[Federal Register Volume 62, Number 206 (Friday, October 24, 1997)]
[Rules and Regulations]
[Pages 55348-55357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28221]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 24

[WT Docket No. 97-82; FCC 97-342]


Installment Payment Financing for Personal Communications 
Services (PCS) Licensees

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Second Report and Order the Commission orders 
resumption of installment payments for the broadband Personal 
Communications Services (PCS) C and F blocks, with the payment deadline 
reinstated as of March 31, 1998. The Commission adopts disaggregation, 
amnesty, and prepayment options designed to assist C block licensees 
experiencing financial difficulties. These options will allow C block 
licensees to build systems or surrender spectrum to the Commission for 
reauction. The Commission's objectives in this proceeding are to ensure 
that the C block licensees have opportunities to provide service to the 
public while maintaining the fairness and integrity of the Commission's 
auctions program.

EFFECTIVE DATE: The effective date of the rule changes herein is 
December 23, 1997. The information collection contained in these rules 
becomes effective on OMB approval but no sooner than December 23, 1997. 
The Commission will publish a document on a later date announcing the 
effective date of the information collection.

FOR FURTHER INFORMATION CONTACT: Jerome Fowlkes or Sandra Danner, 
Auctions and Industry Analysis Division, Wireless Telecommunications 
Bureau, at (202) 418-0660.

SUPPLEMENTARY INFORMATION: This Second Report and Order in WT Docket 
No. 97-82, adopted on September 25, 1997 and released on October 16, 
1997, is available for inspection and copying during normal business 
hours in the FCC Reference Center, Room 239, 1919 M Street, N.W., 
Washington, D.C. 20554. The complete text may be purchased from the 
Commission's copy contractor, International Transcription Service, 
Inc., 1231 20th Street, N.W., Washington, D.C. 20036 (202) 857-3800. 
The complete Second Report and Order also is available on the 
Commission's Internet home page (http://www.fcc.gov).

Summary of Action

I. Background

    1. In the Competitive Bidding Fifth Report and Order, the 
Commission established a variety of incentives to encourage small 
businesses to participate in the auction of C block 30 MHz and F block 
10 MHz broadband PCS licenses. See Implementation of Section 309(j) of 
the Communications Act--Competitive Bidding, Fifth Report and Order, 59 
FR 37566 (July 22, 1994) (Competitive Bidding Fifth Report and Order). 
Provisions to promote participation by small businesses in broadband 
PCS included limiting eligibility in the initial C and F block auctions 
to entrepreneurs and small businesses, offering varying bidding 
credits, and offering installment payment plans. 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 only paid for the first six years and interest and principal 
for the remaining four. See 47 CFR Sec. 24.711(b)(3). In addition, 
there were other installment payment options available for bidders

[[Page 55349]]

qualifying as entrepreneurs. See 47 CFR Secs. 24.711(b)(1)-(3). All 
bidders in the C block auction, however, qualified as small businesses. 
Installment payments for small business F block licensees were limited 
to 80% of the bid price over ten years, and payments consist of 
interest only for the first two years, then interest and principal for 
the remaining eight years. See 47 CFR Sec. 24.716(b)(3). Entrepreneurs 
were also eligible for less favorable installment payment terms. See 47 
CFR Secs. 24.711(b)(1)-(2).
    2. On May 6, 1996 and July 16, 1996, the Commission concluded its 
broadband PCS C block auctions. Ninety bidders (including the C block 
reauction winners) won 493 C block licenses. The broadband PCS D, E, 
and F block auction concluded on January 14, 1997, and 88 bidders won 
491 F block licenses. Net high bids received for C block 30 MHz 
licenses, including C block reauction bids, totalled approximately 
$10.2 billion; net high bids received for F block 10 MHz licenses 
totalled $642.3 million.
    3. While many C block licenses were purchased for prices below or 
comparable to those for the A or B blocks, a handful of large bidders 
bid extremely high prices per pop for major markets, even adjusted for 
the value of the government financing we provide. The aggregate results 
of the C block auction, when measured in average price per pop paid, 
are markedly higher than the other PCS bands, even after adjusting for 
financing, and even though many individual small licensees bid prices 
comparable to those paid for the A and B block PCS licenses.
    4. When formulating its original auction rules in 1994, the 
Commission considered the possibility of debt restructuring and 
observed that it would follow current procedures under the existing 
debt collection rules and procedures. See Implementation of Section 
309(j) of the Communications Act--Competitive Bidding, Second Report 
and Order, 59 FR 22980 (May 4, 1994) (Competitive Bidding Second Report 
and Order).
    5. The Notice of Proposed Rulemaking to revise the part 1 auction 
rules sought comment on several topics related to auction installment 
debt. See Amendment of Part 1 of the Commission's Rules--Competitive 
Bidding Proceeding, Order, Memorandum Opinion and Order, and Notice of 
Proposed Rule Making, 62 FR 13540 (March 21, 1997) (Part 1 Proceeding). 
The Commission sought comment on imposing late payment fees on 
installment payments; the default provisions of Sec. 1.2104(g) in the 
event of installment payment defaults; and revised procedures for 
granting grace period requests.
    6. On March 31, 1997, in response to a joint request from several C 
block licensees seeking to modify their installment payment 
obligations, and because of other debt collection issues, the Wireless 
Telecommunications Bureau (Bureau) suspended the deadline for payment 
of installment payments for all C block licensees. On April 28, 1997, 
the Bureau extended the suspension to F block licensees.
    7. On June 30, 1997, the Bureau conducted a public forum in 
Washington, D.C. (``FCC Public Forum'') to discuss broadband PCS C and 
F block installment payment issues, including the alternative financing 
arrangements proposed in connection with the Public Notices issued on 
June 2, 1997. An FCC Task Force also was established which included 
representatives from the Bureau, the Office of Plans and Policy, the 
Office of General Counsel, and the Office of Communications Business 
Opportunities. This Task Force was charged with evaluating proposals 
for alternative financing arrangements submitted by PCS C and F block 
licensees and recommending to the Commission how to respond to those 
proposals. Both before and after the FCC Public Forum, numerous 
comments, reply comments, and ex parte letters and presentations were 
submitted to the Commission as part of this proceeding. The Commission 
thus has before it a wide range of proposals from entrepreneur block 
licensees, financial institutions and investors, equipment vendors, and 
other interested parties.

