WASHINGTON-Bankrupt NextWave Telecom Inc. insisted last week in meetings with industry, federal regulators and the press that it plans to build out its network, and further litigation only delays that from happening.
“For all practical purposes, this litigation has kept us in jail, kept the handcuffs on,” said Allen Salmasi, NextWave’s chief executive officer.
NextWave’s meetings came in the wake of the government’s announcement Aug. 6 that it will appeal to the U.S. Supreme Court the adverse opinion by the U.S. Court of Appeals for the District of Columbia Circuit that said the Federal Communications Commission erred when it canceled, reallocated and re-auctioned NextWave’s licenses.
“High Court review will protect the integrity of the FCC’s auctions program, which Congress has chosen as the best method of assigning scarce and precious spectrum resources to those that will put them to their most productive use. Through this appeal, I also hope the court will clarify how the important public policy goals of the Bankruptcy Code should interact with the equally important public policy goal of ensuring that spectrum is used for the benefit of the American people,” said FCC Chairman Michael K. Powell.
The FCC plans to file its appeal, known as a writ of certiorari, next month.
In addition, as expected, the FCC asked the D.C. Circuit to stay its mandate; in other words, not to order the FCC to return the licenses to NextWave. The court’s order to the FCC would have become final today without the request to stay the mandate.
The bankrupt carrier was not amused by the FCC’s actions. “The FCC has decided to extend its litigation efforts and impede yet again NextWave’s construction of the first nationwide [third-generation] wireless network. Those efforts have accomplished nothing to date except to delay substantially the availability of next-generation wireless services to consumers across the country. It is past time for the FCC to stop its legal delaying tactics and return the licenses to NextWave Telecom, as instructed by the Court of Appeals. The court’s decision confirmed that NextWave’s efforts to commercialize its licenses should not have been halted by the FCC. The FCC continues to unfairly penalize consumers who want access to advanced 3G telecom services that NextWave Telecom will provide. … The company will oppose all efforts to block the buildout of its advanced 3G network,” said Michael R. Wack, senior vice president and deputy general counsel.
The FCC said the stay was necessary to keep NextWave from emerging from bankruptcy. NextWave is set to disclose its financing on Sept. 12. If the appeals court refuses to stay its mandate-an unlikely proposition-NextWave could emerge from bankruptcy this fall.
If that were to happen, the FCC would find itself in the same position it found itself in the bankruptcy case of Metro PCS, formerly General Wireless Inc. In that case, the appeals court refused to reverse the lower court’s decision reducing Metro’s installment payment obligation because the company had emerged from bankruptcy. The Supreme Court also refused to take the case.
If NextWave was to emerge from bankruptcy “before the Supreme Court finishes its review of the matter, the government could again find itself unable to challenge the plan, thus making the licenses NextWave’s permanently and eliminating the government’s ability to secure Supreme Court review. That outcome would have significant prejudicial effects on the government. It would as a practical matter remove the government’s ability to ask the Supreme Court to review the matter. It would violate what the commission views as substantial public policy interests in ensuring that auction participants pay their bid prices in full and on time, and would result in spectrum licenses being held by a party that has failed to fulfill license conditions,” said the Department of Justice, filing on behalf of the FCC.
The FCC’s stay request gives several clues to the arguments it will present to urge the Supreme Court to hear the case by contradicting the D.C. Circuit’s June 22 decision in several instances, mostly with respect to what it calls the integrity of the auction process.
The Supreme Court is expected to make a decision on whether to take the case before the end of the year. Oral argument then would be scheduled for 2002 with a decision expected by summer.
