*Pages 1--15 from Microsoft Word - 1676.doc* Federal Communications Commission FCC 00- 190 Before the Federal Communications Commission Washington, D. C. 20554 In re Applications of ) ) MERCURY PCS II, LLC ) File No. 00114- CW- L- 97 et al. ) For Authority to Construct and Operate ) Broadband Personal Communications Services ) Systems on the D, E, and F Frequency Blocks ) MEMORANDUM OPINION AND ORDER Adopted: May 25, 2000 Released: June 2, 2000 By the Commission: TABLE OF CONTENTS Paragraph I. INTRODUCTION……………………………………………………………………………………. 1 II. BACKGROUND A. WTB Order on Reconsideration…………………………………………………………………… 2 B. OGC Letter Decision on Reconsideration………………………………………………………… 9 III. DISCUSSION A. Bid Signaling…………………………………………………………………………………. 13 B. Misrepresentation and Lack of Candor……………………………………………………….. 14 C. Ex Parte Communications……………………………………………………………………. 22 IV. CONCLUSION……………………………………………………………………………………… 27 V. ORDERING CLAUSES……………………………………………………………………………… 28 I. INTRODUCTION 1. This Memorandum Opinion and Order resolves two applications for review filed by High Plains Wireless, L. P. (High Plains). High Plains' first application for review concerns the WTB Order on Reconsideration released by the Wireless Telecommunications Bureau (WTB) on November 5, 1997, which unconditionally granted nine applications for broadband Personal Communications Services (PCS) D and F block licenses filed by Mercury PCS II, LLC (Mercury), and removed conditions from twenty- 1 Federal Communications Commission FCC 00- 190 2 three other broadband PCS E and F block licenses previously granted to Mercury. 1 High Plains' second application for review concerns the OGC Letter Decision on Reconsideration issued by the Office of General Counsel (OGC) on April 6, 1998, which rejected High Plains' allegations that Mercury violated our Ex Parte rules. 2 We have consolidated the two proceedings, and for the reasons that follow, we deny High Plains' applications for review and affirm the WTB Order on Reconsideration and the OGC Letter Decision on Reconsideration. II. BACKGROUND A. WTB Order on Reconsideration 2. The Commission conducted an auction of PCS licenses in the D, E, and F blocks from August 26, 1996 to January 14, 1997. During the course of the auction, High Plains filed an emergency motion to disqualify Mercury, 3 alleging that Mercury had violated the Commission’s auctions anti-collusion rule by communicating its bidding strategy to other bidders, including High Plains, while bidding on the F block licenses for Amarillo, Texas (BTA 013) and Lubbock, Texas (BTA 264). 4 Specifically, High Plains claimed that Mercury incorporated the BTA number for the Lubbock license into the last three digits of some of its bids for the Amarillo license, and the BTA number for the Amarillo license into the last three digits of some of its bids for the Lubbock license. 5 According to High Plains, Mercury's use of these "trailing numbers" was intended to signal High Plains that if it did not stop bidding for the Lubbock license, then Mercury would retaliate by outbidding High Plains for the Amarillo license. 6 High Plains alleged that after it stopped bidding for the Lubbock license, Mercury stopped bidding for the Amarillo license. 7 In response to High Plains' emergency motion, Mercury claimed that it did not violate any Commission rules and that the use of trailing numbers was common among other bidders in the D, E, and F block auctions. 8 At the end of the auction, High Plains was the high bidder for the Amarillo F block license, 9 while Mercury 1 Mercury PCS II, LLC, 12 FCC Rcd. 18093 (1997) (WTB Order on Reconsideration). The Mercury licenses at issue are listed in Appendix A. Mercury has since changed its name to Digital PCS, LLC. See Letter from J. Justin McClure, counsel for Mercury, to Steven E. Weingarten, Chief, Commercial Wireless Division, Wireless Telecommunications Bureau (filed June 29, 1998). For consistency, we will refer to Mercury throughout this Memorandum Opinion and Order. 2 Letter from Christopher J. Wright, General Counsel, to Eliot J. Greenwald, counsel for High Plains, 13 FCC Rcd. 7132 (April 6, 1998) (OGC Letter Decision on Reconsideration). 3 Emergency Motion for Disqualification (filed Nov. 26, 1996). 4 See 47 C. F. R. § 1.2105( c) (subject to certain exceptions not relevant here, applicants are prohibited from cooperating, collaborating, discussing, or disclosing the substance of their bids or bidding strategies with other applicants after the filing of short- form applications and before the submission of down payments). 5 Emergency Motion for Disqualification at 2- 3. 6 Id. at 3. 7 Id. 8 Opposition to Emergency Motion for Disqualification at 5- 8 (filed Dec. 6, 1996). 9 High Plains was also the high bidder for the Lubbock D Block license. 2 Federal Communications Commission FCC 00- 190 3 was the high bidder for the Lubbock F block license. 10 3. Based on High Plains' allegations and Mercury's response, WTB launched a general investigation into bid signaling in the D, E, and F block auctions. WTB also forwarded High Plains' emergency motion for disqualification to the Department of Justice (DOJ), which undertook its own civil investigation into bid signaling in the D, E, and F block auctions, as well as other Commission auctions. 11 On March 21, 1997, High Plains filed a petition to deny all of Mercury's applications, reasserting its earlier allegations of bid signaling. 