II. Second Report and Order

    8. The Commission requires C and F block licensees to resume their 
Note payments on March 31, 1998. They will also be required to pay on 
that date one-eighth of the Suspension Interest, and thereafter, pay 
one-eighth of the Suspension Interest with each regular installment 
payment made until the Suspension Interest is paid in full. 
``Suspension Interest'' is the entire amount of the unpaid simple 
interest that was accrued at the rate set forth in each licensee's 
Note(s) during the period beginning with the date on which each license 
was conditionally granted through and including March 31, 1998 
(``Suspension Period''). After March 31, 1998, payment due dates will 
conform to those indicated in the Notes executed by the licensees. C 
block licensees will be entitled to elect to continue making payments 
under their original C block Notes. In addition, the Commission adopts 
three options relating to the rules governing installment payments for 
the C block. These are designed to help to resolve the financing issues 
facing C block licensees and restore certainty to the marketplace, 
while at the same time helping the Commission meet its statutorily 
mandated public interest considerations set forth under Section 309(j) 
of the Communications Act.
    9. These goals will also be furthered by generally applying the 
same rules regarding eligibility that were used in the C block auction 
to the reauction of C block licenses. See 47 CFR Sec. 24.709. All 
applicants for the reauction meeting the current definition of 
``entrepreneur'' will be eligible to bid in the reauction. The 
Commission will also allow all entities that were eligible for and 
participated in the original C block auction to bid in the reauction. 
Further, with the exception of incumbent licensees who choose to 
disaggregate portions of spectrum they currently hold, and those 
licensees who surrender licenses under the prepayment option, all C 
block licensees who return licenses to the Commission will be eligible 
to bid on all markets in the reauction.
A. Resumption of Payments
    10. Effective March 31, 1998, the Commission rescinds the Order and 
Public Notice suspending payments for the C and F block licenses and 
reinstates the installment payment plans for all C and F block 
licensees. The Commission directs that all payments due and owing on 
and after March 31, 1998 be made in accordance with the terms of each 
licensee's Note, associated Security Agreement, and the Commission 
Orders and regulations. All Suspension Interest will become due and 
payable over a two-year period and all Commission rules regarding 
installment payments and defaults for the broadband PCS C and F blocks 
will remain in effect. Any C or F block licensee that fails to remit 
the payment due on March 31, 1998, and remains delinquent for more than 
60 days (i.e., fails to make the March 31, 1998, payment on or before 
May 30, 1998), will be in default on its license. See 47 CFR 
Sec. 1.2110(e)(4)(i). The 60-day period is an exception to the existing 
rules that provide for an automatic 90-day non-default period. Given 
the one year suspension, the Commission believes that providing a 
shorter automatic grace period is justified.
    11. Any licensee that continues under its original Note(s), will be 
required to pay on March 31, 1998, one-eighth of the Suspension 
Interest; thereafter, regular payments will become due and payable in 
accordance with the provisions of the licensee's original Note. The 
Commission concludes that it

[[Page 55350]]

could place a significant burden on licensees to require payment of the 
entire amount of the Suspension Interest on March 31, 1998. Therefore, 
the Commission requires that broadband PCS C and F block licensees 
submit one-eighth of the Suspension Interest on March 31, 1998, and 
one-eighth of the Suspension Interest with each regular installment 
payment made thereafter until the Suspension Interest is paid in full. 
After March 31, 1998, payment due dates will conform to those indicated 
in the Note(s) executed by the licensees. While the first regular 
installment payment next made after March 31, 1998, will be pro-rated 
to account for the resumption of payments on March 31, 1998, all 
regular installment payments thereafter will be in the amounts shown on 
the amortization schedule attached to and made a part of each Note, as 
amended, plus the applicable payments of Suspension Interest. For 
example, for those licensees granted in September, 1996 whose regular 
installments occur on March 31, June 30, September 30, and December 31 
of each year, the next regular payment due after March 31, 1998, will 
be due on June 30, 1998, and will include the amount of interest 
accrued from April 1, 1998, through and including June 30, 1998, plus 
one-eighth of the Suspension Interest. The next regular payment will be 
due on September 30, 1998, and will be due in the amount shown on the 
amortization schedule attached to the Note (i.e., interest from July 1, 
1998, through and including September 30, 1998), plus one-eighth of the 
Suspension Interest. Regular payments will continue on each and every 
December 31, March 31, June 30, and September 30 thereafter until the 
Note is paid in full. For these licensees, the payment due on December 
31, 1999, will be the last payment due that includes any amortized 
Suspension Interest. All payments after that date will continue in 
accordance with the terms of the amortization schedule attached to the 
Note executed by the licensee. All installment payments previously made 
by licensees who elect one of the three options will be applied in 
accordance with the provisions set forth under the discussion of each 
option below.
    12. The Commission delegates to the Bureau authority to set forth 
all procedures for implementing the resumption of payments.
    13. Broadband PCS C block licensees choosing to surrender their 
licenses pursuant to the amnesty option described below and those 
surrendering licenses that are not prepaid pursuant to the prepayment 
option described below will be required to return to the Commission 
each original Note and Security Agreement for cancellation by the 
Commission. The Commission will not entertain any requests for an 
extension of the March 31, 1998 deadline beyond the automatic 60-day 
non-default period discussed above. The licensees have already been 
afforded a significant period to licensees during which payments were 
not required. Therefore, the Commission intends to deny any requests 
for a grace period beyond the automatic 60-day non-default period 
adopted herein, including any requests made pursuant to Sec. 1.2110 of 
the Commission's rules. See 47 CFR Sec. 1.2110(e)(4)(ii).
    14. C block licensees may resume payments under their current Note 
or elect one of the three options described below.
B. Disaggregation of Spectrum for Reauction
    15. Under the disaggregation option adopted today by the 
Commission, any C block licensee may disaggregate a portion of its 
spectrum from each of its licenses and surrender it to the Commission 
for reauction. The licensee must disaggregate 15 MHz of spectrum it 
holds across all Basic Trading Areas (BTAs) in an Major Trading Area 
(MTA). These provisions prevent licensees from selectively surrendering 
spectrum for which they may believe they paid too much, or otherwise 
discarding spectrum in markets that may be more difficult to serve 
(commonly referred to as ``cherry-picking'' of licenses or spectrum). 
The Commission limits the ability of licensees to selectively 
disaggregate spectrum within an MTA also to facilitate attempts by new 
bidders to aggregate spectrum and initiate service. Because the 
Commission is allowing disaggregation on an MTA-by-MTA basis, special 
exemptions for built-out systems, such as the one adopted under the 
amnesty option discussed below, are unnecessary. In cases where a 
licensee has built-out a BTA, it can choose either to retain all 30 MHz 
in each of the BTAs it has licenses for in an MTA, or it can operate 
its built-out system with 15 MHz. The Commission believes that this 
flexibility mitigates the need for a build-out exception for this 
option.
    16. Licensees electing this option will be required to return half 
of their spectrum at 1895-1902.5 MHz paired with 1975-1982.5 MHz, which 
is spectrum contiguous to the PCS F block. The surrender of spectrum 
adjacent to the F block will provide sufficient contiguous spectrum for 
both the incumbent and new licensees to offer competitive PCS services.
    17. Under the disaggregation option, the Commission will reduce the 
amount of the debt owed by an amount equal to the pro rata portion of 
the spectrum returned to the Commission, i.e., by 50%, subject to 
coordination with the Department of Justice pursuant to applicable 
federal claims collection standards. The Commission will retain the pro 
rata portion of the down payments applicable to the spectrum. The 
following illustrates how this proposal would operate in practice:

    Company X holds a 30 MHz license in a BTA market; paid the 
Commission $100,000 in its down payment; and owes the Commission 
$900,000 on a net bid of $1,000,000. Company X could disaggregate 15 
MHz and surrender it to the Commission for reauction, and the 
Commission would retain $50,000 of the down payment. In return, the 
Commission would reduce the licensee's obligation to the government 
to $450,000.

