Federal Communications Commission 
Washington, D.C. 20554 · 
Jolm A Prendergast, Esq. 
Blooston, Mordkofsky, Jackson & Dickens 
2120 L Street, N.W. 
Suite 300 
Washington, D.C. 20037 
Drar :Mr. Prendergast: 
April 9, 1999 
DA 99-690 
In this letter, we set forth the default payment obligations and procedures for New 
Wave Networks, L.LC. (''New Wave") resulting from its failure to remit the total payment 
required on licenses for which it was the successful high bidder in the Local Multipoint 
Distribution Service ("LMDS") auction, Auction No. 17. AS discussed below, New Wave is 
in default on its full payment obligations with respect to two B block licenses in the Basic 
Trading Areas (''BTAs") of Reno, Nevada, Market No. B372 and St George, Utah, Market 
No. B392 and is subject to an initial default payment of $18,068. 
On March 25, 1998, the Connnission concluded Auction No. 17. New Wave was the 
winning bidder on licenses in the following six Markets: (1) B038 (Bend, OR); (2) B 144 
(Flagstaff, AZ); (3) B254 (Lihue, HI); (4) B371 (Redding, CA); (5) B372 (Reno, NV); and 
(6) B392 (St George, UI).1 On March 26, 1998, the Commission mmmmced by Public 
Notice that by April 9, 1998, winning bidders would be required to have on deposit with 
Mellon Bank in Pittsburgh, Pemsylvania enough funds to cover initial down payments for 
winning bids.2 For its six B block licenses, New Wave was required to make an initial down 
payment equal to 20 percent of its net bids,3 or $173,250.4 Prior to the commencement of the 
auction, Ne\V Wave had deposited with Mellon Bank an upfront payment of $56,317. On 
April 9, 1998, New Wave made a payment of $116,933 bringing its total deposits to 
$173,250, the full ammmt owed the Connnission by the down payment deadline. 
"l..MDS Auction Qoses," Public Notice, DA 98-572 (rel. March 26, 1998). 
2 Id 
3 The tenn ''net bid" refers to a bidder's winning bid less any applicable bidding credits. 
_ __,,.,-/' 
4 47 c.r.R 24. 706(b ). See attachment 
6323 
On July 16, 1998, the Wireless Telecommunications Bureau (the "Bureau"), under 
delegated authority, conditionally granted New Wave's applications for the six B block 
licenses.5 The grant of these licenses was subject to New Wave's payment by July 30, 1998, 
of the balance of its net bids. 6 At the time the Announcement Public Notice was released, the 
balance due on New Wave's six licenses totaled $693,000.7 On July 30, 1998, New Wave 
wired a payment of $140,000. This was the last payment that New Wave made with respect 
to the six licenses at issue. 
On August 13, 1998, New Wave filed a request seeking an extension and/or waiver of 
the payment deadlines.8 Subsequently, New Wave filed three supplements to this request. 9 
On November 6, 1998, in a Public Notice, the Bureau included in the upcoming LMDS Re­
Auction, Auction No. 23, the six licenses for which New Wave had been the winning bidder 
in Auction No. 17.10 On December 9, 1998, in its third supplement, New Wave withdrew its 
request for waiver of the final payment deadline and, instead, requested that it be permitted to 
default selectively on two licenses (in Markets B372 and B392) and receive an unconditional 
grant of the remaining four licenses (in Markets B038, Bl44, B254, and B371) for which 
New Wave claims it has made timely and complete payment. 11 
"FCC Announces the Conditional Grant of 36 Local Multipoint Distribution Service Licenses," Public 
Notice, DA 98-1401 (rel. July 16, 1998) ("Announcement Public Notice"). 
6 Id Specifically, the Bureau explained that these grants "are conditioned upon the full and timely 
payment of the remaining balance of the applicant's winning bid(s) within ten (IO) business days of the date of 
this Public Notice (i.e., by July 30, 1998)." 
7 See attachment. 
8 47 C.F.R. §§ l.2109(a) and (c) and 101.1 IOS(b). Final Payment for LMDS Licenses, filed by John A. 
Prendergast (counsel for New Wave) on August 13, 1998. 
9 Supplement to Request for Waiver and/or Extension of Deadline, filed by John A. Prendergast and D. 
Cary Mitchell on September 2, 1998; Second Supplement to Request for Waiver and Request for Confidentiality, 
filed by John A. Prendergast and D. Cary Mitchell on October 9, 1998; Third Supplement to Request for Waiver, 
filed by John A. Prendergast and D. Cary Mitchell on December 9, 1998. 
