2121 AVENUE. OF THE STARS
SuiTE 3120
LOS ANGELES. CALIFORNIA 90067
(310) 552-6577
~AX(310) 553-4911
EX PARTE OR LATE FILED
THE MARSHALL COMPANY
IISO CONNECTICUT AVENUE, N.W.
SUITE 7,0
WASHINGTON. D.C. 20036
(202) 775-8469
January 23,1995
rJ~N241995
William F. Caton
Secretary
Federal Communications Commission
1919 M Street, N.W.
Washington, D.C. 20554
RE: Notification ofPermitted Written Ex Parte Presentation
in PP Docket No. 93-253
Dear Mr. Caton: \\f.\ r\LE.CO?~OR\G\N~L
The Marshallco}h~~ny,pursuant to Section 1. 1206(a)(1)-(a)(2) ofthe Commission's
rules, hereby submits an original and one copy ofa permitted ex parte written presentation
sent to Chairman Hundt and Commissioners QueUo, Barrett, Ness, and Chong regarding PP
Docket No. 93-253. Other than addressing, the letters are identical.
Kindly direct any questions regarding this matter to the undersigned.
Respectfully submitted,
~II/\~~(/j\
Sherrie Marshall
Enclosures
EX PARTE OR LATE FILED
THE MARSHALL COMPANY
2121 AVENUE OF THE STAR'S
SuiTE 3120
LOS ANGELES. CALIFORNIA 90067
(3101 552-6577
FAX 1310) 553-4911
January 23, 1995
The Honorable Reed Hundt
Chairman
Federal Communications Commission
1919 M Street, N.W., Room 814
Washington, D.C. 20554
Re: Broadband PCS Auctions, PP Docket 93-253 -
January 10, 1995 Erratum
1150 CONNECTICUT AVENUE, N.W.
SUITE 710
WASHINGTON. D.C. 20036
1202) 775-8469
Dear Chairman Hundt:
As a designated entity owner planning to participate in the Commission's upcoming
entrepreneur's block broadband PCS auctions, I am writing to express my serious concerns
regarding a rule change made in a recent Erratum! to the Commission's Broadband PCS Fifth
Memorandum Opinion and Order.
2
Specifically, the Erratum changed the "unjust enrichment" provisions applicable to
broadband PCS designated entities by requiring a repayment ofall bidding credits ifthe
designated entity transfers or sells the controlling interest in its license to any non-designated
entity within the entire ten-year license period. This is directly contrary to the provisions
adopted in the Fifth MO&O, and relied upon by all designated entities preparing to bid in the
upcoming BTA auctions. Indeed, the Fifth MO&O established only a five-year holding
period during which bidding credit reimbursements would be required.
3
Ifallowed to stand, this rule change will make it extraordinarily difficult for
designated entities to secure sufficient capital to bid on and acquire PCS licenses. For such a
significant rule change to be issued as an Erratum just six weeks prior to the February 28th
application deadline for the entrepreneur's block auctions is particularly unsettling and may, in
fact, be contrary to the Commission's own rules.
4
I have been working with potential investors and strategic partners for over six
months to create a financially viable designated entity. For the past two months (since the
I Erratum, DA 95-19 (released January 10, 1995).
2 Fifth Memorandum Opinion and Order, PP Docket No. 93-253 (released November 23,
1994)("Fifth MO&Olt).
347 C.F.R. § 24.712(d)(l)-(d)(2) as adopted in the Fifth MO&O.
4 See 47 C.F.R § 1. lOR, which requires the Commission to act within 30 days 011 its own motion
(such as through an Erratum) to set aside or amend previously approved mles
The Honorable Reed Hundt
January 23, 1995
Page 2
November 28th release ofthe Fifth MO&O) my designated entity, New Communications
Services, Inc. (NEWCOM), has been engaged in extensive negotiations with potential
investors and strategic partners based on the five-year holding period. We were in the process
offinalizing those commitments when the Erratum was issued. Now both our financial
commitments and strategic partnership agreements are in jeopardy and may not go forward if
the Erratum is not corrected.
