WASHINGTON-As the Federal Communications Commission frantically prepared to re-auction 422 C- and F-block personal communications services licenses beginning tomorrow, the agency on Dec. 1 released the names of those planning to participate in the auction and those that had been rejected.
Of the large companies participating in an auction for licenses that were once reserved only for small companies, only Cingular Wireless L.L.C. seemed to be rejected from participating. This was a turnaround from Nov. 17 when the FCC sent back the applications of 66 companies, including AT&T Wireless PCS L.L.C, Cellco Partnership d/b/a Verizon Wireless, Leap Wireless International Inc., Nextel Acquisition Corp. and SprintCom Inc., saying they were incomplete.
Cingular’s rejection made headlines on the business wires, but the company was quick to clarify that it has struck a deal with Salmon PCS L.L.C. Salmon is claiming small-business status, which will give it a discount in the bidding. According to the FCC, Salmon has applied to bid on all of the licenses.
Salmon is owned by George Crowley, a long-time associate of SBC Wireless Inc.-the controlling entity in the partnership with BellSouth Corp. that created Cingular. SBC “acted as construction manager” of Crowley’s first cellular property in Tulsa, Okla., and also purchased four Midwestern cellular properties from Crowley in the 1990s, said Cingular spokesman Clay Owen. “He is a real player,” said Owen.
Cingular originally applied to participate in the re-auction, but later made the arrangement with Crowley. Applying was simply a way of protecting all of Cingular’s options, Owen said.
In addition to Cingular, another large carrier-AT&T Wireless-has made an agreement with Alaska Native Wireless L.L.C. AT&T has a 39-percent ownership stake in Alaska Native, an entity formed by three Alaska Native regional corporations-Arctic Slope Regional Corp., Sealaska Corp., and Arctic Slope Regional Corp.
AT&T Wireless spokesman Ken Woo confirmed AT&T’s investment in Alaska Native.
“Primarily we thought it was a good thing to do. They are a designated entity [small business] and will be involved in separate proceedings from us in the auctions,” said Woo.
Another Alaska native corporation, Cook Inlet, has a relationship with VoiceStream Wireless Corp.
Both Cook Inlet and VoiceStream plan to participate in the auction, according to the FCC. This runs in the face of a letter sent Nov. 30 from Sen. Ernest Hollings (D-S.C.), which raised questions about VoiceStream’s eligibility to bid in the auction, citing possible foreign-government-ownership problems.
Hollings said a $5 billion cash transfer from Deutsche Telekom AG to VoiceStream may run afoul of foreign-ownership rules which bar firms more than 25-percent owned by a foreign government from holding FCC licenses. The FCC has the discretion to waive the 25-percent rule.
Hollings unsuccessfully fought to cut off the waiver option this fall, upset that Deutsche Telekom-more than 50-percent owned by the German government-might compete against U.S. wireless companies that do not enjoy government subsidization.
Hollings asked the FCC to issue a declaratory ruling on the $5 billion DT investment in VoiceStream. A VoiceStream official said the $5 billion investment amounts to DT having an 11.5-percent interest in VoiceStream, not the 39-percent stake claimed by Hollings.
The FCC is preparing a response to Hollings but as of RCR Wireless News’ deadline, it had neither been sent to Hollings nor released.
Not participating in the re-auction are Northeast Communications of Wisconsin, Timberlake L.L.C. and Wireless Group L.L.C. All of these entities were listed on the Nov. 17 public notice but were not listed on the Dec. 1 notice. The main reason for this is probably that the companies did not make a timely upfront payment.
Beginning Tuesday, the FCC plans to auction 422 licenses mostly from NextWave. NextWave originally had 90 licenses but some of those licenses have been carved up to allow big players to bid on smaller chunks. The PCS C- and F-blocks were previously reserved for small businesses. Other reclaimed licenses and licenses unsold from previous auctions are also included.
Should the auction still be going as of Dec. 21, the FCC will halt the auction at the end of that day for the Christmas and New Year’s holidays resuming it on Jan. 4.
In other C-block action, the FCC on Nov. 27 reversed an earlier decision that rescinded a license-transfer approval for Lakeland PCS to sell its license for the Lakeland-Winter Haven, Fla., market to Leap Wireless.
Finally, in addition to the brouhaha over DT’s acquisition of VoiceStream, the FCC has also been recently enmeshed in another foreign-government-ownership controversy. This time involving Finnish-government owned Sonera Corp.
Sonera Corp. has a significant interest in Eliska Wireless Ventures I Inc. which is trying to acquire eight C-block licenses from DiGiPH PCS Inc.
The FCC’s Wireless Telecommunications and International Bureaus were apparently ready to grant the license transfers when the Department of Justice stepped in at the last moment citing national-security concerns. The Justice Department and the FBI then asked the FCC to hold off on granting the license transfers until Eliska/Sonera and DOJ/FBI could reach an agreement. That agreement, which allows for law enforcement access to Eliska’s networks in cases where national-security issues or public-safety issues are involved, was filed with the FCC last week.
All indications at RCR Wireless News press time were that the FCC would soon grant the application but at least one commissioner is not happy about the process.
“As the commissioner has said before, he is deeply troubled by the FBI’s handling of these matters,” said Bryan Tramont, legal adviser to FCC Commissioner Harold Furchtgott-Roth. “It ignores the timelines in the [Committee on Foreign Investment of the United States] CIFUS Act, disregards our deadlines, hijacks our process and holds the licensees hostage. We unfortunately delay our decision making to let it happen.”
