**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In re Applications of )

)

MERCURY PCS II, LLC ) File No. 00114-CW-L-97 *et al.*

)

For Authority to Construct and Operate )

Broadband Personal Communications Services )

Systems on the D, E, and F Frequency Blocks )

**MEMORANDUM OPINION AND ORDER**

**Adopted: May 25, 2000 Released: June 2, 2000**

By the Commission:

**TABLE OF CONTENTS**

[Paragraph]{.underline}

I.
INTRODUCTION.................................................................................................1

II\. BACKGROUND

A. *WTB Order on
Reconsideration..............................................................................*
2

B. *OGC Letter Decision on
Reconsideration..................................................................*9

III\. DISCUSSION

A. Bid
Signaling..............................................................................................13

B. Misrepresentation and Lack of
Candor.................................................................14

C. *Ex Parte*
Communications...............................................................................22

IV\.
CONCLUSION...................................................................................................
27

V. ORDERING
CLAUSES..........................................................................................
28

**I. INTRODUCTION**

1.  This Memorandum Opinion and Order resolves two applications for
    review filed by High Plains Wireless, L.P. (High Plains). High
    Plains\' first application for review concerns the *WTB Order on
    Reconsideration* released by the Wireless Telecommunications Bureau
    (WTB) on November 5, 1997, which unconditionally granted nine
    applications for broadband Personal Communications Services (PCS) D
    and F block licenses filed by Mercury PCS II, LLC (Mercury), and
    removed conditions from twenty-three other broadband PCS E and F
    block licenses previously granted to Mercury.[^1] High Plains\'
    second application for review concerns the *OGC Letter Decision on
    Reconsideration* issued by the Office of General Counsel (OGC) on
    April 6, 1998, which rejected High Plains\' allegations that Mercury
    violated our *Ex Parte* rules.[^2] We have consolidated the two
    proceedings, and for the reasons that follow, we deny High Plains\'
    applications for review and affirm the *WTB* *Order on
    Reconsideration* and the *OGC* *Letter Decision on Reconsideration*.

**II. BACKGROUND**

**A. *WTB* *Order on Reconsideration***

2.  The Commission conducted an auction of PCS licenses in the D, E, and
    F blocks from August 26, 1996 to January 14, 1997. During the course
    of the auction, High Plains filed an emergency motion to disqualify
    Mercury,[^3] alleging that Mercury had violated the Commission's
    auctions anti-collusion rule by communicating its bidding strategy
    to other bidders, including High Plains, while bidding on the F
    block licenses for Amarillo, Texas (BTA 013) and Lubbock, Texas (BTA
    264).[^4] Specifically, High Plains claimed that Mercury
    incorporated the BTA number for the Lubbock license into the last
    three digits of some of its bids for the Amarillo license, and the
    BTA number for the Amarillo license into the last three digits of
    some of its bids for the Lubbock license.[^5] According to High
    Plains, Mercury\'s use of these \"trailing numbers\" was intended to
    signal High Plains that if it did not stop bidding for the Lubbock
    license, then Mercury would retaliate by outbidding High Plains for
    the Amarillo license.[^6] High Plains alleged that after it stopped
    bidding for the Lubbock license, Mercury stopped bidding for the
    Amarillo license.[^7] In response to High Plains\' emergency motion,
    Mercury claimed that it did not violate any Commission rules and
    that the use of trailing numbers was common among other bidders in
    the D, E, and F block auctions.[^8] At the end of the auction, High
    Plains was the high bidder for the Amarillo F block license,[^9]
    while Mercury was the high bidder for the Lubbock F block
    license.[^10]

3.  Based on High Plains\' allegations and Mercury\'s response, WTB
    launched a general investigation into bid signaling in the D, E, and
    F block auctions. WTB also forwarded High Plains\' emergency motion
    for disqualification to the Department of Justice (DOJ), which
    undertook its own civil investigation into bid signaling in the D,
    E, and F block auctions, as well as other Commission auctions.[^11]
    On March 21, 1997, High Plains filed a petition to deny all of
    Mercury\'s applications, reasserting its earlier allegations of bid
    signaling.[^12] In opposition, Mercury again denied that its use of
    trailing numbers violated the anti-collusion rule.[^13]

4.  On August 21, 1997, WTB released an order conditionally granting
    twenty-three of Mercury\'s licenses and deferring action on the
    remaining nine.[^14] WTB granted the twenty-three licenses because
    it found no evidence of bid signaling in those markets.[^15]
    However, it conditioned the licenses on the outcome of its
    continuing investigation into bid signaling.[^16] WTB deferred
    action on the other nine licenses because it found that bid
    signaling had occurred in those markets and concluded that further
    investigation was warranted.[^17] High Plains and Mercury both
    sought reconsideration of WTB\'s *Partial Grant Order*. High Plains
    argued that WTB prematurely granted the twenty-three Mercury
    licenses because WTB\'s ongoing investigation could find that
    Mercury\'s behavior in the nine remaining markets was sufficiently
    egregious to render Mercury unfit to hold any licenses.[^18] In
    contrast, Mercury claimed that further investigation was unnecessary
    and the deferral of its nine applications was unjustified because
    its conduct did not violate the anti-collusion rule.[^19]

5.  On September 10, 1997, WTB\'s Enforcement and Consumer Information
    Division (Enforcement) issued a letter of inquiry asking Mercury to
    answer a series of questions regarding its bidding activities in the
    D, E, and F block auctions.[^20] In response, Mercury admitted using
    trailing numbers in its bids, but claimed that such activity was not
    a communication of bidding strategy and did not violate Commission
    rules.[^21] On October 28, 1997, the Commission released a Notice of
    Apparent Liability for Forfeiture, which concluded the investigation
    into bid signaling by Mercury in the D, E, and F block auction.[^22]
    The Commission found that Mercury\'s use of \"reflexive bid
    signaling\" violated the anti-collusion rule, and assessed Mercury a
    forfeiture in the amount of \$650,000.00.[^23] High Plains and
    Mercury each sought reconsideration of the *NALF*. High Plains
    argued that the forfeiture amount was insufficient and failed to
    account for all of Mercury\'s reflexive bid signals during the
    auction.[^24] In contrast, Mercury argued that its conduct did not
    violate the anti-collusion rule and that the forfeiture amount was
    excessive.[^25]

