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 Federal  Communications  Commission  FCC  00-  335 
 Before  the 
 Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 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 


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 File  Nos.  00341CWL96,  et.  al. 


 ORDER  ON  RECONSIDERATION 
 Adopted:  August  31,  2000  Released:  September  6,  2000 
 By  the  Commission:  Commissioner  Furchtgott-  Roth  issuing  a  statement. 
 I.  Introduction 
 1.  We  have  before  us  a  Petition  for  Reconsideration  (  Petition)  filed  by  NextWave  Personal 
 Communications  Inc.  and  NextWave  Power  Partners  Inc.  (collectively,  NextWave).  1  NextWave  requests 
 that  the  Commission  review  the  Wireless  Telecommunications  Bureaus  (  Wireless  Bureau)  public  notice, 
 which  announced  an  auction  of  the  C  and  F  block  Personal  Communications  Service  (  PCS)  spectrum 
 licenses  previously  licensed  to  NextWave.  2  For  the  reasons  set  forth  below,  we  deny  NextWaves  Petition. 
 In  addition,  we  dismiss  Antigone  Communications,  Limited  Partnership  and  PCS  Devco,  Inc.  s 
 (  Antigone/  Devco)  Application  for  Review  and  Settlement  Request  as  moot. 


 II.  Background 
 2.  Section  309(  j)(  4)(  D)  requires  the  Commission,  when  promulgating  auctions  regulations,  to 
 ensure  that  small  businesses  and  other  designated  entities  are  given  the  opportunity  to  participate  in  the 
 provision  of  spectrum-  based  services.  3  In  accordance  with  its  mandate,  the  Commission  created  provisions 


 1  See  Petition  for  Reconsideration  filed  by  NextWave  Personal  Communications  and  NextWave  Power 
 Partners  Inc.  (February  11,  2000)  (  NextWave  Petition).  On  August  11,  21  and  24,  2000,  NextWave  filed  letter 
 supplements  to  its  Petition  which  we  also  address  in  this  order. 


 2  See  Auction  of  C  and  F  Block  Broadband  PCS  Licenses,  Public  Notice,  DA  00-  49,  15  FCC  Rcd  693 
 (2000)  (January  12  th  Public  Notice).  On  June  7,  2000,  the  Wireless  Bureau  released  a  public  notice  postponing 
 the  C  and  F  block  auction  until  November  29,  2000.  See  Auction  of  Licenses  for  C  and  F  Block  Broadband  PCS 
 Spectrum  Postponed  Until  November  29,  2000,  Public  Notice,  DA  00-  1246  (rel.  June  7,  2000). 


 3  See  47  U.  S.  C.    309(  j)(  4)(  D). 
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 in  the  auctions  program  to  promote  participation  by  small  businesses  in  broadband  PCS,  such  as  limiting 
 eligibility  for  the  C  and  F  block  auctions  to  those  with  total  assets  and  revenues  below  a  certain  threshold, 
 and  offering  bidding  credits  and  installment  payment  plans.  4 


 3.  NextWave  was  the  high  bidder  on  95  licenses  in  the  broadband  PCS  C,  D,  E,  and  F  block 
 auctions  that  concluded  in  1996  and  1997.  5  A  petition  to  deny  was  filed  against  NextWaves  C  block 
 license  application  and,  ultimately,  the  Wireless  Bureau  found  NextWave  in  violation  of  the  Commissions 
 foreign  ownership  restrictions.  NextWaves  C  block  licenses  were  conditionally  granted  on  January  3, 
 1997,  however,  subject  to  certain  restructuring  obligations  to  bring  the  company  into  compliance  with  the 
 Commissions  foreign  ownership  rules.  6  Each  of  NextWaves  C  and  F  block  licenses  was  explicitly 
 conditioned  on  full  and  timely  payment  of  all  installments  under  the  Commissions  installment  payment 
 plan,  and  each  license  stated  that  [  f]  ailure  to  comply  with  this  condition  will  result  in  the  automatic 
 cancellation  of  this  authorization.  7  Antigone/  Devco  filed  an  Application  for  Review  of  the  Commissions 
 decision  to  conditionally  grant  NextWaves  licenses  on  March  17,  1997.  Antigone/  Devco  subsequently 
 filed  a  settlement  request  setting  forth  the  terms  of  a  proposed  settlement  under  which  the  Application  for 
 Review  would  be  withdrawn.  8 


 4.  After  it  received  its  C  block  licenses,  NextWave  and  other  PCS  block  licensees  petitioned 
 the  Commission  for  relief  in  order  to  modify  their  installment  payment  obligations.  9  In  response,  the 


 4  The  installment  payment  plan  for  C  block  permitted  licensees  that  qualified  as  small  businesses  to  pay 
 90%  of  the  bid  price  over  a  period  of  ten  years,  with  interest  paid  for  the  first  six  years  and  interest  and  principal 
 for  the  remaining  four.  See  47  C.  F.  R.    24.711(  b)(  3)(  1996).  The  installment  payment  plan  for  F  block  permitted 
 licensees  that  qualified  as  small  businesses  to  pay  80%  of  the  bid  price  over  a  period  of  ten  years,  with  interest 
 paid  for  the  first  eight  years  and  interest  and  principal  for  the  remaining  two.  See  47  C.  F.  R.   
 24.716(  b)(  3)(  1997).  All  but  two  bidders  in  the  1996  C  block  auction  qualified  as  small  businesses. 


 5  See  Entrepreneurs  C  Block  Auction  Closes:  FCC  Announces  Winning  Bidders  in  the  Auction  of  493 


 Licenses  to  Provide  Broadband  PCS  in  Basic  Trading  Areas,  Public  Notice,  DA  96-  716  (rel.  May  8,  1996); 
 Entrepeneurs  C  Block  Reauction  Closes  FCC  announces  Winning  Bidders  in  the  Reauction  of  18  Licenses  to 
 Provide  Broadband  PCS  in  Basic  Trading  Areas,  Public  Notice,  DA  96-  1153,  11  FCC  Rcd  8183  (1996);  D,  E, 
 and  F  Block  Auction  Closes  --  Winning  Bidders  in  the  Auction  of  1,479  Licenses  To  Provide  Broadband  PCS  in 
 Basic  Trading  Areas,  Public  Notice,  DA  97-  81  (rel.  Jan.  15,  1997).  While  the  C  and  F  block  licenses  that 
 NextWave  won  were  to  be  paid  for  by  installment  payments,  NextWave  paid  for  its  D  and  E  block  licenses  in  full 
 in  accordance  with  the  Commissions  rules. 


 6  See  Wireless  Telecommunications  Bureau  Announces  Conditional  Grant  Of  Broadband  Personal 


 Communications  Services  Entrepreneurs'  C  Block  Licenses  To  Nextwave  Personal  Communications,  Inc.--  Final 
 Down  Payment  due  by  January  10,  1997,  Public  Notice,  DA  97-  12  (rel.  Jan.  3,  1997);  In  re  Applications  of 
 NextWave  Personal  Communications  Inc.  for  Various  C  Block  Broadband  PCS  Licenses,  Memorandum  Opinion 
 and  Order,  12  FCC  Rcd  2030,  2034,    9  (1997). 


 7  License  at  2. 


 8  See  Settlement  Request  Pursuant  to  DA  99-  745,  filed  by  Antigone/  Devco  (filed  April  29,  1999);  Request 
 for  Approval  of  Withdrawal  of  Pleading  and  Motion  To  Dismiss  With  Prejudice,  filed  by  Antigone/  Devco  (filed 
 June  1,  1998). 


 9  See  Wireless  Telecommunications  Bureau  Seeks  Comment  on  Broadband  PCS  C  and  F  Block 


 Installment  Payment  Issues,  Public  Notice,  DA  97-  679,  12  FCC  Rcd  24230  (1997). 
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 Commission  suspended  C  and  F  block  installment  payments  temporarily  10  and  initiated  a  rulemaking 
 proceeding  in  order  to  consider  whether  to  provide  relief,  and  if  so,  the  scope  of  that  relief  to  C  and/  or  F 
 block  licensees.  11  Ultimately,  the  Commission  adopted  several  restructuring  options  to  assist  C  block 
 licensees  in  meeting  their  debt  obligations,  including  resumption  of  payments,  disaggregation,  amnesty  and 
 prepayment.  12  All  of  the  elections  entailed  licensees  paying  the  full  bid  price,  on  a  pro  rata  basis,  for  any 
 and  all  spectrum  retained  by  the  licensee.  Licensees  were  required  to  elect  from  among  these  options  by 
 June  8,  1998,  the  Election  Date,  and  resume  payments  by  July  31,  1998.  13  In  the  event  licensees  could  not 
 make  payment  by  July  31,  1998,  the  Restructuring  Orders  gave  licensees  a  single  90-  day  grace  period,  i.  e., 
 until  October  29,  1998,  after  which  the  licensee  would  be  in  default  and  its  licenses  would  automatically 
 cancel.  14 


 5.  NextWave  sought  and  was  denied  a  stay  of  the  Election  Date,  15  and  did  not  file  an  election 
 with  the  Commission.  Therefore,  under  the  Commissions  rules,  NextWave  was  deemed  to  have  elected  to 
 resume  payments  under  its  existing  Notes  and  Security  Agreements.  16  On  the  same  day  as  its  election  was 
 due  to  the  Commission,  NextWave  filed  for  protection  under  Chapter  11  of  the  Bankruptcy  Code.  17 


 10  Installment  payments  were  suspended  for  C  block  licensees  on  March  31,  1997,  and  for  F  block 
 licensees  on  April  28,  1997.  See  Installment  Payments  for  PCS  Licenses,  Order,  12  FCC  Rcd  17325  (1997); 
 FCC  Announces  Grant  of  Broadband  Personal  Communications  Services  D,  E,  and  F  Block  BTA  Licenses, 
 Public  Notice,  DA  97-  883,  13  FCC  Rcd  1286  (1997). 


 11  Supra  at  note  9. 


 12  In  the  Matter  of  Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for 
 Personal  Communications  Services  (PCS)  Licensees,  Second  Report  and  Order,  FCC  97-  342,  12  FCC  Rcd  16436 
 (1997)  (Second  Report  and  Order);  In  the  Matter  of  Amendment  of  the  Commissions  Rules  Regarding 
 Installment  Payment  Financing  for  Personal  Communications  Services  (PCS)  Licenses,  Order  on 
 Reconsideration  of  the  Second  Report  and  Order,  FCC  98-  46,  13  FCC  Rcd  8345  (1998)  (First  Reconsideration 
 Order);  In  the  Matter  of  Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for 
 Personal  Communications  Services  (PCS)  Licensees,  Second  Order  on  Reconsideration  of  the  Second  Report  and 
 Order,  FCC  99-  66,  14  FCC  Rcd  6571  (1999)  (Second  Reconsideration  Order).  We  refer  to  these  orders 
 collectively  as  the  Restructuring  Orders. 


 13  Wireless  Telecommunications  Bureau  Announces  1998  Election  Date  for  Broadband  PCS  C  Block 


 Licensees;  Payments  for  C  and  F  Block  Licensees  Resume  July  31,  1998,  Public  Notice,  DA  98-  471,  13  FCC 
 Rcd  7413  (1998). 


 14  See  First  Reconsideration  Order,  13  FCC  Rcd  at  8354-  8355,    25-  26.  See  also  Sections 


 1.2110(  f)(  4)(  ii),  (iii),  (iv)  of  the  Commissions  Rules,  47  C.  F.  R.    1.2110(  f)(  4)(  ii),  (iii),  (iv)(  1999). 
 15  See  NextWave  Telecom  v.  FCC,  No.  98-  1255  (D.  C.  Cir.  June  11,  1998);  In  the  Matter  of  Petition  of 


 NextWave  Telecom,  Inc.  for  a  Stay  of  the  June  8,  1998,  Personal  Communications  Services  C  Block  Election 
 Date,  Order,  13  FCC  Rcd  11880,  11881,    5  (1998). 


