WASHINGTON—The Federal Communications Commission said that it is returning 85 percent of the deposits made when the agency re-auctioned the PCS C- and F-block licenses originally won by NextWave Telecom Inc. and Urban Comm-North Carolina Inc. The total to be returned is $2.8 billion.
“The commission found that petitioners, many of whom are small businesses, may require access to their funds to continue to operate their businesses. At the same time, the commission must protect the integrity of [the re-auction] in the event the commission is ultimately successful in its litigation and a bidder subsequently defaults on its payment obligations. The commission therefore struck a public-interest balance between the hardship that would be imposed by continued retention of the down payments and the need to protect the integrity of the auction by authorizing refund of a substantial portion of the down payments,” said the FCC in a statement.
The $2.8 billion amount equals 3 percent of the bid totals each carrier made, said the FCC. Carriers must pay 3 percent of their bid totals if they default, added the agency.
The FCC also rejected Verizon Wireless Inc.’s petition claiming that the re-auction should be voided due to a federal appeals court ruling returning the licenses to NextWave.
“We have made no secret of our position that [the re-auction] is void. Now that the commission has announced its opinion about our position, we will look at options to resolve this difference of opinion,” said Jeffrey C. Nelson, Verizon Wireless’ executive director of corporate communications.
The U.S. Court of Appeals for the District of Columbia Circuit on June 22 said the FCC had erred when it canceled, reallocated and re-auctioned NextWave’s licenses for non-payment. The D.C. Circuit said the Bankruptcy Code protected NextWave’s assets.
The Supreme Court on March 4 agreed to hear the FCC’s appeal of the D.C. Circuit’s decision. Oral argument in that case is expected next fall with a decision in early 2003.
Finality of the case though is not expected unless the Supreme Court affirms the D.C. Circuit because the D.C. Circuit left many issues unanswered, which NextWave would be expected to appeal if the FCC wins at the appeals court. Such an appeal would start the Supreme Court cycle all over again.
In the meantime, the FCC stressed multiple times in its statement Wednesday that the re-auction winners are liable for their winning bids if and when the litigation is finally resolved to the FCC’s benefit.