6.  On November 5, 1997, WTB issued the *WTB* *Order on
    Reconsideration*, removing the conditions on Mercury\'s previously
    granted twenty-three licenses and unconditionally granting the nine
    remaining licenses.[^26] WTB concluded that, notwithstanding the
    *NALF*, Mercury was qualified to be a Commission licensee because
    Mercury believed that the use of trailing numbers was permissible
    under our rules, admitted using trailing numbers, and did not intend
    to mislead or deceive the Commission or other parties concerning its
    bidding conduct.[^27]

7.  High Plains filed an application for review of the *WTB* *Order on
    Reconsideration* on December 5, 1997.[^28] High Plains argues that
    when WTB granted Mercury\'s licenses it failed to fully consider
    Mercury\'s: (1) bid signaling in the D, E, and F block auctions, (2)
    alleged misrepresentations and lack of candor in responding to
    WTB\'s bid signaling investigation, and (3) alleged *ex parte*
    violations.[^29] Mercury filed an opposition to the application for
    review on December 22, 1997, claiming that High Plains\' arguments
    lacked merit.[^30]

8.  While High Plains\' application for review was pending, we rescinded
    the *NALF* against Mercury on August 28, 1998.[^31] In the *NALF
    Reconsideration*, we affirmed the Commission's earlier conclusion in
    the *NALF* that Mercury\'s use of trailing numbers was prohibited
    under the anti-collusion rule.[^32] However, we concluded that
    Mercury did not have adequate notice that its conduct was improper,
    and therefore, that Mercury should not be subject to a monetary
    forfeiture.[^33] We cautioned, however, that the use of trailing
    numbers for reflexive bid signaling is prohibited by the
    anti-collusion rule and will not be tolerated in future
    auctions.[^34]

    **B. *OGC* *Letter Decision on Reconsideration***

9.  On August 14, 1997, High Plains alleged that an improper *ex parte*
    presentation concerning Mercury was made to the Commission.[^35]
    According to High Plains, Mercury solicited letters to be sent on
    its behalf from a number of Congressional offices, and these letters
    addressed the merits of the applications in violation of the
    Commission's *ex parte* rules. High Plains further alleged that a
    Member of Congress or Congressional staff member requested and
    received assurances from a Commission staff member that Mercury\'s
    applications would be acted on by a certain date.[^36] On October
    24, 1997, OGC\'s Administrative Law Division found that the
    communications between Commission staff and Congressional offices
    were status inquiries that did not address the merits of the
    licensing proceeding.[^37] Accordingly, the Administrative Law
    Division concluded that there was no violation of our *ex parte*
    rules.[^38]

10. On November 24, 1997, High Plains petitioned for reconsideration of
    the *OGC* *Letter Decision*.[^39] High Plains accused Mercury of
    orchestrating a campaign to influence the licensing process through
    improper pressure from Congress. High Plains noted that the
    Chairman\'s Office received letters from twenty-seven Congressional
    offices addressing the status of Mercury\'s applications before the
    *Partial Grant Order* was released, and another nine letters before
    the *NALF* and *WTB* *Order on Reconsideration* were released.[^40]
    High Plains asserted that Mercury prompted these Congressional
    inquiries by having a consultant write to various Senators and
    Representatives in an effort to have them exert pressure on the
    Commission to grant Mercury\'s applications.[^41]

11. On April 6, 1998, OGC issued the *OGC* *Letter Decision on
    Reconsideration*, denying High Plains\' petition for reconsideration
    of the Administrative Law Division\'s *Letter Decision*.[^42] OGC
    concluded that the Congressional letters did not taint the
    decision-making process and that sanctions against Mercury were
    unwarranted.[^43] OGC also found that although service of the
    Congressional letters on High Plains was not always timely, such a
    transgression of the *ex parte* rules was minor and did not call for
    sanctions.[^44]

12. On May 6, 1998, High Plains filed an application for review of the
    *OGC* *Letter Decision on Reconsideration*, claiming that OGC failed
    to recognize the seriousness of Mercury\'s *ex parte* violations and
    impose appropriate sanctions.[^45] High Plains also filed a motion
    to consolidate its application for review of the *OGC* *Letter
    Decision on Reconsideration* with its application for review of the
    *WTB* *Order on Reconsideration*.[^46] Because the two applications
    for review raise issues arising out of the same facts, we will
    consider them together.[^47] We will first address the bid
    signaling, misrepresentation, and lack of candor arguments raised in
    High Plains' application for review of WTB\'s *Order on
    Reconsideration*, and then we will address the *ex parte* arguments,
    which are common to both of High Plains' applications for review.

**III. DISCUSSION**

**A. Bid Signaling**

13. High Plains argues that the *WTB* *Order on Reconsideration* \"fails
    to consider the full scope and impact of Mercury\'s illicit use of
    reflexive trailing numbers.\"[^48] However, rather than alleging any
    specific errors by the Bureau, High Plains focuses its argument on
    the *NALF* and asserts that the \"relatively nominal\" forfeiture of
    \$650,000 is insufficient in light of the number of reflexive bids
    placed by Mercury.[^49] We have previously addressed this issue
    fully in the *NALF Reconsideration*. In light of our conclusion that
    the *NALF* should be rescinded, we find no merit in High Plains\'
    argument that WTB failed to consider the full extent of Mercury\'s
    bid signaling when it granted Mercury's license applications.