 16  See  Electronic  Election  Procedures  for  the  Broadband  Personal  Communications  Service  (PCS)  C 


 Block  Installment  Payment  Plans,  Public  Notice,  DA  98-  1006,  13  FCC  Rcd  10364,  10366-  10367  (1998).  C 
 block  licensees  were  also  informed  that  if  they  failed  to  make  an  election  they  would  have  to  pay  the  entire 
 Suspension  Interest  on  or  before  March  31,  1998.  See  Second  Report  and  Order,  12  FCC  Rcd  at  16471,    76. 


 17  In  re  NextWave  Personal  Communications,  Inc.  et  al.,  235  B.  R.  263,  267  (Bankr.  S.  D.  N.  Y.  1998). 
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 NextWave  simultaneously  filed  an  Adversary  Proceeding  18  against  the  United  States  Government  19 
 asking  the  bankruptcy  court  to  restructure  its  debt  to  the  United  States  based  on  the  theory  that  its 
 assumption  of  the  full  amount  of  the  C  block  auction  debt  was  a  fraudulent  conveyance  under 
 bankruptcy  law.  20  On  August  7,  1998,  NextWave  sent  a  letter  to  the  Commission  indicating  its  belief  that 
 bankruptcy  afforded  protections  that  extend  the  date  for  making  an  Election  under  the  Restructuring 
 Orders.  21  On  September  2,  1998,  the  Wireless  Bureau  replied  by  letter  that  it  disagreed,  and  considered 
 the  election  requirements  to  be  binding  on  NextWave,  notwithstanding  its  bankruptcy  filing  (  September  2, 
 1998  Letter).  22  Pursuant  to  our  Restructuring  Orders,  the  C  and  F  block  licenses  granted  to  NextWave 
 canceled  automatically  on  October  30,  1998  because  NextWave  failed  to  make  its  payment  by  the 
 resumption  deadline  of  October  29,  1998.  23 


 6.  In  the  bankruptcy  proceedings,  the  Government  opposed  NextWaves  attempt  to  use  the 
 Bankruptcy  Code  to  retain  its  licenses  without  complying  with  the  full  and  timely  payment  condition,  and 
 moved  to  dismiss  the  Adversary  Proceeding  as  an  improper  collateral  attack  on  our  Restructuring  Orders. 
 The  bankruptcy  court  rejected  the  Governments  motion  to  dismiss  the  Adversary  Proceeding,  and  ruled 
 that  on  the  fraudulent  conveyance  count,  the  Commission  should  be  treated  as  a  creditor,  and  not  as  a 
 regulator.  24  On  May  26,  1999,  the  bankruptcy  court  found  that  a  constructive  fraudulent  transfer  had 
 occurred  and,  consequently,  avoided  approximately  $3.  7  billion  of  NextWave's  aggregate  $4.  7  billion 
 obligation  to  the  Government.  25  The  U.  S.  District  Court  for  the  Southern  District  of  New  York  affirmed 


 18  NextWave  Personal  Communications,  Inc.  v.  FCC,  Summons  and  Notice  of  Pretrial  Conference  in  an 
 Adversary  Proceeding,  Adv.  Proc.  No.  98-  5178A  (Bankr.  S.  D.  N.  Y.  June  8,  1998)  (  NextWave  Complaint). 
 19  The  United  States  Department  of  Justice  represented  the  United  States  Government  (hereinafter  the 


 Government)  in  the  bankruptcy  proceeding. 
 20  NextWave  argued  that  its  auction  debt  was  voidable  under  the  state  fraudulent  conveyance  law  of 


 California,  New  York  or  the  District  of  Columbia.  See  NextWave  Complaint,  supra  at  note  18.  See  also  11 
 U.  S.  C.    544(  b)  (allowing  the  bankruptcy  estate  to  avoid  any  obligation  incurred  by  the  debtor  that  is  voidable 
 under  applicable  law).  NextWave  did  not  contest  the  value  of  the  F  block  licenses  in  the  Adversary  Proceeding. 


 21  See  Letter  from  Michael  R.  Wack,  Vice  President  Regulation,  NextWave  Telecom  Inc.,  to  the  Secretary, 


 Federal  Communications  Commission,  dated  August  7,  1998. 
 22  See  Letter  from  Daniel  B.  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  to  Michael  R.  Wack, 


 Vice  President  Regulation,  NextWave  Telecom  Inc.,  dated  Sept.  2,  1998.  The  Bureau  Chief  stated  that  the 
 rights  to  make  an  election  are  set  forth  in  the  Commissions  Second  Report  and  Order  and  Further  Notice  of 
 Proposed  Rulemaking  in  WT  Docket  No.  97-  82,  12  FCC  Rcd  16436  (1997),  as  modified  by  Order  on 
 Reconsideration  of  the  Second  Report  and  Order,  FCC  98-  46  (released  Mar.  24,  1998).  We  are  unaware  of  any 
 provision  in  the  federal  Bankruptcy  Code  or  other  statute,  which,  at  this  time,  precludes  application  of  the 
 Commissions  election  requirements  to  [the  Debtors]. 


 23  See  First  Reconsideration  Order,  13  FCC  Rcd  at  8354-  8355,    25-  26;  47  C.  F.  R.    1.2110(  f)(  4)(  ii) 


 (1999). 
 24  See  In  re  NextWave  Personal  Communications,  Inc.,  235  B.  R.  263,  271  (Bankr.  S.  D.  N.  Y.  1998) 


 (holding  that  the  FCCs  restructuring  orders  were  not  binding  in  bankruptcy  proceedings). 
 25  See  In  re  NextWave  Personal  Communications,  Inc.  v.  FCC,  235  B.  R.  277  (Bankr.  S.  D.  N.  Y.  1999);  In 


 re  NextWave  Personal  Communications,  Inc.,  235  B.  R.  305  (Bankr.  S.  D.  N.  Y.  1999). 
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 the  bankruptcy  courts  decision  on  July  27,  1999,  26  but  the  United  States  Court  of  Appeals  for  the  Second 
 Circuit  (  Second  Circuit)  reversed  on  November  24,  1999,  and  followed  with  an  opinion  on  December  22, 
 1999  (  December  22  nd  Opinion).  27  In  the  December  22  nd  Opinion,  the  Second  Circuit  determined  that  the 
 requirement  that  licensees  comply  with  the  full  and  timely  payment  condition  in  order  to  retain  their  licenses 
 is  regulatory  in  nature,  because  the  auction  is  the  mechanism  used  by  the  Commission  to  assign  licenses 
 under  its  statutory  mandate  in  Section  309(  j)  of  the  Communications  Act.  Therefore,  the  Second  Circuit 
 found  the  bankruptcy  court  had  erred  in  treating  the  Commission  as  merely  a  creditor.  The  Second  Circuit 
 concluded  that  the  bankruptcy  court  lacked  the  power  to  alter  the  Commissions  licensing  scheme  by 
 changing  the  payment  terms  that  applied  to  auction  winners.  In  addition,  the  Court  reversed  the  ruling  that 
 NextWaves  obligation  could  be  avoided  as  a  fraudulent  conveyance.  28  In  its  December  22  nd  Opinion,  the 
 Second  Circuit  recognized  that  the  bankruptcy  court  litigation  had  hindered  the  Commissions  enforcement 
 of  its  licensing  payment  rules  against  NextWave: 


 Because  of  the  ongoing  litigation,  the  FCC  has  not  yet  sought  to  take  any  action  vis-  a-  vis 
 the  Licenses.  While  it  would  probably  be  fair  to  assume  that  the  FCC  will  seek  to  revoke 
 the  Licenses  and  collect  on  its  debts,  we  cannot  presume  to  know  in  advance  the  course 
 that  the  agency  will  ultimately  follow.  29 


 7.  Following  the  Second  Circuits  decision,  NextWave  endeavored  to  amend  its  bankruptcy 
 plan  of  reorganization  by  substituting  full  payment  of  its  debt  obligation  for  the  reduced  sum  set  by  the 
 bankruptcy  court.  30  On  January  12,  2000,  the  Government  objected  to  the  new  reorganization  plan, 
 arguing  that  pursuant  to  the  conditions  of  the  C  and  F  block  licenses  granted  to  NextWave,  the  licenses  had 
 automatically  canceled  when  NextWave  failed  to  make  its  required  payments  under  the  Commissions 


 26  NextWave  Personal  Communications,  Inc.  v.  FCC  (In  re  NextWave  Personal  Communications,  Inc.), 
 241  B.  R.  311  (S.  D.  N.  Y.  1999). 
 27  In  re  NextWave  Personal  Communications,  Inc.,  200  F.  3d  43  (2d  Cir.  1999),  petit.  for  panel  rehg  and 


 rehg  en  banc  denied  (Mar.  9,  2000)  (  NPCI).  On  June  9,  2000,  NextWave  filed  a  Petition  for  a  Writ  of 
 Certiorari  with  the  U.  S.  Supreme  Court  seeking  review  of  the  December  22  nd  Opinion.  NextWave  Personal 
 Communications,  Inc.,  v.  FCC,  Petition  for  a  Writ  of  Certiorari  (June  9,  2000).  That  Petition  is  pending. 


 28  The  Court  agreed  with  the  Government  that  the  obligation  to  pay  for  licenses  was  incurred  at  the  close 


 of  the  auction,  not  at  the  time  of  subsequent  license  grant  or  note  signing,  as  the  bankruptcy  court  had  found. 
 NPCI,  200  F.  3d  at  62.  On  August  24,  2000,  NextWave  filed  a  Supplement  in  which  it  requested  that  the 
 Commission  take  notice  of  In  Re:  Kansas  Personal  Communications  Service  Ltd.,  Case  No.  99-  21747-  11-  JAR, 
 Judgment  on  Decision  (Bankr.  D.  Kan.  Aug.  16,  2000),  in  which  the  bankruptcy  court  found  that  the  automatic 
 cancellation  of  licenses  is  stayed  under  the  Bankruptcy  Code.  The  Government  has  filed  with  the  bankruptcy 
 court  its  motion  to  stay  the  bankruptcy  courts  decision  and  notice  of  intent  to  appeal  to  the  federal  district  court 
 (United  States'  Emergency  Motion  for  Stay  Pending  Appeal  of  the  Memorandum  Opinion  and  Order  Denying 
 Motion  for  Amendment  of  the  Schedules  and  Statement  of  Financial  Affairs  and  to  Strike  References  to  PCS 
 Licenses  (Bankr.  D.  Kan.  Aug.  24,  2000)  and  Notice  of  Appeal  and  Statement  of  Election  (Bankr.  D.  Kan.  Aug. 
 28,  2000)).  Having  duly  noted  the  bankruptcy  courts  decision  and  the  Governments  response  thereto,  we 
 believe  we  need  not  consider  that  proceeding  further  in  reaching  a  decision  with  respect  to  NextWave. 


 29  NPCI,  200  F.  3d  at  59. 


 30  See  Debtors  Modified  First  Amended  Joint  Plan  of  Reorganization,  In  re  NextWave  Personal 
 Communications,  Inc.,  et.  al.,  No.  98B21529  (ASH)  (Bankr.  S.  D.  N.  Y.  Dec.  16,  1999). 
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 Restructuring  Orders.  31  The  Governments  filing  attached  the  January  12  th  Public  Notice  in  which  the 
 Commission  announced  the  auction  of  various  PCS  licenses,  including  those  previously  conditionally 
 granted  to  NextWave,  on  July  26,  2000  (  July  26  th  Auction). 