12 In opposition, Mercury again denied that its use of trailing numbers violated the anti- collusion rule. 13 4. On August 21, 1997, WTB released an order conditionally granting twenty- three of Mercury's licenses and deferring action on the remaining nine. 14 WTB granted the twenty- three licenses because it found no evidence of bid signaling in those markets. 15 However, it conditioned the licenses on the outcome of its continuing investigation into bid signaling. 16 WTB deferred action on the other nine licenses because it found that bid signaling had occurred in those markets and concluded that further investigation was warranted. 17 High Plains and Mercury both sought reconsideration of WTB's Partial Grant Order. High Plains argued that WTB prematurely granted the twenty- three Mercury licenses because WTB's ongoing investigation could find that Mercury's behavior in the nine remaining markets was sufficiently egregious to render Mercury unfit to hold any licenses. 18 In contrast, Mercury claimed that further investigation was unnecessary and the deferral of its nine applications was unjustified because its 10 Mercury was also the high bidder for thirty- one D, E, and F Block licenses in other markets. 11 DOJ has since terminated its investigation and has entered into a consent decree with Mercury enjoining Mercury from engaging in bid signaling in future auctions. U. S. v. Mercury PCS II LLC, No. 98- 2751( PLF), Final Judgement (entered April 29, 1999) 12 Petition to Deny (filed March 21, 1997). On the same day, Mercury filed a petition to deny High Plains' applications for the Amarillo F block license and Lubbock D block license, alleging that High Plains filed its emergency motion for disqualification to intimidate Mercury and impede litigation between the parties in Texas. Petition to Deny (filed March 21, 1997). Mercury claimed that High Plains' pleading was an abuse of process, rendering High Plains unfit to be a Commission licensee. Id. at 1. WTB subsequently denied Mercury's petition to deny and granted High Plains' applications. High Plains Wireless, L. P., 12 FCC Rcd. 19,627 (WTB Nov. 25, 1997) (High Plains Grant Order). Mercury filed a petition for reconsideration of the High Plains Grant Order, which the Bureau denied in an Order released on March 2, 2000. High Plains Wireless, L. P., DA 00- 474, 15 FCC Rcd. 4620 (WTB). 13 Opposition to Petition to Deny (filed April 8, 1997). 14 Mercury PCS II, LLC, 13 FCC Rcd. 5756 (WTB 1997) (Partial Grant Order). 15 Id. at 5795 ¶¶ 6- 7. 16 Id. 17 Id. 18 Petition for Partial Reconsideration (filed Sept. 22, 1997). 3 Federal Communications Commission FCC 00- 190 4 conduct did not violate the anti- collusion rule. 19 5. On September 10, 1997, WTB's Enforcement and Consumer Information Division (Enforcement) issued a letter of inquiry asking Mercury to answer a series of questions regarding its bidding activities in the D, E, and F block auctions. 20 In response, Mercury admitted using trailing numbers in its bids, but claimed that such activity was not a communication of bidding strategy and did not violate Commission rules. 21 On October 28, 1997, the Commission released a Notice of Apparent Liability for Forfeiture, which concluded the investigation into bid signaling by Mercury in the D, E, and F block auction. 22 The Commission found that Mercury's use of "reflexive bid signaling" violated the anti- collusion rule, and assessed Mercury a forfeiture in the amount of $650,000.00. 23 High Plains and Mercury each sought reconsideration of the NALF. High Plains argued that the forfeiture amount was insufficient and failed to account for all of Mercury's reflexive bid signals during the auction. 24 In contrast, Mercury argued that its conduct did not violate the anti- collusion rule and that the forfeiture amount was excessive. 25 19 Petition for Reconsideration (filed Sept. 22, 1997). 20 Letter from Howard Davenport, Chief, Enforcement and Consumer Information Division, Wireless Telecommunications Bureau, to William M. Mounger, II, and Jerry M. Sullivan, Mercury (Sept. 10, 1997) (Letter of Inquiry). See 47 U. S. C. § 308( b) (At any time after the filing of an original application and during the term of any license, the Commission may require an applicant or licensee to submit written statements of fact to enable the Commission to determine whether to grant or deny the application or revoke the license). 21 Letter from Thomas Gutierrez, counsel for Mercury, to Susan Aaron, Enforcement and Consumer Information Division, Wireless Telecommunications Bureau (filed Sept. 17, 1997) (Response to Letter of Inquiry). 22 Mercury PCS II, LLC, 12 FCC Rcd. 17,970 (1997) (NALF). 23 Id. at 17,978, ¶ 24. We described reflexive bid signaling as follows: Reflexive bid signaling (through the use of trailing numbers) involves a bidder placing a bid in one market (market A) in which the final three digits of the bid (the trailing numbers) reflect the three- digit BTA number of a second market (market B) that it was targeting or a competing bidder was targeting. Then, within a short number of rounds, the bidder places a bid in the second market (market B) in which the final three digits of the bid reflect the BTA number of the first market (market A). These reflexive bids communicate different messages depending on the context of the bids. The signaling bidder could be communicating to competing bidders that they should stop bidding for the signaling bidder's targeted markets in exchange for which the signaling bidder would stop bidding in the competing bidder's targeted market. The reflexive bids could also communicate that a competitor's continued bidding in one of the signaling bidder's targeted markets would result in a "bidding war" in which the signaling bidder would continue to drive up the price in the competing bidder's targeted market. Finally, the reflexive bids could inform the competing bidders that both markets are being targeted by the signaling bidder. Id. at 17,976 ¶ 16. 