10 "Local Multipoint Distribution Service Spectrum Re-Auction of 168 Licenses Scheduled for April 27, 
1999; Application Filing Deadline Set for March 29, 1999," Public Notice, DA 98-2266 (rel. November 6, 1998). 
11 Third Supplement to Request for Waiver, filed by John A. Prendergast.and-.D. Cary Mitchell on 
December 9, 1998. See also Request for Waiver of Rule Sections 101.1 IOS(b) and l.2109(a)-(c), filed by John 
A. Prendergast and D. Cary Mitchell on March 26, 1999. Because New Wave's waiver request was withdrawn, 
we will return, under separate cover, the materials related to that request for which New Wave sought 
confidentiality. 
Under the Commission's Rules, a winning bidder that defaults after having made the 
required down payment is subject to default payment obligations. 12 Specifically, such bidder 
is required to pay the difference between the amount bid and the amount of the winning bid 
the next time the license is offered by the Commission (so long as the subsequent winning bid 
is less than the amount bid), plus an additional payment equal to three percent of the 
defaulter's bid or the subsequent winning bid, whichever is less. 13 In the event that the 
subsequent winning bid is greater than or equal to the defaulted bid, the total default payment 
is equal to three percent of the defaulted bid. 14 Upfront and down payment amounts on 
deposit with the Commission are first applied to default payments before being applied to 
payments owed on other licenses the bidder seeks to acquire. 15 
The·purpose of Section 1.2104(g)(2) of the Commission's Rules is to assure that the 
winning bidder is obligated to pay the full amount of its winning bid (less any mitigation of 
damages arising from a reauction of the spectrum) even if the winning bidder defaults or is 
determined to be disqualified and is never issued a license.16 The winning bidder's 
contractual obligation to pay the winning bid thus becomes fixed and established at the close 
of the auction, and the winning bidder, not the Commission or the taxpayer, bears the risk of 
a change in the market between the acceptance of the winning bid and the grant of the 
license. A licensee that chooses to default, rather than comply with the payment obligation, 
will, therefore, still be obligated to make the Commission whole for the amount of the 
winning bid, subject to any mitigation of damages as a result of a subsequent auction of a 
license for the same spectrum. 
I 
New Wave'1s second payment of $140,000, made on July 30, 1998, was insufficient to 
cover the full amount due by that date ($693,300) for all six licenses that it had won. When 
the Commission has allowed selective default on licenses, the winning bidder has remained 
responsible for default penalties.17 We find that the amount on deposit after New Wave's 
12 See 41 C.F.R. § l.2109(c), § 24.704, and § l.2104(g)(2). 
13 47 C.F.R. § 24.704. 
14 Id 
15 47 C.F.R § 1.2106. See also Letter from Michele C. Farquhar, Chief, Wireless Telecommunications 
Bureau, to Kenneth Hobbs, C.H. PCS, Inc., DA 97-260 (rel. February 4, 1997) and "Wireless 
Telecommunications Bureau Will Strictly Enforce Default Payment Rules; Bureau to Re-Auction Licenses 
Quickly," Public Notice, DA 96-481, 11 FCC Red 10853 (1996). 
16 47 C.F.R. § l.2104(gX2). 
17 See, e.g., Tel-Com Wireless Cable TV Corporation, Order, DA 97-1100 (rel. May 23, 1997); Wireless 
Telecommunications, Inc., Order, DA 97-1101 (rel. May 23, 1997); Letter to Stephen Kaffee, counsel for 
Entertainment Unlimited, Inc., from Amy J. Zoslov, Chief Auctions and Industry Analysis Division, Wireless 
6325 
second payment was sufficient to pay for four licenses and that New Wave is in default on 
two licenses in the BTAs of Reno, Nevada, Market B372 and St. George, Utah, Market B392. 
Thus, New Wave is subject to the default payment provisions specified in Sections 24.704 and 
1.2104(g)(2) of the Commission's Rules. 18 
Because the licenses for Markets B372 and B392 will be included in Auction No. 23, 
which is scheduled to begin on April 27, 1999, we cannot, at this time, determine the full 
amount of the default payment owed by New Wave. Therefore, pursuant to Commission 
practice, we will assess a deposit toward the default payment ultimately owed by New Wave19 
amounting to three percent of New Wave's net bid on each of the two licenses.20 
Specifically, for defaulting on license B372, we require that New Wave pay $14,124, which 
represents three percent of its net bid of $470,800.21 For defaulting on license B392~ we 
require that New Wave pay $3,944, which represents three percent of its net bid of 
$131,450.22 New Wave is, therefore, assessed an initial total default penalty of $18,068.23 If 
an additional payment is required following Auction No. 23, a second Order will assess the 
amount due. 
