WASHINGTON-Yet another court will have to decide whether the Federal Communications Commission has the authority to re-auction the 90 personal communications services licenses once owned by NextWave Telecom Inc.
The U.S. Court of Appeals for the 2nd Circuit ruled a bankruptcy court could not stop the FCC from canceling and re-auctioning the licenses. But the 2nd Circuit ruled the District of Columbia Circuit Court will have to decide whether the FCC was within its rights to cancel the licenses and make plans to re-auction them.
The 2nd Circuit’s decision affirmed a ruling made last year that said bankruptcy law could not be used in licensing and regulating spectrum governed by communications law.
“We are pleased that the court has reaffirmed our regulatory role in licensing spectrum as well as our authority to insist upon timely payment as a licensing condition,” said FCC Chairman William Kennard.
Based on the 2nd Circuit’s Dec. 22 decision, the FCC on Jan. 12 issued a public notice announcing that it would re-auction the NextWave licenses on July 26. NextWave appealed the action to Bankruptcy Judge Adlai S. Hardin Jr., who ruled in favor of NextWave, saying the move to re-auction the licenses amounted to “self-help repossession by ambush.”
While the FCC waited for a decision from the 2nd Circuit, it has been preparing for the re-auction by seeking comment on various rule changes that would allow large carriers to bid for this spectrum.
NextWave won licenses set aside for small businesses, known as designated entities, so other DEs have been lobbying hard for the FCC to keep the DE rules in place.
The 2nd Circuit’s decision means that action in the NextWave matter now moves to the D.C. Circuit. It is unclear whether the FCC will go forward with the re-auction since the 2nd Circuit bucked the decision to the D.C. Circuit, but it should be noted that in its decision last week, the 2nd Circuit repeatedly referred to the licenses “previously belonging to NextWave.”
In the meantime, NextWave vowed to continue its fight.
“NextWave intends to expeditiously seek relief, as necessary, to preserve the company’s assets until the substantive merits of the case can be decided. Proceeding with a re-auction before the company receives a hearing on the merits would be grossly unfair to NextWave,” the company said.
The bankrupt C-blocker may have a tough time in the D.C. circuit since that circuit is generally known to rule in favor of the FCC.
In addition to litigation, both sides have been seeking legislative relief.
Earlier this month, NextWave lost a battle to have language added to a bankruptcy bill that would have overturned the 2nd Circuit ruling.
In addition, the FCC is urging Senate appropriators to insert language in legislation that would allow the commission to take back licenses from all bankrupt C-blockers. Such language was killed in the final moments of congressional debate last year.