There are a number ofpractical business reasons why a designated entity should have
the ability to transfer all or part ofits interest in a broadband PCS license before the end of
the ten-year license term. Ten years is much longer than most potential financiers and passive
equity investors wish to wait before obtaining a significant return on their investment.
Further, with a five-year holding period, potential investors could calculate with some degree
ofcertainty the value ofa particular license and use this figure to calculate cash flows, needed
loan amounts, and other business judgments. The ten-year period removes, or at least
significantly lessens, this degree ofcertainty, making such calculations more difficult and
uncertain and making investment in designated entities much less attractive.
Based on my own experiences with potential investors and strategic partners, I can
confirm that this Erratum has had a substantial adverse impact on the willingness ofsuch
groups to invest in designated entities. Standard equity and debt financing arrangements
generally allow for some liquidity ofinvestment in the medium term. Such liquidity is
essential to commercial lenders and venture capitalists, particularly given the high upfront
capital expenditures and lack ofnear-term cash flow inherent in establishing a PCS business.
The Commission is properly concerned with ensuring that designated entities be bona
fide and have a legitimate interest in participating in broadband PCS for the long term. There
are, however, sufficient rules in place to ensure that this occurs.
Requiring repayment ofbidding credits for any sale or transfer to any non-designated
entity (which are the very firms most likely to have sufficient capital to acquire a successful
designated entity) during the entire ten-year license period is directly and adversely affecting
the Commission's stated objectives ofencouraging participation by women and minority
owned small businesses in broadband PCS. Accordingly, I respectfully urge the Commission
to withdraw the Bureau's Erratum and reinstate the five-year unjust enrichment provision
contained in the Fifth MO&O.
Sincerely,
Sherrie Marshall
SMIJTIER RATUM. L01/00195
EX PARTE OR LATE FILED
THE MARSHALL COMPANY
2121 AVENUE OF THE STARS
SUITE 3120
LOS ANGELI'S. CALIFORNIA 90067
(310J 552-6577
FAX (310) 553-491\
January 23, 1995
The Honorable James Quello
Commissioner
Federal Communications Commission
1919 M Street, N.W., Room 802
Washington, D.C. 20554
Re: Broadband PCS Auctions, PP Docket 93-253 -
January 10, 1995 Erratum
1150 CONNECTICUT AVENUE, N,W
SUITE 710
WASHINGTON. D.C. 20036
(202) 775-8469
Dear Commissioner Quello:
As a designated entity owner planning to participate in the Commission's upcoming
entrepreneur's block broadband PCS auctions, I am writing to express my serious concerns
regarding a rule change made in a recent Erratum
1
to the Commission's Broadband PCS Fifth
Memorandum Opinion and Order.
2
Specifically, the Erratum changed the "unjust enrichment" provisions applicable to
broadband PCS designated entities by requiring a repayment ofall bidding credits ifthe
designated entity transfers or sells the controlling interest in its license to any non-designated
entity within the entire ten-year license period. This is directly contrary to the provisions
adopted in the Fifth MO&O, and relied upon by all designated entities preparing to bid in the
upcoming BTA auctions. Indeed, the Fifth MO&O established only a five-year holding
period during which bidding credit reimbursements would be required.
3
Ifallowed to stand, this rule change will make it extraordinarily difficult for
designated entities to secure sufficient capital to bid on and acquire PCS licenses. For such a
significant rule change to be issued as an Erratum just six weeks prior to the February 28th
application deadline for the entrepreneur's block auctions is particularly unsettling and may, in
fact, be contrary to the Commission's own rules
4
I have been working with potential investors and strategic partners for over six
months to create a financially viable designated entity. For the past two months (since the
1 Erratum, DA 95-19 (released January 10. 1995).
2 Fifth Memorandum Opinion and Order, PP Docket No. 93-253 (released November 23,
1994)("Fifth MO&O")
3 47 C.F.R. § 24712(d)( 1)-(d)(2) as adopted in Ihe Fifth MO&o.
