[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which are no longer active bidders in the C block auction) filed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
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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