Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554

In the Matter of ) ) Petition of Windstream Services LLC, ) AU Docket No. 20-34 Debtor-In-Possession for Waiver of ) Section 1.21001(d)(4) of the Commission’s ) WC Docket No. 19-126 Rules, as Necessary ) ) WC Docket No. 10-90

WAIVER–EXPEDITED ACTION REQUESTED

Windstream Services LLC, Debtor-In-Possession (“Windstream”), by counsel and pursuant to 47 C.F.R. §§ 1.3 and 1.925, hereby respectfully requests the Office of Economics and Analytics (“OEA”) and the Wireless Telecommunications Bureau (“WTB”) grant a waiver on an expedited basis of 47 C.F.R. § 1.21001(d)(4) (the “Major Modification” rule) to allow

Windstream to amend its Auction 904 short-form application (FCC Form 183), when and as necessary, to reflect the consummation of Step One and/or implementation of Step Two of its pending FCC application for consent to transfer control of licenses and authorizations held by

Windstream and its affiliates, as debtors-in-possession licensees, to the same licensees, with reorganized indirect ownership according to a court-approved plan of reorganization.1 Grant of

the waiver would enable Windstream to emerge from bankruptcy at a point during the Auction

904 timeline, without disqualifying it from participating in the auction. As set forth below, good

cause exists for granting this waiver request, and the grant will serve the public interest.

I. Background

Windstream, a Delaware limited liability company, is a wholly-owned direct subsidiary

1 Step One is anticipated to occur in 3Q2020. Step Two will occur after emergence from bankruptcy. See infra page 5.

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of Windstream Holdings, Inc., Debtor-In-Possession (“Holdings”), a Delaware corporation.2 On

February 25, 2019, Holdings and each of its subsidiaries (the “Windstream Entities”) voluntarily

filed for Chapter 11 reorganization in the United States Bankruptcy Court for the Southern

District of New York.3 Following the filing of the petitions and the securing of $1 billion in debtor-in-possession financing, Windstream continued to provide service to its customers as it negotiated a comprehensive restructuring plan with its creditors. On April 1, 2020, Holdings filed a plan of reorganization with the Bankruptcy Court proposing a restructuring that would allow Holdings, Windstream, and Windstream’s subsidiaries to emerge from bankruptcy with a deleveraged capital structure and sufficient liquidity to fund the post-emergence business plan.

The plan of reorganization, as amended (the “Plan”), was approved by the Bankruptcy Court on

June 26, 2020.

As contemplated by the approved Plan, the interests held by Holdings’ existing

stockholders will be canceled and the company will be reorganized. To facilitate Windstream’s

prompt emergence from bankruptcy, it has requested Commission permission to complete the

transfer of control in two steps (the “Transaction”).

In Step One of the Transaction, the interests held by the existing stockholders of

Holdings will be canceled, and the creditors who hold the first lien debt of Windstream will

2 Windstream’s operating subsidiaries provide voice, data, and transport services on a local and long-haul fiber network currently spanning approximately 150,000 route miles. Windstream’s consumer and small business segment includes approximately 1.4 million residential and small business customers. In addition, Windstream provides 100 Gbps bandwidth and transport services to wholesale customers, including telecommunications companies, content providers, and cable and other network operators. Windstream’s incumbent local exchange carrier (“LEC”) subsidiaries serve customers in 18 states, while Windstream’s competitive LEC subsidiaries serve primarily enterprise and government customers in all 50 states and the District of Columbia. 3 Windstream Holdings, Inc., Debtors, Chapter 11, Case No. 19-22312-rdd (Bankr. S.D.N.Y. 2019).