 8.  In  response  to  a  motion  filed  by  NextWave,  the  bankruptcy  court  subsequently  issued  an 
 order  holding  that  under  the  Bankruptcy  Code,  the  FCC  had  no  power  to  cancel  NextWaves  licenses 
 (  January  31  st  Bankruptcy  Court  Order).  32  The  bankruptcy  court  set  forth  its  own  interpretation  of  the 
 FCCs  rules  and  enjoined  the  FCC  from  going  forward  with  the  July  26  th  Auction.  On  February  10,  2000, 
 upon  the  Governments  motion  for  leave  to  file  a  petition  for  writ  of  mandamus,  the  Second  Circuit  stayed 
 the  January  31  st  Bankruptcy  Court  Order  insofar  as  it  precluded  the  Commission  from  taking  steps  in 
 preparation  for  the  auction,  pending  review  of  the  mandamus  petition,  and  established  a  briefing  schedule 
 to  review  the  bankruptcy  courts  order.  On  May  25,  2000,  the  Second  Circuit  issued  an  opinion  granting 
 the  writ  of  mandamus  (  May  25  th  Opinion).  33  In  the  May  25  th  Opinion,  the  Second  Circuit  confirmed 
 that  bankruptcy  provisions  could  not  be  used  to  collaterally  attack  the  Commissions  regulatory  licensing 
 scheme.  The  Court  further  explained  that  the  Commissions  rules  requiring  full  and  timely  payment  of 
 installment  obligations  as  a  condition  to  holding  FCC  licenses  served  a  fundamental  regulatory  purpose, 
 and  therefore  could  not  be  altered  in  bankruptcy. 


 9.  On  February  11,  2000,  while  the  mandamus  proceedings  were  pending  in  the  Second 
 Circuit,  NextWave  filed  the  instant  Petition  for  Reconsideration  with  the  Commission  challenging  license 
 cancellation  on  the  grounds  that  it  is  arbitrary  and  capricious,  contrary  to  law,  and  barred  by  the  doctrines 
 of  estoppel  and  waiver.  NextWave  simultaneously  filed  a  petition  for  review  and  notice  of  appeal  before 
 the  U.  S.  Court  of  Appeals  for  the  D.  C.  Circuit  (  D.  C.  Circuit).  On  June  23,  2000,  the  D.  C.  Circuit 
 granted  the  Commissions  motion  to  dismiss  NextWaves  petition  for  review  and  notice  of  appeal  on  the 
 grounds  that  they  were  premature  in  advance  of  this  order  (  June  23  rd  Order).  34  On  July  5,  2000, 
 NextWave  filed  a  petition  for  rehearing  of  the  June  23  rd  Order,  which  was  denied  by  the  D.  C.  Circuit  on 
 August  3,  2000.  35 


 III.  Discussion 
 10.  Procedural  Issues.  In  challenging  the  issue  of  cancellation  in  its  Petition  for 
 Reconsideration,  NextWave  apparently  takes  the  position  that  the  January  12  th  Public  Notice  is  a  final 
 order  constituting  a  decision  to  cancel  its  previously-  held  licenses,  rather  than  simply  a  public  notice 
 announcing  the  date  that  an  auction  is  scheduled  to  begin.  While  we  believe  that  in  some  instances  it  may 


 31  See  Objection  of  Federal  Communications  Commission  To  Debtors  Modified  First  Amended  Joint  Plan 
 of  Reorganization,  No.  98B21529  (ASH)  (Bankr.  S.  D.  N.  Y.  Dec.  21,  2000). 
 32  In  re  NextWave  Personal  Communications,  Inc.,  244  B.  R.  253  (Bankr.  S.  D.  N.  Y.  2000). 


 33  In  re  Federal  Communications  Commission,  Petitioner,  Docket  No.  99-  5063,  2000  WL  828282  (2d  Cir. 
 May  25,  2000).  On  July  10,  2000,  NextWave  filed  a  petition  for  panel  rehearing  and  a  petition  for  rehearing  en 
 banc,  in  which  it  requested  reconsideration  of  the  May  25  th  Opinion.  The  Second  Circuit  denied  these  petitions 
 on  August  23,  2000. 


 34  NextWave  Personal  Communications,  Inc.  and  NextWave  Power  Partners,  Inc.  v.  FCC,  00-  1045,  00- 


 1046,  Order  (D.  C.  Cir.  June  23,  2000). 
 35  NextWave  Personal  Communications  Inc.  and  NextWave  Power  Partners,  Inc.  v.  FCC,  00-  1045,  00- 


 1046,  pet.  for  rehg  denied  (D.  C.  Cir.  Aug.  3,  2000). 
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 be  proper  for  a  party  to  challenge  the  Commissions  public  notices  that  establish  or  deny  rights,  the 
 January  12  th  Public  Notice  was  not  an  order  or  action  of  the  Commission  (or  the  Wireless  Bureau) 
 canceling  NextWaves  licenses.  Pursuant  to  our  rules,  the  licenses  canceled  automatically  on  October  30, 
 1998.  Our  records  contain  no  timely  challenge  to  the  automatic  cancellation  rule  by  NextWave  at  the  time 
 of  the  rules  promulgation,  nor  did  NextWave  challenge  the  rule  during  the  course  of  the  proceedings 
 culminating  in  the  Restructuring  Orders.  NextWave  did  not  file  a  request  for  waiver  of  the  payment 
 resumption  deadline,  as  did  several  other  parties.  36  Finally,  NextWave  could  have  filed  a  petition  for 
 reconsideration  when  the  licenses  canceled  on  October  30,  1998,  but  did  not.  37  Thus,  we  believe 
 NextWaves  Petition  to  be  late  and  its  challenge  to  the  January  12  th  Public  Notice  to  be  procedurally 
 defective.  38  Nevertheless,  because  of  the  importance  of  the  issues  raised  in  NextWaves  Petition,  we 
 address  NextWaves  challenge  to  the  automatic  cancellation  of  its  licenses.  39 


 11.  Arbitrary  and  Capricious  Standards.  NextWave  argues  that  the  automatic  cancellation  of 
 its  licenses  and  January  12  th  Public  Notice  were  arbitrary  and  capricious  and  contrary  to  reasoned 
 decision-  making  40  because  the  Commission  has  violated  its  own  regulations  and  departed  from  consistent 


 36  See  In  the  Matter  of  Requests  for  Extension  of  the  Commissions  Initial  Non-  Delinquency  Period  for  C 
 and  F  Block  Installment  Payments,  Order,  13  FCC  Rcd  22071  (1998)  (  Extension  Request  Order),  affd  on 
 recon,  In  the  Matter  of  Requests  for  Extension  of  the  Commissions  Initial  Non-  Delinquency  Period  for  C  and  F 
 Block  Installment  Payments,  Memorandum  Opinion  and  Order,  14  FCC  Rcd  6080  (1999)(  SouthEast  MO&  O), 
 affd,  SouthEast  Telephone  v.  FCC,  No.  99-  1164,  1999  WL  1215855  (D.  C.  Cir.  Nov.  24,  1999)(  SouthEast 
 Telephone). 


 37  We  do  not  mean  to  suggest  that  such  a  request  would  have  been  appropriate,  only  that  it  would  have 


 been  procedurally  permissible.  See  also    15  and  16,  infra. 
 38  We  note  that  although  it  had  no  occasion  to  decide  the  question,  the  Second  Circuit  stated  its  belief  that 


 the  January  12  th  Public  Notice  is  an  appealable  decision  or  order,  for  the  purpose  of  Commission  and  judicial 
 review.  See  May  25  th  Opinion,  note  29.  The  Court  cited  Mountain  Solutions,  Ltd.,  Inc.  v.  FCC,  197  F.  3d  512, 
 522  (D.  C.  Cir.  1999)  (  Mountain  Solutions)  for  the  proposition  that  the  Commissions  treatment  of  the  denial  of 
 a  waiver  request  is  an  adjudicatory  decision.  In  that  case,  Mountain  Solutions  requested  a  waiver  of  the 
 Commissions  rules  governing  the  deadline  for  down  payments.  The  Commission  denied  the  waiver  request  in 
 an  appealable  order.  See  In  the  Matter  of  Mountain  Solutions  Ltd.,  Inc.  Emergency  Petition  for  Waiver  of 
 24.711(  a)(  2)  of  the  Commissions  Rules  Regarding  Various  BTA  Markets  in  the  Broadband  Personal 
 Communications  Services  (PCS)  C  Block  Auction,  Memorandum  Opinion  and  Order,  13  FCC  Rcd  21983, 
 21997,    26  (1998).  We  believe  that  Mountain  Solutions  is  procedurally  inapposite  to  the  case  before  us  because 
 NextWave  is  not  requesting  reconsideration  of  an  order,  but  rather,  reconsideration  of  a  public  notice  establishing 
 a  date  to  auction  licenses  for  spectrum  previously  licensed  to  it.  Furthermore,  as  discussed  above,  Mountain 
 Solutions  had  requested  a  waiver  of  the  rule,  which  NextWave  has  not  done. 


 39  See  In  The  Matter  Of  Additional  Information  Regarding  Broadband  PCS  Spectrum  Included  in  the 


 Auction  Scheduled  for  March  23,  1999,  Order,  14  FCC  Rcd.  6561,  6562,    3  (1999)(  Commission  considered  an 
 application  for  review  of  a  public  notice  establishing  an  auction  date  despite  the  procedural  deficiency  of  the 
 application). 


 40  The  Supreme  Court  has  stated  that  [  n]  ormally,  an  agency  rule  would  be  arbitrary  and  capricious  if  the 


 agency  has  relied  on  factors  which  Congress  has  not  intended  it  to  consider,  entirely  failed  to  consider  an 
 important  aspect  of  the  problem,  offered  an  explanation  for  its  decision  that  runs  counter  to  the  evidence  before 
 the  agency,  or  is  so  implausible  that  it  could  not  be  ascribed  to  a  difference  in  view  or  the  product  of  agency 
 expertise.  See  Motor  Vehicle  Manufacturers  Assn  v.  State  Farm  Mutual  Automobile  Ins.  Co.,  463  U.  S.  29,  43 
 (1983). 
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 prior  practice  by  purporting  to  cancel  NextWave's  licenses  without  any  previous  declaration  that 
 NextWave  had  defaulted  on  its  installment  payments.  41  We  disagree.  Cancellation  is  fully  consistent  with 
 our  congressional  mandate,  the  Commissions  regulations,  and  precedent.  As  the  D.  C.  Circuit  has 
 recognized  in  a  related  context,  the  Commission  has  given  fair  notice  of  the  importance  it  attached  to 
 meeting  payment  dates  .  .  .  .  42  The  necessary  corollary  to  this  requirement  is  that  licenses  cancel  if  timely 
 payment  is  not  made.  The  requirement  to  pay  in  full  and  on  time  is  paramount  to  preserve  the  reliability 
 and  integrity  of  our  auction  licensing  program.  Furthermore,  the  Commission  has  designed  its  competitive 
 bidding  system  with  the  goal  of  awarding  licenses  expeditiously  to  bring  competitive  wireless  services  to 
 the  public  without  undue  delay.  43  Providing  for  the  automatic  cancellation  of  licenses  for  nonpayment  is 
 designed  to  permit  the  most  expeditious  auction  of  spectrum  licenses  in  furtherance  of  this  goal. 


 12.  NextWaves  argument  that  cancellation  is  arbitrary  and  capricious  ignores  the  multitude  of 
 Commission  pronouncements  that  licenses  would  cancel  automatically  if  the  applicable  installment 
 payments  were  not  timely  received  by  October  29,  1998.  At  the  time  that  NextWave  was  conditionally 
 granted  its  licenses,  the  payment  rules  provided  that  a  license  would  cancel  automatically  following  the 
 expiration  of  any  grace  period  without  the  successful  resumption  of  payment  or  upon  default  with  no  grace 
 period.  44  As  noted  above,  the  full  and  timely  payment  condition  was  explicitly  stated  on  the  face  of  each 
 license  45  and  referenced  in  the  Notes  and  Security  Agreements  that  memorialized  the  payment  terms  and 
 obligations  applicable  to  each  license.  46  The  First  Reconsideration  Order  amended  the  rules  to  provide 
 that  C  and  F  block  licensees  must  resume  payment  by  July  31,  1998,  and  that  C  and  F  block  licensees 
 shall  be  in  default  if  their  payment  due  on  the  resumption  date  .  .  .  is  more  than  ninety  (90)  days  late  (i.  e., 


 41  See  NextWave  Petition  at  9-  10. 
 42  Mountain  Solutions,  197  F.  3d  at  522  (relating  to  default  rules  for  downpayments  applied  to  C  block 
 bidders). 
 43  See  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  Second 


 Report  and  Order,  9  FCC  Rcd  2348,  2349,    4-  5  (1994).  We  also  note  that  Section  309(  j)(  3)(  A)  of  the 
 Communications  Act,  as  amended,  requires  that  the  Commission  pursue  the  development  and  rapid  deployment 
 of  new  technologies,  products,  and  services  for  the  benefit  of  the  public  .  .  .  without  administrative  or  judicial 
 delays.  47  U.  S.  C.    309(  j)(  3)(  A). 


