March 22, 1999
The Honorable William E. Kennard
Chairman
Federal Communication Commission
8th floor
445 12th Street, S.W.
The Portals
Washington, DC 20554
Dear Mr. Chairman:
The Office of Advocacy of the United States Small Business Administration ("Advocacy") submits these Ex Parte Comments on behalf of the Petition for Extraordinary Relief regarding Gloria Borland Hawaii PCS, Inc. in the above-captioned proceeding.
Congress established the Office of Advocacy in 1976 to represent the views and interests of small business within the Federal government. Pub. L. No. 94-305 (codified as amended at 15 U.S.C. §§ 634 a-g, 637). Its statutory duties include serving as a focal point for concerns regarding the government’s policies as they affect small business, developing proposals for changes in Federal agencies’ policies, and communicating these proposals to the agencies. 15 U.S.C. § 634c(1)-(4). Advocacy also has a statutory duty to monitor and report on the Commission’s compliance with the Regulatory Flexibility Act of 1980 ("RFA"), Pub. L. No. 96-354, 94 Stat. 1164 (1980)(codified at 5 U.S.C. § 601 et seq.), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 ("SBREFA"), Subtitle II of the Contract with America Advancement Act. Pub. L. No. 104-121, 110 Stat. 857 (1996)(codified at 5 U.S.C. § 612(a)).
The Office of Advocacy believes that withdrawal of the Honolulu and Hilo, Hawaii BTAs from the PCS C block reauction to commence on March 23, 1999, and grant of the Hawaii BTA licenses to Ms. Borland is in the public interest. This action supports fully the Commission's long-standing objective to expedite broadband PCS as a competitive wireless service to the public.
Advocacy believes that the irreparable harm to Ms. Borland's undisputed ownership interest in the Hawaii BTAs is the valid issue before the Commission at this time. Resolution of this issue in Ms. Borland's favor is the only reasonable and equitable thing to do. She has complied with all FCC rules and staff instructions. She has not declared bankruptcy. Neither has she defaulted on any payment. We encourage the Commission to take all necessary steps to ensure that this small business and minority female prospective licensee is able to fulfill the initial promise of C Block.
As to the issue of whether the FCC's withdrawal of the Hawaii BTAs from the reauction and subsequent grant of the licenses to Ms. Borland given her agreement to pay the bankruptcy price of $9.1 million, sets an undesirable precedent – the entire C Block should be so lucky. Such a precedent of a small business willing to pay for the license in one payment, benefiting the U.S. Treasury, resolving a bankruptcy issue, and expediting service to the public all at the same time, would be welcome given the continuing saga of C Block.
Furthermore, Advocacy does not believe that those entities, even if they are bona fide small businesses, that selected the Hawaii BTAs in the reauction will be harmed by withdrawing the Hawaii BTAs from the reauction. Inconvenienced yes, harmed no. And such inconvenience is only short term. Significantly, those bidders that selected Hawaii with the actual or constructive knowledge that this license was not free and clear given unresolved judicial and/or FCC proceedings. The Hawaii BTAs are just two of many contingent licenses and potential bidders assumed the risk of such status when they applied and deposited their down payments. Furthermore, Advocacy believes that many of the bidders checked "All" BTAs, and Hawaii was not necessarily a preferred market. For those potential bidders that want Hawaii specifically, they still will not be harmed because they do not have a recognizable ownership interest in Hawaii since ownership is still subject to the highest bidder and award of the license by the FCC. Nor have these potential bidders expended significant financial expenses to acquire the subject BTAs – especially compared to Ms. Borland! The reauction has not started and the downpayment can be easily applied to another market.
Withdrawal of the Hawaii BTAs from the reauction also eliminates a market entry barrier for both Ms. Borland and potential bidders. 47 U.S.C. § 257. Although potential bidders assume the risk of bidding on licenses still encumbered by legal proceedings, there is still a tremendous cost to any entity that bids on such licenses and especially, the winning bidder for a contingent license. There are costs imposed on small entities before, during, and after the reauction due to regulatory uncertainty. The winner will also be subject to additional litigation from Ms. Borland, further delaying service to the public. It is difficult for any business, especially small businesses, to develop and execute sound business plans based on something that may not be resolved for an unknown length of time. Time is money, and resolution of the Hawaii BTAs now saves everyone time – and thus, money.
Finally, Ms. Borland does not have a reasonable nor viable option to participate in the reauction to secure the Hawaii BTAs. She shouldn't have to. She has held a 5 percent interest in the Hawaii licenses since 1996. She should not have to forfeit the substantial time and money already invested in this effort - to expend more money to bid on something that already belongs in part to her. Moreover, she would have to compete against larger and well-financed bidders in the re-auction, the very situation that caused her to partner with Pocket in the first place. There is a tremendous expense just to participate in the auction whether a license is won or not. Such costs would be an unnecessary expense and a depletion of hard-earned financial resources for Ms. Borland.
Advocacy is very concerned that the FCC has not yet resolved all outstanding issues within its control before the start of the reauction leaving other incumbent licensees with pending Application for Reviews and Petitions for Reconsideration still facing uncertainty about their status. This uncertainty is costly and very burdensome for all small businesses involved – incumbents and bidders. Nonetheless, Ms. Borland's situation is very different from other unresolved cases. Given the unique circumstances of her case and the fact that she has complied with all FCC rules and has undertaken heroic initiatives to protect her interests and resolve this bankruptcy issue – and will still lose the license through no fault of her own given the Bureau's decision – no other applicant or licensee is similarly situated and therefore, should not expect the same relief that Ms. Borland deserves.
For the reasons stated herein, the Office of Advocacy respectfully requests that the Commission grant Gloria Borland Hawaii PCS Inc.'s Petition for Extraordinary Relief and immediately withdraw the Honolulu and Hilo, Hawaii BTA PCS C Block licenses from the re-auction on March 23, 1999. We also support grant of these licenses to Ms. Borland upon the payment of the bankruptcy price of $9.1 million.
Thank you for your consideration of this important matter.
Sincerely,
Jere W. Glover
Chief Counsel for Advocacy
S. Jenell Trigg
Assistant Chief Counsel
for Telecommunications
Eric E. Menge
Assistant Chief Counsel
for Telecommunications
cc: Commissioner Susan Ness
Commissioner Michael Powell
Commissioner Harold Furchtgott-Roth
Commissioner Gloria Tristani
Thomas Sugrue
Kathleen Ham
J. Jeffrey Craven
Janet Fitzpatrick
Gloria Borland