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equitize a portion of their debt claims against Holdings and Windstream and receive repayment or replacement loans for the remaining portion. As a result of equitizing their debt and exercising subscription rights and equity commitments in connection with the reorganization plan, the existing holders of first lien debt of Windstream, as a group, will acquire 100% of the equity of Holdings (“New Windstream”). It is not anticipated that any entity would obtain either de jure or de facto control of New Windstream. The following U.S.-based entities will hold a

10% or greater equity or voting interest in New Windstream after the completion of Step One:

Nexus Aggregator, L.P. (estimated 49.9% voting and equity interest) and Franklin Resources,

Inc. (estimated 30.3% voting and equity interest). Nexus Aggregator, L.P. is an investment vehicle affiliated with Elliott Management Corporation and its affiliated investment entities, including Elliott Investment Management L.P. (collectively “Elliott”). While Elliott does not itself provide communications services, it anticipates that, at the time of Windstream’s emergency from bankruptcy, it will hold a disclosable minority interest in LogMeIn, Inc.

(LogMeIn), which has wholly-owned subsidiaries that hold telecommunications authorizations.

Furthermore, as outlined in the Notice of Filing of Third Amended Plan Support

Agreement, filed with the Bankruptcy Court on June 22, 2020,4 Windstream will be constituting a new board upon satisfaction of all conditions, including applicable federal and state regulatory approvals, for emergence.

In connection with the reorganization, on May 21, 2020, the Windstream Entities filed with the Commission an application for consent to transfer control of licenses and authorizations held by Windstream and its subsidiaries to effect this two-step transaction (the “214

4 Notice of Filing of Third Amended Plan Supplement, In re Windstream Holdings, Inc., et al., Chapter 11, Case No. 19-22312, (Bankr. S.D.N.Y. entered June 22, 2020).

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Application”). The Wireline Competition, International, and Wireless Telecommunications

Bureaus jointly issued a public notice regarding the application on June 25, 2020, describing the

transaction and establishing the pleading cycle.5 No parties filed any opposition to, or indeed

any other comments regarding, the Transaction.

To facilitate prompt emergence from bankruptcy, Windstream requested that the

Commission approve the pending transfer of control applications as part of Step One.

Windstream will emerge with aggregate foreign ownership below the 25% statutory benchmark

set forth in section 310(b)(4) of the Act and with no foreign investor holding 10% or more of

New Windstream’s stock. To achieve the necessary levels of foreign ownership, certain

prospective foreign investors would hold upon closing Special Warrants entitling them to obtain

indirect equity interests in New Windstream, but they could not exercise such Special Warrants

until the Commission approves a higher level of foreign investment in “Step Two” of the

Transaction. With respect to Step Two, within 30 days of emergence from bankruptcy,

Windstream would file a Petition for Declaratory Ruling requesting Commission approval to permit the exercise of the Special Warrants by foreign entities of indirect interests in New

Windstream at levels that would require disclosure or specific approval in some cases, and in the aggregate greater than 25%.

5 Applications Filed for the Transfer of Control of Windstream Holdings, Inc., Debtor-in- Possession, to Windstream Holdings, Inc., WC Docket No. 20-151, Public Notice, DA 20- 675 (rel. June 25, 2020). The 214 Application provides extensive information about the Windstream transaction. Also pending at the Wireline Competition Bureau is an application requesting approval for certain entities known as the Windstream Licensees to transfer certain fiber optic assets to Uniti Group Finance Inc. and Uniti National LLC. See Joint Application of Windstream Licensees and Uniti Group Finance Inc. and Uniti National LLC for Grant of Authority Pursuant to Section 214 of the Communications Act of 1934, as Amended, and Section 63.04 of the Commission’s Rules, WC Docket No. 20-161 (filed June 3, 2020). The transaction, which is the subject of the Windstream-Uniti application, does not implicate the transfer of control of Holdings and Windstream discussed herein.

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Upon emergence from bankruptcy, and pursuant to a grant of the pending applications,

New Windstream will continue to be Windstream’s parent, and the ultimate parent of

Windstream’s operating subsidiaries, and will indirectly hold all licenses and authorizations held

by Windstream and its subsidiaries. These changes will not affect the form or organization of

any subsidiaries below Windstream.