 44  47  C.  F.  R.    1.2110(  e)(  4)(  iii)  (1997). 


 45  Each  C  and  F  block  license  issued  to  NextWave  expressly  stated  that  [  t]  his  authorization  is  conditioned 
 upon  the  full  and  timely  payment  of  all  monies  due  pursuant  to  Sections  1.2110  and  24.711  of  the  Commissions 
 Rules  and  the  terms  of  the  Commissions  installment  plan  as  set  forth  in  the  Note  and  Security  Agreement 
 executed  by  the  licensee.  Failure  to  comply  with  this  condition  will  result  in  the  automatic  cancellation  of  this 
 authorization.  See,  e.  g.,  C  block  License  at  2. 


 46  For  example,  the  Note  signed  by  NextWave  for  each  C  and  F  block  license  it  received  stated  at  3: 


 The  Maker  hereby  acknowledges  that  the  Commission  has  issued  Maker  the  above  referenced  License 
 pursuant  to  the  Communications  Act  of  1934,  as  amended,  that  is  conditioned  upon  full  and  timely 
 payment  of  financial  obligations  under  the  Commission's  installment  payment  plan,  as  set  forth  in  the 
 then-  applicable  orders  and  regulations  of  the  Commission,  as  amended,  and  that  the  sanctions  and 
 enforcement  authority  of  the  Commission  shall  remain  applicable  in  the  event  of  a  failure  to  comply 
 with  the  terms  and  conditions  of  the  License,  regardless  of  the  enforceability  of  this  Note  or  the  Security 
 Agreement. 
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 after  October  29,  1998).  47 
 13.  In  addition  to  the  rules  and  orders  issued  by  the  Commission,  the  Wireless  Bureau  issued  a 
 series  of  public  notices  that  gave  Commission  licensees  specific  instructions  regarding  the  dates  that 
 payments  were  due  and  the  consequences  of  non-  compliance.  In  a  Public  Notice  released  on  April  17, 
 1998,  the  Wireless  Bureau  stated  that  licensees  who  failed  to  meet  the  July  31,  1998,  payment  resumption 
 deadline  could  submit  their  payment  on  or  before  October  29,  1998,  without  being  considered  delinquent,  if 
 they  timely  paid  a  five  percent  late  fee.  48  In  a  Public  Notice  dated  September  18,  1998,  the  Wireless 
 Bureau  emphasized  that  licensees  that  miss  the  late  payment  deadline  would  be  in  default  and  their  licenses 
 would  automatically  cancel.  49 


 14.  Beyond  these  public  notices,  the  Wireless  Bureaus  September  2,  1998  Letter  directly 
 informed  NextWave  that  the  Commission  took  the  position  that  NextWaves  pending  bankruptcy  case  did 
 not  relieve  it  of  its  regulatory  obligations  under  the  Commissions  Restructuring  Orders.  50  After  the 
 September  2,  1998  Letter    nearly  two  months  before  the  final  payment  date    it  would  have  been 
 unreasonable  for  NextWave  to  believe  that  the  Commission  expected  it  to  make  the  election  required  by  the 
 Restructuring  Orders,  but  not  to  make  the  concomitant  payments  required  pursuant  to  that  election  and 
 specified  in  the  Restructuring  Orders.  Thus,  NextWave  could  not  reasonably  have  assumed  that  the 
 Commission  agreed  with  its  position  that  its  bankruptcy  filing  freed  it  from  its  regulatory  obligations,  such 
 as  the  timely  payment  requirement. 


 15.  Recognizing  that  the  cancellation  of  NextWaves  licenses  occurred  automatically  under 
 our  rules  on  October  30,  1998  is,  in  fact,  fully  consistent  with  our  treatment  of  similarly  situated  C  block 
 licensees.  As  noted  above,  in  October  1998,  immediately  prior  to  the  payment  resumption  deadline,  a 
 number  of  licensees  claimed  to  be  facing  serious  financial  difficulties,  notwithstanding  the  relief  we  had 
 provided  in  our  Restructuring  Orders.  Those  licensees  filed  requests  for  waiver  of  the  October  29,  1998 


 47  See  First  Reconsideration  Order,  13  FCC  Rcd  at  8354-  8355,    25-  26.  The  Commission  established  the 
 dates  for  installment  payment  resumption  in  Wireless  Telecommunications  Bureau  Announces  1998  Election 
 Date  for  Broadband  PCS  C  Block  Licensees;  Payments  for  C  and  F  Block  Licensees  Resume  July  31,  1998, 
 Public  Notice,  DA  98-  741,  13  FCC  Rcd  7413  (1998)  (  1998  Election  Date  Notice).  See  also  47  C.  F.  R.   
 1.2110(  f)(  4)(  iii),  (iv)(  1999). 


 48  See  1998  Election  Date  Notice.  To  assist  in  making  elections,  the  Commission  sent  to  each  C  block 


 licensee  a  statement  of  current  account  balances.  NextWave  received  the  pre-  election  notice  sent  to  all  C  block 
 licensees. 


 49  See  Wireless  Telecommunications  Bureau  Provides  Guidance  on  Grace  Period  and  Installment 


 Payment  Rules,  Public  Notice,  DA  98-  1897,  13  FCC  Rcd  18213  (1998). 
 50  See  supra  at  note  22.  The  September  2,  1998  Letter  is  consistent  with  our  longstanding  statements 


 regarding  compliance  with  regulatory  requirements  by  Commission  licensees  in  bankruptcy.  For  example  in 
 paragraph  135  of  the  Fifth  Memorandum  Opinion  and  Order  in  the  competitive  bidding  docket  (PP  Docket  No. 
 93-  253),  10  F.  C.  C.  403  (1994),  we  noted  that  a  designated  entity  with  installment  payments  that  went  into 
 bankruptcy  would  be  able  to  transfer  its  license  through  a  bankruptcy  court  sale  only  if  it  had  maintained  its 
 installment  payments  during  the  bankruptcy  (or  had  obtained  a  Commission-  granted  grace  period),  and  otherwise 
 complied  with  our  regulatory  requirements  for  designated  entities.  Nothing  in  the  Commissions  language 
 suggests  that  these  requirements  are  suspended  or  abrogated  by  a  bankruptcy  filing. 
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 payment  deadline.  51  In  our  Extension  Request  Order,  we  declined  to  further  extend  the  deadline,  noting 
 that  we  had  already  provided  a  lengthy  suspension  period  and  explaining  that  to  extend  the  deadline  still 
 further  would  only  serve  to  undermine  the  enforcement  of  [our]  payment  deadlines.  52  Subsequent  to  that 
 order,  two  of  the  five  licensees  that  had  requested  waivers  made  the  requisite  payment,  whereas  SouthEast 
 Telephone,  Inc.,  and  Wireless  Ventures,  Inc.  lost  their  licenses  by  operation  of  the  automatic  cancellation 
 rule.  53  The  Wireless  Bureau  did  not  issue  a  declaration  of  default,  but  simply  released  a  public  notice 
 announcing  its  intention  to  include  the  spectrum  previously  licensed  to  SouthEast  and  Wireless  Ventures  in 
 our  March  23,  1999  auction.  54 


 16.  The  only  material  differences  of  which  we  are  aware  between  NextWave  and  these 
 companies  are  that  NextWave  was  in  bankruptcy  some  months  prior  to  the  resumption  deadline,  and 
 NextWave  did  not  seek  a  waiver  of  the  payment  deadline.  Had  NextWave  filed  for  a  waiver  at  that  time, 
 we  are  not  aware  of  any  basis  on  which  relief  would  have  been  afforded  to  it  and  not  the  other  licensees  that 
 did  request  equitable  relief.  55  To  now  decline  to  enforce  the  automatic  cancellation  of  NextWaves  licenses 
 would  provide  NextWave,  retroactively,  with  just  the  relief  that  we  declined  to  provide  to  those  that  had 
 properly  requested  it.  Such  a  result  would  be  unjustified.  56 


 17.  NextWave  argues  that  before  there  can  be  an  automatic  cancellation  of  a  license,  the 
 Commission  must  declare  that  the  licensee  was  in  default  under  its  payment  obligations  and  that  such  a 
 declaration  was  not  made  in  this  instance.  The  Commission  did  not  contemplate  a  separate  individual 
 declaration  to  achieve  automatic  license  cancellation,  especially  for  C  and  F  block  licensees.  C  and  F 
 block  payments  had  been  suspended  for  over  a  year.  The  Commission  therefore  had  a  strong  interest  in 
 ensuring  that  the  spectrum  would  be  returned  quickly  if  licensees  did  not  have  the  financial  ability  to  meet 


 51  Airadigm  Communications,  Inc.,  Urban  Comm-  North  Carolina,  Inc.,  SouthEast  Telephone,  Inc., 
 Wireless  Ventures,  Inc.,  and  Personal  Communications  Network,  Inc.  all  filed  requests  for  waiver  of  the  October 
 29,  1998  deadline. 


 52  Extension  Request  Order,  13  FCC  Rcd  at  22073,    5. 


 53  Urban  Comm-  North  Carolina,  Inc.  filed  for  bankruptcy  under  Chapter  11  of  the  Bankruptcy  Code  (Case 
 No.  98-  B-  10086,  Bankr.  S.  D.  N.  Y.  1998),  and  also  filed  a  fraudulent  conveyance  action  seeking  to  reduce  the 
 amount  of  its  debt  for  the  licenses  (Adv.  Pro.  No.  99-  8125  Bankr.  S.  D.  N.  Y.  1999).  As  in  the  case  of  NextWave, 
 the  Government  has  taken  the  position  that  the  licenses  issued  to  Urban  Comm-  North  Carolina  canceled  for 
 failure  to  make  the  October  29,  1998  payment. 


 54  See  C  Block  PCS  Spectrum  Auction  Scheduled  for  March  23,  1999;  Comment  Sought  on  Procedural 


 Issues,  Public  Notice,  DA  98-  2318,  13  FCC  Rcd  24947  (1998).  SouthEasts  challenge  to  our  denial  of  its 
 waiver  request  was  ultimately  rejected  by  the  D.  C.  Circuit  on  November  24,  1999.  See  SouthEast  Telephone, 
 supra  at  note  36. 


 55  Even  now  NextWave  has  not  utilized  the  appropriate  vehicle  of  requesting  a  waiver  or  other  equitable 


 relief.  We  do  not  undertake  in  this  order  to  address  the  adequacy  of  a  request  that  has  not  been  made.  Our 
 purpose  is  merely  to  illustrate  that  the  cancellation  of  NextWaves  licenses  is  consistent  with  the  treatment  of 
 others  similarly  situated. 


