WASHINGTON-Although D-, E- and F-block personal communications services winner Mercury PCS II L.L.C. received most of its 32 licenses earlier this fall, the Federal Communications Commission withheld nine as it continued its investigation into bid-signaling charges brought against the company by High Plains Wireless L.P., a competitor for some of the same licenses.
Late last month, the commission fined Mercury $650,000 for violating the agency’s anti-collusion rules.
The $650,000 forfeiture represents $50,000 per inappropriate bid signal. Payment is due late next month. According to Mercury attorney Tom Gutierrez of Lukas McGowan Nace & Gutierrez, no money will change hands by the time this issue is resolved.
“This was a typical, results-driven decision by the former FCC chairman,” Gutierrez told RCR. “He was between a rock and a hard place. He had to decide whether there was no violation or if violations were widespread. He made an artificial distinction between us and many others who did the same thing in the same way.”
Gutierrez, in his Oct. 20 response to High Plains’ opposition to Mercury’s petition for reconsideration on this matter, also mentioned that Ken Iscol, a High Plains controlling principal, is a high roller in the Democratic Party, contributing more than $100,000 to Democratic causes during the past three years and rubbing elbows on the golf course with President Clinton during his Cape Cod vacation earlier this fall.
Whether there was a request from the White House to cite Mercury is unknown. High Plains had charged Mercury’s Mounger family with playing politics with this decision via their Republican contacts in the Capitol because some 27 congressmen wrote to the FCC on Mercury’s behalf.
Gutierrez will be filing his response to the commission’s decision before the Nov. 27 deadline. He said he also is considering asking the U.S. District Court for a trial de novo, in which the judges would hear the case without reading the past record.
The commission cited Mercury for using trailing numbers as a means of “sending a signal” to competitor High Plains to stop bidding on certain Texas F-block properties desired by Mercury. In its explanation, High Plains noted that once it stopped bidding on the Amarillo and Lubbock properties, the bid-trailing stopped. When responding to High Plains’ charges, Mercury told the commission that “the use of trailing number bids constituted nothing more than gamesmanship, `letting competitors know what is important to you so that they don’t respond destructively.’ “
Indeed, Gutierrez said he has lists of examples of other bidders in the auction who were using trailing numbers, that it was a widespread occurrence, and that Mercury’s use of them “did not constitute a communications of bidding strategy,” as the commission had charged in its order.
The FCC countered that “disclosing in any manner the substance of … bids or bidding strategies” was against commission collusion rules. Taking that at face value, according to Gutierrez, all bidders should be charged with collusion every time they place a public bid, because the numbers are “substance.”
The commission also mentioned its Dec. 20, 1996, warning against using trailing digits, even though it had made no determination on High Plains’ complaints. Gutierrez also mooted that argument by saying that Mercury had stopped using the trailers the previous month.
