47 C.F.R. Subpart H—Competitive Bidding Procedures for Broadband PCS
Title 47 - Telecommunication
Source: 59 FR 37604, July 22, 1994, unless otherwise noted.
Mutually exclusive initial applications for broadband PCS service licenses are subject to competitive bidding. The general competitive bidding procedures set forth in part 1, subpart Q of this chapter will apply unless otherwise provided in this subpart. [67 FR 45367, July 9, 2002]
Title 47: Telecommunication
PART 24—PERSONAL COMMUNICATIONS SERVICES
Subpart H—Competitive Bidding Procedures for Broadband PCS
§ 24.701 Broadband PCS subject to competitive bidding.
§§ 24.702-24.708 [Reserved]
§ 24.709 Eligibility for licenses for frequency Blocks C or F.
(a) General rule for licenses offered for closed bidding. (1) No application is acceptable for filing and no license shall be granted to a winning bidder in closed bidding for frequency block C or frequency block F, unless the applicant, together with its affiliates and persons or entities that hold interests in the applicant and their affiliates, have had gross revenues of less than $125 million in each of the last two years and total assets of less than $500 million at the time the applicant's short-form application (Form 175) is filed.
(2) Any licensee awarded a license won in closed bidding pursuant to the eligibility requirements of this section (or pursuant to §24.839(a)(2)) shall maintain its eligibility until at least five years from the date of initial license grant, except that a licensee's (or other attributable entity's) increased gross revenues or increased total assets due to nonattributable equity investments (i.e., from sources whose gross revenues and total assets are not considered under paragraph (b) of this section), debt financing, revenue from operations or other investments, business development, or expanded service shall not be considered.
(3) Tiers. (i) For purposes of determining spectrum to which the eligibility requirements of this section are applicable, the BTA service areas (see §24.202(b)) are divided into two tiers according to their population as follows:
(A) Tier 1: BTA service areas with population equal to or greater than 2.5 million;
(B) Tier 2: BTA service areas with population less than 2.5 million.
(ii) For Auction No. 35, the population of individual BTA service areas will be based on the 1990 census. For auctions beginning after the start of Auction No. 35, the population of individual BTA service areas will be based on the most recent available decennial census.
(4) Application of eligibility requirements. (i) The following categories of licenses will be subject to closed bidding pursuant to the eligibility requirements of this section in auctions that begin after the effective date of this paragraph.
(A) For Tier 1 BTAs, one of the 10 MHz C block licenses (1895–1900 MHz paired with 1975–1980 MHz);
(B) For Tier 2 BTAs, two of the 10 MHz C block licenses (1895–1900 MHz paired with 1975–1980 MHz; 1900–1905 MHz paired with 1980–1985 MHz) and all 15 MHz C block licenses.
(ii) Notwithstanding the provisions of paragraph (a)(4)(i) of this section, any C block license for operation on spectrum that has been offered, but not won by a bidder, in closed bidding in any auction beginning on or after March 23, 1999, will not be subject in a subsequent auction to closed bidding pursuant to the eligibility requirements of this section.
(5) Special rule for licensees disaggregating or returning certain spectrum in frequency block C.
(i) In addition to entities qualifying for closed bidding under paragraph (a)(1) of this section, any entity that was eligible for and participated in the auction for frequency block C, which began on December 18, 1995, or the reauction for frequency block C, which began on July 3, 1996, will be eligible to bid for C block licenses offered in closed bidding in any reauction of frequency block C spectrum that begins within two years of March 23, 1999.
(ii) In cases of merger, acquisition, or other business combination of entities, where each of the entities is eligible to bid for C block licenses offered in closed bidding in any reauction of C block spectrum on the basis of the eligibility exception set forth in paragraph (a)(5)(i) of this section, the resulting entity will also be eligible for the exception specified in paragraph (a)(5)(i) of this section.
(iii) In cases of merger, acquisition, or other business combination of entities, where one or more of the entities are ineligible for the exception set forth in paragraph (a)(5)(i) of this section, the resulting entity will not be eligible pursuant to paragraph (a)(5)(i) of this section unless an eligible entity possesses de jure and de facto control over the resulting entity.