**B. Misrepresentation and Lack of Candor**

14. High Plains cites several instances where Mercury allegedly
    misrepresented facts or lacked candor in responding to WTB\'s Letter
    of Inquiry.[^50] High Plains contends that these alleged
    misrepresentations and lack of candor should disqualify Mercury from
    becoming a Commission licensee.[^51] We will address each of High
    Plains\' allegations in turn.[^52]

15. First, High Plains claims that Mercury lacked candor in not
    admitting its use of trailing numbers until after High Plains
    discovered Mercury\'s conduct and reported it to the
    Commission.[^53] We disagree. As we explained in the *NALF
    Reconsideration*, Mercury did not have adequate notice that its use
    of trailing numbers was prohibited by the anti-collusion rule.[^54]
    Without adequate notice that its conduct was prohibited, Mercury had
    no reason to report its use of trailing numbers to the Commission
    prior to the Commission's inquiry.

16. High Plains also alleges that Mercury lacked candor in responding to
    several specific questions in WTB's Letter of Inquiry.[^55] Question
    Four asked Mercury *inter alia*, to describe the purpose of its
    trailing numbers.[^56] High Plains alleges that Mercury's responses
    that the trailing numbers were meant to "bluff and confuse\" is
    inconsistent with Federal Court testimony by Mercury representative
    Jerry Sullivan, Jr.[^57] However, in response to Question Four of
    the Letter of Inquiry, Mercury stated:

Mercury utilized the final three digits of its bids to: (a) gain
separation from other bidders above and beyond minimum bid increments;
(b) to avoid the so-called \"fat-finger\" bid problem; and (c) to
misdirect, bluff, *threaten*, and posture in relation to other
bidders.^\[^[^58]^\]^

We find no inconsistency between Mercury\'s response to Question Four
and Sullivan\'s statement. Accordingly, we reject High Plains\' claim
that Mercury lacked candor in responding to this question.

17. Next, High Plains claims that Mercury omitted materials from its
    response to Question Five of the Letter of Inquiry.[^59] Question
    Five asked Mercury, *inter alia*, to produce all documents
    memorializing, referring to or relating to its strategic plan and/or
    bidding strategy.[^60] High Plains alleges that Mercury failed to
    produce certain bidding diaries that were purportedly responsive to
    the request.[^61] In opposition, Mercury maintains that the bidding
    diaries do not contain material responsive to Question Five of the
    Letter of Inquiry. Nonetheless, pursuant to a request from the
    Commercial Wireless Division,[^62] Mercury submitted copies of its
    bidding diaries on October 2, 1998.[^63] In the accompanying
    transmittal letter, Mercury's counsel reasserted its claim that the
    bidding diaries contained no material information.[^64]

18. The ultimate materiality of the diaries, however, is not dispositive
    of the issue of Mercury's responsiveness to the Letter of Inquiry.
    As noted above the Letter of Inquiry requested all documents
    referring or relating to Mercury's bidding strategy. These bidding
    diaries were a contemporaneous record of Mercury's bidding activity
    by those persons at Mercury conducting the bidding. We find it
    difficult to imagine a reasonable interpretation of WTB's request
    that would exclude these diaries. The officers of Mercury, not being
    newcomers to the telecommunications industry, should have known that
    Mercury was required to produce these diaries, and if its failure to
    do so was based on advice of counsel, it was ill-served by that
    advice.[^65] However, we have no basis to believe that Mercury's
    failure to produce the diaries was the result of a willful intent to
    conceal information. Mercury ultimately did produce the diaries when
    they were requested specifically, and the information provided only
    served to confirm what Mercury had already admitted to regarding its
    use of trailing numbers. Because intent to deceive is an essential
    element of lack of candor,[^66] we are unwilling to find that
    Mercury lacked candor in its response to Question Five of the Letter
    of Inquiry.

19. High Plains also claims that Mercury lacked candor in its response
    to Question Seven of the Letter of Inquiry,[^67] which asked Mercury
    to identify all markets in which it placed bids using bid signals,
    but did not intend to win.[^68] In response, Mercury stated the
    following:

None. In each instance where Mercury placed a bid it structured its bid
in such a manner that it was prepared to accept and pay for the license
if it were the highest bidder at the auction\'s end. Clearly, Mercury
bid on markets that were not included on its list of target markets (see
Schedule 6). In many instances, this reflected only an appropriate
desire to \"park pops\" and thereby protect eligibility without
disclosing overall bidding strategies. See also Mercury\'s response to
Question 4 for a further explanation of such bids and a listing of all
markets for which Mercury\'s bids did not end with \"000\".^\[^[^69]^\]^

High Plains argues that Mercury bid in certain markets solely for the
purpose of signaling competing bidders to stop bidding in other markets
in which Mercury was truly interested.[^70] However, Mercury did not
withdraw bids in any of the markets where it used bid signals, and High
Plains provides no evidence of Mercury\'s alleged lack of intent to
accept and pay for certain markets. In the absence of such evidence, we
are unwilling to find that Mercury lacked candor in this response.

20. High Plains further contends that Mercury responded untruthfully to
    Question Eight of the Letter of Inquiry,[^71] which asked Mercury to
    identify each instance where it placed a retaliatory bid and the
    result that Mercury was seeking to achieve by placing each such
    bid.[^72] Mercury responded as follows:

Mercury did not use pure retaliatory bidding. Attachment 4 sets forth
the complete history of Mercury\'s use of Trailing Numbers. In some
instances identified therein, Mercury employed Trailing Numbers in a
manner intended to posture, threatened \[sic\] and compete for markets
based on bids submitted by others in prior rounds. In no instance did
any such bid reflect an agreement or solicitation to do or forebear from
doing anything with respect to subsequent bidding. Nor did Mercury
intend any such bids to convey any information concerning Mercury\'s
bidding strategies.^\[^[^73]^\]^

We find Mercury\'s response to be contradictory. Mercury denies that it
used trailing numbers to convey information or solicit action from
competing bidders, yet at the same time, Mercury admits that it used
trailing numbers to threaten competing bidders. Such threats necessarily
communicate information and seek to influence the actions of competing
bidders.[^74] However, even if we were to conclude that Mercury's answer
was internally inconsistent, we do not find that it was untruthful. In
its response to the Letter of Inquiry, Mercury fully disclosed all
instances in which it used trailing numbers in bids, and discussed its
reasons for doing so in detail. We find no evidence that Mercury
intended to deceive or mislead the Commission in its response to this
question.

