A number of new licenses will be up for grabs early next year as the majority of C-block personal communications services licensees opted to return their licenses to the Federal Communications Commission.
The FCC said 175 licenses will be returned in full. Another 130 portions of licenses will be returned, giving the FCC a total of 305 licenses to re-auction.
These numbers include licensees that still have until tomorrow to refile their elections. A number of C-block licensees, including Omnipoint Corp., filed elections subject to certain conditions. The FCC rejected their filings as non-responsive and said it will not accept conditional elections. No other changes to the elections made on June 8 will be accepted, said the Wireless Telecommunications Bureau.
The FCC required C-block licensees by June 8 to elect one of four options that require licensees to either resume payments, disaggregate half of their 30 megahertz of spectrum, return licenses for debt forgiveness or bidding credit or make full payments for some of their licenses while returning others.
The top three C-block licensees-NextWave Telecom Inc., Pocket Communications Inc. and General Wireless Inc.-have sought bankruptcy protection. Pocket participated in the elections, opting to disaggregate and purchase some of its licenses with the credit system established by the FCC. Pocket’s election, however, is conditional and cannot be effective unless it either breaks off negotiations with the FCC and Department of Justice, the loan from the debtors-in-possession is not extended or if negotiations do not result in a settlement before Sept. 30.
GWI-which successfully reduced its license-value amount from more than $1 billion to $166 million in a recent bankruptcy ruling-not surprisingly elected to resume payments.
NextWave did not file an election. It lost its bid June 5 in U.S. Court of Appeals to stay the election and subsequently filed for bankruptcy, claiming the FCC’s delay in awarding the C-block licenses reduced the value of the licenses.
“It will be very interesting to see what happens to the licenses that are tied up in bankruptcy and how the FCC resolves the issue,” said Perry Walter, wireless analyst with Robinson-Humphrey Co. in Atlanta. “The bankruptcy proceedings could take a long time … That could impact the value of the remaining licenses.”
“The real story remains the bankruptcy issue,” said Mark Tauber, head of the communications group at Piper & Marbury L.L.P., a law firm in Washington D.C., which represents several C-block licensees. “The truth of the matter is that if GWI, NextWave or even Pocket are successful in reducing the value of their licenses, this gives tremendous marketplace advantage against those who paid the auction price. If the FCC isn’t successful in defending the auction process in court, it is going got have to do something retrospectively.”
The FCC said licensees that did not file an election will be treated as having elected to continue making payments under existing note obligations and are required to pay, by July 31, all unpaid interest accruing from the date of license grant through July 31.
Anishnabe Communications Enterprise Inc., which holds three basic trading area licenses in Michigan, and Southern Communications Systems Inc., which owns one license in Cleveland, Tenn., did not make an election.
Fortunet Communications L.P., which owns 31 C-block licenses, opted to retain 15 megahertz of spectrum in Tallahassee, Panama City and Oscala, Fla. It said it will receive $3.9 million back from the FCC for the remaining 28 licenses.
“The partners of Fortunet, including Lynch’s subsidiary, were extremely disappointed by the FCC’s restructuring options,” said a press release issued by Lynch Corp., 50-percent owner of Fortunet. “Lynch had taken in 1997 a $7 million pre-tax write-off, or $3.27 per share after-tax effect, relating to the investment.”
C blockers Aer Force Communications L.P., Fortunet Wireless Communications L.P., High Country Communications L.P., New England Wireless Communications L.P. and Southeast Wireless L.P. formed Fortunet last year.
ClearComm L.P., formerly PCS 2000, chose a mixture of options for its licenses. The company chose to give back 15 megahertz of spectrum in Merced, Modesto and Redding, Calif., and in San Juan and Mayaguez, Puerto Rico. Its remaining 10 licenses will go back to the FCC for re-auction.
21st Century Telesis chose to disaggregate and resume payments on all of its 17 licenses. The Cook Inlet/Western Wireless Corp. partnership will give back two licenses in Texas and disaggregate and resume payments on 11 licenses. Omnipoint announced in April plans to return portions of its spectrum outside of its Philadelphia major trading area and disaggregate its licenses within the MTA.
Airadigm Communications Inc., BRK Wireless Co. Inc., Carolina PCS 1 L.P., Southeast Telephone Inc., Urban Communicators-North Carolina Inc., Virginia PCS Alliance L.C. and Wireless Telecommunications Co., Comtel PCS Mainstreet L.P., Duluth PCS Inc., Pine Belt PCS Inc., Polycell Communications Inc. and St. Joseph PCS Inc. chose to resume payments on all of their licenses.
Very few licenses with more than 1 million pops will be returned to the FCC. Pocket’s creditors would like to keep and operate the Dallas and Chicago markets. Licenses for Detroit, Mich., New Orleans and St. Louis, Mo., also belong to Pocket. Their fate likely will not be decided until fall.
Other licenses with more than 1 million pops the FCC will re-auction include Hartford, Conn.; Salt Lake City, Utah; San Juan and Mayaguez; Memphis and Nashville, Tenn.; and Birmingham, Ala.