The record shows that New Wave currently has on deposit with the Commission 
$313,250, which is the sum of New Wave's $140,000 second payment and the $173,250 
amount previously paid to satisfy its down payment obligation for all six licenses. 24 Pursuant 
to Sections 1.2106(e) and l.2104(g) of the Commission's Rules, the $18,068 initial default 
penalty will be deducted from the $313,250 amount on deposit, leaving a balance of 
$295,182.25 This $295,182 on deposit is sufficient to satisfy New Wave's full payment 
Telecommunications Bureau, DA 99-520 (rel. March 17, 1999). 
18 47 C.F.R. §§ 24.704 and l.2104(g)(2). 
19 See Implementation of Section 3090) of the Communications Act - Competitive Bidding. Second Report 
and Order, PP Docket No. 93-253, 9 FCC Red 2348 (1994), 2382-83, 1111 195-197; "Wireless 
Telecommunications Bureau Will Strictly Enforce Default Payment Rules; Bureau to Re-Auction Licenses 
Quickly,'' Public Notice, DA 96-481, 11 FCC Red 10853 (1996). 
20 47 C.F.R. §§ 24.704 and l.2104(g). 
21 See attachment. 
22 Id 
23 Id 
24 Id 
25 47 C.F.R. §§ l.2106(e) and l.2104(g). See attachment. 
6326 
obligation of $264,000 for the four licenses in Markets B038, Bl44, B254 and B371.26 
Therefore, these licenses will not be available in Auction No. 23 and the Commission will 
retain the remainder of New Wave's deposit ($31,182) pending assessment of the full default 
payment at the close of the auction. 27 
Accordingly, New Wave's request that the Commission apply its monies on deposit to 
four select licenses is hereby granted. New Wave is assessed an initial default payment on 
licenses B372 and B392 in the amount of $18,068, and these licenses are hereby cancelled. 
Having satisfied its initial default payment, New Wave will be eligible to bid in Auction No. 
23. However, New Wave will be subject to the balance of the payment specified in Sections 
24.704 and 1.2104(g) once licenses B372 and B392 are auctioned and the actual default 
payments for the licenses are determined.28 Further, the licenses for the following four 
Markets will not be available in Auction No. 23: B038 (Bend, Oregon), B 144 (Flagstaff, 
Arizona), B254 (Lihue, Hawaii), and B371 (Redding, California). 
This action is taken pursuant to delegated authority; 47 C.F.R. § 0.331. 
26 See attachment. 
27 Id 
21 47 C.F.R. §§ 24.704 and 1.2104(gX2). 
6327 
Analysis Division 
· ns Bureau 
Licenses Won: 
Market No. Net Bid 
B038 52,250 
Bl44 188,650 
B254 7,700 
B371 15,400 
B372 470,800 
B392 131,450 
Total: 866,250 
Total Due: 
Total Paid: 
Defaulted Licenses: Net Bid 
B372 470,800 
B392 131,450 
Remaining Licenses: Net Bid 
B038 
Bl44 
B254 
B371 
Total: 
Summary of Deposits: 
52,250 
188,650 
7,700 
15,400 
_264,000 
Down Payment Made: 
Final Payment Made: 
Total: 
Summary of Charges: 
173,250 
140,000 
313,250 
Total Amount on Deposit: 
3% Default Penalty for B372: 
3% Default Penalty for B392: 
Total: 
Attachment 
Down Pavments Due 
10,450 (200/0 of net bid) 
37,730 (200/o of net bid) 
1,540 (20% of net bid) 
3,080 (20% of net bid) 
94,160 (200/0 of net bid) 
26,290 (200/0 of net bid) 
173,250 
173,250 
173,250 
Default Penalty 
3% of 470,800 = 
3% of 131,450 = 
Total: 
313,250 
14,124 
3,944 
295,182 
14,124 
3,944 
18,068 
Remaining Amount on Deposit: 295,182 - 264,000 = 31,182 
6328 
Final Payments Due 
41,800 (80% of net bid) 
150,920 (80% of net bid) 
6,160. (80% of net bid) 
12,320 (80% of net bid) 
376,640 (80% of net bid) · 
105,160 (80% of net bid) 
693,000 
693,000 
140,000