WASHINGTON-The Federal Communications Commission received two rebukes from the Senate last week regarding the agreement its general counsel signed Aug. 10 that seemed to pave the way for Nextel Communications Inc. to buy personal communications services licenses held by NextWave Telecom Inc.
Also, notwithstanding a termination fee that would have to be paid to Nextel if the FCC were to terminate its agreement, an agency official said last week the commission would seek higher and better offers, which could include the same type of waivers that would have to be approved if Nextel were granted the NextWave licenses.
“The FCC can do whatever it wants” as far as waiving the designated-entity requirement, said an FCC official who declined to be named.
Currently, only small businesses are allowed to hold C- and F-block licenses. Nextel previously attempted to be granted DE status to participate in C-block auctions, but it was rebuffed by the FCC.
The C- and F-blocks were set aside for small businesses to comply with congressional wishes that small businesses be given access to PCS spectrum.
Officially, the FCC has had no comment on the entire matter, first claiming there was a court-imposed gag order and then saying it is a complicated matter that is still pending. “Very rarely do you have the FCC litigating in the press,” said FCC spokesman David Fiske.
The FCC’s attempt to broker a deal outside of the normal process is beginning to resonate on Capitol Hill. Sens. Ben Nighthorse Campbell (R-Colo.) and Robert G. Toricelli (D-N.J.) sent letters to FCC Chairman William Kennard expressing their concerns about the matter.
“The fact that the FCC’s senior legal officer has agreed to prejudge formal administrative law proceedings is astonishing. The agency’s institutional integrity will remain under a cloud until the [FCC] demonstrates that its decision must be made in accordance with the Administrative Procedure Act and other civil and criminal statutes that limit the boundaries of agency decision making,” said Campbell.
Campbell sits on the Senate Appropriations Committee and is expected to participate in FCC budget negotiations. Currently, the Senate version of the FCC budget bill includes language that would allow the FCC to take back licenses from bankrupt companies. The House version does not.
“I would hope that the FCC would strive to remain fair and impartial in making a decision of this significance,” said Torricelli.
Other wireless companies want to enter into negotiations with the FCC to buy the NextWave licenses if possible. Vodafone AirTouch plc sent a letter to FCC General Counsel Christopher J. Wright requesting information on the process.
Vodafone AirTouch “asks that you identify the person at the FCC to whom competing bids and proposals should be sent, and within what time frame such competing proposals are due in order to be considered by the FCC and [Department of Justice]. We also need to know the bases on which the FCC will judge between competing proposals that are `substantially similar’ within the meaning of that term as used in the term sheet,” said Brian D. Kidney, AirTouch Communications vice president for external affairs.
The FCC did not respond to the AirTouch letter. A spokeswoman for the FCC’s Office of General Counsel said that neither Wright nor his deputies were available for comment since they were out of the office.
The AirTouch letter follows a letter from the Wilkinson Barker Knauer L.L.P. law firm.
The Wilkinson letter was sent the day after the Nextel agreement came to light. The agreement, the letter said, “has created significant confusion within the wireless telecommunications industry. That announcement led several of our clients to raise questions about the processes followed to date, and to indicate interest in the procedures to be followed hereafter with respect to the ownership and control of the spectrum.”
Other companies repeatedly have attempted to obtain the same information over the telephone-all to no avail. The FCC official who spoke with RCR said the FCC is not negotiating with anyone and will not negotiate with anyone until or unless an exclusivity termination motion is granted.
Pocket bankruptcy?
In other C-block action, Pocket Communications Inc. is negotiating with Mark Feldman to try convince him to withdraw his motion to move DCR Inc. into Chapter 7 bankruptcy. DCR holds the licenses Pocket would need to sell as part of its Chapter 11 bankruptcy proceeding.
The Feldman motion is seen as an “outrageous additional burden” on Pocket/DCR as it is trying to emerge from bankruptcy, said Kenneth Irvin, an attorney for Pocket’s debtors-in-possession lenders.
Dan Riker, Pocket’s founder, said that its deal with the DiP lenders-Ericsson, Pacific Eagle Investments Ltd., Masa Telecom Asia Investment, and Siemens Information and Communications Network Inc.-is that it will not sell or otherwise use the 12 C-block licenses it holds until after the resolution of litigation that the DiP lenders have brought against the FCC. That litigation is expected to go to trial in November, Riker said.
Pocket has returned to the government all but 12 of the 43 licenses for which it bid more than $1 billion. Pocket was the second-largest winner in the auction.