Step One is anticipated to occur in 3Q2020, subject to receipt of all necessary regulatory

approvals from the FCC and state agencies and New Windstream’s subsequent emergence from

bankruptcy (other federal regulatory approvals in the form of early termination under the Hart-

Scott-Rodino Act have been received). Step Two will occur after emergence from bankruptcy

and, as noted above, Windstream will be required to file a Petition for Declaratory Ruling to

implement Step Two within 30 days after emerging from bankruptcy requesting the FCC’s

approval for it to be up to 100% foreign-owned and for specific approval of certain foreign

investors.

The two-step process will allow Windstream and the subsidiaries to avoid the adverse consequences that could result from a delay in implementing the reorganization plan. Operating as a debtor-in-possession imposes significant financial and operational burdens on Windstream, such as a potential need to incur additional indebtedness to maintain liquidity. Prompt emergence from bankruptcy will allow the company to resume normal operations and will generate substantial public interest benefits, including providing even greater assurance of continuity of service to customers; improved operational and leasing arrangements of certain network assets; and increasing competition due to a more stable and solvent Windstream with a stronger capital structure and better access to capital, thus enabling Windstream to improve its broadband service offerings and its enterprise service capabilities, continue its investments in

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customer service and support, enhance its financial and operational flexibility, and participate in

Commission broadband deployment funding auctions.

On July 15, 2020, Windstream submitted an accurate and timely short-form application

(FCC Form 183) to participate in Auction 904, which was after the date on which the 214

Application was filed and after the Bankruptcy Court approved the Plan.

The Commission’s rules only permit an applicant in Auction 904 to make minor changes

to its application after the initial short-form application deadline.6 Such minor modifications

include correcting typographical errors and supplying or correcting information as requested to

support the certifications made in the application. Modifications, such as changes in ownership

that would constitute the transfer of control of the applicant, are not permitted after the initial

FCC Form 183 filing deadline.7 If an amendment to the initial short-form application constitutes a “major amendment” as described in Section 1.21001(d)(4),8 absent a waiver, the major

amendment will not be accepted and may result in the dismissal of the application.

II. Basis for the Waiver Request

Windstream timely-filed the required FCC Form 183 with accurate ownership

information, including information about the reorganization. Windstream has further updated its

6 See Rural Digital Opportunity Fund Phase I Auction Scheduled for October 29, 2020; Notice and Filing Requirements and Other Procedures for Auction 904, Public Notice, FCC 20-77, ¶ 182 (rel. June 11, 2020) (“Auction 904 Procedures Public Notice”); 47 C.F.R. § 1.21001(d)(5). 7 Id. 8 47 C.F.R. § 1.21001(d)(4) (defining major modification to include “any changes in the ownership of the applicant that constitute an assignment or transfer of control”). The Auction 904 Procedures Public Notice is clear that “[i]f an amendment reporting changes is a ‘major amendment,’ as described in section 1.21001(d)(4), the major amendment will not be accepted and may result in dismissal of the application.” Auction 904 Procedures Public Notice, ¶ 182.

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short-form application with information regarding the proposed post-bankruptcy ownership structure at both Step One and Step Two.9 Bidding in Auction 904 is scheduled to begin on

October 29, 2020. Shortly after bidding has ended, OEA and WTB will issue a public notice declaring the auction closed, identifying the winning bidders, and establishing the deadline for submitting a properly completed long-form application (FCC Form 683).10

It is impossible to determine when the Commission will act upon Windstream’s pending transfer of control applications, but such action is anticipated to occur in 3Q2020, which is during the Auction 904 timeline. If the applications are granted and Windstream were to consummate Step One (which would result in a change in ownership that would constitute a transfer of control), and/or implement Step Two, in which it will be required to file a Petition for

Declaratory Ruling within 30 days after emerging from bankruptcy requesting the FCC’s approval for it to be up to 100% foreign-owned and for specific approval of certain foreign investors, it may be disqualified from further participating in Auction 904, absent a waiver of 47

C.F.R. § 1.21001(d)(4). Of course, Windstream instead could elect to delay consummation to avoid disqualification, but such action would delay implementation of the reorganization plan, result in significant adverse consequences, and contravene assurances Windstream gave to the bankruptcy court. Such result would not be in the public interest.

