[Federal Register Volume 61, Number 76 (Thursday, April 18, 1996)]
[Notices]
[Page 16914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9490]



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FEDERAL COMMUNICATIONS COMMISSION
[DA 96-481]


Wireless Telecommunications Bureau Will Strictly Enforce Default 
Payment Rules; Bureau To Re-Auction Licenses Quickly

Released: April 4, 1996.
    The Wireless Telecommunications Bureau (``Bureau'') has received 
numerous inquiries concerning the Commission's rules on bidder defaults 
in the various spectrum auctions. In response to these inquiries, the 
Bureau reminds bidders that the Commission's rules concerning default 
payments will be strictly enforced in all auctions. Under 47 CFR 
1.2109(b), if a winning bidder fails to submit the required down 
payment(s) within the time frame designated by the applicable auction 
rules, the bidder will be deemed to have defaulted, its application 
will be dismissed, and it will be subject to the default payment 
specified in 47 CFR 1.2104(g)(2). All funds, including upfront payments 
and down payments, will be applied first to satisfy outstanding bid 
withdrawal and default payments before being applied toward the down 
payment on licenses the bidder has won and seeks to acquire. 47 CFR 
1.2104(g)(2). As indicated in the Fifth Report and Order in PP Docket 
No. 93-253 and the Broadband PCS C Block Supplemental Bidder Package, 
if the amount of the bid withdrawal or default payment cannot be 
determined, the bidder will be required to make a deposit of 20 percent 
of the amount bid on such licenses.\1\
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    \1\ See, Fifth Report and Order in PP Docket No. 93-253, FCC 94-
178, 9 FCC Rcd 5532, released July 15, 1994 at fn. 51; Broadband PCS 
C Block Supplemental Bidder Package at page 39.

    Example: Bidder X submitted an upfront payment of $5 to 
participate in an auction. At the close of an auction, Bidder X is 
the high bidder on licenses A, B and C. Bidder X submitted high bids 
of $1,000 for license A, $1,500 for license B, and $2,000 for 
license C. Within five days of the close of the auction, Bidder X 
must supplement its upfront payment with down payments sufficient to 
bring its total deposits up to five percent of its winning bids. 
Thus, Bidder X must submit down payments totalling $220 ($225 minus 
its $5 upfront payment) to be in compliance with the down payment 
requirements. If Bidder X submits $120 as down payments for licenses 
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A and B only, it will be in default on license C.

    Under our rules, all of Bidder X's funds on deposit with the 
Commission will be applied first to satisfy the default payment on 
license C. Because the amount of the default payment cannot be 
determined until the license is re-auctioned, Bidder X is required to 
make a deposit of 20 percent of the amount it bid on license C, or 
$400. Thus, all of the $125 that Bidder X has submitted to the 
Commission will be applied toward satisfying the default payment 
obligation on license C. Because Bidder X still owes $275 to satisfy 
its default payment on license C, Bidder X will be considered to be in 
default on licenses A and B as well. Bidder X will then owe the 
Commission $775 for its default payments (twenty percent of the amount 
bid on all three licenses (or $900) minus the amount it has on deposit 
(or $125)). Bidder X can avoid defaulting on licenses A and B only if 
it is able to deposit sufficient funds to cover the down payments on 
all three licenses ($225) or the default payment on license C and the 
down payments on licenses A and B ($625).
    Should a winning bidder fail to submit the required down 
payment(s), the Bureau will either re-auction the license(s) to 
existing or new applicants, or offer the license(s) to the other 
highest bidders (in descending order) at their final bids. 47 CFR 
1.2109(b). For defaults on licenses that occur after the down payments 
are due (or, in the case of small business applicants, after the first 
down payment is due), the Bureau will move to re-auction these licenses 
as quickly as possible. 47 CFR 1.2109(c).
    For further information, please contact James W. Hedlund, Wireless 
Telecommunications Bureau, Auctions Division at (202) 418-0660.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-9490 Filed 4-17-96; 8:45 am]
BILLING CODE 6712-01-P