowhere in the
    statements quoted by NextWave does a DOJ attorney state that
    NextWave could miss a payment and still retain its licenses.
    *Second*, NextWave takes the selected DOJ attorney statements out of
    context. All of the statements were made during the course of
    ongoing litigation in which the Government's consistent position was
    that NextWave could not modify the terms and conditions of the
    Commission's licenses, including specifically the condition of full
    and timely payment. Given that express position, NextWave could not
    have reasonably assumed from any of the quoted DOJ attorney
    statements that NextWave could ignore the payment deadlines
    prescribed by the Commission's rules without peril to its licenses
    if the Government's position ultimately prevailed. [^88] Notably,
    many of the DOJ attorney statements quoted by NextWave were made
    long after the October 29, 1998 payment deadline, and long after any
    arguable 60-day extension of the deadline under Section 108 of the
    Bankruptcy Code. NextWave could not possibly have relied on these
    post-deadline statements for its decision to fail to comply with the
    full and timely payment condition. *Third*, before the October
    payment deadline, NextWave received directly from the Commission the
    *September 2, 1998 Letter*, which made it clear that the Commission
    intended to enforce its *Restructuring Order* deadlines regardless
    of the bankruptcy filing. *Finally*, as a matter of law, a lawyer's
    passing remark is not a basis for estopping a federal regulatory
    agency from enforcing its rules in the public interest.[^89]

32. For the same reasons set forth above, the Commission is not
    judicially estopped. The Commission's consistent position in the
    litigation has been that the Commission's licensing rules and
    conditions remain applicable to NextWave notwithstanding its
    bankruptcy filing. Accordingly, the Commission's actions in
    recognizing the cancellation of the licenses for non-payment and in
    announcing an auction of PCS C and F block licenses, including those
    NextWave previously held, are not inconsistent with any of its
    statements before the courts.

33. In its August 11^th^ Supplement, NextWave relies on *Iowa Utilities
    Board V. FCC*.[^90] Without commenting on the holding by the Eighth
    Circuit with respect to the judicial estoppel found by that Court,
    none of the statements relied upon by NextWave, nor the
    circumstances in which they were made, are analogous to the
    statements made to the United States Supreme Court concerning the
    proxy prices at issue in that case. As explained at length in this
    order, the Government's consistent position in this litigation has
    been that FCC license conditions should apply despite NextWave's
    bankruptcy filing.

    **IV. Ordering Clauses**

34. Therefore, for all of the reasons stated above, IT IS ORDERED that
    the Petition for Reconsideration filed by NextWave IS DENIED.

35. IT IS FURTHER ORDERED that as a result of the cancellation of the
    licenses and the denial of NextWave's Petition for Reconsideration,
    the Application for Review and Settlement Request filed by Antigone
    Communications, Limited Partnership and PCS Devco, Inc. are
    DISMISSED AS MOOT.

> FEDERAL COMMUNICATIONS COMMISSION
>
> Magalie Roman Salas
>
> Secretary

# SEPARATE STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH 

Re Public Notice DA 00-49, Auction of C and F Block Broadband PCS
Licenses, Nextwave Petition for Reconsideration, Order on
Reconsideration *(rel. September 6, 2000)*

Government is at its best when it is most boring, when it follows laws
and rules with a soporific routine. A government that is predictable and
unshakable is a government on which people can rely in order to make
long-term plans. After the long ordeal of the C Block bankruptcies, the
Commission can best return to its routine by taking a step back and
delaying the auction of the C Block licenses until there is greater
clarity about the legal fate of these licenses. We should not endeavor
to rush into a re-auction that may only exacerbate the already vast
troubles suffered by all parties concerned. Thus, while I concur with
today's decision regarding NextWave's petition for reconsideration, I
would have supported a request to delay the re-auction until NextWave
has had an opportunity to pursue a final decision from the Supreme Court
regarding the interaction between the bankruptcy code and the
Communications Act.

New technologies and ever-changing market circumstances create
uncertainty and instability. Each of our auctions has dealt with
different portions of the spectrum, has had different legal
requirements, and has had different policy objectives. The differences
in auctions make each unique. Honest and hard-working individuals, both
inside and outside of the federal government, and particularly here at
the FCC, invested their time, efforts, and hopes into developing a new
auction model to distribute PCS licenses. Some new government programs
succeed beyond anyone's wildest dreams; others never fail to disappoint.
Although perhaps clear in retrospect, at the time no signal of the C
Block's fate was apparent.

It launched with great fanfare. At the time, the bid amounts were
breathtakingly large. The auction seemed to mark an auspicious launch
for new businesses, and a windfall of promised receipts for the federal
government.

These hopes made the rapid collapse of the C-block licensees all the
more dramatic, disappointing, and almost incomprehensible. In
retrospect, the entire episode was not incomprehensible at all.
Something dreadful went wrong. The culprit was not an individual inside
or outside government; the culprit was installment payments. Their
culpability is widely recognized; indeed, it is incomprehensible that
this agency would ever use them again.

History is not forgiving. We cannot go back in time, completely correct
our past mistakes, and start over without a trace. If we could, we would
have redone the C-block auction long ago. Instead, the FCC and private
parties have bravely faced the inescapable: the failure of the initial
C-block auction.

What should a government agency and private parties do in the wake of a
failure? Private parties can be expected to take whatever positions are
necessary to save themselves. They can be expected to be mercurial and
even desperate. They can be expected to seek to blame others for their
plight.

