WASHINGTON-Federal Communications Commission Chairman Bill Kennard responded March 30 to a congressional letter questioning the commission on its recent C-block personal communications services financial-restructuring reconsideration order and on its pending deal with one bankrupt C-blocker’s creditors.
Reps. Thomas Bliley (R-Va.), Billy Tauzin (R-La.) and John Dingell (D-Mich.) conveyed their concerns that the reconsideration order did not go far enough, that all problems were not resolved and that the FCC was wont to give preference to one player over another without instituting parity.
With the reauction date of C-block licenses now looking like February 1999, the commission left some issues on the table, such as attribution and control-group rules, Kennard wrote. The commission plans to address those items by next month, perhaps by the next open meeting May 14. “This would ensure adoption of the rules well in advance of the election date and would therefore allow C-block licensees to make business decisions with full knowledge of the governing rules,” Kennard explained.
In addition, the Wireless Telecommunications Bureau will release several public notices this month “explaining every aspect of the [C-block restructuring option] election process,” in which the Justice Department also plans to “play a significant role.”
Regarding the commission’s proposed plan to sell bankrupt Pocket Communications Inc.’s Dallas and Chicago major trading areas to its creditor group, which includes Siemens AG and L.M. Ericsson, while retaining Pocket’s other licenses in lieu of payment, Kennard told the congressmen, “It is important to recognize that it is not a desirable outcome for the Pocket licensee, which-having already entered bankruptcy at great personal and professional expense-will now leave the wireless telecommunications business entirely.” All government participants want to reiterate that the Pocket transaction is no incentive for bankruptcy, and Kennard believes no one will use Pocket as an example.
“The commission will require that the new operator of the Pocket licenses meet all of the rules that are applicable,” he continued. “Second, internal analysts and outside financial advisers tell us that this proposal actually has a higher financial value to the government than Pocket’s most feasible option under our C-block rules. Moreover, the proposal contains certain restrictive provisions, favorable to the government, which are not employed under our C-block approach … Other creditors who decide to force their licensees into bankruptcy will find that this is a costly and time-consuming process with no sure outcome.”
Finally, Kennard pointed out that he expects a better offer to appear for Pocket’s licenses before the May cutoff date, at which time the government will “apply the same standards to them as were applied during the negotiations with the Pocket creditors” before a final decision is made.