24 Petition for Partial Reconsideration of Notice of Apparent Liability for Forfeiture (filed Nov. 26, 1997). 25 Response to Notice of Apparent Liability for Forfeiture (filed Nov. 28, 1997). 4 Federal Communications Commission FCC 00- 190 5 6. On November 5, 1997, WTB issued the WTB Order on Reconsideration, removing the conditions on Mercury's previously granted twenty- three licenses and unconditionally granting the nine remaining licenses. 26 WTB concluded that, notwithstanding the NALF, Mercury was qualified to be a Commission licensee because Mercury believed that the use of trailing numbers was permissible under our rules, admitted using trailing numbers, and did not intend to mislead or deceive the Commission or other parties concerning its bidding conduct. 27 7. High Plains filed an application for review of the WTB Order on Reconsideration on December 5, 1997. 28 High Plains argues that when WTB granted Mercury's licenses it failed to fully consider Mercury's: (1) bid signaling in the D, E, and F block auctions, (2) alleged misrepresentations and lack of candor in responding to WTB's bid signaling investigation, and (3) alleged ex parte violations. 29 Mercury filed an opposition to the application for review on December 22, 1997, claiming that High Plains' arguments lacked merit. 30 8. While High Plains' application for review was pending, we rescinded the NALF against Mercury on August 28, 1998. 31 In the NALF Reconsideration, we affirmed the Commission’s earlier conclusion in the NALF that Mercury's use of trailing numbers was prohibited under the anti- collusion rule. 32 However, we concluded that Mercury did not have adequate notice that its conduct was improper, and therefore, that Mercury should not be subject to a monetary forfeiture. 33 We cautioned, however, that 26 WTB Order on Reconsideration, 12 FCC Rcd. 18093 at ¶¶ 17, 25 27 Id. at 18,099- 100 ¶ 11. 28 Application for Review (filed Dec. 5, 1997). 29 Id. at 5- 6. 30 Opposition to Application for Review (filed Dec. 22, 1997). High Plains and Mercury subsequently filed several pleadings that were untimely and/ or unauthorized. First, High Plains filed a reply to Mercury's opposition to the application for review on January 6, 1998, together with a motion to accept the reply. Reply to Opposition to Application for Review (filed Jan. 6, 1998); Motion to Accept Filing of Reply to Opposition (filed Jan. 6, 1998). Although High Plains' reply was due on January 2, 1998, see 47 C. F. R. §1.115( d), the motion to accept the reply neither acknowledges that the reply was late filed nor does it offer an explanation for its untimeliness. Accordingly, we will not consider the reply. Second, High Plains filed a supplement to its application for review on January 13, 1998. Supplement to Application for Review (filed Jan. 13, 1998). In the supplement, High Plains argues that Mercury's December 29, 1997 petition for reconsideration of WTB's High Plains Grant Order is frivolous and demonstrates Mercury's lack of fitness to hold Commission licenses. However, High Plains failed to seek authority to file its supplement, and we will not consider it. See 47 C. F. R. § 1.45( c). Third, Mercury filed a supplement to its opposition to High Plains' application for review on February 20, 1998, responding to issues raised in High Plains reply and supplement. Supplement to Application for Review (filed Feb. 20, 1998). Since we are not considering High Plains' reply and supplement, we will not consider Mercury's supplement. Finally, High Plains filed a reply to Mercury's supplement on March 5, 1998. Reply to Supplement to Application for Review (filed March 5, 1998). Because we are not considering Mercury's supplement, we will not consider High Plains reply to Mercury's supplement. 31 Mercury PCS II, LLC, 13 FCC Rcd. 23755 (1998) (NALF Reconsideration). 32 Id., ¶ 9. 33 Id., ¶ 10. 5 Federal Communications Commission FCC 00- 190 6 the use of trailing numbers for reflexive bid signaling is prohibited by the anti- collusion rule and will not be tolerated in future auctions. 34 B. OGC Letter Decision on Reconsideration 9. On August 14, 1997, High Plains alleged that an improper ex parte presentation concerning Mercury was made to the Commission. 35 According to High Plains, Mercury solicited letters to be sent on its behalf from a number of Congressional offices, and these letters addressed the merits of the applications in violation of the Commission’s ex parte rules. High Plains further alleged that a Member of Congress or Congressional staff member requested and received assurances from a Commission staff member that Mercury's applications would be acted on by a certain date. 36 On October 24, 1997, OGC's Administrative Law Division found that the communications between Commission staff and Congressional offices were status inquiries that did not address the merits of the licensing proceeding. 37 Accordingly, the Administrative Law Division concluded that there was no violation of our ex parte rules. 38 10. On November 24, 1997, High Plains petitioned for reconsideration of the OGC Letter Decision. 