(iv) The following restrictions will apply for any reauction of frequency block C spectrum conducted after March 24, 1998:
(A) Applicants that elected to disaggregate and surrender to the Commission 15 MHz of spectrum from any or all of their frequency block C licenses, as provided in Amendment of the Commission's Rules Regarding Installment Payment Financing for Personal Communications Services (PCS) Licensees, Second Report and Order and Further Notice of Proposed Rule Making, WT Docket No. 97–82, 12 FCC Rcd 16,436 (1997), as modified by the Order on Reconsideration of the Second Report and Order, WT Docket No. 97–82, FCC 98–46 (rel. Mar. 24, 1998), will not be eligible to apply for such disaggregated spectrum until 2 years from the start of the reauction of that spectrum.
(B) Applicants that surrendered to the Commission any of their frequency block C licenses, as provided in Amendment of the Commission's Rules Regarding Installment Payment Financing for Personal Communications Services (PCS) Licensees, Second Report and Order and Further Notice of Proposed Rule Making, WT Docket No. 97–82, 12 FCC Rcd 16,436 (1997), as modified by the Order on Reconsideration of the Second Report and Order, WT Docket No. 97–82, FCC 98–46 (rel. Mar. 24, 1998), will not be eligible to apply for the licenses that they surrendered to the Commission until 2 years from the start of the reauction of those licenses if they elected to apply a credit of 70% of the down payment they made on those licenses toward the prepayment of licenses they did not surrender.
(b) Exceptions to general rule—(1) Scope. The following provisions apply to licenses acquired in Auctions No. 5, 10, 11 or 22, or pursuant to §24.839(a)(2) or (a)(3) prior to October 30, 2000.
(i) Small business consortia. Where an applicant (or licensee) is a consortium of small businesses, the gross revenues and total assets of each small business shall not be aggregated.
(ii) Publicly-traded corporations. Where an applicant (or licensee) is a publicly traded corporation with widely dispersed voting power, the gross revenues and total assets of a person or entity that holds an interest in the applicant (or licensee), and its affiliates, shall not be considered.
(iii) 25 Percent equity exception. The gross revenues and total assets of a person or entity that holds an interest in the applicant (or licensee), and its affiliates, shall not be considered so long as:
(A) Such person or entity, together with its affiliates, holds only nonattributable equity equaling no more than 25 percent of the applicant's (or licensee's) total equity;
(B) Except as provided in paragraph (b)(1)(v) of this section, such person or entity is not a member of the applicant's (or licensee's) control group; and
(C) The applicant (or licensee) has a control group that complies with the minimum equity requirements of paragraph (b)(1)(v) of this section, and, if the applicant (or licensee) is a corporation, owns at least 50.1 percent of the applicant's (or licensee's) voting interests, and, if the applicant (or licensee) is a partnership, holds all of its general partnership interests.
(iv) 49.9 Percent equity exception. The gross revenues and total assets of a person or entity that holds an interest in the applicant (or licensee), and its affiliates, shall not be considered so long as:
(A) Such person or entity, together with its affiliates, holds only nonattributable equity equaling no more than 49.9 percent of the applicant's (or licensee's) total equity;
(B) Except as provided in paragraph (b)(1)(vi) of this section, such person or entity is not a member of the applicant's (or licensee's) control group; and
(C) The applicant (or licensee) has a control group that complies with the minimum equity requirements of paragraph (b)(1)(vi) of this section and, if the applicant (or licensee) is a corporation, owns at least 50.1 percent of the applicant's (or licensee's) voting interests, and, if the applicant (or licensee) is a partnership, holds all of its general partnership interests.
(v) Control group minimum 25 percent equity requirement. In order to be eligible to exclude gross revenues and total assets of persons or entities identified in paragraph (b)(1)(iii) of this section, and applicant (or licensee) must comply with the following requirements:
(A) Except for an applicant (or licensee) whose sole control group member is a preexisting entity, as provided in paragraph (b)(1)(v)(B) of this section, at the time the applicant's short-form application (Form 175) is filed and until at least three years following the date of initial license grant, the applicant's (or licensee's) control group must own at least 25 percent of the applicant's (or licensee's) total equity as follows:
(1) At least 15 percent of the applicant's (or licensee's) total equity must be held by qualifying investors, either unconditionally or in the form of options exercisable, at the option of the holder, at any time and at any exercise price equal to or less than the market value at the time the applicant files its short-form application (Form 175);
(2) Such qualifying investors must hold 50.1 percent of the voting stock and all general partnership interests within the control group, and must have de facto control of the control group and of the applicant;
(3) The remaining 10 percent of the applicant's (or licensee's) total equity may be owned, either unconditionally or in the form of stock options, by any of the following entities, which may not comply with §24.720(g)(1):
(i) Institutional Investors;
(ii) Noncontrolling existing investors in any preexisting entity that is a member of the control group;
(iii) Individuals that are members of the applicant's (or licensee's) management; or
(iv) Qualifying investors, as specified in §24.720(g)(3).