21. Finally, High Plains claims that Mercury lacked candor in its
    response to Question Nine of the Letter of Inquiry.[^75] Question
    Nine asked Mercury to \"\[i\]dentify every auction participant or
    other individual who you believe ceased bidding in one of Mercury\'s
    targeted markets in response to a retaliatory bid placed by
    Mercury.\"[^76] In response, Mercury provided charts showing its
    relevant bidding history.[^77] These charts listed Mercury's bids in
    which the trailing numbers corresponded with the identification
    numbers of other markets in which Mercury was bidding. They also
    showed the subsequent bids of the competing bidders in those
    markets. However, Mercury qualified its response by stating that it
    could not be certain why a particular bidder ceased bidding in a
    given market because Mercury never had any communications or
    agreements with any other bidder on this subject, either verbal or
    in writing. We do not believe this response demonstrates an intent
    to deceive the Commission. Mercury candidly disclosed the bids in
    which trailing numbers were used and the bids of other bidders in
    markets corresponding to those trailing numbers, but declined to
    speculate why a particular bidder may have ceased bidding in a given
    market. High Plains fails to identify any communications, agreements
    or other evidence demonstrating that Mercury had knowledge of why a
    particular bidder ceased bidding in a given market. Therefore, we
    find no merit in High Plains\' claim.

**C. *Ex Parte* Communications**

22. High Plains also seeks review of rulings by the Bureau and the
    Office of General Counsel (OGC) rejecting High Plains\' allegations
    that Mercury violated the Commission\'s *ex parte* rules. According
    to High Plains, in the weeks leading up to the Bureau\'s August 21
    action conditionally granting 23 of Mercury\'s applications, the
    Commission received at least 27 letters from members of Congress
    regarding those pending applications. In its initial letter ruling
    and the *OGC Letter Decision on Reconsideration*, OGC rejected the
    allegations that Mercury\'s solicitation of congressional support
    involved misconduct or undermined the integrity of the Commission\'s
    processes.[^78] OGC found that the congressional letters and
    telephone calls involved no significant violation of the
    Commission\'s *ex parte* rules. The Bureau similarly rejected High
    Plains\' allegations that Mercury committed significant violations
    of the *ex parte* rules. [^79]

23. We disagree with High Plains\' contentions that the OGC\'s analysis
    of the *ex parte* question was wrong and that a serious violation of
    the *ex parte* rules warranting designation for hearing of
    Mercury\'s licenses had occurred. High Plains does not dispute that
    the congressional letters, submitted on Mercury's behalf, were
    served on High Plains, and presents no evidence that any delay in
    service was deliberate or intended to prejudice High Plains. Our
    review of the record indicates that by August 1, 1997, High Plains
    had been served with at least 12 congressional letters, thereby
    giving High Plains notice of the thrust of the congressional
    concerns well before the Bureau issued its initial licensing
    decision on August 21, 1997. All seven congressional letters sent in
    September-October 1997 were also served on High Plains, and all but
    one were served the same day that they were filed. These facts
    confirm both that Mercury made a reasonable effort to achieve
    service and that High Plains was not prejudiced by any failure by
    Mercury to ensure timely service. Additionally, High Plains presents
    no evidence to challenge OGC\'s finding that the telephone calls
    were legitimate status inquiries.

24. In view of the foregoing, the cases cited by High Plains[^80] do not
    support designating for hearing Mercury\'s applications or revoking
    Mercury\'s licenses for *ex parte* violations, even though the
    number of congressional contacts here was greater. Unlike all three
    of these cases, the letters were in fact served, albeit not always
    in a timely fashion, and Mercury informed the authors of the letters
    of the need for service. In contrast to *Stearns*, the only one of
    these cases in which the violator\'s application was dismissed,
    Mercury had not been expressly warned to avoid repetition of an *ex
    parte* violation.[^81]

25. High Plains also disputes OGC\'s conclusion that there was no
    improper congressional intrusion into the Commission\'s decisional
    process. High Plains asserts that the congressional letters
    improperly addressed the merits of Mercury\'s applications and that
    they \"imply\" a preference for Mercury. High Plains also asserts
    that the sheer volume of congressional correspondence created undue
    pressure on the Commission and that even pressure related to timing
    is improper.

26. We find no basis to overturn OGC's conclusions. Although the volume
    of letters filed on Mercury's behalf was high, they did not
    improperly intrude into the decisional process. The substance of the
    letters was that action on Mercury's applications not be delayed
    pending the outcome of the investigations. [^82] The letters express
    support for an \"unfettered\" investigation into the issue of
    whether Mercury violated the bid signaling rule.[^83] The letters
    expressed no opinion as to how the investigations should be resolved
    or what sanction (potentially including license revocation), if any,
    should be imposed.[^84] Accordingly, we deny High Plains\'
    application for review as to the *OGC Letter Decision on
    Reconsideration*.

