> DA 01-2542 October 30, 2001

## Mr. Kurt Schueler

#### President 

New England Mobile Communications, Inc.

37 Ridgewood Drive

Burlington, Vermont 05401

Dear Mr. Schueler:

This letter responds to your July 12, 2001 letter on behalf of New
England Mobile Communications, Inc. ("New England").[^1] New England
requests a waiver of the interest associated with its installment
payment obligations on a 218-219 MHz Service license, MSA 248A,
Burlington, Vermont. For the reasons set forth below, we deny New
England's request for waiver.

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

On September 10, 1999, the Commission issued the *218-219 MHz* *Order*,
which, among other measures, modified service and technical rules for
the band, extended the license term from five to ten years, and adopted
a financial restructuring plan for "Eligible Licensees." [^2] Pursuant
to the restructuring plan, Eligible Licensees were required to make
elections by January 31, 2001[^3] on a per license basis, choosing among
three options: (i) Reamortization and Resumption of Payments; (ii)
Amnesty; or (iii) Prepayment (Prepayment-Retain or
Prepayment-Return).[^4] If an Eligible Licensee elected Reamortization
and Resumption of Payments ("the resumption option"), the licensee
retained one or more of its licenses and remained in the installment
payment plan.[^5] Under the resumption option, the existing loans were
"reamortized" over the remaining term of the license, *i.e.*, the
Commission capitalized all accrued and unpaid interest into the
principal amount as of the election date, taking into account the
remedial bidding credit granted to winning bidders that met the small
business qualifications for the auction.[^6] New England, an Eligible
Licensee,[^7] participated in the restructuring plan and elected the
resumption option.[^8] For those Eligible Licensees who elected the
resumption option, including New England, the first quarterly
installment payment was due on April 30, 2001.[^9] The Commission's late
payment rules for installment payments allow licensees to use two
quarterly grace periods, subject to late payment fees, if the licensees
require additional time to submit payment.[^10] Therefore, in accordance
with the Commission's rules, any such licensee who fails to make the
April 30, 2001 quarterly installment payment with the associated late
fees within the two quarterly grace periods, *i.e.*, by October 31,
2001, will be in default, its license(s) will automatically cancel, and
it will be subject to debt collection procedures.[^11]

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

New England requests a waiver of the interest associated with its
installment payment obligations to the Commission on the basis that it
cannot raise sufficient capital to build out and pay the Commission for
the license.[^12] In essence, it appears that New England seeks to only
pay the principal amount, *i.e*., its winning bid without the associated
interest.[^13] In return for the Commission's waiver of interest,
*i.e.*, the amount previously capitalized into principal and future
interest, New England proposes to use the resulting savings to build out
and pay the entire principal balance owed on the license.[^14] New
England asserts that such an option would encourage licensees to build
out their systems and satisfy the Commission's objective of making the
service available to the public while lowering the possibility that
licensees will file for bankruptcy.[^15]

To obtain a waiver of the Commission's rules, New England 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 New England has no reasonable
alternative.[^16] For the reasons discussed below, we find that New
England's waiver request fails to meet the Commission's standard for
granting a waiver.

In adopting the restructuring plan, the Commission balanced the need to
serve the public interest by affording relief to licensees with its duty
to preserve the integrity of the auction process.[^17] The Commission
recognized that the options adopted might not suit every licensee's
particular business plan.[^18] The Commission also found that the
restructuring plan provided licensees with sufficient time to make an
informed decision as to which option to elect.[^19] With respect to the
resumption option, the Commission specifically found that it, coupled
with the grace period rules, would provide specific relief for licensees
that wished to retain their licenses but were experiencing financial
hardship.[^20] Requiring that licensees fulfill their payment
obligations under the resumption option and thereby demonstrate their
ability to pay as a condition to holding licenses ensures a fair and
efficient licensing process.[^21] It is also fair to participants in the
original auction and to those who made elections based upon the
restructuring options, as contained in the *218-219 MHz Order*, and
fosters the promotion of economic opportunity and competition in the
marketplace.[^22] Accordingly, New England has not demonstrated that the
underlying purpose of the rule would not be served or would be
frustrated by its application in this particular case.