    The face amount of the licensee's Note will be adjusted to reflect 
the new principal, and the Note will then be amortized from the 
original date of execution to calculate the payments at the new face 
amount of the Note. All installment payments made as of March 31, 1997 
(including any payments due prior to and on March 31, 1997) will be 
applied to reduce the amount of the Suspension Interest calculated on 
the new principal balance to be made in eight equal payments beginning 
March 31, 1998.
    18. Where applicable, the existing disaggregation rules will govern 
this option. See 47 CFR Sec. 24.714. However, the broadband 
disaggregation rules were not designed for the surrender of spectrum to 
the Commission. Thus, existing rule provisions on designated entity 
transfer restrictions, unjust enrichment, installment payments, 
abbreviated license terms and construction requirements, restrictions 
on the amount of spectrum that can be disaggregated, and similar rules 
will not apply to disaggregation to the Commission authorized by this 
option. In order to take advantage of the disaggregation option, 
licensees will be required to make an election consistent with the 
procedures specified in this Second Report and Order.
    19. In order to avoid unjust enrichment, licensees (defined as 
qualifying members of the licensee's control group, and their 
affiliates) will be prohibited from bidding in the subsequent reauction 
for spectrum the incumbent licensee has disaggregated. However, they 
will be permitted to acquire spectrum for any BTA for which

[[Page 55351]]

the incumbent licensee has not disaggregated spectrum. The Commission 
does not believe that it would be fair for these entities to benefit 
from a reauction after taking advantage of the disaggregation option. 
To ensure further against unjust enrichment, these entities will also 
be barred from reacquiring the spectrum they have surrendered to the 
Commission through a secondary market transaction for a period of two 
years from the start of a reauction.
    20. The Commission believes that the disaggregation option set 
forth above is consistent with the goals in this proceeding and serves 
the public interest. First, this option preserves the credibility and 
integrity of the Commission's rules. The relief provided is another 
means of making more efficient use of the spectrum. It does not provide 
a windfall or unfair advantage to the C block licensees availing 
themselves of the disaggregation option. The disaggregating licensee 
continues to pay for spectrum at its net high bid price, and the 
Commission receives full payment for the spectrum retained by the 
licensee. In addition, the Commission will retain 50% of the down 
payment consistent with the amount of spectrum being surrendered to the 
Commission. Moreover, disaggregation with a pro rata adjustment in debt 
is consistent with the Commission's rules with regard to private party 
disaggregation.
    21. Second, the disaggregation option is fair and equitable to all 
interested parties. Losing bidders and other eligible parties will have 
an opportunity to bid on the disaggregated spectrum in the reauction. 
Also, by limiting disaggregation of spectrum to 15 MHz blocks on a BTA 
within an MTA basis, the Commission increases the likelihood that the 
licenses available for reauction will be in quantities and geographic 
clusters that are commercially viable. In addition, by providing this 
limited opportunity to ``pick and choose'' which licenses to 
disaggregate, and not requiring the surrender of all 30 MHz of the 
spectrum it holds in an MTA, this option is fair to those who have 
built-out some of their markets. This option does not materially alter 
the competitive landscape for commercial mobile radio services. Given 
the current state of the market and the Commission's existing rules, it 
is reasonable to expect that some C block spectrum will be transferred 
to competitors through reauction or private sale. The Commission's 
action here facilitate this process, by reducing the amount of spectrum 
that would otherwise be marketed in a piecemeal fashion. Moreover, as 
noted above, other parties will have an opportunity to bid on this 
spectrum in the reauction and, because of the spectrum's proximity to 
the F block, the spectrum may be particularly attractive to prospective 
licensees.
    22. Third, the disaggregation option is consistent with the Section 
309(j) obligation for the Commission to promote opportunities for 
designated entities, including small businesses. This option should 
assist current C block licensees in moving forward with the deployment 
of their service offerings. Disaggregation will also provide 
opportunities for other small businesses to enter the PCS market in the 
future. Finally, by requiring C block licensees to disaggregate the 15 
MHz of spectrum adjacent to the F block, the Commission provides 
opportunities for existing F block licensees to aggregate spectrum in a 
manner that could benefit their planned or prospective service 
offerings.
C. Surrender Licenses for Reauction (Amnesty)
    23. The Commission concludes that it serves the public interest to 
adopt an amnesty option that permits any C block licensee to surrender 
all of its licenses in exchange for relief from its outstanding debt 
and waive any applicable default payments, subject to coordination with 
the Department of Justice pursuant to applicable federal claims 
collections standards. The Commission adopts the amnesty option for 
purposes of speeding use of the C block spectrum to provide services to 
the American public. The surrender of licenses under this option will 
provide qualified parties with an opportunity to obtain C block 
licenses at the market value of the licenses prevailing at the time of 
the reauction. The amnesty option adopted today is equitable to all 
parties because, while amnesty relieves a licensee from further debt 
obligations and any applicable default payments, a coordinated 
surrender of licenses facilitates expeditious reauctioning of the 
spectrum and will provide new market opportunities for all eligible 
entities. In addition, rapid reauction of those licenses surrendered 
will also comply with the Congressional directive that we promote 
competition and participation in the telecommunications industry by 
small businesses.
    24. A C block licensee must make the amnesty election in accordance 
with the procedures set forth below in this Second Report and Order. 
The Commission will reauction those licenses surrendered on an 
expedited basis under the reauction rules discussed in the Further 
Notice of Proposed Rulemaking adopted with this Second Report and 
Order. Licensees electing the amnesty option will be eligible to bid 
for any and all licenses at the reauction.
    25. Licensees electing the amnesty option will not have their down 
payment returned. This will discourage speculation and ensure that all 
bidders, new entrants as well as existing licensees, participate in the 
reauction without undue advantage. Retention of the down payments--10% 
of the bid price for most licensees--is consistent with the 
Commission's previous decisions and actions affecting C block bidders. 
The Commission has retained any payments made by those C block bidders 
who have failed to make their first or second down payments. In 
forgiving the outstanding debt the Commission affords significant 
relief to the licensees by allowing them to avoid anticipated defaults. 
In addition, these licensees will not be deemed in default or 
delinquent in meeting government debt obligations. Nor will they be 
subject to any applicable default payments or in violation of any 
Commission rules or license conditions.
    26. Subject to one exception identified below, licensees choosing 
to take advantage of the amnesty option will be required to surrender 
all of their licenses to the Commission. The requirement that all 
licenses be surrendered precludes licensees from ``cherry picking.'' 
The simultaneous multiple-round auction design enables bidders to place 
bids on many licenses at once and to aggregate desired licenses in a 
manner that facilitates workable business plans. If licensees could 
``cherry pick'' which licenses to surrender, the interdependency of the 
licenses would be harmed. Licenses surrendered pursuant to such a 
``cherry picking'' scheme might lack the potential for beneficial 
aggregation within MTAs, and therefore would likely be less valuable to 
potential bidders and impair business plans of new investors.
    27. As an exception to the all-or-nothing requirement, licensees 
that have met or exceeded the five year build-out requirements by 
September 25, 1997, the date of adoption of this Second Report and 
Order, will not be required to surrender licenses for built-out 
markets. In addition, these licensees will be permitted to retain those 
BTA licenses in which such build-out has occurred. However, licensees 
availing themselves of this exception may not pick and choose BTAs 
within an MTA but will be required, instead, to keep all of the other 
BTAs in the MTA in which the build-out requirement has been met

