> DA 03-2273

July 11, 2003

[]{.mark}

Mr. John Jung

Jung on Jung

350 5^th^ Avenue

Suite 6107

New York, NY 100118

Dear Mr. Jung:

This letter responds to correspondence filed on behalf of Jung on Jung
requesting that the Auctions and Industry Analysis Division ("Division")
waive the Commission's installment payment rules.[^1] Specifically, Jung
on Jung requests that the Division waive Jung on Jung's late fees and
allow an extension of its installment payment obligations on two
Multipoint Distribution Service ("MDS") licenses, MDB010
(Allentown-Bethlehem) and MDB488 (San Juan, PR). For the reasons set
forth below, we deny Jung on Jung's request for waiver and extension of
its installment payment obligations.

**1. [Background]{.underline}**

On March 28, 1996, the Commission announced that Jung on Jung was the
high bidder for two MDS licenses,[^2] including MDB010
(Allentown-Bethlehem) and MDB488 (San Juan, PR), in Auction No. 6. As a
small business, Jung on Jung was eligible to participate in the
Commission's installment payment plan.[^3] Grant of the licenses, MDB010
and MDB488, was conditioned upon Jung on Jung's full and timely
performance of the payment obligations.[^4] As an eligible licensee
qualifying as a small business under 47 C.F.R. § 21.960(b), Jung on Jung
was scheduled to make interest-only payments for the first two years of
the license term.[^5] Payments of interest and principal are amortized
over the remaining eight years of the license term.[^6] In accordance
with Commission rules, Jung on Jung made its scheduled February 28, 2001
quarterly installment payments on August 30, 2001, *i.e*., within the
two quarterly grace periods. However, Jung on Jung failed to make
further quarterly installment payments thereafter.[^7]

The Commission's installment payments rule allows licensees to use up to
two quarterly grace periods, subject to late payment fees, if the
licensees require additional time to submit payment.[^8] If a licensee
fails to make an installment payment within that time period, it is
considered to be in default of its installment payment obligations, and
its license automatically cancels. Therefore, in accordance with the
Commission's rules, when Jung on Jung failed to make the May 31, 2001
quarterly installment payments with the associated late fees within the
two quarterly grace periods, *i.e.*, by December 1, 2001, it was in
default, its license automatically canceled, and it is subject to debt
collection procedures.[^9]

**2. [Discussion]{.underline}**

Jung on Jung requests a waiver of the installment payment rules alleging
that economic conditions, including an accelerated decline in Jung on
Jung's business after the September 11, 2001 events, have undermined its
financial ability to meet its installment payment obligations as well as
its ability to operate as a small business.[^10] Accordingly, Jung on
Jung requests that the Commission waive Jung on Jung's late fees and
allow an extension of its installment payment obligations on both the
MDB010 (Allentown-Bethlehem) and MDB488 (San Juan, PR) licenses.

To obtain a waiver of the Commission's rules, Jung on Jung must show:
(i) that the underlying purpose of the rule would not be served, or
would be frustrated, by its application in this particular case, and
that grant of the requested waiver would be in the public interest; or
(ii) that the unique facts and circumstances of the particular case
render application of the rule inequitable, unduly burdensome or
otherwise contrary to the public interest, or that Jung on Jung has no
reasonable alternative.[^11] For the reasons discussed below, we find
that Jung on Jung's waiver request fails to meet the Commission's
standard for granting a waiver.

Jung on Jung fails to show how the underlying purpose of our installment
payment rules would not be served, or would be frustrated, by
application of the rules in this instance, or that grant of the
requested waiver would be in the public interest. In designing a
licensing system that employs competitive bidding pursuant to Section
309(j)[^12] of the Communications Act, the Commission determined that
the Act's objectives would best be served by awarding licenses to those
who value them most highly.[^13] The Commission has repeatedly
emphasized that strict enforcement of the installment payment rules
enhances the integrity of the auction and licensing process by ensuring
that winning bidders have the necessary financial capacity to build out
its systems and provide service, and that spectrum is awarded to those
qualified bidders who value the spectrum most.[^14] Requiring licensees
to comply with the full and timely payment rule is essential to a fair
and efficient licensing process.[^15] Moreover, it is fair to all
participants in our auctions, including those who won licenses in the
auction and those who did not, and it fosters the promotion of economic
opportunity and competition in the marketplace and rapid deployment of
new services for the benefit of the public.[^16]