9 FCC Form 183 was submitted with attachments outlining the proposed post-emergence ownership structure (“Supplemental Information Regarding Restructuring Ownership Changes FINAL3.pdf”) and board changes (“Notice of Filing of Third Amended Plan Supplement 06222020.pdf”) on July 15, 2020 (application file number 0009149718). Further supplemental information updating the previous attachments (“Further Supplemental Information Regarding Restructuring Ownership Changes (RDOF) FINAL.pdf”) was transmitted to [email protected] on July 31, 2020, and will be submitted to the Auction Application System once the resubmission filing window is open. See Auction 904 Procedures Public Notice, ¶ 186. 10 Auction 904 Procedures Public Notice, ¶ 286; 47 C.F.R. § 1.21004(a).

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III. Grant of This Waiver Request Will Not Frustrate the Purposes of the Major Modifications Rule and Will Be Consistent With Prior Commission Decisions

The Commission may waive its rules and requirements where there is “good cause”

shown to do so.11 Good cause may be found “where particular facts would make strict

compliance inconsistent with the public interest.”12 In making this determination, the

Commission may “take into account considerations of hardship, equity, or more effective

implementation of overall policy.”13 A waiver is therefore “appropriate only if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest.”14 To make such a public interest determination, the waiver cannot undermine the purposes of the rule, and there must be a stronger public interest benefit in granting the waiver than in applying the rule.15

Circumstances here justify waiver of the rule. Here, the good cause consists of

11 47 C.F.R. § 1.3. 12 Ne. Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990). 13 WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969). 14 Ne. Cellular Tel. Co., 897 F.2d at 1166. 15 See, e.g., Request for Permanent Renewal of, and Changes to Conditions on, Waiver Granted to SafeView, Inc., Letter, 26 FCC Rcd 10250, 10251 (OET 2011) (citing Ne. Cellular Tel. Co., 897 F.2d at 1166); see also WAIT Radio, 418 F.2d at 1155, 1157. The waiver standard applied under Section 1.3 is substantially the same as the waiver standard applied under Section 1.925 in the context of wireless radio services licenses. See Delta Radio, Inc., Memorandum Opinion and Order, 18 FCC Rcd 16889, 16891, ¶ 7 & n.19 (2003) (citing Bellsouth Corp. v. FCC, 162 F.3d 1215, 1225 n.10 (D.C. Cir. 1999)). Section 1.925(b)(3) provides that the Commission may grant a request for waiver with respect to wireless services if it is shown that (i) the underlying purpose of the rule(s) would not be served or would be frustrated by application to the instant case, and that a grant of the requested waiver would be in the public interest; or (ii) in view of unique or unusual factual circumstances of the instant case, application of the rule(s) would be inequitable, unduly burdensome or contrary to the public interest, or the applicant has no reasonable alternative. 47 C.F.R. § 1.925(b)(3)(i)–(ii). 8

“facilitating the successful resolution of a bankruptcy proceeding,”16 which raises very different public interest considerations than those underlying the bar in the auction rules on a major amendment to a short-form application. Emergence from bankruptcy typically involves changes in ownership of the applicant that would constitute an assignment or transfer of control, but this is not the type of situation of concern to the major modification rule. Windstream will emerge from the bankruptcy proceeding pursuant to a process supervised and administered by the

Bankruptcy Court, in accordance with applicable federal bankruptcy laws, and only after all required approvals are obtained from the Commission as well as state regulators.

The Bankruptcy Court’s equitable powers and role in overseeing the process and approving the Plan represent a significant and substantive difference from the situation of privately-negotiated changes in ownership of an applicant that would constitute a license transfer or assignment.

• Bankruptcy law and the rules of the bankruptcy process constrain the flexibility that a

company and its various stakeholders would otherwise have in the privately-negotiated

context to implement changes to the company’s capital structure. Here, the Bankruptcy

Court closely supervised the plan of reorganization process.