4~C:(;47 C.F.R § 1108, which requires the Commission 10 act within'() days on its OWII motion
(such as through an ErrahJII!) to sel asidc or amclld previously approved fIIlcs
The Honorable James Quello
January 23, 1995
Page 2
November 28th release ofthe Fifth MO&O) my designated entity, New Communications
Services, Inc. (NEWCOM), has been engaged in extensive negotiations with potential
investors and strategic partners based on the five-year holding period. We were in the process
offinalizing those commitments when the Erratum was issued. Now both our financial
commitments and strategic partnership agreements are in jeopardy and may not go forward if
the Erratum is not corrected.
There are a number ofpractical business reasons why a designated entity should have
the ability to transfer all or part ofits interest in a broadband PCS license before the end of
the ten-year license term. Ten years is much longer than most potential financiers and passive
equity investors wish to wait before obtaining a significant return on their investment.
Further, with a five-year holding period, potential investors could calculate with some degree
ofcertainty the value ofa particular license and use this figure to calculate cash flows, needed
loan amounts, and other business judgments. The ten-year period removes, or at least
significantly lessens, this degree ofcertainty, making such calculations more difficult and
uncertain and making investment in designated entities much less attractive.
Based on my own experiences with potential investors and strategic partners, I can
confirm that this Erratum has had a substantial adverse impact on the willingness ofsuch
groups to invest in designated entities. Standard equity and debt financing arrangements
generally allow for some liquidity ofinvestment in the medium term. Such liquidity is
essential to commercial lenders and venture capitalists, particularly given the high upfront
capital expenditures and lack ofnear-term cash flow inherent in establishing a PCS business.
The Commission is properly concerned with ensuring that designated entities be bona
fide and have a legitimate interest in participating in broadband PCS for the long term. There
are, however, sufficient rules in place to ensure that this occurs.
Requiring repayment ofbidding credits for any sale or transfer to any non-designated
entity (which are the very firms most likely to have sufficient capital to acquire a successful
designated entity) during the entire ten-year license period is directly and adversely affecting
the Commission's stated objectives ofencouraging participation by women and minority
owned small businesses in broadband PCS. Accordingly, I respectfully urge the Commission
to withdraw the Bureau's Erratum and reinstate the five-year unjust enrichment provision
contained in the Fifth MO&O.
Sincerely,
Sherrie Marshall
SM/JT/ERRATUM.l01/00195
EX PARTE OR LATE FILED
THE MARSHALL COMPANY
2121 AVENUE OF THE STARS
SUITE 3120
LOS ANGELES. CALIFORNIA 90067
(310) 552-6577
FAX (310) 553-4911
January 23, 1995
The Honorable Andrew Barrett
Commissioner
Federal Communications Commission
1919 M Street, N.W., Room 826
Washington, D.C. 20554
Re: Broadband PCS Auctions, PP Docket 93-253 -
January 10, 1995 Erratum
1150 CONNECTICUT AVENUE, N,W.
SUITE 710
WASHINGTON. D.C. 20036
1202} 775-8469
Dear Commissioner Barrett:
As a designated entity owner planning to participate in the Commission's upcoming
entrepreneur's block broadband PCS auctions, I am writing to express my serious concerns
regarding a rule change made in a recent Erratum
l
to the Commission's Broadband PCS Fifth
Memorandum Opinion and Order.
2
Specifically, the Erratum changed the "unjust enrichment" provisions applicable to
broadband PCS designated entities by requiring a repayment ofall bidding credits ifthe
designated entity transfers or sells the controlling interest in its license to any non-designated
entity within the entire ten-year license period. This is directly contrary to the provisions
adopted in the Fifth MO&O, and relied upon by all designated entities preparing to bid in the
upcoming BTA auctions. Indeed, the Fifth MO&O established only a five-year holding
period during which bidding credit reimbursements would be required.
3
Ifallowed to stand, this rule change will make it extraordinarily difficult for
designated entities to secure sufficient capital to bid on and acquire PCS licenses. For such a
significant rule change to be issued as an Erratum just six weeks prior to the February 28th
application deadline for the entrepreneur's block auctions is particularly unsettling and may, in
fact, be contrary to the Commission's own rules.
