Federal Communications Commission

Washington, D.C. 20554

# February 14, 2001

# 

# 

#  **DA 01-385**

Fred D. Middleton, Jr.

President

P.A.W., Inc.

526 Superior Avenue, East

#620 The Leader Building

Cleveland, Ohio 44144-1900

## Re: [Eligibility Status of P.A.W., Inc. for the 218-219 MHz Service Restructuring Plan]{.underline}

Dear Mr. Middleton:

This letter responds to your correspondence on behalf of P.A.W., Inc.
("P.A.W.")[^1] requesting reconsideration of the Auctions Finance and
Market Analysis Branch ("Branch") determination[^2] that P.A.W. is
ineligible to participate in the restructuring plan adopted in the
Commission's *218-219 MHz Order*.[^3] P.A.W. contends that it complied
with Commission regulations for payments and grace period requests, and
therefore is entitled to participate in the Commission restructuring
plan.[^4] As such, P.A.W. asserts that its failure to make any
installment payments should not have resulted in its default and the
automatic cancellation of its licenses[^5]

pursuant to Section 1.2110 of the Federal Communication Commission\'s
("Commission") rules.[^6] Thus, P.A.W. contends that it should be
eligible to participate in the 218-219 MHz Service restructuring plan.
For the reasons set forth below, we deny P.A.W.'s request.[^7]

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

On September 10, 1999, the Commission issued the *218-219 MHz* *Order*,
which modified the regulations governing the licensing of the 218-219
MHz Service (formerly known as IVDS) to maximize the efficient and
effective use of the band.[^8] The *218-219 MHz Order*, among other
measures, modified service and technical rules for the band and extended
the license term from five to ten years.[^9] The *218-219 MHz Order*
also announced the Commission's decision to adopt a financial
restructuring plan for "Eligible Licensees." Eligible Licensees are
licensees that: (i) were current in installment payments as of March 16,
1998; (ii) were less than ninety days delinquent on the last payment due
before March 16, 1998; or (iii) had properly filed grace period requests
under the former installment payment rules.[^10] "Ineligible Entities"
are former licensees that made second down payments and: (i) made some
installment payments, but were not current in their installment payments
as of March 16, 1998, and did not have a grace period request on file in
conformance with the former rules; or (ii) entities that never made any
installment payments and did not have a timely filed grace period
request on file.[^11] Ineligible Entities are not entitled to
participate in the 218-219 MHz Service restructuring plan as their
licenses cancelled automatically.[^12] However, Ineligible Entities will
be granted debt forgiveness for any outstanding balances owed and will
be refunded their previously paid installment payments.[^13]

In January 2000, in accordance with the rules set forth in the *218-219
MHz Order*, current and former 218-219 MHz licensees were notified of
their eligibility status with regard to the restructuring plan. P.A.W.
was informed that it was an Ineligible Entity.[^14] P.A.W. did not meet
the eligibility criteria for participation in the 218-219 MHz Service
restructuring plan because it never made an installment payment on any
of its licenses, and it did not file a timely grace period request.

Upon notification of its ineligibility, P.A.W. sought reconsideration of
the Branch's decision. In its petition, P.A.W. contends that it had
until January 1997, approximately 2 years after grant of its licenses,
to file a grace period request.[^15] In support of its contention,
P.A.W. relies on a document regarding the 218-219 MHz service that
appears to be a newsletter produced by a third party, Don Lounibos, who
was not a government employee. In addition, P.A.W. relies upon alleged
conversations with Commission staff.[^16]

### 2. Discussion 

P.A.W.'s petition fails to demonstrate that it is eligible to
participate in the 218-219 MHz Service restructuring plan. P.A.W. failed
to make a single installment payment on its licenses.[^17] P.A.W.'s
first installment payment was due on January 5, 1996.[^18] The
Commission\'s rules in effect at that time provided that any licensee
whose installment payment was more than ninety days past due was in
default, unless the licensee properly filed a grace period request.[^19]
Accordingly, in order to avoid automatic cancellation of its licenses,
P.A.W. should have filed a grace period request no later than April 4,
1996.[^20] P.A.W. does not even assert that it met this deadline.
Consequently, P.A.W. went into default and its licenses cancelled
automatically. In its

petition, P.A.W. fails to present any facts that establish it met the
criteria to be an Eligible Licensee. Further, its argument that it had
until January 1997 to file a grace period request is legally and
factually flawed.