The Commission's late payment rules for installment payments provide
licensees experiencing financial difficulties a substantial amount of
time within which to pursue private market solutions to their financial
difficulties.[^17] The Commission adopted these provisions for
"extraordinary circumstances -- instances of financial distress -- for
which temporary relief is appropriate."[^18] The Commission has
recognized that although there is considerable flexibility in its
payment rules, "it is inevitable that some licensees will seek more time
to pay," and, in this respect, the Commission's rules cannot accommodate
every licensee's business plans.[^19] In light of the flexibility
already present in the installment payment rules, to allow Jung on Jung
additional time would only serve to undermine the purpose behind
enforcement of the Commission's payment deadlines, which the Commission
decided is best served by strict enforcement after the expiration of the
two quarterly grace periods.[^20] The circumstances presented here, in
fact, establish that strict enforcement serves the rule's underlying
purpose because Jung on Jung neither offers a definitive time-frame nor
any assurance for when it will be able to pay for its licenses.[^21]
Thus, grant of a waiver request based upon Jung on Jung's speculation
that it may attract potential investors is not an adequate basis for
grant of a waiver.[^22] Accordingly, we find that Jung on Jung has
failed to demonstrate that the rule's purpose would not be served, or
that it would be frustrated, by applying it to Jung on Jung, and that
petitioner has failed to show that grant of the requested waiver would
be in the public interest.

Jung on Jung's arguments concerning the facts and circumstances of its
particular case do not rise to the level of unique or unusual
circumstances and therefore do not change our analysis. Jung on Jung's
contention that a downturn in economic conditions coupled with a lack of
financial participation

by lenders has decreased its ability to fund the operation and
development of its system and to make installment payments,[^23] while
unfortunate, is not a unique fact or circumstance that meets the waiver
standard.[^24] All licensees bear the risk of changes in the market.
Licensees are obligated to maintain sufficient resources to both pay for
and build out their licenses to serve the public.[^25] Jung on Jung had
full notice that the grant of its licenses was conditioned upon Jung on
Jung's full and timely performance of the payment obligations and
compliance with our general installment payment rules. Furthermore, Jung
on Jung's speculation that market conditions will improve is not an
adequate basis for grant of a waiver. Thus, Jung on Jung's alleged
financial difficulties do not constitute unique circumstances sufficient
to justify waiver of our late payment rules.[^26] Accordingly, Jung on
Jung's request is denied.

Accordingly, IT IS ORDERED that, the Waiver Request filed by Jung on
Jung, dated November 27, 2001, and its Supplemental Request, dated
November 30, 2001, are DENIED.

IT IS FURTHER ORDERED that the request dated August 29, 2001 is
DISMISSED as moot.

IT IS FURTHER ORDERED that this letter shall be sent to the Jung on Jung
and its representatives by certified mail, return receipt requested.

This action is taken pursuant to Sections 4(i), 4(j), 303(r), and 309(j)
of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i),
154(j), 303(r), and 309(j), under authority delegated pursuant to
Section 0.331 of the Commission's rules.[^27]

Sincerely,

Margaret W. Wiener

Chief, Auctions and Industry Analysis Division

Wireless Telecommunications Bureau

cc: Jung on Jung, 240-72 67^th^ Ave., 2^nd^ Floor, Douglaston, NY 11362

Mr. Jeffrey Craven, 2550 M Street, NW, Washington, DC 20037

[^1]: Letter from Jung on Jung, to Susan A. Donahue, Chief, Revenues &
    Receivables Operation Group, Office of the Managing Director,
    Federal Communications Commission, dated November 27, 2001 ("Waiver
    Request")(letter requesting extension of its installment payment
    deadline obligations); Letter from Jung on Jung, to Susan A.
    Donahue, Chief, Revenues & Receivables Operation Group, Office of
    the Managing Director, Federal Communications Commission, dated
    November 30, 2001 ("Supplemental Request")(additional letter
    requesting extension of its installment payment deadline
    obligations"); *see also* Letter from Jung on Jung, to Mr. Mark
    Reger, Chief Financial Officer, Federal Communications Commission,
    dated August 29, 2001. The August 29, 2001 letter questioned
    previous payment notices with respect to certain late fees, and to
    the extent necessary, sought waiver of late fees associated with
    past notices. Specifically, Jung on Jung questioned the absence of a
    late fee on its February 16, 2001 payment notice. The issue with
    regard to late fees is irrelevant because Jung on Jung wholly failed
    to make the May 31, 2001 quarterly installment payments within the
    two quarterly grace periods. Accordingly, we dismiss this request
    for clarification as moot.