(4) Following termination of the three-year period specified in paragraph (b)(1)(v)(A) of this section, qualifying investors must continue to own at least 10 percent of the applicant's (or licensee's) total equity unconditionally or in the form of stock options subject to the restrictions in paragraph (b)(1)(v)(A)(1) of this section. The restrictions specified in paragraphs (b)(1)(v)(A)(3)(i) through (b)(1)(v)(A)(3)(iv) of this section no longer apply to the remaining equity after termination of such three-year period.
(B) At the election of an applicant (or licensee) whose control group's sole member is a preexisting entity, the 25 percent minimum equity requirements set forth in paragraph (b)(1)(v)(A) of this section shall apply, except that only 10 percent of the applicant's (or licensee's) total equity must be held in qualifying investors, and that the remaining 15 percent of the applicant's (or licensee's) total equity may be held by qualifying investors, or noncontrolling existing investors in such control group member or individuals that are members of the applicant's (or licensee's) management. These restrictions on the identity of the holder(s) of the remaining 15 percent of the licensee's total equity no longer apply after termination of the three-year period specified in paragraph (b)(1)(v)(A) of this section.
(vi) Control group minimum 50.1 percent equity requirement. In order to be eligible to exclude gross revenues and total assets of persons or entities identified in paragraph (b)(1)(iv) of this section, an applicant (or licensee) must comply with the following requirements:
(A) Except for an applicant (or licenses) whose sole control group member is a preexisting entity, as provided in paragraph (b)(1)(vi)(B) of this section, at the time the applicant's short-form application (Form 175) is filed and until at least three years following the date of initial license grant, the applicant's (or licensee's) control group must own at least 50.1 percent of the applicant's (or licensee's) total equity as follows:
(1) At least 30 percent of the applicant's (or licensee's) total equity must be held by qualifying investors, either unconditionally or in the form of options, exercisable at the option of the holder, at any time and at any exercise price equal to or less than the market value at the time the applicant files its short-form application (Form 175);
(2) Such qualifying investors must hold 50.1 percent of the voting stock and all general partnership interests within the control group and must have de facto control of the control group and of the applicant;
(3) The remaining 20.1 percent of the applicant's (or licensee's) total equity may be owned by qualifying investors, either unconditionally or in the form of stock options not subject to the restrictions of paragraph (b)(1)(vi)(A)(1) of this section, or by any of the following entities which may not comply with §24.720(g)(1):
(i) Institutional investors, either unconditionally or in the form of stock options;
(ii) Noncontrolling existing investors in any preexisting entity that is a member of the control group, either unconditionally or in the form of stock options;
(iii) Individuals that are members of the applicant's (or licensee's) management, either unconditionally or in the form of stock options; or
(iv) Qualifying investors, as specified in §24.720(g)(3).
(4) Following termination of the three-year period specified in paragraph (b)(1)(vi)(A) of this section, qualifying investors must continue to own at least 20 percent of the applicant's (or licensee's) total equity unconditionally or in the form of stock options subject to the restrictions in paragraph (b)(1)(vi)(A)(1) of this section. The restrictions specified in paragraph (b)(1)(vi)(A)(3)(i) through (b)(1)(vi)(A)(3)(iv) of this section no longer apply to the remaining equity after termination of such three-year period.
(B) At the election of an applicant (or licensee) whose control group's sole member is a preexisting entity, the 50.1 percent minimum equity requirements set forth in paragraph (b)(1)(vi)(A) of this section shall apply, except that only 20 percent of the applicant's (or licensee's) total equity must be held by qualifying investors, and that the remaining 30.1 percent of the applicant's (or licensee's) total equity may be held by qualifying investors, or noncontrolling existing investors in such control group member or individuals that are members of the applicant's (or licensee's) management. These restrictions on the identity of the holder(s) of the remaining 30.1 percent of the licensee's total equity no longer apply after termination of the three-year period specified in paragraph (b)(1)(vi)(A) of this section.