New England's request, which is in essence an untimely request to
reconsider the payment restructuring options, was submitted on July 12,
2001, significantly past the adoption of the *218-219 MHz Order*,[^23]
the Election Date, [^24] and the first quarterly installment payment due
date.[^25] New England had the opportunity to return its 218-219 MHz
license and receive amnesty on the outstanding amount of its debt
obligation. However, with full notice of the elements of the
Commission's restructuring options, New England elected resumption on
January 24, 2001[^26] and is now precluded from opting out of its
election.[^27] If New England subsequently realized that it, in fact,
lacked sufficient resources to both pay for and build out its license,
New England bore that risk when it made its election. These are not
unique circumstances sufficient to justify waiver of our late payment
rules.[^28] Accordingly, New England's request is denied.

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.[^29]

Sincerely,

Margaret W. Wiener

Chief, Auctions and Industry Analysis Division

Wireless Telecommunications Bureau

[^1]: Letter to Ms. Magalie Roman Salas, Secretary, Office of the
    Secretary, Federal Communications Commission, from Mr. Kurt
    Schueler, President, New England Mobile Communications, Inc. (July
    12, 2001) ("Request").

[^2]: In the Matter of Amendment of Part 95 of the Commission's Rules to
    Provide Regulatory Flexibility in the 218-219 MHz Service, *Report
    and Order and Memorandum Opinion and Order*, FCC 99-239, 15 FCC Rcd
    1497, 1506, ¶ 15, 1517, ¶ 31 (1999) ("*218-219 MHz Order"*).
    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. *218-219 MHz Order*, 15 FCC Rcd at
    1520, ¶ 37.

[^3]: Wireless Telecommunications Bureau Announces Revised Election Date
    (January 31, 2001) and Amended Eligibility List for 218-219 MHz
    Service, *Public Notice*, DA 01-9, 16 FCC Rcd 5937 (2001)
    ("*Election Public Notice*").

[^4]: *Id.*; *see also 218-219 MHz Order*, 15 FCC Rcd at 1518, ¶ 34.

[^5]: *218-219 MHz Order*, 15 FCC Rcd at 1522-25 ¶ 40-45; 47 CFR §
    95.816(b).

[^6]: *218-219 MHz Order*, 15 FCC Rcd at 1524 ¶ 44, 1533-34, ¶¶ 61-63;
    47 CFR § 95.816(b) (Allowing Eligible Licensees that elect
    resumption to continue to participate in the installment payment
    program).

[^7]: ^?^ *Election Public Notice*, 16 FCC Rcd at 5943, Attachment A,
    List of Eligible Licensees.

[^8]: New England's Election to Reamortization/Resumption of Payments
    under the installment payment plan, dated January 24, 2001;
    *Accepted Elections PN*, 16 FCC Rcd at 5908, Attachment A, List of
    Accepted Elections.

[^9]: Wireless Telecommunications Bureau Announces the Elections for the
    218-219 MHz Service, *Public Notice*, DA 01-583, 16 FCC Rcd 5901,
    5902 (2001)("*Accepted Elections PN*").

[^10]: 47 C.F.R. § 1.2110(g)(4)(i)-(ii).

[^11]: 47 C.F.R. § 1.2110(g)(4)(iv); s*ee also* *Accepted Elections PN*,
    16 FCC Rcd at 5902.

[^12]: Request at 2.

[^13]: *Id.* We note that it is not clear if New England seeks waiver of
    all interest on the original principal amount, or all interest
    associated with the reamortized principal. Because we would deny
    either request, the precise nature of the request is irrelevant.

[^14]: *Id*.

[^15]: *Id.*

[^16]: 47 C.F.R. § 1.925.

[^17]: *218-219 MHz Order*, 15 FCC Rcd at 1499, ¶ 2 and 1520, ¶¶ 37-38;
    *see* 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, 15 FCC Rcd 25020, 25027, ¶ 12 (2000)
    ("*Second Order on Recon*").

[^18]: *Second Order on Recon*, 15 FCC Rcd at 25029, ¶ 19 (the
    Commission discussed the purpose and impact of the restructuring
    plan in rejecting a disaggregation option).

[^19]: *218-219 MHz Order*, 15 FCC Rcd at 1524, ¶ 44.