# IV. CONCLUSION

27. After carefully reviewing High Plains\' applications for review of
    the *WTB Order on Reconsideration* and the *OGC* *Letter Decision on
    Reconsideration*, we conclude that High Plains has failed to present
    sufficient facts and/or arguments to support its claims that WTB or
    OGC erred in their decisions. Therefore, we deny High Plains\'
    applications for review and affirm the *WTB* *Order on
    Reconsideration* and the *OGC* *Letter Decision on
    Reconsideration*.**\
    **

# V. ORDERING CLAUSES

28. Accordingly, IT IS ORDERED that, pursuant to sections 4(i) and
    5(c)(5) of the Communications Act of 1934, as amended, 47 U.S.C. §§
    154(i) and 155(c)(5), and section 1.115 of the Commission\'s rules,
    47 C.F.R. § 1.115, the Application for Review filed by High Plains
    Wireless, L.P. on December 5, 1997, IS DENIED.

29. IT IS FURTHER ORDERED that, pursuant to sections 4(i) and 5(c)(5) of
    the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i) and
    155(c)(5), and section 1.115 of the Commission\'s rules, 47 C.F.R. §
    1.115, the Application for Review filed by High Plains Wireless,
    L.P. on May 6, 1998, 1998, IS DENIED.

30. IT IS FURTHER ORDERED that, pursuant to section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i), and
    section 1.45(c) of the Commission\'s rules, 47 C.F.R. § 1.45(c), the
    Reply to Opposition to Application for Review filed by High Plains
    Wireless, L.P. on January 6, 1998, IS DISMISSED.

31. IT IS FURTHER ORDERED that, pursuant to section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i), and
    section 1.45(c) of the Commission\'s rules, 47 C.F.R. § 1.45(c), the
    Supplement to Application for Review filed by High Plains Wireless,
    L.P. on January 13, 1998, IS DISMISSED.

32. IT IS FURTHER ORDERED that, pursuant to section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i), and
    section 1.45(c) of the Commission\'s rules, 47 C.F.R. § 1.45(c), the
    Supplement to its Opposition to Application for Review filed by
    Mercury PCS II, LLC on February 20, 1998, IS DISMISSED.

33. IT IS FURTHER ORDERED that, pursuant to section 4(i) of the
    Communications Act of 1934, as amended, 47 U.S.C. § 154(i), and
    section 1.45(c) of the Commission\'s rules, 47 C.F.R. § 1.45(c), the
    Reply to Mercury's Supplement to Opposition to Application for
    Review filed by High Plains Wireless, L.P. on March 5, 1998, IS
    DISMISSED.

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas

Secretary

**APPENDIX A**

Mercury PCS II, LLC Broadband PCS D, E, and F block licenses

  --------------------- ---------------------- ------------------- --------------------- ----------------------------
  [Block]{.underline}   [Market]{.underline}   [Call               [File                 [Location]{.underline}
                                               Sign]{.underline}   Number]{.underline}   

  D                     B121                   KNLG913             01291-CW-L-97         Eagle Pass-Del Rio, TX

  E                     B191                   KNLG919             01297-CW-L-97         Hobbs, NM

  E                     B246                   KNLG922             01300-CW-L-97         Laurel, MS

  F                     B003                   KNLF929             00114-CW-L-97         Abilene, TX

  F                     B032                   KNLG906             01284-CW-L-97         Baton Rouge, LA

  F                     B040                   KNLG907             01285-CW-L-97         Big Spring, TX

  F                     B042                   KNLG908             01286-CW-L-97         Biloxi-Gulfport-Pascagula,
                                                                                         MS

  F                     B052                   KNLG909             01287-CW-L-97         Bowling Green-Glasgo, KY

  F                     B058                   KNLG910             01288-CW-L-97         Brunswick, GA

  F                     B087                   KNLG911             01289-CW-L-97         Clovis, NM

  F                     B115                   KNLG912             01290-CW-L-97         Dothan-Enterprise, AL

  F                     B146                   KNLG914             01292-CW-L-97         Florence, AL

  F                     B154                   KNLG915             01293-CW-L-97         Ft. Walton Beach, FL

  F                     B159                   KNLG916             01294-CW-L-97         Gainesville, FL

  F                     B180                   KNLG917             01295-CW-L-97         Hammond, LA

  F                     B186                   KNLG918             01296-CW-L-97         Hattiesburg, MS

  F                     B195                   KNLG920             01298-CW-L-97         Houma-Thibodeaux, LA

  F                     B236                   KNLG921             01299-CW-L-97         Lafayette-New Iberia, LA

  F                     B263                   KNLG923             01301-CW-L-97         Louisville, KY

  F                     B264                   KNLG924             01302-CW-L-97         Lubbock, TX

  F                     B269                   KNLG925             01303-CW-L-97         McComb-Brookhaven, MS

  F                     B296                   KNLG926             01304-CW-L-97         Midland, TX

  F                     B302                   KNLG927             01305-CW-L-97         Mobile, AL

  F                     B305                   KNLG928             01306-CW-L-97         Montgomery, AL

  F                     B327                   KNLG929             01307-CW-L-97         Odessa, TX

  F                     B340                   KNLG930             01308-CW-L-97         Panama City, FL

  F                     B343                   KNLG931             01309-CW-L-97         Pensacola, FL

  F                     B400                   KNLG932             01310-CW-L-97         San Angelo, TX

  F                     B415                   KNLG933             01311-CW-L-97         Selma, AL

  F                     B439                   KNLG934             01312-CW-L-97         Tallahassee, FL

  F                     B454                   KNLG935             01313-CW-L-97         Valdosta, GA

  F                     B467                   KNLG936             01314-CW-L-97         Waycross, GA
  --------------------- ---------------------- ------------------- --------------------- ----------------------------

[^1]:     ^?^ *Mercury PCS II, LLC*, 12 FCC Rcd. 18093 (1997) (*WTB*
    *Order on Reconsideration*). The Mercury licenses at issue are
    listed in Appendix A. Mercury has since changed its name to Digital
    PCS, LLC. *See* Letter from J. Justin McClure, counsel for Mercury,
    to Steven E. Weingarten, Chief, Commercial Wireless Division,
    Wireless Telecommunications Bureau (filed June 29, 1998). For
    consistency, we will refer to Mercury throughout this Memorandum
    Opinion and Order.