(vii) Calculation of certain interests. Except as provided in paragraphs (b)(1)(v) and (b)(1)(vi) of this section, ownership interests shall be calculated on a fully diluted basis; all agreements such as warrants, stock options and convertible debentures will generally be treated as if the rights thereunder already have been fully exercised, except that such agreements may not be used to appear to terminate or divest ownership interests before they actually do so, in order to comply with the nonattributable equity requirements in paragraphs (b)(1)(iii)(A) and (b)(1)(iv)(A) of this section.
(viii) Aggregation of affiliate interests. Persons or entities that hold interest in an applicant (or licensee) that are affiliates of each other or have an identify of interests identified in §1.2110(c)(5)(iii) will be treated as though they were one person or entity and their ownership interests aggregated for purposes of determining an applicant's (or licensee's) compliance with the nonattributable equity requirements in paragraphs (b)(1)(iii)(A) and (b)(1)(iv)(A) of this section.
Example 1 for paragraph (b)(1)(viii). ABC Corp. is owned by individuals, A, B, and C, each having an equal one-third voting interest in ABC Corp. A and B together, with two-thirds of the stock have the power to control ABC Corp. and have an identity of interest. If A & B invest in DE Corp., a broadband PCS applicant for block C, A and B's separate interests in DE Corp. must be aggregated because A and B are to be treated as one person.
Example 2 for paragraph (b)(1)(viii). ABC Corp. has subsidiary BC Corp., of which it holds a controlling 51 percent of the stock. If ABC Corp. and BC Corp., both invest in DE Corp., their separate interests in DE Corp. must be aggregated because ABC Corp. and BC Corp. are affiliates of each other.
(2) The following provisions apply to licenses acquired pursuant to §24.839(a)(2) or (a)(3) on or after October 30, 2000. In addition to the eligibility requirements set forth at 24.709(a) and (b), applicants and/or licensees seeking to acquire C and/or F block licenses pursuant to 24.839(a)(2) or (a)(3) will be subject to the controlling interest standard in 1.2110(c)(2) of this chapter for purposes of determining unjust enrichment payment obligations. See §1.2111 of this chapter.
(c) Short-form and long-form applications: Certifications and disclosure.
(1) Short-form application. In addition to certifications and disclosures required by part 1, subpart Q of this chapter, each applicant to participate in closed bidding for frequency block C or frequency block F shall certify on its short-form application (Form 175) that it is eligible to bid on and obtain such license(s), and (if applicable) that it is eligible for designated entity status pursuant to this section and §24.720, and shall append the following information as an exhibit to its Form 175:
(i) For all applicants: The applicant's gross revenues and total assets, computed in accordance with paragraphs (a) of this section and §1.2110(b)(1) through (b)(2) of this chapter.
(ii) For all applicants that participated in Auction Nos. 5, 10, 11, and/or 22:
(A) The identity of each member of the applicant's control group, regardless of the size of each member's total interest in the applicant, and the percentage and type of interest held;
(B) The status of each control group member that is an institutional investor, an existing investor, and/or a member of the applicant's management;
(C) The identity of each affiliate of the applicant and each affiliate of individuals or entities identified pursuant to paragraphs (C)(1)(ii)(A) and (c)(1)(ii)(B) of this section;
(D) A certification that the applicant's sole control group member is a preexisting entity, if the applicant makes the election in either paragraph (b)(1)(v)(B) or (b)(1)(vi)(B)of this section; and
(E) For an applicant that is a publicly traded corporation with widely disbursed voting power:
(1) A certified statement that such applicant complies with the requirements of the definition of publicly traded corporation with widely disbursed voting power set forth in §24.720(f);
(2) The identity of each affiliate of the applicant.
(iii) For each applicant claiming status as a small business consortium, the information specified in paragraph (c)(1)(ii) of this section, for each member of such consortium.
(2) Long-form application. In addition to the requirements in subpart I of this part and other applicable rules (e.g., §§20.6(e) and 20.9(b) of this chapter), each applicant submitting a long-form application for a license(s) for frequency block C or F shall in an exhibit to its long-form application:
(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;
(ii) List and summarize all agreements or other instruments (with appropriate references to specific provisions in the text of such agreements and instruments) that support the applicant's eligibility for a license(s) for frequency block C or frequency block F and its eligibility under §§24.711, 24.712, 24.714 and 24.720, including the establishment of de facto and de jure control; such agreements and instruments include articles of incorporation and bylaws, shareholder agreements, voting or other trust agreements, partnership agreements, management agreements, joint marketing agreements, franchise agreements, and any other relevant agreements (including letters of intent), oral or written; and
(iii) List and summarize any investor protection agreements and identify specifically any such provisions in those agreements identified pursuant to paragraph (c)(2)(ii) of this section, including rights of first refusal, supermajority clauses, options, veto rights, and rights to hire and fire employees and to appoint members to boards of directors or management committees.