P.A.W.'s contention that it had until January 1997 to file a grace
period request is unsupported. The Commission, in the *1995 IVDS Omnibus
Order,* and the Bureau in the *IVDS Grace Period PN*, cautioned
licensees that, in accordance with Section 1.2110(e)(4)(ii)[^21] of our
Rules, if winning bidders individually required financial assistance,
they should request a three- or six-month grace period during the first
ninety days following any missed installment payments.[^22] The Bureau
further cautioned licensees that if a licensee failed to make timely
payments the license would be in default if a grace period request had
not been filed.[^23] The Commission's rules in effect at that time
provided for a 90-day non-delinquency period.[^24] Any licensee whose
installment payment was more than ninety days past due was in default,
unless the licensee properly filed a grace period request.[^25]
Licensees with properly filed grace period requests would not be held in
default during the pendency of their requests and the interest accruing
would be amortized by adding it to the other interest payments over the
remaining term of the license.[^26] Upon expiration of any grace period
without successful resumption of payment, or upon default with no such
request submitted, the license would cancel automatically.[^27]

In light of the ample notice given to licensees regarding the grace
period rules, P.A.W. has failed to support its contention that it had
until January of 1997 to file a grace period request. Neither the
newsletter attached to the petition, nor the purported conversations
P.A.W. personnel had with Commission staff change the obligations of a
licensee or the effect of the Commission's rules. The statements of a
third party in the newsletter attached to P.A.W.'s petition do not bind
the Commission. Accordingly, the newsletter does not support P.A.W.'s
contention that it had until January 1997 to file a grace period
request. Further, it appears that this newsletter was providing advice
to entities relating to a March 1997 installment payment and not the
January 5, 1996 installment payment missed by P.A.W. Finally, because
the newsletter is dated "February/March 1997," P.A.W. cannot contend
that, prior to January 1997, it relied upon the newsletter to determine
the date by which it must file a grace period request.

P.A.W. also alleges in its affidavit that it held telephone
conversations with Commission staff that purportedly led P.A.W. to
conclude that the grace period filing deadline was in January 1997.[^28]
P.A.W. does not offer any details regarding the purported conversation.
Even assuming such phone conversations occurred, it would not change the
result here because the Commission would not be bound by erroneous
advice given by a staff member.[^29] This is especially true here as the
Commission repeatedly indicated to licensees the consequence of failing
to make timely payments.[^30]

Finally, in its Petition, P.A.W. notes that it filed for Chapter 11
bankruptcy in U.S. Bankruptcy Court, Northern District of Ohio, on
February 28, 1996.[^31] The bankruptcy court dismissed P.A.W.'s petition
on December 3, 1996.[^32] Although P.A.W. did not argue that the
bankruptcy should be taken into consideration here, we note that filing
for bankruptcy did not relieve P.A.W. from its obligation to make
installment payments, or to file a request for a grace period, if it was
experiencing financial difficulty.[^33]

**3. [Conclusion]{.underline}**

For the reasons detailed above, we find that P.A.W. has not timely filed
a grace period request with the Commission. Nor does P.A.W. otherwise
meet the requirements for "Eligible Licensee" status for participation
in the 218-219 MHz Service restructuring plan. Accordingly, P.A.W.'s
petition for reconsideration of the Branch's decision regarding P.A.W.'s
eligibility to participate in the 218-219 MHz Service restructuring plan
is DENIED.

This action is taken pursuant to sections 1, 4(i), 4(j), and 303(r) of
the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i),
154(j), 303(r), and the authority delegated pursuant to section 0.331 of
the Commission's Rules, 47 C.F.R. § 0.331.

> Sincerely,

Margaret Wiener

Chief

Auctions and Industry Analysis Division

Wireless Telecommunications Bureau

[^1]: Petition to Appeal the Denial of P.A.W., Inc. Eligible in the
    218-219 MHz Restructure Plan, dated May 22, 2000 ("P.A.W.
    Petition").

[^2]: Letter to Fred D. Middleton, Jr., P.A.W., Inc., from Rachel Kazan,
    Chief, Auctions Finance and Market Analysis Branch, Wireless
    Telecommunications Bureau, Federal Communications Commission, dated
    January 6, 2000 ("*P.A.W. Ineligibility Letter*"*)*.

[^3]: Amendment of Part 95 of the Commission's Rules to Provide
    Regulatory Flexibility in the 218-219 MHz Service, WT Docket No.
    98-169, *Report and Order and Memorandum Opinion and Order*, FCC
    99-239, WT Docket No. 98-169, RM-8951, 15 FCC Rcd 1497 (1999)
    ("*218-219 MHz Order"*); *see* In the Matter of Amendment of Part 95
    of the Commission's Rules to Provide Regulatory Flexibility in the
    218-219 MHz Service, *Second Order on Reconsideration of the Report
    and Order and Memorandum Opinion and Order*, WT Docket No. 98-169,
    FCC No. 00-411 (rel. December 13, 2000) ("*Second Order on
    Reconsideration*").