The federal government could respond in a similar manner. The
government's behavior could be mercurial and even desperate. It could
seek to blame others for their plight.

The federal government, however, is at its best when it chooses a
different path. Unlike a small company, the federal government is not
threatened with evanescence. It has a future, long and bright, despite
countless mistakes and bad situations. The federal government is at its
best: when it is dull and boring, when it takes tedious rules and
carries them out, when it is painfully predictable, when it is selfless
in accepting blame for its mistakes, and when it is long-forbearing in
understanding the behavior of private parties that are not at their
best.

The story of the aftermath of the C-block auction, the role of the
government and the private licensees is not a happy history or a
pleasant drama. It is a tragedy with many victims and no heroes. It is a
mixture of a comedy of the absurd and a comedy of errors---combined in a
manner without comedy, only absurdity and errors. At times throughout
this history, the behavior of the federal government has been difficult
to predict.

The history recounted in the Commission's document has many twists and
turns. But it is only part of the story. It does not, for example,
describe the unexpected delays in the issuing of the initial licenses.
Nor does it describe how the government's battle with NextWave is but
one of several battles the government is having with C-block licensees
over the role of the bankruptcy code. The federal government has had
smashing legal victories against NextWave; the progress of the war is
less clear in other skirmishes; and final victory for the federal
government in the entire legal war is far from certain.[^91]

What precisely is the federal government's view of the applicability of
FCC's automatic termination of licenses to companies subject to the
bankruptcy code's stay provisions? Perhaps one should ask Airadigm
today, or 3 months ago, or 6 months ago, or 12 months ago. That company
has been offering service for months with what it believed to be an FCC
license, but which now, it seems, automatically cancelled in 1999.[^92]
Or perhaps one should ask Nextel about its negotiations with Commission
staff for the possible transfer of NextWave's licenses in 1999 that,
today, we reaffirm terminated in 1998. Or perhaps one could ask Judge
Hardin, the Bankruptcy Judge in NextWave's case, who clearly seemed
surprised to learn that the licenses had never been a part of that
proceeding.

The battle between the Commission and NextWave has raged for two years.
It is a sequence of precipitous decisions on both sides. NextWave has
had victories in some courts; the Commission has had victories on appeal
in higher courts. The outcomes have been hardly predictable; indeed, the
entire saga is filled with more twists and turns and unexpected
developments so as to appear more fictional than real.

The NextWave litigation has not yet ended. The litigation for other
C-block licensees rages as well. Yet the Commission seeks now to
reauction certain C-block licenses as quickly as possible. Which
licenses will be offered for auction? That depends on the status of
litigation at the time of the auction. Certainly, no one today could say
with certainty exactly which licenses will be available in 3 months, or
6 months, or 9 months. The Commission could hold an auction with
licenses available as of a given date; but the following day, based on
either Commission or court action, some of those licenses may no longer
be available for auction. An auction in which the legal status of
licenses is still in doubt is a risky and unpredictable adventure. Some
may say that the legal status is firmly and finally established in the
current matter; given the dramatic history of the C-Block, I am yet to
be convinced that we have read the final chapter. There is one outcome
that could be far worse than the current tragedy: if the Commission held
a premature auction that a court subsequently held invalid. In that
situation, the number and classes of victims would only expand; the
tortuous litigation of two years would be prolonged much longer.

Independent of the merits of NextWave's litigation, I believe that it
would make sense for the FCC to hold a C-Block reauction only when we
have greater clarity about which licenses are available. It would result
in a simple, perhaps tedious auction, one without the drama and
unpredictability of the past two years. But it would be government at
its best. It would be a government that sees a long future and sees its
measure of success in the long term, not next week or next month. It
would be a government that is patient, long-forbearing, willing to admit
its faults, willing to stand by its decisions. If that were our path, we
could be predictable, unshakable, and boring in our routine. And we
would all be the better for it.

[^1]: *See* Petition for Reconsideration filed by NextWave Personal
    Communications and NextWave Power Partners Inc. (February 11, 2000)
    ("NextWave Petition"). On August 11, 21 and 24, 2000, NextWave filed
    letter supplements to its Petition which we also address in this
    order.

[^2]: *See* "Auction of C and F Block Broadband PCS Licenses," *Public
    Notice*, DA 00-49, 15 FCC Rcd 693 (2000) (*January 12^th^ Public
    Notice*). On June 7, 2000, the Wireless Bureau released a public
    notice postponing the C and F block auction until November 29, 2000.
    *See* "Auction of Licenses for C and F Block Broadband PCS Spectrum
    Postponed Until November 29, 2000," *Public Notice*, DA 00-1246
    (rel. June 7, 2000).

[^3]: See 47 U.S.C. § 309(j)(4)(D).

[^4]: The installment payment plan for C block permitted licensees that
    qualified as small businesses to pay 90% of the bid price over a
    period of ten years, with interest paid for the first six years and
    interest and principal for the remaining four. *See* 47 C.F.R. §
    24.711(b)(3)(1996). The installment payment plan for F block
    permitted licensees that qualified as small businesses to pay 80% of
    the bid price over a period of ten years, with interest paid for the
    first eight years and interest and principal for the remaining two.
    *See* 47 C.F.R. § 24.716(b)(3)(1997). All but two bidders in the
    1996 C block auction qualified as small businesses.

