[Federal Register Volume 61, Number 101 (Thursday, May 23, 1996)]
[Rules and Regulations]
[Pages 25808-25810]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12943]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 24

[DA 96-705]


Waiver of Audited Financial Statements and General Application 
Requirements for the Broadband Personal Communications Services

AGENCY: Federal Communications Commission.

ACTION: Final rule; waiver.

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SUMMARY: Several parties have filed requests for waiver of Sections 
24.720 (f) and (g) of the Commission's rules with respect to the long-
form applications (FCC Form 600) to be filed for broadband Personal 
Communications Service (PCS) C block licenses. The parties argued that 
the requirement that gross revenues and total assets figures disclosed 
on the long-form applications be evidenced by audited financial 
statement is unduly burdensome. The Commission granted the waivers and 
on our own motion extended the waiver to all broadband PCS C block 
applicants subject to the requirements of Sections 24.720 (f) and (g) 
of the rules. In

[[Page 25809]]

addition, on our own motion, we waived certain ownership information 
disclosure requirements of Section 24.813(a) (1), and (2) of the 
Commission's rules for all successful broadband PCS C block bidders 
filing long-form applications.

EFFECTIVE DATE: May 8, 1996.

FOR FURTHER INFORMATION CONTACT:
 James Hedlund at 202-418-0660.

SUPPLEMENTARY INFORMATION:  This Order, adopted May 8, 1996 and 
released May 8, 1996, is available for inspection and copying during 
normal business hours in the FCC Reference Center, Room 239, 1919 M 
Street NW., Washington D.C. The complete text may be purchased from the 
Commission's copy contractor, International Transcription Services, 
Inc., 2100 M Street NW., Suite 140, Washington D.C. 20037 (202) 857-
3800.

Order

    By the Chief, Wireless Telecommunications Bureau:

    1. Several parties have filed requests for waiver of Sections 
24.720 (f) and (g) of the Commission's rules with respect to the long-
form applications (FCC Form 600) to be filed for broadband Personal 
Communications Service (PCS) C block licenses. See, e.g., Covington and 
Burling Request for Waiver on behalf of unnamed investors in C block 
applicants, filed January 26, 1996. The following applicants (many of 
which are no longer active bidders in the C block auction) filed 
requests for waiver of Section 24.720 (f) and (g) along with their 
short-form applications (FCC Form 175) on November 6, 1995: Adilia M. 
Aguilar; AirLink, L.L.C.; Airwave Telecommunications, Inc.; BC&D 
Partners II, L.L.C.; CHPCS, Inc.; B&P PCS, Inc.; CDL Communications, 
Inc.; Horsetooth Communications, Inc.; Glenn Ishihara; Global 
Information Technologies, Inc.; James Communications Partners, GP; 
Lubbock Radio Paging Service, Inc.; Mid-State Systems, Inc.; New Dakota 
Investment Trust; Overland Company, Inc.; PCS Spectrum Partners, L.P.; 
R&S PCS, Inc.; Reserve Telephone Company, Inc.; Shawn Capistrano; SPD 
CableTel, Inc.; South Central Communications Corporation; Teltrust PCS 
of the Intermountain States, Inc.; Teltrust PCS of Utah, Inc.; USA 
Microcellular, Inc.; Virginia PCS Alliance Consortium; Whidbey 
Telephone Company; William Ingram; Windkeeper Communications, Inc.; and 
Wireless PCS, Inc. Generally, the parties argue that the requirement 
that gross revenues and total assets figures disclosed on the long-form 
applications be evidenced by audited financial statements is unduly 
burdensome. Pursuant to delegated authority, we grant the waivers and 
on our own motion extend this waiver to all broadband PCS C block 
applicants subject to the requirements of Sections 24.720 (f) and (g) 
of the Commission's rules. In addition, on our own motion, we waive 
certain ownership information disclosure requirements of Sections 
24.813(a) (1) and (2) of the Commission's rules for all successful 
broadband PCS C block bidders filing long-form applications.
    2. Section 24.709(c)(2)(i) of the Commission's rules provides that 
each applicant submitting a long-form application shall in an exhibit:

    (i) Disclose separately and in the aggregate the gross revenues 
and total assets, computed in accordance with paragraphs (a) and (b) 
of this section, for each of the following: the applicant; the 
applicant's affiliates; the applicant's control group members; the 
applicant's attributable investors; and affiliates of its 
attributable investors.

    Sections 24.720 (f) and (g) of the Commission's rules require that 
gross revenues and total assets be evidenced by audited financial 
statements under most circumstances:
    (f) Gross Revenues. Gross revenues shall mean all income received 
by an entity, whether earned or passive, before any deductions are made 
for costs of doing business (e.g., cost of goods sold), as evidenced by 
audited financial statements for the relevant number of calendar years 
preceding January 1, 1994, or, if audited financial statements were not 
prepared on a calendar-year basis, for the most completed fiscal years 
preceding the filing of the applicant's short-form application (Form 
175). For applications filed after December 31, 1995, gross revenues 
shall be evidenced by audited financial statements for the preceding 
relevant number of calendar or fiscal years. If an entity was not in 
existence for all or part of the relevant period, gross revenues shall 
be evidenced by the audited financial statements of the entity's 
predecessor-in-interest or, if there is no identifiable predecessor-in-
interest, unaudited financial statements certified by the applicant as 
accurate.

    (g) Total assets. Total assets shall mean the book value (except 
where generally accepted accounting principles (GAAP) require market 
valuation) of the property owned by an entity, whether real or 
personal, tangible or intangible, as evidenced by the most recent 
audited financial statements.

