WASHINGTON-House Majority Leader Dick Armey (R-Texas) and a bipartisan coalition of top
telecom lawmakers last week urged the Clinton administration to revise estimated receipts from C-block personal
communications services license sales to reflect their depreciated value, and warned the Federal Communications
Commission against continuing to lobby for legislation that would allow regulators to swiftly retrieve wireless licenses
of bankrupt firms.
The Jan. 27 letter to Office of Management and Budget Director Jacob Lew was signed by
Armey, House Commerce Committee Chairman Thomas Bliley (R-Va.), House telecommunications subcommittee
Chairman Billy Tauzin (R-La.), ranking House Commerce Committee minority member John Dingell (D-Mich.) and
Rep. Edward Markey (D-Mass.), ranking minority member of the telecom panel.
The timing of the correspondence,
coming as OMB was putting the final touches on the fiscal 2000 budget President Clinton sends to Congress today,
added a dash of drama to the stern 3-page letter that appeared aimed as much at OMB as at the FCC.
“Despite
the substantial reduction in indebtedness ordered by the bankruptcy court in Texas, the bankruptcy filings by other
large licensees, and the return of licenses to the commission, OMB re-estimates do not yet reflect the level of receipts
that the government will receive from the C-block licensees,” said the lawmakers.
Behind highly technical
questions in the letter about OMB’s obligations under the Federal Credit Reform Act and OMB Circular A-11
requirements, there is a suspicion within Congress that the administration is politicizing the budget process to further its
wireless telecom agenda.
Congress and the administration have been at constant odds over how to revamp the C-
block PCS repayment schedule in light of bankruptcies and financial troubles that nearly wiped out the $10.2 billion
pledged to the U.S. Treasury in the FCC auction that ended in May 1996.
NextWave Telecom Inc., General
Wireless Inc. and Pocket Communications Inc., which accounted for $6.6 billion in the C-block PCS auction,
subsequently filed for bankruptcy protection.
Early on, Bliley, Dingell, Tauzin and Markey expressed support for
liberal relaxation of the C-block PCS repayment schedule in hopes of furthering wireless competition, but the FCC-led
by Commissioner Susan Ness-twice approved only modest relief for financially strapped start-ups.
Having failed to
convince the FCC, the House lawmakers pushed through C-block bailout legislation, which was rolled into the omnibus
budget bill last fall. However, that effort failed.
The significance of the lawmakers’ emphasis on budgetary scoring
of C-block PCS licenses at this time is this: By putting a high dollar value on the licenses, the administration
succeeded in undermining the House lawmakers’ C-block bailout bill and bolstered its case for bankruptcy legislation,
which would be devastating to struggling C-block licensees.
By getting the administration to officially lower the
revenue it expects to receive from C-block license sales, the White House and the FCC effectively would be admitting
that a Texas bankruptcy court was correct in finding that GWI’s licenses had lost 84 percent of their value from the time
they were originally bid on.
In addition, a lower valuation of C-block licenses by the government could help
NextWave’s bankruptcy case against the FCC (the trial begins April 19 in New York) and possibly even open the way
for the reintroduction of new C-block bailout legislation.
In the letter, the House lawmakers chastised the
administration for pushing legislation they said retroactively would have stripped C-block licensees of their bankruptcy
rights.
“The bankruptcy proposal would have spawned litigation which would further delay the delivery of
service to the public, tilt the competitive landscape in favor on incumbent service providers, and frustrate our national
policy of encouraging the deployment of new services,” the lawmakers stated.
Yet, Ari Fitzgerald, wireless
adviser to FCC Chairman William Kennard, told RCR recently the president’s budget will include the bankruptcy
initiative.
Given that the House letter went out just days before today’s release of the new Clinton budget, it is
unclear whether any changes were made to C-block PCS license scoring or to the bankruptcy proposal.