[[Page 55352]]

and to pay for those licenses under the terms of their Notes. The 
build-out exception facilitates the achievement of the statutory goal 
set forth in Section 309(j) that it encourages the rapid provision of 
service to the public, and responds to the needs of licensees that have 
already commenced operations or have otherwise invested significantly 
in certain of their C block licenses. The Commission has an interest in 
minimizing the competitive impact of the changes that it makes to the 
auction rules, consistent with its broader policy objectives. The 
exception adopted today is one method by which the Commission can 
ensure that the menu of options available to the C block is fair to 
those licensees that have rapidly built-out their markets and initiated 
provision of competitive service.
    28. Some licensees made their installment payments (i.e., 
installments due on that date, and amounts due on December 31, 1996, 
but not paid until March 31, 1997, based on the automatic 90-day non-
default rule) after the suspension. In addition, prior to the 
suspension of payments, many C block licensees made their regularly 
scheduled installment payments. Due to the actions taken in this Second 
Report and Order, it would be unjust and inequitable for C block 
licensees to be treated differently merely because some C block 
licensees made prior payments while others did not. Consequently, the 
Wireless Telecommunications Bureau is directed to refund any 
installment payments made (whether due on or before March 31, 1997) on 
any license that is surrendered pursuant to this Second Report and 
Order. In addition, the Commission will forgive payment of any due, but 
unpaid, installment payments for any surrendered license. For licensees 
exercising the build-out exception and retaining certain licenses, all 
previously made installment payments will be applied first to reduce 
the Suspension Interest applicable to those licenses, and any amounts 
remaining will be refunded.
D. Prepayment
    29. Under the prepayment option the Commission adopts, any C block 
licensee may prepay selective licenses subject to the restrictions 
described in this Second Report and Order. All licenses that are not 
prepaid in accordance with this option must be surrendered to the 
Commission in exchange for a forgiveness of the corresponding debt and 
any penalties. A licensee selecting this option may apply 70% of the 
total of all down payments it made on the licenses that it elects to 
surrender to the Commission (``Available Down Payments''), to a 
prepayment of the Notes for as many of its licenses it wishes to keep. 
For example, if a licensee held two licenses with net high bids of $100 
and $200, then the total down payments would equal $30 ($10 + $20). If 
the licensee elected to keep the $200 license, the licensee would have 
$7 ($10 x 70 percent) of its down payment from the $100 license to 
apply towards the prepayment of the $200 license's Note. If, on the 
other hand, the licensee elected to prepay the $100 license, then the 
licensee would have $14 ($20 x 70 percent) of its down payment from the 
$200 license to apply towards the prepayment of the $100 license's 
Note. The remaining down payments not applied to prepayment will be 
retained by the Commission.
    30. Additionally, an incumbent may use any ``new money'' to prepay 
as many of its own licenses as it desires. Any installment payments 
previously made by the licensee for all its licenses will be added to 
the Available Down Payments to increase the funds available to prepay 
its Notes. Interest accrued from the date of the conditional license 
grant through the Election Date will be forgiven. For purposes of this 
option, the down payment associated with licenses that are transferred 
as of the Election Date to subsidiaries or affiliates will be 
considered transferred with the licenses and the corresponding debt. 
For example, if ABC Company paid $100,000 each for two licenses and 
submitted $10,000 in down payments for each license, the total down 
payments submitted by ABC Company would be $20,000. However, if ABC had 
subsequently transferred one of its licenses to XYZ Company, a wholly-
owned subsidiary, ABC Company would not have any additional money 
available to purchase its license, and XYZ Company would not have any 
additional money available to purchase its license. This option, 
however, is not intended to prohibit additional license transfers 
consistent with existing Commission rules.
    31. The Commission believes that this prepayment option fairly 
balances competing interests, while maintaining the fairness and 
integrity of our rules and auctions. The Commission notes that 30% of 
the down payments is equal to 3% of the net high bids and is consistent 
with the approach adopted previously for down payments. Under the 
Commission's existing rules, an applicant is subject to a 3% payment if 
it fails to make the required down payment. See 47 CFR 
Secs. 1.2104(g)(2), 24.704(a)(2). The Commission believes it to be most 
fair to apply this provision to those licensees who seek the relief 
provided by this option. If licensees were able to use all of their 
down payment, they would recoup in full what they paid, and there would 
be no deterrent effect against bidding excessively in the auction or 
otherwise gaming the process. Thus, in the next auction to which 
default payments apply, these rules could be ignored with impunity. 
Such a result would severely harm the Commission's market-based auction 
program. It would make it impossible to impose the charges already 
imposed in past cases, including in C block cases. Further, permitting 
C block licensees access to the down payments they previously made for 
licenses they no longer wish to retain is a substantial benefit and 
fair to these licensees. To allow them to use 100% of those funds would 
be unfair to other C block licensees who choose to continue to pay 
under their existing obligations, and to bidders who were unsuccessful 
in the auction.
    32. The Commission declines to discount the Notes. The Commission 
believes it is fair to other bidders and to the credibility and 
integrity of the rules for the prepayment to be in the amount of the 
outstanding debt for the net high bid. In other words, licensees should 
pay what they bid. To offer deep discounts off the amount of the debt 
is outside normal commercial practices and otherwise appears to be a 
``bail-out'' of C block licensees who have encountered financial 
difficulties long after the auction was completed and the financial 
commitments were made. Debt paid off in advance of the maturity date 
allows the debtor to reap the benefit of not incurring additional 
interest due on the principal amount owed. To discount the amount of 
the principal would unfairly permit a windfall to the licensee electing 
this option. The Commission is cognizant of the financial difficulties 
for some C block licensees, but is also mindful of a duty to the other 
C block licensees who are successfully meeting their obligations and 
continuing build-out efforts for wireless services. Therefore, the 
Commission believes that it strikes the proper balance by allowing a 
licensee the benefit of prepaying its debt obligations, thereby 
reducing the amount of interest that would be payable over the full 
term of the Note, while avoiding fundamental changes to our rules that 
unfairly harm other licensees who followed the rules and who continue 
to meet their payment obligations.
    33. Under this prepayment option, an incumbent must prepay all of 
the BTA licenses in a particular MTA and cannot