39 High Plains accused Mercury of orchestrating a campaign to influence the licensing process through improper pressure from Congress. High Plains noted that the Chairman's Office received letters from twenty- seven Congressional offices addressing the status of Mercury's applications before the Partial Grant Order was released, and another nine letters before the NALF and WTB Order on Reconsideration were released. 40 High Plains asserted that Mercury prompted these Congressional inquiries by having a consultant write to various Senators and Representatives in an effort to have them exert pressure on the Commission to grant Mercury's applications. 41 11. On April 6, 1998, OGC issued the OGC Letter Decision on Reconsideration, denying High Plains' petition for reconsideration of the Administrative Law Division's Letter Decision. 42 OGC concluded that the Congressional letters did not taint the decision- making process and that sanctions against Mercury were unwarranted. 43 OGC also found that although service of the Congressional letters on High Plains was not always timely, such a transgression of the ex parte rules was minor and did not call for 34 Id., ¶ 11. 35 Letter from Eliot J. Greenwald, counsel for High Plains, to Dan Phythyon, Chief, Wireless Telecommunications Bureau (filed Aug. 14, 1997). 36 Id at 1. 37 Letter from John I Riffer, Assistant General Counsel, Administrative Law Division, Office of General Counsel, to Eliot J. Greenwald, counsel for High Plains (Oct. 24, 1997) (OGC Letter Decision). 38 Id. at 2. 39 Petition for Reconsideration; Request for Investigation (filed Nov. 24, 1997). 40 Id. at 3- 4. 41 Id. at 3. 42 OGC Letter Decision on Reconsideration, 13 FCC Rcd. at 7135. 43 Id. 6 Federal Communications Commission FCC 00- 190 7 sanctions. 44 12. On May 6, 1998, High Plains filed an application for review of the OGC Letter Decision on Reconsideration, claiming that OGC failed to recognize the seriousness of Mercury's ex parte violations and impose appropriate sanctions. 45 High Plains also filed a motion to consolidate its application for review of the OGC Letter Decision on Reconsideration with its application for review of the WTB Order on Reconsideration. 46 Because the two applications for review raise issues arising out of the same facts, we will consider them together. 47 We will first address the bid signaling, misrepresentation, and lack of candor arguments raised in High Plains’ application for review of WTB's Order on Reconsideration, and then we will address the ex parte arguments, which are common to both of High Plains’ applications for review. III. DISCUSSION A. Bid Signaling 13. High Plains argues that the WTB Order on Reconsideration "fails to consider the full scope and impact of Mercury's illicit use of reflexive trailing numbers." 48 However, rather than alleging any specific errors by the Bureau, High Plains focuses its argument on the NALF and asserts that the "relatively nominal" forfeiture of $650,000 is insufficient in light of the number of reflexive bids placed by Mercury. 49 We have previously addressed this issue fully in the NALF Reconsideration. In light of our conclusion that the NALF should be rescinded, we find no merit in High Plains' argument that WTB failed to consider the full extent of Mercury's bid signaling when it granted Mercury’s license applications. B. Misrepresentation and Lack of Candor 14. High Plains cites several instances where Mercury allegedly misrepresented facts or lacked candor in responding to WTB's Letter of Inquiry. 50 High Plains contends that these alleged misrepresentations and lack of candor should disqualify Mercury from becoming a Commission licensee. 51 We will address each of High Plains' allegations in turn. 52 44 Id. at 7134- 35. 45 Application for Review (filed May 6, 1998). 46 Motion to Consolidate Proceedings (filed May 6, 1998). 47 See 47 C. F. R. § 1. 1 (Procedures to be followed by the Commission shall, unless specifically prescribed in this part, be such as in the opinion of the Commission will best serve the purposes of such proceedings). 48 High Plains Application for Review at 6. 49 Id. at 9. 50 Application for Review at 10- 14. 51 Id. 52 In its application for review, High Plains acknowledges that its arguments concerning Mercury's Response to the Letter of Inquiry have not previously been presented to the Bureau. Application for Review at (continued….) 7 Federal Communications Commission FCC 00- 190 8 15. First, High Plains claims that Mercury lacked candor in not admitting its use of trailing numbers until after High Plains discovered Mercury's conduct and reported it to the Commission. 53 We disagree. As we explained in the NALF Reconsideration, Mercury did not have adequate notice that its use of trailing numbers was prohibited by the anti- collusion rule. 54 Without adequate notice that its conduct was prohibited, Mercury had no reason to report its use of trailing numbers to the Commission prior to the Commission’s inquiry. 16. High Plains also alleges that Mercury lacked candor in responding to several specific questions in WTB’s Letter of Inquiry. 55 Question Four asked Mercury inter alia, to describe the purpose of its trailing numbers. 