[^5]: *See* "Entrepreneur's C Block Auction Closes: FCC Announces
    Winning Bidders in the Auction of 493 Licenses to Provide Broadband
    PCS in Basic Trading Areas," *Public Notice*, DA 96-716 (rel. May 8,
    1996); "Entrepeneur's C Block Reauction Closes---FCC announces
    Winning Bidders in the Reauction of 18 Licenses to Provide Broadband
    PCS in Basic Trading Areas," *Public Notice*, DA 96-1153, 11 FCC Rcd
    8183 (1996); "D, E, and F Block Auction Closes \-- Winning Bidders
    in the Auction of 1,479 Licenses To Provide Broadband PCS in Basic
    Trading Areas," *Public Notice*, DA 97-81 (rel. Jan. 15, 1997).
    While the C and F block licenses that NextWave won were to be paid
    for by installment payments, NextWave paid for its D and E block
    licenses in full in accordance with the Commission's rules.

[^6]: *See* "Wireless Telecommunications Bureau Announces Conditional
    Grant Of Broadband Personal Communications Services Entrepreneurs\'
    C Block Licenses To Nextwave Personal Communications, Inc.\--Final
    Down Payment due by January 10, 1997," *Public Notice*, DA 97-12
    (rel. Jan. 3, 1997); In re Applications of NextWave Personal
    Communications Inc. for Various C Block Broadband PCS Licenses,
    *Memorandum Opinion and Order*, 12 FCC Rcd 2030, 2034, ¶ 9 (1997).

[^7]: License at 2.

[^8]: *See* Settlement Request Pursuant to DA 99-745, filed by
    Antigone/Devco (filed April 29, 1999); Request for Approval of
    Withdrawal of Pleading and Motion To Dismiss With Prejudice, filed
    by Antigone/Devco (filed June 1, 1998).

[^9]: *See* "Wireless Telecommunications Bureau Seeks Comment on
    Broadband PCS C and F Block Installment Payment Issues," *Public
    Notice*, DA 97-679, 12 FCC Rcd 24230 (1997).

[^10]: Installment payments were suspended for C block licensees on
    March 31, 1997, and for F block licensees on April 28, 1997. *See*
    Installment Payments for PCS Licenses, *Order*, 12 FCC Rcd 17325
    (1997); "FCC Announces Grant of Broadband Personal Communications
    Services D, E, and F Block BTA Licenses," *Public Notice*, DA
    97-883, 13 FCC Rcd 1286 (1997).

[^11]: *Supra* at note 9.

[^12]: In the Matter of Amendment of the Commission's Rules Regarding
    Installment Payment Financing for Personal Communications Services
    (PCS) Licensees, *Second Report and Order*, FCC 97-342, 12 FCC Rcd
    16436 (1997) (*Second Report and Order*); In the Matter of Amendment
    of the Commission's Rules Regarding Installment Payment Financing
    for Personal Communications Services (PCS) Licenses*, Order on
    Reconsideration of the Second Report and Order*, FCC 98-46, 13 FCC
    Rcd 8345 (1998) (*First Reconsideration Order)*; In the Matter of
    Amendment of the Commission's Rules Regarding Installment Payment
    Financing for Personal Communications Services (PCS) Licensees,
    *Second Order on Reconsideration of the Second Report and Order*,
    FCC 99-66, 14 FCC Rcd 6571 (1999) (*Second Reconsideration Order)*.
    We refer to these orders collectively as the *Restructuring Orders*.

[^13]: "Wireless Telecommunications Bureau Announces 1998 Election Date
    for Broadband PCS C Block Licensees; Payments for C and F Block
    Licensees Resume July 31, 1998," *Public Notice*, DA 98-471, 13 FCC
    Rcd 7413 (1998).

[^14]: *See First Reconsideration Order*, 13 FCC Rcd at 8354-8355, ¶¶
    25-26. *See also* Sections 1.2110(f)(4)(ii), (iii), (iv) of the
    Commission's Rules, 47 C.F.R. §§ 1.2110(f)(4)(ii), (iii),
    (iv)(1999).

[^15]: *See* *NextWave Telecom v. FC*C, No. 98-1255 (D.C. Cir. June 11,
    1998); In the Matter of Petition of NextWave Telecom, Inc. for a
    Stay of the June 8, 1998, Personal Communications Services C Block
    Election Date, *Order*, 13 FCC Rcd 11880, 11881, ¶ 5 (1998).

[^16]: *See* "Electronic Election Procedures for the Broadband Personal
    Communications Service (PCS) C Block Installment Payment Plans,"
    *Public Notice*, DA 98-1006, 13 FCC Rcd 10364, 10366-10367 (1998). C
    block licensees were also informed that if they failed to make an
    election they would have to pay the entire Suspension Interest on or
    before March 31, 1998. *See Second Report and Order*, 12 FCC Rcd at
    16471, ¶ 76.

[^17]: *In re NextWave Personal Communications, Inc. et al.*, 235 B.R.
    263, 267 (Bankr. S.D.N.Y. 1998).

[^18]: *NextWave Personal Communications, Inc. v. FCC*, Summons and
    Notice of Pretrial Conference in an Adversary Proceeding, Adv.Proc.
    No. 98-5178A (Bankr. S.D.N.Y. June 8, 1998) ("*NextWave
    Complaint*").

[^19]: The United States Department of Justice represented the United
    States Government (*hereinafter* "the Government") in the bankruptcy
    proceeding.