    3. Although these rules do not require applicants to file audited 
financial statements with their long-form applications, they do require 
gross revenues and total assets reported on the applications to be 
supported by audited financial statements obtained by the applicants. 
Several parties contend that for small businesses with limited 
resources, obtaining audited financial statements would cause an 
extreme financial hardship.
    4. We agree that requiring broadband PCS C block applicants with 
limited resources to obtain audited financial statements solely for the 
purpose of supporting the long-form applications is excessively 
burdensome. Thus, we waive the audited financial statements requirement 
of Sections 24.720 (f) and (g) of the Commission's rules. With respect 
to the filing of long-form applications, we believe that this waiver 
will enable the Commission to continue to obtain timely financial data 
while providing applicants with some degree of flexibility in their 
financial reporting practices. We emphasize, however, that applicants 
and their affiliates shall continue to be required to certify the 
accuracy of all gross revenue and total assets figures submitted. We 
also reserve the right to require licensees to provide audited 
financial statements as required by Sections 24.720 (f) and (g) of the 
Commission's rules at a later date.
    5. Section 24.813(a) of the Commission's rules provides that 
broadband PCS auction winners filing the long-form application shall 
include in an exhibit, inter alia:

    (1) A list of any business five percent or more of whose stock, 
warrants, options or debt securities are owned by the applicant or 
an officer, director, attributable stockholder or key management 
personnel of the applicant. This list must include a description of 
each such business's principal business and a description of each 
such business's relationship to the applicant.
    (2) A list of the party which holds a five percent or more 
interest (or a ten percent interest or more interest for 
institutional investors as defined in Sec. 24.720(h)) in the 
applicant, or an entity in which a five percent or more interest (or 
a ten percent interest or more interest for institutional investors 
as defined in Sec. 24.720(h)) is held by another party which holds a 
five percent or more interest (or a ten percent interest or more 
interest for institutional investors as defined in Sec. 24.720(h)) 
in the applicant (e.g., If company A owns 5% of Company B (the 
applicant) and 5% of Company C, then Companies A and C must be 
listed on Company B's application).

    6. The former Private Radio Bureau, acting on delegated authority, 
waived some of the information disclosure requirements of Section 
24.813(a)(1) and 24.813(a)(2) for the short-form applications (FCC Form 
175s) filed for the auction of the broadband PCS A and

[[Page 25810]]

B block licenses. The Wireless Telecommunications Bureau (``Bureau'') 
later waived the same provisions for the long-form applications for the 
auction of the broadband PCS A and B block licenses. These same 
provisions also were waived for the short-form applications filed for 
the auction of the broadband PCS C block licenses. We find that the 
public interest would be served by waiving certain ownership 
information disclosure requirements for the long-form applications 
filed by the block winning bidders. Specifically, our rules require 
applicants to list in their long-form applications all businesses in 
which each attributable stockholder owns at least five percent. This 
requirement necessitates reporting of interests in firms with no 
relation to the licenses auctioned. For many companies, particularly 
investment firms with diverse holdings, compliance with this 
requirement is extremely burdensome, especially when calculating 
indirect ownership interests in outside firms. We believe that, for 
purposes of long-form application processing, requiring stockholders in 
applicants to report all firms in which they hold an interest of five 
percent or more is overly burdensome.
    7. The purpose of the PCS ownership disclosure requirements is to 
allow the Commission to determine who is the real party in interest, to 
determine compliance with the anti-collusion rules, the applicable 
spectrum caps, certain ownership restrictions such as the multiple and 
cross ownership rules, and the alien ownership restrictions. All 
applicants already must certify that they are in compliance with these 
regulations, and the applicants themselves should be able to supply the 
bulk of the information required by Section 24.813(a) without 
significant burden.
    8. Consequently, we waive the information disclosure requirement of 
Sections 24.813(a)(1) and 24.813(a)(2) of the Commission's rules with 
respect to other, outside ownership interests of attributable 
stockholders of applicants, except that outside interests of five 
percent or more in other land mobile services (i.e., Commercial Mobile 
Radio Service licensees or applicants or Private Mobile Radio Service 
licensees or applicants) shall be disclosed. Also, all direct or 
indirect interests in the applicant that amount to five percent or more 
must be reported. All indirect interests held in the applicant should 
be computed in accordance with the multiplier approach set forth in 47 
CFR Sec. 24.204(d)(viii). Institutional investors need only disclose 
direct or indirect interests of ten percent or more in the applicant, 
and need to report all outside business interests of five percent or 
more in CMRS or PMRS businesses. We reserve the right to ask applicants 
for any additional information required by Section 24.813 of the 
Commission's rules at a later date. All other long-form reporting 
requirements will continue to apply.
    9. This Order is not subject to the general notice and comment 
requirement of the Administrative Procedure Act, because it concerns 
procedural rules, and we are relieving applicants of an administrative 
burden as opposed to imposing a reporting burden on them. In addition, 
good cause for the waiver is shown. The waiver will expedite the 
Commission's ability to process broadband PCS C block applications, 
thus expediting the delivery of service to the public.
    10. Accordingly, it is ordered That the requirements of Sections 
24.720(f) and 24.720(g) of the Commission's rules, 47 CFR 
Secs. 24.720(f) and 24.720(g), are waived to the extent described here 
with respect to long-form applications (FCC Form 600) for broadband PCS 
C block licenses.
    11. It is further ordered That the requirements of Sections 
24.813(a)(1) and 24.813(a)(2), 47 CFR Secs. 24.813(a)(1) and 
24.813(a)(2), are waived to the extent described here with respect to 
long-form applications (FCC Form 600) for broadband PCS C block 
licenses.

Federal Communications Commission.
Michele C. Farquhar,
Chief, Wireless Telecommunications Bureau.
[FR Doc. 96-12943 Filed 5-22-96; 8:45 am]
BILLING CODE 6712-01-M