NEW ORLEANS-The Federal Communications Commission will decide by early April whether to restrict bidding in the scheduled re-auction of personal communications services C- and F-block licenses to small businesses-known as designated entities-and those who do not exceed the spectrum caps, top FCC staffers told attendees at last week’s CTIA Wireless 2000.
“The chairman’s goal is to resolve that issue before people have to file short forms for 60-69,” said Ari Fitzgerald, wireless legal adviser to FCC Chairman William Kennard.
Short forms for the 700 MHz auction-sometimes referred to as 60-69, due to its place on the TV dial-are due on April 10.
Such a deadline, when the comment cycle just closed last week, is pretty burdensome, said Thomas Sugrue, chief of the FCC’s Wireless Telecommunications Bureau, but the FCC cannot stall the 60-69 auction due to a congressional mandate and feels it must re-auction the C-and F-block licenses because it has reclaimed them.
“I don’t know how the [FCC], having reclaimed the licenses, can sit on them,” Sugrue said.
The FCC announced on Jan. 12 that it was canceling NextWave Telecom Inc.’s 90 C- and F-block licenses and would re-auction them on July 26. It later said the licenses actually canceled in late 1998 or early 1999. The FCC based its actions on a Dec. 22 opinion from the U.S. Circuit Court of Appeals for the Second Circuit saying bankruptcy law could not be used in the licensing and regulating of spectrum governed by communications law.
When the FCC announced it was re-auctioning the NextWave licenses, Nextel Communications Inc. filed a petition to hold an auction that would allow one company to bid on a portion of all of the licenses at once. In Nextel’s “bulk-bidding” proposal, the FCC would split NextWave’s 63 C-block licenses into two blocks-one of 20 megahertz and one of 10 megahertz.
The 20-megahertz blocks would be combined together and added to the remaining 15-megahertz licenses the FCC is also re-auctioning, to create one mega-license. This license would be auctioned to the highest bidder on May 31, and the money would be deposited into the treasury by Sept. 30. The opening bid would be set at $2 billion.
The 10-megahertz blocks would be auctioned on July 26 and would remain restricted to DEs.
As CTIA was meeting here, Nextel defended its idea in reply comments to largely negative comments filed on Feb. 22 in Washington.
“It is particularly ironic that some parties, even while urging auction frameworks that would inure primarily to their own benefit, argue that Nextel’s plan is driven by self-interest,” Nextel said.
Whatever the FCC decides, it apparently will have to defend its decision to the United States Senate, which is divided on the issue.
“From a policy perspective, some of us are beginning to ask whether this spectrum should be set aside when the SBCs, the Sprints and BellSouths of the world could do some really exciting things,” said Howard Waltzman, general counsel to Senator Sam Brownback (R-Kan.).
Waltzman participated in a CTIA 2000 panel of congressional staff. He later told RCR that his boss has not made any decisions about what, if anything, should be done about the C-block and the associated DE rules.
While Waltzman may be right that this is one view in the Senate, the Senate majority leader has an entirely different view.
“The [FCC] properly recognized that, absent eligibility limitations, the largest, most entrenched telecommunications carriers could outbid small businesses for key markets strategic to them, and thereby entirely undermine small businesses’ ability to compete in the auctions. Nothing has transpired that would warrant the [FCC] revisiting its long-standing policy at this late date,” said Sen. Trent Lott (R- Miss.) in a letter last month to the FCC.
Second Circuit briefs
The FCC’s rules on re-auctioning the NextWave licenses will be null and void -and indeed unnecessary-if the Second Circuit agrees with Bankruptcy Judge Adlai S. Hardin Jr. that the licenses could not have canceled in 1998 or 1999 because they were subject to the bankruptcy automatic stay.
On Feb. 25, Judge Hardin defended his Jan. 31 ruling that the Second Circuit’s December opinion did not mean the FCC could take back and re-auction the licenses.
“The institutional question involves the power of the judiciary to review acts and regulations of the executive branch in the context of non-regulatory or commercial activity,” Hardin said.
The Second Circuit is now deciding the issue after the FCC appealed the Hardin ruling. The appeals court announced last month that it would give each of the parties, including Hardin, the opportunity to explain the status of NextWave’s licenses. If necessary, oral argument on this issue will be heard at any time with three days notice.
NextWave also urged the Second Circuit to reject the FCC’s arguments.
