# Presentation: 934578

## Overview ofDue Diligenceand Post-Auction Process

**Overview of****Due Diligence****and Post-Auction Process**

**Michael E Connelly**
**Attorney Advisor**
**Mobility Division**
**Wireless Telecommunications Bureau**
**December 3, 2003**

***900 MHz Specialized Mobile Radio***
***Auction No. 55 Seminar***

**Notes:**
Good morning everyone, and welcome.

I’ll be speaking on some of the legal issues associated with Auction 55 - Due Diligence and the Post-auction process.

## Disclaimer

- Nothing herein is intended to supersede any provision of the Commission's rules or public notices.  These slides should not be used as a substitute for a prospective applicant's review of the Commission's relevant orders, rules, and public notices.  Prospective applicants must familiarize themselves thoroughly and remain current with the Commission's rules relating to 900 MHz Specialized Mobile Radio (“SMR”) Service, rules relating to application and auction procedures, and the procedures, terms and conditions contained in the Auction No. 55 public notices.

## Introduction

- Due diligence: What is required before you place your bid.
- Post-auction process: What is required after you win your license.

**Notes:**
This presentation is divided in two parts:

 Due diligence: What is required before you place your bid; and 
 Post-auction process: What is required after you win your license. 

## Due Diligence

- Information to aid potential bidders with their research and evaluation of the radio spectrum, in this instance, 900 MHz SMR
- Presents issues that should be considered by potential bidders when formulating their business strategies
- Due Diligence information contained in the Procedures PN
- Auction No. 55 Procedures Public Notice, released October 17, 2003, DA 03-3235
- See Auctions web site: http://wireless.fcc.gov/auctions/55/

**Notes:**
Due Diligence is information to aid potential bidders with their research and evaluation of the radio spectrum

Certain issues need to be considered by potential bidders when formulating their business strategies

Just about everything I will cover is contained in the Procedures PN in your packet of materials. The PN is also available on the Auctions website. 

## Pending Matters

- Certain matters relating to licenses available at auction may be pending or subject to administrative or judicial review
- Such matters may include, *e.g.,* waiver requests, petitions to deny, petitions for reconsideration, applications for review
- Some matters may not be resolved before the commencement of the auction

**Notes:**
	One aspect of due diligence is researching pending matters ...
	As potential bidders, you should be aware of certain pending matters relating to Auction 55 licenses
	There may be administrative or judicial proceedings that are pending or subject to further review
	Such matters may include, for example, waiver requests, petitions for reconsideration, and applications for review
	Some matters may not be resolved before the auction begins

## Pending Matters, continued

- Resolution of these matters could affect the availability of spectrum purchased at auction and must be considered by potential bidders
- Make periodic, and continuing, inquiries to the Office of the Secretary and other available resources

**Notes:**
Resolution of these matters could affect the availability of spectrum purchased at auction and must be considered by potential bidders

## Pending Matters, continued

- Read the Procedures Public Notice
- The Commission makes no representations or guarantees that listed matters are only pending matters that could affect availability of spectrum

**Notes:**
I would encourage you to carefully review your Procedures PN
Note: The Commission makes no representations or guarantees that listed matters are only pending matters that could affect availability of spectrum

## Do your Due Diligence

- Do your homework
- Research prospective markets and spectrum
- Be familiar with the Commission’s rules and proceedings relating to Narrowband PCS

**Notes:**
So, please –

Do your due diligence, Do your research

And be familiar with the relevant Commission’s rules and proceedings

## It Is Your Responsibility

- As potential bidders, you are solely responsible for identifying associated risks, and investigating and evaluating the degree to which such matters may affect your ability to bid on, otherwise acquire, or make use of licenses available in the auction

**Notes:**
As potential bidders, you are solely responsible for identifying associated risks, and investigating and evaluating the degree to which such matters may affect your ability to bid on, otherwise acquire, or make use of licenses available in the auction

