Federal Communications Commission Washington, D.C. 20554 October 1, 2008 DA 08 - 2207 Via Certified Mail, Return Receipt Requested VentureTel 700, Inc. Attn: Charles M. Austin 400 E. Royal Lane Suite N24 Irving, TX 75039 Re: Notice of Interim Default Payment Obligation for Auction 73 Dear Mr. Austin: This letter provides notice of the interim default payment obligation for VentureTel 700, Inc. (“VentureTel”) with respect to its default arising out of a Federal Communications Commission (“Commission”) auction of the 700 MHz Band licenses (“Auction 73”). VentureTel, a participant in Auction 73, was the winning bidder on seven licenses.1 As described below, VentureTel defaulted on its final payment obligation for its winning bids for CMA169-B, CMA202-B, CMA147-B, CMA625-B, CMA724-B, CMA204-B, and CMA725-B. Accordingly, this letter sets forth the interim default payment obligation of VentureTel for its defaulted bids for the above-noted licenses and dismisses VentureTel’s long-form application.2 Under the Commission’s rules, a bidder who fails to timely remit the required down or final payment for a license or permit for which it was the high bidder is in default, its application is dismissed, and it is subject to a default payment.3 The default payment has two components. The first component is the difference between the bidder’s net defaulted bid and the subsequent net winning bid, or the difference between the bidder’s gross defaulted bid and the subsequent gross winning bid, whichever is less, the next time the license or permit is offered by the Commission (so long as the subsequent winning bid is less than the defaulted bid).4 This component of the default payment cannot be determined until after the licenses on which VentureTel defaulted are re-auctioned. The second component of the default payment is an additional payment, the amount of which was set in advance of the auction at fifteen percent (15%) of the defaulter’s bid, or the subsequent winning bid, whichever is less.5 If either bid amount is subject to a bidding credit, this component of the default payment will be calculated using the 1 See Auction of 700 MHz Band Licenses Closes; Winning Bidders Announced for Auction 73, Public Notice, DA 08-595, 23 FCC Rcd 4572 (2008) (“Auction 73 Closing Public Notice”). 2 See File No. 0003383859 (filed April 4, 2008). 3 47 C.F.R. §§ 1.2104(g)(2), 1.2109(c). 4 47 C.F.R § 1.2104(g)(2). 5 See 47 C.F.R § 1.2104(g)(2)(ii); Auction of 700 MHz Licenses Scheduled for January 24, 2008; Notice and Filing Requirements, Minimum Opening Bids, Reserve Prices, Upfront Payments, and Other Procedures for Auctions 73 and 76, Public Notice, DA 07-4171, 22 FCC Rcd 18141, 18222 ¶ 305 (2007). Charles M. Austin DA 08-2207 October 1, 2008 Page 2 same bid amounts and basis (net or gross bids) as in the first component of the default payment.6 In the event that the subsequent winning bid is greater than or equal to the defaulted bid, the total default payment is equal to fifteen percent (15%) of the defaulted bid.7 Until the close of the subsequent auction, the Commission cannot determine the full amount of the default payment that is owed. Therefore, the Commission assesses an interim payment amounting to between three and twenty percent of the net winning bid.8 The remainder, if any, is assessed once a subsequent winning bid for the defaulted licenses is established. On March 20, 2008, the Wireless Telecommunications Bureau (“Bureau”) announced the winning bidders in Auction 73, including VentureTel.9 The Bureau also announced that by no later than April 3, 2008, all Auction 73 winning bidders were required to have on deposit enough funds to bring each winning bidders’ deposits to twenty-percent (20%) of its winning bids and, by April 17, 2008, all winning bidders were required to submit a final payment for the balance of the net amount of each winning bid.10 If a winning bidder’s upfront payment was not sufficient to meet the down payment requirement, the winning bidder was required to deposit sufficient funds to meet its down payment. VentureTel’s net winning bids totaled $1,455,000.00.11 The Bureau applied the $705,500.00 that VentureTel had on deposit toward the down payment requirement and notified VentureTel that the additional amount due to meet its final payment was $749,500.00.12 VentureTel failed to submit the final payment due by April 17, 2008. The Auction 73 Closing Public Notice also announced that, pursuant to Section 1.2107(c) of the Rules, all winning bidders were required to submit their long-form applications (FCC Form 601 and 602) on or before April 3, 2008. VentureTel timely submitted its long-form application.13 VentureTel failed to remit the balance of its winning bids. Section 1.2109(c) of the rules provides that a winning bidder that “fails to remit the balance of its winning bid in a timely manner . . . will be deemed to have defaulted (and) its application will be dismissed . . . .”14. 