[^2]:     ^?^ Letter from Christopher J. Wright, General Counsel, to
    Eliot J. Greenwald, counsel for High Plains, 13 FCC Rcd. 7132 (April
    6, 1998) (*OGC Letter Decision on Reconsideration*).

[^3]:     ^?^ Emergency Motion for Disqualification (filed Nov. 26,
    1996).

[^4]:     ^?^ *See* 47 C.F.R. § 1.2105(c) (subject to certain exceptions
    not relevant here, applicants are prohibited from cooperating,
    collaborating, discussing, or disclosing the substance of their bids
    or bidding strategies with other applicants after the filing of
    short-form applications and before the submission of down payments).

[^5]:     ^?^ Emergency Motion for Disqualification at 2-3.

[^6]:     ^?^ *Id*. at 3.

[^7]:     ^?^ *Id*.

[^8]:     ^?^ Opposition to Emergency Motion for Disqualification at 5-8
    (filed Dec. 6, 1996).

[^9]: ^?^ High Plains was also the high bidder for the Lubbock D Block
    license.

[^10]: ^?^ Mercury was also the high bidder for thirty-one D, E, and F
    Block licenses in other markets.

[^11]: DOJ has since terminated its investigation and has entered into a
    consent decree with Mercury enjoining Mercury from engaging in bid
    signaling in future auctions. U.S. v. Mercury PCS II LLC, No.
    98-2751(PLF), Final Judgement (entered April 29, 1999)

[^12]:     ^?^ Petition to Deny (filed March 21, 1997). On the same day,
    Mercury filed a petition to deny High Plains\' applications for the
    Amarillo F block license and Lubbock D block license, alleging that
    High Plains filed its emergency motion for disqualification to
    intimidate Mercury and impede litigation between the parties in
    Texas. Petition to Deny (filed March 21, 1997). Mercury claimed that
    High Plains\' pleading was an abuse of process, rendering High
    Plains unfit to be a Commission licensee. *Id.* at 1. WTB
    subsequently denied Mercury\'s petition to deny and granted High
    Plains\' applications. *High Plains Wireless, L.P.*, 12 FCC Rcd.
    19,627 (WTB Nov. 25, 1997) (*High Plains Grant Order*). Mercury
    filed a petition for reconsideration of the *High Plains Grant
    Order*, which the Bureau denied in an Order released on March 2,
    2000. *High Plains Wireless, L.P.*, DA 00-474, 15 FCC Rcd. 4620
    (WTB).

[^13]:     ^?^ Opposition to Petition to Deny (filed April 8, 1997).

[^14]:     ^?^ *Mercury PCS II, LLC*, 13 FCC Rcd. 5756 (WTB 1997)
    (*Partial Grant Order*).

[^15]:     ^?^ *Id*. at 5795 ¶¶ 6-7.

[^16]:     ^?^ *Id*.

[^17]:     ^?^ *Id*.

[^18]:     ^?^ Petition for Partial Reconsideration (filed Sept. 22,
    1997).

[^19]:     ^?^ Petition for Reconsideration (filed Sept. 22, 1997).

[^20]:     ^?^ Letter from Howard Davenport, Chief, Enforcement and
    Consumer Information Division, Wireless Telecommunications Bureau,
    to William M. Mounger, II, and Jerry M. Sullivan, Mercury (Sept. 10,
    1997) (Letter of Inquiry). *See* 47 U.S.C. § 308(b) (At any time
    after the filing of an original application and during the term of
    any license, the Commission may require an applicant or licensee to
    submit written statements of fact to enable the Commission to
    determine whether to grant or deny the application or revoke the
    license).

[^21]:     ^?^ Letter from Thomas Gutierrez, counsel for Mercury, to
    Susan Aaron, Enforcement and Consumer Information Division, Wireless
    Telecommunications Bureau (filed Sept. 17, 1997) (Response to Letter
    of Inquiry).

[^22]:     ^?^ *Mercury PCS II, LLC*, 12 FCC Rcd. 17,970 (1997)
    (*NALF*).

[^23]:     ^?^ *Id*. at 17,978, ¶ 24. We described reflexive bid
    signaling as follows:

    Reflexive bid signaling (through the use of trailing numbers)
    involves a bidder placing a bid in one market (market A) in which
    the final three digits of the bid (the trailing numbers) reflect the
    three-digit BTA number of a second market (market B) that it was
    targeting or a competing bidder was targeting. Then, within a short
    number of rounds, the bidder places a bid in the second market
    (market B) in which the final three digits of the bid reflect the
    BTA number of the first market (market A). These reflexive bids
    communicate different messages depending on the context of the bids.
    The signaling bidder could be communicating to competing bidders
    that they should stop bidding for the signaling bidder\'s targeted
    markets in exchange for which the signaling bidder would stop
    bidding in the competing bidder\'s targeted market. The reflexive
    bids could also communicate that a competitor\'s continued bidding
    in one of the signaling bidder\'s targeted markets would result in a
    \"bidding war\" in which the signaling bidder would continue to
    drive up the price in the competing bidder\'s targeted market.
    Finally, the reflexive bids could inform the competing bidders that
    both markets are being targeted by the signaling bidder.

    *Id*. at 17,976 ¶ 16.

[^24]:     ^?^ Petition for Partial Reconsideration of Notice of
    Apparent Liability for Forfeiture (filed Nov. 26, 1997).

[^25]:     ^?^ Response to Notice of Apparent Liability for Forfeiture
    (filed Nov. 28, 1997).

[^26]:     ^?^ *WTB Order on Reconsideration*, 12 FCC Rcd. 18093 at ¶¶
    17, 25

[^27]:     ^?^ *Id*. at 18,099-100 ¶ 11.

[^28]:     ^?^ Application for Review (filed Dec. 5, 1997).

[^29]:     ^?^ *Id*. at 5-6.

