WASHINGTON-Federal Communications Commission regulatory procedures and wireless privacy have been put under the microscope by a federal appeals court here, following lawsuits by wireless firms and a former House Republican leader.
Last week, FCC rules and processes were scrutinized by a three-judge panel in connection with the agency’s handling of specialized mobile radio licenses made available after the Federal Trade Commission shut down a fraudulent application mill in 1994.
Daniel R. Goodman (who was appointed by the government to receive 4,400 SMR licenses), Chadmoore Wireless Group, SMR Services Inc. and others-that either bought or contracted to manage freed up SMR licenses-challenged a 1998 FCC ruling that they said was confusing and irrational. The ruling effectively thwarted the companies’ abilities to build SMR systems and load them with mobile units.
“Why isn’t this a rule making?” Judge Douglas H. Ginsburg asked FCC lawyer Roberta Cook. She said SMRs were at fault for not constructing SMR systems, even if there were regulatory uncertainties.
Judges Ginsburg, A. Raymond Randolph and David B. Sentelle also pressed SMR firms to explain why they felt they had grounds to appeal the FCC ruling and how they were injured.
“So, has anyone been independently hurt?” asked Sentelle.
Rodney Glover, an attorney for Goodman, said SMR licensees suffered $800,000 in damages but was at a loss for words when asked simple questions by Randolph about the SMRs.
“The FCC set up all these categories [of SMRs that held application mill-related licenses] and wouldn’t tell anyone which one they were in,” said Martin Lobel, a lawyer for Chadmoore.
Lobel explained how the FCC first told Chadmoore their 640 licenses were legitimate, then abruptly informed the firm last October that only 20 percent were valid.
“We thought we gave a compelling argument. We demonstrated the fairness of our case,” said William Owen, a Chadmoore lobbyist.
The Goodman case, given its convoluted and seemingly never-ending nature, became a flash point last year when Senate Commerce Committee Chairman John McCain (R-Ariz.) singled it out in a letter chastising the FCC’s Wireless Telecommunications Bureau for massive regulatory gridlock.
Charges of FCC foot-dragging on SMR licensing come at time when small- and medium-size dispatch radio operators are trying to survive in a market increasingly dominated by Nextel Communications Inc.
It is uncertain when the D.C. appeals court will render a decision.
In a another case before the same court, the FCC is off the hook.
FCC off the hook
The FCC was accused by WebCel Communications Inc. of crafting a back-room deal that in 1997 awarded possibly $1 billion of licenses to Teledesic Corp., a broadband satellite venture bankrolled by high-tech billionaires Craig McCaw and Bill Gates, and to Teligent Inc., a wireless access firm run by former AT&T Corp. executive Alex Mandl.
Both firms have politically well-connected lawyers and lobbyists.
BellSouth Corp. also sharply criticized the FCC’s Teledesic-Teligent ruling, but chose not to appeal it.
House Commerce Committee Chairman Thomas Bliley (R-Va.) probed the FCC’s handling of the matter, but ultimately dropped it.
On April 28, the D.C. appeals court ruled WebCel lacked standing because it could not prove it was injured by the FCC giving Teledesic free access to the 18 GHz band and handing over 400 megahertz at 24 GHz to Teligent.
Due to an apparent licensing mistake by the FCC, Teledesic and Teligent were licensed on the same 18 GHz band. But the FCC-with Clinton administration input-decided the two firms couldn’t coexist on the same band because of potential interference to Teledesic and to U.S. spy satellites.
Teligent was lured away to the 24 GHz band with the promise of 400 megahertz and other concessions.
WebCel, among other things, argued the FCC should have arrived at a decision through a rule making rather than by executive fiat.
In a Nov. 26, 1996, e-mail message to the FCC, obtained last week by RCR, lawyer Scott Harris-a Clinton backer who resigned as FCC International Bureau chief in May 1996 and afterward came to represent Teledesic-suggested a solution to the problem and spoke to the rule making issue raised by WebCel.
“That leaves us, as far as I can tell, with 24 GHz. My government friends tell me they’ve offered us the spectrum we need,” Harris told Steve Sharkey, then acting chief of the Satellite Engineering Branch at the FCC. “That has to be the answer here,” said Harris.
“You can skip the rule making,” Harris continued, “you get to auction off spectrum you didn’t even have before (think of how you can spin that), and you protect the government satellite system. That sounds like a grand slam to me … You’ve just got to get Associated to agree-or move them whether they agree or not.”
Teligent was formerly known as Associated Communications L.L.C.
The FCC’s Teligent-Teledesic decision coincided with Harris’ recommendations. Indeed, with the WebCel lawsuit history, the FCC now is moving forward to sell-later this year or next year-licenses in the same 24 GHz band where Teligent received 400 megahertz free.
Free speech supreme
In another appeal heard by the D.C. Circuit on April 30, Rep. John Boehner (R-Ohio) challenged a lower court decision that said free-speech rights are supreme to the wireless privacy law.
That is a big problem for the wireless industry, which has expended lots of resources to get wireless privacy legislation only to find a huge loophole in the law.
Boehner, former House GOP conference chairman, sued fellow Rep. James McDermott (D-Wash.) on charges McDermott broke the wireless privacy law by leaking to the press a transcript of a 1996 conversation among House Republican leaders about how to deal with congressional ethics charges against then Speaker of the House Newt Gingrich (R-Ga).
The conference call, which Boehner participated in with his analog cell phone, was overheard on a radio scanner and tape recorded by a Florida couple.
If the D.C. circuit does not overturn the lower court ruling, the free-speech loophole will remain intact and result in a weakened wireless privacy law.
