WASHINGTON-The Federal Communications Commission will go forward with the C-block personal communications services auction and allow Radiofone Inc. and several others that had sought waivers of PCS-cellular cross ownership rules to bid Dec. 11, but vowed to challenge a recent federal appeals court decision that calls those rules into question.

In response, Radiofone is considering seeking another court injunction to keep the auction from going forward. Radiofone, a paging and cellular firm in New Orleans, said it is concerned that if it wins the New Orleans PCS license and the Nov. 9 appeals court decision is overturned, the FCC will force it to divest one of its two wireless telephony licenses. The firm wants to hold both licenses.

For that reason, Radiofone would like the court to force the FCC to address PCS-cellular cross ownership guidelines before the auction. But it is unclear whether the U.S. Court of Appeals for the Sixth Circuit in Cincinnati can stay the auction a second time.

The Sixth Circuit stayed the C-block auction Oct. 18, the third time a court has intervened to block bidding, but Supreme Court Justice John Paul Stevens vacated the stay a week later and the full court affirmed Stevens shortly thereafter.

“Radiofone will have to pull a legal rabbit out of a hat,” said FCC Chairman Reed Hundt.

The FCC earlier this month received nearly 400 applications for the 493 next-generation pocket telephone licenses being sold.

The Sixth Circuit said the FCC did not justify rules restricting cellular carriers, which use 25 megahertz, from bidding on 30-megahertz PCS licenses in their service areas.

To avoid excessive ownership concentration in wireless telephony markets, the two cellular operators in each market are limited to bidding on 10-megahertz licenses. No firm can hold more than 40 megahertz of PCS spectrum in a given market.

However, the court upheld the FCC rule limiting entities from holding more than 45 megahertz of paging, PCS, cellular and special mobile radio spectrum in any one market.

“They didn’t have a clear victory in this case,” said William Kennard, general counsel of the FCC. Kennard said the FCC likely will petition the full Sixth Circuit for a rehearing of the three-judge panel’s opinion. The agency also could ask the Supreme Court to hear the case. The least likely scenario has the FCC trying to reconstruct arguments in support of PCS-cellular cross-ownership rules before the Sixth Circuit.

In any event, the Sixth Circuit’s stunning ruling further complicates the long-awaited auction. The C-block auction was to be held in late May, roughly two-and-a-half months after the FCC sold 99 PCS licenses for $7 billion to Sprint Corp., AT&T Corp., the seven Baby Bells and others, but legal challenges to female and minority preferences and cellular-PCS cross ownership rules have kept bidding on hold.

FCC officials said the Sixth Circuit’s decision likely will not affect the results of the A- and B-block auction.

PCS-cellular cross ownership rules prevent Radiofone from competing for three Louisiana markets (New Orleans, Baton Rouge and Houma-Thibodeaux) in the upcoming small business PCS auction.

Radifone said it “has time and again reminded the Commission that the continued existence of small entrepreneurs rests on their ability to bid on PCS licenses in their cellular service areas” and “has repeatedly told the Commission that small businesses cannot actually engage in anti-competitive or unfair conduct in a marketplace dominated by megalithic telecommunications companies.”

In addition to ruling in favor of Radiofone, the Sixth Circuit ordered the FCC to re-examine rules challenged by Cincinnati Bell Telephone Co. that bars investors holding 20 percent or more interest in cellular carriers from bidding on 30-megahertz PCS licenses.

The court also said a requirement that Bell telephone companies set up separate subsidiaries for cellular service, but not for PCS service, should be reconsidered by the FCC.

In a related matter, the FCC said last week’s government-wide shut down will delay the Nov. 28-scheduled 900 MHz SMR auction at least three days.


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