[[Page 55353]]

arbitrarily select individual BTA licenses in a given MTA to prepay 
while surrendering other licenses in that MTA, with one exception. The 
Commission concludes that while a licensee must prepay the debt on all 
of the BTAs for which it holds licenses in an MTA, a licensee may not 
have sufficient funds available to it to prepay all of its Notes for 
the BTA licenses in a given MTA. Therefore, any licensee that has 
enough funds on hand to prepay one or more BTAs within an MTA, but not 
enough for the entire MTA, must prepay all of those BTAs within that 
MTA that it can afford. The Commission concludes that a requirement 
that all licenses in a given MTA be prepaid precludes licensees from 
``cherry picking.'' The simultaneous multiple-round auction design 
discussed in the Further Notice of Proposed Rulemaking enables bidders 
to place bids on many licenses at once. If licensees were permitted to 
``cherry pick'' which licenses in an MTA to prepay and which to 
surrender under this option, the interdependency of the licenses would 
be threatened. Licenses surrendered pursuant to such a ``cherry 
picking'' scheme would lack the potential for aggregation, and 
consequently would hold much less value to other bidders in the 
subsequent reauction.
    34. The Commission declines to provide an exception for markets in 
which the five-year build-out requirement has been met as provided 
under the amnesty option. Under the prepayment option, licensees have 
the flexibility to select which markets they will retain subject to the 
restrictions in this Second Report and Order. For this reason, 
licensees have the option of selecting and prepaying for licenses where 
they have invested capital to meet the build-out requirements and not 
prepaying in an MTA where they have not. The Commission believes that 
this flexibility, compared to the all or nothing approach of simple 
amnesty, mitigates the need for this exception.
    35. Finally, for a period of two years from the start date of the 
reauction, licensees (defined as qualifying members of the licensee's 
control group, and their affiliates) will be prohibited from 
reacquiring the licenses surrendered pursuant to this option either 
through a reauction or any other secondary market transaction. The 
Commission does not believe that it would be fair to other licensees 
and bidders for these licensees to benefit from a reauction of those 
licenses after taking advantage of this option. Furthermore, the 
Commission does not believe that this option should provide 
opportunities for licensees to ``selectively'' reduce their license 
obligations by surrendering a license in hopes of re-obtaining it in a 
reauction at a lower price.
E. Election Procedures
    36. The Commission concludes that a licensee electing to continue 
under its existing installment payment plan or electing one of the 
options set forth in this Second Report and Order, must file a written 
notice of such election with the Wireless Telecommunications Bureau on 
or before the Election Date (``Election Notice''). The ``Election 
Date'' is January 15, 1998. The Election Notice must be filed on or 
before January 15, 1998 with the Office of the Secretary, Federal 
Communications Commission, Washington, D.C. 20554 (attn: Wireless 
Telecommunications Bureau, Auctions and Industry Analysis Division--
Election Notice). The Wireless Telecommunications Bureau will provide 
more information concerning filing procedures in a subsequent public 
notice.
    37. The Commission requires that those licensees electing (i) to 
continue making payments under their original C block Notes, (ii) the 
disaggregation option, or (iii) the amnesty option who elect to take 
advantage of the build-out exception and retain certain of their 
licenses make the appropriate payment by March 31, 1998 (or by the end 
of the 60-day grace period allowed), and execute any necessary 
financing documents pursuant to appropriate requirements and time 
frames established by the Bureau in order to continue to be eligible 
under the option chosen.
    38. Continuation Under Existing Note(s). Any licensee that wishes 
to continue making installment payments in accordance with the terms of 
its original C block Note, must elect to do so by submitting the 
Election Notice of such election.
    39. Disaggregation. For licensees electing the disaggregation 
option, the Election Notice must include (i) a list of all licenses 
being disaggregated, (ii) the original of all licenses being 
disaggregated, and (iii) all originals of the Notes and Security 
Agreements for those licenses being disaggregated for cancellation by 
the Commission. Upon acceptance of the Election Notice, the 
disaggregated spectrum will be deemed returned to the Commission.
    40. Amnesty. For licensees electing the amnesty option, the 
Election Notice must include (i) a list of all licenses being 
surrendered, (ii) if applicable, a statement indicating that it intends 
to avail itself of the build-out exception together with a list of 
those BTA licenses it intends to retain and pertinent information 
concerning build-out pursuant to the Commission's rules, (iii) the 
original of all licenses being surrendered, and (iv) all originals of 
the Notes and Security Agreements for those licenses being surrendered 
for cancellation by the Commission. Those licensees electing to proceed 
under the build-out exception will be required to adhere to the 
specific obligations set forth in their Notes and Security Agreements, 
as modified for those licenses not being surrendered to the Commission.
    41. Prepayment. For licensees electing the prepayment option, the 
Election Notice must include (i) a list of all licenses being prepaid, 
(ii) a payment in the amount of any additional ``new money'' a licensee 
desires to apply to the prepayment of its licenses, (iii) the original 
of all licenses not being prepaid in accordance with this option, and 
(iv) all originals of the Notes and Security Agreements for those 
licenses not being prepaid for cancellation by the Commission. Notes 
which are prepaid will be marked ``Paid-In-Full'' and returned to the 
licensee.
    42. The Commission further concludes that any C block licensee that 
(i) fails to elect one of the options set forth in this Second Report 
and Order on or before the Election Date, or (ii) fails to elect on or 
before the Election Date to continue making payments under its original 
C block Note(s), or (iii) fails to fully and timely execute and deliver 
to the Commission (or its agent) any required financing documents 
within the period of time specified by the Bureau, will not be afforded 
the opportunity granted to licensees who do make a timely election to 
repay the Suspension Interest over a period of eight equal payments. In 
such event, the licensee will be required, on or before March 31, 1998, 
to make all payments that would have been due under its Note(s) but for 
the effect of the Suspension Order. For example, a licensee whose 
regular installment due date was March 31, 1997, who did not make 
payment on that date because of the Suspension Order, will owe on March 
31, 1998, all payments that were due and payable earlier, but unpaid 
due to the Suspension Order, in addition to the regularly scheduled 
March 31, 1998, payment.
F. Cross Defaults
    43. The Commission will not pursue cross default remedies against C 
block licensees who default on installment payments with regard to 
other licenses in the C or F blocks. For example, if a