[^20]: NextWave argued that its auction debt was voidable under the
    state fraudulent conveyance law of California, New York or the
    District of Columbia. *See NextWave* *Complaint, supra* at note 18.
    *See also* 11 U.S.C. § 544(b) (allowing the bankruptcy estate to
    "avoid" any "obligation incurred by the debtor that is voidable
    under applicable law"). NextWave did not contest the value of the F
    block licenses in the Adversary Proceeding.

[^21]: *See* Letter from Michael R. Wack, Vice President Regulation,
    NextWave Telecom Inc., to the Secretary, Federal Communications
    Commission, dated August 7, 1998.

[^22]: *See* Letter from Daniel B. Phythyon, Chief, Wireless
    Telecommunications Bureau, to Michael R. Wack, Vice President
    Regulation, NextWave Telecom Inc., dated Sept. 2, 1998. The Bureau
    Chief stated that "the rights to make an election are set forth in
    the Commission's *Second Report and Order and Further Notice of
    Prop*osed *Rulemaking* in WT Docket No. 97-82, 12 FCC Rcd 16436
    (1997*), as modified by Order on Reconsideration* *of the Second
    Report and Order*, FCC 98-46 (released Mar. 24, 1998). We are
    unaware of any provision in the federal Bankruptcy Code or other
    statute, which, at this time, precludes application of the
    Commission's election requirements to \[the Debtors\]."

[^23]: *See First Reconsideration Order*, 13 FCC Rcd at 8354-8355, ¶¶
    25-26; 47 C.F.R. § 1.2110(f)(4)(ii) (1999).

[^24]: *See In re NextWave Personal Communications, Inc.,* 235 B.R. 263,
    271 (Bankr. S.D.N.Y. 1998) (holding that the FCC's restructuring
    orders were not binding in bankruptcy proceedings).

[^25]: *See* *In re NextWave Personal Communications, Inc. v. FCC*, 235
    B.R. 277 (Bankr. S.D.N.Y. 1999); *In re NextWave Personal
    Communications, Inc.,* 235 B.R. 305 (Bankr. S.D.N.Y. 1999).

[^26]: *NextWave Personal Communications, Inc. v. FCC* (*In re NextWave
    Personal Communications, Inc.*), 241 B.R. 311 (S.D.N.Y. 1999).

[^27]: *In re NextWave Personal Communications, Inc*., 200 F.3d 43 (2d
    Cir. 1999), *petit. for panel reh'g and reh'g en banc denied* (Mar.
    9, 2000) ("*NPCI"*). On June 9, 2000, NextWave filed a Petition for
    a Writ of Certiorari with the U.S. Supreme Court seeking review of
    the *December 22^nd^ Opinion*. *NextWave Personal Communications,
    Inc., v. FCC,* Petition for a Writ of Certiorari (June 9, 2000).
    That Petition is pending.

[^28]: The Court agreed with the Government that the obligation to pay
    for licenses was incurred at the close of the auction, not at the
    time of subsequent license grant or note signing, as the bankruptcy
    court had found. *NPCI*, 200 F.3d at 62. On August 24, 2000,
    NextWave filed a Supplement in which it requested that the
    Commission take notice of *In Re: Kansas Personal Communications
    Service Ltd*., Case No. 99-21747-11-JAR, Judgment on Decision
    (Bankr. D. Kan. Aug. 16, 2000), in which the bankruptcy court found
    that the automatic cancellation of licenses is stayed under the
    Bankruptcy Code. The Government has filed with the bankruptcy court
    its motion to stay the bankruptcy court's decision and notice of
    intent to appeal to the federal district court (United States\'
    Emergency Motion for Stay Pending Appeal of the Memorandum Opinion
    and Order Denying Motion for Amendment of the Schedules and
    Statement of Financial Affairs and to Strike References to PCS
    Licenses (Bankr.D.Kan. Aug. 24, 2000) and Notice of Appeal and
    Statement of Election (Bankr. D. Kan. Aug. 28, 2000)). Having duly
    noted the bankruptcy court's decision and the Government's response
    thereto, we believe we need not consider that proceeding further in
    reaching a decision with respect to NextWave.

[^29]: *NPCI*, 200 F.3d at 59.

[^30]: *See* *Debtors' Modified First Amended Joint Plan of
    Reorganization, In re NextWave Personal Communications, Inc., et.
    al.*, No. 98B21529 (ASH) (Bankr. S.D.N.Y. Dec. 16, 1999).

[^31]: *See* *Objection of Federal Communications Commission To Debtors'
    Modified First Amended Joint Plan of Reorganization*, No. 98B21529
    (ASH) (Bankr. S.D.N.Y. Dec. 21, 2000).

[^32]: *In re NextWave Personal Communications, Inc.*, 244 B.R. 253
    (Bankr. S.D.N.Y. 2000).

[^33]: *In re Federal Communications Commission*, Petitioner, Docket No.
    99-5063, 2000 WL 828282 (2d Cir. May 25, 2000). On July 10, 2000,
    NextWave filed a petition for panel rehearing and a petition for
    rehearing en banc, in which it requested reconsideration of the *May
    25^th^ Opinion.* The Second Circuit denied these petitions on August
    23, 2000.

[^34]: *NextWave Personal Communications, Inc. and NextWave Power
    Partners, Inc. v. FCC*, 00-1045, 00-1046, *Order* (D.C. Cir. June
    23, 2000).