 56  In  failing  to  pay  despite  the  automatic  cancellation  rule,  NextWave  apparently  was  relying  on  the 


 automatic  stay  of  the  Bankruptcy  Code.  That  reliance  was  erroneous.  See,  e.  g.,  May  25  th  Opinion,  at  32-  35 
 (holding  that  the  timely  payment  condition  is  regulatory,  and  therefore  the  automatic  stay  does  not  apply).  We 
 are  not  aware  of  any  precedent  supporting  the  proposition  that  a  waiver  is  warranted,  retroactively,  on  account  of 
 mistaken  reliance  on  an  inapplicable  provision. 
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 the  payment  obligations  established  by  their  winning  bids  at  the  auction.  At  the  time  NextWave  defaulted 
 on  its  payment  obligations,  the  licenses,  notes,  security  agreements,  and  operative  Commission  rules  all 
 called  for  automatic  cancellation  upon  a  payment  default.  57  Section  1.2110(  f)(  4)(  iv)  of  the 
 Commissions  rules  provided  that  if  the  payment  obligations  are  missed  the  licensee  will  be  declared  in 
 default,  its  licenses  will  automatically  cancel,  and  will  be  subject  to  debt  collection  procedures.  58  This  rule 
 does  not  require  a  distinct,  affirmative  act,  involving  a  separate  declaration  of  default  for  each  licensee 
 that  has  missed  a  payment  as  a  precursor  to  automatic  license  cancellation.  Indeed,  to  require  that  the 
 Commission  take  affirmative  steps  to  declare  a  licensee  in  default  before  the  operation  of  the  cancellation  of 
 the  license  would  render  the  automatic  nature  of  the  process  futile  and  meaningless.  Nor,  as  explained 
 above,  have  we  followed  the  practice  of  issuing  a  separate  declaration  of  default  in  prior  cases.  59  For  all 
 these  reasons,  we  reject  NextWaves  interpretation  of  our  default  and  cancellation  rules  and  reaffirm  that 
 the  failure  to  make  full  payment  in  a  timely  manner  following  exhaustion  of  all  applicable  grace  periods 
 constitutes  a  default,  and  results  in  the  automatic  cancellation  of  the  license  without  further  Commission 
 action. 


 18.  In  a  August  11  th  Supplemental  filing,  NextWave  calls  our  attention  to  Trinity 
 Broadcasting  of  Florida  v.  FCC,  60  where  the  D.  C.  Circuit  held  that  we  had  failed  to  provide  adequate 
 notice  of  the  interpretation  of  our  minority  ownership  rules  that  we  sought  to  apply  to  Trinity.  NextWave 
 argues  that  our  rules  did  not  clarify  that  cancellation  could  occur  without  a  prior  declaration  of  default. 
 The  interpretation  urged  by  NextWave  is  not  a  reasonable  one  and  could  not  reasonably  be  relied  upon.  61 


 57  See  47  C.  F.  R.    1.2110(  f)(  4)(  iv)(  1998). 


 58  Recently  the  Commission  restated  this  rule  as  follows:  [  i]  f  an  eligible  entity  obligated  to  make 
 installment  payments  fails  to  pay  the  total  Required  Installment  Payment  within  two  quarters  (6  months)  of  the 
 Required  Installment  Payment  due  date,  it  shall  be  in  default,  its  license  shall  automatically  cancel,  and  it  will  be 
 subject  to  debt  collection  procedures.  See  In  the  Matter  of  Amendment  of  the  Commissions  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,  FCC  00-  274  (rel.  August  14,  2000),    28  (Part  1 
 Reconsideration  Order). 


 59  NextWave  offers  no  case  in  which  the  Commission  has  issued  a  separate  formal  declaration  of  default 


 before  the  license  cancellation  rules  were  applied.  To  the  extent  that  NextWave  relies  on  a  letter  from  Kathleen 
 OBrien  Ham,  Chief,  Auctions  and  Industry  Analysis  Div.,  Wireless  Telecommunications  Bureau,  to  Jack  Bond, 
 Mountain  SMR  Group,  L.  L.  C.,  DA  98-  378,  13  FCC  Rcd  4504  (1998)  (Mountain  SMR),  to  support  its  position 
 that  a  separate  declaration  of  default  is  required,  its  argument  is  misplaced.  In  Mountain  SMR,  a  winning 
 bidder  in  an  SMR  service  auction  failed  to  make  its  required  down  payment,  and  requested  waiver  of  the 
 Commissions  bid  withdrawal  and  down  payment  rules.  The  staff  issued  a  decision  in  which  it  denied  the 
 requests  for  waiver  and  specified  the  amount  of  default  payment  that  was  due  pursuant  to  Sections  90.905(  b)  and 
 (c)  of  the  Commissions  rules.  In  the  course  of  the  decision,  the  staff  stated  that  because  Mountain  SMR  missed 
 its  down  payment,  it  was  deemed  to  be  in  default  on  these  obligations.  Id  at  4508.  The  plain  purpose  of  the 
 staff  letter  was  not  to  declare  a  default,  but  to  deny  the  waiver  request  and  specify  the  amount  of  payments  due  as 
 a  result  of  the  default. 


 60  211  F.  3d  618  (D.  C.  Cir.  2000). 


 61  NextWaves  suggested  alternative  interpretation  of  our  rules    that  a  licensee  making  a  partial 
 payment  would  be  subject  to  automatic  cancellation,  while  a  licensee  that  misses  a  payment  entirely  would  be 
 protected  from  automatic  cancellation    is  obviously  not  a  reasonable  one.  See  August  11  th  Supplemental  filing 
 at  2.  Moreover,  as  we  have  already  stated,  automatic  cancellation  was  specified  on  the  face  of  its  licenses,  and  in 
 the  Notes  and  Security  Agreements  executed  by  NextWave. 
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 Even  if  it  were  reasonable  to  read  the  rule  this  way,  NextWave  could  not  have  relied  upon  the  alternative 
 interpretation  it  urges.  Whether  cancellation  was  automatic,  or  would  require  a  prior  declaration,  it 
 was  certainly  clear  that  the  consequence  of  NextWaves  failure  to  pay  on  time  would  be  nothing  less  than 
 the  loss  of  its  licenses.  NextWave  could  not  have  been  waiting  for  a  declaration  of  default,  because,  even 
 under  its  interpretation,  such  a  declaration  would  itself  trigger  automatic  cancellation  without  recourse  to 
 NextWave.  Thus,  the  only  way  that  NextWave  could  have  avoided  the  loss  of  its  licenses,  even  under  the 
 rule  interpretation  it  urges,  was  to  avoid  a  default  by  making  full  and  timely  payment  on  or  before  the 
 payment  due  date,  which  it  unquestionably  failed  to  do.  62 


 19.  We  also  reject  NextWaves  argument  that  automatic  cancellation  and  the  January  12  th 
 Public  Notice  are  inconsistent  with  the  Wireless  Bureaus  decisions  in  a  series  of  non  C  block  cases   
 specifically,  the  Lancaster  Communications,  63  Cordell  Engineering,  64  TE-  MCG,  65  and  Ivan  Brisbin  66 
 cases.  In  Lancaster  Communications,  Cordell  Engineering  and  TE-  MCG,  the  Commission,  as  a  result  of 
 an  administrative  oversight,  accepted  payments  from  the  licensees  after  the  payment  deadlines  had  passed, 
 thereby  constructively  waiving  the  installment  payment  deadlines  so  that  the  licenses  at  issue  did  not  cancel. 
 The  Commission  is  not  required  to  repeat  previous  errors  in  order  to  maintain  consistency  with  precedent.  67  Moreover,  in  this  case,  the  Commission  has  not  acted  in  such  a  way  that  reasonably  could  be  construed 


 62  Nor  does  Trinity  support  NextWaves  argument  that  the  Commission  was  required  to  inform  NextWave 
 specifically  that  the  automatic  stay  would  not  override  FCC  licensing  regulations.  Trinity  concerned  differing 
 interpretations  of  Commission  rules,  not  the  interaction  of  our  rules  with  other  federal  law.  In  any  event, 
 NextWaves  argument  ignores  the  Governments  consistent  position  taken  throughout  the  litigation,  that 
 NextWaves  bankruptcy  case  represented  an  impermissible  collateral  attack  on  our  Restructuring  Orders  and  our 
 authority  to  place  conditions  on  FCC  licenses.  NextWave  also  ignores  the  September  2,  1998  Letter,  which,  as 
 discussed  elsewhere,  did  inform  NextWave  directly  (and  before  cancellation  actually  occurred)  of  the 
 Commissions  rejection  of  NextWaves  position  that  its  bankruptcy  filing  precluded  enforcement  of  our 
 Restructuring  Orders.  For  these  reasons,  NextWaves  reliance  on  Trinity  is  unavailing. 


 63  See  Letter  from  Daniel  B.  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  to  Thomas  Gutierrez, 
 Esq.,  Counsel  for  Lancaster  Communications,  Inc.,  DA  98-  2052,  1998  WL  709412  (FCC)  (rel.  Oct.  9,  1998) 
 (Lancaster  Communications). 


 64  Letter  from  Amy  J.  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless 


 Telecommunications  Bureau,  to  Meredith  S.  Senter,  Jr.,  Esq.,  Counsel  for  Cordell  Engineering,  DA  99-  277,  14 
 FCC  Rcd  5003  (1999)  (Cordell  Engineering). 


 65  Letter  from  Thomas  J.  Sugrue,  Chief,  Wireless  Telecommunications  Bureau,  to  Lloyd  W.  Coward,  Esq., 


 Counsel  for  TE-  MCG  Consortium,  DA  99-  258,  14  FCC  Rcd  2173  (1999)  (TE-  MCG). 
 66  In  the  Matter  of  Ivan  Brisbin  (Call  Sign  WPCB813)  Request  for  Waiver  of  Section  90.149(  a)  of  the 


 Commissions  Rules,  Order  on  Reconsideration,  DA  00-  59,  15  FCC  Rcd  724  (2000)  (Ivan  Brisbin). 
 67  The  D.  C.  Circuit  recently  rejected  a  similar  argument  presented  by  SouthEast  Telephone,  after  its 


 licenses  automatically  canceled  when  it  failed  to  make  the  required  payment  by  October  29,  1998.  See  SouthEast 
 Telephone,  supra  at  note  36.  SouthEast,  like  NextWave,  relied  on  TE-  MCG  in  arguing  that  the  Commission  was 
 acting  improperly  when  it  enforced  its  timely  payment  rules  because  the  Commission  had  granted  waivers  of  late 
 payments  to  some  licensees  in  the  past  in  other,  non-  PCS,  services.  The  D.  C.  Circuit  understood  that  these  past 
 instances  were  based  in  part  on  the  FCC's  inadvertent  acceptance  of  late  payments  and  resulting  constructive 
 waiver  of  the  payment  deadlines  and  the  Court  concluded  that  in  these  circumstances,  the  mere  fact  that  the 
 agency  granted  TE-  MCG's  request  does  not  require  it  to  grant  petitioner's  request.  Id.  at  1.  As  the  Court 
 recognized,  an  agency  is  not  required  to  continue  to  repeat  its  past  errors  in  order  to  remain  consistent  with  past 
 (continued.) 
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 as  constructively  waiving  the  October  29,  1998,  late  payment  deadline. 
 20.  Moreover,  it  is  significant  that  in  Lancaster  Communications,  Cordell  Engineering,  and 
 TE-  MCG,  the  parties  were  not  C  or  F  block  licensees  and  were  not  affected  by  the  extraordinary  measures 
 the  Commission  took  to  facilitate  payment  by  such  licensees.  68  In  attempting  to  accommodate  the  needs  of 
 the  C  Block  licensees  in  the  Restructuring  Orders,  the  Commission  reiterated  its  belief  that  the  ability  to 
 make  installment  payments  is  evidence  of  licensees  ability  to  access  the  capital  necessary  to  both  pay  for 
 the  licenses  and  provide  service  to  the  public.  69  Having  allowed  C  and  F  block  licensees  to  defer  any 
 installment  payments  for  more  than  a  year,  the  Commission  took  the  position  that  it  would  strictly  enforce 
 the  resumption  deadline,  and  not  permit  any  further  extensions.  70  In  these  circumstances,  it  is  hardly 
 arbitrary  or  capricious  for  the  Commission  to  recognize  the  applicability  of  its  automatic  cancellation  rules 
 to  a  licensee  that  failed  to  make  a  payment  by  the  resumption  deadline.  As  a  party  in  the  C  block 
 restructuring  proceedings,  NextWave  certainly  knew  that  we  intended  to  strictly  enforce  the  October  29, 
 1998  payment  deadline,  particularly  in  light  of  the  year  of  suspension  of  payments  already  afforded  to  C 
 block  licensees.  71 


 21.  Ivan  Brisbin  is  also  inapposite.  There,  the  Commercial  Wireless  Division  granted  a  late 
 request  for  waiver  of  the  Commissions  rules  establishing  license  renewal  terms  for  Specialized  Mobile 
 Radio  (SMR)  licensees  72  and  reinstated  its  license  on  the  grounds  that  the  licensee  had  completed 
 construction  and  had  been  operating  over  the  course  of  the  license  term.  The  full  and  timely  payment  rules, 
 applicable  to  NextWave,  were  not  at  issue  in  Ivan  Brisbin,  which  was  not  a  payment  default  case. 
 Moreover,  because  NextWave  is  not  in  commercial  operation,  its  case  does  not  present  the  same  public 
 interest  concerns,  i.  e.,  the  uninterrupted  provision  of  service,  that  informed  the  Wireless  Bureaus  decision 
 in  Ivan  Brisbin. 