[^30]:     ^?^ Opposition to Application for Review (filed Dec. 22,
    1997). High Plains and Mercury subsequently filed several pleadings
    that were untimely and/or unauthorized. First, High Plains filed a
    reply to Mercury\'s opposition to the application for review on
    January 6, 1998, together with a motion to accept the reply. Reply
    to Opposition to Application for Review (filed Jan. 6, 1998); Motion
    to Accept Filing of Reply to Opposition (filed Jan. 6, 1998).
    Although High Plains\' reply was due on January 2, 1998, *see* 47
    C.F.R. §1.115(d), the motion to accept the reply neither
    acknowledges that the reply was late filed nor does it offer an
    explanation for its untimeliness. Accordingly, we will not consider
    the reply. Second, High Plains filed a supplement to its application
    for review on January 13, 1998. Supplement to Application for Review
    (filed Jan. 13, 1998). In the supplement, High Plains argues that
    Mercury\'s December 29, 1997 petition for reconsideration of WTB\'s
    *High Plains Grant Order* is frivolous and demonstrates Mercury\'s
    lack of fitness to hold Commission licenses. However, High Plains
    failed to seek authority to file its supplement, and we will not
    consider it. *See* 47 C.F.R. § 1.45(c). Third, Mercury filed a
    supplement to its opposition to High Plains\' application for review
    on February 20, 1998, responding to issues raised in High Plains
    reply and supplement. Supplement to Application for Review (filed
    Feb. 20, 1998). Since we are not considering High Plains\' reply and
    supplement, we will not consider Mercury\'s supplement. Finally,
    High Plains filed a reply to Mercury\'s supplement on March 5, 1998.
    Reply to Supplement to Application for Review (filed March 5, 1998).
    Because we are not considering Mercury\'s supplement, we will not
    consider High Plains reply to Mercury\'s supplement.

[^31]:     ^?^ *Mercury PCS II*, *LLC*, 13 FCC Rcd. 23755 (1998) (*NALF
    Reconsideration*).

[^32]:     ^?^ *Id*., ¶ 9.

[^33]:     ^?^ *Id*., ¶ 10.

[^34]:     ^?^ *Id*., ¶ 11.

[^35]:     ^?^ Letter from Eliot J. Greenwald, counsel for High Plains,
    to Dan Phythyon, Chief, Wireless Telecommunications Bureau (filed
    Aug. 14, 1997).

[^36]:     ^?^ *Id* at 1.

[^37]:     ^?^ Letter from John I Riffer, Assistant General Counsel,
    Administrative Law Division, Office of General Counsel, to Eliot J.
    Greenwald, counsel for High Plains (Oct. 24, 1997) (*OGC* *Letter
    Decision*).

[^38]:     ^?^ *Id*. at 2.

[^39]:     ^?^ Petition for Reconsideration; Request for Investigation
    (filed Nov. 24, 1997).

[^40]:     ^?^ *Id*. at 3-4.

[^41]:     ^?^ *Id*. at 3.

[^42]:     ^?^ *OGC Letter Decision on Reconsideration*, 13 FCC Rcd. at
    7135.

[^43]:     ^?^ *Id*.

[^44]:     ^?^ *Id*. at 7134-35.

[^45]:     ^?^ Application for Review (filed May 6, 1998).

[^46]:     ^?^ Motion to Consolidate Proceedings (filed May 6, 1998).

[^47]:     ^?^ *See* 47 C.F.R. § 1.1 (Procedures to be followed by the
    Commission shall, unless specifically prescribed in this part, be
    such as in the opinion of the Commission will best serve the
    purposes of such proceedings).

[^48]:     ^?^ High Plains Application for Review at 6.

[^49]:     ^?^ *Id*. at 9.

[^50]:     ^?^ Application for Review at 10-14.

[^51]:     ^?^ *Id.*

[^52]:     ^?^ In its application for review, High Plains acknowledges
    that its arguments concerning Mercury\'s Response to the Letter of
    Inquiry have not previously been presented to the Bureau.
    Application for Review at 13. Ordinarily, we do not consider
    questions of law or fact on application for review that are not
    first presented to the bureau or office that rendered the initial
    decision. *See* 47 C.F.R. § 1.115(c). However, we have waived this
    rule in the past where doing so was in the public interest. *See* 47
    C.F.R. § 1.3 (Commission may waive its rules for good cause);
    *Sperzel v. NEC Telephone, Inc.*, 86 FCC 2d 97, 100 ¶ 9 (1981)
    (waiver of section 1.115(c) and consideration of issue not presented
    to the designated authority was in the public interest); *Silverman
    v. KOOL-TV*, 63 FCC 2d 507, 507 n.1 (1977) (pursuant to section 1.3,
    waiver of section 1.115(c) was in the public interest); *Sage v.
    WHEN-TV*, 63 FCC 2d 148, 150 n.2 (1977) (public interest served by
    waiver of section 1.115(c) and consideration of argument not
    presented to the designated authority). Addressing High Plains\'
    arguments here will provide guidance to the public on important
    issues of misrepresentation and lack of candor, and it will also
    alleviate any prejudice that High Plains may have suffered as a
    result of the unusual procedural path that this case has taken.
    Thus, under the unique circumstances of this case, we believe that
    it would serve the public interest for us to consider High Plains\'
    arguments concerning the Response to Letter of Inquiry.

[^53]:     ^?^ Application for Review at 11.

[^54]:     ^?^ *NALF Reconsideration*, FCC 98-203 at ¶ 10.

[^55]:     ^?^ Application for Review at 11.

[^56]:     ^?^ Letter of Inquiry at 2.

[^57]:     ^?^ Sullivan, who was responsible for formulating Mercury\'s
    bidding strategy and implementing Mercury\'s bids, described the use
    of trailing numbers as follows: \"\[t\]o be honest with you, I was
    probably putting it \[in\] to threaten High Plains that I was fixing
    to come blister their butt in Amarillo.\" Deposition of Jerry
    Sullivan, Jr. in the United States District Court for the Northern
    District of Texas, at 179 (Sept. 19, 1997).