16 Stanford Springel As Chapter 11 Tr. for the Bankr. Estate of Innovative Commc’n Corp., Transferor & Assignor, & Nat’l Rural Utilities Coop. Fin. Corp. & Its Subsidiaries, Transferees & Assignees, 24 FCC Rcd. 14360, 14369 ¶ 19 (2009) (“Innovative Order”); Applications for Consent to the Assignment and/or Transfer of Control of Licenses; Adelphia Commc’ns Corp., (& Subsidiaries, Debtors-in-Possession), Assignors, to Time Warner Cable Inc. (Subsidiaries), Assignees; Adelphia Commc’ns Corp., (& Subsidiaries, Debtors-in- Possession), Assignors & Transferors, to Comcast Corp. (Subsidiaries), Assignees & Transferees; Comcast Corp., Transferor, to Time Warner Inc., Transferee; Time Warner Inc., Transferor, to Comcast Corp., Transferee, Memorandum Opinion & Order, 21 FCC Rcd. 8203, 8323 ¶ 282 (2006) (“Adelphia Order”) (citing WorldCom, Inc. & its Subsidiaries (Debtors-in-Possession), Transferor, & MCI, Inc., Transferee, Memorandum Opinion & Order, 18 FCC Rcd. 26484, 26503 ¶ 29 (2003) (“WorldCom Order”)).

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• Unlike a privately-negotiated transaction, the bankruptcy process is open to diverse

participants in a court-supervised setting, including secured and unsecured debt holders,

trade creditors, vendors, stockholders, government entities, and any other parties with

claims of interest.

• Bankruptcy restructurings utilize open dockets where the public has access to the

pleadings and filings in real time. For example, all pleadings and filings made in

connection with the Windstream chapter 11 cases are made accessible to the public by the

Federal Judiciary at www.pacer.gov. In addition, in connection with their chapter 11

cases, a website has been maintained where all pleadings and filings are made accessible

to the public. See http://www.kccllc.net/windstream.

Grant of the waiver request will facilitate Windstream’s prompt emergence from the

bankruptcy process consistent with the Commission’s longstanding process to accommodate federal bankruptcy law when doing so will not unduly interfere with the Commission’s public interest obligations under the Act.17 “It is the Commission’s policy to support the bankruptcy

laws, and where possible to accommodate them in a manner that is consistent with the Act.”18

17 See Maritime Communications/Land Mobile, LLC, 31 FCC Rcd. 13729, 13737–38 (2016); LaRose v. FCC, 494 F.2d 1145, 1146–48 & n.2 (D.C. Cir. 1974); Applications Granted for the Transfer of Control of Fusion Connect, Inc., Debtor-In-Possession, and Subsidiaries, Public Notice, 35 FCC Rcd. 409, 413 (2020); Liberman Television of Dallas License LLC, Debtor-in-Possession, Order, DA 19-1012, ¶ 14 (MB 2019). 18 Innovative Order at 14369 ¶ 19. See also WorldCom Order at 26503 ¶ 29 (citing Mobilemedia Corp., et al., Memorandum Opinion & Order, 14 FCC Rcd. 8017, 8018 ¶ 4 (1999); Space Station Sys. Licensee, Inc., Memorandum Opinion, Order & Authorization, 17 FCC Rcd. 2271, 2286–87 ¶ 34 (Int’l Bur. 2002) (“Because this transaction permits the Iridium system to emerge from bankruptcy and continue operations, the competitive impact is likely to be beneficial.”); Orbital Commc’ns Corp., Order & Authorization, 17 FCC Rcd. 4496, 4504 ¶15 (Int’l Bur. 2002) (“Because this transaction permits the [licensee] to emerge from bankruptcy and continue operations, the competitive impact will be beneficial. . . . 10

Facilitating prompt and successful emergence from bankruptcy “advances the public interest by providing economic and social benefits, especially including the compensation of innocent creditors.”19

