WASHINGTON-The Clinton administration, ratcheting up the debate with top telecom lawmakers
over C-block personal communications services policy, staunchly defended a proposal to enable the Federal
Communications Commission to swiftly recover licenses entangled in wireless bankruptcies.
“Spectrum is a
public resource, and licenses confer only the right to use the resource, not ownership,” said Jacob Lew, director
of the Office of Management and Budget.
Lew’s remarks came in a Feb. 5 letter to House Majority Leader Dick
Armey (R-Texas), House Commerce Committee Chairman Thomas Bliley (R-Va.), House telecommunications
subcommittee Chairman Billy Tauzin and ranking telecom Democrats John Dingell of Michigan and Edward Markey
of Massachusetts.
The lawmakers expressed concerns with the administration’s C-block PCS policy in a letter to
Lew on Jan. 27, days before the White House sent Congress its fiscal 2000 budget proposal. Clinton’s budget plan calls
for a change in the law to put creditors behind the FCC in wireless bankruptcies.
“The administration believes
that clarification of the status of the spectrum licenses, as we have proposed in the budget, will allow a more rapid
recovery of the licenses than costly, time-consuming litigation and (will) truly promote the expeditious deployment of
new services,” said Lew.
The five lawmakers, pointing to last year’s Texas bankruptcy decision forgiving
most of General Wireless Inc.’s billion dollar-plus debt associated with C-block PCS bids, accused OMB of not
accounting for the steep depreciation in C-block licenses since their auction by the FCC in 1995.
The administration
wants to avoid a repeat of the GWI situation by getting new legislation allowing the FCC to reclaim wireless licenses
before they get tied up in bankruptcy litigation.
Critics say the administration’s proposal would undercut licensees’
legitimate rights under bankruptcy law.
House members also told Lew the White House’s pursuit of bankruptcy
legislation is unwise.
GWI, NextWave Telecom Inc. and Pocket Communications Inc., whose PCS license bids
represent more than half of the $10 billion pledged in the 1995 auction, each subsequently filed for bankruptcy
protection.
The firms, among other things, claim the FCC’s mishandling of policy and licensing after the auction
contributed to the devaluation of licenses they bought.
Others, however, say the FCC is not totally to blame for the
startups’ financial woes. The massive infusion of PCS spectrum into the market, coupled with what some believe were
grossly inflated license bids, turned NextWave, Pocket and GWI into risky propositions.
The FCC, in this issue led
by Commissioner Susan Ness, twice rejected entreaties for a C-block bailout from House lawmakers and from former
FCC Chairman Reed Hundt.
NextWave, GWI and Pocket, for their part, aggressively have lobbied policy makers
for debt relief.
Last year, the House tried to pass a C-block rescue plan, but the initiative was killed by Senate
Commerce Committee Chairman John McCain (R-Ariz.), with help from established wireless carriers with cellular and
PCS holdings and the Clinton administration.
House lawmakers suspect the administration refuses to write down
revenue expected from C-block license sales in order to bolster arguments for bankruptcy legislation (reasoning
licenses could be swiftly resold in furtherance of competition) and against a bailout (reasoning a rescue plan would
shortchange tax payers).
Lew told House lawmakers OMB has factored into budget calculations lower anticipated
receipts from C-block PCS licenses, including those being reauctioned in March.
Critics claim OMB’s numbers are
still too high and do not reflect the huge loss in value of C-block PCS permits since the 1995 auction.