4
I have been working with potential investors and strategic partners for over six
months to create a financially viable designated entity. For the past two months (since the
I Erratum, DA 95-19 (released January 10, 1995).
2 Fifth Memorandum Opinion and Order, PP Docket No. 93-253 (released November 23,
1994)(
tl
Fifth MO&O").
147 C.F.R. § 24.712(d)( I )-(d)(2) as adopted in the Fifth MO&O.
4 See 47 C.F.R § 1.108. which requires the Commission to acl within 30 days on its own 1Il0tion
(such as through an Brra!!IIIJ) to sct aside or amend previously approved mles
The Honorable Andrew Barrett
January 23, 1995
Page 2
November 28th release ofthe Fifth MO&O) my designated entity, New Communications
Services, Inc. (NEWCOM), has been engaged in extensive negotiations with potential
investors and strategic partners based on the five-year holding period. We were in the process
offinalizing those commitments when the Erratum was issued. Now both our financial
commitments and strategic partnership agreements are in jeopardy and may not go forward if
the Erratum is not corrected.
There are a numberofpractical business reasons why a designated entity should have
the ability to transfer all or part ofits interest in a broadband PCS license before the end of
the ten-year license term. Ten years is much longer than most potential financiers and passive
equity investors wish to wait before obtaining a significant return on their investment.
Further, with a five-year holding period, potential investors could calculate with some degree
ofcertainty the value ofa particular license and use this figure to calculate cash flows, needed
loan amounts, and other business judgments. The ten-year period removes, or at least
significantly lessens, this degree ofcertainty, making such calculations more difficult and
uncertain and making investment in designated entities much less attractive.
Based on my own experiences with potential investors and strategic partners, I can
confirm that this Erratum has had a substantial adverse impact on the willingness ofsuch
groups to invest in designated entities. Standard equity and debt financing arrangements
generally allow for some liquidity ofinvestment in the medium term. Such liquidity is
essential to commercial lenders and venture capitalists, particularly given the high upfront
capital expenditures and lack ofnear-term cash flow inherent in establishing a PCS business.
The Commission is properly concerned with ensuring that designated entities be bona
fide and have a legitimate interest in participating in broadband PCS for the long term. There
are, however, sufficient rules in place to ensure that this occurs.
Requiring repayment ofbidding credits for any sale or transfer to any non-designated
entity (which are the very firms most likely to have sufficient capital to acquire a successful
designated entity) during the entire ten-year license period is directly and adversely affecting
the Commission's stated objectives ofencouraging participation by women and minority
owned small businesses in broadband PCS. Accordingly, I respectfully urge the Commission
to withdraw the Bureau's Erratum and reinstate the five-year unjust enrichment provision
contained in the Fifth MO&O.
Sincerely,
c£!~~(t~~/~/vr
Sherrie Marshall
SMIJT/ERRATUM,L01/00195
EX PARTE OR LATE FILED
THE MARSHALL COMPANY
2121 AVENUE OF THE STARS
SUITE 3120
LOS ANGELES. CALIFORNIA 90067
(310) 552-6577
FAX\310~553-491\
January 23, 1995
The Honorable Susan Ness
Commissioner
Federal Communications Commission
1919 M Street, N.W., Room 832
Washington, D.C. 20554
Re: Broadband PCS Auctions, PP Docket 93-253 -
January 10,1995 Erratum
Dear Commissioner Ness:
1150 CONNECTiCUT AVENUE, N.W
SUITE 710
WASHINGTON. D.C. 20036
(202) 775-8469
As a designated entity owner planning to participate in the Commission's upcoming
entrepreneur's block broadband PCS auctions, I am writing to express my serious concerns
regarding a rule change made in a recent Erratum
l
to the Commission's Broadband PCS Fifth
Memorandum Opinion and Order.