(3) Records maintenance. All applicants, including those that are winning bidders, shall maintain at their principal place of business an updated file of ownership, revenue and asset information, including those documents referenced in paragraphs (c)(2)(ii) and (c)(2)(iii) of this section and any other documents necessary to establish eligibility under this section and any other documents necessary to establish eligibility under this section or under the definition of small business. Licensees (and their successors in interest) shall maintain such files for the term of the license. Applicants that do not obtain the license(s) for which they applied shall maintain such files until the grant of such license(s) is final, or one year from the date of the filing of their short-form application (Form 175), whichever is earlier.
(d) Definitions. The terms control group, existing investor, institutional investor, nonattributable equity, preexisting entity, publicly traded corporation with widely dispersed voting power, qualifying investor, and small business used in this section are defined in §24.720.
[67 FR 45368, July 9, 2002, as amended at 68 FR 42998, July 21, 2003]
§ 24.710 [Reserved]
§ 24.711 Installment payments for licenses for frequency Block C.
Installment payments. Each eligible licensee of frequency Block C may pay the remaining 90 percent of the net auction price for the license in installment payments pursuant to §1.2110(f) of this chapter and under the following terms:
(a) For an eligible licensee with gross revenues exceeding $75 million (calculated in accordance with §1.2110(n) of this chapter and §24.709(b)) in each of the two preceding years (calculated in accordance with §1.2110(n) of this chapter), interest shall be imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the license is granted, plus 3.5 percent; payments shall include both principal and interest amortized over the term of the license.
(b) For an eligible licensee with gross revenues not exceeding $75 million (calculated in accordance with §1.2110(b) of this chapter and §24.709(b)) in each of the two preceding years, interest shall be imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the license is granted, plus 2.5 percent; payments shall include interest only for the first year and payments of interest and principal amortized over the remaining nine years of the license term.
(c) For an eligible licensee that qualifies as a small business or as a consortium of small businesses, interest shall be imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the license is granted; payments shall include interest only for the first six years and payments of interest and principal amortized over the remaining four years of the license term.
[67 FR 45371, July 9, 2002, as amended at 68 FR 42999, July 21, 2003]
§ 24.712 Bidding credits for licenses won for frequency Block C.
(a) Except with respect to licenses won in closed bidding in auctions that begin after March 23, 1999, a winning bidder that qualifies as a small business, as defined in §24.720(b)(1), or a consortium of small businesses may use a bidding credit of fifteen percent, as specified in §1.2110(f)(2)(iii) of this chapter, to lower the cost of its winning bid.
(b) Except with respect to licenses won in closed bidding in auctions that begin after March 23, 1999, a winning bidder that qualifies as a very small business, as defined in §24.720(b)(2), or a consortium of very small businesses may use a bidding credit of twenty-five percent as specified in §1.2110(f)(2)(ii) of this chapter, to lower the cost of its winning bid.
(c) Unjust enrichment. The unjust enrichment provisions of §1.2111(d) and (e)(2) of this chapter shall not apply with respect to licenses acquired in either the auction for frequency block C that began on December 18, 1995, or the reauction of block C spectrum that began on July 3, 1996.
[67 FR 45371, July 9, 2002, as amended at 68 FR 42999, July 21, 2003]
§ 24.713 [Reserved]
§ 24.714 Partitioned licenses and disaggregated spectrum.
(a) Eligibility. (1) Parties seeking approval for partitioning and disaggregation shall request an authorization for partial assignment of a license pursuant to §24.839.
(2) Broadband PCS licensees in spectrum blocks A, B, D, and E and broadband PCS C and F block licenses not subject to the eligibility requirements of §24.709 may apply to partition their licensed geographic service area or disaggregate their licensed spectrum at any time following the grant of their licenses.
(3) Broadband PCS licensees that acquired C or F block licenses in closed bidding subject to the eligibility requirements of §24.709 may partition their licensed geographic service area or disaggregate their licensed spectrum at any time to an entity that meets the eligibility criteria set forth in §24.709 at the time the request for partial assignment of license is filed or to an entity that holds license(s) for frequency blocks C and F that met the eligibility criteria set forth in §24.709 at the time of receipt of such license(s). Partial assignment applications seeking partitioning or disaggregation of broadband PCS licenses in spectrum blocks C and F must include an attachment demonstrating compliance with this section.