## Database Research

- Information about 900 MHz SMR Service licenses available through the Wireless Telecommunication Bureau’s Universal Licensing System (ULS) database, on the Internet at http://wireless.fcc.gov/uls
- Commission makes no representations or guarantees regarding the accuracy or completeness of its database
- Do not rely solely on database searches because the data relies on third party submissions
- Physically inspect any sites located in, or near, the geographic area for which you plan to bid

**Notes:**
Information about 900 MHz SMR service licenses is available through the Bureau’s Universal Licensing System (ULS)
Later, Gary will discuss how to use ULS for due diligence – check about this w/Gary
For now, I’m just going to talk about the disclaimers –
The Commission makes no representations or guarantees regarding the accuracy or completeness of its database
Do not rely solely on database searches because the data relies on third party submissions
We strongly encourage you, as potential bidders, to physically inspect any sites located in, or near, the geographic area for which you plan to bid

## Due Diligence: Summary

- Information discussed here is in the Procedures Public Notice
- Commission makes no representations or guarantees regarding its due diligence information
- You are solely responsible for identifying the risks involved and for conducting the proper investigation of your prospective markets

**Notes:**
In sum, make sure you do your due diligence

The Commission offers a variety of sources of information, but cannot make any guarantees

Ultimately, you are responsible for doing your due diligence

## Post-Auction Issues:An Overview

- You win your license at auction: What happens next?
- Public Notice released to announce the close of the auction (“Closing PN”)
- Winning bidders file FCC Forms 601 (long form application) and 602 (ownership disclosure form)
- Commission review of long form applications
- Transfer of control and Assignment issues

**Notes:**
Now, the second portion of the general legal overview, Post-auction issues

After you’re the high bidder in Auction 55, there’s still a lot of work to be done before being granted and actually operating that license

In this segment of my presentation, I will discuss

First, The Closing PN

Next, completing the long forms and ownership reports

Then, Commission review of your forms

And finally I will note some TC and AA issues

## Closing PN Released After Auction

- Your Closing PN will walk you through the post-auction process
- Winning bidders are announced, and receive the Closing PN via overnight mail
- Down payments, bid withdrawal payments and/or deposits information is contained in PN
- Detailed instructions for filing Forms 601 and 602
- Application processing information (*e.g.*, pleading cycle) provided
- Contact information listed

**Notes:**
A Public Notice, your Closing PN, will be released after the auction, and this PN will walk you through the post-auction process

In the Closing PN, Winning bidders will be announced, and will receive the Closing PN by overnight mail

Payment and other information is contained in the PN

Detailed instructions for filing Forms 601 and 602 will be in the PN

The pleading cycle information is in the PN

Also, staff contact information will be listed 

## 601 Long Form Application

- Form 601 is due 10 days after release of Closing PN
- 601 long form is the formal application to apply for the licenses won at auction
- Applications must be filed electronically via ULS
- Incomplete or defective applications may be returned
- Failure to timely file will result in default
- Late-filed applications will not be accepted without a showing of good cause

**Notes:**
Your long-form (Form 601) is due 10 days after the release of the Closing PN
601 long form is the formal application to apply for the licenses won at auction
Applications must be filed electronically via ULS
Incomplete or defective applications may be returned
Failure to timely file will result in default (and other penalties)
Late-filed applications will not be accepted without a showing of good cause

## 601 Content Highlights

- 601 long form application includes exhibits
- Use Closing PN as a guide to format the exhibits
- Exhibit A: Ownership is required for all applications; identifies real party-in-interest
- Exhibit C: Designated Entities is required for applicants seeking bidding credits; must provide gross revenues information
- Failure to provide these required exhibits may cause you to be disqualified or to lose your bidding credit
- Tribal lands bidding credit applicants (to be discussed later) should use separate 601 for TLBC markets

