WASHINGTON-The impact on the federal budget of last month’s decision by a federal appeals court to overturn the reclamation and re-auction of bankrupt NextWave Telecom Inc.’s 90 PCS C- and F-block licenses was an undercurrent of Thursday’s Senate Appropriations commerce, justice, state and the judiciary subcommittee hearing.
Sen. Ernest Hollings (D-S.C.), chairman, seemed to indicate support for the actions of the Federal Communications Commission when Hollings said it was, in his opinion, in the public interest to place conditions on spectrum licenses. The FCC had argued unsuccessfully before the U.S. Court of Appeals for the District of Columbia Circuit that it was not subject to the automatic stay of payments in the Bankruptcy Code because the FCC was acting in its regulatory function when it said that full and timely payment was a condition to keep a wireless license.
Later talking to reporters, Powell said the NextWave story is not going to be over soon. “From my perspective getting these licenses-which also have [third-generation wireless] functionality-into the marketplace and used by someone who is really going to build a network and be able to finance the network and we will be able to see the benefit of that. We have a lot to figure out to see which path we think makes that happen and that is all I am trying to get done and it is hard,” he said.
This is likely to upset the highest bidder in the re-auction of NextWave’s licenses, Verizon Wireless, which bid $8.8 billion for the rights to use a large slice of the spectrum claimed by NextWave.
All of the bidders were warned before the re-auction that there was a cloud of legal uncertainty over the licenses until the completion of the litigation with NextWave.
A wireless consulting firm, MobileInfo, said the D.C. Circuit decision meant, “auction rules need to be redefined.”
In his written testimony, Powell mentioned the spectrum licensing process and its relationship with the federal budget.
“Our responsibility to auction the spectrum is a creation of the budget and appropriations process, and it currently represents both a mechanism for encouraging competition and a valuable source of revenue for the U.S. Treasury,” said Powell.
Powell requested $248.5 million for fiscal year 2002, which starts in October. The request is nearly an 8 percent increase over FY 2001 and will fund nearly 2,000 employees. The FCC expects to recover 88 percent of this money through the use of regulatory fees, which have been controversial since the Cellular Telecommunications & Internet Association says the wireless industry is unfairly assessed fees because it is the fastest growing segment of the telecommunications industry.
Powell received good news from Hollings who said he would push for the FCC’s full funding request.
Hollings’ comments came one day after the House Appropriations Committee passed its version of the FCC’s budget, which increased it by $9 million but did not approve the entire $18.5 million increase. The House Appropriations commerce, justice, state and the judiciary subcommittee, had expressed skepticism at the FCC’s request for an 8 percent increase when Powell appeared before them in May.
Nonetheless, Powell said the House Appropriations Committee’s action could mean that he will not be able to implement his new initiatives including his FCC University, which is his effort to keep the FCC staff up to date technically. The House’s action “removed all of the funding for new initiatives,” said Powell.
Also at the Senate appropriations subcommittee hearing, Powell said calls on wireless phones take calls from the wireline network so wireless phones can be considered a competitive alternative to wireline service.
