WASHINGTON-Language to allow the Federal Communications Commission to take back RF licenses from bankrupt entities has been stripped from the FCC spending bill being considered by Congress.
Legislation that would allow the FCC to take back the licenses of bankrupt companies was included in a Senate committee version of the FCC’s budget. Such language was not included in the version that passed the House.
Since time is short, lawmakers reportedly are skipping the Senate and directly negotiating all remaining appropriations bills with the White House. And since negotiations are sensitive, the Senate leadership has decided to drop the pro-FCC language.
This blow to the FCC comes as the agency late last week released the final list of licenses and minimum bid amounts it intends to auction Dec. 12. The list did not contain any surprise additions or deletions from previous notices and is made up largely of those licenses reclaimed from NextWave Telecom Inc.
While NextWave continues to aggressively lobby for language that would either allow them to keep the licenses outright or delay the auction until the litigation ends-a process that could take years-the wireless industry told members of Congress that no legislation is the best alternative. This is especially true if the language either postponed the auction or changed the rules to prohibit large carriers from participating.
Meanwhile, a source close to FCC Chairman William Kennard-in an attempt to assuage skittish members of Congress who believe the agency has been too hard on NextWave-said the chairman would like to see NextWave participate in the auction.
NextWave denounced any idea that it would participate in the re-auction.
“Participating in a re-auction is the furthest thing from NextWave’s mind. The company is committed to building out its spectrum licenses as soon as possible, and right now, the fastest route to accomplishing that goal appears to be through Congress and the courts,” said Michael Wack, NextWave deputy general counsel.
If NextWave wanted to participate, it would need at least one waiver from the FCC to exempt it from rules that prohibit entities with debts to the government to participate in auctions. Such a waiver would be subject to full commission approval.
Another unknown is whether NextWave’s backers or the bankruptcy court would allow NextWave to bid. NextWave’s backers have reportedly agreed that the company can spend as much as $6 billion for the spectrum. Merrill Lynch noted last month that it valued the bankrupt PCS licensee was valued at $18.5 billion.
While all of this action was occurring on Capitol Hill, the litigation surrounding the licenses continued.
Last Friday, parties opposed to NextWave requested that the U.S. Court of Appeals for the District of Columbia stay the auction until the appeals court has time to examine whether the FCC acted properly when it canceled NextWave’s licenses.
The Cellular Telecommunications Industry Association, joined by major wireless entities such as Verizon Wireless and AT&T Wireless Services Inc., told the D.C. Circuit in opposing the NextWave stay request that the bankrupt entity had failed to prove that a stay was warranted.
The FCC “has expressly conditioned the upcoming re-auction of the former NextWave licenses on the outcome of the NextWave litigation, and winning bidders will have their bid amounts refunded if NextWave’s licenses are reinstated. Moreover, a stay will not preserve an ongoing business because NextWave is in bankruptcy and its primary asset is the possibility its licenses may be returned as the result of the litigation. In addition, NextWave is not likely to prevail on the merits since its main argument is that the bankruptcy [code] should nullify the FCC’s enforcement of its payment obligation. Twice the U.S. Court of Appeals for the 2nd Circuit has reviewed this argument, and it has not been persuaded,” said the industry in its filing.
“We are confident the FCC’s actions (of canceling our licenses and scheduling a re-auction) will be found unlawful” by the D.C. Circuit, said Wack.
Also, the Supreme Court is expected to announce Tuesday whether it will hear oral argument on charges that the 2nd Circuit erred last year when it said that communications law trumped bankruptcy law.