2
Specifically, the Erratum changed the "unjust enrichment" provisions applicable to
broadband PCS designated entities by requiring a repayment ofall bidding credits ifthe
designated entity transfers or sells the controlling interest in its license to any non-designated
entity within the entire ten-year license period. This is directly contrary to the provisions
adopted in the Fifth MO&O, and relied upon by all designated entities preparing to bid in the
upcoming BTA auctions. Indeed, the Fifth MO&O established only a five-year holding
period during which bidding credit reimbursements would be required.
3
Ifallowed to stand, this rule change will make it extraordinarily difficult for
designated entities to secure sufficient capital to bid on and acquire PCS licenses. For such a
significant rule change to be issued as an Erratum just six weeks prior to the February 28th
application deadline for the entrepreneur's block auctions is particularly unsettling and may, in
fact, be contrary to the Commission's own rules.
4
I have been working with potential investors and strategic partners for over six
months to create a financially viable designated entity. For the past two months (since the
1 Erratum, DA 95-19 (released January 10, 1995).
2 Fifth Memorandum Opinion and Order, PP Docket No. 93-253 (released November 23.
I994)("Fifth MO&O").
147 CF.R § 24712(d)(J)-(d)(2) as adopted in the Fifth MO&O.
4 See 47 CFR § l.IOR. which requires the Commission 10 act within 30 days all its own 1lI0tion
(such as through anr~rr;.!ll1!ll)to sel aside or amend previously approved rules
The Honorable Susan Ness
January 23, 1995
Page 2
November 28th release ofthe Fifth MO&O) my designated entity, New Communications
Services, Inc. (NEWCOM), has been engaged in extensive negotiations with potential
investors and strategic partners based on the five-year holding period. We were in the process
offinalizing those commitments when the Erratum was issued. Now both our financial
commitments and strategic partnership agreements are in jeopardy and may not go forward if
the Erratum is not corrected.
There are a number ofpractical business reasons why a designated entity should have
the ability to transfer all or part ofits interest in a broadband pes license before the end of
the ten-year license term. Ten years is much longer than most potential financiers and passive
equity investors wish to wait before obtaining a significant return on their investment.
Further, with a five-year holding period, potential investors could calculate with some degree
ofcertainty the value ofa particular license and use this figure to calculate cash flows, needed
loan amounts, and other business judgments. The ten-year period removes, or at least
significantly lessens, this degree ofcertainty, making such calculations more difficult and
uncertain and making investment in designated entities much less attractive.
Based on my own experiences with potential investors and strategic partners, I can
confirm that this Erratum has had a substantial adverse impact on the willingness ofsuch
groups to invest in designated entities. Standard equity and debt financing arrangements
generally allow for some liquidity ofinvestment in the medium term. Such liquidity is
essential to commercial lenders and venture capitalists, particularly given the high upfront
capital expenditures and lack ofnear-term cash flow inherent in establishing a PCS business.
The Commission is properly concerned with ensuring that designated entities be bona
fide and have a legitimate interest in participating in broadband PCS for the long term. There
are, however, sufficient rules in place to ensure that this occurs.
Requiring repayment ofbidding credits for any sale or transfer to any non-designated
entity (which are the very firms most likely to have sufficient capital to acquire a successful
designated entity) during the entire ten-year license period is directly and adversely affecting
the Commission's stated objectives ofencouraging participation by women and minority
owned small businesses in broadband PCS. Accordingly, I respectfully urge the Commission
to withdraw the Bureau's Erratum and reinstate the five-year unjust enrichment provision
contained in the Fifth MO&O.
Sincerely,
~!~\~/Jf
Sherrie Marshall
SM/JT/ERRATUM.L01 /00195
THE MARSHALL COMPANY
212! AVENUE OF THE STARS
SUITE 3120
LOS ANGELES. CALIFORNIA 90067
(310) 552-6577
FAX (310) 553-4911
January 23, 1995
The Honorable Rachelle Chong
Commissioner
Federal Communications Commission
1919 M Street, N.W., Room 844
Washington, D.C. 20554
EX PARTE OR LATE FILED
1150 CONNECTICUT AVENUE, N.W
SUITE 710
WASHINGTON. D.C. 20036
(2021 775-8469
Re: Broadband PCS Auctions, PP Docket 93-253 -
January 10, 1995 Erratum
Dear Commissioner Chong:
As a designated entity owner planning to participate in the Commission's upcoming
entrepreneur's block broadband PCS auctions, I am writing to express my serious concerns
regarding a rule change made in a recent Erratum
l
to the Commission's Broadband PCS Fifth
Memorandum Opinion and Order.