56 High Plains alleges that Mercury’s responses that the trailing numbers were meant to “bluff and confuse" is inconsistent with Federal Court testimony by Mercury representative Jerry Sullivan, Jr. 57 However, in response to Question Four of the Letter of Inquiry, Mercury stated: Mercury utilized the final three digits of its bids to: (a) gain separation from other bidders above and beyond minimum bid increments; (b) to avoid the so- called "fat- finger" bid problem; and (c) to misdirect, bluff, threaten, and posture in relation to other bidders. [58] We find no inconsistency between Mercury's response to Question Four and Sullivan's statement. Accordingly, we reject High Plains' claim that Mercury lacked candor in responding to this question. 17. Next, High Plains claims that Mercury omitted materials from its response to Question Five of the Letter of Inquiry. 59 Question Five asked Mercury, inter alia, to produce all documents (Continued from previous page) 13. Ordinarily, we do not consider questions of law or fact on application for review that are not first presented to the bureau or office that rendered the initial decision. See 47 C. F. R. § 1.115( c). However, we have waived this rule in the past where doing so was in the public interest. See 47 C. F. R. § 1.3 (Commission may waive its rules for good cause); Sperzel v. NEC Telephone, Inc., 86 FCC 2d 97, 100 ¶ 9 (1981) (waiver of section 1.115( c) and consideration of issue not presented to the designated authority was in the public interest); Silverman v. KOOL-TV, 63 FCC 2d 507, 507 n. 1 (1977) (pursuant to section 1.3, waiver of section 1.115( c) was in the public interest); Sage v. WHEN- TV, 63 FCC 2d 148, 150 n. 2 (1977) (public interest served by waiver of section 1.115( c) and consideration of argument not presented to the designated authority). Addressing High Plains' arguments here will provide guidance to the public on important issues of misrepresentation and lack of candor, and it will also alleviate any prejudice that High Plains may have suffered as a result of the unusual procedural path that this case has taken. Thus, under the unique circumstances of this case, we believe that it would serve the public interest for us to consider High Plains' arguments concerning the Response to Letter of Inquiry. 53 Application for Review at 11. 54 NALF Reconsideration, FCC 98- 203 at ¶ 10. 55 Application for Review at 11. 56 Letter of Inquiry at 2. 57 Sullivan, who was responsible for formulating Mercury's bidding strategy and implementing Mercury's bids, described the use of trailing numbers as follows: "[ t] o be honest with you, I was probably putting it [in] to threaten High Plains that I was fixing to come blister their butt in Amarillo." Deposition of Jerry Sullivan, Jr. in the United States District Court for the Northern District of Texas, at 179 (Sept. 19, 1997). 58 Response to Letter of Inquiry at 7 (emphasis added) (footnote omitted). 59 Application for Review at 12. 8 Federal Communications Commission FCC 00- 190 9 memorializing, referring to or relating to its strategic plan and/ or bidding strategy. 60 High Plains alleges that Mercury failed to produce certain bidding diaries that were purportedly responsive to the request. 61 In opposition, Mercury maintains that the bidding diaries do not contain material responsive to Question Five of the Letter of Inquiry. Nonetheless, pursuant to a request from the Commercial Wireless Division, 62 Mercury submitted copies of its bidding diaries on October 2, 1998. 63 In the accompanying transmittal letter, Mercury’s counsel reasserted its claim that the bidding diaries contained no material information. 64 18. The ultimate materiality of the diaries, however, is not dispositive of the issue of Mercury’s responsiveness to the Letter of Inquiry. As noted above the Letter of Inquiry requested all documents referring or relating to Mercury’s bidding strategy. These bidding diaries were a contemporaneous record of Mercury’s bidding activity by those persons at Mercury conducting the bidding. We find it difficult to imagine a reasonable interpretation of WTB’s request that would exclude these diaries. The officers of Mercury, not being newcomers to the telecommunications industry, should have known that Mercury was required to produce these diaries, and if its failure to do so was based on advice of counsel, it was ill- served by that advice. 65 However, we have no basis to believe that Mercury’s failure to produce the diaries was the result of a willful intent to conceal information. Mercury ultimately did produce the diaries when they were requested specifically, and the information provided only served to confirm what Mercury had already admitted to regarding its use of trailing numbers. Because intent to deceive is an essential element of lack of candor, 66 we are unwilling to find that Mercury lacked candor in its response to Question Five of the Letter of Inquiry. 19. High Plains also claims that Mercury lacked candor in its response to Question Seven of the Letter of Inquiry, 67 which asked Mercury to identify all markets in which it placed bids using bid signals, but did not intend to win. 68 In response, Mercury stated the following: 60 Letter of Inquiry at 2. 61 Application for Review at 12. 62 See letter from Steven E. Weingarten, Chief, Commercial Wireless Division, WTB to Thomas Gutierrez, Esq. dated Sep. 25 1998. 63 See letter from Thomas Gutierrez, Esq. dated Oct 2, 1998. 64 Id. 65 We note that the Wireless Bureau did not take enforcement action against Mercury for its failure to produce the bidding diaries, and that the one- year statute of limitations applicable to monetary forfeitures has since run with respect to this issue. See 47 USC § 503( b)( 6)( B). However, the one- year limitation applies only to forfeiture proceedings, and does not preclude the Commission from considering Mercury’s actions in the context of High Plains’ challenge to Mercury’s qualifications to be a Commission licensee. 