Anyway you slice it, the Nextel-government-NextWave thing is weird.
Nextel Communications Inc. gets government approval to go after NextWave Telecom Inc. licenses, even though NextWave has no intention of giving up its licenses and has had significant victories in bankruptcy court in reducing its license payment from $4.7 billion to $1 billion.
The Federal Communications Commission isn’t talking. The agency says it can’t comment on the issue because it remains in bankruptcy litigation with NextWave. But while the FCC cannot talk to RCR, it obviously felt free to talk to Nextel about NextWave’s licenses.
There have been some rumblings within the commission that say the agency never gave Nextel permission to pursue NextWave creditors for licenses. But why did a Department of Justice spokeswoman (the DOJ represents the FCC in bankruptcy litigation) tell RCR it agreed to Nextel’s reorganization plan?
Further, Nextel is not known for issuing frivolous press releases. Nor does it have a reputation for jumping the gun with the media. The carrier must have felt pretty confident to take the news public.
Is the FCC so tired of getting beat in bankruptcy court on C-block licenses that it is losing sight of its own laws?
Nextel does not fall within the FCC’s guidelines for participating in the C-block auction. That auction was limited to entrepreneurs, those with less than $125 million in gross revenues and less than $500 million in total assets. Nextel in 1998 reported consolidated revenues of $1.85 billion and total assets of $11 billion.
Nextel has asked the FCC several times to change the rules so it could take part in the C-block auction and re-auction. Each time, the commission said no.
What changed?
The FCC must answer that question to regain its credibility among the carriers, entrepreneurs and others following these events.
While the FCC has charged bankruptcy litigation has corrupted the C-block auction process, it’s beginning to appear the government may be corrupting the bankruptcy process.
