WASHINGTON-A NextWave Telecom Inc. plan that would defer interest payments for C-block personal communications services companies for five years was circulating last week on Capitol Hill. The plan would circumvent the Federal Communications Commission’s financial restructuring blueprint adopted in October via a rider attached to a bill that includes FCC funding for fiscal-year 1998.
Congressional sources did not give the proposal much hope, given the fact that Congress is scheduled to adjourn shortly, and the spending bill is on a fast track. Nevertheless, a NextWave lobbyist said the spending bill is only one of several vehicles the C-block licensee could use this year or next to get the issue before Congress.
NextWave originally floated a deal to defer interest payments on C-block PCS licenses earlier this year and the deal was included in a Congressional Budget Office report. It was shopped around in Congress again last week just prior to a House/Senate conference committee meeting scheduled for last Friday. If included in the language of the final Commerce appropriations bill, the plan could hamper at least one part the FCC’s restructuring decision.
While NextWave spokeswoman Jennifer Walsh said no one from her company was involved in this latest round of lobbying, she did say that the plan was a NextWave original. “NextWave’s deferral plan was part of a CBO report. We have not been invited to participate in the budget-making process,” Walsh added.
However, RCR has learned that a prominent Washington, D.C., law firm is lobbying for NextWave to secure legislative relief by way of a five-year interest-payment deferral. A source connected to the activity confirmed that influential members of Congress had been presented with the plan.
NextWave and the other top C-block winners Pocket Communications Inc. and General Wireless Inc.-both now in Chapter 11 bankruptcy-are unhappy with the FCC’s restructuring plan, as is former Chairman Reed Hundt, who favored the more sympathetic approach crafted by Reps. Billy Tauzin (R-La.), chairman of the House telecommunications subcommittee, and Ed Markey (D-Mass.).
If the conference committee can be convinced to include the deferral plan as a rider to its final package, C-block carriers will not have to make payments to the government for at least five years. And despite approving a four-option refinancing package, the FCC would have to drop those plans.
An aide to Tauzin said his boss had seen the plan but was “uncommitted” to it. Sen. Ted Stevens (R-Alaska), chairman of the Appropriations Committee, also had been approached by NextWave lobbyists on at least two occasions-the last by an evening phone call Nov. 5-“from a couple of guys from a law firm, asking could we help them out on C block.”
In an interview with RCR last week, FCC Commissioner Susan Ness, who successfully opposed Hundt’s more lenient debt-restructuring stance, said she does not favor revising the commission’s decision. At the same time, new FCC Chairman Bill Kennard indicated he was open to ideas to keep financially troubled PCS companies out of bankruptcy but did not elaborate further.
NextWave’s lobbying effort was made difficult not only by the controversial policy perspective of securing a more liberal bailout than the one authored by the FCC, but also by budget-scoring technicalities.
CBO initially said the C-block auction, given the financial problems of the largest winning bidders, would net only half of the $10.2 billion pledged for pocket telephone licenses. At the same time, CBO noted that NextWave’s interest-deferral plan would not make that shortfall worse.
However, White House number crunchers at the Office of Management and Budget were said to have projected that American taxpayers would take a $400 million hit if NextWave’s plan was incorporated into FY98 budgeting.
A NextWave lobbyist said late last week that OMB reportedly changed its tune, at least to the extent that NextWave’s plan would be budget-neutral if it were integrated into FY99 accounting.
OMB, for its part, is uncomfortable with C-block interest deferral plans floating around on Capitol Hill.
“We are trying to make it clear that these options are going to be expensive,” said Lawrence Hass, a spokesman for OMB.
Hass said OMB had been asked informally by congressional staffers to estimate the cost of such plans. Hass said if Congress were to agree at this time it could trigger across-the-board cuts in other programs, like Medicare, to pay for easing the financial burden on financially trouble PCS firms.
Hass said the administration wants the FCC, not Congress, to deal with the issue.