[^35]: *NextWave Personal Communications Inc. and NextWave Power
    Partners, Inc. v. FCC*, 00-1045, 00-1046, *pet. for reh'g denied*
    (D.C. Cir. Aug. 3, 2000).

[^36]: *See* In the Matter of Requests for Extension of the Commission's
    Initial Non-Delinquency Period for C and F Block Installment
    Payments, *Order*, 13 FCC Rcd 22071 (1998) (*"Extension Request
    Order*"), *aff'd on recon*, In the Matter of Requests for Extension
    of the Commission's Initial Non-Delinquency Period for C and F Block
    Installment Payments, *Memorandum Opinion and* *Order*, 14 FCC Rcd
    6080 (1999)("*SouthEast MO&O*"), *aff'd,* *SouthEast Telephone v.
    FCC*, No. 99-1164, 1999 WL 1215855 (D.C. Cir. Nov. 24,
    1999)("*SouthEast Telephone*").

[^37]: We do not mean to suggest that such a request would have been
    appropriate, only that it would have been procedurally permissible.
    *See also* ¶¶ 15 and 16, *infra*.

[^38]: We note that although it had no occasion to decide the question,
    the Second Circuit stated its belief that the *January 12^th^ Public
    Notice* is an appealable decision or order, for the purpose of
    Commission and judicial review. *See May 25^th^ Opinion*, note 29.
    The Court cited *Mountain Solutions,* *Ltd., Inc. v. FCC*, 197 F.3d
    512, 522 (D.C. Cir. 1999) ("*Mountain Solutions*") for the
    proposition that the Commission's treatment of the denial of a
    waiver request is an adjudicatory decision. In that case, Mountain
    Solutions requested a waiver of the Commission's rules governing the
    deadline for down payments. The Commission denied the waiver request
    in an appealable order. *See* In the Matter of Mountain Solutions
    Ltd., Inc. Emergency Petition for Waiver of 24.711(a)(2) of the
    Commission's Rules Regarding Various BTA Markets in the Broadband
    Personal Communications Services (PCS) C Block Auction, *Memorandum
    Opinion and Order*, 13 FCC Rcd 21983, 21997, ¶ 26 (1998). We believe
    that *Mountain Solutions* is procedurally inapposite to the case
    before us because NextWave is not requesting reconsideration of an
    order, but rather, reconsideration of a public notice establishing a
    date to auction licenses for spectrum previously licensed to it.
    Furthermore, as discussed above, Mountain Solutions had requested a
    waiver of the rule, which NextWave has not done.

[^39]: *See* In The Matter Of Additional Information Regarding Broadband
    PCS Spectrum Included in the Auction Scheduled for March 23, 1999,
    *Order*, 14 FCC Rcd. 6561, 6562, ¶ 3 (1999)(Commission considered an
    application for review of a public notice establishing an auction
    date despite the procedural deficiency of the application).

[^40]: The Supreme Court has stated that "\[n\]ormally, an agency rule
    would be arbitrary and capricious if the agency has relied on
    factors which Congress has not intended it to consider, entirely
    failed to consider an important aspect of the problem, offered an
    explanation for its decision that runs counter to the evidence
    before the agency, or is so implausible that it could not be
    ascribed to a difference in view or the product of agency
    expertise." *See* *Motor Vehicle Manufacturers Ass'n v. State Farm
    Mutual Automobile Ins. Co.*, 463 U.S. 29, 43 (1983).

[^41]: *See* NextWave Petition at 9-10.

[^42]: *Mountain Solutions,* 197 F.3d at 522 (relating to default rules
    for downpayments applied to C block bidders).

[^43]: *See* Implementation of Section 309(j) of the Communications Act
    -- Competitive Bidding, *Second Report and Order*, 9 FCC Rcd 2348,
    2349, ¶¶ 4-5 (1994). We also note that Section 309(j)(3)(A) of the
    Communications Act, as amended, requires that the Commission pursue
    "the development and rapid deployment of new technologies, products,
    and services for the benefit of the public . . . without
    administrative or judicial delays." 47 U.S.C. § 309(j)(3)(A).

[^44]: 47 C.F.R. § 1.2110(e)(4)(iii) (1997).

[^45]: Each C and F block license issued to NextWave expressly stated
    that "\[t\]his authorization is conditioned upon the full and timely
    payment of all monies due pursuant to Sections 1.2110 and 24.711 of
    the Commission's Rules and the terms of the Commission's installment
    plan as set forth in the Note and Security Agreement executed by the
    licensee. Failure to comply with this condition will result in the
    automatic cancellation of this authorization." *See, e.g.,* C block
    License at 2.

[^46]: For example, the Note signed by NextWave for each C and F block
    license it received stated at 3:

    > The Maker hereby acknowledges that the Commission has issued Maker
    > the above referenced License pursuant to the Communications Act of
    > 1934, as amended, that is conditioned upon full and timely payment
    > of financial obligations under the Commission\'s installment
    > payment plan, as set forth in the then-applicable orders and
    > regulations of the Commission, as amended, and that the sanctions
    > and enforcement authority of the Commission shall remain
    > applicable in the event of a failure to comply with the terms and
    > conditions of the License, regardless of the enforceability of
    > this Note or the Security Agreement.