[^2]: *See Public Notice*, "Winning Bidders in the Auction of
    Authorizations to Provide Multipoint Distribution Service in 493
    Basic Trading Areas," rel. March 29, 1996 ("*March 1996 Public
    Notice*"). Jung on Jung's net high bid for the B010 license was \$
    600,000 and the net high bid for the B488 license was \$716,000.
    *March 1996 Public Notice,* Attachment A.

[^3]: 47 C.F.R. §§ 1.2110(e) and 21.960(b)(2001).

[^4]: 47 C.F.R. §§ 1.2110(e) and 21.960(b)(2001) ("An MTA license issued
    to an eligible small business that elects installment payments will
    be conditioned on the full and timely performance of the license
    holder' quarterly payments.").

[^5]: 47 C.F.R. § 21.960(b)(2001).

[^6]: *Id.*

[^7]: *See* Waiver Request at 1; Supplemental Request at 2 (noting that
    there was a slim likelihood that Jung on Jung would make its May 31,
    2001 quarterly installment payments within the two quarterly grace
    periods).

[^8]: 47 C.F.R. § 1.2110(g)(4)(i)-(ii).

[^9]: 47 C.F.R. § 1.2110(g)(4)(iv); *see also* Wireless
    Telecommunications Bureau Provides Guidance on Grace Period and
    Installment Payment Rules, 13 FCC Rcd 18213, 18214 (1998) *("WTB
    Guidance PN*") ("Any licensee that becomes more than one-hundred
    eighty (180) days delinquent on an installment payment shall be in
    default, and the license shall automatically cancel without further
    action by the Commission. In that event, the debt shall be
    transferred to the Department of Treasury for collection subject to
    the Debt Collection Improvement Act of 1996").

[^10]: Waiver Request at 1; Supplemental Request at 1. Jung on Jung does
    not assert that it lost facilities during the September 11, 2001
    events, rather, Jung on Jung blames its financial problems on its
    business location being within 20 miles of the collapsed World Trade
    Center and the subsequent downturn in the economy.

[^11]: 47 C.F.R. § 1.925.

[^12]: 47 U.S.C. § 309(j).

[^13]: Implementation of Section 309(j) of the Communications Act -
    Competitive Bidding, PP Docket No. 93-253*, Second Report and
    Order*, 9 FCC Rcd. 2348 ¶ 70 (1994) ("*Competitive Bidding Second
    Report and Order"*).

[^14]: Southern Communications Systems, Inc., Request for Limited Rule
    Waiver to Comply with PCS Installment Payment for C Block Licenses
    in the Cleveland, TN BTA, *Memorandum Opinion & Orde*r, 15 FCC Rcd
    25103, 25110-11 at ¶ 15 (2000) ("*Southern Communications MO&*O"),
    *further recon. denied Second Memorandum Opinion and Order,* FCC
    01-298 (rel. Oct. 12, 2001); Licenses of 21st Century Telesis, Inc.,
    For Facilities in the Broadband Personal Communications Service,
    *Memorandum Opinion & Orde*r, 15 FCC Rcd 25113, 25117-18 at ¶ 10
    (2000) ("*21st Century MO&O*"), *aff'd* 21st Century Telesis Joint
    Venture and 21st Century Bidding Corporation v. Federal
    Communications Commission, 318 F.3d 192 (D.C. Cir. 2003); Wireless
    Telecommunications Bureau Will Strictly Enforce Default Payment
    Rules; Bureau to Re-Auction Licenses Quickly, *Public Notic*e, 11
    FCC Rcd 10853 (1996); s*ee WTB Guidance PN*, 13 FCC Rcd at 18214.

[^15]: Amendment of the Commission's Rules Regarding Installment Payment
    Financing of Personal Communications (PCS) Licensees, *Order on
    Reconsideration of the Second Report and Orde*r, 13 FCC Rcd 8345,
    8348 at ¶ 8 (1998); *see also* In the Matter of Amendment of Part 1
    of the Commission's Rules, Competitive Bidding Procedures, WT Docket
    No. 97-82, Allocation of Spectrum Below 5 GHz Transferred from
    Federal Government Use, ET Docket No. 94-32, 4660- 4685 MHz, *Third
    Report and Order and Second Further Notice of Proposed Rule Making,*
    13 FCC Rcd 374, 429, 430 ¶¶ 95-96 (1998); *Southern Communications
    MO&O,* 15 FCC Rcd at 25106, ¶ 7; Letter to Messrs. Stephen Diaz
    Gavin and Paul C. Besozzi, Counsel for U.S. Telemetry Corporation,
    from Margaret Wiener, Chief, Auctions and Industry Analysis
    Division, Wireless Telecommunications Bureau, 17 FCC Rcd 6442, 6446
    (2002) ("*U.S. Telemetry Corporation Letter"*).

