§ 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]

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