WASHINGTON-The Senate Commerce Committee passed by voice vote a bill meant to keep the NextWave Telecom Inc. bankruptcy saga from happening again.
“The bill would ensure that valuable spectrum would not go unused unnecessarily. It precludes a successful bidder in a spectrum auction to avoid its obligation to pay for its spectrum license and thereby keeping spectrum unused and tied up in a bankruptcy proceeding,” said Chairman John McCain (R-Ariz.).
NextWave filed for bankruptcy in 1998 after not being able to secure financing to pay the Federal Communications Commission for its bid of $4.7 billion for 95 PCS C-block licenses. That action led to a nearly five-year saga about whether the FCC could cancel NextWave’s licenses during bankruptcy. In January, the Supreme Court ruled it could not.
NextWave did not respond to calls for comment.
Meanwhile in bankruptcy court in White Plains, N.Y., Judge Adlai Hardin is expected to hold a hearing Wednesday to determine whether NextWave should be allowed to extend the exclusivity period and its employee severance package until Sept. 30.
In papers filed last week, NextWave argued that extending the exclusivity period-where only NextWave can offer a plan of reorganization-is only fair given the extensive litigation.
“Prior to receipt of the Supreme Court opinion, it was literally impossible for the plan process to move forward. No outside party was willing to expend the requisite resources on evaluating opportunities with [NextWave] not knowing whether NextWave would ultimately retain its licenses or not. Accordingly, realistically, [NextWave has] only been able to move forward on the business and financing plans which will form the core of the plan of reorganization for the last several months,” said NextWave.
The employee severance package is meant to retain key employees as the workload changes from litigation to implementation and buildout, said NextWave.
“NextWave is aggressively proceeding to attempt to maximize the value of its assets to the benefit of all of its constituencies. [NextWave is] proceeding with all of the elements (technological, operational and financial) necessary to expand the previously completed buildout of a nationwide data network and simultaneously evaluating and pursuing the variety of other potential transactions that may maximize the value,” said NextWave. The next status conference on the NextWave bankruptcy is set for Aug. 19.
The spectrum bankruptcy language was included in the FCC re-authorization bill, which will now go to the Senate floor for consideration.
Along with the bankruptcy provision, the re-authorization bill would no longer allow industry trade groups to pay for FCC employees’ travel.
More FCC staff have attended the annual Cellular Telecommunications & Internet Association show since the agency decided industry could pick up the tab. However, that hasn’t sat too well with public-policy watchdog groups, and McCain said it is best “to avoid the appearance of impropriety.”
In addition, the common practice of senior FCC officials leaving the agency to become top lobbyists would be seriously curtailed since officials would have to “cool off” for at least a year before lobbying their former employer.
“I appreciate your willingness to close the current loophole that currently allows senior FCC employees to evade the one-year `cooling off’ period when they leave government service,” said Sen. Ernest Hollings (D-S.C.), ranking member.
Thomas Sugrue, former chief of the FCC’s Wireless Telecommunications Bureau, recently left the agency to become the top lobbyist for T-Mobile USA Inc.
The FCC will also be able to fine companies 10 times what the current limits allow if the bill passes and is signed into law.
“This bill makes great strides in increasing maximum forfeiture penalties by 10 times the current high-water mark. It is my hope that the FCC will take the hint and use these tools that we are providing in this bill to benefit consumers,” said Hollings.
FCC Chairman Michael Powell has long called for more enforcement authority, saying that if a carrier breaks the rules he wants to “hurt them and hurt them bad” but that the current fine limits meant that breaking the rules and paying the fines could be construed as the cost of doing business.