**Notes:**
Your long form application must include certain exhibits
Use the Closing PN as your guide

Exhibit A: Ownership is required for all applications; identifies the real party-in-interest
Exhibit C: Designated Entities is required for applicants seeking bidding credits; must provide gross revenues information
Failure to provide required exhibits may cause you to be disqualified or to lose your bidding credit
I’ll be discussing Tribal lands bidding credits a little later, but I will note now that you should use a separate 601 for all of your TLBC markets

## FCC Form 602 Highlights

- Every licensee must comply with the ownership reporting requirements, as set forth §§ 1.913, 1.919, and 1.2112, by the 601 filing deadline
- A 602 must be current and on file by the 601 filing deadline
- Winning bidders without a current 602 already on file must submit a properly completed 602 at the time they submit their long-form applications
- Electronic filing of 602 now mandatory
- Step saver: You can use your 602 as your 601’s Exhibit A by scanning it in as an attachment
- Common mistake:  Using the 602 as your 601’s Exhibit A does not eliminate the need to separately file a 602

**Notes:**
Every licensee must comply with the ownership reporting requirements, as set forth §§ 1.913, 1.919, and 1.2112, by the 601 filing deadline
A 602 must be current and on file by the 601 filing deadline
Winning bidders without a current 602 already on file must submit a properly completed 602 at the time they submit their long-form applications
Electronic filing of 602 now mandatory
Step saver: You can use your 602 as your 601’s Exhibit A by scanning it in as an attachment
Common mistake:  Using the 602 as your 601’s Exhibit A does not eliminate the need to separately file a 602

## Application Processing

- Initial Review of 601 long forms is usually done within approximately 3-4 weeks of Closing PN
- After long form review, Accepted for Filing PN issued
- Pleading cycle established
- After pleading cycle, Ready to Grant PN issued, starting the clock for making your final payments
- Failure to pay may result in disqualification
- Finally, a Grant PN issued
- Process typically takes 3-4 months, but may take longer

**Notes:**
Initial Review of the long forms is usually done within approximately 2-3 weeks after release of the Closing PN

After initial review, an Accepted for Filing PN is issued, which will set a Pleading cycle 

After pleading cycle, Prepared to Grant PN issued, starting the clock for making your final payments

Failure to pay may result in disqualification

Finally, a Grant PN will be issued

Expect the process to take at least 3 months, but maybe longer

## Pleading Cycle

- Pleading cycle set by Accepted for Filing PN
- See § 1.2108 of rules for details
- 10 days for filing petitions to deny (PTDs)
- 5 days after that for filing oppositions to PTDs
- 5 days after that for filing replies to oppositions

**Notes:**
The pleading cycle will be set by the AFF PN

Usually, it will be ...
10 days for filing petitions to deny (PTDs)
5 days after that for filing oppositions to PTDs
5 days after that for filing replies to oppositions

## Transfer of Control and Assignment Issues

*Pro forma* transfers (*e.g.*, reorganizations) are discouraged until after 601 is filed
- Substantial transfers prior to filing 601 may cause disqualification of applicant
- Unjust enrichment payments are required for transfers of licenses which received bidding credits to a transferee who is not eligible for the same bidding credit (based on gross revenues) § 1.2111

**Notes:**
Finally, TC and AA issues

Pro forma transfers (e.g., reorganizations) are discouraged until after your long form is filed
Substantial transfers prior to filing your 601 may cause disqualification of applicant 

Also, if you received bidding credits at auction and want to transfer your license before 5 years after the grant, you are subject to the Commission’s Unjust enrichment rules in sec. 1.2111

If selling to an entity who is not eligible for the same bidding credit as you, you will have to make an Unjust enrichment payment

## 

THE END

Any Questions?
Contact: Evan Baranoff, 202-418-7142, Evan.Baranoff@fcc.gov

- THE END
- Any Questions?
- Contact: Evan Baranoff, 202-418-7142, Evan.Baranoff@fcc.gov

- Due Diligence and Post-auction Process