2
Specifically, the Erratum changed the "unjust enrichment" provisions applicable to
broadband PCS designated entities by requiring a repayment ofall bidding credits ifthe
designated entity transfers or sells the controlling interest in its license to any non-designated
entity within the entire ten-year license period. This is directly contrary to the provisions
adopted in the Fifth MO&O, and relied upon by all designated entities preparing to bid in the
upcoming BTA auctions. Indeed, the Fifth MO&O established only a five-year holding
period during which bidding credit reimbursements would be required.
3
Ifallowed to stand, this rule change will make it extraordinarily difficult for
designated entities to secure sufficient capital to bid on and acquire PCS licenses. For such a
significant rule change to be issued as an Erratum just six weeks prior to the February 28th
application deadline for the entrepreneur's block auctions is particularly unsettling and may, in
fact, be contrary to the Commission's own rules.
4
I have been working with potential investors and strategic partners for over six
months to create a financially viable designated entity. For the past two months (since the
I Erratum, DA 95-19 (released January 10, 1995).
2 Fifth Memorandum Opinion and Order, PP Docket No. 9:\-25:\ (released November 23.
I994)("Fifth MO&O")
347 C.F.R. § 24.712(d)(I)-(d)(2) as adopted in the Fifth MO&O.
4 See 47 C.FR § 1.108. which requircs the Commission to act within 10 days on its own Illotion
(such as through an g1I11(l!IJ\) to sci aside or amcnd previollsly approved rulcs.
The Honorable Rachelle Chong
January 23, 1995
Page 2
November 28th release ofthe Fifth MO&O) my designated entity, New Communications
Services, Inc. (NEWCOM), has been engaged in extensive negotiations with potential
investors and strategic partners based on the five-year holding period. We were in the process
offinalizing those commitments when the Erratum was issued. Now both our financial
commitments and strategic partnership agreements are in jeopardy and may not go forward if
the Erratum is not corrected.
There are a number ofpractical business reasons why a designated entity should have
the ability to transfer all or part ofits interest in a broadband PCS license before the end of
the ten-year license term. Ten years is much longer than most potential financiers and passive
equity investors wish to wait before obtaining a significant return on their investment.
Further, with a five-year holding period, potential investors could calculate with some degree
ofcertainty the value ofa particular license and use this figure to calculate cash flows, needed
loan amounts, and other business judgments. The ten-year period removes, or at least
significantly lessens, this degree ofcertainty, making such calculations more difficult and
uncertain and making investment in designated entities much less attractive.
Based on my own experiences with potential investors and strategic partners, I can
confirm that this Erratum has had a substantial adverse impact on the willingness ofsuch
groups to invest in designated entities. Standard equity and debt financing arrangements
generally allow for some liquidity ofinvestment in the medium term. Such liquidity is
essential to commercial lenders and venture capitalists, particularly given the high upfront
capital expenditures and lack ofnear-term cash flow inherent in establishing a pes business.
The Commission is properly concerned with ensuring that designated entities be bona
fide and have a legitimate interest in participating in broadband PCS for the long term. There
are, however, sufficient rules in place to ensure that this occurs.
Requiring repayment ofbidding credits for any sale or transfer to any non-designated
entity (which are the very firms most likely to have sufficient capital to acquire a successful
designated entity) during the entire ten-year license period is directly and adversely affecting
the Commission's stated objectives ofencouraging participation by women and minority
owned small businesses in broadband PCS. Accordingly, I respectfully urge the Commission
to withdraw the Bureau's Erratum and reinstate the five-year unjust enrichment provision
contained in the Fifth MO&O.
Sincerely,
Sherrie Marshall
SM/JT/ERRATUM. L01 /00195