[[Page 55354]]

licensee defaults on a C block license and that licensee holds other C 
block licenses on which it is making its payments, the Commission will 
not declare it to be in default on its debt associated with the other C 
block licenses. Similarly, if a licensee defaults on a C block license, 
and also holds F block licenses on which it is making its payments, the 
Commission will not declare it to be in default on its F block debt.
    44. This decision is warranted in light of the efforts to provide 
current C block licensees who are experiencing financing difficulties 
with options for meeting their financial obligations to the Commission. 
This decision does not affect the Commission's policy with regard to 
defaults on first or second down payments. The Commission emphasizes 
that this decision only addresses the context of a licensee's default 
on an installment payment for a C block license upon other licenses 
held by that licensee in the C or F blocks. The Commission defers to 
completion of the Part 1 Rulemaking a decision on whether to amend more 
comprehensively the policy of cross defaults. The Commission also 
emphasizes that existing installment payment default rules and license 
conditions will continue to apply for those particular licenses in 
default after March 31, 1998. Accordingly, upon default, a license will 
automatically cancel and the Commission will initiate debt collection 
procedures against the licensee and accountable affiliates. See 47 CFR 
Sec. 1.2110(e)(4)(iii).

III. Conclusion

    45. In this Second Report and Order the Commission orders 
resumption of installment payments for the broadband PCS C and F 
blocks, with the payment deadline reinstated as of March 31, 1998. The 
Commission also adopt options designed to assist C block licensees that 
are experiencing financial difficulties to build systems that will 
promote competition, or to surrender spectrum to the Commission for 
reauction. These options include disaggregation, amnesty, and 
prepayment. These provisions will create opportunities for C block 
licensees to provide service to the public while maintaining the 
fairness and integrity of our auctions program.

IV. Procedural Matters and Ordering Clauses

A. Regulatory Flexibility Analysis
    46. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 
Sec. 604, an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in Amendment of Part 1 of the Commission's Rules--
Competitive Bidding Proceeding, Order, Memorandum Opinion and Order, 
and Notice of Proposed Rule Making, 62 FR 13540 (March 21, 1997) (Part 
1 Proceeding) in WT Docket No. 97-82. The Commission sought written 
public comment on the proposals in the Part 1 Proceeding, including 
comment on the IRFA. This Final Regulatory Flexibility Analysis (FRFA) 
conforms to the IRFA.

Need for, and Objectives of, this Action

    47. This Second Report and Order is designed to assist C block 
broadband personal communications services (PCS) licensees to meet 
their financial obligations to the Commission while at the same time 
helping the Commission meet its goals of ensuring the rapid provision 
of PCS service to the public.

Summary of Significant Issues Raised by Public Comments in Response to 
the Initial Regulatory Flexibility Analysis (IRFA)

    48. There were no comments filed in response to the IRFA; however, 
in this proceeding we have considered the economic impact on small 
businesses of the rules adopted herein.

Description and Estimate of the Number of Small Entities to Which Rules 
Will Apply

    49. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that will be 
affected by our rules. See 5 U.S.C. Secs. 603(b)(3), 604(a)(3). The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' See 5 U.S.C. Sec. 601(6). In addition, the 
term ``small business'' has the same meaning as the term ``small 
business concern'' under Section 3 of the Small Business Act. See 5 
U.S.C. Sec. 601(3). Under the Small Business Act, a ``small business 
concern'' is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) meets any additional 
criteria established by the Small Business Administration (SBA). See 15 
U.S.C. Sec. 632.
    50. This Second Report and Order applies to broadband PCS C and F 
block licensees. The Commission, with respect to broadband PCS, defines 
small entities to mean those having gross revenues of not more than $40 
million in each of the preceding three calendar years. See 47 CFR 
Sec. 24.720(b)(1). This definition has been approved by the SBA. On May 
6, 1996, the Commission concluded the broadband PCS C block auction. 
The broadband PCS D, E, and F block auction closed on Jan. 14, 1997. 
Ninety bidders (including the C block reauction winners, prior to any 
defaults by winning bidders) won 493 C block licenses and 88 bidders 
won 491 F block licenses. Small businesses placing high bids in the C 
and F block auctions were eligible for bidding credits and installment 
payment plans. For purposes of our evaluations and conclusion in this 
FRFA, we assume that all of the 90 C block broadband PCS licensees and 
88 F block broadband PCS licensees, a total of 178 licensees 
potentially affected by this order, are small entities.

Description of the Projected Reporting, Recordkeeping, and other 
Compliance Requirements

    51. A licensee electing one of the options set forth in the Order 
must file a written notice of such election (the ``Election Notice'') 
with the Wireless Telecommunications Bureau, Auctions and Industry 
Analysis Division no later than the Election Date. The ``Election 
Date'' is January 15, 1998. Those licensees electing either (1) to 
continue making payments under their original C block Notes; (2) the 
disaggregation option; or (3) the amnesty option but elect to take 
advantage of the build-out exception and retain certain of their 
licenses, will be required to execute and submit a modification of 
their Notes, Security Agreements, Uniform Commercial Code (``UCC'') 
Financing Statements and any other related documents securing their 
Notes within the time frame established by the Bureau.
    52. Continuation under Existing Note(s). Any licensee that wishes 
to continue making installment payments in accordance with the terms of 
its original C block Note, must elect to do so by submitting the 
Election Notice.
    53. Disaggregation. For licensees electing the disaggregation 
option, the Election Notice must include the following: (1) A list of 
all licenses being disaggregated; (2) the original of all licenses 
being disaggregated; and (3) all originals of the Notes and Security 
Agreements for those licenses being disaggregated for cancellation by 
the Commission.
    54. Amnesty. For licensees electing the amnesty option, the 
Election Notice must include the following: (1) A list of all licenses 
being surrendered; (2) if applicable, a statement indicating that the 
licensee intends to avail itself of the build-out exception together 
with a list of those BTA licenses it intends to retain and pertinent 
information

[[Page 55355]]

concerning build-out; (3) the original of all licenses being 
surrendered; and (4) originals of the Notes and Security Agreements for 
those licenses being surrendered for cancellation by the Commission.
    55. Prepayment. For licensees electing the prepayment option, the 
Election Notice must include the following: (1) A list of all licenses 
being prepaid; (2) a payment in the amount of any additional ``new 
money'' as a licensee desires to apply to the prepayment of its 
licenses; (3) the original of all licenses not being prepaid in 
accordance with this option; and (4) all originals of the Notes and 
Security Agreements for those licenses not being prepaid for 
cancellation by the Commission.