[^47]: *See First Reconsideration Order*, 13 FCC Rcd at 8354-8355, ¶¶
    25-26. The Commission established the dates for installment payment
    resumption in "Wireless Telecommunications Bureau Announces 1998
    Election Date for Broadband PCS C Block Licensees; Payments for C
    and F Block Licensees Resume July 31, 1998," *Public Notice*, DA
    98-741, 13 FCC Rcd 7413 (1998) ("*1998 Election Date Notice*"). *See
    also* 47 C.F.R. §§ 1.2110(f)(4)(iii), (iv)(1999).

[^48]: *See* 1998 *Election Date Notice*. To assist in making elections,
    the Commission sent to each C block licensee a statement of current
    account balances. NextWave received the pre-election notice sent to
    all C block licensees.

[^49]: *See* "Wireless Telecommunications Bureau Provides Guidance on
    Grace Period and Installment Payment Rules," *Public Notice*, DA
    98-1897, 13 FCC Rcd 18213 (1998).

[^50]: *See supra* at note 22. The *September 2, 1998 Letter* is
    consistent with our longstanding statements regarding compliance
    with regulatory requirements by Commission licensees in bankruptcy.
    For example in paragraph 135 of the Fifth Memorandum Opinion and
    Order in the competitive bidding docket (PP Docket No. 93‑253), 10
    F.C.C. 403 (1994), we noted that a designated entity with
    installment payments that went into bankruptcy would be able to
    transfer its license through a bankruptcy court sale only if it had
    maintained its installment payments during the bankruptcy (or had
    obtained a Commission-granted grace period), and otherwise complied
    with our regulatory requirements for designated entities. Nothing in
    the Commission's language suggests that these requirements are
    suspended or abrogated by a bankruptcy filing.

[^51]: Airadigm Communications, Inc., Urban Comm-North Carolina, Inc.,
    SouthEast Telephone, Inc., Wireless Ventures, Inc., and Personal
    Communications Network, Inc. all filed requests for waiver of the
    October 29, 1998 deadline.

[^52]: *Extension Request Order*, 13 FCC Rcd at 22073, ¶ 5.

[^53]: Urban Comm-North Carolina, Inc. filed for bankruptcy under
    Chapter 11 of the Bankruptcy Code (Case No. 98-B-10086, Bankr.
    S.D.N.Y. 1998), and also filed a fraudulent conveyance action
    seeking to reduce the amount of its debt for the licenses (Adv.Pro.
    No. 99-8125 Bankr. S.D.N.Y. 1999). As in the case of NextWave, the
    Government has taken the position that the licenses issued to Urban
    Comm-North Carolina canceled for failure to make the October 29,
    1998 payment.

[^54]: *See* "C Block PCS Spectrum Auction Scheduled for March 23, 1999;
    Comment Sought on Procedural Issues," *Public Notice*, DA 98-2318,
    13 FCC Rcd 24947 (1998). SouthEast's challenge to our denial of its
    waiver request was ultimately rejected by the D.C. Circuit on
    November 24, 1999. *See SouthEast Telephone, supra* at note 36.

[^55]: Even now NextWave has not utilized the appropriate vehicle of
    requesting a waiver or other equitable relief. We do not undertake
    in this order to address the adequacy of a request that has not been
    made. Our purpose is merely to illustrate that the cancellation of
    NextWave's licenses is consistent with the treatment of others
    similarly situated.

[^56]: In failing to pay despite the automatic cancellation rule,
    NextWave apparently was relying on the automatic stay of the
    Bankruptcy Code. That reliance was erroneous*. See, e.g., May 25^th^
    Opinion*, at 32-35 (holding that the timely payment condition is
    regulatory, and therefore the automatic stay does not apply). We are
    not aware of any precedent supporting the proposition that a waiver
    is warranted, retroactively, on account of mistaken reliance on an
    inapplicable provision.

[^57]: See 47 C.F.R. § 1.2110(f)(4)(iv)(1998).

[^58]: Recently the Commission restated this rule as follows: "\[i\]f an
    eligible entity obligated to make installment payments fails to pay
    the total Required Installment Payment within two quarters (6
    months) of the Required Installment Payment due date, it shall be in
    default, its license shall automatically cancel, and it will be
    subject to debt collection procedures." *See* In the Matter of
    Amendment 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*, FCC 00-274 (rel. August 14, 2000), ¶ 28 (*Part 1
    Reconsideration Order*).

[^59]: NextWave offers no case in which the Commission has issued a
    separate formal "declaration" of default before the license
    cancellation rules were applied. To the extent that NextWave relies
    on a letter from Kathleen O'Brien Ham, Chief, Auctions and Industry
    Analysis Div., Wireless Telecommunications Bureau, to Jack Bond,
    Mountain SMR Group, L.L.C*.*, DA 98-378, 13 FCC Rcd 4504 (1998)
    (*Mountain SMR*), to support its position that a separate
    "declaration of default" is required, its argument is misplaced. In
    *Mountain SMR*, a winning bidder in an SMR service auction failed to
    make its required down payment, and requested waiver of the
    Commission's bid withdrawal and down payment rules. The staff issued
    a decision in which it denied the requests for waiver and specified
    the amount of default payment that was due pursuant to Sections
    90.905(b) and (c) of the Commission's rules. In the course of the
    decision, the staff stated that because Mountain SMR missed its down
    payment, it was "deemed to be in default" on these obligations. *Id*
    at 4508. The plain purpose of the staff letter was not to declare a
    default, but to deny the waiver request and specify the amount of
    payments due as a result of the default.

