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 NEWS  News  media  Information  202  /  418-  0500  TTY  202  /  418-  2555  Fax-  On-  Demand  202  /  418-  2830  Internet:  http://  www.  fcc.  gov  ftp.  fcc.  gov  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  This  is  an  unofficial  announcement  of  Commission  action.  Release  of  the  full  text  of  a  Commission  order  constitutes  official  action.  See  MCI  v.  FCC.  515  F  2d  385  (D.  C.  Circ  1974). 
 FOR  IMMEDIATE  RELEASE  NEWS  MEDIA  CONTACT:  March  27,  2002  Meribeth  McCarrick  at  (202)  418-  0654 
 FCC  ANNOUNCES  IT  WILL  REFUND  A  SUBSTANTIAL  PORTION  OF  CERTAIN  AUCTION  #35  DOWN  PAYMENTS 
 Washington,  D.  C.  –  The  Federal  Communications  Commission  (FCC)  has  announced  that  it  will  refund  a  substantial  portion  of  down  payments  made  by  winning  bidders  in  Auction  No.  35  for  licenses 
 previously  issued  to  NextWave  Personal  Communications  Inc.,  NextWave  Power  Partners  Inc.  (NextWave)  and  Urban  Comm-  North  Carolina,  Inc.  (Urban  Comm).  The  FCC  will  return  approximately 
 $2.8  billion,  or  85  percent,  of  the  down  payments  currently  held.  The  Commission  will  maintain  the  pending  status  of  the  applications  for  these  licenses.  This  action  will  give  the  bidders  access  to  the  bulk 
 of  their  money  while  at  the  same  time  preserving  the  results  and  integrity  of  Auction  No.  35. 
 Background: 
 In  Auction  No.  35,  the  FCC  auctioned  licenses  to  use  spectrum  previously  licensed  to  NextWave  and  Urban  Comm,  both  of  which  previously  defaulted  on  their  payment  obligations.  Nets  bids  for  those 
 licenses  totaled  approximately  $16.3  billion,  and  the  FCC  collected  downpayments  totaling  approximately  $3.3  billion.  The  United  States  Court  of  Appeals  for  the  D.  C.  Circuit  subsequently  ruled 
 in  NextWave  v.  FCC  that  Section  525  of  the  Bankruptcy  Code  forbade  the  FCC  from  canceling  licenses  held  by  NextWave.  The  United  States  and  the  Commission  petitioned  the  Supreme  Court  to  review  the 
 case,  and  the  Petition  was  granted  on  March  4,  2002.  Prior  Public  Notices  had  made  Auction  35  contingent  on  the  final  outcome  of  litigation  over  the  NextWave  and  Urban  Comm  licenses. 


 In  January  2002,  a  coalition  of  winning  bidders  (Petitioners)  jointly  requested  full  refund  of  their  down  payments. 
 Specifics  of  Today’s  Action: 
 The  Commission  affirmed  that  winning  Auction  No.  35  bidders  continue  to  be  bound  by  their  bid  obligations.  The  FCC  recognized,  however,  that  it  has  some  discretion  with  respect  to  the  amount  of 
 down  payments  it  maintains  on  deposit.  The  Commission  found  that  petitioners,  many  of  whom  are  small  businesses,  may  require  access  to  their  funds  to  continue  to  operate  their  businesses.  At  the  same  time, 
 the  Commission  must  protect  the  integrity  of  Auction  No.  35  in  the  event  the  Commission  is  ultimately  successful  in  its  litigation  and  a  bidder  subsequently  defaults  on  its  payment  obligations.  The 
 Commission  therefore  struck  a  public  interest  balance  between  the  hardship  that  would  be  imposed  by  continued  retention  of  the  down  payments  and  the  need  to  protect  the  integrity  of  the  auction  by 
 authorizing  refund  of  a  substantial  portion  of  the  down  payments. 
 To  effectuate  the  partial  refund,  the  Commission  waived  its  rules  requiring  that  down  payments  equal  to  20  percent  of  winning  bidders’  total  net  bids  be  held  by  the  FCC  until  resolution  of  the  licensing 
 process.  Instead,  the  FCC  will  retain  an  amount,  for  each  bidder,  equal  to  three  percent  of  that  winning  bidder’s  total  net  bids  for  the  licenses.  Three  percent  represents  the  minimum  amount  of  money  a  bidder 
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 must  pay  if  it  defaults  on  its  bid  obligation.  The  FCC  set  out  specific  procedures  companies  must  follow  in  order  to  receive  refunds. 
 The  Commission  will  maintain  the  pending  status  of  the  applications  for  these  licenses.  Should  the  Commission  prevail  in  the  NextWave  litigation,  winning  bidders  in  Auction  No.  35  will  be  required  to 
 pay  the  full  amount  of  their  winning  bids  or  be  subject  to  default  under  the  Commission’s  rules. 
 The  Commission  also  rejected  the  claim  of  Verizon  Wireless  (Verizon)  that  the  delay  in  licensing  entitles  it  to  avoid  its  obligation  to  pay  the  full  amount  of  its  winning  bids.  The  Commission  stated  that 
 by  participating  in  the  auction,  Verizon  assumed  a  known  risk  of  litigation-  related  delay  and  thus  continues  to  be  bound  by  the  auction  rules.  Those  rules  require  all  bidders  to  pay  their  full  bid  in  the 
 event  the  Commission  is  ultimately  successful  in  its  litigation  and  the  licenses  are  issued. 
 Action  by  the  Commission  on  March  26,  2002,  by  Order  (FCC  02-  99).  Chairman  Powell,  Commissioners  Abernathy,  Copps  and  Martin. 


 FCC  Contact:  Leora  Hochstein  at  (202)  418-  1022  or  lhochste@  fcc.  gov. 
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