[^4]: P.A.W. Petition.

[^5]: In Auction No. 2 held July 28-29, 1994, P.A.W. was the winning
    bidder for five licenses in the 218-219 MHz Service for the
    following Metropolitan Statistical Areas ("MSAs") and frequency
    blocks: 143 (Johnstown, PA) Block B; 145 (Hamilton-Middletown, OH)
    Block B; 225 (Altoona, PA) Block B; 231 (Mansfield, OH) Block B; and
    282 (Bloomington, IN) Block A. Announcing High Bidders for 594
    Interactive Video and Data Service (IVDS) Licenses, *Public Notice*,
    Mimeo No. 44160, rel. Aug. 2, 1994.

[^6]: 47 C.F. R. § 1.2110 (1994).

[^7]: *See also* Letter to J. Jeffrey Craven, Esq. Patton Boggs, L.L.P.,
    from Margaret Wiener, Chief, Auctions and Industry Analysis
    Division, Wireless Telecommunications Bureau, Federal Communications
    Commission, DA 01-170, dated January 23, 2001 ("*IVIDCO*").

[^8]: *218-219 MHz Order*, 15 FCC Rcd at 1506 ¶ 15.

[^9]: *Id*. at 1517 ¶ 31.

[^10]: *Id*. at 1520 ¶ 37.

[^11]: *Id*. at 1520 ¶ 38.

[^12]: *Id.* at 1518 ¶ 33 (citing 47 C.F.R. § 1.2110 (1994)); *see
    also,* *In re NextWave Personal Communications, Inc.,* 200 F.3d 43
    (2d Cir. 1999*), mandamus granted*, *In re Federal Communications
    Comm'n,* 217 F.3d 125 (2d Cir. 2000); *Mountain Solutions v. FCC*,
    197 F.3d 512 (D.C. Cir. 1999) (upholding the Commission's decision,
    in a PCS licensing matter, to deny a waiver of its rule requiring a
    winning bidder to timely submit both its first and second down
    payment before the Commission will grant a license); In the Matter
    of Public Notice DA 00-49 Auction of C and F Block Broadband PCS
    Licenses, NextWave Personal Communications, Inc., and NextWave Power
    Partners, Inc., Petition for Reconsideration, In re Settlement
    Request Pursuant to DA 99-745 For Various Broadband PCS C Block
    Licenses, *Order on Reconsideration*, FCC 00-335, 15 FCC Rcd 17,500
    (2000) ("*NextWave Order on Reconsideration")*.

[^13]: *218-219 MHz Order*, 15 FCC Rcd at 1520 ¶ 38; Implementation
    Procedures For The Report And Order And Memorandum Opinion And Order
    Addressing the 218-219 MHz Services (formerly known as Interactive
    Video And Data Services (IVDS)), *Public Notice*, DA 00-900, 15 FCC
    Rcd 7329 (2000) (WTB) (noting that the Department of Justice
    authorized the reduction of debt owed to the United States in
    accordance with the debt relief provisions of the *218-219* *MHz
    Order*); *see also IVIDCO*.

[^14]: *P.A.W. Ineligibility Letter*.

[^15]: Affidavit of Fred D. Middleton, Jr., May 22, 2000 at ¶ 6 ("P.A.W.
    Petition Attachment"). P.A.W. does not indicate a specific date in
    the month of January 1997.

[^16]: *Id*. at ¶ 6; P.A.W. Petition at Exhibit B. P.A.W. does not
    provide a date when the purported conversations with Commission
    staff were held.

[^17]: *P.A.W. Ineligibility Letter.*

[^18]: *218-219* *MHz Order* 15 FCC Rcd at 1504 ¶ 11; *Second Order on
    Reconsideration* at ¶ 8.

