Sun Valley Firm, Others Lose Interactive Rights After Failing to Pay Up

A Sun Valley company lost the rights to deliver an array of wireless services Friday when federal regulators denied 13 bidders more time to pay for interactive television licenses won at auction in July.

Interactive America Corp. was the second-largest bidder in the Federal Communications Commission’s first auction for the licenses. The blockbuster sale, which drew more than $215 million in bids, has since been plagued by controversy as a number of successful bidders, including Interactive, failed to make their down payments on time.

Interactive America, along with top bidder Commercial Realty St. Pete Inc. of St. Petersburg, Fla., was previously identified by a well-placed source as the target of a criminal investigation into whether the two companies misrepresented themselves as female-owned small businesses. The designation qualified the companies for discounts on their bids.

The FCC has also said it is looking into whether some of the defaulting firms entered into the bidding with no intention or ability to pay.

Commercial Realty St. Pete was identified Friday as another of the companies that lost its right to a license.

FCC spokeswoman Susan Sallet said the agency will re-auction the interactive video and data service licenses. No date has been set.

The licenses, which have not yet been issued, would permit a company to deliver to consumers such services as home play along with a favorite game show.

The 13 parties will have to pay the government a penalty, FCC officials said, based on the difference, plus 3%, between the original winning bid and the new winning bid when the licenses are re-auctioned.

Down payments on the licenses were due Aug. 8.

Interactive America has said it withheld its down payment because only one equipment supplier had been approved by the FCC.

Indeed, one of the most common reasons the defaulting firms cited in requesting more time was a lack of equipment to deliver the interactive services within FCC deadlines.

The commission said that did not warrant an extension. “The status of equipment availability is a matter which we believe prudent business persons would investigate prior to committing thousands or millions of dollars for an IVDS license,” the FCC said in its order. “Bidders who won IVDS licenses without fully understanding these matters should not be able to shift responsibility for their actions onto the government.”

Interactive America--which, on its auction application, listed its headquarters address as that of a ramshackle house in Sun Valley--bid $17 million for 15 licenses. It qualified for a $3.3-million discount because it identified itself as owned by a woman. The woman’s identity has never been disclosed.