[^16]: *See* Letter to Mr. Kurt Schueler, President of New England
    Mobile Communications, Inc., from Margaret Wiener, Chief, Auctions
    and Industry Analysis Division, Wireless Telecommunications Bureau,
    16 FCC Rcd 19355, 19357-58 (2001) ("*New England Mobile Letter*").

[^17]: Amendment of Part 1 of the Commission's Rules -- Competitive
    Bidding Procedures, Allocation of Spectrum Below 5 GHz Transferred
    from Federal Government Use, 4660-4685 MHz, WT Docket 97-82, *Third
    Report and Order and Second Further Notice of Proposed Rulemaking,*
    13 FCC Rcd 374, 439-440, ¶ 110 (1997) ("*Part 1 Third Report and
    Order*"); *see also Southern Communications MO&O,* 15 FCC Rcd at
    25110, ¶ 15; *U.S. Telemetry Corporation Letter*, 17 FCC Rcd at
    6446.

[^18]: Amendment of Part 1 of the Commission's Rules -- Competitive
    Bidding Procedures, *Order on Reconsideration of the Third Report
    and Order, Fifth Report and Order, and Fourth Further Notice of
    Proposed Rule Making,* 15 FCC Rcd 15293, 15304-05, ¶ 19 (2000)
    ("*Part 1 Order on Recon of Third Report and Order*"); *Part 1 Third
    Report and Order,* 13 FCC Rcd at 440, ¶ 110; *see also U.S.
    Telemetry Corporation Letter*, 17 FCC Rcd at 6446.

[^19]: Amendment of the Commission's Rules Regarding Installment
    Financing for Personal Communications Services ("PCS") Licensees,
    *Order on Reconsideration of the Second Report and Order,* 13 FCC
    Rcd 8345, 8354 at ¶ 24 (1997) ("No matter what deadline we
    establish, it is inevitable that some licensees will seek more time
    to pay."); *see also Southern Communications MO&O*, 15 FCC Rcd at
    25110, ¶ 15; *New England Mobile Letter*, 16 FCC Rcd at 19357-58
    (noting that the Commission's payment rules cannot accommodate every
    business plan).

[^20]: *Southern Communications MO&O,* 15 FCC Rcd at 25111, ¶ 15; *21st
    Century MO&O*, 15 FCC Rcd at 25117-18, ¶ 10; *New England Mobile
    Letter*, 16 FCC Rcd at 19357-58; *U.S. Telemetry Corporation
    Letter*, 17 FCC Rcd at 6446-47.

[^21]: *See supra* notes 13 &14.

[^22]: Waiver Request at 1.

[^23]: ^?^ Waiver Request at 1*;* Supplemental Request at 2.

[^24]: *New England Mobile*, 16 FCC Rcd at 19358 (holding that a 218-219
    MHz licensee's inability to raise sufficient capital to build out
    and pay for licenses does not justify waiver of the payment rules
    particularly when the licensee assumed such risks in electing the
    resumption option); *U.S. Telemetry Corporation Letter*, 17 FCC Rcd
    at 6447(holding that a 218-219 MHz licensee's contention that a
    decline in the financial markets decreased its ability to fund the
    operation and development of its system and to make installment
    payments does not justify waiver of the payment rules since the
    licensee accepted the risk in acquiring the licenses); *see also
    Southern Communication MO&O,* 15 FCC Rcd at 25107, ¶ 10 (holding
    that a failure to appropriately manage business arrangements does
    not justify waiver of the automatic cancellation rule).

[^25]: *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, 22072, ¶ 4 (1998) ("The
    challenge of raising capital to finance ... licenses exists in
    varying degrees for all licensees and does not constitute 'unique
    facts and circumstances.' "), *petition for recon. denied*, 14 FCC
    Rcd 6080 (1999*), aff'd*., *SouthEast Telephone v. FCC*, No.
    99-1164, 1999 WL 1215855 (D.C. Cir. Nov. 24, 1999).

[^26]: *See Southern Communications MO&O*, 15 FCC Rcd at 25107, ¶ 10
    (holding that a failure to appropriately manage business
    arrangements does not justify waiver of the automatic cancellation
    rule); *U.S. Telemetry Corporation Letter*, 17 FCC Rcd at 6447.

[^27]: ^?^ 47 C.F.R. § 0.331.