66 “The Commission will not disqualify an applicant . . ., for a negligent omission; ‘intent to deceive [is] an essential element of a showing of misrepresentation or lack of candor showing. ’” Swan Creek Communications, Inc., v. FCC, 39 F. 3d 1217, 1222 (DC Cir. 1994), quoting Weyburn Broadcasting, L. P. v. FCC, 984 F. 2d 1220 (DC Cir. 1983). 67 Application for Review at 12. 68 Letter of Inquiry at 3. 9 Federal Communications Commission FCC 00- 190 10 None. In each instance where Mercury placed a bid it structured its bid in such a manner that it was prepared to accept and pay for the license if it were the highest bidder at the auction's end. Clearly, Mercury bid on markets that were not included on its list of target markets (see Schedule 6). In many instances, this reflected only an appropriate desire to "park pops" and thereby protect eligibility without disclosing overall bidding strategies. See also Mercury's response to Question 4 for a further explanation of such bids and a listing of all markets for which Mercury's bids did not end with "000". [69] High Plains argues that Mercury bid in certain markets solely for the purpose of signaling competing bidders to stop bidding in other markets in which Mercury was truly interested. 70 However, Mercury did not withdraw bids in any of the markets where it used bid signals, and High Plains provides no evidence of Mercury's alleged lack of intent to accept and pay for certain markets. In the absence of such evidence, we are unwilling to find that Mercury lacked candor in this response. 20. High Plains further contends that Mercury responded untruthfully to Question Eight of the Letter of Inquiry, 71 which asked Mercury to identify each instance where it placed a retaliatory bid and the result that Mercury was seeking to achieve by placing each such bid. 72 Mercury responded as follows: Mercury did not use pure retaliatory bidding. Attachment 4 sets forth the complete history of Mercury's use of Trailing Numbers. In some instances identified therein, Mercury employed Trailing Numbers in a manner intended to posture, threatened [sic] and compete for markets based on bids submitted by others in prior rounds. In no instance did any such bid reflect an agreement or solicitation to do or forebear from doing anything with respect to subsequent bidding. Nor did Mercury intend any such bids to convey any information concerning Mercury's bidding strategies. [73] We find Mercury's response to be contradictory. Mercury denies that it used trailing numbers to convey information or solicit action from competing bidders, yet at the same time, Mercury admits that it used trailing numbers to threaten competing bidders. Such threats necessarily communicate information and seek to influence the actions of competing bidders. 74 However, even if we were to conclude that Mercury’s answer was internally inconsistent, we do not find that it was untruthful. In its response to the Letter of Inquiry, Mercury fully disclosed all instances in which it used trailing numbers in bids, and discussed its reasons for doing so in detail. We find no evidence that Mercury intended to deceive or mislead the 69 Response to Letter of Inquiry at 8- 9. 70 Application for Review at 12. 71 Id. 72 Letter of Inquiry at 3. 73 Response to Letter of Inquiry at 9. 74 Black's Law Dictionary defines a threat, in relevant part, as follows: A communicated intent to inflict physical or other harm on any person or on property. A declaration of an intention to injure another or his property by some unlawful act. . . . A declaration of one's purpose or intention to work injury to the person, property, or rights of another, with a view of restraining such person's freedom of action. Black's Law Dictionary 1480 (6th ed. 1990) (citations omitted). 10 Federal Communications Commission FCC 00- 190 11 Commission in its response to this question. 21. Finally, High Plains claims that Mercury lacked candor in its response to Question Nine of the Letter of Inquiry. 75 Question Nine asked Mercury to "[ i] dentify every auction participant or other individual who you believe ceased bidding in one of Mercury's targeted markets in response to a retaliatory bid placed by Mercury." 76 In response, Mercury provided charts showing its relevant bidding history. 77 These charts listed Mercury’s bids in which the trailing numbers corresponded with the identification numbers of other markets in which Mercury was bidding. They also showed the subsequent bids of the competing bidders in those markets. However, Mercury qualified its response by stating that it could not be certain why a particular bidder ceased bidding in a given market because Mercury never had any communications or agreements with any other bidder on this subject, either verbal or in writing. We do not believe this response demonstrates an intent to deceive the Commission. Mercury candidly disclosed the bids in which trailing numbers were used and the bids of other bidders in markets corresponding to those trailing numbers, but declined to speculate why a particular bidder may have ceased bidding in a given market. High Plains fails to identify any communications, agreements or other evidence demonstrating that Mercury had knowledge of why a particular bidder ceased bidding in a given market. Therefore, we find no merit in High Plains' claim. C. Ex Parte Communications 22. High Plains also seeks review of rulings by the Bureau and the Office of General Counsel (OGC) rejecting High Plains' allegations that Mercury violated the Commission's ex parte rules. According to High Plains, in the weeks leading up to the Bureau's August 21 action conditionally granting 23 of Mercury's applications, the Commission received at least 27 letters from members of Congress regarding those pending applications. In its initial letter ruling and the OGC Letter Decision on Reconsideration, OGC rejected the allegations that Mercury's solicitation of congressional support involved misconduct or undermined the integrity of the Commission's processes. 