 22.  NextWave  also  contends  that  in  asserting  cancellation,  the  Commission  departed  without 
 explanation  from  the  consistent  course  of  conduct  it  followed  in  the  NextWave  bankruptcy  proceedings, 
 particularly  in  regard  to  an  agreement  reached  in  principle  between  the  Government  and  Nextel 
 Communications,  Inc.  (  Nextel)  to  settle  the  NextWave  bankruptcy.  The  circumstances  surrounding  this 
 agreement  demonstrate  that  NextWaves  contention  is  erroneous.  The  Government  consistently  maintained 
 throughout  the  litigation  that  NextWaves  Adversary  Proceeding  represented  a  collateral  attack  on  the 
 Restructuring  Orders.  The  bankruptcy  court,  however,  rejected  this  position  and  ruled  that  NextWave 
 could  retain  its  licenses  for  significantly  less  than  its  winning  bid  at  auction.  The  Government  appealed. 
 Thereafter,  the  bankruptcy  court  allowed  NextWaves  reorganization  efforts  to  proceed.  Until  resolution  of 


 (Continued  from  previous  page) 
 decisions.  Id.  See  also  Chem-  Haulers,  Inc.  v.  ICC,  565  F.  2d  728,  730  (D.  C.  Cir.  1977);  Texas  International 
 Airlines  v.  CAB,  458  F.  2d  782,  785  (D.  C.  Cir.  1971). 


 68  See  Restructuring  Orders,  supra  at  note  12. 


 69  See  First  Reconsideration  Order,  8345  FCC  Rcd  at  8348,    8. 
 70  The  Commission  clearly  stated  that  it  would  not  entertain  any  requests  for  an  extension  beyond  the 
 payment  resumption  date.  See  Second  Report  and  Order,  12  FCC  Rcd  at16451-  16452,    30.  See  also  Extension 
 Request  Order,  supra  at  note  36. 


 71  See,  e.  g.,  Extension  Request  Order,  supra  at  note  36;  SouthEast  Telephone  MO  &O,  supra  at  note  36. 


 72  See  47  C.  F.  R.    90.149(  a)(  1998). 
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 that  appeal,  the  Government  appropriately  entertained  settlement  proposals.  73  Settlement  discussions  do 
 not  constitute  an  admission  that  the  positions  that  a  party  has  maintained  and  continues  to  press  in  the 
 litigation  are  incorrect. 


 23.  NextWave  also  argues  that  in  enforcing  the  automatic  cancellation  rules,  the  Commission 
 failed  to  consider  the  significant  congressional  policy  judgments  that  are  embodied  in  the  Bankruptcy  Code, 
 including  equality  of  distribution  among  creditors,  a  fresh  start  for  debtors  and  the  efficient  and  economical 
 administration  of  cases,  or  to  attempt  to  weigh  those  judgments  against  the  Commission's  own  policy 
 objectives.  We  have,  in  fact,  made  the  assessment  that  NextWave  seeks.  Our  consistent  position 
 throughout  the  bankruptcy  litigation  reflects  just  the  sort  of  consideration  that  NextWave  complains  to  be 
 lacking.  As  we  explain  below,  even  when  these  bankruptcy  policies  are  considered,  the  public  interest  is 
 best  served  by  enforcing  our  automatic  cancellation  rules  against  NextWave.  Indeed,  the  D.  C.  Circuit  has 
 stated  that  the  Commission  should  assure  that  licensees  do  not  use  bankruptcy  as  a  means  of 
 circumventing  their  obligation  to  operate  in  the  public  interest."  74 


 24.  In  making  public  interest  assessments  under  the  Communications  Act  we  take  into  account 
 the  policies  embodied  in  other  federal  statutes,  including  the  Bankruptcy  Code.  75  We  have  fully  considered 
 the  policies  embodied  in  the  Bankruptcy  Code  as  presented  by  NextWave  and  find  that  the  public  interest  in 
 maintaining  the  integrity  of  the  licensing  process  through  auctions,  the  need  to  ensure  that  licenses  are 
 allocated  to  those  licensees  that  are  best  qualified  to  hold  them,  and  our  desire  to  in  this  way  further 
 competition  in  the  marketplace  outweigh  NextWaves  individual  business  interests  and  those  of  its 
 creditors.  76  Furthermore,  the  preservation  and  protection  of  the  public  interest  in  facilitating  the  goals  of 
 the  Communications  Act  of  1934  as  set  forth  in  Section  309(  j)  are  decisive  here.  77  Section  309(  j)  embodies 


 73  Until  the  Second  Circuits  decision  in  December  1999  (and  later  affirmed  in  May  2000),  the 
 Commission  was  bound  by  the  law  of  the  case  and  was  prevented  from  enforcing  cancellation.  See    6  supra. 
 74  See  LaRose  v.  FCC,  494  F.  2d  1145  at  1146  n.  2  (D.  C.  Cir.  1974)  (LaRose). 


 75  See  LaRose  v.  FCC,  494  F.  2d  at  1146  n.  2,  1147-  1148;  Second  Thursday  Corp.,  22  FCC2d  515  at  516,   
 5  (1970);  Telemundo,  Inc.  v.  FCC,  802  F.  2d  513  at  518  (D.  C.  Cir.  1986).  See  also  In  the  Matter  of  Mobilemedia 
 Corporation,  et.  al.,  Memorandum  Opinion  and  Order,  14  FCC  Rcd.  8017  (1999);  In  re  Application  of  San  Diego 
 Television,  Inc.,  Debtor-  in  Possession,  Memorandum  Opinion  and  Order,  11  FCC  Rcd  14689,  14693    13 
 (1996)  (San  Diego);  In  re  Application  of  Various  Subsidiaries  and  Affiliates  of  Geotek  Communications,  Inc., 
 Memorandum  Opinion  and  Order,  15  FCC  Rcd  790,  809  n.  90  (2000). 


 76  While  under  LaRose  we  are  to  consider  ways  in  which  our  rules  can  be  enforced  without  harming 


 innocent  creditors,  we  believe  LaRose  to  be  inapplicable  under  the  instant  facts.  LaRose  concerned  an 
 application  to  transfer  existing  licenses,  and  a  decision  by  the  Court  that  creditors  should  not  be  penalized  for  the 
 malfeasance  of  the  licensees  operators  or  principals.  Unlike  LaRose,  all  creditors  of  NextWave,  and  of  other  C 
 block  licensees,  should  have  understood  that  the  maintenance  of  their  investment  was  contingent  on  their 
 companys  ability  to  pay  the  winning  bid  price  as  provided  in  our  rules.  Indeed,  it  is  likely  that  creditors  of  other 
 licensees  did  lose  their  investment  as  a  result  of  the  operation  of  our  rules.  We  do  not  believe  it  would  be 
 appropriate  to  decline  to  apply  our  rules  governing  cancellation,  and  thereby  eviscerate  our  regulatory  scheme  for 
 assigning  licenses,  in  order  to  protect  NextWaves  creditors  from  a  known  risk  that  they  undertook  at  the  time 
 they  invested. 


 77  In  addition,  Section  308(  b)  the  Communications  Act  of  1934,  as  amended,  states  that  the  Commission 


 by  regulation  may  prescribe  as  to  the  citizenship,  character,  and  financial,  technical,  and  other  qualifications  of 
 the  applicant  to  operate  the  station.  47  U.  S.  C.    308(  b). 
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 a  presumption  that  licenses  should  be  allocated  as  a  result  of  an  auction  to  those  who  place  the  highest 
 value  on  the  use  of  the  spectrum.  Such  entities  are  presumed  to  be  those  best  able  to  put  the  licenses  to 
 their  most  efficient  use.  If  licensees  were  allowed  to  adjust  their  winning  bid  obligations  after  the  fact  in 
 bankruptcy,  the  result  of  the  auction  would  be  negated,  and  the  integrity  of  the  auction  process  would  be 
 completely  undermined.  The  winning  bidder  would  be  allowed  to  retain  licenses  despite  having  lost  the 
 above  presumption.  Nor  would  this  be  fair  to  those  who:  1)  participated  in  the  auction  but  were  outbid  by 
 NextWave;  2)  would  like  an  opportunity  to  bid  on  the  licenses  now,  and;  3)  perhaps  most  importantly, 
 complied  with  our  Restructuring  Orders.  Some  of  the  licensees  that  complied  with  our  orders  actually 
 forfeited  their  licenses  because  they  could  not  ultimately  meet  their  bid  obligations;  the  balance  either 
 returned  spectrum  pursuant  to  our  Restructuring  Orders  or  made  their  installment  payments  as  required.  It 
 would  be  unfair  to  permit  a  licensee  that  could  not  satisfy  its  bid  to  file  for  bankruptcy,  tying  up  the 
 spectrum  in  the  process,  and  then  emerge  from  bankruptcy  at  some  later  time  and  retain  the  licenses,  while 
 others  that  complied  with  our  rules  lost  their  licenses. 


 25.  Congress  gave  the  Commission  the  authority  to  auction  radio  spectrum  licenses  in  order  to 
 facilitate  the  fulfillment  of  its  mandate,  which  is,  inter  alia,  to  promote  the  rapid  deployment  of  new 
 technologies,  products,  and  services  to  the  American  public  while  recovering  for  the  public  the  value  of  that 
 spectrum.  78  In  order  to  implement  the  auction  program,  Congress  delegated  to  the  Commission  the 
 authority  to  make  the  rules  by  which  the  program  operates,  including  the  payment  rules.  Strict  enforcement 
 of  payment  rules  enhances  the  integrity  of  the  auction  and  licensing  process  by  ensuring  that  applicants 
 have  the  necessary  financial  qualifications  and  that  spectrum  is  awarded  to  those  qualified  bidders  who 
 value  the  spectrum  most.  Insisting  that  licensees  demonstrate  their  ability  to  pay  as  a  condition  to  holding 
 licenses  is  essential  to  a  fair  and  efficient  licensing  process,  is  fair  to  all  participants  in  our  auctions, 
 including  those  who  won  licenses  in  the  auctions  and  those  who  did  not,  and  fosters  the  promotion  of 
 economic  opportunity  and  competition  in  the  marketplace.  NextWave  is  providing  no  service.  The 
 spectrum  licensed  to  NextWave  has  gone  unused  since  early  1997  and  represents  licenses  in  90  markets 
 across  the  United  States.  Since  the  cancellation  and  the  January  12  th  Public  Notice,  there  has  been  an 
 overwhelming  interest  in  this  spectrum.  79  NextWaves  failure  to  utilize  the  spectrum  and  its  attempts  to 
 shield  the  spectrum  in  bankruptcy  have  hindered  the  growth  of  innovative  and  competitive 
 telecommunications  services  in  many  areas  of  the  United  States,  to  the  detriment  of  the  American  public. 
 Under  the  circumstances  presented,  and  on  balance,  we  cannot  accommodate  the  policies  embodied  in  the 
 Bankruptcy  Code  without  causing  undue  harm  to  the  integrity  of  our  auction  and  licensing  process  and 
 further  harming  the  publics  interest  in  the  efficient  deployment  of  telecommunications  services. 


