WASHINGTON-After weeks of refusing to publicly explain its deal with Nextel Communications Inc., the Federal Communications Commission is being forced to tell all to the top House telecommunications policy maker by Sept. 27.
Rep. Thomas Bliley (R-Va.), chairman of the House Commerce Committee, sent a letter Thursday to FCC Chairman William Kennard expressing his concern over a letter signed Aug. 10 by FCC General Counsel Christopher Wright, saying Wright and other FCC staff would recommend Nextel be able to buy spectrum licenses that bankrupt NextWave Telecom Inc. won at auction.
“I strongly believe that the FCC’s decision-making processes should always be conducted in a transparent and public manner … I am growing increasingly concerned by what appears to be a pattern at the FCC of engaging in closed-door deal-making with private parties on matters that affect the public interest. Unfortunately, this latest Nextel `agreement’ seems to be more of the same,” Bliley said.
Under the deal brokered between the commission and Nextel, Nextel would pay $2.1 billion for NextWave’s 95 personal communications service licenses-which is substantially more than a bankruptcy judge in New York said the licenses were worth, but far less than the $4.7 billion NextWave bid in 1996.
Currently, only small businesses are allowed to hold C- and F-block licenses. Nextel previously attempted to be granted designated-entity status to participate in C-block auctions, but was rebuffed twice by the FCC.
The C- and F-blocks were specifically set aside by the FCC for small businesses to comply with congressional wishes that smaller companies be given access to PCS spectrum.
Bliley’s letter requires Kennard to provide the following information by Sept. 27:
1. Please identify by name and title the FCC staff who engaged in discussions with Nextel concerning its proposed reorganization plan, and indicate who among such staff agreed to recommend to the FCC that it accept and agree to support the resolution of the NextWave cases as proposed by Nextel.
2. Please state whether you or any other commissioners were consulted about this apparent agreement by FCC staff prior to the Aug. 10 letter to Nextel, and if so, please state whether you or any of the other commissioners granted or indicated their approval of such action.
3. Please state whether the FCC staff and/or commissioners identified in response to Questions 1 and 2 above will be excluded from (or will be required to recuse themselves from) formal commission consideration of any further Nextel petition to transfer NextWave’s licenses, as contemplated by the Nextel-proposed reorganization plan for NextWave. If not, please explain why.
4. Please explain the merits of the underlying decision by FCC staff to agree to support the transfer of NextWave’s licenses to Nextel, and implicitly a waiver of the small business eligibility requirements for such licenses.
5. Please provide all records relating to the FCC’s consideration of matters relating to the NextWave bankruptcy proceeding and the status of its spectrum licenses.
6. Please provide all records relating to the FCC’s consideration of the Nextel-proposed reorganization plan of NextWave, including but not limited to all records relating to communications with respect to such matters between the FCC and the Department of Justice, and Nextel.
Two parties, the Cellular Telecommunications Industry Association, and Vodafone AirTouch plc, said the information was essentially the same as they sought in separate letters sent to the FCC.
The FCC believes Bliley will find nothing wrong.
“This matter is in the courts. We will of course respond to Rep. Bliley’s inquiry. We have full confidence in our process and our people,” said an FCC spokeswoman.
The FCC has refused to explain why Wright signed the Nextel letter, which included a bankruptcy term sheet that gives Nextel either the right to buy the licenses or a termination fee of at least $15 million if the FCC chooses another buyer. The new buyer would have to pay the fee to Nextel.
With the exception of one FCC official saying that other non-designated entities also would be allowed to submit proposals for the NextWave licenses, the FCC has yet to say what process led up to the Nextel offer or how it would proceed from here. At one point, the FCC said there was a court-imposed gag order, but that was later found to be false.
Meanwhile, what Congress-and Bliley-do with Kennard’s answers could be significant because there is language in the Senate version of the FCC spending bill that would allow the agency to take back licenses in bankruptcy. The language was not included in the House version after Bliley and others protested. The issue will be debated in a conference committee between the House and Senate.