Steps Taken to Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered

    56. The Commission believes that it is in the public interest to 
adopt these provisions to facilitate use of C block licenses without 
further regulatory or marketplace delay. The menu approach adopted in 
this Second Report and Order is intended to provide options to 
facilitate the rapid introduction of service to the public, while 
recognizing that ultimately the decisions concerning competition and 
services appropriately are marketplace decisions and should not be 
determined by government intervention. This decision is intended to be 
fair to current C block licensees (including small entities), to 
bidders who were not successful in their attempts to obtain licenses in 
this spectrum, and to the public desiring new and innovative 
competitive services. These options minimize the potential significant 
economic impact on small entities because they meet the unique 
circumstances facing the C block licensees and permit these small 
entities to choose one of three alternative solutions to reduce their 
debt to the Commission. All of the entities affected by this Second 
Report and Order are small entities, and the intent of this Second 
Report and Order is to alleviate, to some extent, the financial 
difficulties faced by these small entities. These options are 
relatively straightforward, achieve a degree of fairness to all 
parties, including losing bidders in the C block auction, continue to 
promote competition and participation by smaller businesses in 
providing broadband PCS service, and avoid solutions that merely 
prolong uncertainty.
    57. The Commission received numerous comments and ex parte comments 
that addressed these issues at great length. The majority of commenters 
favor some type of relief, including debt restructuring, spectrum 
disaggregation, or a penalty-free license surrender (i.e., amnesty) 
followed by a reauction. Other commenters express disapproval of any 
relief, and urge the Commission to strictly enforce its rules. The 
Commission believes that there may be a need for some measure of relief 
for these small entities in addition to the suspension of payments 
previously granted. The Commission believes that the options adopted in 
this Second Report and Order are relatively straightforward and achieve 
a degree of fairness to all parties, including small entities. Finally, 
the Commission rejects any proposal of a deferral of payments on the 
grounds that such proposal would be unfair to unsuccessful bidders who 
may have withdrawn from the C block when prices became too high.
    58. Among other goals, Section 309(j) directs the Commission to 
disseminate licenses among a wide variety of applicants, including 
small businesses and other designated entities. See 47 U.S.C. 
Sec. 309(j)(3)(B). At the same time, Section 309(j) requires that the 
Commission ensure the development and rapid deployment of new 
technologies, products and services for the benefit of the public, and 
recover for the public a portion of the value of the public spectrum 
resource made available for commercial use. See 47 U.S.C. 
Secs. 309(j)(3)(A), (C). In assessing the public interest, the 
Commission must try to ensure that all the objectives of Section 309(j) 
are considered. The Commission believes that those goals are best met 
by promoting efficient competition while maintaining fairness and 
efficiencies of process in the Commission's rules.

Report to Congress

    59. The Commission shall send a copy of the Second Report and 
Order, including the Final Regulatory Flexibility Analysis, in a report 
to Congress pursuant to the Small Business Regulatory Enforcement 
Fairness Act of 1996. See 5 U.S.C. Sec. 801(a)(1)(A). A copy of the 
Second Report and Order and this Final Regulatory Flexibility Analysis 
will also be sent to the Chief Counsel for Advocacy of the Small 
Business Administration.
B. Paperwork Reduction Act
    60. This Second Report and Order contains a modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to take this opportunity to comment on the 
information collections contained in this Second Report and Order, as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
Public and agency comments are due December 1, 1997. OMB comments are 
due December 1, 1997. Comments should address: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    Dates: Written comments by the public on the modified information 
collections in this Second Report and Order are due on or before 
December 1, 1997. Written comments must be submitted by OMB on the 
modified information collections on or before December 1, 1997.
    Address: In addition to filing comments with the Secretary, a copy 
of any comments on the information collections contained herein should 
be submitted to Judy Boley, Federal Communications Commission, Room 
234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to 
<a href="/cdn-cgi/l/email-protection#3d575f525158447d5b5e5e135a524b"><span class="__cf_email__" data-cfemail="bbd1d9d4d7dec2fbddd8d895dcd4cd">[email protected]</span></a> and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--
17th Street, N.W., Washington, DC 20503 or via the Internet to 
<a href="/cdn-cgi/l/email-protection#1f797e767140406b5f7e73317a706f31787069"><span class="__cf_email__" data-cfemail="cbadaaa2a59494bf8baaa7e5aea4bbe5aca4bd">[email protected]</span></a>.
    Further Information: For additional information concerning the 
information collections contained in this Second Report and Order 
contact Judy Boley, Federal Communications Commission, Room 234, 1919 M 
Street, N.W., Washington, DC 20554, or via the Internet to 
<a href="/cdn-cgi/l/email-protection#2e444c41424b576e484d4d00494158"><span class="__cf_email__" data-cfemail="d1bbb3bebdb4a891b7b2b2ffb6bea7">[email protected]</span></a>.

Supplementary Information

    Title: Amendment of the Commission's Rules Regarding Installment 
Payment Financing for Personal Communications Services (PCS) Licensees
    Type of Review: New Collection.

Respondents

    Number of Respondents: The Commission estimates that up to 90 
respondents will take the opportunity to elect one of the options in 
the Second Report and Order.
    Estimated Time Per Response: The Commission estimates the total 
burden under the disaggregation and amnesty options would be 4.0 hours 
per

[[Page 55356]]

respondent, a total hour burden of 360 hours, which is the highest 
estimate and assumes that all 90 potential respondents elect either the 
disaggregation or amnesty options. The Commission believes that the 
actual total hour burden will be less than 360 hours. The Commission is 
of the opinion that the respondents will prepare the submission with 
in-house staff, such as in-house counsel or the equivalent, in lieu of 
outside contractors. At the equivalent of the GS 15 hourly rate, 
$41.24, the total burden would be $41.24 times 360 hours = $14,846.40.
    Estimate of total cost burden to respondents: The Commission 
estimates that there will be no additional cost burden to respondents.