[^60]: 211 F.3d 618 (D.C. Cir. 2000).

[^61]: NextWave's suggested alternative interpretation of our rules --
    that a licensee making a "partial" payment would be subject to
    automatic cancellation, while a licensee that misses a payment
    entirely would be protected from automatic cancellation -- is
    obviously not a reasonable one*. See* August 11^th^ Supplemental
    filing at 2. Moreover, as we have already stated, automatic
    cancellation was specified on the face of its licenses, and in the
    Notes and Security Agreements executed by NextWave.

[^62]: Nor does *Trinity* support NextWave's argument that the
    Commission was required to inform NextWave specifically that the
    automatic stay would not override FCC licensing regulations.
    *Trinity* concerned differing interpretations of Commission rules,
    not the interaction of our rules with other federal law. In any
    event, NextWave's argument ignores the Government's consistent
    position taken throughout the litigation, that NextWave's bankruptcy
    case represented an impermissible collateral attack on our
    *Restructuring Orders* and our authority to place conditions on FCC
    licenses. NextWave also ignores the *September 2, 1998 Letter*,
    which, as discussed elsewhere, did inform NextWave directly (and
    before cancellation actually occurred) of the Commission's rejection
    of NextWave's position that its bankruptcy filing precluded
    enforcement of our *Restructuring Orders*. For these reasons,
    NextWave's reliance on *Trinity* is unavailing.

[^63]: *See* Letter from Daniel B. Phythyon, Chief, Wireless
    Telecommunications Bureau, to Thomas Gutierrez, Esq., Counsel for
    Lancaster Communications, Inc*.*, DA 98-2052, 1998 WL 709412 (FCC)
    (rel. Oct. 9, 1998) (*Lancaster Communications*).

[^64]: Letter from Amy J. Zoslov, Chief, Auctions and Industry Analysis
    Division, Wireless Telecommunications Bureau, to Meredith S. Senter,
    Jr., Esq., Counsel for Cordell Engineering, DA 99-277, 14 FCC Rcd
    5003 (1999) (*Cordell Engineering*).

[^65]: Letter from Thomas J. Sugrue, Chief, Wireless Telecommunications
    Bureau, to Lloyd W. Coward, Esq., Counsel for TE-MCG Consortium, DA
    99-258, 14 FCC Rcd 2173 (1999) (*TE-MCG*).

[^66]: In the Matter of Ivan Brisbin (Call Sign WPCB813) Request for
    Waiver of Section 90.149(a) of the Commission's Rules, *Order on
    Reconsideration*, DA 00-59, 15 FCC Rcd 724 (2000) (*Ivan Brisbin*).

[^67]: The D.C. Circuit recently rejected a similar argument presented
    by SouthEast Telephone, after its licenses automatically canceled
    when it failed to make the required payment by October 29, 1998.
    *See SouthEast Telephone,* *supra* at note 36. SouthEast, like
    NextWave, relied on *TE-MCG* in arguing that the Commission was
    acting improperly when it enforced its timely payment rules because
    the Commission had granted waivers of late payments to some
    licensees in the past in other, non-PCS, services. The D.C. Circuit
    understood that these past instances were "based in part on the
    FCC\'s inadvertent acceptance of late payments and resulting
    constructive waiver of the payment deadlines" and the Court
    concluded that in these circumstances, "the mere fact that the
    agency granted TE-MCG\'s request does not require it to grant
    petitioner\'s request." *Id*. at 1. As the Court recognized, an
    agency is not required to continue to repeat its past errors in
    order to remain consistent with past decisions. *Id.* *See* *also*
    *Chem-Haulers, Inc. v. ICC*, 565 F.2d 728, 730 (D.C. Cir. 1977);
    *Texas International Airlines v. CAB*, 458 F.2d 782, 785 (D.C. Cir.
    1971).

[^68]: *See Restructuring Orders*, *supra* at note 12*.*

[^69]: *See First Reconsideration Order*, 8345 FCC Rcd at 8348, ¶ 8.

[^70]: The Commission clearly stated that it would "not entertain any
    requests for an extension" beyond the payment resumption date. *See
    Second Report and Order*, 12 FCC Rcd at16451-16452, ¶ 30. *See also*
    *Extension Request Order*, *supra* at note 36.

[^71]: *See, e.g., Extension Request Order*, *supra* at note 36;
    *SouthEast Telephone MO &O,* *supra* at note 36*.*

[^72]: *See* 47 C.F.R. § 90.149(a)(1998).

[^73]: Until the Second Circuit's decision in December 1999 (and later
    affirmed in May 2000), the Commission was bound by the law of the
    case and was prevented from enforcing cancellation. *See* ¶ 6
    *supra*.

[^74]: *See LaRose v. FCC*, 494 F.2d 1145 at 1146 n.2 (D.C. Cir. 1974)
    (*LaRose*).

[^75]: *See LaRose v. FCC*, 494 F.2d at 1146 n.2, 1147-1148; *Second
    Thursday Corp*., 22 FCC2d 515 at 516, ¶ 5 (1970); *Telemundo, Inc.
    v. FCC*, 802 F.2d 513 at 518 (D.C. Cir. 1986). *See also* In the
    Matter of Mobilemedia Corporation, et.al., *Memorandum Opinion and
    Order*, 14 FCC Rcd. 8017 (1999); In re Application of San Diego
    Television, Inc., Debtor-in Possession, *Memorandum Opinion and
    Order*, 11 FCC Rcd 14689, 14693 ¶ 13 (1996) (*San Diego*); In re
    Application of Various Subsidiaries and Affiliates of Geotek
    Communications, Inc., *Memorandum Opinion and Order*, 15 FCC Rcd
    790, 809 n.90 (2000).