 26.  Application  of  Federal  Bankruptcy  Laws.  NextWave  argues  that  the  release  of  the 
 January  12  th  Public  Notice  violates  Sections  362(  a),  525,  1123,  and  1124  of  the  Bankruptcy  Code.  To  the 
 extent  NextWave  argues  that  the  Bankruptcy  Code  operates  to  preclude  license  cancellation  under  our 
 rules,  that  argument  has  been  summarily  rejected  by  the  Second  Circuit  and  is  precluded  under  the  doctrine 


 78  47  U.  S.  C.    309(  j)(  3). 
 79  See  Comments  filed  on  June  22,  2000,  by  Alpine  PCS,  Inc.,  America  Connect,  Inc.,  BellSouth 
 Corporation,  Carolina  PCS  I  Limited  Partnership,  Nextel  Communications,  Inc.,  Rural  Telecommunications 
 Group  et  al.,  Twenty  First  Wireless,  Inc.,  and  Verizon  Wireless  in  response  to  In  the  Matter  of  Amendment  of 
 the  Commissions  Rules  Regarding  Payment  Financing  for  Personal  Communication  Services  (PCS)  Licensees, 
 WT  Docket  No.  97-  82,  Further  Notice  of  Proposed  Rulemaking,  FCC  00-  197  (rel.  June  7,  2000). 
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 16 
 of  res  judicata.  80 
 27.  Estoppel  and  Waiver.  NextWave  claims  that  the  Commission  is  barred  by  the  doctrines  of 
 equitable  estoppel,  judicial  estoppel,  and  waiver  from  asserting  that  its  licenses  have  canceled.  81  NextWave 
 asserts  that  the  Commission  did  not  seek  payments  from  it  and  did  not  send  quarterly  notices  of  payment 
 obligations,  specifying  the  outstanding  balance  of  the  debt.  NextWave  also  cites  to  statements  made  by 
 Department  of  Justice  attorneys  in  the  bankruptcy  case,  which  NextWave  claims  led  it  and  its  investors  to 
 believe  that  the  Commission  was  taking  the  position  that  it  could  not  cancel  licenses  during  the  pendency  of 
 the  bankruptcy  case.  We  note  that  these  arguments  were  made  to  the  Second  Circuit,  and  were  responded 
 to  by  the  Government.  82 


 28.  The  party  seeking  to  raise  the  defense  of  equitable  estoppel  must  first  establish  the 
 following  elements:  (1)  the  party  to  be  estopped  must  be  aware  of  the  facts;  (2)  the  party  to  be  estopped 
 intended  his  act  or  omission  to  be  acted  upon;  (3)  the  party  asserting  estoppel  did  not  have  knowledge  of  the 
 facts;  and  (4)  the  party  asserting  estoppel  reasonably  relied  on  the  conduct  of  the  other  to  his  substantial 
 injury.  83  In  addition  to  these  elements,  a  private  litigant  seeking  to  estop  the  government  bears  a  heavy 
 burden.  Estoppel  will  not  lie  unless  the  party  can  show  affirmative  misconduct  by  the  government  84  that 
 goes  beyond  mere  negligence,  delay,  inaction  or  failure  to  follow  internal  agency  guidelines  85  ;  erroneous 
 oral  and  written  advice  given  by  a  lower  level  official  is  not  sufficient.  86  None  of  these  prerequisites  is 
 satisfied  here. 


 29.  The  Commission  did  not  act  in  a  manner  that  would  have  led  NextWave  reasonably  to 
 believe  that  its  licenses  would  not  cancel  if  it  failed  to  make  timely  payment.  In  fact,  NextWave  had  ample 
 notice  to  the  contrary.  As  discussed  above,  outside  the  bankruptcy  context  we  have  consistently  stressed 
 the  importance  of  the  full  and  timely  payment  condition  as  set  forth  in  our  rules  and  on  the  face  of  the 
 licenses  themselves.  Under  our  Restructuring  Orders  it  was  clear  that  payments  must  resume  by  October 
 29,  1998,  at  the  latest,  to  prevent  cancellation,  and  requests  by  similarly  situated  parties  to  waive  the 
 payment  resumption  deadline  were  denied.  In  the  bankruptcy  case,  the  Governments  consistent  position 
 was  that  NextWave  could  not  use  bankruptcy  to  collaterally  attack  our  Restructuring  Orders.  The 
 September  2,  1998  Letter  reiterated  to  NextWave  our  position  that  the  filing  of  bankruptcy  did  not  relieve 
 it  of  its  regulatory  obligations.  It  is  true  that  NextWave  argued  repeatedly  in  court  that  the  obligation  to 


 80  We  note  that  NextWave  has  argued  to  the  D.  C.  Circuit  in  its  now-  dismissed  petition  for  review  and  its 
 papers  relating  to  the  motion  to  dismiss  that  these  questions  were  not  decided  by  the  Second  Circuit.  We 
 disagree.  We  do  not  read  the  Second  Circuits  May  25  th  Opinion  as  an  invitation  to  argue  before  us  or  the  D.  C. 
 Circuit  the  applicability  of  various  Bankruptcy  Code  provisions. 


 81  See  NextWave  Petition  at  19-  20. 


 82  See  In  re:  Federal  Communications  Commission,  Case  No.  99-  5063,  Petition  for  a  Writ  of  Mandamus 
 (2  nd  Cir.  February  22,  2000),  pp.  36-  46  (Mandamus  Petition). 
 83  See  Mangaroo  v.  Nelson,  864  F.  2d  1202,  1204  (5  th  Cir.  1989). 


 84  Drozd  v.  INS,  155  F.  3d  81,  90  (2d  Cir.  1998). 
 85  Ingalls  Shipbuilding,  Inc.  v.  U.  S.  Dept.  of  Labor,  976  F.  2d  934,  938  (5  th  Cir.  1992). 
 86  Office  of  Personnel  Management  v.  Richmond,  496  U.  S.  414,  415-  416  (1990);  see  also  Deaf  Smith 
 County  Grain  Processors  v.  USDA,  162  F.  3d  1206  (D.  C.  Cir.  1998). 
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 pay  is  not  regulatory,  but  the  Government  argued  just  as  forcefully  that  the  full  and  timely  payment 
 requirement  is  a  critical  regulatory  condition.  Given  these  circumstances,  we  do  not  think  NextWave  could 
 reasonably  have  believed  that  we  agreed  with  its  position  that  the  bankruptcy  filing  precluded  enforcement 
 of  our  licensing  rules. 


 30.  Turning  to  NextWaves  specific  assertions,  the  fact  that  NextWave  did  not  receive 
 payment  notices  after  the  bankruptcy  case  was  filed  does  not  establish  waiver  or  estoppel.  At  the  time  that 
 the  payment  was  due,  October  29,  1998,  NextWave  already  knew  from  our  Restructuring  Orders,  the 
 Wireless  Bureaus  public  notices,  and  the  Commissions  orders  rejecting  requests  for  extension  of  time  to 
 pay  by  other  C-  block  licensees,  that  the  Commission  had  established  October  29,  1998  as  the  final  due  date 
 for  payments  under  the  Restructuring  Orders.  NextWave  also  received  the  September  2,  1998  Letter 
 nearly  two  months  before  payment  was  due.  Given  these  formal  and  informal  statements,  NextWave  did 
 not  need  a  separate  notice  that  its  payments  were  due  by  October  29  in  order  to  understand  the 
 Commissions  position  that  it  was  obligated  to  comply  with  the  Commissions  rules  regardless  of  the 
 bankruptcy  filing.  The  practice  of  sending  out  individual  notice  is  not  mandated  by  any  Commission  rule, 
 and  the  fact  that  no  special  additional  notice  was  sent  to  NextWave  during  the  pendency  of  the  bankruptcy 
 case  of  the  amount  due  does  not  meet  the  prerequisites  of  waiver  or  estoppel.  As  a  Commission  licensee, 
 NextWave  was  responsible  for  making  timely  payment  on  the  dates  set  by  the  Commission,  without 
 individual  notice  of  payment  due.  87 


 31.  NextWave  argues  that  the  Commission  is  estopped  from  asserting  cancellation  because  of 
 selected  quotes  from  statements  made  by  DOJ  attorneys  in  court  regarding  the  operation  of  the  Bankruptcy 
 Code.  We  do  not  find  that  any  of  these  statements,  taken  individually  or  collectively,  constitute  an 
 estoppel.  First,  nowhere  in  the  statements  quoted  by  NextWave  does  a  DOJ  attorney  state  that  NextWave 
 could  miss  a  payment  and  still  retain  its  licenses.  Second,  NextWave  takes  the  selected  DOJ  attorney 
 statements  out  of  context.  All  of  the  statements  were  made  during  the  course  of  ongoing  litigation  in  which 
 the  Governments  consistent  position  was  that  NextWave  could  not  modify  the  terms  and  conditions  of  the 
 Commissions  licenses,  including  specifically  the  condition  of  full  and  timely  payment.  Given  that  express 
 position,  NextWave  could  not  have  reasonably  assumed  from  any  of  the  quoted  DOJ  attorney  statements 
 that  NextWave  could  ignore  the  payment  deadlines  prescribed  by  the  Commissions  rules  without  peril  to 
 its  licenses  if  the  Governments  position  ultimately  prevailed.  88  Notably,  many  of  the  DOJ  attorney 
 statements  quoted  by  NextWave  were  made  long  after  the  October  29,  1998  payment  deadline,  and  long 
 after  any  arguable  60-  day  extension  of  the  deadline  under  Section  108  of  the  Bankruptcy  Code.  NextWave 
 could  not  possibly  have  relied  on  these  post-  deadline  statements  for  its  decision  to  fail  to  comply  with  the 
 full  and  timely  payment  condition.  Third,  before  the  October  payment  deadline,  NextWave  received 
 directly  from  the  Commission  the  September  2,  1998  Letter,  which  made  it  clear  that  the  Commission 
 intended  to  enforce  its  Restructuring  Order  deadlines  regardless  of  the  bankruptcy  filing.  Finally,  as  a 


 87  See  also  Letter  from  Louis  Sigalos,  Deputy  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless 
 Telecommunications  Bureau,  to  James  A.  LaBelle,  21  st  Century  Telesis,  Inc.,  DA  00-  1791  (Aug.  7,  2000). 
 88  As  the  Government  explained  in  its  Mandamus  Petition,  at  p.  38,  there  is  nothing  inconsistent  between 


 Government  counsel's  statements  and  the  distinction  drawn  in  Section  362(  b)(  4)  of  the  Bankruptcy  Code 
 between  an  agency's  forbidden  efforts  to  collect  money  payments  and  its  permissible  exercise  of  regulatory 
 authority.  Indeed,  counsel's  statements  are  consistent  with  the  Second  Circuit's  observation  that,  "if  the  FCC 
 chooses  to  pursue  .  .  .  collection  .  .  .  it  may  find  itself  acting  as  a  creditor."  NPCI,  200  F.  3d  at  59  n.  15.  Thus,  the 
 statement  that  the  automatic  stay  would  preclude  affirmative  efforts  to  collect  license  payments  did  not  suggest  that 
 the  automatic  stay  would  preclude  operation  of  the  Commission's  rules  respecting  automatic  cancellation  for  failure 
 to  comply  with  license  conditions. 
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 matter  of  law,  a  lawyers  passing  remark  is  not  a  basis  for  estopping  a  federal  regulatory  agency  from 
 enforcing  its  rules  in  the  public  interest.  89 


 32.  For  the  same  reasons  set  forth  above,  the  Commission  is  not  judicially  estopped.  The 
 Commissions  consistent  position  in  the  litigation  has  been  that  the  Commissions  licensing  rules  and 
 conditions  remain  applicable  to  NextWave  notwithstanding  its  bankruptcy  filing.  Accordingly,  the 
 Commissions  actions  in  recognizing  the  cancellation  of  the  licenses  for  non-  payment  and  in  announcing  an 
 auction  of  PCS  C  and  F  block  licenses,  including  those  NextWave  previously  held,  are  not  inconsistent 
 with  any  of  its  statements  before  the  courts. 


