Having returned from Cape Cod and read about the ill-fated hostile takeover attempt by Nextel Communications Inc., the Federal Communications Commission and the Justice Department, I got to thinking: Had FCC Chairman Bill Kennard become Melville’s Ahab, so obsessed with catching NextWave Telecom Inc. (and recovering a whale of a lot of money that doesn’t exist) that he would take the agency down with him in disgrace?
“The firm tower, that is Ahab; the volcano, that is Ahab; the courageous, the undaunted, and victorious fowl, that, too, is Ahab; all are Ahab; and this round gold is but the image of the rounder globe, which, like a magician’s glass, to each and every man in turn but mirrors back his own mysterious self,” Ahab soliloquizes.
And auction money, is that the FCC?
How else to explain the bizarre coup gamble by FCC General Counsel Chris Wright, Associate Attorney General Raymond Fisher and Nextel attorneys as NextWave emerges from bankruptcy reorganization?
For sure, the FCC wants to recoup as much of the $11 billion pledged for C-block licenses as possible. Good luck. The agency will collect only a fraction of it. But so what? Money was never supposed to be the point.
The 1993 auction law and the 1996 telecom law were designed to promote diversity and competition.
Competition? Wireless licenses are heavily concentrated among AT&T, Baby Bells, GTE, Sprint and AirTouch. Meanwhile, many start-ups-squeezed by heavy auction debt and competition from incumbents-likely will go belly up in coming years. Is that why Big Wireless wants the spectrum cap removed?
The industry could use a vibrant NextWave with a national resale strategy-one that opens up opportunities for women, minorities and small businesses. Oh, hell, who am I kidding. MCI WorldCom would be the big winner as a reseller, and might even better Nextel’s $2.1 billion offer for NextWave. Again, so what?
I know about narrow wiggle room in the Nextel term sheet for competing NextWave offers. But why now, at this very moment, is the self-proclaimed small business FCC suddenly rethinking designated-entity waivers?
Try revenge-against NextWave.
The FCC no doubt despises NextWave for making a bloody mess of its beloved auction program. One lawyer called the FCC-backed assault on NextWave a “regulatory hate crime.”
Still, a bigger question in all this: Were laws broken?
That the FCC would collude with Nextel is interesting in view of allegations against the wireless firm for heavy-handed and misleading marketing, refusing to resell and violating a 1995 antitrust consent decree.
For that, the FCC has slapped Nextel on the wrist, and allowed it to acquire private wireless spectrum. But then again, when Nextel buys licenses, it pays up promptly.
Justice, for its part, has rewarded Nextel with a sweet deal to increase its 900 MHz holdings today and perhaps recapture Geotek’s SMR holdings next fall.
The dark necessity of this crazed pursuit of NextWave is bound to further entangle an already embattled FCC chairman. Whether it takes Kennard and his ship down remains to be seen.