[^76]: While under *LaRose* we are to consider ways in which our rules
    can be enforced without harming innocent creditors, we believe
    *LaRose* to be inapplicable under the instant facts. *LaRose*
    concerned an application to transfer existing licenses, and a
    decision by the Court that creditors should not be penalized for the
    malfeasance of the licensee's operators or principals. Unlike
    *LaRose*, all creditors of NextWave, and of other C block licensees,
    should have understood that the maintenance of their investment was
    contingent on their company's ability to pay the winning bid price
    as provided in our rules. Indeed, it is likely that creditors of
    other licensees did lose their investment as a result of the
    operation of our rules. We do not believe it would be appropriate to
    decline to apply our rules governing cancellation, and thereby
    eviscerate our regulatory scheme for assigning licenses, in order to
    protect NextWave's creditors from a known risk that they undertook
    at the time they invested.

[^77]: In addition, Section 308(b) the Communications Act of 1934, as
    amended, states that "the Commission by regulation may prescribe as
    to the citizenship, character, and financial, technical, and other
    qualifications of the applicant to operate the station." 47 U.S.C. §
    308(b).

[^78]: 47 U.S.C. § 309(j)(3).

[^79]: *See* Comments filed on June 22, 2000, by Alpine PCS, Inc.,
    America Connect, Inc., BellSouth Corporation, Carolina PCS I Limited
    Partnership, Nextel Communications, Inc., Rural Telecommunications
    Group *et al*., Twenty First Wireless, Inc., and Verizon Wireless in
    response to In the Matter of Amendment of the Commission's Rules
    Regarding Payment Financing for Personal Communication Services
    (PCS) Licensees, WT Docket No. 97-82, *Further Notice of Proposed
    Rulemaking*, FCC 00-197 (rel. June 7, 2000).

[^80]: We note that NextWave has argued to the D.C. Circuit in its
    now-dismissed petition for review and its papers relating to the
    motion to dismiss that these questions were not decided by the
    Second Circuit. We disagree. We do not read the Second Circuit's
    *May 25^th^ Opinion* as an invitation to argue before us or the D.C.
    Circuit the applicability of various Bankruptcy Code provisions.

[^81]: *See* NextWave Petition at 19-20.

[^82]: *See In re: Federal Communications Commission*, Case No. 99-5063,
    Petition for a Writ of Mandamus (2^nd^ Cir. February 22, 2000),
    pp.36-46 (*Mandamus Petition*).

[^83]: *See Mangaroo* *v. Nelson,* 864 F.2d 1202, 1204 (5^th^ Cir.
    1989).

[^84]: *Drozd v. INS*, 155 F.3d 81, 90 (2d Cir. 1998).

[^85]: *Ingalls Shipbuilding, Inc. v. U.S. Dept. of Labor*, 976 F.2d
    934, 938 (5^th^ Cir. 1992).

[^86]: *Office of Personnel Management v. Richmond*, 496 U.S. 414,
    415-416 (1990); *see also* *Deaf Smith County Grain Processors v.
    USDA*, 162 F.3d 1206 (D.C. Cir. 1998).

[^87]: *See also* Letter from Louis Sigalos, Deputy Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau, to
    James A. LaBelle, 21^st^ Century Telesis, Inc., DA 00-1791 (Aug. 7,
    2000).

[^88]: As the Government explained in its *Mandamus Petition*, at p. 38,
    there is nothing inconsistent between Government counsel\'s
    statements and the distinction drawn in Section 362(b)(4) of the
    Bankruptcy Code

    between an agency\'s forbidden efforts to collect money payments and
    its permissible exercise of regulatory authority. Indeed, counsel\'s
    statements are consistent with the Second Circuit\'s observation
    that, \"if the FCC chooses to pursue . . . collection . . . it may
    find itself acting as a creditor.\" *NPCI*, 200 F.3d at 59 n.15.
    Thus, the statement that the automatic stay would preclude
    affirmative efforts to collect license payments did not suggest that
    the automatic stay would preclude operation of the Commission\'s
    rules respecting automatic cancellation for failure to comply with
    license conditions.

[^89]: *See In re Ludlow Hosp. Soc.*, 124 F.3d 22, 26 (1^st^ Cir.
    1997)(where Assistant United States Attorney gave oral assurances
    regarding deadline materially distinct from one-year deadline
    prescribed by regulation, bankruptcy trustee could not reasonably
    rely on those assurances as a basis for inferring blanket Government
    concession that bankruptcy court had equitable power to override
    regulatory deadlines).

[^90]: 2000 U.S. App. LEXIS 17234 (8^th^ Cir. July 18, 2000).

[^91]: *See e.g.* In Re: Kansas Personal Communications Services, Ltd.,
    Case No. 99-21747-11-JAR, Judgment on Decision (Bankruptcy Court, D.
    Kansas Aug. 16, 2000).

[^92]: *See* Airadigm Contingent Emergency Petition for Reinstatement or
    in the Alternative for Waiver (filed February 7, 2000). Does this
    petition form the foundation for differential treatment?