WASHINGTON-Federal Communications Commission Chairman William Kennard denied improperly lobbying for legislation to prevent wireless licenses from becoming mired in bankruptcy litigation, but now-in a new flare up-has drawn sharp rebuke from two fellow regulators for effectively cutting off personal communications service in rural Kentucky by refusing to give Southeast Telephone Inc. more time to make an installment payment for licenses bought from the government.
“Let me assure you that I am not seeking to evade the jurisdiction of your subcommittee,” Kennard told House telecom subcommittee Chairman Billy Tauzin (R-La.) in an April 7 letter.
During a March 17 oversight hearing, Tauzin questioned Kennard about agency activities in connection with a Clinton administration bankruptcy proposal that would enable the FCC to swiftly retrieve licenses from bankrupt wireless firms.
FCC and Justice e-mails that surfaced in one bankruptcy case suggest staff from both agencies actively lobbied Congress last year for bankruptcy legislation.
In his letter to Tauzin, Kennard-without expressly denying lobbying allegations-said FCC support for bankruptcy legislation is well known and is amply documented since 1997.
Tauzin called Kennard’s response classic “Washington speak.” “He didn’t answer the question [about lobbying]. I know he supports the bill. He hasn’t come clean,” said Tauzin.
The bankruptcy initiative, which President Clinton included in his fiscal 2000 budget plan, runs directly counter to legislation unsuccessfully pushed last fall by Tauzin and a bipartisan group of influential telecom lawmakers.
Tauzin and others favor helping financially distressed C-block PCS operators that were poised to compete with major wireless carriers like AT&T Corp., Sprint Corp., AirTouch Communications Inc. and the Baby Bells.
Indeed, competition and widespread access to modern telecommunications are key themes in Kennard’s FCC program.
Senate Commerce Committee Chairman John McCain (R-Ariz.) and some established wireless players support Kennard’s hardline tack in dealing with bankrupt C-block firms.
However, if the administration’s bankruptcy proposal were to pick up traction this year, that could change. The measure is broad enough that all spectrum-dependent licensees-including paging, dispatch radio, cellular, PCS and broadcast operators-could lose basic bankruptcy rights and protection provided under current law.
The biggest beneficiaries of last year’s ill-fated bailout bill would have been NextWave Telecom Inc., Pocket Communications Inc.-supported by Tauzin and other House Commerce Committee members-and General Wireless Inc. The firms accounted for more than half of the $10 billion pledged by bidders in the 1996 C-block PCS auction.
Pocket, pointing to FCC bankruptcy bill lobbying in its bankruptcy case, accused the FCC of dealing in bad faith.
The FCC, for its part, desperately wants to avoid the catastrophic loss it suffered in GWI bankruptcy litigation when a Texas judge freed the PCS startup from having to repay most of the $1 billion owed to the U.S. Treasury.
Bankrupt C-block firms, for their part, argue the FCC is to blame for the devaluation of licenses. Moreover, they claim Clinton budget crunchers have been reluctant to acknowledge the diminished value of C-block licenses because doing so could undercut its case for bankruptcy legislation.