[^20]: *218-219 MHz Order*, 15 FCC Rcd at 1518-19, ¶ 34 and 1523, ¶ 43
    (citing widespread support from commenters, the Commission stated
    that adoption of the resumption option would best serve the public
    interest). Notably, the Commission rejected an alternative
    resumption option that would have provided for an interest-free
    repayment plan. *218-219 MHz Order*, 15 FCC Rcd at 1523, ¶ 42
    (citing CRSPI Reply Comments at 2). A subsequent challenge to the
    accrual of interest during the suspension period was also rejected
    by the Commission on the basis that the Commission, in relieving the
    licensees of one consequence of failing to make timely payment
    (*i.e*., suspension of the automatic cancellation rules), did not
    intend to also relieve the licensees of all the consequences of
    failing to make payments. *Second Order on Recon,* 15 FCC Rcd at
    25037-38, ¶¶ 38-39.

[^21]: *See* Letter to E. Ashton Johnston, Esq., Counsel for Vista
    Communications, Inc., from Margaret Wiener, Chief, Auctions and
    Industry Analysis Division, Wireless Telecommunications Bureau, DA
    01-1413, 16 FCC Rcd. 12430 (2001) ("*Vista*"); Letter to J. Jeffrey
    Craven, Esq., Counsel for IVIDCO, L.L.C., from Margaret Wiener,
    Chief, Auctions and Industry Analysis Division, Wireless
    Telecommunications Bureau, DA 01-170, 16 FCC Rcd. 7236 (2001)
    ("*Ividco*"); In the Matter of Licenses of 21st Century Telesis,
    Inc. for Facilities in the Broadband Personal Communications
    Services, Petition for Reconsideration, *Memorandum Opinion and
    Order*, FCC 00-434, 15 FCC Rcd 25,113 (2000); In the Matter of
    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 & Order*, FCC 00-433,
    15 FCC Rcd 25103, 25106, ¶ 7 (2000) ("*Southern Communications
    MO&O*"); *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)*.*

[^22]: *See Vista,* 16 FCC Rcd. 12430; *Ividco*, 16 FCC Rcd. 7236;
    Southern Communications MO&O, 15 FCC Rcd at 25106, ¶ 7.

[^23]: The *218-219 MHz Order* was adopted on September 7, 1999.
    *218-219 MHz Order*, 15 FCC Rcd at 1497. In the *218-219 MHz NPRM*,
    the Commission sought comment on its proposal to permit
    reamortization of principal and interest installment payments for
    non-defaulted 218-219 MHz licenses. Amendment of Part 95 of the
    Commission\'s Rules to Provide Regulatory Flexibility in the 218-219
    MHz Service and Amendment of Part 95 of the Commission\'s Rules to
    Allow Interactive Video and Data Service Licensees to Provide Mobile
    Services*, Order, Memorandum Opinion and Order, and Notice of
    Proposed Rulemaking*, 13 FCC Rcd 19064, 19085-87, ¶¶ 37-39 (1998)
    ("*218-219 MHz NPRM"*). New England had the opportunity to
    participate in the restructuring of the service by commenting on the
    reamortization of principal and interest payments but opted not to
    do so. *See* *218-219 MHz Order*, 15 FCC Rcd at 1565-66, Appendix A,
    Lists of Commenters and Reply Commenters; *see also*, *Second Order
    on Recon*, 15 FCC Rcd at 25045, Appendix A, List of Petitioners.

[^24]: Eligible Licensees were required to make their elections by
    January 31, 2001. *Election Public Notice*, 16 FCC Rcd at 5938.

[^25]: As stated previously, the first quarterly installment payment was
    due on April 30, 2001.

[^26]: New England's Election for Reamortization/Resumption of Payments
    under the installment payment plan, dated January 24, 2001.

[^27]: *See* *Election Public Notice*, 16 FCC Rcd at 5937-38
    ("Accordingly, Eligible Licensees must make their elections by 7
    p.m., Wednesday, January 31, 2001. **NO ELECTIONS OR CHANGES TO
    ELECTIONS WILL BE ACCEPTED AFTER 7 P.M. ON THE ELECTION DATE.**")
    (no emphasis added).

[^28]: *See also 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); BDPCS, Inc., Emergency Petition for Waiver of Section
    24.711(a)(2) of the Commission's Rules, *Memorandum Opinion and
    Order*, 12 FCC Rcd 3230, 3235, ¶ 8 (1997) (holding that the failure
    of a third party to perform its contractual obligation does not
    constitute a special circumstance justifying a waiver of the down
    payment default rule).

[^29]: ^?^ 47 C.F.R. § 0.331.