YOU ARE AT:Archived ArticlesFCC FINES BDPCS $67M FOR PCS BIDDING BLUNDER

FCC FINES BDPCS $67M FOR PCS BIDDING BLUNDER

WASHINGTON-BDPCS Inc., which lost its C-block personal communications services licenses last year due to a default on its down payment, still is liable for a $67.6 million payment due mid-June to the Federal Communications Commission.

In an order released May 21, the Wireless Telecommunications Bureau declined to grant BDPCS’s petition for reconsideration regarding the amount of the payment, which was the total of the difference between the company’s winning bids and the amount the FCC recovered following the reauction of the markets plus a 3 percent penalty. BDPCS principal Robert Kyle could not be reached for comment on the company’s future plans.

BDPCS asked the commission for both a reduction in the amount and a three-year payment plan, saying that it could not have foreseen the pullout of its financial backers; the withdrawal of its primary initial public offering underwriter, Merrill Lynch; that the commission gained $30 million in the reauction, making the $67 million “unjustified;” and that a $24 million obligation would be more appropriate because “its existing assets and revenues are not sufficient to cover the current default payment and bankruptcy will result if compelled to do so.”

The bureau, on the other hand, argued that “the fact that BDPCS lost all sources of funding does not diminish its financial responsibility under the commission’s rules.” It also pointed out that the FCC “is not responsible for the private business arrangements that an applicant has made to finance its successful bid, nor can it `police the private business activities of each bidder.’ “

Regarding the amount of money the commission garnered following the reauction of BDPCS’ 17 licenses, the bureau said no defaulting bidder could “seek relief simply because gains made on some licenses offset losses incurred on others.” BDPCS again was admonished that it should have refrained from continued bidding in the C-block once it found its financial sources had dried up, and that all high bids should have been withdrawn “until its financing was secure.”

“If the commission were to reduce default payments based on a bidder’s inability to pay, that would serve only to encourage bidders to bid without secure financial backing and contravene commission policy,” the bureau concluded. In light of that, the three-year payment plan requested by BDPCS was rejected on the grounds that “the impact of the default payment rule would be significantly reduced if we were to defer the due date.”

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