6 Id. 7 Id. 8 See Amendment of Part 1 of the Commission’s Rules — Competitive Bidding Procedures, WT Docket No. 97-82, Third Report and Order and Second Further Notice of Proposed Rule Making, 13 FCC Rcd 374, 434 ¶ 102 (1997); Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-253, Fifth Report and Order, 9 FCC Rcd at 5563 n.51 (1994); see also Implementation of Section 309(j) of the Communications Act – Competitive Bidding, PP Docket No. 93-253, Second Report and Order, 9 FCC Rcd at 2382-83 ¶ 197 (1994). 9 See Auction 73 Closing Public Notice. 10 47 C.F.R. §§ 1.2107(b), 1.2109(a). 11 See Auction 73 Closing Public Notice, Attachment B. 12 See id. Commission staff sent to VentureTel on March 20, 2008, a pre-filled Remittance Advice (Form 159) showing the amount of VentureTel’s final payment in an overnight mailing that also included a copy of the Auction 73 Closing Public Notice. 13 See File No. 0003383859 (filed April 3, 2008). 14 47 C.F.R. § 1.2109(b). Charles M. Austin DA 08-2207 October 1, 2008 Page 3 Accordingly, VentureTel is considered to be in default on the seven licenses for which it was the high bidder in Auction 73. Because VentureTel defaulted on its winning bids for the seven licenses, its application is dismissed and it is subject to the applicable default payment.15 Consistent with the percentage that will be used to calculate the additional payment component of the final default payment, VentureTel owes an interim default payment of $218,250.00, which is fifteen-percent (15%) of its total net winning bids of $1,455,000.00.16 Pursuant to Section 1.2106(e) of the Rules, we will apply VentureTel’s payments on deposit to satisfy this interim default payment obligation.17 Once subsequent high bids are established for the relevant spectrum, we will determine VentureTel’s final default payment obligation.18 If an additional payment is required, a further order will assess such payment.19 Ordering Clauses Accordingly, IT IS ORDERED that, pursuant to Sections 4(i) and 309 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 309, and Section 1.2104(g)(2) of the Commission’s Rules, 47 C.F.R. § 1.2104(g)(2), VentureTel 700, Inc. is ASSESSED an interim default payment of $218,250.00 for its defaulted high bids for the 700 MHz Band licenses CMA169-B, CMA202-B, CMA147-B, CMA625-B, CMA724-B, CMA204-B, and CMA725-B in Auction 73. IT IS FURTHER ORDERED that, pursuant to 47 C.F.R. §§ 1.2104 and 1.2106, VentureTel 700, Inc. funds on deposit will be applied to satisfy the interim default payment obligation. IT IS FURTHER ORDERED that, pursuant to 47 C.F.R. § 1.2104(g)(2), VentureTel 700, Inc. will be subject to a final default payment for its defaulted high bids for the 700 MHz Band licenses CMA169-B, CMA202-B, CMA147-B, CMA625-B, CMA724-B, CMA204-B, and CMA725-B in Auction 73 once the spectrum associated with the licenses are re-auctioned and the full default payment amount is determined. IT IS FURTHER ORDERED that, pursuant to 47 C.F.R. § 1.2109(c), application FCC File No. 0003383859, filed by VentureTel 700, Inc. on April 4, 2008, is DISMISSED. 15 47 C.F.R. §§ 1.2104(g)(2), 1.2109(c). 16 47 C.F.R. § 1.2104(g)(2). 17 Consistent with Commission precedent, the disposition of the remaining amount of monies on deposit with the Commission related to this matter will be addressed in a subsequent letter to the payor of record, once a permit covering the same spectrum is re-auctioned and the final default payment can be calculated. See AirCom Communication Consultants, Inc., Order, 16 FCC Rcd 17685, 17691 n.47 (Pub. Safety Div. 2001), recon. denied sub nom., AirCom Consultants, Inc., Order on Reconsideration, 18 FCC Rcd 1806 (Pub. Safety Div. 2003). See also 47 C.F.R. § 1.2104(g)(2). 18 47 C.F.R. § 1.2104(g)(2). 19 See Mountain Solutions Ltd., Inc., Memorandum Opinion and Order, 13 FCC Rcd. 21,983, 21,997 ¶ 25 (1998). Charles M. Austin DA 08-2207 October 1, 2008 Page 4 IT IS FURTHER ORDERED that this letter shall be sent to the applicant and its representatives by certified mail, return receipt requested. This action is taken pursuant to authority delegated by Section 0.331 of the Commission’s Rules, 47 C.F.R. § 0.331. Sincerely, Margaret W. Wiener, Chief Auctions and Spectrum Access Division Wireless Telecommunications Bureau Roger S. Noel, Chief Mobility Division Wireless Telecommunications Bureau