78 OGC found that the congressional letters and telephone calls involved no significant violation of the Commission's ex parte rules. The Bureau similarly rejected High Plains' allegations that Mercury committed significant violations of the ex parte rules. 79 23. We disagree with High Plains' contentions that the OGC's analysis of the ex parte question was wrong and that a serious violation of the ex parte rules warranting designation for hearing of Mercury's licenses had occurred. High Plains does not dispute that the congressional letters, submitted on Mercury’s behalf, were served on High Plains, and presents no evidence that any delay in service was 75 Application for Review at 12- 13. 76 Letter of Inquiry at 3. 77 Response to Letter of Inquiry at 9. 78 High Plains asserts that these letters were solicited by Joseph G. Riemer, III, a consultant, who contacted Republican Senators and Representatives from southern states on Mercury's behalf. High Plains further asserts that on or about July 31, 1997, Blair Levin, then Chairman Reed Hundt's chief of staff, received numerous telephone calls from congressional offices requesting Commission action by August 13. Moreover, High Plains alleges that by October 1997, shortly before the Bureau, on November 5, granted Mercury's nine remaining applications, the Commission received another seven congressional letters. OGC Letter Decision on Reconsideration, 13 FCC Rcd 7132 (OGC 1998). 79 See Mercury PCS II, LLC, 12 FCC Rcd 18093, 18103- 04 ¶¶ 20- 21 (WTB 1997). 11 Federal Communications Commission FCC 00- 190 12 deliberate or intended to prejudice High Plains. Our review of the record indicates that by August 1, 1997, High Plains had been served with at least 12 congressional letters, thereby giving High Plains notice of the thrust of the congressional concerns well before the Bureau issued its initial licensing decision on August 21, 1997. All seven congressional letters sent in September- October 1997 were also served on High Plains, and all but one were served the same day that they were filed. These facts confirm both that Mercury made a reasonable effort to achieve service and that High Plains was not prejudiced by any failure by Mercury to ensure timely service. Additionally, High Plains presents no evidence to challenge OGC's finding that the telephone calls were legitimate status inquiries. 24. In view of the foregoing, the cases cited by High Plains 80 do not support designating for hearing Mercury's applications or revoking Mercury's licenses for ex parte violations, even though the number of congressional contacts here was greater. Unlike all three of these cases, the letters were in fact served, albeit not always in a timely fashion, and Mercury informed the authors of the letters of the need for service. In contrast to Stearns, the only one of these cases in which the violator's application was dismissed, Mercury had not been expressly warned to avoid repetition of an ex parte violation. 81 25. High Plains also disputes OGC's conclusion that there was no improper congressional intrusion into the Commission's decisional process. High Plains asserts that the congressional letters improperly addressed the merits of Mercury's applications and that they "imply" a preference for Mercury. High Plains also asserts that the sheer volume of congressional correspondence created undue pressure on the Commission and that even pressure related to timing is improper. 26. We find no basis to overturn OGC’s conclusions. Although the volume of letters filed on Mercury’s behalf was high, they did not improperly intrude into the decisional process. The substance of the letters was that action on Mercury’s applications not be delayed pending the outcome of the investigations. 82 The letters express support for an "unfettered" investigation into the issue of whether 80 Elkhart Telephone Co., 11 FCC Rcd 1165 (1995); Pepper Schultz, 4 FCC Rcd 6393 (Rev. Bd. 1989), rev. denied, 5 FCC Rcd 3273 (1990); Stearns County Broadcasting Company, Inc., 104 FCC 2d 688 (Rev. Bd. 1986). 81 See 104 FCC 2d at 696 ¶ 10. 82 The July 17, 1997 letter from Senators Trent Lott and Thad Cochran is typical. It reads: We would appreciate the Federal Communications Commission promptly considering the D. E, and F Block Personal Communications Services applications filed by Mercury PCS II, LLC. In addition, please provide us with a projected timetable for action . . . . We are concerned that the Commission's inaction on Mercury's applications reflects an administrative delay which has placed Mercury at a competitive disadvantage with other PCS operators who already have their licenses. This is of particular concern when no findings of merit or demerit regarding Mercury have been made. We are aware that the Department of Justice is investigating some 50 participants in the Commission's PCS auctions which include Mercury. We fully support the Commission and the Department efforts to conduct unfettered investigations into the auction process. Yet, all 50 participants except Mercury, have already received their licenses. Clearly a license can be issued without impeding a thorough investigation by either the Commission or the Department (continued….) 