 33.  In  its  August  11  th  Supplement,  NextWave  relies  on  Iowa  Utilities  Board  V.  FCC.  90 
 Without  commenting  on  the  holding  by  the  Eighth  Circuit  with  respect  to  the  judicial  estoppel  found  by  that 
 Court,  none  of  the  statements  relied  upon  by  NextWave,  nor  the  circumstances  in  which  they  were  made, 
 are  analogous  to  the  statements  made  to  the  United  States  Supreme  Court  concerning  the  proxy  prices  at 
 issue  in  that  case.  As  explained  at  length  in  this  order,  the  Governments  consistent  position  in  this 
 litigation  has  been  that  FCC  license  conditions  should  apply  despite  NextWaves  bankruptcy  filing. 


 IV.  Ordering  Clauses 
 34.  Therefore,  for  all  of  the  reasons  stated  above,  IT  IS  ORDERED  that  the  Petition  for 
 Reconsideration  filed  by  NextWave  IS  DENIED. 


 35.  IT  IS  FURTHER  ORDERED  that  as  a  result  of  the  cancellation  of  the  licenses  and  the 
 denial  of  NextWaves  Petition  for  Reconsideration,  the  Application  for  Review  and  Settlement  Request 
 filed  by  Antigone  Communications,  Limited  Partnership  and  PCS  Devco,  Inc.  are  DISMISSED  AS 
 MOOT. 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Magalie  Roman  Salas 
 Secretary 


 89  See  In  re  Ludlow  Hosp.  Soc.,  124  F.  3d  22,  26  (1  st  Cir.  1997)(  where  Assistant  United  States  Attorney 
 gave  oral  assurances  regarding  deadline  materially  distinct  from  one-  year  deadline  prescribed  by  regulation, 
 bankruptcy  trustee  could  not  reasonably  rely  on  those  assurances  as  a  basis  for  inferring  blanket  Government 
 concession  that  bankruptcy  court  had  equitable  power  to  override  regulatory  deadlines). 


 90  2000  U.  S.  App.  LEXIS  17234  (8  th  Cir.  July  18,  2000). 
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 SEPARATE  STATEMENT  OF  COMMISSIONER  HAROLD  FURCHTGOTT-  ROTH 
 Re  Public  Notice  DA  00-  49,  Auction  of  C  and  F  Block  Broadband  PCS  Licenses,  Nextwave  Petition  for 
 Reconsideration,  Order  on  Reconsideration  (rel.  September  6,  2000) 


 Government  is  at  its  best  when  it  is  most  boring,  when  it  follows  laws  and  rules  with  a  soporific 
 routine.  A  government  that  is  predictable  and  unshakable  is  a  government  on  which  people  can  rely  in 
 order  to  make  long-  term  plans.  After  the  long  ordeal  of  the  C  Block  bankruptcies,  the  Commission  can 
 best  return  to  its  routine  by  taking  a  step  back  and  delaying  the  auction  of  the  C  Block  licenses  until  there  is 
 greater  clarity  about  the  legal  fate  of  these  licenses.  We  should  not  endeavor  to  rush  into  a  re-  auction  that 
 may  only  exacerbate  the  already  vast  troubles  suffered  by  all  parties  concerned.  Thus,  while  I  concur  with 
 todays  decision  regarding  NextWaves  petition  for  reconsideration,  I  would  have  supported  a  request  to 
 delay  the  re-  auction  until  NextWave  has  had  an  opportunity  to  pursue  a  final  decision  from  the  Supreme 
 Court  regarding  the  interaction  between  the  bankruptcy  code  and  the  Communications  Act. 


 New  technologies  and  ever-  changing  market  circumstances  create  uncertainty  and  instability.  Each 
 of  our  auctions  has  dealt  with  different  portions  of  the  spectrum,  has  had  different  legal  requirements,  and 
 has  had  different  policy  objectives.  The  differences  in  auctions  make  each  unique.  Honest  and  hard-working 
 individuals,  both  inside  and  outside  of  the  federal  government,  and  particularly  here  at  the  FCC, 
 invested  their  time,  efforts,  and  hopes  into  developing  a  new  auction  model  to  distribute  PCS  licenses. 
 Some  new  government  programs  succeed  beyond  anyones  wildest  dreams;  others  never  fail  to  disappoint. 
 Although  perhaps  clear  in  retrospect,  at  the  time  no  signal  of  the  C  Blocks  fate  was  apparent. 


 It  launched  with  great  fanfare.  At  the  time,  the  bid  amounts  were  breathtakingly  large.  The 
 auction  seemed  to  mark  an  auspicious  launch  for  new  businesses,  and  a  windfall  of  promised  receipts  for 
 the  federal  government. 


 These  hopes  made  the  rapid  collapse  of  the  C-  block  licensees  all  the  more  dramatic,  disappointing, 
 and  almost  incomprehensible.  In  retrospect,  the  entire  episode  was  not  incomprehensible  at  all.  Something 
 dreadful  went  wrong.  The  culprit  was  not  an  individual  inside  or  outside  government;  the  culprit  was 
 installment  payments.  Their  culpability  is  widely  recognized;  indeed,  it  is  incomprehensible  that  this 
 agency  would  ever  use  them  again. 


 History  is  not  forgiving.  We  cannot  go  back  in  time,  completely  correct  our  past  mistakes,  and 
 start  over  without  a  trace.  If  we  could,  we  would  have  redone  the  C-  block  auction  long  ago.  Instead,  the 
 FCC  and  private  parties  have  bravely  faced  the  inescapable:  the  failure  of  the  initial  C-  block  auction. 


 What  should  a  government  agency  and  private  parties  do  in  the  wake  of  a  failure?  Private  parties 
 can  be  expected  to  take  whatever  positions  are  necessary  to  save  themselves.  They  can  be  expected  to  be 
 mercurial  and  even  desperate.  They  can  be  expected  to  seek  to  blame  others  for  their  plight. 


 The  federal  government  could  respond  in  a  similar  manner.  The  governments  behavior  could  be 
 mercurial  and  even  desperate.  It  could  seek  to  blame  others  for  their  plight. 


 The  federal  government,  however,  is  at  its  best  when  it  chooses  a  different  path.  Unlike  a  small 
 company,  the  federal  government  is  not  threatened  with  evanescence.  It  has  a  future,  long  and  bright, 
 despite  countless  mistakes  and  bad  situations.  The  federal  government  is  at  its  best:  when  it  is  dull  and 
 boring,  when  it  takes  tedious  rules  and  carries  them  out,  when  it  is  painfully  predictable,  when  it  is  selfless 
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 in  accepting  blame  for  its  mistakes,  and  when  it  is  long-  forbearing  in  understanding  the  behavior  of  private 
 parties  that  are  not  at  their  best. 


 The  story  of  the  aftermath  of  the  C-  block  auction,  the  role  of  the  government  and  the  private 
 licensees  is  not  a  happy  history  or  a  pleasant  drama.  It  is  a  tragedy  with  many  victims  and  no  heroes.  It  is 
 a  mixture  of  a  comedy  of  the  absurd  and  a  comedy  of  errors  combined  in  a  manner  without  comedy,  only 
 absurdity  and  errors.  At  times  throughout  this  history,  the  behavior  of  the  federal  government  has  been 
 difficult  to  predict. 


 The  history  recounted  in  the  Commissions  document  has  many  twists  and  turns.  But  it  is  only 
 part  of  the  story.  It  does  not,  for  example,  describe  the  unexpected  delays  in  the  issuing  of  the  initial 
 licenses.  Nor  does  it  describe  how  the  governments  battle  with  NextWave  is  but  one  of  several  battles  the 
 government  is  having  with  C-  block  licensees  over  the  role  of  the  bankruptcy  code.  The  federal  government 
 has  had  smashing  legal  victories  against  NextWave;  the  progress  of  the  war  is  less  clear  in  other 
 skirmishes;  and  final  victory  for  the  federal  government  in  the  entire  legal  war  is  far  from  certain.  91 


 What  precisely  is  the  federal  governments  view  of  the  applicability  of  FCCs  automatic 
 termination  of  licenses  to  companies  subject  to  the  bankruptcy  codes  stay  provisions?  Perhaps  one  should 
 ask  Airadigm  today,  or  3  months  ago,  or  6  months  ago,  or  12  months  ago.  That  company  has  been  offering 
 service  for  months  with  what  it  believed  to  be  an  FCC  license,  but  which  now,  it  seems,  automatically 
 cancelled  in  1999.  92  Or  perhaps  one  should  ask  Nextel  about  its  negotiations  with  Commission  staff  for  the 
 possible  transfer  of  NextWaves  licenses  in  1999  that,  today,  we  reaffirm  terminated  in  1998.  Or  perhaps 
 one  could  ask  Judge  Hardin,  the  Bankruptcy  Judge  in  NextWaves  case,  who  clearly  seemed  surprised  to 
 learn  that  the  licenses  had  never  been  a  part  of  that  proceeding. 


 The  battle  between  the  Commission  and  NextWave  has  raged  for  two  years.  It  is  a  sequence  of 
 precipitous  decisions  on  both  sides.  NextWave  has  had  victories  in  some  courts;  the  Commission  has  had 
 victories  on  appeal  in  higher  courts.  The  outcomes  have  been  hardly  predictable;  indeed,  the  entire  saga  is 
 filled  with  more  twists  and  turns  and  unexpected  developments  so  as  to  appear  more  fictional  than  real. 


 The  NextWave  litigation  has  not  yet  ended.  The  litigation  for  other  C-  block  licensees  rages  as 
 well.  Yet  the  Commission  seeks  now  to  reauction  certain  C-  block  licenses  as  quickly  as  possible.  Which 
 licenses  will  be  offered  for  auction?  That  depends  on  the  status  of  litigation  at  the  time  of  the  auction. 
 Certainly,  no  one  today  could  say  with  certainty  exactly  which  licenses  will  be  available  in  3  months,  or  6 
 months,  or  9  months.  The  Commission  could  hold  an  auction  with  licenses  available  as  of  a  given  date;  but 
 the  following  day,  based  on  either  Commission  or  court  action,  some  of  those  licenses  may  no  longer  be 
 available  for  auction.  An  auction  in  which  the  legal  status  of  licenses  is  still  in  doubt  is  a  risky  and 
 unpredictable  adventure.  Some  may  say  that  the  legal  status  is  firmly  and  finally  established  in  the  current 
 matter;  given  the  dramatic  history  of  the  C-  Block,  I  am  yet  to  be  convinced  that  we  have  read  the  final 
 chapter.  There  is  one  outcome  that  could  be  far  worse  than  the  current  tragedy:  if  the  Commission  held  a 
 premature  auction  that  a  court  subsequently  held  invalid.  In  that  situation,  the  number  and  classes  of 
 victims  would  only  expand;  the  tortuous  litigation  of  two  years  would  be  prolonged  much  longer. 


 91  See  e.  g.  In  Re:  Kansas  Personal  Communications  Services,  Ltd.,  Case  No.  99-  21747-  11-  JAR,  Judgment 
 on  Decision  (Bankruptcy  Court,  D.  Kansas  Aug.  16,  2000). 
 92  See  Airadigm  Contingent  Emergency  Petition  for  Reinstatement  or  in  the  Alternative  for  Waiver  (filed 


 February  7,  2000).  Does  this  petition  form  the  foundation  for  differential  treatment? 
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 21 
 Independent  of  the  merits  of  NextWaves  litigation,  I  believe  that  it  would  make  sense  for  the  FCC 
 to  hold  a  C-  Block  reauction  only  when  we  have  greater  clarity  about  which  licenses  are  available.  It  would 
 result  in  a  simple,  perhaps  tedious  auction,  one  without  the  drama  and  unpredictability  of  the  past  two 
 years.  But  it  would  be  government  at  its  best.  It  would  be  a  government  that  sees  a  long  future  and  sees  its 
 measure  of  success  in  the  long  term,  not  next  week  or  next  month.  It  would  be  a  government  that  is  patient, 
 long-  forbearing,  willing  to  admit  its  faults,  willing  to  stand  by  its  decisions.  If  that  were  our  path,  we  could 
 be  predictable,  unshakable,  and  boring  in  our  routine.  And  we  would  all  be  the  better  for  it. 
21