In this case, grant of the requested waiver will permit Windstream and its subsidiaries to emerge from bankruptcy more quickly and avoid the adverse consequences that could result from a delay in implementing the reorganization plan. At the same time, grant of this request will not interfere with the Commission’s public interest obligations because Windstream has disclosed in the 214 Application and in the bankruptcy proceeding its future post-emergence real parties-in-interest and relevant ownership information. As the Commission observed in granting waivers to participants in the Connect America Fund Phase II auction, the objectives of the rule prohibiting major modifications to an auction ownership application include assuring that:

an auction applicant’s ownership structure, financial condition, and real parties-in-interest are fully disclosed and can be assessed prior to the auction; the representations and certifications in the application remain effective and enforceable while the application is pending; the pre-auction process is transparent; and the Commission, auction participants, and other applicants have consistent and transparent information about the identity of other applicants, which enhances auction competition by leveling the informational playing field.20

Accordingly, consistent with previous waivers, “the rule’s particular purposes of safeguarding

Successful emergence from bankruptcy is critical to the continued operation and expansion of the ORBCOMM system.”). 19 Innovative Order at 14369, ¶ 19; Worldcom Order at 26503, ¶ 29; see also LaRose v. FCC, 494 F.2d 1145, 1146 n.2 (D.C. Cir. 1974) (in applying its policies where an application arises from bankruptcy, the Commission should consider “the public interest in the protection of innocent creditors”). 20 Connect America Fund, Petition of Hawaiian Telecom et al, Order, 33 FCC Rcd. 6208, 6211 (WCB/WTB 2018) (“Hawaii Telecom Order”); see also Connect America Fund, Petition of Sunset Digital Communications, Inc. Waiver of Section 54.314(b)(6)(iv) of the Commission’s Rules, Order, 34 FCC Rcd. 7010, 7015 (WCB, OEA 2019) (“Sunset Digital Waiver Order”).

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the integrity of the pre-auction review and qualification process do not require strict application

of the major change prohibition in these special circumstances, and . . . deviation from the

general rule is warranted.”21 The rule’s particular purpose of safeguarding the integrity of the

pre-auction review and qualification does not require strict application of the major change prohibition in these circumstances.

Moreover, application of the bar on the transfer of control of the applicant, under the special circumstances here, also would be contrary to the Commission’s policy of facilitating

auction participation. Granting Windstream’s waiver request offers public interest benefits that

would not be achievable through strict application of the Major Modification rule. The goals of

Auction 904 include promoting the deployment of high-speed broadband and voice services in

unserved communities for lower levels of relative support for the benefit of the public. These

goals would be “most effectively met by encouraging participation and avoiding unnecessary

disqualification.”22

Deviation from the rule in the circumstances described above would not undermine the

purposes of the rule prohibiting major modifications because there is a stronger public interest

benefit in granting the waivers than there would be in strict application of the rule.

* * *

For the reasons set forth above, the Office of Economics and Analytics and the Wireless

Telecommunications Bureau should grant a waiver on an expedited basis of 47 C.F.R.

§§ 1.21001(d)(4) and 54.315(b)(6)(iv) to allow Windstream to amend its Auction 904 short-form

application, when and as necessary, to reflect the consummation of Step One and any other

21 Hawaiian Telecom Waiver Order, 33 FCC Rcd. at 6211; see also Sunset Digital Waiver Order at 7015. 22 Id.

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changes that occur related to the Plan or the Transaction of its pending FCC application for consent to transfer control of licenses and authorizations held by Windstream and its affiliates, as debtors-in-possession licensees, to the same licensees, as non-debtors-in-possession.

Respectfully submitted,

John T. Nakahata Randall W. Sifers HARRIS, WILTSHIRE & GRANNIS LLP 1919 M Street NW Suite 800 Washington, DC 20036 (202) 730-1300 [email protected]

August 4, 2020 Counsel for Windstream Services LLC, Debtor-in-Possession

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