(b) Technical standards—(1) Partitioning. In the case of partitioning, applicants and licensees must file FCC Form 603 pursuant to §1.948 of this chapter and list the partitioned service area on a schedule to the application. The geographic coordinates must be specified in degrees, minutes, and seconds to the nearest second of latitude and longitude and must be based upon the 1983 North American Datum (NAD83).
(2) Disaggregation. Spectrum may be disaggregated in any amount.
(3) Combined partitioning and disaggregation. The Commission will consider requests for partial assignment of licenses that propose combinations of partitioning and disaggregation.
(c) Installment payments—(1) Apportioning the balance on installment payment plans. When a winning bidder elects to pay for its license through an installment payment plan pursuant to §§1.2110(g) of this chapter or 24.716, and partitions its licensed area or disaggregates spectrum to another party, the outstanding balance owed by the licensee on its installment payment plan (including accrued and unpaid interest) shall be apportioned between the licensee and partitionee or disaggregatee. Both parties will be responsible for paying their proportionate share of the outstanding balance to the U.S. Treasury. In the case of partitioning, the balance shall be apportioned based upon the ratio of the population of the partitioned area to the population of the entire original license area calculated based upon the most recent census data. In the case of disaggregation, the balance shall be apportioned based upon the ratio of the amount of spectrum disaggregated to the amount of spectrum allocated to the licensed area.
(2) Parties not qualified for installment payment plans. (i) When a winning bidder elects to pay for its license through an installment payment plan, and partitions its license or disaggregates spectrum to another party that would not qualify for an installment payment plan or elects not to pay its share of the license through installment payments, the outstanding balance owed by the licensee (including accrued and unpaid interest shall be apportioned according to §24.714(c)(1)).
(ii) The partitionee or disaggregatee shall, as a condition of the approval of the partial assignment application, pay its entire pro rata amount within 30 days of Public Notice conditionally granting the partial assignment application. Failure to meet this condition will result in a rescission of the grant of the partial assignment application.
(iii) The licensee shall be permitted to continue to pay its pro rata share of the outstanding balance and shall receive new financing documents (promissory note, security agreement) with a revised payment obligation, based on the remaining amount of time on the original installment payment schedule. These financing documents will replace the licensee's existing financing documents, which shall be marked “superseded” and returned to the licensee upon receipt of the new financing documents. The original interest rate, established pursuant to §1.2110(g)(3)(i) of this chapter at the time of the grant of the initial license in the market, shall continue to be applied to the licensee's portion of the remaining government obligation. The Commission will require, as a further condition to approval of the partial assignment application, that the licensee execute and return to the U.S. Treasury the new financing documents within 30 days of the Public Notice conditionally granting the partial assignment application. Failure to meet this condition will result in the automatic cancellation of the grant of the partial assignment application.
(iv) A default on the licensee's payment obligation will only affect the licensee's portion of the market.
(3) Parties qualified for installment payment plans. (i) Where both parties to a partitioning or disaggregation agreement qualify for installment payments, the partitionee or disaggregatee will be permitted to make installment payments on its portion of the remaining government obligations, as calculated according to §24.714(c)(1).
(ii) Each party will be required, as a condition to approval of the partial assignment application, to execute separate financing documents (promissory note, security agreement) agreeing to pay their pro rata portion of the balance due (including accrued and unpaid interest) based upon the installment payment terms for which they qualify under the rules. The financing documents must be returned to the U.S. Treasury within thirty (30) days of the Public Notice conditionally granting the partial assignment application. Failure by either party to meet this condition will result in the automatic cancellation of the grant of the partial assignment application. The interest rate, established pursuant to §1.2110(g)(3)(i) of this chapter at the time of the grant of the initial license in the market, shall continue to be applied to both parties' portion of the balance due. Each party will receive a license for their portion of the partitioned market or disaggregated spectrum.
(iii) A default on an obligation will only affect that portion of the market area held by the defaulting party.
(iv) Partitionees and disaggregatees that qualify for installment payment plans may elect to pay some of their pro rata portion of the balance due in a lump sum payment to the U.S. Treasury and to pay the remaining portion of the balance due pursuant to an installment payment plan.
(d) License term. The license term for a partitioned license area and for disaggregated spectrum shall be the remainder of the original licensee's license term as provided for in §24.15.
