WASHINGTON-Congress, in a move that has raised constitutional questions, is pushing legislation that would end entrepreneur block auction litigation and open the way for the sale of more personal communications services licenses in early December.
A provision in a House Commerce Committee plan to raise $14 billion from spectrum auctions over the next seven years would ratify competitive bidding rules that became race- and gender-neutral after the Supreme Court in June curbed affirmative action. Those auction guidelines, currently the subject of various lawsuits, would become the law of the land.
If enacted as part of a sweeping budget reconciliation bill, the entrepreneur block PCS auction would be required to be held by the Federal Communications Commission by Dec. 4.
“I think there are serious legal issues regarding whether Congress can overrule a pending stay by a federal court of appeals,” said Keith Harrison, a lawyer for Qtel Wireless Inc.
Qtel is a Michigan-based minority startup company that sued the FCC for dropping female and minority bidding credits in July. “I think there’s a separation of power issue,” said Harrison.
The U.S. District Court of Appeals for the District of Columbia Circuit stayed the entrepreneur block auction for a second time this year in late July when Omnipoint Corp., a Colorado Springs, Colo., firm with a pioneer’s preference PCS license in New York, challenged liberalized auction ownership rules that it argues would allow huge corporations to dominate an auction designed for small- and medium-sized firms.
“If they codify rules as they are, they’ll be codifying rules that created the big company front band,” said Douglas Smith, president of Omnipoint.
Several other lawsuits also have been filed and consolidated into one case. Oral argument is set for Sept. 28.
“We believe there’s a bigger issue here: It’s getting service to the public,” said Steven Zecola, president of Go Communications Corp., a well-financed startup firm that has lobbied aggressively to get the auction back on track.
Zecola noted there is a push to get similar language in the Senate budget reconciliation bill, legislation that serves as the foundation of the GOP-led Congress’ plan to balance the budget by 2002.
“I think moving forward is in everybody’s interest except Omnipoint’s,” added Zecola.
Smith said Omnipoint wants the auction to proceed.
New Wave LLC, Central Alabama Partnership L.P. and Mobile Tri-States L.P. jointly appealed revised auction rules that exclude revenues of firms affiliated with small businesses so long as total revenues do not exceed $125 million.
“My clients do not have a problem with proceeding to the auction quickly but they take issue with the proposal of Congress to ratify [new auction rules] without a deliberative study of the issues presently litigated at the court of appeals,” said Eliot Greenwald, an attorney for the three companies.
The FCC had high hopes of holding the entrepreneur block auction in late spring after completing in March the first broadband PCS auction, which generated $7 billion from AT&T Corp., Sprint Corp., the Baby Bells and others.
A court stay earlier this year was dissolved after Telephone Electronics Corp. dropped a lawsuit against the FCC once PCS PrimeCo L.P., winner of 11 PCS licenses, agreed to let the rural Mississippi telephone company offer next-generation digital pocket telephone service in the New Orleans-Baton Rouge market.
The entrepreneur block auction was originally conceived to comply with the desire of the then-Democratic Congress in 1993 to give preferential treatment to women, minorities, small businesses and rural telephone companies in auctions for advanced wireless technology licenses.
But the assault on affirmative action from the conservative-leaning Supreme Court and the GOP Congress, which gained control of both houses after last November’s midterm election, has largely obliterated the Democrats’ policy objective.
Entrepreneur block auction eligibility is limited to firms with less than $125 million in gross annual revenues. Small businesses, entities with less than $40 million in gross revenues, are entitled to a 25 percent bidding credit.
“This latest legislation is indicative of the kind of back-room politicking by high-priced lobbyists that has plagued these bidding rules from the start. We’re going to fight it,” said Harrison.
