WASHINGTON-The Supreme Court has paved the way for the PCS entrepreneur block auction to begin Dec. 11, but bidding for 493 next-generation pocket telephone licenses could be postponed once again if the U.S. Court of Appeals for the Sixth Circuit in Cincinnati strikes down spectrum cap rules between now and then.

FCC Chairman Reed Hundt does not expect that to happen.

“Justice Stevens was aspiring to communicate very directly to the Sixth Circuit what would happen to a negative ruling by them … namely he was trying to say `let the auctions go forward,’ ” said Hundt.

Justice John Paul Stevens Oct. 25 vacated the stay of the C-block auction issued a week earlier by the Sixth Circuit, saying his action would not prevent that appeals court from granting “appropriate relief in the event that the respondent overcomes the presumption of validity that supports the FCC regulations.”

Stevens added that “the harm to the public caused by a nationwide postponement of the auction would outweigh the possible harm” to Radiofone Inc., whose challenge to rules that prevent cellular carriers from bidding on 30 megahertz PCS licenses in markets they already serve could be decided any day by the Sixth Circuit in view of today’s short-form application filing deadline for the auction.

Up-front payments, which determine how many markets bidders are eligible to vie for at any one time, are due Nov. 27.

The spectrum cap rule keeps Radiofone, which operates one of the two cellular systems in New Orleans, from bidding on three broadband PCS licenses in Louisiana. The intent of the restriction is to prevent excessive ownership concentration in wireless telephony markets.

Radiofone’s petition to overturn the Stevens’ order was rejected by the Supreme Court. But while the stay has been lifted and it appears the C-block auction is back on track, an adverse ruling on the spectrum cap issue by the Sixth Circuit-which already has signaled support for Radiofone’s cause-could cause the Dec. 11 date to slip and add yet another twist to the surreal odyssey of an auction originally scheduled for late May, or roughly two-and-a-half months after AT&T Corp., Sprint Corp., the Baby Bells and others paid $7 billion for 99 next-generation pocket telephone licenses.

The entrepreneur block auction, which is geared to small businesses, has been held up three times by court injunctions.

“In this environment,” argues Radiofone in reference to how big firms dominated the first broadband PCS auction, “there is simply no reality to the notion that permitting Radiofone to operate both as a cellular licensee and a PCS licensee in a particular market would be anti-competitive.”

Hundt conceded that while the FCC might prevail on spectrum caps if the issue were revisited by the high court, the litigation itself could further delay the auction.

Yet he maintains that Stevens’ order “is a vote of confidence for our entire auction procedure and that it greatly strengthens the likelihood that we will be able to do auction rulemakings and conduct auctions on a very prompt schedule in the future.”

In addition to the Radiofone appeal in the Sixth Circuit, FCC auction rules are also under attack in the U.S. Court of Appeals for the District of Columbia Circuit.

That court in late September dissolved a previous stay of the C-block auction and affirmed bidding rules that were made race-and gender-neutral after the Supreme Court reined in affirmative action last June.

The Sixth Circuit case has taken several curious turns. The court denied Radiofone’s request for a stay of the auction in June, but last month with two new judges on the case the court invited Radiofone to renew its stay request when apprised during oral arguments of the D.C. Circuit’s action. Radiofone did so at that time, despite not having filed any formal request of that nature, and the court entered a stay Oct. 18.

When the FCC sought reconsideration of the Sixth Circuit’s stay order, the court turned the agency down in a matter of hours. That the Sixth Circuit did not immediately reject Radiofone’s appeal after Stevens vacated the stay could signal that the lower court is deciding whether to exert its independence on the issue.


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