Goto Section: 24.701 | 24.710 | Table of Contents
FCC 24.709
Revised as of October 1, 2011
Goto Year:2010 |
2012
§ 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]
Goto Section: 24.701 | 24.710
Goto Year: 2010 |
2012
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