12 Federal Communications Commission FCC 00- 190 13 Mercury violated the bid signaling rule. 83 The letters expressed no opinion as to how the investigations should be resolved or what sanction (potentially including license revocation), if any, should be imposed. 84 Accordingly, we deny High Plains' application for review as to the OGC Letter Decision on Reconsideration. IV. CONCLUSION 27. After carefully reviewing High Plains' applications for review of the WTB Order on Reconsideration and the OGC Letter Decision on Reconsideration, we conclude that High Plains has failed to present sufficient facts and/ or arguments to support its claims that WTB or OGC erred in their decisions. Therefore, we deny High Plains' applications for review and affirm the WTB Order on Reconsideration and the OGC Letter Decision on Reconsideration. V. ORDERING CLAUSES 28. Accordingly, IT IS ORDERED that, pursuant to sections 4( i) and 5( c)( 5) of the Communications Act of 1934, as amended, 47 U. S. C. §§ 154( i) and 155( c)( 5), and section 1.115 of the Commission's rules, 47 C. F. R. § 1.115, the Application for Review filed by High Plains Wireless, L. P. on December 5, 1997, IS DENIED. 29. IT IS FURTHER ORDERED that, pursuant to sections 4( i) and 5( c)( 5) of the Communications Act of 1934, as amended, 47 U. S. C. §§ 154( i) and 155( c)( 5), and section 1.115 of the Commission's rules, 47 C. F. R. § 1.115, the Application for Review filed by High Plains Wireless, L. P. on May 6, 1998, 1998, IS DENIED. 30. IT IS FURTHER ORDERED that, pursuant to section 4( i) of the Communications Act of 1934, as amended, 47 U. S. C. § 154( i), and section 1.45( c) of the Commission's rules, 47 C. F. R. § 1.45( c), the Reply to Opposition to Application for Review filed by High Plains Wireless, L. P. on January 6, 1998, IS DISMISSED. 31. IT IS FURTHER ORDERED that, pursuant to section 4( i) of the Communications Act of 1934, as amended, 47 U. S. C. § 154( i), and section 1.45( c) of the Commission's rules, 47 C. F. R. § 1.45( c), the Supplement to Application for Review filed by High Plains Wireless, L. P. on January 13, 1998, IS DISMISSED. (Continued from previous page) of Justice. We are hopeful that the delay on Mercury's applications can be resolved. Thank you for your assistance in dealing with this issue which represents a substantial investment in Mississippi's economy. Letter from [Senators] Trent Lott and Thad Cochran to Chairman Reed Hundt (July 17, 1997). 83 Id. 84 "[ T] he question of administrative delay is well established as a proper subject of communication between a party and a Congressman and between a Congressman and the Commission." Amigos Broadcasting, Inc. v. FCC, 696 F. 2d 128, 129 (D. C. Cir. 1982). 13 Federal Communications Commission FCC 00- 190 14 32. IT IS FURTHER ORDERED that, pursuant to section 4( i) of the Communications Act of 1934, as amended, 47 U. S. C. § 154( i), and section 1.45( c) of the Commission's rules, 47 C. F. R. § 1.45( c), the Supplement to its Opposition to Application for Review filed by Mercury PCS II, LLC on February 20, 1998, IS DISMISSED. 33. IT IS FURTHER ORDERED that, pursuant to section 4( i) of the Communications Act of 1934, as amended, 47 U. S. C. § 154( i), and section 1.45( c) of the Commission's rules, 47 C. F. R. § 1.45( c), the Reply to Mercury’s Supplement to Opposition to Application for Review filed by High Plains Wireless, L. P. on March 5, 1998, IS DISMISSED. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary 14 Federal Communications Commission FCC 00- 190 15 APPENDIX A Mercury PCS II, LLC Broadband PCS D, E, and F block licenses Block Market Call Sign File Number Location D B121 KNLG913 01291- CW- L- 97 Eagle Pass- Del Rio, TX E B191 KNLG919 01297- CW- L- 97 Hobbs, NM E B246 KNLG922 01300- CW- L- 97 Laurel, MS F B003 KNLF929 00114- CW- L- 97 Abilene, TX F B032 KNLG906 01284- CW- L- 97 Baton Rouge, LA F B040 KNLG907 01285- CW- L- 97 Big Spring, TX F B042 KNLG908 01286- CW- L- 97 Biloxi- Gulfport- Pascagula, MS F B052 KNLG909 01287- CW- L- 97 Bowling Green- Glasgo, KY F B058 KNLG910 01288- CW- L- 97 Brunswick, GA F B087 KNLG911 01289- CW- L- 97 Clovis, NM F B115 KNLG912 01290- CW- L- 97 Dothan- Enterprise, AL F B146 KNLG914 01292- CW- L- 97 Florence, AL F B154 KNLG915 01293- CW- L- 97 Ft. Walton Beach, FL F B159 KNLG916 01294- CW- L- 97 Gainesville, FL F B180 KNLG917 01295- CW- L- 97 Hammond, LA F B186 KNLG918 01296- CW- L- 97 Hattiesburg, MS F B195 KNLG920 01298- CW- L- 97 Houma- Thibodeaux, LA F B236 KNLG921 01299- CW- L- 97 Lafayette- New Iberia, LA F B263 KNLG923 01301- CW- L- 97 Louisville, KY F B264 KNLG924 01302- CW- L- 97 Lubbock, TX F B269 KNLG925 01303- CW- L- 97 McComb- Brookhaven, MS F B296 KNLG926 01304- CW- L- 97 Midland, TX F B302 KNLG927 01305- CW- L- 97 Mobile, AL F B305 KNLG928 01306- CW- L- 97 Montgomery, AL F B327 KNLG929 01307- CW- L- 97 Odessa, TX F B340 KNLG930 01308- CW- L- 97 Panama City, FL F B343 KNLG931 01309- CW- L- 97 Pensacola, FL F B400 KNLG932 01310- CW- L- 97 San Angelo, TX F B415 KNLG933 01311- CW- L- 97 Selma, AL F B439 KNLG934 01312- CW- L- 97 Tallahassee, FL F B454 KNLG935 01313- CW- L- 97 Valdosta, GA F B467 KNLG936 01314- CW- L- 97 Waycross, GA 15