[^19]: ^?^ 47 C.F.R. § 1.2110(e)(4)(ii) and (iii) (1994). The Commission
    amended the installment payment rules in 1998 to provide for two
    automatic grace periods of ninety days, subject to late fees.
    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, *Third Report and Order and
    Second Further Notice of Proposed Rule Making,*, 13 FCC Rcd 374 at
    436 (1997) (*"Part 1 Third Report and Order")*; *see also* 47 C.F.R.
    § 1.2110(f)(4)(ii)(iii) (1998). The 1998 amendment of the
    installment payment rules did not affect pending grace period
    requests filed by 218-219 MHz Service licensees. *Part 1 Third
    Report and Order*, 13 FCC. Rcd at 441-442 ¶ 113; Amendment of Part
    95 of the Commission's Rules to Provide Regulatory Flexibility in
    the 218-219 MHz Service WT Docket No. 98-169, RM-8951*, Order,
    Memorandum Opinion and Order and Notice of Proposed Rulemaking*, FCC
    No. 98-228, 13 FCC Rcd 19064 at 19072 ¶ 30 (1998*) ("218-219 MHz
    Flex NPRM*"). More recently, the Commission further modified these
    rules. 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*, WT No. 97-82, FCC No. 00-274 (rel. August 14,
    2000) (\"*Order on Reconsideration of the Part 1 Third Report and
    Order*\").

[^20]: 47 C.F.R. § 1.2110(e)(4)(ii) and (iii) (1994).

[^21]: 47 C.F.R. § 1.2110(e)(4)(ii) (1994).

[^22]: ^?^ Interactive Video and Data Service (IVDS) Licensees, Various
    Requests by Auction Winners, *Order*, FCC No. 95-479, 11 FCC Rcd
    1282 at 1285 ¶ 19 (1995) ("*1995 IVDS Omnibus Order"*); Wireless
    Telecommunications Bureau Staff Clarifies "Grace Period" Rule for
    IVDS "Auction" Licensees Paying By Installment Payments, *Public
    Notice*, DA 95-1617, 10 FCC Rcd 10724 (1995) (WTB) ("*IVDS Grace
    Period PN*"); *see also* Wireless Telecommunications Bureau Staff
    Responds to Questions About the Broadband PCS C Block Auction,
    *Public Notice*, Mimeo 54270 (1995) (clarified grace period rule in
    the context of Personal Communications Services auction) ("*PCS
    Grace Period PN*").

[^23]: *IVDS Grace Period PN*, 10 FCC Rcd 10724 ("IVDS licensees that
    elect to pay for their license in installments will have their
    license conditioned upon full and timely performance of all
    installment payment obligations. The Commission's rules provide that
    a licensee will be deemed in default on its installment payments if
    it is more than 90 days delinquent in making a payment to the
    government.").

[^24]: ^?^ 47 C.F.R. § 1.2110(e)(4)(ii) and (iii) (1994).

[^25]: ^?^ *Id*.

[^26]: ^?^ *218-219 MHz Order*, 15 FCC Rcd at 1505 ¶ 12 (*citing* 47
    C.F.R. § 1.2110(e)(4)(ii)(iii) (1994)).

[^27]: ^?^ *Id.; see also* *IVDS Grace Period PN*, 10 FCC Rcd 10724;
    *PCS Grace Period PN*; *IVIDCO.*

[^28]: P.A.W. Petition Attachment at ¶ 6.

[^29]: *Office of Personnel Management v. Richmond*, 497 U.S. 1046
    (1990) (there can be no estoppel against the Federal Government
    where an employee has given erroneous oral or written advice
    contrary to statute); In the Matter of Request for Review of the
    Decision of the Universal Service Administrator by Merced Union High
    School District, Merced, California, *Order*, DA 00-1887, ¶ 7 (rel.
    Aug. 18, 2000) (CCB) (applying *Office of Personnel Management v.
    Richmond* to the Commission's rules and procedures); In re Mary Ann
    Salvatoriello, *Memorandum Opinion and Order*, 6 FCC Rcd 4705,
    4707-08, ¶ 22 (1991) (applying *Office of Personnel Management v.
    Richmond* to the Commission's rules and procedures).

[^30]: *1995 IVDS Omnibus Order*, 11 FCC Rcd 1282 at 1285 ¶ 19; *IVDS
    Grace Period PN,* 10 FCC Rcd 10724; *Second Order on
    Reconsideration* at ¶ 28.

[^31]: P.A.W. Petition Attachment at ¶ 2; *In re* *P.A.W., Inc.*, No.
    96-10711 (Bankr. N.D. Ohio filed Dec. 3, 1996).

[^32]: *In re* *P.A.W., Inc.*, No. 96-10711 (Bankr. N.D. Ohio filed Dec.
    3, 1996).

[^33]: *See* *In re NextWave Personal Communications, Inc.,* 200 F.3d 43
    (2d Cir. 1999*), mandamus granted*, *In re Federal Communications
    Comm'n,* 217 F.3d 125 (2d Cir. 2000)*; see also* *NextWave Order on
    Reconsideration*.