(e) Construction requirements—(1) Requirements for partitioning. Parties seeking authority to partition must meet one of the following construction requirements:
(i) The partitionee may certify that it will satisfy the applicable construction requirements set forth in §24.203 for the partitioned license area; or
(ii) The original licensee may certify that it has or will meet its five-year construction requirement and will meet the ten-year construction requirement, as set forth in §24.203, for the entire license area. In that case, the partitionee must only satisfy the requirements for “substantial service,” as set forth in §24.16(a), for the partitioned license area by the end of the original ten-year license term of the licensee.
(iii) Applications requesting partial assignments of license for partitioning must include a certification by each party as to which of the above construction options they select.
(iv) Partitionees must submit supporting documents showing compliance with the respective construction requirements within the appropriate five- and ten-year construction benchmarks set forth in §24.203.
(v) Failure by any partitionee to meet its respective construction requirements will result in the automatic cancellation of the partitioned or disaggregated license without further Commission action.
(2) Requirements for disaggregation. Parties seeking authority to disaggregate must submit with their partial assignment application a certification signed by both parties stating which of the parties will be responsible for meeting the five- and ten-year construction requirements for the PCS market as set forth in §24.203. Parties may agree to share responsibility for meeting the construction requirements. Parties that accept responsibility for meeting the construction requirements and later fail to do so will be subject to license forfeiture without further Commission action.
[62 FR 661, Jan. 6, 1997, as amended at 63 FR 68953, Dec. 14, 1998; 65 FR 53638, Sept. 5, 2000; 67 FR 45371, July 9, 2002; 68 FR 42999, July 21, 2003]
§ 24.716 Installment payments for licenses for frequency Block F.
Installment Payments. Each eligible licensee of frequency Block F may pay the remaining 80 percent of the net auction price for the license in installment payments pursuant to §1.2110(g) of this chapter and under the following terms:
(a) For an eligible licensee with gross revenues exceeding $75 million (calculated in accordance with §1.2110(b) of this chapter and, when applicable, §24.709(b)) in each of the two preceding years (calculated in accordance with §1.2110(n) of this chapter), interest shall be imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the license is granted, plus 3.5 percent; payments shall include both principal and interest amortized over the term of the license;
(b) For an eligible licensee with gross revenues not exceeding $75 million (calculated in accordance with §1.2110(b) of this chapter and, when applicable, §24.709(b)) in each of the two preceding years (calculated in accordance with §1.2110(n) of this chapter), interest shall be imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the license is granted, plus 2.5 percent; payments shall include interest only for the first year and payments of interest and principal amortized over the remaining nine years of the license term; or
(c) For an eligible licensee that qualifies as a small business or as a consortium of small businesses, interest shall be imposed based on the rate for ten-year U.S. Treasury obligations applicable on the date the license is granted; payments shall include interest only for the first two years and payments of interest and principal amortized over the remaining eight years of the license term.
[67 FR 45371, July 9, 2002, as amended at 68 FR 42999, July 21, 2003]
§ 24.717 Bidding credits for licenses for frequency Block F.
(a) Except with respect to licenses won in closed bidding in auctions that begin after March 23, 1999, a winning bidder that qualifies as a small business, as defined in §24.720(b)(1), or a consortium of small businesses may use a bidding credit of fifteen percent, as specified in §1.2110(f)(2)(iii) of this chapter, to lower the cost of its winning bid.
(b) Except with respect to licenses won in closed bidding in auctions that begin after March 23, 1999, a winning bidder that qualifies as a very small business, as defined in §24.720(b)(2), or a consortium of very small businesses may use a bidding credit of twenty-five percent as specified in §1.2110(f)(2)(ii) of this chapter, to lower the cost of its winning bid.
[68 FR 42999, July 21, 2003]
§ 24.720 Definitions.
(a) Scope. The definitions in this section apply to §§24.709 through 24.717, unless otherwise specified in those sections.
(b) Small and very small business. (1) A small business is an entity that, together with its affiliates and persons or entities that hold interest in such entity and their affiliates, has average annual gross revenues that are not more than $40 million for the preceding three years.
(2) A very small business is an entity that, together with its affiliates and persons or entities that hold interests in such entity and their affiliates, has average annual gross revenues that are not more than $15 million for the preceding three years.
