An ugly trend of rewarding those who break the rules is taking place in Washington. One need look no further than Congress, which appointed Newt Gingrich Speaker of the House after he admitted he gave false information to the House Ethics Committee.
The Federal Communications Commission is following suit with its conditional granting of PCS licenses to NextWave Telecom Inc.
I don’t want to quibble about what is equity and what is debt. The FCC already ruled NextWave’s foreign ownership exceeded the limits allowed by law.
But despite the fact that NextWave didn’t bid in the C-block auction under the same restraints as the other players, the FCC granted NextWave its conditional licenses, saying that doing so was in the public interest.
Huh?
PCS licenses were auctioned to bring the public wireless competition. It worked. Cellular carriers have been quick to lower prices. PCS winners are quickly invading cellular bastions. The people have choices. NextWave is not going to break or make wireless competition.
The real public interest is that NextWave is willing to pay $5 billion to the U.S. Treasury to own PCS permits. The public interest is that those licenses likely won’t fetch $5 billion in a reauction.
The damage is done.
Is anyone else appalled that NextWave didn’t have to play by the same set of rules as its competitors? Can you imagine how the “entrepreneurial” auction could have turned out if NextWave hadn’t had such a huge bankroll? People made major life changes to compete in that auction. John DeFeo quit a lucrative job at U S West to play. Steve Zecola left an executive job at MCI to try his hand at owning a PCS company. DeFeo’s and Zecola’s companies bailed out of C-block bidding when the prices got too high.
I could stomach this a little easier if the FCC had granted a little leniency (would another week have been too much?) to C-block winners that couldn’t make their initial down payments. But the FCC snapped back those licenses to reauction them. NextWave, on the other hand, has six months to comply with the law.
I have admired spunky NextWave. The company has the ability to spin wireless telecommunications on its ear. I wish it had played by the rules.
But my distaste is reserved for the FCC; those hired to uphold the rules. I don’t have the solution to this problem. Perhaps levying a large fine against NextWave is the best the public can hope for.
But I do know some PCS bidders are owed, at the least, an apology.
