WASHINGTON-Radiofone Inc., in what amounts to a new stay request, wants the U.S. Court of Appeals for the Sixth Circuit in Cincinnati to decide whether the Federal Communications Commission is breaking the law by holding the C-block personal communications services auction before re-examining PCS-cellular cross-ownership rules struck down by the court last month.
Despite the Nov. 9 ruling that the FCC didn’t justify cellular-PCS cross-ownership rules, the agency plans to hold the auction Dec. 18 and allow Radiofone and several other applicants that had sought waivers of those rules to bid pending the outcome of further litigation and regulatory proceedings.
“By allowing Radiofone to participate in the auction, the FCC has fulfilled both the letter and spirit of the court’s Nov. 9 opinion,” the commission told the court. “There is no need to `clarify’ the opinion by turning it into a stay of the auction.”
But Radiofone is leery about entering the C-block auction with the lawsuit unsettled, particularly in light of the prospects of being forced to sell one or more PCS licenses or being penalized if cellular-PCS cross-ownership rules are upheld later.
“Radiofone hopes that the C-block auction can go forward as soon as a clear set of rules is finalized by the commission and the shadow of uncertainty created by the commission’s response to the Sixth Circuit decision has been removed,” said the firm in a prepared statement after filing its Nov. 17 motion with the court. Radiofone asked the court to find the FCC in contempt if it determines the agency should have addressed the cross-ownership rules before proceeding with the auction.
The FCC said it plans to “vigorously defend” auction rules challenged by Radiofone, a family-owned cellular and paging firm in New Orleans.
Until now, the cellular-PCS cross-ownership restriction prevented Radiofone from bidding on digital pocket telephone licenses in the Louisiana markets of New Orleans, Baton Rouge and Houma-Thibodeaux. Yet Radiofone’s interest in PCS is far from parochial; the firm has applied for pocket telephone system licenses throughout the country. The FCC asserts Radiofone has misrepresented itself as a small company interested primarily in bringing PCS to its existing cellular service area in New Orleans.
In all, the FCC received applications from 377 firms for the nearly 500 PCS licenses that will go on sale in two weeks unless the Sixth Circuit holds up the C-block auction and forces the FCC to address shortcomings it found in bidding regulations.
The auction was to be held next Monday, but last month’s week-long government shutdown pushed the date back to Dec. 18.
“The delay is killing us,” laments GO Communications Corp. President Steven Zecola, whose well-financed start-up firm is expected to be among the most aggressive bidders in the C-block PCS auction. American Personal Communications launched the nation’s first PCS system, marketed as Sprint Spectrum, last month.
FCC General Counsel William Kennard said the FCC is likely to seek a rehearing of the Nov. 9 cellular-PCS cross-ownership decision before the full Sixth Circuit and, if unsuccessful, appeal the case to the Supreme Court.
The high court in October affirmed Supreme Court Justice John Paul Stevens’ decision to vacate the stay of the C-block PCS auction imposed by the Sixth Circuit on Oct. 18.
The auction, designed for small businesses, has been delayed since last spring because of lawsuits challenging female and minority bidding credits first and, now, cellular-PCS cross-ownership rules. The cross-ownership issue also is before a federal appeals court in the nation’s capital.
The field of competitors in the entrepreneur block auction is expected to narrow following the Dec. 1 filing of upfront payments that can run well into the millions of dollars.
Battling GO Communications will be other tough competitors like U.S. AirWaves Inc., DCR Communications Inc., NextWave, General Wireless, Telecorp, National Telecom Inc., U.S. Intelco, Cook Inlet and Omnipoint Corp.
National Telecom has asked the FCC not to allow Radiofone to bid conditionally or to let bidders whose applications initially found incomplete compete in the C-block auction.
The FCC normally forbids 25-megahertz cellular carriers-including investors holding 20 percent or more in mobile telephone systems-from bidding on 30 megahertz PCS licenses in markets they serve because there is a 40 megahertz PCS spectrum cap.
But cellular companies can bid on 30-megahertz PCS licenses outside their geographic service areas and on 10-megahertz licenses in their territories that will be sold next year. Now, as a result of the Sixth Circuit’s order, the FCC will conditionally permit some cellular operators to bid on 30-megahertz PCS licenses in their existing service areas.
What complicates the Sixth Circuit’s ruling is the court struck down the 40-megahertz PCS spectrum cap, but upheld a separate spectrum cap that restricts a company from holding more than 45 megahertz of commercial mobile radio services like paging, PCS cellular and specialized mobile radio. That gives the FCC confidence the Sixth Circuit ruling can be overturned since, under the 45-megahertz cap, cellular carriers would exceed that ceiling if they acquired 30-megahertz PCS franchises.
The cellular-PCS cross-ownership restriction, which derives from the spectrum caps, is designed to foster competition in a fast-growing wireless telephony market controlled by the two cellular carriers in each market and dominated by AT&T Corp., the Baby Bells, AirTouch Communications Inc. and GTE Corp.
These same telecommunications giants-and now Sprint Corp.-also are expected to call the shots in the PCS business after picking up more than half the 99 next-generation digital pocket telephones sold earlier this year for $7 billion.