(c) Institutional Investor. An institutional investor is an insurance company, a bank holding stock in trust accounts through its trust department, or an investment company as defined in 15 U.S.C. 80a–3(a), including within such definition any entity that would otherwise meet the definition of investment company under 15 U.S.C. 80a–3(a) but is excluded by the exemptions set forth in 15 U.S.C. 80a–3(b) and (c), without regard to whether such entity is an issuer of securities; provided that, if such investment company is owned, in whole or in part, by other entities, such investment company, such other entities and the affiliates of such other entities, taken as a whole, must be primarily engaged in the business of investing, reinvesting or trading in securities or in distributing or providing investment management services for securities.
(d) Nonattributable Equity. (1) Nonattributable equity shall mean:
(i) For corporations, voting stock or non-voting stock that includes no more than twenty-five percent of the total voting equity, including the right to vote such stock through a voting trust or other arrangement;
(ii) For partnerships, joint ventures and other non-corporate entities, limited partnership interests and similar interests that do not afford the power to exercise control of the entity.
(2) For purposes of assessing compliance with the equity limits in §§24.709 (b)(1)(iii)(A) and (b)(1)(iv)(A), where such interests are not held directly in the applicant, the total equity held by a person or entity shall be determined by successive multiplication of the ownership percentages for each link in the vertical ownership chain.
(e) Control Group. A control group is an entity, or a group of individuals or entities, that possesses de jure control and de facto control of an applicant or licensee, and as to which the applicant's or licensee's charters, bylaws, agreements and any other relevant documents (and amendments thereto) provide:
(1) That the entity and/or its members own unconditionally at least 50.1 percent of the total voting interests of a corporation;
(2) That the entity and/or its members receive at least 50.1 percent of the annual distribution or any dividends paid on the voting stock of a corporation;
(3) That, in the event of dissolution or liquidation of a corporation, the entity and/or its members are entitled to receive 100 percent of the value of each share of stock in its possession and a percentage of the retained earnings of the concern that is equivalent to the amount of equity held in the corporation; and
(4) That, for other types of businesses, the entity and/or its members have the right to receive dividends, profits and regular and liquidating distributions from the business in proportion to the amount of equity held in the business.
Note to paragraph
(f) Publicly Traded Corporation with Widely Dispersed Voting Power. A publicly traded corporation with widely dispersed voting power is a business entity organized under the laws of the United States:
(1) Whose shares, debt, or other ownership interests are traded on an organized securities exchange within the United States;
(2) In which no person:
(i) Owns more than 15 percent of the equity; or
(ii) Possesses, directly or indirectly, through the ownership of voting securities, by contract or otherwise, the power to control the election of more than 15 percent of the members of the board of directors or other governing body of such publicly traded corporation; and
(3) Over which no person other than the management and members of the board of directors or other governing body of such publicly traded corporation, in their capacities as such, has de facto control.
(4) The term person shall be defined as in section 13(d) of the Securities and Exchange Act of 1934, as amended (15 U.S.C. 78(m)), and shall also include investors that are commonly controlled under the indicia of control set forth in the definition of affiliate in §1.2110(c)(5) of the Commission's rules.
(g) Qualifying investor. (1) A qualifying investor is a person who is (or holds an interest in) a member of the applicant's (or licensee's) control group and whose gross revenues and total assets, when aggregated with those of all other attributable investors and affiliates, do not exceed the gross revenues and total assets limits specified in §24.709(a), or, in the case of an applicant (or licensee) that is a small business, do not exceed the gross revenues limit specified in paragraph (b) of this section.
(2) For purposes of assessing compliance with the minimum equity requirements of §24.709(b)(1)(v) and (b)(1)(vi), where such equity interests are not held directly in the applicant, interests held by qualifying investors shall be determined by successive multiplication of the ownership percentages for each link in the vertical ownership chain.
(3) For purposes of §24.709(b)(1)(v)(A)(3) and (b)(1)(vi)(A)(3), a qualifying investor is a person who is (or holds an interest in) a member of the applicant's (or licensee's) control group and whose gross revenues and total assets do not exceed the gross revenues and total assets limits specified in §24.709(a).
(h) Preexisting entity; Existing investor. A preexisting entity is an entity that was operating and earning revenues for at least two years prior to December 31, 1994. An existing investor is a person or entity that was an owner of record of a preexisting entity's equity as of November 10, 1994, and any person or entity acquiring de minimis equity holdings in a preexisting entity after that date.
Note to paragraph
[67 FR 45372, July 9, 2002, as amended at 68 FR 42999, July 21, 2003; 68 FR 57829, Oct. 7, 2003]
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