Cost to the Federal Government

GS 7 Legal Instrument Examiners at $14.06 per hour to review the 
documentation for approximately 0.5 hours per submission, times 90 
submissions = $632.70
GS 7 Clerical at $14.06 per hour to process refunds for approximately 
1.0 hour per submission, times 90 submissions = $1,265.40
GS 12 Engineers to review the documentation at $24.95 per hour, for 
approximately 0.5 hours per submission, times 90 submissions = 
$1,122.75
GS 12 Engineers to review technical analysis at $24.95 per hour, for 
approximately 0.5 hours per submission, times 90 submissions = 
$1,122.75
GS 12 Attorneys to review the financial documentation at $24.95 per 
hour, for approximately 2.0 hours per submission, times 90 submissions 
= $4,491.00
GS 15 Financial Analysts or Accountants to review the documentation, 
accounting analysis, and revised payment schedules and to oversee the 
repayment process at $41.24 per hour, for approximately 2.0 hours per 
submission, times 90 submissions = $7,423.20
Total = $16,057.80.
C. Authority
    61. The above action is authorized under the Communications Act of 
1934, Secs. 4(i), 5(b), 5(c)(1), 303(r), and 309(j) as amended.
D. Ordering Clauses
    62. Accordingly, it is ordered that, pursuant to Sections 4(i), 
5(b), 5(c)(1), 303(r), and 309(j) of the Communications Act of 1934, as 
amended, 47 U.S.C. Sections 154(i), 155(b), 156(c)(1), 303(r), and 
309(j), this Second Report and Order is hereby adopted, and 
Secs. 1.2110 and 24.709 of the Commission's rules are amended as set 
forth below, effective December 23, 1997. The information collection 
contained in these rules becomes effective on OMB approval but no 
sooner than December 23, 1997. The Commission will publish a document 
on a later date announcing the effective date of the information 
collection.
    63. It is further ordered that the Wireless Telecommunications 
Bureau's Suspension Order dated March 31, 1997, suspending the 
installment payment obligations for Personal Communications Services 
(PCS) C block licensees, and the subsequent Public Notice dated April 
28, 1997, suspending those obligations for PCS F block licensees are 
rescinded, effective March 31, 1998, and installment payments for C and 
F block PCS licensees are reinstated as of that date.
    64. It is further ordered that on or before January 15, 1998, the 
Election Date, all C block broadband PCS licensees must elect either 
(1) to continue making payments under their original C block Notes, or 
(2) one of the options set forth in Section IV of this Second Report 
and Order. The Election Notice must be filed on or before January 15, 
1998 with the Office of the Secretary, Federal Communications 
Commission, Washington, D.C. 20554 (attn: Wireless Telecommunications 
Bureau, Auctions and Industry Analysis Division--Election Notice).
    65. It is further ordered that the Secretary shall send a copy of 
this Second Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration, in accordance with Section 605(b) of the 
Regulatory Flexibility Act, 5 U.S.C. Secs. 601 et seq.
    66. It is further ordered that, pursuant to 47 U.S.C. Sec. 155(c) 
and 47 CFR Sec. 0.331, the Chief of the Wireless Telecommunications 
Bureau Is granted delegated authority to prescribe and set forth 
procedures for the implementation of the provisions adopted herein.

List of Subjects

47 CFR Part 1

    Communications common carriers, Reporting and recordkeeping 
requirements.

47 CFR Part 24

    Communications common carriers, Reporting and recordkeeping 
requirements.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Parts 1 and 24 of Chapter I of title 47 of the Code of Federal 
Regulations are amended as follows:

PART 1--PRACTICE AND PROCEDURE

    1. The authority citation for Part 24 continues to read as follows:

    Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066, 
1082, as amended; 47 U.S.C. Secs. 154, 301, 302, 303, 309 and 332, 
unless otherwise noted.

    2. Section 1.2110 is amended by revising paragraph (e)(4)(i) to 
read as follows.


Sec. 1.2110  Designated entities.

* * * * *
    (e) * * *
    (4) * * *
    (i) If an eligible entity making installment payments is more than 
ninety (90) days delinquent in any payment, it shall be in default, 
except that broadband PCS frequency block C licensees making the March 
31, 1998, interest payment pursuant to their elections under the 
Amendment of the Commission's Rules Regarding Installment Payment 
Financing for Personal Communications Services Licensees, Second Report 
and Order, WT Docket No. 97-82 (released October 16, 1997), shall be in 
default if they are more than sixty (60) days delinquent on such 
payment. (The Second Report and Order is available in the FCC Reference 
Center, Room 239, 1919 M Street, NW., Washington, DC 20554.)
* * * * *

PART 24--PERSONAL COMMUNICATIONS SERVICES

    3. The authority citation for Part 24 continues to read as follows:

    Authority: Secs. 4, 301, 302, 303, 309 and 332, 48 Stat. 1066, 
1082, as amended; 47 U.S.C. Secs. 154, 301, 302, 303, 309 and 332, 
unless otherwise noted.

    4. Section 24.709 is amended by adding paragraph (b)(9) to read as 
follows.


Sec. 24.709  Eligibility for licenses for frequency Blocks C and F.

* * * * *
    (b) * * *
    (9) Special rule for licensees disaggregating or returning certain 
spectrum in frequency block C.
    (i) In addition to entities qualifying under this section, any 
entity that was

[[Page 55357]]

eligible for and participated in the first auction for frequency block 
C, which began on December 18, 1995, will be eligible to bid in a 
reauction of licenses for frequency block C conducted after March 31, 
1998.
    (ii) The following restrictions will apply for any reauction of 
frequency block C licenses conducted after March 31, 1998:
    (A) Applicants that elected to disaggregate 15 MHz of spectrum from 
any or all of their frequency block C licenses, as provided in 
subsection IV.B., Amendment of the Commission's Rules Regarding 
Installment Payment Financing for Personal Communications Services 
Licensees, Second Report and Order, WT Docket No. 97-82 (released 
October 16, 1997), will not be eligible to apply for such disaggregated 
licenses until 2 years from the start of the reauction of those 
licenses. The Second Report and Order is available in the FCC Reference 
Center, Room 239, 1919 M Street, NW., Washington, DC 20554.
    (B) Applicants that surrendered any of their frequency block C 
licenses as provided in subsection IV.D. (the ``prepayment option'') 
Amendment of the Commission's Rules Regarding Installment Payment 
Financing for Personal Communications Services Licensees, Second Report 
and Order, WT Docket No. 97-82 (released October 16, 1997), will not be 
eligible to apply for the licenses that they surrendered to the 
Commission until 2 years from the start of the reauction of those 
licenses.
    (C) For purposes of this paragraph, applicant shall mean the 
applicant and its affiliates and any present or former qualifying 
member of a control group and their affiliates.
* * * * *
[FR Doc. 97-28221 Filed 10-23-97; 8:45 am]
BILLING CODE 6712-01-P


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