WASHINGTON-The Federal Communications Commission late last week was close to approving a new plan to relax conservative parts of its C-block personal communications services debt-restructuring rules and to extend the election date for financing options by as much as 90 days beyond the current Feb. 26 deadline.
The commission has come under increasing pressure from Congress and financially troubled wireless start-ups to act on reconsideration petitions regarding four financial options in order to give C-block licensees and potential investors enough time to make informed decisions on retention, disaggregation or just plain give-backs of their permits.
Many of the larger bidders have taken issue with the amount of cash the FCC will allow on returned markets, either for use in the re-auction or to pay for other owned markets outright.
The agency refused to publicly comment on last week’s Wall Street Journal report that it will allow up to 70 percent of down payments on licenses returned to the FCC to be used to pay for retained markets and that it may allow bidders to choose multiple payment options for multiple market areas.
But FCC Chairman Bill Kennard released a written statement addressing the growing concern over the Feb. 26 election date. “The FCC is seriously considering affording C-block bidders more flexibility consistent with the options in the original C-block order,” said Kennard. “This will likely require the commission to move the election date. We want to make sure that the spectrum is put to work for the American consumer as soon as possible.”
A Kennard aide on Friday said the Wall Street Journal article was accurate.
The possible 70-percent plan is one that was backed by former FCC chairman Reed Hundt last fall, but opposed by other commissioners for being excessively generous to big bidders and undermining the integrity of the agency.
FCC Commissioner Susan Ness, who led the revolt against Hundt and supported very limited relief for overspent C-block licensees, continues to hold the line against a massive bailout.
But there are four new commissioners, including Kennard, and that changes the dynamics somewhat.
Commissioner Harold Furchtgott-Roth, a conservative Republican who was chief economist on the House Commerce Committee, is said to be in Kennard’s corner insofar as loosening debt restructuring within existing parameters.
Commissioner Michael Powell, a moderate Republican, shows signs of leaning toward Ness. Nevertheless, Powell and Democrat Gloria Tristani’s votes remain hard to predict.
From all accounts, there will not be a major departure from the existing debt restructuring plan. And unlike last year, debate within the FCC is said to be more collegial and less acrimonious than it was under Hundt.
Nearly all signs point to a change of the election date.
Industry insiders noted “there is now some basis for this logic.”
One source close to several C-block licensees told RCR, “The FCC cannot at this point not postpone the election date. It has been lobbied by large licensees and by Congress, and the only question now is if it will be 30, 60 or 90 days.”
The source also speculated that restructuring changes only will be “tweaks,” and that there will be no new notice of proposed rule making and no long-term deferral.
Large C-block licensees with financial troubles will welcome the flexibility that the commission reportedly will propose because they can choose one option-disaggregation, for example-in one market and full payment in another. The extended time frame also may allow some of them to negotiate for new financing.
Some smaller C-block PCS licensees are adamantly opposed to a rescue plan that rewards firms that overbid at the expense of those without financial problems that played by the rules from the start.
“There are no leaders in the regulatory world for the wireless industry,” said Carl Artman, president and chief operating officer of Airadigm Communications, a C-block operator in Wisconsin, which has vocalized in the past its opposition to the FCC’s restructuring plans. “Chairman Hundt and now Chairman Kennard have tried to take the lead, and when it looks like they are taking charge, they vacillate. This is harming the market, harming the operators and harming the consumers. Right now, the wireless industry is begging for regulatory leadership. None can be found.”
While refusing to forward an option on the possible FCC action, Kevin Christiano, a spokesman for NextWave Telecom Inc., told RCR, “We want commercially reasonable restructuring options. We want new competition. That’s what NextWave is all about.”
Corey Linquist, director of strategic planning for GWI PCS Inc., the third-highest bidder in the C-block auction that is now in bankruptcy, said a decision from the FCC would only work to its benefit if it addresses evaluation of licenses.
“We would have to see exactly what they (the FCC) say, but any movement that addresses the evaluation issue is a step in the right direction. If it doesn’t address evaluation, they’re simply arranging the deck of the Titanic,” he said.
Lynnette Luna, Jeffrey Silva and Debra Wayne collaborated on this article.