[^58]:     ^?^ Response to Letter of Inquiry at 7 (emphasis added)
    (footnote omitted).

[^59]:     ^?^ Application for Review at 12.

[^60]:     ^?^ Letter of Inquiry at 2.

[^61]:     ^?^ Application for Review at 12.

[^62]:     ^?^ See letter from Steven E. Weingarten, Chief, Commercial
    Wireless Division, WTB to Thomas Gutierrez, Esq. dated Sep. 25 1998.

[^63]: ^?^ See letter from Thomas Gutierrez, Esq. dated Oct 2, 1998.

[^64]: ^?^ *Id.*

[^65]: We note that the Wireless Bureau did not take enforcement action
    against Mercury for its failure to produce the bidding diaries, and
    that the one-year statute of limitations applicable to monetary
    forfeitures has since run with respect to this issue. *See* 47 USC §
    503(b)(6)(B). However, the one-year limitation applies only to
    forfeiture proceedings, and does not preclude the Commission from
    considering Mercury's actions in the context of High Plains'
    challenge to Mercury's qualifications to be a Commission licensee.

[^66]: ^?^ "The Commission will not disqualify an applicant . . ., for a
    negligent omission; 'intent to deceive \[is\] an essential element
    of a showing of misrepresentation or lack of candor showing.'" *Swan
    Creek Communications, Inc., v. FCC,* 39 F.3d 1217, 1222 (DC Cir.
    1994), quoting *Weyburn Broadcasting, L.P. v. FCC*, 984 F.2d 1220
    (DC Cir. 1983).

[^67]:     ^?^ Application for Review at 12.

[^68]:     ^?^ Letter of Inquiry at 3.

[^69]:     ^?^ Response to Letter of Inquiry at 8-9.

[^70]:     ^?^ Application for Review at 12.

[^71]:     ^?^ *Id*.

[^72]:     ^?^ Letter of Inquiry at 3.

[^73]:     ^?^ Response to Letter of Inquiry at 9.

[^74]:     ^?^ Black\'s Law Dictionary defines a threat, in relevant
    part, as follows:

    *A communicated intent to inflict physical or other harm on any
    person or on property. A declaration of an intention to injure
    another or his property by some unlawful act. . . . A declaration of
    one\'s purpose or intention to work injury to the person, property,
    or rights of another, with a view of restraining such person\'s
    freedom of action.*

    Black\'s Law Dictionary 1480 (6th ed. 1990) (citations omitted).

[^75]:     ^?^ Application for Review at 12-13.

[^76]:     ^?^ Letter of Inquiry at 3.

[^77]:     ^?^ Response to Letter of Inquiry at 9.

[^78]: ^?^ High Plains asserts that these letters were solicited by
    Joseph G. Riemer, III, a consultant, who contacted Republican
    Senators and Representatives from southern states on Mercury\'s
    behalf. High Plains further asserts that on or about July 31, 1997,
    Blair Levin, then Chairman Reed Hundt\'s chief of staff, received
    numerous telephone calls from congressional offices requesting
    Commission action by August 13. Moreover, High Plains alleges that
    by October 1997, shortly before the Bureau, on November 5, granted
    Mercury\'s nine remaining applications, the Commission received
    another seven congressional letters. *OGC Letter Decision on
    Reconsideration*, 13 FCC Rcd 7132 (OGC 1998).

[^79]: ^?^ *See Mercury PCS II, LLC*, 12 FCC Rcd 18093, 18103-04 ¶¶
    20-21 (WTB 1997).

[^80]: ^?^ *Elkhart Telephone Co*[.]{.underline}, 11 FCC Rcd 1165
    (1995); *Pepper Schultz*, 4 FCC Rcd 6393 (Rev. Bd. 1989), rev.
    denied, 5 FCC Rcd 3273 (1990); *Stearns County Broadcasting Company,
    Inc*[.]{.underline}, 104 FCC 2d 688 (Rev. Bd. 1986).

[^81]: ^?^ *See* 104 FCC 2d at 696 ¶ 10.

[^82]: ^?^ The July 17, 1997 letter from Senators Trent Lott and Thad
    Cochran is typical. It reads:

    We would appreciate the Federal Communications Commission promptly
    considering the D. E, and F Block Personal Communications Services
    applications filed by Mercury PCS II, LLC. In addition, please
    provide us with a projected timetable for action . . . .

    We are concerned that the Commission\'s inaction on Mercury\'s
    applications reflects an administrative delay which has placed
    Mercury at a competitive disadvantage with other PCS operators who
    already have their licenses. This is of particular concern when no
    findings of merit or demerit regarding Mercury have been made.

    > We are aware that the Department of Justice is investigating some
    > 50 participants in the Commission\'s PCS auctions which include
    > Mercury. We fully support the Commission and the Department
    > efforts to conduct unfettered investigations into the auction
    > process. Yet, all 50 participants except Mercury, have already
    > received their licenses. Clearly a license can be issued without
    > impeding a thorough investigation by either the Commission or the
    > Department of Justice. We are hopeful that the delay on Mercury\'s
    > applications can be resolved.

    Thank you for your assistance in dealing with this issue which
    represents a substantial investment in Mississippi\'s economy.

    Letter from \[Senators\] Trent Lott and Thad Cochran to Chairman
    Reed Hundt (July 17, 1997).

[^83]: ^?^ *Id.*

[^84]: ^?^ \"\[T\]he question of administrative delay is well
    established as a proper subject of communication between a party and
    a Congressman and between a Congressman and the Commission.\"
    *Amigos Broadcasting, Inc. v. FCC*, 696 F.2d 128, 129 (D.C. Cir.
    1982).